Ministry of Commerce
& Industry
Department of
Commerce
Directorate General
of Anti-Dumping & Allied Duties
Udyog Bhawan
Final Findings
Subject :
Anti-dumping investigation concerning import of Flexible Slabstock Polyol of Molecular
weight 3000 to 4000 from China PR, Republic of Korea, Taiwan and Brazil. – Final
Findings.
No. 14/4/2003-DGAD
– Having regard to the Customs Tariff Act, 1975 as amended in 1995 and the Customs
Tariff (Identification, Assessment and Collection of Anti-Dumping Duty on Dumped Articles
and for Determination of Injury) Rules, 1995, thereof.
A. PROCEDURE:
i)
The
Designated Authority (hereinafter referred to as Authority), under the above Rules,
received a written petition from M/s Manali Petrochemicals Ltd., Manali, Chennai
representing the domestic industry, alleging dumping of Flexible Slabstock Polyol of
Molecular weight 3000 to 4000 (hereinafter referred to as subject goods) originating in
and exported from People’s Republic of China, Republic of Korea, Taiwan (hereinafter
mentioned as Chinese Taipei) and Brazil (the said four countries are hereinafter referred
to as subject countries);
ii)
The Authority notified the Embassies of subject countries
in India about the receipt of dumping application made by the petitioner before proceeding
to initiate the investigation in accordance with sub-rule (5) of Rule 5 supra;
iii)
The
Authority issued a Public Notice dated 21st May,
2003 published in the Gazette of India, Extraordinary, initiating anti dumping
proceedings concerning imports of Flexible Slabstock Polyol of Molecular weight 3000 to
4000 covered under Chapter heading/subheading 3907.20, 3907.99 and 3907.91 of Schedule I
of the Customs Tariff Act;
iv)
The
Authority forwarded copy of the said public notice to the known exporters, importers and
to the complainants and gave them an opportunity to make their views known in writing;
v)
According
to sub-rule (3) of Rule 6 supra, the Authority provided a copy of the petition to all the
known exporters and Embassies of subject countries in India;
vi)
Request was made to the Central Board of Excise
and Customs (CBEC) and Directorate General of Commercial Intelligence and Statistics
(DGCI&S) to arrange details of imports of subject goods;
vii)
The
Authority provided copies of the non-confidential version of the Petition to the known
exporters and the Embassies of the subject countries in accordance with Rule 6(3) supra;
viii)
The
Embassies of the subject countries were informed about the initiation of the investigation
in accordance with Rule 6(2) with a request to advise the exporters/producers from their
country to respond to the questionnaire within the prescribed time. A copy of the letter,
petition and questionnaire sent to the exporters was also sent to them;
ix)
A
questionnaire was sent to the known importers/users (as per details in the preliminary
findings) of subject goods in India calling for necessary information in accordance with
Rule 6(4);
x)
The
Authority notified preliminary findings vide notification dated 11th December,
2003 and requested the interested parties to make their views known in writing within
forty days from the date of its publication;
xi)
The
Authority also forwarded a copy of the preliminary findings to the Embassies of subject
countries in India with a request that the exporters/ producers of subject goods and other
interested parties may be advised to furnish their views on the preliminary findings in
the time frame as stipulated above;
xii)
The
Authority forwarded a copy of the preliminary findings to all the known exporters (whose
details were made available by the Petitioner) other exporters who responded to the
initiation notification, importers in India and they were requested to furnish their
views, if any, on the preliminary findings within forty days from the date of the letter;
xiii)
The
Authority provided an opportunity to the interested parties to present their views orally
in a public hearing held on 17th February, 2004.
All parties presenting views were requested to file written submissions of their
views expressed. The parties were advised to
collect copies of the views expressed by the opposing parties and offer rebuttals, if any;
xiv)
The
Authority made available to all interested parties the public file containing
non-confidential version of evidence submitted by various interested parties for
inspection, upon request as per Rule 6(7);
xv)
Arguments
made by the interested parties before announcing the preliminary findings, which have been
brought out in the preliminary findings notified have not been repeated herein for sake of
brevity. However, the arguments raised by the
interested parties subsequently have been appropriately dealt in the disclosure statement
and these findings;
xvi)
In
accordance with Rule 16 of the Rules supra, the essential facts/basis considered for these
findings were disclosed to known interested parties on 13th October, 2004 vide a disclosure statement and comments received
on the same have also been duly considered in these findings;
xvii)
Cost
investigations including spot verification (as deemed necessary) of the domestic industry
were also conducted to work out optimum cost of production and cost to make and sell the
subject goods in India on the basis of Generally Accepted Accounting Principles (GAAP) and
the information furnished by the Petitioner;
xviii)
The
Authority conducted on the spot verification of information furnished by the exporter M/s
SKC Co. Ltd., Korea;
xix)
***
in this notification represents information furnished by the interested parties on
confidential basis and so considered by the Authority under the Rules;
xx)
The
investigation covered the period from 1st April, 2002 to 31st
December, 2002. The injury analysis covered
the two preceding years 2000-2001, 2001-2002 and the POI.
xxi)
Copies
of the Initiation Notice and Preliminary Findings were also sent to FICCI, CII, ASSOCHAM
etc. for wider circulation.
B.
VIEWS OF PETITIONERS, EXPORTERS, IMPORTERS AND OTHER INTERESTED PARTIES AND
EXAMINATION BY AUTHORITY.
3. The views
expressed by various interested parties have been discussed in the preliminary findings
and also in the disclosure statement. The
views which have not been discussed earlier in the preliminary findings and disclosure
statement and those now raised in response to the disclosure statement are discussed in
the relevant paragraphs herein below to the extent these are relevant as per rules and
have a bearing upon the case. The arguments
raised by the interested parties have been examined, considered and, wherever appropriate,
dealt in the relevant paragraphs herein below.
