MINISTRY OF COMMERCE AND INDUSTRY

(Department of Commerce)

(Directorate General of Anti-Dumping and Allied Duties)

NOTIFICATION

New Delhi, the 25th January, 200 J

Preliminary Findings

Sub.: Anti-Dumping investigation concerning imports of Sports Shoes from People's RepnbHc of China

56/1/2000-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 investigation:

The Designated Authority (hereinafter also referred to as

Authority), under the above Rules, received information

from reliable sources regarding dumping of Sports Shoes

(hereinafter also referred to as subject goods) into India

originating in or exported from People's Republic of China

(hereinafter referred to as subject country).

ii)

The Authority on the basis of prima-facie evidence as

received decided to initiate the investigation against

imports of subject goods from People's Republic of China

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[PART I—SEC. 1]

under Rule 5 (4). The Authority notified the Embassy of

People's Republic of China in New Delhi about the receipt of

the

information

before

proceeding

initiate the

investigation in accordance with sub-Rule 5(5) of the Rules.

iii)

The Authority issued a public notice dated 20.11.2000

published in the Gazette of India, Extraordinary, initiating

anti-dumping investigations concerning imports of the

subject goods classified under custom Head 6402 to 6405

of Schedule I of the Customs Tariff Act, 1975 originating

in or exported from People's Republic of China.

iv)

The Authority forwarded a copy of the public notice to all

the known exporters (whose details were obtained from

various sources) and the industry associations and gave

them ar\ opportunity to make their views known in writing in

accordance with the Rule 6(2):

The Authority forwarded a copy of the public notice to all

the known importers (whose details were available from

various sources) of subject goods in India and advised them

to make their views known in writing within forty days from

the date of issue of the letter.

vi)

Request was made to the Central Board of Excise and

Customs (CBEC) to arrange details of imports of subject

goods made in India during the past three years, including

the period of investigation.

vii)

The Authority provided a copy of the Initiation Notification

to the known exporters and the Embassy of the subject

country in accordance with Rules 6(3) supra. A copy of the

Initiation Notification was also provided to other interested

parties, wherever requested.

vlii) The Authority sent a questionnaire to elicit relevant

information to the following known exporters/producers in

the subject country in accordance with the Rule 6(4):

M/s Beijing Daihua Group, Beijing, China

M/s Tianjin Wuqing Yangang Shoe Factor, Tianjin, China

M/s Anshan Tongxu Rubber Plant, Liaoning, China

M/s Jilin Helong Sports Shoes Factory, Jilin, China

M/s Pote (Xiamen)Shoe Co. Ltd., Fujian, China

M/s Wuzhou Rubber Plant, Guangxi, China

M/s Shanghai Huoju Shoe Industrial Co. Ltd., Shanghai,

China

M/s Tiazhou Jialan Shoes Industrial Co. Ltd., Zhejiang,

China

M/s Tiazhou Beili Shoes Industrial Co. Ltd. Zhejiang, China

10.

M/s Tianjin Xinli Shoe Co. Ltd., Tianjin, China

ix)

The Embassy of the subject country in New Delhi was

informed about the initiation of the investigation in

accordance with Rule 6(2) with a request to advise the

exporters/producers from the subject country to respond

to the questionnaire within the prescribed time. A copy of

the letter, Initiation Notification and questionnaire sent to

the exporters was also sent to the Embassy of the subject

country alongwith a list of known exporters/producers.

A questionnaire

was sent

the

following

known

importers/user associations of the subject goods for

necessary information in accordance with Rule 6(4):

M/s Reebok India Company

M/s Bata India Ltd.

M/s Adidas India Trading Pvt. Ltd.

M/s Alishan India Ltd.

xi)

Response/ information to the questionnaire/notification was

not filed by any of the exporters/producers from the

•2.H&&i\i.tn>i - 2

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[PART I — S E C . 1]

subject country. Response was filed by M/s Bato. India Ltd.

and M/s Reebok India Company.

xii)

Information

regarding

injury

parameters,

cost

production was sought from the domestic industry, which

was also furnished by the following domestic producers:--

M/s Relaxo Footwear Ltd. (2 units, namely, t^/s Marvel

Polymers P Ltd. and M/s Nuwave Shoes)

M/s API Associates Ltd.

