Proposal for a Council Regulation imposing a definitive anti-dumping duty and collecting definitively the provisional duty imposed on imports of certain graphite electrode systems originating in India
Date: 2004-08-26
Institutions: European Commission
Subjects: India, anti-dumping duty, carbon, electrical equipment, import, originating product

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 26.8.2004 
COM(2004) 571 final 

. 

Proposal for a 

COUNCIL REGULATION 

imposing a definitive anti-dumping duty and collecting definitively the provisional duty 
imposed on imports of certain graphite electrode systems originating in India 

. 

(presented by the Commission) 

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EXPLANATORY MEMORANDUM 

On  21  August  2003,  the  Commission  initiated  an  anti-dumping  investigation  with  regard  to 
imports into the Community of certain graphite electrode systems originating in India. On 19 
May 2004, provisional anti-dumping duties were imposed by the Commission. 

The  attached  proposal  for  a  Council  Regulation  is  based  on  the  definitive  findings  which 
confirmed  the  existence  of  dumping  and  injury,  and  of  a  causal  link  between  dumping  and 
injury. The examination of all interests involved, in particular that of the Community industry, 
of  unrelated  importers  and  of  users,  confirmed  the  conclusion  that  it  is  not  against  the 
Community interest to take definitive measures. 

The  normal  deadline  applicable  for  anti-dumping  proceedings  would  imply  that  definitive 
anti-dumping measures should be imposed no later than 20 November 2004. However, there 
is  a  parallel  anti-subsidy  proceeding  concerning  the  same  product  and  origin  for  which  the 
relevant  deadline  is  20  September  2004.  As  in  those  cases  the  practice  is  to  publish  both 
Regulations  at  the  same  time,  it  is  therefore  proposed  that  the  Council  adopt  the  attached 
proposal for a Regulation which should be published in the Official Journal no later than 20 
September 2004. 

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Proposal for a 

COUNCIL REGULATION 

imposing a definitive anti-dumping duty and collecting definitively the provisional duty 
imposed on imports of certain graphite electrode systems originating in India 

THE COUNCIL OF THE EUROPEAN UNION, 

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  Community1 
(the ‘basic Regulation’) and in particular Article 9 thereof, 

Having  regard  to  the  proposal  submitted  by  the  Commission  after  consulting  the  Advisory 
Committee, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

A. 

PROVISIONAL MEASURES 

the  Commission,  by  Regulation  (EC)  No  1009/20042 
On  19  May  2004, 
(‘the  provisional  Regulation’),  imposed  a  provisional  anti-dumping  duty  on  imports 
into the Community of certain graphite electrode systems originating in India. 

B. 

SUBSEQUENT PROCEDURE 

Subsequent to the disclosure of the essential facts and considerations on the basis of 
which it was decided to impose provisional anti-dumping measures, several interested 
parties  made  written  submissions  making  their  views  known  on  the  provisional 
findings. The parties who so requested were granted an opportunity to be heard.  

The Commission continued to seek and verify all information it deemed necessary for 
the definitive findings.  

All  parties  were  informed  of  the  essential  facts  and  considerations  on  the  basis  of 
which it was intended to recommend the imposition of a definitive anti-dumping duty 
on imports of certain graphite electrode systems originating in India and the definitive 
collection  of  the  amounts  secured  by  way  of  the  provisional  duty.  They  were  also 
granted a period within which to make representations subsequent to the disclosure of 
the essential facts and considerations.  

1 
2 

OJ L 56, 6.3.1996, p. 1, as last amended by Regulation (EC) No 461/2004 (OJ L 77, 13.3.2004, p. 12.). 
OJ L 183, 20.5.2004, p. 61. 

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(5) 

The  oral  and  written  comments  submitted  by  the  interested  parties  were  considered 
and, where appropriate, the findings have been modified accordingly. 

C. 

PRODUCT CONCERNED AND LIKE PRODUCT 

(6) 

Since no new comments were received regarding the product concerned and the like 
product, recitals (11) to (15) of the provisional Regulation are hereby confirmed. 

D. 

