REGD. NO. D.

4/99

The Gazette of India

EXTRAORDINARY

PART I—Section 1

PUBLISHED BY AUTHORITY

No. 23]

NEW DELHI, WEDNESDAY, JANUARY 24,2001/MAGHA4,1922

2J3GI/2001

(1)

THE GAZETTE OF INDIA : EXTRAORDINARY

|PART I—SEC. I]

MINISTRY OF COMMERCE AND INDUSTRY

(Department of Commerce)

(DIRECTORATE GENERAL OF ANTI-DUMPING AND ALLIED DUTIES)

NOTIFICATION

New Delhi, the 24th January. 2001

Subject:

Anti dumping investigation concerning imports of Dry

Batteries originating in or exported from PR China -

Preliminary Findings

NO.S3/I/2IMM)-DGAD.- 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.

Procedure:

The procedure described below has been followed with regard to the

investigations:--

(i)

The Designated Authority (hereinafter referred to as Authority),

under Rules received information from reliable sources that dry

batteries (hereinafter referred to as subject goods), originating in or

exported from China PR (hereinafter referred to as subject country)

are being dumped in India and are causing injury to the domestic

industry;

(ii)

The Authority on the basis of information and evidence available

before it decided to initiate anti dumping investigations against

imports of subject goods from the subject country;

(iii)

In accordance with sub-rule 5(5) of the Rules, the Authority

notified the Embassy of China PR in India about the receipt of

information and evidence mentioned above before proceeding to

initiate investigations;

(iv)

The Authority issued a Public Notice dated the 20^th November

2000 published in the Gazette of India, Extraordinary, initiating

anti dumping investigations concerning imports of subject goods

from subject country, classified under custom sub-heading 8506.10

of Chapter 85 of the Schedule I of Customs Tariff Act 1975;

(v)

It was also mentioned in the initiation notification that product

under consideration is dry batteries (more specifically primary

pencil cells and batteries) and custom classification mentioned is

indicative only and is in no way binding on the scope of the

present investigation. Further the batteries are available in various

sizes, however, R6 (AA) both in paper and metal (both heavy duty

THE GAZETTE OF INDIA : EXTRAORDINARY

|PART I—SEC. 1]

and super heavy duty) jacketed form are within the scope of

investigations;

(vi)

The Embassy of China in New Delhi was informed and a copy of

initiation notification was sent to them in accordance with Rule

6(2). They were also requested to advise the exporters/producers

in their country to respond to the questionnaire within the

prescribed time.

A copy of the questionnaire meant for

exporters/producers along with covering letter addressed to

exporters/producers containing guidelines for filling up the

questionnaire was also sent;

(vii) On receipt of list from reliable sources of exporters/producers of

subject goods from subject country, the Authority forwarded a

copy of the public notice to them and gave them an opportunity to

make their views known in writing;

(viii) In accordance with Rule 6(4) the Authority also sent questionnaire

to elicit relevant information to the known exporters from China as

per the list given below:-

1. M/s. Shandong Zibo Disheng Power Co Ltd., Shandong, China

2. M/s. Tiansliui Battery Factory, Gansu, China

3. M/s. Lishui Battery Factory, Zhejiang, China

4. M/s. Wuzhou Storage Battery Factory, Guangxi, China

5. M/s. Nanchang Battery Factory, Jiangxi, China

6. M/s. Linquing Battery Factory, Shandong, China

7. M/s. Weifang Bohai Electrical Light Source Co. Ltd.,

Shandong, China

8. M/s. Guangzhou Light Industries Products, Electric Appliances

Imp and Exp. Co., Guangdong, China

9. M/s. Nanping Nanfu Battery Co. Ltd., Fujian, China

(ix)

