Attention is invited to Paragraph 4.11 of the Export and Import Policy 1997-2002, as amended and Paragraphs 7.8 and 7.10 of the Handbook of Procedures Vl. 1 1997-2002 as amended and also to the Handbook of Procedures, Vol. 2, 1997-2002, as amended from time to time

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

EXTRAORDINARY

PART I--Section 1

PUBLISHED BY AUTHORITY

No. 64] NEW DELHI, WEDNESDAY, MARCH 7, 2001/PHALGUNA16,1922

(1)

719 GI/20012 THE GAZETTE OF INDIA EXTRAORDINARY IPART I—Str II 3 4 THE GAZETTE OF INDIA EXTRAORDINARY [PART I—SEC. 1] 5 6 THE GAZETTE OF INDIA. EXTRAORDINARY [PART I—SEC. 11 7 8 THE GAZETTE OF INDIA EXTRAORDINARY [PAKTI—SLC II g 719GI/2001—210 THE GAZETTE OF INDIA: EXTRAORDINARY [PART I—SEC. 1] 11 12 THE GAZETTE OF INDIA EXTRAORDINARY I PAR i I—SEC II 13 TTJC nA TTTTTP CiF TNTJTA EXTRAORDINARY [PART I—SEC. 1] 14 1?

719 GI/2001— 3

MINISTRY OF COMMERCE AND INDUSTRY

(Department of Commerce)

PUBLIC NOTICE

New Delhi, the 1st March, 2001

NO. 59 (RE-2001)/1997—2002

F. No. 01/85/44/19/AM 2001/DES-VL—Attention is invited to Paragraph 4.11 of the Export and Import Policy 1997—2002, as amended and Paragraphs 7.8 and 7.10 of the Handbook of Procedures, \bl. 1 1997—2002 as amended and also to the Handbook of Procedures, Vol. 2, 1997-2002, as amended from time to time19

MINISTRY OF COMMERCE AND INDUSTRY

(Department of Commerce)

(DIRECTORATE GENERAL OF ANTI-DUMPING & ALLIED DUTIES)

NOTIFICATION

New Delhi, the 5th March, 2001

PRELIMINARY FINDINGS

Sub : Anti-Dumping investigation concerning imports of Zinc Oxide from

PR China

No 62/l/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;

A. PROCEDURE

1. The procedure described below has been followed with regard to the investigation;

i) The Designated Authority (hereinafter also referred to as Authority), under the above Rules, received a written application from the M/s Transpek Industries Ltd. (TIL) having registered office at Kalali Road, Atladra Road, Vadodara, Gujarat and its subsidiary Co. M/s Transpek Metals and Oxides Ltd. (TMOL) jointly with M/s Demosha Chemicals Ltd. having registered office at 1O5A, Mittal Towers, 210, Nariman Point, Mumbai-400021 with its associate company M/s Western India Ltd. (hereinafter also referred to as petitioner) on behalf of domestic industry, alleging dumping of Zinc Oxide (hereinafter also referred to as subject goods) originating in or exported from Peoples Republic of China (hereinafter referred to as subject country). The petition is also supported by M/s Pragati Chemicals.

ii) Preliminary scrutiny of the application filed by the petitioner revealed certain deficiencies, which were subsequently rectified by the petitioner. The petition was, therefore, considered as properly documented.

iii) The Authority on the basis of sufficient prima-facie evidence submitted by the petitioner decided to initiate the investigation against imports of subject goods from People's Republic of China (hereinafter referred to as subject country) only. The Authority notified the Embassy of the Peoples Republic of China in New Delhi (hereinafter also called Embassy of the subject country) about the receipt of dumping allegation before proceeding to initiate the investigation in accordance with sub-Rule 5(5) of the Rule.

iv) The Authority issued a public notice dated 8.12.2000 published in the Gazette of India, Extraordinary, initiating Anti-Dumping investigations concerning imports of the subject goods classified under custom Code 2817.0001 of Schedule I of the Customs Tariff Act, 1975 originating in or exported from Peoples Republic of China.

