Zeolite 4A (Detergent Grade) from China to Face
$207.72 per MT Anti-dumping Duty, Two Producers to Face Lower Duty
[Final
Finding (Case No. O.I. 25/2017) F.No.6/14/2017-DGAD dated 29th October
2018]
Subject: Antidumping
investigation concerning imports of Zeolite 4A (Detergent grade) originating in
or exported from People’s Republic of China.
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 Antidumping 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; the Designated
Authority (hereinafter referred to as the Authority) had initiated an
Antidumping investigation against imports of Zeolite 4A (Detergent Grade) originating
in or exported from People’s Republic of China vide Notification No.
06/14/2017-DGAD on 2nd January, 2018.
1.
And whereas, M/s Gujarat Credo Mineral
Industries Ltd and M/s Chemicals India
(hereinafter also referred to as “Petitioners” or “Applicants”) filed an
application in the present case before the Designated Authority (hereinafter
also referred to as the Authority) in accordance with the Act and the Rules for
initiation of Antidumping investigation concerning imports of Zeolite 4A (Detergent
grade) (hereinafter also referred to as the subject goods), originating in or
exported from People’s Republic of China (hereinafter also referred to as the
subject country) and requested for imposition of Antidumping duties on the
imports of the subject goods, originating in or exported from the subject
country.
2.
And Whereas, the Authority on the basis of prima facie evidence submitted by the
applicant to justify initiation of Antidumping investigation issued a public
notice vide Notification No. 6/14/2017-DGAD on 2nd January, 2018 to examine and
determine the existence, degree and effect of the alleged dumping of the
subject goods, originating in or exported from the subject country, and to
recommend the amount of antidumping duty, which, if levied, would be adequate
to remove the alleged injury to the DI.
3. Procedure described
herein below has been followed with regard to this investigation, after
issuance of the public notice notifying the initiation of the above
investigation by the Authority:
i.
The Authority notified the Embassy of the
subject country in India about the receipt of the Antidumping
application before proceeding to initiate the investigations in accordance with
sub-rule (5) of Rule 5 supra.
ii.
The Authority sent a copy of the Initiation
Notification to the concerned Embassy of the subject country in India; known
producers/exporters from the subject country; known importers/users in India;
other Indian producers and the DI as per the addresses made available by the
applicants and requested them to make their views known in writing within 40 days
of the Initiation Notification.
iii. The
Authority provided a copy of the non-confidential version of the application to
the known producers/exporters and to the Embassy of the subject country in
India in accordance with Rule 6(3) of the Rules supra.
iv. The
Embassy of the subject country in India was also requested to advise the
exporters/producers from their country to respond to the questionnaire within
the prescribed time limit. A copy of the letter and questionnaire sent to the
producers/exporters was also sent to them along with the names and addresses of
the known producers/exporters from the subject country.
v.
The Authority sent Exporter’s Questionnaire
and Supplementary Questionnaire to the following known producers/exporters to
elicit relevant information in accordance with Rule 6(4) of the Rules:
a.
M/s Chalco Qingdao
International Trading
b.
M/s Chalco Zibo
International Trading Co.
c.
M/s Xiamen Zhongzhao
Imp and Exp Co Ltd
d.
M/s Tianjin Gerkwin
International Trading Company Ltd
e.
M/s Guangzhou Chemicals Imp. & Export Co
Ltd
f.
M/s Huiying
Chemical Industry
vi. In
response to the above notification, the following exporters/producers responded
and submitted questionnaire responses.
a.
M/s Inner Mongolia Risheng
Recycling Resource Co., Ltd.
b.
M/s Tianjin Gerkwin
International Trading Co., Ltd.
c.
M/s Chalco Shandong
Advanced Material Co., Ltd
d.
M/s Chalco Qingdao
International Trading Co.,Ltd.
e.
M/s Chalco Zibo
International Trading Co., Ltd
vii. Legal
submissions were also filed by Chalco Shandong
Advanced Material Co., Ltd, Chalco Qingdao
International Trading Co., Ltd., Chalco Zibo
International Trading
Co., Ltd, Tianjin Gerkwin
International Trading Co, Xiamen Zhongzhao Import and
Export Co. Ltd and China Chamber of Commerce of Metals,
Minerals & Chemicals
Importers & Exporters
viii. The Authority sent Importer’s
Questionnaires to the following known importers/users/user associations of
subject goods in India calling for necessary information in accordance with
Rule 6(4) of the Rules:
a.
M/s Nirmesh Enterprises
Private Limited
b.
M/s Pee Cee Cosma Sope Limited
c.
M/s Zeolites and Allied Products Private Limted
d.
M/s Ankush
Enterprises
e.
M/s Sankur Exim
Pvt. Ltd.
f.
M/s Vimal Agencies
g.
M/s Vaghani Inc.
h.
M/s S.B. International
i.
M/s Shree Soaps & Chemical Industries
j.
M/s Plasma Exim Llp
k.
M/s Nirma Limited
l.
M/s Devanshi
Exports Private Limited
m. M/s
Oasis Capital Private Limited
n.
M/s Dev Overseas
o.
M/s Rspl Limited (Ghari Detergent)
p.
M/s Procter & Gamble Home Products
Private Limited
q.
M/s Balleshwar Exim
Private Limited
r.
M/s Agarwal Minerals
s.
M/s Aaditya Finechem Pvt.Ltd.
ix. The
following importers of the subject goods responded by filing questionnaire
responses
a.
M/s Aaditya Finechem (P) Ltd.
b.
M/s Hindustan Unilever Limited
x.
The Authority made available non-confidential
version of the evidence presented by various interested parties in the form of
a public file kept open for inspection by the interested parties;
xi. Request
was made to the Directorate General of Commercial Intelligence and Statistics
(DGCI&S) to provide the transaction-wise details of imports of subject
goods for the past three years, and the period of investigation, which was
received by the Authority. The Authority has relied upon the DGCI&S data
for computation of the volume of imports and required analysis after due
examination of the transactions.
xii. The
Non-Injurious Price (NIP) based on the optimum cost of production and cost to
make & sell the subject goods in India based on the information furnished
by the DI on the basis of Generally Accepted Accounting Principles (GAAP) and
Annexure III to the Antidumping Rules has been worked out so as to ascertain
whether Antidumping duty lower than the dumping margin would be sufficient to
remove injury to the DI.
xiii. The
Authority held a public hearing on 25th May, 2018 to provide an
opportunity to the interested parties to present relevant information orally in
accordance to Rule 6 (6), which was attended by the representatives of DI and
other interested parties. All the parties who presented their views in the
public hearing were requested to file written submissions of their views
expressed orally. The parties were also advised to collect written submissions
made by the opposing parties and to submit their rejoinders thereon.
xiv. The
verification of the information provided by the DI was carried out to the
extent considered necessary. Only such verified information with necessary
rectification, wherever applicable, has been relied upon.
xv. The
petitioners had proposed the period April 2016 – March 2017 (12 Months) as the
period of investigation in the petition. For enabling the Authority to make
required analysis on the basis of more updated data, the Authority determined
the POI as April 2016 to June 2017 (15 Months). The examination of trends in the
context of injury analysis covered the periods April 2013-March 2014, April
2014-March 2015, April 2015-March 2016 and the POI.
xvi. The
submissions made by the interested parties during the course of this
investigation, wherever found relevant, have been addressed by the Authority in
this notification.
xvii. Information
provided by the interested parties on confidential basis was examined with
regard to sufficiency of the confidentiality claim. On being satisfied, the
Authority has accepted the confidentiality claims wherever warranted and such
information has been considered as confidential and not disclosed to other
interested parties. Wherever possible, parties providing information on
confidential basis were directed to provide sufficient non confidential version
of the information filed on confidential basis.
xviii.
Wherever
an interested party has refused access to, or has otherwise not provided
necessary information during the course of the present investigation, or has
significantly impeded the investigation, the Authority has considered such
parties as non-cooperative and recorded the views/observations on the basis of
the facts available.
xix. ‘***’
in this document represents information furnished by an interested party on
confidential basis and so considered by the Authority under the Rules.
xx. The
exchange rate for the POI has been taken by the Authority as ₹67.45 = US$1.
4. The
views of the DI are as follows:
i.
The product under consideration (PUC) is
“Zeolite 4A (Detergent Grade)” also known as “Synthetic Zeolite 4A”. Zeolites are micro porous crystalline solids
with welldefined structures. Generally, they contain
silicon, aluminium and oxygen in their framework and
cat-ions, water and/or other molecules within their pores. Many occur naturally
as minerals, and are extensively mined in many parts of the world. Others are
synthetic, and are made commercially for specific uses in various industries.
The general formula of Zeolite is given as Nax[(AlO2)x(SiO2)y].zH2O.
ii.
Due to cubical shape with rounded corners and
edges, Zeolite 4A crystals do not remain on fabrics and are easily removed on
rinsing. They have high sequestering power even at high temperatures and Alkali
reaction with pH less than 12. The average particle size is less than 5micron.
