GM 2020 IN: Certain grinding media
Statement of Reasons—final decisions

Complainant

[15] The name and address of the complainant is as follows:

Magotteaux Limitée
601 rue Champlain
Magog, QC  J1X 2N1

[16] Magotteaux is a subsidiary of Magotteaux International S.A. (the Magotteaux Group), with its headquarters located in Belgium. The Magotteaux Group has production facilities around the world, including the Magog facility in Canada, and can produce a wide range of GM, including cast and forged, low and high chromium, as well as ceramic grinding beads.^{Footnote 2}

[17] Magotteaux was incorporated in Quebec and has been in operation since 1979. The Magog facility is the only GM production facility in Canada under the Magotteaux Group and produces iron cast grinding media exclusively.^{Footnote 3}

[18] Magotteaux is the only known producer of GM in Canada.^{Footnote 4}

Trade unions

[19] According to the complainant, persons employed in the production of GM in Canada are not represented by a trade union.^{Footnote 5}

Importers

[20] At the initiation of the investigations, the CBSA identified three potential importers of the subject goods based on both information provided by the complainant and CBSA import entry documentation. All of the potential importers were asked to respond to the CBSA’s Importer request for information (RFI).^{Footnote 6}

[21] The CBSA received one response to the Importer RFI from a non-resident importer. CBSA officers performed verifications by way of Verification Questionnaires for the importer, Vega Industries Limited USA.

Exporters

[22] At the initiation of the investigations, the CBSA identified 11 potential exporters, producers, and vendors of the subject goods from CBSA import documentation and from information submitted in the complaint. All of the potential exporters, producers, and vendors were asked to respond to the CBSA’s Dumping RFI^{Footnote 7} and the CBSA’s Subsidy RFI.^{Footnote 8}

[23] One exporter, its subsidiary vendor, and one of its subsidiary producers collectively responded to the Dumping RFI. The exporter and the subsidiary producer also collectively responded to the Subsidy RFI. Information on the results of the investigations pertaining to the exporter are summarized in the Results of the dumping investigation and Results of the subsidy investigation sections, found below.

[24] CBSA officers performed verifications by way of Verification Questionnaires for the exporter AIA Engineering Ltd. and its subsidiary producer Welcast Steels Ltd.

Government

[25] For the purposes of these investigations, “Government of India or GOI” refers to all levels of government, i.e., federal, central, provincial/state, regional, municipal, city, township, village, local, legislative, administrative or judicial, singular, collective, elected or appointed. It also includes any person, agency, enterprise, or institution acting for, on behalf of, or under the authority of, or under the authority of any law passed by, the government of that country or that provincial, state or municipal or other local or regional government.

[26] At the initiation of the investigations, the CBSA sent a Government Subsidy RFI^{Footnote 9} to the GOI. The GOI provided a response to the Government Subsidy RFI.

Product definition^{Footnote 10}

[27] For the purpose of these investigations, subject goods are defined as:

Additional product information^{Footnote 11}

[28] For greater clarity, the product definition does not cover:

• Grinding media produced through the forging or stamping method; and
• Chromium cast iron grinding media with an alloy composition of less than 10 percent chromium (< 10% of total mass)

[29] Within the mineral processing industry, a range of grinding conditions or environments exists and each of these mill environments presents particular conditions for grinding media that require the application of specific physical and chemical properties for optimum grinding media performance. Size and chemical composition of grinding media are two important factors influencing a grinding’s wear resistance and performance in a ball mill.

[30] Size of the grinding media depends on the mill feed size (particle size of material supplied to the mill) and achieved degree of fineness (size and percentage of required class size material at the exit of a ball mill). Grinding media are typically spherical in shape.

[31] GM are normally produced using a metal alloy composed mostly of steel scrap and alloys such as chromium. The chromium content of grinding media is another key component to the grinding media’s performance and affects the grinding media’s wear resistance against abrasion and corrosion, as well as the level of hardness of the grinding media.

[32] GM normally encompasses an alloy composition of 10 percent or more chromium content, with typical thresholds that do not exceed 35% chromium. The chromium content of GM is measured by testing the total chemical composition of the alloy with a spectrometer, determining the percentage of chromium to the total mass of the alloy.

[33] Production of GM in Canada focuses on the market segment of greatest demand which is 1” to 1 ½” grinding balls of 15% to 18% chromium content. There are no international technical standards applicable to grinding media.

Production process^{Footnote 12}

[34] The production of GM normally has seven main steps, which entails: (1) segregation of scrap metal, melting and preparation of the alloy; (2) preparation of the sand casts; (3) pouring of alloy and sand casting; (4) breaking of the casts; (5) heat treatment; (6) quenching; and (7) quality control.

1. Segregation of scrap metal, melting and preparation of the alloy

[35] GM is produced using steel scrap metal as the main raw material input, consisting of iron and a variety of alloys. A high Cr content is preferable when pricing of this raw material is competitive, otherwise, mixed scrap is used, and the Cr content adjusted by adding ferrochrome (FeCr).

