Government of Pakistan National Tariff Commission

44 Pages·2017·0.74 MB·English

(NON-CONFIDENTIAL)

Government of Pakistan
National Tariff Commission

REPORT

ON

FINAL DETERMINATION AND LEVY OF DEFINITIVE ANTIDUMPING DUTIES
ON DUMPED IMPORTS OF ONE SIDE COATED DUPLEX BOARD – GREY BACK
INTO PAKISTAN ORIGINATING IN AND/OR EXPORTED FROM CHINA,
INDONESIA AND KOREA

A.D.C No.43/2016/NTC/CDB

July 27 , 2017
NON-CONFIDENTIAL

Final Determination and Levy of Definitive Antidumping Duties on Dumped Imports of One Side Coated Duplex Board – Grey Back Into Pakistan
Originating in and/or Exported From China, Indonesia And Korea.

TABLE OF CONTENTS
S.No Description Page No.

A. PROCEDURE 6
5. Receipt of Application 6
6. Evaluation and Examination of the Application 6
7. Domestic Industry 6
8. Standing of the Application 9
9. Applicant Views 10
10. Exporters/Foreign Producers Involved in Dumping 11
11. Initiation of Investigation 11
12. Investigated Product, Like Product and Domestic Like 12
Product
13. Period of Investigation 14
14. Information/Data Gathering 14
16. Verification of information 15
17. Public File 16
18. Confidentiality 16
19. Preliminary Determination 16
21. Hearing 17
22. Disclosure of Essential Facts 17

23. Views/Comments of the interested parties on 17
Preliminary Determination

B DETERMINATION OF DUMPING 18
24. Dumping 18
25. Normal Value 19
26. Export Price 20
27. Dumping Determination 20
28. Determination of Normal Value 20
29. Determination of Export Price 21
30. Dumping Margin 22
31. Negligible Volume of Dumped Imports & Dumping 23
Margin & Cummulation

C. INJURY TO DOMESTIC INDUSTRY 25
32. Determination of Injury 25
33. Domestic Industry 25
34. Volume of Dumped Imports 26
35. Price Effects 26
36. Effects on Market Share 28
37. Effects on Capacity Utilization 29
38. Effects on Sales 29
39. Effects on Profits/Loss 29
40. Effects on Inventories 30
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Final Determination and Levy of Definitive Antidumping Duties on Dumped Imports of One Side Coated Duplex Board – Grey Back Into Pakistan
Originating in and/or Exported From China, Indonesia And Korea.

41. Effects on Employment, Productivity and Salaries & 30
Wages
42. Effects on Cash Flow 31
43. Effects on Investment 31
44. Ability to Raise Capital 32
45. Effect on growth 32
46. Magnitude of Dumping Margin 32
47. Summing up of Material Injury 33

D CAUSATION 34

48. Effect of Dumped Imports 34
49. Other Factors 34

E. CONCLUSIONS 35

F. Imposition of Definitive Measures 35

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NON-CONFIDENTIAL

Final Determination and Levy of Definitive Antidumping Duties on Dumped Imports of One Side Coated Duplex Board – Grey Back Into Pakistan
Originating in and/or Exported From China, Indonesia And Korea.

The National Tariff Commission (the “Commission”) having regard to the Anti-
Dumping Duties Act, 2015 (XIV of 2015) (the “Act”) and the Anti-Dumping Duties Rules, 2001
(the “Rules”) relating to investigation and determination of dumping of goods into the Islamic
Republic of Pakistan (“Pakistan”), material injury to the domestic industry caused by such
imports, and imposition of anti-dumping duties to offset the impact of such injurious dumping,
and to ensure fair competition thereof and to the Agreement on Implementation of Article VI of
the General Agreement on Tariffs and Trade 1994 (“Agreement on Antidumping”).

2. The Commission has conducted this investigation on imports of One Side Coated
Duplex Board - Grey Back (“Duplex Board”) into Pakistan originating in and/or exported from
the People's Republic of China ("China"), Republic of Indonesia ("Indonesia") and Republic of
Korea ("Korea") (the “Exporting Countries”) under the Act and the Rules. The Commission has
made final determination in this investigation under Section 39 of the Act. This report on final
determination has been issued in accordance with Section 39 of the Act and Article 12.2 of the
Agreement on Anti-dumping.

