PIMA Pig Iron Manufacturers Association

China PR/China The People’s Republic of China

Authority Designated Authority

MBF Mini Blast Furnace

ICA Industries and Commerce Association, Dhanbad

LAMC Low Ash Metallurgical Coke

PMI The Permanent Mission of India in Geneva

CPA Certified Public Accountant

4. Metallurgical Coke is produced by destructive distillation of Metallurgical (coking coal) in the absence of oxygen at high temperature generally ranging around 1000 degrees centigrade without burning the coal. The Metallurgical Coke produced is mainly carbon along with some mineral and residual volatile material. The metcoke is used as a primary fuel in industries where a uniform and high temperature is required in kilns of furnaces.

5. Metallurgical Coke is classified under Chapter 27 (under sub- heading 27.04) of the Customs Tariff Act. 1975. The classification, manufacturing process and usage of the product indicated herein are, however, indicative only and are in no way binding on the scope of the product under consideration.

6. Metcoke is used in various industries including pig iron, foundries, ferro alloys, chemical, integrated steel plants and others.

7. It has been argued by the importers that the product under consideration at the time of initiation of investigation was "Metallurgical coke made out of low ash coal" but the product described in preliminary findings is "Metallurgical Coke" and thus the Authority has enlarged the scope of investigation. However, it can be seen that all interested parties to the investigation have all throughout agreed that the Chinese coke alleged to have been dumped into India has low ash content. The Authority, therefore, considers that there is no enlargement of the scope of the investigations and all metallurgical coke originating in or exported from China PR is covered under the scope of the present investigations.

(b) Foundries Upto 40% ash

(c) Ferro Alloys Low sulphur, low phosphorous

(d) Chemicals Upto 38% ash

(e) Other Coke of any ash content

8.3. The production process for high ash coke or low ash coke is identical notwithstanding the type of coal used. Indian coke manufactures can even convert imported coal for specific industry in their existing plants without any modification. There is no restriction, technical or otherwise to manufacture coke in India using imported coal. Therefore, prima-facie, it is erroneous and misleading to state that coke produced in China is not identical to coke produced in India. The petitioner has quoted the case of NBR wherein it was held that although identical grades of NBR were not being manufactured in India, there were no restrictions in manufacturing the same. Indian plants are fully capable of manufacturing coke with imported coal and this is in fact being done at several plants all over India.

8.4. Indian coke and Chinese coke are used interchangeably. The argument of the pig iron manufacturing association that Indian coke is unsuitable for their plants is factually incorrect. Even Steel Ministry has stated that indigenous coke manufactures will need to be encouraged to meet the domestic demand generated by new Mini Blast Furnaces (MBF) which are coming up in India. Thus, Indian raw material is to be used in the manufacture of pig iron in India.

8.5. Tata Korf is the pre- dominant technology used by nearly 90% of pig iron plants in India. In 1989, Tata Korf presented a paper stating that MBF can use medium grade coking coal with ash content up to 30% and coking coal with ash content of 30% will produce coke with ash content between 40% to 45%. The paper also states that coke can be imported or could be produced in India using imported coal. Alternatively, this better quality coke can be mixed with coke from Indian source. However the cost of imported coal/ coke is more expensive and will increase the overall cost of production of pig iron. Indian ore contain 66.5% iron. In order to obtain sufficient ‘slag and flow’ approximately 18% ash is required. Since Chinese coke has less ash than Indian coke, Indian pig iron manufactures are compelled to add quartzite (a form of ash) in the process of manufacture.

8.6. Indian met coke is having characteristics closely resembling to the metcoke from China and hence coke imported from China is a "like article" to Indian metcoke and it is "commercially and technically" substitutable.

8.7. The petitioner has argued that factors which compare Indian coke with Chinese coke are:

(ii) Metcoke made of Indian coking coal.

9.2 Metcoke produced from Indian coking coal is not comparable to metcoke produced from imported coking coal or imported metcoke. The distinguishing factor in the metcoke manufactured from Indian coking coal and imported coking coal or imported metcoke is the ash content. The coke produced out of Indian coking coal is appropriately termed as High Ash Metcoke (HAMC) whereas the coke produced out of imported coking coal or imported metcoke is termed as Low Ash Metcoke (LAMC). The physical and chemical properties of the two types of coke are as under: -

9.4. The petitioner is claiming that while the coal used in China and that used in India are not identical, there is no restriction to manufacture coke in India using imported coal. However, this argument has no relevance whatsoever to the question whether the metcoke with ash content up to 15% imported from China is a like or not like article to metcoke produced by ICA, which has an ash content of 27-40%. The issue is not whether the ICA member could manufacture metcoke with low ash content from imported coal but whether the coke manufactured by them from high ash Indian coke could be used as a substitute to low ash coke in Mini Blast Furnaces (MBFs). The petitioner had relied on a paper presented by Tata Korf Engg. Services Ltd. in Sept 1989 stating the MBF can use medium grade coking coal with ash content up to 30%. However, the importers in response have submitted a letter from Tata Korf Engineering Services Ltd. that ash content in the coke for use in MBF should be limited to about 12%. One of the reasons for difference in opinion in 1989 and in 1998 given by M/s Tata Korf for non- suitability of high ash coke is that Tata Korf had no experience of operating Mini Blast Furnace in India and now they are recommending coke with ash content of about 13%. Tata Korf Engineering Services Ltd., has further stated that they have designed its mini blast furnaces to operate with technical parameters with respect to coke rate, productivity, slag volumes etc. whereby the process will be technically and economically viable and can produce hot metal of suitable grade. These plants are designed basically for cost effective technology for which it is essential to use LAMC having the following parameters: -

9.6. Quartzite is not being added in the burden in the mini blast fumace operating on low ash imported coke and producing basic grade low silicon iron for steel making. Small amount of quartzite is added by these MBF operators who are producing very high silicon (2.0-3.0%) pig iron for foundries. It would be appropriate to mention here that quartzite is not’ a form of ash function wise quartzite cannot be substituted by the silica contained in the coke. The addition of quartzite is necessary to produce high silicon foundry grade iron since quartzite is pure form of silica (above 97%SIO2) which has better mechanism of silicon transfer to hot metal inside the blast fumace. Quartzite plays an important role in maintaining the bosh slag (primary slag) basicity. The silica of quartzite combines with CaO to form the primary slag at the bosh region. Whereas, if high ash coke is used, the SIO2 of coke ash is released only in the tuyere region, thus making the bosh slag viscous, which hinders in blast flow through the burden. Silicon transfer to hot metal cannot be easily achieved through the use of high as coke which on the other hand brings adverse effects on productivity, coke rate, slag volume, etc. Moreover, high ash coke will lead to higher alumina input, thereby making the slag viscous. To take care of such a situation, more silica in the form of quartzite needs to be added. This calls for high requirement of fluxes and consequently higher slag volume, which can be encountered by combustion of more coke to keep the slag molten. Obviously this has compounding effect on unfavorable coke rate, slag volume and productivity. In view of the above it has been recommended that only low ash metallurgical coke is used in Tata Korf mini blast furnaces.

9.11. In the input output norms published by Ministry of Commerce for production of pig iron (blast furnace route) one of the input shown is low ash metallurgical coke (with ash content below 15%). Thus metcoke with ash content of 27-40% is not a like article to metcoke imported. The high ash content coke produced by Indian coke producers hampers productivity, increases the rate of consumption with cascading effect on cost of production. The viability of MBF operation is based on the presumption that high quality of Chinese coke would be available at economic prices.

9.12. When the petitioner themselves are distinguishing these two products i.e., low ash metcoke and high ash metcoke, how the Designated Authority has come to the conclusion that the products are substitutable both technically and commercially. Where an identical article which is alike in all respect with the article under investigation exists, it will constitute like article. There are manufactures of metcoke in India who produce LAMC out of imported coal. Such LAMC is identical in all respect and thus it will constitute a like article. If such article was not being manufactured in India, then the Authority should look for whether the article produced by domestic industry is having characteristics closely resembling those under investigation. Thus the product produced by ICA, Dhanbad should be excluded.

9.16. The ferro alloys industry has stated that the coke required for ferro alloys industry has a different specification. They require coke only in the size range of 10 to 30 mm and with a phosphorous content not exceeding 0.0166%. The coke produced from Indian coal has a phosphorous content of 0.15% and it cannot at all be used by the ferro alloys produced. The coke produced by ICA Dhanbad is neither suitable for pig iron manufacturers because of ash content nor suitable for ferro alloys producers because of high ash and phosphorous content. The local ferro alloys industry require low ash, low phosphorous, low sulphur metcoke having stringent sufficient specification which is not available for indigenous sources. Manufacture of ferro alloys is a continuous process and as such the plant has to be operated continuously without any interruption and stoppage. For this, the industry has to import low phosphorous, low ash, low sulphur metcoke from China as the indigenous metcoke cannot be used.

"Like article" means an article which is identical or alike in all respect to the article under investigation for being dumped in India or in the absence of such article, another article which although not alike in all respect, has characteristics closely resembling to those articles under investigation."

11. With regard to the issue of "like article", it has been contended by the exporters and the importers that the metcoke produced by the Industries and Commerce Association (ICA) has very high ash content and, therefore, the same cannot be called as a like article to the metcoke imported from China. It has also been mentioned that the other technical specifications are also different to an extent that the user industries cannot substitute the Chinese coke with the metcoke produced by ICA.

13. The Authority also observes that the production process for both the above categories is same and the ash content of the metcoke depends upon the blend of the coal used for the purpose. Blending of different varieties of coal is done to arrive at the desired level of ash content in the finished product i.e. metcoke. The Authority observes that there have been instances where the blast furnace have used the high ash content metcoke also even though they have mainly preferred to use the imported Chinese coke with low ash content. The claims made by the domestic industry that the pig iron manufacturers were using coke made from Indian coal in the past, particularly in the period prior to 1992, remains uncontroverted.

14. In view of the above, the Authority concludes that there is considerable evidence to suggest that the variation in the technical composition, particularly the ash content, does not make it technically impossible for all the user industries to use the high ash content metcoke. The argument that the user industry has not placed any orders during the period of investigation does not have any bearing on the aspect of technical substitutability of the Indian metcoke with the Chinese metcoke. Even the opinion of the technical experts does not categorically state that the substitution of the two categories of metcoke is not possible. The opinions expressed by the experts merely indicate that use of high ash content metcoke in the production of pig iron will lead to high slag generation etc., and that the commercial viability of the MBFs is entirely dependant upon the use of low ash content Chinese metcoke. The Authority observes that for determining the "like article", it is the substitutability which is of paramount importance and not the actual substitution, the latter may be a relevant factor from the injury point of view.

15. Some user industry groups like manufactures of ductile iron pipes, ferro alloys have indicated that the metcoke required by them has to have some other physical as well as chemical properties. For instance, it has been indicated by the ductile iron pipes industry that the phosphorous content in the metcoke required by them should be less than 0.035%. While it is appreciated that certain industries may have special requirements, anti-dumping rules do not permit analysis on the basis of specific end users when there is a high degree of substitution possible among different types of user industries. The Authority therefore is not in a position to make any separate categorisation for users with special requirements.

16. In view of the above, the Authority holds that even through the members of ICA mainly produce metcoke which is not substitutable to the low ash content metcoke for some uses, these producers are capable manufacturing low ash content metcoke depending upon the quality and source of coal used by them. However, it is also observed that the members of ICA had not produced significant quantities of low ash content metcoke either from good quality India coal or imported coal. However, the petitioner BLA Industries Ltd. has produce significant quantities of Low Ash Content Low for a specific segment of end users in the domestic market.

17. The Authority, therefore, holds that it is only the production of low ash content metcoke which is " like article " to the imported Chinese coke. The contention of the exporter/importers that high ash content metcoke should not be considered as like articles, has considerable force and is accepted in view of the facts and circumstances of the case.

19.3. RINL must also be excluded from the domestic industry as their production is consumed internally within their process of production and negligible amount reaches the merchant market. Under the proviso to Rule 2(b) read with Rule 11(3); the producers who produce and market metcoke and those who produce and captively consume, constitute two competitive markets and each one of them must be treated as a separate domestic industry. Since RINL is a consumer of metcoke and its produces metcoke for its captive consumption it is an intermediary product and not as an end product for the purpose of excise duty or sales tax or any other purpose. Further the exclusion of captive consumption is common in GATT practice world over.

