9911796707
TMI BlogSafeguard investigation concerning imports of Acetylene Black into India — Final FindingsX X X X Extracts X X X X X X X X Extracts X X X X ..... ties : (i) M/s. Panyam Cements and Mineral Industries Ltd. (ii) M/s. Senka Carbon Pvt. Ltd. (iii) M/s. Tecil Hydro Power Ltd. (iv) Economic and Commercial Counsellor, Embassy of Peoples Republic of China. Their request was considered and an extension of time up to 24-3-1998 was allowed. 4. Replies to the notice dated 27-1-1998 were received from the following parties :- (a) All the domestic producers through their advocates. (b) All the importers through their advocates. (c) Exporters/Governments of exporting countries : (i) High Commissioner, Republic of Singapore. (ii) Embassy of the Peoples Republic of China. (iii) MCCI Corporation Philippines. (iv) South African High Commission as convenor for six countries involved namely Belgium, Peoples Republic of China, Japan, The Philippines, Singapore and South Africa. (v) M/s. Denki Kagaku Kogyo Kabushiki Kaisha (DENKA). (vi) M/s. Denka Singapore Private Ltd. (DSPL). (vii) Embassy of France. (viii) Embassy of Japan. 5. Verification of information deemed necessary for the investigation was conducted by a team of officers and to this end investigations were carried out by a team of o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to heavy importation of AB at unrealistic prices undercutting the local market by the overseas suppliers. (iv) The effect of heavy importation of AB which began in 1996-97 and continued unabated has affected the performance of AB manufacturers particularly in 1997-98 (second half) when the plants were being operated intermittently with reduced production below the economic level of operation. Reduced production and sale of AB at the slashed down prices of procurement offered by Indian Dry Cell Battery Manufacturers (IDCBM) is gravely affecting the industry s financial results. (v) During the quarter Oct.-Dec., 1997 production of AB in Panyam was only 296 MT as against 937 MT during the period Apr.-Sept., 1997. By Sept., 1997 Panyam had a huge unsold stock due to lack of confirmed orders/dispatch instructions. (vi) Despite power problems in Karnataka and Kerala, Panyam whose installed capacity was 1800 TPA and was expected to produce at 80% efficiency, in fact produced as much as 1949 MT in 1996-97 but could sell only 1786 MT due to reduced level of offtake. (vii) Shut down of the Panyam plant for one month during Sept., 1996 was for annual maintenance, a common feature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir main customer M/s INL. Geep had two manufacturing plants, one at Allahabad and the other at Mysore. While Allahabad Plant did not raise any quality problems, towards the end of 1996 Mysore Plant complained about Senka s AB quality as not meeting with their specifications. Thus, it seemed that within the same company, each plant manufactures identical products, albeit with different input acceptance level, which is unlikely. It is more likely that Geep was committed to imports and wanted some excuse for not purchasing from domestic industry. They reduced off-takes due to build up of stocks of imported AB. (xiii) Tecil too had stabilised their quality of production as would be seen from a reference to the book titled Technology in India Acetylene Black Industry - a report prepared under the National Register of Foreign Collaborations - Government of India, Department of Scientific and Industrial Research-August 1988 vide Page 22, Page 26, Para 3.5 and page 68, Para 6.6. (xiv) Cost of production of AB was brought down by Tecil from ₹ 1,27,576 in 1996-97 to ₹ 1,10,146 by reducing the consumption of power in the manufacture of calcium carbide. (xv) The manufact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nse of dumping. (xxvi) The Report of Department of Scientific and Industrial Research on the AB Manufacture in India is a 1988 Report and cannot be entirely relied upon in today s context as many parameters since then have changed. (xxvii) Tecil is a captive producer of Calcium Carbide and would therefore continue to manufacture AB from this route. (xxviii) Calcium Carbide and AB are two different products both manufactured domestically and the issues connected with Calcium Carbide should not be mixed up with the issue concerning AB. (xxix) The domestic producers of AB are not in a position to generate adequate resources to facilitate their restructuring unless Safeguard Duty is imposed on AB. (xxx) CIF pricing of exporters is same irrespective of the method of manufacturing i.e. through Petrochemical or Calcium Carbide route. No distinction on the basis of route, therefore, need to be made. (xxxi) Reduction in price of imported AB was the main reason for increased imports. (xxxii) The domestic industry has made plans to adjust their plants. Tecil is installing Ullunkal hydro-electric plant which is over 80% complete. Tecil has also entered into a collaboration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in production in Tecil was, therefore, not due to the alleged increased imports. (v) The fall in capacity utilisation is mainly attributable to the drop in apparent demand in the first half of 1997-98 by 14%, and increase in installed capacity by about 6% and problems of inefficiency power cuts and labour faced by Tecil and not due to increased imports. The increase in the market share of imports from 21.8% in 1996-97 to 22.81% in 1997-98 i.e. 1%, cannot be regarded as serious injury resulting in significant overall impairment of the domestic industry. (vi) Injury to domestic industry is a self inflicted injury as they increased the installed capacity from 5300 MT to 5600 MT inspite of a low capacity utilisation. The causal link between increased imports and serious injury to the domestic industry is absent. (vii) The