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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 ..... ters. 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 parties to express their views in a public hearing. The applicant participated in the hearing. One of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Explanation. - For the purpose of this section, - (a) "margin of dumping", in relation to an article, means the di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ritory." 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 undertaking has been received from any exporter to revise its prices or to cease exports to the area in qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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 India. Rule 20 requires the Authority to cause to be published in the Official Gazette, all orders relat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v) 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, shall be determined after making due allowance in each case for differences in conditions and terms o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fidentiality 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 attempted to do. 11. Letter dated 16-9-1993 from the Indian Embassy in Japan reported that selling price of NBR in Japan's domestic market was 300 Yen to 500 Yen per kg, i.e. about US $ 3,00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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-cooperation adopted by the exporters and their agents in not disclosing wholesale price or price for buyers of large quantities. M/s. Bombay Chemical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ange 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 buy directly from the exporters. The Authority gave allowance of 5% as dealers' commission on the price of every ten metric ton of NBR. Dealer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ercutting 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 domestic industry to reduce its prices to unremunerative levels and the various indications relating to domestic industry referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce 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 :- - Price in 1992-93 Rs. 37.92 per kg landed price - Price in 1993-94 Rs. 36.21 per kg Excluding Auxiliary duty. The appellant gave the following statistics of Japanese import price of DN 200 JSR 230 SL :- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BR 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 normative capacity. The question of injury to domestic industry cannot be decided by assuming ideal conditions, but has to be decided on prevailing conditions though giving reasonable adjustments. Having gone through the confidential papers, we are satisfied that these factors have been adverted to and assessed properly. GAPL reduced its' prices not as a result of decline in customs duties in India on international prices of raw materials but as a result of decline in Japan's export price to India which might be partly due to declining raw material prices and rates of customs duty. The aspect of injury cannot be considered in isolation from other factors. 20. The Authority c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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 indicate a modest increase in NBR sales turnover a substantial increase in non-NBR sales turnover other income in 1993-94. This would show that instead of going ahead with increasing production of NBR, GAPL had to resort to increasing production of non-NBR products to contain the loss in NBR business and improve capacity utilisation and to absorb overhead expenditure. 21. It is contended that the average realization of sales of NBR of GAPL is much less than the landed cost of NBR imported from Japan. The particulars are : 1992-93 1993-94 Landed cost Rs. 83,788 PMT Rs. 80,315 PMT Landed cost less CVD Rs. 71,795 PMT Rs. 67,346 PMT Average realization of GAPL Rs. 61,793 PMT Rs. 58,592 PMT It has to be appreciated that the amount of average realization from sales does not take into consideration dealers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 industry in India. The finding is that it has caused material injury to domestic industry. Appellants streneously assail this finding by pointing out that injury has been caused not by the import, but by the inefficiency, inadequate capacity utilisation, and wastage and similar factors. The position has to be considered not in the context of ideal conditions but in the specific circumstances of the domestic industry. NBR is a synthetic rubber, mainly used for manufacture of various rubber articles such as oil seals, Hoses, Automotive products, Gaskets, Rice Dehusking Rolls, Printers fabrics, Oil field products etc. The Authority has found that the manufacturing process, equipments and other facilities needed for producing different grades of NBR are common. There is no material to show any inefficiency on the part of GAPL administration or production in any specific area. Allegation of wastage is made on the basis of alleged i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dence 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 rejection by the Authority of the allegation against the quality of the product is justified. 27. It is next contended that GAPL reduced the price of NBR in 1993-94 on account of reduced cost of raw materials and reduction of customs duties on raw materials and not on account of dumping. While discussing the aspect of injury we have held that GAPL was constrained to reduce price in 1993-94 even as the exporters reduced the prices but the cost of the domestic product to the consumer still remained at high level compared to the price of imported NBR in the hands of the customer. The domestic prices were undoubtedly at unremunerative levels. GAPL could not have reduced prices so as to bring down the cost to the consumer in comparison to the cost of the imported product to the consumer. GAPL produced before the Authority letters showing that their customers were pressing for reduction in prices in the aftermath of the re- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the arguments advanced by the appellants against the reasoning and conclusion of the Authority and found the same devoid of substance. The substantial increase in imports in absolute terms from Japan, the substantial increase in their share of imports by India and of the Indian market during the relevant period, the substantial reduction in export prices by Japan, the fall in import value from Japan (though partly referable to reduction in Customs Duties in India), the exports from Japan resulting in price undercutting and forcing the domestic industry to reduce their prices to unremunerative levels and the other circumstances referred to above clearly establish that imports from Japan suppressed the price of the domestic industry to such degree that the domestic industry was successfully prevented from recovering full cost of production and earn a reasonable profit from sales of NBR in India. Thus the causal link between Dumping by Japan and material injury to Indian domestic industry has been established, as rightl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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