MINISTRY OF COMMERCE

NOTIFICATION

New Delhi, the 19th March, 1998

FINAL FINDINGS

Subject: Anti dumping investigation concerning imports of PTA from Thailand, Korea RP and Indonesia - Final Findings

14/1/96/ADD – 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

1.         The procedure described below has been followed subsequent to the preliminary findings:

i)          The Designated Authority (hereinafter also referred to as the Authority) notified preliminary findings vide notification dated the 4th Sept., 1997 and requested the interested parties to make their views known in writing within forty days from the date of its publication;

ii)          The Authority forwarded a copy of the preliminary findings to the known interested parties who were requested to furnish their views, if any, on the preliminary findings within forty days of the date of the letter;

iii)         The Authority also forwarded copies of the preliminary findings to the Embassies of Thailand, Korea RP, and Indonesia in New Delhi with a request that the exporters and other interested parties  may be advised to furnish their views on the preliminary findings;

iv)         The Authority provided an opportunity to all interested parties to present their views orally on 20th Oct., 1997. All parties presenting views orally were requested to file written submissions of the views expressed orally. The parties were advised to collect copies of the views expressed by the opposing parties and offer written rebuttals, if any.

v)          Subsequent to the appointment of new Designated Authority by the Central Government on 17th Dec., 1997, all interested parties were advised vide letter dated 20th Jan., 1998 to indicate if they would like to explain orally the submissions made by them, which were already on record, in accordance with Rule 6(6). The interested parties were informed that they could appear before the Authority on 10th Feb., 1998, if so desired, to explain their case orally. M/s. J. Sagar & Associates waived its right to oral hearing on behalf of the four exporters (Samsung, Sunkyong, Kohap and Tuntex) from the subject countries and all the importers in India;

vi)         The Authority held an oral hearing on 10th, Feb., 1998. It was clarified that no new issues could be brought up and that the arguments should be limited to the issues presented at the hearing on 20th Oct., 1997. No written statements were accepted or taken on record.

vii)        The investigations have been concluded within the time limit extended by the Central Government. The one year time limit expired on 19th Dec., 1997. The same has been, however, extended by the Central Government by three months and the extended time limit expires on 19th March, 1998.

viii)        The Authority made available the public file to all interested parties containing non-confidential version of all evidence submitted by various interested parties. All parties who made request for inspection, in writing, were, allowed to inspect the public file;

ix)         M/s. J. Sager & Associates informed, vide their fax dated 9th Sept., 1998 that the names of the following exporters represented by it were wrongly mentioned by the Authority in the preliminary findings notified and the correct names were as under:

Correct name as per J. Sagar & Associates	Name mentioned by the Authority in the preliminary findings (as per J. Sagar & Associates)
Sunkyong Industries Kohap Petrochemical Co. Ltd.	Sunkyong Ltd. Kohap Chemical Corporation

The Authority notes that the correct names of these exporters, as per available information on record furnished by them, are Sunkyong Industries Ltd. and Kohap Petrochemical Corporation and the Authority had also mentioned the same in the preliminary findings and relies on the same;

x)         Argument raised by the interested parties before announcing the preliminary findings, which have been brought out in the preliminary findings notified have not been repeated for sake of brevity. However, the arguments raised by the interested parties have been appropriately dealt in the preliminary findings and/or in these findings.

xi)         In accordance with Rule 16 of the Rules supra, the essential facts/basis considered for these findings were disclosed to known interested parties and comments received on the same have also been duly considered in these findings;

It is clarified that the disclosure statement was issued on 5th March, 1998 by Speed Post. The same was sent by fax also to a large number of interested parties. The Authority has consistently allowed about the same time period for offering comments on disclosure as has been allowed in this case.

