91-911

NOTICES

DEPARTMENT OF COMMERCE

[C-533-802]

Final Affirmative Countervailing Duty Determination: Steel Wire Rope from India

Wednesday, September 11, 1991

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AGENCY: Import Administration, International Trade Administration,
Department of Commerce.

EFFECTIVE DATE: September 11, 1991.

FOR FURTHER INFORMATION CONTACT:Roy A. Malmrose, Office of Countervailing
Investigations, Import Administration, International Trade Administration, U.S.
Department of Commerce, Washington, DC 20230 at (202) 377-5414.

Final Determination

Case History

Since the publication of our preliminary determination in the Federal Register (56 FR 4259,
February 4, 1991), the following events have occurred. On February 13, 1991, petitioners
requested that we align the due date for the final countervailing duty determination with
the final determination in the concurrent antidumping duty investigation. On February 20,
1991 (56 FR 6837), we published an amendment to the preliminary determination.
On March 8, 1991, we presented a supplemental questionnaire to the Government of India,
Usha Martin Industries Ltd. (USHA), and Bombay Wire Ropes Ltd. (BWR). On March 18,
1991, we published a notice in the Federal Register (56 FR 11406) announcing the alignment
of the final countervailing duty determinations for India and Thailand with the final
determinations in the companion antidumping duty investigations for India and Thailand.
We received responses from the Engineering Export Promotion Council (EEPC), on behalf of
the Government of India, USHA, and BWR on April 1, 1991. From April 16 to April 26,
1991, we conducted verification in India of the questionnaire responses of the EEPC,
USHA, and BWR. On May 17, 1991, we received additional information from the
respondents. On June 12, 1991, we published a notice in the Federal Register (56 FR 26994)
postponing the final determination in this investigation until September 4, 1991.
On May 28, 1991, the Department received a request from petitioners to exclude stainless
steel wire rope from the scope of this investigation. On June 10, 1991, the Department
solicited comments from interested parties regarding petitioners' request. On July 9, 1991,
we published notices in the investigations of steel wire rope from Argentina and Mexico
excluding stainless steel wire rope from the scope of those investigations. See Final
Determination of Sales at Less Than Fair Value: Steel Wire Rope from Mexico (56 FR 31098,
July 9, 1991).
Case briefs were filed by petitioners and respondents on August 7, 1991, and a rebuttal brief
was filed by petitioners on August 14, 1991.

Scope of Investigation

The product covered by this investigation is steel wire rope. Steel wire rope encompasses
ropes, cables, and cordage of iron or steel, other than stranded wire, not fitted with fittings
or made up into articles, and not made up of brass plated wire. Excluded from this
investigation is stainless steel wire rope, i.e., ropes, cables, and cordage other than stranded
wire, of stainless steel, not fitted with fittings or made up into articles, which is classifiable
under Harmonized Tariff Schedule (HTS) subheading 7312.10.6000.
Steel wire rope is currently classifiable under HTS subheadings 7312.10.9030,
7312.10.9060, and 7312.10.9090. Although the HTS subheadings are provided for
convenience and customs purposes, our written description of the scope of this proceeding
is dispositive.

Analysis of Programs

We did not receive responses to our questionnaire from South India Wire Ropes, Ltd.
(South India) and Mohatta & Hectel Ltd. (Mohatta). Therefore, as best information
available (BIA), we are assigning these companies the highest subsidy rate found in this
investigation for any company for each program determined to be countervailable.
When we calculate the country-wide rate, we weight the individual company rates
according to each company's share of exports of the subject merchandise to the United
States. In this case, however, we cannot include South India and Mohatta in the calculation
of the country-wide rate because we have no information on the value of their exports of
the subject merchandise to the United States. Therefore, these two companies to the United
States. Therefore, these two companies are receiving separate rates, which have not been
included in the calculation of the country-wide rate.
For purposes of this investigation, the period for which we are measuring subsidies ("the
review period") is April 1, 1989, through March 31, 1990, which corresponds to the most
recently completed fiscal year of the respondent companies.
Based on our analysis of the petition, responses to our questionnaires, verification, and
written comments from petitioners and respondents, we determine the following:

I. Programs Determined to Confer Subsidies

We determine that subsidies are being provided to manufacturers, producers, or exporters
in India of steel wire rope (wire rope) under the following programs:

A. International Price Reimbursement Scheme (IPRS)

On February 9, 1981, the Government of India introduced the IPRS for exporters of
products with steel inputs. The purpose of the program is to rebate the difference between
higher domestic and lower international prices of steel. On January 10, 1985, and June 2,
1988, the Government of India extended the IPRS to include stainless steel wire rod and
high carbon steel wire rod, respectively. The price of wire rod, the primary input into wire
rope, is not controlled. Eligibility for IPRS rebates is restricted to wire rope inputs
purchased domestically.
The EEPC, a non-profit organization funded by the Government of India and private firms,
processes the claims for, and disburses, the IPRS rebate. The IPRS rebate is purportedly
based on (1) the differential between the domestic and international prices of steel wire rod
and (2) the actual wire rod consumption, inclusive of a maximum ten percent allowance for
waste. The domestic price of wire rod is based on a calculated average of domestic
producers' prices. The international price of wire rod is theoretically derived from
international prices of an upstream steel product. During the review period, both USHA and
BWR received IPRS rebates on exports of wire rope to the United States.
We consider a government program that results in the provision of an input to exporters at
a lower price than to producers of domestically-sold products to confer a subsidy within the
meaning of section 771(5)(A) of the Act. Therefore, we determine that the IPRS program
confers a countervailable export subsidy. We consider the benefit to be the entire IPRS
rebate with an

