Proposal for a Council Regulation amending Regulation (EC) No 1338/2002 imposing a definitive countervailing duty on imports of sulphanilic acid originating in India and amending Regulation (EC) No 1339/2002 imposing a definitive anti-dumping duty on imports of sulphanilic acid originating, inter alia, in India
Date: 2005-12-07
Institutions: European Commission
Subjects: India, anti-dumping duty, chemical product, countervailing charge, import, originating product

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 7.12.2005 
COM(2005)619 final 

. 

Proposal for a 

COUNCIL REGULATION 

amending Regulation (EC) No 1338/2002 imposing a definitive countervailing duty 
on imports of sulphanilic acid originating in India and amending Regulation (EC) 
No 1339/2002 imposing a definitive anti-dumping duty on imports of sulphanilic acid 
originating, inter alia, in India  

. 

(presented by the Commission) 

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EXPLANATORY MEMORANDUM 

CONTEXT OF THE PROPOSAL 

Grounds for and objectives of the proposal 

This  proposal  concerns  the  application  of  Council  Regulation  EC)  No  384/96  of  22 
December 1995 on protection against dumped imports from countries not members of 
the European Community (the basic anti-dumping Regulation) and Council Regulation 
(EC)  No  2026/97  of  6  October  1997  on  protection  against  subsidised  imports  from 
countries  not  members  of  the  European  Community,  as  last  amended  by  Council 
Regulation (EC) No 461/2004 of 8 March 2004 (‘the basic anti-subsidy Regulation’) in 
the proceeding concerning imports of sulphanilic acid originating in India. 

General context 

This  proposal  is  made  in  the  context  of  the  implementation  of  both,  the  basic  anti-
dumping  Regulation  and  the  basic  anti-subsidy  Regulation  and  is  the  result  of  an 
investigation  which  was  carried  out  in  line  with  the  substantive  and  procedural 
requirements laid out in these Regulations. 

Existing provisions in the area of the proposal 

(1) 

(2) 

(3) 

(4) 

Council  Regulation  (EC)  No  1339/2002  imposing  a  definitive  anti-dumping 
duty  on  imports  of  sulphanilic  acid  originating  in  India  and  the  People’s 
Republic of China (the PRC). 

Council  Regulation  (EC)  No  1338/2002  imposing  a  definitive  countervailing 
duty on imports of sulphanilic acid originating in India.  

Commission  Decision  2002/611/EC  accepting  the  undertaking  offered  by 
Kokan  Synthetics  &  Chemicals  Pvt  Ltd.  in  connection  with  the  anti-dumping 
and countervailing measures.  

Commission  Decision  2004/255/EC  repealing  the  undertaking  offered  by 
Kokan Synthetics & Chemicals Pvt Ltd. 

Council  Regulation  (EC)  No  236/2004,  concluding  an  anti-absorption  investigation 
pursuant to Article 12 of the basic anti-dumping Regulation and increasing the rate of 
definitive anti-dumping duty concerning imports originating in the PRC. 

Consistency with other policies and objectives of the Union 

Not applicable. 

CONSULTATION OF INTERESTED PARTIES AND IMPACT ASSESSMENT 

Consultation of interested parties 

Interested  parties  concerned  by  the  proceeding  have  already  had  the  possibility  to 
defend their interests during the investigation, in line with the provisions of the basic 

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Regulations. 

Collection and use of expertise 

There was no need for external expertise. 

Impact assessment 

This  proposal  is  the  result  of  the  implementation  of  the  basic  anti-dumping  and  the 
basic anti-subsidy Regulation. 

Both Regulations do not foresee a general impact assessment but contain an exhaustive 
list of conditions that have to be assessed. 

LEGAL ELEMENTS OF THE PROPOSAL 

Summary of the proposed action 

1. 

2. 

3. 

In  April  2005,  following  a  request  lodged  by  Kokan  Synthetics,  the 
Commission  initiated  a  partial  interim  review  of  the  measures  pursuant  to 
Article 11 (3) of the basic antidumping Regulation and Article 19 of the basic 
anti-subsidy  Regulation  respectively,  limited  in  scope  to  the  examination  of 
the acceptability of an undertaking to be offered by Kokan Synthetics.  

The  Commission  had  already  accepted  an  undertaking  from  the  applicant 
when definitive anti-dumping and countervailing duties were imposed, which 
was  withdrawn  by  the  applicant  at  a  later  stage  in  March  2004.  The 
investigation  showed  no  compelling  reasons  not  to  re-accept  an  undertaking 
from the applicant.  

