MINISTRY OF COMMERCE AND INDUSTRY
(Department of Commerce)
(DIRECTORATE GENERAL OF TRADE REMEDIES)
NOTIFICATION
FINAL FINDINGS
New Delhi, the 19th October, 2020
Case No. (SSR) 02/2020

Subject : Sunset Review investigation concerning anti-dumping duty on imports of ‘Fluoroelstomer’ (FKM) originating in or exported from China PR.

F. No. 7/03/2020-DGTR.—Having regard to the Customs Tariff Act, 1975 as amended from time to time (hereinafter referred to as the “Act”) and the Customs Tariff (Identification, Assessment and Collection of Duty or Additional Duty on Dumped Articles and for Determination of Injury) Rules, 1995 (hereinafter referred to as the “Rules”) thereof;

A. BACKGROUND OF THE CASE

1. The Designated Authority (hereinafter referred to as the Authority) initiated the original anti-dumping investigation in respect of the imports of “Fluoroelastomers (FKM)”(hereinafter referred to as the subject goods or PUC or Product Under Consideration) originating in or exported from China PR (hereinafter referred to as the subject country) vide Notification No. No. 6/25/2017-DGAD dated 2nd January 2018. The Authority notified final findings vide Notification No 6/25/2017/DGAD dated 27th December 2018 recommending definitive antidumping duty on imports of Fluoroelastomers (FKM) from the subject country for a period of 18 months. The definitive antidumping duty was imposed on the subject goods vide Customs Notification No. 6/2019-Customs (ADD) dated 28th January 2019 for a period of 18 months till 27th July 2020. Further ADD was extended for period of three months vide Custom Notification No 19/2020-Customs (ADD) dated 21st July, 2020 up to 27th October 2020.

2. In terms of Section 9A (5) of the Act, 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 DI, as to whether the expiry of duty is likely to lead to continuation or recurrence of dumping and injury.

3. Rule 23(1B) of the Rules provides as follows:

“…any definitive anti-dumping 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 Gujarat Fluorochemicals Ltd. (hereinafter referred to as the “Applicant”) has filed an application before the Authority, on behalf of the domestic industry, in accordance with the Customs Tariff Act, 1975 as amended from time to time (hereinafter referred 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 referred as the Rules), for Sunset Review of Anti-Dumping investigation concerning imports of ” “Fluoroelastomers (FKM)” (hereinafter referred as the “subject goods” or “product under consideration”), originating in or exported from China PR (hereinafter referred to as the “subject country”).

5. In view of the duly substantiated application, filed by the Applicant, the Authority in accordance with Section 9A(5) of the Act, read with Rule 23 of the Antidumping Rules, initiated the sunset review investigation vide Notification No.7/03/2020- DGTR (Case No. SSR 02/2020) dated 07th February, 2020 to review the need for continued imposition of the antidumping duties in respect of the subject goods, originating in or exported from subject country, and to examine whether the expiry of the said duty is likely to lead to continuation or recurrence of dumping and injury to the domestic industry.

6. In exercise of the powers conferred by sub-sections (1) and (5) of section 9A of the Customs Tariff Act and in pursuance of Rule 23 of the Anti-dumping Rules, the Central Government vide Notification No. 19/2020-Customs (ADD) dated 21st July, 2020 extended the Anti-dumping duties till 27th October, 2020.

7. The scope of the present review covers all aspects of the previous investigations concerning imports of the subject goods, originating in or exported from the subject country

B. PROCEDURE

8. The procedure described below has been followed with regard to the investigation:

i. The Authority notified the embassy of the subject country in India about the receipt of the present application before proceeding to initiate the investigations in accordance with sub-rule 5(5) of the AD Rules.

ii. The Authority issued a Notification dated 07th February, 2020, published in the Gazette of India Extraordinary, initiating investigation concerning imports of the subject goods from the subject country

iii. The Authority sent copy of the initiation notification dated 07th February, 2020 to the Embassy of the subject country in India, known producer and exporters from the subject country, known importers and other interested parties, as per the addresses made available by the applicant and requested them to make their views known in writing within 40 days of the initiation notification in accordance with Rule 6(2) of the AD Rules.

iv. Copy of letter and questionnaire sent to the exporters were also sent to Embassy of the subject country along with a list of known exporters/ producers, with a request to advise the exporters/producers from the subject country to respond within the prescribed time.

v. The Authority provided a copy of the non-confidential version of the application to the known producers/exporters, known importers and to the embassy of the subject country in India in accordance with Rule 6(3) of the AD Rules.

vi. The Authority forwarded a copy of the public notice initiating the SSR to the following known producers/exporters in the subject countries and provided them opportunity to make their views known in writing within forty days from the date of the letter in accordance with the Rules 6(2) and 6(4) of the Rules.

a. M/s. Zhengxin Fluorocarbons

b. M/s. Shandong Dongyue Chemical Co., Ltd

c. M/s. Changzhou Xiangtong Chemical Co. Ltd.

d. M/s. Taizhou Meilan Resin Process Co. Ltd

e. M/s. ShanDong DongYue Polymer Material Co., Ltd

f. M/s. DuPont (Changshu) Fluoro Technolozy Co. Ltd.

g. M/s. Sichuan Chenguang Institute of Chemical Industry

h. M/s. Jiangsu Meilan Chemical Co., Ltd.

i. M/s. Juhua Group Corporation

j. M/s. Shanghai 3F New Materials Co., Ltd. (Manufacture)

k. M/s. Fuxin Hengtong Fluorine

l. Chenguang Research Institute of Chemical Industry

m. The Chemours Chemical Co., Ltd.

n. Daikin Fluorochemicals (China) Co. Ltd.

o. Shanghai Fluoron TM Chemicals Co.,Ltd,

p. Chengdu Dowhon Industrial Co.,Ltd..

q. Solvay (China) Co.,Ltd.

r. Guangzhou Polain Chemical Technology Co., Ltd

s. Shandong Huaxia Shenzhou New Material Co., Ltd,

t. Jiangsu Meilan Chemical Co. Ltd

u. Shanghai HeChang Fluorocarbon Co Ltd

v. Wuxi Fuda Fluoroplastics Co., LTD

w. Beijing Ruicheng Co. Ltd.

x. Kam Pin Paint Works Ltd

y. Hubei Dachang China Co Ltd

z. Wuxi Ta Tang Compound (not involved)

aa. Shanghai Kinering Co. Ltd.

bb. Chenguang Fluoro & Silicone Polymer Co.,Ltd.

cc. 3M China Limited

dd. Arkema (Changshu ) Fluorine Chemical Co., Ltd.

vii. 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.

viii. The following producers/exporters from the subject country filed exporter‘s questionnaire response:

a. Chenguang Fluoro and Silicone Elastomers Co., Ltd.

b. Zhonghao Chenguang Research Institute of Chemical Industry Co., Ltd.

c. Daikin Fluorochemicals (China) Co., Ltd

d. UNI-Alliance Limited, Hong Kong

e. Inner Mongolia 3F Wanhao Fluorochemical Co., Ltd

ix.  Questionnaire was sent to the following known importers/users of subject goods in India calling for necessary information in accordance with Rule 6(4) of the Anti Dumping Rules:

a. Meen Been Elastomers

b. JMF Synthetic

c. Polmann India Ltd

d. BP Chemicals

e. Nishiganda Polymers

f. Hind Elastomers

g. Jayashree Polymers

h. Dalmia Polymers LLP. (DPL);

i. Zenith Industrial Rubber

j. Techno Ploymer Industries;

k. SKF Technologies India Pvt Ltd;

l. Nishigandha Polymers Private Limited;

m. Shore Auto rubber Exports Pvt, Ltd;

n. Merek Life Science Pvt. Ltd;

o. Draeger Safety India Private Limited;

p. 3m India Limited;

q. Agilient Technologies India Pvt. Ltd;

r. Devashish Polymer Pvt Ltd;

s. Hi-Tech Arai Private Limited;

t. Perfect Oil seals Industrial Rubber Products;

u. Premier seals india Pvt Lt;

v. G B Rubber Products;

w. Ucal Polymers Industries;

x. Ucal Fuel Systems Limited;

y. Vikas Elastochem Agencies Pvt.ltd.,

z. Devashish Polymers Pvt. Ltd.,

aa. Nu-Cork Products (P) Ltd.

bb. S.J.Rubber Industries Ltd.

cc. M.K. Marketing

dd. Zenith Industrial Rubber

ee. Products P.Ltd. C-15/16/17,

ff. Dombivli Industrial Estate

gg. Navarang Naka,Midc,Phase I,

hh. Rawat Engg Tech. Pvt. Ltd.

ii. Kokoku lntech India

jj. BDS Polychem

kk. Pionner Rubber & Chemical Co.;

ll. Devashish Polymer;

mm. K.K. Enterprises;

nn. Techno Polymer Industries;

x. The following importers or consumers of the product have filed the importer‘s questionnaire response:

a. Eastcorp International

b. Eastern Steel Cooperation

c. Nishigandha Polymers Private Ltd

xi. Exporters, foreign producers and other interested parties who have not responded to the Authority, or not supplied information relevant to this investigation, have been treated as non-cooperating interested parties.