quality certificate received from M/s. INL by Senka were much earlier to the current period of investigation in 1997-98. The quality problem brought to Senka s notice by M/s. Geep in 1997 has not at all been dealt by the DG in his Preliminary Findings. The domestic industry has not taken any action to switch over from the Calcium Carbide route to the Hydrocar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asons other than increased imports i.e. labour and power problems etc. This domestic producer alone cannot constitute the domestic industry as per the definition of the domestic industry under the Safeguard Law and, therefore, no action need be taken for imposition of Safeguard Duty. (xv) Availability of Acetylene from Hydrocarbon route is doubtful. Two of the domestic producers in the context of anti-dumping petition concerning calcium carbide have mentioned that there are no known manufacturer of acetylene in Petrochemical industry in India. Adjustment plan submitted by some of the domestic producers is, therefore, questionable. (D) VIEWS OF THE EXPORTERS/EXPORTING COUNTRIES 9. The exporters of AB/governments of exporting countries have made the following main points : (a) Karbochem : (i) AB producers in India have become uncompetitive as compared to overseas suppliers due to higher electricity price. (ii) Current rate of protection to the domestic producers against imports is sufficient since duties have been reduced from 85% in 1993-94 to the current level of 35% on CIF value and the domestic producers who had more than 97% of market share of AB up to 1996 sti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rease of total consumption in India. The net increase of import of AB is attributable to increased demand of AB by the users of AB specially when domestic producers fail to meet the demand of dry cell battery manufacturers. (ii) Infrastructure problems such as power and labour and inefficiency of the domestic producers cause serious injury or threaten to cause serious injury to the domestic industry. (iii) Rate of provisional duty is unfair and unjustified. (iv) The marginal decrease in price of imported AB from US $ 2280 in 1996 to US $ 1970 in 1997 (CIF) was due to fall in international prices. (d) Embassy of the Peoples Republic of China did not make any specific submissions except asking for a list of Chinese exporters of AB in India as well as a list of Indian importers of AB from China. The information regarding all known importers/exporters etc. is already available in the application. (e) The Republic of Singapore wanted to be apprised of the developments and progress of the investigation and in their view imposition of provisional safeguard duty was unwarranted. (f) The South African Economic Office made the following points as convenor of six countries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of ₹ 19,500 per MT would cause the total duty of AB to exceed the level given under Schedule of Concessions? India needs to fulfil its duties of investigation, notification and consultation under the Agreement on Safeguards. (F) FINDINGS OF DG 10. I have gone through the case records and the submissions made by the interested parties. The issues raised by various parties are dealt with at appropriate places in the findings below : Product under investigation The product under Investigation is Acetylene Black (AB). AB is a unique type of Carbon Black. It is fluffy and has a bulk density of 19 kg. per cubic meter. It is the purest form of carbon black. It is the most crystalline of the commercial blacks and is a product of low surface activity, low moisture absorption, high liquid (acetone, HCI) absorption and high electrical and thermal conductivity. AB is mainly used to improve the conductivity of manganese dioxide used in dry cells. Abroad it also finds application in the manufacture of rubber heater pads, heater tapes, anti-static belt drives and shoe soles. It is also used in the manufacture of aircraft tyres. The process of manufacture basically comprises ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gium material. a. Name of the product imported : Acetylene Black b. Description of the product including various grades, sizes, models or type etc. : (a) Acetylene Black (Denka) 50% compressed. (b) Carbon Black - Super P (c) Acetylene Black (China) It is evident from the above that the users of Carbon Black Super P, the so-called Conductive Carbon, themselves have described this product as AB. Commercially, functionally and in consumers perception, Carbon Black Super P, the so called Conductive Carbon is the same as AB which is the subject matter of the present investigation. 15. It is also observed that in the compilation of import statistics, the Director General Commercial Intelligence and Statistics (DGCIS), Calcutta has recorded the imports of Carbon Black from Belgium under classification 28030009 which pertains to Carbon Black - nes. However, while the per MT prices of Carbon Black under this classification are in the range of ₹ 137 per kg, the prices of Belgium material have been recorded in the range of ₹ 66 per kg. It is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... production as well as to meet the increased domestic demand. 