Customs, Excise and Gold Tribunal - Delhi
Birla Periclase vs Designated Authority (Anti-Dumping), ... on 19 January, 2000
Equivalent citations: 2000(70)ECC381, 2000(116)ELT336(TRI-DEL)
ORDER
K. Sreedharan, J. (President)
1. These appeals arise out of final findings arrived at by the Designated Authority published in the Ministry of Commerce notification dated 2-2-1999 in the anti-dumping investigation concerning import of Fused Magnesia from China PR. We are disposing of these appeals by this common order.
2. Appeal No. C/152/99-AD is filed by M/s. Birla Periclase at whose instance proceedings under the Customs Tariff Act, 1975 as amended in 1995 and the Customs Tariff (Identification, Assessment and Collection of Anti-Dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995, hereinafter referred to as the Rules, were initiated. In this appeal, appellant prays for enhancement of anti-dumping duty recommended by the Designated Authority which was notified by the Government of India. The main argument made by the appellant is that the Designated Authority did not fix the normal value of Magnesia correctly on actual data. The cost of electricity consumed in manufacture of Fused Magnesia was not properly assessed. If the cost of electricity which goes into the manufacture of Fused Magnesia was properly reckoned, the normal value would have been much more than that fixed by the Designated Authority. The difference between proper normal value and the export price, in the above situation would have been far more than that fixed by the Authority. Thus, fixation of the dumping margin was clearly erroneous and so the anti-dumping duty suggested by the Designated Authority and notified by the Govt. should require an upward revision.
3. The second appeal, namely, Appeal No. C/153/99-AD is at the instance of M/s. Indian Refractory Makers' Association. As per this appellant, the Fused Magnesia that is imported from China is not an article like Sea Water Magnesia produced by M/s. Birla Periclase and so no anti-dumping duty could have been imposed on Fused Magnesia imported from China.
4. M/s. Birla Periclase is a Division of M/s. Indian Rayon and Industries Ltd. They conceived a project for setting up a plant for the manufacture of Sintered Sea Water Magnesia in April, 1990. Sintered Sea Water Magnesia is a basic refractory material for high temperature process in steel industry. It can also be used in cement, glass and copper smelting industries. The plant set up by M/s. Birla Periclase started trial production in November, 1997. Consequent on the completion of the trial production, it went into commercial production in early 1998. They found that Fused Magnesia imported from China PR was being sold at a lower price and it prevented them from realising a fair price for their product. Import of Fused Magnesia retarded the setting up of the appellant's plant and its lower selling price was detrimental to the setting up of their industry. In other words, it was felt that import of Fused Magnesia from China materially retards the establishment of the domestic industry. Therefore, M/s. Birla Periclase submitted a petition to the Designated Authority in March, 1997. Based on that petition, the Designated Authority initiated an anti-dumping investigation on import of Fused Magnesia from China PR as per notification published on 4th November, 1997. The period of investigation was from 1st April, 1996 to 30th June, 1997. Pursuant to that notification, parties appeared before the Designated Authority and raised their views on the issue of dumping Fused Magnesia into India. The Chinese manufacturers produced evidence to prove actual cost of manufacture of Fused Magnesia.
5. A large number of interested parties who were using Fused Magnesia in their oven also appeared before the Designated Authority. Their argument was that the Fused Magnesia imported from China PR is an article entirely different from the Sintered Magnesia manufactured by domestic industry, that they have distinct and different characteristics and that they are not like articles. It was their contention that Fused Magnesia and Sintered Magnesia are not commercially identical or interchangeable. Article manufactured by the domestic industry and Fused Magnesia imported from China PR are used in different specific locations of the oven and that one cannot be substituted by the other. Use of these two articles being different, import cannot affect the domestic industry which manufactures entirely different article. In this view, it was contended that no anti-dumping action is to be initiated against Fused Magnesia imported from China PR.
6. Before us lengthy arguments have been advanced by domestic industry, namely, M/s. Birla Periclase, on the one hand and domestic consumers and Chinese manufacturers of Fused Magnesia, on the other hand, on the issue whether Sintered Magnesia manufactured by domestic industry and Fused Magnesia imported from China PR are like articles as defined in the Rules. Since the main argument was on the issue as to whether the article manufactured by domestic industry and whether the imported Fused Magnesia are like articles, we will take up that issue first. Like article is defined in Rule 2(d) of the Rules. It reads :
"(d) "Like article" means 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 an article, another article which although not alike in all respects, has characteristics closely resembling those of the articles under investigation."