DUMPING 

1.  Claims made by the exporting producers 

(7) 

(8) 

The two  cooperating  exporting producers  reiterated their claim that a duty drawback 
adjustment on the normal value should have been granted, pursuant to Article 2(10)(b) 
‘Import  charges  and  indirect  taxes’  or  alternatively  under  Article  2(10)(k)  ‘Other 
factors’ of the basic Regulation, for the benefits received under the Duty Entitlement 
Passbook Scheme (‘DEPB’) on a post-export basis. Pursuant to Article 2(10)(b), they 
claimed that at least the amount of DEPB credits used against imports of raw materials 
consumed  in  the  production  process  of  the  exported  product  should  be  granted  as 
allowance. 

In  this  regard,  it  should  be  noted  that  no  adjustment  could  be  granted  because,  as  it 
was explained in recital (25) of the provisional Regulation, the investigation showed 
that no direct link could be established between the DEPB credits granted and the raw 
materials purchased as the credits could be used against duties payable on any goods 
to  be  imported,  except  for  capital  goods  and  goods  subject  to  import  restrictions  or 
prohibitions.  Moreover,  even  when  the  credits  were  used  against  imports  of  raw 
materials necessary for the production of graphite electrodes, the exporting producers 
could not demonstrate that these raw materials had been used for the production of the 
exported product. In addition, the DEPB benefit was accounted for as an income and 
not as a negative item in the cost accounting system of the companies. Therefore, on 
the basis of the companies’ accounting records, there was no link between the pricing 
of  the  exported  goods  and  the  DEPB  income  received.  Finally,  no  new  arguments 
justifying the application of Article 2(10)(k) of the basic Regulation were submitted. 
Therefore, these claims could not be accepted and the findings set out in recitals (25) 
and (26) of the provisional Regulation are hereby confirmed. 

(9) 

Both  cooperating  exporting  producers  also  reiterated  their  claims  pursuant  to  Article 
2(10)(d)(ii)  of  the  basic  Regulation,  with  regard  to  differences  in  levels  of  trade. 
However,  no  new  arguments  were  brought  forward,  therefore  the  findings  set  out  in 
recitals (27) and (28) of the provisional Regulation are hereby confirmed. 

(10)  The  cooperating  exporting  producers  contested  the  exchange  rates  used  in  the 
calculation of the export prices. They claimed that the exchange rates used should be 
those prevailing at the date of payment instead of the date of the invoice. Moreover, 
they  also  claimed  that  instead  of  using  the  average  exchange  rates  of  the  month  in 
which the invoice was issued, it would have been more accurate to use the actual daily 
exchange rates. 

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(11) 

In this respect, it should be noted that it is the consistent practice of the Commission to 
use  exchange  rates  pertaining  to  the  date  of  the  invoice,  because  the  price 
determination takes into consideration the exchanges rates at the moment of invoicing. 
The  claim  to  use  the  exchange  rates  prevailing  at  the  date  of  payment  was  therefore 
rejected. However, it was accepted to use the actual exchange rates prevailing at the 
date of invoice instead of the average monthly exchange rates pertaining to that date. 
In view of this, the dumping calculations were amended accordingly. 

(12)  Whilst examining the matter, a clerical error was discovered in the provided average 
monthly exchange rates. As these exchange rates were replaced by the daily exchange 
rates, as explained in recital (11), this error is considered to be corrected. 

2.  Dumping calculations 

(13)  Following  the  adjustments  with  regard  to  the  exchange  rates  used,  as  described  in 
recitals (10) to (12) above, the amount of dumping finally determined, expressed as a 
percentage of the CIF net free-at-Community-frontier price, is as follows: 

Graphite India Limited (GIL) 

31,1% 

Hindustan Electro Graphite (HEG) Limited 

22,4% 

All others 

31,1% 

E. 

COMMUNITY INDUSTRY 

(14) 

In  the  absence  of  any  substantially  new  information  or  argument  in  this  particular 
respect, recitals (32) to (35) of the provisional Regulation are hereby confirmed. 

F. 

INJURY 

(15)  Following the provisional disclosure, the Indian exporters pointed to the divergence in 
the undercutting margin of one particular type of the product concerned, as compared 
with the undercutting margins of similar types. The claim was properly examined and 
it was found that the discrepancy was due to a mistake in the reporting of a number of 
credit  notes  and  discounts  of  one  particular  Community  producer.  The  claim  was 
therefore  accepted  and  the  undercutting  margin  of  this  particular  type  and,  where 
applicable, of other types were corrected accordingly.  