19.4. Considering above point, BLA Industries Ltd. and ICA constitute 45% at the time of initiation and at present express support for the petition is 67.81%. The statutory requirement of locus standing in respect of Domestic Industry have been fully complied with.

19.5. The repeated argument of the importer/exporter that WTO has clarified to the Ministry of Commerce in 1994, that for standing purpose only captive production must be included in the preview of domestic industry has never been substantiated. There is no question of "WTO" having issued any clarification to any query pertaining to the technical aspect of dealing with "captive production" unless all member states give ascent to such a clarification.

20. Views of the importers: The views of importers on Standing of Domestic Industry are as follows:

20.1. The Authority has not taken into account the production of metcoke by Rashtriya Ispat Nigam Ltd. (RINL) even though it had been brought to the notice of Authority about the clarification issued by WTO that production, predominately for captive consumption should be taken into account for the purpose of determining the standing of petitioner. With reference to WTO clarification, for the purpose of determination of standing, production is important and not consumption. For the purpose of determination of injury, those producers who produce mainly for captive consumption should get little attention. The argument of the petitioner that GATT practice world over to exclude captive consumption is incorrect. It is claimed by importer that practice in US & Europe supports their views and captive consumption be excluded in injury analysis.

20.2. The petitioner has argued that as per proviso to Rule 2(b) and Rule11(3) would imply that there are two competitive market of Metcoke and each one of them must be treated as a separate domestic industry and those producer producing the Metcoke for captive consumption be treated as separate industry and those producing Metcoke for sale in the market must be treated as another industry. This argument is erroneous and has been made without proper appreciation of the legal position because such separation can be invoked only where there has been a concentration of dumped imports into a certain area and the producers within that area sell all their production in that area and the demand in that area is not supplied by producers located elsewhere in the territory to any substantial degree.

20.3. The argument of petitioner that RINL should be excluded from the purview of domestic industry on the basis that RINL is under the administrative control of Ministry of Steel is not correct. SAIL is also under the administrative control of Ministry of Steel and has been excluded as Visvesvariya Iron & Steel Ltd. (VISL), which is a subsidiary of SAIL, has imported the Metcoke. The petitioner has argued that since RINL and SAIL are under the administrative control of Ministry of Steel and thus related to each other. It is stated in Article VI that producers shall be related to importers if one of them directly of indirectly controls the other, or both of them are directly of indirectly controlled by a third person or together they directly or indirectly controls a third person.

20.4. It is argued that the question whether RINL directly or indirectly controls VISL has to be answered in negative as RINL is neither legally nor operationally in a position to exercise restraint of direction over VISL. The converse is also true. RINL is not legally or operationally in a position to exercise restraint or direction over SAIL and vice versa hence RINL and VISL are not related. On the date of initiation of investigation, there was no express support from RINL. If RINL questionnaire response is to be treated as support to the petition, then their subsequent opposition to imposition of anti-dumping duty are also to be considered. The petitioner did not have the express support of RINL on the date of initiation and hence did not satisfy the 25% requirement under the proviso to Rule 5(3)(a) and the standing had to be determined only with reference to the support existing on the date of initiation.

20.5. The claim of the petitioner that the stage for determining the standing of the domestic industry is, before the Designated Authority decided to initiate the investigation, and not thereafter, is not correct.

20.6. P!MA has pointed out that even after excluding the production of SAIL & T1SCO whose subsidiaries had imported the Coke, the petitioner M/s BLA Industries ICA account for 18.1% of the total production of Metcoke and hence do not have standing to fire petition.

20.7 The petitioners who filed the petition did not indicate the names of other producers of Metcoke. To this extent the information furnished by petitioner was insufficient incorrect and misleading. It is the duty of Designated Authority to satisfy itself that the petition who made the application satisfy the statutory requirements on standing to file petition. These conditions have to be satisfied at the time of initiation of the investigation. If a producer who at the time of initiation of investigation did not support the petition but later on support the petition after initiation of investigation, that cannot be taken into account to validate the initiation of the investigations, if the original initiation was not in order. Since the petitioner had not given the details of production of RINL or BCCL, the Designated Authority was missed. Wellman Incandescent Ltd.. on 24.4.98 submitted to Authority that it is suffering injury. However, in the letter they are not expressly indicating any support to petition, BCCL expressly supported the petition on 22-5-98. RINL has filed response in 28.11.97 however there is no indication about the express support. The said letter has been withdrawn on 15.5.98 and vide the letter dated 1.6.98, they are opposing the petitions. Thus even if BCCL support is taken into account which should not be taken into account, the percentage of productions of supporter and opponents of applications is 25.28% which is less than the statutory requirement of 50%. Thus the petitioners have no standing to file the petition nor maintain it and consequently the Designated Authority has no iurisdiction to initiate or continue the investigations.

20.8 The Authority has excluded the production of SAIL for determination of domestic industry on the ground that it is producing the coke for captive consumption and one of the subsidiary namely Visvesvaraya Iron and Steel is an importer. Under Rule 2(b) there is no provision to exclude the production of producing who produce far captive consumption. The excluded category covers the persons who are "themselves" the importers of the articles in questions. The expression "themselves" is of almost importance and refers to the producers/manufactures of article in question. There is no provision anywhere in Rule 2(b) for excluding the figures of production on the ground that the domestic manufacturer itself is not an importer but one of its subsidiary company is an importer. Hence the petitioner and its supporters accounts for 4.2% domestic production and have no standing. Even if the figures of SAIL is excluded their share is 18% and they do not have standing to file petition.

20.9. There are only two producers BLA Industries Ltd. and Gujarat NRE Coke Ltd., among petitioners alleging dumping of coke, who have facilities to produce low ash coke with 12-15% Ash from imported coking coal. However they can not cater to the requirement of Pig Iron/ Steel producers.

