9911796707
TMI Blog2024 (5) TMI 383X X X X Extracts X X X X X X X X Extracts X X X X ..... cision of this Court in similar facts in case of Realstrips Limited and others [ 2022 (9) TMI 1171 - GUJARAT HIGH COURT] , wherein in case of levy of countervailing duty under the Act having pari-materia provisions for levy of ADD, this Court after considering the case laws cited by both the sides answered the question that rescinding the notifications of levy of countervailing duty was irregular and illegal exercise and such notification rescinding the countervailing duty could not have been issued when the exercise in law is required to be undertaken pursuant to the commencement of process of sunset review not completed in that case, whereas in the facts of the case, sunset review was never initiated. The contention raised on behalf of the respondents are considered by this Court in the aforesaid decision of Realstrips Limited and others in detail however, the specific contention raised by respondent No. 3 in the affidavit in reply to justify the revocation of ADD on the subject products is concerned, the respondent No. 3 has only narrated the factors which may be considered for taking a decision by the Central Government to revoke the ADD, however, as held by the aforesaid decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s concerned, same shall be complied with and completed in accordance with the statutory provisions and rules for determining about the continuation or recurrence of injury to domestic industry in respect of the product in question. (iv) As the No. 3/2020-Customs (ADD) dated February 2, 2020 is set aside, the original Notification No. 28/2019 Customs (ADD) dated 24th July, 2019 shall revive and ADD shall become leviable on the product in question. (v) Respondent no. 2 after initiation of sunset review shall comply with the Rules 23 and 24 of the Rules and shall recommend to the Central Government for its continuance or withdrawal of ADD on subject goods. Since the review process is yet to commence, respondent no. 2 Designated Authority shall issue notification of initiation of sunset review and thereafter complete the same as per Rules 23(2) and (3) of the Rules. However, in the interregnum i.e. from the date of Notification No. 3/2020 dated February 2, 2020 till respondent no. 2 takes appropriate decision after final findings notification is issued by the respondent No. 1, levy of ADD shall continue on the subject goods till 19.07.2024. Petition disposed off. - HONOURABLE MR. JUS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... industry on imports of PTA originating from the aforesaid countries. 6. Respondent no. 2 issued the preliminary findings vide Notification No. 14/7/2013-DGAD dated June 19, 2014 recommending imposition of provisional anti-dumping duty on imports of PTA originating in or exported from aforesaid countries. 7. Respondent No. 1 by Notification No. 36/2014-Customs (ADD) dated July 25, 2014 imposed provisional anti-dumping duties on PTA originating in or exported from aforesaid countries. 8. Designated Authority - respondent no. 2 by final findings issued Notification No. 14/7/2013-DGAD dated April 7, 2015 confirming the preliminary findings notified vide Notification dated June 19, 2014 and recommended imposition of ADD on imports of PTA from Korea RP and Thailand. 9. Respondent No. 1 imposed ADD vide Notification No. F.No. 354/95/2014-TRU dated May 27,2015 for a period of five years from the date of imposition of provisional anti-dumping duty i.e. July 25, 2014 on imports of PTA from Korea RP and Thailand. 10. Respondent No. 2 - Designated Authority (For short DA ) issued a public notice vide Notification No. 14/8/2015-DGAD dated June 18, 2015 initiating anti-dumping investigation conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntral Government however, by Notification No. 3/2020-Customs (ADD) dated February 2, 2020 revoked the anti-dumping duty imposed on PTA including its variants Medium Quality Terephthalic Acid and Qualified Terephthalic Acid falling under tariff item 2917 36 00 of the First Schedule to the Customs Tariff Act, 1975 (For short the Act ) originating in or exported from People s Republic of China, Iran, Indonesia, Malaysia, Taiwan, Korea RP and Thailand and imported into India rescinding the notifications of the Government of India in the Ministry of Finance (Department of Revenue) being Notification No. 28/2016-Customs (ADD) dated 5th July, 2016 and Notification No. 28/2019-Customs (ADD) dated 24th July, 2019. 19. Petitioner No. 3 Association of which petitioner nos. 1 and 2 are also the members filed a representation dated February 18, 2020 requesting respondent No. 1 to reconsider the withdrawal of ADD on imports of the product. The petitioner again made a representation dated July 21, 2020 to respondent No. 1 with a request to consider industry representation and withdraw the Notification No. 3/2020 and restore the ADD earlier imposed for the reason that the industry is also now suff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was submitted that the petitioners have statutory right under section 9A (5) of the Act read with Rule 23(1B) of the Rules to file a sunset review application before the Designated Authority for continuation of duty for a further period of five years. 26. It was submitted that in terms of Trade Notice No. 3/2021 dated April 4, 2021 domestic industry is required to file the petition seeking extension to continue the anti-dumping duty measures at least 270 days prior to the date of expiry of anti-dumping measures. As in the facts of the case, the duty is expiring on 23.07.2024, the petitioner was required to file application for sunset review at least 270 days prior to expiry of the duty i.e. 23.10.2023. 27. It was submitted that however, on account of premature withdrawal of the duties by respondent No. 1, right of the applicant to seek continuation of duty is being impeded. 