This makes it suitable to pass through the mesh size of clothes and preventing
greying thereby. The subject good are mainly used as a builder in detergents
iii. Detergent
grade zeolites are primarily water softener compounds, used to remove calcium
and magnesium ions from hard water. This results in softening of water, which
requires less soap for the same cleaning effort, as soap is not wasted mopping
up calcium ions.
iv. PUC
falls under Chapter 38 of the Customs Tariff Act, 1975. The subject goods were
classified under customs sub-heading 38249022 at the time of filing of
petition; but the classification has thereupon changed to 38249922. It is
pertinent to note that the customs classification indicated is only indicative.
The PUC has been imported under different heads such as - 38249090, 38249990,
28429090, 28269000, 28399090 &
28421000
v.
Since the PUC is being imported under various
codes, the Authority may kindly specify these indicative codes as well in the
duty table. Only the duty table contents are relevant in this regard. Anything
mentioned in the para relating to "product under consideration" but
not stated in duty table is likely to get ignored while issuing notification by
the Ministry of Finance. Customs authorities at the port consider and rely upon
the notifications notification issued by the MOF. Hence it is of utmost important
that the duty table itself include all these clarifications
vi. A
large number of imports are taking place under such codes despite the existence
of a dedicated code. The possibility of circumvention becomes very high if
relevant codes are not mentioned in customs notification.
vii. GCMIL
produces Zeolite 4A for detergent industry use and supplies to all major
detergent makers in India, including Nirma, Ghari, Jyothy Lab and P&G on
regular basis. GCMIL product matches with all other producers including
Chinese. Attachment related to the Exhibits displaying communication between
HUL and GCMIL regarding quality being unacceptable, has not been shown to the
petitioner, claiming confidentiality. GCMIL has not received any technical data
from HUL concerning the results of the sample submitted as claimed by HUL and
only false claims in this regard have been raised.
viii. Difference
in quality is not a sufficient justification for exclusion of a product
reference has been laid on the decision of the Hon’ble CESTAT in the matter of
DSM Idemitsu Limited Versus DA.
5. The
views of other interested parties are as follows:
i.
The product scope includes products not being
commercially produced and manufactured by the Petitioners. Therefore, the
imported product and the DI’s product cannot be considered as “like
articles”.
ii.
Petitioners are unable to manufacture and
commercially supply Zeolite Grade 4A as per the technical specifications
required by HUL. Hence it is requested to exclude Zeolite Grade 4A
specifications which matches the bulk density and the content as provided in
HUL’s specifications
6.
The PUC is Synthetic Zeolite 4A (Detergent
Grade). Zeolites are micro porous crystalline solids with well-defined
structures. Generally, they contain silicon, aluminum and oxygen in their
framework and cat-ions, water and/or other molecules within their pores. They
also occur naturally as minerals, and are extensively mined in many parts of
the world. Others are synthetic, and are made commercially for specific uses in
various industries. The general formula is given as Nax[(AlO2)x(SiO2)y].zH2O.
7.
The PUC functions as a detergent builder
primarily as a water softener resulting in softening of water, which requires
less soap for the same cleaning effort, as soap is not wasted mopping up
calcium ions.
8.
The Authority notes that the PUC falls under
Chapter 38 of the Customs Tariff Act, 1975. The subject goods were classified
under customs sub-heading 38249022 at the time of filing of petition; however,
the classification has thereupon changed to 38249922. It is further noted that
the product is also being imported under different headings such as – 38249090,
38249990, 28429090, 28269000, 28399090 & 28421000. In view of the same, all
such reported headings are also included in the scope of the present
investigation. In any case, the Customs classification indicated is only
indicative.
9.
As regards the claims of HUL that the product
produced by the DI is unfit for the desired use, the Authority notes that HUL
was specifically directed to provide evidence in support of its claim. While no
verifiable evidence was provided by the company, the DI provided documents
showing that HUL has not established how the goods produced by the two
petitioner companies cannot be used by them. In view of the same and after
considering the evidence placed on record by DI, the Authority proposes to hold
that there is no known difference in PUC exported from the subject country and
the goods product produced by the Indian industry. The like article produced by
the DI is comparable to the subject goods exported from subject country in
terms of characteristics such as physical & chemical characteristics,
functions & uses, product specifications, distribution & marketing and
tariff classification of the goods. The two are technically and commercially
substitutable. The consumers are using the two interchangeably.
10. Thus,
the Authority proposes to hold that the goods produced by the applicant DI are
like article to the PUC exported from the subject country, in accordance with
the AD Rules.
11. Following
submissions have been made by the DI:
i.
The petition has been filed by M/s Gujarat
Credo Mineral Industries Limited & M/s Chemical India. The petitioners are
not related to any importer in India or exporter from subject country, nor have
the petitioners imported the PUC within the meaning of Rule 2(b). The
production of the petitioners constitutes total Indian production. The
petitioners have, therefore, satisfied the requirement of standing and
constitute DI within the meaning of the Antidumping Rules.
ii.
Petitioners are the only producers of the
subject goods in the Indian market during relevant period. As per petitioner’s
market intelligence there are no other known producer of subject goods in the
domestic market. Other producers namely, NALCO and Gujarat Multi Gas Base
Chemicals Pvt. Ltd. who were known to produce earlier, were contacted by the
petitioner. However, no information has been provided to the petitioner with
regard to production by these companies. None of them have responded despite
several attempts made by the petitioners and thus it was considered that the
petitioners are the only domestic producers in the domestic market. The
Authority may investigate and seek further information in this regard. Even if
these alleged other producers still produce subject goods, the production by
the petitioners would still remain a major proportion of total Indian
production.
12. The
following submission has been made in this regard –
i. Applicants
have falsely claimed to be the sole producers of the subject goods when they
themselves have admitted to their being multiple other producers, such as NALCO
and Gujarat Multi Gas Base Chemicals Pvt. Ltd. involved in production of the
same. ii. Entire production of the
Applicants cannot constitute a major proportion’ of the total domestic
production in India. Must include production of NALCO and Gujarat Multi Gas
Base Chemicals Pvt. Ltd.
13. The
application was filed by M/s Gujarat Credo Mineral Industries Limited & M/s
Chemical India. The Authority notes that the applicants are not related to any
importer in India or exporter from subject country, nor have they imported the
PUC within the meaning of Rule 2(b).
14. As
regards the claims that there are other Indian producers of the subject goods
namely, NALCO and Gujarat Multi Gas Base Chemicals Pvt. Ltd., it is noted that
evidences have been provided by the applicants showing repeated attempts made
by them as regards possible production by other Indian producers, if any.
However, none of other companies have come forward with regard to their
possible production. Relevant information was also sought from concerned
administrative authority. No evidence has been brought on record which shows
production by any other producer of the subject goods. In view of the same, the
Authority proposes to hold that the production of the applicants constitutes a
major proportion in the Indian production.
15. It
is, thus, determined that the applicants constitute ‘Domestic Industry’ in
terms of Rule 2(b) of the AD Rules and the application made by them is held as
made on behalf of the
DI. Further, the application satisfies the requirements
of ‘standing’ under Rule 5 of the AD Rules.
16. The
following miscellaneous submissions have been made by the DI:
i.
The change in figures between the original
NCV petition and the first updated petition in terms of profit & loss and
cost of sales is only in the POI as a result of the extension of the POI by the
Authority from March 2017 to July 2017. In the second updated information, the
cost reflected for the year 2013-14 has been normated,
in view of the recommencement of production by Chemicals India, to reflect a
realistic condition of the DI. Difference in figures relating to market share
is because at the time of filing of the petition secondary data was used while
the updated information was filed with the DGCI&S T-by-T data.
ii.
Transaction wise import data has been
provided for the placement in the public file. DI has segregated detergent
grade zeolite from other items coming under the HS Code 38249022 based upon the
description provided in the transaction wise data and DI’s knowledge about the
importer of the PUC. The Authority may correlate this information with the
importers name provided in the transaction wise DGCI&S data and the
information furnished by the exporters.
iii. Arguments
raised on non-disclosure of landed price, market share of petitioners, other
producers, subject imports and non-subject imports are irrelevant as the same
have already been provided. All relevant information has been provided in the
petition and the updated information filed pursuant to change in POI.
Adjustments claimed by the DI are according to the best available information
to the DI and are in consonance with the practice followed by Authority. The
petitioners relied upon DGCI&S data for filing of the updated petition as
the POI was extended by the Authority.
iv. NALCO’s
ability to reduce cost of production by 20% by using Sodium Aluminate Liquor
along with its state of the art production facility for producing Zeolite 4A is
reflected in its inability to produce and sell the PUC. It is unheard of any
business achieving such landmarks and then not producing to the extent of
capacities created. The non-production of the invoices by users/consumers of
the other Indian producers in itself evidences the non-production of PUC by the
other Indian producers.
v.
Change in original petition and subsequent
updated information is because import data used at time of filing of the
petition was procured from secondary source which was subsequently changed to
DGCI&S transaction wise data. Also, the DGCI&S published data, which is
being referred to, may not report all the imports coming under other codes
apart from the dedicated code. DGCI&S transaction wise data shows that
there has been a significant increase in imports in the POI.
vi. The
DI has disclosed actual figures for volume parameters while the exporters have
claimed complete confidentiality on their data including information of
exports, sales production etc. but are demanding the same from the DI. Certain
related/ group companies have even found it irrelevant to respond and
participate in the investigations. The yardsticks of claiming confidentiality
cannot be different for domestic producers and exporters.
