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TMI Blog2018 (10) TMI 601X X X X Extracts X X X X X X X X Extracts X X X X ..... g in or exported from the Peoples Republic of China, has been rejected. 3. Before we advert to the facts of the case as they unfold and to the grounds of challenge in the petition to the order dated 17/05/2018, by which the application of the petitioner for extension of the anti-dumping duty for a further period had been rejected, the relevant legal provisions need to be reproduced which are as under: "SECTION 9A . Anti- dumping duty on dumped articles. - (1) Where any article is exported by an exporter or producer from any country or territory (hereinafter in this section referred to as the exporting country or territory) to India at less than its normal value, then, upon the importation of such article into India, the Central Government may, by notification in the Official Gazette, impose an antidumping duty not exceeding the margin of dumping in relation to such article. Explanation. For the purposes of this section, - (a) "margin of dumping", in relation to an article, means the difference between its export price and its normal value; (b) "export price", in relation to an article, means the price of the article exported from the exporting country or territory and in cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry of its origin or export or in any other manner, whereby the antidumping duty so imposed is rendered ineffective, it may extend the antidumping duty to such article or an article originating in or exported from such country, as the case may be.] (2) The Central Government may, pending the determination in accordance with the provisions of this section and the rules made thereunder of the normal value and the margin of dumping in relation to any article, impose on the importation of such article into India an anti-dumping duty on the basis of a provisional estimate of such value and margin and if such anti-dumping duty exceeds the margin as so determined :- (a) the Central Government shall, having regard to such determination and as soon as may be after such determination, reduce such anti-dumping duty; and (b) refund shall be made of so much of the antidumping duty which has been collected as is in excess of the anti-dumping duty as so reduced. (2A) Notwithstanding anything contained in sub-section (1) and sub-section (2), a notification issued under sub-section (1) or any anti-dumping duty imposed under sub-section (2), shall not apply to articles imported by a hundred per c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmence 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. (6) The margin of dumping as referred to in subsection (1) or sub-section (2) shall, from time to time, be ascertained and determined by the Central Government, after such inquiry as it may consider necessary and the Central Government may, by notification in the Official Gazette, make rules for the purposes of this section, and without prejudice to the generality of the foregoing, such rules may provide for the manner in which articles liable for any anti-dumping duty under this section may be identified, and for the manner in which the export price and the normal value of, and the margin of dumping in relation to, such articles may be determined and for the assessment and collection of such anti-dumping duty. (6A) The margin of dumping in relation to an article, exported by an exporter or producer, under inquiry under sub-section (6) shall be det ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discharge of its functions under the Customs Act, 1962 (52 of 1962). (5) Every appeal under sub-section (1) shall be heard by a Special Bench constituted by the President of the Appellate Tribunal for hearing such appeals and such Bench shall consist of the President and not less than two members and shall include one judicial member and one technical member. 3.1 The Relevant Rules i.e. the Customs Tariff Identification, Assessment And Collection of Anti Dumping Duty on Dumped Articles for Determation Of Injury) Rules, 1995 read as under: 3. Appointment of designated authority. - (1) The Central Government may, by notification in the Official Gazette, appoint a person not below the rank of a Joint Secretary to the Government of India or such other person as that Government may think fit as the designated authority for purposes of these rules. (2) The Central Government may provide to the designated authority the services of such other persons and such other facilities as it deems fit. 4. Duties of the designated authority. - (1) It shall be the duty of the designated authority in accordance with these rules- (a) to investigate as to the existence, degree and effect of any al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an investigation. Explanation. - For the purpose of this rule the application shall be deemed to have been made by or on behalf of the domestic industry, if it is supported by those domestic producers whose collective output constitute more than fifty per cent of the total production of the like article produced by that portion of the domestic industry expressing either support for or opposition, as the case may be, to the application. (4) Notwithstanding anything contained in sub-rule (1) the designated authority may initiate an investigation suo moto if it is satisfied from the information received from the Commissioner of Customs appointed under the Customs Act, 1962 (52 of 1962) or from any other source that sufficient evidence exists as to the existence of the circumstances referred to in clause (b) of sub-rule (3). (5) The designated authority shall notify the government of the exporting country before proceeding to initiate an investigation. 