1. These three appeals under Section 9C of the Customs tariff Act are filed against the final findings dated 06/06/2005 in the mid-term review and subsequent notification No. 78/2005 dated 01/09/2005 vide which the definitive anti dumping duty of US$ 138.39 was imposed on the imports made from Korea Kumho Petrochemicals.
2.1 In appeal No. C/935 of 2005 the Domestic Industry is in appeal against the final findings and is seeking to modify the final findings and increase in the anti dumping duty on the ground that the designated authority has not calculated the expenses incurred on the S&GA expenses.
2.2 In appeal Nos. C/68 and 69 of 2006 the Exporter Korea Kumho Petrochemicals and importer Rishiroop Polymers Ltd., are challenging the impugned final findings and the notification by which the anti-dumping duty imposed on the exporter was continued, at an enhanced rate pursuant to the mid-term review.
3. The designated authority had initiated mid-term review investigation of the anti-dumping duty that was extended after sunset review. The designated authority on a request by the exporter Korea Kumho Petrochemicals initiated this mid-term review. The period of investigation for the mid-term review was 11^st January 2003 to 31st December 2003. The designated authority sent questionnaires to the known exporters and importers. The exporter from Germany did not co-operate and the exporter from Korea co-operated and responded to the exporter's questionnaire. The importer of the subject goods also responded to the importer's questionnaire. The designated authority conducted a public hearing on 15^th July 2004 and invited comments from all interested parties. The designated authority conducted on the spot verification of the records of the exporter and domestic industry. The authority sent the verification report of the exporters record to the exporter on 8 November 2004 and sought clarification from them. The exporter did not respond despite given extension of time by the authority. The authority issued disclosure statement on 15 March 2005, wherein it was disclosed that there is dumping of NBR from Korea and Germany and the dumped imports are causing injury to the domestic industry. All the interested parties filed their written response to the disclosure statement. The authority after considering the comments to the disclosure statement, in its final findings came to conclusion that the dumped imports are causing injury to the domestic industry and discontinuation of the anti-dumping duty would also cause injury, hence recommended the continuation of the anti-dumping duty at an enhanced rate.
4. The learned Counsel appearing for the exporter and importer submits that their challenge is restricted to the calculation of the dumping margin worked out by the authority and they are not challenging the injury parameters in their appeal. It was contended that the calculation of the dumping margin is erroneous as the authority has wrongly considered the non-existent data and has not considered the detailed comments made by the exporter to the disclosure statement. It was contended that while working out the Normal value of the NBR the authority has made unknown addition to the raw materials cost which in turn has increased the normal value of NBR. It was also further contended that this increase was towards the VAT and transportation charges of the main raw material i.e. "Acrylonitrile". It was contended that the exporter during the verification of his records had produced the books of accounts and had also given all the invoices vide which the said raw material was purchased. It is his submission that the landed cost of the raw material was verified by the authority in their factory and had not found any amount debited by the exporter in their accounts for the VAT and transportation of the raw material. It was also his contention that the raw material is transported across the fence thru pipelines and the said pipeline belonged to the supplier and the invoice price is the final cost of their raw material. The non-consideration of these submissions has increased the cost of raw material has jacked up the normal value of their NBR. As regards the export price it is submitted that the authority has calculated the export price based on the evidences submitted by the appellant. It was contended that the authority has reduced from the export price additional amount of inland freight charges and packing cost. It is his submission that all the exports made by the appellant is from Ulsan port and only few are made thru Busan port, that the appellant has rate contract for the transportation of NBR to Ulsan and Busan port and also for domestic sales. It is submitted that they had produced the rate contract and the evidences supporting their claim, despite verification of the records the authority has arrived at the weighted average of the transportation cost and reduced the same from the export price. As regards the packing cost it is submitted that the for export to India the appellant uses only paper bags for packing NBR and for domestic sales wooden pallets are used. In support of his claim they produced the Invoices and packing list of the exports made during the POI and contends that the authority has deducted additional amount of packing cost from the export price. It is his submission that the net effect of all these is that there is increase in the Normal value and reduction in the Export price due which the dumping margin is skewed and there is increase in the imposition of antidumping duty from US $ 106.16 as imposed after sunset review to US $ 138.39. It is his submission that the appellant had come in for mid-term review claiming that the dumping margin has reduced considerably and on the investigation the authority has held otherwise. He also submitted that the cost of raw material, packing cost and inland transportation cost was never challenged in the initial investigation, first mid-term review and sunset review, only in this mid-term review the authority has taken a different view. He submits that he is not challenging the allocation of R&D expenses in this case due to lack of supporting documents.
