MINISTRY OF COMMERCE
NOTIFICATION
PRELIMINARY FINDINGS
Subject: Anti Dumping investigation concerning imports of Vitamin-C from
No. 10/1/97/ADD- Having regard to the Customs Tariff Act, 1975 as amended 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 present investigation:
a)
The Designated Authority
(hereinafter also referred to as Authority), under the above Rules, received written
petition from M/s. Ambalal Sarabhai
Enterprises Ltd., alleging dumping of Vitamin C (Ascorbic Acid) originating in or exported
from Japan and China PR;
b)
The preliminary scrutiny of
the application revealed certain deficiencies, which were
pointed out to the petitioners;
c)
The Authority, on the basis
of sufficient evidence submitted by the petitioner, decided to initiate investigations
against alleged dumped imports originating in or exported from
d)
The Authority issued a
public notice dated 26.5.97, published in the Gazette of India, Extraordinary, initiating
anti-dumping investigation concerning imports of Vitamin C, originating in or exported
from Japan and China.
e)
The Authority forwarded copy of the public notice to the known exporters/importers (whose details were made
available by the petitioner) and gave them an
opportunity to make their views known in writing, within forty days, in accordance with
the rule 6{2);
f) The Authority
forwarded copies of the public notice to the known Importers of Vitamin C in
g) Request was also made to the Central
Board of Excise & Customs (CBEC) to
arrange copies of all the relevant Bills of Entries for the period of investigation i.e. April to December’ 96 No information has, however, been received from the CBEC;
h) 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,
i)
The Authority sent
questionnaires, to elicit
relevant information to
the following
exporters:
Ø
Takeda
Chemicals Industries Ltd.,
Ø
Hebei Welcome Pharma Co., Shigiz huang,
Ø
National Chemicals and Pharmaceutical
Corporation(NCPC), Shigiazhuang
The following exporters filed responses to the
questionnaire within the stipulated/ extended time:
1. Takeda Chemicals
Industries Ltd.,
(M/s Takeda
Vitamins & Food Asia Pte Ltd,
2.
Hebei Welcome Pharma Co , Shigiaz huang,
j)
A number
of exporters, importers
and consumers requested
for extension of time, which was allowed by the Authority till 15.10.97. The
Authority holds that there is no provision for obtaining or waiting for responses from all
the interested parties or giving any additional time to those interested parties from whom
the Authority had not specifically called for information In
the first instance
k)
The Embassies of
l) The
questionnaire was sent to the following known indenting agents and importers of Vitamin C
in
1. Anglo French Drugs (Easter) Ltd.
2. American Remedies,
Madras
3. Bharat
Laboratory Suppliers
4. Crystal
Pharmaceuticals, Calcutta
5. C J Shah &
Company, Bombay
6. Concepe
Pharma Ltd., Bombay
7
Chemie Pharma
8. Dilip
Kumar & Company, Bombay
9. Eros Pharma,
10.
Fourts (I) Labs Pvt. Ltd.,
11.
Glaxo India Ltd., Bombay
12.
Gracure Pharmaceuticals Ltd., New Delhi
13.
Khanna Pharma, Delhi
14.
K. Seventilal & company
15.
LARK Chemicals & Company, Bombay
16.
Lalchand Bhimraj,
17.
Merit Organics Ltd.,
18.
Mercury Labs Ltd., Bombay
19.
Medley Labs Bombay
20.
Medi Pharma Drug House,
21.
Nemi Pharma Pvt. Ltd.,
22.
Puja Enterprises, Bombay
23.
Pradip Kumar & Company, Bombay
24.
Pharmaceutical
25.
Recon Ltd.,
26.
Remidex Pharma P Ltd.,
27.
Stride Pharma Ltd., New
26.
Sunways Pvt. Ltd.,
29
Taru Enterprises, Bombay
30
Turakha Bros., Bombay
31.
T H Thakore Pharma Labs,
32.
Tablets India Ltd.,
m) Information regarding the domestic
industry was sought from the petitioners, M/s Ambalal Sarabhai Ltd.,
n) No information was furnished
by M/S Jayant Vitamins Ltd.
o) Cost Investigations were
also conducted for the purpose of
Preliminary Findings to work out optimum cost of production and cost to make and sell Vitamin C 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 enough to remove injury to the domestic
industry.
p)
The investigation covers the period starting from
B
PETITIONERS’ VIEWS
2.
