2022 (3) TMI 167 - AT - Customs

Withdrawal of anti-dumping duty - imports of PVC Flex Film from the China PR - withdrawal of duty enforced by notification dated 08.08.2016, as further extended by notification dated 30.06.2021 upto 31.01.2022 - applicability of provisions of rule 23(3), rule 11 of the 1995 Rules to sunset reviews - HELD THAT - Though the anti-dumping duty imposed under sub-section (1) of section 9A of the Tariff Act shall cease to have effect on the expiry of five years from the date of such imposition, but under sub-section (5) of section 9A, the Central Government, in a review, can extend the period of such imposition for a further period of five years if the Central Government is of the opinion that cessation of such duty is likely to lead to continuance or recurrence of dumping and injury. Rule 23 of the 1995 Rules provides that though the definitive anti-dumping duty shall be effective for a period not exceeding five years from the date of its publication, but an exception has been culled out namely that the designated authority can extend the period provided the designated authority comes to a conclusion upon a duly substantiated request by the domestic industry that the expiry of the anti-dumping duty would likely lead to continuation or recurrence of dumping and injury to the domestic industry. It also provides that rule 11 of the 1995 Rules would also be applicable to sunset reviews and rule 11 of the 1995 Rules requires the designated authority to determine threat of injury to the domestic industry taking into account all relevant facts in accordance with the principles set out in Annexure II of the Rules. The designated authority is mandated to undertake a rigorous examination of all the following three factors before deciding to continue the anti-dumping duty (i) There is a duly substantiated request made by the domestic industry which implies that the domestic industry has to provide cogent evidence to substantiate its claim; (ii) There is a likelihood of continuation or recurrence of dumping in case duties are revoked; and (iii) There is likelihood of continuation or recurrence of injury to the domestic industry in case duties are revoked. In the present case, the designated authority discontinued the anti-dumping duty since the first and third conditions were found on determination to be absent. To substantiate that cessation of anti- dumping duty, which had earlier been levied by notification dated 25.08.2011 for a period of five years and thereafter continued for another period of five years on the basis of notification dated 30.06.2016 in reference to the first sunset review, was likely to lead to continuation or recurrence of dumping and injury, the appellant placed strong reliance upon the Report of Special Research and Investment Feasibility Assessment on China Polyvinyl Chloride Flexible Film/Sheet Market 2021-2025 . The designated authority, in the final findings, did not consider it appropriate to place reliance on the said report for the reason that the name of the author or the agency which prepared the report was not mentioned nor the report made any mention of the original source of data. What has to be determined in a sunset review is whether withdrawal of anti-dumping duty would lead to continuance or recurrence of injury to the domestic industry. This determination cannot be based on guess work or on mere assumption or presumption but should be based on some tangible and positive evidence. The designated authority has to conduct a rigorous examination in a sunset review before the exception that duty should be continued can apply. This requires an appropriate degree of diligence on the part of the designated authority. It cannot be urged that since after the imposition of anti-dumping duties, imports had declined and domestic production had increased, it is possible that after cessation of anti-dumping duty, the imports would increase and the domestic production would reduce. There has to be a strong explanation as to why this would happen as mere possibility of injury to domestic industry is not sufficient - the designated authority was justified in holding that there did not exist sufficient factual material to allow the designated authority to conclude that there was a likelihood of continuation or recurrence of injury in case of cessation of anti- dumping duty. The designated authority committed no illegality in not placing reliance upon the unauthenticated report. The burden of proof was on the appellant to provide tangible evidence in sunset review to substantiate that cessation of anti-dumping duty would lead to continuance or recurrence of anti-dumping. The appellant failed to discharge this burden. A perusal for the final findings of the designated authority reveal that the trend of import volumes and landed (import) prices, and its effect on the domestic industry together with the increase in capacity, production, sales of the domestic industry, its market share, along with negative price undercutting and negative injury margins led the designated authority to conclude that there was no likelihood of injury. It is for this reason that the designated authority recommended discontinuation of anti-dumping duties. The final findings of the designated authority, therefore, for all the reasons stated above, do not call for any interference in this appeal - Appeal disissed.

