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3. EXPORTER'S VIEWS

1. M/S TRICON ENERGY LIMITED, USA

a) STANDING OF THE PETITIONER

(i) The petitioners claim that the petition is being filed by M/s Alkaline Manufacturers Association of India. Further in the petition, "participating companies" data is produced for the injury analysis.

(ii) It is respectfully submitted that this is contrary to the Anti Dumping laws and practice in India. All the supporting petitioners must provide full and complete data for this proceeding. Clearly data of "participating companies cannot be the basis for injury to the industry as a whole. In fact it may well be the case that the data of the "non -participating companies" might indicate that there is no injury at all.

b) PRODUCT UNDER CONSIDERATION

The product under consideration as defined by the petitioners is "Sodium Hydroxide" generally known as Caustic Soda. Caustic Soda is chemically known as NaOH. It is an organic chemical classified under Chapter 28 of the Customs Tariff act. Caustic Soda is produced in two forms –lye and solids. Solids can be used in the form of flakes, prills, granules or any other form. All forms of Caustic Soda are the subject matter of the present petition.

(i) It is submitted that the petitioners have erroneously gone ahead and evolved only one Normal Value for both lye and solids, which is clearly not permissible under the Anti Dumping laws in India as the two ciA/Ta. Globally the chlor-alkali industry is being driven by the demand-supply of chlorine, unlike in India and therefore globally, Caustic Soda is considered as a by-product. Demand for Chlorine is higher than that of Caustic and many a times a part of Caustic produced in the process is wasted.

(ii) This is reflected in the fact that only 4 out of 42 domestic producers of caustic soda have participated in the NALCO tender. Furthermore it is noteworthy that none of these four were awarded any quantity in the global tender, the reasons for which are not prima facie apparent.

(iii) Caustic Soda solutions are produced as a co-product with Chlorine electrolytically by three technologies, mercury cells, membrane cells and diaphragm cells. Each of these processes utilize NaCL salt as the primary raw material. The salt is electrolytically split using direct current (DC) electricity, resulting in Chlorine and an available sodium ion (Na4-) that is reacted with water in the cell to make Caustic Soda and by-product Hydrogen. The Hydrogen by­ product produced is used as a fuel source, sold to Hydrogen customers, or to produce high purity (burner grade) Hydrochloric Acid. A fourth technology that produces commercially available quantities of Caustic Sods solutions is a chemical conversion of trone ore. This process produces low quality Caustic Soda.

(iv) The mercury cell operation utilizes mercury as the cathode for the electrolytic reaction, as well as for the sodium amalgam that is reacted to demonized water to produce the Caustic Soda solution. There is essentially no wet consumption of mercury in process, as all cells are `closed loop' with regards to mercury flow across the bottom of the cell and through the cell decomposer, where the amalgam is reacted to Caustic Soda solution. The solution produced by this process is 50-52% by weight NaOH, produced directly from the cell without any additional evaporation. This process produces the highest purity Caustic Soda commercially available.

The high purity characteristic is descriptive of the very low concentrations of contaminants in the product. Salt, or NaCI, is typically less than 10 ppm, with a maximum of 30 ppm. Sodium Chlorates, or NaC103 are typically 0.5 ppm, with a maximum limit of 1 ppm. Sodium Carbonates, or Na2C03, are typically 0.02 weight %, with a maximum limit of 0.06 weight %, Sodium Sulfates, or Na2S04, are typically 10 ppm, with a maximum of 20 ppm.

The mercury cell produced Caustic Soda is typically referred as Mercury Cell Grade, or more commonly, Rayon Grade. Most product of rayon fiber is dependent on the availability of the high purity Rayon Grade Caustic Soda solution. Another very common use of this high purity caustic solution is for Domestic Industry water exchangers. The Domestic Industry unit resin literature often specified Rayon Grade Caustic Soda only for regeneration. One must remember that this literature was published prior to the availability of membrane cell produced solution.

(v) The Diaphragm Cell process utilizes asbestos, or alternate substitutes to asbestos, to separate the co-products Caustic Soda and Chlorine. The production of 509' Caustic Soda occurs primarily outside of the electrolytic cell. The diaphragm cell produces a very weak `cell liquor' which contains 12-14% by weight, NaOH and roughly the same concentraiton NaCl salt. The `cell liquor' is subsequently evaporated in a three or four `effect' evaporation process to a final nominal concentration of 50% NaOH by weight (49-52% range). The excess salt is precipitated and filtered through the evaporation process for subsequent reuse/recycle. The process produces the lower quality electrochemical Caustic Soda solution.

The quality considerations with respect to the diaphragm cell produced Caustic solutions include relatively high salt, chlorates, carbonates, and sulfates. Salt as NaCI, concentrations are typically 1.0% with maximums raning from 1.1 to 1.3 weight %, depending on producer. Sodium Chlorates are typically 0.15 weight %, with a maximum of 0.3 weight %. Sodium Carbonates are typically 0.1 weight %, with a maximum of 0.2 weight %. Sodium Sulfates are typically 0.01 weight %, with a maximum of 0.02 weight %.

The diaphragm cell produced Caustic Soda is often referred to as Diaphragm Cell Grade. It is also called Commercial Grade. Technical Grade and occasionally Technical Diaphragm or other similar combinations.

An additional `Grade' of Caustic Soda produced by the diaphragm cell process is the purified Grade. The production of Purified Grade involves the further evaporation of the 50% Diaphragm Grade Caustic Soda solution to reduce the salt concentration. The higher Caustic Soda concentration forces precipitation of the salts, which are soluble in Caustic Soda solution in an inverse relationship. The higher concentration solution is then re-diluted to the 50% concentration commercially available as Purified Grade Caustic Soda.

Common uses include process and wastewater neutralization, textiles production soaps and detergents and aluminum production. These uses and applications generally will refer to the Caustic Soda as any of the various grades previous v addressed, dependent on supplier's terminology.

