2007 (12) TMI 224 - HC - Customs

Anti-dumping duty - Sunset review - Held that - We are, therefore, not at all in agreement with the view canvassed by the learned Additional Solicitor General on behalf of the Central Government that a sunset review was not possible in the circumstances of the case and that the domestic industry was only entitled to be heard in respect of a mid-term review. A request having been made by the domestic industry for a sunset review, it ought to have been considered by the Central Government and if so advised, rejected on merits. It would not be appropriate to interfere with the contractual liabilities that have already been established since it may lead to avoidable controversies. We, therefore, direct that all imports of the subject goods made from Russia and China with effect from 1st February, 2008 should be provisionally cleared by the Central Government and its nominees such as the Customs Officers. In the meanwhile, the Central Government should carry out a review to determine whether the anti-dumping duty imposed by the Notification dated 25th June, 2001 should continue beyond the period of five years from 26th December, 2005 onwards. If it is found by the Central Government that the requirements of the first proviso to Section 9A(5) of the Act are met and anti-dumping duty should continue, then the provisional assessments made with effect from 1st February, 2008 will take care of the interests of the domestic industry. On the other hand, if it is found that there is no reason to continue with the anti-dumping duty, the provisional assessment can always be finalized without any detriment to the rights of the Indian importers of the subject goods. It is expected that the Central Government will complete the review as expeditiously as possible.

Issues Involved:
1. Validity of the Central Government's premature withdrawal of anti-dumping duty.
2. Whether the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) was correct in holding that the Central Government cannot extend the anti-dumping duty beyond the initial period of five years.
3. Whether the Central Government should conduct a sunset review to determine the continuation of anti-dumping duty beyond the initial period of five years.

Issue-Wise Detailed Analysis:

1. Validity of the Central Government's Premature Withdrawal of Anti-Dumping Duty:
The Petitioner filed a writ petition under Article 226 of the Constitution, challenging the Central Government's withdrawal of the anti-dumping duty imposed by Notification No. 65/2001-Cus., dated 25th June, 2001. The anti-dumping duty was initially imposed provisionally by Notification No. 151/2000-Cus., dated 26th December, 2000, and was to remain in force for five years. However, it was prematurely withdrawn by Notification No. 69/2005-Cus. dated 19th July, 2005. The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) set aside the withdrawal notification but declined to extend the imposition of anti-dumping duty beyond the initial period of five years. The High Court agreed with the Petitioner that there was no valid reason for the Designated Authority to recommend, and for the Central Government to accept, the premature withdrawal of the anti-dumping duty. The Court noted that this view was accepted by the Designated Authority and the Central Government, neither of whom challenged the Tribunal's decision.

2. Tribunal's Holding on the Extension of Anti-Dumping Duty:
The Tribunal held that under the first proviso to Section 9A(5) of the Customs Tariff Act, 1975, the Central Government cannot extend the period of imposition of anti-dumping duty beyond the initial period of five years. The Tribunal's reasoning was that a mid-term review, which was conducted in this case, could only determine whether the duty should be revoked earlier and not whether it should be continued beyond five years. The High Court concurred with the Tribunal, stating that the question of continuance beyond five years could only arise in a sunset review, not in a mid-term review.

3. Conducting a Sunset Review:
The Petitioner argued that the conditions for a sunset review, as postulated by the first proviso to Section 9A(5) of the Act, were met. The cessation of anti-dumping duty was likely to lead to the continuation or recurrence of dumping and injury to the domestic industry. Initially, the Designated Authority intended to conduct a sunset review but later issued a corrigendum converting it into a mid-term review. The High Court noted that the Designated Authority and the Central Government could have conducted a sunset review based on the material placed before them. The Court emphasized that the Central Government should have considered the domestic industry's repeated requests for a sunset review. The Court found no conflict between Article 11 of the Anti-Dumping Agreement and the municipal law, both of which contemplate an initial imposition of anti-dumping duty, a mid-term review, and a sunset review at the end of five years.

Relief:
The High Court directed the Central Government to consider whether the anti-dumping duty on the subject goods should continue for a period of five years from 25th December, 2005, following the procedure laid down in Rule 23(3) of the Rules. The Court acknowledged that almost two years had passed due to litigation and that some importers might have already entered into contracts. Therefore, it directed that all imports of the subject goods from Russia and China with effect from 1st February, 2008, should be provisionally cleared. The Central Government was instructed to complete the review expeditiously to determine whether the anti-dumping duty should continue. If the requirements were met, the provisional assessments would protect the domestic industry's interests. If not, the provisional assessments could be finalized without detriment to Indian importers.

Conclusion:
The writ petition was allowed, and the High Court directed the Central Government to review the necessity of continuing the anti-dumping duty beyond the initial five-year period, ensuring a balance between the interests of the domestic industry and importers.

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