7/1/2001-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 :

The procedure described below has been followed:

1. The Designated Authority (hereinafter also referred to as Authority), under the above Rules, received a written application from the M/s Transpek Industries Ltd. (TIL) having registered office at Kalali Road, Atladra Road, Vadodara, Gujarat and M/s Demosha Chemicals Ltd. having registered office at 105A, Mittal Towers, 210, Nariman Point, Mumbai-400021 with its associate company M/s Western India Ltd. (hereinafter also referred to as petitioner) on behalf of domestic industry, alleging dumping of Zinc Oxide (hereinafter also referred to as subject goods) originating in or exported from Peoples Republic of Nepal(hereinafter referred to as subject country). The petition is also supported by M/s All India Zinc Oxide Manufactures Association. Subsequent to initiation M/s J G Chemicals, Kolkata, M/s Synotex, Kolkata, M/s Pragati Chemicals, Mumbai, M/s R.S. Chemicals, Kolkata, M/s Western India Chemicals, Mumbai, M/s Gem Techno Chem, Jaipur and M/s Metalco Pvt. India Ltd., New Delhi have also supported the petition.

2. Preliminary scrutiny of the application filed by the petitioner revealed certain deficiencies, which were subsequently rectified by the petitioner. The petition was, therefore, considered as properly documented.
3. The Authority on the basis of prima-facie evidence as received decided to initiate the investigation against imports of subject goods from Nepal. The Authority notified the Embassy of Nepal in New Delhi about the receipt of the dumping allegation before proceeding to initiate the investigation in accordance with sub-Rule 5(5) of the Rules.
4. The Authority issued a public notice dated 19.3.2001 published in the Gazette of India, Extraordinary, initiating Anti-Dumping investigations concerning imports of the subject goods classified under Custom Code 2817.0001 of Schedule I of the Customs Tariff Act, 1975 originating in or exported from Nepal.

6. The Authority also forwarded a copy of the preliminary findings to the Embassy of the subject country in New Delhi with a request that the exporters of subject goods and other interested parties may be advised to furnish their views on the preliminary findings in the time frame as stipulated in (v) above.
7. The Authority forwarded a copy of the public notice to all the known exporters (whose details were made available by petitioner) and industry associations and gave them an opportunity to make their views known in writing in accordance with the Rule 6(2).

viii. Responses/information was filed by the following interested parties during the investigation:-

1. M/s All India Zinc Oxide Manufacturers Association, New Delhi
2. M/s ATMA, New Delhi

3. M/s Northern India Chemicals Limited, Chandigarh
4. M/s Pashupati Oxide Udyog Limited, Sonapur, Nepal
5. M/s Asian Metals, Birganj, Nepal
6. M/s Shree Pashupati Rasayanik Udyog (P) Ltd. Kathmandu, Nepal
7. M/s Unnat Industries (P) Ltd. Duhabi, nepal
8. M/s Swastic Metal Industries, Birat Nagar, Nepal
9. M/s Pashupati Metal Industries, Birat Nagar, Nepal

10. The Authority made available the public file to all interested parties containing non-confidential version of all evidence submitted by various interested parties for inspection, upon request;
11. Request was made to the Central Board of Excise and Customs (CBEC) to arrange details of imports of subject goods made in India during the past three years, including the period of investigation.
12. Arguments raised by the interested parties before announcing the preliminary findings, which have been brought out in the preliminary findings notified have not been repeated herein for sake of brevity. However, the arguments raised by the interested parties subsequently have been appropriately dealt in the preliminary findings and/or these findings;
13. In accordance with Rule 16 of the Rules supra, the essential facts/basis considered for these findings were disclosed to known interested parties on 1.3.2002 and comments received on the same have also been duly considered in these findings.
14. *** in this notification represents information furnished by an interested party on confidential basis and so considered by the Authority under the Rules.
15. The period of investigation (POI) considered is 1.4.1999 to 30.9.2000

The views expressed by various interested parties have been discussed in the preliminary findings and also in the disclosure statement. The views which have not been discussed earlier in the preliminary findings and disclosure statement and those now raised in response to the disclosure statement are discussed in the relevant paras herein below to the extent these are relevant as per rules and have a bearing upon the case. The arguments raised by the interested parties have been examined, considered and, wherever appropriate, dealt in the relevant paras herein below.

None of the interested parties has made any submission on the issue of product under consideration.

The Authority notes that none of interested parties has made any submissions on the product under consideration. The Authority therefore confirms the Product Under Consideration as held in the preliminary finding in para C.1

The Authority reiterates that the product under consideration is Zinc Oxide a white/off white powder with chemical formula ZnO, produced in various grades viz. regular grade (99%), IP Grade (99%), Feed Grade etc. The product is classified under Custom Tariff Head 2817.0001. The product is used in manufacture of automobile tyres and other rubber goods, manufacture of high purity Zinc chemicals such as sulphate, chloride etc. and is used as an input for ceremic industry and as a supplement in animal feed formulations. Zinc Oxide is reserved for production in the small-scale sector.

