Customs, Excise and Gold Tribunal - Delhi
Nippon Zeon Co. Ltd. vs Designated Authority on 4 February, 1997
Equivalent citations: 1997(96)ELT126(TRI-DEL)
ORDER
U.L. Bhat, J. President
1. These appeals are filed under Section 9A of the Customs Tariff Act, 1975 (for short, the Act) against the order of determination regarding the existence, degree and effect of dumping in relation to import of Acrylonitrile Butadiene Rubber (NBR) from Japan, passed under Section 9A of the Act. The particulars of the appeals and appellants are as follows :-
Appeals No. C/74/96-A by M/s. Nippon Zeon Co. Ltd., Japan (for short, NZL) - Exporter.
Appeal No. C/75/96-A by M/s. Japan Synthetic Rubber Co., Japan
(for short, JSL) - Exporter.
Appeal No. C/76/96-A by M/s. Bombay Chemicals and Rubber
Products - Importers.
Appeal No. C/77/96-A by M/s. Golden Rolls (Pvt.) Ltd. -
Importers.
Appeal No. C/78/96-A by M/s. Kasturi International -
Importers.
Appeal No. C/79/96-A by M/s. Sharp International - Importers.
Appeal No. C/80/96-A by M/s. Sujan Group and Polyrub
Extrusions - Importers.
2. The impugned order has been passed by the Designated Authority appointed as such under Rule 3 of the Customs Tariff (Identification, Assessment and Collection of duty or Additional duty on dumped articles and for determination of injury) Rules, 1985 (for short, the Rules). The investigation resulting in the order impugned was initiated on an application filed by M/s. Gujarat Apar Polymers Ltd., Bombay (for short, GAPL, one of the two and the main Indian manufacturers of NBR) alleging dumping of NBR originating from Japan causing injury to domestic industry. The Designated Authority sent questionnaire to the two exporters in Japan and two of the importers to elicit relevant information. Opportunity was given to exporters, importers, applicant and other interested parties to express their views in a public hearing. The applicant participated in the hearing. One of the importers attended the hearing on behalf of JSL. Some other interested parties also participated in the hearing. Several interested parties made written submissions. The exporters and their representatives did not furnish answers to the questionnaire but gave only general and vague replies.
3. The Designated Authority determined export price, normal value and margin of dumping as follows :-
Normal Value 3,677 US $ PMT (Rs. 1,16,009/-) Export Price - FOB 1,048 US $ PMT (Rs. 33,380/-) Margin of Dumping 2,619 US $ PMT (Rs. 82,629 /-)
The authority further held that the dumping of NBR by the two exporters of Japan has caused material injury to the domestic industry i.e. GAPL. It was further found that the average landed price of the Japanese imports was Rs. 66,820/- PMT and the fair selling price of NBR produced by the domestic industry was Rs. 86,126/- PMT and on that basis anti-dumping duty of Rs. 19,306/- was recommended to remove the extent of injury to the domestic industry caused directly by the exports from Japan. Subsequently, on the basis of the finding of the Designated Authority, the Central Government, under Section 9A of the Act read with Rule 21 of the Rules imposed on the said goods when imported from Japan, an additional duty (anti-dumping duty) at the rate of Rs. 19,306/-PMT.
4. Sections 9A and 9B were substituted in the Act by Central Act 52 of 1982 with effect from 2-9-1985. While these provisions were substituted, Section 9C was also incorporated by this Act. The original provisions were enacted and the Rules were framed in view of Article VI of the GATT and the Agreement on implementation of Article VI of GATT (Anti-Dumping code). We will advert to these provisions to have a clear picture of the law before dealing with the facts. We will confine our attention to the provisions of Sections 9A and 9B of the Act as substituted in 1985 and the rules framed thereunder since the impugned order has been passed under those provisions.
5. Sub-section (1) of Section 9A of the Act reads as follows :-
"Section 9A. Anti-dumping duty. - (1) Where any article is exported from any country Or territory (hereinafter in this section referred to as the exporting country or territory) to India at less than its normal value, then, upon the importation of such article into India, the Central Government may, by notification in the Official Gazette, impose, -
(a) if the article is not otherwise chargeable with duty under the provisions of this Act, a duty; or
(b) if the article is otherwise so chargeable, an additional duty, not exceeding the margin of dumping in relation to such article:
Provided that the Central Government may, pending the determination in accordance with the provisions of this section and the rules made there- under of the normal value and the margin of dumping in relation to any article, impose on the importation of such article into India a duty or additional duty under this Sub-section on the basis of a provisional estimate of such value and margin and if such duty or additional duty exceeds the margin as so determined, -
(a) the Central Government shall, having regard to such determination and as soon as may be after such determination, reduce such duty or additional duty; and
(b) refund shall be made of so much of such duty or additional duty which has been collected as is in excess of such duty or additional duty as so reduced.
Explanation. - For the purpose of this section, -
(a) "margin of dumping", in relation to an article, means the difference between the price at which such article is exported and its normal value;
(b) "normal value", in relation to an article, means -
(i) the comparable price in the ordinary course of trade for the said article or like article when meant for consumption in the exporting country or territory as determined under Sub-section (2); and
(ii) where such comparable price cannot be ascertained because of the particular market situation or for any other reason, such value shall be either -
(A) the highest comparable price for the said article or like article from the exporting country or territory to any third country in the ordinary course of trade as determined under Sub-section (2) or (B) the cost of production of the said article or like article in the country of origin along with reasonable addition for selling and any other cost, and for profits, as determined under Sub-section (2)."
