Sunset Review of anti-dumping duty concerning imports of Acrylic Fibre originating in or exported from USA, Korea (RP) and Thailand-Final Findings

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

EXTRAORDINARY

PART I—Section 1

PUBLISHED BY AUTHORITY

No. 199] NEW DELHI, TUESDAY, AUGUST 6, 2002/SRAVANA 15, 1924

2464 GI/2002

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MINISTRY OF COMMERCE AND INDUSTRY

(Department of Commerce)

(DIRECTORATE GENERAL OF ANTI-DUMPING AND ALLIED DUTIES)

NOTIFICATION

New Delhi, the 6th August, 2002

FINAL FINDINGS

Subject : Sunset Review of anti-dumping duty concerning imports of Acrylic Fibre originating in or

exported from USA, Korea (RP) and Thailand—Final Findings.

No. 26/1/2001-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 investigations:-

(i) The Designated Authority (hereinafter referred to as Authority), initiated the Sunset Review investigation of anti-dumping duty imposed on imports of Acrylic Fibre (hereinafter referred to as subject goods), originating in or exported from USA, Korea (RP) and Thailand (hereinafter referred to as subject countries) pursuant to the Final Findings notification No.47/ADD/IW dated 14-10- 1997 and mid-term review notification No.21/l/99-DGAD dated 19-4-2000. -This Sunset Review was initiated vide Notification No. 26/1/2001-DGAD dated 7th August, 2001.

(ii) The Designated Authority notified the initiation of this Sunset Review vide Notification No. 26/1/2001-DGAD dated 7th August, 2001 with regard to anti-dumping duties imposed on imports of Acrylic Fibre originating in or exported from the subject countries.

23 The Designated Authority forwarded a copy of the initiation notification 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.

(iii) The Authority forwarded a copy of the public notice to the known industry associations and Forum of Acrylic Fibre Manufacturers and gave them an opportunity to make their views known in writing.

(iv) The Authority forwarded a copy of the public notice to all the known exporters and gave them an opportunity to make their views known in writing in accordance with the Rule 6(2). The Authority sent questionnaire to the following known exporters:-

1. M/s. Thai Acrylic Fibre Co. Limited, Thailand. 2. M/s. Haril Synthetic Fibber Co., Ltd., Seoul, Korea. 3. Ms/. Taekwang Industrial Co., Ltd., Seoul, Korea. 4. M/s. Sterling Fibers, Inc., USA. 5. M/s. Cytec Industries Inc., USA.

Only M/s. Thai Acrylic Fibre Co. Ltd., Thailand responded to the questionnaire.

(v) The Authority forwarded copy of the public notice to the following known importers and consumers of Acrylic Fibre in India (whose details were made available by the petitioners in the original investigations) in accordance with Rule 6(5) and advised them to make their views known in writing within forty days from the date of the letter.

1. M/s. Rajasthan Spinning & Weaving Mills Ltd., New Delhi. 2. M/s. Siddharth Super Spinning Mills Ltd., New Delhi. 3. M/s. Adhinath Textiles Ltd., Punjab. 4. M/s. Vardhaman Spinning & General Mills, Punjab. 5. M/s. Malwa Cotton Spinning Mills Ltd., Punjab. 6. M/s. Winsome Textile Industries Ltd., Chandigarh. 7. M/s. Bhiwani Textile Mills, Haryana. 8. M/s. Shruti Synthetics Ltd., Rajasthan. 9. M/s. Nahar Spinning Mills Ltd., Punjab. 1 O.Indian Spinners' Association, Mumbai.

11 .M/s. Supreme Nonwovens Ltd., Mumbai.

(vi) The Authority forwarded the initiation notification to the Embassies of the subject countries in New Delhi in accordance with Rule 6(2) with a request to advise the exporters/producers from their country to respond to the questionnaire within the prescribed time. A copy of the letter and questionnaire sent to the exporters was also sent to the concerned Embassies, along with a list of known exporters/producers

(vii) The Authority provided an opportunity to the interested parties to present their views orally in a public hearing on 10.1.2002. All parties presenting views were requested to file written submissions of their views expressed. The parties were advised to collect copies of the views expressed by the opposing parties and offer rebuttals, if any;

(viii) In addition to the known interested parties, responses/information was filed by the following interested parties during the investigation:

1. Sutlej Industries Ltd., Mumbai. 2. APM Industries Ltd., (Unit: Orient Syntex), New Delhi. 3. Deepak Spinners Ltd., Chandigarh - 160019.

(ix) The Authority made available the public file to all interested parties containing non-confidential version of all evidence submitted by various interested parties for inspection, upon request;

(x) Arguments raised by the interested parties have been appropriately dealt in these findings;

(xi) In accordance with Rule 16 of the Rules supra, the essential facts/basis considered for these findings were disclosed to known interested parties on 22nd July, 2002 and comments received on the same have also been duly considered in these findings;

(xii) The period of investigation (POI) for the present sunset review is 1st April, 2000 to 31st March, 2001.