The product is importable under Open General Licence(OGL) and attracts a basic duty of 35%. The present investigation covers all grades of Zinc Oxide.

2. STANDING OF THE DOMESTIC INDUSTRY:

A. DOMESTIC INDUSTRY

In response to the Disclosure Statement, the domestic industry has reiterated their submissions on the issue of standing viz. the total zinc oxide consumption derived from the data on zinc consumption and rubber production.

B. EXPORTERS

The following submissions have been made:-

1. We have given several lists of manufacturers outside the Association whose production may be ascertained to examine the issue of standing. The calculation of total production of zinc oxide by input method is faulty due to various factors. Zinc oxide is produced from zinc dross, zinc hydroxide and zinc ash. No account has been taken of the imports of zinc dross, zinc hydroxide and zinc ash in the calculation. The figures given for zinc dross are totally incorrect. The DGCI&S and other sources of information do not reflect the full volume of imports. The adjustments may be made on an analysis of zinc oxide imports from Nepal as reflected in the DGCI&S data as regards the zinc oxide exporters as per our responses.
2. The All India Zinc Oxide Manufacturers Association should excluded for the purpose of determining standing.
3. The secondary sources for determining standing should be looked into only when direct information is not available. It is submitted that as per the Association of Zinc Oxide Manufacturers there are 125 units functioning in the POI. Around 47 of these are members of Association. We have given names of around another 40 odd units. Therefore data of a majority of the units can be found out from the units themselves.
4. The Association of Zinc Oxide Manufacturers on the one hand are claiming that there are 300 units producing 600000 lakhs tons to CII. They have made another representation indicating that there are 125 units producing 300000 tons. Whether the figure of 600000 lakhs tons or 300000 lakhs tons is taken, the petitioners will not have the standing. The claim of the petitioners on the total production of 40000 tons is totally incorrect and that the correct figure should be around 75000 tons.

In response to the Disclosure Statement, the exporters/producers have mentioned that:-

1. Standing of the petitioners as domestic industry is a pre-requisite for initiation. It is submitted that the All India Zinc Oxide Manufactures Association has itself provided certain information regarding the production of zinc oxide in India to the CII. It is submitted that this information should form the basis for determination of the total domestic production. With this data, the petitioners would have no standing as domestic industry.
2. The calculation of total domestic production as proposed in the disclosure is not based on any evidence. The total zinc consumption in India has been determined and its assumed that some percentage of this relates to zinc oxide. The entire working is based on a theoretical assumption regarding share of zinc oxide in total consumption. In the absence of any data on this aspect, the determination of total domestic production is factually erroneous.
3. The petition is maintainable for lack of standing. As regards, the reliance on the findings dated 5.10.2001, it is submitted that the exporters were not a party to those proceedings, and therefore, in the interests of justice, the standing may be considered on the basis of the evidence on records in the present case.

The Authority notes the various submissions made by the exporters/producers in response to the preliminary findings, public hearing and the disclosure statement.

The Authority notes that the product under consideration is manufactured by the small-scale industry. Though All India Zinc Manufacturing Association has provided details of zinc oxide production in the country, it had come to the notice of the Authority that the total number of producers of zinc oxide in the country is more than the producers as indicated by All India Zinc Manufacturing Association. The Authority has received details on actual production from some Directorate of industries, in certain states. The Authority notes that M/s ATMA has indicated that the total production of zinc oxide in the country is 65,000 MT and 40% is consumed by the tyre industry. ATMA has also indicated the quantity of rubber consumed by the tyre industry. The Authority notes that this also correlates with the data published by Indian Rubber Journal regarding consumption of rubber by the tyre industry. Keeping in view the fact that the data of all SSI producers may not be exhaustively available, the Authority has constructed production of zinc oxide by indirect method. The Authority also notes the submissions that zinc oxide can be produced from zinc metal, zinc hydroxide, zinc dross and zinc ash. The Authority on the basis of production norms of these four raw materials has constructed the total domestic production of zinc oxide in the country.

