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Customs Notification, Circulars Anti-Dumping Notifications (DGAD)  NOTIFICATION NO. 27/1/2001-DGAD DATE 19/09/2002
NOTIFICATION NO. 27/1/2001-DGAD DATE 19/09/2002

Anti-Dumping investigations concerning Sunset Review of anti dumping duty on imports of Catalysts viz. Hydrodesulphurisation, Zinc Oxide Desulphurisation, High Temperature Shift, Low Temperature Shift, Secondary Reforming and Methanation Catalysts from Denmark [FINAL FINDINGS]

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.

A
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 Catalysts as indicated in the original preliminary findings of the Authority dated 7.5.1997 and the Custom Notification No.56 dated 20.6.1997 (hereinafter also referred to as subject goods and subject catalysts) originating in or exported from Denmark (hereinafter referred to as subject country).
(ii)
The Authority issued a public notice dated 17.1.2002 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 38 and also under 98 of Schedule I of the Customs Tariff Act, 1975 as amended in 1995 originating in or exported from Denmark.
(iii)
The Authority forwarded a copy of the public notice to all the known exporters (whose details were available in view of investigations conducted earlier) and 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 exporter and the Embassy of the subject country/ European Union, Delegation of the European Commission, 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 Haldor Topsoe A/s (HTAS), Denmark

Response/information to the questionnaire was filed by the following exporters/producers:

(i) M/s Haldor Topsoe A/s (HTAS), Denmark
(viii)
The Embassy of the subject country in New Delhi and European Union, Delegation of the European Commission New ,Delhi were informed about the initiation of the investigation in accordance with Rule ,6(2)4, 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 Embassy of the subject country and European Union, Delegation of the European Commission, New Delhi 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):-

Response/information to the questionnaire was filed by the following importers:

(i) M/s Rashtriya Chemicals & Fertilisers Ltd., Mumbai

(ii) M/s Indian Oil Corporation Ltd., West Bengal.
(x)
Information regarding injury was sought from M/s Project and Development India Ltd? (PDIL) and M/s Sud-Chemie India Pvt., Ltd. (SCIL,), the domestic producers of the subject goods. The cost of production/injury information was furnished by M/s SCIL only. M/s PDIL however gave information regarding their production of various subject catalysts in the POI
(xi)
Request for extension was made by certain interested parties which was considered by the Authority and extension was grated upto 20.3.2002. Comments received on the same have also been duly considered in these findings.
(xii)
Cost investigation of M/s SCIL was also conducted to work out optimum cost of production and cost to make ad sell the subject goods in India on the basis of Generally Accepted Accounting Principles (GAAP( ad the information .furnished by the petitioner. The cost data of M/s Sud-Chemie India Pvt. Ltd. was provided and analysed.
(xiii)
Additional information from M/s HTAS, the only responding exporter from Denmark was also sought.
(xiv)
An opportunity was provided to all interested parties to present their views orally on 29.4.2002. 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.
(xv)
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).
(xvi)
In accordance with Rule 16 of the Rules supra, the essential facts/basis considered for these findings were disclosed to known interested parties on 3.9.2002.
(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 (POI) considered is 1.4.2000 to 30.9.2001
B.
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 arguments raised by the interested parties have been examined, considered and, wherever appropriate, dealt in the relevant paras herein below.

1.
VIEWS EXPRESSED BY M/S SUD-CHEMIE INDIA PVT. LTD. (SCIL)
a)
PRODUCT UNDER CONSIDERATION & LIKE ARTICLE
(i)
In regard to LTS, HTAS has mentioned that they are supplying special catalyst LSK. Both LSK and LK823 type catalysts have been manufactured and can not be manufactured in that way in India. This claim of M/s HTAS illustrates that HTAS is building grounds to circumvent anti dumping duty in future in case of LTS catalyst.
(ii)
HTAS resorts to offer catalysts with minor modification and calls them proprietary by changing nomenclature.
(iii)
In regard to Methanation, there is nothing revolutionary in introducing a pre-reduced catalysts. Domestic Industry can also manufacture pre-reduced or activate the catalyst before delivery. HTAS is trying to introduce a new proprietary product by circumventing anti dumping duties.
(iv)
HTAS has supplied HDS catalyst from its market subsidiary which does not attract anti dumping duties. We request the anti dumping duty to be put on this catalyst when supplied from USA also.
b)
DUMPING
(i)
NORMAL VALUE
(i)
The Domestic Industry has provided information on the actual prices received from M/s Sud-Chemie AG, Germany during the period of investigation for supply of subject catalysts within the Territory of European Union.
(ii)
The domestic market of M/s HTAS is not only confined to Denmark since it does not have any user industry but to the entire Territory of European Union.
(iii)
M/s HTAS have admitted to have supplied ZnODS and LTS catalysts into India at prices which are at dumped levels. In case of ZnODS, there was no anti dumping duty in place since there were insufficient injury caused to the Domestic Industry during initial investigation though the Designated Authority had found M/s HTAS's prices were dumped prices. This scenario has changed for the worst and that injury would be found to the Domestic Industry now.
(iv)
The dumping is relevant to the normal value and not to the cost of production and that the normal value should be the price at which the HTAS supplied these catalysts in the European Union. Mls HTAS should make available these prices in the European Union to the Designated Authority.
(ii)
EXPORT PRICE
(i)
M/s SCIL has provided tender participation details on six catalysts for the POI indicating the participation and award of tender to various participants.
In response to the Disclosure, the following submissions have been made