17. The
following miscellaneous submissions have been made by other interested parties
in this regard –
i.
There are inconsistencies between the data
provided in Original Petition, First Updated Information and the Second Updated
Information in the profit-loss, cost of sales and market shares.
ii.
Transaction-wise import data has not been
made available. Products other than the PUC which falls under the HS Code
38249022 has been taken for the purpose of analysis. In light of the same the
methodology used for sorting the import data should be provided.
iii. Unjustified
Request for Confidential Treatment has been made by the petitioners; Landed
price of the subject imports have to be disclosed in actual figures as it does
not contain confidential information; they have also not provided the market
share of the petitioners, other producers, subject imports, non-subject imports.
iv. Information
regarding all economic parameters, imports, normal value, market share, dumping
margin and soft copy (Excel file) of T-B-T import data has not been provided
for April 2016 to June 2017.
v.
NALCO’s ability to reduce cost of production
by 20% by using Sodium Aluminate Liquor along with its state of the art
production facility for producing Zeolite 4A should have been considered by the
Applicant while producing the PUC and NALCO should be included as an interested
party in the present matter; Reference is laid on European Communities -
Definitive Antidumping Measures on Certain Iron or Steel
Fasteners from China, WT/DS397/AB/R vi. Since,
the volume and value of alleged dumped imports are based on data sourced from Seair Exim Solutions the same show a surge in imports.
Applicant must submit DGCI&S data for proper evaluation of import data.
vii. Applicant
has provided data for 12 months only which is incomplete as per initiation
notification; the initiation of present investigation cannot be said to be
based on positive evidence for the POI and injury period considered in the
initiation notification.
viii. Import
data of applicants is completely separate from Department of Commerce data. ix. Excessive
confidentiality claimed with regard to performance of Applicants. The same has
gone to the extent of concealing crucial data for determination of injury.
18. Various
interested parties have raised several issues with respect to the present
investigation and the same are examined and addressed as under:
i. As
regards the argument on the inconsistencies in the original petition and the
first and second updated information, the Authority notes that POI proposed by
the DI was extended and covered the period April, 2016-June, 2017 (15 Months).
In view of this extended POI updated information of the industry was filed on
the basis of DGCI&S published data whereas the petition was originally
filed on the basis of secondary import data. The second updated information was
filed by the domestic involving the import methodology and the injury
information of the DI on the basis of normated costs
in view of capacity installed by the one of the domestic producer. It is
because of this reason that the figures are different. There is no
inconsistency in the information filed by the DI. ii. As
regards the argument on transaction wise data not being made available and
those products other than the PUC falling under the same code and yet taken for
the purpose of injury analysis, the Authority notes that the transaction wise
import data has been provided and placed in the public file. Detergent grade
Zeolite has been segregated on the basis of the description as given in the
transaction wise data. The data has been corroborated with the exporters’ data
as per its questionnaire response and has been found that as against *** MT
volume of imports reported under DGCI&S data the import volume reported by
the exporters in China are ***MT.
iii. As
regards the argument of undue confidentiality claimed on various parameters by
the interested parties, the Authority notes that confidentiality claim made by
interested parties has been examined and found admissible as per the Rule 7 of
the Antidumping Rules.
iv. As
regards the claims raised on an alternate process as used by NALCO that should
have also been considered by the DI, the Authority notes that concrete evidence
has not been submitted in support of production of the subject goods by NALCO.
In view of the same the Authority proposes to hold that NALCO is not engaged in
the production of the subject goods and hence the claims on the alternate
production process are not being considered.
v.
As regards the claims that the data has been
provided only for 12 months and thus initiation is not based on positive
information for the POI considered for the present investigation, it is noted
that Authority based on the positive information, prima facie, satisfied itself
with fact of dumping causing injury to the DI. The POI has been extended by a
quarter, thus major part of the POI was examined for the purpose of initiation.
It was in order to make the POI close to the date of initiation that the POI
was extended. It is also noted that the POI can be changed even during the
course of the investigation as the purpose is to evaluate dumping causing
injury to the DI in an appropriate period suitable for making objective
assessment. In any case, the fact of dumping and injury is established in the
present POI as can be seen from this Notification at relevant places. vi. As
regards the argument on the import data of the DI being different from that of
the DGCI&S data, it is seen that that the because of non-availability of
the DGCI&S Transaction wise data, the application was filed on the basis of
the data obtained from secondary sources. This was later updated by the DI on
the basis of transaction wise data obtained from DGCI&S. The Authority has
also considered the updated data.
19. The
DI inter alia submitted as follows:
i. One
of the provisions of Accession protocol has expired on 11th December,
2016. The Designated Authority should however proceed with present
investigation considering Chinese producers as producers operating in
non-market economy conditions due to reasons given below. ii. The
investigation period considered by the Authority in the present case is April
2016 to June 2017 (15 months).
iii. The
purpose of fixation of POI is to consider a period when the existence of
dumping causing injury is claimed and established. In the present case, a major
part of the Period of Investigation falls before the expiry of the Chinese
Accession Protocol and hence, it would be appropriate to consider China as a
non-market economy.
iv. The
Chinese producers are required to be treated as non-market economy companies
for the reason that the
costs and prices in China did not reasonably reflect the market forces during
the POI. Para 8 to Annexure-I specifies the parameters which should be
considered for grant of market economy status.
v.
Since Chinese companies were denied market
economy status for the reasons mentioned in Para 8 of Annexure-I till December,
2016, petitioner submits that the Chinese producers are required to be treated
as non-market economy companies till such time the investigation period
includes the period specified in Accession protocol. vi. Chinese
producers are required to be treated as companies operating under non-market
economy environment and the Authority may proceed to determine the normal value
on the basis of Para 7 of Annexure-I.
vii. Normal
value could not be determined on the basis of price of like article in an appropriate
market economy third country for the reason that the relevant information is
not publicly available. The petitioner has claimed consideration of normal
value on the basis of cost of production in India duly adjusted.
viii. The
dumping margin from China is not only significant, but also substantial, thus
establishing existence of significant dumping of the PUC in India. The import
volume of China has remained significant throughout the present injury period.
ix. The
adjustments claimed by the DI are according to the best available information
to them and in consonance with the practice followed by the Authority. The
exporters have filed responses and the Authority may after verification, and if
found appropriate and correct may consider the actual adjustments.
x.
DI has provided normated
figures for Gujarat Credo Minerals, on the basis of project report. The figures
in the petition, do not reflect the real injury suffered by the DI, it is
rather much lower injury suffered on basis of normated
figures.
20. The
following submissions have been made with regard to normal value, export price
and dumping margin:
i.
The DI has claimed adjustments from Net
Export Price but has not provided any evidence/ justification for the same
ii.
Normal value determination in current
investigation is flawed as the same should have been determined from the
domestic sales and cost of subject goods in China PR, as provisions of para 15
(a)(ii) of Accession Protocol of China PR has been rescinded. The mandatory
procedure prescribed by law in the present case has not been followed as the
interested parties have not been put to notice about selection of the third
country; no details, whether petitioners have made any adjustment on account of
non-utilization of optimum capacity.
iii. Normal
value determined on the basis of the cost of production of the DI cannot be
accepted as one of the petitioners is a newly incorporated entity, facing high
cost of production.
E.3 Examination by the Authority
21. At
the stage of initiation, the petitioners proceeded with the presumption by
treating China PR as a non-market economy country. Upon initiation, the
Authority advised the producers/exporters in China to respond to the notice of
initiation and provide information relevant to determination of whether their
data/information could be adopted for the purpose of normal value
determination. The Authority sent copies of the questionnaire to all the known
producers/ exporters for providing relevant information in this regard.
22. The
Authority notes that none of the producers/ exporters of the subject goods from
the subject country have submitted the ‘Market Economy’ questionnaire response
on the facts & circumstances of the present case. In view of this
non-cooperation, the Authority is unable to determine normal value in case of
China PR on the basis of questionnaire response of the Chinese producers/
exporters.
23. None
of the interested parties, including the DI, has made available any material to
the Authority to determine normal value on the basis of costs or price in
market economy third country. The Authority has, therefore, determined normal
value in respect of China PR on the basis of best information available, in
terms of rule 6(8) of the Rules.
24. Normal
value for the subject goods imported from China PR into India has been
constructed considering best optimum consumption of the raw materials and
utilities, and best estimates of conversion cost, interest, SGA, etc. including
reasonable profit on the cost of production.
25. The
Authority notes that five exporters from China PR have furnished information to
the Authority which could be used for determination of export price and
individual dumping margin.
a.
M/s Inner Mongolia Risheng
Recycling Resource Co., Ltd.
b.
M/s Tianjin Gerkwin
International Trading Co., Ltd.
c.
M/s Chalco Shandong
Advanced Material Co., Ltd
d.
