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TMI Blog2009 (5) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... ates in WP(C) No. 8749/2009, and Mr Pramod Kumar Rai with Mr Abdhesh Chaudhary, Ms Manisha Suri Mr Neelendu, Advocates in WP(C) No. 8761/2009, for the Appellant Mr. Sandeep Sethi, Sr. Advocate with Mr Rajesh Sharma, Advocate in WP(C) No. 8749/2009 and Mr Mukesh Anand, Advocate in WP(C) No. 8761/2009 for the Respondent. JUDGMENT RAJIV SHAKDHER, J. - The captioned writ petitions lay challenge to notice of initiation of safeguard investigation dated 16.01.2009 issued under Rule 6 of the Customs Tariff (Transitional Product Specific Safeguard Duty) Rules, 2002 (hereinafter referred to as 'Rules'), the notification of preliminary findings dated 30.01.2009 issued by the Director General (Safeguards)(hereinafter referred to as 'the Director General'), and the consequent notification bearing No.37/2009-Customs dated 20.04.2009 issued by the Government of India, Ministry of Finance, Department of Revenue imposing a provisional safeguard duty at the rate of 20 per cent ad valorem in respect to soda ash falling under sub-heading 283620 of the first schedule to the Act on its import into India from People's Republic of China (in short 'China'). 2. Petitioner No.1 in Writ Pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d notice of initiation of safeguards investigation dated 16.01.2009; a copy of which, as mandated under Rule 5, was sent to all interested parties calling upon them to respond by 16.02.2009. By the said initiation notice, it was also made clear that any other party to the investigation who wishes to be considered as an interested party was free to submit its request to the Director General within 21 days of the said notice. 4.1 It is not disputed that Saint-Gobain received a copy of the initiation notice, even though the date of receipt is not indicated in the writ petition. What is, however, not in dispute is that, by a communication dated 29.01.2009, Saint-Gobain requested the Director General to supply to it, a copy of the initiation notification, correspondence exchanged with the interested parties and the domestic industry, copy of the application and updated information, if any, as also a copy of the index to the public file and inspection of the public file. In the very same communication, a request was also made that in the interregnum, in consonance with the principles of natural justice, no steps prejudicial to the interest of the user industry be taken till effectiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f preliminary findings dated 30.01.2009 were impugned, was filed in this court, on 06.03.2009. The said writ petition, i.e., WP(C) No. 7782/2009 came up for hearing in Court on 26.03.2009 when, it was disposed of by a Division Bench, briefly, on the ground that the institution of the writ petition was premature as no order of levy of provisional safeguard duty had been passed by the Central Government at that point in time. 7.1 It would be important to note at this stage that, in the interregnum, i.e., 23.03.2009, a public hearing had been held by the Director General as indicated in the Notification of preliminary hearing dated 30.01.2009. This fact requires to be mentioned at this juncture as great stress has been laid on this aspect of the matter by the petitioners before us which will be dealt with at a later stage in this judgment. 7.2. Continuing with the narration, the petitioners' stand is that after the conclusion of the public hearing, an opportunity was given to file written submissions. Accordingly, written submissions were filed by the petitioners on 30.03.2009 followed by a rejoinder by the domestic producers on 30.04.2009. 7.3. It seems that Government ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otification of preliminary findings dated 30.01.2009 and the Government of India notification dated 20.04.2009 imposing provisional duty had to be quashed and set aside. 8.2 In order to buttress their submission, the learned counsel for the petitioners drew our attention to the application filed by the domestic producers to demonstrate the inherent contradiction in the assertions made in their application. Towards this end, it was pointed out that even though the domestic producers' application specifically states that the soda ash imported from China is high density soda ash, the relief sought is with respect to all types of soda ash which includes light as well as high density soda ash. Our attention was also drawn to the statistical table contained in Section II, paragraph 8 of the application to demonstrate that the allegation of import of increased quantities of soda ash from China, which purportedly caused or threatened to cause market disruption, could not sustain on a plain reading of the data incorporated therein. To appreciate this submission, it would be perhaps relevant to note that comparative data which has been filed by the domestic producers to show import of incr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the aforesaid, it was argued that during the relevant period i.e., April-September, 2008, the volume of imports of soda ash from China was only 22,907 metric tonnes (MT) whereas in comparison, the import from other countries was much more, i.e., 1,05,997 MT. Similarly, the price of soda ash imported from China was Rs 13,181/- per MT, which was higher than that which was obtained with respect to soda ash imported from other countries which disclosed as Rs 11,365/- per MT. Pivoted on these discrepancies, a contention was made that the domestic producers had failed to make out even a prima facie case, despite which, the Director General, without making a suitable inquiry into the matter, had, with undue haste, proceeded to issue a notice of preliminary findings, setting out his recommendation for imposition of provisional duty, by accepting the material and data supplied by domestic producers as gospel truth. 9. In rebuttal, on behalf of the Union of India and the Director General Mr. Mukesh Anand, Advocate and Mr. Sandeep Sethi, Sr. Advocate representing the domestic producers, vigorously opposed the admission of the Writ Petition contending that if the submission of petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r a period of nearly 200 days at the rate of 20% ad valorem by the Government of India, entailed serious civil consequences. It was submitted that there were no critical circumstances which were present in the instant case, as the imposition of the provisional duty was brought about after expiry of nearly two and a half months from the date of issuance of Notification of preliminary findings by the Director General. It was further contended that at the point in time when the petitioners had approached this Court by way of writ petition in March, 2009, it was contended by the respondent Nos. 1 2 before this Court, that it may not be necessary to issue an order for imposition of provisional duty as hearing with respect to final determination had been completed in the matter. It was submitted that contrary to the stand taken before this Court on 26.03.2009, in the earlier round, the Respondent Nos. 1 2 had proceeded to impose provisional duty without giving any opportunity to the petitioners to protect their interests. 