The procedure described below has been followed with regard to the investigations:

ix The Embassy of the subject country in New Delhi was informed about the initiation of the investigations in accordance with rule 6(2) with a request to advise the exporters/producers from their country to respond to the questionnaire within the prescribed time. A copy of the letter, petition and questionnaire sent to the exporter was also sent to the Embassy, along with a list of known exporter/producer.

x. A questionnaire was sent to the following known Importers HFRM in India calling for necessary information in accordance with rule 6(4):

xi Additional Information regarding injury was sought from the petitioner, which was also received;

xii. The Authority made available non-confidential version of the evidence presented by various interested parties in the form of a public file kept open for inspection by the interested parties;

xiii. The Authority conducted spot verification of the domestic industry to the extent considered necessary.

xiv. The Authority held a public hearing on 22.02.99 and the views expressed in the meeting and which were reproduced in writing subsequently have been considered in these findings

xv. Cost investigations were also conducted to work out optimum cost of production and cost to make and sell the subject goods in India on the basis of Generally Accepted Accounting Principles (GAAP) and the information furnished by the petitioner so as to ascertain if anti-dumping duty lower than the dumping margin would he sufficient to remove injury to the domestic industry;

xvi. **** in this notification represents information furnished by the petitioner on confidential basis and so considered by the Authority under the Rules.

xvii. Investigation was carried out for the period starting from 1st April. 1996 to 30th September, 1997.

2 The petitioner has raised the following issues in its petition:

(i) On Dumping

3. None of the interested parties from China PR responded to the notice of initiation M/s O.K. Gidumal & Watumulllt Ltd who are one of the alleged exporters in their response stated that they have not exporters any Hard Ferrite Ring Magnets to India during the period of investigation. However, the Electronics Component Manufacturers Association (ELCINA) in their response staled that -

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

5 The product considered in the present investigation is HFRM originating in or spurted from China PR. Hard Ferrite Ring Magnets is manufactured in the form of Rings. The Ring Magnets are used in the manufacture of Loud Speakers. Public Address systems Magnetic Assemble etc. As claimed by the petitioner, the HFRM produced by the domestic industry includes the Barium Magnet and the Strontium Magnets and have varying cuter diameters ranging from 22mm to 280 mm and inner diameters ranging from 12 mm to 180 mm and having a thickness of 4mm to 30mm depending upon the end use of the Rind Magnets. -

6. HFRM is classified under custom Sub-heading 8505.99 of Schedule I of the Customs Tariff Act, 1975. The manufacturing process functions & uses and tariff classification are, however, indicative only and are in no way binding an the scope of the preset investigations.

7. The petitioner has claimed that the HFRM produced and sold by the Domestic Industry and those imported from China, are being used inter changeably by the Customers in India. The process and technology for manufacturing the product all over world is similar in terms of machinery. raw materials, manufacturing process except for minor differences such as additive, automaton in material handling etc. HFRM are produced and sold in various sizes. However, the various sizes serves the same general purpose. None of the interested party have disputed the claims made by the petitioner.

In view of the same, the Authority holds that HFRM being produced by the domestic industry and those being imported from China P.R. can be used interchangeably and thus are commercially and technically substitutable and therefore, are like articles within the meaning of the rules.

8 The petitioners M/s. Hard Ferrite Manufacturers Association represents the following producers of HFRM in India:-

(i) The comparable price, in the ordinary course of trade, for the like article when meant for consumption in the exporting county 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 or 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-

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 transshipped 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 lo its price in the country of origin.

10. The Authority provided opportunity to the exporters from China PR to furnish information relevant to the investigations and offer comments, if any, in accordance with the Section cited above. The Authority wrote to the Embassy of China PR in India also. However, none of the exporters from China PR has responded to the Authority’s request for information.

11. None of the importers of the subject goods in India or other interested parties has responded to the notice of initiation of investigations nor has any interested party furnished any information relevant for determination of normal value. The claim made by the petitioner with regard to the determination of normal value has also not been disputed by any interested party(ies). The Authority has, therefore, proceeded on the basis of Rule 6(8), i.e., best information available.

12. The normal value was determined at the time of initiation of the investigations on the basis of the constructed cost of production of HFRM in China PR. The Authority has considered the same as the basis for discrimination of the Normal Value.

13. The Normal Value has been constructed on the basis of the best available information with the Authority in the optimum working conditions in the absence of any information from the exporters. Therefore, the cost of production of HFRM in India has been adopted as the basis for the constructed cost in China PR after allowing for the reasonable margins for the profits. Accordingly, the normal value of HFRM has been lake at Rs. 41.80 per Kg.

14. None of the exporters from China PR have responded to the notice of initiation and furnished information requested by the Authority. The importers and other interested parties nave also not furnished the relevant information. The export price has therefore, been worked out on the basis of information furnished by the petitioner.

15. (i) HFRM are classified under the chap-tar heading 8505.19 as ‘others’ under the Harmonized System of nomenclature which comprises of a number of magnets Therefore, the evidence on the export prices based on DGCI&S Calcutta could not be relied upon as the basis for export prices. However, the petitioner’s has furnished the evidence on the export price based on (he data compiled by tie Bureau of Commercial Intelligence and Statistics. The Authority has, therefore, adopted the average export price on the basis of data n the Bureau of Commercial Intelligence and Statistics as the basis for the export price.

(ii) Based on the secondary sources, the fallowing imports of HFRM took place from China P.R. during the period of investigation far which the information is available:-

Accordingly, the weighted average rates per Kg. for the imports of HFRM have been adopted as Rs.17.76 per Kg.

16. The export price, as claimed by the petitioner, has not been disputed by any of the interested party. Besides, none of the interested parties have claimed any price adjustment on the export price.

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

18. For the purpose of fair comparison between tie normal value and the export price, the information furnished by the petitioner and other published information available with ‘he Authority has been relied upon Since none o-f the interested parties have disputed the export price as claimed by the petitioner and no adjustments have been claimed, the normal value and export price determined, as detailed above, has been considered as at ex-works levels.

20. Under Rule 11 supra. Annexure-ll, 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 damped imports, their effect en prices n the domestic market for like artifice and the consequent effect of such imports on domestic producers of such articles...." In considering the effect of the dumped imports an 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 once to a significant degree or prevent price increases which otherwise would have occurred, to a significant degree.

21. 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 utilization, sales quantum, stock. profitability, net sales realization, the magnitude and margin of dumping, etc. in accordance with Annexure 11 (iv) of the rules supra.

(a) The profitability of the petitioner companies has remained fairly constant at around Rs 11 Crores during the period from 1994-95 to 1996-97. However, in the first half of the financial year 1997-98, the overall loss of the petitioner companies was Rs 0.056 Crores. Some of the petitioner companies produce other type of magnets also. (which are not the subject matter of the present investigation) However, the HFRM constitutes a significant portion of the overall activities of the petitioner companies The fall in the sales realization of the domestic industry without any corresponding decline ‘n the manufacturing cost indicates that it substantial contributed to the decline in the profitability level of the petitioners.

(b) The domestic sales realization of the petitioner companies in respect of HFRM has declined from Rs.35.65 Crores in 1993-94 to Rs.27 85 Crores in 1995-96 The sales realization during first half 1996-97 was Rs.12.53 Crorcs showing an annualised decline of 10% during 1997-98.

(c) The sales of the petitioner companies in teems of quantum of sales has shown marginal improvement. The petitioner companies sold 4832.82MT of HFRM in 1994-95 which increased to 5088 MT in 1995-96. The sales in the first half of 97-98 was 2626 MT.

(d) The production of HFRM of the petitioner companies during 1995-96 was 6519.76 MT. It increased during 1996-97 to 7589.90 MT. During the six months period ending Sept.,1997, the production of petitioner companies was 4095 MT. In the case of four of the petitioner companies, there has been a significant decline in the volume of production during 1996-97 as well as during the six months period ending 30^th Sept., 1997.

(e) The average sales realisation of all the petitioner companies for the domestic ales of HFRM has declined significantly during the period of investigation. The decline in the sales realisation of the petitioner companies during the first half of 1997-98 was as much as 35% over the sales realisation in 1995-96.

(f) There has been a constant decline in the average capacity utilisation of the petitioner companies and the same declined from 84% in 1995- 96 to 73% during the period of investigation.

23. It is thus seen that the petitioner companies have suffered material injury in terms of declining profitability, the declining sales realisation and were not able to utilise the installed capacities to the full extent. The domestic industry has. therefore suffered material injury from the dumped imports.

25. The purpose of anti dumping duties, in general is to eliminate dumping which is causing injury to the petitioner companies and to re-establish a situation of open and fair competition in the Indian market, which is in the general interest of the country.

26. It is recognized that the imposition of anti dumping duties might affect the price levels of the products manufactured using the subject goods and consequently might have some influence on relative competitiveness of these products. However, fair competition on the Indian market will not be reduced by the anti dumping measures, particularly if the levy of the anti dumping duty is restricted to an amount necessary to redress the injury to the petitioner companies On the contrary, imposition of anti dumping measures would remove the unfair advantages gained by dumping practices, would prevent the decline of the petitioner companies and help maintain availability of wider choice to the consumers of HFRM imposition of anti dumping measures would not restrict imports from the subject countries in any way, and, therefore, would not affect the availability of the product to the consumers.

27. To ascertain the extent of anti-dumping duty necessary to remove the injury to the petitioner companies, the Authority has relied upon reasonable selling price of HFRM in India for the petitioner companies, by considering the optimum cost of production at optimum level of capacity utilisation for the petitioner companies.

28. The landed value has been determined on the basis of export price of HFRM from China PR, determined as detailed above in the para relating to dumping, after adding the prevailing level of customs duties and one percent landing and two percent handling charges.

30. It is considered necessary to impose anti dumping duty, provisionally, pending final determination, on all imports of HFRM originating in or exported from the subject country, pending investigations

31. It was considered whether a duty lower than the dumping margin would be sufficient to remove the injury. The average landed price of the imports, for the purpose, was compared with the reasonable selling price of the petitioner companies, determined for the period of investigations. Wherever the difference was less than the dumping margin, a duty lower than the dumping margin is recommended.

Accordingly, if is proposed that provisional duties be imposed, pending final determination on all imports of HFRM originating in or exported from China P.R. The anti-dumping duly shall be Rs 21/- per Kg. to be imposed from the date of Notification to be issued in this regard by the Central Govt. on all the imports of HFRM falling under Chapter 85 of the Customs Tariff, originating in or exported from China P.R.

32. 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 Additional duty of Customs levied under Section 3 of the Customs Act, 1975.

33. The following procedure would be fallowed subsequent to notifying the preliminary findings: -