(To be published in Section 1: Part I of Gazette of India Extraordinary)
MINISTRY OF COMMERCE & INDUSTRY
New Delhi, the 25th September, 2001
Subject: Anti-dumping investigation concerning imports of Acrylic Yarn originating in or exported from Nepal - preliminary findings.
No. 29/1/2001-DGAD - The 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;
(i) The Designated Authority (hereinafter referred to as Authority), under the above Rules, received a written petition from M/s. Punjab Fibres Ltd., Nawan Shahar, Punjab; M/s. Vardhman Spinning & General Mills Ltd., Ludhiana; M/s. Sportking India Ltd., Ludhiana; M/s. Malwa Cotton Spinning Mills Ltd., Ludhiana on behalf of the domestic industry, alleging dumping of Acrylic Yarn (hereinafter referred to as subject goods) originating in and exported from Nepal (hereinafter referred to as subject country) ;
(ii) The Authority notified the Embassy of subject country in India about the receipt of dumping application made by the petitioners before proceeding to initiate the investigation in accordance with sub-rule (5) of Rule 5 supra;
(iii) The Authority issued a Public Notice dated 3rd July, 2001 published in the Gazette of India, Extraordinary, initiating anti dumping proceedings concerning imports of Acrylic Yarn originating in or exported from Nepal classified under heading 5402.39, 5402.69 and under sub-heads of heading 5509 of Schedule I of the Customs Tariff Act, 1975;
(iv) The Authority forwarded copy of the said public notice to the known exporters, importers, chambers of commerce and to the complainants and gave them an opportunity to make their views known in writing.
(v) According to sub-rule (3) of Rule 6 supra, the Authority provided a copy of the petition to all the known exporters and Embassy of subject country in India.
(vi) The Authority sent questionnaires, to elicit relevant information, to the following exporters:
(vii) The Embassy of Nepal in New Delhi was also informed about the initiation of investigation and requested to advise the exporters/producers from their countries to respond to the questionnaire within the prescribed time;
(viii) The exporter from Nepal sought extension of time for furnishing of reply and the Designated Authority, having regard to Rule 6(4) supra, allowed extension of one week for submission of response by the exporter, in view of sufficient cause having been shown by the exporter.
(ix) The questionnaire was sent to the following importers/users of Acrylic Yarn:
The above importers sought extension of time for furnishing of reply as given in the case of the exporters. The Authority considered the request and allowed similar extension of time of one week for submission of reply by the importers as allowed in the case of exporters.
(x) Among the users/importers, response to the questionnaire was filed by M/s. Kaur Sain Traders, Ludhiana and M/s. Goyal Agencies, Delhi. Among the exporters, M/s. Reliance Spinning Mills Ltd., Distt. Sunsori, Nepal having their corporate/head office at Kathmandu, Nepal has filed response to the questionnaire.
(xi) Additional information regarding injury was sought from the petitioners, which was also furnished;
(xii) The Authority kept available non-confidential version of the evidence presented by various interested parties in the form of a public file maintained by the Authority and kept open for inspection by the interested parties;
(xiii) ***** in this notification represents information furnished by the interested party on confidential basis and so considered by the Authority under the Rules;
(xiv) The Authority sought and verified information given by the domestic industry and to this end investigations were carried out at the premises of the petitioners at Ludhiana in Punjab;
(xv) The Authority also conducted cost investigation and worked out optimum cost of production and cost to make and sell subject goods in India on the basis of Generally Accepted Accounting Principles;
(xvi) The investigation covered the period from 1st April, 2000 to 31st March, 2001.
(xvii) Copies of initiation notice were also sent to FICCI, CII, ASSOCHAM etc., for wider circulation.
3. The petitioners have made the following major points in their submissions:
The export price has been claimed on the basis of the data compiled by the Directorate General of Commercial Intelligence & Statistics, Calcutta. Adjustments have been claimed on account of freight, insurance, commission, loading of material, to arrive at net export price at ex-factory level.
