2006/38/EC: Commission Decision of  22 December 2005  amending Commission Decision 1999/572/EC accepting undertakings offered in connection with the anti-dumping proceedings concerning imports of steel wire ropes and cables originating,  inter alia , in India
Date: 2005-12-22
Institutions: European Commission
Subjects: India, anti-dumping legislation, import, originating product, section

L 22/54

EN

Official Journal of the European Union

26.1.2006

COMMISSION DECISION

of 22 December 2005

amending Commission Decision 1999/572/EC accepting undertakings offered in connection with
the anti-dumping proceedings concerning imports of steel wire ropes and cables originating, inter
alia, in India

(2006/38/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

(4)

Having regard to the Treaty
Community,

establishing the European

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)
(the
basic Regulation), and in particular Articles 8 and 9 thereof,

After consulting the Advisory Committee,

Whereas:

(1)

(2)

(3)

A. PREVIOUS PROCEDURE

In August 1999, by Regulation (EC) No 1796/1999 (2),
the Council imposed a definitive anti-dumping duty on
imports of steel ropes and cables (the product concerned)
originating, inter alia, in India.

By Decision 1999/572/EC (3), the Commission accepted a
price undertaking from an Indian company,
i.e. Usha
Martin Industries & Usha Beltron Ltd. This company
has changed its name in the meantime and is now
known as Usha Martin Ltd (UML). The change of name
in no way affected the activities of the company.

As a result, imports into the Community of the product
concerned of Indian origin, produced by UML or by any
other related company worldwide, and of a type covered
by the undertaking (the product covered by the under-
taking), were exempted from the definitive anti-dumping
duties.

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

(EC) No 2117/2005 (OJ L 340, 23.12.2005, p. 17).

(2) OJ L 217, 17.8.1999, p. 1. Regulation as amended by Regulation

(EC) No 1674/2003 (OJ L 238, 25.9.2003, p. 1).

(3) OJ L 217, 17.8.1999, p. 63. Decision as last amended by Regulation

(EC) No 1678/2003 (OJ L 238, 25.9.2003, p. 13).

In this regard, it should be noted that certain types of
steel wire rope currently produced by UML were not
exported to the Community during the investigation
period which led to the imposition of definitive anti-
dumping measures and were not, therefore, within the
scope of
the exemption afforded by the undertaking.
Accordingly, such steel wire ropes were liable to the
payment of
the anti-dumping duty when entered for
free circulation in the Community.

In November 2005, following an expiry review pursuant
to Article 11(2) of the basic Regulation, the Council, by
Regulation (EC) No 121/2006 (4) decided that the anti-
dumping measures applicable to imports of the product
concerned originating, inter alia, in India should be main-
tained.

B. BREACHES OF THE UNDERTAKING

1. Obligations of companies with undertakings

to,

inter alia, export

(and any
The undertaking offered by UML obliges it
related company worldwide)
the
product covered by the undertaking to the first inde-
pendent customer
in the Community at or above
certain minimum import price levels (MIPs) laid down
in the undertaking. These price levels eliminate the
injurious effects of dumping. In the case of resales in
the Community to the first independent customer by
the product
related importers,
appropriate
undertaking,
the
covered
adjustments for selling, general and administrative costs
and a reasonable profit, must also be at levels which
eliminate the injurious effects of dumping.

the resale prices of
after

by

The terms of the undertaking also oblige UML to provide
the Commission with regular and detailed information in
the form of a quarterly report of its sales (and resales by
its related parties in the Community) of
the product
concerned originating in India to the Community. Such
reports are intended to include the products covered by
the undertaking which benefit from the exemption to the
anti-dumping duty as well as those types of steel wire
ropes not covered by the undertaking and which are
therefore liable to the anti-dumping duty.

(5)

(6)

(7)

(4) See page 1 of this Official Journal.

