Customs, Excise and Gold Tribunal - Delhi
Andhra Petrochemical Ltd., Sasol ... vs Designated Authority And Ministry Of ... on 13 April, 2006
ORDER R.K. Abichandani, J.
Facts:
1. These four appeals which have been filed under the provisions of Section 9C of the Customs Tariff Act, 1975 against the notification and the final findings, by which anti-dumping duty was imposed on acyclic alcohols specified in the notification, exported from the countries mentioned therein and imported into India at the rates specified in the corresponding entries shown in the table contained in the notification, to the extent that the respective appellants have felt aggrieved against the impugned final findings and the notification issued on the basis thereof by the Central Government in exercise of the powers conferred by Sub-section (1) read with Sub-section (5) of Section 9A of the Customs Tariff Act, 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.
2. In its final finding, the Designated authority had come to the conclusion that acyclic alcohols (Oxo Alochols), namely, Normal Butanol (NBA), 2-Ethyl Hexanol (2-EHA), Iso Butanol (IBA), Sabutol and Octanol had been exported to India from the subject countries below their normal value and that the domestic industry had suffered material injury which had been caused cumulatively by the dumped imports from the subject countries. It was held that it was considered necessary to impose definitive antidumping duty on the forms of acyclic alcohols (Oxo Alcohols), including those forms held as "like article", where there was either evidence of dumping of the specific forms or of other forms held as "like article" during the period of investigation. The designated authority accordingly recommended imposition of anti-dumping duty on the imports of the following forms/types of acyclic alochols from subject countries in order to remove the injury to the domestic industry:
(i) Normal Butanol (NBA)
(ii) 2-Ethyl Hexanol (2-EHA),
(iii) Iso Butanol (IBA),
(iv) Sabutol
(v) Octanol The designated authority proposed that definitive anti-dumping duties be imposed on the subject goods originating in or exported from the subject countries being cleared under Tariff Heading 2905 of the Schedule I of the Customs Tariff Act at the anti-dumping duty amounts mentioned in Col.9 of the table contained in the final findings.
3. Appeal No. C/599/03 has been filed by the domestic industry praying that the dumping margin in respect of exports of NBA from South Africa and Malaysia and IBA from Singapore be re-determined and antidumping be imposed in respect of all "exempted types"; to hold that exclusions of Malaysia and South Africa from the scope of anti-dumping duty on NBA, Singapore from the scope of anti-dumping duty on INA and IBA are incorrect, and modify the final findings notified by the respondent No. 2 and anti-dumping duty imposed by the respondent No. 1 in respect of these alcohols; hold that anti-dumping duty is required to be extended to all like forms of the product and impose duty on Iso Octanol, Nonanol and Iso Nonanol, and duty on Sabutol from South Africa be enhanced appropriately.
4. Appeal No. C/606/03 has been filed by an exporter while Appeal Nos. C/609/03 and C/610/03 have been filed by the importers.
4.1 In Appeal No. C/606/03 which has been filed by an exporter (Sasol Chemicals Industries Ltd.) it has been prayed that the impugned notification and the final findings be set aside in so far as they apply to the appellants and the product Sabutol, and order that Sabutol and IBA from South Africa be excluded for the purposes of imposition and modify the impugned notification accordingly.
4.2 In Appeal No. C/609/03 the importer (Indian Plasticizer Manufacturers Association) have prayed for setting aside the impugned final findings dated 29.7.2003 and the impugned notification dated 1.10.2003 imposing anti-dumping duties on the imports of certain types of acyclic alcohols originating in or exported from Brazil, Rumania, Malaysia, Singapore and South Africa and allow the appeal with full consequential reliefs. Alternatively, it is prayed that the impugned final findings and the resultant notification levying the anti-dumping duties be modified so as to: remove the anti-dumping duty on those categories of alcohols for which dumping margin has not been determined or cannot be determined; remove the anti-dumping duty on octanol and sabutol as these alcohols are not manufactured in India; exclude from the purview of product under consideration nonanol, Iso nonanol, octanol and sabutol as there is no domestic industry that manufactures these alcohols; and remove the retrospective effect of the final anti-dumping duty.
4.3 In Appeal No. C/610/03 the importer [Lubrizol India (P) Ltd.] has prayed for the same reliefs, as in Appeal No. C/609/03.
5. The initiation notification dated 31.1.2002, was issued in respect of anti-dumping investigation concerning import of the subject articles from Singapore, Brazil, Rumania, Malaysia and South Africa on the basis of the petition filed by National Organic Chemicals Industries Ltd. (NOCIL), Mumbai, and Andhra Petrochemicals Ltd. Hyderabad alleging dumping of certain types of acyclic alcohols from these countries into India and requesting for anti-dumping investigations and levy of anti-dumping duties.
5.1 The product involved in the petition was the following types of acyclic alchols and their halogenated, sulphonated, nitrated or nitosated derivatives (commonly known as Oxo alochols):
(i) Normal Butanol (NBA) or N-Butyl Alcohol, Butan-1-01,
(ii) 2-Eethyl Hexanol (2-EHA)
(iii) Iso Butanol (IBA) or Butan-2-o 1
(iv) Sabutol
(v) Hexanol
(vi) Haptanol
(vii) Octanol and Iso Octanol
(viii) Nonanol and Iso Nonanol
(ix) Decanol and Iso Decanol
(x) Mixtures of above 5.2 The petitioners had claimed that the goods produced by them were either identical to the subject goods being imported or had characteristics closely resembling to the goods produced, originating in or exported from the subject countries. The petitioners claimed that the domestic industry was producing NBA, IBA and 2-EHA. They sought for inclusion of other types of acyclic alcohols though not imported into India during the investigation period on the ground that these types of alcohols are comparable to the type of Alcohols being produced by the domestic industry and that they closely resembled in respect of their characteristics. It was claimed by the petitioner domestic industry that there was a great amount of substitutability between these various types of alcohols and that all these acyclic alcohols are produced from common raw material olefins and are utilized for similar end use, largely for production of plasticizers. These acyclic alcohols are nothing but industrial alcohols with different carbon numbers. These alcohols are used to form esters (such as Phthalates) for plasticizing vinyl and other resins. They are also used as solvents, acyclic alcohols are classified under sub-headings 2905.13, 2905.14, 2905.16, 2905.17 and 2905.19 of the main Heading 29.05 of Schedule I of the Customs Tariff.
5.4 According to the petitioners (domestic), NBAA, IBA, 2-EHA and Sabutol were exported to India in the period of investigation. The domestic industry is producing IBA, NBA and 2-EHA types of subject goods. Sabutol was included because it was comparable to IBA/NBA which were produced in India. The other types of subject goods, namely, Hexanol, Heptanol, Octonol and Iso Octanol, Nonanol and Iso Nonanol, Decanol and Iso Decanol though not imported in India during the period of investigation were included into the scope of investigations because they were comparable to 2-EHA in terms of their product characteristics, such as physical and chemical characteristics, manufacturing process and technology, functions and uses, product specifications, distribution and marketing and tariff classification. According to the domestic industry, these types of subject goods are "like articles" to the types imported in India and that though various types of alcohols are required for specific end applications, there is a great amount of substitutability between various of types of alcohols in terms of product characteristics. It was claimed that the fact that different types of plasticizers are produced using different types of alcohols did not imply that these alcohols were different products. Plasticizers can be broadly divided into two categories based on their specific end applications, namely, general purpose plasticizers and speciality plasticizers. The general purpose plasticizers are Di Octyl Phthalate (DOP) and Di Iso Octyl Phthalate ((DIOP), and find major market in the manufacture of films, leather cloth, cables, foot-wear, flooring tiles etc. Dibutyl Phthalate (DBP) and Di Iso butyl Phthalate (DIBP) are used as substitutes for DOP and DIOP in India. DOP and DIOP are produced from 2 EHA and Iso Octanol respectively, whereas DBP and DIBP are produced from normal Butanol and Iso Butanol. These DOP, DIOP, DBP and DIBP are general purpose plasticizers. Specialty Plasticizers find application in the manufacture of cables which can withstand high temperatures as they give improved electrical insulation properties as well as high temperature performance. Di Iso Nonyl Phthalate DINP) and Di Iso Decyl Phthalate (DIDP) are speciality plasticizers. In addition to the production of various types of plasticizers, which is the major consumption area for subject alcohols, they find application in the paint industry as a solvent in nitrocellulose lacquers and thinners and as an intermediate in the manufacture of acetates, in pharmaceuticals, lube oil additives and acrylates. According to the domestic industry, the various subject alcohols thus perform the same function and are used for closely resembling end products. The subject alcohols are classified under Customs Chapter 29 and they fall under Heading 2905.