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

xiii. The Authority made available non-confidential version of the evidence presented by various interested parties in the form of a public file kept open for inspection by the interested parties. Whenever they requested inspection of public file and copies of the documents therefrom were provided with the same.

xiv. The Period of Investigation for the purpose of the present investigation has been considered January 2019 to September 2019 (9 Months) and the injury period will cover the periods April 2016 – March 2017, April 2017 – March 2018, April 2018 – March 2019 and the POI.

xv. Additional/supplementary information was sought from the applicants and other interested parties to the extent deemed necessary. Verification of the data provided by the domestic industry and exporters/producers was conducted to the extent considered necessary for the purpose of the investigation.

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

xvii. Information provided by the Directorate General of Commercial Intelligence and Statistics (DGCI&S) on transaction-wise basis for the past three years, and the period of investigation has been adopted for determination of volume and value of imports of product concerned in India.

xviii. In accordance with Rule 6(6) of the Rules, the Authority also provided opportunity to all interested parties to present their views orally in a hearing held on 09th September 2020. All the parties who had attended the oral hearing were provided an opportunity to file written submissions, followed by rejoinders, if any.

xix. The submissions made by the interested parties during the course of this investigation, wherever found relevant, have been addressed by the Authority, in this final finding.

xx. 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 this final finding on the basis of facts available.

xxi. In accordance with Rule 16 of the Rules, a Disclosure Statement containing the essential facts in this investigation which forms the basis of the present Final Finding was issued to the interested parties on 9th October, 2020. The post disclosure statement submissions received from the domestic industry and other interested parties have been considered, to the extent found relevant, in this Final Finding. The Authority notes that most of the post disclosure submissions made by the interested parties are mere reiteration of their earlier submissions. However, the post disclosure submissions to the extent considered relevant are being examined in this final finding.

xxii. . *** In this Final Findings represents information furnished by an interested party on confidential basis, and so considered by the Authority under the Rules.

xxiii. The exchange rate adopted by the Authority during the POI for the subject investigations is 1 US$= Rs. 71.03.

C. PRODUCT UNDER CONSIDERATION AND LIKE ARTICLE

C.1 Views of the Domestic Industry

9. The domestic industry has submitted as follows with regard to product under consideration and like article:

i. The present investigation being a sunset review investigation, product under consideration remains the same as defined in the previously conducted investigation. Further, no significant developments have taken place over the period. Therefore, Petitioner refers to and relies upon the previous investigations regarding product under consideration.

ii. The product produced by the domestic industry is a like article to the product imported from subject country. The issue of like article has been examined by the Authority in the original investigation as well.

C.2 Views of the other interested parties

10. Other interested parties have submitted as follows with regard to product under consideration and like article:

i. Substitution of grades of FKM possible only if competitor develops a superior quality.

ii. Applicant manufactures inferior quality products and since it is a new entrant, it has not developed all grades of FKM.

C.3 Examination by the Authority

11. The Authority notes that the product under consideration has been comprehensively defined in the Initiation Notification dated February 02, 2020 as under;:

The product under consideration (PUC) in the present investigation is Fluoroelastomers (FKM). Fluoroelastomers (FKM) is a class of synthetic rubber designed for very high temperature operation. With excellent over-all properties, Fluoroelastomers (FKM) is called as the “Rubber King. It contains not-fully- fluorinated molecular structure, and its main and side chains contain strong electronegativity of fluorine atoms. “Fluoroelastomers” are a family of fluoropolymer rubbers, not a single entity. It can be classified by their fluorine content, 66%, 68%, & 70% respectively. FKMs are broadly categorized in two sets – Copolymer and Terpolymer.

There are various applications of Fluoroelastomers (FKM) such as industrial use in hydraulic O-ring seals, check valve balls, electrical connectors, automotive use in shaft seals, fuel injector O-rings, and aerospace use in O-ring seals in fuels, lubricants & hydraulic system, manifold gaskets and fuel tank bladders.”

12. The two main fluoroelastomers categories based on monomers, fluroine content and curatives, are as follow:

a) Copolymer fluoroelastomers (F 66%):

These are prepared out of vinylidene fluoride (VDF) and hexafluoropropylene (HFP). Co­polymer FKM can be in two forms i.e. Raw Gum and Pre- Compound. It has a significant temperature, oxidation, oil and chemical resistance and good mechanical properties. With fluorine content of 66%, FKM is one of the best temperature resistance rubbers, and it can be used at 250°C for a long time and at 300oc for short time.

b) Terpolymer fluoroelastomers (F 67-70%):

These are prepared using vinylidene fluoride (VDF), tetra-fluoroethane (TFE) and Hexa fluoropropylene i.e HFP or propylene or Perfluoromethylvinylether (PMVE). Terpolymer FKM can be in two forms i.e. Raw Gum and Pre- Compound. It can be cured with curatives i.e Amine, Bisphenol and Peroxide. It has high chemical and long-term heat resistance properties. With fluorine content of 67-70%, Terpolymers FKM has higher acid, ketone and ester resistance than copolymers.

13. The product does not have dedicated classification. The product under consideration is classified under Chapter 39 under customs subheading no 3904 of the Act. The classification is, however, indicative only and is in no way binding on the scope of the present investigation.

14. 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 the scope of the PUC in the present investigation remains the same as in the original and subsequent review investigation. Moreover, none of the interested parties have made any submission requesting modification in the scope of the review.

15. The Authority notes following aspects based on the various submissions.

1. Domestic industry based on the scope of the product range manufactured by them in the period of investigation have provided the following PCNs in the petition.

SN Name of Product Type PCN Description of PCN
1 Copolymer Raw gum FCP#RG0001 Fluoroelastomers (FKM) Co-Polymer Raw Gum
2 Copolymer Pre- Compound FCP#PC0004 Fluoroelastomers (FKM) Copolymer Pre-Compound
3 Terpolymer Bisphenol Curable Raw Gum FTPBRG0005 Fluoroelastomers (FKM) Terpolymer Bisphenol Curable Raw Gum
4 Terpolymer Peroxide Curable Raw Gum FTPPRG0003 Fluoroelastomers (FKM) Terpolymer Peroxide Curable Raw Gum
5 Terpolymer Bisphenol Curable Raw Gum FTPPRG0002 Fluoroelastomers (FKM) Terpolymer Bisphenol Curable Raw Gum

2. Producer/ Exporters have also filed the Questionnaire response in accordance with the PCNs as mentioned above.

16. Authority in view of the aforesaid proposed PCN, holds that the PUC i.e. Fluoroelastomers includes copolymer and terpolymer both in raw gum and pre-compound form and of different types. Compounds and FFKM are excluded from the scope of PUC. The types (PCN) stated by the DI in their submission have been considered for evaluating Dumping Margin and injury Margin separately for different types (PCN‘s) of PUC.

17. With regard to the issue of difference in quality, the Authority notes that product cannot be excluded from the scope of the investigation merely on the quality grounds. Further, interested parties have not provided any evidence to demonstrate that these products with alleged quality difference are not competing with each other.

