Judgments nº T-435/15 of Tribunal General de la Unión Europea, October 10, 2017

• Resolution Date: October 10, 2017
• Issuing Organization: Tribunal General de la Unión Europea
• Decision Number: T-435/15

In Case T-435/15,

Kolachi Raj Industrial (Private) Ltd, established in Karachi (Pakistan), represented by P. Bentley, QC,

applicant,

v

European Commission, represented by J.-F. Brakeland, M. França and A. Demeneix, acting as Agents,

defendant,

supported by

European Bicycle Manufacturers Association (EBMA), represented by L. Ruessmann, avocat, and J. Beck, Solicitor,

intervener,

APPLICATION pursuant to Article 263 TFEU seeking the annulment of Commission Implementing Regulation (EU) 2015/776 of 18 May 2015 extending the definitive anti-dumping duty imposed by Council Regulation (EU) No 502/2013 on imports of bicycles originating in the People’s Republic of China to imports of bicycles consigned from Cambodia, Pakistan and the Philippines, whether declared as originating in Cambodia, Pakistan and the Philippines or not (OJ 2015, L 122, p. 4), to the extent that it applies to the applicant,

THE GENERAL COURT (Seventh Chamber),

composed of V. Tomljenović, President, A. Marcoulli and A. Kornezov (Rapporteur), Judges,

Registrar: C. Heeren, Administrator,

having regard to the written part of the procedure and further to the hearing on 17 May 2017,

gives the following

Judgment

Background to the dispute

1 By Council Regulation (EEC) No 2474/93 of 8 September 1993 imposing a definitive anti-dumping duty on imports into the Community of bicycles originating in the People’s Republic of China and collecting definitively the provisional anti-dumping duty (OJ 1993 L 228, p. 1), the Council of the European Union imposed a definitive anti-dumping duty of 30.6% on imports of bicycles originating in China.

2 Following an expiry review, pursuant to Article 11(2) of Council Regulation (EC) No 384/96 of 22 December 1995 on protection against dumped imports from countries not members of the European Community (OJ 1996 L 56, p. 1), the Council, by Regulation (EC) No 1524/2000 of 10 July 2000 imposing a definitive anti-dumping duty on imports of bicycles originating in the People’s Republic of China (OJ 2000 L 175, p. 39), decided to maintain the anti-dumping duty of 30.6%.

3 Following an interim review, pursuant to Article 11(3) of Regulation No 384/96, the Council, by Regulation (EC) No 1095/2005 of 12 July 2005 imposing a definitive anti-dumping duty on imports of bicycles originating in Vietnam, and amending Regulation No 1524/2000 (OJ 2005 L 183, p. 1), increased the anti-dumping duty on imports of bicycles originating in China to 48.5%.

4 The Council, by Implementing Regulation (EU) No 990/2011 of 3 October 2011 imposing a definitive anti-dumping duty on imports of bicycles originating in the People’s Republic of China following an expiry review pursuant to Article 11(2) of Regulation (EC) No 1225/2009 (OJ 2011, L 261, p. 2), decided to maintain the anti-dumping duty in force at 48.5%.

5 In May 2013, following an interim review, pursuant to Article 11(3) of Council Regulation (EC) No 1225/2009 of 30 November 2009 on protection against dumped imports from countries not members of the European Community (OJ 2009 L 343, p. 51, corrigendum OJ 2010 L 7, p. 22, ‘the basic regulation’), which was in force at the time, the Council adopted Regulation (EU) No 502/2013 of 29 May 2013 amending Implementing Regulation No 990/2011 (OJ 2013 L 153, p. 17) and decided to maintain the anti-dumping duty in force at 48.5%, except for bicycles exported by three companies, to which individual duty rates were attributed.

6 Following an anti-circumvention investigation, pursuant to Article 13 of the basic regulation, the Council adopted Regulation (EU) No 501/2013 of 29 May 2013 extending the definitive anti-dumping duty imposed by Implementing Regulation No 990/2011 on imports of bicycles originating in the People’s Republic of China to imports of bicycles consigned from Indonesia, Malaysia, Sri Lanka and Tunisia, whether declared as originating in Indonesia, Malaysia, Sri Lanka and Tunisia or not (OJ 2013 L 153, p. 1).

