MINISTRY OF COMMERCE AND INDUSTRY

(Department of Commerce)

NOTIFICATION

New Delhi, the 20th September, 2002

Final Findings

Subject: Anti-dumping investigation concerning imports of D (-) Para Hydroxy Phenyl Glycine Base

(PHPG-Base) originating in or exported from China PR and Singapore—Final Findings.

N0.51/1/2001-DGAD.— Having regard to the Customs Tariff Act 1975 as amended in

1995 and the Customs Tariff (Identification Assessment -nr¹ Collection of Anti

Dumping Duty on Dumped Articles and for Determination OT S-jury) Rules 1995

thereof

A PROCEDURE

The Procedure described below has been followed

(i)

The Designated Authority (hereinafter also referred to as the Authority)

notified preliminary findings vide Notification No 51/1/2001-DGAD dated the

st October 2001

with regard to Anti Dumping investigations concerning

imports of D (-) Para Hydroxy Phenyl Glycine Base

originating

in or

exported from

China PR and Singapore and requested the interested

parties to make their views known in writing within forty days from the date

of its publication

(n)

The Authority forwarded a copy of the Preliminary Findings to known

interested parties who were requested to furnish their views if any. on the

Preliminary Findings within forty days of the date of the letter

(IN)

The Authority also forwarded a copy of the Preliminary Findings to tne

Embassies/High Commissions of subject countries n New Delhi with a

request to furnish their views on the Preliminary Findinn

(iv)

The Authority held a public hearing on 10^th April 2002 to hear the interested

parties orally which was attended by representatives of the domestic

industry importers and exporters from Singapore The sorties attending thy

dumping duty shall be reflected on to tne selling price of Amoxicillm then it

is the patient who comes to bear the cost increase

(d)

Amoxicillm production for domestic consumption is estimated to be around

1200-1300 MT per year and it is equivalent of around 600 MT or more per

year of PHPG Base and still increasing

This quantity is obviously more

than the capacity of DOL which is claimed to be 500MT

(e)

The exporter has claimed that their technology is the most advanced

and efficient

state of the art

IMMOBILIZED ENZYME method

utilizing gene technology

( recombinant

of DNA)

while

their

technology is conventional CHEMICAL RESOLUTION method and

therefore cost structure is completely different

(f)

Further the exporter has submitted that they are one of the largest

producer of PHPG Base and PHPG Dane Salt in the

world and

regarded as one of the most reputable and reliable supplier of the

products, in a sense of both quantitative and quality so that customer

perception should not be the same at all in world wide basis M/s

Torrent Gujarat Biotech Ltd has also submitted that

The

quality of PHPG Base of M/s

Daurala

Organics Ltd

(DOL) is not consistent and the product is yet to be stabilized

for its quality

The quality of Amoxicillm Tnhydrate is directly

related to the quality of PHPG Base

In case of M/s DOL

the quality

the product is not yet

proven in trv> market as regarding its yield stability of final

product etc

(g)

The name of DOL is not heard in the market other than India

On the

other hand, we have been producing PHPG Base for more than 20

years with current capacity of around 3000 MT per year and been

supplying PHPG Base and PHPG Dane Salt to the customers all over

the world

(h)

As stated during the oral hearing by the government that the landed

value of imports determined by the government of US$24 83 is based

on the production cost of DOL might mean either their production cost

would be significantly higher than ours or they reserved a huge profit

margin

If the case would be the former one, we wonder

if DOL

might have had been able to launch their business even there would

not have price reduction from China which started on February, 2001

(according to DOL's petition), solely due to its high cost

(i)

At the time DOL filed petition

total of tax and duty applicable to

PHPG Base importing in to India is around 41%

Thus US$24 83

• E

[

]

works out to be US$17 60 Kg as GIF basis

This price is equivalent

to the worldwide market price of around 1995-1996 period

The

product has been in the market since around 1970 and current market

is around 8000 MT per year worldwide basis

Price of the product

has been determined by market with supply demand balance

Our

price for India is determined by such price mechanism of market and

not discriminatory at all

While the world wide market price has been

on down trend since then if DOL regards their business can not be

viable with the price under US$17 60/ Kg,

regardless of whether

China started lowering price from February 2001 or not

DOL's

business has had been

not viable since 1995-96 and there is no

issue of anti dumping

Considering such situation if anti dumping

duty would be imposed it means Indian Amoxicillin producer should

buy PHPG Base at much higher level than worldwide market price

and therefore it would

end up with higher cost on Indian social

welfare

(j)

Many PHPG Base producers using chemical resolution method such

as DSM- Andeno of Holland

Nippon Kayaku of Japan

Ward

Blenkinsop U K Plotfarmaco Italy Bracco Italy etc

had faded out

in the past due to its higher production cost

(k)

The exporter has desired to give an opportunity to continue to serve

the health industry of India with their duty of supplying PHPG Base,

the inevitable intermediate of Amoxicillin

an essential and life saving

drug for people with excellent and stable quality and stable supply

based on our huge capacity

VIEWS OF DOMESTIC INDUSTRY

(i)

Only two exporters have responded to the Authority The responses

filed by these exporters were grossly insufficient and inadequate, as

held by the

Designated Authority in the preliminary findings also

The public file

does not

indicate that these exporters have

completed the deficiencies pointed out by the Designated Authority

in the preliminary findings

Therefore

the responses of

the

exporters should be rejected for the final determination also

and

the Authority

would be justified in

proceeding with the

best

available information in accordance with the Rules in the absence of

complete information in the form and manner prescribed

M/s DOL

has requested the Designated Authority to confirm the preliminary

findings in this regard

(n)

With regard to Singapore the petitioner has

pointed out

that the

exporter has not filed complete questionnaire response

Further the

non-confidential version of the response is grossly deficient

proper non-confidential

summaries have been provided by the

exporter.

