MINISTRY OF COMMERCE
NOTIFICATION
Preliminary Findings
Subject:
Anti-dumping investigation
concerning import of Isobutyl Benzene originating from Peoples Republic of
China-preliminary findings.
No,
14/50/93/TPD - B. The
Government of
(i) Whereas the Designated Authority under the above rules, received in August, 1993 a written complaint from the Indian IBB Manufacturer’s Association, Bombay, who account for the total indigenous production of Isobutyl Benzene in India, alleging dumping of Isobutyl Benzene (hereinafter referred to as IBB) originating in the People’s Republic of China;
(ii) Whereas the
Designated Authority announced by a Public Notice dated 7.1.1994 published in
the Gazette of India, the initiation of an anti dumping proceeding concerning
imports into India of IBB failing under heading 2933.40 of Schedule I of India,
Customs Tariff Act, 1975 and No. 2933.04.08 under India Trade classification
(Based on Harmonized Commodity Description and Coding System) originating from
the Peoples’ Republic of China.
(iii) Whereas the
Designated Authority officially advised the concerned exporters and
importer as known to the Designated
Authority, the representatives of the exporting country and the complainant and
gave them an opportunity to make their views known in writing and to request a
hearing.
(iv) Whereas the Designated Authority addressed the questionnaire to
elicit relevant information from the following exporters:
1.
M/s. Shenyong Pesticide
2.
M/s.
3.
M/s. Sinchent
4.
M/s. Tiaijin Chemicals,
5.
M/s. Fushn No. 4 Chemical Plant,
6.
M/s. Honshon Chemical Plant,
(v) Whereas the
Embassy of Peoples Republic of
(vi) Whereas the questionnaire was also sent to the known importers and
users of IBB and to the Bulk Drugs Manufacturers’ Association,
2. The
petitioner highlighted the following points:
(a)
That no
representative of the exporter exporting country i.e. People Republic of
(b) That the export price of IBB originating from the Peoples’ Republic of China was continuously falling and was also below their normal value;
(c)
That
imports from china has caused materials injury to the Indian producers in that
the Indian producers had been compelled to reduce domestic price below their
fair selling price and hence were suffering substantial losses;
(d)
That the
provisions of Section 9B (1) of the Customs Tariff Act. (proving
of injury) were not applicable to
3. The views expressed by IBB importers and users and their association in the public hearing and in their written submissions were briefly as follows:
(a) That the
Government of India had notified
(b) That IBB was
imported for manufacture and export of
(c) That the
Indian IBB manufacturers were not operating at optimum levels resulting in
extra overheads and high cost.
(d) That there was inadequate material for determining normal value.
(e) That the international prices of IBB were ruling at a similar level.
Finding of the Designated Authority
4. The Designated Authority (D.A.), having considered the arguments and counterarguments highlighted above as well as having perused the relevant records, found that:
(i)
(ii) The Indian
IBB producers have had to sell below their Fair Selling Price has not been
disputed.
(iii) That the
cost of Indian IBB may not be optimum because of low capacity utilisation may be true in 1992-93. However, in 1993-94 the
capacity utilisation was 92 per cent. The Designated
Authority has given due weightage to this aspect
while determining material injury to the domestic injury.
(iv) The argument of the importers that there was inadequate
material for determining normal value was not substantiated.
5. The D.A.
sought and verified information deemed necessary for the purpose of the
preliminary determination. To this end an investigation was carried out at the
premises of the following domestic producers.
(i) M.s. Vinati Organies Ltd.
(ii) M/s. Herdillia Chemicals Ltd.
6. The
investigation covered the period from
7. In the
absence of any response from the exporters, the Designated Authority has made
the preliminary finding on the basis of the information available to it as per
Rule 14 supra.
E. PRODUCT UNDER CONSIDERATION, LIKE PRODUCT AND INDIAN INDUSTRY:
(a) Product under consideration and like product.
8. The product
covered by the investigation is Isobutyl Benzene falling under heading 2933.40
of schedule I of Indian Customs Tariff Act. 1975 and No.