20.10. Rashtriya Ispat Nigam Ltd., (RINL) has requested to examine the possibilities of imposing duty on Metcoke on 28.11.97. However this letter was withdrawn on 15.5.98 On 1.6.98 they submitted another letter wherein they have opposed the petition to levy anti- dumping duty. They have stated that the coke production at RINL is primarily for its captive consumption and only surplus quantities have been sold in domestic market. They have also stated that their letter dated 28.11.97 had no clearance from the management and it was given unauthorized. It is also stated that content of the letter do not reflect the philosophy of Policy of RINL and they are taking suitable action internally for sending such an unauthorised letter. They requested to treat the letter dated 28.11.97 as withdrawn and as null and void. Thus RINL has opposed the petitioner.

22. Provided that in exceptional circumstances referred to in sub Rule(3)of Rule 11.the domestic industry in relation to the article in question shall be deemed to comprise two or more competitive markets and the producers within each such market a separate industry if

(i) there is a concentration of dumped imports into an isolated market, and

24. From the definition of domestic industry, as mentioned above, the Designated Authority is required to evaluate the scope of the term "Domestic Industry" in the context of the domestic producers who are engaged in the manufacture of "like article" and any activity connected therewith. Rule 5(a) clearly states that the Authority is required to examine the degree of support for or opposition to the application expressed by the domestic producers of the "like article". The proviso further states that no investigation shall be initiated if the domestic producers expressly supporting the application account for less than 25% of the total production of the "like article" by the domestic industry.

25. It is clear from the above that for the determination of domestic industry, only the producers of "like article" have to be taken into account. The Authority, having already determined the scope of the term "like article" in para 18 above, is required to take into consideration the total production of only the "like article" i.e. metcoke of ash content up to and below 15% only for the purposes of determining the threshold limits of 25% and 50%. The authority, therefore, proceeds to determine, on a factual basis, as to which of the producers constitute the domestic industry of India:

27. It has also been noticed that the members of ICA and RINL are producers of metcoke of above 15% ash content. Therefore, these units are not the producers of like articles for the purpose of these investigations. Subsequent to the disclosure if essential facts, it has been stated by the importers that it would not be correct to state that RINL is producing coke with ash content of above 15% in view of the fact that some tolerance is to be allowed in the stated figure of 15%. The Authority notes that the production figures of RINL and their average ash content was provided by RINL itself on a monthly basis. These figures clearly indicate that RINL, by its own admission, had never produced metcoke of less than or upto 15%. Moreover, the facts stated in the disclosure statement have not been disputed by RINL itself. The contention of the importer, therefore, cannot be accepted. This is without prejudice to the finding of the Authority that the production of RINL which is meant for captive consumption is not to be included for the purpose of either the determination of domestic industry or for the purpose of standing.

30. The final position with regard to the producers who are being considered as a part of the "Domestic Industry" is as follows:

32. Subsequent to the disclosure, a number of importers have annexed a copy of a communication received from the Permanent Mission of India at Geneva (PMI) with regard to the issue of including the production meant for captive consumption for the purpose of standing. None of the parties has, however, enclosed copies of the letter dated 10th June, 1998, seeking clarification from the PMI. The said communication dated 20.7.98, which was submitted to the Authority on 10.8.98 (the last date of submitting response to the disclosure statement), reads as under:

34. Notwithstanding the fact that the Authority is not bound by the personal or official opinions of the WTO Secretariat officials, no legal or economic analysis, reasoning or case law has been cited to arrive at the said opinion. In this respect, no credence can be attached to the said clarification nor can it be said to have even any persuasive value. The Authority observes that, as per its consistent practice, production meant for captive consumption need not be included for the purpose of defining "Domestic Industry" or the standing of the petitioners. The Authority considers that goods meant for captive consumption do not enter into the markets where the merchant goods are competing with the alleged dumped goods. In any case, the Authority observes that in the instant case, there is no producer of metcoke of upto 15% ash content, who is otherwise eligible to be covered under the scope of "Domestic Industry". The Authority also observes that the practice of European Commission and the US authorities cited by the exporters counsel that goods meant for captive consumption are not excluded, is not factually correct.

35. The Authority observes that the total production of metcoke of upto 15% ash content (like article) by the "Domestic Industry" is 240245 MT during the period of investigation. The petition has the support of the all producers who account for 100 per cent of the total production of the "like article" by the "Domestic Industry". The Authority therefore concludes that the petition has the requisite support as envisaged under the law.

36. An issue has been raised that the Authority has to determine the standing on the date of initiation and any subsequent support to the petition should not be taken into account. The Authority observes that even though it is required to determine the support of opposition to a petition at the time of initiation of investigations, such determination is based only on the basis of examination of the evidence available at that point of time. Further, the Authority should and can go into the issues of scope of "Domestic Industry" and "like article" only after the investigations are initiated. The details of whether any producer is also an importer of the alleged dumped goods can only be established after a proper investigation is initiated following the due process of law. Similarly, the precise scope of the term "like article" can also be determined after the Authority gets an opportunity to carry out detailed investigations, and after giving due opportunity to all the interested parties. On the basis of detailed information and an in- depth analysis, the scope of the terms "Domestic Industry" and "like article" is determined by the Designated Authority, which has a direct bearing on the standing issue. A final determination of any aspect at the pre- initiation stage itself is, therefore, not contemplated either in the Indian laws or in the GATT Agreement nor would such a process be consistent with the principles of natural justice.

37. In view of the above discussions, the Authority also holds that based on the information available to it at the time of initiation, the petitioners had the standing to file the petition on behalf of the domestic industry. As stated earlier, after redefining the scope of "like article" and admitting the argument of the importers/ exporters that the high ash content metcoke producers should be excluded, the Authority holds that the petition has the support of producers accounting for 100% of the production of "like article". On the date of initiation the petition was filed by M/s BLA Industries Ltd. And ICA and was supported by Southern Fuels Ltd. These producers collectively accounted for more than 25% of "Domestic Industry" known as producers of metallurgical coke at that point of time. As such, the petitioners had the standing to file the petition on behalf of the Indian "Domestic Industry" on the date of initiation of investigations.

39. Ningxia Xiacheng Import & Export Corpn: The said exporter has not submitted any other information after the preliminary findings were notified. Thus the claims of the above exporter in the preliminary findings stand and there is no change.

