GOVERNMENT OF INDIA
MINISTRY OF COMMERCE & INDUSTRY
DEPARTMENT OF COMMERCE

(DIRECTORATE GENERAL OF ANTI-DUMPING & ALLIED DUTIES)

Sub: Sunset Review of Anti-Dumping duty on imports of Acrylic Fibre originating in or exported from Italy, Spain, Portugal, and Japan

No. 15/4/2003-DGAD - WHEREAS, The Designated Authority (herein after also referred to as the Authority), having regard to the Customs Tariff Act, 1975 as amended in 1995 (herein after referred to as the Act) and the Customs Tariff (Identification, Assessment and Collection of Antidumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995, (herein after referred to as the Rules) investigated and recommended imposition of provisional Anti Dumping duty on imports of Acrylic Fibre (hereinafter referred to as subject goods) falling under Sub-heading 5501.30 and 5503.30 of ITC HS classification and originating in or exported from Japan, Spain, Portugal and Italy (hereinafter referred to as subject countries). The interim findings of the Authority were published vide Notification no. 32/1/97-ADD dated 20^th October 1998 and provisional duty was imposed on the subject goods vide Customs notification No. 90/98 dated 17.11.1998. The Authority came out with its final findings on 24^th December 1998 and definitive anti dumping duty was imposed by the Central Government vide notification No8/99 dated 22.01.1999 as amended by Notification No. 53/99-Cus. dated 04.05.1999.

2. AND WHEREAS, The Designated Authority, under Section 9A (5) of the Act and Rules made there under, received an application from the Forum for Acrylic Fibre Manufacturers, New Delhi on behalf of the following producers of Acrylic Fibre in India i.e., M/s Indian Acrylic Ltd., Chandigarh; M/s Consolidated Fibre and Chemicals Ltd, Calcutta; and M/s Pasupati Acrylon Ltd., New Delhi, for initiation of a sunset review investigation for continuation of the antidumping duty imposed on the subject goods under the above mentioned notifications for a further period of 5 years. One of the other Indian producers i.e. M/s Vardhaman Acrylics Ltd supported the application filed by the Forum for Acrylic Fibre Manufacturers. The Authority, on the basis of a request made on behalf of the domestic industry, issued a public notice dated 03.09.2003 published in the Gazette of India, Extraordinary, initiating Anti-Dumping sunset review investigation in respect of the duty in force against the subject countries as above, to determine whether the expiry of the duty would be likely to lead to continuation or recurrence of dumping and injury.

3. AND WHEREAS the antidumping duty as notified vides notification No8/99 dated 22.01.1999 as amended by Notification No. 53/99. Cus. dated 04.05.1999 was extended up to 16^th Nov 2004 vide notification No. 158/2003 dated 22.10.2003 in terms of Section 9 (A) (5) of the said Act.

A BACK GROUND OF THE CASE

4. On the basis of an application filed by the above domestic producers in India alongwith M/s J.K. Synthetic Ltd, the Designated Authority conducted an investigation into Dumping, injury and Causal links of the imports from the above named countries and on the basis of its determination of dumping, injury and causal links notified its final findings on 24^th December 1998. Acting Upon the findings of the Authority the Central Government imposed antidumping duty on imports of the subject goods from the subject countries vide Customs notification No. 8/99 dated 22.01.1999. However, certain interested parties appealed against the findings of the Designated Authority and Notification of the Central Government before the CEGAT. While disposing off the petitions by several interested parties CEGAT modified the duty recommended by the Authority under para 55 of its final findings. The duty was converted into Dollar term. Acting upon the orders of the CEGAT, the Central Government amended the duties vide Notification No. 53/99. Cus. dated 04.05.1999.

B. PROCEDURE

5. The procedure described below has been followed with regard to the investigation:

i) The Authority sent questionnaires, alongwith the initiation notification, to the following known exporters/producers, in accordance with the Rule 6(4), to elicit relevant information;

1. M/s Ashahi Chemicals Industry Co. Ltd. Japan
2. M/s Komatsuya Corporation, Japan
3. M/s Fibras Simteticas De Portugal, Portugal
4. M/s Courtaulds Europeans Fibre, Spain
5. M/s Monte Fibre SPA, Italy

ii) The Embassies/High Commissions/ Representatives of the subject countries including the Delegation of the European Union in New Delhi were informed about the initiation of the investigation, in accordance with Rule 6(2), with a request to advise the exporters/producers from their respective countries to respond to the questionnaire within the prescribed time. Copies of the letters, petitions and questionnaires sent to the exporters were also sent to the Embassies/High Commissions of subject countries alongwith a list of known exporters/ producers.

