9911796707
TMI Blog2024 (5) TMI 383X X X X Extracts X X X X X X X X Extracts X X X X ..... the applicant in Civil Application No. 1 of 2020 as well as learned advocate Mr. Harsheel Shukla for the respondent No. 1. 2. Having regard to the controversy involved in this petition, with the consent of the learned advocates for the respective parties, the petition is taken up for final hearing. 3. Rule returnable forthwith. Learned advocates Mr. Paresh Dave and Mr. Harsheel D. Shukla waives service of notice of rule on behalf of the respective respondents. 4. By this petition under Article 226 of the Constitution of India, the petitioner has challenged the Notification No. 03/2020-Customs (ADD) dated February, 2, 2020 issued by respondent No. 1 - Union of India, Ministry of Finance, Department of Revenue, Government of India, whereby Notification No. 28/2016-Customs (ADD) dated 5th July, 2016 and Notification No. 28/2019 - Customs (ADD) dated 24th July, 2019 are rescinded and thereby Anti-Dumping Duty (For short "ADD") imposed on Purified Terephthalic Acid (here-in-after referred to as "PTA" or the "Product") originating in or exported from the People's Republic of China, Iran, Indonesia, Malaysia, Taiwan, Korea RP and Thailand is revoked. 5. Respondent no. 2 issued a publ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g in or exported from People's Republic of China, Iran, Indonesia, Malaysia and Taiwan. 13. Respondent no. 2 on conclusion of investigation filed final findings vide Notification dated June 9, 2016 confirming the preliminary findings and recommended imposition of ADD against import of PTA from China PR, Indonesia, Iran, Malaysia and Taiwan. 14. Respondent No. 1 on the basis of aforesaid final findings of respondent no. 2 issued Notification No. 28/2016 - Customs (ADD) dated July 5, 2016 imposed anti-dumping duty on PTA including its variants originating in, or exported from the People's Republic of China, Iran, Indonesia, Malaysia and Taiwan. 15. Petitioner Nos. 1 and 2 filed an application to initiate the sunset review in the matter of continuation of ADD on the imports of PTA originating in or exported from Korea RP and Thailand and pursuant to such application, respondent no. 2 issued Notification No. 7/36/2018-DGTR dated October 31, 2018 initiating sunset review in the matter of continuation of anti-dumping duty on imports of PTA originating in or exported from Korea RP and Thailand. 16. Respondent no. 2 after examining the likelihood of continuation/recurrence of dumping a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of mandamus or a writ, order or direction in the nature of mandamus so as to direct the Respondent No. 1 to revive the Notifications No. 28/2016-Customs (ADD), dated the 5th July, 2016 and 28/2019-Customs (ADD), dated the 24th July." 21. Learned Senior Advocate Mr. Mihir Joshi appearing with learned advocate Ms. Gargi Vyas for the petitioner submitted that the impugned notification is issued by respondent No. 1 arbitrarily and without following the due process of law whereby rescinding the Notification No. 28/2016-Customs (ADD) dated July 5, 2016 by which anti-dumping duty was imposed on import of PTA from People's Republic of China, Iran, Indonesia, Malaysia and Taiwan and Notification No. 28/2019-Customs (ADD) dated July 24, 2019 by which anti-dumping duty was imposed on PTA from Korea RP and Thailand after detailed investigation and determination made by respondent no. 2 in terms of Section 9A of the Act and the Rules. 22. It was submitted that as per the said notification ADD imposed would be effective for a period of five years from the date of publication of the said notification in the official gazette and such period can only be curtailed by revoking the imposition of AD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gation and final findings on conclusion of such sunset review after giving an opportunity of hearing to all concern, the Central Government may pass appropriate order exercising powers under section 9A of the Act. 29. Learned Senior Advocate Mr. Joshi submitted that India is a signatory to the Marrakesh Agreement establishing the World Trade Organization in 1994. Pursuant to this, it has implemented the Agreement on Implementation of Article VI of the GATT 1994 referred to as the Anti-Dumping Agreement (ADA). In terms of Article 18.4 of the Agreement, each Member country is required to ensure the conformity of its laws, regulations and administrative procedures with the provisions of the Agreement. As a consequence, Sections 9A, Section 9AA, Section 9B and Section 9C of the Act were enacted. 30. It was submitted that Section 9A(5) of the Act mandates that ADD shall be levied for a period of five years, unless revoked earlier. Notification No. 28/2016 Customs (ADD), dated the July 5, 2016 and Notification No. 28/2019 Customs (ADD), dated the July 24, 2019 specifically stated that the ADD shall be for five years. It was submitted that Rule 23(1A) of the Rules lay down the jurisdict ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cumstance could relate to one or more factors which led to imposition of duty. Further, such material change in circumstances can be examined and established only by Respondent no. 2, and that too after following the procedure prescribed under the Rules. However, there is no such evidence of changed circumstance before respondent No. 1 warranting withdrawal of duty before its life. It was submitted that respondent No. 2 has not conducted any "review" to establish any changed circumstance warranting withdrawal of duty and therefore, the aforesaid mandatory conditions were not satisfied while issuing the impugned Notification. It was submitted that respondent No. 1 having failed to do so, its attempt to revoke and rescind the ADD through the impugned Notification is without authority of law; and is contrary to the terms of sub-section 1 and 5 of Section 9A of the Act read with Rule 23 of the Rules and has taken away valuable rights conferred onto the petitioners through notification levying duties. 