Certain Iron-Metal Castings from India: Preliminary Results of Countervailing Duty Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[C-533-063]

Certain Iron-Metal Castings from India: Preliminary Results of

Countervailing Duty Administrative Review

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of Preliminary Results of Countervailing Duty

Administrative Review.

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SUMMARY: The Department of Commerce is conducting an administrative

review of the countervailing duty order on certain iron-metal castings

from India. The period covered by this administrative review is January

1, 1996 through December 31, 1996. For information on the net subsidy

for each reviewed company, as well as for all non-reviewed companies,

please see the Preliminary Results of Review section of this notice. If

the final results remain the same as these preliminary results of

administrative review, we will instruct the U.S. Customs Service to

assess countervailing duties as detailed in the Preliminary Results of

Review section of this notice. Interested parties are invited to

comment on these preliminary results. (See Public Comment section of

this notice.)

EFFECTIVE DATE: July 13, 1998.

FOR FURTHER INFORMATION CONTACT: Kristen Johnson or Christopher Cassel,

Office of CVD/AD Enforcement VI, Import Administration, International

Trade Administration, U.S. Department of Commerce, 14th Street and

Constitution Avenue, NW, Washington, D.C. 20230; telephone: (202) 482-

2786.

SUPPLEMENTARY INFORMATION:

Background

On October 16, 1980, the Department of Commerce (``the

Department'') published in the Federal Register (45 FR 50739) the

countervailing duty order on certain iron-metal castings from India. On

October 2, 1997, the Department published a notice of ``Opportunity to

Request Administrative Review'' (62 FR 51628) of this countervailing

duty order. We received timely requests for review, and we initiated a

review covering the period January 1, 1996 through December 31, 1996,

on November 26, 1997 (62 FR 63069).

In accordance with 19 C.F.R. 351.213(b), this review covers only

those producers or exporters of the subject merchandise for which a

review was specifically requested. The producers/exporters of the

subject merchandise for which the review was requested are:

Calcutta Ferrous Ltd.,

Carnation Industries Ltd.,

Commex Corporation,

Crescent Foundry Co. Pvt. Ltd.,

Delta Enterprises,

Dinesh Brothers (P) Ltd.,

Kajaria Iron Castings Pvt. Ltd.,

Kejriwal Iron & Steel Works Pvt. Ltd.,

Metflow Corporation,

Nandikeshwari Iron Foundry Pvt. Ltd.,

Orissa Metal Industries,

Overseas Iron Foundry,

R.B. Agarwalla & Company,

R.B. Agarwalla & Co. Pvt. Ltd.,

RSI Limited,

Seramapore Industries Pvt. Ltd.,

Shree Rama Enterprise,

Shree Uma Foundries,

Siko Exports,

SSL Exports,

Super Iron Foundry,

Uma Iron & Steel, and

Victory Castings Ltd.

Delta Enterprises, Metflow Corporation, Orissa Metal Industries, R.B.

Agarwalla & Co. Pvt. Ltd., Shree Uma Foundries, Siko Exports, and SSL

Exports did not export the subject merchandise to the United States

during the period of review (``POR''). Therefore, these companies have

not been assigned an individual company rate for this administrative

review. This review covers 19 programs.

On November 14, 1997, the Department issued a questionnaire to the

Government of India (``GOI'') and producers/exporters of the subject

merchandise. The Department received questionnaire responses from the

GOI and the producers/exporters of the subject merchandise on January

13, 1998. The Department issued supplemental questionnaires to the GOI

and certain producers/exporters of the subject merchandise on March 16

and 25, 1998, April 30, 1998, and May 14, 1998. The supplemental

questionnaire responses were received on April 9, 1998, and May 11, 15,

and 21, 1998.

Applicable Statute and Regulations

Unless otherwise indicated, all citations to the statute are

references to the provisions of the Tariff Act of 1930, as amended by

the Uruguay Round Agreements Act (``URAA'') effective January 1, 1995

(``the Act''). The Department is conducting this administrative review

in accordance with section 751(a) of the Act. All citations to the

Department's regulations reference 19 C.F.R. Part 351, 62 FR 27296 (May

19, 1997), unless otherwise indicated.