(vi) The membrane cell process utilises a selective membrane that separates Chlorine and Sodium ions. The membrane allows the Sodium ion to ‘migrate' across the membrane while keeping the Chlorine gas and salt (brine) solution in a compartment on the other side of the membrane. The sodium ion is reacted with purified water as in the mercury cell to produce the Caustic Soda. The solution produced by the membrane cell process is nominally 33-35 weight %. Evaporation is utilized, as in the diaphragm process, to raise the concentration up to the nominal 50 weight % solution suitable for shipments. The salt concentrations are not concentrated as significantly in this evaporation process due to the selective osmotic nature of the membranes as well as the reduced amount of evaporation required in this process opposed to the diaphragm evaporation. Minute quantities of salt do migrate across the membrane, concentrating upto to the maximum 75 ppm. Note that other producers employing the membrane cell technology may have a higher maximum limit of 100 ppm on the allowable salt concentration in the Caustic Soda solution.

The high purity characteristic is descriptive of the low concentrations of contaminants in the product. Salt, or NaCI, is typically less than 30 ppm, with a maximum of 75 ppm. Sodium Chlorates, or NaC103 are typically 3 ppm, with a maximum limit of 5 ppm. Sodium Carbonates, or Na2C03 are typically 0.03 weight %„ with a maximum limit of 0.05 ppm. Sodium Carbonates, or Na2S04, are typically 15 ppm, with a maximum of 20 ppm. Note that these limits are Olin specific, with some slight deviation to be expected amongst the various membrane cell operations.

The Caustic soda produced by the membrane cell process is most commonly referred to as Membrane Grade.

(vii) It is a well known fact within the Caustic Soda production, consumption and trading industry that the cost of caustic sod a is linked to the cost of chlorine, as both are produced during the same process. In effect when chlorine prices are high, caustic soda prices are low and vice versa. It is a well known fact that during the POI, chlorine pries globally were at an all time high and consequently caustic soda prices were at historic lows.

(viii) It is respectfully submitted that M/s Tricon Energy Limited sold caustic lye in India pursuant to a global tender dated 31.8.2001 for 1,00,000,00 DMT, plus/minus 5%(on 1000 Naoh basis).

(ix) Two alternatives were offered and M/s Tricon Energy were awarded the tender to supply 30,000 DMT plus/minus 5% of caustic soda lye on 10% NaOH basis. This caustic soda was to be produced by the diaphragm method which is typically USD 5 cheaper than caustic soda lye produced through a membrane method. This fact was recognized in the tender document itself wherein it was noted that "for comparison of prices of mercury/ membrane grade with that of diaphragm grade caustic soda lye, a financial loading of USD 5 per DMT shall be loaded in the price of the diaphragm grade.”

(x) It may be pertinent to note that DMT means dry metric tonne. Caustic Soda Lye being in a liquid form will contain caustic soda plus water. To obtain caustic soda or DMT basis the water will have to be evaporated. Typicaly, for example obtain 500 DMT of caustic soda on 100% NaOH basis, 1000 MT of caustic soda lye will be shipped in a soluble form. When evaporated, it will result in 500 DMT of caustic soda on 100% NaOH basis.

(xi) M/s Tricon Energy Limited, represented M/s Hanwa Chemical Corporation in the aforesaid tender. M/s Tricon Energy Limited inter alia put up the earnest money deposit and the performance guarantee bond. In addition to this there were several other requirements of the tender which were fulfilled by M/s Tricon Energy Limited.

(xii) The main response has been filed by M/s Hanwa Chemical Corporation, which accurately reflects the role played by M/s Tricon Energy Limited on a purely documented and commercial manner. To explain this position briefly, M/s Tricon Energy Ltd., contracted with M/s Hanwha Corporation for supply of 30000 DT +/- 5% at USD 189.36/DMT CFR vizag as per Sale and Purchase contract dt. December, 10, 2001. Proforma Invoice for L/C opening was however issued by Hanwha Corporation at USD 184.79/DMT CFR Visakhapatnam for adjustment of USD 4.57/DMT from previous transaction between M/s Hanwha Chemical Corporation and M/s Tricon Energy.

c) INJURY AND CAUSAL LINK

(i) It is denied and disputed that the Domestic Industry has suffered the injury

(ii) First as stated above, Chlorine prices were at record high and the domestic producers must have reaped benefits of that.

(iii) Second, notwithstanding the representations on capacity, it is submitted that the domestic units, have a much lower capacity of caustic soda that was has been represented. The size of the unit compared with the outdated technology and the high cost of power, clearly indicate that the injury if any, is not caused by any dumping. Furthermore, one of the domestic producers who also manufactured epichlorohydrin M/s Tamil Nadu Petro Products Limited admitted that the high cost of energy was the reason for their `serious injury' in a safeguard proceeding. As part of their restructuring plan, they had committed to introduce a captive power plant, which would reduce their cost of production. Thus it is admitted that Indian industry was being injured due to factors other than dumping.

(iv) As stated above, M/s NALCO floated global tender with a view towards obtaining the most competitive price for its requirement. It may be noted that the supplies were made to M/s NALCO at non dumped prices based on then prevailing market rate. On the other hand, the local suppliers were at an inherent disadvantage in as much as the local transportation costs were prohibitively high based on the requirement of M/s NALCO that the shipment may be in liquid form. Furthermore, the four Indian bidders offered almost identical prices, irrespective of their method of production or capacity. It is respectfully submitted that prima facie such pricing is not possible.

Without any prejudice to the aforesaid, it is respectfully submitted that the Domestic Industry could not have been injured by the minimal supplies made by M/s Hanwha Chemical Corporation and M/s Tricon Energy Limited pursuant to the NALCO tender.

2. M/S HANWHA CHEMICAL CORPORATION, KOREA RP

a) PRODUCT UNDER CONSIDERATION

(i) Hanwha group is one of the top ten conglomerates from the Rep. Of Korea. Further Hanwha Chemical Corp. is the manufactures of the Caustic Soda, which is being sold in the overseas market through the group’s trading window (Hanwha Corp., Seoul, Korea) and some other traders (if any, for example in present case the cargo sold to NALCO through M/s Tricon-Energy, USA).

