2019 (12) TMI 18 - AT - Customs

Continuation of Anti Dumping Duty (ADD) for a further period of 5 years - Legality of second sunset review of the duty which was initiated at the behest of Appellant-domestic industry - imports of Nonyl Phenol from Chinese Taipei - case of appellant is that the nature of exercise to be undertaken in the sun set review proceedings is different from the initial exercise which is directed with the objective whether anti dumping duty is warranted or otherwise. Whether the conclusions and the recommendations of the designated authority dated 11.01.2019 against continuation of anti dumping duty on the subject goods Nonyl Phenol from the subject country Chinese Taipei, pursuant to the sunset review, is correct in law or otherwise? HELD THAT - The decisions in the cases of M/S. PT. ASAHIMAS CHEMICALS VERSUS DESIGNATED AUTHORITY/ MINISTRY OF FINANCE 2015 (2) TMI 912 - CESTAT NEW DELHI and THAI ACRYLIC FIBRE CO. LTD. VERSUS DESIGNATED AUTHORITY 2010 (4) TMI 389 - CESTAT, NEW DELHI considered - the object and purpose of the sunset review as explained in the aforesaid judgments, precisely is to examine as to whether on removal of anti dumping duty, there is likelihood of recurrence of dumping and injury to the domestic industry. It has also been held that the degree and extent of dumping and consequent injury to the domestic industry during the POI is not of much relevance. The mandate or requirement under Section 9A(5) of CTA,1975 read with Rule 23 of Anti dumping Rules,1995 and Annexure-II (vii) is that the authority has to examine all relevant aspects to ascertain the likelihood of dumping and injury, once the present anti dumping duty is removed. It is obvious that such determination cannot be based on a guess work or on mere assumption presumption, but definitely to rest on the past present facts, influencing the trend of dumping, resultant injury, performance and other relevant economic and other factors relating to the domestic Industries as well as the exporting Industries/countries to analyse and arrive at a probable situation of continuation of dumping and injury in future to the domestic industry. In the present case, admittedly there has been no participation by the exporting industries in the investigation conducted by the DA. The relevant data have been provided by the Domestic Industry and no serious dispute in this regard i.e. authenticity/correctness of the data raised by the DA or interested opposing parties and the data had been accepted without reservation - The finding and conclusion of the designated authority, reproduced below, in nut shell indicates that since the health and condition of the domestic industry is not in bad shape during the relevant period and also as the Appellant could not prove/establish from the existing facts and evidences that there is any likelihood of dumping and injury to the domestic industry that would recur in future once the duty is removed extension of antidumping duty is not warranted. There is a fundamental fallacy in the approach of the DA in the determination of likelihood of recurrence of dumping and injury post removal of the duty on the subject goods from the subject country. There is no dispute of the fact that evidence of past and present circumstances is relevant and necessary to arrive at a reasonable and logical determination of continuation of same scenario in future warranting continuation of antidumping duty or otherwise. However, it is impractical and also illogical to insist on the positive evidences on future events, for determination of the likelihood of dumping and injury in future on removal of duty - the Appellant domestic industry could reasonably establish through present and past evidence that most of these parameters are satisfied in the present case. The dumping margin is in the range of 10-15% and is positive and above de-minimis. Despite anti dumping duty, the earning of domestic industry is meagre 2% and return of capital is around 5% against the normal return of 22%. The landed value of import without anti dumping duty are below the cost of production of domestic industry. The conclusions and the recommendations of the Designated Authority dated 11.01.2019 is not agreed upon - The same is liable to be set aside and consequently the conclusions and recommendations is set aside and matter remanded to the Designated Authority to calculate the appropriate anti dumping duty while taking note of overall circumstances of the case - appeal allowed by way of remand.

Summary

Issues Involved:
1. Imposition of Anti-Dumping Duty.
2. Likelihood of Continuation or Recurrence of Dumping and Injury.
3. Analysis of Domestic Industry's Current Condition.
4. Parameters for Sunset Review.
5. Participation of Exporters in Investigation.
6. Legal and Procedural Requirements.

Detailed Analysis:

1. Imposition of Anti-Dumping Duty:
The case revolves around the imposition of anti-dumping duty on imports of "Nonyl Phenol" from Chinese Taipei. Initially imposed in 2007, the duty was extended following a sunset review in 2012. The current appeal concerns the second sunset review initiated in 2018, where the Designated Authority (DA) concluded that continuation of the duty was not warranted.

2. Likelihood of Continuation or Recurrence of Dumping and Injury:
The DA's analysis focused on whether the cessation of the anti-dumping duty would lead to a continuation or recurrence of dumping and injury to the domestic industry. The DA concluded that the domestic industry's financial and economic parameters were stable and did not indicate a significant likelihood of dumping and injury recurrence.

The Appellant argued that the DA erred in requiring positive future evidence for determining the likelihood of dumping and injury, which is impractical and illogical. They contended that the presence of factors like significant production capacity with exporters, export orientation, continued dumping, and the price attractiveness of the Indian market established the likelihood of dumping and injury.

3. Analysis of Domestic Industry's Current Condition:
The DA observed that the domestic industry's capacity, production, domestic sales, and overall profitability had increased, indicating no current injury or deteriorated economic condition. However, the Appellant argued that despite the anti-dumping duty, their profits were meager, and they were forced to match the landed price of imports, indicating a vulnerable condition.

4. Parameters for Sunset Review:
The Tribunal emphasized that the nature of sunset reviews is prospective, focusing on the likelihood of continuation or recurrence of dumping and injury if the duty is removed. The DA's approach was criticized for not adequately considering the likelihood of future events based on current and past evidence. Parameters such as current dumping and injury, significant production capacity, export restrictions in other markets, and failure of respondents to participate in the review were highlighted as relevant factors.

5. Participation of Exporters in Investigation:
The DA noted the non-participation of exporters from Chinese Taipei in the investigation, which the Appellant argued should lead to an adverse inference against the exporters. The Tribunal found merit in this argument, emphasizing that the lack of participation by exporters is a significant factor in determining the likelihood of dumping and injury.

6. Legal and Procedural Requirements:
The Tribunal referred to various legal provisions and international practices, emphasizing that the determination of likelihood in sunset reviews should be based on tangible evidence and not mere assumptions. The DA's conclusions were found to be inconsistent with the principles of sunset reviews, as they did not adequately consider the relevant parameters and evidence provided by the domestic industry.

Conclusion:
The Tribunal set aside the DA's conclusions and recommendations, remanding the matter for a re-evaluation of the anti-dumping duty. The DA was directed to analyze the relevant data and determine the appropriate duty, considering the overall circumstances and evidence presented. The appeal was allowed, and the matter was remanded for further action.