2024 (5) TMI 383 - HC - Customs

Revocation of ADD imposed on Purified Terephthalic Acid - Absence of any recommendation by the Designated Authority (DA) - Sunset review - exported from the People s Republic of China, Iran, Indonesia, Malaysia, Taiwan, Korea RP and Thailand - levy without initiating sunset review - by N/N. 03/2020-Customs (ADD) dated February, 2, 2020 issued by respondent No. 1 Union of India, Ministry of Finance, Department of Revenue, Government of India, N/N. 28/2016-Customs (ADD) dated 5th July, 2016 and Notification No. 28/2019 Customs (ADD) dated 24th July, 2019 are rescinded. HELD THAT - The issue raised in this petition with regard to revocation of ADD on subject goods during the five years without initiating sunset review is no more res integra in view of decision of this Court in similar facts in case of Realstrips Limited and others 2022 (9) TMI 1171 - GUJARAT HIGH COURT , wherein in case of levy of countervailing duty under the Act having pari-materia provisions for levy of ADD, this Court after considering the case laws cited by both the sides answered the question that rescinding the notifications of levy of countervailing duty was irregular and illegal exercise and such notification rescinding the countervailing duty could not have been issued when the exercise in law is required to be undertaken pursuant to the commencement of process of sunset review not completed in that case, whereas in the facts of the case, sunset review was never initiated. The contention raised on behalf of the respondents are considered by this Court in the aforesaid decision of Realstrips Limited and others in detail however, the specific contention raised by respondent No. 3 in the affidavit in reply to justify the revocation of ADD on the subject products is concerned, the respondent No. 3 has only narrated the factors which may be considered for taking a decision by the Central Government to revoke the ADD, however, as held by the aforesaid decision of Realstrips Limited and others, the Central Government could not have issued the notification rescinding the ADD in absence of any recommendatory exercise conducted by the Designated Authority and without waiting for such recommendation of the Designated Authority in accordance with the prescribed procedure in the Rules. Therefore, the impugned notification issued by the Central Government is without power in the manner in which it is issued in absence of any recommendation by the Designated Authority. Therefore, the procedure prescribed as per the provisions of the Act and the Rules could not be considered as directory as the same would reduce the entire scheme of levy of ADD as futile exercise to be carried out by treating such procedure as optional, more particularly, when the Designated Authority has recommended for continuation of ADD on the subject product and based upon such final recommendation, Notification No. 28/2019 dated 24th July, 2019 was issued by the Central Government for continuation of the ADD on the subject product to be imported from Thailand and Korea RP. So far as other subject countries are concerned, Notification No. 28/2016 was very much in existence for levy of ADD and the Designated Authority was required to conduct sunset review for making recommendation as to continue to levy ADD on the other subject countries such as China PR, Iran, Indonesia, Malaysia and Taiwan after completion of five years. As the facts of the present case are similar to the facts which were before the Court in case of Realstrips Limited and others. Adopting the same reasonings and result of the discussion made therein, the present petition is allowed in terms of the following orders and directions (i) The Notification No. 3/2020-Customs (ADD) dated February 2, 2020 issued by respondent No. 1 rescinding the anti-dumping duty on subject goods is hereby quashed and set aside. (ii) Respondent no. 2 shall immediately proceed to initiate Sunset review process in relation to the continuance or otherwise of the ADD already levied as per Notification No. 28/2019 Customs (ADD) dated 24th July, 2019. So far as Notification No. 28/2016-Customs (ADD) dated 5th July, 2016, the period of five years is over during the pendency of this petition. (iii) The provisions of the Act and the rules so far as sunset review in case of Notification No. 28/2019 Customs (ADD) is concerned, same shall be complied with and completed in accordance with the statutory provisions and rules for determining about the continuation or recurrence of injury to domestic industry in respect of the product in question. (iv) As the No. 3/2020-Customs (ADD) dated February 2, 2020 is set aside, the original Notification No. 28/2019 Customs (ADD) dated 24th July, 2019 shall revive and ADD shall become leviable on the product in question. (v) Respondent no. 2 after initiation of sunset review shall comply with the Rules 23 and 24 of the Rules and shall recommend to the Central Government for its continuance or withdrawal of ADD on subject goods. Since the review process is yet to commence, respondent no. 2 Designated Authority shall issue notification of initiation of sunset review and thereafter complete the same as per Rules 23(2) and (3) of the Rules. However, in the interregnum i.e. from the date of Notification No. 3/2020 dated February 2, 2020 till respondent no. 2 takes appropriate decision after final findings notification is issued by the respondent No. 1, levy of ADD shall continue on the subject goods till 19.07.2024. Petition disposed off.

Summary

Issues Involved:
1. Legality of Notification No. 03/2020-Customs (ADD) dated February 2, 2020.
2. Requirement of sunset review for revocation of Anti-Dumping Duty (ADD).
3. Compliance with statutory provisions and rules for revocation of ADD.
4. Public interest considerations in revocation of ADD.

Summary:

1. Legality of Notification No. 03/2020-Customs (ADD) dated February 2, 2020:
The petitioner challenged the Notification No. 03/2020-Customs (ADD) dated February 2, 2020, issued by the Central Government, which revoked the Anti-Dumping Duty (ADD) on Purified Terephthalic Acid (PTA). The petitioner argued that the notification was issued arbitrarily and without following due process of law, violating Section 9A of the Customs Tariff Act, 1975, and related rules.

2. Requirement of sunset review for revocation of ADD:
The petitioner contended that ADD imposed should be effective for five years unless revoked earlier through a "review" conducted by the Designated Authority (DA) under section 9A(5) of the Act and Rule 23 of the Rules. The petitioner argued that the Central Government's action of revoking ADD without adopting the mandatory review procedure was arbitrary and illegal.

3. Compliance with statutory provisions and rules for revocation of ADD:
The court held that the Central Government could not issue the notification rescinding ADD without a recommendatory exercise by the DA and without waiting for such recommendations. The court emphasized that the procedure and exercise contemplated in Section 9A(5) and (6) of the Act read with Rule 23 and 24 of the Rules are mandatory and cannot be bypassed. The court noted that the Central Government acted without the foundational aspects and jurisdictional facts to issue the notification.

4. Public interest considerations in revocation of ADD:
The Central Government justified the revocation of ADD on the grounds of public interest, stating that the revocation would benefit the downstream textile industry by making PTA available at competitive prices. However, the court found that the Central Government's action was not in compliance with the statutory provisions and rules, and the decision to revoke ADD without following the due process was arbitrary and illegal.

Conclusion:
The court quashed and set aside Notification No. 03/2020-Customs (ADD) dated February 2, 2020, and directed the Designated Authority to immediately initiate the sunset review process for the continuance or otherwise of the ADD already levied as per Notification No. 28/2019-Customs (ADD) dated July 24, 2019. The court further directed that the original Notification No. 28/2019-Customs (ADD) dated July 24, 2019, shall revive, and ADD shall become leviable on the product in question. The sunset review process shall be completed in accordance with the statutory provisions and rules.