5.5 On behalf of the importers the Indian Plasticizers Manufacturers Association opposed the petition of the domestic industry on the ground that most of the problems faced by the Oxo alcohol manufacturers are not related to import of Oxo alcohols into India and that they are related to non-availability of raw materials mounting transportation costs due to locational disadvantages etc. According to them, only three types of alcohols were produced by the domestic industry, namely, NBA, IBA and 2-EHA and therefore, the product coverage should be restricted to only three types of alcohols. Moreover, Sabutol cannot be equated to IBA, or NBA. While IBA and NBA are produced following Oxo process, Sabutol is obtained by coal carbonization process and it is a by-product. Furthermore, Sabutol is not being manufactured in India and should be excluded from the scope of the investigations. It was also contended that no anti-dumping duty could be imposed on Iso Butanol, Iso Octanol and Iso Decanol as there was no domestic industry which manufactured these types of alcohols. The exporters also contended that all the products which were not manufactured in India, should be excluded from the purview of the investigation. According to the view of the Indian Plasticizers Manufacturers' Association, the petitioners appeared to treat all plasticizers as a homogenous product presuming that any type of alcohol may be used in the production of every plasticizer. According to them, there are different varieties of plasticizers and one variety cannot be used as a substitute for another. Raw material for one plasticizer is different from the raw material for another plasticizer and the end uses of one plasticizer are also different from that of another plasticizer. Further, Iso Octanol and Iso Decanol were manufactured earlier by M/s. Indo Nissan which closed down three years back and they were not petitioners in the investigation. After the closer of Indo Nissan, there were no producers for Iso Octanol and Iso Decanol. All these other types of alcohols are neither produced in India nor they form substitutes for the three products produced in India and therefore, they should be excluded from the product definition. As regards Sabutol, it was also contended by Sasol that its traditional use was not to manufacture plasticizers. Any use of Sabutol for the purpose of plasticizers is a recent development. Plasticizers made from Sabutol did not have the traditional plasticizing efficiency to plasticizers, such as DOP, DBP and DIBP which are manufactured from 99% pure 2 EHA, 99% pure NBA and 99% pure IBA, and thus its application was limited. The use of Sabutol for the manufacture of plasticizers is a cumbersome and detailed process which required specialized technical expertise.
5.6 In the preliminary findings, the authority after examining the submissions made by the petitioners, importers, exporters and other interested parties noted that only the following types of acyclic alcohols produced were imported during the period of investigation:
(i) Normal Butanol (NBA) or N. Butyl Alocohol Butan-1-01
(ii) Ethyl Hexanol (2- EHA)
(iii) Iso Butanol (IBA) or Butan-2-01
(iv) Sabutol
(v) Octanol In paragraph 6.3 of the preliminary finding, the authority observed as regards NBA, 2-EHA and IBA which were manufactured in India that, "there was no argument from any interested party disputing that the types of acyclic alcohols being imported and being investigated are not alike articles to those being produced by the domestic industry". It was held that it was a known fact that the types of acyclic alcohols being produced by the domestic industry are not identical or like in all respects to Sabutol, one of the products under investigation. However, in the absence of an identical product the next parameter for determination, was, whether the products being produced by the domestic industry, which although not alike in all respects, have characteristics closely resembling those of the articles under investigation. It held that Sabutol contained 65% to 69% of Normal Butanol or Normal Butyl Alcohol (NBA), as per the own admission of the exporter Sasol. The range of specific gravity of Sabutol, as per the commercial literature was considered. Sabutol was claimed to be a mixture of NBA and IBA and secondary pentanol. It was held that the majority ingredients of Sabutol resembled to those being produced by the domestic industry NBA and IBA. Moreover, Sabutol was mentioned in the commercial literature of the exporter Sasol in the range of the products under the heading 'Oxo Alcohols'. The authority, therefore, found that Sabutol was a "like article" to the products being manufactured by the domestic industry.
5.7 As regards the octanol, it was observed that octanol and 2-EHA were used interchangeably, as was seen from the response of the Brazilian exporter as well as some of the trade related data. It was, therefore, held that octanol was a "like article" to the products being produced by the domestic industry.
5.8 As regards Nonanol and Iso Nonanol, the authority observed that as per the technical literature furnished by the petitioner showing the characteristics of these two types as a resembling those of 2-EHA, and the article appearing in Asian Chemical News (25th February, 2002 issue) showed that their technical characteristics closely resemble to 2-EHA, and that DOP the plasticizer produced from 2-EHA had substitutability with DINP the plasticizers produced from Iso Nonanol. It was held that Nonanol and Iso Nonanol were "like articles" within the meaning of Rule 2(d) of the rules, 5.9 The authority held that at the time of initiation of investigation in the instant case the petitioners had supported their claim that the types of alcohols being included in the investigation are "like article" to the products being manufactured by the domestic industry. The designated authority upon being satisfied with the prima facie evidence as regards the requirement of Rule 2(d) had initiated the investigations in respect of ten types of acyclic alcohols. It was held that there "may" be no dispute in the scope of the present investigation as regards the product involved which covered the ten types of Oxo-Alochols.
5.10 The authority in the light of examination of views and records discussed in the preliminary findings found that the following types of Oxo-Alcohols be treated as "like article":
(i) Normal Butanol (NBA) or N-Butyl Alcohol, Butan-1-01
(ii) 2-Ethyl Hexanol (2-EHA)
(iii) Iso Butanol (IBA) or Butan 2-01
(iv) Sabutol
(v) Octanol and Iso Octanol
(vi) Nonanol and Iso Nonanol 5.11 The authority restricted its recommendations in the preliminary findings to the aforesaid six types of Oxo Alcohols. The authority found it appropriate to cumulatively assess the effect of subject goods on the domestically produced like article as the export prices from the subject countries were directly competing with the prices offered by the domestic industry prices in the Indian market and found that there was a cumulative effect of injury by import of subject goods in the domestic industry. It was found that the imports from subject countries increased in absolute terms during the period of investigation. They also grew significantly in relation to total imports of subject goods and also in relation to total Indian demand of subject goods. It was held that the imports of Sabutol tend to displace the demand for domestically produced Oxo-Alcohols and that importers were using Sabutol as a cheaper substitute for Oxo-Alcohols produced domestically. The authorities held that the imports of Sabutol and Octanol, though not produced by the petitioner company had caused injury to the domestic industry.
5.12 It was noted in paragraph 18 of the preliminary findings that the petitioner Andhra Petrochemicals Ltd. had suspended its operations from 22.1.2001 to 4.7.2001, due to uneconomic market pricing which had adversely affected the capacity utilization of the company and demonstrated suffering of injury for having not been able to achieve full capacity utilization during the entire period of investigation. The authority concluded in paragraph 20 of the order that domestic industry had suffered material injury and there was imminent threat of injury. As regards causal link, it was held that the increase in quantum of imports from subject countries resulted in the curtailment of market share of the petitioners. Sabutol and Octanol though not produced by the domestic industry were found, on the basis of close resemblance of characteristics, to be like articles to the domestically produced Oxo alcohols and it was held that they were commercial substitutes and their import had the effect to displace the demand of domestically produced alcohols.
5.13 It was concluded in the preliminary findings that acyclic alcohols, namely, NBA, 2-EHA, IBA, Sabutol, Octonol and Iso Octonol had been exported to India from the subject countries below their normal value the domestic industry had suffered material injury that had been caused cumulatively by the dumped imports from the subject countries and there was a threat of injury due to imminent imports of like article in large quantities.
5.14 On the basis of the preliminary findings, provisional duty notification was issued by the Ministry of Finance on 5.9.2002, imposing anti-dumping duty with effect from 4.3.2003 on the said acyclic alcohols which were imported from Brazil, Malaysia, Romania, Singapore and South Africa, as tabulated in the notification.
6. The authority provided an opportunity to the interested parties to present their views orally in two public hearings held on 7.10.2002, and 4.4.2003 and the parties presenting their views were requested to file their written views expressed. In accordance with Rule 16 of the said rules, the essential facts/basis considered for the findings were disclosed to known interested parties on 23.5.2003 under a disclosure statement and comments received on the same were duly considered. The final findings were published under the Notification dated 29.7.2003. As regards the issue of product under consideration and like article, the authority was of the view that specific ten types of acyclic alcohols were included in the product under consideration as part of the main product i.e. acyclic alcohols. The fact that the ten types fall under the description of acyclic alcohols and their prima facie similarity was sufficient enough to include them within the scope or the product under consideration. The authority, therefore, did not consider it improper to have included ten types of alcohols within the description of the product involved under investigation, though some forms or types of these alcohols had not been imported during the period of investigation. The authority took into account the following criteria for deciding the issues on like article:
(i) Technical and Commercial substitutability;
(ii) Functions and uses of the products;
(iii) Resemblance of the physical and/or chemical properties;
(iv) Users' perception for switching over from one product to another;
(vi) Similar production processes; and
(vi) End-product substitutability.
6.1 It was held that the fact that Octanol, Nonanol, Iso Nonanol and Sabutol had different chemical properties from 2-EHA, IBA and NBA produced by the domestic industry was itself not a decisive factor. The other criteria like functions and uses, commercial and technical substitutability, user's perception in switching over from one product to another, end product substitutability and production processes were also considered, and it was found that Nonanol, Iso Nonanol, Octonol and Sabutol were commercial substitutes of the domestically produced Oxo Alcohols though they had dissimilar chemical properties, yet they were close enough to be bracketed as acyclic alcohols. Moreover, the user had switched over from one form of alcohol to the other form in the case of Nonanol, Iso Nonanol and Sabutol as a preference to the domestically produced alcohols. As regards Octonol, it was noted that some of the Indian user had placed order on the Indian domestic producer giving the description as 2-EHA (Octonol). The exports of Octonol from Romania had been cleared by the importer describing them as 2-EHA on the bill of entry. The authority, therefore, confirmed its view that NBA, 2-EHA, IBA, Sabutol and Iso Octonol, Nonanol and Iso Nonanol which were forms of acyclicalcohol in the product under consideration were like article to the domestically produced Oxo Alochol, namely, 2-EHA, IBA and NBA.
6.2 The authorities on the basis of the material on record determined the dumping margin, as tabulated in paragraph 33 of its final findings which showed that import of NBA from Malaysia and South Africa were de-minimus.
6.3 After examining the relevant indices for injury analysis, the authority concluded that the domestic industry had suffered material injury on account of significant increase in the volume of dumped imports from the subject countries, significant price undercutting and price suppression. It was held that the price effect of the dumped imports had caused suffering of financial losses by the company. The domestic industry was not able to raise funds for capital investment and continued to suffer cash losses and negative return on investment. It was of the view that the improvement in some of the parameters, namely, production and sales could possibly be due to the imposition of anti-dumping duty on imports from other sources. It was, however, held that since there was no evidence of dumping of Iso Nonanol during the period of investigation and sufficient justification as per the requirements of rules (Annexure II) paragraph (vii) had not been brought out before the authority, the case had not been conclusively established for a threat of material injury to the domestic industry on account of the alleged imports of Iso Nonanol subsequent to the period of investigation. It was, therefore, held that despite the view taken in the preliminary findings with regard to imposition of anti-dumping duty on Iso Nonanol, the authority was not inclined to continue imposition of anti-dumping duty on Iso Nonanol. As regards the causal link, the authority observed in paragraph 50 of its findings that the material injury to the domestic industry was caused by dumped imports from the subject countries. It was held that the increase in quantum of imports from subject countries resulted in curtailment of market shares of the petitioner and that increase in the dumped imports of subject goods had the effect of undercutting price of the domestic product forcing the domestic industry to sell below its fair selling price. The domestic industry was not in a position to realize its fair selling price and therefore, incurred losses. It was held that material injury was caused to the domestic industry by the dumped imports from the subject goods. It was concluded that acyclic alcohols NBA 2-EHA, IBA, Sabutol and Octonol had been exported to India from the subject countries below their normal value, that the domestic industry had suffered material injury and that the material injury had been caused cumulatively by the dumped imports from subject countries. Imposition of anti-dumping duty was, therefore, recommended on the imports of five forms/types of acyclic alcohols NBA, 2-EHA, IBA, Sabutol and Octonol) from subject countries in order to remove injury to the domestic industry.
6.4 The anti-dumping duty was accordingly imposed by the Notification dated 1.10.2003, as detailed in the said notification with effect from 5.9.2002, being the date of imposition of the provisional anti-dumping duty.
Arguments on behalf of the Domestic Industry:
7. The learned Counsel appearing for the domestic industry submitted that the designated authority has misdirected himself by proceeding on the basis that it can only levy duty on product types that are actually exported to India from a given country even though he found that other product types are being dumped by that country. It was submitted that proper procedure which was required to be followed was to work out one weighted average dumping margin for all the product types put together after taking into account individual dumping margin of each product type and without zeroing. According to him, the designated authority should not have worked out dumping margin for product type not actually exported to India by an exporter from a country. It was further submitted that in the absence of non-confidential summary submitted by the exporters especially Sasol and BASF Malaysia, all submissions made after the preliminary finding should have been omitted from consideration and these exporters should have been held to be non-co-operative under Rule 6(8) of the said rules. He also submitted that in the case of IBA from Singapore packing costs should have been reduced from the export price and this would have the effect of reworking the dumping margin.