6. Principles governing investigations.- (1) The designated authority shall, after it has decided to initiate investigation to determine the existence, degree and effect of any alleged dumping of any article, issue a public notice no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n relevant to the investigation orally but such oral information shall be taken into consideration by the designated authority only when it is subsequently reproduced in writing. (7) The designated authority shall make available the evidence presented to it by one interested party to the other interested parties, participating in the investigation. (8) In a case where an interested party refuses access to, or otherwise does not provide necessary information within a reasonable period, or significantly impedes the investigation, the designated authority may record its findings on the basis of the facts available to it and make such recommendations to the Central Government as it deems fit under such circumstances. 7. Confidential information- (1) Notwithstanding anything contained in sub-rules (2), (3) and (7) of rule 6, sub-rule (2) of rule 12, sub-rule (4) of rule 15 and sub-rule (4) of rule 17, the copies of applications received under sub-rule (1) of rule 5, or any other information provided to the designated authority on a confidential basis by any party in the course of investigation, shall, upon the designated authority being satisfied as to its confidentiality, be treated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (3) The designated authority may, in exceptional cases, give a finding as to the existence of injury even where a substantial portion of the domestic industry is not injured, if- (i) there is a concentration of dumped imports into an isolated market, and (ii) the dumped articles are causing injury to the producers of all or almost all of the production within such market. 12. Preliminary findings. - (1) The designated authority shall proceed expeditiously with the conduct of the investigation and shall, in appropriate cases, record a preliminary finding regarding export price, normal value and margin of dumping, and in respect of imports from specified countries, it shall also record a further finding regarding injury to the domestic industry and such finding shall contain sufficiently detailed information for the preliminary determinations on dumping and injury and shall refer to the matters of fact and law which have led to arguments being accepted or rejected. It will also contain:- (i) the names of the suppliers, or when this is impracticable, the supplying countries involved; (ii) a description of the article which is sufficient for customs purposes; (iii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , also not accept undertakings offered by any exporter, if it considers that acceptance of such undertaking is impractical or is unacceptable for any other reason. (4) The designated authority shall intimate the acceptance of an undertaking and suspension or termination of investigation to the Central Government and also issue a public notice in this regard. The public notice shall, contain inter alia, the non-confidential part of the undertaking. (5) In cases where an undertaking has been accepted by the designated authority the Central Government may not impose a duty under subsection (2) of section 9A of the Act for such period the undertaking acceptable to the designated authority remains valid. (6) Where the designated authority has accepted any undertaking under sub-rule (1), it may require the exporter from whom such undertaking has been accepted to provide from time to time information relevant to the fulfilment of the undertaking and to permit verification of relevant data: Provided that in case of any violation of an undertaking, the designated authority shall, as soon as may be possible, inform the Central Government of the violation of the undertaking and recommend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is sufficient for customs purposes; (iii) the margins of dumping established and a full explanation of the reasons for the methodology used in the establishment and comparison of the export price and the normal value; (iv) Considerations relevant to the injury determination; and (v) the main reasons leading to the determination. (3) The designated authority shall determine an individual margin of dumping for each known exporter or producer concerned of the article under investigation: Provided that in cases where the number of exporters, producers, importers or types of articles involved are so large as to make such determination impracticable, it may limit its findings either to a reasonable number of interested parties or articles by using statistically valid samples based on information available at the time of selection, or to the largest percentage of the volume of the exports from the country in question which can reasonably be investigated, and any selection, of exporters, producers, or types of articles, made under this proviso shall preferably be made in consultation with and with the consent of the exporters, producers or importers concerned : Provided furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value, export price and margin of dumping shall take into account inter alia, the following principles - 1. The elements of costs referred to in the context of determination of normal value shall normally be determined on the basis of records kept by the exporter or producer under investigation, provided such records are in accordance with the generally accepted accounting principles of the exporting country, and such records reasonably reflect the cost associated with production and sale of the article under consideration. 