GOVERNMENT OF INDIA
MINISTRY OF COMMERCE & INDUSTRY
DEPARTMENT OF COMMERCE
(DIRECTORATE GENERAL OF ANTI DUMPING &
ALLIED DUTIES)
UDYOG BHAWAN,
*******
NOTIFICATION
Dated,
FINAL FINDINGS
Subject: Anti-dumping
investigation concerning imports of Citric Acid originating in or exported from
No. 14/12/2004-DGAD - Having regard to the Customs Tariff
Act, 1975 as amended in 1995 and the Customs Tariff (Identification, Assessment
and Collection of Anti Dumping Duty on Dumped Articles and for Determination of
Injury) Rules, 1995, (hereinafter referred to as AD Rules) thereof;
A.
PROCEDURE:
1. The procedure described below has been
followed:-
(i) The Designated Authority (hereinafter
referred to as Authority), under the above Rules, received a
written application from M/s. Solaris Biochemicals Ltd, on
behalf of the domestic industry, alleging dumping of Citric Acid originating in
or exported from China PR, Korea RP and Ukraine
(hereinafter referred to as subject countries);
(ii) The
Authority notified the Embassies of subject countries in
(iii) The Authority issued a Public Notice dated 27thAugust,
2004 published in the Gazette of India, Extraordinary, initiating anti dumping
proceedings concerning imports of Citric Acid of Schedule I of the Customs
Tariff Act;
(iv) The
Authority forwarded copy of the said public notice to the known exporters,
importers, industry associations and to the complainant in terms of Rule 6(2)
and gave them an opportunity to make their views known in writing;
(v) The
Embassies of subject countries in New Delhi were also informed about the
initiation of investigation and requested to advise the exporters / producers
from their respective countries to respond to the questionnaire within the
prescribed time;
(vi) The Authority sent questionnaires, to elicit relevant
information, to the following known exporters from Subject countries as per
Rule 6(4),
1. Tianjin Hengyi
International Trade Co., Ltd.,
2. Sihuan Science Trade Development
Co., Ltd.,
3. Shinwon Industrial Co., Ltd.,
4. BKC Exports Inc.,
(vii) The
Market Economy Treatment (hereinafter also referred to as MET) questionnaire
was also sent to
the known exporters from ChinaPR and Bureau of Fair
Trade for Imports and Exports, Govt. of China to elicit relevant information;
(viii) M/s.
Gansu Xuejing Biochemical
Ltd., China PR,(Producer) (hereinafter also referred to as Gansu,),
M/s Anhui Garments Sheos
and Caps Industrial Group Company, China PR(exporter) (hereinafter also
referred to as Anhui,) and M/s Kharkhov
Plant of Citric Acid, Kharkhov region, Ukraine
(hereinafter also referred to as Kharkhov,) have
responded to the exporters questionnaire. Some of the exporters as well as
Importers had asked for extension of time to respond to the questionnaire and
the Authority after considering the request from the exporters and importers
extended the time period to reply to the questionnaire and file their
submissions;
(ix) The
questionnaire was sent to the following known users/importers of subject goods,
1.
M/s. C.J. Shah
& Co., Mumbai
2.
M/s. Cipla Ltd., Pune
3.
M/s. Tata Tea Ltd., Mumbai
4.
M/s. Park
Organics Ltd., Mumbai
5.
M/s. Sparklings Trading Pvt. Ltd., Mumbai
6.
M/s. Shubh Trading
7. M/s. Amijal
Chemicals
(x) The
Authority kept available non-confidential version of the evidence presented by
various interested parties in the form of a public file maintained by the
Authority and kept open for inspection by the interested parties;
(xi) The
Authority sought and verified all the information it deemed necessary for the
purpose of determination of dumping and causing injury due to dumped
imports. The Authority conducted on the
spot investigation of the domestic industry to the extent considered
necessary. The Authority also conducted
on-the-spot verification of the co-operative Chinese exporters;
(xii) The
cost of the production of the domestic industry was also analysed to work out
the optimum cost of the production and the cost to make and sell the subject
goods in India on the basis of Generally Accepted Accounting Principles based
on the information furnished by the applicant so as to ascertain if anti
dumping duty lower than dumping margin would be sufficient to remove injury to
the domestic Industry;
(xiii) Copies of initiation notice were also sent to FICCI, CII,
ASSOCHAM etc., for wider circulation;
(xiv) A
request were made to the Central Board of Excise and Customs (CBEC) and
Director General of Commercial Intelligence and Statistics (DGCI&S), Kolkata to arrange details of imports of subject goods made
in India during the past three years, including the period of
investigation;
(xv) In
accordance with Rule 16 supra, the essential facts/basis considered for these
findings were disclosed to known interested parties on 22/07/2005 and extension
for filing the comments on the disclosure statement was granted upto 14/08/2005 on examination of request of the interested
party. Comments received by the interested parties have been duly considered
relevant in these findings.
(xvi) **** in this notification represents
information furnished by the interested parties on confidential basis and so
considered by the Authority under the Rules. The information concerning prices
and costing filed by the interested parties were claimed confidential by
respective interested parties and these were treated as confidential by the
Authority;
(xvii) The investigation of dumping and injury covered the period from
B. PRODUCT
UNDER CONSIDERATION:
2. The
product under consideration is “Citric Acid”.
It is mainly used as preservative in food and beverage, soft drinks,
confectionery, drugs etc. It is also
used in textile dyeing and printing industry and for some other industrial uses
such as boiler cleaning etc. It is freely importable under OGL. It is
classified under Chapter 29 of the Customs Tariff Act, 1975 under sub-headings
No 2918.14.The Custom classification is indicative only and not binding on the
scope of investigation.
C. LIKE
ARTICLES:
3. The
applicant has claimed that goods produced by them are like articles to the
goods originating in or exported from subject countries. There is no
significant difference in the subject goods produced by the applicant and those
exported from subject countries. Rule
2(d) of the AD Rules specifies that like articles mean an article, which is
identical and alike in all respects to the product under investigation or in the
absence of such an article, another article having characteristics closely
resembling those of the articles under examination. In order to establish that subject goods
produced by the domestic industry is a like article to that exported product
from subject countries, characteristics such as technical specifications,
manufacturing process, functions and uses and tariff classification have been
considered by the Authority and it has been found from the responses of the
interested parties that the subject imported goods and domestically produced
goods have been used simultaneously by the same users. None of the interested
parties has raised any arguments concerning the issue of like article. In view of the above, it is noted that subject goods
produced by the domestic industry and those being imported from the subject
countries are like articles within the meaning of the Rules 2(d).