8. It was submitted that the designated authority has acted inconsistently by imposing anti-dumping duties on some alcohols found to be like products that were not imported from some countries but not on others that were also found to be like products. The learned Counsel argued that duties on imports of Nonanol and Iso Nonanol ought to have been recommended because they were held to be like articles to the imported products and the Oxo Nonanol domestically produced. It was pointed out that the designated authority determined dumping margin for NBA, IBA and 2-EHA from Brazil which were exported to India and had also imposed duties on Octonol which was not exported to India. He, therefore, ought to have imposed duties on Nonanol and Iso Nonanol since they were like products. It was further pointed out that the designated authority had determined dumping margin for NBA and 2-EHA from Malaysia, which were exported to India and had also imposed duties on IBA which was not exported to India. Likewise, it had determined dumping margin for NBA, IBA and Sabutol from South Africa which were exported to India and had also imposed duties on 2-EHA and Octonol which were not exported to India. It had determined dumping margin only for 2-EHA and Octonol from Romania which were exported to India and had imposed duties on NBA and IBA which were not exported to India. In the same way, it had determined dumping margin for NBA and 2-EHA from Singapore which were exported to India and had also imposed duties on Octonol which was not exported to India. In case of Sasol, an exporter from South Africa, the designated authority had determined dumping margin for IBA, but did not recommend the imposition of duties on IBA exported from Sasol. The learned Counsel submitted that once the product under consideration had been defined in a broad way all its forms or types must be included within the purview of antidumping duties so long as they are found to be all "like articles" under the limb of the definition of 'like article' in Rule 2(d) of the rules. It was argued that the product under consideration must be identified on the basis of the definition of a like product. Reliance was placed on Bed Linen case (WT/DS/141/AB/R) for pointing out that the appellate body while interpreting Article 2.4.2 of the Anti-Dumping Agreement held that having identified the product which was clearly identified cotton type bed linen as the product under investigation, which fact was undisputed in the appeal, the European Communities were bound to treat that product consistently thereafter in accordance with that definition, and that, with respect to Article 2.4.2 the EU had to establish, "the existence of margins of dumping" for the product - cotton type bed linen- and not for the various types or models of the product. It was held that there was nothing in Article 2.4.2 or any other provision of the Anti-Dumping Agreement that provided for the establishment of "the existence of margins of dumping" of the types or models of product under investigation; to contrary, all references to the establishment of "the existence of margin of dumping" are references to the product that is the subject of the investigation. It was held that whatever the method used to include the margin of dumping, the margins must be and can only be established for the product under investigation as a whole. On the basis of this appellate body report, it was contended that when some products are dumped and some are un-dumped, the duty of the investigating authority is to arrive at a single anti-dumping margin and impose one single duty for the product under consideration irrespective of the number of product types. Reliance was also placed on the WTO Panel Report dated September 28, 2001 in Argentina Ceramic Floor Tiles from Italy WT/DS 189/R, for contending that when some products are dumped and some are undumped, the duty of the investigating authority is to arrive at a single dumping margin and impose one single duty for 'product under consideration' irrespective of the number of product types dumped or undumped into a market. In that case, the product under investigation was ceramic tiles of any size and it was held that the authority was required to establish an individual dumping margin for each exporter of that product as a whole and not for each size-category. The panel cautioned that it is important not to confuse the usefulness of grouping by size, model, type for the purpose of making a fair comparison under Article 2.4 and the requirement under Article 6.10 to determine an individual margin of dumping for the product as a whole. It was submitted that product under consideration in the present case was "acyclic alcohols" and not IBA, NBA, 2-EHA or Sabutol, IBA. NBA and various forms of acyclic alcohols have become so popular that they are known in the market place by their specific forms rather than as acyclic alcohols, according to the learned Counsel. He also placed reliance on Kajaria Tiles' case (Final Order No. 1/2006-AD in Appeal No. 367/03-AD), for pointing out that one of the most important tests, as held therein, was whether the product type concerned was technically and commercially substitutable with the product being manufactured in India. It was submitted that all producers described various types of acyclic alcohols as Oxa alcohols. Even Sasol was described Sabutol as Oxo alcohol. Product list of various producers described various functions of Oxo alcohols "for production of plasticizers" and not for "production of DOP/DINP, DBP/DIPB". It was also submitted that various consumers had interchangeably consumed Deconol, Octonol, EHA, INA, which clearly established substitutability. Moreover, the association of the consumers was named after "plasticizers" and the consumers did not refer themselves as producers of DOP, DINP etc. It was submitted that since the designated authority had confirmed in the final findings its reasoning that nonanol and Iso nonanol were "like products", to the products NBA, IBA and 2-EHA, manufactured by the domestic industry, duty ought to have been imposed on them. It was submitted that there were numerous cases where anti-dumping duty was imposed on products not imported in the investigation period. It was then argued that the domestic industry had suffered material injury caused by the dumped imports. Indo Nissan Chemical Industries Ltd. Bombay suspended production since 1999 during the previous investigation. Subsequently, NOCIL also suspended production of the subject goods during the present period of investigation. It was only imposition of anti-dumping duties in the previous investigation that permitted the appellant domestic industry Andhra Pradesh Petro Chemicals to survive. It was submitted that increase in the market share of the domestic industry should be seen in the light of the past measures. Even when the domestic industry was improving, it could not fully recover due to fresh dumping from the subject countries. It was submitted that the imports from subject countries were causing significant price undercutting of the like articles produced by the domestic industry which prevented the domestic industry from realizing fair price for its products resulting in injury in the form of profit, less cash flow and return on investment.
Arguments on behalf of the Importers and Exporters:
9. The learned Counsel appearing for the importers in these appeals and the exporter argued that the authority should not have initiated investigation in respect of the products for which the petitioner itself showed that there was no dumping margin. The authority had to follow the provisions of Rule 5(3) of the said rules while making such investigation. It was further contended that imposition of anti-dumping duty or initiation in respect of products not imported into India was violative of Section 9A(1) of the Act. It was contended that unless article under investigation was identified, the question of determination of like articles did not arise and the designated authority had made wrong determination of the like articles and virtually put cart before the horse. The learned Counsel tried to demonstrate from the record that the injury analysis made by the designated authority was flawed and the casual link analysis was also flawed. It was also submitted that there was a gap from 5.3.2003 to 30.9.2003 during which no anti-dumping duty could have been levied. It was submitted that retrospective levy of final anti-dumping duty covering interregnum period was illegal. The learned Counsel further argued that the demonstration of the causal relationship between dumped imports and injury was based on an examination of relevant evidence and the finding was contrary to facts on record. The evaluation of injury parameters and the determination of material injury to the domestic industry were not objective. It was submitted that the finding that the increased imports resulting in curtailment of market share of the petitioner was factually incorrect. It was pointed out from the table in paragraph 45 of the final findings that it was stated therein that the market share of the domestic industry increased from 27% to 31.55% to 42.76% in the period of investigation and that the domestic industry had significantly increased the market share. Even then, in paragraph 46(f), the authority had categorically recorded that the market share in demand, of the domestic industry had increased during the period of investigation. The other producers had also increased the market share 24% to 33.59% while imports lost