40.2 Price adjustments have been claimed on account of discount (penalty for quality deviations affected in invoice) commission, inland freight and handling charges in the export price to India. The exporter has submitted the agency agreement wherein the commission percentage as claimed is indicated. In support of inland freight the exporter has submitted invoice from Railways and a certificate from the Railway Bureau of Beijing, Shiziazhnang Station dated 9.7.98 wherein it is certified that during the period from April 96 to April 97, the freight rate has not changed. Regarding the handling charges the exporter has submitted invoice raised by handling agent. The exporter has revised its claim from **** to **** in respect of handling charges. Further, the domestic price has been shown as ****. The exporter has not claimed any deduction to arrive at the ex- factory price as they have stated that domestic customers take the delivery at the factory gate and bear all further expenses and the list price is only the base price, taxes and other additions are extra.

40.3. In support of domestic price claimed, the exporter has submitted copy of sales ledger for the relevant period. The exporter has submitted invoices for July 96, Oct 96 and Nov 96, Feb 97 to show the prevailing domestic price. Cost statement of the producer claiming that domestic sales were profitable which are certified by the CPA showing that the production and sales of coke of the concerned size are at profit has also been submitted.

41.2. The company has further stated that it had exported four consignments to India during the period of investigation. Out of four consignments, three export consignments were purchased from company A and one was purchased from company B. In respect of export through company A, the exporter has revised its claim on inland freight and loading charges. In respect of exports through company B, no deduction is claimed as the port is stated to be located at the backyard of cokery.

41.3. The exporter has submitted the invoices in respect of inland freight and loading charges. Thus the ex- factory price in respect of exports is as under: -

44. Shanghai Pacific Chemical Corporation: The exporter has claimed that it manufactures the coke. It is claimed that their cookery is at the backyard of the port and the coke produced is directly conveyed by belt to the port site where it is stored and loaded on the vessel. Thus there is no inland freight involved. The exporter has claimed price adjustment on account of storage charges in the export price to India and submitted some invoice claiming the storage charges. The export price on ex-factory basis is ***. The exporter has claimed that it is selling the product within China and has claimed deduction of VAT @ 17%, which is shown in the invoice also. It has been claimed that the delivery of coke for domestic sales is on ex-factory basis and the customer incurs the expenses for transporting the coke from the factory of the manufacturer premises. No expenditure is incurred separately on account of packing, storage and handling incase of domestic sales. The exporter has claimed the domestic price on ex-factory basis after VAT as *** as compared to the domestic price of ***. The exporter has thus claimed de-minimus dumping margin. The exporter has stated that the number of domestic invoice runs into more than 20000 and in view of large number of invoice and short time available. It has been unable to trace out and make photocopies of all the invoices. The exporter has submitted a copy of its ledger showing the invoice wise sale of coke for May, June, August, Oct & Nov 1996 and Jan. & March 1997 (corresponding to the eight months in which there were export transaction). The exporter has submitted all the invoice for the month of Oct 96 and sample invoices in respect of other months. The company has submitted its cost statement for 1996 and 1997, certified by Shanghai Region Certified Public Accountant and has claimed that it had made profits on production and sale of coke both in the year 1996 and 1997 and therefore domestic sales price reported within China should be considered viable and should be used for determination of the normal value.

45. Some exporter have submitted a few copies of the purchase invoices of coal. The English translation of these invoice is woefully inadequate in as much as the ash content of coal is also not given. The other commercial derails have also not been translated. In any case, the Authority retrains from accepting any fresh evidence at this stage, as it would be a denial of natural justice to the other side who would not have an opportunity to rebut any additional evidence at this late stage. As stated earlier, the exporter failed to provide sufficient evidence in support of their claims despite several opportunities.

46.2 There is a complex web of licensing requirement and thus all these companies are related and collectively involved in large scale of dumping.

46.3 China is a non-market economy and in India Designated Authority has recognised China as a non-market economy in several anti dumping cases. Mere submission of certain invoices in domestic transaction, does not suffice in providing that coke is sold domestically within China at free market rate. State, in China, still remain the owner of most enterprises and a complex web of licensing requirement is used to maintain total control. Thus normal value cannot be taken on the basis of domestic sales. Chinese metcoke manufacture have neglected to provide the domestic price on coal and they seem to rely on reverse accounting of ‘normal value’. Since normal value cannot be accepted on the basis of domestic prices, it is to be constructed.

46.4 Coal accounts for over 70% of the cost of coke and thus accurate cost of coal is fundamental to any construction of price of coke. Best and most accurate method of doing so is when a country having abundant natural resources would pay for the same natural resources from other countries. Thus c.i.f. price of coal imported by China should be taken as cost of coal.

46.5 As per the responses of exporters, there has been a 100% variation in the price of coke in China by different supplier. If they are selling coke at US$ 33.8 PMT, the price of coal has to be free. None of the exporter have their own domestic sales but provided information of domestic sales from other producers. Some of the exporters have claimed deduction on VAT, whereas others have not. Thus the information submitted by exporters are incorrect and should not be taken into consideration. None of the exporters have submitted the price of coal. On the other hand, several attempts were made to derive the cost of coal by reverse calculation. This strengthen the view that price of coal be taken as the price at which Chinese and importing coal from Australia. In China, coal companies are selling coal below cost and thus domestic coal price in China are non reflective of fair cost and is cross subsidized by Government in several cases.

46.7 The petitioner have denied that cost of manufacturing in China is exaggerated. It is estimated in China based on competitive cost in India. Chinese accounting standards are not upto standard. Thus neither the cost of production nor domestic prices as submitted by Chinese exporters can be relied upon.

46.8 The importer have failed to account for "specific density of coke Vs coal". In layman terms, this means that more coal will fit into same size of bucket than coke and thus transportation cost of 1 tonne of coal will be cheaper than the transport cost of 1 tonne of coke. This ratio of coke is to coal is 1:1.81 on these basis, the price of coke produced in India would be cheaper as compared to Chinese coke.

47.2. The determination of dumping margin of 118.53% and recommendation of an anti-dumping duty of Rs. 1800/- PMT is nor clearly borne cut by the facts and satisfactory and illegal.

