Page 462 - MANUAL OF SOP

General Issues

best suited method to the facts and circumstances of each particular transaction. If
an enterprise entered into various transactions with different related entities, then
the same method will not be applicable to all the transactions. The Most Appropriate
Method will be selected considering the facts and circumstances of each and every
transaction to find out appropriate Arms’ Length Price.

OPERATING PRACTICE FOR INVESTIGATION
19.11. The AD Rules have defined related parties for the purposes of DI standing,
however, no guidance has been provided beyond that. As the related party
transactions have great ramifications for all the interested parties, the comments
and observations of the statutory auditors in the audited accounts may be relevant
for trade remedy investigations.

19.12. The purpose of seeking information regarding related party transactions is
to ensure that the transactions between two related parties are conducted are at
arm’s length, so as to avoid any distortions in costs. The arm’s length pricing of a
related party transaction ensures that both parties in the transaction are acting in
their own self-interest and are not subject to any pressure from the other. It ensures
that parties to the transaction are on an equal footing.

19.13. In view of lack of specific instructions for determination of arm’s length
price, the investigating team should seek details from the respective DI on the
subject matter with supporting evidences and audited records. The investigation
team should look into the details of the related party transactions and segregate
those transactions, which are not at arm’s length pricing and appropriately adjust
them for NIP computation.

19.14. A clarification has been issued regarding the definition of related parties in
case of questionnaire for Anti-dumping investigation for producer/exporter/related
importer vide Trade Notice No. 9/2018 dated May 10, 2018 (copy attached):

RATIONALE OF REASONABLE RETURN ON CAPITAL EMPLOYED IN
COMPUTATION OF NON-INJURIOUS PRICE (ROCE)

INTRODUCTION

19.15. The issue regarding reasonability of 22% return on Capital Employed
in case of domestic industry for determination of the Non-Injurious Price (NIP)
under the Indian anti-dumping laws have been repeatedly raised by various

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