Sub-sections (1) and (2) of Section 9B read as follows :-
"Section 9B. No levy under Section 9 or Section 9A in certain cases in the absence of injury to industry in India. - (1) Notwithstanding anything contained in Section 9 or Section 9A, the Central Government shall not levy any duty or additional duty under either of those sections on the import into India of any article from any country or territory to which this section applies unless that Government, after making investigation in accordance with the rules made under Sub-section (3), declares, by notification in the Official Gazette, that the import of such article into India causes or threatens material injury to any industry established in India or materially retards the establishment of any industry in India.
(2) This section applies to every country or territory which is specified by the Central Government by notification in the Official Gazette to be a country or territory which, by reason of its being a party to the General Agreement on Tariffs and Trade or by reason of any agreement between it and India for giving the most favoured nation treatment or for any other reason, levies duty or additional duty of the nature referred to in Section 9 or Section 9A on articles imported from India only when such import causes or threatens any material injury to any industry established in such country or territory or materially retards the establishment of such industry in such country or territory."
Thus, the statutory conditions necessary in the matter of imposition of the duty under Section 9A(1) are :-
(a) the price at which an article exported from any country to India is less than its normal value.
(b) Anti-dumping duty shall not exceed the margin of dumping, i.e., the difference between the export price and normal value.
(c) In the case of import into India of any article from a member country of the World Trade Organisation (WTO) or from a country with whom Government of India has a most favoured nation agreement (specified country) the duty shall not be imposed unless determination has been made as per rules framed under Section 9A(2) that import of such article into India
(i) causes or threatens material injury to any established industry in India, or
(ii) materially retards the establishment of any industry in India except where anti-dumping duty has been imposed on any article to prevent injury or threat of an injury to the domestic industry of a third country exporting the like articles to India.
(d) The duty may not be imposed if satisfactory undertaking has been received from any exporter to revise its prices or to cease exports to the area in question at dumped price and if the Central Government is satisfied that the injury effect of dumping is thereby eliminated.
6. By virtue of the power conferred by Section 9B(2) of the Act, the Central Government framed the 1985 Rules. Rule 2(c) of the rules defines "domestic industry". Suffice to say that there is no challenge against the status of GAPL as "domestic industry" in these cases. Rule 3 empowers the Central Government to appoint "Designated Authority" whose duty shall be to investigate as to the existence, degree and effect of any alleged dumping in relation to import of any article, to identify the article liable for anti-dumping duty, to submit finding to the Central Government as to Normal Value, Export Price, Margin of Dumping and injury or threat of injury to domestic industry or material retardation to the establishment of an industry in India upon the import of such article from the specified countries. The Authority shall also recommend the amount of anti-dumping, which if levied, would be adequate to remove the injury to the domestic industry and the date of commencement of the duty and to review the need for continuance of the duty. Rule 7 deals with initiation of investigation. It has to be normally on the written request by or on behalf of the domestic industry. In the present case, GAPL submitted such application. Rule 5 deals with principles governing investigation. The Authority shall obtain all relevant information and data and shall consider an article as being dumped into India if the export price of the article in the ordinary course of trade is less than the normal value in relation to the said article or like article. The Authority has communicate to the Government of the exporting country names of the articles which are proposed to be subject to investigation. The Authority shall allow the representative of an interested party or Government of the exporting country concerned, upon request, a reasonable opportunity to inspect any relevant information that is in its possession which is not confidential and an opportunity to represent their views in writing or orally. Rule 10 deals with protection of confidential information. Rule 12 deals with preliminary finding and Rule 13 with provisional duty. Rule 15 relates to termination or suspension of investigation. According to Rule 8, where an interested party refuses access to or otherwise does not provide necessary information or impedes the investigation, the Authority may record its findings on the basis of information available to it and make appropriate recommendations. Rule 16 requires the Authority, within one year from the date of initiation of investigation, to record final finding determining extent of dumping, export price of the article and question of material injury or retardation, as the case may be. Rule 17 stipulates that an article shall be considered as being dumped if it is exported from a country to India at less than its normal value. In determining the normal value, reasonable relief on merits has to be allowed for the differences in terms and conditions of sale, taxation and other factors affecting price comparability. According to Rule 18, in the case of countries notified under Section 9B(2) of the Act, duty shall not be imposed unless the Authority finds that the import of the article causes or threatens to cause material injury to any established industry in India or materially retards the establishment of any industry in India. Rule 20 requires the Authority to cause to be published in the Official Gazette, all orders relating to the initiation, suspension or limitation of investigation, preliminary finding and final finding. Anti-dumping duty is to be imposed under Rule 21. Imposition of duty shall be on non-discriminatory basis. Rule 23 requires the Authority to review from time to time, the need for the continued imposition of the duty and, if so satisfied, to recommend to the Central Government for its withdrawal.
7. Learned Counsel for the appellant urged the following contentions :-
(a) The Designated Authority was in error in determining "Normal Value" of NBR under Sub-clause (i) of Clause (b) of the Explanation to Section 9A(1) of the Act and should have resorted to Sub-clause (ii)A or (ii)B of Clause (b) of the Explanation.
(b) The "Normal Value" determined is not correct even if Clause (b)(i) of the Explanation is attracted.
(c) The finding that there was dumping is erroneous.
(d) The determination of "margin of dumping" is erroneous.
(e) The Authority was in error in holding that GAPL had suffered material injury; in any event, the Authority was in error in holding that there was causal connection between the imports and the material injury caused to domestic industry.