28. It was submitted that issue of unilateral revocation by the Central Government of countervailing duty for which similar provisions are provided in the Act and the Rules, this Court in case of Realstrips Limited and others v. Union of India and others (judgment dated 02.09.2022 passed in Special Civil Appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It was submitted that Section 9A(5) of the Act is in tune with the Article 11 of the Anti-Dumping Agreement and provides that ADD may be imposed for a period of 5 (five) years. However, the period of 5 (five) years can be curtailed after following a procedure followed as laid down under the law and for the said purpose, respondent No. 2 is required to conduct a review in terms of Rule 23(1A) of the Rules to ascertain whether there has been such a significant change in the facts and circumstances that it is considered necessary either to withdraw or modify appropriately the ADD earlier imposed and unless respondent No. 2, either suo motu or on the basis of an application establishes that there has been a significant change in the facts and circumstances relating to each of the basic requirements or conditions precedent for imposing duty, the determination made by respondent No. 2 earlier leading to imposition of duty, continues to hold the field. It was therefore, submitted that respondent no. 1 cannot rescind the duty and the valuable economic rights earlier conferred onto the domestic industry. 32. It was submitted that though the impugned Notification is purportedly issued in ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, respondent No. 1 has acted wholly without the authority of law and wholly without the jurisdiction in issuing the Impugned Notification. 35. It was submitted that under the provisions of Section 9A of the Act and the related provisions of law, respondent No. 1 has no sui generis or suo moto jurisdiction to issue a notification to rescind a subsisting levy of ADD and in fact, the provisions of Rule 23(1A) of the Rules specifically negate the possibility of any such sui generis or suo moto jurisdiction of the Respondent No. 1. 36. Learned Senior Advocate thereafter pointed out the jurisdictional facts that are required to be satisfied to justify respondent No. 2 making a recommendation for a withdrawal of any subsisting ADD as under: a) Positive information substantiating the need for such review; b) Reasonable period of time having elapsed since the imposition of the definitive anti-dumping duty. In the present case the ADD was imposed vide Notification dated July 24, 2019 and the Impugned Notification revoking the ADD; and c) Respondent No. 2 must, after conducting an investigation and collecting information from various interested parties, including domestic industry, foreign ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a vires Section 9A of the Act and its related provisions and therefore, this basis is also unconstitutional in terms of Article 14, 19(1)(g), and 300A of the Constitution. 39. It was submitted that the concept of larger public interest to the exclusion of the consideration of the injury caused to the Domestic Industry is also wholly contrary to, and incompatible with the provisions of Section 9A of the Act and its related provisions. 40. It was submitted that respondent No. 1 has not revoked the present duty under Section 21 of General Clauses Act 1897 (hereinafter referred to as the General Clauses Act ) and in any case, even Section 21-of the General Clauses Act, could not have been invoked/applied in the present case. Reliance was placed on Section 21 of the Act which provides as under: 21. Power to issue, to include power to add to, amend, vary or rescind notifications, orders, rules or bye-laws. Where, by any Central Act or Regulations a power to issue notifications, orders, rules or bye-laws is conferred, then that power includes a power, exercisable in the like manner and subject to the like sanction and conditions if any, to add to, amend, vary or rescind any notifications, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er such destruction has taken place, prices are again raised. 12. The purpose of Section 9A is, therefore, to maintain a level-playing field and prevent dumping, while allowing for healthy competition, The purpose is not protectionism in the classical sense (as proposed by the German Economist Friedrich List in his famous book 'National System of Political Economy' published in 1841) but to prevent unfair trade practices. The 1995 Amendment to Section 9A was apparently made in pursuance to Article VI of the General Agreement on Tariffs and Trade 1994 (GATT 1994) which permitted anti-dumping measures as an instrument of fair competition. 13. The concept of anti-dumping is founded on the basis that a foreign manufacturer sells below the normal value in order to destabilize domestic manufacturers. Dumping, in the short term, may give some transitory benefits to the local customers on account of lower priced goods, but in the long run destroys the local industries and may have a drastic effect on prices in the long run. 44. Learned Senior Advocate Mr. Mihir Joshi further submitted that the broad and comprehensive procedural requirements relating to investigations, time periods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stoms (ADD), dated the July 5, 2016 on PTA, originating in, or exported from, the People's Republic of China, Iran, Indonesia, Malaysia and Taiwan and imported into India. 49. It was submitted that similarly, respondent No. 2 in its final findings, published vide notification No. 7/36/2018-DGAD, dated the June 28, 2019 had come to the following conclusion that- i. there is continued dumping of the subject goods and the imports are likely to enter the Indian market at dumped prices in the event of expiry of duty: ii. the parameters such as significant dumping margin, injury margin, significant volume of imports, positive price undercutting, price attractiveness of the Indian market, low return on investment earned by the domestic industry and surplus capacities of the exporters, collectively and cumulatively shows that injury to the domestic industry is likely in the event of cessation of duty and the situation of domestic industry is likely to deteriorate if the existing Anti-Dumping duties are allowed to cease; iii. the deterioration in the performance of the domestic industry is likely because of dumped imports from the subject country and thus, the anti-dumping duties are re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o adverse impact of the duty on the users, and continued imposition of ADD is necessary. Such recommendation and imposition has created valuable rights on the domestic industry. However, Respondent No. 1, without following statutory provisions and without affording an opportunity of being heard to the domestic industry, has revoked the anti-dumping duty. Respondent No. 2 ought to have conducted review by granting an opportunity of hearing to affected domestic industry before deciding against