Customs, Excise and Gold Tribunal - Delhi
Lubrizol (India) Pvt. Ltd. vs Designated Authority on 28 July, 2005
Equivalent citations: 2005(187)ELT402(TRI-DEL)
ORDER
R.K. Abichandani, J. (President)
1. Brief Facts : Both these appeals raise identical issues and, therefore, have been argued together for common disposal. Both the sides have referred to the record of appeal No. C/41/2003 during their arguments.
2. These appeals have been preferred against the final findings dated 5-9-2002 of the Designated Authority and the Notification dated 31-10-2002 issued by the Central Government in the exercise of powers conferred by Sub-section (1) read with Sub-section (5) of Section 9A of the Customs Tariff Act, 1975 and Rules 18 and 20 of the Customs Tariff (Identification, Assessment and Collection of Anti-dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995, imposing anti-dumping duty on imports of Poly-Iso-Butene (PIB) at the rate which is equivalent to the difference between the amount specified in column 4 of the table (non-injurious price) and the landed value in US Dollars per MT of such imported PIB exported from the countries specified in column 2 of the table, namely, People's Republic of Korea, Brazil, Japan and Singapore. The anti-dumping duty imposed under the impugned Notification was ordered to be levied with effect from the date of imposition of the provisional anti-dumping duty i.e. 16-1-2002.
3. In the proceedings before the Designated Authority pursuant to initiation of the investigation concerning imports of PIB against six countries/territories European Union, Brazil, Japan, Korea, Singapore and Thailand, the appellants had filed responses to the initiation notification of 16-1-2001. The Designated Authority published the preliminary findings on 12-12-2001 recommending levy of provisional anti-dumping duty on the imports of PIB from Korea, Brazil, Japan and Singapore and no duty was recommended against imports from European Union and Thailand. The Designated Authority recommended the reference price of US $ 1037 per MT for imports from these four countries subjected to the provisional anti-dumping duty. The appellants participated also in the public hearing held on 28-2-2002 by the Authority and filed their written submissions contesting the proposed imposition of anti-dumping duty on PIB imports from these countries.
4. The appellant, Lubrizol (India) Private Ltd. was authorized to make a joint representation for the oil industries including importers who had authorised it to represent them by letters issued on 12-8-2002. The appellant, Castrol India Pvt. Ltd had also issued similar authorisation on 12-8-2002 in favour of Lubrizol (India) Private Ltd. by a communication addressed to the Designated Authority.
5. The product involved is Poly-Iso-Butene (PIB) which is a synthetic hydrocarbon polymer manufactured by polymerization of C4 olefins stream consisting of mainly iso-butene. It has applications in various fields like lube oil additives, cable filling compounds, rubber modifiers, leather chemicals, oil insulators, adhesives, etc. It is classified under sub-heading No. 3902.20 under Chapter 39 of the Customs Tariff Act.
6. The reasons for opposing the imposition of anti-dumping duty put forth by the appellants as reflected in para 5(ii) of the notification dated 12-12-2001 imposing provisional anti-dumping duty are as under :
"(ii) M/s. Lubrizol India Pvt. Ltd.
M/s. Lubrizol has intimated that they have not imported the subject goods during the period of investigation. However, they have stated that they do not support case of levy of Anti-dumping Duty on Poly-Iso-Butylene for the following reasons :
(a) There is a surplus capacity available in the international market and the prices internationally are extremely competitive. The present import price of polybutenes by local consumers is the right competitive international price. Due to large petroleum feed stock becoming surplus due to the shift in the product made/market internationally, the feed stock import to Polybutenes will be further cheaper which will lower the prices over a period.
(b) One of the largest suppliers of Polybutenes i.e. M/s. Indian Petrochemicals Corporation Ltd. (Government of India undertaking) has not come up with such case for anti-dumping. When any Antidumping is considered by the Government it is voice of the Industry that is being looked into but with the overriding fact kept in mind that such actions should not put the consumer/pubic at disadvantage."
7. In the Notification of final findings dated 5-9-2002, the objections of the appellants are reflected in the joint representation made by the Six oil industries, as reproduced in paragraph D-4 of the final findings.
8. The Designated Authority had received an application from M/s. Kothari Sugar and Chemicals Ltd. alleging dumping of PIB originating in or exported from European Union, Brazil, Japan, Republic of Korea, Singapore and Thailand. The Designated Authority on the basis of the evidence submitted by the petitioner, decided to initiate investigation against the subject countries and issued public notice dated 12-9-2001 published in the Gazette of India, Extraordinary initiating the investigation. A copy of public notice was forwarded to the known exporters of whom only M/s. BASF, Germany and M/s. DAELIM Corporation, Korea, responded. A questionnaire was sent to the known importers and consumers of the subject goods of whom the appellant, Lubrizol (India) Ltd. and Indian Additives Ltd. responded.
