FINAL FINDINGS

New Delhi: 20^th October 2003.

Subject: Anti-dumping investigation concerning import of Sodium Hydrosulphite originating in or exported from Germany and Korea RP - Final Findings.

No. 14/34/2002-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

1. The procedure described below has been followed with regard to the investigation:

1. The Designated Authority (hereinafter referred to as Authority), under the above Rules, received a petition filed by M/s Transpek Silox Industry Ltd., Vadodara and M/s. Demosha Chemicals Pvt. Ltd., Mumbai, (hereinafter referred to as Petitioners) on behalf of the domestic industry, alleged dumping of Sodium Hydrosulphite originating in or exported from Germany and Korea RP (hereinafter referred to as subject countries).
2. The Authority issued a public notice dated 14.11.2002 published in the Gazette of India, Extraordinary, initiating Anti-Dumping investigations concerning imports of the subject goods classified under chapter 28 and 29 of Schedule I of the Customs Tariff Act, 1975 originating in or exported from Germany and Korea RP.
3. The Designated Authority (hereinafter also referred to as the Authority) notified preliminary findings vide Notification No. 14/34/2002-DGAD dated the 25^th February, 2003 with regard to Anti Dumping investigations concerning imports of Sodium Hydrosulphite originating in or exported from Germany and Korea RP and requested the interested parties to make their views known in writing within forty days from the date of its publication;
4. The Authority forwarded a copy of the Preliminary Findings to 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;
5. The Authority also forwarded copy of the Preliminary Findings to the Embassies/High Commissions/Representatives of subject countries in New Delhi with a request to furnish their views on the Preliminary Findings;

vi) The Authority held a public hearing on 5^th May 2003 to hear the interested parties orally, which was attended by representatives of the domestic industry, importers and exporters from subject countries. The parties attending the public hearing were requested to file written submissions of views expressed orally. The written submissions thus received from interested parties have been considered by Designated Authority in these finding;

vii) The Authority kept available non-confidential version of the evidence presented by various interested parties in the form of a public file maintained by the Authority and kept open for inspection by the interested parties as per Rule 6(7);

viii) The cost of production of the domestic industry was also analysed 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) based on the information furnished by petitioner so as to ascertain if anti dumping duty lower than dumping margin would be sufficient to remove injury to domestic industry. The cost of production data of the following companies were considered and examined appropriately:--

1. M/s Transpeak Silox Industry Ltd., Vadodara

2. M/s. Demosha Chemicals Pvt. Ltd., Mumbai

ix) The Authority conducted on-the-spot verification of the domestic industry to the extent considered necessary;

x) 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;

xi) Investigation was carried out for the period starting from 1^st April 2001 to 30^th September 2002 i.e. the period of investigation (POI).

xii) ****In this notification represents information furnished by an interested party on confidential basis and so considered by the Authority under the Rules.

B. PRODUCT UNDER CONSIDERATION /LIKE ARTICLE

2. The product under consideration is known as Sodium Hydrosulphite. It is a white or greyish crystalline powder, free from visible foreign particles with pungent odour. It has been imported under Chapter 28 and 29 of Customs Tariff Act.

3. As far as the process of manufacturing is concerned, the petitioners adopt both the Zinc and Formate route for producing the subject goods. This is internationally acceptable and adopted by manufacturers worldwide. Amalgam process adopted by M/s BASF is, in fact, being phased out considering the usage of Mercury in the process. However, whatever is the technology, the end product is comparable and technically & commercially substitutable.

4. The exporter has claimed that their product is preferred over Indian product. Petitioners submit that (a) this is a mere statement, factually incorrect; (b) the exporter has not been exporting large volumes for a long period and, therefore, question of preference does not arise; (c) preference was non existence, when imports were being made from China; (d) increase in imports is due to reduction in prices; (e) it is the price offered by BASF and not preference of the customers which is the real reason, as can be seen from the statement of customer wise sales statement; and (f) preference of one product over other product implies that the two are like articles.

5. There are two different Production Processes worldwide. BASF manufactures Sodium Hydroxide by Amalgam Process. Our "Hydrosulfit N" brand contains a dust-binding agent, which is completely soluble in water, That is why it commands preferences over locally manufactured product. The locally manufactured product contains a mineral oil as a dust-binding agent and is not completely soluble in water.

6. In the Publication of Harriman Chemsult it is written, that DEMOSHA is using Zinc process and second petitioner SILOEX uses both Zinc and Formate process. The statement that the technology adapted by the Indian Industries is comparable with the Manufactures of Sodium Hydrosulphite in Germany and Korea RP is completely wrong and misleading.