5. The learned advocate appearing for the domestic industry submits that the conduct of the exporter in the initial, mid-term and sunset review was not above board in as much that they never submitted any details in one shot but chose to submit only few details, indulge in litigation in various courts to frustrate the authority in coming to correct conclusion. It is contended that the authority would find it difficult to work out the cost and dissect the information in the accounts unless until the exporter files the details in proper form. It is also submitted that exporter has not produced the agreement regarding the supply of the raw material and has not shown the ownership of the pipeline to the authority and as regards VAT it is submitted that it is common knowledge that VAT is applicable in all sales and purchases made in Korea. It is submitted that the exporter has not produced any evidence in support of their claim and has only produced random invoices and that the appellant cannot now take up the issue having failed to respond to the verification report. It was contended that filing response to the disclosure statement is belated and the authority could not have gone in to the details and verified the data at that time. It was submitted that the exporter couldn't make up a lost case, in the comments to the disclosure statement and seek for reworking out the dumping margin on the products under consideration. It was also submitted that the authority has not considered the fact that there was no material produced by the exporter while seeking the mid-term review but for the reduction in Tariff rate of the customs, in the absence of any material evidence, the designated authority has erred in initiating the mid-term review. It was also submitted that the domestic industries were not served with the copy of application, which in turn has deprived an opportunity of filing objections to initiations of mid-term review.
6. The learned advocate appearing for the designated authority submits that the designated authority has initiated the mid-term review on an application by the exporter due to change in the circumstances. It is his submission that the reduction in customs duty will warrant a mid-term review in view of the fact the extended anti dumping duty was imposed on the reference price basis. It was also his submission that the authority did not initiate the mid-term review only on this ground, but considered the overall situation and then took a decision of mid-term review. It is his submission that the exporter from Germany did not co-operate while the exporter from Korea co-operated. It was further submitted that the designated authority had issued a verification report to the exporter after verifying the records produced and sought clarification from the exporter that did not come and hence on the basis of on the spot verification, the authority came to a conclusion that in this case the anti dumping duty has been enhanced. It was his submission that the exporter did not produce the invoices and other documents to the authority during the course of investigation to substantiate their submissions. It was submitted that during the course of investigation the authority did not find NBR packed for export purposes, which would indicate, that the packing was different for export purposes and the exporter did not produce any evidence to substantiate that there was no VAT payable on the main raw material. It was also submitted that there was a big gap in the contracts of transportation costs, in as much that the transportation cost within Korea was much higher than the transportation cost of the goods meant for export and hence the authority has struck a weighted average to arrive at the inland freight component. He submits that the SGA expenses were considered based on the figures as reported in the balance sheet of the exporter and it has been correctly worked out.