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Official Journal of the European Union

L 22/55

(8)

(9)

it

assumed by the
indicated,
Unless otherwise
Commission that
the sales reports of UML (and the
reports of resales of related companies established in
the Community) are, as submitted, complete, exhaustive
and correct in all particulars.

is

It was also acknowledged by UML that, with regard to
the exemption to the anti-dumping duties afforded by
the undertaking, such exemption is conditional upon
services of an
presentation to Community customs
‘Undertaking
company
the
undertook not to issue such Undertaking Invoices for
sales of
the product concerned not
covered by the undertaking and which are therefore
liable to the anti-dumping duty.

Invoice’. Moreover,

those types of

(10)

It is also a condition of the undertaking that the terms
and provisions thereof apply to any related company to
UML, worldwide.

(11)

For the purposes of ensuring compliance with the under-
taking, UML also agreed to provide all
information
considered necessary by the Commission and to allow
on-spot verification visits at its premises, and those of
in order to verify the accuracy
any related companies,
and veracity of data submitted in the said quarterly
reports.

(12)

In this regard, verification visits were carried out at the
premises of UML in India and at
those of a related
i.e. Brunton Wolf Wire
company to UML in Dubai,
Ropes FZE (BWWR).

2. Results of the verification visit to UML

(13)

company’s

that

volumes of

the
significant

Examination of
accounting records
the product
showed
concerned not covered by the undertaking had not
been included in the quarterly undertaking sales reports
submitted to the Commission. Furthermore, the goods in
question had been sold by UML to its related importers
in the UK and Denmark and included on Undertaking
Invoices.

(15)

(16)

(17)

(18)

3. Results of the verification visit to BWWR

It should first be noted that
finished steel wire rope
produced by BWWR has previously gone through two
main production stages, namely: (i) a given number of
individual steel wires are first twisted into what is known
as a ‘stranded wire’, and (ii) a given number of such
stranded wires formed from individual steel wires are
then twisted together to form the finished steel wire
rope.

The verification at the premises of BWWR established
that significant quantities of stranded wire of
Indian
origin had been sold by UML to BWWR and that
BWWR had transformed this stranded wire into steel
wire rope,
then sold to the
Community and exported as having United Arab
Emirates (UAE) origin.

some of which was

In view of this transformation process, it was considered
necessary to examine the question of the origin of the
steel wire rope sold to the Community by BWWR.
Reference was therefore made to Article 22 of Council
Regulation (EEC) No 2913/92 of 12 October 1992
establishing the Community Customs Code (1)
(the
Community Customs Code), which provides that
the
non-preferential rules of origin apply to measures other
than
by Community
provisions governing specific fields relating to trade in
goods, such as anti-dumping measures.

tariff measures

established

regarding determination of

The provisions
the non-
preferential origin of products, the production of which
involves more than one country, are set out in Articles
24 and 25 of the Community Customs Code and Articles
35 and 39 of Commission Regulation (EEC) No
2454/93 (2) laying down the provisions for the imple-
the Community Customs Code. As
mentation of
concerns the concept of the ‘last substantial
transfor-
mation’ referred to in Article 24 of
the Community
in the case of steel wire ropes,
Customs Code,
is
considered that
this product has undergone its last
substantial processing or working when it is classified
in a four-digit Harmonised System Tariff Heading (the
four-digit Heading) distinct from the four-digit Headings
where the materials used in the manufacturing of this
product were classified.

it

(14)

It is considered that the omission of the sales in question
from the sales reports and their incorrect inclusion on
Undertaking Invoices constitute breaches of the under-
taking.

(1) OJ L 302, 19.10.1992, p. 1. Regulation as last amended by Regu-
lation (EC) No 648/2005 of the European Parliament and of the
Council (OJ L 117, 4.5.2005, p. 13).

(2) OJ L 253, 11.10.1993, p. 1. Regulation as last amended by Regu-

lation (EC) No 883/2005 (OJ L 148, 11.6.2005, p. 5).

