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THF, GAZETTE OF INDIA EXTRAORDINARY

|PM,I 1—SH.\ 1|

MINISTRY OFCOMMERCE AND INDUSTRY

(Department of Commerce)

DIRECTORATE GENERAL OF ANTI-DUMPING AND ALLIED DUTIES

NOTIFICATION

New Delhi, the 21 st September, 2002

FINAL FINDINGS

Sub.: Anti-Dumping invcstigaiions concerning Sunset Re\ itw of antidumping duty on imports of Acrylonitrile

Butadiene Rubber (N Bit) from Korea RI^J and Germany.

N0.50/1/2001-DGAD.— -Having regard to the Section 9A(5) of 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:

PROCEDURE

The procedure described below has been followed

(i)

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

above Rules as per Section 9A(5) of the Customs Tariff (Amendment) Act,

1995 and the Customs Tariff (Identification, Assessment and Collection of

Anti-Dumping Duty on Dumped Articles and for Determination of Injury)

Rules, 1995

initiated Sunset Review to review the need for continued

imposition of anti-dumping duty on imports of Acrylonitrile Butadiene

Rubber (NBR) (hereinafter called subject goods) from Korea R.P and

Germany(hefeinafter called subject countries) Subject goods were defined in

the original preliminary findings of the Authority dated 30 12 1996 and

thereafter confirmed vide Final Findings dated 17.7.1997. The Anti Dumping

Duty after the last mid-term review were notified vide Customs Notification

No.91/2001 -Cus. Dated 7.9.2001 and the Anti Dumping Duty is present in

force vide Custom Notification No.61/2002 dated 7.6 2002.

(ii)

The Authority issued a public notice dated 1 10 2001 published in the Gazette

of India, Extraordinary, initiating Anti-Dumping investigations in respect of

the above mentioned investigation concerning imports of the subject goods

classified under Chapter 40 of Schedule 1 of the Customs Tariff Act, 1975 as

amended in 1995 originating in or exported from Korea RP and Germany

(iii)

The Authority forwarded a copy of the public notice to all the known

exporters (whose details were available in the investigations conducted

earlier) and the industry/user associations and gave them an opportunity to

make their views known in writing in accordance with the Rule 6(2)

(iv)

The Authority forwarded a copy of the public notice to all the known

importers ((whose details were available in view of investigations conducted

earlier) of subject goods in India and advised them to make their views known

in writing within forty days from the date of issue of the letter in accordance

with the Rule 6(2)

(v)

Request was made to the Central Board of Excise and Customs (CBEC) to

arrange details of imports of subject goods made in India during the past three

years, including the period of investigation

(vi)

The Authority provided a copy of the initiation notification to the known

exporters and the Embassies of the subject counties, New Delhi in accordance

with Rules 6(3) supra

(vii)

The Authority sent a questionnaire to elicit relevant information to the

following known exporters/producers, in accordance with the Rule 6(4)

(i)

M/s Korea Kumho Petrochemical Co Ltd (KKPC), Korea RP

(ii)

M/s Hyundai Petrochemical Co Ltd Korea RP

(iii)

M/s Bayer AG, Germany

Response/information to the questionnaire was filed by the following

exporters/producers'

(i)

M/s Korea Kumho Petrochemical Co Ltd (KKPC), Korea RP

(ii)

M/s Hyundai Petrochemical Co. Ltd Korea RP

(iii)

M/s Bayer AG, Germany

Though M/s KKPC filed structured response to the questionnaire, M/s Hyundai

Petrochemic Co Ltd indicated no desire to furnish the information, and M/s Bayer AG

provided details on exports made by them and their views on their cost of production in

general, and nol as per structured questionnaire response

(viii)

The Embassies of the subject countries in New Delhi were also informed

about the initiation of the investigation in accordance with Rule 6(2) with a

request to advise all concerned exporters/producers from their country to

respond to the questionnaire within the prescribed time A copy of the letter

and questionnaire sent to the known exporter was also sent to the Embassies of

the subject countries in accordance with Rule 6(3)

(ix)

A questionnaire was sent to the known importers/user associations of the

subject goods whose details were made available by the petitioner for

necessary information in accordance with Rule 6(4) -

THEGAZETTEOFINDIA EXTRAORDINARY

[PARTI—SK- 1]

Response/information to the questionnaire was filed by the following

importers -

All India Federation of Rubber Footwear Industries

(jj)

Small Scale Rubber Industries Association of India

('")

All India Rubber Industries Association of India

(x)

Information regarding injury was sought from M/s Apar Industries Ltd.,

the domestic producer of the subject goods

(xi)

Cost investigation of M/s Apar Industries Ltd at their premises at Walia,

Gujarat was also conducted to work out optimum cost of production and

cost to make and sell the subject goods in India on the basis of Generally

Accepted Accounting Principles (GAAP) and to examine various injury

parameters

(xii)

Additional information from M/s KKPC and M/s Apar Industries Ltd was

also sought

(xiii)

An opportunity was provided to all interested parties to present their views

orally on 7 12 2001 All parties presenting views were requested to file

written submissions of the views expressed The parties were advised to

collect copies of the views expressed by the opposing parties and offer

rebuttals, if any,

(xiv)

The Authority kept available non-confidential version of the evidence

presented by various interested parties in the form of a public file

maintained by the Authority by the Authority and kept open for inspection

by the interested parties as per Rule 6(7)

(xv)

In accordance with Rule 16 of the Rules supra, the essential facts/basis

considered for these findings were disclosed to known interested parties

on 13 9 2002 Response to which was filed by M/s KKPC and M/s Apar

Industries Ltd.

(xvi)

On site verification of the exporter, M/s KKPC, Seoul was conducted on

23^rd August and 24^th August of 2002

(xvii)

*** in this notification represents information furnished by an interested

party on confidential basis and so considered by the Authority under the

Rules.

(xviii)

The period of investigation (PO1) considered is 1 4 2000 to 31 3 2001

VIEWS OF THE DOMESTIC INDUSTRY, EXPORTERS, IMPORTERS,

USER ASSOCIATIONS

AND OTHER INTERESTED PARTIES &

EXAMINATION BY THE AUTHORITY

The views expressed by various interested parties have been discussed in the

disclosure statement The views which have not been discussed earlier in the disclosure

statement and those now raised in response to the disclosure statement are discussed in

the relevant paras herein below to the extent these are relevant as per rules and have a

bearing upon the case The relevant arguments raised by the interested parties have been

examined, considered and, wherever appropriate, dealt in the relevant paras herein below

VIEWS EXPRESSED BY M/S APAR INDUSTRIES LTD.

PRODUCT UNDER CONSIDERATION & LIKE ARTICLE

(i)

Acrylonitrile Butadiene Rubber (NBR) is a synthetic rubber and is popularly

known as Nitrile Rubber or NBR

NBR can be of various grades and can be

supplied in various forms.

(ii)

NBR is normally described in terms of acrylonitrile and mooney viscocity

(iii)

Indian industry produces equivalent of all those grades which are being .imported

at present from Korea RP and Germany

(iv)

Indian industry is in a position to produce equivalent of all those grades which

are being produced by the producers in South Korea and Germany even though

the same are not being exported to India at present

(y)

NBR is classified in the Customs Tariff Act under Chapter 40 at six digit level

under 4002 59 Though NBR has been categorised under dedicated Customs sub-

head, lot of material is allowed to be imported under other customs heads as

importers some time describe NBR as synthetic rubber The official statistics of

Directorate General of Commercial Intelligence and Statistics (DGCl&S) does

not therefore exhibit true and complete picture with regard to volume and value

of imports The issue was brought out before the Designated Authority in earlier

investigation regarding imports of NBR from Germany and South Korea also In

fact the information fiirnished by the exporter from Germany and South Korea

confirmed that the exports of NBR made by them were significantly higher than

the imports shown by DGCI&S

(vi)

NBR. is primarily used wheie oil resistance, abrasion resistance and heat

resistance applications are involved

It is widely used in defence automobile,

footwear, fabtics, printers, oil field products industries etc

(vii)

Use of a particular grade of NBR depends on the end use to which the goods

could put to use

(yjii)

Customers in India as well as the other parts of the world can use NBR produced

by any manufacturer interchangeably without making any changes in the plant

and equipment

Theie is no viable substitute for NBR and that there is no

significant difference in the NBR produced by the petitioner and that exported

from Germany and South Korea

They all have similar characteristic and are

technically and commercially substitutable and should be treated as like article

(ixj

"Iheie cannot be any difference in the technology adopted by Apar and the

technology adopted by the producers in Germany and South Korea as NBR

wot Id over is produced by emulsion polymerization technology

(x)

The present investigation is a Sunset review and therefore the position on

product under consideration, like article and Domestic Industry remains the same

as decided in the earlier findings

DUMPING

(i)

NORMAL VALUE

The following submissions have been made by M/s Apar Industries Ltd.:-

(i)

The cost of production for the manufacturers in South Korea and Germany has

been calculated on the basis of the raw material prices as given by 1CIS-LOR. and

on the basis of other costs as per the best available information The constructed

normal value comes to ****$/MT

(ii)

The information on exports has been compiled from secondary sources

viz

Polymei s Plastic Rubber Journal(PPR) The material has been cleared by Customs

bearing description synthetic rubber

The PPR data has therefore been cross-

2985 G1/2002—7

THE GAZETTE OF INDIA: EXTRAORDINARY

IPARTI—SK\ 1]

examined considering the name of importer, description of goods and the price at

which it has been imported,

(iii)

The ex-factory export price from South Korea and Germany comes to 1.08 $/kg

and 1.80$/kg respectively. The adjustments are to be made account of ocean

freight, inland freight, marine insurance, commission, inland freight, port handling

to an extent of ****$/MT, ****$/MT, ****$/MT, ****$/MT, ****$/MT and

****$/MT respectively,

(iv)

The Dumping Margin for South Korea comes to 144.94% based on cost and

60.67% based on previous investigation The Dumping Margin for Germany

comes to 48.29% based on cost and 46.94% based on previous investigation

(v)

The domestic industry has given their estimation regarding the cost of production

for M/s KKPC and submit that the exporter's NBR operation were not profitable

(vi)

M/s Hyundai have shown losses during the first half of 2001 and since the exporter

has not responded, we request the Authority to use the best available information,

(vii)

M/s Bayer Germany are transacting at time at low prices causing injury to us and

we apprehend that they still are dumping,

(viii)

Bayer has been arguing that cost comparison of their medium grade with our

medium grade NBR should be done and high grade with high grade. We submit

that this method of computation is appropriate

INJURY & CAUSAL LINK

(i)

The Korean and German exporters have increased quantities in the Indian market

since 1995-96 to 2000-2001. The imports and the market share are es under::

Imports

(in MT)