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

vi) The Authority forwarded a copy of the public notice to all the known importers (whose details were made available by petitioner) 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.

vii) 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.

viii) The Authority provided a copy of the petition to the known exporters and the Embassy of the subject country in accordance with Rules 6(3) supra. A copy of the petition was also provided to other interested parties, wherever requested.

ix) 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):

1.

M/s Guangxi Chemicals Imports A Exports Corpn.,

China

2.

M/s China National Chemical Construction

Corpn.,China

3.

M/s Sinochem Heinan Company Ltd., China

4.

M/s Sinochem Shanghai I/E corpn., China

5.

M/s China Hunan Chemicals Import A Export

Limited, China

6.

M/s Mudanjing Import A Export Corporation,

China

7.

M/s Sinochem Hebi Barium Salts Co. Ltd., China

8.

M/s Lanzhou Chemicals Material Plant, China

9.

M/s Wuxi Chemical Industry Group Co. Ltd., China

x) 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 their countries to respond to the

questionnaire within the prescribed time. A copy of the letter,

petition and questionnaire sent to the exporters was also sent

to the Embassy of the subject country alongwith a list of

known exporters/producers.

xi) A questionnaire was sent to the following known

importers/user associations of the subject goods for

necessary information in accordance with Rule 6(4):

1.

M/s J K Industries Ltd., New Delhi

2.

M/s Rubamin Pharmaceuticals, Baroda

3.

M/s Zincollid India, Baroda

4.

M/s Govind Rubber Ltd., Mumbai

5.

M/s Navbhaat Metallic Oxide Industries Ltd.,

Mumbai

6.

M/s Pix Transmissions Ltd., Nagpur

7. 8.

9.

10.

11.

12.

13.

14.

M/s Vikrant Tyres Ltd., Mysore M/s Poddar Tyres Ltd., Mumbai M/s Kaypan Vanijya P Ltd., Mumbai M/s MRF Tyres Ltd., Chennai M/s South Asia Tyres, Aurangabad ^\/s Goodyear India Ltd., Haryana M/s Modi Rubber Ltd., Modinagar M/s Ceat Tyres Ltd., Mumbai M/s Falcon Tyres Ltd., Bangalore M/s Balkrishna Industries Ltd., Mumbai

15. 16.

xii) Response/ information to the questionnaire/notification was not filed by any of the exporters/producers of the subject country.

xiii) Response/information to the questionnaire/notification was filed by the following Importers/user Associations:

1. M/s J K Industries Ltd. 2. M/s MRF Ltd. 3. M/s Nav Bharat Metallic Oxide Industries Ltd.

xiv) Additional information regarding various injury parameters, including cost of production was also sought from the petitioner, which was also furnished.

xv) The Authority verified the information provided by the petitioner to the extent considered necessary.

xvi) The Authority kept available non-confidential version of the evidence presented by various interested parties in the form of a public file maintained by the Authority and kept open for inspection by the interested parties;

xvii) Optimum cost of production and cost to make and sell the subject goods in India was worked out on the basis of Generally Accepted Accounting Principles (GAAP) and by analysing the cost information furnished by the petitioner. xviii) ****in this notification represents information furnished by an interested party on confidential basis and so considered by the Authority under the Rules.

xix) Investigation was carried out for the period starting from 1.4.99 to 30.9.2000 i.e. the period of investigation (POI).

B . VIEWS OF PETITIONER, EXPORTERS. IMPORTERS AND

OTHER INTERESTED PARTIES

1. PETITIONER'S VIEWS

a) ON PRODUCT UNDER CONSIDERATION

1. The product under consideration is Zinc Oxide a white/off white powder with chemical formula ZnO, produced in various grades viz. regular grade (99%), IP Grade (99%) and Feed Grade. The product is classified under a dedicated Custom Tariff Head 2817.0001. The product is importable under OGl and attracts a basic duty of 30 %.

