To be published in Part-I Section I of the Gazette of India Extraordinary

F. No. 06/53/2020-DGTR
Government of India
Ministry of Commerce & Industry
Department of Commerce
(Directorate General of Trade Remedies)
Jeevan Tara Building, 4th Floor, 5, Parliament Street, New Delhi -110001

Dated: 24th February, 2022

FINAL FINDINGS

Case No. ADD (OI) - 45/2020

Subject: Anti-dumping investigation (Material-Retardation) concerning imports

of "N, N'-Dicyclohexyl Carbodiimide (DCC)" originating in or exported from
China PR.

Having regard to the Customs Tariff Act, 1975, as amended from time to time
(hereinafter referred as the “Act”) and the Customs Tariff (Identification, Assessment
and Collection of Anti-dumping Duty on Dumped Articles and for Determination of
Injury) Rules, 1995, as amended from time to time (hereinafter referred as the “Rules”)
thereof;

A. BACKGROUND OF THE CASE

2. M/s Clean Science and Technology Limited, erstwhile known as Clean Science and
Technology Private Limited (hereinafter also referred to as the "applicant" or the
“petitioner” or the “domestic industry” or the “DI”) has filed an application before the
Designated Authority (hereinafter also referred to as the "Authority") seeking initiation
of an anti-dumping investigation concerning imports of "N, N'-Dicyclohexyl
Carbodiimide (DCC)" (hereinafter also referred to as "subject goods" or the "product
under consideration" or the “PUC”) originating in or exported from China PR
(hereinafter also referred to as "subject country"), citing reason of material retardation.
3. The Authority, on the basis of prima facie evidence submitted by the applicant issued a
public notice vide Notification No. 06/53/2020-DGTR dated 25th February, 2021,
published in the Gazette of India, Extraordinary, initiating an anti-dumping
investigation in accordance with Rule 5 of the Rules to determine the existence, degree
and effect of the alleged dumping of the subject goods, originating in or exported from
the subject country, and to recommend the amount of anti-dumping duty, which, if
levied, would be adequate to remove the alleged injury in the form of material
retardation to the domestic industry.

B. PROCEDURE

4. The procedure described hereinbelow has been followed with regard to the
investigation:

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a. The Authority notified the Embassy of the subject country in India about the receipt of
the present application before proceeding to initiate the investigation in accordance with
Rule 5(5) of the Anti-Dumping Rules.
b. The Authority issued a public notice dated 25th February, 2021, published in the Gazette
of India, Extraordinary, initiating an investigation concerning the imports of the subject
goods originating in or exported from the subject country.
c. The Authority sent a copy of the initiation notification to the Embassy of the subject
country in India, known producers and exporters from the subject country, known
importers / users and the domestic industry as well as the other domestic producers as
per the information made available to it by the applicant, and requested them to make
their views known in writing within the prescribed time limit.
d. The Authority provided a copy of the non-confidential version of the application to the
known producers/exporters and to the Embassy of the subject country in India, in
accordance with Rule 6(3) of the Rules. A copy of the non-confidential version of the
application was circulated to the other interested parties.
e. The Embassy of the subject country in India was also requested to advise the producers
/ exporters in their country to respond to the questionnaire within the prescribed time
limit. A copy of the letter and questionnaire sent to the producers / exporters was also
sent to them along with the names and addresses of the known producers/exporters from
the subject country.
f. The Authority forwarded a copy of the public notice initiating an anti-dumping
investigation to the following known producers/exporters in the subject country and
offered an opportunity to them to make their submissions known in accordance with
Rule 6(2) of the Rules:

i. Shandong Huihai Pharmaceutical and Chemical Company Limited

ii. Zhanhua Jiashi Chemical Company Limited
iii. Zibo Tiantangshan Chemical Company Limited
iv. Zhejiang Tianyu Pharmaceuticals Company Limited
v. Xinjiang Da Jiang Run Yang Chemical Company Limited
vi. Farmasino Pharmaceuticals (Jiangsu) Company Limited

g. In response to the initiation notification of the subject investigation, the following

producer from the subject country has responded by filing a questionnaire response:

i. Shandong Huihai Pharmaceutical and Chemical Company Limited.

h. The Authority sent Questionnaires to the following known importers / users of the
subject goods in India, calling for necessary information in accordance with Rule 6(4)
of the Rules.

i. Aurobindo Pharma Limited

ii. Mylan Laboratories Limited
iii. Hetero Drugs Limited
iv. Dasami Lab Private Limited
v. Srini Pharmaceuticals Private Limited
vi. Honour Lab
vii. Msn Laboratories Private Limited
viii. Indswift
ix. Aarti Industries Limited

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 x. SMS Lifescience

i. The Authority also sent initiation notification to the following associations asking them
to intimate all their members regarding the initiation of the investigation and submit
response or comments, if any.

i. Indian Chemical Council (ICC)

ii. Federation of Indian Chamber of Commerce and Industry (FICCI)
iii. Associated Chambers of Commerce and Industry of India (ASSOCHAM)
iv. Confederation of Indian Industry (CII)

j. None of the importers and users or associations have submitted response to the
questionnaires issued to them by the Authority:
k. The period of investigation (POI) which was proposed by the applicant for the purpose
of present investigation was 1st January, 2020 to 30th June, 2020 (6 months). However,
the Authority has considered the POI as 1st January, 2020 to 31st December, 2020 (12
months). The injury investigation period covers the periods April 2017-March 2018,
April 2018- March 2019, April 2019-December 2019 and the POI.
l. The transaction-wise imports data for the period of investigation and the preceding
three years was procured from the DGCI&S. The Authority has relied upon data of
DGCI&S for calculating the volume and value of the imports of the subject goods in
India.
m. Further information was sought from the applicant to the extent deemed necessary. The
verification of the data provided by the domestic industry was conducted to the extent
considered necessary for the purpose of the present investigation.
n. The Authority made available the non-confidential version of the submissions made by
the various interested parties. A list of all the interested parties was uploaded on the
DGTR website along with the request therein to all of them to email the non-
confidential version of their submissions to all the other interested parties since the
public file was not accessible physically due to the ongoing Covid-19 global pandemic.
o. The domestic industry has submitted the financial data duly certified by the
Chartered/Cost Accountant. The non-injurious price (NIP) has been determined based
on the examination carried out on the basis of actual data/information available read
with the first-year project report furnished by the applicant. The Authority computed
the NIP on the basis of the comparison of the actual data available and the first year of
the project report. Optimization is done on the basis of the best capacity achieved out
of four quarters during the POI and compared with first year project report of the POI
period. Optimum cost of production and the cost to make & sell the subject goods in
India as per the information furnished by the domestic industry and in accordance with
Generally Accepted Accounting Principles (GAAP) and Annexure III to the Rules.
Such non-injurious price compared to the actual efficient plant capacity at ***% has
been considered to ascertain whether anti-dumping duty lower than the dumping margin
would be sufficient to remove material retardation injury to the domestic industry.
p. In accordance with Rule 6(6) of the Rules, the Authority provided opportunity to the
interested parties to present their views orally in a public hearing held on 20th August,
2021 through video conferencing. The parties, which presented their views in the oral
hearing, were requested to file written submissions of the views expressed orally,
followed by rejoinder submissions.
q. A disclosure statement containing the essential facts in this investigation which would
have been formed the basis of the final findings was issued to the interested parties on

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 03.02.2022 and the interested parties were allowed time to comment on the same. The
comments on the disclosure statement received from the interested parties have been
considered, to the extent found relevant, in this final findings notification.
r. The submissions made by the interested parties, arguments raised and the information
provided by the various interested parties during the course of the investigation, to the
extent the same are supported with evidence and considered relevant to the present
investigation, have been appropriately considered by the Authority in these Final
Findings.
s. The Authority, during the course of the investigation, satisfied itself as to the accuracy
of the information supplied by the interested parties, which forms the basis of these
Final Findings, to the extent possible and verified the data / documents submitted by
the domestic industry to the extent considered relevant and possible.
t. The information provided by the interested parties on confidential basis was examined
with regard to sufficiency of the confidentiality claim. On being satisfied, the Authority
has accepted the confidentiality claims wherever warranted and such information has
been considered as confidential and not disclosed to the other interested parties.
Wherever possible, the parties providing the information on confidential basis were
directed to provide sufficient non-confidential version of the information filed on
confidential basis.
u. Wherever an interested party has refused access to, or has otherwise not provided
necessary information during the course of the present investigation, or has
significantly impeded the investigation, the Authority has considered such party as non-
cooperative and recorded these Final Findings on the basis of the facts available.
v. *** in the NCV of Final Findings represents information furnished by an interested
party on confidential basis and so considered by the Authority under the Rules.
w. The exchange rate adopted by the Authority for the subject investigation is 1 US$ = Rs.
74.86.

C. PRODUCT UNDER CONSIDERATION AND LIKE ARTICLE

5. At the stage of initiation, the product under consideration was defined as follows:

“3. The product under consideration in the present application is

Dicyclohexylcarbodiimide, also known as N, N'-Dicyclohexyl Carbodiimide, DCC
and 1, 3-Dicyclohexylcarbodiimide (DCC), originating in or exported from the
subject country. DCC is an organic compound with chemical formula (C6H1
1N)2C. It is colourless to pale yellow in colour, occurring in liquid or semi solid
form and has a sweet odor. Its primary use is to couple amino acids during
artificial peptide synthesis. The low melting point of this material allows it to be
melted for easy handling. It is highly soluble in dichloromethane, tetrahydrofuran,
acetonitrile and dimethylformamide but insoluble in water and the Chemical
Abstracts Service (CAS) Registry number for the subject goods is 538-75-0.”

C.1. Submissions of the other interested parties

6. The other interested parties have not made any submissions with respect to the scope
of the product under consideration and the like article.

C.2. Submissions of the domestic industry

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7. The domestic industry has submitted as follows with regard to the scope of the product
under consideration and the like article:

a. The product under consideration is mainly used in amikacin, glutathione dehydrants, as

well as in the synthesis of acid anhydride, aldehyde, ketone, isocyanate.
b. It is also used in peptide and nucleic synthesis. It is a key raw material in antiretroviral
drugs like Valaliclovir and Amikacin.
c. The product under consideration produced by the applicant is the like article to the
products imported from the subject country.
d. Prior to the establishment of the domestic industry’s plant, there was no other producer
of the product under consideration, and the entire domestic demand for the product
under consideration was catered to by the imports.
e. Considering the high prices of the imports of the product under consideration, the
domestic industry began production of the product in order to sell it at a lower price.