They have requested the Designated Authority to direct

the exporter to disclose information appropriately

In absence of

meaningful non-confidential submission by the exporter, Domestic

Industry will not be in a position to submit proper response of the

submission made by the exporter Should be exporter fail to provide

proper and adequate non-confidential summaries, the response is

required to be rejected

(in)

The Domestic Industry has submitted that they have provided

detailed information to the Designated Authority clearly establishing

that the Domestic Industry has suffered injury and dumped imports

are causing material

retardation to the establishment of industry.

The same has been taken note by the Designated Authority and the

preliminary findings are quite elaborate with regard to injury to the

Domestic Industry.

(iv)

The Designated Authority should consider the following points while

assessing the injury analysis.

The injury to the Domestic Industry is required to be assessed

cumulatively

The imports from the subject countries have increased in

absolute terms in spite of the fact that commenced commercial

production of the Domestic Industry has already commenced.

The imports from the subject countries have prevented the

Domestic Industry from getting its due market share, which

would have otherwise been

achieved by the

Domestic

Industry, given that the Domestic Industry had just commenced

commercial production

The Domestic Industry was not able to achieve the level of

production, which it could have otherwise achieved in the

absence of dumping

The sales

of the Domestic Industry have not

grown as per

projections

Even

though the demand of the product has

increased, the Domestic Industry was not able to increase its

sales

Even though the Domestic Industry had entered the market

very recently it was forced to lower its selling prices due to

dumped imports undercutting its prices

The imports from the subject countries were undercutting the

prices of the Domestic Industry

THE GAZETTE OF INDIA: EXTRAORDINARY

[PART I—SECI]

The

Domestic

Industry

has

very

recently , commenced

commercial production

The industry was expected to

increase employment in the product

given that its production,

sales and market share

should have increased

However,

the Domestic Industry was not able to effectively increase its

employment

The

imports

were

underselling

the

Domestic

Industry

Resultantly the Domestic Industry was forced to incur heavy

financial losses

The Domestic Industry has submitted that

all these parameters,

collectively and cumulatively establish

that the

Domestic Industry

suffered material injury and further imports were causing material

retardation to its establishment

The Domestic Industry thus suffered

injury from the imports

(v)

The Domestic Industry has submitted that the final duties may also

be recommended in terms of US$ only

so that erosion in the

quantum of protection does not take place on account of changes in

the

exchange

rate

Further

the

duties

may

kindly

recommended in terms of benchmark pricing as was done in the

Preliminary Findings

(vi)

In response to the argument raised by the exporters that DOL has

commenced commercial production from April

2001 whereas the

dumping started in Feb

2001 M/s DOL has

submitted

that the

present

petition

against

dumped

imports

from

China

and

Singapore

which are causing material retardation to establishment

of industry

Thus the

exports which commenced in Feb

2001

materially retarded establishment of the company

(vn)

In response to the argument that

Domestic Industry would not be

able to meet the demand the Domestic Industry has submitted that

Hon'ble CEGAT held in the matter of EPDM Rubber that

inability

to meet out demand is not a

pre-requisite condition for domestic

industry for seeking relief under Anti dumping laws

(vin) The Domestic Industry in the instant case is an infant stage which

had recently commenced commercial production

While the industry

is not able to produce to the extent of capacity created the industry

cannot think of further enhancing the capacity

(ix)

Even by their own admission we can produce to the extent of 500

MT as against the demand of 600 MT

(x)

It is our understanding that there are some imports of the product

against exports

Since these

would continue to be met out of

imports (dUtt to benefit of duty granted to them) the demand to such

an extent is not effectively available to the Domestic Industry

(xi)

Not with standing above it is submitted that we are committed to

meet the requirements of the customer and would take all necessary

steps, in the right direction should the market remain competitive and

we be allowed reasonable price for our product

(xn)

In response to Exporters argument that the sales quantities of the

Domestic Industry are insignificant compared to imports

We agree

with Kaneka and that is our entire grievance that we have not been

able to sell the newly introduced produce in spite of vast market due

to presence of dumped imports in the market

In fact this statement

of Kaneka itself establishes that the injury is caused to the Domestic

Industry from the dumped imports

(xin) Kaneka has admitted that price of its product is market driven

This

implies

that

their export price to India was dependent upon the

prices in India

When Chinese producers lowered their prices this

forced Kaneka also to review supplies

Kaneka has argued that prices are identical universally

This is

Inconceivable

a way Kaneka has argued that the prices of

product world over are the same

VIEWS OF IMPORTERS:

M/S TORRENT GUJARAT BIOTECH LTD.:

M/s Torrent Gujarat Biotech Ltd one of the importers of the subject

goods, has submitted that -

D(-) Para Hydroxy Phenyl Glycine Base (PHPG Base) is an

important ingredient for manufacturing Amoxycillin Tnhydrate

The total consumption of PHPG Base in the country is more

than 2200/2500 MT per annum

Penicillin based Anti Biotics and in particular Amoxycillin

Tnhydrate is the cheapest drug widely used in most of the

developing /developed countries

DOL has started the production of PHPG Base recently and the

quality of the product is not yet proven in the market as

regarding its yield stability of final product etc

DOL is the only producer of this product in India and imposing

of Anti Dumping Duty on the subject

material will lead to

Monopolistic situation in the domestic market and the Indian

<2?fS'<?J/d)2-5

THE GAZETTE OF INDIA: EXTRAORDINARY

[PART I—SEC. 1 ]

manufacturers of Arnoxycillin Trihydrate will be compelled to

either Import material with Anti Dumping Duty or would be

required to use locally available material whose quality control

related parameters v:z required minimum yield, impurities and

stability of the product are yet to be established/proven

Accordingly the importer has submitted that .

