The Canada Border Services Agency (CBSA) has today concluded a re-investigation of the normal values and export prices of certain grinding media originating in or exported from India, in accordance with the Special Import Measures Act (SIMA).
The re-investigation was initiated on October 26, 2022, as part of the CBSA’s ongoing enforcement of the Canadian International Trade Tribunal’s (CITT) finding issued on August 27, 2021 in inquiry NQ-2021-001.
The product definition and the applicable tariff classification numbers of the goods subject to the CITT’s order can be found on the CBSA’s Measures in force.
Period of investigation
The period of investigation (POI) and the profitability analysis period (PAP) for the re-investigation were from September 1, 2021 to August 31, 2022.
At the initiation of the re-investigation, the CBSA sent a request for information (RFI) to all known importers, exporters, producers and vendors to solicit information on the costs and selling prices of subject goods and like goods. The information was requested for purposes of updating the normal values and export prices for subject goods imported into Canada. The CBSA received responses to the RFIs from one exporter alongside its related importer and global distributor.
On-site verifications of all parties were conducted at the premises of the exporter located in India. Following the on-site verification, the CBSA extended the close of record by 3-days, to February 17, 2023, to permit for the filing of verification exhibits.
As part of the re-investigation, case arguments and reply submissions were provided by counsel representing the Canadian producer as well as the responding exporter, related importer and global distributor. Details of the representations are provided in Appendix 1. Details pertaining to the information submitted by the exporter in response to the RFIs as well as the results of the CBSA’s re-investigation are provided below.
Specific normal values and export prices for future shipments of grinding media have been determined for the exporter that submitted a complete response to the dumping RFI, supplemental RFIs, and whose information was determined to be reliable as a result of the on site verification.
Normal values and export prices
Normal values are generally determined based on the domestic selling prices of like goods in the country of export, in accordance with section 15 of SIMA, or on the aggregate of the cost of production of the goods, a reasonable amount for administrative, selling and all other costs, plus a reasonable amount for profits, in accordance with paragraph 19(b) of SIMA.
Where, in the opinion of the CBSA, sufficient information has not been furnished or is not available, normal values are determined pursuant to a Ministerial specification in accordance with subsection 29(1) of SIMA.
The export price of goods sold to importers in Canada is generally determined in accordance with section 24 of SIMA, based on the lesser of the adjusted exporter’s sale price for the goods or the adjusted importer’s purchase price. These prices are adjusted where necessary by deducting the costs, charges, expenses, duties and taxes resulting from the exportation of the goods as provided for in subparagraphs 24(a)(i) to 24(a)(iii) of SIMA.
Where there are sales between associated persons and/or a compensatory arrangement exists, the export price may be determined based on the importer’s resale price of the imported goods in Canada to unrelated purchasers, less deductions for all costs incurred in preparing, shipping and exporting the goods to Canada that are additional to those incurred on the sales of like goods for use in the country of export, all costs included in the resale price that are incurred in reselling the goods (including duties and taxes) or associated with the assembly of the goods in Canada and an amount representative of the average industry profit in Canada, pursuant to paragraphs 25(1)(c) and 25(1)(d) of SIMA. In any cases not provided for under paragraphs 25(1)(c) and 25(1)(d) of SIMA, the export price is determined in such a manner as the Minister specifies, pursuant to paragraph 25(1)(e).
The following details are regarding the exporter who provided a complete response to the CBSA’s dumping RFIs and supplementary RFIs. Specific normal values for future shipments of subject goods, effective on or after March 31, 2023, were issued to this exporter.
AIA Engineering Ltd.
AIA Engineering Ltd. (AIA) is a producer and exporter of grinding media in India who shipped subject goods to Canada produced at two of its production facilities, Moraiya and Kerala, located in Gujarat during the POI.
Vega Industries Middle East F.Z.C. (Vega ME), a wholly owned subsidiary of AIA, is a global distributor of products produced by AIA, including the subject goods exported to Canada during the POI.
During the POI, subject goods exported by AIA were sold to Vega Industries Limited USA (Vega USA), a wholly owned subsidiary of Vega ME. Vega USA is a non-resident importer who re-sold the subject goods to unrelated purchasers in Canada.
AIA, Vega ME, and Vega USA provided substantially complete responses to the CBSA’s RFIs and supplemental RFIs. An on-site verification of the information provided from all parties was conducted at AIA’s headquarters in India during February 2023.
AIA did not have domestic sales that met the conditions of sections 15 and 16 of SIMA during the POI/PAP. Therefore, normal values were determined pursuant to section 19(b) of SIMA, based on the aggregate of the cost of production of the goods, a reasonable amount for administrative, selling and all other costs plus a reasonable amount for profit. The amount for profits was determined in accordance with subparagraph 11(1)(b)(ii) of the Special Import Measures Regulations (SIMR) by using AIA’s profitable domestic sales of goods of the same general category during the POI/PAP.
