New Delhi, the 2nd December, 1998

Subject:-Anti-Dumping investigation concerning imports of industrial sewing machine needles from Japan, Korea, Germany China and Czech Republic- Preliminary Findings

23/1/97/ADD- Having regard to the Customs Tariff Act 1975 and the Customs Tariff (Identification, Assessment and Collection of Anti-Dumping Duty on Dumped Articles and for Determination of Injury), Rules, 1995, thereof:

1. The procedure given below has been followed with regard to the investigations:

i) The Designated Authority (hereinafter referred to as Authority), under the above Rules, received a written Petition from Altek Lammertz Needles Ltd., alleging dumping of Industrial Sewing Machine Needles, (hereinafter referred to as Needles) originating in or exported from Japan, Korea, Germany, China and Czech Republic.

ii) The preliminary scrutiny of the application revealed certain deficiencies, which were subsequently rectified by the petitioner. The petition was therefore considered as properly documented.

iii) The Authority on the basis of sufficient evidence submitted by the Petitioner decided to initiate investigations against alleged dumped imports of Needles originating in or exported from Japan, Korea, Germany, China and Czech Republic . The Authority notified the Embassies of the subject countries about the receipt of dumping allegation before proceeding to initiate investigations in accordance with sub- rule 5(5) of the Rules;

 iv) The Authority issued a Public Notice dated 16^th January 98, published in the Gazette of India Extraordinary initiating Anti-dumping investigation concerning imports of Needles classified under Chapter 84 of the Customs Tariff Act, 1975, originating in or exported from the subject countries;

v) The Authority forwarded a copy of the Public Notice to the known exporters (whose details were made available by the Petitioner) and industry associations and gave them an opportunity to make their views known in writing within forty days in accordance with Rule 6(2);

vi) The Authority forwarded a copy of the Public Notice to the known importers of Needles (whose details were made available by the petitioner) and advised them to make their views known in writing within forty days from the date of the letter;

vii) Request was made to the Central Board of Excise and Customs (CBEC) to arrange details of imports of Needles made in India during the past three years, including the period of investigation, No information was, however, received from CBEC.

viii) The Authority provided copies of the Petition to the known exporters and the Embassies of the subject countries in accordance with Rule 6(3)supra, A copy of the petition was also provided to other interested parties, wherever requested;

ix) The Authority sent a questionnaire, to elicit relevant information, to the following known exporters, in accordance with Rule 6(4);

• Japan

• Korea

• Germany

• Czech Republic

 • China

1. Shanghai Bon-Fun Machine Needle Co., Ltd.
2. Shanghai Diamond Needle Factory,
3. Shanghai Red Star Sewing Machine Needle Manufacturer
4. Nan Tong No. 1 Sewing Machine Needle Factory
5. South China Needle Factory
6. Qingdao Needle Factory,
7. Yantai Knitting Equipment Factory,
8. Tianjin Sewing Machine Needle Factory,

Response to the questionnaire was filed by the following exporters:

• Organ Needle, Japan,

• K.O. Needle Co, Ltd., Korea,

• Ferd Schmetz Gmbh, Germany

• Groz-Beckert KG, Germany

x) The Embassies of Japan, Korea, Germany, China and Czech Republic in New-Delhi were informed about the initiation of the investigations in accordance with Rule 6(2) with a request to advise the exporters/producers from their respective countries to respond to the questionnaire within the prescribed time. A copy of the letter, petition and questionnaire sent to the exporters was also sent to them, alongwith a list of known exporters/producers.

xi) A questionnaire was sent to the following known importers of Needles in India calling for necessary information in accordance with Rule 6(4);

• Coats Viyella India Ltd., Bangalore
• Ashwin Intercontinental. Bangalore
• Jark Needle Manufacturing Co., Mumbai
• Groz-Beckert Kg, Chandigarh

Response to the questionnaire was filed by the following:

• Coats Viyella India Ltd., Bangalore
• Groz-Beckert Kg, Chandigarh

xii) A number of parties requested for extension of time to submit the responses, which was, upon good cause shown, allowed by the Authority;

xiii) The Authority made available the 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;

xiv) The Authority conducted on-the-spot investigations at the premises of the co-operating exporters in Japan and Korea and petitioner to the extent considered necessary;

xv) Additional information regarding injury was sought from the petitioner, which was also furnished;

xvi) 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 be sufficient to remove injury to the domestic industry.

xvii) A letter was issued to the DC(SSl), Ministry of Industry, seeking Information on domestic industry and a reply was received;

Information regarding domestic industry was sought from M/s. T.V.S, Sewing Needles Ltd., Lakshmi Building, Usilampatti Road, Kochadai, P.O. Box No.59, Madurai-625016. In its reply to the Authority, M/s TVS Sewing Needles has stated that it had commenced production in the year 1962. They have not furnished details of capacity, manufacturing process and technology and have expressed their unwillingness to participate further at this stage of the investigation,

xviii) Domestic Industry as detailed hereinabove, is constituted by the Petitioner viz., M/s Altek Lammertz Needles Ltd., with a capacity of 45,000,000 numbers of needles per annum.

xix) A request of the petitioner to terminate the anti-dumping investigations for exports of needles from Germany under Rule 14 supra was received by the Authority.

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

xxi) Investigations were carried out for the period from 1^st April, 1996 to 31^st March, 1997.

2. The Petitioner has raised the following major issues in their petition and in their subsequent submissions.

(i) Altek Lammertz is a joint venture company incorporated in India with Lammertz GmBH, Germany, holding a 24°/o equity, The project cost of industrial sewing needles was Rsl2,50 crores and had been appraised by IC1C1 and SCICI, Lammertz with a tradition of more than 130 years in manufacture of needles has provided an entire line of production machinery and technology to Altek for manufacturing high precision industrial sewing needles for the first time in India.

(ii) Industrial sewing machine needles is a product of precision engineering with its own identity, manufacturing process and uses, The needle wire which is the main raw material for the product is imported from Germany. The main chemical which is about 50% of the value of total chemicals is also imported from Germany. Other consumables are indigenously procured. There is no difference in the process of manufacture in India and that followed elsewhere in Europe and Asia. These needles are manufactured only in few countries around the world. The technology is closely held and the machinery required to manufacture the needles are proprietory

(iii) The Petitioner has stated that no import was made of systems DBX1, DBXF2 and TVX1 which are also covered by the scope of this investigation, during the period of investigation. Of the remaining systems only 1,49,300 numbers of needles were imported for purposes of testing, seed marketing and sampling to customers. The Petitioner has stated that considering the volume of the market, this quantity is too small to be considered as a commercial activity,

On dumping:-

(i) Alleged dumping of needles is stated to take place from Japan, Korea, China and Czech Republic.

(ii) The Petitioner has given evidence to indicate normal values and export prices prevailing in the subject countries. In the case of Japan, normal value is established by a price list of Organ Needle Company Ltd., of Japan. A quotation evidencing the export price to Coats Viyella Ltd., Bangalore, has also been furnished,

(iii) Normal value in Korea could not be made available by the Petitioner.

(iv) The Petitioner has stated that the normal value prevailing in China and Czech Republic and their export prices are unavailable as the commercial practices in these countries are not known. Prices based on the constructed cost of production have been furnished for determination of normal value.

(i) As a result of dumping, the Petitioner has been unable to build up sales.

(ii) The Petitioners capacity utilisation has remained low at less than 20%.

(iii) Inventories of the Petitioner have been rising.

(iv) As a result of dumping and to combat competition, the Petitioner is unable to raise the selling price to a remunerative level. This has inflicted large losses and the Petitioner is finding it difficult to maintain production.

(v) The Petitioner has defaulted on repayment of term loan installments and interest dues to banks.

(vi) The Petitioner has to compete on price terms to make an entry but it is alleged that the foreign competitors are ready to incur losses to keep them out of the market. It is stated that Japanese and Korean companies have timed their steep price cuts and intensified their sales efforts to coincide with production by the Petitioner.

C. VIEWS OF EXPORTERS IMPORTERS AND OTHER INTERESTED PARTIES:

3. The views expressed by exporters, importers and other interested parties who have responded to the Authority, are as under:

a) Organ Needle Company, Japan:

(i) Prices of needle products, in general, are stated to be higher due to the increase in particularity of applications thereof. A mature market in which manufacturing of high-grade complicated apparels is carried out requires special needles depending on individual applications. Sales volumes of expensive needles in the whole market is increased correspondingly as is in Japan. Direct comparison between the concerned

(ii) Market in Japan and that in India would be unreasonable, because both are unlike in characteristics, the manner of sales, etc.

(ii) Comparison of the export price to India and to other countries with the domestic sales price indicates that an ex-factory price of Kyushu Organ ( a subsidiary of Organ) for export to India is the same as that for export to other countries and the domestic price somewhat exceeds the prices for export. Such a difference in manufacturing costs is on account of two factors, The first is a difference in the manner of packaging between the products for exports and those for domestic sales. There is an increase in packaging costs in the needle products for domestic sales. The other cause is a difference in direct labour cost due to the above difference in the manner of packaging,

(ii) The price for domestic sales is increased due to the operating cost of Organ’s domestic branches and the inventory cost as compared with the price of the products for export. The price system for domestic sales in individually prepared for "machine builders" and "wholesalers". The operating cost and inventory cost are applied to the products for domestic machine builders. Nevertheless, the sales price for domestic machine builders is reduced as compared with that for domestic wholesalers.

(iii) In Organ’s price system, additional cost is added to the sales price for domestic sales for the special types of needles such as those with a special configuration of needle-tip, needles with special surface coatings, specially small-sized needles etc. Such special types which are more expensive than the standard types occupies about 12% of the total sales amount in the domestic sales.

b) M/s. K.O. Nedles Company Ltd. (South Korea)

(i) Industrial Sewing machine needles are used by units involved in manufacturing large volume of materials and/or specialized garments. They are low cost products and may be considered ‘disposable’ as they cannot be repaired or reused.

(ii) The Respondent has been in the business of manufacturing needles for the last 30 years and has been in the Indian market for over 11 years i.e., long before the commencement of business by the Petitioner.

(iii) In the domestic South Korean market, the Respondent is the only manufacturer. There are no restrictions on the import of this product into South Korea. On account of the superiority of it’s product and low cost of manufacture, the Respondent has been able to effectively combat imports.

(iv) The Respondent has an exclusive selling arrangement in it’s domestic market. All sales are made to one customer (Master Agent), who is in no way related to the Respondent. This Master Agent in turn sells it to other subagents, which in turn sell into the market.

(v) In the domestic market, the product is marketed under the name "Organ" and not "Orange" as it is done around the world.

(vi) The Petitioner is not a monopoly manufacturer as M/s. T.V.S. Sewing Needles Ltd., Madurai, is another manufacturer of the product under investigation. An actual product sample from this manufacturer has been enclosed with the Respondent’s views in order to establish this point.

(vii) The manufacture of industrial sewing machine needles is done on a very large scale given the ‘disposable’ nature and low cost of the product. While the process of manufacture may be the same, the manner in which they are carried out is unique to each manufacturer. In the case of the Respondent, the process is largely automated. In the Respondent’s view, it is generally incorrect to state that the manufacture of needles is labour intensive.

(viii) Over the decades, there has been a sea-change in the process of manufacturing needles. Each manufacturer has a unique method and the machinery is designed and manufactured by the manufacturer themselves. It is not enough for the Petitioner to have dated technology. There must be constant modification to improve the efficiency of the process. Given the fact that the end-product is low-cost and high volume, economy of scale is vital to the success of any plant.

(ix) The Petitioner has suffered no injury on account of the Respondent. The dumping margin as calculated by the Petitioner is grossly exaggerated. The cost of production and the normal value of the product under investigation are much lower. For every year during it’s operation in India, it has continuously been raising it’s prices. This fact fundamentally opposes the concept of dumping. In spite of yearly price increase, the Respondent has increased it’s market share on account of the superior quality of it’s product.

(x) The injury, if any, to the Petitioner, is due to old manufacturing technology which does not provide adequate economies of scale. Another reason is the inferior quality of the product offered by the Petitioner, The feedback from the market indicates that the Petitioners product is liable to break easily thus requiring frequent replacement.

(xi) As per provisions of Art. VI of GATT, it is submitted by the Respondent that monopoly markets must also be excluded as the abnormal conditions distort the normal value, The sales in the domestic market cannot be considered in the "ordinary course of trade" and cannot be used to calculate "normal value". It is submitted by the Respondent that the Authority should consider sales to the neighboring countries/markets to determine the normal value, Accordingly data for company sales in Sri Lanka, Pakistan and Bangladesh have been submitted for the reasons cited below:

a) These countries are in the same geographical location for exports.

b) Requirements are similar and the varieties of systems sold by the Respondent in the region are largely common.

c) The type of products manufactured in these four countries is largely cotton garments and leather goods which are exported the world over.

d) The Respondent has internally divided its export market and these four countries are in the same group. These countries have the same freight costs.

C. IMPORTERS VIEWS:

(i) It is incorrect to state that DBX1 is not used by the leather industry, The Petitioner’s representation about Organ’s catalogue classifying DBX1 needle as Lockstich with a hand written note, "for garment applications not for leather" is totally misleading as the said note has been inserted by the Petitioner and not by Organ Needle Company. Lockstich is the most basic and widely used stich worldwide to sew all kinds of material together. Lockstich machines are extensively used in the ready made garment, leather garment and leather footwear industries in India. For the purpose of leather stitching on Lockstich machines there are basically two types of needle points that are used, viz,, ROUND POINT NEEDLES also known as DBX1,CUTTING POINT NEEDLES also known as 134LR and 134PCL. Of the above types, the latter are high performance needles and are almost 50% more expensive, DBX1 needles are stated to be the obvious choice when price is of importance in the leather industry. It is not mandatory that all leather stitching has to be done only with 134LR or 134PCL needles. In many parts of India leather stitching is done with ‘round point’ or DBX1 needles. There is no needle manufacturer in the world who can insist that only ‘cutting point’ needles should be used for stitching leather.

(ii) The allegation of the Petitioner about imports under the Vabal scheme are false and irrelevant for the present investigation. Coats had used the Vabal scheme for certain imports from Organ Needles. Coats were legally entitled for such imports and had purchased advance licences paying market premium. As evident from the Bill of Entry, Coats had never availed of Concessional rate of duty of 20% as applicable to the leather industry. Even though needles have been declared for use by the leather industry, Coats had paid the full duty of 52%.

(iii) The statement of imports from Japan as brought out by the Petitioner in the complaint is not accurate. The imports from Japan were increased as the importer had purposely increased inventory to improve service to it’s customers who are mainly garment exporters.

(iv) The evidence of dumping submitted by the Petitioner is absurd. The measurement of needles is given in kg because there is no standard conversion factor from number of pieces into kg. Therefore the prices per needle figure given by the Petitioner is meaningless as they are calculated on the basis of arbitrary conversion factors.

(v) M/s. Coats Viyella have enclosed a packet of industrial sewing needles manufactured by TVS Sewing Needles Ltd., Madurai and marketed by Madura Coats Ltd, Ltd. The maximum retail price fixed by TVS is Rs 30/ for ten needles. It is therefore evident that Indian manufacturers and distributors can profitably survive by offering such prices. The Petitioner’s claim that they are unable to make profits by selling at Rs.2.50/ per needle is not tenable.

(vi) It is absurd to suggest that Japanese, Korean and Czech companies who are themselves competitors in the global market have allegedly resorted to steep price cuts to coincide with the commencement of production by the Petitioner. The complainant’s capacity is absolutely insignificant as compared to the scale of manufacturing of the producers in these countries to incur losses to cause damage to the Petitioner.

(vii) The basis for the entire complaint is that the Petitioner had expected to sell the needles at an average price of Rs4/ per needle whereas needles are being sold at prices ranging from Rs.0.93 to Rs 4/ per needle, This assessment was a gross misjudgment. There is no price cutting or suppression of prices by exporters and thus no injury can be said to have been caused to the Petitioner.

(viii) The price of Organ Needles marketed by Coats are in the range of Rs 3.74 to Rs.3.91 per needle. The Petitioner is selling needles at Rs 2.50/-per needle approximately. Thus there cannot be any conceivable loss or injury to the Petitioner. In view of the above, the question of causal relationship between the alleged dumping and alleged injury does not arise.

4. The submissions made by the Petitioner, exporters, importers have been examined, considered and dealt with at appropriate places hereunder

5. The product under consideration in the present investigation is Industrial Sewing Machine Needles. Such needles are used mainly in sewing textile garments and leather products. Industrial sewing machine needles are classified under Chapter 84 of the Customs Tariff Act, 1975, under tariff classification HS Code No. 8452.30. The classification is however indicative only and in no way binding on the scope of the present investigations.

6. The Petitioner has claimed that the 8 systems/types of needles manufactured by them comprise the bulk of the needle requirement in India. The investigation is on alleged dumping in these eight systems of needles. In order to establish that the needles produced by the domestic industry is a like article to the needles exported from the subject countries, characteristics such as technical specifications, manufacturing process, technology, functions and uses and tariff classification have been considered. There is no argument disputing that needles produced by the domestic industry in these various systems/sizes are like articles and are substitutable by the needles imported from the subject countries - both commercially and technically. The needles produced by the domestic industry have therefore, been treated as like article to the goods exported from Japan, Korea, China and Czech Republic, within the meaning of Rule 2(d),

7. The systems/types, sizes, categories and usage/features of the needles manufactured by the Petitioner and covered by the scope of these investigations are as follows;

KNITTING NEEDLES

CUTTING POINT NEEDLES (for leather industry)

8. The petition has been filed by M/s Altek Lammertz Needles Ltd., Chennai. The Petitioner had stated in their petition to the Authority that they were the sole manufacturers of industrial sewing machine needles. In the course of the investigations , it was brought to the notice of the Authority by other interested parties that M/s TVS Sewing Needles Madurai, was also manufacturing the product under consideration. In response to the request for information sought by the Authority in this regard, M/s TVS Sewing Needles, Madurai have clarified that they are also manufacturers of both Household and industrial Sewing Machine Needles. Their company was incorporated in the year 1962. Their production (in numbers) of industrial sewing machine needles during the period of investigation, 1996-97 was 8,41,720. The petitioner’s production during Jan-March ’97 alone was 10,45,000 numbers of needles against annual capacity of 45 mn numbers of needles,

The petitioner therefore accounts for more than 55.4% of the total production of the like article by the domestic industry in India, and therefore satisfies the definition of domestic industry, in accordance with Rule 2(b) supra.

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

(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 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-

(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 rule made under sub-section (6); or

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

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 to its price in the country of origin.

10. The Authority sent questionnaires to the exporters from Japan, Korea RP China and Czech Republic to furnish information relevant to the investigations and offer comments, if any, in accordance with the section cited above. A number of companies requested for extension of time, which was allowed by the Authority. M/s Organ Needle, Japan and M/s K.O. Needle Co. Ltd., Korea, has responded to the questionnaire sent by the Authority. None of the exporters from China and Czech Republic have responded to the questionnaire. The claims made by the exporters with regard to normal value and export price are as under:

i) Organ Needle co. Ltd., Japan

The company has responded to the questionnaire sent by the Authority. The price system for the domestic market in Japan is for "machine builders" and "wholesalers". There is a difference in cost of production between domestic sales and exports to India on account of :-

a) increase in packaging costs in products meant for domestic sales;

b) operating cost and inventory cost which are applied to the products for domestic machine builders.

The price for India is for the agent or distributor which is stated to be the same as the sales price for the Japanese domestic market. The exporter has claimed price adjustment on account of inland freight, overseas freight, and insurance and shipping charges in (the export price to India. Evidence in support of the claims has been furnished.

ii) K.O. Needle Co Ltd.. Korea RP.

The company has responded to the questionnaire sent by the Authority. This exporter is the only manufacturer in the domestic South Korean market and all sales are made to one customer (Master Agent).

The company has price lists for domestic sales for various systems of needles and has claimed adjustments on account of packaging, inland freight and interest for deferred payment.

Export prices to India are categorized into four price groups, Adjustments have been claimed on account of packing, inland freight and handling.

12. Organ Needle Company Ltd., Japan.

Normal Value:- Normal value has been determined on the basis of information furnished by the exporter. Normal value is based on the average of the selling price to machine builders and wholesalers. Adjustments on account of packing cost, inland freight and difference in cost of production have been allowed. The domestic selling price after adjustment of the above has been considered as normal value.

Export Price:- The company has furnished details of average price of goods exported to India separately for each system. The selling price has been considered on the basis of average sale price. While arriving at export price adjustment on account of inland freight (charges before FOB) and overseas freight, insurance, and shipping charges on the basis of average expenses( charges after FOB) have been made to arrive at the ex-works export price.

13. M/s. K.O. Needles Ltd., Korea

Normal Value: The normal value has been determined on the basis of information furnished by the exporter. The company has price lists for sales in the home market. The selling price is for various systems. The average selling price has been adopted for each system as the selling price.

The company has claimed price adjustments on sales in the home market on account of packing, inland freight, and interest on deferred payment. Since these are expenses incurred by the company on domestic sales, they have been allowed.

Adjustments have also been claimed on account of donations and advertisement. The expenses incurred on donations are not regular expenditure and therefore have been disallowed. Expenditure incurred on advertisement being an expense incurred in the domestic market has been allowed.

Export Price: In case of exports made to India, the exporter has claimed the following price adjustments on packing, inland freight and handling. The claims being on the basis of differences in the expenses in the two markets, have been allowed.

The company has claimed export price for four types on the basis of price-groups, whereas the normal value is based on the systems sold. It is also found that several systems may fall in one price group, Therefore, it is considered appropriate to compare the eight needle systems sold in the home market and being the subject matter of the present investigation with the four price groups pertaining to exports.

14. China A Czech Republic

It is claimed that China has emerged as the largest manufacturer and exporter of industrial sewing machine needles. Their commercial practices are not known and their pricing policies have no relationship to profitability.

The Czech company is stated to export AKRA brand of industrial sewing machine needles. Like the Chinese, their pricing policies are also not known. This exporter has also not responded to the Authority’s request for information. Chinese exporters have not responded to the Authority’s request for information.

It is observed by the Authority that none of the exporters from China and Czech Republic have responded to the Authority’s questionnaire and submitted information relating to normal value, export price, dumping margin and thus the Authority has considered them as non-cooperative exporters and proceeded on best available information.

15. The petitioner is claiming the constructed cost of production based on evidence available with regard to variable cost and other claims like fixed costs on the basis of factors prevailing in India, The petitioner is claiming the constructed cost of production of industrial sewing needles of DM 102.01 (USD 61.05 )& DM 123.30 (USD 73.8) per 1000 needles for China and Czech Republic respectively. However none of the exporters or importers has contested the method of calculation, nor the factual data used in arriving at the cost. In the circumstances, the Authority is constrained to rely on the available information submitted by the petitioner and determine the constructed cost accordingly.

16. Normal value has been determined on the basis of constructed cost of production as given by the petitioner. Export price has been determined from DGCIS data after taking 1% as ocean freight and 0.29% as insurance charges. As volume in DGCIS data is given in terms of kg, the same has been converted into numbers at a conversion factor of 0.6 gms per needle as claimed by the petitioner.

17. The rules relating to comparison provides as follows:

" 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 as nearly as possible at the same time. Due allowance shall be made in each case, on its merits, for differences which affect price comparability, including differences in conditions and terms of sale, taxation, levels of trade, quantities, physical characteristics, and any other differences which are demonstrated to affect price comparability."

18. For the purpose of fair comparison between the normal value and the export price, the Authority took into account the information furnished by the petitioner, exporters and other published information. The normal value and export price determined, as detailed above, are at ex-works level and therefore the average normal value of each system of needle has been compared with average export price at ex-works level. In the case of K.O. Needles Korea, average export price is categorised under different price groups.

19. The dumping margin comes as under:

Japan Organ Needle Co. Per 000 needles

20. 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.

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 shall cumulatively assess the effect of such imports, only when it determines that:

(a) the margin of dumping established in relation to the imports from each country is more than two per cent 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 countries is less than three percent, the imports cumulatively account for more than seven percent of the imports of the article, and

(b) cumulative assessment of the effect of imports is appropriate in the light of the conditions of competition between the imported articles and the domestic articles.

21. The Authority notes that the margin of dumping and quantum of imports from each of the subject countries Japan, Korea RP. China are more than the limits prescribed above except in case of Czech Republic. Cumulative assessment of the effects of imports is appropriate since the exports from the subject countries were directly competing with the goods offered by the domestic industry in the Indian market.

22. For the examination of the impact of the imports on the domestic industry in India, the Authority considered both (a) volume of dumped imports and the effect of the dumped imports on prices in the domestic market for the Like article and (b) the consequent impact of these imports on domestic producers of such products. The Authority has, for the purpose of assessing the impact of the dumped imports on domestic producers, considered such indices having a bearing on the state of the industry as production, net sales realisation, the magnitude and margin of dumping, etc. in accordance with Annexure II (iv) of the rules supra.

23. Volume of Dumped Imports:

The total imports of needles were 1,58,343 kg, 1,54,841 kg and 1,54,156 kg during 1994-95, 95-96 and 96-97 respectively. The decrease in imports was 2.21% in 1995-96 over 94-95. Imports decreased by 0.44% in 96-97 over 95-96. The decrease was 2.64% in 96-97 over 94-95, Thus the quantum of total imports have gone down during the period of investigation.

It is observed that the quantum of imports from other countries decreased in 95-96 over 94-95by 9.04% and in 96-97 it decreased by 11.54% over 95-96. The quantum of imports from other countries was 60,752 kg, 55,260 kg and 48,882 kg in 94-95, 95-96 and 96-97, respectively.

The total imports of needles from Japan, Korea China and Czech Republic were 97,591 kg, 99,581 kg and 1,05,274 kg in 1994-95, 1995-96 and 1996-97, respectively. Thus the increase was 2.04% in 1995-96 over 94-95. Imports increased by 5,72% in 96-97 over 1995-96. The increase was 7.87% in 1996-97 over 94-95, Thus the quantum of imports from the subject countries has gone up during the period of investigation,

24. Market Share

The share of the subject countries in total imports were 61.63% in 94-95, 64.31% in 95-96 and 68.28% in 96-97. The share of the subject countries individually in total imports were as follows:-

 Thus it is observed that the market share of the subject countries in total imports of needles increased by 3.97% in 1996-97 over that of 95-96 and by 6.65% over that of 94-95. Individual market shares of the subject countries also recorded increase in the period of investigation. As per Rules, investigations against any country are required to be terminated if the volume of the dumped imports from the particular source are found to be below 3% of the total imports provided the cumulative imports from all those countries who individually account for less than 3%, are more than 7%.

In view of the above provisions, the Authority decided to terminate the present investigations with reference to Czech Republic as the volume of imports from that source during the period of investigation was de-minimus.

27. Parameters affecting the domestic industry:

i) Production and Capacity Utilisation:

Against the installed capacity o f 4 5 million /anum , Production of the Domestic industry was only 10.45 lacs needles during Jan -March 97 resulting in low capacity utilisation of 9.29% during the last quarter of 96-97.

ii) Stocks: Stocks of needles with the domestic industry were:

iii) Sales realisation of the domestic industry during the period Jan – March 97 was Rs****/needle.

28. Price undercutting and price depression

The petitioner has stated that imports from the subject countries have been at prices below their own cost of production. Cheaper imports have prevented the domestic industry from increasing their selling prices. The petitioner has stated that having commenced commercial production they are incurring financial losses as the domestic industry is unable to realise reasonable value of Rs ****per needle for their needles which is necessary for the Indian industry to break even as envisaged by 1CICI. It is observed that the unit sales realisation was Rs **** per needle which is below the fair prices of the petitioner for most of the systems investigated. At this price level, the petitioner has suffered a loss of Rs.**** lacs in the period of investigation.

The petitioners production has not been at optimum level and capacity utilisation was low. The Annual Report for 1996-97 states that the plant and machinery imported and those purchased were installed during early 1996. Almost the entire year (POI) was spent in overcoming teething problems. It is claimed that determined efforts were made to manufacture needles of international quality and production quality stabilised for commercial production to begin only on 1^st January’97.

29. Conclusion on injury

The Authority notes from the foregoing that:

1. The imports from the subject countries and their market shares have increased in absolute and relative terms. Imports from China in 96-97 declined by 1321 kg in absolute terms but increased by 1.2% in relative terms. In respect of volume, China commands the largest market share of imports.

2. The domestic industry has been unable to establish itself in the market in view of the huge volumes of imports of the product under consideration from the subject countries.

3. Imports have depressed the prices of the domestic product resulting in poor sales, losses.

4. There were substantial stocks of the subject goods with the domestic industry after the commencement of commercial production.

The Authority therefore concludes that the domestic industry has suffered material injury.

30. In establishing that the material injury to the domestic industry has been caused by the imports from the subject countries, the Authority holds that the imports of the product from the subject countries increased significantly in absolute terms and the share of the subject countries in total imports also increased significantly. This resulted in decline in the market share of the petitioner leading to steep increase in inventory level.

31. 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.

It is recognised 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 in 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 domestic industry. 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 industrial sewing machine needles. Imposition of anti-dumping measures would nor restrict imports from the subject countries in any way, and therefore, would not affect the availability of the product to the consumers.

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

32. The landed value has been determined on the basis of average export price of needles from Japan, Korea RP and China after adding the prevailing level of customs duties and one percent landing and two percent handling charges.

33. After considering the foregoing it is seen that:

a. Needles originating in or exported from Japan, Korea RP, China have been exported to India below normal value, resulting in dumping;

b. The Indian industry has suffered material injury;

c. Injury has been caused cumulatively by imports from Japan, Korea RP, China;

d. The volume of imports from the Czech Republic during the period of investigation is de-minimus and hence investigations against that country terminated;

34. It is considered necessary to impose anti-dumping duty, provisionally, pending final determination, on imports of needles pertaining to the eight systems being the subject of this investigation, originating in or exported from the subject countries, pending further investigation.

35. It was considered whether a duty lower than the dumping margin would be sufficient to remove the injury. Landed prices of the imports, for the purpose, was compared with the fair selling price of the domestic industry, determined for the period of investigations. Wherever the difference was less than the dumping margin, a duty lower that the dumping margin is recommended. Accordingly, it is proposed that provisional 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 industrial sewing machine needles originating in or exported from Japan, Korea RP, China falling under Chapter 84 of the Customs Tariff pending final determination.

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

37. Exporters, importers, petitioner and other interested parties known to be concerned are being addressed separately by the Authority, who may make known their views within forty days from the date of the despatch of the letter. Any other interested party may also make known its views within forty days from the date of publication of these findings.