4. At the
Preliminary Findings stage responses had been received from the following:
Exporters:
-
(i)
M/s SKC Co., Ltd. Korea
(ii)
M/s Dow Quimica S.A.,
Brazil
(iii)
M/s Jin Hua Chemicals
(Group) Corporation, China
(iv)
M/s Bayer Polyurethanes,
Taiwan
Importers
(i)
M/s.
Sheela Foam Pvt. Ltd., Ghaziabad
(ii)
M/s
Joy Foam Pvt. Ltd., Chennai
(iii)
M/s
Star Foam Pvt. Ltd., Chennai
(iv)
M/s
Polyurathane Association of India, Ghaziabad
Subsequent to the
preliminary findings and the public hearing,
following interested parties have made submissions :
(i)
Domestic
Industry
(ii)
M/s
Dow Quimica – SA, Brazil – Exporter
(iii)
M/s
SKC Co. Ltd., Seoul, Korea – Exporter
(iv)
Government
of Republic of Korea – through their Embassy
(v)
Government
of Republic of Brazil – through their Embassy
The
submissions made by various interested parties had been dealt with in the preliminary
findings and these are not being repeated here for the sake of brevity.
5.
Product under Consideration :
The product under
consideration in this investigation is Flexible Slabstock Polyol of Molecular weight 3000
to 4000 (hereinafter referred to as subject goods). The product is used to produce
flexible slabstock foam. The product is
covered under Customs heading 3907.20 of Schedule I of Customs Tariff Act and is also
cleared under Chapter Heading 3907.99 and 3907.91. This Custom classification is however,
indicative only and is in no way binding on the scope of the present investigation. There are no arguments as regards the
product under consideration. The Authority
confirms the product under consideration as considered in the preliminary findings.
6. Like
Article :
The petitioner has claimed that
there is no difference between the product manufactured by them and the imported product. They have also stated that the subject product
manufactured in India by the petitioner is commercially and technically substitutable to
the imported product and hence all conditions of like article are satisfied. There are no arguments to oppose this claim. The Authority found that the domestic
industry produces Flexible Slabstock Polyol of molecular weight 3000 to 4000. Based on the
information received from exporters and importers, the Authority holds that the product
being manufactured by the domestic industry is like article to the subject goods being
imported from subject countries.
7.
Domestic Industry :
The application had
been filed by M/s Manali Petrochemicals Ltd., Chennai. The applicant company is the sole
producer of Flexible Slabstock Polyol of molecular weight 3000 to 4000 in India. Therefore, they represent the 100% domestic
production of the subject goods. There
is no other argument to oppose this position. The
Authority, therefore, held that M/s Manali Petrochemicals Ltd. represents the ‘Domestic Industry’ within the meaning
of Rule 2(b) supra.
8.
Submission of Non-confidential Information :
It had been argued by the domestic
industry that the non-confidential version of response of exporter M/s SKC Co. Ltd., Korea
was inadequate and that there was no information or data which could be commented by them. The Authority has found that the exporter
had furnished non-confidential response which contained summary of the response in respect
of general information, sales, price structure and sales arrangement, accounting system
and policies. The exporter had considered
the information in the various appendices 1 to 9 as confidential. As this information relates to sales, adjustments,
actual prices , cost of production, these have been treated as confidential. The Authority does not find the argument of the
domestic industry as valid.
9.
Inadequate and inaccurate information in application for initiation of
investigation :
It has been argued by
the exporter that the claim of domestic industry regarding the alleged dumping is based on
constructed normal value. Information on
critical issues of dumping, injury and causal link is not based on adequate data. It is
bad in law to initiate anti dumping investigation on the basis of unsubstantiated
allegations and unreliable data.
The Authority has
examined these arguments and found that the DGCI&S data on imports of Polyol under
Heading 3907.20, 3907.91 and 3907.99 is not dedicated for import of Flexible Slabstock
Polyol alone. Under this heading, other
grades of polyol like rigid, moulded and other speciality products are also imported. Therefore, relying completely on DGCI&S
data would not have been appropriate in this case.
Information based on secondary sources was therefore, considered to be more
appropriate. The information from the
secondary sources has also been corroborated and further supplemented by the response from
the exporter from Korea and some importers. The
Authority did not find the argument of the exporter maintainable regarding inadequacy and
inaccuracy of the information relating to volume of imports, dumping, injury and causal
link at the stage of initiation of investigation. The
petitioner had furnished information regarding the volume of imports of subject goods that
could reasonably be assessed at the stage of making the application. The estimate regarding normal value in the subject
countries was based on information relating to constructed normal value on the basis of
information reasonably available in respect of cost of production of subject goods in the
subject countries.
C.
EXAMINATION OF CLAIMS REGARDING NORMAL VALUE, EXPORT PRICE AND DUMPING MARGIN.
10. Copy of Initiation
Notice and Preliminary Findings were sent to the Embassies of subject countries, the
exporters, importers and domestic industry. As
brought out in the preliminary findings, the Designated Authority sent questionnaires to
known exporters of the subject goods in subject countries.
Responses were received from the following
exporters:
(i)
M/s SKC Co., Ltd. Korea
(ii)
M/s Dow Quimica S.A.,
Brazil
(iii)
M/s Jin Hua Chemicals
(Group) Corporation, China
(iv)
M/s Bayer Polyurethanes,
Taiwan
However, only M/s SKC
Co. Ltd. Korea had furnished questionnaire response which was also verified by the
Authority by a verification visit to the Republic of Korea.
Other exporters did not furnish questionnaire response and have been treated as
non-cooperative.