The Authority noted after interactions with the domestic industry and India Zinc Lead Development Association that there are two major producers of zinc in the country. These are M/s Hindustan Zinc Ltd. and M/s Binani Zinc Ltd. The authority gathered information on the zinc production by these producers from the India Zinc Lead Development Association and also from these two producers directly. The Authority also examined the consumption pattern of zinc in various sectors like rubber, chemicals, automotive sector etc. The authority on the basis of the response received from the India Zinc Lead Development Association and also directly from the two zinc producers noted that the total zinc production in the POI by M/s Hindustan Zinc Ltd. was 145796 MTs and by M/s Binani Zinc Ltd. was29161 MTs. The two producers sold 3706 MT and 3797 MT respectively to the Zinc Oxide Manufacturers in the country. The consumption pattern indicated that 4.28% of the zinc produced in the country was being used by the Zinc Oxide manufacturers. The same consumption pattern norm has been applied on the zinc imported during POI as per the data of DGCI&S. The proportion of imported zinc consumed in the zinc oxide manufacturing sector came to 2660 MT. The India Zinc Lead Development Association indicated that 175000MT equivalent to 70-75% of the total zinc production is consumed in the galvanizing sector. Out of this 10 to 15% is recovered as zinc dross. The Authority has referenced the higher benchmark i.e. 15% for evaluating the availability of zinc dross through this route. The zinc dross thus made available though the galvanized route comes to 26250 MTs. The zinc dross imports during POI as per the secondary source Minerals and Metals Review (MMR) review is 1157MT. The Authority notes that as per the technical consumption norms (also correlated with norms of advance license under EXIM Policy) 850 MT of zinc gives 1000 MT of zinc oxide while 900 MT of zinc dross gives 1000 MT of zinc oxide. The Authority notes that as regards zinc hydroxide it is an intermediate stage of zinc oxide production from the prime zinc route and that there are no zinc hydroxide imports made during the POI. Zinc ash is available from the zinc scrap waste route. The total imports of zinc scrap during 1999-2000 is 45479 MT. Considering all of the scrap as usable for conversion to zinc oxide, on the basis of end use pattern of zinc and recovery ratio of 0.85, the total zinc oxide produced from zinc ash/zinc scrap route comes to 915 MT. The total zinc oxide production therefore, on the basis of the above sources of zinc as indicated above come to 41192 MTs. It has been presumed that all the zinc dross imported from the galvanizing sector goes into the production of the zinc oxide only. By removing the production of those producers who have imported zinc oxide from Nepal in POI as per Rule 2(b), the total eligible domestic production comes to 32942 MT. The domestic industry’s share in domestic production as per this comes to 31.7%.

As per the consumption of zinc oxide in the rubber industry, the Authority notes that the petitioners sell more than 95% of their production of zinc oxide to the rubber industry. The Authority notes that as per the response of ATMA, the total consumption of zinc oxide in tyre industry is 25000 MT while rubber consumption in the tyre sector is 408400 MT. Since the two data do not correlate if 2% usage norms of zinc oxide in tyre sector is applied, the Authority on the basis of the utilisation ratio of 40% consumption of zinc oxide by tyre industry as indicated by ATMA, usage of 2% of zinc in the rubber industry which is indicated under the input output norms available for advance license in the EXIM Policy and total consumption of rubber in 1999-2000, notes that the total production of zinc oxide in 1999-2000 comes to 20420 MT which also upholds the standing of the petitioner.

The Authority holds that keeping in view the specific nature of the zinc oxide industry which is dispersed in the SSI sector, the construction method of zinc oxide production on an input or an output route p is logical, scientific and reliable.

The Authority in view of the above holds that the petitioners satisfy the standing to file the petition as per rule 5(a) and 5(b) and represents the domestic industry as per rule 2(b). The Authority recalls and confirms Para C(1) of the preliminary finding of Zinc Oxide from Nepal dated 6.8.2001.

3. LIKE ARTICLE

The Authority notes that there are no submissions made on this issue by any of the interested parties and the Authority in this regard recalls Para C(2) of the Preliminary Findings of 6.8.2001 and reiterates that the subject goods as produced by the domestic industry and those exported from the subject country are technically and commercially substitutable in various end-use sectors and are used interchangeably. One of the interested parties have indicated that imported subject goods from the subject country are produced by different manufacturing process and since the domestic manufacturers have full capacity utilization implies that imported goods from the subject country are used in different sectors and are not Like Article to the goods produced in domestic market. The Authority also on the basis of information filed by various interested parties and as available from secondary source notes that the goods imported from the subject country and those domestically produced have been consumed by the common customers interchangeably.

The Authority in view of this, therefore, holds that the subject goods imported from the subject country and that manufactured by the domestic industry are Like Article within the meaning of the Rule 2(d) and confirms para C(2) of preliminary finding

A. DOMESTIC INDUSTRY

Subsequent to the disclosure, the following submissions have been made:-

We fully support the determination of dumping margin in the disclosure statement.

Even though the Designated Authority has already determined normal value in respect of those exporters who did not have viable domestic sales on the basis of other cooperating exporters, we reiterate that the decision of the Hon’ble Supreme Court is not only fully binding on the Desigated authority but also quite unambiguous on this issue. Further it is the practice of the other investigating authorities also(in particular EU) that the sales of other responding exporters are considered for determination of normal value in respect of those exporters who did not have viable domestic sales n the investigation period.

