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M/s. Qingdao Double star Tire Industrial & Co. Ltd. & Another v/s Union of India/DA


Company & Directors' Information:- STAR INDIA PRIVATE LIMITED [Active] CIN = U72300MH1994PTC076485

Company & Directors' Information:- THE INDIA COMPANY PRIVATE LIMITED [Active] CIN = U74999TN1919PTC000911

Company & Directors' Information:- STAR COMPANY LIMITED [Strike Off] CIN = U67120WB1927PLC005620

Company & Directors' Information:- INDIA CORPORATION PRIVATE LIMITED [Active] CIN = U65990MH1941PTC003461

Company & Directors' Information:- STAR T V PRIVATE LIMITED [Strike Off] CIN = U51395UP1985PTC007023

Company & Directors' Information:- STAR OF INDIA LIMITED. [Strike Off] CIN = U99999CH1946PLC001119

Company & Directors' Information:- A. S. STAR PRIVATE LIMITED [Active] CIN = U74999RJ2016PTC056637

Company & Directors' Information:- STAR O & M PRIVATE LIMITED [Active] CIN = U74999DL2015PTC281303

Company & Directors' Information:- K. D. STAR PRIVATE LIMITED [Active] CIN = U45201GJ2011PTC067973

Company & Directors' Information:- INDUSTRIAL UNION PRIVATE LIMITED [Dissolved] CIN = U91110KL1901PTC000443

Company & Directors' Information:- STAR LTD. [Dissolved] CIN = U99999MH1921PTC000957

    Anti Dumping Appeal Nos. 51926 & 51983 of 2017 with Stay Application No. 51041 of 2017 & Misc. Application No. 50098 of 2018 & Application No. 51064 of 2017 & Final Order Nos. 51102-51103 of 2018

    Decided On, 27 March 2018

    At, Customs Excise Service Tax Appellate Tribunal Principal Bench New Delhi

    By, THE HONOURABLE DR. JUSTICE SATISH CHANDRA
    By, PRESIDENT
    By, THE HONOURABLE MR. S.K. MOHANTY
    By, JUDICIAL MEMBER & THE HONOURABLE MR. B. RAVICHANDRAN
    By, TECHNICAL MEMBER

    For the Appearing Parties: R. Parthasarathy, Dhruv Gupta, Darpan Bhuyan, Reena Khair, Rajesh Sharma, Rita Jha, Shreya Dahiya, Aastha Gupta, C.A. Ameet Singh, Heeba Zaidi, R.K. Majhi, Advocates.



Judgment Text

B. Ravichandran, Technical Member.

1. These two appeals are against final findings dated 01/08/2017 of the Designated Authority (DA), Directorate General of Anti Dumping and Allied Duties, Ministry of Commerce and Industry and Notification No. 45/2017-CUS (ADD) dated 18/09/2017 issued by the Ministry of Finance imposing definitive Anti Dumping Duty on 'new/unused pneumatic radial tyres with or without tubes and/or flap of rubber (including tubeless tyres) having normal rim dia code above 16', used in buses and lorries/trucks', (hereinafter referred to as ‘the subject goods’) originating in or exported from China PR. The first appellant is a producer and exporter of subject goods in China. They are aggrieved by the imposition of AD duty, as stated above. The second appellant is a representative body of Automotive Tyre Manufacturers Association [ATMA] (DI). The appeal by them is against imposition of lesser anti dumping duty on the subject goods. Before proceeding with the appeals on merit we note that ATMA filed a miscellaneous application stating that there was a delay of 11 days in filing the appeal and they prayed for condonation of the delay. After considering the reasons mentioned in the application, we allow the condonation of delay and admit the appeal for a decision on merit.

2. The ATMA had filed an application on behalf of domestic producers of subject goods, namely, Apollo Tyres, J.K. Tyre Industries Ltd. and CEAT Ltd. before the DA for initiation of anti dumping investigation and investigation and imposition of AD duty on the import of subject goods from China. The DA issued Initiation Notification dated 03/05/2016 and thereafter followed the procedure as per the provisions of Customs Tariff (Identification, Assessment and Collection of Anti Dumping Duty on Dumped Article and for Determination of Injury) Rules, 1995. On completion of investigation, the DA issued his final findings on 01/08/2017 recommending imposition of AD duty on the subject goods from China. Accepting the recommendation, the Finance Ministry issued notification on 18/09/2017 imposing definitive anti dumping duty on different combination of producer/exporter of subject goods from China.

3. The learned Counsel appearing for the first appellant (producer/export in China) submitted that the DA failed in proper analysis of relevant economic factors before deciding the existence of dumping and injury due to such dumping for the DI. He submitted that out of 15 parameters examined by the DA only 4 parameters indicated the possibility of injury and remaining 11 parameters were all significantly positive with no scope for injury. On previous occasion also the subject goods were examined for anti dumping duty and the Tribunal held that there is no material injury to the DI. The learned Counsel relied on the decision of the Tribunal in Bridge Stone Tyre Manufacturing (Thailand) vs. Designated Authority – 2011 (270) E.L.T. 696 (Tri. – Del.). He further submitted that the financial position and various parameters for DI are much better in the present case.

4. The learned Counsel submitted that the profit of DI had gone up and they have also shown improved performance with increase of return on capital employed. The fall in market share in replacement market is not evidenced by actual figures. There is no causal link between dumping and any possible injury to the DI. The increase in inventory with DI is due to increased production. Proportional analysis of production and stock has not been made by the DA. When the economic parameters for DA with reference to profit, growth etc. were all showing significant improvement there is no injury to the DI calling for AD duty.

