NOTIFICATION NO. 41/1/2001-DGAD DATE 19/09/2002

Anti-dumping investigation concerning imports of Flexible Slabstock Polyol of molecular weight 3000 to 4000 originating in or exported from USA, Japan, Singapore and European Union [FINAL FINDINGS]
Having regard to the Customs Tariff Act, 1975--as--amended in 1995 and the Customs Tariff (Identification, Assessment and Collection of Anti-Dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995, thereof.

A. PROCEDURE:

2. The procedure described below has been followed with regard to the investigations:-

(i) The Designated Authority (hereinafter referred to as Authority), under the above Rules, received a written petition from M/s. Manali Petrochemicals Ltd. (MPL) on behalf of the domestic industry, alleging dumping of Flexible Slabstock Polyol of Molecular Weight 3000 to 4000 ( hereinafter referred to as subject goods or FSP) originating in or/and exported from U.S.A, Japan, Singapore and European Union (hereinafter referred to as subject countries);

(ii) The Authority notified the Embassies/ Representative of the subject countries in India about the receipt of dumping application made by the petitioners before proceeding to initiate the investigation in accordance with sub rule (5) of Rule 5 supra;

(iii) The Authority on the basis of information and evidence available before it decided to initiate anti dumping investigations against imports of subject goods from the subject countries;

(iv) The Authority issued a Public Notice dated the 21" September, 2001 published in the Gazette of India, Extraordinary, initiating anti dumping investigations concerning imports of subject goods from subject countries, falling under Chapter Heading 39.07 of Schedule I of the Customs Tariff Act.

(v) The Authority notified preliminary findings vide notification dated 14th December, 2001 on anti-dumping investigation concerning imports of subject goods from the subject countries and requested the interested parties to make their views known in writing within forty days from the date of its publication;

(vi) The Authority forwarded copies of the preliminary findings to the known interested parties, who were requested to furnish their views, if any, on the preliminary findings within forty days from the date of its publication;

(vii) The Authority also forwarded copies of the preliminary findings to the known interested parties and Embassies of U.S.A, Japan, Spain, Germany & High Commission of Singapore in India with a request that the exporters and other interested parties may be advised to furnish their views on the preliminary findings in the time frame as stipulated.

(viii) The Authority provided opportunity to the interested parties to present their views orally on 11.04.2002. All parties presenting views were requested to file written submissions of their views expressed as prescribed under the Rules. The parties were advised to collect copies of the views expressed by the opposing parties and offer rebuttals, if any;

(ix) The Authority made available the public file to all interested parties containing non-confidential version of evidence submitted by various interested parties for inspection, upon request;

(x) Issues which have been dealt with in the preliminary findings have not been repeated herein for the sake of brevity. However, the arguments raised by the interested parties subsequently have been appropriately dealt in these findings;

(xi) In accordance with Rule 16 of the Rules supra, the essential facts/basis considered for these findings were disclosed to known interested parties on 2.9.2002 vide a disclosure statement and comments received on the same have also been duly considered in these findings;

(xii) The period of investigation for the purpose of these investigations is from 1St October, 2000 to 30th June, 2001.

(xiii) * * * * * in this notification represents information furnished by the interested party on confidential basis and so considered by the Authority under the Rules;

B. VIEWS OF PETITIONERS, EXPORTERS, IMPORTERS AND OTHER INTERESTED PARTIES AND EXAMINATION BY AUTHORITY.

3. The views expressed by various interested parties prior to the preliminary findings have been discussed in the preliminary findings. As stated earlier, arguments and submissions made subsequent to the preliminary findings are discussed in the relevant paragraphs herein below to the extent these are relevant as per rules and have a bearing upon the case. The Authority confirms that it had resorted to rule 6(8) supra wherever the information is not as per the prescribed proforma or the information received was found to be deficient.

Views of Importers and Exporters

(i) M/s. Kurlon Limited submitted that the domestic industry is working at very low capacity and it is necessary to import polyols for the shortfall. The domestic industry has not updated the technology to enable them to compete with global suppliers either in the quality or in the cost.

