No.14/12/2002- 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:

 

1. PROCEDURE

    

 

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

    

 

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

    

 

4. The Authority made available the public file to all interested parties containing non-confidential version of all evidence submitted and arguments made by various interested parties;

    

    

    

    

5. The arguments raised by the petitioners and other interested parties have been appropriately dealt with in the preliminary findings and/or these findings;

    

    

    

    

    

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

    

    

    

7. On the basis of sufficient evidence submitted by the Petitioner, the Authority initiated these investigations vide Public Notice dated 15^th April 2002 concerning imports of XBIS form the subject territory; Investigations were carried out for the period 1^st April, 2001 to 31^st December, 2001 (9months).

    

    

    

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

    

2. The product under investigation in the present case is ‘X-ray Baggage Inspection Multi Energy System’ (XBIS). It is used for detection of explosives, firearms, narcotics and contra band at port of importation, security agencies and airports. There is no substitute available to XBIS. The petition is against alleged dumping of two models viz., Heimann Models HS6040i and HS9075i and four ranges of size (tunnel dimension) width x height as given below:-

‘X-ray Baggage Inspection Multi Energy System’ (XBIS) is classified under Customs sub-heading no. 90.22.19 of the Customs Tariff Act, 1975 and the ITC classification is 90.22.1901. The classification is however indicative only and in no way binding on the scope of the present investigations.

The Authority confirms the preliminary findings on product under consideration.

 

3. LIKE ARTICLES

    

3. Rule 2(d) of the anti-dumping rules specifies that "Like Articles" means an Article which is identical or alike in all respects to the product under investigation or in the absence of such an Article, another Article, having characteristics closely resembling those of the articles under examinations.

The petitioner has claimed that technically Indian manufactured products are more superior to the imported products and are adapted for local environment and handling. The comparable models of ECIL – Rapiscan and Heimann which are alleged to be dumped are as follows:

In the absence of any arguments on like article by any interested party, goods produced by the petitioner are being treated as Like Articles to the goods imported from the subject country within the meaning of the Rules.

For the purpose of initiation, the petitioner had claimed normal value in European Union (Germany) on the basis of M/s Heimann Systems GmbH prices as quoted to the Brazil Government Postal Service in the International Tender of the Brazil Postal Services for the acquisition of X-Ray equipments for model 6040d (which is claimed to be the same model as 6040i with minor modification for the customer by the petitioner) and 9075. As evidence of dumping M/s Heimann’s pricing in Brazil as published in The Journal De Brasilia and its English translation were enclosed in the petition. M/s Heimann’s pricing in Brazil was accepted by the Authority for prima facie determination of normal value for purpose of initiation. As per the request of the AAI, M/s Heimann’s pricing in Brazil as published in The Journal De Brasilia and its English translation were treated as 'non-confidential' by the petitioner and placed in the public file.

Confidential submissions were thereafter made by M/s Heimann Systems vide their letter dated 13^th July 2002 wherein they have submitted details of the differences in the models supplied to Brazil and to Airports Authority of India. M/s Heimann Systems was requested by the Authority vide letter dated 19^th August 2002 to treat the submissions as non-confidential so that they could be placed in the public file for eliciting the views of interested parties. The Authority notes that no response in this regard was received from M/s Heimann Systems.

The Authority however notes that the issue in the present investigations, is that of comparison between the models produced and sold by the petitioner with those exported to India from the EU, as given in the exporter's response. The Like Article is therefore the comparable models manufactured by the petitioner of XBIS 6075i and 9075, which have been sold in the domestic market in EU and imported by Airports Authority of India during the period of investigations. The Authority notes that M/s Heimann in their confidential response to the exporters questionnaire have not furnished details of the technical specifications of the product sold to India i.e., 6040i and 9075. However, no interested party has stated that the models exported to India are not like articles to those manufactured by the domestic industry.

The petitioner has stated that the users normally indicate a range of tunnel sizes in notices inviting tenders so that a number of manufacturers and models could participate and compete for the order. It is also a practice among various producers to give different model numbers or model names even if the tunnel sizes vary marginally. Therefore, all models of XBIS machines should be treated as like articles for the purpose of this investigation.

The Authority notes that for Indian Airports, Bureau of Civil Aviation (BCAS) lays down the standards for security applications. They are derived mainly from ICAO standards followed by member countries. In the tender invited by the AAI during the period of investigations, two models of XBIS were involved i.e., 6040i and 9075. The Authority notes that there is a tender process involved in the purchase of the subject goods and therefore the technical specifications as laid down are required to be complied with by potential suppliers. The technical specifications of the subject goods and the purchase procedure through tender do not indicate ease of product substitutability by users; in this case the major user being the Airports Authority of India. The AAI in its submissions has indicated that with the change in the dimensions of the machine there is difference in detection circuitry and added specifications (such as input motorised conveyor and output chute) and increased tunnel size, software for TIP facility and input and output roller facility contribute to higher cost. The Authority notes therefore that there are technical differences on account of differences in value added features and penetration and resolution differences between various models. The difference in price is on account of differences in built-in value added features depending on the requirement of each system/tunnel range. The difference in the price of 6040 and 9075 models which are the subject matter of the present investigation is USD *** or Rs ***. This difference is not only account of tunnel size but on account of difference in zoom facility (upto 16x for Heimann Systems) and (upto 8x for ECIL). The present investigation is therefore restricted to the two models of XBIS i.e., 6040i and 9075 which were imported during the period of investigations of corresponding tunnel sizes.