There has been significant increase in the imports of Acrylic Yarn from Nepal in the last two-three years. The imports increased from 0.16 million kgs in 1996 to 18 million kgs in 2001. The imports from Nepal have increased in actual terms;
The capacity for Acrylic Yarn manufacture being created in Nepal are primarily to target Indian market only;
The market share of imports from Nepal in India has increased from 8.36% in 1998-99 to 27.37% in 2000-01;
The imports of subject goods are being made from Nepal at dumped prices since the normal value determined on constructed cost of production is significantly higher than the export price. The dumped imports are causing serious injury to the domestic industry;
Due to the dumping of subject goods the domestic industry production has either stagnated or declined. Whereas, the share of imports from Nepal has increased in the overall demand of Acrylic Yarn;
The domestic industry has suffered injury due to price under-cutting as the industry has been forced to sell its product at severe losses. The cost of production of the domestic industry increased significantly. However, sales realization of the petitioners could not be increased to a level of reasonable profitability. The landed value of the imported material from Nepal is significantly below the selling price of the domestic industry causing severe price under-cutting in the Indian market.
The domestic industry has suffered injury due to dumped imports causing price suppression/depression. The landed value of imports of subject goods from Nepal is significantly below the cost of production of the domestic industry causing price suppression, depression in the Indian market.
The domestic industry has suffered significant losses due to selling of the subject goods at selling price lower than the cost of production resulting in losses continuously;
C. EXPORTERS' VIEWS
4. The exporters have expressed following views in their response:
D. EXAMINATION AND FINDINGS BY AUTHORITY
5. The submissions made and the information provided by the exporters, importers and the domestic industry have been examined and considered while arriving at these findings and wherever appropriate have been dealt hereinafter. The Authority observed that the exporter has given information in respect of the questionnaire selectively. In the initial response the exporter chose not to give information on domestic sales in Appendix-I. Similarly, information about domestic market sales for current year and preceding two years as required in Appendix-3 was not given. The information about export sales data for preceding two years was also not given for April-March period for proper comparison and instead data was given for 17th July to 16th July period. Sales price structure for domestic sales (Appendix-5), factory cost and profit of domestic sales (Appendix-9) were not furnished. On being asked to clarify about information on domestic sales, the exporter gave information about domestic sales transactions on Appendix-1, however, other information as above has not been given. Therefore, the exporter gave selective information and did not make a complete response. The shortcomings in the response have also been dealt with in the findings wherever considered appropriate.
6. The cases of new exporters or those stated to be willing to give price undertaking shall be considered, on request, by the Authority in accordance with the Rules supra.
E. PRODUCT UNDER CONSIDERATION AND LIKE ARTICLE
7.The product under consideration is Acrylic Yarn. Acrylic Yarn is made of acrylic fibre and spun in mainly 3-4 counts. It can be made either from 100% acrylic fibre or in combination of 90% acrylic fibre blended with 10% polyester or viscose or 85% acrylic fibre blended with 15% polyester or viscose. Acrylic yarn is used for production of knitwears, hosiery, shawls etc. Acrylic Yarn imports are covered under various sub-headings of Customs Tariff Classification Major Head 5402 like 5402.39 and 5402.69 and also under sub-heads of Major Head 5509. These Custom classifications are however, indicative only and are in no way binding on the scope of the investigation.
8. The petitioners have claimed that the goods produced by them are like articles to the goods produced, originating in or exported from Nepal. The exporters had not raised any point on this issue in their initial response and had given selective information. However, when they were asked to clarify on the issue of domestic sales, they raised the point that grey and dyed Acrylic Yarn should be considered as separate products as they are not technically and commercially interchangeable. While doing so the exporters gave details of domestic sales of Acrylic dyed yarn as required under Appendix-1 of questionnaire. The Authority has examined the views expressed by the exporters as regards like article. The product involved in the present investigation is Acrylic Yarn as mentioned in the para 2 of the initiation notification dated 3.7.2001. Acrylic Dyed Yarn had not been excluded from the purview of the present investigation. The information regarding exports made by the exporter during the period of investigation also includes exports of Acrylic Dyed Yarn. The Authority considers that Acrylic Grey Yarn and Acrylic Dyed Yarn are technically same product except that grey yarn when dyed becomes dyed yarn. These are mutually substitutable. The Authority did not agree to the contention of the exporter to exclude Acrylic Dyed Yarn from the present investigation and therefore for the purpose of investigation, the goods produced by the petitioners are being treated as like articles of the product involved, i.e. Acrylic Yarn imported from the subject country within the meaning of the Rules supra.