8.1 According to the petitioners, the imports of PIB from the subject countries had increased significantly in absolute terms, and the export price from the subject countries had significantly declined. The selling price of the domestic industry which was increasing till 2000-2001 reduced significantly in 2001-02. The increase in the selling price in 2000-2001 over 1999-2000 was much lower than the increase in the cost of production, resulting in significant financial losses to the domestic industry. It was alleged that the dumped imports caused severe price undercutting to the domestic industry in the market. Referring to the international tender quoted by the Indian Oil Corporation for procurement of the product at three places in India, namely Trombay, Chennai and Calcutta, it was alleged that the price quoted by the exporters in their tenders, could not permit recovery of even cost of production and the quotations by the exporters had resulted in severe price suppression/depression in the Indian Market. It was further stated that the domestic industry had been forced to reduce the prices below the cost of production as a result of significant dumping in the country and the financial situation of the domestic industry had deteriorated significantly.
8.2 According to the responding exporter, BASF of Germany, the quality of BASF product was different and the imported product cannot be substituted by the local Product. DAELIM submitted that the petitioner-Kothari alone did not represent more than 25% of the production of subject goods and therefore, it did not have the standing to file the petition. On the aspect of industry, the said exporter submitted that the imports had increased since the beginning of 2000 even though the customs duty was at the rate of 35%. It was stated that they had competitive advantage of the economics of scale, the quality of product and their own PIB technology, over the producers of India. The production cost of PIB was lower than the Indian producers so they could get the tender business.
9. Indian Petrochemicals Corporation Ltd. (IPCL), Gujarat described as "one of the manufacturers of the subject goods" in para 4(i) of the preliminary findings of the Designated Authority, supported the petition stating that the imports of PIB had increased significantly in the past few years and that they were so low priced that at indigenous price of feedstock and conversion cost, their margins had a great stress. It was submitted that in the tenders floated by the Indian Oil Corporation, exporters had quoted significantly lower price, which if they were forced to match, their margins will be eroded to such extent that viability of business will become questionable. It was also submitted that dumping was resulting in significant injury to the domestic industry, and that the situation demanded immediate imposition of anti-dumping duty on dumped imports from the subject countries.
9.1 Kochi Refineries Ltd., one of the manufacturers of the goods, also supported the anti-dumping duty petition filed by Kothari and in response to the questionnaire, they submitted the cost details stating that due to dumping of the product by the foreign agencies on the Indian market, they had to reduce their prices, far below the cost of production so as to match the landed price of the imported product to sustain operation of the plant. They had to drastically cut down the price to match with the prices offered by the foreign venders in the tenders floated by a major marketing company India (IOC). They also stated that a net loss of several crores (figure kept as confidential) against the total turnover was suffered by them in the financial year 2001-01 and that they were selling the subject goods below the cost of production, due to severe market pressures.
10. The Designated Authority on the basis of the views of Petitioners/exporters and other interested parties and on a detailed consideration of the contentions raised in the joint representation headed by Lubrizol (India) Pvt. Ltd., keeping in view all the relevant principles and factors required to be considered for making the determinations as regards the dumped imports and their causal link with the material injury suffered by the domestic industry, for the reasons detailed in the final findings, concluded that PIB originating in or exported from Brazil, Japan, Korea RP and Singapore, had been exported into India below normal value resulting in dumping; that the Indian Industry had suffered material injury on account of price under-cutting, price suppression and significant increase in the volume of dumped imports of PIB from these four countries; and that the injury was caused cumulatively by the dumped imports from these four countries. The Designated Authority, therefore, considered it necessary to impose definitive anti-dumping duty on all imports of PIB originating from these four countries. While considering whether duty lower than the dumping duty margin was sufficient to remove the injury, the Designated Authority compared the average landed price of the imports for the purpose, with the non-injurious price of the petitioner-company determined for the period of investigation and recommended that wherever the difference was less than the dumping margin, a duty lower than the dumping margin be imposed, and accordingly definitive anti-dumping duty equal to the difference between the amount of US $ 1037.77 (non-injurious price) and the landed value of imports was recommended for imposition of all grades of subject goods originating from these four countries.
