To be published in the Part I Section 1 Gazette of India, Extraordinary

Subject:- Anti-Dumping Investigation concerning imports of Aniline from European Union (EU)- Preliminary Findings.

No.21/1/2000-DGAD – Government of India 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, thereof:

1. The procedure given below has been followed with regard to the investigations:

i) The Designated Authority (hereinafter referred to as Authority), under the above Rules, received a written petition from M/s. Hindustan Organic Chemicals Ltd. (HOCL), M/s. Narmada Chematur Petro Chemicals Ltd. (NCPL), and M/s. Anirox Pigments Ltd., alleging dumping of Aniline originating in or exported from European Union.

ii) The preliminary scrutiny of the application revealed certain deficiencies, which were subsequently rectified by the petitioner. The petition was, therefore, considered as properly documented.

iii) The Authority on the basis of sufficient evidence submitted by the Petitioner decided to initiate investigations against alleged dumped imports of Aniline originating in or exported from European Union. The Authority notified the Delegation of European Union, New Delhi about the receipt of dumping allegation before proceeding to initiate investigations in accordance with sub rule 5 (5) of the Rules;

iv) The Authority issued a Public Notice dated 29^th May, 2000 published in the Gazette of India Extraordinary initiating anti-dumping investigations concerning imports of Aniline classified under Chapter-29 customs sub-heading no. 2921.41 of the Customs Tariff Act, 1975, originating in or exported from European Union.

v) The Authority forwarded a copy of the Public Notice to the known exporters (whose details were made available by the Petitioner) and industry associations and gave them on opportunity to make their views known in writing within forty days from the date of the letter;

vi) The Authority forwarded a copy of the Public Notice to the known importers (whose details were made available by the petitioner) of Aniline and advised them to make their views known in writing within forty days from the date of the letter;

vii) Request was made to the Central Board of Excise and Customs (CBEC) to arrange details of imports of Aniline:

viii) The Authority provided copies of the Petition to the Known exporters and the Delegation of European Union in India in accordance with Rule 6(3) supra;

ix) The Authority sent a questionnaire, to elicit relevant information to the following known exporters, from the European Union in accordance with Rule 6(4);

x) The Delegation of EU 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, petition and questionnaire sent to the exporters was also sent to them, alongwith a list of known exporters/producers

xi) A questionnaire was sent to the following known importers of Aniline in India calling for necessary information in accordance with Rule 6(4);

xii) Some of the interested parties requested for extension of time to submit the responses, which was, upon good cause shown allowed by the Authority.

xiii) The Authority made available the non-confidential version of the evidence presented by various interested parties in the form of a public file kept open for inspection by the interested parties.

xiv) Cost investigations 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 Petitioner.

xv) *** in this notification represents information furnished by an interested party on confidential basis and so considered by the Authority under the Rules;

xvi) Investigations were carried out for the period starting from 1^st April, 1999 to 31^st December, 1999.

a. Aniline is being dumped by the exporters, manufacturers and traders from European Union.

b. Aniline is being imported directly from EU as well as through traders in third countries such as Switzerland.

c. The official statistics published by Government of India through the DGCI&S, Calcutta reflects true, reliable and reasonable picture with regard to volumes and value of imports of Aniline. The imports from EU increased significantly in absolute terms. Imports from EU which were merely 236.53 MT in 1996-97 increased to 1140.5 MT during period April-December, 1999 i.e. 1521 MT (on annualised basis).

d. The market shares of imports from EU had earlier declined in view of dumping resorted by exporters from Japan/USA. However with the initiation of anti dumping action against Japan/USA the exports have steeply increased from EU. In the period April-Dec.1999 the imports from EU stood at 98% (from about 3% in the preceding year).

e. The imports from EU are causing severe price undercutting. The landed price of imports from EU is significantly lower than the selling price of domestic industry.

3.1 M/s. BASF, Germany:They have stated that they have not exported Aniline during the period of investigation to India. They have stated that BASF is producing the product under consideration i.e. Aniline. During the POI, there was no BASF shipment left from any country of the EU to India. However, they reserve their right to file new shipper investigation under rule 22 when they start exports to India.

