NO.14/13/2004-DGAD

Government of India

MINISTRY OF COMMERCE & INDUSTRY

DEPARTMENT OF COMMERCE

(DIRECTORATE GENERAL OF ANTI-DUMPING & ALLIED DUTIES)

New Delhi

Dated the    16^th August 2005

Notification

Final Finding

Sub: Anti-Dumping Investigation concerning imports of Certain Rubber Chemicals (MOR, PX13 and TDQ) originating in or exported from the European Union, USA, China PR and Chinese Taipei

A.        Background and Initiation

NO.14/13/2004-DGAD: Whereas, on the basis of an application filed by M/s National Organic Chemicals Industries Ltd. (herein after referred to as NOCIL or petitioner) alleging dumping of Certain Rubber Chemicals namely MOR, PX13 and TDQ (herein after referred to as subject goods) originating in or exported from the European Union, USA, Chinese Taipei and People Republic of China (hereinafter referred to as subject countries/ territories), the Designated Authority (hereinafter referred to as the Authority), initiated an investigation vide notification dated 17^th August 2004, in accordance with Rules 5(5) of the Antidumping Rules to determine the existence, degree and effect of alleged dumping and to recommend the amount of antidumping duty, which if levied would be adequate to remove the injury to the domestic industry., 

2          And Whereas, the Authority notified its preliminary findings vide notification dated 8^th April 2005, published in the Gazette of India Extraordinary, recommending imposition of provisional antidumping duty on the subject goods imported from the subject countries/ territories. The Central Government vide Notification No. 63/2005- Customs Dated 7^th July 2005 imposed provisional antidumping duty on the subject goods.

B.        Further Procedure

            3.         Procedure described below has been followed with regard to this investigation after notification of the Preliminary Findings of the Authority in respect of the above investigation.

(i)         The Designated Authority sent copies of preliminary finding dated 8^th April 2005 to all interested parties to this investigation, including the Embassies/representatives of the subject countries/territories in India, cooperating exporters from the subject countries/territories, domestic industry and the importers participating in the investigation requesting them to make their views known in writing within 40 days of the notification of the preliminary findings..

ii)         The following exporters, from the subject countries/territories have filed their questionnaire response to the initiation of the investigation and made substantive submissions after the preliminary findings:

1.                  M/s Flexsys NV, Belgium

2.                  M/s Lanxess NV, Belgium

3.                  M/s Lanxess GmbH, Germany

4.                  M/s General Quimica SA, Spain

iii)        While M/s J.K Industries Ltd. filed its importers questionnaire response, the following importers and other interested parties have filed their responses/comments at different stages of the investigation:

a)                 M/s  Lanxess India Pvt. Ltd

b)                 M/s Automotivre Tyres Manufactureres Association (ATMA)

The Delegation of the European Union has also made a brief submission after the preliminary findings, which have been taken on record by the Authority.

iv)        The comments of the interested parties in response to the initiation of the investigation and the preliminary findings have been taken on record and the Authority has examined the issues raised therein in this finding.

v)         The Authority made available non-confidential version of the evidence presented by various interested parties in the form of a  public file  kept   open for inspection by the interested parties;

vi)        For the sake of brevity the comments of various interested parties and issues raised prior to the preliminary findings and addressed therein have not been repeated in this finding.

vii)       The Authority held a public hearing on 27^th April 2005 to provide an opportunity to all interested parties to present there views. The oral submissions made by the parties during the public hearing reproduced in writing have been taken on record for the purpose of this investigation.

viii)      The Authority issued disclosure statements to all interested parties to this investigation on 22^nd July 2005 intimating the essential facts under consideration by the Authority and methodology of determination proposed to be adopted by the Authority, and calling for the comments of the interested parties to the said disclosure. Only the domestic industry and the exporters from the European Union have filed their comments to the disclosure statement. Comments of the interested parties, to the extent they are relevant have been considered by the Authority in this finding.

ix)        The Authority has examined the confidentiality claims of various interested parties in respect of the data submitted by them. The information, which is by nature confidential or which has been provided on a confidential basis by the interested parties’ alongwith non-confidential summary thereof, has been treated confidential. ***** in this Notification represents information furnished by the petitioner on confidential basis and so considered by   Authority under the Rules;

ix)           Investigation was carried out for the period starting from 1^st January 2003 to 31^st December 2003 (POI) for the dumping determination and the trends for injury investigation was examined for a period from 2000-01 to 2002-03 and POI

C.        Products under Consideration and Like Article

4.         As recorded in the preliminary findings the products under consideration in this investigation are three specific rubber chemicals used in manufacture of rubber products, namely: i) Anti-Degradants :PX 13 ii) Accelerators: MOR ii) Antioxidant :TDQ. Since the details of the products have been described in the preliminary findings, for the sake of brevity the same is not repeated in this finding.

C.1      Classification

5.         ATMA has argued that there is no such classification as ‘rubber chemicals’. The chemicals are classified as rubber accelerators, compound plasticizers, and anti-oxidizing preparations. The classification of the subject chemicals into rubber chemicals is probably done on the basis of use of those chemicals whereas there is no such classification in customs tariff. 

6.         The Authority notes that the products under consideration are chemicals used in the rubber industry and therefore, in generic term they are known as rubber chemicals. It is further noted that there is no dedicated ITC HS Classification or tariff head for the subject goods and products under consideration are classified under various sub-headings of customs classification heads 38.12.10, 38.12.20 and 38.12.30 as well as under 29.34.20 and 29.25.20 (at six digit levels) of the Customs Tariff Act and ITC HS classification. Therefore, these products covered under various sub-heads have been covered under this investigation. The Customs and ITC HS classifications are however, indicative only and are in no way binding on the scope of the present investigation.

C.2      Views of the interested parties

7.         The interested parties, in their various submissions, have argued that the Designated Authority should not have initiated a combined investigation covering three distinctive and separate rubber chemicals i.e. PX-13, MOR and TDQ in a single investigation. They have argued that the Authority ought to have treated each of the four Rubber Chemicals separately as the markets, exporters, importers; producers and users may be different for each of these products. Therefore, taking them together would exclude meaningful cooperation from a number of parties in India, which would distort the facts. They have also argued that it is not possible to reach any determination on injury or volume/price effects without disaggregating the import data separately for each of the chemicals covered by the concerned tariff head. They have further argued that domestic industry has itself admitted that rubber chemicals involved are three different products which are not inter se substitutable. It was therefore incumbent upon the Authority to initiate separate investigations so that the dumping, injury and causal link analysis can be done in a meaningful way.

8.         The domestic industry has argued that the subject goods are broadly used in treating rubber and rubber compounds and there is a great amount of commonality with regard to producers and consumers. Therefore, a common investigation was more appropriate than investigating all the products separately, as long as all anaysis are conducted separately for the products under consideration.  They have further argued that there are past precedence where the Authority had investigated multiple products in a single investigation.

C.3            Examination by the Authority

9.               The Authority notes that neither the Agreement nor the Antidumping Rules prohibits in any manner investigation of multiple products in one investigation. As long as the individual domestic products and the individual export products are like articles, and injury determination can be conducted against individual products, there is no explicit restriction in the Agreement to limit the investigation to single product as has been argued by the interested parties.

10.             The Authority further notes that the products under consideration, in the present investigation, are three distinct yet same general category of rubber chemicals used in the rubber industry. The domestic industry is same for these rubber chemicals, which manufactures all these chemicals in the same manufacturing facilities. Therefore, initiation of a combined investigation was most ideal in this situation to optimize use of resources for such investigations.

The Authority also notes that the initiation notification has amply clarified that both dumping and injury investigations are to be carried out in respect of individual products. The Authority also notes that the standing requirement of the domestic industry has also been examined with respect to individual products. Therefore, the arguments of the interested parties in this respect do not appear to be valid.

D.                LIKE ARTICLES

11.       The applicant has claimed that each individual product included in the application is a stand-alone product and does not have inter se substitutability with other rubber chemicals. These are specific chemicals used in specific recipe used for manufacture of different types of rubber products and cannot be substituted for other chemicals though they are generally known as accelerators, anti-oxidants and anti-degradant. Moreover, the rubber chemicals included in the present application are also not inter se substitutable or inter se like products as these materials are used for specific end applications. Therefore, dumping margins and all other analysis, including injury to the domestic industry has been done on individual products.

