Sunset Review of anti-dumping investigation on Methylene Chloride import

MINISTRY OF COMMERCE AND INDUSTRY

(Department of Commerce)

(DIRECTORATE GENERAL OF TRADE REMEDIES)

NOTIFICATION

New Delhi, the 22nd November, 2018

FINAL FINDINGS

Subject: Sunset Review of anti-dumping investigation on the imports of “Methylene Chloride” originating in or exported from the European Union and the United States.

A. BACKGROUND OF THE CASE

F. No. 7/15/2018-DGAD.— 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) thereof;

2. Whereas having regard to the above Act and the Rules, the Designated Authority (hereinafter referred to as the “Authority”) initiated an anti-dumping investigation against imports of Methylene Chloride originating in or exported from the European Union, the United States, and Korea RP vide Notification No.14/19/2012-DGAD on 04th April, 2013. The Preliminary Findings were notified on 06th September, 2013 and the provisional duties were imposed by the Ministry of Finance vide Notification No. 24/2013 – Cus (ADD) dated 21st October, 2013. The Authority had thereafter issued final findings on 2nd April, 2014 recommending the imposition of definitive anti-dumping duties on the subject imports. The definitive anti-dumping duties on the subject goods imported from the subject countries were imposed by the Ministry of Finance vide Customs Notification No. 24/2014 – Cus (ADD) dated 21st May, 2014.

3. Whereas, in terms of the Act and the Rules, the anti-dumping duty imposed shall, unless revoked earlier, cease to have effect on the expiry of five years from the date of such imposition.

4. And, notwithstanding the above provision, the Authority is required to review, on the basis of a duly substantiated request made by or on behalf of the domestic industry within a reasonable period of time prior to the expiry of the measure, as to whether the expiry of duty is likely to lead to continuation or recurrence of dumping and injury.

5. And whereas, M/s Gujarat Fluorochemicals Ltd. and M/s Chemplast Sanmar Ltd. (hereinafter also referred to as the “Petitioners” or “Applicants”) filed an application before the Authority in accordance with the Act and the Rules alleging continuation of dumping of Methylene Chloride (hereinafter also referred to as the “subject goods”) originating in or exported from the European Union and the United States, and the likelihood of continuation of dumping of the subject goods, originating in or exported from Korea RP, and consequent injury to the domestic industry. The Applicants have requested the Authority for review and continuation of the anti-dumping duties on the imports of the subject goods from these countries.

6. And whereas, in view of the duly substantiated application filed in accordance with Section 9A(5) of the Act read with Rule 23 of the Rules, and on finding that prima facie evidence of dumping of the subject goods, originating in or exported from the United States of America (USA) and the European Union (EU) (hereinafter also referred to as the “subject countries”), injury to the domestic industry and causal link between the alleged dumping and injury exists to justify initiation of anti-dumping investigation; the Authority issued a public notice vide Notification No. F.No.7/15/2018-DGAD dated 03rd May, 2018 to examine whether the expiry of the anti-dumping duty is likely to lead to continuation or recurrence of dumping and injury to the domestic industry.

7. Since there were no imports of the subject goods from Korea RP in the POI and consequently no evidence of current dumping by the Korean producers, the sunset review investigation concerning imports originating or exported from Korea RP was not initiated.

8. The scope of the present review covers all aspects of the original investigation concerning imports of the subject goods, originating in or exported from the subject countries.

B. GENERAL PROCEDURE

9. The procedure described below has been followed with regard to this investigation, after issuance of the public notice notifying the initiation of the above investigation by the Authority:

i. The Authority notified the Embassies/Missions of the subject countries in India about the receipt of the anti-dumping application before proceeding to initiate the sunset review investigation in accordance with sub-rule (5) of Rule 5.

ii. The Authority sent a copy of the initiation notification to the Embassies/Missions of the subject countries in India, known producers/exporters from the subject countries, known importers/users in India, other Indian producers and the domestic industry as per the addresses made available by the Applicants and requested them to make their views known in writing within 40 days of the initiation notification.

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

iv. The Embassies/Missions of the subject countries in India were also requested to advise the exporters/producers from their respective 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.

v. The Authority sent Exporter’s Questionnaire to elicit relevant information from the following known producers/exporters in accordance with Rule 6(4) of the Rules:

The European Union

a) DOW Chemicals

b) INEOS Chlor Limited

c) Akzo Nobel Industrial Chemicals Ltd.

d) Solvay SA – rue de Ransbeek

e) Arkema SA

f) M/s. Akzo Nobel Industrial Chemicals B.V

The United States

a) Olin Corporation

b) Occidental Chemical Corporation

c) Dow Texas Operations 2301

vi. However, no producer/exporter responded to questionnaire sent by the Authority.

vii. The Authority sent Importer’s Questionnaires to the following known importers/users of subject goods in India calling for necessary information in accordance with Rule 6(4) of the Rules:

a. Vardhaman Trading Corporation

b. Harsh Kumar & Company

c. Ralchem Limited

d. Morpean LABS

e. Surya Medicare Limited

f. Indsol Drugs Limited

g. Meghmani Organics Limited

h. United Phosphorus Limited

i. KDL Biotech Limited

j. Sun Pharmaceuticals Industries Limited

k. Rails India Limited

l. Alembic Limited

m. Hindustan Chemicals Industries

viii. However, no importer of the subject goods responded to questionnaire sent by the Authority.

ix. The Authority made available non-confidential version of the evidence and submissions presented by the interested parties in the form of a public file kept open for inspection by the interested parties.

x. A 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 required analysis after due examination of the transactions.

xi. The Non-Injurious Price (NIP) 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, based on the optimum cost of production and cost to make & sell the subject goods in India. The optimum cost of production and cost to make & sell the subject goods has been based on the information furnished by the domestic industry in accordance with Generally Accepted Accounting Principles (GAAP) and Annexure III to the Anti-Dumping Rules.

xii. The Authority held an oral hearing on 26thJuly, 2018 to provide an opportunity to the interested parties to present relevant information orally in accordance to Rule 6 (6). The hearing was attended by the representatives of the domestic industry only, who presented their views orally and were subsequently advised to file written submissions of the same with the Authority.

xiii. A disclosure statement, disclosing the essential facts of the investigation, was issued by the Authority on 12th November, 2018 inviting comments. No submissions have been made by any interested party apart from the domestic industry during the course of this investigation. Therefore, there were no submissions apart from the domestic industry that needed to be addressed by the Authority.

xiv. Verification of the data of the domestic industry was carried out to the extent considered necessary. Only such verified information with necessary rectification, wherever applicable, has been relied upon by the Authority.

xv. The Period of Investigation (POI) for the purpose of the present review investigation is 1stJanuary, 2017 to 31st December, 2017 (12 months). The examination of trends in the context of injury analysis covered the years 2014-2015, 2015- 2016, 2016- 2017 and the POI.

xvi. Information provided by the domestic industry 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, the domestic industry was directed to provide sufficient non-confidential version of the information filed on confidential basis.

xvii. 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 findings on the basis of the facts available.

xviii. ‘***’ in this document represents information furnished to the Authority on confidential basis and so considered by the Authority under the Rules.

xix. The exchange rate for the POI has been taken by the Authority as Rs.66.07 = 1 US$.

C. PRODUCT UNDER CONSIDERATION AND LIKE ARTICLE

C.1 Views of the Domestic industry

10. The views of the domestic industry are as follows:

i. The present investigation is a sunset review investigation. The product involved in the original investigation and in the present sunset review investigation is Methylene Chloride, also known as Dichloromethane or Methylene Dichloride (hereinafter also referred to as the “subject goods”, or “PUC” or “MDC”). The product under consideration in the present sunset review investigation is the same as has been defined by the Authority in the original investigation.

ii. Methylene Chloride is an organic compound with molecular formula CH2Cl2. It is a colourless liquid with sweetish ether-like odour and is used as a solvent predominantly. It is essentially non-flammable under most conditions of use. However, it can burn if strongly heated. Methylene Chloride may decompose at high temperatures forming toxic gases. It is completely miscible with variety of solvents.

iii. Methylene Chloride is a solvent and is used in the manufacturing of polycarbonate and phenolic resins, rayon yarn, pharmaceuticals, agro and fragrance chemicals. It is also used as an extractant for edible fats, cocoa, butter and essences.

iv. The PUC in this investigation should remain the same as was defined in the course of the original investigation.

v. Considering that the present application is for sunset review of existing anti-dumping duty and that are no major developments since the previous investigations with regard to the PUC, the scope of the PUC is required to be kept the same as that in the original investigation.

vi. There are no grades of the subject goods. However, it can be traded in loose or packed, thereby having direct effect on prices.

vii. Methylene Chloride is classified under Chapter 29 (Organic Chemical) of the Customs Tariff Act, 1975, under customs subheading 29031200. The customs classification is indicative only and in no way binding on the scope of the present investigation.

viii. There are two processes for production of Methylene Chloride – Methane route and Methanol route. The product produced through both the routes has essentially similar technical characteristics. Thus, the difference in production process does not result in a different product.

C.2 Views of other Interested Parties

11. Since no interested party apart from the domestic industry has participated in this investigation, there are no submissions by other interested parties for the Authority to consider.

C.3 Examination by the Authority

12. The product under consideration in this investigation is Methylene Chloride, also known as Dichloromethane or Methylene Dichloride. It is an organic compound with molecular formula CH2Cl2. It is a colourless liquid with sweetish ether-like odour and is used as a solvent, predominantly. It is essentially non- flammable under most conditions of use. However, it can burn if strongly heated. MDC may decompose at high temperatures forming toxic gases. It is completely miscible with a variety of solvents.

13. The subject goods are classified under Chapter 29 (Organic Chemical) of the Customs Tariff Act, 1975, under customs subheading 29031200. However, customs classifications are indicative only and in no way binding on the scope of this investigation.

14. The present investigation being a sunset review investigation and anti-dumping duties, as recommended earlier by the Authority, being in force on the imports of the subject goods from the subject countries, the Authority considers that the scope of the subject goods in the present investigation remains the same as that in the original investigation.

15. With regard to like article, Rule 2(d) of the Anti-Dumping Rules provides as under:

“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;

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

17. Thus, the Authority holds that the subject product produced by the applicant domestic industry is like article to the PUC exported from the subject countries, in accordance with the AD Rules.

D. SCOPE OF DOMESTIC INDUSTRY & STANDING

D.1 Submissions by the Domestic Industry

18. Following submissions have been made by the domestic industry with regard to scope and standing of the domestic industry:

i. The petition was jointly filed by Gujarat Fluorochemicals Ltd. and Chemplast Sanmar as the domestic producers of the PUC. There are three other producers of the subject goods in India, namely, TGV SRAAC Ltd. (formerly Sree Rayalaseema Alkalies and Allied Chemicals Ltd.), Gujarat Alkalies & Chemicals Ltd. and SRF Ltd. The Petition is supported by TGV SRAAC Ltd

ii. The Applicants account for 52.80% of the total domestic production and therefore can be termed to be holding a major proportion of the domestic production of the subject goods in India.

iii. The share of the Applicants along with the supporter accounts for 69.12% of the total Indian production.

iv. There are no imports of the PUC by the Applicants or any of their related parties during the POI, within the meaning of Rule 2(b) nor are they related to any of the importers or exporters for the subject countries. Therefore, the Applicants clearly satisfy the standing criteria and constitute domestic industry within the meaning of the Rules.

D.2 Views of other Interested Parties

19. Since no interested party apart from the domestic industry has participated in this investigation, there are no submissions by other interested parties for the Authority to consider.

D.3 Examination  by the Authority

20. The application has been jointly filed by Gujarat Fluorochemicals Ltd. and Chemplast Sanmar and is supported by TGV SRAAC Ltd.

21. As per the information provided by the Applicants as part of their Petition, it can be seen that the Applicants constitute 52.80% of the total domestic production; and, after including the production of the supporter M/s TGV SRAAC Ltd, their collective share accounts for 69.12% of the total Indian production, as seen from the table below.

Statement of Indian Production

22. Further, as per the information submitted by the Applicants, they are not found to have imported the subject goods during the POI,and they are also not found to be related to any exporter of the subject goods in the subject countries or any importer of the PUC in India within the meaning of Rule 2(b).

23. In view of the above and after due examination, the Authority holds that the Applicants satisfy the standing requirements and constitute domestic industry under Rule 2(b) and Rule 5(3) of the AD Rules.

E. ISSUES RELATING TO CONFIDENTIALITY

E1. Examination by the Authority

24. 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).

25. There are no submissions made by the interested parties with regard to confidentiality.

F. NORMAL VALUE, EXPORT PRICE AND DETERMINATION OF DUMPING MARGIN

F.1 Determination of Normal Value for producers and exporters in the subject countries

26. The provisions pertaining to normal value are given in Section 9A(1)(c) of the Act and Annexure – I to AD Rules.

According to Section 9A (1) (c) of the Customs Tariff Act, 1975, ‘Normal Value’ in relation to an article means:

(i) the comparable price, in the ordinary course of trade, for the like article when destined 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 to an appropriate third country as determined in accordance with the rules made under sub-section (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 transhipped through thecountry 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.

27. None of the producers/exporters from the United States and the European Union have filed the response to questionnaire. In view of non-cooperation from producers /exporters from the subject countries, the Authority is not able to determine individual dumping margin and is constrained to proceed with the principles of best available information. The Authority determined normal value as per facts available in terms of Rule 6(8) of the Rules. Accordingly, Constructed Normal value has been determined as shown in the dumping margin table below.

28. The Authority has determined the Normal Value for the subject goods exported by all exporters in the subject countries by considering the optimum cost of production and after making additions for selling, general & administrative costs and providing reasonable profit.

F.2 Determination of Export Price for producers and exporters in the subject countries

29. The Authority has determined the export price for producers/exporters in the subject countries on the basis of the DGCI&S transaction -wise data. The export price has been adjusted on account of Freight, Marine Insurance, Bank Charges, Port Expenses to arrive at the net export price at ex-factory level. Accordingly, the net export price at ex-factory level for exports from subject countries is as shown in the dumping margin table below.

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