28.6.2017   

EN

Official Journal of the European Union

L 165/1

28.6.2017   

EN

Official Journal of the European Union

L 165/1

28.6.2017   

EN

Official Journal of the European Union

L 165/2

(1)

In April 2011, following an anti-subsidy investigation (‘the original investigation’), the Council imposed by Implementing Regulation (EU) No 405/2011 (2) (‘the definitive Regulation’), a definitive countervailing duty on imports of certain stainless steel bars and rods (‘SSB’) currently falling within CN codes 7222 20 21, 7222 20 29, 7222 20 31, 7222 20 39, 7222 20 81 and 7222 20 89 and originating in India.

(2)

The definitive Regulation imposed a countervailing duty at rates ranging between 3,3 % and 4,3 % on imports from the sampled exporting producers, 4,0 % on the non-sampled cooperating companies and a duty rate of 4,3 % on all other companies in India.

(3)

In July 2013, following a partial interim review (‘the interim review’), the Council changed by Implementing Regulation (EU) No 721/2013 (3) (‘the amending Regulation’), the duty rate applicable to Indian exporting producer Viraj Profiles Limited, Palghar, Maharashtra and Mumbai, Maharashtra (‘Viraj’) from 4,3 % to 0 % and revised the duty rate for all other companies from 4,3 % to 4,0 %.

(4)

In June 2015 the Commission published a notice of impending expiry of the countervailing measures on SSB originating in India in the Official Journal of the European Union  (4).

(5)

On 28 January 2016 the European Steel Association (‘Eurofer’), representing more than 25 % of the total production of SSB in the European Union (‘the Union’), lodged a request for review under Article 18 of Council Regulation (EC) No 597/2009 (5).

(6)

Eurofer based their request on the grounds that the expiry of the measures would be likely to result in continuation of subsidisation and continuation or recurrence of injury to the Union industry.

(7)

Having determined that sufficient evidence existed for the initiation of an expiry review, on 27 April 2016 the Commission published a notice of initiation in the Official Journal of the European Union  (6) (‘the Notice of Initiation’)

(8)

The Commission invited in the Notice of Initiation all interested parties to contact it in order to participate in the investigation.

(9)

In addition, the Commission specifically informed Eurofer; known Union producers and their associations; known importers and users of SSB in the Union; as well as the Government of India (‘the GOI’) and known exporting producers in India of the initiation of the expiry review and invited them to participate.

(10)

All interested parties had the opportunity to comment on the initiation of the investigation and to request a hearing with the Commission and/or the Hearing Officer in trade proceedings.

(11)

In the Notice of Initiation, the Commission stated that it might sample interested parties, in accordance with Article 27 of the basic Regulation.

(12)

The Commission stated in the Notice of Initiation that it had provisionally selected a sample of Union producers.

(13)

In accordance with Article 27(1) of the basic Regulation the Commission selected the sample on the basis of the largest representative volume of sales that could be investigated in the time available, whilst ensuring a geographical spread.

(14)

The provisionally selected sample consisted of three Union producers accounting for around 50 % of the total sales of cooperating Union producers. The Commission invited interested parties to comment on the provisional sample.

(15)

The Commission was notified that one Union producer had reported sales between group members as sales to the Union and therefore replaced it with another Union producer. The final sample also covered around 50 % of total sales of cooperating Union producers.

(16)

The Commission invited in the Notice of Initiation importers and their representative associations to make themselves known and to provide specific information necessary to decide whether sampling was necessary and, if so, to select a sample. Two importers came forward.

(17)

To decide whether sampling is necessary and, if so, to select a sample, the Commission asked all exporting producers in India to provide the information specified in the Notice of Initiation. In addition, the Commission requested the authorities of India to identify and/or contact other exporting producers, if any, that could be interested in participating in the investigation.

(18)

Fourteen exporting producers/group of exporting producers, representing around 46 % of the total imports in the Union of SSB from India, provided the information requested in Annex I to the Notice of Initiation for the purpose of sampling. The Commission sampled three exporting producers/groups of exporting producers with the highest volume of export sales to the Union (representing 62 % of the volume of exports by the cooperating companies) that could reasonably be investigated within the time available.

(19)

In accordance with Article 27(2) of the basic Regulation, all known exporting producers concerned, and the authorities of India, were consulted on the selection of the sample. No comments were made.

(20)

The Commission invited in the Notice of Initiation the users and their representative associations, and representative consumer organisations make themselves known and cooperate. No users in the Union or their associations came forward.

(21)

The Commission sent questionnaires to all parties known to be concerned and to all other companies that made themselves known within the deadlines set out in the Notice of Initiation.

(22)

This included the GOI, three sampled exporting producers in India, three sampled Union producers, two importers referred to in recital 16 above, Eurofer and another association of Union producers.

(23)

Questionnaire replies were received from three sampled Union producers, Eurofer the GOI, and three sampled exporting producers in India.

(24)

The Commission sought and verified all the information it deemed necessary for the determination of the likelihood of continuation or recurrence of subsidisation; and continuation or recurrence of injury; and whether maintaining the countervailing measures would not be against the Union interest.

(25)

Verification visits under Article 26 of the basic Regulation were carried out at the premises of the GOI in Delhi, India and at the premises of Eurofer in Brussels, Belgium, and the following companies:

(26)

The investigation of the likelihood of continuation or recurrence of subsidisation and injury covered the period from 1 April 2015 to 31 March 2016 (‘the RIP’).

(27)

The examination of trends relevant for the assessment of the likelihood of a continuation or recurrence of injury covered the period from 1 January 2012 to the end of the review investigation period (‘the period considered’).

(28)

The product concerned is the same product as the one defined in the original investigation, that is stainless steel bars and rods, not further worked than cold-formed or cold-finished, other than bars and rods of circular cross-section of a diameter of 80 mm or more (‘SSB’ or ‘the product under review’), currently falling within CN codes 7222 20 21, 7222 20 29, 7222 20 31, 7222 20 39, 7222 20 81 and 7222 20 89 and originating in India (‘the product concerned’).

(29)

The investigation showed that the following products have the same basic physical and technical characteristics as well as the same basic uses:

(30)

The Commission concluded that these products are like products within the meaning of Article 2(c) of the basic Regulation.

(31)

In accordance with Article 18(1) of the basic Regulation, the Commission examined whether the expiry of the existing measures would be likely to lead to a continuation of subsidisation.

(32)

On the basis of the information contained in the review request, the following schemes, which allegedly involve the granting of subsidies, were investigated:

(33)

The schemes listed in points (a), (c), (d), (g) and (i) above are based on the Foreign Trade (Development and Regulation) Act 1992 (No 22 of 1992) which entered into force on 7 August 1992 (‘Foreign Trade Act’). The Foreign Trade Act authorises the GOI to issue notifications regarding the export and import policy. These are summarised in ‘Foreign Trade Policy’ documents, which are issued by the Ministry of Commerce every 5 years and updated regularly. Two Foreign Trade Policy documents are relevant for the review investigation period of this investigation: Foreign Trade Policy 2009-2014 (‘FTP 09-14’) and Foreign Trade Policy 2015-2020 (‘FTP 15-20’). The latter entered into force in April 2015. The GOI also sets out the procedures governing FTP 09-14 and FTP 15-20 in a ‘Handbook of Procedures, Volume I, 2009-2014’ (‘HOP I 04-09’) and a ‘Handbook of Procedures, Volume I, 2015-2020’ (‘HOP I 15-20’) respectively. The Handbooks of Procedures are updated on a regular basis.