Subsequent to the
Preliminary Findings and the public hearing, comments were received from the following :
(i) Domestic Industry
(ii) M/s Dow Quimica
– SA, Brazil – Exporter
(iii) M/s SKC Co. Ltd., Seoul, Korea – Exporter
(iv) Government of
Republic of Korea – through their Embassy
(v) Government of
Republic of Brazil – through their Embassy
None of
the interested parties have made any comments on the Disclosure Statement except the
domestic industry. The arguments made
by all the interested parties have been duly examined by the Authority in the succeeding
paragraphs to the extent these were relevant to the investigation.
11.
Normal value for
Brazil
The Authority recalls
the preliminary findings as regards normal value for Brazil. None of the exporters / producers from Brazil had
furnished questionnaire response giving information regarding cost of production, domestic
sales price, adjustments etc. Only M/s Dow
Quimica (Dow) from Brazil had made some statement about injury. The Authority considered the Brazilian
producers/exporters as non-cooperative. In
the preliminary findings, the Authority had determined normal value on the constructed
cost of production on the basis of evidence furnished by the applicant, which included the
cost of main raw material Propylene as reported in international journal and other
elements of costs as available reasonably. Subsequent
to the Preliminary Findings, the Brazilian Government has made arguments that, full explanation of the reasons for the methodology used
in the establishment of normal value and export price has not been provided in the
preliminary findings as required under Article 12.2 of the Agreement. Lack of such
information makes it difficult to assess the methodology employed. In the absence of full
explanation of the methodology used for the establishment of normal value and export
price, an adequate assessment of the compliance with the ‘fair comparison’
provisions in Article 2.4 of the Agreement was not possible.
The Authority
considered these arguments and found that in the absence of co-operation from Brazilian
exporters, the Authority was justified in resorting to facts available in accordance with
Article 6.8 read with Annex II. In the
absence of information about domestic sales price of subject goods in Brazil and evidence
about exports to other countries from Brazil, cost of production of Brazilian producers,
the Authority considered it appropriate to determine normal value on the basis of a
reasonable estimate of cost of production of subject goods in the country of origin plus a
reasonable amount for administrative, selling and general costs and for profits. The applicant had furnished information in this
regard in the application. The Authority
considered the cost of major raw material Propylene during the POI for US region on the basis of published prices in
Asian Chemical News. The
cost of other raw materials, utilities, selling, general and administrative expenses have
been taken on the basis of verified information of the domestic industry. A reasonable profit margin has been added to
arrive at the normal value of US$*** PMT.
12.
Export Price for Brazil :
None of the exporters
from Brazil have given information regarding export price.
The Authority has considered the information furnished by the petitioner regarding
export prices which is based on the data obtained from M/s International Data Services,
Mumbai as stated in the non-confidential petition. The
information furnished by importers corroborates the price of exports from Brazil. Adjustments from the average CIF price have
been made on account of sea freight and insurance. The
net export price arrived is US$ *** PMT.
13.
Normal Value for People’s Republic of China
The Authority
recalls the preliminary findings as regards normal value for China. None of the exporters / producers from China had
furnished questionnaire response giving information regarding cost of production, domestic
sales price, adjustments etc. Only M/s Jin
Hua Chemicals from China had given some information regarding invoices (in Chinese) of
domestic sales and agency agreement etc. The
information furnished could not be used for normal value determination in the absence of
information regarding cost of production. The Authority considers the Chinese
producers/exporters as non-cooperative. In
the preliminary findings, the Authority had determined normal value on the constructed
cost of production on the basis of evidence furnished by the applicant, which included the
cost of main raw material Propylene as reported in international journal and other
elements of costs as available reasonably. Subsequent
to the Preliminary Findings, no information has been furnished by any Chinese producer /
exporter. In response to the Disclosures, the
domestic industry has argued that in the absence of response from Chinese exporter, the
Authority should treat China as non-market economy and determine the normal value under
the specific provisions meant for such economy.
The Authority finds
that in the absence of co-operation from Chinese exporters, it was justified in resorting
to facts available in accordance with Article 6.8 read with Annex II. Moreover, there is no response from any Chinese
producer / exporter to rebut the presumption about non-market economy conditions. The applicant had furnished information with
regard to constructed normal value in the application.
Para 7 of Annexure 1 of Anti Dumping rules inter alia allows the Authority to
determine the normal value in the case of non-market economy country on any other
reasonable basis. Accordingly, the Authority
has considered the cost of major raw material Propylene during the POI for North-East Asia region on the basis of
published prices in Asian Chemical News.
The cost of other raw materials, utilities, selling, general and administrative
expenses have been taken on the basis of verified information of the domestic industry. A reasonable profit margin has been added to
arrive at the normal value of US$ *** PMT.
14.
Export Price
from P.R. China :
None of the exporters
from PR China have given information regarding export price. The Authority has considered the information
furnished by the petitioner regarding export prices which is based on the data obtained
from M/s International Data Services, Mumbai as stated in the non-confidential petition. Adjustments have been made from the average
CIF price on account of sea freight and insurance. The
net export price arrived is US$ *** PMT.
15.
Normal Value for
Chinese-Taipei
The Authority
recalls the preliminary findings as regards normal value for Chinese-Taipei. None of the exporters / producers from
Chinese-Taipei had furnished questionnaire response giving information regarding cost of
production, domestic sales price, adjustments etc. Only
M/s Bayer Polyurethanes from Taiwan had given
some general comments. Without any information relating to normal value determination. the
Authority considers the producers/exporters from Chinese-Taipei
as non-cooperative. In the preliminary
findings, the Authority had determined normal value on the constructed cost of production
on the basis of evidence furnished by the applicant, which included the cost of main raw
material Propylene as reported in international journal and other elements of costs as
available reasonably. Subsequent to the
Preliminary Findings, no information has been furnished by any producer / exporter.