(1)

There is no justification for fixing of the Anti dumping duty.

(2)

It is incorrect to conclude that PHPG Base has been exported

to India from China PR and Singapore, below its normal value

as the same product is offered at almost same price by

European suppliers too.

(3^N

It is incorrect to conclude that the domestic Industries has

suffered material injury on account of imports from China PR

and Singapore.

(4)

The importer has further requested that in the interest of

domestic Amoxycillin manufacturers and in the national interest

!h8 proposal of levying Anti Dumping Duty of PHPG Base

imported from China P R and Singapore be dropped

VIEWS OF INTERESTED PARTIES ON DISCLOSURE STATEMENT

ISSUED BY THE DESIGNATED AUTHORITY:

(i)

VIEWS OF DOMESTIC INDUSTRY

Submissions made by M/s Kanaka, Singapore^nartequate and they

have not provided sfiy meaningful Non conf-dantial submission to

enable us defend our interests

before the Designated Authority

The Authority has already

pointed

number of anomalies/

contradictory statements made by the exporters Once the Authority

had identified the issues which are critical for determination of cost

of production of the subject material. Designated Authority should

have rejected the entire submission

of the exporter with regard to

the costing and determine the normal value under Rule 6(8) i e, best

available information

(ii)

VIEWS OF IMPORTERS:

M/S TORRENT GUJARAT BIOTECH LTD:

(a)

The bulk drug Amoxycillin which

they are manufacturing, is

a life saving drug being used in several formulations as

antibiotic for human consumption

In the manufacture of this

bulk drug D(-) Para Hydroxy Phenyl

Glycine Base is an

ingredient and any quality variation of this product will affect the

final finished product

(b)

For the pharmaceutical industry there are stringent quality control

checks for use of raw materials which goes into thy quality of final

finished product

Domestic Industry's view of "no significant

difference" cannot be accepted as the slight variation in the

quality of raw material will affect the quality of finished product

which cannot be accepted by the end user

(c)

The petitioners view that unqualified quality difference does not

make the product different is not

correct This raw material is

basically used for the life saving drug and any sort of compromise

on quality cannot be considered at all

(e)

The view of the petitioner that they have got repeated orders is

not necessarily approval and acceptability of the quality of the

product

(in)

VIEWS OF EXPORTERS

M/s Kaneka

Singapore one of the exporter of tne subje-t goods in

response to the Disclosure Statement vide their letter dated 30 August

2002 sought clarifications with regard to the methodology adoptea for

calculation of the Normal Value and Export Price before submitting their

views on the Disclosure Statement Reply to the same was sent to M/s

Kaneka and they were advised to furnish th^ir comments on the

Disclosure Statement with in the extended period I-K wever no reply

was leceived from M/s Kaneka on the same within the given time

EXAMINATION BY THE AUTHORITY:

The Authority has considered all submissions made by the interested

parties on merits and in accordance with the Rules

PRODUCT UNDER CONSIDERATION

D (-) Para Hydroxy Phenyl Glycine Base is also known as

(a) D (-) ALPHA PARA H Y D R O X Y PHENYL GLYCINE D (-)

A' PHA PARA

H Y D R O X Y PHENYL GLYCINE BASE D (-) PARA H Y D R O \Y \ HENYL

GLYCINE, PARA HYDROXY PHENYL GLYCINE BASE PARA HYDROXY

PHENYL GLYCINE, D (-) P - HYDROXY PHENYL GLYCINE BASE D (-) P

- HYDROXY PHENYL GLYCINE

(b)

Petitioner has claimed that predominantly

D (-) Para Hydroxy Phenyl

Glycine Base' (also to be read as per above mentioned synonyms) i e the

THE GAZETTE OF INDIA EXTRAORDINARY

[PAJITI—SEC I]

'subject goods' (herein after also referred as 'PHPG) is imported into India

which is converted in-situ to

D (-) Para Hydroxy Phenyl Glycine Methyl

Potassium Dane Salt " (herein after referred as

PHPGDS) by various

importers / manufacturers and used for the production of Arnoxycillin and

Cefadroxyl (i e bulk drugs)

(c)

All types of PHPG are classified in chapter heading 29 42 of Schedule I of

the Customs Tariff Act As per ITC eight digit classification PHPG Base is

classified in others category i e in 2942 0029 The investigation is against

the product under consideration irrespective of the classification under

which it is imported

Customs classification is indicative only and is in no

way binding on the scope of the present investigation The Authority to

confirm the Preliminary Findings on product under consideration

LIKE ARTICLES:

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 closoiy resembling those of the articles under examination

(a)

yigyVSjSFJIJCPORTER:

M/s Kfj^e*va

on<e of the exporters of the subject goods from the

subject ^o« MT\ev has stated that PHPG Base is produced by their

unique mobilised enzymatic method by them which is different

from the (uc^an and Chinese producers mentioned in the petition

Indian and Chinese production method is mostly

conventional

chemicals

mehioa

and

production

costs

their

immobilized

enzymatic rnwr n j >s much lower than such chemical method

(b)