The product is used in manufacture of automobile tyres and other rubber goods, manufacture of high purity Zinc chemicals such as Sulphate Chloride etc. used as an input for ceremic industry and as a supplement in animal feed formulations. The product is reserved for production in the small scale sector

b) ON DOMESTIC INDUSTRY

1. The petitioner has indicated that they had approached Deptt. of chemicals and office of DCSSI regarding data on total domestic production and in this regard, they received a response from Ministry of Chemicals and Fertilizers. However, they have got an exhaustive information from all India Zinc Oxide Manufacturers' Association which could be considered as best available information.

c) ON LIKE ARTICLE

1. The petitioner have indicated that there is no significant difference in Zinc Oxide produced by the Indian industry and the Zinc Oxide exported from PR China which have can any impact on price. The goods produced by the domestic industry and those imported from the subject country are comparable in terms of physical and chemicals characteristics, manufacturing process and technology, functions and24 THE GAZETTE OF INDIA: EXTRAORDINARY JPARTI—SEC 1]

uses, product classifications, pricing, distribution and marketing and

tariff classification of the goods. The domestic and the imported

goods are technically and commercially substitutable and can be used

interchangeably. The goods are, therefore, Like Article in accordance

with the Anti-Dumping Rules. The domestic producer is also not aware

of the technologies adopted by the exporters/manufacturers in the

subject country.

a) ON DUMPING

1. The petitioner has indicated that PR China is a non-market

economy and that the normal value to be determined on the

basis of the amended Anti-Dumping Rules. The petitioner has

provided constructed normal value for PR China on confidential

basis.

2. The petitioner has also provided details on export quantities

and prices in the year 96-97, 97-98 and 98-99 and 99-2000 on

the basis of DGCI&5 and also port wise information from a

secondary source. The petitioner has claimed adjustments on

account of landing charges, ocean freight, marine insurance,

commission, Inland freight, port handling and port charges to

an extent of ***, * * * * * * * * * * * * * ** 4 ***$/MT.

3. The petitioner on the basis of the above normal value and

export price has provided dumping margin as ***%.

e) ON INJURY AND CAUSAL LINK

1. The petitioner has indicated that the imports from subject

country have increased in absolute terms and also its market

share.

2. The export price from subject country has declined over the

years.

3. In spite of the increased production by the domestic industry,

the industry has suffered heavily on profitability due to dumped

imports from the subject country as they were forced to sell at

such prices which have led to losses.

4. The increase in capacity utilization and consequential increase in

production has rather resulted in mounting losses.

5. Though the petitioner has increased sales, it has been achieved at the cost of profitability in view of availability of dumped imports.

6. The domestic industry has been forced to sell its product at prices much lower than its optimum cost of production and reasonable profit on investments, as provided on the confidential basis.

7. Though the petitioner have the policy to retain its people.

However, in view of continued dumping it would be difficult to maintain the production and hence employment.

8. The profits of domestic industry have been significantly eroded and that a large number of units have either suspended their production or completely closed their operations related to Zinc Oxide.

9. Since there is no significant change in demand of product in India and also since the imports from other non-subject countries which are coming at significantly higher prices, the injury has been on account of dumping of subject goods from subject country, thus establishing the causal link.

2. EXPORTER'S VIEWS

None of the exporters/producers from subject country have responded.

3. IMPORTERS AND USER ASSOCIATIONS VIEWS

M/s J K Industries have made the following submissions:

1. M/s J K Industries Ltd. has provided the import prices of subject goods in POI. Also the importer has provided details of their purchasing procedure. They have also indicated that the imports have been made by them under Advance Licensing Scheme.

rm4t/>*°i -^

M/s MRF Ltd. has made the following submissions:

1. M/s MRF have made no imports of Zinc Oxide from the subject country and that their requirements are entirely met by the domestic industry.

M/s Nav Bharat Metallic Oxide Industries Ltd., Mumbai has made the following submission:

1. Usage of the subject goods from subject country is different. Subject goods can also be manufactured by different processes viz. American, French. Zinc Oxide from PR China is manufactured by direct process.

2. The chemical/ physical properties of differently produced Zinc Oxide varies from the goods produced by the domestic industry. Therefore, the goods produced by the domestic industry and those exported are not Like Article.

3. Also the domestic producers are operating at full capacity utilization. Zinc Oxide from China goes to different end- use which implies no anti-dumping duty may be levied.