Arguments on behalf of the Appellants :
11. It has been contended by the learned counsel appearing for the appellants that the petition was not made by or on behalf of the domestic industry, as the petitioner-Kothari did not represent a 'major proportion' of the total domestic output of PIB and that the application was not supported by sufficient evidence to prove dumping, injury and causal link. It was submitted that the Designated Authority had not determined injury to domestic industry but had determined injury to one domestic producer i.e. Kothari who did not constitute a major proportion of the total domestic output of PIB. It was argued that the injury to the domestic industry contemplated under the first part of Rule 11(2), was required to be an injury to the collective output of the domestic producers of the article which constituted more than 50% of the total domestic production of that article. It was also contended that significant increase in dumped imports was not established and that all of the fifteen mandatory injury parameters were not properly evaluated by the Designated Authority. It was contented that the causal link between the alleged dumped imports and injury to the domestic industry was not established, and that the reference price, i.e. non-injurious price was only of the single producer and not of the domestic industry. It was, therefore, contended that the final findings were in violation of the provisions of Rule 5 and Rule 11 read with Rule 2(b) and Clauses (ii), (iv) and (v) of Annexure II of the said Rules. The learned counsel argued that, comparison of dumped imports in absolute terms dropping in the period of investigation with the previous year was ignored, though required by rules. It was also contended that capacity utilisation was more than 100% in 1999-2000 and 2000-2001 as found in the published balance sheets given by the shareholders, but different figures were given to the Designated Authority who did not correct its earlier findings. It was then contended that the domestic prices were lowered due to fierce inter se competition between the domestic producers, as the IPCL lowered the prices and landed prices of imported goods were above the domestic selling prices at all times. It was submitted that there was no finding that the price under-cutting for the domestic producers was due to the dumped imports. The learned Counsel had initially argued that export price calculation for Japan and Singapore was wrongly made in the preliminary findings, but gave up that contention during the course of his arguments. It was submitted that the petitioner- company could not increase its prices to the level of the landed prices because of much lower prices of IPCL prevailing in the domestic market, as shown in the graph prepared by the learned Counsel. He submitted that there was a demand contraction in the period 2000-2001 and the exporters had lost more market-share than the petitioner. In response to the preliminary objection as to the maintainability of the appeals at the instance of the importers, who had not imported during the period of investigation, it was contended that both the appellants were party to the proceedings and were vitally affected by the impugned final findings and the notification, because the burden of anti-dumping duty was required to be borne by the importers. It was submitted that Lubrizol (India) Pvt. Ltd. had, in fact, imported the article within two years before the period of investigation and also thereafter and was cited as interested party during the proceedings and had also responded by answering the questionnaire meant for importers which were supplied to the appellants. He pointed out from the response to the questionnaire sent by Lubrizol (India) Pvt. Ltd. that, in 1999-2000 Lubrizol (India) Pvt. Ltd. had imported 533.14 MTS of PIB.
11.1 The learned Counsel for the appellant relied upon the following decisions in support of his contentions :
(A) National Thermal Power Company Ltd. v. Commissioner of Income Tax reported in 1998 (99) E.L.T. 200 (S.C.) was cited for the proposition that the Tribunal has jurisdiction to examine a new ground raising a question of law which arises from the facts as found by the authorities below, even though the said question was not raised before the lower authorities nor in the appeal memorandum before the Tribunal and was sought to be added later on as an additional ground.
(B) Amines Plasticizers Ltd. v. Commissioner of Income Tax was cited to point out that the Gauhati High Court held therein that if the additional ground was urged by the assessee at the time of hearing of the appeal, the Tribunal ought to have appreciated the additional ground and it would be the duty of the Tribunal to give sufficient opportunity to the other side for being heard.
(C) Ramgopal Ganpatrai & Sons Ltd. v. Commissioner of Excess Profit Tax, Bombay City , was cited for the proposition that when a statute confers a right of appeal and permits an order of the trial court to be challenged, the Appellate Court has full jurisdiction to reverse or modify that order on any ground, which is open to it in law, even on a point of law taken by itself suo motu, without being asked to do so by the appellant.
Arguments on behalf of the respondents :
12. The learned Counsel appearing for the respondent-Domestic Industry (Kothari) and the learned Counsel for the Designated Authority raised a preliminary objection that the appellants were not persons aggrieved, and therefore, the appeals were not maintainable at their instance under Section 9C of the Tariff Act. It was argued that the appellants not being importers during the period of investigation were not "interested parties" within the meaning of Rule 2(c) of the said Rules. It was submitted that an appeal under Section 9C could be filed only by those persons against whom a decision on determination has been pronounced depriving such person of something or wrongfully refusing such person something. It was submitted that only the domestic industry and/or exporter would have a right to file appeal against an order of determination made against it with reference to existence, degree and effect of any alleged dumping. It was further argued that the term 'major proportion' in Rule 2(b) of the said Rules, did not mean more than half of the total domestic production but only meant an important or a significant part of the total domestic production. Reliance was placed in support of this contention on the report of the Panel on Argentina - Definitive Anti-Dumping Duties on Poultry from Brazil, more particularly on paragraphs 7.337 to 7.344, in which it was found that it is "permissible to define the domestic industry in terms of domestic producers of an important, serious or significant proportion of total domestic production" (para 7.341 of the Report). It was further submitted that subsequent imports by the appellants will not make them interested parties and the remedy in such cases was by way of review under Section 9A(5) and Rule 23 of the Rules. He submitted that Rules 2, 5 and 11 of the said Rules are required to be read in harmony and the meaning of "domestic industry" is required to be read in a uniform manner in all these provisions, both in the context of standing for initiation of the proceedings and injury to a domestic industry. He took us through the relevant record and the findings of the Designated Authority to point out that all the injury parameters were duly considered by the authority who was fully conscious of the requirements of Rule 11 and Annexure II while deciding causal link between the dumped imports and the injury to the domestic industry. He supported the reasoning and findings of the Designated Authority and contended that the petitioner was fully supported by IPCL who manufactured the article through its job workers Gujarat Petrosynthese Ltd. (GPL) and Maharashtra Polybutenes Ltd. (MPL).
