Page 466 - MANUAL OF SOP

General Issues

Community industry could reasonably count on under normal conditions of
competition, in the absence of dumped imports.
19.23. In other cases, the Commission has made adjustments to EU producers’
costs.

19.24. It is clear from the above that the EC has also used the cost of production
of the efficient community producer. However, there is not much clarity about
the complete practice generally adopted by the EC. On the other hand, the policy
adopted by DGAD for transparent optimization is to consider the performance of
respective constituents of Domestic Constituent companies only. No adjustment is
made for inter-se variations in efficiency amongst the constituents of DI. In other
words, weighted average NIP which is worked out for all the units, includes impact
of high cost domestic producers also.

19.25. Incidentally, even though the costing methodology followed by USA is not
transparently available, Chapter 9 of the United States Anti-Dumping Manual states
inter-alia with respect to Direct Materials Cost with respect to Exporter’s cost of
production as under:

Direct Materials Costs

Direct materials costs include the acquisition costs of all materials that are
identified as part of the finished product and may be traced to the finished
product in an economically feasible way.

19.25.1. The aforesaid indicates that the “economically feasible” direct material
costs only are considered, which may be yet another terminology for “optimization”.
Further, the costing methodology followed in India allows all indirect costs as
per books of accounts including corporate overheads, and other misc. expenses,
whereas USA Anti-Dumping Manual provides for examination of each element of
cost in computation of cost of production. The relevant excerpt with respect to
“Fixed Manufacturing Overhead costs” is provided below:

Fixed Manufacturing Overhead Costs: Fixed manufacturing overhead costs
include those production costs that generally do not vary in total with changes
in the volume of merchandise produced at a given level of operations. Fixed
manufacturing overhead costs may include the costs incurred for building
or equipment rental, depreciation, supervisory labor paid on a salary basis,
plant property taxes, and factory administrative costs. In addition, fixed

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