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

REGD. NO.D.L.--33004/99 The Gazette of India

EXTRAORDINARY

PART I—Section 1

PUBLISHED BY AUTHORITY

No. 56] NEW DELHI, WEDNESDAY, FEBRUARY 28, 2001/PHALGUNA 9,1922

609 GI/2001

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MINISTRY OF COMMERCE AND INDUSTRY

(Department of Commerce)

NOTIFICATION

New Delhi, the 28th February. 2001

TERMINATION ORDER

Subject:—Anti-Dumping investigation concerning imports of Isopropyl Alcohol (IPA) from USA,

Singapore and Netherlands.

No. "2/i/2(to(t-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:

A PROCEDURE

2. The procedure described below has been followed with regard to the investigation:

i. The Designated Authority (hereinafter referred to as Authority), under the Rules, received written application from M/s. National Organic Chemical Industries Limited (M/s NOCIL), alleging dumping of Isopropyl Alcohol (IPA), originating in or exported from USA, Singapore and Netherlands (hereinafter referred to as subject countries);

ii. The Authority, on the basis of evidence submitted by the petitioner, decided to initiate investigation against imports of Isopropyl Alcohol from the subject countries. In accordance with sub-rule 5(5) of the Rules, the Authority notified the Embassies of the subject countries about the receipt of dumping allegation before proceeding to initiate the investigation;

iii. The Authority issued a public notice dated 12Ul June, 2000 published in the Gazette of India, Extraordinary, initiating anti-dumping investigation concerning imports of Isopropyl Alcohol classified under custom sub- headings 2905-1201 of Schedule I of the Customs Tariff Act, 1975, originating in or exported from the subject countries;

37 iv. The Authority forwarded a copy of the public notice to the known exporters (whose details were made available by the petitioner) and industry associations and gave them an opportunity to make their views known in writing in accordance with rule 6(2);

v. The Authority forwarded a copy of the public notice to the known importers of Isopropyl Alcohol in India and advised them to make their views known in writing within forty days from the date of the letter;

vi. Request was made to the Central Board of Excise and Customs (CBEC) to arrange details of imports of Isopropyl Alcohol for the past three years, including the period of investigation.

vii. The Authority provided a copy of the non-confidential petition to the known exporters and the Embassies of the subject countries in accordance with rules 6(3) supra;

viii. The Authority sent questionnaire, to elicit relevant information, to the known exporter from USA, Singapore and Netherlands as indicated by the petitioner , as mentioned below in accordance with the Rule 6(4):-

USA

• M/s Exxon Chemical, Houston, USA

SINGAPORE

• M/s Shell Eastern Chemicals (Singapore)

NETHERLANDS

• M/s Shell Nederland Chemie BV of Netherlands

ix. The response to the questionnaire was received from M/s Exxon, USA, M/s Shell Nederland Chemie B.V.Netherlands, M/s Shell India Pvt. Ltd., India and M/s Shell Eastern Chemicals (S), Singapore. None of the other exporters responded to the questionnaire,

x. The Embassies of the subject countries in New Delhi were informed about the initiation of the investigations in accordance with rule 6(2) with a request to advise the exporters/producers from their country to respond to38 THE GAZETTE OF INDIA: EXTRAORDINARY [PART I—SEC. 1] the questionnaire within the prescribed time. A copy of the letter, non- confidential petition and questionnaire sent to the exporter was also sent to the Embassies, along with a list of known exporters/producers;

xi. A questionnaire was sent to the following known importers/ wholesale dealers of Isopropyl Alcohol in India calling for necessary information in accordance with rule 6(4):

• M/s Alkyl Amines Chemicals Ltd., Mumbai • M/s Aarti Drugs Ltd, Mumbai • M/s Coates of India Ltd, Mumbai • M/s Finolex Essex, Goa • M/s Lubrizon India Ltd., Mumbai •> M/s IPCA Laboratories Ltd., Mumbai • M/s Kopran Drugs Ltd., Mumbai • M/s Themis Chemicals Ltd., Mumbai • M/s Goodlass Nerolac Paints Ltd., Mumbai • M/s Hindustan Insectides Limited, New Delhi • M/s Ranbaxy Laboratories Ltd., New Delhi • M/s ICI Nitrocellulose Business, Gurgaon • M/s Aurobindo Pharma Ltd., Hyderabad •> M/s Cheminor Drugs Ltd., Hyderabad • Dr. Reddy's Laboratories, Hyderabad • M/s Hetero Drugs Ltd., Medak • M/s Prabhu's Inks, Podanur • M/s Sudarshan Drugs Ltd., Hyderabad • M/s Shasun Chemicals & Drugs Ltd., Madras • M/s. Daurala Organics Ltd.

The response was, however, filed by the following importers of IPA:

• M/s Alkyl Amines Chemicals Limited, Mumbai • M/s Shasun Chemicals And Drugs Ltd., Chennai • M/s Daurala Organics,

xii. Additional information regarding injury was sought from the petitioner, which was also received;

xiii. 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 narties" 39 xiv. **** in this notification represents information furnished by the petitioner on confidential basis and so considered by the Authority under the Rules.

xv Investigation was carried out for the period starting from 1st January, 1999 to 31st December, 1999.