market share from about 43% to about 27%. It was submitted that there was thus no curtailment in the market share of the domestic industry. Therefore, the finding that the increased imports resulted in curtailment of market share of the domestic industry was contrary to the facts on record. It was then argued that in the annual report of the domestic industry for the year 2000-01, it was stated that the plant operations were suspended from January 22, 2001 till 4th July, 2001 due to operational constraints and uneconomic market pricing. The domestic industry had increased its capacity from 30,000 MTs to 36,000 MTs in 2000-01 as per the annual report. During the ten months of operation till 22nd January, 2001, they produced 34,437 Mts of oxo alcohols as against the installed capacity of 30,000 MTs (i.e. the proportionate capacity for ten months). The annual report specifically stated that the company earned a cash profit of Rs. 432.14 lacs in that year. It was submitted that a combined reading of the information led to inescapable conclusion that the stoppage of production from 22.1.2001, was not due to uneconomic market pricing. It was submitted that company was earning cash profits, and it would not suspend operations since the cash profits go towards set-off of non-cash expenses like depreciation. Therefore, operational constraint could only be the reason for suspension. It was submitted that the conclusion of the authority that the suspension was due to uneconomic market pricing was an incorrect finding of fact. Even the conclusion that closure had adversely affected the capacity utilization of the company, was factually wrong, erroneous since the domestic industry had achieved 115% capacity utilization from April 2000 to January 2001, and thereafter, operation was suspended, as a result of which they could not achieve even higher sales and market share. It was submitted that the suspension of operation of the company was due to operational constraint, namely non-availability of propylene which was the raw material. Therefore, injury caused by such operational constraint during five months out of the fifteen months' period of investigation, cannot be attributed to dumping. It was pointed out that as per the annual report of the domestic industry, the profit margin was low mainly due to higher propylene prices. The causal link analysis was, therefore, flawed on the ground that there was curtailment of market share and that operational constraint was the reason for the injury. The build up of stocks could not be the reason for suspension of operations, as the stock was liquidated by 31st March, 2001 and the sale quantity in April-June, 2001 was only 78 MTs. It was submitted that the imports were attracted because of suspension of operation. This was demonstrated from the fact that the total import in POI (12,014 MT) was made up of 3766 MTs in the year 2000-01, and 8248 MTs from April to June 2001. In the year 2000-01, when the domestic industry operated at full capacity, the imports were low at 3766 MTs as against 5262 MTs in the previous year. However, consequent on suspension of operation from 22.1.2001 to 4.7.2001, imports came in. This explains the increased import of 8348 MTs in April-June 2001. Thus the increased imports were caused by the suspension of operations and not vice versa. It was submitted that this established that the causal link was totally incorrect. It was then contended that there was a contraction in demand. There was a fall of about 20% in demand in the POI as compared to 1999-2000. It was submitted that in a period when the demand fell by 20%, the market share of the domestic industry increased by over 11%, and the evaluation made by the designated authority was, therefore incorrect. As regards price undercutting, it was submitted that mere price depression/suppression was not sufficient and that it should be a significant one. The data shows that the suppression/depression in price which had reduced from 69.93% to 2.5%, was not significant suppression. The designated authority did not consider whether there had been a significant price undercutting, as contemplated in para (ii) of Annexure II to the rules. It was then pointed out that the domestic industry had consistently suffered loss during the past few years and it was able to reduce its losses significantly. As per the Director's report for the year 2000-01, the company had earned cash profit of Rs. 432.14 lacs as against the cash loss of Rs. 698.93 lacs in the previous year. It was submitted that there was no analysis made by the designated authority as to how this loss could be attributed to the dumped imports. It was also submitted that there was an increase of the landed value of the products by 75% in the POI. It was also pointed out that despite suspension of operations for five months of the fifteen months period of investigation, the company was able to earn cash profit and also increase its capacity. Referring to the finding of WTO Appellate Body in the case of "US-AD Measures on Certain Hot-rolled steel products from Japan" in which the Appellate Body held that Article 3.5 of ADA envisages the need to separate and distinguish the injurious effects of different causal factors (paras 228-233 of the report), it was submitted that the market share of the domestic industry had increased to 73.36% from 55.81% and thus, despite the fact that the domestic industry had suspended its operations for five months due to non-availability of propylene, it was able to increase its market share. It was also submitted that the sales of domestic industry had significantly increased despite the fact that the operations of the company were suspended for five months, but for which they would have increased further. It was pointed out that as per the final finding NBA from Malaysia and South Africa had not been dumped and IBA had not been dumped from Singapore. Since the volumes of these three products were not dumped, they should have been excluded in evaluating the effect of dumped imports. By not doing so, the injury of causal link analysis, got vitiated. Reliance was placed on the Appellate Body Report on "Thailand-H beam from Poland" (WT/DS 122/AB/R) in support of the contention that the authority had not evaluated as to how and why, in the light of positive trends in many injury factors, the negative trends outweighed the positive and domestic injury was injured thereby. It was also submitted that the petition itself showed the negative dumping margin by South Africa for NBA, Malaysia for IBA and Singapore for IBA. However, the authority initiated the investigation in respect of these three products and imposed anti-dumping duty on IBA from Malaysia. It was submitted that initiation for these three products and imposition of duty on one product from Malaysia was illegal, and that the notification was liable to set aside to that extent. Moreover, as per the petition of domestic industry, 2 EHA was not imported from South Africa, NBA and IBA were not imported from Romania; and there was no import of Hexanol, Heptanol, Nonanol and Iso-nonanol, Decanol and Iso-deconol, and therefore, initiation of investigation in respect of these products from these countries was illegal. It was then argued that the authority had investigated different products in a single investigation and not different product types. It was submitted that it was not customary for an initiation notification to specify the product types and investigation is always against the article or articles under investigation. Different types of 'article under investigation' are also 'article under investigation' and hence are not specified separately. It was submitted that the contention that each of the oxo alcohols are product types and not different products was an afterthought. It was submitted that the decision in Cotton Bed Linen case cannot apply to the present case because, in that case the issue which arose for decision by the Panel was whether negative dumping margins for certain types of bed linen are to be taken at the negative value or should be assigned zero, as was done by European Communities in computing the dumping margin for the product "cotton type bed linen". The issue as to whether certain items are types of the article under investigation and hence anti-dumping duty can be imposed on these types notwithstanding that they had not been exported by India in the period of investigation, did not at all arise in that case. It was submitted that since during the arguments on behalf of the domestic industry the prayer was limited to inclusion of Nonanol and Iso-nonanol, no duty could be imposed on Hexanol, Heptanol, Decanol and Iso-decanol, nor on product mixtures of such Oxo-alochols. As regards Sabutol, it was submitted that it was mixture of IBA, NBA and secondary pentanol, and that it was manufactured from the coal carbonization process and not by oxo process. It was submitted that it was clearly erroneous on the part of the authority to consider NIP of NBA as a representative of Sabutol, which was a mixture containing NBA only upto 65%. The dumping margin for Sabutol was determined by comparing the normal value of Sabutol in South Africa with export price to India. For determining whether anti-dumping duty lower than the dumping margin was adequate to remove the injury to the domestic industry, the authority was required to compare the non-injurious price of an article which was equivalent to Sabutol in India with the landed price of Sabutol. Hence the determination in respect of Sabutol was clearly illegal.
