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 Final FindingsX X X X Extracts X X X X X X X X Extracts X X X X ..... imposition of Safeguard Duty on imports of Hot-rolled flat products of non-alloy and other alloy Steel in coils of a width of 600 mm or more , as increase in imports is causing and/or threatening to cause serious injury to the domestic producers. 2. 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 under Chapter 72 of the Customs Tariff Act, 1975 , under tariff heading 7208 and tariff item 72253090 . The applicant has claimed that these products are not further worked than hot-rolled and are flat products of iron, alloy or non-alloy steel, in prime or non-prime condition having 'as-rolled' edge or 'trimmed' edge or 'slit' edge. These products may be pickled or non-pickled (with or without skin-pass or tempering), slit or non-slit and having nominal width of greater than or equal to 600mm. These products may be as-rolled or thermo-mechanically rolled or thermomechanically controlled rolled or controlled rolled. These products may have patterns in relief derived directly from rolli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a. Alstom India Ltd., Mumbai b. Arcelor Neel Tailored Blank Private Limited, New Delhi c. Bharat Heavy Electricals Limited, New Delhi d. Bhilai Engineering Corporation Ltd., Bhilai, Chattisgarh e. C.R.I. Pumps Private Limited, Coimbatore f. Caterpillar India Pvt. Ltd., Chennai g. Denis Plast Limited, Gandhinagar Mehsana, Gujarat h. Desmi Equipments Pvt.Ltd., Thane(W), Maharashtra i. Escorts Ltd., Faridabad j. Exedy India Limited, Aurangabad, Maharashtra k. Fine Forge Limited., Hyderabad l. Flakt (India) Limited, Chennai m. Gamesa Wind Turbines P.Ltd, New Delhi n. Ganpati Enterprises, Jaipur o. Hindustan Shipyard Ltd., P.O. Gandhigram, Visakhapatnam p. Hindustan Construction Co. Ltd., Vikhroli(W), Mumbai q. IDL Explosives Limited PO Kukatpally, Hyderabad, r. IFB Automotive Private, Kolkata(W.B.) s. JBM Industries Ltd., New Delhi t. JCB India Limited, New Delhi u. Kalinga Fixtures Ltd. Parel, Mumbai v. Kalpataru Power Transmission Ltd., Gandhinagar , Gujarat w. Larsen Toubro, Mumbai, Maharashtra x. Lloyds Steel Industries Ltd, Mumbai, Maharashtra y. Maruti Suzuki India Limited, New Delhi z. MPP Technologies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Devki Nandan J. Gupta Iron and Steel Merchants, Mumbai f. Dmson's Metal Pvt. Ltd., Andheri (West), Mumbai g. EEPC India, New Delhi h. Embassy of Brazil, New Delhi i. Embassy of Turkey, New Delhi j. European Union Delegation to India, New Delhi k. Federation of Association of Maharashtra (FAM) l. Federation of Industries of India (FII), Delhi m. Hero Steels Limited, Hero Nagar, Ludhiana n. Honda Cars India Limited, GNOIDA, Distt. Gautam Budh Nagar (U.P.) o. Hyndai Steel Company, Seoul, Republic of Korea p. Japan Chamber of Commerce and Industry in India (JCCII), New Delhi q. Jawandamal Dhanamal Iron and Steel Merchants, Mumbai r. JFE Steel Corporation, Japan s. Kobe Steel Ltd t. Magnitogorsk Iron Steel Works, Kirov stret, 93 u. Magnum Steels, Khar (W), Mumbai v. Manaksia Steels Ltd, Bikaner Building, Kolkata w. Metal One Corporation India Pvt. Ltd., New Delhi x. Ministry of Economic Development of Russian Federation, New Delhi y. Ministry of Industry and Trade, Russian Federation, New Delhi z. Mitsui Co. Ltd, Japan aa. Mudhra Fine Blanc Pvt Ltd, Chennai bb. Nezone Strips Limited, Kolkata cc. Nezone Tu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Provisional safeguard duty was issued under Rule 9 (2) of the Customs Tariff (Identification and Assessment of Safeguard Duty) Rules, 1997 on 9th September, 2015 and was published in the Gazette of India vide G.S.R.690(E) on the same day i.e. 9th September, 2015. 10. Provisional safeguard duty was subsequently imposed vide Ministry of Finance, department of revenue Notification No. 02/2015-Cus (SG) dated 14th September, 2015 imposing Safeguard duty @20% for a period not exceeding 200 days from the date of issue of the Notification concerned. 11. Thereafter, a public hearing was held on 16th November, 2015. The interested parties, along with the Domestic Industry made oral submissions at the time of Public hearing. In terms of sub rule (6) of rule 6 of the Custom Tariff (Transitional Product Specific Safeguard Duty) Rules, 1997, all the interested parties who participated in the public hearing were requested to file written submission of the views presented orally. 12. Copy of written submissions filed by one interested party was made available to all the other interested parties. Interested parties were also given an opportunity to file rejoinders, if any, to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 2014-15 to 33% on 2015-16 (Annualised). Thus, there is no valid reason to establish critical circumstances for the imposition of provisional safeguard measure as required by Article 6 of the Agreement on Safeguards since no increased import within the meaning of Article 2.1 of the Agreement on Safeguards has taken place. c. As per UN Comtrade data, the share of imports of the PUC originating from Indonesia in 2014 is less than 3%. Provisional safeguard duty has been imposed on a general heading of 7208 , which includes both coils and plates . This will cause loss to Indonesia's exporters, since Indonesia's share of imports of PUC is less than 3%, in fact only 0.75% compared to the total world import into India. d. Indonesia is a developing country and exporter of the PUC. However, PUC originating from Indonesia has specific types (not in coil and/or hot rolled plate) and the share of imports is less than 3%. Therefore, Indonesia strongly requests to exclude it from the imposition of safeguard duty. e. PT Krakatau POSCO, an exporter from Indonesia has only exported certain products under the classification of not in coil and/or hot-rolled plate . Therefore, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ities. For instance, POSCO-Maharashtra Pvt. Ltd. produces high quality steel products specially used for automobile industry in India. The import of HR steel is unavoidable since local procurement is limited considering the need to meet the high quality and sufficient quantity demanded by its key customer, automobile industry. Korea fears that the imposition of the safeguard measures on imports of HR steel from Korea will cause a severely adverse effect on downstream industries and consumers in India. d. Korean corporations' commitment and contribution to be a genuine partner of 'Make in India' and 'Invest in India' should be fully considered. POSCO, as one of the major Korean corporations in India, has invested more than USD 1 billion and is currently operating 6 plants in India. Especially, through its subsidiary company in India (POSCO-Maharashtra Pvt. Ltd.), POSCO recently completed the construction for 1.8 MTPA downstream steel plant in the State of Maharashtra to produce high quality steel products specially used for automobile industry in India. e. Causal link is lacking between increase in imports from Korea and the serious injury that the Indian i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rts from all sources, often limit legitimate market access to imports that are not causing injury. Increased imports b. While imports increased overall, a breakdown of imports by domestic is not provided in the report on preliminary findings. However, in relation to the unforeseen development, sources such as China, Russia and Ukraine are mentioned. As indicated above, in cases where imports increase mainly from one or several sources, the anti-dumping or anti-subsidy instrument would be more suitable. c. The domestic industry does not produce grades falling under HS codes 72253090, 72082590 and 72082790, as per the information available with the Commission. If the absence of domestic production is confirmed, these grades should be excluded from the product scope as it would be impossible to conclude that these grades can be the cause of any injury. Any measures on these grades would unduly harm the downstream industry, in particular, automotive end users, as they would confront a limited choice, lesser quality and/or higher prices. Injury and causality d. The data for 2015-16 has been extrapolated based on 1st quarter only. This methodology is likely to lead to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... industry, the impact of captive sales and of competition from other Indian producers; iii. The scope of the investigation and in particular the product types not produced in India. VI. Republic of Turkey a. Article 9.1 of the Agreement on Safeguards provides that a WTO member shall not impose a safeguard measure to a developing country so long as its share of imports of the product concerned in the importing member does not exceed 3%, provided that developing country members with less than 3% of import share collectively do not account for more than 9% of total imports of the product concerned. b. According to the International Trade Centre statistics, Turkey's individual share in India's subject merchandise imports in terms of quantity corresponds to levels under 3% (1.05% in 2014, 0% in 2013, 0.59% in 2012 and 0.18% in 2011). In addition, the collective imports share of developing countries with a ratio below 3% is far from reaching 9% of India's total imports of the product under consideration. c. In light of the negligible import levels of the PUC from Turkey into India, India should exclude Turkey from the application of any possible safeguard me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... XIX:1(a) of the GATT 1994 are both circumstances which must be demonstrated as a matter of fact in order for a safeguard measure to be applied consistently with the provisions of Article XIX of the GATT 1994. They constitute prerequisites . ii. Consequently, the text of the first clause of Article XIX:1(a) of the GATT refers to unexpected factual circumstances due to which the increase in imports causing injury has taken place and expresses a logical relationship between these circumstances and the ensuing increase in imports causing injury. iii. The Preliminary Determination contains a factual description of certain developments with respect to the steel sector in general and a number of developments concerning specific exporting countries. These developments largely overlap with the section on factors that may be attributing to increased imports in the Application. iv. The central thread throughout the described developments is that (i) capacity in Russia, Ukraine and the People's Republic of China ( China ) and(ii) demand in the US and the EU have decreased, and that (ii) the resulting excess capacity was primarily diverted to India. v. In contrast with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . xii. It is apparent from the Preliminary Determination that the Investigating Authority has not identified, in accordance with Article XIX of the GATT 1994 and of the AS, the obligations under GATT 1994 (for example, tariff concessions) with respect to the product concerned that have had the effect of precluding India from taking the measures necessary to prevent the change generated by the unforeseen development , i.e. resulted in the increase in imports causing serious injury to the domestic industry. Indeed, as underlined by the Appellate Body, this is one of the circumstances included in the first clause of Article XIX:1(a) which must be demonstrated as a matter of fact. xiii. Furthermore, Metinvest would like to draw the Investigating Authority's attention to the fact that the wording of Article XIX:1(a) provides that the increase in imports must have come about as a result of the effect of the obligations incurred by the Member under the GATT 1994. However, the Preliminary Determination not only lacks any identification of the obligations incurred under the GATT 1994, but also lacks a reasoned and adequate explanation of how the effect of these obligations r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T 1994, it appears form Graph 1 below that the trend in imports shows a decrease. From financial year 2011-12 to financial year 2013-14 there is a significant decrease of almost 42% in imports of the product concerned in absolute terms. v. The figures demonstrate that the increase in imports between financial year 2013-14 and financial year 2014-15 is around the same level as the imports in financial year 2011-12. It is therefore more appropriate to qualify the trend in imports of the product concerned in terms of a significant decrease, followed by a recovery of the import levels, to a level comparable to the level prior to the decrease in imports. vi. With respect to the alleged increase in imports in relative terms, the clear decreasing trend is even more apparent. While the share of imports in total domestic production was 11% in the financial year 2011-12, it decreased to only 5% in the financial year 2013-14. While the share of imports in total domestic production indeed rose to 10% in the financial year 2014-15 this share is still below the share of the financial year 2011-12. vii. The increase in imports between the financial years 2013-2014 and 2014-15 was not sig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AS, as the inclusion of these concepts in Article 6 of the AS would otherwise be redundant. The critical circumstances and the damage which it would be difficult to repair are therefore conditions in addition to serious injury or threat of serious injury, and these conditions must also be met in order to justify the imposition of a provisional safeguard duty. iv. Contrary to the wording and scheme of the AS, the Preliminary Determination seems to equate serious injury and threat of serious injury with critical circumstances, where delay would cause damage which it would be difficult to repair . v. Furthermore, the Preliminary Determination fails to identify any damage which it would be difficult to repair . This is not surprising, since there is no damage which it would be difficult to repair to speak of. It appears from the complete data of the Application that the above-mentioned selective use of data provides an inaccurate picture of the state of the domestic industry, since most factors pertaining to any detrimental effect on the Applicants have changed insignificantly or have remained stable: - the market share of the Applicants is still 58% in Q1 of financ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e POI between 2013-14 and 2014-15 financial years by 35%. Moreover, a decrease of profitability to -55 (indexed) is reported only for Q1 of 2015 compared to financial year 2013-14. Moreover, despite the above-mentioned conclusions of the Investigating Authority with regard to domestic industry's profitability, JSW Steel Limited and Essar Steel India Limited, reported themselves that they enjoy a healthy and stable financial performance, especially on the domestic market. Although Steel Authority of India Limited reported negative profitability during the period concerned, it explicitly attributed it to factors other than imports from third countries. Finally, it should be noted that the Applicants also produce and export other products apart from the product concerned (HRC), and that any losses reported at the companies' group level should not automatically explain the losses of the domestic industry with respect to the product concerned. Moreover, there was no information providing whether the profitability calculation results take into account depreciation costs and indirect costs. It is submitted that if all these factors, mentioned above, are taken into account, this wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egatively performing is in fact positive explanation, can result in an adequate and reasoned conclusion with respect to the existence of serious injury or threat thereof to the domestic industry in India. It is therefore maintained that the indicators of serious injury mentioned in Article 4.2(a)of the WTO Safeguards Agreement were inadequately evaluated by the Investigating Authority and that the explanations provided in the Preliminary Determination do not support the conclusion that the overall position of the domestic industry indicated significant overall impairment. f. There is no causal link between the alleged increase in imports and the alleged injury : i. The evolution of imports in absolute terms should be assessed in light of the rate and amount of such imports, in accordance with Article 4.2(a) of the WTO Safeguards Agreement and the interpretation given to this provision by WTO case law. ii. Metinvest submits and trusts that the Indian Investigating Authority will acknowledge that the decrease in imports by almost 10% between 2011-12 and 2014-15 in relation to domestic production in India, as well as the insignificant increase by 14% only between 2011-12 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... import level (both in absolute and in relative terms) and the evolution of the injury indicators, no causal link between them can be found. Consequently, the causation requirement laid down in Article XIX of the GATT 1994 and in Articles 2.1 and 4.2 of the WTO Safeguards Agreement is not met and no safeguard measures can be imposed. ix. Metinvest trusts that the Investigating Authority will carry out an in-depth non-attribution analysis in line with the requirements described above and that this analysis will lead to the conclusion that any alleged injury is caused by factors other than imports. Metinvest maintains that this aspect is of the utmost importance in the framework of this safeguard investigation. x. In particular, as was extensively explained above, there was, among others, a striking divergence between global prices for raw materials and the prices on local market in India. First, the high cost of domestically available iron ore, the main raw material for the product under investigation, in India during the period concerned is an important factor for the viability of the domestic industry, which was not evaluated by the Investigating Authority.Second, the pricin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imposed as a form of a safeguard measure. This provision also clarifies the modalities of a quantitative restriction to be applied as a safeguard measure, i.e. that it shall not reduce the quantity of imports below the level [...] in the last three representative years . Article 5.2(a) of the WTO Safeguard Agreement further details how a particular form of a quantitative restriction, i.e. quotas, shall be determined and imposed. v. It should also be added that Article XIII:2 of GATT further clarifies that in applying import restrictions to any product Members shall aim at a distribution of trade in such product approaching as closely as possible the shares which the various contracting parties might be expected to obtain in the absence of such restrictions . vi. It follows from the above that India has an obligation to ensure that any safeguard measure to be imposed upon importation of the product concerned from, inter alia, Ukraine must be commensurate with the goals of preventing or remedying the alleged serious injury of Indian domestic industry, i.e. being least trade-distorting, taking into account, inter alia, the form and level of the proposed measure. h. Ukraine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present case decide to impose safeguard measures in the form of a tariff rate quota, which is set at a level reflecting the last three representative years, there will be no obligation on its part to provide detailed and substantial justifications for such decision. i. Current situation in Ukraine: i. The situation in the Eastern regions of Ukraine (Donetsk and Lugansk areas) has continued to improve in recent months and there are legitimate expectations that this will continue to the end of the year and beyond, bringing normalization of life in these regions. ii. Given the particular situation in these areas, the construction business, aimed at restoring the heavily damaged and destroyed infrastructure, could be expected to absorb any additional capacities of the Ukrainian domestic industry and even take part of the current export quantities, once the security and political situation in those areas normalizes. iii. Given the expected increase in domestic demand in Ukraine for the product concerned, as explained above, it can be concluded that any continued alleged increase of imports from Ukraine to third markets, including to India, is not to be expected. VIII. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Body interpretation. That import surge must present itself in a state of recent enough, sudden enough, sharp enough, and significant enough, both quantitatively and qualitatively to cause or threaten to cause serious injury. - Mere 4.35% increase in market share simply cannot be share enough or significant enough and hence cannot constitute surge by any count. - Profitability of the domestic industry, increased substantially during 2014-2015 from the preceding years 2013-14 i.e. from 100 to 135 by index. Given the positive movement on profitability of DI, and only a marginal decline in DI 's market share during the first two full references years, there is no critical circumstance proven to exist on the case record. IX. China Iron and Steel Association filed submissions through their representative M/s. Athena Law Associates a. The Association has filed preliminary submissions based on the material in the initiation notification and the preliminary findings. b. Safeguard measures are based on a no fault principle and applied on imports that are made fairly and not with the intention of hurting the domestic industry. Therefore, recourse to safeguard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd quantifiable nature while evaluating whether the increased imports have caused or threatened to cause serious injury to the domestic industry. The following facts demonstrate that no serious injury or threat of injury has been caused to Applicant: i. No significant changes in the capacity of the Applicants. ii. Slight increase in the production during 2015-16 (annualized) as compared to 2013-14. iii. Capacity utilization has remained the same during the period 2013-14 to 2015-16 (annualized) iv. Applicants have shown losses in 2015-16 (01) but during the same period PBIT was significantly positive. Therefore, losses are on account of interest burden and not due to import price as evidence from negative price undercutting. v. Inventory levels slightly increased from 100 points in 2013-14 to 103 points in 2015-16 (01) but the same was not considerable as significant. vi. The employment and productivity remained the same throughout the injury period. vii. There is negative price undercutting since 2014-15 (quarterly) till available data 2015-16(Q1) thereby the landed price was higher than the net sales realization of the Applicants. Hence, the losses to the App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Imposition of safeguard duty is likely to have serious impact on users which depend on imported hot rolled flat products. XI. Arcelor Mittal,Brasil(AM Brasil) : The conditions required to initiate a safeguard investigation are not fulfilled in this case a. Indian authorities breached the right of defense of interested parties by imposing safeguard duty at abnormally early stage. b. There has been no increase of imports within the meaning of the WTO safeguard Agreement as interpreted by the WTO case-law. c. The Petitioner has not suffered serious injury or a threat of serious injury. In addition there is no causal link between the alleged serious injury (if any) and imports. d. Available information shows that there had not been any significant increase in imports within the meaning of WTO Safeguard rules. The increase in imports of the product concerned to India is far from being sharp, recent, sudden and significant. e. AM Brasil highly challenges the investigation period selected by the Indian authorities which also includes 2015-2016 based on annualized data. Most recent data should only serve to confirm or infirm trends evidenced during the period of investi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of Brazilian imports within the scope of Application of safeguard measures under Article 9.1 of the WTO Safeguard Agreement. o. There seems to be nothing in the non-confidential version of the petition regarding the question of the shares of developing countries within total imports, and on which the Indian authorities may have relied to preliminary conclude that developing countries should be included within the imposition of provisional measures. p. By failing to substantiate their analysis, the Indian authorities breached their obligations under Article 3.1 of the WTO Safeguard Agreement. q. There is beach of Article 12(1) as a result of a failure to notify immediately. AM Brasil notes that the case was initiated on 7th September and was notified to the WTO Committee on Safeguards on 15th September, i.e., 8 days after the initiation of the investigation. r. There is breach of Article 12(4) as a result of a failure to notify before taking a provisional safeguard measure. XII. JFE Steel Corporation, Nissin Steel Co. Ltd, Nippon Steel Sumitomo Metal Corporation and Kobe Steel Ltd represented by M/s. AZB Partners a. The DG Safeguards has failed to examine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dustry. There is no decline in production levels, employment, and capacity utilization during the POI. The market share of the Petitioners has decreased due to inter-se competition among the Indian producers and increase in captive consumption. Further, existing levels of production of DI are already high. k. The movement in profit/loss is not correlated with imports. Imports have increased in 2014-15 by 97% and during the same period domestic industry saw a rise in profits by 35%. l. Injury, if any suffered by the domestic industry is not caused by increased imports. Domestic Industry is suffering from diversion of supply for internal captive consumption, delayed implementation of projects, nolending support by the Government, exposure to global price shocks, handicaps in capacity building and generation, competitive products from other countries, lower-quality iron ores which require more coal, lower quality of coal, problems in acquisition of raw material etc. m. High transportation costs and poor infrastructure are impacting Indian producers' efficiency. n. Injury caused by dumping of the PUC into India must be segregated from alleged injury due to increased ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reports and press releases indicate that demand in India has declined as a result of which Indian steel companies have accumulated huge debt over the last few years because of capacity expansions, acquisitions and rupee depreciations. g. Applicants sell the PUC in the domestic market at a higher rate whereas export the same product at prices prevailing in the global market. h. There is no causal link between imports and injury or threat to the domestic industry as rise in imports has been negligible and the same is attributable to the inability of the domestic industry to meet domestic demand. Despite being unable to meet domestic demand has resorted to exporting part of its production outside India. i. The provisional duty imposed by the DG, Safeguards was without proper analysis of the facts and circumstances of the case. Further, interested parties were not given an opportunity to file their comments. j. The domestic industry cannot meet the quality requirements of downstream consumers. Further, certain grades of the PUC should be excluded form the investigation as the same are not being produced by the domestic industry. k. Imposition of a safeguard duty will con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -16 is artificial data of a microperiod. Data should be taken for atleast a five year data base commencing from 2010-11 to 2015-16. The period of 2013-14 cannot be taken as a base year as it was a rock-bottom year for the steel industry. XIV. Hyundai Steel Company, Korea (dated 08.11.2015) : Hyundai Steel is a producer and exporter of the subject goods from Korea RP. The company has requested confidential treatment on their submissions. In view of this request, their contentions are summarised below in a non-confidential manner to the extent possible: a. After reviewing the preliminary findings, there is no clear evidence that Hyundai Steel caused serious injury to the domestic industry/producers of hot-rolled coil in India. b. Hyundai Steel's export selling prices were higher than the prices that were offered by the domestic manufacturers in India and other foreign exporters. The quantity exported to India was at average during the past several years without any drastic increase. The other findings and observations in the notice also appear to be irrelevant to Hyundai Steel. c. For these reasons, Hyundai Steel asks the Director General to immediately terminate the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... blic of Korea and Hyundai Steel to become responsible for the Director General's arguments on unforeseen development as nowhere in his findings mentions any causes by Korea and Hyundai. j. Adjustment Plan: The safeguard investigation requires the petitioners to build a comprehensive adjustment plan and explain that they need time and emergency relief to restructure their organisations. Simply put, the instant case is missing this requirement. k. Undue Protection: India is known to over-protect its domestic industries. This should risk their relations and future trade status with the Republic of Korea and the rest of the international community. l. Public Interest: The imports of subject goods from Hyundai Steel have contributed in satisfying the Indian industry's demand and it is far more important to protect the different interests of end-users and consumers rather than to reinforce the dominant position of the petitioners by means of over-protecting the domestic producers against imports from various countries. m. Hot-rolled coil with pickling and oiling (PO): Hyundai Steel Korea sells the PO product to HSIL, which, in turn sells the merchandise to an affiliat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Indexed 100 103 60 109 As per JPC data, the increase over the period of 4 years (which is a more logical period for a trend analysis) is only about 9%. While alleging surge in imports in 2014-15 over the period of 2013-14, a due thought has not been given to the fact that there was an abnormal drop of roughly 40% in the earlier year mainly due to the unprecedented dollar volatility during that period. Moreover, the applicants took the advantage of this dollar volatility and increased imports and hence keeping domestic prices much higher at the cost of the Indian consumer. g. On perusing the sales figures of the JSW Steel Ltd. it shows an increase of about 29% over the period. On a similar analysis of the Steel Authority of India (SAIL) figures, it shows a more or less stable trend in the sales turnover. h. In cases of both these applicants, it shows a fairly increasing / stable trend in the annual sales in spite of the drop in the prices of the major raw materials such as iron ore, coaking coal and coke by almost about 40-60% i. For the same period, capacity utilization of JSW Steel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ported around 0.95 million tonnes of the subject goods for this purpose between the period of May 2014 to September 2015 for their own Steel Plant in Maharashtra. r. It is submitted that, if these imports as well as the quantity of imports attributable to other cold roller mills is removed from the total import figures as produced by the applicants, there is actually the decline in the imports of the subject goods in India over this period. In fact, local plants have declined POSCO to provide the subject goods due to their own inability to produce the required quality and quantity of those goods. The quantum of such imports of raw material may be around 35-40% of the total imports of PUC in India. s. The applicants have argued that the countries like Thailand and Malaysia had also taken recourse to these tariff barriers by imposing the safeguard and anti-dumping duties respectively. However, it is hereby submitted that the scenario of surge in imports and other parameters have been very critical at that point in time in those countries. These could not be in any manner comparable to present situation in India. t. All the aspects when examined in detail with facts and figur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sudden or sharp increase in imports of alloy steel imports so as to cause or threaten to cause serious injury to the domestic industry. XVI. Purva Metal Sections Pvt. Ltd. a. We require HR coils as raw material for manufacturing Steel Pipes Tubes. Imposition of safeguard duty will shoot up our raw material procurement cost and our product cost will increase unreasonably, thereby we will lose competitiveness in the market. b. One side we will incur higher cost of production while on the other side there is always threat of competition from foreign exporters. c. By implementing safeguard duty, you will be knowingly creating supporting monopolistic trade practices in India. d. If safeguard duty is being recommended in this investigation, then we request you to impose the safeguard duty on import of Steel pipes tubes into India also. XVII. Bharat Chamber of Commerce a. Imposition of safeguard duty will seriously affect the automobile, construction and other industries which are consuming HR steel coil as raw material. b. Engineering industry will lose its competitiveness globally. c. Imposition of safeguard duty will affect the manufacturing industr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... steel exposure of PSU banks has already been restructured. This exercise usually takes 12 to 18 months. This means that the companies were already in default from years which can be attributed to the indiscipline in cost, political issues of raw material supply etc. Imports are not the reason of this condition of steel industry. b. JPC data shows export of approx. one million ton at prices lower than domestic prices which created a deficit which has been filled by the imports. c. Imposition of safeguard duty will lead to increase in import of finished goods making Indian manufacturers more non-competitive. d. In the increased imports figure, one of the largest constituent is has been the import quantity of POSCO and China Steel Corporation who are importing HR coil from their parent companies to convert it into cold rolled and electrical sheets in their new steel plants commissioned in Maharashtra and Gujarat respectively. e. Some industries have been forced to import due to lack of availability of their products in right sizes, quality and correct prices. XXI. Cold rolled steel manufacturers Association of India (CORSMA) a. The imports of HR Coil were high duri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xcessive imports because the production of HR coils has increased. Moreover, neither there is any decline in the capacity utilization nor there is laying off of the workers k. Reduction in global prices of HR Coils due to sharp fall in prices of raw materials. The global and domestic prices of basic inputs for steel making like Iron ore, coking coal, oil and lubricants have registered a steep decline of leading to a decline in the global prices of HR Coils. l. Allegation of cheap imports of steel from China flooding the Indian market is also baseless as imports from China constituted only 28% of total imports in April-June 2015 while for HR Coils it was around 30% m. HR Coils producers have incurred heavy debt mainly due to indiscreet and unproductive investments n. Domestic HR coils producers have not been able to match the global prices despite having captive iron ore and coal mines because of absence of technological and product development. XXII. Surya Roshni Limited a. If injury is found to be suffered by the HR coil producers, then all the downstream products including Cold Rolled, GP/GC Sheets/ Coil, MS ERW and Spiral Pipe, Color coated steel etc. should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Indian Steel Industries viz. High Tensile, High Strength Impact Resistant and need to be imported for end user. e. China is exporting steel at FOB rates, the Government may curb import from China and not restrict blanket import from other countries such as Japan. Korea, with whom we have existing Free Trade Agreements. f. Safeguard Duty will affect our relationship with ETA countries and our exports to these countries may be severely affected. g. Safeguard