2. Sales of the like product in the domestic market of the exporting country or sales to a third country at prices below per unit (fixed and variable) costs of production plus administrative, selling and general costs may be treated as not being in the ordinary course of trade by reason of price. The designated authority may disregard these sales, in determining normal value, provided it has determined that- (i) such sales are made within a reasonable period of time (not less than six months) in substantial quantities, i.e. when the weighted average selling price of the article is below the weighted average per unit costs or when the volume of the sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... country of origin. 5. The designated authority, while arriving at a constructed export price, shall give due allowance for costs including duties and taxes, incurred between importation and resale and for profits. 6. (i) While arriving at margin of dumping, the designated authority shall make a fair comparison between the export price and the normal value. The comparison shall be made at the same level of trade, normally at the ex-factory level, and in respect of sales made at as nearly as possibly the same time. Due allowance shall be made in each case, on its merits, for differences which affect price comparability, including differences in conditions and in terms of sale, taxation, levels of trade, quantities, physical characteristics, and any other differences which are demonstrated to affect price comparability. (ii) In the cases where export prices is a constructed one, the comparison shall be made only after establishing the normal value at equivalent level of trade. (iii) When the comparison under this para requires a conversion of currencies, such conversion should be made by using the rate of exchange on the date of sale, provided that when a sale on foreign currency ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r pricing structures, so that sales of merchandise in such country do not reflect the fair value of the merchandise, in accordance with the criteria specified in sub-paragraph (3) (2) There shall be a presumption that any country that has been determined to be, or has been treated as, a non-market economy country for purposes of an anti-dumping investigation by the designated authority or by the competent authority of any WTO member country during the three year period preceding the investigation is a nonmarket economy country. Provided, however, that the non-market economy country or the concerned firms from such country may rebut such a presumption by providing information and evidence to the designated authority that establishes that such country is not a non-market economy country on the basis of the criteria specified in sub-paragraph (3). (3) The designated authority shall consider in each case the following criteria as to whether: (a) the decisions of the concerned firms in such country regarding prices, costs and inputs, including raw materials, cost of technology and labour, output, sales and investment, are made in response to market signals reflecting supply and dem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or relative to production or consumption in India. With regard to the affect of the dumped imports on prices as referred to in subrule (2) of rule 18 the designated authority shall consider whether there has been a significant price under cutting by the dumped imports as compared with the price of like product in India, or whether the effect of such imports is otherwise to depress prices to a significant degree or prevent price increase which otherwise would have occurred, to a significant degree. (iii) In cases where imports of a product from more than one country are being simultaneously subjected to anti-dumping investigation, the designated authority will cumulatively assess the effect of such imports, only when it determines that (a) the margin of dumping established in relation to the imports from each country is more than two per cent expressed as percentage of export price and the volume of the imports from each country is three per cent of the import of like article or where the export of individual countries less than three per cent, the imports collectively accounts for more than seven per cent of the import of like article and (b) cumulative assessment of the effect o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ossibility. The change in circumstances which would create a situation in which the dumping would cause injury must be clearly foreseen and imminent. In making a determination regarding the existence of a threat of material injury, the designated authority shall consider, inter alia, such factors as: (a) a significant rate of increase of dumped imports into India indicating the likelihood of substantially increased importation; (b) sufficient freely disposable, or an imminent, substantial increase in, capacity of the exporter indicating the likelihood of substantially increased dumped exports to Indian markets, taking into account the availability of other export markets to absorb any additional exports; (c) whether imports are entering at prices that will have a significant depressing or suppressing effect on domestic prices, and would likely increase demand for further imports; and (d) inventories of the article being investigated." 