New Delhi, the 1st February, 2002

Subject:- Anti-dumping investigation concerning imports of Sodium Nitrite from European Union (EU) and Taiwan –Preliminary Findings.
No.54/1/2001-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:

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

1. The Designated Authority (hereinafter referred to as Authority), under the Rules, received written application from M/s Deepak Nitrite Ltd., Nandesari, Baroda; on behalf of the domestic industry, alleging dumping of Sodium Nitrite originating in or exported from European Union (EU) and Taiwan ;
2. The Authority, on the basis of sufficient evidence submitted by the Petitioner, decided to initiate investigations against imports of Sodium Nitrite from European Union (EU) and Taiwan. The Authority notified the Delegation of European Union in New Delhi, India and Taiwan Cultural Center, in New Delhi about the receipt of dumping allegation before proceeding to initiate the investigations in accordance with sub-rule 5(5) of the Rules;
3. The Authority issued a public notice dated 2nd November, 2001 published in the Gazette of India, Extraordinary, initiating anti-dumping investigations concerning imports of subject goods, classified under heading 2834.10 of Schedule I of the Customs Tariff Act, 1975 and No.2834.1001 under Indian Trade Classification (Based on Harmonised Commodity Description and Coding System) originating from EU & Taiwan. The classification is, however indicative only and in no way binding on the present investigations;
4. 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 in accordance with the rule 6(2);
5. The Authority forwarded a copy of the public notice to the known importers of Sodium Nitrite in India and advised them to make their views known in writing within forty days from the date of the letter;
6. Request was made to the Central Board of Excise and Customs (CBEC) to arrange details of imports of Sodium Nitrite for the past three years, including the period of investigation.
7. The Authority provided a copy of the petition to the known exporters and the Delegation of EU in New Delhi, India and Taiwan Cultural Center, New Delhi, India in accordance with rules 6(3) supra;
8. The Authority sent questionnaire, to elicit relevant information, to the following known exporters, in accordance with the rule 6(4);

• M/s. BASF Aktiengesechaft, Germany
• M/s.Terra Nitrogen (UK) Ltd, Stockton-on-tees
• M/s. Chainfong Company Limited, Taiwan

(ix) The Delegation of EU in India and Taiwan Cultural Center, New Delhi was informed about the initiation of the investigations in accordance with rule 6(2) with a request to advise the exporters/producers from their country to respond to the questionnaire with in the prescribed time. A copy of the letter, petition and questionnaire sent to the exporters was also sent to them, alongwith the list of known exporters and producer from European Union and Taiwan.

(x) The questionnaire was also sent to the following importers of Sodium Nitrite in India calling for necessary information in accordance with rule 6(4);

• Ahmedabad Chemicals, Ahmedabad
• Asitic Industries, Ahmedabad
• Aries Dyechem Industries, Ahmedabad
• Bakul Aromatics & Chemicals, Bombay
• B.I. Metha, Bombay
• Caffil Pvt. Ltd. Mumbai
• Denex Dyechem Ltd. Ahmedabad
• Dynemic IndustriesLtd.Ahmedabad
• Enzel Chem (I) Pvt.Ltd. Mumbai
• Formson Pharmaceuticals, Baroda
• Indocool Chem Ltd. Ahmedabad
• Island Veerchemie, Hyderabad
• Janson Ltd.,Mumbai
• Katul Chem. Pvt. Ltd. Mumbai
• Metrochem Industries,Ahemedabad
• Manish Chemicals, Ahemedabad-
• Parsin Chemical LTD.,Hyderbad.500082
• Ravi Dyewear Company. Ltd.Mumbai
• Savakashi Dye-o Fab, Ahemadabad-382330
• Su-Vi Chemcals, Solapur
• Suven Pharmaceutical, Hydrabad.

(xi) Additional information regarding injury was sought from the petitioner, which was also received;

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

(xiii) The Authority sought and verified information deemed necessary for the investigation, and the investigations were carried out at the premises of Petitioner’s ;

(xiv) The Authority also conducted cost investigation and worked out optimum cost of production and cost to make and sell in India on the basis of Generally Accepted Accounting Principles.

(xv) The investigations covered the period of 1^st April, 2000 to 31^st March, 2001 (12 months);

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

B Petitioner’s Views:

2. The petitioner has raised following issues in their petition :

1. Petitioner has submitted that the domestic industry was earlier suffering injury from dumping by the exporters from China PR. The Designated Authority recently conducted investigation against dumping from China, which have resulted in imposition of Anti Dumping Duty. The imports from China are, therefore, already attracting duties.
2. In view of the above, it is submitted that while examining injury to the domestic industry in the present case, existence of dumping from China causing injury to the domestic industry is required to be considered, particularly in terms of economic parameters affecting domestic industry and impacts of dumped imports on the prices in the market. The investigation period considered by the Designated Authority in that case was April, 98 to March, 99.

