ORDER
C.N.B. Nair, Member (T)
1. This appeal is directed against Final Findings of the Designated Authority (hereinafter referred to as DA) dated 12th November, 1996 recommending imposition of anti-dumping duty on Dead Burnt Magnesite (DBM) originating from People’s Republic of China and imported into India. The DA reached the following final findings :-
“37. The Authority has, after considering the foregoing come to the conclusion that:
(i) the reference grade DBM of Chinese origin has been exported to India below its normal value;
(ii) the domestic industry has suffered material injury;
(iii) injury has been caused to the Domestic Industry by imports from China PR.
38. The Authority therefore, confirms paras 47 to 49 of the Preliminary Findings and recommends the imposition of final Anti-dumping Duties on all imports of reference grade DBM originating in or exported from China PR at the rates specified below :-
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Name of the Exporter Amount of Duty (Rs. Per MT)
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China Metal Imports and Exports 705
Corpn., China
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Sima Resources Gmbh, Germany 1264
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China Soungang International Trade 1150
and Engg. Corpn., China
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Exporters other than Above 1264
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2. The appellants are an Association of Refractory Producers in India. They import DBM from China and produce refractory bricks out of the same. The imposition of Anti-dumping duty has adversely affected their interest by making their input more expensive and are, therefore, aggrieved by the findings of the DA.
3. The reference grade DBM involved in this appeal is “Dead Burnt Magnesite (DBM) having MgO content ranging from 85% to 92%.” The appellants had taken part in the investigation proceedings of the DA and had contested the imposition of duty on all grades of DBM having MgO content of 85% to 92%. They contended that silica content in DBM is a very important factor and DBM having less than 4% silica content by weight is not produced in India and, therefore, the refractory makers have no option but to import the DBM of that grade. Further, since local producers of DBM are not producing that grade DBM, they are not suffering any material injury by the import of that grade DBM and that, in any event, there is no causal link between the import of that grade DBM and the injury, if any, suffered by domestic industry. They had produced technical, expert, commercial and governmental findings, opinions and materials in support of their claim. They also submitted copy of Ministry of Finance Notification 241/85-Cus., dated 1-8-1985 to show that even during the years of import control, DBM with less than 4% silica was being allowed to be imported at reduced concessional rate of duty. The DA did not accept these submissions of the appellants and recommended imposition of duty on DBM having MgO content ranging from 85% to 92%. The DA reached the finding that as imports had increased from People’s Republic of China and as the exports from People’s Republic of China have resulted in price suppression in the markets and forced the domestic industry to keep its prices at unremunerative levels, preventing recovery of its full cost of production, the conclusion was inescapable that the domestic industry had suffered material injury. The Authority also reached the conclusion that domestic industry has lost its market share as the share of market from People’s Republic of China had increased. Thus, rejecting the appellants’ contention regarding injury and causal link also.
4. The present appeal faults the investigation procedure followed by the DA as well as the findings reached by him. It has been submitted that the investigation proceedings conducted by the DA were not fair and just as materials relied upon for determination of normal value were treated as confidential. Further, the method adopted for determination of ‘export price’ was ultra vires as the export price was taken at the FOB level and not at CIF level. It also submits that the DBM of less than 4% silica imported from China is not ‘like article’ when compared to the DBM produced in India. In addition, the appellants have stressed their contentions regarding injury and causal link.
5. We heard the learned counsel representing the DA on the above points. He submitted that the findings of the DA were entirely in accordance with the legal provisions relating to anti-dumping investigations. Rule 7 of Anti-Dumping Rules specifically provides that data furnished on confidential basis shall be treated as such by the Designated Authority. Further, the appellant importers are in no position to challenge the ‘normal value’ of goods in China as they have no information about the domestic price of the goods in China or the cost of production of the said goods in China. He also submitted that the DA was correct in taking the export price at FOB level, as the relevant price under Section 9 of Customs Tariff Act, for determining whether there is dumping, is whether the export price is less than the domestic sale price in the exporting country. Landed price of the exported goods in India is of no concern. He also submitted that, for an article to be treated as ‘like article’, it is sufficient that the article has characteristics closely resembling those of the articles under investigation according to the definition of ‘like article’ in Rule 2(d) of Anti-Dumping Rules. With regard to the findings of the DA on injury and causal link, he pointed out that the DA has specifically held that the articles imported from China PR have substituted the articles produced by the domestic industry – both commercially and technically. He, therefore, submitted that no objection could be taken to the finding that it is the increased import of DBM from China which has led to the injury caused to the domestic industry and thus, injury and causal link criteria are fully satisfied.