[36] The scrap metal is prepared and loaded into the electric induction melting furnace to be melted down to a “liquid state” available for pouring. Once molten, the alloy composition is tested and adjusted through the addition of other metals, principally FeCr, in order to achieve the correct chemical composition. For each batch, the chemical composition of the alloy is tested with a spectrometer and corrective additions are made until the alloy`s chemical composition falls within the desired tolerance range.

[37] The molten metal is then transferred to hand ladles where the degassing process is done. After degassing, slag is skimmed off from the molten metal. The batch is then transferred into the pouring tank, a heated tank located above a casting line from which the alloy is poured into the sand casts.

2. Preparation of the sand casts

[38] First, the sand mould, in which the liquid alloy will be poured, is shaped through an automated process. The moulds are created by pouring a green sand mix into a moulding chamber using compressed air. The sand is then squeezed between a ram and a swing, which are provided with a set of matching pattern plates that can be changed depending on the grinding media size to be produced.

3. Pouring of alloy and sand casting

[39] Next, the liquid alloy, having been transferred to the pouring tank, is poured through the pouring sprue, a hole on the top of the sand mould left by the pattern impressions. The alloy then fills the inner cavities shaped in the right ball sizes by the pattern plates. Once poured, there is a “cool down” period, allowing the alloy to cool down and solidify within the cavities, leaving a set of solid metal balls connected by metal sprues.

4. Breaking of the casts

[40] Once the metal alloy has solidified back to a solid shape, the sand mould with the solid metal balls inside, is transferred into the first of two rotary breaking drums. In the first “shake-out” drum, the sand mould is broken, and the sand taken out of the process, leaving only the metal grinding balls and pouring sprue. The balls and the sprues are then transferred to a second “breaker” drum to separate the balls from one another and break the sprues connecting each ball. The balls are then transferred into containers for another cooling period between 24-48 hours.

5. Heat Treatment

[41] After cooling, the balls are moved to the heat treatment process. The balls move by conveyor to a furnace, which evenly and uniformly heats the balls to a specified temperature dependent upon required hardness.

6. Quenching

[42] Once the heat treatment is completed, the grinding balls are quenched by placing the batch in a bath filled with a polymer-based quenching fluid. This involves the controlled cooling of a metal from a high temperature to a cooler temperature to facilitate the formation of the desired microstructure and physical properties. This thermal shock creates a stress inside the balls, making them achieve a hardness level measured on the Rockwell C scale using a durometer.

7. Quality control

[43] Finally, quality tests such as metallurgical microscopic observations, experimental ball mills test, impact testing, and hardness tests are carried out to determine if the hardness of the balls is within the acceptable range. The balls are then packaged, ready to be shipped to customers.

Product use^{Footnote 13}

[44] GM are used to crush or grind material in a grinding mill. The type of mills in which this takes place are generally called ball mills, which are facilities in which a grinder is operated to crush mineral ore or raw materials. In the mining industry, the grinding process is the first step in the extraction of the ore from the mineral substrate in which it is found. Grinding mills are used for the comminution of iron ore, gold, copper, or other types of ores. In the cement industry, the grinding mill is essential to the comminution of limestone and other raw materials used in the production of cement and clinker.

[45] A ball mill is a cylindrical device used in grinding (or mixing) materials like ore, chemicals, water, or cement production raw materials. Ball mills rotate around a horizontal axis, partially filled with the material to be ground plus the grinding medium, with or without the addition of water (i.e., wet or dry mill conditions). The internal cascading effect caused by the rotation of the material to be ground with the grinding media causes the material to be reduced to a powder or slurry. Ball mills are designed to operate continuously, fed at one end with the material to be ground and the grinding media, and discharging the ground material at the other end.

[46] In the mining industry, dry grinding mills are primarily used when the downstream preparation process requires dry material, or in order to save water resources in dry environments. However, wet grinding is generally the norm in the Canadian mining and cement industries.

[47] Ball mills can grind various ores and other materials either wet or dry. There are two kinds of ball mills, grate type and overflow type, due to different ways of discharging material. Different ball mills will require different types of grinding, each material having its own specific properties and advantages.

Classification of imports

[48] The dumped and subsidized goods are normally classified under the following tariff classification numbers: 7325.91.00.10 and 7325.91.00.90.

[49] The listing of tariff classification numbers is for convenience of reference only. The tariff classification numbers may include non-subject goods. Also, subject goods may fall under tariff classification numbers that are not listed. Refer to the product definition for authoritative details regarding the subject goods.

Normal value

[64] 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 based on either the methodology of paragraph 19(a) 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.

[65] 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.

Export price

[66] 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.

[67] 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).

[68] Where, in the opinion of the CBSA, sufficient information has not been furnished or is not available, export prices are determined pursuant to a ministerial specification under subsection 29(1) of SIMA.

Margin of dumping

[69] The margin of dumping by exporter is equal to the amount by which the total normal value exceeds the total export price of the goods, expressed as a percentage of the total export price. All the subject goods shipped to Canada during the POI are included in the margins of dumping of the goods. Where the total normal value of the goods does not exceed the total export price of the goods, the margin of dumping is zero.

