Imports of Normal Butanol or 'N-Butyl Alcohol' from European Union, Malaysia

Ministry of Commerce & Industry Department of Commerce (Directorate General of Anti Dumping& Allied Duties)

FINAL FINDINGS

m. Following importers/consumers filed questionnaire responses.

i. PCM Chemicals India Pvt. Ltd., ii. Payal Petrochem Pvt. Ltd., iii. Rachna Plasticizers, iv. KLJ Plasticizers Ltd., v. KLJ Resources Ltd., vi. Payal Polyplast Pvt. Ltd.

Further a number of other interested parties have offered comments and submission with regard to the present investigation, which have been appropriately taken into account. The said interested parties are as follows:

i. Evonik Industries ii. Lubrizol India Pvt. Ltd. iii. Barkur Surfactants Pvt. Ltd., Mumbai iv. Unitop Chemicals Pvt. Ltd., Mumbai v. Advanced Microdevices Pvt. Ltd. vi. Sri Krishna Pharmaceuticals Ltd.

n. 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 all interested parties. The public file was inspected by a number of interested parties a number of times. Interested parties, who requested inspection and copies of the documents from the public file, were provided with the same.

o. 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 and such information has been considered confidential and not disclosed to other interested parties. Wherever possible, parties providing information on confidential basis were directed to provide sufficient non confidential version of the information filed on confidential basis, which was made available through public file.

p. Further information was sought from the petitioner and other interested parties to the extent deemed necessary. Verification of domestic industry was conducted to the extent considered necessary for the purpose of present investigation.

q. On the request of the Authority, the Central Government extended the time for completion of the Investigation up to 19th February, 2016, in terms of Rule 17 of the AD Rules.

r. A spot verification was also conducted at the premises of the following exporters:

 PETRONAS Chemicals Derivatives SdnBhd, Malaysia or PCD (on 8th December, 2015)

 PETRONAS Chemicals Marketing SdnBhd, Malaysia or PCM (on 9th December, 2015)

 BASF PETRONAS Chemicals SDN Bhd, Malaysia (on 7th December, 2015)

 Oxea GmbH , EU (on 2nd- 3rd November, 2015)

s. The above exporters were issued a report of the verification conducted. Comments offered by the exporters have further been taken into account in this Findings.

t. The Non-injurious Price (hereinafter referred to as ‘NIP’) considering 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) has been worked out so as to ascertain whether Anti-Dumping duty lower than the dumping margin would be sufficient to remove injury to the Domestic Industry.

u. Investigation was carried out for the period starting from 1st April 2013 to 30th June 2014 (15 months) (hereinafter referred to as the ‘period of investigation’ or the ‘POI’).Theexamination of trends, in the context of injury analysis covered the period from 2010-11, 2011- 12, 2012-13 and the POI.

v. In accordance with Rule 6(6) of the Anti-dumping Rules, the Authority provided opportunity to the interested parties to present their views orally in a public hearing held on 6th November 2015. The parties, who presented their views in oral hearing were requested to file written submissions of the views expressed orally, followed by rejoinder submissions.

w. Exchange rate for conversion of US$ to Rs. is considered for the POI as Rs.60.77 as per customs data.

x. In accordance with Rule 16 of the Rules supra, the essential facts were disclosed by the Authority on 8th February, 2016 to the known interested parties and comments received on the same, to the extent considered relevant by the Authority, has been considered in this final finding.

y. In this Final Findings, “***” represents information furnished by the interested parties on confidential basis, and so considered by the Authority under the Rules.

B. PRODUCT UNDER CONSIDERATION AND LIKE ARTICLE

2. The product under consideration in the present investigation is “Normal Butanol” or “NButyl Alcohol”.

Views of Exporters, Importers, Consumers and other Interested Parties

3. The Designated Authority should examine the petitioner’s assertions that the goods produced by it and the product under consideration are like and technically and commercially substitutable.

Views of the Domestic Industry

4. The domestic industry has made the following submissions with regard to the product under consideration: -

a) The product under consideration in the present petition is n-Butanol also known as nbutyl alcohol or normal butanol. Normal butanol is a primary alcohol with a 4-carbon structure and molecular formula C4H9OH. It is a clear, mobile, neutral liquid with a characteristic odor. It is miscible with all common solvents but it is only sparingly soluble in water. NBA occurs naturally as a minor product of the fermentation of sugars and other carbohydrates, and is present in many foods and beverages.

b) Normal butanol is an excellent solvent for acid-curable lacquers and baking finishes derived from urea, melamine or phenolic resins. A large part of N-Butanol is converted into derivatives for use as solvents in coating industries.

Examination by the Authority

5. The product under consideration in the present investigation is “Normal Butanol”. Normal Butanol is a basic organic chemical normally classified under Chapter 29 of the Customs Tariff Act. Normal Butanol is a primary alcohol with a 4-carbon structure and molecular formula C4H9OH.

6. Normal Butanol is an excellent solvent for acid-curable lacquers and baking finishes derived from urea, melamine or phenolic resins. A large part of Normal Butanol is converted into derivatives for use as solvent in coating industries and printing inks. Normal Butanol also finds application as extractant in production of drugs and natural substances, additive in polishes and cleaners, solubilizer in the textile industry, additive in deicing fluids, anti-icing additive in gasoline, humectant for cellulose nitrate, feedstock in the production of glycol ethers and flotation aids (Butyl Xanthate) and as starting material for the production of Butyl mono Carboxylates, Butyl Acetate, Butyl butyrate.

7. The product is classified under Customs Tariff heading No. 29051300. However, the said Customs classification is indicative only and in no way binding on the scope of the present investigation.

8. Rule 2(d) relating to the definition of "like article" specifies that "like article" means an article which is identical or alike in all respects to the article under investigation, or in the absence of such an article, another article having characteristics closely resembling those of the article under investigation.

9. The petitioner has claimed that the subject goods, which are exported from subject countries into India, are identical to the goods produced by the domestic industry. Normal Butanol produced by the domestic industry and imported from subject countries are comparable in terms of physical & chemical characteristics, manufacturing process & technology, functions & uses, product specifications, pricing, distribution & marketing and tariff classification of the goods. Consumers can use and are using the two interchangeably. The two are technically and commercially substitutable and hence, should be treated as ‘like article’ under the AD Rules. No specific instances of differences in technical characteristics which affect substitutability of domestic and imported subject goods have been substantiated which warrants a detailed examination. The issue of form of packaging has been dealt at appropriate places. Therefore, for the purpose of the present investigation, the subject goods produced by the petitioner in India are treated as ‘Like Article’ to the subject goods being imported from the subject countries.

10. The Authority notes that the Petitioner is producing NBA, EHA and IBA. EHA and NBA are produced in two different plants since 2011.

11. The Authority therefore holds that the product manufactured by the petitioner constitutes like article to the subject goods being imported into India from the subject countries.

C. SCOPE OF DOMESTIC INDUSTRY AND STANDING

12. 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”

Views of Exporters, Importers, Consumers and other Interested Parties

13. M/s PCD, PCM and PCM Chemicals India Pvt. Ltd. have contended that there are many other producers of like article namely, M/s Galaxy Chemicals, M/s Hemanshu Chemicals and Meru Chem Pvt. Ltd. The applicant has not mentioned the names of these producers at all.