Scope of the Review

Imports covered by this administrative review are shipments of

Indian manhole covers and frames, clean-out covers and frames, and

catch basin grates and frames. These articles are commonly called

municipal or public works castings and are used for access or drainage

for public utility, water, and sanitary systems. During the review

period, such merchandise was classifiable under the Harmonized Tariff

Schedule (``HTS'') item numbers 7325.10.0010 and 7325.10.0050. The HTS

item numbers are provided for

[[Page 37535]]

convenience and Customs purposes. The written description remains

dispositive.

Verification

As provided in section 782(i) of the Act, we verified information

submitted by the Government of India and certain producers/exporters of

the subject merchandise. We followed standard verification procedures,

including meeting with government and company officials and conducting

an examination of all relevant accounting and financial records and

other original source documents. Our verification results are outlined

in the public versions of the verification reports, which are on file

in the Central Records Unit (Room B-099 of the Main Commerce Building).

Analysis of Programs

I. Programs Conferring Subsidies

A. Pre-Shipment Export Financing

The Reserve Bank of India (``RBI''), through commercial banks,

provides short-term pre-shipment financing, or ``packing credits,'' to

exporters. Upon presentation of a confirmed export order or letter of

credit, companies may receive pre-shipment loans for working capital

purposes, i.e., for the purchase of raw materials and for packing,

warehousing, and transporting of export merchandise. Exporters may also

establish pre-shipment credit lines upon which they may draw as needed.

Credit line limits are established by commercial banks, based upon a

company's creditworthiness and past export performance. Companies that

have pre-shipment credit lines typically pay interest on a quarterly

basis on the outstanding balance of the account at the end of each

period. In general, packing credits are granted for a period of up to

180 days.

Commercial banks extending export credit to Indian companies must,

by law, charge interest on this credit at rates determined by the RBI.

During the POR, the rate of interest charged on pre-shipment export

loans was 13.0 percent. For packing credits not repaid within 180 days,

banks charged interest at 15.0 percent for the number of days the loan

was overdue. Exporters would lose the concessional interest rate if the

loan was not repaid within 270 days. If that occurred, banks were able

to charge a non-concessional interest rate above 15.0 percent. If the

pre-shipment loan was outstanding beyond 360 days, banks then charged

the cash credit rate from the first day of advance of the loan until

the exports were realized.

Interest charged under this program must be liquidated with export

proceeds. If the interest is paid with sources other than foreign

currency export proceeds, the interest element of the loan is not

treated as export credit, and is charged at rates applicable to

domestic credit. During the POR, if a company's exports did not

materialize, banks charged the cash credit rate plus a penal interest

rate of two (2.0) percent from the first day of advance of the loan.

The Department found this program to be an export subsidy, and thus

countervailable, in prior administrative reviews of this order, because

receipt of pre-shipment export financing was contingent upon export

performance, and the interest rates were preferential. See, e.g., Final

Results of Countervailing Duty Administrative Review: Certain Iron-

Metal Castings From India, 56 FR 41658 (August 22, 1991); Final Results

of Countervailing Duty Administrative Review: Certain Iron-Metal

Castings From India, 56 FR 52515 (October 21, 1991); and Final Results

of Countervailing Duty Administrative Review: Certain Iron-Metal

Castings From India, 61 FR 64676 (December 6, 1996) (``1987, 1988, and

1993 Indian Castings Final Results''). No new information or evidence

of changed circumstances has been submitted in this proceeding to

warrant reconsideration of this finding. Therefore, in accordance with

Sec. 771(5A)(B) of the Act, we continue to find that this program

constitutes an export subsidy.

To determine the benefit conferred under this program, we compared

the interest rate charged under the pre-shipment financing program to a

benchmark interest rate. In conducting this administrative review, we

learned that of the twelve respondents that received pre-shipment

financing on which interest was paid during the POR, four had received,

and paid interest on, commercial short-term working capital loans,

which were not provided under a GOI program. These companies are:

Calcutta Ferrous Ltd. (``Calcutta Ferrous''), Crescent Foundry Co. Pvt.

Ltd. (``Crescent Foundry''), Dinesh Brothers (P) Ltd. (``Dinesh''), and

Nandikeshwari Iron Foundry Pvt. Ltd. (``Nandikeshwari''). For these

companies, we used a company-specific benchmark interest rate to

measure the benefit each company received under the pre-shipment export

financing scheme.

For all other respondents, we used as our benchmark the cash credit

rate. In the 1994 administrative review of this order, the Department

determined that, in the absence of a company-specific benchmark, the

most ``comparable'' short-term benchmark to measure the benefit under

the pre-shipment export financing scheme is the cash credit interest

rate. See, Final Results of Countervailing Duty Administrative Review:

Certain Iron-Metal Castings From India, 62 FR 32297 (June 13, 1997)

(``1994 Indian Castings Final Results''). The cash credit interest rate

is for domestic working capital finance, and thus comparable to pre-and

post-shipment export working capital finance. During the POR, this rate

was 18.44 percent, as reported by the GOI in its April 9, 1998

questionnaire response.

We compared either the company-specific benchmark rates or the cash

credit benchmark rate, as appropriate, to the interest rates charged on

pre-shipment rupee loans and found that for loans granted under this

program, the interest rates charged were lower than the benchmark

rates. Therefore, in accordance with section 771(5)(E)(ii) of the Act,

this program conferred countervailable benefits during the POR because

the interest rates charged on these loans were less than what a company

otherwise would have had to pay on a comparable short-term commercial

loan.

To calculate the benefit from the pre-shipment loans, we compared

the actual interest paid on the loans with the amount of interest that

would have been paid at the applicable benchmark interest rate. Where

the benchmark rates exceeded the program rates, the difference between

those amounts is the benefit.

If the pre-shipment financing loans were provided solely to finance

exports of subject merchandise to the United States, we divided the

benefit derived from those loans by exports of subject merchandise to

the United States. For all other pre-shipment financing loans, we

divided the benefit by total exports to all destinations. On this

basis, we preliminarily determine the net subsidy from this program for

the producers/exporters of the subject merchandise to be as follows:

------------------------------------------------------------------------

Net subsidy

Net subsidies--producer/exporter rate-- percent

------------------------------------------------------------------------

Calcutta Ferrous Ltd.................................... 0.20

Commex Corporation...................................... 0.13

Crescent Foundry Co. Pvt. Ltd........................... 0.08

Dinesh Brothers Pvt. Ltd................................ 3.05

Kajaria Iron Castings Pvt. Ltd.......................... 0.33

Nandikeshwari Iron Foundry Pvt. Ltd..................... 0.22

R.B. Agarwalla & Company................................ 0.34

RSI Limited............................................. 0.37

Seramapore Industries Pvt. Ltd.......................... 0.53

Super Iron Foundry...................................... 1.11

Uma Iron & Steel........................................ 0.34

[[Page 37536]]

Victory Castings Ltd.................................... 0.30

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B. Post-Shipment Export Financing

Post-shipment export financing consists of loans in the form of

trade bill discounting or advances by commercial banks. The credit

covers the period from the date of shipment of the goods, to the date

of realization of export proceeds from the overseas customer. Post-

shipment finance, therefore, is a working capital finance or sales

finance against receivables. The interest amount owed is deducted from

the total amount of the bill at the time of discounting by the bank.

The exporter's account is then credited for the rupee equivalent of the

net amount.

In general, post-shipment loans are granted for a period of up to

90 days. The interest rate charged on these loans was 13.0 percent

during the POR. For loans not repaid within the negotiated number of

days (90 days maximum), banks assessed interest at 15.0 percent for the

number of days the loan was overdue, up to six months from the date of

shipment. Between February 8, 1996 and October 20, 1996, the RBI

``freed'' the interest rate charged on loans not repaid within 90 days,

and allowed banks to charge commercial interest rates on such credit.

On October 21, 1996, the RBI restored the 15.0 percent interest rate

for loans due beyond 90 days. For loans not repaid within 180 days,

exporters would lose the concessional interest rate on this financing,

and interest would be charged at a commercial rate determined by the

banks.

In prior administrative reviews, the Department found this program

to be an export subsidy because receipt of the post-shipment financing

was contingent upon export performance, and the interest rates were

preferential. See, e.g., 1987, 1988, and 1993 Indian Castings Final

Results. No new information or evidence of changed circumstances has

been submitted in this proceeding to warrant reconsideration of this

finding. Therefore, in accordance with section 771(5A)(B) of the Act,

we continue to find that this program constitutes an export subsidy.

During the POR, thirteen of the sixteen respondent companies made

payments on post-shipment loans for exports of subject castings to the

United States.

To determine the benefit conferred under this program, we compared

the interest rate charged under the post-shipment financing program to

a benchmark interest rate. For Calcutta Ferrous, Crescent Foundry,

Dinesh, and Nandikeshwari, we used as our benchmark, the company-

specific interest rates, discussed above, to measure the benefit each

company received under the post-shipment export financing scheme.

