Government of India

MINISTRY OF COMMERCE & INDUSTRY

DEPARTMENT OF COMMERCE

(DIRECTORATE GENERAL OF ANTI-DUMPING & ALLIED DUTIES)

NOTIFICATION

NEW DELHI, the 30th March 2005

Preliminary Findings

Subject:        Antidumping investigation involving import of Acrylonitrile Butadiene Rubber (NBR) from the European Union (Excluding Germany), Mexico and Brazil

NO.14/32/2003-DGAD : - Having regard to the Customs Tariff Act 1975 as amended in 1995 (hereinafter referred to as the Act) and the Customs Tariff (Identification, Assessment and Collection of Anti-Dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995, (hereinafter referred to as the Rules) thereof:

2.         Whereas M/s Apar Industries Ltd. (herein after referred to as the Applicant) has filed an application before the Designated Authority (hereinafter referred to as this Authority), in accordance with the Customs Tariff Act, 1975 as amended in 1995 and Customs Tariff (Identification, Assessment and Collection of Anti Dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995 (herein after referred as Rules), alleging dumping of Acrylonitrile Butadiene Rubber or NBR (herein after referred to as subject goods), originating in or exported from the European Union (excluding Germany), Brazil and Mexico (herein after referred to as subject countries/territories) and requested for initiation of Anti Dumping investigations for levy of anti dumping duties on the subject goods.

3.         AND WHEREAS, the Authority on the basis of sufficient evidence submitted by the petitioner M/S Apar Industries. on behalf of the domestic industry, issued a public notice dated 17^th August 2004 published in the Gazette of India, Extraordinary, initiating Anti-Dumping investigations concerning imports of the subject goods originating in or exported from the subject countries/territories in accordance with the sub-Rule 5(5) of the Rules to determine the existence, degree and effect of alleged dumping and to recommend the amount of antidumping duty, which if levied would be adequate to remove the injury to the domestic industry.

A.        Procedure

            4.         Procedure described below has been followed with regard to this investigation after issuance of the public notice notifying the initiation of the above investigation by the Authority.

(i)         The Designated Authority sent copies of initiation notifications dated 17^th August, 2004  to the Embassies/representatives of the subject countries/territories in  India, known exporters from the subject countries, importers and the domestic industry as per the list available and requested them to make their views known in writing within 40 days of the initiation notification.

(ii)        Copies of the non-confidential version of the petition filed by the domestic industry were made available to the known exporters and the Embassies/High Commissions of the subject countries in accordance with Rules 6(3) supra.

iii)        The Embassies/High Commissions/ Representatives of the subject countries in New Delhi were informed about the initiation of the investigations in accordance with Rule 6(2) with a request to advise the exporters/producers from their country to respond to the questionnaire within the prescribed time.  A copy of the letter, petition and questionnaire sent to the exporter was also sent to the Embassies/High Commissions of subject countries along with a list of known exporters/ producers.

iv)        The Authority sent questionnaire, to elicit relevant information, to the known exporters from subject countries as mentioned below in accordance with the rule 6(4):-

1.                  Zeon Chemicals Europe Limited (ZCE)

Hayes Road,  Sully

Vale of Glamorgan, CF64 5YU,

United Kingdom

2.                  Bayer Elastomeres

BP 41, F-76610 La Wantzenau

France

3.                  Eliochem

14, Av des Tropiques,

S A De Courtaboueuf 2,

91955, Les Ulis Cedex, France

4.                  Enichem S P A (EN)

Elastomers and Styrenics Division

Piazza Boldrini, 1

200097, San Donato Milanese

Italy

5.                  Bayer Rubber Belgium N.V. (BRD)

Canadastraat 21,

B-2070, Zwijndrecht

Belgium

6.                  DSM Copolymer Inc. (DSMC)

Postbus 43, 6130 AA,

Sittard

Netherlands

7.                  Nitriflex S.A. Industria e Comercio (NX)

Rua Marumbi s/n

Campos Eliseos, Duque de,

Caxias – RJ – Brazil, CE – 25 – 240 - 260

8.                  Petroflex Industria e Comercio S.A. (PX)

Rua Marumbi 600

Campos Eliseos

Duque de Caxias – RJ – 25221 – 000; Brazil

9.                  Paratec Elastimers LLC (PARA)

Benson Road, Middlebury, CT 06749;Mexico

10.             Industrias Negromex S.A. De C.V. (N)

Bosque de Cirelos 180 3er Piso

Bosque de las lomas, Mexico

v)         In response to the above notification the following exporters from the subject countries/ territories filed their questionnaire responses.