7. After the sunset review of the imposition of the antidumping duty on the NBR imported from Korea and Germany, the Government of India extended the imposition definitive antidumping duty on the NBR imported from Korea and Germany, for a further period of Five years by customs notification No. 111/2002 dated 10^th October 2002. The designated authority initiated the review investigation of the antidumping duty imposed on the imports of NBR from Korea and Germany on an application filed by the exporter from Korea. It has been strongly contended by the domestic industry that the initiation of mid-term review was unwarranted and is being undertaken without any material evidence in support. We find that in a similar issue as regards the initiation of mid-term review, in the case of Saudi Basic Industries corporation (vide Final Order No. 20-24/06-AD dated 4-5-2006) we have held as under: Rule 23 provides for review of the need for the continued imposition of anti-dumping duty which can be done by the designated authority from time to time. Such review may be done if the designated authority is satisfied on the basis of information received by it that there is no justification for the continued imposition of such duty. At the stage of initiating such mid-term review, the designated authority can act on the basis of information received by it from the interested parties. It is during the investigation, after it is initiated, that disputes may arise as to the nature and efficacy of such information. However, the initiation will not be vitiated, if the designated authority has acted on the basis of information received by it by being satisfied that a review was called for with a view to ascertain whether there was need for the continued imposition of the anti-dumping duty.
In the case before us we find that the designated authority initiated the mid-term review not only based on the request letter of the exporter/importer, but also on his appreciation of the situation. It is on record that the designated authority had called for the information from DGCIS, the import prices of the subject goods, and found that the same has gone up substantially. We are of the opinion that the prejudice test is the test that weighs in the mind of designated authority in these kinds of cases. Rule 23 contemplates that the designated authority's subjective satisfaction based on the objective data is in itself enough for the initiation of the mid-term review. The designated authority in this case has reached subjective satisfaction on the basis of the material available and changed circumstances, as reflected in paragraph 2 of the final findings, we hold that the initiation of mid-term review was validly done in exercise of the powers of the designated authority under Rule 23 of the said rules.
7.1 In this case the designated authority has imposed the anti-dumping duty on the finding of the dumping margin worked out by him after verifying the records of the exporter. The designated authority has worked out the dumping margin as 13.22% and imposed US$ 138.39 as antidumping duty for the imports made from the appellant exporter.
Dumping Margin calculation is based on the Normal Value and export price of the subject goods. The designated authority has to take in to consideration the claims of the exporter and then has to arrive at the dumping margin. This can be done by the designated authority based on the records and, if necessitated, by a verification of the records of the exporter. In this case the designated authority undertook the exercise of verification of the records of the exporter at his premises and arrived at the dumping margin as indicated in the final findings.
It was strongly contended by the appellant exporter that while arriving at the Normal Value the designated authority has erred by enhancing the cost of raw material by 10% towards the VAT and transportation charges.
The production cost of NBR, the subject goods in question, depends upon the cost of main raw material i.e. Acrilonitrile, and increase or decrease in the cost of this raw material would influence the cost of NBR either way. It has come on record that the appellant exporter purchases this main raw material from a company situated within the same complex and the said raw material is transported to the appellant/exporter thru pipelines. The designated authority has enhanced the cost of raw material by 10% on the ground that the appellant has not produced any evidence regarding the ownership of the pipelines. We find that the appellant had in fact produced the invoices of the purchase of raw material, which indicated a particular price; there was no tax payable on these purchases as the appellant was making the payment in foreign exchange for such purchases. It is also on record that the said raw material is transported through pipelines. The designated authority has not brought on record that there was an additional payment from the appellant's side to the supplier of raw material over and above the amount shown in the Invoices. The appellant had produced exemption granted by the Korean authorities from payment of VAT if the payment is made in foreign exchange, which is not rebutted. In the absence of any evidence indicating additional payment over and above the invoice price shown by the appellant in the purchase register, we find strong force in the appellant/exporter's contention.
We are of the view that the enhancement of the cost of raw material by 10% by the designated authority is unwarranted and not in consonance with principles of arriving at the cost of production.