12.1 The learned counsel for the domestic industry placed reliance on the following decisions in support of his contentions :-
(A) Ahimsa Mines & Minerals Ltd. v. Designated Authority reported in 2002 (142) E.L.T. 71 (Tri. - Del.), was cited for the proposition that an appeal at the instance of the appellant who is not aggrieved by the order impugned, is not maintainable.
(B) Cyanides & Chemicals Ltd. v. Designated Authority reported in 2000 (120) E.L.T. 822 (Tribunal), was cited to point out that 'interested party' in an anti-dumping appeal was in the position of an intervener who cannot raise new grounds. It will be noticed from the said judgment that this was the contention of the senior counsel reproduced in para 5 of the judgment. The Tribunal in para 7 holding that the objection raised on behalf of the appellants was beyond their competence, rejected the same.
(C) Designated Authority v. Haldor Topsoe A/S reported in 2000 (120) E.L.T. 11 (S.C.), was cited for the proposition that when information was not furnished for no valid reason and the authority was compelled to rely on other material available to it and resort to the best judgment valuation, in such a situation the complaint of the respondent against the material relied upon by the authority cannot be countenanced (paragraph 19).
Reasons :
13. A preliminary objection has been raised on behalf of the respondent-domestic industry and the Designated Authority against the maintainability of this appeal on the ground that the appellant was not a "person aggrieved", because during the period of investigation it had no imports. It was argued that a person does not get a right of appeal and is not even an interested party by virtue of any post-investigation imports. It was also submitted that for those who come in the picture late, remedy of review lies and therefore, no appeal lies at the instance of the appellants. On behalf of the appellant, it was contended that the appellant Lubrizol was a known importer before and after the period of investigation, it had imported the product. Since the importer had to pay anti-dumping duty in India, it was vitally affected by an order imposing anti-dumping duty. It was pointed out that information was sought for the period of two years prior to the investigation period for the purpose of the trend analysis of exports, imports and price. Since the appellant was interested party and had participated in the proceedings, it was entitled to file an appeal under Section 9C against the final findings and the notification accepting them for imposing the anti-dumping duty.
13.1 It is evident from the record, that copy of the public notice dated 12-9-2001 initiating anti-dumping investigation was forwarded to the importers of the subject goods in India, whose details were made available by the petitioners, and their views were sought. A questionnaire was sent to such known importers including the appellant, as is clear from paragraph A(10) of the notification dated 12-12-2001. The appellant Lubrizol had sent its response as stated therein showing that they had imported 533.14 MTs of PIB in 1999-2000. Under the heading "views of importers", the views of the appellant were set out in para 5(ii) of that notification, as reproduced herein above. All throughout the proceedings, the appellant participated and opposed the imposition of the anti-dumping duty and the Designated Authority considered their views while making the determinations. The appellants were, therefore, parties to the proceedings before the Designated Authority. They would be persons aggrieved against the imposition of anti-dumping duty, because the anti-dumping duty would cause an additional burden on the importers wanting to import the subject goods from the subject countries.
13.2 The words "person aggrieved" are of wide import and should not be subjected to a narrow interpretation. They do not include, of course, a mere busy body, who is interfering in things which do not concern him, but they do include a person who has a genuine grievance because an order has been made which prejudicially affects his interest. Parties to the proceedings of the inferior judicial or quasi judicial forums, in relation to appeals from their proceedings, are within the expression "person interested". A person whose interests are adversely affected by the decision from which an appeal lies has a standing, to challenge such decision. The expression "person aggrieved" is not confined only to persons who can establish that they have a legal interest at stake in the making of the decision - it would also cover a person who can show a grievance which will be suffered as a result of the decision complained of, because the decision directly affects the existing or future legal rights of such person. The decision may affect the person in the conduct of business or may affect his rights against third parties. In the present case, the rules recognize the importer as an interested party and since the appellant as a known importer, was allowed all through to participate in the anti-dumping duty proceedings, he would be entitled to file an appeal being a party aggrieved by the decision imposing the anti-dumping duty.
13.3 The expression "interested party" has an inclusive definition in Rule 2(c) and includes under Sub-clause (i), inter alia, the importer of an article subject to investigation for being dumped in India. The preliminary objection is based on this definition, which takes into consideration the importer who had imported the article which is investigated. However, since the definition is inclusive, it cannot be used in the context of Section 9C of the said Act to take away the right to appeal of an importer, who participated in the proceedings and opposed the imposition of the anti-dumping duty. The Scheme of the said Act indicates that all importers would be subjected to anti-dumping duty for the dumped imports subjected to anti-dumping duty, even if they did not import during the period of investigation. The period of investigation is chosen by the Designated Authority with a view to detect whether the article identified was being dumped in the Indian market and the injury caused thereby to the domestic industry. The transactions during the period of investigation have evidentiary value for showing the existence of dumping, but when duty was imposed on the dumped imports, it obviously will apply to the subsequent imports to prevent injurious dumping and not on the imports that have taken place during the period of investigation. Therefore, an importer, who, like the appellant, Lubrizol (India) Private Ltd., had in fact participated in the proceedings and had shown past imports in response to the questionnaire and was authorised to oppose on behalf of the importers [the appellant, Castrol (India) Private Ltd.] who had signed letters of authorisation in its favour, would, in our view, be an interested party who is aggrieved by the imposition of the anti-dumping duty on all the exporters from the subject countries that would directly affect their duty liability on the imports from such countries. There is, therefore, no substance in the preliminary objection raised against the maintainability of these appeals under Section 9C at the instance of the appellants-importers, who are parties aggrieved against the orders.
