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TMI Blog2006 (8) TMI 337X X X X Extracts X X X X X X X X Extracts X X X X ..... i.e. seamless grade alloys and non-alloys, steel billets, bars and rounds originating in or exported from Russia and China. Following the request made by the importer M/s. Maharashtra Ceramics Ltd., the designated authority initiated a mid-term review investigation under Rule 23 of the Customs Tariff (Identification, Assessment and Collection of Anti-Dumping Duty) Rules, 1995, in order to determine whether the continued imposition of the duty was required to offset dumping, and whether injury was likely to continue or recur if the duty were removed or varied, or both. 3. The designated authority followed the required procedure with regard to the investigation as contemplated by rule 23 of the said rules. The investigation was carried for the period starting from 1-1-2003 to 31-12-2003. However, injury examination was conducted for the years 2000, 2001 and 2002 and the period of investigation. No response to the initiation notification was received from any other exporter, importer or association, except M/s. Kunal Corporation, Mumbai and M/s. Federation of Indian Industries, Steel Re-Rolling Mills Association of India and the applicant for the review. The non-confidential ver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith regard to various parameters contemplated by Rule 11 of the said rules. 5.1 The designated authority held that it was evident from the provisions of Rule 23 of the said rules and Articles 11.1 to 11.3 of the Anti-Dumping Agreement that the anti-dumping duty imposed shall be withdrawn in case it is found that there is no justification for the continued imposition of fresh duty. It was observed that the designated authority is required to examine whether there is justification for continued imposition of anti-dumping duty, that is, whether there is no injury to the domestic industry any longer and withdrawal of anti-dumping duty, is likely to result in continuation or recurrence of injury to the domestic industry. The authority conducted the mid-term review in order to examine the degree and extent of dumping and injury and the need for continuation of the duty. For the purpose of injury analysis it examined the volume and price effect of dumped imports of the subject goods on the domestic industry and its effect on the prices and profitability to examine the existence of injury and causal link between the dumping and injury, if any. All the exports from the subject countri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... like products of the domestic industry on account of such dumped imports. Considering the relevant parameters having bearing on the aspect of assessment of injury, the designated authority concluded that injury indicated did not reflect injury to the domestic industry and though injury parameters like decline in the market share of the domestic production and inadequate return on the capital showed a negative trend, a situation of continuance of injury caused by dumped imports could not be established. It noted that the return on the capital employed had increased by 14% and the cash profit relating to subject goods of the domestic industry had also improved and grown by 50% from the preceding year. The turnover of the domestic industry had increased along with its productivity. 5.3 On the question of likelihood of recurrence of injury the authority concluded that the fall in the market share of the domestic industry was absorbed by the increased market share of other Indian domestic producers and not by dumped imports from abroad. Taking into account the provisions of paragraph (vii) of Annexure-II to the said rules, which deals with threat of injury, the authority held tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... awal of duty could be made. Even the finding that there was no likelihood of injury was not in consonance with the provisions of Rule 23 of the said rules read with Section 9A(5) of the Act. It was submitted that the designated authority had wrongly shifted the onus of proof on the domestic industry. Since no positive evidence was adduced by the applicant for establishing that there was no justification for the continued imposition of duty, no case for withdrawal was made out. It was also submitted that no finding was given on the causal link aspect. It was further submitted that some of the parameters showed improvement for the domestic industry only because of the protection of the anti-dumping duty. If the anti-dumping duty element was removed, and comparison made that would have demonstrated that there was hardly any improvement in such parameters. It was further argued that the NIP was worked out at Rs. 20,161 per M.T. while the landed value was Rs. 18,883/- per M.T. Therefore, there was obviously a pressure on the appellant to sell below the NIP in view of the landed value of the subject goods being lower by Rs. 1,278/- per M.T. The learned Counsel argued that this single fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er by the designated authority in suo motu review or by the applicant seeking the review. The Supreme Court further observed that in the absence of new material the designated authority was not required to apply afresh parameters or criteria enumerated in paragraph (iv) of Annexure II, which had already been done at the initial stage of imposition of anti-dumping duty (see paragraph 37 of the judgment). Arguments on behalf of the Respondents-importer and the Designated Authority: 7. The learned Counsel appearing for the respondent-importer argued that the designated authority on the basis of the information on record has rightly found that there was no justification for continued imposition of duty and that its revocation was not likely to lead to continuation or recurrence of dumping injury. It was submitted that the interested party had submitted positive information substantiating the need for a review and the designated authority was required to examine in such mid-term review whether the continued imposition of the duty is necessary to offset dumping, whether the injury was likely to continue or recur if the duty were removed or varied or both. If it appeared to the det ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NIP there could still be a finding of no injury or no causal link. It was submitted that the difference between the NIP and the landed value has a bearing only on quantum of duty which was required to be imposed and cannot constitute a sole criteria for determining injury or threat of injury to the domestic industry. 