(i)
We would like to reiterate here that the Sunset Review the Designated Authority needs to take a broad view of the case to examine whether M/s HTAS will again resort to dumping their products in the absence of Anti Dumping Rules.
(ii)
The Designated, Authority has examined the case within the limited time frame of the period of investigation under this review. This, while enough for the Designated Authority to examine if actual dumping is occurring and the injury on Domestic Industry, is not "large enough a time span to come to a conclusion as to the long term intentions of any company.
(iii)
We would also like to bring to your attention to our submission dated July 13, 2002, wherein we have provided information on M/s HTAS's dumping prior to POI under this review, and have shown M/s HTAS receiving orders for HTS catalyst at highly injurious prices. This period was outside the POI but clearly shows HTAS's intention. It was because of these orders having been procured by HTAS that PDIL and ourselves had to suppress our prices to get further orders. In actual fact, PDIL and us were not competing against each other as alleged by HTAS but were forced to reduce our prices or else lose orders to HTAS. It is pertinent to note that at the time of bidding, it is not always known who the other contenders are.
(iv)
Keeping the fact of (iii) above and a larger time frame in mind, we request the Designated Authority to continue with the Anti Dumping-Duty on HTS catalyst as, in the absence of the Anti Dumping Duty, HTAS will once again resort to selling their catalyst at dumping prices.
(v)
We request that in the event of finding yourself unable to use information from outside the POI, you at least use the Non-Injurious price worked out by you for the HTS catalyst and take an undertaking from Ws HTAS that they will not supply at prices below such NIP. We are confident that M/s HTAS will refuse to do so in the event of being asked further strengthening our contention that their intention to dump at injurious prices remain.
c)
INJURY & CAUSAL LINK
(i)
We have been able to maintain our market share and therefore there is no significant decline either in our production or in capacity utilisation or in our employment levels. However this has been achieved at the cost of having to suppress our sales price in spite of our increase in production leading to greater loss in profits as evidenced by the loss incurred in actual indigenous sales turnover for the past six years.
(ii)
The catalysts-wise information and the landed value clearly indicates that there is a causal link between our performance and the existence of Anti Dumping Duty.
(iii)
Because of present anti dumping duty in case of some catalysts, we have managed to benefit by increasing our market share as also our capacity utilisation. However this alone has not been sufficient to remove injury caused to us as cm been seen from the sales price compared to our cost of production.
(iv)
Injury has persisted due to our having to suppress or reduce our prices because of M/s HTAS's policy of negotiating down or quoting the very low prices in their catalysts.
(v)
In case of ZnODS catalysts, HTAS continued to dump and that the fall in existing duty, the dumping margin has increased. The situation has now changed and we are being injured by the dumping of ZnODS.
(vi)
The process of recovery has been slow for us and that five years is too short a time for anti dumping duty to have effect on the market to enable the prices to be increased. The majority of these five years have been consumed in the legal process and there has been a stiff resistance for any increase in price.
(vii)
There has been a significant effect of catalyst's life which pertains from 5 years to 12 years depending on plant design and therefore 5 years period for anti dumping duty is not sufficient to have its effect in the market.
(viii)
We are managing to retain our market share provided that if the anti dumping duties are continued for a few more years so that we will be able to increase our price in a manner which will be to our customer's satisfaction.
(ix)
The anti dumping duty as calculated on the basis of our cost of production at 70% capacity utilisation is inadequate to redress the actual market injury being suffered now by the Domestic Industry.
(x)
The basic Customs duty has decreased to 25% which has meant the landed cost for exporter is now cheaper allowing him to further reduce its price.
(xi)
HTAS's strategy has been to quote very low prices on non-proprietary catalysts and compensate the losses so incurred by selling their proprietary catalysts namely Primary Reforming Catalyst and Ammonia Synthesis Catalysts at high prices giving them unrealistic profits.
(xii)
In case of Methanation, no tender was floated during the POI. As was if HTAS has not supplied this as dumped prices because there is no demand for this catalyst.
(xiii)
In case of Secondary Reforming Catalyst only one tender was floated during the POI and the order was awarded to a foreign company i.e. M/s Synthetic. HTAS did not participate in this tender at all.
(xiv)
In case of HTS we found it difficult to believe that HTAS who continued dumping in case of other catalysts will not take advantage of the situation to recommence dumping of HTS if there were no anti dumping duties.
(xv)
Regarding price suppression, it has been mentioned by HTAS that it has been on account of internal competition amongst domestic producers. As pointed out by us, there is a definite causal link between HTAS's account of dumping and inability of the Domestic Industry to substantially increase its prices. We deny HTAS's contention that our injury is self-inflicted.
(xvi)
We are not only being injured by the attitude of M/s HTAS but also the injury has increased from past levels because of factors like existing customs duties, cost of production, capacity utilisation etc. which ale beyond our control.
2.
IMPORTER'S VIEWS
The following submissions have been made by M/s Rashtriva Chemicals & Fertilisers Ltd.. Mumbai and M/s Indian Oil Corporation Ltd.. West Bengal:

a)
EXPORT PRICE
(i)
The import prices of various non-subject catalysts have been provided by M/s Rashtriya Chemicals & Fertilisers Ltd., Mumbai and M/s Indian Oil Corporation Ltd., West Bengal which are not pertaining to the subject catalysts.
3.
EXPORTER'S VIEWS
A)
M/S HALDOR TOPSOE A/S(HTAS), DENMARK
a)
PRODUCT UNDER CONSIDERATION & LIKE ARTICLE :
(i)
The allegation regarding circumventing anti-dumping duty on LTS is incorrect since LTS catalyst is subjected to anti dumping duty even after modification. There are no catalysts being manufactured within India today with the proprietary LSK and LK 823.
(ii)
As regards pre-reduced methanation catalyst, we have not exported the same and we have made submission that this catalyst has not been manufactured in India till date.
In response to the Disclosure Statement, the following submissions have been made :

