No.14/7/2003-DGAD
GOVERNMENT OF INDIA
MINISTRY OF COMMERCE & INDUSTRY
(DEPARTMENT OF COMMERCE)
DIRECTORATE GENERAL OF ANTI DUMPING & ALLIED DUTIES

New Delhi, the 15^th December 2004

Final Finding

Subject: Anti-dumping investigation concerning imports of coated paper including paper and paper boards of 80 GSM and above originating in or exported from the European Union and Indonesia – Final finding

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. BILT Graphics papers Ltd, on behalf of the domestic industry, alleging dumping of coated paper including paper and paper boards of 80 GSM and above originating in or exported from the European Union and Indonesia (hereinafter also referred to as subject countries);

(ii) The Authority notified the Embassies/High Commissions of subject countries in India about the receipt of fully documented application made by the petitioner before proceeding to initiate the investigation in accordance with sub-rule (5) of Rule 5 supra;

(iii) The Authority issued a Public Notice dated 17^th June 2003 published in the Gazette of India, Extraordinary, initiating anti dumping proceedings concerning imports of coated paper including paper and paper boards of 80 GSM and above in 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 and gave them an opportunity to make their views known in writing.

(v) According to sub-rule (3) and sub rule (4) of Rule 6 supra, the Authority provided a copy of the application to all the known exporters and Embassies/High Commissions of subject countries in India. The Authority sent questionnaires, to elicit relevant information, to the known exporters from subject countries and importers from India. M/s Sappi Europe, Brussels European Union, and M/s Pindo Deli (PD) and M/s Tjiwi Kimia (TK) of the Sinar Mas Group, Indonesia, have responded to the application by submitting substantial data and submitted the appendices to the exporters questionnaire and also offered verification to the data submitted by them. M/s Stora Enso, M/s M-Real Corporation and M/s UPM from the EU also submitted some of the information. However, since their information was considered substantially deficient , no verification of the data submitted by them was undertaken by the Authority and they have been treated as non cooperative in the subject investigation.

 

(vi) The Embassies/High Commissions of subject countries in New Delhi were also informed about the initiation of investigation and requested to advise the exporters/producers from their countries to respond to the questionnaire within the prescribed time;

(vii) The questionnaire was sent to the large number of importers. Few importers have submitted the data as required in the form and manner as prescribed in the exporter’s questionnaire. However many of the importers and users have submitted arguments which have been analysed to the extent as they have been found to be relevant to the investigation. The importers and users whose views have been taken into account amongst others include

Names of users and importers:

1. All India Federation of Master Printers, New Delhi
2. All India Paper Coaters’ Association, Mumbai
3. ITC Bhadrachalam Paper Board Ltd, Andhra Pradesh
4. Shri Krishna Paper Mills, New Delhi
5. Pragati Offset Pvt Ltd, Hyderabad
6. Ajanta Offset, New Delhi
7. India Today, New Delhi
8. Thomson Press, Faridabad
9. Ankit Packaging Ltd, Hyderabad
10. Pitamber Coated Papers, New Delhi
11. Hero Paper Co, Mumbai
12. Rollatainers, Faridabad
13. Kosmo Graphics, Mumbai
14. Laxmi Traders, Kolkata
15. ITC Ltd, Kolkata
16. Ganapati Enterprises
17. Shyam Traders, Delhi
18. Sumat Prasad & Sons, Delhi
19. Indu Marketing Corporation, New Delhi

Exporters

1. M/s. Mayr-Meinhof-Karton, Austria
2. M/s. M-Real Corporation, Finland
3. M/s. Stora Enso Fine Paper, Netherlands
4. M/s. UPM-Kymmene Corporation, Finland
5. M/s. Sappi Fine Paper Europe, Belgium
6. M/s. Asia Pulp & Paper, Indonesia
7. M/s. P.T. Pindo Deli, Indonesia
8. M/s. P.T Tijwi Kimia, Indonesia
9. M/s. Prabrik Kertas, Indonesia
10.  

Their views essentially pertain to the issue of the standing, domestic industry, product under consideration, like article and injury to the domestic industry. Their arguments have been analysed in the relevant headings and the determination of the authority with regards to claims of the various interested parties has been concluded in the same headings.

(viii) 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;

(ix)    **** in this notification represents information furnished by the interested parties on confidential basis and so considered by the Authority under the Rules;

(x) The investigation of dumping and injury covered the period from 1^st January 2002 to 31^st December 2002 (Also called the period of investigation or POI). The examination of trends in the context of injury analysis covered the period from 1^st January 2000 to the end of the POI (also called period under consideration or injury period). The import data has been examined from IBIS, Mumbai, DGCIS and data submitted by the exporters and importers. However after examining all the data including the transaction wise data from DGCIS and IBIS, Mumbai, it was considered appropriate to rely on the information submitted by the exporters , importers, and transaction wise data from the IBIS (international business information system), Mumbai as DGCIS data does not show the exclusive classification with respect to the subject goods.

