F.No. 23/1/2000-DGAD
Government of India
Ministry of Commerce & Industry
Department of Commerce
Directorate General of Anti-Dumping & Allied Duties

…..

New Delhi, the 16 April 2001

Subject: Anti dumping investigation concerning imports of Sodium ferrocyanide from European Union: Final Findings

23/1/2000-DGAD: Having regard to the Customs Tariff Act 1975 as amended in 1995 and the Custom Tariff (Identification, Assessment and Collection of Anti-dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995, thereof:

1. PROCEDURE

1. The procedure described below has been followed:

1. Based on the petition filed by M/s. Cyanides and Chemicals Company, Mumbai, investigation against imports into India of Sodium ferrocyanide (hereinafter referred to as subject goods) from the territory of EU (hereinafter referred to as subject country) were initiated vide notification of number 23.1.2000-DGAD dated 11.6.2000.
2. The Designated Authority (hereinafter also referred to as the Authority) notified preliminary findings vide notification dated 2.1.2001 on anti-dumping investigation concerning imports of Sodium ferrocyanide from European Union and requested the interested parties to make their views known in writing within forty days from the date of its publication;
3. The Authority forwarded a copy of the preliminary findings to the known interested parties, who were requested to furnish their views, if any, on the preliminary findings within forty days from the date of its publication;
4. The Authority also forwarded a copy of the preliminary findings to the Delegation of European Commission in New Delhi with a request that the exporters and other interested parties may be advised to furnish their views on the preliminary findings in the time frame as stipulated in (ii) and (iii) above.
5. The Authority provided an opportunity to all interested parties to present their views orally on 7.2.2001. 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;
6. The Authority made available the public file to all interested parties containing non-confidential version of all evidence submitted by various interested parties for inspection, upon request;
7. Argument raised by the interested parties before announcing the preliminary findings, which have been brought out in the preliminary findings notified have not been repeated herein for sake of brevity. However, the arguments raised by the interested parties subsequently have been appropriately dealt in these findings;
8. In accordance with Rule 16 of the Rules supra, the essential facts/basis considered for these findings were disclosed to known interested parties and comments received on the same have also been duly considered in these findings;
9. The period of investigation (POI) considered is 1.1.99 to 31.12.99.

2. The views expressed by various interested parties have been discussed in the preliminary findings and also in the disclosure statement. The views which have not been discussed earlier in the preliminary findings and disclosure statement and those now raised in response to the disclosure statement are discussed in the relevant paras herein below to the extent these are relevant as per rules and have a bearing upon the case. The arguments raised by the interested parties have been examined, considered and, wherever appropriate, dealt in the relevant paragraphs herein below.

3. It was mentioned in the preliminary findings that M/s. Cyanide and Chemical Co., Mumbai, who are the only petitioner in this investigation, account for more than eighty percent of the domestic production and therefore constitute domestic industry in accordance with Rule 2(b) supra. The Authority notes that there is no argument raised by interested parties on the standing of the petitioners and hence determine that the petitioner represent domestic industry for the purpose of present investigation.

 D. PRODUCT UNDER CONSIDERATION AND LIKE ARTICLES

4. It was mentioned in the preliminary findings that Sodium Ferrocyanide is an Inorganic chemical and is manufactured out of Sodium Cyanide, having application for production of fencycine, pigments, photographic fixing agents in electroplating industry, for fermentation processes of fruits acids and pharmaceutical/chemical industry etc. Sodium Ferrocyanide is classified under custom code 2837.20 of Schedule I of the Customs Tariff Act, 1975. Sodium Ferrocyanide being imported from EU has characteristics closely resembling to the Sodium Ferrocyanide being produced by the domestic industry and, therefore, the two are considered as like article in accordance with Rule 2(d) supra. The product, Sodium Ferrocyanide is, therefore, covered under the scope of this investigation. As there is no argument raised by any interested with regard to product under consideration and like article, the Authority has decided to continue with the same description as given in the preliminary findings which are hereby confirmed in this regard.

