(To be published in Section 1: Part I of Gazette of India Extraordinary)

MINISTRY OF COMMERCE & INDUSTRY
(Department of Commerce)
Directorate General of Anti Dumping & Allied Duties

Notification

No.11/1/2001-DGAD

New Delhi, the 9th April, 2001

PRELIMINARY FINDINGS

Subject: Anti-dumping investigation concerning imports of Phosphoric Acid (Technical grade) originating in or exported from the China- preliminary findings

No. 11/1/2001-DGAD - The Government of India having regard to the Customs Tariff Act, 1975 as amended in 1995 and the Customs Tariff (Identification, Assessment and Collection of Anti Dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995, thereof;

A. PROCEDURE

2. The procedure described below has been followed:-

  1. The Designated Authority (hereinafter referred to as Authority), under the above Rules, received a written petition from M/s. Gujarat Alkalies & Chemicals Ltd., and M/s. Bilt Chemicals Limited, on behalf of the domestic industry, alleging dumping of Phosphoric Acid (Technical grade) (hereinafter referred to as subject goods) originating in and exported from China (hereinafter referred to as subject country) ;

  2. The Authority notified the Embassy of China in India about the receipt of dumping application made by the petitioner before proceeding to initiate the investigation in accordance with sub-rule (5) of Rule 5 supra;

  3. The Authority issued a Public Notice dated 7th February, 2001 published in the Gazette of India, Extraordinary, initiating anti dumping proceedings concerning imports of Phosphoric Acid (Technical grade) falling under Chapter 28 of Schedule I of the Customs Tariff Act, relating to ‘inorganic chemicals’. Custom sub-heading 2809.20 relates to Phosphoric Acid but includes all grades of Phosphoric Acid;

  4. The Authority forwarded copy of the said public notice to the known exporters, importers, industry associations and to the complainants and also M/s. Star Chemicals (Bombay) Ltd., Mumbai, a domestic producer of subject goods and gave them an opportunity to make their views known in writing.

  5. According to sub-rule (3) of Rule 6 supra, the Authority provided a copy of the petition to all the known exporters and Embassy of subject country in India.

  6. The Authority sent questionnaires, to elicit relevant information, to the following exporters from China:

    1. M/s. China National Chemical Construction Corporation, Beijing

    2. M/s. Gunga Dong Chemicals and Import Exports Corporation, Guangzhou

  7. The Embassy of China in New Delhi were also informed about the initiation of investigation and requested to advise the exporters/producers from their countries to respond to the questionnaire within the prescribed time;

  8. The questionnaire was sent to the following users/importers of Phosphoric Acid (Technical grade):

1. M/s. Chemetall-Rai India Ltd., Mumbai

2. M/s. Chembond Chemicals Ltd., Navi Mumbai

3. M/s. Colgate Palmolive (I) Ltd., Mumbai

4. M/s. Kun Chem Pretreatments Pvt Ltd., Thane

5. M/s. Peddington Chemical Industries (India), Mumbai

6. M/s. Protochem Industries, Mumbai

7. M/s. Coro Chem, Mumbai

8. M/s. STS Chemicals Ltd., Pune

9. Jaydip, Mumbai

10. M/s. Bhavita Chemicals Pvt Ltd., Mumbai

11. CJ Shah, Mumbai

 

  1. Among the users/importers, response to the questionnaire was filed only by M/s. Bhavita Chemicals Pvt Ltd. None of the exporters responded to the questionnaire.

  2. Additional information regarding injury was sought from the petitioners, which was also furnished;

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

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

  5. The investigation covered the period from 1st April 2000 to 31st December 2000 (nine months);

  6. Copies of initiation notice was also sent to FICCI, CII,ASSOCHAM etc., for wider circulation.

B. PETITIONER’S VIEWS

3. The petitioners, M/s. Gujarat Alkalies & Chemicals Ltd., and M/s. Bilt Chemicals Limited have made the following major points in their submissions:-

(i) They account for a major portion of the production of subject goods which is primarily used for manufacture of sodium phosphate, calcium phosphate, organic phosphate, ammonium phosphate, etc. Though Phosphoric Acid is produced in various forms, however, it is only the technical grade which is the subject matter of this petition. Phosphoric Acid (technical grade) has a purity level of minimum 85% whereas other grades have lower purity levels.