The Authority forwarded a copy of the public notice to M/s. Four

line Export, Indore, an importer of subject goods and advised them

to make their views known in writing within 40 days of the date of

the letter. Other importers of subject goods from China who have

come to the notice of the Authority subsequently are as follows:-

M/s. Videocon International Ltd, Aurangabad

M/s. Shri Exporters, Mumbai

M/s. Kalson Mkg. Pvt. Ltd., New Delhi

M/s. Global Impex, Mumbai

M/s. Advance Semiconductor, New Delhi

M/s. Sheraton Overseas, Chennai

M/s. Techno Enterprises, Noida

M/s. Deepak Exports, Delhi

M/s. Shah RP Technologies, Delhi

10. M/s. KS International, N Delhi

M/s. Super Fine Overseas, N Delhi

12. M/s. Devika Impex, Delhi-

13. M/s. Perfect Trading Co., Delhi

14. M/s. Anand Enterprises, N Delhi

THE GAZETTE OF INDIA : EXTRAORDINARY

[PART I—SEC. 11

15. M/s. Delhi International, Delhi

16. M/s. Ambica Enterprises, N Delhi

17. M/s. VK International N Delhi

18. M/s. Crystal Electronic Corpn., Chennai

19. M/s. VR Electronics, Jaipur

(x)

Request was also made to the Directorate General of Commercial

Intelligence and Statistics (DGCIS) Calcutta and Central Board of

Excise and Customs to arrange for data on import of subject goods

during the period of investigation.

(xi)

A copy of the initiation notice was sent to industrial associations,

such as ASSOCHAM, CII and FICCI and also to newspapers and

news agencies

to give wide publicity for the benefit of all

concerned and also to invite their participation in the investigation;

(xii) A copy of the initiation notification was also forwarded to the

Association of Dry Cell Manufacturers and also to the domestic

producers of subject goods as per list below:-

Eveready Industries India Ltd., Calcutta

Indo National Limited, Chennai

Matsushita Lakhanpal Battery India Ltd.,

Vadodara

Wilkinson Sword India Ltd., (Geep)

N Delhi

Energizer India Ltd., New Delhi

Duracell India Pvt Ltd., New Delhi

BPL Limited, Bangalore

(xiii) The Authority made available non-confidential

information and evidence available before it in the form

of a public file kept open for investigation by the

interested parties;

(xiv)

*** in this notification represents information

submitted on confidential basis by interested parties and

so considered by the Authority under the Rules. This

also includes confidential information available before

the Authority from independent sources;

(xv) The period of investigation for the purpose of this

anti dumping investigation is 1.4.2000 to 30.9.2000.

Domestic Industry's Views

The domestic industry in response to the initiation notice has

furnished information in the prescribed format and made the following

submissions :-

(i)

The product under investigation falls under custom heading

8506.10 and described as'dry cell batteries' (more specifically

primary pencil cells and batteries) especially R (AA) both in

THE GAZETTE OF INDIA : EXTRAORDINARY

[PART I—SEC. 1]

paper and metal (both heavy duty and super heavy duty)

jacketed form;

(ii)

The product under consideration i.e., dry cell batteries is

transacted in terms of number of pieces.

However, the

information on imports available from various custom ports

reveal that imports have been cleared in unit terms such as

dozens, sets and cartons etc. thus though the volume is to be

denominated in terms of number of pieces, the DGCIS data for

denoting the volume may not be reliable as a common unit does

not seem to have been adopted while compiling the data. This

will also imply that the value per unit calculated from DGCIS

data may not be the true reflection of the actual export price

per unit. Apart from sub heading 8506.10, from the detailed

data on the imports available it is seen that the subject goods

have been cleared under different heading such as 8513 also

particularly in view of the fact that that custom duties are same

for all these sub headings;

(hi) The rechargeable batteries also fall under the same custom

heading and are also imported from the subject countries. Since

the value per unit of rechargeable battery is many times higher

than that of the subject goods the data complied under the

custom sub heading will not give a true picture of the unit value

of the import of subject goods;

(iv)

From the foregoing discussion,

it is clear that, the data

provided by DGCIS may not be reliable to determine the

volume, value and per unit prices of the imports from subject

country. The information on imports collected from various

ports in the country may be more reliable indicator of the

volume and value of imports looking into the consignment wise

details giving different specific description of the product being

imported;

(v)

Import of various types of dry batteries were under 'restricted

list¹ of imports till 31^st March 2000. Effective from 1^st April

2000, these imports have been placed in Open General Licence

(OGL) and there are no restriction on imports since then;

(vi)

After the import of dry cell batteries was placed under OGL,

the exporters from China have resorted to severe dumping

which is taking the form of either direct shipment from China

or there is trans-shipment of material of Chinese origin from

Hong Kong and Singapore.