(34)

The DDS in point (b) above is based on section 75 of the Customs Act of 1962, on section 37 of the Central Excise Act of 1944, on sections 93A and 94 of the Financial Act of 1994 and on the Customs, Central Excise Duties and Service Tax Drawback Rules of 1995. Drawback rates are published on a regular basis.

(35)

The Exemption of Export Credit from Interest Taxes in point (e) above is based on the Interest Tax Act, 1974.

(36)

The ECS in point (f) above is based on sections 21 and 35A of the Banking Regulation Act 1949, which allow the Reserve Bank of India (‘RBI’) to direct commercial banks in the field of export credits.

(37)

The Loan Guarantees and direct transfers of funds from the GOI in point (h) above are governed by the Government Guarantee Policy.

(38)

The PSI in point (j), applicable from 1 April 2013, is based on Resolution No: PSI–2013/(CR–54)/IND–8, issued by the Government of Maharashtra Industries, Energy and Labour Department.

(39)

Regional Subsidy Schemes in point (k) are governed by regional governments.

(40)

The detailed description of the scheme is contained in paragraphs 4.1.1 to 4.1.14 of the FTP 09-14 and chapters 4.1 to 4.30 of the HOP I 09-14 as well as paragraphs 4.03 to 4.24 of FTP 15-20 and chapters 4.04 to 4.52 of HOP I 15-20.

(41)

The AAS consists of six sub-schemes, as described in more detail in recital 42 below. Those sub-schemes differ, inter alia, in the scope of eligibility. Manufacturer-exporters and merchant-exporters ‘tied to’ supporting manufacturers are eligible for the AAS physical exports and for the AAS for annual requirement sub-schemes. Manufacturer-exporters supplying the ultimate exporter are eligible for AAS for intermediate supplies. Main contractors which supply to the ‘deemed export’ categories mentioned in paragraph 7.02 of the FTP 15-20, such as suppliers of an export oriented unit (‘EOU’), are eligible for the AAS deemed export sub-scheme. Eventually, intermediate suppliers to manufacturer-exporters are eligible for ‘deemed export’ benefits under the sub-schemes Advance Release Order and Back to back inland letter of credit.

(42)

The AAS can be issued for:

(43)

The Commission found that the cooperating exporting producers using the scheme obtained concessions under the first sub-scheme i.e. AAS physical exports during the review investigation period. It is therefore not necessary to establish the countervailability of the remaining unused sub-schemes.

(44)

For verification purposes by the Indian authorities, an Advance Authorisation holder is legally obliged to maintain ‘a true and proper account of consumption and utilisation of duty-free imported/domestically procured goods’ in a specified format (chapters 4.47, 4.51 and Appendix 4H HOP I 15-20), i.e. an actual consumption register. This register has to be verified by an external chartered accountant/cost and works accountant who issues a certificate stating that the prescribed registers and relevant records have been examined and the information furnished under Appendix 4H is true and correct in all respects.

(45)

With regard to the sub-scheme used during the review investigation period by the companies concerned, i.e. physical exports, the import allowance and the export obligation are fixed in volume and value by the GOI and are documented on the Authorisation. In addition, at the time of import and of export, the corresponding transactions are to be documented by Government officials on the Authorisation. The volume of imports allowed under the AAS is determined by the GOI on the basis of Standard Input Output Norms (‘SIONs’) which exist for most products including the product concerned.

(46)

Imported input materials are not transferable and have to be used to produce the resultant export product. The export obligation must be fulfilled within a prescribed time frame after issuance of the licence (18 months with two possible extensions of 6 months each).

(47)

The Commission established that there is no close nexus between the imported inputs and the exported finished products. The eligible input materials are also imported and used for products other than the product concerned. Moreover, licences for various products can be clubbed. This means that exports under AAS licence of one product may give right to duty-free imports of inputs under an AAS licence for another product.

(48)

During the verification visit conducted by the Commission, one of the exporting producers confirmed that because of this lack of a clear nexus, the consumption of inputs is being reported on the basis of SIONs. The other exporting producer using the scheme stated that it has a tracing system whereby inputs imported under the scheme are traced to the final product. However, the company was unable to provide any description of this system in their internal documents. No audit of this system ever took place.

(49)

One of the exporting producers was unable to show any appendixes 4H for their AAS licences. The other exporting producer was able to furnish one appendix 4H form showing no excess remission. However, it is clear from the wording of the charted accountant's declaration in appendix 4H and confirmed by the GOI during the verification visit that the examination by charted accountant is limited to whether the figures in the relevant Appendix 4H match company records. Furthermore, one exporting producer confirmed that the charted accountant focuses on whether the export obligation matches the import allowance as per SION under the relevant licences. He does not question nor indeed examine whether the actual consumption corresponds to the relevant SION. Consequently, the charted accountant does not verify whether the records themselves show a true and proper account of consumption and utilisation of duty-free imported/domestically procured goods. It is also of note that during and after the verification visit the GOI was unable to provide the Commission with a copy of a single appendix 4H form submitted to it by the sampled exporting producers. In sum, the Commission concluded that both companies using the scheme were unable to demonstrate that the relevant FTP provisions were met.

(50)

The exemption from import duties is a subsidy within the meaning of Article 3(1)(a)(ii) and Article 3(2) of the basic Regulation, namely it constitutes a financial contribution of the GOI since it decreases duty revenue which would otherwise be due and it confers a benefit upon the investigated exporter since it improves its liquidity.

(51)

In addition, AAS physical exports are contingent in law upon export performance, and therefore deemed to be specific and countervailable under Article 4(4), first subparagraph, point (a) of the basic Regulation. Without an export commitment a company cannot obtain benefits under this scheme.

(52)

The sub-scheme used in the present case cannot be considered a permissible duty drawback system or substitution drawback system within the meaning of Article 3(1)(a)(ii) of the basic Regulation. It does not conform to the rules laid down in Annex I item (i), Annex II (definition and rules for drawback) and Annex III (definition and rules for substitution drawback) of the basic Regulation. The GOI did not effectively apply a verification system or a procedure to confirm whether and in what amounts inputs were consumed in the production of the exported product (Annex II(4) of the basic Regulation and, in the case of substitution drawback schemes, Annex III(II)(2) of the basic Regulation). It is also considered that the SIONs for the product under review were not sufficiently precise and that themselves cannot constitute a verification system of actual consumption because the design of those standard norms does not enable the GOI to verify with sufficient precision what amounts of inputs were consumed in the export production. In addition, the GOI did not carry out a further examination based on actual inputs involved, although this would need to be carried out in the absence of an effectively applied verification system (Annex II(5) and Annex III(II)(3) to the basic Regulation).

