MINISTRY OF
COMMERCE
NOTIFICATION
Subject : Anti dumping
investigation concerning imports of PTA from
14/1/96-ADD- 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:
A.
PROCEDURE
The procedure described below has
been followed with regard to the investigation:
i. The
Designated Authority (hereinafter also referred to as Authority), under the above Rules,
received two separate written applications from M/s. Bombay Dyeing & Manufacturing
Company Ltd. (referred to as Bombay Dyeing or BDMC hereinafter) and Reliance Industries
Ltd. (referred to as Reliance or RIL hereinafter) on behalf of the domestic industry,
alleging dumping of PTA originating in or exported from Thailand, the Republic of Korea
(referred to as Korea or Korea RP hereinafter) and the Republic of Indonesia (referred to
as Indonesia hereinafter). Reliance alleged dumping against
ii. SVC
Superchern Ltd. and Indian Petrochemical Corpn. Ltd. also expressed their concern over
dumping of PTA. While SVC Superchem expressed concern over dumping by Far East Producers,
IPCL expressed concern over dumping by Korea RP,
iii. Preliminary
scrutiny of the application filed by BDMC revealed certain deficiencies, which were
subsequently rectified by the petitioner. The petition was, therefore, considered as
properly documented;
iv. The
Authority, on the basis of sufficient evidence submitted by the petitioners, decided to
initiate the investigations against imports of PTA from Korea RP,
v. The
Authority issued a public notice dated 20th Dec., 1996 published in the Gazette of India,
Extraordinary, initiating anti dumping investigations concerning imports of PTA,
classified under custom heading 291736 of Schedule I of the Customs Tariff Act, 1975
originating in or exported from Thailand, Indonesia and Korea RP (referred to as the
subject countries hereinafter);
vi. The
Authority forwarded a copy of the public notice to all the known exporters (whose details
were made available by the petitioners) and industry associations and gave them an
opportunity to make their views known in writing in accordance with the rule 6(2);
vii. The Authority
forwarded a copy of the public notice to ail the known importers of PTA in
viii. Request was made to
the Central Board of Excise and Customs (CBEC) to arrange details of imports of PTA made
in
ix. The
Authority provided a copy of the petition to the known exporters and the Embassies of the
subject countries in accordance with rules 6(3) supra. A copy of the petition was also
provided to other interested parties, wherever requested;
x. The
Authority sent questionnaire, to elicit relevant information, to the following known
exporters, in accordance with the rule 6(4);
? Sungkyong
Industries Ltd., Korea RP referred to as Sungkyong hereinafter);
? Samsung
Petrochemical Co., Ltd., Korea RP (referred to as Samsung hereinafter);
? Kohap
Petrochemical Corporation, Korea RP (referred to as Kohap hereinafter);
? Tae Kwang
Industrial Co. Ltd.,
? Tuntex
Petrochemicals (
?
A number of
parties requested for extension of time, which was allowed by the Authority by two weeks.
Response to the questionnaire was filed by the following:
? Samsung;
? Kohap;
? Tuntex;
? Sungkyong.
xi. The
Embassies of the subject countries in
xii. A questionnaire
was sent to the following known importers of PTA in
• Sanghi
Polyesters Ltd.,
• Orrisa
Synthetics Ltd.,
• Parasrampuria
Synthetics Ltd.,
• JCT
Ltd., Hoshiarpur;
• Indian
Organics Chemicals Ltd., Mumbai;
• India
Polyfibres Ltd.,
• Futura
Polymers,
• DCL
Ltd.,
• K.
Synthetics Ltd.,
• Raymond
Synthetics Ltd.,
• Indo
Rama Synthetics Ltd., Dhar;
• Pearl
Engg. Polymers Ltd.,
• Garware
Polyesters Ltd.,
A number of parties requested for extension of time, which also was allowed by the
Authority by two weeks. Response to the questionnaire was filed by the following:
• JCT
Ltd.,
• Indo
Rama Synthetics Ltd.,
• J K
Synthetics Ltd.,
• Orissa
Synthetics Ltd.,
• Parasrampuria
Synthetics Ltd.,
• DCL
Polyesters Ltd.,
• Indian
Organics
xiii. Additional information
regarding injury was sought from the petitioners, which was also furnished by them;
xiv. The Authority
conducted on-the-spot investigations, at the premises of the petitioners;
xv. 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.
xvi. 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 petitioners so as to ascertain if anti dumping duty lower
than the dumping margin would be sufficient to remove injury to the domestic industry.
xvii. " *** " in this
notification represents information furnished by an interested party on confidential basis
and so considered by the Authority under the Rules;
xviii. Investigation was carried out for
the period starting from
B.
PETITIONER’S VIEWS
2. The
petitioner has raised the following major issues in its petition and subsequent
submissions:
a) PTA is a like article to DMT - both
technically and commercially under the meaning of the definition of ‘like
article’ under the Rules. This is evidenced by the following:
i) DMT
and PTA are both technically alternate raw materials to be used in the manufacture of
polyester.
ii) Dual feed
users can easily change over from DMT to PTA or vice versa depending on availability and
commercial considerations.
iii) PSF, PFY
and Polyester Film are sold under a competitive environment where the product quality and
the price are the deciding factors and not the process employed for the manufacture or the
raw materials used. Producers of DMT ensure that the DMT prices result in Polyester cost
same as that produced with PTA as a feedstock. There is, therefore, commercial equivalence
between PTA and DMT which varies from country to country and from time to time.