a)                 M/s Nitriflex, Brazil

b)                 M/s Petroflex, Brazil

c)                  M/s Lanxess Elastomere AG, Germany

vi)        Questionnaires were sent to known importers and Consumers of subject goods in India calling for necessary information in accordance with Rule 6(4). However, only All India Federation of Rubber Footwear Manufacturers and All India Rubber Industries Association, Association of Butadiene & Styrene Based Industries, M/s Sebok International and M/s Gates India Pvt. Ltd filed brief comments during the course of the investigation. Their comments, to the extent they are relevant to the case, have been taken into consideration in this finding.

vii)       Request was made to the Directorate General of Commercial Intelligence and Statistics (DGCI&S) and Central Board of Excise and Customs (CBEC) to arrange details of imports of subject goods for the past three years, including the period of investigations;

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)        Optimum cost of production and cost to make and sell the subject goods in India based on the information furnished by the petitioner on the basis of Generally Accepted Accounting Principles (GAAP) was worked out so as to ascertain if Anti-Dumping duty lower than the dumping margin would be sufficient to remove injury to   Domestic Industry;

x)         The Authority also carried out verification of the cooperative exporter’s data to the extent possible to determine the dumping margin.

xi)        *** in this Notification represents information furnished by the petitioner on confidential basis and so considered by   Authority under the Rules;

(xii)      Investigation was carried out for the period starting from 1.4.2003 to 31.3.2004 (POI).

C.        Product under Consideration

5.         The product under consideration in the present petition is Acrylonitrile Butadiene Rubber.  Acrylonitrile Butadiene Rubber is a synthetic rubber and is popularly known as Nitrile Rubber or NBR in the market parlance. NBR is primarily used where oil resistance, abrasion resistance and heat resistance applications are involved. NBR is widely used in Defense, Automobile, Footwear, Fabrics, Printers, Oil field products industries etc

6.         NBR can be of various grades and can be supplied in various forms. In terms of form, NBR can be categorized as Normal NBR, (in Bale form); Powder NBR, (in powder form); Carboxylated NBR (i.e. with a third monomer). Normal NBR is the most common form of NBR and is widely used. Depending upon acrylonitrile content and mooney viscosity, Normal NBR may be further divided into three types i.e. Low Nitrile, Medium Nitrile, High Nitrile NBR.

7.         This investigation covers all grades of NBR in bale form only. Other forms of NBR exported from the subject counties are therefore, not covered under the product under consideration. A doubt was raised by the interested parties whether the product under consideration also covers Carboxylated NBR which is also manufactured in Bale form. It is clarified that the present investigation covers only normal NBR in bale form, which excludes powder NBR and carboxylated NBR. The domestic industry has also confirmed this as the scope of the product under investigation.

8.         Acrylonitrile butadiene rubber (NBR) is classified in the category of rubber and articles thereof under chapter 40 of the Customs Tariff Act, and ITC HS Classification under the category of synthetic rubber under sub-heading no. 40.02 at four-digit level and under no. 4002.59 at six-digit level. Though the above is the dedicated head for NBR the Authority notes that import of NBR has been reported under other heads describing NBR merely as synthetic rubber. Therefore, Customs and ITC HS classifications are indicative only and are in no way binding on the scope of the present investigation.

C.1      Like Article

9.         In terms of Article 2.6 of the Agreement the term “like product” (“product similaire”) shall be interpreted to mean a product which is identical, i.e. alike in all respects to the product under consideration, or in the absence of such a product, another product which, although not alike in all respects, has characteristics closely resembling those of the product under consideration. For the purpose of determination of the normal value the exporters from Brazil have indicated their respective grades sold in the domestic market as well exported to India. Since identical grades are available in the domestic market compared to the grades exported to India for the purpose of determination of the dumping margin of the cooperating exporters the Authority has considered the identical products sold in the domestic market and exported to India as the like products and normal value has been worked out based on these grades only.