The duties are required to be

imposed on all imports of subject product originated in or

exported from the subject country;

(vi)

The domestic industry consists of five producers of subject

goods.

These producers have imported other types of batteries

which are not the subject matter of present investigation (such

as rechargeable batteries) and none of the Indian producers are

related to exporters or importer of the subject goods from

China;

(vii) The present investigations are against dumping of subject goods

from China which is a non-market economy country. As per

the amended Anti Dumping Rules, normal value in a non

•-•33 G1,2001—4

THE GAZETTE OF INDIA : EXTRAORDINARY

[PART 1—SEC. 1]

market economy country can be determined on the basis of

price actually paid or payable in India for the like product, duly

adjusted, if necessary, to include a reasonable margin of profit.

The Designated Authority has already conducted a number of

investigations into dumping from China wherein the normal

value was determined based on constructed cost of production.

(viii) There has been sharp increase in the import of subject goods

from China during the period of investigation which has caused

material injury to the domestic industry and also threatening

further injury in the form of price under-cutting, erosion, in

market share, loss of sales and profitability etc;

(ix)

The export price of Chinese goods is not even sufficient to

recover the cost of raw material of the product, not to speak of

the manufacturing and processing expenses, cost of finance,

selling and distribution expenses etc.;

(x)

The dumping of the subject goods from China is causing

material injury to the domestic industry and the anti dumping

duty should be imposed on imports of dry cell batteries from

China;

_J27

Views of manufacturers, exporters from China and importers in

India

None of the exporters or manufacturers of the subject goods from

China nor the importers in India of the subject goods responded to the

initiation notice of the Authority.

Examination and Findings by Authority

The submission made by the exporters, importers, domestic industry

and other interested parties have been examined and considered while

arriving at these findings and wherever appropriate have been dealt

hereinafter.

The Authority confirms, the absence of any direct response from the

exporters in the form and manner prescribed and having made the findings

on the basis of the fact available to it as per rule 6(8) supra.

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.

Product under Consideration and Like Article

As already mentioned in the initiation notification the product under

consideration is dry batteries

(specifically primary pencil cells and

batteries) which is classified under custom sub-heading 850610 of Schedule

THE GAZETTE OF INDIA: EXTRAORDINARY

|PAKT 1—SEC. 1]

I of the Customs Tariff Act, 1975. The product is used in torches,

transistors, toys, cameras, tape recorders, CD players, laptop PCs and other

electronic and electrical gadgets. The batteries are available in various sizes,

however, R6 (AA) both in paper and metal (both heavy duty and super

heavy duty) jacketed form are within the scope of investigation. Further, the

goods manufactured by the domestic industry are Tike articles' to the goods

imported from the subject country within the meaning of Rule 2(d). The

classification is indicative only and is in no way binding on the scope of the

present investigation. The Authority continues with the same description as

mentioned above for the purpose of preliminary findings except that the

rechargeable batteries are not within the scope of investigation.

F. Domestic industry

There are five producers of dry cell pencil batteries in India. They are

Eveready Industries Ltd

BPL Soft Hnergy System Ltd

Matsushita Lakhanpal Battery India Ltd

Indo National Ltd

Wilkinson Sword India Ltd

10.

Of the above five companies, companies at serial nos. 1 to 4 above,

have provided information for the purpose of investigation. Some of these

companies have imported other types of batteries which is not the subject

matter of the present investigation and it has been stated that none of these

companies are related to any exporter or importer of subject goods from

China. The Authority, therefore, considers M/s. Eveready Industries Ltd.,

M/s. BPL Soft Energy System Ltd., M/s. Matsushita Lakhanpal Battery

India Ltd., and M/s. Indo National Ltd as domestic industry for the purpose

of present investigation and these producers together are referred to as

'domestic industry' for the findings.

G. Dumping & examination of claims made on Normal Value &

Export Prices

11.

Under Section 9A(1)€>, 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^); 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

origin

along with

reasonable

addition

for

administrative, selling and general costs, and for

THE GAZETTE OF INDIA : EXTRAORDINARY

[PART I—SHC. IJ

profits, as determined in accordance with the rules

made under sub-section (6);

12.

