To be published in part I Section 1 of the Gazette of India, Extraordinary

Subject:- Anti-dumping investigation concerning import into India of Vitrified/ Porcelain Tiles originating in or exported from China PR and UAE- Final Findings.

No. 37/1/2001-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;

(i) The Designated Authority (hereinafter also referred to as the Authority) notified Preliminary Findings vide Notification No. 37/1/2001-DGAD dated the 3^rd December, 2001 with regard to Anti Dumping investigations concerning imports of Vitrified/ Porcelain Tiles (hereinafter referred to as subject goods) originating in or exported from China PR and UAE (hereinafter referred to as subject countries) 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 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 copy of the Preliminary Findings to the Embassies of subject countries in New Delhi with a request to furnish their views on the Preliminary Findings;

(iv) The Authority held a public hearing on 2^nd July 2002 to hear the interested parties orally, which was attended by representatives of the domestic industry, importers and exporters from UAE. The parties attending the public hearing were requested to file written submissions/rejoinders of views expressed orally. The written submissions/rejoinders thus received from interested parties have been considered by Designated Authority in this finding;

(v) The Authority made the public file available to all interested parties containing non-confidential version of the evidence submitted by various interested parties, for inspection, upon request;

(vi) Arguments raised by interested parties before announcing of Preliminary Findings, which have been brought out in the Preliminary Findings dated 3^rd December, 2001 have not been repeated herein for sake of brevity. However, arguments raised by the interested parties have been appropriately dealt with in the Preliminary Findings and/or these findings;

(vii) In accordance with Rule 16 of the Rules supra, the essential facts/basis considered for these findings were disclosed to known interested parties on 17^th January, 2003 and comments received on the same have also been duly considered in these findings;

Investigation was carried out for the period starting from 1^st April, 2000 to 31^st March, 2001.

(ix) The on site verification of exporter’s data was carried out at the premises of exporter, i.e. M/s RAK Ceramics at UAE.

(ix) **** in the Notification represents information furnished by interested parties on confidential basis and so considered by Authority under the Rules.

B. VIEWS OF PETITIONERS, EXPORTERS, IMPORTERS AND OTHER INTERESTED PARTIES AND EXAMINATION BY AUTHORITY:

(i)We have preliminary objection with regard to certain importers to appear before the oral hearing before the Designated Authority. As per Sub-Rule 6(4), the information called by the Designated Authority shall be furnished by the persons in writing. Therefore there is unambiguous obligation under Rule 6 on the interested parties to provide information. The scope and the obligations of Rule 6(4) and 6(6) are not linked to each other since the Rule 6 follows a sequential order giving the rights and obligations to different interested parties. Therefore it is our submission that the Authority may kindly not take cognizance of the submissions made by all those interested parties who have failed to fulfill their legal obligations under the Rules. We also object to the opportunity being given to certain interested parties to comment on the case of the petitioners without the balancing right being made available to the petitioners which is violation of the principle of natural justice.

(ii)It has been argued by importers/exporters that it is not in consumer interest to levy anti dumping duty. The major exporter M/s RAK Ceramics from UAE have themselves admitted that they supply 3^rd and 4^th quality tiles to India. Consumer interests cannot be furthered by bringing in 3^rd and 4^th quality products.

(iii)The judgement of Hon’ble Supreme Court in the case of Designated Authority Vs. M/s Haldor Topsoe is relevant regarding the issue of right of interested parties to make the oral submissions and in this regard we reiterate our submissions as made earlier.

(iv)It has been mentioned that the petitioners were required to submit costing, selling price and other information on model to model and grade to grade basis and that in absence of this, application cannot be considered. It has also been argued that this mistake cannot be rectified at this stage. In this regard, it is submitted that the Domestic Industry has submitted the information as per Rule 5(1) and (2). Designated Authority has examined the standing of the petitioner and has indicated in its initiation notification dated 6.8.2002.

(i)a determination prior to initiation is required to be done by the Designated Authority only with respect to the issue of ‘standing’ and not for dumping, injury or the causal link

(ii)an examination of the accuracy and adequacy of evidence, coupled with the satisfaction of the Designated Authority, as to the sufficiency of such evidence. The argument of the representative of the exporter that there must be a complete determination on all issues, is entirely contrary to the sequential basis of conducting such proceedings under the statutory provisions. As long as there is satisfaction as to the sufficiency of evidence, there is no further requirement of a determination let alone a determination on a model to model or grade to grade basis.

(i) The availability of imported products has been a boon to the industry and Indian consumers and have played a major role in substantially expanding market for Vitrified Tiles.

(i)The Authority has not acknowledged the submissions made by hundreds of consumers organizations, traders, importers and distributors who have filed their submissions well before the preliminary findings.

d) VIEWS OF M/S KENT CERAMIC TILES COMPANY PVT. LTD. & M/S KAJARIA CERAMICS:

(i)The petitioners have misconstrued the provisions of Rule 6. The Rule 6(4) and 6(6) are clearly independent. The Hon’ble Supreme Court in case of Haldor Topsoe has considered the issue on the method of determination of Normal Value and not the issue regarding whether importers are barred from making submissions under Rule 6.

(ii)The failure and continued reluctance of the petitioner to separately categorise different types of Vitrified tiles so as to enable a proper appreciation of whether adequate evidence has been provided to establish dumping, material injury and causal link is contrary not only to technical and commercial understanding but is also strictly in the teeth of the Dispute Settlement Panel Report of Argentina vs. Italy in respect of the import of Ceramic Floor tiles case.

(iii)The failure of the importers to submit information could if at all affect the issues of export price and quantum of imports. This however does not deny the importers and other interested parties from an issue to make submissions on the issues of product under consideration, accuracy or adequacy of evidence, absence of material injury and absence of a causal link of alleged dumping .

(i) As per Rule 2 (c), the term interested party is not defined as an exporter or an importer who have submitted a questionnaire response. It refers to an exporter or importer per se without any further qualification. The term interested party includes even an association of importers, association of exporters and the Government of exporting country. These interested parties are not required to file response to any questionnaire prescribed by the Authority. Sending questionnaires and participating in an oral hearing are two different aspects of investigation. The only legal requirement under Rule 6(6) is that the said oral information should be taken into consideration only when it is reproduced in writing. Therefore objection by Domestic Industry is unfounded. We are grateful to the Authority for overruling this objection at the hearing itself. We have separately sent response to the importers questionnaire (both confidential and non-confidential version).

(ii) The Domestic Industry should be directed to index the figures in various tables and that the non-confidential summary should be provided as per Article 6.5.1. Designated Authority should direct the Domestic Industry to resubmit the non-confidential version of the petition giving index figures where *** appears..

(iii) The reference by the Domestic Industry to the case of M/s Haldor Topose Vs. Designated Authority has no relevance to the facts of the present case. In that case, an exporter did not furnish the information that was available in his possession and in that case the Supreme Court had held that the exporter cannot argue about the best information that the Authority has used. The Supreme Court did not say that as a consequence Haldor Topsoe cannot at all participate in the proceedings. In this case the response to importer’s questionnaire has nothing to do with the submissions on material injury and causal link.

(iv) The import data it appears has been complied from the DGCI&S data by manual identification of the product under consideration. This methodology could be subjected to manipulation by the Domestic Industry. Clubbing all the product prices into one product has distorted the entire picture. In absence of any clear cut definition of product under consideration, all the subsequent stages of dumping, material injury and causal link have been distorted and cannot be termed as objective and unbiased.

The initiation of the investigation is bad and is not as per Rule 5. The complainant have not provided sufficient evidence in the application which is mandatory to establish prima facie dumping, injury and causal link. The applicants in their application have concealed the vital fact regarding several models and sizes for the two duct and their prices and continue to do so in spite of reminders to disclose information to that effect.

