2023 (1) TMI 1059 - AT - Customs

Levy of Anti-dumping duty - exports by Xinyi Energy - submission is that its exports to India by Xinyi Energy are not at dumped prices, and the determination of the dumping margin by the designated authority in the final findings is erroneous for the reason that it is based on a faulty determination of the normal value and export price. Whether the designated authority was justified in making deductions from the export price of Xinyi Energy on account of liaison office? - HELD THAT - A person who is not a resident of India can open a branch office or a liaison office only with the prior approval of the Reserve Bank of India and in accordance with the Regulations. Secondly, the liaison office cannot undertake any commercial/trading/industrial activity directly or indirectly. The domestic industry has not brought on record any evidence to suggest that Xinyi Glass carried out any commercial activity. There was only one employee of Xinyi Glass in India who was merely looking after the registration process of the liaison office. It would, therefore, not be appropriate to examine the information referred to by the learned senior counsel to determine whether Xinyi Energy had a liaison office in India - the expenses, if any, incurred by Xinyi Glass would have no bearing or impact on the price at which the goods were exported. Section 9A(1)(b) of the Tariff Act which deals with the definition of export price provides for a construction of an export price where either on account of relationship between exporter and importer or a third party, the export price to India becomes unreliable. The present is a case where the exporter and importer are not related parties and the sale price to the Indian importer represents the true and full consideration for the sale. The findings recorded by the designated authority on this aspect, therefore, cannot be sustained. n the absence of any opportunity or any specific request from the designated authority for furnishing such information, rule 6(8) would not be applicable in the present case. Loading the Cost of Production - It is argued that the designated authority was not justified in making adjustment to the normal value by loading the cost of production - HELD THAT - The rate offered by the Bank is 0.8% plus the Hong Kong Interbank Offer Rate HIBOR notified by the Hong Kong Association of Bank. The Hong Kong Association of Banks, has as its members banks such as Bank of America, Bank of India, Barclay s Bank, PLC, Citi Bank NA, Credit Suisse AG. The HIBOR is an international Benchmark for lending and debt instruments issued in the Asian region - the interest free advances received from the parent company are for expansion of the production facility and future production activity, and not relatable to the production and export of subject goods to India during the period of investigation. Even if the advances are to be treated as an interest free loan relatable to the subject goods, then too, the actual interest cost as per the loan agreement should be taken, but the designated authority took the interest cost based on a notional rate of interest prevailing in Malaysia, without rendering any finding as to why the actual interest cost is not acceptable for determining the interest foregone. It is, therefore, not possible to accept the contentions advanced by the learned counsel for the appellant that Xinyi Energy should have been treated as a non-co-operating exporter by the designated authority and should have been relegated to residuary anti-dumping duty. The matter has to be remitted to the designated authority to determine the export price by excluding the deductions from the export price of Xinyi Energy on account of the alleged liaison office in India. The designed authority shall also determine the normal value of the product in the light of the observations made in this order and forward the recommendations to the Central Government for issuance of a fresh notification under rule 18 of the 1995 Anti-Dumping Rules, if so considered necessary - Appeal allowed.

Summary

Issues Involved:
1. Justification of deductions from the export price of Xinyi Energy on account of a liaison office.
2. Adjustment to the normal value by loading the cost of production.
3. Allegation of Xinyi Energy providing incorrect information and suppression of material facts.

Issue-wise Detailed Analysis:

1. Justification of deductions from the export price of Xinyi Energy on account of a liaison office:
The designated authority initially noted that Xinyi Glass, a related company, had applied for a liaison office in India but had not started operations. The authority initially did not adjust the export price based on this information. However, in the final findings, it concluded that Xinyi Glass was involved in marketing and sales during the investigation period. This conclusion was based on the application for a liaison office, renting an office, website information, and public hearing attendance by a representative. The Tribunal found no fresh evidence post-disclosure to justify this change and noted that the liaison office had not been approved by the Reserve Bank of India during the investigation period. It concluded that the expenses incurred by Xinyi Glass had no bearing on the export price and that the findings of the designated authority on this aspect could not be sustained.

2. Adjustment to the normal value by loading the cost of production:
Xinyi Energy received interest-free advances from its parent company for future expansion, not related to the production and export of goods during the investigation period. The designated authority adjusted the normal value by imputing notional interest costs based on rates in Malaysia, without justifying why the actual interest cost from the loan agreement was not acceptable. The Tribunal found this adjustment unjustified, noting that the loan was from a Hong Kong-based bank and not subject to Chinese laws, and that Hong Kong is not considered a non-market economy.

3. Allegation of Xinyi Energy providing incorrect information and suppression of material facts:
The domestic industry alleged that Xinyi Energy provided incorrect information regarding its marketing activities in India. The Tribunal found that the information provided by Xinyi Energy was factually correct, as it did not have an office in India during the investigation period, and the question did not require disclosure of related entities' offices. The Tribunal also noted that the designated authority did not request specific information about expenses incurred by Xinyi Glass, making rule 6(8) inapplicable. The Tribunal rejected the domestic industry's contention that Xinyi Energy should be declared non-cooperative based on the evidence provided.

Conclusion:
The Tribunal remitted the matter to the designated authority to re-determine the export price of Xinyi Energy excluding deductions for the alleged liaison office and to re-determine the normal value considering the Tribunal's observations. The appeals by the domestic industry were dismissed, while the appeal by Xinyi Energy was allowed to the extent indicated.

Order Pronounced on 20.01.2023.