EXAMINATION OF THE AUTHORITY

7. The product under consideration is known as Sodium Hydrosulphite (Also referred to as subject goods hereinafter). It is a white or grayish crystalline powder, free from visible foreign particles with pungent odour. It has been imported under Chapter 28 and 29 of Customs Tariff Act. Though the classifications sub-headings 2831.1001 and 2832.1002 suggest description as Sodium Hydrosulphite but correct Custom classification may be treated under 6 digit heading 2831.10 as Sodium Sulphites. The classification is, however indicative only and is in no way binding on the scope of the present investigation. The Authority notes that the investigation covers all forms of Sodium Hydrosulphite as product under consideration

8. There is no significant difference in Sodium Hydrosulphite produced by the Indian industry and Sodium Hydrosulphite exported from Germany and Korea, which can have an impact on price. Sodium Hydrosulphite produced by the Indian industry and imported from Germany and Korea are comparable in terms of characteristics such as physical & chemical characteristics, manufacturing process & technology, functions & uses, product specifications, pricing, distribution & marketing and tariff classification of the goods. The two are technically and commercially substitutable. The consumers have used the two interchangeably. Sodium Hydrosulphite produced by the petitioners and imported from Germany and Korea should be treated as like articles in accordance with the anti dumping Rules. The technology adopted by the Indian industry is comparable with the technology adopted by the manufacturers of Sodium Hydrosulphite in Germany and Korea.

9. The Authority, therefore, notes that the goods produced by the Domestic Industry and those exported from the subject countries are like article within the meaning of the Rules 2(d).

C. DOMESTIC INDUSTRY:

10. As per Rule 2(b) of the Anti Dumping Rules, "domestic industry means the domestic producers as a whole engaged in the manufacture of the like article and any activity connected therewith or those whose collective output of the said article constitutes a major proportion of the total domestic production of that article except when such producers are related to the exporters or importers of the alleged dumped article or are themselves importers thereof in which case such producers shall be deemed not to form part of domestic industry." Further Rule 5(3) of the Anti Dumping Rules states that Designated Authority shall not initiate any investigations pursuant to an application made under sub rule (1) unless it determines on the basis of an examination of the degree of support for, or opposition to the application expressed by domestic producers of the like product that the application has been made by or on behalf of the Domestic Industry provided that no investigation shall be initiated if domestic producers expressedly supporting the application account for less than 25% of the total production of the like article by the Domestic Industry .

11. M/s. Transpeak Silox Industry Ltd., and M/s. Demosha Chemicals Pvt. Ltd. have filed the petition, on behalf of the domestic industry. These petitioner companies represent 54.80% of the subject goods under production.

12. The Authority notes that the domestic producers constitute more than 50% of the total domestic production and there is no opposition to the petition by any of the domestic producers, therefore, have the standing to file the petition on behalf of the domestic industry as per Rule 5 (3) (a) and (b) of the Anti-Dumping Rules and also represent Domestic Industry in terms of Rule 2(b)

13. The European Commission finds that the preliminary findings do not satisfy the requirements spelt out in the WTO Anti-Dumping Agreement, in particular Article 2 on dumping and Articles 3.4 and 3.5 on injury. The DA has failed to demonstrate the existence of dumping, has neglected to examine all relevant economic factors and has not provided any evidence on the existence of a causal link between the alleged dumped imports and material injury to the domestic injury. Finally, the European Commission finds that DA has omitted to adequately address the existence of other factors and their impact on the alleged injury.

14. The European Commission is surprised to note that the DA has entirely failed to account for the significant remaining domestic sales (of the non complaining industry), which on average represent 40% of total domestic consumption. In order to give a fair and complete view of the situation in the domestic industry, the trends in sales and market shares of the remaining domestic producers should have been examined.

15. The Commission would like to point to the fact that the market share of the petitioner has fallen by 5.24 percentage points from 1999/00 to IP, whereas that of the alleged dumped imports in the same period has increased by only 0.84 percentage points. This leaves a total of 4.41 percentage points accounted for. It would appear that the petitioner’s loss of market share has been brought about by intra-industry competition and not by alleged dumped imports, which would effectively break any causal link between dumped imports and injury.

16. The Authority has determined separate dumping margins for both cooperating and non-cooperating exporters. Since the Indian anti–dumping rules provide lesser duty, and merely became the dumping margin is different for cooperative and non cooperative exporter, so the benchmark can still be the same for both.

17. As regards the examination of factors of injury under Article 3.4 and Article3.5, the Authority examined various injury parameters relating to the domestic industry on the basis of their costing and financial information. With regard to improvement in some parameter, it would be relevant to point out that improvement in few parameters do not imply that the domestic industry has not suffered material injury. Even one single parameter may be sufficient to establish that the domestic industry has suffered material injury. With regard to market share in demand, it is noted that the petitioner companies constitute more than 50% of the domestic production with complete costing information.. The injury parameters have been examined in detail in a separate section on Injury and Causal Link of these findings.

