Imports of Coumarin from China PR-Final findings of the Sun Set Review
Dated 2nd March, 2016 | Copy of | Notification Sl26 |
MINISTRY OF COMMERCE & INDUSTRY DEPARTMENT OF COMMERCE (DIRECTORATE GENERAL OF ANTI DUMPING & ALLIED DUTIES)
Final Findinq
Subject: Sun Set Review (SSR) investigation of the anti dumping duties imposed on the imports of _Coumarin', originating in or exported from China PR.
No.15/26/2014-DGAD: Having regard to the Customs Tariff Act 1975, as amended from time to time (hereinafter also referred to as the Act) and the Customs Tariff (Identification, Assessment and Collection of Anti-Dumping Duty on Dumped Articles and for Determination of Injury) Rules 1995, as amended from time to time (hereinafter also referred to as the Rules) thereof;
A.Backqround of the case 2.An anti-dumping investigation concerning imports of "Coumarin" (hereinafter also referred to as the subject goods), originating in or exported from China PR was initiated by the Designated Authority (hereinafter also referred to as the Authority) vide Noti6cation No.14/17/2009-DGAD dated lOth July 2009 The preliminary finding was issued by the Authority, recommending imposition of provisional anti-dumping duties on the imports of the subject goods, originating in or exported from China PR, vide Notification No. 14/17/2009- DGAD dated 29th January 2010. The provisional duty was imposed by the Central Government on the imports of the subject goods, originating in or exported from China PR vide Notification No, 38/2010-Customs dated 23rd March 2010. The final findings notification of the Authority was published vide Notification No. 14/17/2009-DGAD dated 7th July 2010 The definitive anti dumping duties were imposed by the Central Government on the imports of the subject goods, originating in or exported from the subject country, vide Notification No. 82 /2010-Customs dated 20th August 2010. 3. Fragrance and Flavors Association had filed an appeal before CESTAT, challenging the imposition of Anti-dumping duty. The Hon’ble CESTAT vide its order dated 17th June, 2011 set aside the Final Findings and the Customs Notification dated 20th August, 2010 and remanded the matter back to Designated Authority for fresh decision after granting a reasonable opportunity of hearing to the appellant within a period of 6 months. The Authority published the remanded finding vide Notification No. 14/17/2009- DGAD dated 23rd December 2011 and the relevant notification imposing the anti-dumping duty was issued by the Central Government vide Notification No. 12/2012–Customs dated 8th February, 2012. 4. M/s. Atlas Fine Chemicals Pvt. Ltd. which has now been acquired by M/s. Aims Impex Pvt. Ltd. w.e.f. 23rd October 2015 and now known by the name M/s. Aims Impex Pvt. Ltd. (hereinafter also referred to as the petitioner), have filed a duly substantiated application before the Authority, in accordance with the Act and the Rules, alleging likelihood of continuation or recurrence of dumping of the subject goods, originating in or exported from China PR and consequent injury to the domestic industry and requested for review, continuation and enhancement of the anti-dumping duties, imposed on the imports of the subject goods, originating in or exported from the said subject country. Accordingly, the Authority initiated the sunset review (SSR) investigation in accordance with Section 9A(5) of the Act read with Rule 23 of the Anti-dumping Rules, vide Notification No. 15/26/2014-DGAD, dated 16th March, 2015 to review the need for continued imposition of the duties in force in respect of the subject goods, originating in or exported from China PR (hereinafter also referred to as the subject country) and to examine whether the expiry of such duty is likely to lead to continuation or recurrence of dumping and injury to the domestic industry. B. Procedure 5. The procedure described below has been followed with regard to the investigation: i. The Authority sent copy of the initiation notification dated 16th March, 2015 to the embassy of the subject country in India, known exporters from the subject country, known importers and other interested parties, and the domestic producer, as per available information. The known interested parties were requested to file questionnaire responses and make their views known in writing within the prescribed time limit. Copies of the letter and questionnaires sent to the exporters were also sent to embassy of the subject country along with a list of known exporters/producers, with a request to advise the exporters/producers from the subject country to respond within the prescribed time. ii. Copy of the non-confidential version of the application filed on behalf of the petitioner was made available to the known exporters, producers and the embassy of the subject country in accordance with Rule 6(3) of the Rules. iii. The Authority forwarded a copy of the public notice initiating the sunset review to the following known producers/exporters in the subject countries and gave them opportunity to make their views known in writing within forty days from the date of the letter in accordance with the Rules:
iv. However, none of the producers/exporters from the subject countries have responded by filing questionnaire response or made any submissions.