B ISSUE RAISED ON STANDING OF THE DOMESTIC INDUSTRY

3 VIEWS OF M/s EXXON CHEMICAL INTERNATIONAL

SERVICES LIMITED, HONG KONG (ECIS) AND EXXON MOBIL

CHEMICAL CO.,(EMCC)

(i) After initiation of the case M/s Exxon raised a major issue that the Domestic Industry M/s NOCIL has a relationship with one of the exporters M/s Shell as they have signed a MoU for the de-merger way back in 1998. M/s Exxon has further stated that as per Section 2(b) of the Anti Dumping Rules, M/s NOCIL may be deemed not to form part of the Domestic Industry within the definition of "Domestic Industry" and hence the petition ought to be dismissed and the investigation proceeding be terminated forthwith. The major points highlighted by M/s Exxon are as under;-

• M/s Shell has agreed to partner with M/s NOCIL (hold 49% equity) for its Petro Chemical Business which includes the manufacture of the product under investigation;

• M/s NOCIL and M/s Shell have signed an MOU in 1998;

• The Board of M/s NOCIL has approved a scheme of arrangement that result in the company being split into three. All assets and liabilities pertaining to the Petrochemical and Polymer division of the compain will be demerged and vested as a going concern in M/s NOCIL Petrochemicals Ltd (NPL) while those related to the Rubber Chemicals Division will be demerged and vested as a going concern in Polyolefines Rubber Chemicals Ltd. (PRCL). The plastic products division along with subsidiary companies and certain investments will remain with M/s NOCIL whose paid up equity capital will stand correspondingly reduced.

• Steps have been taken by M/s NOCIL to comply with M/s Shell's

request for a trimmed work force and management during the Period of Investigation;

• Steps have been taken for seeking approval of the Scheme of De- Merger of the Petro-Chemical Unit during the Period of Investigation.

• A Team of Shell Managers is in the process of implementing the MoU and working of the Project itself.

• The petitioner has filed the present petition at the instance of M/s Shell Chemicals Ltd to impose Anti-Dumping Duty on import of IPA to keep out M/s Exxon from Indian market.

• The petitioner has intentionally concealed the material fact before the Authority to get an advantage of Anti-Dumping Duty.

• M/s NOCIL has filed an application in the Bombay High Court for the approval of above scheme.

• M/s NOCIL at the time of filing the petition has concealed deliberately the facts of said MoU before Designated Authority to get an advantage.

(ii) As the issue was very crucial, an oral hearing was held on 25th August, 2000 with all the interested parties only to discuss the relationship issue raised by M/s Exxon . The representatives of petitioner company, exporters and other interested parties participated in the oral hearing and presented their views and rejoinders subsequently. The Authority has solicited further clarifications/evidences from the petitioner as well as exporters to substantiate their submissions and rejoinders. M/s Exxon Limited has submitted the information required by the Directorate. The petitioner and M/s Shell Nederland did not submit the relevant papers before the Designated Authority. Letters were issued to petitioner company as on 04.10.2000 and subsequent reminders on 24.10.2000, 17.11.2000, 23.11.2000 and 24.11.2000 for the submission of all the relevant papers by 28th November 2000.

_41 (iii) M/S. NOCIL vide there letter dt. 03.11.00 has provided only few papers as solicited by the Authority and has not provided the copy of the De-Merger petition filed in Bombay High Court for approval of De merger scheme. This document is most crucial document for establishing whether the petitioner is related to the exporter or not. In spite of repeated verbal and written requests, M/s NOCIL has not- provided the same. Final opportunity had been given to petitioner for submission of the deficient information/papers along with a chance to comment on their letter dated 3rd November, 2000 wherein it stated that as on today MoU has expired and is not effective as of today. Hence the entire issue of alleged relationship between M/s Shell and M/s NOCIL brought out by other interested parties is irrelevant and deserves to be ignored. Along with the aforesaid letter M/s NOCIL did not provide the full information as solicited by the Designated Authority vide our earlier letters/reminders.

In view of aforesaid development and information submitted by M/s Exxon, M/s NOCIL was advised to submit an affidavit to the effect that MoU dated 30th September 1998 is*no more in existence (iv) The Authority has advised the petitioner to file all the papers/information in view of their statement made vide their letter dated 3rd November, 2000 which were very crucial to arrive at any findings vis-a-vis the relationship of the petitioner. Secondly, apart from this, the Designated Authority has also advised M/s NOCIL to file an affidavit that no shareholder agreement has been entered into and as such no MoU has been in existence as of today.

(v) M/s NOCIL has failed to furnish the additional Information vide their letter dated 24.11.2000 as solicited by the Designated Authority vide their earlier letters/reminders. However, M/s NOCIL once again reiterated that none of the documents solicited by the Designated Authority and the steps initiated by our company in relation to the said MoU are in any way relevant to the present investigation being carried out by the Authority.

(vi) M/s NOCIL further stated that the said MoU, the resolutions passed at the various meetings of Board of Directors and shareholders of the ^09 fii'?nni_-642 ___ THE GAZETTE OF INDIA EXTR AORDINARY [PART I—SEC. 1] company as well as the petition filed by the company in the High Court of Bombay are all concerning the future restructuring and extension of the petrochemical business, it is likely to occur not earlier than 4-5 years from now. They also stated that the present case has been initiated by the company in order to seek relief in respect of the existing business as carried out by the company which is suffering on account of exports by the respondents and hence the course of events which are likely to happen and which are contingent upon several conditions precedent do not bear any relevance to the present investigation,

(vii) They have again submitted that petitioner has not demerged its business and continue to function as a single entity. They have further stated that the future events (which are in any event contingent) cannot decide the status of the Domestic Industry in the investigation period. It is further stated that none of the Shell group of companies hold any share in the existing company nor do they exercise any management control over the existing company which is suffering on account of dumping of IPA.

(viii) M/s NOCIL has submitted that respondents are deliberately trying to misguide the Authority by bringing certain frivolous and irrelevant facts into this investigation in order to escape the order of anti dumping being imposed on them.

(ix) Finally they have stated that the above submissions dated 24.11,2000 are without prejudice to the earlier submissions made by them in their letter dated 11lh September, 2000 and such other submissions which are not contrary to the submissions made herein.