This definition has two parts. First part takes in identical articles and articles alike in all respects to the article under investigation. According to the party, if the article which is being dumped into India is identical to the article under investigation or is alike in all respects to the article under investigation, then the imported article will satisfy the definition of like article. If the article that is dumped is not falling within the first category, that is, if they are not identical or like in all respects to the article under investigation, then it has to be seen whether such article dumped falls within the ambit of the second part of the definition. The second part of the definition deals with another article which, although not alike in all respects, has characteristics closely resembling those of the articles under investigation. The article that falls within the second category is one which is entirely different from the one satisfying the first part of the definition. This means that that article which falls within the second part of the definition need not be an article identical or alike in all respects to the article under investigation. Such a different article if it has characteristics closely resembling the article under investigation will also be "like article." Thus the second part of the definition of like article takes within its ambit even those articles though not identical or alike but have characteristics closely resembling the article under investigation.
7. Domestic industry, M/s. Birla Periclase manufactures Sintered Magnesia from Sea Water. Magnesia is MgO (Magnesium Oxide). This chemical combination of MgO does not vary depending on the source from which it is manufactured, whether by mining or by processing sea water. Sintered Magnesia is not in crystal form. For making Magnesia in crystal form smaller particles will have to be fused by using electric power. By such fusion MgO does not undergo any Chemical change. Chemical properties continue to be the sathe. Sintered Magnesia which is in smaller granules will be different from Fused Magnesia in crystal form. The granular Sintered Magnesia and crystal Fused Magnesia are not, therefore, identical, nor they can be said to be alike in all respects. The article that is manufactured by the dothestic industry is Sintered Magnesia. So, the Fused Magnesia which is in crystal form cannot fall within the first limb of the definition of like article, but it certainly satisfies the test of like article in the second limb of the definition. Fused Magnesia has characteristics closely resembling Sintered Magnesia. Both are used for with standing high temperature. Both are having purity of 97% and both are MgO. So, they are having characteristics closely resembling each other. The chemical combination and characteristics closely resembling each other, nathely, the content of MgO, its purity and the capacity to withstand high temperature make Sintered Magnesia and Fused Magnesia like articles as defined in Rule 2(d) of the Rules.
8. In view of the above discussion, we overrule the contention raised by the appellant in Appeal No. C/153/99-AD, namely, M/s. Indian Refractory Makers' Association, the domestic consumers of Fused Magnesia, that Sintered Magnesia and Fused Magnesia are different products and not like products coming under the definition in the Rule. This finding by itself will not be sufficient to support imposition of anti-dumping duty on fused Magnesia. For the assessment of anti-dumping duty, further examination into the injury that is caused to the domestic industry which makes Sintered Magnesia and the causal link of the import of Fused Magnesia on the production and sale of Sintered Magnesia to be undertaken.
9. As stated earlier, the period of investigation was from 1st April, 1996 to 30th June, 1997. During that period, the plant for the production of Sintered Magnesia in India was not set up. Its trial production started only in November, 1997. Commercial production commenced only towards the end of February, 1998. So, the investigation was on the aspect whether the import of Fused Magnesia will materially retard the establishment of an industry in India. It is common case that no other plant or establishment in India manufactures Sintered or Fused Magnesia. So, the question that is to be dealt with is whether the import of Fused Magnesia will retard the establishment of the industry.
10. The Designated Authority was bound to determine the threat of injury to the domestic industry or material retardation to the establishment of the domestic industry. Causal link between the dumped imports and their effect on the price in the domestic market should also have been examined.