(xi) The Authority provided an opportunity to all interested parties to present their views orally on 4^th September 2003. All parties presenting views orally were requested to file written submissions, of the views expressed orally. Domestic verification as well as exporter’s verification of the data submitted by them was undertaken by the Authority. The Authority sought and verified all the information it deemed necessary for the purpose of final Findings with regards to determination of dumping and resulting injury. The Authority conducted on the spot investigation of the domestic industry to the extent considered necessary. The Authority also carried out an on spot verification of the data submitted by cooperating exporters, namely, M/s Sinar Mas Group, Indonesia and M/s Sappi Europe, Brussels and verified the data submitted by them.

(xii) The cost of the production of the domestic industry was also analysed to work out the best 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 petitioner so as to ascertain if anti Dumping duty lower than dumping margin would be sufficient to remove injury to the domestic Industry. In accordance with Rule 16 of The Rule supra, the essential facts/ basis considered for these findings were disclosed to known interested parties on 29^th November 2004 and comments received on the same considered relevant to investigation are duly considered in Final Findings.

 

B PRODUCT UNDER CONSIDERATION

2. The product under consideration in the present investigation as mentioned in the initiation notification is Coated Paper including paper and paper board of 80 GSM and above. The product under consideration is classifiable within Customs Heading 4810 of the First Schedule to the Customs Tariff Act, 1975.

3. It has been argued by some of the interested parties that the product under consideration also covers coated papers other than those meant for printing, writing and graphics purposes as the product under consideration in the initiation notification indicates the customs Heading as 4810. It has also been argued that the product under consideration includes all the coated papers including packaging boards and other coated boards used for different purposes other than mentioned in the initiation notification and the description mentioned in the application. Some interested parties have also argued the fact that the Authority has rightly chosen the product under consideration regardless of the manufacturing process which was claimed by the applicant in their application. All the contentions have been carefully examined by the Authority. It is noted that anti-dumping investigation are carried out on the basis of description of the product under consideration and not its Tariff Classification. Moreover, in the initiation notification, it has been specifically indicated that the Customs Tariff classifications are indicative only and in no way binding on the scope of the present investigation. The Customs classification is only for the ease of reference and for collection of import data, and does not have any bearing on the product under consideration

4 The Domestic Industry mentioned in their application that the Coated papers including papers and paperboards of 80 GSM and above are produced by applying a thin film of a formulation of chemicals containing various pigments, binders etc. It was also added by them that the coating process is used for improving the print gloss and smoothness of the printing papers. The process of coating is mainly done by two processes namely, Air Knife Coating and Blade Coating. The applicant produces the coated paper by adopting the Blade Coating technology which ensures that the finished paper so produced has the desired level of smoothness, finish, uniformity of coating and better printability as compared to coated paper produced from Air Knife Coating Technique. The coated paper produced by Blade Coated technology has a high IGT value which can be used for high speed printing. On the other hand, coated paper produced by Air Knife technology has a low IGT value which does not give the same printing speed. The Domestic Industry further contended that the paper imported from the subject countries is produced by Blade Coated technology with high IGT value and, therefore, directly substitutes the paper produced by the Domestic Industry. They also submitted that the present Petition was filed only against Coated Paper produced from Blade Coated technique since such products directly compete with the dumped imports from the subject countries.

5. It has also been argued by other interested parties that the process of manufacture cannot be a factor to define the product under consideration in an anti-dumping investigation. The Authority has carefully examined various submissions made by the exporters, importers, and other interested parties as well as the Domestic Industry. The process of manufacture and the technical details of the product imported from the subject countries and those manufactured by the Domestic Industry were also physically verified by the Authority. The detailed technical specifications and the technical and commercial differences between the Blade Coated and Air Knife papers have also been examined. Based on the above input from all the interested parties including the Domestic Industry and cooperating exporters from the subject countries whose premises including their factories and information were physically verified by the investigation teams, the Authority is of the view that coated paper being imported from the subject countries are largely made through the blade coating technologies as the air knife coating techniques have not been in vogue in the recent years (it has been largely replaced by the Blade coated Process).. However, the Authority does not agree with the subsequent views of the domestic industry that the scope of the product should be restricted only to the product manufactured by blade process as it notes that the scope of the product can not be restricted by the process of the coating even if that given coating process gives the product a certain advantage in terms of properties like glossiness, IGT values and superior quality. Subsequent to the disclosure statement, various interested parties have reiterated their positions as mentioned in the disclosure statement and no fresh submissions/facts have been brought to the notice of the authority. Considering all the above factors the Authority considers the product under consideration as mentioned in the initiation notification as "coated paper including paper and paperboards of 80 GSM and above" (herein after also referred to as subject goods). The subject goods does not include coated paper with below 80 GSM (commonly known as light weight coated paper), glazed newsprint and all uncoated papers.

LIKE ARTICLE

6. The applicant claimed that under Rule 2(d), "like article" is defined as an article which is identical or alike in all respects to the article under investigation for being dumped in India. It is their contention that it is only in the absence of such an article that other goods which may not be identical but have characteristics closely resembling the dumped article, can be considered as "Like Articles". According to the petitioners, in the instant case, the dumping of Blade Coated paper is taking place as it is only this variety of coated paper which is produced abroad with very little or negligible quantities of Air Knife paper. It had also been submitted that besides the difference in processes of manufacture, the resulting end product have characteristics vastly different from each other. Therefore they submitted that it would not be legally permissible to include the producers of Air Knife paper within the definition of "Domestic Industry" as per the Anti-dumping Rules. It is their claim that they constitute more than 95% of the domestic production of the "Like Article" i.e., Coated Paper including paper and paperboards of 80 GSM and above of Blade coating variety. In support of their contention, the Petitioners have placed reliance on CESTAT decision passed in the case of Birla Periclase Vs. Designated Authority reported at 2000(16) ELT 336 (Tribunal) wherein it has been held that the Designated Authority is permitted to take recourse to the second limb of the definition of "Like Article" only in the absence of an identical article as envisaged in the first limb of the definition.