25 (xiii) ***in this notification represents information furnished by the interested party on confidential basis and so considered by the Authority under the Rules;

B. PRODUCT UNDER CONSIDERATION

3. The product involved in the present investigation is Acrylic Fibre. Acrylic Fibre is a long chain of synthetic polymer composed of at least 85% by weight of Acrylonitrile, which is the major raw material for production of Acrylic Fibre. Acrylic Fibre is classified under sub-head 550330 of Schedule I of the Customs Tariff Act, 1975 and No. 55033000 under the Indian Trade Classification (based on Harmonised Commodity description). The Classification is, however, indicative only and is in no way binding on the scope of the present investigations.

Submissions made by M/s. Thai Acrylic Fibre Co. Ltd.,

4. The present sunset review is simply a review of the investigation that was originally commenced on 13.9.1996. The scope of the product under investigation and subjected to anti-dumping duty in the sunset review is and should be the same as that of the original investigation. In the original investigation also, the product was defined as Acrylic Fibre falling under Customs Code 5503.30. However, in para 50 of the preliminary findings dated 31.3.1997, anti-dumping duty was recommended on all Acrylic Fibre falling under Chapter 55. This, however, did not alter the scope of the product that was subject to investigation and to anti-dumping duty.

5. In the present petition, the domestic industry has indicated the product as covering both Synthetic filament tow falling under 5501.30 and Synthetic staple fibre falling under 5503.30. The import statistics have also been indicated for both these customs codes. The Authority has indicated in the initiation notice only Customs code 5503.30. Products falling under different tariff entries of the Customs Tariff are recognized as distinct and different products. While different products may be covered by a single tariff entry, the converse is not true, i.e. different tariff items cannot cover the same item. The product on which the domestic industry wanted anti-dumping duty was Acrylic Fibre. The investigation originally was restricted only to this item. Subsequently, it appears that another product has also been brought within the ambit of the investigation without appreciation of the scope of the review and investigation.

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6. The import statistics relied upon by the petitioner and by the Authority in the original investigation included only Acrylic Fibre falling under 5503.30. It is not known as to how Acrylic tow falling under 5501.30 has also been covered in the petition and the finding in the subsequent review. Even in the year 93-94 there were imports of Acrylic tow under 5501.30 of 1859.370 MT. Hence, Acrylic tow has been brought within the scope of investigation erroneously.

7. Thus the investigation should be restricted to Acrylic Fibre falling under 5503.30. The import statistics for the purpose of evaluating material injury should also be restricted to 5503.30. The domestic industry must not be allowed to enlarge the scope of the investigation subsequently by such means.

Submissions made by Indian Spinners Association:

8. According to Notification No. 26/1/2001-DGAD dated 7.8.2001 the product under consideration is Acrylic Fibre classified under sub-heading No. 550330 of Schedule - I of Customs Tariff Act. It would mean that modacrylic fibre falling in item No. 5503.30 or acrylic or modacrylic tow falling in sub-heading No. 5501.30 are outside the purview of the enquiry.

Submissions made by the domestic industry:

9. The product under consideration in the present investigation is Acrylic fibre, irrespective of its grade and types, whether it is tow or top. All types are covered within the scope of the duty and since, all types are covered under scope of duty, all types are within the scope of the present review. It has been clearly mentioned in the initiation notification also that the custom classification is indicative only and not binding on the scope of the investigation.

10. Being a review investigation, the product under consideration in the present investigation has to remain same as has been in the main investigation. It is classified under custom subheading 5501.30 and 5503.30 of the Customs Tariff Act.

11. In the questionnaire response filed by the only responding exporter in the present investigation, the exporter has stated the scope of the 27 investigation from 1.5 denier to 8.0 denier. It is clarified that the scope in the present investigation covers all deniers of Acrylic Fibre.

12. As regards different custom tariffs for different products, the custom tariffs for different products and different types of a product are two different issues. It is factually not correct to say that different tariff items can not cover the same item. It has been demonstrated in a number of investigations that the product has been imported under a number of different customs classifications. It can not be said that scope of a product can not exceed custom classification. We rely upon various investigation conducted by the Designated Authority so far, in which more than one custom classification has been clubbed for a product.

13. Regarding request by the exporter to specifically clarify that the duty is applicable on Acrylic Fibre "falling under custom subheading no. 5503.30" only, we rely upon the decision of the Designated Authority on the same product in the previously completed investigations.

Examination by the Designated Authority:

14. In the preliminary findings dated 31.3.1997 of the previous investigation the Designated Authority had recommended imposition of anti- dumping duty on imports of Acrylic Fibre falling under Chapter 55 of the Customs Tariff. In the final findings dated 14.10.1997, Authority has confirmed the preliminary findings as regards imposition of anti-dumping duty on imports of Acrylic Fibre. Similarly, in the review findings notified vide Notification No. 21/1/99-DGAD dated 19.4.2000 the Authority had recommended imposition of anti-dumping duty on Acrylic Fibre falling under Chapter 55 of the Customs Tariff. As has been stated in the initiation notification dated 7.8.2001 under para 1 that the Customs/ITC classification mentioned therein are indicative only and are in no way binding on the scope of the investigations. Therefore, the investigation and/or imposition of anti- dumping duty cannot be restricted to sub-heading 550330 of Schedule I of the Customs Tariff Classification and the investigations can cover Acrylic Fibre classifiable under any sub-heading of Chapter 55 of the Customs Tariff Classification.