C.3. Examination by the Authority

8. The product under consideration in the present investigation is

Dicyclohexylcarbodiimide, also known as N, N'-Dicyclohexyl Carbodiimide, DCC and
1, 3-Dicyclohexylcarbodiimide (DCC), originating in or exported from the subject
country. DCC is an organic compound with chemical formula (C6H1 1N)2C. It is
colourless to pale yellow in colour, occurring in liquid or semi-solid form and has a
sweet odor. Its primary use is to couple amino acids during artificial peptide synthesis.
The low melting point of this material allows it to be melted for easy handling. It is
highly soluble in dichloromethane, tetrahydrofuran, acetonitrile and
dimethylformamide but insoluble in water and the Chemical Abstracts Service (CAS)
Registry number for the subject goods is 538-75-0.
9. This product is mainly used in amikacin, glutathione dehydrants as well as in the
synthesis of acid anhydride, aldehyde, ketone and isocyanate. It is also used in the
synthesis of peptides, esters, ethers, nitriles etc. It is a key raw material in antiretroviral
drugs like Valaliclovir and Amikacin. DCC is widely used in medical, health, make-up
and biological products.
10. The PUC is classified under different custom tariff classification such as 29212990,
29241900, 29242990, 29251900, 29252910, 29252990, 29333990 and 29419090. The
PUC, however, has also been imported under many other ITC (HS) codes. The
Authority has considered all such ITC (HS) codes. The customs classification is only
indicative and not binding in any manner on the scope of the product under
consideration.
11. The Authority notes that the applicant is the first producer of the product under
consideration in the country and prior to the commencement of the applicant’s
production, the entire demand for the product under consideration was being met by the
imports, most of which came from the subject country. There are no other producers of
the product under consideration in the country, and the present application is being filed
for examination of the material retardation to the establishment of an industry.
12. The Authority notes that the domestic industry has claimed that the subject goods,
which are being dumped into India, are identical to the goods produced by the domestic
industry. There are no differences either in the technical specifications, quality,
functions or end-users of the dumped imports and the domestically produced subject
goods and the product under consideration manufactured by the applicant. The two are
technically and commercially substitutable and hence should be treated as ‘like articles’

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 under the Anti-Dumping Rules. Therefore, for the purpose of the present investigation,
the subject goods produced by the applicant in India are being treated as ‘Like Article’
to the subject goods being imported from the subject country.

D. SCOPE OF THE DOMESTIC INDUSTRY & STANDING

D.1. Views of other interested parties

13. The other interested parties have not made any submissions with regard to the scope
and standing of the domestic industry.

D.2. Submissions of the domestic industry

14. The domestic industry has submitted as follows with regards to the scope of the
domestic industry and the standing:

a. The applicant declared commercial production in November, 2019 but the production
of the product under consideration only began in January, 2020.
b. Prior to the applicant, there were no other producers of the product under consideration
in India, and the entire demand for the subject goods was met with the imports from the
other countries.
c. The applicant, being the first and the only producer of the product under consideration,
holds 100% share in the total domestic production of the subject goods in India.
d. The evidence available on record indicates that the applicant satisfies the requirements
of standing as per Rule 2(b) and Rule 5 of the Rules.

D.3. Examination by the Authority

15. Rule 2(b) of the Anti-Dumping Rules defines domestic industry as under:

“(b) “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
exporters or importers of the alleged dumped article or are themselves importers
thereof in such case the term ‘domestic industry’ may be construed as referring to
the rest of the producers”.

16. The present investigation has been initiated pursuant to a petition filed by Clean Science
and Technology Limited (previously known as Clean Science and Technology Private
Limited) as the sole producer of the subject goods in India. The petitioner declared
commercial production in November, 2019. However, it actually began production in
January, 2020.
17. The Authority notes that the present application is being filed for examination of the
material retardation to the establishment of an industry. The Indian industry for the
product under consideration is at a nascent stage and is yet to establish itself in the
market. As indicated by the applicant, there are no other producers of the product under
consideration in India. The applicant is the sole producer of the subject goods, and
therefore, holds 100% of the share of total domestic production of the subject goods.

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 There is also neither any support nor opposition to the present application. The
respondent also does not contest the claim of the applicant that it is the sole producer
of the subject goods in India. Therefore, the Authority holds that the domestic industry
satisfies the necessity of standing as per Rule 2(b) read with Rule 5(3) of the Rules.

E. CONFIDENTIALITY

E.1. Submissions of the other interested parties

18. The other interested parties have submitted as follows with regards to confidentiality.
a. The petition filed by the domestic industry does not disclose certain essential
information which would allow the respondents to adequately make their case.
b. The domestic industry has claimed excessive confidentiality in its application
regarding the costing information.
c. The non-confidential version of the petition does not allow the interested parties
to exercise their right to defense.
d. Section VI – costing information filed by the domestic industry does not furnish
any information whatsoever.
e. The petitioner has claimed that annual reports and balance sheets are business
proprietary information, not amenable to summarization. However, it was
submitted that the annual reports and the balance sheets are filed before the
Ministry of Corporate Affairs annually and are available in the public domain.
f. Contrary to the petitioner’s claim, the respondent does not provide any year-on-
year rebate and, therefore, the information in the response filed by the exporter
is not insufficient.
g. The producer has provided all the necessary information in both confidential
and non-confidential versions and, therefore, the claim of excessive
confidentiality is false.

E.2. Submissions of the domestic industry

19. The domestic industry has submitted as follows with regards to the confidentiality:
a. The claims that the petitioner has not filed information as required under the
relevant Trade Notices is false and must be rejected.
b. The information contained in the costing formats is business sensitive
information that cannot be disclosed to the parties. However, the domestic
industry has submitted non confidential versions of the same.
c. The financial statements produced before the Ministry of Corporate Affairs are
not the same as those required by the Authority for trade remedy investigations.
The Authority requires more detailed financial statements.
d. The exporter has suppressed material information and made false claims that it
had not received any rebate.
e. The producer has claimed excess confidentiality and has not disclosed the
information regarding corporate structure and shareholding pattern that is
available in the public domain.
f. The producers have failed to disclose the information regarding the volume and
the value of the export/import of the subject goods.

E.3. Examination by the Authority

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20. The Authority made available the non-confidential version of the information provided
by the various parties to all the other interested parties as per Rule 6(7).
21. With regard to confidentiality of the information, Rule 7 of Anti-Dumping Rules
provides as follows:

“7. Confidential Information:

(1) Notwithstanding anything contained in sub-rules (2), (3) and (7) of rule 6, sub-
rule (2) of rule 12, sub-rule (4) of rule 15 and sub-rule (4) of rule 17, the copies of
applications received under sub -rule (1) of rule 5, or any other information
provided to the designated authority on a confidential basis by any party in the
course of investigation, shall, upon the designated authority being satisfied as to
its confidentiality, be treated as such by it and no such information shall be
disclosed to any other party without specific authorization of the party providing
such information.
(2) The designated authority may require the interested parties providing
information on confidential basis to furnish non-confidential summary thereof and
if, in the opinion of a party providing such information, such information is not
susceptible of summary, such party may submit to the designated authority a
statement of reasons why summarisation is not possible.
(3) Notwithstanding anything contained in sub-rule (2), if the designated authority
is satisfied that the request for confidentiality is not warranted or the supplier of
the information is either unwilling to make the information public or to authorize
its disclosure in a generalized or summary form, it may disregard such
information.”

22. The information provided by the interested parties on confidential basis was examined
with regard to sufficiency of the confidentiality claims. On being satisfied, the
Authority has accepted the confidentiality claims, wherever warranted and such
information has been considered confidential and not disclosed to the other interested
parties. Wherever possible, the parties providing information on confidential basis were
directed to provide sufficient non-confidential version of the information filed on
confidential basis. The revised NCV format H was circulated to the other interested
parties for clear understanding of the data furnished by the DI on the instructions of the
Authority.
23. A list of all the registered interested parties was uploaded on the DGTR's website along
with the request therein to all of them to email the non-confidential version of their
submissions to all the other interested parties since the public file is not accessible
physically due to ongoing Covid-19 global pandemic.

F. MISCELLANEOUS ISSUES

F.1. Submissions of the other interested parties

24. The other interested parties have made the following miscellaneous submissions:
a. The Authority has initiated the present investigation with insufficient facts, and
has made a wrong assessment for the initiation of the investigation.
b. The requirement as per the relevant provisions of law is that the Authority must
be satisfied as to the adequacy of the sufficient information.

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 c. The initiation notification shows that the Authority was satisfied as to the
existence of ‘prima facie’ evidence rather than ‘sufficient’ evidence. This was
allegedly the wrong basis to initiate an investigation.
d. The Authority is required to assess the adequacy and accuracy of the
information provided in the application and determine whether the information
provided is sufficient.
e. Reliance was placed on WTO Appellate Body reports to argue that the
application fails to meet the requirements necessary for the purpose of initiation
of this investigation.
f. If the Authority imposes an anti-dumping duty, this would lead to a monopoly
in the domestic market since there are no other domestic producers of the subject
goods.

F.2. Submissions of the domestic industry

25. The domestic industry has made the following miscellaneous submissions:
a. The domestic industry is the first and the only industry engaged in the
production of the subject goods in India.
b. The domestic industry declared commercial production in the November, 2019,
but commenced commercial production only in January, 2020.
c. Prior to the domestic industry’s entry into the market, the price of the PUC,
which was imported from China was Rs. 1,117/kg. However, after the
establishment of the domestic industry’s plant, the price of the imported goods
has drastically reduced.
d. There is clear indication that the producers are engaging in predatory pricing,
and their intention is to drive the domestic industry out of the market.
e. The domestic industry is in a position to meet the entire demand of the subject
goods in India.
f. The price of the subject goods exported by the domestic industry is much higher
than the price at which the subject goods have been sold within the country.
g. The Authority is required to only determine the accuracy of the information
provided in the application and is not required to conduct a detailed inquiry
before initiation of an investigation.
h. The domestic industry has relied upon the orders of the Tribunal to argue that
the Authority must only satisfy itself of a prima facie case before initiation of
an investigation.
i. The monopoly prices were charged by the importers of the subject goods before
the domestic industry commenced commercial production.

F.3. Examination by the Authority

26. The Authority notes that the present investigation is one for material retardation to the
establishment of an industry. Therefore, the Authority would conduct the injury
analysis on that basis. The Authority will also assess whether the domestic industry has
been established or not.
27. With respect to the claim of the domestic industry that the prices of the imported subject
goods decreased after it commenced commercial production, the Authority has
examined the same and has conducted a detailed injury analysis.
28. With respect to the contention that the Authority has initiated the present investigation
based on ‘prima facie’ evidence and not ‘sufficient evidence’, the Authority notes that

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 prior to initiation of the present investigation, the Authority conducted a prima facie
scrutiny of the application filed by the domestic industry and upon being satisfied as to
the sufficiency of the information/evidence provided to the Authority, it decided to
initiate the investigation. The relevant portion of the initiation notification is as under:

Initiation of Anti-Dumping Investigation

16. On the basis of the duly substantiated written application by or on behalf of the
domestic industry, and having satisfied itself, on the basis of the prima
facie evidence submitted by the domestic industry, about dumping of the product
under consideration originating in or exported from the subject country, material
retardation/injury to the domestic industry and causal link between such alleged
dumping and material retardation/injury, and in accordance with Section 9A of the
Act read with Rule 5 of the Rules, the Authority, hereby, initiates an investigation
to determine the existence, degree and effect of any alleged dumping in respect of
the product under consideration originating in or exported from the subject
country and to recommend the amount of anti-dumping duty, which if levied, would
be adequate to remove the material retardation/injury to the domestic industry.

