Commission Regulation (EC) No 833/2004 of 26 March 2004 amending Commission Regulation (EC) No 449/2000 imposing a provisional anti-dumping duty on imports of malleable cast iron tube or pipe fittings originating in Brazil, the Czech Republic, Japan, the People's Republic of China, the Republic of Korea and Thailand and accepting an undertaking offered by an exporting producer in the Czech Republic
Date: 2004-03-26
Institutions: European Commission
Subjects: anti-dumping duty, import, originating product, piping, third country

29.4.2004

EN

Official Journal of the European Union

L 127/37

COMMISSION REGULATION (EC) No 833/2004

of 26 March 2004

amending Commission Regulation (EC) No 449/2000 imposing a provisional anti-dumping duty on
imports of malleable cast iron tube or pipe fittings originating in Brazil, the Czech Republic, Japan,
the People's Republic of China, the Republic of Korea and Thailand and accepting an undertaking
offered by an exporting producer in the Czech Republic

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European
Community,

Having regard to Council Regulation (EC) No 384/96 of 22
December 1995 on protection against dumped imports from
countries not members of the European Community (1), and in
particular Articles 8 and 9 thereof,

duties as an undertaking had already been accepted defi-
nitively from this company at the provisional stage of
the proceeding.

B. BREACHES OF THE UNDERTAKING

After consulting the Advisory Committee,

1. Obligations of company with an undertaking

Whereas:

(1)

(2)

(3)

(4)

A. PREVIOUS PROCEDURE

On 29 May 1999, by means of a notice published in the
Official Journal of the European Communities, the Commis-
sion announced the initiation of an anti-dumping
proceeding (2)
in respect of imports of malleable cast
iron tube or pipe fittings (the product concerned) origin-
ating in Brazil, Croatia, the Czech Republic, the Federal
Republic of Yugoslavia, Japan, the People's Republic of
China, the Republic of Korea and Thailand.

This proceeding resulted in provisional anti-dumping
duties being imposed in February 2000 against Brazil,
the Czech Republic,
the People's Republic of
China, the Republic of Korea and Thailand by Commis-
sion Regulation (EC) No 449/2000 (3) in order to elimi-
nate the injurious effects of dumping.

Japan,

In the same Regulation, the Commission accepted an
undertaking offered by an exporting producer in the
Czech Republic, Moravske Zelezárny a.s.
(Moravske).
Subject to the conditions set out in Regulation (EC) No
449/2000, imports of the product concerned into the
Community from this company were exempted from the
said provisional anti-dumping duties, pursuant to Article
2 (1) of the same Regulation.

Definitive duties were later imposed against Brazil, the
Czech Republic, Japan, the People's Republic of China,
the Republic of Korea and Thailand by Council Regu-
lation (EC) No 1784/2000 (4). Subject to the conditions
set out
this Regulation also granted goods
manufactured and exported to the Community by
Moravske an exemption to the definitive anti-dumping

therein,

(1) OJ L 56, 6.3.1996, p. 1. Regulation as last amended by Regulation

(EC) No 461/2004 (OJ L 77, 13.3.2004, p. 12)

(2) OJ C 151, 29.5.1999, p. 21.
(3) OJ L 55, 29.2.2000, p. 3.
(4) OJ L 208, 18.8.2000, p. 8.

(5)

(6)

(7)

(8)

The undertaking offered in the present case obliges the
company concerned,
inter alia, to export the product
concerned to the Community at or above certain
minimum import price levels (MIPs) specified therein.
The company also undertakes not to circumvent the
undertaking by making compensatory arrangements
with any other party which causes the net price paid by
the first independent customer for in the Community to
be below the MIP.

Furthermore, in order to allow effective monitoring of
the undertaking, Moravske is obliged to send to the
European Commission a quarterly report of all its export
sales of the product concerned to the European Com-
munity. These reports should include details of all
invoices issued during the period for sales made under
the terms of the undertaking for which exemption to the
anti-dumping duties is sought. The data submitted in
these sales reports should be complete and correct in all
particulars.

For the purposes of ensuring compliance with the under-
taking, Moravske also agreed to provide allow on-spot
verification visits at its premises in order to verify the
accuracy and veracity of data submitted in the said quar-
terly reports.
In this regard, a verification visit was
carried out at the premises of Moravske in the Czech
Republic in September 2003.

2. Results of the verification visit

The visit to Moravske established that sales to a particu-
lar customer in the Community of certain types of the
product concerned had, according to the export invoices
and undertaking sales reports, purportedly been made at
prices in conformity with the MIPs, whilst sales to the
same customer of products not subject to anti-dumping

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Official Journal of the European Union

29.4.2004

measures were at price levels significantly below Moravs-
ke's average sales prices for these other products when
sold to other customers in the Community. The goods
subject
to the undertaking were then re-sold by the
purchaser in the Community to a second company in
another Member State.

(9)

It was stated during the visit that, due to the level of the
MIPs, Moravske was allegedly uncompetitive for certain
fittings models in the second Member State. Moravske
admitted that a system of cross-compensation between
products
to the undertaking and products
outside the scope of the anti-dumping measures had
those
been set up which allowed Moravske to sell
models at net
(i.e. compensated) prices which were
below the MIPs. Such sales by Moravske were, therefore,
not in accordance with the terms of its undertaking.

subject

(10) Upon being notified of

the verification visit,

the
company had checked the quarterly undertaking sales
reports previously submitted to the Commission. Just
prior to the visit, the company informed the Commis-
sion that it had found sixteen invoices accompanying
sales to the Community made under the terms of the
undertaking which had been omitted from the quarterly
sales reports. It was claimed that the errors were due to
the company's accounting software programme. In addi-
tion, acting on information received from one of the
Community's
the Commission
found during the visit that another invoice for sales to
the Community had been not been included on the
It was
appropriate quarterly undertaking sales report.
established that
the invoice in question had been
omitted due to incorrect destination country coding of
the invoice in the company's accounting system.

authorities,

customs

(11) Although all

the sales transactions on the seventeen
omitted invoices had not been made to companies with
which Moravske had compensation arrangements and
were apparently in accordance with the MIPs, the fact
remains that the company's accounting system failed to
pick up the invoices for the purposes of the undertaking
reports. The obligation of
the company to submit
complete reports of all its sales was not, therefore, met.

3. Breaches of the undertaking

(12)

The compensation scheme found was considered to
breach the undertaking. The failure to report all sales
transactions to the Community was also a breach of the
undertaking. The company was therefore informed in
writing of the essential facts and considerations on the
basis of which the Commission intended to withdraw
acceptance of the its undertaking and to recommend the
imposition of the definitive anti-dumping duty.

(13) Written submissions were made by the company within
the due time limits and a hearing was also requested and
granted.

(14) Within the framework of

the current administrative
procedure, the company also requested a copy of the
Commission Services' internal report of the on-spot veri-
fication visit as, it was contended, without this document
it could not adequately defend its interests. However, the
company has, as provided for by Articles 8 (9) and 20
of Regulation 384/96, received in writing full disclosure
of all the facts and considerations on the basis of which
it was intended that the present decision be taken, and
has been given adequate opportunity to comment on
these facts and considerations prior to the present deci-
sion being taken. Hence, the company has received all
information necessary to enable it to fully exercise its
rights of defence. Therefore, this request could not be
granted. A request for access to the report of the visit
under Regulation (EC) No 1049/2001 of the European
Parliament and of the Council (1) is being dealt with in
accordance with the provisions of that Regulation.

(15) As concerns the issue of the compensation scheme, it
was submitted that the amount of the compensation
granted to the customer in question during 2002 was
insignificant when viewed as part of the company's total
exports to the Community of all products and that there
was therefore no material breach. It was further argued
that withdrawal of acceptance of the undertaking due to
this compensation scheme was out of proportion to the
actions of the company.

(16)

argument

concerning materiality

be
cannot
This
accepted as the declared aim of
the compensation
scheme was to enable Moravske to sell its products in a
certain Member State at prices below the MIPs and,
therefore, at injurious price levels. In addition, even if a
breach concerns only one customer in one Member
State (or even only one transaction), a violation such as
this clearly breaks the relationship of trust which formed
the basis for the European Commission accepting the
undertaking in the first place.