6. On a careful consideration of the submissions made by both the sides, we find that the appellants’ objection that the proceedings were conducted in violation of the principles of natural justice by not disclosing the information used for arriving at the normal value of the goods in PR of China cannot be sustained. As pointed out by the learned counsel for the DA, Rule 7 specifically stipulates that any information provided to the DA on a confidential basis by any party in the course of investigation shall be treated as such by the DA and no such information shall be disclosed to any other party without specific authorisation of the party providing such information. The learned counsel of the DA is also right in his submission that an Indian importer is hardly in a position to challenge the materials or findings regarding normal value of goods for domestic sale in China as he is not privy to any such information. This is particularly so, as explained by him, since PR China is not a market economy and prices are distorted by Government interventions by providing subsidies and imposing administered prices. Therefore, these objections of the appellants have to be rejected. The appellants’ objection that the DBM produced in India cannot be treated as ‘like article’ as compared to articles under import from China also may not be correct as the definition of like article’ in Rule 2(d) of Anti-Dumping Rules has an expanded ambit as to cover articles having characteristics closely resembling those of the articles under investigation. We also observe that we have accepted this view in our order in the case of Birla Periclase and M/s. Indian Refractory Makers Association v. Designated Authority in Final Order No.4 & 5/2000-AD, dated 19-1-2000 [2000 (116) E.L.T. 336 (Tribunal)]. We, however, find that the appellants’ submissions regarding injury and causal link require our detailed consideration which we do hereunder.
7. The appellants’ contention before the DA as well as in the present appeal is that their import i.e. DBM of less than 4% by weight silica, is a different type/grade of DBM which is required by them for manufacture of refractory bricks which conforms to specification of steel industry. They contend that silica content is vital in ensuring that the bricks are able to withstand the temperature in the steel industry furnace for several operations. They had produced materials to substantiate this submission of theirs before the Designated Authority. The counsel for the appellants took us through these materials in great detail during hearing. He submitted that the DBM produced in both South India and North India contains above 4% by weight of silicon. The higher silica content leads to formation of several low melting compounds in the refractory lining. The higher silica content adversely affects the capability to resist repeated thermal shocks while operating the LD converter in the steel industry. The high silica content reduces sorting point of Magnesite refractory brick. They had also submitted before the DA copy of the certificate of Dr. N.R. Sircar, former Deputy Director of Central Glass and Ceramic Research Institute and the later General Manager (Technical) of Bharat Refractories Ltd. in support of their submission. They also submitted that the consumer industries prescribe use of DBM having more than 90% MgO and less than 4% silica. They enclosed copies of orders received from consumer industries like Bhilai Steel Plant & Rourkela Steel Plant to substantiate their submission. The appellants also submitted that DBM is a generic term and it has different grades. The grade of DBM largely depends on MgO and silica content and other characteristics such as bulk density etc. Each grade of DBM is used for particular purpose and is not interchangeable. They had submitted copies of relevant extracts from Indian Standard specification of Magnesite in support of this contention. It was explained that most grades of Indian magnesite have less than 89% of MgO content, with high silica. Another contention of the appellants was that the Government had all along accepted that DBM of less than 4% silica is a separate grade by itself and had allowed its import at a concessional rate of duty. Copies of Notification No. 241/85 and other notifications were submitted in support of this submission. The appellants also relied on the Minutes of a meeting of Indian Manufacturers, Importers and others held on November 5,1986 under the chairmanship of Mr. N. Biswas, the then Deputy Director General of Directorate General of Technical Development wherein it was decided that it was necessary to import better quality of DBM and accordingly, it was agreed that DBM of MgO content of more than 90% and silica of less than 3.5% should be placed under OGL. Copy of the Minutes of the Meeting was also submitted to the DA during investigation. They also submitted that Indian Bureau of Mines had also accepted that higher quality of DBM is required to improve refractory products manufactured in India. They also submitted that Indian Standard 14303:1995 had prescribed specifications for Magnesite for refractory industry. It recognised two types of Dead Burned Magnesite – Type 1, for forging and other general applications and Type 2, for specific application based on end use. During hearing, the appellants’ counsel specifically referred to letter of Tamil Nadu Magnesite Limited regarding revision of selling price of DBM produced by them with effect from 10-8-1995 and pointed out that the DBM of various grades produced by them were all containing silicon ranging from 4.5% to 10-12%. They also submitted that with regard to their specific request for supply of DBM of 90-92% MgO and 4% maximum silica, Tamil Nadu Magnesite Limited replied on 15-11-1995 that they were not having stock of such DBM and that they would inform when the availability of such grade is ready. The counsel submitted that it is clear from this letter as well as the price revision letter that Tamil Nadu Magnesite Limited was not producing DBM of less than 4% silica. Thus, the submission of the appellants, based on IS specifications, DGTD meeting decision and commercial information, is that high grade DBM with less than 4% silica is not available domestically and for that reason, the imported silica of that standard is not in commercial competition with the indigenously produced silica. It is also not substituted by high silicon DBM produced in the country. They, therefore, submit that the DBM industry in India is not injured by the import of a different type/grade DBM. Therefore, they submit that there is no causal link between injury, if any, felt by the domestic industry and the import of Chinese DBM of less than 4%. These submissions regarding imported DBM being of a different grade from what is available in the country have been answered in the findings of the DA by stating that the articles imported from China PR have substituted the articles produced by domestic industry both commercially and technically, without answering the materials produced by them.