(ii) M/s. DP Foam Private Ltd. submitted that the product had protection of safeguard duty earlier, the plant capacity of domestic industry does not have the viable size of a polyol plant, the polyol exported is hetero polyol, there is a general global slow down of the economy and price of almost all polymers in general are under pressure. The authority did not quantify the sales of the petitioner nor the accumulated stock due to said dumping.

(iii) M/s. Sheela Foam Private Ltd., M/s. Pallavi Foam Industries Private Ltd., M/s. Feather Foam Enterprises Private Ltd., M/s. Soft Foam Industries Private Ltd. have submitted similar submissions, the salient points of which are as follows:

(a) The authority has arrived at the preliminary findings for Normal value on the basis of insufficient evidence. Even if the exporters had not supplied full information, the designated authority has the responsibility to examine the entire evidence placed before them.

(b) As held by the Hon'ble Supreme Court in the case of Designated Authority Vs. Haldor Topsoe, the authority has to take into account all the material available before it and was not bound to look into the material which was produced by the interested party.

(c) The Designated Authority in the present case had not taken up the matter with regard to the evidence to both dumping and injury simultaneously.

(d) Under the Customs Tariff Act, the Govt. may impose anti­dumping duties not exceeding the margin of dumping, the authority had recommended a uniform anti-dumping duty on export from all the subject countries. There could not be a single normal value for all the exporting countries.

(e) The anti-dumping duty is exporter specific. By recommending a uniform anti-dumping at all the exports from the named exporting countries, no scope has been left for application of sub-section 1(c)(ii) of 9B relating to voluntary undertaking.

(f) There being only one domestic producer, it appeared doubtful whether the injury has been determined in a dispassionate manner.

(g) The operating results of M/s. Manali Petrochemicals Ltd. are not as adverse as had been made out in their petition for imposing of Anti-dumping duty. As per their Annual Report for the 1999-2000 their sales of Polyol had gone up from 5583 MT and valued Rs.4797.60 lacs in the year 1998-99 to 7070 MT valued Rs.6,402.06 lacs in the year 1999-2000. During this period their capacity utilization had gone up from 90% to 104% with effect from 1.4.2000. There has been merger of SPIC organization, a sister company in SPIC Group manufacturing the same line of products with Manali Petrochemicals Ltd. As per directors report in the Annual Report for year 2000-2001, number of benefits were going to accrue as a result of this merger. There is no mention of this fact of merger and the benefits reaped as a result of the such merger in the petition by Ws. Manali Petrochemicals Ltd.

(h) M/s. Manali Petrochemicals Ltd. is also having intentions of entering into joint ventures with Polyol manufacturers situated in exporting countries.

(iv) Ws. Polyurethane Association of India (Flexible PU-Cell) have submitted similar submissions as brought out in the above paragraphs. In addition, they have submitted that in the preliminary findings the interests of the user industries have been completely ignored and their submissions have not been fully met. The Authority has recommended duty at an extremely high uniform, price. The foam industry is passing through a critical phase and the subject raw material is used for consumer products. The Authority has chosen to impose provisional anti-dumping duty on the basis of injury margin of the petitioner. The duty should be only in Indian rupees and not in USD. The alleged injury to the petitioner is due to its own inefficient and obsolete technology and way of conducting their business. The petitioner had got protection under the safeguard duty provisions. The imposition of duty on polyol shall lead to imports of down stream products like foam and laminated foam from the neighbouring countries affecting the domestic PU foam industry.

(v) M/s. Polyurethane Association of India (Slab Stock Foam Cell) have submitted that as per the balance sheet of the domestic industry for the financial year 1999-2000 there has been a cash profit. The petitioner has misrepresented the facts by giving only the imports for the nine months period which have been arrived at by extrapoliting the figures for the less months which is the best period of the industry. The figures in respect of capacity utilization are not factually correct. The petitioner is not affected by the fall of rupee as compared to the USD as they do not import any inputs for their consumption. The petitioner had at no stage to compete with the low price and dumped imports of subject goods from the subject countries as the prices of polyol is consistent throughout the world. The finding relating to drop in employment, increase in inventory and certain other indicators is not based on facts. The causal link is not tenable. There is no comparison between the cost of production of the stated exporting countries and the petitioner as the exporting counties have bigger plants having 20 times more capacity.