It is evident from
the above that DMT and PTA are interchangeable products and that their prices are related
to ensure that the end-product has the same cost structure for its producer,
b) The prices of DMT bear a distinct relationship
with the prices of PTA. BDMC had to reduce its prices of DMT even to those consumers who
could not use PTA in view of failing PTA prices, resulting in injury to it from the dumped
PTA imports.
c) The PTA export price from the subject
countries should be based on the quantities which landed in
d) In view of DMT/PTA new capacities projected
for 1996-2000, the imports from the subject countries pose a threat of material injury to
domestic industry.
e) Anti dumping duty to the extent of 25 percent
is required to compensate the domestic industry for the injury suffered by it.
C. VIEWS OF
EXPORTERS, IMPORTERS AND OTHER INTERESTED PARTIES
3. The views
expressed by the exporters, importers and other interested parties are briefly as under.
(I)
On Initiation of investigation:
i) Bombay
Dyeing filed petition on 20.12.96 and investigations were also initiated on 20.12.96. It
is inconceivable that the Authority received the petition on 20.12.96, analysed the facts
stated therein, came to a prima facie view about dumping and injury, notified the
Governments of the exporting countries and initiated the investigations, all on the same
day. IPCL supported the petition of Bombay Dyeing on 10.10.96, whereas the petition was
filed on 20.12.1996. The Authority does not seem to have notified the Governments of the
exporting countries.
ii) IPCL
has alleged dumping Korea RP and
iii) The
Authority has not satisfied itself about the adequacy and accuracy of the evidence with
regard to normal value and export price with due care. In the light of the claims made and
the evidence adduced by Bombay Dying, it is clear that the petition consists of a number
of inconsistent figures. The petitioner has justified an anti dumping duty 23.1% based on
the domestic price of PTA in
(II)
On like articles:
DMT and PTA are
not like articles within the meaning of the rule 2(b). The argument is supported by the
following :
i) Like Article means an article which is
identical or alike in all respects. The article under investigation is PTA and there is an
exactly identical product being manufactured in
Rule 2(b) specifically provides that another article having characteristics closely
assembling the article under investigation has to be considered in the absence of an
article which is identical or alike in all respects.
Since RIL is the
only manufacturers of PTA in
iii)
The chemical formula of PTA and DMT are
different. PTA has molecular weight of 166, whereas DMT has 194.
iv) Hawley’s condensed chemical dictionary has
described DMT and PTA, which states that DMT and PTA have different end-use. While DMT is
used for manufacturing polyester chips for film and fibre production, PTA is used, in
addition, as a regent for alkali in wool and as additive to poultry fields.
v) PTA and DMT are not universally substitutable.
While it is true that PTA and DMT are both used for the manufacture of fibre, the
petitioner himself has conceded that ".... domestic polyester producer has the option
to change over to PTA if he has dual feed facilities ...’ (emphasis added by the
contender). It is, therefore, abundantly clear that PTA and DMT are entirely different
products and even to use them interchangeably there must be a provision for dual feed
facility.
(III)
On dumping:
There are a number
of price adjustments which are required to be made in the domestic selling prices in order
to determine dumping. Taking into account these admissible adjustments, the dumping margin
would be much lower than the difference indicated by the petitioners.
(IV)
On injury:
i) PSF manufacturers in
• PTA
only;
• DMT
only;
• both
PTA and DMT.
Manufacturers such
as RIL, Indo Rama, Orissa Synthetics (OSL) cannot use DMT at all. BRPL, Swadeshi Polytex
(SPL) can use DMT only. JCT, India Polyfibers
(IPL), Indian Organic Chemicals (IOC) and JK Synthetics (JKS) can use both DMT and PTA.
Thus, there are only four manufacturers who can switch between PTA and DMT and it is their
import of PTA which, if at all, can injure the manufacturers of DMT. In this scenario,
equating PTA with DMT as like articles and considering that import of PTA by all. PSF
manufacturers could cause injury to the DMT manufacturers sounds highly illogical. This
aspect appears to have escaped the attention of the Authority completely.
ii) An analysis of the imported and domestic
sourcing of DMT and PTA from the information made available by PSF manufacturers in
a) IOC and JKS had not
used DMT during 1995-96 and 1996-97 and, therefore, cannot have injured domestic industry.
b) JCT had not
imported PTA from any of the three countries during the last two years. In fact, JCT
increased their domestic purchases of PTA from 1458 MT (1995-96) to 20072 MT (1996-97).
c) IPL has neither
imported from the three subject countries nor procured domestically. They have also not
imported DMT from the subject countries.
d) JKS reduced the
quantum of imports from the three countries from 5516 MT (1995-96) to 510 MT (1996-97).
e) Parasrampuria
(which uses DMT and PTA) neither imported from the subject countries nor purchased from
domestic market. They have not imported DMT also.
f) DCL Polyester
have been using only PTA and their sourcing within
g) Raymond Synthetics
has not imported DMT, though their domestic sourcing declined from 13531 MT (1995-96) to
2976 MT (1996-97). There has been no significant increase in the quantum of PTA domestic
sourcing or imports by Raymond Synthetics.
