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TMI Blog1997 (2) TMI 285X X X X Extracts X X X X X X X X Extracts X X X X ..... /96-A by M/s. Bombay Chemicals and Rubber Products - Importers. Appeal No. C/77/96-A by M/s. Golden Rolls (Pvt.) Ltd. - Importers. Appeal No. C/78/96-A by M/s. Kasturi International - Importers. Appeal No. C/79/96-A by M/s. Sharp International - Importers. Appeal No. C/80/96-A by M/s. Sujan Group and Polyrub Extrusions - Importers. 2. The impugned order has been passed by the Designated Authority appointed as such under Rule 3 of the Customs Tariff (Identification, Assessment and Collection of duty or Additional duty on dumped articles and for determination of injury) Rules, 1985 (for short, the Rules). The investigation resulting in the order impugned was initiated on an application filed by M/s. Gujarat Apar Polymers Ltd., Bombay (for short, GAPL, one of the two and the main Indian manufacturers of NBR) alleging dumping of NBR originating from Japan causing injury to domestic industry. The Designated Authority sent questionnaire to the two exporters in Japan and two of the importers to elicit relevant information. Opportunity was given to exporters, importers, applicant and other interested ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o India at less than its normal value, then, upon the importation of such article into India, the Central Government may, by notification in the Official Gazette, impose, - (a) if the article is not otherwise chargeable with duty under the provisions of this Act, a duty; or (b) if the article is otherwise so chargeable, an additional duty, not exceeding the margin of dumping in relation to such article : Provided that the Central Government may, pending the determination in accordance with the provisions of this section and the rules made there- under of the normal value and the margin of dumping in relation to any article, impose on the importation of such article into India a duty or additional duty under this sub-section on the basis of a provisional estimate of such value and margin and if such duty or additional duty exceeds the margin as so determined, - (a) the Central Government shall, having regard to such determination and as soon as may be after such determination, reduce such duty or additional duty; and (b) refund shall be made of so much of such duty or additional duty which has been collected as is in excess of such duty or additional duty as so reduced. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ountry or territory or materially retards the establishment of such industry in such country or territory." Thus, the statutory conditions necessary in the matter of imposition of the duty under Section 9A(1) are :- (a) the price at which an article exported from any country to India is less than its normal value. (b) Anti-dumping duty shall not exceed the margin of dumping, i.e., the difference between the export price and normal value. (c) In the case of import into India of any article from a member country of the World Trade Organisation (WTO) or from a country with whom Government of India has a most favoured nation agreement (specified country) the duty shall not be imposed unless determination has been made as per rules framed under Section 9A(2) that import of such article into India (i) causes or threatens material injury to any established industry in India, or (ii) materially retards the establishment of any industry in India except where anti-dumping duty has been imposed on any article to prevent injury or threat of an injury to the domestic industry of a third country exporting the like articles to India. (d) The duty may not be imposed if satisfactory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ination or suspension of investigation. According to Rule 8, where an interested party refuses access to or otherwise does not provide necessary information or impedes the investigation, the Authority may record its findings on the basis of information available to it and make appropriate recommendations. Rule 16 requires the Authority, within one year from the date of initiation of investigation, to record final finding determining extent of dumping, export price of the article and question of material injury or retardation, as the case may be. Rule 17 stipulates that an article shall be considered as being dumped if it is exported from a country to India at less than its normal value. In determining the normal value, reasonable relief on merits has to be allowed for the differences in terms and conditions of sale, taxation and other factors affecting price comparability. According to Rule 18, in the case of countries notified under Section 9B(2) of the Act, duty shall not be imposed unless the Authority finds that the import of the article causes or threatens to cause material injury to any established industry in India or materially retards the establishment of any industry in I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he two years. The impugned order also refers to the relevant data for the two years. In paragraph 2(xiv) of the impugned order, the Authority stated that the investigation covered the period from 1-4-1993 to 31-3-1994. Para 16 of the impugned order indicates that the export price has been determined on the basis of weighted average price reported by the importers for the purpose of customs clearances as compiled by DGCIS, Calcutta which was found reliable. The CIF export price has been adjusted for ocean freight for working out the FOB price and the FOB price has been treated as Ex-works price based on the best information available. 