(x) In view of non-cooperation from the petitioner, the Authority decided to hold a further hearing only on the 'relationship issue' with all the interested parties together giving petitioner a last chance to put forth all their information/ submissions . Accordingly, an oral hearing was held on 20th December, 2000 to discuss the relationship issue only. M/s NOCIL (Petitioner), M/s Exxon Chemicals and M/s Shell (Exporters), submitted their submissions and rejoinders. The salient features of the submissions and rejoinders are as under:-

43 4 VIEWS OF M/SNOCTL (PETITIONER) ON RELATIONSHIP

(i) Compliant filed by the petitioner is in respect of all imports made from the said three countries, irrespective of the identities of the exporters in question which itself establishes that M/s NOCIL is not related to M/s Shell.

(ii) The Authority before initiating this investigation had sufficient prima facie evidence regarding dumping and M/s Exxon is fully aware that if the present anti dumping investigation is proceeded with, the only possible conclusion can be imposition of having anti dumping duty on its exports to India. } Ience, they are trying that present anti dumping inquiry be terminated at the threshold itself.

(iii) The Authority has been empowered to initiate investigation suo- moto under Rule 5 (4) of Anti Dumping Rules if it is satisfied that the information received from any authentic source that sufficient evidence exists as to existence of dumping and injury caused thereby. The identity of the person who brings these facts to the notice of the Authority is of no importance or consequence at all. Hence, the issue of locus standi of M/s NOCIL as petitioner becomes absolutely insignificant and immaterial.

The present case is in fact a far stronger one for initiating suo moto inquiry having regard to the voluminous and detailed materials, facts and figures already with the Authority. Hence, if the petitioner is found technically to be related to a foreign exporter in terms of Rule 2(b) the Authority, in its discretion may still regard the unit to be a Domestic Industry.

(IV) There is nothing in MoU which can possibly be considered to give M/s Shell control over M/s NOCIL. With the new de- merged entity, M/s Shell will have control over the new company only. They have submitted that the question of relationship within the meaning of Rule 2(b) should be considered having regard to the facts and circumstances in existence during the period of investigation and at the time when the petition was moved, not on the basis of facts and circumstances that came into existence long thereafter.

The MoU is also subject to various conditions/ precedents which have to be fulfilled before the MoU can be considered to become operative. The first and basic condition precedent is that the Bombay High Court should sanction the Scheme of Arrangement under Section 391 to 394 of the Companies Act, 1956. Apart from that a lot of approvals/permissions/consents etc. is to be taken from various government/regulatory authorities, At present all these conditions precedent mentioned have not yet been fulfilled.

(v) Board of Directors of both the companies of Royal Dutch/Shell Group has not yet granted their approvals.

(vi) The MoU has technically expired on 30.9.2000 and discussions are on. The allegation of M/s Exxon that there are two employees of M/s Shell Company in Bombay for the purpose of facilitating the implementation to de-merger schemes. These two employees are on the roll of M/s Shell and have absolutely no control over the management/operation of the M/s NOCIL. On contention of VRS M/s NOCTL has pointed out that said VRS was a management decision taken by M/s NOCIL on its own and certainly not at the behest of any third party or of the M/s Shell.

(vii) The best proof and the clearest indications of the fact that M/s NOCIL and M/s Shell are not related, is that M/s Shell has not been able to prevent M/s NOCIL from filing the anti dumping complaint against M/s Shell and further, M/s NOCIL has not been able to prevent M/s Shell of Singapore and M/s Shell of Nederlands from dumping the articles thereby causing injury to M/s NOCIL, nor has M/s NOCIL been able to prevent these companies from opposing the complaint.

(viii) M/s Exxon contention that M/s Shell is ll legally or operationally in a position to exercise restraint or direction over the M/s NOCIL" is directly contrary to the provisions of Companies Act, 1956 under Section 291 of the Companies Act, the power of regulation/management/control of an Indian company is vested in its Board of Directors. In the present case, M/s Shell does not have any representation whatsoever on the Board of Directors nor does M/s Shell have any shareholder interests whatsoever in M/s NOCIL.

HRtI ^?T

(x) M/s Exxon's contention that the said MoU dated 30.9.98 had already been implemented. This assertion is not only false, but the same is directly contrary to and is falsified by the terms of the MoU and also the Scheme of the Arrangement, obviously make it patently clear that there are many conditions precedent which are yet to be fulfilled before the Scheme can be considered to become operative.

(xi) Strictly without prejudice to the above mentioned basic submissions that M/s NOCIL is not related to M/s Shell, it is submitted that, in the alternative and on the pure demurrer, that even if it is held that M/s NOCIL as a matter of fact, is related to M/s Shell, there is no warrant or justification at all for excluding M/s NOCIL from the Domestic Industry as rules are amended. M/s NOCIL has cited certain legal texts of anti dumping law along with the submissions.

(xii) M/s Exxon Counsel contended that all the extracts and judgements referred during hearing applied only to a case where there were several units in the Domestic Industry. In fact, all judgements are based only on the consideration of whether the presence of a "related party" would hinder the anti dumping inquiry in some manner or not, and are not in any way dependant on whether the Domestic Industry consists of one or more units.

(xiii) Various judgements show that the settled principle which has always been followed where dumping has taken place and caused some injury, "concerned authorities" have never46 THE GAZETTE OF INDIA: EXTRAORDINARY | PAR i I - - Sr.r. 11 stopped the inquiry only on technical grounds that the complainant or the petitioner is related to the foreign exporter or importer of the dumped article. On the contrary, the consistent principle which has been followed in all these cases is that nothing should be allowed to come in the way of an anti dumping inquiry which is considered necessary.