M/s Nikhil Footwear Ltd.

M/s Lakhani India Ltd. (2 units, namely, PVC Injected Unit

and PVA Sole Unit)

xiv) The Authority verified the information provided by the

domestic industry to the extent considered necessary.

xv)

The Authority kept available non-confidential version of the

information as obtained from various sources furnished 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) * * * * j n this notification represents information furnished by

an interested party on confidential basis and so considered

by the Authority under the Rules.

xvii) Investigation was carried out for the period starting from

1.4.2000 to 30.9.2000 i.e. the period of investigation (POI).

B . VIEWS

DOMESTIC

INDUSTRY,

EXPORTERS,

IMPORTERS AND OTHER INTERESTED PARTIES

No response was received from exporters/producers/User

Associations.

VIEWS OF THE IMPORTERS

M/s Bata India Ltd. has provided the details of the various

brands and the import prices of the subject goods in the POI

from the subject country. The importer has also provided for

the details of the purchase and the demand procedures.

M/S Reebok India Limited have provided details on the

imports and import prices made by them during the POI, costing

of the branded shoes procured by them from the domestic

suppliers. The importers have indicated that the high priced end

shoes imported by them are speciality shoes made from

technologies not available with the domestic manufacturers.

Anti-Dumping duty is protectionist in nature and that the

developed countries adopt consumer driven economic policies and

not the industry driven economic policies.

THE DOMESTIC INDUSTRY'S VIEWS

PRODUCT

UNDER

CONSIDERATION

LIKE

ARTICLE". The domestic industry has informed that the

following goods are being imported from the subject

country:

PVC injected shoes, sandals with canvas or synthetic

uppers.

Canvas shoes with upper soles

Sports shoes with uppers synthetic or textiles or

. combination materials and with rubber or EVA sole.

The domestic producers are producing the similar type of

shoes which are used by the Indian customers interchangeably.

THE GAZETTE OF INDIA: EXTRAORDINARY

[PART I—SEC.TI

ON DOMESTIC INDUSTRY:

The following domestic producers who account for more tan

50% of the total domestic production have supported the

application:-

M/s API Polymers P Ltd., New Delhi

M/s Nikhil Footwear P Ltd.,New Delhi

f^/s Footwear (Klick) India P Ltd., New Delhi

M/s Prem Enterprises, New Delhi

l\A/s Welcome shoes, New Delhi

M/s Galaxy Shoes (I) P Ltd., New Delhi

M/s Aditi International, New Delhi

M/s Lakhani Shoes Ltd., Faridabad

M/s Liberty Group, New Delhi

10. M/s Relaxo International, New Delhi

ON DUMPING: The domestic industry has indicated that

the exporters from the subject country are exporting the

product at very low prices and have provided the details on

CIF prices and the ocean/air freight which the exporters

would have incurred.

ON INJURY:

The domestic industry has reported that

there is no fall in demand of the subject goods and that

they have faced material injury on the following account :-

The market share of the domestic industry has

declined from 74.09% in 1999-2000 to 57.81% in

the POI.

ii)

The imports from China have increased from 4,68

lakh pairs in 1999-2000 to 5.7 lakh pairs in POI

(annualized). Further the imports have also been

routed through Hong Kong, Singapore as per the

available evidence and thus imports from China are

in much higher quantity,

iii)

The production of the domestic industry has

declined by 11.24% in POI as compared to 98-99.

iv)

The capacity utilization percentage has declined

from 62.97% in 98-99 to 60% in 99-2000 and

further to 53.26% in POI.

The profitability of the industry has declined from

Rs. *** crores in 1999-2000 to Rs. *** crores in

POI.

vi)

The weighted average profit per pair has declined

from Rs. *** per pair in 1999-2000 to Rs. *** per

pair in the POI.

EXAMINATION BY AUTHORITY

The foregoing submissions made by the interested parties

and other interested parties have been examined, considered and

dealt with at appropriate places in these findings to the extent

these are relevant as per Rules and have a bearing upon the case.