iii) RIL has been operating at more than 125% of
their installed capacity. Captive consumption of PTA by RIL has been increasing from year
to year with a corresponding reduction in the quantity of PTA available for sale in the
domestic market.
iv) Capacity utilisation of BDMC has been in the range
of 80-85% during the last three financial years. Sales of BDMC have also increased by
about 18% in 1995-96 and 1996-97. Loss of market share due to imports, dumped or
otherwise, is more an imagination than actual.
v) RIL, BDMC, IPCL have all made considerable
profits. Even though these companies are multi-product, it is common knowledge that each
of their products has been operating profitably.
vi) The fall in the prices of DMT and PTA for both RIL
and BDMC is due to reduction in customs duty from 35% to 27%.
vii) Fall in the international price has an impact on the
domestic prices irrespective of whether the imports are dumped or not. Thus, a reduction
in the domestic realisation is attributable to the fall in the international price of PTA
and reduction in customs duty. The fall in the prices of Paraxylene also contributed to
the fall in the domestic prices. Paraxylene prices declined from US $ 1036 (Q 1, 1996) to
US $ 760 (Q 2, 1996) and US $ 419 (Q3, 1996) per MT.
If the reduction in selling prices is adjusted for the above factors, it will be
seen that there is no causal link between the import prices of PTA and price depression in
(V)
Other Issues:
i) There
are customs duties anomalies, which the Government of
ii) PTA/DMT
is produced world-wide by giant petrochemical companies, who are not in a position to
store these goods. It is the distributors, who depending upon the market, find it
convenient to dispose off the material in the spot market at whatever prices they are able
to realise. Question of dumping would, therefore, never arise;
iii) Indian
PTA/DMT producers price their product based on unreasonably high spot prices, which had
cascading effect on the Indian PSF industry;
iv) There
is a monopolistic supply situation for PTA in
v) Allegation
of dumping should be considered with reference to the prices of Paraxylene;
vi) When
prices of PTA/DMT went up to US $ 2000 pmt in 1994-95, the domestic PTA/DMT producers had
made huge profits. These producers are continuously earning profits. There should be no
intervention now when the global prices have come down. Competing market forces should be
allowed to operate in a level playing field;
vii) The
problems faced by the DMT producers in
viii) The prices
of PTA have since gone up. Since there is no trigger mechanism in the anti-dumping duty,
even genuine imports would suffer the levy.
D.
EXAMINATION OF THE ISSUES RAISED
4. The
submissions made by the exporter, importers, petitioners and other interested parties have
been examined, considered and have been dealt at appropriate places in the notification.
5. It is
clarified that the BDMC filed a petition on 24.9.1996. The petitioner was asked to furnish
additional copies of the non-confidential version of the petition filed for enabling the
Authority to provide the same to the interested parties in accordance with Rule 6(3). The
additional copies were supplied on 20.12.96. The contentions raised by the exporters in
this regard are, therefore, incorrect. The Authority notified the Governments of the
exporting countries on 12.12.1996.
6. With
regard to differences among the petitioners as to countries from which the product is
allegedly dumped, the Authority notes that the Authority has considered the petition filed
by BDMC and Reliance. The complaints made by others, including IPCL are irrelevant for the
purpose.
7. The
Authority satisfied itself about the adequacy and accuracy of the evidence with regard to
dumping, injury, and causal link between dumping and injury in accordance with Rule 5(2)
before initiating the investigation. Mere existence of factual discrepancies in an
application does not debar an applicant from seeking redressal of his grievance in
accordance with the law, so long as the applicant has been able to demonstrate a prima
facie case with reasonable burden.
E.
PRODUCT UNDER CONSIDERATION
8. The
product considered in this report for the purpose of the present investigation is Purified
Terephthalic Acid (popularly known as PTA and referred to as PTA hereinafter in this
notification).
9. PTA is a
white crystal or powder; insoluble in water, chloroform, ether, acetic acid; slightly
soluble in alcohol; soluble in alkalis; sublimes above 300C Combustible. PTA is produced
by oxidation of p-xylene or of mixed xylenes and other alkyl aromatics. PTA is used for
production of linear, crystalline polyester resins, fibers, and films by combination with
glycols; reagent for alkali in wool; additive to poultry feeds. The major usage of PTA is,
however, for production of polyester fibre.
10. PTA is classified
under the chapter 29 (under subheading 2917.36). The custom classification, manufacturing
process and, usage of the product indicated herein are, however, indicative only and acre
in no way binding on the scope of the product under consideration.
F.
LIKE ARTICLES
11. Rule 2(d) relating to
the definition of "like article" specifies that "like article" means
an article which is identical or alike in all respects to the article under investigation,
or in the absence of such an article, another article having characteristics closely
resembling those of the article under investigation.