The vital information on the product cannot be corrected retrospectively in view of the expressed provisions of Rule 5(3) (b) of anti dumping duties 1995. The complainant has been pursuing the product as one model and type for the purpose of determination of dumping and injury and underselling and undercutting phenomena and also NIP. The computation for model to model, grade to grade is essential. The initiation of the case in light of improper product description has therefore not passed the test of accuracy and adequacy of evidence and therefore the initiation is bad.

(iii) The proposed provisional anti dumping duty is contrary to the provisions of Rule 13, Rule 17(3) of Rules, 1995, Article 6.10 and Article 2.4 of the Anti Dumping Agreement. The Authority has failed to make any adjustments for these apparent physical differences which affect the price comparability. The adjustments on level of trade, quantity discounts and credit cost have not been considered.

M/s. Al Khaleej did not provide response as per the prescribed questionnaire. Subsequent to the preliminary findings, the exporter has made certain submissions which are as under:

(i)In the initiation and the preliminary findings, there are glaring breaches of the WTO Agreement on Anti Dumping. In the present proceedings, the product is aggregated without the distinction of various grades which are of different quality and price. Even in proceedings such as Cold Rolled Steel plates, there were references to different grades. The aggregation of grades does not lead to an accurate determination of dumping, injury and causal link. Indian tiles manufactured at USD 2 per square mt. cannot be injured by the imports of tiles at USD 13 per square mt. or vice-versa.

(ii)The initiation is not as per Article 5.3 and 5.8. The application lacks adequate and accurate evidences. The application is therefore not fully documented since it does not lead to grade to grade analysis of the product under consideration.

C. 3. VIEWS OF INTERESTED PARTIES ON DISCLOSURE STATEMENT ISSUED BY THE DESIGNATED AUTHORITY:

(a) The gradation of RAK is done on the basis of quality of the vitrified tiles which are determined only after the tile is fully produced. The Designated Authority has consistently held that quality is not an issue for anti dumping matter. This position has also been confirmed by the CEGAT.

(b) We have repeatedly requested that the classification of vitrified tiles into various grades must be supported by differences in physical specifications. These specifications have not been made known to us for our comments. Accordingly, the approach of the Designated Authority to carry out comparison on the basis of grade is wholly erroneous.

(c) The Authority has rightly rejected the claim of RAK on apportionment of the cost of production of various types of tiles on the basis of sales realization.

(d) A correct method of overhead absorption is essential for arriving at an objective cost estimate. The decision of the Designated Authority to apportion selling and distribution expenses and interest costs on the basis of sales realisation is erroneous. Interest cost is a factory overhead and needs to be allocated on the basis of direct cost and not on the basis of sales realisation. Allocating selling expenses on the basis of sales realisation misses a crucial point that the effort involved in selling the product remains same irrespective of size/grade/model. To distribute this component of cost the correct method will be size-wise allocation of selling overheads. Distribution cost will not vary with the sales realisation. Allocation of distribution cost on the basis of sales realisation is erroneous.

(e) In light of the above, the domestic industry has requested Designated Authority to rework the dumping margin for M/s RAK Ceramics.

(f) Adjustments on packing cost can be claimed only to the extent that the packing for the goods meant for domestic consumption is different for the goods meant for exports. Packing expenses cannot be deducted from the cost of production for the purpose of carrying out the ordinary course of trade test.

(g) M/s RAK Ceramics has not submitted Appendix 3 to Appendix 10 in the non-confidential version of the Exporter Questionnaire. In the absence of information relating to the share of interest cost, selling and distribution expenses in the total cost of the exporter we cannot definitely say what impact the erroneous method will have on the normal value and hence the dumping margin in the case of particular exporter.

(a) They have already submitted complete details regarding sales in the domestic market alongwith basis on which the level of trade adjustments has been claimed. This information was submitted by RAK alongwith submissions to the exporters questionnaire and during the investigation proceedings. Now as indicated and desired by the Authority that for the purpose of adjustments for level of trade, comparison needs to be done grade wise, model wise for a particular size between end-users and traders in the domestic market this information. This information has been adequately submitted to the Designated Authority. Based on the data submitted by M/s RAK the exporter has claimed the adjustment for the level of trade as **** %.

(b) The Authority has accepted that the subject goods are being exported into country by RAK and also produced and sold by the Domestic Industry in different sizes, grades, models, polished and unpolished. Therefore prices of the subject goods vary according to these different features. Since the landed costs of different tiles of different sizes, grades and models vary substantially, giving one reference price will lead to a situation where all grades will be bench marked at one reference price. at one reference price. This will contradict the basic findings of the Designated Authority regarding acceptance of grades/sizes and models. The levy of anti dumping duty at a reference price will result in a situation where effective duty is higher than Dumping Margin in number of sizes/grades/models. In support of the argument raised above the exporter has cited three cases where the Authority has recommended anti dumping duty on reference price basis in the Preliminary Findings and in the Final Findings the Authority has recommended fixed duty. The exporter has submitted that if at all anti dumping duty is recommended, the same may be a fixed duty against variable duty imposed in the Preliminary Findings.

(c) On issue pertaining to Injury and Causal link the exporter has reiterated his arguments as raised during the course of investigation.

(a)The Authority has correctly recognized and proposed to determine different normal values for different sizes, models/grades etc. for M/s RAK Ceramics from UAE. This logic cannot be ignored when it comes to China. Accordingly it is necessary to arrive at a constructed normal value for different sizes/models/grades. The single normal value indicated for China does not reflect the changes that are required due to differences in sizes, models, grades, level of polish etc. The Authority shall determine different normal value for tiles of different sizes, models, grades etc. and compare the same with the export price of respective sizes, models and grades.

(b)The imports starting coming into the country with effect from 1.4.2000. Earlier to the same the domestic industry was having a 100% market share. The domestic industry cannot hope to retain 100% of the market even after imports were allowed into India. The mere fact that domestic industry does not enjoy 100% market share does not indicate any injury.

(c)As proposed in the disclosure statement the Authority shall evaluate all the 15 injury parameters.

(d)The price undercutting shall be determined not at CIF level of import but only at the prices at which the imported goods are resold in the domestic market.

(e)The Authority should disclose the methodology of calculating Non Injurious Price of the domestic industry similar to non-confidential disclosure of the dumping margin.

(a)The cost price of the local manufacturer do not appear to have been taken into consideration.

(b)Because of non-receipt of information from manufacturer from China, it is unfair to the importer that his views are not considered. Therefore views of the importer from China may also be considered.

(c)If the Authority feels to levy anti dumping duties the local manufacturer prices should also be considered and the quantum of anti dumping duty needs to be reduced. ‘From the price list of M/s HR Johnson India it is clear that while a local manufacturer price before payment of excise duty is only USD *** and USD *** respectively, the import price before payment of additional duty to be adopted as per proposal is USD 13.62. This is clearly discriminatory and as such without prejudice to the contention that no anti dumping duty is to be imposed.

(i)The Authority notes the submissions made by various interested parties regarding the opportunity to be granted to those importers who have not filed the questionnaire response as per the prescribed format of the Designated Authority for participating in the public hearing. The Authority also notes submissions made by various interested parties that a number of consumers/traders and users of the Vitrified Tiles had filed information to the Designated Authority for consideration before the preliminary findings which have not been acknowledged. The Authority also notes the representations received from certain interested parties that they have not been invited for the public hearing.

(ii)The Authority in this regard holds that filing of a questionnaire and participating in a public hearing as per Rule 6 are two independent obligations and that is in the interest of the investigation and natural justice that even though an interested party has not filed any information as such on the issue of export price may make submissions on issues which may not be emanating from his response had he filed the same. The Authority also holds that though various submissions were made by various architects/dealers/users in favour of non-imposition of anti dumping duty keeping in view the wider availability of good quality tiles from the subject country, a number of submissions have also been received in support of levy of anti dumping duty. Those supporting anti dumping duty have indicated the imports from the subject country being of low quality with under-invoiced pricing and hitting the Domestic Industry adversely.