18. The Authority also notes that there is no reason for concern that injury to the domestic industry could have been due to other Indian producers. On the contrary, there is positive evidence that the domestic industry has lost market due to dumped imports, prices have declined due to steep decline in the import prices and adverse performance of the domestic industry is due to dumped imports. Since Indian Anti-dumping Rules provide for lesser duty Rule, any such impact due to higher cost of production is automatically restricted

D. NORMAL VALUE,EXPORT PRICE AND DUMPING MARGIN:

19. Under Section 9A(1)( c), normal value in relation to an article means:-

The comparable price, in the ordinary course of trade, for the like article when meant for consumption in the exporting country or territory as determined in accordance with the rules made under sub-section (6); or

When there are no sales of the like article in the ordinary course of trade in domestic market of the exporting country or territory, or when because of the particular market situation or low volume of the sales in the domestic market of the exporting country or territory, such sales do not permit a proper comparison, the normal value shall be either: -

(a) Comparable representative price of the like article when exported from the exporting country or territory or an appropriate third country as determined in accordance with the rules made under sub-section (6); or

(b) The cost of production of the same article in the country of origin along with reasonable addition for administrative, selling and general costs and for profits, as determined in accordance with the rules made under sub-section (6);

VIEWS OF DOMESTIC INDUSTRY

20. Designated Authority sent questionnaire to known exporters/producers in Germany and Korea and Embassy of the subject countries in India. However only M/s. BASF from Germany responded to the Authority. The response filed by the exporter was grossly deficient and inadequate as is evident from the preliminary findings itself. It is not clear from the disclosure statement that whether the exporter has furnished profit & loss account for the period of investigation. Further, in the preliminary finding, it is admitted that the exporter had not furnished cost of production of the subject goods. It is not clear from disclosure statement that whether the exporter has furnished cost of production and whether the cost information furnished is for period of investigation.

21. With regard to Korea RP, there is no response from Korea. Thus, the claim of the domestic industry earlier in the petition and the preliminary findings notified by the Designated Authority now remains unrefuted. Such being the case, petitioners request the Designated Authority to kindly confirm the preliminary findings.

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

23. The Authority provided opportunity to the exporters from subject countries to furnish information relevant to the investigations and offer comments, if any, in accordance with the Section cited above. The Authority wrote to the Embassies/High Commissions/Representative of subject countries in India also. The Authority sent questionnaires to all the known exporters for the purpose of determination of export price and normal value in accordance with Section 9A(1) (c) of the Custom Tariff Act Only M/s. Solvay Belgium filed the response which were incomplete. None of the exporters responded to the preliminary findings and did not offer comment either on dumping or injury.

24. The exporter claimed adjustment on account of selling & marketing costs but no justification was provided for such claim and hence such unsubstantiated claims were rejected. As per Para 2 of Annexure 1 of the Rules the domestic sales of the product under consideration were compared with the cost of production plus selling administrative and general costs which were provided separately for exports, domestic sales and exports to third countries.

Although the Hon’ble Authority in its statement has mentioned that domestic sales of the product under consideration were compared with the cost of production plus selling administrative and general costs which were provided separately for exports, domestic sales and exports to third countries but adjustments on account of selling and distribution costs towards domestic sales have not been allowed.

EXAMINATION BY THE AUTHORITY

Germany

M/s. BASF, Germany

25. M/s. BASF maintains Audited Accounts and calendar year is the accounting year for the company. The complete BASF accounts are kept in Euro currency. The company maintains its accounts on SAP. Different products are considered as separate product centers and profitability is assessed separately for each product. Although the period of investigation was different from the accounting year kept by the exporter, still it was possible to obtain the cost of production of the subject goods for the period of investigation from the SAP.

NORMAL VALUE:

26. The company has furnished transaction wise details of sale made in the home market of Sodium Hydrosulphite for the period of investigation. The information was verified with the basic records of sales and invoices and found to be correct. The company has sold 4263 Mt of Sodium Hydrosulphite in the domestic market during the period of investigation. It was further observed that all the domestic sales were made at cif level. In order to assess the sale at ex factory level, the exporter has claimed certain adjustments in these sales transactions. The exporters claim of adjustment on account of selling & marketing costs was not considered as it was neither justified nor substantiated with facts during the course of on-spot verification, hence, such unsubstantiated claims were rejected by the Authority for the purpose of arriving at ex-factory cost of domestic sales in their home market. As per Para 2 of Annexure I of Rules the domestic sales of the product under consideration were compared with the cost of production plus selling administrative and general costs which were provided separately for exports to India, domestic sales, and exports to third countries. The domestic sales in the domestic market are found to be in the ordinary course of trade. The company provided copies of profit and loss account and balance sheet for the current year and previous two financial years showing the determination of gross profit, details of selling and administration and other costs and net profit. The cost of production was determined and compared with the domestic sales and it is found that all sales transaction are above the cost of production and were therefore in the ordinary course of trade. The normal value has therefore been based on the average sales realization of the subject goods in the domestic market. Adjustments on account of packing, freight, storage and handling have been considered to arrive at the ex factory domestic sales price.