3. In terms of Section 29 of the Act, the Commission shall, except in special circumstances,
conclude an investigation within twelve months, and in no case more than eighteen months,
after its initiation. The Commission initiated this anti-dumping investigation on January 30,
2016 and notice of preliminary determination in this investigation was published in Official
Gazette on May 12, 2017. However, The Lahore High Court, Lahore granted stay against the
proceeding in this investigation on February 11, 2016. The Lahore High Court in its decision
dated March 15, 2016 ordered that:

“Till such time the NTC complies with the requirement of sections 3 and 5 of the Act, the
impugned Notice of initiation shall be held in abeyance and as soon as NTC is functional
in terms of sections 3 and 5, it may proceed further with the said notice strictly in
accordance with law”.

4. The petitioners challenged the decision of the Lahore High Court, Lahore dated March
15, 2016 in the Honorable Supreme Court of Pakistan and the Supreme Court dismissed the
Civil Petitions on April 6, 2017 with an observation that:

“the Commission which has been constituted now shall examine the initiation of the proceedings in
question and if those are found to be valid it may continue with them otherwise those proceedings can
always be withdrawn by the Commission. In the light of the above, we do not find any merits in these
petitions, which are accordingly dismissed.”

5. In compliance of the direction of the Honorable Supreme Court, the Commission which
was constituted on September 5, 2016, considered and revisited the initiation of the
investigation dated January 30, 2016 and found it in accordance with the relevant provisions of
the Act and the Rules.

6. The importers filed Appeal against the initiation of investigation before the
Antidumping Appellate Tribunal (the “Tribunal”) and the Tribunal in its order dated
November 11, 2016 directed the Commission to examine all issues raised by the Appellants
before it.
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Final Determination and Levy of Definitive Antidumping Duties on Dumped Imports of One Side Coated Duplex Board – Grey Back Into Pakistan
Originating in and/or Exported From China, Indonesia And Korea.

7. Furthermore, the Honorable Peshawar High Court, Peshawar stayed the proceedings of
the investigation through its order dated January 25, 2017 passed in W.P. No. 298-p/2017 filed
by the importers of Duplex Board. The Honorable Peshawar High Court disposed-off the writ
petition through its order dated April 6, 2017, in following terms:

“…In order to ensure that the petitioners are not prejudiced due to the lack of any appellate
forum, this court consider it appropriate that the proceeding envisaged under the Act as for
as investigation and preliminary determination are concerned may proceed. However, the
final duty, if any, determined against the petitioners, should not be recovered from them till
the constitution of a valid Appellate Tribunal, as envisaged under Section 64 of the Act
ibid. Let it be clear that all the objections of the respondents shall be taken up by the
Tribunal.”

8. The Honorable Sindh High Court, Karachi in its order dated April 21, 2017 held that:

“Let notices be issued to the defendants as well as DAG. In the meanwhile no coercive
action shall be taken against the plaintiffs.”

9. After the preliminary determination in this investigation, some importers of the Duplex
Board filed petitions against the initiation of investigation and preliminary determination in this
investigation in Honorable Sindh High Court. The Honorable Sindh High Court, Karachi in its
order dated July 7, 2017 held that;

“Let notices be issued to the defendants as well as DAG for 26-07-2017. In the
meanwhile no coercive action shall be taken against the plaintiffs till the next date of
hearing.”

10. On the basis of litigation in the courts and stay orders granted by Honorable Lahore
High Court and Honorable Peshawar High Court, the time period for which the proceedings of
the Commission were stayed by the Honorable High Courts has been adjusted.

11. As stated at paragraph 5, ibid, the Honorable Tribunal has directed the Commission to
examine all issues raised by the appellants before the Tribunal. The issues, include,

(i) the extremely broad product scope of the investigated product;
(ii) segregation of import data from all other imports falling under the same PCT
head;
(iii) composition of the domestic industry under the Act;
(iv) relationship between the Applicant and its related firm i.e. Merit Packages as the
related firm is itself importer of investigated product

12. The Commission has considered the above mentioned issues raised before the Tribunal
and othe issues raised before the Commission. The determination of the Commission on
aforesaid issues is attached at Annexure-I to this report.