12.       These individual products are known by their chemical, as well as trade names world-over and there is no difference between the product manufactured by them and the import products. There is no difference in the products produced by the domestic industry and imported from subject country. The products are being directly imported by the tyre industry and also by traders for supply to other industries. The consumers are using the domestic and corresponding import products interchangeably.

13.       The individual products produced by the domestic industry and imported from subject countries/territories are identical in all essential characteristics and therefore, like articles within the meaning of the term as per the Rules.

E.                 DOMESTIC INDUSTRY

E.1      Views of the interested parties

14.       The interested parties have reiterated their views on the standing of the domestic industry and have argued that the standing should have been examined vis-a vis the production by other Indian producers. They have argued that the Authority ‘may’ and not ‘shall’ exclude the producers having imports in their name or related to importers from the scope of domestic industry. Hence, the Authority must first decide whether it will include or exclude producers, who may also be importers, from the scope of domestic industry. It is only then that the domestic industry standing of NOCIL may be determined and a finding to this effect should be given by the Authority. They have also questioned the statement of the domestic industry that the other producers of the subject goods have either stopped production or turned traders. The domestic industry has argued that these producers have substantially exited from the production of the subject goods and resorted to imports.

E.2      Examination by the Authority

15.       The application for the investigation has been filed by M/s. NOCIL, Mumbai.  M/s Bayer India Ltd., M/s ICI Ltd. and M/s Merchem Ltd. are the other manufacturers of some of these products under consideration. However, it has been argued by the domestic industry that all of them have either ceased to produce the subject goods because of the dumped imports or substantially reduced their production and turned themselves into importer of the subject goods. All the three companies were asked by the Authority to provide necessary information on their capacity, production, sales and imports of the subject goods and also to confirm their support or opposition to the application. However, no response was received from these producers except from M/s ICI Ltd. who opposed the investigation.

16.       Transaction-wise import data provided by DGCI&S and other sources show that these companies have substantial imports of these products during the period of investigation. As far as Bayer India is concerned, the Company is related to M/s Bayer GmbH, a major producer and exporter of the subject goods to India from its manufacturing facilities located at different locations. However, these producers did not respond to a specific request from the Authority, prior to initiation of the investigation, seeking information from these domestic manufacturers and their support or opposition to the application. Therefore, the Authority concluded that there is no viable opposition to the investigation from any other domestic producers and in view of their importers status these domestic manufacturers do not qualify to be included in the domestic industry domain in terms of Article 4.1 (i) of the Agreement.

17.       The applicant is a multi-product manufacturer of organic chemicals. The Authority notes that the plant capacity of the petitioner, for the individual products under consideration, is dedicated. Taking into consideration the production of the individual chemicals (subject products under consideration) of the petitioner company and after disallowing the production of the producers who have substantial imports of respective products, the applicant company commands a major proportion of the total domestic production of the products under consideration namely, PX-13, MOR and TDQ. In view of the above the Authority holds that the applicant commands the standing and fulfils the requisite criteria to represent the domestic industry, as required under Rule 5(a) and (b) and Rule 2(b) of AD Rules.

F.         De Minimis Limits

18.       Automotive Tyre Manufacturers Association has argued that EU cannot be treated as a single territory for the purpose of Antidumping investigation and imports from several EU member countries are either nil or de minimis. In this connection the Authority notes that Section 9A (1), read with Rules 2 (f) and Rule 10 provides that when an article is exported from any ‘country’ or “territory’ [as defined under Rule 2(f)] to India at less than its normal value, the Authority can investigate and recommend imposition of antidumping duty subject to the provisions of the said Rules. For the purpose of this investigation the European Union has been treated as a single customs territory and the preliminary findings were issued accordingly. Therefore, the arguments of the importer have not been accepted.

19.       As per the import data received by the Authority from the Directorate General of Commercial Intelligence and Statistics (DGCI&S) and other secondary sources the imports of the individual products from the subject countries/territories are above the de minimis level.

G.        Other submissions and issues raised

20.       The interested parties have reiterated their views on various aspects of the investigation in their post-preliminary finding and post-disclosure submissions, without repeating their arguments on various issues these arguments to the extent they are relevant have been summarized as follows:

G.1      Exporters and other interested parties

21.       The exporters and other interested parties have inter alia argued

·        That the applicant industry i.e. NOCIL has filed incomplete and inaccurate information or used excessive confidentiality in respect of information on estimates of normal value and dumping margin thereby violating the disclosure requirements as per the law; 

·        That the Authority must disclose detailed import data and methodology adopted for determination of the injury, including the injury margin and the non-injurious price considered for this purpose;

·        That for several years up to 2004 there had been a serious slump in prices of rubber chemicals as a result of over capacity in the world market and all manufacturers including the domestic industry in this case suffered loss on a sustained basis. However, shortly prior to the initiation of this investigation a dramatic reversal in this trend has commenced and the prices have risen sharply as a result of rationalization of global capacities and down-sizing of production of major global producers. This has benefited all manufactures of rubber chemicals and therefore, there is no need for any protection to the domestic industry in this scenario.

·        That while the POI has been taken as a calendar year the injury investigation period covers three previous financial year and one calendar year (POI) thereby overlapping a quarter. It has been argued that such a comparison does not take into account the cyclic pattern of consumption inherent to any industry.

·        That the accuracy and adequacy of the data provided by the applicant about the capacity and production of other domestic producers is doubtful and full disclosure in this respect has not been provided. Therefore, the standing determination could be flawed;

G.2      Views of the Domestic Industry

22.       The domestic industry, in its post preliminary finding submissions, has argued

·        That other domestic producers have not closed production but have suspended their production and resorted to trading and it has been admitted by the interested parties that this industry is undergoing considerable restructuring;

·        That as far as overlapping POI and injury period is concerned it is appropriate to compare the performance of the POI (calendar year) with the previous years (accounting years) and such approach is followed by the Authorities under many jurisdictions;

·        That it has been conceded by the exporters that the producers world over are having over capacity, which has resulted in losses forcing these global producers to undertake rationalization of capacities;

·        That the responses of the cooperating exporters are deficient in many respect and the exporters have resorted to excessive confidentiality; and submissions made by the exporters on non-confidential basis do not permit reasonable understanding of the substance of information provided to the Authority on confidential basis;

·        That China has been treated as a non-market economy by the European Commission and USA as well as Indian Authority in several cases and therefore, it should be treated so in the instant case in terms of para 8 of Annex-1 (as amended) and normal value should be determined accordingly in terms of para 7 of the said annex-1 to the Rule;

G.3      Examination by the Authority

23.       The Authority has taken note of various arguments of the interested parties and the issues have been examined in appropriate manner.

24.       As far as information on other producers and standing determination is concerned the Authority notes that other known producers of the subject goods were specifically asked by the Authority before initiation of the investigation to provide information on these issues. However, no response was received from these producers. Therefore, the information supplied by the applicant has been accepted as the best information that was reasonably available with the Authority. 

25.       Regarding estimates of normal value and confidentiality claims of the same, the Authority notes that the domestic industry has provided an estimate of the normal value based on cost of production in the countries of export based on certain data of certain producers and such information are confidential in nature. Therefore, the details of estimates, and elements of costs, which are based on certain confidential data, could not be disclosed. However, the Authority notes that the normal values in the countries of exporters have been determined based on the cooperating exporters data, to the extent the data was made available by them. Therefore, the interests of the exporters have not been affected by non-disclosure of estimates of the normal value in any manner. The Authority also notes that the confidential information provided by any interested party, including the applicant, without sufficient non-confidential summary are liable to be ignored by the Authority and Authority is at liberty to proceed with facts available with it. The Authority further notes that the confidentiality claims of domestic industry have been carefully considered by the Authority. The applicant being a multi-product company, the information relating to its production and sales have been claimed as confidential and have been treated so by the Authority and indexed data in respect of all the information have been adequately provided in the disclosures for a meaningful understanding of the same. Therefore, the argument of the exporter in this respect has not been found to be valid.