Results of the dumping investigation

AIA Engineering Ltd.

[70] AIA Engineering Ltd. (AIA), established in 1979, is a publicly traded limited corporation in India and a manufacturer and exporter of GM. AIA has a total of three production facilities capable of producing subject goods, i.e. Moraiya and Kerala facilities located in Gujarat and Trichy facility located in Tamilnadu.

[71] Welcast Steels Ltd. (Welcast), established in 1972, is a publicly listed company in India and a subsidiary of AIA. Welcast is a manufacturer of GM with its only production facility located in Karnataka.

[72] Vega Industries Middle East F.Z.C. (Vega ME), located in Ajman, UAE was established in 2002 and is a wholly owned subsidiary of AIA. Vega ME is a global distributor of products produced by AIA and its affiliated companies, including the subject goods exported to Canada.

[73] During the POI, all of the subject goods exported by AIA were sold to Vega Industries Limited USA (Vega USA). Vega USA, located in Brentwood, Tennessee, is 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.

[74] AIA, Welcast, and Vega ME collectively provided substantially complete responses to the Exporter dumping RFI and supplemental dumping RFIs, including a database of domestic sales of GM during the PAP. Vega USA provided a substantially complete response to the Importer RFI and three supplemental RFIs.

[75] As per the CBSA’s review and verification of AIA’s information, all of the issues raised during the course of the dumping investigation were addressed. AIA’s submission was considered to be substantially complete and reliable for purposes of the final determination.

[76] Where there were sufficient domestic sales, normal values were determined using the methodology of section 15 of SIMA, based on domestic selling prices of like goods. Where there were insufficient sales of like goods that met the conditions of sections 15 and 16 of SIMA, normal values were determined using the methodology of paragraph 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, and a reasonable amount for profits.

[77] The amount for profits was determined in accordance with subparagraph 11(1)(b)(ii) of the SIMR, based on the profits earned by AIA on its domestic sales of goods of the same general category during the PAP.

[78] During the POI, all of the 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.

[79] The reliability test revealed that the export prices in accordance with section 24 of SIMA were unreliable and, therefore, export prices were determined in accordance with section 25 of SIMA.

[80] The total normal value compared to the total export price results in a margin of dumping of 15.7% for AIA, expressed as a percentage of the export price.

All other exporters

[81] For exporters of subject goods that did not provide a response to the dumping RFI or did not furnish sufficient information, the normal values and export prices were determined on the basis of facts available.

[82] In establishing the methodology for determining normal values and export prices under the ministerial specification, the CBSA analyzed all the information on the administrative record, including the complaint, the CBSA’s estimates at the initiation of the investigations, information submitted by the exporter of GM from India, and customs documentation.

[83] The CBSA decided that the normal values determined for the exporter whose submissions were complete and reliable for the final determination, rather than the information provided in the complaint or estimated at initiation, would be used to establish the methodology for determining normal values since it reflects exporters’ actual trading practices during the POI. One exporter, AIA, provided substantially complete and reliable submissions.

[84] The CBSA examined the difference between the normal value and the export price for each individual transaction for AIA and decided that the highest amount by which the normal value exceeded the export price (expressed as a percentage of export price), was an appropriate basis for determining normal values. The transactions were examined to ensure that no anomalies were considered, such as a very low volume or value, effects of seasonality or other business factors. No such anomalies were identified. This methodology limits the advantage that an exporter may gain from not providing the necessary information requested in a dumping investigation as compared to an exporter that did provide the necessary information.

[85] The CBSA considered that the information submitted on the CBSA’s customs entry documentation was the best information on which to determine the export price of the goods as it reflects actual import data.

[86] Based on the above methodologies, for exporters that did not provide a response to the Dumping RFI, the margin of dumping of subject goods originating in or exported from India was determined to be 38.7%, expressed as a percentage of export price.

Summary of results—dumping

[87] A summary of the results of the dumping investigation respecting all subject goods released into Canada during the POI is as follows:

[88] Under paragraph 41(1)(a) of SIMA, the CBSA is required to terminate an investigation in respect of any goods of an exporter if it is satisfied that the goods have not been dumped or the margin of dumping of the goods of that exporter is insignificant, meaning a margin of dumping that is less than 2% of the export price of the goods.

[89] The goods under investigation have been dumped and the margins of dumping determined for the goods are greater than the threshold of 2% and are therefore not considered insignificant. As a result, pursuant to paragraph 41(1)(b) of SIMA, the CBSA made a final determination of dumping respecting certain GM originating in or exported from India.

[90] A summary of the results of the dumping investigation respecting the subject goods released into Canada during the POI are presented in Appendix 1.

Results of the subsidy investigation

[98] At the initiation of the investigation, the CBSA sent Subsidy RFIs to the GOI, as well as to all known exporters, producers and vendors of GM in India.

[99] The GOI requested an extension to submit their response to the Government Subsidy RFI. The CBSA granted the extension and the GOI provided an incomplete response on the extended deadline of February 9, 2021. Following its review, on March 23, 2021, the CBSA sent a deficiency letter to the GOI stating that their response was incomplete.

