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Safeguard Investigation concerning Imports of Unwrought Aluminium (Aluminium not alloyed and Aluminium alloys) into India- Preliminary Findings

Customs - G.S.R. 435(E) - Dated:- 21-4-2016 - DIRECTORATE GENERAL OF SAFEGUARDS (Customs and Central Excise) NOTIFICATION New Delhi, the 21st April, 2016 Subject: Safeguard Investigation concerning Imports of Unwrought Aluminium (Aluminium not alloyed and Aluminium alloys) into India- Preliminary Findings-Reg G.S.R. 435(E).-having regard to the Customs Tariff Act, 1975 and the Custom Tariff (Identification and Assessment of Safeguard Duty) Rules, 1997 thereof; (A) Procedure: 1. An updated applic .....

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on imports of Unwrought Aluminium ( Aluminium not alloyed and Aluminium alloys) into India to protect the domestic producers of Unwrought Aluminium ( Aluminium not alloyed and Aluminium alloys) against serious injury /threat of serious injury caused by the increased imports of Unwrought Aluminium ( Aluminium not alloyed and Aluminium alloys) . The domestic industry has also requested for imposition of provisional safeguard duty in view of steep deterioration in performance of the domestic indus .....

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inium not alloyed and Aluminium alloys) into India was initiated vide Notice of Initiation dated 19th April, 2016 and published in the Gazette of India, Extraordinary on the same day. 3. A copy of the Notice of Initiation dated 19th April,2016 along with copy of non-confidential version of the application filed by the domestic industry were forwarded to the Central Government in the Ministry dealing with Commerce and other Ministries concerned, Governments of major exporting countries through th .....

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5. I have carefully gone through the application filed by the domestic industry and report of verification conducted by the officers of the Directorate General of Safeguards from the excise records. My observations, findings and recommendations are discussed in the succeeding paras. (I) The product under Consideration (PUC): 6. The product under consideration is Unwrought Aluminium ( Aluminium not alloyed and Aluminium alloys) classified under Customs heading No.7601 of Chapter 76 of the Custom .....

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on has been jointly filed by (i) M/s. Vedanta Limited -Aluminium & Power, (ii) M/s Bharat Aluminium Company Ltd and (iii) M/s Hindalco Industries Limited for imposition of Safeguard Duty on imports of PUC. On perusal of the application and latest data provided by the applicants it is seen that the applicants account for more than 50% of the total production of PUC in India and hence, the applicants qualify as Domestic industry (DI). (III) Period of Investigation (POI): 9. The Customs Tariff .....

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fficiently long to allow conclusion to be drawn on increased import and serious injury. The period of investigation in this case has been taken from 2011-12 to 2015-16 which is long enough to take into consideration the market conditions and to ascertain the need, if any, for imposition of Safeguard Duty. (IV) Source of Information: 10. The import data till January, 2016 for the PUC has been taken from Export Import data bank, Ministry of Commerce (http://www.commerce.nic.in/eidb/icomq.asp) and .....

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rovisions of Safeguard Duty Rules 1997 and Trade Notice No. SG/TN/1/97 dt. 06.09.1997. Further the DI has submitted reasons for seeking confidentiality at the time of filing the application. 12. Rule 7 of the Safeguards Duty Rules, 1997 and Art. 3.2 of WTO Agreement on Safeguards also provide for confidentiality. The applicant is not required to disclose such information which is confidential information of the company, disclosure of which can cause serious prejudice to the business interests of .....

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ates the national authorities to examine the unforeseen developments which led to serious injury to the DI. Some of the unforeseen developments are detailed below: (i) It is observed that China, which is a major producer accounting for almost half of the world Aluminium production, has witnessed a recent, sudden and unexpected drop in the growth rate of its economy leading to reduced consumption of Aluminium. This has resulted in huge surplus of Aluminium production capacities in China. The exce .....

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unviable due to weaker demand, the smelters continue to operate and feed the already over supplied world Aluminium market. Since China has export tax on Ingots and tax rebate on value added products, the exports from China is taking place on value added products of Aluminium. Some of the value added products also known as fake semis are exported with a view to avail the export rebate and avoid export tax. These fake semis are ultimately meant for re-melting into Ingots at the place of destinati .....

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circumstances are unforeseen which has lead to significant increase in the imports of the PUC into India. (VII) Increased Imports: 15. Imports of PUC into India are as detailed below: Financial Year Total Import (MT) Import Indexed 2011-12 2,42,533 100 2012-13 3,08,279 127 2013-14 3,48,889 144 2014-15 3,43,428 142 2015-16 (April - Jan, 2016) 3,60,308 2015-16 (Annualized) 4,32,370 178 It is seen that imports of the PUC have sharply increased during the injury period. The imports have increased f .....

