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TMI Blog2005 (12) TMI 120X X X X Extracts X X X X X X X X Extracts X X X X ..... er, 2002 and the interested parties were requested to make their views known in writing. A copy of the preliminary findings was also sent to known exporters, importers and embassies of subject countries in India requesting them to advice the producers and exporters in their countries to respond to the Designated Authority (hereinafter referred to as 'DA') to furnish their views. Opportunity of public hearing to interested parties was given on 18-2-2003. Thereafter all parties were requested to file written submissions of their views. The authority made available the public file to all interested parties containing non-confidential version of evidence submitted by various interested parties for inspection, on request. In accordance with Rule 16 of the Customs Tariff (Identification, Assessment and Collection of Anti-dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995, (hereinafter referred to as Anti-dumping Rules), the essential facts/basis considered were disclosed/made known to the interested parties on 14-7-2003. The investigation covered the period from 1st April, 2001 to 31st March, 2002. On the basis of the preliminary findings of the Designated Autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-I to Anti-dumping Rules. The Designated Authority has not worked out abnormal transaction below cost price by taking freight of each transaction but instead of this taken weighted average of freight. There were 20,000 transactions during the period of investigation for sale in domestic market but transaction-wise freight has not been shown separately by the Hanwah Chemical Corporation. The Designated Authority on the basis of total freight for the entire period determined per unit freight. The Designated Authority under letter dated 14-8-2002 had informed M/s. Hanwah Chemical Corporation that they have claimed freight *** per MT on domestic sale, but there is no evidence of this under sample invoices provided by them. There is no information on freight paid for domestic transactions as indicated in the transaction-wise domestic sale information. M/s. Hanwah Chemical Corporation in response to the letter furnished month wise freight incurred on domestic sales paid during period of investigation. The total inland freight includes sea freight as well as tank lorry freight. By taking the average inland freight without taking transaction-wise freight, the normal value determined by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diaphram technology. Adjustment of $ 4.57 per DMT was made in the export(d) price for making up losses of M/s. Tricon suffered by them during previous transactions between M/s. Hanwah Chemical Corporation and M/s. Tricon. In arriving at ex-factory export price, the Selling and General Administrative (SGA) expenses of M/s. Hanwah Corporation were not considered. Addition of $ 5 per DMT and $ 4.57 per DMT has increased the export which is contrary to Rules. No figures were given in the non-confidential version of determination of export price. Indexation should have been done for export price and normal price. Compensatory arrangement between Hanwah Chemical Corporation, Hanwah Corporation and M/s. Tricon was not examined. 4.1 It is further argued that, since the normal price was reduced and export price was enhanced by adopting incorrect method, the dumping margin was wrongly calculated without full response from Tricon and Hanwah Corporation. The Designated Authority could not have worked out export price at ex-factory level as deduction allowed for arriving at ex-factory price without checking the records of Tricon and M/s. Hanwah Corporation as both of these concerns had not g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporation. However, money finally came to Hanwah Chemical Corporation, after giving commission to Hanwah Corporation. In view of this position, the question of taking into consideration SGA of middlemen i.e. Hanwah Corporation has nothing to do with ex-factory export price. 5.1It was argued on behalf of Hanwah Chemical Corporation and Hanwah Corporation that standard of confidentiality in obtaining information from the domestic industry and co-operating exporters was not equally applied. The domestic industry was required to given only two years information of imported products but 10 years information was give without disclosing the source of information. Therefore, figures are not reliable. For the year 2001-2002, information was given only up to December, 2001 and the same was annualized. Thus, for 2001-2002, full information was not made available. The first export from Hanwah Corporation was on 30-12-2001 and this was not added in the figures up to December and in the final findings, the D.A. has held that Hanwah Chemical Corporation was only exporter. The examples were cited that before initiation of investigation, domestic industry did not give any relevant information in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hod was adopted for Hanwah Chemical Corporation for determining the price of caustic soda than in India. The apportionment of cost of caustic soda and chlorine has to be done at the point of separation of these products on the basis of volume of production. It was also pleaded that verification reports in respect of December transaction were not furnished to them. Initiation of investigation is faulty on the following grounds : (i) Non-confidential version of petition made available to interested parties is without any table under proforma IVA. (ii) Performa IVB is also incomplete as it does not show the price of indigenous industries. (iii) Entire performa VI relating to costing information was not given. It was also not kept in public file. (iv) Different standard was applied by the D.A. for domestic industry and exporters as proforma of export quarantee was supplied in the indexed form to the domestic industry. (v) D.A. did not accept books of account for costing of causti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cording to para 6 of Annexure 1 to Anti-Dumping Rules, the benefit of 5 dollars was required to be given. 6.2 It was further submitted that, the export questionnaire is on costing of product information. It is kept confidential and information in indexed form is supplied to DA as per Rule 7(2) of Anti-Dumping Rules. They have given non-confidential summary where possible. Where it was not possible reasons for the same were given to DA. WTO Agreement on Anti-Dumping Duty gives full authority to DA for determining weighted average of freight. DA has verified each freight contract and weighted average was correctly taken. Averaging can be done by D.A. under Rule 17(3) of the Anti-Dumping provisions. December, 2001 to March, 2002 was the period of shipment which was taken by D.A. If date of sale is taken for dumping margin, then it will lead to different result but D.A. has exercised his discretion in this regard. Dumping can only be held if goods are introduced in the commerce of importing countries. It is relevant for initiating investigation. Investigations were initiated on the basis of tender which was to be executed. Therefore, initiation of investigation was wrong. 7.On behalf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mation can be provided. Thus, while determining the NIP Designated Authority has not considered the chlorine prices as a known-factor as required under para (v) of Annexure-II to Anti-Dumping Rules. The Designated Authority has to apply his mind independently to determine the cost of production and profit irrespective of what has been done by other authority under Companies Act or Act on Taxation. Para (vi) of Annexure-II to Anti-Dumping Rules makes it obligatory on Designated Authority to work out the cost attributable to Caustic Soda, this has not been done by the Designated Authority. This is clear from the methodology adopted by the Designated Authority for arriving at non-injurious price. The Designated Authority has taken unreasonable profit for Caustic Soda while determining the NIP. Such a unreasonable profit has not been accepted by this Bench of this Tribunal in the case of Indian Spinners Association v. Designated Authority - 2004 (170) E.L.T. 144. While disclosing the methodology the Designated Authority has not given the point-wise analysis for arriving at the non-injurious price. It was not disclosed whether chlorine was taken as a joint product or a bye-product while ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mining the injury, the entire case is based on the NALCO tender and only the figures of the tender for import or soda ash by NALCO were taken. It was submitted that in response to the NALCO tender for supply of Caustic Soda the domestic industry had not responded to supply of total quantity required by NALCO. Thus, to meet their requirement they have necessarily to import the Caustic Soda. Majority of the domestic industry of Caustic Soda has not responded to NALCO tender then it cannot be said that there has been injury to domestic industry. None of the industries who have responded to tender have complaint of dumping. The imports made by NALCO were only of caustic soda lye but the enquiry was made for lye, flakes, prills and granules. It was pointed out that Caustic Soda lye and Caustic Soda flakes, prills and granules are not the identical goods. Lye is of 50% Caustic Soda whereas the solid form like flakes, prill and granules contained 100% Caustic Soda. Therefore, these are not comparable goods. Reliance was placed on the judgment of European Court of Justice dated 11-6-92. 7.2 It was also pointed out that for determining the Anti-Dumping duty on Korea and M/s. Hanwah Chemica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ic soda namely in the form of lye, flakes, prills and granules. The domestic industry had given the volume of import in the country since 1980-81 whereas according to the Anti-Dumping Rules and proforma for application they were required to give the figures of last three years. Even though it is mentioned in the application for initiation of investigation that NALCO has placed its order for 87,000 MT which is more than combined imports of caustic soda in a year in India, but no notice for initiation of investigation was issued by the Designated Authority to NALCO. According to Rule 6(1), if the Designated Authority has decided to initiate investigation to determine the existence, degree and effect of any alleged dumping of any article, it shall issue a public notice notifying its decision and such public notice shall, inter alia, contain adequate information namely; name of the exporting countries and the article involved; the date of initiation of the investigation; a summary of the factors on which the allegation of injury is based and the address to which representations by interested parties to be directed along with time limit allowed to interested parties. As per Rule 6(3) th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The proceedings for investigation under Rule 5 are initiated on a written application by the domestic industry. The application is required to be supported by evidence of (a) dumping; (b) injury where applicable; and (c) causal link between dumping of imports and the alleged injury. The Designated Authority is required on the basis of the evidence as adduced by the domestic industry to arrive at prima facie conclusion before initiating the investigation. Rule 5 requires satisfaction of the Designated Authority for initiating the investigation which was not there on the basis of evidence produced before him. Reliance was also placed on the following decisions :- (i) Pig Iron Mfrs. Assn. v. Designated Authority, 2000 (116) E.L.T. 67 (para 5.1) - where it was held that Designated Authority shall initiate investigation only upon receipt of written application by or on behalf of domestic industry withdrawal of support after initiation does not terminate proceedings. (ii) Commissioner of Income Tax v. GM Mittal Stainless Steel, (2003) 11 S.C.C. 441 (Para 6) - where it was held that power of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... joint product and it should have been taken into consideration. There was cost variation for chlorine during POI ranging from Rs. 1000/- PMT to Rs. 8000/- PMT with such a wide variation in cost of chlorine, cost should have been apportioned at the point of separation between chlorine and caustic soda proportionately. ARGUMENTS ON BEHALF OF D.A. : 9.On behalf of the Designated Authority it was pleaded that the costs between chlorine and caustic soda were not apportioned on the basis of joint product but cost was taken on the basis of proforma 'A' and 'B' of Cost Accounting Rules. At the relevant time Cost Accounting Records (Caustic Soda) Rules, 1967 as amended from 1999 were applicable and according to Rule 3(3) of the said Rule every company to which these rules were applicable were required to maintain proper books of account containing particulars specified in Schedule 3 and Proforma 'A' and 'B' annexed to the Schedule of these rules relating to the utilization of materials, labour and other items of cost in so far as they are applicable to caustic soda in any form. The manufacturers were maintaining these records in India. As per proforma 'A' and 'B' they were required to re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is uniformally adopted by the Designated Authority for all industries as the same profit has been standardized. 9.3 It was further contended for the Designated Authority that they have taken the figures of import as per DGCI&E and same figures were given by the domestic industry. The Designated Authority has not taken wrong figures. The Designated Authority has taken caustic soda as a single product instead of the various form in which it is available in the market or it is imported. Since the product is one and interchangeable with domestic product, its different form do not make it as a different product, therefore, the pleading of the appellants that there is no finding on the like articles given by the Designated Authority is baseless. REASONS : 10.We have considered the submissions made by both the sides and our findings are as under :- INITIATION : 11.It was alleged that the Designated Authority has not taken proper care to see that the application for initiation of investigation had not given the sufficient evidence for alleged dumping and injury and evidence of causal link between the alleged dumped imports. It was obligatory for the Designated Authority to examine th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority noted that the installed capacity and availability of sufficiently freely disposable subject goods by exporters in the subject countries couple with the export price of subject goods to India by countries have caused price under cutting and also pose a threat of material injury to domestic industry by way of price suppression and under cutting. For initiation of investigation the information available before the Designated Authority was submitted by the applicant M/s. AMAI. The information given by M/s. AMAI was required to be verified by the Designated Authority for initiation of the investigation with reference to the source from which the information has been furnished which has been done by the Designated Authority. He prima facie came to the conclusion that there is dumping of the caustic soda from Korea P.R. and P.R. China. At the stage for initiation of the investigation the Designated Authority has only to examine the accuracy and adequacy of evidence provided in the application and the same has been done by the Designated Authority as is evident from the initiation notification. Therefore, it cannot be said that the Designated Authority has not applied his mind r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he subject goods production and have thus the sanding to file the petition on behalf of domestic industry as per Rule 5(3)(a) and (b) of Anti-Dumping Rules. 13.It is pleaded that the proceeding initiated by Designated Authority are void ab initio as caustic soda lye, caustic soda flakes, prills and granules have been taken as one product. We find that according to Rule 2(d), "like article" means an article which is identical or alike in all respects to article under investigation or being dumped in India or in the absence of such an article other article which although not alike in all respects but characteristics closely resembling those of articles under investigation. In the present case the application for imposing Anti-Dumping duty was in respect of Sodium Hydroxide commonly known as caustic soda. The goods produced by the domestic industry are like article to the goods produced, originating in or exported from the subject countries and both are used in interchangeably. Same technology is applied for production of caustic soda throughout the world. Therefore, irrespective of the form, the sodium hydroxide is one product and it has been correctly taken as one product by the De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vestigation. RINIL had supported the levy at the early stage of proceedings. Therefore, the requirement for initiation had been met". In case of Commissioner of Income Tax v. Mittal Stainless Steel (P) Ltd. - (2003) 11 S.C.C. 441 (supra) in para 6 it is held that "in this particular case, the Commissioner has not recorded any reason whatsoever for coming to the conclusion that the assessing officer was erroneous in deciding that the power subsidy was capital receipt.........The power of Commissioner under Section 263 of the Income-tax Act must be exercised on the basis of the material that was available to him when he exercised the power. At that time, there was no dispute that the issue whether the power subsidy should be treated as capital receipt had been concluded against the Revenue. The satisfaction of the Commissioner, therefore, was based on no material, either legal or factual which would have given him the jurisdiction to take action under Section 263 of the Income-tax, Act". 13.3 We find that the above decisions are in no way supporting the appellant (NALCO) that Designated Authority has not applied his mind. The application for initiation of investigation had furnished ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t given reasons how these were considered. If the Designated Authority was of the view that this information is not capable of being provided on a non-confidential basis in terms of Rule 7(3) of the Rules, it must disclose reasons for the same. 15.1 During hearing of appeal the non-confidential information was exchanged and all parties got the necessary information to present their case. However, it is necessary for us to bring to the notice of DA the issue of maintenance of proper public file by the Designated Authority. The Designated Authority is required to maintain the public file/files with file number/numbers in which all the responses from the interested parties importers/exporters should be kept and properly page numbered and indexed. Date of filing the document in the public file should be indicated in the index. When any interested party examines the public file a proper dated acknowledgement should be obtained so that the interested parties may not claim that they have not been provided with the information in the public file or the document was not available in the public file. These acknowledgements should be made available when the appeals against the final findings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xporters of China whose business is effected by imposing anti-dumping duty. 17.The main duty of Designated Authority is to determine existence degree and effect of alleged dumping in relation to import of any article and to submit its finding provisionally or finally to the Central Government regarding normal value, export price and margin of dumping in relation to the article under investigation and the injury or threat of injury to an industry established in India or material retardation to the establishment of industry in India consequent upon imports of such articles from specified countries and to recommend levy of Anti-dumping duty equal to the margin of dumping or less which if levied would remove the injury to the domestic industry and the date of commencement of such duty. For doing so, the Designated Authority has to determine the normal value export price and margin of dumping and also to determine the injury to the domestic industry. It was pleaded before us by the domestic industry that in case of Hanwha Chemical Corporation the normal value and export price has not been correctly determined which has lead to non-imposition of duty on M/s. Hanwha Chemical Corporation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ales below per unit cost represent not less than 20% volume sold in transaction under consideration is to be excluded for determining the normal value. During the POI the number of transactions were 20,000 and the transactions where the goods were sold below per unit cost were in all 1.96%. The quantity of the goods sold was also not substantiated; therefore, the Designated Authority correctly did not remove these transactions while arriving at the normal value. Therefore, the plea of the domestic industry on this count is rejected. During the period of investigation there were 20,000 transactions of sale in domestic area but transaction-wise freight has not been shown separately by the exporter M/s. Hanwha Chemical Corporation. When details were called, M/s. Hanwha Chemical Corporation have enclosed details of inland freight paid during the POI month-wise. The D.A. has got verified each freight contract and ex-factory price was determined on the basis of records kept in accordance with the generally accepted accounting principal of exporting country and determined the normal value on the basis of price in ordinary course of sale when meant for consumption in the exporting country. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ex-factory price for export. This has been done, therefore, there is no relevance of taking into consideration the SGA expanses of M/s. Hanwha Corporation. We also find that deduction of $ 5 per DMT was also not permitted by the Designated Authority for caustic soda produced by diaphram technology as there is no difference in caustic soda when manufactured by membrain technology or diaphram technology. It is immaterial whether M/s. Hanwha Chemical Corporation and M/s. Hanwha Corporation were running in loss, we have only to see whether the export price has been correctly determined or not. We find that the Designated Authority in his final finding has observed that the authority for the purpose of final finding considered the adjustment as claimed by the customer on discount adjustment in terms of sale as per NALCO tender and adjustment of previous transaction sale to M/s. Tricon. Thus addition of $ 4.57/MT was correctly done. Thus, Designated Authority has correctly determined the export price for caustic soda and it was normatted for other exporters from Korea. This normatted export price was taken and normal value was determined on the basis of published figures of domestic sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ic industry was caused by the dumped imports, the Designated Authority is required to look into any known-factors other than the dumped import, which at the same time are injuring the domestic industry and injury caused by these other factors must not be attributable to the dumped imports. The factor which may be relevant in this regard include, inter alia, the volume and prices of 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. It was argued that the Designated Authority should have also taken into account of the obsolete machinery and high electrical cost while determining the non-injurious price. We find that these factors have been taken into account by the Designated Authority while determining the non-injurious price. The technology which is being used is same throughout the world, therefore, it cannot be state that India is using obsolete machinery. 21.1 As discussed above, we have observed that in case of Hanwah Chemical Corporation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estic industry as profit for working out the non-injurious price. It was clarified for the DA that this has been taken on the basis of the standard adopted, and same standard is adopted in all other cases. No body will invest money for manufacture if one does not get reasonable profit on capital investment. No evidence was produced that margin of profit is unreasonable. Therefore, profit taken is reasonable. 22.2 We are, therefore, of the view that the non-injurious price was not correctly determined by the Designated Authority. In case of M/s. Hanwah Chemical Corporation, the appellant had separated the cost of production between Caustic soda and Chlorine at the point of separation of the Chlorine and Caustic soda. The same principle should be applied for domestic industry for reasonable and equitable distribution of cost of production between chlorine and caustic soda. Since this has not been done and this has lead to incorrect fixation of non-injurious price, and consequently anti-dumping duty. FINAL ORDER : 23.We, therefore, set aside the impugned notification No. 142/2003-Cus. dated 23-9-2003 and the final findings of the DA on non-injurious price and injury margin. We rema ..... X X X X Extracts X X X X X X X X Extracts X X X X
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