14. The petitioner should not be considered as ‘domestic industry’ to impose anti dumping duties on PUC as the petitioner has never been a regular producer of subject goods. 

Views of the Domestic Industry

15. The domestic industry has made the following submissions with regard to the product under consideration: -

a) The petition has been filed by M/s The Andhra Petrochemicals Limited as domestic industry.

b) The Petitioner is the sole producer of the subject goods in India.

c) As regards the contention of other parties, the petitioner has collected information and submitted the same to the Authority showing that these companies are not manufacturing product under consideration.

d) Petitioner has neither imported the subject goods nor is related (either directly or indirectly) to any exporter or importer of product under consideration in the subject countries.

e) The petitioner is eligible to constitute domestic industry as per Rule 2(b).

Examination by the Authority

16. The Authority notes that the application was filed by M/s The Andhra Petrochemicals Limited as domestic industry. The Petitioner is the sole producer of the subject goods in India. Petitioner has not imported the subject goods during the POI. Further, petitioner is not related (either directly or indirectly) to any exporter or importer of product under consideration in the subject countries.

17. As regards the contention that M/s Galaxy Chemicals, M/s Hemanshu Chemicals and Meru Chem Pvt. Ltd. are also producers of the product under consideration, the Authority notes that any evidence establishing that these parties are engaged in production of the product under consideration has not been provided. The clarificatory information provided by the Petitioner showed a written communication from these parties to the Petitioner stating therein as follows:

i. Meru Chem Pvt. Ltd. stated that they are only trader and supplier of chemicals and solvent; they do not produce NBA or any other chemicals or solvent;

ii. Hemanshu Chemicals stated that they are not producing the product, but are trading in the product;

iii. Galaxy Chemicals stated they are not a user of the product and are trading in NBA and other solvent.

Dumping margin

  II. EUROPEAN UNION

a. Cooperative producers/ exporters

OXEA GmbH, Germany, EU

34. The above producer has submitted, inter-alia, as follows

a) The raw materials used in manufacture of n-butanol are n-Butyraldehyde and hydrogen.

b) The normal value has been claimed based on its sales in EU.

c) The adjustments have been claimed on inland freight, inland insurance handling, credit and interest.

d) The exports to India in POI have been made through M/s Petrochem Middle East, Dubai and M/s ICC Chemicals, USA.

35. The Authority notes that M/s Oxea GmbH, a producer of the subject goods in EU sold a total of ***MT of the subject goods in their domestic market. The ordinary course of trade (80:20) test on the domestic sales referencing the verified ex-factory cost of production in POI indicates that more than 99% of the domestic sales of M/s Oxea GmbH were in the ordinary course of trade. Therefore the normal value of the producer is computed as per the weighted average domestic sales price with adjustments on inland freight (***$/MT), inland insurance (***$/MT), handling (***$/MT), credit & interest (***$/MT) [total of ***$/MT]. The weighted average normal value is thus determined as ***$/MT.

36. Further, the producer has exported a total of ***MT of the subject goods to India in POI through M/s Petrochem Middle East, Dubai (***MT) and M/s ICC Chemicals, USA (***MT). The weighted average export price (CIF) of the quantity exported to India is computed as ***$/MT. The Authority on the above export price, has allowed adjustments on inland freight (***$/MT), insurance (***$/MT), handling (***$/MT), overseas freight (***$/MT), overseas insurance (***$/MT), shipping charges (***$/MT) and others (***$/MT), coming to a total of ***$/MT. The ex-factory export price for M/s Oxea Gmbh, producer is thus held to be as ***$/MT with the dumping margin determined as ***$/MT (15-20 %). 

37. M/s Petrochem Middle East FZE, Dubai, the exporter has submitted, that their company is only a trading company which, procures the subject goods from producers/ exporters based in EU and resells them to India.***MT of subject goods in POI has been exported by them to India. The weighted average CIF is determined as***$/MT.

38. ICC Chemical Corporation, USA, the exporter has submitted, that their company is only an exporter of the subject goods ***MT of subject goods in POI has been exported by them to India, at a weighted average CIF of ***$/MT.

39. Further, the landed value for M/s Oxea GmbH has been determined by adding 1% landing charges to CIF and applicable customs duties, i.e. basic custom duty and cess.

b. NON COOPERATIVE PRODUCERS/ EXPORTERS FROM EU

40. For all other non- cooperating producers and exporters from EU, the highest domestic selling price of cooperative exporters without any adjustment is taken into consideration for the computation of NV. For the determination of ex- factory export price, the lowest export price of cooperative exporters with adjustments as noted in case of cooperative exporters is taken into consideration. The CIF price for residual exporters/ producers from EU is determined as *** $/MT. Accordingly, the NV and the ex- factory export price are determined as ***MT and ***$/MT respectively. The dumping margin is thus considered as ***$/MT (30-35 %).

41. The landed value for non cooperative producers/ exporters from EU has been computed on the basis of the lowest export price/ CIF, with 1% landing charges and applicable customs duty i.e. basic custom duty and cess.

Dumping Margin

  III. PRODUCERS/ EXPORTERS FROM USA, SINGAPORE AND SOUTH AFRICA

Oxea Corporation, USA

42. The exporter has submitted, that their company did not export the subject goods to India in the POI and, therefore, does not have a basis to participate in the instant investigation or respond to the Exporter Questionnaire. Should the anti-dumping duty be imposed, the company reserves the right to apply for a New Shipper Review.

43. The Authority notes the submissions made by M/s Oxea Corporation, USA and holds that the new shipper review request would be dealt appropriately as per the relevant ADD Rules.

44. The Authority further notes that none of the producers/ exporters from USA, Singapore and South Africa have filed questionnaire response. Thus, in the absence of any response, the Authority has constructed normal value for all the producers/ exporters from these three countries on the basis of estimates of cost of production in accordance with Section 9A(1)c read with Rule 6(8) supra.

45. The normal value has been constructed by adopting consumption norms for major raw materials including Naphtha and their prices, prevailing power price and known estimates for conversion cost during the relevant period as per best available information. Selling, general & administrative costs and reasonable profit margin has been added to the cost of production so determined so as to arrive at a constructed normal value. A number of interested parties have contended that the cost of production of the domestic industry is significantly higher due to lower production in the present POI and higher price of raw material being paid by them. It is clarified that the Authority has adopted raw material and utility cost at best consumption norms, and conversion cost of POI has been normated at highest achieved capacity utilisation during injury period. The normal value for all non- cooperative producers/exporters in each of the abovementioned three subject countries, is considered as***$/MT.

46. Further, the Authority as per its consistent practice, adopts the weighted average export price for all the producers/exporters of the above three countries based on transaction wise DGCI&S data for POI considering adjustments on a reasonable ocean freight as evidenced (*** US$ for USA and *** US$ for Singapore and South Africa each), marine insurance (***% of CIF), commission (***% of FOB), bank charges (***% of FOB), port expenses (***% of FOB) and handling (***% of FOB) for each of the three countries. The ex- factory export prices for USA, Singapore and South Africa are thus referenced as *** $/MT, ***$/MT and ***$/MT respectively.