v. Market Economy Treatment (MET) questionnaire was also forwarded to the known producers/exporters in China PR and the Embassy of China PR in India with the request to provide relevant information to the Authority within the prescribed time limit. While for the purpose of initiation, the normal value in China PR was considered based on the cost of production of the subject goods in India, duly adjusted, the Authority informed the known producers/exporters from China PR that it proposes to examine the claim of the petitioner in the light of Para 7 and Para 8 of Annexure I of Anti-dumping Rules, as amended. The exporters/producers of the subject goods from China PR were, therefore, requested to furnish necessary information/sufficient evidence as mentioned to enable the Authority to consider whether market economy treatment can be granted to the cooperative exporters/producers in China PR. However, none of the Chinese producers/exporters have filed MET questionnaire response rebutting the non-market economy treatment meted out to China PR.
vi. Questionnaires were sent to the following known importers/users/ associations of subject goods in India calling for necessary information in accordance with the Rules:
C. PRODUCT UNDER CONSIDERATION AND LIKE ARTICLE
6. The product under consideration in the present investigation is Coumarin of all types (hereinafter referred as subject goods). The product is classified under Chapter 29 (Organic Chemical) of the Customs Tariff Act under Customs Sub-heading No. 2932.21.00. However, customs classification is indicative in nature and not binding on the scope of the investigations. Since the present investigation is for sunset review, the scope of the product under consideration remains the same as that of the original investigation. The product under consideration in the final findings of the original investigations was defined as follows:
“The product under consideration in the present investigation is Coumarin of all types (hereinafter referred as "subject goods"). Coumarin (Chemical Formulae C9H6O2) belongs to the lactone family of chemicals. It is an aroma chemical, which can be in the form of white crystals, flake or powder. It has characteristic odour of newly mown hay and bittersweet somewhat similar to vanilla. Coumarin is used in the preparation of fragrance compounds and those fragrance compounds are used in the production of soaps, detergents, cosmetics, incense sticks, and fine fragrances. It imparts pleasant fragrance and masks unpleasant odors in many other household and industrial products. Coumarin, which was originally a natural product obtained from Tonka beans is now produced synthetically. It can be obtained by two synthetic processes i.e. (i) Starting from phenol to obtain Salicylaldehyde followed by Perkin reaction and (ii) Starting from Ortho-cresol which is also called Raschig method in which Salicylaldehyde is made from Ortho-cresol and then converted into Coumarin. In both the processes Salicylaldehyde and Acetic Anhydride react in the presence of Sodium Acetate in Acetic Acid as catalyst and crude Coumarin is separated from Acetic Acid by distillation. The crude Coumarin is further purified by several distillations and then crystallized in Methanol. The crystallized product is separated by centrifugation and dried. The main physical specification of Coumarin is its purity, for which the melting point is the indicator.”
7. None of the interested parties made any submissions regarding the product under consideration at any stage of the proceedings. This investigation being a sunset review, the Authority considers the product under consideration as defined in the final findings of the original investigations for the present review investigation as well.
8. With regard to like article, Rule 2(d) provides as: -
"like article" means an article which is identical or alike in all respects to the article under investigation for being dumped in India or in the absence of such article, another article which although not alike in all respects, has characteristics closely resembling those of the articles under investigation;
9. The petitioner has claimed that there are no known differences in subject goods produced by the Indian industry and exported from China PR. The product under consideration produced by the Indian industry and imported from subject country are comparable in terms of characteristics such as physical & chemical characteristics, manufacturing process & technology, functions & uses, product specifications, pricing, distribution & marketing and tariff classification of the goods. The two are technically and commercially substitutable. The consumers are using the two interchangeably.
10. The Authority notes that none of the interested parties have raised any argument in relation to product under consideration and like article. The Authority, therefore, holds that the subject goods produced by the domestic industry is like article to the subject goods imported from subject country in accordance with the AD rules for the purpose of the present investigation.
D. SCOPE OF DOMESTIC INDUSTRY AND STANDING
Submissions made by the Exporters/Importers/users/other Interested Parties
11. With regard to scope of the domestic industry and standing, no submissions have been made by the exporters/importers/users/other interested parties.
Submissions made by Domestic Industry
12. Following submissions have been made by the domestic industry with regard to standing and scope of the domestic industry:
i. The petition was filed by Atlas Fine Chemical Pvt. Ltd., the sole producer of the subject goods in India. However, M/s. Atlas Fine Chemicals Pvt. Ltd. has been acquired by its related company M/s. Aims Impex Pvt. Ltd. with effect from 23rd October. All Assets and liabilities of M/s. Atlas Fine Chemicals Pvt. Ltd. have been transferred to Transferee Company i.e. Aims Impex Pvt Ltd.
ii. Promoters for both the companies are same before and after amalgamation. As regards the business operations, Atlas was the producer of Coumarin, whereas Aims Impex was the producer of Vanalin prior to amalgamation. After amalgamation, Atlas Fine Chemicals has been merged into Aims Impex. Aims Impex is now the producer of both Coumarin and Vanalin.