27. The Authority has arrived at the Normal Value for M/S BASF, Germany as ****$/MT.

28. The exporter has furnished invoice wise details of exports made to India during the period of investigation. The information submitted was verified with the basic records and invoices. The exporter in its response to the questionnaire and subsequent clarification was submitted that the exports to India are in Euro. However during the course of verification it was observed that the exports are made in US$, and the exporter submitted revised information in Appendix 2 of the questionnaire . M/s BASF has sold 840 Mt of subject goods to India during the period of investigation. Sales to India are directly shipped from M/S BASF, Ludweigshafen, Germany to the Indian customer. It was also observed during the cource of verification that the product under consideration was delivered /sold only to M/s Ramanand Kidernath International in India by the exporter during the period of investigation. Invoicing is done by BSEA, Singapore. For acquiring the customers BASF India gets a commission of 3%. BSEA, Singapore gets a commission of 3.5% for invoicing, handling of receivables, order processing etc. The exporter has claimed adjustments on account of such commissions to its sister concerns at Singapore and India. It was observed that the sales were made at CIF level and adjustments claimed on account of inland freight, handling charges etc., was verified from their system and found to be in order.

29. The Authority, therefore, determined the ex-factory export price for M/S BASF Germany as US$ ****/MT.

Other Exporters/Producers from Germany

Normal Value

30. The Authority notes that none of the exporters from Germany except M/s. BASF responded .The Authority in view of non-cooperation, has constructed the normal value for all other producers/exporters on the basis of estimated costs available for cooperative exporters and facts available in accordance with Rule 6 (8) of anti dumping Rules.

31. The normal value is therefore referenced as ****$/MT .

Export Price

32. The Authority notes that the export price has been determined on the basis of the statistical information from DGCI&S Kolkata. The adjustments on ocean freight, ocean insurance, commission, inland freight and port expenses to an extent of ****$/MT, ****$/MT, ****$/MT, ****$/MT, and ****$/MT respectively have been estimated from the adjustments of the cooperative exporters/producers from Germany.

33. The ex-factory export price is referenced as ****$/MT.

Korea, RP

Normal Value

34. The Authority notes that none of the exporters from Korea has responded by way of questionnaire response to the initiation notification or subsequent to the preliminary findings. The Authority in view of non-cooperation, constructed the normal value for all producers/exporters on the basis of facts available as per Rule 6 (8) of anti dumping Rules. Thus the constructed cost of production with due adjustments has therefore been referenced for the purpose of determination of normal value of the subject goods in Korea.

35. The normal value is therefore referenced as ****$/MT.

36. The Authority notes that the export price has been determined on the basis of the data from DGCI&S Kolkata. Since there is no response from exporters, adjustments on ocean freight, ocean insurance, commission, inland freight, and port expenses to an extent of ****$/MT, ****$/MT, ****$/MT, ****$/MT. and ****$/MT have respectively considered as provided by the petitioners.

37. The ex-factory export price is referenced as ****$/MT.

38. The rules relating to comparison provides as follows:

39. "While arriving at margin of dumping, the Designated Authority shall make a fair comparison between the export price and the normal value. The comparison shall be made at the same level of trade, normally at ex-works level, and in respect of sales made at as nearly possible the same time. Due allowance shall be made in each case, on its merits, for differences which affect price comparability, including differences in conditions and terms of sale, taxation, levels of trade, quantities, physical characteristics, and any other differences which are demonstrated to affect price comparability."

40. The Authority has followed the consistent policy of adopting the principles governing the determination of Normal Value, Export Price and Margin of Dumping as laid down in Annexure I of the Anti Dumping Rules. Based on the Normal values and Export prices as indicated above the Authority assessed the Dumping Margins in case of all exporters/Producers from the subject countries as given in the table below:-

The dumping margin for exporter/producers comes as under:

The above Dumping Margins are above the de-minimus limits.

E. INJURY AND CAUSAL LINK:

1. The principles for determination of injury set out in Annexure-II of the Anti-Dumping Rules lay down that:

1. 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.
2. While examination 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 19 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.For the examination of the impact of the dumped imports on the domestic industry in India, the Authority has considered such indices having a bearing on the state of the industry as production, capacity utilisation, sales quantum, stock, profitability, net sales realisation, the magnitude and margin of dumping, etc. in accordance with Annexure II(iv) of the rules supra.

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

43. The data presented does not sufficiently support the claim of Material Injury as pr following analysis:

1. Domestic sales only decreased by 4.63% from 1999-2000 to POI and by 1.23% from 2000-01 to POI.
2. Production cost per unit declined from 100 (1999-2000) to 98.43 (2000-01) to 93.31 (POI).
3. Where as profitability has increased over the same period from 100 (1999-2000) to 100.14 (2000-01) to 100.16 (POI).
4. How alleged dumped imports, which represent only 2.5% of total domestic consumption, could have had significant impact on the Petitioners, which account for 48% of domestic consumption.
5. The trend in sales and market share of the remaining domestic Industry, which on average represent 40% of total consumption should also be kindly, examine.
6. The market share of the Petitioners has fallen by 5.24% from 1999-2000 to POI where alleged imports have increased by only 0.84%. These leaves a total 4.41% unaccounted for. It would appear that the Petitioners’ loss of market share has been brought down by INTRA-INDUSTRY completion.