From the above
definition of the term "like article", it is clear that the like article has to
be identical or alike in all respects to the article under investigation. The scope of the
term like article shall include those articles having closely resembling characteristics
to those under investigation in the absence of articles identical or alike in all
respects. Therefore, the usage of the words "in the absence of" is of critical
significance for the interpretation of the term like article under the statute. There is
no dispute that the words "in the absence of" have to be understood in the
context of domestic industry alone whether there exists a "domestic industry"
producing the "like article" or not. In other words, if there is no domestic
industry producing identical article, the law permits the authorities to cover, in the
scope of the term, even those articles which have closely resembling characteristics. In
the instant case the petition has been made by the producers of PTA and DMT, on the ground
that both of them are suffering injury on account of dumped imports of PTA from the
subject countries. However, in view of the definition of the term "domestic
industry" in the law, the only manufacturer of PTA, namely, RIL has been excluded.
There is sufficient evidence and technical literature to suggest that even though DMT is
not identical to PTA, DMT has been technically and commercially substituted by PTA and,
therefore, it can, be considered that in the absence of any "domestic industry"
producing an article identical to PTA, it is DMT which is a like article in the context of
these investigations.
G.
DOMESTIC INDUSTRY
12. Petitions have been
filed separately by M/s Bombay Dyeing, Manufacturing Company Ltd. and Reliance Industries
Ltd. There are the following two more producers of PTA/DMT in
M/s.
? Indian
Petrochemicals Corporation Ltd., Vadodara
? Bongaigaon
Refinery & Petrochemicals Ltd., Dhaliagon
13. In addition to the
above, Mls. SVC Superchem is also setting up facilities for production of PTA. SVC
Superchem has, however, not yet commenced commercial production. The petitioners have not
alleged that the imports of PTA into
14. Reliance has imported
PTA from the subject countries during the investigation period and, therefore, cannot
constitute domestic industry within the meaning of rule 2(b). Production of BDMC
constitutes a major proportion of the total domestic production of DMT/PTA in
H.
DUMPING
15.
Under Section 9A(1)(c), normal value in relation to an article means:
(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-
(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):
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 transhipped 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 of origin.
16. The Authority sent
questionnaire to the exporters from the subject countries in terms of the section cited
above. The normal value and export price in respect of the exporters who have furnished
information to the Authority have been determined from the information furnished by them
and the same is discussed hereinbelow. Since these exporters have furnished details of
their prices in the home market, normal value has been determined in accordance with the
Section 9A(1)c(i). The dumping margin in case of individual exporters have been analysed
hereinbelow:
i)
Exporter - Samsung Petrochemical Co. Ltd. (Samsung):
17.
The arguments raised and the claims made by Samsung are as under:
a) The company has
not directly exported to
b) Samsung has
claimed the following price adjustments in the domestic prices and export prices to
i) Packing costs:
The company has claimed different packing cost for the sales made in the domestic market
(won *** pmt) and export markets (won *** pmt).
ii) Freight:
Samsung has claimed that it has not incurred any expenditure on account of inland and
ocean freight in cases of exports to
iii) Duty
drawback: The company has claimed an amount of won *** pmt (US $ ***) on account of duty
drawback.
iv) Credit
expenses: The company has claimed an amount of won *** pmt (US $ ***) on account of credit
extended by it in the domestic market. The claim has been made on the basis of average
collection period of the sales in the domestic market (which has been claimed as *** days)
and interest rate for the company’s short term borrowings (which has been claimed as
***%).
v) Unloading
expenses: The company has claimed an adjustment amounting to won *** pmt (US $ ***) on
account of unloading facilities especially designed in customers factory. The company has
claimed that it incurred a total expenditure of won *** on this account during the
relevant period.
(ii)
Exporter - Tuntex Petrochemicals (
(Tuntex):
18. a.) Tuntex has claimed
the following price adjustments in the export price to
?
Inland freight (US $ *** pmt);
?
Terminal handling charges (US $ *** pmt);
? Ocean
freight (US $ *** pmt);
? Bill
of lading fee (US $ *** pmt).
Adjustment on
account of inland freight has been claimed on the basis of some debit notes raised by a
transport services company in Thailand, which indicates that the company has been debited
@ Baht *** per *** MT container. Adjustment on account of ocean freight, B/L fee, and
handling have been claimed on the basis of some invoices raised on the exporter, which
indicate that invoices have been raised on the company
@ US $ *** per container on account of ocean freight, Baht *** per container on
account of terminal handling charges (TMC) and Baht *** for B/L fee.
b) The following
adjustments have been claimed in the selling prices in the domestic market:
?
Inland freight (US $ *** pmt);
?
VAT (value added tax @ 7%, amounting to US $ *** pmt);
?
Interest (US $ *** pmt);
?
Drawback (US $ *** pmt).
Adjustment on
account of drawback has been claimed on the basis of volume of sales made in the home
market and amount of duty.