We therefore request the Designated Authority to confirm the disclosure statement in this regard.

B. EXPORTERS

2. It is submitted that the level of trade in the domestic and export market is quite different. The data clearly reveals that sales in the Nepal market are extremely small in comparison with the export sales to the Indian market. There are also two types of customers, actual users and traders. The fact that any customer, who purchases a large quantity, becomes eligible for a better price is common phenomenon in any market. The sale invoices indicate net prices inclusive of discounts. In view of the glaring different in the size of the sales, adjustments should be allowed.
3. It is submitted that there is total absence of dumping.

2. M/S ASIAN METALS, BIRGANJ

1. It is submitted that since there are domestic sales by M/s Asian Metals, it is not permissible to determine normal value based on the domestic sales of another manufacturer. It is submitted that the product under consideration is zinc oxide. There is no further qualification as regards quality. As the sales in the domestic market by M/s Asian Metals are admittedly of zinc oxide, which is the product under investigation, they must form the basis for determination of normal value and not the sale price of some other manufacturer. The fact that these sales may have been of a different quality is at best an adjustment issue. It is submitted that appropriate adjustment may be made with reference to difference in quality, if required. The sales cannot be disregarded on the ground of quality. Moreover, there is nothing on record to suggest that the zinc oxide sold by M/s Pashupati Oxide Udyog Ltd. is of comparable quality to the exports made by M/s Asian Metals. This becomes all the more relevant, since the Authority itself accepts that the quality of the zinc oxide sold by M/s Pashupati Oxide Udyog Ltd. in the Nepal market is of a superior quality. It is submitted that the sales by M/s Pashupati Oxide Udyog Ltd. in the Nepal market are not comparable with the exports of M/s Asian Metals on account of quality, the adoption of their data for determination of normal value is unjustified.
2. It is further submitted that the decision of the Hon’ble Supreme Court in the case of M/s Haldor Topsoe is not applicable to the facts of the present case. The Hon’ble Supreme Court has merely held that in the absence of domestic sales by the exporter, sales of other manufacturers in the said country or territory may be looked into. It is submitted that it is not the finding of the Court that the domestic sales of the exporter concerned can be rejected in preference to the sales of other manufacturers. Such an approach would be contrary to the aforessaid decision and Section 9A of the Customs Tariff Act. It is requested that the normal value may be determined on the basis of the domestic sales of Asian Metals or in the alternative on the cost of production.

2. M/S SHREE PASHUPATI RASAYANIK UDYOG(P) LTD.

It is submitted that the zinc oxide sold by M/s Pashupati Oxide Udyog Ltd. in the Nepal market is not comparable to the zinc oxide manufactured by M/s Shree Pashupati Rasaynik Udyog (P) Ltd. The quality of the zinc oxide manufactured and sold by M/s Pashupati Oxide in the home market is very superior and therefore commands a higher price. In fact, M/s Pashupati Oxide Udyog Ltd. is having a monopoly in the local Nepal market on account of the superior quality. In such circumstances, the fixation of the normal value on the basis of those sales is totally unjustified, as the products are not comparable. It is requested that the normal value may be determined based on the cost of production and not on the sale price of a high quality product sold in the Nepal market. The decision in the case of Haldor Topsoe is not applicable since the sale in the Nepal market by M/s Pashupati Oxide is not of comparable goods.

3. M/S UNNAT INDUSTRIES(P) LTD.

1. The Authority has rejected the domestic sales on the ground that since the goods sold in the domestic market have been manufactured from recycled raw material, it is not comparable to the export goods. In this regard it is submitted that zinc oxide in Nepal and in India is manufactured from various types of materials, zinc ingots, zinc dross, zinc ash, etc. The raw material affects the recovery rate of zinc from that raw material, but does nto affect the quality of the finished zinc oxide. The zinc oxide sold in the Indian market and the Nepal market is therefore comparable. In fact, we understand that the petitioners are also manufacturing zinc oxide from recycled materials and that has been taken into consideration for the purpose of standing and injury. It is also submitted that if a distinction is to be made based on the starting raw material, then separate margins for dumping and injury may be determined based on the starting raw material. In any case, the goods sold by M/s Pashupati Oxide Udyog Ltd. are not comparable to the zinc oxide manufactured by this exporter on account of quality.
2. The decision of Haldor Topsoe is not applicable since it does not lay down a proposition that domestic sales of the exporter are to be disregarded in preference to the sales of other manufacturers.

2. M/S SWASTIC METAL INDUSTRIES

It is submitted that the domestic sales of Pashupati Udyog are not comparable to the sales of this exporter. Therefore the only available option is to determine the normal value based on the cost of production. If this basis were adopted, there would not be any margin of dumping. The decision of Haldor Topsoe is not applicable as it related to comparable goods and not for goods, which vary significantly in quality.