(vi) M/s. Dow Chemicals International Private Ltd., the exporter from USA has reiterated their earlier submissions. In addition, it is submitted that the inability of the petitioner to increase its capacity utilization is not due to imports but due to their internal problems. The petitioner has not shown adequate evidence that the alleged injury is due to imports and is silent on the measures that it had promised to take to become competitive for it was granted safeguard duty.

(vii) M/s. Repsol of Spain and Shell Eastern Petroleum (Pte.) Ltd., Singapore have reiterated their earlier submissions.

(viii) M/s. Bayer Polyurethane's Asia Pte. Ltd. reiterated their earlier submissions and further submitted that the Authority did not take into consideration that the prices of this product in the entire region were low and there was no intention and justification to offer low prices and cause dumping in the Indian market.

The Authority proposes to deal with all these submissions to the extent they are relevant to the anti-dumping investigations and have not been addressed in the preliminary findings.

C. PRODUCT UNDER CONSIDERATION AND LIKE ARTICLE

4. The product under consideration in the present petition is Flexible Slabstock Polyol of molecular weight 3000 to 4000. The product is classified under Chapter Heading 3907.20 of the Customs Tariff Act but the same has also been cleared under Chapter Headings 3907.91 and 3907.99. However, no substantive arguments have been advanced subsequent to the preliminary findings regarding the product under consideration. The Authority, therefore, confirms the Preliminary Findings as regards the product under consideration. It is reiterated that the customs classification is indicative only and is in no way binding on the scope of investigation.

D. LIKE ARTICLE:

5. The petitioners have claimed that the goods produced by them are like; articles to the goods originating in or exported from the subject countries. An issue had been raised by some of the exporters; that the products produced by the petitioners and the imported products cannot be considered as like articles. This issue has already been extensively examined in the preliminary findings and in absence of any fresh arguments, the authority confirms the preliminary findings on this aspect.

E. DOMESTIC INDUSTRY:

6. As per Rule 2(b) of the Anti Dumping Rules, "domestic industry means the domestic producers as a whole engaged in the manufacture of the like article and any activity connected therewith or those whose collective output of the said article constitutes a major proportion of the total domestic production of that article except when such producers are related to the exporter; or importers of the alleged dumped article or are themselves importers thereof in which case such producers may be deemed not to form part of domestic industry." The definition of domestic industry given above is further clarified by Article 5.4 of WTO Anti Dumping Agreement which reads as follows:

" ... ... ... ... ... The application shall be considered to have been made `by or on behalf of the domestic industry' if it is supported by those domestic producers whose collective output constitutes more than fifty percent of the total production of the like product produced by that portion of the domestic industry expressing either support for or opposition to the application. However, no investigation shall be initiated when domestic producers expressly supporting the application account for less than 25% of the total production of the like product produced by the domestic industry. "

The petition has been filed by M/s. Manali Petrochemicals Ltd. (MPL), who are the only producers of the* subject goods in the country. Therefore, they have the standing to file the application on behalf of the domestic industry. Further, the petitioner has neither imported the subject goods nor are they related to any importer/exporter of the subject product. The petitioner, therefore, satisfies the criteria of standing to file the petition on behalf of the Domestic Industry in terms of Rule 5 (3) of the Rules supra.

F. DUMPING

7. NORMAL VALUE:

(i) JAPAN:

No exporter has responded to the exporters' questionnaire at any stage of the investigations. Accordingly, the Authority has determined the normal value on the basis of the best information available to it in terms of Rule 6 (8) of the Anti­dumping Rules. The constructed normal value on the basis of cost of production plus SG & A expenses plus profit in terms of Section 9 (A) of the Customs Tariff Act read with para 4 of Annexure I to the Anti-dumping Rules works out to US$ *****/MT.