Duty and Customs Duty on H.R. Coils, aggregate to 32.5%, whereas the Customs Duty on finished goods is much lower (average 10 %) and hence imports of finished goods would increase, particularly from China which would be contrary to our Make in India policy. XXVI. Textile Machinery Manufacturers Association (India) : The representation is made for one of its member Lakshmi Machine Works Ltd., Coimbatore, who is an importer of the subject goods. a. There are no manufacturers in the country who are supplying above 4mm thickness of hot rolled skin passed pickled and oiled laser stabilised sheets. b. It would be unwise to impose safeguard duty of 20% on all types of hot rolled flat products of 600 mm width or more ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uantity. Unreasonable pricing make it difficult to cater to the consumer's budget and service delivery is extremely poor. b. The custom duty on tin plates have increased from 7.5% to 12.5 % which has made tinplates competitive compared to other packaging material. Moreover the local tinplate has deficiency in quality like pin holes etc., which are hindrance to market safety and environment. XXX. World Trade Scanner : They are a weekly magazine and contend that the matter needs further investigation from other points of view besides that the Indian producers. XXXI. United Human Rights Federation ( UHRF ) : The UHRF is engaged in taking up various common problems of the peoples for redressal and engaged in safeguarding public interest. The submissions are based on the letter filed by Manufacturers Association of India (CORSMA). UHRF had also filed writ petition in the Hon'ble Supreme Court Writ Petition No. (Civil) No. 764 of 2015, against the decision of imposition of preliminary safeguard duty on the product concerned. The Supreme Court vide its order dated 30.10.2015, disposed the said Writ Petition while granted permission to the petitioner/ UHRF to withdraw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n duty drawback to exporters and with the domestic prices being influenced by such levies, the drawback rates should simultaneously go up. j. Neither the prescribed procedure nor the timelines pertaining thereto have been followed. k. There is no difference material difference in the production process between the applicant and the exporters from the subject country. l. The Notification completely ignores the views of the Domestic Market on the said subject goods, it also does not take into consideration the effects on the final product by virtue of higher cost of the raw material and penalising the end user. m. The levy of import duty on a particular item at the instance of hand of Domestic manufactures of hot rolled coil cannot be a ground for the entire industry to suffer. n. The views of interested parties have not been taken into consideration. o. The said applicants have failed to seek any causal link between imports and alleged serious injury or threat of serious injury and hence, the said notification has been issued in breach of Customs Tariff Rules. p. There is no base in the Notification how exact 20% duty has been imposed as sought by the said appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the increase in inventory is mere 11,411 MT during 2014-15 as compared to 2013-14 and a merge of 8,809 MT during quarter one of 2015-16. y. The fall in market share and fall in revenues/ profits are prominent global phenomenon, being experienced by even mega steel players worldwide. z. The safeguard duty is against the national objective of increasing industrial production and in turns the Gross Domestic Product growth, and makes a mockery of the Central Government's avowed policy dictum of Make in India . aa. The end users are not concerned about the source of hot rolled coils (whether Indian or imported) as long as the quality is not compromised, and the price is more competitive. bb. The said applicant do not produce a large range of certain special steel grades which end users are therefore compelled to continue to import, as they have been doing historically and those end users will be penalized by the steep Safeguard Duty, when there is no domestic supply of such requirements, then the consumers end up paying more, just to help the said applicants before the Directorate General of Safeguard earn higher profits. cc. The data must be sourced from Joint Plant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... price in line with import price and globally prevailing price. These prices were lower than the domestic price and created a deficit, which is very much the gap, which has been filled by imports. c. This is against the Make in India concept of reducing tariff barriers ad making available competitive environment. d. The largest constituent has been the import quantity from Posco /India and China Steel Corporation. If the imports figures are removed for them the imports quantities would be much softer. e. The imports are available in various quantities which are not produced in India, due to size, quality, specification etc. XXXIII. Manaksia Steels Limited : Manaksia Steels Limited is an importer of the subject goods in India. They contend that: a. The imposition of the safeguard duty on the subject goods which is raw material in their industry will compel them to shut down their operations. b. The imposition of safeguard duty is against the very purpose of Make in India campaign and would culminate the import of finished products. XXXIV. WhirlpoolIndia Limited : They are a user of the subject goods in India. a. There has been decline in the prices of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investigations initiated under FTA. FTA provides for a different regime for the initiation of bilateral safeguard measures with additional mandatory requirements to be complied with. The Authority has completely ignored the provisions of FTA in relation to bilateral safeguards and the special conditions and procedure set out therein. d. In the present case no intimation has been provided to the Embassy/ Government of Japan regarding the initiation of the investigation proceeding regarding the import of the product under Consideration from Japan. The act of issuing a Preliminary Finding by the Authority, without providing any intimation or information to the Embassy/ Government of Japan, is an act of clear defiance of the provisions of the FTA. The reliance was placed on US- Underwear , Appellate Body Report, US-Underwear, where it was held that prior publication of a measure, as required under Article- X of GATT, could not in and of itself, justify the retroactive effects of applying import quotas with respect to imports during a period starting before the quota 's publication date. e. No methodology provided for the determination of the Product under Consideration. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted and thus they cannot be included in the same grade for comparison with the products manufactured by the domestic producers/ petitioners. The reliance is placed upon Panel Report issued by WTO in DS 427- China- Anti Dumping and Countervailing Duty Measures on Broiler Products from the United States. - The inclusion of the non- furnished Product under Consideration by the Authority is unjustified and not required as these products are imported in different volumes and are differently priced. j. The Respondent is purchaser of steel products from - JSW Steel Limited, - Essar Steel Limited, - Bhushan Steel Limited, - Tata Steel Limited - Hero Steel Limited. k. 93% of the total raw material and components consumed by the Respondent have been procured from the above-named domestic producers, which also include two Petitioners. It is only the remaining 7% of the special kind of steel, the demand of which is not fulfilled by the Domestic industry, is imported from Japan and Korea by the respondent. Indian products are different from the products that are manufactured from these countries : - Imported products are manufactured by Japanese Industrial Standards, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct on the domestic production of the goods. The Authority at para 25(a) of the Preliminary Finding has recommended that the production of the Domestic Producers have remained at the same level. The Authority has not substantiated as to what are the critical circumstances to warrant an issue of Preliminary Finding. The Authority has acted in contravention principles of safeguard investigation. q. No evidence provided by Petitioner to show serious injury. The Authroity has ignored in the Preliminary Finding that the requirement under Safeguard Rule is to initiate investigation only when there is sufficient evidence to suggest that the increased imports of the product has caused an injury to the Domestic Producers. r. The Authority has acted in contravention of Paragraph 1 and 2 of the Annexure to the Safeguard Rules. The Respondent relied upon the Appellate Body Report on US- Cotton Yarn. Following submissions are made based on the case sited: - Petition does not show any injury whatsoever. - Petitioners has fared consistently well in terms of production, domestic sales and total sales and profitability. - The methodology prescribed for segregating capacity for the P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tensive importers of the subject products, and levy of any safeguard duty will affect the business interest of the said importers substantially. Safeguard Duty will be inconsistent with fiscal incentives introduced by the Government of India for improving the ailing health of the Automobile Industry. XXXVI. V.K. Industrial Corporation Limited a. Steel imports only constitute 10% of the total steel consumption in India. This is very small share of total market. b. Government has already given too many benefits to the steel mills. c. Importers are a very small percentage of total market and are catering small and medium sized business and startup companies which require goods on credit basis. Domestic manufacturers are unable to cater to such small requirements. d. Prices of raw material fell steeply. Thus domestic mills should also be able to decrease their prices. It is due to fall in raw material prices, other countries are supplying at lower prices e. Domestic producers are exporting steel prices lower than domestic prices. Thus domestic mills are able to compete globally with other cheap steel mills and maintain profits. f. Small engineering and consumer f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ck Scheme' @1.9% of export FOB value. Due to provisional safeguard duty of 20%, cost of raw material of these equipment have risen. Larsen Toubro requests DG Safeguards to waive the safeguard duty for imports of inputs required for manufacture of export products. XLI. Uttam Value Steels Ltd.: The Company extends full support for imposition of safeguard duties against imports of the subject goods. XLII. Tube Investments of India (TII) a. Imports by TII are based on agreed specifications with the suppliers. Being an auto component supplier, TII's product undergoes a lot of validation process and imports are done irrespective of international and domestic steel prices. b. Levy of safeguard duty on hot rolled coils will impact the cold rolling business heavily as consumers will switch to import of cold rolled coils. c. DG Safeguard should look at a fair floor price mechanism for imposition of safeguard duty for HR Coils. Moreover, CR/CRCA should also be considered along with HR for purpose of imposing safeguard duty. XLIII. Nippon Steel Pipe India Pvt. Ltd. (NPI) represented by AZB Partners a. NPI imports 22 different specifications of PUC which a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stry. Applicants have not distinguished between alloy and non alloy products. These are distinctly classified products having different identities and customs classification g. Authenticity of the data relied by the Applicants is questionable as it is not from a government recognized entity specifically authorized to collect and maintain such data. Further, the methodology used for sorting the product under consideration is a mere reproduction of the definition of the product under consideration and does not sort the product as claimed h. Applicants have misrepresented to the Authority by submitting that one of the uses of the subject goods is for automotive industry. Automotive industry relies on alloy steel products which has negligible domestic production i. If alloy steel production is excluded from the total imports, there would be no substantial increase of imports. Moreover, 2013-14 cannot be construed to be a benchmark as it was an abnormal year. j. Quarter to quarter comparison has to be of a quarter of a year with the same quarter the previous year. k. Imports for captive consumption should not be considered as it does not determine the regular demand. Impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the alloy steel products. Applicants have made a vague statement that imports during August 2015 is in the range of USD 320-350/MT. Applicants have not provided details of alloy steel imports as two distinct products cannot have the same prices. y. The nature and quantum of safeguard duty sought is arbitrary and without any basis. Imposition of safeguard duty on the importers of alloy steel products, the production of which is negligible in nature, is violative of right to livelihood of the Interested Party and the like more specifically Article 14, 19 and 21 of the Constitution of India. XLV. Honda Cars India Limited (HCIL) a. HCIL uses steel products as per its global Honda Engineering Standards. HCIL has developed steel grades as per these standards with various steel mills globally, among which there are various Indian steel mills like Tata, JCAPCPL, JSW, POSCO. b. HCIL has been working to localise its raw material requirements to a large extent. However, even after lots of localisation, local steel mills have not been able to meet HCIL's entire steel grades requirement. To meet its requirements, HCIL is importing some of HR material either for direct applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 80 mm and above. c. The intention of the notification dated 14 September 2015 is to levy safeguard duty of 20% on hot-rolled coils to protect the domestic industry and not Plates described as flat products under CTH 7208. Moreover, the Plates, as indicated above are not manufactured by domestic industry and hence there is no need for levy of safeguard duty. d. It is requested that suitable amendment/instructions under Notification No. 02/2015 dated 14 September 2015 should be issued to avoid misinterpretation of safeguard provision and exempt import of Steel Plates (Flat Products) falling under CTH 7208 from imposition of 20% safeguard duty. C. POST-PUBLIC HEARING WRITTEN SUBMISSIONS I. Domestic Industry a. Domestic Industry reiterates all the facts, contentions, averments and statements presented in the petition and requests that such submissions made earlier shall be deemed to be incorporated herein. The earlier submissions on behalf of Domestic Industry should be treated as part and parcel of the present submissions. b. Import data upto 19th October 2015 and costing information has been provided. c. Domestic Industry has excluded the API Grade Steel from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hare of the PUC in total demand excluding captive. The imports have taken away all the increase in demand of the PUC m. The quarterly trends for the recent period indicate that the market share of imports in total demand including captive increased from 7% in the first quarter of 2014-15 to 13% by the fourth quarter. Market share of imports in total demand excluding captive increased from 11% in the first quarter of 2014-15 to 21% by the fourth quarter. The market share of imports in total demand remained high during the first quarter of 2015- 16. If imports continue to increase at this pace, the Domestic Industry will be wiped out soon. n. During 2014-15, demand (excluding captive) increased by 1,158,614 MT compared to 2013-14. At the same time, sales of the applicant domestic industry decreased by 393,351 MT during the same period. The Domestic Industry has not been able to increase its sales commensurate with the increase in demand. o. The domestic industry has made significant investments during 2012-13 and 2013-14 in view of increasing demand of subject goods in India. However, capacity utilization of the Domestic Industry has remained stagnant over the entire period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to India for the mentioned periods were insignificant and in no way could affect economic performance Indian producers. d. The reduction of share of Russian import confirms the lack of intention of the Russian producers to extend their deliveries to India. The considerable part of it plays the fact that the Russian producers do not have significant export potential for delivery the hot-rolled flat products. e. The fact that regulations of WTO stipulates the possibility of pointed neutralization of unfair methods of competition with resort to antidumping or countervailing measures. Besides that, India has Free Trade Agreements with Korea RP and Japan and there is opportunity to settle concern of the Indian side with utilization of bilateral mechanisms stipulated by the Agreements. f. The WTO Agreement on special safeguard measures specifies high standards of evidence of injury / threat of injury, which, in accordance with the Agreement, should be classified as serious for purposes of taking some kind of measures. g. The economic performance of national industry, in spite of increase in deliveries from China PR, Japan and Korea RP, remains at the same level. Investmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, Brazil argues that it has not been able to exercise its right of defence under Article 3.1 of the SA. g. Brazil argues that there is no serious injury or threat thereof to the domestic industry, and there is no causal link as well. Brazil further contends that formal requirements such as notification to the WTO and publication of essential information have not been observed in this case. IV. China PR a. There is no unforeseen development in terms of Article XIX of GATT and what has been experienced by Petitioners is normal market fluctuation which cannot be ruled as unforeseen. b. There