3. M/S PASHUPATI METAL INDUSRIES

1. 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
2. when there are no sales of the like article in the ordinary course of trade in the 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:-

1. 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
2. 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);

The normal value and ex-factory export price determination is illustrated below.

1. M/S PASHUPATI OXIDE UDYOG LIMITED, SONAPUR, NEPAL

The Authority notes the various submissions made by various interested parties. The Authority has referenced the normal value on the basis of the weighted average domestic selling price of the subject goods in the domestic market during the Period of Investigation (POI) and has considered adjustments on account of credit cost and handling on the domestic selling price. As regards the level of trade adjustment and quantity discount adjustment , the Authority notes that there is sale of subject goods by the exporter in the domestic market during the POI only to the actual users and that there is no sale made to a trader in the domestic market during the POI and therefore the price differentiation on account of level of trade cannot be evaluated in this market. The Authority also notes that there has been no quantification on account of any extra sales and distribution expenses which have been incurred by the exporter on account of selling directly to the actual users in the domestic market. Also the Authority notes that the domestic selling price policy of the exporter in the domestic market primarily considers service and quality as two parameters and that there has been no evidence on account of any extra price realisation from the customers on account of their being actual users in the domestic market. The Authority has therefore not granted any adjustment on account of the level of trade. Also on the sales documents both on domestic market and on export market, there is no indication of any discounts being offered on higher account of quantity sales. The Authority has therefore not granted any adjustment on account of quantity discounts since these are not evidenced.

The Authority notes that it has been indicated in response to the disclosure statement that quality of the goods sold by the exporter in the domestic market are superior and that reliance cannot be made on these domestic sales to determine the normal value of such goods. The Authority holds that that the argument on a superior quality goods in the domestic market has been raised by the exporter in response to the disclosure statement only and was never indicated during the investigation or during the time of verification. The exporter had indicated that the better price realisation in the domestic market is on account of service and quality and that the Authority has considered the same in the context of the exporter’s claim that the domestic price is higher because of its sales being to the actual users. The issue of quality was not per se an issue highlighted by the exporter for claim of any quality adjustment or for the purpose of disregarding the domestic sales as not being comparable to the exports sales. The Authority therefore does not find any justification to consider this argument of discarding the domestic selling prices and placing reliance on the cost of production.

The Authority has therefore allowed adjustment on account of credit cost and handling to an extent of****$/MT and ****$/MT respectively.

The normal value of the basis of these adjustments comes to ****$/MT.

As regards ex-factory export price, the Authority has granted adjustments on account of handling, export tax, certificate of origin charges, duty drawback, bank guarantee commission and credit on the FOB price during the POI to an extent of ****$/MT, ****$/MT, ****$/MT, ****$/MT. ****$/MT, and ****$/MT respectively.

The ex-factory export price on the basis of the above adjustments comes to .****$/MT.

2. M/S ASIAN METALS, BIRGANJ, NEPAL

The Authority notes that the exporter has sold inferior quality goods in the domestic market whose domestic sales price cannot be compared with the export price of subject goods exporter to India during the POI. The Authority in this regard notes that as per Section 9A(I) (c) the normal value implies 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).

In response to this, the exporter in the disclosure statement has mentioned that the product under consideration is only zinc oxide and there is no further quantification as regards quality. The difference in the quality is at best an adjustment issue and that the domestic sales cannot be disregarded. Also there is nothing on record to show that the zinc oxide sold by M/s Pashupati Oxide Udyog is of comparable quality to the exports made by M/s Asian Metals. The Authority noting these submissions hold that that the domestic selling prices of the subject goods in the POI by the exporter are significantly lower than the prevailing domestic selling prices in Nepal. The Authority also notes that it has been indicated by the exporter that these are of the inferior quality. The exporter has at no point of time claimed any adjustment on account of quality. Also the Authority notes that on the basis of comparison with the constructed cost of production for the comparable goods exported to India , the domestic selling prices of such inferior goods would also not be in the ordinary course of trade. The Authority therefore holds that the prices of the domestic goods being of inferior quality are not comparable to the goods exported by the exporter to India during the POI.

The Authority in this regard recalls the judgement of Hon’ble Supreme Court in case of M/s Haldor and Topsoe (Exports of Catalysts from Denmark). The Authority notes that in event of domestic selling prices of like article not being available, the judgement when read with Section 9A(1) ( c) permitted referring the representative domestic selling price of Like Article of other producer/exporter in Nepal. The Authority has referenced the domestic selling price of another producer/exporter who has been selling the subject goods in the domestic market in sufficient quantity for quite some time including POI for determining the Normal Value for this exporter as well.

The Normal Value has therefore been referenced as ****$/MT.