iii. The management took decision for amalgamation in view of the fact that it would be advantageous to combine the activities and operations in a single company to reap synergetic advantages such as supply chain and logistics alignment, benefit from the increased scale of operations, saving in various fixed cost etc. Consolidation of business will result in savings of cost and improvement in the revenues and margins. Availability of common operating platform will provide an opportunity to leverage combined assets and build a stronger sustainable business.
iv. Neither Atlas Fine Chemical Pvt. Ltd. nor Aims Impex Pvt. Ltd. has imported the subject goods during the period of investigation, or, are related to any exporter or producer of the subject goods in China or an importer or user of the product under consideration in India within the meaning of Rule 2(b).
v. There is no other known producer of Coumarin in India and hence the production of petitioner constitutes 100% of the Indian production.
Examination by the Authority
13. According to Rule 2 (b), “domestic industry” means the domestic producers as a whole engaged in the manufacture of the like article and any activity connected therewith or those whose collective output of the said article constitutes a major proportion of the total domestic production of that article except when such producers are related to the exporters or importers of the alleged dumped article or are themselves importers thereof in such case the term ‘domestic industry’ may be construed as referring to the rest of the producers”.
14. The Authority notes that in the previous investigation the Authority accepted that:
“The Authority holds that the M/s Atlas Fine Chemicals Pvt. Ltd is the sole producer of the like article in India and constitutes ‘domestic industry’ within the meaning of the Rule 2(b) of the AD Rules. The Authority further holds that the application satisfies the requirements of Rule 2(b) and Rule 5(3) of the AD Rules.”
15. The Authority further notes that the petitioner is M/s. Atlas Fine Chemicals Pvt. Ltd. However, post initiation of investigations, the identity of the petitioner has changed. Atlas Fine Chemicals has been merged into its related company, Aims Impex Pvt. Ltd. The Authority examined and found that there is no change in the status of the petitioner even after amalgamation in terms of ownership, assets and liabilities etc. The Authority, therefore, holds that M/s. Atlas Fine Chemicals Pvt. Ltd., now known as M/s. Aims Impex Pvt. Ltd., is the domestic industry for the product under consideration.
E. Other issues
Submissions by producers/exporters/importers/other interested parties
16. No submissions have been made by the producers/exporters/importers/other interested parties in this regard. However, post oral hearing, the following submissions have been made by Fragrance and Flavours Association of India, who did not attend the oral hearing despite intimation:
a. Imposition of anti-dumping duty would increase the cost of production of Perfumery Compound, Cosmetics, Agarbatti (Incense Sticks) etc. Further, increase in cost of production would adversely affect their exports. It would be prudent to create and maintain healthy and competitive environment for our industry to compete successfully in the global markets.
b. The proposed structure of Anti-dumping duty is unfairly excessive. It should be just, fair and minimal.
c. The proposal of levying Anti-dumping Duty on originating / Imports of Coumarin from China PR., in its present form could encourage the formation of CARTEL. Moreover, the unusual disparity of price between domestic and Chinese products would mean contravention of Monopolies and Restricted Trade Practice.
Submissions made by the Domestic Industry
17. Following are the submissions made by the domestic industry:
i. Petitioner has procured IBIS transaction wise data along with China customs data. Petitioner has also procured DGCI&S transaction-wise import data. On comparison of DGCI&S data with the data received from IBIS and China customs, it is found that the DGCI&S is showing import volumes significantly below the volumes reported in China customs. Further, the volumes reported in IBIS are even lower than volumes reported in DGCI&S.
ii. The import price reported in DGCI&S transaction wise data is materially higher than the China customs prices. Further, the price reported in IBIS is significantly higher than DGCI&S transaction wise data.
iii. It is settled position of the Directorate that the Directorate would consider the data which shows highest volumes. Since the import volumes reported in China Customs are the highest, the Authority should consider China customs data.
iv. A comparison of the information as per various sources shows that significant volumes of exports of product under consideration have been made from China to India and at far lower prices than reflected in the Indian Customs.
*Based on IBIS up to up to 2009-10 and China Customs thereafter
Examination by the Authority
18. As regards the submission that imposition of anti-dumping duty would increase the cost of production of Perfumery Compound, Cosmetics, Agarbatti (Incense Sticks) etc and adversely affect their exports, the Authority notes that the objective of anti-dumping measures is to create a level playing field for the domestic industry against the unfair trade practices of dumping. Imposition of anti-dumping measures would not restrict imports from the subject country in any way; and therefore, would not affect the availability of the product to the consumers.