(ii) USA:

The exporter M/s. Dow Chemicals Company from USA responded to the questionnaire. The deficiencies in their response were pointed out to them on several occasions but the required information had not been supplied. However, the authority has considered the information on record, which it deems reasonable, for the purpose of arriving at normal value. From the available information, the authority considers the domestic sales to be in the ordinary course of trade. The weighted average of all these transactions have been considered reasonable to be adopted as domestic sales price. The average comes to US$ * * * * */MT. The company has claimed US$ * * * * */MT which comes to * * * * *% of weighted average selling price on account of discounts, commission & price adjustments for which no explanation have been given by the company. The Company was specifically asked to clarify this adjustment to which no explanation has been supplied. It has been mentioned by the company that the prices are negotiated and adjusted on monthly or quarterly basis and hence the actual price and the invoice price may be quite different depending on the market situation. However, in the absence of any supporting details, the Authority is not in a position to accept this claim. The Authority notes that in the absence of properly substantiated claims, the adjustments claimed by any interested party are liable to be rejected. However, considering the information available with the authority in respect of commission etc., an adjustment of *****%, as considered for the exporters from EU, is considered reasonable and allowed. The company has claimed US$* * * * */MT on account of logistic cost, US$ * * * * */MT on account of domestic freight and US$ * * * * */MT on account of domestic insurance. In the absence of complete information, these could not be verified. However, going by comparative reasonableness of the adjustments, the Authority has allowed these adjustments as claimed. The company has also claimed packing adjustment @ US$ * * * * */MT for which the basis of this claim has been submitted subsequent to the disclosure statement. Accepting the submissions of the company in this regards, the adjustment on account of packing have been allowed. After making these adjustments, the ex-works sale price for domestic sales works out to US$ * * * * */MT for the POI which the authority has adopted.

Though M/S DOW Chemicals expressed its willingness for an on the spot verification, the Authority observed that the information supplied by them was grossly deficient for the purpose of on the spot verification. In the absence of specific clarifications to specific queries raised ' by the authority, any verification was not considered to be warranted and appropriate.

(iii) EU:

The Authority has received the response to exporters questionnaire only in respect of one exporter namely Repsol Quimica, S.A. from Spain. No other exporter responded even after the preliminary findings or the public hearing. As regards Repsol Quimica, it is observed that the information submitted by the exporter is grossly inadequate for the authority to place its reliance on the same. It is noticed that the said exporter has not even provided the invoice-wise details of the Flexible Slabstock Polyol sold in the domestic market. The exporter has merely given the month-wise details for the period of investigation which is not sufficient for the authority to arrive at any meaningful findings , with regard to its normal value. Further, it is observed that the aggregated, information with regard to domestic sales is for entire EU and not invoice-wises as required, the Designated Authority leas been prevented from analyzing the sale ;pattern for ascertaining the appropriate normal value. It is also observed that the exporter has been admittedly selling the product under consideration below its cost of production and thus the domestic sales are not in the ordinary course of trade. Under the circumstances, the Authority has determined the normal value on the basis of cost of production plus SG &A expenses plus profit in terms of Section 9 (A) of the Customs Tariff Act. Based on the above. the normal value works out to Euro * * * * */MT.

(iv) SINGAPORE:

M/s. Shell Eastern Petroleum (Pte) Ltd., Singapore has furnished its response to the questionnaire containing information relating to domestic sales and exports to India. The Authority has also conducted an on the spot verification of the exporter's information. It has been found that the domestic sales of the exporter are above the cost of production plus administrative, selling and general costs and is considered to be in ordinary course of trade. Therefore, normal value in respect of Singapore is considered on the basis of sales price in domestic market. Various adjustments claimed have been verified. The Authority has allowed the adjustments on account of discounts US$ #**** /MT, inland trucking US$ * * * * * /MT, expenses on account of cross harbour to Pandan US$ * * * * */MT, handling at Pandan US$ * * * * */MT, technical Support and impact of credit cost US$ * * * * * & * * * * * /MT to the extent admissible, the details of which have been disclosed to the exporter in the disclosure statement. The normal value on the above basis for this exporter comes to US$ *****/MT.It has been argued by some parties that the Designated Authority must not rely only upon the information submitted by the domestic industry in accordance with the decision of the Hon'ble Supreme Court in the case of Designated Authority . versus Haldor Topsoe. It may be mentioned that the Authority has taken into account all the information on record to the extent it was reliable and relevant. The apprehensions expressed by the importers in this regard are therefore misplaced.