(53)

The sub-scheme is therefore countervailable.

(54)

In the absence of permitted duty drawback systems or substitution drawback systems, the countervailable benefit is the remission of total import duties normally due upon importation of inputs. In this respect, it is noted that the basic Regulation does not only provide for the countervailing of an ‘excess’ remission of duties. According to Article 3(1)(a)(ii) and Annex I(i) of the basic Regulation only the excess remission of duties can be countervailed, when the conditions of Annexes II and III of the basic Regulation are met. However, these conditions were not fulfilled in the present case. Thus, if an adequate monitoring process is not demonstrated, the above exception for drawback schemes is not applicable and the normal rule for countervailing the amount of unpaid duties (revenue forgone), applies, rather than for any purported excess remission. As set out in Annexes II(II) and III(II) of the basic Regulation the burden is not upon the investigating authority to calculate such excess remission. To the contrary, according to Article 3(1)(a)(ii) of the basic Regulation, the investigating authority only has to establish sufficient evidence to refute the appropriateness of an alleged verification system.

(55)

As explained in recital 47 above, the benefit entitlement (i.e. the export under the licence) and the benefit conferral (i.e. duty free import of the input) are only loosely linked to one another. They do not have to occur in any particular order or time proximity. It is thus possible that whilst the entitlement occurs during the review investigation period, the related conferral may occur before as well as after the review investigation period. Furthermore, through clubbing, benefit entitlement under a licence for one product may be transferred so that it ultimately confers a benefit on another product.

(56)

In the definitive Regulation the subsidy amount derived from AAS was calculated on the basis of import duties forgone on all material imported for SSB products under the scheme during the original investigation period. This subsidy amount was then allocated over the export turnover of the product concerned during the original investigation period.

(57)

The two exporting producers using the AAS agreed with the Commission's assessment laid out in recital 55 above and confirmed that exports during the review investigation period of the product concerned entitled them to a benefit, part of which was or will be conferred outside of the review investigation period. Furthermore, one of the exporting producers confirmed that, due to the way the melting process was conducted during the review investigation period, it cannot be excluded that inputs imports under AAS licences for SSB ended up in other products and that inputs imports under AAS licences for other products ended up in SSB. Consequently, the exporting producer agreed that looking only at the duty foregone for imports under AAS licences for SSB during the review investigation period would not reflect the actual benefit conferred on exports of SSB during that period by the scheme. Due to the lack of the appropriate data, the Commission was unable to calculate the subsidy amount on the basis of import duties forgone on all material imported for SSB under the scheme during the review investigation period as in the original investigation.

(58)

In these circumstances, both companies agreed to calculate the subsidy amount on the basis of the total export transactions cleared during the review investigation period under the AAS licences related to the product concerned. Each company proposed a methodology appropriate to their particular situation (in this case depending on the range of the raw materials imported for the production of the product concerned). Either by using the SION or the average added value under all previous licences opened for the product concerned, the amount of duty saved on imported inputs could be reliably calculated. The Commission considered these methodologies as appropriate and accepted them.

(59)

In accordance with Article 7(2) of the basic Regulation these subsidy amounts have been allocated over the total export turnover of the product concerned during the review investigation period as appropriate denominator, because the subsidy is contingent upon export performance and it was not granted by reference to the quantities manufactured, produced, exported or transported.

(60)

The Commission thus established that the subsidy rates in respect of this scheme during the review investigation period amounted to 0,88 % for Chandan Steel Limited and 1,56 % for Isinox Steel Limited.

(61)

The detailed description of the DDS is contained in the Custom & Central Excise Duties Drawback Rules 1995 as amended by successive notifications.

(62)

Any manufacturer-exporter or merchant-exporter is eligible for this scheme.

(63)

An eligible exporter can apply for a drawback amount which is calculated as a percentage of the free-on-board (‘FOB’) value of products exported under this scheme. The drawback rates have been established by the GOI for a number of products, including the product concerned. They are determined on the basis of the average quantity or value of materials used as inputs in the manufacturing of a product and the average amount of duties paid on inputs. They are applicable regardless of whether import duties have actually been paid or not. During the review investigation period the DDS rate was 1,9 % until 22 November 2015, then 2 % with a cap of 3,2 INR/kg until 10 February 2016 and then 2 % with a cap of 4,3 INR/kg thereafter.

(64)

To benefit from this scheme a company must export. At the moment when shipment details are entered in the Customs server (ICEGATE), it is indicated that the export is taking place under the DDS and the DDS amount is fixed irrevocably. After the shipping company has filed the Export General Manifest (EGM) and the Customs office has satisfactorily compared that document with the shipping bill data, all conditions are fulfilled to authorise the payment of the drawback amount by either direct payment on the exporter's bank account or by draft.

(65)

The exporter also has to produce evidence of realisation of export proceeds by means of a Bank Realisation Certificate (BRC). This document can be provided after the drawback amount has been paid but the GOI will recover the paid amount if the exporter fails to submit the BRC within a given delay.

(66)

The drawback amount can be used for any purpose.

(67)

In accordance with Indian accounting standards, the duty drawback amount can be booked on an accrual basis as income in the commercial accounts, upon fulfilment of the export obligation.

(68)

The Commission found that all the cooperating exporting producers continued benefiting from the DDS during the review investigation period.

(69)

The DDS provides subsidies within the meaning of Article 3(1)(a)(I) and Article 3(2) of the basic Regulation. The so-called duty drawback amount is a financial contribution by the GOI as it takes the form of a direct transfer of funds by the GOI. There are no restrictions as to the use of these funds. In addition, the duty drawback amount confers a benefit upon the exporter, because it improves its liquidity.

(70)

The rate of duty drawback for exports is determined by the GOI on a product by product basis. However, although the subsidy is referred to as a duty drawback, the scheme does not have the characteristics of a permissible duty drawback system or substitution drawback system within the meaning of Article 3(1)(a)(ii) of the basic Regulation. The cash payment to the exporter is not linked to actual payments of import duties on raw materials and is not a duty credit to offset import duties on past or future imports of raw materials.

(71)

During the verification visit, the GOI claimed that there was an adequate link between the drawback rates as well as the duties paid on raw materials. This is because the GOI takes into account the average quantity or value of materials used as inputs in the manufacturing of the product as well as the average amount of duties paid on inputs in determining the duty drawback rates.

(72)

The Commission however does not consider that the alleged link between the drawback rates and the duties paid on raw materials is sufficient in order for the scheme to conform to the rules laid down in Annex I, Annex II (definition and rules for drawback) and Annex III (definition and rules for substitution drawback) of the basic Regulation. In particular, the amount of credit is not calculated in relation to actual inputs used. Moreover, there is no system or procedure in place to confirm which inputs (including their amounts and origin) are consumed in the production process of the exported product or whether an excess payment of import duties occurred within the meaning of item (I) of Annex I, and Annexes II and III of the basic Regulation. Moreover, no further examination by the GOI was conducted on the basis of actual inputs and transactions in order to determine whether an excess payment occurred. Therefore, the claim was rejected.