8. We have examined the records of the DA relating to the investigation and have considered the submissions made by both the sides. It is established from the Indian Standards, opinion of DGTD and other authorities that DBM with less silica (4%) is a different type or grade of DBM. The Indian producers of DBM also agree (the Minutes of DGTD meeting and the letters of Tamil Nadu Magnesite Limited) that such low silica content DBM is not produced in India. The free import of that grade DBM and the partial exemption granted from customs duty under Notification 241/85, dated 1-8-85 also confirm acceptance of this position by the Government. The final findings of the DA concludes that the DBM imported from China substituted the article produced by domestic industry both commercially and technically. However, we find that the order does not answer the submissions of the Indian Refractory Makers Association or the materials relied on by them. The only material available in the records of investigation on the subject is a letter dated 19th August, 1996 from the Executive Director (Operations) of Steel Authority of India Limited. This letter mentions that “from indigenous sources, DBM is available mainly from Almora/Nainital region of U.P. and Salem District in Tamil Nadu. The DBM available in U.P. is suitable for fettling; whereas the DBM available in Tamil Nadu is suitable for brick making.” However, this letter does not give any details about the specifications of the various grades of DBM, their characteristics, similarities and differences. Further, this observation is no sufficient answer to the points made by the Association or the technical and commercial data and opinion produced by them (Indian Refractory Makers Association). It is clear from the recommendation to restrict the imposition of duty on DBM having MgO content of 85-92% itself that DBM is available in different grades and the import of all grades of DBM does not cause injury to the domestic industry.
9. From the above discussions, it is clear that DBM of less than 4% silica content imported by the appellants from PR China is a different grade/type product from the DBM produced in India. The imported DBM is not substituted by the DBM produced in India. The imported DBM is also not in commercial competition with the domestically produced DBM. Accordingly, we accept the submission of the Indian Refractory Makers Association that the import of DBM containing less than 4% silica by them causes no material injury to the Indian DBM manufacturing industry and that there cannot be a causal link between the import of that grade DBM from PR China and the injury, if any, experienced by the Indian DBM industry.
10. For the purpose of imposing anti-dumping duty on dumped imports, it is a requirement under Rule 11 of Anti-Dumping Rules that import of such article into India causes or threatens material injury to any established industry in India or materially retards the establishment of any industry in India. Further, Rule 4(b) of the same Rules requires that DA shall ‘identify’ the article liable for anti-dumping duty. If dumped import of an article does not or is not capable of causing injury to the domestic industry, imposition of anti-damping duty is not warranted as it only increases the cost to the Indian importers without affording any protection to the Indian manufacturers of like article. We had considered the requirement to satisfy injury and causal link under the Anti-Dumping Rules in our decision in the case of Birla Periclase and M/s. Indian Refractory Makers Association (supra) and held that in the absence of injury and causal link, imposition of anti-dumping duty is not permissible. The present case of DBM of less than 4% silica is such a case. Therefore, we hold that imposition of anti-dumping duty on DBM containing less than 4% silica was not justified.
11. In accordance with our discussions above, we modify the impugned final findings of the DA dated 12th November, 1996 so as to exclude DBM of less than 4% silica from its operation. Consequently, levy of antidumping duty shall be on “Dead Burnt Magnesite (DBM) having MgO content ranging from 85% to 92%; but excluding such DBM having a silica content of less than 4% by weight.” The appeal is allowed to this extent.