.

ii) Questionnaires were sent to known importers and consumers of subject goods in India calling for necessary information in accordance with Rule 6(4).

iv) Investigation was carried out for the period starting from 1^st April, 2002 to 31^st March, 2003 (POI). However, injury examination was conducted for a period from 1999-00 to 2002-03.

v) Request was made to the Central Board of Excise and Customs (CBEC) and DGCI&S to arrange details of imports of subject goods for the past three years, and the period of investigations;

vi) In response to the initiation communications were received from the following exporters through their legal representatives:

a) M/s Mitsubishi Rayon Co. Ltd Japan,

b) M/s Japan Exlan Co. Ltd, Japan,

c) M/s Marubeni Corporation, Japan,

The response of M/s Mitsubishi Rayon was incomplete in all respect and in spite of deficiency reminders the Company did not respond to complete the questionnaire. The other two exporters from Japan submitted their questionnaire responses but did not respond to the Authority’s communication regarding the verification requirement of the data submitted by them vide letters dated 7^th April 2004 and 22^nd April 2004. Vide their letter dt. 30^th April, 2004 the representative of the companies informed that due to major reshuffle in the acrylic fibre departments of their clients, they were unable to confirm any date for verification and that they have advised their clients that the investigation being time bound, the authority will make a decision on the basis of best information available under Rule 6.8 of the Anti Dumping Rules. Verification of cost of production is an essential component of anti dumping investigation for determination of normal value in the country of export in ordinary course of trade. Since the exporters involved did not cooperate for verification of their data, the questionnaire response submitted by them could not be relied upon and the above named exporters from Japan were treated as non-cooperative for the purpose of this investigation. These exporters also did not participate in the public hearing but the consultants for them filed two written submission after the public hearing based on the submissions made by others. The miscellaneous submissions made by these exporters have been considered to the extent they are relevant.

1. M/s Fisispe Barcelona S.A., Portugal intimated that they have decided to leave the Indian Market and therefore, would prefer not to respond to the questionnaire.
2. M/s Asahi Kasei Corporation, Japan intimated that they are not the exporters or producers of the subject goods any more and therefore, not interested to participate in the investigation.
3. No other exporter from any of the countries named, have submitted any response, in any manner, to the initiation notification.

7. Following importers/ users of the subject goods filed their submissions in response to the initiation notification:

• M/s Rajasthan Spinning Mills Ltd. through the Indian Spinner’s Association

• Indian Spinners Association and Ludhiana spinners Association also made their representations at different stages of the investigation.

viii) The Authority made available non-confidential version of the evidence presented by various interested parties in the form of a public file kept open for inspection by the interested parties;

ix) The other Indian manufacturers of the subject goods i.e. M/s Vardhaman Acrylics Ltd and M/s IPCL, who had not initially participated in the investigation and joined as applicants for the review, were requested by the Authority for their cost as well as other relevant data for a broad based examination of injury and non-injurious price. Whereas M/s Vardhaman Acrylic subsequently submitted their cost data and joined the other applicants as a supporter of the application for review, M/s IPCL provided very limited information which has been taken into consideration to the extent found relevant.

x) The Authority verified the information furnished by the domestic industry as well as the supporting party to the extent possible to work out optimum cost of production and cost to make and sell the subject goods in India on the basis of Generally Accepted Accounting Principles (GAAP) and the information furnished by the applicants so as to ascertain if Anti-Dumping duty lower than the dumping margin would be sufficient to remove injury to Domestic Industry;

xi) The Authority held a public hearing on 02.04.2004 to hear the interested parties orally, which was attended by representatives of the domestic industry, importers/ users of the subject goods and representative of the Delegation of European Union. None of the exporters from the subject countries however, appeared for the public hearing, except a representative of the Delegation of the European Union. The parties attending the public hearing were requested to file written submissions of views expressed orally. The written submissions received from interested parties have been considered by Designated Authority in this finding;

Xii) In accordance with Rule 16 of the Rules supra, the essential facts considered for these findings and basis of determination were disclosed to known interested parties vide general disclosure and confidential disclosures to parties involved vide letters dated 15^th October 2004. Comments to the disclosures received from the interested parties have also been duly considered in these findings to the extent the arguments and claims made by various parties are substantiated with evidence and data;

Xiii) **** In the Notification represents information furnished by interested parties on confidential basis and so considered by the Authority under the Rules.

C. PRODUCT UNDER CONSIDERATION AND ‘LIKE ARTICLE’

6. The product under consideration in the original investigation and the product attracting antidumping duty on the basis of the final findings of the Authority is "Acrylic fibre, both in shrinkable and non-shrinkable form, ranging from 1.5 Denier to 8 Denier and covered tow, top and staples fibres". The product is classified under ITC HS classification Nos. 5501.30 and 5503.30.

C.1 Views of Petitioners, exporters, importers and other interested parties

7. The applicants have argued that the product involved in the present investigation is Acrylic Fibre, irrespective of its customs subheadings. Being a review investigation, the product under consideration in the present investigation has to be the same as it was in the original investigation. They have further argued that the scope of the product has also been settled by the Appellate Tribunal in this case and therefore, there is no scope for further deliberation on this matter

8. There is no full cooperation from any of the exporters and this issue has not been addressed by any of them in their limited submissions.

9. The Indian Spinners Association in its submissions before the Authority has argued:

• That the domestic industry has clubbed two different items viz. acrylic/modacrylic fibre having HSN No.5503.3000 and synthetic filament tow falling under Hearing No.5501.3000.

• While subject goods include two different and distinct items having two distinct trade classification numbers under Customs Tariff Act, data relating to the domestic industry with regard to price, production etc, relate to acrylic fibre only. This has totally vitiated the investigation.

• That it was admitted by the representative of the Domestic Industry during the public hearing that filament tow has to undergo a further process before it becomes fibre.

