Pursuant to Article 2(7)(b) of the basic Regulation, in anti-dumping investigations concerning imports originating in the PRC, normal value shall be determined in accordance with paragraphs 1 to 6 of Article 2 of the basic Regulation for those exporting producers which were found to meet the criteria laid down in Article 2(7)(c) of the basic Regulation, i.e. where it is shown that market economic conditions prevail in respect of the manufacture and sale of the like product.

The investigation established that the applicant's accounting records were not in line with international accounting standards and that, therefore, the company's accounting practice does not fulfil the requirements of the second criterion. In particular, the applicant failed to report in its accounts the implementation of an incentive scheme for management staff in line with international accounting standards.

As a consequence, the balance sheet did not faithfully represent the financial position of the company and the profit and loss account and cash flow statement were burdened by financial costs for which there was no justification.

Based on these considerations, the applicant could not be granted MET.

The applicant and other interested parties were given an opportunity to comment on the above findings.

The applicant pointed out that the incentive scheme should be booked in 2013, that it has no connection with the balance sheet of 2012 and that in 2012 the nature of the scheme was not yet determined. According to the applicant, such determination would be made in accordance with recommendations to be made by the auditors at the moment of the auditing exercise of the financial accounts for 2013 and could take the form of remuneration, interest on loan or quasi-contribution.

The scheme was contractually concluded upon between the company and the management in 2012. However, there was no indication of it in the audited accounts of 2012, not even in the notes to the financial accounts. No accounting entry, identifying the incentive scheme, was made during the financial year 2013 up to the time of the investigation (November 2013) either.

This absence of reporting in the accounts is serious. Indeed, the total liabilities reported in the trial balance at the end of the IP, 31 July 2013, were significantly underreported since the total loan amount pledged by managers would have increased the figure of the liabilities by 14 %. Moreover, the profit and loss account of 2013 will contain financial costs for which there is no legal basis, since no incoming cash flow corresponding to the incentive scheme occurred and interests were nevertheless effectively paid in 2013. As a consequence, the 2013 financial costs will be 9 times higher than the costs reported for 2012. Therefore, the financial information contained in the accounts did not provide for a reliable and faithful representation of the financial position of the company.

It should also be noted that the nature of the scheme and the accounting thereof cannot depend on auditing qualification and that the booking thereof should be correctly made in a timely manner and not retrospectively. Therefore, a failure to report with accuracy the financial position and flows related to the scheme, cannot be considered to be in line with international accounting standards.

In reaction to the disclosure of the Commission's findings, the applicant reiterated its request for MET, without however bringing any new argument. The findings on the MET determination are therefore confirmed.

According to Article 2(7)(a) of the basic Regulation, for non-market economy countries and, to the extent that MET could not be granted, for countries in transition, normal value has to be established on the basis of the price or constructed value in an analogue country.

As announced in the Regulation (EU) No 809/2013, the Commission envisaged using Japan as an analogue country for the purpose of establishing normal value for the applicant in the event that it was not granted market economy treatment and as it was done in the investigation which led to the imposition of measures by the original Regulation.

Interested parties were invited to comment on the appropriateness of Japan as an analogue country and did not submit any comments. The Commission also contacted producers in the United States of America, but did not obtain any cooperation. Consequently, Japan is considered to be an appropriate analogue country. One producer in Japan agreed to cooperate and submitted the requested information.

In accordance with Article 2(2) of the basic Regulation, the Commission first examined whether the Japanese producer's domestic sales of TCCA to independent customers were representative. In this respect, it was found that the total volume of such sales was equal to at least 5 % of the total volume of applicant's export sales to the Union.

The Commission subsequently examined whether there were types of TCCA sold domestically by the Japanese cooperating producer that were sufficiently comparable to the types sold by the applicant for export to the Union. The Commission identified the types of TCCA found to be identical or directly comparable to the type sold for export to the Union by the applicant. It was also established that these types were sold at profitable levels and in the ordinary course of trade by the Japanese company and that the domestic sales prices could be considered for the determination of the normal value.

Therefore, normal value was based on the actual domestic price, calculated as a weighted average, of the product types of TCCA deemed comparable.

As the product concerned was exported directly to independent customers in the Union, the export price was established in accordance with Article 2(8) of the basic regulation, i.e. on the basis of the export prices actually paid or payable for the product when sold for export to the Union.

The normal value and export prices were compared on an ex-works basis and at the same level of trade. For the purpose of ensuring a fair comparison between the normal value and the export price, account was taken, in accordance with article 2(10) of the basic Regulation, of differences which affected price comparability. For this purpose, transport costs and packaging expenses were removed from both the Chinese export prices and the Japanese cooperating producer's domestic sales prices.

As provided for under Article 2(11) of the basic Regulation, the dumping margin was established on the basis of a comparison of a weighted average normal value by type with the weighted average export price of the corresponding type of the product concerned. This comparison showed the existence of dumping.

The dumping margin for the applicant, expressed as a percentage of the net, free-at-Union-frontier price was found to be 32,8 %.