TMI Blog2023 (1) TMI 1059X X X X Extracts X X X X X X X X Extracts X X X X ..... fice. It would, therefore, not be appropriate to examine the information referred to by the learned senior counsel to determine whether Xinyi Energy had a liaison office in India - the expenses, if any, incurred by Xinyi Glass would have no bearing or impact on the price at which the goods were exported. Section 9A(1)(b) of the Tariff Act which deals with the definition of export price provides for a construction of an export price where either on account of relationship between exporter and importer or a third party, the export price to India becomes unreliable. The present is a case where the exporter and importer are not related parties and the sale price to the Indian importer represents the true and full consideration for the sale. The findings recorded by the designated authority on this aspect, therefore, cannot be sustained. n the absence of any opportunity or any specific request from the designated authority for furnishing such information, rule 6(8) would not be applicable in the present case. Loading the Cost of Production - It is argued that the designated authority was not justified in making adjustment to the normal value by loading the cost of production ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Advocates and Shri Jinendra Singhvi, Consultant for the Domestic Industry Shri Ameet Singh and Shri Mohit Yadav, Advocates for the Designated Authority Shri Rakesh Kumar, Authorized Representative for the Government of India ORDER Anti-Dumping Appeal No. 50322 of 2021 has been filed by M/s. Xinyi Energy Smart (Malaysia), Sdn Bhd [ Xinyi Energy ] for setting aside the imposition of anti-dumping duty so far as the exports by Xinyi Energy are concerned by customs notification dated 11.11.2020 read with the final findings dated 20.08.2020. The submission is that its exports to India by Xinyi Energy are not at dumped prices, and the determination of the dumping margin by the designated authority in the final findings is erroneous for the reason that it is based on a faulty determination of the normal value and export price. 2. Anti-Dumping Appeal Numbers 50412 of 2021, 50413 of 2021, 50414 of 2021 and 50418 of 2021 have been filed by M/s. Asahi India Glass Ltd, M/s. Gold Plus Glass Industry Ltd., M/s. Saint Gobain India Pvt Ltd. and M/s. Sisecam Flat Glass India Pvt. Ltd.[ the domestic industry ] , respectively, as domestic industry, with a prayer that Xiny ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .11.2020, which was published on the same date in the Gazette of India, imposing anti-dumping duty at the rate equal to the difference between the landed value of subject goods and the amount indicated in the corresponding entry in column (7). The said Table is reproduced below: S. No. Heading/ Subheading Description of Group Country of origin Country of Export Producer Amount Currency Unit 1 2 3 4 5 6 7 8 9 1. 7005 Clear Float Glass of nominal thicknesses ranging from 4mm to 12mm (both inclusive), the nominal thickness being as per BIS 14900:2000 Malaysia Malaysia Kibing Group (M) Sdn. Bhd. 273.12 United States Dollar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of dumping in relation to such article. Explanation. - For the purposes of this section, - (a) margin of dumping , in relation to an article, means the difference between its export price and its normal value; (b) export price , in relation to an article, means the price of the article exported from the exporting country or territory and in cases where there is no export price or where the export price is unreliable because of association or a compensatory arrangement between the exporter and the importer or a third party, the export price may be constructed on the basis of the price at which the imported articles are first resold to an independent buyer or if the article is not resold to an independent buyer, or not resold in the condition as imported, on such reasonable basis as may be determined in accordance with the rules made under sub-section (6); (c) normal value , in relation to an article, means (i) the comparable price, in the ordinary course of trade, for the like article when destined for consumption in the exporting country or territory as determined in accordance with the rules made under subsection (6); or (ii) when there are no s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 9A and sub-section (2) of the section 9B of the Tariff Act, the Central Government framed the 1995 Anti-Dumping Rules. 15. The duties of the designated authority are contained in rule 4 and the relevant portion is reproduced below: 4. Duties of the designated authority.- xxxxxxxxxxx (d) to recommend to the Central Government- (i) the amount of anti-dumping duty equal to the margin of dumping or less, which if levied, would remove the injury to the domestic industry, after considering the principles laid down in the Annexure III to these rules; and (ii) the date of commencement of such duty; 16. Rule 5 deals with initiation of investigation to determine the existence, degree and effect of any alleged dumping. 