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c parameters of the industry justifying their claims. The data provided by the DI has been analysed as below: a) Production: The domestic production of DI has increased during the period of investigation as shown below: Financial Year Production (MT) Production Indexed 2011-12 8,87,286 100 2012-13 9,31,776 105 2013-14 10,51,100 118 2014-15 13,53,271 153 2015-16 15,63,639 176 b) Increased Imports w.r.t total production: PUC is imported into India from a number of countries, and mainly from UAE, M .....

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72 13 2015-16 4,32,370(Annualised) 28,18,978 15 The Imports have increased from 242533 MT in 2011-12 to 432370 MT in 2015-16 (Annualised) which shows an increase of 78%. It may be seen that import in the recent year 2015-16 has increased by 26% when compared to immediate preceding year 2014-15 which in my view is sudden, sharp and significant . c) Market Share & Changes in levels of Sales: (MT in 000 s) Financial Year Import Sales of DI Captive Consumption Sales of other Indian Producers Tot .....

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5-16. During the same period the share of DI increased from 28% to 31%. However, when seen along with captive consumption, the share of DI has increased only by 1%. d) Capacity Utilization: Even though there has been significant increase in demand of the PUC, the increasing imports have resulted in significant idling of production capacity of the domestic producers as can be seen in the Table below: Financial Year Installed Capacity (MT) Production (MT) Capacity Utilisation (%) Total Demand 2011 .....

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ble below depicts the inventory levels during the POI. Financial Year Inventory (in MT) Indexed 2011-12 100 2012-13 53 2013-14 46 2014-15 97 2015-16 49 g) Productivity & Employment: There is increase in the level of employment keeping in tandem with increasing capacity. Financial Year Production (MT) Employment (Nos.) Productivity per employee (MT) 2011-12 8,87,286 100 77 2012-13 9,31,776 95 85 2013-14 10,51,100 112 81 2014-15 13,53,271 111 105 2015-16 15,63,639 105 129 h) Price depression: .....

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ice Under Rs/KG 100 40 66 96 -32 selling (Indexed) 17. There are a number of parameters on which the DI is showing positive trends, however, the most significant and the most dominant factor is profitability of the DI which has shown a serious downturn in the recent past due to increased imports arriving at depressed prices. In view of the above, it is seen that there is a deterioration in the financial parameters of the domestic industry causing losses to the DI due to which the domestic indust .....

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increase and continue to threaten the domestic industry with serious injury. (IX) Causal Link between Increased Import and Serious injury or Threat of Serious injury: 19. The Panel on Korea - Dairy (Para s. 7.89-7.90) set forth the basic approach for determining causation : In performing its causal link assessment, it is our view that the national authority needs to analyse and determine whether developments in the industry, considered by the national authority to demonstrate serious injury, hav .....

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h a causal link, Korea has to demonstrate that the injury to its Domestic Industry results from increased imports. In other words, Korea has to demonstrate that the imports of SMPP cause injury to the Domestic Industry producing milk powder and raw 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. 20. A comprehensive evaluation of parameters enumerated ab .....

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ptive consumption) of domestic industry has remained stagnant leading to low capacity utilization despite increasing domestic demand. iii) The product is largely sold in comparison /competition with imports. iv) The landed price of import is significantly lower than the cost of sales in the recent period of 2015-16. v) Domestic industry is forced to export at a price lower than the domestic price in order to curtail the piling of inventories and to sustain production. vi) Profitability of domest .....

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y suffered by DI is caused by increased imports. (X) Developing Nations: 22. The percentages of imports from developing nations have also been examined for the year 2015-16. Except Malaysia, South Africa and Thailand other developing nations individually and collectively have less than 3% and 9% share respectively of total imports into India. Therefore, in terms of Notification No.19/2016-Cus dated 05.02.2016 imports of the product under consideration originating from developing nations except M .....

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ndustry and delay in imposition of provisional safeguard duty would cause irreparable damage to the domestic industry. 24. Rule 9 of Customs Tariff (Identification and Assessment of Safeguard Duty) Rules, 1997 notified vide Notification No. 35/97-NT-Customs dated 29.07.1997 prescribes that the Director General shall proceed expeditiously with the conduct of the investigation and in critical circumstances, he/she may record a preliminary finding regarding serious or threat of serious injury . The .....

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lower than the provisional duty already imposed and collected. 25. The import of PUC into India has shown significant increase. Imports have increased by 78% in 2015-16 as compared to the base year of 2011-12 and 26% between 2014-15 and 2015-16. This increase in import at low prices have led to depression of price in the domestic market, forcing the DI to sell at prices below cost of sales, thus leading to unutilized and idling of huge capacities of the domestic industry during the period of inv .....

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