1. The appellant Urals Heavy Machine Building Plant, JSC, an exporter from Russia has preferred this appeal against the Final Findings dated 2.7.2003 of the designated authority and the Notification No. 127/03 dated 14.8.03 imposing anti-dumping duty under Section 9A(1) of the Customs Tariff Act, 1975, read with rules 18 and 20 of the Customs Tariff (Identification, Assessment and Collection of Anti-dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995, on "induction hardened forged steel rolls" of the sizes above 300 mm and up to 605 mm diameter covered under Tariff Item 8455.30.00 of schedule to the Customs Tariff Act, 1975, imported into India from Russia, at the rate equal to the difference between the amount of US $ 2762.79 PMT and the landed value of the goods, w.e.f. 1.1.2003 being the date from which the provisional anti-dumping duty was earlier imposed.
2. On receiving an application from M/s. Gontermann-Peipers (India) for and on behalf of domestic industry, alleging dumping of induction hardened forged steel rolls originating in or exported from Russia, Ukraine and Korea RP and on being satisfied about the eligibility of the petitioner ho was supported by the other domestic producer M/s.
Heavy Engineering Corporation, Ranchi, the designated authority initiated anti-dumping duty investigation by a public notice dated 27th August 2002. The designated authority sent questionnaire to elicit relevant information to the known exporters/producers in accordance with rule 6(4) including the appellant. A questionnaire was also sent to the 17 known exporters/users association in accordance with rule 6(4).
2.1 Out of the 4 known exporters to whom questionnaire was sent, response/information thereto was filed by the appellant from Russia and by Doosan Heavy Industries Co. Ltd. of Korea. From among the importers response to questionnaire was filed by Tinplate Company of India Ltd. Jamshedpur.
3. The product in question is used primarily by steel plants for cold rolling of ferrous and non-ferrous coils obtained from Hot Rolling Mills. These cold rolled coils with fine texture, thin gauges with superior mechanical properties are used as roof sheet for buildings and by equipment manufacturers for car biddies, scooters, buses, autos, fridges, washing machines, utensils, cigarette foils and bicycles etc.
Forged rolls are basically made up of vacuum degassed alloy and forged under hydraulic press. Forging is done to remove the internal stress and also to refine grains during forging operations. The roll is then spheroidised to the desired microstructure and after machine it is induction hardened, tempered, subjected to final machining before despatch to customer.
3.1 The designated authority issued preliminary findings dated 11.12.2002 recommending imposition of anti-dumping duty provisionally pending further investigation and forwarded copy of the preliminary finding to the interested parties known to be concerned, requesting them to furnish their views, if any, within 40 days from the date of publication of the preliminary findings. Since thereafter it was pointed out that the domestic industry did not produce forged rolls above 600 mm diameter and the petition was confined to induction hardened forged rolls above 300 mm and up 600 mm diameter which was within the production capacity of the petitioner, the authority restricted the size of the product under consideration upto 605 mm diameter and proposed the product description as Induction Hardened Forged Rolls (of size ranging from 300 mm to 605 mm dia) including all types of induction hardened forged rolls, including back rolls, and work rolls, for the purpose of final findings.
4. The petitioner had claimed that they accounted for 54.46% of the total Indian production of the subject goods. The only other producer Heavy Engineering Corporation (HEC) with a standing of 45.54% had fully supported the petitioner. The petition was, therefore, deemed to have been filed by an one behalf of the domestic industry in consonance with the rules and it was held that the petitioner satisfied the criteria of standing to file the petition on behalf of the domestic industry in terms of rule 5(3)(a) and was considered as "domestic industry" within the meaning of rule 2(b) of the said rules.
4.1 The designated authority found that the imports were from Russia, Ukraine and Korea during the period of investigation (POI) i.e. from 1.4.2001 to 30.6.2002 was above de-minimus level. None of the exporters from South Korea and Ukraine had responded by way of questionnaire response. In view of non-submission of data and non-co-operation by these countries, the designated authority constructed the normal value for all producers and exporters of South Korea and Ukraine on the basis of the best information as made available by the petitioner. The cost of production as provided by the petitioner with due adjustments was, therefore, referenced for the purpose of determination of normal value of the subject goods from these two countries. In view of non-co-operation from any of the exporters/importer, the information on export price from the secondary source made available by the petitioner was relied upon the after making adjustments on account of inland freight, port expenses, ocean freight and marine expenses, export price was fixed in respect of South Korea and Ukraine.