4. The petition arises under the following background of facts: 4.1 The Government Of India in the Ministry of Finance (Department Of Revenue), by a Notification dated 14/09/2007 imposed an anti-dumping duty on imports of ductile iron pipes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng and injury to domestic industry and therefore the same may be further extended. On such a review being filed within a reasonable period of time prior to the expiry of that period when the duty period is to expire, the designated authority shall conclude the review within a period not exceeding twelve months from the date of initiation of such review. 4.3 Since the extended duty period of the anti-dumping duty imposed by the Notification dated 10/10/2013 is to expire on 9/10/2018, by virtue of which the anti-dumping duty would cease and the protection to the domestic industry would cease, the petitioner filed such a Review Application before the designated authority on 31/3/2018, six months before it was to expire and by the impugned order dated 17/5/2018 the same has been rejected. 5. Mr Mihir Joshi, learned Senior Counsel appearing with Mr. Jitendra Singh and Mr. H.A Dave, learned advocates for the petitioner has drawn our attention to the Sunset Review Application so filed and annexed with the Paper Book and an additional application filed by the petitioner on 14/05/2018. By such application, the petitioner made out a case that the anti-dumping duty ought to be continued fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urred in the domestic industry. b) The utility and consumables cost has been taken on the basis of the cost incurred by the domestic industry. c) The depreciation, labor cost and other costs for the above subject country is taken based on the cost incurred by the domestic industry. A profit margin of 5% is added to cost to arrive at the normal value Normal Value Calculation :- Production Normal Value JSL 368508 ****** ECL 295581 ****** SKL 271779 ****** Wt. Average NIP 935868 48098 * The dumping margin based on such computed normal value was also shown which is as follows: "Dumping Margin The Dumping Margin based on the above computed normal value and the export price is as follows : Calculation of dumping margin Particulars Unit To India Turkey Vietnam Sri Lanka Normal Value Rs/MT ****** ****** ****** ****** Ex-Factory Price Rs/MT ****** ****** ****** ****** Dumping Margin Rs/MT ****** ****** ****** ****** Dumping Margin % -60% 67% 58% 50% * With regard to the evidence of likelihood of continuance or recurrence of dumping and injury relevant statistical date was produced which is at Page 112 of the Paper Book. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontrived prices, which cannot be used for any analytical purpose." * Positive effects of anti-dumping duty in force was shown showing that the domestic market had increased by 69% and therefore if the duty is lifted the manufacturers and exporters of the subject goods from China would increase the imports. The plea therefore is that the antidumping duty be continued. 5.2 Mr. Mihir Joshi invited our attention to the additional material made available by the application dated 14/05/2018 to suggest that in case the anti-dumping duty is withdrawn the domestic market would be inundated by Chinese subject goods as the capacity of China is 477% of sales of domestic industry. Keeping these parameters in view the Application for Sunset Review was made. 5.3 Mr. Mihir Joshi then invited our attention to the Rules under which the designated authority is to decide and the mode and the manner in which such a decision making process was envisaged under the Rules. 5.4 Inviting our attention to Section 9A(5) of the Customs Tariff Act,1975, Mr Joshi submitted that either the Government undertakes a mid-term review on the aspect of continuing the duty or undertakes a review at the end of five ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 23(1B) clearly stipulated that the designated authority has to come to a conclusion that the expiry of the said duty is likely to lead to continuation or recurrence of dumping and injury. Sub-rule (3) of Rule 23 specifically provides that the provisions of Rules 6, 7, 8, 9, 10, 11, 16, 17, 18, 19 and 20 shall mutatis mutandis apply in a case of review and therefore the order on such a review should reflect consideration of such parameters. While refusing to even initiate an investigation, by the impugned order, none of these considerations have been gone into by the designated authority and the order therefore is without reasons and must be struck down as illegal. 5.8 In the submission of Mr. Joshi, the order reflects that the designated authority without even conducting such an investigation has perfunctorily decided the application on the ground that the petitioner has failed to provide sufficient and satisfactory evidence in support of the application, when in fact it has been so provided. The Designated Authority ought to have called for additional evidences as required and with the material that was even provided by the additional letter, the authority could not have ignore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Saurashtra Chemicals Ltd versus Union Of India reported in 2000(118) ELT 305. 6. Mr. Nirzar Desai has appeared on behalf of the Union Of India. He has supported the order of the Designated Authority. It is his case that taking into consideration the relevant factors under the Act and the Rules, the designated authority has come to a conclusion that no review is warranted. Once such a policy decision by a quasi judicial authority has been taken, this Court, in exercise of powers under Article 226 of the Constitution of India, ought not to substitute its own views. 