26.       As far as issue of POI and injury period is concerned, the Authority notes that the POI cannot and need not always be the same as the financial/ accounting year or calendar year. The POI would vary depending upon the time of initiation of the investigation. Therefore, it would not be practicable to adopt a uniform POI and injury investigation period. Since twelve-month data is being compared the comparison is considered as reasonable as possible.

27.       With regards to the comments of the interested parties regarding changes in certain figures in the disclosures compared to the preliminary findings the Authority notes that the preliminary findings were issued based on certain verified data and desk analysis of certain data/information, which were in the process of being collected/verified or analysed, whereas the final findings are based on verified data after completion of the investigation. Therefore, certain variation in data is normal. Therefore, the arguments of the interested parties have not been found to be acceptable.

H.        Determination of Dumping Margin

H.1      Product: PX-13

28.       The Authority notes that only two exporter from the European Union i.e M/s Flexsys NV, Belgium and M/s Lanxess GmbH, Germany, have filed their questionnaire response in respect of this product. Though the product is allegedly dumped from Chinese Taipei also, no response has been received from any exporter from Chinese Taipei in respect of this product.

H.1.1   M/s Flexsys NV, Belgium

29.       M/s Flexsys NV Belgium has filed a detailed questionnaire response to the investigation only in respect of 6 PPD or PX 13 and based on their response and deficiencies therein certain additional information were also called for. The Authority also conducted on-the spot investigation and verification of the data submitted by this exporter and on the basis of the verification conducted detailed verification reports was sent to them for their comments.

30.       The Authority notes that this exporter produces 6PPD and sells the same in the domestic market as well as in the Indian market. The product is equivalent of the PX13 manufactured and sold by the domestic producer in India. Therefore, 6PPD constitutes the like product for this exporter and domestic sales data of 6PPD has been accepted for the purpose of determination of the normal value for this exporter.

a)         Normal Value

31.       For the purpose of this investigation the sales within the European Union has been treated as home market sales to determine the normal value of the product. During the POI the Company had ***** transactions of the product under consideration and the total quantity sold in the EU market are as follows:

32.       The domestic sales are in sufficient quantity and representative for the purpose of determination of the normal value. The transactions are also at arms length.

33.       The domestic sale transactions within the EU are Delivered Duty paid basis. Therefore, the exporter has claimed adjustment towards inland transport from the above DDP price to arrive at the Ex-works price. The above adjustment has been verified and weighted average adjustment on account of local transport worked out to US$***** per Kg. The transactions were subjected to ordinary course of trade test against the cost of production verified by the Authority. Since more than 80% of the quantity sold is above the cost of production entire domestic sales have been taken into account for determination of normal value. Accordingly the Normal value of the product under consideration, based on its domestic sales worked out as follows:

b)        Export Price

34.       During the POI the exporter exported *****  MT of the subject goods to India. The exports to India being at CIF prices the export prices have been adjusted towards, Inland fright, commission, handling charges, ocean fright as per their records. Accordingly, the net export price has been worked out as follows:

c)         Dumping Margin

35.       For the purpose of determination of dumping margin the ex-works normal value and export prices so determined have been compared at the same level of trade. Accordingly, the dumping margin for this exporter has been determined as follows:

36.       The exporter, in its post disclosure submission, has not commented anything on the dumping determination. Therefore, the dumping determination as above is confirmed.

G.1.2   M/s Lanxess GmbH, Germany

37.       M/s Lanxess GmbH has filed its response for only one product i.e PX-13 (Volkanox 4020).  However, the exporter did not fully cooperate with the Authority for determination of its normal value as per the Rules. The exporter has further argued that it is not necessary to make sales at profit for the same to constitute sales in the ordinary course of trade and it is necessary for the Authority to consider the market forces and conditions in operation at relevant time for the products under investigation in order to determine whether sales made at loss would automatically mean that the same were not in the ordinary course of trade. In this connection the Authority refers to the Article 2.2.1 of the Agreement which provides that “sales of the like product in the domestic market of the exporting country or sales to a third country at prices below per unit (fixed and variable) costs of production plus administrative, selling and general costs may be treated as not being in the ordinary course of trade by reason of prices and may be disregarded in determining normal value………” Since the provision of the Agreement is clear in this respect, the arguments of the exporter are not tenable. However, the exporter provided the information pertaining to its exports to India. Accordingly, this exporter has been treated as partially cooperative.

a)         Normal Value:         Lanxess GmbH

38.      Since the responding exporter did not fully cooperate in determination of normal value in the country/territory of export, the normal value has been determined on facts available basis in terms of Article 6.8 of the Agreement. For the purpose of this determination the highest transaction value of commercial quantities of the cooperating exporter has been accepted as the normal value for this exporter. The exporter has not claimed any adjustment on its transaction prices and therefore, it is presumed that the price is at the ex-factory level. Accordingly the normal value of PX-13 proposed to be determined as US$ ***** per KG

b)        Export Price:           Lanxess Gmbh

39.       Lanxess GmbH exported ***** MT of PX-13 to India during the POI at an average CIF price of US$***** per KG. Since the exports to India are at CIF prices adjustments towards inland and ocean freight, insurance and handling charges, and commission are to be deducted from this price to arrive at net ex-woks export price.

40.       Total Freight cost per MT works out to Euro ***** per MT. At the average exchange rate of 1 Euro = 1.154 US$ during the POI the fright cost works out to US$***** per MT (US$ ***** per KG)

41.       The insurance premium paid by the exporter on its export sales to India was ***** % of the insured value (CFR value + 10%). Therefore, insurance cost per KG works out to US$ ***** per KG.

42.       As a group policy the exporter pays a commission of ***** % to Bayer (Lanxess) India on all export sales to India. The company extracted from its system the data pertaining to the actual commission paid to Bayer on individual transactions to India for verification. Therefore, incidence of Commission per KG of subject good exported to India works out to US$ ***** per KG.

43.       No difference in domestic and export packing was found for admitting any adjustment.  On the basis of the above the net export price for the above exporter for MOR works out as follows:

c)         Dumping Margins (Lanxess GmbH) PX-13

44.       For arriving at the dumping margin the export price has been compared with the normal value at the same level of trade, i.e. at ex-works level, during the POI. The exporter has not claimed any adjustments towards the differences that affect price comparability, including differences in conditions and terms of sales, taxation, levels of trade, quantities, physical characteristics, and any other differences, which are demonstrated to affect price comparability. Accordingly, the dumping margins for the producers/exporters of the subject goods in the subject countries have been determined as under:-

G.1.3   All other exporters from EU: PX-13

45.       For the non-cooperative exporters from the European Union the Authority has determined the dumping margin based on facts available. Normal Value for the non-cooperative exporters has been determined as US$***** Per Kg based on facts available. Similarly, export price has been determined as US$***** per Kg based on the average CIF export price after allowing for adjustments towards Commissions, inland transportation, ocean freight and insurance as applicable. Accordingly, the dumping margin for all other exporters from the EU works out to US$***** Per Kg (44.54%).

G.1.4   All exporters from Chinese Taipei

46.       The Authority notes that none of the exporters/producers from Chinese Taipei has provided any response or information on the normal value as per the prescribed questionnaire. No argument has been extended by any interested party regarding the provisional determination of dumping in respect of Chinese Taipei. Therefore, the Authority proposes to confirm its finding in respect of this country as follows:

47.       The constructed normal value based on estimated cost of production with reasonable profit of the subject good in the Chinese Taipei as per the best information available as per the Rules above has been determined as US$ ***** per Kg. 

48.       The Authority has worked out the weighted average export price of all comparable transaction in respect of imports from the Chinese Taipei to arrive at the CIF export price to India which works out to US$***** PMT. The export price so assessed, being the CIF export price, adjustments towards inland transportation, ocean freight, insurance and commission totaling to US$ ***** /Kg based on the facts available, have been considered in view of complete non cooperation by the concerned exporters. Accordingly, net-export price at the ex-factory level has been determined as US$ ***** Per Kg.

49.       The ex-works normal value has been compared with the normal value so determined at the same level of trade to determine the dumping margin which works out to US$ ***** Per Kg (36.86%) for all exporters from Chinese Taipei.

G.2      Product: MOR

50.       The Authority notes that though the subject goods are allegedly being dumped from the European Union, USA and China PR, only one exporter from the European Union i.e M/s Lanxess NV, Belgium has filed a questionnaire response in respect of this product. No response has been received from any exporter from the other countries i.e. USA and China PR in respect of this product.

