2018 (3) TMI 1505 - AT - Customs

Counterveiling Duty (CVD) - Valuation - certain hot rolled and cold rolled stainless steel flat products - import from China PR - Following the Lesser Duty Rule, the DA recommended CV duty equal to the lesser of margin of subsidy and marginal injury, from the date of issue of notification by the Government, so as to remove injury to the DI. The duty amount recommended is 18.5 % of landed value - Held that - there is no legal requirement of internal homogeneity within the subject goods or for inter-se substitutability of various types of subject goods - Even the Customs Tariff main heading did not specify the products for classification separately. It was also noted that substantial cost of production is on raw materials and utilities upto the stage of steel melting. Expenses involved at rolling stage, whether hot or cold, and are not so significant. The DI produces both HR and CR products in a wide range of shape, size and metallurgical composition as per requirement of the customer. Imposition of CV duty and AD duty on the same subject goods - Held that - various other countries including EU follow the practice of imposing CV duty and AD duty on the same subject goods. However, the duties together never exceed the injury margin. In other words, if the dumping margin, as established in the investigation, is 30% with subsidy margin worked-out at 10%, injury margin at 25%, the duty imposed are 10% CV duty to offset subsidy and 15% AD duty. It is seen that the CV duty and AD duty put together did not exceed the injury margin though the dumping margin is higher. The same principle of Lesser Duty Rule is followed in India also - there is no infirmity in the final findings of the DA and customs Notification imposing CV duty with reference to subsidy on the subject goods. Appeal dismissed.

Summary

Issues:
1. Imposition of Countervailing duty on certain steel products originating from China.
2. Scope of subject goods and distinction between hot rolled (HR) and cold rolled (CR) steel products.
3. Legality of imposing both Anti-Dumping (AD) duty and Countervailing (CV) duty on the same subject goods.

Analysis:
1. The appeal challenged the imposition of Countervailing duty on specific steel products from China by the Designated Authority (DA) and Ministry of Finance. The investigation was initiated based on an application by the Domestic Industry (DI) for anti-subsidy/Countervailing duty. The DA recommended a definitive CV duty to remove injury to the DI, which was accepted by the Ministry of Finance. The appeal contended that the scope of subject goods was expanded incorrectly and that HR and CR steel products should not have been considered together. The appellant argued that the conditions of manufacture, nature, and end use of HR and CR products are distinct.

2. The appellant further argued that treating China as a non-market economy should preclude the imposition of CV duty for subsidy. Reference was made to Section 9 and 9B of the Customs Tariff Act, 1975, which prohibits imposing both CV duty and AD duty on the same goods to compensate for the same dumping or export subsidization situation. The appellant cited legal provisions and previous judgments to support the distinction between CR and HR products and the prohibition on double remedies.

3. The DI defended the DA's findings, emphasizing the proper analysis of subject goods and the impact of dumping on the DI. The DI argued that the AD duty covers situations in non-market economies only concerning domestic subsidy, not export subsidization. The DI contended that the duties imposed did not exceed the injury margin and that the Lesser Duty Rule was followed. The DA and Authorized Representative supported the findings and imposition of CV duty. The Tribunal upheld the DA's findings, noting the distinction between HR and CR products, the legality of imposing both AD and CV duties, and the application of the Lesser Duty Rule to ensure duties did not exceed the injury margin. The appeal was dismissed, and the misc. application was disposed of.

This detailed analysis covers the issues raised in the legal judgment regarding the imposition of Countervailing duty on certain steel products from China, the scope of subject goods, and the legality of imposing both Anti-Dumping and Countervailing duties on the same goods.