The Authority finds
that in the absence of co-operation from Chinese-Taipei exporters, it was
justified in resorting to facts available in accordance with Article 6.8 read with Annex
II. In the absence of information about
domestic sales price of subject goods in Chinese-Taipei and evidence about exports to
other countries from Chinese-Taipei, cost of production of Chinese-Taipei producers, the
Authority considered it appropriate to determine normal value on the basis of a reasonable
estimate of cost of production of subject goods in the country of origin plus a reasonable
amount for administrative, selling and general costs and for profits. The applicant had furnished information in this
regard in the application. The Authority has
considered the cost of major raw material Propylene during the POI for North-East Asia region on the basis of
published prices in Asian Chemical News.
The cost of other raw materials, utilities, selling, general and administrative
expenses have been taken on the basis of verified information of the domestic industry. A reasonable profit margin has been added to
arrive at the normal value of US$*** PMT.
16.
Export Price in respect of Chinese-Taipei
None of the exporters
from Chinese-Taipei has given information
regarding export price. The Authority has
considered the information furnished by the petitioner regarding export prices which is
based on the data obtained from M/s International Data Services, Mumbai as stated in the
non-confidential petition. Adjustments
have been made from the average CIF price on account of sea freight and insurance which
have been allowed. The net export price
arrived is US$ *** PMT.
17.
Normal Value for
Republic of Korea :
M/s SKC Co. Ltd., Korea had furnished
information in the questionnaire regarding domestic sales, exports to India, adjustments,
sales price structure, cost of production etc. The
Authority had conducted on the spot verification of the information furnished by the
exporter.
The Company had given
information regarding sales of *** MT of Flexible Slabstock Polyol during the POI i.e.
April – December 2002. The exporter had
shown adjustments from the domestic sales price on account of discount, inland freight,
storage, advertisement, technical services, sales promotion and credit.
After allowing
adjustments on account of discounts, credit, inland freight, storage, advertisement,
technical services, sales promotion and credit, the sale value at ex-factory level comes
to KW *** per Kg. Individual domestic sales transactions were compared with the cost of
production plus SGA determined for the company and it was found that the domestic sales
were in the ordinary course of trade. Normal
value based on domestic sales price at ex-factory level comes to US$ *** PMT.
18.
Export Price for Republic of Korea :
The Company had
exported *** MT of Flexible Slabstock Polyol to India during the POI. These sales were made to different customers on
CIF Indian port/ ICD delivery terms. The payment terms were against LC at *** days credit. The company has shown adjustments on account of
discount, inland freight, shipping cost including terminal handling charges, packing
charges, overseas freight and insurance.
The weighted average export price at ex-factory level comes to US$*** PMT. The exporter has shown an adjustment of KW*** per kg towards import duty drawback to add back to
the export price. This was verified with
reference to the claims for drawback filed by the company, which was KW*** per kg. This comes to US$ ***PMT. After adding this, the net export price comes to
US$ *** PMT.
19. Other Non-cooperative
Exporters from Republic of Korea :
In respect of other
exporters from Republic of Korea, who have not co-operated, the Authority has considered
the highest domestic sale price of the co-operative exporter for normal value
determination. For the export price, the
lowest sale price to India of the co-operative exporter has been considered. Appropriate adjustments have been allowed. The normal value for other non-cooperative
exporter has been determined as US$ *** PMT. The
export price has been determined as US$ *** PMT.
20.
Dumping Margin :
The Authority
followed the consistent practice of adopting the principles governing the determination of
Normal Value, Export Price and Margin of Dumping as laid down in Annexure I to the
anti-dumping rules. Dumping margins have been determined on the basis of a fair comparison
of Export Price with the Normal Value in pursuance of
the principle laid down in Para 6 of
Annexure-1 to the Rules. The comparison
is at the same level of trade, i.e. Ex-factory level.
Normal Value at ex-factory level has been compared with the export price at
ex-factory level of relevant comparable type of Flexible Slabstock Polyol of Molecular
weight 3000 to 4000. Based on the
Normal Value and export price as determined above, the Authority has determined the
following dumping margins (%):
|
China |
Chinese-Taipei |
Brazil |
SKC-Korea |
Korea-Others |
Normal Value $PMT |
*** |
*** |
*** |
*** |
*** |
Export Price $PMT |
*** |
*** |
*** |
*** |
*** |
Dumping Margin
$PMT |
*** |
*** |
*** |
*** |
*** |
Dumping Margin % |
58.54 |
63.01 |
79.07 |
37.01 |
56.87 |
D.
INJURY TO THE DOMESTIC INDUSTRY
21. Rule 11 of Anti
Dumping Rules reads as follows:
“Determination of Injury:
(1) In the
case of imports from specified countries, the designated authority shall record a further
finding that import of such article into India causes or threatens material injury to any
established industry or materially retards the establishment of any industry in India;
(2) The
designated authority shall determine the injury to domestic industry, threat of injury to
domestic industry, material retardation to establishment of domestic industry and a causal
link between dumped imports and injury, taking into account all relevant facts, including
the volume of dumped imports, their effect on price in the domestic market for like
articles and the consequent effect of such imports on domestic producers of such articles
and in accordance with the principles set out in Annexure II to these rules.”
a.
A
determination of injury shall involve an objective examination of both (a) the volume of
dumped imports and the effect of the dumped imports on prices in the domestic market for
like article and (b) the consequent impact of these imports on domestic producers of such
products.
b.