them. 53. It was submitted that the petitioners have not been given any opportunity of hearing or presented with any evidence that they could rebut prior to the issuance of the Impugned Notification. There has therefore been a breach of natural justice and due process which has adversely impacted the petitioners. It was submitted that in this background, it is necessary that this Court directs the respondent No. 1 to make available for the scrutiny of this Court its records and files pertaining to the issuance of the impugned Notification, with a view to determine, (i) what compelling factors changed in relation to the Textile Industry between 24 July 2019 and 1 February 2020, requiring the iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al feed stocks for downstream users. PTA, for example, is a critical input for textile fibres and yarns. Its easy availability at competitive prices is desirable to unlock immense potential in textile sector which is a significant employment generator. Therefore, in the larger public interest, anti-dumping duty on PTA is being abolished. 57. It was submitted that however, in the instant case, there can be no doubt that imposition of ADD was not against public interest. The respondent No. 1 itself had earlier imposed ADD on the imports of PTA, a number of times and extended the same thereafter through review proceeding. At the stage of review proceedings, respondent no. 2 specifically found that the impact of ADD on the eventual public was minimal. It was submitted that the consumers had represented before both respondent No. 1 and 2 at that time and only thereafter, respondent no. 1 had extended the ADD. Respondent No. 1 was satisfied that the arguments of adverse impact by the consumers were without any substance. Further, there is no documented history of adverse effect of these duties on the consumers. The domestic industry even brought material to show that the performance of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of State of Kerala and others v. K.G. Madhavan Pillai and others reported in (1988) 4 Supreme Court Cases 669. 4) In case of Indian National Congress (1) v. Institute of Social Welfare and others reported in (2002) 5 Supreme Court Cases 685. 5) In case of Bhavnagar University v. Palitana Sugar Mill (P) Ltd. and others reported in (2003) 2 Supreme Court Cases 111. 6) In case of Rishiroop Polymers (P) Ltd. v. Designated Authority Additional Secretary reported in (2006) 4 Supreme Court Cases 303. 7) In case of Reliance Industries Ltd. v. Designated Authority and others reported in (2006) 10 Supreme Court Cases 368. 8) In case of Indian Metal and Ferro Alloys Ltd. v. Designated Authority reported in (2008) 224 ELT 375. 9) In case of Automotive Tyre Manufacturers Association v. Designated Authority and others reported in (2011) 2 Supreme Court Cases 258. 10) In case of Union of India and another v. Kumho Petrochemicals Company Limited and another reported in (2017) 8 Supreme Court Cases 307. 11) In case of Century Plyboards (I) Ltd. and another v. Union of India and others reported in (2020) 1 Gauhati Law Reports 741. 61. Learned advocate Mr. Paresh Dave appearing for applicant in Ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2020 issued by respondent No. 1 is bad in law, as notification imposing ADD on import of PTA would be revived resulting in making the operation of members of Association unviable as PTA Users Association members are facing difficult times since Covid-19 and may suffer immensely if they have to pay ADD on import of PTA from the subject countries. It was therefore, submitted that when the Central Government while discharging their legislative functions for revoking ADD based upon the information, document and data decision for taking appropriate action of withdrawing ADD is taken. 66. In support of his submissions, reliance was placed on the following decisions: 1) In case of Prabodh Verma and others v. State of Uttar Pradesh and others reported in (1984) 4 Supreme Court Cases 251. 2) In case of Union of India v. Northern Plastics Ltd. reported in 1992 (61) ELT 74 (Del). 3) In case of M/s. Neyvely Lignite Corpn. Ltd. v. Special Tahsildar (Land Acquisition), Nevyely and others reported in AIR 1995 Supreme Court 1004. 67. Learned advocate Mr. Harsheel Shukla for respondent No. 1 Union of India submitted that the Designated Authority is only a recommendatory body of the Central Governm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Ministry of Textiles) (Respondent No. 3) in August 2019 and December, 2019 for revocation of ADD on PTA. The Ministry of Textiles had stated that PTA and MEG (Mono ethylene glycol), the key ingredients of PSF and PFY, constitute about 80% of the value of the product. It was requested that ADD on PTA be discontinued as it is making the raw material expensive for downstream industry, thus choking its growth. It was further informed that an Inter-ministerial Group (IMG) under CEO, NITI Aayog had been set up in pursuance to the decisions taken on Measures for boosting exports from the Textile sector . This IMG included. NITI Aayog, the Department of Commerce and the Ministry of Textiles. 14. In furtherance of the same, in its Budget 2020-21 proposals in December, 2019, the administrative Ministry again requested that ADD on PTA be revoked in the overall interest of promoting growth of the man-made fibre (MMF) textile industry. It was informed that imposition of ADD has made textile products (yarn, fabric, garments) uncompetitive when compared to availability at international price. It was stated that cessation of duty would positively impact the downstream segments of the textile valu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rganized sector with large investments in plant and machinery, had enjoyed the benefit of ADD on the imports of PTA for a very long period. Further, petitioner No. 1 enjoys a dominant position in the domestic production of PTA and is a major player in PTA in the international market. The consultation and examination, as above revealed that the protection given to the domestic PTA industry has led to serious hardship to the downstream industry while PTA manufacturer, particularly the petitioner, grew to a dominant position. Ministry of Textiles, the IMG and also wider consultation during the budget exercise led the Central Government to conclude that continuation of ADD on PTA was not in public interest and it has impacted adversely a huge segment of domestic PTA down-stream user