2018 (10) TMI 601 - HC - Customs

Initiation of Sunset Review - ADD on Ductile Iron Pipes - import from Peoples Republic of China - Rule 23 of the Customs Tariff (Identification, Assessment and Collection of Anti-Dumping Articles for Determination of Injury) Rules, 1995 - extension of ADD for a further period. Whether the impugned order dated 17.5.2018 refusing to initiate a Sunset Review, on an application made by the petitioner, stands the test of it being so passed within the prescribed legal parameters? Held that - As is evident from the Notification dated 10/10/2013, that for the first time, anti-dumping duty on ductile pipes was imposed by a notification dated 14/09/2007. The Central Government had extended the anti-dumping duty on the subject goods i.e. ductile pipes originating in or exported from China for a further period of five years vide a notification dated 10/10/2013. This was done on an assessment of facts in exercise of powers under sub-sections (91) and (5) of Section 9 of the Customs Tariff Act, 1975 read with Rules 18 and 23 of the Customs and Tariff (Identification, Assessment and Collection of Anti-dumping Duty of Dumped Articles for Determination of Injury) Rules, 1995. Section 9A provides for imposition of anti-dumping duty and also stipulates that it shall remain in fore for a period of five years, unless revoked earlier. Sub-section (5) provides that the anti-dumping duty shall cease to have effect on the expiry of five years. The first proviso provides that if, the Central Government, in a review, is of the opinion that the cessation of such duty is likely to lead to continuation or recurrence of dumping and injury, it may from time to time, extend the period of such imposition for a further period of five years. Therefore, there is power to review the necessity of continuing the enforcement or period of anti-dumping duty on a review so initiated - Rule 23 of the Rules provides that the review, either can be on the Central Government s own initiative or upon a request by any interested party who submits positive information substantiating the need for such review. Moreover, such an application has to be duly substantiated. What is evident from the facts on hand is that the antidumping duty was initially imposed in 2007 and was initially extended by a period of five years. It was to cease to have effect in 2012, however the designated authority on a review, by a notification dated 10/10/2013 extended the anti-dumping duty for a period of five years and the same is set to expire on and from 9/10/2018. From 10/10/2018, unless the period of anti-dumping duty is further extended, the same shall cease to have effect. The review is carried out under Rule 23 of the Rules. Importantly, sub-rule(3) of Rule 23 states the provisions of Rules 6, 7, 8, 9, 10, 11, 16, 17, 19 and 20 shall mutates mutandis apply in the case of review. Therefore, while deciding an application for a review, the designated authority s order should reflect in such decision making process, the parameters of determination, as laid out under Rules 10, 11, 16 and 17. Petition allowed.

Summary

Issues Involved
1. Challenge to the rejection of the application for initiating a sunset review investigation.
2. Examination of whether the Designated Authority followed the prescribed legal parameters.
3. Evaluation of the sufficiency and adequacy of evidence provided by the petitioner.
4. Determination of whether the cessation of anti-dumping duty would lead to continuation or recurrence of dumping and injury.

Detailed Analysis

1. Challenge to the Rejection of the Application for Initiating a Sunset Review Investigation:

The petitioner challenged the Order No.7/18/2018-DGAD dated 17/05/2018, which rejected their application to initiate a sunset review investigation under Rule 23 of the Customs Tariff Rules, 1995. This application sought the continuation of the anti-dumping duty on Ductile Iron Pipes from China. The petitioner argued that the cessation of duty would likely lead to the recurrence of dumping and injury to the domestic industry.

2. Examination of Whether the Designated Authority Followed the Prescribed Legal Parameters:

The Court examined whether the Designated Authority adhered to the legal parameters stipulated under the Customs Tariff Act, 1975, and the corresponding Rules. The relevant sections and rules include Section 9A, which deals with the imposition of anti-dumping duty, and Rule 23, which governs the review process. The Court noted that the Designated Authority must follow principles laid out in Rules 6, 7, 10, 11, 16, and 17 during the review process.

3. Evaluation of the Sufficiency and Adequacy of Evidence Provided by the Petitioner:

The petitioner provided extensive evidence, including statistical data and constructed normal value calculations, to support their claim that the cessation of anti-dumping duty would lead to the recurrence of dumping and injury. They highlighted the significant capacity of Chinese producers and the potential for increased imports to India if the duty were lifted. However, the Designated Authority concluded that the petitioner failed to provide sufficient and satisfactory evidence to warrant a sunset review investigation.

4. Determination of Whether the Cessation of Anti-Dumping Duty Would Lead to Continuation or Recurrence of Dumping and Injury:

The Court scrutinized the Designated Authority's decision, which stated that the volume of imports during the injury period was minuscule and that economic parameters such as sales, production, and profits had improved. The Authority also noted that the likelihood of recurrence of injury was not substantiated by the petitioner. The Court found that the Designated Authority did not adequately consider the extensive material provided by the petitioner and failed to follow the procedural requirements under the Rules.

Conclusion:

The Court set aside the impugned order dated 17.05.2018, finding it to be without sufficient reasons and not in compliance with the legal requirements. The Designated Authority was directed to decide the application for a sunset review afresh within six months, and the anti-dumping duty was extended until such a decision is made. The petition was allowed, and the rule was made absolute.