Summary

Issues Involved:
1. Issuance of notification recommending withdrawal of anti-dumping duty.
2. Examination of likelihood of continuation or recurrence of dumping and injury.
3. Reliability and authenticity of the market research report.
4. Consideration of volume and price effects of dumped imports.
5. Determination of injury to domestic industry.
6. Examination of economic parameters of the domestic industry.
7. Non-attribution analysis.
8. Application of the principles for determination of injury.
9. Compliance with procedural requirements and confidentiality.

Detailed Analysis:

1. Issuance of Notification Recommending Withdrawal of Anti-Dumping Duty:
The appeal was filed against the notification dated 28.10.2021, which recommended the withdrawal of anti-dumping duty on PVC Flex Film imports from China. The anti-dumping duty had been initially imposed for five years by a notification dated 08.08.2016. The appellant sought modification of the final findings to continue the anti-dumping duty for another five years.

2. Examination of Likelihood of Continuation or Recurrence of Dumping and Injury:
The designated authority initiated a second sunset review to assess the need for continued imposition of duties. The investigation period was from 01.10.2019 to 30.09.2020. The authority issued a disclosure statement on 20.10.2021, inviting comments from interested parties. The authority concluded that there was no justification for the continuance of anti-dumping duty due to the significant decline in imports and lack of sufficient independent corroborative evidence.

3. Reliability and Authenticity of the Market Research Report:
The appellant relied on a market research report to establish the likelihood of recurrence of dumping and injury. The designated authority rejected this report because it lacked the name of the author/agency and the original data source. The Tribunal upheld this rejection, noting that the appellant did not raise the issue of confidentiality due to the Data Secrecy Law in the appeal memorandum and failed to provide a non-confidential summary.

4. Consideration of Volume and Price Effects of Dumped Imports:
The authority noted a significant decline in the volume of imports from China, both in absolute and relative terms. The imports were less than 1% of Indian demand and production from 2018-19 onwards. The price undercutting was negative, and the domestic industry's selling price declined over the injury period while the landed price of imports increased.

5. Determination of Injury to Domestic Industry:
The authority examined various economic parameters, including capacity, production, sales, and market share of the domestic industry. It concluded that the decline in performance was due to the COVID-19 pandemic and not due to dumped imports. The domestic industry admitted that the injury was not caused by subject imports.

6. Examination of Economic Parameters of the Domestic Industry:
The authority found that the domestic industry's capacity increased, but production and sales declined during the investigation period. The market share of the domestic industry reduced, while the market share of other Indian producers increased. The profits per unit, cash profits, and return on capital employed declined due to the pandemic.

7. Non-Attribution Analysis:
The authority examined other factors that could have caused injury to the domestic industry, such as the COVID-19 pandemic, inter-se competition, and increased fixed costs. It concluded that the injury was not attributable to dumped imports and did not require segregation of injury caused by other factors.

8. Application of the Principles for Determination of Injury:
The authority applied the principles set out in Annexure II of the 1995 Rules, which require that the determination of injury must be based on facts and not on allegations, conjectures, or remote possibilities. The change in circumstances must be clearly foreseen and imminent.

9. Compliance with Procedural Requirements and Confidentiality:
The appellant failed to provide the name of the author/agency of the market research report and a non-confidential summary to other interested parties. The Tribunal noted that the designated authority conducted a rigorous examination and that the appellant did not discharge the burden of proof to substantiate the likelihood of continuation or recurrence of dumping and injury.

Conclusion:
The Tribunal upheld the designated authority's decision to discontinue the anti-dumping duty, finding no sufficient factual basis to conclude that there was a likelihood of continuation or recurrence of injury if the duty was revoked. The appeal was dismissed.