Director General (Safeguards)
NOTIFICATION
(F.No.22011/46/08
Subject:- Safeguard Duty
investigation against imports of
Aluminum Flat Rolled Products and Aluminum Foil in to
G S R Having regard to the Customs Tariff Act, 1975
and the Customs Tariff (Transitional Product Specific Safeguard Duty) Rules,
2002 thereof;
1. Procedure : The Notice of
Initiation of Safeguard investigation concerning imports of Aluminum Flat
Rolled Products and Aluminum Foil into
Domestic
Producers (Aluminum FRP & Foils)
“Century Bhavan”, 3rd Floor,
Mumbai
NALCO Bhavan, P/1, Nayapalli,
Bhubaneswar-751
013.
Business Square,
“C’ Wing, 2nd Floor,
Andheri (E),
Mumbai.
Ess Dee House,
Kandivali (East),
Mumbai-400 101.
Pipalia Kalan,
Rajasthan
702, Safron,
7th Floor, Pacchwati,
Ahmedabad
Gujarat-380 006.
1,
Kolkata, West Bengal-700 058,
C-53-54 Sector-57
Phase III, Noida,
Uttar
Pradesh-201301
9. M/s
Manaksia Ltd.,
8/1,
Kolkata - 700 001
10. M/s.
Paragon Industries Ltd.,
Khasra No :168-171,
Roorkee-247667, Uttrakhand
11. M/s
Marudhar Industries
611 GIDC
Phase-IV
Ahmedabad- 382445
12. Jindal Aluminium Foils :
Plot No 443 / 442, GIDC Waghodia,
Dist. Vadodara
– 391760,
Importers
(a) Aluminum
Foil
Plot No. 124-133,
Panchal Udyog Naga
Bhimpore,
2nd Flr.,
Mulund (West),
Mumbai, M.S.
Positive
Packaging Dta,
Vill. Ransai,
Survey
No.51&53
Shed No. 3 &
4, 181/A,
Ranoli -
Near Cargo
Motors,
Village – Vadoda
40/A, Panchratna Inds. Estate, At Changodar,
Tal. Sanand,
Dist. Ahmedabad
34
& 44/126, Amli Village,
Opp.
66 Kva Station,
Silvassa,
Dadra
& Nagar Havelli
30,
Keshavrao Khadye Marg,
Byculla
West,
Mumbai,
Maharashtra
400011
R-308,
Ttc, Midc Area, Rabale,
Navi
Mumbai,
Maharashtra
Village Takave Budruk
Tal: Maval,
Dist Pune 412106
Plot No. A1, Midc,
Murbad,
Dist. Thane.
601auto Commerce
House,
Nana Chowk,
Mumbai,
258/3,Near
Telephone Exchange,
Union Terrritory Of Dadra & Nagar Haveli
C-53-54, Sector
57,
Phase Iii
Noida 201 301
Epip Kartholi
1. Manaksia
Ltd.( Formerly Hindustan Seals
Ltd.)
Kolkata 700 001.
2. Tata Toyo Radiator Ltd.
Survey No. 235/245,
Village Hinjewadi,
Tal. Mulshi Dist.
Pune ,Maharasht.
3. Alcan Composites India Pvt. Ltd.
Unit 321, Building 3,
2nd Floor,Solitaire Corporate
Park,
Mumbai 400 093.
4. Alstrong Enterprises
Factory: Lane-2, Phase-Ii,
J&K Sidco Industrial Estate
Jammu-181133
Office: 95,
Malviya Nagar,
New Delhi-110017.
5. V.L.
Estates Pvt.Ltd.
204, Neelgiri Appartments,
6. Bhaiya Fibres
Ltd.
Aludecor Lamination (P) Ltd.,
209, Kapadia
Chambers,
599,
Marine Lines (E),
Mumbai –400002.
7. Lallubhai Amichand
Limited
48/50, Kansara
Chawl,
8. Sterlite Technologies Ltd.
Survey No.209, Phase 2,
Piparia Industrial Estate,
Silvassa - 394240,
9. Durabuild Technologies Pvt. Ltd.
76/79,
Off
Andheri East,
Mumbai 400 059.