8. Export Price

In the case of cooperative exporters, the Authority has relied upon the information submitted in this regard and accepted the export prices after making due adjustments, the details of which have also been communicated to the respective exporters. As regards other exporters, the Authority is constrained to rely upon the best available information. In this connection, it is observed that there is no dedicated code for the product under consideration and therefore, the DGCI&S data would not be adequate to arrive at the export price. The domestic industry has submitted adequate information from the secondary sources which in turn are based on the customs daily lists. This data­base indicates the actual description of the imports made under particular Chapter Heading and therefore, gives a reliable estimate of the export price. Based on the data from secondary sources and after making appropriate adjustments in the CIF value, the export price for import from the subject countries have been worked out.

(i) JAPAN:

Since none of the exporters from Japan has cooperated with the Designated Authority in the investigations, the Authority has no option but to proceed on the basis of the best available information. As stated in the aforesaid paragraphs, the domestic industry has submitted information in this regard from the secondary sources, which in turn is based on the customs daily list. Based on this data and after making appropriate adjustments in the sale value, the. export price for import from Japan works out to US $ * * * * */MT.

(ii) USA:

The exporters had submitted information of goods shipped from warehouse from Singapore to India and they have mentioned that the goods have not been directly shipped from the plant. The company is having its plant at Freeport Texas, USA. The exporters were asked specific information in this regard as to the incidence of expenditure after ex-factory in USA itself to which no reply was given despite several opportunities. The exporter has claimed adjustments on account of freight to Singapore US$ *****/MT, storage, drumming, handling US * * * * */MT, overseas freight (presumably from Singapore to India) US$ * * * * */MT & overseas insurance US$ * */lMT which are considered reasonable and are allowed. The; ex-factory price thus comes to US$ * * * * */MT.

(iii) SINGAPORE:

In respect of M/s. Shell Eastern Petroleum (Pte) Ltd. Singapore, the export price has been determined on the basis of information furnished by the exporter. Adjustments from the export price have been allowed on actual basis. The company has submitted the adjustment on account of discount from the selling price as US$ *****/MT. Further evidence to substantiate this adjustment was called for. On verification of information furnished, the authority has found that commission paid to Indian Agents/Company on account of the product under consideration was @ * * * * % and not @******% as claimed by the exporter. In reply to the disclosure statement the exporter has submitted that this adjustment has been claimed in respect of service fee on a principal to principal basis and not by way of commission to an agent. On the basis of information submitted covering individual invoices, the commission for the product comes to * * * * *%. Thus, appropriate adjustment of *****% on account of commission has been made. In view of the information submitted covering details of overseas freight, the weighted average as claimed by the company in reply to the disclosure statement @ US$ * * * * */MT has been allowed. The adjustments on account of packing US$ *****/MT, cross harbour to Pandan US$ * * * * */MT, handling at Pandan US$ * * * * */MT, inspection at loading US$ * * * * */MT, overseas insurance US$ *****/MT & impact of cost of credit US$ * * * * */MT have been allowed as claimed by the exporter. After allowing these adjustments, the weighted average expert price works out to US$ * * * * */MT.

(iv) EU:

As per the information submitted by M/s. REPSOL, Spain, the selling price for sales in India has been shown as Euro * * * * */MT. The exporter has claimed adjustments on account of discounts & commission, Euro * * * * */MT, packing Euro * * * * */MT, inland freight Euro * * * * */MT, storage Euro * * * * */MT, handling Euro * * * * */MT, overseas freight Euro * * * * */MT, overseas insurance Euro * * * * */MT, shipping charges Euro *****/MT and clearance & handling Euro * * * * */MT. Since the exporter has failed to provide complete information as asked for in the prescribed format, the Authority has not been able to examine its veracity and admissibility. However, based on the information submitted and after allowing the adjustments considered reasonable, the ex-factory export price comes to Euro * * * * */MT.

9. Non Cooperative exporters

(i) In respect of non cooperative exporters from USA, the normal value as determined for M/s Dow chemicals has been considered. For determining the export price, the lowest export price of available transactions has been adopted and adjustments considered for cooperative exporters have been made. This gives dumping margin of 47.86%.