South Korea

and

Germany

Other

imports

Total

imports

Indigenous

Sale

Total

1995-96

650

2804

3454

*****

1996-97

2650

1834

4484

*****

1997-98

2349

2323

4672

*****

1998-1999

3251

2028

5279

*****

• •**•

1999-00

1579

1946

3525

*****

2000-01

1794

2219

4013

*****

Market Share Tin %)

South Korea

and

Germany

Other

imports

1995-96

18.8

81.2

1996-97

59.1

40.9

1997-98

50.3

49.7

1998-1999

61.5

38.50

1999-00

44.8

55.2

2000-01

44.7

55.3

(ii)

The indigenous NBR production has been very low and consequently the

utilisation of the plant for NBR has been very poor. As a result of the dismal

NBR operations, the plant has been utilised for production of non-NBR products

also in order to recover some fixed overhead costs. The NBR production and

capacity utilisation are as under:-

Gross

NBR

production

(including

domestic

and

export

qty)

(MT)

Polymer

Capacity

Polymer

capacity

utilisation (%)

1996-97

100

1997-98

84.68

100.00

84.67

1998-99

103.69

100.00

103.66

1999-00

112.04

100.00

112.10

2000-01 ,

114.56

100.00

114.63

(Hi)

Domestic industry has been forced to sell at prices below its fair selling price as .

indicated below:-

Average

NBR

Selling

Price

(Rs/MT)

With

Excise

Duty

Without Excise

Duty

1996-97

100

1997-98

89,40

89.40

90.88

1998-99

88.58

91.17

1999-00

82.82

85.50

2000-01

88.85

91.84

(iv)

There has been considerable turnover of the employees cost of low motivation

level as the employees have felt that they may not be able to grow due to

dumping,

(v)

The profitability of the industry has been very poor since its inception,

The

industry had to undergo the financial rehabilitation which involved significant

sacrifices on part of the promoters,

(vi)

The injury margin is quite significant and there has been a severe injury to the

Domestic Industry and is further threatened in case appropriate duties are not

imposed at the earliest.

(vii)

Some other countries have dumped NBR and the anti dumping duties have

alreadv been imoosed on them. The existing anti dumoinc duties are as under-

Subject

countries

Countries

attracting

duties

1997-98

Price

Rs/Kg

55,64

59.78

Qty

2349

1094

1998-99

Price

Rs/Kg

45.64

58.89

Qty

3251

799

1999-2000

Price

Rs/Kg

46.93

58.57

Qty

1579

729

2000-01

Price

Rs/Kg

52.84

69.67

Qty

1794

699

THE GAZETTE OF INDIA EXTRAORDINARY

[PART I— SEC. 1]

Other

countries

79.93

1228

79.86

1229

86.19

1217

108.09

1519

(viii) The demand of NBR has been stable with small growth and that injury to the

Domestic Industry is not on account of any recession or contraction of any

demand.

OTHER ISSUES

(i)

We have not been able to find any document from Bayer, which mentions that

they have stopped supplies of NBR from Germany. Our understanding is that

they have consolidated their entire NBR production in France, and are supplying

NBR to India from France. Since this development is post-POI, we believe that

the DGAD may not be able to take this into consideration.

In response to the disclosure, the following submissions have been made by

M/s Apar Industries Ltd.:-

•

At the outset, we submit that the present investigation is a sunset review

investigation. In the review investigation, the Designated Authority is required

to examine recurrence of dumping and/or injury. The Anti Dumping Duty has

been in force on the product. Various injury parameters are, therefore,

required to be seen in the light of existing duties and recurrence of injury.

•

In the instant case also, it is evident from the disclosure statement that even

the dumping continues from the subject goods. Therefore, the present situation

is that of continuation of dumping rather than recurrence of dumping. It is,

therefore, vital to continue the duty for a further period of five years.

•

We would also like to state that because of the action by DGAD in the form of

an anti dumping duty, we have been able to survive thus far. We have tried

our level best to optimize on production, plant utilization and sales volumes,

However, we have been continuously forced to sell at sub-optimal prices due

to the severe undercutting by the imports.

•

The present investigation is a sunset review investigation, The position with

regard to product under consideration and like article remains the same. There

is no change in the structure of the industry. The scope of the domestic

industry remains the same. These have been acknowledged by the Designated

Authority in the disclosure statement. We request the Designated Authority to

confirm the earlier findings in this regard.

•

With regard to issue of various grades are being like article, though it is

acknowledged by the Designated Authority that the argument is not

substantiated by the opposing interested parties, we submit that the domestic

industry is required to produce like article to goods imported into country.

Different grades of an article may not per se be substitutable. However, it does

not mean that they are not like article Reliance is being placed upon various

investigation conducted by the Designated Authority, which includes

DMT/PTA, BOPP, Acrylic Fibre etc. and Anti Dumping Investigation by

European Commission against, inter alia, India concerning polyester film.

•

Notwithstanding above, it is submitted that various grades of NBR are like

products, as these are comparable in terms of various product characteristics,

such as physical and chemical characteristics, product specifications, raw

material, production technology and manufacturing process, functions & uses,

pricing, tariff classification, etc. It is relevant to point out that slight variations

in the values of various parameters per se does not imply different product.

Slight variations in various product parameters is nothing peculiar to this

product This is so for almost every product.

•

It is also relevant to point out that the Designated Authority has also held that

various NBR are like product in the investigations earlier conducted on this

product. Such being the case, there is no merit in the argument that various

types are different products.

Dumping by Korea Kumho

•

The disclosure statement shows that the dumping margin is just 10.60%.

Apparently, the submissions made by Kumho are inconsistent with the

submissions made by the exporter in the previous review.

•

The dumping margin assessed in Review 1 was 27.94 % or $ 248.3/mt. If we

assume momentarily that there are no other changes in the production cost,

then the dumping margin in the Sunset Review on account of the changes in

the raw material costs and the selling prices should have increased to US $

350/mt or more.

•

Our contention that the dumping margin has increased in the Sunset Review is

corroborated by the fact that Kumho's losses have increased very

substantially. Kumho has incurred heavy losses of 24,257 Billion Won in the

calendar year 2000, and a loss of 9.249 Billion Won in the 1* half of 2001.

Thus, it is clear that in the Period of Investigation (2000-01), Kumho has

incurred very heavy losses on account of the higher raw material costs and

disproportional increases in finished product prices.

•

We would like to bring to the attention of the Designated Authority that, in

our opinion, the dumping margin of 10.60 % is not only less than expectations

of the domestic industry but also much less than the facts.

The following would also be relevant with regard to the two reviews: -

a) The investigation period in the instant case is 2000-01 year, which differs

from financial year of the exporter, who maintains accounts on calendar year

basis. It is not clear from the disclosure statement that whether the exporter

has provided information for the period of investigation

b) In the review 1, the issue of various reconciliation statement was raised by the

Designated Authority. Considering the response of the exporter in the

previous review, it is important whether the exporter has now provided such

information and various reconciliation to the Designated Authority.

c) With regard to consumption of raw materials, we submit that the consumption

factors earlier adopted by the Designated Authority in the Review 1 need be

applied in this case also, given the complexity of the operations of the

company and behaviour of the exporter in the previous case.

d) At least two elements of costs could not have been considered based on the

information given by the company. These are (a) Conversion Cost and (b)

Other Plant Cost considering experience in Review 1.

THE GAZETTE OF INDIA EXTRAORDINARY

IPARTI—SEC. 1]

e) It appears that the exporter has again shown lower cost of production. Either

the raw material costs are understated or the conversion cost is understated.

We request element wise comparison of previous cost of production with the

present cost of production. In case it is found that some elements of costs have

been claimed much lower than what these were shown earlier, it is submitted

that such claims deserves reconsideration.

In line with earlier study submitted during Review 1, the cost of production

would not be as low as US $ 890/mt.

•

It may be noted that Korea has increased capacities far in excess of its

domestic requirement. The Korean capacity for this product is in region of

40,000 MT, as against their relatively small domestic demand. Thus, the

producers in Korea are always having the problem of excess capacity. To

compound the problems further for them, one of the producers - Hyundai -

had set up facilities about 4-5 years back and thus had tremendous pressure on

its sales and on Kumho's sales. The exporters are obviously exporting as well

as selling in their own domestic market at marginal cost. Unfortunately, they

have to sell even below their full cost of production and are suffering losses in

the process.

•

Another issue relevant to dumping here is that both the Korean producers are

having their own Butadiene, which they might be making profits. However,

profits made on Butadiene cannot be offset against losses being suffered on

NBR. As is known, anti-dumping investigations are product specific

investigations. The exporters must establish that their NBR operations were

profitable - which is impossible since the factual position shows otherwise.

Therefore, the raw material produced by the company should be considered at

market price of such material.

It is also submitted that the following issues are relevant with regard to the

dumping margin determined by the Designated Authority: -

a) Packing costs; - Even if it is assumed that the form of packing is different in

case of domestic market, KKPC has vehemently argued in CEGAT and before

the Designated Authority and is our market knowledge, KKPC is using such

kind of packing material that the same can not be described "consumable".

The same material is recycled by the company. Cost incurred on packing

material can not be, therefore, considered as the packing cost Such being the

case, at best, depreciation on such packing material and cost of recycling can

be considered as the packing cost. It is also submitted that there is every

likelihood that the exporter should have already included' the transportation

charges associated with return of the packing material under the adjustment on

inland freight. Therefore, no price adjustment on this account could be

claimed by the exporter. It would be relevant to point out in this regard that

the life of such material would be at least ten years. Further, it is submitted

that the entire cost of depreciation cannot be charged to single shipment.

