1. LEGAL PROVISIONS

 

Section 9A(1) of the Act provides as following:

 

“dumping” occurs when the export price is less than the normal value. The “margin of dumping”  or  “dumping  margin”  is  the fair comparison between the export price and the normal value. Irrespective of whether the duties are recommended on an ad valorem basis or in specific terms, the Authority must necessarily calculate the dumping margin in percentage terms in order to carry out the de minimis test. All data for the calculation of dumping margin should be only for the defined period of  investigation.

 

Extract of Rule (6) of Annexure-1 to the Rules states that:

 

6. (i) While arriving at margin of dumping, the designated authority shall make a fair comparison between the export price and the normal value.  The  comparison  shall  be  made  at  the  same  level  of trade, normally at the ex-factory level, and in respect  of  sales made at as nearly as possible the same time. Due allowance shall     be made in each case, on its merits, for  differences  which  affect price comparability, including differences  in  conditions  and  terms  of sale, taxation, levels of trade, quantities, physical characteristics, and any other differences which are demonstrated to affect price comparability.

 

(ii) In the cases where export price is a constructed price, the comparison shall be made only after establishing the normal value at equivalent level of trade…

 

… (iv) Subject to the provisions governing comparison in this paragraph, the existence of margin of dumping during the investigation phase shall normally be established on the basis of a comparison of a weighted average normal value and export prices on a transaction-to-transaction basis. A normal value established on a weighted average basis may be compared to prices of individual export transactions if it is found that a pattern of export prices which differ significantly among different purchasers, regions or time periods, and if an explanation is provided as to why such differences cannot be taken into account appropriately by the use of a weighted average-to- weighted average or transaction-to-transaction comparison.

 

2. OPERATING PRACTICE

 

Dumping margin is determined by comparing the Normal Value (or the Constructed Normal Value, as the case may be) with the Net Export Price of the relevant responding co-operative producer exporters unless the response is not complete or it is not being accepted for reasons to be mentioned clearly. The calculation of NEP and NV has been explained in detail in the earlier chapter.

 

For the calculation of Dumping Margin, the Normal Value and Net Export Price should be compared for sales made as nearly as possible at the same time.

 

In exceptional cases, if it is found that a pattern of export prices significantly differs amongst different purchasers, regions or time periods, then the comparison of daily/monthly/quarterly NV with export transactions for the respective period may be undertaken.

 

The method for calculation of DM is generally weighted average method, wherein the weighted average normal value is compared to the weighted average net export price over the period of investigation. The weighted average method requires that all sales which are in the ordinary course of trade (including the OCT test) and which have passed the sufficiency test (5% test) must be included for the normal value used for calculating the dumping margin. Similarly, for export sales, all commercial transactions which are in the normal course of business must be considered.

 

The Dumping Margin should be expressed as a percentage of the net export price. For this, the DM is divided by Net Export Price. DM is also mentioned in terms of range (needed for non-confidential version) which should normally be unit of 10.

 

Dumping Margin = (NV or CNV) – NEP

 

% Dumping Margin = (DM/NEP) X 100

 

The Authority shall determine one single dumping margin for each cooperating producer exporter irrespective of whether the goods are exported to India directly or through any intermediary by taking into account the producer’s normal value (including that of its related producer in the country under investigation) and the export prices of all the intermediaries. In such cases, the intermediaries have to file all the relevant information called for by the Designated Authority in order to complete the chain right upto the independent importer in India. Also, a separate common dumping margin is worked out for the residual category of exporter(s), who have not filed response or have responded but declared non- cooperative.

 

The calculation of dumping margin is comparatively simpler, where the product under consideration is homogeneous, as only one NEP and one NV figure for the product under consideration needs to be determined.

 

In case, the PUC has been sub-divided into distinct models or types, called product control numbers (PCNs), then NEP and NV for each of the PCN is required to be determined individually for calculation of dumping margins. This ensures a fair comparison between the NEP and NV.

 

As already pointed above, the NEP and NV are to be worked out separately for each of the PCNs exported to India by the respective foreign producer/exporter. There is possibility that some of the exporter(s) would have exported few PCNs, but have not sold those in their home market during the POI. Notional or Estimated NV is worked out in such cases based on the most similar product produced & sold in the home market by such producer exporters. If there is no similar product sold in the domestic market, then NV may be constructed for such PCN on the basis of COP of most similar PCN plus reasonable profit. Necessary adjustments are then made for various differences in the product sold in their country. This is compliant with WTO rules as all PCNs are like products and NIP is worked out based on best available information.

 

The Anti-Dumping Rules do not mandate any particular methodology for the dumping margin calculation for the residual category. The practice in the Directorate is as follows:

 

In case there are co-operative exporters,the residual dumping margin is determined by comparing the normal value, which is the highest of the co-operative exporters, with the NEP which is the lowest of the co-operative exporters. While working out the dumping margin in case of residual category, it may be ensured that margin for “others” is higher than the highest margin determined for any cooperating producer so that non-cooperation is not rewarded.