F. DOMESTIC INDUSTRY
9. There are several producers of the subject goods in India, however, the petition has been filed by M/s. Punjab Fibres Ltd., Nawan Shahar, Punjab; M/s. Vardhman Spinning & General Mills Ltd., Ludhiana; M/s. Sportking India Ltd., Ludhiana; M/s. Malwa Cotton Spinning Mills Ltd., Ludhiana. As per the petition the estimated production of Acrylic Yarn during April 2000 to March, 2001 (POI) was 36.65 million kg and the production of the four petitioners during this period was 19.884 million kg which is 54.4% of the production. However, the production figures of Acrylic Yarn were verified from the office of the Textile Commissioner, Mumbai who have informed that the total production of Acrylic spun yarn during the period of investigation was 64.94 million kgs and the share of the four petitioners was 22.59 million kgs which comes to 34.79%. The exporter has raised the point regarding standing of the petitioner. However, they have derived the Acrylic Yarn production figure from Acrylic Fibre. There is a possibility of use of Acrylic Fibre in manufacture of different blends of yarn, besides, any other usage. There are also some exports of Acrylic Fibre from India. As the exporter has not furnished any authentic data regarding the production of Acrylic Yarn during POI, the authority considers it appropriate to rely upon the information received from the office of the Textile Commissioner, Mumbai and therefore, the petitioners, who account for more than 25% of the total production of the like article, are treated to represent the domestic industry in terms of Rule 5 supra. During the course of the investigation the following domestic producers have also supported the petition for anti-dumping investigation into the dumping of Acrylic Yarn from Nepal:
Name of the domestic producer
Production in 2000-2001 (MT)
M/s. Vardhman Polytex, Ludhiana.
M/s. Garg Acrylics Ltd., Ludhiana.
M/s. Adinath Textiles Ltd., Ludhiana
M/s.Mahavir Spinning Mills Ltd., Ludhiana
M/s. Arisudana Industries Ltd., Ludhiana
M/s. Deepak Spinners Ltd., Chandigarh
M/s.Supreme Woolen Mills Ltd., Ludhiana
G. DUMPING & EXAMINATION OF CLAIMS MADE ON NORMAL VALUE & EXPORT PRICESNormal Value
10. Under Section 9A(1)(c), normal value in relation to an article means:
11. The Authority sent questionnaires to the known exporters for the purpose of determination of normal value in accordance with Section 9A(1)(c). However, response was received only fromM/s. Reliance Spinning Mills Ltd., Distt. Sunsori, Nepal having their corporate/head office at Kathmandu Nepal. According to exporters they have not made any sales of Acrylic Grey Yarn in Nepal. Therefore, the domestic prices of grey yarn are not available. As regards, dyed Acrylic Yarn, they have exported a very small quantity in the count of 1/40. Acrylic Yarn of this count has however not been sold in the domestic market in Nepal. Therefore, according to the exporter, the normal value cannot be determined based on domestic sale prices in Nepal. Though the exporter had not furnished information relating to the domestic sales, the information furnished did reflect that there were domestic sales of the product involved in the investigation, i.e. Acrylic Yarn. The exporter was asked to clarify on this inconsistency. The exporter responded stating that grey and dyed Acrylic Yarn should be considered as separate product as they are not technically and commercially interchangeable. While furnishing the clarification the exporter submitted information relating to domestic sales of Acrylic Dyed Yarn. Complete information on the prescribed format has not been furnished regarding sale price structure for domestic sales. The factory cost and profit of domestic sales as per Appendix 9 has also not been furnished. As per information furnished by the exporters the quantum of domestic sales of Acrylic Dyed Yarn is *** MT. This is 2.3% of the exports made by the exporter of the product involved during the Period of Investigation. According to Section 9A(1)(c)(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
(a) comparable representative price of the like article when exported from the exporting country or territory or an appropriate third country as determined in accordance with the rules made under sub-section (6); or
(b) the cost of production of the said article in the country of origin along with reasonable addition for administrative, selling and general costs, and for profits, as determined in accordance with the rules made under sub-section (6);
