Domestic industry and market economy findings upheld, but normal value was revised and anti-dumping duty reduced.

Domestic industry status was upheld where the sole petitioner accounted for a substantial share of domestic production and other domestic producers had imported the subject goods during the investigation period. Denial of market economy status to the exporters was also upheld because the determination rested on an overall assessment of distorted cost factors, including non-market procurement of raw material and state-guided utility pricing, making domestic costs and prices unreliable for normal value purposes. The normal value method was, however, modified because the original basis was unsustainable; the alternative method using average consumption norms of cooperative exporters was accepted, and the anti-dumping duty was reduced accordingly.

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Issues: (i) Whether the grant of domestic industry status to the sole domestic producer was liable to be interfered with; (ii) Whether the denial of market economy status to the exporters was sustainable; (iii) Whether the method adopted for determining normal value and dumping margin required modification on account of excessive confidentiality and the resulting anti-dumping duty was liable to be reduced.

Issue (i): Whether the grant of domestic industry status to the sole domestic producer was liable to be interfered with.

Analysis: The domestic producers other than the petitioner were found to have imported the subject goods during the period of investigation and, therefore, did not qualify for inclusion as domestic industry. The petitioner was found to account for a substantial share of domestic production, and the record did not show that it had imported the subject goods, only intermediate inputs.

Conclusion: The finding granting domestic industry status to the sole petitioner was upheld.

Issue (ii): Whether the denial of market economy status to the exporters was sustainable.

Analysis: The denial was based on an overall assessment of several distorted cost factors, including procurement of major raw material from non-market conditions and state-guided utility pricing. The determination was not based on any single factor in isolation, and the exporters' domestic costs and prices were treated as unreliable for normal value purposes.

Conclusion: The denial of market economy status was upheld.

Issue (iii): Whether the method adopted for determining normal value and dumping margin required modification on account of excessive confidentiality and the resulting anti-dumping duty was liable to be reduced.

Analysis: The construction of normal value based on the import price of the principal raw material was found unsustainable because the discarded method did not adequately reflect the cost position. The lower normal value derived from the alternative method using the average consumption norms of cooperative exporters was held to be the proper basis for calculating dumping margin and duty.

Conclusion: The anti-dumping duty was reduced from US$ 55.61 per kg to US$ 39.42 per kg.

Final Conclusion: The challenge succeeded only to the limited extent of reduction in the anti-dumping duty, while the findings on domestic industry status and market economy status were sustained.

Ratio Decidendi: A market economy determination must rest on an overall assessment of cost and price distortions, and where the basis adopted for normal value is unsustainable, the dumping margin and anti-dumping duty must be recalculated on the proper method.

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