D.
DOMESTIC INDUSTRY:
4.
Interested parties have argued
that the composition of the domestic industry of citric acid has changed
because the producers of citric acid have changed in the past few years. They
have stated that the applicant company has taken over the liabilities of the
earlier closed unit M/s Bharat Starch Industries Ltd.
and because of this reason of high cost of production the domestic industry is
facing injury. The arguments of the interested parties were examined and the
Authority found that the other producer of subject goods M/s. Citurgia Biochemicals Ltd. has no production during the
POI. The applicant company M/s. Solaris Biochemicals Ltd has started its
production in December, 2001 and its commercial production started only from
April, 2003. As regards the high cost of production it is noted that
non-injurious price is determined after taking into consideration all the
relevant factors including cost of raw material used in the production of the
subject goods, the consumption thereof, the cost of utilities, interest cost,
cost of labour, depreciation cost and selling and distribution expenses and
cost of investments. It is also noted
that the non-injurious price has been determined at normated
level of capacity utilization to eliminate the inefficiency of any nature. The Authority notes that the applicant is the
sole producer of the subject goods during the POI, therefore has the standing
to file the application in terms of Rules 5(3) of AD Rule 2(b).
D.1 SUBMISSION OF
NON-CONFIDENTIAL INFORMATION
5. The domestic industry
has submitted that the exporters have resorted to excessive use of
confidentiality. The information provided by the exporter on non-confidential
basis do not permit any understanding of the substance
of information provided on confidential basis. They have further stated that
the exporters have filed entire submissions with complete disregard to the
requirement of non-confidential version. The exporters have also argued that
the domestic industry did not provide adequate summary of non-confidential
version enabling the exporters to effectively and meaningfully defend their
interest thereby violating Article 6.5.1 of the WTO Anti-dumping Agreement.
Both the domestic industry and exporters have argued that the non-confidential
version of their respective responses was inadequate and number
of information / data were kept confidential. The arguments of the interested parties were
examined and it is noted that the non-confidential responses provided by the
interested parties were kept in the public file and were made available to all
the interested parties. On examination of the
claim of the interested parties regarding the information concerning prices and
costing of the interested parties, the Authority considered these information as
confidential because of its business sensivity.
6. The Authority sent questionnaires to all the
known exporters for the purpose of determination of normal value in accordance
with Section 9A(1)(c) of the Customs Tariff Act, 1975 and the responses were
received from the following exporters;
i) M/s
Gansu Xeujing Biochemical
Ltd., China PR,(producer) (hereinafter referred to as
ii) M/s
Anhui Garments Sheos and
Caps Industrial Group Company, China PR,(exporter)
(hereinafter referred to as
iii) M/s Kharkhov Plant of Citric Acid, Kharkhov
region,
E.1 VIEWS OF THE INTERESTED PARTIES
7. The views of the interested parties are
summarized below;
i) The domestic industry
produces Citric Acid through the sugar route which cannot be viable since the Chinese
companies use corn starch syrup and their economies of scale is also very
competitive. Because of this reason
their cost of production is very low and they are able to export throughout the
world at the most competitive prices including
ii) The average export price of Citric Acid
from
iii) In the comments to the disclosure statement
they have stated that there no interference of State in this
two companies and this two companies are independently taking decisions and
earning profits like in case of any company operating in market economy.
iv) They
have submitted that takeover of the management by the workers cooperatives has
been permitted in
v) The sunset review was rejected by the
Authority on merits, restoring the benefit through a fresh investigation will
not be appropriate. In case of
E.2 VIEWS OF THE DOMESTIC INDUSTRY
8. The
views of the domestic industry are summarized below;
i) The
Chinese exporter M/s.
ii)
The domestic industry has once again reiterated that the Korean and
Malaysian imports are more likely to be of Chinese origin and the importers
have involved in circumvention of anti dumping duty by transshipment of subject
goods at dumped prices since anti-dumping duty was in place on imports of
Citric Acid from
E.3
VIEWS OF M/S GANSU XEUJING BIOCHEMICAL
LTD.,
9.
10. The company claimed that it is governed
by civil procedures court of People’s Republic of
11.
The company has claimed that the raw materials were purchased from the
local market and the prices of the raw materials purchased reflect the price
prevailing in the local markets and orders were normally awarded on the basis
of lowest price quoted by the suppliers. They have also claimed that the raw
materials are procured from different sources at market driven prices without
any involvement of the State in the decision making process. The company itself makes its decisions
regarding purchase of raw materials and procurement of utilities.
12. In support of their claim of MET they
have stated that 39 countries have granted market economy status to China
including Australia, New Zealand, Brazil, Argentina, Russia, South Africa etc.
India has also granted MET to many Chinese companies in several anti dumping
investigations, therefore, this company should also be given market economy
treatment.
VIEWS OF M/S
13.
14.
15. There are
no incentives on exports being claimed by the manufacturer of goods i.e. M/s. Gansu Xuejing Biochemical Co.
Ltd., however, the exporter is entitled to claim drawback @ 13% on exports
& retained by them. They claim that citric acid is purchased on ex factory
basis therefore, they pay the cost of goods including
the VAT. In addition to this, the local freight to
EXAMINATION OF THE AUTHORITY
16. The Designated Authority, as per para 8(2) of Annexure I of the AD Rules for the purpose of
assessing the Normal Value, proceeded with a presumption that any country that
has been determined to be or has been treated as, a non-market economy country
for purposes of an anti dumping investigation by the Designated Authority or by
the competent authority of any WTO member country during the three years period
preceding the investigation is a non-market economic country. In the past three
years WTO members such as EU and
17. The
Authority sent market economy treatment (MET) questionnaire and exporters
questionnaire to all the known exporters (whose details were made available by
the applicant) for the purpose of determination of normal value. Incomplete responses have been received from
18. In
anti-dumping investigations concerning imports originating in China PR, normal
value shall be determined in accordance with para 7
& 8 of Annexure I of the AD Rules. The Authority notes that para 7 of Annexure 1 of AD Rules provides
that:
“In case of imports from non-market
economy countries, normal value shall be determined on the basis of the price
or constructed value in the market economy third country, or the price from
such a third country to other countries, including India or where it is not
possible, or on any other reasonable basis, including the price actually paid
or payable in India for the like product, duly adjusted if necessary, to
include a reasonable profit margin.”