13. The final determination is based on the information available to the Commission at this
time. This report on final determination has been issued in accordance with Section 39 of the
Act.
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Final Determination and Levy of Definitive Antidumping Duties on Dumped Imports of One Side Coated Duplex Board – Grey Back Into Pakistan
Originating in and/or Exported From China, Indonesia And Korea.

A. PROCEDURE

14. The procedure set out below has been followed with regard to this investigation.

15. Receipt of Application

15.1 On December 21, 2015, the Commission received a written application under Section 20
of the Act from M/s Century Paper & Board Mills Limited, (“the Applicant”) on behalf of the
domestic industry manufacturing Duplex Board.

15.2 The Applicant alleged that Duplex Board is being exported to Pakistan at dumped prices
from the Exporting Countries. According to the Applicant, dumped imports of Duplex Board
have caused and are causing material injury to Pakistan’s domestic industry producing Duplex
Board.

15.3 The Commission informed the respective embassies of the Exporting Countries, in
Islamabad through note verbale dated December 30, 2015, of the receipt of application in
accordance with the requirements of Section 21 of the Act.

16. Evaluation and Examination of the Application

The examination of the application showed that it met the requirements of Section 20 of
the Act as it contained sufficient evidence of dumping of Duplex Board into Pakistan from the
Exporting Countries and material injury to the domestic industry caused therefrom.
Requirements of Rule 3 of the Rules, which relate to the submission of information prescribed
therein were also found to have been met

17. The Domestic Industry

Section 2(d) of the Act defines domestic industry as:

“domestic industry” means the domestic producers as a whole of a domestic like product or those
of them whose collective output of that product constitutes a major proportion of the total
domestic production of that product, except that when any such domestic producers are related to
the exporters or importers, or are themselves importers of the allegedly dumped investigated
product in such a case “domestic industry” may mean the rest of the domestic producers”.
Explanation.- For the purposes of this clause, producers shall be deemed to be related to exporters
or importers only if;

(i) one of them directly or indirectly controls the other;
(ii) both of them are directly or indirectly controlled by the same third person; or
(iii) together they directly or indirectly control a third person;

Provided that there are grounds for believing or suspecting that the effect of the relationship is
such as to cause the producer concerned to behave differently from non-related producers and for
that purpose one shall be deemed to control another when the former is legally or operationally in
a position to exercise restraint or direction over the latter”.

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Final Determination and Levy of Definitive Antidumping Duties on Dumped Imports of One Side Coated Duplex Board – Grey Back Into Pakistan
Originating in and/or Exported From China, Indonesia And Korea.

17.1 The applicants identified the following ten units manufacturing Duplex Board in the
country.
i. Century Paper & Board Mills Limited
ii. Bulleh Shah Packaging (Pvt) Limited
iii. Malik Board & Paper Industries (Pvt) Ltd.
iv. Synergy Paper & Board (Pvt) Ltd.
v. Fazal Paper Mills (Pvt) Ltd.
vi. Shifa Board (Pvt) Ltd.
vii. Tajjalla Board
viii. Paramount Duplex Board Mills (Pvt) Ltd.
ix. Horizon Paper & Board Mills (Pvt) Ltd.
x. Shabbir Paper & Board Mills (Pvt) Ltd.

17.2 During the course of the investigation, the importers of Duplex Board raised following
issues;

i. There are other domestic producers of Duplex Board which the Applicant has concealed
and no information was given in the application. Following manufacturers of the Duplex
Board were identified;

i. Karachi Paper and Board Mills (Pvt) Ltd
ii. Olympia Paper and Board Mills Ltd
iii. S.K Industries (Pvt) Ltd
iv. Neelum Paper and Board Mills (Pvt) Ltd
v. Prime Paper Products.
vi. Zaman Industries
vii. Attas Paper Board

ii. One of the importer namely Merit Packaging Ltd., a related company of the Applicant
imported the investigated product during the POI therefore, the Applicant in terms of
Section 2(d) of the Act does not qualify to be the domestic industry and hence is not eligible
to submit application on behalf of the domestic industry.