industry, most of which comprised Medium, Small and Micro enterprises (MSME), particularly the industry engaged in fabric and garment manufacture. Also, as analyzed by the IMG, and the Ministry of Textiles, removal of ADD on PTA was necessary to unshackle the full potential of the downstream value chain. While continuation of ADD would have benefited only a very few large players like the petitioner (who, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shukla referring to section 9A(6) of the Act submitted that the Central Government is empowered to frame rules for the purpose of the said section without prejudice to the generality of the provisions contained therein to provide for the manner in which articles liable for anti-dumping duty under the said section may be identified and for the manner in which the export price and normal value and margin of dumping in relation to such articles may be determined and for assessment and collection of such anti-dumping duty. It was therefore, submitted that power of imposition of anti-dumping duty is to be exercised by the Central Government which has an absolute power and therefore, power of revocation of anti-dumping duty imposed by the Central Government is inherent in the power of imposition of levy. 73. Learned advocate Mr. Shukla vehemently submitted that section 9A(5) of the Act prescribes that anti-dumping duty imposed under section 9A of the Act shall cease to have effect on the expiry of five years unless revoked earlier means the Act provides for early revocation of Anti-Dumping duty by the Central Government and therefore, power to impose ADD includes power to revoke it also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e examining these issues would not be involved in ascertaining other consequences of imposition or otherwise of Anti-dumping duty. It is necessarily the task of the Central Government to ascertain such factors and to come to conclusion whether despite such recommendations. Anti-dumping duty should be imposed or not. 37. When such issues of great complexities are involved, Courts have always shown restrain and permitted greater latitude to the Executive in implementation of its policies, particularly, in fiscal and economic areas, In case of Bajaj Hindustan Limited v. Sir Shadi Lal Enterprises Limited and another reported in (2011) 1 Supreme Court Cases 640 , decision of the Central Government by which Sugar Industry was de-licensed under the Industries(Development and Regulation) Act. 1951 came up for consideration before the Apex Court. Examining challenge to the judgement of the High Court quashing such an order of the Government, the Apex Court observed that it is settled law that in areas of economics and commerce, there is far greater latitude available to the executive than other matters. Court cannot sit in judgment over the wisdom of policy of the Legislature or the executi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e years. Out of global apparel exports of USD 482bn, MMF apparel has a share of 36% (USD 172 bn) as per said report. India's share in this market is a meager 2% (USD 3.7 bn). Global apparel exports witnessed a CAGR growth of 2.8% in last five years, whereas in case of India, CAGR growth of MMF apparel has been (-) 0.5%. D. In India, the domestic market has been dominated by cotton through the 2000s, with a share greater than 55%. In contrast with global consumption pattern which is in favour of synthetics (polyester, yarn, acrylic), with MMF apparel having a share of 36% and blends 21% in India, the consumption pattern has been lower with MMF. To cater to domestic and overseas textiles markets India's MMF base needs to grow. To enable the textile sector to grow from its current market size of USD 110mn to about USD 200 bn by 2025, fibre production in the country must grow from current level of 8 billion kg to about 16 billion kg. This growth has to come largely from the MMF segment since cotton has a limited capacity to grow given various constraints. The world production of PSF and PFY is estimated at 55.04 mn tons. Share of China is 71% (38.93 mn tons) and that of India, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for apparel is 40.7. No segregated data is available for MMF except for fibre where labour intensity is 3.24 persons per crore of investment. H. PTA Users Association represented to this Ministry for revocation of ADD on PTA for the overall interest of promoting growth of MMF textile industry. PTA manufacturers enjoyed the benefit of Anti-Dumping on PTA for a good part of the last 23 years. The ADD on import of PTA was initially imposed vide Notification No.85/97-Customs dated 21.11.1997, and has been levied for major part of the period since then in one form or the other on import of PTA from different exporters and countries. Protection by way of ADD to a particular company should not be provided for such a long period at the cost of other growing users industry which employs huge number of peoples. Therefore, in the larger public interest and based on the representation from textile industry, Ministry of Textiles recommended, vide communication dated 20.12.2019, for abolition of anti-dumping duty on PTA. I. Announcement in Union Budget 2020-21 In the Union Budget 2020-21, it was recognized that Chemicals are crucial feed stocks for downstream users. PTA, for example, is a critic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which 60% is internally consumed and therefore, there is a need for augmentation of production capacity of PTA and according to PTA Users Association, PTA industries operates at a margin of 15% and PTA players are earning around USD200-225/ton. 76. It was submitted that PTA manufacturers enjoyed the benefit of Anti-Dumping on PTA for a good part of the last 23 years. The ADD on import of PTA was initially imposed vide Notification No. 85/97-Customs dated 21.11.1997, and has been levied for major part of the period since then in one form or the other on import of PTA from different exporters and countries. It was further submitted that protection by way of ADD to a particular company should not be provided for such a long period at the cost of other growing users industry which employs huge number of peoples. If the petitioner is not able to sustain even after enjoying the benefit of anti-dumping duty on PTA at the cost of other user industry for such a long period, then introspection by the company is in order and warranted. It was submitted that the Government cannot allow ADD for indefinite period, keeping in view the larger public interest. The raw material was available at high ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia and another etc. v. V.V.F. Limited and another etc. reported in 2020 SCC OnLine SC 378. 