2019 (9) TMI 539 - AT - Customs

Extension of anti-dumping circumvention duty - Relevant date of imposition - import of Cold-rolled Flat products of width not covered under customs notification dated 11 December 2015 originating in or exported from China PR, Japan, Korea, European Union, South Africa, Tiwan, Thailand and USA - validity of imposition of ADD on the PUI from the date of publication of the notification on 24 October, 2017 and not retrospectively from the date of initiation of the anti-circumvention proceedings on 19 February, 2016 - Rule 5 of the Customs Tariff (Identification, Assessment and Collection of Anti-Dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995. HELD THAT - Section 9A (1) of the Tariff Act empowers the Central Government to impose anti-dumping duty. Section 9A (1A) of the Tariff Act deals with circumvention of anti-dumping duty. It provides that if the Central Government is of the opinion that circumvention of anti-dumping duty has taken place whereby the anti-dumping duty imposed has been rendered ineffective by altering the description or the composition of the article, then it may extend the anti-dumping duty to such article. In exercise of the powers conferred under section 9A (6) of the Tariff Act, the Central Government framed Rules called the 1995 Rules. Rule 25 deals with circumvention of anti-dumping duty, while Rule 26 deals with initiation of investigation to determine circumvention. Rule 27 deals with determination of circumvention. It provides that Designated Authority, upon determination that circumvention of anti-dumping duty exists, may recommend imposition of anti-dumping duty to imports of articles found to be circumventing an existing anti-dumping duty and such levy may apply retrospectively from the date of initiation of the investigation under Rule 26. Sub-Rule (3) of Rule 27 provides that the Central Government may, pursuant to the recommendations made by the designated authority, extend the anti-dumping duty to imports of article from the date of initiation of the investigation under Rule 26 or such date as may be recommended by the Designated Authority. In the instant case, after the Designated Authority informed all interested parties of the essential facts under consideration which formed the basis of its decision, the Domestic Industry filed post disclosure comments. It emphasised that the anti-dumping circumvention duty should be imposed from the date of initiation of the investigation on 19 February, 2016 in terms of Rule 27 of the 1995 Rules. The relevant portion of the post disclosure comments have been reproduced in paragraph 8 of this order. It was pointed out that the motive of the importers/ exporters would be achieved if the Designated Authority recommends prospective anti-circumvention duty - It will, therefore, not be appropriate to examine the order on the basis of reasons not contained in the final findings recorded by Designated Authority. The reasons contained in the order can only be seen, but no reasons are contained in final findings as to why the anti-circumvention duty as pointed out by the Appellant was not levied retrospectively. There is no consideration of this aspect in the final findings even though it was specifically raised by the Appellant in the post disclosure comments. In Kranti Associates Pvt. Ltd. Vs. Masood Ahmed Khan 2010 (9) TMI 886 - SUPREME COURT , reported in the Supreme Court after referring to the earlier decisions that hold that a quasi judicial authority must record reasons in support of its conclusion because reasons assure that the discretion has been exercised by the decision maker on relevant grounds and by disregarding irrelevant considerations, also observed that recording of reasons operates as a valid restraint on any possible arbitrary exercise of quasi judicial power. It is seen that the Designated Authority, without examining whether the anti-dumping duty should be levied retrospectively from the date of initiation of the investigation, recommended that the anti-dumping duty will be applicable from the date of its notification by the Central Government. The Central Government issued the Notification No. 52/2017 that was published in the Gazette of India, Extraordinary on 24 October, 2017 imposing anti-dumping duty from the date of publication in the Gazette. The matter, therefore, needs to be remitted to the Designated Authority to record a specific finding as to whether the anti circumvention duty should be levied retrospectively from the date of initiation of the investigation - Appeal allowed by way of remand.

Summary

Issues Involved:

1. Retrospective Imposition of Anti-Dumping Duty
2. Determination of Circumvention
3. Procedural Fairness and Natural Justice

Issue-wise Detailed Analysis:

1. Retrospective Imposition of Anti-Dumping Duty:

The Domestic Industry, represented by the appellants, argued that the anti-dumping duty should be imposed retrospectively from the date of initiation of the anti-circumvention investigation (19 February 2016) rather than from the date of publication of the notification (24 October 2017). They emphasized that the delay in imposing the duty allowed importers/exporters to circumvent the existing anti-dumping duties, causing continued harm to the Domestic Industry. The appellants cited Rule 27 of the 1995 Rules, arguing that the word "may" in the rule should be interpreted as "shall," mandating retrospective imposition once circumvention is established. They supported this argument with various legal precedents.

The Designated Authority, however, recommended imposing the duty prospectively without providing reasons for not imposing it retrospectively, which the Domestic Industry claimed was arbitrary and contrary to principles of equality and natural justice.

2. Determination of Circumvention:

The Designated Authority found that the Product Under Investigation (PUI) had all the essential characteristics of the product subjected to anti-dumping duty, except for its width. The Authority noted that the volume of imports of the PUI increased significantly post-imposition of anti-dumping duties, indicating circumvention. The Authority concluded that the PUI was undermining the existing anti-dumping measures and recommended extending the existing anti-dumping duty to the PUI.

The Authority also provided specific exemptions for genuine use of PUI without slitting and recommended a monitoring mechanism to ensure compliance. The final findings included detailed recommendations for the imposition of anti-dumping duties on PUI, specifying conditions under which duties would or would not apply.

3. Procedural Fairness and Natural Justice:

The Tribunal emphasized that the Designated Authority's proceedings are quasi-judicial and must adhere to principles of natural justice, including providing reasons for its decisions. The Tribunal noted that the Designated Authority failed to address the Domestic Industry's specific request for retrospective imposition of duty in its final findings, which lacked any discussion or reasoning on this issue.

The Tribunal cited various Supreme Court judgments underscoring the necessity for quasi-judicial authorities to record reasons for their conclusions to ensure transparency and fairness. The Tribunal concluded that the absence of reasons in the final findings prevented the Domestic Industry from effectively exercising their right to appeal.

Conclusion:

The Tribunal remitted the matter to the Designated Authority to specifically determine whether the anti-circumvention duty should be levied retrospectively from the date of initiation of the investigation. The Designated Authority was directed to pass an appropriate order expeditiously, preferably within three months, and the final findings and notification would abide by this decision. The appeal was allowed to the extent of requiring the Designated Authority to reconsider the issue of retrospective imposition of duty.