There should have been several shipments made by the exporter using the

same packing material. Thus, number of cycles for which the packing material

has been used is required to be considered while considering the cost of

packing

It is submitted that the claim of the exporter appears to be based on sample

calculations of packing cost involved rather than accounting information It

would be perhaps necessary to consider the total expenses incurred on packing

material by the exporter during the whole year rather than cost of packing

material

b) US $ denominated sales in the domestic market - The exporter has US $

denominated sales in the domestic market However, these appear to be

deemed export sales of the exporter It would be relevant here to point out that

the exporter has a trading arm as its affiliate It is possible that some of the

sales of the exporter are through the trading arm In case, however, the

material has physically moved out of Korea, these sales can not be described

as domestic sales and are required to be excluded

c) Level of trade - The argument on level of trade does not concern the dumping

margin calculations The level of trade between exports to India and domestic

sales is the same With regard to injury margin, (a) the exporter as also

domestic industry is selling at the same level of trade, (b) the injury margin is

substantially higher than the dumping margin

d) Amortization expenses - Amortization of intangible assets is similar to

depreciation on common facilities Since depreciation on common facilities is

loaded onto the products, amortization of intangible assets cannot be excluded

from the full cost of production, particularly when the cost of production is

required to be determined after considering SGA

e) Duty Drawback - The exporter has never before claimed an allowance on this

account Further, the exporter has resorted to import of duty free material It

is, therefore, not understood how the exporter can now claim duty drawback

as an adjustment

f) Butadiene price - As argued earlier, Butadiene is required to be considered at

the price at which the exporter has purchased Butadiene In any case, the cost

of production of Butadiene should be full cost of production including SGA

DUMPING BY HYUNDAI

•

With regards to dumping by Hyundai, their losses have been astonishingly

increasing The calendar year 2000 showed a loss of 378 35 Billion Won and

1^st Half of 2001 showed a loss of 144 482 Billion Won

•

So, the dumping margin for Hyundai is obviously much higher than Kumho,

also considering that it is a newer plant and accordingly would have higher

interest and depreciation costs That could be the reason for no questionnaire

response by the company Since the exporter has preferred not to respond, we

request the Rule of Best Information Available in respect of this company

DUMPING BY BAYER

•

The Review 1 clearly shows that dumping continues, and we apprehend that

dumping still continues Further, they have been transacting at times at low

THE GAZETTE OF TNDIA: EXTRAORDINARY

IPARI I—She, 1]

prices causing injury to us. One issue, which Bayer has raised, is that the

company has been exporting High Acrylonitrile level NBR (in short - high

NBR) and Medium Acrylonitrile level NBR (in short - medium NBR) to

India. We are also producing these types. Bayer has been arguing about cost

comparison of their medium with our medium NBR and their high with our

high NBR. We submit that we do not have any objection to this method of

comparison.

INJURY AND CAUSAL LINK

•

On the injury front, we have been forced to sell at much below our Non-

injurious price due to the heavily dumped imports particularly from South

Korea. While our operations have increased in terms of production, sales,

capacity utilization; our margins have been under tremendous strain and

we have been incurring losses in the NBR business.

•

It is submitted that the present investigation is a sunset review of existing

anti-dumping duty. Examination of various economic parameters, such as

production, sales volumes, selling prices, profit/loss, etc. are to be

examined in the context of an anti dumping duty being in force on the

product. Recurrence of injury is also equally important in a case of

Review, even though the facts of this case clearly show continuance of

injury. It is also submitted that with anti dumping duty being in force,

improvement in some of the parameters could be a result of anti-dumping

duty in force, which merely justifies continued imposition of such duty,

The only relevant parameters in such reviews are the fair selling price of

the domestic industry and landed price of imports so as to ascertain the

existence of injury margin. As may be seen from the costing information

provided by us, the injury margin has substantially increased in this case,

thereby necessitating imposition of higher duties.

•

Price undercutting: The dumped imports are undercutting the prices in the

Indian market. The landed price of imports from Korea has been

significantly lower than the selling price of the domestic industry and the

Non-injurious price even after imposition of anti-dumping duty on imports

from Korea. The landed price of imports from Germany is lower than the

Non-injurious price for the domestic industry.

The Injury incurred by the domestic industry is evident from some of the

following facts:

a) Substantial capacity available with the exporters in the subject countries

given that the domestic market is not big enough to absorb all their

production and enhanced capacities which have become available after the

previous investigation period.

b) Imports are entering India at prices, which have a significant depressing

effect on domestic prices. In spite of increase in the cost of production, we

are not in a position to increase the selling prices.

c) Imports are resulting in severe price undercutting and consequently the

domestic industry is not able to sell at its fair selling price.

d) The domestic industry has not been able to improve its operating margins

in spite of imposition of anti-dumping duty.

e) Stock with the domestic industry has piled up. The industry as a result was

forced to decrease its production of NBR.

f) Capacity utilisation of the industry has remained sub-optimal. The

industry has been forced to make other products to increase the utilisation

of the plant.

g) Domestic industry's market-share has been low and is likely to decline

further in case the anti-dumping duty on imports from Korea is not

appropriately enhanced.

h) Employees of the domestic industry are demoralised as a result of

continued dumping of the product in the market.

i) The domestic industry's lack of profits are hampering its growth. The

promoters have done their utmost in investing funds for increasing the

competitiveness, However, with the continued dumping, the investments

being made will be un-remunerative. Also, no fresh investments would be

possible thereafter since investors will not be confident of their returns.

DUTY ON VARIABLE BASIS

It is requested that the revised duty may be recommended on variable

basis in terms of US $. This would be appropriate in view of the following: -

1. There is considerable decline in the export price in respect of the exporter

after the investigation period, This is in spite of no significant decline in

the associated raw material costs. Thus, the dumping has intensified in the

post investigation period. The whole purpose of variable duty being check

on intensified dumping, the variable duty would be most appropriate basis.

2. The customs duty on this product has also declined after the investigation

period. The duty may decline in future. One of the purpose of variable

duty being to check injury to the domestic industry due to decline in the

customs duty, it would be appropriate to have variable duty.

3. The Designated Authority has already imposed variable duty on this

product in case of imports from Japan in the sunset review investigations.

Thus, the last investigations on this product had variable form of duty.

4. The Designated Authority had recommended variable duty in the past on

Acrylic Fibre, a product having significant consumption of Acrylonitrile,

which is one of the major raw materials in this case.

5. The export price of the exporter have not proportionately changed with the

changes in the associated raw material costs, The enclosed table

demonstrates that the exporter has absorbed changes in the cost of

production on account of raw materials to a very significant extent.

6. The Designated Authority as also CEGAT has held in various cases that

variable duty is appropriate benchmark to handle the situation of

intensified dumping,

In view of the above, it is prayed that the final duties may kindly be

recommended in terms of US $ on variable basis.

2985 01/2002—8

THE GAZETTE OF INDIA EXTRAORDINARY

[PART I—SEC. 1 j

Non injurious price

We have no comments on the non injurious price of Rs. **** determined

by the Designated Authority.

IMPORTER'S VIEWS

PRODUCT UNDER CONSIDERATION AND LIKE ARTICLE

The following submissions have been made by All India rubber Industries

Association:-

(i)

Apar do not produce all grades of NBR which are produced by M/s KKPC and as

well as by M/s Bayer. Apar's NBR grades are also not like article to the NBR

grades produced by KKPC and Bayer as well as there would be a need to depend

on imports.

(ii)

There is no justification in imposition of anti dumping duty on such grades of

NBR which are not produced by Apar industry

The following submissions have been made by All India Federation of

RubberFootwear Industries:-

(i)

Apar does not produce all grades of NBR as produced by KKPC and Bayer.

The following submissions have been made by Small Scale Rubber Industries

Association of India:-

(i)

The Authority must also examine the specifications and chemical composition of

various types of NBR produced by the Domestic Industry

INJURY

The following submissions have been made by All India Rubber Industries

Association:-

(i)

M/s Apar has claimed that DGCI&S data is not reliable and have urged to depend

on PPR data. Association urges Designated Authority to rely on the official

DGCI&S statistics for the analysis.

(ii)

The market share of the Domestic Industry has increased from 28% in 1994-95 to

52% in 2000-2001 and their production has gone upto 2452 MT in 1994-95 to

5280 MT in 2000-2001 which proves that there is no injury to the Domestic

Industry by way of exports from KKPC and Bayer.

(iii)

The high cost of production of NBR by Apar are solely related to their multi-

product plant and due to inefficient operation of the plant, high raw material cost

due to limited range of products and without any control on the volatility of the

market and uneconomic plant capacity

(iv)

Designated Authority should consider all the applications of the Domestic

Industry for imposition of anti dumping duty on various grades of synthetic

rubber because of the transfer of the capacity and production from one item to

another.

(v)

Apar have jacked up various prices by more than 80% and there is no injury to

them.

(vi)

The non-injurious price for Apar would now be lower has they have increased

their plant capacity and improved upon their claims for utilities and there would

be no injury in the forthcoming pfcriod by the imports from KKPC and Bayer.

The following submissions have been made by All India Federation of

Rubber Footwear Industries:-

(i)

Apar has increased their capacity, but is not sufficient to meet the demand of

NBR

(ii)

We request Designated Authority to depend on DGCI&S data for analysis and not

on the PPR data as claimed by Apar,

(iii)

Apar has sold material above the non-injurious price and made made good profits,

(iv)

The landed price of German NBR is higher than the Apar ex-factory selling price

even without taking into account the anti dumping duty and that imports of NBR

from Germany have declined and their prices have increased.

The following submissions have been made bv Small Scale Rubber Industries

Association of India:-

(i)

The review period of investigation should be changed suitably to cover upto

30.9.2001 so as to reflect the present position. The individual cost of the Domestic

Industry is far less now and M/s Apar Industries Ltd, had made huge profits.

(ii)

M/s Apar's performance has been excellent and their exists no causal link for the

injury caused due to imports from the subject countries.

(iii)

M/s Apar's capacity remains low and is not cost effective and profit worthy.

(iv)

Apar produces NBR and a few other items which do not have the advantage of

manufacture of a large diversified range of products with a result that they have to

depend on the volatility of the prices of the raw materials and have no control on

the prices of the inputs/sales, loosing out on the price front to the international

manufacturers.

(v)

Apar's plant is located at a place which involves substantial transportation cost of

raw materials and other overheads,

(vi)

Apar industry should submit detailed account of production figures, sales, cost of

production etc.

(vii)

Apar must come with detailed information indicating the production of various

types of rubbers such as NBR, SBR and HSR.

(viii)

A team of Cost Accountant, Chartered Accountant, Engineers and process analyst

must be formed to examine/investigate the matter in depth and submit the Report

before the Anti Dumping Authority,

THE GAZETTE Of INDIA: EXTRAORDINARY

[PART I—SEC. 11

OTHER ISSUES

The following submissions have been made bv A\\ flndia Rubber Industries

Association;-

(i)

The Anti Dumping Authority did not follow the appropriate procedure for holding

the public hearing on 7.12.2001.

(ii)

M/s Rishiroop Polymers Pvt. Ltd. have apprehension that they cannot get a fair

and impartial decision from the- Authority and have requested the Authority to

step aside from this investigation and have asked the Government to nominate

another Designated Authority who will hearing their case de novo. We support

the stand of M/s Rishiroop Polymers Pvt Ltd. for fair and quick opportunity to be

provided both to the representatives of the Domestic Industry as well the

consumer industry.

The following submissions have been made bv All India Rubber Industries

Association:-

(i)

The production by the Domestic Industry will not be able to meet the total

demand of NBR in the country since there is an annual growth of 6.67% of the

demand of NBR.

The following submissions have been made bv Small Scale Rubber Industries

Association of India:-

(i)

Continuance of anti dumping duty on the basic inputs of rubber industry

will

open floodgates of imports of finished rubber products and will be extremely

difficult for Indian rubber manufacturers to keep their foothold in the domestic

market.

fin

The consumer industries would appreciate a fair trade war between the Domestic

Industry and the exporting industry and the fair competition must not be closed. A

team of Cost Accountant, Chartered Accountant, Engineers and process analyst

must be formed to examine/investigate the matter in depth and submit the Report

before the Anti Dumping Authority.