34. It was submitted that respondent No. 1 has a specified and limited role in relation to such a review, which is to either accept or not accept the recommendations made by Respondent No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the impugned Notification, as there is not even a whisper of any consideration of whether the injury to the Domestic Industry is likely to continue or recur on account of the rescinding the subsisting ADD. 38. It was submitted that Section 9A of the Act and its related provisions do not in any manner provide for or contemplate the availability of products at "competitive prices" as being an essential ingredient for consideration, in relation to the levy or continuation of ADD. Section 9A of the Act mandates the various provisions and the procedures to deal with dumping, imported goods entering India at dumped prices (goods being sold in India at a price lower than the price at which they are sold in the domestic market of the foreign exporter), which cause material injury to the domestic Indian industry. It was submitted that the entire framework of provisions and procedure have no reference to "competitive prices" being available to the domestic user industry. It was submitted that to rescind a levy of ADD on the basis that a product should be available at "competitive prices" to the domestic user industry is wholly alien and antithetic to the provisions of Section 9A of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Act and/or Section 9A of the Act, respondent No. 1 lacks legal authority to revoke any subsisting ADD without a recommendation from Respondent No. 2. 42. Relying upon the decision in case of Nazir Ahmed v. King Emperor, AIR 1936 PC 253, it was submitted that in the said case, the Privy Council declared that "Where a power is given to do a certain thing in a certain way, the thing must be done in that way or not at all." It was submitted that this salutary rule has been universally followed in numerous later judgments by the Hon'ble Supreme Court in case of Rao Shiv Bahadur Singh v. State of V.P. reported in AIR 1954 SC 322; in case of State of U.P. v. Singhara Singh reported in AIR 1964 SC 358; in case of Meera Sahni v. Lieutenant Governor of Delhi & Ors. reported in 2008 (9) SCC 177 and in case of Shin-Etsu Chemical Co. Ltd. v. Aksh Optifibre Lid. & Anr. reported in (2005) 7 SCC 2341. 43. Relying upon the judgment in case of Reliance Industries Ltd. Versus Designated Authority reported in 2006 (202) Ε.Ι.Τ. 23 (S.C.), it was submitted that the Hon'ble Supreme Court has elaborated the object and purpose of ADD in the following manner: "11. The result w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted that the Hon'ble Supreme Court in case of Automotive Tyre Manufacturers v. Designated Authority (2011) 2 SCC 258, held that the functions of respondent No. 2 are quasi-judicial in nature. It therefore, has to conform to principles of natural justice. 46. It was submitted that the nature and scope of the exercise by respondent No. 2 and respondent No. 1 Central Government was lucidly explained by Hon'ble Supreme Court in case of Reliance Industries v. Designated Authorities(supra). 47. It was submitted that respondent No. 2 in its final findings published vide Notification No. 14/8/2015-DGAD, dated the June 9, 2016, had come to following conclusion thus conferring valuable rights onto the domestic industry, which could not have been upturned without following due process of law and investigation - i. the subject goods have been exported to India from subject countries below its normal value, resulting in dumping, ii. the domestic industry has suffered material injury due to dumping of the subject goods from the subject countries; iii. material injury has been caused by the dumped imports of subject goods from the subject countries, and has recommended the impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcise of the powers conferred by sub-sections (1) and (5) of section 9A of the Act, read with rules 18, 20 and 23 of the Rules imposed ADD vide Notifications No. 28/2019-Customs (ADD), dated the July 24, 2019 on PTA, originating in, or exported from, the Korea RP and Thailand and imported into India. 51. It was submitted that respondent No. 1 had imposed ADD after detailed investigation by Respondent No. 2 and only after satisfying that imposition of ADD was in public interest and having imposed ADD in public interest, respondent No. 1 could not have revoked the same without conducting review. There can be no information or evidence which can establish that imposition or existence of ADD was causing significant hardship to public at large. On the contrary, Respondent No. 2 has come to a conclusion that impact of ADD on the consumer was bare minimal and thus, the statement that duty is being withdrawn in greater public interest is baseless and contrary to the past decision and material on record. 