14. From the arguments raised and reproduced in paragraph D-4 of the final findings, it is evident that the appellants and other members of oil industry who made a joint representation, did not raise the contention that the petitioner was not a "domestic industry" within the meaning of Rule 2(b) read with Rule 11(2) on the ground that their collective output of the said article did not constitute a major proportion of the total domestic production of the article. The contention is, however, raised now, in the context of definition of "domestic industry" in Rule 2(b) and Rule 11(2) as also Clauses (ii), (iv) and (v) of annexure 2 to the Rules which are reproduced hereunder :
2(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 producer are related to the exporters or importers of the alleged dumped article or are themselves importers thereof in which case (such producers may be deemed) not to form part of domestic industry.
(emphasis added)
11. "Determination of injury. - (1) In the case of imports from specified countries the Designated Authority shall record a further finding that import of such article into India causes or threatens material injury to any established industry in India or materially retards the establishment of any industry in India.
(emphasis added) (2) The Designated Authority shall determine the injury to domestic industry, threat of injury to domestic industry, material retardation to establishment of domestic industry and a causal link between dumped imports and injury, taking into account all relevant facts, including the volume of dumped imports, their effect on price in the domestic market for like articles and the consequent effect of such imports on domestic producers of such articles and in accordance with the principles set out in Annexure II to these rules.
(emphasis added) Annexure II Principles for determination of injury The Designated Authority while determining the injury or threat of material injury to domestic industry or material retardation of the establishment of such an industry, herein referred to as "injury" and causal link between dumped imports and such injury, shall inter alia, take following under consideration.
(i) ... (ii) While examining the volume of dumped imports, the said authority shall 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 as referred to in Sub-rule (2) of Rule 11 of the Designated Authority shall consider whether there has been a significant price under cutting by the dumped imports as compared with the price of like production 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. (iii) ...
(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 stake of the industry, including natural and (potential) decline in sales, profits, output, market share, productivity, return on investments or utilisation 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.
(v) It must be demonstrated that the dumped imports are, through the effects of dumping, as set forth in paragraphs (ii) and (iv) above, causing injury to the domestic industry. The demonstration of a casual relationship between the dumped imports and the injury to the domestic industry shall be based on an examination of relevant evidence before the Designated Authority. The Designated Authority shall also examine any known factors other than the dumped imports which at the same time are injuring the domestic industry, and the injury caused by these other factors must not be attributed to the dumped imports. Factors which may be relevant in this respect include, inter alia, the volume and prices of imports not sold at dumping prices, contraction in demand or changes in the patterns of consumption, trade restrictive practices of and competition between the foreign and domestic producers, developments in technology and the export performance and the productivity of the domestic industry."
15. Admittedly, the IPCL has supported the petition. IPCL supplied raw material to MPL and GPL who manufactured the subject product for it on job work basis. This borne out from paragraph 13 of the final findings in which it is held that M/s. Kochi Refineries Ltd. and IPCL have submitted their support to the petition for imposition of anti-dumping duty on import of the subject goods. The activity of IPCL, of conversion of C-4 into PIB on payment of conversion charges as per agreement with MPL and GPL, was clearly an activity connected with the manufacture of PIB within the meaning of Rule 2(b) of the said Rules. For the purpose of computing collective output of the article, the output of domestic producers, engaged in the manufacture of subject goods as well as the output of those engaged in any activity connected with the manufacture, as envisaged by Rule 2(b), will have to be taken into account for deciding the "major proportion" of the total domestic production. The fact that GPL and MPL were producing on job work basis for the Indian Petrochemicals Ltd. was asserted in para 3 of Part II of the petition and was not controverted. It was also stated therein that the fourth producer, BPCL produced their article for captive consumption only. IPCL was considered by the Designated Authority to be an interested party and its views were considered in paragraph 4(i) of the Notification dated 12-12-2001 as of interested party. It was stated therein that:
"M/s. IPCL one of the manufacturers of the subject goods, which supported the petition have stated that imports of Poly-Iso-Butylene have increased significantly in the past few years. The imports are so low priced that at indigenous price of feedstock and conversion cost their margins are at great stress. In the recent tenders floated by Indian Oil Corporation, exporters have quoted significantly lower price, which if they are forced to match, their margins will be eroded to such extent that viability of business will be questionable. The dumping is resulting in significant injury to the Indian industry. The situation demands immediate imposition of antidumping duty on dumped imports from subject countries."