EXPORTER'S VIEWS

M/S KOREA KUMHO PETROCHEMICAL CO. LTD. (KKPC), KOREA

PRODUCT UNDER CONSIDERATION & LIKE ARTICLE :-

(i)

M/s Apar does not produce all grades of NBR which are produced by M/s KKPC

and M/s Bayer and that Apar's grades are not like article to the grades produced

by KKPC and that the matter is also sub-judiced before the Delhi High Court.

(ii)

There are several grades of NBR such as Carbo Oxylated NBR which are not

produced by M/s Apar Industries and that there should not be any anti dumping

duty on these grades.

DUMPING.

(i)

M/s KKPC has filed the exporter questionnaire and have provided data on the cost

of production of various grades of NBR, domestic selling prices of grades sold in

domestic market and the export prices to India and other countries during the

Period of Investigation (POI).

(ii)

M/s KKPC has claimed adjustments on the domestic selling prices on account of

packing and inland freight to the extent of ****$/MT and ****$/MT respectively.

(iii)

M/s KKPC have dso claimed adjustments on the export price to India on account

of inland freight, ocean freight, ocean insurance, duty drawback and packing and

commission to M/s Rishiroop Polymers Pvt. Ltd. to an extent of ****$/MT,

****$/MT, ****$/MT, ****$/MT, ***$/MT and ****$/MT respectively. M/s

KKPC has also indicated that their exports to India are made to the wholesalers

whereas the sales made by M/s Apar Industries Ltd to the end users and

adjustments on account of this level of trade to an extent of ****$/MT should be

considered.

(iv)

The exporter has also provided information pertaining to SGA expenses, R&D

expenses and interest charges as sought for during the verification conducted on

23.24^th August 2002 at M/s KKPC's premises at Seoul. M/s KKPC vide their

letter dated 27 August, 2002 and

in response to the Authority's letter dated

10.6.2002 and have indicated their explanation pertaining to their domestic sales

in certain cases being in US dollar, exports sales being on sight basis, type of

packing, handling charges on exports to India, clarifications on SGA expenses

and consumption norms and financial expenses in the cost of production.

(v)

M/s KKPC had also sought adjustments on account of small volumes sold in the

domestic market and on large volumes sent to India without any technical

support. The adjustments of 7.5% for difference in this level of trade has been

sought.

(vi)

It is indicated that M/s Apar continues, to mislead the Authority on the constructed

cost of production for KKPC. The dumping margins for M/s KKPC presented by

Apar are inflated and misleading.

(vii)

M/s KKPC have also indicated that there has been no dumping during the Sunset

Review POI and have highlighted the method of allocation of selling and

administrative expenses to be considered for evaluating the cost of production for

M/s KKPC.

INJURY

(i)

M/s KKPC has also in response to the Authority's letter dated 10,6.2002

provided views regarding Injury to the Domestic Industry indicating that there

has been a significant decline in the exports of NBR to India during the Sunset

Review Period and that there was no likelihood

for substantial increase of

exports into India from KKPC. It has also been indicated by M/s KKPC that they

do no have any freely disposable capacity or plan for expansion of capacity in

immediate future, It has also been indicated that exports price from M/s KKPC

to India has increased during the Sunset Review POI and coupled together with

the depreciation of the Indian currency during the POI. It has also been indicated

THE GAZETTE OF INDIA EXTRAORDINARY

|P VRi I—SD . 11

that M/s KKPC does not have any excess inventories of NBR for disposal or

export to India.

(ii)

It is submitted that While evaluating the Apar's economic status for their NBR

plant, the Authority should adjust/discount the installed capacity pertaining to

capacity operating cost, return on investment etc. for the quantum of HSR

produced by them at their Walia plant where they make their NBR from the total

cost of operations. Therefore there is a need to examine as to how the various

costs and capacities have been apportioned by the Authority for their NBR and

HSR operation at Walia. The interest cost for M/s Apar to make and sell NBR

calculating for its Non-Injurious Price should be reworked since it works out to

only 3 85%.

The Authority should uniformly apply the principle for

determination of NIP for NBR made by Apar by taking their cost of production

and adding a 5% profit. The non-injurious price should be calculated on the

expanded capacity of Apar.

(iii)

The price data of new grade of ANB-35L introduced by Apar in review POI

should be excluded from the analysis of selling price of Apar.

(iv)

Apar had incorrectly submitted that they are not having profits from their

operations of NBR and hide the facts and that there is no evidence of injury to

them.

(v)

M/s KKPC have also indicated methodology to determine the NIP for M/s Apar

Industry.

(vi)

M/s Apar has given various official statistics on import data from DGCI&S and

PPR. We request the Authority to give a clear findings on the subject matter

when it publishes its final findings so that very basis of its analysis is not

distorted and a consistent practice is followed even though it may not be perfect

OTHER ISSUES

(i)

Importer has mentioned that the appropriate procedure was not followed for

holding the public hearing indicating that the Designated Authority was not

available during the hearing and that the meeting was delayed. The Authority

also indicated from any side stated that the doors of CEGAT and High Courts are

open to anybody who were unhappy with the Authority's decision. M/s Rishiroop

Polymers Pvt Ltd., representing M/s KKPC have also quoted Article 6.3 of WTO

related to the matter.

(ii)

The findings should be completed within end of January, 2002.

(iii)

The NBR demand for all grades by 2006 would be about 17336 MT per annum

and that there is going to be a demand-supply gap for NBR in India.

(iv)

There exists no provision in any Indian law for any adjudicating Authority to levy

anti dumping duty in currency other than India rupee and therefore levy of anti

dumping duty should not be indicated in dollar terms.

In response to the disclosure, the followiii2 submissions have been made by

M/s KKPC:-

Preliminary objections:

•

The Disclosure statement is not signed by Designated Authority and is invalid in law.

Rules 16 of Anti Dumping Rules and Article 6.9 of WTO and case relevant laws have

been mentioned

•

The Sunset review initiated in violation of Trade Motice 1/99 issued by the

department is invalid in law as in the present case, ar» earlier rev«e"" was completed

on 20-7-2001 against which the revenue notification was issued en 7-9-2001 and the

sunset review initiated on 1-10-2001,i.e, well within one year's time period

The

Designated Authority ought to have known about this requirement and should not to

violate several case laws of the Apex court have been cited

•

The views of the Designated authority at the Public hearing were biased

and

proceedings at the public hearing were improper as Designated Authority had a

prejudged mind set and asked 2 of the exporters to agree to give a price undertaking.

This was also in violation of Article 8 2 of the WTO Rules.

•

KKPC has also expressed that views that oral submissions are followed by written

submission indicating that they can substitute oral submissions is not proper.

•

Article 6.2 and sub rule (6) of Ruie (6) has been cited in this regard.

Product under consideration and Like Article

•

As regards product under consideration, the decision on this subject matter is

subjudice with the Supreme Court and that our appeal has been admitted by it and

matter is pending for hearing. It is also admitted position of the domestic industry

that they do not produce Carboxylated NBR and still the authority chooses to

continue to levy the anti dumping duty on it. There is no justification for the same.

'The authority has every right to apply the anti dumping duty to an narrower class of

products as compared to the original investigation based on additional information

with it. Since APAR does not produce Carboxylated NBR, we request the authority to

exclude the same from levy of any future anti dumping duty by refining the class of

products of NBR for levy of duty This would be consistent with the Authority's own

decision in the-matter of SBR anti dumping investigation wherein for the grades of

SBR not produced in India during the POI, the authority had held that anti dumping

duty was not to be levied Same should be followed in the present case for

Carboxylated NBR.

NORMAL VALUE

Cost of Production of KKPC's NBR

•

The authority has incorrectly chosen basis of allocation and apportionment of costs on

cost of sales of manufactured goods basis KKPC recognizes frorji the disclosure

statement that the Authority has decided to determine the cost of production and

allocation of expenses for interest and SGA based on the ratio of cost of sales KKPC

cannot accept the same. The basis of cost allocation and apportionnjiem followed by

KKPC is in accord mce with the Korean HAAP law ani tunher.p'Lre this basis of

cost allocation Ly :^k \>^r has also brer? cc v=i«Vnt!y fol-«>veu 'v tiK/C and it has

been pr^ irusly a« '-. *^{x s h}y the Author"'} in *' c- previoi i ir^ e^aafons for NBR (

original in 1997) as well as ihe SBR ant; d..>7ipnc hvesugalion / J , cie 2 2 1 ana

Rule 1 of the WTO has ^een cinM

THE GAZETTE OF INDIA: EXTRAORDINARY

[PART I—SEC. 11

•

The authority should accept KKPC's methodology for cost allocation since these are

based on the basis of records kept by it and followed consistently for several years

and are in accordance with the generally accepted principles of accounting in Korea.

These records also reasonably reflect the costs associated with the production and sale

of the articles under consideration. The officers of the department who had visited

KKPC's office for verification had stated that KKPC's methodology for cost

allocation based on ratio of quantity of NBR produced to total quantity of all products

made by the company after deducting the SGA for trading and indenting sales is

inappropriate as for one item, namely, steam the SGA costs are disproportionate to its

selling price. That may appear to be the case, but it is a policy adopted by KKPC and

KKPC has consistently followed the cost allocation method since long time. This

cannot be the reason to reject KKPC's method of cost allocation as it is acceptable in

Korean standards.

•

Notwithstanding our objection to the methodology for cost allocation adopted by the

authority, for argument sake and without prejudice, the following is submitted:

a) The Authority has not allocated any SGA cost for trading sales and indent sales.

b) KKPC has requested the authority to allow the apportionment of SGA expenses

for trading sales at Won **** and for indent sales expenses at Won **** before

apportioning any costs to NBR production.

c) KKPC does not agree with the disallowance of

advertisement expenses,

commissions and R&D costs. The same have been elaborated, indicating that

for the Commission expenses, in fact the authority is silent in the disclosure

statement. That is no reference to it at all. This adjustment is legitimately claimed

as it would tantamount to double accounting if this is not deducted from the SGA

expenses as it is considered separately as post ex factory cost whilst determining

the same from the CIF price of the sale of NBR to India.

d) KKPC has already submitted in its earlier letter to the authority that it did not

incur any expenses for advertisement in India for sale of any of its products

during the POI. The advertisement expenses incurred by KKPC during the POI as

reflected in the SGA list as solely for the sales promotion in the domestic market

and have no bearing on the export sales of NBR to India. In order to arrive at like

for like comparison of apples to apples comparison of price at ex Factory level

between cost for domestic sales and for export to India of the NBR produced by

KKPC this adjustment of advertisement expenses should be allowed by the

authority.

e) As regards R&D expenses, KKPC submits that at the very least the authority

should consider to allow at least 50% of the R& D expenditure allocable to

KLESL center where research work is only being carried out on life sciences and

which we categorically submit has no correlation to any synthetic rubber business

ofKKPC.

f) Valuation of transfer price for BD captively produced and consumed, is incorrect.