G.2.1   M/s Lanxess NV, Belgium

51.       As noted in the preliminary findings of the Authority, M/s Lanxess NV, Belgium has filed its questionnaire response for only one product i.e. MOR. Lanxess NV produces and sells vulcanizing accelerator MOR in the name of Vulkacit MOZ which is equivalent of the product under consideration and therefore, there is no issue regarding the like article. However, the exporter failed to fully cooperate with the Authority in determination of normal value of the product. They have further argued that it is not necessary to make sales at profit for the same to constitute sales in the ordinary course of trade and it is necessary for the Authority to consider the market forces and conditions in operation at relevant time for the products under investigation in order to determine whether sales made at loss would automatically mean that the same were not in the ordinary course of trade. In this connection the Authority refers to the Article 2.2.1 of the Agreement which provides that “sales of the like product in the domestic market of the exporting country or sales to a third country at prices below per unit (fixed and variable) costs of production plus administrative, selling and general costs may be treated as not being in the ordinary course of trade by reason of prices and may be disregarded in determining normal value………”. Since the provision of the Agreement is clear in this respect, the arguments of the exporter are not tenable.

52.       The exporter however, provided necessary information about its exports to India. In view of their non-cooperation in determination of normal value the exporter has been treated as partially cooperative.

a)         Normal Value: Lanxess NV.

53.       Since the exporter did not fully cooperate with of the Authority to determine the normal value of the above product in terms of the Rules the Authority has determined the normal value on facts available based on the highest commercial transaction value of this exporter. Accordingly the ex-works normal value has been determined as Euro ***** (US$ *****) per Kg.

b)        Export Price: Lanxess NV

54.       M/s Lanxess NV had exported ***** MT of MOR to India during the POI out of which ***** MT was exported to its affiliated concern Bayer (Lanxess) India and rest was exported to other unaffiliated customers. However, no major price difference between the unit price between the prices offered to unaffiliated customers and affiliated customer was found. Since there is no major price difference between unaffiliated and affiliated sales the entire export volume to India was examined for the purpose of arriving at weighted average net ex-works export price of MOR for this exporter. The weighted average CIF price of exports to India during the POI was US$***** Per KG.

55.       Since the exports to India are at CIF prices adjustments towards inland and ocean freight, insurance and handling charges, and commission are to be deducted from this price to arrive at net ex-woks export price.

56.       Total Freight cost per MT works out to Euro ***** per MT. At the average exchange rate of 1 Euro = 1.154 US$ during the POI the fright cost works out to US$***** per MT (US$ ***** per KG)

57.       The insurance premium paid by the exporter on its export sales to India was ***** % of the insured value (CFR value + 10%). Therefore, insurance cost per KG works out to US$ ***** per KG.

58.       Incidence of Commission @ of ***** % of CIF price per KG of subject good exported to India works out to US$ ***** per KG.

59.       No difference in domestic and export packing was found for admitting any adjustment.

60.       On the basis of the above the net export price for the above exporter for MOR works out as follows:

c)         Dumping Margin: Lanxess NV (Product MOR)

61.       Since no other adjustments have been claimed or substantiated by the exporter ex-works Normal Value so determined on facts available basis has been compared with the ex-works export price to India at the same level of trade and the dumping margin works out to US$***** per Kg i.e. 24.4 % of the export price.

G.2.2   All other exporters from EU

62.       Normal value for all other exporters from the EU determined provisionally in the preliminary findings is confirmed as no other material facts have been placed before the Authority to revise the same. Accordingly, the normal value for all other exporters from the EU has been determined as US$ ***** per Kg on facts available basis.

63.       Ex-works Export Price has been determined on the basis of average export price from the European Union after allowing for adjustments towards commissions, inland freight, ocean freight and insurance.  Average CIF price of the subject goods from the EU has been determined as US$***** per Kg. After allowing adjustments towards ocean freight, inland freight, insurance commission etc. the net ex-work export price works out to US$***** per Kg

64.       Accordingly, dumping margin for all non-cooperative exporters from the EU works out to US$ ***** per Kg (29.06%).

G.2.3.  All exporters from the USA

65.       As noted in the preliminary findings none of the exporters/producers from the USA has provided any response or information on the normal value as per the prescribed questionnaire. The interested parties have also not provided any additional material facts before the Authority requiring a review of the estimated normal value, export price and dumping margin for the exports from the USA. Therefore, the Authority confirms its findings in respect of this country as per the best available information in terms of the Rules 6(8) supra as follows: 

66.       Normal Value of MOR for all exporters from the USA is proposed to be confirmed as US$***** per Kg. 

67.       The Authority has worked out the weighted average export price of all comparable transaction in respect of imports from the USA to arrive at the CIF export price to India which works out to US$***** per Kg. The export price so assessed, being the CIF export price, adjustments towards inland transportation, ocean freight, insurance and commission totaling to US$ ***** /Kg based on the facts available, have been considered in view of complete non cooperation by the concerned exporters. Accordingly, net-export price at the ex-factory level has been determined as US$***** Per Kg.

68.       The ex-works normal value has been compared with the normal value so determined at the same level of trade and the dumping margin is proposed to be determined as US$***** Per Kg (40%) for all exporters from the USA.

G.2.4   All exporters from China

69.       The Authority notes that none of the exporters/producers from China PR has provided any response or information on the normal value as per the prescribed questionnaire or rebutted the non-market economy presumption against Chinese exporters.  The Authority therefore, holds that none of the exporters from China PR has cooperated with the Authority as envisaged under the Rules. Para 8 of Annex II of the Rules provides that for the exporters from the non-market economy countries the normal value can be determined on the basis of cost of production and a reasonable profit for the product under consideration in an appropriate third country including India. The interested parties have argued that the Authority should have notified the appropriate third country before selecting India as the appropriate third country for determination of normal value in terms of para 7 of Annex II of the Rules. However, the Authority notes that there is no cooperation from any exporter from China and no material facts have been placed by any interested parties for selection of an appropriate third country. Therefore, the Authority has constructed the normal value in China based on estimated cost of production in China with reasonable profit. For estimating the cost of production, international price of raw material and conversion cost based on best available information has been relied upon. Accordingly, the Constructed Normal Value of MOR for all exporters from China has been determined as US$ ***** per Kg. 

70.       The Authority has worked out the weighted average export price of all comparable transactions in respect of imports from the China PR to arrive at the CIF export price to India which works out to US$***** /Kg. The export price so assessed, being the CIF export price, adjustments towards inland transportation, ocean freight, insurance and commission totaling to US$ ***** per Kg based on the facts available, have been considered in view of complete non cooperation by the concerned exporters. Accordingly, net-export price at the ex-factory level has been determined as US$***** Per Kg.

71.       The ex-works normal value has been compared with the normal value so determined to determine the dumping margin which works out to US$ ***** Per Kg (37.45%) for all exporters from China PR.

G.3      Product TDQ

72.       The Authority notes that TDQ is allegedly dumped from the European Union and Chinese Taipei. However, only one exporter from the European Union i.e. M/s General Quimica SA, has filed its questionnaire response in respect of this product. M/s Lanxess GmbH, Germany has provided only data regarding their domestic selling price of the product in the EU market and has submitted that this product is not exported by them to India but their domestic sales prices have been provided to help the Authority for an objective determination in respect of this product. No other exporter from Chinese Taipei has filed any response to the initiation in respect of this product.