• That there is a difference of about Rs.8/- per kg. in the prices of the two. By taking the average price of tow and fibre originating/exported from the subject countries and at the same time, by taking the price of only fibre in respect of domestic industry, the price comparison gets totally vitiated, because the difference of about Rs.8/- per kg., in the prices of tow and fibre mars the comparison

• That while computing market share, the quantity of imports would include both fibre and tow in the case of imports, while it would include only fibre in the case of domestic industry. This vitiates the comparisons and yields misleading results.

• That by mixing up two items for purposes of import data and taking only one item for purpose of domestic industry, the whole enquiry has been vitiated.

10. In their post disclosure submissions the interested parties have again reiterated their stand on separation of tow and fibres on the grounds that acrylic fibre and tow are two separate and distinct items covered by two distinct ITC classifications and they have separate end uses. While tow is used as raw material in the knitting industry, fibre is used by the spinners working on cotton spinning system. Knitting yarn is used for the manufacture of knitted fabrics while spun yarn goes for manufacture of woven cloth. Therefore, it has been argued that quality, specification, pricing and consequently economics of these two products are entirely different.

11. The Authority has carefully considered the views of the petitioners, exporters and importers, and other interested parties on the issue of the product under consideration and the like article including submissions made in response to the disclosure statement.

12. For the purpose of this investigation the product under consideration was ‘Acrylic fibre, both in shrinkable and non-shrinkable form, ranging from 1.5 Denier to 8 Denier and covered tow, top and staples fibres’. The issue has been deliberated and settled appropriately in the final findings of original investigation itself and the subsequent CEGAT orders. Moreover, this being a sunset review investigation, the scope of the investigation is limited to the product already identified in the original investigation.

13. The products i.e. tow and fibre, are manufactured in the same manufacturing process though fibre requires minor incremental processing of crimping and cutting to staple lengths. The price differential is essentially due to the incremental process involved and the differential has been found to be marginal. For the purpose of this investigation weighted average cost of Acrylic fibre and tow has been taken for all comparisons of normal value and export price from the countries of exports. Therefore, the cost comparison of the domestic industry and that of the imports is considered to be fair and reasonable. The domestic industry also produces both, tow and fiber in different proportions depending upon the demand. This being a settled issue in the Appellate Tribunal also the Authority finds no reason to alter the product under consideration or the like article in any manner.

14. The review has been initiated on the basis of a duly substantiated request submitted on behalf of the domestic industry in terms of Article 11.3 of the Antidumping Agreement read with Section 9 A (5) of the Acts, and the same has not been challenged by any of the interested parties. However, the Authority notes that standing is not an issue in a sunset review request.

E. ISSUES BEFORE THE AUTHORITY

15. Section 9 A (5) of the Act provides that the Authority, in a sunset review, is required to examine, whether the cessation of such duty is likely to lead to continuation or recurrence of dumping and injury. Therefore, the issues before the Authority are to determine:

1. Whether Dumping is likely to continue or recur, if definitive duties are removed or expired;
2. Whether Injury to the Domestic Industry is likely to continue or recur, if definitive duties are allowed to expire or removed.

On the basis of the above the Authority proceeds to examine these issues in the succeeding paragraphs.

16. Quoting the US practice in their Sunset Review investigations, the applicants have argued that the following circumstances would lead to affirmative determination in a sunset review:

1. Dumping continued at any level above 0.5% after the issuance of definitive duty order;
2. Imports ceased after issuance of the order; Or
3. Dumping was eliminated after the issuance of the order and import volumes declined significantly.

17. The applicants have also argued that existence of actual imports in the POI is not a pre-requisite in a sunset review investigation which is more of a likelihood test rather than an actual dumping and injury test. In this connection they have quoted the decision of the EC in the matter of Polyester Staple Fibre from Belarus in which the said authority has continued the duty even when there was no imports from that country, holding that revocation of the duty would lead to recurrence of dumping. The applicants have also quoted Brazil; Import of Jute bags from India, sunset review case, where the duties have been continued even though there were no imports from India in the entire five year period.

18. The applicants further argue that the WTO Appellate Body, in the matter of US sunset review of antidumping duties on Corrosion Resistant Carbon Steel Products from Japan, held that there is no obligation under the antidumping agreement for investigating Authorities to calculate or rely on dumping margins in determining the likelihood of continuation or recurrence of dumping.

19. In summary the arguments of the applicants are that inescapable conclusion in any of the following conditions would be likelihood of continued dumping or likelihood of recurrence of dumping:

1. In case the product has been exported to India from the subject countries at prices below normal value in the relevant period;
2. In case exports of the product have ceased after imposition of Antidumping Duty but the exporting country producers continue to export the products at dumped prices in other countries.

20. The Indian Spinner’s Association in its submission has argued that the domestic industry should have relied on the actual transaction data reported in reputed trade journals published in the subject countries for estimation of the normal values in the countries of exports rather than the price data reported in Technon. They have questioned the standing and reputation of Technon regarding reliability of data published by it. They have also argued that the Technon data shows the average price for a region which may not be representative for the countries involved. They have also questioned reliance of the petitioners on the Textile Handbook 2003 for the purpose of prices in Japan.

21. They have further argued that in the case of Portugal, its proximity to Spain and Italy does not imply that the same price would prevail in Portugal also, which prevails in Spain and Italy. Interested parties have argued that simply because, European Union is a customs union, it does not mean that in all Member-countries, wage rates, power tariff and other elements of cost are the same and, therefore, cost of production is the same. Therefore, there is bound to be difference in the prices of different producers.