52. It was submitted that the powers exercised by Respondent No. 1 are not legislative and can only at best be described as quasi-judicial. In this regard, reliance is placed on the decis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Indian Metal and Ferro Alloys ltd. Versus Designated Authority reported in [2008 (224) ELT. 375 (Del.), it was submitted that it is well settled that in examining a review as to the continued imposition of ADD, the Domestic Industry should not be placed in a status quo ante with respect to imposition of the anti-dumping duty. In the present case, the Domestic Industry would be placed in a status quo ante consequent to the revocation of the ADD by way of the impugned Notification. The product is a highly capital-intensive product, wherein public and private sector companies have invested Rs. 25,000 Crores. While recommending extension of ADD, respondent No. 2 found that the return on capital employed earned by the industry was even below a level required to service the funds. It was submitted that while the country needed effort and action to reinvest the earnings to enhance the capacities further, revocation of duty has deprived the country of the reinvestment economics and this is particularly important and relevant when capacities in exporting countries are far higher than their own domestic demand and Indian market is largely saturated in terms of demand-supply. 55. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terest is a much wider term encompassing therein the interests of domestic producers of the Product, its consumers, the raw material suppliers, and public at large. While revoking the ADD, respondent No. 1 has considered only the interests of immediate consumers and therefore conclusion for revoking of duty should be considered insufficient and arbitrary. In any event, there was no verifiable evidence showing adverse impact of the ADD earlier imposed and respondent no. 1 could not have acted on mere allegations. 59. It was submitted that ADD can be imposed only if the investigation establishes that dumping caused injury. Similarly, revocation can be justified only if it is established that such imposition is no longer necessary and the same is also not be in public interests after conducting investigation. It was submitted that Consumer Industry will always be looking for access to material at dumped prices and would always be confronting with domestic manufacturers and Consumers always want access to lowest possible prices even at the cost of causing injury to domestic manufacturing unit. It was submitted that it is for the respondent No. 1 to balance the interests of all side an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is having not only the power but obligation to revoke the ADD during the period of five years at any time. 62. It was submitted that if review is always initiated by the Designated Authority then recommendation of Designated Authority may have to be awaited but if no review is initiated and Central Government found that ADD should not be continued in public interest then same can be revoked at any time by rescinding the notification issued for levy of ADD. 63. It was submitted that it is open for the Central Government not to accept the recommendation of DA as held in case of Alembic Ltd. v. Union of India reported in 2013 (291) E.L.T. 327 (Guj.) then it is also open for the Central Government to undertake its own exercise to examine the material data and take appropriate decision and action for rescinding the notification by revoking ADD and only consideration in such situation would be whether public interest demanded withdrawal of ADD and then the Court may examine whether the public interest is better served by withdrawing of ADD or not. It was submitted that ADD in facts of the case was imposed since 1997 and it was not a new notification. 64. Reference was made to Rule 23 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. 68. Reliance was placed on the decision of Hon'ble Supreme Court in case of The Designated Authority versus M/s The Andhra Petrochemicals Limited (Judgment dated 1st September, 2020 in Civil Appeal No. 3046-3048 of 2020), wherein Hon'ble Apex Court held as under: "32. Access to judicial review is a valuable right conferred upon citizens and persons aggrieved; the Constitution arms the High Courts and this court with powers under Articles 226 and 32. At the same time, barring exceptional features necessitating intervention in an ongoing investigation triggered by a complaint by the concerned domestic industry, judicial review should not be exercised virtually as a continuous oversight of the DA's functions. This court has cautioned more than once, that judicial review is to be exercised in a circumspect manner, especially where final findings are rendered by the DA." 69. It was therefore, submitted that the Central Government has the absolute discretion whether to continue the ADD imposed by accepting the recommendation for levy as per the final findings given by DA. 70. Learned advocate Mr. Shukla thereafter referred to and relied upon the following averments made in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and it engages and consults the industry widely. The proposal of the Ministry of Textile based on their own analysis of the sector was naturally an outcome of these industry, wide consultations. Meanwhile, in its report forwarded to this Ministry in January, 2020, the IMG also suggested revocation of Anti-Dumping duty on PTA as way forward to give a fillip to the domestic MMF industry. The IMG report mentions that while the capacity utilization of PTA producers is around 90%, that of user industry (spinning) is