VIEWS OF DOMESTIC INDUSTRY:

44. The parameters for cumulative assessment are well satisfied in this case. Any interested party has not disputed this. Therefore, petitioners refrain from making any further submissions and submit that the injury to the domestic industry is required to be assessed cumulatively from the two countries.

45. The subject goods were earlier being dumped by the producers in China. With the imposition of anti dumping duty, the imports from China have been limited to an extent. This has helped the domestic industry in improving its performance. However, the performance of the domestic industry could not reach optimal levels due to fresh dumping experienced from Germany and Korea. In view of the same, petitioners submit that the fact of previous dumping of the product from a different country causing injury to the domestic industry and imposition of anti dumping duty on such source may kindly be kept in mind while assessing the performance of the domestic industry.

46. One of the petitioner companies has taken significant steps in reducing its cost of production. There is a significant reduction in the interest liability of the Company due to such steps. This has consequently reflected in the profitability of the domestic industry. However, what is relevant for the present purpose is the return (sum of interest and profit) which the domestic industry is entitled, rather than when the Company has higher of interest or higher of profits. A Company having higher interest cost would be entitled to lower profits while a Company with lower interest cost would be entitled to higher profits.

47. The imports from subject countries have increased significantly both in absolute and relative terms.

48. Share of imports from the subject countries has increased significantly in relation to total imports of subject goods.

49. Production, capacity utilization and sales volumes were improving with the imposition of anti dumping duty on China. However, the same has declined in Period of Investigation as compared to immediate preceding year, even though the sales volumes in overall terms have partially increased due to imposition of anti dumping duty on China.

50. Decline in sales volumes has resulted in increase in stocks in spite of decline in production.

51. The cost of production of domestic industry has declined as a result of continuous dedicated efforts of the domestic industry. At the same time, the domestic industry has been forced to reduce the selling price. Resultantly, domestic industry continues to make financial losses, albeit at a lower level.

52. The domestic industry had expected to achieve optimum profitability after imposition of anti dumping duty on imports from China. However, dumping from new sources with the imposition of antidumping duty on imports from China has prevented the domestic industry from realizing reasonable profits.

53. The domestic industry has lost orders/contracts due to dumped imports.

54. The imports were at so significantly low prices that the landed price of imports is significantly below the average selling price of the domestic industry. Dumped imports are causing severe price undercutting.

55. Landed value of the dumped imports was below the cost of production of the domestic industry. Should the present trend of import prices continue, the imports would have severe suppressing/depressing effect on the domestic industry.

56. Though the industry has a tendency to retain its employees, the dumped imports have forced the industry to curtail its employment.

57. Though the productivity of the domestic industry has been increase, it is to be considered that the employment level of the domestic industry has declined. Thus, while production per employee has increased, Production per day declined in POI as compared to previous period, even though the same had been increasing over the years.

58. Return on capital employed has been negative in previous years due to dumping from China and that trend continues. Considering the non-injurious price determined by the Designated Authority, it can be said that the sales realization of the domestic industry was lower than the non-injurious price determined. This further established that the return on capital employed has been sub-optimal.

59. Cash flow of the domestic industry has been adversely affected by the continuous losses being suffered by domestic industry, even though cash profits over the years have been improving with the imposition of anti dumping duty on imports from China.

60. Growth of the domestic industry is adversely affected. In fact, growth has become negative from a situation of positive growth.

61. The domestic industry is finding it difficult to plan fresh investments.

62. Though the Designated Authority has already recommended anti-dumping duty in terms of US $, it is submitted that the final duties may also be recommended in terms of US $ only, so that erosion in the quantum of protection does not take place on account of changes in the exchange rate. However, the duties may please be kept in terms of reference price only.

63. Petitioners have earlier provided all information for the purpose of the present investigation. Should the Designated Authority require any further information/clarification, petitioners shall be pleased to provide the same.

64. With regard to various arguments presented by BASF, petitioners have already given detailed comments in their rejoinder. It is submitted that the domestic industry is suffering injury more on price front due to dumped imports from Germany and Korea, even though the sales volumes have also declined. While decline in 1999-00 was predominantly due to dumping from China, the dumped imports from Germany and Korea have resulted in decline in sales volumes in POI. Profitability of the domestic industry has improved more because of restructuring plans and continuous efforts to curtail and marginalise costs by the domestic industry. However, should the landed price of imports be compared with the cost of production, it would be seen that the same is significantly below the landed price of imports. Further, imports from subject countries are significantly undercutting the prices of domestic industry. Resultantly, the domestic industry has lost significant sales to BASF. Petitioners have already provided customer wise sales statement, which clearly establishes that the domestic industry has lost sales to BASF. BASF has reduced the prices considerably and Indian producers are being forced to reduce the prices of subject goods so as to match the prices of imports. We have already provided some letters from dealers which clearly establishes that Indian producers have lost sales to BASF and their market share in respect of these sales has declined. Imports admittedly represented 2.5% of domestic consumption, which is significant, even going by the legal provision in the EC.

