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TMI Blog2019 (6) TMI 864X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Articles and for Determination of Injury) Rules, 1995." The Final Findings were published in the Gazette of India - Extra Ordinary dated 19 July 2017 and the notification issued by the Ministry of Finance was published in the Gazette of India - Extra Ordinary dated 25 August 2017. 2. It transpires that the designated authority had earlier initiated an anti-dumping investigation against the import of Sodium Nitrite by a notification dated 4 November 1999. The final findings were notified by the designated authority on 3 November 2000 recommending imposition of definitive duties on imports of Sodium Nitrite which were notified by the Department of Revenue by a notification dated 19 December 2000. A sunset review was also carried out and the final finding was notified by the designated authority on 30 June 2011 recommending continued imposition of anti-dumping duty. The Central Government, thereafter, issued the notification dated 17 August 2011. A mid-term review was also conducted at the behest of the Appellant and the designated authority notified the final findings recommending change in the anti-dumping duty by notification dated 15 October 2014. The anti-dumping duty that wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ic industry and determined the range of 'Injury Margin' to be 10 - 20%. 6. The designated authority, however, before giving its final findings informed all the interested parties of the essential facts under consideration which would form the basis for its decision. 7. In as far as the determination of the NIP is concerned, the following disclosure was made: "Price Underselling: The Authority notes that the price underselling is an important indicator of assessment of injury. Non injurious price has been worked out and compared with the landed value of the subject goods to arrive at the extent of price underselling. The non-injurious price has been determined considering the cost of production of the domestic industry for the product under consideration during the POI, in accordance with Annexure III of the anti-dumping Rules." 8. The domestic industry submitted its comments and the relevant comments on which emphasis has been laid by learned counsel for the Appellant during the course of hearing, relate to the NIP that was determined. These comments are contained in paragraphs 7, 8, 9, 10 and 11. The relevant portions are reproduced below: "7. The non-injurious price dete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent treatment plant, office buildings, land, cooling towers and other facilities are common. d. DNL is capturing actual cost of Raw Material & Utilities based on the actual consumption & utilization. e. Other manufacturing expenses, Administrative Expenses & selling expenses and depreciation expenses are allocated based on the production volume of these products. f. Sodium Nitrite and Sodium Nitrate account for production volume of approx 189 MT per day in joint / co-product route, while MAHCL (Fine & Specialty Chemicals) production is only approx 4 MT per day. Other products account for production of approx 11 MT per day. From the above numbers, it can be said that more than 90% production is coming from SNI/SNA, other products are only 5-6% and MAHCL is only 1-2% of production volume. g. MAHCL is a specialized chemical which is manufactured for a particular product, for 100% export purpose and more than 95% of its quantity is sold to only one customer. Thus, DNL is having only two customers and second customer is taking less than 5% of total production. Further, MAHCL is made against the order of this customer and the company has to keep its plant shut in case no order is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Division. In terms of volume, MAHCL accounts for only 2% production and sales of the Nitrite Division. Product - POI Production Volume Sales Volume Sales Value MT % MT % Rs. Lacs % Sodium Nitrite 55,395 74.38 52,219 72.91 20,789.41 54.40 Sodium Nitrate 13,468 18.08 13,644 19.05 4,604.19 12.05 MAHCL 1,420 1.91 1,410 1.97 12,101.75 31.67 NSA / KNA 4,192 5.63 4,347 6.07 721.83 1.89 p. The maximum resources are deployed by the company for SNI / SNA production. q. Considering above facts, DNL is allocating all expenses on the basis of production quantity. r. Post filing of the petition and during the course of the investigation, no query whatsoever has been raised seeking information on appointment methodology adopted in the disclosure statement. The petitioner has now come to know that the Designated Authority has modified the apportionment methodology. Nor there is any reasons given in the disclosure statement for rejecting the apportionment methodology followed by the petitioner and adopting a different appointment methodology. s. Merely because sales price of a product is higher due to higher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings and the same are reproduced below: "93. The Authority notes that post-disclosure comments / submission made by the domestic industry are mostly reiterations of earlier submissions, which have already been examined suitably and adequately and properly addressed in the disclosure statement or relevant paras of the present finding. The Authority further considers as follows with regard to fresh issues raised by the domestic industry: i) As regards the submissions of the domestic industry concerning determination of non-injurious price (NIP) the Authority notes that the detailed guidelines for computation of NIP is laid down under Annexure III of the anti-dumping Rules and the same has been adopted while determining NIP in the present investigation. ii) As regards the submission of the domestic industry concerning continuation of the existing quantum and form of duty, the Authority notes that injury margin as well as dumping margin is positive in the present case. The mandate of the Designated Authority is to determine the existence, degree and effect of the alleged dumping and to recommend adequate quantum of anti-dumping duty, which, if levied, would be adequate to remove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , made the following submissions: i) The Appellant had filed detailed comments to the disclosure statement in regard to the determination of NIP proposed by