(iii)The Authority notes that these are generic issues in support or against imposition of anti dumping duty rather than on specific technical aspects of dumping, injury and causal link which the Authority is to examine under the relevant Anti Dumping Rules. The Authority therefore has examined those issues which are pertinent to investigation and have a bearing on the critical parameters of the investigation. The Authority has also considered the submissions on quality and choice of consumers in light of its consistent practice of addressing the aspect of increased competition and the wider availability of goods as being considered in its earlier determinations. As regards those who have informed that they were not invited to participate in the public hearing, the Authority in view of the observations in the above para, has taken on board the relevant issues pertaining to investigation as provided in their submissions.

(iv)As against initiation of the case, the Authority notes that the case was initiated in accordance with Rule 5(3) (a) and (b). The fact of dumping from PR China is not disputed as there is no response and the prima facie evidence of dumping from UAE was referenced on the basis of a price list which is a reasonable evidence for the purpose of initiating an investigation. The issue pertaining to exclusion of specific products, and appropriate comparison of dumping and injury has appropriately deal with in the Final Findings.

(v)All issues raised by various interested parties in response to the Disclosure Statement have been examined by the Authority and appropriately dealt in the Final Findings.

(i)The description of the product under consideration has been done on the basis of the technical specifications, national and international standards. The criterion of water absorption of less than or equal to 3% is also based on national and international standards. We would like to reiterate that all tiles falling under the scope of product under consideration should be subjected to anti dumping duties irrespective of the custom classification under which they are cleared.

(i)The petitioners has claimed that all types of unglazed tiles are classified in chapter heading 69.07. However, unglazed tiles are also being imported under chapter heading 69.14 as other articles of porcelain. In addition, glazed porcelain tiles are being imported under chapter heading 69.14 with various descriptions like G.P. Tiles, Porcelain Tiles, Gres Porcelenato Tiles, Porcelain Vitrified Tiles, etc. It has further been stated that the Glazed Porcelain Tiles, being imported under chapter heading 69.14 are substitutable with the unglazed tiles of chapter heading 69.07 in terms of properties, uses, functions, distribution channels etc. Petitioners have further submitted that Glazed Porcelain Tiles are erroneously being classified under chapter heading 69.14 by many importers. These products are rightly classifiable under chapter heading 69.08 as Glazed Tiles. Therefore, petitioners requested that the investigations be carried out against the product under consideration irrespective of the classification under which they are being imported.

(ii)As regards the argument by the Counsel for RAK Ceramics that the Domestic Industry does not make vitrified tiles in sizes 98 x 98 cm or 120 x 180 cm, it is submitted that the said sizes do compete directly with the product range of the Domestic Industry and would be adequately covered by the scope of the term ‘like article’ under the Anti Dumping Rules. The claim of RAK that the Domestic Industry does not manufacture Rustic, Stone, Opficium, Antica, Mosaico, Metallica, Al-hambra etc. is of no consequence as these are names given to their designs. Our plants can make similar designs and effects and therefore, there is no reason to agree to the exclusion of certain manufacturer-specific design names.

(i)The product under consideration is Vitrified or Porcelain Tiles of water absorption upto 3%. The petitioners also produce Vitrified Tiles having water absorption levels as 0.5%. The tiles are sold in number of sizes, colours and designs and their costs as well as prices vary. This issue has been conveniently overlooked by the petitioners companies who have also sold their products at prices which vary significantly in terms of per square metre. All different types of products cannot be combined.

(ii)The scope of investigation is not clearly defined. The present investigation also tends to include Ceramic Mosaic tiles.

(i)The product under consideration is of a wide coverage. It also includes Ceramic Mosaic Tiles which are not commercially substitutable and are imported at prices much less than vitrified tiles.

(ii)The tiles are of different characteristics, style, prices and uses. The ISO 13006 is of international standard for tiles and it recognizes the different categories of Tiles as A: extrudes, B: dry pressed and C: tiles made by other processes. On the basis of the water absorption capacities, it recognizes them under Group 1 to Group III. Further the categories are also categorized under sub-categories.

(iii)The product description adopted by the petitioners covers products of various prices. The Porselano range of HRJ for a 60 x 60 tile is priced at Rs.884/- per sq. mt and the Chinese Vitrified tiles have an MRP of Rs.1022/- per sq. mt. While the HRJ Marbonite range of tiles have MRP of Rs.1,111/- per sq. mt., the Porselano range of HRJ and the Marbonite range of HRJ, both of which fall under the product descriptions are clearly competition interse, with Porselano range being priced even lower than the imports.

(iv)It is submitted that Ceramic Mosaic Tiles be excluded from anti dumping duty and the proceedings be terminated under Rule 14(b) and that there should be no anti dumping duty on imports from China and that the reference price should be lower as the margin of dumping has been miscalculated.

The product under consideration has not been defined in sufficient details to enable the Authority to analyse the existence of dumping, injury and causal link. The product under consideration should be defined properly before sending questionnaire to the exporter and for evaluating injury to the Domestic Industry as also the causal link. Since this has not been done, the investigation should be terminated.

There are certain models of 98 x 98 cm or 120 x 180 cm or variety of any tiles like rustic, stone, antica, mosaic, opficium, metallica, A1-Hambra etc. for which the Domestic Industry does not have production facility, technology or know-how. To that extent, there is no causal link for these products.

The Authority has unilaterally and without opportunity extended, the proceedings beyond its initial scope by also considering data in the context of Mosaic ceramic tiles which were never subject matter of the original proceedings initiated.

(i) The Authority notes that the product under consideration has been defined as "Unglazed tiles in polished or unpolished finish and Glazed Porcelain/Ceramic tiles both with less than 3% water absorption (commonly known as Vitrified Tiles/Porcelain Tiles)" originating in or exported from subject countries" in the preliminary findings dated 3^rd December, 2001 under Para F. Many interested parties have indicated that the product under consideration is too generic and should have been categorised under various categories of grades, models, sizes, etc. at the time of initiation itself. It has also been indicated by certain interested parties that tiles like Mosaic tiles which are different from Vitrified Tiles are also covered under under scope of investigation. It has also been submitted by one of the interested parties that certain superior quality tiles like rustic, stone, antica, mosaic, opficium, metallica, A1-Hambra are not being manufactured by the Domestic Industry. The Authority after examining various submissions has considered the product under consideration as defined in the preliminary finding. On the argument on exclusion of Mosaic Tiles it is reiterated that Mosaic tiles are excluded from the scope of investigation which would not fall under the category of the product under consideration as defined in Para F of the preliminary findings dated 3.12.2001. Since Vitrified Tiles have been specifically defined with water absorption less than 3%, to that extent the product is clearly defined and the Authority confirms the same in the final findings. The names of the tiles provided by the exporter, M/s RAK Ceramics, UAE are commercial names and as have not been demonstrated by appropriate evidence to be outside the scope of investigation.

(ii)With regard to the claim of the Domestic Industry that the subject goods are being imported under different customs classifications the Authority reiterates its consistent position that Anti dumping investigations are on the product under consideration, irrespective of customs classification. So long as the imported product confirms the product under consideration it will attract anti dumping duty. Customs classifications are indicative only and are in no way binding on the scope of the present investigation.

(iii)As regards the issue of categorization of the product is concerned, the Authority holds that the aspect of categorization is relevant for the purpose of determining dumping margin appropriate as per Article 2.4 of the WTO Agreement and Para 6 of Annexure 1 of the Indian Anti Dumping Rules and also Para (vi) of Annexure II of Anti Dumping Rules. However, the aspect of categorization does not alter the definition and scope of product under consideration as was defined in the preliminary findings dated 3^rd December, 2001 under Para F.

