TMI Blog2015 (9) TMI 715X X X X Extracts X X X X X X X X Extracts X X X X ..... in ordinary course of trade by reason of price – when major input imported from non-market economy country, sale price reflected in record will have to be scrutinized to detect and correct distortion resulting from non-market economy price of input used, cost of which is required to be worked out in order to correct distorted cost of production of article – Authority is justified in rejecting domestic sales price shown as record when input in question was produced within non-market economy country, because price for such input would be distorted, as they do not reflect normal market economy purchase price – Apex Court in case of Reliance Industries [2006 (9) TMI 180 - SUPREME COURT OF INDIA], held that normal value is country specific not exporter specific, and hence accounts of exporter are to be considered only, where they reflect normal or ordinary cost of inputs. Authority rightly rejected price of 4ADPA and opted for construction of normal value, based on international price of 4ADPA – Domestic industry had brought on record evidence of import prices of 4ADPA from Germany to India, but Authority before recording Final Findings, did not give opportunity to comment on accept ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he normal value for 6PPD had not been appropriately determined by the Designated Authority. The exporter had been sourcing 4ADPA from Sinorghem China PR, which was a cooperating exporter from China in the investigations. The Authority committed a serious error in rejection of the actual cost of 4ADPA, in the absence of any legal provision to justify rejection of the actual cost of procurement of 4ADPA, since Korea is a market economy, and not subject to provisions of Paragraphs 7 and 8 of Annexure 1 to the Customs Tariff (Identification, Assessment and Collection of Duty or Additional duty on Dumped Articles, and for Determination of Injury) Rules, 1995 (Anti-Dumping Rules). It was also contended by the ld. counsel that:- i. There is no dispute that the actual cost of 4ADPA had been reflected in their books of accounts, and therefore the same ought to have been adopted for determination of normal value in terms of Para 3 of Annexure 1 to the Rules. ii. The source of procurement of the input is immaterial for determination of normal value, since only actual cost of production is relevant in terms of Section 9A(1)(c) of the Act. iii. If the actual cost of 4ADPA is not acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in accordance ewith the generally accepted accounting principles of the exporting country, and such records reasonably reflect the cost associated with production and sale of the article under consideration. It was argued that since, the Designated Authority has held that Sinorgchem is not operating under market economy conditions in terms of para 8 of Annexure-1 to the Rules, it has rightly concluded that the cost and price of the goods produced and sold by Sinorgchem does not represent fair market value. Such being the case, it is evident that the price at which Sinorgchem has sold 4ADPA to Petrochemicals does not reasonably reflect the costs associated with its production and sale and export price of 4ADPA requires adjustment on account of benefits of non-market economy being shared by Sinorgchem with Kumho Petrochemicals. As the export prices of 4ADPA of Sinorgchem did not reflect their true value, their prices from China to other exporters in India, were also not reliable for fixation of normal value. 6. It was submitted that Para 1 of Annexure 1 is to be construed in the context of the words normal and ordinary used in Section 9A (1) of the Act. The elements of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dihydrostretomycin from China, the Commission adjusted the raw material price on the basis of international price due to distortion. iii. Council Regulation (EC) No.237/2008 relating to imports of Ammonium Nitrate originating from Ukraine, the Commission adjusted the price of gas from Russia on the basis of international price due to distortion. iv. Council Regulation (EEC) No.2818/91 relating to provisional anti-dumping duty on imports of cotton yarn originating in Brazil, the Commission adjusted the raw material price on the basis of international price due to distortion. 8. On the aspect of non-disclosure of the international price of 4ADPA, the domestic industry pointed out that the international price of US $ 3.09 had been disclosed to the parties by their letter dated 06.02.2008, which had not been rebutted by the exporter. 9. In respect of the appeal filed by domestic industry, it was argued that the import price of 6PPD into Korea may be considered for determination of normal value. However, since the notification under challenge had already expired, they did not press this point, at this stage. It was further submitted that adequate disclosure had not bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the cost of 4ADPA. ii. Whether due process has been following by the Designated Authority, with regard to disclosure of relevant information to the affected parties. 13. As regards the first issue, we find that Kumho Petrochemicals is sourcing 4ADPA exclusively from Sinorgchem China for its manufacturing operations in Korea. Sinorgchem is also a producer and exporter of 6PPD, and in this context participated in the investigation. The Authority in Paragraph 38 of the Findings has held as under:- Authority notes that Shandong Sinorgchem Co. Ltd., emerged in August 1998 during the property right reform of state owned enterprises. As per business licence, the company was in operation since 14th May, 1999. The company was set up by means of promotion and was established by Heze Import Export Co.; Shandong, Shandong Caoxian Sinorgchem Chemical Factory, Cookian Kemic Co; Shandong, Caoxian He Rubber Additive Agent Co; Shandong and Caoxian He Chang Rubber Additive Agent Co; Shandong. From the information available on record, it is noted that both Shandong Heze Area Import and Export Company and Shandong Cao country Sinorgchem Five Chemical Plant were state owned enterpri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to in the context of normal value shall normally be determined on the basis of records kept by the producer or exporter under investigation provided such records are in accordance with the generally accepted accounting principles (GAAP) of the exporting country, and such records reasonably reflect the cost associated with production and sale of the article under consideration. Thus, what is contemplated in Paragraph 1 is the records prepared on the basis of market economy conditions because only then they will reasonably reflect the cost associated with production and sale of the goods. This is clear from the scheme of Annexure 1, which applies paragraphs 1 to 6 to firms operating under market economy conditions responsive to market signals and paragraphs 7 and 8 to firms operating under non-market economy conditions. 16. The element of cost referred to in the context of normal value can therefore not be determined based on the records kept by the producer in the exporting country, even if they are kept in accordance with GAAP of the country, because such records would not correctly reflect the cost associated with the production of the article under consideration, in which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed normal value in particular where the costs of production do not result from the ordinary course of trade, even though such recourse is expressly provided for in Article 2(3) of that regulation. 46. The institutions were therefore fully entitled to conclude that one of the items in the applicants records could not be regarded as reasonable and that, consequently, that item had to be adjusted by having recourse to other sources from markets which the institutions regarded as more representative and, consequently, the price of gas had to be adjusted. 19. In dumping investigations, the Authority routinely requests both price and cost information in order to check whether domestic sales are made below cost. In determining normal value, sales of the like product in the domestic market of the exporting country at prices below per unit (fixed and variable) costs of production plus SGA costs will be treated as not being in ordinary course of trade by reason of price. In order to ascertain the comparable price for the like article when meant for consumption in ordinary course of trade in the exporting country under Section 9A (1) (c) (i) ibid, the sales reflected in the accounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... comparable price in the context can only be with reference to the price of similar articles sold under similar circumstances irrespective of the manufacturer. By holding anti-dumping duty to be export-specific, the Tribunal could not have restricted the scope of the investigation only to materials to be produced by a party against whom an investigation is being conducted. Such an interpretation of the statute is wholly contrary to the very scheme of the statute. In our opinion, both normal value and NIP are not exporter or domestic industry specific respectively but exporting country specific and importing country specific (India). Findings and Order 20. In the light of the foregoing, we are of the view that the Authority rightly rejected the price of 4ADPA from Sinorgchem, and opted for construction of normal value, based on the international price of 4ADPA. However, having rightly rejected the 4ADPA price from China and opting for construction of normal value based on the international price of 4ADPA, it was incumbent on the Authority to make adequate disclosure, and call for information / comments from the interested parties as regards evidence of internationa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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