TMI Blog2006 (4) TMI 510X X X X Extracts X X X X X X X X Extracts X X X X ..... cles under investigation. It is evident even from this definition of like article that the expression article in 9A(1) which may be liable to anti-dumping duty and in respect of which investigation is to be made as per the rules, will not by itself include any other article which has characteristics closely resembling those of the article under investigation unless even such another article is specifically identified as the article under consideration for the purpose of investigation and imposition of anti-dumping duty. It is evident from the provisions of Section 9A(1) that not only the article should be identified for the purpose of the impost, it should be an article that is exported from any country or territory to India. Therefore, export of the article identified from the country is the basis for the levy when it is exported at less than its normal value and becomes liable to imposition of anti-dumping duty not exceeding the margin of dumping upon the importation. An article which has not been exported to India cannot, therefore, be subjected to imposition of anti-dumping duty under Section 9A(1) of the Act which lays down the basis for the impost. There is, therefore, no err ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, clear that the findings of the designated authority in relation to injury and causal link aspects are erroneous and are not borne out from the material on record thereby vitiating the recommendations made by it for imposition of anti-dumping duty. It thus transpires from the material on record that the final findings as regards the domestic industry having suffered material injury on account of the dumped imports of the articles under consideration, is clearly erroneous and the imposition of anti-dumping duty cannot, therefore, be sustained. The impugned final findings and the impugned notification imposing anti-dumping duty, therefore, deserve to be set aside. Thus, the impugned final findings and the impugned notification imposing anti-dumping duty are hereby set aside and the Appeal Nos. C/609/03-AD, C/610/03-AD and C/606/03-AD are allowed and Appeal No. C/599/03-AD is dismissed. - R.K. Abichandani, President, Shri M.V. Ravindran, Member (J) and Dr. T.V. Sairam, Member (T) Shri K. Venugopalan, Shalinder Saini, Rajesh Sharma, Taurn Gulati, Samir Gandhi, R. Parthasarathy and Seetharaman, Advocates, for the Appellant. Shri Ameet Singh and Ms. Prema Swarup, Advocates, for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 3. Appeal No. C/599/03 has been filed by the domestic industry praying that the dumping margin in respect of exports of NBA from South Africa and Malaysia and IBA from Singapore be re-determined and anti-dumping be imposed in respect of all exempted types ; to hold that exclusions of Malaysia and South Africa from the scope of anti-dumping duty on NBA, Singapore from the scope of anti-dumping duty on INA and IBA are incorrect, and modify the final findings notified by the respondent No. 2 and anti-dumping duty imposed by the respondent No. 1 in respect of these alcohols; hold that anti-dumping duty is required to be extended to all like forms of the product and impose duty on Iso Octanol, Nonanol and Iso Nonanol, and duty on Sabutol from South Africa be enhanced appropriately. 4. Appeal No. C/606/03 has been filed by an exporter while Appeal Nos. C/609/03 and C/610/03 have been filed by the importers. 4.1 In Appeal No. C/606/03 which has been filed by an exporter (Sasol Chemicals Industries Ltd.) it has been prayed that the impugned notification and the final findings be set aside in so far as they apply to the appellants and the product Sabutol, and order that Sabutol and IBA fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... closely resembling to the goods produced, originating in or exported from the subject countries. The petitioners claimed that the domestic industry was producing NBA, IBA and 2-EHA. They sought for inclusion of other types of acyclic alcohols though not imported into India during the investigation period on the ground that these types of alcohols are comparable to the type of Alcohols being produced by the domestic industry and that they closely resembled in respect of their characteristics. It was claimed by the petitioner domestic industry that there was a great amount of substitutability between these various types of alcohols and that all these acyclic alcohols are produced from common raw material olefins and are utilised for similar end use, largely for production of plasticizers. These acyclic alcohols are nothing but industrial alcohols with different carbon numbers. These alcohols are used to form esters (such as Phthalates) for plasticizing vinyl and other resins. They are also used as solvents, acyclic alcohols are classified under sub-headings 2905.13, 2905.14, 2905.16, 2905.17 and 2905.19 of the main Heading 29.05 of Schedule I of the Customs Tariff. 5.4 According to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the paint industry as a solvent in nitrocellulose lacquers and thinners and as an intermediate in the manufacture of acetates, in Pharmaceuticals, lube oil additives and acrylates. According to the domestic industry, the various subject alcohols thus perform the same function and are used for closely resembling end products. The subject alcohols are classified under Customs Chapter 29 and they fall under Heading 2905. 