MINISTRY
OF COMMERCE .
(Directorate
General of Anti Dumping & Allied Duties)
NOTIFICATION
Subject : Anti dumping investigation concerning imports of Lovastatin-Preliminary
Findings.
11/1/97/ADD.-Having regard to the Customs Tariff Act 1975 as amended in 1995 and
the Customs Tariff (Identification, Assessment and Collections of Anti Dumping Duty on
Dumped Articles and for Determination of Injury) Rules, 1995, thereof
A. PROCEDURE
The procedure described below has been followed with regard to the investigations
i. The Designated Authority (hereinafter referred to as Authority), under the Rules, received written application from M/s. Artemis Pharmaceuticals Limited, on behalf of the domestic industry, alleging dumping of Lovastatin, originating in or exported from the People’s Republic of China (referred to as China PR hereinafter);
ii. The
Authority, on the basis of sufficient evidence furnished by the petitioner, decided to
initiate investigations against imports of Lovastatin from China PR. The Authority
notified the Embassy of China PR about the receipt of dumping allegation before proceeding
to initiate the investigations in accordance with sub-rules 5 (5) of the Rules;
iii. The Authority issued a public notice dated 22nd Dec., 1997 published in the Gazette of India, Extraordinary, initiating anti-dumping investigations concerning imports of Lovastatin, classified under custom sub-headings 294 1.91.1 of Schedule I of the Customs Tariff Act, 1975, originating, in or exported from China PR;
iv. The Authority forwarded a copy of the public notice to the known exporter (whose details were made available by the petitioner) and industry associations and gave them an opportunity to make their views known in writing in accordance with the rule 6(2);
v.
The Authority forwarded a copy of the public notice to the known importers of
Lovastatin in
vi. Request
was made to the Central Board of Excise and Customs (CBEC) to arrange details of imports
of Lovastatin for the past three years, including the period of investigations.
vii. The Authority
provided x copy of the petition to the known exporter and the Embassy of China PR in
accordance with rules 6(3) supra;
viii. The Authority sent
questionnaire, to elicit relevant information, to M/s. Wenzhou Kanlong Pharmacy Company
Limited„,
ix. The
Embassy of the subject country in
x.
A questionnaire was sent to the following known importers of Lovastatin in
a) M/s.
Sun Pharmaceuticals Industries Limited, Mumbai
b) M/s.
Torrent Pharmaceuticals Limited, Ahmedabad
c) M/s.
Glenmark Pharmaceuticals Limited, Mumbai
d) M/s.
Micro Labs. Limited,
e) M/s.
Cadila Healthcare Pvt. Ltd., Ahmedabad
f) M/s.
Searle (
g) M/s.
Wockhardt Limited, Mumbai
h) M/s.
Intas Pharmaceuticals Limited, Ahmedabad
i) M/s.
Blue Cross Labs. Limited, Mumbai
j) M/s.
Medley Labs. Pvt. Ltd., Mumbai
No information was, however, filed by any importer.
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. 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;
xiv. Investigation was
carried out for the period from starting 1s’ July 1996 to
B. PETITIONER’S
VIEWS
2. The
petitioner has raised the following issues in its petition:
i) On
Dumping:
a) There
are only three producers of Lovastatin in the world.
b) The dumping is originating from the producer of Lovastatin in China PR. Chinese producer is offering the material at throw away prices in order to capture the Indian Market.
c)
Chinese producer is exporting Lovastatin to various European countries at more then
US $ 6000 per kg., while the same Lovastatin is being exported to
d) Chinese producer is continuously reducing price in Indian -market while maintaining the price in the European Market. The prices offered by the exporters from China PR are unrelated to its cost of production. The prices in the Indian market have been continuously reduced as is evident from the following:
(US $ per MT) r
26.11.96
4300
CIF by air, L/C at site
27.11.96.1
3900
CIF by air, L/C at site
30.12.96
4100
CIF by air, L/C at site
04.03.97
3000
CIF by air, L/C 90 days
28 05.97
3000
CIF by air, L/C at site
24.06.97
2490
CIF by air, 90 days D/A
13.08.97
2400
CIF by air, L/C 90 days
The above establish that Lovastatin is being dumped in
ii)
On
injury:
The petitioner has suffered injury as seen from the following:
a) The imports of Lovastatin from China PR increased from nil up to 1995-96 to 1400 Kg. in 1996-97 and 525 Kg.(April - July, 1996) in 1997-98.
b) Though the
consumption’ of Lovastatin in
c) Artemis
has been forced to reduce its prices in the Indian market in view of reduction in the
prices by the Chinese exporter.
d) The
Chinese producer is trying to keep Artemis out of business to create his monopoly.
e) Sales of
the petitioner have drastically declined.
f) The
selling prices of the petitioner are based on cost of production, in spite of which the
petitioner is not able to compete with the prices offered by the exporter from China PR.
