2016 (11) TMI 37 - AT - Customs

Imposition of ADD - Polytetrafluoroethylene or PTEF - imported from Russia - correctness of method adopted by the DA while arriving at NIP considering a large number of captively produced and consumed inputs while manufacturing the subject goods by the appellant - the DA has adopted the norms of Rule 8 of Central Excise Valuation Rules, 2000 and CAS-4 governing transfer value and captive excisable inputs - the DA had been adding 22% return on capital employed in producing captive inputs for arriving at price - Held that - neither AD Rule 1995 including Annexure III of the said Rules nor any other statutory provision mandated specifically the method to be adopted in dealing with captively used inputs while arriving at NIP. The admitted practice by the DA of allowing 22% return on capital deployed has been changed in the present case by the DA. We find no reason recorded for such sudden change inpractice. We also note that there is no reason recorded for adopting the Central Excise provision of Valuation (Rules 8) for captively used inputs. Rule 8 as in the present form mandate that the value of excisable goods captively consumed shall be 110% of cost of production. The said Rule is meant for excise duty levied. Admittedly, there is no provision in AD Rules or in Customs Tariff Act which mandates the application of such Rule to calculate NIP in antidumping investigations. It is apparent that DA has deviated from the consistent practice of valuation adopted by him in numerous other cases of captively used inputs while fixing NIP for subject goods. We do not find any legal reason for such deviation in the present case. In such a factual matrix, we find that NIP determined in the present case is faulty in so far as it relates to the treatment of captively used goods with specific reference to profit/ return on capital deployed. The matter has to be re-examined by the DA afresh after giving due opportunity to the interested parties to arrive at a finding in consonance with the legal provision applicable - Appeal disposed off - matter remanded - decided partly in favor of appellant.

Summary

Issues:
Challenge to anti-dumping duty imposed on 'Polytetrafluoroethylene or PTEF (subject goods) originating in or exported from Russia due to inadequate duty. Argument regarding non-injurious price (NIP) determination by the Designated Authority (DA) being low and inconsistent with Annexure III of AD Rules and past practice of DA in valuing captively used inputs.

Analysis:
The appeal before the Appellate Tribunal CESTAT NEW DELHI challenged the Final Findings and Customs Notification imposing anti-dumping duty on 'Polytetrafluoroethylene or PTEF (subject goods) originating in or exported from Russia. The appellant, a domestic manufacturer of the subject goods, contended that the anti-dumping duty imposed was inadequate. The main argument presented was regarding the determination of non-injurious price (NIP) by the Designated Authority (DA), which was considered low and inconsistent with the principles laid down in Annexure III of AD Rules and the past practice of the DA in valuing captively used inputs.

The appellant argued that various captive inputs produced by them, such as power, AHF, Chlorine, Chloroform, or 22 TFE, were used in the production of subject goods. They provided a detailed statement showing the cost of production of these captive inputs to the DA during the investigation. The DA, in past practice, had been adding a 22% return on capital employed for assets utilized in producing such inputs when transferred at the cost of production. However, in the present case, the DA adopted a different method, applying Rule 8 of Central Excise Valuation Rules, 2000, which was deemed inconsistent and without legal basis.

During the proceedings, the DA acknowledged that they had been allowing a 22% return on capital employed in cases of captively used inputs while fixing NIP in past investigations. However, in the present case, the DA deviated from this practice without providing a legal reason for the change. The Tribunal found that the NIP determined in the present case was faulty concerning the treatment of captively used goods, specifically in terms of profit/return on capital deployed. Consequently, the Tribunal set aside the final findings of the DA and remanded the matter for re-examination.

The Tribunal directed the DA to re-examine the issue, giving due opportunity to interested parties and ensuring findings in consonance with applicable legal provisions. The DA was instructed to record reasons for arriving at a particular NIP concerning captively used inputs. The Tribunal emphasized the importance of adhering to legal provisions in determining injury margin and AD duties. The matter was remanded back to the DA for a fresh decision, allowing the appeal to that extent. The Tribunal also directed the continuation of the provisional anti-dumping duty for six months pending the completion of the sunset review by the DA.