C. Like Article

15. Rule 2(d) of the anti-dumping rules specifies that "Like Articles" means an Article which is identical or alike in all respects to the product under investigation or in the absence of such an Article, another Article, having characteristics closely resembling those of the articles under examinations.

16. The Authority also finds that there is no argument disputing that Acrylic Fibre produced by the domestic industry has characteristics closely resembling the imported material and is substitutable by Acrylic Fibre imported from the subject countries both commercially and technically. Therefore, the Authority holds the view that Acrylic Fibre produced by the domestic industry be treated as Like Article to the product exported from USA, Korea (RP) and Thailand within the meaning of Rule 2(d).

D. DOMESTIC INDUSTRY

Submissions made by M/s. Thai Acrylic Fibre Co. Ltd., Thailand.

17. In part II of the petition, the production of 5 Indian Producers has been given. M/s. Vardhaman Acrylics Ltd (VAL) is one producer. It has been indicated in the petition that the said producer is related to Vardhaman Spinning, an importer of acrylic fibre. VAL has, therefore, been excluded from the scope of the domestic industry. We submit that the exclusion of VAL, unilaterally by the domestic industry, is incorrect and amounts to the domestic industry exercising the power of the Designated Authority.

18. It is our submission that the quantum of imports into the country is small and most of the imports are to advance licence holders for the purpose of using the acrylic fibre in export production. Consequently the imports, if any, by Vardhaman Spinning will not necessitate the exclusion of VAL from the domestic industry. We submit that this exclusion has been made deliberately in order to distort the picture of the domestic industry and the injury analysis.

Submissions made by the domestic industry:

19. The domestic industry has merely brought the facts and claimed that M/s. Vardhman should be excluded from the scope of the investigations. The 29 Designated Authority appears to be satisfied that the company is required to be excluded from the scope of the present investigations. However, in case the Designated Authority considers it relevant to include the information in respect of that company, relevant information can always be called from that company. The petitioners have no objection to their inclusion also.

Examination by the Designated Authority:

20. As per the information furnished by the domestic industry the three producers, viz, Indian Acrylics Ltd., ii) Consolidated Fibres and Chemicals Ltd., and iii) M/s. Pasupati Acrlylon Ltd., account for a share of 60% of the domestic production. It has been stated in the non-confidential version of the petition that M/s. Vardhman Acrylics Ltd., another producer of Acrylic Fibre, is related to M/s. Vardhman Spinning Mills Ltd., which is a group company promoted by S.P. Oswal group. M/s. Vardhman Spinning Mills is an importer of Acrylic Fibre and therefore M/s. Vardhman Acrylics Ltd., were excluded from the domestic industry. The Authority therefore is of the view that the three producers represent the domestic industry in terms of Rule 5(3) as they account for majority of the domestic production of Acrylic Fibre.

E. EXAMINATION OF ISSUES RELATED TO NORMAL VALUE,

EXPORT PRICE & DUMPING

21. The Authority sent questionnaires to the known exporters and the embassies of the subject countries in India for the purpose of determination of normal value in accordance with section 9A(1)(C) of the Act. Only one exporter from Thailand, viz M/s. Thai Acrylic Fibre Co. Ltd., has responded to the questionnaire. None of the exporters/producers from USA and Korea RP have responded to the questionnaire.

Views of the domestic industry

22. It is relevant to point out that the Designated Authority has found in the past that considerable amount of sales were made by the exporter in home market below its cost of production. This has been finding of the Designated Authority in the previously concluded two review investigations also. Such sales are to be ignored in accordance with Annexure I to the Rules. The exports from Korea continued at considerable volume in spite of the fact that substantial anti dumping duties are applicable on such exports. The exporters30 THE GAZETTE OF INDIA: EXTRAORDINARY [PART I—SEC, lj from Korea have not cooperated with the Designated Authority in the past. Similar is the situation with regard to exports from USA.

Examination by the Authority

Normal Value in respect of Thailand

23. 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^); or

(ii) when there are no sales of the like article in the ordinary course of trade in the domestic market of the exporting country or territory, or when because of the particular market situation or low volume of the sales in the domestic market of the exporting country or territory, such sales do not permit a proper comparison, the normal value shall be either -

(a) comparable representative price of the like article when exported from the exporting country or territory or an appropriate third country as determined in accordance with the rules made under sub-section (6); or

(b)the cost of production of the said article in the country of origin along with reasonable addition for administrative, selling and general costs, and for profits, as determined in accordance with the rules made under sub-section (6). M/s. Thai Acrylic Fibre Co. Ltd., Thailand has furnished a detailed response to the questionnaire containing information relating to domestic sales and exports to India. The Authority has also conducted an on the spot verification of the exporter's information. It has been found that the domestic sales of the exporter have been in the ordinary course of trade as more than 80% of the domestic sales are above the cost of production plus administrative, selling and general costs. Therefore normal value in respect of Thailand has been determined on the basis of sale price of Acrylic Fibre in domestic market. Various adjustments claimed have been verified. After considering the adjustments on account of Discounts ***Baht, Inland freight ***Baht, Interest Jl ***Baht and Guarantee commission ***Baht the normal value for Thai exporter has been determined as ***Baht/kg.