(16) 

It was further found that a number of sale transactions of the Community industry used 
for  the  undercutting  calculations  were  double-counted.  In  view  of  this,  the  double-
counted transactions had to be eliminated and the undercutting calculations had to be 
modified  accordingly.  However,  this  double-counting  had  not  taken  place  when 
establishing the figures used for assessing the injury indicators. Therefore, the injury 
indicators did not need to be modified.  

(17)  As  a  result,  the  comparison  showed  that  during  the  IP  the  prices  of  the  product 
concerned  originating  in  India  and  sold  in  the  Community  undercut  the  Community 
industry’s prices by between 3% and 11%. 

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(18) 

In  the  absence  of  any  substantially  new  information  or  argument  in  this  particular 
respect, recitals (36) to (72) of the provisional Regulation are hereby confirmed, with 
the exception of recital (42) (see recitals (15) to (17) above). 

G. 

CAUSATION 

1.  Return  to  normal  competition  conditions  after  the  dismantling  of  the 

cartel 

(19)  The Indian exporters re-iterated their argument that the establishment of a causal link 
between the dumped imports and the injury felt by the Community industry is based 
on  data  which  would  be  unreliable  because  of  the  existence  of  a  cartel  up  until  the 
beginning  of  1998.  However,  the  Indian  exporters  did  not  provide  any  new 
information within the deadline set for submitting comments in this particular respect.  

2. 

Imports from other third countries 

(20)  Several  interested  parties  submitted  that  the  Commission  should  have  initiated  this 
proceeding  also  against  imports  of  the  like  product  from  Japan.  At  the  time  of  the 
initiation of the current proceeding, the Commission did not have sufficient evidence 
regarding  injurious  dumping  that  would  have  justified  the  initiation  of  a  proceeding 
against imports originating in Japan in line with the requirements of Article 5 of the 
basic Regulation. The information provided by certain parties after the initiation does 
not  constitute  such  sufficient  evidence,  whether  taken  into  account  separately  or 
together  with  other  information  available  to  the  Commission  at  the  time  of  the 
investigation, as no evidence of injurious dumping emanates therefrom. For example, 
the  evidence  provided  by  the  above-referred  parties  contained  only  information  on 
average  domestic  and  export  prices  for  Japanese  graphite  electrodes,  without  any 
indication as to whether these graphite electrodes actually met the parameters defining 
the  product  concerned,  as  set  in  recital  (13)  of  the  provisional  Regulation.  In  any 
event, the fact that imports originating in Japan are not subject to the proceeding does 
not in any way alter the conclusions of the investigation regarding the existence of a 
causal link.  

(21) 

In the absence of any substantially new information or argument, recitals (73) to (93) 
of the provisional Regulation are hereby confirmed. 

H. 

COMMUNITY INTEREST 

(22)  An  association  representing  users  and  a  user  company  reiterated  their  main  concern 
that, by excluding Indian suppliers from the Community market, the imposition of any 
measure  would  reduce  overall  competition  on  the  Community  market  for  this 
particular  product  and  inevitably  lead  to  an  increase  in  prices.  However,  as  assessed 
under  recital  (103)  of  the  provisional  Regulation,  the  impact  of  any  increase  in  the 
price  of  the  like  product  for  final  customers  is  likely  to  be  minimal.  It  is  further 
recalled that the purpose of any anti-dumping measure is by no means to stop access 
into the Community of products from India, but rather to restore a level playing field 
that had been distorted by unfair trade practices. Finally, it is considered that the level 
of  the  measures  is  not  such  as  to  exclude the Indian producers from the Community 
market. 

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(23) 

In  the  absence  of  any  substantially  new  information  or  argument  in  this  particular 
respect, recitals (94) to (107) of the provisional Regulation are hereby confirmed. 

I. 