B.         PETITIONER’S VIEWS

2.         The petitioners raised the following arguments:

a)   The volume of PTA imported in the investigation period exceeds the minimum prescribed level of imports qualified for investigations and levy of duty.

b)   In the circumstances that RIL is excluded from the definition of domestic industry and there doesn’t exist an identical product for comparison, the second part of definition of the like product would be applicable in the present case.

c)   It is not disputed by any interested party that polyester can be made from either PTA or DMT. Substitutability is universally accepted norm to determine like article. It is also undisputed that the price of DMT has direct relationship with the price of PTA. There is commercial equivalence between DMT & PTA. DMT & PTA are, therefore, like products within the meaning of the rules.

d)   RIL stated that its second PTA plant went into production in the first quarter of 1997 and the company stopped importing PTA thereafter. The company further argued that since investigations have not yet been completed, it should be considered as domestic industry for the purpose of the present investigations.

e)   The exporters incurred expenditures such as ocean freight, commission, inspection charges at the port, inland freight, interest on the credit extended to the importers, bill of lading charges, higher packing export, etc. associated with exports. When the export price is adjusted for these expenses the dumping margin comes to 2.5% - 18%. Dumping is also established in case normal value is calculated based on costs, which establishes dumping margin of 10 % to 30%.

f)    The claims made by the exporters with regard to negotiation fee for the domestic sales needs careful examination.

g)   The claims made by Kohap with regard to dumping need be very carefully scrutinised. The argument that Kohap is selling PTA at much lower prices in their domestic market than others tantamount to Kohap becoming the most competitive supplier of PTA in Korea. Other producers in Korea would not have sustained in such a case, particularly when Korea is a surplus PTA market.

h)   RIL argued that while the cost of production can be claimed confidential, the price and adjustments therein cannot be claimed as confidential by an exporter. The company requested that such information be made available to them.

i)    RIL argued that it had argued in the petition that threat of dumping would become a reality, no sooner its next PTA plant of 350000 MT capacity goes into production. This has become the reality with the commissioning of its second plant.

j)    Dumping of PTA resulted in decline of PTA prices from Rs. 57000 pmt to Rs. 37000 pmt in India. The sole cause for serious price erosion in the Indian market was massive dumping of PTA.

k)   The anti-dumping duty should be levied not only with immediate effect but atleast with effect from 04.09.1997, when the competent authority had come to a conclusion that the duty is necessary.

I)    The normal value claimed by Kohap doesn’t appear to be genuine in view of prevailing prices of Paraxylene (referred to as Px hereinafter).

m)  Imports of PTA from Korea have been made at US $ 515 per MT in the post investigation period.

C.         VIEWS OF EXPORTERS, IMPORTERS AND OTHER INTERESTED PARTIES

3.         The views expressed by the importers and the exporters on the product under consideration, like article, domestic industry, dumping, injury and causal link have discussed in the relevant paras hereinbelow. Other views expressed by them are briefly mentioned below:

a)   Imposition of anti dumping duty will affect a number of polyester units involving substantial investments and employment.

b)   Anti-dumping duty on PTA would trigger dumping of PSF, PFY, PET resin and films in India.

D.         EXAMINATION BY AUTHORITY

4.         The submissions made by the petitioner, exporters, importers and other interested parties have been examined, considered and, wherever appropriate, dealt hereinafter.

E.         PRODUCT UNDER CONSIDERATION, LIKE ARTICLES AND DOMESTIC INDUSTRY

5.         Product under consideration in the present investigations is Purified Terephthalic Acid (also known as PTA and referred to as PTA in this notification). There is no dispute on the product under consideration and, therefore, the Authority confirms preliminary findings with regard to product under consideration.

6.         Arguments have been raised with regard to the like article that if the definition of like article is interspersed in the definition of domestic industry, it would be seen that the scope of the term "domestic industry" will be determined only with reference to the domestic producers who produce identical article to the product under investigation. It is only in the absence of such an article, that the second leg of the definition would come into play. There is a domestic producer, producing PTA and the two are identical or alike in all respects. Disqualification of RIL is immaterial as the same is to dissuade domestic producers from importing and enjoying the benefits of dumped products and simultaneously bringing an action against the said product. Interpretation of the term domestic industry in any other manner would be against all established canons of interpretation of statutes. It has further been argued that reasoning of the Authority on this account is erroneous. It is not a case that there is no domestic producer producing the identical article. There exists domestic industry producing PTA but has been disqualified in terms of the statutory definition. The statutory bar cannot be overcome by imparting the interpretation rendered by the Authority.