(iv)With regard to Rule 2(d) of the Anti Dumping Rules which defines "Like Article" the exporters/importers have argued that the tiles imported by them are of different quality. However, no evidence has been adduced by them to indicate that the imported tiles are not substituting the domestically produced tile either technically or commercially. The Authority notes that the vitrified/porcelain tiles produced by the Domestic Industry has characteristics which are similar to those of the tiles imported from the subject countries. The channels of distribution, end-use etc., also indicate that the imported tiles are like articles to the product under consideration. In view of the above, the Authority holds that Vitrified/Porcelain tiles produced by the Domestic Industry and those being imported from the subject countries are "Like Articles" within the meaning of the Rules.

(i) 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."

(ii) The definition of Domestic Industry given above is further clarified by Rule 5 of Rules which reads as follows:-

The petition has been filed by M/s. SPL Ltd., M/s. H&R Johnson India Ltd. and M/s. Murudeshwar Ceramics Ltd. The petitioners account for almost 60% of the total Indian production in terms of Sq. Meters of the subject goods. The Authority notes that the submissions have been made regarding wrong initiation under Rule 5. The issue of standing has also been argued by certain interested parties to extent that the product under consideration was not specifically categorized. The Authority in view of the above clarification for the product under consideration confirms the standing of the Domestic Industry as held in the preliminary findings dated 3^rd December, 2001 in Para H. As the product under consideration is unaltered, no re-look on the standing issue is required, the Authority therefore confirms the standing as defined in the preliminary findings.

(i) 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

(ii) 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);

(c) 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.

(d) 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 of subject countries in India also.

(i)M/s RAK Ceramics, the only cooperating exporter from UAE have themselves admitted that they are engaged in supplying 3^rd and 4^th quality and residual grades and quality tiles to India. Therefore M/s RAK Ceramics is not only indulging in price dumping but also resorting to dumping of sub-standard goods to India.

(ii)The product under consideration is not covered under a dedicated head of DGCI&S and therefore Domestic Industry had to rely upon sources other than DGCI&S to compile the exporter information. Para 7 of Annexure-II of the WTO Agreement merely cautions the Authorities to exercise special circumspection while using the secondary data. Since the exporter has submitted grossly deficient information, the Authority has rightly resorted to Rule 6(8).

(iii)The Designated Authority has relied upon the price list of the exporter himself and therefore the rigors of Para 7 of Annexure-II are also satisfied.

(iv)It has been alleged by M/s RAK Ceramics that prima facie evidence with regard to the normal value is bad in law as reliance has been placed on unbinding price list of one of the UAE producers. The importers have also mentioned that the evidence is bad as the petitioners have not supplied even a evidence of a concluding contract. The Domestic Industry in view of the negotiated price cannot be expected legally or in practice to get the confidential documents of two commercial entities. As per Para 1 (a) of Para III of the Application proforma, price list can be a reasonable indication of the Normal Value in the market of the export.

(v)It has been argued by M/s RAK Ceramics that the Domestic Industry ought to have given model-wise information to Designated Authority for initiation of the case. Article 2.4 of WTO was referred in this regard. It is submitted that the reliance of M/s RAK Ceramics on Article 2.4 is totally misconceived as this Article pertains only to the comparison of Normal Value and export price for the purpose of dumping margin. There is no mention of such a comparison to be made between the models of the exports and the products of the Domestic Industry. We request the Designated Authority to confirm the preliminary findings in this regard.

(i)The order passed by the Hon’ble High Court of Gujarat at Ahmedabad in Special Civil Application No.11935 of 2001, with Civil Application No.96 of 2002 and Civil Application No.148 of 2002 in the matter of Surfaces Plus through Partner Dilip Shah versus Union of India on January 9, 2002 held that:-

"By our earlier order dated 27.12.2001, we allowed the petitioner (M/s Surfaces Plus through Partner Mr. Dilip Shah) to make a representation to the Central Government on the preliminary findings. However, at this stage, we direct the Central Government, before issuing the notification of provisional duty, to consider the representation of the petitioner in accordance with law. The intervenors shall also be given an opportunity to make a representation along with other parties.

(ii) However to our great dismay, we learn that provisional anti dumping duties of 300% have been levied on imports of such tiles from China and UAE. It is not clear as to why a uniform prices at US$ 13.62 per square meter can be arrived at for all Vitrified tiles which can be quite dissimilar to each other on various matters like size, design, method of decoration etc.

The Normal Value in case of M/s RAK Ceramics has been taken on the basis of a price list which only an offer price and there are further discounts depending upon quantity offered and competition. The price lists are also not static. The dumping margin has to be evaluated in accordance with the provisions of Custom Tariff Act, 1975 while looking at the domestic selling price of the exporters.

(i)The information has been taken by petitioners from the International Business Information Service. The petitioner has also included in the export price the import price of Mosaic Tiles and which has reduced the landed value. The petitioner has sought to fill in the gap that the importer should provide such information. The provision places a strict onus of proof on the petitioners and the proceedings cannot be initiated where the petitioner hopes to pick up essential information during the course of the proceedings.

(ii)The Dispute Settlement Body has issued a Panel Report dated October, 2001 as to Ceramic Floor tiles from Italy in proceedings initiated by Argentina. In the report, it is seen that three distinct categories based on size and determining the dumping margin and all other issues were based on three categories. The petitioners have failed to make the appropriate categorisation of the product and consequently the entire proceedings are ill-defined. The indices on sales volume, sales value, per unit realisation, capacity utilisation and production have been positive for the Domestic Industry. Also the imports constitute 3.36% of the market demand. The average selling price of indigenous production is above the reference price fixed by the Designated Authority

(iii)The levy of anti dumping duty at a reference price is not sustainable as there could be situations where effective levy is higher than both the margin of dumping and the margin as determined during the POI.

(iv)As regards the information from secondary sources, export prices have been reworked by the petitioner. In these circumstances, the caution particularly in view of that as even the secondary source information has been reworked by the petitioner is accepting this data be followed.

(i)The petitioners have accepted the provision of Article 2.4 though late. The provisions of Article 2.4 would also be ipso facto apply on determining of price undercutting and underselling margins for which the comparison have to be done model to model, grade to grade and then a weighted average margin has to be done at without actually zeroing. In the absence of model to model, cost of production information in the Domestic Industry, it would also be difficult to determine as to whether the domestic sales of model used in comparison are in normal course of trade or not.

(ii)M/s RAK Ceramics subsequent to the preliminary findings have also provided information pertaining to technical specifications of their various models and grades, sales price structure for domestic sales and exports to India on a non-confidential basis, additional information to the exporters questionnaire on a confidential basis indicating the statement of raw material consumption and resale for the POI and the cost of production for various grades.

(iii)M/s RAK have also provided on a confidential basis the costing principles from a secondary source in support for computation of costing done by them on model to model and grade to grade. Comparison using the cost of production as evaluated for a specific model or grade has also been demonstrated indicating the weighted average dumping margin which is evaluated as de-minimis.

(iv)The grounds on which the exporter’s data has been rejected for the purpose of preliminary findings are unsustainable, on unfounded premises and on false attributes. M/s RAK has provided the non-confidential summary of the confidential information filed by them and that it is only their business information which has not been provided in the non-confidential version.

(v)M/s RAK was never informed of further evidence or information which was required by the Authority or that the information submitted with the response were being rejected along with the reasons thereof and that no opportunity was granted to them to explain or provide any further information. The rejection of information submitted by them is also inconsistent with the provisions of Article 17.6 of the WTO’s Anti Dumping Agreement.

(vi)Vide letter dated 16.12.2002 and 17.12.2002, M/s RAK Ceramics have responded to the letter dated 1.11.2002 and 15.11.2002 of the Directorate General of Anti Dumping and Allied Duties and have submitted the information on Normal Value, cost of production and adjustments thereof.

The reference price mechanism would result in a situation wherein in the levy of anti dumping duty would be in excess of lower of the margin of injury and dumping. This is unsustainable under Article 9.1 and 9.3 of the WTO Agreement.