22. In their post disclosure submissions the interested parties have again reiterated their stand on acceptance of the Technon data and also stated that they have not been provided a copy of the same though these are published public documents to comment on the limitations and shortcomings in those data.

23. The exporters from Japan in their post public hearing submission have urged the authority to fix normal value for them based on their questionnaire response. They have also raised the issue of data anomaly in the monthly import data as compiled by DGCI&S and submitted by the applicants.

24. Interested parties however, have not countered the arguments raised by the petitioners regarding the standards and scope of sunset review investigation based on international practices.

F.3 Examination by the Authority

25. The Authority notes that interested parties, while arguing against use of the information from the secondary sources as produced by the petitioners, have not submitted any useful information about the domestic prices in theses countries. During the public hearing itself the interested parties were asked to make any reliable information in this regard available to the authority. The Technon news letters which are available in the public domain are easily available to the interested parties dealing with the same product. However, copies of the news letters as produced by the applicants were also placed in the public file for inspection by all interested parties. Therefore, the authority finds no justification in the arguments raised by the interested parties in this regard.

26. The responding exporters from Japan have not fully cooperated with the Authority and did not offer themselves for verification. In the absence of cooperation from them their data could not be relied upon and authority had to resort to facts available. In view of the above facts available method for determination of dumping margin for Japan was resorted to in terms of Article 6.8 of the Agreement. As far as their arguments regarding the import data is concerned it is noted that reconciled transaction-wise annual import data of DGCI&S has been relied upon for all determinations in this case.

27. The Authority has noted the arguments made by the applicants on the methodology and practices adopted by various Authorities in their Sunset Reviews and the relevant WTO jurisprudence on the subject and have examined the issue of continuance and likelihood of recurrence of dumping to decide the matter in this case.

F.4 Continuance of Dumping: Determination of Normal Values, Export Prices and Dumping Margins

28. As a first step to determine whether dumping has continued during the period in which the duty was in force, particularly the POI, the Authority determined the normal value, export price and dumping margin for individual countries of exports.

29. The Authority notes that none of the exporters from Spain, Portugal and Italy has provided any information and cooperated in the investigation in order to enable the Authority to determine the normal value and export price of the subject goods from these countries. The exporters from Japan, after their initial partial cooperation, have not responded to subsequent queries and the verification requirements. Therefore, the Authority is forced to ignore their data for the purpose of this investigation and proceeds to determine dumping margin on the basis of facts available in terms of Rule 7(8) of Antidumping Rules read with Article 6.8 of the Agreement.

F.4.1 Normal Values

30. In the absence of any cooperation from any exporter from the subject countries the Authority has relied on facts available method to determine the normal value and/or constructed the normal value in the countries of exports.

Para 7 of the Annex II to the Agreement on Antidumping provide that:

"if the authorities have to base their findings, including those with respect to normal value, on information from a secondary source, including the information supplied in application for initiation of investigation, they should do so with special circumspection. In such case, the authority should, where practicable, check information from other independent sources at their disposal, such as published price lists, official import statistics and customs returns, and from the information obtained from other interested parties during the investigation. It is clear, however, that if an interested party does not cooperate and thus relevant information is being withheld from the authorities, this situation could lead to a result which is less favorable to the party than if the party did cooperate".

31. The applicants have submitted copies of Tecnon Orbichem, a monthly news letters in the Fibres & Intermediate Consulting Services, published from London, for the relevant periods in the POI. The news letter publishes quarterly data on trade in the above products, along with price trend in different markets. Though the interested parties have objected to use of this data none of the interested parties have brought any other relevant information before the Authority to refute the price trends published in these news letters. In the absence of any other reliable data on the home market prices in the exporting countries, this published data has been relied upon for the purpose of determination of home market prices of the subject goods in the subject countries.

32. The interested parties in their post disclosure submissions have questioned the method of determination of normal values, export prices and adjustments adopted by the authority and have inter alia argued that:

1. if Technon prices are the starting point, prices in the country has to be determined taking into account difference in wage rates, power tariff rates, interest rates etc. and denier differences in the case of Japan.
2. From the market rates given in Tecnon, amounts towards excise duty, trade margin, transportation, other taxes, etc. will have to be deducted to arrive at the mill gate price of the fibre in the country of origin.
3. Inland transportation and handling should not be deducted from CIF price for purposes of comparison of Normal value with export price.

33. These arguments of the interested parties have been carefully examined. However, none of these parties have provided any useful information on the prices and information on adjustments proposed by them. In the absence of reliable information from the interested parties, including the exporters in the subject countries, the Authority has resorted to facts available method of determination of normal value in those countries and adjustments to the export prices to the extent possible.

34. However, the arguments of interested parties that the published data of Technon might be reflecting the wholesale price of the commodity in the market and not the ex-works price of the commodity, merits consideration. Therefore, a term of trade and level of trade adjustment has been made on these prices to arrive at the ex-works normal value in the countries of exports assuming that the reported prices are at wholesale level and a commission of 3% and an additional selling and general expenses of 2% are incurred in those transactions. Accordingly the following determinations have been made.