10.       As far as all other exporters from Brazil, Mexico and the EU are concerned in the absence of details of the grades manufactured and sold in the domestic market the Authority notes that various grades of NBR are produced from the same general raw materials, employs the same basic production technology and follow through the same production process. Various types of NBR are employed for the same general purpose, i.e., to provide resistance to petroleum chemicals.

11.       The applicant has also stated that they produce equivalent/comparable of all the grades being imported at present from the subject countries. The Indian industry has capacity and capability to produce equivalents of all those grades, which are being produced by the producers in the subject countries, even if some of them are not being exported to India at present.

12.       It therefore, appears that there is no difference in the products produced by the domestic industry and imported from subject Countries/territories. The products are being directly imported by the user industries and also by traders for supply to other industries. The consumers are using the domestic and corresponding import products interchangeably. The products produced by the domestic industry and imported from subject Countries/territories being identical in all essential characteristics are treated as like articles within the meaning of the term as per the Rules.

13.       The Authority has noted the arguments of the interested parties in respect product under consideration and like article determination for the purpose of determination of normal value and export prices in the countries of exports and also for the purpose of imposition of the duty and holds that the normal value and dumping margin determination shall be done grade-wise for the exporters who have provided their data on grade basis before the weighted average dumping margin is established.

 D.       Standing of the Domestic Industry and initiation of the investigation

14.       The petition has been filed by M/s. Apar Industries Ltd., Mumbai, which is the sole producer of the subject goods in India. The petitioner, therefore, accounts for complete production of subject goods in India and constitute domestic industry within the meaning of the Indian Antidumping Rules. Other interested parties have not raised any argument in this regard.

E.        De Minimis Limits

15.       Imports have been reported from several EU member countries. However, for the purpose of this investigation the EU has been taken as a single customs territory. As per the import data received by the Authority from the Directorate General of Commercial Intelligence and Statistics (DGCI&S) and other secondary sources the imports of the individual products from the USA, EU, China and Taiwan are above the de minimis level.

16.       However, the Government of Mexico has submitted that as per their export statistics there is no export of the subject goods from Mexico to India during the POI. However, the Authority notes that the information available in the petition filed by the domestic industry indicates that there are at least two producers namely, M/s Paratec Elastomer LLC and M/s Industrias Negromax SA in Mexico.   M/s Paratec’s business consists of two companies: a company incorporated in Mexico called Para Tec S.A. de C.V. in care of manufacturing with technology acquired from its partner Uniroyal Chemical, with plant facilities located at Altamira, Tamaulipas, with a rated capacity of 40000 Metric Tons of NBR and a company called ParaTec Elastomers, LLC incorporated in the United States, in care of marketing its products worldwide under the trademark PARACRIL with the worldwide sales and distribution force coverage of UCC. The petitioner has also submitted some invoices which indicate the port of loading as Mexican port though the invoices have been drawn by the exporter in Los Angeles, USA. As per the import data available with the Authority Mexico has exported 207 MT of NBR of various grades to India during the POI

F.                 Other submissions and issues raised

F.1                  Domestic Industry

17.       The domestic industry had pleaded that imports of NBR have been reported under various heads of Customs and segregation of NBR is difficult from the DGCI&S transaction-wise data because of the fact that DGCI&S data does not reflect complete description of the product. Therefore, they have relied upon the import data published in the Plastics and Polymer Review (PPR) for the relevant period. The Authority has examined the transaction level data of DGCI&S and also the import data published by PPR, pruning the DGCI&S data of the unrelated products to the extent possible.

18.       However, because of the description and classification problem highlighted above the data from these two sources show substantial differences. Moreover, the Authority notes that DGCIS data shows much lower imports from Korea compared to the export data provided by the cooperating exporter from that country in a parallel antidumping review investigation against that country. It is also noted that PPR does not report import through all ports. Therefore, for the Authority has taken note of the above data anomalies and has adopted the DGCI&S data after adjusting it for the imports from Korea based on data available with it.