Further
Para 8 of Annexure 1 of the AD Rules (as amended) provides that:
“8
(1) The term “non-market economy country”
means any country which the designated authority determines as not operating on
market principles of cost or pricing structures, so that sales of merchandise
in such country do not reflect the fair value of the merchandise, in accordance
with the criteria specified in sub-paragraph(3)
(2) There shall be a presumption that
any country that has been determined to be, or has been treated as, a
non-market economy country for purposes of an anti dumping investigation by the
Designated Authority or by the competent authority of any WTO member country during
the three year period preceding the investigation is a non-market economic
country;
Provided, however, that the non-market
economy country or the concerned firms from such country may rebut such a
presumption by providing information and evidence to the designated authority
that establishes that such country is not a non-market economy country on the
basis of the criteria specified in sub-paragraph (3).”
19. It
is noted that the responding Chinese producer furnished information/ evidence
as mentioned in para 8(3) of Annexure 1 of AD Rules
to enable the Designated Authority to consider the following criteria as to
whether
b)
the production
costs and financial situation of such firms are subject to significant
distortions carried over from the former non-market economy system, in
particular in relation to depreciation of assets, other write-offs, barter
trade and payment via compensation of debts;
c)
such firms are
subject to bankruptcy and property laws which guarantee legal certainty and
stability for the operation of the firms, and
d) the exchange rate conversions are
carried out at the market rate;
20. The Authority examined whether
the decision of concerned firms in such
country regarding prices, costs and inputs, including raw materials cost of
technology and labour, output sales and investment, are made in response to
market signals reflecting supply and demand without significant State
interference and in this regard whether costs of major inputs substantially
reflect market values. After
verification of the data the Authority forwarded a detailed verification report
highlighting the facts. In response to the verification report, they have
argued that the scope of non-market economy examination is limited to dumping
determination and the Authority is required to examine information/data for the period of investigation only not the
data/information prior to POI for market economy treatment . The Authority
notes that the determination of normal value is based on the data of the POI
only, however, the examination of market economy takes into account the entire
data of the company preceding to the POI also.
21. The
Chinese company manufactures both Starch & Citric Acid from the basic raw
material, i.e, Corn. In the product catalogue, liquid
fertilizer is mentioned as one of the products of the company. On inquiry, the
company clarified that this product is
no longer manufactured by them. This product was manufactured by the earlier
business entity M/s. Gansu Linze
Starch Plant and its production has been stopped since 1997 for which
reasonable explanation could not be provided to the verification team. The
producer provided information only for the period of the new company came into
existence. In response to the verification report, the company has submitted
that “the company commenced production in Sept.03” and therefore, data has been
provided only for the period from September,2003 to March,2004.
The company further submitted that the
response is submitted by
22. The
company generates own steam from coal. Coal was purchased partly from State owned enterprise and partly from
limited companies. The company provided details of the purchase, receipt &
payment documents of coal on randomly selected records which were verified from
their records. Electricity is
purchased from a State Owned Enterprise. The company provided a tariff chart of
the electricity company. The average rate appeared to be on the lower side as
compared to the electricity rates in other parts of china. The company argued
that this part of
23. Regarding
the production costs and financial situation of such firms are subject to
significant distortions carried over from the former non-market economy system,
in particular in relation to depreciation of assets, other write-offs, barter
trade and payment via compensation of debts, the Chinese producer submitted that there is no significant distortions
carried over from the former non-market economy system in order to rebut the
presumption of NME . The company claimed that the
ownership of the land use rights have been obtained on long term lease basis from the
Government. On verification of their
records it is observed that land has been obtained from the State but they
could not provide the details of payment of rentals of leased land to the
Government. During the course of verification it was also found that the new
company has been taken over from erstwhile State owned company by the
association made of staffs of earlier SOE, at a value which does not reflect
the market prices of such industrial setup. In view of this, exclusion cannot
be made regarding the significant distortions carried over from the former
non-market economy system. The exporter have argued since the businesses have been in loss
for many years, therefore there were no bidders apart from company formed by
the staffs of the earlier SOE company.
As far as debt rescheduling and write offs are concerned they have
submitted that it is a common feature of privatisation of loss making companies
in the market economies also. As per para 8 (3) (b), it is essential to examine the process of
transformation and how the assets and liabilities of the entity have been
valued for the purpose of privatisation.
In this connection the Authority notes that the manner in which the
process of privatisation has taken place and the fixed and financial assets of
the erstwhile state owned company has been transferred to the new company
appears to have significantly affected the costs of subject goods. The Authority further notes that the cost of
production and the prices in the domestic market do not reflect the market
prices, therefore, cannot be accepted for the purpose of this investigation.
24. As regards their claim of its existence
of bankruptcy law which guarantees stability and legal certainity,
the company claimed that this company faced significant financial difficulties
having been loss making for a number of consecutive years and declared
bankrupt. Since it was a State owned
company, the liabilities on the part of the company were written off and handed
over to a newly formed association made by the existing staff of the company
having ****% shareholding along with M/s Gansu Jinbao Investment Company
Limited having ****% shareholding. The
company could not substantiate with facts that the bankrupt company has been
handed over to a new entity in a reasonable and transparent manner and could
not demonstrate the non-interference of the State in the entire chain. The
company provided a report of the asset valuation of Gansu
as on 01.12.2003 and claimed that the assets of the State owned enterprise were
taken over by the ICBC bank and the bank took over the assets and put up a
Public Notice for the disposal of assets. The discrepancy was observed with
regard to the commencement of the new entity in the month of September 2003
whereas the assets of the State owned company has been valued in December,2003. In support of their claim they provided a copy of the
public notice issued by the bank. As per the decision of the court, an amount
of RMB**** was determined to be the shortfall
between the assets and liabilities of the
25. In respect
of drawback receiveable from the government, the
exporting company claimed at the rate of 13% and called for adjustment in the
export price. However, in case of exports to
26. As regards the exchange rate conversions
are carried out at the market rate, the bank realization certificates were
verified the as proof of receipt of the export proceeds. These realisation
certificates showed the invoice number, the
27. The
Authority notes that the Chinese company did not provide sufficient evidence to
demonstrate that their business decisions are not subjected to State
interference. Further it was observed
that the transactions have not been carried out without significant
distortions, which is evidenced by the transactions with the erstwhile State
owned entity. The Authority observed that the value
at which the assets of State owned entity were transferred to the private
ownership and the manner in which the liabilities have been adjusted or written
off by the State, distorts the cost of production of the products manufactured
from this plant. In this connection the
Authority notes that the manner in which the assets of the erstwhile State
owned enterprise has been transferred to the new entity appears to have
significantly affected the cost of production for the subject goods. Therefore,
the Authority is of the opinion that the cost of production and its prices in
the domestic market do not reflect the correct market price of the product and
cannot be accepted for the purpose of this investigation.
