TaxTMI 
TaxTMI 
TaxTMI 
2006 (4) TMI 510
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....fication issued on the basis thereof by the Central Government in exercise of the powers conferred by sub-section (1) read with sub-section (5) of Section 9A of the Customs Tariff Act, and Rules 18 and 20 of the Customs Tariff (Identification, Assessment and Collection of Anti-Dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995. 2. In its final finding, the Designated authority had come to the conclusion that acyclic alcohols (Oxo Alochols), namely, Normal Butanol (NBA), 2-Ethyl Hexanol (2-EHA), Iso Butanol (IBA), Sabutol and Octanol had been exported to India from the subject countries below their normal value and that the domestic industry had suffered material injury which had been caused cumulatively by the dumped imports from the subject countries. It was held that it was considered necessary to impose definitive anti-dumping duty on the forms of acyclic alcohols (Oxo Alcohols), including those forms held as "like article", where there was either evidence of dumping of the specific forms or of other forms held as "like article" during the period of investigation. The designated authority accordingly recommended imposition of anti-dumping duty on ....
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....final findings and the resultant notification levying the anti-dumping duties be modified so as to; remove the anti-dumping duty on those categories of alcohols for which dumping margin has not been determined or cannot be determined; remove the anti-dumping duty on octanol and sabutol as these alcohols are not manufactured in India; exclude from the purview of product under consideration nonanol, Iso nonanol, octanol and sabutol as there is no domestic industry that manufactures these alcohols; and remove the retrospective effect of the final anti-dumping duty. 4.3 In Appeal No. C/610/03 the importer [Lubrizol India (P) Ltd.] has prayed for the same reliefs, as in Appeal No. C/609/03. 5. The initiation notification dated 31-1-2002, was issued in respect of anti-dumping investigation concerning import of the subject articles from Singapore, Brazil, Rumania, Malaysia and South Africa on the basis of the petition filed by National Organic Chemicals Industries Ltd. (NOCIL), Mumbai, and Andhra Petrochemicals Ltd., Hyderabad alleging dumping of certain types of acyclic alcohols from these countries into India and requesting for anti-dumping investigations and levy of anti-du....
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....hey were comparable to 2-EHA in terms of their product characteristics, such as physical and chemical characteristics, manufacturing process and technology, functions and uses, product specifications, distribution and marketing and tariff classification. According to the domestic industry, these types of subject goods are "like articles" to the types imported in India and that though various types of alcohols are required for specific end applications, there is a great amount of substitutability between various of types of alcohols in terms of product characteristics. It was claimed that the fact that different types of plasticizers are produced using different types of alcohols did not imply that these alcohols were different products. Plasticizers can be broadly divided into two categories based on their specific end applications, namely, general purpose plasticizers and speciality plasticizers. The general purpose plasticizers are Di Octyl Phthalate (DOP) and Di Iso Octyl Phthalate ((DIOP), and find major market in the manufacture of films, leather cloth, cables, foot-wear, flooring tiles etc. Dibutyl Phthalate (DBP) and Di Iso butyl Phthalate (DIBP) are used as substitutes for ....
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...., the petitioners appeared to treat all plasticizers as a homogenous product presuming that any type of alcohol may be used in the production of every plasticizer. According to them, there are different varieties of plasticizers and one variety cannot be used as a substitute for another. Raw material for one plasticizer is different from the raw material for another plasticizer and the end uses of one plasticizer are also different from that of another plasticizer. Further, Iso Octanol and Iso Decanol were manufactured earlier by M/s. Indo Nissan which closed down three years back and they were not petitioners in the investigation. After the closer of Indo Nissan, there were no producers for Iso Octanol and Iso Decanol. All these other types of alcohols are neither produced in India nor they form substitutes for the three products produced in India and therefore, they should be excluded from the product definition. As regards Sabutol, it was also contended by Sasol that its traditional use was not to manufacture plasticizers. Any use of Sabutol for the purpose of plasticizers is a recent development. Plasticizers made from Sabutol did not have the traditional plasticizing efficienc....
