2017 (9) TMI 404 - HC - Customs

ADD - initiation of sunset review - imports of Metronidazole originating in or exported from China to India - whether the ADD that was imposed by the Notification No. 40/2012-Customs dated 30th August 2012 and which expires today, i.e. 29th August 2017, should be continued as a consequence of this Court having directed the Respondents to initiate the SSR? - Held that - it must be noted that in all earlier instances when the domestic industry came to the court seeking relief against a decision of the Central Government declining to initiate the SSR for some reason, it was not prior to the expiry of the notification imposing the ADD - the Petitioner representing the domestic industry has approached the Court prior to the actual cessation of the ADD under the original notification which is why the Court has placed the matter for hearing today itself. There is no delay in the Petitioner approaching the Court. The impugned order is dated 22nd August 2017 and the present petition was filed immediately thereafter and heard first on 25th August 2017. Whether the Petitioner having made out a prima facie case which weighed with the Court to persuade it to direct the initiation of the SSR as an interim measure, can be refused the consequential relief of continuation of ADD in the circumstances that the Petitioner points out? - Held that - the Court finds that the conclusions reached by the DA, which have been summarised hereinbefore, do not prima facie appear to have accounted for the detailed statistics placed before the DA by the Petitioner some of which have been referred to earlier by the Court. In particular, the possibility of the undercutting of the price at which the product may be sold by the domestic industry has not been adverted to by the DA. Also, the present annual capacity of the entities in China PR which are unutilized and which far exceed the Indian demand of 2200 MT per year does not appear to have been discussed by the DA. The Court is satisfied that the balance of convenience in directing continuation of the ADD pending the conclusion of the SSR subject, of course, to the outer limit of one year as stipulated in the 2nd proviso to Section 9A(5) of the CTA, is in favour of the Petitioner. The Court would like to add that, by way of balancing the equities, in the event ultimately it is found that the decision of the Central Government not to initiate the SSR was correct, the ADD collected from the importers of the product from China PR during the period of the SSR can be refunded to such importers. The Court directs that the ADD that was initiated by Notification No.40/2012 dated 31st August, 2012 will continue till the conclusion of the SSR initiated by the Central Government on the direction of this Court by the order dated 25th August, 2017 - the continuation of the ADD will be only till such time, the SSR continues and in any event will not exceed the one year period stipulated in the 2nd Proviso to Section 9A(5) of the CTA. Application disposed off.

Summary

Issues Involved:
1. Challenge to the order declining to initiate a Sun Set Review (SSR) concerning continuation of Anti-dumping Duty (ADD).
2. Whether the continuation of ADD should be directed pending the outcome of the SSR.
3. Interpretation of the second proviso to Section 9A(5) of the Customs Tariff Act, 1975 regarding the continuation of ADD during SSR.

Issue-wise Detailed Analysis:

1. Challenge to the order declining to initiate a Sun Set Review (SSR) concerning continuation of Anti-dumping Duty (ADD):

The petitioner challenged the order dated 22nd August 2017 by the Designated Authority (DA) in the Directorate General of Anti-Dumping & Allied Duties, which declined to initiate an SSR on the continuation of ADD on imports of 'Metronidazole' from China. The DA's decision was based on several observations: significant imports by the applicant, lack of evidence of injury to the domestic industry (DI), and insufficient evidence to conclude a likelihood of injury if ADD were to lapse. The DA concluded that there was no significant rate of increase in dumped imports, no substantial increase in the capacity of the exporter, no price suppression or depression impact, and inadequate data on the stock in hand with Chinese exporters.

2. Whether the continuation of ADD should be directed pending the outcome of the SSR:

The petitioner argued that under the second proviso to Section 9A(5) of the Customs Tariff Act, 1975, if an SSR is initiated before the expiry of the ADD and has not concluded, the ADD should remain in force pending the outcome of the review for up to one year. The petitioner cited the Supreme Court decision in Union of India v. Kumho Petrochemicals Company Limited to support this contention. The Court, in its interim order on 25th August 2017, directed the respondents to initiate the SSR by 29th August 2017 and stated that the proceedings would be subject to the final outcome of the writ petition. The petitioner emphasized that the cessation of ADD would significantly harm the domestic industry, as evidenced by detailed statistics and previous findings by the DA.

3. Interpretation of the second proviso to Section 9A(5) of the Customs Tariff Act, 1975 regarding the continuation of ADD during SSR:

The Court considered the Supreme Court's observations in Kumho, which clarified that the continuation of ADD during an SSR is not automatic and requires a proper notification by the Central Government. The Court noted that the petitioner approached the Court before the actual cessation of the ADD and had made a prima facie case for the continuation of ADD. The Court found that the DA's conclusions did not account for detailed statistics provided by the petitioner, such as the potential price undercutting and the unutilized capacity of Chinese exporters. The Court emphasized that the balance of convenience favored the petitioner, as the loss to the domestic industry from the cessation of ADD could not be compensated if the SSR later justified the continuation of ADD.

Conclusion:

The Court directed that the ADD initiated by Notification No. 40/2012 dated 31st August 2012 would continue till the conclusion of the SSR initiated by the Central Government, subject to a maximum period of one year as stipulated in the second proviso to Section 9A(5) of the Customs Tariff Act, 1975. The continuation of ADD would cease if the SSR concluded earlier. The Court ordered the Central Government to issue a consequential notification in terms of this order immediately. The application was disposed of, and the main writ petition was listed for further hearing on 6th September 2017.