18. The Authority found that the subject goods produced by the domestic industry and that imported from the subject country are comparable in terms of characteristics such as physical & chemical characteristics, manufacturing process & technology, functions & uses, product specifications, pricing, distribution & marketing and tariff classification of the goods. The two are technically and commercially substitutable. The consumers are using the two interchangeably. The consumers importing the product under consideration have also purchased the same from the domestic industry. In view of the same, the product under consideration produced by the domestic industry were treated as like article to the product under consideration imported from subject country.

19. In view of the above, the scope of the product under consideration in the present review investigation remains the same as that in the original investigation.

D. DOMESTIC INDUSTRY AND STANDING

D.1 Views of the Domestic Industry

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

i. The Application for initiation of Sunset Review investigation has been filed by Gujarat Fluorochemicals Ltd.

ii. Applicant accounts for entire Indian production, since there is no other producer of the subject goods in India.

iii. The applicant has not imported the subject goods from the subject country and is not related to any exporter of the subject goods in the subject country and importers in India either directly or indirectly.

D.2 Views of the other interested parties

21. No submissions have been made by the exporters/other interested parties with regard to the domestic industry and standing.

D.3 Examination by the Authority

22. Rule 2(b) of the AD 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.”

23. The application in the present case has been filed by Gujarat Fluorochemicals Ltd. Applicant is the sole producer of FKM in India. Considering the information on record, the Authority notes that the applicant accounts for entire Indian production, The applicant is an eligible domestic industry within the meaning of Rule 2(b) of the Rules and the application satisfies the criteria of standing in terms of Rule 5(3) 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.

E. CONFIDENTIALITY

E.1 Submissions by the domestic industry

24. Following submissions have been made by the domestic industry with regard to confidentiality –

iv. Applicant has filed the application in accordance with the guidelines and procedure issued by the Designated Authority and wherever any information is claimed as confidential applicant has provided the reasoning.

v. Costing information is a business proprietary information of the company and is not amenable to summarization therefore claimed as confidential.

vi. The responding exporters and producers have claimed excessive confidentiality in blatant disregard of the guidelines issued by the Designated Authority, vide trade notice 10/2018 dated 7th September 2018.

vii. In the present case, most of the responding interested parties have failed to furnish an appropriate and meaningful non-confidential summary.

viii. The information kept confidential by the interested parties form an essential part of the questionnaire response. Due to lack of such vital information, the domestic industry is unable to offer any comment to protect its interests.

ix. Excessive and unreasonable confidentiality claims amount to lack of opportunity to an interested party for defending its interests, breaching the principles of natural justice, hampering the investigation process and assisting the Authority in identifying discrepancies or misrepresentations in the responses:

x. The Authority is requested to disregard these responses and issue the findings accordingly.

xi. The evidence on likelihood is the market research report which is a third-party information and applicant does not have the authority to disclose.

E.2. Submissions by other interested parties

25. Following submissions have been made by the interested parties with regard to confidentiality-

i. Non-confidential Version (NCV) of the petition does not allow reasonable understanding of the allegations and it violates Rule 7 of the Anti-Dumping Rules.

ii. Applicant has claimed Format A to K as confidential and no information in Non-confidential Version (NCV) of the petition.

iii. Evidences of likelihood are claimed as confidential.

iv. Information in public domain kept confidential including names of reports and source. Data pertaining to exporters from China PR cannot be kept confidential from them.

E.3 Examination by the Authority

26. With regard to confidentiality of information, Rule 7 of the AD 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 summarization is not possible.

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

27. Non-confidential version of the information provided by various interested parties were made available to all interested parties through the public file as per Rule 6(7) and Trade Notice No. 10/2018 dated September 7, 2018.

28. Authority made non-confidential version of the information provided by various interested parties available to all interested parties for inspection through the public file containing non-confidential version of evidences submitted by various interested parties.

29. With regard to the confidentiality of information, the Authority notes that the information provided by the interested parties on confidential basis was examined with regard to sufficiency of the confidentiality claims in accordance with Rule 7 of the Rules. On being satisfied, the Authority has accepted the confidentiality claims, wherever warranted and such information has been considered confidential.

F. MISCELLANEOUS SUBMISSIONS

F.1. Submissions by the domestic industry

30. The following miscellaneous submissions have been made by the domestic industry:

i. All India Rubber Industries Association should be considered as non-Cooperative.

ii. The Association itself has not filed any comments to the petition or any information related to its users within the time limits prescribed by the Authority. The Association made its submissions for the first time during the hearing.

iii. Further, none of the members of the Association has filed the response to the prescribed User questionnaire. It clearly shows that the members of the said user Association are not willing to participate in the investigations and provide their data to the Authority.

iv. The Authority is requested to reject the incomplete responses filed by the exporters.

v. The domestic industry has provided information as prescribed by the Authority.

F.2. Submissions by other interested parties

31. Following miscellaneous submissions have been made by other interested parties:

a. No substantive evidence to prove condition for initiation of sunset review investigation has been furnished and application is short of legal and factual basis.

b. There is Lack of meaningful analysis of economic factors and indices listed in Rule 11 & para IV of Annexure II such that indexed data on unit price, total costs, investments, employment and stocks are not explicitly provided or analyzed.

c) Information provided by Petitioners is insufficient for initiation under Rule 5(3). Allegations set out in the petition are based on estimates and assumptions. The WTO Panel Reports in the United States – Softwood Lumber, Guatemala – Cement II, and Mexico – Steel Pipes and Tubes are relied upon.

F.3 Examination by the Authority.

32. The Authority has noted all the arguments and counterarguments of the interested parties and has examined all aspects of the submissions as under.

33. With regard to the submissions of interested parties regarding adequacy and accuracy of the application and questionnaire responses, 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 decided to initiate the present investigation. As regards questionnaire response, the information contained therein is found sufficient for determination of dumping margin.

34. With regards to submissions on eligibility of All India Rubber Industries Association as an interested party, the Authority has, on the basis of facts and circumstances of the case, and the practice of the Authority, acknowledged and accepted the submissions made by the interested parties.

G. NORMAL VALUE, EXPORT PRICE AND DUMPING MARGIN

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

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

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

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

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

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

G.1. Submissions by the domestic industry

36. The submissions made by the domestic industry with regard to normal value, export price and dumping margin are as follows:

i. The Designated Authority should follow Para 1-6 of Annexure I for determination of normal value only if the responding Chinese companies establish that their costs and price information is such that individual normal value and dumping margin can be determined. If the responding Chinese companies are not able to demonstrate that their costs and price information can be adopted, the Designated Authority should reject the claim of individual dumping margin.

ii. In the present investigation none of the responding producers/ exporters has filed a response to the Market Economy Treatment Questionnaire.

iii. Except for Daikin Fluorochemicals (China) Co., Ltd., none of the responding producers/ exporters has even raised an explicit claim for Market Economy Treatment.

iv. The Designated Authority is requested to determine the normal value based on prices in the market economy third country for all the responding producers/ exporters.

v. The domestic industry considers that USA is appropriate third country for determination of normal value.

vi. The applicant has calculated normal value on the basis of import prices of product under consideration in India from USA.

vii. Para 7 of Annexure 1 of the AD Rules clearly provides for hierarchy in the options available for determination of normal value.

viii. Authority cannot construct the normal value before ascertaining that there is no evidence available regarding price or constructed value in the market economy third country or price from that third country to other country including India.

ix. Applicant refer and rely upon CESTAT decision in the matter of Kuitun Jinjiang Chemical Industry Co Ltd vs Union of India wherein tribunal has held that the level of development is not relevant when the import price from the surrogate country to India is considered for normal value determination.

x. That the fact that the import price of one product is lower than import price of other product does not imply that the import price cannot be treated appropriate, therefore Normal value based on import price from USA being rejected in the previous findings is not relevant.

xi. Export price is calculated after making various adjustments based on market information and general experience and considering most conservative estimates.

xii. Dumping margin calculated for the subject country is positive and significant.