3.2 M/s. Bayer AG Germany : They have stated that with in investigation period 1^st April to 31^st Dec.1999, Bayer AG has not exported Aniline product to India.

3.3 M/s. Bayer (India) Ltd. (BIL), Mumbai : They have stated that they have not directly imported during the period April 1997-Dec.1999. BIL has however, made purchases through M/s. C.J. Shah a quantity of 128.34 during April-May, 1999

They have also stated that after the imposition of provisional anti-dumping duty on imports of Aniline originating from Japan & USA, the local manufacturers have increased their prices of Aniline and they have strongly opposed the move of the petitioners for initiation of anti dumping investigations.

3.4 M/s. ICI India Ltd., Haryana: M/s. ICI India Ltd. is a subsidiary of M/s. ICI plc. of UK. They have stated that they are engaged in business of manufacturing and dealing in paints,rubber, chemicals, pharmaceuticals, and specialty chemicals etc.They have also stated that no imports of Aniline were carried out during the period of investigation.

The importers have stated that they have not imported Aniline oil and have only purchased the raw material from domestic supply sources. They have also stated that the increase in domestic Aniline prices has affected the cost of various down stream products thereby rendering imports more attractive.

The importers have submitted that though the Petitioners have contended in their petition that Aniline is exported from EU to India at less than its normal value as defined under Section 9A of the Customs Tariff Act 1975, the petition does not disclose and specify as to what according to them is the normal value.

The Magazine/Bulletin, information relied upon by the petitioners for purpose of normal value cannot be treated as confidential information.

The import information furnished by the petitioners for the period of investigation is not reliable. As admitted by the petitioners themselves that there have been no imports on Aniline during Aug- Dec99 the production of Aniline by the domestic industry during April-December,1999 show no injury to the petitioners. Other indicators like sales also show no injury to the domestic industry. The domestic industry have been able to actually increase the prices progressively during April 1999-Dec.1999 and beyond. The theory of price undercutting made out by the petitioners is false and untrue.

Since the allegation of dumping is only in respect of two manufacturers in Germany, the petitioners could, if at all seek imposition of anti dumping duty on Aniline originating from Germany and not anywhere from EU normally notified as "Others". The Notification also should specify as Aniline originating from BASF, Bayer, Germany and not exported from Germany/EU, since East Europe producers also use west European coasts such as Rotterdam for their export.

They have submitted that there is no merit in the petition and have prayed that the same be dismissed.

4.1 The foregoing submissions made by the petitioner, exporters, importers and other interested parties, to the extent these are relevant as per Rules and to the extent these have a bearing upon the case, have been examined and considered and have been dealt with at appropriate places in these findings.

5.1 The product under consideration in the present investigation is Aniline also known as Aniline oil. Aniline is a transparent, oily, Colourless to pale yellow liquid when freshly distilled. It darkens on exposure to light or air. Aniline is a primary amine compound and a basic organic chemical essential for vital industries such as drugs, pharmaceuticals, dyes and dye intermediates. Aniline is also used in some other industries such as rubber chemicals, explosives, resins etc.

5.2 Aniline is an intermediate for Rubber Chemicals (vulcanization, accelerators, antioxidants), Dyes, Drugs such as analgin, Sulpha drugs, Photographic chemicals (hydroquinone), Isocyanates (MDI or Methylene Diphenylene Di-Isocyanate). In India, 70% of the production of Aniline is used in rubber chemicals, drugs and drug intermediates and dye industries, whereas 80% of production of Aniline world-over is used in MDI.

5.3 Aniline is classified under Chapter 29 of the Customs Tariff Act, 1975, under custom sub-heading no. 2921.41. The classification is however indicative only and in no way binding on the scope of the present investigations.

"Like Article means an article which is identical or alike in all respects to the article under investigation for being dumped in India or in the absence of such article, another article which although not alike in all respects, has characteristics closely resembling those of the articles under investigation."

6.2 Aniline is produced and sold in specifications as per ISI standards, which depict the properties of the chemical. The quality of Aniline is described in terms of its purity. The standard quality of Aniline normally contains 99.8% purity by weight. There is however, no significant difference in terms of process, equipment or technology for the production of Aniline.

