ANTI-DUMPING DUTY AND ROLE OF CMA PRAMOD KUMAR REGIONAL VALUE LEADER S I Group-India Ltd Thane Belapur Road Opp. Jui Nagar Railway Station Navi Mumbai

TOPICS COVERED: Definition of various terms used in Anti-dumping Provision for levy of Anti-dumping Duty Authorities Procedure to be followed for Levy of Anti-dumping Duty Costing Formats Computation of Non Injurious Price Duration of Duty Mid Term Review/Sunset Review Role of CMA

Why do we need Anti-dumping duty ?

Need for Anti-dumping duty It is a measure to rectify the situation arising out of the dumping of goods and its trade distortive effect Thus the purpose of anti-dumping duty is to rectify the trade distortive effect of dumping and re-establish fair trade The use of anti-dumping measure as an instrument of fair competition is permitted by the WTO It provides relief to the domestic industry against the injury caused by dumping

Definitions of terms used in Anti-dumping Like Article - means an article which is identical or alike in all respects to the article under investigation for being dumped in India or in the absence of such an article, another article which although not alike in all respects, has characteristics closely resembling those of the articles under investigation Dumping - means export of an article from any country or territory to India at less than its normal value Normal value - means the comparable price, in the ordinary course of trade, for the like article when destined for consumption in the exporting country. 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 low volume of the sales in the domestic market of the exporting country, 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; 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 Injury Margin – means difference between the fair selling price due to domestic industry and the landed cost of product under consideration Margin of Dumping - means difference between the Normal value and the export price of the goods under complaint. It is generally expressed as a percentage of the export price contd…..

Definitions of terms used in Anti-dumping Non-Injurious Price is that level of price, which the industry is, expected to have charged under normal circumstances in the Indian market during the Period defined. This price would have enabled reasonable recovery of cost of production and profit after nullifying adverse impact of those factors of production which could have adversely effected the company and for which dumped imports can’t be held responsible Non-market Economy: The term “non-market economy country” means any country which the designated authority determines as not operating on market principles of cost or pricing structures, so that sales of merchandise in such country do not reflect the fair value of the merchandise Causal Link between dumping and injury to the domestic industry is required to establish injury to the domestic industry by dumping. Such a link must exist between the material injury being suffered by the Indian industry and the dumped imports Constructed Export Price: If the export price is not reliable because of association or a compensatory arrangement between the exporter and the importer or a third party, the export price may be constructed on the basis of the price at which the imported articles are first resold to an independent buyer. If the articles are not resold as above or not resold in the same condition as imported, their export price may be determined on a reasonable basis

Anti-dumping in India is governed by : Customs Tariff (Identification, Assessment and Collection of Anti-dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995 governs antidumping, which is in conformity with ARTICLE VI of the General Agreement in Tariff and Trade, 1994 – Anti-Dumping and Countervailing Duties

BRIEF ON ARTICLE VI OF G A T T , 1994 The contracting parties recognize that dumping, by which products of one country are introduced into the commerce of another country at less than the normal value of the products, is to be condemned if it causes or threatens material injury to an established industry in the territory of a contracting party or materially retards the establishment of a domestic industry In order to offset or prevent dumping, a contracting party may levy on any dumped product an anti-dumping duty not greater in amount than the margin of dumping in respect of such product

Authorities : Anti dumping measures in India are administered by the Directorate General of Anti-dumping and Allied Duties (DGAD) functioning in the Department of Commerce in the Ministry of Commerce and Industry and the same is headed by the "Designated Authority” The duties of the designated authority are specified in Anti dumping Rules, 1995 and it includes the following:- to investigate as to the existence, degree and effect of any alleged dumping in relation to import of any article; to identify the article liable for anti-dumping duty; to submit its findings, provisional or otherwise to Central Government as to- (i) normal value, export price and the margin of dumping in relation to the article under investigation, and (ii) the injury or threat of injury to an industry established in India or material retardation to the establishment of an industry in India consequent upon the import of such article from the specified countries. to recommend to the Central Government – (i) the amount of anti-dumping duty equal to the margin of dumping or less, which if levied, would remove the injury to the domestic industry, after considering the principles laid down in the Annexure III to these rules; and (ii) the date of commencement of such duty; to review the need for continuance of anti-dumping duty.