are no critical circumstances within the meaning of Article 6 of the Agreement on Safeguards ( SA ) that warranted imposition of provisional safeguard duty. c. There is no serious injury or threat thereof to the domestic industry. d. Imposition of safeguard duty is not in public interest as downstream industries such as automotive and consumer durables might suffer. e. Provisional safeguard duties should be immediately revoked. V. Chinese Taipei Taiwan's primary concern is that its name does not feature in the list of developing countries that was notified by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s from Indonesia cause no serious injury to the domestic industry. g. India has increased import duty on steel recently but imports from certain Asian countries are happening at low duty to bilateral trade under India-ASEAN FTA, India-Japan CEPA and India-Korea CEPA. VIII. Republic of Turkey a. Competent authorities are required by the WTO rules to identify the existence of unforeseen developments which have led to increased imports causing or threatening to cause serious injury on the relevant domestic industry. b. The notifications by India to the WTO do not contain a reasonable or adequate explanation/analysis concerning the existence of unforeseen developments. The Indian authorities should clarify what are the unforeseen developments that led to alleged increase in imports of the subject goods. c. Increase in imports on annualised basis for 2015-16 does not show the correct picture. Extrapolation on figures in the first quarter of 2015-16 and disregarding 2011-13 periods raise questions and pave the way for misleading perceptions in analysing the effects of imports on the Indian domestic industry. d. Movement in injury parameters for period 2011-12 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visional safeguard measures under Article 6 of the SA. f. There is no causal link in this case in terms of Articles 2.1 and 4.2(b) of the SA, as injury to the domestic industry is due to loss of market share to other domestic producers. Consequently, competition between domestic producers was the other factor causing injury to the domestic industry. Submissions by Prodcucers/Exporters and Associations X. China Iron and Steel Association; Angang Group Hong Kong Co. Limited; Angang Steel Company Limited; Shanghai Meishan Iron Steel Co., Limited; Angang Group International Trade Corporation; Baosteel Singapore Pte Ltd; Maanshan Iron Steel Co., Ltd.; Benxi Iron Steel (Group) International Economic Trading Co., Ltd.; Jiangsu Shagang Group; Handan Iron Steel Group Co., Ltd. represented by Athena Law Associates a. Safeguard measures are based on a no fault principle and applied on imports that are made fairly and not with the intention of hurting the domestic industry. Therefore, recourse to safeguard measures should be taken only in strong cases where there is no other alternative other than imposition of duty to save a dying industry. The Appellate Body in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on MT in the previous quarter to 3.38 million MT. There were sharp increases between 2013-14 and 2014-15 but the domestic industry was in profit then. The increase, if any, was of a temporary nature with a strong reversal character as evident during FY 2015-16 (Q1). f. Article XIX of the Safeguards Agreement and the interpretations by the Panel in Argentina - Footwear and the AB in US-Certain Steel Products hold that safeguard actions are of an exceptional nature which should be adopted only in exceptional circumstances. Applicant has relied upon unsubstantiated claims such as crisis in global steel market, geopolitical tension, depreciation in currency, slowdown in China, huge surplus capacities in China and Japan, trade measures by other countries. However, these claims do not establish the existence of unforeseen developments concerning the product. Applicants claim that exports from Russia, Ukraine, China and EU have suddenly increased on account of geopolitical tensions, excess capacity and currency depreciation is a false statement. Imports from China diminished by almost 50% between FY 2014-15 and FY2015-16(Q1). Also there was a dip of 4.22% between 2011-12 and FY2015- 16 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tical that any delay in imposing provisional measures would cause irreparable damages. The critical circumstances required for provisional measures have not been fulfilled. l. Paragraph 10 of initiation notification stated that interested parties were to be given 30 days to make their views known to the authorities but without waiting for any response the authority issued the preliminary findings. m. Applicant do not qualify as domestic industry under Section 6(d) of the CTA as it cannot be concluded that the Applicants constitute 50% of total Indian production. n. The Applicant has claimed excessive confidentiality and does not allow a reasonable and meaningful understanding of the domestic industry's case. o. Applicant has not provided any adjustment plan and the preliminary findings also do not mention an adjustment plan. In an application filed by United Phosphorus in 1999 for safeguards duty imposition, the authority refused to impose a safeguard duty on the ground of lack of an adjustment plan. Imposition of the safeguard duty is not in public interest. The term public interest has not been defined in the safeguards laws but has been interpreted by the Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mills, since it is critical for the structural application and no perfectly substitutable product is manufactured by any domestic manufacturer. g. The process of selecting an HRC supplier is a long drawn and expensive process and involves many rounds of testing to ensure that the product meets stringent quality standards to ensure reduced weight and high strength of the automobile component. All material sources are decided early during the model development and it is very difficult for an Automotive OEM to switch sources of HRC during the lifetime of the model in order to ensure consistency in the quality of cars manufactured. Therefore, even after imposition of safeguards, auto-manufacturers will need to continue use of imported HRC directly or indirectly, which will need to continue use of imported HRC directly or indirectly, which will lead to a significant increase in the manufacturing cost of automobiles. h. The DG Safeguards has clubbed all grades of hot-rolled coil products into a single PUC. It is not clear from the application and preliminary findings if the PUC excludes hot-rolled coil products which are exported by the Japanese mills but not manufactured by the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvestigation period from 2013-2014 until 2015-2016 . AM Brasil highly challenges the investigation period selected by the Indian authorities which also includes 2015-2016 based on annualized data . b. In fact, the situation of imports shows a significant decrease from 2011 until 2014: by 13% between 2011- 12 and 2012-13, and by 40% between 2012-13 and 2014-15. Between 2011 and 2014, imports decreased by almost 50%. c. The decrease in 2013-2014 was followed by a recovery of the imports levels to a level comparable to the level prior to the decrease and can hardly be viewed as sharp, significant, recent and sudden enough , as such notions were defined by WTO case law. d. The way the volume of imports was computed for the most recent period, through annualization based on Q 1 2015-2016 is likely to lead to biased results. e. If imports increased (by 14%), it must necessarily be analyzed in conjunction with the evolution rate for consumption (+ 29%) f. The (excessive) focus on profit for one quarter of the investigation based on an annual basis is likely to lead to biased results. All the more that all other factors show stability or positive evolutions. g. Petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umbers clearly shows that DG Safeguards has acted in a manner to favour the Domestic Industry. f. Domestic Industry has been seeking undue and unwarranted protection from the Government from time to time. g. No non-confidential version of the adjustment plan was ever filed by the Domestic Industry. h. Article 3(1) of the WTO Agreement on Safeguards requires that the investigation Authority should record its findings as to whether imposition of Safeguard duty will be in public interest or not. The Preliminary Finding is silent on this issue. i. Taiwan is widely regarded as a developing country by multiple WTO members and international organizations and hence Imports from Taiwan must fall within the developing country clause. j. High-strength steels (HSS) used primarily by the Indian automobile industries, including, but not limited to, E34 SS4012A, JSH780RNN-22002OP, SAE 1005M, SAE 1006, SAE 1006M, SAE 1008, SAE 1040, SCM435, SPA-H , SS400, SS490, CUST-S235, JSH590RNN-22002OP,JSH780RNN-22002OP, SAE 1010 , SAE 1020 , SAPH 440, and SPHC grades, as well as CSC's own standards compatible with the foregoing international standards catering to auto industries should b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... downstream products has no meaning and this will finish the value adding downstream Industry in India. XIX. Nippon Steel Sumikin Pipe India Co., Ltd. a. From a plain reading of Article 2(1) the SGA along with Rule 2 of the SG Rules, it is clear that safeguard measures cannot be imposed on imports that are not identical or alike in all respects to the products produced by the domestic industry. b. The Hot Rolled Coils (HRCs) imported by NPI must be excluded from the scope of the PUC as they are not 'like or directly competitive article' to the products manufactured by the Domestic Industry. c. NPI imports very specific types of HRCs to make automotive pipes and tubes required by its customers in India. d. HRC produced by the DI differ in chemical composition from HRC's imported by NPI e. HRC's produced by the DI differ in quality from those imported by NPI f. NPI imports HRCs for use in manufacture of automotive pipes that Indian domestic steel manufacturers (i) are unable to supply HRCs of sufficient quality or (ii) have not obtained the approval from the ultimate end users (i.e., the automobile manufacturers). g. NPI is unable to u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined by 2,63,000 resulting in higher imports . j. The imports were at global prices in line with the Indian producer exported over 1 million tonne of HR Coil in 2014-15 and 2 lakh 30 thousand tonne in April-Sept 2015-16 . k. The Hot Rolled Coil producer have been making high profits in the past five years by fixing the domestic prices on landed cost basis and losses incurred by some of them may be directly attributed to indiscreet investments in India and abroad in Steel and other industries incurring debt and interest burden. l. The financial performance should be improved by sale of stake as held by RBI rather than destabilize the industrial and economic growth of the country by blocking Steel imports and monopolistic pricing by the domestic producer. m. The imposition of Provisional Safeguard duty on the imports of HR Coils has also led to inverted duty structure as while be total import duty on HR Coil the intermediate product amounts to 32.5%, the duty on the finished Cold Rolled products is only 12.5% and lead to heavy imports of value added Cold Rolled products hitting the domestic industry . XXI. Tubes Limited Nezone Strips Limited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dustry while calculating its % market share in domestic market. d. However, at the same, no such method has been adopted for calculation of % market share of imports as the volume of imports captively consumed (which is a major proportion) has been considered for calculating the % market share of imports in domestic market. e. Market share of other producers have increased from 25% (2011-12) to 31% (2014-15). The market share which is alleged to have been lost by the Petitioners, has been taken up by other producers, and quite evidently, has not been captured by imports. f. The surface quality of the PUC supplied by the DI cannot be used and is often rejected due to the low quality. g. The exact grade of the PUC which do not meet the quality requirements have been tabulated and are enclosed with submission as Exhibit - V . h. Reasons for alleged decrease in sales of domestic industry are due to: (a) underutilization; (b) high debt/finance cost (being a capital intensive industry); (c) PUC when exported by DI are those prevalent in the global market; (d) PUC when sold by DI in domestic market is much higher than the global/international prices. i. The analysis of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustry permanently. i. Domestic producers are earning profits and sustain high turnovers. The World Steel Association reported that India had a 2.8% growth in steel output while world steel production fell by 3% in 2014-15. j. Imports are a lifeline to SMEs that are trying to compete with MNCs. The imposition of the safeguard duty has put the supply chain partners in deep losses. k. India thrives on exports of capital goods and steel is one of the main raw materials for production of these capital goods. Exporters of these products will therefore face very high production costs and become incompetent. Imposition of safeguard measures on steel will reduce capital goods export by 25% and increase costs by 15% compared to global competitors. l. The safeguard duty has disappointed many foreign investors and puts India's relationship with Korea in jeopardy. Therefore, foreign investment will decrease in India. m. Imposition of safeguard duties will increase the costs to engineering firms in India by 33-35%. Therefore, importing the capital good will make for economic sense rather than manufacturing the same. XXIV. Hyundai Motor India Limited a. It will be retro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding an opportunity of being heard to the importers, exporters and other interested parties. There by violating the Principles of Natural Justice. The Authority has issued the preliminary finding in hustle. They have relied upon: - Siemens Engineering Manufacturing Co of India Ltd. v. Union of India Anr. [1976] Suppl. S. C.R 489, - C.B Gautam V. Union of India (1993) 1 SC 78 , - Swadeshi Cotton Mills vs. Union of India 1981 SCR (2) 533, - Automotive Tyre Manufacturers vs The Designated Authority Ors. - 2011-TIOL-03-SC-CUS . b. The Directorate General of Safeguard in the present case was appointed on September 7, 2015. The reliance was placed on in Automotive Tyre Manufacturers vs The Designated Authority Ors. Where-by it was stated that the new designated authority should have provided a separate hearing. c. India being member of Comprehensive Economic Partnership Agreement needs to abide by Article 23 of the FTA. Which states that India needs to follow certain specific guidelines in case of safeguard investigations initiated under FTA. FTA provides for a different regime for the initiation of bilateral safeguard measures with additional man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where recorded the Product under Consideration with that of the products imported by the imported by the importers on the touchstone of the definition of like product as provided in the Rule 2 (e) of the safeguard Rules. - The Product from Korea and Japan is not like article in terms of the Rule 2(e) of the safeguard Rule and thus different from the product manufactured by the domestic producers. Product under Consideration imported by the Respondent from Japan and Korea are of superior quality. - The need for the import of Product under Consideration from Japan is because of the incapacity of the Domestic Producers to supply the high quality of products as required by Respondent. The Authority should exclude such imported goods that are not being manufactured by the Petitioners. Reliance has been placed on Hon 'ble Customs, Excise and Service Tax Appellate Tribunal in Magnet Users Association vs. Designated Authority [2003 (157) ELT 150 (Tri-Del) ], wherein was held that there is no justification in including those grades that are not manufactured in India. - The Product under Consideration are heterogeneous set of products imported and thus they cannot be inclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mination and corroboration of the information provided by the Domestic Producers. Without corroborating the evidence produced by the Domestic Producers, the Authority heavily relied on the said information and recommended imposition of Safeguard Duty at a whopping rate of 20%. n. The Authority did not disclose the methodology adopted to determine the level of safeguard Duty recommended by the Authority. The Authority did not follow the principle laid down in Article XIX of GATT 1994. The initiation notice was silent on the unforeseen development that have led to increase of imports of Product under Consideration. The petitioner also failed to show factual or legal basis to demonstrate that unforeseen development exist in the present matter. o. There has been miniscule increase in the import data as provided in the petition. No justification provided to show on which petitioners have annualised the imports for the entire year of 2015.There is gradual increase in the imports of the Product under Consideration and there is no sharp , significant or sudden increase in imports.. p. The increased import n Product under Consideration has no impact on the domestic production of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8,872 8,783 1% PAT 2,166 1,335 62% Earnings per share (diluted) ₹ 88.24 Rs.53.86 64% - SAIL has been consistently making profits. - Price Underselling, depression and suppression data has not been indicated in detailed from in the NCV of the petition filed by the Petitioner. - There is no change in the capacity utilization of the Domestic Producers as per Para 25 (d) of the Preliminary Finding. - The Authority in preliminary Finding has also not pointed out any possibility of likelihood of a sudden decline in the capacity utilisation of the Domestic producers. - The Authority has not corroborated any piece of information provided by the Petitioner and has without any recording any reasons assumed a prima facie case and initiated the investigation process. - The safeguard duty will have