C EXAMINATION BY AUTHORITY

The foregoing submissions made by the exporters, the importers, the petitioner 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. 1. PRODUCT UNDER CONSIDERATION

The product under consideration is Zinc Oxide a white/off white powder with chemical formula ZnO, produced in various grades viz. regular grade (99%), IP Grade (99%), Feed Grade etc. The product is classified under Custom Tariff Head 2817.0001. The product is used in manufacture of automobile tyres and other rubber goods, manufacture of high purity Zinc chemicals such as sulphate chloride etc. used as an input for ceremic industry and as a supplement in animal feed27 formulations. Zinc Oxide is reserved for production in the small scale sector.

The product is importable under OGL and attracts a basic duty of 30%. The present investigation covers all grades of Zinc Oxide. The classification is however, indicative only and is in no way binding on the scope of the present investigation.

2. LIKE ARTICLE

The authority notes that the subject goods as produced by the domestic industry and those exported from the subject country are technically and commercially substitutable in various end-use sectors and are used interchangeably. One of the interested parties have indicated that imported subject goods from the subject country are produced by different manufacturing process and since the domestic manufacturers have full capacity utilization implies that imported goods from the subject country are used in different sectors and are not Like Article to the goods produced in domestic market. The authority on the basis of information filed by various interested parties and as available from secondary source notes that the goods imported from the subject country and those domestically produced have been consumed by the common customers.

The Authority in view of this, therefore, for the purpose of the Preliminary Findings holds that the subject goods imported from the subject countries and that manufactured by the domestic industry are Like Article within the meaning of the Rule 2(d).

3. DOMESTIC INDUSTRY

The petition has been filed by M/s Transpek Industries Ltd. (TIL) having registered office at Kalali Road, Altadra Road, Vadodara, Gujarat and its subsidiary Co. M/s Transpek Metals and Oxides Ltd. (TMOL) jointly with M/s Demosha Chemicals Ltd. having registered office at 105A, Mittal Towers, 210, Nariman Point, Mumbai-400021 and its associate company tA/s Western India Ltd. who account for more than 50% of the domestic production in the POI. The authority notes 719GI/2001— fi28 THE GAZETTE OF INDIA: EXTRAORDINARY [PART I—SEC. 11 that since the product is reserved for the S SI sector, the value of total domestic production is indicative only for the purpose of preliminary determination pending final determination. The authority, therefore, for the purpose of preliminary determination pending final determination holds that the petitioner satisfies the standing to file the petition on behalf of the domestic industry as per Rule 5(a) and (b) and Rule 2(b). •

4. NORMAL VALUE A 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 same 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 in29 the country of export, the normal value shall be determined with reference to its price in the country of origin.

A, PR China

Normal value

The authority notes that none of the producers/exporters for the subject goods has responded. The authority as per Anti-Dumping Rules considers it appropriate to construct the normal value for the subject goods in the subject country on the basis of the best available information viz. data on the cost of production of the subject goods with appropriate adjustments on capacity utilization, bench marking best utilization practices. The weighted average normal value comes to ***$/MT.

Ex factory export price

The authority notes that the petitioner has provided port wise data on imports from the secondary sources. Also the data on imports during POX has been provided by DGCI&S. None of the importers has provided data on imports of 99.5% purity Zinc Oxide. The authority notes that the data from these sources is quite consistent and authority has, therefore, referenced the CxSCI&S data as co-related with importer's response for the purpose of CIF prices. The weighted average CIF price comes to * * * $ / M T. The authority notes that the petitioner has claimed adjustments on ocean freight, commission, ocean insurance, port expenses, inland freight to an extent of * ** ****** ***t and * * * $ / MT respectively. The authority for the purpose of preliminary determination pending final determination allows these adjustments as claimed and as correlated with the existing practice and norms for these adjustments. The weighted average ex-factory export price comes to * * * $ / M T.

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 sole, 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.

The dumping margins for the producers/exporters of the subject goods in the subject country are as under:--

Exporter/producers

Export price

Normal value

Dumping

($/MT)

($/MT)

margm(%) PR China

* * * **

* * * **

All exporters/producers

79.84

The dumping margin is above the deminimus limit.