35. For the purpose of home market prices in the European Countries (Spain, Portugal & Italy) in this case, the quarterly prices of the Acrylic fibre in the West European Market as reported in this news letter has been accepted. In the absence of prices in the individual countries the prices published in the news letter appears to be the best that can reflect the home market price in these countries. Moreover, it is noted that the countries involved being part of the same customs union the prices in these markets will be more or less uniform. The details of the published data are as follows:

Spain, Portugal and Italy:

Selling Price (High) : US$1748 Per Ton i.e. US$1.74 Per Kg

Selling Price (Low) : US$1708 Per Ton i.e. US$1.70 Per Kg

Average Selling Price : US$1728 per Ton i.e. US$1.728 Per Kg

Adjustments : US$86.4 per Ton i.e. US$0.864 Per Kg

Normal Value : US$1641.6 Per Ton i.e. US$1.641 Per Kg

36. M/s Japan Exlan had furnished its home market sales prices in Japan, but subsequently did not cooperate with the Authority and the data could not be verified. In the absence of verification of their cost of production the normal value of the product in Japan in the ordinary course of trade could not be determined based on the exporter’s data. It is also noticed that substantial domestic sales of this exporter are to their affiliated parties i.e. their own yarn business. Therefore, in the absence of complete verification of their affiliated party transactions, the data could not be accepted. The other exporter i.e. M/s Marubeni Corporation is only a trader involved in exports to India and, therefore, in normal value determination in their case depended upon the cooperation of the manufacturer. The applicants have enclosed a copy of the e-mail from the Indian Mission at Osaka providing the domestic price information of Acrylic fibre in Japan based on the data collected from JETRO, Osaka. The prices indicated in the report of Indian mission are as follows:

Prices March 2002: JYen350 per Kg = 2.7 US$ @ Approx Yen 130 =1Us$

June 2002: JYen 350 per Kg = 2.7 US$

These prices appear to be at the retail level or for some high end products which do not give a sound basis for adopting the same.

37. In the absence of any other reliable data on the home market sales price in Japan the published information in Tecnon has been relied upon. But the above publication does not indicate the prices in Japan in its Asian Prices segment. However, prices in China are available for only 3 Den fibres. In the absence of any other reasonable information, the prevailing prices in China was examined as the closest possible information on the domestic prices in Japan to work out the Normal value for Japan as follows:

38. This data was compared with the Japan’s export price to China during April 2003 as reported in the same documents, which also shows an average price of US$1.72 per kg. Therefore, the Authority hold that the above estimation is more appropriate and accordingly normal value in Japan is worked out as follows:

Selling Price (High) : US$1680 Per Ton i.e. US$1.68 Per Kg

Selling Price (Low) : US$1640 Per Ton i.e. US$1.64 Per Kg

Average Selling Price : US$1660 Per Ton i.e. US$1.66 Per Kg

Adjustments : US$83 Per Ton i.e. US$0.83 Per Kg

Normal value : US$1577 Per Ton i.e. US$1.577 Per Kg

39. In the absence of actual export data from the subject countries the transaction-wise import data as compiled by DGCI&S has been examined after pruning the data of the unrelated products wherever necessary. Necessary adjustments towards inland and ocean freight, handling charges, insurance, commissions etc have been applied to the CIF import price as per the DGCIS data to arrive at weighted average ex-works export price in the country of export for both tows and fibers as follows:

Spain, Portugal and Italy:

40. Adjustments towards Ocean Freight, Insurance, Commissions and port handling in case of exports from European countries have been worked out as per the data provided by one of the cooperating importers in India i.e. M/s Rajastan Spinning Mills in its questionnaire responses and the inland transportation charges has been worked out on the facts available basis. Accordingly, the adjustments allowed for exports from these countries are as follows:

(a) Net CIF Price US$/Kg =******

(b) Net FOB Price US$/Kg =*******

(c) Adjustments towards Ocean Freight, Insurance and Handling = a – b = 0.047

(d) Adjustments towards Inland transportation and handling = 0.004

(e) Total Adjustments = c + d = 0.051 US$/Kg

Japan:

41. As far as exports from Japan are concerned actual adjustment towards ocean freight, commissions, handling, insurance, as well as inland transportation charges, as provided by one of the Cooperative exporters in its questionnaire response has been used to arrive at net export price of exports from Japan.

a) Ocean freight, Commission, insurance etc. : US$ ***** /kg

b) Inland transportation Charges : US$ ***** /Kg

Total Adjustments : US$ 0.1358/Kg

42. As per DGCI&S import data the quantity and CIF Value of imports from Spain in respect of Tow and Fiber are as follows:

Exchange rate: Rs48.64=US$1.0

43. DIGCI&S data shows no imports of both tow and fiber from Portugal. Therefore, continuation of dumping from Portugal is not an issue.

44. As per DGCI&S import data the quantity and CIF Value of imports from Italy in respect of Tow and Fiber are as follows:

Exchange rate: Rs48.64=US$1.0

45. As per DGCI&S import data the quantity and CIF Value of imports from Japan in respect of Tow and Fiber are as follows:

Exchange rate: Rs48.64=US$1.0

46. The above data has been compared with the questionnaire response filed by the exporters from Japan for a reasonable determination. On the basis of the questionnaire response filed by the exporters from Japan net export price from Japan works out to US$****** per Kg, which is close to the export price derived on the basis of DGCI&S data. However, some of the transactions of the exporters are to their affiliated importer in India. In the absence of cooperation from both, the exporter and the importer in the situation of affiliated sales, determination of export price is not possible. Therefore, the net export price worked out on the basis of DGCI&S data has been found to be more appropriate.