5) In case of Kasinka Trading and another v. Union of India and another reported in (1995) 1 Supreme Court Cases 274. 6) In case of Sales Tax Officer and another v. Shree Durga Oil Mills and another reported in (1998) 1 Supreme Court Cases 572. 80. In rejoinder, learned Senior Advocate Mr. Mihir Joshi submitted that contention raised on behalf of the respondents that ADD on PTA is in force for last 23 years is not true and correct as the provisional ADD was imposed vide Customs Notification No. 85/97 dated 21st November, 1997 and final ADD vide Customs Notification No. 13/98 dated 28th April, 1998. However, the same was withdrawn vide final finding dated 06/05/2023 in sunset review investigation. 81. It was submitted that vide Notification No. 82/2000-Customs dated 30th May, 2000, ADD had been imposed against Spain only for a period of five years and thereafter the provisional duty was imposed vide notification No. 36/2014-Customs (ADD) dated July 25, 2014 and final ADD vide Notification No. 23/2015-Customs (ADD) dated May 27, 2015 on imports from Korea RP and Thailand and thereafter, ADD was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly using PTA but is used by the manufacturers of PSF and POY which are enjoying increasing profits. 86. It was submitted that the contention that the PTA Users Association made representations before the Ministry of Textile that prices of PTA have recorded a downward steam since 02.02.2020 clearly shows that respondent No. 3 has only considered one side statement provided by the PTA User Association without considering all the facts as the price of the product under consideration has declined even during the life of the duty wherein price had reduced from Rs. 57,088 per MT in 2014-2015 to Rs. 49,581 per MT in 2017-2018, because price of PTA is linked to the prices of crude. It was therefore, submitted that without considering the factors for reduction in prices which has no relation with the imposition of ADD, respondent No. 3 has failed to appreciate the proven fact that PTA producers in the other countries are engaged in dumping of the subject goods as a result of which the imports are entering in the Indian market at injurious and unfair prices. 87. Having heard the learned advocates for the respective parties and considering the facts emerging from the record, the issue raised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edent for issuance of the Notification of rescinding the countervailing duty by the Central Government? 89. This Court thereafter held as under: 3.2 The countervailing duty or Anti-Dumping Duty is a trade remedy. These are the duties quite different in their nature and purpose of imposition, not similar to the levy of customs duty or other taxes. The countervailing duty is levied on a product, which may be imported to this country to which the exporting country extends artificial subsidies, to push the product into Indian market, which may ultimately lead to detriment to the domestic industry with adverse effect in general on the economy. Whereas, anti-dumping duty is imposed upon the imported products when the exporting country dumps such products in the Indian market at a lower price to the detriment to the domestic industry. Recognised by GATT, 1994 3.3 India is a signatory to agreement on Implementation of Article VI of the General Agreement On Tariffs And Trade 1994, known as GATT Agreement. Under this agreement, the member countries have agreed to abide by the set of Rules relating to type of subsidies, which are permissible as per the Agreement of Subsidies and Countervailin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of another Member is in accordance with Article VI of the GATT and the terms of the agreement-ASCM. It is stated that countervailing duty may only be imposed pursuant to investigation initiated and concluded in accordance with the provisions of the Agreement. 3.4.1 Article 11 of ASCM is in relation to initiation and subsequent investigation. Articles 12 and 13 are about evidence and consultations; Article 14 deals with the calculation of amount of subsidy in terms of benefit to recipient. Article 15 of the ASCM mentions about the determination of injury. Article 15.1 says that determination of injury for the purpose of Article VI of GATT shall be based on positive evidence and involving objections, examining (a) The volume of subsidies, imports and effect of subsidies, imports on the prices in the domestic market for like products; (b) The consequent impact of this imports on domestic industry on such products. 3.4.2 Article 15 is regarding determination or injury, Articles 15.7 says that determination of threat of material injury shall be based on facts and not merely on allegations of remote possibility or conjecture. It outlines the factors which the investigating authorities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... untervailing duty shall be terminated on a date not later than five years from its imposition (or from the date of the most recent review under paragraph 2 if that review has covered both subsidization and injury, or under this paragraph), unless the authorities determine, in a review initiated before that date on their own initiative or upon a duly substantiated request made by or on behalf of the domestic industry within a reasonable period of time prior to that date, that the expiry of the duty would be likely to lead to continuation or recurrence of subsidization and injury. The duty may remain in force pending the outcome of such a review. 21.4 The provisions of Article 12 regarding evidence and procedure shall apply to any review carried out under this Article. Any such review shall be carried out expeditiously and shall normally be concluded within 12 months of the date of initiation of the review. 