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....e Brazilian exporter as well as some of the trade related data. It was, therefore, held that octanol was a "like article" to the products being produced by the domestic industry. 5.8 As regards Nonanol and Iso Nonanol, the authority observed that as per the technical literature furnished by the petitioner showing the characteristics of these two types as a resembling those of 2-EHA, and the article appearing in Asian Chemical News (25th February, 2002 issue) showed that their technical characteristics closely resemble to 2-EHA, and that DOP the plasticizer produced from 2-EHA had substitutability with DINP the plasticizers produced from Iso Nonanol. It was held that Nonanol and Iso Nonanol were "like articles" within the meaning of Rule 2(d) of the rules. 5.9 The authority held that at the time of initiation of investigation in the instant case the petitioners had supported their claim that the types of alcohols being included in the investigation are "like article" to the products being manufactured by the domestic industry. The designated authority upon being satisfied with the prima facie evidence as regards the requirement of Rule 2(d) had initiated the investigatio....
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....es resulted in the curtailment of market share of the petitioners. Sabutol and Octanol though not produced by the domestic industry were found, on the basis of close resemblance of characteristics, to be like articles to the domestically produced Oxo alcohols and it was held that they were commercial substitutes and their import had the effect to displace the demand of domestically produced alcohols. 5.13 It was concluded in the preliminary findings that acyclic alcohols, namely, NBA, 2-EHA, IBA, Sabutol, Octonol and Iso Octonol had been exported to India from the subject countries below their normal value; the domestic industry had suffered material injury that had been caused cumulatively by the dumped imports from the subject countries and there was a threat of injury due to imminent imports of like article in large quantities. 5.14 On the basis of the preliminary findings, provisional duty notification was issued by the Ministry of Finance on 5-9-2002, imposing anti-dumping duty with effect from 4-3-2003 on the said acyclic alcohols which were imported from Brazil, Malaysia, Romania, Singapore and South Africa, as tabulated in the notification. 6. The authorit....
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....cohol to the other form in the case of Nonanol, Iso Nonanol and Sabutol as a preference to the domestically produced alcohols. As regards Octonol, it was noted that some of the Indian user had placed order on the Indian domestic producer giving the description as 2-EHA (Octonol). The exports of Octonol from Romania had been cleared by the importer describing them as 2-EHA on the bill of entry. The authority, therefore, confirmed its view that NBA, 2-EHA, IBA, Sabutol and Iso Octonol, Nonanol and Iso Nonanol which were forms of acyclic alcohol in the product under consideration were like article to the domestically produced Oxo Alochol, namely, 2-EHA, IBA and NBA. 6.2 The authorities on the basis of the material on record determined the dumping margin, as tabulated in paragraph 33 of its final findings which showed that import of NBA from Malaysia and South Africa were de minimus. 6.3 After examining the relevant indices for injury analysis, the authority concluded that the domestic industry had suffered material injury on account of significant increase in the volume of dumped imports from the subject countries, significant price undercutting and price suppression. It w....
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.... industry. 6.4 The anti-dumping duty was accordingly imposed by the Notification, dated 1-10-2003, as detailed in the said notification with effect from 5-9-2002, being the date of imposition of the provisional anti-dumping duty. Arguments on behalf of the Domestic Industry : 7. The learned Counsel appearing for the domestic industry submitted that the designated authority has misdirected himself by proceeding on the basis that it can only levy duty on product types that are actually exported to India from a given country even though he found that other product types are being dumped by that country. It was submitted that proper procedure which was required to be followed was to work out one weighted average dumping margin for all the product types put together after taking into account individual dumping margin of each product type and without zeroing. According to him, the designated authority should not have worked out dumping margin for product type not actually exported to India by an exporter from a country. It was further submitted that in the absence of non-confidential summary submitted by the exporters especially Sasol and BASF Malaysia, all submissions made ....