(ii) Our plants are fully integrated plant as against this the local makers in India (the petitioners) are running the smaller capacity plants where they are not able to effectively manage the output of chlorine and thereby making hue and cry about their higher cost of production of Caustic Soda.

(iii) In a Chlor Alkali unit, from the common slat primarily we get two things, Caustic Soda and Clorine, now, if Chlorine (which is a commodity which cannot be trade in the international market due to its extremely hazardous nature) cannot be used in some other effective way (like production of product like Epichlorohydine and EDC->VCM>PVC) the burden of Chlorine prices would be reflected on Caustic Soda.

(iv) Caustic Soda is a commodity; the general price reference is drawn from the Electric Chemical Unit, also known as ECU (this includes the Caustic Soda + Chlorine). Further in case of global size plants, the prices are influenced by various factors. The main factors are as follow:

+ the price movements of EDC > VCM >PVC

(v) For all the above two factors one of the basic raw materials is Chlorine - now, if the international market demands more PVC, it means that the demand of Chlorine is high, now to produce more Chlorine, more of Caustic Soda will be generated. So, while looking into the pricing factors, the other related factors may kindly be looked into before coming to any conclusion and determination of prices.

(vi) Further the global practice is to produce primarily Chlorine and thus Caustic Soda as by-product, whereas in India it seems to be otherwise.

b) INJURY

(i) In the written petition of the Alkali Maker's Association, we find that the Caustic Soda industry is a very old industry and that there are several makers claiming that their joint capacity to be more than the demand in India. On the other side, we find that India has also enough capacity for PVC and Epichlorohydrin - however if we make further observations, we find that the PVC plants in India are importing EDC and/or VCM as their basic feedstock Viand not able to produce EDC and/or VCM locally by using the local Chlorine). The Designated Authority may ask this to the petitioners and we are sure the findings would be that the local Caustic units were planned considering only the local rather neighbourhood demand for Caustic Soda Lye only - it is not out of place to mention that we have come across situations whereby the local Caustic producers were said to be disposing chlorine at virtually nil cost - this in a way clearly shows their inefficient handling of production costs.

(ii) Irrespective of any protection they seek, this situation would never going to change - rather, the user industry would keep on suffering while the Caustic units making merry just because of the protections.

(iii) We are not engaged in dumping of Caustic Soda Lye in India market by merely offering international price. No intention to dumping Caustic Soda Lye in India and causing injury to the Domestic Industry in India.

(iv) First of all, we have not sold any cargo to India market directly. Easically, we received one inquiry from Tricon Energy, USA and we have given them offers considering the prevailing international market for supplies to NALCO in India. And, Tricon have further participated in the NALCO teader.

(v) The export volume during the investigation period from Korea RP was very little i.e only 12569.32 DMT and the percentage of total inputs as compared to total consumption in India which is 1600000 DMI is a meager 0.78% only. This cannot cause any injury to the Domestic Industry.

(vi) The Caustic Soda Lye has become a commodity and for this the price reference is drawn from the international price indexes -- the prices are quoted like metals in London Metal Exchange (LEM for various metals) and PLATTACIS for Polymers, etc. Rather ii' the Designated Authority compare the prices prevailing in the international market at the time of the shipments that we have made to NALCO, the same is fairly higher.

(vii) There is a global size Alumina producer in India-NALCO - they consume big quantity of Caustic Soda Lye and to get a heater pricing they invite global tenders where tie local makers acrd as well as the global producers participate The Designated Authority has seen the cost comparison presented by the: petitioner related to the offers made by the overseas suppliers - however, if we examine the participation by the local makers in that tend, we find that out of the 42 producers only 4 companies participated, the total qty. offered by them (83,000 DMT +/-5%) the Designated Authority may look into this situation prior to conning to any conclusion.

(viii) We from Hanwha have offered only Diaphram Process to NALCO(though we have Membrane Process also). We further reiterate that based of the petition of the petitioner, there seems to be only one marker of Diaphram Process in India and their installed capacity is approx.7250 MT. Which is only 1/4`h of the NALCO's total requirement of particular process. Considering this fact it is not at all a dumping rather we have offered a grade, which is not offered by the local maker.

(ix) Petitioner has mentioned that Caustic Soda produced by the three process are same - the Designated Authority may note that there are some critical difference in the specifications. The Chloride content in the Diaphram Grade Caustic Soda is higher than that of Mercury and Membrane Grade.

(x) Though in the petition the petitioners have mentioned that there are three production processes to produce Caustic Soda Lye, prima facie it appears that the local companies in India use either Mercury cell or membrane cell based Caustic Soda Lye.

(xi) On further analysis of the capacities of the participating local makers in the NALCO's said tender, we find that only Tamil Nadu Petroproducts Ltd. (TPL­-Capacity 49500 MT) and Andhra Sugars (Capacity 30000 MT) have membrane cell technology and their operation ratio during year 2000-2001 has been almost touching 100%.

(xii) The Designated Authority may please look into the fact that the local companies, operating at near about 100% of their capacity or above, without selling their products to NALCO - offer to NALCO in tender anywhere 30% to 60% of their total capacity - the obvious intentions seems to be to exploit the regional market which they are catering to.

(xiii) Though the petitioner claims that in India, Caustic Soda is produced by using all the three processes (Mercury, Diaphram and Membrane), however, we find in their submissions that only one maker (Sirpur Paper) has a production process based on Diaphram Cell, that too a very small capacity of 7250 MT/year.

(xiv) One of the plea that the local makers take about their higher cost of production is that the cost of power is very high in India and as since power plays a very important and significant role in Caustic production so they should be given protection.

(xv) Here we draw the reference of one submissions made by one of the Caustic producers in India - Tamil Nadu Petrol products Ltd. (TPL) - during one hearing hearings in the Safe-Guard duty on Epichlorohydrin imports into India.-TPL has referred that they are producing Caustic Soda and as well as Epichlorohydrin and further that by way of installation of a captive power plant they propose to reduce the cost of the Chlorine to one third the existing cost - at this jucture we would like to draw the attention of the Designated Authority - as tPL(one of the Caustic Soda producers has clearly established the link in the production of Caustic Chlorine and ECH) and further, they say that the captive power plants can drastically reduce the cost of productions. Therefore, our submission is that while determining the costing of Caustic Soda, these factors may kindly be looked into more closely.

(xvi) In their petition- the petitioners have described the characteristics of Caustic Soda Lye and the solid/flakes -the Designated Authority can very well understand from a fist glance that for supplies of Caustic Soda Lye some special provisions have to be made (because crystallization begins at 12-15 Deg Celsius) and further the boiling point is 142-148 Deg. Celsius.

(xvii) Nowhere we find that among the petitioner companies location from the user (NALCO) are far off- which means that they have to make special arrangements for transportation of Lye. This also means that many of inland producers have primarily no right to seek Anti Dumping duty on a product which they cannot deliver practically to their buyers owning to geographical locations. Further for the other producers, one has to really look into the facilities for loading into a specailised vessels and subsequent deliveries to the buyer (NALCO). We feel that this is one of the main reasons for only 4 local companies participating in the NALCO tender.

(xviii) If we examine the India's exports of Caustic Soda - this becomes more evident that India is not able to export Caustic Soda Lye whereas the exports of Solid and Flake types are their.

(xix) Now the Designated Authority may look into the submissions made by the petitioner-represent the imports of Caustic Soda, it is seems that the petitioner is trying to mislead the investigations by mixing the two (Caustic Soda Lye and Caustic Soda flakes/solid)

(xx) The petitioner in their non-confidential submissions has taken total imports during the POI 163,012 mt, after annualizing the data of imports from April­ December, 2001. However the supporting annexure of their submissions covers the data for April, 2001 -November, 2001 only. In fact it seems that the petitioner is trying to mislead the Authority by adding total quantity awarded in the NALCO tender as imports during the POI. The fact is that the quantity awarded is to be supplied as staggered shipments till December, 2002. The actual imports during the POI is much less as compared to the previous year. Further if we annualize the data on the basis of the imports (April 01 –January 02) the total imports also shows considerable decline in Caustic Soda Lye imports.

(xxi) Now think of the problems that could be faced by the buyers like NALLCO-who need Caustic Soda Lye-if they are supplied with Caustic Soda Flakes/Solid; end if they have to arrange to convert that to Lye again-it leaves a big question mark?

(xxii) One of the basic reasons for imposition of anti dumping duty on the imports of Caustic Soda from Korea (Hanwha Chemical Corporation) together with others - the petitioner states in their petition that the capacity in these countries are far higher than their besic domestic requirement. It is observed from the Korea's import statistics for the Caustic Soda - it is evident from our submissions, that Korea imports large volume of Caustic Soda as well as exports. The basic reason for this trading is to effectively manage the Caustic situation in Korea.

(xxiii) Here it not out of place to mention that we participated in the NALCO tender during the 2°d half of year 2001- by that time prices had started to come down in the international market. Further, if the Designated Authority may look at the prices in the international market prevailing during Apri1, 2002 it touched USD 30 per DMT FOB US GULF - however from may, 02, the prices have again started to move upwards sharply.

(xxiv) Our capacity of production, cost of production, local sales volume and the costing etc. are being submitted in the specified formats as prescribed by tile Designated Authority and in view of the sensitivity of the information, we are submitted those details as absolutely confidential. The ex-factory export price to India is much higher than the ex-factory domestic selling price in Korea. The Designated Authority or the nominated officials can verify these data for this purpose in our head office in Korea at any mutually suitable date and time.

3. CHLOR SHANGHAI CHEMICAL CO. LTD., PR CHINA

(i) The exporter has filed exporter questionnaire and have mentioned that this is company limited by shares duly established in accordance. with the Company Law in China which independently operates business and production activities and selects suppliers and customers and develops sales market acceptance to the signals of the market.

(ii) The respondents have claimed a market economy/individual treatment.

(iii) The exporter has indicated that the respondent quotes the export price according to the terms and conditions of its trading company in Hong Kong who then passes the sales documents to its customers in Japan which are reinvoiced to the Indian customers.

(iv) Hong Kong company is acting on a commission basis.

(v) It has also been requested that comparison should be made at appropriate percentage on caustic soda basis and that 99% subject goods be excluded.

(vi) The exporter has provided transactions of the domestic sales during POI of the subject goods and the associated export prices to India along with the relevant cost of production details.

C. EXAMINATION BY AUTHORITY

The foregoing submissions made by the exporter, petitioner and other interested partiesw, 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

The product under consideration in the present investigation is Sodium Hydroxide '(chemical nomenclature NaOH), commonly known as Caustic Soda originating ire or exported from Korea RP and PR China Caustic soda is an inorganic. soapy, strongly alkaline and odourless chemical and finds application in various fields like manufacture of pulp and paper, newsprint, viscose yarn, staple fibre, aluminium, cotton, textiles, toilet and laundry soaps, detergent, dyestuffs, drugs and pharmaceuticals, petroleum refining etc.

Caustic soda is classified under chapter 28 of the customs Tariff Act, 1975 under Costoms Head 2815.11 and 2815.12. As per ITC Eight Digit classification, the product is classification, is however, indicative only is in no way binding on the scope of the present investigation.

Caustic soda is produced in two forms, i.e. lye and solids by three technology processes, i.e. mercury cell process, diaphragm process and membrane process.

Caustic Soda can be imported under OGL and attracts a basic customs duty of 35%. The present investigation covers all forms of caustic soda.

The Authority notes that it has been mentioned by various interested parties that the: three different types of production process of caustic soda produces different quality of casuistic soda. It has also been indicated that the Membrane type process is used by a very few producers in India Further it has been mentioned that 99% caustic soda be excluded from the purview of the scope of the investigation.