6.3 The Authority finds that Aniline produced by the petitioners and the subject product imported from European Union are comparable in terms of characteristics such as physical and chemical characteristics, manufacturing process and technology, function and uses, products specifications etc. The two are technically and commercially substitutable.

6.4 In light of the foregoing, Authority concludes that Aniline produced by the petitioner is a Like Article to the Aniline imported from European Union.

7.0 M/s. Hindustan Organic Chemicals Ltd. (HOCL), M/s. Narmada Chematur Petro Chemicals Ltd. (NCPL), and M/s. Anirox Pigments Ltd., have jointly filed the petition. These three units are the only producers of Aniline in India. The petitioner companies, therefore, account for 100% of domestic production and have the required standing to file the petition under the Rules.

7.1 In light of the foregoing, the Authority concludes that the petitioner has the standing to file the petition on behalf of the domestic industry under the rules.

(i) "the comparable price, in the ordinary course of trade, for the like article when meant for consumption in the exporting country or territory as determined in accordance with the rules made under sub-section (6); or

(ii) when there are no sales of the like article in the ordinary course of trade in the domestic market of the exporting country or territory, or when because of the particular market situation or low volume of the sales in the domestic market of the exporting country or territory, such sales do not permit a proper comparison, the normal value shall be either-

Provided that in the case of import of the article from a country other than the country of origin and where the article has been merely transshipped through the country of export or such article is not produced in the country of export or there is no comparable price in the country of export, the normal value shall be determined with reference to its price in the country or origin".

8.1 M/s BASF : They have stated that they have not exported Aniline during the Period of Investigation. They have also stated that there is no shipment of Aniline to India.

8.2 M/s Bayer: They have stated that within the investigation period 1^st April to 31^st December, Bayer AG has not exported Aniline to India.

8.3 Authority notes that the Two exporters, viz. M/s BASF, Germany and M/s Bayers AG, Germany have stated that they have not exported Aniline during the POI and may request for separate assessment as a new shipper - Rule 22 supra.

8.4 In view of the non-submission of information to the questionnaire by any other producers/ exporters from EU, the Authority have been constrained to rely upon best available information with regard to normal value and export price as provided by the petitioners.

8.5 As regards to imposition of anti dumping duty on Aniline originating from Germany and not anywhere from EU, Authority notes that the Domestic Industry has alleged dumping of subject good from European Union of which Germany is a member country. Hence the anti dumping investigations have been initiated against European Union as a territory.

8.6 The petitioners have provided evidence with respect to prices in Europe, based on a Magazine Chemical Week UK which reported CIF prices of Aniline in European markets in the region of US $ 880 – 925 PMT. The Authority relies upon the claim made by the petitioner with regard to normal value as at ex-factory in European Union and as the best information on record. The normal value is determined at US $ *** PMT.

8.7 The petitioners have provided the export data as reported by Directorate General of Commercial Intelligence & Statistics (DGCI&S, Calcutta) for the period April-December, 1999. The volume of imports from EU is reported at 1251.7 MT and have claimed adjustments on account of Ocean freight, commission, inland transportation, port handling to arrive at ex-factory export price.

8.8 The import data as reported by Customs daily list, Kandla Port indicates the volume of 2652 MT from European Union during the POI which is much higher than that reported by DGCI&S. The Authority had relied on the import data for POI as reported by Custom Daily List. The Authority has allowed adjustments on account of Ocean freight, commission, inland transportation, port handling charges and export price (ex-factory level) has been accordingly determined, at US $ *** PMT.

8.9 The Rules relating to comparison provides comparison of normal value and export price provides as follows:

"While arriving at margin of dumping Designated Authority shall make a fair comparison between the export price and the normal value. A comparison shall be made at the same level of trade, normally at ex-works level and in respect of sales made and as nearly possible the same time. Due allowance shall be made in each case on its merits, for differences which occur price comparability including differences in conditions and terms and sales, taxation, levels of trade quantities, physical characteristics and any other differences which are demonstrated to affect price comparability."

8.10 For the purpose of fair comparison between normal value and export price the Authority took into account the information furnished by the petitioner and other published information available with the Authority. The normal value and export prices determined as detailed above are at ex-works level. The comparison of normal value and export price works out to a dumping margin of *** PMT. The dumping margin expressed as a percentage of export price for EU works out to 166.17 %.