4.2 The appellant who was the only exporter/producer from Russia, that had responded to the questionnaire, claimed that Russia should be treated as a market economy. It tried to rebut the claim of non-market economy against Russia made by the petitioner by contending that in the end of year 2002 Russia was recognized had fully agreed with the conditions of enlistment to the World Trade Organization (WTO) with nine countries who are members of the WTO and had a talk with 15 other countries which were to materialize by the spring of 2003. The designated authority noted in its Disclosure under Rule 16 that as per the extant provisions the non-market economy country or the concerned firms from such country may rebut such presumption by providing information and evidence to establish that such country was non a non-market economy, on the basis of the criteria specified in sub-paragraph (3) of para 8 to Annexure - 1 of the rules. The designated authority found that the appellant did into provide such information or evidence to substantiate their submissions. The responses of the appellant to the exporters' questionnaire was also incomplete. The information required under Appendix - 1 of the questionnaire was provided for the year 2000 against the POI which was from 1.4.2001 to 30.6.2002. Moreover the appellant did not provide information in Appendix 7 to the questionnaire to enable the designated authority to ascertain the installed capacity as well as to enable the reconciliation of the appendices submitted by the appellant. It was held that the information submitted in respect of factory cost and profit was also incomplete as no information under various headings was provided. The appellant did not submit its financial statement or other statements showing the evidence for establishing that the said country was operating upon market economy principle. Since the appellant failed to rebut the presumption by substantiating its claim by evidence, and the cost of production of the subject goods was not disclosed, the designated authority could not apply the ordinary course of trade test, and therefore, it referenced the normal value on the basis of the material provided by the petitioner by resorting to constructed cost of production with appropriate adjustments as per the said rules.
4.3 As regards the export price of the goods exported by the appellants, the designated authority relied upon the information furnished by the appellant for the subject goods during the period of investigation and reference the export price, with adjustments on packaging, inland freight, storage, ocean freight, ocean insurance and documentation cost as provided by the appellant.
4.4. The designated authority took into account all the relevant parameters under the said rules while examining relevant parameters under the said rules while examining "injury" to the domestic industry.
It took into consideration the contention of the appellant that duty determined for Russia at the rate of 79.91% was consequence of an error and that it could not exceed the dumping margin which was 31.43%.
According to the appellant, there was no dumping done by the appellant's goods during the period of investigation and that the imposition of anti-dumping duty was against the provisions of "item 1 of clause 6 of General agreement on Tariff (rates) and Trade".
4.5 On basis of the relevant parameters and indices having a bearing on the state of industry and the cumulative assessment of the effect of imports from the subject countries, it was held that inspite of significant investments and considerable trial runs, the domestic industry was not able to produce optimally due to very un-remunerative prices. The improvement in production and capacity utilization was to be seen in relation to indices of production and capacity utilization that the petitioner could have achieved. It was held that though the sales volume of the petitioner company increased, the trial production of the company could be sold with lot of difficulty, as the prices offered to the petitioner were very un remunerative. It was held that the product in question was normally manufacture against specific customer's requirements and therefore, receipt of orders for production was more relevant that the sales effected. It was further held that the petitioner had not been able to produce optimally in the absence of firm orders which resulted in low productivity. The designated authority held that the landed price of imports from the subject countries was considerably lower than the selling price of the domestic industry, resulting in price undercutting. In number of orders, customers had forced the domestic industry to match the price of the imported product. Inspite of very un-remunerative prices, the domestic industry had no option but to accept the orders at such low prices which were not at all remunerative and did not permit recovery of even cash cost of production to the domestic industry.
4.6 The designated authority found that the domestic industry had been forced to sell the product at prices below the cost of production in view of lower prices of the imported product. It was held that price under-selling reflected the injury faced by eh domestic industry better as compared to price under-cutting.
4.7 On the basis of the material on record, the designated authority also came to a finding that cash flow of the petitioner company remained negative due to higher cash outflow as compared to inflow.
Since the subject goods were largely made as per specific requirements of the customers, the domestic industry had no option but to produce only against confirmed order from such customers. This being the situation, inventories were not very relevant to reflect the injury to the domestic industry.
4.8 It was noted that domestic industry was at a a nascent stage and had started commercial production during the period of investigation.
However, significant dumping very adversely retarded the growth of the domestic industry as the petitioner found it extremely difficult to complete its planned investments on the product and the project in view of severe dumping, which the petitioner was facing in the market. The petitioner domestic industry was not able to fully utilize its planned investment and had serious marketing problems due to such dumping. The price at which the domestic producer was forced to sell the product did not permit recovery of reasonable cost of production and the petitioner company was forced to face severe financial losses.
4.9 The designated authority further noted that the petitioner had set up new production facilities and commenced commercial production w.e.f.
1.4.2002. It was found that the petitioner domestic industry was not able to establish itself as a new producer of the subject goods in the face of the dumped imports being available in the market. The designated authority noted that the production and capacity utilization of the domestic industry was significantly lower than what the domestic industry could have achieved. It was held that the lack of orders at remunerative prices against which production could be undertaken prevented the domestic producer from producing and selling the product for which it had set up new facilities. It was held that if such a situation was allowed to continue, it would not only cause material injury to the domestic industry, but also would jeopardize its entire existence.
4.10 A regards the causal link, the designated authority held that the substantial imports of the said goods from the subject countries at dumped prices forced the domestic industry to reduce its selling prices to an un-remunerative level, resulting in a situation of price under-cutting in Indian market. These imports suppressed the prices of the products to such an extent, that eh domestic industry was prevented from recovering its full cost of production, and earn a reasonable profit from the sale of subject goods in India. The share of imports from Russia was 17.07% out of the total imports of 66.85% during the period of investigation. The domestic industry in its attempt to match the dumped import prices, was forced to sell below its non-injurious price. It was found that imports from other countries was much less during the previous years and prices from the subject countries were higher. It was found that there were no other known factors such as contraction of demand, change in pattern of consumption, trade restrictive practices etc. which could have caused injury to the domestic industry. It was held that the increase in market share of imports from the subject countries resulted in decline in the market share of the petitioner i.e. the domestic industry and prevented it from raising its market share. It was found on the basis of relevant factors that material injury was caused to the domestic industry by the imports form the subject countries.
4.11 The designated authority determined the non-injurious price by using the actual cost of production of the subject goods to determine optimum cost of production for the domestic industry taking into account the normated best consumption norms and the actual price of the raw materials which were consumed for production of the subject goods during the period of investigation. For calculation of injury margin, the designated authority compared the ex-factory non-injurious price determined for the period of investigation with the landed value of imported goods. The authority after considering the responses of the interested parties including the appellant during the investigation, came to the conclusion that the subject goods originating in or exported from the subject countries were exported in India below the normal value resulting in dumping; that the Indian domestic industry had suffered material injury in terms of subject goods produced by it; that establishment of domestic industry was being materially retarded by the dumped imports, inasmuch as the domestic industry was trying to establish itself in the Indian market with the new subject product; that injury was caused by imports of subject goods from the subject countries; that it was considered necessary to impose definitive anti-dumping duty on imports of subject goods originating in or exported from the subject countries; and that anti-dumping duty should be imposed equal to the margin of dumping or lower so as to remove the injury to the domestic industry that had resulted on account of dumping. The designated authority, therefore, proposed that definitive anti-dumping duty equal to the difference between an amount mentioned in column 9 of the table prepared by it in the final findings which is US $ 2762.79 in respect of any exporter/producer from Russia (which included the appellant) and the landed value of the subject goods in US $/MT be imposed by the Central Government on all imports of subject goods originating in or exported from the subject countries.
4.12 The said final findings dated 2.7.2003 were accepted by the Central Government culminating in the impugned notification dated 14.8.2003.
5. The learned authorized representative appearing for the appellant contended that Russia was a market economy and ought to have been treated as such by the designated authority in view of the fact that in June 2002, it was recognized by the United States as a market economy.
