Council Regulation (EC) No 906/2008 of 15 September 2008 terminating the new exporter review of Regulation (EC) No 1659/2005 imposing a definitive anti-dumping duty on imports of certain magnesia bricks originating in the People’s Republic of China
Date: 2008-09-15
Institutions: Council of the European Union
Subjects: China, anti-dumping duty, anti-dumping legislation, brick, heat-resisting materials, import, originating product

19.9.2008

EN

Official Journal of the European Union

L 251/1

(Acts adopted under the EC Treaty/Euratom Treaty whose publication is obligatory)

I

REGULATIONS

COUNCIL REGULATION (EC) No 906/2008

of 15 September 2008

terminating the new exporter review of Regulation (EC) No 1659/2005 imposing a definitive anti-
dumping duty on imports of certain magnesia bricks originating in the People’s Republic of China

THE COUNCIL OF THE EUROPEAN UNION,

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 Article 9(4) and
Article 11(4) thereof,

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

Whereas:

(1)

(2)

1. PROCEDURE

1.1. Existing measures

The Council, by Regulation (EC) No 1659/2005 (2) (the
original Regulation),
imposed a definitive anti-dumping
duty on imports of certain magnesia bricks originating
in the People’s Republic of China (the PRC). The
measures consist of an ad valorem duty rate of 39,9 %,
with the exception of six companies expressly mentioned
in the original Regulation which are subject to individual
duty rates.

1.2. Request for a review

Subsequent to the imposition of definitive measures, the
Commission received an application to initiate a new
exporter
review of Regulation (EC) No 1659/2005,
pursuant to Article 11(4) of the basic Regulation, from
a Chinese exporting producer, Yingkou Dalmond Refrac­
tories Co. Ltd (the applicant). The applicant claimed that
it was not related to any of the exporting producers in
the PRC subject to the anti-dumping measures in force
with regard to magnesia bricks. Furthermore, it claimed
it had not exported magnesia bricks during the
that

(3)

(4)

(5)

original period of investigation (from 1 April 2003 to
31 March 2004), but had exported them to the
Community after that period.

1.3. Initiation of a new exporter review

The Commission examined the prima facie evidence
submitted by the applicant and considered it sufficient
to justify the initiation of a review in accordance with
Article 11(4) of the basic Regulation. After consultation
of the Advisory Committee and after the Community
industry concerned had been given the opportunity to
comment, the Commission initiated, by Regulation (EC)
No 1536/2007 (3), a review of Regulation (EC) No
1659/2005 with regard to the applicant.

Pursuant to Commission Regulation (EC) No 1536/2007,
the anti-dumping duty of 39,9 % imposed by Regulation
(EC) No 1659/2005 was repealed with regard to imports
of magnesia bricks produced and sold for exports to the
Community by the applicant. Simultaneously, pursuant
to Article 14(5) of the basic Regulation, customs au­
thorities were directed to take appropriate steps
to
register such imports.

1.4. Product concerned and like product

least 80 % MgO, whether or not

The product concerned is the same as that described in
the original Regulation,
i.e. chemically bonded, unfired
magnesia bricks, whose magnesia component contains
at
containing
magnesite, originating in the PRC, currently classifiable
within CN codes ex 6815 91 00, ex 6815 99 10 and
ex 6815 99 90
6815 91 00 10,
codes
6815 99 10 20 and 6815 99 90 20).

(TARIC

(6)

The like product is also the same as that defined in the
original Regulation.

(1) OJ L 56, 6.3.1996, p. 1.
(2) OJ L 267, 12.10.2005, p. 1.

(3) OJ L 337, 21.12.2007, p. 42.

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Official Journal of the European Union

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(7)

(8)

1.5. Parties concerned

the applicant and the representatives of

The Commission officially advised the Community
the
industry,
exporting country of
review.
Interested parties were given the opportunity to make
their views known in writing and to be heard.

initiation of

the

the

subject
regard to the product concerned.

to the anti-dumping measures in force with

(12) Accordingly, it was confirmed that the company should
in accordance with

be considered a ‘new exporter’
Article 11(4) of the basic Regulation.