6.1 Mr Desai has invited our attention to the impugned order and suggested that that it is on examination of facts in detail that the authority has come to the conclusion that the during the injury period the imports have been miniscule. That the price cutting also has been negative and the economic parameters such as sales, production, capacity utilisation profits and cash profits have consistently improved and therefore there is no material injury being suffered. Further, as regards likelihood of recurrence of injury on cessation, the authority has observed that the argument of the petitioner is not valid as no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve years. The first proviso provides 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. Therefore, there is power to review the necessity of continuing the enforcement or period of anti-dumping duty on a review so initiated. 8.2 Rule 23 of the Rules provides that the review, either can be on the Central Government's own initiative or upon a request by any interested party who submits positive information substantiating the need for such review. Moreover, such an application has to be duly substantiated. What is evident from the facts on hand is that the antidumping duty was initially imposed in 2007 and was initially extended by a period of five years. It was to cease to have effect in 2012, however the designated authority on a review, by a notification dated 10/10/2013 extended the anti-dumping duty for a period of five years and the same is set to expire on and from 9/10/2018. From 10/10/2018, unless the period of anti-dumping duty is further extended, the same shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll be submitted to the Central Government. The final findings should reflect determination as to whether or not the article under investigation is being dumped and the finding should show as to: the export price, normal value and the margin of dumping; whether the import of the said article causes or threatens to cause material injury or retards the establishment of such industry: a causal link. The final findings should reflect certain established facts as laid out in sub-rule (20) of Rule 17. 10.4 As stated earlier, the review is carried out under Rule 23 of the Rules. Importantly, sub-rule(3) of Rule 23 states the provisions of Rules 6, 7, 8, 9, 10, 11, 16, 17, 19 and 20 shall mutates mutandis apply in the case of review. Therefore, while deciding an application for a review, the designated authority's order should reflect in such decision making process, the parameters of determination, as laid out under Rules 10, 11, 16 and 17. For the sake of convenience, the order impugned is reproduced herein below: " Dated 17.05.2018 To, M/s. Electrosteel Casting Limited, M/s. Srikalahasti Pipes Ltd. (SPL) and M/s. Jindal Saw Limited Through : APJ-SLG Law Offices, F-21, Geetanjali En ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orters of DI Pipes have been the target of anti-dumping and other unreasonable trade measures in EU and Brazil over the last few years. The actions by EU are the behest of M/s. Saint - Gobain PAM International (SG PAM), which happens to be one of the biggest producers of the DI pipes in the world. SG PAM has multiple facilities around the world with significant presence in China. The imposition of anti-dumping and anti-subsidy duties and the subsequent action is clearly a retaliatory action by SG PAM against Indian exporters as they are not in a position to supply to the Indian market at fair and undumped prices. d) The DI pipes supply market is largely tender based and thus highly price-sensitive since any loss in price competitiveness may result in bidder losing out the entire contract. e) There has been acceleration in growth for the domestic DI pipe industry, largely on account of water and sewerage infrastructure development in Indian urban, suburban and rural sector. With only around 31% of India's population currently urbanized, India's urbanization trends have scope to significantly accelerate and likely to be around 40% by 2030 and a healthy domestic DI pipe industry is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ason enough for diversion and dumping of subject goods into India. iii. No evidence has hitherto been given with regard to likelihood of price suppression/price depression caused by the imports of subject goods from China PR. 6. In view of the above, the Authority notes that the applicant has not been able to provide sufficient and satisfactory evidence in support of its prayer to initiate sunset review investigation. Therefore, the Authority decides that the case is not fit for initiation of sunset review investigation." 11. Examination of the impugned order in the background of these significant mandate as required under the Rules would suggest the absence of following factors: * Nothing is evident to suggest that the designated authority called for information by supplying such copy of the application to known exporters or to the concerned trade associations, foreign producers, calling for information factors on which the allegations of injury were made by the Review Applicants * Nothing is evident to suggest that there was any determination of normal value, export price and margin of dumping and its assessment in accordance with the principles laid out in Annexure I of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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