O-Acid from China under Anti-dumping Investigation on Aarti Drugs Ltd Mumbai Complaint

[Anti-dumping Initiation Notification No. 14/31/2016-DGAD dated 21^st September 2016]

Subject: Anti Dumping investigation concerning imports of O-Acid originating in or exported from China PR.

M/s Aarti Drugs Ltd. (hereinafter referred to as the applicant) has filed an application before the Designated Authority (hereinafter also referred to as the Authority) in accordance with the Customs Tariff Act, 1975 as amended from time to time (hereinafter also referred to as the Act) and 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) for initiation of anti-dumping investigation and imposition of anti dumping duty concerning imports of O- Acid (hereinafter also referred to as the subject goods), originating in or exported from China (hereinafter also referred to as the subject country).

2. And whereas, the Authority prima facie finds that sufficient evidence of dumping of the subject goods, originating in or exported from the subject country, ‘injury’ to the domestic industry and causal link between the alleged dumping and ‘injury’ exist to justify initiation of an anti-dumping investigation; the Authority hereby initiates an investigation into the alleged dumping, and consequent injury to the domestic industry in terms of Rule 5 of the Rules, to determine the existence, degree and effect of alleged dumping and to recommend the amount of anti dumping duty, which if levied, would be adequate to remove the ‘injury’ to the domestic industry.

Domestic Industry & Standing

3. The petition has been filed by M/s. Aarti Drugs Ltd., Mumbai as a domestic producer of the product under consideration. There is no other known producer of product under consideration in India. Petitioner is the new producer of the product under consideration in India with no past history of production in India.

4. The petitioner has stated that they were importing O-Acid before they commenced production of O-Acid for consumption in production of the final product namely ofloxacin. After commencement of their own production of O-Acid, petitioner had stopped importing O-Acid completely. However, the exporters from China reduced the prices very significantly. The decline in the prices by the Chinese producers was so significant that the landed prices of the imported O-Acid was below normatted cost of production of the petitioner and hence domestic industry was forced to import O-Acid from China to continue the production of the final product Ofloxacin.

5. As per the evidence available on record, the production of the applicant accounts for a major proportion in the gross domestic production of the like article. The Authority, therefore, determines that the applicant constitutes eligible domestic industry within the meaning of Rule 2 (b) of the Anti Dumping Rules and the application satisfies the criteria of standing in terms of Rule 5 (3) of the Rules supra.

Product under consideration

6. The product under consideration in the present petition is Ofloxacin acid or Oacid. It is an off-white to white crystalline powder and is used as an intermediate for the manufacture of Ofloxacin, which is a synthetic chemotherapeutic antibiotic of the fluoroquinolone drug class considered to be a second-generation fluoroquinolone. Ofloxacin is a racemic mixture, which consists of 50% levofloxacin (the biologically active component) and 50% of its “mirror image” or enantiomer dextrofloxacin.

7. Ofloxacin Acid is used in production of Ofloxacin, which is used to treat certain infections including bronchitis, pneumonia, and infections of the skin, bladder, urinary tract, reproductive organs, and prostate. Ofloxacin is sold under a wide variety of brand names as well as generic drug equivalents, for oral and intravenous administration. Ofloxacin is also available for topical use, as eye drops and ear drops. It is on the WHO Model List of Essential Medicines, the most important medications needed in a basic health system. The PUC can be manufactured as per IP/BP/EP/USP pharmacopeia standards.

8. Product under consideration is classified under Chapter 29 of the Customs Tariff Act. The PUC has a specific HS code 2941 9030, however, the imports also take place under various other HS codes namely 2915 2990, 2916 3990, 2918 3090, 2918 9900, 2934 9900, 2941 1090, 2941 9090, 2942 0090. Customs classification in any case is indicative and not binding on the scope of the product under consideration in the present investigation.

Like Article

9. The applicant has claimed that there is no known difference between the subject goods exported from subject country and that produced by the applicant. As submitted by the applicant, O-Acid produced by the domestic industry and imported from subject country are comparable in terms of essential product characteristics such as physical & chemical characteristics, manufacturing process & technology, functions & uses, product specifications, pricing, distribution & marketing and tariff classification of the goods. Consumers can use and are using the two interchangeably. The applicant has further claimed that two are technically and commercially substitutable and, hence, should be treated as ‘like article’ under the Rules. Therefore, for the purpose of the present investigation, the Authority treats the subject goods produced by the applicant in India as ‘Like Article’ to the subject goods being imported from the subject country.

Country/(ies) involved

10. The present investigation is in respect of alleged dumping of the product under consideration from China (referred to as the subject country).

Normal Value

11. Applicant has claimed that China should be treated as a non-market economy and normal value in case of China should be determined in accordance with para-7 and 8 of Annexure I of the Rules. The applicant has claimed normal value for China PR on the basis of cost of production in India, duly adjusted. In terms of Para 8 in Annexure 1 to the Rules it is presumed that the producers of the subject goods in China PR are operating under non market economy conditions.

12. In view of the above non-market economy presumption and subject to rebuttal of the same by the responding exporters from China PR, normal value of the subject goods in China PR has been estimated in terms of Para 7 of Annexure 1 to the Rules.

Export Price

13. The applicant has determined export price on the basis of data procured from transaction wise IBIS import data. Price adjustments have been claimed on account of ocean freight, marine insurance, commission, port expenses, inland freight, bank charges, and adjustment for VAT to arrive at the net export price.

Dumping Margin

14. The normal value has been compared with the export price at ex-factory level. There is sufficient prima facie evidence that the normal value of the subject goods in the subject country are higher than the ex-factory export price, indicating, that the subject goods are being dumped into the Indian market by the exporters from the subject country. The dumping margin is estimated to be above de minimis.

