pri Anti-Dumping Investigation on imports of Dimethyl Formamide Anti-Dumping Investigation on imports of Dimethyl Formamide

MINISTRY OF COMMERCE AND INDUSTRY
(Department of Commerce)
(DIRECTORATE GENERAL OF TRADE REMEDIES)
NOTIFICATION
FINAL FINDINGS
New Delhi, the 11th January, 2021

CASE NO. (OI) 24/2019

Sub. : Final Findings in the Anti-Dumping Original Investigation concerning imports of “Dimethyl Formamide” (DMF) originating in or exported from China PR and Saudi Arabia.

F. No. 6/37/2019-DGTR.—Having regard to the Customs Tariff Act, 1975, as amended from time to time (hereinafter referred to as the Act) and the Customs Tariff (Identification, Assessment and Collection of Anti-Dumping Duty on Dumped Articles and for Determination of Injury) Rules thereof, as amended from time to time (hereinafter referred to as the AD rules), thereof;

A. BACKGROUND OF THE CASE

1. M/s. Balaji Amines Ltd (hereinafter also referred to as “the Applicant”) has filed an application before the Designated Authority (hereinafter also referred to as “the Authority”) on behalf of the domestic industry, in accordance with the Customs Tariff Act, 1975 as amended from time to time (hereinafter also referred to as the “Act”) and the Customs Tariff (Identification, Assessment and Collection of AntiDumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995 as amended from time to time (hereinafter also referred to as the “Rules”) for Original Investigation of Anti-dumping Duty concerning imports of “Dimethyl Formamide” (DMF) (hereinafter also referred to as “subject goods” or “product under consideration” or “PUC”), originating in or exported from Saudi Arabia and China PR (hereinafter also referred to as the “subject countries”).

2. The Authority, on the basis of prima facie evidence submitted by the Applicant, issued a public notice vide Notification F. No. 6/37/2019-DGTR dated 14th January, 2020, published in the Gazette of India Extraordinary, initiating the subject investigation in accordance with Section 9A of the Act read with Rule 5 of the Rules to determine existence, degree and effect of the alleged dumping of the subject goods, originating in or exported from the subject countries, and to recommend the amount of antidumping duty, which if levied, would be adequate to remove the alleged injury to the Domestic Industry.

3. The Authority, in terms of Rule 12 of the Rules, issued a public notice vide Notification No.7/37/2019 – DGTR dated 18th August, 2020 notifying preliminary findings in the investigation. However, the same has not been implemented by the Central Government.

B. PROCEDURE

4. The procedure described herein below has been followed with regard to the subject investigation:

a. The Authority notified the Embassies of the Subject Countries in India about the receipt of the present anti-dumping application before proceeding to initiate the investigation in accordance with Sub-Rule (5) of Rule 5 supra.

b. The Authority issued a public notice dated 14th January, 2020 published in the Gazette of India Extraordinary, initiating anti-dumping investigation concerning imports of the subject goods from subject countries.

c. The Authority sent a copy of the initiation notification to the Embassies of the Subject Countries in India, known producers/exporters from the subject countries, known importers/users and the Domestic Industry as well as other domestic producers as per the addresses made available by the Applicant and requested them to make their views known in writing within the prescribed time limit.

d. The Authority provided a copy of the non-confidential version of the application to the known producers/exporters and to the Embassies of the subject countries in India in accordance with Rule 6(3) of the Rules supra.

e. The Embassies of the subject countries in India were also requested to advise the exporters/producers from their countries to respond to the questionnaire within the prescribed time limit. A copy of the letter and questionnaire sent to the producers/exporters was also sent to them along with the names and addresses of the known producers/exporters from the subject countries.

f. The Authority sent questionnaires to the following known producers/exporters in the subject countries in accordance with Rule 6(4) of the AD Rules Saudi Arabia

i. Methanol Chemicals Company

ii. Fahad Thnayan AI Thnayan and PA

iii. Barwil Agencies Ltd China PR

i. Shandong Hualu-Hengsheng Chemical Co Ltd

ii. Hualu Holding Group Co., Ltd

iii. Zibo Luzhong Chemical & Light Industry Co., Ltd

iv. Anhui Huaihua Fine Chemicals Co., Ltd

v. Zhejiang Jiangshan Chemical Co., Ltd

g. In response, the following exporters/producers from the subject countries filed exporter‘s questionnaire response;

i. Methanol Chemicals Company, Saudi Arabia,

ii. M/s. Luxi Chemical Group Co. Ltd., Chlor-Alkali Chemical Branch, China, now known as M/s. Liaocheng Luxi Mehtylamine Chemical Co., Ltd.

iii. M/s. Shandong Liaocheng Luxi New Material Sale Co., Ltd., China and

iv. M/s. Liaocheng Ruijin (Hong Kong) Co., Limited.

h. The Authority sent Importer‘s Questionnaire to the following known importers/users of subject goods in India calling for necessary information in accordance with Rule 6(4) of the Rule

i. Orchid Chemicals and Pharmaceuticals Ltd

ii. Symed Labs Ltd

iii. Matrix Laboratories Ltd

iv. Dorf-Ketal Chemicals India Pvt Ltd

v. Harman Finochem Ltd

vi. Ramkamal Chemicals Pvt Ltd

vii. Piramal Enterprises Ltd

viii. Matrix Laboratories Ltd

ix. AMI Organics Pvt Ltd

x. Pasupati Acrylon Limited

xi. Indian Acrylics Ltd

xii. Wockhardt Ltd

xiii. Yogesh Dyestuff Products Pvt. Ltd

xiv. Sun Pharmaceutical Industries Ltd

xv. Lupin Ltd

xvi. Aurobindo Pharma Ltd

i. In response, the following importers/users have responded and filed importer‘s questionnaire response;

i. Ramniklal S Gosalia & Co

ii. Aurobindo Pharma Ltd

iii. Pasupati Acrylon Limited

iv. Indian Acrylics Ltd

v. Laurus Labs Ltd.

j. M/s. Sandeep Organics Ltd has only filed letter/submissions and no responses were filed in the prescribed formats within the stipulated time to do so following the initiation. Notwithstanding the same, the submissions on the party to the extent found relevant is considered and addressed.

k. The Authority, upon request, granted extension, to file Exporter Questionnaire Response (EQR) by 02.03.2020, which was placed in the public domain through DGTR‘s website.

l. The Authority made available non-confidential version of the evidence presented/made by various interested parties to the other parties by directing the parties to exchange such submissions based on the list of interested parties relevant for the investigation made available to all relevant parties.

m. Request was made to the Directorate General of Commercial Intelligence and Statistics (DGCI&S) to provide the transaction-wise details of imports of subject goods for the past three years, and the period of investigation, which was received by the Authority. The Authority has, relied upon the DGCI&S data for computation of the volume of imports and its analysis after due examination of the transactions.

n. The Non-Injurious Price (NIP) has been determined based on the cost of production and cost to make & sell the subject goods in India based on the information furnished by the Domestic Industry on the basis of Generally Accepted Accounting Principles (GAAP) and Annexure III to the Anti-Dumping Rules so as to ascertain whether Anti-Dumping duty lower than the dumping margin would be sufficient to remove injury to the Domestic Industry.

o. The Period of Investigation for the purpose of the present anti-dumping investigation is from 1st January, 2019 to 30th September, 2019 (9 Months). The injury investigation period has however, been considered as the period from April 2016 – March 2017, April 2017 – March 2018, April 2018 – March 2019 and the POI.

p. The Authority notified the Preliminary Findings to all interested parties. As recorded in the Preliminary Findings, the Authority invited comments on the same and the views of the interested parties on the preliminary determination has been considered and addressed to the extent relevant for the purpose of present Final Findings.

q. Desk verification of the information provided by the applicant, responding producers and exporters from subject countries to the extent deemed necessary, was carried out by the Authority. Only such verified information with necessary modification/rectification, wherever applicable, has been relied upon for the purpose of Final Findings.

r. In accordance with Rule 6(6) of the Rules, the Authority also provided opportunity to all interested parties to present their views orally in a hearing held via Video Conferencing on 16th November, 2020. All the parties who had attended the oral hearing were provided an opportunity to file written submissions, followed by rejoinders, if any.

s. The submissions made by the interested parties during the course of this investigation so far including the post disclosure comments, to the extent supported with evidence and considered relevant to the present investigation, have been appropriately considered and addressed by the Authority, in this Final Findings which includes the comments of the parties on disclosure statement as well.

t. Information provided by the interested parties on confidential basis was examined with regard to sufficiency of the confidentiality claim. On being satisfied, the Authority has accepted the confidentiality claims wherever warranted and such information has been considered as confidential and not disclosed to other interested parties. Wherever possible, parties providing information on confidential basis were directed to provide sufficient non-confidential version of the information filed on confidential basis.

u. Wherever an interested party has refused access to, or has otherwise not provided necessary information during the course of the present investigation, or has significantly impeded the investigation, the Authority has considered such parties as non-cooperative and recorded the views/observations on the basis of the facts available.

v. In accordance with Rule 16 of the Rules, the essential facts of the investigation were disclosed to the known interested parties vide disclosure statement dated 26th December 2020 and comments received thereon, considered relevant by the Authority, have been addressed in this Final Findings.

w . ‘***‘ in this Final Findings represents information furnished by an interested party on confidential basis and so considered by the Authority under the Rules.

x. The exchange rate adopted by the Authority for the subject investigation is US$1 = Rs.71.03.

C. PRODUCT UNDER CONSIDERATION AND LIKE ARTICLE

5. At the stage of initiation, the product under consideration was defined as:

i) ‘The product under consideration in the present investigation is Di Methyl Formamide and has also been referred as DMF’.

ii) ‘Di Methyl Formamide ‘, is a colourless, high boiling polar aprotic solvent with a characteristic odor. It is stable on heating and under its distillation temperature range and is freely miscible with water, alcohols, ethers, ketones, ester, carbon disulfide and chlorinated and aromatic hydrocarbons. The application and uses of the subject goods can be broadly categorized as follows;

a. As a solvent in pharmaceuticals manufacturing;

b. As a solvents in Acrylic Polymers manufacturing;

c. As a feedstock for synthesis of derivatives of DMF;

d. As a solvent in pesticides formulations

iii) The PUC is primarily declared under Customs subheading 29211110 at the time of imports. However, the subheading is indicative only and is not binding on the scope of the PUC since the chances of imports of PUC getting reported under other subheadings cannot be ruled our as claimed by the petitioner. It would not be appropriate to restrict the scope of PUC to customs subheading alone and what is relevant is the product description.

Submissions made by the Domestic Industry

6. . The submissions made by the domestic industry with regard to product under consideration and like article and considered relevant by the Authority are as follows:

i. The product under consideration in the present case is ‘Dimethyl Formamide‘ (DMF) originating in or exported Saudi Arabia and China PR. Dimethyl Formamide is the organic compound with the formula C3H7NO or HCON(CH3)2 and bears the chemical nomenclature ‘N,NDIMETHYLFORMAMIDE‘.

ii. ‘Dimethyl Formamide‘, is a colorless, high boiling polar aprotic solvent with a characteristic odor. It is stable on heating and under its distillation temperature range and is freely miscible with water, alcohols, ethers, ketones, ester, carbon disulfide and chlorinated and aromatic hydrocarbons.

iii. The product under consideration is imported under Chapter 29 of the Customs Tariff Act, 1975 under customs sub-heading 29211110. The customs classification is indicative only and not binding on scope of the product under consideration.

iv. There is no difference in product produced by the Applicant and exported from the subject country.

v. None of the responding exporters/importers have raised any differences between the imported DMF and that produced by the petitioner. It has been submitted that DMF is sold in bulk/container or packed in HDPE drums. Mode of packing does not create any difference in the product as such. The Authority may compare DMF sold in container to container and drums to drums for all practical purposes of determining dumping and injury margins. The petitioner has already provided cost and price information separately for bulk and packed product including information relevant for NIP.

vi. The contentions of Sandeep Organics Pvt Ltd have no authenticity as the said party has not established its bona fides and the company has not filed any Questionnaire Response. While the Company, whose status is not known, have raised concerns on the product comparability, the participating producers/exporters and importers/users have not raised any such issues. The contentions raised by the company are denied on all factual counts and DMF produced by the petitioner is comparable to the DMF imported into India within the meaning of Rule 2 (d).

Submissions made by the other interested parties

7. The submissions made by the exporters, importers, users and other interested parties with regard to product under consideration and like article, and considered relevant by the Authority, are as follows:

i. There is no difference of technical or physical characteristics for the PUC imported from country concerned with that produced in India. However, the landed price for the PUC imported from country concerned with that produced in India could be different.

ii. The product under consideration sold in Saudi Arabian domestic market, and the products exported to India are identical in physical and chemical characteristics.

iii. There are no known differences in the product domestically manufactured and product imported.

iv. The product under consideration is a single product, physically and chemically identical in all markets. The only difference is that the product is sold in bulk or in drums.

v. Sandeep Organics Pvt Ltd contended that verification of Exporter and DI both are required in terms of manufacturing process & difference in quality produced. It has also been contended by the Company that there is difference in the Dimethylamine, formic acid, ph, conductivity, Fe, methanol and Dimethylacetamide contents in the DMF produced in India and that exported from producers from China PR like Luxi Chemical.

vi. Anti-dumping duty as per packing should be ascertained/calculated as DMF has different price for different packing.

Examination of the Authority

8. The submissions made by the interested parties and the Domestic Industry with regard to the PUC related issues and considered relevant by the Authority are examined and addressed hereunder.

9. The product under consideration for the purpose of present investigation is ―Dimethyl Formamide (DMF)‖ originating in or exported from Saudi Arabia and China.

10. It is a colorless, high boiling polar aprotic solvent with a characteristic odor. It is stable on heating and under its distillation temperature range and is freely miscible with water, alcohols, ethers, ketones, ester, carbon disulfide and chlorinated and aromatic hydrocarbons. The PUC is used as a solvent in pharmaceuticals manufacturing, Acrylic Polymers manufacturer and pesticides formulations. It is used as a feedstock for synthesis of derivatives of DMF.

11. PUC is classifiable under Chapter 29 of the Customs Tariff Act, 1975 under sub-heading 2921 1110. However, the customs classification is indicative only and is in no way binding on the scope of the present investigation.

12. With regard to like article, Rule 2(d) of the AD Rules provides as follows: –

like article” means an article which is identical or alike in all respects to the article under investigation for being dumped in India or in the absence of such article, another article which although not alike in all respects, has characteristics closely resembling those of the articles under investigation.

13. It is also noted from the responses submitted by the opposing interested parties that there are no differences in the subject goods domestically manufactured and those which are imported. Based on the information available on record, it is noted that there is no known difference in the subject goods produced by the petitioner and the product under consideration produced and exported from the subject countries. The two products are comparable in terms of essential product characteristics such as physical & chemical characteristics, manufacturing process & technology, functions & uses, product specifications, pricing, distribution & marketing and tariff classification of the goods etc. The two are technically and commercially substitutable. Therefore, for the purpose of the present Final Findings, the subject goods produced by the petitioner in India are found as ‗Like Article‘ to the subject goods being imported from the subject countries under Rule 2 (d) of the AD Rules.