29. The Authority further notes that the mere use of the words ‘prima facie’ in the initiation
notification rather than ‘sufficient evidence’ as claimed by the producer/exporter does
not have a bearing on the outcome of the Authority’s assessment of the application. The
Authority finds that this contention of the producer is without any basis. The Authority
notes that apart from merely making the claim that a ‘prima facie’ satisfaction is not
the same as ‘sufficiency’ requirement, the producer/exporter has not provided any
indication of the manner in which the Authority had faulted in proposing to initiate the
investigation. Nor has the exporter/producer indicated the defects/deficiencies in the
application of the domestic industry which warrant its rejection. Therefore, this claim
of the exporter/producer is without any basis.
30. Notwithstanding the use of the word ‘prima facie’ in the initiation notification, the
Authority reiterates that it had initiated the present investigation after complying with
all the legal requirements contained in the Statutes, and the relevant judicial
pronouncements.
31. With regards to the submission that the anti-dumping duty will result in a monopoly for
the domestic industry, the Authority notes that before the domestic industry entered the
market, there were no Indian manufacturers of the subject goods. The entire demand
for the subject goods was being catered to by the imports, mostly from the subject
country. Therefore, the importers from the subject country almost had a monopoly in
the Indian market for the subject goods before the domestic industry entered the market.
The domestic industry’s entry and existence in the market would only enrich the
competition between the exporters and the domestic industry.

G. DETERMINATION OF NORMAL VALUE, EXPORT PRICE AND DUMPING

MARGIN

32. Under Section 9A(1)(c) of the Act, the normal value in relation to an article means:

“(c) “normal value”, in relation to an article, means –

(i) the comparable price, in the ordinary course of trade, for the like article
when destined for consumption in the exporting country or territory as
determined in accordance with the rules made under sub-section (6); or

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 (ii) when there are no sales of the like article in the ordinary course of trade in
the domestic market of the exporting country or territory, or when because of
the particular market situation or low volume of the sales in the domestic market
of the exporting country or territory, such sales do not permit a proper
comparison, the normal value shall be either-
(a) comparable representative price of the like article when exported
from the exporting country or territory to an appropriate third country
as determined in accordance with the rules made under sub-section (6);
or
(b) the cost of production of the said article in the country of origin
along with reasonable addition for administrative, selling and general
costs, and for profits, as determined in accordance with the rules made
under sub-section (6):
Provided that in the case of import of the article from a country other than the
country of origin and where the article has been merely transhipped through
the country of export or such article is not produced in the country of export or
there is no comparable price in the country of export, the normal value shall be
determined with reference to its price in the country of origin.”

G.1. Submissions of the other interested parties

33. The other interested parties have submitted as follows with regards to the normal value,
the export price and the dumping margin.
a. Designation of China PR as a Non-Market Economy (NME) is not in
accordance with applicable laws and procedures.
b. The relevant provision in Section 15 of China’s accession protocol which
allowed for treatment of China PR as an NME has expired on 11th December,
2016. Therefore, there are currently no provisions prevailing which allow the
Authority to treat China PR as an NME in any investigation.
c. China has been treated as a Market Economy by the US and EU.
d. Even if the Authority determines that China is a non-market economy for the
purpose of this investigation, the Authority cannot directly resort to calculating
the normal value based on the third methodology in Paragraph 7 of Annexure I
to the Rules (i.e., on any other reasonable basis).
e. The basic principles of treaty interpretation require China’s Accession Protocol
to be interpreted in a fair manner.
f. The issuance of a supplementary questionnaire to prove market economy status
is against India’s international obligations.

G.2. Submissions of the domestic industry

34. The domestic industry has submitted as follows with regard to the normal value, the
export price and the dumping margin:

a. China PR should be treated as an NME in accordance with Article 15(a)(i) of China’s

Accession Protocol, and the normal value should be determined in terms of Annexure
I, Rule 7 of the Rules.
b. Paragraph 8 of Annexure I to the Rules leaves no choice to the Authority to presume
that China is an NME, unless the exporters prove otherwise. Therefore, regardless of

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 the expiry of Section 15(a)(ii) of China’s accession protocol, the Authority is bound by
Paragraph 8 to presume that China is an NME.
c. Market economy status is not automatic upon the expiry of Section 15(a)(i), but rather
it would require China’s compliance with the other provisions of Section 15 of the
Accession Protocol.
d. The market economy claim of the exporter should not be accepted, as there is significant
government intervention in several important sectors of the Chinese economy,
warranting the maintenance of non-market economy status of China.
e. The market economy status cannot be granted unless the responding Chinese exporters
pass the test in respect of each and every parameter laid down under the rules.
f. The market economy claim of the producers from China was rejected on the same basis
in several recent investigations.
g. The market economy status cannot be given unless the responding Chinese exporters
establish that the prices of major inputs substantially reflect market values.
h. The market economy treatment must be rejected if the Chinese exporters are unable to
establish that their books are consistent with the International Accounting Standards.
i. It is not for the Authority to establish that the responding companies are operating under
market economy environment. But it is for the responding Chinese exporters to
establish that they are operating under the market economy conditions.
j. The market economy status cannot be granted unless the responding company and its
group as a whole make the claim. If one or more companies forming part of the group
has not filed the response, the claim for market economy status must be rejected.
k. The normal value in China can thus be determined on the basis of the cost of production
in India, duly adjusted, including the selling, general and administrative expenses and
profit as per the consistent practice of the DGTR.
l. The responding exporter has not claimed market economy treatment by filing the
necessary responses to the questionnaire. Therefore, it must be presumed that the
subject country is an NME.
m. As per paragraph 7 of Annexure I to the Rules, the normal value in cases of NME must
be constructed by: (a) price or constructed price in a market economy third country; (b)
export prices from third country to other country, including India; (c) any other
reasonable basis.
n. Since there is no information to construct the normal value through the first two
methods, the domestic industry has proposed construction of the normal value based on
the third method, i.e., on any other reasonable basis.
o. Owing to the dumped imports of the subject goods in India, the price paid in India is
not reflective of the appropriate price. Accordingly, the normal value must be
determined based on the price payable in India.
p. The petitioner has proposed to consider the cost of production of the domestic industry,
along with a reasonable addition for profits.

G.3. Examination by the Authority

35. The Authority had sent questionnaires to the known producers / exporters from the
subject country, advising them to provide the information in the form and manner
prescribed by the Authority. Only Shandong Huihai Pharmaceutical and Chemical Co.,
Ltd. has filed the response to the exporters’ questionnaire. However, the supplementary
questionnaire has not been filed.

G.3.1. Determination of the Normal Value

12 | P a g e
Examination of Market Economy Treatment

36. The Authority had sent questionnaires to the known producers / exporters from the
subject country, advising them to provide the information in the form and manner
prescribed by the Authority. None of the producers have filed response to the
supplementary questionnaire for claiming the market economy treatment.

Normal value for China PR

37. Section 15 of China’s Accession Protocol to the WTO provides as follows:

“Article VI of the GATT 1994, the Agreement on Implementation of Article VI of the

General Agreement on Tariffs and Trade 1994 ("Anti-Dumping Agreement") and the
SCM Agreement shall apply in proceedings involving imports of Chinese origin into
a WTO Member consistent with the following:
(a) In determining price comparability under Article VI of the GATT 1994 and the
Anti-Dumping Agreement, the importing WTO Member shall use either Chinese
prices or costs for the industry under investigation or a methodology that is not
based on a strict comparison with domestic prices or costs in China based on the
following rules:
(i) If the producers under investigation can clearly show that market economy
conditions prevail in the industry producing the like product with regard to the
manufacture, production and sale of that product, the importing WTO Member
shall use Chinese prices or costs for the industry under investigation in
determining price comparability;
(ii) The importing WTO Member may use a methodology that is not based on
a strict comparison with domestic prices or costs in China if the producers
under investigation cannot clearly show that market economy conditions
prevail in the industry producing the like product with regard to manufacture,
production and sale of that product.
(b) In proceedings under Parts II, III and V of the SCM Agreement, when
addressing subsidies described in Articles 14(a), 14(b), 14(c) and 14(d), relevant
provisions of the SCM Agreement shall apply; however, if there are special
difficulties in that application, the importing WTO Member may then use
methodologies for identifying and measuring the subsidy benefit which take into
account the possibility that prevailing terms and conditions in China may not
always be available as appropriate benchmarks. In applying such methodologies,
where practicable, the importing WTO Member should adjust such prevailing
terms and conditions before considering the use of terms and conditions prevailing
outside China.
(c) The importing WTO Member shall notify methodologies used in accordance
with subparagraph (a) to the Committee on Anti-Dumping Practices and shall
notify methodologies used in accordance with subparagraph (b) to the Committee
on Subsidies and Countervailing Measures.
(d) Once China has established, under the national law of the importing WTO
Member, that it is a market economy, the provisions of subparagraph (a) shall be
terminated provided that the importing Member's national law contains market
economy criteria as of the date of accession. In any event, the provisions of
subparagraph (a)(ii) shall expire 15 years after the date of accession. In addition,

13 | P a g e
 should China establish, pursuant to the national law of the importing WTO
Member, that market economy conditions prevail in a particular industry or sector,
the non-market economy provisions of subparagraph (a) shall no longer apply to
that industry or sector.

38. The applicant has cited and relied upon Article 15(a)(i) of China's Accession Protocol.
The applicant has claimed that producers in China PR must be asked to demonstrate
that market economy conditions prevail in their industry producing the like product
with regard to the manufacturing, the production and the sale of the product under
consideration. It has been stated by the applicant that in case the responding Chinese
producers are not able to demonstrate that their costs and price information are market-
driven, the normal value should be calculated in terms of provisions of Para 7 and 8 of
Annexure- I to the Rules.
39. As per the current international framework emerging from Section 15 of China’s
Accession Protocol, there is no restrictions in treating China as an NME. It is noted that
while the provision contained in Section 15 (a)(ii) has expired on 11.12.2016, the
provision under Article 2.2.1.1 of WTO read with the obligation under Section 15(a)(i)
of the Accession Protocol requires the criteria stipulated in paragraph 8 of Annexure I
of the Rules to be satisfied through the information/data to be provided in the
supplementary questionnaire on claiming market economy treatment. Furthermore,
Paragraph 8 of Annexure I create a presumption that China PR must be treated as a
Non-Market Economy. Therefore, the burden is on the respondent to prove that Market
Economy Conditions prevail in the subject country. It is noted that since the responding
producer/exporter from China PR has not submitted the response to
MET/Supplementary questionnaire in the form and manner provided, the normal value
computation is required to be done as per the provisions of paragraph 7 of Annexure I
of the Rules.
40. As none of the producers from China PR has claimed determination of the normal value
on the basis of their own data/information, the normal value has been determined in
accordance with paragraph 7 of Annexure I of the Rules, which reads as under:

7. In case of imports from non-market economy countries, normal value shall be

determined on the basis if the price or constructed value in the market economy third
country, or the price from such a third country to other countries, including India or
where it is not possible, or 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 selection.
Accounts shall be taken within time limits, where appropriate, of the investigation made
in any similar matter in respect of any other market economy third country. The parties
to the investigation shall be informed without any unreasonable delay the aforesaid
selection of the market economy third country and shall be given a reasonable period
of time to offer their comments.