Because the loans under this program are discounted, and the effective

rate paid by the exporters on these post-shipment loans is a discounted

rate, we derived discounted benchmark rates from each company's

respective benchmark interest rate.

In regard to those respondents for which we did not have a company-

specific benchmark rate, we used as our benchmark, the cash credit rate

discussed above in the pre-shipment financing section. From the cash

credit benchmark, we derived a discounted rate of 15.57 percent for

measuring the benefits conferred by this program.

We compared either the discounted company-specific benchmark rates

or the discounted cash credit benchmark rate to the interest rates

charged on post-shipment loans and found that for loans granted under

this program, the interest rates charged were lower than the

benchmarks. Therefore, in accordance with section 771(5)(E)(ii) of the

Act, this program conferred countervailable benefits during the POR

where the interest rates charged on the loans were less than what a

company otherwise would have had to pay on a comparable short-term

commercial loan.

To calculate the benefit from these loans, we followed the same

short-term loan methodology discussed above for pre-shipment financing.

We divided the benefit by either total exports or exports of the

subject merchandise to the United States, depending on whether the

company was able to segregate its post-shipment financing by

merchandise and destination. For RSI Limited, however, we used as our

denominator, total exports of subject castings and non-subject castings

to the United States. On this basis, we preliminarily determine the net

subsidy from this program for the producers/exporters of the subject

merchandise to be as follows:

------------------------------------------------------------------------

Net subsidy

Net subsidies--producer/exporter rate--percent

------------------------------------------------------------------------

Calcutta Ferrous Ltd.................................... 0.78

Carnation Industries Ltd................................ 0.03

Commex Corporation...................................... 0.35

Crescent Foundry Co. Pvt. Ltd........................... 0.31

Dinesh Brothers Pvt. Ltd................................ 0.67

Kajaria Iron Castings Pvt. Ltd.......................... 0.42

Nandikeshwari Iron Foundry Pvt. Ltd..................... 0.27

R.B. Agarwalla & Company................................ 0.35

RSI Limited............................................. 0.20

Seramapore Industries Pvt. Ltd.......................... 0.05

Super Iron Foundry...................................... 0.12

Uma Iron & Steel........................................ 0.53

Victory Castings Ltd.................................... 0.40

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C. Post-Shipment Export Credit in Foreign Currency (``PSCFC'')

On January 1, 1992, the GOI introduced a modified post-shipment

financing scheme, i.e., Post-Shipment Export Credit in Foreign

Currency. (The GOI terminated the PSCFC scheme effective February 8,

1996.) This modified scheme enabled exporters to discount foreign

currency export bills at foreign currency interest rates linked to the

London Interbank Offering Interest Rate (``LIBOR''). Loans under this

financing scheme were not provided to the exporter in the foreign

currency, but the post-shipment credit liability of the exporter was

denominated in the foreign currency, which was then liquidated with

export proceeds in foreign currency. During the POR, PSCFC loans were

granted for a period of up to 90 days with an interest rate fixed by

the RBI. The interest amount, calculated at the applicable foreign

currency interest rate, was deducted from the total amount of the bill

at the time of discounting by the bank. The exporter's account was then

credited for the rupee equivalent of the net foreign currency amount.

During the POR, the interest rate charged on PSCFC loans ranged from

7.5 percent to 9.5 percent for the negotiated term of the loan (90 days

maximum). Interest on overdue loans was charged at 9.5 percent until

January 15, 1996. Thereafter, banks were free to charge commercial

interest rates on PSCFC loans not repaid within 90 days.

If the overseas customer defaulted and the export bill could not be

liquidated with export proceeds, the PSCFC loan was converted into

rupee credit at the selling foreign exchange rate prevailing on the day

of liquidation. The exporter was responsible for paying the rupee

equivalent of the bill at the exchange rate prevailing on the day of

liquidation by the bank. The interest recovered on the liquidated loan

was charged at a commercial rate determined by the bank.

Under the PSCFC program, companies had the option of converting

their export bills into rupees using either the spot rate of exchange

or the forward rate of exchange. During the POR, all respondent

companies, which used the PSCFC program, elected to convert their

export bills into rupees at the spot rate of exchange. If the bank

holding the

[[Page 37537]]

export bill, converted at the spot rate, realized an exchange rate gain

due to exchange rate movements up to the date the bill came due, the

bank was required, by law, to transfer the gain to the exporter.