21.5 The provisions of this Article shall apply mutatis mutandis to undertakings accepted under Article 18. Statutory provisions 3.5 The Central Government legislated on the lines of aforementioned international agreement. Section 9 and section 9-A in the Customs Tariff Act, 1975 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is difficult to repair, is caused by massive imports in a relatively short period, of the article benefiting from subsidies paid or bestowed and where in order to preclude the recurrence of such injury, it is necessary to levy countervailing duty retrospectively, the Central Government may, by notification in the Official Gazette, levy countervailing duty from a date prior to the date of imposition of countervailing duty under sub-section (2) but not beyond ninety days from the date of notification under that Sub-section and notwithstanding anything contained in any law for the time being in force, such duty shall be payable from the date as specified in the notification issued under this sub-section. (5) The countervailing duty chargeable under this section shall be in addition to any other duty imposed under this Act or any other law for the time being in force. (6) The countervailing 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 recur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vernment of India has a most favoured nation agreement (hereinafter referred as a specified country), unless in accordance with the rules made under sub-section (2) of this section, a determination has been made that import of such article into India causes or threatens material injury to any established industry in India or materially retards the establishment of any industry in India; and (iii) under sub-section (2) of each of these sections, on import into India of any article from the specified countries unless in accordance with the rules made under sub-section (2) of this section, a preliminary findings has been made of subsidy or dumping and consequent injury to domestic industry; and a further determination has also been made that a duty is necessary to prevent injury being caused during the investigation : Provided that nothing contained in sub-clauses (ii) and (iii) of clause (b) shall apply if a countervailing duty or an anti-dumping duty has been imposed on any article to prevent injury or threat of an injury to the domestic industry of a third country exporting the like articles to India; (c) the Central Government may not levy - (i) any countervailing duty under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of imposition, unless revoked earlier. The scope and manner in unless revoked earlier is the bone of contention in the present controversy. 3.6.3 Proviso to sub-section (6) of section 9 says that if the Central Government in review is of the opinion that the cessation of the duty is likely to lead to continuation or recurrence of subsidisation and injury, the Central Government may extend the period of duty for further five years. Section provides that where the review initiated before the expiry of five years, which period is not over, before such expiry, the countervailing duty may continue to remain in force for further period not exceeding one year pending the outcome of such review. Prevalent Rules 3.7 The Customs Tariff (Identification, Assessment and Collection of countervailing duty on Subsidised Articles and for Determination of Injury) Rules, 1995, came to be framed by the Central Government in exercise of powers conferred by sub-section(7) of Section 9 and sub-section(2) of section 9B of the Customs Tariff Act, 1975. 3.7.1 Having a bird's eye-view of the rules and pinpointing the relevant, under Rule 3, the Central Government appoints designated authority which is re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t made by or on behalf of the domestic industry within a reasonable period of time prior to the expiry of that period, that the expiry of the said countervailing duty is likely to lead to continuation or recurrence of subsidisation and injury to the domestic industry, make recommendation for extending the period of such imposition in accordance with provisions of section 9 of the Act. (4) Any review initiated under sub-rule (1) shall be concluded within a period not exceeding twelve months from the date of initiation of such review. [Provided that notwithstanding anything contained in rule 19, such review shall be completed at least three months prior to expiry of the countervailing duty under review. [(5) Subject to sub-rule (4), the provisions of rules 7,8,9,10,11,12,13,18,19,20,21 and 22 shall apply mutatis mutandis in case of review.:] 3.7.4 It would be seen from the above Rules that the designated authority will undertake the process of investigation, shall thereupon, on ascertainment of continuance of subsidy and injury, domestic market to recommend the Central Government, if the recommendation is for withdrawal of duty, it would lead to revocation of the notification and wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on investments, or utilization of capacity; factors affecting domestic prices; actual and potential negative effects on cash flow, inventories, employment, wages, growth, ability to raise capital investments and, in the case of agriculture, whether there has been an increased burden on government support programmes. 3.8 It would be seen that the contents of the relevant provisions of the Act and the Rules above are on the lines and conceptually match the different corresponding Articles in the agreement-ASCM on subsidy and countervailing measures. 3.8.1 Section 9 is with regard to countervailing duty on subsidised articles. Section 9-A is in respect of Anti-Dumping duty on dumped articles. Both are measures to protect the domestic exported market force . Both sections contain similar provisions with similar import. 3.8.2 Therefore, whatever legal principles are enunciated by the courts in the context of the scheme of the provisions and the judgments are rendered in relation to the anti-dumping duty, and they would apply in their reasoning and ratio, mutatis mutandis to the countervailing duty. xxx Obligation Emanating from Treaty 5.2 Prefacing the discussion on the aspects of law i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the treaty. This is for the reason that in such cases what is sought to be achieved by the international treaty is a uniform international code of law which is to be applied by the courts of all the signatory nations in a manner that leads to the same result in all the signatory nations. 