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Safeguard investigation concerning imports of Hot-rolled flat products of non-alloy and other alloy Steel in coils of a width of 600 mm or more into India. - Preliminary findings-Reg

Dated:- 14-9-2015 - DIRECTOR GENERAL (SAFEGUARDS) NOTIFICATION New Delhi, 9th September, 2015 G S R D- 22011/26/2015 dated 9th September, 2015 having regard to the Customs Tariff Act, 1975 and the Custom Tariff (Identification and Assessment of Safeguard Duty) Rules, 1997 thereof; (A) Procedure 1. An application has been filed before me on 27th July, 2015 under Rule 5 of the Customs Tariff (Identification and Assessment of Safeguard Duty) Rules, 1997 by M/S Steel Authority of India Limited; M/S .....

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has also requested for imposition of provisional safeguard duty in view of steep deterioration in performance of the domestic industry as a result of increased imports of product under consideration. 2. In order to satisfy the requirements under Rule 5 of the said Safeguard Rules, the information presented by the applicant was got verified by on-site visits to the plants of the domestic producers to the extent considered necessary. The non-confidential version of verification report is kept in t .....

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Commerce and other Ministries concerned, Governments of major exporting countries through their embassies in India, and the Interested Parties mentioned in the application filed by domestic industry, in accordance with Rule 6(2) and 6(3) of the Customs Tariff (Identification and Assessment of Safeguard Duty) Rules, 1997. 4. Questionnaires were sent to the known interested parties as per the information available with request to make their views known in writing within 30 days of the initiation n .....

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deration) classifiable under Chapter 72 of the Customs Tariff Act, 1975, under tariff heading 7208 and tariff item 72253090. The applicant has claimed that these products are not further worked than hot-rolled and are flat products of iron, alloy or non alloy steel, in prime or non-prime condition having as-rolled edge or trimmed edge or slit edge. These products may be pickled or non-pickled (with or without skin-pass or tempering), slit or non-slit and having nominal width of greater than or e .....

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0mm; b) API grade steel; c) Silicon electrical steel; d) Hot-rolled flat products of steel of spring steel quality; e) Hot-rolled flat products of steel which are electrolytically plated or coated with zinc; f) Hot-rolled flat products of steel otherwise plated or coated with zinc; and g) Hot-rolled flat products of stainless steel. (II) Domestic Industry: 6. Section 6(b) of the Customs Tariff Act 1975 defines domestic industry as follows: (b) Domestic industry means producers - i. as a whole of .....

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than 50% of the total production of PUC in India and it represent a major proportion of Indian production of the product under consideration in the country and thus have the standing to file the present application. 8. After taking into account the information on record, it is determined that production of the domestic producers filing the application and who have provided relevant information constitutes a major share of the total production of the said article in India. Accordingly, they const .....

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TT provides specific guidelines on the period of investigation except the fact that the relevant investigation period should be sufficiently long to allow conclusion to be drawn on increased import and serious injury. The Period of investigation in this case has been taken from 2013-14 to 2015-16(Annualised) which is long enough to take into consideration the market conditions and to ascertain the need, if any, of imposition of Safeguard Duty. (IV) Source of Information: 10. The transaction wise .....

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of Information submitted 11. The domestic industry has provided some information on confidential basis and sought confidentiality on the information /data submitted. The domestic industry provided non confidential version of the application for safeguard measure as per the provisions of Safeguard Rules 1997 and Trade Notice No. SG/TN/1/97 dt. 06.09.1997. Further the domestic industry has submitted reasons for seeking confidentiality at the time of filing the application. 12. Rule 7 of the Safeg .....

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mports (Absolute & in relative terms) 13. PUC is imported into India from various countries. The imports of PUC have shown an increasing trend in absolute terms as well as in relative terms during the period as shown in table below:- Financial Year Total Imports (MT) Index All India Production (MT) Import with respect to all India production (%) 2013-14 1292099 100 25510777 5 2014-15 2540114 197 26395795 10 2015-16(Q1) 844840 6646258 2015-16(A) 3379360 262 26585032 13 (VII) Unforeseen develo .....

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Agreement on Safeguards read with Article XIX of GATT, however, obligates the national authorities to examine the unforeseen developments which led to the serious injury to the Domestic Industry. It is understood that this Directorate has consistently been examining the issue of unforeseen developments in its investigations. It is, therefore, considered important to examine the unforeseen developments or circumstances which have led to increased imports. 15. The Appellate Body in Argentina - Foo .....

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Appellate Body in Korea-Dairy case held that unforeseen developments are developments not foreseen or expected when member incurred that obligation. 16. The Appellate Body, in Argentina - Footwear (EC), then held that the requirement of unforeseen developments did not establish a separate condition for the imposition of safeguard measures, but described a certain set of circumstances : 17. The panel on US- Steel Safeguards1 concluded that the confluence of several events can unite to form the b .....

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demand of steel by developed countries and rest of the world. Most of the developed countries that were traditionally the biggest importers of steel such as United States and the European Union have reduced their dependence on imported steel. This development adversely affected exports of steel from China PR, Russia, Ukraine etc. to developed countries. Manufacturers in these countries had to think of ways to dispose off their production. India happened to be the natural choice for these manufa .....

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d its exports to India. As per a report by a reputed journal Steel 360, Russian steel exporters have been experiencing high realization for their exports due to their currency that has weakened in the recent past. This has led to an export push for Russian steel in India. Further, the Russian exporters have a restricted access to traditional markets like the European Union and Ukraine resulting in export push to India. 22. Ukraine s currency Hryvnia witnessed sharp depreciation of about 60% in 2 .....

