DG Safeguard Drops Safeguard Duty on Polyol FSP in Final Finding

No Significant Injury to Manali Petrochem, Single Producer Noticed

Subject: Safeguard investigation concerning imports of Flexible Slabstock Polyol (FSP) –Final findings under Rule 11 of Customs Tariff (Identification and Assessment of Safeguard Duty) Rules, 1997

[Ref: G S R D-22011/4/2014/ dated 13.01.2015]

Conclusion of Investigation (Excerpt from Final Order)

“On examination of forgoing relevant factors I find that:

75. There has been a significant increase in imports in absolute terms as well as in relation to production in

relation to the base year.

76. The Market share of the DI has decreased from 34% in 2010-11 to 21 % in 2013-14. However, the total demand increased by 32% in the year 2013-14 in relation to 2010-11. The share of domestic industry is showing an increasing trend and the imports are also showing a decreasing trend in post POI.

77. The production and sales of DI have stabilized during 2012-13 and 2013-14 and are showing increasing trend in post POI period.

78. Increase in imports have resulted in decline in market share of the domestic industry but there is no evidence to suggest overall impairment of the domestic industry as the domestic industry is in overall profit during the period of investigation and loss, if any, is due to other factors. In fact for the year ending March 2014, the domestic industry has announced 10% dividend which also shows that overall position of the domestic industry is good. The imports are showing a decreasing trend post POI, the production and clearance are also showing similar trend and are showing increasing trend in post POI period. It appears that there is no serious injury caused by increased imports.

79. The DI has shown loss in respect of the PUC. However, it is seen that the domestic industry has not taken the cost of PUC on proportionate basis as per the cost audit report of polyols provided by the DI vide letter dated 26.9.2014. Had the cost charges for manufacture of PUC been taken on the proportionate basis in terms of cost audit report the domestic industry might have registered profit in the PUC also. The DI was requested to provide cost data of all the products manufactured by DI. However, the DI provided only the cost audit data of Polyols and not of individual products. Further, since the DI is in overall profits, they apparently seem to have capability to fight the challenge posed by cheaper imports of PUC.

80. The domestic industry is not able to demonstrate that increase in imports is due to existence of unforeseen circumstances.

81. Adjustment plan submitted by the domestic industry has no specified time frame. The Di has submitted a letter of intent to increase the production capacity. However, the letter of intent for expansion is in respect of the polyol plant and no reference to PUC has been made. DI has not produced a viable adjustment plan to become competitive to meet the challenge of imported PUC.

82. There is a huge demand supply gap in the domestic market. Inspite of the increased imports the DI has shown increase in profits in the POI. The increase in profits (annualized) in post POI period is almost double to the base year (2010-11). The share of the domestic industry is showing an increasing trend and the share of imports is showing a decreasing trend relative to the domestic demand.

83. Thus, the existence of alleged serious injury or threat of serious injury to domestic industry during the period of investigation does not stand vindicated and therefore, in my view, no protection as prayed for is warranted.


84. In view of the discussions detailed above and the conclusions reached, safeguard duty on the imports of the “Flexible Slabstock Polyol of MW 3000 to 4000” is not recommended and the investigation in this case is terminated.