EXAMINATION OF THE AUTHORITY:

65. The Authority has taken into account all indices regarding injury while doing the final determination. This would involve all relevant facts viz., volume of dumped imports, their effect on price in the domestic market and its subsequent effect on domestic producers, production, capacity utilisation, profitability, net sales realisation etc. While determining the non-injurious price for the like article for the domestic industry, the Authority considered the optimum cost of production for the domestic industry which would take into account the normated best consumption norms and would also take into account the actual price of the raw materials during the period of investigation which go into the production of the product under consideration.

66. It is observed from the facts available on record that the margins of dumping from each of the subject countries are more than the 2% limit expressed as % of export price. Also the volumes of imports from each of the country are more than deminimus. Cumulative assessment of the effects of imports would be appropriate since the exports from the subject countries directly compete with each other and with the goods offered by the domestic industry in the Indian market. The Authority, therefore, proposes to assess injury to the domestic industry from the subject countries cumulatively.

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

68. Following parameters establish that material injury has been caused to the domestic industry from dumped imports from the subject countries;

F. Volume and Market share of dumped imports

69. Imports of Sodium Hydrosulphite from subject countries have increased significantly. While the imports are primarily from many countries, but share of imports from Germany and Korea RP have increased during the period of investigation in relation to the demand in India. The share of imports from subject countries has increased from 37.35% in 2000-2001 to 150.60% during the POI (annualized), whereas the share of imports from other countries has decreased from 63.81% in 2000-2001 to 56.36% during the POI (annualized). Imports are coming from other sources also but those imports are either di-minimus or attracting anti-dumping duty. Imports from subject countries have increased both in relative and absolute terms. It is also evident that the imports are increased in relation to production of the domestic industry and share of imports in demand of the product in the country. .

70. The production and capacity utilization of the domestic industry has decreased during the period of investigation. This decrease in the production and capacity utilization is due to the fact that demand has increased. The rate of growth of imports of subject goods is much more than the rate of growth of domestic production and demand of subject goods.

71. The petitioner companies determine their prices based on prevailing market conditions. The market prices were driven by the prices of the dumped imports as the share of dumped imports has increased from 10.96 % in 2000-2001 to 36.26% during the POI (annualised).

72. Though domestic sales volumes of the domestic industry have marginally decreased, the selling price has marginally improved. Further, domestic industry could not reduce its selling price to match dumped imports. The landed price of imports is so low compared to the cost of production and selling price of the domestic industry that the domestic industry is not in a position to reduce its price to match with the price of imported subject goods. The Authority, therefore, notes that in this prevailing situation the domestic industry lost both the profit and the market to compete with the dumped imports. The increase of imports both in absolute terms as well as percentage terms of Sodium Hydrosulphite has led to the loss of sales/contract to the domestic industry.

73. The share of domestic industry in demand has decreased from 92.01 in 2000-2001 to 90.21 during the POI (annualised). The other producers have also lost their share in demand, which have been taken by the dumped imports from subject countries. The share of imports from other countries has also decreased from 63.81 in 2000-2001 to 56.36 during the POI (annualised). The demand in general has increased from 104.70 in 2000-2001 to 105.48 during the POI (annualised). The Authority, therefore, notes that the dumped imports have displaced the market share of domestic industry even after increase in demand because of dumped imports of sodium hydrosulphide from subject countries.

74. The production of Sodium Hydrosulphite by the domestic industry has decreased from 15123 MT in 1999-2000 to 14540 MT in 2000-2001, which has further decreased to 14423 MT during the POI (Annualised). In general production has declined. There has been a consistent decline in the capacity utilisation from 88.44% in 1999-2000 to 85.35% in 2000-2001 and finally 79.73% in POI annualised.

75. Sales of the domestic industry showing a consistent decline from 14468 MT in 1999-2000 to 13939 MT in 2000-2001 finally to 13767 MT during the annualised POI. The dumped imports are instrumental for a declining trend both in capacity utilisation as well as in the sales volume of the subject goods respectively, and since the sales volumes is declining, the domestic industry does not intend to increase the production which will lead to further stocks of inventory.

Inventory and evidence of loss of contract

76. The Authority notes that the inventory stocks have increased from 90.71in 2000-2001 to 99.07 during the POI (annualised). The Authority holds that the increasing trend in stocks along with the displacement of share of domestic industry in the market during the POI (annualised) is due to the dumped imports from the subject countries. The Authority, therefore, notes that the declining sales volume has resulted in increase in stocks in spite of decline in production.

77. It has been observed that because of the decline in export price, the domestic industry is forced to match the selling price with the landed value of export and keep the selling price at a level to compete in the market. In this process the domestic industry is not able to recover its marginal cost, therefore, the domestic industry is unable to sell the subject goods at such a low price resulting loss of contract. Hence, the Authority notes that due to the dumped price, the domestic industry is forced to sell the product at a loss.