cascading effect on the overall prices of vehicles and parts on the automobile industry. s. A number of automobile companies and OEMs are extensive importers of the subject product ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Applicants. g. Imports under Advance License that are used in the manufacturing of finished goods for exports must be excluded from the import figures as they do not come into the domestic market at all and could not impact the Indian domestic market. h. Authenticity of the IBIS data relied by the Applicants is questionable as it reflects inflated figures when compared with the JPC data. i. Prices of major raw materials have dropped between 40-60% and the selling prices of the subject goods must be adjusted accordingly. j. Comparison with trade measures by countries like Thailand and Malaysia is unsustainable and misleading as the surge in imports and other parameters were very critical in those countries. k. Applicants are themselves importing cheaper raw material as well as the PUC. The alleged surge in imports during July- September 2015 is on account of huge imports of the subject PUC by the applicants specifically JSW Steel Ltd. l. Undue haste has been shown in the imposition of safeguard duty without even consulting a cross section of the stakeholders. XXIX. Federation of Associations of Maharashtra (FAM) In addition to the contentions already rais ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Indian consumers and infrastructure development in India and on the other hand, making windfall profits for themselves. The same is evident from JPC data. l. The subject goods which are used as raw materials for certain re-roller mills such as POSCO, Uttam Steel, National Steels, Asian Color Coated etc. it needs to be noted that PUC is a raw material and not a product for trade. In such cases, PUC is further worked upon and converted into cold rolled sheets / galvanized sheets / corrugated sheets etc. POSCO alone had imported around 0.95 million tonnes of the subject goods for this purpose between the period of May 2014 to September 2015 for their own Steel Plant in Maharashtra. m. It is submitted that, if these imports as well as the quantity of imports attributable to other cold roller mills is removed from the total import figures as produced by the applicants, there is actually the decline in the imports of the subject goods in India over this period. In fact, local plants have declined POSCO to provide the subject goods due to their own inability to produce the required quality and quantity of those goods. The quantum of such imports of raw material may be around 35-40 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e imports do not exceed 3% and aggregate of imports from such countries do not exceed 9% should be kept outside the purview of safeguard duty. It is also argued that imports from Brazil and Taiwan meet the above requirement and should be outside the purview of safeguard duty. With respect to the contention concerning Taiwan, Petitioners have already addressed this contention in the specific rejoinder to the Embassy of Taiwan. However, Petitioners reiterate their contention here briefly. It is understood that a list of developing countries has been issued by the Government of India vide Notification No. 103/98-Cus dated 14 December 1998 . It is pertinent to note that Taiwan's name does not feature in this list. Therefore, even if for the sake argument it is accepted that imports from Taiwan are below 3% and aggregate of imports from developing countries does not exceed 9%, Taiwan can still not be excluded from the purview of safeguard duty, as it is not recognised as a developing country by Government of India as of today. Therefore, the contention with respect to exclusion of Taiwan from the purview of safeguard duty cannot be accepted in light of the Notification No. 103/98- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statistics and accuracy of information : Many interested parties have argued that import data from a private agency like IBIS is not authentic and tenable and the Authority should consider only JPC data. Interested parties further argue that a detailed methodology for determining product under consideration is not provided in the petition. Interested parties also argue that DGCI S data should be used to verify the authenticity of IBIS data used in the petition. Interested parties further argue that certain imports fall outside the purview of the product scope. Petitioners object to all the contentions above. It is submitted that IBIS is a renowned agency and its data is regularly used in many trade remedy investigations, be it safeguards or anti-dumping investigations. Further, it is standard practice for the Authority to procure DGCI S data and compare the data with IBIS data to verify authenticity of the information. The Authority has the discretion to use IBIS or DGCI S data. Further, Petitioners submit that JPC data cannot be used in this investigation because this data is only available at a broader level for the steel sector and not at PUC level, which is relevant for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity, as prayed for by the domestic industry, is granted. (emphasis supplied) The Authority has clearly observed that Petitioners are not required to disclose such information, disclosure of which would cause serious prejudice to business interests of the domestic industry. In this regard, the Authority has adhered to Rule 7 of the Safeguard Duty Rules read with Article 3.2 of the SA to demonstrate compliance with the legal requirements. In accordance with the above, the Authority has granted confidentiality claims of Petitioners. Therefore, interested parties are wrong in arguing that the Authority has not provided any reasons while granting confidentiality claims of Petitioners. e. Deficiencies in the petition : Several interested parties argue that no additional questionnaire was filed by the constituents of the domestic industry. Therefore, the Authority did not have complete information when preliminary findings were issued. Interested parties further argue that no creditable adjustment plan has been provided by the domestic industry and there is no mention of the same in the preliminary findings. Petitioners strongly object to the above contentions. It is submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Contentions of interested parties on standing of domestic industry are, thus, incorrect and should be rejected outright. g. Imports by domestic industry : Interested parties argue that surge in imports during Q2 of 2015-16 is because the domestic industry, specifically M/s JSW Steel Ltd. had imported huge quantities of the subject goods during this period. Petitioners strongly object to this contention and submit that interested parties are simply making baseless arguments. Petitioners have provided their data to the Authority, which has also been duly verified. Imports by the domestic industry were miniscule during the injury analysis period, which fact is also supported by their data on record. Such miniscule imports were only for internal consumption and not for sales in open market. Therefore, the above contentions of interested parties are incorrect and should be rejected. h. Scope of the product under consideration: Several interested parties have raised issues on the product under consideration. All such issues are addressed below: i. HR Coil in thickness 2.00 mm and below : M/s Nezone Strips Ltd. and M/s Nezone Tube Ltd. argued that they have been import ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the following grades should be excluded from the product scope due to limited availability, quality issues and because TII has already identified and approved sources of supply which they cannot change now: a. SAE 1541 b. SAE 1020/1040/1045/1050/1055 c. SCM 435 d. Boron Steel e. 16 MnCr5 f. SAE 1006/1010 g. ST 52.3 TII's claims are baseless. They have failed to substantiate the availability and quality issues they are facing from domestic manufacturers. Further, if TII has approved their sources of supply, they can even approve domestic manufacturers for supply of the same grades. It is submitted that the domestic industry has proven capability to manufacture all the grades listed above and have achieved the necessary quality standards as well. The domestic industry is competent to manufacture and supply TII's requirements. Therefore, these grades cannot be excluded from the product scope. iv. Hot-rolled coil with pickling and oiling ( PO ) : M/s Hyundai Steel Korea argues that PO products manufactured by them are sold to M/s Hyundai Steel India Limited, which, in turn sells it to M/s Hyundai Motor India Limited. They argue that such imports a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ortunity to effectively defend their case. vi. Grade JSH 270/370 and Grade JSH 590 : M/s Maruti Suzuki Ltd. argues that these two grades should be excluded from product scope as these grades are imported to meet requirements of customer safety and meeting emission norms. They argue that domestic manufacturers cannot meet the required quality standards and are inconsistent suppliers of raw material. Petitioners strongly object to the above contentions. During the public hearing, M/s Maruti Suzuki Ltd. admitted that they are trying to localise their procurement to the maximum extent. However, Petitioners submit that despite having proven capabilities to manufacture these grades, M/s Maruti Suzuki Ltd. hardly gives an opportunity to domestic manufacturers to supply these grades. This goes contrary to M/s Maruti Suzuki Ltd.'s claim that that they are trying to localise procurement of all raw materials. M/s Maruti Suzuki Ltd. should give an opportunity to domestic manufacturers to supply these grades who can meet the quality that M/s Maruti Suzuki Ltd. requires. Further, Petitioners submit that they are already on the approved vendor list of several automobile makers, their vend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tem 7225.30.90 actually have very minute quantities of boron due to which they get classified under this tariff item. These imports are disguised as alloy steel and are severely affecting the domestic industry, as these imports are technically and commercially substitutable with non-alloy flat products of hot-rolled steel in coils produced by the domestic industry. Due to this reason, Petitioners have included imports under the tariff item 7225.30.90 under the product scope. In light of the above, FAM's contentions should be rejected outright. China Iron Steel Association have also questioned why alloy steel falling under customs tariff heading 7225 has been included in product scope. The above analysis also addresses the contentions by China Iron Steel Association. viii. High Strength Steel ( HSS ) : China Steel Corporation, Taiwan argues that HSS grade used in automobile industry should be excluded from product scope. As stated earlier, Petitioners have proven capability to manufacture Auto Grade High Strength Steels (HSS) including higher strength levels. Therefore, HSS grade cannot be excluded from product scope. ix. Steel produced by Japanese Mills : M/s JFE St ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th Korea RP and Japan have caused serious injury to the domestic industry. It is immaterial that imports from Korea RP and Japan increased due to low customs duty under the respective FTAs. Imports from these two countries have occurred in huge quantities in the most recent period and these imports are at unfairly low prices causing serious injury to the domestic industry. Further, it is the discretion of the Government of India to explore bilateral mechanisms under the respective FTAs or adopt a general safeguard measure in this case. Both the FTAs nowhere mention that India is obligated to explore bilateral mechanisms first and only after failure of such mechanisms can adopt a general safeguard measure. Further, these FTAs have specific provisions that allow India to impose general safeguard duty. The only exception under SA and Safeguard Duty Rules is exclusion of developing countries whose individual share in imports is below 3% and whose aggregate share in imports is below 9%. Korea RP and Japan do not fall under this exception, as both of them are developed countries. Therefore, contentions of interested parties are incorrect and should be rejected. k. Fall in raw materia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imports between 2012-13 and 2013-14. Some interested parties argue that period of analysis should be 5 years and a shorter period is erroneous. Petitioners strongly object to these contentions. It is submitted that the legal provisions nowhere specify the minimum period for which serious injury should be examined. The only available guidance in this respect is in Article XIX of GATT where it is stated that imports should be sudden, sharp and significant in a recent enough period. Further, the only guidance on length of the period for which data should be provided by parties is given in Trade Notice No. SG/TN/1/97 dt. 06.09.1997 where in paragraph 5(i) it is stated that parties should provide information for the most recent period of three years (or longer) for which data is available. However, the Trade Notice also does not prescribe what should be the length of injury analysis period, which the Authority should examine. In light of the above, Petitioners submit that they have provided information from 2011-12 onwards to Q1 of 2015-16 in the petition, which is as close and recent to the initiation of the investigation. In Petitioners' written submission data has now been provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been identified but do not correlate with the subject goods. Some interested parties are of the view that depreciation of Indian Rupee and local procurement by users offset unforeseen developments. Petitioners believe that none of the interested parties have actually perused the petition and preliminary findings in entirety. Such negligence on the part of interested parties is astonishing considering they seem to have made significant efforts to rebut Petitioners' claims. The petition documents in very precise terms the unforeseen developments that led to sudden, sharp, significant and recent increase in imports of the subject goods that caused or threatens to cause serious injury to the domestic industry. The preliminary findings also discuss in very precise manner such unforeseen developments. Further, there is no provision in law that suggests that one development can offset an unforeseen development as suggested by one of the parties. Therefore, depreciation of Indian Rupee and local procurement by user industry is irrelevant and immaterial as far as offsetting unforeseen developments is concerned. o. Exclusion of imports made to related downstream industry : Some inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the day such duty was imposed would be affected, as such imports will be subject to safeguard duty. In fact, such parties have also requested for refund of safeguard duty as they are of the view that imposition of provisional safeguard duty was unforeseen to them. Petitioners submit that such contentions cannot be entertained. There is no mechanism under law that allows such exemptions. Such imports should be subject to safeguard duty like all other imports of the subject goods. r. Situations in Thailand/Malaysia cannot be compared : Interested parties argue that countries like Malaysia and Thailand have imposed anti-dumping duties and safeguard duties respectively, on the subject goods in a situation when there was a huge surge in imports to the extent of 1350%, which is not the case in the present investigation. Thus, interested parties argue that comparison with these countries is incorrect. Petitioners object to this contention and submit that if Indian domestic industry waits till imports rise to 1350% in India, by that time there will be no domestic industry left to protect. The domestic industry is already facing an alarming situation by the sudden, sharp and signific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd duty. The above contention of interested parties is, thus, unacceptable and should be rejected. v. Safeguard duty would threaten employment and create monopoly : Many interested parties wrongly claim that imposition of safeguard duty would threaten employment in India. Petitioners humbly submit that if safeguard duty is not imposed, huge employment of domestic industry would be at stake. It is in public interest to impose safeguard duty immediately and protect the domestic industry. Further, imposition of safeguard duty would not create a monopoly as there are several manufacturers of the subject goods in India and there is healthy competition among them. Imports of the subject goods that are distorting the competition have to be checked by imposition of safeguard duty. Further, imposition of safeguard duty does not ban imports of the subject goods. Further, safeguard duty is just a temporary protection for the domestic industry to correct the market distortion create by huge quantities of low priced imports of the subject goods into India. w. Other procedural issues in the investigation : Several interested parties are concerned that India failed to notify to the WTO ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cal circumstances existed in this case, the Authority expeditiously issued preliminary findings in this case, and thereafter customs notification was issued after one week of initiation of this investigation. Therefore, all legal requirements have been met in this case keeping in view existence of critical circumstances. Contentions by interested parties on injury parameters Petitioners object to the submissions made by interested parties with respect to injury and causal link issues and would like to draw the attention of the Authority to the following key submissions in this respect: i) Injury indicators including sales, production, capacity, investment levels, inventories, employment have remained stable and some indicators show positive trend: Petitioners have provided updated information on all economic parameters with rejoinder. x. Petitioners object to the contention of interested parties that injury indicators including sales, production, capacity, investment levels, inventories, employment, etc. have