14. With regard to the contentions raised by M/s. Sandeep Organics Pvt Ltd, it is noted that the contentions are not supported by any evidences and no details of imports or purchase of DMF made by M/s. Sandeep Organics Pvt Ltd have been provided to examine such differences claimed by the party. Also, the cooperating exporters and importers/users have stated in their responses that the imported and domestically produced DMF are comparable technically and commercially. In view of the same, the contentions raised by M/s. Sandeep Organics Pvt Ltd are rejected.

15. As regards the claims for separate comparison of product traded in bulk and packed condition for determination of margins, appropriate comparison are carried out for the determination of dumping and injury margin in this Final Findings.

16. After considering the information on record, the Authority holds that there is no known difference in product under consideration exported from subject countries and the subject product produced by the Domestic Industry. The subject goods produced by the Domestic Industry are comparable to the subject goods exported from subject countries in terms of characteristics such as physical & chemical characteristics, functions & uses, product specifications, and tariff classification of the goods. The two are technically and commercially substitutable. The consumers are using the two interchangeably.

D. DOMESTIC INDUSTRY AND STANDING

Submissions made by the Domestic Industry

17. The submissions made by the Domestic Industry with regard to scope of Domestic Industry & standing so far are as follows;

a. The petitioner in the present case namely Balaji Amines Ltd is the sole producer of the subject goods in India and production by Balaji constitutes 100% share of total Indian production. The petitioner did not import the dumped material or are related to exporters/imports of the subject goods as provided in the Rule. Thus, the petitioner fulfills the requirements of standing and also constitutes domestic industry as defined in Rule 2 (b) of the AD Rules.

b. It may be noted that M/s. RCF Ltd was also a producer of subject goods. RCF Ltd has not produced the subject goods for some time now as per the understanding of the petitioner.

c. The details of some imports made by the petitioner in the early part of 2016-17 (base year of present investigation) were provided in the petition itself. The facts of such imports were covered in a previous investigation concerning the product and such imports have no material effect on the determinations under Rule 2(b) as the petitioner did not import during the POI.

Submission of other interested parties

18. The submissions on the aspect of domestic industry and standing filed by other interested parties so far is as follows;

a. The Petitioner has not provided any details of the quantity of imports made by it or any other relevant information in respect of imports made by it in the base year.

b. Since RCF has had the capacity to produce PUC, the Authority is requested to verify if RCF has, in fact, commercially not produced and sold the PUC in the POI in India.

Examination of the Authority

19. Rule 2 (b) of the AD rules defines the ―domestic industry‖ as under:

“(b) “domestic industry” means the domestic producers as a whole engaged in the manufacture of the like article and any activity connected therewith or those whose collective output of the said article constitutes a major proportion of the total domestic production of that article except when such producers are related to the exporters or importers of the alleged dumped article or are themselves importers thereof in such case the term domestic industry‟ may be construed as referring to the rest of the producers”

20. It is noted that the application has been filed by M/s. Balaji Amines Ltd. who has claimed to be the sole producer of subject goods in India. As per the petition, M/s. Rashtriya Chemical & Fertilizers Ltd (RCF Ltd) was also a producer of subject goods. However, as provided in the petition, M/s. RCF has not produced the subject goods for quite some time. It is also noted that M/s. RCF Ltd has neither supported the petition nor opposed it.

21. M/s. Balaji Amines Ltd has not imported the PUC from the subject countries and is not related either to any exporter or producer of the PUC in the subject countries or any importer of the PUC in India.

22. As regards imports by the Petitioner, it is noted from the petition that no imports were made during the Period of Investigation by the petitioner.

23. As regards the participation by RCF Ltd, it is noted that RCF Ltd has not responded to the present investigation.

24. Accordingly, the Authority holds that for the purpose of this investigation, the Applicant Company satisfies the standing requirement and constitutes the ―Domestic Industry‖ in terms of Rule 2(b) and Rule 5(3) of the Anti-dumping Rules.

E. MISCELLANEOUS ISSUES

Submissions made by the Domestic Industry

25. Certain miscellaneous submissions put forth by the domestic industry at this stage is noted as follows:

i. The case requires immediate levy of preliminary measures as the domestic industry have been suffering financial losses during the POI and the trend is just continuing. The discussion of overall injury in the petition shows that the enormity of such injury is just increasing on all key parameters of injury.

ii. The losses are directly linked to the injury created by dumped imports and immediate reliefs are necessary in the form of interim measures so that the DI can sustain in manufacturing pending the investigation.

iii. The facts of the present case shows significant import of the subject goods from subject countries which has increased in absolute terms at aggravated level of dumping (55 to 60 %) and such targeted dumping need quick measures to arrest the impacts on the DI. In fact, the dumped imports held about *** of the Indian demand and any fair share in demand to the DI can be ensured by imposition of anti-dumping duties only.

iv. No anti-dumping duties on import of PUC at the end of a recent Anti-dumping investigation concerning the subject goods [F. No.6/37/2017-DGAD dated 23.10.2018] apparently been taken as a golden opportunity by the producers/exporters from subject countries to increase dumping in India and after the said findings, the vigor of dumping has sky rocketed. The DI has again come before the Authority but with a much aggravated situation of injury. If Anti­dumping Duty is not levied at the earliest, there will be complete closure of the domestic industry and therefore, pray for immediate provisional measures pending detailed investigations and definitive measures by the Authority.

v. Provisional finding (PF) shows existence of dumping, injury and a causal relation between such dumping and injury concerning the dumped imports of subject goods from subject countries. ADD on PUC from subject countries is very essential at this juncture as dumping and injury is getting aggravated and the injury already caused in still unaddressed.

vi. The quantum of duty determined appears very low for the responding exporters. Inadequate duty will not help the domestic industry and the domestic industry will continue to suffer even after a finding of dumping and injury if no adequate duty is imposed.

vii. The duties will not impact the public interest in any manner and the existence of a unit producing the DMF shall certainly be in the larger public interest.

viii. Production by the petitioner is essential to avoid dependency of the Indian users on imports. DMF which is a solvent which is also recovered to some level after use forms only an insignificant part in the total cost at the end of the users including pharmaceutical companies. DMF is not even pharmaceutical input and is only a solvent which enables chemical reaction wherever it is used.

ix. Any ADD shall not impact the users in any significant manner but such duties are essential for the petitioner to continue with production amidst dumping. Imports such as under AL are not covered under ADD and the users can still import at un-dumped prices. Any duties to counteract dumping will not impact the public interest in any manner. India has imposed ADD on many key pharmaceutical inputs itself in the past and there are no jurisprudences which say no ADD on chemicals used in pharmaceutical industry as contended by some users. ADD is essential to ensure level playing field between petitioner and the exporters/importers of DMF.

x. The claims of the opposing parties that imposition of antidumping duty will lead to an increase in the input cost for their products which will potentially lead to less of exports resulting in decline of forex earning are not of any merit. The share of DMF in the cost of finished product at the end of such parties shall be very negligible and it is not going to impact the export competitiveness etc. in any manner. Import for exports under Advance Licenses is not even covered under ADD.

xi. It has been contended that lower production and selling capacity of Indian producer would make it difficult for them to connect with a customer having large requirements and this has led to lower sales realization and hence lower profitability of the DI. The contention at the best shows the DI faced lower sales realization and lower profitability. Lower production and selling was on account of the presence of dumped imports in India and in the absence of  dumping the petitioner would have produced and sold more at profitable price.

xii. It has been contended that inefficient utilization of installed productioncapacity due to lower demand has led to higher fixed cost and lower profits.Claim is not true. Underutilization of the capacity was the result of presence of dumped imports in India and in the absence of dumping the petitioner would have produced and sold more.

xiii. It has been contended that reliance on imported Methanol (Raw material required to manufacture DMF) has led to delays in production and running losses. The contention is not true. The issue is that though the cost ofproduction declined, the reduction in selling price was much higher than such reduction and what has influenced the selling price of the petitioner is the sharp decline in landed price of dumped imports of subject goods from subject countries.

xiv. It has been contended that the domestic players don‘t have proven capacities to cater to Indian demand and any imposition of antidumping duty would lead to scarcity of the product and will increase the price of DMF. The contention is self serving only. The real issue is that the capacity of the DI has been grossly underutilized and dumping was the cause of such underutilization. New capacities can emerge only when the current capacities are utilized to the best. In any case, demand supply gap is not any justification to dump the product.

xv. It has been contended that no basis or explanation for selection of 9 months POI is provided. The claim is not true. The petition itself contains the basis of such POI. The POI commences after the final finding in previous investigation and best reflects the dumping and consequent injury suffered by the DI relevant for this investigation. The selection of POI has not vitiated the merits of the case in any manner and the POI is proper and consistent with the practices. There is plethora of investigations wherein POI was considered as either 6 months or 9 months or 15 or 18 months depending on the facts of each case and no rule says POI has to be invariably 12 months.

xvi. It has been contended that Domestic industry‘s financial performance hasbeen impacted by the steep increase in the cost of raw materials used in the production of the like article in India. The contention is not true. In fact the cost of production declined during the POI viz. the previous year. However, the reduction in selling price was much higher than such reduction and

xvii. what has influenced the selling price of the petitioner is the sharp decline in landed price of dumped imports in the same period.

xiii. It has been contended that the petitioner did not share the details of import data as per DGCI&S. The petitioner has provided all relevant information including the DGCI&S data and summary as required under the rule, thus, the contention has no meaning.

xviii. It is contended that only reference form of duty should be considered in the present matter and no duty should be imposed on public interest. The contentions need to be rejected. Only fixed form of duty shall be the appropriate form of duty in the acts of the present case and reference form of duty is not appropriate as the product does not cover any large varieties and wide range of products etc. Reference price can lead to circumvention and the form of duty has to be in such a manner to achieve the intended purpose of the duty. It shall be in public interest to impose ADD on DMF as the petitioner is the sole producer and its existence can be ensured by imposing ADD.

xix. There are oppositions raised against request for retrospective levy of ADD. The fact that the dumping and injury aggravated after a recent finding not to impose ADD alone establishes the need for retrospective duties as the parties were well aware of the dumping being practiced by the exporters but they continued to import significant volume at dumped and injurious price. As elaborated in the petition, present case is a fit case for imposition of ADD on retrospective basis also.

xx. It has been contended that mechanism of anti-dumping duty cannot be resorted to for protectionism of domestic producers. The contention is only a baseless insinuation. The DI sought protection against injurious dumping and duties to remove injury on account dumping of DMF is a justified action under the Anti-dumping law and is not any protectionist measure per se.

xxi. It has been contended that currently, there is shortage as of DMF as demand is high and supply by DI is less. The contention has no meaning. About 70% of the capacity of the DI was underutilized during the POI and the reason for such underutilization was presence of dumped imports. Demand supply gap is not any justification for dumping as held in many AD cases. The present case is all about underutilization due to dumping and not about demand supply gap.

xxii. It has been contended that domestic prices and also landed price of imports have increased after the notification. The claim has no basis as the information pertaining to the injury period alone is relevant in the present matter. Also, any such increase in price depending on other factors does not vitiate the claim of dumping and injury relevant for the present matter in any manner.

Submission of other interested parties

26. The submissions made by the opposing parties in the responses considered as miscellaneous issues at this stage are as follows:

i. Imposition of anti-dumping duties shall impact the users/importers adversely.

ii. The users are against the imposition of anti-dumping duties.

iii. Imposition of anti-dumping duties shall lead to monopolistic behavior by Balaji Amines Ltd.

iv. The imposition of antidumping duty will lead to an increase in the input cost for products at the end of users. Any increase in the input cost will make the product uncompetitive for exports. This will potentially lead to less exports resulting in decline of Forex earning.

v. It is not possible for the company to switch to other sources for supply of product under investigation within a short duration of time. This is due to the fact the domestic industry in India has very limited capacity to supply the subject goods and the prices are not competitive as compared to the imported DMF.

vi. The claims of the Petitioner lack merit as is evidenced from the previous investigation and analysis of the Authority. The findings of the said previous investigation will apply equally to the present investigation given the greater decline in import volumes in relative terms and positive growth in the Petitioner‘s economic parameters.

vii. Preliminary Findings have been erroneously issued and do not consider submissions made by the Users. The failure to address and consider the User‘s Preliminary Submissions and issue a speaking Preliminary Finding is in violation of the principles of natural justice recognized by the Hon‘ble Supreme Court.

viii. The Petitioner has failed to disclose the DGCI&S transaction wise data relied upon by it to determine the export price in the Petition.

ix. The POI in the present investigation covers a 9-month period from January to September 2019. The User submits that the selection of 9-month POI in the present investigation is a departure from the normal practice of the Authority. Also, there are no justifications given for selection of such POI.

x. In the event the Authority recommends imposition of duty, the User requests the Authority to consider duty in the form of reference price. This is for the reasons that globally, the prices of PUC have spiked. Currently, the landed prices for the PUC are in the range of 109-110 Rs/Kg, which is far above the landed prices quoted in the Petition. Also, the Petitioner (who claims to be the sole producer of PUC in India) has been unable to cater to the requirement of the User industries in India. There are past instances wherein form of duty in the final finding was different from PF.

xi. In the event anti-dumping duty is recommended on PUC from subjectcountries, the pharma companies, in the interest of public, should not be subjected to duty if they provide an end-user certificate.

xii. Currently, CIF from Saudi Arabia is over USD 1350 PMT CIF. Currently, CIF from China PR is over USD 1500 PMT CIF. Currently, Indian price is RS. 112-114 per kg ex stock.

xiii. Currently, imports are not viable. Domestic prices have increased after the notification. Capacity of DI should be personally verified.

xiv. Currently, there is shortage for the product in India as the demand is high and supply is less.

xv. Mechanism of anti-dumping duty cannot be resorted to for protectionism of domestic producers.

xvi. There is no justification for retrospective application of antidumping duty in the present investigation.

xvii. Imposition of anti-dumping duty on DMF will adversely affect the health sector in India.

xviii. The underutilization of the capacity which appears to be single biggest concern for the domestic industry, the domestic industry did not disclose the material fact that the same capacity is used for producing other value added products such as DMAC and DMA HCL.

xix. Even if the Petitioner were to achieve 100% capacity utilization and sell its entire production in the domestic market, even then the Petitioner may at best meet around 60% demand. Given the lack of import substitutability, it would be highly detrimental for user industry in India, which majorly comprises of pharmaceutical companies, who use the subject goods as a solvent.

xx. It is relevant to note that the only a minor portion of the imports made by the User (approximately 25%) benefit from advance authorization scheme and almost 75% of imports are made after payment of duty. Therefore, the Petitioner‘s contention that the Users may avail benefit of advance authorization and will not be subject to anti-dumping duty is factually incorrect.

Examination by the Authority

27. The various submissions made by the interested parties and the Petitioner with regard to miscellaneous issues as recorded above have been examined and addressed below:

a. As regards the need for interim measures raised by the applicant, the Authority has taken note of the submissions made by the applicant and opposing interested parties so far in this investigation and has examined the same in accordance with the Rules and is addressed appropriately at relevant place in the said provisional findings itself.

b. With regard to the apprehensions of the opposing parties that the anti-dumping duties shall lead to monopolistic behavior of the domestic industry and adversities to the users, it is noted that the any anti-dumping duty is intended to remove the injurious effects caused by such dumping and no duties beyond lower of the injury/dumping margin is recommended, if any found necessary. Anti-dumping duties per se will not restrict the availability of the goods to the users. Any gap in the supply of PUC against total demand in the country cannot justify dumping and consequent injury, if any.

c. As regards the submissions of the parties on recommendation of provisional duties, the circumstances which necessitated such recommendation along with the grounds has been provided in the Provisional Finding itself which does not require any further examination at this juncture. However, comments of the parties on specific aspects of the said provisional finding are ipso facto addressed here.

d. As regards the submission that the period of investigation cannot be less than 12 months and also the 9 months POI is not justified, the Authority notes that the Act or the Rules or the Anti-dumping Agreement does not prohibit a period of investigation comprising of 9 months. At the time of initiation, there was no provision of POI in the Rules. A specific provision on POI has been included in the Rules only in February 2020. The Authority noted that the guidelines of the Committee on Anti-Dumping practices regarding duration of period of investigation adopted on 5th May, 2000 recognizes that the Investigating Authorities may consider appropriate POI‘s on a case specific basis which cannot be less than six months. In the instant investigation, the period of investigation is of nine months which is compatible with the WTO guidelines. At the time of initiation, the Authority adopted most recent period i.e 1st January, 2019 to 30th September, 2019 as POI. The Period was not considered from 1.10.2018 onwards by the petitioner as the Finding in an earlier investigation concerning the product was concluded on 23.10.2018. Hence, the Authority adopted the period of investigation of 9 months. POI of less than 12 months has been adopted by the Authority in a number of anti-dumping investigations.

e. As regards the claims that there have been changes in the price of the product in the post POI period, it is noted that the scope of the present investigation is already defined in the initiation notification.

f. As regards the contention of the opposing parties that domestic industry did not disclose the material fact that the same capacity is used for producing other value added products such as DMAC and DMA HCL, the Authority notes that the capacity considered is of the subject goods only and the detail of capacity of DMF available with the petitioner has been checked.

F. ISSUES ON CONFIDENTIALITY

Submissions made by the Domestic Industry

28. The following submissions have been made by the Domestic Industry with regard to confidentiality issues:

a. The information submitted by the opposing interested parties do not permit any proper understanding of their claims and the submissions suffer from excessive use of confidentiality and lack of information. The Authority may direct such parties to comply with the requirements of Rule 7 and provide an opportunity to the DI to comment on such submissions.

b. Aurobindo Pharma Ltd has held information such as contact number of the company etc as confidential which shows the frivolous approach adopted by the company while claiming confidentiality. The company held the reply to Q.7 under Section C of the Response as confidential which asks for any other known reason in view of the party which may have caused injury to the India producer. In the absence of such information, no comments can be offered. Though the company raised concerns about impact of any ADD on DMF on their finished product, no meaningful summary is provided in the response to understand the material effect of such duties. Crucial information in this regard in Annexure 3 and 4 to the response is all held confidential without any indexed summary or range etc.

c. Laurus Labs Limited has held the Annexures to the Response totally confidential without giving any summary, range or indexed information The Company in fact misused the confidentiality provision while adopting such excessive confidentiality. The reasons given for such claims are also not justified and merely sketchy.

d. The Response by Luxi Chemical Group Company and its related parties also suffer seriously from excessive use of confidentiality. The exporter submitted blank appendixes with no summary whatsoever which doesn‘t enable any understanding of the claims of the exporter.

e. The NCV response does not permit any proper understanding of the claims of such parties and the same has impacted our opportunity to offer adequate comments on such responses.

Submissions by other interested parties

29. The following submissions have been made by other interested parties with regard to confidentiality issues:

a. The domestic industry has kept lots of information as confidential without providing any legitimate reasons and in violation of the Rules and detailed procedure laid down by the Authority.

b. The domestic industry has kept confidential the DGCI&S import data, item-wise details of constructed normal value, evidence with regard to adjustments to the export price, volume related figures of the injury parameters and ROCE and Profitability in percentage terms etc which is not permissible in view of the legal provisions and the guidelines laid down by the Authority from time to time.

c. The Petitioner has claimed excess confidentiality and has failed to comply with the Trade Notice 10 of 2018. Petitioner has not fulfilled the guidelines as prescribed by Annexure I of the aforementioned Trade Notice. A detailed analysis of the same has been filed vide letter dated 14 May 2020.

d. The initiation of investigation is bad in law as the application filed by the Petitioner is grossly incomplete and insufficient as excessive confidentiality has been claimed. The said excessive confidentiality is in violation of Article 6.5.1 of the Agreement on Implementation of Article VI of GATT (“ADA”) read with Rule 7 of the AD Rules 1995.

e. Production capacity not provided in the petition, though the same has been disclosed in the financial statements of the petitioner.

f. Information relating to normal value calculation has been claimed confidential without disclosing the indexed figures claimed for arriving at the normal value for both China PR and Saudi Arabia.

g. In respect of export price, not only has the Petitioner treated all the adjustments as confidential but has also treated the supporting documents and information in respect of such adjustments as confidential.

h. Purchase policy, sales policy, accounting policy, cost accounting policy, quality control procedure and tests have been treated as confidential even though there is nothing confidential in giving the general policies adopted by the companies

i. In respect of costing information required to be provided under Section VI of the petition, certain information such as utilities consumption cost of production, raw material and packing material consumption information is required to be provided for POI as well as injury period. However, no trend has been provided.

Examination by the Authority

30. With regard to confidentiality of information, Rule 7 of the Rules provides as follows:

“Confidential information: (1) Notwithstanding anything contained in sub-rules (2), (3) and (7)of rule 6, sub-rule(2) of rule12,sub-rule(4) of rule 15 and sub-rule (4) of rule 17, the copies of applications received under sub-rule (1) of rule 5, or any other information provided to the designated authority on a confidential basis by any party in the course of investigation, shall, upon the designated authority being satisfied as to its confidentiality, be treated as such by it and no such information shall be disclosed to any other party without specific authorization of the party providing such information.

(2) The designated authority may require the parties providing information on confidential basis to furnish non-confidential summary thereof and if, in the opinion of a party providing such information, such information is not susceptible of summary, such party may submit to the designated authority a statement of reasons why summarization is not possible.

(3) Notwithstanding anything contained in sub-rule (2), if the designated authority is satisfied that the request for confidentiality is not warranted or the supplier of the information is either unwilling to make the information public or to authorise its disclosure in a generalized or summary form, it may disregard such information.”

31. The Authority made available non-confidential version of the information provided by various interested parties to all interested parties through directions to exchange such submissions among the interested parties by way of e-mail on account of the difficulties in physically accessing the public file containing non- confidential version of evidences submitted by various interested parties for inspection.

32. Submissions made by the Domestic Industry and other opposing interested parties with regard to confidentiality to the extent considered relevant were examined by the Authority and addressed accordingly. Information provided by the interested parties on confidential basis was examined with regard to sufficiency of the confidentiality claim. On being satisfied, the Authority has accepted the confidentiality claims, wherever warranted and such information has been considered confidential and not disclosed to other interested parties. Wherever possible, parties providing information on confidential basis were directed to provide sufficient non-confidential version of the information filed on confidential basis. The Authority made available the non-confidential version of the evidences submitted by various interested parties to other parties by way of exchanging the same among all interested parties. The Authority also notes that all interested parties have claimed their business-related sensitive information as confidential. Further, the Authority notes that the Trade Notice 10/2018 dated 7th September 2018 requires a domestic producer (where a single producer is filing the petition) to provide certain data (such as production, capacity etc.) as a trend as opposed to actual data. Hence, the claim that the petitioner did not provide actual volume information etc cannot be accepted.

G. MARKET ECONOMY TREATMENT (MET), NORMAL VALUE, EXPORT PRICE & DETERMINATION OF DUMPING MARGIN

Submissions made by the Domestic Industry

33. The following submissions have been made by the Domestic Industry:

a. China should be treated as a non-market economy and normal value in case of the subject countries should be determined in accordance with para-7 and 8 of Annexure I of the Rules. In terms of Para 8 in Annexure 1 to the Rules, it is presumed that the producers of the subject goods in China are operating under non-market economy conditions. Therefore, normal value of the subject goods in China PR has been estimated in terms of Para 7 of Annexure 1 to the Rules.

b. In view of the above, normal value has been determined for the subject country on the basis of cost of production in India, based on the cost of the domestic industry duly adjusted with selling, general and administrative expenses. This methodology has been considered by the Designated Authority in the earlier investigations against China PR.

c. Export price from subject country has been determined considering volume and value of imports for the proposed period of investigation as per transaction wise data collected from the DGCI&S. Adjustments have been made for freight, insurance, port expenses, and bank charges.

d. Considering the normal value and export price as discussed above, the dumping margin has been determined, details of which can be seen from the petition on record. The dumping margins from the subject country are above de minimis levels and significant.

e. The Authority may compare DMF sold in container to container and drums to drums for all practical purposes of determining dumping and injury margin though such separate comparison has no relevance in the context of various injury parameters.

f. The cost records provided by Methanol Chemicals Company, Saudi Arabia does not reflect the cost associated with production and sale of the article under consideration as stipulated in Annexure I to the Rules and this is a significant ground to reject the cost provided by the Company for the purpose of Normal Value.

g. Methanol Chemicals Company has a gas supply agreement with a party whose name is not disclosed. The Authority may check the price as per the said agreement since such agreement has an impact on the fair utility cost of the Company. It is apparent that the company procured utilities from related parties and the fairness of utility cost needs strict scrutiny.

h. It is evident from the Appendix 6 of Methanol Chemicals Company that the Company procured inputs from related parties at each stage and it was incumbent on the Company to provide proper details of related party transactions in Appendix 11 also but the same is marked as ―not applicable‖. It was stated by the exporter that there were confidential exchanges with the Authority in this regard to which we register our concerns and request the Authority to direct the exporter to share necessary NCV details with the petitioner also as required under the rule about such exchanges if any since such information is part of the EQR itself. Thus, the Appendix 6 of the company cannot be relied upon while determining the cost of the product as the fairness of purchase price of inputs from related parties cannot be determined.

i. When the disclosure requirement in case of purchase of inputs from related party is very elaborate, Methanol Chemicals Company replied that Appendix 11 is not applicable. This alone should lead to the rejection of the Response by the exporter. Until and unless Appendix 6 and Appendix 11 is correlated, input cost as claimed by the company should not be used for any cost determination purposes.

j. Annexure I sub rule 1 of the Anti-dumping rules says that the records kept by the exporter should reasonably reflect the cost associated with production and sale of the article under consideration. In the absence of explanations on whether the pricing considered by the exporter is reflective and representative of a fair market price or not, the reasonableness of the cost claimed cannot be examined by the Authority which should lead to the rejection of cost claimed by Methanol Chemicals Company.

k. The PF shows that the domestic sales of Methanol Chemicals Company were not considered for normal value after Ordinary Course Test (OCT). But the real issue now is that the cost claimed by the exporter itself is unrepresentative and cannot be relied upon. The Authority may reject the cost of the exporter and construct the normal value based on Indian cost as domestic price and third country price cannot be subjected to OCT without verified cost with all required details as per the Rule.

l. Methanol Chemicals Company had submitted third country export price for determining normal value though no such alternative claims was made by the Company at the time of filing the Response. The third country price also has to go through OCT test as per sub rule 2 of Annexure I. However, the issue is that the cost claimed by the company is apparently unrepresentative and cannot be considered for OCT test.

m. It is on Methanol Chemicals Company to comply with the requirements of Annexure I and any failure to do so should lead to the rejection of the response by the exporter.

n. The PF shows that the Authority has determined provisional individual margin for Liaocheng Luxi Methylamine Chemical Co., Ltd. Such margin is not tenable as there is no proper response filed to claim such margins.

o. Liaocheng Luxi Methylamine Chemical Co., Ltd did not file any EQ Response and the provisional individual margin determined for them are based on the EQR filed by the predecessor producer namely Luxi Chemical Group Co., Ltd. The response of Luxi Chemical Group Co., Ltd shows that they transferred the DMF business as such to Liaocheng Luxi Methylamine Chemical Co., Ltd w.e.f 1st January, 2020. Such being the case, at what capacity Luxi Chemical Group Co., Ltd filed the EQR much after such date with a request for margins to be assigned on another entity is not explained.

p. Though it is clear that the concerned entity relevant for the investigation at the time of filing the response was Liaocheng Luxi Methylamine Chemical Co., Ltd but the information was provided concerning Luxi Chemical Group Co., Ltd as the producer. Effectively, the Authority determined a margin for an entity which did not file the Response.

q. Various certifications in the response have been provided by Luxi Chemical Group Co., Ltd but it is not shown how such certification become applicable and correct when the business is already transferred to another entity. The certifications by Luxi have no meaning as the request is to assign the margin to another entity which did not file the response.

r. Liaocheng Luxi Methylamine Chemical Co., Ltd ought to have filed the response if they wanted IM based on the exports made by the predecessor entity and at the same time providing all the bona fides of Liaocheng Luxi Methylamine Chemical Co., Ltd as well. Which is not done in the present matter and no margin should be determined without knowing the entity.

s. The response does not show the details of Liaocheng Luxi Methylamine Chemical Co., Ltd and its relation with DMF. Whether this company is related to some other producers also of DMF, whether this company has any other factories to produce DMF, whether it has any managerial control over any other producer producing DMF, what is going to be the Management decisions in the future viz. exports of DMF to India etc. all remain unanswered as there are no response is filed by Liaocheng Luxi Methylamine Chemical Co., Ltd.

t. Until and unless the credentials of Liaocheng Luxi Methylamine Chemical Co., Ltd as a bona fide producer/exporter of DMF is made known to the Authority vide a proper response, no IM ought to have been determined for Liaocheng Luxi Methylamine Chemical Co., Ltd. Rule 17 (3) says that the Authority shall determine an individual margin of dumping for each known exporter or producer concerned of the article under investigation. Liaocheng Luxi Methylamine Chemical Co., Ltd has not made them known as a producer or exporter of PUC by way of a response and no margin can be determined for the said company.

u. The opposing parties have questioned the basis of normal value used in the PF for China PR. The contentions have no legal or factual basis. The basis of normal value in case of China PR as per the rule has been elaborated in the PF which is as per the rule and needs to be adopted for the final finding also. The legal position is not that China PR is a market economy country for anti-dumping purposes and China PR continues to be treated as an NME country. However, the presumption of NME can be rebutted by the exporters by replying in the designated response which was not filed by the parties here. In the absence of such response, cost and domestic price supplied by the parties have no relevance and the basis adopted in the petition and PF alone can sustain.

v. The basis of normal value viz. China PR adopted in the PF is consistent with all recent investigation and the expiry of conditions as provided in para 15(a)(ii) of the Protocol of Accession of the People’s Republic of China to WTO on 11th December 2016 has no bearing on such basis of normal value as claimed which is a settled issue in the decisions of the Authority as evident from its recent findings involving China PR.

w. It has been notes that the Normal Value based on cooperating producer from Saudi Arabia be adopted for China PR also. The proposition is not of any tenability. Mere participation from a ME third country is not enough to fulfill the requirement of the Rule and no such proposition to treat Saudi as a proper third country have been presented in the Response. In any case, we have raised serious concerns over the Response filed by the Company from Saudi and in the PF, the Authority determined NV for such country also based on cost in India. It was also seen that dumping margin in case of the cooperating producer from Saudi is also significantly positive. Thus, the proposition has no factual or legal basis.

x. Request for considering the response from China PR for Normal Value should not be accepted. The basis adopted in the PF is as per Rule and is also reasonable that the same approach should be adopted in the final findings also.

Submission of other interested parties

34. The following submissions have been made by the other interested parties concerning determination of normal value, export price and dumping margin;

a. The determination of normal value for China PR in the current investigation is not in accordance with the legal provisions and therefore, the dumping margin in the current investigation for the Chinese producer is not appropriately determined.

b. Normal value for the companies from China PR should be determined on the basis of their domestic sales and the cost of the subject goods in view of the fact that the period of 15 years for disregarding the domestic prices or costs of Chinese producers not being on market economy conditions as provided in para 15(a)(ii) of the Protocol of Accession of the People’s Republic of China to WTO, has expired on 11th December 2016 in terms of para 15(d) and has become nonoperational.

c. The costs of the responding Chinese producer is calculated on the basis of records kept by them which are in accordance with the generally accepted accounting principles of China and reasonably reflect the costs associated with the production and sale of the product under consideration which should form basis for determination under Article 2.2.1.1 of the AD Agreement.

d. The Domestic Industry has not followed the procedure as envisaged under para 7 of Annexure I of the Anti-dumping Rules nor has any attempt been made to follow the procedure prescribed therein. The approach is against the judgment of the Hon‘ble Supreme Court in Shenyang Matsushita case.

e. It is submitted in the interest of justice and fairness that since a producer namely M/s. Methanol Chemicals Company from market economy country i.e. Saudi Arabia has responded to in this investigation and provided all the relevant verifiable information on record and that this information has been utilized for the determination of its normal value for this producer, we request for the determination of normal value for the producers from China on the basis of the information of M/s. Methanol Chemicals Company from Saudi Arabia in view of the first alternative provided in Para 7.

f. In respect of export price, it is also relevant to note that the Petitioner has not provided the information with regard to the adjustments made by it at Annexure 3.2 of the Petition without any reasonable basis. In view of the same, the User is not in a position to make meaningful comments on this issue. Petitioner should provide the information on exact adjustments made to the export price calculation.

g. The User submits that the Petitioner‘s averment that ―increased dumping (in comparison to the dumping margin determined in the previous investigation) suggests threat of dumping‖ may be rejected as the Authority in an original anti-dumping investigation is not required to determine threat of dumping.

h. The Authority may verify the response filed by the cooperative producer/exporter from the subject countries and base the normal value and export price for each producer/exporter on the actual data provided by them rather than on the domestic industry‘s averments.

i. The Authority has seemingly bypassed the determination of normal value by adoption of the second method of normal value calculation, in spite of Chemanol having provided the details of export price to countries other than India. No reason whatsoever has been given for not considering the export prices provided by Chemanol. Therefore, the determination of normal value for Chemanol seems inconsistent with the provisions of the Act. The Respondent importer requests the Authority to re-determine the normal value for Chemanol and revise the dumping margin accordingly.

j. Domestic Industry has not provided any admissible evidence for construction of normal value for Saudi Arabia and China PR.

k. Adjustments made for construction of normal value are not tenable as per Explanation (c) to Section 9A(1) of the Customs Tariff Act, 1975 r/w Annexure I of the AD Rules 1995.

l. Adjustments made with respect to the Export Price are abnormally high and unsubstantiated, and there is no evidence of existing injury to the domestic industry.

m. While the Respondent understands that the final analysis of the margin of dumping will be based on the verified data of the cooperating exporters from the subject countries, however, that does not justify Authority‘s acceptance of petition without any supporting documentation. However, not only has Authority initiated the investigation but has also issued the preliminary findings, without first examining the accuracy and adequacy of the petition filed by the domestic industry. By initiating and undertaking further investigation, the Authority‘s action has rendered provisions of Article 5 of ADA read with Rule 5 of Indian AD Rules redundant.

n. In addition to rendering the legal provisions nugatory, the finding of the Authority has also been rendered non-speaking for not taking into consideration the submissions of the Respondent, leave alone examining the same. For this reason as well, the preliminary finding must be set aside.

o. With regard to the claims of the petitioners on Gas supply agreements, the Respondent has provided a copy of the said gas supply agreement along with confidential response and Authority may verify for itself that utilities were not procured from related entities.

p. As regards the claim that Appendix 6 of the questionnaire response filed by the Respondent shows that inputs were procured from related parties at each stage, it is submitted that there were no related party purchases reported by Chemanol at Appendix 6. The Authority may verify the responses filed with it and check the same. For the same reason, Appendix 11 remains inapplicable to Chemanol as there were no related party transactions. The domestic industry is raising issues, which have absolutely no factual backing and must be rejected.

q. The anti-dumping provisions make it clear that the dumping margin determined for responding exporters should be based only on the verified information supplied by such producers and exporters. Merely because the domestic industry feels that the duty rate determined is too low cannot be a basis to increase the rate of duty.

r. It is submitted that we provided the factual details of the transfer of the DMF production line from M/s. Luxi Chemical Group Co., Ltd. Chlor-alkali Chemical Branch to another related company, M/s. Liaocheng Luxi Methylamine Chemical Co., Ltd. in January 2020 which is after the expiry of the period of investigation i.e. January 2019 to September 2019 in the current investigation. We also provided the details of the business license of Luxi MC, the transferee company. We are also willing to provide any additional information including the details in the questionnaire format as may be required from Luxi MC.

Examination of the Authority

35. As regards various contentions on appropriateness of the basis of normal value and export price including the correctness of various adjustments considered for the initiation of the investigation and also provisional finding, it is noted that normal value and export price in all events were considered as per the applicable rules and consistent practices of the Authority and no material fallacies in such calculations adopted is pointed out by any of the parties. Notwithstanding the above, the basis of normal value and export price which were proposed to be used for the final finding after considering various submissions of the parties have been disclosed to all the interested parties before being adopted in this final finding.

36. The Authority sent questionnaires to the known producers/exporters from the subject countries, advising them to provide information in the form and manner prescribed by the Authority. The following producers/exporters have filed the prescribed questionnaire responses:

i. M/s. Methanol Chemicals Company

ii. M/s. Luxi Chemical Group Co. Ltd., Chlor-Alkali Chemical Branch, China now known as M/s. Liaocheng Luxi Mehtylamine Chemical Co., Ltd.,

iii. M/s. Shandong Liaocheng Luxi New Material Sale Co., Ltd., China and

iv. M/s. Liaocheng Ruijin (Hong Kong) Co., Limited

Normal value

37. Under Section 9A (1)(c), normal value in relation to an article means:

(i) the comparable price, in the ordinary course of trade, for the like article when meant for consumption in the exporting country or territory as determined in accordance withthe rules made under sub-section (6); or

(ii) when there are no sales of the like article in the ordinary course of trade in the domestic market ofthe exporting country or territory, or when because of the particular market situation or low volume of the sales in the domestic market of the exporting country or territory, such sales do not permit a proper comparison, the normal value shall be either-

(a) comparable representative price of the like article when exported from the exporting country or territory or an appropriate third country as determined in accordance with the rules made under subsection (6); or

(b) the cost of production of the said article in the country of origin along with reasonable addition for administrative, selling and general costs, and for profits, as determined in accordance with the rules made under sub-section (6):

Provided that in the case of import of the article from a country other than the country of origin and where the article has been merely transshipped through the country of export or such article is not produced in the country of export or there is no comparable price in the country of export, the normal value shall be determined with reference to its price in the country of origin.

38. Article 15 of China‘s Accession Protocol in WTO provides as follows: ―Article VI of the GATT 1994, the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (“Anti-Dumping Agreement”) and the SCM Agreement shall apply in proceedings involving imports of Chinese origin into a WTO Member consistent with the following:

“(a) In determining price comparability under Article VI of the GATT 1994 and the Anti-Dumping Agreement, the importing WTO Member shall use either Chinese prices or costs for the industry under investigation or a methodology that is not based on a strict comparison with domestic prices or costs in China based on the following rules:

(i) If the producers under investigation can clearly show that market economy conditions prevail in the industry producing the like product with regard to the manufacture, production and sale of that product, the importing WTO Member shall use Chinese prices or costs for the industry under investigation in determining price comparability;

(ii) The importing WTO Member may use a methodology that is not based on a strict comparison with domestic prices or costs in China if the producers under investigation cannot clearly show that market economy conditions prevail in the industry producing the like product with regard to manufacture, production and sale of that product.

(b) In proceedings under Parts II, III and V of the SCM Agreement, when addressing subsidies described in Articles 14(a), 14(b), 14(c) and 14(d), relevant provisions of the SCM Agreement shall apply; however, if there are special difficulties in that application, the importing WTO Member may then use methodologies for identifying and measuring the subsidy benefit which take into account the possibility that prevailing terms and conditions in China may not always be available as appropriate benchmarks. In applying such methodologies, where practicable, the importing WTO Member should adjust such prevailing terms and conditions before considering the use of terms and conditions prevailing outside China.

(c) The importing WTO Member shall notify methodologies used in accordance with subparagraph (a) to the Committee on Anti-Dumping Practices and shall notify methodologies used in accordance with subparagraph (b) to the Committee on Subsidies and Countervailing Measures.

(d) Once China has established, under the national law of the importing WTO Member, that it is a market economy, the provisions of subparagraph (a) shall be terminated provided that the importing Member’s national law contains market economy criteria as of the date of accession. In any event, the provisions of subparagraph (a)(ii) shall expire 15 years after the date of accession. In addition, should China establish, pursuant to the national law of the importing WTO Member, that market economy conditions prevail in a particular industry or sector, the non-market economy provisions of subparagraph (a) shall no longer apply to that industry or sector.”

Determination of Normal Value and Export Price for all cooperating Producers and Exporters in China PR

Normal Value

39. At the stage of initiation, the Authority, after evaluating the options under Para 7 to Annexure I of the Rules, had prima facie concluded that options other than Constructed Normal Value are not feasible for the determination of Normal Value in this case. Upon initiation, the Authority advised the producers/exporters in China PR to respond to the notice of initiation and provide information relevant to determination of whether their data/information could be adopted for the purpose of normal value determination.

40. The Authority sent copies of market economy treatment/supplementary questionnaire to all the known producers/ exporters for providing relevant information in this regard. But none of the producers/exporters have claimed MET status. In view of this position as well as the fact that neither the petitioner nor any other interested parties have provided any information with regard to any of the provisos of Rule 7 of Annexue 1 of the Rules. The NV has therefore been constructed by adopting cost of production in India as normated with due adjustment for SGA expenses and a reasonable profit at the rate of 5% on cost of production in accordance with Para 6(8) of the Rules. The Normal value is therefore determined as US$ ***per MT.

Export Price

41. The Authority notes that M/s. Luxi Chemical Group Co. Ltd., Chlor-Alkali Chemical Branch, China, now known as M/s. Liaocheng Luxi Mehtylamine Chemical Co., Ltd., M/s. Shandong Liaocheng Luxi New Material Sale Co., Ltd., China and M/s. Liaocheng Ruijin (Hong Kong) Co. limited, the related entities, have responded and have provided the information to determine the Net Export Price (NEP). The expenses on account of Ocean freight, Marine Insurance and others have been reduced from their CIF export prices. The net ex-factory export price, after adjustment of the above expenses has been determined as US$ ***per MT.

Determination of Normal Value and Export Price for all non cooperating Producers and Exporters in China PR

42. The Authority notes that no other producer/ exporter from China PR has responded to the exporter‘ questionnaire. Therefore, the normal value as determined for cooperative producers/ exporters as stated above on the basis of facts available as per Rule 6(8) has been adopted for non-cooperative producers/ exporters as well.

Export Price for non cooperating producers/exporters from China PR

43. The Authority notes that no other producer/exporter from China PR has responded to the Authority in the present investigation. For all the non-cooperative producers/exporters in China PR, the Authority determines the net export price adopting the least export price from the responses filed by cooperative producers/exporters, that is, M/s. Luxi Chemical Group Co. Ltd., Chlor-Alkali Chemical Branch, China, now known as M/s. Liaocheng Luxi Mehtylamine Chemical Co., Ltd., M/s. Shandong Liaocheng Luxi New Material Sale Co., Ltd., China and M/s. Liaocheng Ruijin (Hong Kong) Co. limited.

Determination of Normal Value and Export Price for cooperating producers and exporters in Saudi Arabia Normal value

44. It is noted that Methanol Chemicals Company from Saudi Arabia has filed the EQ Response in the present case to claim individual margins. It was first seen, whether the domestic sales of the subject goods by the responding producer/ exporter in their domestic market were representative or not and viable for permitting determination of normal value on the basis of their domestic selling prices and whether the ordinary course of trade test was satisfied as per the data provided by the Company. The Company has provided transaction-wise details of the sales of the like article in their home market. It has been found that the domestic sales of the subject goods by the responding producer/ exporter in their domestic market were not representative as it was lower than 5% of total exports of PUC to India. Details of exports to third country other than India was sought from the producer/exporter. The exporter has provided the details of Export Price to countries other than India. In absence of appropriate country for comparison not having been identified, the Authority has considered the Normal value on the basis of Cost of Production of the producer/exporter of PUC which has been considered an appropriate methodology since the third country exports would also require meeting the ordinary course of trade test. The normal value is determined as US$ ***per MT for bulk and US$ ***per MT for packed.

Export Price

45. The Authority notes from the Exporters Questionnaire Response filed by Methanol Chemicals Company from Saudi Arabia that the company has exported **** MT of subject goods to India during the POI. The company has submitted adjustments on account of inland freight and port handling expense, ocean freight, ocean insurance, credit expense and bank charge and the same has been considered to work out the ex-factory export price. The net export price determined for the Company comes to US$ ***per MT for bulk and US$ ***per MT for packed.

Normal Value for non cooperating producers/exporters from Saudi Arabia

46. The Authority notes that no other producer/ exporter from Saudi Arabia have responded to the exporter‘ questionnaire. The NV has therefore been constructed by adopting cost of production in India as normated with due adjustment for SGA expenses and a reasonable profit at the rate of 5% on cost of production in accordance with Para 6(8) of the Rules. The Normal value therefore determined as US$ ***per MT.

Export Price for non cooperating producers/exporters from Saudi Arabia

47. The Authority notes that no other producer/exporter from Saudi Arabia has responded to the Authority in the present investigation. For all the non-cooperative producers/exporters in Saudi Arabia, the Authority has determined net export price by adopting the least export price from the responses filed by Methanol Chemicals Company. The net export price so determined is US$ ***Per MT.

Dumping Margin

48. The ex-factory export price to India has been compared with the normal value to determine the dumping margins. The table below shows the weighted average dumping margins during the POI for all the producers of the subject goods originating in or exported from subject countries.

49. It is seen that the dumping margins are significant and more than the limits prescribed under the Rules in respect of exports made from each of the subject countries.

S.No.
Country
Producer
Normal Value US$/
MT
Net Export Price US$/
MT
Du-mping Margin US$/ MT
Dum-ping Margin %
Dum-ping Margin (Range %)
1
China PR
M/s. Liaocheng Luxi Mehtylamine Chemical Co., Ltd., (Packed)
***
***
***
***
70-80
2
China PR
Non cooperative Producers/exporters
***
***
***
***
75-85
3
Saudi Arabia
M/s. Methanol Chemicals Company (Bulk)
***
***
***
***
20-30
4
Saudi
Arabia
M/s. Methanol Chemicals Company (Packed)
***
***
***
***
15-25
5
Total
***
***
***
***
20-30
6
Saudi
Arabia
Non cooperative Producers/exporters
***
***
***
***
50 -60

H. INJURY ASSESSMENT AND CAUSAL LINK

Submissions made by the Domestic Industry

50. The submissions of the Domestic Industry has been as follows:

i. Cumulative assessment of the effect of imports is appropriate in light of the conditions of competition between the imported article and the like domestic articles.

ii. Volume of dumped imports from subject countries have increased significantly and in absolute terms by the POI. Such increases in imports are in a precipitous manner by offering dumped prices.

iii. The increase in imports by the POI should be read with reductions in prices which would show that the producers/exporters from subject countries reduced the prices further to dominate the market creating significant price injury to the DI. Dumping has been adopted as a strategy to enjoy such share in Indian demand and this has curtailed the anticipated volume growth at the end of the DI. The DI has now started to bleed with financial losses.

iv. Volume of dumped imports from subject countries has been at price undercutting and suppressing levels which impacted the pricing decisions of the domestic industry.

v. The price undercutting has been significantly positive from China PR and Saudi Arabia individually and also cumulatively. Thus, the dumped imports created price undercutting effects on the prices offered by the domestic industry by forcing the domestic industry to sell at such low levels which did not even permit recovery of cost leaving the DI to suffer losses.

vi. The NSR of the DI is clearly a depressed and non-profit making one. Thus, domestic industry faced price suppression effect which is evident in the fact that the increase in price was suppressed by the landed price of imports.

vii. The information in the petition shows that although injury parameters such as production volume, capacity utilization, sales and market share have hown some increases in the injury period and in the POI, the fact remains that the actual performance on such parameters were below par levels and the increases are the result of very low base numbers and have not been any meaningful growth per se.

viii. The domestic industry could operate only at a level of *** capacity utilization during the POI and such a low utilization is the result of the fact that about *** of the market share in demand was held by dumped import.

ix. The effects of such low level of utilization created by the dumped imports are reflected in other volume parameters also and the cascading effects of low volumes are reflected in the price parameters also.

x. Material injury suffered by the domestic industry on account of dumping of subject goods from subject countries is visible in the price parameters also. The landed price of dumped imports which were creating price undercutting, price suppression/depression and underselling effects forced the DI to sell at a price below even its cost of production and as a result the DI once again started making financial losses from the year 2018-19 and the losses were highest during the POI.

xi. The profitability of the domestic industry which had turned slightly positive by 2017-18 viz. the base year once again turned into huge losses by the present POI. Profits per unit declined from -100 points in the base year to -479 points in the POI which is a sharp and significant fall.

xii. There has been a significant fall in ROCE from 2018-19 and through the POI as a result of financial losses suffered by the DI on account of price injury created by the dumped imports. ROCE became very negative in the range of 20-25%.

xiii. It is apparent that the producers/exporters from subject countries reduced their prices so drastically and such targeted dumping with drastic price cut has forced the DI to reduce its prices beyond any reduction in cost leading to material injury on account of all profitability parameters.

xiv. The adverse situation in volume and price parameters is further reflected in other core parameters of injury as well. Thus, the domestic industry has suffered material injury on account of dumping of subject goods from China PR and Saudi Arabia.

xv. The injury caused to the domestic industry is on account of dumped imports of PUC from subject countries only. Had there been no dumping the situation of the domestic industry would have been that of better performance and profitability with significant market share and moderate capacity utilization. This shows injury suffered by the DI were on account of dumping of subject goods from subject countries only.

xvi. The decision of the Authority not to recommend any duty on import of PUC at the end of a recent Anti-dumping investigation concerning the subject goods apparently been taken as a golden opportunity by the producers/exporters from subject countries to dump more in India and after the said negative finding, the vigor of dumping has sky rocketed that the DI is before the Authority once again but this time with a bleeding and much aggravated situation of injury. No ADD at the earliest shall lead to the complete closure of the domestic industry and the industry prays for immediate provisional measures pending detailed investigations and definitive measures by the Authority.

xvii. The imports from subject countries increased in absolute terms from 34037 MT in the base year to 39332MT in the POI which shows a clear trend of growth in imports as envisaged in Annexure II to the Rules. Though there was a slight decline in import during the POI viz. the immediate previous year, it has not vitiated the growing trajectory of imports and imports stood significantly higher than the base year.

xviii. Even though the volume parameters of the domestic industry also increased in the same period from the very low base levels, the actual volumes achieved in terms of production and sales during the POI were still very low and the petitioner was completely sidelined to operate only at a capacity utilization of about *** in the POI. Thus, the below par volume performance shows that the petitioner suffered injury in terms of volume parameters also.

xix. The reason for such below par volume performance was clearly the 75 to 80% market share held by the dumped imports. Until and unless such dumped volumes are brought down by imposing adequate ADD, the volume performance of the DI cannot reach any meaningful level. In fact, the DI is sitting on huge unutilized capacities since commencement on account of dumped imports.

xx. The facts of the case show serious price injury as well. When the cost of the DI for the product moved from 100 indexed points in base year to 127 points in 218-19 and then declined to 120 points in POI, the NSR of the DI moved from 100 points in the base year to 128 points in 2018-19 and 108 points in the POI. What is notable is the fall in price was not commensurate with the decline in cost and the price fell much more than the fall in cost.

xxi. The reason for such fall was clearly the reduction in landed price during the POI and the same moved from a 100 base year indexed points to 136 points in 2018-19 and have come down to 115 points in the POI. When the landed price increased between base year and the POI, the DI could still pass on the cost as the landed price also increased in the same period. In fact, the landed price from Saudi Arabia which was Rs67/Kg in the year 2018-19 was reduced to a level of Rs57/Kg in the POI and landed price from China PR which was Rs73/Kg in 2018-19 was reduced to Rs60/Kg in the POI.

xxii. The landed price at such levels created serious price undercutting, underselling and suppression levels as evident. As a result of such price effects, the profitability parameters of the DI got severely impacted. Profitability at per unit level, PBT, PBIT and cash profit turned significantly negative in POI which was in the slightly positive region in the year 2017-18. DI suffered very seriously on the ROCE front also. The ROCE which was in the slightly positive range of ***in the year 2017-18 turned to be negative ***for such declines in performance and material injury establishes causal link between dumping and injury in the present matter. Nothing is brought on record to demonstrate that dumping was not the cause of injury.

xxiii. What is also very notable in the trend of imports and volume parameters of the DI is that when the DI registered some uptick in the volume levels in the period between 2017-18 and 2018-19, the exporters could not bear such volume gains by the DI and they resorted to sharp reduction in export price to retain the market in India. Thus, reduction in land price has been done as a strategy to keep the DI away not to lose any market share.

xxiv. Exporters from subject countries who got no significant domestic or market elsewhere cannot afford to lose Indian market and it is very evident that such price reduction will follow with every increase in volume by the DI. A level playing field in such a scenario can be only be ensured by ADD.

xxv. It has been contended that reliance on imported Methanol (Raw material required to manufacture DMF) has led to delays in production and running losses. The contention is not true. The issue is that though the cost of production declined, the reduction in selling price was much higher than such reduction and what has influenced the selling price of the petitioner is the sharp decline in landed price of dumped imports of subject goods from subject countries.

xxvi. It has been contended that domestic industry‘s financial performance has been impacted by the steep increase in the cost of raw materials used in the production of the like article in India. The contention is not true. In fact the cost of production declined during the POI viz. the previous year. However, the reduction in selling price was much higher than such reduction and what has influenced the selling price of the petitioner is the sharp decline in landed price of dumped imports in the same period.

xxvii. It has been contended by the opposing parties that the DI did not suffer any injury and there is no causal link between alleged dumping and injury. The contentions are not based on facts. It can be noted that imports from SC haves increased in absolute terms. Such imports prohibited the DI from operating normally and the sales volumes remained below par and negligible levels even after many years into production of DMF. The landed price of such dumped imports created price undercutting, suppression and underselling effects on the DI. As a result, the DI could not sell at a profitable price and as a result suffered financial losses and negative returns on investment. Such injurious situation was the creation of the dumped imports alone and such facts are well reflected in the petition. The company had to operate at below par level of capacity utilization of 25 to 30% as result of presence of dumped material in India and it cannot be said that the imports are due to the inability of the petitioner to utilize its capacity any better. Material injury is visible in both volume and price parameters as elaborated in our petition/submissions. Causal link is evident in the fact that sharp and significant reduction in landed price of dumped imports was the cause of decline in selling price of the DI more than reduction in cost and as a result profitability of the DI suffered seriously including financial losses. Dumped imports at price undercutting, suppressing and underselling level ate into the market share of DI in demand as a result DI had to operate at very low capacity utilization levels. In the absence of dumping, the DI would have produced and sold more at profitable rates. Thus, the causal link is very evident and the contentions of the parties in this regard need to be rejected.

xxviii. It has been contended that there is lack of causal link and it is evident that fluctuation in prices of PUC or impact on the domestic industry‘s performance is not on account of imports from the Subject Countries. It was also contended that the imports made by the DI in the base year should be examined in the context of causal link. Both the contentions have no meaning. In fact the cost of production declined during the POI viz. the previous year. However, the reduction in selling price was much higher than such reduction and what has influenced the selling price of the petitioner is the sharp decline in landed price of dumped imports in the same period. Also, though there were some imports made by the DI in the base year, it is not of any consequences as the claim of injury pertains to the POI. In any case, such imports were part of the previous investigation also and no way vitiate the claim of injury during the POI.

xxix. Reliance was placed on WTO Appellate Body in the decision of Argentina – Footwear while arguing that the domestic industry did not suffer any injury. It is narrated in detail that the DI suffered material injury and it is in a bleeding situation of financial losses on account of dumped imports. The reliance of the party on WTO Appellate Body in the decision of Argentina – Footwear also has no meaning. The WTO AB did not say the investigation must be terminated if there is a dip in import in the POI over the immediate previous year or there is fluctuation in import. The requirement under Annexure II to the rule is that while examining the volume of dumped imports, the authority shall consider whether there has been a significant increase in the dumped imports, either in absolute terms or relative to production or consumption in India and it can be seen that in the present case imports increased in absolute terms that too very significantly.

xxx. It has been contended that injury to domestic industry is due to factors other than subject imports and due to steep increase in raw material costs and producers of the PUC in the subject countries have the advantage of affordable, competitively priced methanol and easy availability of methanol in comparison to the domestic industry in India. The contentions are not correct viz. cost of DI. In fact the cost of production declined during the POI viz. the previous year. However, the reduction in selling price was much higher than such reduction and what has influenced the selling price of the petitioner is the sharp decline in landed price of dumped imports in the same period. The Authority must take note of the claim here that the exporters have access to Methanol in abundance and it is apparent that such accessibility is being misused to dump the DMF in India at throw away price. The submission by the party shows the cause which is abetting dumping.

xxxi. It has been contended that underutilization of DMF capacity by Petitioner is due to intrinsic factors and not due to subject imports. The contention is not correct. Underutilization of the DMF capacity shows the volume effect of dumped imports and even the production undertaken was in losses as the dumped prices were creating undercutting, suppressing and underselling effects.

xxxii. It has been contended that there have been no significant increase in imports and as result first sentence of paragraph (ii) of Annex II to AD Rules 1995 not met. The assertion is only a misleading reading of rule. Imports have increased in absolute terms as required in the rule.

xxxiii. It has been contended that the practice of ‗annualizing‘ import volumes is not a permissible practice as decided by a WTO panel in a case against India itself. The claim is baseless. Annualizing the volume was essential to ensure comparability and such practice is adopted wherever the POI is different from the normal case of 12 months and has been done in plethora of cases.

xxxiv. It has been contended that status of the domestic industry has improved during the POI in respect of all the volume parameters. The statement is wrong. The volume parameters though improved was below par levels as the dumped imports held about 80% of the market share. Price parameters turned negative in the POI after some improvements in the previous years. Overall situation was of grave injury on account of dumped imports.

xxxv. It has been contended that trend lines of imports and profitability are asymmetric. The claim is of no merit. There is no requirement that the trend line has to be in any particular pattern to seek remedy against dumping and injury. Imports increased by the POI over the base year and overall trend of imports remained in the increasing trajectory coincided with evidence of material injury.

Submissions made by the other interested parties

51. The submissions made by the other interested parties inter alia in their response in the context of injury are noted as follows:

i) Imports from subject countries are not causing any injury to the domestic industry.

ii) Imposition of anti-dumping duties on the PUC will have catastrophic effect on importers and end-users that rely on the imports for raw materials. Further, such imposition of duty would leave importers at the mercy and whims of domestic producers which do not have sufficient capability to cater to the domestic demand.

iii) The 18 months period of April 2016 to September 2017 which was considered in the previous investigation overlaps with the current investigation. There cannot be any injury to the Domestic Industry in such period as has been already recorded by the Authority.

iv) Imports from the Subject Countries have not increased in either absolute or relative terms in the present investigation.

v) The alleged increase in imports in POI (Annualized) from base year is only marginal and not substantial. In any event, the User submits that an end to end comparison (i.e. base year to POI) in the present investigation is incorrect when particularly there has been a decrease in imports in the POI (Annualized) / POI from previous year.

vi) When there was an alleged increase in imports from the Subject Countries in the POI (Annualized) from the base year by 16 index points, there was a significant increase in domestic sales volume and value by 204 and 236 index points respectively in the same period.

vii) The subject imports in relation to Indian demand, have declined in the POI in comparison to the previous years and base year.

viii) There is no volume injury either in absolute or relative terms to the Domestic Industry. Hence, the question of assessment of injury does not arise in the present investigation. Without prejudice, injury, if any, suffered by the Petitioners has absolutely no correlation to imports from the Subject Countries.

ix) The profits have been fluctuating even though the price undercutting has been stable in most of the injury period. It is therefore conclusive of the fact that there is no correlation between the alleged imports and the performance or prices of the Domestic Industry.

x) The economic parameters including production, sales volume, sales value, etc. have shown a significant increase in POI in comparison to the base year. The Domestic Industry is clearly not suffering any injury and injury, if any, is self-inflicted.

xi) The Annual Report 2018-2019 of the Petitioner at page no. 44 has noted that there is volatility in the prices of raw materials such as methanol (which is in turn used to manufacture methylamines such as DMA) and the same is passed on to the end customers. (Please see Annexure 6.13 to the Petition filed by the Petitioner). Accordingly, it is evident that fluctuation in prices of PUC or impact on the domestic industry‘s performance is not on account of imports from the Subject Countries.

xii) The Petitioner at paragraph no. 6 of the Petition has noted that it has imported minor quantities of PUC in FY 2016-17. However, the details of the quantity of imports made by it or any other relevant information in respect of imports made by it have not been provided. The Authority may ascertain factors such as Petitioner‘s quantity of imports made in the injury period, percentage quantity of Petitioner‘s imports to the total imports and Indian production, the reasons thereof for imports and the price at which imports were made.

xiii) Petitioner has failed to prove threat of material injury under Paragraph (vii) of Annexure II of the AD Rules with any iota of substantiated/verifiable evidence and the averments as made by the Petitioner ought to be rejected.

xiv) The Petitioner has not provided any justifiable basis for the imposition of retrospective duties under Rule 20(2) of the AD Rules read with Section 9A(3) of the Customs Tariff Act (―Act‖) and therefore, the averments as made by the Petitioner ought to be rejected

xv) The subject country imports would show that they have decreased in the POI in comparison to the previous year as well as the base year i.e. 2016-17. That is, there is an overall decline in the volume of subject imports in the injury period. However, in its preliminary findings, the Authority has determined that the subject imports have increased in absolute terms.

xvi) If the Authority is permitted to selectively compare the data in the POI vis-à-vis the base year alone, a finding on such a basis may be distorted.

xvii) The import data would show that the volume of the subject imports has decreased in relation to both consumption and production in the POI.

xviii) Mere existence of price undercutting is not a condition precedent for determining the existence of price effect. As per paragraph (ii) of Annexure II, price undercutting has to be significant so as to be causing injury.

xix) The domestic industry has been able to increase its domestic selling prices commensurate to the decline in the cost of sales. Though the domestic industry‘s selling prices also declined in the POI, the same was due to the decline in its cost of sales. The domestic industry did not reduce its selling prices due to decrease in the landed value. The views of the Authority in PF on price effects are flawed.

xx) There is no price suppression or depression. Further, even if there is price suppression or depression, the Authority has not determined whether such suppression or depression was significant. In the absence of such a determination, it would be incorrect to hold that the prices of the subject imports have caused a price effect on the domestic selling prices.

xxi) Except for a decline in 2018-19, the domestic industry‘s production, capacity utilization and domestic sales (volume and value) of DMF has continuously and significantly increased throughout the injury period. In fact, the domestic industry‘s performance in the above operational parameters is highest in the POI. In light of such performance, the Authority should hold that there is no injury to the domestic industry on account of operational parameters.

xxii) Domestic industry‘s market share has increased continuously and significantly throughout the injury period. The market share of imports has declined in the corresponding period.

xxiii) DI claimed that there is a decline in profitability parameters and this is indicative of injury. Even if it is assumed that profitability has declined due to subject imports, the decline does not fit with the excellent performance in the domestic industry‘s operational parameters. The Respondent requests the Authority to examine whether financial parameters have declined due to reasons other than subject imports.

xxiv) The Domestic Industry demonstrated growth with respect to production, sales, capacity utilization, employment and productivity. The Domestic Industry‘s sales and sales value have also improved in the POI. Therefore, the domestic industry‘s growth in operational performance is healthy.

xxv) In comparison to the producers/exporters in China PR and Saudi Arabia, producers of DMF in India do not have easy access to methanol. They are highly dependent on imports of the same. However, countries like China PR and Saudi Arabia are huge manufacturers of methanol and thus producers of the PUC in the subject countries have the advantage of affordable, competitively priced methanol and easy availability of methanol in comparison to the domestic industry in India. Such factors need examination in the context of causal link.

xxvi) Domestic industry has admitted that its financial performance has been affected due to prices of raw materials.

xxvii) One of the countries from whom the domestic industry sources methanol is Iran. However, sourcing raw material from Iran has become difficult due to the sanctions imposed by the United States for certain political reasons. This has further compounded the availability of methanol for the domestic industry.

xxviii) Underutilization of DMF capacity by Petitioner due to intrinsic factors and not due to subject imports.

xxix) No significant increase in imports. First sentence of paragraph (ii) of Annex II to AD Rules 1995 not met.

xxx) Imports from subject countries collectively as well as individually, declined during the POI vis-à-vis base year. While subject country imports declined by 13% between 2016-17 and POI, imports from China PR and Saudi Arabia also fell by 38% and 3% respectively.

xxxi) Facts of the present case as recorded by the Authority itself indicates that there was a decline in imports in absolute terms as well as in comparison with domestic sales, production of the domestic industry as well as demand for subject goods

xxxii) The practice of ‗annualizing‘ import volumes is not a permissible practice as decided by a WTO panel in a case against India itself.

xxxiii) Status of the domestic industry has improved during the POI in respect of all the volume parameters.

xxxiv) Trend lines of imports and profitability are asymmetric.

xxxv) Ability to raise capital for further investments is not of relevance due to the Domestic Industry being a multi product company. However, domestic industry has been able to increase its average capital employed by 9%;

xxxvi) There was no price suppression and price depression due to imports from subject countries as the Domestic Industry‘s prices did not follow the trend of import prices from subject countries over the injury period. The alleged price suppression/depression, if any, was due to its intrinsic factors such as pricing decisions, which significantly affected its profitability.

xxxvii) It is further submitted that declining performance of the Domestic Industry with respect to few parameters cannot be attributed to imports from subject countries. Without prejudice, the domestic industry has been performing exceptionally well during the injury period and POI and thus, no further protection is required in the present case.

xxxviii) There are no reasons or analysis as to how come the domestic industry was in a position to increase its production and capacity utilization to such a significant level despite the existence of the alleged dumped imports.

xxxix) The profits, ROCE and Cash flow of the domestic industry in the current investigation have suffered due to high fixed per unit cost of the domestic industry on account of non-utilization of optimum capacity such as depreciation, interest, wages, fixed overheads etc.

Examination of the Authority

52. The Authority has taken note of the submissions made by the petitioner and opposing interested parties so far in this investigation on injury and causal link aspect and has examined and addressed the same in accordance with the Anti-Dumping Rules at relevant place in this Final Findings which is self-explanatory and such final view have been arrived at after taking note of the comments of the parties on disclosure statement as well.

i. Cumulative Assessment

53. Para (iii) of Annexure II of the Anti-Dumping Rules provides that in case where imports of a product from more than one country are being simultaneously subjected to anti- dumping investigation, the Authority holds to cumulatively assess the effect of such imports, in case it determines that:

a) Margin of dumping established in relation to the imports from each country is more than two percent expressed as percentage of export price and the volume of imports from each country is three percent (or more) of the import of like article or where the import of individual countries is less than three percent, the imports collectively account for more than seven percent of the import of like article; and

b) Cumulative assessment of the effect of imports is appropriate in the light of the conditions of competition between the imported article and the like domestic articles.

54. The Authority notes that:

a) The subject goods are being dumped into India from subject countries. The margin of dumping from each of the subject countries is more than the de minimis limits prescribed under the Rules.

b) The volume of imports from each of the subject countries is individually more than 3% of total volume of imports.

c) Cumulative assessment of the effect of imports is appropriate as the exports from the subject countries not only directly compete inter se but also with the like article offered by the Domestic Industry in the Indian market.

d) In view of the above, the Authority considers that it is appropriate to assess injury to the Domestic Industry cumulatively from imports of the subject goods from the subject countries.

e) Rule 11 of Antidumping Rules read with Annexure II provides that an injury determination shall involve examination of factors that may indicate injury to the Domestic Industry, “…. taking into account all relevant facts, including the volume of dumped imports, their effect on prices in the domestic market for like articles and the consequent effect of such imports on domestic producers of such articles….”. In considering the effect of the dumped imports on prices, it is considered necessary to examine whether there has been a significant price undercutting by the dumped imports as compared with the price of the like article in India, or whether the effect of such imports is otherwise to depress prices to a significant degree or prevent price increases, which otherwise would have occurred, to a significant degree. For the examination of the impact of the dumped imports on the Domestic Industry in India, indices having a bearing on the state of the industry such as production, capacity utilization, sales volume, inventory, profitability, net sales realization, the magnitude and margin of dumping, etc. have been considered in accordance with Annexure II of the Anti-Dumping Rules.

ii. Volume Effect of Dumped Imports on the Domestic Industry

a. Assessment of Demand/Apparent Consumption

55. The Authority has taken into consideration, for the purpose of the present investigation, demand or apparent consumption of the product in India as the sum of domestic sales of the Indian Producers and imports from all sources. The demand so assessed has increased during the injury investigation period and the POI.

Particulars Unit 2016-17 2017-18 2018-19 POI- Jan-
2019 to
Sept- 2019
POI

Annualized

Imports from
China PR
MT 10,237 5,624 9,392 6,379 8505
Imports from
Saudi Arabia
MT 23,802 26,101 35,456 23,120 30827
Total Imports
from Subject
Countries
MT 34,039 31,725 44,848 29,499 39,332
Trend Indexed 100 93 132 116 116
Total Imports
from Other
Countries
MT 3,218 3,110 3,017 821 1,094
Total Imports into
the Country
MT 37,257 34,835 47,865 30,319 40,426
Domestic Sales of Petitioner MT *** *** *** *** ***
Trend Indexed 100 255 177 304 304
Domestic Sales of Other Producers MT *** *** *** *** ***
Total Demand MT *** *** *** *** ***
Trend Indexed 100 106 132 124 124

56. As can be seen from the above table, demand for the subject goods in India has shown significant increases over the injury period and POI (A). The demand which was ***in the base year increased to ***in the POI (A). Thus, any decline in demand cannot be noted as the cause of injury suffered by the domestic industry. Imports and also sales of the domestic industry increased in the same period.

b. Import Volumes from subject countries

57. With regard to the volume of the dumped imports, the Authority is required to consider whether there has been a significant increase in dumped imports, either in absolute terms or relative to production or consumption in India.

Particulars Unit 2016-17 2017-18 2018-19 POI- Jan-2019 to Sept- 2019 POI

Annualized

Imports from China

PR

MT 10,237 5,624 9,392 6,379 8505
Imports from Saudi
Arabia
MT 23,802 26,101 35,456 23,120 30827
Total Imports
from Subject
Countries
MT 34,039 31,725 44,848 29,499 39,332
Market Share in Import Volume
China PR % 27 16 20 21 21
Saudi Arabia % 64 75 74 76 76
Share of Subject
Countries
% 91 91 94 97 97
Share of Other
Countries
% 9 9 6 3 3
Total % 100 100 100 100 100

58. It is seen that dumped imports of the subject goods from the subject countries have increased in absolute terms from 34039 MT in 2016-17 to 39332 MT in POI (A). Also, share of dumped imports from subject countries in overall imports into India increased while the share of imports from other countries decreased in the injury period and in the POI (A).

c. Subject Country Imports in relative terms

Particulars Unit 2016-17 2017-18 2018-19 POI- Jan-2019 to Sept- 2019 POI Annualized
Total Imports from Subject Countries MT 34,039 31,725 44,848 29,499 39,332
Total Demand MT *** *** *** *** ***
Trend Indexed 100 106 132 124 124
Production of DI MT *** *** *** *** ***
Trend Indexed 100 205 158 234 234
Imports from subject countries relative to Indian consumption % *** *** *** *** ***
Trend Indexed 100 88 100 93 93
Imports from % *** *** *** *** ***
Particulars Unit 2016-17 2017-18 2018-19 POI- Jan-2019 to Sept- 2019 POI

Annualized

subject countries relative to production of DI
Trend Indexed 100 45 83 49 49

59. It is seen that the dumped imports from subject countries in relation to production and demand decreased in the POI (A) as compared to the base year and previous years except 2017-18 though such imports have increased in absolute terms by the POI (A) and the share of such dumped imports remained substantial in overall demand.

60. It is further noted that with regard to the volume of the dumped imports, the Authority is required to consider whether there has been a significant increase in dumped imports, either in absolute terms or relative to production or consumption in India, and the imports as above shows increase in subject imports in absolute terms.

d. Market Share in Demand

Particulars Unit 2016-17 2017-18 2018-19 POI- Jan-2019 to Sept- 2019 POI Annualized
Total Imports
from Subject
Countries
MT 34,039 31,725 44,848 29,499 39,332
Sales of
Domestic
Industry
MT *** *** *** *** ***
Trend Indexed 100 255 177 304 304
Total Demand MT *** *** *** *** ***
Trend Indexed 100 106 132 124 124
Market Share in Demand
Domestic
Industry
% *** *** *** *** ***
Trend Indexed 100 240 134 245 245
Imports from subject countries % 84 74 84 78 78
Imports from
other countries
% 8 7 6 2 2
Sales of other
producers
% *** *** *** *** ***
Total % 100 100 100 100 100

61. The Authority notes that the market share of the subject imports have declined in the overall demand by
the POI (A) in comparison to the base year though the same have increased over the year 2017-18. The share of the Petitioner in demand has increased over the injury period and POI (A). Even though the share of dumped imports in demand declined, the same remained at 78% during the POI (A) which is noted as a significant level.

iii. Price Effect of The Imports On The Domestic Industry

62. With regard to the effect of the dumped imports on prices, it is required to be analyzed whether there has been a significant price undercutting by the alleged dumped imports as compared to the price of the like products in India, or whether the effect of such imports is otherwise to depress prices or prevent price increases, which otherwise would have occurred in the normal course. The impact on the prices of the Domestic Industry on account of the dumped imports from subject countries has been examined with reference to price undercutting, price underselling, price suppression and price depression, if any. For the purpose of this analysis, the cost of production, net sales realization (NSR) and the non-injurious price (NIP) of the Domestic Industry have been compared with landed price of imports of the subject goods from the subject countries.

a) Price Undercutting

63. For the purpose of price undercutting analysis, the net selling price of the Domestic Industry has been compared with the landed value of imports from the subject countries. While computing the net selling price of the Domestic Industry all taxes, rebates, discounts and commissions have been deducted and sales realization at ex works level has been determined for comparison with the landed value of the dumped imports. Accordingly, the undercutting effects of the dumped imports from the subject countries work out as follows:

Particulars Unit China PR Saudi Arabia Subject
Countries
Net Sales Realization Rs./Kg *** *** ***
Landed Price (LV) Rs./Kg 60.40 57.52 58.15
Price Undercutting Rs./Kg *** *** ***
Price Undercutting % of LV *** *** ***
Price Undercutting % Range 1-5 5-10 5-10

64. From the aforesaid table, it can be seen that the imports from subject countries are coming at prices significantly below the domestic selling price of the Petitioner. Thus, price undercutting during the period of investigation is positive for the subject countries, individually and cumulatively.

b) Price Suppression/Depression

65. In order to determine whether the dumped imports are depressing the domestic prices and whether the effect of such imports is to suppress prices to a significant degree or prevent price increases which otherwise would have occurred in normal course, the changes in the costs and prices over the injury period, were compared as below:

Particulars Unit 2016-17 2017-18 2018-19 POI- Jan-2019 to Sept- 2019
Cost of Sales Rs./Kg *** *** *** ***
Indexed 100 101 127 119
Domestic Selling Price Rs./Kg *** *** *** ***
Indexed 100 113 128 108
Landed Value-Subject Countries Rs./Kg 50.60 60.59 68.78 58.15
Indexed 100 120 136 115

66. From the above table, it can be seen that the imports from subject countries were coming at prices much lower than the cost of sales of the Domestic Industry. This has forced the Domestic Industry to reduce its prices during POI (A) and has led to a situation in which the Domestic Industry has been forced to sell below its cost of sales leading to financial losses. It is also noted that though the cost of sales and NSR increased over the years, landed price of dumped imports have been consistently below the cost and price of the domestic industry indicating adverse price effects from such landed value.

67. It is also noted that the reduction in selling price of the domestic industry in the POI viz. the immediate
previous year was very significant and much higher than the reduction in cost whereas the landed price of subject imports declined significantly. Thus, the effect of significant reduction in the landed price of the subject goods from subject countries on the selling price of the domestic industry in the same period is very evident.

c) Price Underselling

68. The non-injurious price (NIP) of the Domestic Industry has been determined and compared with the landed value of the subject goods to arrive at the extent of price underselling. The NIP of the product under consideration has been determined by adopting information/data relating to the cost of production for the period of investigation on the basis of principles mentioned in Annexure III of the Rules. The analysis shows that during the period of investigation, the landed value of subject imports was below the non-injurious price of the Domestic Industry, as can be seen from the table below, demonstrating positive price underselling effect:

Particulars Unit China PR Saudi Arabia
Bulk Packed Total Bulk Packed Total
Landed Value for
POI
Rs./Kg 55.20 61.25 60.40 56.10 57.81 57.52
Non-Injurious Price
(NIP)
Rs./Kg *** *** *** *** *** ***
Injury Margin Rs./Kg *** *** *** *** *** ***
% *** *** *** *** *** ***
Range 40-50 35-45 35-45 40-50 40-50 35-45

69. From the aforesaid table, it can be seen that the imports are coming into India at a price much lower than the non-injurious price of the domestic industry. Thus, the price underselling from the subject countries during the POI has been positive and quite significant.

iv. Economic Parameters of the Domestic Industry

70. Annexure II to the Anti-Dumping Rules requires that the determination of injury shall involve an objective examination of the consequent impact of dumped imports on domestic producers of such products. With regard to consequent impact of dumped imports on domestic producers of such products, the Anti-dumping Rules further provide that the examination of the impact of the dumped imports on the Domestic Industry should include an objective and unbiased evaluation of all relevant economic factors and indices having a bearing on the state of the industry, including actual and potential decline in sales, profits, output, market share, productivity, return on investments or utilization of capacity; factors affecting domestic prices, the magnitude of the margin of dumping; actual and potential negative effects on cash flow, inventories, employment, wages, growth, ability to raise capital investments.

71. The Authority has examined the injury parameters objectively taking into account various facts and arguments made by the interested parties in their submissions post initiation and also after the provisional findings.

a) Production, Capacity, Sales and Capacity Utilization

72. The performance of the domestic industry with regard to production, domestic sales, capacity & capacity utilization was as follows:

Particulars Unit 2016-17 2017-18 2018-19 POI- Jan-2019
to Sept- 2019
POI Annualized
Installed
Capacity
MT *** *** *** *** ***
Trend Indexed 100 100 100 100 100
Production MT *** *** *** *** ***
Trend Indexed 100 205 158 234 234
Capacity
Utilization
% *** *** *** *** ***
Trend Indexed 100 205 158 234 234
Domestic Sales MT *** *** *** *** ***
Trend Indexed 100 255 177 304 304

73. The capacity, production, sales and capacity utilization of the Petitioner was in a positive trend but still
the Petitioner has not been able to increase the sales of product concerned commensurate with the demand because of the significant volume of dumped imports coming from subject countries. The increase in sales of domestic industry is noted along with the market share of about 78% held by the dumped imports in the POI (A).

b) Profitability, return on investment and cash profits

74. Profitability, return on investment and cash profits of the Domestic Industry over the injury period is given in the table below: –

Particulars Unit 2016-17 2017-18 2018-19 POI- Jan-2019
to Sept- 2019
POI Annualized
Profit/Loss Rs. Kg *** *** *** *** ***
Trend Indexed -100 350 -100 -448 -448
Profit/(Loss) before Int. & Tax (PBIT) Rs. Lacs *** *** *** *** ***
Trend Indexed -100 860 -141 -1163 -1551
Cash Profit Rs. Lacs *** *** *** *** ***
Trend Indexed 100 620 89 -674 -866
Capital Employed Rs. Lacs *** *** *** *** ***
Trend Indexed 100 104 104 109 109
Return on Capital
Employed
% *** *** *** *** ***
Trend Indexed -100 831 -136 -1429 -1429

75. From the above table, it is noted that:

a) Profitability of Domestic Industry has been adversely affected due to the intensified dumping by producers/exporters from subject countries. Profit before interest and tax (PBIT) of the Domestic Industry have significantly declined during the POI (A) and was in the negative territory. The PBIT which was -100 indexed points in 2016-17 increased to 760 points in 2017-18 and declined sharply to -1551 indexed points during the POI (A). (The figures considered here are verified numbers and hence some differences with the PF)

b) Per unit profit also declined sharply by the POI (A) and was in the negatives during the POI (A). The per unit losses incurred by the domestic industry is noted as significant.

c) Similarly, cash profits of the Domestic Industry have reduced significantly. From cash profit of 100 indexed points in 2016-17, it has decreased to -766 indexed points during the POI (A).

d) Similar to the profitability, Return on capital employed also declined drastically by the POI (A) to – 1429 indexed points from -100 indexed points in 2016-17. The fall in ROCE during the POI (A) is even sharper if compared with the year 2017-18 wherein the ROCE was in the positive territory. The domestic industry‘s ROCE during the POI is noted as significantly negative in the range of ***%.

c) Employment, productivity and wages

76. Employment, productivity and wages of Domestic Industry over the injury period are given in the table below.

Particulars Unit 2016-17 2017-18 2018-19 POI- Jan-2019 to Sept- 2019
Employment Nos *** *** *** ***
Trend Indexed 100 105 105 105
Wages Rs. Kg *** *** *** ***
Trend Indexed 100 107 123 120
Productivity
per employee
MT/Person *** *** *** ***
Trend Indexed 100 195 151 223

77. It is noted that the employment of the Domestic Industry was almost constant throughout the injury investigation period and during the POI. However, productivity per employee increased significantly by the POI.

d) Inventories

78. Inventory position with the Domestic Industry over the injury period is given in the table below:

Particulars Unit 2016-17 2017-18 2018-19 POI- Jan-2019
to Sept- 2019
Average Inventory MT *** *** *** ***
Indexed 100 102 112 89

79. It is noted that the average inventory with the domestic industry declined by the POI viz. the base year.

e) Growth

80. The Authority notes that growth of the Domestic Industry with regard to volume parameters like production and domestic sales have been positive but price parameters such as profits, return on investment etc. have been declining and the growth was negative during the POI as can be seen from the table below;

Particulars Unit 2016-17 2017-18 2018-19 POI- Jan-2019 to
Sept- 2019
Production % 1.05 (0.23) 0.48
Sales Volume Domestic % 1.55 (0.31) 0.71
Selling Price Per KG % 0.13 0.14 (0.16)
Cost of Sales Per KG % 0.01 0.25 (0.06)
Return on Capital Employed % 11 (12) (18)
Profit per Unit % 3.48 (1.31) (4.77)
PBIT Per Unit % 3.98 (1.27) (5.43)

f) Ability to raise capital investments

81. The Authority notes that given the rising demand of the product in the country, the Domestic Industry has made significant investments in plant and machinery. However, despite these investments, the performance of the Domestic Industry has deteriorated considerably, and further investment may get adversely affected.

g) Factors affecting domestic prices

82. The examination of the import prices from the subject countries, change in the cost structure, competition in the domestic market, factors other than dumped imports that might be affecting the prices of the Domestic Industry in the domestic market, etc. shows that the landed value of imported material from the subject countries is below the selling price, cost of sales and the non-injurious price of the Domestic Industry, causing significant price undercutting as well as price underselling in the Indian market apart from financial losses. It is also noted that the demand for the subject goods was showing significant increase during the injury period including the POI and therefore it could not have been a factor affecting domestic prices. Thus, it can be provisionally concluded that the principal factor affecting the domestic prices is the dumped imports of subject goods from subject countries.

h) Magnitude of Injury and Injury Margin

83. The Authority has determined Non-Injurious Price for the Domestic Industry on the basis of principles laid down in Anti-Dumping Rules read with Annexure III, as amended. The NIP of the product under consideration has been determined by adopting information/data relating to the cost of production for the period of investigation. The NIP of the Domestic Industry has been worked out and it has been compared with the landed price from producers/exporters from the subject countries for calculating injury margin. The ‗all others‘ rate has been determined based on the facts available with the Authority.

Injury Margin

S.No
Country
Producer
NIP US$/Kg
Landed Value US$/Kg
Injury Margin US$/Kg
Injury Margin %
Injury Margin % Range
1
China PR
M/s. Liaocheng Luxi Mehtylamine Chemical Co., Ltd., (Packed)
***
***
***
***
40-50
2
China PR
Non cooperative Producers/exporters (Packed)
***
***
***
***
45-55
3
Saudi Arabia
M/s. Methanol Chemicals Company (Bulk)
***
***
***
***
45-55
4
Saudi Arabia
M/s. Methanol Chemicals Company Packed
***
***
***
***
45-55
5
Saudi Arabia
Weighted average
***
***
***
***
40-50
6
Saudi Arabia
Non cooperative Producers/exporters
***
***
***
***
70-80

I. NON-ATTRIBUTION ANALYSIS

84. As per the AD Rules, the Authority, inter alia, is required to examine any known factors other than the dumped imports which at the same time are injuring the Domestic Industry, so that the injury caused by these other factors may not be attributed to the dumped imports. Factors which may be relevant in this respect include, inter alia, the volume and prices of imports not sold at dumped 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 has been examined below whether factors other than dumped imports could have contributed to the injury to the Domestic Industry.

(i) Volume and price of imports from third countries

85. The imports from countries other than the subject countries are not significant in volume terms so as to cause or threaten to cause injury to the Domestic Industry. Imports from other countries put together accounted for less than 3% in total imports and less than 3% of total demand/consumption in India. Thus, it cannot be said that imports from other countries are causing injury.

(ii) Export Performance

86. The Authority has considered the data for domestic operations only for its injury analysis.

(iii) Contraction in demand Changes in pattern of consumption

87. It is noted that the demand of the subject goods has increased consistently over the entire injury period. Thus, it can be provisionally concluded that the injury to the Domestic Industry was not due to contraction in demand.

(iv) Trade restrictive practices of and competition between the foreign and domestic producers

88. The import of the subject goods is not restricted in any manner and the same are freely importable in the country. No evidence has been submitted by any interested party to suggest that the conditions of competition between the foreign and the domestic producers have undergone any change.

(v) Developments in technology

89. None of the interested parties have furnished any evidence to demonstrate significant changes in the technology that could have caused injury to the Domestic Industry

(vi) Changes in pattern of consumption

90. The domestic industry is producing the type of goods that have been imported into India. Possible changes in pattern of consumption are not a factor that could have caused claimed injury to the domestic industry.

(vii) Performance of the domestic industry with respect to other products

91. The Authority notes that the performance of other products being produced and sold by the domestic industry has not affected the assessment made by the Authority of the domestic industry‘s performances. The information considered by the Authority is with respect to the product under consideration only.

(viii) Productivity of the domestic industry

92. The Authority notes that deterioration in productivity has not caused injury to the domestic industry. Rather, productivity per employee has seen an increasing trend.

J. INDIAN INDUSTRY‟S INTEREST & OTHER ISSUES

93. The Authority notes that the purpose of anti-dumping duties, in general, is to eliminate injury caused to the Domestic Industry by the unfair trade practices of dumping so as to re-establish a situation of open and fair competition in the Indian market, which is in the general interest of the country. Imposition of anti-dumping measures would not restrict imports from the subject countries in any way, and, therefore, would not affect the availability of the product to the consumers. The submissions of the parties on public interest have been examined in view of this premise.

K. Post Disclosure comments

Post Disclosure comments by DI

94. The Disclosure shows that the subject goods produced by the petitioner in India are ‗Like Article‘ to the subject goods being imported from the subject countries under Rule 2 (d) of the AD Rules.

95. The Disclosure shows that the petitioner fulfills the requirement of standing and constitutes domestic industry for the purpose of present investigation. The Authority may confirm its proposals on the aspect of standing and domestic industry in the final finding.

96. Also, it has been our submission that the cost of M/s. Methanol Chemicals Company does not reflect fair cost as required under the rule and the response failed to demonstrate the reasonableness of the cost claimed by the company. We refute the claims of the exporter that complete cost details including details of any purchase of raw materials from related parties were disclosed by the company. In view of the same, we request the Authority to consider Indian cost while constructing normal value for M/s. Methanol Chemicals Company. The dumping margin currently determined for the company appears very low viz. the actual dumping practices being followed by the company for quite some time.

97. The discussions on injury in the Disclosure shows that the domestic industry has suffered material injury on account of dumping of subject goods from subject counties. The domestic industry has suffered severe financial losses as a result of price effects created by the landed price of dumped imports and the volume parameters have also been at below par levels on account of huge presence of dumped imports in the Indian market holding substantial part of the market share. The case clearly warrants anti-dumping duties to correct the effect of dumping and we request the Authority to recommend definitive measures at the earliest.

98. Also, the facts of the present case do not show that any ADD on DMF shall be largely against public interest and will impact the pharmaceutical sector in any manner. None of the opposing parties quantified the impacts of any ADD on DMF whereas our submission demonstrated that there shall be absolutely no serious adverse effects on users as DMF constitute only a negligible share in the cost of users where DMF is used. The exports of products using imported DMF also will not be impacted as the imports for export purpose is excluded from the scope of any ADD.

Post Disclosure comments by Government of Saudi Arabia

99. The Saudi General Authority of Foreign Trade (hereinafter referred to as ―GAFT‖) disagrees with the Disclosure statement on following issues:

– First, one of our crucial concerns is determining an APOI that includes estimated data of imports as to be the basis of examining the development of the subject imports and analyzing their impacts on the injury factors. In fact, the Disclosure did not sufficiently consider this concern as it only highlights that the DGTR may consider a 9-month POI.

– The second crucial point in GAFT submissions is the absence of injury suffered by the Applicant. As provide in our submissions, almost all economic indicators of the Applicant are positive and substantially improving.

– Finally, the third crucial point raised by GAFT submissions among other points that were not considered probably by DGTR, is the absence of a causal link between the alleged dumped imports and the alleged injury. GAFT submits that it is not enough to reach a 5 decision of imposing anti­dumping measures only by finding any increase of imports and some negative indicators during the IPOI. The DGTR should reach a conclusion based on positive evidence and objective examination that there is a significant increase of imports and a causal link between the alleged dumped imports and the injury.

Post Disclosure comments by Methanol, Saudi Arabia

A. Disclosure Statement has disclosed confidential information pertaining to Chemanol

100. In the injury margin table below para 83 of the Disclosure Statement, the Authority has disclosed the confidential landed value of subject goods exported by Chemanol. The said landed value is business sensitive in nature, and is not available in public domain.

B. Excessive confidentiality has been claimed by the Authority itself

101. It is submitted that the calculation for arriving at the per-unit cost of production and details of adjustments made from the cost of production which has been submitted by the respondent itself in the questionnaire response cannot be kept confidential from the answering respondent. Furthermore, despite the request by the Respondent to provide the said information, the detailed calculations have not been provided.

C. Improper examination of injury and causal link parameters by the Authority

(i) No significant increase in imports

102. In fact, there was a greater decline in imports vis-à-vis demand of the subject goods.

i. Between POI and base year, demand for subject goods declined by 7%. In comparison, fall in imports was even more significant at 13% for subject country imports as a whole. Domestic sales of petitioner, however, increased by a mammoth 128% during the same period.

ii. Between POI and previous year, the demand for the subject goods declined by 39%. In comparison, fall in imports was even more significant 45% fall in respect of subject country imports as a whole and fall of 52% in respect of imports from Saudi Arabia. Domestic sales of petitioner, however, increased by a mammoth 51% during the same period.

(ii) Annualizing‟ import volumes is not a permissible practice

103. In the present investigation, the Authority has continued with consideration of a 9-month POI i.e., January 2019 to September 2019, despite the submissions of the answering respondent to the contrary. Furthermore, the Authority has analysed information, including imports for the POI, on an annualized basis in the present Disclosure Statement. It is relevant to note that the same 9-month period of investigation was also considered at the stage of publication of Notice of Initiation as well as Preliminary Findings.

104. The Respondent underscores its concerns that no consideration has been lent to the fact that the Annualised POI includes overlapping period of three months at the last three months of the previous year of the considered injury analysis period. The Domestic Industry has proposed to the Authority this designed, selective, and overlapping period to deliberately provide information which favours them. This becomes clear when comparing the volume of imports of the subject countries in the first three months of 2019 with the same periods of each examined years 2016, 2017, and 2018.

(iii) Status of the domestic industry has improved during the POI in respect of all volume parameters

(a) No adverse volume effect

(b) No adverse effect on inventory and productivity per day

(c) No adverse price effect

(iv) Conclusion of impact on economic parameters

105. An overall analysis the economic parameters of the Domestic Industry clearly reveal that the situation of the Domestic Industry has improved substantially and that imports from the subject countries have had no impact on its performance.

106. It is further submitted that declining performance of the Domestic Industry with respect to few parameters cannot be attributed to imports from subject countries. Without prejudice, the domestic industry has been performing exceptionally well during the injury period and POI and thus, no further protection is required in the present case.

(v) Public interest issue has not been addressed by the Authority.

Post Disclosure comments by Luxi, China

107.With regard to the observation in para 27(d) of the disclosure statement that the Authority notes that the Act or the Rules or the Anti-dumping Agreement does not prohibit a period of investigation comprising of 9 months, we agree with it. However, it is requested that the caveats with regard to choosing or selecting POI of less than 12 months or more than 12 months may also be respected whereas the conditions for selecting of POI of less than 12 months in the current investigation does not exist under the facts and circumstances of the current investigation.

108. Without prejudice, it is submitted that the observation recorded in para 40 of the disclosure statement that ‗neither the petitioner nor any other interested parties have provided any information with regard to any of the provisos of Rule 7 of Annexue 1 of the Rules‟ is factually incorrect. It may be seen that in terms of the provisions of Para 7 of the Annexure I, the exporters from China have already proposed in this investigation that the normal value in the current investigation may please be determined on the basis of the domestic prices/exports to other countries in/by market economy third country i.e. Saudi Arabia and the exporter from Saudi Arabia has participated and provided all the information necessary for the determination of normal value for China that may be considered in the current investigation.

109. It is reiterated that since a producer namely M/s. Methanol Chemicals Company from market economy country i.e. Saudi Arabia has responded to in this investigation and provided all the relevant verifiable information on record and that this information has been utilized for the determination of its normal value for this producer, we request for the determination of normal value for the producers from China on the basis of the information of M/s. Methanol Chemicals Company from Saudi Arabia in view of the first two alternatives provided in Para 7. The normal value on the basis of the cost of production, SGA and profit of the domestic producer in India in the current investigation may not be considered as it is the last alternative provided in Para 7 and the last alternative cannot be substituted and made first/second alternative as is being done in the current investigation.

110. With regard to injury, it is seen that the facts recorded in the disclosure statement are similar to the preliminary findings. It is reiterated that the domestic industry has not suffered any injury in the current investigation due to alleged imports.

111. It is also submitted that there is an absence of causal link in the current investigation. It may be seen that a rational and prudent investigation authority would not make a determination on the existence of causal link in the current investigation as there is a robust growth in injury parameters of the domestic industry. Also, there was no evidence for the significant price effect by the subject imports on domestic prices and there was no evidence that the domestic industry is experiencing injury due to alleged dumped imports from China.

Post Disclosure comments by importers/users

112. POI can be less than 12 months only in exceptional circumstances.

113. The Respondent submits that even though demand for the PUC increased in the POI, the domestic industry‘s increase in market share shows that it was not injured in this regard. The Authority is requested to factor this consideration in the Final Findings.

114. The Respondent submits that the increase in subject imports has only been examined on an end-point to end-point basis. A review of the data regarding the subject country imports would show that they have decreased in the POI in comparison to the previous year. Further, subject imports have decreased in 2017-18, i.e., the year after the base year. Therefore, there is no clear increase in subject imports in the injury period.

115. The Respondent submits that the mere existence of price undercutting is not a condition precedent for determining the existence of price effect. As per paragraph (ii) of Annexure II, price undercutting has to be significant so as to be causing injury. In fact, in the case of imports from China PR, the price undercutting is in the range of 1-5%. When taken cumulatively with the landed value from Saudi Arabia, the price undercutting would definitely be less than 10%, which the Respondent submits, by no yardstick can be considered so “significant” as to cause injury to the domestic industry.

116. Respondent submits that even if it is assumed that profitability has declined due to subject imports, the decline does not fit with excellent performance in the domestic industry‘s operational parameters. The Respondent requests the Authority to examine whether financial parameters have declined due to reasons other than subject imports.

117. The Respondent however reiterates its previous submissions that the imposition of antidumping duty on imports of the subject goods will lead to a situation where the downstream user/pharmaceutical industries will be constrained to pass the price hike onto the consumers and healthcare sector, thus increasing health care costs in India. Such a move would be inimical to public interest and therefore the Authority must be mindful of this factor before recommending continuation of anti-dumping duties.

118. Sandeep Organics Pvt Ltd contended that verification of Exporter and DI both are required in terms of manufacturing process & difference in quality produced. It has also been contended by the Company that there is difference in the Dimethylamine, formic acid, ph, conductivity, Fe, methanol and Dimethylacetamide contents in the DMF produced in India and that exported from producers from China PR like Luxi Chemical.

L. Examination by the Authority

119. As regards the submission regarding confidentiality of M/s. Methanol Chemicals Company, Saudi Arabia to asterix its landed value, the Authority has asterixed the same in the final findings.

120. As regards the reiteration of the contention that reasoning for adoption of less than 12 months as POI is insufficient and the Authority must define the POI for the standard period of 12 months to accurately reflect the correct picture, the Authority notes that the issue has been addressed in the foregoing paras. The WTO‘s guidelines on POI suggest a POI of at least 6 months. There is no restriction on POI with a duration of less than 12 months though post initiation of this investigation, the duration of POI is included in the rules. The Authority has in past considered POI different from 12 months also and in this case no different standard has been adopted.

121. As regards the request of producers/exporters from China PR to adopt normal value determined for cooperating producer from Saudi Arabia as normal value for China PR also, the Authority notes that the claim is only based on an assertion that normal value in market economy third country is available by the virtue of cooperation by a producer from Saudi Arabia. However, it is noted that such availability of data alone is not sufficient to adopt normal value as provided under the rule. The rule requires selection of an appropriate market economy third country and no information have been provided by the producers from China PR to demonstrate that Saudi Arabia is an appropriate market economy third country for China PR. Further as Market Economy Treatment (MET) claim has not been made, the options in the hierarchy of para 7 of Annexure 1 of AD Rules has not been claimed by the producer/exporter on the basis of any credible evidence. Therefore, the normal value for China PR has been constructed by adopting cost of production in India as normated with due adjustment for SGA expenses and a reasonable profit at the rate of 5% on cost of production in accordance with Para 6(8) of the Rules.

122. The Authority notes that the producer/exporter has stated that complete methodology of the cost of production evaluated for the purpose of normal value has not been disclosed. In this regard, Authority notes that post the preliminary findings, the Authority had provided the cost of production and the normal value computed to the producer/exporter. The producer/exporter did not request any details of cost of production but rather provided further details on cost of production for desk verification which resulted in lowering of the normal value as the cost of production was modified on the basis of the data filed in response to preliminary findings by the producer/exporter. The lowered cost of production based on the revised claim has been appropriately considered by the Authority and informed in the disclosure which is being confirmed in this final findings.

123. As regards the comments of the parties on facts disclosed on injury, dumping and causal link and also the views expressed therein, the Authority notes that these final findings are arrived after considering all such views of the interested parties even though such comments are not being addressed here separately for the sake of brevity. The examination of dumping, injury and a causal link between the same have been carried out objectively as required under the Rules and also as per the consistent practice of the Authority and the views are recorded in this findings at appropriate places addressing issues related to dumping, injury and causal link.

124. As regards the submission of the parties that no Anti-dumping duty must be recommended considering the public interest and the interest of pharmaceutical producers, the Authority notes that the purpose of anti-dumping duties, in general, is to eliminate injury caused to the Domestic Industry by the unfair trade practices of dumping so as to re-establish a situation of open and fair competition in the Indian market.

125. As regards the contention of Sandeep Organics Pvt. Ltd that certificate of Analysis and evidences of manufacturing of PUC shows difference between subject goods produced in India and imported into India, the Authority notes that Sandeep Organics Pvt. Ltd relied upon product information mainly pertaining to the cooperating exporters to claim differences in DMF produced by domestic industry and that imported into India. However, such cooperating producers from subject countries have not claimed any such differences in the products rather they claimed the products are comparable. Similar views have been shared by cooperating importers/users as well. Also, even an examination of some documents submitted by Sandeep Organics does not show that the imported DMF and the DMF produced in India are different products.

M. Conclusion

126. After examining the submissions made by the interested parties and issues raised therein, and considering the facts available on record, the Authority concludes that:

a. The product under consideration has been exported to India from the subject countries below its normal value.

b. The Domestic Industry has suffered material injury.

c. Material injury has been caused by such dumped imports of the subject goods from the subject countries.

N. Recommendations

127. The Authority notes that the investigation was initiated and notified to all interested parties and adequate opportunity was given to the domestic industry, exporters, importers and other interested parties to provide positive information on the aspect of dumping, injury and causal link. Having initiated and conducted the investigation into dumping, injury, causal link, and likelihood of continuation or recurrence of dumping and injury in terms of the provisions laid down under the Anti-Dumping Rules, the Authority is of the view that anti-dumping duty is required to offset dumping and injury. Therefore, Authority considers it necessary and recommend the levy of anti-dumping duty on imports of subject goods from the subject countries.

128. In terms of provision contained in Rule 4(d) & Rule 17(i) (b) of the Rules, the Authority recommends imposition of anti-dumping duty equal to the lesser of margin of dumping and the margin of injury, so as to remove the injury to the domestic industry. Accordingly, definitive anti-dumping duty equal to the amount mentioned in Column 7 of the duty table below is recommended to be imposed for five (5) years from the date of the Notification to be issued by the Central Government, on all imports of goods described at column 3 of the duty table below, originating in or exported from subject countries.

Duty Table

Sl.No
Heading
Description
Country of origin
Country of export
Producer
Amount
Unit
Currency
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
1
29211110
Dimethyl Formamide (DMF)
China PR
China PR
M/s. Liaocheng Mehtylamine Chemical Co., Ltd.,
377.21
US$Luxi
MT
2
29211110
Dimethyl Formamide (DMF)
China PR
China PR
Any other producer except M/s. Liaocheng Luxi Mehtylamine Chemical Co., Ltd.,
405.75
MT
US$
3
29211110
Dimethyl Formamide (DMF)
China PR
Any country other than China PR
M/s. Liaocheng Luxi Mehtylamine Chemical Co., Ltd.,
377.21
MT
US$
4
29211110
Dimethyl Formamide (DMF)
China PR
Any country other than China PR
Any other producer except M/s. Liaocheng Luxi Mehtylamine Chemical Co., Ltd.,
405.75
MT
US$
5
29211110
Dimethyl Formamide (DMF)
Any country other than China PR
China PR
M/s. Liaocheng Luxi Mehtylamine
Chemical Co.,
Ltd.,
377.21
MT
US$
6
29211110
Dimethyl Formamide (DMF)
Any country other than China PR
China PR
Any other producer except M/s. Liaocheng Luxi Mehtylamine Chemical Co., Ltd.,
405.75
MT
US$
7
29211110
Dimethyl Formamide (DMF)
Saudi Arabia
Saudi Arabia
M/s. Methanol
Chemicals
Company
136.64
MT
US$
8
29211110
Dimethyl Formamide (DMF)
Saudi Arabia
Saudi Arabia
Any other producer except
M/s. Methanol
Chemicals
Company
267.35
MT
US$
9
29211110
Dimethyl Formamide (DMF)
Saudi Arabia
Any
country
other
than
Saudi
Arabia
M/s. Methanol
Chemicals
Company
136.64
MT
US$
10
29211110
Dimethyl Formamide (DMF)
Saudi Arabia
Any
country
other
than
Saudi
Arabia
Any other producer except
M/s. Methanol
Chemicals
Company
267.35
MT
US$
11
29211110
Dimethyl Formamide (DMF)
Any country other than Saudi Arabia
Saudi Arabia
M/s. Methanol
Chemicals
Company
136.64
MT
US$
12
29211110
Dimethyl Formamide (DMF)
Any country other than Saudi Arabia
Saudi Arabia
Any other producer except M/s. Methanol
Chemicals
Company
267.35
MT
US$

O. FURTHER PROCEDURE

129. An appeal against the order of the Central Government arising out of these findings shall lie before the Customs, Excise and Service Tax Appellate Tribunal in accordance with the relevant provisions of the Customs Tariff Act, 1975.

B. SWAIN, Spl. Secy. & Designated Authority

More Under Custom Duty

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