17. The principles governing investigations are contained in Rule 6. Rule 10 provides for determination of normal value, export price and margin of dumping and is reproduced below: 10. Determination of normal value, export price and margin of dumping. An article shall be considered as being dumped if it is exported from a country or territory to India at a price less than its normal value and in such circumstances the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gation was kept under suspension shall not be taken into account while calculating the period of said one year, (b) recommending the amount of duty which, if levied, would remove the injury where applicable, to the domestic industry after considering the principles laid down in the Annexure III to rules. --- --- --- --- (4) The designated authority shall issue a public notice recording its final findings. (emphasis supplied) 20. Ms. Reena Khair, learned counsel assisted by Ms. Shreya Dahiya, Shri Anmol Jain and Shri Subham Jaiswal made the following submissions:- (i) The exports of Xinyi Energy to India are not at dumped prices, and the determination of the dumping margin by the designated authority in the final findings is erroneous as it is based on a faulty determination of the normal value and export price. The designated authority committed an error in making a deduction from the export price of Xinyi Energy to India on account of the proposed liaison office of the related company; (ii) The disclosure statement notes that Xinyi Glass (India) Ltd ,[ Xinyi Glass ] a company registered in Hong Kong, had applied for opening of a liaison offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct goods, then too the actual interest cost as per the loan agreement should be taken, but the designated authority took the interest cost based on a notional rate of interest prevailing in Malaysia, without rendering any finding as to why the actual interest cost is not acceptable for determining the interest foregone; (viii) The submission made on behalf of the domestic industry that Xinyi Energy mis-declared facts in the Questionnaire is not correct. The question required the exporter to mention the address of its main corporate office and its office in India. As Xinyi Energy did not have any office in India, it correctly indicated the address of its Corporate Office in Hong Kong. The question did not require the exporter to mention the addresses of offices in India of all its related entities; (ix) In any case, Xinyi Glass did not have an office in India, either during the period of investigation or at the time of filing of the Questionnaire response. The fact that a related company had applied to the Reserve Bank of India for permission to open a liaison office was not required to be mentioned in response to this question. The response given by the Xinyi Energy w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailable and took the prevailing interest rate in Malaysia on the basis of the information available with it; (iii) The reason for the application of notional interest was elaborated by the Supreme Court in Metal Box India Ltd. vs. The Collector of Central Excise, Madras [ Civil Appeal No s. 215-16 of 1989 decided on 10.01.1995 ] ; (iv) The interest free loans received by Xinyi Energy do not reflect the actual cost associated with the production and sale of the article under consideration and no information regarding the interest rates prevailing in Malaysia was provided by Xinyi Energy to the designated authority during the course of the investigation; and (v) The loan taken by Xinyi Hong Kong from a Bank situated in Hong Kong is not an international transaction, as the loan was taken by an entity situated in Hong Kong from a bank in Hong Kong under the rules and regulation made therein. Moreover, the transfer of loan from Xinyi Hong Kong to Xinyi Malaysia is an inter group transaction, which is not at arm s length. The designated authority, in order to compute the cost of production for the purpose of carrying ordinary course of trade test for the domestic sales in Mal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appropriately adjusted while computing normal value . As regards the submissions of the Domestic Industry that the exporters are purchasing the raw material from their related parties, it is noted that the Domestic industry has not provided any evidence to prove that the input prices and machinery price from related parties are not a fair price. Moreover, while analyzing the data submitted by the exporters, the Authority has also not found any inconsistency in the prices of the inputs from the related party. In view, thereof, the concerns of the Domestic industry relating to transfer pricing are adequately taken care of. (emphasis supplied) 28. The normal value for Xinyi Energy that was disclosed in the disclosure statement is as follows: Normal Value for the Appellant 36. It is noted from the response that M/s Xinyi Energy Smart (Malaysia) Sdn. Bhd., Malaysia, during the POI, has sold *** MT of the subject goods having invoice value *** MYR to unrelated customers in the domestic market. It is noted that their domestic sales are in sufficient quantity in the domestic market . Xinyi Energy has provided transaction wise details of sales made in home market in i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ost so arrived has been considered for applying ordinary course of trade test. In case profit making transactions are more than 80% then the Authority has considered all the transactions in the domestic market for the determination of the normal value. Where profitable transactions are less than 80%, only profitable domestic sales are taken into consideration for the determination of normal value. Based on the ordinary course of trade test, only profit-making domestic sales have been taken for determination of normal value, since the profitable sales were found to be less than 80%. 39. M/s Xinyi Energy Smart (Malaysia) Sdn. Bhd., Malaysia, has claimed adjustments on account of ocean freight, insurance, inland transportation, credit and rebate. Accordingly, weighted average normal value for M/s Xinyi Energy Smart (Malaysia) Sdn. Bhd., Malaysia, has been determined, and the same is mentioned in dumping margin table. (emphasis supplied) 29. The designated authority also disclosed the export price for Xinyi Energy in the disclosure statement and it is as follows: Export Price for the Appellant 40. M/s Xinyi Energy Smart (Malaysia) Sdn. Bhd., Malaysia, has expor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he designated authority also noted the submissions made by the domestic industry in the comments filed to the disclosure statement and the same have been noted as follows: H. Post Disclosure Submissions Submission by the domestic industry 93. The Domestic Industry in their post disclosure statement submissions has further submitted that Xinyi India is involved in the operations of marketing and sales of Xinyi Smart Malaysia being the same group company. It has been further submitted that the presence of their country representative, in the first oral hearing to monitor the overall proceedings relating to antidumping and anti-subsidy investigation and the fact that their regional representative, based in Mumbai as Territory Manager in Xinyi Glass Holdings Ltd., to focus on marketing and sales of Xinyi Smart product in the Indian market, shows the level of involvement in the operations relating to sales of the product under consideration in India. In view thereof, the Domestic Industry reiterated its request to reject the claim of individual dumping margin of Xinyi Group. They also requested that the export price of the exporter should be appropriately adjusted to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the expenses incurred by Xinyi Glass Holdings Ltd, the Authority has examined the issue in the light of information already on record and post-disclosure comments received from all the parties where both the parties have submitted documents in support of their contention, and based on the information on record, and examination, the Authority has found credence in the submissions of the Domestic Industry that Xinyi glass (India) Ltd is indeed involved in the marketing and sales of the products of Xinyi Group. It was, therefore, incumbent upon the exporter to declare their operations and the set-up with full transparency . It is also noted that it was only after the Domestic Industry pointed out the presence of the representative of Xinyi Glass (India) Ltd in the oral hearing as well as the fact that they are involved in the marketing and sales to India that the exporter provided additional information to the Authority to the extent that they only have a temporary office in India. From the submission of the exporter, it is also noted that the Xinyi glass (India) Ltd, are working with temporary office. However, the Authority also notes that the exporter has not provided any eviden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial injury to the domestic industry caused by such dumped imports, the Authority is of the view that imposition of definitive anti-dumping duty is required to offset dumping and injury. The Authority, therefore, considers it necessary and recommends impositions of antidumping duty on imports of the subject goods from the subject country in the form and manner described hereunder. Liaison Office 36. The first issue that has to be decided is as to whether the designated authority was justified in making deductions from the export price of Xinyi Energy on account of liaison office. 37. It needs to be noted that in the disclosure statement the designated authority noted that Xinyi Glass is a company registered in Hong Kong and it had applied for opening a liaison office in India for which it had established a temporary office for receiving official correspondence. This temporary office was noted in the website in anticipation of the approval to be granted by the Reserve Bank of India. The designated authority accepted the contention of Xinyi Energy that Xinyi Glass was not concerned with the export of the subject goods by Xinyi Energy during the period of investigation a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed as [Exhibit-1]: Section 2 (e) reads as Liaison Office means a place of business to act as a channel of communication between the principal place of business or Head Office or by whatever name called and entities in India but which does not undertake any commercial/trading/industrial activity, directly or indirectly, and maintains itself out of inward remittances received from abroad through normal banking channel, Section 3 reads as under: Prohibition against a branch office or a liaison office or a project office or any other place of business in India No person resident outside India shall without prior approval of the Reserve Bank open in India a branch office or a liaison office or a project office or any other place of business by whatever naive called except as laid down in these Regulations. 