2023 (6) TMI 15 - AT - Customs

Levy of Anti-Dumping Duty - certain flat rolled products of aluminium - grant of exclusion to higher width Lithograde Aluminium coils above 1150 mm width, which are not commercially manufactured and supplied by the domestic industry i.e., Hindalco Industries Ltd. - HELD THAT - It is seen that for the period from Financial Year 2019-2020 to 2022-2023 Hindalco only supplied miniscule quantities, on trial basis to the appellant during the period of investigation but no supply of higher width coils was to the appellant made either pre or post period of investigation. In fact, only 2% of the requirement of the appellant of higher width coils were supplied on trial basis during the period of investigation and 25% of the supplies were rejected because they did not meet the technical manufacturing requirements. Even according to the Hindalco, only 74% of the supply of lithograde aluminium coils between 1150 mm to 1600 mm met the requirements. It is, therefore, clear that Hindalco does not produce lithograde aluminium coils above 1150 mm on a commercial basis and it was only on a trial basis that this product was supplied to the appellant which also could not meet the technical requirements. The designated authority, therefore, committed an error in observing that Hindalco had supplied lithograde aluminium coils beyond 1150 mm and up to 1600 mm to the appellant when only miniscule supply had been made. In such a situation when commercial production had not been undertaken by Hindalco of this product, the issue of demand-supply gap would not arise. At its plant, the appellant subjects the lithographic coils to the electro-chemical graining process for conversion into offset printing plates. Electro-chemical graining is a process by which the surface of the coil is evenly roughened to improve the adhesion of the coating layer to the coils which improves the water/ink balance of the printing by the printers through exposure and developing. Technically the electro graining can only be done in the direction in which the coil has been rolled by Hindalco. After undergoing graining, the coils then undergo, inter-alia, the processes of anodizing and coating to become lithographic plates. When the manufactured plates are installed into the printing press, they get bent at their gripper ends of the printing rollers. In such a situation, bending of the plates takes place perpendicular to the graining direction of the plates. If they are bent parallel to the graining direction of the plates, they will crack during the high-speed printing causing serious accidents. The web printing presses are high speed machines with 40,000 to 80,000 impressions per hour speeds. The printing machine rollers exert high pressure on the plate cylinders and tension/stress on the plate edge which is bent for lockup in the gripper at both ends. Due to this reason, the length of the coated coil cannot be transposed as width of the plate while mounting in the press. In the material injury analysis, the anti-dumping law requires consideration of period of investigation data and not future commitments which is entirely subjective. The future expansion of scope of product is to be considered under a new investigation or a mid-term review provision under the 1995 Rules, once facts of manufacture and supply in commercial quantities are established. In any view of the matter, this submission was not raised by Hindalco before the designated authority. The inevitable conclusion that follows from the aforesaid discussion is that Hindalco does not manufacture/produce lithograde aluminium coils above 1150 mm on a commercial basis. Thus, when the domestic industry does not manufacture/produce lithograde aluminium coils above 1150 mm on a commercial basis, this product would have to be excluded from scope of the product on which anti-dumping duty has been imposed under the customs notification dated 06.12.2021 issued by the Central Government on the basis of the final findings dated 07.09.2021 issued by the designated authority. The customs notification dated 06.12.2021 is, accordingly, modified by excluding the lithograde aluminium coils above 1150 mm from imposition of anti-dumping duty - Appeal allowed.

Summary

Issues Involved:

1. Exclusion of higher width Lithograde Aluminium coils above 1150 mm from anti-dumping duty.
2. Examination of the domestic industry's capability to manufacture and supply the said coils.
3. Consideration of demand-supply gap and quality parameters.

Summary:

Issue 1: Exclusion of Higher Width Lithograde Aluminium Coils Above 1150 mm from Anti-dumping Duty

Technova Imaging Systems Private Limited [the appellant] challenged the imposition of anti-dumping duty on 'certain flat rolled products of aluminium' from China PR and sought exclusion of higher width Lithograde Aluminium coils above 1150 mm width, which are not commercially manufactured and supplied by the domestic industry, Hindalco Industries Ltd. [Hindalco]. The appellant restricted its submissions to this second prayer during the hearing.

Issue 2: Examination of Domestic Industry's Capability

The designated authority had verified that Hindalco supplied lithograde aluminium coils beyond 1150 mm width on a trial basis, but the appellant claimed these did not meet technical requirements. The authority concluded that the domestic industry could supply these coils and included them within the scope of the product under consideration (PUC). However, the appellant argued that Hindalco was unable to supply commercial quantities of higher width coils, necessitating imports to meet demand.

Issue 3: Demand-Supply Gap and Quality Parameters

The designated authority and Hindalco contended that a demand-supply gap does not justify exclusion from anti-dumping duty. Hindalco argued that excluding higher width coils would lead to circumvention of the duty imposed on coils less than 1150 mm. The appellant countered that Hindalco's trial supplies were insufficient and often failed to meet technical standards. The Tribunal noted that Hindalco did not commercially produce lithograde aluminium coils above 1150 mm and that the Manual of Standard Operating Practices for Trade Remedy Investigations supports excluding products not commercially manufactured by the domestic industry.

Conclusion

The Tribunal concluded that Hindalco does not produce lithograde aluminium coils above 1150 mm on a commercial basis. Consequently, these coils should be excluded from the scope of the product on which anti-dumping duty has been imposed. The customs notification dated 06.12.2021 was modified to exclude 'lithograde aluminium coils above 1150 mm' from the imposition of anti-dumping duty. The appeal was allowed to this extent.

(Order Pronounced on 13.04.2023)