Normal value in respect of USA & Korea

24. None of the exporters from USA and Korea responded to the Questionnaire issued by the Authority or furnished any information relevant to the determination of dumping. The petitioner has claimed that dumping continues from USA and Korea and has claimed normal value of Acrylic Fibre on the basis of prices for the major raw material Acrylo Nitrile published in a Journal named as Tecnon. In view of non-cooperation from exporters from USA and Korea in the form and manner prescribed the Authority confirms to have made the findings with regard to exporters from USA and Korea on the basis of facts available to it as per Rule 6(8) supra. Accordingly, the Authority has determined normal value of Acrylic Fibre in respect of USA and Korea on the basis of information furnished by the domestic industry.

Export Price:-

25. None of the exporters from USA and Korea responded to the questionnaire forwarded by Authority. Few importers have responded to the questionnaire giving information as under:

(i) M/s. Sutlej Industries Ltd., - showing imports from Korea; (ii) M/s. Deepak Spinners Ltd., regarding imports from Japan, Taiwan (which is not relevant to this investigation); and

(iii) M/s. APM Industries, regarding imports from Japan (which is not relevant to this investigation).

The Authority has considered information as per DGCI&S data and the importers' information to the extent these are relevant for this investigation for determining the export price in respect of USA and Korea. Necessary adjustments on account of ocean freight, marine insurance, commission, inland transportation and port charges as per the claim of the domestic industry have been allowed, except commission has been allowed @ 3% of FOB value, to arrive at the ex-factory export price.

26. In respect of M/s. Thai Acrylic Fibre Co. Ltd, Thailand the export price has been determined on the basis of information furnished by the exporter. The exporter made sales of ***kgs for US$ **• to India. The export value in32 THE GAZh'ITK OF INDIA: EXTRAORDINARY [PART I—SEC. 1] US$ has been converted to Baht taking into account the exchange rate on the date of invoice. This is in accordance with Rule 6(iii) of Rules supra. The exporter has shown adjustment on account of drawback as ***Bhat/MT which has been verified and found correct. The other adjustments from the export price have been allowed on actual basis on account of discounts/commissions ***Baht/MT, inland freight ***Baht/MT, overseas freight ***Baht/MT, insurance **+Baht/MT, shipping charges •••Baht/MT and clearance and handling ***Baht/MT. The net export price at ex-factory level is thus determined as •••Bant/kg.

Dumping Margin:-

Submissions by M/s. Thai Acrylic Fibre Co. Ltd. on dumping margin:

27. The exporter M/s. Thai Acrylic has accepted the Disclosure as regards the normal value. As regards export price they have argued that the net export price has been understated resulting in higher dumping margin of 12.39%. According to them the difference between the calculations has arisen because of the conversion of export price into Thai Baht at the exchange rate prevailing on the date of invoice. According to them there was no requirement to convert US$ export price into Thai Baht for the fair comparison in as much as the export proceeds are realized in Thai Baht and are recorded in the books of account at the actual amounts realized. According to the exporter para 6(iii) of Annexure-1 has no application whatsoever to the facts of this case.

Examination by the Authority

28. The Authority followed the consistent practice of adopting the principles governing the determination of Normal Value, Export Price and Margin of Dumping as laid down in Annexure I to the anti-dumping rules. Dumping margin has been determined on the basis of a fair comparison of Export Price with the Normal Value in pursuance of the principle laid down in Para 6 of Annexure-1 to the Rules. The comparison is at the same level of trade, i.e. Ex- factory level.

29. The Authority had found during the verification that the exporter records the export sales made in US$ in its books of accounts in Thai Baht at the exchange rate prevalent on the date of invoice/sale. The actual realization of export proceeds takes place at a later date when the exchange rate would be 3.1 different. The exporter makes adjustments in its books of accounts due to this exchange rate. Rule 6(iii) of Annexure-1 states, inter-alia, that:

"when the comparison under this para requires a conversion of currencies,

such conversion should be made by using the rate of exchange on the date of

sale, ".

For the purpose of determining the dumping margin the provisions of Rule 6(iii) of Annexure-1 as stated above are very clear and unambiguous. Therefore the Authority has considered the exchange rate between US$ and Thai Baht on the date of sale for export transactions to India. The Authority does not find merit in the argument of the exporter that para 6(iii) has no application in this case as the exporter itself records the export sales to Tndia in its books of accounts by converting US$ to Baht at a given exchange rate.

Accordingly, in respect of M/s. Thai Acrylic Fibre Co. Ltd., the dumping margin arrived at is 12.39% of export price.

Dumping margin in respect of other exporters of Thailand

30. As regards other exporters, if any, from Thailand the Authority has determined the dumping margin taking into account the normal value as determined for M/s. Thai Acrylic Fibre and the lowest export price from the available information. The dumping margin is arrived at 27.46% of the export price

Dumping margin in respect of exporters from USA and Korea

31. Th? Vuthority has worked out a common Dumping Margin for all the exporters from USA and Korea in the absence of cooperation from any of the Exporters. On the basis of these calculations the Dumping Margin works out to 29.90 % of net Export Price for USA and 16.53% for Korea.

F. INJURY

Views of the domestic industry:

32. The Designated Authority is required to examine whether the cessation of the existing duty is likely to lead to continuation or recurrence of dumping and injury. The injury to the domestic industry is, therefore, required to be ~>ha/Cl/orj^-;

examined in the context of its continuation or recurrence. Further, existence of anti dumping duty in force is required to be kept in view while examining the injury to the domestic industry.