47. Further, the transaction wise DGCI&S data has been sorted on the product under consideration and non-product under consideration for all the injury period year including POI. The non PUC entries to an extent of about 6% in POI have been filtered for the purpose of evaluating the weighted average CIF for non-cooperating producers/ exporters from above mentioned three subject countries i.e. USA, Singapore and South Africa.

48. The Landed Value of the subject goods in POI has been determined on the basis of the transaction wise DGCI&S data after adding 1% landing charges on CIF, basic customs duty with cess.

Dumping margin

E. INJURY

Submissions made by Domestic Industry

49. The domestic industry has submitted that:

a. Demand for the product under consideration has remained positive throughout the injury period.

b. Imports from the subject countries have shown significant increase over the period in absolute terms as well as in relation to consumption and production of the product under consideration in India. Further, imports from the subject countries constitute almost the entire volume of imports into India.

c. Weighted average import prices (after including basic customs duties) have been significantly below the selling prices of the domestic industry, thus resulting in significant price undercutting.

d. The injury margin is significant.

e. The landed price of imports is significantly below the cost of production of the domestic industry throughout the injury period. Imports have had significant suppressing effect on the prices of the domestic industry in the market. Whereas the cost of sales increased significantly over the injury period, the selling price could not increase to such an extent due to presence of dumped imports, thereby suffering huge losses.

f. The domestic industry enhanced capacities in the year 2011-12 in response to increase in demand. The production of the domestic industry improved in 2011-12 and then declined. The decline in production is significant in the POI when compared to the previous year.

g. The domestic industry was able to achieve good capacity utilization in the period 2011- 12, but the same has declined significantly thereafter in 2012-13 and the POI.

h. Loss in production in the POI is due to other factors as well. The production in the POI declined to 5,388 MT on account of non-remunerative prices for some time and shortage in the supply of raw material. Considering that the loss of production in this period is due to other factors, the petitioner has reported its performance, as it would have been, had there been no loss of production due to shortage of raw materials. For this purpose, the petitioner has excluded the idle time cost from the total cost incurred for the production of product under consideration for the purpose of working out injury caused by dumped imports. It would be seen that even if the petitioner had achieved normal production in the POI, the selling price would still have been  below cost of production. The petitioner has also claimed profitability after adjusting for idle time.

i. Domestic sales have seen a similar trend. Whereas the demand for the product has increased by 18% between 2010-11 and the POI; the sales have declined by 68% and imports from the subject countries have increased by 125% in the same period. This clearly indicates that the imports have increasingly captured the market of the domestic industry.

j. The profits of the domestic industry have declined throughout the injury period since 2010-11. The domestic industry has been suffering losses since 2012-13, which have intensified considerably in the POI. Profitability, cash profits, profit before interest and tax and return on investment have shown a similar trend.

k. The petitioner has segregated cost incurred on account of idle time from the total cost to assess the injury caused by dumped imports. It would be seen that even if the petitioner had been able to achieve normal production in the POI, the profitability would have severely declined as a result of intense dumping from the subject countries.

l. Market share of the domestic industry has declined throughout the injury period whereas the market share of the dumped imports has significantly increased throughout the injury period.

m. Domestic industry has lost substantial orders during the injury period.

n. The employment level increased in 2012-13 and declined thereafter. Wages paid have increased up to 2011-12 and then declined over the injury period.

o. Productivity of the domestic industry has moved in the same direction as production.

p. There is a threat of further material injury due to significant increase in volume of imports, significant price undercutting and price suppression, increasing inventories with the domestic industry and market share of dumped imports.

Submissions made by importers, exporters, users and user associations

50. The importers, exporters, users and user associations nad other interested parties have submitted as follows: a. There is complete absence of causal link between the alleged injury to the domestic industry and the imports of subject goods from subject countries in the present case, as can be shown below: 

 Volume effect: Raw material shortage, fire accident, cyclone Hudhud plant shutdown  reduced production  reduced sales  reduced market share

 Price effect: Negative price undercutting  domestic industry did not adequately increase its price in response to the increasing cost even until the POI  decline in profitability factors due to plant shutdown

b. Plant shutdown is an important factor in a causal link analysis. On this point, Hematite Pig Iron case [1990 O.J. (L135) 7] and AGFA Gevaert AG vs. Designated Authority were cited.

c. Petitioner has attempted to lower the landed value by deducting notional credit cost for 90 days and inflate the non-injurious price by taking into account notional credit cost for 270 days.

d. The sole reason of injury to Petitioner is suspension of production leading to plant closure for 212 days (almost 7 months) during the POI on account of non-availability of raw materials. Injury due to such factors cannot be attributed to imports. Petitioner’s annual reports also stated this aspect. The Hon’ble CESTAT in the case of Andhra Petrochemicals Ltd. v. Designated Authority, 2006 (201) ELT 481 (Tri.-Del.) had also relied on the annual report of the domestic industry in that case to set aside the final findings by the Authority in that case. e. Petitioner has reported its performance as it would have been, had there been no loss of production. This is not permitted under law. The Authority may compare the level of imports during the period when Petitioner was operational and the level of imports when Petitioner was non-operational. Also, it is not clear what is raw material price considered for determining the performance. The domestic industry has to be taken “as is” to determine injury. On this point, the cases of Caustic Soda originating in or exported from Chinese Taipei, Indonesia and EU (excluding France) - Final Findings dated October 1, 2003 and the Appellate Body Report of the Thailand – H Beams were cited.

f. The petitioner has calculated normal value on the basis of inflated cost and has wrongly claimed confidentiality over the constructed normal value. In this regard, Birla Ericsson Opticals vs Designated Authority 2004(167) E.L.T. 163 (Tri. - Del.) was cited. 

g. Even during the period when the petitioner was producing, its production was not optimum. Therefore, imports during the POI were necessitated due to lack of production by the domestic industry.

h. Price undercutting and price underselling are actually negative, which implies absence of causal link.

i. Adjustments for credit cost and freight cost are not permissible under Indian law. Further, customs duty should be added to assessable value and not CIF price for calculating landed value.

i.The reason for decline in Petitioner’s profitability and increase in cost are intrinsic factors, such as non-availability of raw material to the petitioner.

j. In light of the decline in inventories during the POI in comparison to 2011-12 and 2012- 13, there is no injury to the domestic industry.

k. The Government of Malaysia’s submissions on non-injurious price and injury margin made during the public hearing should be considered. During a public hearing all interested parties including governments of concerned countries have a right to raise concerns about issues that arise in an AD investigation.

l. The contention of the petitioner that excise duty and sales tax should be added to NIP for determination of injury margin, and that CVD should also be added to import price, should be rejected as per the Authority’s consistent practice.

m. Test of cumulative examination may not be even relevant in the present case as the present case warrants termination on grounds of causal link breach of a terminal magnitude.

n. The lower volumes of petitioner are not on account of imports, but on account of idle time caused by short supply of raw material.