In view of this, it is necessary to amend Regulations (EC) No 1338/2002 and 
No 1339/2002 in order to exempt the company from the payment of the anti-
dumping and countervailing duty. 

It is therefore proposed that the Council adopts the attached proposal for a Regulation 
which  should  be  published  in  the  Official  Journal  of  the  European  Union  as  soon  as 
possible.  

Legal basis 

Council  Regulation  (EC)  No  384/96  of  22  December  1995  on  protection  against 
dumped  imports  from  countries  not  members  of  the  European  Community,  as  last 
amended by Council Regulation (EC) No 461/2004 of 8 March 2004. 

Council  Regulation  (EC)  No  2026/97  of  6  October  1997  on  protection  against 
subsidised  imports  from  countries  not  members  of  the  European  Community,  as  last 
amended by Council Regulation (EC) No 461/2004 of 8 March 2004. 

Subsidiarity principle 

The proposal falls under the exclusive competence of the Community. The subsidiarity 

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principle therefore does not apply. 

Proportionality principle 

The proposal complies with the proportionality principle for the following reasons: 

The form of action is described in the above-mentioned basic Regulations and leaves 
no scope for national decision. 

Indication  of  how  financial  and  administrative  burden  falling  upon  the  Community, 
national governments, regional and local authorities, economic operators and citizens is 
minimized and proportionate to the objective of the proposal is not applicable. 

Choice of instruments 

Proposed instruments: regulation. 

Other  means  would  not  be  adequate  because  the  basic  Regulations  do  not  foresee 
alternative options. 

BUDGETARY IMPLICATION 

The proposal has no implication for the Community budget. 

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Proposal for a 

COUNCIL REGULATION 

amending Regulation (EC) No 1338/2002 imposing a definitive countervailing duty 
on imports of sulphanilic acid originating in India and amending Regulation (EC) 
No 1339/2002 imposing a definitive anti-dumping duty on imports of sulphanilic acid 
originating, inter alia, 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 
anti-dumping Regulation’), and in particular Articles 8 and 11(3) thereof, 

Having  regard  to  Council  Regulation  (EC)  No  2026/97  of  6  October  1997  on  protection 
against  subsidised  imports  from  countries  not  members  of  the  European  Community2  (‘the 
basic anti-subsidy Regulation’), and in particular Articles 13 and 19 thereof, 

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

Whereas: 

A.  

PROCEDURE 

1.  

(1) 

1 

2 

3  

4 

Previous investigations and existing measures 

In  July  2002,  the  Council,  by  Regulation  (EC)  No  1338/20023  imposed  definitive 
countervailing duties on imports of sulphanilic acid originating in India. On the same 
day,  the  Council,  by  Regulation  (EC)  No  1339/20024,  imposed  definitive  anti-
dumping duties on imports of sulphanilic acid originating in the People’s Republic of 
China and India (‘the measures’).  

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). 
OJ  L  288,  21.10.1997,  p.  1.  Regulation  as  last  amended  by  Regulation  (EC)  No  461/2004 
(OJ L 77, 13.3.2004, p. 12). 
OJ  L  196,  25.7.2002,  p.  1.  Regulation  last  amended  by  Council  Regulation  (EC)  No  492/2004 
(OJ L 80, 18.3.2004, p. 6). 
OJ  L  196,  25.7.2002,  p.  11.  Regulation  as  last  amended  by  Council  Regulation  (EC)  No  492/2004 
(OJ L 80, 18.3.2004, p. 6). 

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(2)  Within 

the  framework  of 

the  Commission,  by  Decision 
2002/611/EC5 accepted a price undertaking offered by the Indian company, i.e. Kokan 
Synthetics & Chemicals Pvt Ltd. ( ‘the company’). 

these  proceedings, 

(3) 

(4) 

(5) 

2.  

(6) 

(7) 

(8) 

(9) 

In June 2003, the Commission initiated an anti-absorption reinvestigation pursuant to 
Article  12  of  the  basic  anti-dumping  Regulation,  concerning  imports  of  sulphanilic 
acid originating in the People’s Republic of China (‘PRC’).6 

In December 2003, the company informed the Commission that it wished to withdraw 
its  undertaking  voluntarily.  Accordingly,  the  Commission  Decision  accepting  the 
undertaking was repealed by Commission Decision 2004/255/EC.7 

In  February  2004,  an  anti-absorption  investigation  concerning  imports  of  the 
sulphanilic  acid  originating  in  the  PRC  has  been  concluded  by  Council  Regulation 
(EC) No 236/2004,8 which increased the rate of the definitive anti-dumping duty for 
the PRC from 21% to 33,7% (‘the anti-absorption investigation’). 