F.4.4 Dumping Margins

47. Normal value so determined being an average normal value for the product types (Fibres and Tows) for the POI have been compared with the weighted average export prices as determined above for the purpose of determination of average dumping margins. Accordingly dumping margins work out as follows:

48. The Dumping Margins so determined has been found to be significant and above de-minimis.

49. Dumping margin for Portugal could not be determined, in the absence of any export from that country, during the period under investigation.

50. The analysis in the earlier section shows that imports from Spain, Italy and Japan continue at dumped prices in spite of the antidumping duty in force. However, to examine the likely effect of withdrawal duties on the prices the authority analysed the current prices of imports from the subject countries against the background of the duty already in force. The current landed value of imports from these countries are found to be much below the reference price fixed by the Authority in the original investigation, as can be seen from the table below.

51. The above table shows that landed values of exports from all countries continue to be below the reference prices fixed. Further, likelihood of dumping is to be analysed with reference to the spare capacity in the countries involved. In this regard in the absence of any other data/information the conference report of Technon Orbichem:- 7^th Asia Fibre markets (Shangahi, 17^th-18^th June 2004) has been relied upon.

52. The above report shows that though there is a huge gap between the capacity and production all over the world, production, both in West Europe and Japan, has been reduced while East Asia shows a huge jump in production. Therefore, rationalization of capacities in the subject countries indicates that there may not be enough spare capacity in these countries which can be utilized to continue to dump in India on marginal cost basis. As far as Japan is concerned, two major producers i.e., Asahi and Kanebo have stopped production. However, Japan has been a major exporter of Acrylic fibres to China with a quarterly export of about 55000MTs.

53. The report also suggests that two Acrylic fibre plants i.e Montefibre’s Ottana plant and Fisipe’s Barcelona plants have been closed recently. Therefore, as far as Spain is concerned, the only large producer in that country has closed and therefore, there is no likelihood of recurrence of dumping from that country though the POI data shows current dumping.

54. Major producer and exporter from Portugal i.e. M/s Fisispe Barcelona S.A., has intimated the Authority that they have decided to leave the Indian market and therefore, did not wish to participate in the proceedings. The domestic industry in its post disclosure statement has confirmed that after closure of FISIPIE’s Spain plant, this company is catering to the domestic market from its Portugal plant and therefore, do not have sufficient spare capacity to export. Therefore, likelihood of dumping from Portugal in the future is not foreseen.

55. In their post disclosure submissions the applicant domestic industry has submitted that though they do not disagree with the Authority that there appears little threat of continued dumping from Spain, Portugal and Italy, given closure of a number of plants in Europe, they disagree with the Authority that there is a huge gap between the production and capacity world over. They have accepted the fact that there is very little likelihood of dumping continuing from Spain, Portugal and Italy. On the other hand they have pleaded that while they are not much concerned about the possible continuance of dumping from Europe, because of overall decline of exports from Europe to the entire world market, they have argued that volume of exports from Japan is very huge and there is a strong likelihood continuation of dumping from Japan.

56. The authority has looked at the World Trade Atlas data for the years 2001, 2002 and 2003. This data showing the export from the subject countries to the entire world during the years 2001, 2002 and 2003 shows the following trend:

This indicates that total export from Spain and Italy to the world market is very insignificant. However, Japan continues to have a huge export volume in the world market despite closure of two of its units. Various reports quoted earlier also indicate that Japan has been a major exporter of Acrylic fibres to China with a quarterly export of about 55000MTs. However, saturation in Chinese demand is likely to create a glut in demand for Japanese producers and the spare capacity may be used to dump in India. Therefore, the applicants have argued that there is a strong possibility or likelihood of continuation and/or recurrence of dumping from Japan.

57. Various arguments raised by the applicants and other interested parties on the likelihood of continuation of dumping from the subject countries and the capacity rationalization as well as volume of exports from these countries have been examined. The facts brought before the authority indicates that the volume of exports from Spain, Portugal and Italy in last several years indicate that these countries do not have sufficient capacity to dump and therefore do not cause a threat to Indian Industry in the near future. However, Japan seems to have huge spare capacity and volume of exports to world market, China constituting about 50% of the total volume of exports. Various reports indicate that China has built up substantial capacity in last few years and with the built up of domestic capacity in China, likelihood of dumping into India from Japan becomes very high. On the basis of the above analysis the Authority holds that though dumping has continued from Spain, Italy and Japan during the period under investigation, there is no likelihood of continuation or intensification of dumping from Spain, Portugal and Italy if the duties are withdrawn. However, the same does not appear to be the case as far as Japan is concerned.

58. As in the case of dumping determination, the injury analysis in case of a sunset review is required to examine whether Injury to the Domestic Industry is likely to continue or recur if definitive duties are allowed to expire or removed.

59. The Authority notes that this is a sunset review of the measure already in force and examined the issue of cumulative assessment of injury to the domestic industry on account of simultaneous dumping from the subject countries, in terms of Annexure II (iii) of the Antidumping Rules and holds that the conditions specified in the said Rules are satisfied in this case for cumulative assessment.