G.2. Submissions by other interested parties

37. The submissions made by other interested parties with regard to normal value, export price and dumping margin are as follows:

i. NME status of China expired on 11th Dec, 2016 and hence no legal basis to use surrogate country methodology to construct normal value.

ii. Market Economy Status to be granted to China and normal value to be calculated according to Article 2 of ADA.

iii. Reliance placed on the decision EC- Fasteners – wherein it has been held that China automatically obtains market economy status on expiry of Article 15 of Protocol.

iv. Further, reliance is also placed on US – China bilateral agreement and EU‘s Explanatory Memorandum to Council Decision establishing the Community position on China‘s accession – China to be treated as NME for 15 years after its accession to WTO

v. USA is not an appropriate surrogate country for constructing normal value for China PR as USA is a far more developed country than China.

vi. Consideration of import price from USA for constructed normal value is not appropriate and reasonable.

vii. The Report of Working Parties on the ―Accession of Poland” and ―Accession of Romania” which states that method used to construct normal value on the basis of price for a like product originating in another country must be appropriate and not unreasonable.

viii. The Authority is requested to construct the normal value. The normal value based on USA import price was rejected in the previous case after objections being raised by the opposing interested parties.

G.3. Examination by the Authority

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

xii. Chenguang Fluoro and Silicone Elastomers Co., Ltd.

xiii. Zhonghao Chenguang Research Institute of Chemical Industry Co., Ltd.

xiv. Daikin Fluorochemicals (China) Co., Ltd

xv. UNI-Alliance Limited, Hong Kong

xvi. Inner Mongolia 3F Wanhao Fluorochemical Co., Ltd

39. Article l5 of China’s Accession Protocol in WTO provides as follows:

“Article VI of the GATT 1994, the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (“Anti-Dumping Agreement”) and the SCM Agreement shall apply in proceedings involving imports of Chinese origin into a WTO Member consistent with the following:

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

(i) If the producers under investigation can clearly show that market economy conditions prevail in the industry producing the like product with regard to the manufacture, production and sale of that product, the importing WO 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.

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.”

40. It is noted that while, the provision contained in Article 15 (a) (ii) have expired on 11.12.2016, the provision under Article 2.2.1.1 of WTO Anti-Dumping Agreement read with obligation under 15 (a) (i) of the Accession Protocol require criterion stipulated in para 8 of the Annexure I of the India’s Rules to be satisfied through the information/data to be provided in the supplementary questionnaire for claiming the market economy status. It is noted that no producer/exporter from China PR has filed supplementary questionnaire. Accordingly, the normal value computation is required to be done as per provisions of para 7 of Annexure I of the Rules. The normal value and export price for the all the producers/ exporters from the subject country have been determined as below.

Normal Value determination for All producers/exporters from China PR

41. As none of the producers from China PR have filed the Supplementary Questionnaire response for market economy treatment, the normal value has been determined in accordance with Para 7 of Annexure I of the Rules. In the absence of sufficient information on record, regarding, the other methods enshrined in Para 7 of Annexure I of the Rules, the Authority has determined the normal value by considering the method on ―any other reasonable basis‖.

42. 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 on addition of reasonable profits. The constructed normal value so determined for Chinese producers/exporters is mentioned in the dumping margin table below

Export Price

Export Price determination for Cooperative Exporters/Producers

43. The following producers/exporters have filed the prescribed questionnaire responses:

i. Chenguang Fluoro and Silicone Elastomers Co., Ltd.

ii. Zhonghao Chenguang Research Institute of Chemical Industry Co., Ltd.

iii. Daikin Fluorochemicals (China) Co., Ltd

iv. UNI-Alliance Limited, Hong Kong

v. Inner Mongolia 3F Wanhao Fluorochemical Co., Ltd

Export price of Chenguang Fluoro and Silicone Elastomers Co., Ltd.

44. M/s Chenguang Fluoro and Silicone Elastomers Co., Ltd. has exported the subject goods i.e Fluoroelastomers (Copolymer Pre-compound and Terpolymer Bisphenol Curable Pre-Compound,*** MT & *** MT respectively) of invoice value *** US$ (both with FOB and CIF terms) during POI to India.

a. Copolymer Pre-compound: After allowing the adjustment on ocean freight, insurance, inland transportation and Bank Charges, the Ex-factory export price comes to *** $/MT. The Landed Value after applying all applicable duties comes to *** $/MT.

b. Terpolymer Bisphenol Curable Pre-Compound: After allowing the adjustment on ocean freight, insurance, inland transportation and Bank Charges, the Ex-factory export price comes to *** $/MT. The Landed Value after applying all applicable duties comes to *** $/MT.

Export price of Daikin Fluorochemicals (China) Co., Ltd., (producer/exporter) China PR and Uni-Alliance Limited (Trader) Hong Kong

45. M/s Daikin Fluorochemicals (China) Co. Ltd. has exported the subject goods i.e Fluoroelastomers to an extent of *** MT of Fluoroelastomers during POI to India through 2 channels i.e. M/s Mitsubishi (*** MT) and M/s Uni alliance (*** MT). M/s Mitsubishi has not filed the Exporter Questionnaire Response. The exports by M/s Uni-Alliance includes *** MT of Fluoroelastomers (Terpolymer Bisphenol Full-Compound) which is not part of PUC and the same is proposed to be excluded. Therefore the PUC to an extent of *** MT of 3 grades i.e. Copolymer Pre-Compound, Copolymer Raw Gum, Terpolymer Bisphenol Pre-Compound have been exported by M/s Uni Alliance to totalling of *** MT, *** MT, *** MT at a total invoice value of *** US$, *** US$, *** US$ respectively (both with FOB and CIF terms).

a. Copolymer Pre-Compound: After allowing the adjustment on ocean freight, insurance, inland transportation, port and other related expenses, credit cost and bank charges, the Ex-factory export price comes to *** US$ $/MT. The Landed Value after applying all applicable duties comes to *** US$/MT.

b. Copolymer Raw Gum: After allowing the adjustment on ocean freight, insurance, inland transportation, port and other related expenses, credit cost and bank charges the Ex-factory export price comes to *** US$/MT. The Landed Value after applying all applicable duties comes to *** US$/MT.

c. Terpolymer Bisphenol Pre-Compound: After allowing the adjustment on ocean freight, insurance, inland transportation, port and other related expenses, credit cost and bank charges, the Ex-factory export price comes to *** US$/MT. The Landed Value after applying all applicable duties comes to *** US$/MT.

Export price of Zhonghao Chenguang Research Institute of Chemical Industry Co., Ltd.

46. M/s Zhonghao Chenguang Research Institute of Chemical Industry Co., Ltd. has exported the subject goods i.e Fluoroelastomers (Copolymer -Raw Gum and Terpolymer Bisphenol Curable Raw Gum, *** MT & *** MT respectively) *** MT of invoice value *** US$ during POI to India.

a. Copolymer -Raw Gum: After allowing the adjustment on inland transportation, port and other related expenses, ocean freight, insurance, bank charges and credit cost, the Ex-factory export price comes to *** US$/MT. The Landed Value after applying all applicable duties comes to *** US$/MT.

b. Terpolymer Bisphenol Curable Raw Gum, after allowing the adjustment on inland transportation, port and other related expenses, ocean freight, insurance and bank charges, the Ex-factory export price comes to *** US$/MT. The Landed Value after applying all applicable duties comes to *** US$/MT.

Export Price of Inner Mongolia 3F Wanhao Fluorochemical Co/ Ltd

47. Inner Mongolia 3F Wanhao Fluorochemical Co/ Ltd has exported the subject goods i.e Fluoroelastomers (Copolymer Pre-Compound, Copolymer Raw Gum, *** MT & *** MT respectively) *** MT, of invoice value *** US$ in FOB terms during POI to India.

a. Copolymer Raw Gum: After allowing the adjustment on inland transportation & port handling charges, the Ex-factory export price comes to *** US$/MT. The Landed Value after applying all applicable duties comes to *** US$/MT.

b. Copolymer Pre-Compound: After allowing the adjustment on inland transportation & port handling charges, the Ex-factory export price comes to *** US$/MT. The landed value after applying all applicable duties comes to &*** US$/MT.

Determination of Export Price in respect of Non-Cooperative Exporters/Producers

48. For the producer/exporter of the subject goods who have not filed response; the Authority has determined the export price as per ‗facts available‘ in terms of Rule 6(8) of the AD Rules in respect of ―any other producer/exporter‖ from China.