F.2      M/s. Petroflex, Brazil

19.    M/s Petroflex, one of the cooperative exporters from Brazil, in its preliminary submissions have commented on the level of non-confidential disclosures by the domestic industry and has argued that no investigation ought to have been initiated in the first instance for lack of proper disclosure of relevant figures and material. It has further argued that the DA has wrongly relied on Petitioner’s data that is derived from a secondary source [Polymers, Plastics and Rubber Trade Intelligence (PPR)] for information relating to export of subject goods instead of relying on DGCI&S data. They have further argued that recourse to Anti-Dumping proceedings is essentially a remedial measure but the Petitioner has sought to use anti dumping proceedings only to establish its monopoly. They have argued that there is no injury to the domestic Industry and the Petitioner has only sought to ‘manipulate injury’ where none exists, to initiate an investigation.

20.       They have further argued that the sales channel and distribution process followed by Petroflex for sale of the subject goods exported for sale in the Indian Market are sold in the Indian market solely through Commissioned Agent(s). Thereby implying that the fixation of the end price of the subject goods for sale in India is not decided or controlled by Petroflex. 

F.3      M/s Nitriflex, Brazil

21.       M/s Nitriflex, the other cooperative exporter from Brazil, in its preliminary submissions has argued that the Designated Authority has erred in initiating the investigation on the basis of the prima facie wrong data submitted in the Petition on the issues relating to the quantum of imports, production, sales information. They have argued that the data provided in the Petition is in contravention to the data as verified by the Authority in the sunset investigation on the dumping of NBR from Korea, RP and Germany. They have further argued that evidence as to calculation of normal value in the Non Confidential version is incomplete and the Petitioner is unable to verify and comment upon the allegations of dumping of imports of the subject goods from Brazil. They have also submitted that methodology to calculate Normal value in Brazil has not been disclosed by the petitioner for others to counter the allegations made by the Petitioner. Therefore, the Petitioner has not fulfilled even the bare minimum requirement of providing non-confidential summaries of the information relied upon in arriving at the normal value and has significantly hampered the right of Nitriflex to defend itself in this investigation. 

F.4      M/s Lanxess Elastmere

22.       M/s Lanxess Elastomere AG is the only exporter from the European Union who has partially cooperated in the investigation and has filed a part of the questionnaire response. In their preliminary submissions they have argued that the petitioner has kept the “estimates” of Normal Value, and estimates of expenses used in determining Export Price confidential. These being only estimates should not have been kept confidential. They have argued that the preliminary findings of the Authority should be issued only after disclosing these figures. 

23.       They have further argued that their facility in France has a capacity of ****** metric tonnes dedicated to NBR only (excluding other polymers) whereas the exports to India comprise approximately ****** metric tones. Therefore, they have argued that it is absurd even to suggest that Lanxess would restructure their entire business and shift production from Germany to France with the intention of servicing such a minute part of their business.  The commencement of production of NBR from their plant in France and the closure of the production facilities for NBR in Germany was effective in 2002 as part of an exercise in corporate restructuring and rationalization and has nothing whatsoever to do with the imposition of anti-dumping duties in the previous NBR proceedings in 1997. 

24.       With regards to the allegation of antitrust proceedings against them in the USA the exporter has submitted that it is wrong to draw certain inferences from the fact that Bayer had made payments of penalties in certain proceedings in the USA with respect to pricing of NBR and attempted to state that the high price in the USA was meant to off set dumping prices in India.  They have pleaded that USA proceedings do not relate in any manner to any issues of dumping such as would establish that Bayer were following any systemic pattern of dumping

25.       They have further argued that the petitioners also exported the product under investigation. No details with respect to the same, or the prices at which the same have been sold, have been provided. 

26.       Regarding their partial cooperation in the investigation the exporter has submitted that in view of the ex facie lack of merit in the petition and the failure to provide essential evidence of injury or causal link, the petition merits summary dismissal even assuming, whilst denying, that the information provided by them is insufficient.

27.       The Authority has taken note of the submissions made by the exporters in respect of determination of their normal values and export prices of the products under consideration and the arguments on confidentiality.

