TMI BlogSafeguard 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 findingsX X X X Extracts X X X X X X X X Extracts X X X X ..... led 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 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 the public file. Having satisfied that the requirements 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich 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 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 accounts for more 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 domest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idential 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 granted. (VI) Increased Imports (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Asia and the former USSR and the continued growth in steel demand in the United States' market as other markets declined, lead to increased imports. 18. The applicant has pointed out that Steel manufacturers in a number of countries including China PR, Russia, Ukraine have developed huge capacities to cater to 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 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 better demand prospects (domestic demand up by 3.1%) and high domestic price ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... try 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 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 unforeseen development. (VIII) Serious Injury and Threat of Serious Injury 25. Serious Injury: The applicant have claimed that the increased imports of 'PUC' have caused and are threatening to cause serious injury to the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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(Q1) and the domestic industry recorded losses as shown in the following table:- Financial Year Profitability (Rs. /MT) (Indexed) 2013-14 100 2014-15 135 2015-16(Q1) (55) (f) Inventory - The table below depicts the inventory levels which have witnessed an increase from 100 points in 2013-14 to 103 points in 2015-16 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A) which is a cause of concern. (IX) Causal Link between Increased Import and Serious injury or Threat of Serious injury: 28. The Panel on Korea - Dairy set forth the basic approach for determining causation : 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 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 link, Korea has to demonstrate that the injury to its Domestic Industry results from increased imports. In other words, Korea has to demonstrate that the imports of SMPP cause injury to the Domestic Industry producing milk powder and raw mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the Critical circumstances means circumstances in which there is clear evidence that imports have taken place in such increased quantities and under such circumstances as to cause or threaten to cause serious injury to the domestic industry and delay in imposition of provisional safeguard duty would cause irreparable 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 prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eady 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 the range of USD 320-350 per MT during the month of July 2015 for supplies to be effected in September-October, 2015. Accordingly, the prices of the domestic industry are spiraling down further. There is clear evidence that increased imports have caused and are also threatening to cause serious injury to the domestic industry. d) The market share of 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 ex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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