The Commission sent a market economy treatment
(MET) claim form and a questionnaire to the applicant
and received a reply within the deadline set for that
purpose. The Commission sought to verify all the infor­
mation it deemed necessary for the determination of
dumping, and verification visits were carried out at the
premises of the applicant and the following cooperating
related companies in the PRC:

(13)

— Yingkou Dalmond Refractories Co.

Ltd

(the

applicant),

2.2. Market economy treatment (MET)

Pursuant to Article 2(7)(b) of the basic Regulation,
in
anti-dumping investigations concerning imports from
the PRC, normal value shall be determined in accordance
with paragraphs 1 to 6 of Article 2 of the basic Regu­
lation for those producers which were found to meet the
criteria laid down in Article 2(7)(c) of the basic Regu­
lation,
is shown that market economy
the manufacture and
conditions prevail
sale of the like product. These criteria are set out in a
summarised form below:

in respect of

i.e. where it

— Liaoning Qunyi Group Refractories Co. Ltd (the

mother company),

— business decisions are made in response to market
signals, without significant State interference, and
costs reflect market values,

— Yingkou Guangshan Refractories Co. Ltd (related

producer),

— Dalian Dalmond Trading Co. Ltd (related exporter).

1.6. Investigation period

(9)

The investigation of dumping covered the period from
1 April 2006 to 30 September 2007 (‘investigation
period’ or ‘IP’).

— firms have one clear set of basic accounting records
which are independently audited in line with interna­
tional accounting standards (IAS) and applied for all
purposes,

— there are no significant distortions carried over from

the former non-market economy system,

— bankruptcy and property laws guarantee stability and

legal certainty,

2. RESULTS OF THE INVESTIGATION

— currency exchanges are carried out at market rates.

(10)

2.1. New exporter qualification

The Community industry argued that the applicant was
exporting the product concerned to the Community as
early as 2004 and backed this assertion by various
website pages and catalogues of the applicant mentioning
sales in the Community. However, these documents did
not mention specifically the product concerned or the
date of the export, and the examination of the sales
ledger of
related companies
showed no evidence of such exports. The investigation
the applicant had not exported the
confirmed that
product concerned during the original
investigation
period and that
it had begun exporting to the
Community after that period.

the applicant and its

(14)

(15)

(11)

Furthermore,
the applicant was able to satisfactorily
demonstrate that it did not have any links, direct or
indirect, with any of the Chinese exporting producers

The applicant requested MET pursuant to Article 2(7)(b)
of the basic Regulation and was invited to complete a
MET claim form.

In the course of the investigation the applicant submitted
a number of MET claims for its related companies. After
analysis of the claims, the Commission identified four
MET claims for verification of companies involved in
the production and sale of
the product concerned.
These companies are listed in recital 8 of this Regulation.
However, at a late stage of the investigation, it was found
that the applicant was related to another producer and
another exporter of the product concerned located in the
PRC. These companies did not fill a separate MET claim
form and thus it was not possible to assess the situation
of
is
the whole group within which the applicant
operating.

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Official Journal of the European Union

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(16)

It is the Commission’s consistent practice to examine
whether a group of
related companies, as a whole,
fulfils the conditions for MET. This is deemed to be
necessary to avoid sales of a group of companies being
channelled via one of the related companies in the group,
should a preferential individual duty rate be granted to
that company. Therefore, in cases where a subsidiary or
any other related company is a producer and/or a seller
of the product concerned, all such related companies
have to provide a MET claim form to enable an exam­
ination of whether the criteria in Article 2(7)(c) of the
basic Regulation are met. The failure of the applicant to
these companies alone is
disclose the existence of
sufficient
it cannot be established
whether the group as a whole fulfils all the conditions
for MET.

to conclude that

(20) As regards the third company,

this company did not demonstrate that

it did not demonstrate
that business decisions were made in response to
market
signals, without significant State interference,
and that its costs reflect market values (criterion one).
it
Secondly,
had one clear set of basic accounting records, which
were prepared and audited in compliance with IAS:
several breaches of
IAS were noted such as the late
booking of revenues, or incorrect depreciation of fixed
the company did not
assets (criterion two). Finally,
demonstrate that it was free from significant distortions
from the former non-market economy
carried over
system,
the
company could not be considered as
independently
evaluated (criterion three).

in particular because the initial assets of

(21)

(22)

(23)

(24)

(25)