the designated authority, but the designated authority determined the NIP on 'turn over' basis instead of 'production quantity basis' without any discussion and without assigning any reason; ii) The incorrect determination of NIP has resulted in a lower injury margin and consequently the duty imposed is inadequate to address the injurious effect of dumping on the domestic industry. iii) The common expenses are to be apportioned in accordance with paragraph 4 (vi) of Annexure III to the anti-dumping rules and even though 'production quantity' is listed as a 'scientific and reasonable basis' for apportionment and has also been applied consistently by the domestic industry for the period under investigation, but the designated authority has changed the methodology to 'sales turn over' without any justification; iv) The designated authority could not have adopted a basis different from that adopted by the domestic industry, except where the method adopted by the domestic industry was not scientific or reasonable; v) The d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tigation, the designated authority issued a public notice. The period of investigation for the purpose of review and investigation was April 2015 to March 2016. 18. In order to appreciate the contentions advanced by the learned counsel, it would be appropriate at this stage to refer to the relevant provisions of the Act and the Rules framed therein. 19. Section 9A of the Act deals with anti-dumping duty on dumped articles and is reproduced below: "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 anti-dumping 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 expo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to mean the difference between the export price and the normal value. The export price means the price of the article exported from the exporting country. Normal value has been defined to mean the comparable prices for the like article when destined for consumption in the exporting country. 21. Rule 3 of the 1995 Rules provides that 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 the Government may think fit as the designated authority for the purpose of the Rules. The principles governing investigations are contained in Rule 6. Rule 10 provides for determination of normal value, export price and margin of dumping and is reproduced below: 10. Determination of normal value, export price and margin of dumping. - An article shall be considered as being dumped if it is exported from a country or territory to India at a price less than its normal value and in such circumstances the designated authority shall determine the normal value, export price and the margin of dumping taking into account, inter alia, the principles laid down in Annexure I to these ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mine as to whether or not the article under investigation is being dumped in India and submit to the Central Government its final finding - (a) as to, - (i) the export price, normal value and the margin of dumping of the said article; (ii) whether import of the said article into India, in the case of imports from specified countries, causes or threatens material injury to any industry established in India or materially retards the establishment of any industry in India; (iii) a causal link, where applicable, between the dumped imports and injury; (iv) whether a retrospective levy is called for and if so, the reasons therefore and date of commencement of such retrospective levy: Provided that the Central Government may, in its discretion in special circumstances extend further the aforesaid period of one year by six months: Provided further that in those cases where the designated authority has suspended the investigation on the acceptance of a price undertaking as provided in rule 15 and subsequently resumes the same on violation of the terms of the said undertaking, the period for which investigation was kept under suspension shall not be taken into account while cal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the 1995 Rules and the relevant portions are as follows: "Principles for determination of non-injurious price: (1) The designated authority is required under sub-rule (1) of rule 17 to recommend the amount of anti-dumping duty which, if levied, would remove the injury where applicable to the domestic industry. (2) For the purpose of making recommendation under clause (1), the designated authority shall determine the fair selling (notional) price or non-injurious price of the like domestic product taking into account the principles specified herein under. (3) The non-injurious price is required to be determined by considering the information or data relating to cost of production for the period of investigation in respect of the producers constituting domestic industry. Detailed analysis or examination and reconciliation of the financial and cost records maintained by the constituents of the domestic industry are to be carried out for this purpose. (4) The following elements of cost of production are required to be examined for working out the non-injurious price, namely : - --- --- --- --- (vi) The expenses to the extent identified to the product are to be directly a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tured for a particular customer for 100% export purpose and more than 95% of its quantity is sold to only one customer. The remaining 5% is sold to a second customer. It is, therefore, stated that hardly any sales activity is carried out for MAHCL since there are only two customers and no administrative cost is involved. In fact, it is produced against orders placed by the customers and the plant has to be kept shut in case no order is received. For sodium nitrite and sodium nitrate it has to handle more than 100 customers and dealers. Thus, the production and sale of these two products involves a significantly higher degree of effort as compared to MAHCL. The sale price of MAHCL of sodium nitrite and sodium nitrate is also not comparable since sodium nitrite was sold at Rs. 38.72 per kg while MAHCL was sold at Rs. 852.26 per kg during the period of investigation. Thus, during the period of one year, the sale in terms of value is 31.67% from MAHCL and 68.33% from the remaining products, while on volume basis, 90% of sales is for sodium nitrate / sodium nitrite and only 1-2% sales is for MAHCL. The