7. Some of the importers and exporters have argued that the Coated paper produced through Air Knife Coating and Blade Coated technology could definitely be grouped as like article. It has been argued that the process of manufacture is not relevant for the determination of the "like article". The concerned exporter has cited the decisions of the Designated Authority in the case of 3,4,5-TMBA, 8 HQ and Magnesium from China. It is submitted that in all these cases the production process was not considered to be relevant for determination of the "like article". M/s. M-Real advanced similar arguments in the context of standing of the petitioners to file an anti-dumping application for and on behalf of the Domestic Industry.

The Authority has examined the submissions made by interested parties and has also examined the submissions of the domestic industry.

8. The Authority notes that Rule 2(d) defines like article as follows:

"(d) "like article" means an article which is identical or alike in all respects to the article under investigation for being dumped in India or in the absence of such an article, another article which although not alike in all respects, has characteristics closely resembling those of the articles under investigation;"

9. From the definition given above, it is clear that the Authority is required to consider that product as a "like article" which is identical or alike in all respects to the article under investigation. It is only in the absence of such an Article, that the Authority would be permitted to take resort to the second limb of the definition of "like article". It has been argued that the decisions cited by the exporters may not be relevant as in these cases as the Authority resorted to the second limb of the definition when identical goods were not produced by the Domestic Industry, as envisaged under the first limb of the definition of "like article". The proposition by the exporters that the paper produced by Air Knife technology ought to have been included as "like article", was examined by the Authority. Following the representation by the exporters giving the names and addresses including their production capacities, the Authority called for the details of the production of the coated paper made through other processes by other producers as alleged by the other interested parties consisting largely of the exporters and importers. It is noted that several opportunities were given to the alleged other producers of the domestic like product to submit the information of their production, capacities and the fact if they are producing the like goods to the subject goods as alleged by the other interested parties. However, it is noted that the alleged other producers did not submit information as required in the proforma other than the production details of their plant for their period under consideration. As no information except the production details were forthcoming from the alleged other producers, the Authority has proceeded on the basis of the best information available to it.

10. For determination of the like article, the Authority is required to see whether various types are comparable in terms of parameters such as product specifications, physical and technical characteristics, manufacturing process and technology, plant and equipment, functions and uses, their substitutability, tariff classification and consumer perception. The Authority also notes that technical specification of the subject goods produced and supplied by the applicants are identical/comparable to the goods imported from the subject countries and the two are comparable in terms of physical, chemical properties and substitutability in terms of its usage. Subsequent to the disclosure statement, various interested parties have reiterated their positions as mentioned in the disclosure statement and no fresh submissions/facts have been brought to the notice of the authority

11. Keeping in view the arguments made by various interested parties and the available material on record, the Authority holds that the subject goods produced by the domestic industry are like article to the product under consideration.

STANDING OF THE DOMESTIC INDUSTRY:

12. It has been argued by the some of the exporters and importers after the initiation that that the applicant does not have the standing to file the application as per 5(3) of the Anti dumping rules. . The thrust of their argument is that the production of the "like article" by the Domestic Industry is less than the threshold limit of 25%. In support of their contention, M/s M-Real, one of the exporters of the subject goods from EU has relied upon a report from Jaakko Pöyry which has been obtained at their instance after the initiation of the investigation.

13. It is noted that the petitioners in their application had indicated that they accounted for more than 95% of the production of the "like article" in the country. The Authority had examined the production details as submitted by the applicant with regards to its obligation under 5(2) of the Anti dumping rules and had taken M/s BILT graphics paper as having the required standing to file the application in terms of the 5(3) of the Anti dumping rules as they constituted a major proportion of the domestic production under rule 2(b) to become a domestic industry read with rule 2(d). After the initiation notification, one of the exporters of the subject goods M/s M-Real from EU challenged the domestic industry status of the applicant in the Hon’ble Delhi High Court where their plea was treated as withdrawn. However, in the public hearing which was attended by most of the interested parties including the representative of the concerned ministry , and in the written submissions made before the Designated Authority after the public hearing, a plea was made to the Authority to ask the other alleged producers of the subject goods and to re-examine the standing of the applicant in the light of the information submitted by them. Though it was made known to them that a communication had already been made to the concerned ministry and its reply was awaited, the other interested parties submitted that the Authority should proactively ask so called other producers of the product concerned so that the standing of the domestic industry could be re ascertained by the Authority themselves before proceeding further in the investigation. They also requested the Authority not to proceed with the investigations till the standing issue is re-examined.