(ii) The product falls under Chapter 28 relating to ‘inorganic chemicals’ on the customs classification which includes all grades of Phosphoric Acid. As stated above, it is only the technical grade which is the subject matter of this investigation and not the other grades. Because of only ‘technical grade’ being subject matter of investigation, Director General Commercial Intelligence and Statistics data will not be relevant in this case and we have to rely on data available from secondary sources. The custom classification is 2809.2001. The petitioners have compiled data from secondary sources and prepared import details on the basis of Customs Daily List issued by various Custom Houses at different ports.

(iii) M/s. Gujarat Alkalies and Chemicals, Baroda, which is public sector company and M/s. Bilt Chemicals Ltd., Secundrabad, account for major portion of the domestic production.

(iv) As the investigation is proposed to be initiated against import from China, the petitioners have stated that China being a non market economy, the provision introduced in the Indian anti dumping laws on the non market economy vide amendment dated 15th July 1999 may be followed and the constructed cost of production in India should be used as the normal value. It has been argued that manufacturers in China produce Phosphoric Acid (technical grade) by reacting rock phosphate with power resulting in yellow/white phosphorous which is further reacted with air resulting in phosphoric oxide which on further reaction with water gives technical grade phosphoric acid (H3PO4) . Using the above mentioned process, given input norms of various raw materials and utilisation and international prices of raw materials, the constructed cost of production in China has been calculated.

C IMPORTERS AND EXPORTERS VIEWS

4. As stated above only one importer M/s. Bhavita Chemicals Private Limited, Mumbai have responded to the questionnaire and expressed the following views in their submissions:-

(i) The petitioners allegation that the subject goods are being dumped at a lower rate than the prevailing international rate is not true and justifiable;

(ii) Apart from the petitioner companies, the subject goods are being manufactured by M/s. Excel Industries Ltd., M/s. Star Chemicals Ltd., M/s. Rosschem Industries Ltd. (EoU);

(iii) While the petitioner companies manufacture subject goods directly from rock phosphate which process is also called as ‘israeil process’ the companies mentioned in (ii) above manufacture phosphoric acid from yellow phosphorous;

(iv) That they are the manufacturers of phospho Gr DI calcium phosphate which is a 100% import substitute product in India which also is their raw material. The main use of DI calcium phosphate (DCP) is in making day light phosphors used in lamps, tube lights which is of very high purity grade; before manufacture of DCP they first manufacture DI ammonium phosphate (DAP) from technical grade phosphoric acid 87% by passing ammonia gas in phosphorous acid to get solution of DAP;

(v) That the petitioners are not supplying the subject goods at competitive rates and that they have jacked up their price by forming a syndicate with the help of their agents and stockists. In support of this statement they have furnished copies of purchase bills. As on date without use of advance licence and DEPB the cost of imported subject goods comes to around Rs.31 per kg, which includes customs duty and other costs;

(vi) Imposition of anti dumping duty will hike the cost of their import substitute material DCP and will be uncompetitive which ultimately will lead their unit to become sick as their entire unit is dependent only on the imported subject goods;

(vii) The subject goods manufactured by the petitioners’ are of poor quality and their manufacturing process does not match international standards;

D. EXAMINATION AND FINDING BY AUTHORITY

5. The submission made by the exporters, importers, domestic industry and other interested parties have been examined and considered while arriving at these findings and wherever appropriate have been dealt hereinafter.

6. The Authority confirms, the absence of any direct response from the exporters from China in the form and manner prescribed and having made the findings with regard to exports from China on the basis of the fact available to it as per rule 6(8) supra.

7. The cases of new exporters or those stated to be willing to give price undertaking shall be considered, on request, by the Authority in accordance with the Rules supra.