19. As regards the submission that imposition of anti-dumping duty would encourage cartelization and therefore the same should be just, fair and minimal, the Authority notes that the recommendation of continued imposition of duty in the present investigation is on the basis of likelihood analysis. The Authority has examined dumping and injury in the present investigation for POI and post POI and in respect of third country as well. While the investigation shows continued dumping of the subject goods from the subject country during POI despite the anti-dumping duty in force, injury to the domestic industry on account of such dumping is likely to recur in the event of revocation of the antidumping duty if the subject goods are imported in to India from the subject country at the prices at which the subject country is exporting the subject goods to the third countries.
20. As already explained in this finding, the Authority relied upon the IBIS data furnished by the applicant domestic industry prima facie for the purpose of initiation of the investigation. Post initiation, request was made to the Directorate General of Commercial Intelligence and Statistics (DGCI&S) to arrange for details of transaction-wise imports of subject goods for the injury period including POI and post-POI and the same was received by the Authority. The volume of imports from China to India during the POI was also checked up from the World Trade Atlas (WTA) data. The details of imports in the various sources of data, as provided by the domestic industry, DGCI&S and World Trade Atlas during the POI are as follows:
21. The Authority noted that there is a wide variation between the imports data from the IBIS, DGCI&S and China Customs. However, the data purportedly from China Customs as furnished by the domestic industry cannot be relied upon since high sea sales cannot be ruled out. The Authority has, therefore, relied upon the imports data obtained from DGCI&S in the present investigation.
F. MARKET ECONOMY TREATMENT, NORMAL VALUE, EXPORT PRICE AND DUMPING MARGIN
Submissions made by exporters, importers and other interested parties
22. No submissions have been made by the exporters, importers and other interested parties with regard to market economy, normal value, export price and dumping margin.
Submissions made by the domestic industry
23. The submissions made by the domestic industry in this regard are as follows:
i. China is a non-market economy. No country has granted market economy country status to China after following elaborate evaluation parameters.
ii. Normal value in case of China should be determined in accordance with para-7 Annexure-I to the Rules.
iii. India and China are the only producers of the product under consideration in the World. There is no other country to constitute a representative third country for consideration of price from a third country to India. Thus, due to unavailability of information, India can be considered an appropriate surrogate country for Chinese producers.
Examination of the Authority
Determination of Normal Value for producers and exporters in China PR
24. The Authority notes that in the past three years China PR has been treated as non-market economy country in the anti-dumping investigations by other WTO Members. Therefore, in terms of Para 8 (2) of the annexure 1 of AD rules, China PR has been treated as a non-market economy country subject to rebuttal of the above presumption by the exporting country or individual Producers/Exporters in terms of the above Rules.
25. As per Paragraph 8 of Annexure I of the Anti-dumping Rules, the presumption of a non-market economy can be rebutted, if the exporter(s) from China PR provide information and sufficient evidence on the basis of the criteria specified in sub paragraph (3) of Paragraph 8 and establish the facts to the contrary. The cooperating exporters/producers of the subject goods from People’s Republic of China are required to furnish necessary information/sufficient evidence as mentioned in sub-paragraph (3) of paragraph 8 in response to the Market Economy Treatment questionnaire to enable the Authority to consider the following criteria as to whether:
a. the decisions of concerned firms in China PR regarding prices, costs and inputs, including raw materials, cost of technology and labour, output, sales and investment are made in response to market signals reflecting supply and demand and without significant State interference in this regard, and whether costs of major inputs substantially reflect market values;
b. the production costs and financial situation of such firms are subject to significant distortions carried over from the former non-market economy system, in particular in relation to depreciation of assets, other write-offs, barter trade and payment via compensation of debts;
c. such firms are subject to bankruptcy and property laws which guarantee legal certainty and stability for the operation of the firms and
d. the exchange rate conversions are carried out at the market rate.
26. Paragraph-7 of the Annexure-1 to the Anti-dumping Rules provides as follows:
“In case of imports from non-market economy countries, normal value shall be determined on the basis of the price or constructed value in the market economy third country, or the price from such a third country to other countries, including India or where it is not possible, or on any other reasonable basis, including the price actually paid or payable in India for the like product, duly adjusted if necessary, to include a reasonable profit margin. An appropriate market economy third country shall be selected by the designated Authority in a reasonable manner, keeping in view the level of development of the country concerned and the product in question, and due account shall be taken of any reliable information made available at the time of selection. Accounts shall be taken within time limits, where appropriate, of the investigation made in any similar matter in respect of any other market economy third country. The parties to the investigation shall be informed without any unreasonable delay the aforesaid selection of the market economy third country and shall be given a reasonable period of time to offer their comments”
27. According to these Rules, the normal value in China can be determined on any of the following basis:
a) On the basis of the price in a market economy third country, or
b) The constructed value in a market economy third country, or
c) The price from such a third country to other countries, including India.
d) If the normal value cannot be determined on the basis of the alternatives mentioned above, the Designated Authority may determine the normal value on any other reasonable basis including the price actually paid or payable in India for the like product duly adjusted to include reasonable profit margin.