8. The learned Counsel appearing for the designated authority supported the reasoning and findings reached by the designated authority and submitted that the initiation of mid-term review was done on the basis of positive information supplied by the applicant-importer. He submitted that though there were dumped imports, in the absence of injury or likelihood of injury to the domestic industry there was no justification for continuation of the duty imposed. He referred to the material on the record for contending that the findings reached for recommending withdrawal of duty were justified. It was submitted that the injury indicators did not reflect injury to the domestic industry during the period of investigation and there was improvement in the position of the domestic industry in terms of price increase and the domestic industry was back into profit from the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Section 9A(5) of the Customs Tariff Act, 1975 and Rule 23 of the said rules which have a bearing on review for "earlier revocation" and also on the review for continued imposition of duty on expiry of five years are reproduced hereunder:- "Section 9A(5). - The anti-dumping duty imposed under this section shall, unless revoked earlier, cease to have effect on the expiry of five years from the date of such imposition: Provided that if the Central Government, in a review, is of the opinion that the cessation of such duty is likely to lead to continuation or recurrence of dumping and injury, it may, from time to time, extend the period of such imposition for a further period of five years and such further period shall commence from the date of order of such extension: Provided further that where a review initiated before the expiry of the aforesaid period of five years has not come to a conclusion before such expiry, the anti-dumping duty may continue to remain in force pending the outcome of such a review for a further period not exceeding one year." (emphasis added) "Rule 23. Review. - (1) The designated authority shall, from time to time, review the need for the continued im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eview, enquiry will be whether the case is made out for revocation of anti-dumping duty imposed, the duration of which will normally be five years unless revoked earlier. Duty can be revoked earlier if the very basis on which it was imposed no more exists. Mid-term review would necessarily entail investigation into the issues whether the pre-condition for imposition, namely, margin of dumping no more exists [Section 9A(1)] and whether the import does not cause or threaten material injury anymore to any established industry in India or no longer materially retards the establishment of any industry in India, as envisaged in Section 9B(l)(b)(ii). Thus, an inquiry into earlier revocation is necessarily an examination of existence of dumping margin and injury caused or threat of material injury. If the dumped imports no more cause or threaten material injury, a case for revocation will be made out, but not otherwise. 10.3 The case of revocation will not be made out when dumping margin exists in the POI of review and imports cause injury or threat of material injury, and a mere marginal decrease in these basic factors, which can be attributed to the existing anti-dumping duty, will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the applicant seeking review. In the present case, the review had been initiated by the Designated authority. Neither the Designated authority nor the appellant had placed any material on record which could possibly displace the findings given by the Designated authority at the stage of initial anti-dumping duty. In the absence of any new material, the Designated authority is not required to apply afresh all parameters or criteria enumerated in para (iv) of Annexure-II, which had already been done at the initial stage of imposition of anti-dumping duty. There is no material on record to show that there was a change in the parameters or the criteria relating to the injury which would warrant withdrawal of anti-dumping duty. Nevertheless, the Designated authority has still analysed the issue of injury in detail in the Mid Term Review findings and has considered all the criteria or parameters enumerated in Annexure-II. There is, therefore, no merit or substance in the appellant's contention regarding non-compliance with Annexure-II." [Emphasis added] 11.1 Necessarily therefore, the party asserting earlier revocation of anti-dumping duty has to make out a case by showing that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ification. 14. In the case of review under Rule 23, the provisions prescribed for determination of injury under Rule 11 have to be followed and the designated authority shall determine injury to domestic industry, threat of injury to domestic industry, material retardation to establishment of domestic industry and causal link between dumped imports and injury, taking into account "all relevant facts" including the volume of dumped imports, their effect on price in the domestic market for like articles and the consequent effect of such imports on domestic producers of such articles in accordance with, the principles set out in Annexure II to the rules. 