(f) The Authority was in error in recommending imposition of Antidumping duty of Rs. 19,306/- as necessary to remove the extent of injury to the domestic industry caused directly by the imports.
These contentions are rebutted by S/Shri T.R. Malik, SDR and Rakesh Tikko, Sr. Advocate appearing for the Designated Authority and Shri M.H. Baig, Senior Advocate appearing for GAPL, the applicant. Learned Counsel for the parties have taken us through the record of investigation and the materials available.
8. The application seeking investigation was filed by GAPL in August, 1994. Investigation was initiated by the Authority as per order as notified on 28-10-1994 and published in the Official Gazette on the same day. The order shows that the allegation of dumping was made on a comparison of quantity imported from Japan in 1992-93 and 1993-94 as well as of export price during the two years. The order also shows that allegation of injury was made on a comparison of the market share, capacity utilization and the decline in prices of Indian products and loss caused to Indian industry during the two years. The impugned order also refers to the relevant data for the two years. In paragraph 2(xiv) of the impugned order, the Authority stated that the investigation covered the period from 1-4-1993 to 31-3-1994. Para 16 of the impugned order indicates that the export price has been determined on the basis of "weighted average price" reported by the importers for the purpose of customs clearances as compiled by DGCIS, Calcutta which was found reliable. The CIF export price has been adjusted for ocean freight for working out the FOB price and the FOB price has been treated as Ex-works price based on the best information available.
9. We will first deal with the contention of appellants in regard to determination of "Normal Value". "Normal Value" of an article as defined in Explanation (b)(i) of Section 9A(1) of the Act means the comparable price in the ordinary course of trade for the said article or like article when meant for consumption in the exporting country or territory as determined under subsection (2) of Section 9A of the Act. According to Sub-section (2), subject to Rules framed under Sub-section (3), Normal Value, as also export price and margin of dumping, shall be determined after making due allowance in each case for differences in conditions and terms of sale, for differences in taxation and for other differences affecting price comparability. Where the "comparable price" as indicated in Clause (b)(i) of the Explanation cannot be ascertained because of the market situation or for any other reason, the value under Clause (b)(ii) of the Explanation shall be either the highest comparable price for the said article or like article from the exporting country to any third country in the ordinary course of trade or the cost of production of the said article or like article in the country of origin along with reasonable addition for selling and any other cost and for profits. The Designated Authority has determined "Normal Value" under Clause (b)(i) of the Explanation. It is contended that the Authority has not been successful in finding out "comparable price in the ordinary course of trade" for NBR in the domestic market in Japan and therefore value should have been determined on the basis of comparative price from Japan to third countries. Appellants contended that the Japanese exporters export NBR to Pakistan, China or Malaysia and such export prices should have been adopted as 'Normal Value' in the present cases. Appellants have referred to the following export prices in Dollars per metric ton from Japan to third countries, as furnished in the application of GAPL. They are as follows :-
Year India Pakistan China Malaysia 1990 1264 1293 1350 1328 1991 1280 1303 1340 1512 1992 1014 1231 1314 1322
Compared to the export prices to third countries, the Normal Value determined by the Designated Authority, namely, 3,677 US $, it is contended, cannot be realistic or correct.
10. At the commencement of the investigation, the Designated Authority issued notices to the two Japanese exporters, their agents, importers and the Government of Japan and the exporters, their agents and importers were requested to furnish answers to the questionnaire prepared and sent by the Authority. The exporters and their agents did not answer the questionnaire and thereby failed to reveal the comparable price of NBR in the Japanese market. Learned Counsel for appellant stated that revealing such information would have adversely affected the exporters' market and sales in Japan and hence it was not made available to the Authority. Rule 10 of the Rules contains provision to ensure confidentiality of any information provided to the Authority. If the Authority is satisfied as to the confidentiality of any information, it shall not be disclosed to any other party without specific authorisation of the party providing such information. Though the exporters and their agents filed written submissions before the Authority, there was no disclosure of comparative price in Japanese domestic market. Non-disclosure of comparative price by them does not necessarily render it "unascertainable". We also notice that the attempt of the Indian Embassy at Tokyo to find out wholesale prices of NBR in Japanese domestic market did not meet with success on account of the reluctance of the companies to furnish such information. Rule 14 of the Rules enables the Authority, in the context of refusal of any interested party to provide access to information or to provide necessary information, to record its findings on the basis of information available to it. This was precisely what the Authority attempted to do.
