THE GAZETTE OF INDIA : EXTRAORDINARY

[PART 1—SEC. 1]

MINISTRY OF COMMERCE AND INDUSTRY

(Department of Commerce)

(Directorate General of Anti Dumping and Allied Duties)

NOTIFICATION

New Delhi, the 2nd January, 2001

PRELIMINARY FINDINGS

Subject: Anti-dumping investigation concerning imports of Sodium Ferrocyanide originating in or

exported from the European Union—Preliminary findings

No. 23/1/2000-DG AD,—The Government of India having regard to the Customs Tariff Act, 1975

as amended in 1905 and the Customs Tariff (Identification, Assessment and Collection of Anti Dumping

Duty on Dumped Articles and for Determination of Injury) Rules, 1995, thereof;

PROCEDURE

The procedure described below has been followed-

(i)

The Designated Authority (hereinafter referred to as Authority), under the

above Rules, received a written petition from M/s. Cyanides and Chemicals

Company, Mumbai on behalf of the domestic industry, alleging dumping of

Sodium Ferrocyanide originating in and exported from the European Union

(hereinafter referred to as EU);

(ii)

The Authority notified the Delegation of European Commission in India about

the receipt of dumping application made by the petitioner before proceeding to

initiate the investigation in accordance with sub-rule (5) of Rule 5 supra;

(iii)

The Authority issued a Public Notice dated 13^th June, 2000 published in the

Gazette of India, Extraordinary,

initiating anti dumping proceedings

concerning imports of Sodium Ferrocyanide originating from EU classified

under heading 2837.20 of Schedule I of the Customs Tariff Act, 1975;

(iv)

The Authority forwarded copy of the said public notice to the known exporters,

importers, industry associations and to the complainant 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 Delegation of European Commission in

India.

(vi)

The Authority sent questionnaires, to elicit relevant information, to the

following exporters:

M/s. Manox Pigment Business, Manchester, Great Britain

M/s. Degussa-Huls AG, Frankfurt, Germany

M/s. Degussa Huls Ltd., Cheshire SK, Great Britain

(vii)

The Delegation of European Commission in New Delhi was also informed

about the initiation of investigation and was requested to advise the

exporters/producers from their territory to respond to the questionnaire within

the prescribed time;

(viii)

The questionnaire was sent to the following importers of Sodium Ferrocyanide:

M/s. Citurgia Bio-Chemicals, Mumbai

M/s/ Seth Chemicals Works Pvt Ltd., Calcutta

M/s. Shanti Labs, Bikaner

M/s. Sona Inter-Chem, Vapi

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[PART I—SEC. 11

M/s. Chemical Corporation, Mumbai

(ix)

Response to the questionnaire was filed by M/s. Sona Inter-Chem, Vapi, who

have stated that they have not made any imports during the period of

investigation. Among the exporters, M/s. Degussa Huls AG, Germany have

filed response to the questionnaire. The information submitted by them was

verified at their premises at Frankfurt, Germany and at works in Manchester

UK.

(x)

Additional information regarding injury was sought from the petitioners, which

was also furnished;

(xi)

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;

(xii)

***** in this notification represents information furnished by the interested

party on confidential basis and so considered by the Authority under the Rules;

(xiii) The Authority sought and verified information given by the domestic industry

and to this end investigations were carried out at the premises of the petitioner's

head office at Mumbai and works at Surat;

(xiv) The Authority also conducted cost investigation and worked out optimum cost

of production and cost to make and sell Sodium Ferrocyanide in India on the

basis of Generally Accepted Accounting Principles;

(xv)

The investigation covered the period from 1^st January 1999 to 31^st December

1999.

1 "

(xvi)

Copies of initiation notice was also sent to FICCI, CII, ASSOCKAM etc, for

wider circulation.

PETITIONER'S VIEWS

The petitioner made the following major points:

(i)

The petitioner represents the domestic industry and Sodium Ferrocyanidc being

produced by the petitioner is a like product to the Sodium Ferrocyanide being

imported from EU.

(ii)

EU is dumping Sodium Ferrocyanide in India and the petitioner has, therefore,

approached the Designated Authority for considering levy of ami dumping

duty.

(iii)

Sodium Cyanide is a basic raw material going into production oC Sod,urn

Ferrocyanide and considering the value of Sodium Cyanide alone, cost of ever¹

this single raw material is not being recovered by the exports from EU.