41. The Authority notes that paragraph 7 of Annexure I stipulate three methods of
constructing the normal value for Non-Market Economies: (a) on the basis of price or
constructed value in a market economy third country; (b) export price from a third
country to other countries, including India; and (c) on any other reasonable basis. The

14 | P a g e
 Authority notes that under the provisions of para (7), the normal value must first be
determined on the basis of the price or constructed value in a surrogate country, or the
price of the exports from such country to other countries, including India. However,
when such basis is not possible, only then the Authority can determine the normal value
on any other reasonable basis, including the price paid or payable in India.
42. The Supreme Court has held that as per paragraph 7 of Annexure I to the Rules, the
Authority may move to the alternative methods only when it has exhausted the first two
methods, that is, the price or the constructed value in a surrogate country, or the price
of the exports from a surrogate country to third countries, including India. However, it
is to be noted that no information/evidence has been provided by the parties for the
construction of the normal value on the basis of the first and the second methods. There
is no public data available to the Authority to determine the normal value from the
above two methods. In the absence of the above information/evidence, it is not possible
for the Authority to determine normal value on the basis of the first or second method.
Therefore, the Authority has decided to construct normal value based on the third
method, i.e., on any other reasonable basis including the price actually paid or payable
in India. The Authority has constructed the normal value on the basis of the price paid
or payable in India.
43. The Authority has constructed the normal value taking into consideration the highest
achieved capacity out of the four quarters during the POI (i.e., ***% capacity
utilization). The costs and other expenses have been normated to reflect the highest
performance out of the four quarters during the POI. The normal value determined
accordingly has been mentioned in the dumping margin table below.

G.3.2. Determination of the Export Price

Export price for Shandong Huihai Pharmaceutical and Chemical Co., Ltd.

44. Shandong Huihai Pharmaceutical and Chemical Co., Ltd. has exported *** MT of the
subject goods directly to the unrelated customer in India during the POI. The exporter
has claimed adjustments on account of inland transports, port expenses, credit cost,
custom declaration expenses, ocean freight and marine insurance wherever applicable,
which has been accepted by the Authority. The net export price determined accordingly
has been mentioned in the dumping margin table below.

Export price for non-cooperating producers/exporters from China PR

45. The export price for all other producers and exporters has been determined on the basis
of the facts available.

G.3.3. Determination of Dumping Margin

46. Considering the normal value and the export price for the subject goods, the dumping
margin for the subject goods from the subject country is to be determined as follows:

Constructed Normal
Net Export Dumping Dumping Dumping
SN Name of Producer Value @ ***% plant
Price Margin Margin Margin
capacity

15 | P a g e
 (USD/MT) (USD/MT) (USD/MT) (%) (Range)
China PR
Shandong Huihai *** *** *** ***
1. Pharmaceutical and 0-10
Chemical Co., Ltd
Non-cooperative / *** *** *** ***
2 10-20
residual exporters

H. EXAMINATION OF INJURY AND CAUSAL LINK

H.1. Submissions by the other interested parties

47. The other interested party has submitted as follows with regards to the injury and the
causal link:

a. The domestic industry cannot claim injury on the basis of material retardation to the
establishment of an industry since it has already commenced commercial production,
and is, therefore, not an ‘unestablished industry’.
b. The Authority must first examine whether the petitioner was yet to find a way into the
market or was already established.
c. The injury caused to the petitioner is due to start-up costs, price of raw materials and
the buyer’s market.
d. The data provided by the petitioner only indicates the normal start up conditions, and
the petitioner cannot immediately achieve sales and the market share.
e. There is no increase in the volume of the imports from the subject country during the
POI.
f. The petition itself indicates that there is negative price undercutting during the POI.
This indicates that the landed price is higher than the non-injurious price.
g. Since this is the case of material retardation, there would be no information regarding
the production, capacity utilisation, sales, inventories, market share and the
employment. Therefore, there is no basis to claim injury.
h. The exporter reduced its prices after the domestic industry entered the market so that it
can compete with the prices of the domestic industry. Therefore, it is the domestic
industry that is the price setter, and the exporter is merely responding to the prices set
by the domestic industry.
i. The costs of the domestic industry are inflated due to inefficiencies associated with a
new plant, low-capacity utilisation and the start-up costs.
j. The domestic industry has admitted that its manufacturing plant was shut down during
March, 2020 and April, 2020 due to lockdown. Therefore, the injury to the domestic
industry is due to Covid-19 related restrictions.

H.2. Submissions by the domestic industry

48. The domestic industry has made the following submissions with regard to injury and
the causal link:

a. Since the domestic industry has just commenced commercial production, it is at a

nascent stage of production and, therefore, it cannot be considered to be an established
industry.
b. The analysis must be that of material retardation to the establishment of an industry.

16 | P a g e
c. For material retardation criteria to apply, the industry must be unestablished. It is not
necessary that an unestablished industry is the one where no production has
commenced.
d. There may be two types of unestablished industries: (a) a developing industry which
has not yet commenced commercial production but has made a commercial
commitment to commence production; and (b) a nascent industry that has commenced
commercial production but is yet to establish itself in the market.
e. The domestic industry began commercial production in November, 2019 and is yet to
establish itself in the market.
f. In examining whether a nascent industry has been established or not, the Authority is
required to look at the time for which the industry has been operational, whether there
is steady production, the amount of production as compared to capacity, whether the
domestic industry has achieved its breakeven point and whether the production is
intermittent.
g. The volume of the imports increased over the injury period even though the domestic
industry set up its plant and commenced production.
h. There is a substantial increase in the volume of the imports during the month of June,
2020, six months after the domestic industry commenced commercial production.
i. Despite the fact that the domestic industry has the capacity to cater to 89% of the total
domestic demand, the volume of the imports accounts for almost all of the consumption
in India.
j. As compared to 2018-19, the price of the subject goods decreased by 51% during the
POI. Further, there was a reduction in price by 25% between November, 2019 and June,
2020.
k. There is positive price undercutting, and this undercutting is not allowing the domestic
industry to achieve its targeted prices as per its projection.
l. The import price is much below the projected selling price at 70% capacity.
Furthermore, the subject goods are being imported into the country at below the cost of
production.
m. Even taken at the optimal capacity utilization of 70%, there is significant price
underselling.
n. The economic injury parameters have been assessed based on the projections. There are
significant losses, negative return on investments and cash profits even at 70% capacity
utilization.
o. The domestic industry is a new entrant in the market and, therefore, it would be forced
to set the prices according to the existing market players.
p. The export price of the domestic industry is much higher than the domestic sales price
in India.
q. The subject imports are below the costs of sales of the domestic industry.
r. Owing to the dumped imports, the domestic industry has been able to achieve a capacity
utilization of only ***%. It has achieved a market share of only ***% when it has the
capacity to cater to almost 90% of the domestic market.
s. Even the post-POI data shows that the market share of the domestic industry is less than
one-fourth. The domestic industry has been selling at a loss and its export sales are
more profitable than the domestic sales.
t. The price of the major raw material of the subject good has increased beyond the landed
price of the goods.
u. The purchase orders from the domestic industry’s customers/user industry are much
below the cost of sales even at 70% capacity utilization.

17 | P a g e
H.3. Examination by the Authority

49. The Authority has examined the arguments and counterarguments of the interested
parties with regard to injury to the domestic industry. The Authority notes that the
present case is one for material retardation of the establishment of an industry and not
of material injury. There is a need to address certain legal aspects regarding the concept
of ‘material retardation’ to the establishment of an industry prior to proceeding with the
injury analysis.

H.3.1. Material retardation of establishment of industry

50. Article 3 of the WTO Agreement on the implementation of Article VI of the GATT
provides no definition for ‘material retardation’. The footnote 9 to Article 3 merely
states as follows:

Under this Agreement the term "injury" shall, unless otherwise specified, be
taken to mean material injury to a domestic industry, threat of material injury to
a domestic industry or material retardation of the establishment of such an
industry and shall be interpreted in accordance with the provisions of this
Article.

51. Similar is the case with the Customs Tariff (Identification, Assessment and Collection
of Anti-Dumping Duty on Dumped Articles and for Determination of Injury) Rules,
1995, wherein Annexure II merely clubs ‘material injury’, ‘threat to material injury’
and ‘material retardation’ under the definition of ‘injury’. There is no further
explanation as to what constitutes material retardation to the establishment of an
industry.
52. However, it is clear that ‘material retardation’ applies only to unestablished industries
and not industries that are fully established. This is true because it is not logical for the
Authority to find that a domestic industry was being injured by the dumped imports
(which presupposed that such an industry was already established) and at the same time
that the establishment of a domestic industry was materially retarded by those
imports. The meaning of ‘unestablished industries’ has also not been provided in the
Anti-Dumping Agreement, or the Act and the Rules. However, there has been a
proposal at the WTO for amendment of the Anti-Dumping Agreement which provides
some clarity as to the meaning of material retardation and establishment of the industry.
The relevant portion of the draft proposal is as under:

“3.9. A determination of material retardation of the establishment of a domestic

industry shall be based on facts and not merely on allegation, conjecture or
remote possibility. An industry may be considered to be in establishment where a
genuine and substantial commitment of resources has been made to domestic
production of a like product not previously produced in the territory of the
importing Member, but production has not yet begun or has not yet been achieved
in commercial volumes. In making a determination whether an industry is in
establishment, and in examining the impact of dumped imports on the
establishment of that industry, the authorities may take into account evidence
concerning, inter alia, installed capacity, investments made and financing
obtained, and feasibility studies, investment plans or market studies.

18 | P a g e
53. Although the above extract is merely a proposal and not binding on the Authority, it
would serve as a guidance in conducting an examination of material retardation.
Furthermore, the above proposal has been relied upon by the DGTR in the
investigations concerning SBR Rubber and Fibre Boards.
54. From the above extract, it may be possible to discern the meaning of ‘material
retardation’ and ‘unestablished industry’ or ‘establishment of an industry’. The
Authority notes that it is not necessary that an ‘unestablished industry’ should be one
where production has not commenced. There could be circumstances where an industry
has already commenced commercial production but it has not achieved commercial
presence in the market. This may be considered to be an ‘unestablished industry’ as
well and the material retardation analysis would be necessary in such cases. This is
implicit from the second sentence to proposed Article 3.9 and the footnote No. 14 of
the WTO’s proposed amendment extracted above. Furthermore, in the SBR
investigation the Authority has noted as follows:

“71. While the test of material injury or threat of material injury can be applied
to an existing domestic industry or to the extent of operations that the domestic
industry has had in the past, in the case of domestic industry yet to be fully
established, the test to be applied is that of material retardation. The Authority
notes that the following two conditions are relevant where the test of material
retardation may be applicable:
(i) in case of “developing industry” which has not yet begun commercial
production but substantial commitment to commence production has been made;
(ii) in case of “nascent industry” whose commercial production although has
begun but the industry has yet to find its place in the market.”

55. The United States follows a similar approach in material retardation investigations. The
practice mentioned in the US Handbook on procedure is:

“Petitioners may allege that the establishment of an industry in the United States is
materially retarded by reason of imports, or sales (or the likelihood of sales) for
importation, of the subject merchandise. The statute does not define “material
retardation;” however, in considering this issue in past cases, the Commission has begun
by examining the question of whether the U.S. industry is “established.” If U.S.
producers have commenced production of the product, the industry is considered to be
established if U.S. producers have “stabilized” their operations. In making this
assessment, the Commission has examined the following factors: (1) when the U.S.
industry began production; (2) whether the production has been steady or start‐and‐stop;
(3) the size of domestic production compared to the size of the domestic market as a
whole; (4) whether the U.S. industry has reached a reasonable “break‐ even point;” and
(5) whether the activities are truly a new industry or merely a new product line of an
established firm. If the industry is not established, the Commission considers whether
the performance of the industry reflects normal start‐up difficulties or whether the
imports of the subject merchandise have materially retarded the establishment of the
industry.”