KKPC has consistently followed the practice of valuing all its captively consumed

products at the cost of ex Factory production cost and not on sales cost This

practice is in accordance with the Korean GAAP laws and also it is in accordance

with the Indian costing rules followed by the Indian Government itself. Section

209 of the Companies Act has been cited

g) Ratio of 55.65 % of assets deployed taken by authority for allocating the interest

cost for operations is incorrect. KKPC request the authority to reconsider its

decision to allocate 55.65% of the funds deployed towards production activities as

against KKPC's allocation of 46.5% for the production activities

h) Assessment of Cost of Production of NBR produced by KKPC is incorrect

KKPC had submitted data to the authority showing the ex factory cost of

production at USD 977.53 per MT. As against this the authority has worked out

the cost of production at USD 1079 39 per MT based on *he main differences

resulting from the raw material costs ( BD transfer pricing), interest cost and SGA

costs Thus the authority has inflated the cost of production by USD 101.86 per

MT. The authority has not stipulated its methodology deployed for excluding

some of its domestic sales, No explanation has been ottered in this regard, The

authority in such cases is required to consider a price band whilst allowing some

variation in price below the rated average cost of production. In this regard we

object to the procedure adopted by the authority and request you to reconsider the

same.

i) Determination of Normal Value for KKPC's NBR sales is incorrect The authority

has adopted a unfair cut off level to exclude certain sales transaction in domestic

sales if they fall below the figure of cost of production so determined by it

without providing for a price variation band around that figure. The Indian

Antidumping rules governing the determination of normal value are cited:

Principles governing the determination of Normal Value.

•

The corresponding WTO Rule Article 2.2.1 for determination of normal value is also

cited.

•

In the confidential disclosure the authority is silent with regard to the adjustment to

the commission but by interpolation we are presuming that the authority has forgotten

to include it in the adjustments. This may kindly be confirmed.

The authority has

not allowed any adjustments in the level of trade for sales to India as it considers it as

not being relevant for determination of normal value but appropriate for emanation of

injury determination

•

KKPC submits that the adjustment of duty drawback of USD 1,7/MT should be made

to the cost of production and to the domestic ex factory selling price and not to the

ex-factory export price since to provide for an apple to apple comparison it is the cost

of the raw materials consumed for domestic sales which need to be reduced by USD

1.7/MT and not the post production cost as has been adjusted by the authority.

2985 GI/2002—9

THE GAZETTE OF INDIA EXTRAORDINARY

[PART I—SEr. 1 ]

INJURY DETERMINATION FOR APAR

•

The authority has not revealed in index form its determination of the assessed

economic parameters as required under the rules The authority has simply published

index extracts from the submissions made by the domestic industry and has not

published in index form or otherwise its comments on all the economic factors for the

domestic industry for the POI as compared to the previous years, a separate

assessment is required to be made by the authority for determination of factors other

than imports from KKPC which are causing or may be causing injury to the domestic

industry.

Principles for determination of injury (ANNEXTUREII)

•

Rule (V) and Article 3.5 have been cited.

•

It is reiterated that some of the major factors causing injury, if any, to the domestic

industry other than imports of NBR from KKPC are:

1) Imports from other countries simultaneously being subjected to

antidumping duty such as Japan, Taiwan, etc.

2) Imports at similar price level as that from KKPC from countries not

subject to any antidumping duty.

3) Substantial reduction in custom duty from the original POI to the

sunset review POI thereby resulting in a substantial reduction in

landed value of the goods.

4) Small operational capacity of the domestic industry vis-a-vis all other

international competitors

5) Improper location of plant site by increasing cost of BD.

We request the authority to arrive at separate and distinctive quantifiable findings

from factors other than imports from KPPC which are causing or may be causing injury

to the domestic industry in accordance with the governing rules citied above.

•

Causation and Non -Attribution - Article 3.5 of WTO is required to be followed,

WTO case laws have been cited.

•

In support of their submission that there is absence of any causal link between the

imports from KKPC and the alleged injury, if any, to the domestic industry, the

calculations indicating injury due to KKPC's exports and as per factors of Designated

Authority has been done for appropriate consideration.

•

Utilization of concept of landed value including custom duty without adjustment

for variation in customs duty to original POI for determination of injury margin

invalid in law. Injury incidence due to fall in custom duty has been submitted.

•

The Indian rules governing the antidumping investigation require the authority to

recommend levy of any antidumping duty only in the event of its arriving of injury

findings. The relevant Section 9B, 11(2) and Rule has been cited

•

Throughout our various submissions we have clearly shown to the authority that all

the economic parameters as required to be evaluated for any injury determination are

positive for APAR for the POI. It appears that the only issue that is in the mind of the

authority is on the aspect of profitability We would like to remind the authority that

it has been empowered to take action solely for "trade distortion" and to that extent

only and it is not to the forum for "trade protection" or for "assurance of profitability"

to any domestic industry.

Adjustment for level of trade/differences in conditions of sale/taxes

•

We had requested the authority to make due adjustment for the difference in the level

of trade between KKPC's sale to Indian customers and APAR's sale to its customers

in order to make a fair comparison of the price of the imported goods to the end user

with that of the price from the domestic industry.. We request the authority to make

this adjustment whist assessing the injury margin and in determination of the so

called price undercutting effect as well

•

In view of the foregoing, we request the authority to kindly allow this adjustment and

to take into account the net impact of such sales through intermediary level in the

supply chain to the customer. We reiterate that this would be appropriate for making

an apple to apple comparison as APAR sells its product directly to the end user and it

does not charge any sales tax to its customers as they are exempted from the same for

a period of 15 years from the start of commercial operations due to incentive given by

the Government of Gujarat to them.

Adjustment for 4 % Special additional duty (SAD)

•

We submit that we had made a claim with the authority for adjustment for the 4 %

Special additional duty paid by the importers of NBR from KKPC which is normally

supposed to bring level playing field between the domestic producers and exporters.

In the present case, however, since APAR has special incentive of no sales tax on its

sales this SAD tax constitutes a disadvantage to the importers of NBR vis-a-vis

APAR's sales of NBR Article 2.4 of WTO rule as under for making adjustment for "

differences in conditions of sale":

Interest of consumers and community at large to be considered.

•

From the analysis of the statistical data it will be clear that as against an estimated

market demand of about 13,000 to 14,000 MT of NBR in sunset POI, APAR has sold

only about 5100 MT which is about 40% or so of the market Approximately 60% if

the end users are, therefore, forced to pay anti-dumping duty for their imports from

one source' or the other

APAR is operating at about 115% of their production

capacity so the authority ought to see the larger community interest as well whilst

arriving at any affirmative determination of levy of anti dumping duty.

O N

I -

•

1 1

Levy of any anti dumping duty in terms of US Dollars is illegal

•

It is our submission that the levy of any anti dumping duty based on any foreign

currency such as the US Dollar is not lawful. This matter has already been taken up

by us under an appeal which is pending with the Honorable Supreme court and we do

not elaborate on it here

HYUNDAI PETROCHEMICAL CO. LTD.

DUMPING

(i)

From our past experience, we decide not to furnish the information in the

prescribed format.

(ii)

There are only two exporters of NBR in Korea, viz KKPC and Hyundai

Petrochemical Co. Ltd

Before the Designated Authority published its final

findings on 17^th July, 1997, we represented to the Authority that we had

commissioned NBR production plant in October, 1996 and do not produce nor

have exported any quantity to NBR in India during the first initial period of

investigation.

(iii)

The Authority should have acknowledged in the preliminary findings dated

30.12.1996 and also in final findings dated 17 7.1997 that during the PO1 there

was only one manufacturer viz. KKPC from Korea RP Despite our oral and

written submissions, the Authority recommended imposition of anti dumping

duties at the rate of 8975 Rs/MT. The anti dumping duty if at all should have

been applicable to NBR produced by KKPC whereas Hyundai Petrochemical

should have been kept out of the imposition of anti dumping duty for the simple

and clear reason that during the POI it did not export any quantity to India.

(iv)

The Hon'ble CEGAT vide its order dated 2 2.2000 has modified the duty to dollar

form and the Authority should have modified the anti dumping duty in dollar

form only for KKPC. Hyundai Petrochemical however did not contest the above

notification and findings of the Designated Authority.

(v)

During the mid-term review vide Notification No 27/1/2000-DGAD dated

20 7 2001, the Authority reduced the anti dumping duty from 264 S/MT to

248 35S/MT for KKPC whereas recommended imposition of highest ever anti

dumping duty of 679 $/MT from 264 $/MT for us This enhancement has been

made despite the fact that we exported at prices higher than KKPC.

(vi)

Our exports to India were for negligible quantity of 600 MT which is far less than

10% of the total consumption of NBR in India.

(vii)

M/s Apar do not manufacture NBR grades equivalent to ours as the major

application of NBR in India is for production of rice rolls constituting more than

50% of NBR production. Our NBR is not used in the rice rolls application at all.

(viii)

During the Sunset Review we have sold a total quantity of 600 MT on NBR

constituting of different grades

We have however not sold any NBR since

imposition of highest anti dumping duty of 679 S/MT.

(ix)

The various facts and circumstances therefore compel us to believe that there is

no use to submit information in the prescribed format

INJURY

(1)

The exports of NBR from Bayer have reduced in quantity substantially frO"i ?0¹4

MT in 1996-97 to 467 MT in POI.

(ii)

Our average CIF prices have also increased during the cmrent period of

investigation as compared to the initial period of investigation for which the anti

dumping duty was levied.

(iii)

During the current POI, the prices of NBR frc" Bayer was higher than the

domestic industry's ex-factory selling price without considering the anti dumping

duties There is no prima facie evidence for review of anti dumping duty at Bayer

AG's exports price but there is a warrant to remove the whole of anti dumping

duty of 110 64$/MT in force at present

(iv)

Capacity utilisation for Domestic Industry has improved significantly from 34%

in April, 1994-95 to 84% in the present POI. From the Domestic Industry 's

Annual Report, it has been seen that for the years 1994-95 onwards it has made

piofits whereas in the year 2000-2001 there has been a net loss which has been

indicated to be temporary on account of squeeze in margins due to intense

competition and the abnormal rise in cost of raw materials and interests Further

even during the period, the cash flow from operating activities was positive

(v)

Considering all these facts, Designated Authority should examine as to what

extent NBR business could be contributed to their performance.

( .