28. The petitioner has claimed that normal value in China can be determined on the basis of (a) import price from third country into India, (b) selling price in India, and (b) cost of production in India, duly adjusted, including selling, general and administrative expenses and profit. Petitioner has further claimed that since these options for determination of normal value are available, the Designated Authority may not kindly consider "any other basis" as "any other basis" option is required to be applied only when other basis listed under the law cannot be applied. However, in the instant case, information on other basis is available and therefore "any other basis" should not be applied.
29. The Authority notes that consequent upon the initiation notice issued by the Authority, none of the producers or exporters from China PR have filed Exporter’s Questionnaire Response or Market Economy Treatment (MET) Response or filed any submissions. The Authority notes that there is no other known producer in any third country to select an appropriate market economy third country for the purpose of determination of normal value in case of China PR. Moreover no interested party has made any submission in this regard and made available the required information. Under the circumstances, the Authority is not in a position to apply Para 8 of Annexure 1 to the Rules and therefore proceeds to construct the normal value based on any other reasonable basis in terms of Para 7 of Annexure 1 to the Rules.
30. The Authority notes that in the current circumstances, due to unavailability of information, India can be considered as an appropriate surrogate country for Chinese producers which would result in access to accurate and adequate information. India has been considered as an appropriate surrogate by other Investigating Authorities too. Under such circumstances the Authority proceeds to construct the normal value based on any other reasonable basis in terms of Para 7 of Annexure 1 to the Rules.
31. In terms of Para 7 of Annexure 1 to the Rules, the Authority has constructed the Normal value for the Chinese producers on the basis of efficient consumption norms and conversion cost of the domestic industry, after including selling, general & administrative costs and reasonable profit margin. The Authority proposes to determine the normal value accordingly as per the table given below.
G. EXPORT PRICE
32. According to Section 9A(1)(b) of the Customs Tariff Act, 1975, 'export price' in relation to an article means:
“export price”, in relation to an article, means the price of the article exported from the exporting country or territory and in `cases where there is not export price or where the export price is unreliable because of association or a compensatory arrangement between the exporter and the importer or a third party, the export price may be constructed on the basis of the price at which the imported articles are first resold to an independent buyer or if the article is not resold to an independent buyer, or not resold in the condition as imported, on such reasonable basis as may be determined in accordance with the rules made under sub-section (6);
33. The Authority proposes to determine export price by considering WTA data for the POI. Since the export price as per WTA data is FOB price, the Authority has considered the general adjustments for the expenses, which may have been incurred by the exporters for exporting the PUC to India, to arrive at the net export price. The Authority has made appropriate adjustments for commission, bank charges, port expenses, inland freight charges and VAT difference.
H. DUMPING MARGIN
34. Considering the proposed normal value and export price as determined above, the proposed dumping margin determined by the Authority for the POI is as below:
37. The Authority notes that the likely dumping margin during the post POI is not only positive but also substantial.
38. The Authority also examined the impact of Chinese exports to the third countries during the POI from the World Trade Atlas data and determined the likely dumping margin from the angle of third country data as below:
39. The Authority notes that the likely dumping margin determined on the basis of third country data is also substantial From the World Trade Atlas data, the Authority notes that the average net export price of Chinese exports of product under consideration to the world over is US$ ***/Kg. Considering the proposed CNV determined for China during the POI as US$***/Kg, the dumping is not only positive but also substantial. This implies that in the event of revocation of the anti-dumping duty, if China exports the product under consideration to India at the same average price at which China is exporting to the rest of the world market, the same is likely to result in intensified and significant dumping. The likelihood of dumping in the event of revocation of the anti-dumping duty becomes more imminent considering the fact that the domestic industry in the present investigation is the sole producer of product under consideration in the country and China enjoys literal monopoly in the world market due to its huge production capacity and penchant for exports. It may not be incorrect to say that in the event of revocation of the anti-dumping duty, the sole domestic industry in India may have to close down in the face of recurrence of intense Chinese dumping.