The Authority for the determination of the ex-factory export price has considered adjustments from FOB export price on account of insurance, export tax, duty drawback and bank guarantee commission to an extent of ****, ****, **** and **** $/MT respectively.

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

3. M/S SHREE PASHUPATI RASAYANIK UDYOG (p) LTD., KATHMANDU, NEPAL

The Authority notes that the exporter has not sold the subject goods in the domestic market during the POI and nor has exported the subject goods during the POI to countries other than India.

The Authority notes that the exporter has indicated that the domestic selling price of M/s Pashupati Oxide Udyog cannot be referenced for them as M/s Pashupati Oxide Udyog’s sells quality zinc oxide in the domestic market. Also the judgement in case of M/s Haldor and Topose is not applicable as the goods are not comparable. The Authority notes that the sales of M/s Pashupati Oxide Udyog are in sufficient quantity and are representative of the domestic selling prices of zinc oxide in Nepal. The exporter has not quantified any adjustment on account of quality which can be accorded as a matter of adjustment in their selling price to India. The Authority in this event holds that the determination of the normal value is to be made as per Section 9 A(1) ( c) and the judgement in M/s Haldor & Topsoe case.

The Authority notes that as per Section 9A(1) (c) the normal value implies 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).

The Authority in this regard recalls the judgement of Hon’ble Supreme Court in case of M/s Haldor and Topsoe (Exports of Catalysts from Denmark). The Authority has referenced the representative domestic selling price of Like Article of other producer/exporter in Nepal who has been selling the subject goods in the domestic market in sufficient quantity for quite some time including POI. The Authority has referenced the Normal Value of other producer/exporter in Nepal as the representative Normal Value for this exporter as well. The Normal Value comes to ****$/MT.

The Authority for the determination of the ex-factory export price has considered adjustments from FOB export price on account of insurance, export tax, duty drawback and bank guarantee commission to an extent of ****, ****, **** and **** $/MT respectively.

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

4. M/S UNNAT INDUSTRIES (P) LTD., DUHABI, NEPAL

The Authority notes that the exporter has sold subject goods in the domestic market which have been manufactured from the recycled raw material and that the domestic selling price and cost of production of such recycled goods are significantly different from the export prices of the subject goods exported to India.

The Authority notes that in response to the disclosure the exporter has indicated that zinc oxide in Nepal and in India are manufactured by various types of raw materials and that the raw material affects the recovery rate of zinc oxide from that of the raw material but does not affect the quality of the finished zinc oxide. The Authority notes that the domestic selling prices of the recycled material when compared with the constructed cost of production, for the like article as exported to India, indicates that the domestic sales are not in the ordinary course of trade. The Authority holds that this also supports the conclusion of the Authority that goods sold in the domestic market and that exported to India are not comparable. The exporter has also submitted that the domestic material sold is of inferior quality. As regards the submission of the exporter that the domestic industry in India also manufactures the goods from the recycled material, the Authority holds that the comparison of dumping and injury margins have been made on comparable products and that any exclusion of the recycled material from the total domestic production in the country, would only improve the standing of the petitioner. The Authority therefore under these circumstances recalls the Section 9 A (1) (c) and the judgement in case of M/s Haldor and Topsoe and considers it appropriate to reference these two.

The Authority notes that as per Section 9A(1) (c) the normal value implies 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).

The Authority in this regard recalls the judgement of Hon’ble Supreme Court in case of M/s Haldor and Topsoe (Exports of Catalysts from Denmark). The Authority has referenced the representative domestic selling price of Like Article of other producer/exporter in Nepal who has been selling the subject goods in the domestic market in sufficient quantity for quite some time including POI. The Authority has referenced the Normal Value of other producer/exporter in Nepal as the representative Normal Value for this exporter as well.

The Normal Value comes to ****$/MT.

The Authority for the determination of the ex-factory export price has considered adjustments from FOB on account of export tax, certificate of origin charges, credit cost, duty drawback and bank guarantee commission to an extent of ****, ****, **** and ****.

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

5. M/S SWASTIC METAL INDUSTRIES, BIRAT NAGAR, NEPAL

The Authority notes that the exporter has sold the subject goods in the domestic market which are not in sufficient quantity. The Authority has therefore disregarded these domestic sales for not being in significant quantity.

The Authority notes that the exporter in response to the disclosure statement has indicted that the domestic sales of M/s Pashupati Oxide Udyog are not comparable with the sales made by them and therefore the cost of production should be adopted for working out the dumping margin. The Authority notes that no evidence has been provided as to why the two sales are not similar. The Authority also notes that if there was an issue regarding quality adjustment, the same has also not been quantified. The Authority in this regard recalls the judgement of Hon’ble Supreme Court in case of M/s Haldor and Topsoe (Exports of Catalysts from Denmark). The Authority has referenced the representative domestic selling price of Like Article of other producer/exporter in Nepal who has been selling the subject goods in the domestic market in sufficient quantity for quite some time including POI. The Authority has referenced the Normal Value of other producer/exporter in Nepal as the representative Normal Value for this exporter as well.