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adjustment for a service fee charged by the EEPC.
For any given review period, it has been our practice to consider the benefit from the IPRS
program to equal the total amount of IPRS benefits received during the review period. (See
Final Results of Countervailing Duty Administrative Review: Certain Iron-Metal
Castings from India 56 FR 41658 (August 22, 1991)) (Castings, 1987 Administrative
Review). The estimate net subsidy from this program is 32.66 percent ad valorem for all
manufacturers and exporters in India of wire rope except for USHA, which has a
significantly different aggregate benefit. The estimated net subsidy for USHA is 11.08
percent ad valorem. The estimated net subsidy for South India and Mohatta is 32.66
percent ad valorem.

B. Pre-Shipment Export Loans

The Reserve Bank of India, through commercial banks, provides pre-shipment or "packing"
credits to exporters. With these pre-shipment loans, exporters may purchase raw materials
and packing materials based in presentation of a confirmed order or letter of credit. In
general, the pre-shipment loans are granted for a period of 180 days. Interest on these loans
is paid quarterly or at the date of repayment. Because only exporters are eligible for these
pre- shipment loans, we determine that they are countervailable to the extent that they are
provided at preferential rates.
During the review period, the interest rates under this program were 7.5 percent for goods
shipped within the first 180 days, 9.5 percent for the next 90 days, and the commercial
interest rate thereafter. As the Government of India does not maintain statistics on the
average predominate short-term commercial rate, it was unable to provide a benchmark
interest rate. However, based on the information gathered at verification from officials from
the Reserve Bank of India and a commercial bank, we estimate that the average short-term
commercial interest rate during the review period was 17.5 percent and have used this rate
as our commercial benchmark.
We compared this benchmark to the interest rate charged on pre-shipment financing and
found that the interest rate charged under the program was lower than the benchmark.
Therefore, we determine that loans provided under this program are countervailable.
The calculate the benefit on those preferential loans for which interest was paid during
1989-1990, we followed the short-term loan methodology which has been applied
consistently in our past determinations and is described in more detail in the Subsidies
Appendix attached to the notice of Cold-Rolled Carbon Steel Flat-Rolled Products from
Argentina: Final Affirmative Countervailing Duty Determination and Countervailing
Duty Order (49 FR 18006, April 16, 1984); see also Alhambra Foundry v. United States,
626 F. Supp. 402 (CIT, 1985).
We compared the amount of interest actually paid during the review period to the amount
that would have been paid at the benchmark rate. The difference between these amounts is
the benefit. We allocated the benefit to either total exports or exports of the subject
merchandise to the United States, depending on how the amount of pre-shipment financing
was reported or verified. On this basis, we determine the estimated net subsidy from this
program to be 2.91 percent for all manufactures and exporters in India of steel wire rope
except for USHA, which has a significantly different aggregate benefit. The estimated net
subsidy for USHA is 1.68 percent ad valorem. The estimated net subsidy for South India
and Mohatta is 2.91 percent ad valorem.

C. Post-Shipment Loans

The Reserve Bank of India, through commercial banks, provides post-shipment financing
to exporters. Post-shipment financing provides working capital to
manufacturers/exporters for the interim period between shipment of goods and receipt of
payment. Post-shipment financing is available to manufacturers/exporters upon
presentation of a confirmed order or letter of credit subsequent to shipment of the goods.
The terms of post-shipment financing with respect to the due date are those stated in the
purchase order/contract. The due date may in no case exceed 180 days. Interest on these
loans usually is paid up front in the form of a discount. Because only exporters are eligible
for these post-shipment loans, we determine that they are counteravailable to the extent
that they are provided at preferential rates.
During the review period, the interest rate under this program was 8.65 percent. For the
reasons stated in the Pre-Shipment Financing section, we are using 17.5 percent as our
short-term interest rate benchmark. We compared this benchmark to the interest rate
charged on Pre-Shipment Financing and found that the interest rate charged under this
program was lower than the benchmark. Therefore, we determine that loans provided
under this program are counteravailable.
To calculate the benefit on those preferential loans for which interest was paid during
1989-1990, we followed the same short-term loan methodology discussed above. We
compared the amount of interest actually paid during the review period to the amount that
would have been paid at the benchmark rate. The difference between these amounts is the
benefit. We allocated the benefit to total exports of the subject merchandise to all markets.
On this basis, we determine the estimated net subsidy from this program to be 0.66 percent
for all manufacturers and exporters in India of steel wire rope except for USHA, which has
a significantly different aggregate benefit. The estimated net subsidy for USHA is 1.97
percent ad valorem. The estimated net subsidy for South India and Mohatta is 1.97 percent
ad valorem.