EXAMINATION BY AUTHORITY:

The foregoing submissions made by the various interested parties, to the extent

these are relevant as per Rules and have a bearing upon the case, have been examined,

considered and dealt with at appropriate places in these findings

PRODUCT UNDER CONSIDERATION AND LIKE ARTICLE AND

DOMESTIC INDUSTRY

The Authority notes the submissions made by the various interested parties on the

pioduct under consideration and the like article The Authority also notes that the present

Sunset Review conducted as per Section 9A(5) of the Customs Tariff Act, 1995 is with

reference to the existing Anti Dumping Duties which were first recommended vide the

preliminary findings dated 30 12 96 and thereafter confirmed vide final finding dated

17 7 1997 The Anti Dumping Duties were also continued vide Customs Notification

No 91/2001 dated 7¹'¹ September, 2001 in a Midterm Review and presently levied vide

Custom Notification No 61/2002 dated 7 6 2002 The Authority

in the Disclosure

Statement had proposed to confirm the scope of the product under consideration as already

settled in the earlier main investigation The Authority notes that though submissions

pertaining to like article have been made by some of the interested parties, they are not

supported with evidence showing non-interchangeability as far as the like article and scope

of the product under consideration is considered, which in the main investigation has

alreadv been settled to cover all the grades of NBR

It has however been mentioned by

M/s KKPC that certain goods like carbooxylated grades are not manufactured by the

THE GAZETTE OF INDIA EXTRAORDINARY

IP i i I—Si

Domestic Industry and be excluded and that this issue is also sub|udiced in the court of

law However it is noted that M/s KKPC has not exported the carboxylated grade but have

exported only KNB 35L grade while have demanded exclusion of the carbooxylated

giade

The Authority has in all its earlier investigations for subject goods from these

subject countries have considered all grades of NBR within the scope of investigation and

this being a Sunset review reiterates and reconfirms the product under consideiation as

"Acrylonitinle Butadiene Rubber, also known as Nitnle Rubber and NBR as indicated in

orginal finding dated 30 12 1996 NBR is mainly used for manufacturing various rubbei

articles such as Oil Seals, Hoses, Automotive products, Gaskets, Rice Dehusking Rolls,

Printers fabrics, Oil field products The Domestic Industry supplies the subject goods to

various users viz rice rolls, moulded and extruded auto and industrial parts, seals, hoses,

automotive components, oil seeds, O rings, automobiles hoses, bellows, fuel tubes, fuel

hoses and railway and defence products

The Authority recalls and confirms the product

under consideration as also indicated in the initial preliminary findings under Para E(l)

and E(5) and Paras F(4) and F(5) in final findings dated 17 7 1997

As regards the standing of the Domestic Industry is concerned M/s Apar Industries

Ltd is the sole producer and represents the Domestic Industry as per Rule 2(b) of the Anti

Dumping Rules

The Authority therefore reconfirms the scope of product under consideration and

like article as indicated in the main investigation earlier and holds that the goods exported

from South Korea and Germany as like article to the goods manufactured by the Domestic

Industry as per Rule 2(d)

NORMAL VALUE AND EXPORT PRICE

DUMPING MARGIN, NORMAL VALUE AND EXPORT PRICE

KOREA RP

M/S KOREA KUMHO PETROCHEMICAL CO. LTD(KKPC)

NORMAL VALUE

The Authority recalls its observations in the disclosure statement and reiterates

that arguments/submissions made by M/s KKPC on various aspects of computation of

their cost of production for the various grades of NBR sold by them in the domestic

market during the POI have been considered appropriately

The submissions/data

furnished during on the spot verification on 23-24^th August, 2002 and the submissions

made by them in their main/supplementary response to the questionnaire and the

clarifications offered by them to the Directorate subsequent to the verification have been

appropriately considered

The Authority notes the claim of SGA and interest of the

exporter

regarding apportionment on the production basis does not

appear to be

justifiable and logical keeping in view- the costing principles governing such

apportionment in case the company is producing heterogeneous products with wide

variations in the per unit cost and the sales realisation Thus the Authority in disclosure

statement proposed to apportion these costs on the basis of cost of sales

As regards R&D expenses, the Authority notes from the company's

literature/brochure provided during the on spot verification that the R&D activities are

relevant for all the products including NBR. Further the details on grade-wise cost of

production of NBR shows that the company has incurred substantial amount of R&D

expenses on NBR also. Thus these have been considered as part of the SGA expenses.

The claim regarding exclusion of bad debts was proposed to be considered by the

Authority as the same is not related to NBR. Similarly the claim regarding amortization

of intangible assets was also proposed to be considered by the Authority as done for bad

debts as indicated above.

As regards the advertisement expenses, it was mentioned in disclosure that the

exporter has not been able to substantiate its claim for exclusion of the expenses related

to the advertisement.

Hence the same was not proposed to be considered by the

Authority.

As regards the interest expenses, the exporter has worked out the percentage of

funds available to the production activity by excluding funds related to investment

activities, Against the claim of exporter of ****% of funds applicable to production

activities, the Authority has assessed the same as ****% after considering of investments

made in non-production activities. For allocation of interest to production activities, the

exporter has considered net interest cost after deducing interest income,. This claim was

indicated to be proposed to be considered since the interest income relates to the

investment activities of the company and not the production activity. The total amount

worked out for SGA and interest has been allocated to different products on the basis of

the cost of sales. It has been observed that the transfer price of captively produced and

captively used Butadiene does not take into consideration the incidence of SGA and

interest although for allocation of SGA and interest the incidence of cost of sales related

to Butadiene has been considered in the denominator to arrive at the share applicable to

various production activities. Accordingly based on the consumption factor of captively

produced and used Butadiene in the production of NBR, the incidence of SGA and

interest was proposed to be duly considered, The Authority had noted that the exporter

has provided weighted average domestic selling price of all grades for determination of

Normal Value. The cost of production has also been provided by the exporter on the

weighted average ex-factory basis for all grades. It was observed by verification team

during the on the spot verification of exporter that there is a narrow band of variation in

the cost of production for various grades and keeping in view that this is a Sunset

Review, the methodology of weighted average to weighted average grade comparison as

done earlier was indicated to be adopted for the purpose of evaluation of normal value,

cost of production and the export price to India.

In order to evaluate the normal value for the domestic sales, the Authority had

excluded all those transactions which have not been made in the ordinary course of trade

after evaluating weighted average cost of production as indicated in the para above.

After excluding such transactions, the weighted average normal value during POI was

indicated as ****$/MT.

THEGAZETTr.OriNDlA EXTRAORDINARY

IPARI I—WFC,.f]

The

Authority had proposed to reference the normal value as ****$/MT.

Confidential disclosure was made available to the exporter.

EXPORT PRICE

As regards the evaluation of the ex-factory export price, the Authority proposed to

consider the adjustments claimed by the exporter on ocean freight, ocean insurance,

inland freight, packing, commission to agent viz M/s Rishiroop Polymer Pvt. Ltd. and

duty drawback

The Authority however noted that in case of inland freight claimed on

exports to India, there were certain exports made through another port viz. Busan Port

also as was indicated by the exporter to the verification team during on the spot

verification Accordingly, the inland freight is proposed to be considered as ****$/MT.

The exporter had claimed adjustments on account of their level of trade in the

domestic market and also the exports made to India.

However during on the spot

verification, the exporter has foregone their claim as far as the level of trade in the

domestic market vs. the exports to India is concerned. Since the domestic market sales

were also made both to actual users and the distributors/wholesellers. However they have

now submitted that in view of the exports by them to India made to wholesellers unlike

the sales made by the Domestic Industry which are at the end user level, they have

quantified an adjustment on account of this level of trade. The Authority had indicated

that since level of trade adjustments in domestic market and export market has not been

claimed and could not be evidenced, the question of considering this adjustment for the

purpose of Normal Value does not arise

As regards their claim on level of trade for

exports to India is concerned, it was indicated that it can be examined only for the

purpose of injury determination as per the Anti Dumping Rules and the consistent

practice followed for injury evaluation for industrial products by the Authority

As regards the adjustments on packing, the Authority indicated that there is a

variation in the amount of packing cost claimed for exports to India and that claimed for

domestic sales and exports to other countries Two different types of packing have been

used for the domestic and exports sales to India, viz box type and bag type respectively

The Authority on the basis of the evidence provided by the exporter during on the spot

verification have considered the packing expenses on exports to India as claimed on the

basis of the evidence produced However after reconciling of the packing expenses with

the Profit & Loss Account, adjustments have been considered to an extent of **^J|"*¹$/M I

as far as the domestic sales packaging are concerned were indicated in the confidential

disclosure to the exporter.

On the basis of the above, the ex-factory export price was indicated as ****S'MT

and the dumping margin as ]0.6%(****$/MT)

As regards the comments offered

subsequent to the disclosure by tin-

representative of M/s KKPC, the Authority has carefully examined the same as undei -

The argument of the exporter that they are historically using

the basis

foi

allocation of SGA and interest on quantity basis could not be substantiated b>

KKPC during the course of verification from basic records as thev

maintain

product-wise cost upto cost of sales only and not afterwards.

During the course

of verification this was duly explained to KKPC that the methodology for cost

allocation based on ratio of quantity of NBR produced to total quantity to all

products is inappropriate

for one item namely steam the SGA cost

disproportionate to its cost and selling price.

The exporter has agreed to the

argument in his response to the Disclosure Statement.

On quantity terms the

steam constitutes more than 70% of the total production whereas in terms of cost

of sales the same constitutes about 7% only. Treating steam and other products

at par on quantity basis for allocation of SGA and interest is not appropriate.

Accordingly,

cost apportionment of SGA and interest on the basis of cost of

sales was considered appropriate and the same is adopted by the Authority.

The exporter has himself accepted that the trading sales and indent sales for

foreign suppliers from whom it received indenting or offer sales commission do

not get reflected in KKPC's books of accounts. Accordingly, it is difficult to

assess the SGA on the basis of sales value. Further, the sales value does not

reflect the true and fair value especially in case of NBR which is claimed to be

dumped by the exporter. Therefore, the Authority has considered appropriate to

adopt the cost of sales as most appropriate basis of apportionment/allocation of

SGA and interest in the present circumstances.

The argument that the Authority disallowed

certain adjustments on account of

advertisement expenses commission and R&D expenses for determination of net

SGA expenses has been examined. It is observed that the Authority considered the

claim of

KKPC with regard to commission and excluded the same

while

determining the

net SGA cost.

With regard to advertisement expenses the

Disclosure Statement is clear as to why the same has been considered as part of

SGA. With regard to research and development expenses the exporter could not

substantiate his claim and now he has stated that in cost statement the R&D

expenditure is mistranslated in English.

M/s. KKPC, now based on

some

hypothetical

assumption,

has desired to at least consider 50% of the R&D

expenses only

Since no basis has been given for such assumption it is not

possible accept the argument of the exporter in this regard.

