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TMI Blog2019 (5) TMI 1142X X X X Extracts X X X X X X X X Extracts X X X X ..... in 2014-15 to 85% in 2017- 18, and the domestic sales have also increased from 115 MW in 2014-15 to 314 in 2017-18 and the production of the domestic industry has increased from 141 MW in 2014-15 to 318 in 2017-18 (annualized), it is equally true that the volume of the imports has grown from 1275 MW in 2014-15 to 9833 in 2017-18 (annualized) that is an increase of 671% in comparison to the production of the domestic industry which has increased by 126% during the same period. Moreover, though the total sales of the domestic industry have increased, the percentage of sales has decreased from 8% to 3%. Though the capacity utilisation has increased, the Director General has recorded that when compared with the growth in demand which increased to 10618 MW in 2017-18, the domestic industry's total capacity should have got utilised. The capacity remaining below 100% even in such enhanced demand indicates a clear preference for the imported product under consideration. The Director General (Safeguard) has examined all the relevant parameters and has given his findings thereon. The Director General has found that domestic industry suffered serious injury during the POI and that ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , three were situated in the SEZ and, therefore, the Director General has accepted the contention that those three are not eligible to move such application and has restricted the application to two such domestic industries. The attention of the court was invited to paragraph 27(j)(iv) of the impugned order, to point out that the Director General has recorded that the scope of DI is restricted only to the producers I.e. M/s.Indosolar Limited and M/s. Jupiter Solar Power Limited. It was submitted that he has thereafter found that these two companies collectively account for 38% of the total domestic production in the DTA. Reference was made to the table below, to point out that the calculation is based on the basis that the total Indian production is 842 MW whereas total Indian production exceeds 2000 MW. It was submitted that, therefore, the calculation of 38% is incorrect. The attention of the court was invited to the definition of domestic industry as defined under clause(b) of sub-section (6) of section 8B of the Customs Tariff Act, 1975, to submit that the same inter-alia means the producers whose collective output of the like articles or a directly competitive article in Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Revenue are ultra vires the Customs Tariff Act and the Safeguard Duty Rules as well as unconstitutional in terms of articles, 14, 19(1)(g), 21, 265 and 300A of the Constitution of India and other ancillary reliefs. 4. By the Final Findings dated 16.7.2018, the Director General has recommended that the increased imports of Solar Cells (Product under consideration for short PUC ) into India have caused serious injury and threaten to cause serious injury to the domestic producers of PUC into India and it will be in the public interest to impose safeguard duty on imports of 'PUC into India in terms of rule 12 of the Customs Tariff (Identification and Assessment of Safeguard Duty) Rules, 1997 (hereinafter referred to as the rules ) for a period of two years and has further recommended imposition of safeguard duty as reflected in the said final findings. Pursuant thereto, the Government of India has issued a notification dated 30.7.2018 levying safeguard duty at the rates specified therein. Being aggrieved, the petitioner presented the captioned petition wherein this court, by the order dated 28.12.2018 had granted ex parte ad-interim relief in favour of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is restricted to only two producers, that is, M/s. Indosolar Limited (EOU) and M/s. Jupiter Solar Power Limited, the applicant herein and that, with the exclusion of three SEZ units, the domestic industry is now restricted to M/s. Indosolar Limited and M/s. Jupiter Solar Power Limited which collectively account for 38% of the total domestic production in the DTA. The support of ISMA rendered through the resolution of its managing committee and with no opposition qualifies the two applicant units meeting the requirements of major share of Indian industry. Referring to the chart below paragraph 27(j)(v) of the Final Findings, it was pointed out that the production of the domestic industry was as high as 93% in 2015-16 and that it is the entire period of investigation which is required to be taken into consideration and, therefore, the share of production of the domestic industry at 38% is incorrect. It was accordingly submitted that the contention raised on behalf of the petitioner at the time when ex parte ad interim relief came to be granted in its favour that the applicants before the Director General did not constitute domestic industry as contemplated under section 8B(6)(b) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nted is permitted to continue, the domestic industry would suffer irreparable injury. 