47.3. China has produced 1280 million tonnes of coal in 96-97 and has produced 80 million of coke as per petitioner. Thus the quantity of coal required for producing this coke is 120 million tonnes of coking coal which China has produced domestically China imported 2.51 lacs tonnes of coking coal from international source for trial purpose which contributes 0.2% of coking coal used by China. Thus the import of coking coal by China during 1996-97 has been negligible when compared to its domestic production of coking coal. The import of 0.2% of coking coal can not be made the basis of calculation of normal value of Chinese coke as shown by applicant.

47.4. The price of imported LAMC from Australia and Japan are also similar to that of Chinese coke exported to India. When these are claimed non- dumped: the alleged dumping from China is not justified. The volume of imports from so ceiled non-dumping source is also not insignificant.

47.5. The petitioner’s claim that domestic sale within China are not in the ordinary course of sale, is not supported by any evidence. Hence this submission deserves to be rejected.

47.6. The exporter in their responses have submitted their cost sheets snowing the cost of coal, various expenses which should be taken while arriving at the cost of coke. The claim of the petitioner, that cost of coal in unrealistically low as labour and other social cost are ignored, is incorrect.

47.8. There can not be two opinion that domestic invoices are the most formidable evidence of the domestic sales transaction. If invoices can not prove the transaction, it is highly improbable that any other documents an be relied upon. The contention of petitioner that mere submission of certain invoices of domestic transaction, will not suffice in proving that coke is sold domestically within China at free market rate, is not correct. Thus domestic price of coke should be considered in arriving at the normal value.

47.9. In the present case, co- operating exporters have made available the details of normal value, being sale within the domestic market in China, as also the cost of production to show that the domestic prices are viable. This being the case, the resort to constructed cost or to determine the normal value with reference to any other hypothetical factor is unwarranted.

47.10. PIMA has pointed out that even by considering the figures in petition, it can be established that there is no dumping by exporters from China. Assuming that FOB cost of Chinese coal is same as that in Australia (in fact it is much lower), the cost of coal for a Chinese coking plant at its factory gate will be US$ 18.02 (deduction from FOB of US$ 51.02, US$ 8 on account of stevedoring and US$ 25 for inland transportation). The cost of coke at the conversion rate of 1.5 times would work out to be US$ 27.03. If the manufacturing cost as indicated in petition, US$ 29.17 is added, the cost of coke in China would work out to be US$ 56.20 PMT. The export price has been more than this domestic cost. The cost shown by petitioner US$ 206 PMT is highly exaggerated. One of the importer has also pointed out that, conversion cost of coal into coke is normally about Rs.450/- PMT and there is absolutely no scope to take the manufacturing cost at Rs. 1050/- PMT. The petitioner has claimed the ocean freight as US$ 22, which in fact should be US$ 17. Thus the c.i.f. value of metcoke should be US$ 87 PMT and this is based upon petitioner own facts. The export price is about US$ 97 on c.i.f. basis and thus there is no dumping.

47.11. Some of the importers have, however submitted that, on the basis of information available in the petition, the dumping margin works out to be Rs.502/- and therefore the duty is liable to be reduced to Rs. 502/-. However it is submitted, that this is based on certain assumption and without admitting that any dumping is being done by Chinese exporters. It is also submitted that landed cost has not been calculated correctly and it requires revision.

47.12. The exporters have submitted that their response to questionnaire sent after the initiation of investigation contained all information required by Designated Authority to arrive at a prima facie view that such exporters are not dumping metcoke in India. The Authority could have supplemented this prima facie view by the verification at site of the exporter and producer as the exporter/ producer had shown their willingness for such verification. The Authority had discarded the information on the basis that no evidence/ clear evidence have been submitted. The Authority had also observed that it appeared that the goods have been sold by exporters who did not produce goods and it was not clear whether the claims made pertained to the exporter or to the producer and thus the Authority was prevented from determining the export price as the price of producers to the exporters was not available and the normal value of the producers can not be compared with the export price of the exporter. It is now submitted by the exporters that export of goods from China is to be made only by the Organisation which hold an export licence. All producers do not hold export licence and hence sell their goods to the export companies holding an export licence who in turn export the goods to various countries. Thus the exporters had responded to the questionnaire and providing at the same time the details of the cost of production and the domestic sales of the producer to enable the Authority to determining the dumping margin for the export corporation and the connected producer. As it was not required to submit all the evidence, the exporters claims, that they submitted sample invoices and it was presumed that all the other invoices and evidence would be looked at by the Authority during verification. Regarding the submission of evidence to cost statement, it is argued by the exporter that, there was no requirement in the questionnaire to support the cost statement with any further evidence. The cost of product is a matter for verification site. Thus the exporters argued that levy of anti- dumping duty has caused serious prejudice to their interest.

- Total quantity of by- product generated

- Balance of by- product in stock with the company volume and value

49. The Authority notes that none the exporters furnished above information in spite of specific request made by the Authority. The Authority is thus not in a position to satisfy itself whether the claim made by the exporter with regard to adjustment towards by- product is justified. The claim of the exporter on account of by- product recovery assumes importance in view of the arguments raised by the other interested parties. While the petitioner has furnished information suggesting that the recoveries on account of by- products does not exceed US$ 8 (based on the recoveries made by one of the largest producers of metcoke in India having by- product recovery type manufacturing process), one of the importers has conceded that the recoveries does not exceed US$ 3. The claim of the exporter is nowhere close to the claims made by other interested parties and the exporter has suppressed specific information requested by the Authority on this account. The exporter has thus not co- operated with the Authority in so far as material information requested by the Authority has not been furnished.

50. With regard the argument that Authority could have asked for information required before notifying the preliminary findings or the Authority could have verified the information at the premises of the exporters, the Authority observes that the purpose of sending questionnaire to the interested parties is to allow them to respond in the form and manner prescribed. There is no obligation on the Authority to point out deficiencies in the responses submitted, particularly when the Authority is required to notify the findings, preliminary or final, within the time limits prescribed.

51. The argument of the exporter that the Authority could have verified the claims made by the exporter cannot also be appreciated as the purpose of spot verification is to verify the information furnished by an interested party and not collection of information. In fact, Annex I to the Anti Dumping Agreement provides that the information should be collected prior to verification. Verification of information by the Authority at the premises of the exporters can not substitute submission of information by the interested parties. In fact, when the information requested has not been submitted in the form and manner prescribed the verification visits may also not serve any useful purpose.