In view of the
above, the Authority could not grant market economy status to the responding
co-operative Chinese producer.
28.
It is noted that the cooperative exporter from
Para 7 of Annexure I provides that, “In case of imports from non-market economy
countries, normal value shall be determined on the basis of the price or
constructed value in the market economy third country, or the price from such a
third country to other countries, including India or where it is not possible,
or on any other reasonable basis, including the price actually paid or payable
in India for the like product, duly adjusted if necessary, to include a
reasonable profit margin. An appropriate
market economy third country shall be selected in a reasonable manner (keeping
in view the level of development of the country concerned and the product in
question) and due account shall be taken of any reliable information made
available at the time of selection.
Account shall also be taken within time limits, where appropriate, of
the investigation if any made in similar matters in respect of any other market
economy third country. The parties to
the investigation shall be informed without unreasonable delay the aforesaid
selection of the market economy third country and shall be given a reasonable
period of time to offer their comments.”
29.
The interested parties have argued that the normal value in a non market
economy country shall be required to be determined on the basis of prices from
third country to other countries including
EXPORT PRICE
30.
OTHER EXPORTERS/PRODUCERS FROM
NORMAL VALUE
31. It
is noted since there were no other exporters/producers cooperated apart from
the responding exporters in China PR, the Authority has constructed the normal
value as per para 7 of Annexure-I of AD Rules for all
other exporters/producers from China, PR. The raw materials for manufacturing
Citric Acid at the international price, the consumption norms of the industry and
reasonable profit have been considered for constructing the normal value. The
normal value is, therefore, constructed as US$****/Kg.
EXPORT PRICE
32. The export price is determined on the
basis of import statistics made available by DGCI&S. To arrive at ex-factory export price,
adjustments have been considered as provided by the domestic industry. The
ex-factory export price is determined as US$****/Kg for all other
exporters/producers from
E.5
33. The Designated Authority, as per para 8(2) of Annexure I of the AD Rules for the purpose of
assessing the Normal Value, proceeded with a presumption that any country that
has been determined to be or has been treated as, a non-market economy country
for purposes of an anti dumping investigation by the Designated Authority or by
the competent authority of any WTO member country during the three years period
preceding the investigation is a non-market economic country. In the past three
years
34. The
Authority sent market economy treatment (MET) questionnaire and exporters
questionnaire to all the known exporters (whose details were made available by
the applicant) for the purpose of determination of normal value. The Government of Ukraine has filed
submissions for its claim of market economy Status but did not file submissions
as per para 8(4) of Annexure-I of AD Rules in the MET
questionnaire.
35. The Trade and Economic Mission of Embassy
of Ukraine,
36. The company did not file complete
information regarding the domestic sales and export sales in Appendix 1 &
Appendix 2. They did not file the
information in Appendix 5 and Appendix 6 . As regards, the information in Appendix 4 and
Appendix 7 incomplete information have been provided. The cost of production with regard to
domestic sales, export sales and exports to third country has not been filed.
The profit and loss account and the balance sheet for the POI and preceding
years have not been furnished to analyse the costing
and financial information of the company.
The deficiency letter was sent on
37. The determination of normal value in
respect of
“In case of imports from non-market
economy countries, normal value shall be determined on the basis of the price
or constructed value in the market economy third country, or the price from
such a third country to other countries, including India or where it is not
possible, or on any other reasonable basis, including the price actually paid
or payable in India for the like product, duly adjusted if necessary, to
include a reasonable profit margin.”
38. Further
Para 8 of Annexure 1 of the AD Rules (as amended) provides that:
“8
(1) The term “non-market economy country”
means any country which the designated authority determines as not operating on
market principles of cost or pricing structures, so that sales of merchandise
in such country do not reflect the fair value of the merchandise, in accordance
with the criteria specified in sub-paragraph(3)
(2) There shall be a presumption that
any country that has been determined to be, or has been treated as, a
non-market economy country for purposes of an anti dumping investigation by the
Designated Authority or by the competent authority of any WTO member country
during the three year period preceding the investigation is a non-market
economic country;
Provided, however, that the non-market
economy country or the concerned firms from such country may rebut such a
presumption by providing information and evidence to the designated authority
that establishes that such country is not a non-market economy country on the
basis of the criteria specified in sub-paragraph (3).”