11. Letter dated 16-9-1993 from the Indian Embassy in Japan reported that selling price of NBR in Japan's domestic market was 300 Yen to 500 Yen per kg, i.e. about US $ 3,000 to 5,000 PMT. The Japan Chemical Week dated 25-8-1994 which provides more reliable data indicated that selling price of NBR in Japan's domestic market as 420 Yen per kg to 460 Yen per kg i.e. about US $ 4,200 to 4,600 PMT. Annexure to the application filed by GAPL furnished the prices of NBR as published in all the issues of Japan Chemical Week for the previous two years. The agent of JSL in written submission before the Authority stated that those prices were the prices to retail customers. The exporters informed the Authority that in case of sale in their domestic market, they have to deliver small quantity of NBR at any time and additional expenses have to be met for personal contact with the buyers, sending technical staff to solve their technical problems and for R & D work in the laboratory and to develop special grades of NBR for each customer. They also indicated that sales are through several agents which adds to the sales expenses. It was pointed out that since these factors are not relevant in the case of exports, there will be some difference between export price and domestic price. The authority accepted that the Japan Chemical Week prices were retail and not wholesale prices while the exports to India were in large quantities and took into consideration this and most of the other factors mentioned by the exporters' agents in ascertaining and arriving at the "comparative price" in Japanese domestic market for NBR. Accordingly the Normal Value was determined as US $ 3,677 PMT at exchange rates applicable during September, 1993. We may point out that besides merely alleging the various special factors as prevailing in Japanese domestic market, the exporters or their agents did not furnish any supporting material as to the existence or prevalence of such circumstances. Sub-section (2) of Section 9A of the Act contemplates due allowance being made for differences in conditions and terms of sale, in taxation and for other differences affecting price comparability. Since in this case, retail prices are available, it would be possible to ascertain 'comparable price' in Japan's domestic market by making necessary adjustments. Whether the adjustments made by the Authority are correct or adequate is a different matter. In these circumstances, the Authority was justified in determining the 'comparable price' in Japans' domestic market under Clause (b)(i) of the Explanation to Section 9A of the Act on the basis of the prices for small quantities on making appropriate adjustments. There was no warrant to invoke Clause b(ii) of the Explanation.
12. The next aspect relates to the correctness or adequacy of allowances made by the Authority in determining the comparable price of NBR in the domestic market of Japan. The Normal Value was worked out as follows :-
Domestic-price in Japan O.Y- 4,20,000 PMT) = US $ 3,955 PMT Less - Dealers'Commission - 5% Technical and after Sales service - 1% R&D - 1% = US $278 PMT Normal Value = US $3,677 PMT = Rs. 1,16,009 PMT It is contended for the appellants that the Authority did not really make allowance for the peculiar retail market conditions in Japan. We have already referred to the attitude of non-cooperation adopted by the exporters and their agents in not disclosing wholesale price or price for buyers of large quantities. M/s. Bombay Chemical and Rubber Products, agents of JSR in submission dated 9-3-1995 stated that peculiar market conditions are prevalent in Japan with its high cost of living and expensive services and marketing pattern consisting of various channels of distribution, with specialised personnel for attending customers' grievances, special packing, developing special formulation, extending credit etc. - all these factors go to add to the cost of goods but there is no occasion to provide such services in the case of exports. JSL, by letter dated 17-2-1995 claimed that in the case of domestic customers, goods have to be delivered to customers at any time even if the order is for small quantity, and their personnel have to visit customers, that technical staff have to be deputed to resolve technical problems, attention has to be devoted to R & D in their laboratory. It was also alleged that sales are effected through several agents as per Japanese Custom and this adds to sales expenses and domestic price covers all these expenses. But the exporters failed to give any statistical details or any evidence in support of their explanation for high domestic prices. Nevertheless, the Authority while accepting the minimum price in the price range furnished in Japan Chemical Week, allowed deduction of 4% for Dealers' Commission, of 1% for Technical and After Sales Service and of 1% for R & D determined the market value as US $ 3,677 or Rs. 16,609 PMT. The exporters who were in a position to provide evidence about the alleged peculiar conditions in the domestic market and about the particulars of additional expenses on such account deliberately refrained from doing so. A wrong-doer cannot be allowed to take advantage of his wrong. Hence the Authority has been constrained to determine the Normal Value on the basis of best information available from other sources. Unless the determination made by the Authority is unreasonable or perverse, the exporters can have no legal grievance. In the face of non-cooperation on the part of the exporters, the Authority bearing in mind his duty and responsibility applied his mind to the best information available and adopted a reasonable attitude and gave allowance of 7% in all. If the Authority has erred, he has erred in favour of the exporters. The anxiety of the Authority to hold the scales even is manifest from the fact that while Japanese domestic price range is available, instead of adopting the average or mean price, the lowest of the range was adopted. The price range was between J.Y. 4,20,000 to 4,80,000 PMT i.e., US $ 3,955 to 4,520. The mean would be US $ 4,217.50. Instead of adopting the mean, the Authority adopted the lowest, namely US $ 3,955 PMT. This involved price reduction by 6.22%.
13. Appellants contended that the difference in levels of export from Japan and the small quantities of NBR being sold was not taken into consideration by the Authority. This aspect has been referred to in the order but the worksheet does not show any allowance on this account. The total quantity exported by Japan to India was 1863 MT in 1992-93 and 3807 in 1993-94. The exporters did not furnish the total quantity of NBR being sold in the domestic trade and the quantities being sold to buyers other than retailers. Such information having been suppressed, there was no evidence before the Authority to show that as per domestic trade pattern any discount was being allowed to large scale buyers who buy directly from the exporters. The Authority gave allowance of 5% as dealers' commission on the price of every ten metric ton of NBR. Dealers' commission is not shown to have any relevance in the context of direct sales to large buyers. This allowance as well as the effective reduction in price granted by adopting the lowest price in the range of prices will certainly more than cover the factor of difference, if any, in trade levels referred to by appellants, even assuming that such difference has an effect on domestic price.
14. The Designated Authority determined the export price (FOB) as US $ 1,058 PMT equal to Rs. 33,380/- PMT and the correctness of the same is not disputed in the course of submissions made before us. Normal Value is US $ 3,677 PMT or Rs. 1,16,009/-. Margin of dumping has accordingly been determined as US $ 2,619 PMT or Rs. 82,629/- PMT. Since we have found no reason to interfere with the normal value determined, the margin of dumping determined has to be upheld. It necessarily follows that the exporters have dumped NBR in India.
15. We will now consider the contention of the appellants regarding the finding of the Designated Authority on the aspects of "material injury" caused to domestic industry and the causal link between the injury and dumping. The Authority was assisted by a team of personnel of various services relating to customs, cost accountants and others functioning under his supervision. Data was initially scrutinized by the Assistant Director and Joint Director of the Investigation Wing and thereafter by the Director and finally by the Authority. The Investigative Wing subjected the records of the applicant, GAPL to thorough and severe scrutiny. Information was collected from GAPL, Exporters, other interested parties and other sources, though as we have indicated earlier, the exporters did not cooperate and declined to provide relevant information.
16. Japan is a country notified under Sub-section (2) of Section 9B of the Act. Rule 18(2) of the Rules requires that the finding in regard to "material injury" shall involve an examination of facts which the Designated Authority considers relevant under the circumstances including the volume of dumped imports and their effect on prices in the domestic market for the like products and the consequent impact of such imports on domestic producers of such products. The Authority in paragraph 19 of the order stated that it was considered necessary to examine whether there has been a significant price undercutting by the dumped imports as compared with the price of the like product in India or whether the effect of such imports otherwise depressed prices to a significant degree or prevent price increases, which otherwise would have occurred, to a significant degree. The authority considered volume and market share of dumped import, production trend and capacity utilization, sales in absolute trend, selling price trend, stock trend and profitability trend and concluded that the quantity imported from Japan increased significantly, that the share of Japan in imports in India increased significantly during the investigation period as compared to he previous period, that the market share of Japan in the total demand in India increased sharply by about 11%, that as a consequence of reduction in import prices by Japan and reduction in Customs Duty by the Government of India, the import value from Japan after considering Customs Duty (but not Additional Customs Duty) declined by about 9%, that exports from Japan resulted in price undercutting and forced the domestic industry to reduce its prices to unremunerative levels and the various indications relating to domestic industry referred to earlier establish that domestic industry has suffered material injury. The Authority indicated that the Authority took into account the increase in imports from Japan in absolute terms and relative to the consumption of the NBR in India, the increase in share of Japan in total imports, the loss of market share for the domestic industry, the lower value of imports from Japan coupled with higher volumes forcing the domestic industry to reduce its selling price to unremunerative level and restricting it from utilising its capacity to the optimum level, the imports from Japan suppressing the prices of the domestic industry so as to prevent the latter from receiving its full cost of production and earn a reasonable profit, the inventory of the petitioner increasing despite a decrease in the average sales realisation, the near consistency in imports in absolute terms from four major non-Japanese countries despite an appreciable increase in demand for NBR and the steep increase in supply from Japan being attributable only to the lower landed cost arising from dumping which has been injurious to the domestic industry.
17. The application filed by GAPL before the Designated Authority quoted provisional statistics compiled by DGCI & S but subsequently the statistics finalised by DGCI & S became available. The findings of the Authority are based on the final statistics.
Category 1991-92 1992-93 1993-94
Quantity percent- Quantity percent- Quantity percent-
age age age
I. Imports 2327 MT 52.20% 1863 MT 36% 3807 MT 47%
from Japan
Germany
France
S. Korea
USA 1429 MT 32.05% 1246 MT 24% 1826 MT 23%
Other coun-
tries
Total Imports 3756 MT 84.25% 3109 MT 60% 5633 MT 70%
II. Indian
Domestic
Inds.
GAPL
S&C 702 MT 15.75% 1916 MT 37% 2271 MT 28%
167 MT 3% 134 MT 2%
2083 MT 2405 MT
Total Demand 4458 MT 5192 MT 8038 MT
S & C is a very minor part of the domestic industry and did not respond to the notice issued by the Authority. The demand increased steadily during the three years and substantially in the last year. GAPL started production on 1-1-1992 and could make some impact only in 1992-93, whereby the import share fell down. The market share of Japan was 36% out of total import share of 60% as against GAPL share of 37%. But 1993-94 showed a significant change in the pattern of market share, with import share rising to by 10% and share of Japan increasing by 11% while the market share go GAPL fell by 9%. In absolute terms, the increase in the case of Japan was more than 100% while the increase in the case of GAPL was only 18.5%. In 1994-95, shares of Japan, other countries, and Indian domestic industry were 46%, 26.5% and 31.5.% respectively. The share of Japan in imports increased from 60% in 1992-93 to 68% in 1993-94.
18. The CIF import price from Japan to India declined during the period as indicated here below :-
Price in 1992-93 - Rs. 37.92 per kg landed price Price in 1993-94 - Rs. 36.21 per kg excluding Auxiliary duty.
The appellant gave the following statistics of Japanese import price of DN 200 JSR 230 SL :-
1992-93 1993-94 1994-95
(1) Average FOB price US $ 1,060 US $ 1,010 US $ 980 PMT
PMT PMT
(2) Total landed cost Rs. 83,748 Rs. 80,315PMT Rs. 70,010 PMT
including CVD PMT
(3) Landed cost Rs. 71,795 Rs. 67,346 Rs. 58,758
excluding CVD
The decline in landed cost from 1992-93 to 1993-94 was about 6.2%.
19. According to appellants, the above decline in export price has to be considered in the light of the decline in international price of raw materials for manufacture of NBR and reduction in customs duties effected by Government of India. The statistics at page 490 of the paper book relating to the international prices of one of the main raw materials, Acrylonitrile show the following range in terms of Japanese Yen per kilogram.
1981-1990 Fall from 228 to 146
1991 Fall to 121
December, 1991 Fall to 90
1992 Average price increased to 96
1993 Price ranged between 94 to 82
January to 79
March, 1994
The fall in range of international prices for another main raw material, Butadiene is seen at page 491 of the paper book in terms of Japanese Yen per kg :-
1988 84.7
1989 83.8
1990 84.8
1991 80.8
1992 73.4
1993 68.5 to 70
The following are the rates of customs duty and auxiliary duty prevalent in India for the import of the raw materials :-
Year Basic duty Auxiliary duty Total 1991-92 Acrylonitrile 15% 50% 65% Butadiene 40% 15% 55% 1992-93 Acrylonitrile 15% 45% 60% Butadiene 40% - 40% 1993-94 Acrylonitrile 40% - 40% Butadiene 15% - 15% 1994-95 Acrylonitrile 40% - 40% Butadiene 15% - 15%
The duties for both the raw materials came down from 1992-93 to 1993-94. The average realization by GAPL from sales of NBR, exclusive of central excise duty declined sharply from Rs. 61,793/- PMT in 1992-93 to Rs. 58,592/- PMT in 1993-94. The decline was by about 5.1%. It is argued by the learned counsel for appellants that due account has to be taken of the teething troubles, inefficiency, failure in optimum utilization of capacity and wastage and other factors. Taking all the negative features, the Authority arrived at the fair selling price of NBR manufactured by GAPL which is much higher than the landed value of import from Japan. The exact figure is not being indicated here as it is confidential. In arriving at this figure, the Authority took into consideration cost of production, raw material cost, consumption of utilities, packing material, stores, spares, salary, wages, interest liability, return, normative and actual production. We have seen the work chart and find that the Authority production is much higher than the fair selling price at normative capacity. The question of injury to domestic industry cannot be decided by assuming ideal conditions, but has to be decided on prevailing conditions though giving reasonable adjustments. Having gone through the confidential papers, we are satisfied that these factors have been adverted to and assessed properly. GAPL reduced its' prices not as a result of decline in customs duties in India on international prices of raw materials but as a result of decline in Japan's export price to India which might be partly due to declining raw material prices and rates of customs duty. The aspect of injury cannot be considered in isolation from other factors.
20. The Authority considered the production trend and capacity utilization of GAPL. Production increased from 1992-93 (2,178 MT) to 1993-94 (2,380 MT). The comment on low production in May and June, 1994 does not seem to be relevant, the period being outside the period under investigation. The exporters have not disclosed their production statistics during the relevant period. But market share of GAPL declined substantially. The capacity utilisation of GAPL was below optimum level. It is contended by appellants that GAPL's cost of production was more than their price but it has decreased, that value of sales has increased from Rs. 14.75 crores in 1992-93 to Rs. 18.129 crores in 1993-94, that expenditure has decreased from Rs. 26.60 crores in 1992-93 to Rs. 25.87 crores in 1993-94 and that there was wastage problem in 1993-94 and loss has also declined. These statistics are taken from copies of the Balance Sheet for 1993-94 seen at pages 200 and 201 of the Paper Book. Reference is also made to the Balance Sheet for the year 1993-94. We tabulate the relevant statistics for easy reference :-
Heads 1992-93 1993-94 1994-95
(in crores) (in crores) (in crores)
1. Income (Sales) Rs. 14.74 Rs. 18.11 Rs. 61.42
Processing - Rs. 2.2
Charges
Other income Rs. 0.30 Rs. 0.10 Rs. 1.00
2. Expenditure :
B Manufacturing &
Other expenses Rs. 17.00 Rs. 17.95 Rs. 53.40
Interest Rs. 6.65 Rs.5.21 Rs.6.49
Depreciation &
Amortisation Rs. 4.12 Rs. 2.38 Rs. 2.29
xxx xxx xxx
Total: Rs. 26.66 Rs. 25.87 Rs. 62.36
3. Loss before
taxation Rs. 11.60 Rs. 5.45 Profit Rs. 0.54
4. Loss after
taxation Rs. 11.60 Rs.5.4 Profit Rs. 0.54
5. Balance brought
forward from
previous year Rs. 2.14 Rs. 13.74 (Rs. 16.92)
6. Balance Rs.2.14 Rs. 13.74 (Rs. 16.37)
1994-95 is outside the period of investigation. It is argued that sales turnover has been increasing, expenditure and loss has been decreasing. Learned Counsel for GAPL pointed out from the information available in the Balance Sheet at page 187 of the paper book that Financial Institutions agreed for waiver of liquidated damages and simple interest and other reliefs on condition that SBR unit of Apar Limited (a private limited company) should be transferred to GAPL (a public interest limited) and the transfer was made on 1-4-1994 and this involved considerable sacrifice on the part of the promoters. This explains the increase in sales, manufacture, expenditure and earning a nominal profit in 1994-95. However, we are not concerned with the developments which took place in 1994-95. The Balance Sheet for 1993-94 does not give the particulars of manufacturing expenditure or sales of NBR separately. These particulars supplied to the Authority confidentially broadly indicate a modest increase in NBR sales turnover a substantial increase in non-NBR sales turnover other income in 1993-94. This would show that instead of going ahead with increasing production of NBR, GAPL had to resort to increasing production of non-NBR products to contain the loss in NBR business and improve capacity utilisation and to absorb overhead expenditure.