G.1.1 Views of the Domestic Industry

60. The domestic industry has pleaded that the injury to the domestic industry continues in spite of the protection of antidumping duty available to them due to continuation of dumped imports from many sources. They have inter alia argued:

• That they have suffered injury due to dumping from various countries, including the present countries, investigations against which are either under progress, or antidumping duties are in force.
• That the domestic industry has been suffering for a long time due to dumping from various sources one by one. Therefore, the injury and the economic parameters indicating existence of injury is required to be seen in the light of existing duties and on-going investigations.
• That the imports of subject goods from various countries (including the subject countries) have increased significantly in absolute terms in spite of imposition of antidumping duty.
• Share of imports of the subject goods from the subject countries has increased in relation to demand of the product in India despite antidumping duty already in force.
• Share of imports of the subject goods from the subject countries has increased in relation to production of the domestic industry.
• That though there is a marginal increase in the selling prices of the domestic industry it is due to the fact that the cost of production has increased and the domestic industry has started its recovery due to antidumping duty protection after suffering losses for a longtime due to prolonged dumping.
• That landed prices of imports from subject countries are significantly lower than the selling prices of the domestic industry, undercutting the domestic industry’s prices significantly.
• That the Landed price of imports is below the cost of production of the domestic industry thereby causing significant price underselling.
• That the domestic industry has lost significant sales volume and market share
• That the selling price of the domestic industry is below its cost of production.
• That even though the losses have declined it should be seen in the light of the antidumping protection and significant past losses. Though the cash flow has improved the domestic industry continues to suffer financial losses.
• That the dumped imports have forced the domestic industry to curtail its employment level
• That productivity has improved due to increase in production and reduction in employment level.
• That even when the market is growing, the growth of the domestic industry has been negative due to dumped imports.
• That all parameters collectively establish that the domestic industry has suffered material injury due to dumped imports from the subject countries and injury to the industry would intensify if the duties are revoked at this stage.

61. In their post disclosure submissions, the applicants have argued that the improvement in certain parameters is due to imposition of antidumping duties on a number of sources. They have further argued that should the duties are withdrawn the domestic industry would again suffer injury. They have further argued that for the purpose of price undercutting and underselling determination allowance should be made from the landed value, for commission paid by the foreign producers to agents in exporting and/or importing country.

62. The applicants have also argued that the imports from sources attracting antidumping duty should be examined to see whether these imports are actually antidumping duty paid imports or imports under duty exemption schemes. Since these imports are mostly duty exempted imports under various schemes, the landed value of these imports without antidumping duty is relevant for price undercutting and underselling analysis.

G.2 Views of the exporters, importers and other Interested Parties

63. The Indian Spinner’s Association and Ludhiana Spinner’s Association and the exporters from Japan in their respective submissions have inter alia argued:

• That the domestic industry has clubbed acrylic fibre and tow so far as imports are concerned and has taken the domestic sales figures of only acrylic fibre

• That although capacity has been claimed to remain stagnant in the short period, production has increased substantially and currently it is running above the capacity, therefore, not a sign of injury.

• that acrylic fibre produced by the domestic industry has to compete with other fibres produced or manufactured in India, which might be preferred by the consuming industry on the basis of change in the pattern of demand, price angle etc. In other words, there is no reserved market for any fibre, whether polyester or viscose or acrylic or cotton or any other fibre. The domestic industry has thus to stand in competition with other producers or manufacturers in India.

• that exports have suddenly jumped from a level of 320 tons per annum in earlier years to 5176 tons in 2002-2003. Competition from other fibres produced in India and exports has impacted sales in 2002-2003, despite a rising growth in the previous years. Therefore, this is certainly not a sign of injury from imports.

• That while Indian Petrochemicals Limited (IPCL) and Consolidated Fibres and Chemicals could improve production and Vardhaman could maintain it, two units, namely, Indian Acrylics and Pashupati Acrylon have reported drastic reduction.

• that the cost of production of Indian Acrylic and Pashupati Acrylon would be much higher in the year under review, as they are not harnessing their capacity properly, which increases the average cost of production of the industry. Thus, industry averages are vitiated and the study of trend in average selling price, cost of production, profit/loss are also vitiated.

• That when three units could do better and two units could not fare well, it means that the problem is not with imports, but it is due to own difficulties of those two units.

• That the calculations given by the domestic industry are wrong because imports include tow and fibre, whereas indigenous production is of fibre only.

• The average selling prices of the domestic industry are higher because of higher cost of some units, which are reporting decline in production due to their own deficiencies.

• That the domestic industry is exporting acrylic fibre at about Rs.65.87 per kg.

• that all statements with regard to price suppression/depression and price undercutting and price underselling are totally wrong because the imported prices are for tow and fibre while Indian prices are for fibre only.

• the rate of return on capital employed assumed is very high and therefore should be worked out on the basis of profit and loss figures and not on the basis of any norm.

• that the domestic industry should realize Anti-dumping Duty is an instrument for correcting market distortions and not for protecting the inefficiencies of the domestic industry.

• That due to the clubbing of acrylic fibre and tow in the case of imports and consideration of only acrylic fibre in the case of indigenous production by the domestic industry, all comparisons are vitiated and distorted and conclusions are misleading and wrong;

• That data for determination of normal price for Italy, Spain and Japan are patently wrong and unreliable and cannot be made use of for a tariff inquiry;

• That there are no imports from Portugal and the fear of likely imports is imaginary having no basis and is frivolous.

