2011 (1) TMI 7 - SC - Customs

Imposition of anti-dumping duty - imports of NTCF from China - manner of decision - principles of natural justice - Held that -if one person hears and other decides, then personal hearing becomes an empty formality. In the present case, admittedly, the entire material had been collected by the predecessor of the DA; he had allowed the interested parties and/or their representatives to present the relevant information before him in terms of Rule 6(6) but the final findings in the form of an order were recorded by the successor DA, who had no occasion to hear the appellants herein. In our opinion, the final order passed by the new DA offends the basic principle of natural justice. Thus, the impugned notification having been issued on the basis of the final findings of the DA, who failed to follow the principles of natural justice, cannot be sustained. It is quashed accordingly. the appellants cannot claim refund of duty already levied in as much as they have not specifically challenged the findings of the sunset review, and therefore, the findings in relation to the existence of dumped imports, material injury to domestic industry and causal link between dumped imports and material injury to domestic industry remain unchallenged

Summary

Issues Involved:
1. Nature of the Designated Authority's (DA) functions under the Customs Tariff Act, 1975 and the 1995 Rules.
2. Compliance with the principles of natural justice by the DA.
3. Validity of retrospective levy of anti-dumping duty.
4. Entitlement to refund of anti-dumping duty already paid.

Detailed Analysis:

1. Nature of the Designated Authority's (DA) Functions:
The primary issue was whether the DA's functions were administrative or quasi-judicial. The Court held that the DA exercises quasi-judicial functions. The DA determines the rights and obligations of interested parties by applying objective standards based on the material presented by exporters, foreign producers, and other interested parties. The DA's determinations are based on criteria laid down in the Tariff Act and the 1995 Rules, and involve a detailed procedure including public notices, collection of evidence, and hearings. The DA's findings are subject to appeal under Section 9C of the Tariff Act, further underscoring the quasi-judicial nature of its functions.

2. Compliance with Principles of Natural Justice:
The Court found that the DA's decision dated 9th March 2005, which returned the final findings, violated the principles of natural justice. The new DA did not provide a fresh public hearing to the appellants, which was essential since the final findings were based on material collected by the predecessor DA. The Court emphasized that personal hearings are crucial for ensuring fair play in action and that written arguments cannot substitute for oral hearings. The final order by the new DA, without a fresh hearing, was deemed to offend the basic principle of natural justice.

3. Validity of Retrospective Levy of Anti-Dumping Duty:
The appellants contended that the retrospective levy of anti-dumping duty during the interregnum period between 26th January 2005 to 27th April 2005 was not contemplated by the provisions of the Tariff Act or the Rules made thereunder. The Court did not delve deeply into this issue due to its finding on the breach of natural justice, which was sufficient to quash the notification imposing the duty.

4. Entitlement to Refund of Anti-Dumping Duty Already Paid:
The Court held that the appellants were not entitled to a refund of the anti-dumping duty already paid. This decision was based on the doctrine of unjust enrichment, which prevents parties from being refunded taxes or duties they have passed on to third parties. The DA's findings during the Sunset Review indicated that the burden of the anti-dumping duty had been absorbed by the exporters, and the appellants had not shown that they bore the burden themselves. Additionally, the appellants had not specifically challenged the findings of the Sunset Review, which confirmed the existence of dumped imports and material injury to the domestic industry.

Conclusion:
The appeals were allowed to the extent that the decision of the Tribunal was set aside and Notification No. 36/2005-Cus., dated 27th April 2005, was quashed. However, the appellants were not entitled to a refund of the anti-dumping duty already paid. The parties were directed to bear their own costs.