(iv)

Regarding the normal value, petitioners made efforts to get informa'ion on the

domestic prices of sodium ferrocyanide in the EU, However, :hey could not

get a reasonable and authentic evidence of the local prices charged by the

manufacturers in the EU or for their exports to other countries. Therefore tl»cy

constructed the normal value in EU on the basis of the details of cost of

production for sodium cyanide which is the basic raw material and prices of

utilities etc.,

on the basis of ihe industry norms.

Sodium cyanide is a vital

raw material for production of sodium ferrocyanide and constitutes major part

of the total cost of production of sodium ferrocyanide.

(v)

The cif export price of sodium ferrocyanide from EU has been worked out on

the basis of information available from secondary sources as Director General

of Commercial Intelligence and Statistics'!, Calcutta, which is the official

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THE GAZETTE OF INDIA : EXTRAORDINARY

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agency io; compiling such data in India has not given the information for the

year 1099 at the time the petition was filed. Assessable value of imports per

unit in US$ comes to 936.11 PMT The export prices need to be adjusted for

the various expenses such as landing charges @ 1%, ocean freight, marine

insurance, commission, inland transportation in the country of export, port

handling and port charges for arriving at the net export price which is to be

compared with the normal value for arriving at the dumping margin. On the

basis of the calculations made by the domestic industry dumping margin as

percentage of net export price is more than 100%.

(vi)

The imports of Sodium Ferrocyanide from EU have increased steeply from nil

in 1998 to 200 MT in 1999.

(vii)

The total imports during the year 1999 into India of Sodium Ferrocyanide were

298 MT.

(viii) The exports of Sodium Ferrocyanide from EU to India have led to substantial

decline in the sales of domestic industry in 1999 as compared with 1998 and

hence a fall in domestic production and capacity utilisation.

(ix)

A situation of price undercutting and sales decline prevailed in the Indian

market in view of dumping from EU.

(x)

Indian industry has suffered material and real injury directly caused by the

dumped imports,

IMPORTERS AND EXPORTERS' VIEWS

M/s. Sona InterChem Pvt Ltd., Vapi, one of the importers in reply to the

notification have stated that they have not imported any quantity of the product during

the last four years and hence they are not submitting any information on the

questionnaire.

M/s. Degussa Huls, AG, exporter from the EU made a request for extension of

time for filing the reply to the questionnaire addressed to them till 11,8.2000 which

was accepted by the Designated Authority and the reply was filed by them through

their legal representatives on 11.8.2000. Subsequently further submissions were made

by them vide their letters of 14^th and 18^th September 2000 clarifying certain issues

submitted in their earlier submissions.

The information submitted by them was

verified by the Designated Authority at their premises in Frankfurt, Germany and at

their works in Manchester, UK, The points made by the exporters in their submissions

are briefly stated as follows:-

(i)

All the quantities exported to India during the period of investigation

i.e., Jan-December 1999 have been to only one customer. Even though

the individual shipments are of smaller quantities they are against one

single order for a total supply of *** MTS per year shipped as per the

delivery instructions of the customer in India,

(ii)

As compared to the above supply to India they had supplied the said

product to a number of customers in EU and only very few of these

customers had ordered and were supplied quantities in excess of ***

MTS.

Requirements of other customers were relatively small as

compared with the quantities ordered by the Indian customer in the

above said order.

In terms of para 6(i) of Annexure I of the Anti

Dumping Rules a fair comparison shall be made between the export

price and the normal value and the comparison shall be at the same

level of trade and in respect of sales made at as nearly as possible the

same time, Due allowances are required to be made for differences

which affect price comparability.

One factor which has specifically

been mentioned is difference in quantities. It is therefore submitted that

THE GAZETTE OF INDIA : EXTRAORDINARY

[PAKT I—SEC. 1]

the normal value corresponding to the exports to India should be

weighted average price to those customers in the EU who were supplied

quantities in excess of*** MTS.

(iii)

As per the submissions made by the petitioners, the normal value o^f "

sodium ferrocyanide in the EU has been constructed by taking the

normal value of sodium cyanide, which is the major raw material, as

determined by the Authority in an earlier anti dumping investigation on

sodium cyanide from the EU. Sodium cyanide is produced and sold by

one division of Degussa Hills in Germany whereas sodium ferrocyanide

is manufactured in another division in Manchester, UK. This division

does not buy sodium cyanide from within the Group whereas the

petitioners have assumed to be so. This is prima facie fallacy in their

case.