5.5 The attention of the court was invited to rule 16 of the rules to point out that the duty levied under rule 12 thereof shall be only for such period of time as may be necessary to prevent or remedy serious injury and to facilitate positive adjustment. Reference was also made to rule 17 of the rules which provides for Liberalization of duty and says that if the duration of the duty levied under rule 12 exceeds one year, the duty shall be progressively liberalized at regular intervals during the period of its imposition. It was submitted that if the interim relief is permitted to continue, the period contemplated under rule 16 would soon be over and the provisions of rule 17 of the rules would come into play. 5.6 Next it was submitted apart from the fact that the conduct of the petitioner disentitles it to equitable relief, the petition was delayed by five months, inasmuch as the final findings are dated 16.7.2018, whereas the petition has been filed on 19.12.2018. It was submitted that in the present case, the factors of balance of convenience as well as irrepa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had initiated the proceedings. 6.3 On the question of balance of convenience, it was submitted that while the power purchase agreement may provide for pass through, the petitioner has a right to pass on at the appropriate stage when it actually sells power, whereas safeguard duty has to be paid when it imports the goods. It was submitted that the petitioner would take time to set up the plant and the cost of safeguard duty would not be reimbursed overnight. It was submitted that the petitioner would be able to recoup the amount paid over a period of twenty to thirty years subject to GERC. It was submitted that the outflow of money today is a certainty but the recovery thereof is not certain. It was submitted that the mere fact that there is possibility of recoupment cannot be regarded as a factor while considering the question of balance of convenience. It was submitted that such argument was made before the Madras High Court but did not appeal to the said court. 6.4 On the merits of the final findings, it was submitted that two persons would not constitute a domestic industry. Reference was made to the definition of domestic industry as defined in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8% in 2014-15 to 85% in 2017-18 without any protection and that production has gone up three times from 115 to 314 though the percentage has gone down. It was contended that, therefore, it is evident that the domestic industry does not need any protection and that even if the capacity of the domestic industry had increased to 100%, at best they could have manufactured only 373 MW. It was further submitted that the production capacity of the domestic industry is far below the requirements of the country and that there is a policy of the Government not to impose safeguard duty where requirement is more than twice the domestic industry capacity and hence also safeguard duty could not have been imposed. 6.7 It was submitted that considering the increase in production, capacity and sales, it is evident that the domestic industry has not suffered any loss. It was argued that the authority says that the domestic industry has not grown at the rate at which imports have grown, overlooking the fact that the domestic industry has not grown because it does not have the capacity to grow. It was submitted that the safeguard duty is imposed to ensure that a person who can manufact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xceeding the amount which is found adequate to prevent or remedy serious injury and to facilitate positive adjustment. It was submitted that the Director General (Safeguard) has duly considered all the aspects which are necessary while considering the application under section 8B of the Customs Tariff Act and, therefore, the interim relief granted by this court deserves to be vacated. 9. In rejoinder, Mr. Mihir Joshi, learned counsel for the applicant reiterated the submissions with regard to judicial adventurism, to submit that the petitioner had gone before the authority as an association but thereafter the members of the association have fragmented into different parties to invoke the jurisdiction of different courts. It was submitted that it was the principal company which was the objector, however, it has selected the special purpose vehicles to institute proceedings in different courts with the idea to have multiple litigation through special purpose vehicles. 9.1 Reliance was placed upon the decision of the Supreme Court in the case of Bloom Dekor. Limited v. Subhash Himatlal Desai , (1994) 6 SCC 322 , wherein the court has held thus:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... selling price and is suffering losses. It was submitted that it is the balance of public interest for which prima facie the authority has considered relevant factors. 9.4 Insofar as the applicant not falling within the ambit of domestic industry as contemplated under section 8B(6) (b) of the Customs Tariff Act is concerned, the attention of the court was invited to the findings recorded by the Director General in this regard. It was submitted that the applicants have the support of ISMA which renders them major sharers. It was submitted that the investigation period is 2014-15 to 2017-18 and in 2015-16, the share of the domestic industry was as high as 93% and hence, there is no reason to restrict the share of domestic industry to 38% and that in any case since the applicants before the authority have the support of ISMA the domestic industry is even otherwise a major sharer. 