The Normal Value comes to ****$/MT.

The Authority for the determination of the ex-factory export price has considered adjustments from FOB on account of export tax, certificate of origin charges, credit cost, duty drawback and bank guarantee commission to an extent of ****, ****, **** and ****$/MT respectively.

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

6. M/S PASHUPATI METAL INDUSTRIES, BIRAT NAGAR, NEPAL

The Authority notes that the exporter has sold the subject goods in the domestic market of different grades and quality(second quality). Keeping in view that the quality of goods are entirely different in the domestic and export market, the Authority proposes to disregard the domestic selling price of the inferior quality subject goods during the POI, as they are not like article to the goods exported to India.

The Authority notes that the exporter in response to the disclosure statement has submitted that the goods sold by M/s Pashupati Oxide Udyog are of superior quality and therefore cannot be considered for determination of the normal value for them. The Authority in this regard notes that no quantification has been provided by the exporter for any quality adjustments and further earlier in their response they had indicated that their goods to be of inferior quality and therefore the Authority considers that the representative domestic selling price of the subject goods in Nepal need to be referenced on the basis of the selling prices of the said subject goods sold by other exporters/producers in Nepal.

The Authority in this regard recalls the judgement of Hon’ble Supreme Court in case of M/s Haldor and Topsoe (Exports of Catalysts from Denmark). The Authority has referenced the representative domestic selling price of Like Article of other producer/exporter in Nepal who has been selling the subject goods in the domestic market in sufficient quantity for quite some time including POI. The Authority has referenced the Normal Value of other producer/exporter in Nepal as the representative Normal Value for this exporter as well.

The Normal Value comes to ****$/MT.

The Authority for the determination of the ex-factory export price has considered adjustments from FOB on account of export tax, certificate of origin charges, credit cost, duty drawback and bank guarantee commission to an extent of ****, ****, ****, **** and **** $/MT respectively.

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

The rules relating to comparison provides as follows:

For the residual exporters of subject goods from Nepal, the highest dumping margin has been referenced and also highest anti dumping duties have been recommended as indicated in the following para.

Under Rule 11 supra, Annexure-II, when a finding of injury is arrived at, such finding shall involve determination of the injury to the domestic industry, "…..taking into account all relevant facts, including the volume of dumped imports, their effect on prices in the domestic market for like articles and the consequent effect of such imports on domestic producers of such articles…." 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 article in India, or whether the effect of such imports is otherwise to depress prices to a significant degree or prevent price increases, which otherwise would have occurred, to a significant degree.

For the examination of the impact of the dumped imports on the domestic industry in India, 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. have been considered in accordance with Annexure II(iv) of the rules supra.

The following submissions have been made by various interested parties

A. DOMESTIC INDUSTRY

1. Cost of production of domestic industry increased significantly. However, the domestic industry has not been able to proportionately increase its selling prices, causing financial losses to the domestic industry.
2. The final duties may be recommended in US dollar terms so as there is no erosion on account of the exchange rate fluctuation

Subsequent to the disclosure, the following submissions have been made:-

B. EXPORTERS

Subsequent to the disclosure, the following submissions have been made:-

It is submitted that the Indo-Nepal Treaty excludes the applicability of anti dumping provision. It is also submitted that injury if any to the Indian industry is caused by imports from China and not on account of imports from Nepal. It is also submitted that there is no causal link between the injury if any and the imports from Nepal. The competitive advantage of the exporters from Nepal arises on account of the duty benefit available under the Treaty. The exporters have access to duty free raw materials and were having facility of export to India without levy of basic and SAD during the period of investigation. These benefits arise on account of the policies of the Indian and Nepal government. In the examination of the causal link, the impact of the treaty is required to be examined. The lower cost and consequent better prices of exporters in Nepal is not a phenomenon arising from dumping but due to tariffs. In the absence of a causal link, no duties may be recommended against the exporters from Nepal.

(iii) The market share of the domestic industry for the subject goods was 14.6% in 1997-98 which increased to 15.6% in POI.

(iv) The total demand of the subject goods during the POI has been around 45000 MT(Annualised). The demand has not declined over the last years and therefore the demand has not been a contributing factor to the injury caused to the domestic industry

Also in order to eliminate effect of any inefficiencies in the production process of the subject goods by Domestic Industry, which could be a contributing factor to the injury to the Domestic Industry, the Authority has determined a Non Injurious Price (NIP) for the Domestic Industry during the POI. The Non Injurious Price has been evaluated by normating and benchmarking the best utilisation and consumption norms of various const entitites viz. Raw material, utilities and consumables etc. for the Domestic Industry in POI.