Evidence with
regard to inland freight (invoice raised by a transport company) indicates that the
invoice of Baht *** was raised for transportation of *** MT goods, translating into an
expense of US $ *** pmt, as against US $ *** pmt claimed by the company. Since the
exporter has not furnished evidence suggesting that the inland freight paid during the
investigation period averaged US *** pmt, the Authority has allowed an adjustment of US $
*** on this account.
(iii)
Exporter - Sungkyong Industries Ltd. (Sungkyong):
19. Sungkyong has not
provided any supporting document, such as purchase order, invoice, bill of landing, rebate
settlement, discounts information, pleading that the same is voluminous and is available
for on-site verification. Sungkyong has claimed the following differences in the
circumstances of sales:
i) Terms of
payment: The exporter has claimed that the company allows approx. *** months trade credit
for the domestic market whereas the exports are on the basis of at-sight local L/C. The
exporter has argued that the opportunity cost for the credit extended in the domestic
market should, therefore, be taken into account for a fair comparison.
ii) Quantity
discounts: The exporter has claimed that it allows discount and/or rebate based on the
sales quantity in domestic market and export markets. The exporter has, therefore, argued
price comparisons on the basis of prices for similar quantity levels.
iii) On-going
customer and spot customer: The exporter has claimed that offers different price formula
for its on-going customers, which can stabilise the price change and it may offer these
customers the prices based on announced prices by market leader. The same is followed in
case of exports also in case of on-going customers. The exporter has claimed at the price
of its exports to
iv) Sungkyong has
claimed the following price adjustments:
a) On
export price:
? Commission: Sungkyong has
exported through two trading companies, one of which is related to Sungkyong. The company
has claimed that according to Korean law any price discrimination between related and
unrelated parties is illegal. The company has further provided sale price structure by
relationship separately for the related and unrelated company. It is found that the prices
at which the goods have been sold by the exporter to the two companies are comparable. The
company has shown commission paid to the related company (there is only one sale made
through unrelated company), and has claimed that no commission was paid in case of the
sale made through the unrelated company. The commission shown by the company ranged
between ***% to ***% of the export price.
? Inland freight ranging
between US $ *** pmt to US $ *** pmt.
? Handling charges ranging
between US $ *** pmt to US $ *** pmt.
? Ocean freight of US $ ***
pmt, except for the export made through the unrelated company, in which case the amount is
US $ *** pmt.
? Duty drawback ranging
between US $ *** pmt to US $ *** pmt.
It is considered
appropriate to allow the adjustment on account of the above, as claimed.
b) On
domestic market:
The exporter has
claimed the following price adjustments in the selling prices in the domestic market:
? Inland freight ranging
between US $ *** pmt to US $ *** pmt, with a declining trend from April, 1996 to Oct.,
1996;
? Credit expenses ranging
between US $ *** pmt to US $ *** pmt for sales made to the related customers, except for
one sale in the month of 1996, wherein the amount claimed is US $ *** pmt in which case
the sales were made through an unrelated party
(iv) Exporter
- Kohap Petrochemical Company
20. Kohap has claimed the
normal value in Korea RP and export price of the exports made to
a. Selling
prices: Kohap has claimed selling price in the home market and export to
b. Adjustments
in the selling prices for exports to
i) Packing
expenses (***);
ii) Inland
Freight (***);
iii) Terminal
handling charges (***);
iv) Container tax
(***);
v) W/F (***)
vi) Stuffing (***);
vii) Customs (***)
viii) Interest (***)
ix) Overseas freight
(***);
c. Adjustments
in the selling prices in the home market: The exporter has claimed the following price
adjustments in the average selling price for sales it the home market (all adjustments are
in US $ pmt):
i) Inland
freight (***);
ii) Interest
(***)
iii) Container
tax (***);
iv) Transfer fee
(***);
v) Nego fee
(***)
Adjustment on
account of interest has been claimed on the grounds that credit period for sales in the
home market is *** days, whereas the exports are on the basis of L/C at sight. The
exporter has claimed that it has two customers in the home market and supply to one
customer is through pipelines. Transfer fee of US $ *** has been claimed on the basis of
cost of nitrogen used for transporting PTA through pipelines from its factory to its
customer.
21. Examination
of the claims of the exporters by the Authority:
Samsung has worked
out the packing costs on the basis of material and labour costs involved. It is, however,
found that the company has claimed higher labour cost on account of packing (won *** pmt)
in case of domestic market as compared to exports (won *** pmt). The Authority has allowed
the same amount of packing labour costs for the two markets. The revised packing cost for
the exports comes to won *** pmt, which has been allowed as an adjustment-
All the exporters
have claimed adjustment on account of credit purported to have been extended by the
exporters only in their domestic market. Sungkyong has claimed adjustment on this account
even without establishing the actual period for which credit was extended to the domestic
market customers. Tuntex has not adduced any evidence in support of the claim made on this
account. The claim of these exporters is based on the contention that the exporters have
sold on credit in the home market, whereas the exports to
The Authority has
allowed all other adjustments, except as stated in the foregoing, for the purpose of
preliminary determination.
(v)
Exporters from
22. None of the exporters
from
23.
The rules relating to comparison provides as follows:
"While
arriving at margin of dumping, the designated authority shall make a fair comparison
between the export price and the normal value. The comparison shall be made at the same
level of trade, normally at ex-works level, and in respect of sales made at as nearly
possible the same time. Due allowance shall be made in each case, on its merits, for
differences which affect price comparability, including differences in conditions and
terms of sale, taxation, levels of trade, quantities, physical characteristics, and any
other differences which are demonstrated to affect price comparability.
24. For the purpose of
fair comparison between the normal value and the export price, the Authority took into
account the information furnished by the exporters, importers, and petitioners. The
Authority notes that there is significant decline in the selling prices in both the
markets from April, 1996 to Oct., 1996 and some of the exporters have not exported in all
the months of the investigation period. Comparison of normal value with export price on
weighted average basis would, therefore, not represent the correct comparison. The
Authority has compared weighted average normal value with weighted average export price on
month-to-month basis for individual exporter.