42. Thus a, person who is not a resident of India can open a branch office or a liaison office only with the prior approval of the Reserve Bank of India and in accordance with the Regulations. Secondly, the liaison office cannot undertake any commercial/trading/industrial activity directly or indirectly. The domestic industry has not brought on record any evide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that Xinyi Glass (India) Ltd has only one employee at present in India. He is looking after the registration process of Liaison Office. No Commercial activity is being carried out as such by Xinyi Glass (India) Ltd. local office in India, which is merely acting as a postal address for completing the registration process in India . (emphasis supplied) 43. It is, therefore, clear that Xinyi Energy by the communication dated 14.08.2020 informed the designated authority that the application filed by the Xinyi Glass before the Reserve Bank of India for granting approval to establish a liaison office in India was pending and that Xinyi Glass had not established any business operations in India. In fact, without obtaining the approval Xinyi Glass could not have started its activities. Xinyi Energy also informed that even otherwise liaison office cannot perform any business activity. 44. Learned senior counsel for the domestic industry, however, submitted that the website of the Xinyi Glass mentions India office under the heading sales network and the address, email and the contact number is also provided in the website. This apart, one Mr. Rajesh Singh country ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the sales of the product under consideration. 48. As noted above, the information/documents on basis of which the domestic industry so urges cannot be considered and secondly even otherwise, the domestic industry is not justified in making such and averment. 49. Article 6.8 of Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade, 1994 [ GATT ] read as follows: 6.8 In cases in which any interested party refuses access to, or otherwise does not provide, necessary information within a reasonable period or significantly impedes the investigation, preliminary and final determinations, affirmative or negative, may be made on the basis of the facts available. The provisions of Annex II shall be observed in the application of this paragraph. 50. Paragraph 6 of Annexure II referred to an article 6.8 is relevant and is as follows: 6. If evidence or information is not accepted, the supplying party should be informed forthwith of the reason therefor, and should have an opportunity to provide further explanation with a reasonable period, due account being taken of the time-limits of the investigation. If the explanations are cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r furnishing such information, rule 6(8) would not be applicable in the present case. It was also pointed out by the learned counsel for Xinyi Energy during the course of hearing that the adjustment made by the designated authority is about 40 times the total expenses incurred by Xinyi Glass in 2018 and 2019 in their annual report. Loading the Cost of Production 55. The second submission advanced by learned counsel for Xinyi Energy that the designated authority was not justified in making adjustment to the normal value by loading the cost of production. 56. The submission advanced by the learned counsel for Xinyi Energy is that the Xinyi Energy received advances from its parent Company i.e. Xinyi International Investment Ltd., a Company incorporated in Hong Kong and in the Audited Financial Statement for the year ended 31.12.2019 for Xinyi Energy, the advance has been reflected in the current liabilities of the company as an amount due to the immediate holding company. Learned counsel also pointed out that Note 15 to the Statement mentions that the amount due to the immediate holding Company represent advances which are unsecured, interest free and repayable on demand. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank of America, Bank of India, Barclay s Bank, PLC, Citi Bank NA, Credit Suisse AG. The HIBOR is an international Benchmark for lending and debt instruments issued in the Asian region. 63. Thus, the interest free advances received from the parent company are for expansion of the production facility and future production activity, and not relatable to the production and export of subject goods to India during the period of investigation. 64. However, even if the advances are to be treated as an interest free loan relatable to the subject goods, then too, the actual interest cost as per the loan agreement should be taken, but the designated authority took the interest cost based on a notional rate of interest prevailing in Malaysia, without rendering any finding as to why the actual interest cost is not acceptable for determining the interest foregone. 65. Learned senior counsel for the domestic industry also submitted that the loan agreement should be discarded because China is not a market company. 66. This submission cannot be accepted for the simple reason that the Bank of China (Hong Kong) Ltd. is incorporated under the Laws of Hong Kong and is not in main land ..... 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