 

In case, there is only one co-operative responding exporter, its transaction wise export data is considered for arriving at NEP for the residual category following the same methodology as explained above.

 

In case no exporter has been declared co-operative or there is no response, the residual dumping margin is determined by comparing the constructed normal value with the net export price to be calculated from DGCI&S data as per aforesaid methodology.

 

In case of PCNs, the dumping margin, whether positive or negative, shall be worked out with respect to each PCN exported to India by the respective producer exporter. Finally, Producer Exporter wise weighted average of all PCNs is worked out to arrive at the figure of dumping margin with respect to each of the co- operative producer exporter and residual category.

 

In determining the weighted average dumping margin for the Product under Consideration as a whole, there should not be any “zeroing” of any negative ‘margins’ for a particular PCN/model/grade. In fact India does not have the provisions under law or act providing for “zeroing”.

 

It may be clarified here that even if the investigation reveals that certain PCNs are not dumped, the overall weighted average dumping margin of each Producer Exporter is considered to be representative for all the PCNs exported by the respective Producer Exporter. No exemption or exclusion from antidumping duty is allowed for any PCN, merely because a particular PCN has negative injury margin or dumping margin. The following illustrations clarify the situation:

 

S. No.	Pcn No.	Quantity Exported By Producer	Quantity Produced By DI	Normal Value	NEP	Dumping Margin	Dumping %
1	ABC 1	50	500	14	12	2	16.67
2	ABC 2	60	350	16	10	6	60.00
3	ABC 3	0	400	0		0	0.00
4	ABC 4	15	500	11	14	-3	-21.43
5	ABC 5	40	300	14	13	1	7.69
6	ABC 6	100	250	11	10	1	10.00
7	ABC 7	45	500	13	14	-1	-7.14
8	ABC 8	100	-	15	14	1	7.14
9	ABC 9	80	300	18	22	-4	-18.18
Total QTY.        490 Exported/.Avg			3100	14.00	13.63	0.38	6.84
Weighted Average Dumping Margin				14.31	13.71	0.59	4.32

 

The margins are determined PCN wise, wherever applicable, for fair and accurate comparison, which are kept as workings in the case file. Further, the weighted averages are calculated and form the basis for recommendation of duty.

 

3. COMPUTATION OF DUMPING MARGIN IN CASE OF  PCNs:

 

The following procedural steps should be followed after receipt of response from the producer exporter:

 

(i) Compute the Normal Value for each PCN individually.

(ii) Compute the Net Export Price for each PCN individually

(iii) Compare the PCN wise normal value and net export price for calculation of dumping margin.

(iv) The PCN wise dumping margin is multiplied with the respective export quantity supplied to India during the period of investigation and divided by total quantity exported by the respective exporter to arrive at the weighted average dumping margin for that exporter.

 

(v) Following illustration explains the methodology:

 

PCN	Export Price ($/MT)	Normal Value ($/MT)	Export Quantity (MT)	Dumping Margin ($/MT)	Dumping Margin (%)
				(3-2)	(5/2)
1	2	3	4	5	6
A	100	150	1000	50	50%
B	150	135	2000	-15	-10%
C	200	250	1500	50	25%
Total			4500

*Weighted Average= [(50X1000)+ (-15X2000) +(50X1500)]/4500 =21.11%

 

(vi) In the above illustration, the Dumping Margin has been calculated on weighted average basis.

 

4. DUMPING MARGINS IN CASE OF SAMPLING

 

LEGAL PROVISION

 

Article 6.10 of the AD Agreement provides that the investigating authorities must, calculate an individual dumping margin for each known exporter or producer of the product under investigation. However, the second sentence provides an exception to the above principle, i.e., where the number of exporting producers is so large as to make the determination of an individual dumping margin impracticable, investigating authorities may limit their examination "by using samples". Accordingly sampling is the only exception to the rule of individual margins.

 

The Indian provision for sampling is contained in Rule 17(3). If there are large number of responses, the Authority may resort to sampling as per the methodology explained in the Chapter 8.

 

OPERATING PRACTICE

 

In case there are three or more responses from any of the subject country it may be advisable to resort to sampling.

 

In an event where the Authority resorts to sampling, it would have to determine:

 

(i) Individual dumping margins for the sampled producer exporter;

 

(ii) One common margin for non-sampled co-operative producer exporter; and

 

(iii) Residual margin for the non-cooperative exporters as well as the non- responding producer exporter:

 

Individual dumping margin shall be calculated for each of selected sampled exporters.

 

A weighted average dumping margin is calculated from the sampled exporters which is extended to all non-sampled exporters in terms of Rule 18(2) of the AD Rules. These are the producer exporters, who participated in the sampling exercise and offered cooperation but were not picked up as a part of the sample.

 

The dumping margin for all other non-responding exporters including non- cooperative exporters is calculated by comparing the normal value, which is the highest of the sampled exporters, with the NEP which is the lowest of the sampled exporters.

 

Source: Manual Of Operating Practices For Trade Remedy Investigations