India Slaps First Anti-Subsidy Duty of 13.44% on Castings for Wind Electricity Generators from China

[Click here for Final Findings]

The highlights of the case

•    The Designated Authority for Anti-Subsidy slapped a stiff 13.4% anti subsidy duty, known as CVD in international parlance, on castings from China. A notification of this affect was released on 19.01.2016. Only Zhejiang Jiali Co. operated so it was subjected to 8.78% duty. The CVD will apply on landed value, that is, value of goods plus basic duty. The duty is vated for five years.

•    On the spot verification of the information/data/evidences furnished and claims made by the Govt of China as well as Zhejiang Jiali Chinese producer/exporter could not be carried out.

•    The petition was filed by Larsen & Toubro Limited whose production constitutes more than 50% of Indian production. M/s Patel Alloys Steels Pvt. Limited has supported the petition. Data showed the companies were losing capacity utilization due to competition and also falling demand.

•    Govt of China says petition is only copy/paste from WTO case. No specific data generated

•    Almost 50 exporters of product concerned in China but only one came forward.

•    7 major categories of subsidies containing in total 44 subsidy programmes. But, petitioner could not identify which specific subsidy programs is related to the product under investigation and whether these programs existed and financial benefit conferred in the sector within which the exporting producers fall.

•    MNRE estimates total demand of casting components of WOEG will be 7,00,000 MT by 2022 as against the local manufacturing capacity of 90,000 tonne/annum from L&T and Patel Aloys only.

•    MNRE has set an ambitious target of 60 GW capacity installation by 2022. Accordingly, the demand for the casting components would increase manifold.

•    Domestic manufacturing companies may have the capacity to meet the required demand, but quality of the products needs to be ensured.

Major Subsidies Alleged

A. Grants

B. Equity Programs

C. Preferential Loans

D. Preferential Income Tax Programs

E. Relief from Duties and Taxes on Materials and Machinery

F. Goods/Services Provided by Government at Less than Fair Market Value

Export Subsidies included in Finding

Provision of input materials and utilities for less than adequate remuneration

Program No. 43

Provision of various goods for less than adequate remuneration

8.12

8.12

Preferential Income Tax Programs & Tax Incentives

Program No. 25

Preferential Tax Policies for FIEs and Foreign Enterprises

-

2.13

Grants

Program No. 8

The State Key Technology Renovation Projects Fund

1.99

1.99

Total Subsidy Margin as a % of landed value

11.18

13.44

Key Data

Demand

Unit

2010-11

2011-12

2012-13

POI*

Sales of Domestic Industry (CMU & KBL of L&T)

MT

14,122

8,079

5,133

6,888

Sales of Other Indian Producers

MT

7,310

7,368

3,076

3,364

Subject country- Imports

MT

4,486

15,117

10,430

14,245

Other Countries- Imports

MT

591

1661

502

214

Total demand/ consumption

MT

26,509

32,225

19,141

24,711

POI*- Oct’ 2012- Dec’ 2013 (15 Months)

Price Undercutting

%

***

***

***

***

Price Undercutting Range

%

40-50

50-60

10-20

0-10

•  Comments by Indian Wind Turbine Manufacturers Association (WTMA)

Domestic manufacturing of complete item affected with confusion in castings segment of supply chain.

•  Comments by GE India Industrial Private Limited and Inox Wind Ltd

i.  Designated Authority has failed to adequately disclose the essential facts of the investigation, especially those concerning casual link. Authority must issue a fresh disclosure statement in order to fulfill its obligations by giving sufficient time to respond to the same.

ii. Authority’s observation that the impact of the countervailing measures is hardly 0.1% increase in costs to a consumer is inaccurate. The logistical inefficiencies such as the costly supply chain model have a great impact on the cost of purchase from the domestic industry. L&T is unable to produce the product with the necessary technical specifications depending on the consumer preference is the important factor due to which the Importer had to import the subject goods.

iii. The market share of the imports from the subject country increased irrespective of a decrease in the market share of the domestic industry. Therefore, injury faced by the domestic industry cannot be attributed to the increase in imports.