G.3.1   M/s General Quimica SA

73.       M/s General Quimica SA, Spain has filed its questionnaire response in respect of its product Rubatan 184 which is equivalent to the product TDQ. This exporter has significant sale of this product in the domestic EU market and very small volume exported to India. The questionnaire response of this exporter was also verified during on the spot investigation conducted by the Authority and a verification report was also sent to the exporter for their comments. Based on their data the dumping margin for this exporter has been determined as follows:

a)         Normal Value

74.       The normal value for this exporter has been determined as the weighted average of the domestic sale transactions in the ordinary course of trade. The sales are at arms length and in sufficient quantity to be adopted for normal value determination. Accordingly, the normal value works out to Euro ***** Per MT or US$***** Per MT at the average Exchange Rate of 1 Euro= 1.154 US$. The domestic sales (within the European Union) are on delivered basis and accordingly the exporter has claimed adjustment towards transportation cost which works out to Euro ***** per MT on average basis as verified from their records and normal value so determined has been accordingly adjusted to arrive at the ex-factory level. The net-ex-works normal value works out to Euro ***** PMT (US$***** Per Kg)

b)        Export Price

75.       The exporter had exported only *****  MT of TDQ to India during the POI at the CIF price of US$*****  PMT. The CIF price has been adjusted towards inland freight, insurance, handling charges, ocean freight and insurance for Euro ***** PMT = US$ ***** PMT. No adjustment towards packing is claimed or admissible as all consignments, including domestic and export sales are dispatched in 3 ply paper bags and wooden pallets. Therefore, weighted average net ex-works export price of exports to India has been determined based on the exporter’s own data works out to US$***** PMT (US$***** per Kg).

c)         Dumping Margin

76.       Weighted average normal value determined at ex-factory level has been compared with the weighted average net export price determined above and the dumping margin for this exporter is determined as US$***** PMT (US$ ***** per Kg) i.e. 29.46%.

G.3.2   All other exporters from EU

77.       The Authority notes that other than Ms General Quimica SA, M/s laxness GmbH has provided certain information about its sale of TDQ in its home market as a proof of normal value in the European Union. However, this information has not been substantiated and the levels of trade for these transactions are not known. The exporter has also not provided any information to conduct ordinary course of trade test on these transactions. Therefore, this data could not be relied upon. In view of the above the Authority confirms its determination of dumping margin in respect of all other exporters fro the European Union as notified in the provisional findings.

78.       The normal value for all non-cooperating exporters in the EU has been determined on the basis of highest domestic transaction value of the cooperating exporter as the best information available. Accordingly, the ex-works Normal value for the non-cooperating exporters from the EU has been determined as US$*****  Per MT (US$***** per Kg). 

79.       The ex-works export price of the subject goods for the non-cooperating exporters have been estimated based on the cooperating exporter’s lowest transaction value, after adjusting for ocean freight, inland freight, insurance, handling charges and commission at the rate of ***** % . Accordingly, the net export price for the non-cooperating exporters is proposed to be determined as US$*****  Per MT (US$***** per Kg). Accordingly, the dumping margin for all non-cooperating exporters from the European Union is confirmed as US$*****  Per MT (US$***** Per KG) i.e. 34.8%.

G.3.3   All exporters from Chinese Taipei

80.       The Authority notes that none of the exporters/producers from Chinese Taipei has provided any response or information on the normal value as per the prescribed questionnaire. No material facts have also been placed before the Authority after notification of the preliminary findings.  Therefore, the Authority proposes to confirm its findings on determination of constructed normal value based on estimated cost of production with reasonable profit of the subject good in the Chinese Taipei as per the best information available. Accordingly, the Normal Value of TDQ for all exporters from the Chinese Taipei is confirmed as US$ ***** Per Kg. 

81.       The Authority has worked out the weighted average export price of all comparable transactions in respect of imports from the Chinese Taipei to arrive at the CIF export price to India which works out to US$***** Per Kg. The export price so assessed, being the CIF export price, adjustments towards inland transportation, ocean freight, insurance and commission based on the facts available, have been considered in view of complete non cooperation by the concerned exporters. Accordingly, net-export price at the ex-factory level has been determined as US$ ***** Per Kg.

82.       The ex-works normal value has been compared with the normal value so determined at the same level of trade to determine the dumping margin which works out to US$***** Per Kg (32.14%) for all exporters from Chinese Taipei.

G.4      Dumping Margins: Summary

H.        injury AND CAUSAL LINK determination

H.1      Views of the Exporters and other interested parties

83.       The views of the interested parties have been noted by the Authority in the preliminary findings. In their respective post-preliminary finding submissions the interested parties, including the exporters from the subject countries and ATMA, have reiterated their arguments in respect of the injury claims of the domestic industry. The basic arguments of these interested parties have been summarized as follows:

• That under the Rules it is the onus of the Designated Authority to come to clear and tacit finding of whether injury caused to the domestic injury is material or non-material and/or injury is negligible;
• That the return on investment claimed by the domestic industry on the basis of which injury has been claimed is unwarranted and untenable;
• That the bench marks of higher profits for the domestic industry is not justified on the basis of profits earned by the foreign producers and profit earned by the domestic industry only is required to be considered for determining NIP for the domestic industry;
• That from the disclosures in the preliminary finding of the Authority it is clear that on critical parameters like capacity, production, sales and cost of production there is an improvement in the performance of the domestic industry and therefore, the injury, if any, in other parameters cannot be treated as ‘material injury’ to the domestic industry;
• That Article 3.4 of the Agreement casts an obligation on the Authority to examine all the listed factors in respect of all the three distinct products and the Authority must give a complete finding in this respect.
• That the applicant has no locus standi to comment about any issues concerning dumping and injury for other domestic producers;
• That the applicant company was declared a sick industrial company under the Board of Industrial and Financial Reconstruction (BIFR) in the year 2004 and therefore, inability of the applicant to raise fresh investment has nothing to do with the exports of the subject goods from the subject countries/ territories;
• That the supposedly injury to the domestic industry stems from the fact of liability passed on the rubber chemicals division from its petrochemicals division which has been hived off;
• That there is a limited availability of the domestic industry’s capacity to attend to the Indian market as their product is also destined for exports. Therefore, it could not be concluded that the increase of the allegedly dumped imports have affected the domestic industry;
• That in view of the volatile prices of the petroleum products worldwide, it is unfair and burdensome to recommend duty on fixed duty basis and Authority ought to consider duty on reference price mechanism if any;
• Lanxsess NV and Lanxsess GmbH have claimed that they have several cost advantages in respect of availability of basic raw materials and process involved as well as advantage of economies of scale and they are the only competent parties in the investigation to comment on these aspects in view of the fact that they actually manufacture and sale the subject goods in both India and the EU;
• Lanxsess India has submitted that in view of the global capacity and demand imbalance Lanxsess India has switched production to other niche products as a part of its key business strategy in a difficult market situation (which the petitioner company has failed to do) and not as a result of the alleged dumping.
• That the applicant has selectively used data from two different sources to present a composite data to the Authority ;
• That the applicant’s own Annual Reports state that increasingly difficult situation was faced by them due to a combination of low selling prices owing to global over capacity and high raw material prices due to a hardening of crude and petroleum feedstock. This establishes that the applicant did not attribute the difficulties to dumping;
• ATMA has submitted that Increase in imports has not affected the sales volume of the domestic industry and there is no negative relationship between the imports and domestic sales volume. They have argued that the imports have increased only due to the strategic decision of other manufacturers namely M/s Bayer India, M/s Merchem and M/s ICI Ltd. to reduce or stop production with respect to each of the subject rubber chemicals and due to consistent increase in demand;

84.       The domestic industry has contested the arguments of the interested parties that the domestic industry does not suffer any material injury on account of the dumped imports from the subject countries/territories and injury if any, is due to factors other than the dumped imports. In its post preliminary finding submissions they have reiterated their claim of injury and causal links and have argued that number of parameters with respect to the performance of the domestic industry has shown declining or deteriorating trends and Improvement or positive trends in some of the parameters are sub-optimal. They have argued that normal impact of increase in capacity, production, sales volume should result in improvement in profit, cash-flow and return in capital employed, whereas in spite of positive trend in volume terms, the performance of the company has deteriorated in financial terms. Therefore, they have argued that the Authority should confirm its findings of material injury to the domestic industry.

85.       The Authority has noted the views expressed by the interested parties in respect of the injury claims of the domestic industry. The mandatory factors of injury have been examined by the Authority in its determination and causal link analysis in these findings to the extent they are relevant and valid.