(i)
We agree with the Authority that the product under consideration is the six Catalysts identified in the original investigation. In regard to the LTS Catalyst, we have clearly stated that there is no attempt to circumvent the anti dumping duty on the said Catalyst. In fact, we had categorically, indicated that the modified LTS Catalyst has been subjected to anti dumping duty. We had only pointed out that the modified LTS Catalyst is not manufactured in India. We agree with the Authority that the HDS Catalyst exported from USA was not within the purview of the original investigation and consequently, is not within the purview of the present Sunset Review.
b)
DOMESTIC INDUSTRY
In response to the disclosure, the following submissions have been made:

(i)
We submit that SCIL and PDIL do not constitute the domestic industry. It is pertinent to note that the Sunset Review has been initiated by the Authority and not at the instance of the domestic industry. Consequent on the initiation, only PDIL has come forward to support the Review. Hence PDIL cannot be treated as forming part of the domestic industry. Our submission is also reinforced by the fact that the Authority had also examined only SCIL for the purpose of injury determination.
c)
DUMPING
(i)
NORMAL VALUE
(i)
The exporter has indicated that there are no sales in the home market of the six catalysts during the Period of review.
(ii)
The exporter has also provided the quantity of exports to other countries with reference to six catalysts.
(iii)
The exporter has provided details on the cost of production for the 6 catalysts during the period of investigation. The exporter has submitted that out of 4 catalysts have not been exported during the period of investigation and so there is no export price and hence the dumping margin cannot be determined.
(iv)
The cost of production of ZnODS and LTS catalysts have been provided and these are supplied at prices which covered total. costs including the overheads and hence these have not been dumped.
(ii)
EXPORT PRICE
M/s HTAS have provided FoB value of ZnODS and LTS catalysts and expenses incurred on account of ocean freight and pre-FoB expenses.

In response to the Disclosure Statement, the following submissions have been made by the various interested parties:

(i)
We agree with the stand taken by the Designated Authority that the Normal Value in respect of Methanation, Secondary Reforming, HDS and HTS Catalysts need not be determined as these four Catalysts were not exported during the review period. Further, HTAS had not even participated in the tender process for two of the subject Catalysts. In any case, in the absence of export price, it is impossible to determine the Dumping Margin. Therefore, these four catalysts cannot be said to have been dumped during the period under review. The recurrence of the dumping of these four Catalysts is also a remote possibility, as has been correctly observed by the Designated Authority, as HTAS had not participated in the tender process / did not obtain any orders for these Catalysts during the period under review.
(ii)
We reiterate that the original investigation was initiated only against Denmark and not against the European Union. It is, therefore, illegal and incorrect to treat European Union as the domestic market for the purposes of review investigation. HTAS, therefore, reiterates its earlier submission that the Normal Value (for the other two Catalysts) should be determined based on the constructed value (cost of production plus profit).
(iii) HTAS notes that the Authority has determined the normal value for the LTS and ZnODS Catalyst on the basis of domestic selling prices in Germany as provided by SCIL. HTAS had exported only 60,400 litres of LTS Catalyst and 87,200 litres of Zinc Oxide Catalyst. There were only two transactions for LTS Catalyst and 7 transactions for Zinc Oxide Catalyst. It is not known whether SCIL made available the details of the sales of these two Catalysts through out the European Union in the 18 months period of investigation. It is our submission that SCIL had probably made available selective information, only of a few sales in Germany at higher prices, in order to distort the Dumping Margin. The information obtained by the domestic industry from their affiliates in Germany is being used to determine the normal value. Hence, the same should be used only after validation. In this connection, we invite the attention of the Authority to para 7 of Annex-II of the Agreement on Implementation of Article VI, dealing with best information available. The selective use of information by domestic industry because of their access to the data of their affiliate company in Germany cannot be ruled out. Hence, their information should be fully validated.
(iv) To the best of our information Zinc Oxide Catalyst had not been sold within Europe during the Review period. We request the Authority to verify the claim of SCIL in this regard. We understand that there was only one order for a small quantity of 10000 litres for LTS Catalyst. The price for this quantity would appear to be negotiated with Sud-Chemi. It is our submission that the price for the LTS Catalyst is not in the ordinary course of trade as it was a single source supply, not under competitive conditions. The said price cannot, therefore, be used for determining the normal value of the LTS Catalyst.
B)
EUROPEAN COMMISSION, DELEGATION OF EUROPEAN COMMISSION, NEW DELHI
a)
DUMPING
The following submissions have been made by European Union. Delegation of the Eurouean Commission, New Delhi:

(i)
By using list prices in Germany from a complainant's affiliate in order to calculate the dumping margin, the Designated Authority violated Article 2.2 of the WTO Anti-Dumping Agreement which provides that the dumping margin may be "determined by comparison with a comparable price of the like product when exported to an appropriate third country, provided that this price is representative. since the list prices were not prices from the exporting company - Denmark(the EU cannot be the exporting territory since the European Commission was never notified of the investigation in accordance with Article 12.1 of the WTO Anti-Dumping Agreement) - and also the list prices were not "comparable" since the Danish exporter HTAS filed evidence to show that Sud-Chemie's actual prices were between 30% and 52% below its list price.
(ii)
Even if the Designated Authority was entitled to conclude that the Danish exporter had refused access to some information, it should not have disregarded the exporter's cost information. By not explaining the reasons for the rejection of the information and not properly conducting a verification of the probative value of the complainant's information which was used, the Designated Authority violated Article 6.8 and Annex II of the WTO Anti-dumping Agreement.
(iii)
By not disclosing to the Danish exporter crucial information used to calculate Normal Value and export prices and to determine the alleged injury, the Designated Authority violated Articles 6.2 and 6.4 of the WTO Anti-dumping Agreement.
In response to the Disclosure. the following submissions have been made•