5. DUMPING

5. The Authority provided opportunity to the known exporters to furnish information in accordance with Section 9(1) © of the Custom Tariff Act 1975, as amended in 1995, cited above. As mentioned in the preliminary finding, the response given by M/s. Degussa Huls, one of the manufacturers and exporters from EU was accepted and the information given by them regarding the domestic and export prices as well as their claim for adjustments on account of landing charges, ocean freight, marine insurance, commission, etc., was also accepted. The argument that the calculation of normal value shall be based on the sale price to those customers in EU who have supplied quantities in excess of the volume supplied to the customers in India, was also accepted and calculations made accordingly.

6. It was also mentioned the preliminary findings that while accepting the arguments by M/s. Degussa Huls above, for the purpose of calculation of normal value, the Authority had decided to ignore the transactions of the domestic sales which are below cost of production as not being in the ordinary course of trade by reason of prices in terms of paragraph 2 of Annexure I of Anti Dumping Rules. It was further observed that in the case of some customers supplies have been made at prices below the cost of production per unit. Further, it was observed that these supplies have been made in substantial quantities throughout the year and hence do not provide for recovery of all costs within a reasonable period of time.

7. In their submissions made in response to the preliminary findings M/s. Degussa Huls have argued that while accepting their request to determine normal value based on price to domestic customers who purchased quantities that were comparable to that of Indian buyers, the Authority has omitted the sales to two domestic customers on the ground that the price to these customers was below the cost of production and hence were not in the ordinary course of trade. It has further been contended that the Authority is precluded from excluding such transactions which are below the cost of production because the weighted average domestic price of all comparable transactions is higher than the weighted average cost of production. Consequently, the sales to the two domestic customers, though below the cost of production, provide for the recovery of all the costs during the period of investigation. This is borne out by the fact that the weighted average domestic realisation is higher than the weighted average cost of production of the PoI.

8. Para 2 of Annexure I of Anti Dumping Rules reads as follows:-

1. such sales are made within a reasonable period of time (not less than six months) in substantial quantities, i.e. when the weighted average selling price of the article is below the weighted average per unit costs or when the volume of the sales below per unit costs represents not less than twenty per cent of the volume sold in transactions under consideration, and

2. such sales are at prices which do not provide for the recovery of all costs within a reasonable period of time. The said prices will be considered to provide for recovery of costs within a reasonable period of time if they are above weighted average per unit costs for the period of investigation, even though they might have been below per unit costs at the time of sale."

9. It is clear from the reading of para 2 of Annexure I of Anti Dumping Rules cited above, that sales which do not provide for recovery of cost at the time of sale and if these sales are more than 20% of the total sales then these are to be accepted as not being in the ordinary course of trade. Therefore, the Authority had decided to ignore the sales below cost of production which are more than 20% of the total sales for the purpose of arriving the normal value. The Authority, therefore, reiterates that the dumping margin in respect of exports made by M/s. Degussa Huls comes to 60% of the export price which is the same as what was determined in the preliminary findings. Also, as done in the preliminary findings, the Authority has decided to continue to use the same dumping margin for all the exports from EU as there does not seem to be any other manufacturer/exporter from the EU of the product under consideration.

10. Under Rule 11 supra, annexure II, when a finding of injury is arrived at, such finding shall involve determination of the injury to the domestic industry, "…….taking into account all relevant facts, including the volume of dumped imports, their effect on prices in the domestic market for like articles and the consequent effect of such imports on domestic producers of such articles……" In considering the effect of the dumped imports on prices, it has been examined 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 is otherwise to depress prices to a significant degree or prevent price increases, which otherwise would have occurred. Also the effect of dumped imports on the volume of sales by the domestic industry has been looked into while determining injury being caused.

11. For the examination of the impact on the domestic industry in India, the Authority has considered such indices having a bearing on the state of industry as production, capacity utilization, sales quantum, stock, profitability, net sales realisation, the magnitude and margin of dumping, etc., in accordance with Annexure II (iv) of the Rules supra. The Authority has also examined factors other than dumped imports viz., demand contraction, recession, uneconomical plant size, high and inefficient consumption norms of raw materials and utilities, high interest burden, distress exports etc., which might be injuring the domestic industry at the same time.