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ve down steel prices and divert its surplus steel to countries with good demand. It is documented that Ukraine will continue this trend even in 2015. 23. China PR is experiencing weak domestic demand. Infrastructure sector, mainly housing, which has been the biggest consumer of steel in China PR is going through a slowdown. Manufacturers in China PR can no longer dispose off their production in the domestic market. This situation is likely to remain unchanged in the short term and Chinese steel .....

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s, has remained an attraction for these steel surplus economies to channelize their excess capacities. The report published in World Steel Dynamics states that effective capacity figure for early 2015 is 1055 million tones for the non-Chinese industry and 991 million tones for China, a total of 2.05 billion tones. When compared to steel production in 2014 of 1.66 billion tones, there is 382 million tones of excess global steel making capacity . Accordingly, In view of above and in view of the ev .....

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domestic producers of PUC as indicated by the following factors: (a) Production: The production of the domestic industry remained at the same level during 2013-14, 2014-15 and 2015-16(Annualised) as shown in the following table:- YEAR Production of DI (MT) Index 2013-14 17881187 100 2014-15 17836937 100 2015-16(Q1) 4456795 2015-16(A) 17887180 100 (b) Market Share of domestic producers in domestic demand: Market share of the applicants has fallen in the most recent period. Applicants had a market .....

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1321497 1180681 7002919 2015-16(A) 3379360 10359716 4263888 5285988 4722724 28011676 37 12 (c) Productivity & Employment: The trend of employment and productivity remained same throughout the period as shown in the table below:- Financial Year No. of Employees (Indexed) Productivity per employee(MT) (Indexed) 2013-14 100 100 2014-15 100 100 2015-16(Q1) 100 2015-16(A) 100 100 (d) Capacity Utilisation: The capacity utilisation remained same during the period 2013-14 to 2015-16(A) as evident fr .....

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witnessed an increase from 100 points in 2013-14 to 103 points in 2015-16(A). Financial Year/Quarter Inventory (MT) Inventory (MT) (Indexed) 2013-14 636879 100 2014-15 648290 102 2015-16(Q1) 657099 103 (g) Price depression: It is noticed from the table that the domestic industry was always under consistent pressure to either reduce their prices to match the import prices or to hold on to their prices. The penetration of increased imports at an unprecedented high level was such that even after r .....

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al parameters of the domestic industry and the domestic industry has suffered serious injury and immediate protection is required in the form of the safeguard duties with a view to save the domestic industry from further injury. 27. As may be seen from the above, a threat of serious injury is also present in the current investigation. There is a huge increase in imports over the period of investigation which has caused serious injury to the domestic industry and in all likelihood, the imports of .....

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ation : In performing its causal link assessment, it is our view that the national authority needs to analyse and determine whether developments in the industry, considered by the national authority to demonstrate serious injury, have been caused by the increased imports. In its causation assessment, the national authority is obliged to evaluate all relevant factors of an objective and quantifiable nature having a bearing on the situation of that industry. In addition, if the national authority .....

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having analyzed the situation of the Domestic Industry, the Korean authority has the obligation not to attribute to the increased imports any injury caused by other factors. 2 29. A comprehensive evaluation of parameters enumerated above demonstrates that serious injury and threat of serious injury is being caused by increased imports. For the purpose of determining causation, all relevant factors of an objective and quantifiable nature having a bearing on the situation of the industry have bee .....

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stry is faced with rising inventory and the decreasing import prices are preventing the Domestic Industry from sustaining its prices.; iv) Due to increased imports on low prices, the Domestic Industry is unable to increase its production and sales as compared to the rate of increase in demand/consumption of product under consideration in India; v) The profitability has declined and DI started to incur losses in the most recent period due to increased imports. 30. In view of the above I find that .....

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ndustry has been caused by the increased imports. (X) Developing Nations: 31. The percentage of imports from developing nations has also been examined. The import of the product under consideration is originating from more than one developing nation whose aggregate percentage of import into India is more than 9% .Therefore, in terms of Ntfn.103/98 cus dated 14-12-98 as amended, the import of product under consideration originating from developing nations will also attract Safeguard Duty in terms .....

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parable damage to the domestic industry. 33. The Rule 9 of Customs Tariff (Identification and Assessment of Safeguard Duty) Rules, 1997 notified vide Notification No. 35/97-NT-Customs dated 29.07.1997 prescribes that the Director General shall proceed expeditiously with the conduct of the investigation and in critical circumstances, he/she may record a preliminary finding regarding serious or threat of serious injury . The principles governing investigations have been provided in the Rule 6 of t .....

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surge in import, poor performance of the domestic industry have been considered in order to determine the existence of critical circumstances. a) The quarter wise analysis of the data for 2014-15 and 2015-16(Q1) indicates that imports have remained at significantly higher levels during the period 2015-16(Q1) as compared to 2014-15(Q1) and the import prices have come down drastically over the same period leading the domestic industry s prices downwards. The net sales realisation of the domestic .....

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ales realisation, profits per MT have declined sharply and turned into losses during 2015-16(Q1) as compared to 2014-15(Q4). As the profits have already turned into losses for the domestic industry, it is necessary to arrest the surge in imports without any further loss of time. c) The domestic industry has claimed that they are also receiving counter offers from many customers to supply the subject goods at substantially lower prices (lower than cost of production). The customers quote the pric .....

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import has risen from 6% in 2013-14 to 12% in 2015-16(A). The domestic industry has been forced to keep production, Sales, capacity utilization on hold due to surge in imports. Inventories with the domestic industry are rising. Further, the domestic industry is facing financial losses. e) The preliminary determination thus shows that excessive surge in import with falling unit price during the entire period of investigation; poor performance of the Domestic industry has caused serious injury or .....

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