During the POI, subject goods exported by AIA were sold to Vega USA, a related importer. Due to the relationship between the parties, a reliability test was performed to determine whether the section 24 export prices were reliable as envisaged by SIMA. This test was conducted by comparing the section 24 export prices with the section 25 export prices. The reliability test revealed that the export prices in accordance with section 24 of SIMA were reliable and, therefore, export prices were determined in accordance with section 24 of SIMA.
Importers are reminded that it is their responsibility to calculate and declare their anti-dumping and countervailing duty liability. If importers are using the services of a customs broker to clear importations, the brokerage firm should be advised that the goods are subject to anti-dumping and countervailing measures and be provided with sufficient information necessary to clear the shipments. To determine their liability for anti-dumping and countervailing duty, importers should contact the exporters to obtain the applicable normal values and amounts of subsidy. For further information on this matter, refer to Memorandum D14-1-2, Disclosure of normal values, export prices, and amounts of subsidy established under the Special Import Measures Act to importers.
The Customs Act applies, with any modifications that the circumstances require, with respect to the accounting and payment of anti-dumping and countervailing duties. As such, failure to pay the duties within the prescribed time will result in the application of the interest provisions of the Act.
Should the importer disagree with the-determination made on any importation of goods, a request for re-determination may be filed. For more information on how to file a request for re-determination, please refer to the Guide for appealing a duty assessment.
Please note that exporters with normal values are required to promptly inform the CBSA in writing of changes to domestic prices, costs, market conditions or terms of sale associated with the production and sales of the goods. All parties are cautioned that where there are increases in domestic prices, and/or costs as noted above, the export price for sales to Canada should be increased accordingly to ensure that any sale made to Canada is not only above the normal value but at or above selling prices and full costs and profit of the goods in the exporter’s domestic market. Where exporters do not properly notify the CBSA of any such changes, do not adjust export prices accordingly, or do not provide the information required to make any necessary adjustments to normal values and export prices, retroactive assessments of anti-dumping or countervailing duties may be warranted.
- Khatira Akbari: 343-553-1892
Appendix 1: Representations
Case arguments and reply submissions were received on behalf of AIA Engineering Limited (AIA), Vega Middle East F.Z.C. (Vega ME) and Vega Industries Limited USA (Vega USA)Footnote 1, as well as by Magotteaux Limitée (Magotteaux)Footnote 2.
Certain details provided in case arguments and reply submissions were designated as confidential information by the submitting counsel. This has restricted the ability of the CBSA to discuss all issues raised in these submissions.
The material issues raised by the parties are summarized as follows:
Identity of the exporter for SIMA purposes
Counsel for AIA submitted that AIA was determined to be the exporter during the original investigation, while Vega ME was recognized as an intermediary in AIA’s export transactions and Vega USA as a non-resident importer of grinding media exported to Canada by AIA. AIA stated that nothing has changed since the original investigation to alter these conclusions.
Counsel for Magotteaux submitted that while Vega ME would have the CBSA believe that it only handles invoicing and logistical operations for AIA the facts show that the company’s functions go beyond that. Counsel stated that such functions are vested in ownership as that of the principal player in the transaction, while referencing confidential information in an effort to support their claims. Counsel went on to state that the application of SIMA assessments should be made under subsection 29(1) of SIMA as a result.
The CBSA considered all information on the record pertaining to whether AIA is the exporter for SIMA purposes. After reviewing the information on the record, including RFI, supplemental RFI and on-site verification questions, the CBSA is of the view that, like in the original investigation, AIA directly exports the subject goods from India to Canada while maintaining ownership of the goods and is considered to be the exporter for SIMA purposes.
Application of paragraph 11(1)(c) of SIMR
Counsel for AIA submitted that the purpose of section 19 of SIMA is to arrive at a proxy of what an exporter’s selling price for goods exported to Canada would be if they were sold in the exporter’s domestic market. Counsel stated that Vega ME acts as its trading arm for export sales and that any expenses incurred by Vega ME are unrelated to AIA’s costs pertaining to domestic sales. Counsel argued that even if AIA were incurring the GS&A expenses of Vega ME on export sales, paragraph 11(1)(c)(i) of the SIMR would preclude the inclusion of those expenses in the GS&A ratio because AIA has provided GS&A expenses on domestic sales of like goods.
Counsel for Magotteaux submitted that if AIA’s arguments regarding the identification of the exporter for SIMA purposes are to be accepted by the CBSA, then the calculation of normal values should capture the costs incurred by Vega ME in the performance of its function in AIA’s international markets.
The CBSA reviewed and verified the information submitted by AIA and Vega ME and determined that a reasonable amount for administrative, selling and all other costs for AIA be made pursuant to subparagraph 11(1)(c)(ii) of the SIMR, on the basis of the GS&A expenses that are reasonably attributable to the production and sale of the goods made by the exporter. As a result, those costs associated with the functions performed by Vega ME have been included in the calculation of normal values pursuant to section 19(b) of SIMA.
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