(i)
Article 11(3) of the WTO Anti Dumping Agreement (ADA) requires that:-
"………….any anti dumping duty shall be terminated on a date not later than five years from its imposition unless the authorities determine, in a review……………that the expiry of the duty would be likely to lead to continuation or recurrence of dumping and injury…………………." This provides pre-supposes the existence of an anti dumping duty on the product under review. However in the case of catalyst ZnODS there was none. Therefore, it is not possible to use the tests of continuation and recurrence based on the expiry of a duty, which does not exist, to justify the imposition on a higher duty rate on this product. Indeed the very inclusion of this product in the review investigation at all is highly questionable.

The European Commission submits that India can only impose a duty on znODS after a fully fledged investigation under Article 5 of the ADA.
ii)
The calculation of the Normal Value is clearly tin breach of the WTO Anti-Dumping Agreement. The Agreement clearly states that where there were no domestic sales the authorities must use either `a comparable price of the like product when exported to an appropriate third country provided that this price is reasonable, or……………….the cost of production in the country of origin……………’

The Indian authorities have stated that there are no sales on the domestic market, which they have identified as the European Union. However they then proceed to calculate normal value on the basis of list prices of a domestic producer in Germany. Given that there are no domestic sales in that market the authorities should have used either export prices to a third country or cost of production in accordance with the WTO Agreement. This they did not do despite the fact that the Danish exporter provided full information on the cost of production of the product concerned. In any event, it should also be mentioned that list prices of a domestic producer in Germany do not take account of discounts and other possibly significant adjustments attracted in the actual sale of a product. Furthermore it is not clear where these prices are for replacements or new equipment, a fact which appears to bear great relevance and on which India makes no finding.
d)
INJURY & CAUSAL LINK
A)
M/S HALDOR TOPSOE A/S(HTAS), DENMARK
(i)
M/s HTAS has not been able to obtain any order for the 4 catalysts during the period of review because of the fluid situation on account of litigation during which the customers have always taken into account the existence of anti-dumping duties in evaluating tenders on or after imposition of the provisional anti-dumping duties.
(ii)
The arguments that M/s Sud-Chemie was not able to make any price increase because of uncertainty does not represent the correct picture.
(iii)
The Submission of Ws Sud-Chemie that they have not been able to retain or increase market price at ruinous price is again due to their own estimation while offering quotations. The injury, if any, as a result of obtained orders at these ruinous prices are self-inflicted and cannot be attributed to dumping.
(iv)
As regards non-injurious price, depending on the optimum capacity utilisation of 70% within a period is a consistently adopted practice on determining NIP at optimal capacity utilisation. This practice has been followed in all cases.
(v)
The injury to M/s Sud-Cliemie is because of the higher costs arising out of lower capacity utilisation even after imposition of anti dumping duty and it supports the contention that injury was due to reasons entirely extraneous to dumping.
(vi)
Reduction in customs duty is a regular phenomena and that the exports have reduced prices to the extent of fall in customs duty is incorrect. The fact that HTAS did not get even one order during the period illustrates that the reduction of customs duty has in no way benefited the exporter.
(vii)
As regards proprietary catalysts referred to by M/s Sud-Chemie, it is a normal practice for technology providers to specific certain pre-conditions such as design criteria, hardware including catalysts supplied in order to stand by the performance guarantee of the plant. These catalysts are not those under investigation and hence references to these are irrelevant.
(viii)
The injury margins were higher in previous investigation because of inclusion of M/s PDIL as a Domestic Industry. Since PDIL has not cooperated in the present investigation, the NIP would be determined on the basis of cost of production of M/s Sud-Chemie only and there would be no injury margin. Hence there is no continued injury nor can injury reoccurs.
(ix)
In a Sunset Review or Expiry Review, the Authority is required to evaluate the following two aspects:-
a)
Whether the dumping and injury are continuing or
b)
Whether dumping and injury are likely to recur if the duty is withdrawn