Procedure for levy of Anti-dumping duty: Application for Anti-dumping investigation by or on behalf of concerned domestic industry to DGAD. It must contain sufficient evidence as to the existence of dumping and such dumped imports are causing or threatening to cause material injury to the Indian Industry Preliminary Screening : to ensure that it is adequately documented and provides sufficient evidence for initiation Initiation : Upon satisfaction that there is sufficient evidence with regard to dumping, material injury and causal link, a Public Notice is issued initiating an investigation to determine the existence and effect of the alleged dumping Access to information. The Authority provides access to the non-confidential evidence presented to it by various interested parties in the form of a public file, which is available for inspection after receipt of the responses contd….

Procedure for levy of Anti-dumping duty Preliminary Findings. D A make a preliminary finding containing the detailed information on the main reasons behind the determination Provisional Duty. A provisional duty not exceeding the margin of dumping may be imposed by the Central Government on the basis of the preliminary finding recorded by the Designated Authority Oral Evidence. The Authority may grant oral hearing anytime during the course of the investigations Final Determination. The final determination is normally made within 150 days of the date of preliminary determination Disclosure of information. Facts which form the basis for its decision before the final finding is made is informed to all interested parties Time Limit for investigation process. One year from the date of initiation of the investigation. The above period may be extended by the Central Government by 6 months

Costing Formats: Format A : Statement of Raw Material and Packing Material consumption and reconciliation Format B : Statement of Raw Material Consumption per unit of Production Format C I : Statement of Cost of Production Format C II: Allocation and Apportionment of Expenditure Format D : Statement of consumption of utilities per unit of production Format E : Statement of Sales Realization

Computation of Non Injurious price For calculating Non-Injurious Price, the Authority calls for costing information from the domestic industry for the period of investigations and for three previous years. In the estimation of Non-Injurious Price, the Authority makes appropriate analysis of all relevant factors like usage of raw material, usage of utilities, captive consumption etc. and the actual expenses during the Period of Investigation including the investments, the capacity utilization etc. The Non-Injurious Price for Domestic Industry is determined considering the reasonable return on the capital employed

Computation of Non Injurious price The expenses, which shall not to be considered while assessing non-injurious price include,— a) research and development Provisions (unless claimed and substantiated as related to the product specific research); b) since non-injurious price is determined at ex-factory level, the post manufacturing expenses such as commission, discount, freight- outward etc.at ex-factory level; c) excise duty, sales tax and other tax levies on sales; d) expenses on job work done for other units; e) royalty, unless it is related to technical know-how for the product; f) trading activity of product under consideration; or g) other non-cost items like bad debts, donations, loss on sale of assets, loss due to fire, flood, etc.

Duration of duty The anti dumping duty shall remain in force for a period of five years from the date of imposition of duty. Duty can be reviewed by the Designated Authority anytime before the expiry of the said period. Such a review can be done suo moto or on the basis of a request received from an interested party in view of the changed circumstances. The review may result in the withdrawal of the duty or in the variation of the duty level depending upon the new circumstances. An interested party can file a request for review only after a year from the imposition of duty. Mid-term Review Mid-term Review is undertaken by the Designated Authority any time during the period of 5 years when the levy Anti-Dumping duty is in force. Sunset Review Sunset Review is undertaken by the Designated Authority before the expiry of the period of 5 years from the date of imposition of Anti-Dumping duty to decide the continuation or other wise of the Anti-dumping duty beyond the stipulated period of five years. The purpose of a Sunset review is to investigate whether the cessation of anti-dumping duty is like to lead to continuation or recurrence of dumping and injury.

Role of C M A Antidumping provides huge opportunity to CMA’s because of their in depth knowledge of Costing, analytical skills and understanding of legal issues involved Since CMA’s have details of product cost and profitability of their clients, they can assist client to file antidumping investigation application if they notice decline in profitability due to surge in cheaper imports Well equipped with knowledge of C A S, which will help in preparing costing formats Certification of Costing Formats.

Thank You Pramod Kumar Pramod.Kumar@siigroup.com 9920621130