Authority’s position:

The Authority notes that the investigations are being conducted for the alleged dumped product i.e. the product under consideration. Having determined the product under consideration, the Authority is required to decide the like article and the relevant domestic industry. There is no denial of the fact that a domestic producer of PTA exists.  However, in view of the fact that RIL, the only producer of PTA, is also one of the petitioners, the Authority considered PTA/DMT as the like article in terms of the definition. It may be re-emphasised that RIL has been excluded only for the purpose of the scope of domestic industry in view of statutory definition.

7.         Petitioners and domestic industry: Arguments raised on the standing of the petitioners to file the petition and the scope of the domestic industry are as under:

a)         The imports made by RIL are negligible as compared to their own PTA production and rejection of the application on technical ground is not fair. Injury, if any, caused to the PTA producer should have been considered while recommending duty. As there was no other PTA producer, investigation should have been terminated.

b)         The exclusion of domestic PTA producer is based on unfair logic.

c)         Since the sole producer of PTA has been disqualified as domestic industry, investigations should have been terminated.

d)         Representative of RIL made submission on behalf of the domestic industry at the time of oral submissions. As RIL had imported PTA, their petition was not accepted by the Authority. RIL had no locus standi in the entire matter and yet they were allowed to made submissions. The Authority should not take into account any of their submissions in making final findings.

Authority’s position:

The Authority notes that it is grossly incorrect to say that RIL has no locus standi in the present investigations. RIL is a petitioner in the present investigations and is entitled to participate in the present investigations as an aggrieved party. The fact that RIL has been excluded from the definition of domestic industry does not debar it as a petitioner, nor does it lose its locus standi in seeking suitable redress. The contentions made by RIL, therefore, have been taken into account to the extent the same are relevant.

8.         With regard to the contention of RIL that it has stopped importing PTA after the investigation period and since the investigations have not been concluded, it should now be considered as the domestic industry, the Authority notes that the factors which are relevant for the purpose of the present investigations are the factors pertaining to the investigation period. Since RIL had imported PTA in the investigation period, it would not be appropriate to change the scope of the domestic industry at this stage.

9.         In view of the forgoing, the Authority confirms preliminary findings in paras 8 to 14 of the preliminary findings notification with regard to the product under consideration, like article, and domestic industry and that the goods produced by the domestic industry are like articles to the product under consideration.

F.         DUMPING

10.        Arguments raised by interested parties on dumping are as follows:

M/s. Pertamina, PT Amoco Mitsui PTA Indonesia, Siam Mitsui PTA Co. Ltd. and Samsung General Chemical Co. Ltd. (also referred to as SGC herein) claimed that they were neither producing PTA during the investigation period, nor had they exported PTA to India. These companies claimed exclusion in accordance with Rule 22 of the Rules supra.

Authority’s position:

The Authority notes that since these companies have claimed that they have neither produced PTA nor exported the same to India during the investigation period, they fall under Rule 22. All the companies, except for Pertamina have separately filed petition under Rule 22, which are being considered on merits.

11.        The methodology adopted with regard to determination of dumping and the claims allowed by the Authority in the preliminary findings are discussed hereinbelow. There is no argument raised by any interested party with regard to the methodology adopted, except for the comparison of normal values with export prices on monthly basis, has been separately examined hereinbelow. The Authority confirms the preliminary findings with regard to the methodology adopted for determination of dumping.

12.        The claims made by these exporters before the preliminary findings with regard to the price adjustments and the adjustments allowed by the Authority at the time of preliminary determination are not being discussed in these findings for sake of brevity. The adjustments allowed by the Authority now for these final findings and the reasoning thereof are discussed hereinbelow.

13.        A team of officials deputed by the Authority conducted detailed spot-investigations at the premises of the four co-operating exporters.

I.          Samsung Petrochemical Co. Ltd. (Samsung):

14.        Samsung claimed that it has exported PTA through an unrelated party. It is, however, found that the company sold its goods to Samsung Corporation, who has in turn exported the subject goods to India. There is evidence available with the Authority that goods have been exported to India by Samsung Asia Pte. Ltd., also "on advise from Samsung Corpn.", which were stated to be produced by Samsung Petrochemical. The claim of the company is that Samsung Petrochemical is not related to either Samsung Corporation or Samsung Asia Pte. Ltd. and the prices at which goods have been sold by Samsung Petrochemical to these companies represent the prices at which goods have been exported by the company in the ordinary course of trade. There is, however, sufficient documentary evidence available to suggest that the sales made by Samsung Petrochemical to Samsung Corporation can not be considered as sales in the ordinary course of trade. The published brochure, for instance, shows consolidated figures for the entire group, where the turnover of Samsung Corporation and Samsung Petrochemical have been shown under the group turnover. Further, the brochure shows Samsung Petrochemical as an "affiliated" company. The Authority, therefore, disregards the export price claimed by the exporter.