5. The learned Counsel for the DI opposed the appeal by the Chinese producer/exporter. She submitted that first of all the appellant is a non-cooperative exporter. The appellant had exported both the tyres and flap collectively to India but have not reported flap in their response. They have not reported correct invoice value in some of the transactions. The learned Counsel for the DI further submitted that the parameters of Annexure II to the AD Rules have been correctly followed by the DA. Proper analysis has been made regarding volume effect of dumped import. There is absolute increase in imports to almost 12 times. The production by DI has only increased by 2% to 13%. There is significant price under-cutting. The dumped imports are being sold below cost of sale of the DI. The DI is attempting to promote radial tyres in India. In respect of bias-ply tyre, the DI is earning profit. The imported radial tyres are cheaper than the bias-ply tyres sold by DI. The increase in profit from 0.5% to 11% is not adequate as per the standards which are reckoned by DI normally. Post POI profit declined. The learned Counsel for DI submitted that it is a known fact that various countries including advanced countries proceeded against Chinese tyre imports and imposed anti dumping duties which are in many cases much higher than what is notified for Indian imports. She mentioned specific instances of such imposition. Further, the learned Counsel also distinguished the decision of the Tribunal in Bridge Stone Tyre Manufacturing (Thailand) (supra). The Tribunal in the said case dealt with various factual errors in the finding recorded by the DA. In the present case, there is no such factual error in the analysis. The question of availability of local tyres for the domestic user was also discussed in the said decision. Presently, there is no grievance in this regard by the end domestic user of tyres.

6. The learned Counsel for DA supported the findings of the DA. He submitted the confidential version of final finding for the perusal of the Bench. He drew our attention to the findings more specifically recorded at paras 70, 77, 78 and 84 of the said findings.

7. On the appeal filed by ATMA, the learned Counsel for the DI submitted that the threat of injury to the DI has not been properly examined by the DA. Though the appeal also mentioned regarding inadequate quantum of AD levy imposed on the subject goods, the learned Counsel submitted that in case material injury as found by the DA is sustained and upheld by the Tribunal, they have no further ground to submit.

8. We have heard learned Counsels for both the appellants, the learned Counsel for the DA and learned AR for Revenue and perused the appeal records. We consider the appeal by the Chinese exporter, first. We note that the first appellant is a producer as well as exporter of subject goods who exported both the tyres and flap collectively to India but have not reported flap in their response filed before the DA during investigation. It is also noted that the appellant had not reported the correct invoice value in some of the transactions. Noting these facts, the DA refused to accept the export price declared and rejected the response filed by the appellant. The export price for the appellant at ex-factory level was determined on the available facts by the DA. On close perusal of the impugned final findings, we note that the demand for the subject goods was showing raising trend. The imports from subject country increased by 12 times between 2012-2013 and POI. The market share of DI had in fact declined during the material period. The DA has clearly recorded that there is a significant price gap between domestic and imported product which led to the consumers increasingly switching over to imported Chinese products. It is clear that the dumped imports resulted in sale of imported goods below the cost of sale of DI. The conclusion of the DA regarding causal link between dumped imports and the injury to the DI para 104 of the findings are categorical. The imports of subject goods have increased in absolute terms over the entire period of investigation. These imports were under-cutting the prices of DI. The price undercutting caused by the dumped imports resulted in increase in market share of imports and decline in market share of DI. For the injury analysis, the DA had examined all the mandatory parameters prescribed under the law. There is no need for segment wise analysis for OEM and replacement market. The categorical conclusion that dumped imports had caused material injury to the DI cannot be contested either in law or on fact.

9. Regarding the reliance placed by the first appellant on the decision of the Tribunal in Bridge Stone Tyre Manufacturing (Thailand) (supra), we note that in the present case the said decision cannot provide any guidance. Admittedly in the said order, the Tribunal pointed out various factual errors in the final findings of the DA. This can be noted from paras 9, 10, 11 and 14 of the said order of the Tribunal. We also note that the Tribunal in the said order observed regarding possible exports of excess quantity by the DI. There was also reference to non-availability of tyres in the required quantity for the use by the Indian consuming industry. In the present case, we note that there is no grievance of non-availability of tyres manufactured in India under any category for use by the user in India.

10. We note one more aspect for analysis regarding the return on capital employed. In common parlance return on investment should be bench marked with possible income when capital is deployed in other secured field of investment like banks etc. Further, the cost of borrowing varies from country to country. It is necessary to note that ROCE of 22% is generally considered as reasonable and adequate for DI. These findings have been upheld in appeals also.

11. It is not out of place to record here that China has over capacity in the manufacture of tyres and the industry in that country is export oriented and aided by policy of the Government of China. Admittedly, a number of countries such as Brazil, Turkey, Colombia, Egypt and U.S. have either imposed AD duty against import of subject goods from China or in the process of investigating cases of dumping. The Chinese companies had significant investment in rubber plantations in various

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parts of the world providing distinct price advantage in procuring natural rubber which is a main raw material in the manufacture of subject goods. 12. In view of the above discussion and analysis, we note that the final findings and the customs notification on the imposition of AD duty on the subject goods are to be sustained. The appeal by the first appellant challenging in the imposition of such duty is without merit and is accordingly dismissed. 13. Regarding appeal by ATMA, we note their grievance that threat of injury has not been examined by the DA has no force. It is clear that the DA after detailed examination of various parameters held that the DI is suffering material injury and as such there is no merit in further conducting analysis for threat of injury. As already noted, the learned Counsel for the DI submitted that in case the material injury as recorded by the DA is upheld, they have no other grounds to submit. Accordingly, the appeal filed by ATMA is also dismissed. 14. To sum up, both the appeals filed against the final finding and customs notification are dismissed.
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