12. All the parameters of injury mentioned above, were examined and considered by the Authority and on the basis of the evidence available it was determined in the preliminary finding that all the relevant factors, cumulatively and collectively establish that the domestic industry has suffered material injury during the period of investigation caused by dumped imports from EU. It was determined that the increase in volume of imports in absolute as well as percentage terms of subject goods from EU is matched by fall in the share of domestic industry in total sales in India during the period of investigation. It was further determined that there has been a significant fall in the capacity utilisation of the domestic industry. It was observed that most significant effect has been the situation of price suppression caused by dumped imports in the Indian market which prevented the domestic industry to sell at prices not commensurate with its cost of production resulting in losses from the sale of the subject goods in the domestic market. It has been argued by the exporter that the domestic industry is obfuscating the issue of injury by adopting different base years to support material injury. However, as is clear from the figures given in the preliminary finding the comparison has been with reference to the previous year data also and not with reference to 1996 only as alleged. The Authority, therefore, confirms the preliminary findings with respect to injury and determines that the domestic industry has suffered material injury during the period of investigation.

13. In their comments subsequent to the preliminary findings it has been argued by M/s. Degussa Huls that the injury caused to the domestic industry and especially the price suppression and price depression have been caused by imports from China and not by imports from EU. It has further been argued that Degussa Huls entered the market at a price which was matching the price being charged by the domestic industry and if by matching the price of the domestic industry the exporter was able to obtain a market share, that cannot be said to be causing injury.

14. The issue of causal link has been addressed in the preliminary finding where it has been determined that the dumped imports at dumped price from EU have caused injury to the domestic industry especially because of situation of price undercutting prevailing in the Indian market and fall in the sales volume of domestic industry was established to be a result of dumped imports from the EU. The above mentioned contention of the exporter that injury to the domestic industry has been caused by Chinese exports and not by the exports from EU has also been discussed in the preliminary finding. The Authority has decided to continue with the determination of causal link given in preliminary finding and confirm these findings.

15. The Authority reiterates that the purpose of anti dumping duties in general is to eliminate dumping which is causing injury to the domestic industry and to re-establish a situation of open and fair competition in the Indian market which is in the general interest of the country.

16. The Authority again recognises that the imposition of anti dumping duties might affect the price levels of the products manufactured using Sodium Ferrocyanide and consequently might have some influence on relative competitiveness of these products. However, fair competition on the Indian market will not be reduced by the anti dumping measures. On the contrary, imposition of anti dumping measures would remove the unfair advantages gained by dumping practices, would prevent the decline of the domestic industry and help maintain availability of wider choice to the consumers of Sodium Ferrocyanide. The Authority notes that the imposition of anti dumping measures would not restrict imports from EU in any way, and therefore, would not affect the availability of the product to the consumers. The consumers could still maintain two or even more sources of supply.

17. To ascertain the extent of anti dumping duty necessary to remove the injury to the domestic industry, the Authority has relied upon non injurious selling price of subject goods in India for the domestic industry by considering the optimum cost of production for the domestic industry.

18. The non injurious price for the domestic industry has been determined by making appropriate analysis of all relevant factors like usage of raw material, usage of utilities, captive consumption, captive generation of utilities etc., and the actual expenses during the period of investigations including the investments and capacity utilisation. The NIP of domestic industry has been determined by considering the optimum cost of production and considering the reasonable return on the capital employed by the domestic industry. While determining NIP, the Authority has taken into account the best consumption norms of raw materials and utilities and has, thereby addressed any inefficiencies which might lead to financial injury to the industry on account of the inefficiencies.

19. After considering the foregoing the Authority concludes that -

1. Sodium Ferrocyanide of EU origin has been exported to India below its normal value;
2. the Indian industry has suffered material injury;
3. the injury has been caused by the imports from EU.

20. The Authority proposes 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. For the purpose of determining injury, the landed price of imports is proposed to be compared with the non injurious selling price of the petitioner companies determined for the period of investigation.

21. The Authority recommends imposition of definitive anti dumping duty on all imports of sodium ferrocyanide falling under Customs Code 2837.20 originating in or exported from European Union. As already determined in the preliminary finding, the anti dumping duty shall continue to be the difference between the amount mentioned in column 3 and landed value of import per MT.

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

23. Subject to the above, the Authority confirms the preliminary findings dated 2.1.2001.

24. An appeal against this order shall lie before the Customs, Excise and Gold (Control) Appellate Tribunal in accordance with the Act, supra.

L V Saptharishi, Designated Authority

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