14. For the purpose of determining the standing of the petitioner to file the application on behalf of the Domestic Industry, it is to be seen that the petitioners should satisfy the conditions prescribed under Rule 5(3) of the Anti-dumping Rules. The relevant Rules are reproduced as under:

" Rule 5(3): The designated authority shall not initiate an investigation pursuant to an application made under sub-rule (1) unless –

(a) it determines, on the basis of an examination of the degree of support for, or opposition to the application expressed by domestic producers of the like product, that the application has been made by or on behalf of the domestic industry:

Provided that no investigation shall be initiated if domestic producers expressly supporting the application account for less than twenty five per cent of the total production of the like article by the domestic industry, and

(b) it examines the accuracy and adequacy of the evidence provided in the application and satisfies itself that there is sufficient evidence regarding -
 

(i) dumping,
(ii) injury, where applicable; and
(iii) where applicable, a causal link between such dumped imports and the alleged injury, to justify the initiation of an investigation.

Explanation. – For the purpose of this rule the application shall be deemed to have been made by or on behalf of the domestic industry, if it is supported by those domestic producers whose collective output constitute more than fifty per cent of the total production of the like article produced by that portion of the domestic industry expressing either support for or opposition, as the case may be, to the application."

15. From the above, it is clear that the Authority is required to take into consideration the total production as well as the production of the petitioners only in so far as it relates to the "like article". Continuing with the examination of the submissions made by the other interested parties in the preceding paragraphs, the Authority notes that the submissions made by some of the exporters as well as importers are erroneous in as much as they have also included a large number of papers which are neither the product under consideration nor the "like article". As regards the tests being applied by the Designated Authority, it is noted that the Designated Authority came to the conclusion that the petitioners account for more than 95% of the production of the Blade Coated paper (the "like article") in the country. It may also be mentioned that the Authority, as a matter of abundant precaution, also obtained the figures of all coated papers including papers and paperboards irrespective of the process of coating prior to the initiation of investigations. It was observed by the Authority that the petitioners accounted for more than 50% of the total domestic production (for coated papers including paper and paperboards irrespective of the processes). Thus, viewed from that perspective, the Authority had examined and satisfied itself that the petitioners fulfilled the criteria of standing as set out in Rule 5(3) of the Anti-dumping Rules.

16. Subsequent to the public hearing, the Authority also obtained the information from CPPRI, which clarified that the production of the subject goods was 252728 MT, during the period of investigation. In fact, a letter dated 2^nd September 2003 of Jaakko Pöyry also states that the total production of coated paper (both from air-knife and blade coated technology) is 240000 MT. However, the report submitted by the concerned ministry are inconclusive in the sense that not all the queries addressed by the other interested parties have been addressed. However, in a response to the letters addressed by the Authority to all the other alleged producers of the product concerned, their association namely M/s All India Paper coater’s association in their letter have written to the Authority that the total production of the subject goods are 156886MT and they support the application filed by M/s BILT Graphics papers Ltd for imposition of anti dumping duty from dumped imports from EU and Indonesia. With this production figure, the applicant constitutes the domestic industry within the meaning of the rule 2(b) read with rule 2(d) and thus they have the standing to file the application as per the 5(3) of the Anti dumping rules. Subsequent to the disclosure statement, there are arguments that M/s BILT Graphics Ltd has no legal meaning as it has ceased to be in effect since 2002 after its merger with M/s Ballarpur Industries Ltd and thus injury analysis of the domestic industry needs be to be revised . The Authority notes that M/s BILT Graphics paper Ltd , the original applicant in this instant case was formally amalgamated with the M/s Ballarpur Industries ltd under a scheme of amalgamation and arrangement between the two in terms of companies act. The scheme was approved by the Delhi high court on 27^th march 2003 and by Mumbai high court on 10^th April 2003. Statutory return was filed with ROC Mumbai on 29^th may 2003 and ROC Mumbai on 19^th June 2003. Subsequently, the domestic industry supplied the copies of these orders along with the merger scheme (affected from an earlier date) to the Authority. It is observed that the standing of the applicant to file an application for an anti dumping application for imposition of anti dumping duties is dependent upon the production of like articles in the India during the POI. Therefore, subsequent amalgamation on the basis of the high court order does not have any bearing on standing of the domestic industry. With regard to the arguments submitted by interested parties about exclusion of ITC Ltd from the purview of the domestic industry, it is stated that no reply with regard to their production details or their affiliation with the exporter has been received by the authority despite several reminders to them.

17. In view of the above, the Authority holds that the applicant qualifies as "Domestic Industry" accounting for a major proportion of the domestic production during the period of investigation and satisfies the criteria of standing as envisaged under Rule 5(3) of the Anti-dumping Rules.

Methodology and Assessment of Dumping

F. Dumping.

1. Under Section 9A(1) I of the Customs Tariff Act 1975, Normal value in relation to an article means:

1. The comparable price, in the ordinary course of trade, for the like article when meant for consumption in the exporting country or territory as determined in accordance with the rules made under sub-section (6); or
2. When there are no sales of the like article in the ordinary course of trade in the domestic market of the exporting country or territory, or when because of the particular market situation or low volume of the sales in the domestic market of the exporting country or territory, such sales do not permit a proper comparison, the normal value shall be either:-
1. Comparable representative price of the like article when exported from the exporting country or territory or an appropriate third country as determined in accordance with the rules made under sub-section (6); or
2. The cost of production of the said article in the country of origin along with reasonable addition for administrative, selling and general costs, and for profits, as determined in accordance with the rules made under sub-section (6)";

Provided that in the case of import of the article from a country other than the country of origin and where the article has been merely transhipped through the country of export or such article is not produced in the country of export or there is no comparable price in the country of export, the normal value shall be determined with reference to its price in the country of origin.