E. PRODUCT UNDER CONSIDERATION AND LIKE ARTICLE

8. The product involved is "Phosphoric Acid (Technical grade)" falling under Chapter 28 of Schedule I of Custom Tariff Act relating to ‘inorganic chemicals’. Custom sub-heading 2809.20 relates to Phosphoric Acid but includes all grades of Phosphoric Acid. However, it is only the technical grade of Phosphoric Acid which is the subject matter of the present investigation. The technical grade of Phosphoric Acid has a purity level of 85% or above and is used for the production of sodium phosphate, calcium phosphate, magnesium phosphate, ammonium phosphate, etc. Though Phosphoric Acid is produced in various grades, however, it is only the technical grade which is the subject matter of this petition. Other grades of Phosphoric Acid which have lower purity level are not the subject matter of present investigation. Further, the custom classification is only indicative and not binding on the scope of present investigation.
Since the goods produced by domestic industry are 'like article' to the goods originating in or exported from the subject country, for the purpose of investigation, the goods produced by the petitioners are being treated as 'like articles' of Phosphoric Acid (Technical grade) imported from the subject country within the meaning of the Rules

9. Though the importer has claimed that they cannot use the material produced by GACL. Here may be mentioned that there are other domestic producers of the subject goods also. Further there are other users of the subject goods in the country other than M/s Bhavita Chemicals Pvt. Ltd. who have not responded to the questionnaire. The scope of investigation cannot be decided on the basis of the individual end use or individual end users. The Authority has, therefore decided to continue with the definition of product under consideration and the scope of investigation as specified in the Initiation Notification and discussed above .

F. DOMESTIC INDUSTRY

10. Apart from the petitioner companies M/s. Gujarat Alkalies and Chemicals Ltd., and M/s. BILT Chemicals Ltd., the other producers of subject goods are M/s. Excel Industries Ltd., M/s. Star Chemicals Ltd., and M/s. Rosschem Industries Ltd. M/s Star Chemicals have given the information regarding the capacity and production. It has bee stated by the dometic industry that manufacturing facilities of Excel Industries Ltd. are in the Star Chemicals. It has further been stated that M/s Rosschem Industries Ltd. is an EOU and is closed for past two years and hence do not form the part of the domestic industry. The petitioners account for more than 25 per cent of the total domestic production. As no domestic producer has opposed investigation, the petitioners have the standing to file the petition. None of the respondents have challenged this claim. Therefore, as far as the issue of standing of the petitioners to file the petition is concerned, the Authority has determined that petitioners represent the domestic industry for the purpose of present investigation.

 

G.     DUMPING & EXAMINATION OF CLAIMS MADE ON NORMAL VALUE & EXPORT PRICES

Normal Value

11. Under Section 9A(1)© normal value in relation to an article means:

  1. The comparable price, in the ordinary course of trade, for the like article when meant for consumption in the exporting country or territory as determined in accordance with the rules made under sub-section(6); or

  2. when there are no sales of the like article in the ordinary course of trade in the domestic market of the exporting country or territory, or when because of the particular market situation or low volume of the sales in the domestic market of the exporting country or territory, such sales do not permit a proper comparison, the normal value shall be either –

(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);

 

12. The Authority sent questionnaires to all the known exporters for the purpose of determination of normal value in accordance with Section 9A(1)(c). However, none of the exporters from China responded to the Authority and have not furnished any information. The Authority, therefore, holds that none of the exporters from China have cooperated with the Authority as envisaged under the Rules. The domestic industry has furnished information with regard to the normal value in China based on the constructed cost of production. In view of non-cooperation from the exporters from China, the Authority has determined normal value in China on the basis of the constructed cost of production.

 

Export Price

13. As has been stated above, it is only the technical grade of Phosphoric Acid which is the subject grade for investigation whereas the data compiled by DGCI&S relate to import of all the grades of Phosphoric Acid. In view of above, the data has been compiled from secondary sources based on Customs Daily Lists. Further adjustments has been given on account of freight, marine insurance, commission, port handling etc. To arrive at net export price on the basis of evidence provided by domestic industry.

