MINISTRY OF COMMERCE AND INDUSTRY
(Department of Commerce)
(DIRECTORATE GENERAL OF TRADE REMEDIES)
NOTIFICATION
New Delhi, the 15th June, 2020
Case No. ADD – OI – 32/2019
PRELIMINARY FINDINGS
Subject: Preliminary Findings in the anti-dumping investigation concerning imports of “Ciprofloxac in Hydrochloride” originating in or exported from China PR.
No. 6/36/2019-DGTR.-A. BACKGROUND OF THE CASE
1. Having regard to 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 Anti-Dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995, as amended from time to time,(hereinafter also referred to
as “the Rules” or “the AD Rules”) thereof:
2. M/s Aarti Drugs Ltd. (hereinafter also referred to as “the Applicant” or “the Domestic Industry” or “the DI”) filed an application before the Designated Authority (hereinafter also referred to as “the Authority”) 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 Anti-Dumping 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 imposition of anti-dumping duty on imports of “Ciprofloxacin Hydrochloride” or “Ciprofloxacin HCL” (hereinafter also referred to as “the product under consideration” or “PUC” or “subject goods”) from People’s Republic of China (hereinafter also referred to as the “subject country”). M/s Godavari Drugs Limited, another domestic producer of the subject goods, supported the application filed by the Applicant.
3. The Authority, on the basis of sufficient prima-facie evidence submitted by the Applicant, issued a public notice vide Notification No. 6/36/2019- DGTR dated 10th January 2020, published in the Gazette of India, initiating the subject investigation in accordance 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 China PR, and to recommend the amount of anti-dumping duty, which, if levied, would be adequate to remove the alleged injury to the Domestic Industry.
B. PROCEDURE
4. The procedure described herein below has been followed by the Authority with regard to the subject
investigation:
a. The Authority notified the Embassy of the Subject Country 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 10th January 2020, published in the Gazette of India Extraordinary, initiating the anti-dumping investigation concerning imports of the subject goods from subject country.
c. The Embassy of subject country in India was informed about the initiation of the investigation in accordance with Rule 6(2) of the Rules. The Authority sent a copy of the initiation notification to the Government of the subject country, through its Embassy in India, known producers/exporters from the subject country, 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 Government of the subject country, through its Embassy in India in accordance with Rule 6(3) of the Rules supra. A copy of the non-confidential version of the application was also made available in the public file and provided to other interested parties, wherever requested.
e. The Authority also forwarded copy of the notice to known producers/ exporters from the subject country, known importers/users in India, other Indian producers and the domestic industry as per the addresses made available by the Applicant and requested them to make their views known in writing within 30 days of the initiation notification. The Authority sent E[SRr$,r’P Uu,P$ Rnnair, $R $Q, following known producers/exporters to elicit relevant information in accordance with Rule 6(4) of the Rules:
i. M/s Zhejiang Guobang Pharmaceutical Co. Ltd
ii. M/s Zhejiang Jingxin Pharmaceutical Imp
iii. M/s Zhejiang Langhua Pharmaceutical Co Ltd.
f. The Embassy of the subject country in India was also requested to advise the exporters/producers from China PR to respond to the questionnaire within the prescribed time limit. A copy of the letter and questionnaire sent to the producers/exporters was also sent to them along with the names and addresses of the known producers/exporters from the subject country.
g. In response to the initiation of the subject investigation, the following exporters/producers from the
subject country filed export,r’P qu,P$iRnnair, r,PQRnP,:
i. M/s Zhejiang Langhua Pharmaceutical Co Ltd
ii. M/s Zhejiang Guobang Pharmaceutical Co Ltd
iii. M/s Zhejiang Jingxin Pharmaceutical Import & Export Co Ltd
iv. M/s Shangyu Jingxin Pharmaceuticals Co Ltd
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 Rules:
i. M/s Pharma Zone
ii. M/s Shalina Laboratories Pvt Ltd
iii. M/s Minerva Biogenix Pvt. Ltd.
iv. M/s Pinnacle Life Science Private Limited
v. M/s Laborate Pharmaceutical India Limited
vi. M/s Sneha Medicare Pvt Ltd
vii. M/s Africure Pharmaceuticals (India) Private Limited
viii. M/s Del Trade International Private Limited
ix. M/s Sevantilal & Sons
x. M/s Bal Pharma Limited
xi. M/s Pratistha Pharma
xii. M/s Granules India Limited
xiii. M/s C J Shah And Co
xiv. M/s Medico Remedies Limited
xv. M/s Aurobindo Pharma Limited
xvi. M/s Cadila Pharmaceuticals Ltd.
xvii. M/s Flamingo Pharmaceuticals Ltd.,
xviii. M/s Prashi Pharma Private Limited
xix. M/s Syncom Formulations (India)Limited.
xx. M/s Micro Labs Ltd
xxi. M/s Mancare Pharmaceuticals Pvt. Ltd.
xxii. M/s Gorang International
xxiii. M/s Granules India Limited
xxiv. M/s Brawn Laboratories Ltd
xxv. M/s Theon Pharmaceuticals Ltd.
xxvi. M/s Agog Pharma Ltd.
xxvii. M/s Aquatic Remedies Limited
xxviii. M/s Medopharm
xxix. M/s Umedica Laboratories Pvt. Ltd.
i. None of the importers/users except M/s Micro labs Limited has responded and filed importer’s questionnaire response.
j. The Authority sent notice of initiation to the following other domestic producers, intimating them of the initiation of investigation with a request to provide relevant information to the Authority in the form and manner prescribed:
i. M/s Aurobindo Pharma Limited
ii. M/s Dr. Reddy’s Laboratories Ltd.
iii. M/s Neuland Laboratories Limited
iv. M/s Emmennar Pharma Private Limited
v. M/s Sreepathi Pharmaceuticals Limited
vi. M/s Sun Pharmaceutical Industries Ltd.
k. None of the other domestic producers have responded or participated in the present investigation.
l. The Authority made available non-confidential version of the evidence presented/submissions made by various interested parties in the form of a public file kept open for inspection by the interested Submissions made by all the interested parties to the extent considered relevant at this stage have been taken into account in this Preliminary Findings Notification.
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
n. The Non-injurious Price (NIP) based on the optimum cost of production and cost to make and 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 Rules has been worked out 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 April 2018 ± June 2019 (15 months). The examination of trends in the context of injury analysis covered the periods April 2015- March 2016, April 2016-March 2017, April 2017-March 2018 and the POI.
p. 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.
q. The Authority has considered the arguments raised and information provided by all the interested parties till this stage, to the extent the same are supported with evidence and considered relevant to the present investigation.
r. 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 preliminary findings on the basis of the facts available.
s. ‘***’ in this preliminary finding represents information furnished by an interested party on confidential basis and so considered by the Authority under the Rules.
t. The exchange rate for the POI has been taken by the Authority as US$1 = 70.73.
C. PRODUCT UNDER CONSIDERATION AND LIKE ARTICLE
5. At the stage of initiation, the product under consideration was defined as:
“.The product under consideration is “Ciprofloxacin Hydrochloride” or “Ciprofloxacin HCL ”.