12. Article 2.2 of the WTO Agreement on Anti-Dumping is relevant here. An explanation to the term low volume of sales in the domestic market has been provided as a footnote stating that "sales of the like product destined for consumption in the domestic market of the exporting country shall normally be considered a sufficient quantity for the determination of the normal value if such sales constitute 5% or more of the sales of the product under consideration to the importing member, provided that a lower ratio should be acceptable where the evidence demonstrates that domestic sales at such lower ratio are nonetheless of sufficient magnitude to provide for a proper comparison". The domestic sales of Acrylic Dyed Yarn constitute only 2.3% of the exports made by the exporter in this case. Therefore, these domestic sales are not treated as sufficient to provide for a proper comparison. As per the information furnished there are no exports made by the exporter to any other country. Therefore, section 9A(1)(c)(ii)(a) for determination of normal value on the basis of comparable representative price of the product when exported to a third country, is also not applicable in this case.
13. Therefore, for determination of normal value section 9A(1)(c)(ii)(b) becomes applicable, i.e. the normal value is to be determined on the basis of the cost of production of the said article in the country of origin along with reasonable addition for administrative, selling and general costs, and for profits, as determined in accordance with the rules made under sub-section (6). In accordance to Rule 10 and Principle 1 of the Annexure -1 of the Customs Tariff (Identification, Assessment and Collection of Anti Dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995, the element of costs referred to in the context of determination of normal value shall normally be determined on the basis of records kept by the exporter or producer under investigation, provided such records are in accordance with the Generally Accepted Accounting Principles of the exporting country, and such records reasonably reflect the cost associated with production and sales of the article under consideration. The period of investigation in this case is from 1st April, 2000 to 31st March, 2001. The exporter had sought extension of time for submission of response on various grounds and one of the grounds was that in Nepal the financial year is as per Hindu calendar starting from 17th July, which is different from the POI and therefore they had to prepare the information keeping in view the investigation period. The Authority had allowed one-week extension for submission of reply. Even after this extension the exporter has not furnished complete information for the period of investigation. The financial information furnished by the exporter is incomplete as the balance sheet and profit and loss account for the period 16th July 2000 to 13th April, 2001 has been furnished which does not serve the requirement of proper verification of costing information for the product under consideration for the investigation period. The information on the factory cost and profit of domestic sales on the prescribed format has not been furnished. Sales price structure for domestic sales has also not been furnished. Therefore, the Authority disregards the costing information furnished. The claims made by the exporter in relation to various aspects of cost determination like cost of raw material, accounting of interest and financial expenses, allocation of costs per frame, dyeing and chemicals cost, etc. are subject to verification on receipt of complete information.
14. For the Preliminary determination the Authority therefore, determines the normal value on the basis of best available information. While doing so the Authority has considered the information furnished by the exporter as regards the cost of the raw material , i.e. Acrylic Fibre. The exporter had produced evidence of CIF Calcutta Price of the raw material Acrylic Fibre. However, the Authority has added Rs.*** towards freight and border clearance charges for the raw material till it reaches the factory of the exporter. The cost of production, selling, general and administrative expenses have been determined on the basis of best available information. According to the available information the normal value determined by the Authority for the product under consideration is Rs.***/Kg. US $***Kg. pending final determination.