merely 65%. The raw material is available at high cost for downstream (fibre) manufacturers. The IMG report also stated that as compared to investment of Rs. 25.000 or by PTA manufacturers which are employing about 6000 persons, the total downstream industry (fibre, spinning fabric, garmenting) has made investment of Rs. 4,02,500 er and employs about 15 million people. While making this recommendation for revocation of ADD on PTA, IMG took into account all relevant factors. It is further stated that the annual Budget exercise, of which the decision to revoke ADD in this case was a part, entails very wide consultative process wherein inputs are taken from a very large numb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ownstream user industry contributes to higher value addition, production, investment and employment, clearly reflected in the inputs received from the administrative Ministry and the IMG headed by NITI Ayog. Therefore, contrary to the petitioner's argument, the revocation of ADD on critical input like ITA supports domestic production of value-added downstream goods, and furthers the objectives of Atmanirbhar Bharat. 18. I say and submit that taking into account all relevant factors it was decided, as part of Budget exercise, 2020-21, to revoke the anti-dumping duty on the import of PTA, including its variants MTA and QTA, imposed vide notification No. 28/2016-Customs (ADD) dated 05.07.2016 and notification No. 28/2019-Customs (ADD) dated 24.07.2019, in public interest, as recommended by the IMG and the administrative Ministry. The Finance Minister in her budget speech for 2020-21 in Parliament, stated as follows- "...143. Chemicals are crucial 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... factors, constituting the public interest, whether or not to impose or continue an existing ADD through consultative process within the Government. It was therefore, submitted that the legality of the action of Government in supervening public interest, specifically in taxation matter has been upheld by the Apex Court in number of judicial pronouncements as under : "In its judgment dated 15 December, 1997 in the matter of Sales Tax Officer and Anr. Versus M/s Shree Durga Oil Mills & Anr, the Hon'ble Supreme Court stated that- "Moreover withdrawal of notification was done in public interest. The Court will not interfere with any action taken by the Government in public interest. Public interest must override any consideration of private loss or gain." Earlier, in its judgment dated 18th October, 1994 in the matter of Kasinka Trading & Anr. Vs Union of India & Anr., the Hon'ble Supreme Court had stated in paragraph-24 that- Where the Government on the basis of the material available before it bonafide, is satisfied that the "public interest" would be served by either granting exemption or by withdrawing, modifying or rescinding an exemption already granted, it should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods which are stated in paragraph No. 6 of the reply as under: "6. Without prejudice to the afore referred preliminary contention, following factual matrix of the matter as well as provision of law, would go to show that the petitioner is not entitled to any relief whatsoever claimed in the petition. A. Share of MMF in world textiles fibre consumption has been increasing steadily over the years. The global consumption pattern is in favour of synthetics (polyester, rayon, acrylic) and blends. In contrast with the global consumption pattern, in India, the domestic market has been dominated by cotton with MMF having a smaller share. B. Based on a meeting chaired by Principal Secretary to PM on "Measures for boosting exports from the Textile Sector' on 26.7.2019, it was decided that a note on issues to be addressed was formulated and forwarded to the Internal Ministerial Group (IMG) by Ministry of Textiles. This issue was discussed during the Inter-Ministerial Group (IMG), constituted by PMO, comprising of (i) CEO, NITI Aayog, Chairman (ii) Secretary, D/o Commerce (iii) Secretary, Ministry of Textiles and (iv) Trade Adviser, Ministry of Textiles. The IMG deliberated upon th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed by two Petitioners, domestic manufacturers of PTA i.e. M/s. Reliance Industries Ltd. and M/s. MCPI Pvt. Ltd. for continuing the duty. The third producer of PTA in India, namely Indian Oil Corporation Ltd. neither supported nor opposed the applications. M/s. PTA Users Association requested that the anti-dumping duty on PTA be revoked in the overall interest of promoting the growth of the MMF textile industry. F. To enable the textile sector to grow from its current market size, man-made fibre manufacturing base in India needs to be grown. Polyester Staple Fibre (PSF) and Polyester Filament Yarn (PFY) are the raw materials for the MMF textile value chain and Purified Terephthalic Acid or PTA is a key ingredient in the manufacture of PSF. As PTA is produced by limited number of producers in the country, it is presently being imported by textile MMF manufacturers. Imports of PTA until now were subjected to Anti-Dumping Duty (ADD) from various countries, viz., South Korea, Thailand, China etc. which was increasing the cost of MMF fibre/ filaments in the country thereby eroding the cost competitiveness of the MMF textile industry in global markets. PTA manufacturers enjoyed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the country of origin. MMF manufacturers will now be able to procure raw material at globally competitive prices and in turn provide Man-Made Fibre/Filament to downstream industry at competitive prices. 