39. It
is noted that the responding company did not furnish complete information/
evidence as mentioned in para 8(3) of Annexure 1 of
AD Rules to enable the Designated Authority to consider the following criteria
as to whether;
b) the production costs and financial
situation of such firms are subject to significant distortions carried over
from the former non-market economy system, in particular in relation to
depreciation of assets, other write-offs, barter trade and payment via
compensation of debts;
c) such firms are
subject to bankruptcy and property laws which guarantee legal certainty and
stability for the operation of the firms, and
d) the exchange rate conversions are
carried out at the market rate;
40. The
Government of
i)
the concerned country has been determined to be or treated
as a market economy for the purpose of AD investigations by WTO Member country;
ii)
such a treatment or determination shall be based on the
latest detail evaluation of relevant criteria which includes the four criteria
specified in para 8 (3) of Annexure 1;
iii)
evaluation has been made in a public document
41. It
is noted that the Government of Ukraine did not furnish the complete
information/evidence to rebut the presumption of non market economy as required
under para 8(4) of Annexure-1 of AD Rules. The
exporter was asked vide letter dated 3.2.2005 that their submissions are
grossly deficient and most of the appendixes of the exporters questionnaire are
incomplete. The Authority also intimated
that in case of non-submission of required documents the firm will be treated
as non-cooperative and the normal value will be determined as per para 7 of Annexure I of AD Rules. The Ukrainian Government has also been asked
to file the complete submission for their claim of market economy as required
under para 8(4) of Annexure I of AD Rules. It was also stated that in absence of
complete information the normal value in respect of all exporters/producers
from Ukraine will be determined as per Rules relating to non-market economies
as contained in para 7 of Annexure I of AD
Rules. The Authority further reminded
both the Ukrainian Government and the responding exporter vide its letters
dated 28.2.2005 but nothing was heard either from the exporter or from the Government,
therefore the Authority found it appropriate to construct normal value as per para 7 of Annexure I of AD Rules. In absence of complete
information the Authority could not grant market economy status to
EXPORT PRICE:
42. The export price is determined on the basis of
import statistics provided by DGCI&S. As per DGCI&S import statistics
E.6
NORMAL VALUE:
43. The
Korean Government has submitted that the total exports of Citric Acid from
Korea RP to all countries including India during the POI is only 108 MT and the
exports of Citric Acid from Korea to India is merely 20 tons as per the
official Korean Export Statistics. In
this regard the Korean Embassy,
44. The
domestic industry has submitted that the submissions made by the Korean
Government regarding the discrepancy in the import data reported as per
DGCI&S and the export statistics provided by the Korean Government may be
dealt by the appropriate authority. They
have further stated that this re-enforces apprehension that the subject goods
claimed to have been originating from
45. In view of
the above, the Authority considered the Korean exports as de-minimis as it is less than 3% in the total imports of
Citric Acid during the POI. Therefore,
Korea RP has been excluded from the subject countries in this investigation and
their volume of imports has been segregated from dumped imports for the purpose
of injury examination. In view of the above, Korea RP has been excluded from
the subject countries in this investigation. Henceforth, only China PR and
E.7 DUMPING MARGIN
46. Based on the
normal value and export price as determined above, the Authority determined the
dumping margin as under:
|
SUBJECT
COUNTRIES/EXPORTERS/PRODUCERS |
NORMAL VALUE |
EXPORT PRICE |
DUMPING MARGIN(%) |
|
M/S. GANSU XUEJING
BIOCHEMICAL LTD., |
**** |
**** |
7.21% |
|
OTHERS EXPORTERS/PRODUCERS
FROM |
**** |
**** |
39.62% |
|
|
**** |
**** |
42.24% |
F. METHODOLOGY FOR INJURY DETERMINATION
AND EXAMINATION OF CAUSAL LINK
F.1 VIEWS
OF THE INTERESTED PARTIES
47. The views of the interested parties are
summarized below;
i) The vast variation in the
consumption norms from the standard norm during the 2003 & 2004 period
clearly indicates the reason for high cost of production of the subject goods.
ii) The domestic industry’s cost of
production is much on the higher side since sugar being the major raw material
and it has not achieved the optimum capacity utilisation therefore their cost
of production need not be taken as constructed normal value.
iii) The domestic industry has themselves
acknowledged that the industry has undergone a change during 2001-2002 to
2003-2004 and this change has led to surge in imports because one of the
producer of the subject goods M/s Citirgia closed
down its production
facilities.
iv) The domestic
industry themselves acknowledged that the output and capacity utilisation has
improved during the POI if taken into account that the trial production has
started during 2000-2001.
v) Due to the closure of one of the
producer of the subject goods and the prevailing demand in the market, imports
were imperative to fulfil the demand.
vi) The sales volume of
the domestic industry has increased during the POI.
vii) The price has reduced by 26% during
2003-2004 whereas the custom duties has come down by
42.85% during the same period. This itself accounts for the reduction in the cost of product to
the consumer.
viii) The productivity of the domestic industry
has improved and the inventories situation has also improved during the POI.
viii) While most of the parameters of injury are
indicating positive trend, therefore no material injury due to dumped imports. There is no
injury to the domestic industry and there is no causal link between the Chinese
imports and injury to the domestic industry due to such imports.
F.2
VIEWS OF THE DOMESTIC
INDUSTRY
48. The views of the domestic industry are
summarized below;
i) The selling
price of the domestic industry has declined more than the dumped price, which
indicates the domestic industry has suffered on account of price injury. Due to the continuance decrease in import
prices, the domestic industry was forced to decrease its prices below cost to
match the prices of dumped imports.
ii) The increase in market share by 2.04% is
negligible when the demand has increased by 30%,
therefore it is not correct to say that the domestic industry has not suffered
on account of loss of market share.
iii) The domestic industry has operated only for
four months registering a sale of 7566 MT during 2001-02 whereas during the POI
it registered a sale of 10203 MT. The
comparison may be done on annualized basis.
iv) The
comparison of cost of production from the base year 2001-02 is not appropriate
since it was under trial production and all the costs were capitalized whereas
the commercial production started only in 2003-04.
v) The capacity utilisation has increased by
only 3% if the base year figure is annualized for the purpose of comparison,whereas the demand has
increased by 30%. They have also
submitted that the capacity utilisation during the POI cannot be said to be
optimum and the plant is still unutilized due to inability of the domestic
industry to sale the subject goods when the total demand has increased by 30%.
vi) They
have submitted that there are no factors other than dumped imports, which has
affected the selling prices of the domestic industry. The selling price has declined by 18% during
the POI whereas the dumped prices have declined by 17% during the same period.
vii) The domestic industry has submitted that
they have suffered losses in the entire injury period that does imply that
there is no return on capital employ by the domestic industry. The domestic industry has improved their
losses in comparison to the trial run period since it was capitalized. The company was under the trial run during
the period 2001-02 and 2002-03, as such the costs for these years have been
capitalized which has not been considered as revenue cost for the purpose of
ascertaining profit or loss.
viii) As per the general practice the Designated
Authority carries out the trend analysis for the entire injury period i.e., POI
and preceding years however, there is no legal bar preventing the Authority
from carrying out the injury analysis only for the POI for which reliable and
acceptable data is not available.
ix) The inventory has declined due to the
decline in the sales price of the domestic industry. The domestic industry has submitted that the
growth in capacity utilisation, production, sales, productivity, market share,
and profitability is either marginal or negative.
x) The domestic industry may show some
apparent improvement in some of the injury parameters, but the same has been
washed way by the low price dumped imports which has cascading affect on
production, sales, capacity utilisation, cost of production and profitability.
xi) The domestic industry has argued that the
import volumes have increased by 25% over the injury period and at the same
time it undercuts the domestic prices by 14-23% indicates the injury due to
dumped imports.
xii) The market share which has improved by 2%
during the injury period in the increased demand of 30% during the same period,
therefore the balance 28% has been taken over by the dumped imports clearly
shows injury to the domestic industry.
xiii) As regards the loss to the domestic
industry, they have submitted that in absence of loss and profit account during
the trial period the trend analysis for the injury period is based on the
arithmetical figure which is not appropriate, therefore a quarterly assessment
of profit and loss account will show injury to the domestic industry.