52. In view of the above, the Authority is constrained to disregard the claim of the exporter with regard to by- product recoveries. By- product recoveries have been provided on the basis of independent information available with the Authority, which is based on recoveries made by one of the largest producers of metcoke in India employing recovery type process. It is found, after making adjustment on account of recovery, that the cost of production of the exporter is significantly higher than the selling prices in the home market. The selling prices in the home market, therefore, are not in the ordinary course of trade by reason of price and have to be disregarded.

53. In view of the foregoing, the Authority has determined the normal value based on the cost of production in accordance with Section 9A(1)c. The cost of production claimed by the exporter has been reworked after making adjustment for by- product recoveries. Due allowance has been made for the selling, general and administrative expenses on the bases of the expenses claimed by the exporter. Fair return has been provided @ 5% as per the consistent practice and in view of insufficient information from the exporters from China PR.

54. From the foregoing paragraphs the Authority observes that the exporters were required to submit adequate and sufficient information on export prices. Domestic prices and costing while responding to the questionnaire. This information is essential to determine the normal value, export price and dumping margins. The Authority observed in the preliminary findings that information submitted by exporters was sketchy and insufficient and the Authority was not in a position to determining the normal value on the basis of such information.

55. After the issue preliminary findings, five exporters out of seven exporters responded and submitted additional information on domestic price, export prices and costing data. The Authority observed that even this information was grossly insufficient to determine the normal value in accordance with the Rules. Therefore, the Authority vide letter dated 30.6.98 (details already given in para 48.2) requested the exporters to provide necessary information as detailed in the letter. The Authority reiterated its requirements regarding furnishing of such information by the exporters in a subsequent letter. Thus, sufficient opportunity was provided to exporters for providing necessary information on several occasions.

56. Five exporters submitted information on 20.7.98 in response to letter dated 30.6.98 issued by the Authority. On examination, the Authority observed that information on prices as asked for was not provided. The Authority observes that critical information on costing data was also not submitted. As detailed in letter dated 30.6.98, the exporters were required to submit the costing information on raw material cost, utilities, appropriation and allocation of overheads for various products, cost sheet, balance sheet and profit & loss account, costing information of by-products. The Authority observes that none of the exporters has given sufficient details/evidence to verify the cost claimed by the exporters. Such details/evidence are of paramount importance as the cost on different items such as raw material, labour, overheads, and other expenses varies significantly in the cost data submitted by exporters and highlighted in para 48.1. The costing data is critical to determine whether the domestic price are above the cost or not. Under the Rules, if the domestic prices are below cost, such domestic price cannot be accepted for the purpose of determination of normal value. It is also observed by the Authority that exporters/producers have claimed that they have made profits on sale of coke. However, the Authority notes that such exporters are incurring significant losses on the sales of by-products such as gas. The basis of allocation of cost between coke and such other by-product is not clear and the details, though specifically called for, have not been provided for. Th Authority also notes that by-product generated per unit of coke and the details of such by-product are not submitted.

58. The Authority, however, has constructed cost of coke in China on the basis of information submitted by M/s. Pacific, who appears to be the largest producer and exporter of metcoke in China amongst those who have responded to the questionnaire. The Authority notes that even though M/s. Shanghai has not provided sufficient information, it has submitted better information as compared to other exporters. Also as the largest producer, their costs can be considered representative of costs in this sector in China. Thus the Authority considers that the costing information submitted by M/s. Shanghai Pacific as the ‘best available information’ in the instant case and therefore can be considered for the purpose of determination of normal value on the basis of constructed cost of production. Thus while constructing the cost of production in China, the Authority accepts the raw material, labour and overheads cost as submitted by M/s. Shanghai Pacific. It is however, observed that M/s. shanghai is recovering by-product, many of which are being sold at losses, in the absence of basis of allocation of cost and evidence/details, the cost allocated to by-products cannot be accepted as claimed by the exporter. The Authority attempted to find out the norms for recovery by products and notes that assuming the gross cost as 100, the information on recovery on by-product is as under: -

62. The Authority has allowed adjustments in the export price to India as well as the export price at ex- factory level as claimed by the said exporter in order to maintain consistency in the calculations of all commercial costs.

63. DUMPING MARGIN: The comparison of normal value and the export price shows the dumping margin of 28.95%.

64.2. Domestic industry has the capacity, reserves and quality to meet the growth and demand. However their growth is almost stagnant for 4 years whereas the Chinese imports have grown up by 916% from 93- 94 to 96- 97. The growth of imports from other country is comparatively low at 173%. The increase in Chinese imports are on accounts of dumping. The domestic users have migrated from Indian metcoke to Chinese metcoke.

64.3. The Authority has levied anti- dumping duty at a lower rate. lnstead of duty Rs. 1800/- PMT the duty should have been Rs. 4147 i.e. 118.53%(Dumping margin in preliminary finding ) of Rs. 3499 (c.i.f. export price).

64.4. The authority should levy the duty retrospectively. There is a clear history of dumping from china as china is appearing in many of the anti- dumping investigations causing injury to the domestic industry.

64.5. Injury is caused by imports from china. The import of coke from non- dumped sources is not causing injury as majority of such imports were by TISCO who is a captive consumer. The purchase from the ‘’ merchant coke’’ market by TISCO was minimal. Whereas the imports from other countries have remained stagnant; imports from china have grown significantly.

65.2. The injury margin calculations of the petitioner are not correct. The cost claimed by the petitioner deserves careful scrutiny, and the saving that would result from an optimum blend of various type of coal by others should be taken into account. If such cost savings are also taken into account, as they ought to be, the injury margin will disappear. The injury margin worked out in the preliminary findings is on the higher side.

65.3. The user industry of metcoke is under severe strain and is operating currently at less than 50% of the installed capacity. The pig iron industry has reduced the prices. The cost of metcoke constitute about 40% of the cost of production of pig iron. Any increase in cost of LAMC is bound to increase the final cost of pig iron resulting in the inability of pig iron manufactures to sell their products. Any anti- dumping duty on LAMC will result in the complete closure of all the pig iron units and will result into loss of direct and indirect employment.