In order to establish that XBIS produced by the domestic industry is a Like Article to that exported from EU, characteristics such as technical specifications, manufacturing process, functions and uses and tariff classification have been considered by the Authority. The Authority also finds that there is no argument disputing that XBIS produced by the domestic industry has characteristics closely resembling the imported material and is substitutable by XBIS imported from the subject territory both commercially and technically. XBIS produced by the domestic industry has been treated as Like Article to the product exported from EU within the meaning of Rule 2(d).

In view of the above, the Authority confirms the preliminary findings on Like Articles.

4. The petition has been filed by M/s ECIL –Rapiscan Limited, Secunderabad, which is a joint venture between Electronic Corporation of India Ltd. (ECIL) Hyderabad, a Government of India Public Sector Undertaking and Opto Sensor Inc. (Rapiscan) USA.,. M/s Opto Sensors Inc. (OSI), California, USA and Electronics Corporation of India Ltd. (ECIL) entered into a joint venture agreement to inter alia organise a limited liability joint stock corporation under the laws of India to manufacture, assemble, test, market, sell and service single and multi- energy X-ray Baggage Inspection Systems, explosive detectors, walk through metal detectors and related security products. The general business purposes of the company ECIL –Rapiscan Limited as given in Article 2 of the joint venture agreement is to : (i) arrange for the manufacture, assembly and testing of the products ( as defined above) in India, (ii) market and sell the product throughout the Territory (iii) service the products sold throughout the Territory, and (iv) engage in such other activities as may be incidental or necessary to the foregoing.

The petition has been filed by ECIL Rapiscan Ltd. (ECR). Under the joint venture agreement, ECR is required to provide ECIL with the components necessary for ECIL to manufacture the products. ECR is required to test, market, sell and service the product. Therefore, the petitioner gets the machines manufactured from ECIL and the entire production of XBIS by ECIL is for and on behalf of ECR. ECIL is the only manufacturer of the subject goods in India and has supported the present petition.

Rule 2 of the Anti - Dumping Rules defines domestic industry as follows:-

"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 may be deemed not to form part of domestic industry."

As stated above, ECR is required to arrange for the manufacture of the subject goods by providing ECIL with the components necessary for ECIL to manufacture the products. ECR is required to test, market, sell and service the product. The entire production of XBIS by ECIL is for and on behalf of ECR. The Authority also notes that M/s ECIL Rapiscan/M/s ECIL are not related to the exporters or importers of the alleged dumped article and are themselves not importers thereof.

The Authority notes therefore that the petitioner constitutes "domestic industry" and has the required standing to file the present petition under the Rules.

5. DUMPING:-

5. The Authority sent questionnaires to the known exporter from the subject territory in terms of section 9 A (1). M/s Heimann Systems furnished a response to the exporters questionnaire.

The exporter has stated that the data for sales in the home market is provided for Germany and for all other sales in the EU. This distinction is critical because sales in Germany are for machines that have different characteristics and value-added items and services to the machines sold elsewhere in the EU.

Grade 6040 - The Authority notes that the selling price in Germany is E *** and the selling price in Europe is E ***. No discounts/commissions have been paid. The Authority has considered the selling price to EU as Germany is a part of the customs union of EU.

The manufactured price is stated to be E *** and the selling price E ***. The charges after ex-factory are on account of packing E ***; and inland freight E ***. Overseas freight and insurance are included in freight. No break-up has been provided on these accounts. After considering the adjustments on the aforesaid the net selling price comes to E ***.

The price variations after manufacture are (i) 2 year service support which includes all parts, labour and help line which is ***% of contract at E ***; (ii) 2 year warranty at ***% E ***; (iii) 6 week delivery (cost to stock and material holding) @ ***%- E ***; (iv) 24 emergency repair contract calculated at ***% of contract - E ***; adjustment on account of variation in specification E ***. The total adjustment cost on account of price variation is E ***.

The ex-factory normal value level is therefore considered to be E ***.

The Authority notes that details of the contract on the basis of which these adjustments have been claimed have not been made available. Details/information on the variation in specification are also not available.

Grade 9075- The Authority notes that the selling price in Germany is E *** and the selling price in Europe is E ***. No discounts/commissions have been paid. The Authority has considered the selling price to EU as Germany is a part of the customs union of EU.

