Customs Tariff (Identification, Assessment And Collection Of Countervailing Duty On Subsidized Articles And For Determination Of Injury) Rul

8 · Confidential informations:- Notwithstanding anything contained in sub-rule (1), (2), (3) and (7) of rule 7, sub-rule (2) of rule 14, sub-rule of rule 17 and sub-rule (3) of rule 19 copies of applications received under sub-rule (1) of rule 6 or any other information provided to the designated authority on a confidential basis by any party in the course of investigation, shall, upon the designated authority being satisfied as to its confidentiality, be treated as such by it and no such information shall be disclosed to any other party without specific authorisation of the party providing such information (2) The designated authority may require the parties providing information on confidential basis to furnish non- confidential summary thereof in sufficient details to permit a reasonable understanding of the substance of the confidential information and if, in the opinion of a party providing such information; such information is not susceptible of summary, such party may submit to the designated authority a statement of reasons why summarisation is not possible_ (3) Notwithstanding anything contained in sub-rule (2), if the designated authority, is satisfied that the request for confidentiality is not warranted or the supplier of the information is either unwilling to make the information public or to authorise its disclosure in generalised or summary form, it may disregard such information: 9. Accuracy of the information - Except in cases referred to in sub-rule (8) of rule 7 the designated authority shall during the course of investigation satisfy itself as to the accuracy of the information supplied by the interested parties upon which its findings are based: 10. Investigation in the territory of other specified countries: (1) The designated authority may carry out investigations in the territories of other countries, in order to verify the information provided or to obtain further details Provided that the designated authority notifies to such country in advance and such country does not object to such investigation. (2) The designated authority may also carry out investigations at the premises of any commercial organisation and may examine its records if such organisation agrees and if the country in whose territory the said commercial organisation is situated, is notified and has not raised any objection for the conduct of such investigation: 11. Nature of subsidy " (1) The designated authority while determining the subsidy shall ascertain as to whether the subsidy under investigation (a) relates to export performance including those illustrated in Annexure IIl to these rules, or; b) relates to the use of domestic goods over imported goods in the export article, or c) it has been conferred on a limited number of persons, engaged in manufacturing; producing or exporting the article unless such a subsidy is for research activities conducted by or on behalf of persons engaged in the manufacture; production or export; Or

1 · Indirect tax rebate schemes can allow for exemption, remission or deferral of prior-stage cumulative indirect taxes levied on inputs that are consumed in the production of the exported product (making normal allowance for waste) . Similarly; drawback schemes can allow for the remission or drawback of import charges levied on inputs that are consumed in the production of the exported product (making normal allowance for waste): 2_ The Illustrative List of Export Subsidies in Part of Annexure IIl of these rules makes reference to the term "inputs that are consumed in the production of the exported product" in paragraphs (h) and (). Pursuant to paragraph (h) , indirect tax rebate schemes can constitute an export subsidy to the extent that they result in exemption; remission or deferral of prior-stage cumulative indirect taxes in excess of the amount of such taxes actually levied on inputs that are consumed in the production of the exported product: Pursuant to paragraph () , drawback schemes can constitute an export subsidy to the extent that they result in a remission or drawback of

1 · Inputs consumed in the production process are inputs physically incorporated, energy, fuels and oil used in the production process and catalysts which are consumed in the course of their use to obtain the exported product. In examining whether inputs are consumed in the production of the exported product; as part of a countervailing duty investigation pursuant to these rules, the designated authority should proceed on the following basis, namely: - (1) Where it is alleged that an indirect tax rebate scheme; or a drawback scheme, conveys a subsidy by reason of over-rebate or excess drawback of indirect taxes or import charges on inputs consumed in the production of the exported product; the designated authority should first determine whether the government of the exporting country has in place and applies a system or procedure to confirm which inputs are consumed in the production of the exported product and in what amounts Where such a system or procedure is determined to be applied; the designated authority should then examine the system or procedure to see whether it is reasonable; effective for the purpose intended, and based on generally accepted commercial practices in the country of export: The designated authority may it necessary if he considers carry out certain practical tests in order to verify information or to satisfy themselves that the system or procedure is being effectively applied: (2) Where there is no such system or procedure; where it is not reasonable; or where it is instituted and considered reasonable but is found not to be applied or not to be applied effectively, a further examination by the exporting country based on the actual inputs involved would need to be carried out in the context of determining whether an excess payment occurred: If the designated authority considers it necessary, a further examination would be carried out in accordance with sub-paragraph 1 above_ 2. The designated authority should treat inputs as physically incorporated if such inputs are used in the production process and are physically present in the product exported: An input need not be present in the final product in the same form in which it entered the production process_ 3 In determining the amount of a particular input that is consumed in the production of the exported product; a "normal allowance for waste" should be taken into account, and such waste should be treated as consumed in the production of the exported product: The term 'waste" refers to that portion of a given input which does not serve an independent function in the production process, is not consumed in the production of the exported product (for reasons such as inefficiencies) and is not recovered; used or sold by the same manufacturer. 4_ The designated authority's determination of whether the claimed allowance for waste is "normal" should take into account the production process; the average experience of the industry in the country of export; and other technical factors, as appropriate. The designated authority should bear in mind that an important question is whether the authorities in the exporting country have reasonably calculated the amount of waste, when such an amount is intended to be included in the tax or duty rebate or remission. PART-3 GUIDELINES IN THE DETERMINATION OF SUBSTITUTION DRAWBACK SYSTEMS AS EXPORT SUBSIDIES