19. The Authority sent questionnaires to all the known exporters for the purpose of determination of normal value in accordance with Section 9A(i)(c). Only three producers, namely, M/s. Sappi Europe (Brussels) from EU and M/s TK and M/s PD (Indonesia) have responded to the questionnaire in the form and manner required as per letter to the exporters and exporter’s questionnaire.

F.1 EU

(a) Cooperation

20. M/s. Sappi Europe, EU has responded to the exporters’ questionnaire by giving substantial information with regard to various appendices mentioned in the exporters’ questionnaire. They also offered verification of the data submitted by them and the Authority has verified the data after onsite inspection at the premises of the producers and the exporter. Other exporters namely M/s Stora Enso and M/s M real have responded to the initiation notification and also attended the public hearing but they have not responded to the information sought by the Authority in the form and manner as prescribed in the exporters’ questionnaire. The Authority recalls that apart from the normal time schedule of 40 days from the date of initiation notification, further opportunity was given to these exporters to submit the information but they have not responded to the Authorities letter by submitting the required information. The authority notes that the these companies were reminded by the authority to submit the complete response in the form and manner as prescribed in the exporter’s questionnaire along with its Non confidential summary and was also reminded of the fact that if the information was not supplied within reasonable time, the Authority would be free to make determinations on the basis of the facts available including those contained in the application for the initiation of the investigation by the domestic industry. The Authority notes that none of the exporters and producers except M/s Sappi Europe (EU) have submitted response to the Authority letter asking for appendix wise information in the form and manner required in the exporters questionnaire. As the exporters from Indonesia namely M/s PD and M/s TK have submitted partial data which have been verified by the Authority, they are being treated as partially cooperative. In view of non-submission of response to the exporter’s questionnaire, the Authority treats the rest of the producers and exporters as Non-cooperative within the meaning of Agreement of Anti Dumping and Anti dumping rules.

(b) Normal Value & Export Price for Sappi Europe, Brussels

 

21. (i) SAPPI Europe , Belgium has submitted a detailed response to the Exporter’s Questionnaire. It has submitted information relating to all the sections of the questionnaire as well as the appendices 1,2,2A,2B,3,3A,3B,4,5,6,7,8A,8B and 9 as per new format. SAPPI has also furnished detailed audited financial statements for the financial years POI and two years prior to that. A perusal of the response indicates that SAPPI Europe has seven related companies that produce the product concerned in Europe.

(ii) Domestic sales in Europe are handled by SAPPI Europe SA [hereinafter referred to as Sappi Europe]. SAPPI Europe gets orders from their customers in Europe. The orders are passed on to any of the seven producing mills depending upon the product, delivery schedule, availability, place of delivery, etc. The concerned mill supplies the goods to the customer but raises an internal invoice on SAPPI, Europe. Sappi Europe raises an invoice on the customer. In a sense, SAPPI Europe acts as an agent of the mills concerned.

(iii) Export sales to India are handled by the Hong Kong branch of another related company M/s. SAPPI Paper Holding GmbH. The Hong Kong Branch of SAPPI Paper Holding GmbH collects orders from customers and passes it on to the concerned mills. The mill supplies the goods directly to the customer in India and raises an internal invoice on SAPPI Paper Holding, Hong Kong Branch which in turn raises its invoice on the customers located in India.

(iv) SAPPI has submitted sample copies of domestic sale invoices made by SAPPI Europe SA as well as export sales invoices made by SAPPI Holding AG, Hong Kong. Documents for domestic sale include order confirmations, invoices and weight list. The documents for export sales include order confirmations, commercial invoices, weight list, quantity/quality inspection certificates, certificate of marine insurance, shipping bills and certificate of origin.

(v) Appendix-I: Information relating to Home Market Sales in EU contains **** records. As an MS Excel file can handle only a maximum of 65,536 records, this appendix is too big for MS Excel. Therefore, SAPPI has given the file in MS Access format. A summary of this Appendix was prepared using MS Access. The summary report gives product code-wise details of domestic sales. The key parameters of the summary report are given in the confidential enclosures.

 

(vi) Similarly, SAPPI has submitted Appenx-2: Exports to India in MS Access format. A summary report was made using MS Access. Key parameters of the file are given below:

1. Export sales to India consist of **** records;
2. Material exported to India fall under **** different product codes;
3. Total quantity exported to India was **** MTs.
4. Net invoice value was Euros. ****
5. Ex-factory realisation was Euros.****.
6. Weighted average ex-factory export price to India was Euros.****per MT.

(vii) Both the above mentioned summary reports were converted into a MS Excel file named ‘SAPPI Analysis.xls’. All other appendices have been given in Ms EXCEL Format.

(viii) Appendix-2A gives ‘Monthly sales overview’ of domestic sales and export sales to India for the years 2001, 2002 and up to September 2003. The totals as per monthly sales overview was cross checked with the details given in Appendix 1 and 2.