VIEWS OF IMPORTER

M/s Torrent Gujarat Biotech Ltd

one of the importers of the subject

goods have submitted that the quality of PHPG Base of M/s Daurala

Organics Ltd (DOL) is not consistent and the product is yet to be

stabilized for its quality

The quality of Amoxycillin Trihydrate is

directly related to the quality of PHPG Base

Until now PHPG Base is being imported from Europe Singapore and

China PR as no reliable domestic source of material is available

ensuring consistent quality and quantity supply

(c)

VIEWS OF DOMESTIC INDUSTRY:

(i) The petitioner has claimed that there is

no significant

difference in

the PHPG base imported from the subject

countries

and the PHPG

Base produced by the Indian Industry in terms of technology,

functions and uses, marketing, pricing and customer perception. The

PHPG Base produced by the Domestic Industry and the PHPG Base

exported from subject countries is technically and commercially

substitutable with each other

PHPG Base produced by the

Domestic Industry is a like article to PHPG Base imported from

subject countries within the meaning of the Anti Dumping Rules

(ii;

In response to the submission from the exporter from Singapore that

technology used by

them is different from Indian and Chinese

producers M/s DOL has submitted that whatever be the production

technology, the subject goods

are like article

The exporter

has

argued that the difference in technology or production process

implied that the two are not like articles

The PHPG Base produced

by the Indian industry and the PHPG Base exported from subject

countries are substitutable with each other

With regard to dumping,

the issue of dumping does not concern differences in production

technology with regard to the argument on the quality raised M/s.

DOL has submitted that

(a)

The Designated Authority has held in several cases that un

quantified quality

difference

does not make the

product

different

At the best, an allowance can be claimed for the

quantified difference in quality

(b)

The CEGAT has held in the matter relating to Anti dumping

duty

on EPDM rubber

that

quality

is not

relevant

consideration to anti dumping investigation

It is not even the

claim of these interested parties that the product

being

produced by us is not a like article to the product under

consideration (which is the sole relevant consideration)

(c)

The claim of the exporters and importers is that the imported

product is superior in quality

Our claim however is that the

same is being sold cheaper than not only their normal value but

also below our selling price

(d)

They

have got repeated orders for

some of the

large

consumers of the subject goods in India and they have found

the quality of our product not only acceptable but also

satisfactory

EXAMINATION BY THE AUTHORITY:

The Authority in the Preliminary Findings had determined that the D

(-) Para Hydroxy Phenyl Glycine Base (PHPG Base) produced and

sold by them and those imported from the subject countries are being

THE GAZETTE OF INDIA EXTRAORDINARY

[PART I—SEC 1]

used inter changeably by the customers in India

The Authority

confirms its Preliminary findings in this regard and holds that the

PHPG Base manufactured by the Domestic Industry and exported by

the subject countries are like article under Rule 2 (d) supra

DOMESTIC INDUSTRY:

(i)

As per Rule 2(b) of the Anti Dumping Rules 'domestic industry means the

domestic producers as a whole engaged in the manufacture of the like

article and any activity connected therewith or those whose collective output

of the said article constitutes a major proportion of the total domestic

production of that article except when such producers are related to the

exporters or importers of the alleged dumped article or are themselves

importers thereof in which case such producers shall be deemed not to form

part of domestic industry

(n)

The definition of Domestic Industry given above is further clarified by Rule 5

of Rules which reads as follows -

the application shall be deemed to have been made by

or on behalf of the domestic'industry if it is supported by those

domestic producers whose collective output constitute more than fifty

percent of the total production of the like article produced by that

portion of the domestic industry expressing either support for or

opposition as the case may be to the application

(in)

The petition has been filed by M/s Daurala Organics Limited Daurala

Meerut U P The petitioner is the sole producer of the subject goods in

India Accordingly the petitioner satisfies the criteria of standing to file the

petition on behalf of the Domestic Industry in terms of Rule 5(3) (a) of the

Rules supra

NORMAL VALUE.EXPORT PRICE AND DUMPING MARGIN-

Under Section 9A(1)( c) normal value in relation to an article means -

(\)

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

(n)

When there are no sales of the like article in the ordinary course of

trade in 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 transhipped through the country of export or such article

is not produced in the country of export or there is no

comparable price in the country of export, the normal value

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

origin.

The Authority provided opportunity to the exporters from

subject countries to furnish information relevant to the

investigations and offer comments, if any. in accordance with

the Section cited above

The Authority wrote to the

Embassies/High Commissions of subject countries in India

also

NORMAL VALUE:

SINGAPORE:

M/S KANEKA SINGAPORE CO. (PTE) LTD.:

(i)

The company has no domestic sales of the product under

consideration as well as there is no substantial / representative sales

of PHPG Base to the representative third country The company has

provided details of the cost of production of the PHPG Base. The

normal value is based on the cost of production including variable

and fixed costs plus selling, general & administrative expenses along

with a reasonable return

(ii)

Initially the company provided the cost of production for PHPG Base

for the POI and previous 2 years Certain deficiencies as pointed out

in the Preliminary Findings,

the Authority did not accept the

company's submission at that stage for the purpose of determination

of normal value and adopted constructed normal value as the basis

of 'Normal Value'

M/s Kaneka Singapore Co (KSC) in its reply to

THE GAZETTE OF INDIA: EXTRAORDINARY

[PART I—SEC, 1]

comment on the preliminary .findings submitted some additional

information alongwith non-confidential summary of the submission to

the Authority.