(xiv) If on the ground of relationship the present investigation is terminated at this juncture itself, both M/s Shell and M/s Exxon will consequently continue to dump their goods in India, thereby causing immeasurable and continuing injury to Indian industry. Further, M/s NOCIL will be left with no remedy by way of appeal against any such findings given by the Hon'ble Designated Authority.

(xv) The MoU has been signed between M/s NOCIL and M/s Shell, UK. M/s Shell of Singapore and M/s Shell of Nederland, which have exported IPA to India are not parties to the said MoU. The fact that M/s Shell of Singapore and M/s Shell of Nederland are supposed to form part of same corporate group, is irrelevant and immaterial and, in this connection and if that be so, then the legal principle cannot be completely different for determining the existence of relationship. Rule 2(b) contemplates and requires a relationship between the Domestic Industry and exporter of the dumped articles.

(xvi) There is nothing in Rule 2(b) which leads to the conclusion that where a foreign exporter belongs to a certain corporate group, then, there is straightway a 'relationship' brought into existence between the Indian industry and only other companies which are part to the corporate group. Further, it would be contrary to the principles laid down by the Hon'ble Supreme Court of India in the Haldor Topsoe case that "levy of anti dumping duty is exporter specific and the same has to be levied separately on the goods exported by each exporter who is found to have dumped goods in India".

(xvii) M/s NOCIL has further submitted that in the event of any relationship between M/s Shell and M/s NOCIL coming into existence in the future, the same can be effectively addressed 47 and dealt with by the provisions for review contained in Rule 23.

Accordingly, M/s NOCIL submitted that M/s Exxon's highly technical preliminary objection should be summarily rejected as it is intended only to thwart and terminate the present anti dumping inquiry which M/s Exxon is most anxious not to contest on merits.

COMBINED SUBMISSION OF M/S SHELL NEDERLAND CHEMIE B.V (SNC), M/S SHELL INDIA PVT. LTD (SIPL) AND M/S SHELL EASTERN CHEMICALS (SINGAPORE) (SEC (S) (i) None of the respondents including SEC (S), a Division of Shell Eastern Trading Pvt. Ltd. (which is the only company exporting IPA to India since 1996) were and/or are at any point of time parties to the MoU/discussions in the proposed project with M/s NOCIL neither they have agreed to hold any equity stake in M/s NOCIL as alleged or at all.

(ii) The respondents have, however, upon enquiry, been informed that the said MoU expired on October 1, 2000 and no further MoU has been signed and/or is in existence between the parties concerned to the knowledge of the respondents.

(iii) MoU has been signed between M/s Shell Chemical (SCL) Ltd and M/s NOCIL which is not a respondent in the present petition. None of the respondents hold any share in the capital of SCL. Neither SCL is subsidiary and/or holding company of the respondent nor is SCL an exporter of IPA to India. Thus, there is no connection whatsoever between SCL and the Respondents in any manner.

(iv) The Respondents vehemently deny the allegation that the present petition has been filed by M/s NOCIL at the instance of the Respondents. It is also specifically denied that there is any attempt on the part of the Respondents to take any advantage of the process of Anti-Dumping Rules as alleged by M/s Exxon.

(v) Respondents once again deny the allegation of M/s Exxon that the direct result if the present petition were to be upheld would create a field for the Respondents to have the alleged monopoly in the Indian48 THE GAZETTE OF INDIA: EXTRAORDINARY f PART I—SEC. 1] market. Respondents herein repeat that if the present petition by M/s NOCIL is upheld duty may be levied on the Respondents too, who are party to the present petition. Thus, the allegations of M/s Exxon made earlier in its submissions are absolutely false, baseless and without any substance.

(vi) It is stated that the Respondents herein are not related to M/s NOCIL as alleged. The Respondents state that there is no entity by the name of M/s Shell Chemicals Ltd. Singapore exporting IPA to India as alleged. As stated, only SEC (S) has been exporting IPA from Singapore to India since 1996.

In the circumstances aforesaid, the Respondents once again respectfully submit and state that there is no alleged relationship between M/s NOCIL and the Respondents to the Petition.

6 COMBINED SUBMISSION OF M/S EXXON CHEMICAL

INTERNATIONAL SERVICES LTD.. HONG KONG (ECIS1 AND

M/S EXXON MOBIL CHEMICAL COMPANY (EMCO

(i) Petitioner is not a "Domestic Industry" as defined under Section 2(b) of Customs Tariff (Identification, Assessment and Collection of Anti-Dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995 as they are related to Exporter, mentioned in the Complaint and were themselves importer of the alleged product till 1993-1994.

(ii) Petitioner has no locus standi to file/maintain the present petition. As per the definition of Domestic Industry, an application for anti dumping investigation is required to be and can only be made by or on behalf of Domestic Industry, who is/are not related to the exporters or importers and is not an importer of the alleged product, themselves. Secondly the standing to file the petition on behalf of the Domestic Industry has to be ascertained at the threshold as Designated Authority has already held this position in the case of Metallurgical Coke from China.

(ii) Rule 5(1) read with Section 2(b) and proviso of the Anti Dumping Rules, clearly reveals the fact that the petition can be filed only by or 49

323GI/2OO1—750 THE GAZETTE OF INDIA : EXTRAORDINARY [PART I—SEC. 1] 1.010 kgs 22.960 kgs

4. Coluring Ink (U.V.) 5. Thixotropic Jelly compound (Filling/ Flooding)

6. Water Blocking Tape 7. High Density

44.100sq.mtrs 77.810 kgs

Polyethelene (H.D.P.E.)

2.910 kgs

8. Aramid Yam/ Aramid Filament Yarn (DTEX 3160/3220)

9. Water Swellable Yarn 10.F.R.P. Rod (2 mm/

6.050 kgs 1.050 kgs

3mm/1.5mm)

0.720 kgs

11. Water Blocking RIP Cord/ Aramid RIP Cord (DTEX 1610/ 1680) Single/3Ply

12.Hot Foil Marking Tape White/Black.