remained stable and some indicators show positive trend. y. The demand for the subject goods in India has increased in the injury analysis period. Despit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 76% 76% 67% IMAGE cc. Inventory levels of domestic industry have increased substantially as compared to the base year due to constant pressure of increasing imports. The domestic industry has raised its capacities foreseeing the increasing demand in India. However, the domestic industry is unable to increase its production and sales which is leading to a situation of inventory accumulation over the injury period. Particulars 2011-12 2012-13 2013-14 2014-15 2015-16 Q1 2015-16 Q2 Inventory (MT) 331,101 583,311 636,879 648,290 657,099 871,440 Indexed 100 176 192 196 198 263 dd. It is, therefore, evident that the contentions of interested parties are wrong. Sales, production, capacity utilisation, investment levels, and employment are showing negative trend indicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... industry further worsened in Q1 and Q2 of 2015-16. In Q1 of 2014-15, profits were 100 indexed points, which sharply declined to 52 indexed points in Q4 of 2014-15. The domestic industry suffered severe losses in Q1 of 2015-16, when it suffered losses to the extent of (36) indexed points. This further worsened in Q2 of 2015-16 when losses increased to (52) indexed points. Particulars Unit 2014-15 Q1 2014-15 Q2 2014-15 Q3 2014-15 Q4 2015-16 Q1 2015-16 Q2 Profits INR(Cr.) **** **** **** **** **** **** Indexed 100 118 42 52 (36) (52) Profits per MT INR/MT **** **** **** **** **** **** Indexed 100 111 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2015-16. If imports continue to increase at this pace, the domestic industry will be wiped out soon. kk. Further, regarding the submission that imports from Korea RP, Japan and Russia are insignificant, Petitioners strongly object the same and submit that the imports from the abovementioned countries are very significant as evident from the table given below. Also, law provides that only a developing country which satisfies the 3%/9% criteria can be excluded. Therefore, the contention that Korea RP, Japan and Russia should be excluded is not correct because these countries are not developing countries but developed countries, and at the same time imports from these countries are significant. Country Import Qty (MT) Share in total imports JAPAN 1,957,260 33.08% KOREA 1,586,318 26.81% RUSSIA 361,511 6.11% Other 2,011,066 33.99% Grand Total 5,916,155 100.00% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Producers (MT) Captive sale of DI (MT) Captive sale of Others (MT) Total Demand (MT) Market Share (%) DI Import 2013-14 1292099 10342565 2994323 4274000 4000724 22903711 45 6 2014-15 2540114 9949214 3298273 5019741 4615864 25423206 39 10 2015-16(Q1) 844840 2589929 1065972 1321497 1180681 7002919 2015-16(A) 3379360 10359716 4263888 5285988 4722724 28011676 37 12 oo. From th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be controlled by way of safeguard measures. Moreover, levy of safeguard duty would only provide a level playing field to domestic manufacturers. Imports can still happen subject to payment of appropriate duty. Also, it is not a permanent measure but a temporary protection for the domestic industry to ensure huge quantities of unfairly low priced imports of the subject goods do not distort competition in the Indian market. Safeguard duty would in fact encourage healthy and fair competition in the Indian market. 3) Safeguard duty on floor price mechanism` tt. M/s Tube Investment and M/s Hyundai Motors have suggested that floor price mechanism should be put in place to control cheaper imports. Petitioners agree with this proposal and submit that floor price mechanism may be resorted to after taking into account the manufacturing cost of the domestic industry and serious injury suffered by the domestic industry due to low priced imports. The Authority may invite views from the domestic industry if such a mechanism is required to be put in place. uu. In light of the above contentions, Petitioners submit that there is no merit in the contentions raised by interested parties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the first quarter of 2015-16. Brazil argues that such an approach is incorrect as it is inconsistent with general accounting principles, and also because one quarter of 2015-16 is not sufficient enough to indicate domestic industry's performance during 2015-16, as this financial year has not elapsed yet. Brazil further argues that the Indian Authority chose to ignore data for the period April 2011 to March 2012, despite the fact that such data was available with the Authority. This, according to Brazil is a violation of Article 4.2(a) of the SA. Brazil further argues that the period for examination of serious prejudice should be three years as per the recommendation of the WTO Anti-dumping Committee and the period of two years and one quarter in this case is not sufficient. Brazil argues that the period of investigation cannot be reduced on a justification that actual data for most recent period would be collected during the course of the investigation. In light of these contentions, Brazil argues that India has failed to comply with the objectives set out in the SA. Petitioners object to all the contentions by Brazil. Petitioners submit that though the WTO Anti-dumping Committ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, Brazil's contention should be rejected. d. Causal Link: In paragraphs 24 to 28 of the written submissions, Brazil argues that there is no causal link in this case, as an analysis of other factors indicates that injury to the domestic industry is not due to imports but other factors. Petitioners strongly object to this contention and submit that there is clear causal link in this case. Petitioners have comprehensively established during the investigation that imports of the subject goods had increased both relative to production and consumption in India. Imports were 7% in production of the domestic industry in 2013-14, which doubled to 14% in 2014-15. Quarter-wise analysis of 2014-15 and Q1/Q2 2015-16 also shows that share of imports has been consistently on the rise in relation to production of the domestic industry. Market share of imports has also increased in total demand during 2015-16. The domestic industry is not able to increase its production and sales commensurate to increase in demand. Capacity utilisation, production, sales and profitability of the domestic industry has suffered. There is significant price depression, suppression, undercutting and underse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c industry. Merely because there was slight delay by India to notify the measure to the WTO does not mean that imposition of provisional safeguard duty itself is per se inconsistent with provisions of SA. Petitioners submit that all essential information has been published in this case which has enabled interested parties to exercise their right of defence. In light of the above contentions, Petitioners submit that there is no merit in Brazil's contentions. III. Rejoinder by Domestic Industry to the submissions of China PR post public hearing Petitioners object to all the contentions made by China PR. China PR's submissions are mere general statements that are not supported by concrete data. Petitioners provide their rejoinder to China PR's contentions below: a. There are unforeseen development that led to the sudden, sharp, significant and recent increase in imports of the subject goods in India. Petitioners have provided very detailed analysis in this regard in the petition. China PR has failed to take notice of such analysis in the petition. b. The petition as well as the preliminary findings comprehensively throw light on the critical circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... significant and recent increase in imports of the subject goods. The Indian steel producers are suffering serious injury due to such imports as a result of unforeseen developments and in order to protect their interest from the sudden surge in imports, safeguard duty is the only suitable measure. Due to this reason, the domestic industry has approached the Authority to take an emergency action to protect the domestic industry. b. Regarding Commission's contention that certain specific grades of the subject goods should be excluded from product scope as the domestic industry may not be manufacturing them, it is submitted that the Commission has failed to identify what all grades the domestic industry does not produce, for which exclusions are required. In the absence of information on specific grades, Petitioners cannot effectively rebut such vague contentions. The Commission should give clarifications on the grades of the subject goods that is concerned with, otherwise, the Authority should reject the Commission's above contention. c. The Commission has raised a number of issues in order to conclude that there is no injury and causality. The Commission argues that use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e terms and therefore, the rise in their open market sales is also limited in absolute terms. Moreover, imports have taken away all the increase in demand of the subject goods. In 2014-15, demand (excluding captive) increased by 1,158,614 MT and imports increased by 1,248,015 MT. When demand (including captive) increased to 25,423,206 MT and (excluding captive) increased to 15,787,601 MT in 2014-15, imports almost doubled to 2,540,114 MT. This shows the aggressive manner in which imports of the subject goods are entering the Indian market. There is no need for the Authority to wait for development of the domestic industry for a longer period as suggested by the Commission, as the domestic industry was established a long time back. The economic parameters of the domestic industry present a fair and accurate picture of the state of the domestic industry. In light of the above contentions, Petitioners submit that there is no merit in the Commission's contentions. VI. Rejoinder by Domestic Industry to the submissions of Government of Indonesia post public hearing : Petitioners provide their rejoinder to Indonesia's contentions below: a. Imports were 7% in production o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 9% of total imports. Petitioners submit that in the present case, since Russia is a developed country, it cannot be excluded from the purview of safeguard duty. b. There exist substantial reasons to invoke safeguard duty in this case, and it cannot be argued that since substantial imports took place from China PR, Korea RP and Japan, safeguard duty cannot be invoked. c. Petitioners respectfully submit that a WTO member country like Russia has no locus to tell domestic industry or the investigating authority of another country that anti-dumping or countervailing measures are more appropriate in a case than safeguard measures. Petitioners have suffered serious injury due to sudden, sharp, significant and recent increase in imports of the subject goods. The circumstances were critical and warranted immediate redressal of the situation by imposition of safeguard duty. Whether India should also explore bilateral mechanism with Korea RP or Japan is the sole discretion of the Government of India. d. Economic performance of the domestic industry has in fact deteriorated due to sudden, sharp, significant and recent increase in imports of the subject goods. Petitioners have compre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticle XIX and the SA. b. India has notified to the WTO about the initiation and levy of provisional safeguard duty based on the notification requirements under the SA. It cannot be said that the notification did not contain a detailed examination of unforeseen developments. The notification expressly refers to the preliminary findings of the Authority dated 9 September 2015. Interested parties including governments can access the preliminary findings from the website of the Authority, which can be easily accessed. India's notification to the WTO when read with the preliminary findings of the Authority very clearly specifies examination all the parameters including unforeseen developments in this case. c. It is to be noted that Petitioners have not annualised data in the petition based on the first quarter of 2015- 16. Petitioners have annualised data for the year 2015 on basis of six months' data for January - June 2015, which is on the record of this investigation. The Authority has also duly examined the same data during the course of this investigation. Petitioners have now provided data for the second quarter of 2015-16 as well in their written submissions dated 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Turkey's contentions. IX. Rejoinder by Domestic Industry to the submissions of Embassy of Ukraine post public hearing: Petitioners submit that Ukraine has indulged in end-to-end analysis of domestic industry's parameters for the period 2011- 12 vis- -vis 2014-15. This kind of selective analysis leads to skewed observations. The WTO Panel in Dominican Republic - Safeguard Measures on Polypropylene Bags and Tubular Fabric has clearly noted that mere end-to-end analysis is not enough. As per the Panel report, an investigating authority should also consider year-on-year analysis to holistically examine variations in domestic industry's parameters. As all of Ukraine's submissions are based only on end-to-end analysis, all the contentions raised by Ukraine are inconsistent with the aforesaid WTO Panel Report. End-to-end analysis alone is incorrect. End-to-end analysis along with yearon- year analysis is the correct legal methodology as established by the WTO Panel in aforesaid case. Petitioners have conducted both end-to-end and year-on-year analysis in the petition and their written submissions dated 16 November 2015. Based on the above analysis, the following are sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that it is a producer of heavy steel plates. b. Petitioners request the Authority to examine the veracity of the above claims by Dillinger and also examine whether Dillinger is producing any other products falling under definition of the subject goods, which it has exported to India. Petitioners request the Authority that if any further information is provided by Dillinger, it should be provided to Petitioners for examination and comments. XI. Rejoinder by JFE Steel Corporation, Nisshin Steel Co., Ltd, Nippon Steel Sumitomo Metal Corporation and Kobe Steel, Ltd. (together referred as Japanese Mills ) represented by M/s. AZB Partners a. The Japanese Mills deny all the contentions averred in the DI's submissions and submit that no part of the rejoinder may be read to be or deemed to be an admission of the facts and contentions pleaded in the DI submissions, unless and insofar as specifically admitted in this rejoinder. b. The DI's post hearing submissions do not provide adequate evidence that is necessary for the initiation of a safeguard duty investigation on imports of the subject goods. c. The DI does not manufacture the kind of HRC that is identical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s evident from this data that the loss in market share of the DI is due to inter-se competition between the DI and other domestic producers. h. Contrary to the submissions of the DI, the market share of Imports fell from 18% in 2011-12 to 9% in 2013- 14, and then increased to 16% in 2014-15, still lower than the imports in 2011-12. Even monthly analysis of import data doesn't lead to a conclusion of a consistent surge in Imports, for instance imports fell from 153,500 MT in April 2014, to 98,192 MT in May 2014, and then rose to 277,891 MT in October 2014 only to fall again to 171,927 MT in November 2014. i. On an analysis of the data in the DI Written Submissions for 2011-12 to 2014-15, it is evident that there has been an increase in the sales of the DI in absolute terms. Moreover, any decrease in sales between 2013-14 and 2014 -15 can be attributed to the DI willfully diverting HRCs to be sold in the domestic market towards captive consumption. This is evident from the increase in captive consumption of the DI from 4,274,000 MT in 2013-14 to 5,019,741 MT in 2014-15. j. Sales of the DI increased only marginally from 10,039,219 MT in 2012-13 to 10,342,565 MT in 2013-14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mplementation of their projects due to land acquisition and environmental clearances, less or no lending support by the Government, exposure to global price shocks, competitive products both in terms of price and quality from other countries, lower-quality iron ores which require more coal, and lower quality of coal. p. These are challenges that cannot be resolved by imposing Safeguard duties on imports. It is pertinent to note that even after the imposition of Safeguard Duties, Moody's Investors Service cut JSW Ltd.'s outlook to negative this November and Fitch Ratings has also observed that the safeguard duty on certain steel products would not be adequate to reform the Steel sector. q. The DI has claimed excessive confidentiality in the non-confidential version of the post-hearing written submissions filed with the Authority with respect to the inventories lying unsold with them. The DI has also not provided data on how long does the DI take to turn its inventory into sales, so as to ascertain the Days Sales on Inventory value. In light of the lack of data, the Authority is requested to put the DI to the strict proof of the same. r. The DI has provided indexed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ests that the products imported by them are not substitutable with those produced by the DI as these are guided and tailored to meet its end consumer preferences and specifications. Therefore, the type of HRC imported by NPI are not like or directly competitive with the HRCs produced by the DI. The Authority should examine if DI is manufacturing the specific grades of HRC imported by NPI and accordingly, exclude the same from the scope of the product under consideration. bb. NPI's customers are original equipment manufacturers and Tier 1 parts makers' who supply parts to automobile manufacturers including ****. NPI's customers require highly customized products, which undergo different levels of testing mainly in Japan