Anti-Dumping investigations concerning import of Trimethoprim (TMP) from China. 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. 66] NEW DELHI, FRIDAY, MARCH 9, 20017PHALGUNA18,1922

752 GI/2001

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MINISTRY OF COMMERCE AND INDUSTRY

(Department of Commerce)

NOTIFICATION

New Delhi, the 9th March, 2001

FINAL FINDINGS

Subject : Anti-Dumping investigations concerning import of Trimethoprim (TMP) from China.

No. 9/1/2000-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:

A. PROCEDURE 1. The procedure described below has been followed subsequent to the preliminary findings:

(a) The Designated Authority (hereinafter also referred to as the Authority) notified Preliminary Findings vide notification dated with regard to anti-dumping investigations concerning imports of Trimethoprim (TMP) from China and requested the interested parties to make their views known in writing within forty days from the date of its publication;

(b) The Authority forwarded a copy of the preliminary findings to the known interested parties, who were requested to furnish their views , if any, on the said findings within forty days from the date of the letter,

(c) The Authority provided an opportunity to all interested parties to present their views orally on 15/12/2000, All parties presenting views orally were requested to file written submissions of the views expressed orally. The parties were advised to collect copies of the views expressed by the opposing parties and offer rejoinders, if any. Only the petitioners were present at the oral hearing.

(d) The Authority made available the public file to all interested parties containing non- confidential version of all evidence submitted and arguments made by various interested parties;

752 G1/2001—j18 THE GAZETTE OF INDIA; EXTRAORDINARY [PART I—SEC. 1] (e) The arguments raised by the petitioners and other interested parties have been appropriately dealt with in the preliminary findings and/or these findings;

(f) In accordance with Rule 16 supra, the essential fact"/basis considered for these findings were disclosed to known interested parties and comments received on the same, (submitted by the domestic industry alone) have been duly considered in these findings;

(g) *** in this notification represents information furnished by an interested party on confidential basis and so considered by the Authority under the Rules.

B. PRODUCT UNDER CONSIDERATION

2. The product under consideration in the present investigation is Trimethoprim (TMP) which is an organic chemical It is a bulk anti-bacterial pharmaceutical ingredient directly used in formulations. Formulation of TMP is used in the combination of Sulphamethoxazole. TMP goes along with the combination of Sulphamethoxazole in 1:5 ratio by weight. There is no viable substitute for Trimethoprim. The chemical formula of TMP is as under:

S-PAS-Trimethoxy Benzyl) Pyrimidine-2,4-Diamine (C1H1N4 03),

The production of TMP involves four stages, which are, addition, condensation, cyclisation and purification.

TMP is classified under dedicated customs sub-heading no. 293359 02 of Chapter 29 of the Customs Tariff Act, 1975

The Authority confirms the preliminary findings on product under consideration.

C. LIKE ARTICLES

3 Trimethoprim (TMP) is an organic chemical. It is a bulk anti-bacterial pharmaceutical ingredient directly used in formulations. It is used particularly for treatment of urinary infections besides generalprescription. Formulation of TMP is used in the combination of Sulphamethoxazole. There is however no significant difference in terms of process, equipment or technology for the production of Trimethoprim.

In order to establish that TMP produced by the domestic industry is a Like Article to that exported from China, characteristics such as technical specifications, manufacturing process, functions and uses and tariff classification have been considered by the Authority.

The Authority also finds that there is no argument disputing that TMP produced by the domestic industry has characteristics closely resembling the imported material and is substitutable by TMP imported from the subject country both commercially and technically. TMP produced by the domestic industry has been treated as Like Article to the product exported from China, within the meaning of Rule 2(d)

In view of the above, the Authority confirms the preliminary findings on Like Articles.

Views expressed by the Domestic Industry on Product under Consideration and Like Article:

With regard to product under consideration and like article, no objection has been raised by any interested party on the determination made by the Designated Authority in the preliminary finding. It is reiterated that Trimethoprim is being cleared under many customs sub-heading. The19 Designated Authority is requested to notify the duties on all imports falling under Chapter 29 It had been the practice of the Designated Authority earlier to recommend duties on the product falling under the relevant Chapter and not on specific customs sub-classifications, Subject to the above, the Designated Authority is requested to confirm the preliminary findings with regard to product under consideration and like article.