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. K. The prices since revocation of ADD on PTA have shown downward trends after removal of ADD on PTA i.e. from 2.2.2020 as informed by PTA Users Association as given below: Month Net PTA price in Rupees/KG Net Filament Price in Rupees/KG January, 2020 52 63 February, 2020 51 62 March 46 58 April 45 56 May 43 56 June 39 55 July 38 51 August 38 50 L. Reduction in price of raw material will lead to availability of fibre/filament/yarn to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estment of Rs. 25,000 crore by PTA manufacturers, total downstream industry (fibre, spinning, fabric, garmenting) has made far greater investments valued at Rs. 4,02,500 crore. As regards employment, the PTA manufacturers have an employment of only 6,000 persons as contrasted with 15mn people employed by the user industry. Capacity of PTA producers is 90% as opposed to 65% of the user industry (spinning) and their margins are 15% as opposed to declining margins of the spinning segment. 78. It was further submitted that ADD on PTA varies from USD 23.61/MT to USD 78.28/MT or Rs.1.6/kg to Rs.5.5/kg (Korea RP and Thailand). The sun-set review has been carried out for two countries namely, Thailand (USD45.43/MT to USD 62.55/MT) and Korea (USD 23.61 to USD 78.28) and impact analysis of anti-dumping duty on PTA by considering duties from source of maximum imports i.e., Korea and Thailand shows that impact of ADD on Polyester fabric was approx Rs.0.15/sq mtr to Rs.0.49/sq mtr. 79. Learned advocate Mr. Shukla referred to the documents placed on record along with affidavit in reply filed on behalf of respondent No. 3 to point out that various associations have made representations for not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... price discrimination by the exporters and the purpose of anti-dumping duty is not to protect the domestic industry, but to correct price distortion and establish fair play. Therefore, anti-dumping duty may continue as long as there is continued dumping, or likelihood of dumping and consequent injury to the domestic industry. It was pointed out that in the facts of the present case, anti-dumping duties were imposed only when it is found by DA that the exporters were indulging in unfair and uncompetitive pricing policy of dumping the product, which was injurious to the domestic industry in India. 83. It was therefore, submitted that Central Government could not have revoked ADD without initiating sunset review more particularly, in view of decision of this Court in case of Realstrips Limited and others (supra). 84. It was submitted that respondent No. 3 has without considering the real situation of textile sector and the factors responsible for its growth, ignored the publicly available facts that the downstream industry in fact grew handsomely and their profits by and large increased with ADD remaining in force as the quantum of ADD is not more than the dumping margin itself estab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 88. It would therefore, be necessary to refer to decision of Realstrips Limited and others (supra) wherein following questions were considered by the Court: "(i) Whether in the midst of Sunset review investigation in respect of continuance of countervailing duty, already initiated and kept undecided, during the currency of the period of original Notification imposing such duty, was it open to the Central Government to straightway issue the Notification rescinding the countervailing duty; (ii) Was it on part of the Central Government to issue such Notification in absence of any recommendatory exercise or recommendation by the designated authority, and without waiting for such recommendati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Rules and is the outcome of the General Agreement on Tariff and Trade (GATT) to which India is a party. The purpose behind the imposition of the duty is to curb unfair trade practices resorted to by exporters of a particular country of flooding the domestic markets with goods at rates which are lower than the rate at which the exporters normally sell the same or like goods in their own countries so as to cause or be likely to cause injury to the domestic market. The levy of dumping duty is a method recognized by GATT which seeks to remedy the injury and at the same time balances the right of exporters from other countries to sell their products within the country with the interest of the domestic markets. Thus the factors to constitute 'dumping', is (i) an import at prices which are lower than the normal value of the goods in the exporting country; (ii) the exports must be sufficient to cause injury to the domestic industry." 3.3.2 In Union of India Vs. Kumho Petrochemicals Co. Ltd. [(2017) 351 ELT 65 (SC)], the Supreme Court stated, India is a signatory to the Marrakesh Agreement establishing the World Trade Organization in 1994. Pursuant to this, it has implemented ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indicating the likelihood of substantially increased importation; (iii) sufficient freely disposable, or an imminent, substantial increase in, capacity of the exporter indicating the likelihood of substantially increased subsidized exports to the importing Member's market, taking into account the availability of other export markets to absorb any additional exports; (iv) whether imports are entering at prices that will have a significant depressing or suppressing effect on domestic prices, and would likely increase demand for further imports; and (v) inventories of the product being investigated. 