M/s Chalco Qingdao
International Trading Co.,Ltd.
e.
M/s Chalco Zibo
International Trading Co., Ltd
26. Therefore,
the Authority has analysed the response made by the
exporters as follows:
27. The
Authority notes that Risheng has exported *** MT of
the subject goods to India through trader Gerkwin
International Trading Co. Ltd. They have claimed expenses on account of inland
freight, ocean freight, marine insurance, credit cost, bank charges, VAT and
commission to Indian exporter. The same have been allowed, after due
verification. Accordingly, the Authority has determined the ex-factory export
price as *** US$/MT.
M/s Chalco Shandong Advanced
Material Co., Ltd, (“Chalco AM”) (Producer), M/s Chalco Qingdao International Trading Co.,Ltd.
(Chalco Qingdao) (Exporter) and M/s Chalco Zibo International Trading Co., Ltd (Chalco Zibo) (Exporter) China PR
28. The
Authority notes that Chalco AM has exported *** MT of
the subject goods to India through related trader Chalco
Qingdao and *** MT of subject goods through another trader related trader,
namely, Chalco Zibo. They have claimed expenses on
account of Inland Freight, Ocean Freight, Marine insurance, credit cost, bank
charges, and Commission to Indian exporter. The same have been allowed, after
due verification. Accordingly, the Authority has determined the ex-factory
export price as *** US$/MT for Chalco AM for exports
through their related trader Chalco Qingdao; and ***
US$/MT for their exports through the other related trader, namely, Chalco Zibo.
29. For
all other producers/ exporters of China PR, export value has been determined
based on facts available. Export price
has been determined on the basis of DGCI&S transaction wise import data,
after correlating the same with the questionnaire response filed by the
responding exporters. The Authority notes that there is no major difference in
the export price reported by the responding exporters and the export price
determined on the basis of the DGCI&S data. Since these are CIF export
price, these have been adjusted for expenses such as ocean freight, insurance,
port expenses, bank charges, inland freight, commission and VAT to determine
ex-factory export price.
30. The
dumping margin for subject goods has been determined by comparing normal value
and export price at ex-factory level for the subject goods. The table below
shows the weighted average values for the responding exporters and subject
country.
|
Producer
|
Exporter
|
Normal
Value (USD/MT) |
Net
Export Price (USD/MT) |
Dumping
Margin (USD/MT) |
Dumping
Margin (%) |
Dumping
Margin (Range %) |
|
M/S Inner Mongolia Risheng Recycling Resource Co. Ltd (IMRRRCL) |
M/s Tianjin Gerkwin International Trading Co. Ltd. (TGITCL) |
*** |
*** |
*** |
*** |
65-75% |
|
M/s Chalco Shandong Advance Material Co. Ltd.(CSAMCL) |
Chalco
Zibo International Trading Co. Ltd (CZITCL) |
*** |
*** |
*** |
*** |
85-95% |
|
M/s Chalco Shandong Advance Material Co. Ltd.(CSAMCL) |
Chalco
Qingdao International Trading Co. Ltd (CQITCL) |
*** |
*** |
*** |
*** |
80-90% |
|
Others |
Others |
*** |
*** |
*** |
*** |
100-110% |
31. It
is seen that the dumping margins are more than the de minimis limits prescribed under the
Rules in respect of all imports into India.
32. As
regards injury and causal link, the DI has made submissions as under:
i.
Examination of material injury is not a mere
trend analysis between base year and POI and any conclusion reached based on
such an analysis can be misleading and will not be objective. Increase or
decrease in trend is not the only yardstick to measure injury. Examination of
the economic situation of the DI should take into account events within the
injury period and that 2013-14 should be ignored for the purpose of injury
analysis.
ii.
The petitioner companies made sufficient and
enough attempts at reaching out to other Indian producers. However, none of
them responded despite several repeated attempts. The petitioners had also
approached the concerned Administrative Ministry to provide information
regarding the same. On the basis of market intelligence, the other producers
are not engaged in the
production of the subject goods.
iii. The
cost and profits/losses of GCMIL have been considered as per normated capacity utilization as per project report. The
data of GCMIL has not been considered at normated
levels. The actual injury suffered by GCMIL is much higher than what has been
taken for the purpose of analysis. Increased production and sale figures are
because of the commencement of production by GCMIL. The price injury that is
claimed is because of the dumped imports from the subject country.
iv. Despite
an increase of 7% in market share of the DI, it still remains miniscule despite
having sufficient capacity to cater to the entire domestic demand whereas
market share of imports remain significantly high. Imports increased in
absolute terms, with significant increase during POI. Imports in relation to
production and sales remain about 1000%. The market share of imports in demand
was 93% in POI.
v.
Comparison of actual profitability from
2013-14 would not show the correct picture as one of the petitioner company had
just recommenced production and that too at miniscule level. The Authority may
consider profitability by considering overhead costs at normal production
levels.
vi. The
landed price of imports is below the level of cost of sales, selling price and noninjurious price of the DI. Price undercutting has also
increased. Landed price of imports declined in the POI without corresponding
decline in cost of sales. The import price which was just below US$ 500/MT in
the beginning of injury period, increased to a level above US$ 500/MT towards middle
of 2013-14, when Chemicals India increased its production and sale. However,
thereafter, prices declined steeply to a level as low as US $ 320/MT. Decline
in import price by about US $ 180/MT is very significant in the nature of this
product. Costs on account of raw materials have increased over this period.
Chinese producers reduced their prices by about 40%, the sole cause of which is
commencement of production by GCMIL and significant increase in production by
Chemicals India.
vii. The
extent of price undercutting has increased in POI with the commencement of
production by GCMIL; as seen from confidential data submitted with the
Authority ROI decreased to abysmally poor levels in the POI. The profits and ROI have to be normatted appropriately for abysmally low production
figures and then only a reasonable picture emerges.
viii. Any
abnormal cost for GCMIL on account of startup has been normated
for the purpose of injury analysis. Alleged claims listing out various
parameters from the annual report of GCMIL, are thus redundant.
ix. Position
of DI in the base year in comparison to the following years is not indicative
of the situation of DI as only Chemicals India re-commenced production in the
base year at a very minute level. Imports have had an adverse impact on the
performance of the DI.
x.
Increase in volume parameters such as sales,
production and utilization is because Chemicals India had only miniscule level
of production in the base year and GCMIL started commencement in the POI thus
showing natural increase in these parameters.
xi. Production and sales is much below the optimum level despite DI
having sufficient capacity to cater to domestic demand. Landed price of imports
is significantly below the level of costs and selling price of DI causing
adverse impact on the DI.
xii. One of the petitioner company recommenced production
from the base year and was expecting to increase production and sales and
profitability however dumped imports prevented it from doing so. The import
price declined significantly when GCMIL started production in the POI. This
caused significant adverse effect on the prices of the DI. xiii. Even with the normated
cost, the DI shows significant losses in the POI. Blaming injury on start-up
costs when stated repeatedly that normated costs have
been taken for GCMIL is unwarranted. The
exporters must answer the significant reduction in import prices.
xiv. All
cost related parameters have been on a normated basis
so that a fair and objective analysis takes place. The claimed injury is not due
to abnormal increase in depreciation, wages or interest expenses.
xv. Price
undercutting is the cause of injury and price underselling reflects the impact
of dumped imports on the DI. Price undercutting led to significant adverse
effect on profits, cash profits and ROI.
xvi. Significant
level of price undercutting resulted into price suppression/depression effect
on the domestic prices and has resultantly forced the DI to keep selling price
much below the level of normated costs (and not
actual costs) resulting into financial losses. Low priced imports at
significant level captured significant portion of the legitimate share of the
DI in the market. Imports have clearly caused injury to the DI.
xvii. The
inventories too of DI have increased substantially over the injury period. In
the post POI period, the inventory has increased to almost 600 MT.
xviii.
The production and sales of DI in the base
year was close to zero, and hence any increase thereafter would show a massive
jump in the production and sales of the DI in indexed terms.
xix. Information
as submitted after normating the costs shows that
cost of sales have increased throughout the injury period whereas selling price
has declined. Landed price of imports has declined sharply in the POI and is
below the level of costs and selling price of DI. Imports are having
significant depressing effect on the prices of the DI. Price underselling is
not a parameter laid down under law indicating injury. xx. The
imports constitute 93% of the demand and there is no evidence of production of
the subject goods by any other producers other than the DI.
xxi. The
NIP for GCMIL can be determined at the level of normated
production. The DI fails to understand the logic behind optimized cost for
price undercutting analysis as it involves the difference between landed price
of imports and selling price. In any case the cost of sales provided by the DI
is normated.
33. Submissions
made by the other interested parties are as under:
i.
Sales of other domestic producers which are
useful for calculating the market share and assessing the injury suffered by
the Petitioners on account of the other domestic producers is absent.
ii.