9.1 The learned Counsel appearing for the exporter Sasol, further contended that Sabutol could not have formed part of the product under consideration for the purpose of the investigation, and that it was not a like product under Rule 2(d). He submitted that an analysis of like product was at two step analysis, as held in Birla Periclase v. Designated authority (Anti-Dumping) GOI . It was submitted that, to club products of varying chemical composition, physical characteristics and end uses together, would lead to a sub-version of the principle of likeness as postulated in Rule 2(d). Reliance was placed on the decision of the Tribunal in Oxo-Alcohols Industries' Association v. Designated authority for pointing out that in that case the Tribunal equated, "close resemblance" to whether the products were directly substitutable or interchangeable with each other and held that in addition to being interchangeable or substitutable, for two products to be a like, their characteristics must closely resemble each other. If Iso-decanol had been used in the manufacture of different types of plasticizers they cannot be a like and that more substitutability was not enough for treating two articles as being "like". It was submitted that the designated authority had no evidence on record to show that Sabutol was in fact substituted for the good quality products such as IBA or NBA. It was submitted that Sabutol was not a like product having regard to the difference in chemical properties, its functionality and its prices factor. The composition of Sabutol was more akin to the seconds material of NBA/IBA column bottoms and these are waste materials and not first grade production. It was submitted that all alcohols are not technically or commercially substitutable and only those alcohols which go into the manufacture of general purpose plasticizers are technically and commercially substitutable. Sabutol is neither technically nor commercially substitutable for IBA and NBA which had 99% purity. Moreover, Sabutol is primarily used to make solutions and has main function in paint industry and it is used in the lowest end of footwear market. It was demonstrated how its chemical properties were different. Reliance was placed on a certificate issued by South Africa Board of Trade confirming that there were no exports of IBA from South Africa and it was submitted that in view of the said certificate there should be no anti-dumping duty on IBA from South Africa since it was not exported to India. It was argued that import of Sabutol could not have caused an injury to acyclic alcohols manufactured in India since they were not like products nor were they commercially substitutable. It was then argued that there was no material injury suffered by the domestic industry since sales quantity, capacity of the domestic industry, market share, level of capacity utilization, sales price of the domestic industry and cash flow position had improved, closing stock had come down, possibility to raise capital investment would logically be improved, profitability had increased and quantity produced too increased. Referring to the WTO Panel decision in Softwood Lumber case on which the domestic industry had relied in support of its proposition that the like products under Article 2.6 of the Anti-Dumping Agreement cannot be applied to determining the product under consideration, it was pointed out from that decision that in para 7.157 Panel Report, the panel had clearly stated that it was not making a decision on the meaning of the term "product under consideration", in the absence of any specific language in the WTO Agreement on Anti-Dumping to that effect. Instead it had arrived at a finding based on the application of the like products test under Article 2.6 as distinguished from product under consideration. In doing so, the panel had suggested that the definitional issue of defining the product under consideration was for the policy makers to decide. The learned Counsel submitted that the findings of the designated authority and the impugned notification were, therefore, illegal and deserve to be set aside.
Arguments on behalf of the respondent Designated Authority:
10. The counsel for the designated authority supporting the reasoning contained in the final findings and the validity of the impugned notification contended that the oxo-alochols were product types and they were all products under consideration. He relied upon the reasons given by the authority in paragraph 48 of the final findings for non-imposition of antidumping duty Nonanol and Iso-nonanol. He submitted that these products were not imported into India and therefore, duty was not levied. As regards Sabutol, he submitted that it could be used as a substitute for NBA and 2-EHA. He submitted that since a Sabutol could replace NBA and there was evidence to show that one user had switched over to that product (para 8.5 of the final finding), there was justification for imposing duty on Sabutol. It was submitted that NBA, 2-EHA, IBA, Sabutol, Octanoland Iso-nonanol were all forms of Acyclic Alcohol in the product under consideration which were like articles to the domestically produced Oxo-alcohol, namely 2 EHA, IBA and NBA. It was submitted that since there was no evidence of dumping of Iso-nonanol during the period of investigation and sufficient justification was not placed on record before the authority, a case had not been conclusively established showing that threat of material injury to the domestic industry on account of the alleged imports of Iso-nonanol subsequent to POI and, therefore, the authority was justified in not continuing imposition of anti-dumping duty on Iso-nonanol. It was submitted that the conclusions reached by the authority that injury was caused to the domestic industry were based on the examination of the relevant injury parameters which indicated significant increase in the volume of dumping imports, significant price undercutting and price suppression, financial losses by the company, inability to raise funds, continued losses and negative return on investment, which all showed the adverse impact of the dumping imports.
Reasons:
11. It would appear from the rival contentions of the parties that the issue as regards article under consideration for the purpose of investigation raised by them is, whether anti-dumping duty may be imposed on 'article under consideration' by giving an extended meaning to 'article' liable to pay anti-dumping duty under Section 9A(1), so as to include in the description of 'article under consideration' even other articles which are like articles.
11.1 In the present case, the initiation under Rule 5 of the said rules was done at the instance of the domestic industry in respect of the following articles under the heading acyclic alcohols or Oxo-alcohols:
(i) Normal Butanol (NBA) or N-Butyl Alcohol, Butan-1-01,
(ii) 2-Ethyl Hexanol (2-EHA) (hi) Iso Butanol (IBA) or Butan-2-01
(iv) Sabutol
(v) Hexanol
(vi) Haptanol
(vii) Octanol and Iso Octanol
(viii) Nonanol and Iso Nonanol
(ix) Decanol and Iso Decanol
(x) Mixtures of above 11.2 Admittedly, the domestic industry is producing only NBA, IBA and 2-EHA. Inclusion of the other types of alcohols, though not imported in India during the period of investigation was made on the ground that they are comparable to the type of alcohols being produced by the domestic industry and that these types of alcohols closely resemble, in respect of their characteristics. According to the domestic industry, there is a great amount of substitutability between these various types of alcohols, which are produced from common raw material olefins and are used for production of plasticizers. These acyclic alcohols are classified under the following subheadings 2905.13, 2905.14, 2905.16, 2905.17 and 2905.19 of heading 29.05 of Schedule 1 of Customs Tariff Classification:
2905.13 - Butan-1-ol (n-butyl alcohol)
2905.14 - Other butanols
2905.16 -- Octanol (octyl alcohol) and isomers thereof
2905.17 -- Dodecan-1-ol (lauryl alcohol), hexadecane-1-o1
(cetyl alcohol) and octadecan-1-o1 (stearyl
alcohol);
2905.19 -- Other
Though the initiation notice was in respect of ten types of acyclic alcohols, in the preliminary findings, the investigation was confined to the following six types of acyclic oxo- alcohols which were treated as "like article" for the preliminary findings, as held in para 6.12 of the preliminary findings:
(i) Normal Butanol (NBA) or N. Butyl Alchol Butan-1-01
(ii) 2-Ethyl Hexanol (2-EHA) (in) Iso Butanol (IBA) or Butan 2-01
(iv) Sabutol
(v) Octanol and Iso Octanol
(vi) Nonanol and Iso Nonanol 11.3 The designated authority held in the preliminary findings (para 6.9) that Nonanol and Iso Nonanol were like articles within the meaning of Rule 2(d) of rules. It was also held (in para 6.6) that Sabutol which was described in the commercial literature of the exporter Sasol in the range of products under the heading 'oxo alcohols' was a like article to the products being produced by the petitioners.
11.4 The designated authority, in the final findings (para 8.3), was of the view that specified ten types of acyclic alcohols were included in the 'product under consideration' as part of the main product i.e. 'acyclic alcohols'. It was held that the fact that the ten types fall under the description of acyclic alcohols and their prima facie similarity was sufficient enough to include them within the scope of 'product under consideration'. The authority did not consider it improper to have included ten types of alchols within the description of the product involved under investigation, though some forms or types of these alcohols had not been imported during the period of Investigation. According to the authority it had taken into account the following criteria for deciding whether the types of acyclic alcohols for which investigation was initiated were like articles:
.Technical and Commercial substitutability, .Functions and uses of the products, .Resemblance of the physical and/or chemical properties, .Users' perception for switching over from one product to another, .Similar production processes, .End-product substitutability 11.5 The authority held (para 8.5) that NBA, 2-EHA, IBA, Sabutol octanol, Iso octanol which are the forms of acyclic alcohol in the product under consideration were 'like article' to the domestically produced oxo alcohols, namely, 2-EHA, IBA and NBA. It was found that Nonanol, Iso Nonanol, Octanol and Sabutol are commercial substitutes of the domestically produced axo alochols. It was observed "these have chemical properties, though dissimilar, yet close enough to be bracketed as acyclic alcohols". Further, the user has switched over from one form of alcohol to the other form in the case of Nonanol, Iso Nonanol and Sabutol as a preference over the domestically produced alcohols. As regards Octanol, it was noted that one of the Indian users had placed order on the Indian domestic producer giving the description as 2-Ethyl Hexanol (Octanol) and that the exports of Octanol from Romania were cleared by the importer describing the same as 2-EHA on the bill of entry.