[100] On April 13, 2021, the GOI responded to the deficiency letter by providing supplemental information, but the submission was still considered to be deficient and on May 11, 2021, the CBSA sent a second deficiency letter to the GOI. By the closing of the record date of June 8, 2021, the GOI had not responded to the second deficiency letter.

[101] Deficiencies identified for the GOI, amongst other issues, was that it did not provide information pertaining to the majority of the alleged subsidy programs and did not include copies of the required legislation, regulations and government notices concerning the alleged subsidy programs. The GOI was informed that should it elect to submit a complete response to the Government Subsidy RFI in sufficient time to allow full analysis and verification of the information provided, the CBSA would endeavor to use such information for the purpose of the final phase of the subsidy investigation.

[102] As a result, the CBSA does not have the information necessary to determine if the programs that were used by the cooperative exporter constitute actionable subsidies, or to determine the actual amount of subsidy for the cooperative exporter using the regular subsidy provisions of SIMA. Without complete information from the GOI, the CBSA cannot determine if any of these programs are specific, a condition that is necessary in determining that a program constitutes an actionable subsidy under SIMA.

[103] In consideration of the level of cooperation received from the exporter who provided a substantially complete response to the Subsidy RFI, the CBSA determined an amount of subsidy for the cooperative exporter pursuant to a ministerial specification under subsection 30.4(2) of SIMA based on the information available, including the information provided in their responses to the Subsidy RFI and SRFIs.

AIA Engineering Ltd. (AIA)

[104] AIA is a producer and exporter of subject goods and provided substantially complete responses to the Subsidy RFI and SRFIs including subsidy Verification Questionnaires.

[105] For purposes of the final determination, AIA was found to have received countervailable benefits from the following six subsidy programs:

1. Program 2: Duty Drawback Scheme (DDS)
2. Program 4: Export Promotion Capital Goods Scheme (EPCG)
3. Program 5: Merchandise Exports from India Scheme (MEIS) / Scheme for Remission of Duties and Taxes on Exported Products (RoDTEP)
4. Program 6: Interest Equalization Scheme on Pre and Post Shipment Rupee Export Credit
5. Program 9: Electricity Duty Exemption
6. Program 10: Electricity Duty Reduction on Furnace

[106] The above subsidy programs were considered to be specific and therefore actionable. This decision was made from the analysis of the information provided by AIA. For purposes of the final determination, the amount of subsidy for AIA is 6.3%, expressed as a percentage of the export price.

[107] A description of identified programs and incentives is included in Appendix 3.

All other exporters

[108] For all other exporters of subject goods originating in or exported India, the CBSA determined an amount of subsidy, pursuant to a ministerial specification under subsection 30.4(2) of SIMA, on the basis of the following methodology:

1. the amount of subsidy for each of the six programs, as found at the final determination, for the producer/exporter located in India for whom the CBSA has sufficient information to determine an amount of subsidy, plus
2. the highest amount of subsidy for the six programs listed in (1), applied to each of the remaining ten potentially actionable subsidy programs for which sufficient information is not available or has not been provided at the final determination

[109] Using the above methodology, for the final determination, the amount of subsidy for all other exporters is 34.5%, expressed as the percentage of the export price.

Summary of results—subsidizing

[110] A summary of the results of the subsidy investigation respecting all subject goods released into Canada during the POI is as follows:

[111] Under paragraph 41(1)(a) of SIMA, the CBSA is required to terminate an investigation in respect of any goods of an exporter if the CBSA is satisfied that the goods have not been subsidized or the amount of subsidy on the goods of that exporter is insignificant.

[112] Pursuant to subsection 2(1) of SIMA, an amount of subsidy of less than 1% of the export price of the goods is defined as insignificant. However, according to section 41.2 of SIMA, the CBSA is required to take into account Article 27.10 of the WTO Agreement on Subsidies and Countervailing Measures (ASCM) when conducting a subsidy investigation. This provision stipulates that a countervailing duty investigation involving a product from a developing country should be terminated where the authorities determine that the overall level of subsidies granted upon the product in question does not exceed 2% of its value calculated on a per unit basis.

[113] Neither the ASCM nor SIMA defines or provides any guidance regarding the determination of a “developing country” for purposes of Article 27.10 of the ASCM. As an administrative alternative, the CBSA refers to the Development Assistance Committee List of Official Development Assistance Recipients^{Footnote 15} and regards a country as developing if it is listed as a least developed country, other low income country, lower middle income country or territory. As India is included in these lists for 2021, the CBSA extends developing country status to India for purposes of this investigation.

[114] As can be seen from the table above, the goods under investigation have been subsidized, and the amounts of subsidy determined are greater than the threshold of 2% and therefore not insignificant. As a result, pursuant to paragraph 41(1)(b) of SIMA, the CBSA made a final determination of subsidy respecting certain GM originating in or exported from India.

[115] A summary of the results of the subsidy investigation respecting the subject goods released into Canada during the POI are presented in Appendix 1.