Notification Text

[Customs Notification 01 (CVD) dated 19th January 2016]

Seeks to levy definitive countervailing duty on import of Castings for wind-operated electricity generators whether or not machined, in raw, finished or sub-assembled form, or as a part of a sub-assembly, or as a part of an equipment/ component meant for wind-operated electricity generators originating in, or exported from the People's Republic of China for a period of five years.

Whereas, in the matter of ‘Castings for wind-operated electricity generators whether or not machined, in raw, finished or sub-assembled form, or as a part of a sub- assembly, or as a part of an equipment/ component meant for wind-operated electricity generators’ (hereinafter referred to as the subject goods) falling under tariff items 8483 40 00, 8503 00 10 or 8503 00 90 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), hereinafter referred to as the Customs Tariff Act, originating in or exported from, People’s Republic of China (hereinafter referred to as the subject country), and imported into India, the designated authority in its final findings, published in the Gazette of India, Extraordinary, Part I, Section 1, vide notification No. 17/6/2013-DGAD, dated the 27th November, 2015 has come to the conclusion that-

(i)   the subject goods have been exported to India from subject country at subsidized value, thus resulting in subsidization of the product;

(ii)  the domestic industry has suffered material injury due to subsidization of the subject goods;

(iii) the material injury has been caused by the subsidized imports of the subject goods originating in or exported from the subject country;

and has recommended the imposition of definitive countervailing duty on imports of the subject goods originating in, or exported, from the subject country,

Now, therefore, in exercise of the powers conferred by sub-sections (1) and (6) of section 9 of the Customs Tariff Act, read with rules 20 and 22 of the Customs Tariff (Identification, Assessment and Collection of Countervailing Duty on Subsidized Articles and for Determination of Injury) Rules, 1995, the Central Government, after considering the aforesaid final findings of the designated authority, hereby imposes on the subject goods, the description of which is specified in column (3) of the Table below, falling under tariff items of the First Schedule to the Customs Tariff Act as specified in the corresponding entry in column (2), originating in the countries as specified in the corresponding entry in column (4), exported from the countries as specified in the corresponding entry in column (5), produced by the producers as specified in the corresponding entry in column (6), exported by the exporters as specified in the corresponding entry in column (7), and imported into India, countervailing duty at the rate to be worked out as percentage of the landed value of imports of the subject goods as specified in the corresponding entry in column (8) of the said Table, namely:-

Table

SNo

Tariff item

Description of goods

Country of origin

Country of export

Producer

Exporter

Percentage of landed value

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

1

8483 40 00, 8503 00 10 or 8503 00 90

Castings for wind- operated electricity generators, whether or not machined, in raw, finished or sub- assembled form, or as a part of a sub- assembly, or as a part of an equipment/ component meant for wind-operated electricity generators

People’s Republic of China

People’s Republic of China

Zhejiang Jiali Wind Power Technology Company Limited

Zhejiang Jiali Wind Power Technology Company Limited

8.78

2

-do-

-do-

People’s Republic of China

People’s Republic of China

Any

Any

13.44

3

-do-

-do-

People’s Republic of China

Any country

Any

Any

13.44

4

-do-

-do-

Any country

People’s Republic of China

Any

Any

13.44

2.  The countervailing duty imposed under this notification shall be levied for a period of five years (unless revoked, superseded or amended earlier) from the date of publication of this notification in the Official Gazette and shall be payable in Indian currency.

Explanation.- For the purposes of this notification, "landed value" shall be the assessable value as determined under the Customs Act 1962, (52 of 1962) and all duties of customs except duties levied under sections 3, 3A, 8B, 9 and 9A of the Customs Tariff Act.

[F. No. 354/84/2015-TRU]