• That Parameters of capacity and production show no injury;

• That parameter of sales requires proper consideration, as stated earlier, to appreciate what influences sales. If the influencing factors are identified, it will be noted that import is not a cause for decline in sales;

• That parameters of market share, price undercutting, price suppression/ depression are influenced by the clubbing of tow and fibre in the case of imports and consideration of only fibre in the case of domestic industry.

64. In summary the interested parties have argued that the domestic industry has improved its performance and suffers no injury at the moment and injury if any is due to their own inefficiencies and therefore, cannot be attributed to the imports from these sources.

65. The interested parties have further reiterated their arguments in their post disclosure submissions and submitted that export sales by the domestic industry should also be added to the domestic industry to analyse the effect of imports on domestic industry. They have further confirmed that the imports are taking place under the duty free import schemes. They have further argued that for the purpose of price undercutting analysis the import price at the consumers gate should be worked out after adding transportation cost. They have also questioned the price suppression and depression analysis on the grounds that the cost of production of the domestic industry is high because of their uneconomic size and other managerial inefficiencies. They have reiterated their arguments on various parameters of injury to the domestic industry

G.3 Examination by the Authority

66. The Authority has taken note of various arguments raised by various parties in their submissions and issue of continuation of injury to the domestic industry has been examined in the light of various arguments made before the Authority. The issue of number of investigations and antidumping duties in force against the subject goods imported from various countries has also been examined.

67. It is noted that in all the previous investigations Acrylic fibre and tow have been treated as like products and a single dumping margin and injury analysis based on combined volumes and values of both the products have been found appropriate. The Authority also notes that the domestic industry produces tow and fibre in varying proportions depending upon the demand and their sales realization in respect of both the products have been verified during the investigation process. Therefore, the weighted average cost of production and sales realization of the domestic industry does not vitiate injury analysis and dumping margin comparison against the interest of other parties. The issue has also been addresses adequately under ‘like article’ determination. Therefore, there arguments raised by interested parties against combined analysis of tow and fibre are not found to be tenable.

68. Article 3.1 of the ADA and Annexure II of the AD Rules provide for an objective examination of both, (a) the volume of dumped imports and the effect of the dumped imports on prices in the domestic market for the like products; and (b) the consequent impact of these imports on domestic producers of such products, with regard to the Volume effect of the dumped imports. The authorities are required to examine whether there has been a significant increase in imports, either in absolute or relative to production or consumption in the importing member. With regard to the price effect of the dumped imports, the authorities are required to examine whether there has been significant price undercutting by the dumped imports as compared to the price of the like product in the importing country, or whether the effect of such imports is otherwise to depress prices to a significant degree, or prevent price increase, which would have otherwise occurred to a significant degree.

69. For the purpose of injury analysis the Authority has examined the volume and price effects of dumped imports of the subject goods on the domestic industry and its effect on the prices and profitability to examine the existence of injury and causal links between the dumping and injury, if any.

70. Since positive dumping margin has been established for the exports from Spain, Italy and Japan, entire exports from those countries has been treated as dumped imports for the purpose of injury analysis and causal links.

(A) VOLUME EFFECT:

71. The effects of the volume of dumped imports from the subject countries as well as other countries attracting antidumping duty have been examined as follows:

i) Import Volumes and share of subject countries:

Source: DGCI&S data

72. Since tow and fibre has been treated as like products all analysis has been done for the total volume of tow and fibre together. It is noted that the volume of imports from the subject countries remain high in spite of the antidumping duty in force against them though in terms of its share in the total volume of imports has dropped from 34% in the base year to 27% during the POI after showing a upward swing in the previous year i.e. 2001-02. It also appears that 7% drop in share of imports from subject countries and 9% drop in share of imports from all sources attracting duty have been taken over by imports from other sources not attracting duty.

ii) Demand, Output and Market shares

73. It may be noted that tow and fibre are produced in the same production line and product mix depends only on the demand for the two products. Therefore, total capacity and all other parameters have been worked out for the combined production of tow and fibres as follows:

* Domestic Industry Consists of M/s Indian Acrylics, M/s Consolidated Fibre, M/s Pashupati Acrylon and M/s Vardhaman Acrylic

• ** Others consists of M/s IPCL

74. Average Capacity utilization of the domestic industry has remained above 90% though some of the units have been performing above their rated capacities. The overall capacity of the industry as a whole, taking into account the production of the other producers the capacity utilization has shown definite improvement from 83% in the base year to 91% in the POI.

75. Domestic sales of the applicants have shown a perceptible decline compared to the base year. However, though the sale by other producers has increased marginally, the total sales of the industry has a whole shows decline and the space has been occupied by the imports.

76. The demand and corresponding shares of various segments have been analysed in the table below. The analysis shows that the increase in demand of the product is not very substantial over the base year and previous year. However, marginal increase in demand has been cornered by the imports from various sources including dumped imports from the subject countries. Total imports from the subject countries have increased marginally in spite of the duty being in force. Imports as a percentage of total demand has increased by 5.5% compared to the base year and 7% compared to the previous year, and the import from subject counties as a percentage of total demand has shown a marginal increase of less than 1% from base year and about 1.5% from the previous year. Therefore, volume effect of dumped imports from the subject countries appears to have a very marginal impact on the domestic industry. However, this is to be seen in the back ground of antidumping duty already in force against the subject countries.

77. The data however, indicates that sales of the domestic industry as a ratio of its production have fallen to 92.5% indicating the inability of the domestic industry to off load its production in the market.