10. Alupan Composite Panels Pvt. Ltd.
Flat No. 7-D, 7th Flr., Hansalaya Bldg.,15,
11. GEI Industrial Systems Ltd.
26/A, Industrial Area,
Govindpura,
12. Banco Products (
Bil, Near Bhaili
Railway Station,
13. Glazetech Alupanel
Pvt. Ltd.
103, Riddhi Siddhi
Complex,
Jaipur-30200.
Exporters
(a) Aluminium Foil
Jingkou science&tech
industrial area,
Jingkou Zone,
No. 388,
Haicang,
Changshu city,
City
China
PR .Post Code: 072750
Shanghai
201319 Pudon
G Shanghai,
` No.1111,
No.1299, Ping An Rd,
(So Uth Of Yuanjiang
Industrial Zone, 2
9/F,
Binhu District
Jingkou Science And Tech.Industrl. Area,
Zhenziang
C China.
17th Floor
No.148,
Nanhui District,
Daqiao Tawn, Donge Country
South New
Zhonglou,
No.100
Ding Ting
No.18
Yantai, P.R.Of
9f
Huayuan
Lanshi
Dayi Industrial Zone,
5/F
A Copy of the Notice was also sent to the government of
People’s Republic of
Questionnaires were also sent, to all known domestic
producers, Exporters and importers and they were asked to submit their response
within 30 days.
The non confidential part of the application and replies are
kept in the Public Folder.
2. View of the Domestic Industry
(A) The
application has been filed by M/s. Aluminium Association of India , 118, 1st Floor, Ramanashree Arcade, 18, M.G.
Road, Bangalore-560 001. They have made following major points:-
(a)
Imports
of the products under consideration have increased from People’s Republic of
(b)
Imports
from People’s Republic of
(c)
Imports
from People’s Republic of
(d)
While
market share of
(e)
Whereas
the market share of the Indian Producers as a whole has declined, that of
imports from
(f)
Given
significant price difference between the imports and the domestic products,
there is strong likelihood of further importation;
(g)
Sales
of the domestic industry have declined in absolute terms;
(h)
Growth
in domestic demand is being captured by Chinese imports.
(i) Domestic
Industry is facing significant idling of production capacities in both the
products under consideration as a result of increased imports. There is decline
in production and consequently decline in capacity utilization in current year
due to significant increase in the import from
(j)
Increased imports are leading to
under utilization of the installed capacity resulting into loss of employment.
(k)
There is significant rise in
inventory.
3. Findings of the Director General:
a) The issue to impose immediate safeguard measures was
examined. The Rule 9 of Customs Tariff (Transitional
Product Specific Safeguard Duty) Rules, 2002 issued vide Notification No.
34/2002-NT-Customs dated 11.06.2002 prescribes that the Director General shall proceed expeditiously
with the conduct of the investigation and in critical circumstances, he may
record a preliminary finding regarding serious injury or threat of serious
injury. The principles governing investigations have been provided in the Rule
6 of the Customs Tariff (Transitional Product
Specific Safeguard Duty) Rules, 2002, which is independent to Rule 9.
The Rule 15 of the Customs Tariff (Transitional
Product Specific Safeguard Duty) Rules, 2002 provide for refund of
differential Safeguard duty in case safeguard duty imposed after conclusions of
the investigations is lower than the provisional duty already imposed and
collected. The harmonious reading of Rules 6, 9 and 15 of the said Rules leads
to a conclusion that the Rules provide for expeditious recommendation of
provisional Safeguard duty based on preliminary findings and refund of the
differential duty in case it is ascertained that the duty imposed after
conclusion of investigation following natural justice as enshrined in the Rule
6 is lower than the provisional Safeguard Duty. However, in critical
circumstances any delay in imposition of Provisional Safeguard duty may cause
damage which would be difficult to repair. Accordingly, it was considered
prudent to analyze circumstances to assess whether the same falls in the
category of critical circumstances.
b)
The product under investigation: The preliminary determination is that the products produced by the
domestic producers are like or directly competing with the products concerned.