15. M/s. Reliance Spinning Mills Ltd., Distt. Sunsori, Nepal has furnished information regarding their exports to India during the period of investigation. There are five consignments of exports of Acrylic Dyed Yarn in the statement of exports furnished and the remaining consignments relate to export of Acrylic 100% Grey Yarn. On the basis of the available information regarding dyeing cost, necessary adjustments have been made in the FOB value of exports. After making these adjustments the weighted average FOB export price of Acrylic Yarn to India works out to Rs.*** US $***per Kg. The exporter has shown adjustments of Rs.*** US $*** from the assessable value of export price on account of inland freight (up to Jogbani), insurance, certificate of origin, export duty, handling and forwarding. The exporter has claimed that freight from the Nepal border to the destination in Ludhiana is borne by the importers and the export invoices do not include this freight amount. The Authority finds that the export invoices do not show any terms of delivery i.e., FOB or CIF. As per the Bills of Entry furnished, assessable value is arrived at by adding amounts on account of freight(factory to Nepal border), insurance, certificate of origin charges, loading charges and Nepalese customs charges. As these charges are incurred up to the point of goods reaching the Nepal border and as the importer pays for the amount as per the export invoice only, it is considered appropriate to make adjustments on these accounts from the invoice value. Therefore, an adjustment of RS.*** US$***/Kg. has been made on these accounts from the weighted average export price. After making these adjustments the net export price has been worked out as Rs.***US $*** per Kg. for the period of investigation.
16. The principles governing the determination of normal value, export price and the dumping margin as laid down in the Custom Tariff Act and the Anti Dumping Rules are elaborated in Annexure I to the Rules. For the purpose of the fair comparison between the normal value and export price, the Authority has made calculations and comparisons at the same level of trade. Normal Value based on the constructed cost of production at ex-factory level has been compared with the weighted average export price. While doing so due allowance has been made for dyeing costs.
17. The normal value based on the constructed cost of production works out to Rs.*** per Kg. US$ ***/Kg. The net export price at ex-factory level worked out as above after making adjustments comes to Rs.*** /Kg Us$***/Kg. The dumping margin in respect of the exports of the subject goods by M/s Reliance Spinning Mills Ltd., Nepal comes to 45.9 % of the export price.
18. Rule 11 of Anti Dumping Rules reads as follows:
"Determination of Injury:
The principles for determination of injury set out in Annexure-II of the Anti- Dumping Rules lay down that:
19. The Authority has examined the information regarding volume of imports during the period of investigation and the two preceding years, i.e. 1998-99 and 1999-2000. The Authority found that there is lot of variance in the volume of imports relating to these years as shown in various sources, viz., Directorate General of Commercial Intelligence & Statistics (DGCIS), the petitioners, the exporters, the importers and the Indian Embassy in Nepal. The DGCIS, in response to the initiation notification, sent data showing imports of Acrylic Yarn from Nepal under ITC Classification 5402.39/69, 5590.61/62/69 as 3436 MTs in 1999-2000 and 1165 MTs during (April 2000 February 2001). Considering the wide variance in the import volumes of different sources, the Authority considers it appropriate to compare the trend of increasing imports on the basis of the information furnished by the exporters and importers. The information relating to preceding two years exports furnished by the exporter could not be useful as the exporters gave this information with reference to the Nepalese financial year, i.e. from 17th July to 16th July, whereas, the POI was 1st April, 2000 to 31st March, 2001. This did not allow a proper comparison. Based on the information furnished by the two importers, the imports grew from 4790 MT in 1998-99 to 7481 MT in 1999-2000 registering an increase of 56% and from 7481 MT in 1999-2000 to 9572 MT in 2000-01 an increase of 27%. The Authority finds that the volume of imports from Nepal have increased significantly during the last three years. The increase in the imports of the product involved during the period of investigation has been in absolute terms. There has also been a significant increase in imports in relation to the demand of the product in India from 6.53% in 1998-99 to 12.8% in 2000-2001.
20. 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 product in India, or whether the effect of such imports is otherwise to depress prices to a significant degree. The Authority finds that dumped imports from Nepal and more particularly from the exporter who has responded to the questionnaire, have increased significantly. During the period of investigation the imports grew by 27% over the previous year. Their share in the Indian demand for the product also grew from 6.53% in 1998-99 to 12.8% in 2000-01 which poses a serious threat of injury to the domestic industry.