14.1 The effect of volume of dumped imports on the price of the like articles in the domestic market is a relevant fact and, therefore, where the quantity of dumped imports in relation to the volume of domestic production is so insignificant that it can hardly have any effect on the price of like articles in the domestic market in a situation of sufficient demand, there would result no injury to the domestic industry. The principle for determination of injury laid down in paragraph (ii) of Annexure II of the rules requires ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... findings. Thus, in the present case, the determinations in connection with the dumping margin weighed in favour of continuance of anti-dumping duty, since the existence of dumping margin to a very significant degree, did not warrant revocation of the anti-dumping duty. In fact, under Section 9A of the Act anti-dumping duty is required to be imposed to the extent that it may not exceed the margin of dumping in relation to the dumped articles. It is only when the imports are from a member country of the World Trade Organisation or from a country with whom Government of India has a most favoured agreement that over and above the dumping margin, determination has also to be made in accordance with the rules that import of such article into India causes threat of material injury to any established industry in India or retards the establishment of any industry in India, and a further finding on the aspect of injury is required to be given in respect of such specified countries under Rule 11(1) of the said rules. Thus, the significance of continued dumped imports remains paramount while considering whether the duty should be revoked or not before the cessation of its normal duration of f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dered significant when observed in a midterm review for revocation of duty, because of the distinct possibility of material injury being caused to the domestic industry on the removal of the anti-dumping duty which removal will have the tendency of decrease in prices further to the extent of the quantum of duty removed which will have a simultaneous cut in the profits. Therefore, the price undercutting determined by the designated authority could not have been brushed aside as insufficient on the ground that it was slightly less than 2%. The rule of de minis i.e. below 2% is not applied under the rules to such price undercutting and its application would be erroneous in a mid-term review. In a mid-term review when such trend is evident, it should ring as an alarm bell against revocation of the anti-dumping duty because the threat of injury would be writ large and the removal of the protective umbrella of the existing anti-dumping duty will translate the threat of material injury into a stark reality. 15.3 The impact of dumped imports on the domestic industry can be judged from the state of profits. The concept of profit ingrains in it the idea of sufficient return to ena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rlooked in its final finding the fact that the landed value of the dumped imports was significantly lower than the non-injurious price of the like articles worked out during the review proceedings as reflected from the disclosure statement (Annexure IV). In paragraph (ii) of Annexure (IV) to the disclosure statement, the authority had determined a non-injurious price for the subject goods after a detailed analysis and scrutiny of information provided by the domestic industry and duly verified by the authority and held that: "Accordingly, weighted average non-injurious price for the domestic industry has been determined by the authority as Rs. 20,161/-for non-alloy grades" In the final findings the landed value of dumped imports is worked out for the period of investigation at Rs. 18,883/- per metric tonne for non-alloy grades, which means that, if the dumped imports continued to come at that landed value, such dumped imports would be lower than the non-injurious price of Rs. 20,161/- for non-alloy grades. Thus, there would be a situation where the domestic industry will be compelled to pull downwards the price of domestic like goods below the non-injurious price if the dumped impor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its continuance beyond five years can never be a matter under consideration in such a review, because, the impost itself was for a statutory duration of five years, and the question of continuance can arise only beyond that. Since we are concerned only with mid-term review in which duty could only be revoked earlier, and there would be no new imposition of duty, the provisions of continuing the duty beyond five years as contained in the two provisos to Section 9A(5) would not be attracted. In a mid-term review the real question is whether duty should be revoked earlier than the period of five years of its statutory duration and not whether it should be continued beyond the period of five years, which would be the scope of enquiry in a "sunset review". We, therefore reject the contention that on our finding that there was no case made out for earlier revocation, we should be directing the continuance of duty beyond five years in a mid term review. Final Order: 17. For the foregoing reasons, we set aside the impugned final findings dated 20-5-2005 and the impugned Notification No. 69/2005-Cus. dated 19-7-2005. The appeal is accordingly allowed. (Pronounced in the open Court ..... X X X X Extracts X X X X X X X X Extracts X X X X
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