2019 (12) TMI 1069 - AT - Customs

Levy of definitive anti dumping duty - appeal by the two exporters from Thailand - import of Non-Plasticized Industrial Grade Nitrocellulose excluding Nitrocellulose Damped in Ethanol and Waterwet - contention of the learned Senior Counsel for the Appellants is that the price of the product under consideration in the domestic market is distorted because of the strict licensing requirements imposed by the Thailand Government - contention of the Domestic Industry is that the Appellants failed to substantiate that there was any distortion in the domestic selling price and mere existence of license regulations cannot lead to a conclusion that there is a distortion in price. HELD THAT - The Arms Act merely seeks to regulate the use of the product in Thailand and has been enacted to ensure public safety as well as law and order. Section 15 of the Arms Act provides that no person shall order, import, produce or possess arms without a license granted by the Permanent Secretary for Defence. Section 16 bars issuance of a licence to any person convicted of an offence or to a person not of age or to a person of unsound mind. Thus, the consideration for issuance of a license has no connection with the domestic requirement or import of the article - Section 26 provides that the licence shall be valid through the period specified therein, but not exceeding one year from the date of its issuance or renewal. The restriction is, therefore, on the period and not on the quantity. There is no restriction on the quantity or value of import nor does it contain any mechanism for fixing of a selling price in the domestic market. A user has to obtain a license whether the article is imported or procured from domestic market. The contention of the Appellant that there is a distortion because of the regulations in the domestic market price as a result of which normal value has not been correctly arrived at, cannot, therefore, be accepted. Clause (2) of Annexure 1 of the 1995 Rule provides that sales of the product in the domestic market of the exporting country may be treated as not being in the ordinary course of trade by reason of price and the Designated Authority may disregard these sales in determining the normal value, provided the factors enumerated therein exist. The Appellants have not been able to substantiate that these factors exist. The Designated Authority had, however, conducted the ordinary course of trade test in respect of sales made in Thailand. It found that Nitro Chemicals had sold 4193 MT of the subject goods in the domestic market and 99.96% of the sales were profitable. The alternative methods for determination of the normal value as provided for in Clause (ii) of Explanation to Section 9A(1) of the Tariff Act can be resorted to only when there are no sales of the article in the ordinary course of trade in the domestic market. Thus, when substantial sales have been made by the exporter in the domestic market and in the absence of any good reason for reduction of the domestic sale price, the normal value would be the comparable price, in the ordinary course of trade, for the like article when destined for consumption in the exporting country. The alternative methods for determination of the normal value as provided for in Clause (ii) of Explanation to Section 9A(1) of the Tariff Act can be resorted to only when there are no sales of the article in the ordinary course of trade in the domestic market - Thus, when substantial sales have been made by the exporter in the domestic market and in the absence of any good reason for reduction of the domestic sale price, the normal value would be the comparable price, in the ordinary course of trade, for the like article when destined for consumption in the exporting country - it is not possible to accept the contention of learned Counsel for the Appellants that normal value should not have been fixed in relation to the comparable price for the like article when destined for consumption in the exporting country and should have been the comparable representative price of the like article when exported from the exporting country to an appropriate third country or should have been the cost of production of the said article in the country of origin. What has to be seen is, whether the satisfaction of the Designated Authority regarding confidentiality was proper and whether the Domestic Industry was justified in not providing summarization under Rule 7 of the 1995 Rules. The Designated Authority, in the present case, on being satisfied about the claims of confidentiality made by the Domestic Industry, did not call upon the Domestic Industry to make any further disclosure. It has been found in the preceding paragraphs of this order that the claim of confidentiality made by the Domestic Industry was justified - The finding of the Designated Authority in regard to confidentiality , therefore, does not suffer from any infirmity so as to call for any interference in this appeal. Appeal dismissed - decided against appellant.

Summary

Issues Involved:
1. Non-consideration of submissions on 'normal value'.
2. Non-consideration of submissions on 'confidentiality'.

Detailed Analysis:

Non-consideration of Submissions on 'Normal Value':

The Appellants contended that the domestic selling price of Nitrocellulose in Thailand was distorted due to demand-supply crunch resulting from strict licensing requirements imposed by the Thailand Government. They argued that the normal value should have been calculated based on sales to third countries or the cost incurred by the Appellants. They also highlighted that the export price to India was not comparable with domestic prices due to additional domestic regulations and expenses.

The Designated Authority, however, found that the domestic prices were appropriate for evaluating whether the sales were made in the ordinary course of trade. The Authority noted that licensing procedures were common in many countries for products that could be used for explosives or hazardous substances, and mere licensing did not imply that domestic prices were not in the ordinary course of trade. The Authority conducted the ordinary course of trade test and found that 99.96% of Nitro Chemicals' domestic sales were profitable.

The Tribunal upheld the Designated Authority's determination of 'normal value' based on the comparable price in the ordinary course of trade for the like article when destined for consumption in the exporting country. The Tribunal found no error in the Authority's determination and rejected the Appellants' contention that the normal value should have been based on sales to third countries or cost of production.

Non-consideration of Submissions on 'Confidentiality':

The Appellants argued that the Designated Authority failed to properly address their objections to the excessive confidentiality claims made by the Domestic Industry. They highlighted that the Domestic Industry omitted several formats (A to L, except G and H) and that the information claimed as confidential was critical for determining injury.

The Designated Authority examined the confidentiality claims and accepted them where warranted. It directed the parties to provide non-confidential summaries or reasons why summarization was not possible. The Tribunal noted that the Domestic Industry provided a summary of performance parameters in Format 'H' and that the information relating to cost of production and related data was commercially sensitive and could not be disclosed.

The Tribunal found that the Designated Authority's satisfaction regarding the confidentiality claims was proper and that the Domestic Industry's claim of confidentiality was justified. The Tribunal also noted that the Appellants had not provided a meaningful summarization of cost information themselves.

Conclusion:

The Tribunal dismissed the appeals, finding no merit in the Appellants' contentions regarding both 'normal value' and 'confidentiality'. The Designated Authority's determination of 'normal value' and handling of confidentiality claims were upheld. The Tribunal concluded that the principles of natural justice were not violated and the final findings and notification did not suffer from any infirmity.