9. We will first deal with the contention of appellants in regard to determination of Normal Value . Normal Value of an article as defined in Explanation (b)(i) of Section 9A(1) of the Act means the comparable price in the ordinary course of trade for the said article or like article when meant for consumption in the exporting country or territory as determined under sub-section (2) of Section 9A of the Act. According to sub-section (2), subject to Rules framed under sub-section (3), Normal Value, as also export price and margin of dumping, sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such information would have adversely affected the exporters market and sales in Japan and hence it was not made available to the Authority. Rule 10 of the Rules contains provision to ensure confidentiality of any information provided to the Authority. If the Authority is satisfied as to the confidentiality of any information, it shall not be disclosed to any other party without specific authorisation of the party providing such information. Though the exporters and their agents filed written submissions before the Authority, there was no disclosure of comparative price in Japanese domestic market. Non-disclosure of comparative price by them does not necessarily render it unascertainable . We also notice that the attempt of the Indian Embassy at Tokyo to find out wholesale prices of NBR in Japanese domestic market did not meet with success on account of the reluctance of the companies to furnish such information. Rule 14 of the Rules enables the Authority, in the context of refusal of any interested party to provide access to information or to provide necessary information, to record its findings on the basis of information available to it. This was precisely what the Authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority are correct or adequate is a different matter. In these circumstances, the Authority was justified in determining the comparable price in Japans domestic market under Clause (b)(i) of the Explanation to Section 9A of the Act on the basis of the prices for small quantities on making appropriate adjustments. There was no warrant to invoke Clause b(ii) of the Explanation. 12. The next aspect relates to the correctness or adequacy of allowances made by the Authority in determining the comparable price of NBR in the domestic market of Japan. The Normal Value was worked out as follows :- Domestic price in Japan (J.Y. 4,20,000 PMT) = US $ 3,955 PMT Less - Dealers Commission 5% - Technical and after Sales service 1% - R D 1% - = US $ 278 PMT Normal Value = US $ 3,677 PMT = Rs. 1,16,009 PMT It is contended for the appellants that the Authority did not really make allowance for the peculiar retail market conditions in Japan. We have already referred to the attitude of non-coope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in favour of the exporters. The anxiety of the Authority to hold the scales even is manifest from the fact that while Japanese domestic price range is available, instead of adopting the average or mean price, the lowest of the range was adopted. The price range was between J.Y. 4,20,000 to 4,80,000 PMT i.e., US $ 3,955 to 4,520. The mean would be US $ 4,217.50. Instead of adopting the mean, the Authority adopted the lowest, namely US $ 3,955 PMT. This involved price reduction by 6.22%. 13. Appellants contended that the difference in levels of export from Japan and the small quantities of NBR being sold was not taken into consideration by the Authority. This aspect has been referred to in the order but the worksheet does not show any allowance on this account. The total quantity exported by Japan to India was 1863 MT in 1992-93 and 3807 in 1993-94. The exporters did not furnish the total quantity of NBR being sold in the domestic trade and the quantities being sold to buyers other than retailers. Such information having been suppressed, there was no evidence before the Authority to show that as per domestic trade pattern any discount was being allowed to large scale buyers who b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty in paragraph 19 of the order stated that it was 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 otherwise depressed prices to a significant degree or prevent price increases, which otherwise would have occurred, to a significant degree. The authority considered volume and market share of dumped import, production trend and capacity utilization, sales in absolute trend, selling price trend, stock trend and profitability trend and concluded that the quantity imported from Japan increased significantly, that the share of Japan in imports in India increased significantly during the investigation period as compared to he previous period, that the market share of Japan in the total demand in India increased sharply by about 11%, that as a consequence of reduction in import prices by Japan and reduction in Customs Duty by the Government of India, the import value from Japan after considering Customs Duty (but not Additional Customs Duty) declined by about 9%, that exports from Japan resulted in price undercutting and forced the dome ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 167 MT 3% 134 MT 2% 2083 MT 2405 MT 5192 MT 8038 MT S C is a very minor part of the domestic industry and did not respond to the notice issued by the Authority. The demand increased steadily during the three years and substantially in the last year. GAPL started production on 1-1-1992 and could make some impact only in 1992-93, whereby the import share fell down. The market share of Japan was 36% out of total import share of 60% as against GAPL share of 37%. But 1993-94 showed a significant change in the pattern of market share, with import share rising to by 10% and share of Japan increasing by 11% while the market share go GAPL fell by 9%. In absolute terms, the increase in the case of Japan was more than 100% while the increase in the case of GAPL was only 18.5%. In 1994-95, shares of Japan, other countries, and Indian domestic industry were 46%, 26.5% and 31.5.% respectively. The share of Japan in imports increased from 60% in 1992-93 to 68% in 1993-94. 18. The CIF import price from Japan to India declined during the period as indicated here below :- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1994-95 Acrylonitrile 40% 40% Butadiene 15% - 15% The duties for both the raw materials came down from 1992-93 to 1993-94. The average realization by GAPL from sales of NBR, exclusive of central excise duty declined sharply from Rs. 61,793/- PMT in 1992-93 to Rs. 58,592/- PMT in 1993-94. The decline was by about 5.1%. It is argued by the learned counsel for appellants that due account has to be taken of the teething troubles, inefficiency, failure in optimum utilization of capacity and wastage and other factors. Taking all the negative features, the Authority arrived at the fair selling price of NBR manufactured by GAPL which is much higher than the landed value of import from Japan. The exact figure is not being indicated here as it is confidential. In arriving at this figure, the Authority took into consideration cost of production, raw material cost, consumption of utilities, packing material, stores, spares, salary, wages, interest