The Authority however notes that both M/s Tricon Energy Ltd., USA and M/S Hanwha Chemical Corporation, Korea RP have indicated an adjustment of 5 $/MT on basis of the membrane technology as indicated in the NALCO's tender. The Authority therefore notes that M/s NALCO has loaded an adjustment o1&'5$/MT for such a technology depending on its own requirements and the Authority has appropriately considered this adjustment while evaluating the Jumping margin for M/s Hanwha Chemical Corporation. Therefore the Authority notes that the difference in terir3s of quality can best be addressed by way of appropriate adjustment as and when evidenced and claimed. The adjustment granted to M/s Hanwha Chemical Corporation has been for the purpose of preliminary determination pending final determination. The Authority also notes that the investigation covers all forms of caustic soda both Lye and flakes and all that are different forms of the same subject goods and are used substitutably depending on the requirement of the user. The two forms in various concentrations are therefore the subject matter of the investigation. The Authority further for the purposes of dumping margin has made appropriate comparisons on DMT basis only.

2. LIKE ARTICLE

The Authority notes that the petitioner has claimed that the goods produced by them are like article to the goods produced, and exported from the subject country. Also both are technically and commercially substitutable and the consumers are using the domestically produced anti imported goods interchangeably. It has been indicated that the Caustic soda is processed by three processes viz. Mercury cells process, diaphragm process and membrane process world over. The difference in these processes does not mean difference in product in terms of various characteristics. Also there is no significant difference in the cost of production for the three processes. The petitioner has claimed that the goods produced by them and those exported from the subject countries are like article within the meaning of the Rules. The Authority in view of submissions made by other interested parties and keeping in view the substitutability and interchangeability of the goods exported from subject countries and those produced by the Domestic Industry, considers the subject goods exported and the domestically produced subject goods as like article as per Rule 2(d) for the purpose of preliminary determination pending final determination.

3. DOMESTIC INDUSTRY

The petition has been filed by M/s Alkali Manufacturers Association of India on behalf of the domestic industry. The petition has been supported by M/s DCW Limited, Mumbai, M/s Gujarat Alkalis & Chemicals Limited, Vadodara Gujarat, Mls Gujarat Alkalies, Dahej, M/s Search Chem Industries Limited, Mumbai, M/s Indian Rayon and Industries Ltd., Veraval, Gujarat, M/s Grasim Industries, Nagda, M.P, M/s SIEI_ Chemical Complex, Patiala, Punjab, Mls Bihar Caustic & Chemicals, Ltd., Jharkhand. M/s Jayshree Chemicals Limited, Orissa, Mls Andhra Sugars Limited, Tanaku , Bilt Chemicals, DCM Sriram, New Delhi and Punjab Alkalies & Chemicals, Chandigarh None of the domestic producers has opposed the petition.

The Authority notes that various interested parties have mentioned that only a limited number of domestic producers participated in the NALCO's tender and that shipping the goods to NALCO by domestic producers is a costly affair because of the high inland freight. It has been indicated that the Domestic Industry definition be limited to these producers who have actually participated in NALCO's tender. The Authority does not consider this argument appropriate since NALCO happens to be only one of the consumers of caustic soda. Also the Authority notes that inability to supply in a cost effective manner to NALCO is a matter to be appropriately considered under injury examination and not to be addressed for the scope of the Domestic Industry. Also the Authority notes that in any event of any displacement of the domestic producers situated in proximity to NALCO, the injury occurring to them would eventually be transmitted to the other domestic producers. However the dumping of goods and their imports by NALCO is to be appropriately addressed as per Anti Dumping Rules. Therefore the argument of the interested parties that suppliers and non-suppliers to NALCO form two different competitive market does not hold merit.

The Authority also notes that the domestic producers who have supported the petition constitute more than 50% of the total domestic production and therefore have the standing to file the petition on behalf of the domestic industry as per Rule 5 (3) (a) and (b) of the Anti-Dumping Rules and also represent Domestic Industry in terms of Rule 2(b)

4 .NORMAL VALUE & EXPORT PRICE

Under Section 9A(1)(c), normal value in relation to an article means:

(i) the comparable price, in the ordinary course of trade, for the like article when meant for consumption in the exporting country or territory as determined in accordance with the rules made under sub-section (6); or

(ii) when there are no sales of the like article in the ordinary course of trade in the domestic market of the exporting country or territory, or when because of the particular market situation or low volume of the sales in the domestic market of the exporting country or territory, such sales do not permit a proper comparison, the normal value shall be either:

(a) comparable representative price of the like article when exported from the exporting country or territory or an appropriate third country as determined in accordance with the rifles made under sub-section (6); or

(b) the cost of production of the said article in the country of origin along with reasonable addition for administrative, selling and general costs, and for profits, as determined in accordance with the rules made under sub-section(6);

Provided that in the case of import of the article from a country other than the country of origin and where the article has been merely transshipped through the country of export or such article is not produced in the country of export or there is no comparable price in the country of export, the normal value shall be determined with reference to its price in the country of origin.

The normal value and ex-factory export price determination is illustrated below.

A. NORMAL VALUE

1, M/S SHANGHAI CHLOR CHEMICAL ALKALI CO. LTD. PR CHINA

The Authority notes that the exporter has provided details on sales in their home market of ion exchange Membrane Grade Caustic Soda (48%) during the Period of investigation (POI). The ex-factory export price has been indicated as ****$/Dry Metric tonne, (DMT) The exporter has provided the cost of production of the subject goods during the POl as ****$/DMT. The weighted average domestic sales price has been known to be making profits and thereby in the ordinary course of trade. In claim of market economy/individual treatment, the exporter has indicated that they are established accordance with the Company Law of China and is a public listed company at the Shanghai Stock Exchange. The exporter independently operates business and production activities, freely selects suppliers and customers and develops sales markets in response to the signals of the market. The Authority in this regard notes the specific provisions in the notification pertaining to Anti Dumping Rules No.28/2001 dated 3152 May, 2001 and Notification No. 1/2001 dated 4a' January, 2002 in which the conditions for `non-market economy' country has been defined. In the Notification dated 4t' January, 2002, a country would be presumed as non-market economy in case the country has been determined to be or has been treated as non-market economy for the purpose of an anti dumping investigation by the (designated Authority or by the competent Authority of any WTO member country during the three year period preceding the investigation.