o. If AD duty is levied based on its erratic and distraught performance on account of raw material supply issue, the position of user industry would become vulnerable and uncompetitive.

p. The submission of the petitioner that there is no concept like NIP anywhere globally is incorrect.

q. The Authority should reject various claims of the petitioner with regard to NIP such as inclusion of taxes etc and NIP should be determined as per Annexure III to the rules.

r. The petitioner produces three products namely -EH, N-Butanol (n-BOL) and I-Butanol (i- BOL)in a single plant. Therefore, before any assessment of injury can be tied to imports it should be examined whether the petitioner harmed himself by reducing the output on n-BOL but increasing the output of 2-EH and i-BOL. 

s. The disruption in the Propylene supplyin May-June 2013 by HPCL and a shutdown of the PRU unit necessary for the production of Propyleneat HPCL in August 2013 should be evaluated. In this regard, the petitioner’s 30th Annual Report 2013, Director report and the rating report should also be noted and assessed.

t. All the numbers and trends showing the (lower) performance of the Petitioner like “production”, “sales volume” etc. would have to be linked and adjusted to those numbers and trends related to the lack of raw material for production of the product concerned for 212 days of the financial year 2013-14.

u. The material injury analysis is a prospective and not a retrospective analysis.

v. Cumulating all subject countries in the present investigation would be inappropriate due to the conditions of competition between the subject countries inter se. In this regard, the following investigations of DGAD were cited: * Anti-dumping investigation concerning imports of Melamine originating in or exported from European Union, Iran, Indonesia and Japan, dated June 1, 2012; * Final Findings – Anti-dumping investigations involving imports of Acetone originating in or exported from European Union, Chinese Taipei, Singapore, South Africa & USA, dated January 4, 2008 * Final Findings – Anti-dumping investigation concerning import of Flexible Slabstock Polyol of Molecular weight 3000 to 4000 from China PR, Republic of Korea, Taiwan and Brazil, dated November 11, 2004 * Final Findings – Anti-dumping investigation concerning imports of Ball Bearings (up to 50 mm bore dia) from China PR, Poland, Russia and Romania dated March 19, 2004.

w. By virtue of AIFTA and the India-Malaysia CECA, the applicable basic customs duty for the same subject goods is different for imports from Malaysia and Singapore on the one hand and the other target countries (EU, US, and South Africa) on the other hand.

x. The Authority should de-cumulate the EU imports and terminate the investigation against these imports. On this point, the EU cases of Certain tube and pipe fittings, of iron or steel, from China, Croatia and Thailand and Ammonium nitrate from Russia.

y. The landed import price from subject countries increased over the injury period, which was more than the increase in price by the Petitioner over the injury period, which clearly indicates that the suppression was not caused by imports. 

z. Dumping must not be the sole but the substantial cause of injury. On this point, the Authority’s Final Findings – Anti-Dumping Investigations concerning imports of Cathode Ray Colour Television Picture Tubes originating in or exported from Malaysia, Thailand, China PR and Korea RP dated February 17, 2009 and Final Findings – Sunset review of Anti-Dumping Duty imposed in respect of imports of Acetone originating in or exported from European Union, South Africa, Singapore and USA dated December 13, 2013, were cited.

aa. The POI cannot be extended to 15 months at this stage of the investigation. The Authority’s Final Findings – Anti-dumping investigation concerning imports of Ball Bearings (up to 50 mm bore dia) from China PR, Poland, Russia and Romania dated March 19, 2004 was cited.

bb. The petitioner has failed to provide DGCI&S transaction-wise import data for the period April-June 2014 and has provided only summary of the said data. The accuracy of such summarised is doubted.

cc. The Authority is requested to examine the reasons why imports from Malaysia have occurred during the injury analysis period in light of India-Malaysia CECA, Notification No. 56/2013 dated 31 December 2013.

dd. The petitioner did not sell the subject goods during the entire POI. In light of this, the methodology adopted for comparison should be disclosed, and a public hearing should also be granted.

ee. The Petitioner’s profits decline when it is unable to procure raw material. Further, if Petitioner could have diversified its procurement of raw material, it could have easily avoided suspension of production during the POI.

ff. The European Commission case referred by the petitioner deals only with the question of dumping margin and not injury margin. Further, the petitioner has not provided the name of the aforementioned case.

gg. The domestic industry pays higher price for raw material because of shortage of raw material. hh. The petitioner’s contention that it is producing the subject goods and EHA in different plants and production of one product in not dependent on another, should be rejected.

ii. The petitioner’s contention that it has invested in technology but still its performance deteriorated should be rejected. 

jj. Fire in HPCL plant is not force majeure, petitioner could source raw material from alternative sources and the petitioner should consider importing raw materials.

kk. The petitioner’s claim on non- remunerative prices on account of dumping is untenable and attempt to misuse the remedies available under the anti-dumping scheme.

ll. Major refiners use propylene, which is the major raw material for NBA, captively to manufacture Poly Propylene. Thus, source of raw material for NBA in India will be unavailable or less available, making it essential to import the subject goods.

mm. The Authority is requested to review and reject the Petitioner’s claim regarding downward adjustment on account of freight costs to the landed price.

nn. The Authority must not adjust the landed price for differences in credit costs between exporting producers and its exporters and the domestic industry.

oo. The Petitioner increased capacities, production and sales significantly between 2010/11 and 2011/12, before the raw material shortages started.

pp. Capacity utilisation has been misleadingly understated by the petitioner because the capacity should be adjusted to reflect the fact that the plant was only running for 153 days or lesser, during the 12-month period.

qq. The Petitioner’s claims that it made investments to optimise the production process and its performance deterioration is due to the competition from allegedly dumped imports, is wrong.

rr. M/s. Lubrizol has stated that the conditions of sale of the product by the petitioner evidently prove that the petitioner is operating under monopolistic condition and dictating the term of sale.

ss. The petitioner may not have interest in supplying blended product with said goods which may force the user to find alternate source of supply of high end blended products.

tt. The petitioner being the sole manufacturer of said product does not inspire any confidence in its valued customer. Non- availability of the product due to shut down of their plant either due to technical or financial reasons can put the domestic users to a greater hardship and would allow the trader to dictate the price of the product to their advantage. Such situation neither benefits the petitioner nor the end user.

rr. For security and continuous supply of product, no anti-dumping duty should be imposed, as this will penalize the user and also impact the potential export made by them.

Cumulative Assessment

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

a) the margin of dumping established in relation to the imports from each country/ territory is more than two percent expressed as percentage of export price and the volume of the imports from each country is three percent of the imports of the like article or where the export of the individual countries is less than three percent, the imports cumulatively accounts for more than seven percent of the imports of like article, and;

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

52. In the present case, the margin of dumping from each of the subject countries have been found to be more than the de minimis limit prescribed; the volume of dumped imports from each of the subject countries is more than the limits prescribed; and the exports from the subject countries directly compete inter se and with the like goods offered by the domestic industry in the Indian market. Cumulative assessment of the effects of the imports is appropriate in light of the conditions of competition between the imported products and the conditions of competition between the imported products and the like domestic product. The therefore Authority considers it appropriate to cumulatively assess the effect of dumped imports.