Determination of dumping margin for producers and exporters in the subject country

49. Considering the normal value and export price as above, the dumping margins for cooperative producers/exporters of the subject goods from the subject country is determined as below. For non-cooperative/residual category, the Authority has considered the highest dumping margin amongst the cooperating producers/exporters. It is seen that the dumping margin is significant. Thus, dumping of the product has continued in the present period.

Producer/Exporter Dumping
Margin in
US$/Kg
Dumping Margin % Dumping Margin Range

-%

M/s Chenguang Fluoro and Silicone Elastomers Co.,Ltd. *** *** 20-40
M/s Zhonghao Chenguang Research Institute of Chemical Industry Co., Ltd. *** *** 0-20
M/s Daikin Fluorochemicals (China) Co., Ltd Through M/s AUL *** *** 0-20
Inner Mongolia 3F Wanhao Fluorochemical Co/ Ltd *** *** 60-80
Any other producer/exporter *** *** 60-80

H. METHODOLOGY FOR INJURY DETERMINATION AND EXAMINATION OF INJURY AND CAUSAL LINK

H.1 Submissions by the domestic industry

50. The submissions of the domestic industry with regard to injury and causal link are reproduced herein below:

i. The domestic industry has suffered continued injury despite Anti-dumping duty in existence.

ii. In the instant case, the Anti-dumping duty was only in existence during period of investigation and not during previous years of injury period.

iii. The parameters will show improvement in the period of investigation as compared to previous years. However, the domestic industry is still at a vulnerable stage despite Anti-dumping duty in existence due to continued presence of dumped imports.

iv. Demand of the subject goods increased till 2017-18 and declined in the POI. The same is attributed to a temporary decline in demand in the auto industry.

v. Subject imports increased till 2017-18 and thereafter declined in the POI. The same is attributed to the imposition of the ADD. Chinese imports constitute 41% of total imports of the PUC, **% of demand and **% of production.

vi. On a month by month analysis of import and domestic prices, it would be seen that the price undercutting was earlier negative and became positive towards the end of the investigation period.

vii. The domestic industry is unable to increase its selling price with increase in raw material prices due to the dumped imports. The domestic industry is suffering losses.

viii. The dumped imports have resulted in significant price underselling.

ix. Production, sales and capacity utilization increased till 2018-19 and declined thereafter in the POI.

x. Inventories increased till Dec, 2018. The domestic industry reduced production thereafter to contain the inventory levels. The domestic industry is holding significant inventories in stock.

xi. The Domestic Industry has remained in losses throughout the injury period due to the presence of the dumped imports in the market. All parameters including Profit/Loss, Cash Flow and ROCE have remained negative throughout the injury period.

xii. The Domestic Industry has a low market share of **% in the Period of Investigation, despite having significantly unutilized capacities.

xiiii. The domestic industry is capable of meeting the entire demand of the product under consideration being catered by Chinese producers.

xiv. Applicant is still suffering from unutilized capacities, which had to be diverted to exports. However, the injury information provided to the Authority is provided separately for domestic and exports, to the extent the same could be segregated.

xv. The argument of the opposing interested parties regarding imports of co-polymer pre-compound declining to nil is factually incorrect.

xvi. Reliance placed on Digital Printing plates case, is not relevant as it was a no continued injury case whereas in the present case the domestic industry situation continued to be fragile and is suffering continued losses.

xvii. There are number of cases where the Authority has continued duties in a situation when there are zero imports from the subject country and no injury to the domestic industry.

xviii. The losses of domestic industry have declined during period of investigation in the present investigation due to Anti-dumping duty in existence.

xix. The Authority has a practice to allow 22% return in all situations and, therefore, principles of equity demand that the same is applied to all situations.

xx. Once it has been established that cessation of duties is likely to cause continuation or recurrence of dumping and injury to the domestic industry, there is no requirement to establish the existence of a causal link between the likely dumping and likely injury.

xxi. Chinese producers are continuing to sell the product at lower prices. This is despite third country imports occurring at much better prices. There is significant difference between the prices offered by the rest of the world and the Chinese producers. Resultantly, the domestic industry is not able to get a reasonable price.

xxii. Even when the domestic industry has been offering sub-optimal prices, it is not able to increase its sales.

xxiii. Imports from subject country are underselling the prices of the domestic industry. Such being the case, considering that the producers in the subject country have surplus capacities, in the event of cessation of anti-dumping duty, the volume of dumped imports would surge significantly.

xxiv. In case duty is ceased and consequently imports from the subject country increase, the Domestic Industry would be forced to further reduce the prices of the product concerned significantly.

xxv. The domestic industry is faced with significant increase in inventories, despite exports undertaken, which clearly shows vulnerability of the domestic industry. Cessation of ADD in such circumstances will aggravate the position of the domestic industry.

H.2 Submissions by other interested parties

51. The submissions of the interested parties with regard to injury and causal link are reproduced herein below:

i. There is no volume injury as demand in India and imports from subject country have declined.

ii. Sales of domestic industry has increased.

iii. Imports from China are demand oriented. Import volume of co-polymer pre-compound declined from 63.03 MT in Jan 19 to 2.40 MT in Aug 19.

iv. Imports in July 19 and Sept 19 are NIL.

v. Market share of imports has declined and that of Domestic Industry has increased. Production and capacity utilization have also increased.

vi. Price undercutting in original and present investigation is negative for all types of FKM except Terpolymer Raw Gum.

vii. Injury to Domestic Industry is due to undue capacity enhancements.

viii. Domestic Industry losses declined from 100 to 61 during POI and even the Productivity has increased.

ix. NIP is inflated. 22% ROCE is not to be adopted as debt portion of capital employed is provided as 22% which results in providing more than 22% return on Net worth portion of capital employed and such high return to Domestic Industry not be allowed during global recession.

x. Authority to consider reasonable return based on return earned by Domestic Industry when there was no allegation of dumping to arrive at NIP. Ref: Bridgestone Tyre Manufacturing & Others v. Designated Authority, Hyosung Corporation v. Designated Authority, European Fertilizer Manufacturer‟s Association (EFMA) v. Council.

H.3. Examination by the Authority

52. Rule 11 read with Annexure II of the Rules provide for an objective examination of both, (a) the volume of dumped imports and the effect of the dumped imports on prices, in the domestic market, for the like products; and (b) the consequent impact of these imports on domestic producers of such products. With regard to the volume effect of the dumped imports, the Authority is required to examine whether there has been a significant increase in dumped imports, either in absolute term or relative to production or consumption in India. With regard to the price effect of the dumped imports, the Authority is required to examine whether there has been 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 the prices to a significant degree, or prevent price increases, which would have otherwise occurred to a significant degree.

53. Rule 1l 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.

54. As regards the consequent impact of dumped imports on the domestic industry, Para (iv) of Annexure II of the Rules states as under:

“(iv) The examination of the impact of the dumped imports on the domestic industry concerned, shall include an evaluation of all relevant economic factors and indices having a bearing on the state of the industry, including natural 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. “

55. For the purpose of current injury analysis, the Authority has examined the volume and price effects of dumped imports of the subject goods on the domestic industry and its effect on the prices and profitability to examine the existence of injury and causal links between the dumping and injury, if any. The Authority has taken note of the various submissions made by domestic industry and other interested parties during the course of investigations with regard to injury and causal link and has examined the injury to the domestic industry in accordance with the Rules.

56. It is not necessary that all parameters of injury show deterioration. Some parameters may show deterioration, while some may not. The Authority considers all injury parameters and, thereafter, concludes whether the domestic industry has suffered injury or not.

57. 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. In the present case, it is found that the volume of import from each of the subject countries is not insignificant and the dumping of the product has continued during the relevant period.

58. 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 countries.

a. Assessment of Demand and Market Share

59. For this purpose, demand or apparent consumption of the product in India is taken as the sum of domestic sales of the Indian producers and imports from all sources. The Authority has considered import data obtained from DGCI&S. Share of imports from the subject country in demand/consumption in India determined by the Authority is as under.

Demand Unit 2016-17

 

2017-

18

2018-

19

POI
Annualised Jan-Sep‘19
Sales of Domestic
industry
MT *** *** *** *** ***
Indexed 100 174 289 230 230
Sales of other Indian Producers MT
China (Subject Country) MT 352 539 395 238 178
Imports – Other Country MT 424 412 363 390 292
Total Indian Demand MT *** *** *** *** ***
Indexed 100 129 121 99 99

60. The Authority notes that the demand of the subject goods has increased in 2017-18 and declined thereafter in 2018-19 and further in period of investigation.

Volume Effect of the dumped imports on the Domestic industry

i. Import Volume and Market share of subject country

61. 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. The volume of imports of the subject goods from the subject countries have been analysed as under -:–

Particulars Unit 2016-17 2017-18 2018-19 POI
Annualised Jan-Sep‘19
Imports Volume
Subject Country MT 352 539 395 238 178
Others MT 424 412 363 390 292
Total MT 777 952 758 628 471
Imports from subject country in relation to
Total Imports % 45.35 56.67 52.15 37.89 37.89
Indian Production % *** *** *** *** ***
Indian consumption % *** *** *** *** ***

62. The Authority notes that the original Anti-dumping investigation was initiated in 2nd Jan 2018 and Anti-dumping duty was imposed on subject country on 28th January 2019 which is during period of investigation. Consequently, the imports from subject country have declined during the period of investigation in absolute terms and in relation to production and consumption.

Price Effect of dumped imports and impact on the domestic industry

63. With regard to the effect of the dumped imports on prices, the Designated Authority is required to consider whether there has been a significant price undercutting by the dumped imports as compared with the price of the like products 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. The impact on the prices of the domestic industry on account of the dumped imports from the subject countries has been examined with reference to the price undercutting, price underselling, price suppression and price depression, if any. For the purpose of this analysis, the cost of production, net sales realization and non-injurious price (NIP) of the domestic industry have been compared with the landed cost of imports from the subject country.

i. Price undercutting

64. In order to determine whether the imports are undercutting the prices, the Authority has undertaken comparison between the landed price of the product and the average selling price of the domestic industry. The landed price of imports, domestic prices and margin of undercutting are shown as per the table below:

Particulars Unit 2016-17 2017-18 2018-19 POI
Landed price of imports Rs./Kg 993 1000 1061 983
Net Selling realization Rs./Kg *** *** *** ***
Price Undercutting Rs./Kg *** *** *** ***
Price Undercutting % *** *** *** ***
Price Undercutting (%) % Range Negative Negative Negative 1-20

65. It is noted that imports of the price under cutting is negative throughout the injury period However, it is marginally positive during POI.

ii. Price Suppression or depression

66. In order to determine whether the effect of imports is to depress prices to a significant degree or prevent price increases which otherwise would have occurred, the Authority has examined the changes in the landed price of imports, and costs & prices of the domestic industry over the injury period, when ADD was in force.

Particulars Unit 2016-17 2017-18 2018-19 POI
Cost of Sales ₹/Kg *** *** *** ***
Indexed 100 91 83 91
Selling Price ₹/ Kg *** *** *** ***
Indexed 100 102 100 112
Landed Price ₹/ Kg 993 1000 1061 983
Indexed 100 101 107 99

67. It is seen that the landed price of imports is lower than the cost of sales of the domestic industry throughout the injury period. Consequently, the domestic industry is unable to increase its selling price to the extent of costs. The imports from subject country is supressing the prices of the domestic industry.

ii. Price underselling

68. The price underselling has been evaluated by comparing the non-injurious price with the landed price of the subject imports.

Particulars – POI Unit Total
(All
Types
of
FKM)
Copolymer
Pre-Compound
Copolymer
Raw Gum
Terpolymer Bisphenol Cured Precompound Unidentified
Types
Import Volume MT 178 101 24 5 48
Non-Injurious Price Rs./Kg *** *** *** *** ***
Landed Value Rs./Kg 983 1,042 670 1277 983
Injury Margin Rs./Kg *** *** *** *** ***
Injury Margin US$/Kg *** *** *** *** ***
Injury Margin                  % *** *** *** *** ***
Injury Margin             % Range 40-60 20-40 40-60 20-40 40-60

69. From a comparison of the landed price with the non-injurious price, it is noted that the dumped imports have resulted in significant price underselling/injury margin during the period of investigation.

IMPACT ON ECONOMIC PARAMETERS OF DOMESTIC INDUSTRY

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

a. Capacity, Production Capacity Utilization and Sales

71. The performance of the domestic industry with regard to production, domestic sales, capacity and capacity utilization is as follows:

72. It is noted from the above table that the capacity with the domestic industry has increased over the injury period. Production, sales and capacity utilization of the domestic industry has increased till 2018-19 but declined thereafter in the POI.

b. Market Share of Domestic Industry in Demand

73. The effects of the dumped imports on the market share of the domestic industry have been examined as below: –

Market Share in Demand Unit 2016-17 2017-18 2018-19 POI
Sales of domestic industry (Applicant) % *** *** *** ***
Import from Subject Country Range % 20-40 40-60 20-40 20-40
Import from Other Country Range % 40-60 20-40 20-40 40-60
Total Demand Share % 100.00 100.00 100.00 100.00

74. It is noted that the market share of the domestic industry has increased till 2018-19 thereafter marginally declined in POI as compared to 2018-19.

c. Inventories

75. The data relating to inventory of the subject goods are shown in the following table:

Stock (Volume) Unit 2016-17 2017-18 2018-19 POI
Average MT *** *** *** ***
Indexed 100 187 322 363

d. Profit or loss, cash profits and return on investment

77. Profit/loss, cash profits and return on investment of the domestic industry are as follows:

Particulars Unit 2016-17 2017-18 2018-19 POI
Jan-Sep‘19 Annualised
Profit/(Loss) per unit ₹/Kg *** *** *** *** ***
Indexed -100 -65 -46 -44 -44
Profit/Loss ₹ Lacs *** *** *** *** ***
Indexed -100 -113 -133 -102 -102
Cash Profit ₹ Lacs *** *** *** *** ***
Indexed -100 -91 -125 -95 -95
PBIT per unit ₹/Kg *** *** *** *** ***
Indexed -100 -63 -44 -40 -40
PBIT ₹ Lacs *** *** *** *** ***
Indexed -100 -109 -127 -92 -92
Return on Capital Employed- % *** *** *** *** ***
Indexed -100 -108 -143 -205 -205

78. It is noted from the above that the Domestic Industry has remained in losses throughout the injury period. Profit/Loss, PBIT, Cash Flow and ROCE have remained negative throughout the injury period.

e. Employment, wages and productivity

79. The situation of the domestic industry with regard to employment, wages and productivity was as below –

Particulars Unit 2016-17 2017-18 2018-19 POI
Jan-Sep‘19 Annualised
No of Employees Nos *** *** *** *** ***
Indexed 100 120 120 120 120
Productivity per day MT *** *** *** *** ***
Indexed 100 180 431 322 322
Productivity per Employee MT/Nos. *** *** *** *** ***
Indexed 100 150 357 267 267
Wages ₹ Lacs *** *** *** *** ***
Indexed 100 158 181 163 163

80. It is seen that the employment levels of the Domestic Industry have remained constant since 2017-18. The wages paid and productivity has increased over the injury period. The domestic industry has, however, submitted that these parameters are not relevant to show the impact of dumping on the domestic industry.

f. Growth

81. Examination of growth parameters of the domestic industry during the injury period is shown below –

Growth Compared to Previous Year Unit 2016-17 2017-18 2018-19 POI
Actual
Production Indexed 80 139 -25
Domestic Sales Volume Indexed 74 66 -21
Profit/Loss domestic Indexed -35 -29 -4
Average stock Indexed 87 72 13

82. It is noted that the domestic industry has witnessed a negative growth in the POI.

g. Level of Dumping and Margin of Dumping

83. It is found that the margin of dumping is positive from the subject country. The Authority holds that there is continued dumping of subject goods from the subject country.

h. Factors affecting Prices

84. The import prices are directly affecting the prices of the domestic industry in the market. It is noted that the landed prices of subject imports is undercutting and underselling the prices of the domestic industry during POI. The imports from subject country are leading to significant decline in profitability and financial losses during period of investigation. Thus, Authority holds that the principal factor affecting the domestic prices is the dumped imports of subject goods from the subject country.

i. Ability to raise capital investments

85. The domestic industry is suffering financial losses in the period of investigation. With the competition being faced by the domestic industry because of the dumped imports, the operations of the industry have been impacted which has affected its ability to raise capital investment. The domestic industry is a multi-product company and therefore ability to raise capital investment is not governed based on the performance of the product alone. However, investment decisions are based on individual product performances.

j. Magnitude of Injury and Injury Margin

86. The non-injurious price of the subject goods produced by the domestic industry when compared with the landed value of the exports from the subject country shows positive and significant injury margin during POI.