The Authority sent questionnaires to all the known exporters for the

purpose of determination of normal value in accordance with section

9A(1)©. However, none of the exporters responded to the Authority and

have not furnished any information.

The Authority, therefore, holds that

none of the exporters from the subject countries have cooperated with the

Authority as envisaged under the Rules.

13.

The domestic industry has furnished information with regard to

normal value, based on constructed cost of production. The normal value

has been determined by the Authority on the basis of cost of production

constructed for China PR in view of non cooperation from the exporters

from China PR.

14.

The domestic industry has claimed export prices on the basis of data

compiled from secondary sources.

Since none of the exporters from

China PR and importers in India have furnished any information with

regard to export price,

the Authority

has determined export price

on the basis of the information available

The CIF export price has been

adjusted for ocean freight and insurance etc., to work out net export price, in

view of non cooperation from the exporters from subject country and

importers in India.

15.

The export price and normal value so determined have been

considered as ex-works prices.

16.

Since none of the exporters from the subject country has responded to

the Authority's request for information, the Authority has not determined

dumping margin for individual exporters. The Authority took into account

the best information available for the purpose of fair comparison between

the normal value and the export price and compared weighted average

normal value with weighted average export price. The comparison shows

dumping margin of 693% of net export price.

Injury

17.

Rule 11 of Anti Dumping Rules reads as follows:

"Determination of Injury:

(l)ln the case of imports from specified countries, the

designated authority shall record a further finding that

import of such article into India causes or threatens material

injury to any established industry or materially retards the

establishment of any industry in India;

THE GAZETTE OF INDIA : EXTRAORDINARY

[PART I—SEC. 1)

(2) The designated authority shall determine the injury to

domestic industry, threat of injury to domestic industry,

material retardation to establishment of domestic industry

and a causal link between dumped imports and injury, taking

into account all relevant facts, including the volume of

dumped imports, their effect on price in the domestic market

for like articles and the consequent effect of such imports on

domestic producers of such articles and in accordance with

the principles set out in Annexure II to these rules."

18.

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 detennination

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."

19.

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 or prevent price increases, which

otherwise would have occurred, to a significant degree.

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, stock, profitability, net sales realisation etc.

20.

All the economic parameters affecting the domestic industry

mentioned above, such as production, capacity utilisation, sales volume etc.,

233 GI/2001— 5

THE GAZETTE OF INDIA : EXTRAORDINARY

[PART I—SEC. 1]

have been examined. However, the most clear effect of dumped imports has

been on the prices. As against the retail selling price of domestic industry in

the range or Rs.** to Rs.** per piece the Chinese batteries were being sold

in the retail market at a price of approximately Rs.1.5 to Rs.2.00 per piece

as per information available. Tt has been stated by the domestic industry that

especially in villages and small towns, which is a large segment of the

market for the industry, the consumers are highly price conscious. There has

been a tremendous erosion for the domestic market and the domestic

industry has further stated that they are finding it difficult to convince the

consumers to continue to buy the domestic product because of the enormous

price difference. Even though there may not be an immediate adverse effect

on the production and capacity utilisation because of the expanding domestic

market, the dumped imports are causing lot of erosion in the market share of

the domestic industry.

21.

The imports from China, demand of subject product in India and share

of China in demand of the subject goods in India has been as under:-

Million pieces

Imports from China

Total demand

China

Demand (%)

1997-98

5.37

556

0.97

1998-99

36.6

748

4.89

Investigation

period

46.8

362

12.93

It is evident from the above that the share of China in Demand of the subject

goods in India has significantly gone up. The volume effect is also being

felt in terms of inability of the domestic industry to increase its sales

proportionate to the increase in the demand, thus resulting in decline in the

market share of domestic industry in demand in India.

As a result of

significant price undercutting, the volume of imports is increasing, thus

resulting in increase in the share of China in demand in India. As a direct

consequence, the domestic industry has lost market.

22.

In addition to the material injury being suffered by the domestic

industry as mentioned in the foregoing paragraph it has been found that the

dumped imports are causing threat of further damage to the domestic

industry which will intensify the injury already being suffered.