11. We have heard the learned counsels for the parties. In order to adjudicate upon this writ petition, it would be important to take note of certain provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entral Government has framed the necessary Rules. 13. It would be relevant to note that the provisions for safeguard duty under Section 8B and 8C of the Act and the relevant rules framed thereunder have been enacted pursuant to 'Article XIX of GATT -Emergency Action on Imports of Particular Products' (in short 'GATT') read with 'WTO Agreement on Safeguards' (in short 'WTO Agreement'). A reading of the provisions of clause 1(a), 1(b), 2, 3(a) and 3(b) of Article XIX GATT read with the provisions of WTO agreement on Safeguards would show that the measures provided for imposition of safeguard duty as also provisional duty in the event of presence of critical circumstances is taken recourse to ensure play for 'structural adjustment' by the domestic industry with a view to 'enhance rather than limit competition' in international markets. The provisions for imposition of safeguard duty are thus temporary in nature. We do not wish to burden the judgment with extensive extracts from either the GATT or the WTO agreement. It would perhaps be sufficient to indicate that the provisions both under 8B and 8C of the Act as well as the rules framed thereunder are largely based on the provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to the other contracting party as far as may be practicable. However, in critical circumstances where delay would cause damage, which would be difficult to repair, action under Paragraph 1 of this Article may be taken provisionally without prior consultation, on the condition that consultation will be effected immediately after taking such action. 15. When this provision is compared with the Rules provided under Section 8C (2) of the Act the scheme of said Rules attains greater clarity. A brief overview of the Rules in so far it is relevant is as follows. 15.1 Rule 1 gives the short title and the date on which the Rules come into force. Rule 2 sets out the definition amongst others, all that which would constitute 'Critical circumstances' and 'Increased quantity'. Rule 3 makes provision for appointment of the Director General (Safeguard). Rule 4 sets out the duties of the Director General, in particular, to investigate existence of market disruption or threat of market disruption to the domestic industry as a consequence of increased import of an article into India as also to identify the article liable for safeguard duty under Section 8C of the Act. On conclusion of h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ector General may also issue notice calling for any information in such form as may be specified by him from the exporters, foreign producers and the Chinese Government. This information is to reach the Director General within a period of 30 days from the date of receipt of the notice or within such extended period as the Director General may allow on sufficient cause been shown. Under Sub-Rule (5) of Rule 6, the Director General is also required to provide an opportunity to industrial users of the article under investigation and representatives of consumer organisations to furnish information relevant to the investigation. Interested parties or its representatives may make oral representations which are to be taken into account only if they are followed by a written submission. Under Sub-Rule (7) of Rule 6, the Director General is required to make evidence available presented by one interested party to all other interested parties participating in the investigation. If a party refuses access to or fails to provide information within reasonable period or impedes the investigation, the Director General under Sub-Rule (8) of Rule 6 would record that fact and make such recommendations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of investigation or such extended time as the Central Government may accord. The final findings are nothing but a final determination that the increased imports of an article under investigation has caused or threatens to cause a market disruption to the domestic industry keeping in mind the umbilical chord of a causal link between the two. In the final determination, the Director General is required to recommend that quantum of duty which, if levied, would be adequate in preventing or in remedying the injury, that is, market disruption caused to the domestic producers. This recommendation would also indicate the duration for which the duty ought to be levied. In recording final findings, the Director General is obliged to deal with all matters of fact and law and give a reasoned conclusions. The said final findings are required to be publically notified with a copy to the Central Government, Ministry of Commerce and Finance. 15.10 Under Rule 12, the Central Government on receipt of the final findings of the Director General may impose a safeguard duty not exceeding the amount indicated by the Director General. In the event the Director General's final findings are contrary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustry to the extent that it could inflict irreparable damage on the domestic industry. 17. If such a situation arises, the scheme of the rules according to us, excludes implicitly the applicability of Rule 6(4) or a procedure akin to it. The reasons for the same are not far to see. Firstly, the criticality of the circumstances demand immediate action in order to remedy and/or prevent the damage to domestic industry of irreparable nature. Secondly, the period of imposition of provisional duty is brief, in any event, cannot exceed 200 days. Thirdly, the recommendation of the Director General for imposition of provisional duty if accepted by the Central Government is subject to the outcome of the final findings of the Director General. If the final finding of the Director General is in the negative, the Central Government is required to withdraw the provisional duty imposed within 30 days, and if the duty recommended in the final finding it is less than that imposed as provisional duty, the importer is entitled to a refund. And lastly, the final finding has to be returned by the Director General within eight months from the date of initiation of investigation. 