D. Advance Licenses

Advance Licenses are only available to exporters to import duty-free raw material inputs
used in the production of exports. Recipients of Advance Licenses are obligated under the
terms of the license to export the products produced with the duty-free imports. The
amount of imports allowed under an Advance License is closely linked to the amount of
exports to be produced. However, a product imported under an Advance License does not
necessarily have to be physically incorporated into the exported product. Unlike
Additional and Replenishment Licenses (discussed below), Advance Licenses are not
transferable.
We verified that USHA used four Advance Licenses during the review period to import
inputs used in the production of wire rope. Of the various inputs used in the production of
wire rope with Advance Licenses, wire rod, zinc, fiber core, lead, and lubricants are
physically incorporated. We consider the use of the Advance License in this case to be the
equivalent of a duty drawback program insofar as customs duties are not paid on physically
incorporated, imported products used in the production of exports. Therefore, we
determine that the duty-free importation of physically incorporated inputs under the
Advance License is not a counteravailable subsidy.
However, because of this program is limited to exporters, we consider any import duty
exemption provided on imported products that are not physically incorporated into an
exported product to constitute a counteravailable export subsidy. During the review
period, USHA also imported soap with an Advance License. Because soap is not physically
incorporated in wire rope, we consider the duty-savings

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attributable to imports of
soap to be a counteravailable subsidy.
We verified that USHA sold in the domestic market steel, lead, and zinc scrap recovered
from production processes outside of its "Export Oriented Unit" (EOU) (see discussion
below). This scrap originated, in part, from duty-free imports made under Advance License.
Because USHA was not liable for the payment of import duties when the scrap from these
imports was sold domestically, we consider the duty-savings attributable to these imports
also to be a counteravailable subsidy.
To calculate the benefit attributable to the duty-savings on soap and scrap, we divided the
total duty-savings by USHA's total exports to all markets. On this basis, we determine the
estimated net subsidy from this program to be 0.00 percent ad valorem for all
manufacturers and exporters in India of wire rope except for USHA, which has a
significantly different aggregate benefit. The estimated net subsidy for USHA is 2.61 percent
ad valorem. The estimated net subsidy for South India and Mohatta is 2.61 percent ad
valorem.

E. Use and Sale of Additional Licenses

Additional Licenses are available to Export/Trading Houses. To be designated as an
Export/Trading House, a company must have achieved a certain level of export
performance over a three-year period. An Additional License permits its holder to import a
relatively wide variety of items in an amount equal to at least ten percent of the "net foreign
exchange" earned in the previous year. Imports against Additional Licenses are dutiable
and recipients face no export obligation. Additional Licenses are fully transferable. If a
recipient does not use the license, it can be sold for a premium, which is expressed as a
percentage of the value of the license (i.e., the amount that can be imported under the
license).
USHA used a portion of one Additional License during the review period. We verified the
value of the portion of the Additional License sold during the review period and the
premium received for this portion of the license. We also verified the value of the Additional
License used during the review period.
Because only exporters receive Additional Licenses based on their status as exporters, we
have determined that these licenses provide a countervailable subsidy, and that the benefit
is equal to the proceeds resulting from the sale of these licenses. To calculate the benefit
from the partial sale of the Additional License, we divided the amount received by total
exports to all markets.
Unlike the situation where the license (or a portion of it) is sold, we have no premium value
for the Additional License that was used. Therefore, as BIA, we calculated the benefit
attributable to use of the Additional License by estimating the value of the proceeds that
would have resulted if the portion of the Additional License used was sold.
To estimate this value, we took the premium percentage earned on the license portion that
was sold and applied it to the value of the license portion that was used. The resulting value
was then divided by total exports to all markets. On this basis, we determine the net subsidy
to be 0.00 percent for all manufacturers and exporters in India of wire rope except for
USHA, which has a significantly different aggregate benefit. The net subsidy for USHA is
1.03 percent ad valorem. The estimated net subsidy for South India and Mohatta is 1.03
percent ad valorem.

F. Cash Compensatory Support (CCS)

In 1966, the Government of India established the CCS program to rebate indirect taxes on
exported merchandise. We verified that the standard rebate for exports of wire rope was set
at a maximum of ten percent for the review period, and is paid as a percentage of the FOB
invoice price. This rate was based on the results of a 1989 audited survey of domestic wire
rope manufacturers administered by the EEPC and the Ministry of Commerce (MOC). The
survey received by the government, upon which the ten percent rebate is based, assumes
that duties are paid on imported inputs.
During the review period, we verified that BWR earned an allowable rebate of ten percent on
its exports of wire rope to the United States. USHA, however, earned less than ten percent
because it imported certain inputs duty-free under EOU procedures and Advance Licenses.
Under the rules governing the CCS, exports from an EOU or exports produced from inputs
imported under an Advance License may earn less than the standard rate. The exact rate
earned is contingent upon the percentage of domestic value-added contained in the
exported product. We verified that USHA earned CCS rebates during the review period
which ranged from five to ten percent depending on the percentage of domestic
value-added.
To determine whether an indirect tax rebate system confers a subsidy, we must apply the
following analysis. (See Preliminary Affirmative Countervailing Duty Determination:
Textile Mill Products and Apparel from Indonesia, 49 FR 49672, December 21, 1984.) First,
we examine whether the system is intended to operate as a rebate of indirect taxes and/or
import duties. Next, we analyze whether the government properly ascertained the level of
the rebate. Finally, we review whether the rebate schedules are revised periodically in
order to determine if the rebate amount reflects the amount of duty and indirect taxes paid.
When the rebate system meets these conditions, the Department will consider that the
system does not confer a subsidy unless the fixed amount set forth in the rebate schedule
for the exported product exceeds the amount rebated for duties and indirect taxes on
inputs physically incorporated into the exported product. When the system rebates duties
and indirect taxes on both physically incorporated and non-physically incorporated inputs,
we find a subsidy to exist to the extent that the fixed rebate exceeds the allowable rebate on
physically incorporated inputs.
In our preliminary determination, we found that the rebate system meets all the
above-mentioned criteria and that the rebates under this program reasonably reflected the
incidence of indirect taxes on physically incorporated inputs. In this determination, we find
that the rebate system meets all three of the above-mentioned criteria and that there is a
clear link between the amount of indirect taxes and import duties paid, and the level of CCS
rebates. However, upon closer examination, we have determined that the rebate rates
earned by BWR and USHA slightly exceed the amount of import duties and indirect taxes
paid on physically incorporated items.
To determine the extent to which the rebate rate earned by BWR exceeds the tax incidence
on items physically incorporated into the subject merchandise we calculated the indirect
taxes paid on physically incorporated inputs. We consider scrap, alloys, coke, graphite,
wire rod, zinc, lead, fiber, lubricants, and packing materials to be raw material inputs that
are physically incorporated into the subject merchandise. We divided the total tax
incidence on these physically incorporated inputs by the net FOB value per metric ton. We
then compared the rebate rate of ten percent to our calculation of the allowable rebate rate
for items physically incorporated and

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found that the government authorized
rebate of ten percent was excessive.
As noted above, USHA earned a CCS rebate less than the standard ten percent because it
imported certain inputs duty-free under EOU procedures and Advance Licenses. The
possibility of importing inputs duty-free was not taken into account in the 1989 survey
received by the government. Because USHA earned less than the standard rate of ten
percent on its exports of wire rope, and because the 1989 survey does not account for
USHA's duty-free importation of inputs during the review period, we have examined certain
company-specific information submitted by USHA. This information consists of verified
information concerning the CCS rebates earned by USHA on its total exports of the subject
merchandise to all markets, and the average amount of indirect taxes and import duties
paid per metric ton of wire rope exported by USHA during the review period. Based on this
information, we find that the average rebate earned by USHA exceeded the amount of the
indirect taxes and import duties paid by USHA during the review period. Consequently, we
determine that there was an overrebate of import duties and indirect taxes to USHA.
On the basis of the two overrebates calculated above, we determine the estimated net
subsidy from this program to be 0.70 percent for all manufacturers and exporters in India
of steel wire rope except for USHA, which has a significantly different aggregate benefit. The
estimated net subsidy for USHA is 0.85 percent ad valorem. The estimated net subsidy for
South India and Mohatta is 0.85 percent ad valorem.

II. Programs Determined Not to Confer Subsidies

Based on the responses and verification, we determine that subsidies are not being provided
to manufacturers, producers, and exporters in India of wire rope under the following
programs:

A. Sick Industrial Company Act (SICA)

SICA was implemented in 1987 with the aim to revive and rehabilitate those "sick industrial
companies" which are potentially commercially viable and to wind up those companies
determined to not be commercially viable. If the Board for Industrial and Financial
Reconstruction (BIFR) determines that a company is commercially viable, it will direct an
"operating agency" (normally, the company's commercial bank) to prepare a rehabilitation
package for the company.
We verified that a wide variety and broad range of industries have benefitted from the
provisions of SICA. Therefore, we have determined that SICA does not confer a
countervailable subsidy.

B. 100 Percent Export Oriented Units (EOU)

Designation as an EOU is awarded by the Board of Approvals. An EOU is a bonded area and
status as an EOU is not transferable. Imports by an EOU are duty-free and an EOU is eligible
for a five-year income tax holiday during the first eight years from commencement of
production. An EOU must export 100 percent of its export production for ten years and
export products with a value-added content of over 20 percent. Goods incorporating
duty-free inputs which are sold in the domestic market, except "deemed" exports, will be
subject to duties and taxes.
In our preliminary determination, we stated that we needed more information concerning
three EOU issues: (1) The domestic sale of final products for which inputs were imported
duty-free, (2) the duty-free importation of certain inputs that may not have been physically
incorporated into exported merchandise, and (3) the duty-free importation of machinery
and equipment during the review period. The first issue relates to products sold by the EOU
in the domestic market which under the regulations governing EOUs in India were
"deemed" or considered as exports by USHA's EOU. We verified that the deemed exports
made by USHA were not of the subject merchandise. Therefore, we determine that USHA
did not receive a countervailable benefit from its "deemed" exports.
The second issue concerned the duty-free importation of inputs which may not have been
physically incorporated into exported merchandise. At verification, we noted that a
typographical error had been made in the preparation of the responses. We verified that the
particular imported product at issue was physically incorporated in an exported product.
Therefore, we determine that no benefit was provided to USHA through the duty-free
importation of inputs used in the production of exports.
With respect to the third issue raised in the preliminary determination, namely the
duty-free importation of machinery and equipment, we verified that although certain
machinery had been imported it was done so after the review period. Therefore, we
determine that USHA did not receive a countervailable benefit during the review period.
Finally, during verification we discovered that all EOUs are eligible for a five-year income
tax holiday. However, we verified that USHA did not claim this benefit on the tax return
filed during the review period. Therefore, we determine that USHA did not receive a benefit
during the review period from the provision of a five-year tax holiday.

III. Programs Determined to be Not Used

Based on the responses and verification, we determine that manufacturers, producers, or
exporters in India of wire rope did not apply for, claim, or receive benefits during the
review period for exports of wire rope to the United States under the following programs:

A. Income Tax Deductions Under Section 80HHC

B. Market Development Assistance (MDA) Grants

C. Receipt, Use, or Sale of Replenishment Licenses

Comments

Comment 1

Petitioners contend that the Department of Commerce (the Department) should affirm its
preliminary finding that rebates received under IPRS by Indian exporters of steel wire rope
constitute a countervailable export subsidy. Petitioner argues that although the U.S.
countervailing duty law explicitly incorporates item (d) of the Illustrative List
contained in Annex A of the GATT Subsidies Code, the Court of International Trade (CIT)
and the Court of Appeals for the Federal Circuit previously have upheld the Department's
findings that the IPRS constitutes a countervailable export subsidy. (Certain Iron-Metal
Construction Castings From India, Final Results of Countervailing Duty Administrative
Review, 51 FR 45788 (December 22, 1986), aff'd RSI (India) Pvt., Ltd. v. United States, 687
F. Supp. 605 (CIT 1988), aff'd 876 F.2d 1571 (Fed. Cir. 1989)) (Castings). Therefore,
respondents' reliance on item (d) of the Illustrative List is not persuasive because its
argument has already been rejected by the Department and the Courts.
Petitioners contend that the IPRS is controlled and funded by the Government of India, as
in the Castings case. In addition, no reliable world market price for steel wire rod, the raw
material used to produce steel wire rope, exists. Petitioners argue that the lack of any
verifiable world market price is demonstrated by (1) the absence

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of a published
international price for high carbon steel wire rod and the subsequent use of the price of a
surrogate product, (2) the absence of any price adjustment to the surrogate price to
account for the differences in the price of the various grades of steel wire rod, and (3) the
failure of the respondents during verification to provide support documentation for the
international price of steel wire rod. Therefore, consistent with the Castings decision, the
Department should find in this case that the IPRS is a countervailable export subsidy.
USHA contends that the Department should reverse its preliminary finding that the IPRS is
countervailable. USHA presents three arguments to support its contention that the IPRS
program does not provide countervailable benefits to Indian steel wire rope producers.
First, USHA distinguishes between the facts in Certain Iron-Metal Castings from India, 55
FR 50747, (December 10, 1990) (Castings, 1985 administrative review), in which the
Department found the IPRS to be countervailable, and the facts in the present case. Unlike
what was found in Castings, 1985 Administrative Review, the Indian government does not
control the price of domestic steel wire rod and, therefore, cannot provide a benefit to
Indian steel wire rope producers through maintenance of artificially high domestic prices of
steel wire rod. Rather, high domestic prices of steel wire rod are a result of higher power
costs and the higher cost of metal scrap used to produce steel wire rod.
Second, USHA argues that the IPRS program does not bestow an economic benefit on steel
wire rope producers because the methodology used to calculate the IPRS rebate is designed
to ensure that no economic difference exists between the price of domestic wire rod and
imported wire rod for use in steel wire rope exports.
Third, the IPRS provides domestically-produced steel wire rod to steel wire rope exporters
at prices equal to or greater than world market prices. Item (d) of the Illustrative List
contained in the Trade Agreements Act of 1979 provides that provision of goods or services
to exporters at preferential prices is countervailable only if the prices are more favorable
than those that would be available on world markets. USHA maintains that, consistent with
the Department's past practice, the Department should not find the IPRS countervailable
because it does not provide domestically-produced steel wire rod at prices lower than
world market prices.

DOC Position

IPRS payments are countervailable because the IPRS program results in the provision of an
input to exporters at a price lower than to producers of domestically-sold products. It may
be that the market, rather than the Indian government, controls the domestic price of steel
wire rod. Nevertheless, as a result of the program, exporters of wire rope in India receive
their primary input at a price lower than the price paid for the same input by producers of
wire rope who sell their product domestically.
With respect to USHA's argument that item (d) of the Illustrative List controls Commerce's
treatment of the IPRS, we have determined that the Illustrative List is not controlling of the
identification and measurement of export subsidies, but must be considered along with
other provisions of the statute and its legislative history, administrative practice and
judicial practice. See Castings, 1987 Administrative Review.
As we stated in the Castings, 1987 Administrative Review, it is irrelevant whether the IPRS
is consistent with item (d) because we are not concerned with world market prices but with
the alternative price of the input commercially available in the domestic market. In this
case, we found at verification that the IPRS program results in the provision of lower-priced
inputs to exporters than to domestic purchasers. Therefore, we determine that the IPRS
program is countervailable.
USHA's remaining argument assumes that the IPRS rebates only the difference between the
domestic and international price of wire rod. However, during verification the EEPC was
unable to document its calculation of the international world price of wire rod (see
Verification Report at p. 19). Therefore, even assuming, arguendo, that USHA's rationale for
the IPRS were correct, there is no evidence on the record to support the notion that the
IPRS provides no economic benefit to wire rope producers. Therefore, USHA's argument
must be rejected.

Comment 2

USHA contends that even if the Department finds the IPRS to be countervailable, the
subsidy rate on the IPRS for USHA should be zero because USHA did not make any claim for
rebates under the IPRS on its exports to the United States during the period of
investigation.
USHA also argues that use of the cash-flow method is inappropriate in this case because
USHA knew with certainty at the time of export that its U.S. exports were ineligible for IPRS
rebates. Furthermore, the objective of the cash flow method is to prevent misstatement of
the amount of the subsidy. In this case, this concern does not exist because there will be no
IPPRS rebates on U.S. exports made during the period of investigation, now or in the future.
Petitioners urge the Department to affirm its preliminary determination to use the cash-flow
method to calculate the amount of countervailable benefits received under the IPRS.
Petitioners argue that the Department's preliminary decision is correct because (1) the
Department's proposed rules codify the cash-flow method, which identifies a
countervailable benefit upon a change in cash flow resulting from receipt of a benefit, and
(2) USHA received IPRS rebates on prior export sales of the subject merchandise during the
period of investigation. Furthermore, the exceptions to the use of the cash-flow method are
inapplicable in this case because the IPRS rebate is based on a price differential formula in
which the amount of the rebate is not known until the time the rebate is received. Therefore,
respondents' argument that USHA was ineligible for IPRS rebates on its export sales made
during the period of investigation is irrelevant.

DOC Position

The Department has continued to countervail IPRS benefits using the cash-flow
methodology, which requires the Department to recognize a subsidy benefit upon receipt of
the rebate rather than when the rebate is claimed. The cash-flow methodology is based
upon the premise that a company does not receive a benefit until its cash flow is affected.
(See Notice of Proposed Rulemaking: Countervailing Duties, 54 FR 23366 (May 31,
1989) at 23384 � 355.48)). Therefore, because USHA received rebates during the period of
review, it is not relevant that USHA made no IPRS claims during the review period.
One of the situations in which we do not employ our cash flow methodology is when the
benefit is earned on a shipment-by-shipment basis and the exact amount of the benefit is
known at the time of export. In this case, we verified that an eligible company does not
know the exact amount of the IPRS payment at the time of export. When a company is not
eligible to claim a benefit it obviously knows that its benefit amount will be zero. However,
the Department's determination as to whether an exception to the cash-flow

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methodology should be made is based on how and when a benefit amount to be provided
under a particular program is calculated. Therefore, the exception to the cash-flow method
does not apply in this case.

Comment 3

Petitioners contend that the Department should increase the subsidy received by USHA
under its Advance License by the amount of the import duty exemption that would be
attributable to the scrap that is sold in the domestic market. The scrap was generated during
the processing of raw materials imported under an Advance License. Petitioners maintain
that the amount of duties not paid on the domestically-sold scrap constitutes a
countervailable domestic subsidy.

DOC Position

The Department agrees with the petitioners. As stated above, the Advance License permits
exporters to import duty-free inputs that are used in the production of exports. During
verification, the Department found that scrap was generated from the production processes
at USHA's non-EOU facilities which used, in part, inputs imported under Advance Licenses.
Verification further revealed that USHA resold lead, steel and zinc scrap, which was
generated from the production process, in the domestic market. USHA, however, did not
pay import duties on the scrap subsequently sold in the domestic market.
Contrary to sales of scrap from non-EOU facilities, the Department also found at verification
that USHA was liable for import duties on scrap which was generated at its EOU facility and
sold in the domestic market.
The Department considers these two situations to be factually consistent except for the
disparity in the requirement of payment of duties on the sale of scrap. Furthermore, we find
that because the Government of India required payment of duties on domestic sales of
scrap from the EOU, the Government of India recognizes that a benefit accrues to the
exporter when such duties are not collected. We also note that in the concurrent
antidumping investigation, the Department was unable to verify that the Government of
India provides for a waste allowance under the Advance License program. Therefore, the
Department determines that the duty savings attributable to sales of scrap generated during
the processing of raw materials imported under Advance License by non- EOU's constitutes
a countervailable subsidy.