9.0 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 is considered necessary to examine whether there has been a significant price undercutting by the dumped imports as compared with the price of the like article 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, to a significant degree;

Rule (iii) of the Annexure II to the Rules requires that in case imports of a product from more than one country are being simultaneously subjected to anti-dumping investigation, The Authority will cumulatively assess the effect of such imports. Such assessment can be, however, made only if it is determined that:

9.1 The Authority notes that the margin of dumping and quantum of imports from European Union as a territory are more than the limits prescribed above. Cumulative assessment of the effects of imports is appropriate since the export prices from European Union as a territory were directly competing with the prices offered by the domestic industry in the Indian market.

9.2 For the examination of the impact of imports on the domestic industry in India, the Authority has considered such further indices having a bearing on the state of the industry such as quantum of Imports production, capacity utilisation, sales quantum, stock market share, profitability, net sales realisation, the magnitude and margin of dumping etc. in accordance with Annexure II (iv) of the rules supra.

	1997-98	1998-99	POI (Apr-Dec.99)	(Annualised)
Import from EU(MT)	251	172	*2652	(3536)
Share of EU in total import(%)	4.3	3.3	98.4
Import from Japan/USA(MT)	5298	5065	0	(0)
From other countries(MT)	298	40	43	(57)
Total Imports (MT)	5847	5277	2695
Sales of Indian Producers(MT)	38373	35820	31468	(41957)
Total Demand in Country (MT)	44220	41097	34163	(45550)
Market Share in Demand
EU	0.6	0.5	7.8
Japan/USA	11.9	12.3	0
Others	0.7	0.1	0.1
Domestic Industry	86.8	87.1	92.1
	100.0	100.0	100.0

As may be seen from the above, the volume of imports from EU which was 251 MTs during 1997-98 increased to 2652 MT (3536 MT Ann.) in 1999-2000. The share of European Union in total imports raised from 4.3% in 1997-98 to 98.4% in POI. The volume of imports from Japan,USA which was 5298 MT (97-98) reduced to Nil during POI. The anti-dumping investigations for alleged dumping from Japan/USA were in progress before the initiation of the present investigation against EU.

While the market share in demand with respect to European Union have increased manifold from 0.6% (97-98) to 7.8% (POI). Market share with respect to domestic industry has also shown increase from 86.8% (97-98) to 92.1% (POI).

It is observed that the market share in demand for Japan/USA in previous years has been shared by major proportion by EU and to a small extent by the domestic industry during the POI.

It is observed that the production capacity, production and capacity utilization of the petitioner companies (viz., HOCL, NCPL and Anirox Pigments) were as under:

The production of domestic industry decreased from 47254 MT in 1997-98 to 43689 MT (Ann.) during the period of investigation. The capacity utilization which was 97.43% during 1997-98 decreased to 88.98 during POI.

The domestic industry has lost substantial sales in 1998-99. Though the sales have improved in the current year, the same is at the cost of substantial losses made by the individual units in respect of Aniline operations.

It may be observed that the closing stock of petitioners were 2226 MT during 1997-98 have increased to 2881 MT during POI.(April-Dec.99)

9.7 Price undercutting:- The landed price of imports from EU is significantly lower than the selling price of domestic industry. As such the domestic industry is selling at prices significantly below their cost of production. The imports from EU are thus causing severe price undercutting of the domestic industry.

	1997-98	1998-99	POI(Apr to Dec /99)
HOCL	100	93	88
NCPL	100	89	81
Anirox	100	98	87
Average for domestic industry	100	91	85

As seen from the above the domestic sales prices in terms of % have declined during POI compared to 1997-98. The Authority notes that imports were undercutting the prices of Indian industry to a significant degree. This has prevented the industry from increasing their selling prices.

9.9 As regards to issue raised by some interested party that there has been no imports of aniline during Aug –Dec 99 and consequently no injury to the domestic industry during April-Dec 99, Authority notes that volume of imports from EU increased sharply during POI and the imports resulted in price undercutting in Indian market during first two quarters of 1999-2000. This also resulted in substantial losses by individual units producing Aniline.