20. In this regard it is observed that the increase in imports is to be considered over a period which under the Trade Notice No. SG/TN/1/97 dated 26th September, 1997 issued by the DG has been specified to be a period of the most recent 3 years (or longer) immediately preceding the commencement of investigation for which data is available. In the current investigation, therefore, the period of investigation has been rightly taken as 1994-95, 1995-96, 1996-97 and the first six months of the year 1997-98 for which data was made available by the applicants and verified by the team of officers. Whether or not there were imports in any of these years is irrelevant specially as the evaluation of imports is to be done on a comparative basis for the entire period. If there were no imports or only a small quantum of imports in a year, that year cannot be ignored only on that ground. The increase in imports for the entire period in totality has to be considered for arriving at a decision whether imports have increased during the period. The answer is clearly in the affirmative in the present case. Serious Injury 21. An a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 MT in 1994-95 has drastically fallen in 1996-97 and thereafter in 1997-98. The same trend is exhibited in the capacity utilisation as well as in the domestic sales and the share of the domestic production in the apparent consumption. The domestic industry has also suffered increases in the cost of production coupled with reduction in sales realisation resulting in operating losses, stoppage of production by some of the domestic producers and loss of man-days in the case of others. Panyam had to shut down their plant from 10th April, 1997 to 2nd June, 1997 due to insufficient orders. Similarly Senka did not produce AB in September 1997 as there was no off-take by the customers. All these factors put together certainly tend to show that the domestic producers have suffered loss of production, loss of sales, building up of inventories, loss in capacity utilisation, loss of employment and profitability which clearly indicates that the domestic industry has suffered serious injury during the period under investigation. Causal Link 23. The domestic industry has suffered serious injury as observed above. However, the crucial question is whether this sufferance of the domestic indu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of increased imports or on account of other factors. In the present case the domestic industry comprises of four producers. Admittedly as per the definition of the domestic industry all the four producers taken together or those who account for a major proportion of the domestic production need to be considered as domestic industry. The application has been filed on behalf of all the four domestic producers which account for the entire domestic production and the analyses of serious injury in Paragraph 21 and 22 above also takes into account data for all the four domestic producers taken together. 25. The crux of the argument of AB users/importers is that while three out of the four producers, who accounted for a major proportion of domestic production, achieved higher production in 1996-97, the decline in overall pro- duction mainly due to inability of the fourth producer due to power and labour problems cannot result in a finding of loss of production and consequently in the finding of serious injury suffered by the domestic industry as a whole. 26. I am afraid this argument is totally fallacious. Firstly, the law does not require that for a determination of increased im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er prices as is evident from the fact that an anti-dumping petition against Calcium Carbide imported from PR China and Romania has been filed before the Designated Authority. In the case of Oswal, they produced about 220 MT in 1996-97. However, it is seen that although they had an installed capacity of 900 MT they have not produced Acetylene Black beyond 220 MT or so. It is also observed that in the year 1996-97 Tecil had power and labour problem till November 1996 and in November 1996 they informed the Dry Cell Manufacturers that they had commenced their operations at full capacity and that they were in a position to offer Acetylene Black. The domestic producers collectively carried a monthly stock of about 20.99 MT on an average from April, 1996 to October, 1996 which increased on an average to 159.88 MT for Nov.-March, 1997 period. Tecil had an opening stock of 4.88 MT in their hand in November, 1996 and they produced 27.33 MT in that month. They however were able to sell only 9.7 MT from out of this quantity, 7.5 MT of which were supplied to Geep. The Inventories of Tecil were built up to 22.91 MT in the beginning of December, 1996 in which month they produced 59.88 MT but coul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es in line with the imported prices. 29. The Dry Cell Manufacturers imported 1169.42 MT of AB in 1996-97. They have submitted that there was an increase in consumption of 213 MT from 3645 MT in 1995-96 to 3858 MT in 1996-97 which coupled with a shortfall of 558 MT in production of Tecil accounts for 771 MT which was the cause of increase in imports of about 770 MT of AB in 1996-97. This argument is strongly biased in favour of the imports as it claims the entire growth in consumption and shortfall in production of Tecil to be catered by imports and, is therefore, totally unreasonable. As mentioned above, the actual imports in 1996-97 were 1169.42 MT which were 1098.42 MT more than 1995-96. The apparent domestic consumption (domestic sales + imports) increased by about 14.84% in 1996-97 to 4186 MT as compared to 3645 MT in 1995-96 and fell down by 8.46% to 1916 MT in the first six months of 1997-98 as compared to 4186 MT in 1996-97 on pro rata basis. The share of the imported Acetylene Black in this apparent consumption increased from 0.24% in 1994-95, to 1.95% in 1995-96, to 28.2% in 1996-97 and to 32.62% in the first six months of 1997-98 and the domestic production lost its sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this period and the other three domestic producers accounted for 1150.48 MT during this period. The production of these three domestic producers which was 2800 MT in 1996-97 fell down by about 17.82% on a pro rata basis. The imports in the first six months of 1997-98 accounted for 49.16% of the domestic production. This happened