(ix) SAPPI has furnished Appendix-3A : Sale Price structure for exports to India. They have claimed deductions towards credit cost, rebates, commission, freight and insurance. The net ex-factory export price comes to Euros. ****per MT. In Appendix – 3B: Sale Price structure for domestic sales, SAPPI has claimed deductions towards discounts, rebates, commission, freight and insurance from the domestic sales. The ex-factory domestic sale realisation comes to Euros. **** per MT. The net ex-factory export price to India shown in Appx-3A and the ex-factory domestic selling price shown in Appx-3B tally with Appx-2 and Appx-1 respectively.

(x) In Appx-4 SAPPI has furnished capacity, production and sales for SAPPI as a whole. In Appx-5 SAPPI has furnished statement of raw materials and packing materials consumption. In Appx-6 SAPPI has provided all costs relating to figures for the product-types that have been exported to India as also sold in Europe.

(xi) In Appx-7 SAPPI has furnished the allocation and apportionment of expenditure for the total operations of the company for the year 2002, Share applicable to the product under investigation and share applicable to other products. SAPPI has furnished in Appx-8A : Factory cost and profits of Exports to India in respect of product-types that have been exported to India. Similarly, SAPPI has also furnished Appx-8B :

(xii) Normal value was determined for each product description sold in EU domestic market following the Anti dumping rules and article 2 of the ADA.

There were only ****product-descriptions that had been exported to India. In respect of all the **** product-descriptions, it was found that less than 20% of the domestic sales were below COP. Therefore, normal value was determined in respect of all the **** product-descriptions.

(xiii) Further, the Authority also verified the adjustment factors in the export sales to India and also their sales in the domestic market. As regards adjustment factors in export sales to India, the authority verified from their records whether all adjustments claimed by them and verified by the Authority are deducted from the export price.

 

(xiv). The dumping margin calculation was revised after verifying the data from the exporters with regards to their normal value and export price at the ex factory level and after verifying all the adjustments. The calculations pertaining to the determination of normal value and export price are annexed at the Confidential Disclosure.

 

Other exporters from EU:

22. As the volume of exports to India from exporters other than the co-operating exporter was very high as compared to total volume of import from EU as a whole, residual dumping margin is determined for the residual exporters by taking the normal value as per the facts available under rule 6(8) and export price as per their exports to India. Subsequent to the disclosure statement, the domestic industry has argued that the export price for the other exporters from the European Union should be taken from the DGCI&S data. It has also been argued in the response to the disclosure statement that export price for the injury determination on the domestic industry should be determined it accordance with the DGCI&S data. The authority has examined the contentions of the various interested parties with regard to computation of export price for other exporters from EU. It has been noted by the authority that the subject investigation was initiated with the import data made available to the authority from the transaction wise data of IBIS for the POI and two years prior to that. It was then contended by the applicant that as the classification of the product under consideration was not exclusive in the six or eight digit customs head and keeping in view the product under consideration, it had not been feasible to rely on the summary classification of the DGCI&S. Subsequent, to the initiation, the authority called for transaction wise data from DGCI&S. However, after examining the transaction wise data, it became apparent that the subject imports are reported in many classifications and the data culled out from the transaction wise information was considered understated for the product under consideration when examined in the light of actual import data submitted by the responding exporters. As is the usual practice in the Directorate, the authority has accepted the export data submitted by the responding exporters i.e. M/s. Sappi (Europe), and M/s. Stora Enso for working out their export prices. However, since only M/s. Sappi Europe has submitted the complete information in the form and manner of the exporter’s questionnaire, they have been declared cooperative exporters in the subject investigation. For the rest of the exporters, the export price has been determined as per the best available information with the authority.

 

Normal Value & Export Price for TK, Indonesia and PD Indonesia

23. The group in its entirety is called the Sinar Mas Group. The Sinar Mas group is then split into different business units. One of the business unit is M/s Pt. Pabrik Kertas Tjiwi Kimia TBK (the company) which is controlled by ****, who is also company`s majority shareholder. The other business unit of the firm is M/s Pindo Deli Pulp and Paper Mills (the company) which is controlled by **** through indirect equity investments. **** is the principal shareholder of ****, which is the company`s majority shareholder. Following the submission of the substantial information from both these concerns, a verification visit was conducted by the verification team from the DGAD. It was verified that the raw material for the manufacture of Coated Paper & Paper Board is pulp which the sister concern of the company manufactures and the same is also sourced from outside also. The prices/transfer prices are set in USD. The company has claimed that they reflect international prices and the raw material prices are based on arm`s length transactions.