The Authority notes that subsequent to the preliminary findings, the exporter had filed information vide their letters dated 28.12.2001 and 25.6.2002 indicating the scheme of categorization of grades, reconciliation of the raw material and cost of production, domestic sales realisation and has highlighted the principle pertaining to which they had evaluated the cost of production of different grades and tiles as per joint costing principles. The Authority also notes that subsequent to the public hearing, the verification dates for 19^th and 20^th August, 2002 were finalised in consultation with the exporter for verification of their data at their premises. When on account of certain administrative reasons, the verification could not be conducted on 19^th and 20^th August, 2002, verification dates of 31^st August and 1^st September, 2002 were agreed. However, vide fax dated 24.8.2002, M/s RAK Ceramics informed Directorate General of Anti Dumping & Allied Duties that the verification needs to be postponed by two months until end of October, 2002. The Authority vide letter dated 1^st November, 2002 desired the exporter to submit additional information and clarification including that the information in Appendix 4 of Volume 8 and the information provided in Volume 4 of the submissions does not tally and that sample invoices for exports and domestic sales indicating size, grade and model of tiles be given. Appropriate invoices/names of the buyers and the evidence regarding sale to end users so as to consider the level of trade adjustments, documentary evidence pertaining to discounts, freight and packing on the domestic sales, evidence on cost of credit on the domestic sales were also called for. Subsequently the Authority vide letter dated 15^th November, 2002 had desired information pertaining to average cost of different sizes/types of such types manufactured during the period of investigation in Appendixes 8, 9 and 10. It was stated that the cost indicated in these appendices should also reconcile with books of accounts/profit and loss account. Vide letter dated 5^th December, 2002, the representative of the exporter desired 10 days to file the information pertaining to the letters dated Ist November, 2002 and 15^th November, 2002 sent by the Authority. Thereafter vide letter dated 16.12.2002 and 17.12.2002, the representative of the exporter filed information in response the letters dated 1st November, 2002 and 15^th November, 2002. Clarifications were also provided by the exporter. The Authority, thereafter, carried out the verification at the premises of M/s. RAK Ceramics on 6^th/7^th January 2003 and verified the cost of production and various adjustments on the domestic and export price.

In response to the Disclosure Statement the exporter has further tried to establish/justify his claim for adjustment on account of level of trade by providing detailed comparison of grade wise, model wise sale for a particular size between end-users and traders in the domestic market. Since this information has been submitted by M/s. RAK after the verification and issue of Disclosure Statement the Authority holds that acceptance of the same at this stage is not appropriate. Hence, the claim of the Exporter with regard to adjustment on account of level of trade has not been considered.

(a) The Authority notes that the exporter has claimed different cost of production for different grades of the vitrified tiles manufactured and exported by them. The Authority in this regard also notes that the principle adopted by the exporter on apportionment of the cost of production is not realistic. The direct costs which have gone into the manufacturing of each grade cannot be apportioned on the basis of the lower sales realisation, if any, realised from the market. The Authority has considered the actual costs except selling and distribution and interest costs size wise, and has apportioned the selling and distribution and interest cost on the basis of sales realisation for each size/grade/model.

(b) In view of this, grade-wise/model wise cost of production pertaining to a particular size of vitrified tiles has been evaluated . Further as the tiles have been indicated as polished and unpolished, the costs for polished and unpolished have also been evaluated separately. The Authority has therefore evaluated the cost of production for different sizes of vitrified tiles grade-wise/model wise for both polished and unpolished tiles. The Authority has considered cost of production including raw materials, utility, labour cost, depreciation and manufacturing overheads for each size of Vitrified Tiles. SGA, and interest cost has been allocated on the basis of sales value of different models and grades of tiles so as to arrive at the total cost of each grade/model type of tile. During verification it was noted that the exporter is selling the product Vitrified Tiles both in domestic and export markets as various grades. This was also evidenced from the commercial documents of domestic and export sales. Also different grades of ceramic tiles were distinguished in terms of their physical characteristics during the production and sorting process. Data made available by the Domestic Industry and other interested parties also evidences the categorization of the product under consideration on grades based on quality pertaining to the production and sales of the Domestic Industry. The Authority in view of the fact that the grades of Vitrified/Ceramic tiles are clearly distinguishable considers it appropriate to apply the ordinary course of trade test as per Annexure 1 for different sizes/models at the grade level. The Authority also notes that the exporter has sought adjustments on freight, credit cost, level of trade adjustment, discounts and packing. The Authority has considered adjustments as evidenced on all these adjustments except level of trade , wherein the Authority notes that regarding level of trade exporter has not provided appropriate information on comparison grade wise and model wise for a particular size between the end user and trader in domestic market during verification and that the comparison made on an average basis does not appear to be realistic. The Authority notes that as regards export sales also, the exporter has not substantiated that the sales to India have been made exclusively to traders only. The Authority has considered adjustments on account of freight, discounts, credit costs and packing only and has evaluated the Normal Value size-wise, grade-wise and model wise separately for polished and unpolished category.

(a) As regards the export price, the Authority has allowed adjustments on account of freight and packing as claimed by the exporter on C&F and also noted during verification that a credit of *** days is granted on export sales. 0.5% insurance has been added on the C&F value to arrive at CIF price so as to evaluate the landed value for determining the price undercutting.

(b) The Authority therefore has evaluated dumping margin of the subject goods exported to India by making comparisons size-wise, grade-wise and for polished and unpolished category separately wherever one to one comparison of a particular model is not feasible on account of no domestic sales, the weighted average cost of production with appropriate profit has been referenced for a particular grade and size.

The Authority has considered the Normal Value of the subject goods for the non-cooperating exporters as per the methodology considered in the preliminary findings on the basis of the petitioners data with appropriate adjustments and has considered the ex-factory export price for such exporters by referencing the average export price evidenced from the data submitted by the cooperating exporter. The dumping margin is assessed as 99%.

The Authority notes that after the Preliminary Findings also, response has not been filed by any of the exporters/producers from PR China in the prescribed questionnaire and therefore there has been no cooperation from any of the producers/exporters from PR China. The Authority therefore confirms the methodology as indicated in the preliminary findings dated 3^rd December, 2001 and adopt the Normal Value for such producers/exporters on the basis of best available information as per Rule 6.8 as done the in the Preliminary Findings .

As regards the export price, the Authority notes the submission that DGCI&S data is not appropriate for evaluating the export price as also held in Para 12 of the Preliminary Findings dated 3^rd December, 2001. It was indicated by certain interested parties in the public hearing and thereafter also in their submissions made to the Authority that the price of Mosaic Tiles is also included in the export price as per the secondary information provided by the petitioners. It has also been mentioned that these are not part of the product under consideration and by their being at a lower price, the landed value has been lowered thereby inflating the injury margin. In view of the submissions, the Authority reconfirms the information as available from the secondary source and provided by the petitioner by considering those transactions which are relevant for the product under consideration. The Authority also notes that subsequent to the public hearing, one of the importers M/s NITCO Tiles have provided information of their imports of the subject goods during the period of investigation from PR China. The Authority has correlated this with the information on the export price as available from the secondary source provided by the petitioners. The Authority has referenced the information on CIF as provided by M/s NITCO Tiles and as by the petitioner for imports other than those made by M/s NITCO who have provided the actual imports data made by them and consider adjustments on ocean freight and ocean insurance as per importer’s information and port expenses, inland freight and commission adjustment on CIF as per the consistent norm of considering these @***%, ***% and ***% of CIF respectively.

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

(i)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.

(ii)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 imparts 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.

19.(a) 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".

(b) The Authority notes that the margin of dumping and quantum of imports from subject countries are more than the limit prescribed above. Cumulative assessment of the effect of the imports from UAE and China P.R. is appropriate since the export prices from these countries were directly competing with the prices offered by the Domestic Industry in the Indian market and displacing domestic producers here.