Price undercutting, Price suppression/depression and Price underselling

78. On the basis of the evidence available before the Authority, it is determined that the domestic industry has suffered injury. It has been observed that the dumping has had a significant impact on the net sales realisation of the domestic industry for the subject goods. To preserve its market share, the petitioner had to compete with low priced and dumped imports of the subject goods from the subject countries. Thus dumped imports were undercutting the prices of the domestic industry as landed value of imports from the subject countries was below the selling price of the domestic industry. The Authority notes that the landed price of the dumped imports indicates the evidence of severe price undercutting.

79. The Authority notes that the price underselling is an important indicator to make an assessment of the injury. The Authority has worked out the fair selling price of the product under consideration and compared the same to the landed value to arrive at the extent of price underselling. The analysis shows a significant level incidence of price underselling causing injury to the domestic industry. The imports were having significant suppressing/depressing effect on the price of the domestic market, as the domestic industry is not able to raise its selling price in view of the dumped imports. Thus the examination of the available evidence shows that the domestic industry as a whole suffered injury on its sales of subject goods during POI. The Authority has determined the extent of price undercutting and price underselling during the POI and holds that domestic industry has suffered significant price undercutting and price underselling during the POI due to dumped imports from the subject country.

80. The fair selling price of domestic industry is below the cost of production of subject goods and further imports were thus preventing the domestic industry effecting legitimate price increase. The Authority has determined the extent of Price suppression/depression during the POI and notes that domestic industry has suffered significant price suppression/depression during the POI due to dumped imports from the subject countries.

Employment

81. The employment level of domestic industry has been consistent and the index has more or less at the same level at 95 to 96. The Authority, however, notes that this position in the level of employment cannot be ascertained that led to injury to the domestic industry.

Profitability

82. The unit cost of production has declined from 100 in 1999-2000 to 98.43 in 2000-2001 and further declined to 93.91 during the POI (annualised) whereas unit-selling price has marginally increased from 100 in 1999-2000 to 100.16 during the POI (annualised).

83. The cost of production of the domestic industry has declined whereas selling price has improved its position. The domestic industry is incurring financial losses but profitability of domestic industries has improved due to the financial restructuring and reducing cost on account of interest of one of the petitioner companies. It is also observed that the domestic industry could not recover the loss even after the subject goods are attracting anti dumping duty on Chinese imports, which is an indication that the recovery of the domestic industry is prevented due to the new source of alleged dumping. The domestic industry has improved a bit in its financial health due to improvement in loss, still the domestic industry is forced to reduce the selling price to hold on markets due to dumped imports from subject countries.

Growth and return in investment

84. The demand for the product has increased however, the growth of the domestic industry has declined. The imports are retarding the growth of the domestic industry in spite of increase in demand in the country. It is noted that due to dumped imports from subject countries the domestic industry is doubtful to achieve the target or even to raise capital from the market unless remedial measures is taken to prevent dumped imports from subject countries. The Authority notes that it would be difficult for the domestic industry to plan fresh investments.

85. The rate of return on investment during POI for the product under consideration is negative due to loss for the domestic industry, as a result of which the domestic industry has not able to raise fresh capital or plan new investment in this product.

86. Further, the increase in the wages has resulted in further increase in the cost of sales, whereas the domestic industry could not maintain its desired profits. The Authority notes that the domestic industry has no option but to increase wages as per prevailing regulations in the country. However, the wage increases will further affect the profitability adversely, as the domestic industry is not able to proportionately increase the prices.

87. Growth of the domestic industry has declined. Productivity, even though improved, did not help the domestic industry in improving the profitability. The Authority, however, notes that this position in the level of employment cannot be ascertained that led to injury to the domestic industry.

G. Cumulative Assessment

88. It is observed from the facts available on record that the margins of dumping from each of the subject countries are more than the 2% limit expressed as % of export price. Also the volumes of imports from each of the country are more than deminimus. Cumulative assessment of the effects of imports would be appropriate since the exports from the subject countries directly compete with each other and with the goods offered by the domestic industry in the Indian market. The circumstances of the present case fully meet conditions of cumulative assessment given in the Annexure II of the Rules, as (1) margin of dumping from each of subject countries is more than the de minimus limits: (2) share of imports from each of the subject countries is more than the limits prescribed; and (3) the imported material is directly competing with the domestic material. The Authority notes that all relevant factors cumulatively and collectively establish that the domestic industry has suffered the material injury during the period of investigation due to dumped imports.

89. The Authority after noting the above submissions holds that the non-injurious price has been evaluated for the domestic producers by appropriately considering the sales realisation from the related products. Also in order to eliminate inefficiencies, the Authority has normated and benchmarked the best practices on utilisation of raw materials, utilities etc.

90. As regards the injury, which could happen on account of higher cost of production in India, the Authority notes that under the Indian Anti Dumping Rules it is the lesser duty rule which is applied. Further in any event the anti dumping duties cannot exceed the dumping margin.