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....Rule 2(d) of the rules. It was argued that the product under consideration must be identified on the basis of the definition of a like product. Reliance was placed on Bed Linen case (WT/DS/141/AB/R) for pointing out that the appellate body while interpreting Article 2.4.2 of the Anti-Dumping Agreement held that having identified the product which was clearly identified cotton type bed linen as the product under investigation, which fact was undisputed in the appeal, the European Communities were bound to treat that product consistently thereafter in accordance with that definition, and that, with respect to Article 2.4.2 the EU had to establish, "the existence of margins of dumping" for the product - cotton type bed linen - and not for the various types or models of the product. It was held that there was nothing in Article 2.4.2 or any other provision of the Anti-Dumping Agreement that provided for the establishment of "the existence of margins of dumping" of the types or models of product under investigation; to contrary, all references to the establishment of "the existence of margin of dumping" are references to the product that is the subject of the investigation. It was held ....
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.... It was also submitted that various consumers had interchangeably consumed Deconol, Octonol, EHA, INA, which clearly established substitutability. Moreover, the association of the consumers was named after "plasticizers" and the consumers did not refer themselves as producers of DOP, DINP etc. It was submitted that since the designated authority had confirmed in the final findings its reasoning that nonanol and Iso nonanol were "like products", to the products NBA, IBA and 2-EHA, manufactured by the domestic industry, duty ought to have been imposed on them. It was submitted that there were numerous cases where anti-dumping duty was imposed on products not imported in the investigation period. It was then argued that the domestic industry had suffered material injury caused by the dumped imports. Indo Nissan Chemical Industries Ltd., Bombay suspended production since 1999 during the previous investigation. Subsequently, NOCIL also suspended production of the subject goods during the present period of investigation. It was only imposition of anti-dumping duties in the previous investigation that permitted the appellant domestic industry Andhra Pradesh Petro Chemicals to surviv....
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....ein that the market share of the domestic industry increased from 27% to 31.55% to 42.76% in the period of investigation and that the domestic industry had significantly increased the market share. Even then, in paragraph 46(f), the authority had categorically recorded that the market share in demand, of the domestic industry had increased during the period of investigation. The other producers had also increased the market share 24% to 33.59% while imports lost market share from about 43% to about 27%. It was submitted that there was thus no curtailment in the market share of the domestic industry. Therefore, the finding that the increased imports resulted in curtailment of market share of the domestic industry was contrary to the facts on record. It was then argued that in the annual report of the domestic industry for the year 2000-01, it was stated that the plant operations were suspended from January 22, 2001 till 4th July, 2001 due to operational constraints and uneconomic market pricing. The domestic industry had increased its capacity from 30,000 MTs to 36,000 MTs in 2000-01 as per the annual report. During the ten months of operation till 22nd January, 2001, they produced ....
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....nsion of operation from 22-1-2001 to 4-7-2001, imports came in. This explains the increased import of 8348 MTs in April-June, 2001. Thus the increased imports were caused by the suspension of operations and not vice versa. It was submitted that this established that the causal link was totally incorrect. It was then contended that there was a contraction in demand. There was a fall of about 20% in demand in the POI as compared to 1999-2000. It was submitted that in a period when the demand fell by 20%, the market share of the domestic industry increased by over 11%, and the evaluation made by the designated authority was, therefore incorrect. As regards price undercutting, it was submitted that mere price depression/suppression was not sufficient and that it should be a significant one. The data shows that the suppression/depression in price which had reduced from 69.93% to 2.5%, was not significant suppression. The designated authority did not consider whether there had been a significant price undercutting, as contemplated in para (ii) of Annexure II to the Rules. It was then pointed out that the domestic industry had consistently suffered loss during the past few years and it wa....
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....g duty on IBA from Malaysia. It was submitted that initiation for these three products and imposition of duty on one product from Malaysia was illegal, and that the notification was liable to set aside to that extent. Moreover, as per the petition of domestic industry, 2 EHA was not imported from South Africa, NBA and IBA were not imported from Romania; and there was no import of Hexanol, Heptanol, Nonanol and Iso-nonanol, Decanol and Iso-deconol, and therefore, initiation of investigation in respect of these products from these countries was illegal. It was then argued that the authority had investigated different products in a single investigation and not different product types. It was submitted that it was not customary for an initiation notification to specify the product types and investigation is always against the article or articles under investigation. Different types of 'article under investigation' are also 'article under investigation' and hence are not specified separately. It was submitted that the contention that each of the oxo alcohols are product types and not different products was an afterthought. It was submitted that the decision in Cotton Bed....