Significant Price Under cutting
21. The price under-cutting of imports have caused a significant depressing effect on the price of the domestic industry. The domestic industry has not been able to realize a fair selling price. During the period of investigation the average Net sales realization of the domestic industry for the product involved has been Rs.***/Kg. whereas the average landed value of imported product has been Rs.***/Kg. This clearly signifies price under-cutting.
22. The evidence of price under cutting demonstrates that the domestic industry has suffered material injury. The industry has not been able to realise a fair selling price on its production of the subject goods so as to recover its costs as well as to earn a reasonable profit.
Threat of Injury
23. 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 ". Further to above, regarding threat of injury, para (vii) of Annexure II of Rules supra, reads as under:-
" (vii) A determination of a threat of material injury shall be based on facts and not merely on allegation, conjecture or remote possibility. The change in circumstances which would create a situation in which the dumping would cause injury must be clearly foreseen and imminent. In making a determination regarding the existence of a threat of material injury, the designated authority shall consider, inter alia, such factors as:
(a) a significant rate of increase of dumped imports into India indicating the likelihood of substantially increased importation;
(b) sufficient freely disposable, or an imminent, substantial increase in, capacity of the exporter indicating the likelihood of substantially increased dumped exports to Indian market, taking into account the availability of other export markets to absorb any additional exports;
(c) whether imports are entering at prices that will have a significant depressing or suppressing effect on domestic prices, and would likely increase demand for further imports; and
(d) inventories of the article being investigated."
24. The continuous dumped imports in large quantities has led to price suppression and the domestic industry has not been able to raise its price to the extent required to recover its cost and earn a reasonable profit. The volume of dumped imports has been significant during the period of investigation and the preceding year. There is every likelihood that imports may keep coming at dumped price in larger quantities causing serious threat of injury to the domestic industry. On the basis of the evidence available before it, the Authority therefore concludes that there is a serious threat of injury being caused to the domestic industry on account of dumped imports of subject goods from subject country.I. CAUSAL LINK
25. As regards the impact of the dumped imports on the domestic industry the principle (iv) of Annexure-II of the Anti-Dumping Rules states:
"The examination of the impact of the dumped imports on the domestic Industry concerned, shall include an evaluation of all relevant economic factors and indices having a bearing on the state of the industry, including natural and potential decline in sales, profits, output, market share, productivity, return on investments or utilisation of capacity; factors affecting domestic prices, the magnitude of margin of dumping; actual and potential negative effects on cash flow inventories, employment, wages, growth, ability to raise capital investments."
Views of the Exporter
26. It is the argument of the exporter that the cost of production as indicated by the petitioners is highly inflated on account of the high unit price of the fibre, high interest cost, less number of man-hours per year and low productivity. Injury, if any is not on account of the exports from Nepal. Further the fair selling price calculation as given on the petition is inaccurate and includes a number of hidden costs. The fair selling price should be determined after removing the impact of anti-dumping duty on fibre and the low efficiency of the petitioners. According to the exporters there is no dumping or injury and there is no causal link between the exports and the injury if any to domestic industry. The main cause for the injury to the domestic industry is the impact of anti-dumping duty on acrylic fibre. These duties have effectively deprived the Indian manufacturers of access to cheap acrylic fibre.
Views of the Petitioners
27. The petitioners have stated that cost of production in Nepal could not be different than the cost of production in India, subject to the difference in raw material costs due to the custom duties payable in India. As per own admission of the exporters producers in Nepal have cost advantage of at least Rs.15-20 per KG. As per the petitioners even by giving a benefit of RS. 17.50 (average of the claim of exporter) the exports by the Nepalese producers are at a price much lower than this difference of Rs. 17.50/ Kg. The petitioners argument is that the exporters in Nepal did not recover their cost of production and that there is suppression of vital information filed by the exporters.