G.        Determination of Dumping Margin

28.       The Authority notes that only two exporter from Brazila have fully cooperated in the investigation and submitted complete questionnaire responses, which have been duly verified by the Authority. Only one exporter from the European Union i.e M/s Lanxess AG, has filed a partial response. In response to the Authorities communication advising them to file complete response the exporter has not submitted any useful information about its domestic sales price and cost of production to estimate dumping margin, if any, with respect to its exports to India. No other exporter from these countries has filed any response to the initiation in respect of this product. For the purpose of the preliminary determination the Authority has examined the data submitted by the responding exporters as follows:

G.1      Brazil

29.       The Authority has received full cooperation from two manufacturer-exporter from Brazil and their respective data has also been verified. On the basis of the submissions made by them and their data on normal value and export price the dumping margin for Brazil has been determined  as follows;

G.1.1   M/s Nitriflex, Brazil

30.       M/s Nitriflex, Brazil has filed a detailed questionnaire response to the investigation and based on their response and deficiencies therein certain additional information were also called for. The questionnaire response of this exporter and the data submitted therein were verified by the Authority. On the basis of the data submitted by this exporter the Authority has worked out its normal value, export price and dumping margin as follows:

a)         Normal Value

31.       M/s Nitriflex produces several grades of NBR including normal NBR in the Bale form. The producer has also substantial domestic sales of the product under consideration in their domestic market covering various grades. However, during the POI only two grades of NBR i.e. N-608 and N-615 B have been exported to India. The exporter has also substantial sale of these two grades on NBR in the domestic market. Therefore, for the purpose of determination of normal value these two grades have been treated as the like products to the product under consideration and the domestic sales price of these two grades only sold in the ordinary course of trade has been examined. The exporter has claimed several adjustments to the gross sales values on account of domestic taxes, inland transportation and insurance, commissions and interest costs on sales made on credit terms. The adjustments have been verified from the record of the exporter and admitted for arriving at the net ex-works Normal Value of the like article in the country of exports. Accordingly, the normal value for this exporter works out as follows:

b)        Export Price

32.       Verified export sales transactions of the two grades of NBR has been adjusted for taxes and local levies, inland transportation, ocean freight and insurance, commissions and other adjustments as verified. No adjustments towards packing were found necessary as the packaging condition for domestic as well as export sales were found to be same. Accordingly, net ex-works export prices for the two grades worked out as follows:

c)         Dumping Margin

33.       For the purpose of determination of dumping margin the ex-works normal value so determined has been compared with the export price determined at the same level of trade. No other adjustment towards other factors affecting price comparability has been claimed. Accordingly, the dumping margin has been provisionally determined as follows:

G1.2    M/s Petroflex, Brazil

34.       M/s Petroflex, Brazil has also filed a detailed questionnaire response to the investigation and based on their response and deficiencies therein certain additional information were also called for. The questionnaire response of this exporter and the data submitted therein were verified by the Authority. On the basis of the data submitted by this exporter the Authority has worked out its normal value, export price and dumping margin as follows:

a)         Normal Value            

35.       M/s Petroflex produces several grades of NBR including normal NBR in the Bale form. The producer has also substantial domestic sales of the product under consideration in their domestic market covering various grades. However, during the POI only two grades of NBR i.e. NBR 3350 and NBR 3960                               have been exported to India. Therefore, for the purpose of determination of normal value these grades have been treated as like products to the product under consideration and the domestic sales price of these grades only sold in the ordinary course of trade has been examined.

b)        Export Price:          

36.       Verified export sales transactions of the respective grades of NBR has been adjusted for taxes and local levies, inland transportation, ocean freight and insurance, commissions and other adjustments as verified. Accordingly, net ex-works export prices for the two grades worked out as follows:

c)         Dumping Margin

37.       For arriving at the dumping margin the export price has been compared with the normal value at the same level of trade, i.e. at ex-works level, during the POI. The exporter has not claimed any adjustments towards the differences which affect price comparability, including differences in conditions and terms of sales, taxation, levels of trade, quantities, physical characteristics, and any other differences which are demonstrated to affect price comparability.

38.       Accordingly, the dumping margins for the producers/exporters of the subject goods in the subject countries have been determined as under:-

G.1.3   All other exporters from Brazil

39. Normal value for all other exporters from Brazil has been determined provisionally based on the highest transaction value of the cooperative exporters from Brazil as best facts available. Accordingly, the Normal Value for all other exporters from Brazil has been assessed as follows:

40.       Ex-works Export Price has been determined provisionally on the basis of lowest export price from the cooperative exporter from Brazil after allowing for adjustments towards commissions, inland freight, ocean freight and insurance which is provisionally assessed as US$ ******* per MT.  