Appellants have also placed a table showing the volume and value details for the peri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disclosure statement have been examined by the designated authority in paragraph 93 of the order, which has also been reproduced above. All that has been stated is that the guidelines contained in Annexure III to the anti-dumping rules have been adopted while determining the NIP. Rule 17 (i) provides that the designated authority shall determine as to whether or not the article under investigation is being dumped in India and submit to the Central Government its final finding on factors enumerated in (a) and (b) of sub-rule (1) of Rule 17. Sub-rule (b)provides that the designated authority shall recommend the amount of duty which, if levied, would remove the injury to the domestic industry after considering the principles laid down in Annexure III to the Rules. It was therefore, imperative for the designated authority, in its final findings, to have determined the amount of duty that would remove the injury in accordance with the principles contained in Annexure III to the 1995 Rules. Clause (2) of Annexure III provides that for the purpose of making the recommendations under Rule 17(i), the designated authority shall determine the NIP of the like domestic product taking into accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intended to, do. Public orders made by public authorities are meant to have public effect and are intended to effect the actings and conduct of those to whom they are addressed and must be construed objectively with reference to the language used in the order itself." Orders are not like old wine becoming better as they grow older." 35. It will, therefore, not be appropriate to examine the order on the basis of reasons not contained in the final findings recorded by designated authority. The reasons contained in the order can only be seen, but as noticed above, no reasons are contained in final findings as to why the basis for determining the common expenses pointed out by the Appellant have not been considered and another basis has been taken into consideration. 36. The determination of a correct NIP went to the root of the matter because the amount of duty to be levied would depend upon it. In this connection, it would be appropriate to refer to the decision of the Supreme Court in Reliance Industries Ltd. Vs. Designated Authority and others reported in (2006) 10 SCC 368. The Supreme Court observed as follows: "33. The purpose of imposition of duty is both to redress injur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f foreign goods from the foreign supplier on the other. The determination of the recommendation of the DA and the Government notification on its basis is subject to an appeal before the CESTAT. This also makes it clear that the proceedings before the DA are quasi-judicial. 40. In the present case, the NIP computed by the DA was much lower than that computed by the Appellant, and the reasons for such variance and detailed calculations were not disclosed by the DA to the Appellant. No good reasons were given for reducing the cost price of electricity supplied by the Appellant produced in its captive power plant. This was clearly illegal. ... ... ... 45. In our opinion, excessive and unwarranted claim of confidentiality defeats the right to appeal. In the absence of knowledge of the consequences, grounds, reasoning and methodology by which the DA has arrived at its decision and made its recommendation, the parties to the proceedings cannot effectively exercise their right to appeal either before the Tribunal or this Court. This is contrary to the view taken by the Constitution Bench of this Court in S.N. Mukherjee's case." (emphasis supplied) 39. In Asstt. Commr. Commercia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and give sufficiently clear and explicit reasons in support of the orders made by them. Then alone administrative authorities and tribunals exercising quasi-judicial function will be able to justify their existence and carry credibility with the people by inspiring confidence in the adjudicatory process. The rule requiring reasons to be given in support of an order is, like the principle of audi alteram partem, a basic principle of natural justice which must inform every quasi-judicial process and this rule must be observed in its proper spirit and mere pretence of compliance with it would not satisfy the requirement of law. ..." (emphasis supplied) 40. In Kranti Associates Pvt. Ltd. Vs. Masood Ahmed Khan reported in 2011 (273) ELT 345 (SC), the Supreme Court after referring to the earlier decisions that hold that a quasi judicial authority must record reasons in support of its conclusion because reasons assure that the discretion has been exercised by the decision maker on relevant grounds and by disregarding irrelevant considerations, also observed that recording of reasons operates as a valid restraint on any possible arbitrary exercise of quasi judicial power. In paragraph ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of judicial powers. Transparency in decision making not only makes the judges and decision makers less prone to errors but also makes them subject to broader scrutiny. (See David Shapiro in Defence of Judicial Candor (1987) 100 Harward Law Review 731-737). (n) Since the requirement to record reasons emanates from the broad doctrine of fairness in decision making, the said requirement is now virtually a component of human rights and was considered part of Strasbourg Jurisprudence. See (1994) 19 EHRR 553, at 562 para 29 and Anya v. University of Oxford, 2001 EWCA Civ 405, wherein the Court referred to Article 6 of European Convention of Human Rights which requires, "adequate and intelligent reasons must be given for judicial decisions". (o) In all common law jurisdictions judgments play a vital role in setting up precedents for the future. Therefore, for development of law, requirement of giving reasons for the decision is of the essence and is virtually a part of "Due Process". 41. Thus, it is clear from the aforesaid decisions of the Supreme Court that the principles of natural justice not only require the designated authority to grant an opportunity to the party to show caus ..... X X X X Extracts X X X X X X X X Extracts X X X X
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