H.2      Cumulative assessment of injury

86.       The Authority notes that the dumped imports are entering the Indian market simultaneously from the subject countries/territories. The issue of cumulative assessment of the injury caused to the domestic industry due to dumped imports from these sources has been examined in terms of Article 3.4 to the Agreement and it is observed that:

i)                 The margins of dumping of individual products from each of the subject countries/territories are more than the de minimis limit;

ii)               The volume of imports of individual products from each of the subject countries/territories is more than the limits prescribed;

iii)             The domestic product and product supplied by producers in various countries are like articles;

iv)              Imported products and domestically produced subject goods are interchangeable and are being interchangeably used. Transaction wise information on imports from various countries shows that the imports are being made by actual users in the Rubber industry as well as traders who have purchased the material for reselling. Goods supplied by the countries involved are entering the Indian markets through the same channels of distributions and directly competing in the same market;

v)                Products supplied from the subject countries are being marketed in India during the same period through comparable sales channels and under similar commercial conditions;

vi)              Imports of individual products from each of the subject countries have increased;

vii)            The domestic producer and exporters in the subject countries are selling the product to the same category of consumers;

viii)          Imports from the subject countries are significantly undercutting the prices of the domestic industry in the market;

Therefore, the Authority has examined the injury to the domestic industry in this case cumulatively covering the imports from all dumped sources.

H.3      Comparison methodology adopted

87.       The products under consideration i.e. MOR, PX-13 and TDQ have been treated as separate and distinct products and are not inter se like products to each other within the meaning of Rule 2(d). Therefore, Authority has assessed injury to the domestic industry individually for each of the subject rubber chemicals. The injury examination has been carried out considering data for the years 2000-2001, 2001-2002, 2002-2003 and Jan.-Dec., 2003 (POI).

88.       The Authority notes that the domestic industry is found to be having significant export activities. However, for the purpose of the injury analysis the performance of the domestic industry has been assessed only in respect of domestic market. Therefore, injury if any, caused due to the export performance of the domestic industry has not been attributed to the injury caused on account of its domestic operations.

H.4      Import data and other issues

89.       With regard to the volume of the dumped imports, the Designated Authority is required to consider whether there has been a significant increase in dumped imports, either in absolute terms or relative to production and consumption in India.

90.       Volume of imports for each of the subject rubber chemical from the subject countries and territories has been analysed based on the data received from DGCIS and also reported in the secondary source (IBIS).  The transaction-wise data reported by IBIS for all Rubber Chemicals have been compared with DGCI&S data for identifying individual products and compilation of data for the individual products. After pruning the data for unrelated products DGCI&S data is proposed to be used for the purpose of the injury determination. The arguments of the interested parties in this respect do not appear to be valid.

H.5      Examination of Injury Parameters

91.       Rule 11 of Antidumping Rules read with Annexure –II provides that an injury determination shall involve examination of factors that may indicate injury to the domestic industry, “…. taking into account all relevant facts, including the volume of dumped imports, their effect on prices in the domestic market for like articles and the consequent effect of such imports on domestic producers of such articles….” In considering the effect the dumped imports on prices, it is considered necessary to examine whether there has been a significant price undercutting by the dumped imports as compared with the price of the like article in India, or whether the effect of such imports is otherwise to depress prices to a significant degree or prevent price increases, which otherwise would have occurred, to a significant degree.

92.       The Authority notes that the investigation covers three distinct rubber chemicals used in the rubber industry. Therefore, in the preliminary findings the injury determination was conducted treating these products as three different and distinct products and injury caused to the domestic industry on account of individual products was examined separately.

93.       For the examination of the impact of the dumped imports on the domestic industry in India, indices having a bearing on the state of the industry such as production, capacity utilization, sales volume, stock, profitability, net sales realization, the magnitude and margin of dumping, etc. have been considered in accordance with Annexure II of the rules supra.

94.       All economic parameters affecting the Domestic Industry as indicated above such as production, capacity utilization, sales volume as well as volume and price effects of dumped imports on the domestic industry have been examined as under:-

H.4.1   Volume Effects of Dumped Imports: Import volumes and market shares

H.4.1.1           MOR

a)         Import Volumes

95.       With regard to the volume of the dumped imports, the Authority is required to consider whether there has been a significant increase in dumped imports, either in absolute terms or relative to production or consumption in India.

96.       On the basis of the examination the import data import volume of MOR works out as follows:

97.       The above data indicates that the dumped imports from the subject countries have increased by over 100% over the base year and the dumped imports constitute more than 95% of total imports of this product. The share of dumped imports in the total imports of the subject goods has significantly increased from about 90% in the base year to 98% during the POI. The imports from other sources are negligible.

b)        Actual and potential effect on Capacity, Production, Capacity Utilization

98.       Performance of the domestic industry in terms of capacity, production, capacity utilization and sales in respect of MOR has been as under:-

99.       The above data indicates that the dumped imports from the subject countries have increased by over 100% over the base year and the dumped imports constitute more than 95% of total imports of this product. The share of dumped imports in the total imports of the subject goods has significantly increased from about 90% in the base year to 98% during the POI. The imports from other sources are negligible.

c)         Actual and potential effect on sales:

100.    The volume of domestic sales and effects of dumped imports on the domestic sales have been examined in terms of absolute sales of the domestic industry, demands and market shares

101     As far as MOR is concerned there is a substantial increase in the demand in the domestic market and the sales of the domestic industry shows substantial increase in absolute volume terms. But the domestic industry has lost substantial market share to the dumped imports which has more than doubled compared to the base year while the demand has gone up by only 50%. The share of dumped imports in the domestic demand has increased from 33% to 45%.

4.1.2   PX-13

a)         Import Volumes

102.    The above data indicates that the dumped import of the subject good from the subject countries have increased by almost 200% over the base year and dumped imports constitute almost 93% of the total imports. The share of dumped imports in the total imports has significantly increased from 75% in the base year to 93% in the POI. The import from other sources is too small to influence the prices or affect the market share of the domestic industry.

b)        Actual and potential effect on Capacity, Production, Capacity Utilization

103.    The data shows that the domestic industry has added substantial capacities during the injury investigation period, in view of a healthy growth in demand during this period. The production of the domestic industry has also grown by about 55%. But the domestic sales do not show a similar growth pattern and has grown by only 22% over the base year. The capacity utilization shows a significant decline after marginal increase in 2000-01 though there is a healthy demand in the market.

c)         Actual and potential effect on sales:

104.    The volume of domestic sales and effects of dumped imports on the domestic sales have been examined in terms of absolute sales of the domestic industry, demands and market shares

105.    The above data in respect of PX-13 shows that while the demand for the product has increased by only 38% the dumped imports has increased by almost 200% and the sales of domestic industry has increased by only 22%. The market share of the domestic industry has declined significantly by 8% while the market share of dumped imports has doubled in the injury period from 22% to 44%.

4.1.3   TDQ

a)         Import Volumes

106.    The above data indicates that total imports and dumped imports of the subject goods from the subject countries have increased substantially during the injury examination period. The growth in import volume from the subject countries is significantly higher than the growth in total imports. It also shows that there is a quantum jump in dumped imports compared to the previous year. Dumped imports from the subject countries constitute about 93% of the total imports and the imports from other sources are too small to affect the prices or the market share of the domestic industry.

b)        Actual and potential effect on Capacity, Production, Capacity Utilization

107.    In respect of this product also the domestic industry has added significant capacity (67%) during the injury investigation period in view of healthy growth in demand. The production has also doubled but the growth in domestic sales has been below the growth in domestic demand for this product. The capacity utilization also shows a declining trend after a significant improvement in 2000-01, in spite of healthy demand in the market.

C)        Actual and potential effect on sales:

108.    As far as TDQ is concerned it is seen that the imports increased over the period in absolute terms by 150% whereas the dumped imports increased by 166%, the sales of the domestic industry increased only by 46%. The market share of the domestic industry has dropped by 2% whereas the share of dumped imports increased by 6%.

109.    The Authority has examined the arguments of the interested parties that the growth in market demand as reflected in the statistics of the rubber consumption in India as per the India Rubber Board shows a lower growth in demand compared to the demand of individual products reflected in the disclosure statements. The Authority notes that while the Rubber Board statistics shows the growth in demand of rubber on annual basis, the growth in sales volume of the domestic industry, in respect of individual Rubber Chemicals have been shown with reference to the base year of 2000-01.

H.4.2   Price effect of dumped imports

110.    With regard to the effect of the dumped imports on prices, the Designated Authority is required to consider whether there has been a significant price undercutting by the dumped imports as compared to the price of the like product in India, or whether the effect of such imports is otherwise to depress prices to a significant degree or prevent price increases, which otherwise would have occurred, to a significant degree.