C. ON CUMULATIVE ASSESSMENT:

1. the margin of dumping established in relation to the imports from each country is more than two percent 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 less than three percent, the imports cumulatively accounts for more than seven percent of the imports of like article, and;
2. cumulative assessment of the effect of imports is appropriate in light of the conditions of competition between the imported article and the like domestic articles.
3. In the instant case, the margin of dumping from each of the subject country are more than the limits prescribed above. The quantum of imports from each of the subject country is more than the de-minimus limits. Cumulative assessment of the effects of imports is appropriate since the exports from the subject countries directly compete with the goods offered by the domestic industry in the Indian market. Petitioners, therefore, have requested to assess injury to the domestic industry cumulatively from the subject countries.

4. ON OTHER ISSUES:

D.Views of Exporters, Importers and other interested parties:

5. M/S BASF, AKTIENSELLSHAFT, GERMANY:

(a) They have stated that they have decided not to fill in the questionnaire concerning dumping and have opinioned that it is evident that due to the 41.3% regular duty there has to be dumping;

(b) The exporter has pointed out that the Taiwanese exporter quoted in the petition by Domestic industry is M/s Chinfong Taipei, is not the producer of the product under investigation and to their knowledge the company in Taiwan, imports the product from M/s Deepak;

6. M/S TERRA NITROGEN (UK) LIMITED, STOCKTON-ON-TEES TS17 6PT :

The exporter has stated that they did not export Sodium Nitrite into India during the period of investigation and thus they have no comments to offer.

E. EXAMINATION OF ISSUES RAISED:

7. The submissions made by the exporters, importers petitioners and other interested parties have been examined, considered and have been dealt with at appropriate places therein.

F. Product under consideration:

8. The product under consideration in the petition is Sodium Nitrite originating in or exported from EU and Taiwan. The product is classified under Customs Tariff heading 2834.10. The classification is, however, indicative only and in no way binding on the present investigations. The petitioner has stated that the product is under OGL category as per the import policy and is an oxidizing as also a reducing agent. It is a white crystal powder mostly used in pharmaceutical industries, dye industry, lubricants, construction chemicals, meat processing, textiles etc.

G. LIKE ARTICLE:

9. Definition of Like Article states as under:

1. "Like Article means an article which is identical or alike in all respects to the article under investigation for being dumped in India or in the absence of such article, another article which although not alike in all respects, has characteristics closely resembling those of the articles under investigation."
2. The Authority finds that Sodium Nitrite produced by the petitioners and the subject product imported from EU and Taiwan are comparable in terms of characteristics such as physical and chemical characteristics, manufacturing process and technology, function and uses, products specifications etc. Therefore, the two are technically and commercially substitutable.
3. In light of the foregoing, Authority concludes that Sodium Nitrite produced by the petitioner is a Like Article to the Sodium Nitrite imported from European and Taiwan.

H. DOMESTIC INDUSTRY:

I. DUMPING:

11. Under Section 9A (1)(c), 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 mark 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-

1. 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
2. the cost of production of the said article in the country of origin alongwith reasonable addition for administrative, selling and general costs, and for profits, as determined in accordance with the rules made under sub-section (6):

J. DUMPING AND DUMPING MARGIN:

12. M/S BASF, AKTIENGENSELLSCHAFT, GERMANY:

1. They have stated that they have decided not to fill in the questionnaire concerning dumping and have opinioned that it is evident that due to the 41.3% regular duty there has to be dumping;
2. The Authority gave opportunity to the Representative of M/s BASF New Delhi Office to discuss the issue and clarified that unless the information sought for by the Authority is in the form and manner prescribed, the exporter would be treated as a ‘non-cooperative’ exporter and the question of seeking additional information would arise only after the receipt of the information from the exporter in the prescribed format.
3. The information sought for has not been furnished by M/s BASF, and in the circumstances, the Authority has treated the exporter as ‘non-cooperative’.

13. M/S TERRA NITROGEN (UK) LIMITED, STOCKTON-ON-TEES TS17 6PT :

No other exporter from EU or Taiwan have responded to this investigation.

EXPORT PRICE:

14. DUMPING MARGIN:

The dumping margin comes as under:

K. INJURY & CAUSAL LINK :

1. the margin of dumping in relation to the imports from each country is more than two percent expressed as percentage of export price and the volume of the imports from each country is three percent of the import of the like article in India, and
2. the cumulative assessment of the effect of imports is appropriate in light of the conditions of competition between the imported article and the like domestic article.

(a) IMPORTS AND MARKET SHARE:

The Authority notes that:-

1. The imports from European Union and Taiwan have cumulatively increased in absolute term.
2. Share of imports from European Union and Taiwan have increased, individually and collectively, in terms of imports of the subject goods in India.
3. Share of imports from European Union and Taiwan, individually and collectively, have increased in terms of demand of the subject goods in India.
4. Imports from the subject countries have increased in relation to production and consumption in India.

(b) DECLINE IN EXPORT PRICE:

The Authority notes that the decline in the export price in terms of US $ is more significant than the decline in terms of Indian Rupee. The decline in export price has directly resulted in decline in landed value of the imported material as is evident from the table below.