Comment 4

Petitioners claim that at the preliminary determination, the Department understated the ad
valorem rate of the benefit conferred from the use of the Advance License by USHA.
Petitioners claim that the amount of the subsidy received should by divided by the f.o.b.
value of the export sales set forth in the licenses rather than the value of export sales to all
markets. Petitioners point out that the f.o.b. value of export sales which used raw materials
imported under the Advance Licenses is explicitly identified in the licenses. Therefore,
because the Department can tie the benefits received directly to specific export sales, the
Department should recalculate the rate of the subsidy conferred to reflect the amount of
export sales authorized by the licenses.

DOC Position

Although petitioners correctly assert that the Advance Licenses required the company to
export a specific amount of sales, the Department is unable to directly tie the benefit
received under the licenses during the review period to the value of export sales set forth in
the licenses. At verification, we found that the time period of the licenses did not
correspond to the review period. Moreover, we do not have information concerning the
amount of exports during the review period which were taken against the export obligation
specified in the licenses. Therefore, we allocated the benefit received over total export sales
during the review period.

Comment 5

Petitioners claim that the Department should countervail the benefits provided to BWR as a
result of its designation as a "sick" company under the Sick Industrial Company Act of 1985
(SICA). Petitioners maintain that these benefits are countervailable because the benefits
were mandated by the Government of India, and only select industries may be designated
as "sick" companies.

DOC Position

We disagree with petitioners. Although the benefits received by BWR may have been
mandated by the Goverment of India, the Department verified that a large number and
broad range of industries have benefitted from the provisions of the SICA. Because the
benefits under SICA are not limited to a specific enterprise, or industry, or group of
enterprises or industries, we have determined that SICA does not confer a countervailable
subsidy.

Comment 6

Petitioners request the Department to use the higher of either the highest subsidy
calculated for a respondent subject to verification or the net subsidy rate alleged in the
petition as BIA to calculate the "all other" rate. Petitioners argue that application of the most
adverse BIA standard conforms with the Department's precedent and regulations. In this
case, at least two Indian respondents completely failed to respond to the Department's
questionnaire. These parties' failure to respond warrants application of the most adverse
BIA rate to all other Indian manufacturers/exporters.

DOC Position

Section 355.20(d) directs the Department to assign producers or exporters under
investigation the country-wide net subsidy rate unless the Department determines that a
firm has received benefits that are "significantly different" from the country-wide rate. If a
significant differential exists between the weighted-average country-wide rate and an
individual company rate, the company receiving significantly different subsidies is assigned
its own individual rate. The "all other" rate is the average of the net subsidy rates of all other
remaining companies. The rate of deposit applied to all companies other than those which
were assigned an individual rate is the "all other" rate.
In the instant investigation, the Department found that USHA received subsidies during the
period that were "significantly different" from those received by the other responding
company under investigation. Therefore, USHA will receive an individual rate while the rate
of deposit applicable to BWR is the "all other" rate.
However, two other companies, South India and Mohatta, received countervailing
duty questionnaires from the Department but completely failed to respond to the
questionnaires. Section 355.37(a) of the Department's regulations permits the Department
to apply BIA to any party which fails to adequately respond to the Department's request for
factual information. It remains within the Department's discretion to determine the nature
of the best information available. We have determined that in this case, best information
available is the highest net subsidy rate for each program calculated for any other
respondent. (See Preliminary Results of Countervailing Duty Administrative Review:
Certain Iron-Metal Castings

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from India, 56 FR 41650 (August 22, 1991)).
When we calculate the "all other" rate, we weight the individual company rates, including
those companies which receive a BIA rate, according to each company's share of exports of
the subject merchandise to the United States. In this case, however, we cannot include the
BIA rates for South India and Mohatta in the calculation of the "all other" rate because we
have no information on the value of their exports of the subject merchandise to the United
States. Therefore, these two companies are receiving separate rates, which are not included
in the calculation of the "all other" rate.

Comment 7

USHA contends that the Department should affirm its decision at the preliminary
determination that the CCS program does not provide countervailable benefits to wire rope
producers. USHA argues that the Department should not find the CCS rebates
countervailable because the rebate percentage earned on exports of the subject
merchandise to the United States was not greater than the average amount of indirect taxes
and import duties paid as a percentage of the average metric ton price of wire rope
exported to all markets.