33. The period of investigation determined by the Designated Authority for the present review investigation is 2000-01. The domestic industry suffered injury due to dumping in this period from various countries, including the subject countries, investigation against which are either under progress or anti-dumping duty is in force. Thus, the injury to the domestic industry is required to be seen in the light of existing duties and on-going investigations against other countries.

34. Annexure II to the Rules provides for cumulation of injury to the domestic industry. A number of investigations are in progress for this product covering the same investigation period as that of present. Thus, the injury to the domestic industry collectively from all these sources is required to be seen while examining the injury to the domestic industry.

35. We have already provided detailed information to the Designated Authority clearly establishing that the cessation of the existing anti dumping duty is likely to lead to continued injury.

36. Further M/s. Thai Acrylic fibre (responding exporter) is exporting Acrylic Fibre since more than five years in the Indian market at dumped prices. The Designated Authority has conducted three investigations earlier against Thailand. There has been repeated claim of the exporter M/s. Thai Acrylic Fiber Company that there was no dumping by them or the dumping margin were de-minimus. It is important to note that in all the investigations, the Designated Authority found significant dumping and dumping margin quite contrary to the claim of the exporter.

Views of exporter M/s. Thai Acrylic Fibre:

37. Annexure II of the anti-dumping rules lays down the principles for determination of injury. Paras (ii) and (iv) of the Annexure indicate a list of factors that are required to be evaluated by the authority in order to arrive at a conclusion on the existence or otherwise of material injury. The 15 35 parameters are required to be compulsorily evaluated and a finding on each of these parameters is required to be given in the published findings. The 15 factors mentioned in Paras (ii) and (iv) are pari materia with Article 3.4 of the Agreement on Anti-dumping.

38. The authority is aware that the Government of India had raised a dispute in the Cotton Type Bed Linen case that the evaluation of all the factors listed therein is compulsory and since the EU did not do so, the finding was contrary to the Agreement on Anti-dumping. A panel of the WTO went into this dispute and ruled in favour of India. The ruling was appealed by EU and the appellate body of the WTO confirmed the panel finding.

39. In view of the above finding in which India was a party, it is imperative that the Designated Authority evaluates all the 15 parameters. It is seen from Part IV of the petition that only production, capacity utilisation, sales volume, selling prices evidence of last contracts or declining sales, employment and profitability have been dealt with. The remaining parameters have not been dealt with.

40. The domestic industry had projected a fall in production of 6598MT in 2000-01 as compared to the previous year. The sales volume has declined from 70591 to 59119MT i.e. a fall of 11472 MT. It has been submitted by the Domestic industry that the decline in sales volume of 17% is directly due to the shifting of some of the customers to dumped imports. This conclusion is totally erroneous. As per the petition, the total volume of imports including 5501.30 and 5503.30 from the 3 countries is 2266.73MT. A fall in sales volume of 11472MT cannot be "directly due to shifting of some of the customers to dumped imports" as the allegedly dumped imports are only 2266.73MT. Further, all exports from Thailand were to advance licence holders and hence the quantum corresponding to that cannot be treated as lost sales. Hence the decline in production and the decline in sales volume are not at all due to the alleged dumping from these 3 countries. The projection by the domestic industry is, therefore, incorrect.

41. The profitability index shows that the domestic industry had made losses in each of the years 98-99, 99-2000 and 2000-01. It has been suggested that the losses have increased because of the dumped imports.

42. It is seen from the import statistics that Acrylic Fibre falling under 5503.30 has been imported during the period of review from 18 countries. Of these 18 countries, anti-dumping duty is in force, or anti-dumping investigation is in progress in respect of Thailand, Korea, USA, Brazil, Bulgaria, Italy, Spain, Portugal, Japan, UK., Germany, Mexico, Turkey and Taiwan. The volume of import from the remaining countries, individually and collectively, is far below the de-minimis level. Thus, imports from all parts of the world into India have been subjected to anti-dumping duty/investigation. Yet the domestic industry is not able to earn a profit despite operating at very high levels of capacity utilisation i.e. 85% to over 100%. This implies inherent problems within the domestic industry, which are being attributed to imports from one country or the other.

43. It may also be pertinent to note that Thai Acrylic had increased its profitability in 2000 as compared to 1999. Further, in 2000-01, the allegedly dumped imports into India had fallen. In this scenario each of the domestic producers has posted higher losses in 2000-01 compared to 1999-2000, which is contrary to the trend at Thai Acrylic. In fact all the domestic producers did register cash profits in 1999-2000 and Vardhaman Acrylics have also posted a cash profit in 2000-01. Hence the inability of the domestic producers to post a profit in 2000-01 is entirely due to their internal reasons of operations and higher cost of production and are not at all caused by the alleged imports from Thailand to India.

Submissions made by Indian Spinners Association:

44. As per Indian Spinners Association the position of different parameters is as under:

(i) Production of domestics producers

The production of Acrylic Fibre was 82 million kg in 1996. After a drop in the next three years, production improved sharply to 99.43 million kg in 2000-01 and year 2001-02 is expected to record a production of 104 million kg. This shows an increase of 32% in a period of two years. The Acrylic production has outperformed the index of industrial production in the 37 recent period. It is clear that the industry has turned the corner and is now firmly set on a growth trajectory.

yii) Capacity-The capacity of Acrylic Fibre has increased to 121 million kg by end of 2000 and further to 137.50 million kg by March 2001 showing a growth of 40% in a period of 3 years.