before being approved by customers. NPI imports very specific types of HRCs to make automotive pipes and tubes required by its customers in India. cc. The products with specifications imported by NPI from Japan are not produced by the Domestic Industry or have not been granted approval from end customers despite of the local availability. dd. The HRCs imported by NPI to India differ in Tensile strength , Steel cleanness , Grain size , and Che ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to the customers. ii. The DI have not furnished any evidence of the actual manufacture of the specific type of hot rolled flat products being imported into India by NPI from Japan. To establish that the products were manufactured by them, the DI ought to have furnished technical information affirming the likeness (in all respects) of their products with the imported hot rolled flat products. The DI's failure on this critical requirement is fatal to the ongoing investigation and for this reason alone the investigation must be terminated. jj. Notwithstanding this submission, NPI submits that the HRCs imported by it are distinct from the products manufactured by the Domestic Industry. The products being imported by NPI differ from the products manufactured by the Domestic Industry in terms of their physical characteristics, chemical composition and end usage. Specifically, the HRCs imported by NPI differ in Tensile strength , Steel cleanness , Grain size and Chemical composition (especially for the nitrogen, the controlled range is much narrower than domestic one). kk. NPI therefore requests the Authority to exclude from the scope of the PUC, imports used for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld also be required to provide injury information considering the disputable position of alleged injury to the Applicant. g. Alleged injury is self-inflicted on account of high interest burden, capacity pressures, dumping, FTA, raw material crisis, etc that have caused pressure on the performance of the Applicants as evident in their annual reports. h. The points below establish that the Applicant are not suffering serious injury or threat of serious injury: i. Major parameters such as production, sales, capacity, utilization, inventory employment, productivity and ROCE have improved in comparison to the previous year. ii. Indian producers hold 88% of domestic demand and imports are merely 12% which is incapable of inflicting serious injury on the domestic industry. iii. Alleged injury is due to high interest and fixed cost burden on account of excess capacity. iv. No price pressure from imported products as landed price of imports were higher than the selling price. v. Selling price of domestic industry being lower than landed price is a prima facie indication of inter se competition between the Indian producers. i. Applicant has made certain claims on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ink as the annual reports admit that the cause of injury is duping and issues related to FTA regime, price undercutting has constantly been negative, injury claimed in 2015-16 when imports were declining, imports increased in 2014-15 when domestic industry earned profits. Reasons for any alleged injury is solely other reasons and any such alleged injuries are not driven by any sudden and sharp surge in imports. XIV. Rejoinder by POSCO, Korea and POSCO Maharashtra Steel Private Limited represented by M/s. Shardul Amarchand Mangaldas Co. d. The parties relied on all their earlier submissions. e. The data provided in the petition is not from an authentic source. The petition is based on data from a private agency rather than from JPC data. The JPC data is based on information provided by the Applicants and TATA Steel. f. The injury analysis has been done based on information only for the first quarter of 2015-16 and 2013-14 has been selected as the base year as it was the worst period in the history of the steel industry. g. The volume of the PUC imported and captively consumed by POSCO must be excluded while calculating the market share of imports. h. The Applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al demand of the PUC in the market but captive consumption of domestic industry has been excluded while calculating its market share. Therefore, total demand is inflated by inclusion of captive consumption and market share has been deflated and distorted by exclusion of captive consumption. n. The market share lost by the Applicants has been taken up by other domestic producers. o. The alleged injury caused to the Applicants is at best self-inflicted injury. The decrease in sales of the domestic industry is on account of quality issues in the PUC supplied by the Applicants. The PUC supplied by the domestic industry can only be used by POSCO to manufacture for industries which need low quality such as construction and general engineering. Exhibits have been provided relating to the quality issues faced and the grades which do not meet quality requirements. p. Reasons for the alleged decrease in sales of domestic industry are due to: (a) underutilization; (b) high debt/finance cost (being a capital intensive industry); (c) PIC when exported by domestic industry are those prevalent in the global market; (d) PUC when sold by domestic industry is much higher than the global/int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue of the SGD Notification and the imported material was also in transit, should not attract Safeguard Duty. d. HR Coil imported for captive consumption should not be included in the import figures shown in the Domestic Producers petition to prove injury. XVI. Rejoinder by Cold Rolled Steel Manufacturers Association of India (CORSMA) a. Prescribed procedure for preliminary investigation and soliciting views of all stakeholders for a rational decision in the matter was not adhered to by D.G. Safeguards and decision to impose the 20% duty taken within 3 days, ignoring even the information available with D.G. Safeguards that in the past 2 Petitions for the imposition of Anti-Dumping duty on imports of HR Coils were rejected by the designated Authority as well as Calcutta and Delhi High courts due to misrepresentation of facts. Besides, safeguard duty Directorate itself had rejected a similar Petition by HR Coil producers, based on the same grounds in 2009, in breach of Articles X and Articles XIX of the GATT Agreement as well as Indian customs Tariff Act. b. Apart from the foregoing, D.G. Safeguards while recommending the imposition of Provisional duty of 20% as demanded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n and unforeseen developments in the global Steel industry in the year 2014-16. l. The imports essential for industrial and economic development of the country have not caused an injury to Indian HR Coil producers and injuries are self-inflicted due to factors like neglect of technological up gradation and heavy debt and interest burden. m. The Petitioners should explain that why the threat is always confined to only HR Coils and not to other Steel products. In fact the foreign producers in the prevalent recessionary conditions prefer to export cold rolled products to optimize capacity utilization of both Hot Rolling and Cold Rolling Mills and the governments also offer higher incentives on the exports of Cold Rolled products. The Petitioners are also major producers of Cold Rolled products but always petition for hike in duties on HR Coils apparently to exploit monopolistic potential. n. Indian HR Coil producers are already over protected by customs duty of 12.5% or USD 40 per MT at the current global price of USD 300 PMT, overage ocean freight of USD 30 PMT, Port, Financial and incidental charges of USD 15 per MT adding up to USD 85 (Rs 5500) PMT. o. The impositions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, allegations cannot be made only on media reports. Every user has a choice to use material as permitted by their project authority and importer cannot assert any control over where the material is eventually utilised. c. DG Safeguards should not be interfering in customs issue as customs is well equipped to do so. d. Petitioner cannot decide the end use of a particular grade. The ultimate decision is of the user. The end use is always indicative in nature and not binding. It is preposterous to suggest that some of India's importers are importing PUC in guise of API. e. For the recent surge in imports in Q2 of 2015-16, DG must obtain factual data for the period for which plants of the domestic industry were under maintenance or under restricted production capacity. Reduced availability as well as their own imports has been one of the major causes of increased imports. f. Imports in 2015-16 should be considered in light of various other factors such as imports for captive consumption, imports by petitioners and for export and advance licenses and bifurcation of alloy and nonalloy steel etc. g. Evaluation period of 2 to 3 years seems short. Sudden and sharp sur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eel Ltd. t. In view of the timelines of events followed in the present case, it clearly shows an undue haste in the imposition of safeguard duty. XVIII. Federation of Association of Maharashtra (FAM) represented by Advocate Tavinder Sidhu a. The submissions made by the above party in their previous submissions have not been repeated here for the sake of brevity. b. In regard to API Grade exclusion, allegations cannot be made only on media reports. Every user has a choice to use material as permitted by their project authority and importer cannot assert any control over where the material is eventually utilized. c. Petitioner cannot decide the end use of a particular grade. The ultimate decision is of the user. The end use is always indicative in nature and not binding. It is preposterous to suggest that some of India's importers are importing PUC in guise of API. d. For the recent surge in imports in Q2 of 2015-16, DG must obtain factual data for the period for which plants of the domestic industry were under maintenance or under restricted production capacity. Reduced availability as well as their own imports has been one of the major causes of increased ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase, it clearly shows an undue haste in the imposition of safeguard duty. XIX. Additional submissions by the Domestic Industry after Introduction of Minimum Import Price (MIP) by Ministry of Commerce After the introduction of MIP on Steel products by the Ministry of Commerce vide Notification No. 38/2015-2020 dated 5th February 2016, Domestic Industry, in response, have made the following additional submissions: - a. The domestic industry vide their letter dated 17/02/2016 stated as follows: - Recently, DGFT has issued Minimum Import Prices (MIP) on items being imported under Chapter 72 of ITC (HS), 2012 vide Notification No. 38/2015-2020 dated 5 February 2016. It is pertinent to note that MIP is in force for a period of six months or until further orders by DGFT, whichever is earlier. This means that MIP could be revoked at any time before the six months period. It is worthy to note that the domestic industry has requested for imposition of safeguard duty for a period of 3 years. Though MIP addresses most of the concerns of the domestic industry, but it is in place only for six months or a lesser period. Once MIP expires, the domestic industry would be left wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sideration (hereinafter referred to as PUC) in the present case is Hot-rolled flat products of non-alloy and other alloy Steel in coils of a width of 600 mm or more classified under Customs Tariff subheading nos. 7208 and 72253090 of Chapter 72 of the Customs Tariff Act, 1975 . The applicant has claimed that these products are not further worked than hot-rolled and are flat products of iron, alloy or non-alloy steel, in prime or non-prime condition having 'as-rolled' edge or 'trimmed' edge or 'slit' edge. These products may be pickled or non-pickled (with or without skin-pass or tempering), slit or non-slit and having nominal width of greater than or 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 600mm; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o import this specific product and such products should be excluded from the product scope. I observe that the interested parties have not stated to have made any efforts to procure the same from the domestic market nor have they stated anywhere that other Domestic Producers can not supply them the goods. Therefore, their contention is not accepted. ii. Automotive Grade of HR Coils: M/s Hyundai Motors India Ltd. submitted that Korean Automotive Grade Steel should be exempted from safeguard duty as even after imposition of safeguard duty, they will have to necessarily import this product as their Nanyang R D Centre does not allow them to change the specifications for the cars manufactured in India. Applicants in their submission have objected that Automotive Grade of HR Coils is a very generic description and cannot be excluded unless they substantiate that Indian steel producers cannot supply this grade. Just because their R D centre will not allow them to procure from elsewhere does not mean that the domestic industry should be allowed to suffer serious injury by exempting imports of this grade from safeguard duty. I find no reason to disagree with the contention of the Do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een shared with the domestic industry and hence they are not in a position to defend its interest. In this regard I re-iterate my observations that the Indian industry is sufficiently advanced to supply diverse grades of steel. vi. Grade JSH 270/370 and Grade JSH 590: M/s Maruti Suzuki Ltd . argues that these two grades should be excluded from product scope as these are special grades of steel which are imported to meet requirements of customer safety and meeting emission norms. They argue that domestic manufacturers cannot meet the required quality standards and are inconsistent suppliers of raw material. Petitioners strongly object to the above contentions. I find that the Indian steel industry is sufficiently advanced and capable of supplying different grades of materials. vii. Alloy Steel : Federation of Association of Maharashtra ( FAM ) argues that alloy steel is produced in negligible quantities in India, so the question of imposition of safeguard duty on alloy steel does not arise. They further argue that imports of non-alloy steel constitutes only 7-8% of total domestic production and more than 90% market share for non-alloy steel is with domestic units. FAM furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vestigation is Hot-rolled flat products of non-alloy and other alloy Steel in coils of a width of 600 mm or more classified under Customs Tariff sub-heading nos. 7208 and 72253090 of Chapter 72 of the Customs Tariff Act, 1975. These products are not further worked than hotrolled and are flat products of iron, alloy or non-alloy steel, in prime or non-prime condition having 'as-rolled' edge or 'trimmed' edge or 'slit' edge. These products may be pickled or non-pickled (with or without skin-pass or tempering), slit or non-slit and having nominal width of greater than or 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 600mm; b) API grade steel; c) Silicon electrical steel; d) Hot-rolled flat products ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt from the table given under Para 13 and Para 25 (a) of the preliminary findings. Accordingly, it is held that the applicant domestic producer constitutes and represents the Domestic Industry (DI) within the definition of DI under Sec 8B(6)(b) of the Customs Tariff Act,1975 . C. Source of information: 27. The product under investigation is imported into India under Custom Tariff Heading 7208 and 72253090 of Chapter 72 of First Schedule to the Customs Tariff Act, 1975 . The Safeguard investigation was initiated on the basis of import data of IBIS (International Business Information Services) from 2013-14 to 2015-16 (April to June 2015). The domestic data from 2011-12 to 2015-16 (Till June 2015) has been submitted by the domestic industry and the same has been verified by on-site visit by the departmental officers on the basis of excise records to the extent considered necessary. The import data as well as the domestic data from July, 2015 to Sept., 2015 in respect of various economic parameters has been furnished by the applicant, in their written submissions/rejoinder. Many interested parties have argued that import data from a private agency like IBIS is not authe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on Safeguards does not contain any general or specific provision or guidelines for choosing the investigation period. However the issue of period of investigation has been dealt in detail in Panel findings in US-Line Pipe Case against Korea (Para 7.196,7.199 and 7.201). The Panel in this case ruled that it is up to the discretion of the investigating authority of the importing Country to decide the length of the period of investigation and its breakdown . We note that the Agreement contains no requirements as to how long the period of investigation in a safeguards investigation should be, nor how the period should be broken down for purposes of analysis. Thus, the period of investigation and its breakdown is left to the discretion of the investigating authorities. In the case before us the period selected by the ITC was five years and six months, which is a period similar in length to the one used by the Argentine investigating authority in Argentina - Footwear Safeguard. However, we note that the Appellate Body, in the findings relied upon by Korea to argue the question of the length of the period of investigation, emphasized not the length of the period per se, but that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nfidential versions of the application for safeguard measure as per the provisions of Safeguard Rules 1997 and Trade Notice No. SG/TN/1/97 dated 06.09.1997. Further, the Domestic Industry claimed confidentiality of financial and costing data by way of hiding them in their non-confidential version, which I find appropriate. F. Increased Imports: 34. Section 8B of Customs Tariff Act, 1975 deals with the power of the Central Government to impose safeguard duty and provides as follows: (1) If the Central Government, after conducting such enquiry as it deems fit, is satisfied that any article is imported into India in such increased quantities and under such conditions so as to cause or threatening to cause serious injury to Domestic Industry, then, it may, by notification in the Official Gazette, impose a safeguard duty on that article : 35. The Rules mandate increase in imports as a basic prerequisite for the application of a safeguard measure. Thus, to determine whether imports of the product under consideration have increased in such quantities for purposes of applying a safeguard measure, the rules require an analysis of the increase in imports, in absolute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... increase must be sufficiently recent, sudden, sharp and significant, both quantitatively and qualitatively, to cause or threaten to cause serious injury. 