CMA Kiran Kulkarni 27th Dec ’2017 CEP Program at

History of trade defence laws Initially to protect interest of domestic industries for developed countries
One of the criticism i.e. “ Protectionist “
First in Canada in the year of 1904 { Steel rails } , 1905 New Zealand { Farm equipments } ,1906 Australian for generic problems.
At the end of nineteenth century , global industrialization led to increased concern for the domestic effects of international trade, and international tariff structures faced problems of application {money } efficiency { Operationalisation }
The GATT resulted into round the table creation of ITO { international trade organisation } held in Geneva in 1947, where united states provided basic working documents and charter which contains most of the provisions which are now in Article VI of General Agreement on Tariffs and Trade ( GATT, 1947 )
Second World War and great reforms in GATT
GATT rules are binding on the WTO members
India entered in the year of 1994. Mainly in the sectors of Chemical, Plastic, Rubber, Wood, Wood article, yarn and textile etc.that threatened the continued viability of these industries.<br>

Procedural aspect Central Govt. has been empowered under respective legislations to frame rules and regulations and investigations procedures for imposition of duties. Fact finding activities is being started.
ADD & CVD investigation is being made under Designated authority in the Ministry of Commerce & Industry ( Department of Commerce , while safeguard recommendations are made by Director General of Safeguards under Ministry of Finance . DGA & D office procedures
Linewise process of initiation of ADD investigations are divided into various phases places for ADD, CVD & Safeguard are categorizes into various forms
Filling of Petition
Scrutiny of petition for prima facie evidence for initiation
Verification of information
Consultation with exporting countries
Notification with exporting country prior to initiation
Initiation of investigation and its publication in Gazette of India
Sending inquiry to all interested parties
Receipt of questionnaire responses from exporters, importers and various interested parties and comments on the petition and proposed measures<br>

Procedural aspect Holding Public Hearing – If necessary
Preliminaries findings / Interim duties and its publications in Gazette of India ( Not mandatory )
Allow interested parties to offer comments on the preliminaries findings
Disclosure of essential facts
Opportunities for comments on disclosure statement
Final Findings and its publication in Gazette of India
Approval by committee on Safeguards
Considerations and if accepted notification by Central Govt. through Ministry of Finance
Time Limit for completion of investigation – ADD ( 12 months can extend further upto 18 months ), CVD ( 12 months can extend further upto 18 months ) Safeguard ( 10 months can be extended further more )
Interim reviews
Expiry / Sunset review ( for further extension )
Fresh investigation after expiry of existing duty<br>

Product Under Consideration In a smaller abbreviate it is being called as ‘ PUC ‘.
It is the article for which investigation is conducted and on which anti dumping duties are proposed.
Size, shape, coverage of product , clear definition , technical aspects etc. needs to be taken carefully as it decide length of working and initiations
Technical grade plays important role in deciding PUC. Alternatives needs to be studies in carefully other this activity will go into futile.
No specific guidelines from Indian Laws or WTO
According to CTA “ any article “ is exported by an exporter or producer from any country or territory to India at less than its normal value, then, upon the importation of ‘ such article ‘ into India, the Central Government may, by notification in Official Gazetteer, impose ADD.
Who decide scope of product under consideration :
Applicant can decide the scope of product under consideration with the circumstances. While deciding the scope of product under consideration should be left with the domestic industry and the investigation authority should merely ensure that the scope of the PUC is just fair, appropriate, well defined and unambiguous and would serve the intended purpose – neither over protecting the domestic industry nor undermining its need to seek protection.
According to the Customs classification HS code are relevant and important<br>

Normal Value Determination Normal value is an essential ingredient in determination of ADD margin
High or low protection – under stated or overstated
Can be challenged at any legal forum
Provision has been made in CTA after taken entry in WTO and NV definition has been made. Means’ comparable price, in the ordinary course of trade, for the like article when meant for consumption in the exporting country or territory’
The act recognizes that this definition may not be applicable in all circumstances. i.e. it changes according to the circumstances and PUC.
Certain Words are being used for determination of NV in CTA
Comparable Price : Price which is comparable to export pricing. Normal adjustments are made to make price comparable by the designated authorities. Examples – Terms of sale, taxation, level of trade, quantities, physical characteristics. Other adjustments are early payment discount, qty.discount, other discounts, rebate, inland frt., warehousing exp., inland insurance, commission, credit expenses, late payment fees, advt. exp, warranty exp, technical service exp, royalties, bank charges, inventory carrying cost, packing cost. Etc. This list is illustrative may change according to nature of investigations.<br>

Normal Value Determination Ordinary course of trade rests : Prices which are not affected in normal business circumstances other than market forces of demand and supply. Two trade instances which are not considered under ordinary course of trade – where a sale of product is below cost of production and where the price or cost is affected due to any compensatory arrangement or relationship.
For the like article : Rules provides definition of like article clear state that ‘ like article is same as the product exported by the company. No need to adjust any type of cost, discount, frt etc. as product comparability is carried with the help of characteristics. The second part of the definition provides closely resemble article .
When meant for consumption in the exporting country or territory - If the producer has sold the product to a trader for exporting the same to some other country, it should considered that this sale is not meant for consumption in the exporting country and may not be considered for determination of NV.
Particular market situation : Export tax, input supply which is different from other agencies, it could be contended that the prices in domestic market are distorted and are unrepresentative.
Low volume of the sales<br>

Normal Value Determination Comparable Representative Price : Not able to determine NV by domestic price is required to considered price to third country.
Appropriate third country : Highest export, product type, economic development. Level of development of the country concerned and the product in question can be considered as an appropriate parameter for this purpose
Cost of production of the said article in the country of origin
Administrative , selling and general costs, and for profits<br>