F.3. CUMULATIVE ASSESSMENT OF THE EFFECTS OF
IMPORTS CONCERNED
49. As
per annexure-II (iii) of Anti Dumping Rules, in cases where imports of a
product from more than one country are being simultaneously subjected to
Anti-dumping investigation, the Authority is required to cumulatively assess
effect of such imports, only when it determines that (a) the margin of dumping
established in relation to imports from each country is more than 2% expressed
as percentage of export price and the volume of the imports from each country
is more than 3% of the imports of like article
and (b) cumulative assessment of the effect of imports is appropriate in
light of the conditions of competition between the imported article and the
like domestic article. The Authority has
found that the margin of dumping in respect of each of the subject countries is
more than 2%. The volume of imports from subject countries collectively is
about 45% and individually it is more than 3% of the total imports during the
POI.
50. On
examination of information, the Authority found that the prices of the subject
goods of subject countries were comparable.
These have been imported under the same tariff classification. The user industry for the imported product
and the domestic products were the same and the same product has been sourced
from different countries by user industry and used interchangeably. The
channels of imports are also found to be similar. The Authority has, therefore, found it
appropriate to cumulatively assess the effect of imports of the subject goods
on the domestically produced like article in the light of conditions of
competition between the imported products and the conditions of competition
between the imported products and like domestic product.
VOLUME AND MARKET SHARE
OF DUMPED IMPORTS
51. The authority
considered the transaction-wise DGCI&S import data for the purpose of
determination of level of imports from subject countries. It is noted that the
imports from subject countries have increased in absolute terms and also as
percentage of total imports, total demand and domestic production.
|
IMPORTS of SUBJECT COUNTRIES IN
TOTAL IMPORTS |
|||
|
|
2001-02 |
2002-03 |
2003-04 |
|
|
1101 |
947 |
2138 |
|
|
000 |
433 |
943 |
|
SUBJECT COUNTRIES(MT) |
1101 |
1380 |
3081 |
|
OTHER COUNTRIES |
4412 |
2019 |
3755 |
|
TOTAL IMPORTS |
5513 |
3399 |
6835 |
52. It is evident from the above table that
the imports from the subject countries have increased from a level of 1101 MT
during 2001-02 to 3081 MT during POI. The total increase over the same period
is almost 3 times of the imports for the period 2001-02. Moreover, the increase during the period of
investigation as compared to previous year 2002-03 is much more than the
increase in the year 2002-03 as compared to the base year 2001-02.
|
SHARE OF IMPORTS OF SUBJECT COUNTRIES IN TOTAL IMPORTS |
|||
|
|
2001-02 |
2002-03 |
2003-04 |
|
|
19.97% |
27.86% |
31.27% |
|
|
0.00% |
12.74% |
13.80% |
|
SUBJECT COUNTRIES |
19.97% |
40.60% |
45.07% |
|
OTHER
COUNTRIES |
80.03% |
59.40% |
54.93% |
|
TOTAL
IMPORTS |
100 |
100 |
100 |
53. It is noted that the share of imports
from the subject countries in total imports has increased from 19.97% in
2001-2002 to 45.07% during the period of investigation. The imports from other countries has decreased during the period
of investigation since anti-dumping duty was in place against
|
SHARE OF IMPORTS OF SUBJECT COUNTRIES IN TOTAL DEMAND |
|||
|
|
2001-02 |
2002-03 |
2003-04 |
|
DAMAND
(MT) |
13079 |
14079 |
17039 |
|
|
8.42% |
6.73% |
12.55% |
|
|
0.00% |
3.08% |
5.53% |
|
SUBJECT COUNTRIES |
8.42% |
9.80% |
18.08% |
|
OTHER COUNTRIES |
33.73% |
14.34% |
22.03% |
54. Further, the share of imports from the subject
countries in total demand have increased
from 8.42% during 2001- 2002 to 18.08% during the period of investigation
whereas the share of imports from other countries in total demand have decreased from 33.73% during 2001- 2002
to 22.03% during the period of investigation.
|
SHARE OF IMPORTS FROM SUBJECT COUNTRIES IN DOMESTIC PRODUCTION |
|||
|
|
2001-02 |
2002-03 |
2003-04 |
|
PRODUCTION |
4099 |
7626 |
13247 |
|
|
26.86% |
12.42% |
16.14% |
|
|
0.00% |
5.68% |
7.12% |
|
SUBJECT COUNTRIES |
26.86% |
18.10% |
23.26% |
|
OTHER COUNTRIES |
107.63% |
25.48% |
28.34% |
55. It may be seen from the above table that
the imports from subject countries as percentage of domestic
production has decreased from a level of 26.86% during 2001-2002 to
23.26% during the period of investigation. The authority notes that the dumped
imports in absolute terms as well as a percentage of total imports in total
demand have increased during the period of investigation.