91. Therefore, the Authority is led to conclusion that all relevant factors, cumulatively and collectively establish that the domestic industry has suffered the material injury during the period of investigation.

H. CAUSAL LINK:

92. In determining whether injury to the domestic industry was caused by the dumped imports, the Authority took into account the following facts: -

93. Substantial imports of subject goods from subject countries at dumped prices forced the domestic industry to reduce its selling prices to un-remunerative level, which has resulted in a situation of price undercutting in the Indian market.

94. The imports from subject countries suppressed the prices of the product in the Indian market to such an extent that the domestic industry was prevented from recovering its full cost of production and earn a reasonable profit from the sale of subject goods in India.

95. From the above table it is observed that the share of volume of dumped imports in total consumption has increased from 0.62% in 2000-2001 to 2.5% during POI, whereas the market share of domestic industry fell from 53.55% in 1999-2000 to 48.31% during the POI. The dumped imports were coming into India at price that significantly undercut the prices of like domestic product. Thus the prices of dumped imports have caused both price depression and price suppression on the prices of like domestic products.

96. There is no contraction in demand. Further, there is no other factor such as trade restrictive practice or development in technology, which could have caused material injury to the domestic industry. Increase in imports in absolute terms, as also relative to the production and consumption in India, have directly resulted increase in the sales, which further resulting in decline in the share of the domestic industry in the demand of the product in the country. Further, the low prices of imports have prevented the domestic industry from optimising their profitability.

97. The Authority, therefore, notes from the above that the landed value of imports from the subject countries have been at a price below the selling price of the domestic industry. Further, the imports into India have been at a price lower than the non-injurious price for the domestic industry. As a consequence thereof the domestic industry has not been able to earn a reasonable return. These parameters collectively and cumulatively indicate that the petitioner has suffered material injury due to the dumped imports.

I. INDIAN INDUSTRY’S INTEREST & OTHER ISSUES

98. The Authority holds that the purpose of anti-dumping duties, in general, is to eliminate injury caused to the Domestic Industry by the unfair trade practices of dumping so as to re-establish a situation of open and fair competition in the Indian market, which is in the general interest of the country.

99. The Authority also recognises that though the imposition of anti-dumping duties might affect the price levels of the products manufactured using the subject goods and consequently might have some influence on relative competitiveness of these products, however, fair competition in the Indian market will not be reduced by these anti-dumping measures. On the contrary, imposition of anti-dumping measures would remove the unfair advantages gained by the dumping practices and would prevent the decline of the domestic industry and help maintain availability of wider choice of the subject goods to the consumers.

100. The Authority notes that the imposition of anti-dumping measures would also not restrict imports from the subject countries in any way, and, therefore, would not affect the availability of the products to the consumers.

101. The Authority has not merely relied upon the submissions of the petitioners regarding fair selling price, rather the Authority deputed a team for on-the-spot investigation and verification of costing and manufacturing process of Sodium Hydrosulphite, and worked out in detail the fair selling price of Sodium Hydrosulphite in India for the Domestic Industry separately.

102. Consumers have raised their arguments that the imposition of anti dumping measures would result in less competition and higher prices for consumers of caustic soda and may harm the user industry. The Authority notes that price advantages based on unfair practices are unjustifiable and may in the longer term are harmful even to the interest of consumer.

J. CONCLUSIONS:

103. The Authority has, after considering the foregoing, come to the conclusion that:

(i) Subject goods have been exported to India from subject countries below its normal value;

(ii) The Indian industry has suffered material injury ;

(iii) The injury has been caused cumulatively by the imports from the subject countries.

104. The Authority considers it necessary to impose an anti dumping duty on all imports of Sodium Hydrosulphite from subject countries in order to remove the injury to the domestic industry. The margin of dumping determined by the Authority is indicated in the paragraphs above. The Authority 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. For the purpose of determining injury, the landed value of imports has been compared with the weighted average non-injurious price of the Petitioner Companies determined for the period of investigation.

105. Accordingly, the Authority recommends that the anti dumping duties as set out below be imposed by the Central Government on all imports of subject goods under consideration falling under customs heading 2831.10 originating in or exported from subject country. The Anti-Dumping duty shall be the difference between the amount mentioned in column no.9 of the following table and the landed value of imports US$ per MT. on all imports of subject goods, falling under chapter 28 of the Customs Tariff, originating in or exported from the subject countries mentioned below:-

106. Landed value of imports for the purpose shall be the assessable value as determined by the Customs under the Customs Act, 1962 and all duties of customs except duties under sections 3, 3A, 8B, 9 and 9A of the Customs Tariff Act, 1975.

107. Subject to the above, the Authority confirms the Preliminary Findings dated 25^th February 2003.

108. An appeal against this order shall lie before the Customs, Excise and Service Tax Appellate Tribunal in accordance with the Act, supra.

(L.V. SAPTHARISHI)
DESIGNATED AUTHORITY

(L.V. Saptharishi)
Designated Authority

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