D. DOMESTIC INDUSTRY:-

4. The petition has been filed by M/s. Alpha Drugs India Ltd., Patiala, and M/s Inventaa Chemicals Ltd., Hyderabad, alleging dumping of Trimethoprim (TMP) originating in or exported from China. The Ministry of Chemicals and Fertilisers have informed the Authority that the list of manufacturers and their production (in MT) during 1996-97, 97-98 and 98-99 as per available data is as indicated below:-

(NA-not available).

Production details for the period of investigation have not been enclosed. However, judging from the pattern of production as given above, the petitioners accounted for a major proportion of the production of TMP in 1998-99.

The petitioners have stated that the production of TMP by various producers in 1999-2000 (upto Dec'99) has been as under-

Zora Pharma Total Indian Production

75 404.71

The petitioners alone account for 73.41% of the total production in the POI and 81.46% of the production in combination with their supporter M/s IPCA Labs as per production data submitted in the petition.

The Authorities notes that the petitioners therefore constitute "domestic industry" and have the required standing to file the present petition under the Rules.

The Authority confirms the stated position on domestic industry as given at para G 8 of the preliminary findings.

E. DUMPING:-

(A) Normal Value Views expressed by Domestic Industry:- In the absence of any response from the exporter/producer in China, the normal value has to be determined on the basis of best available information. Non participation by the exporters from the subject countries also confirm the domestic industry's views that the exporters were dumping the product in the Indian market.

Authority's Position:- The Authority observes that the exporters from China have not responded to the questionnaire in the prescribed format and have not furnished information relating to normal value, export price, and dumping margin. The Authority therefore considers the exporters to be non- cooperative and has proceeded on best available information.

The petitioners had requested that the normal value in China be accepted on the basis of constructed cost of production of Trimethoprim. In the circumstances the Authority was constrained to determine the constructed cost.

The constructed normal value in China for the purpose of Final Findings is now considered to be USD ***/kg or Rs ***/kg at an average exchange rate during POI of lUSD=Rs 43.03 (B) Export Price

The cif price as per the information available with the Authority is determined at Rs ***/kg. The ex-factory export price has been determined after taking USD 0.50/kg as ocean freight (based on petitioner's experience), 0.5% as marine insurance charges, commission @2% for the agent in China, 0.5% as packing costs and 2% for port handling and port charges as per the Indian experience. However, commission @3% for the Indian indenting agent and transportation costs @ 2% likely to be incurred by the producers in China to their sea ports, as claimed by the petitioners are not allowed by the Authority for want of documentary evidence and lack of evidence based on petitioners exports, respectively.

After adjustments on these accounts the ex- factory fob export price is estimated to be Rs ***/kg or USD ***/kg at an average exchange rate of Rs 43 O3~1USD.

(C )Dumping Margin:-

The Authority has followed the consistent policy of adopting the principles governing the determination of Normal Value, Export Price and Margin of Dumping as laid down in Annexure 1 of the anti-dumping rules. Based on the normal values and export prices as indicated above, the Authority has assessed the dumping margins in case of all exporters from China as given in the table below:-

Producer/Exporter

Dumping Margin Country

Normal Value

(USD/kg)

*#*

Export Price (USD/kg) ***

(%) 87.42

China All producers/exporters

F. INJURY:-

5. Argument raised by domestic industry:- As brought out in Para B. 2 of the Preliminary Findings, and after the oral hearing, the domestic industry has stated inter alia that:-

(i) Chinese producers are exporting TMP to the Indian market for quite sometime. The exporters started reducing their prices recently, which has caused material injury to the domestic industry. It is a well known fact that manufacturers in China cannot export their goods directly. There are a number of large, medium and small trading houses who hold valid export licences. TMP is therefore, largely exported by traders in China.

(ii) More significant than the volume of imports is the price effect of imports. The exporters from China have reduced the prices significantly, as may be seen from the following table and graph;

iource-JNov-Dec yy, Chemical Weekly & Mahanshi Visveshvanya Industrial Research & Development Centre (MV1RDC periodical, World Trade Centre, Mumbai).