7.2 As regards the cost of inland freight adjustments made in the export price of the subject goods, we find that the appellant/exporter had produced contracts entered by them with the transporters. It is on record that the appellant had contracted three different rates for the transportation of his goods. It is also on record that the appellant exports subject goods through Ulsan port, which is 15 kms. away, and also through Busan port, which is 120 kms. away from the factory of the appellant/exporter. It is a common knowledge that the transportation cost will depend upon the distance traversed. It is on record that the cost of transportation charges from Busan port is more than the transportation cost from Ulsan port. While arriving at the allowable deduction as regards the inland freight the designated authority has not considered the fact that out of 130 consignments exported by the appellant/exporter, 127 consignments were exported through Ulsan port and only 3 consignments were exported thru Busan port. The designated authority arrived at the weighted average of the total transportation cost incurred by the appellant, which included the transportation cost of the goods made in the domestic market. When the appellant had produced the contracts for the transportation cost for the goods exported during the period of Investigation and the relevant records to show the actual payments made, it was not open for the designated authority to arrive at a weighted average for inland freight charges.
We find that the appellant/exporter had made available all the relevant material on this respect to the designated authority and though it was verified, it was not relied upon by the authority while arriving at the export price. Hence, we find strong force in the contentions raised by the appellant/exporter on this Count.
7.3 As regards the enhanced deduction of the packing cost from the export price it on record that the appellant/exporter had exported the subject goods to India by packing them in an individual paper bags. The packing list and the export invoices on record indicate that the appellant/exporter had stuffed 500 bags of gross weight of 35.4 kgs in each container. The net weight as indicated on the invoices is found tallying with the total net weight. The designated authority has discarded this evidence by a finding that the appellant has not produced goods packed in paper bags for verification and all the goods in the factory during the verification were in wooden pallets. We are of the view that since the export invoices and the packing list of the subject goods indicate that the goods were stuffed in the containers individually, a fact borne out from the bill of lading, the designated authority should not have summarily discarded this evidence. A mere absence of the goods packed in paper bags, in the factory of the appellant/exporter could not be a ground for enhancing or increasing the packing cost, for deduction from the export price. On this ground also we find much force in the contentions of the appellant.
7.4 In the present case, however, we find that the authority has correctly come to the conclusion that there was dumping of the subject goods from the appellant exporter, but has wrongly arrived at the dumping margin without considering legitimate claims of the appellant/exporter, which has resulted in the enhancement of the anti-dumping duty on the subject goods. We are unable to agree with the designated authority on the margin of dumping and the amount of anti-dumping duty imposed on the subject goods when imported from the appellant/exporter for the reasons mentioned above. On a specific query, as what will be the effect on antidumping duty if the adjustments as claimed by the appellant/exporter are allowed, the designated authority was unable to indicate the exact amount.
7.5 At the same time, the learned advocate appearing for the appellant/exporter submitted a detailed working which indicates that as a result of the adjustments claimed, the antidumping duty that may be imposed will work out to U.S. $ 38.73 P.M.T., if imported from appellant exporter. Copy of this working was handed over to the representative of designated authority, and it was not disputed.
7.6 In view of the facts and circumstances as mentioned above, the appeals filed by the appellant/exporter/importer are allowed to the extent that the antidumping duty imposed vide notification No. 78/2005 dated 1.9.2005 for the import of subject goods from Korea Kumho Petrochemicals will be collected at the rate of US$ 38.73, instead of US$ 138.39 per MT. We, therefore, while allowing the appeals of the appellant/exporter/importer direct that the antidumping duty imposed under impugned notification shall be levied at the rate of US$ 38.73 per MT and the impugned notification will accordingly amended by the central government.
7.7 We find that the appeal filed by the domestic industry is more or less in support of the findings of the designated authority, enhancing the anti-dumping duty in mid-term review. As we have already held, that the designated authority has erred in calculating the dumping margin, the appeal filed by domestic industry fails and is dismissed.
8. For the foregoing reasons, the appeals filed by exporter/importer are allowed, subject to the direction that the impugned notification No. 78/2005 dated 1st September 2005, will be suitably amended by the Government of India by imposing the antidumping duty at the rate of US$ 38.73 per MT on the subject goods imported from Korea Kumho Petrochemicals and the appeal filed by the domestic industry is dismissed.