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(19)

the transformation of
In accordance with the above,
Indian stranded wire
four-digit
Heading 73.12 into steel wire rope also falling within
four-digit Heading 73.12 does not confer UAE origin
in this case steel wire rope,
on the finished product,
but instead it keeps Indian origin.

falling within the

(20) Accordingly, steel wire rope sold by BWWR and made
from stranded wire of Indian origin is considered to be
of Indian origin and should therefore be subject to the
current anti-dumping measures applicable to imports
originating in India. Consequently,
these products are
either subject to the terms of the undertaking or liable
to anti-dumping duties when entered for free circulation
in the Community if they do not fall under any product
category covered by the undertaking.

(21)

it was found that the steel wire ropes in
Furthermore,
question, considered to be of
Indian origin, sold by
BWWR to the Community had not been reported in
UML’s or its related companies’ quarterly undertaking
sales reports to the Commission, nor had they been
declared as being of Indian origin on importation for
free circulation in the Community.
in
the absence of an Undertaking Invoice, such imports of
the product concerned into the Community from Dubai,
considered to be of Indian origin, should have been liable
to payment of anti-dumping duty when entered for free
circulation in the Community.

It follows that,

(22) Moreover, it was established that such steel wire ropes of
Indian origin produced in Dubai had been sold on the
Community market below the relevant MIPs established
in UML’s undertaking for the steel wire ropes in question.

(23) Accordingly, in view of all the above findings, UML was
informed of the essential facts and considerations on the
intended to withdraw the
basis of which it was
Commission’s acceptance of
the undertaking and to
impose a definitive anti-dumping duty in its place. A
period was granted within which representations could
be made both in writing and orally. In this regard, UML
submitted comments both in writing and verbally.

4. Submissions

(a) Breaches of reporting obligations

(24) With regard to the issue of

the product concerned
exported by UML and not reported in the quarterly
undertaking sales reports,
it was stated that although
the goods in question figured on Undertaking Invoices,
they were imported into the Community under an
inward processing scheme and were either subsequently
entered for free circulation in the Community upon
re-exported
payment of
the anti-dumping duty, or
outside the Community.
therefore,
that their omission from the undertaking sales reports
that no harm had
was simply due to clerical error,
been caused, and that no material
infringement had
occurred.

It was submitted,

(25)

(26)

the

accuracy of

In support of this argument, UML considered that the
primary aim of an undertaking is to ensure that sales are
made at levels which eliminate injury. In this respect, it
submitted that, as it had fully complied with these
the undertaking sales
conditions,
reports was of secondary importance. Similarly, as long
as products not
covered by the undertaking but
appearing on Undertaking Invoices had ultimately had
the anti-dumping duty paid or had been re-exported
outside the Community, it was considered by UML that
the substance at the heart of the undertaking had been
respected.
It was therefore the view of UML that no
change in the status quo of the Community market had
occurred due to its actions in this regard or those of its
related companies in the Community.

sales of

In response to these arguments, the Commission would
agree that the function of any undertaking is to remove
the injurious effects of dumping. However,
it does not
consider the obligation to provide accurate reports of
sales or the inclusion of goods not covered by the under-
taking on the Undertaking Invoices to be of secondary or
subordinate importance to any other provisions of an
undertaking. Only by being in possession of
the full
details of
concerned to the
the product
Community can the Commission effectively monitor an
undertaking and determine whether it is being respected
and the injurious effects of dumping removed. If sales
reports are incomplete or inaccurate, this casts doubt on
the company’s respect of the undertaking as a whole.
Compliance with
formalities must
therefore be regarded as forming part of the primary
obligations of the companies concerned,
in so far as
those formalities are not only intended to simplify
administrative procedures, but are also necessary for
the proper functioning of the undertaking system as a
whole.

reporting

the

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(27)

It follows from this that with regard to the question of
whether the status quo on the Community market has
been maintained (and,
implicitly, whether harm has
been done to the Community industry), it is considered
that breaches of reporting obligations put the efficacy of
the undertakings system into jeopardy, a system set up to
specifically defend the Community producers of steel
wire ropes from injurious dumping. The absence of
complete and reliable reports also casts doubts on
whether the substantive provisions of the undertaking
have been complied with and therefore prevents the
Commission from determining if all of the company’s
obligations have been met. Accordingly, the Commission
must consider such violations as detrimental
to the
Community producers.

of the undertaking itself, in which all the reporting obli-
gations are set out.