COP Cost is divided into two part direct and indirect
A company that knows how much it will cost to produce goods will have a clear picture of how to price the goods
Cost of production of manufacturing goods. Raw Material, Utilities , Packing, Factory overhead other than depreciation , Depreciation , Admn. Overheads, selling & interest / finance cost , By product generated in the process of main products and Other Income.
Items not considered as a part of cost – Trading purchase & sales, sundry debit/credit w/off, export related expenses, expenditure relating to trading goods, freight outward, product development amortized , donation, preliminary and prior period exp., abnormal exp., profit and loss on sale of FA., Discount off invoice & on invoice, sales commission, excess provision w/off, Unrecoverable cenvat on free sample, free sample distribution, interest income on fixed deposit disallowed, sales of export licenses etc.<br>

Injury Meaning of injury means ‘ as an evaluation / assessment of effects of the subject imports on the industry concerned
Three pillars on which investigation are depends i.e. industry, material/serious and third last import should be the cause of injury is may be serious injury or threat of serious injury
Volume effects – Increase in imports, cumulative assessment of dumped imports, assessment of demand, volume and market share of imports, price effects, price undercutting, price depression or suppression.
Other economic factors and indices are :
Sales
Profits
Output / production
Market shares
Productivity
ROI
Capacity utilisation<br>

Injury Factors affecting domestic prices
The magnitude of the margin of dumping
Actual and potential negative effect on the following
Cash flows
Inventories
Employment
Wages
Growth
Ability to raise capital or investments

No need to prove that all factors should present negative remarks. WTO had presented guidance in this regards as ‘ We do not consider that a negative trend in every single factor examined is necessary in order to be in a position of significant overall impairment. Rather , it is the totality of the trends, and their interaction which must be taken into account in a serious injury determination ………<br>

Key Abbreviated ADD – Anti dumping duty
CVD – Countervailing duty
DGAD – Director General of Anti – Dumping
DI – Domestic industry
EC – European Commission
EU – European Union
GATT – General Agreement on Tariff and Trade
HS Code – Harmonized system Code
ITC – International Trade Commission
MTR – Mid – term – review
NIP – Non injury price
PCN – Product control number
POI – Period of investigation
PUC – Product Under Consideration
SSR – Sun set review<br>

Key issues- General review Dumping of material doesn’t seems to be illegal, but if dumping materially injures or threatens to injure the domestic industry
There is the difference between Customs duty and Anti dumping duty. Though duty is levied and collected by the Customs authority – comments
Concern of dumping investigation is started when Export Price is less than Normal than dumping. Normal value is the comparable price of the product under consideration at which it is sold in the home market of the exporting country.
Major parameters for domestic injury are volume effect and price effect
Non injury price and injury pricing
Minimal level of imports i.e. de-minimis margins from the country and from an individual exporter for which excluded from the scope of anti dumping margins is 2%. Individual 2% and country as origin are 3% .
Institutional arrangement in India are administration is measure by DGAD ( functioning in the Dept. of Commerce in the Ministry of Commerce and Industry and the same is headed by the ‘ Designated Authority ‘<br>

Key issues- General review Application can be made by the domestic industry to the Designated Authority subject to validation of rules application account for more than 25% of total domestic production of the like article under consideration. Further to have this application is deemed to have been made on behalf of the domestic industry only if domestic producers whose collective output equals to or more than 50% of domestic production.
Interested parties to an Anti dumping investigations includes – the domestic industry on whose complaint the proceedings has been initiated, the exporter or the foreign producers of the like articles subject to investigation, the importers of the same article alleged dumped into India, The Government of the exporting country / countries, the trade or business associations of the domestic producers /exporters/importers/user industries/user industries of the dumped product
Data required to be provided for POI and last three years
The Anti dumping duty shall remain the force for a period of five years from the date of imposition of duty<br>

Injury information on Domestic Industry Import – from the subject country and Other country
Installed capacity\
Production
Capacity Utilisation
Captive consumption
Indigenous sale
Export Sale
Opening stock
Closing stock
Cost of Sales
Profit/Loss
Investments
Networth
Capital Investment for
Employment
Demand ( 1+5+6)
Market Share & any other factor<br>

Scope of Cost Accountant Strategic policy decision making and presentation of Cost Input with Govt. authorities.

Injury proven through divisional profitability is the primary factory in ADD. For which product costing is the back bone.

Concerned authority is more concerned with profitability received through costing methodologies

Financial PNL is the supporting for Cost Inputs

Special attention is given to Costing Data

Financial insight depth analysis with product costing and input/output ratios for calculation of standard to comparer with industry standard<br>

Formats Format ‘ A ‘ – functions Statement of raw material and packing material consumption and its reconciliation according to normal rules. i.e. O/Stock+ Purchase – Closing stock = consumption . Applicable Cost accounting standard – CAS 6 – Material Cost & CAS-9 – Packing Material Cost

Format ‘B’ – Statement of raw material consumption In details matter showing major elements covered under consumption of RM , alongwith its norms and cost Per Unit – CAS 6 – Material Cost

Format CI – Statement of Cost of Production – CAS 2- Capacity Determination, CAS 6- Material Cost , CAS 7 – Employee Cost, CAS 8 – Cost of Utilities, CAS 9 – Packing Material Cost, CAS 10 – Direct Expenses, CAS 12 – Repairs & Maintenance

Format CII – Allocation and Apportionment of Expenditures – CAS 1 – Classification of Cost, CAS 2 – Capacity Determination CAS 3 – Overheads

Format D – Statement of consumption of utilities – CAS 8 – Cost of Utilities

Format E – Statement of Sales realization<br>

QUESTION ANSWER<br>

Thank you,
CMA Kiran Kulkarni

27/12/2017<br>