TaxTMI 
TaxTMI 
2011 (8) TMI 672
X X X X Extracts X X X X
X X X X Extracts X X X X
....sition of Anti-dumping duty based on such final findings. 2. The appellants at Sl. No. 1 and 4 are exporters from Thailand. The appellants at Sl. Nos. 3, 5 and 7 are exporters from China PR and the appellants at Sl. Nos. 2 and 6 are the importers in India. The Anti-dumping investigation in this case was initiated pursuant to an application from the Automotive Tyres Manufacturers Association (ATMA) submitted on behalf of the domestic industry. The product covered in the investigation was "new/unused pneumatic radial tyres with or without tubes and flaps of rubber used in buses and lorries/trucks" originating in or exported from China and Thailand. The Anti-dumping investigation was initiated by issue of a public notice dated 21-10-2008. The D.A. has conducted an elaborate exercise after taking into account responses and views from all concerned including the appellants herein as well as the users and user associations in India. As indicated in the final findings, the D.A. has recommended imposition of final Anti-dumping duty at the specified rates so as to remove the injury to the domestic industry after making a determination regarding existence of dumping, injury and causal lin....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Tyres) having imported radial tyres during the relevant period does not qualify to be included in 'domestic industry'. 3.11 The radialization of tyre industry was necessary in the light of public interest. Imposition of anti-dumping duty on imports of radial tyres would seriously undermine the public interest. 4. The learned Advocates appearing for the domestic industry have extensively argued against the challenge to the final findings of the D.A. It is their contention that the imposition of anti-dumping duty is fully justified in view of the D.A's finding regarding existence of dumping, injury and causal relationship between the two. They have also placed on record detailed submissions countering various arguments made on behalf of the appellant-exporters and the importers in India. 5. The learned Advocate appearing for the D.A. supports the final findings and the impugned Customs Notification imposing anti-dumping duty. He has also placed on record submissions refuting challenges to the final findings of the D.A. 6. We have considered the submissions made by both sides as well as the case records. We find that one of the major arguments that has been advanced on be....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ese imports on domestic producers of such products. (ii) While examining the volume of dumped imports, the said authority shall consider whether there has been a significant increase in the dumped imports, either in absolute terms or relative to production or consumption in India. With regard to the effect of the dumped imports on prices as referred to in sub-rule (2) of rule 18 the designated authority shall consider whether there has been a significant price under cutting by the dumped imports as compared with the price of like product in India, or whether the effect of such imports is otherwise to depress prices to a significant degree or prevent price increase which otherwise would have occurred, to a significant degree. (iii) In cases where imports of a product from more than one country are being simultaneously subjected to anti-dumping investigation, the designated authority will cumulatively assess the effect of such imports, only when it determines that (a) the margin of dumping established in relation to the imports from each country is more than two percent expressed as percentage of export price and the volume of the imports from each country is th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he narrowest group or range of products, which includes the like product, for which the necessary information can be provided." 9. In this case, the D.A. has dealt with the injury determination in paragraphs 117 to 161 of the impugned final findings. The D.A. has taken recourse to the provisions in Annexure-II, clause (iii) to the AD Rules and has decided to assess injury to the domestic industry cumulatively from China and Thailand. He has assessed the demand in terms of consumption of the impugned goods by computing the total of domestic sales by the Indian producers and imports from all sources. The Table in paragraph 119 of the final findings, indicates that there are increases in sales by domestic industry from 9999 MTs in 2004-05 to 24159 MTs in the POI Period of Investigation - April 2007 to March 2008). The imports from China and Thailand (subject imports) increased during this period from 1361 MT to 28386 MTs. Imports from other countries were significantly less which increased from 107 MTs to 11006 MTs during the same period. For injury determination the period chosen by the D.A. was from April 2004 to March 2007. 10. While examining the volume effect of the dumped ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....66%. The indexed wages have also increased from 100 to 216.07% between the base period and POI. 13. The D.A's finding is that the productivity of the domestic industry has declined from 100 to 93.16% between the base period and the POI. The D.A. has also come to the conclusion that the landed price of the imports is significantly below the selling price and non-injurious price of the domestic industry resulting in significant price under-cutting and under-selling as recorded in paragraph 140 to 144 of the final finding. As regards the inventories of finished goods with the domestic industry, the D.A. has recorded an increase in the inventories during the POI compared to the base year. As regards the ability to raise investments, the domestic industry has claimed that if the dumping continues they would have difficulty in raising capital but D.A. does not appear to have examined this claim as seen from paragraph 147 of the final finding. The cash profits (indexed) rose from 100 in the base year to 423.36 in the POI. As regards