11. Designated Authority in the impugned order has categorically found that the difference in crystal size would affect the performance of the two products, namely, Sintered Magnesia and Fused Magnesia. On the basis of this finding, the Designated Authority should have gone into the question as to whether the use of Fused Magnesia in the oven can be completely dispensed with. In other words, it should have entered a finding as to whether Sintered Magnesia can entirely replace Fused Magnesia. Such an approach was not made by the Designated Authority. In the impugned order, the Designated Authority states that there is sufficient evidence to suggest that the two have been consumed interchangeably by refractory manufacturers. This conclusion, we are afraid, is not borne out by acceptable material. On behalf of the petitioner, domestic industry, some statements alleged to have been issued by Visakhapatnam Steel Plant dated 19-9-1998 were seen produced before the Designated Authority. Those documents were not authenticated by any officer of Visakhapatnam Steel Plant. Those statements show that the brick quality of Birla withstood 514 or 644 heats. From this statement it cannot be seen that how much quantity of Sintered Magnesia went into the manufacture of those bricks which withstood those number of heats. Except this material there is no other evidence to support the contention that Sintered Magnesia can replace fused magnesia. Based on the available material alone, we are not in a position to hold that Sintered Magnesia and Fused Magnesia can be consumed interchangeably by refractory manufacturers. In view of this conclusion, it cannot be further said that they are interchangeable.
12. Dr. K.C. Agarwal, President of Birla Periclase in his article in IRMA Journal Volume XXVIII No. 2,1995 observed :
"In the quest of producing denser minerals for refractory applications, there have been attempts to melt the mineral and make it dense monolith having near to its theoretical density. Fused Magnesia is one such classic refractory raw material produced by electro-fusion of Caustic or Sintered Magnesia. The development of Fused Magnesia dates back to early twentieth century and since then its superior refractory properties have been well acclaimed over the dead burnt or Sintered Magnesia."
This shows that Fused Magnesia is a denser mineral for refractory applications. It has well marked advantage over Sintered Magnesia in refractory applications. So the imported Fused Magnesia cannot be taken as a substitute for the Sintered Magnesia. Dr. Agarwal in the same article in the journal proceeded to state :
"While the first Sea Water Magnesia (SWM) plant of the country, for the initial capacity of 50,000 tpa is under construction, all preparations are simultaneously going on for adding the production facilities of Fused Magnesia. This SWM plant is scheduled to be commissioned by mid 1996. Once the high purity feed material (Caustic Magnesia) is available, we have plans to install a 10,000 tpa fusion plant straightaway. We are already in touch with the leading producers of Fused Magnesia in the world for the technical know-how, and have started getting very encouraging response from them."
This statement of President of Birla Periclase supports the contention of the appellant in Appeal No. C/153/99-AD that Fused Magnesia is more effective in refractory application and it cannot be replaced by Sintered Magnesia. It is true that Sintered Magnesia is also required in some of the parts of the oven. The Sintered Magnesia and Fused Magnesia are thus seen to be complementary to each other and not interchangeable. Fused Magnesia cannot be wholly substituted by Sintered Magnesia. In this view of the matter, we find it difficult to support the Designated Authority on the question of injury and causal link. The finding that imports of Fused Magnesia resulted in reduction in consumption of Sintered Magnesia is not supported by any acceptable evidence. Consequence is that the import of Fused Magnesia had no causal link with the retardation in the sale of Sintered Magnesia produced domestically.
13. Lengthy arguments were advanced before us on the question of normal value of Fused Magnesia in China. Designated Authority accepted the data given by the exporters from that country to find out the cost of production. The main dispute raised by the domestic industry was that value of the electrical energy consumed by the producers was not properly assessed. According to the appellants, domestic industry, cost of electricity was much more than double the amount stated by them. (According to domestic producers, the price of electrical energy and electrodes in China was more than double). From the files maintained by the Designated Authority it is seen that the price of electrical energy at the place of the manufacture was got ascertained through the Indian Embassy in China. Data furnished by the Indian Embassy was rightly relied on by the Designated Authority. We do not find our way to upset that finding. We hold that the normal value of Fused Magnesia found by the Designated Authority calls for no interference.
14. Since Fused Magnesia has separate and distinct use in the oven compared to the Sintered Magnesia and they are not interchangeable, we hold that its import had no causal link in the retardation of the domestic industry. In the absence of such causal link, no anti-dumping duty can be imposed on the ground that by import of the article injury can be caused to the manufacturer of Sintered Magnesia. The result, therefore, is that anti-dumping duty suggested by the Designated Authority on Fused Magnesia imported from China PR cannot be sustained. We reverse the finding reached by the Designated Authority. Appeals are disposed of accordingly.