20. For the examination of the impact of the imports on the domestic industry in India, the Authority 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.``

(i)It has been mentioned by M/s RAK Ceramics and some importers that there is no injury to Domestic Industry. Some excerpts from the Director’s Report of M/s HRJ where an increase in demand by ***% for the next few years has been indicated has been cited. It is submitted that the mention made in Director’s Report is generally indicative of the entire tile industry.

(ii)It has been stated that M/s SLP’s plant came in operation in November, 2000 and has been used for four months during the year. M/s SPL Vitrified Tiles plant actually commenced commercial production in March, 2000 and not in November, 2000.

(iii)As regards injury, Designated Authority is bound to look into the factors relating only to product under consideration and not company as a whole. It has been submitted by the importers/exporters that the killer earthquake in Gujarat in January, 2001 has affected the production of M/s SPL. It is submitted that the plant of M/s SPL is located in Haryana.

(iv)Extensive arguments have been made that the injury analysis ought to have been made on model to model or grade to grade basis. While making this contention, the opposing parties have completely lost sight of Para 6 of Annexure II of Anti Dumping Rules. The same is reproduced below for ready reference.

(v)This particular provision has been added precisely due to the reason that model to model or grade to grade is inconceivable as separate identification of the production of the Domestic Industry on the basis of such criteria as the production process, producers’ sales and profits is not feasible. In fact, this provision gives enough powers to the Designated Authority to take a larger range of products than the product under consideration under certain circumstances Therefore, there is no basis to claim that the injury analysis ought to be done for a subset of the product under consideration.

(vi)It has been mentioned that the Domestic Industry has made goods profits and therefore their claim of injury is not justified. In this regard, it is submitted that the injury analysis is required to be done only for the product under consideration and not for company as a whole. CEGAT Case Law no.2000(117) ELT-625 (CEGAT), Automotive Tyre Manufacturers Association Vs. Designated Authority is relevant in this regard.

(vii)The importers from the subject countries account for more than 70% of the total imports and that the imports have been able to capture 3.66% of the total demand in a short period of nine months which is very significant. The market share of the Domestic Industry could have been higher by better capacity utilisation but for the dumped imports resulting in depressed demand for the domestic producers.

(viii)One of the importers has argued that examination of price undercutting is not proper and that the Domestic Industry has charged 2.34 times of the landed value of imports and that it has caused injury to them. It has been argued that price undercutting is to be done at the distributors stage as there is a vast difference between the landed value and that the price to the ultimate consumers. Further it has also been mentioned that retail price should be considered for determining the price undercutting. It has been mentioned that NITCO tiles has been selling the products in India at a significant margin compared to landed value of such products. This difference is adequate to conclude that the NITCO tiles has more than sufficient margin available to them because of the dumped prices. They import the product and are therefore in a position to depress the price in domestic industry at their will. his is in stark comparison with the submissions of NITCO Tiles Ltd. and RAK Ceramics that even though the price of the dumped imports is very low, the domestic resale price of the same is very high. The Domestic Industry has submitted the actual data pertaining to the product under consideration with regard to the issue of price undercutting and price underselling, which has been the basis of the preliminary findings by the Authority.

(ix)It was also argued by the Counsel for Kajaria Ceramics that the competition has been from the small scale sector and that dumping would not have caused injury to the Domestic Industry. The argument of importer is misleading as SSI sector does not manufacture Vitrified Tiles at all.

(i)The prices of different grades and types of Vitrified Tiles vary quite substantially not only internationally but also in local market and therefore a common benchmark reference price cannot be set. Before doing any analysis of dumping injury and causal link, identification of different varieties/types of Vitrified Tiles both manufactured within and imported into the country should be done.

(ii)Domestic producers have themselves admitted that their sales volumes as well as realisations have gone up and therefore they cannot claim injury on account of imports.

(i)The production of different grades depends upon the efficiency of a producer and that they are not produced separately. Higher the production of premium quality tiles, higher is the sales realisations. The gradation of tiles is done well before packing. The petitioners have not disclosed the production of their different types and whether they can produce as per international standards. The injury to the petitioners companies is due to their inability to produce higher quality product and as such it is important to note that expenditure incurred remains the same irrespective of grade/quality.

(ii)Size, colour, grade and designs of tiles affect costs and price. The production of tiles also results in wastage because of breakage. The wastage levels of Indian producers is very very high. The consumers cannot be penalised for this inefficiency of the Indian producers.

(iii)The injury to the petitioners could be on account of having high work in progress or the inventories. The project report of the petitioner should be called for and the standards taken in project report for type-wise production should be considered.

(iv)The petitioners companies are multi-product companies producing different types of tiles and that they have sharing facilities. It is possible that costs incurred on other types of tiles have been allocated to Vitrified Tiles with regard to items like overheads and utilities.

(v) The petitioners companies were crying about losses in Ceramic Tiles. They are now crying about losses in Vitrified Tiles but these companies have been showing good profits and all along and there is no change in the profitability of the ceramic industry. Therefore we wonder where from the industry makes profits.

(v)The product is a consumer product and has soled primarily at retail level. The price at which the material is imported and is finally resold to the consumers is vastly different. After importation a number of expenses are incurred by the importers. There would be no price undercutting at the ultimate retail level.

(vi)The imports of Vitrified tiles was permitted without restriction only from 1.4.2000 and that the period of investigation also starts from 1.4.2000. It is not the case of sudden increase of imports and therefore the question of comparing the imports with the previous period when no imports were permitted is not possible.

(vii)The Domestic Industry has mentioned that the demand has gone up and therefore the production, capacity has also increased. In absence of any details regarding increase in imports in absolute terms or relative terms, question of levy of anti dumping duty is not proper.

(viii)The Domestic Industry has failed to provide any concrete evidence to show that they have suffered injury because of imports. The margin of profit is only one of the factors and itself is not sufficient to conclude the injury.

(ix)Before injury is examined, the issues pertaining to inefficiency, fair return, sales and profits have to be considered.

(x)The Domestic Industry manufacture both premium and second grade tiles and there is appreciable price difference and therefore the data submitted by the Domestic Industry relating to market realisation by them is fundamentally wrong and flawed.

(xi)The Designated Authority may also see that prior to imports and after imports, the price realisation of the Domestic Industry has remained same. The prices of GF 109 and GF 200 indicate the same.

(xii)The MRP price of Domestic Industry cannot be compared with landed cost of imports. Suitable adjustments have to be given before any attempt is made to determine the extent of injury.

(i)On the issue of price under-selling, the Authority must disclose the ingredients and elements of Non-Injurious Price to the interested parties. Also as per the Panel Report in EU-Argentina Ceramic Tiles case, the onus is on Designated Authority to distinctly examine each of the 15 indications for injury as per Annexure II to the Rules. The Director’s Report of M/s HRJ also shows that competition is expected from imports and also from small scale sectors. Therefore the petitioners are subjected to a competition from sources other than imports as well.

(ii)Domestic manufacturers control 96.34% of the market and the impact of different products made by the domestic manufacturers is far more significant than the impact of imports.

(iii)The Authority has not considered factors other than dumping which would have caused injury to the Domestic Industry. The product is of mass usage in almost all households, commercial establishments, government offices, hospitals, colleges, etc. and that 400 submissions have been filed which are representing the user interests. Designated Authority should follow some yardstick of a consideration of the interest of domestic users.

(i)The objective assessment of injury under Annexure II requires examination of volume of dumped imports, effect of dumped imports and the consequent impact of these imports on domestic producers. It also requires evaluation of 15 parameters spelt out in para (iv) of Anneuxre II. The Authority has evaluated only 6 out of the 15 indicators. As per Article 3.4 of the Anti Dumping Agreement and the case of Bed Linen from India, Panel on Mexico-HFCS , all 15 parameters need to be evaluated. Therefore examination of material injury to Domestic Industry is not objective.

(ii)The price undercutting and underselling are not the injury parameters listed in Para (iv) of Annexure II.

(iii)It is factually incorrect that the Domestic Industry has lost market share due to imports from subject countries. The Authority appears to have held a view that the Domestic Industry has lost market share to an extent of 3.66%.