 

(i) Pt. Pabrik Kertas Tjiwi Kimia TBK. (TK)

(a) The consolidated financial statements of the company have been prepared in accordance with Generally Accepted Accounting Principles in Indonesia (Indonesia GAAP). The company generates monthly profit and loss account and production cost reports for its reporting purposes. The company has implemented ERP system for its operation and financial information system. M/s Pt. Pabrik Kertas Tjiwi Kimia (TK) provided the cost of production figures to the investigating team. The reporting year of the company is the calendar year which reconciles with the period of investigation . Appendices 7&8 require the information furnished to be certified by a practicing accountant which has not been provided by the company. It was verified that the total production of Coated Paper & Paper Board during the Period of Investigation was ****(capacity utilisation ****). Total sales during the period of investigation was ****. The company has submitted Appendices 7 and 8. The allocations for raw material, spare parts, utilities and direct labour have been done on actuals. Manufacturing overheads have been apportioned on production quantities. Administrative overheads and selling and distribution costs have been allocated on sales amounts. From 2001,the company and certain subsidiaries have defaulted on various principal and interest payments on loans and are in technical default on other loans. The company had a net loss of US$**** million for ended December 31,2002.On March 12, 2001 The company and **** announced a standstill on payment of all obligations (principal and interest) due to their creditors, except for some. Subsequent to the announced standstill, the company began negotiating terms for a consensual debt restructuring. The company has since signed master restructuring Agreements. This MRA and other restructuring documents constitute the definitive restructuring agreement. The success of this MRA is dependent on a host of factors which have been outlined in the financial statements. However, for the purpose of allocating financial expenses (including exchange losses) for this investigation, the company has gone ahead with the presumption that the MRA has been successfully implemented and have restated their liabilities and expenses accordingly. In Appendix 7 the company has claimed financial expense as US $ **** million USD instead of the financial statements amount of **** million USD (for the calendar year 2002). The company claims that the terms contemplated under MRA are bound to be implemented and as such they have recalculated their payables in terms of that agreement. The verification team pointed out that the success of the master restructuring agreement was dependent on a host of factors (significantly undeterminable and not in the control of the company).Also till the time of verification no proof has been provided of the restructuring becoming applicable. An adjustment in the amount of liabilities payable should be demonstrated in their audited accounts. In this particular case there has been no adjustment even a year later. Subsequent to the issuance of verification report and disclosure statement, the exporter has argued that authorities treatment of its financial expenses and profit need to be revised in light of actual liabilities and they have submitted a revised agreement in their support. However, the Authority reiterates its method of determination of financial expenses and reasonable profit as per its earlier determination as intimated to the exporter.

(b) As per Article 2.2.1.1, for determining the cost of production as per Article 2.2, costs shall normally be calculated on the basis of the records kept by the exporter or producer under investigation provided that such records are in accordance with the generally accepted accounting principles (GAAP) of the exporting country. The published financial statements of the company have been certified to be as per the generally accepted accounting principles of the exporting country. In the face of available financial statement as per GAAP, the reliance of the company on subsequent development of MRA for allocation of interest expenses was not considered reasonable. Accordingly the total cost to make and sell has been revised. Details of the same are enclosed in the confidential verification reports as Annexure A, B and C. As the domestic selling price is below the cost of the production on the weighted average basis during the POI, the ordinary course of trade test could not be conducted in the subject investigation and hence the normal value has been constructed by using the best information available under rule 6(8) of the ADA. The constructed normal value has been worked out after providing a profit margin of **** to the cost of production.

(ii) M/s Pindo Deli Pulp and Paper Mills , Indonesia

(a) The consolidated financial statements of the company and subsidiaries have been prepared in accordance with Generally Accepted Accounting Principles in Indonesia (Indonesia GAAP).This is an international standard that is used by majority of companies in Indonesia. The company generates monthly profit and loss account and production cost reports for its reporting purposes. The company has implemented SAP system for its operation and financial information system. M/s Pindo Deli provided the cost of production figures to the investigating team. The reporting year of the company is the calendar year which reconciles with the period of investigation. Appendices 7&8 requires the information furnished to be certified by a practicing accountant which has not been provided by the company. The total production of Coated Paper & Paper Board during the Period of Investigation was ****MT(capacity utilisation-****). Total sales during the period of investigation was **** MT. The company has submitted Appendices 7 and 8. The allocations for raw material, spare parts, utilities and direct labour have been done on actuals. Manufacturing overheads have been apportioned on production quantities. Administrative overheads and selling and distribution costs have been allocated on sales amounts. From 2001,the company and certain subsidiaries have defaulted on various principal and interest payments on loans and are in technical default on other loans. The company had a net loss of US$ **** million and having a deficit of US$ **** million for the year ended December 31,2002. On March 12,2001 **** and its subsidiaries which include the company and **** announced a standstill on payment of all obligations(principal and interest) due to their creditors, except for some. Subsequent to the announced standstill, APP began negotiating terms for a consensual debt restructuring. The company has since signed master restructuring Agreements. This MRA and other restructuring documents constitute the definitive restructuring agreement. The success of this MRA is dependent on a host of factors which have been outlined in the Consolidated financial statements. However, for the purpose of allocating financial expenses (including exchange losses) for this investigation, the company has gone ahead with the presumption that the MRA has been successfully implemented and have restated their liabilities and expenses accordingly. In Appendix 7 the company has claimed financial expense as US $ **** million USD instead of the financial statements amount of **** million USD (for the calendar year 2002). The company claims that the terms contemplated under MRA are bound to be implemented and as such they have recalculated their payables in terms of that agreement.

