Directorate General of Trade Remedies, Ministry of Commerce & Industry, Government of India with Case No. CVD-SSR- 13/2023 has issued an initiation notification for a sunset review investigation of countervailing duty concerning imports of new pneumatic radial tyres for buses and lories. Here are the highlights on what has been initiated, why, and who all should be concerned. If you would like to discuss your case, contact our International Trade & WTO desk.
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What has been initiated in the Sunset Review investigation of countervailing duty concerning imports of new pneumatic radial tyres for buses and lorries?
Automotive Tyres Manufacturers Association ("AIMA") has filed an application on behalf of the domestic producers namely Apollo Tyres Limited, J.K. Tyre Industries Limited and MRF Limited (hereinafter collectively referred to as "applicants") before the Designated Authority (hereinafter referred to as the "Authority") under the provisions of the Customs Tariff Act 1975, as amended from time to time (hereinafter also referred ro as the "Act") and the customs Tariff (identification, Assessment and collection of Countervailing Duty on Subsidized Articles and for Determination of Injury) Rules, 1995 thereof,, as amended from time to time (hereinafter also referred to as the "CVD Rules" or "Rules") for the initiation of a sunset review investigation of countervailing duties concerning imports of "new pneumatic radial tyres for buses and lorries" (hereinafter referred to as the "subject goods" or "product under consideration") originating in or exported from China PR (hereinafter referred to as the "subject country").
In terms of Section 9 (6) of the Act and Rule 24 (3) of the CVD Rules, the countervailing duties imposed shall. unless revoked earlier, cease to have effect on expiry of five years from the date of such imposition, and the Authority is required to review whether the expiry of the said countervailing duty is likely to lead to continuation or recurrence of subsidisation and injury to the domestic industry. In accordance with the same, the Authority is required to review, on the basis of duly substantiated request made by or on behalf of the domestic industry as to whether there is a need for the continued imposition of the countervailing duty, and whether the expiry of the duty is likely to lead to continuation or recurrence of subsidisation and injury.
In terms of Article l3 of the Agreement on Subsidies and Countervailing Measures, pre initiation consultations were held with the officials of the Government of China on 15th December, 2023. The Government of China has alleged that the evidence provided in the application regarding subsidy programs is insufficient. The Authority notes that Article I 1.2 of the Agreement on Subsidies and Countervailing Measures provides that "the application shall contain such information as is reasonably available to the applicant". The Authority considers that the existence ofall alleged programs, their countervailability and extent of benefit therein are required to be analysed through an investigation as per the relevant rules.
What is the Background of the Sunset Review Investigation concerning imports of imports of new pneumatic radial tyres for buses and lorries?
The original anti-subsidy investigation was initiated by the Authority on 27th March 2018. The Authority recommended the imposition of definitive anti-subsidy duties on the imports ofthe subject goods from the subject countries vide final finding no' 6/8/2018-DGAD dated 25th March 2019. The definitive measures were imposed by the Ministry of Finance vide Customs Notification No. l/2019-Customs (CVD), dated 24th June 2019.
Further, pursuant to a request by filed by the exporters M/s. Shandong Haohua Tire Co. Ltd., China PR along with Guangzhou Exceed Industrial Technology Co. Ltd., China PR and HK Trade Wind Trading Limited, Hong Kong, the Authority initiated new shipper review investigation vide notification dated 20th April 2020 for determination of individual countervailing duty. In view of the request received from these exporters for withdrawal of their application, the Authority terminated the new shipper investigation vide notification dated 46 March 2021.
What is the Product under Consideration?
The product under consideration is the same as in the original investigation i.e., "New/Unused pneumatic radial tyres with or without tubes and/or flap of rubber (including tubeless tyres), having nominal rim dia code above 16" used in buses and lorries/trucks"
The present investigation being a sunset review investigation, the scope of the product under consideration remains the same as defined in the original investigation.
The product under consideration is classified under Chapter 40 of the First Schedule to the Customs TariffAct, 1975. Tyres are classified under HS code 40112010 and tubes and flaps are classified under HS codes 40131020 and 40129049 respectively. The product under consideration is also being imported under the HS code 40118000. The customs classification is only indicative and is not binding on the scope of the present investigation. The Authority shall consider imports of the product under consideration, irrespective of its classification for the purpose of the proposed determination.