Request for an interim review 

In December 2004, after conclusion of the anti-absorption investigation, the company 
lodged a request for a partial interim review pursuant to Article 11(3) of the basic anti-
dumping Regulation and Article 19 of the basic anti-subsidy Regulation respectively, 
limited  in  scope  to  the  examination  of  the  acceptability  of  the  reinstatement  of  its 
undertaking.  

The company argued that its original wish to withdraw the undertaking followed from 
the fact that after imposition of measures in 2002, Chinese exporters absorbed the anti-
dumping  duties  imposed,  which  resulted  in  a  price  depression  and  made  the 
undertaking unworkable. The company also referred to the fact that as a result of the 
conclusion  of  the  absorption  review,  the  duty  level  on  imports  from  the  PRC  was 
increased, which had allowed market prices to rise. Therefore, the company informed 
the  Commission  that  it  was  prepared  to  offer  its  undertaking  again  under  the  former 
terms  and  conditions,  which  were  considered  appropriate  to  eliminate  the  relevant 
injurious effects of dumping and subsidisation. 

The company provided sufficient prima facie evidence that no structural changes had 
occurred in the company since the previous findings that may have an impact on the 
acceptability and enforceability of an undertaking.  

In April 2005, pursuant to a notice published in the Official Journal of the European 
Union9,  the  Commission  initiated  a  partial  interim  review  of  the  anti-dumping  and 
countervailing measures applicable to imports of sulphanilic acid originating in India, 
limited in scope to the examination of the acceptability of an undertaking to be offered 
by the company.  

5 
6 
7 
8 
9 

OJ L 196, 25.7.2002, p. 36. 
OJ C 149, 26.6.2003, p. 14. 
OJ L 80, 18.3.2004, p. 29. 
OJ L 40, 12.2.2004, p. 17. 
OJ C 101, 27.4.2005, p. 34. 

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3.  

Procedure 

(10)  The  Commission  officially  advised  the  representatives  of  the  exporting  country,  the 
applicant  and  the  Community  industry  of  the  initiation  of  the  partial  interim  review 
and gave all parties directly concerned the opportunity to make their views known in 
writing and to request a hearing.  

(11)  The company re-offered formally its original undertaking. 

(12)  The Commission sought and verified all the information it deemed necessary for the 

purpose of examining the re-acceptability of this undertaking.  

B.  

FINDINGS OF THE INVESTIGATION 

(13)  The investigation has shown that no structural changes occurred in the company since 
the  original  investigation  that  may  have  a  negative  impact  on  the  acceptability  and 
workability of an undertaking. Furthermore, experience gained during the application 
of  the  original  undertaking  has  shown  that  the  company  respected  the  terms  of  the 
undertaking  and  that  the  undertaking  could  effectively  be  monitored  by  the 
Commission.  

(14)  Nonetheless, it should be noted that significant differences were observed in the price 
of key ingredients in the production of sulphanilic acid since the original investigation, 
in  particular  aniline,  and  its  key  feedstock,  benzene.  In  view  of  the  above,  the 
applicant agreed to index the minimum price originally offered in order to address the 
cyclical nature of sulphanilic acid prices in a way which reasonably eliminates the risk 
of  injurious  dumping.  In  view  of  the  fact  that  a  publicly  available  and  independent 
database providing reliable international price data does exist for benzene but not for 
aniline and given further the strong correlation between the price of benzene and the 
price of aniline, the indexation was based on the price of benzene.  

(15)  The Community industry argued that the applicant should not be allowed to choose the 
form of the measures and in particular to respect a minimum import price only when 
the  prevailing  market  prices  suit  the  company.  Indeed,  a  company  should  not  be 
allowed  to  have  the  form  of  the  measures  changed  based  on  the  evolution  of  the 
market. However, due account should be taken of the exceptional circumstances of the 
case. In this regard, it should be noted that the anti-absorption investigation revealed 
that  the  decrease  in  market  prices  at  the  time  the  company  voluntarily  withdrew  its 
undertaking was prompted by the absorption  of the anti-dumping duty on imports of 
sulphanilic  acid  originating  in  the  PRC.  Therefore,  and  in  view  of  the  changed 
circumstances  resulting  from  the  outcome  of  the  anti-absorption  investigation,  the 
company’s wish to reinstall its undertaking is considered appropriate.  