1.050 kms Annexure "D" to the Public Notice No. 53 Dated: 01 /2/2001 ENGINEERING PRODUCTS

51

7 M/S. NOCIL'S REPLY TO WRITTEN SUBMISSIONS

(i) M/s Exxon's written submissions place strong reliance on severa newspaper reports. It is submitted that newspaper reports, cannot, it law, be considered to be evidence in support of aw statements/averments/contcntions.

(ii) M/s NOCIL has not received any funds/monies whatsoever from M/: Shell/M/s Montell in any manner, arising out of or connected witl the Scheme.

(in) M/s Exxon's allegation that M/s NOCIL, has not come before th< Hon'ble Designated Authority with clean hands, is utterly baseless The contention that at the time of filing the petition, M/s NOCIL ha: failed and omitted to disclose the nature of its relationship with M/: Shell is baseless as M/s NOClL's basic submission and contentioi which it strongly maintains even now, is that neither in facts nor n law is M/s NOCIL at all related to M/s Shell of Singapore and M/: Shell of Nederlands - Iwo exporting companies.

(iv) H\en assuming without conceding that M/s NOCIL is related to M/: Shell of UK, it cannot possibly make M/s NOCIL related to MI: Shell of Singapore or M/s Shell of Nederland which are exportinj companies and which are entirely separate and distinct corporate entities. The allegation of separation can be made against M/: NOCIL only if M/s NOCIL is in dispute of related to one or more o the exporting companies. Any allegation of dishonesty or want o bonafides ennnot possible be made against M/s NOCIL, even if al its legal submissions'and contentions are, for some reason, rejected.

(v) In the present ca^v the so culled alleged relationship between M/i N< K.I!. and Ms Shell is not a fact as such but it is a highly contestec legal position regarding which the correct position cannot be knowi until liic matter is finally decided by the Hon'ble Supreme Court, a: theie i^ no Supreme Court judgement on the point which consider: the rele\;uit legal positions and the issues involved. Consequently i cannot possibly be contended that by not declaring itself to be relatcc to M ^ Shell. M/s NOCIL has suppressed any relevant or materia facts, nor can it be possibly suggested that M/s NOCIL has at all Jl acted with any improper or collateral motives MA NOUL has pointed out and established that it had not only suffered >nc/tt injury by reason of dumping of [PA in India by M/s Exxon as uiiegod M/s Shell of Singapore and M/s Nederland and as a consequence, M/s NOCIL rus been forced to reduce its price resulting into a sizeable loss.

(vi) M/s Exxon is understandably most anxious to have the aiiti dumping enquiry terminated at the threshold because the rnatenals which are already on the files of Hoifble DeMgiiiUed Authority, would establish beyond a shadow of doubt that M/s Exxon has been engaged in dumping on large scale of 1PA in India.

(vii) Without prejudice to M/s NOClL's basic submission that it is not related to M/s Shell, it has also been M/s NOClL's fundamental contention that even if M/s NOCIL is. for some reason, found to be related to M/s Shell of Singapore and M/s Shell of Nederlands, the exporting companies, even then, under the amended Rule 2(b), the Hon'ble Designated Authority has complete unfettered discretion not to exclude M(s NOCIL i'nMn the Domestic Industry for the purpose oTanti dumping enquirv.

(viii) M/s l:x\on',s submission to Jisregrud the judgemenis and case laws and the extracts lelied upon by M/s NOCIL from USA, LU and New Zealand, are do-tilt with only the cases where there was more than one Domestic Industry and that none of these cases deals with a situation where there was only one Domestic Industry as in the present case. The basic logic and reasoning which was variably relied upon to exercise direction in favour and not to exclude the related domestic producers, was that it would not in any manner destroy or hamper or hinder the anti dumping enquiry.

(ix) The two cases referred by M/s Exxon where Designated Authority IKIS taken a decision to exclude !he Domestic Industry [\nu)d related to exporter is mattci related to the period prioi to aroeiidincnt of Rule 2(b) when the Designated Authority did not have :i discretion at all 8- REJOINDER SUBMITTED BY M/S EXX.ON

(i) The relationship between M/s NOCIL and M/s Shell, which now has acquired significant commercial ptoposition, is admittedly for the 54 THE GAZETTE OF INDIA : EXTRAORDINARY [PART I—SEC. ¹]

Annexure "E" to the , Public Notice No. 53 Dated: 01/02/2001

FOOD PRODUCTS

55

4. Saffron

5. Cardamom 6. LDPE Granules

1 gm per kg of export product 15 gms As per packing policy

Annexure "F" to the Public Notice No. 53 Dated: 01/02/2001

control such de-merged Petrochemical arm, The test for determination of 'related services' has been held to be following principles. -

I one has operational control over other; li when both of them together control a third entity; and iii when both of thorn together controlled by a third patty In any event the principle laid down in (ii) above are clearly applicable as the de-merged arm will be controlled by both of the entities namely M/s NOCIL as well as M/s Shell, Therefore, in any event M's NOCIL being a related party is liable to be excluded from the purview of Domestic Industry.

m i i) It is highly illogical for Ms NOCIL to put forth the argument That it has, as under 1 lie circumstances scheme of de-merger pursuant to Mot) dated 30,9.98 has already been formulated and filed with the High Court of Mumbai, MoU has substantially and commercially been acted upon and thereby has acquired legal status of a contract, the consideration for which will be in the form of M/s Shell acquiring stake in the de-merged entity,

(i\) It is respectfully submitted the fact that two employees of M/s Shell currently working with and for M/s NOCIL are on the pay roll of M/s Shell itself clearly establishes the profound commercial relationship between M/s Shell and M/s NOCIL As stntcd hereinbefore the said two employees while supervising the implementation of the MoU dated 30 lV)$ and the claim Formulated thereunder, exorcise significant operationnI and other control over the affairs of M/.< NOCIL, Assuming lor the sake of argument thai the MCJument> of M/s NOCIL that the MoU is still in cubation suiyc ;ind ictjuircs numerous conditions proceeded to become opernlive it is left to become imagination as to the purpose of the said two M/s Shell employees being placed with M/s NOCIL for a significant period of time now.