DI has claimed material injury for both the
companies in the present investigation in order to camouflage the start-up
costs and losses suffered by GCMIL; the fact that GCMIL has recently started
production has been selectively used as per the convenience of the petitioners,
however, while assessing price injury, the Petitioners have strategically not
dealt with the issues with respect to increased costs and initial losses
suffered by GCMIL
iii. The
market share of the Petitioners has increased to 7% in the POI as compared to
the base year.
iv. The
profitability of the Petitioners has been declining rapidly from 2014-15. The
profitability when compared to the base year, declined by 69 index points in
2014-15, while landed price actually increased by 1 index point during the same
period.
v.
If price undercutting did affect the Petitioners,
there should have been a drastic decline in the return of investments in the
POI when compared to the base year which was not the case in the present
factual matrix. [ROI is in the same range for the entire injury period]
vi. GCMIL’s
commencement of production since the POI has led to the Petitioners showing
injury. This injury is due to the high costs and losses that are reflected in
financial indicators such as financial costs, short term borrowing, and trade
payables
vii. DI
has provided selective injury information and with a significant variance for
many injury parameters in latest file as compared to original file, due to
which, respondents cannot provide any meaningful comments
viii. DI
has not suffered injury in following parameters – capacity utilization,
production and capacity have significantly increased during injury period;
domestic sales and market share witnessed a massive rise and reflects no injury
to industry; wages and no. of employees have been held confidential, since
production has increased these parameters also have increased; productivity
information is confidential, since production has increased this must have also
improved; the correct way to analyze the inventories is to compare the closing
inventories with the domestic sales made by the DI as laid down by the Hon’ble
CESTAT in the case of Bridge Stone Tyre Manufacturing (Thailand) Vs. DA 2011 (270) E.L.T. 696
(Tri. - Del.).; No adverse impact on the Growth of the DI.
ix. No
price injury as DI began producing during injury period and thus, will make
lower price for product only; same has not been impacted by imports. Also
market share of subject country imports declined in injury period
x.
Increase in cost of depreciation, wages and
interest has been due to purchase of new machinery from high investment not due
to subject country imports; the impact of increase in capacity on the cost of
the DI is also required to be analyzed when there is an increase in capacity as
laid down by the WTO Panel in China-Grain Oriented Flat-Rolled Electrical
Steel from US xi. Increase in imports is not a factor of
injury as sales of the DI have increased over the injury period; no conclusion
of injury can be drawn on the basis of price undercutting and price
underselling as both are not factors of injury
xii. The
inventories of DI have declined; increase in production, sales and market share
is unprecedented
xiii. No
evidence of price effect by imports and there was no evidence that DI is
experiencing injury hence, no causal link. Injury due to increase in costs and
enhancement of capacity and inter-se
competition.
xiv. DI
has failed to provide data substantiating the claim of injury and economic
parameters such as net sales realization, actual and potential negative effects
on cash flow, wages, growth, ability to raise capital investments
xv. Sales
and production of the subject goods by DI have increased at a rate which is
higher than increase in demand whereas the imports have not increased as much
in comparison
xvi. There
is no price suppression/depression as cost of sales declined and there is no
claim for price underselling
xvii. DI
facing inter-se competition in terms of price of the subject goods and the same
is evident from lack of participation of other producers.
xviii.
NIP could be determined by considering data
from other producers than M/s Gujarat Credo Mineral Industries Ltd. Alternative
analysis of the same should be done. Cost of production being high on account
of start-up cost, the Authority is requested to adjust the cost of production
and NIP so as to arrive at fair determination of price undercutting.
34. The
Authority has taken note of the submissions made by the interested parties and
also the DI. The Authority has examined the injury to the DI in accordance with
the Antidumping Rules and considering the submissions made by the other
interested parties appropriately.
35. The
injury analysis by the Authority hereunder addresses the various submissions
made by the interested parties. This includes correction of a minor calculation
error, as was pointed out in the comments on the Disclosure Statement issued
earlier.
36. For
the examination of the impact of the imports on the DI in India, the Authority
has considered such indices having a bearing on the state of the industry as
production, capacity utilization, sales quantum, stock, profitability, net
sales realization, the magnitude and margin of dumping etc. in accordance with
Annexure II(iv) of the Rules supra.
37. In
consideration of the various submissions made by the interested parties in this
regard, the Authority proceeds to examine the current injury, if any, to the DI
before proceeding to examine the likelihood aspects of dumping and injury on
account of imports from the subject countries.
F.3.1 Volume
Effect of Dumped Imports and Impact on Domestic Industry
38. The
Authority has defined, for the purpose of the present investigation, demand or
apparent consumption of the product in India as the sum of domestic sales of
the Indian producers and imports from all sources. The demand so assessed is
given in the table below.
|
Particulars
|
Units |
2013-14
|
2014-15
|
2015-16 |
POI-A |
|
Demand
|
|
|
|
||
|
Sales of DI |
MT |
*** |
*** |
*** |
*** |
|
Sales of Other
Indian Producers |
MT |
- |
- |
- |
- |
|
Imports from
Subject Countries |
MT |
24,929 |
25,927 |
31,022 |
31,809 |
|
Imports from Other
Countries |
MT |
54 |
77 |
53 |
75 |
|
Total
Demand/Consumption |
MT |
*** |
*** |
*** |
*** |
|
Market
Share in Demand |
|
|
|
||
|
Sales of DI |
% |
0% |
1% |
4% |
7% |
|
Sales of Other
Indian Producers |
% |
0% |
0% |
0% |
0% |
|
Imports from
Subject Countries |
% |
100% |
99% |
96% |
93% |
|
Imports from Other
Countries |
% |
0% |
0% |
0% |
0% |
|
Total
Demand/Consumption |
% |
100% |
100% |
100% |
100% |
39. The
Authority notes that the demand for the PUC has increased throughout the injury
period. Major share of market is being held by imports from subject country.
The share of the DI in the demand is in minority, despite sufficient capacities
with the DI, due to dumping in the Country.
40. 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. The volume of
imports of the subject goods from the subject country has been analyzed as
under:
|
Particulars
|
Units
|
2013-14
|
2014-15
|
2015-16
|
POI-A
|
|
Volumes |
|
|
|
|
|
|
Subject Country |
MT |
24,929 |
25,927 |
31,022 |
31,809 |
|
Other Countries |
MT |
54 |
77 |
53 |
75 |
|
Total
Imports |
MT
|
24,983
|
26,004
|
31,076
|
31,884
|
|
Market
Share in Imports |
|
|
|
|
|
|
Subject Country |
% |
99.78 |
99.70 |
99.83 |
99.77 |
|
Other Countries |
% |
0.22 |
0.3 |
0.17 |
0.23 |
|
Total
Imports |
%
|
100
|
100
|
100
|
100
|
|
Particulars
|
Units
|
2013-14
|
2014-15
|
2015-16
|
POI-A
|
|
Subject Country
Import in Relation to Indian
Production |
% |
830970 |
9804 |
2320 |
1336 |
|
Subject Country
Import in Relation to Consumption |
% |
100 |
99 |
96 |
93 |
|
Subject Country
Import in Relation to Total Imports |
% |
100 |
100 |
100 |
100 |
41. It
is noted that the import volume from subject country has increased throughout
the injury period in absolute terms and have registered significant increase in
the POI. Imports from other countries are negligible throughout the injury
period.
42. Imports
in relation to Indian production and consumption have declined in view of the
commencement of production by GCMIL in the POI and recommencement of production
by Chemicals India.
43. With
regard to the effect of the dumped imports on prices, it is required to be
analyzed whether there has been a significant price undercutting by the alleged
dumped imports as compared to the price of the like products in India, or
whether the effect of such imports is otherwise to depress prices or prevent
price increases, which otherwise would have occurred, in normal course. The
impact on the prices of the DI on account of the dumped imports from subject
countries has been examined with reference to the price undercutting, price
underselling, price suppression and price depression, if any. For the purpose
of this analysis the cost of production, Net Sales Realization (NSR) and the NonInjurious Price (NIP) of the DI have been compared with
the landed price of imports from subject country.
44. One
of the petitioners commenced commercial production w.e.f.
June 2016 whereas the other producer had negligible production till 2013-14,
while low production in 2014-15. It is seen from the import price of the
product over the injury period that the import price started declining in
2015-16, with steep decline in the POI. The decline in the price in US$ was
steeper. Petitioners contended that the only reason for this steep decline in
the import price was the commencement of production in India.
|
Particulars
|
UOM
|
2013-14
|
2014-15
|
2015-16
|
POI-A
|
|
Landed Price of
Imports |
Rs./kg
|
32.65 |
33.03 |
31.18 |
24.52 |
|
Index
|
100
|
101
|
96
|
75
|
|
|
US$ |
0.48 |
0.49 |
0.46 |
0.36 |
|
|
Index
|
100
|
101
|
96
|
75
|
45. In
order to determine whether the imports are undercutting the prices of the DI in
the market, the Authority has compared landed price of imports with net sales
realization of the DI as below. In this regard, a comparison has been made
between the landed value of the product and the average selling price of the DI
net of all rebates and taxes, at the same level of trade. The prices of the DI
were determined at the ex-factory level.
|
Particulars
|
Unit
|
POI-A
|
|
Landed Price of Imports |
Rs./MT
|
24,522 |
|
Net Selling Price |
Rs./MT
|
*** |
|
Price Undercutting |
Rs./MT
|
*** |
|
Price Undercutting |
% |
*** |
|
Price Undercutting |
Range |
10-20% |
46. It
is seen that the landed price has been below the net selling price of the DI.