5.2.2 While applying the domestic legislation, which has originated with reference to the international treaty, the application of the provisions has to conform the principles agreed in the treaty. In G.M. Exports (supra), it was observed, 48. We have already held that this would fly in the face of all the judgments referred to in paragraphs 15 to 22 hereinabove, and principles (3) and (4) of paragraph 23 of this judgment which speak of how domestic legislation must be construed when it is made in furtherance of an international treaty. In particular, in the facts of these cases, it would also ignore the effect of Article 18.4 of the WTO Agreement, which expressly states that all the signatory member nations have to make their laws conform to the provisions of the WTO Agreement, something which the Central Government itself states in its internet website which deals with the law of anti-dumping. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disregard its own laws to act independent of legal requirements, thereby acting sovereign. (b) No public interest in abstract 6.2 Emphasis was laid by learned Additional Solicitor General that the Notification in question rescinding the countervailing duty was issued in public interest. According to him various inputs were taken into account before issuing the Notification. There is a hollowness in the submission inasmuch as while no facts or details were given as to how the public interest is made to subserve, on the other hand the abstract plea and general concept of public interest would be irrelevant. 6.2.1 When the countervailing duty was imposed, it was by following the procedure in law, undertaking the investigation to determine the aspects of subsidy and injury as provided. This itself was an exercise in public interest. The case of the petitioner is that the Notification of the Central Government is in disregard to the compliance of procedure to be undertaken in law. Abiding by the provisions of law and following the statutory prescriptions is by themselves in public interest. The first step to subserve public interest is to follow the statutory mandates. Therefore the sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cial function, in Indian National Congress Vs. Institute of Social Welfare [(2002) 5 SCC 658]. It was observed in para 24 that, the legal principle as to when an act of statutory authority would be a quasi-judicial act, is that where (a) a statutory authority empowered under a statute to do any act (b) which would prejudicially affect the subject (c) although there is no lis or two contending parties and the contest is between the authority and the subject and (d) the statutory authority is required to act judicially under the statute, the decision of said authority is quasi-judicial. 7.1.3 The Apex Court in Indian National Congress (supra) was considering the question whether while exercising powers under Section 29A of the Representation of People Act, 1951, while registering a political party, the Election Commission exercises quasi-judicial power or not. It was held that in view of the requirement under the provisions of Section 29A that the Commission is to give decision only after making an inquiry, the Commission acts quasi-judicially and the decision rendered by it is a quasi-judicial order. 7.1.4 The Supreme Court observed that what distinguishes an administrative act from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions are amenable to appeal and the challenge, and are also subject to judicial review in the writ jurisdiction also, the essential aspects of the provisions concerning the controversy may be analysed, also with reference to the judicial decisions in that regard. 7.2.1 As noted above, the notification levying the countervailing duty once issued under Section 9(1) of the Act, has an expiry period from the date of imposition, unless revoked earlier. It also provides that respondent No. 1 may extend the period further, if it is of the opinion that the cessation of such duty is likely to lead to continuation or recurrence of subsidy and injury . 7.2.2 Two important pre-requisites are postulated by the first proviso of Section 9(6) of the Act. They are, (a) a review being conducted by respondent no. 2, and (b) subsequent formation of an opinion by respondent No. 1 on the basis of the review, that is, whether cessation of countervailing duty would lead to continuation or recurrence of subsidisation and injury. These pre-requisites are required to be satisfied at the time of imposing as well as discontinuing the countervailing duty. 7.3 In Rishiroop Polymers Steel Ltd. Vs. Designated Aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty for another period of five years. This is subject to the provisions of sub-rule (1) of Rule 23 of the Anti-Dumping Rules, under which the Designated Authority is empowered to review the anti-dumping duty imposed from time to time. (para 37) 7.3.2 The followings observations are to be pertinently noticed, Having regard to the scheme of the above mentioned provisions of the statute, once Anti-Dumping duty has been initially imposed, it would be ordinarily continued for five years unless on a review it is found by the Designated Authority that there has been such a significant change in the facts and circumstances, that it is considered necessary either to withdraw or modify appropriately the anti-dumping duty which has been imposed. It is, therefore, clear that unless the Designated Authority suo motu or the applicant for review is in a position to establish clearly that there has been a significant change in th\e facts and circumstances relating to each of the basic requirements or conditions precedent for imposing duty, the finding given by the Designated Authority at the time of initial imposition of anti-dumping duty must be considered to continue to hold the field. (para 37 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the views of all stakeholders by giving them adequate opportunity in this behalf and thereafter arriving at a conclusion that the continuation of the Anti-Dumping duty is justified, otherwise injury to the domestic industry is likely to continue or reoccur, if the said anti-dumping duty is removed or varied. Since this exercise is likely to take some time and may go beyond the period stipulated in the original notification imposing anti-dumping duty, in order to ensure that there is no vacuum in the interregnum, second proviso to sub-section (5) of Section 9A of of the Act empowers the Central Government to continue Anti-Dumping duty for a further period not exceeding one year, pending the outcome of such a review. (para 30) 7.4.2 The Supreme Court agreed with the High Court that the proviso to sub-section (5) of section 9-A of the Act is an enabling provision, which gives maximum life for five years to the imposition of anti-dumping duty by issuing a particular notification, which can of course be extended by issuing fresh notification. 