That is to say that possible slight differences in the production process, and
some differences in terms of quality, they have the same basic physical
characteristics and the same uses and are sold via similar or identical sales
channels. Price information is readily available and the products concerned and
the products of the domestic producers compete mainly on price. Accordingly,
Aluminium Flat Rolled products and Aluminiim
Foil are the products under investigation. The classification of these products
under schedule 1 of the Customs Tariff Act, 1975 are as follows:
|
Name of the Products |
Customs Tariff Heading |
|
Aluminium Flat Rolled Products and Aluminium Foil |
76061110,
76061190, 76061200, 76069110, 76069120, 76069190, 76069210, 76069290 |
|
Aluminium foil |
|
|
|
|
|
|
|
c)
Domestic Industry: The application has been filed
by M/s. Aluminium
Association of India , 118, 1st Floor,
Ramanashree Arcade, 18, M.G. Road, Bangalore-560 001.
M/s Hindalco Industries Limited, “Century Bhavan”, 3rd Floor, Dr. Annie Besant Road, Worli Mumbai, M/s
Nalco India Ltd, Nalco Bhavan, P/1, Nayapalli, Bhubaneshwar 751013
and Bharat Aluminium
Company. Ltd. Business Square, “C” Wing, 2nd FloorAndheri
Kurla Road, Chakala, Andheri (E). Mumbai-
400039 are inter-alia the members of the association
. The members of association account for production of 97% of Aluminium Flat Rolled Products (FRP) and 98% of Aluminium Foil production. The association is
representative of a major proportion of total Community production of the like
and/or directly competing products. One
of its member companies M/s. Hindalco Industries
Limited has provided relevant financial information to file this
application. . M/s. Hindalco
Industries Limited account for production of 71% of Aluminium
Flat Rolled Products (FRP) and 56% of total domestic production of Aluminium Foil.
d) Unforeseen Developments: : As a
result of current economic meltdown, unexpected, unprecedented and uneven
economic recession in various economies especially developed economies, the
demand for the product has declined in
the major export markets. This has resulted in china shifting their exports of
these products to India, which continues to enjoy a reasonable rate of growth.
It is thus observed that aforesaid are unforeseen circumstances leadings to significant
increases in imports from China.
e) Increased
Imports:
Aluminium FRP
There has been increasing trend in import of Aluminium FRP from
People’s Republic of China in absolute term from the year 2005. Taking base
year as 2005-06, the import has increased by 64% in 2006-07, by 170% in
2007-08, by 202% in April 08 to Dec- 08 as mentioned in the table (Table 1)
below.
Table 1
|
|
Units |
2005-06 |
2006-07 |
2007-08 |
April-Dec-08 |
|
Aluminium FRP |
|
|
|
|
|
|
Ř
All countries |
MT |
26,046 |
36,968 |
48,274 |
33,925 |
|
Trend |
Indexed |
100 |
142 |
185 |
174 |
|
Ř
China |
MT |
9,853 |
16,155 |
26,617 |
22,287 |
|
Trend |
Indexed |
100 |
164 |
270 |
302 |
Similarly the share of imports of Aluminium FRP
from
Table 2
|
Aluminium
FRP |
Units |
2005-06 |
2006-07 |
2007-08 |
April-Dec-08 |
|
Share of |
|
|
|
|
|
|
Ř China |
% |
37.83 |
43.70 |
55.14 |
65.69 |
|
Ř Other Countries |
% |
62.17 |
56.30 |
44.86 |
34.31 |
Further, the import has also increased in relative
term i.e compared to the total domestic market. The share
of imports from P.R China has increased from 5.68% in 2005-06 to 14.88% during
April 08 to Dec. 08.(Table-3)
Table 3
|
Share in consumption of Aluminium
FRP (%) |
2005-06 |
2006-07 |
2007-08 |
April-08 to Dec-08 |
|
Imports from China |
5.68 |
8.43 |
11.94 |
14.88 |
Aluminium Foil
In the case of Aluminium Foil There has been increasing trend in import Aluminium Foil from China in absolute term from the year 2005-06. Taking base year as 2005-06, the import has increased by 98% in 2006-07, by 340% in 2007-08, by 575% in April 08- To Dec- 08 as mentioned in the table 4 below.
