OCTG2 2021 UP1: Oil country tubular goods 2
Conclusion of normal value review
The Canada Border Services Agency (CBSA) has today concluded a normal value review to update the normal values and export prices applicable to certain oil country tubular goods (OCTG) exported to Canada from India by Jindal Saw Ltd. (JSL).
This review follows a request for re‑determinations filed by an importer and is part of the CBSA’s enforcement of the Canadian International Trade Tribunal’s (CITT) order issued on December 30, 2020, in Expiry Review No. RR‑2019‑006 respecting the dumping of certain OCTG from the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (Chinese Taipei), India, Indonesia, South Korea, Thailand, Turkey, Ukraine and Vietnam, in accordance with the Special Import Measures Act (SIMA).
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 normal value review were from June 1, 2020 to May 31, 2021.
Normal value review process
At the initiation of the normal value review, the CBSA sent Requests for Information (RFIs) to JSL and an importer in order to solicit information for purposes of re‑determining normal values and export prices applicable to the goods subject to a request for re‑determination filed by the importer.
JSL submitted a response to the dumping RFI on August 20, 2021Footnote 1 and responded to two supplemental RFIs (SFRIs)Footnote 2. Jindal Steel and Power Limited (JSPL), an input supplier, submitted a response to Part D of the dumping RFI on December 23, 2021Footnote 3.
As part of the normal value review, comments on the responses filed by JSL and JSPL were submitted by counsel on behalf of EVRAZ Inc. NA Canada and Welded Tube of Canada Corporation (the Canadian producers)Footnote 4 prior to the close of the record. A response to the Canadian producers’ comments was submitted by counsel on behalf of JSLFootnote 5.
Case argumentsFootnote 6 and reply submissionsFootnote 7 were submitted by counsel on behalf of the Canadian producers. Case argumentsFootnote 8 and reply submissionsFootnote 9 were also submitted by counsel on behalf of JSL.
The issues raised in the comments, case briefs and reply submissions mainly concerned the deficiencies and completeness of JSL’s responses and the relationship between JSL and its input suppliers.
JSL submitted that, effective 2010 through a formal reorganization of the O.P. Jindal Group, JSL, JSPL and JSW Steel Ltd. (JSW) have been completely segregated and they are recognized as separate groups for all regulatory, statutory and business purposes. JSL argued that it cannot and does not control its input suppliers and cannot compel their co‑operation in a CBSA investigation.
Counsel for the Canadian producers submitted that, based on the information on the administrative record, JSL, JSPL and JSW are associated persons pursuant to paragraph 2(3)(h) of SIMA, and further submitted that subsection 11.2(1) of the Special Import Measures Regulations (SIMR) requires the CBSA to collect cost data from associated input suppliers. Counsel for the Canadian producers noted that JSPL’s cost data are deficient and there is no cost data from JSW on the record, and argued that the CBSA cannot determine the cost of the inputs in accordance with the SIMR.
The CBSA is of the position that subsection 11.2(1) of the SIMR requires the CBSA to collect cost data from associated input suppliers. Further, for purposes of determining associated persons, the CBSA is directed by the parameters defined in subsections 2(2) and 2(3) of SIMA. How these provisions were applied by the CBSA is discussed below.
The representations submitted by all parties were given due consideration by the CBSA prior to the conclusion of this normal value review.
Normal values for future shipments
Based on the information provided by JSL in its responses to the dumping RFI and SFRIs, the CBSA found that JSL acquired billets, used in the production of OCTG which was sold domestically and/or exported to Canada during the POI/PAP, from JSPL and JSW.
Where exporters or producers acquire inputs that are a significant factor in the production process from associated suppliers, the cost of the input will be determined according to subsection 11.2(1) of the SIMR. For purposes of determining associated persons, the CBSA is directed by the parameters defined in subsections 2(2) and 2(3) of SIMA where it is stated:
- 2(2) For the purposes of this Act, the following persons are associated persons or persons associated with each other, namely,
- (a) persons related to each other; …
- 2(3) For the purposes of subsection (2), persons are related to each other if
- (h) any other person directly or indirectly owns, holds or controls five per cent or more of the outstanding voting stock or shares of each such person
Confidential information on the administrative record, confirms that one entity directly or indirectly owns, holds or controls five per cent or more of the outstanding voting stock or shares of each of JSL, JSPL and JSWFootnote 10. Therefore, the CBSA found that these three companies are associated persons for purposes of SIMA.
As JSL purchased significant inputs that were manufactured by associated suppliers, the cost of those inputs must be determined on the basis of the greater of the amounts found in paragraphs 11.2(1)(a) to 11.2(1)(c) of the SIMR. Consequently, both JSPL and JSW were requested to provide the cost of production of the billet supplied to JSL, including the administrative, selling and all other costs with respect to its production in accordance with paragraph 11.2(1)(b) of the SIMR.
On December 23, 2021, JSPL provided an incomplete response to the CBSA. No response was received from JSW. A deficiency letter was sent to JSL on January 24, 2022Footnote 11, requesting that critical costing information from its associated suppliers be provided to the CBSA.
During the course of the NVR, JSL indicated that it cannot compel the co‑operation of JSW nor JSPL. In its responses to the CBSA’s deficiency letter dated February 3 and February 7, 2022Footnote 12, JSL reaffirmed its position that the required costing information would not be provided by its associated suppliers.
As a result, the CBSA closed the administrative record on February 9, 2022, and has determined that the information provided by JSL was deficient for the purposes of this normal value review. Any previous normal values issued to the exporter were revoked. The normal values for goods subject to this review and released by the CBSA on or after March 9, 2022 will be determined by advancing the export price of the goods by 37.4%, pursuant to a ministerial specification.
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. If there are changes to the exporter’s domestic prices, costs, market conditions or terms of sale associated with the production and sales of the goods, and where the CBSA considers such changes to be significant, the normal values and export prices will be updated to reflect current conditions. All parties are cautioned that where there are increases in domestic prices, and/or costs as noted above, the export price 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. If 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 will be applied where such action is warranted.
Importers are reminded that it is their responsibility to calculate and declare their anti‑dumping 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 SIMA measures and be provided with sufficient information necessary to clear the shipments. To determine their anti‑dumping liability, importers should contact the exporters to obtain the applicable normal values. 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.
The Customs Act (Act) applies, with any modifications that the circumstances require, with respect to the accounting and payment of anti‑dumping 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.
Any questions concerning the above should be directed to:
- Jason Huang: 343‑553‑1891
- Date modified: