Ministry of Commerce & Industry

Department of Commerce

Directorate General of Anti-Dumping & Allied Duties

Udyog Bhawan

NOTIFICATION

    Final Findings

New Delhi, the 13^th September, 2005

Subject : Mid-term Review of anti dumping duty imposed on imports of Cold Rolled Flat Products of Stainless Steel from EU, Japan, Canada and USA

No. 15/16/2004-DGAD  – Whereas the Designated Authority, having regard to 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 also referred to as Rules) vide Notification No.24/1/2001-DGAD dated 19^th October, 2002 issued its Final Findings recommending definitive anti dumping duty in the anti dumping investigation concerning imports of Cold Rolled Flat Products of Stainless Steel from EU, Japan, Canada and USA (hereinafter referred to as subject countries).   Definitive anti dumping duty was imposed vide Customs Notification No.134/2002-Customs dated 5^th December, 2002. 

2.         And whereas, the Designated Authority(hereinafter also referred to as Authority),  received a written application from M/s Acerinox S.A., Spain, for review of anti dumping duty imposed on imports of subject goods due to changed circumstances with regard to injury.  The request for the review, which contained positive information, was fully supported by the European Commission (EC). Mid-term Review of anti dumping duty imposed on  imports of Cold Rolled Flat Products of Stainless Steel originating in or exported from EU, Japan, Canada and USA into India was initiated by the Designated Authority vide Notification No.15/16/2004-DGAD dated 14^th September, 2004 as per Rule 23 to determine whether the continued imposition of anti dumping duty is required to off-set dumping, and whether injury would be likely to continue or recur if the duty were removed or varied or both.

A.        The Original Investigation

3.         The original investigation concerning imports of Cold Rolled Flat Products of Stainless Steel, of a width of 600mm or more, whether further processed or not of all grades/series from subject countries was initiated on 21^st August, 2001, the preliminary findings were issued by the Designated Authority on 29.11.2001 and provisional duty was imposed vide Customs Notification dated 28.12.2001.  The final findings were issued on 19.10.2002 and definitive anti dumping duty was imposed vide Customs Notification No.134/2002-Customs dated 5^th December, 2002. 

B.            PROCEDURE:

4.     The procedure described below has been followed with regard to this investigation:-

(i)    The Authority issued a Public Notice dated 14^th  September, 2004 published in the Gazette of India, Extraordinary, initiating Mid-term Review of anti dumping duty imposed on  imports of Cold Rolled Flat Products of Stainless Steel, of a width of 600mm or more, whether further processed or not of all grades/series originating in or exported from EU, Japan, Canada and USA into India covered under  Heading No.7219.31, 7219.32, 7219.33, 7219.34, 7219.35 and 7219.90 of Chapter 72 of the First Schedule of the Customs Tariff Act. The Authority forwarded copy of the said public notice to the known exporters, known importers, the domestic industry, the Embassies of subject countries in India, the Delegation of EC in India and gave them an opportunity to make their views known in writing; 

(ii)  According to sub-rule (3) of Rule 6 supra, the Authority provided a copy of the application to the following known exporters and Embassies of subject countries in India and according to sub-rule (4) of Rule 6 supra, the Authority also sent a questionnaire  to the following known exporters to give information within forty days from the date of initiation of this review:

(iii)             Request was made to the Central Board of Excise and Customs (CBEC) and Directorate General of Commercial Intelligence and Statistics (DGCI&S) to arrange details of imports of subject goods;

(iv)       The Embassy of the subject countries and the Delegation of EC in India was informed about the initiation of the investigation in accordance with Rule 6(2) with a request to advise the exporters/producers from their country to respond to the questionnaire within the prescribed time. A copy of the letter, application and questionnaire sent to the exporters was also sent to them;

(v)        A questionnaire was sent to the following known importers/users/industry’s associations  of subject goods in India calling for necessary information in accordance with Rule 6(4);

(vii)            The Authority provided an opportunity to the interested parties to present their views orally in a public hearing held on 18^th January 2005.  All parties presenting views were requested to file written submissions of their views expressed.  The parties were advised to collect copies of the views expressed by the opposing parties and offer rebuttals, if any;

(viii)          The Authority made available to all interested parties the public file containing non-confidential version of evidence submitted by various interested parties for inspection, upon request as per Rule 6(7);

(ix)      Arguments made by the interested parties after initiation of the mid-term review investigation, subsequent to the public hearing and in response to the disclosures have been appropriately dealt with in these findings;

(x)        In accordance with Rule 16 of the Rules supra, the essential facts/basis considered for these findings were disclosed to known interested parties on 24^th August   2005 vide a disclosure statement and comments received on the same have also been duly considered in these findings;     

(xi)      Cost investigations including spot verification (as deemed necessary) of the domestic industry were also conducted to work out optimum cost of production and cost to make and sell the subject goods in India on the basis of Generally Accepted Accounting Principles (GAAP) and the information furnished by the domestic industry;

(xii)            *** in this notification represents information furnished by the interested parties on confidential basis and so considered by the Authority under the Rules;

(xiii)          The investigation covered the period from 1^st April, 2003 to 31^st March, 2004.  The injury analysis covered the three preceding years 2000-2001, 2001-2002, 2002-2003 and the POI.

(xiv)          Copies of the Initiation Notice were also sent to FICCI, CII, ASSOCHAM etc.  for wider circulation.

C.        Product under Consideration  and Like Article:

 5.        Product under consideration :

The product under consideration in the original investigation was Stainless Steel Coils, Sheets and Plates of the description “Cold Rolled Flat Products of Stainless Steel, of a width of 600mm or more, whether further processed or not of all grades/series” (hereinafter also referred as subject goods).  The subject goods are covered under Heading No.7219.31, 7219.32, 7219.33, 7219.34, 7219.35 and 7219.90 of Chapter 72 of the First Schedule of the Customs Tariff Act. These classifications, however, are indicative only and are in no way binding on the scope of the present investigation.  There are no arguments as regards product under consideration. The Authority, therefore, holds the product under consideration as Cold Rolled Flat Products of Stainless Steel, of a width of 600mm or more, whether further processed or not of all grades/series.

6.         Like Article :

            In the original investigation, the authority had treated the Colled Rolled Flat products of Stainless Steel of all grades /series produced by the domestic industry as like article to the product exported from the subject countries. There are no fresh arguments on the issue of like article. Based on the information received from the exporters and the domestic industry, the Authority is of the view that the product being manufactured by the domestic industry is a commercial substitute of the product under consideration and is comparable in terms of characteristics such as physical and chemical characteristics, functions and uses.  The Authority has, therefore, treated the Colled Rolled Flat products of Stainless Steel of all grades /series of a width of 600mm or more manufactured by the domestic industry as like article to the subject goods being imported from subject countries.

D.        Domestic Industry :

7.         At the time of original investigation, there were two main producers of subject goods in India viz. M/s SAIL Salem Plant and M/s Jindal Strips Ltd., Hissar (subsequently known as M/s Jindal Strainless Ltd.).  However, M/s Jindal Strips Ltd. represented the domestic industry in the original investigation.  In this review investigation also, M/s Jindal Stainless Ltd. have furnished information regarding injury, cost of production and other arguments.  The Authority has treated M/s Jindal Stainless Ltd. to represent the  ‘Domestic Industry’ within the meaning of Rule 2(b) supra

E.        Initiation of the Review, Responses received and Arguments raised:

8.         In response to the initiation, responses have been made by the following:

(i)                 Domestic industry through M/s Jindal Stainless Ltd.

(ii)               M/s Acerinox, Spain – Exporter

(iii)             M/s JFE Steel Corporation, Japan-Exporter

(iv)              M/s Outokumpu Stainless Steel, Oy (former Avesta Polarit Oyj Abp.), Finland-Exporter.

The exporters at Sl. No. (ii), (iii) and (iv) above made some arguments.  However, none of these exporters or any other exporter furnished questionnaire response.

9.         Maintainability of the Mid term Review:

a)  Issues raised by the domestic industry :

        i.            The initiation of Mid-term Review in this case was not appropriate, as the basic requirements of the provisions of the law were not satisfied.

      ii.            The exporter has provided certain grounds for initiation of the Mid-term Review; however, no case has been made out to justify the review investigation.

    iii.            Even the exporter has not claimed that their dumping margin have changed permanently or semi-permanently to justify the changed circumstances review.

     iv.            Simple unsubstantiated assertions made by one exporter without any evidence or basis cannot lead to undue burden on the domestic industry.

In response to the disclosures statement, the domestic industry has again argued that there was no sufficient justification for initiation of this review and further there was no positive information furnished by the applicant while seeking this review.

b)   Arguments made by M/s Outokumpu Stainless Steel, Oy (former Avesta Polarit Oyj Abp.), Finland

The mid-term review is maintainable in law and on facts and the submissions made in this behalf by the domestic industry is misconceived.  As per Rule 4(1)(e) of the Anti Dumping Rules, it is one of the duties of the Designated Authority to review the need for continuance of anti dumping duty.   Therefore, irrespective of the fact whether the exporters or importers seek a mid term review and irrespective of the data that may be furnished by the said parties, the authority shall in terms of sub-clause (e) review the need for continuance of anti dumping duty. The opening part of clause (1) of Rule 23 makes it ma ndatory that the authority shall from time to time review the need for continued imposition of anti dumping duty.  The powers of the authority are very wide and are not circumscribed by any restrictions or limitations. The power to review is not contingent upon a request made by third party or any other person or on the basis of some complaint or representation by an interested party.  The powers can be exercised suo motu.  If the need for anti dumping duty does not exist the authority can suo motu enquire whether the same should be continued or not. As such, the submission that the basis for initiation of mid-term review is not proper and therefore, the proceedings are not maintainable is incorrect and the authority has powers under the rules to initiate the same.

Article 11.1 of the agreement throws light on the duration of anti dumping duty and its need for continuation.   Merely because anti dumping duty has been imposed for a particular period, does not ipso facto mean that it shall remain in force for the entire duration, as it is imposed only to counter act dumping that is causing injury to the domestic industry.

Mid-term Review in the present matter is legal, valid and justified on facts as well as in law.  The authority is requested to review the continuance of anti dumping duty and since the domestic industry in its written submissions has not been able to establish the need for its continuance, remove the anti dumping duty on the subject goods.

c)  Examination by the authority

The Authority examined the views of the domestic industry and other interested parties regarding the justification for the initiation of the mid term review.  The applicant M/s Acerinox had furnished information in the application for review, inter-alia, that:

i) On a global basis, market conditions have changed substantially since the duties were initially imposed, as cold rolled stainless markets have shifted from oversupply to shortage, global prices have stabilized at high levels, substantially above the   non-injurious level initially determined by the Designated Authority.

ii) The landed value of exports made by Acerinox to India is well above the minimum non-injurious price established by the Designated Authority.

iii) The price evolution of Acerinox exports showed that these prices were steadily increasing and therefore the exports from Acerinox are not likely to cause injury to the Indian domestic producer.

The above information, inter-alia, was made available in the non-confidential version of the application to all the interested parties including the domestic industry. In the views of the Authority, the applicant had furnished positive information as per Article 11.2 of the Anti Dumping Agreement and the Authority had examined the information before initiating the review. Rule 23 does not prescribe any conditions for initiating the mid term review. As per Rule 23, the Designated Authority shall, from time to time, review the need for the continued imposition of the anti-dumping duty and shall, if it is satisfied on the basis of information received by it that there is no justification for the continued imposition of such duty recommend to the Central Government for its withdrawal. Thus under Rule 23, the Authority is required to reach to a conclusion regarding continued imposition of the duty and where it is found that there is no justification for the continued imposition of the duty, the Authority has to recommend for its withdrawal. The conclusion can be reached after initiation of the review.  In the views of the authority the review has been initiated in accordance with the Rule 23 of Anti Dumping Rules on the basis of positive information furnished by the applicant.

F.         EXAMINATION OF CLAIMS REGARDING NORMAL VALUE, EXPORT PRICE AND DUMPING MARGIN.

10.       Copy of Initiation Notice was sent to the Embassies of subject countries, Delegation of EC in India, the known exporters, importers and domestic industry.  There has been no Questionnaire response from any of the exporters from subject countries.

11.      Normal value for EU

In response to the initiation of Mid-term Review, none of the exporters from EU has given information on the questionnaire.  M/s Acerinox has given general comments regarding the exports of different grades of stainless steel and the grades produced by M/s Jindal Stainless Steel Ltd.  M/s Outokumpu Stainless Steel, Oy (former Avesta Polarit Oyj Abp.), Finland has furnished comments regarding the maintainability of the review, however, they have also not furnished questionnaire response. No other exporter from EU has furnished any response. 

The domestic industry furnished information regarding estimate of normal value in the written submissions subsequent to the public hearing.  In support of their claim for normal value, they have relied on the trade journal Stainless Steel Review which publishes data on negotiated transaction prices of different types/grades of stainless steel in various regions.  The estimate of normal value is based on the average of the reported price of cold rolled coil in EU in Stainless Steel Review for the months from April 2003 to March 2004. In the absence of any questionnaire response from the exporters, the Authority holds the exporters from EU as non-cooperative and is constrained to resort to facts available as per Rule 6(8) read with Article 6.8 and Annex II of the Anti Dumping Agreement.  The domestic industry has also sought an adjustment of US$ 190 PMT on account of thickness of CR Coil taking 0.8 mm as an average on the ground that the reported price in Stainless Steel Review is for 2 mm thickness.  The authority found that the export price reported in the DGCI&S data does not give indication of the thickness of the exported subject goods in respect of all the transactions. Wherever the thickness of the subject goods is indicated, it is of varying thickness. The Authority also noted that in respect of domestic sales, the domestic industry had not furnished data regarding sales in terms of thickness of the product. In the absence of similar adjustment in the export price as well as in domestic sales of domestic industry on account of thickness, the request of the domestic industry to add $ 190 PMT to the estimated normal value was not found to be justified.  The Authority determined normal value for EU on the basis of the average price of Stainless Steel of CR Coils as reported in Steel Review for the period April 2003 – March 2004 and claimed by the domestic industry in their written submissions of 11.2.2005.

12.      Normal value for Japan

In response to the initiation of Mid-term Review, M/s JFE Steel Corporation, Japan has given some general comments on injury but has not given questionnaire response to determine normal value. None of the other exporters from Japan have given any information. 

The domestic industry furnished information regarding estimate of normal value in the written submissions subsequent to the public hearing.  In support of their claim for normal value, they have relied on the trade journal Stainless Steel Review which publishes data on negotiated transaction prices of different types/grades of stainless steel in various regions.  The estimate of normal value is based on the average of the reported price of cold rolled coil in Japan in Stainless Steel Review for the months between April 2003 to March 2004. In the absence of any response from the exporters, the Authority holds the exporters from Japan as non-cooperative and is constrained to resort to facts available as per Rule 6(8) read with Article 6.8 and Annex II of the Anti Dumping Agreement.  The domestic industry has also sought an adjustment of US$ 190 PMT on account of thickness of 0.8 mm as an average on the ground that the reported price in Stainless Steel Review is for 2 mm thickness. The authority finds that the export price reported in the DGCI&S data does not give indication of the thickness of the exported subject goods in respect of all the transactions. Wherever the thickness of the subject goods is indicated, it is of varying thickness. The Authority also noted that in respect of domestic sales, the domestic industry has not furnished data regarding sales in terms of thickness of the product. In the absence of similar adjustment in the export price as well as in domestic sales of domestic industry on account of thickness, the request of the domestic industry to add $ 190 PMT to the estimated normal value was not found justified.  The Authority determined normal value for Japan on the basis of the average price of Stainless Steel of CR Coils as reported in Steel Review for the period April 2003 – March 2004 and claimed by the domestic industry in their written submissions of 11.2.2005.

13.      Normal value for USA

In response to the initiation of Mid-term Review, none of the exporters from USA has given information on the questionnaire. 

The domestic industry furnished information regarding estimate of normal value in the written submissions subsequent to the public hearing.  In support of their claim for normal value, they have relied on the trade journal Stainless Steel Review which publishes data on negotiated transaction prices of different types/grades of stainless steel in various regions.  The estimate of normal value is based on the average of the reported price of cold rolled coil in USA in Stainless Steel Review for the months between April 2003 to March 2004. In the absence of any response from the exporters, the Authority holds the exporters from USA as non-cooperative and is constrained to resort to facts available as per Rule 6(8) read with Article 6.8 and Annex II of the Anti Dumping Agreement.  The domestic industry has also sought an adjustment of US$ 190 PMT on account of thickness of 0.8 mm as an average on the ground that the reported price in Stainless Steel Review is for 2 mm thickness. The authority finds that the export price reported in the DGCI&S data does not give indication of the thickness of the exported subject goods in respect of all the transactions. Wherever the thickness of the subject goods is indicated, it is of varying thickness. The Authority also noted that in respect of domestic sales, the domestic industry has not furnished data regarding sales in terms of thickness of the product. In the absence of similar adjustment in the export price as well as in domestic sales of domestic industry on account of thickness, the request of the domestic industry to add $ 190 PMT to the estimated normal value was not found as justified.  The Authority determined normal value for USA on the basis of the average price of Stainless Steel of CR Coils as reported in Steel Review for the period April 2003 – March 2004 and claimed by the domestic industry in their written submissions of 11.2.2005.

In respect of exports from USA, the Authority found that the import price of 304 grade was abnormally low in the DGCIS transaction wise data for those transactions where series or grade information was available in the data. The Authority thus relied on the aggregate DGCIS data of imports from USA for determining the export price. Like-wise for normal value determination, the Authority adopted the weighted average price for the product under consideration.

14.       Normal value for Canada

In response to the initiation of Mid-term Review, none of the exporters from Canada have given information on the questionnaire. In the absence of any response from the exporters, the Authority holds the exporters from Canada as non-cooperative and is constrained to resort to facts available as per Rule 6(8) read with Article 6.8 and Annex II of the Anti Dumping Agreement.  

The domestic industry furnished information regarding estimate of normal value in the written submissions subsequent to the public hearing.  In support of their claim for normal value, they relied on the trade journal Stainless Steel Review which publishes data on negotiated transaction prices of different types/grades of stainless steel in various regions.  However, the transaction prices for Canada are not reported separately in the Journal.  The authority has adopted the reported price of Cold Rolled Coils in USA for Canada also. The domestic industry has also sought an adjustment of US$ 190 PMT on account of thickness of 0.8 mm as an average on the ground that the reported price in Stainless Steel Review is for 2 mm thickness. The authority found that the export price reported in the DGCI&S data does not give indication of the thickness of the exported subject goods in respect of all the transactions. Wherever the thickness of the subject goods is indicated, it is of varying thickness. The Authority also noted that in respect of domestic sales, the domestic industry had not furnished data regarding sales in terms of thickness of the product. In the absence of similar adjustment in the export price as well as in domestic sales of domestic industry on account of thickness, the request of the domestic industry to add $ 190 PMT to the estimated normal value was not found justified.

Normal value has thus been determined as under:

15.       Export Price

None of the exporters had furnished questionnaire response or information regarding exports – quantity and price. In response to the Disclosures, the domestic industry has argued that DGCIS data had several anomalies, including the one noted about USA export data, which has been acknowledged by the Authority as well. Thus due to non-cooperation of exporters, the Authority should have taken the lower export price as per DGCIS data. M/s JFE Steel Corporation, Japan has argued in response to the disclosure that:

      i.        Import data has not been presented grade -wise;

    ii.        Export price has not been disclosed separately for each of the grades exported;

  iii.        The adjustments carried out for determining the export price for Japan have not been informed;

  iv.        Dumping margin has not been calculated grade wise.

DGCI&S provided data relating to imports of subject goods from subject countries.  With a view to make proper comparison of the similar types / grades of subject goods, transaction-wise import data of DGCI&S has been relied to ascertain export price.  All the individual import transactions did not indicate the grades of the subject goods.  In the absence of cooperation from exporters, including those from Japan as regards furnishing information about normal value and export price grade or series wise, the Authority had to resort to best available information. This mid term review had been initiated at the request of one of the exporters. The domestic industry had given information about the estimate of normal value, export price and dumping margin in their submissions subsequent to the public hearing. The exporters could have assisted the Authority by providing information about series/grade-wise-normal value and export price, if they found the claim of the domestic industry unreasonable. In terms of para 7 of Annex II of Anti Dumping Agreement, regarding the use of best available information, it is clear that if an interested party does not cooperate and thus relevant information is withheld from the authority, this situation could lead to a result which is less favourable to the party than if the party had co-operated. The Authority therefore, does not find merit in the argument advanced on behalf of the Japanese exporter. Therefore, export price has been determined on the basis of those transactions showing grades of the subject goods.   Adjustments have been made from the export price on account of ocean freight, insurance, custom charges and inland freight to the extent considered reasonable by the Authority. Adjustment on account of commission claimed by the domestic industry was not allowed as there was no supportive evidence.

However, in respect of exports from USA, the Authority found that the import price of 304 grade was abnormally low in the DGCIS transaction wise data for those transactions where series or grade information was available in the data. The Authority thus relied on the aggregate DGCIS data of imports from USA for determining the export price. Adjustments have been made from the export price on account of ocean freight, insurance, custom charges and inland freight to the extent considered reasonable by the Authority.

 16.      Dumping Margin :

The Authority followed the principles governing the determination of Normal Value, Export Price and Margin of Dumping as laid down in Annexure I to the anti-dumping rules. Dumping margins have been determined by comparing normal value and export price grade-wise within each series to the extent grade wise data was available. After determining grade-wise dumping margin, a weighted average dumping margin for each series was determined and thereafter one dumping margin for the product under consideration was determined except in the case of USA, where the normal value determined on an aggregate basis for the subject goods was compared with the weighted average export price of all import of subject goods.   The comparison is at the same level of trade, i.e. Ex-factory level.  Based on the Normal Value and export price determination as above, the Authority determined the following dumping margins (%):

G.        INJURY TO THE DOMESTIC INDUSTRY

17.      Arguments made by domestic industry :

a)                 Anti-dumping duty were imposed on Cold Rolled Stainless Steel Flat products of 600 mm and above being manufactured in the Cold Rolled Division.  After imposition of duty in October 2002, the losses have come down over previous years solely because of restrictions on dumped goods at lower prices but still the cold rolled operations continue to incur huge losses.   The figures of profitability for the company as a whole cannot be a basis for initiation of review when anti dumping duty is relating to only the product under consideration.  The applicant provided data for the period up to 31.3.2003, which ought to be examined whereas the POI has been fixed as April 2003 to March 2004.

b)                 It has been mentioned that export prices of the exporter are above the NIP of the domestic industry.  A review cannot be initiated on this ground.  The exporter could seek a refund of duties under Section 9AA of the Customs Tariff Act if they felt that their dumping margin during a particular period has been less that the dumping margin ascertained during the original POI.

c)                  Injury to the domestic industry has to be seen in the context of imports from subject countries and not in the context of a particular exporter.

d)                 The domestic industry’s situation in the Indian market with respect to subject goods has indeed improved with the imposition of anti dumping duties.  However, the analysis of various injury parameters shows that the domestic industry is still under the dark and has not fully recovered from the past dumping.

Further, the domestic industry has furnished the following analysis of various injury factors:

(a)         Imports from the subject countries as percentage of total imports, total demand and production are 53.28%, 19.40% and 39.86% respectively during the period of investigation.

(b)         Sales volume as well as the selling price per MT has increased during the period of investigation. However, the increase in price is not commensurate with the increase in the raw material prices.

(c)          Losses to the domestic industry during the period of investigation have come down as compared to previous years 2001-02 and 2002-03. However, it may be noted that the domestic industry is still incurring losses.

(d)         The production and capacity utilization have increased during the period of investigation as compared to previous years.

(e)         Market share of the domestic industry has increased during the period of investigation as compared to previous years. However, the increase in market share of the domestic industry is 17% during the period of investigation as compared to previous year 2003-04 whereas the growth in the demand over the same period is to the tune of 27%. It clearly shows that the growth in the market has been directly taken over by the dumped imports from the subject countries.

(f)           There is no adverse impact on the number of workers employed by the domestic industry.

(g)         Productivity per employee has improved during the period of investigation.

(h)         The return on capital employed is negative during the period of investigation at 15 % (Index).

(i)           Cash flow is also negative during the period of investigation.   

(j)            As explained above the growth of the domestic industry is not in line with the growth in the market share.

(k)         With respect to price undercutting, the duties in the present case are imposed on the basis of reference price fixed by the Designated Authority. Hence the analysis of any price undercutting would not be meaningful. It may also be noted that the landed values from each of the subject countries are still coming below the reference price.

It has been argued by the domestic industry that while there have been little improvements in financial results in POI (2003-04), after the imposition of final duty in October 2002, the domestic industry is still incurring losses as dumping is still continued in one form or other. The domestic industry has sought the continuation of the anti dumping duty imposed on imports of subject countries. In response to the Disclosure statement the domestic industry has argued that it is mandatory for the authority to examine the likely effect of the continuance or recurrence of dumping and injury if duties are discontinued and the authority has to be satisfied that there is no possibility of dumping and injury to the domestic industry.  The domestic industry is still incurring losses and has not fully recovered from the past dumping. The continuation of anti-dumping duties would be in the interest of domestic industry. The higher levels of dumping margins also indicate that the exporters continue to dump the subject goods even after imposition of duties. Further the determination of price under-cutting and underselling in mid-term review investigation becomes irrelevant in a case where the anti-dumping duties have been imposed based on a reference price as the exporter will try to export at a price as close to the reference price. It has also been argued by the domestic industry that out of the exports of 8079 MT from EU, about 22% is underselling the domestic industry's non-injurious price. These imports are significant and should be considered sufficient enough to have adverse impact on the domestic selling price.

18.       Submissions  of M/s JFE Steel Corporation, Japan

        i.            Since last year corresponding to the POI, there has been a sharp increase of steel demand in the People’s Republic of China.  As a consequence thereof, the world steel market has been significantly affected.   The price of stainless steel of not only 304 series but also 430 is increasing.

      ii.            World demand of steel products has considerably increased and the steel manufacturers all over the world have fully utilized their production capacity.

    iii.            The sudden spurt in demand has caused the price increase of steel products as well as the materials for steel.

     iv.            With the change in prices and consumption patterns, several countries have taken such measures as termination of import restrictions on steel, reduction of import duty and restriction on steel exports.

       v.            In the Japanese market, due to increase in the raw material prices, such as Fe Cr, Molybdenum, the Japanese steel manufacturers have been forced to sell the products at higher prices.  In order to maintain the sales to domestic user and realize the profit, manufacturers have made much of the supply to the domestic users.  Therefore, the capacity available for exports including India of the product is now and will be very limited. These conditions are likely to continue for the time being.  

     vi.            Based on the analysis of publicly available information of the domestic industry, parameters such as state of the industry, production, sales, profits, output and market share, return on investment, capacity utilization, employment and wages and ability to raise capital show positive impact.  The annual report of M/s Jindal Stainless Ltd. shows that the cold rolling unit comprises of cold rolling, annealing and pickling lines and finishing facility. The report inter-alia states that the company has been able to continuously improve its productivity through technology up-gradation of its plant, its equipment and processes.   The report also states that the company has recorded sales growth in excess of 10% with turnover during the year crossing Rs.2600 crores.  The profits have also recorded an impressive growth of 82%. The annual report establishes that during the POI, the domestic industry has shown no signs of injury on account of any exports made from Japan. 

   vii.            There is increase in growth in terms of profit and volume in the Cold Rolling Unit of the domestic industry, which shows that there was no dearth of capital. 

 viii.            The expansion projects planned by the domestic industry proved that their business of stainless steel is fully on road to recovery and shows of positive growth and thus prove that there can be no sign of any visible threat from the alleged dumped imports in the near future.

     ix.            As per domestic industry’s own admission, it is amply clear that their business has improved drastically over the past three years and is currently competitive with other global leader across the market.  Therefore, the anti dumping duty may be terminated.

       x.            The grades being exported into India by JFE cater to the automobile sector which is poised to growth. 

     xi.            Key performance highlights of Jindal Stainless Ltd. for financial year 2003-04 show impressive growth in turnover, EBIDTA, cash profit, PBT and Net Profit.

   xii.            As the subject goods specifically the grades exported by them are used in the manufacturing of catalytic converters, the authority may appreciate that the environmentalists are constantly working towards reducing pollution caused by emissions from the vehicles manufactured.

In response to the disclosure statement, JFE has argued that all the relevant factors analyzed by the authority show that the industry is in increasing recuperation.  There is no persuasive explanation of price undercutting of grade 400 from Japan, which led to positive injury determination. There is no analysis of causal link to lead to the conclusion that the subject imports are the cause of the alleged injury. As per JFE the alleged injury to the domestic industry is caused by imports from third countries. The methodology adopted for determining injury margin may be disclosed.

19.       Submissions of M/s Outokumpu Stainless Steel, Oy (former Avesta Polarit Oyj Abp.), Finland

The authority may examine so called injury and the causal link, if any before any decision is taken in this behalf.  Even assuming that there is dumping of the subject goods (which has not been established), the anti dumping duty cannot be imposed unless it is shown that the domestic industry has suffered injury and that the alleged dumping has caused the injury. It has further been argued in response to the disclosures that injury analysis is incomplete and not in conformity with the rules. The authority should not have determined the injury for all the grades put together. The parameters evaluated by the Authority do not show any material injury to the domestic industry. No causal link has been established. The anti dumping duty should be revoked on the subject goods.

20.       Analysis of injury parameters:

The Authority has analyzed the various injury parameters of domestic industry on aggregate basis in respect of like article of subject goods viz., 'Cold Rolled Flat Products of Stainless Steel, of a width of 600mm or more, whether further processed or not of all grades/series'. This is as per requirement of Rule 11 (2). Wherever price comparability is affected, the Authority attempted to make comparison series or grade wise. However, the exporters have not cooperated by furnishing information regarding series wise export volumes and prices and the Authority had to rely on best available information. The authority has analyzed the information in respect of various injury parameters of domestic industry as under:

21.       Volume of dumped imports:

The volume of imports of subject goods as per DGCI&S data has been found as under:

The Authority found that imports of subject goods from subject countries did not show any significant trend of decline or increase, the imports were 22485 MT during 2000-01 and these were 22105 MT during 2003-04 (POI).  However, total imports of subject goods increased from 30204 MT to 41487 MT.  The share of imports from subject countries in total imports had come down from 74.45% in 2000-01 to 53.28% during POI.  The share of imports from subject countries as a share of domestic production declined from 67.49% to 39.86% during POI. 

22.       Price Effect:

Price Undercutting:

The Authority examined the effect of the dumped imports on the prices in the domestic market of subject goods.  While examining the price undercutting, the Authority considered the sales realization of the domestic industry for subject goods and compared it with the landed value of imports from subject countries. The price undercutting was found to be as under in respect of import transaction showing grade of the subject goods:

As the DGCI&S data of imports did not give details of grades/series of subject goods for all transactions, and there was no cooperation from exporters, the Authority also examined the price undercutting on an aggregate basis by comparing the weighted average sales realization of domestic industry for all series / grades with the landed value of total dumped imports from subject countries and found the price undercutting as under:

The authority found that there was negative price undercutting in respect of imports from EU and a very marginal negative price undercutting from imports from Canada.  However, there were price undercutting from imports from Japan and USA.

23.       Capacity, output and capacity utilization of domestic industry:

The Authority found the production capacity, output and capacity utilization of the domestic industry as under:

The Authority found that the domestic had increased its production capacity from 30000 MT to 90000 MT p.a., which is quite substantial.  Output of the domestic industry showed improvement and it increased to 55453 MT during POI from 33318 MT during 2000-01. The capacity utilization also showed improvement as it increased to 61.61% during POI against the increased capacity of 90000.

24.       Sales, Demand and Market Share:

The Authority found that the sales of M/s Jindal Stainless increased with reference to the base year from 18586 MT to 41464 MT.  The share of domestic industry in total demand increased from 54.64% to 63.59% during POI.  The share of dumped imports from subject countries in total demand declined from 33.77% to 19.4% during POI.  The share of imports from other countries in total demand increased from 11.59% to 17.01% during POI.

25.       Profitability:

The profitability of domestic industry in the sales of subject goods has been analyzed as under for the POI:

The profitability of domestic industry in the sales of subject goods has been found as under for the injury period:

The Authority found that the losses of the domestic industry in the sales of subject goods had come down during POI, however, the domestic industry continued to have losses  during the POI.

26.       Employment:

The above analysis showed that there was increase in the number of employees in the industry.  This was mainly on account of the increased capacity and output of the company. 

27.       Productivity:

The Authority found that the productivity of the domestic industry had improved as the domestic industry increased its output significantly whereas the increase in the number of employees was not so significant.

28.       Return on Investment:

The Authority found that the domestic industry had negative return on capital employed during the POI as well as previous two years.  However, there was some improvement as the extent of loss had declined.

29.       Factors affecting domestic prices:

The Authority examined the sales price and cost of production of domestic industry.  The sales prices were affected by the dumped imports.   However, the sales realization improved during POI.

30.       The magnitude of margin of dumping:

It was found that the margin of dumping in respect of exports from EU was 19.9%.  The margin of dumping was 64.49% for Japan, 130.93% for USA and 150.90% for Canada.  The dumping margin except for EU was found to be substantial.

31.       Actual and potential negative effects on Cash Flow:

The profit / loss before interest was found as under:

The cash flow was as under:

The Authority noted that there was some improvement in the cash flow position of domestic industry during the POI in comparison to the previous two years, however, the cash flow was negative.

32.       Inventories:

The Authority analyzed the closing stock of subject goods of domestic industry  in absolute quantity as well as ratio of closing stock to annual production as under:

The Authority found that inspite of increased production, the inventory of the domestic industry had come down significantly due to higher sales.  This showed significant improvement in performance.

33.       Growth:

The Authority analyzed the growth of domestic industry on parameters such as sales, demand and market share of domestic industry in demand on a year to year basis as under:

The growth in terms of sales, demand and domestic industry’s share in demand showed improved performance. 

34.       Ability to raise capital or investment:

The domestic industry has shown improved performance during the POI though the returns on capital employed were negative during POI in respect of subject goods.   The domestic producer also produces HR Coils which contributes to the  overall profitability of the company. The company is capable to raise new investment. 

35.       Overall assessment of injury:

The authority found that the parameters like output, sales, market share and productivity have shown improved performance by the domestic industry during the POI. Against the increased production capacity of 90,000 MT, the domestic industry achieved a capacity utilization of 61.61% during POI.  Inventories have declined in the face of increased production.  The available data regarding imports showed dumping from subject countries in different magnitude. The exports from subject countries were found to be dumped with a dumping margin ranging from 19.90% to 150.90%. The market share of the imports from subject countries in total demand has declined to 19.4% during POI from 33.77% during 2000-01. The share of domestic industry in total demand has also increased to 63.51% from 54.64%. The exports from EU and Canada had not caused any price undercutting on the domestic sales of the industry. There was Price undercutting in the case of dumped imports from Japan and USA. Cash flow has improved.  There is also no price underselling from the imports from EU and Canada. The losses in sales of subject product have declined. These trends indicate that the domestic industry is in the path to recovery.  The improved performance by the domestic industry on parameters like production, capacity utilization, sales, improved market share, higher productivity and growth can also be attributed to the anti dumping duty imposed in year 2001 as well as to the general improvement in the state of steel industry worldover.  The domestic industry continued to suffer losses in the sale of subject goods, though the losses have declined significantly. Thus the domestic industry continued to suffer material injury.

36.       Causal Link and Likelihood of recurrence of dumping and injury:

As per the above evaluation, the authority found that the demand of the subject goods has been rising.  There was an increase of 71% in demand during the POI over the year 2000-01.   The domestic industry has increased the production capacity in keeping with the increase in demand.  Against the increased production capacity of 90,000 MT, the domestic industry achieved a capacity utilization of 61.61% during POI.   Their share in total demand has also increased to 63.51% from 54.64%.  These trends indicate that the domestic industry is on the path to recovery.  However, the available data regarding imports showed dumping from subject countries in different magnitude.  The improved performance by the domestic industry on parameters like production, capacity utilization, sales, improved market share, higher productivity and growth can also be attributed to the anti dumping duty imposed in year 2001 as well as to the general improvement in the state of steel industry worldover.  The domestic industry continued to suffer losses in the sale of subject goods, though the losses have declined significantly. The current injury is attributable to the dumped imports from subject countries. The industry could not achieve higher capacity utilization due to significant quantity of dumped imports. The demand of the product has been increasing continuously and thus decline in demand can not be a cause of injury to the domestic industry. No technological development or trade restrictive practice has been found to be the cause of the injury. Productivity of the domestic industry has improved and can not be a cause of injury. The losses of domestic industry have been found in the domestic sales of subject goods and can not be attributed to exports. The authority however, is of the view that imposition of anti dumping duty has helped the domestic industry in recovery and improved performance.  The dumping of subject goods has continued. Withdrawal of anti dumping duty may lead to intensified dumping and recurrence of injury to the domestic industry.  The authority, therefore, considers it appropriate to not withdraw the anti dumping duty.  Having regard to the Lesser Duty Rule followed by the authority, the authority recommends imposition of anti dumping duty equal to the margin of dumping or margin of injury, whichever is lesser.  The authority found that the injury margin in respect of imports from EU are negative as the landed value of dumped imports are higher than the Non-Injurious Price of the domestic industry for subject goods in the comparisons made both at the aggregate level of imports as well as on the basis of series-wise data to the extent available.  Regarding the argument of the domestic industry about certain share of imports from EU being at less than NIP, the Authority did not find the averment as correct as the total imports from EU as per injury analysis were 14984 MT and not 8079 MT as contended by the domestic industry. The share of 1786 MT allegedly claimed to be sold at below NIP is 11.9% and not 22% as contended by the domestic industry. Even assuming this as correct, this is not considered significant by the Authority. In addition the Authority also found the trend of sales realization of the domestic industry increasing during POI. In respect of imports from Canada also the Authority found that the injury margin in respect of imports from Canada is negative as the landed value of dumped imports is higher than the Non-Injurious Price of the domestic industry for subject goods in the comparison made at the aggregate level of imports. As regards the argument of the domestic industry that price underselling evaluation is of no relevance in this review investigtion due to the existing duties on a refernce price basis, the Authority's views are that the Authority invariably detrmines NIP in every review investigation. Moreover, the same export prices have been used for determining dumping margins. Therefore, the export prices are relevant and so also the analysis of price undercutting and price underselling. The Authority therefore, is of the view that since the injury margin is negative in respect of imports from EU and Canada, anti dumping duty may not be recommended on imports of subject goods from EU and Canada. The Authority recommends continuation of anti dumping duty, in  persuance to this review on imports from USA and Japan. 

H.        CONCLUSIONS

37.       The Authority has, after considering the foregoing, come to the conclusion that in the review investigation:

(i)                Subject goods have been found to be exported from subject countries to India below their normal value resulting in dumping.

(ii)              The domestic industry continues to suffer material injury. 

(iii)            Due to the likelihood of recurrence of injury to the domestic industry as a result of the continued dumping, the anti dumping duty may continue to remain imposed.

(iv)            Due to the negative injury margin in respect of imports from EU and Canada, the anti dumping duty on EU and Canada may be withdrawn and anti dumping duty may remain in force in respect of USA and Japan.

38.       The Authority, therefore, in accordance with Rule 23, recommends continuance  of anti dumping duty imposed on imports of Cold Rolled Flat Products of Stainless Steel, of a width of 600mm or more, whether further processed or not of all grades/series (covered under Heading No.7219.31, 7219.32, 7219.33, 7219.34, 7219.35 and 7219.90 of Chapter 72 of the First Schedule of the Customs Tariff Act). originating in or exported from USA and Japan.  It is decided to recommend the amount of anti-dumping duty equal to the margin of dumping or less, which if levied, would remove the injury to the domestic industry.  The landed price of imports was also compared with the non-injurious price of the domestic industry, determined for the period of investigation. The anti dumping duty recommended under this notification is to be imposed from the date of notification to be issued in this regard by the Central Government. In the original investigation, the anti dumping duty had been recommended on the basis of a reference price.  The Authority has noted that the prices of subject goods have seen volatility during the recent past.  The Authority, therefore, considers it appropriate to recommend fixed anti dumping duty in persuance to this review. The anti-dumping duty shall be the amount mentioned in Col. 9 in the following Table in US$/MT:

39.       Landed value of imports for the purpose shall be the assessable value as determined under the Customs Act, 1962 and all duties of customs except duties levied under Section 3, 3A, 8B, 9 and 9A of the Customs Tariff Act, 1975.

40.       An appeal against this order shall lie before the Customs, Excise and Service Tax Appellate Tribunal in accordance with the Customs Tariff Act.

Christy L. Fernandez

 Designated Authority

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