(iii) China and India are the two largest producers of TMP in the world. Both India and China are exporting this essential bulk drug to a number of countries. The fact that22 THE GAZh'lTH OF INDIA: EXTRAORDINARY [PART I—SEC 1] China is dumping TMP is evident from the sheer fact that the export price of TMP from India to other countries is significantly higher than the prices at which it is being exported to India by China.

(iv) China is a major exporter of TMP to India. The share of imports from China in imports of TMP in India is predominant since 1996-97 and the same has been almost constant. The exporters from China are exporting the material at significantly dumped prices, far below the selling prices of the domestic industry.

(v) The capacity utilization of the petitioners have been dropping on account of drop in sales.

(vi) Final duties may be extended to Trimethoprim regardless of the Customs/ITC classification as imports are being cleared under a host of customs sub-headings.

(vii) None of the exporters from China have filed any response before the Designated Authority. The preliminary findings may be confirmed with regard to determination of normal value on the basis of constructed cost of production.

(viii) The Designated Authority is requested to allow the adjustments on account of commission for Indian agent and inland transportation costs in China.

(ix) There has been a significant increase in imports in absolute terms. Imports are primarily from China. There are hardly any imports from other countries. Imports from other countries are at significantly higher prices, Imports are causing severe price undercutting.

(x) Reduction in prices in 1998-99 helped the domestic industry in increasing sales However, as a direct consequence, profitability of the companies got adversely affected. The petitioner companies were forced to higher losses or losses from a situation of profits as a result of these declining prices.

(xi) The non-injurious price determined for the purpose of preliminary findings appears to be on the lower side and hardly covers the cost of production of the domestic industry in the investigation period. It is requested that a suitable enhancement in the non- injurious price may kindly be considered

(xii) All economic parameters, collectively and cumulatively, establish that the domestic industry has suffered material injury from the dumped imports from China. The Designated Authority is requested to confirm the preliminary findings in this regard.

6. INJURY

For the examination of the impact of imports on the domestic industry in India, the Authority has considered such indices having a bearing on the state of the industry as production, capacity utilisation, quantum of sales, stock, profitability, net sales realisation, the magnitude and margin of dumping etc. in accordance wire Annexure II (iv) of the rules supra, the details of which as brought out in the Preliminary Findings are reproduced below:-

(a) Quantum of Imports

As per secondary source Quantity (kg )

The increase in the total imports of TMP was 1417% in 1999-2000 (upto Dec. 2000) over 1998-99. Thus the quantum of imports have gone up significantly during the period of investigation.

The quantum of imports from China have gone up by 1384.5% in 1999-2000 (upto Dec. 99) over 1998-99. Imports in 98-99 wn-e exclusively from China. The share of China in total imports was 94.2%, 100% and 97.8% in 1997-98, 1998-99 and 1999-2000, (upto Dec.99) respectively.

(b) Production and Capacity Utilisation

The production capacity, actual production and capacity utilisation of the petitioners was as follows: -

While there has been an increase in the installed capacity of the petitioner, production and capacity utilisation of domestic industry has declined in the period of investigation.

(c) Sales and Market Share It is observed that the demand of TMP was 4,50,438 KG, 5,49,806 KG and 3,70,628 KG in 97- 98. 98-99 and 99-2000 (upto Dec 2000) respectively. The annualized demand for the POI is 4,83,504 KG. The share of imports in total demand was 6.1%, 0.29% and 6.6% in 97-98, 98-9924 THE GAZETTE OF INDIA: EXTRAORDINARY [PART I—SEC 11 and 99-2000 (upto Dec. 99) respectively. The share of the petitioner was 58.77%, 66.81% and 71.17% in 97-98, 98-99 and 99-2000 (upto Dec. 99) respectively.

The sale of TMP below cost of production resulted in heavy loss of profit to the petitioner. Sales prices (Rs/kg) were as follows:-

Unit selling prices have therefore showed a declining trend.

(d) Closing Stocks It is observed that the closing stocks of the petitioner went up by 124% in 97-98 over 96-97. They declined in 98-99 and 99-2000 from the level of closing stocks in 97-98. Alpha Drugs accounted for 61.26% of closing stocks in the POI, while Inventaa accounted for 38.73%.