7 Having received a further complaint in 2014, this time concerning possible circumvention of anti-dumping duties involving producers-exporters of bicycles established in Cambodia, Pakistan and the Philippines, the European Commission adopted Implementing Regulation (EU) No 938/2014 of 2 September 2014 initiating an investigation concerning the possible circumvention of anti-dumping measures imposed by Council Regulation No 502/2013 on imports of bicycles originating in the People’s Republic of China by imports of bicycles consigned from Cambodia, Pakistan and the Philippines, whether declared as originating in Cambodia, Pakistan and the Philippines or not, and making such imports subject to registration (OJ 2014 L 263, p. 5, corrigendum OJ 2014 L 341, p. 31). In the course of that investigation, which covered the period from 1 January 2011 to 31 August 2014 (‘the investigation period’), the applicant, Kolachi Raj Industrial (Private) Ltd, a private limited company incorporated in Pakistan, received from the Commission a ‘Form for companies requesting an exemption from possible extended duties’ (‘the form’), which it completed and returned on 17 October 2014.

8 From the information provided in the form, it appeared that the applicant was purchasing bicycle parts from Sri Lanka and China to assemble them into bicycles in Pakistan. Since the applicant had not stated that it was also manufacturing parts in Pakistan, the Commission took the view that the value added to the parts brought in, during the assembly or completion operation, was not greater than 25% of the manufacturing cost in accordance with Article 13(2)(b) of the basic regulation.

9 The applicant enclosed with the form Table F.2 which lists all purchases of parts made by the applicant in the period from 1 September 2013 to 31 August 2014 (‘the reporting period’). That table shows that five companies were designated as suppliers of the applicant, that is to say, Creative Cycles Pvt Ltd, Great Cycles Pvt Ltd, Continental Cycles Pvt Ltd, Kelani Cycles Pvt Ltd and Flying Horse Pvt Ltd. In this regard, although it is true, as the Commission asserts, that the applicant left empty the column ‘related or unrelated’ in the table, which allows for possible relationships with its suppliers to be identified, it should nevertheless be made clear that it did mention the existence of its relationship with Great Cycles, stating on page 11 of the form that its owner and the owner of Great Cycles was one and the same person.

10 On 27 November 2014, a hearing of the applicant was conducted by the Commission, at the applicant’s request, in the course of which the applicant provided a number of clarifications and adhered to the substance of the information contained in the form, namely, that during the reporting period it was carrying out bicycle assembly operations in Pakistan, but that less than 60% of the value of the parts used in those assembly operations came from China and that its assembly operations did not therefore constitute circumvention of the measures in force for the purposes of Article 13(2)(b) of the basic regulation.

11 Following that hearing, the Commission sent a deficiency letter to which the applicant replied on 16 January 2015, acknowledging that it was related not only to Great Cycles, but also to Creative Cycles and Continental Cycles, and stating, in paragraph 2 of its reply, that it had not originally mentioned these latter two companies because the first ‘had stopped its operations’ and the second was ‘already closed’.

12 A verification visit was conducted on 17 and 18 February 2015, not as originally planned at the applicant’s premises in Karachi (Pakistan), but, for security reasons and with the applicant’s agreement, in Katunayake (Sri Lanka), at the premises of Great Cycles where the accounting documents had been transferred for the purposes of the verification. The purpose of the verification was, inter alia, to determine whether the proportion of parts from China was less than 60% of the value of all the parts used in the assembly operation carried out by the applicant in Pakistan. The Commission decided to focus its investigation on information concerning one of the applicant’s suppliers, Flying Horse, on the ground that the applicant purchased from it 93% of the bicycle parts used in its assembly operations in Pakistan. In that regard, according to the information in Table F.2, that supplier was unrelated to the applicant and, according to information provided by the applicant during the on-spot verification, that supplier was an intermediary which purchased parts in almost equal volumes in China and in Sri Lanka - 46% and 47%, respectively, of all bicycle parts used in the applicant’s assembly operations in Pakistan - and resold them to the applicant. Otherwise, the applicant was supplied directly by Sri Lankan and Cambodian suppliers.

13 It was revealed that Flying Horse purchased a significant volume of frames, forks, alloy rims and plastic wheels from Great Cycles, a bicycle parts manufacturer established in Sri Lanka and related to the applicant, as stated in paragraph 9 above. Tyres and rim strips, on the other hand, were purchased from Vechenson Limited, a bicycle parts manufacturer also established in Sri Lanka and unrelated to the applicant. The Commission found the latter to be a genuine producer of bicycles (paragraph 27 of the defence). Having identified a number of discrepancies, such as the applicant’s outstanding debt of 5 277 325 US dollars (USD) vis-à-vis its supplier Flying Horse, an amount corresponding to more than 90% of the applicant’s sales in the European Union during the reporting period, the attainment by Flying Horse of a very variable mark-up in its sales to the applicant, having regard to the price invoiced to Flying Horse by Great Cycles, ranging from sale below cost to a mark-up of almost 20%, and the existence of multiple invoices, issued either by Flying Horse to the applicant or directly by Great Cycles...