Table 4
|
Aluminium Foil |
Units |
2005-06 |
2006-07 |
2007-08 |
April-Dec-08 |
|
Ř
All countries |
MT |
20,263 |
24,082 |
39,390 |
34,422 |
|
Trend |
Indexed |
100 |
119 |
194 |
227 |
|
Ř China |
MT |
5,437 |
10,777 |
23,925 |
27,534 |
|
Trend |
Indexed |
100 |
198 |
440 |
675 |
Similarly the share of imports of Aluminium Foil from
Table 5
|
Aluminium Foil |
Units |
2005-06 |
2006-07 |
2007-08 |
April-Dec-08 |
|
Share of |
|
|
|
|
|
|
Ř
China |
% |
26.83 |
44.75 |
60.74 |
79.99 |
|
Ř
Other
Countries |
% |
73.17 |
55.25 |
39.26 |
20.01 |
Further, the
import has also increased in relative term i.e
compared to the total domestic market . The share
of imports from P.R China has increased
from 8.78% in 2005-06 to 42.42% during April 08 to Dec. 08.(Table-6)
Table 6
|
Share in
consumption of Aluminium Foil (%) |
2005-06 |
2006-07 |
2007-08 |
April-08 to
Dec-08 |
|
Imports from
China |
8.78 |
16.11 |
28.70 |
42.42 |
Thus the import of Aluminium Products (Flat Rolled Product and Aluminium Foil) from China have increased in absolute terms as well as relative terms. Further, the comparison of cost of sale taking reasonable ROCE and the import prices, it is observed that the imports are at lower prices. Accordingly, I find that there is increase in imports in absolute as well as relative term and the increase in imports during recent period is significant.
f)
Market Disruption and Threat of market
Disruption
a.
Sales:
Aluminium Flat Rolled Products (FRP)
The monthly sales volume by the domestic producer has declined
significantly by 16% during April-December 2008 compared to 2007-08 against the
rising trend during the period from 2005-06 to 2007-08.
Table 7
|
|
|
2005-06 |
2006-07 |
2007-08 |
April 08-
Dec 08 |
|
Month wise sales of domestic industry for Aluminium
FRP |
Index |
100 |
110 |
115 |
97 |
Aluminium Foil
The average monthly sales volume by the domestic producer has shown steady decline, as apparent from the table below:
Table 8
|
|
|
2005-06 |
2006-07 |
2007-08 |
April 08-Dec 08 |
|
Month wise
sales of domestic industry for Aluminium Foil |
Index |
100 |
99 |
95 |
87 |
Market
Share of Domestic Industries:
Aluminium Flat Rolled Products
The market share of domestic producers of Aluminium Flat Rolled Products as well as to the Indian industries of the same product has been on decline. The market share of total Indian industries during April to December 2008 has declined to 77.35% from 84.99% in the base year 2005-06 and 78.34% in immediately preceding year 2007-08 as apparent from the table below (Table 9 ). Similar trend is there for Hindalco, who has provided all financial data.
Table 9
|
Sl.No. |
Market
Share of Domestic Industries in sale of Aluminium FRP (%) |
2005-06 |
2006-07 |
2007-08 |
April-08 to
Dec-08 |
|
1 |
Domestic industry (Hindalco) |
49.31 |
49.17 |
44.20 |
41.67 |
|
2 |
Other Indian Producers |
35.68 |
31.54 |
34.14 |
35.68 |
|
3 |
Indian Industry (1+2) |
84.99 |
80.71 |
78.34 |
77.35 |
Aluminium Foil
The market share of domestic producers of Aluminium Foil as well as to the Indian industries of the same product has been on decline. The market share of total Indian industries during April to December 2008 has declined to 46.97% from 67.26% in the base year 2005-06 and 52.75% in immediately preceding year 2007-08 as apparent from the table below (Table 10). Similar trend is there for Hindalco, who has provided all financial data.
Table 10
|
Sl.No. |
Market
Share of Domestic Industries in sale of Aluminium Foil (%) |
2005-06 |
2006-07 |
2007-08 |
April-08 to Dec-08 |
|
1 |
Domestic industry (Hindalco) |
41.67 |
38.10 |
29.25 |
25.80 |
|
2 |
Other Indian Producers |
25.59 |
25.89 |
23.51 |
21.17 |
|
3 |
Indian Industry (1+2) |
67.26 |
64.00 |
52.75 |
46.97 |
b.