(32)

This approach has also been confirmed by the juris-
prudence of the Court of First Instance which has ruled
that any breach of an undertaking is sufficient to justify
the withdrawal of acceptance of an undertaking (1).

(33) Accordingly,

the arguments presented by UML with
regard to proportionality do not alter the Commission's
view that a breach of the undertaking has occurred.

(28)

In addition, under the undertaking, UML and its related
companies, worldwide, have to respect all the different
that undertaking and to take effective
provisions of
the provisions thereof were
measures to ensure that
complied with. In the present case, the internal checks
and procedures necessary to enable UML to fully meet its
obligations in accordance with the terms of the under-
taking were not present.

(29) Accordingly, the arguments presented by the company
with regard to the reporting formalities do not alter the
Commission's view that a breach of the undertaking has
occurred.

(b) Proportionality

(30)

It was also submitted that there should exist a reasonable
relationship between action taken by the Community
Institutions within the framework of the present system
of price undertakings for the product concerned origi-
nating in India and the intended aims of the measures
(i.e. proportionality).

(c) Developing country

(34) UML also argued that as it is an exporting producer
situated in India, a developing country as defined by
in accordance with Article 15 of the WTO
the WTO,
‘special
Anti-Dumping Agreement,
should be
given to it and, because of
the Commission
should not withdraw acceptance of the undertaking as
this was a ‘first minor issue of non-compliance’.

regard’

this,

concerned in the world.
competence of

(35) With regard to the issue of whether UML being situated
in a developing country is a ground for not withdrawing
acceptance of its undertaking, it should be recalled that
UML is the mother company of a multi-national group
of companies and one of the largest producers of the
the
product
apparent
and the
structure of the UML group seen by the Commission
it cannot be accepted that
during its verification visits,
complying with a reporting requirement would create
any difficulties
a
company offers an undertaking, it has to ensure that it
is subsequently able to comply with the obligations
the
arising from the undertaking. The arguments of
company on this point are therefore rejected.

company. Moreover,

the management

In view of

the

for

if

(d) Non-preferential origin for import purposes

(31) As concerns the issue of proportionality, it should first
be pointed out that in accordance with Article 8(7) of the
basic Regulation, failure to comply with the obligation to
provide relevant information (e.g. non-compliance with
any of the reporting requirements) shall be construed as a
in accordance
breach of the undertaking. Furthermore,
with Article 8(9) of the basic Regulation, a definitive
duty shall be imposed in case of a breach of the under-
taking. It is considered that these Articles underline the
‘stand alone’ importance of the reporting obligation. This
is further emphasised by the clear and precise language

(36) As concerns the question of the origin of the steel wire
ropes exported to the Community from Dubai, made
from stranded wire of Indian origin,
it was submitted
by UML that
in question did not keep
Indian origin at the final processing stage (i.e. twisting
and finishing of stranded wire into steel wire rope) but,
instead, UAE origin was conferred on the goods by virtue
of these final processes.

the goods

(1) Case T-51/96 Miwon Co. Ltd v Council

[2000] ECR II-1841,

paragraph 52.

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(37)

regard,

it was

argued by UML that

the
In this
Commission was wrong to rely on a change in the
four-digit Heading as being the only determinant factor
for non-preferential origin. It was further submitted by
the
UML that, according to Articles 24 and 25 of
Community Customs Code, a change in the four-digit
Heading is only one factor taken into account and is
not necessarily conclusive as local value addition to
imported inputs is another vital issue. In this regard, it
was submitted that the local value addition in Dubai was
in excess of 25 %. Furthermore, UML also contended that
determining origin of goods by reference to changes (or
to the four-digit Heading was the Community’s
not)
negotiating position in ongoing WTO rules of origin
negotiations and was ‘… not adopted Community law’.