While
examining the volume of dumped imports, the said Authority shall consider whether there
has been a significant increase in the dumped imports, either in absolute terms or
relative to production or consumption in India. With
regard to the effect of the dumped imports on prices as referred to in sub-rule (2) of
Rule 18 the Designated Authority shall consider whether there has been a significant price
under-cutting by the dumped imports as compared with the price of like product in India,
or whether the effect of such imports is otherwise to depress prices to a significant
degree or prevent price increase which otherwise would have occurred to a significant
degree.
23. The Authority recalls
the preliminary findings regarding injury determination and causal link. Subsequent to the preliminary findings, following
arguments have been made by the exporter M/s Dow Quimica, Brazil and the Governments of
Brazil and Republic of Korea :
(i) Throughout the POI,
the domestic industry increased its sales, production, capacity utilization, significantly reduced its inventory and succeeded in reducing
per unit losses as compared to the preceding year 2001- 02.
When imports under investigation increased during POI, the domestic industry did
recover.
(ii) With respect to
employment, no data relating to the evolution of employment level for the second period
under analysis (2001-02) was supplied.
(iii) With regard to the
claim that the domestic industry was not able to grant any wage raises, it should be noted
that, according to information contained in the preliminary findings, the share of the
like product in the total production of the petitioner is a minor one. An adequate analysis of the wage policy
implemented by the company should take into account the other products produced by the
company.
(iv) As for the level of
imports, Authority should have analyzed their performance on the basis of official import
statistics and not on information supplied by the petitioner or third party. Even taking into account the data on imports
utilized in the preliminary findings, the conclusion should have been that the increase in the alleged dumped imports was due to a surge
in domestic demand, the incapacity of the producer to fully meet the stronger demand and
restrictions already in place on imports from other origins. Therefore, it is not the increase in the alleged
dumped imports which is causing injury to the domestic industry.
(v) The increase in
imports was inevitable because the domestic industry could not satisfy a rising demand. The demand of Polyol is growing at 15% per annum
and the domestic industry has two plants of total capacity of 14000 MT. The petitioner utilizes only 50% of its capacity
for production of subject goods and remainder being used for production of different
grades of Polyol.
(vi) In view of above, it cannot be
logically demonstrated that the allegedly dumped imports are through the effects of
dumping, causing injury to the domestic industry.
(vii)
India’s
total imports of subject merchandize has not increased in absolute terms, on the contrary,
the volume of imports decreased from 5546.67 MT in 2001-02 to 3532.34 MT during POI whose
annualized figure comes to 4709.79.
(viii)
Strains
of cash flow may result from a variety of reasons i.e. mismanagement of cash flow. The preliminary findings do not show whether or
not the alleged cash loss or strains on cash flow has been caused by the subject goods.
(ix) Manali has
repeatedly sought protection through safeguard and anti dumping measures in 1998 and
December, 2001 respectively. However,
Manali’s competitiveness or efficiency has not improved. Protection by imposition of anti dumping duty
would probably only solidify Manali’s monopolistic status in the Indian domestic
market, eliminating further competition from foreign producers.
24.
Domestic Industry has given rebuttals to the various arguments made by the
interested parties on the issue of injury. The
domestic industry’s Polyol production capacity is 14000 MT as per Balance Sheet. However, the plant is designed, constructed and
tested for a capacity of 15500 MT, which can be enhanced to 23000 MT by making suitable
process modification. The capacity
available for FSP is 11250 MT. The domestic
industry has produced 8049 MT (annualized) FSP against a capacity of 11250 MT which means
72% of capacity utilization. The overall
capacity utilization of Polyol plant is more than 78%.
There is no legal or logical reason to suggest that the domestic industry cannot
claim for imposition of anti dumping duty if it does not fulfill the entire demand of the
product. As regards the arguments that M/s
Manali Petrochemicals is trying to perpetrate a ‘monopoly’, the domestic
industry has argued that if it was in a position to monopolize the market, then they were
not required to drop their prices
continuously to retain its market share. The
existence of a single producer does not mean a monopoly.
As regards the losses of the domestic industry, there was dumping from USA,
Singapore, Japan and EU in the years 2000-01 and 2001-02.
The domestic industry expected to improve its position after imposition of anti
dumping duty on exports from USA, Singapore, Japan and EU (provisional duties were imposed
from 11.2.2002). The situation, however,
again worsened due to dumping of FSP from China, Korea, Taiwan and Brazil. The domestic industry could not earn profits and a
reasonable return on its investment despite increase in its production, capacity
utilization and sales. The selling prices
dropped further during the POI as compared to the previous year, even though the cost of
major raw material increased during this period.
Examination by the
Authority :
25. Cumulative
assessment of injury:
As per annexure-II
(iii), in cases where imports of a product from more than one country are being
simultaneously subjected to Anti-dumping investigation, the Authority is required to
cumulatively assess effect of such imports, only when it determines that (a) the margin of
dumping established in relation to imports from each country is more than 2% expressed as
percentage of export price and the volume of the imports from each country is 3% of the
imports of like article --- and (b) cumulative assessment of the effect of imports is
appropriate in light of the conditions of competition between the imported article and the
like domestic article. The Authority has
found that the margin of dumping in respect of each of the subject country is more than 2%
and the volume of imports from each country is also more than 3%.
With a view to assess the conditions of competition between imported
products and the conditions of competition between the imported products and the like
domestic product, the Authority’s views are that :
(i)
The
subject goods have been imported from the subject countries under the same tariff
classification;
(ii)
The
Authority has found that the imported subject goods are commercial substitutes of the
domestically produced Flexible Slabstock Polyol. The
domestic producers of foam have imported the subject goods as well as sourced from the
domestic producer. Therefore, there is complete substitutability of the imported subject
goods with the domestic like product.
(iii)
The
information furnished by the importers gives a reasonable indication that the exports made
from the different subject countries compete in the same market as these are similar
products though the pricing of these may vary from country to country.