(16)  The  Community  industry  further  claimed  that  the  undertaking  offer  should  only  be 
accepted  following  a  full  interim  review,  since  the  market  evolution  which  might 
justify  a  new  undertaking  might  justify  as  well  a  review  of  the  company’s  dumping 
margin.  In  this  regard,  it  should  be  noted  that  the  current  investigation  is  limited  in 
scope  to  the  examination  of  acceptability  of  an  undertaking  to  be  offered  by  the 
company  and  that  no  request  for  an  interim  review  with  a  different  scope  has  been 
received. Therefore, the claim had to be rejected.  

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(17)  A  user  requested  to  lower  the  anti-dumping  duty  or,  alternatively,  to  address  the 
limited  availability  of  purified  sulphanilic  acid  on  the  Community  market  by 
introducing a system of quotas. Here again, in view of the limited scope of the current 
investigation, the claim had to be rejected. 

C.  

UNDERTAKING 

(18) 

In  view  of  the  above,  the  undertaking  was  accepted  by  the  Commission  in  Decision 
[INSERT NUMBER].  

(19)  To  further  enable  the  Commission  to  effectively  monitor  the  compliance  of  the 
company  with  the  undertaking,  when  the  request  for  release  for  free  circulation  is 
presented  to  the  relevant  customs  authority,  exemption  from  the  duties  will  be 
conditional  upon  the  presentation  of  a  commercial  invoice  containing  at  least  the 
elements  listed  in  the  Annex.  This  level  of  information  is  also  necessary  to  enable 
customs authorities to ascertain with sufficient precision that shipments correspond to 
the commercial documents. Where no such invoice is presented, or when it does not 
correspond to the product presented to customs, the appropriate rate of anti-dumping 
and countervailing duty will instead be payable. 

(20)  To  further  ensure  the  effective  respect  of  the  undertaking,  the  importers  should  be 
made  aware  that  any  violation  of  the  undertaking  may  lead  to  the  retrospective 
application of the anti-dumping and countervailing duty for the relevant transactions. 
Therefore, it is necessary to implement legal provisions providing for the incurrence of 
a  customs  debt  at  the  level  of  the  appropriate  anti-dumping  and  countervailing  duty 
whenever one or more conditions for the exemption are not respected. A customs debt 
should  therefore  be  incurred  whenever  the  declarant  has  chosen  to  release  the  goods 
for  free  circulation,  i.e.  without  collection  of  anti-dumping  and  countervailing  duty, 
and one or several conditions of that undertaking are found to have been violated. 

(21) 

(22) 

In the event of a breach, the anti-dumping and countervailing duty may be recovered, 
provided  that  the  Commission  has  withdrawn  the  acceptance  of  the  undertaking  in 
accordance with Article 8(9) of the basic anti-dumping Regulation or Article 13(9) of 
the  basic  anti-subsidy  Regulation,  by  referring  to  that  particular  transaction  and, 
accordingly,  by  declaring  the  relevant  undertaking  invoice  as  invalid.  Therefore, 
pursuant to Article 14(7) of the basic anti-dumping Regulation and Article 24(7) of the 
basic  anti-subsidy  Regulation,  customs  authorities  should  inform  the  Commission 
immediately whenever indications of a violation of the undertaking are found. 

It should be noted that in the event of a breach or withdrawal of the undertaking, or in 
case  of  withdrawal  of  acceptance  of  the  undertaking  by  the  Commission,  the  anti-
dumping and countervailing duty imposed in accordance with Article 9(4) of the basic 
anti-dumping Regulation and Article 15(1) of the basic anti-subsidy Regulation shall 
automatically apply pursuant to Article 8(9) of the basic anti-dumping Regulation and 
Article 13(9) of the basic anti-subsidy Regulation. 

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HAS ADOPTED THIS REGULATION: 

Article 1 

1. 

“3. 

2. 

The  following  Article  1(3)  shall  be  inserted  both  in  Council  Regulation  (EC) 
No 1338/2002 and in Council Regulation (EC) No 1339/2002: 

Notwithstanding paragraph 1, the definitive duty shall not apply to imports released 
for free circulation in accordance with Article 2.” 