_57 (x) It is submitted that the anti dumping investigations as also admitted by M/s NOCIL in the written submission, being country specific and not exporters specific the aforesaid M/s Shell entities cannot have been, in any event, excluded from the purview of the present investigation. The attempt of M/s NOCIL, therefore, is akin to making virtue out of necessity.

(xi) Press Reports dated December 28, 2000, the conditions precedent for the scheme to become operative have already been obtained and only the permission of High Court of Bombay is awaited. It is, therefore, self-contradictory for M/s NOCIL to say on the one hand that the Scheme shall become operative only on grant of approvals/permissions forming conditions precedent and on the other hand state it to the Public through Press Reports that all the Government approvals have already been obtained. It is, therefore, but a technical objection raised by M/s NOCIL and should be set aside at the very outset.

(xii) While it is true that a company is managed by its Board of Directors, it may not be controlled solely by the Board of Directors. It is further submitted that M/s NOCIL has not put forth any evidence to support its contention that it has no representation from M/s Shell on its Board of Directors. From the aforestated and the significant commercial relationship shared by M/s Shell and M/s NOCIL, it is established beyond doubt that M/s Shell is in a position to exercise restraint and direction over the affairs of M/s NOCIL. It is further clear from the statements of Mr. Hrishikesh Mafatlal that all approvals in terms of what is agreed to by M/s Shell have been obtained.

(xiii) It may be stated that M/s NOCIL had initially denied that there was any relationship whatsoever with M/s Shell. However, in complete contradiction to its own submissions, as per contents of the para under reply, it has been admitted that M/s NOCIL has entered into a contract with M/s Shell and the two share a 809 G1/2001—658 THE GAZETTE OF INDIA EXTRAORDINARY | PAR , I - S EC 11 legally binding relationship. As an established position of law, no contract can be legally binding without a valid consideration. It is submitted that the consideration for the contract has been in the from of M/s Shell investing huge amounts of capital into M/s NOCIL. In this behalf, previous submissions and Press Reports filed on behalf of our client are reiterated.

(xiv) M/s NOCIL, by averring that it would be left with no right of appeal cannot be allowed to gain locus standi for the purposes of present investigations.

(xv) A brief perusal of the corporate structure as has been submitted hereinbefore, establishes a single monolithic corporate structure thereby all the M/s Shell entities are owned, regulated and controlled by the Group holding companies, In the circumstances, therefore, it is illogical for M/s NOCIL to contend that the Shell entities with which it has entered into Moll, and the Shell entities which are allegedly dumping the product under investigation, arc different.

C EXAMINATION OF THE ISSUES RAISED

4. The submissions made by the exporters, importers, petitioner and other interested parties have been examined and issues raised with reference to the Rules and having a bearing on this case have been considered and dealt with at appropriate place in the notification.

5. The question that arises for consideration of the Authority is whether it can be said that there exists a relationship between M/s NOCIL (petitioner) and the exporter M/s SHELL and if there exists such a relationship, whether the Authority should exercise his discretion to exclude M/s NOCIL from the purview of the Domestic Industry. For determining this principle of relationship of Domestic Industry, the Authority has also to consider whether M/s NOCIL has concealed the fact of the alleged relationship from the Authority at the stage of filing the petition and / or in the course of the investigation and whether disclosure of such information is material to exercise the discretion by the Authority.

J9 6. In terms of Rule 5 of the Customs Tariff (Identification, Assessment and Collection of Anti-Dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995 the petition for investigation and imposition of anti dumping duty can be filed only by the Domestic Industry.

Domestic Industry has been defined in Rule 2(b) as amended in July, 1999 asfollows;-

"Domestic Industry" means the domestic producers as a whole engaged in the manufacture of the Like Article and any activity connected therewith or those whose collective output of the said article constitutes a major proportion of the total domestic production of that article except when such producers are related to the exporters or importers of the alleged dumped article or are themselves importers thereof in which case such producers may be deemed not to form part of Domestic Industry."

Following the amendment of Section 2(b), the explanation has been added to the Section which reads as under:

"Explanation, - For the purposes of this clause, -

(i) Producers shall be deemed to be related to exporters or importers only if, -

(a) one of them directly or indirectly controls the other; or (b) both of them are directly or indirectly controlled by a third person; or

(c) together they directly or indirectly control a third person, subject to the condition that there are grounds for believing or suspecting that the effect of the relationship is such as to cause the producers to behave differently from non-related producers.

(ii) A producer shall be deemed to control another producer when the former is legally or operationally in a position to exercise restraint or direction over the latter."60 THE GAZETTE OF INDIA: EXTRAORDINARY [PART I—SEC. 1] 7. As per Rule 5(3) (a), the Designated Authority is required to determine, on the basis of an examination of the degree of support for, or opposition to the application expressed by domestic producers of the like product, that the application has been made by or on behalf of the domestic industry. This is a threshold requirement as held by the Designated Authority in its decision dated 27,08.1998 in investigations in respect of imports of Metallurgical Coke from China. If the petition has not been filed by Domestic Industry as defined under Rule 2(b), no initiation can take place.