(iv)
Therefore,
the Authority finds it appropriate to cumulatively assess the effect of imports of the
subject goods on the domestically produced like article in the light of conditions of
competition between imported products and the conditions of competition between the
imported products and the like domestic product. The
Authority finds that there is a cumulative effect of injury by imports of subject goods
from subject countries on the domestic industry.
26. The Authority has
considered the various arguments made by interested parties on the injury claimed to have
been suffered by the domestic industry. The
Authority has also conducted verification of information furnished by the domestic
industry. As regards the argument that there is no finding regarding the increase in
dumped imports in absolute terms or relative to the consumption in India, the Authority
recalls the preliminary findings wherein it had made clear determination in para 39 and 40
regarding increase in dumped imports from subject countries during the POI in absolute
terms and in relation to the demand of the product of the country.
The information
regarding the various injury parameters has been examined and analyzed by the Authority as
under :
27.
Volume of Imports :
The Authority has
taken note of information regarding imports of subject goods as reflected by the official
statistics published by the DGCI&S, information furnished in application based on
secondary sources, the responses of the exporter and some importers. As earlier stated the data published by DGCI&S
under Heading 3907.20 covered other polyols also which were not the subject matter of this
investigation. Relying on these import figures as it is, would not have been appropriate
as these were much higher than actual imports of subject Polyol. After taking into account
the secondary source information relating to subject Polyol, the information provided by
co-operative exporter and some importers, the Authority has assessed the imports of
subject goods as under which under the circumstances appears to be appropriate.
Imports
(MT) |
2000-01 |
2001-02 |
POI |
POI annualised |
China |
48 |
33.6 |
952.8 |
|
Chinese-Taipei |
0 |
16.8 |
1144.79 |
|
Korea |
16.8 |
1060.6 |
861 |
|
Brazil |
0 |
0 |
1015 |
|
Sub. Countries
Total |
64.8 |
1111 |
3973.59 |
5298.12 |
Others |
3276.3 |
4486 |
120.7 |
160.93 |
Total |
3341.1 |
5597 |
4094.29 |
5459.05 |
% share of
subject countries in total imports |
1.93% |
19.84% |
97.05% |
97.05% |
The imports increased
from 64 MT in 2000-01 to 1111 MT in 2001-02
and to 3973 MT during POI. There was an
increase of imports from subject countries from 1.93% in 2000-01 to 97.05% as a share of
total imports during the POI. Therefore,
there was an increase in imports of subject goods from subject countries in absolute
terms.
28. Market share:
The Authority finds
that the market share of the domestic industry and the imports from the subject countries
in the demand of subject goods has been as under :
|
2000-01 |
2001-02 |
POI |
POI annualised |
Imports-total |
3341.1 |
5597 |
4094.29 |
5459.05 |
Domestic sales |
*** |
*** |
*** |
*** |
Demand |
*** |
*** |
*** |
*** |
Imports from subject countries |
64.8 |
1111 |
3973.59 |
5298.12 |
Imports from
other countries |
3276.3 |
4486 |
120.7 |
160.93 |
Share in
demand-imports from subject countries |
0.61 |
8.94 |
36.18 |
36.18 |
Share in
demand-domestic industry |
68.30 |
54.98 |
62.73 |
62.73 |
Share in demand-
imports from other countries |
31.09 |
36.08 |
1.09 |
1.09 |
The Authority finds
that the share of imports of subject goods from subject countries has increased from 0.61%
during 2000-2001 to 36.18% during POI. There
is thus an increase in the dumped imports from subject countries in relation to the demand
of the product in the country. The share of
domestic industry in total demand has gone down from 68.3% in 2000-01 to 62.73% during the
POI.
29.
Production and Capacity Utilisation:
The production and
capacity utilization of the domestic industry has been as under :
|
2000-2001 |
2001-2002 |
POI |
Capacity
|
11250 |
11250 |
8438 |
Production |
7316.15 |
7129.45 |
6057 |
Capacity Utilization
% |
65.03 |
63.37 |
71.79 |
The Authority finds
that there has been improvement in the capacity utilization of the domestic industry
during the period of investigation in comparison to the earlier years.
30. Sales Volume:
Sales volumes of
domestic industry increased from *** MT in 2000-01 to *** MT (on annualized basis) in POI
and indexed figures are as under :
Year |
Sales Volume (MT) |
Unit Price Rs./MT |
2000-2001 |
100 |
100 |
2001-2002 |
95 |
92.53 |
April- Dec. -2002
(POI-Annualized) |
127.6 |
91.05 |
The Authority finds
that the volume of sales of domestic industry have increased during the POI in comparison
to earlier years. However, the unit value
realization has gone down.
31. Inventory
:
The inventory of
finished stock as a percentage of sales has been as under :
|
2000-01 |
2001-02 |
POI |
MT |
*** |
*** |
*** |
% of sales |
*** |
*** |
*** |
Indexed |
100 |
137.31 |
28.05 |
The
Authority finds that the inventory of finished goods held by the domestic industry has
declined considerably at the end of POI in comparison to the previous year closing on
March, 2002.