111.    With regard to the effect of the dumped imports on prices, the Authority is required to consider whether there has been a significant price undercutting by the dumped imports as compared with the price of the like product in India, or whether the effect of such imports is otherwise to depress prices to a significant degree or prevent price increases, which otherwise would have occurred, to a significant degree. In this connection the Authority has determined net sales realization of the domestic industry considering selling price, excluding taxes & duties, rebates, discounts & commissions and freight & transportation. Landed price of imports has been determined considering weighted average CIF import price, with 1% landing charges and applicable basic customs duty. Accordingly, the price effects of the dumped imports on individual products have been analysed as follows:

H.4.2.1           MOR

112.    The Authority finds that the CIF import prices from the subject countries have been as under:-

a)         Decline in import Prices

113.    The above data shows a steady decline in the CIF as well as landed value of imports of the subject goods from the dumped sources over the injury investigation period and decline in the POI is significant and material.

b)        Price undercutting and underselling effects

Rs Per KG

114.    The above data indicates that the landed value of the dumped imports of MOR individually from the subject countries and also cumulatively undercut the domestic prices significantly. The landed values from the subject countries are also significantly below the non-injurious price of the domestic industry. It is also noticed that due to decline in the landed values, the price undercutting, which was negative in the previous years, has become positive in respect of most of the countries.

c)         Price Suppression and Depression effects of dumped imports

115.    To examine the price suppression effect of the dumped imports on the domestic prices the trend of net sale realization of the domestic industry has been compared with the cost of production. The data indicates that though there is a marginal decline in the cost of production of the subject goods during the injury investigation period, the fall in sales realization has been significantly higher than the decline in cost of production. It therefore, appears that the price effect of the dumped imports have forced the domestic industry to keep its prices lower in order to retain its market share indicating price depression effect. 

H.4.2.2           PX-13

a)         Decline in import Prices

116.    The above data shows a steady decline in the CIF as well as landed value of imports of the subject goods from the dumped sources over the injury investigation period and decline in the POI is significant and material.

b)        Price undercutting and underselling effects

Rs Per KG

117.    The above data indicates that the dumped imports from the subject countries have been undercutting the domestic prices. But the level of undercutting is low. However, the undercutting is also to be examined alongwith the price suppression and depression effects of the dumped imports. Since the domestic prices are depressed the undercutting analysis does not appear to reflect the correct picture of the domestic industry.

c)         Price Suppression and Depression effects of dumped imports

118.    The trend analysis of cost of production and sales realization of the domestic industry shows that whereas the cost of production has declined only by 8% the sales realization has fallen by almost 56% indicating price depression effect of the dumped imports.

H.4.2.3           TDQ

a)         Decline in import Prices

119.    The Authority notes that the CIF price and Landed price of each of the subject rubber chemical declined over the injury period.

b)        Price undercutting and underselling effects

120.    The data in respect of PX-13 also shows a similar trend as can be seen from the table below. The price undercutting of the landed prices have become positive only during the POI or in the previous year due to significant decline in the CIF prices and landed value of dumped imports.

Rs Per KG

121.    The above data indicates that the dumped imports from the subject countries have been undercutting the domestic prices. The above data anyzed alongwith the price depression effect indicates significant undercutting and underselling effects of the dumped imports.

c)         Price Suppression and Depression effects of dumped imports

122.    The above data shows that the decline in sales realization is significantly higher than the decline in cost of production indicating price depression effect of the dumped imports on domestic prices as the domestic industry is trying to retain its market share by lowering its prices to match import prices.

H.4.3   Examination of other injury factors

123.    After examining some of the injury factors i.e. Capacity, Production, Capacity Utilization; actual and potential decline in sales and market share; actual and potential increase in volume of imports etc. in the previous section, the Authority has examined the other mandatory injury parameters as follows:

a)                             Capacity, Production and capacity utilization

124.    As noted in the previous section domestic industry has increased its capacity in respect of the individual products through de-bottlenecking of the existing capacities and by addition of additional equipments. The increase in capacity is line with the increase in demand and also improvement in its production efficiency and cost of production. The production and sales of the domestic industry in each of the rubber chemicals has also increased. But as mentioned earlier the increase in sales is much less compared to the production and the capacity utilization shows significant decline in spite of a healthy growth in demand.

b)        Actual and Potential effects of profits and profitability.

125.    Profits earned by the domestic industry from the sales of the subject goods in the domestic market were as follows:-

Rs per Kg

126.    The data shows that in respect of all the three products the profitability of the domestic industry has declined significantly and the domestic industry has moved to a situation of financial losses from a situation of profits in spite of higher production and sales volumes achieved by the domestic industry over this period.

c)         Employment

127.    Number of employees in each subject rubber chemical has been examined to analyse the productivity of the domestic industry during the investigation period.

Indexed

128.    The above data shows that the productivity of the domestic industry has improved in terms of its labour productivity.

d)        Wages

129.    Wages paid by the company and incidence of wage per unit of production has been as under:-

130.    It is seen that overall wages per kg have reduced due to higher labour productivity and higher production.

e)         Return on Investment

131.    ROI has been calculated by considering capital employed in each rubber chemical and profit before interest, which shows as under:-

132.    Examination of the profitability of the products under consideration indicate that the return on investment in the domestic operation in respect of all the three products have become negative from a position of positive returns in the base year.

f)          Inventories

Indexed

133.    Authority finds that the inventory of the domestic industry has increased substantially for MOR and TDQ whereas there is a drop in inventory in case of PX-13. However, the Authority notes that domestic industry has significant exports of the products under consideration. Inventory levels of the product under consideration are therefore not reflective of any consistent pattern and have been influenced by the pattern of export shipments and volumes.

g)        Cash Flow

134.    Cash profits of the domestic industry over the injury period have been as under:-

135.    It is seen that the cash profits of the domestic industry has deteriorated over the period. This deterioration in cash profits was directly attributable to decline in the selling prices in response to landed price of imports.

h)        Productivity

136.    As noted earlier the productivity of each of the subject rubber chemicals has increased, as may be seen from the table below.

137.    However, the improvement in productivity has not translated into profitability for the domestic industry. It is found that even when productivity of the domestic industry significantly improved, which helped in reduction in unit cost of production, profits of the domestic industry significantly declined from a situation of profits to losses due to decline in selling prices.

i)          Growth

138.    Even though growth of the domestic industry in terms of parameters, such as capacity, production, sales, and productivity was positive, the same was negative in terms of market share, profits, cash flow, and return on investments.

j)          Ability to raise fresh Investment

139.    The Authority notes that the domestic industry has made fresh investments in each of the subject goods, in the injury period more as an indicator of past profitability and future expectations of demand and market share. However, it is found that the financial performance of the domestic industry is significantly eroding, which may have adverse impact on its future ability to raise fresh investments.

Overall assessment

140.    The above analysis of the factors that may indicate existence of material injury to the domestic industry shows that in respect of each of the products involved, in spite of the improvement in capacity, production, and sales in absolute terms and reduction in its cost of production, improvement in productivity, the industry suffers injury on account high unutilized capacity while there is a healthy demand for the products in the domestic markets, low net sales realization, higher inventory built up, negative or low return on investments and profits. The injury suffered in respect of the individual products is material and significant. Therefore, the arguments of the interested parties that the petitioner domestic industry does not suffer any material injury are not valid.

H.5      Causal link and other factors analysis

141.    The interested parties have argued that the injury caused to the domestic industry is on account of its petrochemical unit and has nothing to do with the dumped imports. In this connection they have argued that petrochemical division being a sick unit the overall financial situation of the company has been affected. However, the Authority notes that the petrochemical unit is already in the process of de-merger and the injury analysis as above has been carried out only for the rubber chemical division and in respect of the specific rubber chemicals named in this investigation.