Production:
Aluminium Flat Rolled
Products (FRP)
The average monthly production of Aluminium Flat Rolled Products (FRP) by the domestic producer has declined significantly during April 08-December 08 by 13% compared to 2007-08. The indexed figure of month wise average production of domestic industry is shown in the table 11:
Table 11
|
|
|
2005-06 |
2006-07 |
2007-08 |
April 08-Dec 08 |
|
Monthwise Average production
of domestic industry |
Index |
100 |
111 |
113 |
99 |
Aluminium Foil
The average monthly production of Aluminium Foil by the domestic producers has declined steadily from 2005-06 to April 08-December 08. However, the decline during April 08-December 08 has also been significant.
Table 12
|
|
|
2005-06 |
2006-07 |
2007-08 |
April 08-Dec 08 |
|
Monthwise Average production
of domestic industry |
Index |
100 |
99 |
96 |
89 |
c.
Capacity Utilization:
Aluminium
Flat Rolled Products
The capacity utilization of domestic industry in respect of Aluminium Flat Rolled Products has been more than 100% from 2005-06 to 2007-08, but the same declined to 90.35% during the period April-Dec-08, as can be seen from the table below (Table 13)
Table 13
|
Aluminium FRP |
Unit |
2005-06 |
2006-07 |
2007-08 |
April-Dec-08 |
|
Capacity
Utilization |
% |
107.24 |
101.42 |
103.62 |
90.35 |
Aluminium
Foil
The capacity utilization of domestic industry in respect of Aluminium Foil has been on decline since 2005-06. It declined to 63.48% during April-December-08 from 71.42% in 2005-06 and 68.90% in the immediately preceding year 2007-08, as evident from the table below (Table 14)
Table 14
|
Aluminium Foil |
Unit |
2005-06 |
2006-07 |
2007-08 |
April-Dec-08 |
|
Capacity
Utilization |
% |
71.42 |
70.90 |
68.90 |
63.48 |
d.
Productivity: There is no indication to suggest that the injury is on account of loss
of productivity
e.
Employment: The impact of the market disruption has started being
felt on employment. The indexed data of movement of employees are tabulated
below:
Table 15
|
Year/ Month |
Total number
of people employed in Aluminium FRP (Index) |
Total number
of people employed in Aluminium Foil (Index) |
|
2005-06 |
100 |
100 |
|
2006-07 |
102 |
100 |
|
Apr'07 |
111 |
101 |
|
May'07 |
111 |
99 |
|
Jun'07 |
108 |
100 |
|
Jul'07 |
106 |
100 |
|
Aug'07 |
104 |
97 |
|
Sep'07 |
103 |
97 |
|
Oct'07 |
104 |
96 |
|
Nov'07 |
100 |
95 |
|
Dec'07 |
100 |
98 |
|
Jan'08 |
100 |
97 |
|
Feb'08 |
100 |
97 |
|
Mar'08 |
99 |
94 |
|
Apr'08 |
100 |
94 |
|
May'08 |
101 |
95 |
|
Jun'08 |
101 |
97 |
|
Jul'08 |
101 |
93 |
|
Aug'08 |
100 |
93 |
|
Sep'08 |
98 |
93 |
|
Oct'08 |
97 |
93 |
|
Nov'08 |
95 |
94 |
|
Dec'08 |
95 |
93 |
f.
Profitability:
Aluminium Flat Rolled Products
The domestic industry has
been on profit since April-Oct 08. However, the industry has suffered loss in
the month of October and December. The profit in the month of November has been
marginal. As a whole, the increased import has affected the profitability on
account of Aluminium Flat Rolled Products adversely.