25. The comparison shows
the following normal value, export price and dumping margins:
US $ per MT
S.
No. |
Name
of the exporter |
Dumping Margin ** |
A. |
Exports
from |
|
1. |
Samsung |
3.13 % |
2. |
Sungkyong |
8.65 % |
3. |
Kohap |
2.31 % |
B. |
Exports
from |
|
1. |
Tuntex |
8.61 % |
C. |
Exports
from |
14.97 % |
** Note : The
dumping margins are percentage of export price.
I.
INJURY
26. 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.
27. Annexure II(iii) under
rule 11 supra further provides ‘that in case where imports of a product from more
than one country are being simultaneously subjected to Anti Dumping investigation, the
designated authority will cumulatively assess the effect of such imports, only when it
determines that
(a) the margin of
dumping established in relation to the imports from each country is more than two percent
expressed as percentage of export price and the volume of the imports from each country is
three percent of the imports of the like article or where the export of the individual
countries less than three percent, the imports cumulatively accounts for more than seven
percent of the imports of like article, and
(b) cumulative
assessment of the effect of imports is appropriate in light of the conditions of
competition between the imported article and the like domestic articles.
28 The Authority
notes that the margin of dumping and quantum of imports from each of the subject country,
29. 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 as production, capacity
utilisation, sales quantum, stock, profitability, net sales realisation, the magnitude and
margin of dumping etc. in accordance with Annexure II (iv) of the rules supra.
a.
Volume and Market Share of Dumped Imports
30. Imports of PTA in
31. The weighted average
CIF import price per MT during the corresponding period from the subject countries
increased from Rs. 26784 pmt (1994-95) to Rs. 49180 pmt (1995-96) and declined to Rs.
23965 pmt in the investigation period.
b.
Economic indicators affecting domestic industry:
i)
Production and Capacity Utilisation:
32. Production of DMT by
the domestic industry increased from 113773 MT (1994-95) to 134540 MT (1995-96) and was
76752 MT (131575 MT on annualised basis) during the period of investigation. BDMC
increased its installed capacity from 145000 MT in 1994-95 to 165000 MT in the
investigation period and the capacity utilisation of the domestic industry in the
corresponding periods were 78.46% (1994-95), 92.79% (1995-96) and 79.70% (investigation
period). BDMC had to keep its production at very low levels in the months of May and June,
1996. Even though BDMC enhanced its capacity in the investigation period, it achieved
capacity utilisation of 96.05% in the month of April, ’96 itself and crossed 106% in
the month of Oct., ’96 and, therefore, the decline in capacity utilisation cannot be
attributed to enhanced capacity.
ii)
Sales in Absolute Quantity
33. Sales of the domestic
industry in absolute terms increased from 112166 MT (1994-95) to 132441 MT (1995-96) and
were 79628 MT during the period of investigaiton (136505) MT on annualised basis). The
increase in the sales volume, however, has to be viewed in the context of increased
installed capacity and production, as brought out in the preceding paragraph and declining
sales realisation, as discussed in the following paragraph.
iii)
Selling Price Trend
34. BDMC
argued that the prices of DMT and PTA move in the same direction. 1t further argued that
194 Kg. of DMT gives 192 Kg. of PET and 64 Kg. of MeoH, whereas 166 Kg. of PTA gives 192
Kg. of PET, resulting in stochiometric ratio in DMT and PTA of 1.1687. BDMC has,
therefore, argued that the DMT and PTA prices would bear the following relationship:
DMT Prices |
Ratio |
PTA Prices |
20 |
1.030 |
20.67 |
25 |
1.060 |
26.50 |
30 |
1.079 |
32.36 |
40 |
1.101 |
44.05 |
50 |
1.115 |
55.73 |
60 |
1.125 |
67.42 |
35. An analysis of the
list prices of DMT and PTA since January, 1995 for RIL and BDMC reveals as shown in the
figure below:
There is
reasonable indication to believe that the prices of DMT and PTA move in the same direction
and the prices of DMT remains lower than the prices of PTA.
BDMC has, in view
of the foregoing, argued that it was forced to keep the prices of its DMT lower in view of
imports of PTA from the subject countries, even for those customers who did not use or
even did not have facilities to use PTA. It has furnished evidence indicating that its
customers demanded lower prices for DMT in view of the prevailing prices of PTA from the
subject countries. There is reasonable evidence, therefore, to suggest that the domestic
industry was forced to lower its selling prices even for those customers who did not or
could not use PTA, resulting financial losses to the domestic industry.
36. List price of BDMC and
monthly average net sales realisation (after excluding excise duty and discounts) since
Jan., 1995 were as shown in the figure below :
The net
realisation sharply declined from Rs. 64000 pmt in the month of July, 1995 to a low of Rs.
20116 pmt in the month of August, 1996. It is also seen that the domestic industry which
was selling at the list prices upto Sept., 1995 started offering discounts from Oct.,
1995. The declining sales realisations as also the discounts offered by the domestic
industry were due to dumping as also declining prices of paraxylene, as discussed in the
following paragraph.