56. In Morocco – Anti-Dumping Measures on Certain Hot-Rolled Steel from Turkey, the
WTO Panel has given some guidance on determining whether there is establishment of
an industry. The Panel observed that Article 3.1 does not prescribe a specific

19 | P a g e
 methodology for determining whether an industry has been established. The Authority
is allowed to use any reasonable methodology which is based on assumptions and
inferences. However, these inferences must be based on facts and positive evidence.
57. The issue before the Panel was regarding the “establishment” of an industry for the
purpose of determination of “material retardation”. The Panel observed that the
Authority has the discretion in deciding which parameters are relevant to determine
whether a new industry has been established. One of the parameters considered to be
relevant by the Panel was whether the production constitutes a new ‘product line’ of an
existing company. If an existing industry/company merely introduces a new product
line, this may not be considered as an “unestablished industry”. To examine this factor,
the Authority would have to look into the degree of overlap in the use of overall
infrastructure of the producer (including customer contacts, distribution channels,
existing productive, commercial, research, and administrative assets etc.). A greater
degree of overlap with the old infrastructure would mean that it is less likely that a new
industry has been established. The relevant portion of the Panel’s observation is as
under:

7.211. We note, at the outset, that we do not pronounce ourselves on these factors
or whether they are either prescriptive or definitive for determining whether the
domestic industry is unestablished. We accept that a relevant factor may be
whether the domestic industry is the only producer of the like product in question
in the market. At the same time, we note that whilst there could be only one
producer of that product in the market, where that product constitutes merely a
new "product line" of an existing industry and benefits from the existing
production, marketing and other operations, such shared operations may play
an important role in determining whether a distinct new industry has been
established. If an existing industry chooses to introduce a new product unlike
any other product currently being produced, the introduction of that new
product will not necessarily result in the creation of a new industry. It may still
be perceived as the introduction of a new product line into the existing industry,
depending on the degree to which the overall infrastructure (including the
productive, commercial, research, and administrative assets) of the existing
industry is implicated. The greater the degree of overlap in the use of overall
infrastructure, the less likely the perception that the introduction of the new
product marks the establishment of a new industry. The fact that a domestic
industry is defined by Article 4.1 of the Anti-Dumping Agreement by reference to
like product, and that there are no pre-existing producers of that like product in
the domestic market, does not preclude the possibility of that domestic industry
utilizing existing infrastructure, such as customer contacts and distribution
channels, in its introduction of that like product in the domestic market.

58. Therefore, one of the aspects that has to be seen in determining whether or not the
industry is in existence is whether the product constitutes merely a new product line
within an existing industry. If this is the case, the Authority must analyse the level of
overlap with the overall use of the existing infrastructure in the new product line.
59. With regard to the injury assessment, the WTO Panel has given the following guidance:

7.233. Further, we consider that the obligation in Article 3.4 to evaluate each of
the listed 15 injury factors applies as much to an investigation of injury in the
form of material retardation as it does to that of material injury or threat of

20 | P a g e
 material injury. This is so for the following reason: Article 3.1, read in light of
footnote 9 of the Anti-Dumping Agreement, requires that a determination of
material retardation be based on positive evidence and objective examination of
inter alia "the consequent impact of [dumped] imports on domestic producers".
As explained above, the examination of the impact of dumped imports on domestic
industry, in turn, must, in accordance with the terms of Article 3.4, include an
evaluation of all relevant factors including the 15 injury factors listed in that
provision. It follows that a determination of material retardation must be based
on an examination of the impact of dumped imports on domestic producers, and
that examination must include an evaluation of the 15 injury factors listed in
Article 3.4. Our approach is consistent with the finding by the panel in Egypt –
Steel Rebar that "the Article 3.4 factors must be examined in every investigation,
no matter which particular manifestation or form of injury is at issue in a given
investigation". Nothing in the text of Article 3 supports Morocco's argument that
an investigating authority is not required to address the Article 3.4 factors "with
the same rigor" in a material retardation analysis as in a material injury
analysis.”

H.3.2 Material retardation to the establishment of the Domestic Industry in the present
investigation

60. The Authority notes that prior to the domestic industry’s entry into the market for the
subject goods, the entire demand for the subject good in India was being satisfied by
the imports, mostly from the subject country. The domestic industry had set up its plant
in November, 2019, but commenced commercial production in January, 2020. There is
no other domestic producer of the subject goods in India. In order to ascertain whether
the domestic industry is an unestablished industry or an existing industry, the Authority
has examined the following factors:

a. When the domestic industry began its production?

61. As submitted by the domestic industry, its manufacturing plant was set up in November,
2019, but commercial production commenced only in January of 2020. The production
of the subject goods began only during the POI, and there have been no other domestic
producers of the subject goods. Although the production of the subject goods has
commenced, the production has not reached substantial commercial volumes.
Therefore, it is clear that the domestic industry has been in existence for a very short
period of time, and cannot be considered to be an existing industry on this parameter.

b. Whether the production of the subject good is merely a new product line in an
existing industry?

62. The WTO Panel has observed that if the production of the industry is merely a
new product line in an existing industry, it may not be a case of
material retardation. However, the Panel stressed that what is important is the degree to
which the existing infrastructure is utilized for the production of the product under
consideration. The applicant was incorporated in the year 2006, and its first plant was
set up in 2009. Apart from the subject goods, the applicant also produces various other
products, and also exports its products to 25 other countries. The applicant has two units
operating in Kurkumbh MIDC, Pune. The applicant has stated that for the production

21 | P a g e
 of the subject goods, it proposes to set up a new automated plant in the same premises
of its existing facilities. The details of the plant and machinery that is proposed to be
set up is given in the project report submitted by the applicant. The Authority notes that
the PUC is a newly introduced chemical product among a series of other products
manufactured by the domestic industry. As submitted by the domestic industry, its
manufacturing plant of the PUC was set up in November, 2019, but commercial
production commenced only in January, 2020. Therefore, the domestic industry has
been in existence for a very short period of time, and cannot be considered to be an
existing industry on this parameter.
63. As noted above, the WTO Panel has observed that what is important is not the
introduction of a new product line itself, but rather the degree of overlap with the
existing infrastructure of the industry. The Authority also notes that since a new
plant/production line is being set up to manufacture the product under consideration in
the same premises, the domestic industry may be making utilization of its existing
management/infrastructure to manufacture the product under consideration.

c. Size of production compared to the size of the domestic market as a whole

64. The applicant is the only Indian producer of the subject goods. However, the market
share claimed by the applicant during the POI is merely ***%, and the imports from
the subject country were more than 4 times the total domestic production. As per the
DGCI&S data including the various HS codes under which the PUC was imported, the
market share of the applicant reflects as ***% during the POI.

d. Stability of production

65. The Authority notes that the production of the applicant has commenced only during
the POI, and the production on a month-on-month basis does not give indication that
the production of the applicant has been increasing. The applicant has also indulged in
the exports of the PUC during the POI.
66. The Authority notes that since the manufacturing plant of the PUC was set up in
November, 2019 but commercial production commenced only in January, 2020, the
domestic industry has been in existence for a very short period of time and, therefore,
it cannot be considered to be an existing industry on this parameter. The Authority notes
though the company is undisputedly an existing and established company, engaging in
the production and sale of a number of other products, which are not the subject matter
of the present investigation, yet at the same time, there is no dispute that as far as the
product under consideration is concerned, the applicant company is the sole and new
producer of the same in the country. As far as the production and sale of the product
under consideration is concerned, the same is undisputedly a new product and with no
past history of production. Further, the domestic industry is required to be considered
in relation to a company engaged in production of like article in India. The rules require
that the effect of the dumped imports should be assessed in relation to the domestic
production of the like article when available data permits separate identification of that
production. Thus, material retardation to establishment of the domestic industry is
required to be examined with reference to the product and not with reference to the
company. It is quite possible that the company is already well-established. What is
however relevant is whether the industry with reference to the product under
consideration is well established. The establishment of the industry with reference to
PUC is required to be seen considering the length of operations of the company

22 | P a g e
 concerning the production and sale of the product in the country. Undisputedly, on this
account, there is no dispute that the industry is a new industry with regard to product
under consideration.
67. The Authority has examined four parameters (time period of production, overlap of
existing infrastructure, size of production and stability of production) which are
relevant for determining whether or not the industry has been established. Based on a
thorough assessment of all four parameters, the Authority concludes that the Applicant
is a not an established industry, but is a new and nascent industry in the production of
the product under consideration.
68. The Authority conducted the injury analysis based on the legal position discussed
above. The Authority notes that the domestic industry has not been able to provide the
information regarding injury parameters since it has been in existence for a very short
period of time. The domestic industry has, therefore, proposed to conduct the injury
analysis based on projections of its performance as per its project report. The
examination by the Authority has been made on the basis of best achieved plant
capacity (i.e., ***% capacity utilization) among all four quarters during the POI.
Although this methodology in evaluating the injury parameters would take into
consideration start-up costs, inefficiencies and low-capacity utilization associated with
new industries, since the domestic industry was not in existence during the injury
investigation period, the Authority has examined each parameter on a quarterly basis
during the POI. The injury analysis made by the Authority hereunder addresses the
various submissions made by the interested parties.

I. ASSESSMENT OF DEMAND / APPARENT CONSUMPTION

69. For the purpose of the present investigation, on the basis of the data received from the
DGCI&S, the Authority has defined the demand or the apparent consumption of the
product concerned in India as the sum of the domestic sales of the domestic industry
and the imports under various tariff heads from all sources. The Authority notes that
there is some data variation between the data provided in application and the DGCI&S
data received by the DGTR. The Authority considered the total imports made under
different tariff heads, which was not available in the data provided to the applicant by
the DGCI&S. The demand so assessed is given in the table below.

Apr'19-
Particula 2017- 2018-1 Apr'19- POI (Q POI (Q POI (Q POI (Q
Unit Dec'19 ( POI
rs 18 9 Dec'19 1) 2) 3) 4)
A)
Sales of d *** *** *** *** ***
omestic in Kgs - - - -
dustry
Index
Trend - - - - - 100 1,387 7,386 5,808
ed
Subject i *** *** *** *** *** *** *** *** ***
Kgs
mports
Index
Trend 100 125 66 66 130 100 91 96 85
ed
Other Cou *** *** *** *** ***
ntries imp Kgs *** - - ***
orts

23 | P a g e
 Index
Trend 100 - 168 168 1 100 10 - 5
ed
Total De *** *** *** *** *** *** *** *** ***
Kgs
mand
Index
Trend 100 125 66 66 144 100 94 116 101
ed
Market sh *** *** *** *** ***
are of dom
% - - - -
estic indus
try
Index
Trend - - - - 100 100 1,469 6,380 5,766
ed
Market sh *** *** *** *** *** *** *** *** ***
are of Sub
%
ject impor
ts
Index
Trend 100 100 99 99 91 100 96 83 84
ed
Market sh *** *** *** *** ***
are of othe
% *** - - ***
r countries
imports
Index
Trend 100 - 252 336 0 100 10 - 5
ed

70. It is seen that the total demand for the subject goods has increased from 2017-18 to
2018-19. In the calendar year 2019, the demand for the subject goods has been low.
However, the demand has increased during the POI to the highest level. Although the
volume of the imports overall has dipped during the year 2019, the volume of the
imports from the subject country during the POI is substantially higher than the sales
of the domestic industry. Furthermore, the domestic industry has submitted that it has
the capacity to cater to 89% of the total domestic demand. However, due to the imports,
the domestic industry has only ***% share in the domestic market. The Authority
however notes that with respect to the total demand in India, the domestic industry may
not cater to 89% of the domestic demand. Even at DI’s most optimum level of
production during the POI, (i.e., at 70% capacity utilization), the production of the
domestic industry would be *** Kg, which is about ***% of the total demand that is
also achievable in the fifth year only as per the project report furnished by the DI.
Moreover, taken at 80% capacity utilization, the production of the domestic industry
would be *** Kg. It is seen that even at an overestimated capacity utilization, the
volume of subject imports is much higher than the potential domestic production.
However, the capacity to cater the domestic market by the domestic industry even at
80% capacity utilization would be ***% only.