Thus imports are undercutting the prices of the DI
47. The
Authority has also examined price underselling suffered by the DI on account of
dumped imports from subject country. The same can be seen below:
|
Particular
|
China |
|
|
|
Rs/MT |
US$/MT
|
|
Non Injurious Price
(NIP) |
*** |
*** |
|
Landed Price |
24,522 |
363.56 |
|
Price Underselling |
*** |
*** |
|
Price Underselling
(%) |
*** |
*** |
|
Price Underselling (Range
%) |
40-50% |
|
48. It
is seen that the DI has suffered significant price underselling on account of
imports of the subject goods from the subject country.
49. In
order to determine whether the dumped imports are suppressing or depressing the
domestic prices and whether the effect of such imports is to suppress prices to
a significant degree or prevent price increases which otherwise would have
occurred to a significant degree, the Authority considered the changes in the
costs and prices over the injury period. In view of the fact that GCMIL came
into existence in the POI and thus the actual cost will not be representative,
the Authority has normated the cost based on the
capacity utilization projected by the said producer as observed from the
Project Report. The position is shown as per the table below:
|
Particulars
|
UOM
|
2013-14
|
2014-15
|
2015-16
|
POI-A
|
|
Cost Of Sales |
Rs./kg
|
*** |
*** |
*** |
*** |
|
Index
|
|
100
|
103
|
106
|
108
|
|
Selling Price |
Rs./kg
|
*** |
*** |
*** |
*** |
|
Index
|
|
100
|
97
|
99
|
93
|
|
Landed Price of
Imports |
Rs./kg
|
*** |
*** |
*** |
*** |
|
Index
|
|
100
|
101
|
96
|
75
|
50. It
is seen that the cost of sales has increased over the injury period whereas the
selling price of the DI has declined. The selling price is below the level of
cost of sales. It is further noted that landed price of imports have declined
steeply in the POI and are much below the level of selling price and costs of
production of the DI. Further, whereas the cost of production of the DI
increased, its selling price declined. The imports are causing significant
price depression and suppression in the domestic market.
51. Annexure
II to the AD Rules requires that the determination of injury shall involve an
objective examination of the consequent impact of these imports on domestic
producers of such products. With regard to consequent impact of these imports
on domestic producers of such products, the AD Rules further provide that the
examination of the impact of the dumped imports on the DI should include an
objective and unbiased evaluation of all relevant economic factors and indices
having a bearing on the state of the industry, including actual and potential
decline in sales, profits, output, market share, productivity, return on
investments or utilization of capacity; factors affecting domestic prices, the
magnitude of the margin of dumping; actual and potential negative effects on
cash flow, inventories, employment, wages, growth, ability to raise capital
investments.
52. Accordingly,
various economic parameters of the DI are analyzed herein below:
53. The
performance of the DI with regard to production, capacity, capacity utilization
and sales are as follows:
|
Particulars
|
UOM
|
2013-14
|
2014-15
|
2015-16
|
POI-A
|
|
Capacity |
MT |
*** |
*** |
*** |
*** |
|
Production |
MT |
*** |
*** |
*** |
*** |
|
Capacity Utilization |
% |
*** |
*** |
*** |
*** |
|
Sales |
MT |
*** |
*** |
*** |
*** |
54. The
capacity with the DI increased in the POI with the commencement of production
by one of the domestic producer, i.e., GCMIL. Production and sales have shown
some increase over the injury period as a consequence of commencement of
production by one of the DI and recommencement of production by other domestic
producer. Chemicals India provided information with regard to its production
since 2013-14 and submitted that the company has restricted its production due
to Chinese dumping. The company had earlier been producing and selling in the
domestic market. However, they reduced their production significantly, with
reduction in the prices of the Chinese producers during 2007-08.
Thereafter, as the price increased once again in 2013-14,
the company recommenced its production. However, production level of both the
domestic producers are still at fairly low levels. Despite sufficient demand
and establishment of capacity by the new producer, the DI is not operating at
its optimum level.
55. The
effects of the dumped imports on the market share of the DI have been examined
as below.
|
Particulars
|
Units |
2013-14
|
2014-15
|
2015-16 |
POI-A
|
|
Market
Share in demand |
|
|
|
|
|
|
Sales of DI |
% |
0% |
1% |
4% |
7% |
|
Sales of Other
Indian Producers |
% |
0% |
0% |
0% |
0% |
|
Imports from
Subject Country |
% |
100% |
99% |
96% |
93% |
|
Imports from Other
Country |
% |
0% |
0% |
0% |
0% |
|
Total
Demand/Consumption |
% |
100%
|
100%
|
100%
|
100%
|
56. It
is noted that the market share of the DI has marginally increased while that of
the subject country has marginally declined. This is in view of the fact that
M/s Chemicals India recommenced the production in 2014-15 and GCMIL started
production in the POI. It is seen that share of the DI in the market is just 7%
as against the share of the imports which constitutes 93% in the POI despite
having an installed capacity that could supply up to 55% of the domestic
demand.
57. It
is seen that the average inventory levels of the DI have increased over the
injury investigation period. However, the inventory levels with the DI were
still quite low considering the demand in India and sales of the DI. The DI
also submitted that the inventory levels with the DI increased very significantly
in the post-POI period and the inventory levels with the DI were low only
because restriction on production.
|
Particulars
|
UOM
|
2013-14
|
2014-15
|
2015-16
|
POI-A
|
|
Opening |
MT |
- |
*** |
*** |
*** |
|
Closing |
MT |
- |
*** |
*** |
*** |
|
Average |
MT |
- |
*** |
*** |
*** |
58. Performance
of the DI with regard to profit, return on investment and cash flow is as
follows:
|
Particulars
|
UOM
|
2013-14
|
2014-15
|
2015-16
|
POI-A
|
|
Profit/( Loss) |
Rs./Kg
|
*** |
*** |
*** |
(***) |
|
Trend
|
|
100
|
31
|
19
|
(69)
|
|
Profit/( Loss) |
Rs.Lacs |
*** |
*** |
*** |
(***) |
|
Trend
|
|
100
|
2687.5
|
9225
|
(53962)
|
|
Cash Profit |
Rs.Lacs |
*** |
*** |
*** |
*** |
|
Trend
|
|
100
|
2411
|
8833
|
237466
|
|
Return on Capital
Employed |
% |
*** |
*** |
*** |
*** |
|
Trend
|
|
100
|
2350
|
4867
|
8.33
|
59. In
view of the fact that GCMIL came into existence in the POI and thus the actual
cost will not be representative, the Authority has normated
the cost based on the capacity utilization projected by the said producer as
observed from the Project Report.
60. It
is seen that profitability of the DI has declined and the DI is incurring
substantial losses in the POI. The cash flow has improved over the injury
period. The return on capital employed was low and remains barely positive in
the POI. Return on capital employed declined in the POI once again after
improving in 2015-16.
61. It
is seen that productivity in terms of productivity per day as well as per
employee, has increased over the injury period, which is in line with the
movement of production. However, despite this improvement in productivity,
profitability declined.
|
Productivity
|
UOM
|
2013-14
|
2014-15
|
2015-16
|
POI-A
|
|
Per Employee |
Nos |
*** |
*** |
*** |
*** |
|
Per Day |
Nos |
*** |
*** |
*** |
*** |
62. It
is seen that the employment with the DI and the wages paid have increased over
the injury investigation period.
|
Particulars
|
UOM
|
2013-14
|
2014-15
|
2015-16
|
POI
|
|
Employment |
Nos |
*** |
*** |
*** |
*** |
|
Wages |
Rs.
Lacs |
*** |
*** |
*** |
*** |
63. The
growth of the DI in terms of volume parameters has been positive in view of
commencement of production by GCMIL, while growth in terms of price parameters
is negative. However, even in respect of volume parameters, the growth was far
below what could have been the growth, given the capacities created in India,
demand for the product and capacity utilization achieved by the DI in the
past.
|
Growth
|
UOM
|
2013-14
|
2014-15
|
2015-16
|
POI-A
|
|
Production |
% |
- |
8,715 |
406 |
78 |
|
Capacity Utilization |
% |
- |
4 |
15 |
(5) |
|
Domestic Sales Quantity |
% |
- |
8,698 |
407 |
76 |
|
Selling price per unit |
% |
- |
-3.02 |
2.23 |
-6.23 |
|
PBT per unit |
% |
- |
-69.17 |
-32.45 |
-432.62 |
|
ROCE |
% |
- |
2268 |
107 |
-100 |
64. The
Authority observes that the DI recently made investments, which are performing
very adversely.
65. It
is seen that imports from the subject country are entering at dumped prices and
that the margin of dumping is significant.
(j) Factors
Affecting Domestic Prices 66. The examination indicates that there is
a healthy demand in India for the subject goods. The landed value of subject
goods from subject country is below non injurious price, cost of sales and
selling price of the DI. It is also observed that imports from other countries
are almost non-existent. Thus, factor affecting the domestic prices are
primarily the import prices.