It was further submitted that even if it were to be treated as a non-market economy, the presumption was rebutted by the appellant as per the proviso to para 8(2) of Annexure-1 to the said rule by the communications sent by the appellant on 19.5.2003 and 30.6.2003. It was argued that the designated authority had proceeded on the footing that Russia was a non-market economy, but had not given any finding on the question whether the presumption of non-market economy was rebutted by the appellant. It was submitted that in response to the communication dated 30.5.2003, sent by the designated authority to the appellant, representatives of the appellant had met the designated authority on 18.6.2003 and had furnished particulars in their letter dated 30.6.2003 by which the presumption of non-market economy against Russia stood rebutted. The learned authorized representative referring to the provisions of paragraph 7 of Annexure-1 to the rules strongly contended that the principles for fixation of normal value in case of non-market economy country, as laid down under the said provisions were flouted by the designated authority and therefore, the impugned order and the notification were vitiated. It was submitted that it was incumbent on the part of the designated authority to select a market economy third country for determining the normal value. It was also incumbent upon him to inform the parties to the investigation without unreasonable delay about the selection of market economy third country. The designated authority instead of doing such exercise, straight away relied upon the constructed value of the product in India. It was submitted that, the data furnished by the appellant constituted a reasonable basis on which the designated authority could have acted under paragraph 7 for determining the normal value of the goods exported by the appellant during the period of investigation. It was submitted that data for fixing the normal value was contained in the appendices to the questionnaire which was responded to by the appellant and this was sufficient for determining the normal value. It was pointed out from appendix No. 3 to the questionnaire that the information disclosed therein showed that there was no dumping, because the export price to India was higher than the domestic market sale price in Russia of the subject goods during the POI. It was submitted that nothing turned on giving irrelevant information about domestic sales in appendix form No. 1 which was for the period prior to the period of investigation because the information given in appendix No. 3 was in respect of the relevant period. It was also contended that, merely because information required to be given in form No. 7 (new form 4) was not furnished, the designated authority could not have ignored the information contained in other appendices which substantiated the information contained in appendix No. 3. It was submitted that the selling price per unit of sales to India worked out in form No. 4 tallied with per unit price which could be inferred from form No. 3 by dividing the total selling price by the units sold. It was further submitted that the fact that the sale price situation for domestic sales shown in appendix form No. 5 reflected the earlier period i.e., the period prior to the POI or that he appendix form No. 7 was not produced were not fatal, because the other information was sufficient.
The learned Authorized Representative further argued that the economic parameters disclosed by the domestic industry did not show any injury, because losses had decreased and sales and production capacity had improved. It was submitted that the injury to the domestic industry was caused due to the decline in the aggregate demand. It was also submitted that the figures of imports were in context of the product rang of 300 mm to 1600 mm diameter, while the product range of the domestic industry was 300 mm to 605 mm diameter and, therefore, the basis for determining injury was faulty. It was contended that the petitioner was "related" to Ispat which was a competitor of SAIL, who was the importer and that after the anti-dumping duty was imposed, ISPAT was not importing any more. It was also submitted that price of the product of the domestic industry was high because forged blanks were purchased and only hot treatment and machining was done by the petitioner while the appellant were manufacturing the products from its very initial stage. It was also submitted that since the commercial production was started by the domestic industry on 1.4.2002, the data was prior to that date and the cost of production would, therefore, be higher and not a representative cost for fixing the non-injurious price. It was also submitted that the metal manufactures had opposed the domestic industry. it was finally submitted that the lull in demand was the cause of injury. Moreover, the domestic industry had technical problem as mentioned in their Director's report and there was no integrated production of the said product which all resulted in injury to it.
5.1 The learned authorized representative relied upon the decision of this Tribunal in Indian Spinners Association v. Designated Authority reported in 2004 (170) ELT 144 in which it was held that existence of surplus production capacity cannot be taken as posing a clearly foreseen and imminent threat of injury (para 18) 6. The learned Counsel appearing for the designated authority supporting the determinations made in the final findings submitted that the material information required for fixing the normal value of the subject goods exported by the appellant during the period of investigation to India was not provided, and, therefore, it was not possible to work out the cost of production of the appellant's goods.
It was submitted that the information which was crucial for verifying the correctness of other information. He submitted that the conduct of the appellant amounted to withholding of the vital information on the basis of which the normal value could be worked out. He pointed out, from the original record, to us and also to the appellant's consultant, that the communication dated 30.6.2003 was received by the designated authority on 3.7.2003 at 4.55 PM i.e. after the final findings were notified on 2.7.2003. He, therefore, submitted that the information contained in that letter could not have been considered by the designated authority. It was contended that Russia was a non-marketing economic and therefore, it was incumbent upon the appellant to furnish the information on the criteria laid down in Sub-para (3) of paragraph 8 of Annexure I to the rules, which information was not furnished. He submitted that the finance reports were also not submitted. No information regarding the other products which was required for ascertaining the direct and indirect cost and administrative expenses was given by the appellant nor was its installation capacity disclosed.
The learned counsel for the designated authority place reliance on the decision of the Supreme Court reported in designated authority (Anti-Dumping Directorate), Ministry of Commerce v. Haldor Topsoe A/S , in support of his submission that if a request for information is not met, an adverse inference can be drawn.
He invited our attention to the opinion of United States Court of International Trade in Krupp Thyssen Nirosta Gmbh and Krupp Hoesch Steel Products Inc. v United States on the proposition that if the party fails to co-operate with the requests, Commerce may use adverse facts other wise available on the record as surrogate for the missing information.