HTAS had supplied two consignments of Low Temperature Shift Catalyst during the Period of review. One type of this catalyst was a new catalyst which had a lower rate of methanol formation. This catalyst is not being manufactured in India. Hence the export of this catalyst not produced in India, cannot cause material injury to the domestic producer. Further the attention of the Designated Authority is invited to the fact that in the original investigation there were two domestic producers viz. PDIL and SCIL. In the present investigation, which has been initiated by the Authority on its own motion, PDIL has not extended its cooperation. SCIL is the only domestic producer whose injury recurrence is required to be analysed by the Authority. It is submitted that the fact that PDIL had not cooperated is significant and the recurrence of injury only to SCIL is required to be evaluated judicially. Since the recurrence of dumping and injury are to be not based on a mere conjecture or remote possibility and PDIL has chosen not to cooperate, the Authority may return a negative verdict of recurrence of dumping and injury.
(x)
It is also significant to note that SCIL had not approached the Authority with a request for initiation of the expiry review. It is because the Authority has initiated the review that they have chosen to take advantage of the situation. This is a significant aspect which shows the remote possibility of the continuation or recurrence of injury.
(xi)
We also wish to bring to the notice of the Designated Authority the submission of SCIL that during the period when the anti dumping duty was in force, orders were obtained either by them or by PDIL and that the price of the catalysts had not moved significantly because of the imposition of anti dumping duties. This submission suggests that the prices prevalent in the domestic market are determined by internal competition and is uninfluenced by the price of HTAS. If at these prices, which were prevalent during the Period of review, SCIL had suffered losses (injury), then the causal link for that injury cannot be placed on HTAS. Hence, the recurrence of injury is again a mere conjecture. Injury if any, is self-inflicted and cannot be considered as continuation of the material injury or recurrence of the material injury which presupposes the existence of a causal link between the dumping and the material injury.
(xii)
We entirely agree with the questions posed to SCIL by the Designated Authority at the hearing regarding the number of tenders that SCIL lost and whether such tenders were lost of the Domestic Industry. Since the alleged dumping has been corrected by the existence of anti dumping duties, the inability of the Domestic Industry to make good use of the opportunity shows that their injury if any, was not at all due to the alleged dumping. In fact, this reinforces our submission right through that the injury, if any, was not at all due to HTAS.
In response to the disclosure. the following submissions have been made:

(i)
The CIF price in Dollar per Litre and Dollar per Kg for the two Catalysts is tabulated below:-

Catalyst FOB Price $ Ocean Freight $ CIF $ CIF $
Zinc Oxide 3.162 / lit 0.07 0.005 3.237
LTS 5.12 / lit 0.07 0.008 5.198

(ii)
We request the Authority to use the above CIF figures for determining the landed value and to examine whether the Injury Margin is lower than the dumping margin.
(iii)
The Disclosure states reproduces the submissions of SOIL, the Delegation of the European Commission and HTAS. It is seen from para 4 - "Examination by Authority" that these submissions will be considered at for determination of injury to the Domestic Industry. In other words, there is no disclosure in regard to the existence or recurrence of injury. The Disclosure statement is flawed.
(iv)
The Authority will recall that in the original investigation HTAS had pointed out that each of the six catalysts was a distinct like product. The catalysts are not substitutable and hence the injury should be determined separately for each of the six catalysts. The Authority did not accept this contention and had determined the injury by cumulating all the six catalysts together and had invoked Article 3.6 of the Agreement on Anti dumping. In the present investigation period, 4 of the subject catalysts had not been exported. The Zinc Oxide Catalyst should not have been included in the investigation as the duty on the said catalyst was zero in the original investigation. Since there was no anti dumping duty for Zinc Oxide Catalyst the same cannot form part of the present Review. Proviso to Section 9A (5) provides for a Review on the premise that cessation of the duty is likely to lead to continuation or recurrence of dumping and injury. Cessation of duty pre­supposes the existence of anti dumping duty. There was no duty on Zinc Oxide Catalyst and hence there is no question of cessation of the duty on Zinc Oxide Catalyst. Inclusion of Zinc Oxide catalyst in the Sunset Review is incorrect.
(v)
The injury analysis is, therefore, required to be restricted only to the LTS catalyst. As the Authority had already held that it is not possible to determine injury separately for each catalyst, any injury analysis based on injury parameters for all the six catalysts, would completely distort the injury analysis. The Authority cannot, therefore, determine either the existence of or recurrence of injury to LTS/Zinc Oxide Catalyst. Consequently the review should result in termination of duty on all catalysts.
(vi)
We entirely agree with the Authority, without prejudice to the foregoing, that the withdrawal of anti dumping duty on four Catalysts will not lead to recurrence of injury to the domestic injury. SCIL have argued that during the period of review they had suffered injury and that the said injury has been caused by the dumping. It is clear from their own submission that they have faced stiff resistance for any increase in price from customers. This is purely a commercial aspect and cannot be attributed to HTAS who had not supplied four of these Catalysts.
(vii)
The submission that the reduction in the Customs duties had resulted in increase in dumping margin is totally incorrect. The dumping margin is a function of normal value and export price at ex-works level which are not at all dependent on the customs duty prevailing in India. Similarly, their submission regarding low prices of non-proprietary catalysts and higher prices on proprietary catalysts is totally irrelevant to the issue and is without any basis or evidence. The provisional duty was imposed in June 1997 and the said duty had continued till today. In this scenario, it is difficult to understand the argument of SCIL that the alleged injury during the period 1997 to 2002 has been caused by HTAS. If SCIL had suffered injury during this period when four of these catalysts had not even been exported it could only mean that the injury is self-inflicted. In fact, SCIL had admitted that the injury has increased because of reduction is customs duty, increase in cost of production etc. These are the precise reasons which are required to be analysed by the Authority for determining whether the material injury was caused by reasons other than dumping. In fact, there should be a total termination of this investigation rather than withdrawal of anti dumping duty only on four catalysts.
(viii)
In view of the above, we request the Authority to re-examine the entire aspect of injury and casual link analysis and issue a revised disclosure. It is our submission that no injury has been caused to the domestic industry as a result of the export of the two Catalysts. Hence there is neither a present material injury nor the possibility of recurrence of material injury.
(ix)
We request the Hon'ble Authority to terminate the Sunset Rt riew by recommending withdrawal of anti dumping duties on all the six Catalysts.
B)
EUROPEAN COMMISSION, DELEGATION OF EUROPEAN UNION, NEW DELHI

(i)
By not analysing all factors having bearing on the states of the Domestic Industry as determined under Article 3.4 of the WTO Anti-Dumping Agreement the Designated Authority has violafd the same article.
(ii)
By not demonstrating a causal relationship between the alleged dumped imports and the alleged injury and by failing to examine other possible causes for adverse effects on the Domestic Industry, the Designated Authority violated Article 3.5 of the WTO Anti-dumping Agreement.
In response to the disclosure, the following submissions have been made:

(i)
The European Commission finds the injury analysis in this case to be very weak on a number of points:

  • Of the two products for which injury was found, Catalyst ZnODS should not be included in the analysis for the reasons outlined under i) above.