The argument of KKPC regarding incorrect valuation of transfer

price

for

Butadiene captively produced and consumed by considering share of SGA does

not hold as for assessing the share of SGA and interest applicable to NBR the

total cost of sales of all products has been considered by also adding the

captively produced and consumed raw materials and utilities. Since the SGA and

interest has been allocated on total cost of sales, share applicable to Butadiene

(captively produced and consumed) should be added to arrive at real transfer value

of the raw material.

The ratio of

assets deployed

for production activity

has been

properly

considered by excluding non operational deployment of the funds from the total

funds deployed by the Company as at March, 2001. The hypothetical basis of

distributing quick assets constituting cash and bank balance and short term loans

of 5050 basis was not substantiated and hence could not be accepted

The cost of production has been properly assessed by the Designated Authority as

indicated above

The Authority has determined normal value by applying ordinary course of trade

test as prescribed under the Annexure 2 of the Anti Dumping Rules.

2985GI/2002—10

7 +

THE GAZETTE OF INDIA: EXTRAORDINARY

IPART I—SEC. 11

The Authority also notes that the representative of M/s KKPC has sought

clarification regarding adjustment on commission on export price and have desired to

consider the duty drawback adjustments on the Normal Value. The Authority clarifies

that the commission as claimed by the exporter has been considered for evaluation of the

ex-factory export price and that the duty drawback adjustment has now been

appropriately adjusted on the Normal Value rather than the export price as claimed, since

this adjustment could either be made on the Normal Value or on the export price. The

Authority also notes that in response to the disclosure statement, Domestic Industry has

also raised issues pertaining to the evaluation of Normal Value for M/s KKPC. The

Authority has considered the submissions and have appropriately dealt the relevant issues

as illustrated below:-

With regard to the observation that the exporter maintains accounts on

calendar year basis and the period of investigation is 2000-01 year, it is

submitted that the exporter has provided complete information regarding

Profit and Loss

Account, Balance sheet and cost of production of

different products manufactured including NBR during the period of

investigation which has been considered appropriately

With regard to consumption of raw materials the company has furnished

complete reconciliation of raw material consumption with books of

accounts.

On comments on the packing cost it is submitted that the same has been

duly reconciled with books of accounts.

With regard to amortization

expenses it is clarified that the same has not been considered since they are

related mining activity of the company and not NBR.

The price of the captively produced and consumed Butadine have been

duly adjusted to include cost of SGA and interest as applicable.

Also it was clarified to the representative of the exporter as also acknowledged by

him that under the formulation of net interest cost in the disclosure, the Authority had

actually intended to convey that interest income relates to the investments activities of the

company and not production activity and hence the gross interest cost has been

considered. The argument of the exporter in this regard has been appropriately examined

and the Authority reiterates that the interest income relates only to investment activities

and is hence excluded. The Authority further notes the submissions of the exporter that

by virtue of this discrepancy in the disclosure, the same is invalid. The Authority here

submits that purpose of disclosure is to bring out essential facts and also thereby address

issues emanating from the response to the disclosure. The issues on methodology, factual

inconsistencies etc, are to be appropriately resolved at this stage since it eventually leads

to the final determination. The fact that Authority has clarified this to the exporter and it

has been acknowledged, the Authority has provided the essential facts and invited the

comments thereupon and have also considered these appropriately.

Thus the determination methodology on Normal Value as indicated in the

disclosure with the issues raised as clarified now, is confirmed.

Accordingly the Normal Value comes to ****$/MT and the ex-factory export

price comes to ****$/MT and the dumping margin as ****$/MT(10.27%).

TIYUNDAI.PETROCnEMCIAL CO. LTD.,

NORMAL VALUE

The Authority notes that the exporter has not provided any response in the

prescribed questionnaire on account of various submissions <u> indicated in the foregoing

para The Authority under such circumstances has no option but to construct the normal

value on the basis of the best available information as per Anti Dumping Rule 6(8). The

Authority therefore proposed to reference the highest domestic selling prices as indicated

by one of the cooperating exporter, viz. M/s KKPC for the purpose of evaluating the

normal value for M/s Hyundai Petrochemical Co. Ltd..

Since no response has been filed to the disclosure, the Authority, confirms the

normal value as ****$/MT.

EXPORT PRICE

As regards the export price, the Authority notes that the domestic industry has

provided on the basis of the secondary sources, the transactions pertaining to exports

made by M/s Hyundai during the POI to India. The Authority proposed to reference the

weighted average CTF export price as provided by the domestic industry. The Authority

also proposes to consider adjustments on account of ocean freight, ocean insurance,

commission, inland freight, packing and port expenses on the basis of the information as

made available by the Domestic Industry and also as evidenced/correlated from the data

provided by the cooperating exporter.

As no response has been filed to the disclosure, the Authority confirms the ex-

factory export price as ****$/MT.

On the basis of the above, the dumping margin comes to 47.08%(****$/MT).

OTHER

NON-COOPERATIVE

EXPORTERS/PRODUCERS

FROM

KOREA RP

In view of no response to the disclosure, the Authority confirms the Normal Value

and export price as under:-

NORMAL VALUE

The Authority proposes to reference the highest domestic selling price as

evidenced from the data provided by

M/s KKPC for the non-cooperative

exporters/producers.

The normal value is therefore referenced as ****$/MT.

7 6

T HE GAZETTE OF INDIA • EXTRAORDINARY

| p.M< i I—Sr t •. ] I

EXPORT PRTCE

As regards the export price, the Authority references the least export price as

evidenced from the data provided by the cooperating exporter and the Domestic Industry

The Authority

considers adjustments as considered in case

M/s Hyundai

Petrochemical Co. Ltd for determination of the ex-factory export price

The ex-factory export prices comes to ****$/MT.

On the basis of the above, the dumping margin comes to 49.06%(****$/MT)

GERMANY

BAYER AG, GERMANY

NORMAL VALUE

The Authority notes that M/s Bayer has not provided data as per the structured

questionnaire but have indicated that the only cost change in their cost of production has

happened on account of the cost of Monomers for which they have provided the price.

As regards the other production costs, it has been indicated that the costs has not been

changed by and large,

The Authority in this regard notes that the midterm review

recommendation was given vide Notification dated 17.7.2001 . The Authority also notes

that the same has not been challenged by M/s Bayer.

The Authority has therefore

adopted the same methodology as was done in the earlier review for determination of the

Normal Value.

The Authority notes that the export price to India of NBR exported by M/s Bayer

has increased in the present POI for the Sunset Review, even though the monomer prices

have increased and consequently the normal value of M/s Bayer would also warrant an

upward revision, the Authority proposes to reference the earlier Normal Value as

determined during the past POI, which would be the best available information in the

present circumstances.

The Normal Value on the basis o this comes to ****$/MT. Since there is no

response by the exporter to the disclosure, the Authority confirms the Normal Value as

****$/MT.

EXPORT PRICE

The Authority notes that the exporter has provided the weighted average CIF

price during POI along with the quantities exported to India, The Authority has therefore

referenced the same for the purpose of determination of the export price. The Authority

has on this CIF price considered adjustments on ocean freight, ocean insurance and

commission as per the data provided during the earlier midterm review.

The ex-factory export price comes to ****$/MT.

I"⁹

Since there is no response by the exporter, the Authority confirms the export pi ice

as ****$/MT

On the basis of the above, the dumping margin comes to 24 87%(****yMT)

OTHER

NON-COOPERATIVE

EXPORTERS/PRODUCERS

FROM

GERMANY

As there is no response to the disclosure, the Authority has evaluated Normal

Value and export price as under.-

NORMAL VALUE

The Authority notes that none of the exporters/producers from Germany have

cooperated.

The Authority under such circumstances therefore has referenced the

normal value as determined for M/s Bayer AG only

The normal value therefore has been referenced as ****$/MT

EXPORT PRICE

As regard the ex-factory export price, the Authority has referenced the least

export price of M/s Bayer AG for the non-cooperative exporters/producers.

The

adjustments on export price as granted to M/s Bayer AG have also been considered for

these non-cooperative exporters/producers

The ex-factory export price comes to ****$/MT

On the basis of the above, the dumping margin comes to 44 11%(****$/MT).

DUMPING-COMPARISON OF NORMAL VALUE AND EXPORT PRICE

The rules relating to comparison provides as follows

"While arriving at margin of dumping, the Designated Authority shall make a fair

comparison between the export price and the normal value The comparison shall be

made at the same level of trade, normally at ex-works level, and in respect of sales made

at as nearly possible the same time. Due allowance shall be made in each case, on its

merits, for differences which affect price comparability, including differences in

conditions and terms of sale, taxation, levels of trade, quantities, physical characteristics,

and any other differences which are demonstrated to affect price comparability "

The Authority has carried out comparison of weighted average normal value with

the weighted average ex-factory export price for evaluation of the dumping margin.

While evaluating the Normal Value, the Authority has applied the ordinary course of

trade test as per Rule 2 of the Annexure 1 to the Anti Dumping Rules.

Based on the normal value and the ex-factory export price as determined above

the Authority has evaluated the dumping margin for the subject goods originating in or

exported from the subject countries to India as follows -

2985 GI/2002—11

THE GAZETTE OF INDIA EXTRAORDINARY

IPwrl—Su- Ij

Exporter/producer

KOREA RP

1.Korea

Kumho

Petrochemical

Co.

2.Hyundai

Petrochemical

Co Ltd.

3. All

other

exporters/producers

Germany

1. Bayer AG

2.A11

other

exporters/producers

Normal

Value

$/MT

***

****

* + **

****

Export Price

$/MT

***

****

• ***

Dumping

Margin(%)

10 27

47 08

49 06

24.87

44.11

The above dumping margins are above the de-minimus limit.

INJURY AND CAUSAL LINK

The Authority notes that as per Section 9A(5) of the Customs Tariff Act, 1975 as

amended in 1995 " the anti dumping duty imposed under this section shall, unless

revoked earlier, cease to have effect on the expiry of five years from the date of such

imposition:

Provides further that if the Central Government, in a review, is of the opinion that

the cessation of such duty is likely to lead to continuation or recurrence of dumping and

injury, it may, from time to time, extend the period of such imposition for a further period

of five years and such further period shall commence from the date of order of such

extension;

Provided further that where a review initiated before the expiry of the aforesaid

period of five years has not come to a conclusion before such expiry, the anti dumping

duty may continue to remain in force pending the outcome of such a review for a further

period not exceeding one year"

Also under Rule 11 supra, Annexure-II, when a finding of injury is arrived at,

such finding shall involve determination of the injury to the domestic industry,

taking into account all relevant facts, including the volume of dumped imports, their

effect on prices in the domestic market for like articles and the consequent effect of such

imports on domestic producers of such articles. " In considering the effect of the

dumped imports on prices, it is considered necessary to examine whether there has been a

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

like article in India, or whether the effect of such imports is otherwise to depress prices to

a significant degree or prevent price increases, which otherwise would have occurred, to

a significant degree

For the examination of the impact of the dumped imports on the domestic

industry in India, indices having a bearing on the state of the industry as production,

capacity utilisation, sales quantum, stock, profitability, net sales realisation, the

magnitude and margin of dumping, etc. have been considered in accordance with

Annexure ll(iv) of the rules supra.