(iv)Imports of Vitrified Tiles was restricted till 1999-2000. Imports to an extent of of 3.66% market demand cannot be treated as significant for the material injury to Domestic Industry. Actually the petitioners company market share has increased from 51% to 65.8% in the period of investigation. The total demand increased by 37.5% in 2000-2001 over 1999-2000 and the sales of the Petitioners Company increased by 76.1%. The profitability/ ROI analysis in the preliminary findings had not been attempted to analyze as to how the profitability has changed after 1999-2000 to period of investigation especially when M/s SPL has also come into the market.

(v)The analysis that the landed values of imported products from China and UAE are substantially lower than the average selling price of injurious products and there is price undercutting, actually hides more than it reveals. The fact that the Domestic Industry has charged 2.34 times of the landed value of the imports shows that the landed value of imports has not caused any effect on the domestic pricing. The point at which the price undercutting is to be evaluated is not the landed value vis-à-vis the average selling price but the price at which the imported goods are resold to the distributors vis-à-vis the average selling price of the indigenous industry.

(vi)The resale prices of M/s NITCO after importing from China is significantly higher than the landed value.

(vii)As per the calculations on the basis of the index figures, the price undercutting analysis shows that the Domestic Industry has actually been able to realise price higher than its NIP which implies a total absence of material injury.

(viii)As per the project report filed by M/s HRJ, the realisation has gone up in POI thereby implying no price depression and price suppression.

(ix)The standard of causal link analysis which has to be established by concluding that dumped imports must be a pre-dominant cause of injury has not been demonstrated.

(x)The Authority has not considered the factors other than dumping accordance with Para (v) of Annexure II. The fact of existence of M/s SPL in POI and effect of supply demand and price in the Domestic Industry has not been evaluated.

(xi)The CIF prices from other countries are also lower than the NIP of USD 13.62 per sq. metre which also needs to be evaluated and the effect of imports from other sources should also be evaluated.

(xii)The Domestic Industry for the product Marbonite has four grades and the price difference between premium grade and other grades is quite significant. The investigation has been completely skewed because the comparison and price undercutting and under selling have been based on one selling price of the Domestic Industry and one NIP.

(xiii)The injury to the Domestic Industry is self-inflicted because of the inefficiencies and Authority may call for and examine for the last three years the ratio of production of premium and other qualities in order to evaluate whether the alleged injury is self-inflicted.

(xiv)From the submissions on material injury and causal link in Para 12 to Para 17, it is seen that none of the submissions deals with the specific points raised by us in regard to the absence of material injury and causal link. The submissions contain paras which are very general and do not address the specific issues raised by us during the public hearing.

(i)The injury determination lacks objectivity which is necessary as per Annexure II of the Anti Dumping Rules. It is seen from the examination of Designated Authority that there is no price depression in the prices. In fact the prices have increased. There is non-fulfillment of obligation to provide evidence on model to model basis and also that the causal link is not established. The sales volume and sales value have increased over the two years for the Domestic Industry. The market share in terms of quantity has increased significantly for the Domestic Industry and the cash flow and employment has significantly increased. There is a position of strong profitability by the Domestic Industry which is evidence from the case of Murudeshwar Ceramics Ltd. There is no reason that bigger players like HR Johnson and SPL could suffer any losses. Hence, the causal link is not established between the alleged dumped imports and alleged injury.

(ii)RAK products are selling at higher prices than those of the comparable product of the Domestic Industry, which is evident from the analysis done and provided by RAK.

(iii)The competition triggers at the level of resale and the resale price in a consumer product which may have positive or negative impact on the domestic prices. Conceptually and principally the resale price is equivalent to the landed value which is to be used for the purpose of determining price undercutting and underselling margins. The Authority should also examine other known factors which could have had impact on the Domestic Industry viz. imports from other countries, increase in the costs and other costs including production, inefficiencies and breakages etc.

(i)The preliminary findings have failed to consider the various submissions made by the interested parties particularly the importers. The Authority in Para 19 of the preliminary findings has relied upon a non-injurious selling price by considering the optimum cost of production but the factors of optimum cost and capacity utilisation are not explained in any manner in the preliminary findings.

(ii)The Authority has held in the findings that there is increased sales volume and value and has also held that the prices have been suppressed due to imports from China and UAE. The unit price realisation has also gone up as indicated in preliminary findings but at the same time it states that there is suppression of prices. This is inconsistent and contradictory.

(iii)As regards injury, there are clear discrepancies viz. increase in unit price realisation needs to be examined in the context of return on investment by the Domestic Industry. The sales volume of Domestic Industry have gone up and on the issue of profitability, the Authority has proceeded on the basis of that the Domestic Industry as a whole has negative returns. In a situation where the Domestic Industry is selling above the non-injurious price, i.e. USD 13.62 per square mt., there is no question of injury and causal link.

(iv)The issue of causal link is to be examined in terms of Para 5 of Annexure II of the Rules which are reflective of article 3.5 of the WTO Agreement. Such analysis has not been done in the present case.

(a)The Authority notes the submissions made by various interested parties regarding evaluating injury as per Annexure 3.4 and evaluating 15 parameters of injury as also held in various Panel judgements of WTO. The Authority also notes that various interested parties have indicated that while Article 2.4 pertains to evaluation of the dumping margin ipso facto, it also implies that the price undercutting and underselling should also be calculated after appropriate categorisation of product under consideration. It has also been argued that one of the producers M/s Murudeshar Ceramics Ltd. is making huge profits and that there is no reason why the two other domestic producers should not be making profits. Various excerpts from the Annual Reports have been cited indicating that the ceramic industry is in profits and that there is no injury caused to the domestic producers. The Authority also notes that the submissions have been made regarding the opening up of the imports of vitrified tiles from 1.4.2000 onwards indicating that there is no history before to make any comparison regarding increase in imports and therefore injury to the Domestic Industry on account of imports.

(b)As regards the inefficiencies in the production system of the Domestic Industry are concerned, the Authority has considered the methodology of normating the cost of production by benchmarking best utlisation practice of capacity, raw materials and utilities for evaluating the Non-Injurious Price(NIP) for the Domestic Industry.

(c)The Authority also notes that the submissions have been made regarding evaluating other factors like imports from other countries, inefficiencies in the production system and low market share in demand of the imported tiles to be considered while evaluating the causal link. The Authority has considered these factors as per Article 3.5 of the WTO and Para V of Annexure II of Anti Dumping Rules.

(d)Analysis of injury to the domestic industry has been done on the basis of the information available on record and the verification done by the officials of the Directorate General of Anti-dumping & Allied Duties. The following parameters have been analyzed for the purpose of assessment of injury to the domestic industry:

The domestic industry has claimed that the vitrified tiles industry is not very old in India. It was precisely when the industry was hoping to come out of the red in the last financial year, dumping from the subject countries resulted in increase in losses despite some improvement in sales volume over the last two years. The Authority notes that while there is an increase in the sales volume over the last two years, this increase is primarily on account of the additional capacities that had been created during this period.

An examination of the import data for the subject goods would indicate that the imports (as a percent of the total imports) from the subject countries namely, China and UAE have gone up from NIL in the years 1998-1999 and 1999-2000 to about 71% during the period of investigation.

The Authority being aware that the imports of the subject goods were restricted in the years 1998-1999 and 1999-2000, decided to carry out an inter se trend analysis within the period of investigation. An examination of the import figures indicates that the imports from the subject countries have risen drastically in the second half of the period of investigation as compared to the first half. Of the total imports from the subject countries made during 2000-2001 i.e.. the period of investigation, only 6.42% came during the first half while 93.58% was imported in the second half. Thus, it is clear that the imports from the subject countries show an alarmingly increasing trend within the period of investigation. There is an increase of over fifteen times in imports in the second half as compared to the first half of the period of investigation. The Authority notes that the total imports also show a similar trend over during the very first year of opening up of imports but the change is not as drastic and marked as in the case of the subject countries. The rate of growth of imports within the period of investigation is a sufficient indicator of injury to the domestic industry. This fact has also to be viewed in the context of the abnormally low prices from the subject countries.