Paragraph 11 of the final findings also records that IPCL who was selling the article produced by MPL and GPL had supported the petition and that "the petitioner, therefore, satisfies the standing of the domestic industry in accordance with the rules". The only objection that was raised in the above background as referred to in paragraph 12 of the final findings for the "importers and exporters" was the one raised by the Korean exporter Daelim, that BPCL should be excluded from the scope of domestic industry for captive consumption and therefore, "the petitioner who represents below 25% of the total production in India cannot be construed as "domestic industry". This contention was rejected as factually incorrect. In paragraph 13 of the final findings, the Designated Authority found that:
"the petitioner accounts for more than 25% of the domestic production during the period of investigation of the subject goods in India. The argument of M/s. Daelim that the petitioner accounts for less than 25% of domestic production is factually incorrect. M/s. Kochi Refineries Ltd. and M/s. Indian Petrochemicals Corporation Ltd. (IPCL) have submitted their support to the petition for imposition of anti-dumping duty on the import of the subject goods from the subject countries. M/s. Kochi Refineries and M/s. Maharashtra Polybutene have even provided information relating to their cost of production. The Authority in the preliminary findings held that the petitioner fulfils the requisite criteria to represent the domestic industry, as required under Rule 5(a) and (b) and Rule 2(b)".
Subsequent to the preliminary findings, MPL also provided information relating to cost of production through the IPCL. The Designated Authority thus considered the petitioner's company as domestic industry within the meaning of Rule 2(b). There was never any objection raised on the ground that, even if for initiation of the investigation, the petitioner's company accounted for more than 25% of the total production of the "like article" by the domestic industry, there was no "major proportion" constituted by computing the output of the petitioner, and other manufacturers supporting the petitioner including those engaged in the activity connected with the manufacture of the subject goods like the IPCL who got the product manufactured for themselves by their job workers, GPL and MPL by supplying them raw material which fact was never disputed, throughout the proceedings. The Output of GPL and MPL who were engaged for the manufacture by IPCL was, therefore, required to be computed for working out the collective output of the domestic producers in view of the support expressly given by the IPCL to the petitioner whose output was between 31% to 34% as per para 4 of their petition. The collective output of the petitioner-domestic producer engaged in the manufacture of the said article and the domestic producers, GPL and MPL who were engaged in the activity of manufacture on job work basis for the IPCL far exceeded 50% of the total domestic production. Therefore, even if a narrow meaning, as argued on behalf of the appellant, is inflicted on the expression "major proportion of the total domestic production" in Rule 2(b) so as to mean more than 50% of the total production, there is no substance in the contention now raised, which was rightly not raised, in the above background, during the proceedings before the Designated Authority.
15.1 We may note here that the words "major proportion of the total production" in Rule 2(b) defining the 'domestic industry' are also capable of being construed so as to mean significant proportion or important part of the total production which may not necessarily exceed 50%. The word "major", as per the Oxford Dictionary, means "important, serious or significant". The word "proportion", in the context, would mean share. Therefore, the expression "major proportion" would, in the context, of total production of domestic industry, mean significant or important share. Such an interpretation is clearly permissible and going by it, the share of the petitioner in the total domestic production, being more than 31%, was undoubtedly a significant or important share i.e. a major proportion thereof. The words "major proportion of total domestic production" cannot be viewed from the angle of solving a mathematical sum involving comparative measurements or size of different parts of a whole. The phrase is used in the context of the production output of domestic producers and admits of a broad interpretation so as to take in its sweep collective output that constitutes a significant or important share of the total domestic production of the article by the producers engaged in the manufacture or engaged in any activity connected with the manufacture of such article, as contemplated by Rule 2(b). The contention raised for the appellant that there was no valid determination of injury under Rule 11(2) to the "domestic industry", as defined under Rule 2(b) of the said Rules, therefore, fails because :
(i) the collective output of the petitioner and the GPL and MPL who manufactured the article on job work basis for the IPCL that supported the petitioner, being the collective output of the domestic producers engaged in the manufacture of the article and engaged in the activity connected with such manufacture, far exceeded 50% of the total domestic production, and
(ii) the words "major proportion of the total domestic production" in Rule 2(b) would mean, as per the interpretation permissible by the dictionary meanings of words "major" and "proportion", more appropriately, important or significant share in the total production which may be less than 50% so long it remains a significant or important share, in the context of the total production of the domestic industry.
16. The learned Counsel for the appellants contended that the method adopted by the Designated Authority for injury analysis was flawed and injury parameters have not been taken into account in their entirety. He submitted that the reduction in price was due to the inter se competition in the domestic market and not due to dumping. According to him, the IPCL sold the product in the market at a lower price of Rs. 35 per Kg., which compelled the original authority - Kothari to cut its prices during the investigation period, though they could have sold their product at a higher price at which the exports from the subject countries landed, as reflected from the graph prepared on behalf of the appellant and submitted to the Designated Authority. It was initially argued that, the export price for Japan and Singapore was wrongly determined in the preliminary findings and no correction was made in the final findings, but this contention was specifically abandoned during the course of the arguments, since the landed price was in fact below the NIP even in respect of the exports from these two countries.
16.1 The term 'injury' as contemplated under the Rules means material injury or threat of material injury to a domestic industry or material retardation of the establishment of such an industry. A determination of injury, for the purpose of Rule 11, is required to be based on positive evidence and involves an objective examination of the volume of the dumped imports and the effect of the dumped imports on the prices in the domestic market for like products and the consequent impact of these imports on the domestic producers of such articles.
