Deepak Nitrite Files for Safeguard Duty on Sodium Nitrite

[Safeguards Initiation F.No. D-22011/03/2013 dated 17th April 2013]

Sub: Initiation of safeguard investigation concerning imports of Sodium Nitrite into India.

An application has been filed before me under Rule 5 of the Customs Tariff (Identification and Assessment of Safeguard Duty) Rules, 1997 by M/s. Deepak Nitrite Limited through his consultant M/S TPM solicitors & consultants for imposition of Safeguard Duty on imports of Sodium Nitrite into India to protect the domestic producers of Sodium Nitrite against serious injury/threat of serious injury caused by the increased imports of Sodium Nitrite into India.

2. Domestic Industry: M/S Deepak Nitrite Limited, claimed that his production account for more than 86% of the total production of Sodium Nitrite in the country & represent a major proportion of the Indian production of Sodium Nitrite in the country and thus have the standing to file the present petition. Apart from the applicant, the subject goods are being produced by the following:-

a. Punjab Chemicals & Pharmaceuticals Ltd.

b. National Fertilizers Limited,

c. Rashtriya Chemicals and Fertilizers Limited,

3. Product Involved: The product under consideration in the present case is Sodium Nitrite (NaNO2). Sodium Nitrite is an oxidizing and reducing agent. It is a white crystalline powder mostly used in Pharmaceutical industries, Dye industries, Lubricants, Construction chemicals, Rubber blowing agent, Heat transfer salts, and in meat processing, Textiles, etc. Major raw material for production of Sodium Nitrite is Ammonia, which is converted into Nitrous Oxide at high temperature in presence of catalyst.

Sodium Nitrite is classified under Customs sub-heading nos. 28341010 of Chapter 28 of the Customs Tariff Act, 1975. The classification is however indicative only and in no way binding on the scope of the present investigations.

4. Period of Investigation (POI): The applicant for the purpose of the present application has considered the data for four years period. The applicant has submitted all the data from 2009-10 to 2012-13 (upto Dec.2012). The period for investigation selected is 2009-10 to 2012-13 which is long enough in order to take into consideration the market conditions and to ascertain the need of imposition of Safeguard Duty.

5. Source of information: The import data for the product under consideration has been received from DGCIS, Kolkata till December,2012 and same has been taken into consideration for analysis. The domestic data from 2009-10 to 2012-13 (upto Dec.,2012) has been submitted by the domestic industry whereas the domestic data upto February,2013 has been verified by on site visit by the department to the extent deemed necessary and the verified data has been taken into consideration for injury analysis.

6. Increased Imports (Absolute & in relative terms): Sodium Nitrite is imported into India from a number of countries, and primarily from China and Germany. The imports of Sodium Nitrite have shown an increasing trend in absolute terms as well as compared to the total production. The imports and production of Sodium Nitrite during financial year 2009-10 to 2012-13(Annualised) remained as under:

Financial Year

Total Imports (MT)

All India Production (MT)

Total Demand(MT)

% of Increase in import with respect to production

2009-10

14290

33191

39771

43

2010-11

12915

34600

39715

37

2011-12

14909

34605

40777

43

2012-13 (Annualised)

20397

33783

44850

60

The Imports have increased from 14290MT in 2009-10 to 20397MT in 2012-13(Annualised) which shows an increase of 43%. Further the import with respect to total production increased from 43% in 2009-10 to 60% in 2012-13(Annualised).

7. Injury: The applicant have claimed that the increased imports of Sodium Nitrite have caused and are threatening to cause serious injury to the domestic producers of Sodium Nitrite as indicated by the following factors:

a) Production: Though the production of the domestic industry increased in 2010-11 as compared to the year 2009-10, it declined from 30473 MT in 2010-11 to 29283 MT in 2012-13 (Annualised) .

Year

Qty(MT)

2009-10

29236

2010-11

30473

2011-12

30105

2012-13 (Annualised)

29283

b) Capacity Utilization: Capacity utilization of the domestic industry has declined significantly in the most recent period, from 98% in 2010-11 to 71% in 2012-13.

Year

Installed Capacity (MT)

Capacity utilized(%)

2009-10

31000

94

2010-11

31000

98

2011-12

31000

97

2012-13(Annualised)

41124

71

c) Share of domestic producers in domestic demand: Market share of domestic producers has fallen significantly. Applicants had a market share of 57% in 2010-11 which fell to 52% during 2011-12. The market share of the applicants further declined to 44% in 2012-13. The market share of import increases from 33% in 2010-11 to 45% in 2012-13

Financial Year

Total Import (MT)

Sales of DI (MT)

Sales of other Indian Producers (MT)

Total Demand (MT)

Market Share(%)

Inventories (MT)

 

 

 

 

 

DI

Import

 

2009-10

14290

21526

3955

39771

54

36

170

2010-11

12915

22673

4127

39715

57

33

186

2011-12

14909

21368

4500

40777

52

37

200

2012- 13 (Annualised)

20397

19953

4500

44850

44

45

838

d) Changes in the level of Sales :- Though the sales of the domestic industry increased in 2010-11 as compared to the year 2009-10, it declined from 22673 MT in 2010-11 to 19953 MT in 2012-13(Annualised). This decline in sales is despite the fact that the demand increased from 39715 MT in 2010-11 to 44850 MT in 2012-13. This clearly shows that the domestic industry suffered loss in sales, market share and steep rise in inventory caused by increased imports.

e) Profit/loss the profitability of the domestic industry has steeply deteriorated to such a situation that the domestic industry is now suffering financial losses. This is evident from the table below:-

Financial Year

Profitability (Rs./MT) (Indexed)

2009-10

100

2010-11

131

2011-12

-2

2012-13

-163

8. The domestic industry has requested for immediate imposition of safeguard measures for a period of two year in their application. The domestic industry has also requested for imposition of provisional safeguard duty in view of steep deterioration in performance of the domestic industry as a result of increased imports of product under consideration.

9. The application has been examined and it has been found that prima facie increased imports of Sodium Nitrite have caused and are threatening to cause serious injury to the domestic producers of Sodium Nitrite and such increase in imports has caused irreparable damage to the domestic industry and accordingly, it has been decided to initiate an investigation through this notice.

10. All interested parties may make their views known within a period of 30 days from the date of this notice to:

The Director General (Safeguards)

Bhai Vir Singh Sahitya Sadan: 2nd Floor,

Bhai Vir Singh Marg,

Gole Market, New Delhi-110 001, INDIA.

Telefax: 011-23741542/ 23741537

E-mail: dgsafeguards@nic.in

11. All known interested parties are also being addressed separately.

12. Any other party to the investigation who wishes to be considered as an interested party may submit its request so as to reach the Director General (Safeguards) on the aforementioned address within 21 days from the date of this notice.

13. In terms of Rule 6(7) of Customs Tariff (Identification and Assessment of Safeguard Duty) Rules, 1997, any interested party may inspect the public file containing non-confidential versions of the evidence submitted by the other interested parties after the expiry of 30 days from the date of this notice.