Division manufacturing sodium ferrocyanide which is in UK

sources sodium cyanide solution at a price of US$ *** per MT and on

the basis of the usage of sodium cyanide for manufacture of one MT of

sodium ferrocyanide the actual cost of sodium cyanide used in the

manufacture of sodium ferrocyanide is only US$ *** per MT as against

US$ *•* per MT claimed by the petitioner. The cost of sodium cyanide

has been inflated by the petitioner by more than 50%. The required

evidence regarding this has been enclosed in the confidential version.

(iv)

The above mentioned single factor is enough to convince the Authority

that their cost of production is correct and the petitioner has justified

the dumping only as a result of inflating the constructed cost of sodium

ferrocyanide and the authority is therefore requested to discard the

information given in the petition and to determine the dumping if any

based on the information contained in the questionnaire response.

_JU

(v)

The alleged material injury from the decline in profitability is not due

to EU as exports of sodium ferrocyanide started only in 1999 whereas

the domestic industry was suffering losses even in 1997 and 1998. The

prices of M/s Degussa Huls did not affect the prices of domestic

industry and in fact they ensured that their prices were at the same level

as that of the domestic industry. Further if at these prices the domestic

producer was not able to meet its cost and make a profit, blame cannot

be put on Degussa Huls. Thus the inability of petitioner to cover its

cost is due to historical factors and not caused by export from EU.

EXAMINATION AND FINDINGS BY AUTHORITY

The submissions made by the exporters, importers, petitioner and other

interested parties have been examined and considered while arriving at these findings

and wherever appropriate have been dealt hereinafter.

LIKE ARTICLE AND PRODUCT UNDER CONSIDERATION

Sodium Ferrocyanide is an Inorganic chemical and is manufactured out of

Sodium Cyanide, having application for production of fencycine, pigments,

photographic fixing agents in electroplating industry, for fermentation processes of

fruits acids and pharmaceutical/chemical industry etc.

Sodium Ferrocyanide is

classified under custom code 2837.20 of Schedule 1 of the Customs Tariff Act, 1975.

Sodium Ferrocyanide being imported from EU has characteristics closely

resembling to the Sodium Ferrocyanide being produced by the domestic industry and,

therefore, the two are considered as like article in accordance with Rule 2(d) supra.

The product, Sodium Ferrocyanide is, therefore, covered under the scope of this

investigation.

DOMESTIC INDUSTRY

The petition has been filed by M/s. Cyanides and Chemicals Co., (a unit of

Hindustan Development Corporation) 65 Free Press House, Nariman Point, Mumbai.

t<jL<{itt>/ - *f,

THE GAZETTE OF INDIA : EXTRAORDINARY

[PAR] I—SFC. II

M/s. Gujarat Alkalies and Chemicals Ltd., is also producing Sodium Ferrocyanide.

Production of the petitioners, however, accounted for more than 80%of the total Indian

production and, therefore, the petitioner constitutes domestic industry in accordance

with Rule 2(b) supra,

DUMPING

Normal valuo

The domestic industry in their submissions have requested use of constructed

normal value in the absence of information regarding the evidence of the domestic sale

prices of the manufacturers of EU. However, in view of the response given by M/s.

Degussa Huls, one of the manufacturers in the EU, sufficient information has been

furnished regarding the domestic prices. The Authority intends to use the information

provided by the exporters on the domestic sale price in the EU for arriving at normal

value.

The Authority accepts the argument given by the exporter that the calculation

of normal value shall be based on the sale price to those customers in EU who have

supplied quantities in excess of *** MTS as the order against which supplies have

been made to the customer in India was also for a total supply of

*** MTS.

However, while using this information the Authority has decided to ignore the

transactions of domestic sales which are below cost of production as not being in the

ordinary course of trade by reason of prices, in terms of para 2 of Annexure I of Anti

Dumping Rules. The Authority observes that in the case of some customers, supplies

have been made at prices below the cost of production per unit. These supplies have

been made in substantial quantities throughout the year and hence do not provide for

the recovery of all costs within a reasonable period of time.