From an

average of two million pieces per month being imported till March 2000

when the item was on the 'restricted list' of imports, it increased to an

average of 7 million pieces per month between April 2000 and August 2000

and approximately 12.8 million pieces in the month of September 2000 thus

flooding the Indian market with the dumped Chinese imports, In this

situation in addition to usual comparison of landed price of import with the

ex-factory price of domestic product for the purposes of analysis of the

phenomena of price under-cutting, it is necessary to compare the retail price

of two products to assess the extent of price under-cutting and threat of

injury to the domestic industry. A comparison of the two prices shows the

phenomena of price under-cutting being faced by the domestic industry.

The prices of imported goods are being compared with the domestic prices

ex-factory vis a vis ex-port basis and also the prices to a consumer at retail

level. The comparison given below on both counts shows significant under

cutting of the prices of the domestic industry by the goods being imported

from China.

THE GAZETTE OF INDIA : EXTRAORDINARY

[PART I—SEC. 1]

Rupees per piece

Ex-factory vs ex-port

Sales realisation of domestic industry

Landed price of imports

Price undercutting (percentage terms)

Retail level

Selling price of domestic industry

- lowest

- highest

Selling price of Chinese product

Price undercutting (in percentage terms)

- lowest

- highest

Investigation

period

***

423

175

250

The calculation given above show the threat being faced by the domestic

industry on account of price under cutting by Chinese imports which will

eventually force the domestic industry to reduce its prices to match the

prices of the imported product. This is going to have an adverse effect on

the sales realisation and profitability of the domestic industry.

23.

The domestic industry has further alleged that China has significant

freely available capacity and huge inventories which is evident from the fact

of ever increasing volumes of exports of subject goods to India and to other

countries world over. However, this fact could not be verified because of

lack of participation by exporters/manufacturers from China. On the basis

of the evidence available before it, the Authority therefore concludes that the

phenomena of threat of injury being faced by the domestic industry on

account of dumped imports is established.

Causal Link

24.

The substantial and steady increase in import of subject goods from

China at abysmally low price which is not sufficient even to recover the cost

of raw material of the domestic industry resulting in severe price under-

cutting clearly establishes the causal link between the injury already suffered

as well as threat of injury being faced by the domestic industry with the

phenomena of dumping of subject goods from China.

The Authority

therefore has come to the conclusion that there is an obvious causal link

between the dumping of subject goods from China and the injury being

caused to the domestic industry during the period of investigation.

INDIAN INDUSTRY'S INTEREST

25.

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.

THE GAZETTE OF INDIA : EXTRAORDINARY

[PART I—SEC. 11

26.

The Authority recognised that the imposition of anti dumping duties

might affect the price levels and availability of the

products under

consideration.. 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 China in any way, and therefore, would not affect the

availability of the product to the consumers. It will only check unfair trade

practice. The consumers could still maintain two or even more sources of

supply.

CONCLUSIONS

27.

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

conclusion that:

(i)

Dry Cell Batteries of Chinese origin have been exported to

India below their normal value;

(ii)

the Indian industry has suffered material injury and is being

threatened with further injury;

(iii) the injury has been caused by the dumped imports from China.

28.

The Authority considers it necessary to impose an anti dumping duty

provisionally, pending final determination, on all imports of dry batteries

originating from China 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 16 above.

29.

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 dry batteries

falling under customs code 8506.10 originating from China pending final

determination. The anti dumping duty shall be the difference between

US$ 75.25 per 1000 pieces of dry batteries and landed price of import per

1000 pieces for all exporters/manufacturers from China.

30.

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 sections 3, 3A, 8B, 9 and 9A of the Customs

Tariff Act, 1975.

FURTHER PROCEDURE

31.

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

THE GAZETTE OF INDIA : EXTRAORDINARY

[PART I—She. 11

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)

This being a case of suo motu investigation, fresh submissions

made by any interested party even at this stage also will be

taken into account for the purpose of final findings;

(d)

The authority would provide opportunity to all the interested

parties for oral submissions to be rendered thereafter in writing;

(e)

The Authority would conduct further verification to the extent

deemed necessary;

(f)

The Authority would disclose essential facts before announcing

final findings.

L V SAPTHARISHI, Designated Authority

Printed hy the Manager, Uovt. of India Press, Ring Road, Mayiipuri, New Delhi-11006-1

and Published by the Controller »! Publication*. Dolhi-110054.