The following Article 2 shall be inserted both in Regulation (EC) No 1338/2002 and 
in Regulation (EC) No 1339/2002: 

«Article 2 

1. 

Imports  declared  for  release  into  free  circulation  which  are  invoiced  by 
companies  from  which  undertakings  are  accepted  by  the  Commission  and 
whose  names  are  listed  in  Commission  Decision  [INSERT  NUMBER],  as 
from time to time amended shall be exempt from the duties imposed by Article 
1, on condition that: 

– 

– 

– 

they  are  manufactured,  shipped  and  invoiced  directly  by  the  said 
companies to the first independent customer in the Community; and  

such  imports  are  accompanied  by  a  valid  undertaking  invoice.  An 
undertaking  invoice  is  a  commercial  invoice  containing  at  least  the 
elements and the declaration stipulated in the Annex; and 

the goods declared and presented to customs correspond precisely to the 
description on the undertaking invoice. 

2. 

3. 

A customs debt shall be incurred at the time of acceptance of the declaration 
for release into free circulation whenever it is established, in respect of goods 
described  in  Article  1  and  exempted  from  the  duties  under  the  conditions 
listed in paragraph (1), that one or more of such conditions are not fulfilled. 
The  second  condition  set  out  in  paragraph  (1)  shall  be  considered  as  not 
being fulfilled where the undertaking invoice is found not to comply with the 
provisions of Annex 1 or found not to be authentic or where the Commission 
has withdrawn the acceptance of the undertaking pursuant to Article 8(9) of 
the basic anti-dumping Regulation or Article 13(9) of the basic anti-subsidy 
Regulation  in  a  Regulation  or  Decision  which  refers  to  (a)  particular 
transaction(s) and declares the relevant undertaking invoice(s) as invalid. 

Importers shall accept as a normal trade risk, that the non-fulfilment, by any 
party,  of  one  or  more  of  the  conditions  listed  in  paragraph  1  and  further 
defined  in  paragraph  2  may  give  rise  to  a  customs  debt  incurred  under 
Article  201  of  Council  Regulation  (EEC)  No  2913/92.  The  customs  debt 
incurred  shall  be  recovered  upon  withdrawal  by  the  Commission  of  the 
acceptance of the undertaking.» 

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3. 

The  Annex  of  this  Regulation  shall  be  inserted  both  in  Regulation  (EC) 
No 1338/2002 and in Regulation (EC) No 1339/2002. 

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

Article 2 

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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The  following  elements  shall  be  indicated  in  the  commercial  invoice  accompanying  the 
company’s sales of sulphanilic acid to the Community which are subject to an Undertaking: 

ANNEX 

1. 

2. 

3. 

4. 

5. 

6. 

The  heading  ‘COMMERCIAL  INVOICE  ACCOMPANYING  GOODS  SUBJECT 
TO AN UNDERTAKING’. 

The  name  of  the  company  mentioned  in  Article  1  of  the  Commission  Decision 
accepting the undertaking [INSERT NUMBER] issuing the commercial invoice. 

The commercial invoice number. 

The date of issue of the commercial invoice. 

The TARIC additional code under which the goods on the invoice are to be customs 
cleared at the Community frontier. 

The exact description of the goods, including: 

– 

– 

– 

– 

– 

Product code number (PCN) used for the purposes of the investigation and the
 undertaking (e.g. ‘PA99’, ‘PS85’ or ‘TA98’), 

the  technical/physical  specifications  of  the  PCN,  i.e.  for  ‘PA99’  and  ‘PS85’ 
white free flowing powder, and for ‘TA98’ grey free-flowing powder.  

company product code (CPC) (if applicable), 

CN code, 

quantity (to be given in tonnes)  

7. 

The description of the terms of the sale, including: 

– 

– 

– 

– 

price per tonne  

the applicable payment terms, 

the applicable delivery terms, 

total discounts and rebates. 

8. 

Name  of  the  company  acting  as  an  importer  in  the  Community  to  which  the 
commercial invoice accompanying goods subject to an undertaking is issued directly 
by the company. 

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9. 

The name of the official of the company that has issued the invoice and the following 
signed declaration: 

‘I, the undersigned, certify that the sale for direct export to the European Community 
of the goods covered  by  this  invoice is being made within the scope  and under the 
terms  of  the  undertaking  offered  by  [COMPANY],  and  accepted  by  the  European 
Commission  through  Decision  [INSERT  NUMBER].  I  declare  that  the  information 
provided in this invoice is complete and correct.’ 

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