Producer/Exporter Injury Margin in
US$/Kg
Injury Margin

%

Injury Margin
Range -%
M/s Chenguang Fluoro and Silicone Elastomers Co.,Ltd. *** *** 20-40
M/s Zhonghao Chenguang Research Institute of Chemical Industry Co., Ltd. *** *** 0-20
M/s Daikin Fluorochemicals (China) Co., Ltd Through M/s AUL *** *** 0-20
Inner Mongolia 3F Wanhao Fluorochemical *** *** 60-80
Co/ Ltd
Any other producer/exporter *** *** 60-80

87. For residual category, the Authority has considered the highest Injury margin evaluated amongst the cooperating producers/exporters, considering lowest landed value and NIP of an appropriate PCN for this purpose.

Causal Link

88. As per the AD Rules, the Authority, inter alia, is required to examine any known factors other than the dumped imports which at the same time are injuring the domestic industry, so that the injury caused by these other factors may not be attributed to the dumped imports. While the present investigation is a sunset review investigation and causal link has already been examined in original investigation, the Authority examined whether other known listed factors have caused injury to the domestic industry. It was examined whether the following other factors listed under the AD Rules could have contributed to the injury suffered by the domestic industry.

a. Volume and price of imports from third country:

89. The Authority notes that the imports of the product under consideration from third countries in the POI is at high price.

b. Contraction in Demand and / or Change in Pattern of Consumption

90. The demand of the subject goods has declined. The pattern of consumption with regard to product under consideration has not undergone any change. Changes in the pattern of consumption could not have, therefore, contributed to the injury to the domestic industry

d. Export performance

91. Applicants have exported the subject goods. However, they have not claimed injury in the domestic operations. Applicants have provided costing and injury information for domestic sales separately. Hence, injury to domestic sales cannot be attributed to exports.

e. Development of Technology:

92. None of the interested parties have raised any issue with regard to developments in technology as being the cause of injury to the domestic industry.

e. Performance of other products of the company.

93. The Authority notes that no submission has been made by any of the interested parties to the effect that the performance of other products being produced and sold by the applicants is a possible cause of injury to the domestic industry.

f. Trade Restrictive Practices and Competition between the Foreign and Domestic producers:

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

h. Productivity of the domestic industry

95. The Authority notes that no submissions have been made by either the domestic industry or any of the interested parties regarding the injury to the domestic industry on account of productivity of the domestic industry.

I. LIKELIHOOD OF CONTINUATION OR RECURRENCE OF INJURY

96. In a review investigation, the Authority has to determine whether the subject goods are continuing to enter or likely to enter the Indian market at dumped prices and whether injury to the domestic industry is likely to continue or recur due to these dumped imports if the duty is removed.

I.1. Submissions by the domestic industry

97. The domestic industry submitted as follows with regard to likelihood of continuation or recurrence of dumping or injury –

i. Producers in subject country maintain huge capacities to the extent of 16,950MT. These capacities do not include major producers like Chenguang/ Chemours, Solvay Changshu, Daikin Changshu, 3F Changshu, 3F Inner Mongolia and Fluorine.

ii. The Chinese exporters/producers have a highly unutilized capacities for the product under consideration of about 11.02 KT (almost 65% of the capacity with the Chinese producers is unutilized.)

iii. The Chinese exporters have expanded their respective production capacities in recent years by about 5600 MT.

iv. These capacity expansions have taken place despite the decline in growth rates in the Chinese markets, which signifies the export-oriented outlook the Chinese producers have.

v. The total demand for the subject goods in China is roughly 10,800 MT. However, the known capacities of Chinese producers are well beyond the demand of the subject goods in China.

vi. This leads to oversupply of the goods in China, whereby the capacity is way beyond the demand. The excess capacities with China are around 6150MT.

vii. China constitutes 31% of the total world capacities of product under consideration.

viii. Demand for the subject goods has either declined globally or is stagnating. This trend of decline in demand can also be observed in the subject country.

ix. The stagnation is due to the recent shift in the automobiles sector from vehicles run by fuels to electrical vehicles, and the overall decline in the Automobile sector. On the contrary, India has seen an appreciable increase in Demand over the Injury period.

x. This shift in the user industry pattern has led to a decline in demand globally, and therefore major markets of the subject country are closing, which increases the likelihood of the exports from the subject country to India.

xi. Likelihood of dumping can also be ascertained based on the fact that exports from subject country have declined after imposition of the anti-dumping duty.

xii. Globally, there are surplus capacities with the producers insofar as the subject goods are concerned of about 26,290MT. Therefore, the exporters are continuously in search of surplus markets where they can dispose off their capacities.

xiii. Producer wise dumping margin shows the likelihood of dumping in the event of cessation of Anti-dumping duty.

xiv. Exporters/ producers in China have freely disposable capacity of 6730MT which can easily cater to entire demand in India.

xv. Exporters from the China are not only dumping in India, but they are also dumping in other countries.

xvi. The evidences show that the product under consideration is being circumvented through Thailand and Taiwan. This clearly shows that in the event of cessation of Anti-dumping duty, the imports are likely to enter the Indian market at dumped prices.

xvii. Market intelligence shows that the importers are evading the Anti-dumping duty by way of mis declaration. This further establishes likelihood of dumping and injury.

xviii. As regards reference to Digital Offset Printing Plates originating in or exported from China PR, it is submitted that the facts of the instant case is different from the case referred. In the Digital Printing plates case, there was no continued injury whereas in the present case the domestic industry situation continued to be fragile and is suffering continued losses.

I.2. Submissions by other interested parties

98. Applicant‘s claims of excess production capacities with foreign producers, unutilized capacities of Chinese exporters, significant capacity expansions and overcapacity in Chinese market are baseless submissions with regard to likelihood of continuation or recurrence of dumping or injury:

I.3. Examination by the Authority

99. The present investigation is a sunset review of duties imposed on the imports of subject goods from China PR. Under the Rules, the Authority is required to determine whether continued imposition of antidumping duty is warranted. This also requires an examination of whether the duty imposed is serving the intended purpose.

100. Further, the Authority has also examined other relevant factors having a bearing on the likelihood of continuation or recurrence of dumping and consequent injury to the domestic industry. The examination of the parameters of likelihood is as follows:

a. Continued Imports of appreciable quantum in presence of Anti-Dumping Duty

101. The import details in the subject investigation are as follows:

Particulars Units 2016-17 2017-18 2018-19 Annualized POI Jan-Sep’19
Import Volume
Imports from China MT 352 539 395 259 178

102. The Authority notes that the volume of dumped imports of the product under consideration have increased till 2017-18 but declined in 2018-19 and POI.

b. Production Capacity held by producers in subject Countries

Company Capacity (Kg)
Pervious Accounting Year Jan-Sep 2019
Daikin Fluorochemicals (China) Co., Ltd. *** ***
M/s Chenguang Fluoro and Silicone
Elastomers Co.,Ltd.
*** ***
M/s Zhonghao Chenguang Research Institute of Chemical Industry Co. *** ***
Mongolia 3F Wanhao Fluorochemical Co., Ltd. *** ***

c. Freely disposable Capacities with the foreign producers

103. The Authority notes that production, domestic sales, export sales and capacity utilization of a number of Chinese producers for accounting year of 2018 and POI Jan-Sep 2019 are as follows.