I. METHODOLOGY FOR INJURY DETERMINATION AND EXAMINATION OF INJURY AND CAUSAL LINK
Submissions made by the exporters, importers and other interested parties
40. No submissions have been made by the exporters, importers and other interested parties with regard to methodology for injury determination and examination of injury and causal link. Submissions made by the domestic industry
41. Following are the submissions made by the domestic industry in this regard:
i. Imports from China have continued in spite of anti dumping duty being in force.
ii. Performance of the domestic industry has been stable or improved in respect of various economic parameters. However, the volume of import has remained significant.
iii. Imports would undercut the domestic price in the absence of anti dumping duty.
iv. Cessation of anti dumping duty shall have significant adverse price effect on the prices of the domestic industry in the market as is evident from the fact that excessive exports from China PR have led to the closure of domestic production in EU and USA.
v. Imports made into the domestic market have been made at dumped prices despite imposition of anti-dumping duty. There is huge probability of massive imports of dumped subject goods in the event of cessation of anti dumping duty.
vi. Producers in the subject country have significant capacity which establishes that in the event of cessation of duties, exports to India will intensify.
vii. The exporters from subject country are exporting the product under consideration to third countries at dumped prices.
viii. The dumping margin in the current POI is positive and significant.
ix. The import prices are materially below selling price of the domestic industry and also the benchmark anti dumping duty. The consumers would therefore switch to imported product in the event of cessation of anti-dumping duty which will lead to significant increase in imports of the product.
x. Significant volumes of the dumped imports are at prices below cost of sales of the domestic industry and therefore are likely to lead to price suppression and depression in the market. In case of cessation of antidumping duty, the domestic industry shall have to reduce their selling price further to compete with dumped imports, driving it even below the cost of sales; leading to severe price injury.
xi. In a situation where the import price in different transactions varies so significantly as is the situation in the present case, the domestic industry is required to benchmark itself to the lowest import price. The consumers would not consider the average prices reported in this period. The consumers would consider the lowest prices reported in this period and would require the domestic industry to match those prices. Thus, the fact that significant imports are at higher prices in this period is of advantage to the domestic industry. What is relevant to the domestic industry is the price up to which the Chinese producers can reduce the prices and sell the product.
Examination by Authority
42. Rule 11 of Antidumping Rules read with Annexure–II provides that an injury determination shall involve examination of factors that may indicate injury to the domestic industry, “…. taking into account all relevant facts, including the volume of dumped imports, their effect on prices in the domestic market for like articles and the consequent effect of such imports on domestic producers of such articles….” In considering the effect of the dumped imports on prices, it is considered necessary to examine whether there has been a significant price undercutting by the dumped imports as compared with the price of the like article in India, or whether the effect of such imports is otherwise to depress prices to a significant degree or prevent price increases, which otherwise would have occurred, to a significant degree.
43. For the examination of the impact of the dumped imports on the domestic industry in India, indices having a bearing on the state of the industry such as production, capacity utilization, sales volume, stock, profitability, net sales realization, the magnitude and margin of dumping, etc. have been considered in accordance with Annexure II of the rules supra.
44. The present investigation is a sunset review of anti-dumping duties in force. Rule 23 provides that provisions of Rule 11 shall apply, mutatis mutandis in case of a review as well. The Authority has, therefore, determined injury to the domestic industry considering, mutatis mutandis, the provisions of Rule 11 read with Annexure II. Further, since anti-dumping duties are in force on imports of the product under consideration, the Authority considers whether the existing anti-dumping duties on the imports of subject goods from the subject countries are required to be considered while examining injury to the domestic industry. The Authority has examined whether the existing anti-dumping measure is sufficient or not to counteract the dumping which is causing injury.
45. According to Section 9(A)(5) of the Customs Tariff Act, anti-dumping duty imposed shall, unless revoked earlier, cease to have effect on the expiry of five years from the date of such imposition, provided that if the Central Government, in a review, is of the opinion that the cessation of such duty is likely to lead to continuation or recurrence of dumping and injury, it may, from time to time, extend the period of such imposition for a further period of five years and such further period shall commence from the date of order of such extension.
46. For the purpose of current injury analysis, the Authority has examined the volume and price effects of dumped imports of the subject goods on the domestic industry and its effect on the prices and profitability to examine the existence of injury and causal links between the dumping and injury, if any. The Authority has examined injury to the domestic industry by considering information relating to M/s Atlas Fine Chemicals Pvt. Ltd. (presently known as Aims Impex Pvt. Ltd.), constituting domestic industry under the Rules. Accordingly, the volume and price effect of dumped imports have been examined as follows:- Volume Effect Demand and Market Share
47. Demand or apparent consumption of the product in India, as given in table below, is the sum of domestic sales and imports from all sources.
48. The Authority notes that the demand for the subject goods has increased consistently throughout the injury period. Similarly, the sales and market share of the domestic industry have increased.
Import Volume and share of Subject country
49. With regard to volume of the dumped imports, the Authority is required to consider whether there has been a significant increase in dumped imports either in absolute terms or relative to production or consumption in India. Information in the table below shows that imports from China have substantially declined over the injury period, but still continues to at dumped prices and showing upward trend during post POI.