(73)

Consequently, the payment which takes form of a direct transfer of funds by the GOI subsequent to exports made by exporters has to be considered as a direct grant from the GOI contingent on export performance and is therefore deemed to be specific and countervailable under Article 4(4), first subparagraph, point (a) of the basic Regulation.

(74)

In accordance with Article 3(2) and Article 5 of the basic Regulation, the amount of countervailable subsidies was calculated in terms of the benefit conferred on the recipient, which is found to exist during the review investigation period. In this regard, it was considered that the benefit is conferred on the recipient at the time when an export transaction is made under this scheme. At this moment, the GOI is liable to the payment of the drawback amount, which constitutes a financial contribution within the meaning of Article 3(1)(a)(ii) of the basic Regulation. Once the customs authorities issue an export shipping bill which shows, inter alia, the amount of drawback which is to be granted for that export transaction, the GOI has no discretion as to whether or not to grant the subsidy. In the light of the above, and since there is no reliable evidence showing otherwise, it is considered appropriate to assess the benefit under the DDS as being the sums of the drawback amounts earned on export transactions made under this scheme during the review investigation period.

(75)

In accordance with Article 7(2) of the basic Regulation these subsidy amounts have been allocated over the total export turnover of the product concerned during the review investigation period as appropriate denominator, because the subsidy is contingent upon export performance and it was not granted by reference to the quantities manufactured, produced, exported or transported.

(76)

The Commission thus established that the subsidy rates in respect of this scheme during the review investigation period amounted to 1,02 % for Chandan Steel Limited, 0,66 % for Isinox Steel Limited and 1,82 % for the Venus Group.

(77)

The investigation revealed that this scheme was discontinued and did not confer any benefit on the sampled exporting producers during the review investigation period, rendering further evaluation of its countervailability unnecessary for the purposes of this investigation.

(78)

The investigation revealed that none of the sampled exporting producers benefited from this scheme during the review investigation period, rendering further evaluation of its countervailability unnecessary for the purposes of this investigation.

(79)

The investigation revealed that this scheme was discontinued and did not confer any benefit on the sampled exporting producers during the review investigation period, rendering further evaluation of its countervailability unnecessary for the purposes of this investigation.

(80)

The investigation revealed that all of the sampled exporting producers used this scheme during the review investigation period. However, as it was found that the incentives received were negligible, further evaluation of countervailability of this scheme is unnecessary for the purposes of this investigation.

(81)

The investigation revealed that all of the sampled exporting producers used this scheme during the review investigation period. However, as it was found that the incentives received were negligible, further evaluation of countervailability of this scheme is unnecessary for the purposes of this investigation.

(82)

The investigation revealed that none of the sampled exporting producers received loan guarantees and direct transfers of funds from the GOI that would confer a benefit during the review investigation period, rendering further evaluation of countervailability of these arrangements unnecessary for the purposes of this investigation.

(83)

The detailed description of MEIS is contained in chapter 3 of FTP 15-20 and in chapter 3 of HOP I 15-20.

(84)

MEIS is the successor scheme of 5 other schemes (Focus Market Scheme, Focus Product Scheme, Market Linked Focus Product Scheme, Agricultural Infrastructure Incentive Scrip and VKGUY).

(85)

Any manufacturer-exporter or merchant-exporter is eligible for this scheme.

(86)

Eligible companies can benefit from MEIS by exporting specific products to specific countries which were categorised into Group A (‘Traditional Markets’ including all EU Member States), Group B (‘Emerging and Focus Markets’) and Group C (‘Other Markets’). The countries falling under each group and the list of products with corresponding reward rates were specified in Table 1 and Table 2 respectively of Appendix 3B of FTP 15-20. Towards the end of review investigation period the distinction between various markets was abolished and the scheme became available for all.

(87)

The benefit takes the form of a duty credit equivalent to a percentage of the FOB value of the export. In the case of SSB, at the beginning of the review investigation period this percentage was found to be 2 % for exports to Group B countries and 0 % for exports to Group A and C countries. As mentioned in recital 86 above, at the end of the review investigation period the distinction between groups of countries was abolished and the 2 % became applicable for all countries. Certain types of exports are excluded from the scheme, e.g. exports of imported goods or transhipped goods, deemed exports, service exports and export turnover of units operating under special economic zones/export operating units.

(88)

The duty credits under MEIS are freely transferable and valid for a period of 18 months from the date of issue. They can be used for: (i) payment of custom duties on imports of inputs or goods including capital goods, (ii) payment of excise duties on domestic procurement of inputs or goods including capital goods and, (iii) payment of service tax on procurement of services.

(89)

An application for claiming benefits under MEIS must be filed on line on the Directorate-General of Foreign Trade website. Relevant documentation (shipping bills, bank realisation certificate and proof of landing) must be linked with the on-line application. The relevant Regional Authority (‘RA’) of the GOI issues the duty credit after scrutiny of the documents. As long as the exporter provides the relevant documentation, the RA has no discretion over the granting of the duty credits.

(90)

The Commission found that the sampled exporting producers received benefits under the MEIS during the review investigation period.

(91)

The MEIS provides subsidies within the meaning of Article 3(1)(a)(ii) and Article 3(2) of the basic Regulation. MEIS duty credit is a financial contribution by the GOI, since the credit will eventually be used to offset import duties, thus decreasing the GOI's duty revenue which would be otherwise due. In addition, the MEIS duty credit confers a benefit upon the exporter, because it improves its liquidity.

(92)

Furthermore, MEIS is contingent in law upon export performance, and therefore deemed to be specific and countervailable under Article 4(4), first subparagraph, point (a) of the basic Regulation.

(93)

This scheme cannot be considered a permissible duty drawback system or substitution drawback system within the meaning of Article 3(1)(a)(ii) of the basic Regulation. It does not conform to the strict rules laid down in Annex I point (i), Annex II (definition and rules for drawback) and Annex III (definition and rules for substitution drawback) of the basic Regulation. An exporter is under no obligation to actually consume the goods imported free of duty in the production process and the amount of credit is not calculated in relation to actual inputs used. There is no system or procedure in place to confirm which inputs are consumed in the production process of the exported product or whether an excess payment of import duties occurred within the meaning of point (i) of Annex I and Annexes II and III of the basic Regulation. An exporter is eligible for MEIS benefits regardless of whether it imports any inputs at all. In order to obtain the benefit, it is sufficient for an exporter to simply export goods without having to demonstrate that any input material was imported. Thus, even exporters which procure all of their inputs locally and do not import any goods which can be used as inputs are still entitled to benefit from MEIS. Moreover, an exporter can use MEIS duty credits in order to import capital goods although capital goods are not covered by the scope of permissible duty drawback systems, as set out in Annex I point (i) of the basic Regulation, because they are not consumed in the production of the exported products. Moreover, no further examination by the GOI was conducted on the basis of actual inputs and transactions in order to determining whether an excess payment occurred.