Are there any Like articles?
The applicants have claimed that there are no krown significant differences in the goods produced by the petitioning domestic producers and that exported from the subject countries. Both products have comparable characteristics in terms of parameters such as physical & chemical characteristics, manufacturing process & technology, functions & uses, product specifications, pricing, distribution & marketing and tariff classification. The applicants have claimed that the two are technically and commercially substitutable. Therefore, for the purpose of present investigation, the subject goods produced by the petitioning domestic producers are being treated as 'like article 'to the subject goods originating in or exported from the subject countries.
What is the status of Domestic Industry and their standing?
The application has been filed by Automotive Tyre Manufacturer's Association on behalf of the domestic producers of the product namely, Apollo Tyres Limited, J.K. Tyre lndustries Limited and MRF Limited. As per the evidence available on record, production of the applicants, being more than 50% of Indian production, accounts for a major proportion of the total domestic production. The Authority determines that the constituent domestic producers in the present application namely Apollo Tyres Limited, J.K. Tyre lndustries Limited and MRF Limited constitute domestic industry as defined under Rule 2(b) of the CVD Rules.
What are the subsidy programmes related to the sunset review investigation on countervailing duties concerning imports of new pneumatic radial tyres for buses and lorries?
The applicants have alleged that the producers/ exporters of the subject goods in the subject countries continue to be benefitted from actionable subsidies provided at various levels by the Governments of the subject countries, including the provinces and districts in which producers/exporters are located. The applicants have also claimed that there are additional programs or schemes that should be considered in the present investigation.
The Designated Authority may investigate other subsidies, which may be found to exist and availed by the producers/ exporters of the subject goods in the subject countries, during the course of the investigation.
Likelihood of continuation/ recurrence of subsidy and injury?
There is prima facie evidence of likelihood of continuation/recurence of subsidization and consequent injury to the domestic industry in the event of cessation of anti-subsidy duty, considering third country exports at prices lower than the export price to India and non injurious price of the domestic industry, trade remedial measures imposed by third countries, capacity additions in the subject country, likely suppression or depression effect of imports in the absence of duties, and Iikely adverse impact of cessation of anti-subsidy duty on the performance of the domestic industry.
Initiation of sunset review investigation?
On the basis of the duly substantiated application by or on behalf of the domestic industry, and having satisfied itself, on the basis of the primafacie evidence submitted by the applicants, substantiating likelihood of continuation or recurrence of subsidization and injury to the domestic industry the Authority hereby initiates a sunset review investigation to review the need for continued imposition of countervailing duty on imports ofthe subject goods from the subject country and to examine whether the expiry ofthe existing countervailing duty is likely to lead to continuation or recurrence of subsidy and consequent injury to the domestic industry, in accordance with Section 9 of the Act, read with Rule 24 of the CVD Rules.
Subject countries
The subject country for the present countervailing duty investigation is China PR
Period of investigation
The applicants have proposed period of investigation as 1st April 2022 to 30th June 2023 (15 months) for the purpose of the present investigation. The applicants have submitted that consideration of July 2022 - June 2023 as the investigation period would result in significant practical difficulties for the preparation of the costing data for the applicant domestic industry as these are multi-product companies having several plants. The applicant companies further submitted that there would be no material difference in the merits of the case as the present case is based on continuation of subsidies and likelihood of injury which do not have any bearing on the period considered as POl. The Authority examined import volume and import price from the DGCI&S data considering the period April 2022 to June 2023 (annualised) and July 2022 to June 2023. It was observed that there was no material difference between import volume. value and CIF price. In addition, the present investigation is concerning likelihood of continuation/recurrence of subsidies and injury. The Authority has therefore, accepted the period of investigation proposed by the applicants which is 1st April 2022 to 30th June 2023 (15 months).
The injury investigation period has been considered as the period of investigation and the three preceding financial years, i.e. 2019-20, 2020-21, 2021-22.
Contact Partner: Anu MongaEmail: anu.monga@anantlaw.com Mobile: +91 98112 64474 Landline: +91 11 4302 6688 Connect on LinkedIn |