The Authority has assessed the total demand in the country by adding the total imports to the sales of the entire domestic industry including the petitioners as well as other producers of the product under consideration. The Authority notes that the imports from the subject countries could acquire a market share of 3.66% of the total demand in a very short period of one year. Considering that vitrified tiles are in the nature of consumer goods, a market share of 3.66% clearly constitutes a significant proportion. If only the second half of the period of investigation is considered, the market share of dumped imports is much higher. Moreover, the share of imports from the subject countries could be much more as the current estimates are only from select ports. Further, it is important to note that the imports from the subject countries account for more than 70% of the total imports whereas the WTO Agreement as well as the Indian law considers any import above 3% as significant.

Year	Imports from subject countries (Sq mtrs)	Total Demand (Sq mtrs.)	% share
1998-1999	0.00	1884870	0.00%
1999-2000	0.00	2372081	0.00%
April 2000-Mar 2001	119570	3262558	3.66%

It has been stated by the domestic industry that the demand for the subject goods has grown in the country at a healthy rate and that its use over the conventional floor and wall coverings is steadily catching up. It has further been claimed that despite the existence of a growing market, their losses have gone up due to indiscriminate dumping by the subject countries. The Authority observes that the capacity utilization by the domestic industry in terms of square meters has gone up over the years. The domestic industry has argued that the capacity utilization as a factor of injury can not be of much significance in a product like vitrified tiles as the same would vary significantly depending upon the product mix of the tiles of different sizes being produced during a particular period. Thus, capacity utilization is not being considered as a valid indicator of the health of the industry for a product like tiles where the installed capacity is also a variable depending upon various factors.

The domestic industry has stated that they have made substantial investments and was trying to establish itself in the last two to three years. It has further been argued that the incidence of dumping to such a large extent has inflicted considerable injury to the domestic industry and their losses have increased at a time when the domestic industry was hoping to get out of the loss making situation. The Authority notes that the domestic industry as a whole had negative returns on their investments.

It has been claimed by domestic industry that dumping by China and UAE has had a significant impact on the net sales realization by the domestic industry for the subject goods. The Authority notes that to hold on to its market share, the petitioners had to compete with low priced and dumped imports of subject goods from China & UAE. The landed value of the dumped imports also indicates that there is serious price under-cutting taking place to the extent of over ****% in case of China and over ****% in case of imports from UAE.

It has been argued by one of the importers that the examination of price undercutting is not proper. It has been stated that the fact that the domestic industry has charged 2.34 times the landed value of imports shows that the landed value of imports had not caused any effect on the indigenous pricing. It is further claimed that there is no price undercutting as importers / distributors are selling the goods in India in retail at much higher prices and that the retail price should be considered for determining the extent of price undercutting. In this connection, it should be noted that the argument of the importer that the comparison for the purpose of price undercutting should be the distributor level has no support of law or logic. Price undercutting is to be seen in the context of the landed value of the imports and not the price at which the goods are sold to the end-users. The Authority nevertheless has made the comparisons of the landed values with the ex-factory prices of the domestic industry, as per the consistent practice followed by the Designated Authority.

The Authority has also examined the claim of the domestic industry that the domestic industry is suffering on account of losses or abnormally low return on their investments due to price underselling resorted to by the exporters from subject countries. The Authority has worked out the Non-Injurious Price for the product under consideration and compared the same with the landed value to arrive at the extent of price underselling. The analysis shows a significant level of price underselling causing injury to the domestic industry. Examination of the available evidence also shows that the domestic industry as a whole has suffered losses on its sales of vitrified tiles.

The complainant domestic industry tried its best to hold on to the customers and expand its market. Yet the fact that 119570 sq. mtrs of dumped imports arrived into India during POI is adequate evidence that it lost potential customers.

The manpower strength has increased from 537 in 1999-2000 to 606 during the period of investigation. But this increase has to be seen in the context of the additional capacities that had been created during this period. There was no impact on wages as it is not feasible under the existing situation to vary the wages in line with the financial performance of the company.

Analysis of the stocks show that there is an increase in stocks to the extent of about 14% at the end of the year 2000-2001 as compared to the previous year.

The demand for the subject goods is showing a healthy growth and decline in demand is not a factor of injury to the domestic industry. However, the petitioners have lost market share. It may be noted that imports from subject countries in a relatively short period time have been able to capture as high as 3.66% of the total demand. There is no direct impact shown by the domestic industry on labour productivity but the productivity of capital is under pressure as is revealed from the losses incurred by the domestic industry.

Due to severe underselling by the subject countries, the petitioner companies were operating at a loss. Thus the Return on Investments were negative.

All the petitioner companies are multi-product companies and it would not be feasible to judge the ability to raise capital as it is a company specific function and not related to the performance of any particular product.. The cash flows on account of vitrified tiles business is obviously under pressure as there are direct losses in this business. The domestic industry has also claimed that with the present state of financial losses, it would not be feasible for them to make any further investments in this business.

29. In considering the effect of the dumped imports on prices, it is considered necessary to examine whether there has been a significant price undercutting by the dumped imports as compared with the price of the like product in India, or whether the effect of such imports is otherwise to depress prices to a significant degree. For the examination of the impact on the domestic industry in India, the Authority considered such further indices having a bearing on the state of industry as production, sales, stock, profitability, net sales realisation etc. On examination of the evidence, it has been found there has been a sharp price undercutting. Domestic Industry is prevented from utilising its present capacity and capacity utilisation is very low. However, the most significant parameter evidencing injury is the price undercutting as per the evidence available with the Authority. The rate of increase of imports within the period of investigation especially the corresponding fall in the sales realization of the domestic industry are the parameters clearly showing the injury being suffered by the domestic industry. On the basis of the evidence available before the Authority, it is determined that the domestic industry has suffered injury.

30. In determining whether injury (material/threat/material retardation) to the domestic industry was caused by the dumped imports, the Authority took into account the following facts: -

(i) Imports of subject goods from UAE and China PR 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.

(ii) The imports from China PR and UAE 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.

31. The Authority, therefore, notes from the above that the 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 is suffering financial losses. The petitioner was also prevented from attaining a reasonable level of capacity utilisation. These parameters collectively and cumulatively indicate that the petitioner has suffered material injury due to the dumped imports.

32. 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.

33. The Authority recognizes that the imposition of anti dumping duties might affect the price levels of 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.

34. The Authority notes that the imposition of anti dumping measures would not restrict imports from China PR and UAE in any way, and therefore, would not affect the availability of the product to the consumers. The consumers could still maintain two or even more sources of supply.

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

(i)Vitrified/ Porcelain Tiles have been exported to India from UAE and China PR below its normal value resulting in dumping;

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

36. The Authority considers it necessary to impose anti dumping duty on all imports of Vitrified/ Porcelain Tiles 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 recommends 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 is compared with the weighted average non-injurious price of the Petitioner Companies determined for the period of investigation.

Accordingly, the Authority recommends that definitive anti dumping duties as set out below be imposed from the date of notification to be issued in this regard by the Central Government on all imports of subject goods i.e., Vitrified/ Porcelain Tiles, as described in para 6 above and falling under Chapter 69 of the Customs Tariff, originating in or exported from subject countries. The anti dumping duty shall be equal to the amount mentioned in column 3 on all exporters/manufacturers from the countries named in column 2 of the table below:-

37. 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.

38. Subject to the above, the Authority confirms the Preliminary Findings dated 3^rd December. 2001.

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

Year	Imports from subject countries (Sq mtrs.)	Total Imports(Sq mtrs.)	% share
1998-99	0.00	121.00	0.00%
1999-2000	0.00	8.22	0.00%
April 2000-March 2001	119570.00	169246.70	70.65%