7. The learned Counsel for the respondent-domestic industry argued that Russia was a non-market economy and since the presumption was not rebutted by furnishing material as per sub-para (3) of para 8 of Annexure - I to the rules , the designated authority was justified in relying upon the material furnished by the petitioner domestic industry for fixing the normal value under rule 7. It was submitted that there was no third market economy country which could have been selected by the designated authority and, therefore, there was no option to it but to rely on the information furnished by the domestic industry, which provided a reasonable basis for fixing the normal value. It was also submitted that the percentage of dumping margin initially given by the petitioner was on the basis of insufficient information about the exports by the appellant, and the designated authority was justified in relying on the export price as disclosed by the appellant in respect of the subject goods which was much lower, indicating a higher dumping margin in case of the appellant. The learned counsel further argued that there were three alternatives on the basis of which the normal value could be determined in case of a non-market economy country under paragraph 7 of Annexure - I to the rules. It was submitted that there was no market economy country suggested by the appellant, nor was there any response fro any of the exporters which could have enabled the selection of a third market economy country. Therefore, it was reasonable on the part of the designated authority to rely on the normal value on the basis of constructed cost of production with appropriate adjustments as per rule 6(8), as claimed by the petitioner domestic industry. It was submitted that since no data from any third market economy country was available, the designated authority rightly relied on the data furnished by the petitioner. It was also submitted that a mere look at Appendix/Form No. 7 to the questionnaire shows that there was nothing which could not be understood in that form or which could not be understood in that form or which required to be explained especially when all other forms were understood by the appellant. It was submitted that the appellant did not respond to form No. 7 to the questionnaire because that would have required disclosure of vital information on the basis of which other information could be certified.
The appellant did not show any evidence to indicate that the decisions of the concerned firm were made in response to market demands, whether cost of major imports substantially reflected market value and whether there was absence of any State inference. It was also submitted that in 1992, the appellant was privatized and it was not shown that distortions of non-market economy did not continue. As regards injury, it was submitted that the market share of imports had increased vis-is market share of the domestic industry. The learned counsel also supported the final findings on the basis of the reasoning adopted therein. It was also submitted that even if the letter dated 30.6.2003 were to be taken into consideration, it did not rebut the presumption by proving the criteria mentioned in sub-paragraph (3) of paragraph 8 of Annexure -I of the rules It was submitted that the imports had increased in absolute terms and had remained significant in relation to the product. The market share of imports from Russia and subject countries which was 7.32% and 25.25% respectively was increased to 17.07% and 66.85% during the period of investigation. In respect of all other factors, the learned counsel submitted that the reasoning adopted by the designated authority was valid.
8. The learned authorized representatives appearing for the appellant and the importer SAIL asserted that Russia ought to have been treated as a market economy in view of the material placed before the designated authority, and the principles enumerated in paragraphs 1 to 66 of Annexure-I of the Rules, ought to have been applied by relying on the information given by the appellant for determining the normal value, export price and margin of dumping in the case of the appellant.
8.1 The designated authority is required to take into account, inter alia, the principles set out in Annexure-I read with rule 10 of the said rules while determining normal value, export price and margin of dumping. The relevant period of investigation for determining the normal value, export price and margin of dumping was 1.4.2001 to 30.6.2002. The expression "non-market economy countries" though it occurred in paragraph 7 of the Appendix-I to the rules which laid down the principles for determining the normal value in case of exports from such country, it came to be defined by paragraph 8 which was inserted by the Amend Rules, 2001, made by the Central Government under Section 9A(2)(6) and 9B of the Customs Tariff Act, 1975. This paragraph 8 was later substituted by the Amendment Rule, 2002, made on 4.1.2002.
Paragraphs 7 and 8 of Annexure-I which are relevant for our consideration, as they stood during the period in question, read as follows; - "7. In case of imports from non-market economy countries, normal value shall be determined on the basis of the price or constructed value in a market economy country, or the price from such a third country to other countries, including India, or where it is not possible, on any other reasonable basis, including the price actually paid or payable in India for the like product, duly adjusted if necessary, to include a reasonable profit margin. An appropriate market economy third country shall be selected by the designated authority in a reasonable manner keeping in view the level of development of the country concerned and the product in question and due account shall be taken of any reliable information made available at the time of the selection. Account shall also be taken within time limits, where appropriate, of the investigation if any made in similar matter in respect of any other market economy third country. The parties to the investigation shall be informed without unreasonable delay the aforesaid selection of the market economy third country and shall be given a reasonable period of time to offer their comments.