Price Effect
50. With regard to the effect of the dumped imports on prices, Annexure II (ii) of the Rules lays down as follows:
"With regard to the effect of the dumped imports on prices as referred to in sub-rule (2) of rule 18 the Designated Authority shall consider whether there has been a significant price under cutting by the dumped imports as compared with the price of like product in India, or whether the effect of such imports is otherwise to depress prices to a significant degree or prevent price increase which otherwise would have occurred to a significant degree."
Price Undercutting and Underselling
51. With regard to the effect of dumped imports on prices, the Authority considered whether there has been a significant price undercutting by the dumped imports when compared with the price of like article/product in India, or whether the effect of such imports is otherwise to depress prices to a significant degree or prevent price increases, which otherwise would have occurred, to a significant degree. The Authority also assessed the underselling effect of the import prices on the domestic industry as below:
The Authority notes that the price undercutting is negative during POI but positive during post POI. But, underselling is negative both during POI and post POI.
Price Suppression / Depression
52. The Authority notes that a comparison has been made between the cost of production and net selling price of the domestic industry and landed value of imports. Imports are not causing price suppression or depression effect either in POI or post POI.
56. The Authority notes that Production, sales and capacity utilization have shown improvement over the injury period. The domestic industry has increased their capacity as well during POI. Market Share
57. The Authority notes that the market share of the domestic industry has increased over the injury period and the market share of the subject country has declined. However, the market share of subject country is showing upward trend during the post POI.
Profit/Loss, Cash Flow, Return on Capital Employed
58. Information relating to profits, return on investment and cash flow is given in the table below:
59. The Authority notes from the table above that the selling price of the domestic industry increased over the injury period. Resultantly, profits, cash profits and return on investment have shown improvement over the injury period. The Authority notes that the domestic industry could increase its selling price and earn profits as a result of imposition of anti dumping duty. Inventories
60. The Authority notes that the average inventory level of the domestic industry has declined in the POI as a result of increase in the sales volume.
Employment, wages and productivity
61. The Authority notes that the employment has declined, but wages have gone up. Productivity of the domestic industry has also shown improvement.
Factors affecting domestic prices
62. The Authority notes that during POI, the landed value of imports is marginally higher than the domestic industry’s selling price, thereby resulting in negative price undercutting. However, during post POI, the price undercutting has become positive and substantial. China being sole source of imports and the product under consideration having no substitute, in the event of revocation of the duty, the domestic industry’s prices will be severely undercut by the Chinese dumped prices.
Magnitude of dumping
63. The dumping margin is positive during POI, thereby implying that it is a case of continued dumping despite the imposition of anti-dumping duty.
Growth
64. The Authority notes that during POI the performance of the domestic industry in terms of both volume and price parameters shows an improvement as a result of imposition of anti dumping duty on dumped imports. However, during post POI, the overall performance of the domestic industry has declined thereby meaning that in the event of revocation of the anti-dumping duty, the growth of the domestic industry will deteriorate.
The Authority notes that 95% of Chinese exports to the world market is at dumped prices, with 92% exports having injurious effect. Therefore, in the event of revocation of the duty by India, the Chinese exports may throw the sole domestic industry out of market.
M. Magnitude of Injury and Injury Margin
71. The non-injurious price of the subject goods produced by the domestic industry as determined by the Authority has been compared with the landed value of the exports from the subject country for determination of injury margin during POI. The injury margin proposed to be determined for the subject country, during POI, is as follows:
Injury margin – POI
72. The Authority notes that the injury margin during the POI is negative; thereby implying that during the POI the price at which the imports have come from China has no injurious effect on the domestic industry.
73. The Authority further examined the injurious effect of the Chinese imports during the post POI period and determined the likely injury margin as below:
Injury margin – post POI
The Authority notes that the likely injury margin during the post POI is also negative.
74. Since the injury margin during POI as well as post POI has been negative, the Authority assessed the likely injury margin on the basis of the average Chinese export price to the third countries based on the World Trade Atlas Data as below:
Injury margin – Third Country Price during POI
75. From the aforesaid information, the Authority notes that in the event of revocation of the anti-dumping duty, the domestic industry is likely to get injured if the subject country exports the subject goods at the same average price at which they are exporting to the third countries.
F. Post Disclosure Comments
76. Post disclosure, the following comments have been made by the domestic industry:
i. Dumping from China has continued despite anti dumping duty being in force.
ii. 95% of Chinese exports to the world market are at dumped prices, with 92% exports having injurious effect as is evident from the data showing exports from China to world market.
iii. Cessation of anti dumping duty would lead to intensified dumping resulting in injury to the domestic industry.
iv. Dumping of the product under consideration from the subject country has lead to closure of the domestic production in the European Union and the United States of America.
v. The survival of the sole Indian producer would be put at stake in such a global scenario.
vi. Import prices reported in Indian customs data is the price realigned with the benchmark anti dumping duty and is not reflective of the actual price of imports.
vii. In view of continued dumped imports causing likelihood of intensified dumping and subsequent injury to the domestic industry, anti dumping duty is required to be extended further for a period of five years in the existing quantum and form expressed in US$ terms.