7.4.3 However, the enabling power not to continue the anti-dumping duty/ countervailing duty available under the provision, would not obliterate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation regarding levy of countervailing duty, the procedure prescribed under the Act and Rules regarding the recommendation to be arrived at by the designated authority, is mandatory. These requirements cannot be bypassed. The notifications regarding countervailing duties have to be based on the determination and establishment of ingredients namely likelihood of continuance or recurrence of subsidy and injury which would result for the domestic industry. These are the founding facts before the Central Government can act to issue the notification. These facts are to be established through statutory procedure contemplated in the provisions of the Act and the Rules, as explained above. 7.6.1 The recommendations of the designated authority would contain the findings on these facts and aspects. They are the jurisdictional facts. They are the foundations for the Central Government to take a decision and to issue the notification. The jurisdictional facts cannot be bypassed. 7.6.2 The words 'unless revoked earlier' in section 9(6) of the Act cannot be viewed as denoting powers to the Central Government to revoke the notification of countervailing duty, which is operational, withou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ners, learned senior counsel sought to submit that Section 21 of the General Clauses Act, under which power to issue notification would include power to rescind notification, would not apply and would not come to aid. 8.1 Section 21 of the General Clauses Act reads as under.- 21. Power to issue, to include power to add to , amend, vary or rescind, notifications, orders, rules or bye-laws.-Where, by any Central Act or Regulation, a power to issue notifications, orders, rules, or bye-laws is conferred, then that power includes a power, exercisable in the like manner and subject to the like sanction and conditions (if any) to add to, amend, vary or rescind any notifications, orders, rule or bye-laws so issued. 8.2 The provision contemplates that wherever power is conferred to issue notification etc., such power would include the power to rescind the Notification as well. Such power, the provision says, is exercisable in the like manner and subject to the like sanction and conditions (if any) . What was submitted by the learned counsel for the petitioner that when the countervailing duty was imposed by issuing notification dated 07.09.2017, the procedure was followed and the relevant c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Subsidized Articles and for Determination of Injury) Rules, 1995. (iv) The procedure and exercise contemplated in Section 9(6) and 9(7) of the Customs Tariff Act read with the relevant Rules could not be treated directory. Treating the exercise as per the provision to be directory would amount to negating the whole scheme of the countervailing duty laws and would mean negation thereof. The Central Government cannot treat the procedure in the Act and the Rules as optional on the spacious grounds. (v) The determination that 'cessation of such duty is likely to lead to continuation or recurrence of subsidisation and injury' is sine qua non in the scheme of the provisions before notification to rescind the duty could be issued. The establishing the ingredient 'continuance or recurrence of subsidization' by the exporting counter, and 'injury to the domestic industry' are the founding facts, in the nature of jurisdictional facts. 10. The Supreme Court in Hari Krishna Mandir Trust Vs. State of Maharashtra and Others [(2020) 9 SCC 356] stated that the High Court must issue a writ of mandamus and give directions to compel performance in an appropriate and lawful man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs subject to a case in that regard being made out. That is what the law is. The decision of the Central Government in the matter of anti-dumping duty is appealable and also subject to writ jurisdiction on well-settled parameters of constitutional law. (para 8) 90. In view of above discussion, following directions were issued in the aforesaid matter: Directions 14. As a result of the above discussion and reasons, the present petition is allowed in terms of following order and directions, (i) The Notification No. 1/2022-Customs (CVD) dated 01.02.2022 issued by respondent No. 1 rescinding the countervailing duty is hereby quashed and set aside. (ii) Respondent no. 2 shall immediately proceed in respect of Sunset review process in relation to the continuance or otherwise of the countervailing duty already commenced as per Notification dated 08.10.2021. (iii) The exercise of inquiry and investigation pursuant to Notification dated 08.10.2021, shall be completed in accordance with the statutory provisions and rules for determining about continuation or recurrence of subsidy and injury to domestic industry in respect of the product in question. (iv) Respondent no. 2 shall thereupon make ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral Government for continuation of the ADD on the subject product to be imported from Thailand and Korea RP. So far as other subject countries are concerned, Notification No. 28/2016 was very much in existence for levy of ADD and the Designated Authority was required to conduct sunset review for making recommendation as to continue to levy ADD on the other subject countries such as China PR, Iran, Indonesia, Malaysia and Taiwan after completion of five years. The Central Government therefore, ought to have taken into consideration the requirement of revoking of ADD would not continue the recurrence of subsidisation and injury by dumping of the subject products in India so that the notification to rescind the duty could be issued. However, without considering any factors or elaborating upon the same, the impugned notification is issued giving a go-bye to the ingredient continuance or recurrence of subsidisation by exporting country and injury to the domestic industry which ought to have been the founding facts in the nature of jurisdictional facts to rescind the notification issued for levy of ADD on the subject products. Therefore, the decisions relied upon by the respondents would ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