(94)

In accordance with Article 3(2) and Article 5 of the basic Regulation, the amount of countervailable subsidies was calculated in terms of the benefit conferred on the recipient, which is found to exist during the review investigation period. In this regard, it was considered that the benefit is conferred on the recipient at the time when an export transaction is made under this scheme.

(95)

In accordance with Article 7(2) of the basic Regulation these subsidy amounts have been allocated over the total export turnover of the product concerned during the review investigation period as appropriate denominator, because the subsidy is contingent upon export performance and it was not granted by reference to the quantities manufactured, produced, exported or transported.

(96)

The Commission thus established that the subsidy rates in respect of this scheme during the review investigation period amounted to 1,31 % for Chandan Steel Limited, 1,33 % for Isinox Steel Limited and 1,00 % for the Venus Group.

(97)

Following disclosure, one party argued that only the benefit conferred on the account of the sales to the Union during the review investigation period should be countervailed. However, as mentioned in recital 95 above, in accordance with Article 7(2) of the basic Regulation, the subsidy amount was allocated over the total export turnover of the product concerned during the review investigation period as appropriate denominator. The amount of the benefit allocated to the turnover generated by the exports to the Union was then countervailed.

(98)

The investigation revealed that none of the sampled exporting producers benefited from this scheme during the review investigation period, rendering further evaluation of its countervailability unnecessary for the purposes of this investigation.

(99)

The investigation revealed that none of the sampled exporting producers benefited from these schemes during the review investigation period, rendering further evaluation of their countervailability unnecessary for the purposes of this investigation.

(100)

The amounts of countervailable subsidies in accordance with the provisions of the basic Regulation, expressed ad valorem, for the cooperating exporting producer were as follows:

Table 1

Countervailable subsidies

(101)

The total amount of subsidisation exceeds the de minimis threshold mentioned in Article 14(5) of the basic Regulation.

(102)

In accordance with Article 18(2) of the basic Regulation, the Commission examined whether the expiry of the measures in force would be likely to lead to a continuation of subsidisation.

(103)

As set out under recitals 31 to 101 above, it was established that during the review investigation period Indian exporters of the product concerned continued to benefit from countervailable subsidisation by the Indian authorities.

(104)

The subsidy schemes give recurring benefits and there is no indication that these benefits will be phased out in the foreseeable future. Indeed, the subsidisation under the DDS and the MEIS increased during the review investigation period. The rate and the cap under the DDS increased whereas the MEIS, which was available for exports to a group of countries at the beginning of the review investigation period (not including the Member States), became available for all countries towards its end. The latter change increased the attractiveness of exports to the Union.

(105)

Although SSB prices to the Union are similar to those to third markets, all sampled exporting producers have significant spare capacities ranging from 14 % to 66 %. The capacity utilisation of all cooperating exporting producers (representing around 46 % of the total Union imports of SSB from India) is at around 42 %. The spare capacity of only those producers is at around 156 000 metric tons i.e. 50 % of the entire Union consumption during the review investigation period. Considering that his figure does not include the spare capacity of exporting producers representing the other 54 % of the total Union imports of SSB from India as well as those Indian producers who do not export to the Union, this is a conservative estimate as to the total spare capacity in India.

(106)

According to the Indian draft National Steel Policy 2017, in 2015, India was the only large economy in the world where steel demand continued to demonstrate positive growth at 5,3 %. Whilst, the production for domestic consumption amongst the sampled exporting producers during the review investigation period varies from 1 to 17 % of the total production, the excess capacity of the cooperating exporting producers it at around 58 %. Consequently, even if the domestic consumption growth remained at its 2015 level, it would take many years for it to be able to absorb the excess capacity.

(107)

Union market is attractive, despite the measures. All sampled exporting producers are export oriented, exporting between 83 % and 99 % of their entire SSB production. Despite the measures in force the Union remained an important export destination for the sampled exporting producers, representing from 35 % to 53 % of their entire SSB exports during the review investigation period. Should the measures be repealed it is likely that export volumes to the Union, which are already significant during the review investigation period, would increase. Indeed, as further discussed in recital 183 below, this is well illustrated by the example of one exporting producer, whose duty was reduced to 0 % following an interim review in 2013.

(108)

In view of the above, the Commission concluded that there is a likelihood of a continuation of subsidisation.

(109)

During the review investigation period, the like product was produced by 25 producers. They constitute the ‘Union industry’ within the meaning of Article 9(1) of the basic Regulation.

(110)

Injury has been assessed on the basis of trends concerning production, production capacity, capacity utilisation, sales, market share, employment, productivity and growth collected at the level of the total Union industry and trends concerning prices, profitability, cash flow, ability to raise capital and investments, stocks, return on investment and wages collected at the level of the sampled Union producers.

(111)

During the period considered, except for 2013, positive market conditions prevailed with an increase in consumption of SSB in the Union. As referred to in recital 3 above, in 2013 an interim review reduced the duty rate applicable to Viraj to 0 %.

(112)

The Commission established Union consumption by adding together:

(113)

Union consumption of SSB developed as follows:

Table 2

Union consumption (MT)

(114)

Union consumption increased by 16 % over the period considered. A year-by-year analysis shows an initial drop of 4 % between 2012 and 2013 and a subsequent gradual increase of 20 percentage points or over 55 thousand tonnes over the period 2014 till the end of the review investigation period.

(115)

The Commission established the volume of imports of SSB from India into the Union on the basis of Eurostat data and the market shares of the imports by comparing these import volumes with the Union consumption as shown in Table 2.

(116)

Imports of SSB into from India into the Union developed as follows:

Table 3

Indian import volumes (MT) and market shares

(117)

The import volume from India to the Union increased significantly by 64 % or by nearly 18 000 tonnes over the period considered. A year-by-year analysis shows an initial insignificant decrease in 2013 and a subsequent increase of 57 percentage points in 2014, further increase by 7 percentage points to 2015 and the review investigation period.

(118)

Initially, between 2012 and 2013 imports from India were stable while the Union consumption decreased by 3 %. Between 2013 and the review investigation period imports from India increased by 64 % while the Union consumption increased by 20 %. Since the increase in imports from India was higher than the increase of the Union consumption the market share of those imports increased from 10 % to 14 %.

(119)

The Commission used the prices of imports from India reported by Eurostat.

(120)

The average prices of SSB imports from India into the Union developed as follows:

Table 4

Indian import prices

(121)

The import prices from India decreased by 14 % over the period considered with the biggest decrease occurring between 2012 and 2013. They decreased by 11 % in 2013 and by further 5 percentage points in 2014 to pick up by 5 percentage points in 2015 and further decrease by 3 percentage points in the review investigation period.