8.(1) The term 'non-market economy country' means any country which the Designated Authority determines as not operating on market principles of cost or pricing structures , so that sales of merchandise in such country do not reflect the fair value of the merchandise, in accordance with the criteria specified in sub-paragraph (3).
(2) there shall be a presumption that any country that has been determined to be, or has been treated as, a non-market economy country for purpose of an anti-dumping investigation by the designated authority or by the competent authority of any WTO member country during the three year period preceding the investigation is a non-market economy country: Provided, however, that the non-market economy country or the concerned firms from such country may rebut such a presumption by providing information and evidence to the three year period preceding the investigation is a non-market economy country: (3) The designated authority shall consider in each case the following criteria as to whether: (a) The Decisions of concerned firms in such country regarding prices, costs and inputs, including raw material, cost of technology and labor, output, sales and investment, are made in response to market signals reflecting supply and demand and without signification State interference in this regard, and whether cost of major inputs substantially reflect market values; (b) the production costs and financial situation of such firms are subject to significant distortions carried over from the former the former non-market economy system, in particular in relation to depreciation of assets, other write offs, barter trade and payment via compensation of debts; (c) such firms are subject to bankruptcy and property loss which guarantee legal certainty and stability for the operation of the firms; and Provided, however, that where it is shown by sufficient evidence in writing on the basis of the criteria specified in this paragraph that market conditions prevail for one or more such firms subject to anti-dumping investigations, the Designated Authority may apply the principles set out in paragraphs 1 to 6 instead of the principles set out in paragraph 7 and in this paragraph." 8.2 Russia was named amongst the non-market economy countries earlier earlier in the note to paragraph 8 of Annexure -I to the rules which was inserted by Customs Notification No. 28/01 (NT) dated 31.5.2001.
The said note listing non-market economy countries was removed when the above paragraph was substituted by the amending Notification No.1/01-Cus.(NT) dated 4.1.2002, and in stead, a presumption was raised as per sub-paragraph(2) of paragraph 8, that any country that has been determined to be, or treated as, non-market economy by the designated authority or the competent authority of any WTO member country during the three year period preceding the investigation, is a non-market economy.
8.3 The presumption that a country is a non-market economy, arising in sub-paragraph(2) of paragraph 8 of Annexure-1, could be rebutted by the country concerned or even by the concerned "firms" fro such country. It was not disputed that Russia was determined as a non-market economy by the designated authority of some WTO member countries during the three year period preceding the investigation. There was, therefore, a presumption at the relevant time that Russia was a non-market economy.
The appellant was entitled to rebut this presumption which it attempted to do without success during the proceedings. The said presumption could have been rebutted only by providing information and evidence to the designated authority that on the basis of the criteria specified in sub-paragraph (3) of paragraph 8, Russia was not a non-market economy.
As per the proviso to paragraph 8(2), it was incumbent on the part of the appellant to adduce sufficient evidence in writing to show that market considerations prevailed as per the criteria laid down in paragraph 8(3), for the appellant "firm" for applicability of the principles set out in paragraphs 7 for determining the normal value of the subject article. In case of non-market economy countries, the designated authority had no option, but apply the principles incorporated in paragraph 7 unless the presumption arising under sub-paragraph (2) of paragraph 8 was so rebutted. Where the presumption is not rebutted, there can arise no question of the designated authority considering elements of costs referred to in the context of determination of normal value on the basis of the recorded kept by the exporter/producers under investigation or sales of the like product in the domestic market of the exporting country or sales to a third country, as contemplated under paragraphs 1 and 2 of Annexure -I to the rules.