17.3 To investigate the matter mentioned above, the Commission wrote a letter to the named
domestic manufacturers identified by the importers and send brief questionnaire so as to know
their positon with regard to the application. However none of the producers responded to the
Commission letter. Therefore the Commission relied upon the facts available with the
Commission. The important points regarding the fact available is that the manufacturing status
of such other producers is not available with the Commission and data furnished by the
importer viz their NTN number etc. does not indicate the status of the manufacturer of the
investigated product. It only indicates that they are manufacturer of paper products. Even if it
is considered that they are manufacturer of investigated product even then their position with
regard to application is not clear and they can only be considered as indifferent producers
which could not change standing of the Application. Therefore the Commission has
determined that domestic industry consists of 10 units mentioned in paragraph 17.1.

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Final Determination and Levy of Definitive Antidumping Duties on Dumped Imports of One Side Coated Duplex Board – Grey Back Into Pakistan
Originating in and/or Exported From China, Indonesia And Korea.

17.4 The issue regarding exclusion of manufactures from the domestic industry on the basis
of its relationship with the importers of investigated product has been dealt in detail in the
report of final determination of BOPP Film (A.D.C No. 22/2010/NTC/BOPP). Paragraph 7.3
and 7.6 of the final determination in that case which deal with issue in detail are reproduced
below:

“7.3 In this regard it is held that the exclusion of any product from domestic
industry is dependent upon the expected behavior of the firm concerned. In case it is
suspected that the firm would jeopardize the interest of other domestic producers by
way of its interests in imports, only then such firm would be excluded from the domestic
industry. It is also important to note that the expected behavior of the firm concerned is
in relation to anti-dumping application and not the marketing behavior of the firm. In
this regard the practice and standards being followed by other traditional users of anti-
dumping law and the history of the WTO negotiations has been considered by the
Commission. In this regard a famous lawyer in the field of anti-dumping with the name
of Van Beal & Bellis in his book titled “Anti-dumping and other Trade Protection Law of
EC” has clarified this issue of imports by related companies with reference to the EC
(European Commission) practice. As per page 202 of the book, “A community producer
is held to be an importer regardless of whether it imports directly or through related
trading companies. However, when assessing its conduct, indirect imports are
relevant only as long as the related importer supplies the community producer or acts
in coordination with it”. A reference is also made to EU antidumping investigation of
“Quarto Plates” in which the Commission found that none of the producers had
themselves imported the products. All imports were carried out by a trading company
belonging to the same corporate group as one complaining producer. However, this
company was found to act independently. Based on the structure annual reports and
have no profit or loss transfer agreement with the holding company. Furthermore, the
two companies filed separate income tax returns, has its own board of directors and
conduct business relations with other companies at arm’s length. The Commission
therefore, concluded that the imports could not affect the status of the producers
concerned”

7.6. It is also to be noted that the expected behaviour is dependent upon the
interest of the producer concerned. In this regard it is held that this provision may hold
good when the related party of the applicant has imported the product concerned at
lower prices from the dumped sources and has sold either to the applicant or in the
domestic market under the instructions of the applicant. Packages has not imported the
product concerned under the instruction from Tripack nor sold the imported product to
Tripack or in the domestic market. Tripack is an independent entity maintaining its own
financial accounts, submits separate income tax returns, has no profit and loss transfer
agreement with Packages Limited, has its own board of directors and all the sale of
packages Limited were at arm’s length as disclosed in its Annual Report. Therefore,
there are no grounds to exclude Tripack from the definition of the domestic industry.
Above all, Tripack Ltd. it the major producer and its share in domestic production
during POI was 92%. Surely it cannot work differently than the other producers of the
BOPP film”.

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Final Determination and Levy of Definitive Antidumping Duties on Dumped Imports of One Side Coated Duplex Board – Grey Back Into Pakistan
Originating in and/or Exported From China, Indonesia And Korea.