However, if the bank suffered an exchange rate loss, the exporter, by

law, was obligated to cover that loss. Thus, the bank, in effect, faced

an exchange rate that was fixed over the ``life of the bill.'' Under

such circumstances, where the rupee value of the bill--from the bank's

standpoint--is, in fact, fixed at the time of discount, the rate of

discount measured in either dollars or rupees is the same. Therefore,

the PSCFC discount rate can be viewed equivalently as either a dollar-

denominated rate or a rupee-denominated rate. If viewed as a dollar-

denominated rate, no exchange rate adjustment to the rupee-denominated

benchmark is warranted, because the banks face no exchange rate risk in

holding the bills. Thus, no matter how the PSCFC discount rate is

viewed, a rupee-benchmark is appropriate for benefit calculation

purposes where the exporter opts to convert the exports bills using the

spot rate of exchange.

In the 1993 Indian Castings Final Results, the Department found

this program to be an export subsidy, and thus countervailable, because

receipt of PSCFC loans was contingent upon export performance, and the

interest rates were preferential. No new information or evidence of

changed circumstances has been submitted in this proceeding to warrant

reconsideration of this finding. Therefore, in accordance with

Sec. 771(5A)(B) of the Act, we continue to find that this program

constitutes an export subsidy. During the POR, five of the sixteen

respondent companies made payments on PSCFC loans for shipments of

subject castings to the United States.

To determine the benefit conferred under this program, we compared

the interest rate charged under the PSCFC to a benchmark interest rate.

For Calcutta Ferrous, Dinesh, and Nandikeshwari, we used as our

benchmark, the company-specific interest rates, discussed above, to

measure the benefit each company received under the PSCFC. Because the

loans under this program are discounted, and the effective rate paid by

the exporters on the PSCFC loans is a discounted rate, we derived

discounted benchmark rates from each company's respective company-

specific benchmark interest rate.

In regard to those respondents for which we did not have a company-

specific benchmark rate, we used as our benchmark, the cash credit rate

discussed above in the pre-shipment financing section. From the cash

credit benchmark, we derived a discounted rate of 15.57 percent for

measuring the benefits conferred by this program.

We compared either the company-specific benchmark discounted rates

or the discounted cash credit benchmark rate to the interest rates

charged on the PSCFC loans and found that the interest rates charged

were lower than the benchmarks. Therefore, in accordance with section

771(5)(E)(ii) of the Act, this program conferred countervailable

benefits during the POR because the interest rates charged on these

loans were less than what a company otherwise would have had to pay on

a comparable short-term commercial loan.

To calculate the benefit from these loans, we followed the same

short-term loan methodology discussed above for pre-shipment financing.

We divided the benefit by either total exports or exports of the

subject merchandise to the United States, depending on whether the

company was able to segregate its PSCFC financing by merchandise and

destination. For RSI Limited, however, we used as our denominator,

total exports of subject castings and non-subject castings to the

United States. On this basis, we preliminarily determine the net

subsidy from this program to be as follows:

------------------------------------------------------------------------

Net subsidy

Net subsidies--producer/exporter rate--percent

------------------------------------------------------------------------

Calcutta Ferrous Ltd.................................... 0.06

Dinesh Brothers Pvt. Ltd................................ 0.15

Nandikeshwari Iron Foundry Pvt. Ltd..................... 0.08

R.B. Agarwalla & Company................................ 0.11

RSI Limited............................................. 0.08

------------------------------------------------------------------------

As noted above, the GOI terminated the PSCFC scheme effective

February 8, 1996. All PSCFC loans received by the five above listed

companies were repaid in their entirety (principal and interest) during

the POR. We verified that no residual benefits have been provided or

received, and there is no evidence that a substitute program has been

established. Therefore, in determining the cash deposit rates for these

five castings producers/exporters, we will not include the subsidy

conferred by this program during the POR.

D. Income Tax Deductions Under Section 80HHC

Under section 80HHC of the Income Tax Act, the GOI allows exporters

to deduct profits derived from the export of merchandise from taxable

income. In prior administrative reviews of this order, the Department

found this program to be an export subsidy, and thus countervailable,

because receipt of benefits was contingent upon export performance.

See, e.g., 1993 Indian Castings Final Results. No new information or

evidence of changed circumstances has been submitted in this proceeding

to warrant reconsideration of this finding. Therefore, in accordance

with section771(5A)(B) of the Act, we continue to find that this

program constitutes an export subsidy, and that the financial

contribution in the form of tax revenue not collected, constitutes the

benefit.