5.5 On behalf of the importers the Indian Plasticizers Manufacturers Association opposed the petition of the domestic industry on the ground that most of the problems faced by the Oxo alcohol manufacturers are not related to import of Oxo alcohols into India and that they are related to non-availability of raw materials amounting transportation costs due to locational disadvantages etc. According to them, only three types of alcohols were produced by the domestic industry, namely, NBA, IBA and 2-EHA and therefore, the product coverage should be restricted to only three types of alcohols. Moreover, Sabutol cannot be equated to IBA or NBA. While IBA and NBA are produced following Oxo process, Sabutol is obtained by coal carbonization process and it is a by-product. Furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BA) or Butan-2-01 (iv) Sabutol (v) Octanol In paragraph 6.3 of the preliminary finding, the authority observed as regards NBA, 2-EHA and IBA which were manufactured in India that, there was no argument from any interested party disputing that the types of acyclic alcohols being imported and being investigated are not alike articles to those being produced by the domestic industry . It was held that it was a known fact that the types of acyclic alcohols being produced by the domestic industry are not identical or like in all respects to Sabutol, one of the products under investigation. However, in the absence of an identical product the next parameter for determination, was, whether the products being produced by the domestic industry, which although not alike in all respects, have characteristics closely resembling those of the articles under investigation. It held that Sabutol contained 65% to 69% of Normal Butanol or Normal Butyl Alcohol (NBA), as per the own admission of the exporter Sasol. The range of specific gravity of Sabutol, as per the commercial literature was considered. Sabutol was claimed to be a mixture of NBA and IBA and secondary pentanol. It was held that the majo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty found it appropriate to cumulatively assess the effect of subject goods on the domestically produced like article as the export prices from the subject countries were directly competing with the prices offered by the domestic industry prices in the Indian market and found that there was a cumulative effect of injury by import of subject goods in the domestic industry. It was found that the imports from subject countries increased in absolute terms during the period of investigation. They also grew significantly in relation to total imports of subject goods and also in relation to total Indian demand of subject goods. It was held that the imports of Sabutol tend to displace the demand for domestically produced Oxo-Alcohols and that importers were using Sabutol as a cheaper substitute for Oxo-Alcohols produced domestically. The authorities held that the imports of Sabutol and Octanol, though not produced by the petitioner company had caused injury to the domestic industry. 5.12 It was noted in paragraph 18 of the preliminary findings that the petitioner Andhra Petrochemicals Ltd. had suspended its operations from 22-1-2001 to 4-7-2001, due to uneconomic market pricing which had ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alcohols. The fact that the ten types fall under the description of acyclic alcohols and their prima facie similarity was sufficient enough to include them within the scope of the product under consideration. The authority, therefore, did not consider it improper to have included ten types of alcohols within the description of the product involved under investigation, though some forms or types of these alcohols had not been imported during the period of investigation. The authority took into account the following criteria for deciding the issues on like article :- (i) Technical and Commercial substitutability; (ii) Functions and uses of the products; (iii) Resemblance of the physical and/or chemical properties; (iv) Users perception for switching over from one product to another; (vi) Similar production processes; and (vi) End-product substitutability. 6.1 It was held that the fact that Octanol, Nonanol, Iso Nonanol and Sabutol had different chemical properties from 2-EHA, IBA and NBA produced by the domestic industry was itself not a decisive factor. The other criteria like functions and uses, commercial and technical substitutability, user's perception in switching over fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of the alleged imports of Iso Nonanol subsequent to the period of investigation. It was, therefore, held that despite the view taken in the preliminary findings with regard to imposition of anti-dumping duty on Iso Nonanol, the authority was not inclined to continue imposition of anti-dumping duty on Iso Nonanol. As regards the causal link, the authority observed in paragraph 50 of its findings that the material injury to the domestic industry was caused by dumped imports from the subject countries. It was held that the increase in quantum of imports from subject countries resulted in curtailment of market shares of the petitioner and that increase in the dumped imports of subject goods had the effect of undercutting price of the domestic product forcing the domestic industry to sell below its fair selling price. The domestic industry was not in a position to realise its fair selling price and therefore, incurred losses. It was held that material injury was caused to the domestic industry by the dumped imports from the subject goods. It was concluded that acyclic alcohols NBA, 2-EHA, IBA, Sabutol and Octonol had been exported to India from the subject countries below their norma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It was pointed out that the designated authority determined dumping margin for NBA, IBA and 2-EHA from Brazil which were exported to India and had also imposed duties on Octonol which was not exported to India. He, therefore, ought