The petitioners have raised the following major of issues in their petition and in
their subsequent submissions to the Designated Authority:
On
Dumping:
i)
In China, with
no labour and power cost charged to units, they
could afford to slash the prices and dump goods for quick hard currency and gain world wide market share;
ii) Chinese exporters
increased market share
from under 1%
in 1980 to approximately to 20%
in the year 1996;
iii)
Prices of Vitamin C imported from
On Injury:
i) Vitamin
C is a drug, the prices of which are controlled under Drug Price (Control) Order and the
price control has been in force from the
year 1970 onwards;
ii) Import of Vitamin C in to
the country is permitted
under the
Import Trade Policy under OGL;
iii)
General reduction
in the custom tariff from 65% to 40% in the month
of February, 1996 has helped the exporters to sell the said
product at low prices to
iv)
M/s Jayant
Vitamins Ltd., producer of Vitamin C have suspended operations from September, 1996;
v)
M/s Jindal
(2000 t) and NATCO( 4000 t) have abandoned their new projects;
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-
EXPORTERS
1.
M/s T C I, Japan
No views have been expressed directly by the
manufacturer. However, the views expressed by M/s Takeda Vitamins and
Food Asia Pte. Ltd.,
-
TCI in
- TVFA was
assigned to cover all Asian countries except Korea, Thailand and Japan for sale of Vitamin
‘C’ and food additives
manufactured by TCI, Japan;
- TCI
must be indemnified from charge of dumping and investigation;
-
Due to continued imbalance in demand and supply of Vitamin C, the prices are
tending to tall sharply;
-
The prices of Vitamin C have been falling steadily since 1995 and their prices have always
been in tune with the international prices.
-
The total demand for Vitamin C is more than that produced locally;
-
-
In case the domestic Industry feels that there is dumping of Vitamin C, they should be in a
position to export the material at prices higher than
that prevailing in international market, to prove their claim;
2
M/s. Hebei Welcome Pharma
Co.,
M/s Hebei Welcome Pharma Co., China haw attached some
invoices pertaining to exports to India during 1996, duly certified by Indian embassy in Beijing They have also stated
that the products were exported to India at
the same price as that sold in Chinese domestic
market.
IMPORTERS
(1)
M/s Dilip Kumar and Company have
stated that:
-
M/s Ambalal
Sarabhai are the only manufacturer of Vitamin C in
-
Huge manufacturing
capacities of Vitamin C in
-
That the Japanese material is costlier compared to prices of Chinese material and
they strongly oppose not to enforce any anti- dumping duty on Japanese material.
-
It is well known fact that Swiss & German material are also
available at the same level as Japanese material in International Market;
-
The Authority may charge anti-dumping duty on Chinese material as cif prices are too low, and may be affecting Indian manufacturers;
(2)
GLAXO:
The company have submitted
that the capacity of two Indian manufacturers is far below requirement and the majority
of the requirements is to be met by imports. As long as the supplies from the two indigenous
manufacturers were reasonably regular, their purchases has been totally with them. Their first import in March, 96, was at a landed
cost of Rs. 631/kg as against the prevailing local
price of Rs. 539/-kg. The
price drop has been not only in relation to supplies from
D.
EXAMINATION OF THE ISSUES RA1SED
4.
The statement made by the
exporters, importers, petitioners, consumers and other interested parties have been
examined and considered
and have been dealt with at appropriate places in this
notification.
E
PRODUCT UNDER CONSIDERATION AND SCOPE OF INVESTIGATION
5. The product considered in
the present investigation is Vitamin- C/ Ascorbic Acid originating in or exported from
F LIKE ARTICLES
6.
The article i.e. Vitamin C (manufactured) by the domestic industry is a like
article to the product under consideration.
The petitioners have claimed that the basic manufacturing process of this product
in the domestic industry in
G DOMESTIC INDUSTRY
7.
The petition has been filed by M/s Ambalal Sarabhai Enterprises Ltd. on behalf of the domestic industry. The
petitioners having produced 344 MT account for around 76% of the total production of 454
MT during the period of investigation M/s Jayant Vitamins Ltd, who also manufacture Vitamin C have produced
only 110 MT during April-September, 1996 have however, closed down their plant in
September 1996 and are non- petitioners. Being
the only producer of Vitamin C in
the country, the petitioner constitute domestic industry in accordance with rule 2(b)
supra.