15.        The information furnished by the importers with regard to imports of PTA from the subject countries was analysed with a view to correlate the price at which goods have been exported by Samsung Corporation and the price at which goods have been invoiced by Samsung Petrochemical to Samsung Corporation. The importers have furnished the C&F prices at which goods have been purchased by them, which have been exported by Samsung Corporation. The export price has been considered on the basis of these details of imports available with the Authority.

16.        With regard to price adjustments, since the details of the expenses incurred by Samsung Corporation on exports to India, such as inland freight, overseas freight, marketing, administrative and general costs (SGA) have not been furnished to the Authority either by Samsung Petrochemical or by the exporters, the Authority considers it appropriate to allow adjustments from the export price on the basis of the expenses incurred by the other co-operating exporters from Korea RP, i.e., Kohap and Sunkyong. Since no information is available with regard to SGA expenses, it is considered appropriate to reduce the export price by 3%, which is the commission which would have otherwise been payable by the company had it exported through some other company. With regard to adjustment on account of credit sales in the home market, the Authority notes that since information about the sales made by Samsung Corporation or Samsung Asia Pte Ltd. has not been made available, either in response to the questionnaire or at any subsequent point of time, it would not be appropriate to allow adjustment tin account, as similar information with regard to exports to India is not available with the Authority. No adjustment on account of credit sales has been allowed.

II.         Sunkyong Industries Ltd. (Sunkyong):

17.        The Authority has allowed all adjustments claimed by the exporter in view of detailed verification carried out at the premises of the exporter.

III.        Kohap Petrochemical Corporation (Kohap)

18.        With regard to the selling prices in the home market, it is found at the time of the spot verification that Kohap has been selling to a related company in Korea RP for ultimate consumption in Korea RP. Sales to this related company account for nearly 84% of the total company sales in the home market. Under the Rules, the Authority in such circumstances is required to determine the prices at which the related company sold goods to first unrelated company in Korea RP. In the instant case, however, the related company consumed the goods and therefore, the price to related company cannot be considered.  The Authority has, therefore, disregarded the sales made by Kohap to its related company and determined the selling prices on the basis of sales made to other customers in Korea RP. The Authority notes that the, sales made to other unrelated companies are substantial and can be considered as representative of the selling prices in Korea RP.

19.        The Authority has allowed all price adjustments claimed by the company, except for adjustment on account of credit sales. With regard to adjustment on account of credit sales, the Authority notes that the exporter has claimed that exports to India have been done mainly through Kohap Ltd., which holds 42.5% shares in Kohap Petrochemical Corporation. Further, since the payment terms at which Kohap Ltd. has exported PTA to India are not available with the Authority, it would not be appropriate to allow adjustment on account of credit sales in the home market.

IV.        Tuntex Petrochemicals (Thailand) Public Company Ltd. (Tuntex):

20.        The detailed verification conducted at the premises of Tuntex revealed that the inland freight claimed by the company in case of sates in the home market are not based on the actual expenses incurred by the company and were notional expenditure. The company has incurred an average expenditure of ***** on account of inland freight, as against ***** claimed by the company. The Authority has allowed inland freight on the basis of actual inland freight incurred by the company. The Authority has allowed all other price adjustments claimed by the exporter.

V.         Exporters from Indonesia:

21.        There is no response from any exporter in Indonesia even after the preliminary findings, except from Pertamina. Since Pertamina has not exported any PTA to India during the investigation period, it attracts Rule 22 and cannot be considered for determination of dumping and dumping margin. The Authority has, therefore, proceeded with final determination on the same lines as was done in the preliminary findings in case of Indonesia. The Authority confirms the preliminary findings with regard to determination of dumping in case of exporters from Indonesia.