8.4 Reliance was placed on the communication dated 19.5.2003 in which it was contended that Russia should be treated as market economy on the basis of the "conclusion made by the chamber of Commerce and Industry of Russia" and that "assessment of the said provisional duty was contrary to paragraph 1 of Article 6 of GATT". No attempt was made by the appellant to rebut the presumption arising under paragraph 8(2) of Annexure - I by providing any information and evidence to enable the designated authority to examine the matter in the light of the criteria specified in sub-paragraph (3) of paragraph 8. The learned authorized representative for the appellant tried to place reliance on the communication dated 30.6.2003 for urging that the requisite information was forwarded thereunder to the designated authority in the context of the criteria laid down in sub-paragraph (3) of paragraph 8 which was ignored by the designated authority. On verification of the original record which was made available in the court it was pointed out by the learned authorized representative for the designated authority that the said communication was received by the designated authority on 3.7.2003 at 4.55 PM, i.e. after the Notification of the final findings was issued on 2.7.2003 we have carefully gone through the said letter and are satisfied that while some information was forwarded thereunder, which unfortunately reached the office of the designated authority after the final findings were issued, the vital information required to be furnished in Appendix/Form - 7 (new form No.40 was not still furnished by the appellant. The appellant even in this communication asserted that the information required by the said appendix was already contained in Appendix-3 attached to the older version of exporters' questionnaire. As regards the existence of the roll stock of the appellant, it stated that it did not keep the product in store, since according to it, incurring unreasonable expenses for storage of such stock resulted in rise of product price. Admittedly, on 18.6.2003, the appellant's representatives had met the designated authority in response to the communication dated 30.05.2003 giving them opportunity to furnish the required information. Therefore, there was no question of the appellant's not understanding the contents of the old form No.7 (new form No.4) of the questionnaire. By the communication dated 30.05.2003, the appellant was requested to furnish the information required thereunder, because in the opinion of the designated authority the earlier information was deficient. The appellant was called upon to submit information required by Appendix-I and Appendix-7 of the exporters' questionnaire, for the period of investigation (1.4.2001 to 30.6.2002), information in respect of cost of production and profit for the period of investigation, certified annual accounts and financial statements for the period of investigation. It was also called upon to furnish information pertaining to declaration of the particular "firm" operating under market economy to enable the designated authority to consider the relevant criteria (of paragraph 8(3)) which was reproduced in the said communication. It is evident from the record that the above material information was not at all furnished even though specifically called for under the said letter dated 30.05.2003 and there was a meeting of the representatives with the appellant thereafter on 18.6.2003. Even in the letter dated 30.06.2003 which reached after the final findings were issued, the important information regarding sales in domestic market, required to be given in Appendix-I and regarding the particulars sought under Sppendix-7 of the exporters' questionnaire, the information in respect of cost of production and profit, certified annual accounts and the financial statements for the period of investigation, were not at all furnished. Thus, wile the appellant did send some response to the questionnaire, it did not co-operate by furnishing the requisite information to the designated authority. Form at Appendix-7 of the exporters' questionnaire was of a statement showing licensed capacity, installed capacity, production and sales of the appellant firm. The information regarding the product under investigation as well as other products of the appellant, was to be given in that form. The licensed capacity, opening stock, production during the relevant year, sales during the relevant year, and closing stock were to be shown. There was nothing in the form which may not be understood. The letters 'Q' and 'V' were explained at the bottom as quantity and value. Even after the discussion with the designated authority, the appellant did not furnish the required information. In absence of the information regarding the installed capacity and other products, the working out of the cost of the product in question during the period of investigation was impossible. We, therefore, find ample justification for the designated authority in holding that the response to the exporters' questionnaire by the appellant was incomplete' that the information required under Appendix-I was provided for the year 2000 and not for the period of investigation; that the appellant had not provided information under Appendix-7 to enable the authority to ascertain the capacity, production as also to enable reconciliation of the other appendices which were submitted; that the information submitted in respect of factory cost and profit was incomplete as no information under various cost heads was provided, and that the appellant had not submitted its financial statements or other statements. The designated authority has, therefore, not committed any error in determining the normal value in case of the appellant with reference to the data furnished by the domestic industry on the basis of the constructed cost of production with appropriate adjustments as per rule 6(8) of the said rules. Since the export price was admittedly furnished by the appellant, the designated authority has rightly relied on the export price provided by the appellant for the subject goods during the period of investigation by making adjustments on packaging, inland freight, storage, ocean freight, ocean insurance and documentation cost, as disclosed by the appellant. There has, therefore, been no error in working out the dumping margin so far as the appellant is concerned.
9. It is evident from the scheme of the said rules and the principles governing the determination of the normal value, export price and margin of dumping contained in Annexure-I, that in case of non-market economy country, normal value is required to be determined by the Designated Authority as per paragraph (7) on the basis of:- (i) the price of constructed value in a market economy third country, or (ii) the (export) price from such a third country to other countries, including India, or (iii) where it is no possible to determine it on the above basis, then on any other reasonable basis including the price actually paid or payable in India for the like product duly adjusted, if necessary, to include a reasonable profit margin.