18. We are for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elevant standing orders. The employee challenged the validity of the said standing order as well as the termination order on the ground that it violated the principle of natural justice. The Supreme Court, in that context, made the following observations based on the Constitution Bench judgment of the Supreme Court in the case of UOI Anr. vs Tulsi Ram Patel (1985) 3 SCC 398, in the context of the proviso to Article 311(2) of the Constitution of India:- "The Court also stated that Article 311(2) required that before a civil servant is dismissed, removed or reduced in rank, an enquiry must be held and reasonable opportunity of being heard must be afforded to him in respect of the charges leveled against him. The Court, however, observed that in certain circumstances, application of the principles of natural justice could be modified and even excluded. Both in England and in India, it is well established that where a right to a prior notice and an opportunity to be heard before an order is passed would obstruct in taking of prompt action, such a right could be excluded. It could also be excluded where the nature of the action to be taken, its object and purpose and the scheme of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was held to be a sufficient remedy, and an appeal is a much wider and more effective remedy than a right of making a representation……" ……We are aware of the normal rule that a person must have a fair trial and a fair appeal and he cannot be asked to be satisfied with an unfair trial and a fair appeal. We are also conscious of the general principle that pre-decisional hearing is better and should always be preferred to post- decisional hearing. We are further aware that it has been stated that apart from Laws of Men, Laws of God also observe the rule of audi alteram partem. It has been stated that the first hearing in human history was given in the Garden of Eden. God did not pass sentence upon Adam and Eve before giving an opportunity to show cause as to why they had eaten forbidden fruit. [See R. v. University of Cambridge, (1723) 1 Str 557]. But we are also aware that principles of natural justice are not rigid or immutable and hence they cannot be imprisoned in a straight-jacket. They must yield to and change with exigencies of situations. They must be confined within their limits and cannot be allowed to run wild. It has been stated ; "To do a great right after all, it is pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice could be on account of various factors, one of which may be quality. But what is important, the annualized rate for 2007-08 of soda ash imported from China at Rs 8906 per MT, is lower than the rate of soda ash imported from other countries, which is shown at Rs 9187 per MT. 21.1 A significant point is that the Director General has collated and analyzed the data available with him and broadly arrived at following findings: (i) The soda ash, a product under investigation, which is produced by the domestic producers is like or directly competes with the soda ash imported from China. (ii) The applicants together manufacture more than 90% of the domestic production (nearly 99.98%). (iii) That due to economic melt down, the demand for soda ash had declined. The Chinese producers have significant idling production capacities and therefore, they are resorting to sale of product in the Indian market. What has compounded the problem is the decline in demand for their product in the major export markets and the commencement of new commercial ventures of the same product. This has led to significant increase in imports from China at low prices. (iv) There is not only an in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al duty as any delay would result in damage which would be difficult to repair. 21.3 We would uphold the impugned notification dated 20.04.2009 levying provisional duty for the reasons:- (i) that the levy is in public interest, which is made to give effect to a provision in the statute that domestic industry is to be protected from onslought of increased quantities of export which cause or threaten to cause market disruption; (ii) power is conferred on a senior functionary i.e., the Director General, who is required to exercise the same after due analysis of material and evidence collected by him after taking into account the presence of critical circumstances. In the instant case, the Director General has evaluated the material and criticality of circumstances and come to the conclusion that if the flow of increased imports from China are not stemmed it would cause or threaten to cause market disruption unleashing irreparable damage; (iii) the recommendation of the Director General was considered by the Central Government whereupon the rate of provisional duty imposed was 20% ad valorem as against the recommended rate of 31% ad valorem; (iv) the decision to levy pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yzed. The period of two and a half months by itself cannot be considered as one which would persuade us to hold that criticality of circumstances had disappeared. In this regard, the petitioners had tried to seek sustenance from the order dated 26.03.2009 passed in Writ Petition No. 7782/2009 when this Court had recorded the submissions of the counsel appearing for the Union of India and the Director General that the hearing for final determination is complete and therefore, it may not be any necessary to pass an order of provisional duty. According to us, a close reading of the order of this court dated 26.03.2009 would show that while the said observation of the counsel for Union of India and the Director General was recorded, the court went on to say that this is a matter which is to be considered by the Director General. It is obvious that these carefully worded observations were made keeping in mind the fact the assessment as to whether a provisional duty is to be imposed till the final finding is arrived at by the Director General is entirely within the domain of the Director General. Upon reading of the notification containing the preliminary findings, we have not been able ..... X X X X Extracts X X X X X X X X Extracts X X X X
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