Since under the present investigation it is to be evaluated as to whether cessation

of anti dumping duties would lead to continuance or recurrence of dumping and injury,

the Authority has considered appropriate injury parameters as indicated in Annexure

Il(iv) of the Rules supra to evaluate this aspect.

The Authority observes the various economic parameters pertaining to the

subject goods for the Domestic Industry i.e. M/s Apar Industries Ltd. and imports of

subject goods from subject countries as under:-

Economic

Parameters

Capacity(MT)

Gross

NBR

production(MT)

Effeclive production

(MT)

Capacity utilisation

based on

effective

production (%)

NBR

indigenous

sales (MT)

Gross block (Rs in

lakhs)

Closing stock (MT)

Average wage per

employee(Rs)

Maximum

established

demand(MT)

Total

maximum

imports (MT)

Share of imports of

Korea

total

imports (%)

Share of imports of

Germany

in total

imports (%)

% of subject country

imports

total

imports (%)

% of imports from

South Korea of total

demands

% of imports from

Germany

total

demands

% of imports from

subject countries of

totabdemands

Domestic

Industry

in total demand

1997-98

6250

3785

4300

69%

3149

4483

183

63095

10142

6693

33.59

51.59

23.16

12.41

35.57

31.05

1998-1999

6250

4609

5366

86%

3750

4534

279

66667

9934

6184

48.42

9.7

58.12

30.14

6.04

36.18

37.75

1999-2000

6250

4990

5742

92%

4073

5266

380

69645

12372

8299

53.45

7.23

69.68

35 86

4.85

40.70

32.92

POI (2000-2001)

6250

5154

5360

86%

4637

5865

172

81695

10481

5844

48.58

7.99

56.57

27.09

4.46

31.54

44.24

«>

THE GAZETIt' OF INDIA EXTRAORDINARY

| PAR r I—Stc. 1]

Net

Sales

Realisation

(Rs/MT)

Cos! of producLion

(Rs/MT)

Profii.'ibilm

(Rs/Mh

* + + *

• **+

+** +

+ *++

The authority also notes the submissions regarding referencing DGCI&S data for

imports made by various interested parties The Authority recalls its observations in the

disclosure statement and has evaluated the maximum demand and maximum imports on

the basis of the data available from the responses of the cooperating exporters, DGCI&S

and the secondary source viz. PPR

The Authority notes that it has been submitted by M/s KKPC that various injury

parameters and cost of production of M/s Apar Industries Ltd should be examined in

detail and injury and causal link be appropriately considered

Also various interested

parties have raised the issues pertaining to examination of injury to Domestic Industry

The Authority notes that M/s Apar Industries Limited primarily produces NBR at its

Walia plant at Gujarat

During the period of investigation, the company has produced

NBR to an extent of about 95% of the total capacity utilised during the period of

investigation The company maintains separate books of accounts for Walia plant, duly

audited Thus the basis for determination of NIP is authentic and the costs and expenses

related to NBR only have been considered for the purpose of determination of cost of

production and thereby the non-injurious price

Also consistent with the practice, the

Designated Authority has normated the various elements of costs so as not to grant the

Domestic Industry any undue benefit or protection which might accrue to them on

account of their inefficiencies

Hence the arguments of various interested parties

regarding profitability and cross loading of expenses on different related products by the

company being a multi-product company arc duly taken care of by the Authority during

onsite verification of the Domestic Industry

The above economic parameters in the Table indicates that demand of

subject goods has been around 10000MT to 12000 MT and has therefore not been a

factor for cause of injury. The indicators on production and capacity utilisation for

Domestic Industry show upward trend Though the share of Domestic Industry in total

demand have increased, the imports from the subject countries, especially Korea RP

continue to be significant as imports from subject countries as % of demand continues to

be significant despite anti dumping duty. This coupled with price undercutting is causing

material injury to the Domestic Industry and would also lead to recurrence of injury

The Authority notes that the net sales realisation of the Domestic Industry during

the period of investigation is below the non-injurious price The dumped imports from

the subject countries evidence price undercutting as the landed value of such dumped

imports are below the non-injurious price and in case of M/s KKPC even after imposition

of the existing anti dumping duties, there is still price undercutting when landed values

with anti dumping duty are compared with the non-injurious price The argument of M/s

KKPC that the effect of customs duties and SADD should be appropriately considered

are also duly considered by the Authority The Authority notes that NBR is an industrial

product and as per the consistent practice it is the ex-factory non-injurious price which is

compared with the landed value as defined in this determination below Jr> c^r the

customs duties have fallen during the present period of investigation for the subject

goods, the raw material ustilised for manufacture of the subject goods by ihe Domestic

Industry have also attracted lower duties and therefore the non-injurious pri^ has al=o

been affected by the fall in customs duties Thus the practice uf comparing non-injunousj

price during the period of investigation with the landed value in POI is consistent and

appropriate The argument of M/s KKPC regarding granting the adjustments on the level

of trade as the exports of M/s KKPC are made to the wholesellers and not to the end users

is also not appropriate since if the wholesellers in the distribution chain benefit by the •

dumped imports, ultimately the supplies are only made to the retail level actual users It

therefore has an adverse impact on the sales of the Domestic Industry and thus ex-factory

companson as indicated above is appropriate As indicated above, the comparison for the

evaluation is appropriate at the ex-factory level which the Authority has been doing

consistently The Authority has therefore followed the same approach The landed value

of dumped goods from M/s KKPC even with addition of existing anti dumping duty is

lower than "NIP The Authority in regard to submissions on high Butadiene cost notes that

the Hon'ble CEGAT in its judgement dated 4 2 1997 in case of NBR from Japan has

upheld the methodology on NIP determination at optimum level and have taken

cognizance of the situational conditions of the Domestic Industry The various economic

factors viz price undercutting by dumped imports, net sales realisation lower than NIP

and erosion of profitability

imply that if anti dumping duties on subject goods from

subject countries are withdrawn, the dumping and injury will continue and recur and will

cause intensified material injury to Domestic Industry

INDIAN INDUSTRY'S INTEREST & OTHER ISSUES

The Authority notes that the submissions have been made regarding demand and

supply mismatch of the subject goods and the effect on export competitiveness as well

The Authority in this regard holds that the purpose of anti dumping duty duties, in

general, is to eliminate injury caused to the Domestic Industry by the unfair trade

practices of dumping so as to re-establish a situation of open and fair competition in the

Indian market, which is in the general interest of the country

The Authority also recognises that though the imposition of anti-dumping duties

might affect the price levels of the products manufactured using the subject goods and

consequently might have some influence on relative competitiveness of these products,

however, fair competition in the Indian market will not be reduced by these anti-dumping

measures

On the contrary, imposition of anti-dumping measures would remove the

unfair advantages gained by the dumping practices and would prevent the decline of the

domestic industry and help maintain availability of wider choice of the subject goods to

the consumeis

Imposition of anti-dumping measures would also not restrict imports

from the subject countnes in any way, and, therefore, would not affect the availability of

the products to the consumers/users

THE GAZETTE OF INDIA EXTRAORDINARY

| P \ M I—Si-.<\ I]

The Authority notes that it has been mentioned by M/s KKPC that the disclosure

should have been sent under the signature of Designated Authority citing various case

laws on the matter. Also the exporter has submitted that the public hearing conducted by

the Designated Authority was not appropriately conducted as per Rules and has cited the

WTO artic'^s and cases laws pertaining to the same The Authority in this regard notes

Rule regarding that the oral submissions to be made during the investigation and the

issuance of the disclosure under Rule 16. The Authority notes that the oral submissions

presented during the hearing are only be considered if they are subsequently produced in

writing Therefore an essential requirement is that the oral submissions should be backed

by the written submissions so that this could be appropriately considered during the

course of investigation. The Authority has followed this rule position and its consistent

practice in holding such a hearing and inviting various interested parties to make their

submissions Further the Authority notes that all submissions made by M/s KKPC were

duly verified on site by the verification team and all relevant submissions have been

appropriately considered and addressed. As regards the disclosure, the Authority holds

that the disclosure pertains to the information on the essential facts which form the basis

for the decision but is not a decision. The Authority has followed the consistent practice

of disclosing such a information under the signature of the investigation officer on behalf

of Designated Authority and therefore holds that the practice adopted under Rule I b of

the Anti Dumping Rules has been adhered to in this case as well.

LANDED VALUE

The landed value has been determined for the subject goods after adding on

weighted average CIF export price, the applicable level of custom duties (except duties

levied under Section 3, 3A, 8B, 9, 9A) and one percent towards landing charges

CONCLUSIONS:

It is seen, after considering the foregoing that:

(a)

The subject goods originating in or exported from the subject countries have been

exported to India below its normal value;.

(b)

The various economic indicators and injury parameters in particular price

undercutting by dumped imports imply that the cessation of anti dumping duty on

the subject goods from the subject countries

will lead to continuance or

recurrence of dumping and injury and therefore the Authority recommends

continuation of anti dumping duty on the subject goods as indicated below

this regard the Authority also notes that on NBR imports from Japan in the

Sunset Review implemented by Customs vide Notification dated 21 12.2001 a

variable duty has been levied, the Authority considers it appropriate to levy anti

dumping duty in variable form in this investigation as well The authority recalls

that levy in dollar terms has been upheld by the Hon'ble CEGAT

(c)

In view of the above, it is recommended that the amount of Anti Dumpiny Dul\ in \anable

form equal to the difference between the amount as indicated in Column 3 of the Table

below and the landed value in $/MT be imposed, by the Central Government on all grades

of Acrylonitrile Butadiene Rubber (NBR) originating in or exported fioin Korea RP and

Germany falling under Chapter 40 of the Customs Tariff

SI No.

Name of the exporter/producer

Korea RP

1 Korea Kumho Petrochemical Co.

Ltd. (KKPC)

2. Hyundai Petrochemical Co. Ltd

All other exporter/producers

Germany

1 Bayer AG

2. All other exporters/ producers

Amount ($/MT)

1692 12

1908.28

L902.28

2314.8

2314 8

(d)

An appeal against this order shall lie to the Customs, Excise, Gold (Control)

Appellate Tribunal in accordance with the Act supra.

L.V, SAPTH ARISHI, Designated Authority & Addl. Secy.

l'nnk'il In the M.imigoi. CioM of Iiuti.i Prchs. Ring Roml. M.i\.<piin \c\\ Ddln-110064

.IIKI 1'ublislitfJ liv the Controller of 1'iililic.ilions Delhi-1100.M