67. The
non-injurious price of the subject goods produced by the DI as determined by
the Authority in terms of Annexure III to the AD Rules has been compared with
the landed value of the imports from the subject country for determination of
injury margin during the POI and the injury margin so worked out is as under:
|
Particular
|
M/s
Inner Mongolia Risheng Recycling RCL |
Chalco Zibo International Trading Co. Ltd |
Chalco Qingdao International Trading Co. Ltd
|
All
Other Producers/ Exporters |
||||
|
|
Rs/MT |
US$
|
Rs/MT |
US$
|
Rs/MT |
US$
|
Rs/MT |
US$
|
|
Non Injurious Price
(NIP) |
*** |
*** |
*** |
*** |
*** |
*** |
*** |
*** |
|
Landed Price |
24,582.83 |
364.46 |
24,471.66 |
362.81 |
24,360.73 |
364.52 |
21,631.05 |
320.70 |
|
Injury Margin |
*** |
*** |
*** |
*** |
*** |
*** |
*** |
*** |
|
Injury Margin (%) |
*** |
*** |
*** |
*** |
||||
|
Injury Margin (Range%) |
40-50% |
40-50% |
40-50% |
60-70% |
||||
68. Having
examined the existence of continued injury, volume and price effects of dumped
imports on the prices of the DI, in terms of its price undercutting and price
suppression and depression effects, other indicative parameters listed under
the Indian Rules and Agreement on Antidumping have been examined by the
Authority herein below to see whether any factor, other than the dumped
imports, could have contributed to the injury suffered by the DI.
69. It
is seen that imports from other countries are almost non-existent and, hence
are not causing injury to the DI.
70. There
has been an increase in demand throughout the injury investigation period and
thus the same cannot cause any injury to the DI.
71. The
pattern of consumption with regard to the PUC has not undergone any change.
Therefore, changes in the pattern of consumption cannot be considered to have
caused injury to the DI.
72. Technology
for production of the product concerned has also not undergone any change.
Thus, developments in technology cannot be regarded as a factor causing injury
to the domestic injury.
v) Conditions
of Competition and Trade Restrictive Practices
73. There
is no trade restrictive practice in place.
74. The
performance of the DI and injury thereto has been examined with respect to the
domestic performance to the extent possible. No export sales were made by the
DI throughout the injury investigation period and so the same is not a possible
cause of injury to the DI.
75. The
performance of other products being produced and sold by the DI has not
affected the assessment made by the Authority of the DI’s performance. The
information considered by the Authority is with respect to the PUC only.
76. The
Authority notes that the productivity of the DI has followed the same trend as
production and shows increase. Deterioration in productivity is not a cause of
injury to the DI.
77. The
Authority has noted the concerns expressed by the user industry and importers.
Given that the purpose of Antidumping duties, in general, is to eliminate
injury caused to the DI 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, the Authority feels that
creation of a balanced and equitable environment for both the manufactures;
exporters; importers and users is in all-round interest.
78. Post
disclosure submissions made by the DI are as follows:
i.
Chemicals India is not a new producer and
commenced production in 1992. Unfairly priced imports led to the company
ultimately stopping production in 2008-09. Upon normalization of prices it
resumed production however, as it increased production the import volumes from
the subject country increased at lowered prices despite the increase in costs.
ii.
GCMIL is a joint venture between a state
owned PSU and a public limited enterprise set up for the purpose of mineral
development in the state. The plant was set up in an underdeveloped are to
boost socio-economic development in the region. Production began in 2016 but it
leads to lowered prices of the subject imports thereby forcing it to lower its
prices in the year of commencement only
iii. In
the absence of any MET Questionnaires to determine normal value, it has been
rightly noted that China cannot be given market economy treatment. Because of
failure to disclose vital information, such as name of their related parties,
details of their related party producing product under consideration,
suppression of facts regarding benefits & incentives received by them, the
responses should be rejected. The related parties of the exporters involved in
the production and sale of subject goods have also not participated. iv. Awarding
two dumping margin/injury margin ranges in the name of two different channels
gives an undue, unintended leverage to the producer to attract a duty lower.
Antidumping duty for the common producer should collapse and there should be
one unique duty for every producer and one unique duty for every exporter.
v. Despite
the increase in demand throughout the injury investigation period, the majority
share of the market is held by the subject imports even when the DI has
sufficient capacity. vi. Import
volumes have increased in absolute terms while in relation to production and
consumption have declined because of commencement of production by GCMIL and
recommencement of business by Chemicals India yet remain significant in
relative terms as well, 1336% of Indian Production and 93% of Indian
consumption.
vii. Landed
price has declined since 2014-15 and showed a significant decline in the POI.
Declining prices are a result of commencement of business by GCMIL and
recommencement by Chemicals India. The cost of raw materials increased during
this period. Normated Data as considered by the
Authority also shows injury.
viii. GCMIL
Plant was operational in POI which shows addition of capacity resultantly
showing increased production and sales. Despite increased production and sales,
production for the DI is at fairly low levels.
ix. Even
when the optimum production is considered there would have been immense
inventories accumulated and the optimum production should not be considered
only for NIP purposes but for all other purposes as well. The inventories have
further increased in the post POI period.
x.
Even with the normated
costs there has been significant decline in profitability and DI is suffering
from substantial losses and barely positive ROCE.
xi. Fixed
form of anti dumping duty is required to be imposed
for a period of five years expressed in US/MT.
79. Post
disclosure submissions made by other interested parties are as follows:
i.
The Authority has disclosed the landed prices
of the goods exported by Chalco and the other
responding parties but has not disclosed the aggregate NIP of the DI and the nonconfidential version of various economic parameters such
as inventory, wages, productivity, capacity, production, sales, capacity
utilization neither in indexed nor in percentage terms. The Authority is
requested to disclose the all economic parameters of DI in indexed terms such
that it does not hamper the ability of the respondents to make meaningful
comments.
ii.
The landed value and the subsequent injury
margin for the non-participating producers should be done on the basis of the
DGCI&S data, however, the Authority has considered responding exporter’s
price.
iii. It
has been wrongly determined that the petitioners are the only producers of the
subject goods in the country. As per information obtained from the RTI Act and
from its corporate presentations, it is shown that NALCO is engaged in the
production of detergent grade Zeolite. Since the Authority has the power to
seek information from other ministries, the same may also be done for seeking
necessary information from the Ministry of Mines. iv. NALCO
has certain advantages over other Indian producers such as raw material
advantage, same facility for alumina and zeolite 4A production, state of the
art production facility which is resulting in lower cost of production by NALCO
as compared to the petitioners. It should be examined if the injury to the
petitioners is because of obsolete process and competition with NALCO.
v.
The Authority has not used the methodology
for determination of normal value as laid out in Shenyang Mastsushita S. Battery Co. Ltd. vs.
Exide Industries Ltd. The practice of the Authority of considering the
normal value on the basis of the DI’s cost of production is inconsistent with
the practice followed by other WTO Members.
vi. Since
GCMIL only commenced production in the POI, it can only claim material
retardation and not material injury. And since it is a new producer, the
Authority should determine the NIP only after exclusion of data of GCMIL. The
financial costs and other such costs have only increased because of
commencement of production. Reference in this regard is laid on the FF issued
in the case of SBR wherein the determination of the NIP was on the basis of the
data of the established producer alone.
vii. The
Authority has evaluated the economic parameters of the DI in a contradictory
manner as at one place it has been noted that Chemicals India commenced
production in 2014-15 and that GCMIL commenced production in the POI while at
another place it has been noted that Chemicals India provided information on
production since 2013-14. The base year in the investigation period cannot be
excluded on the grounds of low production volumes.
viii. The
price undercutting has been examined by the Authority for the POI but as per
the practice of the Authority it has to be examined for the entire injury
investigation period. As regards the claims of the DI regarding an increase in
cost in the POI, the price of inputs soda ash and bauxite does not reflect this
claimed price rise. ix. Widening
of scope of PUC by including various codes within chapter 38 and 28 has been
sought for without providing any sufficient evidence.
x.
Petitioners had submitted in their written
submissions that product under consideration falls under Chapter 38 of the
Customs Tariff Act, 1975. The subject goods were classified under customs
sub-heading 38249022 at the time of filing of petition; but the classification
has thereupon changed to 38249922. Further transaction wise segregation of
imports shows that subject goods are being imported under various codes. The
investigation is product under consideration specific and not HS Code specific.
HS Codes are only indicative and not binding on the scope of PUC.
xi. The
Authority is requested to clarify what factors have been considered while normating the costs of DI and disclose the calculation on a
non-confidential basis.
xii. The
normal value and export prices be calculated on the basis of the information
filed by the cooperating exporters and producers. The Authority is requested to
disclose the ranges/indexed figures considered for cost of production, SGA etc.
xiii. The
analysis of market shares or the capacity utilization otherwise than the increase
or decrease in these factors is not mandated to be carried out as per Annexure
II. Both the market share and capacity utilization have significantly improved
over the injury period. Analysis of sufficient utilization of capacity is not
relevant and so no injury can be recorded for these parameters. Since
production, sales and market share have increased significantly from the base
year till the POI no injury can be recorded on these factors. xiv. Price
undercutting and price underselling are not the factors of injury as has been
laid down by the Hon’ble CESTAT in the case of Bridge Stone Tyre Manufacturing (Thailand)
Vs. DA 2011 (270) E.L.T. 696 (Tri. - Del.).
xv. No
reasons or analysis has been recorded for the increase in the cost of the DI.