(17) Moreover, as also concerns the issue of materiality and
proportionality, it should be recalled that the jurispru-
dence of the Court of First Instance of the European
Communities has confirmed that any breach of an
undertaking is sufficient grounds for withdrawing accep-
tance thereof (2).

(18) With regard to the question of the invoices which had
been omitted from its sales reports to the Commission,
to another anti-dumping
Moravske made reference
case (3) in which a Norwegian company had acceptance
its undertaking withdrawn by the Commission
of
terms. The Norwegian
following a breach of
company concerned later requested a partial
interim
review of the anti-dumping/subsidy measures applicable
to it, which was granted. Following a new investigation
by the Commission Services, a fresh undertaking was
accepted from the company concerned, some three years
after acceptance of the original undertaking was with-
drawn.

its

(1) OJ L 145, 31.5.2001, p. 43.
(2) Court of First Instance, Judgment of 30 March 2000, Case T-51/96,

Miwon Co Ltd Vs Council

(3) Farmed Atlantic salmon originating in Norway. Council Regulation

(EC) No 322/2002, OJ L 51, 22.2.2002, p. 1

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(19)

(20)

(21)

In this regard, Moravske drew attention to the fact that
one of the reasons for accepting the new undertaking
from the Norwegian company related to improvements
to its accounting system. Moravske indicated that it too
would be prepared to improve its accounting system so
as to ensure that omissions of invoices did not occur
again and that the ‘benefit’ accorded to the Norwegian
exporter in this regard should also be granted to it.

In response to this submission, it should first be made
clear that the two cases are not the same. The Norwe-
gian company had acceptance of its undertaking with-
drawn following a breach, and it was only several years
later, after an investigation determined that the circum-
stances had changed in the meantime,
that another
undertaking was accepted from the company. Moreover,
several elements were taken into account which satisfied
the Commission that the same breach would not re-
occur
(with improvements made to the Norwegian
company's accounting system being only one aspect of
the overall assessment).

This situation is therefore different to that of Moravske,
which concerns the non-observance of a current under-
taking. What the company would do in the future if the
Commission refrained from withdrawing acceptance of
its undertaking is hypothetical and cannot be considered
as sufficient grounds for halting the current administra-
tive procedure.

(22) Moravske also submitted that production of the product
concerned had been shifted outside the Community by
two of the companies that had lodged the complaint
which led to the
anti-dumping
It was argued that there was therefore no
measures.
further need for measures, as there was no Community
industry to protect and that it was not in the Com-
munity interest to reimpose an anti-dumping duty on
imports from Moravske.

current definitive

(23)

In this regard, the Commission subsequently contacted
the companies constituting the Community industry in
the proceeding who confirmed that no significant reloca-

the
tion of production outside the Community of
product concerned had taken place. Even if the allega-
tion concerning relocation of production had proved to
be correct, this does not alter the fact that Moravske has
breached its undertaking and that accordingly, accep-
tance of the undertaking may be withdrawn immedi-
ately.

C. AMENDMENT OF COMMISSION REGULATION (EC)

No 449/2000

(24)

In the light of the above, Article 2 of Commission Regu-
lation (EC) No 449/2000 accepting an undertaking from
Moravske Zelezárny a.s. should be deleted and Articles 3
and 4 of that Regulation should be renumbered accord-
ingly,

HAS ADOPTED THIS REGULATION:

Article 1

Acceptance of the undertaking offered by Moravske Zelezárny
a.s. is hereby withdrawn.

Article 2

Article 2 of Commission Regulation (EC) No 449/2000 is

1.
hereby deleted.

Article 3 of Commission Regulation (EC) No 449/2000 is

2.
hereby renumbered ‘Article 2’.

Article 4 of Commission Regulation (EC) No 449/2000 is

3.
hereby renumbered ‘Article 3’.

Article 3

This Regulation shall enter into force on the day following that
of its publication in the Official Journal of the European Union.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, 26 March 2004.

For the Commission

Pascal LAMY

Member of the Commission