11.6 The designated authority considered it necessary to impose definitive anti-dumping duty on the form's of acyclic alcohols, (oxo alcohols) including those forms held as 'like articles', where there is either evidence of dumping of specific forms or of other forms held as like articles during the period of investigation. Accordingly, the designated authority recommended (para 56 of the final findings) imposition of anti-dumping duty on the imports of the following forms/types of acyclic alcohols from subject countries in order to remove the injury to the domestic industry:
Normal Butanol (NBA), 2-Ethyl Hexanol (2-EHA), Iso Butanol (IBA), Sabutol and Octanol.
It was held (in para 48) that there was no evidence of dumping of Iso Nonanol during the period of investigation and sufficient justification was not brought out before the authority to establish a case of threat of material injury on account of the alleged imports of Iso Nonanol subsequent to period of investigation.
12. Anti-dumping duty may be imposed upon the importation of any article into India at less than its "normal value". The quantum of duty on such article will not exceed the "margin of dumping" which phrase is defined in the explanation to Section 9A(1) in relation to an article so as to mean the difference between its "export price" and its "normal value" which expressions are also defined. Section 9A(1) makes it clear that imposition of anti-dumping duty is required to be considered in the context of an article; which would be a particular item or object typically one of a specified type. Each item or object of a specified type which is dumped Will merit separate consideration for the purpose of working out the margin of dumping, which requires its "export price" and "normal value" to be determined. All this cannot be done when there is no importation of an article. There can, therefore, be imposed no anti-dumping duty on an article without its importation.
13. The article liable for any anti-dumping duty under Section 9A(1) is required to be identified and the "export price" and the "normal value" and the margin of dumping in relation to such article are required to be determined in the manner provided by the rules, as laid down in Sub-section (6) of Section 9A(1) of the Act. Rule 4(1)(b) enjoins a duty on the designated authority to identify "article" liable for anti-dumping duty. Public notice notifying the decision of the designated authority to initiate investigation, is required to contain, inter alia, information on "the article involved" and the name of the exporting country. The statutory scheme of imposition of anti-dumping duty clearly envisages importation of an identified article, determination of the margin of dumping and injury for deciding the levy of the amount of anti-dumping duty that would remove the injury to the domestic industry. Section 9A(1) makes it pre-requisite for imposition of anti-dumping duty that it should be in relation to the article on its importation from any country or territory to India at less than its normal value. The anti-dumping duty is required to be imposed on such article which has been identified and found to be liable for imposition of antidumping duty. The expression "article" in Section 9A(1) will include only the article on which anti-dumping duty may be imposed and not any other article which may be a like article to such identified article. In other words, anti-dumping duty can be imposed only on the article which is the subject matter of investigation after being identified for the purpose under Rule 4(1)(b) and not on any other article, which may be a like article. The definition of the expression "like article" under Rule 2(d) of the said rules, cannot be projected in Section 9A(1) for the purpose of giving any enlarged meaning to an article which upon its importation into India may be subjected to anti-dumping duty. There can, therefore, be no question of roping in any article other than the article which is identified, for the purpose of imposing anti-dumping duty under Section 9A(1).
14. Rule 2(d) defines the expression "like article" for the purpose of the said rules unless the context otherwise requires, to mean an article which is identical or alike in all respects to the article under investigation for being dumped in India or in the absence of such article another article, which although not alike in all respects, has characteristics closely resembling those of the articles under investigation. It is evident even from this definition of "like article" that the expression "article" in 9A(1) which may be liable to anti-dumping duty and in respect of which investigation is to be made as per the rules, will not by itself include any other article which has characteristics closely resembling those of the article under investigation unless even such "another article" is specifically identified as the article under consideration for the purpose of investigation and imposition of anti-dumping duty.
14.1 The expression "like article" has relevance in the context of the provisions in the rules wherever it occurs; e.g. in the definition clause under Rule 2(b) the expression "domestic industry" refers to the domestic producers engaged in the manufacture of "like article." This would mean that they should be engaged in the production of an article which is identical or alike in all respects to the article under investigation, or in the absence of such article "another article" which has characteristics closely resembling those of the articles under investigation. Therefore, the enquiry would be, while considering the question of injury, over the relevant question whether the domestic industry produces article which is a like article in relation to the article under investigation. From the scheme of the Act and the rules it would appear that while there may be plurality of articles which can be called "like articles" to the article under consideration which are meant for consumption in the exporting country while determining the "normal value", as defined under Section 9A(1)(c) which contains the expression "like article", there is no such plurality of the word "article" in Section 9A(1) when it is identified under Rule 4(1)(b), as the article exported from any country or territory to India at less than its normal value and on which the Government may impose an anti-dumping duty. Therefore, for the purpose of imposition of anti-dumping duty, the like article as identified for the purpose of investigation alone would be relevant, and the expression "like article" defined in different contexts cannot be used for expanding the meaning of "article" under Section 9A(1).
14.2 Furthermore, it is evident from the provisions of Section 9A(1) that not only the article should be identified for the purpose of the impost, it should be an article that is exported from any country or territory to India. Therefore, export of the article identified from the country is the basis for the levy when it is exported at less than its normal value and becomes liable to imposition of anti-dumping duty not exceeding the margin of dumping upon the importation. An article which has not been exported to India cannot, therefore, be subjected to imposition of anti-dumping duty under Section 9A(1) of the Act which lays down the basis for the impost. There is, therefore, no error in the final findings in so far as duty on articles not imported to India, has not been imposed. For the same reasons imposition of anti-dumping duty on the articles which were not imported, was not justified.
14.3 The designated authority is required to give a final finding, inter alia, as to the export price, normal value and the margin of dumping of the article under investigation and as to whether import of the said article into India causes or threatens material injury to any industry established in India or materially retards the establishment of any industry in India. If there are more than one article identified for the purpose of investigation, the scheme of the Act and the rules clearly contemplates determination of existence, degree and effect of any alleged dumping of each article, and determination of the normal value, export price and the margin of dumping of each of such article under investigation. It may be convenient for the designated authority to initiate investigation in respect of more than one article when the domestic industry comes with an allegation that such articles are being dumped and that there is injury and a causal link between the dumped imports and alleged injury. The word "article" that the parliament has used in its wisdom in Article 9A and the expression "article under consideration" that occurs in the rules instead of the use of the word "product" or "product under consideration" clearly indicate that the determinations have to be made in respect of each of the article for which investigation is done as articles under consideration. The fact whether articles which are under consideration are inter se like articles or not, is hardly of any significance because the articles produced by the domestic industry are required to be compared in the context of each of the article under consideration for determining whether they are like articles and for the purpose of making other determinations regarding margin of dumping and injury. For each of the article under consideration, the determinations of margin of dumping and injury have to be separately made for the purpose of deciding upon the imposition of anti-dumping duty on the article that is exported from any country to India at less than its normal value. The scheme of the Act and the rules does not contemplate working out any mean of the dumping margin when multiple articles are under consideration by totaling up the dumping margins of each of them, and article wise determinations are required to be made for ascertaining whether and if so at what rate the anti-dumping duty is required to be imposed. The word "article" clearly indicates a particular item or object typically one of a specified type. Therefore, the dumping margin and injury issues in the context of the articles produced by the domestic industry which are said to be "like articles" in comparison with the article/articles under consideration, are required to be considered separately for the purpose of making determinations of margin of dumping, injury etc. by the designated authority to find out that the relevant article or articles are liable to imposition of duty and if so, to what extent. For the article under consideration which has not been exported to India during the period of investigation, there can arise no question of determining any margin of dumping or injury to the domestic industry. Therefore, no question of imposing any duty can arise where any article under consideration or any of the articles under consideration is not exported to India, nor any question of imposing any duty can arise where any of such article under consideration has not resulted in dumping or has not caused injury to the domestic industry on such separate determinations of the relevant issues in respect of such article. The designated authority, therefore, committed an error, in recommending duty on articles which were not imported from some countries, on the ground that other articles under consideration were being exported to India.