To calculate the benefit to each company, we subtracted the total

amount of income tax the company actually paid during the review period

from the amount of tax the company otherwise would have paid during the

review period had it not claimed any deductions under section 80HHC. We

then divided this difference by the value of the company's total

exports. On this basis, we preliminarily determine the net subsidy from

this program to be as follows:

------------------------------------------------------------------------

Net subsidy

Net subsidies--producer/exporter rate--percent

------------------------------------------------------------------------

Calcutta Ferrous Ltd.................................... 2.91

Carnation Industries Ltd................................ 2.92

Commex Corporation...................................... 4.79

Crescent Foundry Co. Pvt. Ltd........................... 4.53

Dinesh Brothers Pvt. Ltd................................ 5.31

Kajaria Iron Castings Pvt. Ltd.......................... 0.00

Kejriwal Iron & Steel Works Pvt. Ltd.................... 11.76

Nandikeshwari Iron Foundry Pvt. Ltd..................... 3.71

Overseas Iron Foundry................................... 3.74

R.B. Agarwalla & Company................................ 2.73

RSI Limited............................................. 2.73

Seramapore Industries Pvt. Ltd.......................... 4.16

Shree Rama Enterprise................................... 10.85

Super Iron Foundry...................................... 1.93

Uma Iron & Steel........................................ 0.40

Victory Castings Ltd. 2.91.............................. 2.17

------------------------------------------------------------------------

E. Import Mechanisms (Sale of Licenses)

The GOI allows companies to transfer certain types of import

licenses to other companies in India. In prior administrative reviews

of this order, the Department found the sale of these licenses to be an

export subsidy, and thus countervailable, because companies received

these licenses based on their status as exporters. See, e.g., 1993

Indian Castings Final Results. No new information or evidence of

changed circumstances has been submitted in this proceeding to warrant

reconsideration of this finding. Therefore, in accordance with section

771(5A)(B) of the Act, we continue to

[[Page 37538]]

find that this program constitutes an export subsidy, and the financial

contribution in the form of the revenue received on the sale of

licenses, constitutes the benefit.

During the POR, five of the sixteen respondent companies sold

Special Import Licenses. Because the sale of the Special Import

Licenses were not tied to specific shipments, we calculated the

subsidies by dividing the total amount of proceeds a company received

from the sale of these licenses by the total value of its exports of

all products to all markets. We preliminarily determine the net subsidy

from the sale of the Special Import Licenses for these five companies

to be as follows:

------------------------------------------------------------------------

Net subsidy

Net subsidies--producer/exporter rate--percent

------------------------------------------------------------------------

Carnation Industries Ltd................................ 0.24

Kajaria Iron Castings Pvt. Ltd.......................... 0.68

Kejriwal Iron & Steel Works............................. 1.00

RSI Limited............................................. 0.03

Seramapore Industries Pvt. Ltd.......................... 0.73

------------------------------------------------------------------------

F. Exemption of Export Credit from Interest Taxes

Indian commercial banks are required to pay a tax on all interest

accrued from borrowers. The banks pass along this tax to borrowers in

its entirety. As of April 1, 1993, the GOI exempted from the interest

tax all interest accruing to a commercial bank on export-related loans.

In the 1993 administrative review, we determined that this tax

exemption is an export subsidy and thus countervailable, because only

interest accruing on loans and advances made to exporters in the form

of export credit is exempt from the interest tax. See, 1993 Indian

Castings Final Results. No new information or evidence of changed

circumstances has been submitted in this proceeding to warrant

reconsideration of this finding. Therefore, in accordance with

Sec. 771(5A)(B) of the Act, we continue to find that this program

constitutes an export subsidy, and that the financial contribution in

the form of tax revenue not collected, constitutes the benefit.