PRICES
EVOLUTION OF IMPORT PRICES
56. Between
2001-02 and the POI, the average CIF prices of dumped imports registered a decline over the injury period .The import
prices of the subject goods have declined from Rs
37181/MT during 2001-2002 to Rs 30867/MT during the
POI.
|
CIF PRICES |
|
|
Subject countries |
|
2001-2002 |
37181 |
- |
37181 |
|
2002-2003 |
34937 |
32188 |
34075 |
|
2003-2004 |
31230 |
30043 |
30867 |
DOMESTIC PRICES
57. It
is noted that there were two producers of the subject goods in
|
|
|
2001-02 |
2002-03 |
2003-04 |
|
|||||
|
COP
|
Rs./kg |
**** |
**** |
**** |
|||||
|
Index |
|
100.00 |
53.38 |
32.18 |
|||||
|
Selling
price |
Rs./kg |
**** |
**** |
**** |
|||||
|
Index |
|
100.00 |
92.77 |
81.64 |
|||||
|
Profit
/ Loss |
Rs./kg |
**** |
**** |
**** |
|||||
|
Index |
|
-100.00 |
-32.39 |
-5.83 |
|||||
PRICE UNDERCUTTING
58. A
comparison for subject goods during the period under investigation was made between
the weighted average landed value of dumped imports and the domestic selling
price of the domestic industry. The landed value of imports
from the subject countries were lower than the net sales realization of
the domestic industry for the subject goods during the POI thereby,
undercutting the selling price of the domestic industry. The undercutting
margin was within a range of 19 % to 32 % during the
POI.
PRICE UNDERSELLING
59.
The price underselling is an important indicator of assessment of injury,therefore, the Authority
has worked out a non injurious price and compared the same with the landed
value of imports to arrive at the extent of price underselling. The non-injurious price has been evaluated for the
domestic producer by appropriately considering the cost of production for the
product under consideration during the POI and in order to eliminate
inefficiencies, the capacity utilization has been normated.
The analysis shows that the weighted average landed value of the subject goods
from subject countries is much below the non injurious price determined for the
domestic industry during the period of investigation. The underselling margin
was within a range of 22% to38% during the POI.
SITUATION OF THE DOMESTIC INDUSTRY
60. The
authority has examined the injury to the domestic industry keeping in mind the
change in the composition of the domestic industry in the Indian market. It is
noted that the composition of the domestic industry is not the same over the
entire injury investigation period and the domestic industry has changed from
the year 2001-02 to period of investigation.
It is also noted that the domestic industry has started commercial
production of the subject goods only from April, 2003, therefore, it was felt
appropriate to make a trend analysis on year-to-year basis over the
investigation period taking into account the information provided for the trial
production period also since the trial run period was quite long. It is also
observed that the operative company was closed for some time after taken over
by M/s Solaris and started its production in December,2001. Moreover, in the year 2001-02, the domestic
industry produced only for four months whereas during the period of
investigation other producer M/s Citirgia closed down
its operations.
DOMESTIC DEMAND
61. Domestic
demand of the product under consideration has been arrived on the basis of
domestic sales volume of domestic producers and total imports of the subject
goods. On this basis, the domestic
demand of the subject goods has increased from 100 during 2001-02 to 130.07
during the POI registering an increase of 30.07 % during the POI from the base
year 2001 - 2002.
|
|
2001-02 |
2002-03 |
POI |
|
Domestic
Demand(MT) |
13079 |
14079 |
17039 |
|
Indexed |
100 |
107 |
130 |
MARKET SHARE IN DEMAND
62. The market share of dumped imports from subject countries in
total demand has increased from 8.42% during 2001-2002 to 18.08% during the
POI. The market share of domestic industry in demand has increased from 57.85%
in 2001-2002 to 59.89% during the POI.
The market share of imports from other countries in demand has decreased
from 33.73% during 2001-2002 to 22.03% during the POI.
63. The market share of the domestic industry
has slightly improved from 57.85% in 2001-02 to 59.89% during the POI in the
increasing demand in domestic market from 100 in 2001-02 to 130.27 during the POI. The share of dumped imports
from subject countries in total demand during the POI has also risen sharply by
9% where as market share of imports from other countries have decreased by 11%
during the period of investigation . It is noted that in the increased demand
the shares of both
the domestic industry and imports from subject countries have increased.
|
|
2001-02 |
2002-03 |
2003-04 |
|
Imports
from Subject Countries |
1101 |
1380 |
3081 |
|
Imports
from Other Countries |
4412 |
2019 |
3755 |
|
Total
Imports |
5513 |
3399 |
6835 |
|
Sales
- Domestic Industry |
**** |
**** |
**** |
|
Sales-Others |
**** |
**** |
**** |
|
Sales-Total |
**** |
**** |
**** |
|
Indexed |
100 |
141.15 |
134.86 |
|
Total
Demand |
13079 |
14079 |
17039 |
|
Indexed |
100.00 |
107.64 |
130.27 |
|
Share
of Domestic industry (%) |
57.85 |
75.86 |
59.89 |
|
Share
of Subject Countries(%) |
8.42 |
9.80 |
18.08 |
|
Other
countries (%) |
33.73 |
14.34 |
22.03 |
PRODUCTION, CAPACITY AND CAPACITY UTILISATION
64. The
production of the domestic industry has increased from 100 during 2001 -2002 to
323 during the POI. The
capacity utilization of the domestic industry has increased from
20% in 2001-2002 to 52% during POI . It is noted that the domestic industry has increased its
output and the capacity utilization during the POI in the increased market
demand.
|
|
2001-02 |
2002-03 |
2003-04 |
|
Capacity |
25000 |
25000 |
25000 |
|
Production (MT) |
**** |
**** |
**** |
|
Indexed |
100 |
186 |
323 |
|
Capacity
Utilization |
**** |
**** |
**** |
|
Indexed |
100 |
148.83 |
258.53 |
FACTORS AFFECTING DOMESTIC PRICES
65. Changes
in the cost structure and competition in the domestic market were examined to
analyse the factors other than dumped imports that might be affecting the
prices in the domestic market. There is no viable substitute of citric acid and
domestic industry is the sole producer of the subject good, therefore domestic
competition did not affect the prices. The interested parties have argued that
use of sugar as raw materials and its higher prices instead of starch used by
the domestic Industry is the main reason of higher cost of production and
losses to the industry. The interested parties have also argued that technology
of the domestic industry is the cause of injury since the production process of
manufacturing citric acid through sugar route instead of starch as the basic
raw material and due to this reason cost of production for the domestic
industry becomes higher to compete with the imported citric acid. The
production process of the Chinese producers were verified and found that the production
through the starch route was much economical compared with the production
facility through sugar route. The Authority examined the arguments of the
interested parties and found that use of sugar as a raw material for
manufacturing citric acid could be the reason for higher cost of production.