6. 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 dumped31 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

1. The production, domestic sales and capacity utilisation of the domestic industry have increased in the POI as compared to 98-99.

However, the domestic industry has lost certain customers on account of the dumped imports.

2. The Net Sales Realization (N5R) of the domestic sales of the subject goods by the domestic industry in the POI has been lower than the Non-Injurious Price (NIP) determined for the subject goods in the POI for the domestic industry. The NIP of the subject goods in the POI is much above the landed prices of the dumped goods. The authority for the purpose of preliminary determination holds that the fall in the NSR has been on account of the low dumped prices of subject goods from the subject country which have caused price depression and consequentially financial losses to the domestic industry.

3. The demand of the subject goods has been around 24,000/- AAT during 97-98, 98-99 and POI of the subject goods and has not declined and has, therefore, not led to injury to the domestic industry.

4. The authority for the purpose of preliminary findings holds that domestic industry has suffered injury on account of financial losses due to price depression caused dumped imports from the subject32 THE GAZETTE OF INDIA: EXTRAORDINARY (PART I—SEC. 11 country and also certain customers on account of the dumped subject goods.

7. I N D I AN INDUSTRY'S INTEREST A OTHER ISSUES

The authority holds that 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 authority recognises that though the imposition of anti- dumping duties might affect the price levels of the products which manufactured/produced with the usage of the subject goods and consequently might have some influence on relative competitiveness of these products are, 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 countries in any way, and, therefore, would not affect the availability of the products to the consumers.

LANDED VALUE

The landed value has been determined for the subject goods after adding on weighted average CIF export price, the 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.

D. CONCLUSIONS:

It is seen, after considering the foregoing, that:

a. me suojecT gooas in an Torms onginaTing in or exponca from the subject country have been exported to India below its normal value.

b. The domestic industry has suffered material injury by way of depressed Net Sales Realization (NSR) on account of price suppression caused by low landed prices of the dumped subject goods from the subject country leading to financial losses.

c. 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 all forms/grades of subject goods falling under Chapter 28 originating in or exported from the subject country. Zinc Oxide of any grade/purity if imported under any other Head viz. 38123001 A 28179000 would also attract the anti-dumping duties.

d It was considered to recommend the amount of anti- dumping duty equal to the margin of dumping so as to remove the injury to the domestic industry. Accordingly, it is proposed that provisional anti dumping duties as set out below be imposed, from the date of notification to be issued in this regard by the Central Government, all grades of subject goods originating in or exported from PR China falling under Chapter 28 of the Customs sub-heading 2817.0001 of the Customs Tariff, pending final determination.

3 SI No

2 Product

1 Name of the exporter/ producer

Amount of Duty(US$/MT) PR China

1

All exporters/producers

Zmc Oxide all grades 99 5% purity

578 75

_

The authority holds that if lower content/purity of subject goods are exported from subject country, the anti-dumping duties would vary34 THE GAZETTE OF INDIA EXTRAORDINARY [PART I—SEC 1] proportionately i.e. Lmc Oxide with 49.75/o purity/zinc content would attract anti-dumping duty of 289.37$/MT i.e. 50% of the duty prescribed for 99.5% purity subject goods.

E. FURTHER PROCEDURE

The following procedure would be followed subsequent to notifying the preliminary findings:

a. The Authority invites comments on these findings from all interested parties and the same would be considered in the final findings;

b. Exporters/manufacturers of subject goods in subject country, importers, petitioner and other interested parties known to be concerned are being addressed separately by the Authority, who may make known their views, within forty days from the date of the despatch of the letter. Any other interested party may also make known its views within forty days from the date of publication of these findings;

c. The Authority would conduct verifications to the extent deemed necessary:

d. The Authority would provide opportunity to all interested parties for oral submissions, for which the date and time shall be communicated to all known interested parties separately;

e. The Authority would disclose essential facts before announcing the final findings.

L. V. SAPTHARISHI, Designated Authority Printed by the Manager, Oovt. of India Prew, Ring Road, Mayapun, New Delhi-110064 and Publinhed by the Controller of Publication, Delhi-110054