Dumping representations

Whether Market Segment is a Product Characteristic

Case briefs

Counsel for AIA submitted during the investigation and in the case brief that there are two distinct market segments for grinding media (i.e., cement and mining) and that the most important factor affecting AIA’s price quoted to its customers is the application for which the customer is buying the material. AIA submitted that pricing and profitability in the cement segment is considerably higher than those in the mining segment, while cost differences are minor between the two segments.^{Footnote 22}

Counsel for AIA further submitted that price is the key distinguishing characteristic between the cement and mining segments and provided supporting data indicating that AIA’s POI average domestic selling price to the cement segment was higher than its average selling price to the mining segment. AIA argued that there is no fair comparison between normal value and export price unless this fundamental difference is fully taken into account, and cited that a fair comparison between normal value and export price is required according to Article 2.4 of the WTO Anti-Dumping Agreement (ADA).^{Footnote 23}

Counsel for AIA submitted that market segment or end-use has been considered as a product characteristic for model matching purposes by the CBSA in its past investigations, such as Dry Wheat Pasta and Fabricated Industrial Steel Components.^{Footnote 24} Counsel for AIA argued that an adjustment to normal value pursuant to paragraph 5(d) of the SIMR should be made if the CBSA rejects market segment as a product characteristic and submitted that the amount for the adjustment should be equal to the POI average price difference between AIA’s domestic sales to the cement and mining segments.^{Footnote 25}

Counsel for the complainant submitted during the investigation that grinding media presents the same physical characteristics and is an abrasive used for comminution to grind or reduce matter into particulates, regardless of its end-use or of the end-users.^{Footnote 26} Counsel for the complainant also submitted that market segment is not a product characteristic affecting price comparability for purposes of applying section 15 or 19 of SIMA and argued that AIA did not point to any differences (such as conditions and terms of sale, taxation, levels of trade, quantities, physical characteristics) other than price that affect price comparability.^{Footnote 27}

Counsel for the complainant submitted that grinding media is produced using the same production lines, the same raw materials, and the same production techniques, regardless of who the customer may be, and results in similar costs of production. The complainant also submitted that scrap pricing and chromium content are the most important drivers of costs and, accordingly, prices.^{Footnote 28}

Counsel for the complainant submitted that the end-use distinction is not a matter that imparts fundamental physical characteristic distinctions, and argued that the grinding media described as subject goods is essentially the same as the like goods in this investigation. Counsel for the complainant further submitted that end-use or market segment was not deemed of relevance in characterising the product’s characteristics in the investigations conducted by the governments of Brazil and India involving grinding media.^{Footnote 29}

Reply submissions

Counsel for the complainant reiterated its position in the reply submission and submitted that “AIA’s argument that price in itself must be considered as an adjustment factor to reflect price comparability under the ADA is simply wrong”. Counsel for the complainant further refuted AIA’s argument by referring to Vega USA’s response to the importer RFI and submitted that the method used by Vega USA to determine selling prices to different end-users (i.e., mining and cement) is essentially the same.^{Footnote 30}

Counsel for the complainant submitted that section 5 of the SIMR makes reference to qualitative differences between the subject goods and the like goods wherein an adjustment would be warranted and argued that AIA’s approach to propose the Regulation 5 adjustment is not an adjustment provided for under the regulatory construct.^{Footnote 31}

CBSA’s response

The CBSA has reviewed the information submitted by AIA and has taken into consideration the representations provided by AIA and the complainant. Based on the information on the record, the CBSA found that there was no difference in the costing of grinding media based upon application (i.e., cement or mining), although the selling prices to different market segments varied during the POI. In addition, the CBSA found that the most significant factors affecting costs, ultimately price, are materials and energy.^{Footnote 32} The CBSA did not find that the application of grinding media is a cost factor.

The CBSA also found that the same grinding media can be used in both the mining and cement segments as they are interchangeable, as such, the application of grinding media does not impact the product characteristics (i.e., grade, size, shape and heat treatment) identified by the CSBA at the initiation of the investigations. For purposes of this investigation, the CBSA did not consider market segment or end-use as a product characteristic. The CBSA recognizes that market segment or end-use has been used as a product characteristic in previous investigations, however, decisions on such issues were made on a case-by-case basis.

Paragraph 5(d) of the SIMR provides that the selling price of like goods shall be adjusted if the conditions of sale differ between the subject goods and the like goods, which is normally referred to the differences of actual payment periods in the domestic market and for sales to the importer. The market segment issue is irrelevant to section 5 of the SIMR.

Amount for Profits Determined under Paragraph 11(1)(b) of SIMR

Case briefs

Counsel for AIA submitted that the CBSA made no distinction between the amounts for profits realized on AIA’s domestic sales to the cement vs. mining segments at the preliminary determination, and argued that this unjustifiable rejection of this distinction is unfair considering that AIA’s export sales to Canada were predominantly made to the mining segment.