H
8. The Authority had sent
the questionnaire to the exporters to furnish information so that Normal Value could be
worked. M/s TCl,
Japan have not submitted any information directly on the grounds that TCl
has nothing to do with the trade in India. However, M/s Takeda Vitamin
and Food
The Authority notes that the information submitted by
Takeda is selective and
sketchy, and would not render any assistance in determination of a comparable Normal Value in the domestic market of
the exporting country. While some information has been provided in
respect of domestic prices in Singapore, the
Authority observes that the Normal Value is
required to be determined on the basis of the price prevailing in the country of origin in
terms of proviso to Section 9A(1 )c if the goods are merely transshipped through the
country of export.
Based on the above, the Authority considers that TCI
has not cooperated in the present investigations
The Authority has proceeded with the determination of Normal Value on the basis of
evidence available on record in terms of rule 8 supra.
ii.
M/s Habei Welcome Pharma Co., China:- Apart from furnishing three invoices
pertaining to export, company has furnished details of exports to India month-wise for the
period of investigation. Similarly, another statement showing prices in
domestic market has been furnished which lacks supporting details of consignment/bills
sold to domestic market. The company has not furnished total cost of production along with
reconciliation with financial accounts.
iii.
The Authority notes that the response is not as per
the prescribed Exporter’s Questionnaire.
The company has not furnished supporting documentary evidence regarding their domestic
sale for the period of investigation and have not claimed any adjustments for the domestic
price . Hence,
normal value has been assessed based an the constructed cost of production of Vitamin C in
the country of origin along with reasonable addition for administrative, selling &
general costs and profits as determined in accordance with the Rules made under sub-
section (6).
I EXPORT PRICE
9.
The petitioner has submitted copy of Chemical Weekly for the period of
investigation to show the export price of the product from
Similarly, the adjustments in respect of overseas
freight (from Xingang to Mumbai), and clearance charge
as furnished by the Chinese Exporter have been allowed to work out the FOB price.
J .
COMPARISON
10.
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,
importers and the best information available with the Authority in the absence of complete
response in the prescribed form and manner from the exporters. The Authority has. compared normal value with weighted export price (both at ex-factory
level) for individual exporter and has arrived at the following dumping margins:
Rs./Kg.
Country |
Dumping Margin |
Japan (All Exporters) |
58.10 |
48.75 |
** percentage of export
price
K INJURY
11.
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 the 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 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.
Rule (iii) of the Annexure II to the Rules requires
that in case imports of a product from more than one country are being simultaneously
subjected to anti dumping investigation, the Authority will cumulatively assess the effect
of such imports. Such assessment can, however,
be made only if it is determined that the volume of the imports from each country is
three per cent of the import of the like article in
In the present case, the dumping margin in respect of
each exporter as also each country is more than the limits prescribed. Further, cumulative assessment of the effect of
imports is appropriate in the light of the conditions of competition between the imported
article and the like domestic article. The Authority has, therefore, cumulatively assessed
the effects of these imports on the domestic industry.
For the examination of the impact of 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 utilization, sales quantum, stock, profitability, net sales realisation, the magnitude and margin
of dumping etc. in accordance with Annexure II(iv) of the rules supra.
a)
Volume of dumped Imports:
Imports from
The market snare of
b) Factors
affecting domestic Industry:
(i)
Production
Production of the domestic industry during 1994-95 was
1030.6 MT (469 MT
of Ambalal Sarabhai Enterprises
and 561.6 MT of Jayant Vitamins Ltd). The production decreased
in 1995-96 to 918. 4 MT (486 MT
in case of Ambalal Sarabhai
Enterprises and 432.4 MT in case of Jayant Vitamins Ltd.). The
combined production reduced to 496.3 MT
during the period of investigation (386 MT in case of Ambalal
Sarabhai Enterprises
and 110.3 MT in case of Jayant Vitamins Ltd). Domestic industry lost market share from 91.2% in
1995-96 to about 48% during the period of investigation.
M/s Jayant Vitamins Ltd. was forced to suspend their
production activity w.e.f October
1996 due to dumping of the said product and did not participate in the anti-dumping
investigations.
(ii) Price Undercutting:
It has been contended by the Petitioner that from
April, 1996 the subject countries have been dumping the material into the
country at exceptionally low prices ranging from Rs. 296/kg - 32D/kg.(cif), with a view
to eliminate local competition. The landed prices after considering the duty works out to
431/kg. to 465/kg as against the average selling price of Rs 537/kg during the P 0
I, clearly Indicating me price undercutting. As a result there is a drop in the sales volume
also.