liability, return, normative and actual production. We have seen the work chart and find that the Authority production is much higher than the fair selling price at norma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 60 Rs. 5.4 Profit Rs. 0.54 Balance brought forward from previous year 5. Rs. 2.12 Rs. 13.74 (Rs. 16.92) Balance 6. Rs. 2.14 Rs. 13.74 (Rs. 16.37) 1994-95 is outside the period of investigation. It is argued that sales turnover has been increasing, expenditure and loss has been decreasing. Learned Counsel for GAPL pointed out from the information available in the Balance Sheet at page 187 of the paper book that Financial Institutions agreed for waiver of liquidated damages and simple interest and other reliefs on condition that SBR unit of Apar Limited (a private limited company) should be transferred to GAPL (a public interest limited) and the transfer was made on 1-4-1994 and this involved considerable sacrifice on the part of the promoters. This explains the increase in sales, manufacture, expenditure and earning a nominal profit in 1994-95. However, we are not concerned with the developments which took place in 1994-95. The Balance Sheet for 1993-94 does not give the particulars of manufacturing expenditure or sales of NBR separately. These particulars supplied to the Authority confidentially broadly indic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing countries fell marginally, though in real terms there was an increase. (b) Domestic industry was constrained to reduce price during 1993-94 even as the exporters reduced their prices; but the cost of domestic product to consumer still remained at a high level compared to the price of Japanese NBR in the hands of the customer. (c) Manufacturing and other expenses of domestic industry increased marginally. Loss continued at a reduced level and accumulated loss increased. During the year 1994-95, in order to secure some relief from Financial Institutions the promoters had to transfer SBR production of the private limited company to GAPL. GAPL also had to increase production of non-NBR products to contain loss in NBR business and improve capacity utilization. Having regard to all relevant facts and circumstances and the reasonable inferences to be drawn therefrom, we find that the conclusion of the Designated Authority that the domestic industry suffered material injury during the period under investigation is justified and correct. 25. Imposition of anti-dumping duty is justified only if the import from Japan causes or threatens to cause material injury to any established ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... L and also copies of some letters. The submissions to the Authority can be regarded only as unsubstantiated allegations and nothing more. Reliance placed on copies of stray complaints by a few customers seen at pages 661 to 664, 669, 671 are not adequate to support the general allegation against the quality of the product sufficient in nature and degree to adversely affect the market and the price. Reliance is placed on the copy of report dated 13-3-1995 of the senior technical officer of the Government Industrial Development Cum Quality marking centre, Jalandhar issued to M/s. Kohinoor India Pvt. Ltd. The report purports to compare raw rubber sheets of DN200" and Apparene" with reference to presence of volatile matters, tensile strength, elongation at break, swelling in oil. This report does not bring out any defect in the quality of GAPL s product. Neither the exporters, nor any of the importers placed any concrete evidence before the Authority in respect of the poor or defective quality of NBR manufactured by GAPL. GAPL placed before the Authority test reports of national and international laboratories to disprove the allegation regarding quality. In these circumstances, the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s drastically reduced. This assumes added significance since till 1992, the domestic production in India was negligible and GAPL commenced production of NBR from 1-1-1992 and in the three month period till 31-3-1992 produced 702 MT of NBR. At this rate, GAPL production for 1992-93 and 1993-94 should have risen four times to 2810 MT but rose only to 1916 MT in 1992-93 and 2271 MT in 1993-94. This must be due to the aggressive price reduction indulged in by the exporters in 1993 and 1994 for exports to India. Information about FOB export price of NBR from Japan to various countries has been made available to us. It is seen that in 1992, the export price to India was 139.6 JY per kg compared to 226.1 JY per kg for Singapore, 227.1 JY per kg for Indonesia, 202.4 JY per kg for Iran, 276.9 JY per kg for Yemen, 529.5 JY per kg for Britain, 378.2 JY per kg for USA. It is seen that export price to India was the second lowest in 1992. 29. We have now considered the grounds on which the Authority held that dumping of NBR by the exporters from Japan caused material injury to Indian domestic industry and found that almost all the grounds are tenable. We have also considered in great detail th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellants pointed out that the fair selling price of GAPL determined and the basis of determination has not been disclosed in the impugned order and appellants are thereby at a disadvantage. The determination of the fair selling price of GAPL was on the basis of confidential information regarding various factors relating to production of NBR. There is no difficulty for appellants to discover the fair selling price so determined in view of the formula adopted for quantifying the duty to be recommended, but the information collected from GAPL on the basis of which fair selling price was assessed is confidential and cannot be disclosed to appellants. We have carefully gone through the worksheet and the relevant papers and we are satisfied that the assessment has been made fairly and satisfactorily. The factors of alleged inefficiency and other defects in the production of NBR by GAPL are taken care of by assessing the fair selling price at the optimum level of capacity utilisation. The recommendation for imposition of Rs. 19,306 PMT as anti-dumping duty is justified. 31. We find no ground to interfere in any matter or to any extent with the order passed by the Designated Authority ..... X X X X Extracts X X X X X X X X Extracts X X X X
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