2006 (4) TMI 510 - AT - Customs

Tribunal Overturns Anti-Dumping Duties on Acyclic Alcohols, Citing Flawed Analysis and Market Dynamics Misinterpretation.

ANDHRA PETROCHEMICALS LTD. Versus DESIGNATED AUTHORITY

The tribunal annulled the Designated Authority's final findings and notification imposing anti-dumping duties on acyclic alcohols, siding with the ... Imposition of Anti-dumping duty - Acyclic alcohols - exported to India from the subject countries below their normal value and that the domestic industry suffered material injury - initiation of investigation for imposition of anti-dumping duty on dumped imports - whether anti-dumping duty may be imposed on ‘article under consideration’ by giving an extended meaning to ‘article’ liable to pay anti-dumping duty u/s 9A(1), so as to include in the description of ‘article under consideration’ even other articles which are like articles - HELD THAT:- Rule 2(d) defines the expression “like article” for the purpose of the said rules unless the context otherwise requires, to mean an article which is identical or alike in all respects to the article under investigation for being dumped in India or in the absence of such article another article, which although not alike in all respects, has characteristics closely resembling those of the articles under investigation. It is evident even from this definition of “like article” that the expression “article” in 9A(1) which may be liable to anti-dumping duty and in respect of which investigation is to be made as per the rules, will not by itself include any other article which has characteristics closely resembling those of the article under investigation unless even such “another article” is specifically identified as the article under consideration for the purpose of investigation and imposition of anti-dumping duty. It is evident from the provisions of Section 9A(1) that not only the article should be identified for the purpose of the impost, it should be an article that is exported from any country or territory to India. Therefore, export of the article identified from the country is the basis for the levy when it is exported at less than its normal value and becomes liable to imposition of anti-dumping duty not exceeding the margin of dumping upon the importation. An article which has not been exported to India cannot, therefore, be subjected to imposition of anti-dumping duty under Section 9A(1) of the Act which lays down the basis for the impost. There is, therefore, no error in the final findings in so far as duty on articles not imported to India, has not been imposed. Thus, imposition of anti-dumping duty on the articles which were not imported, was not justified. We do not understand as to how the opening words “operational constraints” escaped notice of the designated authority who confined its findings only in the context of “uneconomic market pricing”. Here also it failed to notice that as per the above annual report, profit margin had come down “mainly due to propylene price remaining continuously high throughout the year”. It is also significant to note that the company had ended with a cash profit of ₹ 432.14 lakhs as against loss of ₹ 698.93 lakhs in the previous year. It would appear from the 17th annual report 2000-01 of the domestic industry that as against the item “sales” of oxo alcohols the quantity sold in the year and its value are mentioned which indicate, as calculated by the learned Counsel without any dispute, that the average price was ₹ 35.64 per Kg. which showed that the landed value of ₹ 36.35 per Kg. was lower than the net sales realisation by the domestic industry. The net sales realisation, as reflected from the annual report, does not appear to have been considered by the designated authority, while observing : “As regards price undercutting the authority had compared the landed value of imports of subject goods from the subject countries during the POI with the net sales realisation and found that there was a significant price undercutting by the dumped imports”. Furthermore, while the designated authority observes in the final findings that contraction of demand was not apparent, it failed to apprehend the significance of the fact that the total demand had decreased by 20% but in a scenario of contracted demand, the domestic industry had increased its market share by 11%. It further appears from the record that the domestic industry was continuously incurring losses for five years prior to the period of investigation. There was, therefore, no proper analysis made by the designated authority for evaluating the causal link as to how the position of the domestic industry was worse of because of the dumped imports. As noted, the losses had gradually decreased from ₹ 25.02 crores in 1998-99 to ₹ 18.58 crores in 1999-2000 and to ₹ 7.32 crores in 2000-01. It is, therefore, clear that the findings of the designated authority in relation to injury and causal link aspects are erroneous and are not borne out from the material on record thereby vitiating the recommendations made by it for imposition of anti-dumping duty. It thus transpires from the material on record that the final findings as regards the domestic industry having suffered material injury on account of the dumped imports of the articles under consideration, is clearly erroneous and the imposition of anti-dumping duty cannot, therefore, be sustained. The impugned final findings and the impugned notification imposing anti-dumping duty, therefore, deserve to be set aside. Thus, the impugned final findings and the impugned notification imposing anti-dumping duty are hereby set aside and the Appeal Nos. C/609/03-AD, C/610/03-AD and C/606/03-AD are allowed and Appeal No. C/599/03-AD is dismissed. Issues Involved:1. Imposition of anti-dumping duty on acyclic alcohols.2. Determination of 'like articles.'3. Calculation of dumping margin and injury to domestic industry.4. Inclusion of non-imported products in anti-dumping duty.5. Validity of retrospective anti-dumping duty.6. Analysis of injury and causal link.Issue-wise Analysis:1. Imposition of Anti-Dumping Duty on Acyclic Alcohols:The appeals challenge the notification and final findings imposing anti-dumping duty on acyclic alcohols (Oxo Alcohols) exported from specified countries and imported into India. The Designated Authority concluded that these alcohols were exported below their normal value, causing material injury to the domestic industry. The authority recommended imposing definitive anti-dumping duties on Normal Butanol (NBA), 2-Ethyl Hexanol (2-EHA), Iso Butanol (IBA), Sabutol, and Octanol.2. Determination of 'Like Articles':The Designated Authority included ten types of acyclic alcohols in the investigation, though only NBA, IBA, and 2-EHA were produced domestically. The authority considered technical and commercial substitutability, functions and uses, resemblance of physical and chemical properties, users' perception, similar production processes, and end-product substitutability to determine 'like articles.' It concluded that Nonanol, Iso Nonanol, Octanol, and Sabutol, despite dissimilar chemical properties, were commercial substitutes and thus 'like articles' to domestically produced oxo alcohols.3. Calculation of Dumping Margin and Injury to Domestic Industry:The domestic industry argued that the Designated Authority should have calculated a single weighted average dumping margin for all product types. The authority found that NBA from Malaysia and South Africa and IBA from Singapore had de minimus or negative dumping margins, and thus no anti-dumping duty could be imposed on these products. The authority's injury analysis showed significant price undercutting and suppression, financial losses, and negative return on investment for the domestic industry.4. Inclusion of Non-Imported Products in Anti-Dumping Duty:The appeals included products not imported during the investigation period. The authority held that the inclusion of such products was justified if they were 'like articles' to imported products. However, the tribunal found that anti-dumping duty could not be imposed on non-imported articles as it contravened Section 9A(1) of the Customs Tariff Act, which requires the article to be imported at less than its normal value.5. Validity of Retrospective Anti-Dumping Duty:The importers argued that retrospective imposition of anti-dumping duty was illegal. The tribunal did not specifically address this issue in the final order but focused on the broader aspects of injury and causal link.6. Analysis of Injury and Causal Link:The tribunal found several factual inaccuracies in the Designated Authority's injury analysis. The domestic industry's market share had increased significantly during the investigation period, contradicting the authority's finding of market share curtailment. The suspension of operations by the domestic industry due to operational constraints and high propylene prices, rather than uneconomic market pricing, was not adequately considered. The tribunal concluded that the injury and causal link analysis was flawed and not supported by the material on record.Final Order:The tribunal set aside the impugned final findings and the notification imposing anti-dumping duty, allowing the appeals filed by the importers and exporter while dismissing the appeal filed by the domestic industry.