(iii)

The Authority after analysing the same found it deficient and more

clarification on certain issues were called. The Authority again asked

Kaneka to provide some additional information / clarification

specifically for the POI Data submitted by the exporter on various

stages has been analyzed in detail and same is discussed as under -

(a) It has been observed that during the last 2 years and POI there is

a declining trend in overall production of M/s KSC as well as

decline in production of the product under consideration

Inspite

of decline in production, the company has indicated that the

consumption norms of raw material , utility has improved during

the period of investigation as compared to the previous years. No

satisfactory reply to- this anomaly has been furnished by the

exporter

(b) In its reply to the Authority M/s Kaneka vide their letter dated 26-

7-2002 has clarified that the cost of^oods produced and cost of

goods sold consists of "variable cost" and "Fixed Cost" and does

not include Overheads costs such as sales cost , General and

administration cost , interest expenses and Exchange Loss /

gains. The exporter has further clarified that Variable cost

consists of raw material cost (inclusive of packing material cost)

and utility cost and fixed costs mainly consist of consumable

(production), direct labour, repair and maintenance , storage

charges (for raw materials) etc., The Authority has analysed the

explanation as given by the exporter with regard to the cost

elements considered to arrive at the cost of production are as

under -

(i)

The exporter has indicated that the depreciation has been

taken for the "manufacturing facility only". Accordingly it

implies that depreciation related to the common facilities to

be apportioned on PHPG has not been taken into account,

Storing expenses has been taken for raw material only This

implies that storing expenses for finished goods etc. has not

been taken into account,

(iii) Consumable has been taken for the production only.

Accordingly consumables for common facilities on PHPG

has not been taken into consideration

(iv) Though claimed that packing expenses has been included in

variable cost it has been observed that the cost for drums /

carton box has been indicated negligible as compared to the

cost shown in th» cost statement for the year 1999-2000 and

2000-01

(v) It has been observed that in spite of decline in overall

productivity the exporter has indicated an overall decrease in

the per unit cost of utilities The company has however

indicated that when productivity is high in order to shorten

cycle time of each batch it may be necessary to use more

utility cost to cool and heat the product more quickly and so

the consumption of utility becomes worse An examination of

the facts on record however shows contrary to the logic as

given by the exporter above

(vi) The company is adopting straight line method for providing

depreciation

From balance sheet it has been observed that

there is no considerable disposal on the existing assets rather

there is substantial addition in the plant and machinery of the

company In view of the reasons given above it is concluded

that the total depreciation amount cannot be less than the

previous year s figures This indicates that the company has

not charged full depreciation to the product during the period

of investigation

(vn) The Interest cost has been taken after deducting the other

revenue (interest income) Interest income does not relate to

operations hence cannot be reduced for the determination of

cost of the product

(vm)The company has claimed no financing cost

The company is

a 100% holding of Kaneka Japan and Kaneka Japan has

invested **** million Singapore Dollars in the company in the

form of equity Apart from this Rs **** million is payable to

Kaneka Japan Because of the above funding by the holding

company there is no interest cost involved The exporter has

indicated that in lieu of this company is paying **** profit to

Kaneka Japan apart from dividend The company has shown

an overall profit as **** on cost of sales during the year 2001

Accordingly for determination of Normal Value the Authority

proposes to add reasonable profit to the cost of production so

arrived to determine Normal Value of the product under

consideration during the period of investigation

2?S£C7/62-6

•

[

—

]

(ix)

The Authority has specifically asked clarification On Appendix

7 H" provided by the company as cost of SaJes in the POI

and in previous years shown was lower than the cost of

production The company has claimed that cost of goods sold

per unit

is calculated based on monthly moving average

method and it happened that every month production quantity

was less than the balance quantity of the previous and the

total unit cost of goods reduced were happened to be alwavs

higher than the total cost unit of the previous month balance

except for August This happened to meet unit cost of goods

sold to each month during the period always lower than the

unit cost of goods produced except for Auyust and thus the

average unit cost units of goods sold during the period

became lower than the average unit goods produced during

the period

(x)

The authority has analysed the submission of the exporter in

deta.l and found that not only for the period of investigation

but for the previous years also cost of production was higher

than cost of goods sold hence the contention of exporter that

because of above reasoning the cost of production is high as

compared to the cost of goods sold is not realistic

(xi)

Inspite of the anomalies/ inconsistencies, discrepancies in the

submissions made by the exporter 'n its reply to the

questionnaire and subsequently relatino to cost of production ,

the Authority has determined the Noimal Value of the subject

goods in Singapore considering the cost of production plus

selling general and administrative expenses and reasonable

return based on the cost data subnVled by the exporter

(xn) Accordingly the Authority has determined the Normal Value

for M/s KSC Singapore as US $*"**per kg

EXPORT PRICE :

(a)

The exporter has provided transaction-wise details of exports to India

during the period of investigation M/s KSC has sold subject goods to

M/s Kaneka Corporation Japan which in tern sold to M/s Summit

Asia Pte Ltd and finally sold to Indian customers Information from

M/s Kaneka Corporation Japan and M/s Summit Asia Pte Ltd was

obtained and duly considered for arriving at the Export Price and

Landed cost of the exports made to India

(b)

The exporter has claimed adjustments en accounl of discount,

distributor commission commission to parent comoany packing,

inland freight

insurance

storage

handling

overseas freight,

overseas insurance and shipping charges to arrive at ex-factory

export price for export to India

(c)