(17) Nevertheless,

it should be noted that the investigation
revealed that out of the four companies of the group
that submitted MET claim forms, only one company
for granting MET. The
fulfilled all
remaining three companies did not fulfil the first three
criteria mentioned in recital 13 above.

conditions

the

(18) As regards the mother company, this company did not
demonstrate that
it was free from State interference.
Firstly, the source of the capital of the company incor­
porated in 2001 could not be established and the
accounts demonstrating the capital import could not be
reconciled (criterion one). Secondly, this company did
it had one clear set of basic
not substantiate that
accounting records prepared and audited in compliance
with IAS. In particular, the company did not have indi­
vidual audited accounts. It only had audited consolidated
financial statements, specifically prepared upon request of
individual
a
accounts also showed several breaches of
the IAS,
concerning fixed assets and depreciation, booking of
certain assets and the revaluation of assets (criterion two).

Furthermore,

unaudited

creditor.

the

(19) As regards the applicant, it did not demonstrate that it
was free from State interference. In particular, its articles
of association (AoA), which were communicated to the
State authorities in order to obtain a business licence,
contained restrictions for sales on the domestic market.
the company was unable to provide a
In addition,
energy (criterion one).
the
for
contract
Secondly, the company did not substantiate that it had
one clear set of basic accounting records, which were
prepared and audited in compliance with IAS (criterion
two). Finally, the applicant did not demonstrate that it
was free from significant distortions carried over from
the former non-market economy system,
in particular
because not all
its initial assets were independently
evaluated, and because it benefited from significant tax
rebates (criterion three).

supply of

Based on the above
applicant and the group as a whole,
operates, could not be granted MET.

facts and considerations,

the
in which it

The Community industry, the applicant and the authori­
ties of the exporting country were given an opportunity
to comment on the findings concerning MET. Only the
applicant submitted such comments.

the two companies
The applicant
first argued that
investigation as
the
discovered at a late stage of
mentioned in recital 15 above did not have to submit
MET claims. According to the applicant, MET claims
should be submitted by producers and traders of the
product concerned during the IP. The two companies
in question were not involved in the production or sale
the product concerned during the IP and beyond
of
because the related exporter was
the
beginning of 2008, and the related producer was not
fully operational during the IP since it has not obtained
a production licence.

liquidated at

In this regard it is recalled that the applicant was given
an opportunity to and provided MET claims for most of
its related companies. However, it failed to disclose the
existence of these two companies within the deadlines set
for this purpose, as explained in the following recitals 25
and 26.

file an MET claim and,

The existence of
the alleged liquidated exporter was
discovered by the Commission and confirmed by the
applicant just before the verification visit in the PRC.
in
The company did not
addition,
from the
the applicant, despite a request
Commission, did not provide any accounting records
and other
information to clarify the exact
activities of this company during the IP. Therefore, the
Commission was unable to establish that this company
was not involved in the sale of the product concerned
during the IP.

relevant

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(26) As

regards

the related producer,

its existence was
communicated to the Commission during the verification
visit in the PRC and thus, since this producer was located
the Commission was unable to
in another province,
its operations
verify on the spot the exact nature of
and whether
started
production of the product concerned. It was found that
although the company has not yet obtained a production
licence,
its business licence granted in 2007, namely
during the IP, covers the manufacturing of the product
concerned. This related producer should therefore have
submitted an MET claim.

the company had not

in fact

(32)

The applicant made further claims and brought new
the company
elements allegedly demonstrating that
mentioned in recital 19 above meets all
the MET
criteria. These claims are described and discussed below.

(33) As regards criterion one, the applicant further argued that
any restriction in the AoA is purely a private agreement
between shareholders in which the State did not interfere.
The applicant also claimed that the Chinese Contract Law
did not impose any obligation to sign a written contract
for energy supply.

(27)

these two
The failure to disclose the existence of
companies
and submit MET claims deprived the
Commission of the possibility to verify the subsequently
submitted information on their activities and to assess
whether the group of companies satisfied the conditions
for granting MET.