Examination and Findings of the Authority
28. For the examination of the impact on the domestic industry in India, the Authority considered such further indices having a bearing on the state of industry as production, sales, market share, profitability, net sales realisation etc. All the economic parameters affecting the domestic industry mentioned above have been examined. The production of the four petitioners has been 20309 MTs in 1998-99, 22300 MTs in 1999-2000 and 22594 MTs during POI (April March, 2001). There has been a slight increase in the total production. However, their share in the market has come down from 32.7 % in 1999-2000 to 30% in period of investigation(POI) due to increase in imports in absolute terms, whereas, the share of the imports from subject country increased from 6.5% in 1998-99 to 12.8% during the period of investigation. There was an increase in imports from subject country in absolute terms by 27% during POI. The cost of production of the domestic industry has gone up from Rs.***/ kg. to Rs.***/kg. during POI. The net sales realization has been Rs.***/Kg. during 1999-2000 and Rs.***/Kg. during POI. The net sales realization is found to be lower than the cost of production signifying suffering of losses on account of production and sale of the product involved. There is an evidence of significant price under-cutting as the landed value of the product involved is less than the net sales realization. The domestic industry has also suffered due to price suppression as the landed value of the imported product is significantly below the cost of production of the domestic industry causing price suppression and thereby preventing the domestic industry to raise its price to a level to earn reasonable profits.
29. The Authority finds that the production of the domestic industry has stagnated in the face of significant increase in the imports from the subject country. As the domestic industry was not able to realize a fair selling price to recover its cost of production and a reasonable profit the industry was prevented from augmenting its production. A slight growth in the volume of production of the domestic industry does not signify that there is an absence of injury. Rather the industry has been forced to produce below its optimum capacity. The average net sales realization of the industry are less than the cost of production of the product thereby causing severe injury to the industry. Due to the dumped imports the industry has been prevented from increasing its selling price to a level to recover the cost of production and to give a fair return on the investment. The injury on account of the non-realisation of a fair selling price has been the most severe affecting the profitability of the domestic industry.
30. In determining whether injury to the domestic industry was caused by the dumped import, the Authority has taken into account the factor that it is the increased dumped imports of subject goods at dumped prices in Indian market which has forced the domestic industry to reduce its prices to the levels not sufficient to recover the non injurious price. Therefore, the causal link between the dumped imports of subject goods from subject country and threat of injury being faced by the domestic industry is clear. The Authority therefore concludes that there is a causal link between the dumping of subject goods from the subject country and threat of injury being caused to the domestic industry during the period of investigation.
J. EXAMINATION OF OTHER FACTORS CAUSING INJURY
31. It has been argued by the exporters that the main cause for the injury to the domestic industry is the impact of anti-dumping duty on acrylic fibre. These duties have effectively deprived the Indian manufacturers of access to cheap acrylic fibre. The exporter has also attributed the injury to the domestic industry due to a contraction in overall demand for Acrylic Yarn.
32. The Authority has examined these arguments. While determining the Normal value the Authority has taken into account the fact that import of Acrylic Fibre in Nepal do not attract anti-dumping duty, whereas in India, imports of Acrylic Fibre from specified countries and exporters attract anti-dumping duty. Even while doing so the Authority has found dumping in import of subject product from the subject country. As regards the argument of the exporters that the injury to the domestic industry is due to contraction in overall demand of Acrylic yarn, the authority has found, pending final determination, that demand of Acrylic yarn in India has increased during the period of investigation. However, the share of the domestic industry reduced whereas, the share of the exporter grew from 6.5% in 1998-99 to 12.82% in the POI.
K. INDO-NEPAL TREATY
33. As per the exporter anti-dumping duty cannot be imposed on imports from Nepal as India and Nepal have entered into an agreement of co-operation in matters of trade and transit. As per clause 5 of the Treaty, Indian Government has to provide access to the Indian market free of customs duty for articles manufactured in Nepal. According to the exporter, anti-dumping duty levied under Section 9(A) of the Customs Tariff Act, 1975, is a duty and therefore cannot be levied under the Indo-Nepal Treaty. As per the Indo-Nepal Treaty document of 1996, the Article V states that "The Government of India will provide access to the Indian market free of customs duties and the quantitative restrictions for all articles manufactured in Nepal." The certificate of origin annexed to the said Article V makes the issue clear as the title of the certificate of origin states "For exports free of Basic and Auxiliary duties under the treaty of trade between His Majestys Government of Nepal and Government of India". Therefore, the treaty refers to the exemption from levy of Basic and Auxiliary Duties and not all types of customs duties. By the own admission of the exporter, Additional custom duty (commonly known as CVD) is charged under Section 3 of the Customs Tariff Act on the imports from Nepal. The exporter has cited the case of Hyderabad Industries Ltd. v. Union of India wherein the Honble Supreme Court has made observations regarding the different types of customs duty under the different Acts or Rules. Among the various kinds of duties mentioned in the said orders of the Honble court, Additional custom duty chargeable under Section 3(3) of the Customs tariff Act is also included. In case the argument of the exporter is that no custom duty is chargeable on the imports from Nepal, then by their own admission Additional Custom duty under Section 3 of the Custom Act is charged on the imports from Nepal. Therefore, even if assuming that Anti dumping duty is a kind of custom duty, the same is chargeable on the imports from Nepal as the Indo-Nepal treaty does not give a blanket immunity from imposition of any kind of custom duty (or more specifically anti-dumping duty) on imports from Nepal. In another case relating to anti-dumping investigations into imports of Zinc Oxide from Nepal into India, the Designated Authority had recommended imposition of anti-dumping duties to the central government vide Notification No. 7/1/2001-DGAD dated 6th August 2001. Ministry of Finance has since implemented the recommendation by issuing Customs notification 93/2001 dated 12th September 2001 imposing anti dumping duty on imports of Zinc Oxide from Nepal. Therefore, the Authority does not find the contention of the exporter acceptable on this account.
L. OTHER EXPORTERS/PRODUCERS OF NEPAL
34. Normal Value
As no other exporter/producer has provided information, the Authority proposes to adopt the Normal Value as determined in respect of M/s Reliance Spinning Mills Ltd. The Normal value for the subject goods is considered as Rs.***/Kg/ or US$***/Kg.
35. Export Price
The Authority proposes to adopt the lowest export price from the information submitted to it for arriving at the export price in respect of other exporters/producers. After making the adjustments on account of inland freight (up to Jogbani), insurance, certificate of origin, export duty, handling and forwarding to an extent of Rs.***/Kg.US$***/KG. the ex-factory export price comes to Rs.***/Kg. or US$***/kg.
36. Dumping Margin
The dumping margin in respect of the other exporters/ producers who have not given information comes to 61.76%.
M. INDIAN INDUSTRY'S INTEREST
37. 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.
38. The Authority recognises that the imposition of anti dumping duties might affect the price levels of the products manufactured using Acrylic yarn 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 subject goods. The Authority notes that the imposition of anti dumping measures would not restrict imports from Nepal 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.
N. LANDED VALUE
39. The Landed Value has been determined for the subject goods after adding on the weighted CIF export price, the applicable level of custom duty(except duties levied under Section 3, 3A,8B,9,9A) and one percent towards landing charges for the purposes of preliminary determination pending final findings.
40. The Authority has, after considering the foregoing, come to the conclusion that:
41. The Authority considers it necessary to impose an anti dumping duty provisionally, pending final determination, on all imports of Acrylic Yarn from Nepal in order to remove the injury to the domestic industry. It was considered to recommend the amount of anti-dumping duty equal to the margin of dumping so as to remove the injury to the domestic industry.
42. Accordingly, the Authority recommends that provisional anti dumping duties as set out below be imposed from the date of notification to be issued in this regard by the Central Government on all imports of Acrylic Yarn falling under Customs Heading 5402 and 5509 originating in and/or exported from Nepal pending final determination. The anti dumping duties shall be as follows:-
Anti dumping duty
(US$ per KG.)
Exporter/Producer : M/s Reliance Spinning Mills Ltd.
All other Exporters/Producers of Nepal
P. FURTHER PROCEDURE
43. The following procedure would be followed subsequent to notifying the preliminary findings:-