Counsel for AIA further submitted that AIA earns a much higher profit on domestic sales to the cement segment than the profits earned on its domestic sales to the mining segment, and argued that the amount for profits earned on domestic sales to the cement segment can’t be applied to AIA’s export sales to the mining segment. As such, AIA submitted that separate profit ratios should be applied for sales to the mining and cement segments when determining paragraph 19(b) normal values.^{Footnote 33}

CBSA’s response

Paragraph 11(1)(b) of the SIMR provides direction on what the CBSA is to use as a reasonable amount for profits when calculating paragraph 19(b) normal values, and profit must be established in accordance with a hierarchy provided under subparagraph 11(1)(b)(i) to 11(1)(b)(vi) of the SIMR.

Since market segment was not considered as one of the product characteristics for purposes of selecting like goods in this investigation, and as explained in the Results of the dumping investigation section, a reasonable amount for profits determined for AIA was made pursuant to subparagraph 11(1)(b)(ii) based on the weighted average profits earned on domestic sales of goods that are of the same general category as the subject goods sold to Canada, regardless of market segment or end-use.

Application of Paragraph 11(1)(c) of SIMR

Case briefs

Counsel for AIA submitted that, when determining paragraph 19(b) normal values, a reasonable amount for administrative, selling and all other costs must first be determined in accordance with subparagraph 11(1)(c)(i) of the SIMR on the basis of the GS&A expenses incurred by the exporter on its domestic sales, and further submitted that the CBSA is permitted to consider the other alternative (i.e., subparagraph 11(1)(c)(ii)) only if a reasonable amount can’t be established under subparagraph 11(1)(c)(i) of the SIMR.

Counsel for AIA argued that the GS&A expenses incurred by its related trading company (i.e., Vega Middle East) for the export sales to Canada are irrelevant to AIA’s GS&A expenses incurred on its domestic sales, and submitted that the application of subparagraph 11(1)(c)(i) of the SIMR would preclude the inclusion of those GS&A expenses as AIA had provided a GS&A ratio on its domestic sales.^{Footnote 34}

Reply submissions

Counsel for the complainant refuted the GS&A claim made by AIA and argued that, in applying subparagraph 11(1)(c)(ii) of the SIMR, the GS&A expenses must include all GS&A incurred in the sequence of the sales transactions by all parties involved in the sales transaction.^{Footnote 35}

CBSA’s response

The CBSA has reviewed and verified the information submitted by AIA and considered the costing information of the exporter to be well supported and adequate, as such, a reasonable amount for administrative, selling and all other costs determined for AIA was made pursuant to subparagraph 11(1)(c)(i) of the SIMR on the basis of the GS&A expenses that are reasonably attributable to the production and domestic sales of like goods made by the exporter.

Application of Section 22 of SIMR

Case briefs

Respecting the industry profit calculated at the preliminary determination for purposes of estimating the section 25 export price, counsel for AIA argued that the CBSA claimed that the amount for profit was estimated in accordance with paragraph 22(c) of the SIMR, however, it failed to demonstrate that the requirements of that provision were met. Counsel for AIA further argued that the amount for profit used by the CBSA was plainly unreasonable when the CBSA had other financial data available on the record regarding the actual profits earned by the two grinding media suppliers in Canada (i.e., Vega USA and the complainant).^{Footnote 36}

Reply submissions

Counsel for the complainant submitted that the amount for profit calculated by the CBSA was appropriate and fully in holding the application of the SIMR, and argued that the use of the complainant’s profit as a benchmark was not warranted because the profit was suppressed on account of the injury caused by the presence of dumped and subsidized subject goods in the Canadian market.^{Footnote 37}

CBSA’s response

Paragraphs 22(a) to (c) of the SIMR prescribe the methods by which the amount for profit may be determined for purposes of calculating the section 25 export price. It is the CBSA’s policy that paragraphs 22(a) to (c) are applied in sequence, and the selection of which goods fall in the category of "like" goods, goods of "the same general category" or goods that are of "the group or range of goods that is next largest to the same general category" is at the discretion of the President of the CBSA. The CBSA must be satisfied that the goods selected reasonably fall in the definition of the category being used.

Given that only one of the two interested parties (i.e., the complainant and Vega USA) provided the required financial information in accordance with section 22 of the SIMR, the CBSA is precluded from using the profit data from a single party in order to maintain the confidentiality of the data provided, as such, paragraphs 22(a) and 22(b) cannot be considered in establishing an amount for profit.

The CBSA utilized alternative sources of information in applying paragraph 22(c) of the SIMR, and the best information available for this investigation is a “Financial Performance Data” report published by Innovation, Science and Economic Development Canada (ISEC). For the purposes of the final determination, the amount for profit was determined pursuant to paragraph 22(c) of the SIMR, by using the most recent profit data available from a report generated using ISEC’s 2019 Financial Performance Data. The industry selected by the CBSA is classified as North American Industry Classification System (NAICS) 331511—iron foundries industry, which represents goods that are of the group or range of goods that is next largest to the same general category.

