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TMI Blog2011 (8) TMI 672X X X X Extracts X X X X X X X X Extracts X X X X ..... imate sufferer is the domestic consumer and imposition of anti-dumping duty in such a scenario cannot also be considered to be in the public interest. - AD/10-13, 15-16 and 21/2010 - AD/18-24/2011(PB), - Dated:- 2-8-2011 - Justice R.M.S. Khandeparkar, Dr. Chittaranjan Satapathy, Shri M.V. Ravindran, JJ. S/Shri S. Seetharaman with Atul Gupta, Sagnik Sinha, Bhargav Mansatha, Ashok Dhingra, Ms. Smita Singh, Sonia Gupta and R. Sudhinder, Advocates, for the Appellant. Shri Ameet Singh, Advocate, for the Respondent. S/Shri L.P. Asthana, Ms. Reena Khair and Rajesh Sharma, Advocates, for the Interested Parties. [Order per : Chittaranjan Satapathy, Member (T)]. These seven appeals have been filed against Notification No. 12/2010-Cus., dated 19-2-2010 imposing Anti-dumping duty on bus and truck radial tyres from China and Thailand. Such imposition is based on the final findings of the Designated Authority (D.A.) issued under Notification dated 1-1-2010 pursuant to Anti-Dumping Investigations initiated on 21-10-2008. The challenge in these appeals is to the final findings as well as to the imposition of Anti-dumping duty based on such final findings. 2. The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are erroneous. 3.6 The analysis of injury parameters is erroneous and these have not been objectively examined in the light of improvement of the domestic industry. 3.7 The D.A. has not considered the request of the appellant No. 6 for redefining the product under consideration. The D.A. did not consider submissions from appellant No. 6 that prices for the OEM were not affected by the import prices as the same were fixed according to cost plus profit formula. The D.A. has not considered various submissions made on behalf of, the appellants while giving the final findings and hence the same suffers from violation of principles of natural justice. For example, the D.A. did not consider that the domestic industry was unable to fulfill the growing domestic demand and that it failed to provide radial tyres to the market. 3.8 The claims of material injury made by the domestic industry is without any basis and that the domestic industry has exorbitantly increased the prices of the radial tyres. 3.9 The D.A. has erred in granting NME status to appellant No. 7. 3.10 One of the domestic manufacturers (Appollo Tyres) having imported radial tyres during the relevant period does ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tardation to establishment of domestic industry, and a causal link between dumped imports and injury, taking into account all relevant facts, including the volume of dumped imports, their effect on price in the domestic market for like articles and the consequent effect of such imports on domestic producers of such articles and in accordance with the principles set out in Annexure II to these rules. (3) The designated authority may, in exceptional cases, give a finding as to the existence of injury even where a substantial portion of the domestic industry is not injured, if- (i) there is a concentration of dumped imports into an isolated market, and (ii) the dumped articles are causing injury to the producers of all or almost all of the production within such market. Annexure-II to the said Rules lays down the principles for determination of injury as follows :- (i) A determination of injury shall involve an objective examination of both (a) the volume of the dumped imports and the effect of the dumped imports on prices in the domestic market for like article and (b) the consequent impact of these imports on domestic producers of such products. (ii) W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levant evidence before the designated authority. The designated authority shall also examine any known factors other than the dumped imports which at the same time are injuring the domestic industry, and the injury caused by these other factors must not be attributed to the dumped imports. Factors which may be relevant in this respect include, inter alia, the volume and prices imports not sold at dumping prices, contraction in demand or changes in the patterns of consumption, trade restrictive practices of and competition, between the foreign and domestic producers, developments in technology and the export performance and the productivity of the domestic industry. (vi) The effect of the dumped imports shall be assessed in relation to the domestic production of the like article when available data permit the separate identification of that production on the basis of such criteria as the production process, producer s sales and profits. If such separate identification of that production is not possible, the effects of the dumped imports shall be assessed by the examination of the production of the narrowest group or range of products, which includes the like product, for which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould have otherwise occurred in the absence of imports. The D.A. has also examined other relevant economic factors as provided under clause (iv) to Annexure-II to the AD Rules. As regards production, capacity and capacity utilization are concerned, it is seen from the Table in paragraph 128 of the final finding that there has been an increase in respect of all the three between the base year 2004-05 and the POI. The capacity has increased from 26270 MTs to 37636 MTs and the production has increased from 18622 MTs to 27364 MTs and therefore the capacity utilization has also increased from 70.89% to 72.71%. However, the D.A. has noted that despite growth in demand growth in production has declined. 12. The D.A s examination shows that profit before interest has increased between the base year and the POI so also return on investment. The market share of the domestic industry has gone down from 87.20% in the base year to 45.35% in the POI whereas the market share of the imports has gone up from 11.85% to 52.91%. The employment situation of the domestic industry has improved from the base period to POI by 57.66%. The indexed wages have also increased from 100 to 216.07% between the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c industry has suffered material injury. 