(b) The verification team noted after examining all the documents that the success of the master restructuring agreement was dependent on a host of factors (significantly undeterminable and not in the control of the company). Also till the time of verification no proof has been provided of the restructuring becoming applicable. An adjustment in the amount of liabilities payable should be demonstrated in their audited accounts. In this particular case there has been no adjustment even a year later. Subsequent to the issuance of verification report and disclosure statement, the exporter has argued that authorities treatment of its financial expenses and profit need to be revised in light of actual liabilities and they have submitted a revised agreement in their support. However, the Authority reiterates its method of determination of financial expenses and reasonable profit as per its earlier determination

(c) As per Article 2.2.1.1, for determining the cost of production as per Article 2.2, costs shall normally be calculated on the basis of the records kept by the exporter or producer under investigation provided that such records are in accordance with the generally accepted accounting principles (GAAP) of the exporting country. The published financial statements of the company have been certified to be as per the generally accepted accounting principles of the exporting country. In the face of available financial statement as per GAAP, the reliance of the company on subsequent development of MRA for allocation of interest expenses was not considered reasonable. Accordingly the total cost to make and sell has been revised. Details of the same are enclosed as Annexure A, B and C. The constructed normal value has been worked out after providing a profit margin of 5%. As the domestic selling price is below the cost of the production on the weighted average basis during the POI, the ordinary course of trade test cannot be conducted in the subject investigation and hence the normal value has been constructed by using the best information available under rule 6(8) of the ADA. The constructed normal value has been worked out after providing a profit margin of 5% to the cost of production. Subsequent to the disclosure statement, it has been pointed out by the domestic industry that the authority should have accepted the export price as per the DGCI&S data. In this regard, it is noted that the subject investigation was initiated with the IBIS data (data from the customs daily list provided by IBIS and made available by the domestic industry). Subsequent to the initiation, the exporters who constitute the entire exports to India during the POI did not submit the volume and price of exports of subject goods to India. The authority, in view of this fact, has accepted the export price reported in the IBIS data at the time initiation and all the adjustments and all the adjustment have been carried out as per the best information available which is a usual practice in view of the non-cooperation of the exporters to furnish the export information to India.

Comparison

24. For the purpose of a fair comparison between the normal value and export price at an ex factory level, due allowance in the form of adjustments was made for differences that were claimed and demonstrated to affect prices and price comparability. These adjustments were made, wherever appropriate, in respect of transport, insurance, handling, loading, credit costs and others in accordance with para 6 of the annexure I of the anti dumping rules made under the Customs Tariff Act.

Dumping Margin for TK and PD, Indonesia:

25. In accordance with Rule 6(iv) of annexure I to the anti dumping rules, the dumping margin was established on the basis of constructed normal values with the weighted average export price. The comparison showed the existence of dumping of the subject goods by the exporters during the POI. The weighted average dumping margin, expressed, as a percentage to the export price has been determined and is positive for both the exporters.

Other exporters from Indonesia:

26. As the volume of imports from TK and PD was very high (In fact all the exports made from Indonesia were from these two exporters only during the POI) as compared to total volume of import from Indonesia as a whole, residual import margin is determined for the residual exporters as determined for M/s Pindo Deli, Indonesia.

Dumping Margin:

27. Dumping Margin

 

 

G.    Injury

1. Domestic consumption/demand

28. The domestic consumption/demand is based on the sales of the Domestic Industry, imports from the subject countries and imports from other countries into India. On this basis, the domestic demand or consumption of the subject goods in the domestic market increased from 83194 MT in Jan-Dec 2000 to 110721 MT in the period of investigation representing an increase of 33%. It can be seen that the total demand in the country is constantly growing on a year-to-year basis also.

 

Domestic demand/consumption
	Jan 00-Dec 00	Jan 01-Dec 01	Jan 02-Dec 02(POI)
Demand (MT)	83194	90597	110721
Indexed	100.00	108.90	133.09

 

29. (a) Cumulative Assessment of the effects of imports concerned

i) The Authority examined whether imports of subject goods originating in EU and Indonesia should be assessed cumulatively as per Article 3.3 of the Agreement on Anti-Dumping and Rule 11 of the Anti Dumping Rules Under the Customs Tariff Act.

1. The margin of dumping established in relation to the imports from each of the subject countries (EU and Indonesia) was above the de minimus threshold as defined in Article 5.8 of the Agreement on Anti-Dumping and Rule 14 of the Anti Dumping Rules and Volume of dumped imports from each of these countries was not negligible.
2. The domestic product and product supplied by producers in various countries are like articles; and the imported products and domestically produced subject goods can and are being interchangeably used. Response filed by the various interested parties and correlation of the same with customer wise sales of the domestic industry makes it evident that there are a number of parties who have resorted to purchase from the domestic industry and imports from subject countries. It is further noted that subject goods supplied by various countries compete in the same market. Further, it is also noted that products supplied by various producers in subject countries are being marketed in India during the same periods through comparable sales channels and under similar commercial conditions.
3. In the light of the above, the authority has considered that the criteria set out in article 3.3 of the Agreement of Anti-Dumping and as per para iii of the Annexure II under Rule 11 were met with respect to imports from EU and Indonesia and therefore imports from these two countries should be cumulated for the purpose of injury determinations.

 

2. Imports originating in the subject countries.

Volume

30. The absolute volume of dumped imports of the product under consideration from subject countries into the domestic market increased by 140 % over the period under consideration. As a share in total demand, it increased by 81%. The authority further notes that the domestic consumption increased by 33% during the period under consideration. It is therefore concluded that there has been steady and significant increase in demand and also the volume of dumped imports has significantly increased over the period under consideration.