3.4.3 Article 19 speaks about imposition and collection of countervailing duty. The countervailing duty may be imposed upon determination of the existence an amount of subsidy, its effect and upon investigation and deciding about the causal effect of injury on the domestic market. Article 21 is relevant, as it mentions about the duration and review of countervailing duty and undertakings. 3.4.4 The Article 21 of ASCM is reproduced, Duration and Review of Countervailing Duties and Undertakings 21.1 A countervailing duty shall remain in force only as long as and to the extent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ling Duty on Subsidized Articles.- (1) Where any country or territory pays, bestows, directly or indirectly, any subsidy upon the manufacture or production therein or the exportation therefrom of any article including any subsidy on transportation of such article, then, upon the importation of any such article into India, whether the same is imported directly from the country of manufacture, production or otherwise, and whether it is imported in the same condition as when exported from the country of manufacture or production or has been changed in condition by manufacture, production or otherwise, the Central Government may, by notification in the Official Gazette, impose a countervailing duty not exceeding the amount of such subsidy. Explanation. - For the purposes of this section, a subsidy shall be deemed to exist if- (a). .... (i).... (ii) ..... (iii) ..... (iv) ...... (b). ...... (2) The Central Government may, pending the determination in accordance with the provisions of this section and the rules made thereunder of the amount of subsidy, impose a countervailing duty under this sub-section not exceeding the amount of such subsidy as provisionally estimated b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d further that where a review initiated before the expiry of the aforesaid period of five years has not come to a conclusion before such expiry, the countervailing duty may continue to remain in force pending the outcome of such a review for a further period not exceeding one year. (7) The amount of any such subsidy as referred to in sub-section (1) or sub-section (2) shall, from time to time, be ascertained and determined by the Central Government, after such inquiry as it may consider necessary and the Central Government may, by notification in the Official Gazette, make rules for the identification of such article and for the assessment and collection of any countervailing duty imposed upon the importation thereof under this section. (7A) The provisions of the Customs Act, 1962 (52 of 1962) and the rules and regulations made thereunder, including those relating to the date for determination of rate of duty, assessment, non-levy, short levy, refunds, interest, appeals, offences and penalties shall, as far as may be, apply to the duty chargeable under this section as they apply in relation to duties leviable under that Act. (8) Every notification issued under this section sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es concerning its effect, or the exporter agreeing to revise the price of the article and if the Central Government is satisfied that the injurious effect of the subsidy is eliminated thereby; (ii) any anti-dumping duty under section 9A, at any time, upon receipt of satisfactory voluntary undertaking from any exporter to revise its prices or to cease exports to the area in question at dumped price and if the Central Government is satisfied that the injurious effect of dumping is eliminated by such action. (2) The Central Government may, by notification in the Official Gazette, make rules for the purposes of this section, and without prejudice to the generality of the foregoing, such rules may provide for the manner in which any investigation may be made for the purposes of this section, the factors to which regard shall be at in any such investigation and for all matters connected with such investigation. Working of the provisions 3.6 As per the provisions of section 9(1) of the Act, any country pays or bestows, either directly or indirectly any subsidy upon manufacturer or production or exportation therefrom, of any article, in such eventuality, upon the importation of suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of investigation. Rule 7 contains the principles governing the investigation, Rules 8 and 9 are about confidential information and accuracy of information respectively, whereas Rule 10 is about investigation in the territory of the other specified countries, Rule 11 mentions about nature of subsidy and rule 12 states about calculation of the amount of countervailing duty. 3.7.2 Rule 13 refers to the determination of injury and Rule 14 mentions about designated authority to proceed satisfactorily with conduct of investigation and to record preliminary findings, Rule 15 is about levy of provisional duty and Rule 16 is termination of investigation, Rule 17 speaks of suspension or termination of investigation on acceptance of price undertaking. Rule 18 is about disclosure of information and Rule 19 states about final findings, Rule 20 is about levy of duty. Rule 21 is imposition of duty on non-discriminatory basis, Rule 22 is for commencement of duty, Rule 23 is refund of duty. 3.7.3 Rule 24 is about review and the same is quoted as is relevant, "Review.