Subsidy representations

Duty Drawback Scheme (DDS)

Case briefs

Counsel for AIA submitted that the amount of subsidy under DDS should be based exclusively on the DDS value related to subject goods exported to Canada and that were received during the POI.^{Footnote 38}

Reply submissions

Counsel for the complainant refuted the statement made by counsel for AIA and submitted that under DDS, products made out of duty paid inputs are exported and thereafter a refund of duty is claimed on the basis of two methods: i) actual duty/tax incidence (brand rate) or ii) averages (all industry rates). The complainant submitted that AIA’s argument that the amount of subsidy should be based exclusively on the benefit amount related to subject goods is incorrect and should be set aside and that the CBSA was correct to proceed to calculate the benefit received as it did.^{Footnote 39}

CBSA’s response

Due to the lack of a complete response from the GOI, there is not sufficient information on the record to determine whether the program are specific pursuant to subsection 2(7.2) or subsection 2(7.3) of SIMA; nor is there sufficient information to indicate that the subsidy program is not specific pursuant to the criteria set out in subsection 2(7.1) of SIMA. The available information on the record indicates that this program does not appear to be generally available to all enterprises in India. As a result, the CBSA determined an amount of subsidy pursuant to a ministerial specification under subsection 30.4(2) of SIMA based on the information provided by AIA. The CBSA calculated the amount of subsidy based on the benefits received by AIA under the DDS that were attributable to all sales during the POI.

Export Promotion Capital Goods Scheme (EPCG)

Case briefs

Counsel for AIA submitted that EPCG allows the import of capital goods for pre-production, production and post-production without payment of customs duty and the benefit applies to the production of goods sold in all markets. Counsel for AIA submitted the benefit should be allocated accordingly. Counsel for AIA also submitted that certain type of duties exempted under EPCG are not countervailable, therefore, they should not be included in the calculation of the amount of subsidy, and further argued that this is supported by the decisions made by the US Department of Commerce and the European Commission.^{Footnote 40}

Reply submissions

Counsel for the complainant refuted the statement made by counsel for AIA and submitted that benefits received under EPCG establish the countervailability of the full amount received under that program “on the basis of the unpaid customs duty on imported capital goods spread across a period, which reflects the normal depreciate period of such capital goods.” As such, the CBSA must refer back to the EPCG licenses and cumulate the amount of duty saved appearing on the face of the licenses without any adjustments.^{Footnote 41}

CBSA’s response

Due to the lack of a complete response from the GOI, there is not sufficient information on the record to determine whether the program are specific pursuant to subsection 2(7.2) or subsection 2(7.3) of SIMA; nor is there sufficient information to indicate that the subsidy program is not specific pursuant to the criteria set out in subsection 2(7.1) of SIMA. The available information indicates that this program does not appear to be generally available to all enterprises in India. As a result, the CBSA determined an amount of subsidy pursuant to a ministerial specification under subsection 30.4(2) of SIMA based on the information provided by AIA. The CBSA calculated the amount of subsidy based on the net benefits received by AIA under the EPCG that were attributable to all production during the POI.

Merchandise Export from India Scheme / Scheme for Remission of Duties and Taxes on Exported Products (MEIS)

Case briefs

Counsel for AIA submitted that the amount of benefit under this program should be limited to amounts received during the POI in respect of exports of subject goods to Canada.^{Footnote 42} In addition, AIA’s counsel submitted that the program has been terminated and that no amount of subsidy should apply to future shipments in the event that a final measure is imposed.^{Footnote 43}

Reply submissions

Counsel for the complainant refuted the statement made by counsel for AIA and submitted that another program is replacing MEIS, Scheme for Remission of Duties and taxes on Exported Products (RoDTEP) and provided new information to support its argument.^{Footnote 44}

CBSA’s response

Due to the lack of a complete response from the GOI, there is not sufficient information on the record to determine whether the program are specific pursuant to subsection 2(7.2) or subsection 2(7.3) of SIMA; nor is there sufficient information to indicate that the subsidy program is not specific pursuant to the criteria set out in subsection 2(7.1) of SIMA. The available information indicates that this program does not appear to be generally available to all enterprises in India. As a result, the CBSA determined an amount of subsidy pursuant to a ministerial specification under subsection 30.4(2) of SIMA based on the information provided by AIA. The CBSA calculated the amount of subsidy based on the benefits received by AIA under the MEIS that were attributable to all sales during the POI.

In addition, based on the information available on the record and due to the lack of a response from the GOI, the CBSA determined the amount of subsidy for future shipments pursuant to a ministerial specification under subsection 30.4(2) of SIMA based on the information on the record. The CBSA calculated the amount of subsidy for future shipments based on the benefits received by AIA during the POI.

Gujarat Electricity Duty Exemption Scheme (GEDES) and Electricity Duty Reduction on Furnace

Case briefs

Counsel for AIA submitted the GOI has demonstrated that this program is not countervailable as there is no basis for a finding of specificity. In addition, counsel for AIA argued that the amount of benefit estimated at the preliminary determination under this program was overstated.^{Footnote 45}

Reply submissions

Counsel for the complainant refuted the statement made by counsel for AIA and submitted that GEDES is specific as it provides duty exemption to certain select industrial undertakings for a period of five years.^{Footnote 46} Counsel for the complainant also argued that the Electricity Duty Reduction on Furnace program is also specific as it reduces the rate of duty on electricity consumed in electrochemical, electrolyte and electrometallurgy processes carried out by specific industrial establishments operating in a specific geographic area.^{Footnote 47}

CBSA’s response

Due to the lack of a complete response from the GOI, there is not sufficient information on the record to determine whether the program are specific pursuant to subsection 2(7.2) or subsection 2(7.3) of SIMA; nor is there sufficient information to indicate that the subsidy programs are not specific pursuant to the criteria set out in subsection 2(7.1) of SIMA. The available information indicates that these two programs do not appear to be generally available to all enterprises in India. As a result, the CBSA determined an amount of subsidy pursuant to a ministerial specification under subsection 30.4(2) of SIMA.

