2018 (12) TMI 803 - HC - Customs

Anti-Dumping Duty - applicability of lower rate of ADD - whether any injury exists and if so, its margin, involves (through Rule 11 of the Annexure to the Anti-Dumping Rules and other provisions under such rules) examination of the causal relationship between the dumped imports and the injury to the domestic industry ? Held that - In the present case, the corporate structure of the petitioner companies was such that four companies were part of the Inovyn group. During the investigation, there appears to have been a proposal of restructuring. However, the then existing companies (of which the petitioner claims to be successors) did not disclose this; perhaps correctly so, because the proposal had not been approved by the European Union. However, when that did happen, the EU stipulated that a third party entity had to be part of the holding JV arrangement. This resulted in the entry of Solvay- a complicating factor for the petitioner, because Solvay had stayed out of the investigation and therefore was subjected to the residual, higher rate of duty (rather than the considerably lower anti-dumping duty rate imposed on the petitioner s predecessors). The petitioner had to approach this court, because on the previous occasion the DA felt that since the relevant facts were investigated at the determination of injury margin stage, it had become functus officio. The court therefore, directed the examination of the relevant facts and also stated that if indeed Solvay had exited from the JV, the DA could consider granting the petitioner s request. The DA has re-examined the petitioner s contentions and concluded yet again that the amendment sought is unfeasible. The petitioners, naturally cry foul and attack that order as arbitrary and contrary to the previous order of this court. The two step corporate reorganization of the petitioner companies did not entail only name change or inconsequential changes in shareholding. The petitioner s entities were transformed and placed under the control of different groups. Given that the nature of inquiry by the DA was not superficial but application of mind with respect to a web of details, that authority was justified in holding that the relief- of change in the notification to enable the petitioners to claim benefit of lower rate of anti dumping duty, was not capable of being granted. Petition dismissed.

Summary

Issues Involved:
1. Refusal by the Designated Authority (DA) to recognize the petitioners as successors in interest to their previous corporate entities.
2. Applicability of a lower rate of anti-dumping duty to the petitioners.
3. Validity of the DA's reasoning for rejecting the petitioners' application.
4. Impact of corporate restructuring and shareholding changes on the anti-dumping duty determination.

Issue-wise Detailed Analysis:

1. Refusal by the Designated Authority (DA) to recognize the petitioners as successors in interest to their previous corporate entities:
The petitioners, Vynova Wilhelmshaven Gmbh (VWG) and VYNOVA BELGIUM NV (VB), sought recognition as successors to their previous entities to benefit from a lower anti-dumping duty. The DA refused their request, citing the need for a fresh determination of individual dumping and injury margins due to changes in ownership and corporate structure.

2. Applicability of a lower rate of anti-dumping duty to the petitioners:
The petitioners argued that the DA should unbundle the weighted average injury margin determined for four subsidiaries and recommend duties based on the injury margin already computed for them. However, the DA maintained that the duty had to remain in force "so long as and to the extent necessary, to counteract dumping, which is causing injury."

3. Validity of the DA's reasoning for rejecting the petitioners' application:
The DA's reasoning was based on the fact that Solvay SA did not participate in the original investigation, leading to a higher rate of anti-dumping duties for exports to India. The DA also noted that the exit of Solvay from the joint venture did not restore the status quo ante, as the restructuring involved changes in ownership and shareholding patterns.

4. Impact of corporate restructuring and shareholding changes on the anti-dumping duty determination:
The DA concluded that the restructuring of the petitioners' entities involved more than just a change of name; it included changes in ownership structure and shareholding patterns. The DA found that the entry and exit of Solvay had no bearing on the German and Belgian entities and did not restore the status quo ante for the UK and Swedish entities. The DA's scrutiny revealed that the petitioners had not disclosed full facts earlier, leading to the conclusion that the request for name change was not feasible without a review investigation.

Conclusion:
The court upheld the DA's decision, stating that the corporate reorganization of the petitioner companies did not entail only a name change but involved significant changes in ownership and shareholding. The DA's detailed examination and conclusion that the relief sought by the petitioners was not capable of being granted were deemed justified. The writ petitions were dismissed without any order on costs.