- (1) Any countervailing duty imposed under section 9 of the Act shall remain in force so long as and to the extent necessary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 of the Rules mentions about determination of injury and for determining of injury, principle are set out to be taken into account by the designated authority. 3.7.6 Such principles listed at Annexure-I to the Rules contemplate extensive inquiry into different aspects, extracted below. "(1) A determination of injury for purposes of rule 13 shall be based on positive evidence and involve an objective examination of both (a) the volume of the subsidized imports and the effect of the subsidized imports on prices in the domestic market for like products and (b) the consequent impact of these imports on the domestic producers of such products. (2) With regard to the volume of the subsidized imports, the designated authority shall inter alia consider whether there has been a significant increase in subsidized imports, either in absolute terms or relative to production or consumption in India. (3) With regard to the effect of the subsidized import on prices, the designated authority shall, consider whether there has been a significant price undercutting by the subsidized imports as compared with the price of a like article in India, or whether the effect of such imports is otherw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions regarding countervailing duty, are based on the international treaty obligation. Therefore, the approach to the construction of the statutory provisions which have the origin from the treaty covenants has to be impugned with the treaty obligations. 5.2.1 The Supreme Court in Commissioner of Customs, Bangalore Vs. G.M. Exports and Ors. [(2016) 1 SCC 91] surveyed various decisions to summarise the following principles - "23. A conspectus of the aforesaid authorities would lead to the following conclusions: (1) Article 51(c) of the Constitution of India is a Directive Principle of State Policy which states that the State shall endeavour to foster respect for international law and treaty obligations. As a result, rules of international law which are not contrary to domestic law are followed by the courts in this country. This is a situation in which there is an international treaty to which India is not a signatory or general rules of international law are made applicable. It is in this situation that if there happens to be a conflict between domestic law and international law, domestic law will prevail. (2) In a situation where India is a signatory nation to an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scheme stemming from Section 9, in particular Section 9(6), 9(7) read with Section 9-B of the Act read with Rules, more particularly Rule 24 of the Rules, certain incidental aspects and submissions raised by both the sides may be dealt with. 6.1 On behalf of the respondent it was claimed that issuance of Notification dated 1.2.2022 rescinding the countervailing duty was in exercise of sovereign power by the Government. Thereby, it was sought to be suggested that once the sovereign power is exercised by the Central Government, the rescinding of the duty was justified, at whatever stage it was done. 6.1.1 The submissions were based on the misconception of sovereign power of the state and the attributes of sovereignty. 6.1.2 The concept of sovereignty is an all time assertion of authority by the nation country to the outside world. The concept of sovereignty is in its essence that the country is independent in its all actions, decisions, reactions and in taking its own stand as a nation before the outside world. It signifies that the State will have the final authority to make or enact laws of the governance in all spheres. 6.1.3 There would be no gainsaying that when the Parl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w, even as learned Additional Solicitor General harp on the public interest, not an iota of material was shown or relied on to substantiate as to what were the considerations relating to public interest. xxx Scheme is Quasi-Judicial Process 7. A bare reading and even prima facie analysis of the provisions of Section 9, in particular sub-section (6) and sub-section (7) thereof read with Rule 24 would go to show that the process of issuance of notification to impose the countervailing duty or to revoke the same is based on an inquiry. It is after investigation in respect of applicable factors relating to continuance or recurrence of subsidisation and the injury to the domestic industry, that the opinion will be formed. Only the ascertainment of such aspects after such inquiry about the subsidy etc., would be the basis for issuance of notification by the Central Government. 7.1 Section 9(6) read with Rule 24(2) makes it obligatory with the designated authority shall review the need for continued imposition of countervailing duty and recommend upon investigation to the Central Government for withdrawal of the duty when it comes to conclusion that the injury to the domestic indu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l function under the relevant law, the statutory authority is required to act judicially. In other words, the law requires that an authority before arriving at a decision, must make an inquiry, such a requirement of law makes the authority a quasi-judicial authority. It was observed in light of that Section 29A (i) requires for making an application for registration as a political party, further requires as per its sub-sections (2) and (3) to provide the contents of the application and the further sub-section (7) enjoins the Commission to give reasonable opportunity to the representative of the Association or body while registering a political party or refusing the registration. In the scheme of countervailing duty, the investigation and inquiry is similarly envisaged. 