(122)

Although this decrease followed the downward trend of the raw material prices, the Commission noted that throughout the period considered, the average import price per unit from India was significantly lower than both the average per unit sales price and the average unit cost of production of the Union industry as reported in Table 9, resulting in strong price pressure on the Union sales prices.

(123)

The Commission determined the price undercutting during the review investigation period by comparing:

(124)

The price comparison was made on a type-by-type basis for transactions at the same level of trade, duly adjusted where necessary, and after deduction of rebates and discounts. The result of the comparison was expressed as a percentage of the sampled Union producers' turnover during the review investigation period.

(125)

The comparison showed for cooperating exporting producers a weighted average undercutting margin of 12 % in the Union market during the review investigation period.

(126)

The Commission established the volume of imports from countries other than India on the basis of data from Eurostat and the market shares of these imports by comparing import volumes with the Union consumption as shown in Table 2.

(127)

Imports of SSB into the Union from other countries developed as follows:

Table 5

Imports of SSB from other countries

(128)

The volume of imports from third countries other than India decreased by 8 % compared to the 64 % increase of the volume of imports from India.

(129)

Over the period considered the market share of imports from countries other than India decreased from 8 % to 6 % while the market share of imports from India increased from 10 % to 14 %.

(130)

The market shares of the two most important importing countries after India decreased over the period considered: for Switzerland the market share dropped from 4 % to 3 % and for Ukraine from 2 % to 1 %.

(131)

In the context of Union consumption increasing by 16 % and market share of the Union industry decreasing by 3 % over the period considered this means that the imports from the India gained market not only from the Union industry but also from other imports.

(132)

The average import price from other third countries decreased much slower than import prices from India. They decreased by 6 % while the import prices from India decreased by 14 %.

(133)

The import prices from Switzerland and Ukraine are on average significantly above the import prices from India over the whole period considered. Yet these prices are not necessarily directly comparable, since the average price is affected by a different product mix.

(134)

Furthermore the import volumes from Switzerland (+ 7 %) and Ukraine (– 16 %) in particular, or from all other third countries (– 8 %) in general did not follow such strong increases as those from India (+ 64 %).

(135)

While the volume of imports from India increased by over 17 000 tonnes over the period considered, the import volume from Ukraine decreased by around 700 tonnes, that from Switzerland increased by around 700 tonnes and that from all other third countries (including Switzerland and Ukraine) by around 1 700 tonnes.

(136)

On the basis of the above and given the much smaller import volumes from Switzerland and Ukraine as compared to those from India there is no indication that imports from these two countries were causing injury to the Union industry.

(137)

Imports from countries other India (including Switzerland and Ukraine) are — on average- higher priced than imports from India and had a market share loss of 2 % during the period considered.

(138)

In accordance with Article 8(4) of the basic Regulation, the Commission examined the effect of the subsidised imports on the Union industry by evaluating all the economic indicators that had a bearing on the state of the Union industry during the period considered.

(139)

As referred to in recital 12 above sampling was used for the determination of possible injury suffered by the Union industry.

(140)

For the injury determination, the Commission distinguished between macroeconomic and microeconomic injury indicators.

(141)

The Commission evaluated the macroeconomic indicators on the basis of data in the review request, data submitted by Eurofer and the verified questionnaire replies of the sampled Union producers. The data related to all Union producers.

(142)

The Commission evaluated the microeconomic indicators on the basis of verified data in the questionnaire replies from the sampled Union producers.

(143)

Both sets of data were found to be representative of the economic situation of the Union industry.

(144)

The macroeconomic indicators are: production, production capacity, capacity utilisation, sales volume, market share, growth, employment, productivity, magnitude of the amount of countervailable subsidies, and recovery from past subsidisation.

(145)

The microeconomic indicators are: average unit prices, unit cost, labour costs, inventories, profitability, cash flow, investments, return on investments and ability to raise capital.

(146)

The total Union industry's production, production capacity and capacity utilisation developed over the period considered as follows:

Table 6

Production, production capacity and capacity utilisation of Union producers

(147)

The production volume of the Union industry increased by 14 % over the period considered. A year by year analysis demonstrates that it first decreased by 6 % in 2013 and then gradually increased by 16 percentage points in 2014 and further 4 percentage points in 2015 to stay at the same level in the review investigation period.

(148)

The production capacity of the Union industry increased by 4 % over the period considered.

(149)

As a result of the increase in production volume, the capacity utilisation by the Union industry increased by 10 % during the period considered.

(150)

The Union industry's sales volume in the Union and market share developed over the period considered as follows:

Table 7

Sales volume and market share of Union producers

(151)

The sales volume of the Union industry in the Union market increased over the period considered by around 13 % or by over 28 000 tonnes, which is below the market growth of 16 %, as reported in Table 2.

(152)

A year-by-year analysis shows an initial decrease of 4 % between 2012 and 2013 and subsequent increases of 12 percentage points in 2014, 3 points in 2015, and a further 2 points in the review investigation period.

(153)

The Union industry's market share decreased by 3 % during the period considered, from 82 % in 2012 and 2013 to 79 % over the period between 2014 and the review investigation period.

(154)

The Union consumption increased over the period considered by 16 % or by over 44 000 tonnes. The sales volume of the Union industry increased by 13 % or over 23 000 tonnes which, nonetheless, translated into a Union industry's loss in market share of 4 percentage points.

(155)

Employment and productivity of the Union industry developed over the period considered as follows:

Table 8

Employment and productivity of Union producers

(156)

Employment of the Union industry remained at the same level during the period considered.

(157)

Due to the increase in production of 14 % over the period considered, the productivity also increased by 14 % over the same period. A year-by-year analysis shows an initial decrease of 6 % between 2012 and 2013 and subsequent increases of 16 percentage points in 2014 and further 4 in 2015 to keep the same level in the review investigation period.

(158)

The Commission established that imports of SSB from India continued to enter the Union market at subsidised prices. The subsidy margin established for India during the review investigation period was well above the de minimis level as described in recital 100 above.

(159)

This coincided with a decrease in Indian import prices by 14 % over the period considered. In result the Union industry was not able to fully benefit from the countervailing measures in force as their market share decreased by 4 % and their profitability decreased by almost 5 percentage points.

(160)

The average sales prices of the sampled Union producers to unrelated customers in the Union developed over the period considered as follows:

Table 9

Average sales prices in the Union and unit cost

(161)

The Union industry's average unit sales price to unrelated customers in the Union decreased steadily by 22 % over the period considered to reach 2 482 EUR/tonne in the review investigation period. The Union industry had to adjust its prices downwards in order to reflect the general decrease of selling prices in the SSB market.

(162)

The average cost of production of the Union industry decreased to a lesser extent, by 18 % over the period considered. The major factor having influenced the decrease in the unit cost of production was the decrease in the raw material prices, but also the increasing productivity.

(163)

The average labour costs of the sampled Union producers developed over the period considered as follows:

Table 10

Average labour costs per employee

(164)

The average labour costs per employee the Union industry increased over the period considered by a marginal 3 %.