(v) The low landed values of dumped subject goods have caused price suppression and price undercutting in POI. The Net Sales Realisation (NSR) of Zinc Oxide by the Domestic Industry in POI has been lower than the Non Injurious Price (NIP) for the Domestic Industry during the POI. Also the domestic industry has lost certain customers on account of the price undercutting by the dumped imports.

(vi) The Authority notes that the exporters from Nepal have submitted that the anti dumping duties are not leviable under the Indo-Nepal Treaty. The exporters have also cited a judgement of Supreme Court in the case of Union of India Vs. Kamlakshi Finance Corporation Ltd. and Hyderabad Industries Limited which holds anti dumping duty also as a custom duty. The Authority also recalls the observations made in the Preliminary Findings dated 6.8.2001 in which it was held that " levy of anti dumping duty being a remedial measure prescribed under the WTO Rules is primarily exporter specific exporting from the countries being investigated on the aspect of dumping. The levy of anti dumping duty has been done only on those exporters who have resorted to dumping and, have, therefore, caused injury to the domestic industry. The levy of anti dumping duty is thus not a generic duty but only a corrective remedial measure to offset the injury caused by dumping". Also the Authority recalls the findings in the Preliminary determination dated 25.9.2001 in respect of imports of Acrylic Yarn from Nepal in which the Authority in Para K(33) had observed that

"even if it is assumed that anti dumping duty is a kind of custom duty, the same is chargeable on the imports from Nepal as the Indo-Nepal Treaty does not give a blanket immunity from imposition of any kind of custom duty (or more specifically anti dumping duty) on imports from Nepal.". The Authority therefore holds that as such there is no blanket immunity regarding non-levy of anti dumping duty on imports from Nepal under the Indo-Nepal Treaty and therefore the Authority notes that any injury on account of dumping needs to be appropriately redressed by the mechanism of anti dumping duties as per the provisions of anti dumping duties.

The Authority also notes the various submissions made by the exporters from Nepal regarding the duty concession available to them under the Indo-Nepal Treaty and evaluation of the impact of this on the injury to the Domestic Industry. The Authority holds that the extent of price undercutting due to low dumped imports has been determined as per the consistent practice of determining the injury margin. Further in the case of M/s Haldor & Topsoe, the Hon’ble Supreme Court in its order dated 20.7.2000 has also upheld justification of two anti dumping duties as there were two rates of customs duties prevailing on the subject goods.

The Authority notes that a similar situation exists under the Indo-Nepal Treaty where also though there is an exemption of certain custom duties, the determination of price suppression and injury margin is to be evaluated as per the applicable customs duties as also upheld by the Hon’ble Supreme Court in the M/s Haldor Topsoe judgement.

Further the Authority notes that it has been established that the exporters from the subject country are dumping the said subject goods. The purpose of levy of anti dumping duty is only to bring such export prices at non-dumped or non injurious level. Such export prices as corrected by anti dumping duty would continue to avail the benefits of duty concession as prevalent under the Indo-Nepal Treaty.

The Authority holds that 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.

The Authority also recognises that though the imposition of anti-dumping duties might affect the price levels of the products which may be manufactured/produced with the usage of the subject goods and consequently might have some influence on relative competitiveness of these products are, however, fair competition in 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 the dumping practices and would prevent the decline of the domestic industry and help maintain availability of wider choice of the subject goods to the consumers. Imposition of anti-dumping measures would also not restrict imports from the subject country in any way, and, therefore, would not affect the availability of the products to the consumers.

4. CONCLUSIONS:

1. The subject goods in all forms originating in or exported from the subject country have been exported to India below its normal value.
2. The domestic industry has suffered material injury by way of depressed Net Sales Realization (NSR) on account of price suppression caused by low landed prices of the dumped subject goods from the subject country leading to financial losses.
3. The injury has been caused to the domestic industry by dumping of the subject goods originating in or exported from the subject country. The authority recommends anti-dumping duty on imports of all forms/grades of subject goods falling under Chapter 28 originating in or exported from the subject country. Zinc Oxide of any grade/purity if imported under any other Head viz. 38123001 and 28179000 would also attract the anti-dumping duties.
4. It was considered to recommend the amount of anti-dumping duty equal to the margin of dumping or less so as to remove the injury caused to the domestic industry. Accordingly, it is proposed that definitive anti dumping duties equal to difference between amount as set out below in Column 3 and landed value be imposed, by the Central Government on all grades of subject goods originating in or exported from Nepal falling under Chapter 28 of the Customs sub-heading 2817.0001 of the Customs Tariff.

Subject to above, the Authority confirms the preliminary finding dated 6.8.2001. .

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

(L V SAPTHARISHI)
DESIGNATED AUTHORITY

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