2016 (10) TMI 443 - AT - Customs

Imposition of Anti Dumping Duty - Methylene Chloride - imported from E.U., USA and Korea RP - Notification No. 24/2014-Cus. (ADD) dated 21.05.2014 of Ministry of Finance - costing of subject product in the DI - by-product or joint product? - chloroform and carbon tetrachloride (CTC) which is co-produced alongwith the subject goods should have been treated as a co-product and not as a by-product - Held that - simultaneous emergence of a product does not make it a joint product or a co-product for cost accounting purposes. For this, one has to consider the economic importance of various co-produced products. CTC contributes only 5% of sales realisation when compare to the other two main products which contribute 50% and 45% in sales realisation. Any legal provision or specific cost accounting standards could not be pointed out applying to the relevant time to treat the CTC as a joint product. The CTC is a hazardous product governed by Montreal Protocol for strict control of manufacture and further usage. ADD rightly imposed - appeal rejected - decided against appellant.

Summary

Issues:
Challenge against imposition of Anti Dumping Duty (AD duty) on Methylene Chloride originating from E.U., USA, and Korea RP based on various grounds including costing of subject goods, treatment of co-product CTC, and imposition in US$ terms.

Analysis:
The appeal challenged the Final Finding of the Designated Authority (DA) and Notification imposing AD duty on Methylene Chloride. The delay in filing the appeal was condoned due to valid reasons. The appellant, a domestic user of the subject goods, contested the imposition of AD duty on several grounds. They argued that the domestic demand exceeded the full production capacity of the Domestic Industry (DI) and that the cost allocation between subject goods and co-product CTC was erroneous. Additionally, they raised concerns about the imposition of duty in US$ terms and the need for different rates for loose and packed forms of subject goods.

The DI's counsel highlighted that the user industry failed to provide data on the downstream product's impact on the AD duty investigation. They emphasized that CTC should not be considered a joint product for cost analysis due to its economic insignificance and environmental regulations. The DA supported its findings, noting a decline in profits and cash flows for the DI due to low-priced imports causing injury. The imposition of AD duty in US$ terms was defended as a standard practice, and the manner of packing was deemed irrelevant in the investigation.

The Tribunal considered all arguments and evidence presented by the parties. It rejected the appellant's challenge regarding the costing of subject goods, emphasizing that simultaneous emergence of a product does not make it a joint product for cost accounting purposes. CTC's minimal economic importance and hazardous nature were crucial factors in this determination. The Tribunal agreed with the DI and DA on other issues raised in the appeal, such as the imposition of AD duty in US$ terms and the treatment of subject goods without considering the packing method.

After careful consideration, the Tribunal found no merit in the appeal and upheld the DA's findings. The appeal was rejected, and the stay application was disposed of. The judgment was pronounced on 09.09.2016 by the Appellate Tribunal CESTAT NEW DELHI, comprising Mr. Justice (Dr.) Satish Chandra, President, Mr. S. K. Mohanty, Member (Judicial), and Mr. B. Ravichandran, Member (Technical).