41.       Accordingly, dumping margin for all non-cooperative exporters from Brazil has been estimated as US$*******per MT.

42.       The dumping margins so assessed are above the de-minimus limits and are considered significant

G.2      European Union

43.       As mentioned earlier, the only responding exporter from the European Union i.e. M/s Lanxess Elastomere has filed only a partial response to the investigation. This exporter was asked to supplement the response with additional information in the form and manner prescribed for determination of dumping margin, if any. However, the exporter in response to this advice of the Authority has further submitted that there is no necessity for them to enter into and produce detailed data in view of the numerous defects in the application itself, which merits the termination of the investigation in limine.  They have further submitted that the onus of proving dumping is entirely on the applicants and unless they provide full information on how they have arrived at the fact of there is no cause for them to provide further information without even being given an opportunity to deal with the basic contentions in the application. They have further submitted that the data provided by them is more than sufficient for the proceedings

44.       Though the exporter has submitted partial response and certain data related to its exports sales to India, they did not submit any information on their domestic sales and normal value of the product in the home market. The data is incomplete in many respects and the exporter has not provided any data related to the cost of production of the product under consideration. The exporter has also not submitted any information in the form and manner prescribed towards various adjustments to arrive at the normal value and export prices at the ex-works level.

45.       The Authority has taken note of the arguments and submissions made by the interested parties.

46.       Article 2 of the Agreement on Antidumping provides that

“2.1     For the purpose of this Agreement, a product is to be considered as being dumped, i.e. introduced into the commerce of another country at less than its normal value, if the export price of the product exported from one country to another is less than the comparable price, in the ordinary course of trade, for the like product when destined for consumption in the exporting country.

2.2       When there are no sales of the like product in the ordinary course of trade in the domestic market of the exporting country or when, because of the particular market situation or the low volume of the sales in the domestic market of the exporting country, such sales do not permit a proper comparison, the margin of dumping shall be determined by comparison with a comparable price of the like product when exported to an appropriate third country, provided that this price is representative, or with the cost of production in the country of origin plus a reasonable amount for administrative, selling and general costs and for profits.

2.2.1   Sales of the like product in the domestic market of the exporting country or sales to a third country at prices below per unit (fixed and variable) costs of production plus administrative, selling and general costs may be treated as not being in the ordinary course of trade by reason of price and may be disregarded in determining normal value only if the authorities determine that such sales are made within an extended period of time in substantial quantities and are at prices which do not provide for the recovery of all costs within a reasonable period of time. If prices which are below per unit costs at the time of sale are above weighted average per unit costs for the period of investigation, such prices shall be considered to provide for recovery of costs within a reasonable period of time.“

47.       The Authority notes that adequate opportunity was provided to the exporters from subject countries, including M/s Lanxess Elastomere from the EU, to furnish information relevant to the investigations and offer comments, if any, in accordance with the Section cited above.  The sole responding exporter from the EU in respect of the above product i.e M/s Lanxess Elastomere has produced only a partial response which does not allow an appropriate determination of their normal value and export price. Therefore, the Authority is constrained to declare this exporter non-cooperative for the purpose of the preliminary determinations.

48.       The Authority notes that the partial cooperating exporter from the EU is the major producer and accounts for major portion of the exports to India from the European Union. However, in view of the non-cooperation from the exporters from the European Union the Authority has determined the provisional dumping margin based on facts available in respect of all exporters from the European Union.

a)         Normal value:          All exporters from the EU

49.       The export data of the partial cooperating exporter shows export both High and medium NBR to India during the POI though export of High NBR is much less compared to Medium NBR.. However, as noted above the exporter has not provided the data on its domestic sales to estimate the dumping margin. Therefore, for the purpose of this preliminary determination the Authority has ignored the incomplete data submitted by this exporter and estimated the Normal Value in the European Union on facts available basis in terms of Rule 6.8. The Rules referred above read with Paragraph 1 of the Annex II to the Agreement provide that if the interested party does not provide the information within a reasonable time the Authority shall be free to make the determination based on the facts available including those contained in the application for initiation of the investigation by the domestic industry.  Accordingly normal value for all exporters in the EU has been provisionally estimated as US$**** Per MT for Medium NBR and US$***** Per MT for High