(34)

(28)

The applicant also claimed that
should not have been included in the scope of
MET investigation given that
nor an exporter of the product concerned.

the parent company
the
it is neither a producer

In this regard, it is noted that the Chinese Company Law
provides that the AoA of companies are binding on the
company, shareholders, directors, supervisors and senior
management. Moreover,
the AoA and any changes
thereof are required to be registered with the State au­
thorities. Contrary to the claim of the applicant, it was
also found that the Chinese Contract Law makes clear
reference to contracts for supply and use of energy and
contains
such
contracts. On this basis, the claims concerning criterion
one were rejected.

clear provisions on the

content of

(29)

(30)

The parent company exercises control over its related
companies,
including their activities with regard to the
product concerned. Thus any finding showing that the
parent company is not following market economy prin­
impact on the whole group. The
ciples has a direct
strong links existed
investigation demonstrated that
between the mother company and its subsidiaries,
in
particular with the applicant and another cooperating
company of
group involved in the product
concerned. There were many transactions between the
the assets and overhead
said companies.
expenses were not clearly separated. Moreover,
the
parent company indicated during the verification visit
its intention to produce magnesia bricks in the future,
and there was nothing in its business licence to prevent
this company from doing so. On this basis this claim had
also to be rejected.

In addition,

the

applicant

acknowledged

The
company
mentioned in recital 20 above does not fulfil all MET
should no longer be
criteria, but
considered as a producer since it was currently renting
its production facilities to a related producer.

claimed that

that

the

it

(31)

In this respect it was found that this company has the
capability to resume production on its own right at any
time in the future. Therefore,
this claim had to be
rejected.

(35) As

regards

criterion two,

applicant provided
documents alleging that
found in the
accounts, in particular for a transaction between related
companies, were corrected later
in April 2008, and
argued that criterion two was thus fulfilled.

the
shortcomings

(36)

it

is noted that any alleged remedy
In this respect,
applied in 2008 cannot
the
accounts of the applicant which were provided in the
claim form were not reliable as indicated in recital 19
above. On this basis, this claim had to be rejected.

remedy the fact

that

(37) As regards criterion three, the applicant claimed that the
capital verification report provided in its MET claim
should be sufficient in itself to certify the evaluation of
its assets. The applicant also claimed that the tax rebates
in the
should not have been taken into account
framework of the present anti-dumping investigation as
this issue is relevant only for anti-subsidy investigations.

(38)

It is noted that the investigation found that the capital
verification report was found to be erroneous and thus
cannot be considered as a reliable independent basis for
the evaluation of the assets. Concerning the tax rebates
obtained by the applicant, it is considered that it distorts
significantly the financial situation of the company and
indeed has an impact on the third MET criterion.
Therefore, these claims concerning criterion three had
to be rejected.

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(39) On the basis of the above, the Commission maintained
its findings and conclusions concerning the criteria one
to three. It is thus confirmed that the applicant and the
group in which it operates cannot be granted MET.

comment on the above findings. Only the applicant
submitted the comments below.

2.3. Individual treatment (IT)

(40)

if any,

that Article,

Further to Article 2(7) of the basic Regulation, a country-
is established for countries falling
wide duty,
under
cases where
companies are able to demonstrate that they meet all
criteria
in
Article 9(5) of the basic Regulation. These criteria are
set out in a summarised form below:

individual

in those

treatment

set out

except

(IT)

for

— in the case of wholly or partly foreign owned firms
or joint ventures, exporters are free to repatriate
capital and profits,

— export prices and quantities, and conditions and

terms of sale are freely determined,

— the majority of the shares belong to private persons,
and it must be demonstrated that the company is
sufficiently independent from State interference,

— exchange rate conversions are carried out at

the

market rate,

— State interference is not such as to permit circum­
vention of measures if individual exporters are given
different rates of duty.

(41)

The applicant, as well as requesting MET, also claimed IT
in the event of not being granted MET.

(42) As explained in recital 16 above, it is the Commission’s
consistent practice to examine whether a group of related
companies, as a whole, fulfils the conditions for IT. As
indicated in recital 15, there was one additional producer
and one exporter related to the applicant during the IP
which did not cooperate with the present investigation.
Thus, no conclusion could be made on whether these
two companies fulfilled the criteria for IT.

(43)

It is therefore concluded that neither MET nor IT should
be granted to the applicant.