DOC Position

As explained in Section I.F., based on our analysis of the information submitted by USHA,
we have determined that the CCS rebate on wire rope exports slightly exceeds the indirect
tax incidence on inputs physically incorporated into the exports of wire rope. In making
this determination, we compared the CCS rebates earned by USHA on its total exports of the
subject merchandise to all markets, to the average amount of indirect taxes and import
duties paid as a percentage of the average metric ton price of wire rope exported to all
markets. We used the CCS rebate earned on subject merchandise exports to all markets as
opposed to simply exports to the United States to better match the company's analysis of
indirect taxes and import duties paid.

Comment 8

Consistent with the Department's verification findings, USHA urges the Department to
reaffirm all other aspects of its preliminary determination in which it found no
countervailable benefit, especially with respect to Import Replenishment Licenses, income
tax deductions under section 80 HHC of the Finance Act, and MDA grants. In addition, with
respect to the following programs for which the Department required additional
information to make an informed finding, USHA contends that verification revealed that
such programs did not confer subsidies on Indian steel wire rope producers. These
programs are (1) import duty exemptions available to EOUs, (2) provisions available under
the SICA, and (3) the use, as opposed to the sale, of an Additional License.

DOC Position

As noted above under Section III., we have determined that Import Replenishment
Licenses, income tax deductions under section 80HHC, and MDA grants were not used by
respondents. With respect to import duty exemptions for EOUs and provisions under SICA,
we found these programs not to provide countervailable benefits. However, with respect to
the sale and use of Additional Licenses, we have determined that Additional Licenses
provide a countervailable subsidy because they are available only to exporters in India.
Moreover, we do not believe that using, rather than selling, an Additional License negates
the benefit to the company using the license. When a company uses an Additional License it
is exercising a right to import which is not available to non-exporters. Therefore, we have
determined that the use of an Additional License constitutes a countervailable export
subsidy, and the amount of the countervailable benefit associated with the use of the
Additional License is the amount of the sales proceeds that would have been remitted upon
the sale of the Additional License.

Verification

In accordance with section 776(b) of the Act, we verified the information used in making
our final determination. We followed standard verification procedures, including meeting
with government and company officials, inspecting internal documents and ledgers, tracing
information in the responses to source documents, accounting ledgers and financial
statements, and collecting additional information that we deemed necessary for making our
final determination. Our verification results are outlined in the public versions of the
verification reports, which are on file in the Central Records Unit (room B-009) of the Main
Commerce Building.

Suspension of Liquidation

In accordance with our preliminary affirmative countervailing duty determination
published on February 4, 1991, we directed the U.S. Customs Service to suspend liquidation
on the products under investigation and to require the posting of a cash deposit or bond
equal to the duty deposit rate. This final countervailing duty determination was
extended to coincide with the final antidumping duty determination on the same product
from India, pursuant to section 606 of the Trade and Tariff Act of 1984 (section 705(a)(1)
of the Act).
Under article 5, paragraph 3 of the Subsidies Code, provisional measures cannot be
imposed for more than 120 days without final affirmative determinations of subsidization
and injury. Therefore, we instructed the U.S. Customs Service to discontinue the suspension
of liquidation on the subject merchandise entered on or after June 4, 1991, but to continue
the suspension of liquidation of all entries, or withdrawals from warehouse, for
consumption of the subject merchandise entered between February 4, 1991, and June 3,
1991. We will reinstate suspension of liquidation under section 703(d) of the Act, if the
International Trade Commission (ITC) issues a final affirmative injury determination, and
will require a cash deposit on all entries of the subject merchandise as follows:

-----------------------------------------------------------------------
Manufacturer/Exporter Net ad valorem subsidy (percent)
-----------------------------------------------------------------------
Bombay Wire Ropes, Ltd ........................................... 36.93
Usha Martin Industries Ltd ....................................... 19.21
South India Wire Rope, Ltd ....................................... 42.03
Mohatta & Hectel Ltd ............................................. 42.03
All other manufacturers or exporters ............................. 36.93
-----------------------------------------------------------------------

ITC Notification

In accordance with section 705(d) of the Act, we will notify the ITC of our determination. In
addition, we are making available to the ITC all non- privileged and non-proprietary
information relating to this investigation. We will allow the ITC access to all privileged and
business proprietary information in our files, provided the ITC confirms that it will not
disclose such information, either publicly or under an administrative protective order,
without the written consent of the Deputy Assistant Secretary for Investigations, Import
Administration.
If the ITC determines that material injury, or the threat of material injury, does not exist,
this proceeding will be terminated and all estimated duties deposited or securities posted as
a result of the suspension of liquidation will be refunded or cancelled. If, however, the

*46299

ITC determines that such injury does exist, we will issue a countervailing duty
order, directing Customs officers to assess countervailing duties on all entries of wire
rope from India entered, or withdrawn from warehouse, for consumption, as described in
the "Suspension of Liquidation" section of this notice.
This determination is published pursuant to section 705(d) of the Act (19 U.S.C. 1671d(d)).
Dated: September 4, 1991.

Eric I. Garfinkel,

Assistant Secretary for Import Administration.

[FR Doc. 91-21839 Filed 9-10-91; 8:45 am]

BILLING CODE 3510-DS-M