Evidently, the export price from the subject countries have declined, except in the year 1999-00, resulting in decline in landed price of imported material, forcing the domestic industry to keep their selling price significantly below than the fair selling price of the domestic industry, which should have been increased after imposition of Anti Dumping against dumped imports from China.

(c) PRODUCTION, SALES AND CAPACITY UTILIZATION:

Production, sales and capacity utilization of the petitioner with respect to Sodium Nitrite/Nitrate (as capacity of 27000 MT includes nitrite and nitrate) has been as under:

It is evident from the above, production, sales and capacity utilization of the domestic industry increased upto 1999-00. However, all the three parameters have declined in 2000-01. The domestic industry should have increased sales volumes and hence production and capacity utilization in 2000-01 after imposition of Anti Dumping Duty on imports from China. However, the dumping from Taiwan and EU prevented the domestic industry from increasing its sales and hence production and capacity utilization.

(d) SELLING PRICE:

Sales realization of the domestic industry declined significantly in 1999-00. The increase in the sales realization in 2000-01 is due to steep increase in the cost of production. Sales realization is required to be seen along with the cost of production of the domestic industry. Cost of production of the domestic industry increased in 2000-01, whereas the domestic industry was unable to increase the selling prices proportionately. The imports have thus prevented the domestic industry from effecting legitimate price increases.

It is also relevant to point out that the domestic industry should have increased prices much more than the increase in 1999-00. The NIP fixed by the Designated Authority in the previous investigations was US $****. Thus, the domestic industry is suffering severe price depression/suppression in the market. Also relevant to note that the export price from the subject countries declined continually, except in 1999-2000, resulting in decline in the landed price of imports. In 1999-2000, the increase in the sales volume of the domestic industry and increase in export price from subject countries have to be seen together. Decline in the export price from the subject countries forced the domestic industry to sell even below the cost of production.

(e) PROFITABILITY:

The selling prices of the domestic industry remained unremunerative in spite of imposition of Anti Dumping Duty on imports from China. Dumping from China coupled with fresh dumping from the subject countries has resulted in wiping out of profits of the petitioner. Profit/loss of the domestic industry have been as under:-

19. CONCLUSION:

The Authority thus observe that:

1. The imports from EU and Taiwan have increased sharply during the period of investigations.
2. The production and Capacity utilisation has shown a decline in period of investigation compared to previous year.
3. There is a decrease in sales and consequently increase in closing stock.
4. The market share of imported goods from EU & Taiwan has gone up whereas the share of petitioner in total demand has come down.
5. The cost of production have gone up, during the period of investigation but the realisation have gone down in the later part of the POI and thus the petitioner has suffered losses in the later part of POI. Though in the earlier part, they have earned profit.
6. Imports from subject country resulted in price under cutting in Indian market;
7. The Authority, after considering the above, concludes the domestic industry has suffered material injury from the imports of Sodium Nitrite originating from EU & Taiwan.

L. CAUSAL LINK:

21. DEMAND & OTHER FACTORS:

1. There is no significant change in demand of sodium Nitrite in India. Possible decline in demand has, therefore, not contributed to any injury to the domestic industry. The technology adopted by the petitioner is comparable to the technology adopted by other producers world wide and there is no significant difference in the manufacturing process.
2. The landed value of imports from EU & Taiwan is lower than the selling prices of domestic industry indicating price under cutting. As a direct consequence, the net sales realisation of domestic industry in 1998-99 has remained more or less stagnant and is finding difficult to hold its prices.
3. In view of the above, Authority notes that the injury to domestic industry has been caused by the dumped imports.

M. INDIAN INDUSTRY’S INTEREST AND OTHER ISSUES:

N. LANDED VALUE:

O. CONCLUSIONS;

25. The Authority, after considering the foregoing, concludes that:

1. Sodium Nitrite originating in or exported from EU & Taiwan has been exported to India below normal value resulting in dumping;
2. The domestic industry has suffered material injury.
3. The injury has been caused cumulatively by the imports from the subject countries.
4. It is considered necessary to impose anti-dumping duty, provisionally, pending final determination, on all imports of Sodium Nitrite originating in or exported from the subject country, pending investigations.

28. 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,8B and 9, 9A of the Customs Tariff Act, 1975.

P. FURTHER PROCEDURE:

29. The following procedure would be followed subsequent to notifying the preliminary findings:-

1. The Authority invites comments on these findings from all interested parties and the same would be considered in the final finding;
2. Exporters, importers, petitioner and other interested parties known to be concerned are being addressed separately by the Authority. They may make known their views, within forty days from the date of the dispatch of the letter. Any other interested party may also make known its views within forty days from the date of publication of these findings;
3. The Authority would provide opportunity to all the interest parties for oral submissions to be rendered thereafter in writing.
4. The Authority would conduct further verification to the extent deemed necessary;
5. The Authority would disclose essential facts before announcing final findings.