37. The prices of
Paraxylene (referred to as Px hereinafter) declined sharply from a peak of US $ 1036 pmt
(Q1, 1996) to a low of US $ 470 pmt (Q4, 1996) (both US Gulf Course prices, as payable by
the Indian importers). The decline in the sales realisation, therefore, was also due to
decline in the prices of Px. However, as may be seen from the table and figure
hereinbelow, he decline in the sales realisation was significantly higher than the decline
in the cost of production as a result of decline in the costs of Px.
Rs. per MT
Month |
DMT (Net Realization) |
Cost of Px pmt of DMT |
Increase over previous month |
|
DMT |
Px |
|||
Jan-95 |
*** |
*** |
||
Feb-95 |
*** |
*** |
0 |
0 |
Mar-95 |
*** |
*** |
3250 |
0 |
Apr-95 |
*** |
*** |
7000 |
3715 |
May-95 |
*** |
*** |
0 |
-149 |
Jun-95 |
*** |
*** |
3000 |
0 |
Jul-95 |
*** |
*** |
3000 |
3090 |
Aug-95 |
*** |
*** |
-5000 |
0 |
Sep-95 |
*** |
*** |
-3000 |
243 |
Oct-95 |
*** |
*** |
-5168 |
1960 |
Nov-95 |
*** |
*** |
-363 |
1169 |
Dec-95 |
*** |
*** |
-796 |
-517 |
Jan-96 |
*** |
*** |
-904 |
48 |
Feb-96 |
*** |
*** |
-1603 |
837 |
Mar-96 |
*** |
*** |
-3501 |
0 |
Apr-96 |
*** |
*** |
-7677 |
-1152 |
May-96 |
*** |
*** |
-6875 |
0 |
Jun-96 |
*** |
*** |
-2051 |
0 |
Jul-96 |
*** |
*** |
-4498 |
-9876 |
Aug-96 |
*** |
*** |
-2448 |
0 |
Sep-96 |
*** |
*** |
1122 |
0 |
Oct-96 |
*** |
*** |
4193 |
-2875 |
Whereas the prices
of Px declined in Q2, 1996 by US $ 56 (resulting in reduction in cost of production by Rs.
1381 pmt), the sales realisation declined sharply from Rs. 48769 pmt (Jan., '96) to Rs.
27062 pmt (June, ’96). Further, whereas the prices of Px declined by US $ 395 between
Q 2, ’96 and Q 3, ’96 (resulting in decline in the cost of production by Rs.
9876), the sales realisations declined by Rs. 15872 pmt from Apr., ’96 to Aug.,
’96. The decline in the sales realisations to the domestic industry was, therefore,
significantly higher than the decline in its cost of production attributable to decline in
the Px prices.
iv)
Stock
38. Stock of DMT with the
domestic industry are as shown in the figure below:
The stock position
is more or less constant, which does not directly show injury to the domestic industry.
However, the relatively comfortable position with regard to stock level must be viewed in
the context of the declining sales realisations.
v)
Profit/Loss
39. The petitioners are
engaged in a number of activities in addition of production and sale of DMT. The
profit/loss reported by the petitioners in the published annual accounts cannot,
therefore, be relied upon, for assessment of injury to the domestic industry from sale of
PTA/DMT in the Indian market. DDMC has, however, furnished details, which have also been
verified by the investigating team, which show that the company has suffered financial
losses in the investigation period from sale of DMT at prices significantly below the fair
selling price, resulting in financial losses of Rs. *** pmt (investigation period) as
compared to a profit of Rs. *** pmt (1995-96) and Rs. *** pmt (1994-95), as may be seen
from the table below:
Rs. per MT
Year |
Cost of Sales |
Net Avg. Sales
Realisation |
Profit/Loss |
1992-93 |
*** |
*** |
*** |
1993-94 |
*** |
*** |
*** |
1994-95 |
*** |
*** I |
*** |
1995-96 |
*** |
*** |
*** |
Investigation period |
*** |
*** |
*** |
c.
Conclusion on injury
? The circumstances warrant
consideration of injury on cumulative basis for imports from the subject countries;
? The imports of PTA
increased in absolute terms from the subject countries during the period of investigation;
? The share of the subject
countries in the total demand in the country increased significantly during the
investigation period.
? Exports of PTA from the
subject countries forced the domestic industry to keep its prices of DMT to unremunerative
levels, and prevented the domestic industry from recovering its fair selling price,
resulting in financial losses to the domestic industry, in spite of the fact that the
consumers did not consume PTA during the period.
? Various indicators
relating to domestic industry such as production, capacity utilisation, sales quantities,
average sales realisation, stock, losses collectively and cumulatively establish that the
domestic industry has suffered material injury, even though some of the parameter show
improvement;
It is thus seen the domestic industry has suffered material injury.
J.
CAUSAL L1NK:
40. In establishing that
the material injury to the domestic industry has been caused by the imports from the
subject countries, the Authority has considered that exports of PTA from the subject
countries forced the domestic industry to keep its prices to unremunerative levels, and
prevented it from recovering its fair selling price, resulting in financial losses to the
domestic industry. The Authority has relied upon, in this regard, on the evidence
presented by BDMC establishing that its customers demanded lower prices under the pretext
of lower prices at which PTA was available in the .market, in spite of the fact that these
consumers were not consumers of PTA at all or did not consume PTA during the investigation
period and that the decline in the sales realisation was significantly higher than the
decline in cost of production attributable to the decline in the prices of Px.