(45)

The applicant first reiterated its claim that the investi­
gation on both MET and IT should focus only on
producers and traders of the product concerned during
the IP, and alleged that the two companies which did not
cooperate were not involved in the production or sale of
the product concerned. Then it further argued that the
Commission officials received all necessary information
to assess IT for the two non-cooperating companies
while they were on the spot.

the

(46) On the first claim, it is noted that the exact activity of
these two companies during the IP could not be checked
during the verification visit precisely because of non-
cooperation, as mentioned in particular in recital 15
above. Therefore,
the applicant did not demonstrate
two non-cooperating companies had not
that
produced or were not
the
product concerned during the IP. It is also noted that,
whatever the activity of the producer during the IP,
it
should be included in the assessment of the group for the
reasons explained in particular in recital 16 above. It is
thus maintained that these two companies should have
cooperated in the investigation.

involved in the sale of

(47) As mentioned in recital 24 to 27 above, the information
provided during the on-the-spot visit was insufficient to
make an assessment concerning IT for the two non-
this information
cooperating companies.
was not provided within the time limit set
for the
submission of the IT claim and was provided so late
that it did not allow its verification by the Commission.
Therefore this claim had to be rejected.

In addition,

(48)

The applicant further submitted that the Commission’s
current practice to examine IT criteria is an infringement
of Article 2.3 of the WTO Anti Dumping Agreement,
since this agreement should be considered as an integral
part of the EC legal order.

(49) However, given the non-cooperation from two related
companies, IT criteria were not further examined in the
present investigation, and the issue of their compatibility
with WTO rules was thus irrelevant in the present case.
Therefore this claim could not be further considered.

(44)

The applicant, the authorities of the exporting country
and the interested parties were given an opportunity to

(50)

Based on the above facts and considerations, it is thus
confirmed that the applicant and the group in which it
operates cannot be granted IT.

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3. CONCLUSION

HAS ADOPTED THIS REGULATION:

(51)

The purpose of the present review was to determine the
individual margin of dumping of the applicant, which
was allegedly different from the current residual margin
applicable to imports of the product concerned from the
PRC. The request was mainly based on the allegation that
the applicant fulfilled the criteria for MET.

(52) As the investigation concluded in particular that, in the
absence of cooperation from its related producer and
exporter, the applicant was granted neither MET nor IT,
the Commission could not establish that the applicant’s
individual dumping margin was indeed different from the
residual dumping margin established in the original
investigation. Therefore,
request made by the
the
should be rejected and the new exporter
applicant
anti-dumping duty
review terminated. The
i.e. 39,9 %,
investigation,
found during the original
should consequently be maintained as
the
as
far
applicant is concerned.

residual

4. RETROACTIVE LEVYING OF THE ANTI-DUMPING
DUTY

(53) As

the review has

resulted in a determination of
dumping in respect of the company, the anti-dumping
duty applicable to the company should be levied retro-
actively on imports of the product concerned which have
been made subject to registration pursuant to Article 3 of
Regulation (EC) No 1536/2007.

Article 1

1.
The new exporter review initiated by Regulation (EC) No
1536/2007 is hereby terminated and the anti-dumping duty
applicable according to Article 1 of Regulation (EC) No
in the People’s Republic
1659/2005 to ‘all other companies’
of China is hereby imposed on imports identified in Article 1
of Regulation (EC) No 1536/2007.

2.
The anti-dumping duty applicable according to Article 1
of Regulation (EC) No 1659/2005 to ‘all other companies’ in
the People’s Republic of China is hereby levied with effect from
22 December 2007 on imports of certain magnesia bricks
which have been registered pursuant to Article 3 of Regulation
(EC) No 1536/2007.

The customs authorities are hereby directed to cease the
imports carried out pursuant to Article 3 of

3.
registration of
Regulation (EC) No 1536/2007.

Unless otherwise

4.
concerning customs duties shall apply.

specified,

the provisions

in force

5. DISCLOSURE AND DURATION OF THE MEASURES

(54)

The applicant was informed of the essential facts and
considerations on the basis of which it was intended to
impose a definitive anti-dumping duty on its imports
into the Community and was given the opportunity to
comment.

(55)

This review does not affect the date on which Regulation
(EC) No 1659/2005 will expire pursuant to Article 11(2)
of the basic Regulation,

Article 2

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

Article 1(2) shall apply with effect from 22 December 2007.

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

Done at Brussels, 15 September 2008.

For the Council
The President

B. KOUCHNER