  • The Indian authorities have defined the `like product' to be all six catalysts, despite the arguments of the Danish exporter. It would now appear, from the findings on injury in the review investigation, that the investigation authorities have redefined the `like product' without explicitly admitting it. The reasoning for this assumption, on our part, is that the injury analysis finds no injury in respect of four of the six products which should imply a separation of the various modes for the purpose of injury analysis.


  • The findings contradicts the original finding that these catalysts are one like product and the WTO Rules make it clear that injury must be determined for the like product as a whole. This raises the question, whether, then two thirds of the types concerned are found to be non-injurious, how can injury be found for the remaining one third. In these circumstances, injury could only be deemed to exist if a detailed injury and causation analysis concluded, that the alleged injury by the two models concerned (in fact, only one if ZnODS is excluded) was material in the context of the whole product range. It is clear that no such analysis has been carried out.


  • A further point needs to be made in terms of the information available to the European Commission from the disclosure document and the Danish exporter.The latter has shown that its export prices to India in fact exceed it costs of production, i.e. they are not loss making. Clearly therefore any measure which is added to that price to achieve an Indian non-injurious price will identify the amount of the inefficiencies of the Indian domestic producers in comparison to their Danish counterparts. In the original investigation this ranged from 88% to 266%. With the Indian domestic producers being shown to require non-injurious prices so massively above the cost of production of the Danish exporter, it is difficult to believe that other factors are not responsible for the injury suffered to them.
In summary, therefore, the European Commission considers that the investigation does not fulfill the requirement of Article 11 of the WTO Agreement on Sunset Reviews. The evidence on the table, little that it is, would indicate that the anti dumping proceeding on catalysts should be closed forthwith.

C.
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.

1.
PRODUCT UNDER CONSIDERATION AND LIKE ARTICLE
The Authority notes that the present investigation is a review investigation regarding the product under consideration viz Catalysts, namely, Hydrodesulphurisation (HDS), Zinc Oxide Desulphurisation (ZnODS), High Temperature Shift(HTS), Low Temperature Shift (LTS), Secondary Reforming (SR) and Methanation Catalysts (Meth.).as also indicated in the provisional findings dated 7th May, 1997 and final determination dated 5th January, 1998 (hereinafter called original investigations) and the recommendations of which were implemented vide Customs Notification Numbers. 56 of 20.6.1997 and 2 of 2.2.98 respectively. The detailed technical description of these catalysts is indicated in the original investigation and the related Custom Notifications. The subject catalysts are classified under the Customs Tariff classification 38.15 and are also cleared under Chapter 98 as project imports. Since the present investigation is only a review under Section 9A(5) of the Customs Tariff Act, 1975 as amended in 1995, the Authority holds that the scope of product under consideration is limited to the original investigation as indicated above.

The Authority noting the submissions made by M/s SCIL regarding circumvention of LTS Catalyst under different nomenclature and the HDS Catalyst being supplied in different form from USA holds that the product under consideration has been clearly indicated with technical description in the original investigation in Para E(5) to E(9) of the provisional findings dated 7.7.1997 and that any catalyst conforming to these technical details irrespective of the fact that it has a different commercial nomenclature is within the scope of product under consideration. As regards the Catalysts which has been exported from USA, the same is not within the purview of the present Sunset Review. The Authority reiterates the findings on product under consideration as indicated in Para E(5) to E(8) of preliminary findings dated 7th May, 1997 and para E(5) of the Final Findings dated 5th January, 1998.

2.
DOMESTIC INDUSTRY
The Authority holds that in the original investigation M/s United Catalyst India Limited (UCIL) (Now M/s Sud-Chemie India Pvt. Ltd. (SCIL)) and M/s Projects & Development India Limited(PDIL) represented the Domestic Industry . In the present review investigation, the Authority notes that M/s WAS has indicated that this investigation was a suo moto review and that it has not been supported by M/s PDIL and that M/s SCIL only should be considered as Domestic Industry. The Authority in this regard notes that M/s PDIL has provided information on the production of various subject catalysts during the period of investigation and that M/s SCIL in view of its stand in the total domestic production during the period of investigation represents the. Domestic Industry as per Anti Dumping Rule 2(b).

3.
NORMAL VALUE AND EXPORT PRICE
(i)
FOR ZnODSS and LTS .CATALYSTS
The Authority notes that the submissions made by various interested parties and the response of M/s. Haldor Topsoe (HTAS) indicating that the two catalysts viz Zinc Oxide Desulpherisation (ZnODS) and Low Temperature Shift (ITS) Dave only been exported during the period of investigation. The Authority also notes that in respect of all the six catalysts, the exporter has indicated that there have been nil sales in Denmark and that they have provided the cost of production for the two catalysts exported to India and that they are not at the dumped price. The Authority also notes the submissions made by the European Union, Delegation of the European Commission, New Delhi who have indicated that in the original investigation the list prices as referenced by the Authority were not comparable since the Danish exporter M/s HTAS filed evidence to show that M/s Sud-Chemie's export prices were between 30% and the 52% below its list price It has also been submitted by the European Union, Delegation of the European Commission, New Delhi that the Authority should not have disregarded tire exporter's cost of production information and that by virtue of disregarding these information, the Authority had violated the Article 6.2 and 6.4 of the WTO Anti Dumping Agreement. The Authority notes that in response to the disclosure, it has been mentioned that information given by M/s SCIL is selective and that ZnODS catalyst was not sold during the period of investigation in the Territory of EU and that the LTS catalyst sales are not in ordinary course of trade.