77. Post disclosure, Fragrances and Flavours Association of India stated that they could not attend the oral hearing held by the Authority on 6th November, 2016 due to postponement of the hearing. However, the Authority notes that vide letter dated 21st October, 2015, the interested parties including Fragrances and Flavours Association of India were informed that the oral hearing has been scheduled on 6th November, 2015 at 3.00 PM in the DGAD Conference Room, Jeeavan Tara Building, 4th Floor, 5, Parliament Street, New Delhi – 110001. The interested parties were requested to intimate their interest in the hearing and name and address of the persons who are likely to attend the hearing. The oral hearing was held by the Authority as per the scheduled date, time and venue. While the representatives of domestic industry attended the oral hearing and made submissions, the representative of Fragrances and Flavours Association of India did not attend the oral hearing. Therefore, the Contention that they could not attend the oral hearing due to postponement is baseless.
N. Conclusions:
78. After examining the submissions made by the interested parties including the post disclosure comments and facts available on record, the Authority concludes as below:
i. The product under consideration has been exported to India from the subject country below normal value during the POI despite the anti-dumping duty in force.
ii. During the POI and post POI, although dumping has continued and dumping margin determined by the Authority is positive, it has not caused injury to the domestic industry.
iii. Chinese prices to third countries are dumped prices and if the product under consideration is imported in to India at the said prices, in the event of revocation of the anti-dumping duty, such imports are likely to cause injury to the domestic industry.
O. Indian industry’s interest & other issues
79. The Authority notes that the purpose of anti-dumping duties, in general, is to eliminate injury caused to the Domestic Industry by the unfair trade practices of dumping so as to re-establish a situation of open and fair competition in the Indian market, which is in the general interest of the Country. Imposition of anti-dumping measures would not restrict imports from the subject country in any way; and therefore, would not affect the availability of the product to the consumers.
80. It is recognized that the imposition of anti-dumping duties might affect the price levels of the product manufactured using the subject goods and consequently might have some influence on relative competitiveness of these products. However, fair competition in the Indian market will not be reduced by the anti-dumping measures, particularly if the levy of the antidumping duty is restricted to an amount necessary to redress the injury to the domestic industry. On the contrary, imposition of anti-dumping measures would remove the unfair advantages gained by dumping practices, would prevent the decline of the domestic industry and help maintain availability of wider choice to the consumers of the subject goods.
P. Recommendations
81. The Authority notes that the investigation was initiated and notified to all interested parties and adequate opportunity was given to the exporters, importers and other interested parties to provide positive information on the aspects of dumping, injury and causal link. Having initiated and conducted the investigation into dumping, injury and the causal link thereof in terms of the Act and the Rules and having established positive dumping during POI and post POI and likelihood of injury when compared to the prices of Chinese exports to third countries in the event of revocation of the antidumping duty, the Authority is of the view that continued imposition of the anti-dumping duty is required to offset the likelihood of dumping and ‘injury’ in the instant matter. In view of the finding that the expiry of the antidumping duty is likely to lead to continuation or recurrence of dumping and injury to the domestic industry, the Authority considers it necessary to recommend continued imposition of definitive anti-dumping duties.
82. Having regard to the lesser duty rule followed by the Authority, the Authority recommends continued imposition of definitive anti-dumping duty equal to the lesser of margin of dumping and margin of injury, so as to remove the injury to the domestic industry. Considering that the antidumping duty in the original investigation was imposed on reference price basis, the Authority recommends continuation of definitive anti-dumping duty, on all imports of subject goods, originating in or exported from the subject country, as the difference between the landed value of imports and the reference price, in the same form and manner as imposed earlier vide Notification No. 12/2012-Customs (ADD) dated 8th February, 2012 and Notification No. 8/2015-Customs (ADD) dated 7th April, 2015. Accordingly, the anti-dumping duty equal to the difference between the amount indicated in Col 8 of the table below and the landed value is recommended to be imposed on all imports of subject goods, originating in or exported from China PR.
Duty Table
83. Landed value of imports for the purpose shall be the assessable value as determined by the Customs under the Customs Act, 1962 and all duties of customs except duties under sections 3, 3A, 8B, 9 and 9A of the Customs Tariff Act, 1975.
Q. Further Procedures
84. An appeal against this order, after its acceptance by the Central Government, shall lie before the Customs, Excise and Service Tax Appellate Tribunal in accordance with the Customs Tariff Act, 1975.
A. K. Bhalla Designated Authority
to success.