Normal value has been

determined in accordance with section 9A(T)© of the Customs Tariff Act. An

adjustment of ***% has been claimed as discount/commission by the exporters in the

export price which has been accepted and allowed after verification.

Export Prlc*

10.

The petitioner had fbrnished information regarding the export price on the

basis of the §econdary evidence and claimed adjustments on account of landing

charges, ocean freight, marine insurance, commission etc. However in their

submissions the exporters have given complete information regarding export price

from India and furnished invoices and other documents in support of their claim for

export price and adjustments on account of landing charges, ocean freight^ marine

insurance, commission etc.

The information furnished by the exporters has been

verified and accepted.

Dumping Margin

11.

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 fair comparison

between the normal value and export price, the Authority has made calculations on the

basis of parameters mentioned in paragraphs above. Based on the fair comparison of

the normal value and export price so worked out, the margin of dumping in respect of

exports made by Degussa Huls comes out to be 60% of the export price. The

Authority intends to use the same dumping margin for all the exports from EU as there

does not seem to be any other manufacturer-exporter from the EU of the product.

INJURY v

12.

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

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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 or prevent price increases, which otherwise

would have occurred, to a significant degree. Also the effect of dumped imports on

the volume of sales by the domestic industry needs to be looked into to determine

injury being caused.

13.

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, capacity utilization, sales, stock, profitability, net sales realisation etc.

(a)

Volume and market share of dumped imports

Imports of Sodium Ferrocyanide from EU were nil till 1998 which have

increased to 200 MTS in 1999 which signifies a very sharp increase in the

imports in the total market size of approximately 900 MTS. The market share

of imports from the territories of EU in Sodium Ferrocyanide in India has also

thus increased from nil to approximately 30% of the total domestic demand in

1999 The increase in absolute terms as well as percentage terms of imports of

Sodium Ferrocyanide from EU is matched by fall in the share of domestic

industry in the total sales from approximately 99% in 1998 to 66% in 1999

(b)

Production capacity utilisation

There has been a fall in production of the petitioner from *** MTS to ***

MTS between 1998 and 1999 and as a result there has been a significant fall in

the capacity utilisation of the domestic industry as well.

(c)

Sales in absolute terms

Because of the increased imports, the sales of the domestic industry has fallen

from *** MTS in 1998 to *** MTS in 1999.

(d)

Average sales realisation and price under cutting

The Authority finds that the unit sales realisation for the domestic industry

during three year period ending 1999 has almost remained constant and much

lower than the optimum cost of production resulting in significant losses to the

petitioner.

(c)

Price Suppression

The Authority finds that import of large quantities from EU in 1999 at low

prices resulted in a situation or price suppression in the Indian market, which

prevented the domestic industry to sell at prices commensurate with its cost of

production.

(f)

Profit/Loss

The petitioner is a part of multi-unit organisation engaged in multi product

activities and no conclusion can be drawn from the printed annual accounts

about the financial position of the company for the product under

consideration. The Authority has, however, relied upon the profitability of the

petitioner from the product under consideration after considering allocation and

apportionment of expenses on the basis of Generally Accepted Accounting

Principles.

The Authority noted that the average sales realisation to the

petitioner is less than the cost of production resulting in losses from the sale of

Sodium Ferrocyanide.

(g)

Conclusion of the injury

THE GAZETTE OF INDIA : EXTRAORDINARY

[PARI I --Sic. IJ

The Authority is led to the conclusion that all the relevant factors, cumulatively

and collectively establish that the domestic industry has suffered material

injury during the period of investigation.

CAUSAL LINK

14.

In determining whether material injury to the domestic industry was caused by

the dumped imports, the Authority took into account the following facts;

(i)

the imports of the product from EU increased significantly in absolute

terms and relative to the production and consumption of the product in

India. The share of EU in the total imports also increased significantly

As a direct consequence, the domestic industry lost its market share to a

significant level resulting in fall in its sales volume.

(ii)

The substantial imports of Sodium Ferrocyanide from EU at dumped

prices forced the domestic industry to keep its selling prices at un-

remunerative level which resulted in a situation of price undercutting in

the Indian market.

(iii)

The imports from EU suppressed the prices of the product in the Indian

market to such an extent that the domestic industry was prevented from

recovering its full cost of production and earn a reasonable profit from

the sales of Sodium Ferrocyanide in India.