Dumping Margin

14. The principles governing the determination of normal value, export price and the dumping margin as laid down in the Custom Tariff Act and the Anti Dumping Rules are elaborated in Annexure I to the Rules. The normal value for China based on the constructed cost of production works out to US$ *** per MT. The net export price worked out on the basis of similar parameters and allowing similar adjustments works out to US$ *** per MT. The dumping margin for exports of the subject goods from China comes to 61 % of the export price.

H.    INJURY

15. Rule 11 of Anti Dumping Rules reads as follows:

"Determination of Injury:

(i) In the case of imports from specified countries, the designated authority shall record a further finding that import of such article into India causes or threatens material injury to any established industry or materially retards the establishment of any industry in India;

(ii) The designated authority shall determine the injury to domestic industry, threat of injury to domestic industry, material retardation to establishment of domestic industry and a causal link between dumped imports and injury, taking into account all relevant facts, including the volume of dumped imports, their effect on price in the domestic market for like articles and the consequent effect of such imports on domestic producers of such articles and in accordance with the principles set out in Annexure II to these rules."

16. 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 product in India, or whether the effect of such imports is otherwise to depress prices to a significant degree. For the examination of the impact on the domestic industry in India, the Authority considered such further indices having a bearing on the state of industry as production, sales, stock, profitability, net sales realisation etc. It has been found that on annualized basis there has been a decline in production during the POI of approximately 13% for the petitioner companies. Also the capacity utilisation of petitioner companies has fallen from 85% to approximately 72% which is on account of substantial volume of dumped imports during the period of investigation. The stocks of the subject good have also increased with the petitioner companies. However, the most significant parameter evidencing injury is the low sales realisation on account of price undercutting by imports at dumped prices. The petitioner companies are incurring massive losses to the extent of 25% of the cost of production on every unit of the product sold during the period of investigation.

H.    CAUSAL LINK

17. In determining whether material injury to the domestic industry was caused by the dumped imports, the Authority took into account the following facts:-

(i) Substantial imports of subject goods from China at dumped prices forced the domestic industry to keep its selling prices at un-remunerative level which resulted in a situation of price undercutting in the Indian market.

(ii) The imports from China suppressed the prices of the product in the Indian market to such an extent that the domestic industry was prevented from recovering its full cost of production and earn a reasonable profit from the sale of subject goods in India.

J. INDIAN INDUSTRY'S INTEREST

18. 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.

19. The Authority recognizes that the imposition of anti dumping duties might affect the price levels of the products manufactured using phosphoric acid (technical grade) 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. 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. The Authority notes that the imposition of anti dumping measures would not restrict imports from China in any way, and therefore, would not affect the availability of the product to the consumers. The consumers could still maintain two or even more sources of supply.

K. CONCLUSIONS

20. The Authority has, after considering the foregoing, come to the conclusion that:

(i) Phosphoric Acid (technical grade) has been exported to India from China below its normal value;

(ii)    the Indian industry has suffered injury;

(iii)    the injury has been caused by the dumped imports from China;

21. The Authority considers it necessary to impose an anti dumping duty provisionally, pending final determination, on all imports of Phosphoric Acid (technical grade) from China in order to remove the injury to the domestic industry. The margin of dumping for known exporter determined by the Authority is indicated in the paragraphs above.

22. Accordingly, the Authority recommends that provisional anti dumping duties of US $ 187 per MT be imposed from the date of notification to be issued in this regard by the Central Government on all imports of Phosphoric Acid (technical grade) falling under customs code 2809.20 originating in or exported from China pending final determination.

L. FURTHER PROCEDURE

23. 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)    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 preliminary finding. Any other interested party may also make known its views within forty days from the date of publication of these findings;

(c)    The Authority would provide opportunity to all the interested parties for making oral submissions which have to be rendered thereafter in writing;

(d)    The Authority would conduct further verification to the extent deemed necessary;

(e)    The Authority would disclose essential facts before announcing final findings.

 

L.V. Saptharishi
Designated Authority

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