(iii) Capacity utilization-The capacity utilization was around 80% in the earlier years and has recorded a rise to 86-87% in the current period.

(iv) Market share- The market share of the domestic producers has increased from 69.45% in 1997-98 to 86.7% in 2000-01 and is expected to improve to 96.98% in 2001-02. Thus, the domestic manufacturers have captured practically the total domestic market and they cannot have any grouse in this regard.

(v) Price factor-The argument of the domestic producers that price did not increase commensurate with the increase in cost of production does not hold water. The price of acrylonitrile increased by 12% in 1999-2000 and by 57% in 2001-02 both over 1998-99. Since acrylonitrile accounts for 67% of the cost of production, "it means that cost of Acrylic Fibre increased by 8% in 1999-2000 and by 38% in 2000-01.

(vi) Causal Link-Despite all favourable parameters enumerated above, if domestic manufacturers are still limping as claimed by them, then it is not because of imports of Acrylic Fibre, but due to their inherent difficulties.

(vii) Other favourable factors-It needs to be mentioned here that in the budget for 2001-02, the customs duty on acrylonitrile has come down from 40.55% to 38.74% because of withdrawal of surcharge of 5%.The unchecked imports of Acrylic Yarn from Nepal at concessional duty had become an irritant both to domestic producers as well as consumers. Government have imposed anti-dumping duty on Acrylic Yarn coming from Nepal in terms of Notification No. 105/2001-Cus dated 10th October, 2001. ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••a38 THE GAZETTE OF INDIA: EXTRAORDINARY [PART I—SEC 1]

Examination of Injury and Causal Link by the Authority :-

45. As per Section 9A(5) of the Act read with Rule 23 of Rule supra, in a review, the Designated Authority has to come to a conclusion that the cessation of the existing anti dumping duty is likely to lead to continuation or recurrence of dumping and injury.

46. As per the provisions contained in para (iv) of Annexure-II of Anti Dumping Rules, the examination of the impact of the dumped imports on the domestic industry concerned shall include an evaluation of all relevant economic indicators and indices having a bearing on the state of the industry, including natural and potential decline in sales, profits, output market share, productivity, return on investments or utilization of capacity, factors affecting domestic prices, etc.

47. The domestic industry has furnished information on various economic factors/indices relating to injury determination, viz., natural and potential decline in sales, profits, market share, productivity, return on investments, utilization of capacity, factors affecting domestic prices, effects on cash flow, inventories, employment, wages, etc.

48. The Authority has, therefore, taken into account the aforesaid indices regarding injury and the existing anti-dumping duty on Acrylic Fibre imports, while doing the final determination so as to arrive at conclusions as to whether the withdrawal of existing anti-dumping duty is likely to lead to continuation or recurrence of dumping and injury.

^••••••••••••••••••••••••••••••••••^•••••••i•*••••>•••••••••••••••••••••• In view of the above, the Authority examined all relevant parameters for determination of injury as follows:

(i) Quantum of imports:

(Imports in kgs / Source: DGCI&S)

39 other sources Total imports 32583743 14257792 13967486 (ii) Demand of Acrylic Fibre & Market share (in MT)

(iii) Production and capacity utilization (in MT) *

* In respect of petitioner domestic industry.

(iv) Sales of domestic industry (in MT)

2000-01

1998-99

1999-00

57524

70591

59119 Sales of petitioner companies

(v] Price undercutting

1998-99

1999-00

2000-01

• *•

*•*

Average selling price of domestic industry40 THE GAZETTE OF INDIA: EXTRAORDINARY [PARTI—SEC. ]]

(vi) Price suppression

(vii) Closing stock of domestic industry (MT)

19*99-00

2000-01

1998-99

2551.68

1234.41

750.5

Closing stock

(viii) Profitability

All the three petitioner companies have incurred losses as per balance sheet and profit and loss account for the year 2000-01.

(ix) Return on investments

The Authority finds that the domestic industry has recorded negative return on investment during the year 2000-01 in spite of imposition of anti- dumping duty on a number of sources.

(x) Actual and potential negative cash flow

The cash flow of the petitioner companies was negative in 1998-99, which became positive in 1999-2000 and was again negative in 2000-01.

(xi) Employment

The employment level with the domestic industry increased between years 1997-98 and 1998-99 due to addition of capacity. However, the 41 domestic industry had to resort to curtailment of employment to the extent possible due to continued adverse financial position.

(xii) Wages

The domestic industry had to increase the wages of its employees due to prevailing regulations.

(xiii) Ability to raise capital investment

The constituents of domestic industry had to undergo financial restructuring with great difficulty and the financial institutions are hesitant to lend funds to the domestic industry due to continued losses.

49. The above indicators demonstrate the following:

'••••*••••••••••••••••••••••••>•••••••••••••••••••••••••••••••••••••••••••••••• (i) The quantum of imports of subject goods from the subject countries has gradually declined from year 1998-99 to the period of investigation,

(ii) The overall demand for Acrylic Fibre has not undergone any significant change during the POI when compared to the year 1998-99. (iii) The share of imports from subject countries has come down to 2.02% during POI from 7.42% during 1998-99.