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....e decision of the Tribunal in Oxo-Alcohols Industries' Association v. Designated Authority reported in 2001 (130) E.L.T. 58 (Tribunal) for pointing out that in that case the Tribunal equated, "close resemblance" to whether the products were directly substitutable or interchangeable with each other and held that in addition to being interchangeable or substitutable, for two products to be a like, their characteristics must closely resemble each other. If Iso-decanol had been used in the manufacture of different types of plasticizers they cannot be a like and that more substitutability was not enough for treating two articles as being "like". It was submitted that the designated authority had no evidence on record to show that Sabutol was in fact substituted for the good quality products such as IBA or NBA. It was submitted that Sabutol was not a like product having regard to the difference in chemical properties, its functionality and its prices factor. The composition of Sabutol was more akin to the seconds material of NBA/IBA column bottoms and these are waste materials and not first grade production. It was submitted that all alcohols are not technically or commercially substitut....
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....gnated Authority : 10. The counsel for the designated authority supporting the reasoning contained in the final findings and the validity of the impugned notification contended that the oxo-alochols were product types and they were all products under consideration. He relied upon the reasons given by the authority in paragraph 48 of the final findings for non-imposition of anti-dumping duty Nonanol and Iso-nonanol. He submitted that these products were not imported into India and therefore, duty was not levied. As regards Sabutol, he submitted that it could be used as a substitute for NBA and 2-EHA. He submitted that since a Sabutol could replace NBA and there was evidence to show that one user had switched over to that product (para 8.5 of the final finding), there was justification for imposing duty on Sabutol. It was submitted that NBA, 2-EHA, IBA, Sabutol, Octanoland Iso-nonanol were all forms of Acyclic Alcohol in the product under consideration which were like articles to the domestically produced Oxo-alcohol, namely 2 EHA, IBA and NBA. It was submitted that since there was no evidence of dumping of Iso-nonanol during the period of investigation and sufficient justifica....
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....hese acyclic alcohols are classified under the following sub-headings 2905.13, 2905.14, 2905.16, 2905.17 and 2905.19 of heading 29.05 of Schedule I of Customs Tariff Classification :- "2905.13 --Butan-1-ol (n-butyl alcohol) 2905.14 --Other butanols 2905.16 --Octanol (octyl alcohol) and isomers thereof 2905.17 --Dodecan-1-ol (lauryl alcohol), hexadecane-1-ol (cetyl alcohol) and octadecan-1-ol (stearyl alcohol); 2905.19 --Other" Though the initiation notice was in respect of ten types of acyclic alcohols, in the preliminary findings, the investigation was confined to the following six types of acyclic oxo-alcohols which were treated as "like article" for the preliminary findings, as held in para 6.12 of the preliminary findings :- (i) Normal Butanol (NBA) or N.Butyl Alchol Butan-1 -01 (ii) 2-Ethyl Hexanol (2-EHA) (iii) Iso Butanol (IBA) or Butan 2-01 (iv) Sabutol (v) Octanol and Iso Octanol (vi) Nonanol and Iso Nonanol. 11.3 The designated authority held in the preliminary findings (para 6.9) that Nonanol and Iso Nonanol were like articles within the meaning of Rule 2(d) of rules. It was also held (in para 6.6) that Sabutol which was described in the comm....
