Page 500 - MANUAL OF SOP

Countervailing Duty Investigations

20.84 The investigation can be terminated in certain cases in accordance with Rule
16 of the CVD Rules. For example, when the authority determines that the amount
of subsidy is less than one percent ad-valorem in case of developed countries
and less than two percent in case of developing countries, it shall terminate the
investigation immediately against such country.

20.85 In case of a recommendation of countervailing duty by the DGTR, Department
of Revenue may issue a notification levying countervailing duty within three months
from the date of issuance of the recommendation by the DGTR. Countervailing duty
can be imposed for a maximum period of five years from the date of imposition of a
duty, subject to provisions of review as discussed in paragraphs later in this chapter.

20.86 It may be added that the Paragraph 5 of Article VI of the GATT inter-alia
states that “No product of the territory of any contracting party imported into
the territory of any other contracting party shall be subject to both anti-dumping
and countervailing duties to compensate for the same situation of dumping or
export subsidization”. This provision seeks to prevent a situation of double remedy/
compensation for the “same situation” of “dumping” or “export subsidization”
(and not “domestic subsidization”) in relation to concurrent anti-dumping (AD) and
countervailing duty (CVD) investigations.

20.87 It may be clarified here that an export subsidy may lead to reduction in
the export price of a product, but will not affect the price of domestic sales of
that product in that country. Therefore, this subsidy will result in higher margin of
dumping. In such circumstances, the situation of subsidization and the situation
of dumping are the ‘same situation’. In other words, the dumping margin already
accounts for the export subsidy in such cases; and the application of concurrent
duties would amount to the application of ‘double remedies’ to compensate for, or
offset, a same situation. But it may be ensured by the team that such export subsidy
is either covered in ADD or CVD investigation.

20.88 Another issue, which may be relevant in CVD investigations is about cross-
ownership of the domestic industry. As per the existing practice, the Authority
normally attributes a subsidy to the products produced by the company that directly
received the subsidy. However, in today’s era, where related party transactions are
used to further the interests of an organisation, the following subsidies to the
following types of cross-owned corporations are to be covered (as is done in USA
etc.) for CVD investigations:

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