The Authority, after considering the above, concludes that the domestic industry has suffered material injury from imports of Aniline originating from EU.

10.1 The import of Aniline from other countries is insignificant when compared to total imports to India and in fact the volume of import from Japan/USA is nil during POI. Further, imports from Japan and USA are already attracting provisional anti-dumping duties and further investigations are in progress. The imports from other countries are, therefore, not causing any injury to the domestic industry.

10.2 There is no significant change in demand for Aniline in India. The Authority notes that the changes in demand have, therefore, not contributed to any injury to the domestic industry.

10.3 The technology adopted by the petitioners producing Aniline, is comparable to the technology being adopted by other producers world-over. There is no significant difference in the manufacturing process. The Authority notes that the changes if any, in technology have, therefore, not contributed to any injury to the domestic industry

10.4 In establishing that the material injury to the domestic industry has been caused by the imports from the subject countries, the Authority holds that the increase in market share of imports from European Union prevented the domestic industry from increasing the market share which could be possible as a result of decline in imports from decline in imports from USA/Japan. The domestic industry failed to match the landed price of the imported product on account of the rise in prices of the inputs/feedstock required for the manufacture of aniline. Imports from the subject countries undercut the prices of the domestic product forcing the domestic industry to sell at un-remunerative prices. Resultantly, the domestic industry incurred losses. The material injury to the domestic industry was, therefore, caused by the dumped imports from the said countries.

11.0 The purpose of anti-dumping duties, in general, is to eliminate dumping which is causing injury to the domestic industry and to reestablish a situation of open and fair competition in the Indian market, which is in the general interest of the country.

12.0 It is recognized that the imposition of anti-dumping duties might affect the price levels of the products manufactured using the subject goods and consequently might have some influence on relative competitiveness of these products. However, fair competition in the Indian market will not be reduced by the anti-dumping measures, particularly if they levy of the anti-dumping duty is restricted to an amount necessary to redress the injury to the domestic industry. 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 aniline. Imposition of anti-dumping measures would not restrict imports from the subject countries in any way, and therefore, would not affect the availability of the product to the consumers.

13.0 To ascertain the extent of anti-dumping duty necessary to remove the injury to the domestic industry, the Authority relied upon reasonable selling price of Aniline in India for the domestic industry, by considering the optimum cost of production at optimum level of capacity utilization for the domestic industry.

15.0 It is considered necessary to impose anti-dumping duty, provisionally, pending final determination, on all imports of Aniline originating in or exported from the European Union, pending investigations.

16.0 Authority considered 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 (clause (d) Rule 4 supra as amended). Accordingly, it is proposed that provisional anti-dumping duties be imposed, on Aniline originating in or exported from European Union falling under Customs sub-heading 2921.41 of the Customs Tariff Act, pending final determination. The anti-dumping duty shall be the amount mentioned in Col.3.

17.0 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 Section 3, 3A, 8B and 9, 9A of the Customs Tariff Act, 1975.

18.0 Exporters, importers, petitioners and other interested parties known to be concerned are being addressed separately by the Authority, who may make known their views, within forty days from the date of the dispatch of the letter. Any other interested party may also make known its views within forty days from the date of publication of these findings.

19.0 The following procedure would be followed subsequent to notifying the preliminary findings:

20.0 The Authority invites comments on these findings from all interested parties and the same would be considered in the final findings

21.0 Exporters, importers, petitioner and other interested parties known to be concerned are being addressed separately by the Authority who may make known their views, within forty days of the dispatch of this notification. Any other interested party may also make known its views within forty days from the date of publication of these findings.

22.0 The Authority would provide opportunity to all interested parties for oral submissions;

23.0 The Authority would disclose essential facts before announcing the final findings.

Year	Capacity (MT)	Production (MT)	Capacity Utilisation %
1996-97	48100	40435	84.06
1997-98	48500	47254	97.43
1998-99	49100	41780	85.09
POI(Apr-Dec)	36825	32768	88.98
Annualised	49100	43689	88.98

Country/Territory	Name of the Producer/Exporter	Amount of Duty (US $ per Kg)
1	2	3
European Union	All exporters	0.342