The exporter has provided the Invoice value of each transaction on

each stage The Authority has taken the Invoice value of M/s KSC

which is the first hand sale from producer to an independent party

and afterwards considered adjustments on account of discount

packing inland freight insurance storage handing overseas freight,

overseas insurance and shipping charges to arrived at ex-factory

export price

(d)

It has been observed that the exporter has provided credit to Indian

customers ranging from 120 days to 180 days in most of the cases

As detailed in the Invoices the exporter has charged interest in case

of credit for a period of 180 days from the customers but in case of

credit of 120 days no interest has been charged from the customers

The Authority has provided for the interest Tor 120 days on the basis

of interest rate calculated for 180 days at different point of time for

the purpose of arriving at ex-factory export price

(e)

Accordingly the Authority has determined the ex-factory export price

of the subject goods as US $*****per kg

OTHER EXPORTERS FROM SINGAPORE:

(a)

NORMAL VALUE:

None other exporter/producer in Singapore have responded to the

Authority in the form and manner prescribed in the questionnaire The

Authority has determined normal value on the basis of the best

information available on record in respect of other exporters from

Singapore

(b)

EXPORT PRICE

In respect of all other exporters from Singapore the Authority has

arrived at ex factory export price based on the information provided

by the responding exporter (M/s Kaneka Singapore Co

FTE)

Ltd

Singapore) This gives ex- factory export price as US $ **** per

(Ylt of D (-) Para Hydroxy Phenyl Glycine Base iPHPG 3ase)from all

exporters form Singapore other than M/s Kaneka

THE GAZETTE OF INDIA EXTRAORDINARY

TPARTI—SFC. 11

CHINA P.R.:

(a)

NORMALVALUE:

The Authority sent questionnaires to all the known exporters for the purpose

of determination of Normal Value in accordance with Section 9A(1)(c) Only

one of the exporters from China PR i e M/s Hengdian Group Organic

Chemical Co Ltd

China P R responded to the Authority It has been

observed that M/s Hengdian Group Organic Chemical Co Ltd , China P R

has not furnished the complete information in the prescribed format The

information submitted is without any covering letter only on plain paper with

unsigned rubber stamp The Authority found that information furnished is

grossly inadequate and unreliable in absence of proper signature hence

rejected for the purpose of preliminary findings

The Authority therefore,

holds that none of the exporters from China PR have cooperated with the

Authority as envisaged under the Rules

The domestic industry has

furnished information with regard to the normal value in China PR based on

the constructed cost of production

In view of non-cooperation from the

exporters from China PR the Authority has determined normal value in

China PR on the basis Rule 6(8) i e best information available

(b)

EXPORT PRICE;

As expl n<Ld above there is no dedicated customs classification for

the

rM¥ r^'

y'joc*? as the same is classified in others category

Accoit-,.\, * wigntfid average export price in case Of China PR has

been arnv*»o -?t '^s&d on the statistics compiled from Customs Daily

Lists

Adjilaments

on account

of freight

marine

insurance,

commission

port handling etc

to arrive at net export price is

proposed to r»<?

considered

as per the

claims of the

domestic

industry

DUMPING-COMPARISON OF NORMAL VALUE AND

EXPORT

PRICE:

The rules relating to comparison provides as follows

(a)

"While arriving at the margin of dumping the DA 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

(b)

Due allowance shall be made in each case

on merits

for

differences

which

affect

price

comparability

including

differences in conditions and terms of sales taxation levels of

trade, quantities, physical characteristics

and any other

differences

which

are

demonstrated

affect

price

comparability"

(c)

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 I of the

Anti Dumping Rules

Based on the Normal values and Export

prices as indicated above the Authority assessed the Dumping

Margins in case of all exporters from the subject countries as

given in the table below:-

COUNTRY-WISE

EXPORTERS/

PRODUCERS

Sinqapore

1. M/s

Kaneka

Singapore Co (PTE)

Ltd.,

2. All Other exporters

China PR

AH ^ ; r ^{t e r < !}

NORMAL

VALUE

($/Kg)

* * + +

EXPORT

PRICE

($/Kg)

****

*•*•*

****

DUMPING

MARGIN (%

EXPORT

PRICE)

10.30

58 75

—

97 20

The above Dumping Margins are above the de-minimus limits

INJURY AND CAUSAL LINK:

15.

Rule 11 of Anti Dumping Rules reads as follows

"Determination of Injury

(i)

In the case of imports from specified countries, the Designated

Authority shall record a further finding that import

of such

article into India causes or threatens material injury to any

established industry or materially retards the establishment of

any industry in India

(M)

The Designated Authority

shall determine the injury to

Domestic Industry

threat

of injury of Domestic Industry,

material retardation to establishment of Domestic Industry and

a causal link between dumped imports of injury, taking into

account all relevant facts including the volume of dumped

imports their effect on price in the

domestic market for like

rHE GAZETTE OF fNDIA EXTRAORDINARY

[PART I - S F C . 1]

articles and the consequent effect of such imports on domestic

producers of such articles and in accordance with the principles

set out in Annexure II to these rules "