Examination by the Authority

53. The Authority has taken note of submissions made by the interested parties. The Authority has examined the injury to the domestic industry in accordance with the Anti-dumping Rules and considering the submissions made by the interested parties.

54. The AD Rules require the Authority to examine injury by examining both volume and price effect. A determination of injury involves an objective examination of both (a) the volume of the dumped imports and the effect of the dumped imports on prices in the domestic market for the like article and (b) the consequent impact of these imports on domestic industry. With regard to the volume of dumped imports, the Authority is required to consider whether there has been a significant increase in the dumped imports, either in absolute terms or relative to production or consumption in India. With regard to the effect of the dumped imports on prices the Authority is required to consider whether there has been a significant price undercutting by the dumped imports as compared with the price of like product in India, or whether the effect of such imports is otherwise to depress prices to a significant degree or prevent price increases which otherwise would have occurred to a significant degree.

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

“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.”

56. It is not necessary that all parameters of injury need to show deterioration. Some parameters may show deterioration; while some may show improvement. The Designated Authority considers all injury parameters and thereafter concludes whether the domestic industry has suffered injury due to dumping or not ?

57. The Authority has examined the injury parameters objectively taking into account the facts and arguments in the submissions.

Assessment of Demand

58. The demand of subject goods has been determined by summing the domestic sales of domestic like product with imports of subject goods from all countries. For the purpose of present injury analysis, the Authority has relied on the transaction-wise import data procured  from DGCI&S. The Authority notes that demand of subject goods increased significantly over the injury period as depicted in the table below.

  *POI is annualized (April 2013 to June 2014)

59. It is seen from the above table that the demand of the product in the country has increased in 2011-12, declined in 2012-13 and then increased again in the POI. However, the demand for the product has shown a significant increase in the POI as compared to base year.

Volume Effect of Dumped Imports and Impact on Domestic Industry Import Volumes and Share of Subject Country

60. With regard to the volume of the dumped imports, the Authority is required to consider whether there has been a significant increase in dumped imports, either in absolute terms or relative to production or consumption in India. The volume of imports of the subject goods from the subject countries are as under:

 62. It is seen that imports declined in May, 2013 when production declined; imports increased in June, 2013 when production declined; imports declined in July, 2013 when production increased; imports increased significantly in Aug., 2013 (more than double of April, 2013) when production was significant (double of April 2013) in July and further increased in Aug. (more than three times of April, 2013). Similar situations were found thereafter in Oct. and Nov., 2013. It is also found that despite no production by the domestic industry during Dec, 2013 and March, 2014, import volumes were not only low but declined.

63. The Authority has in view of fluctuating behaviour determined the statistical correlation coefficient between production and imports from subject countries, which comes to 0.5 which is a positive moderate coefficient indicating that both the parameters have more or less moved in the same direction, contrary to the claim of the interested parties that the imports and production have moved in opposite direction.

64. It is thus noted that imports from the subject countries have increased both in absolute terms and in relation to production and consumption in India. It is also noted that even though the domestic industry had suspended production during the POI and while the imports might have been triggered for that reason, it is also a fact that the import volumes were higher when the domestic industry production was higher, thus showing that whenever the domestic industry was in a position to supply subject-goods, it faced competition with significant imports.

Price Effect of the Dumped Imports on the Domestic Industry

65. With regard to the effect of the dumped imports on prices, Annexure II (ii) of the Rules lays down as follows:

“With regard to the effect of the dumped imports on prices as referred to in sub-rule (2) of rule 18 the Designated Authority shall consider whether there has been a significant price undercutting by the dumped imports as compared with the price of like product in India, or whether the effect of such imports is otherwise to depress prices to a significant degree or prevent price increase which otherwise would have occurred to a significant degree.”

66. It has been examined whether there has been a significant price undercutting by the dumped imports of the price of the like product in India, or whether the effect of such imports is otherwise to depress prices to a significant degree or prevent price increases, which otherwise would have occurred, to a significant degree. The impact of dumped imports on the prices of the domestic industry has been examined with reference to the price undercutting, price underselling, price suppression and price depression, if any.

Price Undercutting

67. In order to determine whether the imports are undercutting the prices of the domestic industry in the market, the Authority has compared landed price of imports with net sales realization of the domestic industry. In this regard, a comparison has been made between the landed value of the product from each of the subject countries and the average selling price of the domestic industry net of all rebates and taxes, at the same level of trade. The prices of the domestic industry were determined at ex-factory level. This comparison shows that during the period of investigation, the subject goods originating in the subject countries were imported into the Indian market at prices which were lower than the selling prices of the domestic industry. It is noted that since the domestic industry did not produce the product throughout the POI, the domestic industry practically had no sales few months of the POI. The table below shows the level of price undercutting from each of the subject countries:

• M/s Oxea GmbH through Petrochem Middle East, Dubai and ICC Chemicals, USA:

The landed value for M/s Oxea GmbH has been determined by adding 1% landing charges to CIF and applicable customs duties, i.e. basic custom duty and cess. The landed value is thus evaluated as *** $/MT with injury margin as ***$/MT (-5 to 0 %).

• Non cooperative producers/ exporters: The landed value for non cooperative producers/ exporters from EU has been computed on the basis of the lowest export price/ CIF, with 1% landing charges and applicable customs duty i.e. basic custom duty and cess. The landed value is thus referenced as***$/MT. The injury margin is thus referenced as ***$/MT (0-5 %).

Injury Table

 Malaysia

 M/s PCD through M/s PCM: The weighted average landed value of imports has been determined on the basis of the verified weighted average CIF prices of subject goods produced by M/s PCD and exported by M/s PCM to India by adding 1% landing charges and applicable customs duties i.e. basic custom duty and cess. The landed value is thus referenced as *** $/MT. The injury margin for M/s PCD through M/s PCM is thus determined as*** $/MT (0-5 %).

 M/s BASF PETRONAS: The landed value for M/s BASF PETRONAS has been determined by adding 1% landing charges to CIF and applicable customs duties. The landed value is thus evaluated as *** $/MT with injury margin as ***$/MT (0-5 %).

 Non cooperative producers/ exporters: The landed value for the non cooperative producers/ exporters from Malaysia has been computed on the basis of the lowest export price (CIF), with 1% landing charges and applicable customs duty i.e. basic custom duty and cess. The landed value and the injury margin are determined as ***$/MT and ***$/MT respectively (10-15%).

Injury Table

Injury Table

 72. It is seen that the landed prices of the subject goods from the subject countries except for EU were lower than the NIP determined for the domestic industry, thus indicating price suppression phenomena.