J. VOLUME EFFECT OF THE DUMPED IMPORTS

71. With regard to the volume of the dumped imports, the Authority is required to consider
whether there has been a significant increase in the dumped imports, either in absolute
terms or relative to production or consumption in India. For the purpose of the injury

24 | P a g e
 analysis, the Authority has relied upon the transaction wise import data procured from
DGCI&S. The import volumes of the subject goods from the subject country and share
of the dumped imports during the injury investigation period are as follows:

Apr'19- Apr'19
Particula 2017-1 POI (Q POI (Q POI (Q POI (Q
Unit 2018-19 Dec'19 ( -Dec'1 POI
rs 8 1) 2) 3) 4)
A) 9
Subject C
8,03,80 10,06,7 3,97,56 10,45,7 2,81,40 2,55,67 2,69,43 2,39,26
ountry- C Kgs 5,30,080
0 67 0 80 7 5 4 4
hina PR
Index
Trend 100 125 66 66 130 100 91 96 85
ed
Others Kgs 3,996 - 6,701 5,026 24 21 2 - 1
Index
Trend 100 - 168 168 1 100 10 - 5
ed
Total Imp 8,07,79 10,06,7 4,02,58 10,45,8 2,81,42 2,55,67 2,69,43 2,39,26
Kgs 5,36,781
orts 6 67 6 04 8 7 4 5
Index
Trend 100 125 66 66 129 100 91 96 85
ed
Subject I
mports i
n relatio
n to
Total imp
% 100 100 99 99 100 100 100 100 100
orts
Index
Trend 100 100 99 132 100 100 100 100 100
ed
Indian Pr *** *** *** *** ***
% - - - -
oduction
Index
Trend - - - - 100 100 87 53 45
ed
Indian De *** *** *** *** *** *** *** *** ***
%
mand
Index
Trend 100 100 99 132 91 100 96 83 84
ed

72. The Authority notes that the volume of imports of the product under consideration from
the subject country has been substantial throughout the investigation period. Major
imports are from the subject country only. During the time when the production of the
domestic industry commenced, the imports from the subject country were more than
*** times the domestic production. However, it is seen that DI is able to secure almost
***% market share in the total demand.

K. PRICE EFFECT OF THE DUMPED IMPORTS

73. In terms of Annexure II (ii) of the Rules, with regard to the effect of the dumped imports
on prices, the Authority is required to consider whether there has been a significant
price undercutting by the dumped imports as compared with the price of the like product
in India, or whether the effect of such imports is otherwise to depress prices to a

25 | P a g e
 significant degree or prevent price increases, which otherwise would have occurred, to
a significant degree. In this regard, a comparison has been made between the landed
price of the imports from the subject country with the net sales realization of the
domestic industry for the subject goods.

a. Price undercutting

74. To determine the price undercutting, a comparison has been made between the landed
value of the product and the average selling price of the domestic industry, net of all
rebates and taxes, at the same level of trade.

China UoM POI

Net Sales Realization Rs. /Kg ***
Landed Value Rs. /Kg 589
Price Undercutting Rs. /Kg (***)
Price Undercutting % (***)%

75. It is noted that price undercutting is negative for the subject country in the period of
investigation. However, the domestic industry has stated that it has been forced to sell
the product under consideration at a very low price due to the allegedly dumped
imports. The domestic industry has stated that it intended to sell the product under
consideration at Rs. 900 per Kg, but was constrained to sell it at a lower price.
Furthermore, the domestic industry submits that the exporters/producers initially sold
the subject goods at a much higher price, but have reduced the price after the domestic
industry entered the market. The Authority notes that DI is selling the PUC in the
market below the landed value of the PUC from the subject country.
76. The Authority further notes that even when the price undercutting is negative, still the
DI can suffer injury as it has been forced to sell the product under consideration at a
very low price due to the allegedly dumped imports.

b. Price suppression/depression

77. In order to determine whether the effect of the imports is to depress prices to a
significant degree or prevent price increases which otherwise would have occurred, the
costs and prices over the injury period have been compared with the landed value.

Apr’ 20 –
POI
Particulars Unit 2017-18 2018-19 2019-20 Dec’ 20
(A)
(POI)
Landed Value Rs/Kg 600 1,281 1,231 589 589
Trend Indexed 100 213 205 98 98
Net selling price of *** ***
Rs/Kg
domestic industry
Trend Indexed - - - 100 100
Cost of Sales Rs/Kg - - - *** ***
Trend - - - 100 100

78. The domestic industry has projected a price of Rs. 900 per kg. However, the landed
value of imports is Rs. 589 per kg in the period of investigation. The Authority focuses

26 | P a g e
 on such reasons as well that the domestic industry is in a situation of price suppression
and not able to raise the sales price to the projected level. However, it is noted that DI
is not in a situation of price depression since the landed value is higher than selling
price of DI.

L. ECONOMIC PARAMETERS OF THE DOMESTIC INDUSTRY

79. Annexure II to the Rules provides that the examination of the impact of the dumped
imports on the domestic industry should include an objective and unbiased evaluation
of all relevant economic factors and indices having a bearing on the state of the industry,
including actual and potential decline in sales, profits, output, market share,
productivity, return on investments or utilization of capacity, factors affecting domestic
prices, the magnitude of the margin of dumping, actual and potential negative effects
on cash flow, inventories, employment, wages, growth, ability to raise capital
investments. The various injury parameters relating to the domestic industry are
discussed below.

a. Capacity, production, capacity utilization and sales

80. The performance of the domestic industry with regards to capacity, production, capacity
utilization and sales is as follows:

Apr'19- Apr'19
2017-1 2018-1 POI (Q POI (Q POI (Q POI (Q
Particulars Unit Dec'19 ( -Dec'1 POI
8 9 1) 2) 3) 4)
A) 9 (A)
Capacity Pe *** *** *** *** ***
Kg - - - -
r annum
Index
Trend - - - - 100 100 100 111 133
ed
Production Kg - - - - *** *** *** *** ***
Index
Trend - - - - 100 100 105 180 187
ed
Capacity Ut *** *** *** *** ***
% - - - -
ilization
Index
Trend - - - - 100 100 105 162 140
ed
Domestic S *** *** *** *** ***
Kg - - - -
ales
Index
Trend - - - - 100 100 1,387 7,386 5,808
ed

81. The Authority notes that the domestic industry has a total capacity of ***Kg. The
capacity utilization of the domestic industry has remained at near to projected level
of ***% during the POI.

b. Market share

82. The market share of the domestic industry and the subject imports is compared below.
There are no other domestic producers of the product under consideration.

27 | P a g e
 Apr'19- Apr'19-
2018- POI POI POI POI
Particulars Unit 2017-18 Dec'19 Dec'19 POI
19 (Q1) (Q2) (Q3) (Q4)
(A) (A)
Domestic *** *** *** *** ***
% - - - -
Industry
Trend Indexed - - - - 100 100 1,469 6,380 5,766
Subject *** *** *** *** *** *** *** *** ***
%
Countries
Trend Indexed 100 100 99 99 91 100 96 83 84
Other *** *** *** *** ***
% *** - - ***
countries
Trend Indexed 100 - 252 252 0 100 10 - 5
Total % 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

83. It is seen that the market share of the domestic industry has started growing after the
commencement of the commercial production. The market share of the domestic
industry during the period of investigation was only ***%.

c. Inventories

84. The inventories with the domestic industry over the injury period are as below:

Apr’19-
2017- 2018- Apr’19- POI POI POI POI
Particulars Unit Dec’19 POI
18 19 Dec’19 (Q1) (Q2) (Q3) (Q4)
(A)
Opening Kg - - - - - - *** *** ***
Closing Kg - - - - *** *** *** *** ***
Average *** *** *** *** ***
Kg - - - -
Inventory
Trend Indexed - - - - 100 100 141 225 340

85. It is seen that the inventories of the domestic industry have shown a consistent pattern
of growth throughout the period of investigation, indicating an accumulation of stock
on a quarterly basis.

d. Profitability, cash profits and return on capital employed

86. The profitability, return on investment and cash profits of the domestic industry over
the injury period are as follows:

Apr'19- Apr'19- POI POI POI POI

Particulars Unit 2017-18 2018-19 POI
Dec'19 Dec'19 (A) (Q1) (Q2) (Q3) (Q4)
Cost of sales ₹/Kg - - - - *** *** *** *** ***
Trend Indexed - - - - 100 100 100 100 100
Selling price ₹/Kg - - - - *** *** *** *** ***

28 | P a g e
Trend Indexed - - - - 100 100 89 78 78
Profit per
₹/Kg - - - - (***) (***) (***) (***) (***)
unit
Trend Indexed - - - - (100) (100) (307) (524) (532)
Total
Rs. Lacs - - - - (***) (***) (***) (***) (***)
Profit/(Loss)
Trend Indexed - - - - (100) (100) (4,259) (38,675) (30,906)
Cash Profit Rs. Lacs - - - - *** _ _ _ _
Trend Indexed - - - - (100) _ _ _ _
Profit before
Interest and Rs. Lacs - - - - (***) _ _ _ _
tax
Trend Indexed - - - - (100) _ _ _ _
Return on
Capital % - - - - (***) _ _ _ _
Employed
Trend Range - - - - (0-10) _ _ _ _

87. The cost of sales of the domestic industry is Rs. ***/Kg. However, the selling price of
the domestic industry during the POI (and in each quarter) is below the cost of sales –
indicating that the domestic industry is incurring losses. The Authority notes that the
profits per unit and the return on capital employed have not only remained negative but
also been below the projected levels throughout the POI.

e. Employment, wages and productivity

88. The Authority has examined the information relating to employment, wages and
productivity, as given below.

Apr'19-
2017- 2018- Apr'19- POI POI POI POI
Particulars Unit Dec'19 POI
18 19 Dec'19 (Q1) (Q2) (Q3) (Q4)
(A)
No. of *** *** *** *** ***
Nos. - - - -
Employees
Trend Indexed - - - - 100 100 122 116 113
Salaries & *** *** *** *** ***
Rs. Lacs - - - -
Wages
Trend Indexed - - - - 100 100 1,240 5,779 4,520
Productivity *** *** *** *** ***
Kg/Day - - - -
per day
Trend Indexed - - - - 100 100 105 180 187

89. It is seen that the number of employees of the domestic industry has mostly remained
the same. The productivity per day has increased on a quarterly basis.

f. Growth

29 | P a g e
 90. It is noted that both the volume and profitability parameters of the domestic industry
have witnessed negative growth in the period of investigation. The applicant has
claimed that such decline in the period of investigation is due to the impact of Covid-
19 pandemic. However, the plant of the domestic industry was shut down only for 10-
12 days due to Covid-19 pandemic and the total domestic demand has increased to its
highest level during the POI.

g. Ability to raise capital investment

91. The Authority notes that the ability of the domestic industry to raise capital investment
has not been affected due to the subject imports in the POI.

h. Factors affecting prices

92. The Authority notes that the volume of imports during the period of investigation was
significant and, therefore, may have created a strain on the prices of the domestic
industry. The selling price of the domestic industry may have been affected by the
subject imports.

i. Magnitude of dumping

93. It is noted that the subject goods are being dumped into India with respect to actual
performance of the applicant industry and also when optimized to the quarterly capacity
utilization during the POI.