8. M/s. Exxon's contention in the present case is that the sole producer of the product under investigation is related to one of the exporters and, therefore, do not qualify as Domestic Industry. In order to determine whether the domestic producer is related to the exporter, reference needs to be made to the Explanation to Rule 2(b). M/s. Exxon's case is that M/s SHELL is operationally in a position to exercise restraint or direction over M/s NOCIL.

9. On the basis of the submissions made and the documents available on records, the Authority is of the view that M/s NOCIL and M/s SHELL are related:-

(I) Admittedly M/s NOCIL has entered into a Memorandum of Understanding or a contract with M/s SHELL pursuant to which it is demerging its petro-chemical division and transferring the said division to a newly formed company in which M/s SHELL will invest 49%. It has been brought to the notice of the Authority that M/s SHELL is now proposing to invest in fact 74% equity in the new company.

(ii) It is admitted by M/s NOCIL that as a party to the contract it was bound to take the requisite steps and actions for implementing and giving effect to the said contract.

(iii) The Board of Directors and the shareholders of M/s NOCIL have approved the Scheme of Demerger and the Scheme is now pending before the Bombay High Court for sanction.

61 (IV) It is not disputed by M/s NOCIL that officials of M/s SHELL are currently posted with M/s NOCIL and are supervising the implementation of the MoU and the completion of the project. Various government approvals and environmental clearances have been obtained.

(v) Two VRS Schemes have also been implemented by M/s NOCIL to trim its work force as suggested by M/s SHELL.

(vi) The Authority is, therefore, of the opinion that parties have taken requisite steps and actions for implementing and giving effect to the said MoU, several of these actions having taken place during the period of investigation.

(vii) M/s SHELL has disputed the contention of M/s Exxon that the MOU stands implemented in as much as there are several conditions precedent, which are yet to be fulfilled before the scheme can be considered to be operative. Even though some conditions precedent may have yet to be fulfilled, it has not been disputed by M/s NOCIL that the MoU has been and is being implemented by the parties.

(viii) From the statements made by Management of M/s NOCIL and representatives of M/s SHELL it is clear that M/s SHELL is in a position to directly or indirectly operationally exercise restraint or direction over M/s NOCIL and it is, therefore, not relevant that M/s SHELL does not have any equity in M/s NOCIL or does not have any representative on the Board of Directors of M/s NOCIL.

(ix) The submission of M/s SHELL that the MoU has been signed with M/s SHELL, UK whilst the exporters are M/s SHELL, Netherlands and M/s SHELL, Singapore, who are different entities and, therefore, there cannot be any relationship between M/s NOCIL and M/s SHELL, is not correct. M/s Exxon has placed sufficient evidence before the Authority which indicates that the entire SHELL group of companies are controlled by two parent companies and two group holding companies and the management of M/s SHELL companies62 THE GAZETTE OF INDIA: EXTRAORDINARY | PAH r I—SEC 11 report to the same group holding companies. It is also to be noted that almost all multi-national corporations undertake manufacturing activities and investment activities through different companies which are ultimately managed and controlled by the same set of parent companies. So is the case with M/s SHELL. M/s SHELL, UK may be the investing arm of M/s SHELL group of companies whilst M/s SHELL, Netherlands and M/s SHELL Singapore may be the manufacturing arms but they all report to the same group holding companies. The final distinction sought to be made between M/s SHELL, UK and M/s SHELL, Netherlands and M/s SHELL, Singapore is unsustainable as when the veil is lifted it is clear that all these entities are controlled by the same group holding companies who determine the business and policy direction of the M/s SHELL group.

(x) Having come to the conclusion that M/s NOCIL and M/s SHELL are related persons within the meaning of the Rules, it is still necessary to decide whether the Authority should exercise its discretion to exclude M/s NOCIL as Domestic Industry as such exclusion is no longer an automatic or mandatory after the amendment to the Rules in July, 1999.

(xi) The Authority is of the opinion that in the facts and circumstances of the present case it is necessary to exclude M/s NOCIL as Domestic Industry:-

i) Domestic Industry has withheld material facts. The determination of what comprises Domestic Industry is relevant for:-

a. determining whether the petition as filed is maintainable. Has it been filed by or on behalf of the Domestic Industry; and

b. if it has been so filed, is there any injury to the Domestic Industry;

(ii) It is for this purpose, to arrive at a prima-facie finding for the purpose of initiation of the investigation, that the format 63 prescribed by the Designated Authority in which a petition for investigation should be filed seeks at Question 6 (a) and (b) the following information:-

a) Do any of the petitioneds) import the subject goods. If yes, please provide details of country-wise volume and value of imports during the last two years and in the current year to date.

b) Are any of the petitioners related to the exporters or importers of the alleged dumped article. If so, the nature of such relationship.

(iii) In the present case the petitioner has not responded to the above question. It is incumbent upon the petitioner company to disclose the nature of the relationship it has with any of the exporters and give a full explanation as to why it did not consider such a relationship as prohibiting the maintenance of the petition. This disclosure not having been made, it can be said that the petitioner has withheld material facts which have a direct bearing on the initiation of the investigation itself from the Authority.

iv) As the petitioner has not disclosed the relationship and releva.U Tacts in their anti dumping petition which were well within their knowledge, they are not entitled to the exercise of discretion by the Authority in their favour.

Secondly, even after the issue of the relationship has been raised by M/s. Exxon, the petitioner has not come forth with full and correct disclosure of facts even though the same have been sought for by the Authority vide its several letters. In fact a copy of the entire petition filed in the Bombay High Court for demerger, which is a critical document, has not been furnished by the petitioner till date. Only a copy of the scheme has been filed by M/s Exxon. Various clarifications and documents as solicited by the Authority have also not been furnished by the petitioner.