During the POR, thirteen of the sixteen respondent companies made

interest payments on export-related loans, through the pre- and post-

shipment financing schemes, and thus, were exempt from the interest tax

under this program. To calculate the benefit to each company, we first

determined the total amount of interest paid by each producer/exporter

of subject castings during the POR by adding the interest payments made

on all pre- and post-shipment export loans. Next, we multiplied this

amount by three (3.0) percent, the tax rate that the interest would

have been subject to without the exemption during the POR. We then

divided the benefit by the value of the company's total exports or

exports of subject merchandise to the United States, depending on

whether the export financing was tied to total exports or only exports

of subject castings to the United States. For RSI Limited, however, to

determine the benefit conferred from the exemption of interest on the

company's post-shipment financing, we used as our denominator, total

exports of subject castings and non-subject castings to the United

States. On this basis, we preliminarily determine the net subsidy from

this program to be as follows:

------------------------------------------------------------------------

Net subsidy

Net subsidies--producer/exporter rate--percent

------------------------------------------------------------------------

Calcutta Ferrous Ltd.................................... 0.14

Carnation Industries Ltd................................ 0.13

Commex Corporation...................................... 0.06

Crescent Foundry Co. Pvt. Ltd........................... 0.06

Dinesh Brothers Pvt. Ltd................................ 0.39

Kajaria Iron Castings Pvt. Ltd.......................... 0.26

Nandikeshwari Iron Foundry Pvt. Ltd..................... 0.13

R.B. Agarwalla & Company................................ 0.11

RSI Limited............................................. 0.22

Seramapore Industries Pvt. Ltd.......................... 0.07

Super Iron Foundry...................................... 0.16

Uma Iron & Steel........................................ 0.11

Victory Castings Ltd.0.14............................... 0.18

------------------------------------------------------------------------

II. Programs Preliminarily Found To Be Not Used

We examined the following programs and preliminarily find that the

producers/exporters of the subject merchandise did not apply for or

receive benefits under these programs during the POR:

1. Market Development Assistance (MDA)

2. Rediscounting of Export Bills Abroad (EBR)

3. International Price Reimbursement Scheme (IPRS)

4. Cash Compensatory Support Program (CCS)

5. Programs Operated by the Small Industries Development Bank of India

(SIDBI)

6. Export Promotion Replenishment Scheme (EPRS) (IPRS Replacement)

7. Export Promotion Capital Goods Scheme

8. Benefits for Export Oriented Units and Export Processing Zones

9. Special Imprest Licenses

10. Special Benefits

11. Duty Drawback on Excise Taxes

12. Payment of Premium Against Advance Licenses

13. Pre-Shipment Export Financing in Foreign Currency (PCFC).

Preliminary Results of Review

In accordance with 19 C.F.R. Sec. 351.221(b)(4)(i), we calculated

an individual subsidy rate for each producer/exporter subject to this

administrative review. For the period January 1, 1996 through December

31, 1996, we preliminarily determine the net subsidy for the reviewed

companies to be as follows:

------------------------------------------------------------------------

Net subsidy

Net subsidies--producer/exporter rate--percent

------------------------------------------------------------------------

Calcutta Ferrous Ltd.................................... 4.09

Carnation Industries Ltd................................ 3.32

Commex Corporation...................................... 5.33

Crescent Foundry Co. Pvt. Ltd........................... 4.98

Dinesh Brothers Pvt. Ltd................................ 9.57

Kajaria Iron Castings Pvt. Ltd.......................... 1.69

Kejriwal Iron & Steel Works Pvt. Ltd.................... 12.76

Nandikeshwari Iron Foundry Pvt. Ltd..................... 4.41

Overseas Iron Foundry................................... 3.74

R.B. Agarwalla & Company Pvt. Ltd....................... 3.64

RSI Limited............................................. 3.63

Seramapore Industries Pvt. Ltd.......................... 5.54

Shree Rama Enterprise................................... 10.85

Super Iron Foundry...................................... 3.32

Uma Iron & Steel........................................ 1.38

Victory Castings Ltd.................................... 3.05

------------------------------------------------------------------------

If the final results of this review remain the same as these

preliminary results, the Department intends to instruct the U.S.

Customs Service (``Customs'') to assess countervailing duties as

indicated above.

The Department also intends to instruct Customs to collect cash

deposits of estimated countervailing duties as indicated below, of the

f.o.b. invoice price on all shipments of the subject merchandise from

reviewed companies, entered, or withdrawn from warehouse, for

consumption on or after the date of publication of the final results of

this review. Because the Post-Shipment Export Credit in Foreign

Currency program was terminated effective February 8, 1996, we are not

including the subsidy conferred by this program during the review

period, in determining the cash deposits to be collected by Customs. We

preliminarily determine the cash deposit rates for the reviewed

companies to be as follows:

------------------------------------------------------------------------

Net subsidy

Net Subsidies--Producer/Exporter rate--percent

------------------------------------------------------------------------

Calcutta Ferrous Ltd.................................... 4.03

[[Page 37539]]