22.        With regal to the comparison of normal value with export price, it has been argued that the determination of dumping margin by the Authority in the preliminary findings is incorrect in so far as the Authority has done comparison of normal value with export price on the basis of monthly averages of normal values and export prices. The interested parties have argued that world-over the dumping margin is determined only on the weighted average basis and the same has been done by the Authority also in all the cases so far. Transaction-by-transaction method is used only in unusual circumstances such as when there are a very few sales of the subject merchandise, the parties have argued. The statute permits the Authority to determine dumping margin only on the basis of weighted average normal value and weighted average export price for the investigation period. The conclusion drawn by the Authority in the preliminary findings with regard to comparison does not flow from the observation made by the Authority that the prices in the home market and exports to India were declining. It has been further argued that in cases where both the markets witness simultaneous increase or decrease in the prices, the weighted average is tailor made to adjust for such fluctuations. Further, the determination of dumping margin on a month to month basis is not warranted by law.

            Authority’s position:

The Authority notes that the above arguments with regard to the comparison are factually, conceptually and legally incorrect. The Authority has also determined the dumping margin on "weighted average basis". However, the weighed averages of normal values and export prices have been worked for each of the month in the investigation period. The Authority has done comparison on this basis in view of significant decline in both the normal value and export price during the investigation period and no sales either in the home market or exports to India in some of the months by some of the exporters. It was noted by the Authority that there were very high sales volumes in some months whereas there were no exports to India in some other months. Determination of normal values on the basis of weighted average of normal value for the whole of the investigation period in a case where there are no exports in some of tree months in the investigation period and the export price declined significantly from month to month in the investigation period, comparison of weighted average normal value with export price (which represents export price for the sales made in only some of the months in the investigation period) would be inappropriate, unfair and could even be misleading. In a situation where there are exports to India only in one month in the investigation period, say Oct., 1996, and the prices declined in the investigation period, as in the present case, the results drawn using weighted average basis for comparison may be quite misleading and may result in assessment of dumping margin whereas there may not be any dumping. Converse is also true. For instance, the selling price of Kohap in the domestic market in the month of April, 1996 as worked out now is ***** pmt as against ***** in the next month (May, 1996). There are no exports to India in the month of April, 1996. Had the Authority adopted a single weighted average normal value, the selling price for the month of April, 1996 would have increased the normal value of Kohap, whereas there were no exports to India. This could have led to higher dumping margin, whereas the same is not the fact. The comparison on the basis of month-wise averages is more appropriate in such a situation than a single average for the entire investigation period and, in fact, goes to the advantage of the exporters. Further, it would also be inappropriate to adopt different comparison methods for different exporters. Moreover, it has not been demonstrated by any interested party(ies) how the comparison of normal value with export price on month-to-month basis has resulted in distortions, if any, in the comparison.

23.        In view of the above, the Authority confirms the preliminary findings with regard to dumping (normal value, export price and comparison). The dumping margin comes as under:         

G.         INJURY

24.        The arguments raised by interested parties opposing recommendation of anti-dumping duty are as follows:

a)         The entire injury analysis has been done with reference to the producers of DMT. The recommendation of the duties is on imports of PTA, which is to the exclusive benefits of the disqualified domestic industry. The investigation appears to have been initiated for favouring a single disqualified domestic producer. The conclusion would have been different, had injury to the PTA producers could have been analysed.

Authority’s position:

The above argument deserves to be ignored in view of the scope of the domestic industry, as defined above in the para (no. 7) relating to domestic industry. The argument advanced with regard to injury to the sole PTA producer is presumptive and is not supported by any evidence. Neither the Authority has investigated in detail injury to RIL nor has any interested party established that RIL has not suffered injury. In view of statutory definition of the term domestic industry, the Authority has no other option but to exclude RIL from the scope of domestic industry and analysis of injury.

b)         Injury to the DMT domestic industry and the causal link have to be seen only with reference to those importer who have the facility to use PTA and DMT. Since BDMC has not established even on prima facie basis that it has-been injured as a result of import of PTA by those importers who can use both PTA and DMT, the investigation is required to be terminated.

c)         The preliminary findings suffers from serious contradiction. No real injury has been caused to the domestic industry who are enjoying healthy profits, operating at 100% capacity utilisation. BDMC is working at 95% capacity utilisation and earning profits continuously.

d)         BDMC plant was closed from 15.05.1996 to 15.06.1996 due to chemical leakage, resulting in a loss of production of 14000 MT. The lower capacity utilisation claimed by petitioner is not correct.

e)         BDMC has purchased Px at higher contracted prices compared to ruling lower spot prices.

f)          The entire injury analysis has been done by the Authority without taking into cognisance the fundamental and relevant factors about import and domestic sourcing of PTA and DMT by the PSF manufacturers. No finding has been given by the Authority on the arguments raised on this account.