65.4. The cost of production by domestic industry is high as compared to others who are able to tap the by- products and produce electricity and steam. The petitioner are not recovering the volatile substance to produce valuable by products. This is the main reason for suffering the injury and not the alleged dumping from China.

65.5. The total availability of LAMC out of imported coal is less than 5 lac tonnes whereas the requirement is more than 2 million tonnes. Pig Iron Manufactures have to necessarily import and it does not make sense to impose duty on such huge volumes. Any protection to the domestic manufactures of LAMC will result in serious injury to the pig iron manufactures.

65.6. There is no evidence to suggest or establish that any closure of units in India took place by reason of any alleged dumping of metcoke. The allegation made by petitioner are vague and are totally unsubstantiated.

65.7. Increase in import of Chinese coke was due to the increase in the requirement of met coke over the years. The allegation with regard to profitability of domestic industry and capacity utilisation are totally misconceived.

65.8. The provisional anti- dumping duty @ Rs 1800 PMT levied threatens the very survival of MBF industry MBF capacity of over 3 million tonnes per annum has been sat up dung past 5 years involving an investment of Rs. 3000 crores and employment of over one lakh people. The impact of anti- dumping duty on cost of pig iron/ steel works out to Rs. 1400. At this level, imports of pig iron are more attractive. Thus will spell closure for the pig iron producers and drain of foreign exchange for import of pig iron. Domestic metcoke cannot be used by MBF for quality reasons and thus anti- dumping duty does not really help the domestic coke producers.

65.9. It is submitted by importer that there in no injury to domestic industry. The production and capacity utilisation has increased and also the demand for LAMC has increased over the years. In fact, the production and sales are inadequate to meet the local demand. The installed capacity is inadequate the meet the demand. The import of LAMC by companies who are excluded for the purpose of domestic industry, should be excluded for injury purpose: It is also argued that there is no causal link between decline in market share and import of LAMC. Domestic manufacturer are able to recover their full cost of production along with reasonable profit and are able to obtain more than a far selling price of the product.

67. Annexure II(iii) under rule 11 supra further provides that in case where imports of a product from more than one country are being simultaneously subjected to Anti- Dumping investigation. The Designated Authority will cumulatively assess the effect of such imports. Only when it determines that the margin of dumping established in relation to the imports from each country is more than two percent expressed as percentage of export price and the volume of the imports from each country is three percent of the imports of the like article or where the export of the individual countries less than three percent, the imports cumulatively accounts for more than seven percent of the imports of like article, and cumulative assessment of the effect of imports is appropriate in light of the conditions of competition between the imported article and the like domestic articles.

68. The Authority notes that the margin of dumping and quantum of imports from subject country are more than the limits prescribed above. Cumulative assessment of the effects of imports is appropriate since the export price from the subject country were directly competing with the prices offered by the domestic industry in the Indian market.

69. For the examination of the impact of imports on the domestic industry in India, the Authority has considered such further indices having a bearing on the state of the industry as production, capacity utilisation, sales quantum, stock, profitability, net sales realisation, the magnitude and margin of dumping etc. in accordance with Annexure II (iv) of the rules supra.

69.1. Volume and market share of dumped imports: The volume of dumped Chinese coke in absolute terms increased rapidly. The following tables will illustrate this:

69.3. Market Share: The following table gives a summary of market share of low ash metcoke domestic producers as against that of dumped Chinese goods:

69.6. Increase in closing stock: There is a substantial increase in closing stock of metcoke of the petitioner which is as under:

71. In establishing that the material injury to the domestic industry has been caused by the imports from China, the Authority has considered that exports of metcoke from China forced the domestic industry to keep its price to unremunerative levels, and prevented it to recover its fair price, resulting in decrease in profits/ losses.

73. It is however recognised that the imposition of anti- dumping duties might affect the price levels of the products manufactured using the subject goods and consequently might have an affect on the relative competitiveness of these products or industries producing such products.

74. The Authority in an Anti- Dumping investigation is required to expressly investigate to establish the presence of dumping, material injury to the industry and the causal link of such injury from imports from the subject country. The affect on the relative competitiveness of any other industry if anti- dumping duties are levied is beyond the purview of the Authority’s investigation.

75. Hence, certain information brought to the notice of the Authority during such investigation concerning import of Met Coke from the Peoples Republic of China and said to affect the Indian Iron and Steel Industry have not been expressly commented upon or taken note of by the Authority in these findings. The Authority has only taken note of the imports of Met Coke from China PR and its effect on dumping, material injury to Indian producers of Like Article and accordingly recommended levy of anti dumping duties.

76. The information placed before the Authority by various sectors of the Industry and others is summarized below: -

(a) The producers of Like Article in the "Domestic Industry" will not be able to meet the LAMC requirements of the user industries in India.

(b) LAMC is a base Raw Material widely consumed directly or indirectly by the Pig Iron Industry, SS Iron Casting Industry, Ferro Alloys Industry, Foundries having cupolas and the Base Metal Industry particularly Zinc. These industries, in the core sector of the Indian economy add significant value to a primary raw material, contribute to export earnings, account for substantial employment and fulfill the requirement of inputs of a variety of infrastructure and consumer durable industries. Imposition of high levies of duties have the effect of making these industries and related industry sectors uneconomic and uncompetitive. This view has also been supported by the Ministry of Steel, Govt. of India.

(c) The Pig Iron industry itself has a Rs.3000 crores investment and a Rs.1140 crores investment in the pipeline. There is a high order of investment form IDBI, IFCI, ICCI and UTI. The Ministry of Steel supported the establishment of the Pig Iron Industry and from a position of net importers of Pig Iron, India today produces 3 million tonnes of Pig Iron and has exported 1 million tonnes of pig iron worth US $ 140 million in 1997-98. The industry employs 30,000 persons directly.

77. The Authority has already observed that investigation into representations of various sectors of the Iron and Steel Industry is not within the purview of the Anti Dumping investigations concerning LAMC from China PR.

78. The Authority however notes that India’s total requirements of Met Coke were met with imports (as per DGCIS data) to the extent of :-