In respect of non cooperative exporters from European Union, the normal value as determined for M/s Repsol has bee considered. For determining the export price, the lowest export price of available transactions has been adopted and adjustments considered for cooperative exporter have been made. This gives dumping margin of 12.67%.

In respect of non cooperative exporters from Singapore, the normal value as determined for M/s Shell Eastern Petroleum (Pte) Ltd.: has been considered. For determining the export price, the lowest export price of available transactions has been adopted and adjustments considered for cooperative exporter have been made. This gives dumping margin of 20.55%.

10. Dumping Margin

The Authority followed the principles governing the determination of normal value, export price and margin of dumping as laid down in Annexure I to the anti-dumping rules. Dumping margins have been determined on the basis of a fair comparison of export price with the normal value in pursuance of the principles laid down in Para 6 .of Annexure-1 to the Rules.

Country/Territory	Exporters/Manufacturers	Dumping Margin
USA	M/s Dow chemicals	34.21%
	Non Co-op exporters	47.86%
Japan	All exporters	57.91
EU	M/s. Repsol	7.98%
	Non Co-op exporters	12.67%
Singapore	M/s Shell Eastern Petroleum Pte. Ltd.	4.43%
	Non Co-op exporters	20.55%

G. Injury Analysis and Causal Link

11. As indicated in the preliminary findings, the Authority observes from the facts available on record that the margins of dumping from each of the subject countries are much more than the 2% limit expressed as a percentage of export price. Also the volumes of imports from each of the country are more than de-minimis. Cumulative assessment of the effects of imports would be appropriate since the exports from the subject countries directly compete with each other and with the goods offered by the domestic industry in the Indian Market. The Authority, therefore, assessed injury to the domestic industry from the subject countries cumulatively.

(i) Changes in market share held by Indian producers: The domestic industry had furnished information with regard to the share of the imports and its effect on the market share of the domestic industry on the basis of the information available in public domain. In the preliminary findings, it was noticed that neither the importers nor the exporters had provided the information in the prescribed format. The Designated Authority has now worked out the import statistics and the analysis has been done on the basis of the information made available to it by the domestic industry, importers and exporters. It has been seen that the market share of the imports from the subject countries as a percentage of the total imports has increased from 83.71% in the year 1999-2000 to 96.98% during the period of investigation. The position is as follows:

Year	Imports from the subject countries (MT)	Total Imports	% Share
1998-99	2350.12	2383.72	98.59
1999-2000	1983.15	2368.65	83.72
Oct.2000-June 2001	4722.04	4869.14	96.98

(ii) Market Share of Imports from Subject Countries (% of Total demand) As indicated above, the Authority has been able to get additional information from exporters and the importers on the basis of which it is revealed that the market share of imports from the subject countries as a proportion of total demand has also sharply risen from 19.43% during 1999­2000 to 45.56% during the period of investigation. The position is as follows:

Year	Imports (MT)	Total Demand	% Share
1998-99	2350.12	8900.58	26.40
1999-2000	1983.15	10207.21	19.43
Oct.2000 - June 2001	4722.04	10364.14	45.56

(iii) Production, Productivity & Capacity Utilization

As indicated in the preliminary findings, it is observed that despite the increase in the production and the capacity utilization of the domestic industry during the period of investigation, the domestic industry has incurred losses due to lower, price realization. It is therefore clear that the domestic industry could retain its customers and market share at the cost of suffering on the financial parameters. Thus, the apparent increase in production as well as capacity utilization has to be seen in the context of the price effect of the dumped imports.

Year	Capacity MT)	Production (MT)	Capacity Utilization(%)
1998-1999	*****	*****	*****
1999-2000	*****	*****
2000-June 2001	*****	*****	*****

(iv) Sales Volume & Value of the Domestic Industry

The sales of the domestic industry has declined marginally by 7.00 % during the period of investigation as compared to the previous financial year.