(38)

It was also stated by UML that it was not aware of the
non-preferential rules of origin and that when the Dubai
factory was set up in 2003 it was assumed by the
group’s management in Dubai and in India that steel
wire ropes produced in Dubai from stranded wire of
Indian origin would acquire UAE origin.

‘last

substantial

(39) With regard to these arguments raised by UML on the
the products in question exported to the
origin of
Community from Dubai,
the Commission would first
point out that if two or more countries are involved in
the production of goods, for non-preferential origin the
indeed
concept of
determines
in
general, the criterion of last substantial transformation
the following three ways,
is expressed in one of
namely (i) by a rule requiring a change of
tariff
(sub)heading in the Harmonised System nomenclature,
or (ii) by a list of manufacturing or processing operations
that do or do not confer on the goods the origin of the
country in which these operations were carried out, or
(iii) by a value added rule.

transformation’
the goods. However,

the origin of

the submission of UML that

for the sake of good administrative order, an
Dubai,
figures provided to
examination was also made of
support
the local value
addition in Dubai was substantial. This examination
in
showed that the actual value added in Dubai was,
any event,
lower than the 25 % threshold claimed by
the company, when expressed as a percentage to the
ex-works price of steel wire ropes.

(42) As concerns the submission of UML that the change to
the four-digit Heading approach is a negotiating position
of the Commission with regard to WTO origin nego-
tiations and not adopted law, it is noted that the four-
digit Heading rule is a well-established practice in
applying Article 24 of the Community Customs Code.
As such, it is the rule applied by the Community Insti-
tutions and the competent customs authorities of the
Member States
in determining the non-preferential
origin of a series of products, amongst which is the
product in question.

(43) With regard to the statement

that

raw materials,

rules of origin,

the non-preferential

the company was
unaware of
the
Commission would first of all repeat that UML is the
mother company of a large multi-national operation
with related production sites, distributors and sales
offices situated around the world. Given the movement
finished and semi-finished goods
of
it appears
between member companies in the group,
unlikely that the company was not aware of the non-
preferential rules of origin or the origin of key products
produced at one of
it should be
pointed out,
in any event, that companies are deemed
to know the applicable Code and rules and cannot
invoke ignorance as a justification for non-respect of
the rules in force.

its sites. Moreover,

(40)

In this case, steel wire ropes are one of the products
covered by the rule requiring a change in the tariff
(sub) heading. Therefore, as the four-digit Heading for
stranded wire and steel wire ropes are the same, the
transformation process carried out in Dubai does not
change the Indian origin for the determination of non-
preferential origin.

(44)

In view of the foregoing, the Commission considers that
the goods in question, exported from Dubai, were of
Indian origin and should therefore have been subject to
the anti-dumping measures applicable to imports of steel
wire ropes originating in India.

(41)

Furthermore, although it was not necessary to address
the question of ‘value addition to imported inputs’
in

(45) Accordingly, the arguments presented by the company
with regard to the origin of the goods in question were
not accepted and, therefore, did not alter the Commis-
sion's view that breaches of
the undertaking have
occurred.

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L 22/59

C. AMENDMENT OF DECISION 1999/572/EC

Country

Manufacturer

TARIC additional code

(46)

it

the foregoing,

In the light of
is considered that
acceptance of the undertaking offered by Usha Martin
Industries & Usha Beltron Ltd, now known as Usha
Martin Ltd,
should be withdrawn. Article 1 of
Commission Decision 1999/572/EC accepting an under-
taking from Usha Martin Industries & Usha Beltron Ltd
should be amended accordingly,

HAS DECIDED AS FOLLOWS:

Article 1

South Africa

A023

Haggie
Lower Germiston Road
Jupiter
PO Box 40072
Cleveland
South Africa

Article 3

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

Acceptance of the undertaking in relation to imports of steel
ropes and cables offered by Usha Martin Industries & Usha
Beltron Ltd is hereby withdrawn.

Done at Brussels, 22 December 2005.

Article 2

The table in Article 1(1) of Decision 1999/572/EC is replaced
by the following table:

For the Commission

Peter MANDELSON
Member of the Commission