32. Price Undercutting
The Authority finds
that the price undercutting due to the dumped imports has been as under :
|
China |
SKC Korea |
Korea Others |
Taiwan |
Brazil |
Average NSR |
*** |
*** |
*** |
*** |
*** |
Landed Value |
57165.69 |
*** |
59587.76 |
55694.26 |
50164.80 |
Price
Undercutting |
*** |
*** |
*** |
*** |
*** |
%age Price
Undercutting |
*** |
*** |
*** |
*** |
*** |
Price
under-cutting range |
6-15% |
3-12% |
4-13% |
7-16% |
15-25% |
33. Price underselling
The
Authority finds the price underselling as a result of dumped imports as under
|
China |
SKC Korea |
Korea Others |
Taiwan |
Brazil |
Landed Value |
57165.69 |
*** |
59587.76 |
55694.26 |
50164.80 |
NIP |
*** |
*** |
*** |
*** |
*** |
Price
underselling |
*** |
*** |
*** |
*** |
*** |
% Price underselling |
*** |
*** |
*** |
*** |
*** |
Price
underselling range |
15-25% |
10-20% |
15-25% |
17-27% |
25-35% |
While determining the non-injurious
price (NIP) for the like article for the domestic industry, the Authority has used the
actual cost of production of the subject goods to determine optimum cost of production for
the domestic industry which would take into account the normated best consumption norms
and the actual price of the raw materials which are consumed for the production of the
subject goods during the period of investigation. In
response to the Disclosures, the domestic industry sought more details regarding the
working of NIP which was provided by the Authority. Comments
of the domestic industry in this regard have also been taken into account.
34. Factors
affecting domestic prices :
The Authority notes
that the selling prices of the domestic industry are linked to the raw material cost and
the prices of imports of subject goods from different countries. The domestic industry has increased its
productivity, however, the selling price was under pressure due to the dumped imports. The Authority notes that the industry has suffered
from price depression as they were prevented from realizing higher sales price due to
dumped imports despite rising cost of production.
35.
Magnitude of the
margin of dumping :
The Authority finds
that the magnitude of the margin of dumping of subject goods from the subject countries
has been in the range of 37 to 79% which is considered significant.
36.
Employment :
The employment level
of the company has been as under :
2000-01 |
2001-02 |
POI |
576 |
469 |
430 |
There has been a
decline in manpower from 576 in 2000-2001 to 430 during the period of investigation.
37. Wages :
The Authority notes
that the domestic industry has not been able to grant any increments or promotions during
the last few years. All bonuses other than
the statutory bonus have been reduced substantially.
The company is not in a position even to conclude a fresh wage settlement with the
labour union under Section 12(3) of the Industrial (Disputes & Regulation) Act which
has been due since January 2001 despite numerous representations made to the management.
It has been argued by
the Brazilian Government that the analysis of the wage policy implemented by the company
should take into account the other products
produced by the company. The Authority notes
that sales revenue of all types of Polyols produced by the company accounts for about 53%
of the sales revenue for the year 2002-03. Therefore,
the inability of the company to enter into a fresh wage settlement with the employees
reflects the overall situation of the company including that relating to manufacture of
Polyols.
38. Profitability:
The domestic industry
has suffered direct losses on per unit sale of subject goods as per information below :
Year |
Net Sales Realization
(Rs./PMT) |
Cost of Production
(Rs./PMT) |
Profit/Loss PMT |
Profit/Loss per MT
Indexed |
2000-01 |
*** |
*** |
*** |
(-) 100 |
2001-02 |
*** |
*** |
*** |
(-) 243 |
April-Dec. 2002 (POI) |
*** |
*** |
*** |
(-) 360 |
The Authority finds
that the per unit losses on the sale of subject goods have increased significantly during
the POI in comparison to the earlier years. Since
the company is suffering losses, the return on investments is negative.
39. Evidence of Lost Contracts
The domestic industry
has produced some evidence of loss of orders in the form of copies of orders purportedly
placed by suppliers from China.
40. Actual and potential negative effect
on cash flows
The Authority finds
that the domestic industry has suffered cash loss during the period of investigation in
the sale of subject goods, which has caused strain on the cash flow position of the
company as a whole.
41. Growth:
The Authority finds
that because of losses, it would not be feasible for the domestic industry to make any new
investment. However, factors such as
production and sales of subject goods showed positive trends during the POI.
42. Productivity :
The productivity has
been as under :
|
2000-01 |
2001-02 |
POI |
Production
MT/employee |
*** |
*** |
*** |
Indexed |
100 |
119.68 |
147.87 |
`
43.
Conclusions on injury:
The Authority notes
that factors production, capacity utilization, sales, productivity indicate positive trend
during the POI in comparison to the year 2000-01. The
inventory of finished goods has also come down. The
volume of dumped imports from subject countries has, however, increased significantly from
1.93% to 97.05% in the total imports of subject goods.
The volume of dumped imports has increased in absolute terms. There is also an increase in the volume of dumped
imports in relation to the consumption of the subject goods in India as the share of
dumped imports in demand has increased from 0.61% during 2000-01 to 36.18% during the POI. The share of the domestic industry in the
domestic demand has declined to 62.73% during POI from 68.3% during 2000-01.
The price effect of
the dumped imports is evident from the price undercutting suffered by the domestic
industry as a result of the dumped imports. There
is also price depression. The industry also
has suffered price underselling, as the landed value of dumped imports is significantly
lower than the non-injurious price of the domestic industry. The industry has suffered cash losses in the sale
of subject goods. The authority thus
concludes that the domestic industry has suffered material injury.
E. CAUSAL LINK
44. As regards the impact
of the dumped imports on the domestic industry the Authority has examined the effect of
the dumped imports in accordance with principle (v) of Annexure-II of the Anti-Dumping
Rules.
Arguments have been
raised that the demand of subject goods is growing at the rate of 15% per annum and the
domestic producer has a capacity to produce 11250 MT.
In such a situation, increase in imports is inevitable. It has also been argued that the petitioner
has inefficient production process, uneconomic plant size and availability of raw
material. It has also been argued that the
domestic producer has repeatedly sought protection through safeguard and anti dumping
measures. Protection by anti dumping
duties would probably grant Manali a monopoly status in the Indian market.