21. It is contended that the average realization of sales of NBR of GAPL is much less than the landed cost of NBR imported from Japan. The particulars are:
1992-93 1993-94 Landed cost Rs. 83,788 PMT Rs. 80,315 PMT Landed cost less CVD Rs. 71,795 PMT Rs. 67,346 PMT Average realization of GAPL Rs. 61,793 PMT Rs. 58,592 PMT
It has to be appreciated that the amount of average realization from sales does not take into consideration dealers' margin and other sales expenses. GAPL has provided the following information in the application as seen at pages 43 and 44 of the Paper Book:-
1992-93 1993-94 1994-95 GAPL's NBR Rs. 89,000 PMT Rs. 83,000 PMT Rs. 79,000 PMT prices to customer approximately approximately approximately Landed price to the customer of NBR Rs. 84,000 PMT Rs. 80,000 PMT Rs. 71,000 PMT from Japan approximately approximately approximately
We find that the above information is broadly correct. At the level of the customer the cost of domestic NBR was much higher than the cost of NBR imported from Japan. Loss to GAPL increased substantially from 1992-93 to 1993-94.
22. Appellants challenge the finding of the Authority that stock of NBR with the domestic industry increased from 431 MT on 31-3-1992 to 546 MT as on 31-3-1994. It is conceded that this conclusion is factually incorrect.
23. The profitability trend of GAPL is also clearly found to be negative during the period of investigation.
24. The discussion in the preceding paragraphs will show as follows :
(a) Volume of import from Japan increased massively in 1993-94 in-reall terms and as per percentage of total import and total demand while the domestic production increased marginally but declined substantially in terms of percentage of total demand and total demand went up in a massive measure. The share of imports of other exporting countries fell marginally, though in real terms there was an increase.
(b) Domestic industry was constrained to reduce price during 1993-94 even as the exporters reduced their prices; but the cost of domestic product to consumer still remained at a high level compared to the price of Japanese NBR in the hands of the customer.
(c) Manufacturing and other expenses of domestic industry increased marginally. Loss continued at a reduced level and accumulated loss increased. During the year 1994-95, in order to secure some relief from Financial Institutions the promoters had to transfer SBR production of the private limited company to GAPL. GAPL also had to increase production of non-NBR products to contain loss in NBR business and improve capacity utilization.
Having regard to all relevant facts and circumstances and the reasonable inferences to be drawn therefrom, we find that the conclusion of the Designated Authority that the domestic industry suffered material injury during the period under investigation is justified and correct.
25. Imposition of anti-dumping duty is justified only if the import from Japan causes or threatens to cause material injury to any established industry in India. The finding is that it has caused material injury to domestic industry. Appellants streneously assail this finding by pointing out that injury has been caused not by the import, but by the inefficiency, inadequate capacity utilisation, and wastage and similar factors. The position has to be considered not in the context of ideal conditions but in the specific circumstances of the domestic industry. NBR is a synthetic rubber, mainly used for manufacture of various rubber articles such as oil seals, Hoses, Automotive products, Gaskets, Rice Dehusking Rolls, Printers fabrics, Oil field products etc. The Authority has found that the manufacturing process, equipments and other facilities needed for producing different grades of NBR are common. There is no material to show any inefficiency on the part of GAPL administration or production in any specific area. Allegation of wastage is made on the basis of alleged information available in the balance sheets regarding the quantities of various raw materials used and the quantities of NBR and SBR manufactured. According to appellants there was wastage of raw materials to the extent of 7.12%, 19.65% and 32.26% in 1991-92, 1992-93 and 1993-94 respectively. This is seen stated in the written submissions of M/s. Bombay Chemicals and Rubber Products, agents of JSL (page 328 of paper book). The inference of alleged wastage has been drawn on the basis of quantity of raw material said to have been consumed as found in the Balance Sheet {page 213 Paper Book). But the quantity of raw material indicated in the balance sheet refers not only to raw material consumed in the process of manufacture but also to raw material sold by GAPL. The quantity actually consumed was furnished by GAPL confidentially and this information has been got verified by the Authority through the investigation agency. It was on the basis of such investigation that normative yield has been assessed. Therefore the allegation of wastage of raw materials or loss of yield has not been made out.
26. It is contended for appellants that loss of market share and inability to raise the prices to remunerative levels was not due to the import from Japan but due to poor quality of NBR produced and sold by GAPL. Learned Counsel referred to written representations submitted to the Authority by some of the importers who also had purchased NBR from GAPL and also copies of some letters. The submissions to the Authority can be regarded only as unsubstantiated allegations and nothing more. Reliance placed on copies of stray complaints by a few customers seen at pages 661 to 664,669, 671 are not adequate to support the general allegation against the quality of the product sufficient in nature and degree to adversely affect the market and the price. Reliance is placed on the copy of report dated 13-3-1995 of the senior technical officer of the Government Industrial Development Cum Quality marking centre, Jalandhar issued to M/s. Kohinoor India Pvt. Ltd. The report purports to compare raw rubber sheets of "DN200" and "Apparene" with reference to presence of volatile matters, tensile strength, elongation at break, swelling in oil. This report does not bring out any defect in the quality of GAPL's product. Neither the exporters, nor any of the importers placed any concrete evidence before the Authority in respect of the poor or defective quality of NBR manufactured by GAPL. GAPL placed before the Authority test reports of national and international laboratories to disprove the allegation regarding quality. In these circumstances, the rejection by the Authority of the allegation against the quality of the product is justified.