17.5. This issue was considered by the Anti-Dumping Appellate Tribunal in detail in Appeal
No. 58 and 59. The Appellate Tribunal in its decision observed that:

“ We have gone through the definition of domestic industry as is reflective from clause
(d) of section 2 of the Ordinance, 2000; so also, from the passages (7.3 & 7.6) of final
determination noted above and find enough force in the submissions of the
representatives of the respondent. Thus, having discussed the matters as before, we
answer the question in positive to hold that the respondent company falls within the
definition of domestic industry”.

17.6 In the light of above and the facts that Merit Packaging Ltd. imported only an
insignificant quantity (0.5% of total import and 0.1% of total domestic consumption) during the
POI. Further the import by Merit Packaging Ltd. were for its internal consumption and the
Applicant did not derive any benefits from the transaction. Above all the Applicant is a major
producer of investigated product and its share in domestic sale is major proportion of total sale
by the domestic industry (58%) therefore it cannot work differently than any unrelated
producer of investigated product. In view of this it is determined that the domestic industry
consists of only 10 units mention in paragraph 17.1.

18. Standing of the Application

18.1 In terms of Section 24(1) of the Act,

“…. an application shall be considered to have been made by or on behalf of the domestic
industry only if it is supported by those domestic producers whose collective output constitutes
more than fifty percent of the total production of a domestic like product produced by that portion
of the domestic industry expressing either support for or opposition to the application.”

Furthermore, Section 24(2) of the Act provides that:

“….. no investigation shall be initiated when domestic producers expressly supporting an
application account for less than twenty five percent of the total production of the domestic like
product produced by the domestic industry."

18.2 As per the information supplied in the application, the Applicant produced 58 percent of
production of Duplex Board by the domestic industry of during the period from October 1, 2014
to September 30, 2015. Details of the production of Duplex Board by the domestic industry are
as follows:

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Final Determination and Levy of Definitive Antidumping Duties on Dumped Imports of One Side Coated Duplex Board – Grey Back Into Pakistan
Originating in and/or Exported From China, Indonesia And Korea.

Table - I
Unit-wise Production during the year 2015
Share in Supporting/
domestic Opposing/
S # Name
production Indifferent
(%) (other units)
1 Century Paper & Board Mills Limited 58.4% Applicant
2 Bulleh Shah Packaging (Pvt) Limited 4.3% Supporting
3 Malik Board & Paper Industries (Pvt) Ltd. 7.5% Indifferent
4 Shabbir Paper & Board Mills (Pvt) Ltd. 3.4% Indifferent
5 Horizon Paper & Board Mills (Pvt) Ltd. 2.9% Indifferent
6 Shifa Board (Pvt) Ltd. 4.2% Indifferent
7 Paramount Paper Board Mills (Pvt) Ltd. 2.2% Indifferent
8 Synergy Paper & Board (Pvt) Ltd. 3.5% Indifferent
9 Fazal Paper Mills (Pvt) Ltd. 6.4% Indifferent
10 Tajjalla Board 7.1% Indifferent
100%
Source: The Applicant

18.3 The information given in the above table reveals that the application has been made by
or on behalf of the domestic industry as it is supported by those domestic producers whose
collective output constitutes 100 percent of the total domestic production of the domestic like
product produced by that portion of domestic industry expressing either support for or
opposition to the application. Further, the application has been expressly supported by those
domestic producers whose collective output constitute 63% of total domestic production of
domestic like product produced by domestic industry which is more than 25% as required
under Section 24(2) of the Act. Thus the standing requirements as given in section 24 of the Act
are met and it is determined that the application is made by or on behalf of the domestic
industry.

19. Applicant’s Views

The Applicant, inter alia, raised the following issues in application regarding dumping of
Duplex Board and material injury to the domestic industry caused therefrom:

i. Duplex Board imported from the Exporting Countries into Pakistan and that is
produced in Pakistan by the domestic industry are like products;
ii. Exporters/producers from the Exporting Countries are exporting Duplex Board
to Pakistan at dumped prices; and
iii. Exports of Duplex Board by the exporters/producers from the Exporting
Countries to Pakistan at dumped prices has caused and is causing material injury
to the domestic industry producing Duplex Board mainly through:-

a. Volume of dumped imports
b. Price undercutting;
c. Price suppression;
d. Price depression;
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