growth of domestic industry, the D.A. has noted that the production and sales volume have shown growth between the base period and the POI but the rate of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ut that examination of the injury indices show no material injury to the domestic industry. In this regard, the following Tabulation compiled from the final finding was submitted before us :- Examination of Injury Indices (Source : Final Finding issued by Respondent No. 1 dated January 1, 2010) Unit 2004-05 2005-06 2006-07 POI 1. Capacity MT 26,270 32,414 37,366 37,636 2. Production MT 18,622 21,895 25,190 27,364 3. Capacity Utilization % 71 68 67 73 4. Growth in production MT 18 15 9 5. Sales (Domestic) MT 9,999 14,596 19,440 24,159 6. Sales (Export) as per petition MT 12,487 9,137 7,723 5,561 7. Inventory MT 100 150 233 245 8. Selling Price Rs./Kq. 100 112 119 121 9. Cost of sales Rs./Kg. 100 111 115 118 10. Profit / Loss MT (100) (99) (55). (60) 11. Capital Employed Rs./Lakhs 100 158 185 210 12. Return on Investment % (100) (168) 290 65 13. Cash Profit Rs./Lakhs 100....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y faced deterioration in profits, cash flow and return on investments. In the written submissions filed by the Advocate for the D.A. it has been stated that acceptance of significant price undercutting and consequent decline in market share of domestic industry resulted in a situation where the domestic industry was unable to increase its sales and production volumes in spite of higher market demand and unutilized capacities. Consequently, profitability also suffered. It has also been stated on behalf of the D.A. that the inability of Indian producers to meet the demand for the product in the country cannot be held against them and the domestic industry cannot be denied anti-dumping duties on the ground of its inability to meet the demand. It has also been stated that quality was not relevant consideration particularly when the claim for poor quality was not quantified. The D.A. has also referred to exports by the domestic industry evidencing acceptability of domestic tyres in the export market. 20. The learned Advocate appearing for the domestic industry have argued in support of the D.A's analysis of injury parameters and findings on injury. They have argued that there is no c....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... a view other than what has been taken by the Designated Authority and the Tribunal. Accordingly, the findings recorded by the Designated Authority as well as by the Tribunal on this point are confirmed." 23. Attention has also been drawn on behalf of the domestic industry to the D.A's finding on price undercutting and price underselling. Similar references have also been made by the domestic industry to findings by the D.A. in respect of other relevant economic factors. It has been argued on behalf of the domestic industry that it was prevented from utilizing its production capacities, and that its production and sales volumes suffered on account of significant price undercutting. 24. In reply to the submissions made by one of the appellants, it has been submitted on behalf of the domestic industry that there is no legal justification for excluding imports meant for original equipment from the consideration by the D.A. nor he has any discretion vested in him to do so. The charge of making poor quality of tyres has been denied by the domestic industry stating that tyres made by the domestic industry is for sale in India as well as for export market including Europe. It has al....
X X X X Extracts X X X X
X X X X Extracts X X X X
....stry as seen from paragraph 128 of the final findings was 70,89% in 2004-05 which became 67.55% in 2005-06, 67.42% during 2006-07 but increased to 72.71% in the POI. As such, when the production, domestic sales and the capacity utilization of the domestic industry has increased, it is difficult to say that the increase in import volumes has adversely affected the domestic industry. Despite such growth in production, sales and capacity utilization by the domestic industry, the D.A seems to have concluded an adverse volume effect of imports merely by looking at. the rate of growth of the domestic industry. For example, the domestic industry increased its production from 21895 MTs in 2005-06 to 25190 MTs in 2006-07. Thus there was an increase in production by 3295 MTs which translates to a growth of 15.5%. But the D.A. looks at this adversely because in the previous year the growth has been to the extent of 17.58%. Such a view is debatable. When there is continuous growth by the domestic industry over the period selected as injury period, the D.A.'s conclusion on injury is based on consideration that domestic industry is not growing at a higher rate. 26. We have heard appellant No.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed to increase in sales volume, the level of inventory has almost remained the same percentage-wise and this cannot therefore be straightaway considered to be an injury indicator. While determining the injury to the domestic industry, the D.A. has assumed a profit margin of 22% which has been challenged by the appellants. Calculations done by the D.A. applying 2.2% return on capital has coloured the injury determinations. As stated earlier, it has been submitted by appellant No. 4 that their target return on capital is only 10% and that of Continental Tyres, a German entity which is the fourth largest tyre company in the world has a return on capital of 11% and Hangkok Tyres, which is in the top 10 league, has a capital return of 16% only. The domestic users of impugned products have also questioned the validity of assuming a high return of 22% on capital employed for the domestic tyre industry. Some of the determination, which have been made by the D.A. is based on assumption of such a high level of return on investment and therefore they do not appear to be correct determinants of injury to the domestic industry. For example, determination of the non-injurious price assuming a hi....