27. It is next contended that GAPL reduced the price of NBR in 1993-94 on account of reduced cost of raw materials and reduction of customs duties on raw materials and not on account of dumping. While discussing the aspect of injury we have held that GAPL was constrained to reduce price in 1993-94 even as the exporters reduced the prices but the cost of the domestic product to the consumer still remained at high level compared to the price of imported NBR in the hands of the customer. The domestic prices were undoubtedly at un-remunerative levels. GAPL could not have reduced prices so as to bring down the cost to the consumer in comparison to the cost of the imported product to the consumer. GAPL produced before the Authority letters showing that their customers were pressing for reduction in prices in the aftermath of the reduction of prices by the exporters. Reasonable sale price of GAPL assessed by the Authority takes note of optimum cost of production at attainable level of capacity utilization and any deficiency which might have existed in the working of GAPL. It is therefore clear that the dumping was responsible for the material injury suffered by GAPL during the period in question conclusively indicating price suppression.
28. According to the appellants, since the exporters prices to other countries were comparable to the prices in India, causal link between dumping and injury to Indian domestic industry is not probabilised. They refer to the following statistics :-
Export price in Dollars per MT from Japan to India and neighbouring countries Year India Pakistan China Malaysia 1990 1264 1293 1350 1328 1991 1280 1303 1340 1512 1992 1014 1231 1314 1322 Curiously, learned Counsel for appellant's has not referred to the comparative prices for 1993 and 1994 which have more relevance as we are concerned with prices in 1992-93 and 1993-94. Appellants have not placed before us the conditions in Pakistan, China and Malaysia so far as demand and availability of domestic production are concerned. The statistics reveal a tale of their own. The prices to India are the lowest and in 1992 the price to India was drastically reduced. This assumes added significance since till 1992, the domestic production in India was negligible and GAPL commenced production of NBR from 1-1-1992 and in the three month period till 31-3-1992 produced 702 MT of NBR. At this rate, GAPL production for 1992-93 and 1993-94 should have risen four times to 2810 MT but rose only to 1916 MT in 1992-93 and 2271 MT in 1993-94. This must be due to the aggressive price reduction indulged in by the exporters in 1993 and 1994 for exports to India. Information about FOB export price of NBR from Japan to various countries has been made available to us. It is seen that in 1992, the export price to India was 139.6 JY per kg compared to 226.1 JY per kg for Singapore, 227.1 JY per kg for Indonesia, 202.4 JY per kg fox Iran, 276.9 JY per kg for Yemen, 529.5 JY per kg for Britain, 378.2 JY per kg for USA. It is seen that export price to India was the second lowest in 1992.
29. We have now considered the grounds on which the Authority held that dumping of NBR by the exporters from Japan caused material injury to Indian domestic industry and found that almost all the grounds are tenable. We have also considered in great detail the arguments advanced by the appellants against the reasoning and conclusion of the Authority and found the same devoid of substance. The substantial increase in imports in absolute terms from Japan, the substantial increase in their share of imports by India and of the Indian market during the relevant period, the substantial reduction in export prices by Japan, the fall in import value from Japan (though partly referable to reduction in Customs Duties in India), the exports from Japan resulting in price undercutting and forcing the domestic industry to reduce their prices to unremunerative levels and the other circumstances referred to above clearly establish that imports from Japan suppressed the price of the domestic industry to such degree that the domestic industry was successfully prevented from recovering full cost of production and earn a reasonable profit from sales of NBR in India. Thus the causal link between Dumping by Japan and material injury to Indian domestic industry has been established, as rightly held by the Authority.
30. Since dumping, material injury caused to domestic industry and the causal connection between them has been established, imposition of antidumping duty has become necessary. The limit for quantum of duty is statutorily fixed as the margin of dumping, which in these cases is Rs. 82,629 or US $ 2,619 PMT. The Authority, in such circumstances has a duty to recommend imposition of anti-dumping duty not exceeding the prescribed ceiling. The object sought to be achieved by the imposition of duty is to eliminate the effect of dumping which, in turn, removes the cause of the material injury to the domestic industry. Quantification is a sensitive and delicate task required to be done with care. The Authority recommended imposition of Rs. 19.306 PMT as duty on the ground that such a duty would be sufficient to remove the effect of injury to the domestic industry caused directly by exports of NBR from Japan. This quantum was recommended on the basis of the difference between the weighted average price of the Japanese imports and the fair selling price of NBR produced by GAPL determined at the optimum level of capacity utilisation for the period of investigation. We have perused the worksheet of the Authority for calculating the fair selling price of NBR determined at the optimum level of capacity utilisation. Learned Counsel for appellants pointed out that the fair selling price of GAPL determined and the basis of determination has not been disclosed in the impugned order and appellants are thereby at a disadvantage. The determination of the fair selling price of GAPL was on the basis of confidential information regarding various factors relating to production of NBR. There is no difficulty for appellants to discover the fair selling price so determined in view of the formula adopted for quantifying the duty to be recommended, but the information collected from GAPL on the basis of which fair selling price was assessed is confidential and cannot be disclosed to appellants. We have carefully gone through the worksheet and the relevant papers and we are satisfied that the assessment has been made fairly and satisfactorily. The factors of alleged inefficiency and other defects in the production of NBR by GAPL are taken care of by assessing the fair selling price at the optimum level of capacity utilisation. The recommendation for imposition of Rs. 19,306 PMT as anti-dumping duty is justified.
31. We find no ground to interfere in any matter or to any extent with the order passed by the Designated Authority and accordingly dismiss the appeals.