2933.40.08 under Indian Trade Classification (Based on Harmonised
Commodity Description and coding system).
9. The product
is manufactured out of toluene propylene, methanol, potassium carbonate, sodium
metal etc. It is an organic, aromatic, neutral, colourless
liquid having a specific gravity of around 0.852. It is also known as
2-methyl-L phenyl propane. It is used in the manufacture of ibuprofenean
analgesic, anti-inflammatory drug. By and large IBB exported from
10. The petition has been filed on behalf of
M/s. Vinati Organies Ltd.,
B-12 and B-13/1, MLDC Industrial and M/s. Herdillia
Chemicals Ltd.,
F. Normal
Value:
11. The petitioners did not furnish
information on domestic prices of IBB in
12. Since none of
the exporters responded to the Authority’s request to make available the
relevant information, the export price was determined on the basis of the price
actually paid for the product sold as reported by the petitioners which were
found to be reliable. The export price was also correlated with the data
submitted by the three importers who responded to the questionnaire. The cif export price, was adjusted for
insurance and freight for working out the f.o.b. price. The FOB price was
treated as ex-factory price in the absence of data on the cost of inland
transportation.
13. For the
purpose of a fair comparison between the normal value and export price and in
accordance with section 9(A) (2) of the Customs Tariff Act and Rule 14 supra,
the Authority took into account the best available information with it in the
absence of any response from the exporters in People’s Republic of China who
were given ample opportunity to make available the relevant information from
their end. The average export price obtained during the period of investigation
was compared with
14. The
15. Under Rule 18
supra, when a finding of injury is arrived at, “such finding shall involve an
examination of facts which the Designated Authority considers relevant under
the circumstances including the volume of dumped imports and their effect on
prices in the domestic market for like products and the consequent impact of
such imports on domestic producers of such products”. 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 an identical product 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.
16. For the
examination of the impact on the industry in
17(a) Petitioners
have alleged that import of IBB originating from the People’s Republic of
(b) During April
to December, 1993 the imports from People’s Republic of
18. The Indian industry for IBB started production only in July 1992. The total production of Isobutyl Benzene was 860 MT in 1992-93 (9 months) and 1512 MT in 1993-94 (April to December 1993) which shows a rising trend. The capacity utilisation has increased from 54 per cent to 92 per cent.
19. The total sales of IBB show a rising trend from 717 MT in 1992-93 (9 months) to 1607 MT during April-December, 1993.
20. The Indian industry was able to realize Rs. 121.03 per kg. on an average
on its sales in 1992-93. In 1993-94, the
average price fell to Rs. 85.96 per kg a fall of 29
per cent which is directly attributable to the fall in prices of IBB imported
from
21. The closing
stock of IBB was 140.3 MT on
22 (a) Both the companies constituting the domestic industry incurred losses in 1992-93 and in 1993-94. The loss aggravated steeply in 1993-94 due to the lower average prices. The total losses increased from Rs. 249.71 lakhs in 1992-93 to Rs. 284.39 lakhs in 1993-94 despite increased production and sales.
(b) The domestic
industry has, thus to reduce its selling prices substantially to by and large, match
it with the imported price of IBB to remain in the market. This has resulted in
huge losses to the newly created domestic industry. The following table
establishes this trend.
|
Period
|
Average
landed price Rs. Per Kg. |
Average
domestic price Rs. Per Kg. |
|
May 93 |
104.60 |
94.41 |
|
June
93 |
93.62 |
84.40 |
|
Oct.
93 |
89.80 |
81.20 |
|
Dec.
93 |
85.41 |
78.14 |
It is
evident from the above that the average domestic price of Rs.
121 in 1992-93 had to be brought down in 1993-94 in line with the falling
prices of IBB from republic of China. Ever time the price was reduced by the
Indian industry, the prices were further reduced by
the exporter from
23. The Designated Authority found that the
falling import prices prevented the domestic prices from increasing to meet
even the cost of production. The price suppression was around Rs. 21.093 PMT based on the Fair selling price of IBB
produced by the most efficient unit among the domestic producers.