PRODUCT UNDER CONSIDERATION; The product under

consideration is Sports Shoes, a non-leather sports

footwear classified under the Custom Head 6402 to 6405.

The product covers PVC injected shoes, Canvas shoes with

upper soles and Sports shoes with uppers synthetic or

textiles or combination materials and with rubber or EVA

sole only. The classification is however indicative only and is

in no way binding on the scope of the present investigation.

LIKE ARTICLE: The authority notes that the sports

footwear similar to those being imported are also being

manufactured by the domestic industry and are being used

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[PART I—SEC. I]

interchangeably by the customers in India.

The goods

manufactured by the domestic industry are Like Article to

the goods imported from the subject country within the

meaning of the Rule 2(d).

DOMESTIC INDUSTRY:

The Authority notes that the

domestic producers as indicated below accounting for more

than 50% of the total domestic production have supported

the investigation:

M/s API Polymers P Ltd., New Delhi

M/s Nikhil Footwear P Ltd.,,New Delhi

M/s Footwear (Klick) India P Ltd., New Delhi

M/s Prem Enterprises, New Delhi

M/s Welcome shoes, New Delhi

M/s Galaxy Shoes (I) P Ltd., New Delhi

M/s Aditi International, New Delhi

M/s Lakhani Shoes Ltd., Faridabad

M/s Liberty Group, New Delhi

10. M/s Relaxo International, New Delhi

None of the domestic producers have opposed the anti-

dumping investigation.

Further the following domestic producers have provided the

information on injury:

1. M/s Relaxo Footwear Ltd.

2. M/s API Associates Ltd.

3. AA/s Nikhil Footwear Ltd

4. M/s Lakhani India Ltd.

The above mentioned producers satisfy the criteria for the

domestic industry as per Rule 2(b).

NORMAL VALUE & EXPORT PRICE

Under Section 9A(l)(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 transshipped through the country of export or

such article is not produced in the country of export or there is

no comparable price in the country of export, the normal value

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[PART I—SEC. 1]

shall be determined with reference to its price in the country of

origin.

Normal value

None of the exporters/producers in China have responded

to the Questionnaire sent by the Authority. The information on

domestic selling prices and prices to the third countries has,

however, been provided by certain reliable sources to the

authority. The authority also notes that the cost of production

of the subject goods in India has been made available by the

domestic industry. In view of no cooperation from the exporters,

the Authority considers it appropriate to construct thenormal

value as per the best available information in accordance with the

Anti-Dumping Rules. This has also been co-related with the

Domestic selling price of the subject goods in subject country

and also its export prices to the third countries other than India

on the basis of the information gathered from authentic sources.

The constructed normal value of the un-branded sports shoes

including

low end branded

shoes

and branded

shoes

(Nike/Reebok/Adidas) subject goods in the subject country

comes to ***Rs./per pair and ***Rs./pair respectively.

Export price

The Directorate has on the basis of the information

provided by the domestic industry and certain importers after

co-relating the same with the DGCI&S data evaluated the ex-

factory export price by allowing adjustments on ocean freight,

ocean insurance, commission, port expenses, inland freight etc. to

an extent of ************<£ ***Rs./pair on the basis of the

best available information from the domestic industry and the

importers and the consistent practice adopted in such cases. The

weighted average ex-factory export price of the unbranded

sports shoes including low end branded shoes and branded shoes

(Nike/Reebok/Adidas) subject goods comes to ***Rs./pair and

***Rs./pair respectively.

5. DUMPING-Comparison of Normal Value & Export Price

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."

The authority has carried out comparison of weighted

average normal value with the weighted average ex-factory

export price for evaluation of dumping margin.

Exporter/Producer

All exporters/ producers

Unbranded

A low end

branded

excluding

Nike/Reebok/Adidas

Branded

category

(Ni ke/Reebok/Adidas)

Normal

value

(Rs./pair)

*****

Export

price

(Rs/pair)

*****

Dumping

margin (%)

67.61

126.80

;?W<3t/Ai*>i— *t

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[PAST I- -SEC. 1]

The dumping margin for exporters for the two categories as

indicated above comes to 67.61% and 126.80% respectively.

INJURY AND CAUSAL LINK

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.