INJURY ELIMINATION LEVEL 

(24)  Further to disclosure of provisional findings, several interested parties claimed that the 
profit  level  of  9,4%  deemed  to  represent  the  financial  situation  of  the  Community 
industry in the absence of injurious dumping from India was too high. It was alleged 
that the normal practice was to set a 5% profit ratio for commodity goods sectors such 
as  steel,  textiles  and  base  chemicals.  The  same  parties  further  claimed  that  the 
methodology to arrive to this figure should be fully disclosed.  

(25)  As explained under recital (110) of the provisional Regulation, the profit of 9,4% was 
the result of a reasoned assessment established on the basis of a number of elements, 
amongst which (i) the profit achieved by the Community industry in 1999, when the 
market share of the dumped imports was at its lowest; (ii) the market conditions at that 
time; and (iii) the output drawn from a database on company accounts. As regards this 
database,  it  consists  of  company  accounts  data,  which  are  first  collected  by  national 
central banks of the largest industrialised countries, i.e. most of the member countries 
of  the  European  Union,  the  USA  and  Japan,  and  then  aggregated,  by  sectors,  by  the 
European  Committee  of  Central  Balance  Sheet  Data  Offices  and  the  European 
Commission.  The  database  has  been  updated  between  provisional  and  definitive 
determination. An analysis of the updated data referring to the EU member countries, 
plus the USA and Japan shows that the average profit before extraordinary items for 
companies  belonging  to  the  nearest  available  business  sector  was  of  7,5%  in  2002, 
which is the last year available in the database. 

(26)  However,  it  is  further  considered  that,  when  setting  the  profit  that  could  have  been 
achieved in the absence of dumping, due consideration has to be paid to all qualitative 
and quantitative elements relevant for this purpose. In particular, as this has been done 
under recital (110) of the provisional Regulation, a proper examination was made of 
Community industry’s profit levels when the market share of dumped imports was at 
its lowest (i.e. 1999), and of any other causes and circumstances that might affect the 
representativity  of  the  latter  period.  Finally,  it  is  noted  that  the  product  concerned  is 
used in demanding applications and has to match strictly certain parameters, notably in 
terms  of  electrical  resistance.  This  entails  both  a  highly  capital 
intensive 
manufacturing  process  and  a  not  negligible  amount  of  Research  and  Development 
costs.  The  fact  that  only  a  limited  number  of  producers  in  the  world  master  this 
technology is a further indication that this product can certainly not be considered as a 
basic commodity.  

(27)  Taking all these circumstances and elements into account, it is definitively concluded 
that  the  profit  margin  that  can  reasonably  be  deemed  to  represent  the  financial 
situation of the Community industry in the  absence of  injurious  dumping from India 
should be set at 8% for the purpose of the calculation of the injury margin. 

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(28)  As  a  consequence  of  the  above,  of  the  findings  regarding  undercutting  (see  recitals 
(15) to (17) above), and due account being taken of the revision of the exchange rates 
(see recital (11) above), injury margins were revised as follows. 

Graphite India Limited (GIL) 

Hindustan Electro Graphite (HEG) Limited 

15,7% 

7,0% 

J. 

DEFINITIVE MEASURES 

(29) 

In  view  of  the  conclusions  reached  with  regard  to  dumping,  injury,  causation  and 
Community  interest,  and  in  accordance  with  Article  9(4)  of  the  basic  Regulation,  a 
definitive  anti-dumping  duty  should  be  imposed  at  the  level  of  the  dumping  margin 
found, but should not be higher than the injury margin calculated above. 

(30)  The  correction  made  to  the  dumping  and  injury  margins  had  no  effect  on  the 
application  of  the  lesser  duty  rule.  Therefore,  the  methodology  used  for  establishing 
the  anti-dumping  duty  rates,  taking  into  account  the  parallel  imposition  of 
countervailing  duties  on  imports  of  the  same  product  from  India,  as  described  in 
recitals  (114)  and  (115)  of  the  provisional  Regulation  is  hereby  confirmed.  The 
definitive duties will therefore be as follows: 

Company 

Injury 
elimination 
margin 

Dumping 
margin 

Countervailing 
duty 

Proposed 
anti-dumping 
duty 

Graphite  India  Limited 
(GIL) 

15,7% 

31,1% 

15,7% 

Electro 
(HEG) 

7,0% 

22,4% 

7,0% 

0% 

0% 

Hindustan 
Graphite 
Limited  

All others 

15,7% 

31,1% 

15,7% 

0% 

K. 