14.4 There is no dispute about the fact that negative dumping margin was shown in the petition for NBA by South Africa, from Malaysia and IBA from Singapore. The dumping margins reflected in para 33 of the final findings show that from Malaysia dumping margin of NBA was de minimus, the dumping margin of IBA from Singapore was minus 27.17 and of NBA from South Africa was minus 22.52. When there was no dumping margin or where it was de minimus, no question of imposing anti-dumping duty could have arisen in respect of importation of these items showing no dumping margin during the period of investigation.
14.5 That takes us to the consideration of the issues regarding injury and causal link. It has been demonstrated before us that many of the findings on important aspects of injury and causal link are not factually correct. In paragraph 50 of the final findings it has been held by the designated authority that the increase in quantum of imports from subject countries resulted in the curtailment of market share of the petitioner. This is demonstrated to be factually incorrect by referring to the table in paragraph 45 of the final findings in which the market share of the domestic industry is shown to have increased from 27.08% in 1998-99 to 31.55 in 1999-00 and to 42.76% in April 2000 to June 2001, the annualized during the POI being 42.76%. Thus, the material on record disclosed that the domestic industry had significantly increased its market share. Yet, the designated authority held in para 50 while considering the causal link that, the increase in quantum of imports from subject countries had resulted in the curtailment of the market share of the petitioner. It overlooked its own conclusion on injury in para 46(f) where it concluded that market share in demand, of the domestic industry, increased during the period of investigation.
14.6 It has come on record without any dispute that as per the annual report of the domestic industry for the year 2000-01, the operations of the plant of domestic industry were suspended from 22nd January 2001 till 4th July 2001 due to "operational constraints and uneconomic market pricing". The excerpts from the Director's report to the members having bearing on this aspect and also on the other aspects, of cash profit and the price of raw material propylene is reproduced hereunder from the annual report, a copy of which was placed on record:
"Operations:
The Company achieved significant level of production of 34.437 MTs, in 10 months operation and sales of 34,943 MTs during the year. This high level of operations was possible on account of innovative measures implemented by the plant team in-house, leading to improved on stream factors and at the same time realizing considerable savings in raw-material and energy consumption factors.
The plant operations were suspended from January 22.2001 till 4th July, 2001 due to operational constraints and uneconomic market pricing. Sales and other income for the year under review was Rs. 14,829.01 lakhs as compared to Rs. 8,982.11 lakhs in the previous year. Company ended with a cash profit of Rs. 432.14 lakhs as against loss of Rs. 698.93 lakhs in the previous year. However, profit margin has come down mainly due to Propylene price remaining continuously high throughout the year.
[Emphasis added] 14.7 This authentic document regarding the operations of the company which covers the period of investigation shows that the production of the company was significantly high, inasmuch as, 34.437 MTs were produced in a period of ten months' operation, and also shows the significant level of sales of 34,943 MTs during the year. An important fact emanating from the aforesaid excerpt which has been overlooked by the designated authority in arriving at its final findings and the impact of which was not comprehended, is that, the plant operations of the company were suspended from January 22,2000 till 4th July, 2001, due to "operational constraints and uneconomic market pricing". We do not understand as to how the opening words "operational constraints" escaped notice of the designated authority who confined its findings only in the context of "uneconomic market pricing". Here also it failed to notice that as per the above annual report, profit margin had come down "mainly due to propylene price remaining continuously high throughout the year". It is also significant to note that the company had ended with a cash profit of Rs. 432.14 lakhs as against loss of Rs. 698.93 lakhs in the previous year.
14.8 It also transpires from this annual report at its page 15 that, the licenced and installed capacity for oxo alochols was 30,000 MTs per annum and the production of oxo alcohols was 34,437 MTs during the period often months, as noted from the above excerpt of the annual report. It is obvious that when the production capacity was increased and the production during ten months was in excess of its prorata production capacity and further that there were cash profits to the tune of Rs. 432.14 lakhs, and all this, despite suspension of operation for five months and ten days out of the total fifteen months of the period of investigation, the suspension of operations could not have been attributed due to uneconomic market pricing.
14.9 The break-up of import quantum shows that for the first twelve months of the period of investigation i.e. 2000 to 2001 it was considerably lower (Rs. 3766 MTs) than the previous year while in the last three months of the period of investigation, it was 8248 MTs. This indicates that when the domestic industry was operating till January 2001, the imports were low. Thereafter, they had suspended operation for five months and ten days. It would, therefore, appear that it is because they suspended operations that the imports came in and not vice versa. Since the suspension of operation attracted imports, losses for the period of five months and ten days during which the operation was suspended by the domestic industry could not have been legitimately attributed to dumping. The analysis by the designated authority is in respect of the loss sustained by the domestic industry in the entire period of investigation including the said period of five months and ten days, which was obviously erroneous. It would thus appear that the suspension of operations by the domestic industry that resulted in nonavailability of the goods in the domestic market was the reason for the increased input during the last three months of the POI. The domestic industry had increased its capacity by 20% in the year 2000-2001 by raising it from 30,000 MTs to 36,000 MTs and despite its operations being suspended for more than five months its capacity utilization was nearly 117%. Their sales had increased significantly despite the fact that they had suspended the operation for the said period.
14.10 It would appear from the 17th annual report 2000-01 of the domestic industry (page 15) that as against the item "sales" of oxo alcohols the quantity sold in the year and its value are mentioned which indicate, as calculated by the learned Counsel without any dispute, that the average price was Rs. 35.64 per Kg. which showed that the landed value of Rs. 36.35 per Kg. was lower than the net sales realization by the domestic industry. The net sales realization, as reflected from the annual report, does not appear to have been considered by the designated authority, while observing : "As regards price undercutting the authority had compared the landed value of imports of subject goods from the subject countries during the POI with the net sales realization and found that there was a significant price undercutting by the dumped imports". Furthermore, while the designated authority observes in para 52 of the final findings that contraction of demand was not apparent, it failed to apprehend the significance of the fact that the total demand had decreased by 20% but in a scenario of contracted demand, the domestic industry had increased its market share by 11%. It further appears from the record that the domestic industry was continuously incurring losses for five years prior to the period of investigation. There was, therefore, no proper analysis made by the designated authority for evaluating the causal link as to how the position of the domestic industry was worse of because of the dumped imports. As noted above, the losses had gradually decreased from Rs. 25.02 crores in 1998-99 to Rs. 18.58 crores in 1999-2000 and to Rs. 7.32 crores in 2000-01. It is, therefore, clear that the findings of the designated authority in relation to injury and causal link aspects are erroneous and are not borne out from the material on record thereby vitiating the recommendations made by it for imposition of anti-dumping duty.
15. It thus transpires from the material on record that the final findings as regards the domestic industry having suffered material injury on account of the dumped imports of the articles under consideration, is clearly erroneous and the imposition of anti-dumping duty cannot, therefore, be sustained. The impugned final findings and the impugned notification imposing anti-dumping duty, therefore, deserve to be set aside.
Final Order:
16. For the foregoing reasons, the impugned final findings and the impugned notification imposing anti-dumping duty are hereby set aside and the Appeal Nos. C/609/03-AD, C/610/03-AD and C/606/03-AD are allowed and Appeal No. C/599/03-AD is dismissed.
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