Carnation Industries Ltd................................ 3.32

Commex Corporation...................................... 5.33

Crescent Foundry Co. Pvt. Ltd........................... 4.98

Dinesh Brothers Pvt. Ltd................................ 9.42

Kajaria Iron Castings Pvt. Ltd.......................... 1.69

Kejriwal Iron & Steel Works Pvt. Ltd.................... 12.76

Nandikeshwari Iron Foundry Pvt. Ltd..................... 4.33

Overseas Iron Foundry................................... 3.74

R.B. Agarwalla & Company Pvt. Ltd....................... 3.53

RSI Limited............................................. 3.55

Seramapore Industries Pvt. Ltd.......................... 5.54

Shree Rama Enterprise................................... 10.85

Super Iron Foundry...................................... 3.32

Uma Iron & Steel........................................ 1.38

Victory Castings Ltd.................................... 3.05

------------------------------------------------------------------------

Because the URAA replaced the general rule in favor of a country-

wide rate with a general rule in favor of individual rates for

investigated and reviewed companies, the procedures for establishing

countervailing duty rates, including those for non-reviewed companies,

are now essentially the same as those in antidumping cases, except as

provided for in section 777A(e)(2)(B) of the Act. The requested review

will normally cover only those companies specifically named. See 19

C.F.R. 351.213(b). Pursuant to 19 C.F.R. 351.212(c), for all companies

for which a review was not requested, duties must be assessed at the

cash deposit rate, and cash deposits must continue to be collected, at

the rate previously ordered. As such, the countervailing duty cash

deposit rate applicable to a company can no longer change, except

pursuant to a request for a review of that company. See, Federal-Mogul

Corporation and the Torrington Company v. United States, 822 F.Supp.

782 (CIT 1993) and Floral Trade Council v. United States, 822 F.Supp.

766 (CIT 1993) (interpreting 19 C.F.R. 353.22(e) (now 19 C.F.R.

351.212(c)), the antidumping regulation on automatic assessment, which

is identical to 19 C.F.R. 355.22(g)). Therefore, the cash deposit rates

for all companies except those covered by this review will be unchanged

by the results of this review.

We will instruct Customs to continue to collect cash deposits for

non-reviewed companies at the most recent company-specific or country-

wide rate applicable to the company. Accordingly, the cash deposit

rates that will be applied to non-reviewed companies covered by this

order will be the rate for that company established in the most

recently completed administrative proceeding conducted under the URAA.

See, 1994 Indian Castings Final Results. If such a review has not been

conducted, the rate established in the most recently completed

administrative proceeding pursuant to the statutory provisions that

were in effect prior to the URAA amendments is applicable. See, 1993

Indian Castings Final Results. These rates shall apply to all non-

reviewed companies until a review of a company assigned these rates is

requested. In addition, for the period January 1, 1996 through December

31, 1996, the assessment rates applicable to all non-reviewed companies

covered by this order are the cash deposit rates in effect at the time

of entry.

Public Comment

Pursuant to 19 C.F.R. 351.224(b), the Department will disclose to

the parties of this proceeding within five days after the date of

publication of this notice, the calculations performed in this review.

Interested parties may request a hearing not later than 30 days after

the date of publication of this notice. Interested parties may submit

written arguments in case briefs on these preliminary results within 30

days of the date of publication. Rebuttal briefs, limited to arguments

raised in case briefs, may be submitted five days after the time limit

for filing the case brief. Parties who submit argument in this

proceeding are requested to submit with the argument (1) a statement of

the issue and (2) a brief summary of the argument. Any hearing, if

requested, will be held two days after the scheduled date for

submission of rebuttal briefs. Copies of case briefs and rebuttal

briefs must be served on interested parties in accordance with 19

C.F.R. 351.303(f).

Representatives of parties to the proceeding may request disclosure

of proprietary information under administrative protective order no

later than 10 days after the representative's client or employer

becomes a party to the proceeding, but in no event later than the date

the case briefs, under 19 C.F.R. 351.309(c)(ii), are due. The

Department will publish the final results of this administrative

review, including the results of its analysis of issues raised in any

case or rebuttal brief or at a hearing.

This administrative review and notice are issued and published in

accordance with section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)), 19

C.F.R. 351.213.

Dated: July 6, 1998.

Richard W. Moreland,

Acting Assistant Secretary for Import Administration.

[FR Doc. 98-18598 Filed 7-10-98; 8:45 am]

BILLING CODE 3510-DS-P