Ciprofloxacin Hydrochloride is used to treat different types of bacterial infections, including skin infections, bone and joint infections, respiratory or sinus infections, urinary tract infections, and certain types of diarrhoea. It acts as anti-infective agent, a topoisomerase IV inhibitor, an antibacterial drug, an EC 5.99.1.3 [DNA topoisomerase (ATP-hydrolysing)] inhibitor, a DNA synthesis inhibitor, an antimicrobial agent, an environmental contaminant and a xenobiotic.
The product under consideration is classified under Chapter 29 of the Customs Tariff Act in the name of ‘Ciprofloxacin HCL and its salts’ (subheading 29419030). The Custom classification is indicative only and not binding on the scope of the investigation.”
C.1 Views of the domestic industry
6. The following are the submissions made by domestic industry with regard to product under consideration
and like article:
a. The product under consideration (PUC) is Ciprofloxacin HCL, a quinolone that is quinolin-4(1H)-one bearing cyclopropyl, carboxylic acid, fluoro and piperazin-1-yl substituents at positions 1, 3, 6 and 7, respectively.
b. The prescribed unit of measurement for the product under consideration is weight in Kg/ MT
c. Ciprofloxacin HCL is classified under Chapter 29 of the Customs Tariff Act in the name of ‘Ciprofloxacin HCL and its salts’. The dedicated code for Ciprofloxacin and its salts is 29419030. However, the customs classification is only indicative and is not binding on the scope of the present investigations.
d. The goods produced by the Applicant are like article to the imported goods as they are comparable in terms of chemical & technical characteristics, manufacturing process & technology, functions & uses, product specifications, pricing, distribution & marketing and tariff classification of the goods, and are technically and commercially substitutable.
e. There is no known significant difference in the technology employed by the domestic industry and the
producers in subject country.
C.2 Views of the other interested parties
7. None of the other interested parties has made any submission with regard to PUC.
C.3 Examination by the Authority
8. The product under consideration, as defined in the notice of initiation, is “Ciprofloxacin Hydrochloride” or “Ciprofloxacin HCL”. Cip ofloxacin Hydrochloride is used to treat different types of bac erial infections, including skin infections, bone and joint infections, respiratory or sinus infections, urinary tract infections, and certain types of diarrhea. It acts as anti-infective agent, a topoisomerase IV inhibitor, an antibacterial drug, an EC 5.99.1.3 [DNA topoisomerase (ATP-hydrolysing)] inhibitor, a DNA synthesis inhibitor, an antimicrobial agent, an environmental contaminant and a xenobiotic.
9. The product under consideration is classified under Chapter 29 of the Customs Tariff Act under the tariff code 29419030, in the name of ‘Ciprofloxacin HCL and its salts’. The Customs classification is indicative only and not binding on the scope of the investigation.
10. None of the interested parties have made any submissions for modification of the scope of product under consideration post initiation of investigation. Accordingly, the Authority has considered the product under consideration, as defined in the notice of initiation, for the purpose of the present preliminary findings.
11. The Applicant claimed that the Ciprofloxacin HCL produced by it and that imported from the subject country are produced using the same basic raw materials having broadly similar manufacturing process & technology, functions & uses, product specifications, pricing, distribution & marketing and tariff classification. The contention of the Applicant has not been disputed by the other interested parties. The Authority provisionally holds that the subject goods produced by the domestic industry are like article to the product imported from subject country in terms of Rule 2(d) of the Rules.
D. SCOPE OF DOMESTIC INDUSTRY AND STANDING
D.1 Views of the domestic industry
12. Following are the submissions made by the Applicant with regard to scope of the domestic industry and
standing:
a. The application has been filed by M/s Aarti Drugs Ltd. and supported by M/s Godavari Drugs Limited, another producer of the product under consideration.
b. There are six more known domestic producers of the product under consideration, namely,
i. M/s Aurobindo Pharma Limited,
ii. M/s Dr. Reddy’s Laboratories Ltd.,
iii. M/s Neuland Laboratories Limited,
iv. M/s Emmennar Pharma Private Limited,
v. M/s Sreepathi Pharmaceuticals Limited and
vi. M/s Sun Pharmaceutical Industries Ltd.
c. The Applicant is neither related to an importer in India nor an exporter from the subject country, and has not imported the product under consideration from the subject country.
d. The Applicant holds a major proportion of total domestic production of the subject goods in India and thus, constitutes domestic industry.
D.2. Views of the other interested parties
13. None of the other interested parties has made any submission with regard to domestic industry and standing.
D.3 Examination by the Authority
14. Rule 2(b) of the Rules defines domestic industry as under:
“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”.
15. The application has been filed by M/s Aarti Drugs Ltd. The Applicant is not related to any importer or exporter of subject goods in the subject country, nor have they imported subject goods from subject The Applicant is the largest producer of the subject goods in the country. Further, the application filed by the Applicant was supported by M/s Godavari Drugs Ltd., another domestic producer of the subject goods. Apart from the Applicant and supporter, following are the other Indian producers of the subject goods in India:
a. M/s. Aurobindo Pharma Limited
b. M/s Dr. Reddy’s Laboratories Ltd.
c. M/s Neuland Laboratories Limited
d. M/s Emmennar Pharma Private Limited
e. M/s Sreepathi Pharmaceuticals Limited
f. M/s. Sun Pharmaceutical Industries Ltd.
16. At the stage of initiation and thereafter, the Authority sent a communication to other domestic producers advising them to file information in the form and manner prescribed with regard to injury determination. However, none of other domestic producers have filed complete injury information in the prescribed
17. The evidence on record shows that the Applicant commands a major proportion (43%) in the total domestic production in India. Further, the Applicant, along with the supporter, account for more than 50% of the total production of the subject goods in India. The same has not been disputed by the other interested parties. Accordingly, the Authority holds that the Applicant constitutes domestic industry within the meaning of Rule 2(b) of the Rules and considers that the application satisfied the criteria of standing in terms of Rule 5(3) of the Rules.
E. CONFIDENTIALITY
E.1 Views of the domestic industry
18. The following submissions have been made by the domestic industry with regard to confidentiality:
a. Applicant has disclosed all the essential information in the non-confidential version of the application in accordance with Rule 7 of the Rules and as per Trade Notice No. 10/2018 dated 7th September
b. Indexed information has been provided wherever possible. The injury analysis is essentially an analysis of trend which can be easily seen through trends of various parameters provided in the
c. The non-confidential version of the response filed by the other interested parties is grossly deficient
and should be rejected.
d. Zhejiang Langhua Pharmaceutical Co Ltd has claimed excessive confidentiality with regard to shareholding structure, production process, full value chain, and production facilities. It has failed to disclose details of its related parties and procurement of raw materials.
e. Zhejiang Langhua has claimed product list and corporate structure as confidential, even though the
same is available in public domain.
f. Shengyu Jingxin Pharmaceutical Co Ltd has claimed excessive confidentiality with regard to the working of the company itself, the holding company and its activity, and other related companies engaged in production of the subject goods. Further, it has not provided details of its shareholding structure, channel of distribution, product list, raw material procurement, product description and production process.
g. Zhejiang Jingxin Pharmaceuticals Export and Import Co Ltd (Trader) has claimed excessive confidentiality with regard to its shareholding structure, sales flow chart, and its related company(ies) engaged in the production of the subject goods.
E.2. Views of the other interested parties
19. The following submissions have been made by other interested parties with regard to confidentiality:
i. The standard provided for the disclosure of he ‘Non-Injurious Price’ in Trade Notice 10/2018 i ‘Aggregated actua data must be provided in actual figure range +/- 10%’The same has not been complied with by the domestic industry.
ii. Godavari Drugs Limited is a supporting domestic producer in the subject investigation. Trade Notice 13/2018 dated 27th September 2018 states the information required to be provided by supporting domestic producers and the prescribed formats for the same. Trade Notice 14/2018 dated 1st October 2018 provides guidelines for disclosure of such information in confidential and non-confidential version. The requirements of neither of the trade notices have been complied with. The supporting domestic producer has provided no relevant information to the Respondent.
E.3 Examination by the Authority
20. Various submissions made by the Applicant as well as other interested parties during the course of the investigation with regard to confidentiality, to the extent considered relevant by the Authority, have been examined and addressed as follows.
21. The Authority made available non-confidential version of the information provided by various interested parties to all interested parties through the public file containing non-confidential version of evidences submitted by various interested parties for inspection as per Rule 6(7).
22. As regards information from supporting producers, the Authority has recorded present findings on the basis of information of Applicant domestic industry and has not taken into account the support to the petition. Since injury to the domestic industry is not based on data of the supporting domestic producer, the possibility that such domestic producer may not have provided all information strictly as per format does not vitiate the present determination and right of the Applicant domestic industry. The Authority has prescribed a format for supporting companies only with a view to analyse the performance of such supporting domestic producers. In a situation where supporting domestic producers have not provided information in the prescribed formats, the Authority has not examined possible injury to such other GTmestic JLTd SerRGTFevUr, LIe riRht Tf HJJlicant with UeLJect tT RIta$diSg”LFithin tLI ZLeaniLI UTf RSle 5(3) cannot be diluted even if the supporting domestic producers merely support the petition without providing any information whatsoever.
23. 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.”
24. As regards the contentions with regard to confidentiality of information, it is noted that 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 evidence submitted by various interested parties in the form of public file. The information related to imports, performance parameters and injury parameters of domestic industry has been made available in the public file. Business sensitive information has been kept confidential as per practice.
F. MISCELLANEOUS SUBMISSIONS
Views of the other interested parties
25. There is a gap of 7 months between the date of initiation and the end of period of investigation. It is an established principle that the period of investigation cannot be older than 6 months on the date of initiation. It is submitted that such an outdated period of investigation will not be able to reveal the true picture of the market and will lead to skewed results.
Examination by the Authority
26. As regards submissions concerning the length of POI or its proximity to date of initiation, the Authority notes that the POI chosen for the case is consistent with the legal position at the time of initiation and the practice being followed by the Authority. While it may be desirable to minimise the time gap between end of the POI and date of initiation in order to keep date of initiation as proximate as possible to the end of the POI, the Authority notes that there was no legal provision proscribing initiation of an investigation if the POI was older than six months on the date of initiation. The application was filed by the applicant within the time limits prescribed by the Authority and therefore the Authority was required to consider the same within the framework of legal provisions prevailing at the time of initiation.
27. It is further noted that the Rules have been amended vide Notification No. 9/2020- customs (N.T.) dated 2nd February 2020 wherein Rule 2 (da) and Explanation to Rule 22 have been inserted, incorporating the following provisions:
“The POI shall :-
(i) not be more than six months old as on the date of initiation of investigation.
(ii) be for a period of twelve months and for the reasons to be recorded in writing the designated authority may consider a minimum of six months or maximum of eighteen months.”
It is, however, noted that the above amendment has been carried out after the initiation of the present investigation.
28. With regard to 15 months POI taken by the Authority in this investigation, it is noted that the application in the instant case was filed on 3rd December, 2019. The Authority considers that the investigation period should normally be 12 months period. The Authority can however consider a period longer than 12 months (15 or 18 months), if it is found that such longer period also includes a complete accounting year, and there are no peculiar facts showing that fixation of a longer period of 15 or 18 months as the investigation period would be inappropriate. Considering all aspects, the Authority considered it appropriate to have the POI of 15 months.
G. MARKET ECONOMY TREATMENT (MET), NORMAL VALUE, EXPORT PRICE & DETERMINATION OF DUMPING MARGIN
29. Under Section 9A(l)(c) of the Act, 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 with the 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 of the 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 sub-section (6); or 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):
(b) 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.
G.1 Views of the domestic industry
30. The following submissions have been made by the Applicant with respect to determination of normal value,
export price and dumping margin:
a. China should be considered as a non-market economy, in line with the position taken by the Authority in previous cases, and by investigating authorities in other countries.
b. The cost and price of the Chinese producers cannot be relied upon for determination of normal value, and accordingly, the normal value should be determined in accordance with the provisions of para 7 of Annexure I of the Rules.
c. The Applicant has determined the normal value of subject goods based on cost of production of the subject goods in India with addition of administrative & selling expenses and a reasonable amount of
G.2. Views of the other interested parties
31. None of the interested parties has made any submission with regard to MET Claim. It has been submitted that the export price, landed value and dumping margin should be determined on the basis of the actual data in the exporter’s questionnaire response submitted to the Authority.
G.3 Examination by the Authority
G.3.1 Determination of normal value and export price
Market economy status for Chinese Producers
32. 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 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 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.”
33. It is noted that while, the provision contained in Article 15 (a) (ii) have expired on 11.12.2016, the provision under Article 2.2.1.1 of WTO read with obligation under 15 (a) (i) of the Accession protocol require criterion stipulated in para 8 of the Annexure I of the Rules to be satisfied through the information/data to be provided in the supplementary questionnaire on claiming the market economy status. It is noted that since none of the responding producers and the exporters from China PR have submitted supplementary questionnaire response, the normal value computation is required to be done as per provisions of para 7 of Annexure I of the Rules.
34. Accordingly, the normal value and export price for the producers! exporters from the subject country have been determined as below.
Determination of Normal Value for all producers in China PR
35. As none of the producers from China PR have filed the Supplementary Questionnaire response for market economy treatment, the normal value has been determined in accordance with Para 7 of Annexure I of the Rules, which provides as follows
“In case of imports from non-market economy countries, normal value shall be determined on the basis of the price or constructed value in the market economy third country, or the price from such a third country to other countries, including India or where it is not possible, or on any other reasonable basis, including the price actually paid or payable in India for the like product, duly adjusted if necessary, to include a reasonable profit margin. An appropriate market economy third country shall be selected by the designated authority in a reasonable manner, keeping in view the level of development of the country concerned and the product in question, and due account shall be taken of any reliable information made available at the time of selection. Accounts shall be taken within time limits, where appropriate, of the investigation made in any similar matter in respect of any other market economy third country. The parties to the investigation shall be informed without any unreasonable delay the aforesaid selection of the market economy third country and shall be given a reasonable period of time to offer their comments.”
36. In the absence of sufficient information on record, regarding the other methods as enshrined in Para 7 of Annexure I of the Rules, the Authority has determined the normal value by considering the method on “any other reasonable basis, including the price actually paid or payable in India for the like product, duly adjusted if necessary, to include a reasonable profit margin”. The Authority has, therefore, provisionally constructed the normal value for China PR on the basis of cost of production in India, duly adjusted, including selling, general and administrative expenses an addition of reasonable profits. Accordingly, the constructed normal value so determined for Chinese producers! exporters is mentioned in the dumping margin table below.
Determination of Export Price
M/s Shangyu Jingxin Pharmaceutical Co., Ltd., China PR (Producer) & M/s Zhejiang Jingxin Pharmaceuticals Import and Export Co Ltd, China PR (Exporter)
37. M/s Shangyu Jingxin Pharmaceutical Co. Ltd. is a producer of the subject goods in China PR and has exported the product to India through related company i.e M!s Zhejiang Jingxin Pharmaceuticals Import and Export Co Ltd, (Exporter). Following the receipt of response, a deficiency letter was sent to cooperating producer and exporter asking them to submit replies to the deficiencies. The cooperating producer and exporter has submitted replies to deficiencies, and response has been examined. It is noted that during the POI, M!s Shangyu Jingxin Pharmaceutical Co., Ltd., China PR has exported ***MT of subject goods through related company i.e M!s Zhejiang Jingxin Pharmaceuticals Import and Export Co Ltd, (Exporter). For the purpose of Preliminary findings, the Authority has relied upon the details of the exports given in the questionnaire response filed by the producers!exporters. The adjustments towards inland freight, ocean freight, handling and customs charges, insurance, commission, port expenses, bank charges, and VAT refund have been provisionally accepted for the purpose of preliminary findings. Accordingly, the export price for the PUC at ex-factory level of the Producer i.e. M!s Shangyu Jingxin Pharmaceutical Co., Ltd has been provisionally determined, and shown in the dumping margin table below.
M/s Zhejiang Guobang Pharmaceutical Co., Ltd, China PR
38. M/s Zhejiang Guobang Pharmaceutical Co., Ltd. is a producer of the subject goods in China PR and has exported the subject goods directly to unrelated customers in India. The responding producer/exporter has given details of the exports of subject goods to India in Appendix 3A of the exporters’ questionnaire response. The responding producer!exporter has also clarified that Appendix 3B and Appendix 3C are not applicable in their case because there are no sales to related Indian customers and the responding producer/exporter has not exported the subject goods to India through a trading company. It is noted that during the POI, M/s Zhejiang Guobang Pharmaceutical Co., Ltd, China PR has exported *** MT of subject goods directly to unrelated customers in India. The responding producer!exporter has claimed adjustments on account of ocean freight, insurance, inland transportation, port and other related expenses, credit cost, bank charges and non-refundable VAT which have been allowed by the Authority. The Authority has relied upon the details of the exports given in the questionnaire response filed by the producer/exporter for the purpose of Preliminary findings subject to verification of information. The adjustments towards inland freight, ocean freight, handling and customs charges, insurance, commission, port expenses, bank charges, and VAT have been provisionally accepted for the purpose of preliminary findings. Accordingly, the Authority has provisionally determined the net export price, as mentioned in the dumping margin table below.
M/s Zhejiang Langhua Pharmaceutical Co, China PR
39. M/s Zhejiang Langhua Pharmaceutical Co., Ltd. is a producer of the subject goods in China PR and has exported the subject goods directly to unrelated customers in India. The responding producer/exporter has given details of the exports of subject goods to India in Appendix 3A of the exporters’ questionnaire response. The responding producer/exporter has also clarified that Appendix 3B and Appendix 3C are not applicable in their case because there are no sales to related Indian customers and the responding producer/exporter has not exported the subject goods to India through a trading company. It is noted that during the POI, M/s Zhejiang Langhua Pharmaceutical Co., Ltd., China PR has exported ***MT of subject goods directly to unrelated customers in India. The responding producer/exporter has claimed adjustments on account of ocean freight, insurance, inland transportation, port and other related expenses, credit cost, bank charges and non-refundable VAT which have been allowed by the Authority. The Authority has relied upon the details of the exports given in the questionnaire response filed by the producer/exporter for the purpose of Preliminary findings subject to verification of information. The adjustments towards inland freight, ocean freight, handling and customs charges, insurance, commission, port expenses, bank charges, and VAT have been provisionally accepted for the purpose of preliminary findings. Accordingly, the Authority has provisionally determined the net export price, as mentioned in the dumping margin table below.
Export Price for all other producers/exporters from China PR
40. The export price for other non-cooperating exporters from China PR has been determined as per facts available, taking into account the data of the co-operating exporters from that country.
G.3.2 Dumping Margin
41. On the basis of normal value and export price, as determined above, the dumping margin for producers/exporters from China PR has been determined and the same is provided in the table below:
| Country | Producer | Normal Value/ CNV (US$/ MT) |
Export Price (US$/ MT) |
Dumping Margin US$/MT | Dumping Margin % | Dumping Margin Range |
| China PR | Shangyu Jingxin Pharmaceutical Co., Ltd. |
*** | *** | *** | *** | 20-40 |
| Zhejiang Langhua Pharmaceutical Co., Ltd. |
*** | *** | *** | *** | 0-20 | |
| Zhejiang Guobang Pharmaceutical Co., Ltd. |
*** | *** | *** | *** | 0-20 | |
| Others | *** | *** | *** | *** | 20-40 |
H. INJURY AND CAUSAL LINK
H.1 Views of the domestic industry
42. The submissions made by domestic industry with regard to injury and causal link are summarized as follows:
a. The volume of imports has shown significant increase in absolute terms as well as in relation to production & consumption in India.
b. Imports from the subject country have increased throughout the injury period.
c. While the market share of the imports has increased, the market share of the domestic producers as a whole has declined.
d. The imports significantly are undercutting the prices of the domestic industry in the Indian market.
e. The dumped imports have suppressed the prices of the domestic industry.
f. The domestic industry enhanced its capacity for the product in view of present and potential demand for the product in India and globally. However, the production and sales of the domestic industry have declined over the injury period, despite increase in demand.
g. Due to increasing imports, additional capacity with the domestic industry has remained largely unutilized, resulting in decline in capacity utilization over the injury period.
h. Profitability of the domestic industry with respect of product under consideration has declined consistently over the injury period and the domestic industry is suffering losses in the period of
i. The domestic industry is suffering cash losses and negative return on capital employed in the period of
j. Market share of domestic industry declined over the injury period despite existence of sufficient capacities in the Country.
k. Inventories have shown significant increase throughout the injury period. Inventories in the period of investigation were 4.2 times of inventories in the base year.
l. Productivity has declined in absolute as well as relative terms despite addition in capacities made by the domestic industry.
m. The Applicant produces few other goods as well and therefore employment and wages are not solely dependent on the subject goods performance.
n. The dumping margin is not only more than de-minimis but also substantial. The impact of dumping on the domestic industry is adverse.
o. Growth of the domestic industry in terms of the majority of parameters such as, production, sales, market share, profits, return on investment, cash profits, etc. is adverse.
p. Given the state of affairs of the domestic industry where manufacture and sale of the product is consistently not performing well because of persistent dumping over last few years, substantial fresh investments cannot even be imagined.
H.2. Views of the other interested parties
43. The submissions made by other interested parties with regard to injury and causal link are summarized as
follows:
a. The data provided is inaccurate for various economic parameters as the indices are same for the POl as well as the Annualized POI
b. The Petition cannot be relied on, and no submissions can be made concerning the injury caused due to inaccurate data provided by the applicant. The Authority should ask the Petitioners to provide a revised Petition, to make the required submissions.
c. Aarti Drugs Ltd. is a regular user of Trade remedial measures (TRM) and is not suffering any injury.
d. As per annual report, Applicant is making extremely high profits and giving out handsome dividends. Such a high level of profitability, while also simultaneously suffering an injury in so many products indicates that Applicant intends to create an unfair market space for itself through such measures.
e. Domestic industry is not suffering a material injury due to subject imports.
f. Mere 28% increase in imports is not sufficient to determine a significant increase in imports, particularly in the face of such humungous production by the domestic producers.
g. The subject imports occupy a very small market share in India.
h. The trend for Imports in relation to Production and consumption is misleading.
i. No price suppression or depression caused by imports from the subject country. The sales realization from domestic sales is much higher than the sales realization from export sales.
j. The import price has also moved commensurate to the cost of production.
k. No causal link between the low sales realization of the domestic industry and subject imports. The gap between the cost and sales realization from domestic sales is not high.
l. The prices for the subject goods are low globally and not only in India which cannot be attributed to any price pressure exerted by imports from the subject country.
m. There is an improvement in relevant economic parameters of the domestic industry.
n. The fall in domestic sales is attributed to the sharp decline in demand in 2017-18, and the business decisions administered by the domestic industry.
o. Other producers have been able to retain their position in the market despite the decline in demand in 2017-1 8.
p. The claims of increased inventory by four fold seems to be inaccurate and unreliable as there has been a decrease in production and increase in the total sales being made.
q. No injury in terms of employees since there has been an increase of employees from the base year.
r. The fall in productivity per day can be linked to the reduction in production, owing to the fall in demand and questionable business decisions relating to enhancement of capacity made by the domestic industry.
s. A deep plunge in profit for the domestic industry in the year 2017-18 and the POI, considering that the margin between the cost price and sales price is very slight.
t. The difference between PBT and PBIT is that of the interest costs. The gap between the two are widening, but it is not reflected in the interest cost.
u. Increase in capacity and fall in capital employed has also bound to affect the returns earned by the
v. The Authority needs to verify the profitability claims made by the domestic industry, as the data does not appear to be accurate.
w. Injury, if any, is attributable to sources other than subject imports such as increase in capacity in the time of decline in demand and sharp increase in costs of the product made domestic industry face a heavy losses which affected the profitability of the domestic industry in the POI.
x. The difference in PBT and PBIT does not match the trend of the interest costs.
y. The high-interest costs due to capacity expansion might being concealed.
z. Injury is self-inflicted and cannot be attributed to the subject imports.
aa. Huge losses due to high costs, and low export price of DI. The delta between the export price and the cost of production for exports is huge.
bb. The domestic industry is not cost-efficient as reflected by the price pressure it is facing in the international market. It would be unfair for the subject imports to bear the burden of the inefficiency of the domestic industry.
cc. The causal link between imports and performance of the domestic industry in terms of profit is broken. Price undercutting has remained constant during the injury period, but the profits have fallen by significant margins.
dd. The Authority should not recommend anti-dumping duty and determine that there is no evidence of dumping; injury and causal link.
ee. There is a public health emergency due to the spread of coronavirus and Ciprofloxacin HCL is one of the main chemical components of the drug used for curing various infections and pneumonia is a major component of the wide-spread and fatal coronavirus.
ff. It would not be in the public interest to impose a duty on imports which could save the lives of people of the country. The domestic industry has hiked up high costs, and the drug could be left unavailable to the Indian masses.
gg. Due to the epidemic, the domestic industry is unable to purchase enough raw materials from China resulting in a jack of domestic supply. Therefore, the imposition of anti-dumping duty will not prove to be beneficial for India’s local downstream pharmaceutical companies.
H.3. Examination of the Authority
44. 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 Rules.
45. The Authority has taken note of the submissions made by the domestic industry and has examined various parameters in accordance with the Rules after duly considering the submissions made by the interested
H.3.1 Volume effect of the dumped imports
a. Assessment of demand/apparent consumption
46. For the purpose of the present investigation, the Authority has taken into consideration the demand or apparent consumption of the product in India as the sum of domestic sales of the Indian Producers and imports from all sources.
| Particulars | UoM | 2015-16 | 2016-17 | 2017-18 | POI | POI (A) |
| Domestic Industry Sales | MT | 908 | 810 | 648 | 1,007 | 806 |
| Supporters Sales | MT | *** | *** | *** | *** | *** |
| Sales of Other Producers | MT | *** | *** | *** | *** | *** |
| Total imports from the subject country | MT | 117 | 171 | 217 | 347 | 278 |
| Imports from other countries | MT | – | – | – | 8 | 6 |
| Total Demand/Consumption | MT | 2,730 | 2,837 | 2,475 | 3,444 | 2,755 |
47. It is seen that while the demand for the product under consideration declined in 2017-18, it has increased during the period of investigation. As compared to the base year, the demand for the subject goods has marginally increased.
b. Import volumes from subject country
48. 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 from subject country, either in absolute terms or relative to production or consumption in India. For the purpose of injury analysis, the Authority has relied on the transaction-wise import data procured from DGCI&S. The volume of imports of the subject goods from the subject country has been analysed as under:
| Impoi Volume | UOM | 2015-16 | 2016-17 | 2017-18 | POI | POI(A) |
| Subject Country-China | MT | 117 | 171 | 217 | 347 | 278 |
| Other Countries | MT | – | – | – | 8 | 6 |
| Total Imports | MT | 117 | 171 | 217 | 355 | 284 |
| Total Demand/Consumption | MT | 2,730 | 2,837 | 2,475 | 3,444 | 2,755 |
| Production | MT | 3,236 | 3,530 | 3,001 | 3,835 | 3,068 |
| Imports of subject goods from subject country in relation to | ||||||
| Total Indian Production | % | 3.62% | 4.85% | 7.23% | 9.06% | 9.06% |
| Demand/Consumption | % | 4.29% | 6.04% | 8.77% | 10.09% | 10.09% |
49. It is noted that:
a. The volume of dumped imports has increased significantly in absolute terms over the injury period.
b. The imports have shown a significant increase in relation to domestic production and consumption.
H.3.2 Price effect of the dumped imports
50. In terms of Annexure II (ii) of the Rules, with regard to the effect of the dumped imports on prices, the Authority is required to consider whether there has been a significant price undercutting by the dumped imports as compared with the price of the like product 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.
a. Price undercutting
51. 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 country. 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 considered for comparison with the landed value of the dumped imports. Accordingly, the undercutting effects of the dumped imports from the subject country work out as follows:
Price Undercutting
| Particulars | Units | China PR | |||
| 2015-16 | 2016-17 | 2017-18 | POI (A) | ||
| Landed price of imports | Rs/Kg | 1,743 | 1,295 | 1,447 | 1,819 |
| Net Selling Price | Rs/Kg | *** | *** | *** | *** |
| Price Undercutting | Rs/Kg | *** | *** | *** | *** |
| % | *** | *** | *** | *** | |
| Range | 0-(-10) | 0-10 | 0-10 | 0-10 | |
52. It is seen that the landed prices of the subject goods were below the selling price of the domestic industry. Further, marginal price undercutting is indicative of stiff competition between the foreign producers and domestic industry.
b. Price suppression and depression
53. 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:
Price Suppression and Depression
| Unit | 2015-16 | 2016-17 | 2017-18 | POI-A | |
| Cost of Sales | Rs/Kg | *** | *** | *** | *** |
| Trend | Indexed | 100 | 84 | 97 | 127 |
| Selling Price | Rs/Kg | *** | *** | *** | *** |
| Trend | Indexed | 100 | 84 | 93 | 115 |
| Landed Price-China | Rs/Kg | *** | *** | *** | *** |
| Indexed | Indexed | 100 | 74 | 83 | 104 |
54. It is seen that while the landed price of imports from subject country were above the cost of sales of domestic industry in the year 2015-16 and 2016-17, it declined thereafter to a level lower than the cost of sales. During the period of investigation, the landed price of imports is significantly below the cost of sales. As a result, even though the selling price of the domestic industry has increased in the period of investigation, as compared to the base year, the increase is much less than the increase in cost of sales during the same period. Thus, the imports have prevented price increases, which otherwise would have occurred. The domestic industry has suffered price suppression on account of import of subject goods from subject country.
c. Price underselling
55. The Authority has also examined price underselling suffered by the domestic industry on account of dumped imports from the subject country. For this purpose, the non-injurious price for the domestic industry has been compared with the landed price of imports as obtained from the DGCI&S import data.
| Price Underselling | ||
| Particulars | Unit | |
| Landed Price | Rs/Kg | *** |
| Non Injurious Price | Rs/Kg | *** |
| Price Underselling | Rs/Kg | *** |
| Price Underselling | % | *** |
| Price Underselling | Range | 0-20 |
56. It is noted that the landed value of subject imports was below the non-injurious price of the domestic industry, thus resulting in significant price underselling.
H.3.3 Economic parameters of the domestic industry
57. Annexure II to the 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 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. The various injury parameters relating to the domestic industry are discussed herein below.
a. Production, capacity, sales and capacity utilization
58. Capacity, production, sales and capacity utilization of the domestic industry over the injury period is as follows:
| Particulars | UOM | 2015-16 | 2016-17 | 2017-18 | POI | |
| Actual | Annualized | |||||
| Capacity | MT | *** | *** | *** | *** | *** |
| Trend | Indexed | 100 | 100 | 107 | 112 | 112 |
| Total Production | MT | *** | *** | *** | *** | *** |
| Trend | Indexed | 100 | 102 | 92 | 92 | 92 |
| Capacity Utilization | % | *** | *** | *** | *** | *** |
| Trend | Indexed | 100 | 102 | 85 | 82 | 82 |
| Domestic Sales | MT | *** | *** | *** | *** | *** |
| Trend | Indexed | 100 | 89 | 71 | 89 | 89 |
| Export Sales | MT | *** | *** | *** | *** | *** |
| Trend | Indexed | 100 | 118 | 102 | 107 | 107 |
| Total Sales | MT | *** | *** | *** | *** | *** |
| Trend | Indexed | 100 | 100 | 83 | 96 | 96 |
59. It is seen that:
a. The domestic industry has increased its capacity during the injury period.
b. While capacity with the domestic industry increased, its production has declined post 2016-17. As a result, the capacity utilization of the domestic industry has declined.
c. The sales of the domestic industry have declined from the base year till the year 2017-18. Though there has been increase in the period of investigation, the same remained materially lower than the volumes registered in 2015-16, even though the demand/consumption was slightly higher.
b. Market Share in Demand
60. Market share of the domestic industry and of imports was as shown in table below:
| Particulars | UoM | 2015-16 | 2016-17 | 2017-18 | POI (A) |
| Domestic Industry Sales | % | *** | *** | *** | *** |
| Trend | Indexed | 100 | 86 | 79 | 88 |
| Supporters Sales | % | *** | *** | *** | *** |
| Trend | Indexed | 100 | 101 | 107 | 97 |
| Sales of Other Producers | % | *** | *** | *** | *** |
| Trend | Indexed | 100 | 106 | 103 | 97 |
| Total imports from the subject country |
% | *** | *** | *** | *** |
| Trend | Indexed | 100 | 141 | 205 | 235 |
| Imports from other countries | % | *** | *** | *** | *** |
| Trend | Indexed | – | – | – | 100 |
| Total Demand/Consumption | % | 100% | 100% | 100% | 100% |
61. It is noted that while the market share of subject imports has increased, the share of domestic industry has declined over the period. Further, the market share of Indian industry as a whole has also declined. The decline in market share is despite increase in capacity.
c. Inventories
62. Inventory position with the domestic industry over the injury period is given in the table below:
| Particulars | Unit | 2015-16 | 2016-17 | 2017-18 | POI |
| Opening Stock | MT | *** | *** | *** | *** |
| Closing Stock | MT | *** | *** | *** | *** |
| Average Inventories | MT | *** | *** | *** | *** |
| Trend | Indexed | 100 | 139 | 345 | 418 |
63. It is seen that the inventories with the domestic industry have increased significantly over the injury period.
d. Profitability, return on investment and cash profits
64. Profitability, return on investment and cash profits of the domestic industry over the injury period is given in the table below:
| Particulars | UOM | 2015-16 | 2016-17 | 2017-18 | POI
Actual |
|
| Annualized | ||||||
| Selling price | Rs/Kg | *** | *** | *** | *** | *** |
| Trend | Indexed | 100 | 84 | 93 | 115 | 115 |
| Cost | Rs/Kg | *** | *** | *** | *** | *** |
| Trend | Indexed | 100 | 84 | 97 | 127 | 127 |
| Profit/ loss | Rs/Kg | *** | *** | *** | *** | *** |
| Trend | Indexed | 100 | 86 | (35) | (246) | (246) |
| Profit/ loss | Rs Lacs | *** | *** | *** | *** | *** |
| Trend | Indexed | 100 | 77 | (25) | (219) | (219) |
| Profit/ loss before Interest and Tax | Rs Lacs | *** | *** | *** | *** | *** |
| Trend | Indexed | 100 | 67 | 16 | (57) | (57) |
| Cash Profit | Rs. Lacs | *** | *** | *** | *** | *** |
| Trend | Indexed | 100 | 78 | 10 | (103) | (103) |
| Average Capital Employed | Rs. Lacs | *** | *** | *** | *** | *** |
| Trend | Indexed | 100 | 79 | 70 | 87 | 87 |
| ROCE | % | *** | *** | *** | *** | *** |
| Trend | Indexed | 100 | 85 | 23 | (66) | (66) |
65. It is seen that
a. The profitability of the domestic industry with respect to the product under consideration declined continuously over the injury period and the domestic industry has incurred losses during the period of
b. Similarly, the cash and return on investment have declined, and become negative during the period of investigation.
e. Employment, productivity and wages
66. Performance of the domestic industry with regard to employment, productivity and wages over the injury period was as follows.
| Employment, Productivity and Wages | ||||||
| Particulars | Unit | 2015-16 | 2016-17 | 2017-18 | POI | POI |
| Actual | Annualized | |||||
| Employee | Nos. | *** | *** | *** | *** | *** |
| Trend | Indexed | 100 | 101 | 101 | 102 | 102 |
| Productivity per Day | MT/Day | *** | *** | *** | *** | *** |
| Trend | Indexed | 100 | 102 | 92 | 92 | 92 |
| Productivity per employee | MT/Nos | *** | *** | *** | *** | *** |
| Trend | Indexed | 100 | 101 | 91 | 90 | 90 |
| Wages | Rs. Lacs | *** | *** | *** | *** | *** |
| Trend | Indexed | 100 | 103 | 108 | 127 | 127 |
67. It is seen that the number of employees remained almost at the same level during the injury period, while wages have increased. Productivity has declined with decrease in production.
Growth
| Growth | Unit | 2015-16 | 2016-17 | 2017-18 | POI-A |
| Production (MT) | % | 2.42 | (10.47) | 0.18 | |
| Domestic Sales Volume (MT) | % | (10.75) | (19.99) | 24.28 | |
| Capacity Utilization | % | 2.15 | (15.17) | (2.89) | |
| Cost of Sales (Rs/Kg) | % | (16.22) | 15.69 | 30.82 | |
| Selling Price (Rs/Kg) | % | (16.15) | 10.56 | 23.89 | |
| Profit/ Loss (Rs/Kg) | % | (14.04) | (141) | (606) | |
| Cash Profit | % | (21.58) | (87.75) | (1,167.69) | |
| ROI | % | (1.88) | (7.56) | (10.89) |
68. Growth of the domestic industry with regard to production, domestic sales and capacity utilisation were negative during 2017-18, though these improved to some extent in the period of investigation. However, profits, return on capital employed and cash profits showed negative growth throughout the injury period, especially during the period of investigation.
g. Ability to raise capital investments
69. The Authority notes that domestic industry is suffering low capacity utilization and losses. Further, the return on capital employed of the domestic industry has become negative. This suggests that the imports may impact the ability of the domestic industry to raise capital investments.
h. Magnitude of dumping
70. It is noted that the subject goods are being dumped into India and the dumping margin is positive and
i. Factors affecting domestic prices
71. The examination of the import prices from the subject country, 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 shows that the landed value of imported material from subject country is the benchmark for the selling price of the domestic industry. In fact, the domestic industry is matching the price of imports, and has not increased its prices in proportion to the increase in costs. This shows that the landed prices of subject goods from subject countries are affecting the prices of the domestic industry.
72. As regards contentions with regard to accuracy of the data, the present findings are being recorded on the basis of provisionally verified data. The fact that indexed figures for POI and annualised for the POI are the same does not imply that the figures adopted are inaccurate. Since previous years are of twelve months duration whereas the POI is of fifteen months duration, the index is required to appropriately reflect the same.
73. The Authority examined the reasons for increase in cost of production. It is observed that the primary reason for increase in cost of production is the increase in one of the major raw materials involved in production of the product under consideration.
74. As regards arguments of public interest, it is noted that the purpose of anti-dumping duty is only to address unfair practice of dumping.
75. As regards profits of the Applicant reported in the annual report, it is noted that the Applicant is a multiproduct company having a large number of products. Profits reported in annual report are not reflective of the performance of the domestic industry for the product under consideration.
76. As regards the contention that the domestic industry has suffered losses in exports, it is noted that the information with regard to profits, cash profit, and return on investment is based only on domestic operations and is, therefore, not impacted due to possible losses in exports.
77. As regards the contention that the domestic industry expanded capacity despite losses in the past, the Authority notes that the information on record shows that the Applicant domestic industry was in profit earlier before expansion of capacity, and even after expansion of capacity in 2017-18, the domestic industry was in profits.
I. INJURY MARGIN
78. The Authority has determined Non-Injurious Price (NIP) for the domestic industry on the basis of principles laid down in the Rules read with Annexure III, as amended. The non-injurious price of the product under consideration has been determined by adopting the information/data relating to the cost of production provided by the domestic industry and duly certified by the practising cost accountant for the period of investigation. The non-injurious price has been considered for comparing the landed price from the subject country for calculating injury margin. For determining the non-injurious price, the best utilisation of the raw materials by the domestic industry over the injury period has been considered. The same treatment has been carried out with the utilities. The best utilisation of production capacity over the injury period has been considered. It is ensured that no extraordinary or non-recurring expenses were charged to the cost of production. A reasonable return (pre-tax @ 22%) on average capital employed (i.e. average net fixed assets plus average working capital) for the product under consideration was allowed as pre-tax profit to arrive at the non-injurious price as prescribed in Annexure III of the Rules and being followed as per consistent practice of the Authority.
79. For all the non-cooperative producers/exporters from the subject countries, the Authority has determined the landed price based on facts available.
80. Based on the landed price and non-injurious price determined as above, the injury margin for producers/ exporters has been determined by the Authority and the same is provided in the table below:
| Country | Producer | Non‑ Injurious Price (US$/MT) |
Landed Value (US$/MT) |
Injury Margin US$/MT |
Injury Margin (%) |
Injury Margin % (Range) |
| China PR | Shangyu Jingxin Pharma-ceutical Co., Ltd. |
*** | *** | *** | *** | 0-20 |
| Zhejiang Langhua Pharma-ceutical Co., Ltd. |
*** | *** | *** | *** | 0-20 | |
| Zhejiang Guobang Pharma-ceutical Co., Ltd. |
*** | *** | *** | *** | 0-20 | |
| Others | *** | *** | *** | *** | 0-20 |
H.3.4 Conclusion on injury
81. The examination of the imports of the subject product and performance of domestic industry shows that the volume of imports has increased in absolute terms as well as in relation to production and demand in India. The imports are undercutting the prices of the domestic industry, and the price underselling is also positive. The imports of subject goods from subject country has prevented price increases which otherwise would have occurred due to increase in cost of production. The domestic industry has suffered price suppression on account of import of subject goods from subject country.
82. While the capacity of the domestic industry has increased over the period, the production and sales of the domestic industry has declined when compared to the base year. The market share of subject imports has increased, while the share of domestic industry has declined over the same period. The domestic industry has suffered a decline in its profits over the injury period, and is suffering losses. The cash profits and return on capital employed of the domestic industry has declined significantly and became negative during the POI. It is also noted that the dumping margin is positive and significant.
83. In view of the foregoing, the Authority provisionally concludes that the domestic industry has suffered material injury.
H.3.5 Non-attribution analysis
84. Having examined the existence of injury, volume and price effects of dumped imports on the prices of the domestic industry, the Authority has examined whether injury to the domestic industry can be attributed to any factor, other than the dumped imports, as listed under the Rules.
a. Imports from other sources
85. Since China PR accounts for 97.76% of the total imports, and imports from other countries are negligible,
the imports from other countries could not have caused injury to the domestic industry.
b. Contraction in demand
86. Although the demand for the product under consideration declined in 2017-18, it has rebounded in the period of investigation. Further, the domestic industry has lost market share to the subject imports, in the present demand. Thus, the injury to the domestic industry is not on account of any contraction in demand. In any case, there is no contraction of demand during the injury period.
c. Changes in the pattern of consumption
87. There is no evidence of any change in the pattern of consumption with regard to the product under consideration. Therefore, changes in the pattern of consumption cannot be considered to have caused injury to the Domestic Industry.
d. 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.
e. 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.
f. Export performance
90. The injury information examined hereinabove relates only to the performance of the domestic industry in terms of its domestic market. Thus, the injury suffered cannot be attributed to the export performance of the domestic industry.
g. Performance of other products being produced and sold by the domestic industry
91. The Authority has only considered data relating only to the performance of the subject goods. Therefore, performance of other products produced and sold are not a possible cause of the injury to the domestic industry.
H.3.6 Conclusions on causal link
92. It is thus noted that other known factors listed under the Rules do not show that the domestic industry could have suffered injury due to these other factors. The Authority has also examined whether the dumping of the product has caused injury to the domestic industry. The following parameters show that material injury to the domestic industry has been caused by dumped imports.
a. Imports of the subject goods have increased in absolute terms as well as in relation to production and consumption.
b. The market share of subject imports has increased, while the share of domestic industry has declined over the same period.
c. The price undercutting is positive. The imports of subject goods from subject country has had a suppressing effect on the prices of the product in the market.
d. As a result, the production and sales of the domestic industry have declined over the period.
e. The domestic industry has suffered financial losses, cash losses and negative return on investment.
j. INDIAN INDUSTRY’S INTEREST AND OTHER ISSUES
93. The Authority recognizes that the imposition of anti-dumping duties might affect the price levels of the product in India. However, fair competition in the Indian market will not be reduced by the imposition of anti-dumping measures. On the contrary, imposition of anti-dumping measures would remove the unfair advantages gained by dumping practices, prevent the decline of the domestic industry and help maintain availability of wider choice to the consumers of the subject goods. 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 duties, therefore, would not affect the availability of the product to the consumers. The Authority notes that the imposition of the 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.
K. CONCLUSION AND RECOMMENDATIONS
94. After examining the submissions made by the interested parties and issues raised therein; and considering
the facts available on record, the Authority provisionally concludes that:
a. The subject goods have been exported to India from the subject country at dumped prices.
b. The domestic industry has suffered material injury.
c. The injury to the domestic industry has been caused by the dumped imports.
95. 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 and causal link in terms of the provisions laid down under the Anti-Dumping Rules, the Authority is of the view that imposition of provisional duty is required to offset dumping and injury, pending completion of the investigation. Accordingly, Authority considers it necessary and accordingly recommends imposition of provisional anti-dumping duty on imports of subject goods from the subject country.
96. In terms of provision contained in Rule 4(d) of the Rules,, the Authority recommends imposition of provisional 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, the Authority recommends imposition of provisional antidumping duty on the imports of subject goods, originating in or exported from subject country, from the date of notification to be issued in this regard by the Central Government, equal to the amount mentioned in Col. 7 of the duty table appended below.
| S.No. | Tariff Heading* |
Description of Goods |
Country of Origin/ export |
Country of Export | Producer | Duty Amount |
Currency | Unit |
| 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 |
| 1 | 29419030 | Cipro-floxacin Hydro-chloride | China PR | Any country including China PR |
Shangyu Jingxin Pharma-ceutical Co., Ltd. |
2.41 | US$ | Kg |
| 2 | 29419030 | Ciprof-loxacin Hydro-chloride | China PR | Any country including China PR |
Zhejiang Langhua Pharma-ceutical Co., Ltd. |
0.94 | US$ | Kg |
| 3 | 29419030 | Ciprof-loxacin Hydro-chloride | China PR | Any country including China PR |
Zhejiang Guobang Pharma-ceutical Co., Ltd. |
1.90 | US$ | Kg |
| 4 | 29419030 | Ciprof-loxacin Hydro-chloride | China PR | Any country including China PR |
Any producer other than serial number 1, 2, and 3 |
3.29 | US$ | Kg |
| 5 | 29419030 | Ciprof-loxacin Hydro-chloride | Any country other than China PR |
China PR | Any | 3.29 | US$ | Kg |
*Custom classification is only indicative and the determination of the duty shall be made as per the description of PUC. The PUC mentioned above should be subject to above ADD even when it is imported under any other HS code
97. The landed value of imports for this purpose shall be assessable value as determined by the Customs under Customs Act, 1962 and applicable level of custom duties except duties levied under Section 3, 8B, 9, 9A of the Customs Tariff Act, 1975.
L. FURTHER PROCEDURE
98. The procedure as below would be followed subsequent to notifying the preliminary findings:
(i) The Authority invites comments on these provisional findings from all the interested parties and the same,
considered relevant by the Authority, would be considered in the final finding.
(ii) Domestic Industry, exporters, importers and other interested parties known to be concerned are being addressed separately by the Authority, who may make their views known, within 30 days from the date of the publication of these preliminary findings.
(iii) Any other interested party may also make known its views within 30 days from the date of publication of these findings.
(iv) The Authority would conduct oral hearing in terms of rule 6(6) to give an opportunity to all interested parties to present their views relevant to the investigation. Issues and concerns raised during oral hearing will be examined in the final findings.
(v) The date of the oral hearing would be announced on the DGTR website (gov.in).
(vi) The Authority would conduct further verification to the extent deemed necessary.
(vii) The Authority would disclose the essential facts as per the Anti-dumping Rules before announcing the final findings.
BHUPINDER S. BHALLA, Addl. Secy. & Designated Authority