39. The analysis of the increased imports of the product under consideration has been conducted in the light of the above mentioned law and WTO jurisprudence. Increased Import in absolute terms: 40. The analysis of the trend in imports of PUC in the light of the above mentioned provisions has been done. PUC is imported into India from a number of countries including China PR, Russia, Ukraine, Japan and Korea. Interested parties raised objections that imports of the subject goods are not sudden enough, sharp enough, significant enough and recent enough within the meaning of Article XIX of GATT and SA and therefore, safeguard duty is not warranted in this case. 41. In this regard, I find no merit in the objection from the interested parties as the analysis by taking into account DGCI S import data for the Period of Investigation (up to 15-16 Q1) reveals as under: Financial Year Total Imports (MT) Trend 2013-14 1252441 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ituation of that industry, in particular, the rate and amount of the increase in imports of the article concerned in absolute and relative terms, the share of the domestic market taken by increased imports, changes in the level of sales, production, productivity, capacity utilization, profits and losses, and employment. 48. With regard to the overall impairment in the position of the industry, the Appellate Body in Argentina-Footwear (EC),in contrast to the Panel, held that an evaluation of each listed factor will not necessarily have to show that each such factor is declining to justify a finding of serious injury. Relevant extract is as follows: 139. In our view, it is only when the overall position of the domestic industry is evaluated, in light of all the relevant factors having a bearing on a situation of that industry, that it can be determined whether there is a significant overall impairment in the position of that industry. Although Article 4.2(a) technically requires that certain listed factors must be evaluated, and that all other relevant factors must be evaluated, that provision does not specify what such an evaluation must demonstrate. Obviously, any suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e table below. There is not much variation in the level of sales. Financial Year Total Import (MT) Sales of DI (MT) Sales of other Indian Producers (MT) Captive sale of DI(MT) Captive sale of Others (MT) Total Demand (MT) Market Share (%) DI Import 2013-14 12,52,441 1,03,42,565 29,94,323 42,74,000 40,00,724 2,28,64,053 45 5 2014-15 26,44,911 99,49,214 32,98,273 50,19,741 46,15,864 2,55,28,003 39 10 2015-16(Q1) 8,81,233 25,89,929 10,65,972 13,21,497 11,80,681 70,39,312 2015-16(A) 35,24,932 1,03,59, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2014-15 648290 102 2015-16 (Q1) 657099 103 (ii) Price undercutting, suppression/depression : a. The landed price of imports has been calculated by taking in to consideration the customs duty @7.5% for the period from April, 2013 to March, 2015 @10% (on average) for rest of the period on assessable value of import and then adding duties to CIF value of import which reveals that the 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 market share. This has resulted into losses during 2015-16(Q1) for the domestic industry. The variation of landed prices of imports, cost of Sales, selling price are as under:- Components (Indexed) Unit 2013-14 2014-15 2015-16 (Q1) Cost of Sales ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eguard protection to the Domestic Industry. The very reason why safeguard protection is sought and given and is provided for under SA is that the DI is unable to handle competition and can get some time to adjust to the International competition over a period of time. The main determining factor is that there should be a serious injury or threat of serious injury and there is a causal link with the increased imports. I observe that there is a significant increase in imports of the subject goods which have caused serious injury to the domestic industry which has been duly substantiated in the foregoing paras. 53. Further, POSCO Maharashtra has contended that the surge in imports in 2014-15 is mainly because of imports by them for further use in manufacturing activity in India and if the same is excluded, there would be a slump in imports. In this regard it has been observed that imports have surged not only in 2014-15 but also in Q1of 2015-16. Moreover, POSCO has stated that it has made most of the imports during the first two quarter of 2015-16. HRC by its very nature is a raw material for the downstream industry and mostly has uses only for further manufacturing. So, POSCO' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crease their exports. Secondly, the safeguard action on the FTA limits the safeguards duties only to the level not exceeding the MFN rates, which is not by itself sufficient to mitigate the present situation. It may be noted that these FTAs have specific provisions that allow India to impose general safeguard duty. The only exception under SA and Safeguard Duty Rules is exclusion of developing countries whose individual share in imports is below 3% and whose aggregate share in imports is below 9%. Korea RP and Japan do not fall under this exception, as both of them are developed countries. 56. From the above analysis it is seen that the demand for the PUC in India has increased in the injury analysis period. Despite increase in demand, the production, employment and sales of domestic industry have remained stagnant, while inventories have somewhat increased. Imports have taken away most of share of the increase in demand of the subject goods. In 2014-15, while demand excluding captive increased by 13,03,069 MT and imports increased much more by 13,92,470 MT. This shows the aggressive manner in which imports of the PUC are entering the Indian market. The domestic industry had rai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the imposition of provisional safeguard duty should be exempted from safeguard duty as they are of the view that imposition of provisional safeguard duty was unforeseen and the impact of additional duty would be harsh. However, I find there is no provision under the law that allows such exemptions. 61. Other procedural issues in the investigation : A number of interested parties have expressed concern that India took time to notify the WTO, about the imposition of provisional safeguard duty. Interested parties have also submitted that provisional safeguard duty was imposed in haste without giving an opportunity to be heard. In this regard it is observed that there was a slight delay, however, it would not mean that imposition of provisional safeguard duty per se is inconsistent with provisions of Article 12.4 of SA. A slight delay in meeting with the procedural requirement such as notifying WTO does not by itself compromise with the substantive merits of the provisional safeguard duty. 62. Rule 9(1) of the Safeguard Duty Rules allows the Authority to proceed expeditiously with the conduct of the investigation and in critical circumstances, record a preliminary finding regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rts. In other words, Korea has to demonstrate that the imports of SMPP cause injury to the domestic industry producing milk powder and raw milk. In addition, having analyzed the situation of the domestic industry, the Korean authority has the obligation not to attribute to the increased imports any injury caused by other factors. 65. For the purpose of determining causation, all relevant factors of an objective and quantifiable nature having a bearing on the situation of that industry have been evaluated. A comprehensive evaluation of parameters enumerated in preceding paras demonstrates that serious injury and threat of serious injury is being caused by increased imports. In the instant case, the following are relevant in this regard, when comparing the figures from 2013-14 to 2015-16 (annualized on the basis of Q1): - i) The volume of imports has increased significantly from 100 points (1252441MT) to 281 points (3524932MT). ii) Market share of imports has increased from 5% to 13% and, consequently, market share of the Domestic Industry has declined from 45% to 37%; iii) The decreasing import prices are preventing the Domestic Industry from sustaining its prices; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction in coal blend cost by increase in usage of imported soft coking coal in each plant as a replacement of imported hard coking coal and maximize production/use of coking coal from captive washeries; v. Reduction in gross metallic input and enhancing concast production vi. Reducing the cost of power and other fuels by maximising recovery of gases like CO gas, BF Gas and LD gas to replace boiler coal in captive/JV power plant vii. Improvement in the efficiency of different processes by improvement in the yield of blooming mill/slabbing mill etc. viii. Modernisation plans in SAIL will lead to increase in volume of production, productivity, improvement in yields, conservation of energy and improvement in product quality. b. Essar Steel Limited i. Commissioning of multi fuel power plant at Hazira will help in reduction in costs by utilisation of surplus Corex gas and coal fines; ii. The high quality of iron ore fines from mines acquired under the government auction scheme will provide flexibility to enhance the quality of raw material and thereby improve the productivity and lower the cost; iii. Essar plans to acquire mines nearby its established beneficiat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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'. 73. The Appellate Body, in Argentina - Footwear (EC), then held that the requirement of unforeseen developments did not establish a separate condition for the imposition of safeguard measures, but described a certain set of circumstances : 74. The panel on US- Steel Safeguards 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, lead to increased imports. 75. The applicant has pointed out that Steel manufacturers in a number of countries including China PR, Russia, Ukraine, Japan and Korea have developed huge capacities to cater to demand of steel by developed countries and rest of the world. Most of the developed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to countries like India are 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. 79. Many interested parties are of the view that Petitioners have failed to identify unforeseen developments that led to increase in imports of the subject goods. Some interested parties claim that even the Authority has failed to discuss unforeseen developments in the preliminary findings and a few interested parties also claim that unforeseen developments have been identified but do not correlate with the subject goods. Some interested parties are of the view that depreciation of Indian Rupee and local procurement by users offset unforeseen developments. In this regard I find that the petition explains in detail all the unforeseen developments that led to sudden, sharp, significant and recent increase in imports of the PUC that caused or threaten to cause serious injury to the domestic industry. The preliminary findings and the present findings also discuss these unforeseen developments in sufficient detail which are well reasoned. 80. Some of the interested parties are of the view that the Authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other parties and to submit their views, inter alia, as to whether or not the application of a safeguard measure would be in the public interest. The competent authorities shall publish a report setting forth their findings and reasoned conclusions reached on all pertinent issues of fact and law. 84. Some interested parties are of the view that downstream industry would be hurt by imposition of safeguard duty. They have also contended that imposition of safeguard duty would result in increase in imports of downstream products. 85. In this regard, I observe that there is a sizable downstream industry in India that processes the HR Coil to produce CR Coil, GP/GC sheets, Pipes Tubes, Color Coated Sheets etc. Steel is a basic raw material and it is consumed in a large number of products such as automobiles, machinery, infrastructure, construction, oil and gas industry etc. Therefore, any increase in price of HR Coils has an impact on the downstream industries. Safeguard duty imposed on HR Coil without imposing any duty on the downstream products will impact the value adding downstream Industry in India. Imposition of safeguard duty will add to the cost of production of these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al imports into India. Therefore, in terms of Notification No.103/98-cus dated 14-12-1998 read with Notification No. 19/2016-Customs (N.T.) dated 05-02-2016, imports of the product under consideration originating from developing nations except China PR and Ukraine will not attract Safeguard Duty in terms of proviso to Section 8B (1) of the Customs Tariff Act, 1975 . N. Provisional Measures: 90. In the Preliminary Findings, it was held that increased imports of PUC have caused and threatened to cause serious injury to domestic producers of PUC. It was also observed that critical circumstances existed, where any delay in application for safeguard measures would cause irreparable damage to the industry. Considering the serious injury suffered by domestic industry during the first quarter of 2015-16 in a number of injury parameters as explained in the paragraphs above, it is held that the provisional measures were justified in this case in order to thwart the possibility of irreparable damage. The final findings are now being issued after considering the views of all the interested parties and DI. O. Reply to the specific objections raised by Foreign Governments/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his regard, the contention of Ukraine is not accepted as the period of investigation has been taken from 2013-14 to 2015-16 (Annualised on the basis of Q1) and during this period the imports of PUC have shown an increasing trend, whereas, the domestic indicators like market share and profitability show negative trends as discussed in the foregoing paras. The question as to what is an acceptable period to consider for determining injury, the issue has been discussed in detail in Para-30. As such there is no bar in taking a particular period of investigation so long as the injury analysis also pertains to that period and the surge in imports is recent and significant. European Commission 95. The Commission has submitted that safeguard instrument should be used in exceptional circumstances only and the present case is suitable for anti-dumping or anti-subsidy investigation. In this regard, I find, that at present, the Indian steel industry is going through a very critical phase due to sudden, sharp, significant and recent increase in imports of the subject goods. The Indian steel producers are suffering serious injury due to such imports as a result of unforeseen development ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation were circulated to all interested parties while circulating the Notice of initiation in the matter. The same documents have also been placed in the public file for inspection by the interested parties. There is, thus, no inconsistency in terms of Article 3.1 of the SA. Further, since Brazil's share of imports has been determined to be not more than 3% in total imports during the period 2013-14, 2014-15 2015-16 (Q1), imports of PUC from Brazil is excluded from the purview of safeguard duty. P. Examination of Post POI data: 100. In the given circumstances, an attempt was made to analyse the trend in the period after the POI i.e. upto 2nd quarter of 2015-16 to draw a clear inference about the possibility of accentuation of the injury to the domestic industry. The domestic industry vide their post Public Hearing submissions submitted the domestic data pertaining to certain economic parameters for the subject product under consideration imported into India. The data analysis is as under: 2013-14 2014-15 2015-16 (Annualised on the basis of Q1) 2015-16 (Annualised on the basis of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tablishes causal link between the rise in imports and serious injury caused to the domestic industry during the POI. iii. The domestic industry has been able to demonstrate that the developments in the market for surge in imports of the PUC were unforeseen. iv. There will be a negative impact on the downstream industry as a result of safeguard duty on the PUC which is a raw-material for them. v. It is also established that imposition of safeguard duty in this case would be in public interest because it will aid in recovery of the domestic industry and ensure that end users get a stable supply of subject goods from the domestic industry. i. From the analysis of post POI data, it has been observed that the position of domestic industry further deteriorated on account of production, sales market share. Thus, I conclude that serious injury/ threat of serious injury exists and further protection to the domestic industry is required to be extended. R. Recommendations: a. The increased imports of 'PUC' into India, have caused serious injury and are threatening to cause serious injuries to the domestic producers of PUC and it will be in the public interest t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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