Accounting year of 2018
Installed/ Rated
Capacity
(Quantity) (Kg)
Production
(Quantity) (Kg)
Capacity
Utilisation (%)
Total Sales
(Quantity) (Kg)
Domestic
Sales (Quantity) (Kg)
Sales to
India
(Quantity)
(Kg)
M/s Chenguang Fluoro and Silicone Elastomers Co.,Ltd.
***
***
***
***
***
***
Daikin Fluorochemicals (China) Co., Ltd
***
***
***
***
***
***
M/s Zhonghao Chenguang Research Institute of Chemical Industry Co.
***
***
***
***
***
***
Mongolia 3F Wanhao Fluorochemical Co., Ltd
***
***
***
***
***
***
POI Jan-September 2019
Installed/ Rated
Capacity
(Quantity) (Kg)
Production
(Quantity) (Kg)
Capacity
Utilisation (%)
Total Sales
(Quantity)
(Kg)
Domestic
Sales (Quantity)
(Kg)
Sales to
India
(Quantity )
(Kg)
M/s Chenguang Fluoro and Silicone Elastomers Co.,Ltd.
***
***
***
***
***
***
Daikin Fluorochemicals (China) Co., Ltd
***
***
***
***
***
***
M/s Zhonghao Chenguang Research Institute of Chemical Industry Co.
***
***
***
***
***
***
Mongolia 3F Wanhao Fluorochemical Co., Ltd
***
***
***
***
***
***

104. It is seen that producers have significant unutilised capacities with them.

d. Level of current and past dumping margin

105. The level of dumping margin in the original, as well as present investigation is significant.

J. POST DISCLOSURE COMMENTS

J.1 Submissions made by the domestic industry

106. The submissions made by the domestic industry are as follows

i. All India Rubber Industries Association (AIRIA) should be considered as a non-cooperative party. No NCV of the submissions filed on behalf of the AIRIA was circulated to the domestic industry.

ii. The law on construction of normal value, i.e. Rule 7 of Annexure I, presents an internal hierarchy where a preference is given to the first two methodologies. Only in cases where they are proven to be not feasible, the third methodology is adopted thereafter.

iii. The normal value can be determined based on import price from USA. The CNV can be adopted only after ascertaining that there is no evidence available regarding price or constructed value in a market economy third country or price from such third country to other country, including India

iv. Since M/s Mitsubishi has not filed the exporter questionnaire response, the export price of M/s Daikin Fluorochemicals (China) Co. Ltd through M/s Mitsubishi is required to be based on facts available i.e. lowest export price

v. There is continued dumping of subject goods from the subject country.

vi. The domestic industry has suffered continued injury due to dumped imports

vii. There is definitive likelihood that the domestic industry shall continue to suffer injury in case existing anti-dumping duty ceases and therefore the anti-dumping duty is required to be continued

viii. Anti-dumping duty may be imposed as a fixed quantum of anti-dumping duty (fixed form of duty), expressed in US$/kg.

ix. The domestic industry requests enhancement and extension of the anti-dumping duty, the domestic industry submits that the duty should be imposed in terms of US$.

J.2 Submissions made by other interested parties

107. None of the exporters/other interested parties have filed comments on disclosure statement

J.3 Examination by the Authority

108. Post- disclosure submissions have been received only from domestic industry. The Authority has examined the post-disclosure submissions made by the domestic industry including reiterations which have already been examined suitably and addressed adequately in the relevant paras of these final findings. The issues raised for the first time in the post disclosure comments/submissions by the domestic industry and considered relevant by the Authority are examined as below.

i. As regards exports by M/s Daikin Fluorochemicals (China) Co. Ltd through M/s Mitsubishi, the Authority notes that export of M/s Daikin Fluorochemicals (China) Co. Ltd through M/s Mitsubishi constitute less than 10% of the total exports of M/s Daikin Fluorochemicals (China) Co. Ltd. Therefore, the Authority has accepted the questionnaire response filed by the Company. Further, the dumping margin has been determined based on information available. As regards non-cooperation for one of the exporter concerned, dumping margin in such exports has been determined based on fact available.

ii. The Authority has considered the submissions made by AIRIA for the purpose of present determination.

k. CONCLUSION ON LIKELIHOOD OF DUMPTNG AND INJURY

109. The evidences on record show that even though imports have declined from the subject country, dumping of the subject goods from China PR continues and imports of subject goods are being made at dumped prices and prices below the non-injurious price. The information on record also shows the landed prices of subject imports is undercutting and underselling the prices of the domestic industry during POI. The imports from subject country have led to significant decline in profitability and financial losses during period of investigation. Thus, all these parameters indicate that in the event of cessation of ADD, the exporters in the subject country are likely to intensify export of dumped product in India at dumped prices, leading to intensified injury to the Domestic Industry.

L. INDIAN INDUSTRY’S INTEREST

110. The Authority notes that the purpose of anti-dumping duty, in general, is to eliminate injury caused to the domestic industry by the unfair trade practices of dumping so as to re-establish a situation of open and fair competition in the Indian market, which is in the general interest of the country. Imposition of anti-dumping measures would not restrict imports from the subject country/territory in any way, and, therefore, would not affect the availability of the product to the consumers.

111. 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 anti-dumping 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.

M. CONCLUSION

112. 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:

a. There is continued dumping of the subject goods from subject country along and the imports are likely to enter the Indian market at dumped prices in the event of expiry of duty.

b. There is a continued injury to the domestic industry despite anti-dumping duty in existence.

c. The information on record shows likelihood of continuation of dumping and injury in case the Anti-dumping duty in force is allowed to cease at this stage.

d. There is sufficient evidence to indicate that the cessation of ADD at this stage will lead to continuation of dumping and injury to the Domestic Industry.

N. RECOMMENDATIONS

113. The Authority notes that the investigation was initiated and notified to all interested parties and adequate opportunity was given to the domestic industry, exporters, importers and other interested parties to provide information on the aspects of dumping, injury and the causal link.

114. Having concluded that there is likelihood of continuation of dumping and injury if the existing anti­dumping duties are allowed to cease, the Authority is of the view that continuation of duty is required on the import of PUC from the subject country.

115. The Authority recommends imposition of definitive anti-dumping duty equal to the amount mentioned in Column 7 of the duty table below for the period of five (5) years from the date of the Notification to be issued by the Central Government, on all imports of goods mentioned at Column 3 of the duty table below, originating in or exported from the subject country.

DUTY TABLE

S. No Heading/Sub Heading Description of Goods Country of Origin Country of Export Producer Duty Amount Unit Currency
1 2 3 4 5 6 7 8 9
1 39045090,

39046990,

39049000,

39046910

Fluoro elastomers (FKM)

*note below

China PR Any country including China PR M/s Chenguang Fluoro and Silicone Elastomers Co.,Ltd. 3.85 Kg US$
2 -do- -do- China PR Any country including China PR M/s Zhonghao Chenguang Research Institute of Chemical Industry Co., Ltd. 1.30 Kg US$
3 -do- -do- China PR Any country including China PR M/s Daikin Fluorochemicals (China) Co., Ltd Through M/s AUL 1.04 Kg US$
4 -do- -do- China PR Any country including China PR Inner Mongolia 3F Wanhao Fluorochemical Co/ Ltd 6.84 Kg US$
5 -do- -do- China PR Any country including China PR Any other than mentioned in S.No. 1 to 4 above 8.86 Kg US$
6 -do- -do- Any China PR Any 8.86 KG US$
country other than China PR

* The scope of the product under consideration is Fluoroelastomers, including Copolymer fluoroelastomers, Terpolymer fluoroelastomers, Copolymer Raw gum, Copolymer Pre-Compound, Terpolymer Bisphenol Curable Raw Gum, Terpolymer Peroxide Curable Raw Gum and Terpolymer Bisphenol Curable Raw Gum. However, FKM compound and Perfluoroelastomer (FFKM) are excluded from the scope of the subject goods.

***Note – Customs classification is only indicative, and the determination of anti-dumping duty shall be made as per the description of the PUC. The PUC mentioned above should be subject to above ADD even when it is imported under any other HS code.

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

B. B. SWAIN, Spl. Secy. & Designated Authority

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