Price Suppression/Depression

73. In order to determine whether the dumped imports are depressing the domestic prices or whether the effect of such imports is to suppress prices to a significant degree and prevent price increases which otherwise would have occurred to a significant degree, the Authority considered the changes in the costs and prices over the injury period. The position is shown as per the Table below:

81. It is seen from the above table that:

a) The domestic industry enhanced capacities in 2011-12 in view of higher demand in the Country.

b) The demand for the product under consideration in the country has increased significantly over the injury period.

c) Production of the domestic industry increased in 2011-12. However, the production declined significantly thereafter in 2012-13 and further in the POI. Production of the domestic industry in the POI was significantly low.

d) Capacity utilization of the domestic industry has followed the same trend as that of production. The domestic industry was able to achieve good capacity utilization in the period 2011-12, but the same has declined significantly thereafter in 2012-13 and the POI. Whereas demand for the product under consideration increased by 16% over the period, capacity utilization declined to mere 24% in the POI. Capacity utilization increased in 2010-11 and thereafter declined significantly in 2012-13 and the POI.

e) Sales of domestic industry increased in 2011-12 and declined thereafter. The domestic sales in POI on annualized basis, declined by 68% as compared to base year 2010-11.

82. It is thus concluded that production, domestic sales and capacity utilization of the domestic industry deteriorated significantly despite increase in demand for the product in the Country. The Authority notes that the production of the domestic industry has declined significantly in the period of investigation as compared to base year as well as previous year 2012-13. The petitioner has admitted that the domestic industry has suffered loss in production due to unavailability of raw materials as far as decline in production in 2012-13 and beginning of 2013-14 is concerned. The domestic industry suffered production loss from Aug., 2013 again due to fire in HPCL plant (who supplies them raw materials). At the same time, the annual reports also make it evident that the Petitioner had also curtailed production due to unremunerative price of its products. It is not a situation where entirety of the production loss was due to raw materials unavailability. In any case, the Authority does not consider deterioration in volume parameters (such as production, capacity utilization, sales volumes and market share) in concluding whether that the domestic industry has suffered material injury. 

Profits, profitability, return on investment and cash profits

83. The cost of sales, selling price, profit/loss, cash profits and return on investment of the domestic industry has been analyzed as follows:

84. The Authority notes that:

a) Both, the cost of sales and the selling price, increased over the injury period. However, the increase in selling price was lower than the increase in cost, thus, leading to decline in profitability.

b) The domestic industry had earned profit in the base year, 2010-11. The profitability however deteriorated in 2011-12. The decline in profitability in 2011-12 was despite increase in production in this year. The profitability of the domestic industry deteriorated significantly thereafter and the domestic industry suffered financial losses in 2012-13 and the POI.

c) Return on investment over the injury period has shown the same trend as that of profits. Return on investment declined in 2011-12, becoming negative thereafter, in 2012-13 and the POI.

d) Profit before interest and taxes (PBIT) declined in 2011-12, becoming negative thereafter, in 2012-13 and the POI.

e) Cash profits have also shown the same trend as that of profits. Cash profits declined in 2011-12, becoming negative thereafter, in 2012-13 and the POI.

85. Since the domestic industry has not produced the product under consideration for some part of the POI, the interested parties have contended that the decline in profits is because of suspension of production by the domestic industry. The Authority has for the purpose of determining extent of injury has adopted a normated cost of production to determine NIP so that idle period cost is not included in the analysis.

Market Share

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

 89. It is noted that employment with the domestic industry declined over the injury period. Wages paid have declined up to 2012-13 and then increased slightly in the POI. Productivity increased in 2011-12 and declined thereafter, in line with the decline in production.

90. However, since it is an established fact that the production of the domestic industry suffered both due to non-availability of raw material as well as unremunerative product prices (i.e., dumping), the Authority has not considered these parameters as an indicator of impact of dumping of subject goods on one domestic industry.

Inventories

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

92. It is seen that inventories with the domestic industry increased up to 2012-13 and then declined in the period of investigation. However, since the production of the domestic industry suffered both due to non-availability of raw material as well as unremunerative product prices (i.e., dumping), the Authority has not considered changes in inventory as an indicator of impact of dumping on the domestic industry.

Growth

93. The data relating to growth of the domestic industry is shown in the following table:

94. The Authority notes that growth of the domestic industry was adverse both in terms of volume and price parameters. Growth with regard to sales, production, market share, profits, return on investments and cash flow was negative during period of investigation.

Month wise price undercutting

102. The Authority ‘notices that intrinsic factors’ would primarily leads to a volume injury as the adverse price effect due to high cost elements of raw material, plant overheads and other process efficiencies are normated while computing the NIP as per AD rules. The price effect would be triggered more by extrinsic factors i.e. dumping which can be captured by evaluation of weighted average injury margin for the entire POI. The other factors like changes in demand, product substitutability/obsolescence etc. as required is also examined by the Authority. The Authority in order to capture the price effect strictly on the comparable terms of trade compares the NIP computed for bulk consignments with the import price which also happens in bulk.

103. The Authority has below examined the other factors listed under the Antidumping Rules which could have contributed to injury to the domestic industry for examination of causal link between dumping and material injury to the domestic industry.

Imports from third countries

104. The Authority has examined import data of the subject goods obtained from DGCI&S on transaction-wise basis. It is noted that imports from third countries are negligible and could not have caused claimed injury to the domestic industry.

Contraction in demand

105. The Authority notes that the demand for the subject goods has shown significant improvement during the injury period. It has increased in the POI from the base year and the previous year. Possible contraction in demand could not have caused injury to the domestic industry.

Trade restrictive practices of and competition between the foreign and domestic producers

106. The Authority notes that there is no trade restrictive practice which could have contributed to the injury to the domestic industry.

Developments in technology

107. The domestic industry’s production process is Naphtha based on which they plan to shift to natural gas in future. However, the Authority notes that the existing technology and process adopted by the domestic industry is comparable with foreign producers as regards production of the final product.

Changes in pattern of consumption

  Anti dumping duty may be imposed as fixed quantum of anti dumping duty (fixed form of duty), expressed as duty in US$/kg. To support the said claim, cases of CESTAT were cited:

o In the case of NBR from Korea, the Hon’ble CESTAT modified variable anti-dumping duty recommended by Designated Authority to fixed duty based on the appeal filed by an exporter, M/s. Kumho Petro-Chemicals Co. Ltd. (2004(170)E.L.T. 274)

o In the case of Metcoke, the CESTAT, vide their decision 2000(116) E.L.T. 67 modified the anti-dumping duty from variable to fixed.

o In the case of Vitrified files, the CESTAT upheld the decision of the Designated Authority to impose fixed quantum of duty.

o The decision of the CESTAT in the matter of Metcoke from China.

Comments by Interested Parties:

117. The following comments have been made by interested parties:

 There is no justification for claiming landed price from subject countries as per DGCI&S as confidential.

 Injury, if any, to the domestic market was not due to imports from subject countries but self inflicted.

 There is no disclosure about the methodology adopted by the Authority to make adjustments in the cost of production of petitioner to account for the idle time due to plant shut downs in the disclosure statement.

 AD duties, if any, should only be recommended in terms of Indian Rs and not USD;

 Imposition of any AD duty in the present case would add on the cost of the users who are facing non supply of subject goods by the single domestic producer.

 The Authority may kindly record the term “PETRONAS” in capital letters throughout the disclosure statement and the final findings.