15. The D.A s finding on injury to the domestic industry has been challenged by the appellants. They have pointed out that the domestic industry is doing quite well and has shown increased production, sale and profits etc. It has been specifically challenged by one of the appellants that the D.A. has allowed 22% return on capital employed without any justification. Acceptance of such high return is incorrect and against industry average and unheard of for most of the manufacturing companies operating in the sector according to the appellants. It has been pointed out that the appellants target on return on capital is only 10% and a top German tyre manufacturer which is the fourth largest tyre manufacturing company in the world has only a return capital of 11%. It has also been argued on behalf of one of the appellants that they operate in the quality tyre market and hence they sell tyres in India at higher prices compared to the price in the domestic industry and they have the highest MRP in India. 16. On behalf of one of the appellants it has been pointed out that examination of the injury indices show no material injury to the domesti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 423 14. Demand MT 11,467 20,268 37,997 53,651 It has been further pleaded that the analysis of injury parameters by the D.A. is patently erroneous and is not based on an objective examination. The conclusion of the D.A. that there was an increase in inventory is contradicted to by the data presented in the final findings which shows that sales to production ratio was significantly higher. It has also been alleged by the appellants that the D.A. failed to examine as to whether the alleged injury suffered by the domestic industry arose out of factors such as inability of the industry to cater to the exponential demand for the subject goods in the Indian market. It was further stated that the D.A. has not examined as to whether the alleged injury was a result of decrease in export sales by the domestic industry. 17. One of the appellants which is an automobile manufacturer has specifically stated that despite an agreement with the domestic industry, they are not able to supply the required volume of tyres for which the appellant was compelled to imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A s analysis of injury parameters and findings on injury. They have argued that there is no contradiction in the findings of the D.A. It is their case that the domestic industry suffered continued financial losses, the level of cash profit is extremely low and is insufficient to ensure long term survival of the industry. Since the demand in the product is so positive, in the absence of dumping the cash profit for unit of sale would have shown significant increase. The growth in production has not grown at the same rate as demand has grown. 21. In reply to submissions made by two of the appellants that MRF, JK Tyres and Apollo Tyres constituting domestic industry are listed companies and have reported overall growth, profitability and expansion plans in the financial records, it has been stated by the domestic industry that all the three companies are multi-product companies and that better performance of these companies does not mean better performance of the product under consideration. Within various products produced by these companies, the impugned product (radial tyres) forms only part of the total operations of these companies. The domestic industry has argued that the per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... domestic industry is for sale in India as well as for export market including Europe. It has also been stated that during the POI though the sales volume have increased, the sales price have not increased resulting in erosion of profits. It is the case of the domestic industry that it is facing potential decline in sales on account of the fact that its market share is declining. It has also been argued that demand supply gap is totally irrelevant for imposition of anti-dumping duty and that when the demand increased between 2006-07 and the POI as a result of significant efforts undertaken by the domestic industry, the same was taken away by dumped imports. 25. We have considered the above submissions from both sides on the D.A s determination of injury to the domestic industry. For the purpose of determining demand and consumption of the impugned goods in the country, the D.A. has relied on the sum of domestic sales of Indian producers and imports from all sources. As such, the D.A. has actually computed the quantities supplied in the domestic market indigenously as well as from abroad. The actual demand could be much more as there may be a gap in supply. Therefore, the figures ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion that domestic industry is not growing at a higher rate. 26. We have heard appellant No. 6 pleading that they have an agreement with some of the domestic manufacturers to supply the subject goods for use in the original equipment and the price is determined by the cost plus agreed amount of profit. As such, supply under such agreements is not affected by the alleged dumped prices at which the imports have been made. Yet, according to the appellant No. 6, the domestic industry has failed to make supplies at such pre-determined prices to the extent of required quantity and the appellants had to source their requirement from abroad. Under such a circumstance, the domestic industry cannot claim injury on the ground of potential decline in sales apart from the fact that there has not been any decline in sales, rather the sales volume has grown from year to year. 27. The D.A. has noted in paragraphs 148 149 of his final findings that the cash profits for the domestic industry has increased from ₹ 260.17 lakhs in 2004-05 to ₹ 1101.45 lakhs in the POI, the latter amount is only ₹ 7 44 lakhs less than the cash profits of ₹ 1108.89 in the year 2006-07, but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orrect determinants of injury to the domestic industry. For example, determination of the non-injurious price assuming a high level of 22% return on investment gives an inflated picture of price underselling which cannot be a true indicator of injury. In fact, the levels of price undercutting and price underselling assumed by the D.A. does not explain how on the face of such price undercutting and price underselling, the domestic industry managed to increase its sale from 9999 MTs in 2004-05 to 24159 MTs in the POI. If there was really such price undercutting and price underselling as determined by the D.A., the domestic industry would have been hard put to maintain its sales volume rather show such an increase in sales as recorded in paragraph 119 of the final findings and also increase in cash profit as recorded in paragraph 148 of the final findings. 29. On the other hand, the following submission made by appellant No. 4 regarding increase in profits earned by the domestic industry is significant :- The appellant submits that the motive behind any business operation is of earning profits and in the present case the impugned order holding that the domestic industry is suf ..... X X X X Extracts X X X X X X X X Extracts X X X X
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