The principles for determination of injury set out in Annexure-H of the

Anti-Dumping Rules lay down that

A determination of injury shall involve an objective examination

of both (a) the volume of dumped imports and the effect of the

dumped imports on prices in the

domestic market for like

article and (b) the

consequent impact of these imports on

domestic producers of such products

While examination the volume of dumped imports

the said

Authority shall consider whether there has been a significant

increase in the dumped imports either in absolute terms or

relative to production or consumption in India

With regard to

the effect of the dumped imparts on prices as referred to in

sub-rule (2) of Rule 19 the Designated Authority shall consider

whether there has been a significant

price

under-cutting by

the dumped imports as compared with the price of like product

in India or whether the effect of such imports is otherwise to

depress prices to a significant degree or prevent price increase

which otherwise would have occurred to a significant degree _

CUMULATIVE ASSESSMENT OF l[^iUB¥-

17 (a) Annexure II (in) under Rule 11 supra further provides that "in case

where imports of a product from more than one country are being

simultaneously

subjected

to Anti

Dumping

investigation

the

Designated Authority will cumulatively assess the effect of such

imports , only when it determines that the margin of dumping

established in relation to the imports from each country is more than

two percent expressed as percentage of export price and the volume

of the imports from each country is three percent of the imports of

the like article or where the export of the individual country is less

than three percent the imports cumulatively accounts for more than

seven percent

of the imports

of like article

and

cumulative

assessment of the imports is appropriate in light of the conditions of

competition between the imported article and the like

domestic

articles"

(b) The Authority notes

that the margin of dumping and quantum

imports from subject countries

are more than the limit prescribed

above Cumulative assessment

of the

effect of the imports from

Singapore and China PR is appropriate since the export prices from

these countries were directly competing with the prices offered by

the Domestic Industry in the Indian market and displacing domestic

producers here

For the examination of the impact of the imports on the domestic industry in

India, the Authority considered such 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

in accordance with Annexure II (iv) of the Rules supra "

The various parameters indicating injury to the domestic industry are as

follows -

(a) QUANTUM OF IMPORTS:

The information with regard to the quantum of imports of the subject

goods has been based on the statistics compiled from Customs Daily

Lists The Authority notes that there has been an increase of

36 77%

in imports of the subject goods from the subject countries during the

Period of Investigation over 1999-00

(b)

EXPORT PRICE:

Further the average export price from the subject countries has also

declined during the Period of Investigation against 1999-00 It has been

observed that the export price has declined further within the period of

investigation itself

(c)

CHANGES IN MARKET SHARE HELD BY INDIAN PRODUCERS

AND IMPORTS FROM THE SUBJECT COUNTRY(IES):

The Authority observes that M/s DOL is the new entrant in manufacture

of the subject goods in India and the exporters from subject countries

have intensified dumping of the subject goods into India so as to ensure

that domestic industry does not get its due market share

This has

materially retarded the establishment of the industry at its nascent stage

itself

(d) PRODUCTION AND CAPACITY UTILISATION OF THE PETITIONER:

During period of investigation petitioner has achieved a utilization of

32% of its existing installed capacity only Keeping in view the demand

in the country the same is far below than what could

have been

achieved by the Domestic Industry had the exporters not resorted to

dumping

THE GAZETTE OF INDIA EXTRAORDINARY

[PART I— SFC I]

(e) INSIGNIFICANT GAIN OF MARKET SHARE:

Domestic industry is at nascent stage, hence no past trends are

available but domestic industry is unable to increase its sales volume in

spite of huge demand of the subject goods in the country because of

dumped imports from subject countries

(f) REDUCTION IN

SELLING

PRICE. PRICE EROSION.

PRICE

UNDERCUTTING. PRICE SUPPRESSION OR PRICE DEPRESSION:

In order to analyze the effect of dumped imports on the selling price of

the Domestic Industry an analysis of the monthly sales realization of the

subject goods during the period of investigation has been made The

analysis is as under

Period

Apnl-2001

May-2001

June-2001

July-2001

August-2001

Sepetember-2001

Qty Sold/Kg

Net

Sales

Realization

(Rs/Kg)

****

The indexed above indicates that the monthly average sales realisation

during the Period of Investigation has declined from **** Rs/ Kg during

April 2001 to **** Rs/ Kg during September 2001 showing a decrease

of about 20% within the Period of Investigation itself This is mainly due

to decrease in the average import price by the exporters after the

starting of the commercial production by the Domestic Industry

(g) EVIDENCE OF LOST CONTRACTS OR DECLINING SALES:

It has been observed that because of the sharp decrease in the export

prices by the exporters

the Domestic Industry could not

gain

contracts/orders at the prices which could recover the cost of production

leave aside a fair return on capital employed

The petitioner could

sell the subject goods at substantial losses only

(h) EMPLOYMENT:

The domestic industry has submitted that as the industry is at its

nascent stage

protection from unfair trade practice is vital and

necessary otherwise the manpower deployed will loose their jobs

(i) PROFITABILITY :

It has been observed that the Domestic Industry could sell the subject

goods at prices so as to match the same being offered by the exporters

This has resulted in huge losses

(J)

EXPANSION:

The Domestic Industry has planned to increase its production capacity,

however due to dumped imports from subject countries, the Domestic

Industry is unable to utilize even its existing capacity

In considering the effect of the dumped imports on prices it is considered

necessary to examine whether there has been a significant price

undercutting by the dumped imports as compared with the price of the like

product in India, or whether the effect of such imports is otherwise to

depress prices to a significant degree For the examination of the impact on

the domestic industry in India the Authority considered such further indices

having a bearing on the state of industry as production sales, stock,

profitability, net sales realisation etc On examination of the evidence it has

been found there has been a sharp price undercutting just after the

domestic industry has started its trial run and further intensified during

period of investigation Domestic Industry is prevented from utilising its

present capacity and capacity utilisation is very low However, the most

significant parameter evidencing injury and threat of further injury, is the

price undercutting as per the evidence available with the Authority The rate

of increase of imports during the period of investigation especially from

China PR and the corresponding fall in the sales realization of the domestic

industry are the parameters clearly showing the injury being suffered by the

domestic industry On the basis of the evidence available before the

Authority, it is determined that the domestic industry has suffered injury and

is suffering further threat of injury during the period of investigation

The present petition is basically regarding impact of dumped imports

causing material retardation of the establishment of the industry Since the

petitioner is attempting to settle its production in the Indian market and the

imports from the subject countries are preventing commercialization of the

production by the domestic industry the imports are causing material

retardation to the establishment of the industry Though at the "nascent

industry" i e M/s Daurala Organics Ltd has recently started production the

industry is finding it difficult to get the due place in the market due to

dumped imports by

the

exporters from subject

countries Domestic

Industry is unable to achieve a satisfactory level of capacity utilisation and to

find its place in the market because at the nascent stage itself the

domestic industries is being threatened with material retardation by imports

at dumped prices from the subject countries

^JSTCf/dS 7

THE GAZETTE OF IND1A EXTRAORDINARY

[PART I—SEC. I]

CAUSAL LINK:

In determining whether injury (materiai/threat/material retardation) to the

domestic industry was caused by the dumped imports, the Authority took

into account the following facts¹ -

(I)

Substantial imports of subject goods from China PR and Singapore at

dumped prices forced the domestic industry to reduce its selling prices to

un-remunerative level which has resulted in a situation of price undercutting

in the Indian market

(n)

The imports from China PR and Singapore suppressed the prices of the

product in the Indian market to such an extent that the domestic industry

was prevented from recovering Its full cost of production and earn a

reasonable profit from the sale of subject goods in India

Tne Authority, therefore, notes from the above that the imports from the

subject countries have been at a price below the selling price of the

domestic industry Further the imports into India have been at a price lower

than the non-injurious price for the Domestic Industry As a consequence

thereof thp Domestic Industry is suffering financial losses The petitioner

was also prevented from

attaining a

reasonable

level of capacity

utilisation These parameters collectively and cumulatively indicate that the

petitioner has suffered material injury due to the dumpeo imports

INDIAN INDUSTRY'S INTEREST:

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 it in the general

interest of the country

The Authority recognizes that the imposition of anti dumping duties might

affect the price levels of the products manufactured usmq subject goods and

consequently might have some influence on relative competitiveness of

these products

However fair competition on 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 dumping

practices, would prevent the decline of the domestic industry and help

maintain availability

wider

choice

to the consumers of subject

goods

The Authority notes that the imposition of anti dumping measures would not

restrict imports from China PR and Singapore 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

CONCLUSIONS:

The Authority has after considering the foregoing come to the conclusion

that

(I)

D (-) Para Hydroxy Phenyl Glycine Base has been exported to India

from China PR and Singapore below its normal value

(n)

The Indian industry has suffered material injury and facing threat of

further injury

(in)

The Domestic Industry on account of the injury being suffered

suffering material retardation in the establishment of new industry

to manufacture D (-) Para Hydroxy Phenyl Glycine Base

(iv)

The injury has been caused cumulatively by the imports from the

subject countries

The Authority considers it necessary to impose an anti dumping duty on all

imports of D (-) Para Hydroxy Phenyl Glycine Base from subject countries in

order to remove the injury to the domestic industry The margin of dumping

determined by the Authority is indicated in the paragraphs above The

Authority proposes to recommend the amount of anti dumping duty equal to

the margin of dumping or less which if levied would remove the injury to

the domestic industry For the purpose of determining injury the landed

value of imports is proposed to be compared with the non-injurious price of

the petitioner company determined for the period of investigation

Accordingly the Authority recommends that definite anti dumping duties be

imposed on all imports of D (-) Para Hydroxy Phenyl Glycine

Base also

known as D (-) Alpha

Para Hydroxy Phenyl Glycine D (-) Alpha Para

Hydroxy Phenyl Glycine Base D (-) Para Hydroxy Phenyl Glycine Para

Hydroxy Phenyl Glycine Base Para Hydroxy Phenyl Glycine D (-) P -

Hydroxy Phenyl Glycine Base D (-) P - Hydroxy Phenyl Glycine falling

under Custom Heading 2942 originating in or exported from Peoples

Republic of China and Singapore pending final determination.

The Anti-

Dumping duty shall be the difference between the amount mentioned in

column 3 of the following table and the landed value of imports per Kg to be

52^

THE GAZETTE OF INDIA: EXTRAORDINARY

[PART I—SEC. 1]

imposed on all the imports of subject goods falling under Chapter 29 of the

Customs Tariff, originating in or exported from the countries mentioned

below: -

Exporter/Country

China P.R.

All Exporters

Singapore

M/s

Kaneka

Singapore Co.

(Pte) Ltd.

Other exporters

from

Singapore

Amount(US$ Per Kg.)

22.42

20.88

22.42

30.

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 under sections 3, 3A. 8B, 9 and 9A of the Customs

Tariff Act, 1975.

Subject to the above, the Authority confirms the Preliminary Findings

dated 31 ^{s t} December, 2001

32.

An appeal against this order

shall lie before the Customs, Excise

and Gold (Control) Appellate Tribunal in accordance with the Act,

supra

L V. SAPTHARISHI, Designated Authority

rimlL-cJ h> Hie Miinager, Cinvt ol

India Press. Ring Road, M.ivtipuri New Delhi-1 I()()(i4

,uul Published by [he Controller

nt Publications. Delhi-I |(I(H4