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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

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 - Customs - F. No. D-2011/26/2015/Pt.-I/786 - 690(E) - Dated:- 9-9-2015 - MINISTRY OF FINANCE [DIRECTOR GENERAL (SAFEGUARDS)] NOTIFICATION New Delhi, the 9th September, 2015 Subject - Safeguard investigation concerning imports of "Hot-rolled flat products of non-alloy and other alloy Steel in coils of a width of 60 .....

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hmi Kumaran & Sridharan Attorneys, New Delhi, for imposition of Safeguard Duty on imports of "Hot-rolled flat products of nonalloy and other alloy Steel in coils of a width of 600 mm or more", hereinafter referred to as 'PUC' (Product under consideration) into India to protect the domestic producers of PUC against serious injury/threat of serious injury caused by the increased imports of PUC into India. The domestic industry has also requested for imposition of provisional .....

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ments of Rule 5 were met with, safeguard investigation against imports of PUC into India was initiated vide notice of initiation dated 7th September,2015 and published in the Gazette of India, Extraordinary on the same day. 3. A Copy of the Notice of Initiation dated 7th September,2015 along with copy of non-confidential version of the application filed by the domestic industry were forwarded to the Central Government in the Ministry dealing with Commerce and other Ministries concerned, Governme .....

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f the Director General (Safeguards) : 5. I have carefully gone through the application filed by the domestic industry and the records of verification visit conducted by the officers of the Directorate General of Safeguards. (I) The product under Consideration (PUC): The product under consideration is "Hot-rolled flat products of non-alloy and other alloy Steel in coils of a width of 600 mm or more" hereinafter referred to as 'PUC' (Product under consideration) classifiable unde .....

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equal to 600mm. These products may be as-rolled or thermo-mechanically rolled or thermo-mechanically controlled rolled or controlled rolled. These products may have patterns in relief derived directly from rolling. These products may have been subjected to various processing steps like pickling, oiling, rewinding, temper rolling, heat treatment, etc. The following are not included in the scope of the product under consideration: a) Hot-rolled flat products of steel with nominal width less than .....

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as a whole of the like article or a directly competitive article in India; or ii. whose collective output of the like article or a directly competitive article in India constitutes a major share of the total production of the said article in India 7. The application has been filed by M/S Steel Authority of India Limited; M/S Essar Steel India Limited, and M/S JSW Steel Limited through M/S Lakshmi Kumaran & Sridharan Attorneys, New Delhi. They have claimed that their production together acco .....

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ly, they constitute Domestic Industry as per Section 6(b) of the Customs Tariff Act 1975. (III) Period of Investigation (POI): 9. The Customs Tariff Act, 1975, the Custom Tariff (Identification and Assessment of Safeguard duty) Rules, 1997, the Agreement on Safeguard and the Article XIX of GATT do not specifically define what the Period of Investigation should be. From several case laws on safeguard measures, it is clear that neither the domestic laws on Safeguard nor Agreement on Safeguard and .....

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ansaction wise import data for the 'PUC' has been taken from International Business Information Services (IBIS), as provided by the domestic industry from 2013-14 to 2015-16(Q1) and same has been taken into consideration for analysis. The domestic data from 2011-12 to 2015-16(Q1) has been submitted by the domestic industry and the same has been verified by on-site visit by the department on the basis of excise records and other records maintained in the units to the extent deemed necessa .....

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12. Rule 7 of the Safeguards Rules, 1997 and Art. 3.2 of WTO Agreement on Safeguards also provide for confidentiality. The applicant is not required to disclose such information which is confidential information of the company, disclosure of which can cause serious prejudice to the business interests of the company, which is not in public domain and which the applicant has not disclosed before public at large in the past. Accordingly confidentiality, as prayed for by the domestic industry, is gr .....

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360 262 26585032 13 (VII) Unforeseen development 14. It is noted that there is no express obligation/requirement on the Director General (Safeguards) to analyse unforeseen circumstances as there is no specific requirement either in the Indian Rules, on the methodology that should be followed for analyzing unforeseen developments or in the WTO Agreement on Safeguards, which also does not make any prescription with regard to the methodology that should be followed or the parameters that must be me .....