As regards the sales price, there is some marginal improvement over the last year but it has been claimed by the domestic industry that the increase in price is due to fall of Rs. as compared to the $ and the increase in the cost of the major raw materials and fuel. This is also reflected in the fact that the losses have gone up despite marginal increase in the sales prices. At the same time, it is the claim of the domestic industry that it is not feasible for the domestic industry to increase their prices despite increase in the raw material prices precisely because of dumping. Thus, there is evidence of price suppression on account of dumping by the subject countries.

Year	Sales Volume (MT)	Sales Value (In Rs.lakhs)	Unit Price (Rs./M'T)
1998-1999	*****	*****	*****
1999-2000	*****	*****	*****
Oct. 2000-June 2001	*****	*****	***** *****

(v) Profitability

An examination of the records of the domestic industry indicates that it has suffered injury in the form of direct losses per unit of sale. Thus, it is apparent that it is the price factor alone which can be considered to have led to extensive injury to the domestic industry resulting in losses despite some improvement in capacity utilization as well as production.

Year	Sales Value (In Rs. lakhs)	Cost of Sales (in lakhs)	Profit/Unit
1998-1999	*****	*****	*****
1999-2000	*****	*****	*****
2000-June 2001	*****	*****	*****

(vi.) Return on Investment (Capital employed):

The domestic industry has submitted that the realizations has not been sufficient even to recover the cost of production as well as interest costs. It has been claimed that the domestic industry is entitled to a fair return on its investment but due to the price effect of the dumped imports, the domestic industry has not been able to realize a fair price. The Authority has analyzed the financial information provided by the domestic industry and has also got the verification done. It has been seen that on account of lower prices, the return on capital employed has been negative for the domestic industry which is a critical indicator of injury to the domestic industry.

(vii) Actual and Potential Negative Effect on Cash Flows and Ability to Raise Capital:

It has been noticed that the cash flow position from operating activities of the domestic industry worsened in year 2000-01 in' comparison to year 1999-2000. The impact of negative cash flow has , however, not been segregated for the products covered under the operating activities of the company. The Authority is of the view that the fact that the company is incurring direct losses on its sales is a clear indication that its ability to raise capital has been seriously affected.

(viii) Evidence of lost contracts:

The domestic industry has submitted ample evidence on confidential basis to indicate that they have lost contracts due to the dumped imports.

(ix) Employment:

The employment figures. also show the effect of injury as there is a drop of almost 7% in the employment level despite the fact that it is usually not feasible to reduce manpower due to the existing labour laws.

(x) Increase in Inventories:

The domestic industry has claimed that, it was not able to sell its products in the market due to massive dumping. The inventory with the company increased from * * * * *MT as- on 31.3.2000 to * * * * * MT at the end of June, 200 1. Going by the period to period comparison the inventory has increased from ***** MT as on June, 2000 to ***** MT at the end of June, 2001. It has been claimed by the domestic industry that if immediate relief is not provided they will be forced to shut down their plant.

(xi) Magnitude of Margin of Dumping:

As mentioned in the preceding paras of these final findings, the magnitude of dumping margins from the subject countries is much higher than the de minimis limits, which is quite significant to cause injury to the domestic industry.

(xii) Wages:

While the domestic industry is incurring losses, the existing laws in India do not permit a drop in wages and, therefore, the Authority does not consider this to be a significant factor in the present case.

(xiii) Growth:

The existing. sales volume of the domestic industry in relation to its market share indicates that with the existing price levels, at which the domestic industry has been iced to sell its products, -do not leave any scope for growth in an expanding market.

(xiv) Price Undercutting:

It has been claimed that dumping by the subject countries has had a significant downward impact on the net sales realization by the domestic industry for the subject goods. To hold on to its market share, the petitioners had to compete with low priced and dumped imports of subject goods from the subject countries. The landed values of the imports. Has been found to be significantly lower than the domestic industries net sales realization. The imports were having significantly suppressing/depressing effect on the prices in the domestic market.

(xv) Price Underselling:

The authority has also worked out a fair price for the domestic industry and compared the same to the landed value to arrive at the extent of price underselling. The Authority has noticed that there was a price underselling in the range of 9.91 % to 14.70% during the period of investigation in comparison to the landed price from the subject countries.