The Authority also notes that information pertaining to various specified criteria has been sought for from the cooperative exporter in order to consider the rebuttal on the treatment as non-market economy On perusal of the response provided by the exporter, it is noticed that only a broad statement of fact has been provided regarding the operation on the market signals but no specific information on various criterion as listed in the Custom Notification dated 4th January, 2002 has been provided with adequate evidence to justify treating the exporter to be operating on the market principles. The Authority therefore for the purpose of preliminary determination pending final determination does not propose to consider the broad statement -provided by the exporter as a justification for their being operating on the market economy principles. The Authority also recalls that the China has been treated as non-market economy in Steel Concrete Reinforcing Bar by PR China to USA dated 22.6 2001, Bicycles by China to EU dated 30.6 2001 and Non -Frozen Apple Juice Concrete by China to E.U dated 13 4.2000during the last three years. This has also been indicated in the preliminary finding; pertaining to dumping of STPP from China and Chinese '1`aipei which have also been implemented by the Department of Revenue vide their Notification dated 17.6.2002. The cost data of the subject goods as available from the petitioners which has been duly normated by adopting the best practices on constructed cost of production with appropriate adjustments to arrive at the constructed Normal Value as per Annexure 1 to the Anti Dumping Rules and Section 9A(1)(c)(ii) (b) of the Customs Tariff' Act, 1975 as amended in 1995. The constructed Normal Value of the subject goods has therefore been referenced as ****$/DMT for the POI. The Authority in this regard also notes that the data furnished by the exporter on the ex-factory domestic selling price and the ex-factory export price also indicates the incidence of dumping to an extent of ****$/DMT.

B. EXPORT PRICE

The Authority notes that the exporter has provided the ex-factory export price of the subject goods during the POI as ****$/DMT and have also claimed adjustments of ****$/DMT as discounts/commission and have provided the ex-factory export price as * * * *$/DMT. The Authority on the basis of the information provided by the exporter has correlated the exports made by the exporter with the response provided by M/s NALCO, the importer of the subject goods during the POI.

The Authority for the purpose of preliminary determination pending final determination has considered the ex-factory export price as provided by the exporter and allowed the adjustments on discounts/commission.

The ex-factory export price comes to ****$/DMT. The Authority in this regard also notes the submissions made by the exporter that the appropriate comparison for the purpose of dumping margin be made i.e. 48% subject goods should be compared with 48% of the subject goods and 100% concentration of the subject goods should be compared with 100% of the subject goods. In the instant case, the Authority notes that the export price has been provided on the DMT basis and that the Normal Value as indicated above has also been computed on the DMT basis of the purpose of comparison.

C. ASSESSMENT OF NON-COOPERATING PRODUCERS/EX POR'T'ERS FROM PR CHINA

A. NORMAL VALUE

The Authority notes that none of the exporters other than M/s Shanghai Chlor Alkali Chemical Co. Lt.d, PR China has responded to the questionnaire sent by the Authority for the purpose of investigation. In view of this non-cooperation, the Authority upholds the claim of the petitioners for treating such producers/exporters on the non-market principle. Keeping in view the treatment as considered in various EU/ES cases cited above, the Authority has therefore constructed the normal value by adopting normated cost of production by benchmarking best practices.

The Authority has referenced the Normal Value for such producers/exporters as* * * *$/DMT.

B. EXPORT PRICE

The Authority notes that the export price has been provided by the petitioners on the basis of the data collected by them from DGCI&S and other secondary prices. The petitioners have also claimed adjustments on ocean freight, ocean insurance, commission, inland freight, port expenses and credit cost to an extent of * * * *$/DMT, ***$/DMT, ****$/DM'f, ****$/DMT, ****$/DMT and ****$/DMT respectively. The Authority notes that as per the DGCI&S data imports of subject goods to ail extent of 8210 MT have been shown from PR China. As per the response of one of the cooperating importer viz. M/s NALCO, the imports from PR China are shown to an extent of 26505 MT. The DGCI&S data is therefore not exhaustive and complete and therefore cannot be referenced. Since NALCO is one of the importer, there would be other imports of the subject goods made by other importers which may not have been reflected in the DGCI&S data. Also no response has been received from the Customs regarding the details of the imports made during the POI. Since the best available information under such circumstances for the non-cooperating exporter could only be the information as available from the cooperating exporter, viz. M/s Shanghai Chlor Alkali Co. Ltd. whose export price also happens to be the lowest on the basis of the information as available with the Authority, the Authority considers it appropriate to reference this export price for the non-cooperating exporters from PR China. The adjustments allowed on the CIF on account of ocean freight, ocean insurance, commission, inland freight and port expenses to an extent of * * * * $/DMT, * * * * $/DMT, * * * * $/DMT, * * * * $/DMT.and * * * * $/DMT respectively.

The ex-factory export price is referenced as ****$/DMT.

KOREA RP

M/S HANWHA CHEMICAL CORPORATION, KOREA RP.

A. NORMAL VALUE

The Authority notes the response filed by the exporter regarding their domestic selling prices of subject goods during the POI. The Authority notes that the transaction wise details on the domestic selling price for the POI has been provided by the exporter during the POI. The exporter has claimed adjustments on the domestic sales on account of discounts, inland freight, inland insurance and others to an extent of ****$/DMT, ****$/DMT, ****$/DMT and ****$/DMT respectively. The exporter has also submitted that the domestic sales made during the period as near to the period of exports to India should be referenced for the purpose of appropriate comparison. The Authority notes that the sample evidence pertaining to the domestic selling price has been provided by the exporter. The exporter has claimed an adjustment on account of inland freight to an extent of ****$/DMT which has been substantiated by the exporter by way of expenses incurred on the freight component.