            Authority’s position on (b) to (f):

The above contentions from sub-para (b) to (f) are factually incorrect. The Authority has established in the preliminary findings that injury to the domestic industry has been caused by the imports of PTA at dumped prices regardless of the fact whether the importer could use DMT or not, and the same have been brought out in the preliminary findings. The Authority has considered lower of the contract price and ruling spot prices of Px for determination of fair selling price.

g)         In case DMT prices had to be kept lower in review of lower import price of PTA, the same should have been faced by RIL also. Financial result published by RIL does not reflect any distress sale or reduction in profits.

Authority’s position:

As brought out in preliminary findings, BDMC suffered material injury by imports of PTA at dumped prices, regardless of the fact whether the importer can use DMT or not. Preliminary findings of the Authority in this regard has not been disputed. The argument about the distress sale by RIL is presumptive and the argument about profits made by RIL deserves to be ignored as the same relates to overall profits of RIL obtained from a number of products. The argument is, therefore, liable to be rejected.

25.        The Authority did not analyse the reasons for the increased consumption of PTA. The findings on production and capacity utilisation have to be seen with reference to increase in installed capacity by 20000 MT even when the petitioner could not utilise the existing capacity in view of the demand situation.

            Authority’s position:

The Authority has not held under utilisation of capacity or loss of production as the reasons for the injury suffered by BDMC in the preliminary findings. The Authority has merely analysed these factors in the preliminary findings to determine whether the domestic industry has suffered material injury. The interested parties have failed to distinguish between material injury and causal link between dumping and material injury.

26.        The Authority notes that preliminary findings with regard to the injury to the domestic industry is not based on any single parameter affecting the domestic industry, such as production, capacity utilisation, sales, selling prices, stocks, profitability, etc. The Authority has clearly held in the preliminary findings that various indicators relating to the domestic industry, collectively and cumulatively establish that the domestic industry has suffered material injury. The arguments of the interested parties that some of the factors do not show injury to the domestic industry deserves to be ignored.

27.        The Authority, in view the foregoing, confirms the preliminary findings with regard to the injury to the domestic industry.

H.         CAUSAL LINK

28.        The arguments raised by interested parties that imports of PTA increased due to reasons other than dumping are appreciated. Injury to the domestic industry has to be seen with reference to the principles governing injury. The findings of the Authority on injury does not imply that on the basis of the factors on injury examined by the Authority, the Authority has found that the domestic industry has suffered material injury from dumped imports. The Authority has not held in the preliminary findings that increase in imports from the subject countries or reduction in the production, capacity utilisation, etc. by the domestic industry are the factors which establish that material injury to the domestic industry has been caused by the dumped imports. The Authority has very clearly held in para 40 of the preliminary findings the factors which establish causal link between dumping and injury. The Authority notes that none of the factors listed by the Authority in the preliminary findings with regard to the causal link have been controverted by the interested parties opposing anti-dumping duty.

I.          FINAL FINDINGS

29.        The Authority, after considering the foregoing, concludes that:

•     PTA originating in or exported from Thailand, Korea RP and Indonesia have been exported to India below their normal value;

•     the domestic industry has suffered material injury;

•     the injury has been caused to the domestic industry by the exports of the subject PTA originating in or exported from Thailand, Korea RP, and Indonesia.

30.        The Authority confirms the preliminary findings and recommends imposition of definitive anti-dumping duties on all imports of PTA originating in or exported from Thailand, Korea RP and Indonesia. The final duties comes as under:

31.        Subject to above, the Authority confirms the preliminary findings dated 4.9.1997.

32.        An appeal against this order shall lie to the Customs, Excise and Gold (Control) Appellate Tribunal in accordance with the Act supra.

RATHI VINAY JHA, Designated Authority

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