Injury and Causal Link

15. The applicant has set up a new facility for production of the product under consideration and commenced commercial production within the investigation period. The applicant has claimed that dumping of the product under consideration in India is materially retarding the establishment of the domestic industry. The applicant has furnished information on various parameters relating to injury for the period for which it has commercial production. The domestic industry is forced to sell the product at prices materially below the fair prices envisaged by the domestic industry before commencement of production. The applicant has thus claimed that even when its commercial production has begun, the domestic industry is yet to find its place in the market.

16. The applicant has claimed that domestic industry has suffered material injury from dumped imports exemplified by various parameters such as significant increase in imports in absolute terms as also relative to the production and consumption in India, significant price undercutting, capacity utilization market share, continued financial losses, return on investments, cash flow, inventories, etc. The demand for the product under consideration has increased over the injury period and subject imports have increased in absolute terms. The imports are undercutting the domestic prices. The imports have suppressed/depressed the domestic prices over the injury period. With regard to consequent impact of the imports on the domestic industry, it is noted that performance of the domestic industry has deteriorated in respect of parameters such as profits; return on capital employed and cash profits. The domestic industry is suffering significant financial losses, cash losses and negative return on investments.

17. And whereas, the Authority prima facie finds that sufficient evidence of dumping of the subject goods, originating in or exported from the subject countries; injury to the domestic industry and causal link between the alleged dumping and injury exist to justify initiation of an anti-dumping investigation, the Authority hereby initiates an investigation into the alleged dumping, and consequent injury to the domestic industry in terms of Para 5 of the Rules, to determine the existence, degree and effect of alleged dumping and to recommend the amount of antidumping duty, which if levied, would be adequate to remove the ‘injury’ to the domestic industry.

Initiation of anti-dumping investigations

18. The Designated Authority, in view of the foregoing paragraphs, initiates antidumping investigations into the existence, degree and effect of alleged dumping of the subject goods originating in or exported from the subject country.

Period of Investigation (POI)

19. Petitioner has submitted that they started their trial production in June 2015 and full scale production from October 2015. The Petitioner has submitted petition with analysis of the data for the period July 2015 to June 2016. The Authority considers it appropriate to determine July 2015 - June 2016 (12 months) as the proposed POI. In any case, as far as injury analysis is concerned the same is proposed to be carried out on month to month basis.

Submission of information

20. The known exporters in the subject country, the Government of the subject country through their embassy in India, the importers and users in India known to be concerned with the product are being addressed separately to submit relevant information in the form and manner prescribed and to make their views known to the Authority at the following address:

The Designated Authority,

Directorate General of Anti-Dumping & Allied Duties,

Ministry of Commerce & Industry, Department of Commerce

4th Floor, Jeevan Tara Building, 5 Parliament Street,

New Delhi -110001.

21. Any other interested party may also make its submissions relevant to the investigation in the prescribed form and manner within the time limit set out below.

Time limit

22. Any information relating to the present investigation and any request for hearing should be sent in writing so as to reach the Authority at the address mentioned above not later than forty days (40 Days) from the date of publication of this Notification. If no information is received within the prescribed time limit or the information received is incomplete, the Authority may record its findings on the basis of the facts available on record in accordance with the Anti-dumping Rules.

23. All the interested parties are hereby advised to intimate their interest (including the nature of interest) in the instant matter and file their questionnaire responses and offer their comments to the domestic industry’s application regarding the need to continue or otherwise the Antidumping measures within 40 days from the date of initiation of this investigation.

Submission of Information on Non-Confidential basis

24. In case confidentiality is claimed on any part of the questionnaire’s response/submissions, the same must be submitted in two separate sets (a) marked as Confidential (with title, index, number of pages, etc.) and (b) other set marked as Non Confidential (with title, index, number of pages, etc.). All the information supplied must be clearly marked as either “confidential” or “non-confidential” at the top of each page.

25. Information supplied without any confidential marking shall be treated as nonconfidential and the Authority shall be at liberty to allow the other interested parties to inspect any such non-confidential information. Two (2) copies of the confidential version and five (05) copies of the non confidential version must be submitted by all the interested parties.

26. For information claimed as confidential; the supplier of the information is required to provide a good cause statement along with the supplied information as to why such information cannot be disclosed and/or why summarization of such information is not possible.

27. The non-confidential version is required to be a replica of the confidential version with the confidential information preferably indexed or blanked out/ summarized depending upon the information on which confidentiality is claimed. The nonconfidential summary must be in sufficient detail to permit a reasonable understanding of the substance of the information furnished on confidential basis. However, in exceptional circumstances, parties submitting the confidential information may indicate that such information is not susceptible to summarization; a statement of reasons why summarization is not possible must be provided to the satisfaction of the Authority.

28. The Authority may accept or reject the request for confidentiality on examination of the nature of the information submitted. If the Authority is satisfied that the request for confidentiality is not warranted or the supplier of the information is either unwilling to make the information public or to authorize its disclosure in generalized or summary form, it may disregard such information.

29. Any submission made without a meaningful non-confidential version thereof or without a good cause statement on the confidentiality claim may not be taken on record by the Authority. The Authority on being satisfied and accepting the need for confidentiality of the information provided; shall not disclose it to any party without specific authorization of the party providing such information.

Inspection of Public File

30. In terms of rule 6(7) any interested party may inspect the public file containing non-confidential versions of the evidence submitted by other interested parties.

Non-cooperation

31. In case any interested party refuses access to and otherwise does not provide necessary information within a reasonable period, or significantly impedes the investigation, the Authority may declare such interested party as non-cooperative and record its findings on the basis of the facts available to it and make such recommendations to the Central Government as deemed fit.