(v) Further at one stage in the course of investigation the petitioner has written that the MoU has expired and is not effective as of today. The Authority's queries with regard to this statement, as contained in Directorate letter dated 17.11.2000, has not been answered. It is to be noted that soon after such a statement was made to the Authority on 3.11.2000, M/s SHELL'S representatives have reaffirmed their investment in the new company upto 49% equity through M/s BASELL (a joint venture between M/s SHELL and M/s BASF). M/s SHELL'S representatives have stated that M/s SHELL is still keen on the project and expects the formalities to be completed shortly.

(vi) Thereafter at the oral hearing held on 20.12.2000, petitioner has changed their stand stating that the MoU has technically expired as on 30.9.2000 and discussions are on. M/s. Exxon has also brought to the notice of the Authority that M/s SHELL is now proposing to take a majority stake of 76% in the new company. This fact was not disclosed by the petitioner to the Authority at any stage. The company should have been frank and truthful in the first instance and disclosed on 3rd November, 2000 itself that discussions were going on for increase in equity holding by M/s SHELL. Instead they have stated that the MoU has expired and is not effective as of today.

(vii) The second example of misrepresentation by the petitioner is that in their first submission dated 4.9.2000 it has stated that "M/s NOCIL has entered into an MoU with M/s SHELL and M/s MONTELL it is evident from the MoU that it is just an understanding only", but in their submission dated 26.12.2000 it has mentioned "M/s NOCIL has entered into a contract with M/s SHELL for demerger for its Petro Chemical Division (PCD) and transfer of the said division to a newly formed company. M/s NOCIL, as a party to the said contract, was bound to take the requisite steps and actions for implementing and giving effect to the said contract. Earlier M/s NOCIL contended that it did not have a binding relationship with M/s SHELL whilst in the second submission it states that it has a binding contract with M/s SHELL and was bound to take necessary steps to implement it.

65 (viii) The Authority is of the view that in view of the changing stands and less than frank disclosures by the petitioner at the time of the filing of the petition and during the course of investigation, the petitioner is not entitled to the exercise of any discretion by the Designated Authority in its favour.

( Ix.) Relying on Article 4.1 of the Agreement for Implementation of Article-VI, that when producers are related to the exporters or importers or are themselves importers of the allegedly dumped products the term "Domestic Industry" may be interpreted as referring to the rest of the producers, it has been contended by the petitioner that the Authority should exercise discretion to prevent a company from opposing a petition in case the company opposing is found to be related to the exporter and proceed with the investigation after such exclusion, the present case since the petitioner has not got any benefit from dumping, M/s NOCIL should not be excluded from the definition of Domestic Industry. It is no doubt true that in several decisions the European Commission has not excluded domestic producers who are related to the exporters from the computation/definition of Domestic Industry or whilst excluding such producers have pioceeded with the investigation on the basis of the Domestic Industry comprising of the rest of the producers, but the present case is different from those cases in as much as there is only one domestic producer which constitutes the Domestic Industry and if this domestic producer is to be excluded in determining what constitutes the Domestic Industry, then, there is no question of proceeding ahead with the investigation as there is no other producer/Domestic Industry in respect of which any injury determination can be done. Various decisions and reference books cited by the petitioner in support of their submission are, therefore, not helpful. As stated by the European Commission in the Micro disc's case 1993 OJL 262/4 and 1994 OJL 68/8 the rationale of [former] Article 4(5) is that, for the determination of injury, it should not be open to producers found to be related to exporters to seek relief from unfair trading practices, since they may, through this relationship, have participated in, or benefited from, injurious dumping. It is only by excluding such producers, where appropriate, that 609GI/2001—9#> THE GAZETTE OF INDIA. EXTRAORDINARY [PART I—SEC. 1] the Community institutions can obtain an undistorted and objective view of the effects of the dumped imports. Were this not the case, then in addition to contributing to the injury, producers related to exporters of otherwise benefiting from dumping would be in a position to hinder complainant community producers in their attempts, or even block such attempts, to seek legitimate relief against the injury caused by dumped imports."

(x) It is the contention of the petitioner that a producer who is related to an exporter should be excluded from the scope of the Domestic Industry in case the injury assessment would get distorted, however, in case the Authority can conduct an objective injury assessment after excluding such companies who are themselves related to the exporter, such company should be included in the scope of the Domestic Industry, The Authority is of the view that no injury determination is possible in the in the absence of any other domestic producers other than M/s NOCIL and consequently once M/s N0C1L is excluded it would not be possible for the Authority to continue with the investigation proceedings,

(xi) It has been contended by the petitioner and the exporters that even if M/s NOCIL were not included as Domestic Industry, the Authority should initiate suo"moto investigation. Once M/s NOCIL is excluded m being related to the exporter, there being no Domestic Industry in respect of which determination of injury can be done, it is not open to the Authority to initiate suo-moto investigation,

D. CONCLUSIONS:

10. After considering the foregoing the Authority concludes that:

i) the petitioner M/s NOCIL is related to the exporter M/s SHELL;

li) the existence of the relationship is a material and a relevant fact for the purposes of determining the maintainability of the petition and the determination of injury even at the prima facie stage;

67 iii) this critical information even though it was within the knowledge of the petitioner has been withheld from the Authority and even in the course of investigation less than frank disclosures have been made to the Authority;

iv) M/s NOCIL cannot therefore be treated as Domestic Industry under Rule 2(b) of Anti Dumping Rules.

v) Under Rule 14 (b) supra, it is not possible to determine injury to the Domestic Industry, if the only producer is excluded from the purview of the Domestic Industry, the investigation cannot continue and, therefore, stands terminated.

L V. SAPTHARISHI, Designated Authority Printed b\ itic Manager. Ciovt. of India Press, Ring Road, Mayapun, New Delhi-110064 ;ind Published bv the Controller of Publications, Delhi-110054.