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TMI Blog2007 (8) TMI 512X X X X Extracts X X X X X X X X Extracts X X X X ..... ion and amending the principal notification by adding a proviso to the effect that no anti-dumping duty shall be imposed on the imports into India of subject goods produced by HWC and exported by Lungo through the exporter ET. 2. The producer HWC and exporters FLC and ET made applications for the designated authority for initiating a new shipper review for the purpose of determining their individual dumping margins under Rule 22 of the Customs Tariff (Identification, Assessment and Collection of Anti-dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995. Declarations were filed by these applicants that they were not related to any of the exporters/producers in China PR who were subject to the anti-dumping measures in force with regard to the production in question. They also declared that they had not exported the product concerned during the original period of investigation (POI). The designated authority initiated the new shipper review on the basis of the request made by the applicants by its notification dated 25-8-2004. The period of investigation for the new shipper review for dumping determination was fixed between 1-9-2004 and 28-2-2005. Exporter's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roprietor was given in its certificate and authorization letter. The letter heads showed the complete postal address in a manner that was customary in UAE along with the e-mail address. It was contended that all the applicants had complied with the pre conditions of Rule 22. It was further contended that the mere fact that these companies were newly set up during 2004, did not mean that they were created with the sole objective of circumventing the existing anti-dumping duties. It was also contended that the exporting country was China PR and not UAE and that the goods were shipped directly from China PR to India. Therefore, the normal value was that of in China PR and not UAE. It was also submitted that the export sales transactions in question were through a channel comprising of Chinese-producer-Chinese-exporter-UAE exporter , and therefore, a single individual dumping margin had been sought for the said channel of sales and no separate dumping margins for the producers or exporters were involved. It was also submitted that new shipper review could be initiated as and when the applications were received. The new shipper expressed their stand against the objections raised by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e basis of the information provided by the Chinese producer and exporter on the issue of their claim of market economy treatment, the designated authority treated the said company as operating in market economy, since they were able to show to the satisfaction of the authority that management and control regarding production, marketing and pricing were in the hands of the company which were found to be independent from any State intervention. 6. The designated authority on the basis of the information, which was supplied by the new shipper in response to the exporter's questionnaire, came to a finding that the company did not have any domestic sales. It was found that the sales to the appropriate third country were not in the ordinary course of trade since exports were made at loss. Therefore, cost of production of the subject article in the country of origin with reasonable profit margin, was considered to be appropriate method for determination of the normal value. On the basis of the information providing break-up of cost of production in the prescribed format of all the sizes/models/types of the subject goods that were produced during the period of review, which data was ver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AD) in the case of HR Johnson (I) Ltd. v. Designated Authority and Other decided on 15-2-2007 and it was rejected for the following reasons which we adopt :- 11. The real difficulty of determining whether the new shipper was related to the exporters/producers would, however, arise when the notification imposing anti-dumping duty, imposes it on imports from all the exporters/producers from the exporting country. It is obvious that the anti-dumping duty, in such an event, will be imposed on exports by any exporter from such country upon importation into India, irrespective of the fact whether such exporter of the subject article had made exports before or subsequent to the period of investigation. All the exports made by any such exporters/producers can be said to be subject to anti-dumping duty upon importation into India after the imposition of such duty. It is possible to read the phrase exporters who are subject to anti-dumping duty in its widest amplitude so as to mean each and every exporter/producer who may have exported the product that is made subject to payment of duty on its importation by virtue of such notification, and exclude only those exporters/producers who h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decided not only inter se between the exporters who did not export in the earlier period, but also with those who exported during the earlier period of investigation, and the distinction made in rule 22 between exporters who did not export in the earlier period of investigation and those who did, will get blurred, and no meaningful inquiry can be made while undertaking a colossal task of examining relationship of a new shipper with the entire community of the exporters of that country known and un-known. 11.2 To test it in a different way; suppose, there are two related exporters who both did not export in the initial period of investigation. Both will be disqualified if their inter se relationship is to be reckoned, even if they are not related to any of the exporters who exported during the earlier period of investigation. This makes no sense, because both did not have individual dumping margin determined in the earlier period of investigation as they were not exporting and they will not be able to get it determined under rule 22, since they may be inter se related, and will continue to suffer anti-dumping duty even if they may not be actually dumping. The very purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in relation to such article. Since the country of origin of the subject goods was admittedly China PR, the designated authority has correctly constructed the normal value in consonance with the provisions of Section 9A(1)(c)(ii)(d) of the said Act. 9. It was argued that the normal value cannot be exporter specific , but it has to be exporting country specific . It was submitted that in the present case, the determination of normal value was made in the context of the cost of production of HWC (producer) instead of making it country specific by considering the cost of production of like articles produced by other producers of China PR. Reliance was placed on the observations made in paragraph 31 of the decision of Hon ble the Supreme Court in Reliance Industries Ltd. v. Designated Authority, reported in 2006 (202) E.L.T. 23 (S.C.), in support of this contention. On a careful reading of the decision of Hon ble the Supreme Court it becomes evident that the said contention is misconceived. The Hon ble the Supreme Court held, in Reliance Industries Ltd., in para 23 of the judgment, that there were two main issues for determination in the case before it :- (i) the correct pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... required to be determined. Furthermore, when constructed normal value method is adopted by working out the cost of production under clause (c)(ii)(b) of Section 9A(1), by its very nature, the cost of production of a particular producer, and if there are more producers than one under investigation, then, the cost of production of like article in respect of such other producers also in the country of origin, has to be worked out in accordance with the said provisions and the rules and there can arise no question in such a case of comparable price of the articles sold in the domestic market of the exporting country irrespective of the manufacturer which is the method of working out the normal value which would fall in clause (c)(i) of Section 9A(1) of the said Act. 9.2 The words like article when meant for consumption in the exporting country in clause (c)(i) of Section 9A(1), and, no sales of the like article.......in the domestic market of the exporting country in clause (c)(ii) refer to the price at which the subject goods are sold in the domestic market of the exporting country. Therefore, the data information of domestic market price of subject goods, from whatever sou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng country at prices below per unit costs of production plus administering, selling and general costs will be treated as not being in ordinary course of trade by reason of such price. Actual data pertaining to production and sales is required to be examined. The entire investigation is centred around the data information provided for the domestic sales and costs of production and export transactions of the like articles by the producers-exporters under investigation. 9.4 In cases of new shipper review, such administrative review is only for determining the individual dumping margin for the new shipper applicant. By its very nature the determinations are confined to investigation into the producer/exporter combine that is eligible for new shipper review. Constructed cost of production is to be necessarily worked out in the context of the participating producer for the POR. The normal value so worked out is for the purpose of determining the individual dumping margin of the eligible new shipper exporter. The ratio of the decision of the Supreme Court in Reliance Industries does not at all affect the nature of investigation and determinations contemplated by Rule 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te the review. The rule enables the exporters and producers in exporting country who did not export the product to India during the POI to get their individual dumping margins determined. This necessarily implies that no person/entity who has not at all exported the product after the earlier POI can ask for a review under Rule 22. The provisions of Rule 22 which confer benefits during a new shipper review along with the guarantee provisions indicate, that review for the new shipper is applicable only with respect to the subject goods produced/supplied and exported by the parties who have met all necessary requirements, who successfully participate in the review and whose sales form the basis for the analysis and determination of individual dumping margins in the new shipper review. It is recognized that review proceedings are distinct processes from the original investigation, in that, they have different purposes and nature. Therefore, the applicability of basic rules will vary according to the nature of the proceedings. 11. Paragraph 6(iv) of Annexure I to the Rules contemplates an investigation phase i.e. a distinct period of investigation, to work out the margin of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding FZE (hereinafter referred to as ET ) a company registered in Sharjah Airport International Free Zone, Sharjah, U.A.E. Enterprise Trading is not related to either HWC nor to Lungo. Lungo sells the goods to Enterprise Trading at market driven prices . [emphasis supplied] In their response to the questionnaire it was stated by this applicant that: There are no domestic sales in China . Therefore, admittedly, the producer-applicant did not have any domestic sales or exports of its product prior to the application for initiation of new shipper review. 12.2 Foshan Lungo Ceramics Co. Ltd., the other applicant for new shipper review, stated in para 3 of its application dated July 23-2004 that : Lungo has been engaged in trading of tiles. We do not manufacture the subject goods. Lungo will export porcelain/vitrified tiles manufactured by the affiliate M/s. Heyuan Wanfeng Ceramics Co. Ltd. China (hereinafter referred to as HWC ). These tiles will be sold to India exclusively through Enterprise Trading FZE (hereinafter referred to as ET 3 ) a company registered in Sharjah Airport International Free Zone, Sharjah, U.A.E. a company which is not an affiliate of either HWC or Lung ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to be fixed by the designated authority for the purpose of initiating the review investigation. For determining dumping margin , normal value and the export price for such period of review, the transactions taking place during the period of review will be relevant, in an anti-dumping proceeding. A new shipper review under Rule 22 should normally cover production, exports or sales during the period preceding the initiation of review. Fixing review period, for such investigation, that falls subsequent to the date of the application for such review is not at all warranted, and would be like spreading a red carpet to manipulations by projecting figures during the prospective period of review so tailored as to bring about a dumping margin favourable to the new shipper who can then be a conduit pipe for flowing exports of other exporters and producers whose exports would otherwise have been subjected to the existing anti-dumping duty. Selecting new shipper review for a period subsequent to the application for such review would distort the entire scheme and purpose of imposition of anti-dumping duty, to the grave disadvantage of the domestic industry that had earned the protection ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments form the basis of the margin of dumping determined for the new shipper. 14.1 Where the person requesting the review is the exporter but not the producer of the subject goods, the entity requesting the review must show that the producer or supplier did not export the subject goods to India during the earlier POI and that such exporter did not itself export the subject goods to India during the earlier POI. The requirement of Rule 22 that the new shipper exporters as well as the producers of the subject goods should show that they are not related to the exporters or producers in the exporting country who are subject to anti-dumping duty, indicates that the rule is to be appropriately construed so as to limit the benefits of a new shipper review only to the entities that are involved in the production and sale of the subject product that forms the basis for the review. 14.2 The benefits of new shipper review will, therefore, having regard to the nature of the new shipper review provisions, apply to : (i) export sales by the exporter of the subject goods produced by the exporter, and (ii) export sales by the exporter of the subject goods produced by the producer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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