(165)

Stock levels of the sampled Union producers developed over the period considered as follows:

Table 11

Stocks

(166)

The level of closing stocks of the Union industry decreased by 16 % during the period considered. In the review investigation period, the level of stocks represented around 5 % of their production.

(167)

The Commission established the profitability of the Union industry by expressing the pre-tax net profit of the sales of the like product to unrelated customers in the Union as a percentage of the turnover of those sales.

(168)

Profitability, cash flow, investments and return on investments of the sampled Union producers developed over the period considered as follows:

Table 12

Profitability, cash flow, investments and return on investments

(169)

The profitability of the Union industry decreased gradually from 8,1 % in 2012 to 3,3 % in the review investigation period, what translates into a decrease of 59 %. A year-by-year analysis shows an initial dramatic decrease of 53 % between 2012 and 2013 and subsequent increases of 32 percentage points in 2014, further slight decrease of 3 percentage points in 2015 and further dramatic decrease by 35 percentage points in the review investigation period.

(170)

The net cash flow is the Union industry's ability to self-finance its activities. The net cash flow decreased by 42 % during the period considered. A year-by-year analysis shows an erratic evolution of this indicator. An initial dramatic decrease of 66 % between 2012 and 2013 and subsequent increases of 60 percentage points in 2014, further slight increase of 6 percentage points in 2015 followed by dramatic decrease by 42 percentage points in the review investigation period.

(171)

The substantial decrease in cash flow of the Union industry is mainly explained by the significant decrease in profitability, as described in recital 169 above.

(172)

During the period considered the annual investments in the like product made by the Union industry decreased by 9 %, that is from 7,7 million EUR in 2012 to 7,0 million EUR in the review investigation period.

(173)

The return on investments is the profit as a percentage of the net book value of investments. The Union's industry's return on investment from the production and sale of the like product decreased over the period considered by 47 %.

(174)

The investigation showed that despite the measures in force most of the injury indicators developed negatively and the economic and financial situation of the Union industry deteriorated during the period considered.

(175)

The Union industry lost its market share by 4 % and achieved continuously lower profits, decreasing cash flow, investments and return on investments.

(176)

These negative developments happened in parallel to the significant increase in the Union consumption by 16 % during the period considered. At the same time, the imports from India were increasing constantly their volume and share of the Union market.

(177)

These subsidised imports from India undercut the Union industry's prices by 12 % in the review investigation period, exerting price pressure. In fact the price pressure during the review investigation period was higher than in the original investigation when undercutting was less than 2 %.

(178)

The Union industry was therefore forced to decrease its sales prices in an attempt to limit the loss of market share. As a consequence, its profit, although still positive (3,3 %) in the review investigation period, was below the 9,5 % target profit established in the original investigation.

(179)

At the same time, as indicated in recital 133 above, the imports of SSB from countries other than India were priced higher than the imports from India and lost market share of 2 % during the period considered.

(180)

The Commission therefore concluded that the Union industry continued to be injured during the period considered and during the review investigation period.

(181)

To establish the likelihood of continuation of injury if the measures against India were repealed the Commission analysed the production capacity and the spare capacity in India, exports from India to other countries and the attractiveness of the Union market.

(182)

As explained in recital 105 above, Indian spare capacity is conservatively estimated to be above 156 000 tonnes in the review investigation period, which already represented 50 % of the Union consumption during the same period.

(183)

The Commission also noted that following the reduction of the duty rate of Viraj to 0 % in 2013, as a result of the review referred to in recital 3 above, this producer significantly increased its presence on the Union market.

(184)

Indeed between 2013 and the review investigation period Viraj acquired a majority share in the Indian imports to the Union. Imports of Viraj almost tripled during this period, increasing their share by more than 60 %.

(185)

Over the same period the volume of Indian imports increased by 64 % and their share of the Union market increased by 40 %. The vast majority of this increase was caused by the significantly increasing imports of Viraj. This indicates the increased attractiveness of the Union market to the Indian producers. During the same period the Union industry lost 3 percentage points of market share and almost 5 percentage points of profitability, leading to a deterioration of its situation.

(186)

The price level of Indian exports to other countries was comparable to the one of their exports to the Union.

(187)

As a consequence of the attractiveness of the Union market described in recitals 105, 182 and 183 above, should the measures be repealed, at least part of the spare capacity will, in all likelihood, be directed to the Union market. Also, as described in recital 107 above, Indian producers are highly export oriented.

(188)

The Indian imports undercut the Union sales prices by 12 %. This is an indication of what could be the likely price level of imports from India should the measures be repealed. On this basis, it is likely that the price pressure on the Union market will significantly increase should the measure be repealed, thus further worsening the economic situation of the Union industry.

(189)

On this basis, in the absence of measures, Indian exporting producers will likely increase their presence in the Union market, in terms of both volume and market shares, and at subsidised prices which would significantly undercut the Union industry's sales prices.

(190)

This would create an increased price pressure on the Union market with a negative impact on the Union industry's profitability and financial situation, further deteriorating the economic situation of the Union industry.

(191)

The Commission therefore concluded that that there is a strong likelihood of continuation of injury should the measures be repealed.

(192)

In accordance with Article 31 of the basic Regulation, the Commission examined whether maintaining the existing countervailing measures against India would be against the interest of the Union as a whole.

(193)

The Commission based the determination of the Union interest on an appreciation of all the various interests involved, including those of the Union industry, importers and users. All interested parties were given the opportunity to make their views known pursuant to Article 31(2) of the basic Regulation.

(194)

On this basis, the Commission examined whether, despite the conclusions on the likelihood of a continuation of subsidisation and continuation of injury, compelling reasons existed which would lead to the conclusion that it was not in the Union interest to maintain the existing measures.

(195)

As explained in recital 153 above, the measures did not prevent the Union industry from losing 4 % of market share during the period considered.

(196)

At the same time, the Commission also concluded in recital 188 above that the Union industry would be likely to experience a deterioration of its situation in case the countervailing measures against India were allowed to lapse.

(197)

Therefore, the Commission concluded that the continuation of the measures against India would benefit the Union industry.

(198)

The Commission sent questionnaires to the two cooperating importers. As referred to in recital 23 above none of them either replied or otherwise cooperated in this investigation. No other importers made themselves known.

(199)

Therefore the Commission concluded that there are no indications that the maintenance of the measures would have a negative impact on the importers outweighing the positive impact of the measures.

(200)

As referred to in recital 20 above no users in the Union came forward after the initiation or otherwise cooperated in this investigation.

(201)

SSB are used in a wide variety of applications including the automotive industry, domestic appliances, medical and laboratory instruments, etc.

(202)

Yet, as the Commission found in the original investigation, the users are only intermediate players that produce and supply the elements for the aforementioned applications.

(203)

As such these users are in a position to pass on all or almost all of the increase in prices resulting from the countervailing duty to the final users, bearing in mind that for the latter, the impact of such measures is negligible.

(204)

These findings were confirmed in the current review as the investigation did not reveal any indication that would infirm this original finding for the period after the imposition of the measures in force.