The manufactured price is stated to be E *** and the selling price E ***. The charges after ex-factory are on account of packing E ***; and inland freight E ***. Overseas freight and insurance are included in freight. No break-up has been provided on these accounts. After considering the adjustments on the aforesaid the net selling price comes to E ***.

The price variations after manufacture are (i) 2 year service support which includes all parts, labour and help line which is ***% of contract at E ***; (ii) 2 year warranty at ***% E ***; (iii) 6 week delivery (cost to stock and material holding) at ***%- E ***; (iv) 24 emergency repair contract calculated at ***% of contract - E ***; adjustment on account of variation in specification E ***. The total adjustment cost on account of price variation is E ***.

The ex-factory normal value is therefore considered to be E ***.

The Authority notes that details of the contract on the basis of which these adjustments have been claimed have not been made available,. Details/information on the variation in specification are also not available.

a) Grade 6040- The exporter has sold 42 units to AAI and 3 units to GE Capital of Grade 6040. The factory cost of exports as stated in Appendix 8 is USD *** or E ***. The tract price to AAI is E ***. After ***% sales commission (E ***) the sales price comes to E ***. The selling price to GE is E ***. After ***% sales commission (E ***) the sales price comes to E ***. The average price of AAI and GE before commission is E *** and after commission is E ***.

Grade 6040 AAI- The manufactured price is stated to be E *** and the selling price E ***. The ex-factory cost is E ***.

Grade 6040 GE- The manufactured price is stated to be E *** and the selling price E ***. The ex-factory cost is E ***.

As the adjustments on account of overseas freight and for 2 year warranty vary for sales of this model to AAI and GE, the Authority has considered the weighted average ex-factory price for 6040 which is E ***.

(b) Grade 9075 - 16 units of this grade have been sold to AAI. Price adjustments for this grade have been given in Appendix 4. The factory cost of exports as per Appendix 8 has not been given. The export price for 9075 is stated to be E ***. After sales commission of ***% the selling price comes to E ***. The adjustments include packing cost at E ***, inland freight at E *** before fob and overseas freight at E ***. The total cost on account of the above comes to E ***.

The adjustments for fair comparison include (I) 2 year warranty at ***% or E ***; (ii) specification variation -E ***; (iii) others - E ***.

The exporter has not elaborated on the costs which have been included under 'others'. After considering the above costs including 'others', the ex-factory export price comes to E *** for Grade 9075.

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 M/s Heimann Systems as given in the table below:-

The Authority has taken into account all indices regarding injury while doing the final determination. This involves all relevant principles for determination of injury as specified under Annexure II of the anti-dumping rules viz., the volume of dumped imports, their effect on price in the domestic market and its effect on the production, capacity utilisation, sales, profits, market share etc. of domestic industry. While determining the non-injurious price for the like article for the domestic industry, the Authority has made appropriate analysis of all the relevant factors such as usage of raw material, usage of utilities, etc., and the actual expenses during the period of investigation including factors such as investments and capacity utilisation. The Non-injurious price for the domestic industry has been determined considering a reasonable return on the capital employed by the petitioner. For calculation of injury margin, the ex-factory non-injurious price of the domestic industry has been compared with the landed value of the imported goods.

The quantum of imports, production, capacity and capacity utilisation, sales and market share, closing stocks, landed values of the subject goods from the subject countries and selling prices of the petitioner were as given below:-

 

1. Quantum of Imports

    

   Quantity (nos.)

    

   Countries	1999-2000		2000-01		POI
   	Qty	Value	Qty	Value	Qty	Value
   Total imports	38	***	26	***	106	***
   EU	31	***	13	***	55 Heimann Systems- 61	***
   Others	7	***	13	***	51	***

    

    

   For the purpose of analysing the volume of imports the import data published by DGCIS was considered for the years 1999-2000, 2000-01 and the POI. As per DGCI&S data the imports of the subject goods from the EU was 55 units. As per submissions of M/s Heimann Systems 61 units were exported to India during the POI.

    

    

2. Production and Capacity Utilisation

    

The production of the subject goods by ECIL corroborates with the sales quantity of ECIL to ECR.

Apart from the sales units from ECIL to ECR, the rest of the sales quantity by ECR were from imports effected by ECR of the subject goods.

 

4. Price undercutting and price depression

    

   Rs/lacs

    

    

   	Sales realisation of domestic industry for comparable models	Landed Price of Imports EU		Price undercutting
   				Amount	%
   ECR 520	***	6040	***	***	41.34%
   ECR 526A	***	9075	***	***	39.27%

    

    

   It is seen that while the landed price of the subject imports are lower than the selling prices of the domestic industry, this has not prevented the domestic industry from earning a higher realisation on the sales of the subject models during the POI at a profit. It is also noted that the sales realisation is much higher than the non-injurious price of the domestic industry for the subject goods determined by the Authority for the POI. Hence the question of price suppression does nor arise.

    

    

5. Profitability:-