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led to increased imports. 15. The Appellate Body in Argentina - Footwear (EC case) held that the phrase Unforeseen Developments means the developments which were unexpected. 'Unforeseen developments' require that the developments which led to a product being imported in such increased quantities and under such conditions as to cause or threaten to cause serious injury to domestic producers must have been 'unexpected'. The Body in the same case noted a GATT panel report which held .....

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ces": 17. The panel on US- Steel Safeguards Para 86 of Korea Dairy case Appellate Body Report Of WTO 36 concluded that the confluence of several events can unite to form the basis of an unforeseen development: "The United States argues that the robustness of the US dollar was a development which combined with the other developments, namely, the currency crises in Asia and the former USSR and the continued growth in steel demand in the United States' market as other markets declined .....

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hina 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 manufacturers for multiple reasons. 19. World crude steel capacity at 2351 million tons as on 31 December 2014 has reached a level far in excess of global demand by almost 30% resulting in growing urge to export the surplus steel to countries like India that have good demand. 20. India, with relatively bette .....

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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 2014 alone. This was a result of political unrest in Ukraine due to Russia's intervention. Due to long period of unrest in Ukraine, its economy contracted and its currency sharply depreciated to US dollar. However, depreciation in Ukraine's currency helped its steel producers/exporters to lev .....

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a 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 use will continue to record a negative growth of -0.5% in 2015 and 2016. As a result, exports to countries like India is a natural choice as demand of steel has been on the rise in India. Such intrinsic factors in China PR led to sudden surge of imports from China PR. 24. On examining the da .....

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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 evidences produced, I observe that the excess capacities present in the major exporting countries and increasing Indian demand/apparent consumption of PUC are the reason for increase in imports. It is, therefore, seen that the above reasons cited by the Domestic Industry constitute .....

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x 2013-14 17881187 100 2014-15 17836937 100 2015-16(Q1) 4456795 2015-16(A) 17827180 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 share of 45% in 2013-14 which fell to 37% during 2015-16 (A). During the same period, the market share of import increased from 6% to 12%, as shown below:- Financial Year Total Import (MT) Sales of DI (MT) Sales of other Indian Producers (MT) Captive sale of D .....

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yees (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 from the table below: Financial Year Installed Capacity (MT) Capacity Utilisation (%) 2013-14 23568996 76 2014-15 23568996 76 2015-16(Q1) 5884372 2015-16(A) 23537488 76 (e) Profit/loss - The profitability of the domestic industry has declined sharply in 2015-16( .....

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he 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 reducing the prices, the domestic industry was not able to keep on to its production, sales and market share. This has resulted into losses during 2015-16(Q1) for the domestic industry. Particulars Unit 2013-14 2014-15 2015-16(Q1) Cost of sales (Indexed) Rs/MT .....

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ve, 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 the PUC will further increase and continue to threaten the domestic industry with serious injury. The market share of domestic industry decreased from 45% in 2013-14 to 37% during 2015-16(A) whereas during the same period, the market share of import increased .....

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sed 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 has identified factors other than increased imports which have caused injury to the Domestic Industry, it shall ensure that any injury caused by such factors is not considered to have been caused by the increased imports. To establish a causal .....

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nsive 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 been evaluated. In the instant case, the following are relevant in this regard - i) The volume of imports has increased significantly from 100% to 262% in absolute terms ; ii) Market share of im .....

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c 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 there is a direct correlation between the increase in imports and serious injury suffered by the domestic industry as import in absolute term increased more than two and a half times during .....

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eration 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 of proviso to Section 8B of the Customs Tariff Act, 1975. (XI) Critical Circumstances: 32. As per Rule 2(b) of Custom Tariff (Identification and Assessment of Safeguard Duty) Rules, 1997 th .....

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toms 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 the Customs Tariff (Identification and Assessment of Safeguard Duty) Rules, 1997. The harmonious reading of Rules 6 and 9 of the said Rules leads to a conclu .....

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er 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 industry came down during 2015-16(Q1) when compared with the net sales realization during 2014-15(Q1) as shown below:- Particulars Unit 2014-15 (Q1) 201 .....

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ady 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 prices offered by Chinese and other suppliers to force the reduction in prices of subject goods. The Chinese and Other producers have offered a price in .....

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old 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 threat of serious injury and constitute critical circumstances in the instant case. (C) Conclusion: 35. On the basis of analysis of the application .....

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