to have imposed duties on Nonanol and Iso Nonanol since they were like products. It was further pointed out that the designated authority had determined dumping margin for NBA and 2-EHA from Malaysia, which were exported to India and had also imposed duties on IBA which was not exported to India. Likewise, it had determined dumping margin for NBA, IBA and Sabutol from South Africa which were exported to India and had also imposed duties on 2-EHA and Octonol which were not exported to India. It had determined dumping margin only for 2-EHA and Octonol from Romania which were exported to India and had imposed duties on NBA and IBA which were not exported to India. In the same way, it had determined dumping margin for NBA and 2-EHA from Singapore which were exported to India and had also imposed duties on Octonol which was not exported to India. In case of Sasol, an exporter from South Africa, the designated authority had determined dumping margin for IBA, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he number of product types dumped or undumped into a market. In that case, the product under investigation was ceramic tiles of any size and it was held that the authority was required to establish an individual dumping margin for each exporter of that product as a whole and not for each size-category. The panel cautioned that it is important not to confuse the usefulness of grouping by size, model, type for the purpose of making a fair comparison under Article 2.4 and the requirement under Article 6.10 to determine an individual margin of dumping for the product as a whole. It was submitted that product under consideration in the present case was acyclic alcohols and not IBA, NBA, 2-EHA or Sabutol, IBA. NBA and various forms of acyclic alcohols have become so popular that they are known in the market place by their specific forms rather than as acyclic alcohols, according to the learned Counsel. He also placed reliance on Kajaria Tiles case (Final Order No. 1/2006-AD in Appeal No. 367/03-AD) [2006 (195) E.L.T. 146 (Tri. - Del.)] for pointing out that one of the most important tests, as held therein, was whether the product type concerned was technically and commercially substituta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no dumping margin. The authority had to follow the provisions of Rule 5(3) of the said rules while making such investigation. It was further contended that imposition of anti-dumping duty or initiation in respect of products not imported into India was violative of Section 9A(1) of the Act. It was contended that unless article under investigation was identified, the question of determination of like articles did not arise and the designated authority had made wrong determination of the like articles and virtually put cart before the horse. The learned Counsel tried to demonstrate from the record that the injury analysis made by the designated authority was flawed and the casual link analysis was also flawed. It was also submitted that there was a gap from 5-3-2003 to 30-9-2003 during which no anti-dumping duty could have been levied. It was submitted that retrospective levy of final anti-dumping duty covering interregnum period was illegal. The learned Counsel further argued that the demonstration of the causal relationship between dumped imports and injury was based on an examination of relevant evidence and the finding was contrary to facts on record. The evaluation of injury par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the capacity utilisation of the company, was factually wrong, erroneous since the domestic industry had achieved 115% capacity utilisation from April, 2000 to January, 2001, and thereafter, operation was suspended, as a result of which they could not achieve even higher sales and market share. It was submitted that the suspension of operation of the company was due to operational constraint, namely non-availability of propylene which was the raw material. Therefore, injury caused by such operational constraint during five months out of the fifteen months period of investigation, cannot be attributed to dumping. It was pointed out that as per the annual report of the domestic industry, the profit margin was low mainly due to higher propylene prices. The causal link analysis was, therefore, flawed on the ground that there was curtailment of market share and that operational constraint was the reason for the injury. The build up of stocks could not be the reason for suspension of operations, as the stock was liquidated by 31st March, 2001 and the sale quantity in April-June, 2001 was only 78 MTs. It was submitted that the imports were attracted because of suspension of operation. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... need to separate and distinguish the injurious effects of different causal factors (paras 228-233 of the report), it was submitted that the market share of the domestic industry had increased to 73.36% from 55.81% and thus, despite the fact that the domestic industry had suspended its operations for five months due to non-availability of propylene, it was able to increase its market share. It was also submitted that the sales of domestic industry had significantly increased despite the fact that the operations of the company were suspended for five months, but for which they would have increased further. It was pointed out that as per the final finding NBA from Malaysia and South Africa had not been dumped and IBA had not been dumped from Singapore. Since the volumes of these three products were not dumped, they should have been excluded in evaluating the effect of dumped imports. By not doing so, the injury of causal link analysis, got vitiated. Reliance was placed on the Appellate Body