The
Authority has considered the views expressed by the petitioners and other interested
parties as regards the causal link. The Authority notes that the technology adopted by the
domestic industry for the manufacture of Flexible Slabstock Polyol is comparable with that
adopted by the exporters. Any claim of
perceived efficiency of cost of production of any exporter should normally get reflected
in its selling prices and eventually in the computation of dumping margin. None of the exporters from Brazil, China and
Taiwan has given the information regarding their cost of production. Based on the
verification of the data of the sole co-operative exporter from Korea, the Authority had
found that exports are at dumped prices. The Authority also notes that the domestic
producer is faced with the competition from producers located in various countries. The production costs are directly linked to the
international prices of major raw material Propylene. The evidence of the investigation
indicates that the selling prices realized by the domestic industry are largely impacted
by the prices of the imported subject goods. The Authority found that the demand of the
subject goods has been increasing and the domestic producer is using the contemporary
technology and therefore, these factors cannot be attributed as the cause of injury. The imports of subject goods from other countries
have come down to 120 MT during POI which cannot be the cause of injury. The productivity
of the domestic industry has also increased. The
Authority concludes that the material injury to the domestic industry has been caused due
to the dumped imports from the subject countries. No
other material factor that may be a cause of injury has come to the notice of the
Authority.
F.
INDIAN INDUSTRY'S INTEREST
45. The purpose of anti
dumping duties in general is to eliminate dumping which is causing injury to the domestic
industry and to re-establish a situation of open and fair competition in the Indian market
which is in the general interest of the country.
46. The Authority
recognizes that the imposition of anti dumping duties might affect the price levels of the
subject goods or the products manufactured using subject goods and consequently might have
some influence on relative competitiveness of these products. However, fair competition on the Indian market
will not be reduced by the anti dumping measures. On
the contrary, imposition of anti dumping measures would remove the unfair advantages
gained by dumping practices, would prevent the decline of the domestic industry and help
maintain availability of wider choice to the consumers of subject goods. With a veiw to minimize the impact on the
downstream industry, the Authority has considered it appropriate to recommend anti dumping
duty based on the lower of the dumping and injury margins. The Authority notes that the
imposition of anti dumping measures would not restrict imports from subject countries in
any way, and therefore, would not affect the availability of the product to the consumers.
G.
CONCLUSIONS
47. The Authority has,
after considering the foregoing, come to the conclusion that:
(i) Flexible Slabstock
Polyol of Molecular weight 3000 to 4000 has
been exported to India from subject countries below the normal value;
(ii) The
domestic industry has suffered material injury;
(iii) The
material injury has been caused cumulatively by the dumped imports from subject countries;
49.
It is decided to recommend the amount of anti-dumping duty equal to the margin of
dumping or less, which if levied, would remove the injury to the domestic industry. The landed price of imports was also compared with
the non-injurious price of the domestic industry, determined for the period of
investigation. Accordingly, it is proposed that definitive anti-dumping duties be imposed
on Flexible Slabstock Polyol of Molecular weight 3000 to 4000 originating in or exported
from the subject countries falling under Chapter Heading 3907 2000 of the Schedule I of
Customs Tariff Act. The anti-dumping duty shall be the difference between the amount
mentioned in Col. 9 in the following Table and the landed value of imports of the subject
goods in US$/MT:
S.No |
Sub-Heading |
Description
of Goods |
Specification |
Country
of Origin |
Country
of Export |
Producer |
Exporter |
Amount |
Unit
of Measurement |
Currency |
1 |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
9 |
10 |
11 |
1. |
3907.2000 |
Flexible
Slabstock Polyol |
Molecular
Weight 3000 to 4000 |
P.R.
China |
Any
country |
Any
producer |
Any
exporter |
1472.77 |
MT |
US$ |
2. |
3907.2000 |
Flexible
Slabstock Polyol |
Molecular
Weight 3000 to 4000 |
Any
country |
P.R.
China |
Any
producer |
Any
exporter |
1472.77 |
MT |
US$ |
3. |
3907.2000 |
Flexible
Slabstock Polyol |
Molecular
Weight 3000 to 4000 |
Republic
of Korea |
Any
country |
Any
producer |
Any
exporter |
1472.77 |
MT |
US$ |
4. |
3907.2000 |
Flexible
Slabstock Polyol |
Molecular
Weight 3000 to 4000 |
Any
country |
Republic
of Korea |
Any
producer |
Any
exporter |
1472.77 |
MT |
US$ |
5. |
3907.2000 |
Flexible
Slabstock Polyol |
Molecular
Weight 3000 to 4000 |
Chinese
Taipei |
Any
country |
Any
producer |
Any
exporter |
1472.77 |
MT |
US$ |
6. |
3907.2000 |
Flexible
Slabstock Polyol |
Molecular
Weight 3000 to 4000 |
Any
country |
Chinese
Taipei |
Any
producer |
Any
exporter |
1472.77 |
MT |
US$ |
7. |
3907.2000 |
Flexible
Slabstock Polyol |
Molecular
Weight 3000 to 4000 |
Brazil |
Any
country |
Any
producer |
Any
exporter |
1472.77 |
MT |
US$ |
8. |
3907.2000 |
Flexible
Slabstock Polyol |
Molecular
Weight 3000 to 4000 |
Any
country |
Brazil |
Any
producer |
Any
exporter |
1472.77 |
MT |
US$ |
50.
Landed value of imports for the purpose shall be the assessable value as determined
under the Customs Act, 1962 and all duties of customs except duties levied under Section
3, 3A, 8B, 9 and 9A of the Customs Tariff Act, 1975.
51.
Subject to the above, the Authority confirms the preliminary findings dated 11th
December, 2003.
52. An appeal against
this order shall lie before the Customs, Excise and Service Tax Appellate Tribunal in
accordance with the Customs Tariff Act.