Selling prices of the petitioner include on element of sales tax on raw materials, other
inputs and finished goods, whereas the imports from China PR do not have to bear this
cost.
g) The
petitioner has not been able to earn any return on capital.
C. VIEWS OF
EXPORTERS IMPORTERS AND OTHER INTERESTED PARTIES
3. None of
the interested parties from China PR ‘,has responded to the notice of initiation nor
any other interested party has offered any comment,
D. EXAMINATION
OF THE ISSUES RAISED
4. The submissions made by the petitioner have been examined, considered and have been dealt at appropriate places hereinafter.
E. PRODUCT
UNDER CONSIDERATION AND SCOPE OF INVESTIGATIONS
5. The
product considered in the present investigations is Lovastatin originating or exported
from
6. Lovastatin
is produced by fermentation process. Major inputs used for its production are Lactose,
Dextrose, Ethyl Acetate and Yeast Extract Liquid.
7. Lovastatin
is classified under custom sub-heading 2941.90 of Schedule 1 of the Customs Tariff Act,
1975 and under 2941.90.00 of International Trade Classification. The manufacturing
process, function & uses and tariff classification indicated herein are, however,
indicative only and are in no way binding on the scope of the present investigations.
F. LIKE ARTICLES
8. The
petitioner has claimed that the Lovastatin produced by it has characteristics closely
resembling to the Lovastatin imported from China PR and the two are consumed
interchangeably. None of the interested parties have disputed the claim of the petitioner.
In order to analyze that the Lovastatin produced by-the domestic industry is a like
article to the Lovastatin exported from China PR, characteristics such as physical
characteristics (size, chemical composition, raw material), manufacturing process and
technology, functions and uses, product specifications, pricing, distribution and
marketing and tariff classification of the goods have been considered. Lovastatin produced
by the domestic industry has characteristics closely resembling to the Lovastatin
originating in or exported from
G. DOMESTIC
INDUSTRY
9.
The petition has been filed by M/S. Artemis Pharmaceuticals Limited, Jeedimala,
Hyderabad-500082. The petitioner is the only producer of Lovastatin in
H. DUMPING
Normal
value:
10. Under Section
9A(1)(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 rules made under sub-section (6); or
(b)
The cost of
production of the said 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):
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.
11. 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
12. None of the importers
of the subject goods in
13. The normal value was
determined at the time of initiation on the basis of exports from China PR to third
countries. The Authority has considered the same basis for determination of normal value.
14. The petitioner has
furnished evidence that Lovastatin has been exported from China PR at the rates given
below:
(US $ pmt)
***
***
***
***
***
***
15. The petitioner has not
claimed any price adjustment in the above price. None of the interested parties have
furnished any information which can be relied upon for determining price on ex-works
basis. The Authority has adopted normal value based on the average of the above mentioned
export price from China PR to other countries in the absence of any information from the
exporters from
16. The normal value thus
works out to US $ ***
Export price:
17. None of the exporters
from China PR has responded to the notice of initiation and furnished information
requested by the Authority: The importers and other interested parties have also not
furnished relevant information. The export price has, therefore, been worked out on the
basis of information furnished by the petitioner.
18. The petitioner had
furnished export price on the basis of quotations of Chinese exporters to-”
importers: Since the petitioner has furnished a number of quotations, the Authority has
worked out export price on the basis, of average of the export price mentioned in all the
quotations, copies of which have been furnished by the petitioner.
19. None of the interested
parties, including petitioner, have claimed any price adjustment from the export price.
The Authority has, therefore, not made any price adjustment, in the weighted average
export price.
20. 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
at as nearly possible the same time. Due allowance shall be made in each case, on its
merits, for differences which affect price comparability, including differences in
condition and terms of sale, taxation, levels of trade; .quantities, physical
characteristics, and any other differences which are demonstrated to affect price
comparability.”