17. The fact that the article in question was being dumped from the countries named in the final findings, as held by the Designated Authority in consonance with Rule 10 read with the principles laid down in Annexure I to the Rules, is not disputed. The appellants, however, have alleged in these appeals that the determination of injury in the final findings is flawed.
17.1 Under Rule 11(1), since the imports were admittedly from these specified countries, the Designated Authority was required to record a further finding that the imports of the article in India causes or threatens material injury to any established industry in India or materially retards the establishment of any industry in India. Rule 11(2) mandates the Designated Authority to take into account all relevant facts including the volume of dumped imports, their effect on price in the domestic market for like articles and the consequent effect of such imports on the domestic producers of such articles and make the determination in accordance with the principles set out in Annexure II to the rules which are to be considered by the Designated Authority while determining the "injury" and causal link between dumped imports and such injury. The consideration of the relevant factors for determining injury and causal link by the Designated Authority, is not a mere mechanical exercise with a check-list approach, but, a meaningful assessment of a relevant factors having bearing on the existence and consequence of injury by import of such article in the context of any established industry in India. Its is evident from the preliminary and final findings that the Designated Authority was fully aware of the principles and the factors that it was required to follow by the rules while making the determination on the issue of injury and its impact. It may well be that in the circumstances of a particular case certain factors enumerated in Clause (iv) of Annexure II of the rules are not relevant, or their relative importance may vary significantly from case to case, or that there are some non-listed factors which could be deemed relevant. We are of the view that a mere mechanical check-list approach of reproducing verbatim all factors in the determinations is not required by the principles enumerated in Annexure II to the rules, but keeping in view these principles, the Designated Authority is required to find out whether there exist any weighty factors which reasonably can lead to determination of existence of injury and its causal link with the dumped imports.
17.2 Though, initially the learned Counsel for the appellants argued that the fact that the dumped imports had dropped in absolute terms during the period of investigation as compared with the previous year was ignored by the Designated Authority though mandated in the rules, he gave up this contention as the arguments progressed and rightly so, because, the Designated Authority in paragraph 26(a) of the final findings, on the basis of information published by DGCI&S, Calcutta, did take note of the fact that the market share of imports of the subject goods from the subject countries which cumulatively was 73.60% during 1999-2000 had increased to 86.62% during the period of investigation and thus, the total dumped imports had increased by 13% during the period of investigation over the year 1999-2000. Therefore, even if there was a decline in total imports due to a sluggish demand, the share of dumped imports had increased as against the share of undumped imports, which in a sinking market would have a greater adverse impact on the domestic industry than by increase in the undumped imports.
18. Much time was devoted by the learned Counsel for the appellants to demonstrate from a graph of price trends of PIB, that it was the IPCL dive in the price during the investigation period bringing it down to Rs. 35/- per Kg., which had forced the petitioner-Kothari to fix the price around Rs. 40-41/- per Kg. and not to raise it near about the level of the landed price of the dumped imports which was around Rs. 45/- to Rs. 50/- per Kg as per the graph. We pointed out to the learned Counsel that the graph which was on record did not show the non-injurious price line. The learned Counsel, therefore, prepared a fresh graph showing the non-injurious price (NIP) which was determined at Rs. 47.29 per Kg. This exercise brought down the contention earlier canvassed that anti-dumping duty ought not to have been imposed on Japan and Singapore, because it became clear that the dumped imports from these two countries were also below the NIP and were, therefore, injurious to the domestic industry. The learned Counsel, therefore, rightly bid adieu to the contention that no anti-dumping duty should have been imposed on the imports from these two countries.