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....it necessary to impose definitive anti-dumping duty on the forms of acyclic alcohols, (oxo alcohols) including those forms held as 'like articles', where there is either evidence of dumping of specific forms or of other forms held as like articles during the period of investigation. Accordingly, the designated authority recommended (para 56 of the final findings) imposition of anti-dumping duty on the imports of the following forms/types of acyclic alcohols from subject countries in order to remove the injury to the domestic industry :- "Normal Butanol (NBA), 2-Ethyl Hexanol (2-EHA), Iso Butanol (IBA), Sabutol and Octanol". It was held (in para 48) that there was no evidence of dumping of Iso Nonanol during the period of investigation and sufficient justification was not brought out before the authority to establish a case of threat of material injury on account of the alleged imports of Iso Nonanol subsequent to period of investigation. 12. Anti-dumping duty may be imposed upon the importation of any article into India at less than its "normal value". The quantum of duty on such article will not exceed the "margin of dumping" which phrase is defined in the explanation to S....
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....any other article, which may be a like article. The definition of the expression "like article" under Rule 2(d) of the said rules, cannot be projected in Section 9A(1) for the purpose of giving any enlarged, meaning to an article which upon its importation into India may be subjected to anti-dumping duty. There can, therefore, be no question of roping in any article other than the article which is identified, for the purpose of imposing anti-dumping duty under Section 9A(1). 14. 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 res....
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....n 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. For the same reasons imposition of anti-dumping duty on the articles which were not imported, was not justified. 14.3 The designated authority is required to give a final finding, inter alia, as to the export price, normal value and the margin of dumping of the article under investigation and as to whether import of the said article into India causes or threatens material injury to any industry established in India or materially retards the establishment of any industry in India. If there are more than one article identified for the purpose of investigation, the scheme of the Act and the rules clearly contemplates determination of existence, degree and effect of any alleged dumping of each article, and determination of the normal value, export price and the margin of dumping of each of such article under investigation. It may be convenient for the designated aut....
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....r injury to the domestic industry. Therefore, no question of imposing any duty can arise where any article under consideration or any of the articles under consideration is not exported to India, nor any question of imposing any duty can arise where any of such article under consideration has not resulted in dumping or has not caused injury to the domestic industry on such separate determinations of the relevant issues in respect of such article. The designated authority, therefore, committed an error, in recommending duty on articles which were not imported from some countries, on the ground that other articles under consideration were being exported to India. 14.4 There is no dispute about the fact that negative dumping margin was shown in the petition for NBA by South Africa, from Malaysia and IBA from Singapore. The dumping margins reflected in para 33 of the final findings show that from Malaysia dumping margin of NBA was de minimus, the dumping margin of IBA from Singapore was minus 27.17 and of NBA from South Africa was minus 22.52. When there was no dumping margin or where it was de minimus, no question of imposing anti-dumping duty could have arisen in respect of imp....
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....ational constraints and uneconomic market pricing. Sales and other income for the year under review was Rs. 14,829.01 lakhs as compared to Rs. 8,982.11 lakhs in the previous year. Company ended with a cash profit of Rs. 432.14 lakhs as against loss of Rs. 698.93 lakhs in the previous year. However, profit margin has come down mainly due to Propylene price remaining continuously high throughout the year". [Emphasis added] 14.7 This authentic document regarding the operations of the company which covers the period of investigation shows that the production of the company was significantly high, inasmuch as, 34.437 MTs were produced in a period often months' operation, and also shows the significant level of sales of 34,943 MTs during the year. An important fact emanating from the aforesaid excerpt which has been overlooked by the designated authority in arriving at its final findings and the impact of which was not comprehended, is that, the plant operations of the company were suspended from January 22, 2000 till 4th July, 2001, due to "operational constraints and uneconomic market pricing". We do not understand as to how the opening words "operational constraints" escaped no....
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....the last three months of the POI. The domestic industry had increased its capacity by 20% in the year 2000-2001 by raising it from 30,000 MTs to 36,000 MTs and despite its operations being suspended for more than five months its capacity utilisation was nearly 117%. Their sales had increased significantly despite the fact that they had suspended the operation for the said period. 14.10 It would appear from the 17th annual report 2000-01 of the domestic industry (page 15) 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 Rs. 35.64 per Kg. which showed that the landed value of Rs. 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 pri....