(205)

In addition, despite that the measures are in force since 2011, the users in the Union continued to source their supply, inter alia, from India. The users did not submit any information showing that there have been difficulties in finding other sources of supply and the investigation did also not reveal such information.

(206)

On this basis, and in line with the conclusions drawn in the original investigation, the Commission concluded that the continuation of measures will not have a significant negative impact on users.

(207)

In view of the above, the Commission concluded that there are no compelling reasons to conclude that it is not in the Union interest to extend the existing countervailing measures on imports of SSB originating in India.

(208)

All interested parties were informed of the essential facts and considerations on the basis of which it was intended to maintain the countervailing measures in force. They were also granted a period within which they could submit comments subsequent to this disclosure and to request a hearing with the Commission and/or the Hearing Officer in trade proceedings. The submissions and comments were duly taken into consideration.

(209)

It follows from the above considerations that, under Article 18 of the basic Regulation, the countervailing measures applicable to imports of SSB originating in India imposed by the definitive Regulation, as amended by the amending Regulation, should be maintained.

(210)

The individual company countervailing duty rates specified in this Regulation are solely applicable to imports of the product concerned produced by these companies and thus by the specific legal entities mentioned. Imports of the product concerned manufactured by any other company not specifically mentioned in the operative part of this Regulation with its name and address, including entities related to those specifically mentioned, cannot benefit from these rates and shall be subject to the duty rate applicable to ‘all other companies’.

(211)

Any claim requesting the application of these individual countervailing duty rates (e.g. following a change in the name of the entity or following the setting up of new production or sales entities) should be addressed to the Commission (7) forthwith with all relevant information, in particular any modification in the company's activities linked to production, domestic and export sales associated with, for instance, that name change or that change in the production and sales entities. If appropriate, the Regulation will then be amended accordingly by updating the list of companies benefiting from individual duty rates.

(212)

The measures provided for in this Regulation are in accordance with the opinion of the Committee established by Article 15(1) of Regulation (EU) 2016/1036 of the European Parliament and of the Council (8),

28.6.2017   

EN

Official Journal of the European Union

L 165/29

(1)

Commission Regulation (EC) No 669/2009 (2) lays down rules concerning the increased level of official controls to be carried out on imports of feed and food of non-animal origin listed in Annex I thereto (‘the list’), at the points of entry into the territories referred to in Annex I to Regulation (EC) No 882/2004.

(2)

Article 2 of Regulation (EC) No 669/2009 provides that the list is to be reviewed on a regular basis, and at least biannually, taking into account at least the sources of information referred to in that Article.

(3)

The occurrence and relevance of recent food incidents notified through the Rapid Alert System for Food and Feed, the findings of audits to third countries carried out by the Directorate for Health and Food Audits and Analysis of the Commission Directorate-General for Health and Food Safety, as well as the biannual reports on consignments of feed and food of non-animal origin submitted by Member States to the Commission in accordance with Article 15 of Regulation (EC) No 669/2009 indicate that the list should be amended.

(4)

In particular, for consignments of dried grapes from Turkey and Iran, peppers (Capsicum spp.) from Sri Lanka, groundnuts (peanuts) and derived products from Senegal and sesamum seeds from Nigeria and Sudan, the relevant sources of information indicate the emergence of new risks requiring the introduction of an increased level of official controls. Entries concerning those consignments should therefore be included in the list.

(5)

The list should also be amended by increasing the frequency of official controls for the commodities for which the available information shows a higher degree of non-compliance with the relevant Union legislation, thereby warranting an increased level of official controls. The entry in the list concerning dried apricots from Turkey should therefore be amended accordingly.

(6)

In addition, the list should be amended by decreasing the frequency of official controls of the commodities for which the relevant sources of information indicate an overall improvement of compliance with the relevant requirements provided for in Union legislation and for which the current level of official control is therefore no longer appropriate. The entries in the list concerning peas with pods from Kenya and Brassica oleracea (‘Chinese broccoli’) from China should therefore be amended accordingly.

(7)

The list should also be amended by deleting the entries for commodities for which the available information indicates an overall satisfactory degree of compliance with the relevant safety requirements provided for in Union legislation and for which an increased level of official controls is therefore no longer justified. The entries in the list concerning aubergines from Cambodia and enzymes from India should therefore be deleted.

(8)

In order to ensure consistency and clarity, it is appropriate to replace Annex I to Regulation (EC) No 669/2009 by the text set out in the Annex to this Regulation.

(9)

Regulation (EC) No 669/2009 should therefore be amended accordingly.

(10)

The measures provided for in this Regulation are in accordance with the opinion of the Standing Committee on Plants, Animals, Food and Feed,

28.6.2017   

EN

Official Journal of the European Union

L 165/36

(1)

On 18 September 2015 and 1 October 2015, the Council adopted Decisions (EU, Euratom) 2015/1600 (1) and (EU, Euratom) 2015/1790 (2) appointing the members of the European Economic and Social Committee for the period from 21 September 2015 to 20 September 2020.

(2)

A member's seat on the European Economic and Social Committee has become vacant following the end of the term of office of Mr Michel DUBROMEL,

28.6.2017   

EN

Official Journal of the European Union

L 165/37

(1)

In accordance with Article 31 of Council Regulation (EC) No 1290/2005 (2) and as from 1 January 2015 in accordance with Article 52 of Regulation (EU) No 1306/2013 the Commission is to carry out the necessary verifications, communicate to the Member States the results of those verifications, take note of the comments of the Member States, initiate a bilateral discussion so that an agreement may be reached with the Member States in question, and formally communicate its conclusions to them.

(2)

The Member States have had an opportunity to request the launch of a conciliation procedure. That opportunity has been used in some cases and the reports issued on the outcome have been examined by the Commission.

(3)

In accordance with Regulation (EU) No 1306/2013, only agricultural expenditure which has been incurred in a way that has not infringed Union law may be financed.

(4)

In the light of the verifications carried out, the outcome of the bilateral discussions and the conciliation procedures, part of the expenditure declared by the Member States does not fulfil this requirement and cannot, therefore, be financed under the EAGF and the EAFRD.

(5)

The amounts that are not recognised as being chargeable to the EAGF and the EAFRD should be indicated. Those amounts do not relate to expenditure incurred more than 24 months before the Commission's written notification of the results of the verifications to the Member States.

(6)

The amounts excluded from Union financing by the present Decision should also take into account any reductions or suspensions in accordance with Article 41 of Regulation (EU) No 1306/2013 due to the fact that such reductions or suspensions are of a provisional nature and without prejudice to decisions taken pursuant to Articles 51 or 52 of that Regulation.

(7)

As regards the cases covered by this decision, the assessment of the amounts to be excluded on grounds of non-compliance with Union law was notified by the Commission to the Member States in a summary report on the subject (3).

(8)

This Decision is without prejudice to any financial conclusions that the Commission may draw from the judgments of the Court of Justice of the European Union in cases pending on 31 March 2017,