It only increased because of their inefficiency and losses. There is no
analysis as to how the performance of the DI improved despite of subject
imports.
xvi. Analysis
of inventory on basis of average inventory is incorrect as it ought to be made
on basis of closing inventory as percentage of sales/production. It will
indicate that the inventories of the DI have significantly come down over the
injury period
xvii. There
is a significant difference between the dumping margin for Risheng
Gerkwin group and other exporters. There ought to be
a significant difference in the injury margin for the same as prices of Risheng Gerkwin group are higher
than the prices of other exporters. It is requested that the same may be
rechecked.
80. The
post disclosure submissions have been received from the interested parties. The
issues raised therein have already been raised earlier during the investigation
and also addressed appropriately. However, for the sake of clarity the
submissions by the interested parties are being examined as below:
i.
As regards disclosure of data, the Authority
notes that confidential information cannot be disclosed in the public document.
The Authority has already disclosed non confidential version of the
information, to the extent feasible in the Disclosure Statement, issued
earlier, and in the present findings. Further, the Authority has already given
a detailed analysis which also enabled the interested parties to understand the
substance of information provided on confidential basis and so adopted by the
Authority.
ii.
As regards margins for the non-responding
exporters, the same have been determined as per Rule 6(8) and past practise of the Authority. In case of non-cooperating
exporter, the Authority can consider import price after evaluation of
DGCI&S import data and questionnaire response of the exporter. In fact, it
is found that the DGCI&S data in fact shows imports at even lower
price.
iii. As
regards production by NALCO, the Authority reiterates that the investigation
has shown that NALCO has not produced the product during the POI. The Company
has confirmed to the Authority that production of Zeolite-4A from by NALCO had
been stopped from first week of Dec-2013. The company has claimed that its
production was stopped mainly due to low marketability as the mineral Zeolite
supplied from other countries were much cheaper than theirs. While the reason
cited by the company was not separately verified by the Authority, nonetheless,
NALCO has not produced the PUC during the period of investigation of this case.
iv. As
regards consideration of appropriate market economy third country, the
Authority notes that none of the interested parties suggested any market
economy third country which could be considered for determination of normal
value. While the petitioner contended that no public information was available
in this regard, the interested parties also did not provide any useful
information. The Authority is therefore constrained to resort to “any other
reasonable basis”, i.e., construction of normal value as permitted under
law.
v.
As regards the contention concerning
inclusion of GCMIL for the purpose of injury and injury margin determination,
the Authority notes that the present decision is consistent with the past
determinations on this account. GCMIL has commercially started producing and
selling the subject goods in the POI from the month of July 2016 and was
commercially in operation for 12 months of the POI out of 15 months (April
2016-June 2017). In the SBR Case, Reliance had declared commercial production
only in the post POI. As regards possible higher cost of the company, the NIP
has been determined considering the normated cost on
account of commencement of production by GCMIL.
vi.
It
is clarified that Chemicals India had negligible production in 2013-14 and low
production in 2014-15. The base year has not been excluded for injury
examination. However, the costs have been appropriately normated
for Chemicals India on account of low production in the base year and the cost
of GCMIL has been normated for the POI on account of
commencement of production by the company.
vii. As
regards determination of price undercutting for the injury period, the
Authority notes that the law requires analysing the
price undercutting in the POI. The law does not require determination of price
undercutting over the entirety of the injury period. While the increase in
imports and price depression/suppression is required to be determined over the
injury period, dumping margin, price undercutting and injury margin are
determined only for the POI.
viii. As
regards inclusion of Customs classifications, it is clarified that petitioners
had submitted in their written submissions that product under consideration
falls under Chapter 38 of the Customs Tariff Act, 1975. The subject goods were
classified under customs sub-heading 38249022 at the time of filing of
petition; but the classification has thereupon changed to 38249922. Further
transaction wise segregation of imports shows that subject goods are being
imported under various codes. The investigation is product under consideration
specific and not HS Code specific. HS Codes are only indicative and not binding
on the scope of PUC. It is also noted that one of the purpose of the
investigations is to identify the article liable for ADD and the customs classification
of the same.
ix. It
is clarified that given the fact that one of the petitioner company commenced
production in the POI while the other recommenced production in the base year
of the injury investigation period and to examine the effects of the dumped
products on the DI the costs of the DI have been appropriately normated. Being a new company and because of absence of any
data of the previous years, the costs for GCMIL have been taken on the
projection basis considered before commencement of the project wherein an
optimal target of 70% utilization of the capacity was set considering the
demand of the product in the country.
x.
As regards the contentions of the other
interested parties that project reports are only assumptions and do not reflect
a true picture, the Authority considers that whereas costs and investments of
such magnitude are involved in a business, the company proceeds after due
market research and intelligence, and after ascertaining viability of the
product on the basis of feasibility and viability studies. Such feasibility and viability studies cannot
be brushed aside. In any case, it has not been established that the such feasibility and viability studies are unrealistic
in the present case.
xi. As
regards normation of costs for Chemicals India, it is
clarified that the costs have been normated
considering the utilization levels achieved in 2015-16 and considering the same
to be optimum levels.
xii. As
regards increase in costs of the DI, it is noted that the raw materials costs
have increased in this period and there is no evidence of inefficiencies on the
part of the DI. xiii. Analysis
of inventories by considering separately closing and opening inventories shows
that the closing inventories are in fact higher than opening inventories.
xiv. The
dumping margin and injury margin for the responding exporters have been
rechecked for the alleged difference in the same in terms of range of these.
The same have been correctly reflected in these findings.
81. The
Authority, considering the aforesaid 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 AD Rules and having established positive dumping
margins as well as material injury to the DI caused by such dumped imports, the
Authority is of the view that imposition of Antidumping duty is required to
offset dumping and injury. Therefore, Authority considers it necessary and
recommends anti-dumping duty on imports of subject goods from subject countries
in the form and manner described hereunder.
82. With
regard to duty structure, keeping into account the factual matrix of the case
and having regard to contentions raised, information provided and submissions
made by interested parties, it is deemed appropriate to recommend fixed form of
anti-dumping duty denominated in US$. Further, having regard to the lesser duty
rule followed by the Authority, the Authority recommends imposition of
Antidumping duty equal to the lesser of margin of dumping and margin of injury
for a period of five (5) years, so as to address the injury to the DI.
Accordingly, Antidumping duty equal to the amount
indicated in Col 7. of the table below is recommended to be imposed on all
imports of subject goods originating in or exported from China PR:
|
Duty
Table |
||||||
|
S.No. |
Heading/
Subheading* |
Description
of Goods |
Country
of Origin or Export |
Producer
|
Exporter
|
Duty
Amount (USD/MT |
|
(1)
|
(2)
|
(3)
|
(4)
|
(5)
|
(6)
|
(7)
|
|
1 |
38249922,
38249090, 38249990, 28429090, 28269000, 28399090, 28421000 |
Zeolite
4A (Detergent Grade) |
China
PR |
Inner
Mongolia Risheng Recycling Resource Co. Ltd (IMRRRCL) |
Tianjin
Gerkwin International Trading Co. Ltd.
(TGITCL) |
163.96
|
|
2 |
-do-
|
-do-
|
China
PR |
Chalco Shandong
Advance Material Co. Ltd. (CSAMCL) |
Chalco
Zibo International Trading Co. Ltd (CZITCL);
|
165.61
|
|
3 |
-do-
|
-do-
|
China
PR |
Chalco Shandong
Advance Material Co. Ltd. (CSAMCL) |
Chalco Qingdao
International Trading Co. Ltd (CQITCL) |
163.90
|
|
4 |
-do-
|
-do-
|
China
PR |
Any
other than serial No. 1 to 3 above. |
207.72
|
|
* Custom
classification is only indicative and the determination of the duty shall be
made as per the description of PUC. The PUC mentioned above should be subject
to above ADD even when it is imported under any other HS code.
83. The
duty rates as recommended above are applicable for exports by specified
producer and exporter mentioned therein. The Customs should verify the name of
the producer at the time of clearance of subject goods. Request for change in
the name of a notified exporter will be considered by the Authority in
accordance with the procedure laid down in Trade Notice No. 12/ 2018 dated 17th
September 2018.
84. The
landed value of imports for this purpose shall be the assessable value as
determined by the customs under Customs Tariff Act, 1962 and applicable level
of custom duties except duties levied under Section 3, 3A, 8B, 9, 9A of the
Customs Tariff Act, 1975.
85. An
appeal against the order of the Central Government arising out of this final
finding shall lie before the Customs, Excise and Service Tax Appellate Tribunal
in accordance with the Customs Tariff Act