(iv) The share of domestic industry that had increased to 62.47% during 1999-00 has come down to 52.64%.

(v) The production and capacity utilization of the petitioner domestic industry has come down to 84.03% during POI in comparison to 93.07% during previous year,

(vi) Sales of petitioner domestic industry has come down to 59119 MT during POI from 70591 MT in 1999-00.

(vii) There has been significant price undercutting due to the dumped imports,

(viii) The domestic industry has not been able to realize a fair selling price on its product as the landed value of imports have suppressed the price of domestic industry.

(ix) Closing stock of the domestic industry has increased significantly during POL

JW/Cf/dJ-^

(x) The petitioner domestic companies have incurred losses as reflected from their balance sheets and the domestic industry has recorded negative return on investment.

(xi) The cash flow of the petitioner companies was negative during the POL

(xii) Due to the adverse financial position there was a negative effect on the level of employment. However, the industry was under obligation to increase the wages of its employees due to existing regulations. (xiii) As the industry was making losses financial institutions were hesitant to lend funds to the domestic industry.

••••••••••••••••••••••••••••••••••••"•••^•••••••••••••••••••••••••••••••p

Conclusion on injury and causal link:

50. The Authority notes that while the quantum of imports of subject goods has declined during the period of investigation all other vital economic indicators having a bearing on the state of the domestic industry have shown lack of improvement in the period of investigation which shows that the domestic industry continues to suffer material injury in spite of existing anti dumping duties.

51. The Authority holds that it may be inappropriate to hold that the imports from the subject countries would not cause injury to the domestic industry in the light of the existing economic parameters. The improvement in any economic parameter could be a result of the existing anti dumping duties. The injury to the domestic industry would, however, recur in case the product is sold at dumped prices and the imports are entering at such prices in India which are lower than the non injurious price of the domestic industry. The Authority concludes that in view of overall assessment of economic parameters affecting the domestic industry the removal of anti dumping duty is not warranted.

52. While determining the non-injurious price for the like articles for the domestic industry, the Authority has used the actual cost of production of the subject goods ^to determine optimum cost of production for the domestic industry taking into account the normated best consumption norms and the actual price of the raw materials which are consumed for the production of the subject goods during the period of investigation. For calculation of injury margin, the ex-factory non-injurious price determined for the period of 43 investigations has been compared with the landed value of the imported goods.

G. INDIAN INDUSTRY'S INTERESTS AND OTHER ISSUES:

(a) Exclusion of Homopolymer Acrylic Fibre from anti-dumping duty:

Submissions made by M/s. Supreme Nonwovens Ltd., Mumbai:

53. They are manufacturers of nonwoven industrial fabrics. A large part of their production is Filter Media for Back filters used for Pollution control. As they have the facility and know-how for processing specialty fibres for filter applications they have started manufacturing and marketing these fabrics by importing the specialty fibres. Homopolymer (100% Acrylo Nitrile) Acrylic Fibre is one such fibre. This is resistant to Hot Alkaline conditions whereas standard arcrylic (85% Acrylo Nitrile) Fibre is not. Homopolymer Acrylic Fibre is not manufactured by any fibre manufacturer in India and the domestic manufacturers of Acrylic Fibre have given regret letters to this effect. Therefore, Homopolymer Acrylic Fibre cannot be clubbed with standard Acrylic Fibre for anti-dumping duty for the following reasons:

(i) It is not made in India. (ii) It does not compete with product made from standard Acrylic Fibre. (iii) It is priced much higher than locally manufactured regular Acrylic Fibre.

(iv) It is used to manufacture Needle Punched Nonwoven Filter Media and industrial fabric, currently imported, without imposition of anti- dumping duty.

(v) It is irrational to impose anti-dumping duty on inputs when finished goods, i.e. Filter Media using the same inputs can be imported without attracting anti-dumping duty,

54. The importer has further submitted that during the public hearing held on 10.1.2002 the representatives from the Acrylic Fibre Manufacturer had confirmed that they do not manufacture Homopolymer Acrylic Fibre containing 100% Acrylo Nitrile currently being imported from Korea. It has been further requested that a suitable notification be issued exempting Homopolymer Acrylic Fibre from anti-dumping duty as this would44 „ _ _ _ _ __ T HE G A Z h T l 'E OF I N D IA • E X T R A O R D I N A RY [ P A RT 1 —S E C. 1] immensely help domestic industry to substitute import of finished material and thereby saving the country from foreign exchange.

Domestic industry's views:

55. The product under consideration in the present investigation is "Acrylic Fibre". Homopolymer Acrylic Fibre is nothing but "a type of Acrylic Fibre". The acrylic fibre produced by the domestic indusUy is a like article to the product imported from the subject countries. As per anti dumping Rules:

"like article " means an article which is identical or alike in all

respects to the article under investigation for being dumped in India or

in the absence of such article, another article which although not alike

in all respects, has characteristics closely resembling those of the

articles under investigation;

56. The relevant parameter is whether the domestic industry is in production of "like article". The domestic industry is not required to be in production of "product under consideration", the domestic industry is required to be in production of "like article".