Table 16
|
Aluminium Flat Rolled Products |
||||||||
|
|
|
2005-06 |
2006-07 |
2007-08 |
April 08-Sep 08 |
Oct,08 |
Nov,08 |
Dec,08 |
|
Profit/ loss |
Index (Rs/kg) |
100 |
107 |
48 |
99 |
(63) |
5 |
(51) |
|
Profit/ loss |
Index (Rs/Lacs) |
100 |
117 |
55 |
99 |
(49) |
5 |
(50) |
Aluminium Foils
The domestic loss Rs/Kg and loss Rs/Lacs has
increased significantly during the month of October to December 08, as apparent
from the table below:
Table 17
|
Aluminium Foils |
|
||||||||
|
|
|
2005-06 |
2006-07 |
2007-08 |
April 08-Sep 08 |
Oct,08 |
Nov,08 |
Dec,08 |
|
|
Profit/ loss |
Index Rs/kg |
(100) |
(124) |
(132) |
(103) |
(152) |
(169) |
(147) |
|
|
Profit/ loss |
Index Rs/Lacs |
(100) |
(123) |
(125) |
(94) |
(116) |
(142) |
(108) |
|
g.
Causal Link between Increased Imports and Threat of
Market Disruption: A comprehensive
evaluation of parameters as above for the period from 2005-06 up to the
December 2008 demonstrates threat of market disruption, which is clearly
imminent. The market share of the
domestic industry has substantially declined during April to December, as
discussed above. During the same period there has been substantial increase in
imports both in absolute as well as relative term. From the information
available with the Directorate General, it is seen that the significant
increase in imports and consequent threat of market disruption, which is
clearly imminent, coincide with the unforeseen developments. The declining capacity utilization during the
period 2008-09 (upto December 2008) compared to the
period 2007-08 coincide with the same period when import increased. Further,
the reduction in employment shows similar trend as of increasing import. This
clearly depicts a direct correlation between the increase in imports and threat
of market disruption faced by the domestic industry.
h.
Other
Issues: A provisional examination of the competing interests of different
economic operators and public at large has been carried out. In this respect,
it is important to keep the prime objective of safeguard laws in mind which is
to provide sufficient time to the domestic industry to make positive
adjustments to meet the situation of increased imports. The strategic and
national importance of Aluminium industries has long
been recognized. It is in the interest of all to keep a healthy and competitive
Aluminium Industry. It is apparent that if the
provisional safeguard measures are not taken, both the prices and market share
of domestic industries will further reduce resulting in financial loss of
domestic Industries to the extent of getting the domestic industry unviable and
consequent loss of employment as well as loss of strategic and economic
interest to keep the domestic market competitive. The imposition of safeguard
duty would allow the domestic industry to remain competitive and, at the same
time, users/buyers will have a wider choice to source their material
requirements, that too at competitive prices.
j. Critical Circumstances: The increasing
share of domestic market taken by imports at injurious prices, unutilized
production capacity and idling of capacities in the year 2008 are the critical
circumstances for issue of preliminary findings as the damage caused by delay
will be difficult to repair. The preliminary determination shows that critical
circumstances exist in which delay would cause damage which it would be
difficult to repair. As indicated above threat of market disruption is clearly
imminent. The domestic producers are already suffering a decline, notably in
loss of market share, reduced capacity utilization and loss of employment.
4. Conclusion
and Recommendation: On the basis of
the above preliminary findings it is seen that increased imports of Aluminium Flat Rolled Products and Aluminium
Foils {Aluminum Products (FRP & Foils)} from People’s Republic of
China have caused and threatened to cause market disruption to the domestic
industry/ producers of Aluminum Products (FRP & Foils). There exist
critical circumstances, where any delay in application for Specific Safeguard
measures would cause damage which it would be difficult to repair, necessitating
immediate application of provisional Specific Safeguard duty for period of 200
days, pending final determination of market disruption and threat of market
disruption. Considering the average cost of production of Aluminum Products by
the domestic producers (confidential), a reasonable return on capital employed,
the present level of import duties and average import prices of Aluminum
Product Specific Safeguard Duty at the rate of 21% (Twenty One Percent) ad valorem on all goods falling under Chapter heading 7606 (Aluminium Flat Rolled Products) and at the rate of 35%
(Thirty Five Percent) ad valorem on all goods falling
under Chapter heading 7607 (Aluminium Foil) which is considered to be the minimum
required to protect the interest of domestic industry is recommended to be
imposed on imports of such goods from Peoples Republic of China.
5. Further Process:
I.
A public hearing
will be held in due course before making a final determination, for which the
date will be informed separately.
Sd/
(S. S. RANA)
Director General (Safeguards)