(iii) Decline in sales volume
There are only two manufacturers of Vitamin-C in the country namely, Ambalal Sarabhai Enterprises Ltd and Jayant Vitamins Ltd. (who have suspended production from October 96). The petitioner has been producing Vitamin-C at the normal rate of 40-45 tonnes per month. The volume of sale in respect of petitioner which was 42.96 MT during April 96 declined to 28.45 MT in Dec 96.
(iv) Sales Realisation:
Sales realisation during the period of investigation, which was Rs.544.25/kg in April 96 declined to Rs.538.29/Kg in Dec 96, though the same marginally increased from 533/-{95-96) to Rs. 537 (POI)
(v) Stocks:
Stocks of vitamin C with the petitioner increased from nil (1994-95) to 0.67 MT (1995-96) and 16.93 MT (investigation period). Even though the domestic industry increased its production in the investigation period as compared to the previous year, it could not sell the increased volumes resulting in steep increase in stocks.
c) Profit/loss
M/s Ambatal Sarabhai Enterprises is a multi-product company. Audited Balance Sheet of me company as whole show that there is a steep decline in profits. The company which registered a profit of Rs. 1007.25 lakhs during 94-95 , declined to Rs. 430.51 lakhs during 95-96. The operating results for only Vitamin C, which registered a profit of Rs. 252.65 lakhs during 94-95 declined to Rs131.52 lakhs during 96-96 and posted loss of Rs 93.98 lacs during the period of investigation. Further, the cost of production increased from Rs 533.20/Kg during 95- 96 to Rs 562 68/ Kg. during the period of investigation.
12
Authority notes from the foregoing that:
i)
The imports from the subject countries have increased in absolute terms;
ii)
The exporters
entered into contracts for supplies of
Vitamin C
at increasingly lower rates for deliveries to be made in the subsequent months.
This forced the Indian industry to drastically cut down their production resulting in
increase in cost of production. This has also eroded the
profitability of the domestic industry;
iii)
The
imports from the subject countries resulted in price under cutting in the Indian market;
iv)
Sales of domestic
industry declined steeply in the investigation period;
v) Stocks of subject goods with the domestic
industry increased during the period of investigation;
Authority notes that the domestic industry has
suffered material injury from imports of vitamin C originating from the subject countries.
13. In determining whether material
injury to the domestic industry was caused by the dumped imports, the Authority took into
account the following facts:
(i)
The imports
of the product
from the
object countries increased significantly in absolute terms and
relative to the production and consumption of the product in
(ii)
The substantial imports of Vitamin-C from the subject countries at dumped prices
forced the domestic industry to sell at prices significantly below cost of production
resulting in financial losses.
The Authority has thus arrived to the conclusion that material injury to the
domestic industry was caused by the dumped imports from the subject countries.
INDIAN INDUSTRY’S INTEREST AND OTHER ISSUES
14. 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.
15. It is recognized that the
imposition of anti dumping duties might affect the price levels of the products
manufactured using Vitamin-C and consequently might have some influence on relative
competitiveness of this product. However, fair competition on the Indian market will not
be reduced by anti dumping measures,
particularly, if the levy of the anti dumping duty is limited to the amount necessary to
redress the injury to the domestic industry. On the contrary, imposition of anti dumping
measures would remove 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 the subject goods. The Authority notes that the imposition of anti-dumping
measures would not restrict imports from the subject country in any way, and, therefore
would not affect the availability of the product to the consumers.
16.
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 Vitamin-C in
17. The import duly imposed by the
Government of India has relevance
in determination of the extent of injury suffered by the domestic industry and has been accordingly taken care of.
18.
The Authority concludes, after considering the foregoing, that:
i)
Vitamin-C originating in or
exported from
ii)
Imports of Vitamin-C from these countries have
caused material injury to the domestic industry.
iii) It was considered whether a duty
lower than the dumping margin would be sufficient to remove the injury. The weighted average landed price of the imports
for each exporter, for the purpose, was compared with the fair selling price of the
domestic industry determined for the period or investigation. Whenever the difference was less then the dumping margin, a duty lower
than the dumping
margin is recommended. Accordingly, the Authority recommends 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
Vitamin-C, falling under Customs Tariff Heading 2936.27 of the Customs Tariff Act,
originating in or exported from these countries, pending final determination.
Rs./Kg.
Product originating or exported from |
Amount of Duty |
27.59 |
|
61.96 |
The known exporters, importers, petitioners and other
interested parties are being addressed separately by the Authority, who 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
RATHI VINAY JHA, Designated Authority