M. MAGNITUDE OF INJURY MARGIN

94. The non-injurious price of the subject goods produced by the domestic industry as
determined by the Authority in terms of Annexure III to the Rules has been compared
with the landed value of the exports from the subject country for determination of the
injury margin during the period of investigation and the injury margin so worked out is
as under:

Non-
Landed Injury Injury Injury
injurious
Name of producers price price margin margin margin
SN
(USD/MT) (USD/MT) (USD/MT) (%) (Range)
China PR
Shandong Huihai *** *** *** ***
1 Pharmaceutical and 10-20
Chemical Co., Ltd.
Non-cooperative / *** *** *** ***
2 20-30
residual exporters

N. NON-ATTRIBUTION ANALYSIS

95. As per the Rules, the Authority, inter-alia, is required to examine any known factors
other than the dumped imports which at the same time are injuring the domestic

30 | P a g e
 industry, so that the injury caused by these other factors may not be attributed to the
dumped imports. The factors which may be relevant in this respect include, inter-alia,
the volume and prices of the imports not sold at dumped prices, contraction in demand
or changes in the patterns of consumption, trade restrictive practices of and competition
between the foreign and domestic producers, developments in technology and the
export performance and the productivity of the domestic industry. It has been examined
below whether factors other than dumped imports could have contributed to the injury,
which has resulted in the material retardation to the establishment of the domestic
industry:

a. Volume and price of imports from third country

96. The Authority notes that the imports from third country are miniscule and do not affect
the analysis whatsoever. The imports from third country after the year 2017-18 have
been nil, and the subject country is the only country that is exporting the subject goods
into India.

b. Contraction in demand

97. It is noted that the demand of the subject goods was increasing at a healthy rate. The
demand for the subject goods during the POI is far higher than any previous years
examined.

c. Changes in pattern of consumption

98. There has been no material change in the pattern of consumption of the product under
consideration which is likely to cause injury to the domestic industry.

d. Trade restrictive practices and competition between the foreign and domestic
producers

99. The imports of the subject goods are not restricted in any manner and are freely
importable in the country.

e. Startup costs, inefficiencies associated with newly established industries

100. The Authority notes that the present investigation is one for material retardation. The
domestic industry has declared commercial production in November, 2019, but
commenced commercial production in January, 2020. In the case of material injury
investigation, the Authority examines the injury period of 3 years and the POI for
determination of injury, however, since the industry has been established only in 2019-
20 and no such material injury data is available. Therefore, the domestic industry has
produced evidence of injury parameters on a quarterly basis during the POI. The
domestic industry is at a nascent stage of production, and is incurring operational and
startup costs associated with a newly established industry, and if the Authority
constructs the normal value taking into considerations the highest achievable capacity
at the projected level of 70%, it would reduce the cost. The Authority has conducted
the injury analysis based on the best achieved capacity of the domestic industry among
all four quarters of the POI (i.e., ***% capacity utilization). The Authority notes that

31 | P a g e
 start-up costs, inefficiencies and low-capacity utilization associated with new industries
is a relevant factor in determining causality of the injury.

f. Developments in technology

101.The Authority notes that there has been no material change in the technology for the
production of the product.

g. Export performance

102. The domestic industry has stated that it exports its products to over 25 countries across
the globe. Further, the domestic industry also exported significant quantities of the
subject goods manufactured by it during the POI. However, the Authority considered
only the domestic sales for injury analysis.

h. Productivity

103. The Authority notes that the productivity of the domestic industry was maintained at
the projected levels during the POI even though there was shutdown of plant for almost
10-12 days during the POI.

O. POST-DISCLOSURE STATEMENT COMMENTS:

104. The other interested parties have not submitted any post disclosure statement
comments. Only the domestic industry has made the following comments on the
disclosure statement issued by the Authority. The submissions made by the
domestic industry are summarised as under:

a. Shandong Huihai Pharmaceutical and Chemical Co. Ltd. provides a rebate

of US$1 per kg to Indian customers, and the contrary claims by the exporter
is false.
b. The volume of the subject imports has increased by 30% during the POI as
compared to the base year.
c. Although the imports have not depressed the prices of the domestic industry,
the low-priced imports have forced the domestic industry to sell the subject
goods below its target price.
d. The month-wise data shows that price undercutting is positive for 6 months,
and negative for 5 months.
e. Despite the capacity utilisation of the domestic industry being at nearly the
projected levels, it is able to sell only 47% of its production in the domestic
market.
f. Even with all the domestic sales and the export sales combined, the
inventories of the domestic industry stand at 38% of the total production.
g. The domestic industry is unable to capture the potential market share due to
the dumping of the subject goods. Even at the projected capacity utilisation,
the domestic industry would lose market share.
h. The domestic industry has the potential to cater to 69% of the demand in
India at optimum capacity utilisation. However, during the POI, the market
share of the domestic industry was 12%, and during the post-POI period,
market share was 24%.

32 | P a g e
i. The total production capacity of the domestic industry is enough to cater to
almost 90% of total domestic demand.
j. Even at 80% capacity utilisation, the market share of the domestic industry
would be 5.86 times its current market share.
k. Even at the optimum capacity utilisation, the domestic industry will incur
losses and record negative return on investment.
l. The imports have increased significantly even after the domestic industry
had commenced production.
m. The import prices were reduced by 52% after the domestic industry entered
the market. As a result, the domestic industry was forced to sell below its
cost of production.
n. The imports are priced below the domestic industry’s actual as well as
potential cost of production and sales.
o. The price of the domestic industry’s goods is far below its targeted price.
p. While sales of the applicant have shown positive growth, the profitability
parameters have declined.
q. The price of the major raw material, i.e., cyclohexylamine has increased,
and is now priced higher than the landed value of the subject goods.
r. The domestic industry has also not been able to benefit from the decline in
mark up of raw materials, i.e., cyclohexylamine.
s. The Authority can also consider the post-POI data to evaluate the injury
parameters.
t. Post-POI data has also been considered by the Authority in investigations
concerning ‘Chlorinated Polyvinyl Chloride Resin’, ‘Styrene Butadiene
Rubber and Resin’ or ‘other organic substances bonded wood’.
u. Post-POI data will establish the following: -
i. The market share of the domestic industry is only 24%, while
imports command three-fourths of the market.
ii. Price of the imports has declined further, adding to the strain on
prices of the domestic industry.
iii. The recent orders placed by customers on the domestic industry
indicate that the prices agreed in the post-POI transactions are much
lower than the price during the POI, and consequently, the loss is
much higher.
iv. The performance of the domestic industry has significantly
deteriorated in terms of profits, cash profits and return on
investment.
v. Despite the ample demand of the product under consideration in
India, the domestic industry is not able to make sufficient number of
sales in India. The domestic industry’s export sales are significantly
high since the export markets are more attractive than the Indian
market.
v. The applicant is among the largest global manufacturers of several drugs
produced by it, including the product under consideration. The applicant is
new in the product, and is not new in the industry.
w. The applicant deals in high-quality products, as a result of which, it is
engaged in business with well-known Indian and global customers, and has
supplied the product under consideration to its existing customers.
x. The adverse performance of the domestic industry is not on account of any
inefficiencies or start-up costs. This is evident from the fact that the plant

33 | P a g e
 would have been sufficiently profitable if the import prices prevailing earlier
had sustained.
y. The imposition of the duty in the present investigation is in the interest of
the public due to the following reasons:
i. It would provide a level playing field for the newly established
domestic producer to become viable and competitive;
ii. It would reduce the cost of the product under consideration to the
consumer as the imports would now not be priced exorbitantly; and
iii. It would ensure that there is a stable domestic producer of the
product.
z. If the domestic industry’s production of the product under consideration is
unviable at a nascent stage, it may be compelled to shut down its plant.
aa. The applicant has recently set up capacities in India by investing a large sum
of money. Therefore, there is a need to protect the investments made by the
Applicant.
bb. Before the domestic industry commenced production, the exporters had
intentionally charged exorbitant prices for the subject goods because of the
lack of competition in India.
cc. The applicant is a company that adopts environmentally friendly production
processes, and has due regard to sustainable development. Therefore, the
imposition of the duty would be in the interest of the public at large.
dd. The domestic industry is the sole producer of the product under
consideration in India, and if the situation of dumping persists, it would be
constrained to close its operations. In case of shut down of the Applicant’s
plant, the consumers in India would be entirely dependent on the exporters.
ee. The domestic industry has the capacity to cater to a substantial portion of
the demand in India, which would advance India’s interest of becoming self-
sufficient.
ff. The exporters have not produced any evidence to indicate that the duty
would have an adverse impact on the users.
gg. The impact of the duty on the downstream product is miniscule since the
subject good is not a key raw material and does not constitute a major
proportion of the cost of the finished goods.
hh. The imposition of duty would contribute towards reducing India’s trade
deficit.
ii. Since the subject good is being imported from China PR, the domestic
industry is essentially competing with an industry that does not operate
under market economy conditions.
jj. The Government of China PR provides significant support to its industry.
kk. There are certain inconsistencies in the data related to total profits/loss, cash
profits and PBIT considered by the Authority in the Disclosure Statement.

O.1 Examination by the Authority

105. The Authority notes that most of the submissions made by the domestic industry in
response to the disclosure statement are repetitive in nature and the domestic industry
has largely reiterated earlier submissions. Further, the other interested parties have not
even responded to the disclosure statement issued by the Authority. The Authority has
examined the submissions made by the domestic industry below to the extent found
relevant and not addressed elsewhere.