9.5 It was submitted that the interim relief granted by the Madras High Court whereby it has directed the petitioner therein to furnish bank guarantee for 50% of the safeguard duty would not help the domestic industry in any manner and that the stay granted by this court is requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the conduct of the petitioner in invoking the writ jurisdiction of this court. In the opinion of this court, the decision of the Supreme Court in Bloom Dekor Limited (supra) on which reliance has been placed on behalf of the applicant would have no applicability to the facts of the present case inasmuch as in that case multiple suits came to be instituted by the respondents therein at far away places where no cause of action arose, and in those circumstances the court held that the respondents had indulged in judicial adventurism. 13. On behalf of the opponent No.8- original petitioner, the final findings have been assailed mainly on the ground that the two applicants at whose instance the proceedings for imposition of safeguard duty came to be initiated did not constitute domestic industry as contemplated under section 88(6)(b) of the Customs Tariff Act, 1975. It has further been contended with reference to the final findings recorded by the Director General, that the total Indian production has increased from 170MW in 2014-15 to 842 in 2017-18, domestic sales of the applicants has increased from 115MW to 314 MW; the capacity utilisation of the domestic indu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... existence of the causal link between increased imports of the article concerned and serious injury or threat thereof. When factors other than increased imports are causing injury to the domestic industry at the same time, such injury shall not be attributed to increased imports. In such a cases, the Director General may refer the complaint to the authority for anti-dumping or countervailing duty investigations, as appropriate. 15. For the purpose of confirmation or vacation of interim relief granted by this court, it would be necessary to examine whether prima facie the investigation was in accordance with the rules and whether all relevant factors have been taken into consideration. At this stage, the court would not enter into any detailed inquiry as regards the merits of the final findings recorded by the Director General (Safeguard). 16. It has been contended on behalf of the petitioner that the applicants who made applications for initiation of inquiry under rule 5 of the rules, do not fall within the ambit of domestic industry as contemplated under section 8B(6)(b) of the Customs Tariff Act, inasmuch as, their collective output of the like a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sales have also increased from 115 MW in 2014-15 to 314 in 2017-18 and the production of the domestic industry has increased from 141 MW in 2014-15 to 318 in 2017-18 (annualized), it is equally true that the volume of the imports has grown from 1275 MW in 2014-15 to 9833 in 2017-18 (annualized) that is an increase of 671% in comparison to the production of the domestic industry which has increased by 126% during the same period. Moreover, though the total sales of the domestic industry have increased, the percentage of sales has decreased from 8% to 3%. Though the capacity utilisation has increased, the Director General has recorded that when compared with the growth in demand which increased to 10618 MW in 2017-18, the domestic industry's total capacity should have got utilised. The capacity remaining below 100% even in such enhanced demand indicates a clear preference for the imported product under consideration. 20. The Director General has further found that the profitability per watt was severely impacted during April 2017 - September 2017 period as compared to the previous year and even the base year of injury period. He has also found that the inventory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainst China and certain other countries which would also coincide with the increase in demand due to commitments undertaken under COP21 (Paris Agreement). The Director General has further recorded that the surge in imports at consistently falling landed price changed the competitive relationship between imports and domestic production, to the disadvantage of the latter. This has hampered the domestic industry's ability to compete and make and sell the PUC and that it is but evident that this change in the competitive relationship was entirely unforeseen. 22. Thus, the Director General (Safeguard) has examined all the relevant parameters and has given his findings thereon. The Director General has found that domestic industry suffered serious injury during the POI and that there is threat of serious injury in future to the domestic industry. 23. In paragraph 63 of the final findings, the Director General has evaluated the impact of safeguard measure comprehensively on various stakeholders like (i) the domestic producers of solar cells, (ii) the domestic manufacturers of solar modules who do not manufacture cells themselves and rely upon domestic a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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