TMI Blog2016 (10) TMI 605X X X X Extracts X X X X X X X X Extracts X X X X ..... icant benefit by sale or partly by captive consumption in making derivatives chemicals. However, it is clear, based on the evidence placed that the integrated downstream manufacture resulting in economic consumption of substantial quantum of chlorine in the DI has not reached a level which will make chlorine a product of "Equal Economic Importance" to the producer. On perusal of the cost audit report, it is seen that Chlorine has been consistently treated as by-product and the Cost Accounting Standards applicable to such treatment have been applied. The realisation out of chlorine produced shows that the position of "Equal Economic Importance" cannot be given to chlorine in the Indian context. Treatment of chlorine as a by-product is correct - appeal dismissed - decided against appellant. - Customs Appeal Nos. 521 & 616 of 2003 and 127 of 2004- AD - Order No. C/A/53371-53373/2016-AD[DB] - Dated:- 5-9-2016 - Mr. Justice (Dr.) Satish Chandra, President, Ms. Archana Wadhwa, Member (Judicial) and Mr. B. Ravichandran, Member (Technical) Ms. Reena Khair, Sh. Rajesh Sharma and Ms. Rita Jha, Advocates for the Appellant in AD Appeal No. 521 of 2003 (Alkali) Sh. Gopal Jain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rine is substantial then it should not be taken as by-product but should have been treated as co-product as per para 12 of Annexure -III of Cost Accounting Records (Caustic Soda) Rules, 1967. Two different methods, one for M/s Hanhwa Chemical Corporation and another for domestic industry should not have been followed for arriving at the cost. The Tribunal set-aside the Customs Notification No. 142/2003 dated 23.09.2003 as also the Final Finding of the DA on non injurious price and injury margin. The matter was remanded to the DA for a fresh determination of NIP and injury margin by reasonably and equitably distributing the cost of production between chlorine and caustic soda and to issue Final Finding on that basis, afresh, in accordance with law. 3. Two Civil Appeals were filed against the said order of the Tribunal before the Hon'ble Supreme Court. AMAI contested the Final Order of the Tribunal on the ground that the Tribunal was not justified in comparing the normal value of foreign exporter with the NIP of Indian producers. There is no warrant to direct the DA to determine the cost of production for foreign exporters and of Indian Producers following the same methodology ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocessed a part of chlorine to produce certain value added products/ derivatives like chloride paraffin, benzyl alcohol etc. None of the parties in domestic industry have the same level of integration as achieved by the producers in subject countries investigated by the DA. In such countries chlorine has got very valuable use in integrated PVC resin plants. The chlorine consumed in domestic industry is not to significant level to categorise the same as product of Equal Economic Importance 7. Ld. Counsel for AMAI reiterated that none of the major domestic producers have consumed any substantial portion of chlorine generated during the manufacture of caustic soda. M/s Gujarat Alkali Chemical Limited have sold 78% of chlorine produced during POI. A small portion of derivative chemicals of chlorine were manufactured by this unit during POI. M/s Grasim Industries sold 92% of chlorine produced during the POI. M/s DCW Limited, though had a PVC resin plant, have not consumed chlorine for the said purpose. As per records of the company for production of PVC resin the company utilised VCM as a raw material. Though VCM can be made using chlorine the company has not utilised chlorine for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matter to the DA for a fresh decision on treatment of chlorine for arriving at NIP. Further, the injury to domestic industry should be considered by taking into account the effect of import of total realisation of both chlorine and caustic soda in the domestic market as both have distinct economic importance. To sum up, it is the case of HLL that chlorine has significant economic importance and NIP of caustic soda has to be determined by treating chlorine as a co-product. 11. NALCO in the written submission explained the process of manufacture of caustic soda. It was contended that two third of chlorine produced is consumed in further production vinyl chain. The production of chlorine and caustic soda is inter-related with downstream business including manufacture of PVC and other derivatives. It was contended that the volume effect arrived at by the DA is not based on correct data. The imports by EOU, SEZ and Advance License Holders was not considered by the DA. It was pleaded on behalf of NALCO that there is a built in disparity in the Foreign Trade Policy as well as Customs Notification No.5/94-Cus dated 18.01.1994 as no AD duty is leviable when EOUs are importing the subjec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the same is that when more than one product emerge during the common manufacturing process, two or more those can be considered to have Equal Economic Importance if they give equal economic return or monetary benefit to the producer. In such situation these products can be considered as joint/ co-products. As per Dictionary of Accounting by Jonathan Law - 2010 (Oxford University Press) a main product is a product of a process that has the greatest economic significance. Other products of secondary economic importance are regarded as by-products. However, if all products have equal importance they are regarded as joint products. Keeping this in mind we examine the various submissions made by parties as above. Chlorine and caustic soda are two of the most important inorganic chemicals having industrial use. They are together normally referred to as chlor -alkali. Chorine is largely used in the synthesis of chlorinated organic compound. It is difficult to store and transport economically and hence it is generally produced near the consumer industry. We note that the DI has not evolved a level of total integration for downstream usage of chlorine for manufacturing value added deri ..... 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