DEFINITIVE COLLECTION OF THE PROVISIONAL DUTY 

(31) 

In view of the magnitude of the dumping margins found for the exporting producers in 
India  and  given  the  level  of  the  injury  caused  to  the  Community  industry,  it  is 
considered  necessary  that  the  amounts  secured  by  way  of  provisional  anti-dumping 
duty  imposed  by  the  provisional  Regulation  should  be  definitively  collected  to  the 
extent  of  the  amount  of  definitive  duties imposed.  As  the  definitive  duties  are  lower 
than the provisional duties, amounts provisionally secured in excess of the definitive 
rate of anti-dumping duties shall be released. 

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(32)  The  individual  company  anti-dumping  duty  rates  specified  in  this  Regulation  were 
established  on  the  basis  of  the  findings  of  the  present  investigation.  Therefore,  they 
reflect  the  situation  found  during  that  investigation  with  respect  to  these  companies. 
These  duty  rates  (as  opposed  to  the  country-wide  duty  applicable  to  ‘all  others’)  are 
thus exclusively applicable to imports of products originating in the country concerned 
and  produced  by  the  companies  and  thus  by  the  specific  legal  entities  mentioned. 
Imported products produced by any other company not specifically mentioned in the 
operative part of this Regulation with its name and address, including entities related 
to those specifically mentioned, cannot benefit from these rates and shall be subject to 
the duty rate applicable to ‘all others’. 

(33)  Any claim requesting the application of these individual company anti-dumping duty 
rates (e.g. following a change in the name of the entity or following the setting up of 
new  production  or  sales  entities)  should  be  addressed  to  the  Commission  forthwith 
with all relevant information, in particular any modification in the company's activities 
linked  to  production,  domestic  sales  and  export  sales  associated  with  e.g.  that  name 
change  or  that  change  in  the  production  and  sales  entities.  If  appropriate,  the 
Regulation will accordingly be amended by updating the list of companies benefiting 
from individual duties, 

HAS ADOPTED THIS REGULATION: 

Article 1 

1. 

2. 

A definitive anti-dumping duty is hereby imposed on imports of graphite electrodes 
of a kind used for electric furnaces, with an apparent density of 1,65 g/cm³ or more 
and  an  electrical  resistance  of  6.0  µΩ.m  or  less,  falling  within  CN  code 
ex  8545  11  00  (TARIC  code  8545  11  00  10)  and  nipples  used  for  such electrodes, 
falling  within  CN  code  ex  8545  90  90  (TARIC  code  8545  90  90  10)  whether 
imported together or separately originating in India. 

The rate of the definitive anti-dumping duty applicable to the net free-at-Community-
frontier price, before duty, for products produced by the companies listed below shall 
be as follows:  

Company 

Definitive duty 

TARIC additional code 

India  Limited 

Graphite 
(GIL),  31 
Chowringhee Road, Kolkatta – 700016, 
West Bengal 

Hindustan  Electro  Graphite 
(HEG) 
Limited,  Bhilwara  Towers,  A-12, 
Sector-1,  Noida  –  201301,  Uttar 
Pradesh 

All others 

0% 

0% 

0% 

A530 

A531 

A999 

3. 

Unless  otherwise  specified,  the  provisions  in  force  concerning  customs  duties  shall 
apply. 

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Article 2 

1. 

The  amounts  secured  by  way  of  provisional  anti-dumping  duties  pursuant  to 
Commission  Regulation  (EC)  No  1009/2004  on  imports  of  graphite  electrodes  of  a 
kind used for electric furnaces, with an apparent density of 1,65 g/cm³ or more and 
an  electrical  resistance  of  6.0  µΩ.m  or  less,  falling  within  CN  code  ex  8545  11  00 
(TARIC code 8545 11 00 10) and nipples used for such electrodes, falling within CN 
code  ex  8545  90  90  (TARIC  code  8545  90  90  10)  whether  imported  together  or 
separately originating in India shall be definitively collected as follows. 

The amounts secured in excess of the definitive rate of anti-dumping duties shall be 
released.  

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

Article 3 

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

Done at Brussels, […] 

For the Council 
The President 

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