The Authority holds that in the Review the circumstances on no domestic sales in Territory of European Union which prevailed during the original investigation also prevail as of now. The Authority has however received information with evidence regarding the domestic selling prices in Germany of M/s Sud-Chemie AG, Germany. These domestic selling prices of the two catalysts are during the period of investigation and are therefore considered as the representative domestic selling price for the normal value determination for M/s HTAS also being the best available information. The Authority also notes that vide the Supreme Court's Judgement dated 20.7.2000 the Hon'ble Court has upheld the methodology of normal value computation by the Designated Authority and that the exporter during the period of investigation should have provided the domestic selling prices prevailing in the Territory of European Union for appropriate referencing and determination of the Normal Value as settled by way of Supreme Court's, judgement which was also not challenged by the exporter, However the exporter has maintained the same position as it had taken during the original investigation and further the Delegation of European Commission had also advanced the same argument. Though in response to the disclosure, M/s HTAS and EU have given views on the computation of normal value, no evidence has been provided regarding their claim, while the Authority has received appropriate evidence from the Domestic Industry for the Normal Value computation. Under such circumstances in event of the domestic selling prices in EU being made available by M/s SCIL only for the two catalysts, the Authority has referenced the same for the purpose of the normal value determination for these two catalysts.

The Authority further holds that even if the maximum discounting of 52% as submitted by the Delegation of European Commission is considered on the domestic sales prices of M/s Sud Chemie AG, Germany as provided by M/s SCIL, there is still a definitive dumping margin witnessed in respect of these two catalysts. However no definitive information has been provided by the exporter either on their domestic selling prices in the Territory of European Union or to the third country, or else on the aspect of discounting on list prices to an extent of 30 to 52% as submitted by the Delegation of European Commission even in response to the disclosure statement. The Authority therefore holds that the methodology of determination of Normal Value is consistent in accordance with the original investigation Para F(6) of Findings dated 5.1.1998, which was also upheld by Supreme Court and also not challenged by the exporter.

Keeping in view the judgement of Supreme Court, the provisions of Section 9A(1)(c) of the Customs Tariff act, Annexure 1 to the Anti Dumping Rules, the Authority also does not consider it appropriate to reference the cost of production details as provided by the exporter for determination of the Normal Value but rather adopts the information as provided by M/s SCIL for Normal Value determination consistent with the original investigation.

The Normal Value for ZnODS and LT S come's to * * * * $/kg. and * * * * $/kg. respectively.

(ii)
OTHER CATALYSTS VIZ. HYDRODESULPHURISATION (HDS), HIGH TEMPERATURE SHIFT (HTS), SECONDARY REFORMING (SR) AND METHANATION (METH.)
With regard to the above four catalysts, the Authority notes that while there have been no exports by M/s HTAS during the period of investigation and also in the preceding two years i.e. 1998-99 and 1999-2000 as well and that there have been no participation in the tender process for exports to India in respect of the Methanation and Secondary Reforming catalysts. In respect of High Temperature Shift catalyst, the Authority notes that on the basis of the information provided by M/s SCIL, the price undercutting and suppression phenomena has been on account of internal competition' from the other domestic producer and therefore there does not appear to be enough evidence to suggest that cessation of anti dumping duty would cause recurrence of injury and dumping. It is the competition from players other than M/s HTAS which have led to a situation of price depression. The Authority therefore holds that under such situation recurrence of dumping and injury on account of cessation of anti dumping duty is not conclusive and therefore does not consider it appropriate to evaluate the normal value in respect of these catalysts. As regards Hydrodesulphurisation catalyst the Authority notes that there has been participation by other exporters as well and the orders granted to them in absence of M/s HTAS's participation and the fact that during the period of investigation M/s HTAS has not been able to successfully get any order does not lead to conclusion that cessation of duty is likely to lead to recurrence of dumping and injury.The Authority therefore does not consider it appropriate to evaluate the Normal Value for this catalyst also. As regards the other two catalysts viz. Methanation and Secondary Reforming, as there has not even been any participation in the tender process for exports to India by M/s HTAS during the period of investigation, there also does not appear to be a case where cessation of anti dumping duty would lead to recurrence of dumping and injury and therefore the Authority does not propose to consider it appropriate to evaluate the Normal Value for these catalysts. Also the Authority holds that it is not feasible to evaluate the extent of dumping when there is no participation by the exporter even in the tender process for exports to India and that during the period of investigation there have been no exports.

4.
EXPORT PRICE
The Authority has referenced FOB values of ZnODS and LTS as provided by the exporter as * * * $/Litre and * * * $/Litre respectively. -The Authority also notes that the exporter has provided expenses incurred on account of Ocean Freight, Ocean Insurance and Port expenses. The Authority has evaluated the ex-factory Export Price by reducing the other port expenses from the FOB values and has evaluated the CIF price on the basis of the FOB price, Ocean Freight and Ocean Insurance as provided by the exporter. The Authority notes that response has also been filed by the importers viz. Rashtriya Chemicals and Fertilisers Limited, Mumbai and Indian Oil Corporation Limited, West Bengal which however have not provided the information pertaining to relevant catalysts in the POI 'To the extent the information has been received from thé Custom Authorities, the same has been correlated with the information provided by the exporter.