57. We also draw kind attention of the Designated Authority to the investigations relating to acrylic fibre from, inter-alia, Japan for the same product, wherein the issue of "specialty fibre", "conjugate acrylic fibre", etc. were raised by the Japanese producers. It was held by the Designated Authority that the acrylic fibre being produced by the domestic industry was a like article to the acrylic fibre being imported from Japan and no exclusion was granted by the Designated Authority.

58. It is also relevant to point out that the interested party has not enclosed technical specification, etc. of the homopolymer acrylic fibre.

59. The domestic industry has further argued that as regards exclusion of homopolymer Acrylic Fibre from the scope of the duty, the relevant issue is whether this type Fibre is like article. The test of like article applied by the Directorate in the matter relating to anti-dumping duty on Acrylic Fibre imports from Japan is equally applicable to the present review. It has been admitted that the price of the homopolymer fibre is much higher than the price of normal Acrylic Fibre. Tn the event the Designated Authority is of 45 the view that such homopolymer is not a like article to the goods produced by the domestic industry then the Authority may specify a benchmark price at which such homopolymer can be imported.

Examination by the Authority:

60. The Authority has examined the views of M/s. Supreme Nonwovens Ltd., and the domestic industry. While it may be true that Homopolymer Acrylic Fibre also gets covered under the same custom heading under which Acrylic Fibre is covered, imports of same do not tend to displace the demand of locally produced Acrylic Fibre. This is due to the fact that Homopolymer Acrylic Fibre has 100% Acrylo Nitrile content. It has been confirmed by the domestic producers of Acrylic Fibre, viz., M/s. Pasupati Acrylon Ltd., M/s. Consolidated Fibres and Chemicals Ltd., and M/s. IPCL that they do not manufacture Homopolymer Acrylic Fibre. The export price of Homopolymer Acrylic Fibre is also much higher than the locally made Acrylic Fibre. The Authority finds that Homopolymer Acrylic Fibre is not commercially substitutable by the Acrylic Fibre produced by domestic industry and hence the imports of Homopolymer Acrylic Fibre do not cause injury to the domestic industry as these imports do not displace the demand of domestically produced Acrylic Fibre. Therefore the Authority proposes to exclude the same from the recommendation for imposition of anti-dumping duty. Taking into account the concerns of the domestic industry, the Homopolymer Acrylic Fibre being exempt from anti dumping duty would be those which are priced at US$ 2.40/kg. and above CIF - Indian port. Further, this export price would be linked to variation in the Acrylic Fibre price due to increase/decrease in the international price of main raw material Acrylo Nitrile. This CIF price of US$ 2.40/kg. would be recalculated in case of a variation of 10% (+/-) in the Acrylo Nitrile (ACN) price. The base price of ACN has been considered as $ 940/MT.

61. The Authority reiterates 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.

62. The Authority recognises that the imposition of anti dumping duties might affect the price levels of the product in India. However, fair competition on the Indian market will not be reduced by the anti dumping measures. On the contrary, imposition of anti dumping measures would46 THE GAZETTE OF TNDIA. EXTRAORDINARY [PART I—Sh.c 1] remove the unfair advantages gained by dumping practices, would prevent the decline of the domestic industry and help maintain availability of wider choice to the consumers of subject goods. The Authority notes that the imposition of anti dumping measures would not restrict imports from subject country in any way, and therefore, would not affect the availability of the product to the consumers. The consumers could still maintain two or even more sources of supply.

H. FINAL FINDINGS

63. After considering the foregoing the Authority concludes that - (i) Acrylic fibre has been exported from the subject countries to India below its normal value;

(ii) the domestic industry is suffering injury; (iii) the injury may intensify if anti dumping duty is removed.

64. It is therefore considered appropriate to recommend continuation of the anti dumping duties in force on imports of Acrylic Fibre covered under Chapter 55 of the Ftist Schedule to the Customs Tariff Act, originating in or exported from USA, Korea (RP) and Thailand. The Authority proposes to recommend the amount of anti-dumping duty equal to the margin of dumping or the injury margin whichever is lesser, which if levied, would remove the injury to the domestic industry. For the purpose of determining injury margin, the landed price of imports has been compared with the non injurious selling price of the domestic industry determined for the period of investigation. The revised duties may come into force from the date of notification to be issued in this regard by the Central Govt. The anti dumping duty shall be as follows:-

* Subject however to the condition that imports of Homopolymer Acrylic Fibre containing 100% Acrylonitrile from subject countries, when made at a price US$ 2.40/kg and above CIF-Indian port, would be exempt from the 47 levy of above anti-dumping duty. Variation of 5% in this price shall be permissible. The price of US$ 2.40/kg. for Homopolymer Acrylic Fibre shall be revised appropriately in proportion to changes in the international price of major raw material Acrylonitrile beyond 10% from the base price of US$ 940/MT. For this purpose international prices of Acrylonitrile as reported in the journal 'Tecnon' or PCI Consulting shall be applicable.

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

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

L. V. SAPTHARJSH1, Designated Authority Printed by ihc Manager, Ciovi of India Press, Ring Road, Mayapun, New Dclhi-110064 ,ind Published by the Controller of Publications, Delhi-] 100J4