9.1 The designated authority is required to select an appropriate market economy third country in a reasonable manner keeping in view the level of development of the country concerned and the product in question. There is a requirement under paragraph 7 of Annexure-I to the rules, of informing the parties to the investigation about the selection of the market economy third country and giving them a reasonable period of time to offer their comments. It is evident from the scheme of the rules that the principles for determination of normal value reflected in paragraph 1 to 6 are not required to be followed in case of non-market economy countries unless the presumption is rebutted. Therefore, the designated authority was bound to follow the principles laid down in paragraph 7 for determining the normal value.
The designated authority admittedly did not select the market economy third country in the present case. As noticed hereinabove, out of the three known-exporters who responded, Ukraine was itself a non-economy country, and, therefore, there was no question of selecting that country for the purpose of determining the normal value in case of appellant under paragraph 7. As regards korea, since it did not give any response to the questionnaire, it could not have been selected as a market economy country. Admittedly, there was no suggestion by any of the parties to treat any country as a market economy third country.
Since no other exporter had responded to the questionnaire, there was absolutely no scope for selecting any market economy third country in the present case. The designated authority was, therefore, free to act on any other reasonable basis including the price actually paid or payable in India for the likely product duly adjusted, if necessary, to include a reasonable profit margin, as contemplated by paragraph 7 itself. Therefore, the determination of the normal value made by the designated authority in case of the appellant on the basis of the material furnished by the domestic industry was a reasonable basis.
Since the appellant had not rebutted the presumption under the proviso to paragraph 8 (2) by providing any information and evidence to the designated authority, as contemplated therein, it would have been very unreasonable on the part of the designated authority to rely on the information furnished by the appellant for determining the normal value when paragraph 7 of Annexure 1 to the rules clearly indicated that the normal value in case of imports from non-market economy countries was to be determined on the basis of the price or constructed value in a market economy third country. When there was no scope for selecting market economy third country, as has happened in the present case, the material furnished by the appellant from nonmarket economy country, could not be taken into consideration by resorting to the third alternative under the phrase "on any other reasonable basis" occurring in paragraph 7, despite the presumption not being rebutted by the appellant under the proviso to paragraph 8 (2) of the said rules. We are of the opinion, that in the present case the designated authority had no option but to act upon the information furnished by the domestic industry for working out the normal value under paragraph 7 which was a reasonable basis for the designated authority to adopt. There is, therefore, no substance in the contention that the impugned final findings or the notification are violative of paragraph 7 of Annexure-1 to the said rules.
10. As regards the determination about injury and causal link, the material on record clearly justified the findings reached by the designated authority. The appellant industry was at a nascent stage and it had just commenced commercial production from April 2002. The word "injury" as defined in the opening part of Annexure-II to the rules would mean both injury or threat of material injury to domestic industry and also material retardation of the establishment of such an industry. The designated authority has taken into consideration all the injury parameters authority has taken into consideration all the injury parameters for determining that the dumped imports resulted in injury to the domestic industry. Though there was some increase in sales during the period of investigation, it was noticed that goods could be sold with lot of difficulty, as the prices offered to the petitioner were very unremunerative. The petitioner was not able to produce optimally in the absence of firm orders which resulted in lower productivity. The production of the subject goods was normally made against specific requirements of the customers. The material on record disclosed that the landed value of imports from the subject countries was considerably lower than the selling price of the domestic industry resulting in price under-cutting. The domestic industry had no option but to accept the orders at low prices which wee not remunerative and did not permit recovery of even cost of production to the domestic industry. It is because of the lower prices of imported product that the domestic industry was forced to sell its product at prices below the cost of production. The material on record justifies the conclusion reached by the designated authority that significant dumping was retarding the growth of the domestic industry which had just commenced commercial production during the period of investigation. The production and capacity utilization of the domestic industry was significantly lower than what the domestic industry could have achieved. The petitioner, domestic industry was forced to face severe financial losses. The non-injurious price was fixed for the like articles using the actual cost of production of the subject goods for determining the optimum cost of production for the domestic industry taking into account the normated best consumption norms and the actual price of the raw materials which were consumed for the production of the subject goods during the period of investigation. The designated authority has correctly calculated the injury margin by comparing the ex-factory non-injurious price determined for the period of investigation with the landed value of imported goods.
11. For the foregoing reasons we find ourselves in complete agreement with the reasoning adopted by the designated authority for reaching its conclusions for imposition of the anti-dumping duty. In our opinion, there is no warrant for interference with the impugned Final Findings and the Notification on the basis of any of the contentions raised on behalf of the appellant. The appeal is, therefore, dismissed.
Both the sides admirably co-operated during the hearing and the miscellaneous applications stand disposed off as not pursued.