21. For, the purpose of
fair comparison between. the normal value and the export price, the information furnished
by the petitioner has been .relied upon. The normal value and export price determined, as
detailed above, has been considered as at ex-works levels.
22. The dumping margin
comes to 57.48%.
INJURY
23. Under Rule 11 supra,
Annexure-I1, 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.
24. For the examination of
the impact of the imports on the domestic industry in India, the Authority has considered
such 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. in accordance with Annexure II (iv) of the rules supra.
25. Various parameters
indicating injury to the domestic industry are as follows:
(a) Export price
from
26. CIF export price of Lovastatin from China PR declined steeply as shown in the graph below:
A. (please see the
original notification)
(b)
Economic parameters affecting domestic industry.
27. The petitioner
commenced commercial production from July, 1996. It produced 122 kgs in the nine months
ending 1996-97, but could sell only 120 kgs resulting
in 2 kgs stocks (valued above Rs. 3 lacs). The petitioner produced 47 kgs in the first
three months of 1997-98, but could sell 46.5 kgs, resulting in a stock of 2.5 kgs. Though
the petitioner holds substantially higher capacity, the additional equipment held was not
made operational. The petitioner reduced selling prices, steeply from an average of Rs.
***** per kg (1996-97) to Rs. ***** per kg (1997-98) in the investigation period. Though
the cost of production of the petitioner also declined in ?997-98 as compared to 1996-97
in the investigation period, the reduction in the selling price was much more than the
reduction in the cost of production resulting in much higher losses in the 1997 98 as
compared to 1996--97 in the investigation period.
28. It is thus seen that
the petitioner was not able to utilise the capacities acquired by it and was forced to
sell .below its cost of production resulting in financial losses. The domestic industry
has thus suffered material injury from dumped imports.
J. CAUSAL
LINK:
29. In establishing that
the material injury to the domestic industry has been caused by the imports from the
subject countries, the Authority holds that seep decline in the export price from China PR
forced the domestic industry to reduce its selling prices, resulting in increase in
financial losses to it. Further, the domestic industry was not able to operationalise its
full capacities affecting its capacity utilisation. The domestic industry thus suffered
material injury from dumped imports.
K. INDIAN
INDUSTRY’S INTEREST & OTHER ISSUES
30. 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.
31. 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 hate 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 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 subject goods. 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.
32. To ascertain the
extent of anti-dumping duty necessary to remove the injury to the domestic industry, the
Authority has -relied an reasonable selling pride of Lovastatin in India, for the domestic
industry, by considering the optimum cost of production at optimum level of capacity
uttliaa0on 4or the domestic industry.
L. LANDED
VALUE
33. The landed value has
been determined on the- basis of export price of Lovastatin 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.
M. CONCLUSIONS:
34. It is seen, after considering the foregoing, that:
a. Lovastatin
originating in or exported from China PR has been exported to
b. The Indian
industry has suffered material injury;
c. The injury
has been caused cumulatively by the imports from the subject country.
35. It is considered
necessary to impose anti dumping duty, provisionally, pending final determination, on all
imports of Lovastatin originating in or exported from the subject country, pending
investigations.
36. It was considered
whether a duty lower than the dumping margin would be sufficient to remove the injury.
Landed price of the imports, for the purpose, was compared with the reasonable selling
price of the domestic industry, determined for the period of investigations. Wher6ver the
difference was less than the dumping margin, a duty lower that the dumping margin is
recommended.
37. The anti-dumping duty
shall be the difference between Rs. 191869 per kg. and the landed price of imports per kg,
subject to a maximum of Rs. 73944 per kg.
38. 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 duties levied under Section 3, 3A
arid 9 of the Customs Tariff Act, 1975.
N. FURTHER
PROCEDURE:
39. The following
procedure would be followed subsequent to notifying the preliminary findings:
a. The
Authority invites comments on these findings from all interested parties
and the same would be considered in the final findings;
b. The
Authority would conduct verifications to the extent deemed necessary.
No fresh evidence wilt be accepted at this stage;
c. The Authority would provide opportunity to all interested parties for oral submissions, for which the date and time shall be communicated to all known interested parties separately;
d. The
Authority would disclose essential facts before announcing final findings.
RATHI
VINAY JHA, Designated Authority