(e) Price undercutting and price depression The petitioner has stated that the selling prices of the domestic industry have declined by about 35%. The present prices are insufficient to recover the full costs and are significantly below the notified prices by the Government of India under the Drug Price Control Order (DPCO). The prices are below not only the DPCO but also the cost of production, resulting in severe financial losses to the domestic industry. Further, the imports from the subject country are significantly undercutting the prices of the domestic industry as the landed price of the imported material is below the selling price of the domestic industry as illustrated in the table below.-

(0 Profitability:- The domestic industry has been forced to reduce its selling prices below its cost of production, resulting in substantial financial losses. The injury to the domestic industry is evident from the per unit profit/loss made by the industry from sales in the domestic markets, as shown below:-

In view of the foregoing the Authority confirms the conclusions on injury at Para K.I 3 of the Provisional Findings and reiterates that:-

(a) the quantum of imports from the subject country have increased in absolute terms; (b) the market share of the petitioners have gone down while that of imports has increased; (c) the capacity utilisation of the petitioners have gone down ; (d) the petitioners have been forced to sell at prices below their non-injurious price resulting in losses;

(e) imports are undercutting the prices of the domestic industry; (f) the domestic industry is left with substantial closing stocks.

The Authority therefore concludes that the domestic industry has suffered material injury.

7. Causal Link The Authority holds that the material injury to the domestic industry has been caused by imports from the subject country China is the main exporter of Trimethoprim to India and there has been a tremendous increase in import volumes from China prior to and in the period of investigation. As already noted, the share of China in total imports was 94.2%, 100% and 97.8% in 1997-98, 1998-99 and 1999-2000, (upto Dec.99) respectively. Export prices from the subject country have been declining significantly from 1997-98 onwards reaching an all time low in the POI. The sharp reduction in the export price resulted in steep reduction in the landed price followed by reduction in sales realisation of the petitioners. The increase in the market share of imports from China resulted in the decline in the market share of the petitioner and undercut the prices of the domestic product forcing the domestic industry to sell below its non- injurious price which resultantly, the domestic industry was unable to recover. The material injury to the domestic industry was therefore caused by the dumped imports from the subject country.

S. Anti-Dumping duty imposed:- The Authority has carefully evaluated the injury caused to the domestic industry on account of dumping of Trimethoprim (TMP) arid has recommended the amount of anti-dumping duty equivalent to the dumping margin or less, which if levied, would remove injury to the domestic industry. For this purpose, the Authority has compared the non-injurious selling price of the domestic industry with the landed value of imports from the subject countries. Wherever the margin is found to be less than the dumping margin, the Authority has recommended duty lower than the dumping margin.

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9. FINAL FEVDINGS:-

The Authority after considering the foregoing, concludes that;

(a) Trimethoprim (TMP) originating in or exported from China has been exported to India below normal value, resulting in dumping;

(b) the domestic industry has suffered injury;

(c) injury has been caused by imports from the subject country.

10. The Authority recommends imposition of definitive Anti-dumping duty on all imports of Trimethoprim (TMP) falling under Chapter 29 of the Customs Tariff Act as specified under the para relating to product under consideration originating in or exported from China. The anti- dumping duty shall be the difference between the amount mentioned in Col.3. and the landed value of imports.

Countrv

Name of the producer/exporter

Amount 1.

2.

3. OJSD/ktf All producers/exporters

China

20

11. Landed value of imports for the purpose shall be the assessable value as determined by Customs under the Customs Act, 1962 and all duties of customs except duties levied under Sections 3, 3 A, 8B, 9 and 9A of the Customs Tariff Act, 1975.

12. Subject to the above, the Authority confirms the preliminary findings dated 31st August, 2000.

13. An appeal against this order shall lie before the Customs, Excise and Gold (Control) Appellate Tribunal in accordance with the Act, supra.

L. V. SAPTHARJSHI, Designated Authority Prinled by the Manager, Govt of Indin Prom, King Road, Maytipun, New Delhi-] 10064

nnd Published by the Controller of Publications, Deltu-110054 - 2001