Interest Equalization Scheme on Pre and Post Shipment Rupee Export Credit

Case briefs

Counsel for AIA submitted that this program was ended on June 30, 2021 and in the event that final measures are imposed, no amount of subsidy should be imposed on future exports to Canada.^{Footnote 48}

Reply submissions

Counsel for the complainant refuted the statement made by counsel for AIA and submitted that this program has been extended. Even though the extension conditions have been delayed, the CBSA should countervail benefits received under this program based on rates known to have been conferred under this program during the POI.^{Footnote 49}

CBSA’s response

Due to the lack of a complete response from the GOI, there is not sufficient information on the record to determine whether the program are specific pursuant to subsection 2(7.2) or subsection 2(7.3) of SIMA; nor is there sufficient information to indicate that the subsidy program is not specific pursuant to the criteria set out in subsection 2(7.1) of SIMA. The available information indicates that this program does not appear to be generally available to all enterprises in India. As a result, the CBSA determined an amount of subsidy pursuant to a ministerial specification under subsection 30.4(2) of SIMA.

In addition, based on the information available on the record and due to the lack of a response from the GOI, the CBSA determined the amount of subsidy for future shipments pursuant to a ministerial specification under subsection 30.4(2) of SIMA based on the information on the record. The CBSA calculated the amount of subsidy for future shipments based on the benefits received by AIA during the POI.

Government of India Response

Case briefs

Counsel for AIA submitted that the information requested by the CBSA in the deficiency letters sent to the GOI was unnecessary or had already been provided by the GOI, particularly, regarding some programs that are clearly export subsidies (specific on that basis), the CBSA would not need or use the information relating to benefits received by all sectors of the Indian economy, which impose an undue burden contrary to the WTO Agreement on Subsidies and Countervailing Measures.^{Footnote 50}

CBSA’s response

As noted in the earlier sections of this Statement of Reasons respecting the results of the CBSA’s subsidy investigation, the information submitted by GOI was found to be incomplete. In response to the subsidy RFI, the GOI failed to provide information pertaining to the majority of the alleged subsidy programs and did not include copies of the required legislation, regulations and government notices concerning the alleged subsidy programs.

The GOI was given a second opportunity to submit a complete response following the first deficiency letter, however, the second response did not sufficiently address the deficiencies identified by the CBSA. The CBSA did not receive a response to the second deficiency letter from the GOI.

Export Subsidies

Case briefs

Counsel for AIA submitted that programs 2, 4, 5 and 6 are export subsidies as they are contingent on exports and argued that under these programs should reduce the provisional dumping duties according to section 10 of SIMA.^{Footnote 51}

Counsel for the complainant agreed that programs 2, 4, 5 and 6 are export subsidies and the benefits of these export subsidy programs should be allocated only on the recipient’s export sales and not on the total sales of the beneficiary.^{Footnote 52}

CBSA’s response

For the purposes of the final determinations, the CBSA could not determine whether the named subsidy programs are export subsidies due to the lack of a complete response by the GOI, as such, section 10 of SIMA is not applicable.

Undisclosed Countervailable Programs and Benefits

Case briefs

Counsel for the complainant submitted that programs administered by the Gujarat Industrial Development Corporation (“GIDC”) were in place throughout the entire POI. GIDC acts as an incentivized industrial development location providing 216 advantages. In addition, counsel for the complainant submitted that AIA and Welcast failed to address the benefits of their operations being in GIDC Estates. In addition, AIA failed to inform the CBSA of new, or undisclosed subsidization programs in place in areas or states where AIA and Welcast operate.

These incentives were put in place during the POI and AIA ought to have disclosed this to the CBSA, regardless of whether they received any specific countervailable benefit under the program. Counsel for the complainant submitted that the program must be added to the list of potentially countervailable programs and therefore estimated benefits must be added to the Final Determination subsidy rates calculated by the CBSA in this investigation.^{Footnote 53}

Reply submissions

Counsel for AIA refuted the statement made by the complainant and submitted that AIA has fully disclosed all programs under which it received benefits and their information is consistent with the responses submitted by the GOI. Specifically, AIA disclosed that it has not been allotted land from GIDC directly but holds land by way of assignment of lease and that it has not received benefits under the Scheme for Capital Subsidy for large industries.^{Footnote 54}

CBSA’s response

The CBSA has reviewed and verified the information submitted by AIA and has not found the programs administered by the GIDC to have benefited AIA or Welcast.