not because the domestic producers could not cater to the domestic demands as they carried on with an inventory of 308.12 MT in the beginning of the year and 226 MT at the end of the first six months of 1997-98 and they had capacity surplus to cater to the domestic demand including Tecil who did not have sufficient orders to service inspite of a reduced production. A mention has been made about the quality of AB of Senka in 1997. It is observed that Senka manufactured AB to IS Specification No. 12170/1987 and also received merit award from their main customer namely M/s. Indo National Ltd., an Indo-Japanese Joint Venture during this period and sold almost their entire production. While the Allahabad unit of Geep did not raise any complaint on quality of AB supplied by Senka, their Mysore unit manufacturing similar goods did not accept the quality of AB sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g action, in the case of Safeguard investigation increased imports is the funda- mental requirement for maintaining a safeguard action. At what prices the imports are entering is not the relevant factor because it is not the unfair competition which is the subject matter of safeguard action but it is the competition per se offered by the increased imports to the domestic producers, even if it is at fair prices. Only in this context the import prices are not relevant. However, when it comes to determination of serious injury or threat thereof, the law requires an examination of change in level of sales, profitability etc. of the domestic producers. These factors undoubtedly depend upon the prices of competing products and in that context import prices do become relevant and require an examination, specially to assess their effect on the domestic situation. 33. In conclusion, it is observed that the imports have grown phenomenally during the period under investigation. In percentage terms the imports have grown to 885.42% in 1995-96 over 1994-95, to 1646.5% in 1996-97 over 1995-96 and to 106.95% in the first six months of 1997-98 as compared to 1996-97 on a pro rata basis. These i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uard duty as the user industry may then be able to source their requirement from alternative competitive sources. It is, therefore, considered that imposition of Safeguard duty in the present case would not be against consumer interest rather it would serve the general public interest. Price comparability of acetylene black produced through different routes 36. It has been claimed that Acetylene Black produced through Hydrocarbon route is cheaper as compared to the Acetylene Black produced from Calcium Carbide. It has been submitted that Oswal s prices are about ₹ 20,000/- per MT lower than the prices of the other three domestic producers who manufacture Acetylene Black through Calcium Carbide route and the amount of provisional Safeguard duty recommended i.e. ₹ 19,500 PMT is approx. equal to the difference of the price of Acetylene Black manufactured through the two routes. It has been submitted that the price of Acetylene Black produced through different routes should not be compared. In this regard, it is observed that it is a fact that Oswal are manufacturing AB through the Petrochemical route and their prices are generally lower than the prices of other three ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Unit. They have, therefore, to buy their major raw materials from outside sources. Senka, therefore, submitted that they were discussing with the Petro Chemical Industry for getting Acetylene Gas for converting into AB by cracking the gas. Panyam mentioned that they were also taking steps similar to those proposed by Senka. In this regard, it has been argued that two of the domestic producers have joined in filing an anti-dumping application concerning imports of Calcium Carbide before the Designated Authority in the Ministry of Commerce. In this application it has been mentioned that in India Union Carbide Ethylene Plant at Chembur, Bombay had been recovering acetylene by solvent extraction of the cracked gases in the Naphtha cracker. (But now there are no known manufacture of Acetylene in the Petrochemical Industry in India) . In view of this statement in the anti-dumping application it has been argued that the adjustment plan of Senka and Panyam is not realistic as availability of acetylene through Petrochemical route is doubtful. In this regard, it is observed that the statement made in the anti-dumping application in which two of the domestic producers of Acetylene Black are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itive prices through the Calcium Carbide route. 39. In view of above, it is observed that the adjustment plan submitted by the domestic industry is not hypothetical or academic. They are making a sincere effort to become competitive so as to face competition offered by the imports. It is considered that imposition of Safeguard duty would help them in re-structuring and to become competitive. It is also observed that some of the domestic producers have already taken steps in this direction and the domestic industry would need a period of about two years to substantially complete their plans. Share of different countries 40. The findings in this regard at Paragraph 5(ix) of the Preliminary Findings are confirmed. CONCLUSION AND RECOMMENDATIONS OF THE DG 41. In view of the findings above, it is concluded that increased imports of AB have caused serious injury to the domestic producers of AB and imposition of safeguard duty for a period of two years will be in the public interest. 42. While arriving at the quantum of safeguard duty which will be adequate to protect domestic industry, the cost of production (confidential) of AB produced domestically has been taken on a ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