 The Authority’s observation that imports of the subject goods have increased in absolute terms and in relation to production in the POI, is incorrect in view of the surrounding facts i.e. the domestic industry was shut for a period of 263 days during the POI – for 231 days due to non-availability of raw material and for remaining days due to unremunerative prices. 

 The Authority should do a quarter-by-quarter analysis of imports vis-à-vis production of the domestic industry. The month-by-month analysis of production of the domestic industry with import volumes gives a skewed picture.

 It is not understood, on what basis the correlation coefficient between production and imports from subject countries has been calculated, as the actual figures of production and imports have not been disclosed by the Authority. Further, non-disclosure of production and import figures month-wise is a violation of the principles of natural justice.

 For a proper analysis, landed value of imports should be compared with net sales realization of the domestic industry only for those periods when the domestic industry was in operation. Such analysis would show that there is no price undercutting in this case.

 The Authority’s analysis on Price Underselling is incorrect as the Authority has considered very high cost of production for the domestic industry.

 It is not clear on what basis the NIP has been determined on weighted average basis for the entire POI. The month-wise raw material prices relied upon by the Authority should be disclosed in indexed form to clear the doubts regarding cost of production and NIP of the domestic industry.

 It is not understood on what basis such wages per unit of production have been claimed by the domestic industry and allowed by the Authority.

 NIP should be calculated for the period in which the domestic industry was in operation and landed value should be compared for the same period.

 It is incorrect to say that the product prices were not increasing, because an analysis of landed value for all subject countries shows that landed value consistently increased during the entire injury analysis period.

 It is apparent from the annual reports of the domestic industry that the sole reason of injury was non-supply of raw material leading to plant shutdown.

 The Authority ought to show the exact extract from the annual reports of the domestic industry from the injury analysis period wherein it is stated that the domestic industry has been prevented from increasing prices due to dumping.

 The only reason for injury to the domestic industry is loss of production due to plant shutdown.

  The Annual reports of the domestic industry should be considered as it is. The Authority should not add more facts to already established facts to support the domestic industry’s claims. To support this, CESTAT’s case of Andhra Petrochemicals Ltd. v. Designated Authority [2006 (201) E.L.T. 481 (Tri. - Del.)] was cited.

 Volume parameters cannot be ignored while analysing material injury.

 There is no causal link in the present case as there is no volume injury to the domestic industry and injury due to price effects have been wrongly determined by the Authority.

 The Authority has not explained how cost of production has been adjusted to take into account idle time when production was suspended by the domestic industry.

 In determining the non-injurious price for domestic industry, the statute provides for a reasonable rate of return to be included. Reliance in this regard was placed on CESTAT’ case of Indian Spinners Association v. Designated Authority 2004 (170) E.L.T. 144 (Tri. - Del.)

 The Authority should take into consideration increase in cost of utilities while noting increase in cost of sales of the domestic industry.

 Imports from Malaysia were only bridging the demand-supply gap in the domestic market of India.

 High prices of propylene, the primary raw material for the production of NBA, during the POI should be examined in the causal link analysis. Also the domestic industry was able to sell its entire production in the injury analysis period.

 Same rate of anti-dumping duty for related entities, i.e. for M/s PETRONAS Chemicals Derivatives SDH BHD and M/s BASF PETRONAS Chemicals SDN BHD in the present investigation should be recommended as per the consistent practice of the Authority. In this regard, anti -dumping investigations on the imports of:

(a) Plain Gypsum Plaster Board originating in or exported from China PR, Indonesia, Thailand, and United Arab Emirates [Notification No. 06/2013-Customs (ADD) dated 12 April 2013];

(b) Sunset review concerning imports of ‘Homopolymer of Vinyl Chloride (Suspension Grade)’ originating in or exported from China PR, Chinese Taipei, Indonesia, Japan, Korea RP, Malaysia, Thailand and the United States of America [Notification No. 27/2014-Customs (ADD) dated 13 June 2014]. 

 Dumping margin should be calculated as a percentage of CIF export price and not exfactory export price in this case.

 There is no discussion or evidence placed on record to show that how the production loss of the domestic industry of 212 days did not allegedly lead to self inflicted injury, but the imports did.

 It remains to be seen as to how did the Authority undertook to consider the period of investigation as a comparison period and the last three years for adopting the “best utilization” ratios for various parameters such as raw materials, utilities etc.

 Causal link clearly fails to meet the requirements of Rule 9(2) of the Anti-dumping Rules and Article 5.2 of the Anti Dumping Agreement (ADA).

 The subject countries in the present investigation have wrongly been cumulated for the purposes of analyzing the injury caused to the domestic industry. The Authority de-cumulate the EU imports and terminate the investigation against those imports without the imposition of measures. To support the said claim, Article 3.3 of the ADA, Paragraph (iii) of Annexure II to the Anti-Dumping Rules, European Communities – Malleable Cast Iron Tube Or Pipe Fittings From Brazil [WT/DS219/AB/R dated 22 July 2003], Certain tube and pipe fittings, of iron or steel, from China, Croatia and Thailand [Commission Regulation (EC) No 2318/95 of 27 September 1995] and Ammonium nitrate from Russia [Council Regulation (EC) No 2022/95 of 16 August 1995] were cited.

 Despite increase in demand the imports from EU have declined over the injury period.

 Competition is an indicator of a free market. Inflow of imports into the home market does not point towards dumping especially in the present case where the domestic industry has suspended production during the POI.

 There is no price underselling caused by the producer/ exporter from EU since the injury margin calculated by the Authority is negative (-5 to 0%).

 The Authority's argumentation that the Petitioner should have been able to pass on the 40% price increase of propylene (when by comparison import prices of propylene into the EU increased only by 8% during the same period) is wrong.

 Imports cannot be held responsible for the Petitioner's inability to pass on excess raw material costs. 

 Imports from the subject countries did not suppress /depress the Petitioner's prices. Furthermore, prices of EU imports of n-butanol have not undercut Indian prices throughout the entire period investigated and EU import volumes have decreased by 47% since 2011/12.

 The Authority did not consider deterioration in volume parameters in concluding whether that the domestic industry has suffered material injury. Also, the decline in profits and inability of the domestic industry to raise Capital Investments is because of suspension of production by the domestic industry.

 The Authority has not considered decline in market share; Employment, Productivity & Wages; and considered changes in inventory as an indicator of impact of dumping on the domestic industry.

 Since the imports from EU are not undercutting or underselling the domestic industry’s prices, the alleged dumping is irrelevant for the injury assessment.

 The Authority should also examine factors other than dumped imports which might be injuring the domestic industry at the same time.

 There is a breach in causal link between material injury caused to the domestic industry and the allegedly dumped imports from EU.

 The imposition of anti-dumping duties is not in the interest of the downstream Indian industry as the local demand is more than twice the domestic production.

 The sole purpose of the present Petition is to create an artificial supply shortage through the imposition of anti-dumping duties that would allow the Petitioner to increase prices to the detriment of the domestic users, which is not a legitimate use of the anti-dumping instrument.

 The Authority is requested to order the Petitioner to provide further details on the impact of the cyclone Hudhud on its production capabilities, so that it could be assessed whether imposition of anti-dumping duties would lead to a supply shortage to the detriment of Indian users.

 It is assumed that the Authority has determined the capital employed using book value of the domestic industry’s assets.

 The Authority should adjust the non-injurious price downwards to take into account (i) the part of the Petitioner's injury that it admits is not attributable to imports, and (ii) the part of the injury that is self-inflicted by purchasing propylene at exaggerated prices from a local supplier when it was apparently available cheaper from other international sources. 

 The POI has been set out without appropriate justification.

 Injury, if any, has been suffered by the domestic industry by factors other than imports alleged to be dumped.

 It is wrong to conclude that price level of the Indian domestic industry became unremunerative because of the dumped imports, but rather that the cost of production had abnormally increased without any apparent reason.

 Unavailability of raw material and the resulting plant shut down for 212 days breaks the causal link.

 The petitioner would inevitably have lost market share to the benefit of imports over the period 2010- 11 to the POI because of the significant increase in domestic demand.

 NIP calculated on the basis of an abnormally high cost of sales has been unduly inflated.

 Full set of information on the basis of which the dumping, undercutting and underselling margins had been calculated was not disclosed to the EU exporters.

Examination by Authority:

118. The Authority notes the submissions on injury and causal link made by various interested parties, regarding comparison to be made for the months only when production was made by the Domestic Industry, volume injury occurring only due to intrinsic factors, Authority not to attribute and assign conclusions on statements in the annual reports of the domestic industry, NSR being higher than landed value, terminate present investigation like in earlier photographic paper case where the domestic industry was sick, cumulation of imports not possible due to different rates of basic custom duty, Hon’ble CESTAT having quashed the findings of the same case earlier due to non-evaluation of causal link, lead time of imports not considered and hence erroneous interpretation of import and production correlation, erroneous interpretation of price injury and causal link. The Authority notes the above submissions and holds that a month-wise analysis in POI as requested earlier by various interested parties and keeping the nature of the case was undertaken. However while month-wise trend analysis has been undertaken to analyse causality, for the assessment of quantum of price injury, the entire POI has been taken as done in all cases. The lead time is equally important for domestic production, and therefore for an overall assessment, the entire POI is considered so as to average out the lead time issues, as done consistently in anti- dumping investigations. 

119. The Authority also notes that M/s APL being the sole domestic producer though has no competition from domestic producers, it faces competition from imports especially dumped imports from subject countries. The authority also holds that filling of demand supply gap by imports from subject countries needs to be at fair price and not at unfair dumped price which is being addressed in the finding.

120. As regards the argument on no price injury due to dumping to Domestic Industry made by various interested parties the Authority holds that the verified data in accordance with the Anti Dumping Rules has been adopted and the extent of dumping evaluated has not been contested by either cooperative or non-cooperative exporters. The comparison of NIP and Landed Value in case of cooperative exporters has been done on the basis of export price data submitted by exporters, duly verified and furnished to exporters through an exporter’s verification report and disclosure. The Landed Value accordingly has been worked out on this data and injury margin evaluated after appropriate comparison with NIP over the entire POI. The injury margin has been worked out by adopting the landed value of dumped imports and injurious price effect impact it can have by undercutting the NIP.

121. The price effect though triggered the onset of the injury, its ramification as a volume effect in POI is at a low key as other intrinsic factors have over shadowed the volume injury in POI. The domestic industry is still in production and not closed and has requested for injury redressal due to dumping.

122. The Authority has analysed annual reports and other submissions of the Domestic Industry to evaluate causal link so that factors other than dumping are also addressed in view of the issues submitted by various interested parties citing the earlier Judgement of Hon’ble CESTAT.

123. Transaction wise data of DGCI&S provided by the domestic industry has been placed in public file and made available to various interested parties. 

124. The NIP has been determined for the entire POI by adopting the consistent methodology of determining NIP on highest capacity utilisation, best achieved norms of consumption etc. over the injury period as stipulated in Annexure III to the AD rules. Domestic Industry’s and other interested parties’ contention regarding idle time, the Authority holds that it has adopted the consistent practice to evaluate NIP as per Annexure III to the AD rules.

125. The freight cost as requested by the domestic industry for factoring in the NIP has not been considered appropriate as decisions of locating a unit near to raw-material supply or finished goods consumers are strategic decisions taken at the time of inception and injury assessment in an AD investigation warrants apple to apple comparison of NIP with Landed Value, and cannot be altered on a case to case basis, keeping in view the history of locating a unit which may vary entity to entity with raw-material sources and consumers location also getting diversified and changing dynamically over time.

126. As regards altering the landed value through credit cost adjustment, the Authority holds that the adjustment of credit cost has been done for evaluation of dumping margin. Further, adjustment of credit cost in landed value does not seem appropriate as stated in the disclosure statement as well, as other factors like freight, preferential custom duty or even commission paid to agents by exporters may also warrant an adjustment depending on business practices and bilateral arrangements between countries.

127. As regards the submissions that Authority has not dealt all injury parameters, the Authority holds that all relevant injury parameters have been analysed under the injury and causal link examination with a finding on the possible negative impact due to dumping wherever relevant.

128. The Authority notes the submissions of Lakshmi Kumaran & Sridharan Attorneys to recommend same rate of anti dumping duty for both M/s PCD and M/s BASF PETRONAS. The Authority holds that the channels of export adopted by M/s PCD and M/s BASF PETRONAS are different. As the evaluation has been undertaken specific to a value chain channel and the transaction between related parties have been considered after confirming that these are at arms length, the need to combine the two producers/ exporters from Malaysia does not seem appropriate. Further, exports by channels other than the related channels of export by cooperative producers/ exporters which have been verified and considered for according individual dumping margin and injury margin assessment in the present investigation, would attract anti dumping duty under the residual/ non- cooperative category.

129. As regards the form and manner of duty, the Authority holds that anti dumping duty has consistently been recommended in the form of fixed duty in US$ keeping in view the experience of efficacy in the implementation of anti dumping measures. The Authority has therefore recommended anti dumping duty as per lesser duty rule in fixed form in US$. The Authority noting the submission of the domestic industry to make the duty table comprehensive, has mentioned in the footnote to the domestic industry that customs head is indicative.

Recommendations

130. The Authority notes that the export price of the subject goods exported from the subject countries are below normal value, thus establishing dumping of the same. The Authority also notes that the domestic industry continues to suffer material injury on account of dumped imports from the subject countries. Therefore, the Authority considers it necessary to recommend imposition of antidumping duty on imports of subject goods from the subject countries in the form and manner described in the “Duty Table” below. However, wherever the injury margin is negative for any producer/ exporter, it has been so indicated in the analysis in the previous paragraphs on injury analysis. 131. Having regard to the lesser duty rule followed by the Authority, the Authority recommends imposition of anti-dumping duty equal to the lesser of margin of dumping and the margin of injury, so as to remove the injury to the domestic industry. Accordingly, antidumping duty equal to the amount mentioned in Col 8 of the table below is recommended to be imposed by the Central Government, on imports of the subject goods originating in or exported from the subject countries.

DUTY TABLE

AK Bhalla Additional Secretary & Designated Authority