The Authority for the purpose, of preliminary findings pending final determination has considered the adjustments as claimed on the inland freight. The Authority for the. purpose of preliminary determination pending final determination also allows the other adjustments on inland insurance and commission. The Authority has referenced the domestic selling price for the period December, 2001-March, 2002 which is comparable to the period of exports made to India for the purpose of determination of the Normal Value. The Authority also notes that the cost of production of subject goods as claimed during the POI indicates that the domestic selling prices are in the ordinary course of trade. However the Authority has considered this cost of production for the purpose of preliminary findings pending final determination.

Therefore for the purpose of preliminary determination pending final determination, the Authority has referenced the Normal Value as * * * * $/DMT.

B. EXPORT PRICE

The Authority notes that the exporter has provided the ex-factory export price as * * * * $/DMT. The exporter has provided export price to M/s Tricon Energy Limited, USA who in turn have exported the subject goods to India during the POI. Further the exports have been made through M/s Hanwha Corporation, the trading arm of M/s Hanwha Chemical Corporation. The exporter has claimed adjustments on account of discounts/commission to M/s Hanwha Corporation to an extent of * * * * $/DMT. The Authority has also correlated the exports made by M/s Tricon Energy Limtied, USA to M/s NALCO, the importer of subject goods in India who have provided the CIF price of the subject goods during the POI to India. The Authority for the purpose of final determination pending final determination has considered the adjustments as claimed by the exporter on discounts, adjustment on terms of sales as per NALCO's tender and adjustment on previous transaction sales to M/s Tricon to an extent of ****$/DMT.
The ex-factory export price comes to * * * * $/DMT.

C. ASSESSMENT OF NON-COOPERATING PRODUCERS/EXPORTERS FROM KOREA RP

A. NORMAL VALUE

The Authority notes that none of the exporters other than M/s Hanwha Chemical Corporation, Korea RP has responded to the questionnaire sent by the Authority for the purpose of investigation. In view of this non-cooperation, the Authority has constructed the normal value on the basis of the data provided by the petitioners by referencing the best normated cost of production.

The Authority has referenced the Normal Value for such producers/exporters as * * * * $/DMT.

B. EXPORT PRICE

The Authority notes that the DGCI&S data indicates the imports from Korea RP to an extent of 56 MT. The Authority notes that one of the importers viz. M/s NALCO has provided response indicating imports from Korea RP to an extent of 6270.43 MT whereas the exporter has during this period exported quantity to an extent of 12569 MT. Thus the information as provided by DGCI&S does not capture the import data fully and is being lowest and best available information. Therefore the CIF price of Ws Hanwha Chemical Corporation has been referenced for the non-cooperating exporters as well. The adjustments on the export price are considered on ocean freight, ocean insurance, commission, port and inland freight to an extent of * * * * $/MT, * * * * $/MT, * * * * $/MT, ****$/MT and **** $/DMT respectively on the basis of the information made available by the petitioners and the cooperative exporter.

The ex-factory export price comes to * * * *$/DMT.

5. DUMPING-Comparison of Normal Value & 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 characteristics, and any other differences which are demonstrated to affect price comparability."

The authority has carried out weighted average normal value comparison with the weighted average ex-factory export price in Period of Investigation, for evaluation 'of the dumping margin for all the exporter/producers of the subject country.

The dumping margin for exporter/producers comes as under:

Sl No.	Exporter/Producer	Ex-factory Export Price $/N1T	Dumping Margin as % of EP
1.	KOREA RP 1. Hanwha Chemical Corporation. 2. Other procedure/exporters	****	Deminimis 53.22
2.	PR CHINA 1.Mls Chlor Shanghai Chemical Co. Ltd. 2. Other producers/exporters	**** * * * *	74.02 80.03

6. INJURY AND CAUSAL LINK

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 a 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, we may consider such 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. in accordance with Annexure II (iv) of the rules supra.

As regards the threat of injury, the Authority notes that the Anti-Dumping Rules states as follows:

"A determination of a threat of material injury shall be based on facts and not merely on allegation, conjecture or remote possibility. The change in circumstances, which would create a situation in which the dumping would cause injury, must be clearly foreseen and imminent. In making a determination regarding the existence of a threat of material injury, the DA shall consider, inter-alia, such factors and;

a) a significant rate of increase of dumped imports into India indicating the likelihood of substantially increased importation;

b) sufficient freely disposable or an imminent, substantial increase in capacity of the exporter indicating the likelihood of substantially increased dumped exports to Indian market, taking into account the availability of other export markets to absorb any additional exports;

c) whether imports are entering at prices that will have a significant depressing or suppressing effect on domestic prices, and would likely increase demand for further imports; and,

d) inventories of the article being investigated.

The Authority notes that various interested parties have mentioned that it is in totality that the price of chlorine and hydrochloric acid along with caustic should be considered. It has also been mentioned that the domestic producers of caustic soda in India are using obsolete technology and have high cost of production on account of electricity cost. The issue of high inland freight for supply to NALCO has, also been indicated.

It has also been further mentioned that there is an excess capacity in India which is leading to injury to the domestic producers. Submissions have also been made that world over chlorine is the main product and whereas in India it is the caustic soda which is the main product. The Authority after noting the above submissions holds that the non-injurious price has been evaluated for the various domestic producers by appropriately considering the sales realisation from the related products. Also in order to eliminate inefficiencies, the Authority has normated and benchmarked the best practices on utilisation of raw materials, utilities etc.

As regards the injury which could happen on account of higher cost of production in India, the Authority notes that under the Indian Anti-Dumping Rules it is the lesser duty rule which is applied. Further in any event the anti dumping duties cannot exceed the dumping margin. Therefore in any event if injury to Domestic Industry which could exceed the dumping margin it is certainly not addressed under the Rules of the Anti Dumping.