Report on Thailand-H beam from Poland (WT/DS 122/AB/R) in support of the contention that the authority had not evaluated as to how and why, in the light of positive trends in many injury factors, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xtures of such Oxo-alochols. As regards Sabutol, it was submitted that it was mixture of IBA, NBA and secondary pentanol, and that it was manufactured from the coal carbonization process and not by oxo process. It was submitted that it was clearly erroneous on the part of the authority to consider NIP of NBA as a representative of Sabutol, which was a mixture containing NBA only up to 65%. The dumping margin for Sabutol was determined by comparing the normal value of Sabutol in South Africa with export price to India. For determining whether anti-dumping duty lower than the dumping margin was adequate to remove the injury to the domestic industry, the authority was required to compare the non-injurious price of an article which was equivalent to Sabutol in India with the landed price of Sabutol. Hence the determination in respect of Sabutol was clearly illegal. 9.1. The learned Counsel appearing for the exporter Sasol, further contended that Sabutol could not have formed part of the product under consideration for the purpose of the investigation, and that it was not a like product under Rule 2(d). He submitted that an analysis of like product was a two step analysis, as held in Bi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not like products nor were they commercially substitutable. It was then argued that there was no material injury suffered by the domestic industry since capacity of the domestic industry, market share, level of capacity utilisation, sales price of the domestic industry and cash flow position had improved, closing stock had come down, possibility to raise capital investment would logically be improved, profitability had increased and quantity produced too increased. Referring to the WTO Panel decision in Softwood Lumber case on which the domestic industry had relied in support of its proposition that the like products under Article 2.6 of the Anti-Dumping Agreement cannot be applied to determining the product under consideration, it was pointed out from that decision that in para 7.157 Panel Report, the panel had clearly stated that it was not making a decision on the meaning of the term product under consideration , in the absence of any specific language in the WTO Agreement on Anti-Dumping to that effect. Instead it had arrived at a finding based on the application of the like products test under Article 2.6 as distinguished from product under consideration. In doing so, the pan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es that the issue as regards article under consideration for the purpose of investigation raised by them is, whether anti-dumping duty may be imposed on article under consideration by giving an extended meaning to article liable to pay anti-dumping duty under Section 9A(1), so as to include in the description of article under consideration even other articles which are like articles. 11.1 In the present case, the initiation under Rule 5 of the said rules was done at the instance of the domestic industry in respect of the following articles under the heading acyclic alcohols or Oxo-alcohols :- (i) Normal Butanol (NBA) or N-Butyl Alcohol, Butan-1-01. (ii) 2-Ethyl Hexanol (2-EHA) (iii) Iso Butanol (IBA) or Butan-2-01 (iv) Sabutol (v) Hexanol (vi) Haptanol (vii) Octanol and Iso Octanol (viii) Nonanol and Iso Nonanol (ix) Decanol and Iso Decanol (x) Mixtures of above 11.2 Admittedly, the domestic industry is producing only NBA, IBA and 2-EHA. Inclusion of the other types of alcohols, though not imported in India during the period of investigation was made on the ground that they are comparable to the type of alcohols being produced by the domestic industry and that these types of alcoho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the types of acyclic alcohols for which investigation was initiated were like articles :- - Technical and Commercial substitutability, - Functions and uses of the products, - Resemblance of the physical and/or chemical properties, - Users' perception for switching over from one product to another, - Similar production processes, - End-product substitutability. 11.5 The authority held (para 8.5) that NBA, 2-EHA, IBA, Sabutol octanol, Iso octanol which are the forms of acyclic alcohol in the product under consideration were like article to the domestically produced oxo alcohols, namely, 2-EHA, IBA and NBA. It was found that Nonanol, Iso Nonanol, Octanol and Sabutol are commercial substitutes of the domestically produced axo alochols. It was observed these have chemical properties, though dissimilar, yet close enough to be bracketed as acyclic alcohols . Further, the user has switched over from one form of alcohol to the other form in the case of Nonanol, Iso Nonanol and Sabutol as a preference over the domestically produced alcohols. As regards Octanol, it was noted that one of the Indian users had placed order on the Indian domestic producer giving the description as 2-Ethyl Hex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1) of the Act. Rule 4(1)(b) enjoins a duty on the designated authority to identify article liable for anti-dumping duty. Public notice notifying the decision of the designated authority to initiate investigation, is required to contain, inter alia, information on the article involved and the name of the exporting country. The statutory scheme of imposition of anti-dumping duty clearly envisages importation of an identified article, determination of the margin of dumping and injury for deciding the levy of the amount of anti-dumping duty that would remove the injury to the domestic industry. Section 9A(1) makes it pre-requisite for imposition of anti-dumping duty that it should be in relation to the article on its importation from any country or territory to India at less than its normal value. The anti-dumping duty is required to be imposed on such article which has been identified and found to be liable for imposition of anti-dumping duty. The expression article in Section 9A(1) will include only the article on which anti-dumping duty may be imposed and not any other article which may be a like article to such identified article. In other words, anti-dumping duty can be imposed on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urality of articles which can be called like articles to the article under consideration which are meant for consumption in the exporting country while determining the normal value , as defined under Section 9A(1)(c) which contains the expression like article , there is no such plurality of the word article in Section 9A(1) when it is identified under Rule 4(1)(b), as the article exported from any country or territory to India at less than its normal value and on which the Government may impose an anti-dumping duty. Therefore, for the purpose of imposition of anti-dumping duty, the like article as identified for the purpose of investigation alone would be relevant, and the expression like article defined in different contexts cannot be used for expanding the meaning of article under Section 9A(1). 14.2 Furthermore, it is evident from the provisions of Section 9A(1) that not only the article should be identified for the purpose of the impost, it should be an article that is exported from any country or territory to India. Therefore, export of the article identified from the country is the basis for the levy when it is exported at less than its normal value and becomes liable to impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... separately made for the purpose of deciding upon the imposition of anti-dumping duty on the article that is exported from any country to India at less than its normal value. The scheme of the Act and the rules does not contemplate working out any mean of the dumping margin when multiple articles are under consideration by totaling up the dumping margins of each of them, and article wise determinations are required to be made for ascertaining whether and if so at what rate the anti-dumping duty is required to be imposed. The word article clearly indicates a particular item or object typically one of a specified type. Therefore, the dumping margin and injury issues in the context of the articles produced by the domestic industry which are said to be like articles in comparison with the article/articles under consideration, are required to be considered separately for the purpose of making determinations of margin of dumping, injury etc. by the designated authority to find out that the relevant article or articles are liable to imposition of duty and if so, to what extent. For the article under consideration which has not been exported to India during the period of investigation, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the petitioner. It overlooked its own conclusion on injury in para 46(f) where it concluded that market share in demand, of the domestic industry, increased during the period of investigation. 14.6 It has come on record without any dispute that as per the annual report of the domestic industry for the year 2000-01, the operations of the plant of domestic industry were suspended from 22nd January, 2001 till 4th July, 2001 due to operational constraints and uneconomic market pricing . The excerpts from the Director s report to the members having bearing on this aspect and also on the other aspects, of cash profit and the price of raw material propylene is reproduced hereunder from the annual report, a copy of which was placed on record: - OPERATIONS : The Company achieved significant level of production of 34.437 MTs, in 10 months operation and sales of 34,943 MTs during the year. This high level of operations was possible on account of innovative measures implemented by the plant team in-house, leading to improved on stream factors and at the same time realising considerable savings in raw-material and energy consumption factors. The plant operations were suspended from January ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d due to uneconomic market pricing. 14.9 The break-up of import quantum shows that for the first twelve months of the period of investigation i.e. 2000 to 2001 it was considerably lower (Rs. 3766 MTs) than the previous year while in the last three months of the period of investigation, it was 8248 MTs. This indicates that when the domestic industry was operating till January, 2001, the imports were low. Thereafter, they had suspended operation for five months and ten days. It would, therefore, appear that it is because they suspended operations that the imports came in and not vice versa. Since the suspension of operation attracted imports, losses for the period of five months and ten days during which the operation was suspended by the domestic industry could not have been legitimately attributed to dumping. The analysis by the designated authority is in respect of the loss sustained by the domestic industry in the entire period of investigation including the said period of five months and ten days, which was obviously erroneous. It would thus appear that the suspension of operations by the domestic industry that resulted in non-availability of the goods in the domestic market was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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