K.
FAIR SELLING PRICE:
41. The methodology
adopted by the Authority for determination of fair selling price is as follows:
The cost of
production as also fair selling price considered is for the investigation period. Since
the period does not include any completed accounting year, the information has been
extracted largely from the company’s financial accounts for internal control and/or
report purposes. The company is a multi-product, multi-location, diversified company and
annual accounts do not show complete picture with regard to the expenses and the cost of
production on DMT.
The cost of
production has been worked out element-wise for items or expenditure incurred by the
company. Fair return has been added to the cost of production for arriving at fair selling
price. The details of cost of production and fair selling price worked out are discussed
herein below:
a) Raw material
Cost: Manufacturing of DMT requires paraxylene and Methanol. The raw materials cost has
been allowed as per norms for major raw-materials or actual consumption quantities for
preceding three years, whichever is lower, alongwith the actual raw material rates for the
investigation period.
The company
furnished a statement showing item wise opening stock, purchases, closing stock and
consumption of Px and Methanol for the investigation period. Raw material prices have been
worked out on the basis of this statement, after verification.
b) Utilities:
Bombay Dyeing was requested to provide utilities consumption statement showing therein
consumption norms (standard consumption per unit of production), the actual consumption
per unit of consumption since 1992-93 and the utilities rates for the investigation
period. These have been relied upon. The actual costs of these utilities per unit of
production for the investigation period have been considered to determine total cost of
utilities per unit of production. Utilities cost has been allowed as per consumption norms
or actual consumption quantity for preceding three years whichever is lower alongwith the
actual utilities rates for the investigation period.
c) Overheads:
Bombay Dyeing furnished a statement showing the total overheads costs and costs per unit
of production for the investigation period in the format prescribed by the Authority. The
statement has been compiled by the company from the statements prepared by it from their
financial accounts, which have been verified by the investigating team and the same have
been relied upon. Element wise unit costs have been worked out from these statements.
d) Return: Fair
return has been worked out as per consistent practice of ***% on capital employed.
e) Cost at
Normative Level: Costs have been calculated at a normative level of capacity utilisation.
L.
INDIAN INDUSTRY’S INTEREST & OTHER ISSUES
42. 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.
43. It is recognised that
the imposition of anti dumping duties might affect the price levels of the products
manufactured using PTA/DMT 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, particularly if the 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 PTA/DMT 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.
44. To ascertain the
extent of Anti-dumping duty necessary to remove the injury to the domestic industry, the
Authority as relied upon reasonable selling price of PTA/DMT in India for the domestic
industry, by considering the optimum cost of production at optimum level of capacity
utilisation of the domestic industry.
45. Injury caused to the
domestic industry from factors ether than dumping, if any, have not been considered while
recommending the amount of Anti Dumping Duty necessary to remove the injury to the
domestic industry caused by dumped imports.
46. The reduction in
custom duties in no way affect the dumping per se. In so far as the injury is concerned,
the Authority has calculated the level of injury being faced by the domestic industry
after considering the custom duties prevailing during the period of investigation.
M. LANDED
VALUE:
47. The Authority has
calculated landed value for individual exporter on the basis of weighted average export
price declared by them, after adding the prevailing level of customs duties and one
percent landing and two percent handling charges.
N.
CONCLUSIONS:
48.
The Authority concludes, after considering the foregoing, that:
a. PTA
originating in or exported from Korea RP,
b. the Indian
industry has suffered material injury;
c. the injury
has been caused cumulatively by the imports from the subject countries.
49. It is considered
necessary to impose anti dumping duties, provisionally, pending final determination, on
all imports of PTA originating in or exported from the subject countries, pending
investigations.
50. It was considered
whether a duty lower than the dumping margin would be sufficient to remove the injury.
Landed prices of the imports for each exporter, for the purpose, were compared with the
fair selling price of the domestic industry, determined for the period of investigation,
as detailed hereinabove in paras K and M. Wherever the difference was less than the
dumping margin, a duty lower than the dumping margin is recommended. Accordingly, it is proposed 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 PTA originating in or exported
from Korea RP, Indonesia and Thailand falling Under Chapter 29 of the Customs Tariff,
pending final determination.
(Rs. per MT)
| S. No. |
Products Originating in or
exported from |
Name of the exporter |
Amount of Duty Rs. per MT |
| 1. |
Sungkyong Industries Ltd. |
1355 |
|
| Kohap Petrochemical Corporation |
NIL |
||
| Samsung Petrochemicals Co., Ltd. |
463 |
||
| Any Other Exporter |
1355 |
||
| 2. |
Tuntex Petrochemical ( |
1769 |
|
| Any Other Exporter |
1769 |
||
| 3. |
Any Exporter |
3375 |
51. Known exporters,
importers, petitioners and other interested parties are being addressed separately by the
Authority, who may make known their views, within forty days from the date of the despatch
of the letter. Any other interested party may also make known its views within forty days
from the date of publication of these findings.
(Dipak Chatterjee)
Designated Authority