For the examination of the impact of the dumped imports on

the domestic industry in India, 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. have been considered in accordance

with Annexure II(iv) of the rules supra.

The Authority observes the following

The market share of the domestic industry has declined

from 74.09% in 1999-2000 to 57.81% in the POI.

The imports from China have increased from 4.68 lakh

pair in 1999-2000 to 5.7 lakh pair in the POI (annualized).

Further the imports have also been routed through Hong

Kong and Singapore as per the available evidence.

The production of the domestic industry has declined by

11.24% in POI as compared to 98-99.

The capacity utilization percentage has declined from

62.97% in 98-99 to 60% in 1999-2000 and further to

53.26% in POI.

The profitability of the industry has declined from

Rs *** crores in 1999-2000 to Rs.*** crores in POI.

The weighted average profit per pair has declined from

Rs. *** per pair in 1999-2000 to Rs. *** per pair in POI.

The authority notes that the demand of the subject goods

have increased to 5.6 lakh pair in POI (annualised) from 5.0

lakh pair in 1999-2000 and about 5 lakh pair in 98-99.

The above economic indicators collectively and cumulatively

indicate that the domestic industry has suffered material

injury to the dumped imports.

In establishing that the

material injury to the domestic industry has been caused by

the dumped imports from the subject country, the Authority

holds that the dumped exports of subject goods from the

subject country have depressed the prices of the subject

goods in the domestic market and, therefore, forced the

domestic industry to sell at un-remunerative prices resulting in

decline in profitability and financial losses to the domestic

industry. Since the demand of the subject goods has been

rising, it has not been a contributing factor to the injury

caused to the domestic industry.

INDIAN INDUSTRY'S INTEREST & OTHER ISSUES

Certain interested parties have submitted that the anti-

dumping duties are protectionist in nature.

The authority

recognises that though the imposition of anti-dumping duties

'-M^l/luo/ - S"

THE GAZETTE OF INDIA : EXTRAORDINARY

[PAKTI—SEC. 1]

might affect the price levels of the products manufactured using

the subject goods and consequently might have some influence on

relative competitiveness of these products, however, fair

competition in the Indian market will not be reduced by the anti-

dumping measures. On the contrary, imposition of anti-dumping

measures would remove the unfair advantages gained by the

dumping practices and would prevent the decline of the domestic

industry and help maintain availability of wider choice of the

subject goods to the consumers.

Imposition of anti-dumping

measures would also not restrict imports from the subject

country in any way, and, therefore, would not affect the

availability of the products to the consumers.

LANDED VALUE

The landed value has been determined after adding

applicable level of custom duties (except duties levied under

Section 3, 3A, 8B. 9, 9A) and one percent towards landing

charges for the purposes of preliminary determination pending

final investigation.

CONCLUSIONS:

I t is seen, after considering the foregoing, that:

The subject goods in the forms as indicated in the

foregoing Para C(l) originating in or exported from the

subject country have been exported to India below its

normal value.

The domestic industry has suffered material injury by way

of decline in its market share and financial losses due to

depressed Selling prices on account of price depression

caused by low landed prices of the dumped subject goods.

The injury has been caused to the domestic industry by

dumping of the subject goods originating in or exported

from the subject country, The authority recommends anti-

dumping duty on imports of subject goods falling under

Chapter 64 originating in or exported from the subject

country.

I t was considered to recommend amount of anti-dumping

duty equal to margin of dumping so as to remove injury to

the domestic industry.

Accordingly, it is proposed that

anti-dumping duties be imposed, on all imports of Sports

Shoes originating in or exported from the subject country

i.e. Peoples Republic of China falling under chapter 64

(Custom head 6402 to 6405) of the Customs Tariff. The

subject goods are PVC injected shoes, carw/as shoes with

upper soles and Sports shoes with uppers synthetic or

textiles or combination materials and with rubber or EVA

sole only as also indicated in foregoing para C(l). The anti-

dumping duty shall be the difference between the amounts

mentioned in column 3 below and the landed value of imports

in $/pair.

SI. No

Name of the exporter/producer

All exporters/ producers

Unbranded <& low end branded

excluding Nike/Reebok/Adidas

Branded