(iv)

It has been argued above by the exporters that they

matched the

prevailing price of the domestic industry and did not undercut and that

there was no export of Sodium Ferrocyanide to India from EU during "•••

the years 1997 and 1998. Further the domestic industry was making

losses even during this period and hence the export from EU were not

the cause of injury to the domestic industry. Here it may be mentioned

that prior to 1999 there had been substantial imports from China despite

(he anti dumping duty being there in place

In 1997, 100 tonnes of

Sodium Ferrocyanide was imported from China. On account of this

continued dumping, the Designated Authority in the mid-term review

of anti dumping duties against China, issued a finding on 11.7.2000

recommending enhanced anti dumping duty to US$ 615 PMT on all

imports of Sodium Ferrocyanide into India originating in or exported

from the People Republic of China. The fall in imports from China has

been more than matched by increased imports from EU resulting in

continued price suppression and financial losses for the domestic

industry. Hence the contention of the exporter that imports from EU

have not caused malarial injury to the domestic industry is not correct.

.1.

INDIAN INDUSTRY'S INTEREST

15.

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

J6.

The Authority recognised that the imposition of anti dumping duties might

affect the price levels of the products manufactured using Sodium Ferrocyanide and

consequently might have some influence on relative competitiveness of these products.

However, fair competition on the Indian market will not be reduced by the anti

dumping pleasures

On the contrary, imposition of anti dumping measures would

remove the unfair advantages gained by dumping practices, would prevent the decline

of the domestic industry and help maintain availability of wider choice to the

consumers of Sodium Fen -cyanide.

The Authority notes that the imposition or anti

dumping mtasures would not restrict imports from EU in any way, and therefore,

would not affect the availability of the product to the consumers. The consumers

could still maintain two or even more sources of supply.

THE GAZETTE OF INDIA : EXTRAORDINARY

[pART |—Si-c. 1]

17.

Injury being caused to the petitioner from factors other than dumping from EU

have not been considered by the Authority while recommending the amount of anti

dumping duty.

18.

The Authority notes that the petitioner as well as the other producer have been

forced by the importer to reduce the prices of Sodium Ferrocyanide which clearly

establish a situation of price undercutting prevailing in the Indian market and also

there is fall in sales volume of domestic industry as a result of dumping from EU.

CONCLUSIONS

19.

The Authority has, after considering the foregoing, come to the conclusion

that:

(i)

Sodium Ferrocyanide of EU origin has been exported to India below its

normal value,

(ii)

the Indian industry has suffered material injury;

(iii)

the injury has been caused by the imports from EU.

The Authority considers it necessary to impose an anti dumping duty

provisionally, pending final determination, on all imports of Sodium Ferrocyanide

originating from EU in order to remove the material injury to the domestic industry

The margin of dumping for known exporter determined by the Authority are indicated

in para 11.

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 Sodium Ferrocyanide falling under customs

code 2837 20 originating from EU pending final determination. The anti dumping

duty shall be the difference between the amount mentioned in column 3 and landed

price of import per MT.

Territory/Country

European

Union

(all

member-countries)

Name

Producer/Exporter

M/s.

Degussa

Huls

and

all

other

producers/exporters

Amount in US$

perMT

1535

22.

Landed value of imports for the purpose shall be the assessable value as

determined by the Customs under the Customs Act, 1962 and all duties of customs

except duties under section 3, 3A, 8B, 9 and 9A of the Customs Tariff Act, 1975.

FURTHER PROCEDURE

The following procedure would be followed subsequent to notifying the

preliminary findings:-

(a)

The Authority invites comments on these findings from all interested

parties and the same would be considered in the final findings;

(b)

Exporters, importers, petitioner and other interested parties known to be

concerned are being addressed separately by the Authority, who may

make known their views, within forty days from the date of 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;

(c)

The authority would provide opportunity to all the interested parties for

oral submissions to be rendered thereafter in writing;

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(d)

The Authority would conduct further verification to the extent deemed

necessary,

(e)

The Authority would disclose essential facts before announcing final

findings.

L.V. SAPTHARISHI, Designated Authority

Printed h> ihc Manager. Govt nt India I'rL-ss Ring Road. Mayapuri. New Delhi-I 10064

iind Published h\ the (.ontrollcr t>1 Publications. Dcllu-110054