However despite the above, the Authority appropriately considers the cost of production of the domestic producers and normates the same for determination of Non-Injurious Price (NIP). As regards the injury on account of inland freight is concerned, the Authority holds that the comparison of landed value of dumped goods with NIP is made at the ex-factory level which does not include the inland freight. Therefore the in3 porter viz. Ms NALCO could import the material at non-dumped price and thereby m, y not places order on to the domestic producers in India in case the freight was consideration for them.

As regards the submissions on usage of obsolete technology is concerned, Authority notes that the various domestic producers in India are using all the there technology and that the inefficiencies in the cost of production are appropriately considered while determination of the Non-Injurious Price. As regards filing of separate petitions on chlorine by the Domestic Industry is concerned, the Authority notes that the related product if at all comes for anti dumping duty investigation, its cost of production and non-injurious price would be appropriately considered as per the general accounting and costing principles.

The Authority notes and observes the following economic parameters in the case of the domestic producers who have supported the petition:

	1999-00	2000-01	20001-02
Capacity (MT)	830000 -	830000	842500
Production (MT)	712146	730625	711556
Capacity	85.8	J88.43~	84.40
Utilisation (% Sales MT)	588455	583221-	544046
Net Sales	* * * *	* * * *	* * * *
Realisation (Rs/MT
Cost of Production (Rs/MT	****	****	****
Imports all countries (MT)	86743	73622	93291
Imports from China (MT)	19	1?	26505
Imports from Korea (MT)	21	33	12569
Market share of imports from Subject countries (%)	.05	.07	41.88
Demand (MT)	1477061	1488052	1510619

It could be seen from the above that

(a) Sales of the Domestic Industry have decreased from 588455 MT in 1999-2000 to 544046 MT to 2000-2001.

(b) It is also seen that these is slight fall in the capacity utilisation from 85.8% in 1999-20UU to 84.46% in 2001-2002.

(c) The production of the Domestic Industry has also decreased from 712146MT in 1999-2000 to 711 S56MT in 2000-2001.

(d) Though The Net Sales Realisation have increased from ****MT in 1999-2000 to ****MT in 2001-2002, the cost of production have shown an increase during the period. The Net Sales Realisation is however below the Non-Injurious Price determined for the period of investigation on account of the price undercutting caused by the dumped imports and thereby leading to lower Net Sales Realisation as compared to Non-Injurious Price, and consequently erosion of profitability.

7. INDIAN INDUSTRY'S INTEREST & OTHER ISSUES

The Authority notes that it has been indicated by M/s NALCO that the anti dumping duties would affect their export competitiveness. The Authority in this regard holds that there are various schemes under the EXIM policy which permit imports of goods for export production without levy of anti dumping duty. Therefore there are appropriate schemes which an exporter could avail of for the purpose of export production. The Authority also holds that the purpose of anti-dumping duties, in general, is to eliminate injury caused to the Domestic Industry by the unfair trade practices of dumping so as to re-establish a situation of open and fair competition in the Indian market, which is in the general interest of the country.

The Authority also recognises that though the imposition of anti-dumping duties might affect the price levels of the products manufactured using the subject goods and consequently might have some influence on relative competitiveness of these products, however, fair competition in the Indian market will not be reduced by these anti-dumping measures. On the contrary, imposition of anti-dumping measures would remove the unfair advantages gained by the dumping practices and would prevent the decline of the domestic industry and help maintain availability of wider choice of the subject goods to the consumers. Imposition of anti-dumping measures would also not restrict imports from the subject country in any way, and, therefore, would not affect the availability of the products to the consumers.

8. LANDED VALUE

The landed value of imports for the purpose shall be the assessable value as determined by the customs under Customs Tariff Act, 1962 and applicable level of custom duties except duties levied under Section 3, 3A, 813, 9, 9A of the Customs Tariff Act, 1975.

D. CONCLUSIONS:

It is seen, after considering the foregoing, that:

a) The subject goods in all forms originating in or exported from the subject country have been exported to India below its normal value except NI/s Hanwha Chemical Corporation, Korea RP.

b) The domestic industry has also suffered material injury by way of financial losses due to depressed Net Sales Realisation (NSR) on account of price depression caused by low landed prices of the dumped subject goods.

c) The injury has been caused to the domestic industry by dumping of the subject goods originating in or exported from the subject countries.

d) The Authority recommends anti-dumping duty on imports of subject goods falling under Chapter 28 originating in or exported from the subject countries.

e) It was considered to recommend the amount of anti-dumping duty equal to the margin of dumping so as to remove the injury to the domestic industry accrued on account of dumping. Accordingly, it is proposed that provisional anti-dumping duties equal to the difference between the amount of Column 3 of the Table below and landed value of subject goods in $/MT be imposed, from the date of notification to be issued in this regard by the Central Government, on or imports of subject goods originating in or exported from subject countries under Chapter 28 Customs sub-heading 2815.11 and 2815.12 of the Customs Tarity, pending final determination except on exports by M/s Hanwha (Chemical Corporation.

SI. No.	Exporter/Producer	Amount (US$/MT)
1.	KOREA RP All producers/exporters except M/s Hanwha Chemical Corporation	353.4
2.	PR CHINA 1. M/s Chlor Shanghai Chemical Co. Ltd. 2. Other producers/exporters	362.34 362.34

E. FURTHER PROCEDURE

The following procedure would be followed subsequent to notifying the preliminary findings:

a. The Authority invites comments on these findings from all interested parties and the same would be considered in the final findings;

b. Exporters, Importers, Petitioner and other interested pat-ties known to be concerned are being addressed separately by the Authority, who may make known their views, within forty days from the date of the despatch of the letter. Any other interested party may also make known its views within forty days from the date of publication of these findings;

c. The Authority would conduct verifications to the extent deemed necessary;

d. The Authority would provide opportunity to all interested parties for oral submissions, for which the date and time shall be communicated to all known interested parties separately;

e. The Authority would disclose essential facts before announcing final findings.

Sd/-
L.V. Saptharish, Designated Authority

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