34 | P a g e
106. The Authority notes that the present case is one for material retardation of the
establishment of an industry and not of material injury. As noted above, for the purpose
of material retardation investigations, the Authority must first conclude that the industry
is not already in existence, or that the industry has recently been established and is yet
to find its place in the market. The Authority has examined the certain factors relevant
to determining whether or not the domestic industry is an unestablished industry in
paragraphs 59 to 66 above. However, subsequent to the issuance of the disclosure
statement, the domestic industry has made post-disclosure comments, whereby it has
indicated that the decline in its performance is not due to start-up costs.
107. The present case is one for material retardation of the establishment of an industry and
not of material injury. As noted above, for the purpose of material retardation
investigations, the Authority must first conclude that the industry is not already in
existence, or that the industry has recently been established and is yet to find its place
in the market. The Authority notes that the applicant is undisputedly an existing and
established company, engaging in the production and sale of a number of other
products, which are not the subject matter of the present investigation. However, it is
very important to note that in in relation to the product under consideration, the
applicant is a new entrant in the market. Furthermore, there is no dispute that as far as
the product under consideration is concerned, the applicant company is the sole and
new producer of the same in the country. As noted by the WTO Panel in Morocco –
Anti-Dumping (Turkey) that what is important is not merely the introduction of a new
product line itself, but rather the degree of overlap with the existing infrastructure of
the industry. The WTO Panel has made it clear that even if an applicant has been in
existence and produces other products, the Authority must still focus on the ‘degree of
overlap’ in use of overall infrastructure. The Authority notes that the applicant has set
up a new automated plant in its premises for the production of the product under
consideration. The details of the plant and machinery that is set up is given in the project
report of the applicant. The Authority notes that since a new plant is being set up to
manufacture the product under consideration, the domestic industry would not be
making utilization of its existing infrastructure to manufacture the product under
consideration. Furthermore, the Authority notes that the raw materials and the
production process used in the manufacture of the product under consideration is
entirely different from its other products, thereby reducing any overlaps with existing
infrastructure.
108. The Authority has examined four factors (overlap of existing facilities, time of
establishment, size of the industry and stability of production) which are relevant for
determining whether the industry has been established. In terms of overlap of existing
infrastructure, the Authority has already concluded that there is no overlap between the
production of the PUC and the existing infrastructure of the applicant. As far as the
production and sale of the product under consideration is concerned, the same is
undisputedly a new product, with no past history of production in India. The
manufacturing plant of the PUC was set up in November, 2019 but commercial
production commenced only in January, 2020, the domestic industry has been in
existence for a very short period of time and, therefore, it cannot be considered to be an
existing industry on this parameter. Furthermore, the size of the applicant’s production
of the subject goods is currently very small, and the production of the PUC is not stable
at present. Therefore, as per all four parameters which are relevant for examining
whether or not the industry is in existence, the Authority concludes that the industry is
not an established industry.

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109. The Authority also considers that that as per the Anti-Dumping Agreement as well as
the Customs Tariff (Anti-Dumping) Rules, the definition of the ‘domestic industry’ is
in relation to the ‘like article’. The ‘domestic industry’ has been defined as ‘…the
domestic producers as a whole engaged in the manufacture of the like article…’.
Therefore, it is clear that the injury in the form of material retardation must be
established in relation to the ‘product under consideration’ or the ‘like article’. From a
conjoint reading of the above definition along with the decision of the WTO Panel, the
Authority notes that the rules require that the effect of the dumped imports should be
assessed in relation to the domestic production of the like article. Thus, material
retardation to establishment of the domestic industry is required to be examined with
reference to the product and not with reference to the applicant as a whole. It is quite
possible that the company is already well-established in the production of non-subject
goods. What is however relevant is whether the industry with reference to the product
under consideration is well established. The establishment of the industry with
reference to PUC is required to be seen considering the length of operations of the
company concerning the production and sale of the product in the country. Thus, as far
as the domestic industry for the production of the subject good is concerned, this no
dispute that the Applicant is the only producer in the country and has been in existence
for a very short period of time. The Authority, therefore, concludes that on all
parameters examined above, the Applicant is not an existing industry for the production
of the product under consideration.
110. The statements made by the domestic industry regarding its business with some of the
largest domestic and global players in the pharmaceutical industry suggests that the
applicant is well established in the production of other products in the pharmaceutical
market which are not under investigation. However, as far as product under
consideration is concerned, despite these past credentials of the domestic industry, it is
not able to sell even to the extent of its production. Further, the domestic industry has
not been able to produce and sell despite existence of sufficient production capacities
with it and its established position in the pharmaceutical sector. The above statements
make it clear that despite being well established company in business in the
pharmaceutical market for over a period of 17 years, the domestic industry has not been
able to produce and sell profitably a new product developed. The applicant could,
benefit from its existing presence in the pharmaceutical market. However, it is still
suffering injury. This indicates the injurious effects of the dumped imports. In fact, the
level of protection determined for the domestic industry is considering its level of
operations and had the company being a new company at new location and without any
other past history of production, the level of protection determined could have been
higher, considering that the NIP of such a company could have been higher than
determined at present.
111. Apart from the subject goods, the domestic industry also manufactures several other
products. Furthermore, the production of the product under consideration is taking
place in a new plant established by the domestic industry within its existing premises.
The domestic industry has two manufacturing units in Kurkumbh MIDC and produces
several products. Therefore, the non-injurious price determined must be lower than
what it might have been in case of a stand-alone company and production plant. In the
light of these factors, the Authority holds that although the applicant is an already
existing company, it has commenced production of a new product which was not earlier
produced in the country, and whose establishment is being retarded by the dumping of
the product in the country.

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 112. It could be contended that the performance of the domestic industry is positive in certain
parameters like levels of production, negative price undercutting and absence of price
depression. It is, however, seen that the performance of the domestic industry is much
adverse as compared to what it could have been in the absence of dumping in the
country. The domestic industry could have sold to the extent of its production, would
not have faced piling up of inventories and would have been able to earn profit, cash
profit and positive return on investments.

P. INDIAN INDUSTRY’S INTERESTS & OTHER ISSUES

P.1 Views of the other interested parties

113. The petitioner will not be able to meet the domestic demand. In case of the imposition
of the duty, the petitioner can easily manipulate the price and can create monopoly in
the market. This will adversely affect the downstream industry which is against the
public interest. The duty will have negative impact on several user industries, which
form part of MSME and SME sector.

P.2 Views of the domestic industry

114. The submissions made by the domestic industry are as follows:

a. Before the commencement of the production by the domestic industry, there was a
monopoly of exporters in the domestic market. They charged higher prices for the
product. As soon as the domestic producer entered the market, the exporters
reduced the price of the subject goods with clear intent to prevent the domestic
industry from gaining a foothold in the market and to force the domestic industry
to shut down its operation. In the absence of the duties, the domestic industry will
be forced to shut down its operation and the consumer will have to buy the subject
goods from the producers in the subject country.
b. The imposition of duty on the subject goods is in public interest. The duty would
allow the domestic industry to find a place and establish itself in the market. If the
domestic industry now leaves the market, the consumers would solely depend upon
the subject imports. The prices would not be fair and competitive. The exporter
might sell the subject imports at a higher rate.
c. The domestic industry is newly established in the domestic market for the PUC. If
they are not able to compete in the market due to the dumped imports, they would
have no option but to shut down their operation.
d. The domestic industry has sufficient capacity to fulfil the entire domestic demand
in the country. The imposition of duties will promote Aatmanirbar Bharat Mission.
e. There is no evidence that in case of imposition of duties, it would adversely affect
the users of the product under consideration.
f. The product is consumed by major pharmaceutical industries. Therefore, the user
industry does not constitute producers in the MSME sector.

P.3 Examination by the Authority

115. As per the data available on record, the domestic industry has enough capacity to cater
to the entire demand in India. The product is used in pharmaceutical sector. There is no

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 evidence on record that the consumers comprise only the MSME industry. In any case,
the price of the product was higher in India before the commencement of commercial
production in India. Further, even if there is demand-supply gap in the country, the
same does not justify dumping of the product in the country by foreign producers. The
imports can always occur at reasonable and fair prices. The proposed duty shall not
restrict the imports. The cost of the product is not a major cost in the production of the
downstream products.
116. The Authority considers that the imposition of the anti-dumping duties will create fair
competition in the Indian market. The imposition of the proposed measure would
remove the unfair advantages gained by the dumping practices, allow the domestic
industry to establish in the market, prevent its decline and help maintain availability of
the subject goods to the consumers. The purpose of anti-dumping duties, in general, is
to eliminate injury caused to the domestic industry by the unfair trade practices of
dumping, so as to reestablish a situation of open and fair competition in the Indian
market, which is in the general interests of the country. Imposition of the anti-dumping
duties, therefore, would not affect the availability of the product to the consumers. The
Authority notes that the imposition of the anti-dumping measures would not restrict
imports from the subject country in any way and, therefore, would not affect the
availability of the product to the consumers.

Q. CONCLUSION & RECOMMENDATIONS

117. Having regard to the contentions raised, the information provided, the submissions
made and the facts available before the Authority as recorded in the above findings, the
Authority concludes that:

a. The product under consideration has been exported to India at a price below the normal
value, resulting in dumping. The dumping margin is positive and significant.
b. The dumping of the subject goods has materially retarded the establishment of domestic
industry in India. The examination of the subject imports and the performance of the
domestic industry clearly shows that the volume of the subject imports in absolute and
relative terms has remained high even after commencement of the commercial
production in India. The imports are priced below the target prices of the domestic
industry leading to price suppression. At current prices, the domestic industry will not be
able to achieve its target performance. The domestic industry has not been able to
produce the product to the extent it could have produced. Further, despite significant
demand for the product in the country, the domestic industry has not been able to sell
even to the limited extent it has produced, and has been faced with significant inventories.
The domestic industry is suffering significant financial losses and negative return on
investment.
c. The material retardation to the establishment of the domestic industry in India is due to
the subject dumped imports.
d. The information on record shows that the non-imposition of the anti-dumping duty will
adversely and materially impact the indigenous production, while imposition of the anti-
dumping duty will not materially impact the consumers or the downstream industry or
the public at large.
e. On the basis of the information provided by the interested party and the investigation
conducted, the Authority is of the view that imposition of the anti-dumping duty will not
be against the public interest.

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 118. The Authority notes that the investigation was initiated and notified to all the interested
parties and adequate opportunity was given to the domestic industry, the exporter, the
importers and the other interested parties to provide positive information on the aspect
of dumping, injury and causal link. Having initiated and conducted the investigation
into dumping, injury and causal link in terms of the provisions laid down under the
Anti-Dumping Rules, the Authority is of the view that imposition of the anti-dumping
duty is required to offset the dumping and consequent injury. The Authority considers
it necessary to recommend imposition of the anti-dumping duty on the imports of the
subject goods originating in or exported from the subject country.
119. Having regards to the lesser duty rule followed, the Authority recommends imposition
of anti-dumping duty equal to the lesser of the margin of dumping and the margin of
injury so as to remove the injury to the domestic industry. Accordingly, the Authority
recommends imposition of the anti-dumping duty on the imports of subject goods
originating in or exported from the subject country, from the date of notification to be
issued in this regard by the Central Government, equal to the amount mentioned in Col.
7 of the duty table appended below. The landed value of the imports for this purpose
shall be the assessable value as determined by the Customs under Customs Act, 1962
and applicable level of the customs duties except duties levied under Section 3, 3A, 8B,
9, 9A of the Customs Tariff Act, 1975.

DUTY TABLE

Country Country
SN Heading Description of of Producer Amount Unit Currency
Origin Export
1 2 3 4 5 6 7 8 9
29212990,
Shandong
29241900,
Any Huihai
29242990,
N, N’- country Pharmaceutical
29251900, China
1. Dicyclohexyl including and 493.73 MT USD
29252910, PR
Carbodiimide* China Chemical
29252990,
PR Company
29333990,
Limited
29419090
Any
N, N’- country Any other than
China
2. - do - Dicyclohexyl including that mentioned 826.75 MT USD
PR
Carbodiimide* China at SN 1.
PR
Any
country
N, N’-
other China
3. - do - Dicyclohexyl Any 826.75 MT USD
than PR
Carbodiimide*
China
PR
*Also known as DCC, Dicyclohexylcarbodiimide, 1, 3-Dicyclohexylcarbodiimide

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