H Causal Link:

12. The authority observes that there is a single market for the subject goods where dumped imports compete directly with the goods produced by the domestic industry. Demand for subject Flexible Polyol is showing a healthy growth. Decline in demand is hence not a factor causing injury to the domestic injury. The imported product is sold to meet the similar commercial grades and standard specifications, as domestically produced Flexible Polyol. The imported subject article and the domestically produced goods are like articles and are used for the same applications/end uses. Thus, pricing becomes the most important factor determining purchase of the article from either imported sources or domestic sources. The loss of contracts and the extent of price undercutting clearly show the existence of a causal link between the dumped imports and the consequent injury to the domestic industry.

I. INDIAN INDUSTRY'S INTEREST

13. The purpose of anti dumping duties in general is to eliminate dumping which is causing injury to the domestic industry and to re-establish a situation of open and fair competition in the Indian market which is in the general interest of the country.

14. The Authority recognizes that the imposition of anti dumping duties might affect the price levels of the products manufactured using subject goods and consequently might have some influence on relative competitiveness of these products. However, fair competition on the Indian market will not be reduced by the anti dumping measures. On the contrary, imposition of anti dumping measures would remove the unfair advantage gained by dumping practices, would prevent the decline of the domestic industry and help maintain availability of wider choice to the consumers of subject goods. The Authority notes that the imposition of anti dumping measures would not restrict imports from subject countries in any way, and therefore, would not affect the availability. of the product' to the consumers. The consumers could still maintain two or even more sources of supply.

J. OTHER ISSUES:

15. It has been argued by some of the exporters that the domestic industry's financial position is not adverse as projected by them. In this connection, the Authority observes that under the Anti-dumping Rules, the Authority is required to examine the injury in respect of the product under consideration and the findings in this respect have been dealt with appropriately in the preceding paras.

16. It has also been mentioned by one of the importers that the Authority had erred in recommending provisional duties by resorting to one single normal value. This position is not correct as the Designated Authority has used the information provided by the individual exporters for determination of the normal value. Wherever this information was not available or could not be relied upon, the Authority had no option but to resort to Rule 6(8) as already discussed in the relevant paras.

K. CONCLUSIONS

17. The Authority has, after considering the foregoing, come to the conclusion that:

(i) Flexible Slabstock Polyol as defined above in the para relating to Product under consideration has been exported to India from Subject countries below its normal value;

(ii) the Indian industry has suffered material injury;

(iii) the injury has been caused by the dumped imports from subject countries;

18. The Authority considers it necessary to confirm the anti­dumping duty provisionally imposed on all imports of Flexible Slabstock Polyol from the subject countries in order to remove the injury to the domestic industry. The margin of dumping determined by the Authority is indicated in the paragraphs above. The Authority proposes to recommend the amount of anti dumping duty equal to the margin of dumping or an amount, which if levied, would remove the injury to the domestic industry, whichever is lower. For the purpose of determining injury, the landed value of imports is compared with the non-injurious selling price of the petitioner companies determined for the period of investigation.

19. Accordingly, the Authority recommends the imposition of definitive anti-dumping duty on all imports of product under consideration originating in or exported from subject countries as the difference between the Prices mentioned in column (3) below and the landed value of the imports:

Country/Territory	Exporters/Manufacturers	Reference Price (USD per MT)
(1)	(2)	(3)
USA	M/s Dow chemicals	1597.49
	Other exporters	1597.49
Japan	All exporters	1597.49
EU	M/s. Repsol, Spain	1512.81
	Other exporters	1549.65
Singapore	M/s Shell Eastern Petroleum Pte. Ltd.	1432.65
	Other exporters	1552.45

20. Landed value of imports for the purpose shall be the assessable value as determined by the Customs under the stoms Act, 1962 and all duties of customs except duties under sections 3, 3A, 9 and 9A of the Customs Tariff Act, 1975.

21. Subject to the above, the authority confirms the preliminary findings dated 14.12.2001.

22. An appeal against this order shall lie before the Customs, Excise and Gold(Control) appellate Tribunal in accordance with the act, supra.

Sd/-
L. V. Saptharishi
Designated Authority

Issued by:

Government of India
Ministry of Commerce and Industry
(Department of Commerce), (Directorate of Anti-Dumping and Allied Duties) New Delhi

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