R. Injury
24. Even though the quantum of imports from
25. In
determining whether material injury to Indian industry was caused by the dumped
imports, the Authority took into account the following facts:
(i) Price depression of imports which occurred over the last few
years became more severe since the two Indian producers started manufacturing
Isobutyl Benzene; and
(ii) Price
undercutting by these exporters, below normal value forced the domestic
industry to reduce its selling price to a level below its cost of production to
market its product and coincided with the coming into existence of the domestic
industry.
26 (a) The purpose of
anti dumping duties is in general to eliminate dumping which is causing injury
to the Indian industry and to re-establish the situation of open and fair
competition on the Indian market which is in the general interest of the country.
(b) The
Authority recognized that the imposition of anti dumping duties might affect
the price levels of the products manufactured out of IBB and exported and consequently might have some
influence on relative competitiveness o their products in the export market. However, it is not envisaged that
fair competition, on the Indian market will be reduced by the anti dumping
measures particularly if the levy of the anti dumping duty is limited to the
amount necessary to redress the injury. On the contrary, the removal of the
unfair advantage gained by dumping practices is designed to prevent the decline
of the Indian industry and thus to help maintain the availability of the widest
choice to the consumers.
(c) In view of
the fact that when capacity has been created for the first time to manufacture
IBB indigenously, the Indian industry has been forced into the unhealthy
situation caused by the dumped imports, the Authority considers that in the
absence of intervention, the disappearance of Indian Industry is quite
possible. This could lead to reduction of the choice of suppliers which is not
in the interest of users.
27 (a) Arguments have
been raised that the imposition of anti dumping measures would be contrary to
the Indian public interest because they would result in less competition,
higher prices for consumers of ibuprofen and may harm
(b) Although it
is clear that price advantages based on unfair practices are unjustifiable and
may in the longer term be harmful even to the interest of consumers when they
have the effect on weakening competitors and promoting their disappearance.
There has been earlier experience in many commodities that once the domestic
industry disappeared prices were artificially increased
for the consumers. In any case for the consumers of ibuprofen the imposition of
protective or punitive measures will not result in substantial higher prices
since Isobutyl Benzene is only one of the raw materials which had to be
processed before reaching the consumer.
(c) As far as
the processing industry is concerned, the extent of any price rise is expected
to be limited in view of the fact that a competition between the Indian
producers and exporters will not be reduced.
28(a) The Authority
accordingly has come to the conclusion that:
(i)
Exporters
from Peoples’ Republic of China have sold IBB in
(ii)
the
Indian industry has suffered material injury; and
(iii)
that the dumped imports
were the cause of the material injury suffered by Indian Industry.
(b) In
conclusion, the Authority considered that the imposition of anti-dumping
measures in the present case will re-establish fair competition by eliminating
the injurious effects of dumping practices.
(c) The
Authority considers it necessary to impose a provisional anti dumping duty in
order to remove the material injury to the domestic industry. The export price,
normal value and the margin of dumping in this case were determined by the
Designated Authority as:
|
|
$ MT |
|
|
Normal
Value |
2603 |
81995 |
|
Export
Price |
1834 |
57771 |
|
Margin
of Dumping |
769 |
24224 |
(d) The
Designated Authority considered whether a duty lower than the dumping margin
would be enough to remove the injury. For this purpose, the average landed
price of the Chinese imports was compared with the fair selling price of IBB
produced during the period of investigation. This difference was less than the
dumping margin and accordingly the Designated Authority considered that an anti
dumping duty of Rs. 13,089 per MT be imposed on
imports of IBB originating in the Peoples Republic of china falling under Code
No. 2933.40.08 of the
Custom Tariff.
(e) This duty
would also be applicable to new or any other exporter from
(f) The
parties/exporters concerned may make known their views and apply to be heard
orally by the Authority within one month of the publication of this findings.
J.K. BAGCHI, Designated Authority
of anti
Dumping &
Additional Secy.