The Ex-factory Export Price for ZnODS and LTS comes to * * * * $/kg. and * * * * $/kg. respectively.

5.
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 characteristic.. 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 dumping margin.

Based on the normal value and the ex-factory export price as determined above the Authority has evaluated the dumping margin for the two catalysts exported to India as follows:-

Catalysts Normal Value $/kg Export Price $/kg Dumping Margin (%)
Zinc Oxide Desulpherisation (ZnDOS) * * * * * * 146. 7
Low Temperature Shift (LTS) * * * * * * 240.7

The above dumping margins are above the de-minimus limits

6.
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:

Provided 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 (we 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 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 II(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 ire Annexure II(iv) of the Rules supra to evaluate this aspect.

The Authority observes the various economic parameters pertaining to the six catalysts for the Domestic Industry as under:-

(a)

 1998-99 1999-2000 POI POI
(Annualized)
Production (Kg) 804373 556606 947561 631707.3
Domestic Sales (Kg) 738444 396531 950668 633778.7
Imports from Denmark (Kg) 236225 36950 180880 120586.7
Minimum known demand (Kg) 974669 4330481 1273548 849032
% share of imports from Denmark in the known demand 24.24 8.53 14.21 14.21

(b) The catalyst-wise exports by M/s HTAS are as follows-

Catalysts 1998-99 1999-00 POI (18 months)
HDS 0 0 0
ZnODS 164170 36950 110620
SR 0 0 0
HTS 0 0 0
LTS 72055 0 70260
Meth 0 0 0
Total 23622S 36950 180880

(c) The Authority notes that the let Sales Realisation in Rs./kg. of the subject catalysts has been below the NIP in Rs/kg during the POI.

(d) The Authority notes that in respect of ZnODS catalyst since in the original investigation there was no anti dumping duty imposed under Chapter 38 and also under Chapter 98 category. The arguments made by exporter viz. M/s HTAS and EU regarding the fact that the Sunset Review presupposes the existence of anti dumping duty holds merit especially when all the six catalysts are not interchangeable and substitutable and therefore the Authority holds the test of cessation of anti dumping duty which presupposes the existence of anti dumping duty cannot be applied for this catalyst and therefore does not recommend imposition of any new anti dumping duty on this catalyst.

(e) As regards LTS catalyst, the Authority holds that as.per the evidence made available by the Domestic Industry, the imports of this catalyst have taken place under Chapter 38 category only. The % share of LTS in total known demand was 7.4% in 1998-99 which decreased to 5.52% in POI. The Authority has evaluated landed value in Rs./kg for this catalyst as also requested by M/s. SCIL. This landed value when compared with the Non-Injurious Price in $/kg implies that there is no price undercutting on account of dumped imports of this catalyst and therefore the Authority holds that in this case, the cessation of anti dumping duty would not lead to continuance and recurrence of injury. The Authority therefore does not recommend continuance of anti dumping duty on this catalyst.

(f) As regards the other four catalysts, viz. HDS, HT S, Meth. and SR, the Authority notes that there has either been no participation by M/s HTAS viz., in case of Meth. and SR and as regards the other two catalysts viz HDS and HTS, the price undercutting has been on account of players other than M/s HTAS thus therefore does not imply any causal link between the phenomena of price undercutting and the participation by the exporter in the tender process. The Authority notes that it has been mentioned by Ws SCIL that 39 tenders were evaluated pertaining to the supply of subject catalysts by the user industry during the period of investigation of which 19 were obtained by M/s SCIL, 8 by M/s PDIL and 12 by foreign suppliers including 8 by M/s HTAS. The Authority also notes that in respect of HDS catalyst, M/s Synetix had obtained an order when there was no participation by Ws HTAS. Also in respect of HTS, the orders were placed on M/s PDIL when M/s HTAS did not participate. The Authority notes that there are no exports of these 4 catalysts during the period of investigation and also ii, shp preceding two years i.e. 1998-99 and 1999-2000.

(g) The above economic indicators imply that the cessation of anti dumping duty on the subject catalysts will not lead to continuance or recurrence of dumping and injury to the Domestic Industry and therefore the Authority recommends discontinuance of the anti dumping duty on all the subject catalysts.

7.
LANDED VALUE
The landed value has been determined for the subject goods after adding or, 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

D.
CONCLUSIONS:
It is seen, after considering the foregoing that:

(a) The catalysts viz. ZnODS and LTS in all forms originating in or exported from the subject country have been exported to India, below its normal value;

(b) The various economic indicators and injury parameters imply that the cessation. of anti dumping duty on the subject catalysts will not lead to continuance or recurrence of dumping and injury and therefore the Authority recommends discontinuance of dumping duty on all the six catalysts viz. Hydrodesulphurisation (HDS), Zinc Oxide Desulphurisation (ZnODS), High Temperature Shift (HTS), Low temperature Shift (LTS), Secondary Reforming (SR) and Methanation (Meth.) exported to India from Denmark.

(c) An appeal against this order shall lip to the Customs, Excise, Gold (Control) Appellate Tribunal in accordance with the Act supra.

Sd/-
L. V. Saptharishi
Designated Authority


Issued by:

Government of India
Ministry of Commerce and Industry
(Department of Commerce), (Directorate of Anti-Dumping and Allied Duties)
New Delhi

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