142.    Having examined the existence of material injury and volume and price effects of dumped imports on the prices of the domestic in terms of its price undercutting, price underselling and price suppression, and depression effects the Authority has also examined whether other indicative parameters listed in Article 3.5 of the Agreement could have contributed to injury to the domestic industry. Therefore, the following parameters have been examined:

H.5.1   MOR

a)                 Imports from Third Countries: - Imports of MOR from countries not under investigation are either insignificant or at prices higher than the import prices from the subject countries and therefore, do not affect the prices in the domestic industry;

It has been argued that the Authority has not adequately examined the imports from other sources. In this connection the Authority notes that the volume effect analysis clearly shows that the share of imports from the subject countries is 98% of total imports in respect of the subject goods. Therefore, the volume and price of imports from other sources do not have any significant effect on the domestic industry.

b)                 Contraction in Demand: - Demand for the subject goods (MOR) have increased substantially by 49% during the injury examination period. Therefore, possible contraction in demand cannot be attributed to the injury to the domestic industry.

c)                  Pattern of consumption: - No significant change in the pattern of consumption has been alleged by any interested party.

d)                 Conditions of competition: - The goods are freely importable. The petitioner is the major producer of the subject goods as the other viable producers have either stopped significant production or turned traders of the subject goods. Therefore, domestic competition could not be attributed to the injury to the domestic industry. No other evidence of conditions of competition or trade restrictive practices has been brought to the knowledge of the Authority.

e)                 Developments in technology: - There is no allegation of significant changes in technology, which could have caused injury to the domestic industry. The exporter have claimed substantial cost advantage due to in situ availability of certain raw materials or different production process which could have a bearing on their own cost of production and Normal Values. However, no cost disadvantage to the domestic industry due to technological difference has been claimed.

f)                   Export performance of the domestic industry:-

                                                                                         Indexed

The export sale of the domestic industry is substantial and shows significant growth. But the profitability from the export has been negative. However, for the injury analysis the price and profitability in the domestic and export markets have been segregated. And injury if any caused due to the company’s export performance has not been attributed to the dumped imports.

g)                 Productivity: - Productivity of the domestic industry has improved in terms of total output and productivity per employee. Therefore, this cannot be attributed to the injury of the domestic industry.

H.5.2   PX-13

a)         Imports from Third Countries: - Imports of PX-13 from countries not under investigation are either insignificant or at prices higher than the import prices from the subject countries and therefore, do not affect the prices in the domestic industry. It has been argued that the Authority has not adequately examined the imports from other sources. In this connection the Authority notes that the volume effect analysis clearly shows that the share of imports from the subject countries is 93% of total imports in respect of the subject goods. Therefore, the volume and price of imports from other sources do not have any significant effect on the domestic industry.

b)        Contraction in Demand: - Demand for the subject goods (PX-13) have increased substantially by 38% during the injury examination period. Therefore, possible contraction in demand cannot be attributed to the injury to the domestic industry.

c)                  Pattern of consumption: - No significant change in the pattern of consumption has been alleged by any interested party.

d)                 Conditions of competition: - The goods are freely importable. The petitioner is the major producer of the subject goods as the other viable producers have either stopped significant production or turned traders of the subject goods. Therefore, domestic competition could not be attributed to the injury to the domestic industry. No other evidence of conditions of competition or trade restrictive practices has been brought to the knowledge of the Authority.

e)                 Developments in technology: - There is no allegation of significant changes in technology, which could have caused injury to the domestic industry. The exporter have claimed substantial cost advantage due to in situ availability of certain raw materials or different production process which could have a bearing on their own cost of production and Normal Values. However, no cost disadvantage to the domestic industry due to technological difference has been claimed.

f)                   Export performance of the domestic industry:-

Indexed

The export sale of the domestic industry is substantial and shows significant growth. But the profitability from the export has been negative. However, for the injury analysis the price and profitability in the domestic and export markets have been segregated. And injury if any caused due to the company’s export performance has not been attributed to the dumped imports.

g)                 Productivity: - Productivity of the domestic industry has improved in terms of total output and productivity per employee. Therefore, this cannot be attributed to the injury of the domestic industry.

H.5.3   TDQ

a)         Imports from Third Countries: - Imports of TDQ from countries not under investigation are either insignificant or at prices higher than the import prices from the subject countries and therefore, do not affect the prices in the domestic industry. It has been argued that the Authority has not adequately examined the imports from other sources. In this connection the Authority notes that the volume effect analysis clearly shows that the share of imports from the subject countries is 93% of total imports in respect of the subject goods. Therefore, the volume and price of imports from other sources do not have any significant effect on the domestic industry.

b)                 Contraction in Demand: - Demand for the subject goods (PX-13) have increased substantially by 50% during the injury examination period. Therefore, possible contraction in demand cannot be attributed to the injury to the domestic industry.

c)                  Pattern of consumption: - No significant change in the pattern of consumption has been alleged by any interested party.

d)                 Conditions of competition: - The goods are freely importable. The petitioner is the major producer of the subject goods as the other viable producers have either stopped significant production or turned traders of the subject goods. Therefore, domestic competition could not be attributed to the injury to the domestic industry. No other evidence of conditions of competition or trade restrictive practices has been brought to the knowledge of the Authority.

e)                 Developments in technology: - There is no allegation of significant changes in technology, which could have caused injury to the domestic industry. The exporter have claimed substantial cost advantage due to in situ availability of certain raw materials or different production process which could have a bearing on their own cost of production and Normal Values. However, no cost disadvantage to the domestic industry due to technological difference has been claimed.

f)                   Export performance of the domestic industry:-

Indexed

The export sale of the domestic industry is substantial and shows significant growth. But the profitability from the export has been negative. However, for the injury analysis the price and profitability in the domestic and export markets have been segregated. And injury if any caused due to the company’s export performance has not been attributed to the dumped imports.

g)        Productivity: - Productivity of the domestic industry has improved in terms of total output and productivity per employee. Therefore, this cannot be attributed to the injury of the domestic industry.

143.    It has been argued by the interested parties that the Authority should not base its injury determination solely in terms of loss of market share, low capacity utilization and profitability, regardless of certain positive factors and notwithstanding the fact that the petitioner has been registered as a sick industrial company under BIFR and the injury, if any, is self inflicted. As far as BIFR and self inflicted injury is concerned, the Authority notes that the Company was registered by the BIFR as a sick unit because of consistent erosion of its net worth on account of losses in its petrochemicals business and ultimately, the petrochemicals business was hived off. The Rubber Chemical Unit as a whole is in the recovery path as has been quoted by the interested parties from the Company’s Annual Reports. In spite of improved performance of the company, the products under consideration have suffered material injury as indicated in the foregoing examination of mandatory injury parameters, due to dumped imports from the subject countries/territories. The injury analysis has separated the effects of carry over of losses and expenses if any on account of the de-merged unit from the injury caused to the products involved in its Non-injurious price determination. 

144.    The non-attribution anlysis as above shows that no other factor other than the dumped imports has affected the domestic industry.

H.5.4   Factors establishing causal link

145.    Analysis of the performance of the domestic industry over the injury period shows that the performance of the domestic industry has materially deteriorated due to dumped imports from subject countries. Therefore, the causal links between dumped imports and the injury to the domestic industry is established on the following grounds:

1.                  The dumped import prices and consequently the landed price of imports from the subject countries steeply declined, resulting in significant price undercutting. As a direct consequence, the domestic industry was forced to reduce the prices.

2.                  Reduction in the selling prices by the domestic industry adversely affected the profits, cash flow and return on investments of the company.

3.                  Even though the domestic industry responded to decline in import prices, significant positive price undercutting resulted in increase in market share of imports from the subject countries. As a direct consequence, market share of the domestic industry declined.

4.                  Existence of significant price undercutting and consequent decline in market share of the domestic industry resulted in capacity utilization not reaching the earlier levels. Domestic industry could not increase sales and consequently production and capacity utilization in spite of increase in demand.

5.                  In spite of increase in demand and reduction in selling prices by the domestic industry, market share of the domestic industry declined due to significant reduction in landed price of imports. This retarded the growth of the domestic industry. 

146.    Therefore, the Authority concludes that the domestic industry suffers material injury and the injury has been caused by the dumped imports from the subject countries/territories.

I           Magnitude of Injury and injury margin

147.    The non-injurious price determined by the Authority has been compared with the landed value of the exports for determination of injury margin. For the purpose of this determination the landed values have been worked out after adding 1% landing charges and the basic customs duty to the weighted average CIF price of the exports for the respective exporters from the subject countries/ territories. Accordingly,  the injury margins proposed to be adopted are as follows: