MINISTRY OF COMMERCE AND INDUSTRY
(Department of Commerce)
(DIRECTORATE GENERAL OF TRADE REMEDIES)
NOTIFICATION
FINAL FINDINGS
New Delhi, the 3rd May, 2021
Case No. SSR-21/2020
Subject : Sunset Review investigation concerning imports of ‘Methyl Acetoacetate’ originating in or exported from China PR.
No. 7/40/2020-DGTR.—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 (hereinafter also referred to as ‘the Rules‘) as amended from time to time thereof;
A. BACKGROUND OF THE CASE
1. The Designated Authority (hereinafter also referred as the ‘Authority‘) initiated anti-dumping investigation on imports of ―Methyl Acetoacetate‖ (hereinafter also referred as the ‘subject goods‘ or ‘product under consideration‘ or ‘PUC‘), originating in or exported from China PR and USA vide Notification No. 14/7/2014-DGAD dated 07th January, 2015. The Authority thereafter notified the Final Findings Notification No. 14/7/2014-DGAD dated 01st April 2016, recommending imposition of antidumping duty against imports of the subject goods originating in or exported from China PR and USA. Definitive anti-dumping was imposed by Ministry of Finance vide Notification No. 22/2016-Customs (ADD) dated 31st May, 2016 for 5 years and the same is in force till 30th May, 2021.
2. Section 9A(5) of the Act, inter alia, provides that anti-dumping duty imposed shall, unless revoked earlier, cease to have effect on expiry of five years from the date of such imposition and the Authority is required to review whether the expiry of duty is likely to lead to continuation or recurrence of dumping and injury. In accordance with the above, the Authority is required to review, on the basis of a duly substantiated request made by or on behalf of the domestic industry, as to whether the expiry of duty is likely to lead to continuation or recurrence of dumping and injury or not.
3. Rule 23(1B) of the Rules provides as follows:
“…any definitive antidumping duty levied under the Act, shall be effective for a period not exceeding five years from the date of its imposition, unless the designated authority comes to a conclusion, on a review initiated before that period on its own initiative or upon a duly substantiated request made by or on behalf of the domestic industry within a reasonable period of time prior to the expiry of that period, that the expiry of the said anti-dumping duty is likely to lead to continuation or recurrence of dumping and injury to the domestic industry.”
4. M/s Laxmi Organics Industries Limited (hereinafter referred to as the ‘Applicant‘ or ‘petitioner‘ or ‘Domestic Industry‘ or ‘DI‘) filed a duly substantiated application before the Authority, in accordance with the Act and the Rules alleging likelihood of continuation or recurrence of dumping of the subject goods, originating in or exported from China PR (hereinafter also referred as ‘Subject Country‘) and consequent injury to the domestic industry if the existing anti-dumping duty ceases to exist and has requested for review and continuation of the present anti-dumping duties, applicable on the imports of the subject goods, originating in or exported from the subject country, for another five years.
5. The Applicant has not sought extension of anti-dumping duties on imports of subject goods from USA stating that there is no evidence of likelihood of dumping and injury from USA.
6. Based on the duly substantiated application with prima facie evidence of likelihood of continuation or recurrence of dumping of the subject goods originating in or exported from the subject country and consequent injury filed on behalf of the domestic industry in accordance with Section 9A(5) of the Act, read with Rule 23 of the Rules, the Authority initiated sunset review investigation vide Notification No. 7/40/2020-DGTR dated 30th September, 2020, published in the Gazette of India, Extraordinary, to examine whether the expiry of present anti-dumping duty is likely to lead to continuation or recurrence of dumping and injury.
B. PROCEDURE
7. The procedure, as described herein below, has been followed with regard to the investigation:
a. The Authority notified to the Government of the subject country through its Embassy in India about the receipt of the anti-dumping application before proceeding to initiate the present investigation, in accordance with Rule 5(5) of the Rules.
b. The Authority vide Notification No. 7/40/2020-DGTR dated 30th September, 2020 issued a public notice in the Gazette of India, Extraordinary, initiating anti-dumping investigation against imports of the subject goods from the subject country.
c. In accordance with Rule 6(2) of the AD Rules, the Authority forwarded a copy of the public notice to the Embassy of the subject country in India, known producers/exporters from the subject country, known importers/users association and the domestic industry as per the addresses made available by the Domestic Industry and requested them to make their views/submissions known in writing within thirty days from the date of issue of the letter. The time limit to file information was extended up to 05th December 2020.
d. The Authority provided a copy of the non-confidential version of application filed by the Applicant to the known exporters and the Embassy of the subject country in India, in accordance with Rule 6(3) of the Rules.
e. The Embassy of the subject country in India was also requested to advise the exporters/producers from the subject country 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.
f. The Authority sent questionnaires to elicit relevant information to the following known exporters of the subject goods in the subject country in accordance with Rule 6(4) of the Rules:
(i) M/s. Qingado Double Peach Speciality Chemicals (Group) Co. Ltd
(ii) M/s. Nantong Acetic Acid Chemical Co. Ltd
(iii) M/s. Wang Long Group Co. Ltd
(iv) M/s. Zhangjian Hope Chemicals Co. Ltd
(v) M/s. Nantong Tianhong International Trade Co. Ltd
(vi) M/s. Jiangsu Tiancheng Biochemical Products Co. Ltd
g. The following producer/exporter from the subject country have participated and filed the exporter questionnaire response before the Authority:
(i) M/s. Nantong Acetic Acid Chemical Co., Ltd.
(ii) M/s. Nantong Tianhong International Trade Co., Ltd.
h. Questionnaires were sent 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. C.J. Shah
(ii) M/s. Sojitz
(iii) M/s. Hazel Embassy Centre
(iv) M/s. Sarna Chemicals Pvt. Ltd
(v) M/s. SM Chemicals
(vi) M/s. Arch Pharmalabs Ltd.
(vii) M/s. Aurobindo Pharma Ltd.
(viii) M/s. Colourtex Industries Ltd
(ix) M/s. Kailash Chemicals
(x) M/s. Dia Chemie
(xi) M/s. Prima Chemicals/Polygon Chemicals
i. None of the importers/users has filed Questionnaire response in the present investigation.
j. Information provided by interested parties on confidential basis was examined with regard to sufficiency of the confidentiality claim. The Authority accepted the confidentiality claims wherever warranted after due examination and such information is considered confidential and not disclosed to other parties. Wherever possible, parties providing information on confidential basis were directed to provide sufficient non-confidential version of the confidential information, which was made available through public file.
k. The interested parties were asked vide notification dated 9th December, 2020 to share the non-confidential version of the responses, submissions and evidence presented by them with the other interested parties.
l. Further information was sought from the Applicant and other interested parties to the extent deemed necessary. Verification of the data provided by domestic industry was conducted to the extent considered necessary for the purpose of present investigation.
m. Investigation was conducted for the period from 1st April, 2019 to 31st March, 2020 (12 months) (hereinafter referred to as the ‘Period of Investigation‘ or ‘POI‘) with injury analysis covering the period April, 2016 – March, 2017, April, 2017 – March 2018, April, 2018 – March, 2019 and the POI.
n. The Directorate General of Commercial Intelligence and Statistics (DGCI&S) was requested to provide details of imports of subject goods for the past three years, and the period of investigation, and the said information was obtained from the DGCI&S and has been adopted for the purpose of the present investigation.
o. The Authority has examined the information furnished by the domestic industry to the extent possible on the basis of guidelines laid down in Annexure III of the Rules to work out the cost of production and the non-injurious price of the subject goods in India.
p. In accordance with Rule 6(6) of the Rules, the Authority provided opportunity to all interested parties to present their submissions orally in the oral hearing held on 21st December, 2020 which was attended by various parties. Further, a 2nd oral hearing was held on 18th February, 2021 in view of change in the Designated Authority, in the light of the judgement of the Hon‘ble Supreme Court in the matter of Automotive Tyres Manufacturers Association vs Designated Authority. The oral hearing was held through video conferencing in view of the special circumstances arising out of the COVID-19 pandemic. All the parties who presented their views in the oral hearing were requested to file written submissions of their views, in order to enable opposing interested parties to file rejoinders, if any, thereafter.
q. A Disclosure Statement containing the essential facts in this investigation which would have been formed the basis of the Final Findings was issued to the interested parties on 07.04.2021 and the interested parties were allowed time up to 13.04.2021 to comment on the same. The comments on Disclosure Statement received from the interested parties have been considered, to the extent found relevant, in this Final Findings Notification.
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 disclosure statement on the basis of the facts available.
s. . ‘***‘ in this Final Findings represents the 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 for the subject investigation as 1US$ = Rs. 71.65.
C. PRODUCT UNDER CONSIDERATION AND LIKE ARTICLE
C.1 Submissions made by the Domestic industry
8. As regards the product under consideration and like article, the domestic industry has submitted the following:
a. The product under consideration in the present petition is same as in the original investigation, i.e., ‗Methyl Acetoacetate‘, also referred to as MAA/MAAE/AAME. The PUC is classified under Chapter 29 of the Customs Tariff Act, 1975, under customs sub-heading 29183040.
b. The subject goods are used in the Pharmaceutical Industry, Agrochemical Industry, Polymer Industry and as a reactant in other industries. MAA is also used as a flavouring agent and in colourants.
c. This is a sunset review investigation for continued imposition of anti-dumping duty and the issue of like article has been examined by the Authority in the original investigation as well. Therefore, product imported from subject country is like article to product produced by the Domestic Industry.
C.2 Submissions made by the other interested parties
9. No submission has been made by the exporters/other interested parties with regard to scope of product under consideration (PUC) and like article.
C.3 Examination by the Authority
10. The Authority notes that the product under consideration (PUC) in the present sunset review investigation is ―Methyl Acetoacetate” from China PR. This being a sunset review investigation, the scope of the PUC remains the same as that in the original investigation. The PUC in the original investigation was:
“4. The product under consideration in the present petition is Methyl Acetoacetate. Methyl Acetoacetate (also known as MAA/MAAE/AAME) is a Diketene based Ester or aceto-acetate. The chemical formula of MAA is C5H8O3 and at 99% purity, it is a clear liquid with a colourless appearance.
5. Methyl Acetoacetate is classified in Chapter 29 of the Customs Tariff Act under the subheading 29183040, as „Methyl Acetoacetate”. Though the product under consideration has dedicated customs classification under the Customs Tariff Act, on analysing the import data, it has been observed that the product under consideration is being imported under various other codes as well such as 29146990, 29153910, 29153940, 29153990, 29183090, 29331990, 29410090 and 29189900. Therefore, the customs classification is indicative only and is in no way binding on the scope of the investigation.”
11. The subject goods produced by the domestic industry and that imported from the subject country are comparable in terms of physical characteristics, manufacturing process, functions and uses, product specifications, distribution and marketing, and tariff classification of the goods. The two are technically and commercially substitutable. The consumer also uses the two interchangeably. In view of the same, the Authority holds that product manufactured by the Domestic Industry constitutes ―like article” to the subject goods being imported into India from the subject country.
12. The present investigation being a sunset review investigation and anti-dumping duties being in force on the imports of the subject goods from the subject country, the Authority considers that scope of the product under consideration in the present review investigation remains the same as in the original investigation.
D. SCOPE OF DOMESTIC INDUSTRY AND STANDING
D.1 Submissions made by the Domestic Industry
13. Following submissions have been made by the domestic industry with regard to scope and standing of the domestic industry:
a. The Applicant is the sole producer of the subject goods in India and constitutes entirety of Indian production. The Applicant is neither related to an importer in India nor an exporter of the subject country. The Applicant has also not imported the product under consideration from the subject country. The Application, therefore, satisfies the requirement of standing and the applicant constitutes domestic industry within the meaning of the Rules.
D.2 Submissions made by other interested parties
14. No submissions have been made by the exporters, importers, users or any other interested party with regard to the scope of the domestic industry.
D.3 Examination by the Authority
15. Rule 2(b) of the Anti-Dumping Rules defines domestic industry as under:
―(b) “domestic industry” means the domestic producers as a whole engaged in the manufacture of the like article and any activity connected therewith or those whose collective output of the said article constitutes a major proportion of the total domestic production of that article except when such producers are related to the exporters or importers of the alleged dumped article or are themselves importers thereof in such case the term „domestic industry‟ may be construed as referring to the rest of the producers‖.
16. The application in the present case has been filed by M/s Laxmi Organics Industries Ltd. The Applicant has claimed that it has neither imported the subject goods from the subject country nor is related to any exporter or producer of subject goods in the subject country or an importer of the product under consideration in India and also that the production by the applicant constitutes entire domestic production of the subject goods in India.
17. In view of the above, the Authority holds that the Applicant constitutes eligible domestic industry within the meaning of Rule 2(b) of the Rules, even though standing within the meaning of Rule 5(3) is not required to be established in a sunset review initiated under Rule 23. The Authority holds that the applicant constitutes domestic industry within the meaning of the Rules.
E. CONFIDENTIALITY
E.1 Submissions made by the domestic industry
18. The following submissions have been made by the domestic industry with regard to confidentiality:
a. The information in terms of volume parameters, such as production, sales, etc. has not been disclosed as the same is not in public domain. Disclosure of such highly business sensitive information would be of significant competitive advantage to competitors and consumers and would seriously impact the interest of Applicant. The Applicant has, however, provided indexed information wherever possible.
b. The Applicant has provided sufficient information justifying initiation of the investigation and provided all information as required under the application proforma. As regards failure of evaluation of certain parameters in the write up, the Applicant submits that it is not necessary for the Applicant to evaluate all the parameters in the application. The Applicant is obliged to provide all relevant information, which it has done.
c. The Applicant has provided the data in indexed form in the non-confidential version of the application in accordance with Rule 7 of the Rules and Trade Notice No. 10/2018 dated 7th September, 2018.
d. 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 application.
e. The responding parties have omitted to provide various requisite crucial information. Third country information has been claimed entirely confidential, thus not permitting domestic industry to provide any input. The responding parties have even kept country‘s gross capacity, demand, etc. as confidential.
f. The questionnaire responses are incomplete, claim excessive confidentiality, and disregards the Trade Notice No. 10/2018 dated 7th September, 2018.
g. Therefore, they should not be accepted for determination of individual dumping margin and injury margin.
E.2 Submissions made by other interested parties
19. The following submissions have been made by other interested parties with regard to confidentiality:
a. Domestic industry has claimed excessive confidentiality in contravention to Rule 7 and Trade Notice No. 1/2013 dated 09/12/2013.
b. The petitioner has claimed excessive confidentiality and filed an incomplete petition. Section-VI (Costing Information) of the Application is completely missing from the non-confidential version of the petition and no justification has been given by the petitioner as to why confidentiality was claimed.
c. Non-declaration by the Domestic Industry about the closure of plant due to floods in the application tantamount to misdeclaration and concealment of vital facts.
E.3 Examination by the Authority
20. 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 rule 12, 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 summarisation 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 authorize its disclosure in a generalized or summary form, it may disregard such information.”
21. The Authority made available non-confidential versions of the information provided by various interested parties to all interested parties for inspection through the public file containing non-confidential version of evidence submitted by various interested parties.
22. The Authority examined the confidentiality claims of the interested parties and on being satisfied, allowed the claim on confidentiality. The Authority notes that any information which is by nature confidential (for example, because its disclosure would be of significant competitive advantage to a competitor or because its disclosure would have a significantly adverse effect upon a person supplying the information or upon a person from whom that person acquired the information), or which is provided on a confidential basis by parties to an investigation shall, upon good cause shown, should be treated as such by the authority. Such information cannot be disclosed without specific permission of the party submitting it.
23. The Authority has considered the claims of confidentiality made by the Domestic Industry and the opposing interested parties and on being satisfied about the same, the Authority has allowed the claim on confidentiality. The Authority made available to all interested parties the non-confidential version of evidences submitted by various interested parties for inspection, upon request as per Rule 6(7).
F. MISCELLANEOUS SUBMISSIONS
F.1 Submission made by the Domestic Industry
24. The following miscellaneous submissions have been made by the domestic industry:
a.The Applicant has supported the application with proper evidence justifying initiation of sunset review investigation.
b. The claims regarding likelihood and dumped imports from subject country likely to significantly increase and cause injury thereafter are based on evidence put on record in Application for initiation as well in the written submission filed and shared with all the interested parties on 14th December, 2020. These are not mere allegations or conjectures.
F.2 Submissions made by other interested parties
25. The following miscellaneous submissions have been made by other interested parties:
a. The petition is devoid of substantive evidence, sufficient legal and factual basis and injury and thus should not have been considered for initiation.
b. The Domestic Industry‘s intentional failure to disclose the closure of plants situated at Mahad due to floods amounts to concealment of material facts. The same is disclosed in para 4 of the quarterly report of the petitioner as on September 30, 2019. Impact of such flood should be considered by the Authority.
c. The petitioner has deliberately misled the Authority by concealing the main reason behind such injury occurred during the quarter ending September 30, 2019 which was due to the closure of plant during floods and which is clearly specified in Para 4 of their Quarterly Report. It also mentions that the Company‘s Unit-2 situated at Mahad was affected by flood during the quarter ending September 30, 2019 and it is in the process of evaluating the impact of the damage caused due to floods.
d. The injury, if at all caused to the domestic industry, is due to the closure of plant during floods and not because of the imports of the subject goods from China PR. Imports from China PR cannot be held liable or responsible for any unnatural happening occurring to the domestic industry.
F.3 Examination by the Authority
26. The Authority has noted all the miscellaneous submissions by the interested parties and has examined all aspects of the submissions made hereunder:
a. As regards the submissions of interested parties regarding adequacy and accuracy of the application, the Authority notes that the application contained all information relevant for the purpose of initiation of investigation. The Authority, only after satisfaction that application contained sufficient evidence to justify initiation of the investigation initiated the present investigation. As per Rule 6, the Authority was required to disclose a summary of factors alleged to have caused injury to the domestic industry. The Authority has provided in the initiation notification on what basis it has satisfied itself the need for initiating the review investigation.
b. As regards the contention that the plant was affected because of flood, it is noted that the flood had affected the domestic industry. However, the plant remained in operation during the time. Since, the flood was covered by insurance, the same has not been seen to have had an impact on Profit and Loss of the domestic industry. In any case, the claim of the domestic industry in the present investigation is of likelihood of dumping and injury and not current injury and the investigation also indicates improvement in performance over the injury period. Thus, any effect of flood is immaterial as the investigation does not show material injury being faced by the domestic industry on this account.
G. DETERMINATION OF NORMAL VALUE, EXPORT PRICE AND DUMPING MARGIN
G.1 Normal Value
27. Under Section 9A(1)(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 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 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.2 Submissions of Domestic Industry
28. The following are the submissions made by the domestic industry with regard to normal value:
a. China PR should be considered a non-market economy, in line with the position taken by the Authority in previous cases, and by investigating authorities in other countries. Chinese Producer‘s cost and price cannot be relied upon for determination of normal value.
b. Paragraph 1 to 6 Annexure I of the Rules do not apply for computation of normal value for imports from China PR, unless a producer/exporter shows with sufficient evidence that he is operating under market economy conditions. As a result, normal value for China PR has to be determined in terms of paragraph 7 of Annexure I of the Rules. Para 7 of Annexure I of the Rules provides that the calculation of the normal value in a non-market economy may be determined on the following basis:
i. The price in a market economy third country; or
ii. Constructed cost in a market economy third country; or
iii. The price from such a third country to other countries, including India; or
iv. The price actually paid/payable in India, adjusted to include a reasonable amount of profit.
c. The Applicant could have determined the normal value on any one of the above-mentioned parameters and has determined the normal value of the subject goods considering price from market economy third country to other country, including India. For this purpose, the Applicant has considered price from Switzerland to India.
d. Switzerland is an appropriate market economy third country. The consideration of appropriate market economy third country does not imply that such a country should not be a developed country.
e. The Hon‘ble CESTAT in the matter of Kuitun Jinjiang Chemical Industry Co. Ltd. vs Union of India has held that level of development would be relevant only if the domestic sale price or cost of production of a market economy third country is adopted and not when exports from surrogate country to third country or India is considered as the price in international trade is a function of demand and supply in the international market and is not affected by the level of development of the supplier country.
G.3 Submissions of other interested parties
29. The following submissions were made by other interested parties with regard to normal value:
a. Switzerland has been wrongly claimed as surrogate country for China to construct normal value. Switzerland is a highly developed service sector while China is a developing country. Switzerland has the second highest GDP per capita in the world, which is thirteen times more than China. The cost of living in Switzerland is also nine times more than China.
b. Article 15(a) and (b) of China‘s accession protocol has been accepted by the appellate body in its report in the EC-Fasteners (DS-397) between China and EU. The panel suggested that market economy status be automatically given to China upon expiry of Article 15 of China‘s accession to WTO protocol. Article 15(d) of the protocol states the same. Same has been accepted by USA and EU as well.
G.4 Examination by the Authority
Market Economy status for Chinese producers
30. 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 my conditions prevail in the industry producing the like product with regard to the manufacture, production and sale of that product, the importing WTO Member shall use Chinese prices or costs for the industry under investigation in determining price comparability;
(ii) The importing WTO Member may use a methodology that is not based on a strict comparison with domestic prices or costs in China if the producers under investigation cannot clearly show that market economy conditions prevail in the industry producing the like product with regard to manufacture, production and sale of that product.
b) In proceedings under Parts II, III and V of the SCM Agreement, when addressing subsidies described in Articles 14(a), 14(b), 14(c) and 14(d), relevant provisions of the SCM Agreement shall apply; however, if there are special difficulties in that application, the importing WTO Member may then use methodologies for identifying and measuring the subsidy benefit which take into account the possibility that prevailing terms and conditions in China may not always be available as appropriate benchmarks. In applying such methodologies, where practicable, the importing WTO Member should adjust such prevailing terms and conditions before considering the use of terms and conditions prevailing outside China.
c) The importing WTO Member shall notify methodologies used in accordance with subparagraph (a) to the Committee on Anti-Dumping Practices and shall notify methodologies used in accordance with subparagraph (b) to the Committee on Subsidies and Countervailing Measures.
d) Once China has established, under the national law of the importing WTO Member, that it is a market economy, the provisions of subparagraph (a) shall be terminated provided that the importing Member’s national law contains market economy criteria as of the date of accession. In any event, the provisions of subparagraph (a)(ii) shall expire 15 years after the date of accession. In addition, should China establish, pursuant to the national law of the importing WTO Member, that market economy conditions prevail in a particular industry or sector, the non-market economy provisions of subparagraph (a) shall no longer apply to that industry or sector.”
31. It is noted that while the provisions contained in Article 15(a)(ii) have expired on 11.12.2016, the provisions under Article 2.2.1.1 of the WTO read with obligation under 15 (a) (i) of the Accession protocols require criterion stipulated in para 8 of the Annexure I of India‘s Rules to be satisfied through the information/data to be provided in the supplementary questionnaire on claiming the market economy status.
32. It is noted that since neither the responding producer nor the responding exporter from China PR has submitted supplementary questionnaire response, the normal value computation is required to be done as per provision of para 7 of Annexure I of the Rules.
33. Accordingly, the normal value and export price for the responding producer/exporter from China PR have been determined as below.
G.5 Determination of Normal Value
34. The Authority notes that the M/s. Nantong Acetic Acid Chemical Co., Ltd (producer) and M/s. Nantong Tianhong International Trade Co., Ltd (related exporter) from China PR have filed exporter questionnaire response but have not filed the supplementary questionnaire to claim Market Economy Status.
35. The Authority notes that Normal Value for a country considered as a non-market economy is required to be computed in accordance with para 7 and 8 of Annexure 1 of AD rules. In the instant case the responding producer has not filed any MET questionnaire and, therefore, the Authority notes that options under para 7 of Annexure 1 to AD rules need to be explored. Para 7 lays down hierarchy for determination of normal value and provides that normal value shall be determined on the basis of the price or constructed value in a market economy third country, or the price from such a third country to other country, including India, or where it is not possible, 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. Thus, the Authority notes that the normal value is required to be determined having regard to the various sequential alternatives provided under Annexure 7.
36. The Domestic Industry provided Switzerland customs data to show that Switzerland has made significant exports of the subject goods to India throughout the injury period and proposed Switzerland as a market economy third country for China PR.
37. It has been claimed by the domestic industry that the European Commission has also considered developed country as surrogate country for China PR in several investigations such as (i) anti-dumping duty on imports of melamine originating in the People’s Republic of China (2017); anti-dumping duty and collecting definitively the provisional duty imposed on imports of certain cold rolled flat steel products originating in the People’s Republic of China and the Russian Federation; anti-dumping duty on imports of stainless steel cold-rolled flat products originating in the People’s Republic of China and Taiwan (2015); and anti-dumping duty on imports of certain welded tubes and pipes of iron or non-alloy steel originating in Belarus, the People’s Republic of China and Russia, Thailand and Ukraine (2008).
38. The Authority notes that the Domestic Industry has provided information as per DGCI&S data to consider normal value in terms of para 7 of Annexure I to the Rules on the basis of price from market economy third country to other country, including India and in this regard, has considered prices from Switzerland to India. The Domestic Industry has claimed that Switzerland being a non-subject country with no investigation of anti-dumping underway or anti-dumping measure in force and with import volume from Switzerland being significant, the option of Switzerland is appropriate and is representative of the normal value of the subject goods. The Authority notes that neither the data regarding the domestic sales price in Switzerland is available nor the cost can be constructed since the costing data of Switzerland is unavailable. The Authority also notes that since the PUC is being exported under various HS Codes, the information regarding export price of the subject goods from Switzerland to other countries is also not available. Further, the Authority noted that there are substantial exports of the subject goods from USA to India but the data on exports of the subject goods from USA to other countries cannot be determined as the subject goods fall under more than one HS Code. The Authority, in the absence of sufficient information on record regarding these methods enshrined in Para 7 of Annexure I of the Rules, is left with no option but to determine the normal value by considering the method of “any other reasonable basis”. The Authority has, therefore, constructed the normal value for China PR on the basis of cost of production in India, duly adjusted, including selling, general and administrative expenses and addition of reasonable profits. The constructed normal value so determined for Chinese producers/exporters is mentioned in the Dumping Margin Table below.
G.6 Determination of Export Price
G.6.1 Export Price for Nantong Acetic Acid Chemical Co., Ltd., China (Producer) and Nantong Tianhong International Trade Co., Ltd., China (Exporter)
39. Nantong Acetic Acid Chemical Co., Ltd. is a producer/exporter of the subject goods and has exported the PUC to India during the POI directly as well as through a related trader, namely, Nantong Tianhong International Trade Co., Ltd. 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 have submitted replies to deficiencies, and response has been examined. It is noted that during the POI, Nantong Acetic Acid Chemical Co., Ltd, China has exported *** MT of subject goods directly and *** MT through a related party, namely, Nantong Tianhong International Trade Co., Ltd.
40. The Authority has examined the details of the exports given in the questionnaire response filed by the producer/exporter. The sales to Indian customers are on CIF basis. However, the Authority has determined average ex-factory export price after making due adjustments. The producer/exporter and exporter/trader have claimed adjustments on account of port and handling charges, ocean freight, marine insurance, inland transportation, credit expenses and bank charges which have been allowed. The net export price worked out by the Authority is as shown in the Dumping Margin Table below.
G.7 Calculation Dumping Margin
41. The normal value, ex-factory export price and dumping margin determined in the present investigation for the subject country are as follows: –
DUMPING MARGIN TABLE
| Country | Producer | Normal Value (US$/MT) |
Export Price
(US$/MT) |
Dumping Margin (US$/MT) | Dumping Margin (%) | Dumping Margin (Range) |
| China PR | Nantong Acetic Acid Chemical Co., Ltd. | *** | *** | *** | *** | 20-30 |
| Others | *** | *** | *** | *** | 30-40 |
H. ASSESSMENT OF INJURY, CAUSAL LINK AND LIKELIHOOD OF CONTINUATION OR RECURRENCE OF DUMPING AND INJURY
42. Rule 11 of the 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.
43. Rule 23 of the Rules provides that the provisions of Rule 6,7,8,9,10,11,16,18,19 and 20 shall apply mutatis mutandis in case of a sunset review. The Authority in its examination has evaluated the injury parameters which are required under Rule 11 and Annexure II of the Rules and has also examined as to whether the expiry of duty is likely to lead to continuation or recurrence of dumping and injury.
44. The Authority notes that the application for continuation of antidumping duty has been filed by M/s Laxmi Organics Ltd. In terms of Rule 2(b) of the Rules, the Applicant has been treated as the domestic industry for the purpose of this investigation. Therefore, for the purpose of injury determination, the cost and injury information of the Domestic Industry has been examined.
H.1 Submissions made by the Domestic Industry
45. The following submissions were made by the domestic industry with regard to injury and causal link:
a. The dumped imports from China increased from base year in 2016-17 till 2018-19. However, imports once again increased significantly in the POI.
b. Significant imports are being made under advance license for export purposes. Import prices under advance license are much lower.
c. Imports in relation to production and consumption have increased over the injury period and remained significant throughout the injury period.
d. The landed price of the imports was below the selling price of the domestic industry and thus likely to undercut the prices of the domestic industry in the event duties were to expire.
e. Import prices from subject country vary significantly on transaction-to-transaction basis. However, such import prices from subject country on an average basis are significantly below the selling price of the domestic industry. A significant volume of imports being duty free requires exclusion of custom duties and ADD while examining such imports for the likely impact on the prices of the domestic industry.
f. Owing to significant fluctuations in import prices, the Authority must undertake consideration of transactions with positive undercutting and positive injury margin for examining price effect of dumped imports. Price undercutting and injurious imports/ injury margins should be determined considering only those transactions that were, in fact, undercutting or injuring the prices of the domestic industry. Petitioner‘s concern is against injurious imports and not against non-injurious imports. The petitioner has relied on WTO panel observation in the matter of European Communities – Anti-Dumping Duties on Malleable Cast Iron Tube or Pipe Fittings From Brazil and CESTAT decision in Kothari Sugars & Chemicals Limited v. Designated Authority, and its reference in another CESTAT order in Honest Enterprises Ltd. v. Designated Authority.
g. The weighted average export prices to India are grossly insufficient to determine whether injury to the domestic industry is likely to recur. The producers in subject country are holding huge unutilized capacities. Thus, in the event of cessation of anti-dumping duties, these producers are likely to find good market opportunities in India and are likely to export significant volumes at a price below the selling price of the domestic industry.
h. The landed price of duty paid subject imports is below non-injurious price. The landed price of duty-free subject imports is above non-injurious price because of addition of customs duty not actually paid, and below the CIF import price (which represents the true landed price of imports in these situations). Thus, subject imports continue to undersell the prices of the domestic industry.
i. The domestic industry has capacities for a large number of products produced using diketene. This ensures optimization of its operations. The domestic industry has increased capacity, production, capacity utilization and sales over the injury period.
j. The domestic industry still has unfair competition in segments where the consumer is buying under both advance license and purchasing from domestic industry.
k. The profits, cash profit, PBIT and return on capital employed were significantly high in the base year. However, domestic industry‘s performance on these parameters declined since base year and then declined significantly in the POI. None the less, the domestic industry was still able to earn profits in the POI.
H.2 Submissions made by other interested party
46. The following submissions were made by other interested parties with regard to injury and causal link:
a. The imports from subject country increased with increase in demand. In a multi-product plant, production of product under consideration is not an indication of real capacity utilization and impact of increased imports.
b. Petitioner has increased its capacity utilization and production during POI. All economic parameters remained positive except profitability, cash profits and PBIT. However, theses can be attributed to the floods in the plant, Therefore, the purported injury to the domestic industry cannot be attributed to imports from China PR.
c. The declining profitability is towards quarter ending September, 2019 as a result of the flood. The cash profits and PBIT declined due to not enough increase in the selling price as in line with the increase in cost of sales.
d. The substantial increase in depreciation and amortization expense during the period of investigation when there is no increase in the installed capacity remains a surprise factor and is a very unusual trend. Further, average capital employed by the company during the period of investigation is disproportionate to the increase in installed capacity.
e. The Domestic Industry has failed to explain all the reasons behind consistent loss in PBIT and cash profit loss during the period of investigation and last three years.
f. An analysis of non-attributive factors should be undertaken, and the domestic industry should explain the reasons behind consistent PBIT and cash profit loss during POI. First, an analysis and examination of the effects of other factors must be undertaken.
H.3 Examination by the Authority
47. The Authority has taken note of the submissions made by the interested parties. Annexure- II of the Anti-Dumping Rules provides for objective examination of both (a) the volume of dumped imports and the effect of the dumped imports on prices in domestic market for the like articles; and (b) the consequent impact on domestic producers of such products.
48. According to Section 9(A)(5) of the Customs Tariff Act, 1975, anti-dumping duty imposed shall, unless revoked earlier, cease to have effect on the expiry of five years from the date of such imposition, provided that if the Central Government, in a review, is of the opinion that the cessation of such duty is likely to lead to continuation or recurrence of dumping and injury, it may, from time-to-time, extend the period of such imposition for a further period of five years and such further period shall commence from the date of the order of such extension.
49. In consideration of the various submissions made by the interested parties in this regard, the Authority proceeds to examine the current injury, if any, to the domestic industry before proceeding to examine the likelihood aspects of dumping and injury on account of imports from the subject country.
50. The Authority has examined the injury parameters objectively taking into account the facts and arguments submitted by the domestic industry and other interested parties.
51. The Authority has taken note of various submissions made by the Domestic Industry and other interested parties on injury and causal link and analysed the same considering the facts available on record and applicable laws. The injury analysis made by the Authority in the succeeding preceding paras ipso facto addresses submissions made by the domestic industry and other interested parties.
H.3.1 Volume effect of dumped imports on domestic industry
a. Assessment of demand/ apparent consumption
52. The Authority has taken into consideration, for the purpose of the present investigation, demand or apparent consumption of the product in India as the sum of domestic sales of the domestic industry as it is the sole producer of subject goods and imports from all sources:
| Demand in India | Unit | 2016-17 | 2017-18 | 2018-19 | POI |
| Imports from Subject Country | MT | 402 | 247 | 2,991 | 1,868 |
| Imports from Other Countries | MT | 3,746 | 4,278 | 3,964 | 4,038 |
| Total Imports | MT | 4,148 | 4,525 | 6,955 | 5,905 |
| Total Demand | MT | 8,302 | 9,705 | 10,549 | 12,485 |
| Trend | 100 | 117 | 127 | 150 |
53. It is seen that the demand for the subject goods has increased throughout the injury period.
b. Import Volumes and Share of Subject Country
54. With regard to the volume of dumped imports, the Authority is required to consider whether there has been a significant increase in dumped imports, either in absolute terms or relative to production or consumption in India. In the present case, however, ADD has been in force. For the purpose of injury analysis, the Authority has relied on the import data procured from DGCI&S. The volume of imports of the subject goods and share of the dumped imports during injury investigation period are as follows:
| Particulars | Unit | 2016-17 | 2017-18 | 2018-19 | POI |
| Imports from subject country | MT | 402 | 247 | 2,991 | 1,868 |
| Trend | Indexed | 100 | 61 | 744 | 465 |
| Imports from other countries | MT | 3,746 | 4,278 | 3,964 | 4,038 |
| Trend | Indexed | 100 | 114 | 106 | 108 |
| Total Imports | MT | 4,148 | 4,525 | 6,955 | 5,905 |
| Trend | Indexed | 100 | 109 | 168 | 142 |
| Subject country imports in
relation to total imports |
% | 9.69 | 5.45 | 43.01 | 31.63 |
| Trend | Indexed | 100 | 56 | 444 | 327 |
| Total Indian Production | MT | *** | *** | *** | *** |
| Trend | Indexed | 100 | 115 | 86 | 145 |
| Imports from subject country
relative to production |
% | 10 | 5 | 76 | 29 |
| Trend | Indexed | 100 | 49 | 784 | 295 |
| Demand | MT | 8,302 | 9,705 | 10,549 | 12,485 |
| Trend | Indexed | 100 | 117 | 127 | 150 |
| Imports from subject country
relative to demand in India |
% | 5 | 3 | 28 | 15 |
| Trend | Indexed | 100 | 53 | 586 | 309 |
55. It is seen that:
a) Imports from China PR declined in 2017-18, increased significantly in 2018-19, and thereafter declined in the POI.
b) Similarly, imports from China PR in relation to consumption and production also declined in 2017-18, increased significantly in 2018-19 and thereafter declined in the POI. Imports in relative terms, therefore, continue to be significant. It has been claimed that the imports are not a necessity in the Indian market with domestic industry enhancing capacity over the injury period which is lying unutilized.
H.3.2 Price Effect of The Dumped Imports
56. With regard to the effect of dumped imports on prices, the Authority is required to consider whether there has been a significant price undercutting by the dumped imports as compared to 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 in the normal curse. The impact on the prices of the domestic industry on account of the dumped imports from the subject country has been examined with reference to price undercutting, price underselling, price suppression and price depression, if any, in terms of Annexure II (ii) of the Rules. For the purpose of this analysis, the cost of production, net sales realization (NSR) and the non- injurious price (NIP) of the domestic industry have been compared with landed price of imports of the subject goods from the subject country.
a. Price Undercutting
57. For the purpose of price undercutting analysis, the selling price of the domestic industry has been compared with the weighted average import price from the subject country. Accordingly, the undercutting effects of the dumped imports from the subject country without adding the existing antidumping duty work out as follows:-
| Particulars | UOM | POI |
| Selling Price of DI | Rs/MT | *** |
| Trend | Index | *** |
| Landed price | Rs/MT | *** |
| Price undercutting | Rs/MT | *** |
| Price undercutting | % | *** |
| Price undercutting | Range | 0-10 |
58. It is seen that the landed price of the imports from the subject country is below the selling price of the domestic industry during the period of investigation. Therefore, it is noted that imports from the subject country are likely to undercut the prices of the domestic industry in the event of cessation of ADD.
b. Price suppression and depression
59. In order to determine whether the dumped imports are depressing or suppressing 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 is examined. Table below shows factual position:
| Particulars | Unit | 2016-17 | 2017-18 | 2018-19 | POI |
| Cost of Sales | Rs/MT | *** | *** | *** | *** |
| Trend | 100 | 127 | 162 | 131 | |
| Selling Price | Rs/MT | *** | *** | *** | *** |
| Trend | 100 | 111 | 140 | 110 | |
| Landed Price | Rs/MT | 89,920 | 90,353 | 1,60,317 | 1,04,250 |
| Trend | 100 | 111 | 140 | 110 |
60. It is noted that during the injury period, the cost of sales and the selling price of domestic like product have increased till 2018-19. The cost of sales declined in the POI and consequently the selling price also declined. The Authority thus notes that the imports from the subject country have not caused any price supressing or depressing effect on the domestic industry prices.
H.3.3 Economic Parameters of the Domestic Industry
61. Annexure II to the Rules provides 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 below.
62. The Authority has examined the injury parameters objectively taking into account various facts and arguments made by the interested parties.
i. Production, Capacity, Capacity utilization and Sales
63. The capacity, production, sales and capacity utilisation of the domestic industry over the injury period is given in the table below:
| Particulars | UOM | 2016-17 | 2017-18 | 2018-19 | POI |
| Capacity – Plant | MT | *** | *** | *** | *** |
| Trend | 100 | 100 | 102 | 103 | |
| Production – Plant | MT | *** | *** | *** | *** |
| Trend | 100 | 102 | 100 | 106 | |
| Total Production (PUC) | MT | *** | *** | *** | *** |
| Trend | 100 | 115 | 86 | 145 | |
| Capacity utilization – Plant | % | *** | *** | *** | *** |
| Trend | 100 | 102 | 98 | 103 | |
| Domestic sales | MT | *** | *** | *** | *** |
| Trend | 100 | 125 | 87 | 158 |
64. It is seen that:
a. The capacity is not dedicated for the subject goods and thus the total plant capacity has been considered by the domestic industry. The installed plant capacity of the domestic industry remained the same up to 2017-18 and increased thereafter.
b. Production of the domestic industry declined in 2018-19 and increased thereafter in the POI.
c. The capacity utilization of the domestic industry has increased over the injury period.
d. The domestic sales increased in 2017-18 and declined in 2018-19. Domestic sales once again increased in the POI.
ii. Market Share in Demand
65. Market share of the domestic industry is shown in the table below:
| Particulars | Unit | 2016-17 | 2017-18 | 2018-19 | POI |
| Share of Domestic industry | % | 50 | 53 | 34 | 53 |
| Share of Other Producers | % | – | – | – | – |
| Share from Subject Country | % | 5 | 3 | 28 | 15 |
| Share of Other Countries | % | 45 | 44 | 38 | 32 |
| Total | % | 100.00% | 100.00% | 100.00% | 100.00% |
66. It is seen that the market share of the domestic industry increased in 2017-18 and then declined in 2018-19. Market share then again increased in the POI. Correspondingly, the market share of subject imports declined till 2017-18 and increased significantly in 2018-19 and then declined again in the POI. The market share remains significant in the POI.
iii. Inventories
67. Inventory position with the domestic industry over the injury period is given in the table below:
| Stock | Unit | 2016-17 | 2017-18 | 2018-19 | POI |
| Opening Stock | MT | *** | *** | *** | *** |
| Trend | Indexed | 100 | 102 | 7 | 2074 |
| Closing Stock | MT | *** | *** | *** | *** |
| Trend | Indexed | 100 | 7 | 2030 | 1115 |
| Average Stock | MT | *** | *** | *** | *** |
| Trend | Indexed | 100 | 54 | 1030 | 1589 |
68. It is seen that the average inventory with the domestic industry declined initially from base year in 2016-17 to 2017-18 but increased significantly in 2018-19 and in the POI.
iv. Profitability, cash profits and return on capital employed
69. Profitability, cash profits and return on investment of the domestic industry over the injury period is given in the table below:
| Particulars | UOM | 2016-17 | 2017-18 | 2018-19 | POI |
| Profit/Loss | Rs/MT | *** | *** | *** | *** |
| Trend | 100 | 47 | 55 | 25 | |
| Profit/Loss | Rs Lacs | *** | *** | *** | *** |
| Trend | 100 | 58 | 48 | 39 | |
| Cash Profit | Rs Lacs | *** | *** | *** | *** |
| Trend | 100 | 67 | 60 | 68 | |
| Return on Capital
Employed |
% | *** | *** | *** | *** |
| Trend | 100 | 35 | 34 | 21 |
70. It is seen that:
a) The profitability, cash profits, PBIT and Return on Capital Employed of the domestic industry declined over the injury period. However, the domestic industry has been able to make profits and earn a reasonable return despite the decline in these above-mentioned parameters.
v. Employment, Wages and Productivity
71. Employment, wages and productivity of the domestic industry over the injury period is given in the table below:
| Particulars | Unit | 2016-17 | 2017-18 | 2018-19 | POI |
| Wages | Rs. Lacs | *** | *** | *** | *** |
| Trend | 100 | 140 | 138 | 235 | |
| Employee | Nos. | *** | *** | *** | *** |
| Trend | 100 | 122 | 130 | 183 | |
| Production/Employee | MT/Employee | *** | *** | *** | *** |
| Trend | 100 | 94 | 66 | 79 | |
| Productivity/Day | Per Day (MT) | *** | *** | *** | *** |
| Trend | 100 | 115 | 85 | 100 |
72. It is seen that:
a) The wages paid and the number of employees has increased over the injury period.
b) The productivity per day has also increased over the injury period in consonance with the movement of production.
vi. Growth
73. The data relating to growth of the domestic industry is shown in the following table:
| Particulars | Unit | 2016-17 | 2017-18 | 2018-19 | POI |
| Production | % | – | 15 | -25 | 68 |
| Domestic Sales | % | – | 16 | -31 | 86 |
| Domestic Profit-Per MT | % | – | -53 | 18 | -21 |
| Domestic profit-Per Lacs | % | – | -42 | -18 | 45 |
| Cash Profit | % | – | -33 | -10 | 55 |
| PBIT | % | – | -40 | -7 | -46 |
| ROI | % | – | -48 | 2 | -3 |
74. It is seen that the growth of the domestic industry has been positive in terms of production and sales whereas negative in terms of profitability and return on investment in the period of investigation.
vii. Magnitude of Dumping
75. Magnitude of dumping is an indicator of the extent to which the imports are being dumped in India. The investigation has shown that dumping margin is positive and significant in the period of investigation despite duties in force.
viii. Ability to raise capital investment
76. It is seen that the profitability of the domestic industry has declined in the period of investigation. It is noted that the ability to raise capital investments is likely to be affected in the event of cessation of the existing anti-dumping duty.
Factors Affecting Domestic Prices
77. It is noted that even though there is no price suppression or depression in the market, the landed value of the subject goods from subject country is below the net selling price of the domestic industry. There was significant decline in profitability during the injury period. Thus, dumped imports from the subject country are likely to severely impact the prices of the product in the market.
Observations on injury
78. Imports in relative terms continue to be significant despite existing anti-dumping duty. Imports from the subject country in relation to total imports, demand and production continued to be significant. Imports from the subject country have not caused any price supressing or depressing effect on the domestic industry prices but price undercutting effect of the dumped imports from the subject country without adding the existing anti-dumping duty is positive. The growth of the domestic industry has been positive in terms of production and sales. The profitability, cash profits, PBIT and Return on Capital Employed of the domestic industry declined over the injury period but still the domestic industry has been able to make profits and earn a reasonable return.
Magnitude of price underselling/injury margin
79. The Authority has determined the NIP for the domestic industry on the basis of principles laid down in Anti-Dumping Rules read with Annexure III, as amended. The NIP of the product under consideration has been determined by adopting the information/data relating to the cost of production provided by the domestic industry and duly certified by the practicing accountant for the period of investigation. The NIP 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 and utilities has been considered over the injury period. Best utilisation of production capacity over the injury period has been considered. Extraordinary or non-recurring expenses have been excluded from 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.
80. For all the non-cooperative producers/exporters, the Authority has determined the landed price based on facts available.
81. Based on the landed price and NIP determined as above, the injury margin for producers/exporters as decided by the Authority is provided in the table below:
INJURY MARGIN TABLE
| Country | Producer | NIP
(US$/MT) |
Landed Value (US$/MT) |
Injury Margin (US$/MT) |
Injury Margin
(%) |
Injury Margin (Range) |
| China PR | Nantong Acetic Acid Chemical Co., Ltd. | *** | *** | *** | *** | 10-20 |
| Others | *** | *** | *** | *** | 10-20 |
I. CAUSAL LINK AND NON-ATTRIBUTION ANALYSIS
82. The Authority has examined any known factors other than the dumped imports which at the same time might have been injuring the Domestic Industry, so that the injury caused by these other factors, if any, is not attributed to the dumped imports. Factors which are relevant in this respect include, inter alia, the volume and prices of imports not sold at dumped prices, contraction in demand or changes in the patterns of consumption, trade restrictive practices of and competition between the foreign and domestic producers, developments in technology and the export performance and the productivity of the domestic industry. The Authority examined whether factors other than dumped imports could have contributed to the injury to the Domestic Industry.
a) Volume and price of imports from third country
83. It is seen that the imports from other countries are at higher prices. Therefore, volume and price of imports from third countries are not a reason affecting the domestic industry.
b) Contraction in demand
84. The Authority notes that demand of the product under consideration has increased throughout the injury period.
c) Change in pattern of consumption
85. There has been no material change in the pattern of consumption of the product under consideration. Hence, changes in pattern of consumption have not caused injury to the Domestic industry.
d) Conditions of competition and trade restrictive practices
86. The Authority notes that the investigation has not shown that conditions of competition or trade restrictive practices are responsible for the claimed injury to the Domestic Industry.
e) Development in technology
87. No evidence has been brought by any interested parties about existence of significant changes in the technology that could have caused injury to the domestic industry.
f) Export Performance of the domestic industry
88. The Authority has considered data for the domestic operations only for the injury analysis. Therefore, export performance is not the cause for the injury to the Domestic Industry.
g) Performance of other products
89. The Domestic Industry has provided the injury information for the product under consideration and the same has been considered by the Authority for the purpose of injury analysis.
J. LIKELIHOOD OF CONTINUATION OR RECURRENCE OF DUMPING AND INJURY
J.1 Submissions made by domestic industry
90. The following submissions have been made by the domestic industry with regard to likelihood of continuation or recurrence of dumping or injury:
a. There is a clear likelihood of the continued dumping being further intensified by exporters from China PR leading to a situation of further intensified injury to the domestic industry, if the existing duty is withdrawn.
b. Imports are coming are at dumped and injurious price. Imports of the product under consideration from subject country have continued and increased within the injury period. Thus, cessation of duties is likely to lead to intensified dumping and consequent injury to the domestic industry. The dumping margin in the previous investigation as well as in the present investigation is positive.
c. The individual Chinese producers have excessive production capacities. The total individual capacities as per market intelligence of the domestic industry is at the tune of 2,41,000 MT. The publicly available information with regard to capacity of individual producers in China could be found for only three producers. Even those three producers account for 90,000 MT of the production as against 13,000 MT Indian demand. In addition to these facts, it is important to note that the responding exporter has not disputed the capacity figures stated by the domestic industry.
d. The Authority may check the information on the capacities of other producers from their responses filed at the time of original investigation. At the same time, the capacity for Nantong Acetic Acid Chemical Co. Ltd. could be checked from the response filed in the present investigation as well.
e. The duty-free imports are made at significant dumped and injurious prices. Chinese producers resorted to significantly high level of dumping at injurious prices throughout the injury period.
f. The current level of price undercutting suggests that in the event of expiry of present antidumping duty, imports from subject country are likely to have significant suppressing/depressing effects on the prices in the market. Such a situation would result in domestic industry facing severe decline in profitability in the event domestic industry matches its price or the domestic industry would lose the volumes.
g. The landed value of imports below the domestic industry‘s selling price suggests that in the event of expiry of present anti-dumping duty, the domestic industry will have to either reduce its price to the level of import price or maintain its prices at the cost of losing sale opportunities. In either situation, the domestic industry will again suffer material injury.
h. Article 11.1 of the anti-dumping agreement states that ―an anti-dumping duty shall remain in force only as long as and to the extent necessary to counteract dumping which is causing injury‖, the panel in US-DRAMs while interpreting Article 11.1 observed that this also implies that duties can be extended when such expiry would be likely to lead to continuation or recurrence of dumping and injury.
i. The domestic industry has not suffered material injury. However, dumping has continued and absence of material injury does not imply no likelihood of recurrence of injury in the event of cessation of anti-dumping duties.
J.2 Submissions made by other interested parties
91. Following submissions have been made by other interested parties with regard to likelihood of continuation or recurrence of dumping or injury:
a. There is no necessity to extend current anti-dumping duty. The panel in US-DRAMS (DS-99) observed that the anti-dumping duties shall remain in force only as long and to the extent necessary to counteract injurious dumping under article 11.1 of the anti-dumping agreement.
b. Economic performance of the Domestic industry during the post investigation period is not an appropriate parameter to apply likelihood test due to Covid-19 pandemic.
J.3 Examination by the Authority
92. All the factors brought to the notice of the Authority have been examined to determine as to whether there is a likelihood of continuation or recurrence of dumping or injury in event of cessation of the duty. The Authority has considered various information, as made available by the domestic industry and other interested parties, in order to evaluate the likelihood of continuation or recurrence of dumping and or injury.
93. The Authority has examined the likelihood of continuation or recurrence of injury considering the requirement laid down under Section 9A(5), Rule 23 and parameters relating to the threat of material injury in terms of Annexure – II (vii) of the Rules, and other relevant factors brought on record by the interested parties. The present investigation is a sunset review of ADD earlier imposed on the imports of subject goods from China PR. Under the Rules, the Authority is required to determine whether continued imposition of ADD is warranted. This also requires a consideration of whether the duty imposed is serving the intended purpose of eliminating injurious dumping. There are no specific methodologies available to conduct such a likelihood analysis. However, Clause (vii) of Annexure II of the Rules provides, inter-alia, for factors which are required to be taken into consideration viz.,:
a) A significant rate of increase of dumped imports into India indicting the likelihood of substantially increased importation;
b) Sufficiently freely disposable, or an imminent, substantial increase in, capacity of the exporter indicating the likelihood of substantially increased dumped exports to Indian markets, taking into account the availability of other export markets to absorb any additional exports;
c) Whether imports are entering at prices that will have a significant depressing or suppressing effect on domestic prices, and would likely increase demand for further imports; and
d) Inventories of the article being investigated.
i. Continued dumped imports
94. The Authority notes that the imports of the PUC from the subject country has remained significant despite anti-dumping duty in existence. Further, the dumping margin determined for the POI is positive. Thus, there is a continuation of dumping of subject goods from subject country. It is also seen that without adding the anti-dumping duties, these imports are undercutting the Domestic Industry‘s prices. Thus, a cessation of ADD is likely see positive undercutting.
ii. Surplus capacities in China
95. The domestic industry has alleged surplus capacity with the producers in China. The domestic industry further substantiated information on capacity, production and demand in China based on a report on the Development Status and Investment Prospect Analysis of Methyl Acetto Acetate (MAA) Industry in the World and China (2021-2025)]. The Authority, on the basis of submissions made by the interested parties and evidence on record, has summarized the information as under:
| Particulars | Unit | 2018 | 2019 | 2020 | 2021 F | 2022 F | 2023 F | 2024 F | 2025 F |
| Capacity | MT | 1,73,000 | 1,90,000 | 1,95,000 | 2,04,000 | 2,17,000 | 2,29,000 | 2,40,000 | 2,50,000 |
| Output | MT | 1,53,400 | 1,66,000 | 1,61,000 | 1,70,200 | 1,82,900 | 1,95,900 | 2,08,100 | 2,20,600 |
| Domestic demand (China) | MT | 132700 | 142200 | 135000 | 143300 | 153700 | 163700 | 173200 | 182700 |
| Surplus capacity | MT | 40,300 | 47,800 | 60,000 | 60,700 | 63,300 | 65,300 | 66,800 | 67,300 |
96. It is seen that the exporters in subject country have built mammoth capacities and the capacities are far in excess of the demand in China. The excess capacity projected in 2021 is 60,700MT. It is pertinent to note here that the entire demand in India is to the tune of 12,485MT only. The surplus capacity alone itself is significantly more than the domestic demand in India.
iii. Declining present and potential growth in Chinese domestic demand
97. Evidence provided shows that the growth rate of output (production) projected in China is low, Thus the excess capacity is likely to increase. Further, the already reduced growth rate of production is going to be adversely affected by the outbreak of novel coronavirus. It has been submitted that the Chinese MAA industry has recorded a negative growth and this is likely to decline further as is shown in the table below:
Particu-lars |
Unit |
2018 |
2019 |
2020 |
2021 F |
2022 F |
2023 F |
2024 F |
2024 F |
Output |
MT |
1,53, 400 |
1,66, 000 |
1,61, 000 |
1,70, 200 |
1,82,9 00 |
1,95, 900 |
2,08, 100 |
2,20, 600 |
Growth Rate of Output |
% |
10.70 |
8.21 |
-3.01 |
5.71 |
7.46 |
7.11 |
6.23 |
6.01 |
Consum-ption |
MT |
1,32,700 |
1,42,200 |
1,35,000 |
1,43,300 |
1,53,700 |
1,63,700 |
1,73,200 |
1,82,700 |
Growth |
% |
11.2 |
7.2 |
5.1 |
6.1 |
7.3 |
6.5 |
5.8 |
5.5 |
iv. Price Undercutting and Attractiveness of India as a Market
97. It is noted that price undercutting is positive during the POI, and thus, cessation of ADD currently in place is likely to lead to intensified dumping causing injury in the form of low volume of sales, reduced selling price and decline in profits to the Domestic Industry. The Authority is required to establish that the price prevailing in the domestic market, i.e., India is attractive for the exporter to divert the quantity exported to the third countries. It is noted that the landed value of imports is below the net selling price of the Domestic Industry in the POI.
K. POST-DISCLOSURE COMMENTS
K.1 Submissions made by the domestic industry
98. Post Disclosure comments made by the domestic industry are as follows:
a) Dumping margins determined in the original investigation and present application are not only positive but significant. Positive dumping margin post imposition of duty implies likelihood of dumping in the event of withdrawal of duty and in itself justifies extension of anti-dumping duty.
b) Chinese producers are having excessive production capacities. With the rapid increase of their production capacity, the consumption has not increased proportionately, nor is likely to increase in future, leading to increase in spare capacity and decline in operating rates. Such increase in capacity will eventually be diverted to Indian market once the duties cease to exist.
c) Imports of the product under consideration from subject country have continued and increased within the injury period. Imports have remained significant in absolute as well as in relation to production and consumption despite anti-dumping duties in force. This indicates the intention of the producers to maintain presence in the domestic market.
d) The imports have remained significant and further, the duty free imports are being made at significant dumped and injurious price. Applicant has determined dumping margin and injury margin for the entire injury period to ascertain the actual behaviour of the Chinese producers which shows significantly high level of dumped and injurious imports throughout the injury period.
e) The level of price undercutting indicates that, should the present anti-dumping cease, the imports are likely to have significant suppressing/ depressing effects on the prices in the market, which shall lead to increase in the demand for the imported product in the market. The situation would either lead to domestic industry facing severe decline in profitability (if the domestic industry matches the prices), or, the domestic industry would lose the volumes.
f) The landed value of imports was below selling price of the domestic industry. In the event of cessation of duty, the domestic industry will have to either reduce its price to the level of import price or maintain its prices at the cost of losing sale opportunities. In either situation, the domestic industry will again suffer material injury.
g) India and Europe are the main export destinations of Methyl Acetoacetate (MAA) for Chinese producers because of scale of production in the fields of vitamins, pesticides and dyes. Access to European market is affected due to COVID restrictions and thus India becomes natural export target for Chinese producers/exporters.
K 2. Submissions made by other interested parties
100. Nantong Acetic Acid Chemical Co., Ltd. and Nantong Tianhong International Trade Co., Ltd. from China PR have submitted that:
a. there is no likelihood of continuation or recurrence of dumping situation of subject goods imported from China PR and the imported products have not causes injury or even threat of injury to the Indian domestic industry.
b. Accordingly, we strongly urge the Authority to recommend not to continue the duty imposed by the Ministry of Finance vide Notification No. 22/2016-Customs (ADD) dated 31st May, 2016 and even if the Authority takes a stand of imposition of anti-dumping duty in the present sunset review, the same should be based on the submissions and data filed by the company in the current sunset review investigation and dumping/injury margins determined by the Authority in the present Sunset Review investigation.
K.3 Examination by the Authority
101. The Authority has examined the post Disclosure Statement comments by the domestic industry and other interested parties. The Authority notes that the imports of the PUC from the subject country have remained significant despite anti-dumping duty in existence; the dumping margin determined for the POI is positive; without adding the anti-dumping duties, these imports are undercutting the Domestic Industry‘s prices and thus a cessation of ADD is likely see positive undercutting; the capacities in China are far in excess of the demand in China; the surplus capacity alone itself is significantly more than the domestic demand in India; the growth rate of output (production) of the subject goods projected in China is low and thus the excess capacity is likely to increase and the landed value of imports is below the net selling price of the Domestic Industry in the POI. The Authority, therefore, concludes that there is likelihood of dumping of the subject goods from the subject country and consequent injury to the Domestic Industry in the event of cessation of the current anti dumping duty that is in force on the import of the subject goods originating in or exported from the subject country.
INDIAN INDUSTRY’S INTEREST & OTHER ISSUES
102. The Authority notes that the purpose of anti-dumping duty, in general, is to eliminate injury 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. The interested parties have not established that imposition of duties is going to adversely impact the public interest.
103. It is recognized that the imposition of anti-dumping duty might affect the price levels of the product manufactured using the subject goods and consequently might have some influence on relative competitiveness of this product. However, fair competition in the Indian market will not be reduced by the anti-dumping measure, particularly if the levy of the antidumping duty is restricted to an amount necessary to redress the injury to the domestic industry. On the contrary, imposition of anti-dumping measure would remove the unfair advantages gained by dumping practices, prevent the decline in the performance of the domestic industry and help maintain availability of wider choice to the consumers of the subject goods.
PUBLIC INTEREST
104. The Authority also examined as to whether the extension of the existing duty on imports of the product under investigation originating in or exported from the subject country would be against the larger public interest.
105. The Authority noted that it had issued Gazette Notification initiating the investigation for extension of the existing duty on imports of the product under investigation originating in or exported from the subject country. This Gazette Notification is in the public domain. Through this Notification, the Authority had invited views from all the interested parties, including importers and users, on all aspects of the application submitted by the Domestic Industry for extension of the existing anti dumping duty. It was specifically mentioned in the Initiation Notification that all the interested parties were advised to intimate their interest (including the nature of interest) in the instant matter and file their questionnaire responses and offer their comments to the domestic industry‘s application within forty days (40 days) from the date of publication of the Notification. Further, on the DGTR website, questionnaires for importers and users are also available. Questionnaire for users invites comment from them, inter-alia, on the comparability of the product under investigation imported from the country concerned with that produced in India, identifying any differences (e.g., technical or physical characteristics, prices, uses, etc); whether their company would be in favour of the imposition of antidumping measures or against and are there products that could be easily substituted for the product under investigation.
106. The Authority notes that barring one exporter from China, no one else has filed any questionnaire response. Further, neither any consumer nor any importer of the product under consideration attended the oral hearing. Therefore, no evidence has been put forward by the importers and consumers in India showing that the existence of anti dumping duty on the subject goods over the last five years has had any significant adverse effect either on the consumers or at public at large. In fact, none of the consumers has even filed questionnaire response, nor has filed any written submissions in opposition to the request for extension of the duty filed by the domestic industry. This clearly shows that consumers did not consider that imposition of duty on the product has had any significant adverse effect on the consumers at large, and they were unconcerned about the request for extension of the ADD. Further, the product has been imported from a number of countries. The Authority has considered the application for extension of duty only in respect of import from China. Import from USA, Switzerland and all other sources would in any way remain available to the consumers. Majority of the imports from various countries are not subject to investigation or duty.
CONCLUSION
107. Having regard to the contentions raised, information provided and submissions made and facts available before the Authority as recorded in the above Findings and on the basis of the above analysis of the likelihood of continuation or recurrence of dumping and injury to the domestic industry, the Authority concludes that:
(i) Imports from the subject country in relation to total imports, demand and production continued to be significant despite anti-dumping duty in existence and the dumping and injury margins determined for the POI are positive.
(ii) Though the growth of the domestic industry has been positive in terms of production and sales and the domestic industry has been able to make profits and earn a reasonable return despite its profitability, cash profits, PBIT and Return on Capital Employed of the domestic industry seeing declining trend over the injury period, the fact is that the imports without adding the existing anti-dumping duty are undercutting the prices of the Domestic Industry.
(iii) The capacities in China are far in excess of the demand in China; the surplus capacity alone itself is significantly more than the domestic demand in India; the growth rate of output (production) of the subject goods projected in China is low and thus the excess capacity is likely to increase and the landed value of imports is below the net selling price of the Domestic Industry in the POI.
(iv) The Authority, therefore, concludes that there is likelihood of dumping of the subject
goods from the subject country and consequent injury to the Domestic Industry in the event of cessation of the current anti dumping duty that is in force on the import of the subject goods originating in or exported from the subject country.
M. RECOMMENDATIONS
108. The Authority notes thar the investigation was initiated and notified to all interested parties and adequate opportunity was given to the domestic industry. exporters. importers/users and other interested parties to provide information on the aspects of dumping, injury and the causal link and likelihood of continuation or recurrence of dumping and injury. Having initiated and conducted the investigation into dumping, injury and causal link in terms of the provisions laid down under the Rules, the Authority is of the view that continued imposition of anti-dumping duty is required on the import of the subject goods originating in or exported from the subject country.
109. Under these circumstances, the Authority considers it appropriate to recommend continuation of existing quantum of anti-dumping duty on the imports of the subject goods from the subject countries. The Authority, thus, considers it necessary to recommend continuation of existing definitive anti-dumping duty imposed vide Notification No. 22/2016-Customs (ADD) dated 31st May, 2016. Therefore, anti-dumping duty equal to the amount indicated in Col. 7 of the duty table given below is recommended to be imposed from the date of notification to be issued in this regard by the Central Government, on all imports of subject goods, as detailed in column 3 of the duty table, originating in or exported from the subject country for a further period of five years.
| Sl. No. | Subhead-ing/ Tariff Item |
Descri-ption of Goods |
Country of Origin |
Country of Export |
Producer | Duty Amount | Unit of Measu- rement |
Curr-ency |
| (1) | (2) | (3) | (4) | (5) | (6) | (7) | (8) | (9) |
| 1. | 2914 69 90, 2915 39 10, 2915 39 40, 2915 39 90, 2918 30 40 2918 30 90, 2933 19 90, 2941 00 90
and 2918 99 00 |
Methyl Acetoa-cetate | China PR |
Any country inclu-ding China PR |
Nantong Acetic Acid Chemical Co., Ltd. | 0.277 | Kg | US$ |
| 2. | -Do- | -Do- | China PR |
Any country inclu-ding China PR |
Any other than at Sl. No. 1. |
0.404 | Kg | US$ |
| 3. | -Do- | -D0- | Any other than China PR | China PR |
Any | 0.404 | Kg | US$ |
110. Landed value of imports for the purpose of this Notification shall be the assessable value as determined by the customs under the customs Act, 1962 (52 of 1962) and includes all duties of customs except duties under sections 3, 8B. 9 and 9A of the customs Tariff Act, 1975 as amended from time to rime.
N. FURTHER PROCEDURE
111. An appeal against these findings after its acceptance by the Central Government shall lie before the Customs, Excise and Service tax Appellate Tribunal in accordance with the Customs Tariff Act, l975 as amended in 1995 and Customs Tariff Rules, 1995.
ANANT SWARUP, Jt. Secy. & Designated Authority