PROFIT, RETURN ON CAPITAL EMOPOYED AND CASH FLOW
66. The applicant started its trial run for
producing the subject goods only from December, 2001 and continued trial runs
up to March 2003 and started the commercial production from April 2003. The
other producer i.e. M/s. Citurgia had closed down its
operation and did not produce the subject goods during the period of
investigation. Thus, M/s. Solaris Biochemicals Ltd is the only producer of the
subject goods during the POI. On
examination of ROCE it is found that the return on capital employed and the
cash profit of the domestic industry have improved during the POI. The return
on capital employed has improved from –100 during 2001-2002 to –29.61 during
the POI. The cost of production of the domestic industry has declined from 100 during 2001-02 to
32.18 during the POI whereas the selling price did not decline in the same
proportion during the same period and
thereby the domestic industry has
improved its losses during the POI.
|
|
|
2001-02 |
2002-03 |
2003-04 |
|
|||||
|
COP
|
Rs./kg |
**** |
**** |
**** |
|
|||||
|
Index |
|
100.00 |
53.38 |
32.18 |
|
|||||
|
Selling
price |
Rs./kg |
**** |
**** |
**** |
|
|||||
|
Index |
|
100.00 |
92.77 |
81.64 |
|
|||||
|
Profit
/ Loss |
Rs./kg |
**** |
**** |
**** |
|
|||||
|
Index |
|
-100.00 |
-32.39 |
-5.83 |
|
|||||
|
Return
on Capital Employed |
% |
**** |
**** |
**** |
|||||
|
Index |
|
-100.00 |
-160.77 |
-29.61 |
|||||
|
Cash
Profits |
Rs. Lacs |
**** |
**** |
**** |
|||||
|
Index |
|
-100.00 |
-124.20 |
-3.95 |
|||||
EMPLOYMENT AND WAGES
67. There
is no change in the number of employees engaged by the domestic industry during
the injury period. The Wages and salary per employee of the domestic industry
is more or less the same during the period of investigation and the preceding
year. However, it is observed that the productivity of the domestic industry
has improved during the POI. It is noted that the domestic industry has
improved its productivity even after the same level of employees due
to increase in production and capacity utilisation. Hence, the authority could
not conclude any findings with regard with injury to the domestic industry on
account of this parameter.
|
|
2001-2002 |
2002-2003 |
2003-2004 |
|
Wages(Lacs) |
**** |
**** |
**** |
|
No.
of Employees(No.) |
182 |
182 |
182 |
|
Wages/Employee(Rs) |
**** |
**** |
**** |
|
Wages/Employee(Indexed) |
100 |
163.70 |
162.75 |
PRODUCTIVITY:
68. The productivity per employee has
increased which would be clear from the following table. It has increased from
100 during 2001-2002 to 258.53 during the POI. Therefore, the decline in
productivity is not a cause of injury to the domestic industry.
|
|
2001-02 |
2002-03 |
2003-04 |
|
No.
of Employees |
**** |
**** |
**** |
|
Index |
100.0 |
100.0 |
100.0 |
|
Productivity
per employee(MTPA) |
**** |
**** |
**** |
|
Index |
100.00 |
148.83 |
258.53 |
|
Productivity
per man day |
**** |
**** |
**** |
|
Index |
100.00 |
148.83 |
258.53 |
INVENTORIES
69. It is noted that inventories have declined during the period of investigation. The stocks have decreased during the POI
compared with the base year . In the comments to the
disclosure statement, domestic industry clarified regarding the discrepancy in
the inventory reporting, which has been corrected for the
injury analysis. During 2000-01, inventories constituted 38%
of the sales volume of the Citric acid whereas in the period of investigation,
it declined to 6.24% of the sales volume. In absolute terms also it declined by
23% during the POI.
|
|
2001-02 |
2002-03 |
2003-04 |
|
Closing
Stock(MT) |
**** |
**** |
**** |
|
Index |
100.00 |
144.17 |
77.45 |
|
Sales(MT) |
**** |
**** |
**** |
|
Closing
stocks as the percentage of sales |
38% |
18.13 |
6.24% |
GROWTH
70. During the investigation the Authority
examined various parameters related with production and sales and observed that
the domestic industry is showing a positive growth in many parameters such as, capacity
utilization, production, sales, productivity, market share and profitability
during the POI.
MAGNITUDE OF DUMPING MARGIN
71. The
magnitude of dumping margin from each of the subject countries is worked out in
the dumping examination. These margins established are clearly above diminimis as defined in para iii(a) of the annexure II to rule 11 of the Anti dumping rules.
|
2003-04 (POI) |
|
|
|
Dumping
Margin |
7.21%
to 39.62% |
42.24% |
EVIDENCE OF LOSS CONTRACTS
72. The
applicant has claimed that they have lost contracts due to dumped imports from
subject countries. The argument was examined and the authority could not find
any direct evidence with regard to injury on account of loss contracts. Hence,
the authority could not conclude any findings with regard with injury to the
domestic industry on account of this parameter.
ABILITY TO RAISE CAPITAL INVESTMENTS
73. It is noted that the domestic industry is
incurring losses during the entire
injury period and the return on capital employed is also negative but it
has improved during the POI. The domestic industry could not plan to invest
further since incurring
losses during the entire injury period.
F.4 CONCLUSION
74.
The domestic industry has claimed that the material injury has been
caused by the dumped imports and put forward arguments in support of their
claim for causal link between dumped imports from subject countries and injury
suffered by them. However the responding
exporters have argued that the domestic industry has failed to bring arguments
with evidence regarding causality due to dumped imports. The arguments of the
interested parties were examined and found that the domestic industry has shown
improvement in production, capacity utilisation, sales, profitability and the
inventory of the subject goods in relation to the sales has also declined. The
profitability of the industry as per unit sale of the subject goods has shown
improvement and return on capital employed has also improved. Though the margin of dumping from subject
countries and price undercutting were found to be significant, however the
overall performance of the industry has shown improvement. In view of the above
the Authority concludes that the Domestic Industry has not suffered material
injury.
In view of the negative determination on
material injury, the Authority did not find necessary to record its finding on
causal link.
G. CONCLUSIONS:
75.
The Authority has, after considering the foregoing, come to the
conclusion that:
a. The
subject goods have been exported to
b. The
Domestic Industry has not suffered material injury;
c. Accordingly,
the Authority does not recommend imposition of anti-dumping duties on imports
of Subject goods from subject countries.
(CHRISTY
FERNANDEZ)
DESIGNATED
AUTHORITY