18.1 The graph prepared did not indicate the price trends of PIB imported from Brazil and Thailand. It showed that between April, 2000 and April, 2001, the import price from Korea, Japan, Singapore and European Union, was between Rs. 45/- and Rs. 50/- per kg., while the local price of IPCL and KSCL (Petitioner) was Rs. 35/- and Rs. 41/- respectively. On this basis, it was emphatically contended that there was no under-cutting of domestic prices due to dumped imports from these four countries and it was because IPCL sold the goods at Rs. 35/- per Kg., that the petitioner-Kothari was forced to sell at a price of Rs. 41/- which was lower than the price band of Rs. 45/- to Rs. 50/- per Kg. of the dumped imports. According to the learned Counsel, it was only the internal competition between the petitioner-Kothari and IPCL that had been the cause of the cut in price by the domestic industry and not the landed price of the dumped imports. The argument is based on an allegation of internal rivalry between the petitioner-Kothari and IPCL in the domestic market, which according to the learned Counsel, was a factor causing injury to the established industry, that ought to have carried weight with the Designated Authority. There is a basic flaw in this contention. It will be noticed from the price trend worked out by the learned Counsel for the appellant and attached with the modified graph, that when IPCL sold the goods between Rs. 37 to Rs. 41.35/- per Kg. during June, 1999 to September, 2000, KSCL (Petitioner) sold them between Rs. 36.22 and Rs. 40.22 per Kg. Again, between November 2001 and January 2002 the article was sold at Rs. 41/- per Kg. by IPCL and at Rs. 42.50 per kg. by KSCL (petitioner). It appears from the invoices under which IPCL is said to have sold the goods at Rs. 35/- per Kg. to the appellant, Lubrizol (India) Private Ltd. that, there was a contractual arrangement between them for supply of the subject goods over a long period of time at the rate of Rs. 35/- per Kg. stipulated thereunder which later came to be revised in the extended period of contract to Rs. 41/- per Kg. Such Individual contractual arrangement in the domestic market between IPCL (who supplied raw material for getting goods manufactured from GPL and MPL) and the appellant-Lubrizol who had no imports during the investigation period, cannot be made the basis for attributing the depressed price of Rs 41/- per Kg. of the petitioner-Kothari which was much lower than the NIP of Rs. 47.29 per Kg., to any internal rivalry. In fact, what is relevant, is the consideration of the price at which the goods were dumped and whether that was injurious on the basis of the NIP, and not the internal differences below the NIP in the local prices of the like products. The IPCL, connected with the manufacture of the subject article through GPL and MPL on job work basis, had fully supported the petition and there was no reason for it to sell the product at a price lower than the NIP but for the landed price of the dumped imports being lower than the NIP. When the domestic producers were not in a position to meet with the demand for the product and there was enough market for their total domestic production, there was no need for any cut-throat internal competition or rivalry, which, in any event, was hardly relevant in view of the principles and factors, required to be considered for determining the injury and its impact. It is, therefore, rightly held by the Designated Authority that the dumped imports from the subject countries being below the NIP had resulted in injury to the domestic industry.
18.2 It was argued that even if less than 50% of the total output of domestic industry was to be considered as a major proportion of the total domestic production, then also injury to other domestic producers whose output was equal or more than the petitioners' 31% production should have been considered by the Designated Authority. The Designated Authority did not consider injury to IPCL who was connected with manufacture on job work basis through GPL and MPL. This contention cannot be accepted because, when there was injury caused due to the price of dumped imports being lower than the non-injurious price of Rs. 47.29 per Kg., to the petitioner-producer who had to sell PIB at Rs. 41.20 per Kg., the price of Rs. 35/- per Kg. at which IPCL sold the article was obviously a more injurious price. Moreover, since the data was made available by the petitioner whose output constituted a major proportion of the total domestic production, the Designated Authority was fully justified in relying on the facts which were available on record.
19. The tender which was floated by the IOC was opened during the period of investigation on 19-7-2001. The export prices quoted by the exporters for procurement of 5200 MTs of the subject product were much lower than the NIP and the prices offered by the domestic industry. Since the tenders were opened during the period of investigation disclosing dumped prices at which the exporters committed to offer the goods, the domestic industry was injured not only by loss of contract but there arose a real threat of material injury which also is to be considered as "injury", as defined in the opening part of Annexure II to the rules. Since such threat of injury became a real, in view of the firm offers made below the non-injurious price in the tenders by the exporters, the Designated Authority rightly took that aspect into consideration in paragraph F(6)(iii) of the final findings along with the other relevant factors.
20. It is evident from the impugned final findings, particularly paragraphs 24 to 27 that, the Designated Authority was fully conscious of all the relevant principles and factors, required to be considered under Rule 11 and Annexure II to the rules for injury determination and the causal link and the determination had been made on the basis of the relevant parameters. The Designated Authority has rightly found that the total dumped imports had relatively increased by 13% during the period of investigation. The total production of the petitioner company of the subject goods during 1999-2000 was 6111 MTs which decreased to 5648 MTs during the period of investigation representing a decrease of about 7.58%. The total sales volume of the petitioner decreased by about 18.38%. The average capacity utilisation of the petitioner also decreased to 75.31% during the period of investigation. During the last five months' period of investigation, the average sales realisation for the petitioner had drastically decreased. The average cost of production of the subject goods had substantially increased during the period of investigation. The increase in the sales realisation during the earlier period did not compensate the increase in cost of production during the same period over the previous year. During the period of investigation, the petitioner had incurred heavy losses from the subject goods. The closing stock of the domestic industry during the period of investigation increased by 351% over the previous year of 1999-2000. On consideration of the relevant factors, as enumerated in paragraphs 26 and 27 of the final findings and the relevant record, we are satisfied that the Designated Authority had rightly concluded that, the domestic industry had suffered material injury from the dumped imports, that the parameters cumulatively indicated that the petitioner had suffered material injury, and that the "injury" had been caused due to the dumped imports of the subject goods. The contentions raised on behalf of the appellants cannot, therefore, be accepted.
FINAL ORDER
21. We, accordingly, hold that the conclusion reached by the Designated Authority in the final findings for recommending imposition of antidumping duty on imports from the subject countries, was fully justified and the impugned final findings and the Notification issued by the Central Government on the basis thereof, are legal and valid. Both these appeals are, therefore, dismissed.
(Pronounced on 28-7-2005)