7.1.5 The Court further held that in order to make the function quasi-judicial and the decision quasi-judicial, it is not necessary that there must exist a lis between the parties. It was observed thus - "But there are cases where there is no lis or two contending parties before a statutory authority yet such a statutory authority has been held to be quasi-judicial and decision rendered by it as quasi-judicial de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry [(2006) 4 SCC 303], the Supreme Court while indicating the scope of mid-term review in respect of anti-dumping duty under Section 9-A(5) & (6) stated about the parameters to be adopted and the nature of examination to be undertaken. "...scope of the review inquiry by the Designated Authority is limited to the satisfaction as to whether there is justification for continued imposition of such duty on the information received by it. By its very nature, the review inquiry would be limited to see as to whether the conditions which existed at the time of imposition of antidumping duty have altered to such an extent that there is no longer justification for continued imposition of the duty. The inquiry is limited to the change in the various parameters like the normal value, export price, dumping margin, fixation of non-injury price and injury to domestic industry. The said inquiry has to be limited to the information received with respect to change in the various parameters. The entire purpose of the review inquiry is not to see whether there is a need for imposition of antidumping duty but to see whether in the absence of such continuance, dumping would increase and the domestic in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Apex Court further observed that the final finding recorded by the designated authority at the time of initial imposition of anti-dumping duty on the existence of injury to the domestic industry must be considered to continue to remain valid, unless it is proved to be otherwise, either by the designated authority in suo motu review or by the applicant seeking review. In that case, the review was initiated by the designated authority. No record either placed by the applicant or with the designated authority to displace the findings given by the designated authority at the stage of levy of initial anti-dumping duty. The Court observed that when there was no material to show that there was a change in parameters or criteria relating to the injury, which would warrant withdrawal of anti-dumping duty, it was not open for the designated Authority to reanalyze the issue of injury. 7.4 In Kumho Petro Chemicals Company Limited Vs. Union of India [2014 (306) ELT 3 (Delhi)], the Delhi High Court held in relation to the Anti-Dumping duty that the procedural requirements included finding of causal link between dumping and inquiry to domestic inquiry. It was held that the injury is to be det ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te the requirement for the Countervailing Authorities to disregard or overlook the statutory requirement of fulfiling condition to establish about the prejudicial effect to the domestic industry and the ingredients mentioned in the section such as continuation or recurrence of subsidisation and the resultant injury to the domestic industry. Establishing these elements are sine qua non even before withdrawal or rescindment of the duty under the scheme of the provisions. Jurisdictional Aspects 7.5 In the scheme of the statutory provisions noticed as above, a recommendation from the designated authority-respondent no. 2 herein. A recommendation from the respondent no. 2 is a necessary jurisdictional pre-condition for the Ministry of Finance to either impose or modify or withdraw countervailing duty. Any proposition proposition that the Ministry of Finance can act in relation to countervailing duty, either imposition or withdraw, de hors the recommendation of the respondent No. 1 cannot be accepted. 7.5.1 Firstly, it would be totally contrary to the applicable provisions of law. Secondly, it would create uncertainty in the administration of countervailing duty laws, inasmuch as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operational, without complying with the requirement of recommendatory exercise. The revocation of the countervailing duty notification, even if to be resorted earlier, it must be preceded by ascertainment by the essential ingredients which are jurisdictional aspects and after having the recommendation of the designated authority in that regard. 7.7 In the present case, the Central Government acted without having with it recommendation of the Designated Authority in issuing the Notification rescinding the countervailing duty. The recommendation of the designated authority secured after statutory exercise and after going into the relevant considerations and criteria, was to be the source material for the Central Government to act. The Central Government acted without availability of foundational aspects and jurisdictional facts to proceed to issue the notification. Conferring such licence and power to act in such a way on the Central Government would be extending unfettered and arbitrary powers. 7.8 In Alembic Limited Vs. Union of India [2013 (291) E.L.T. 327 (Gujarat)] the Division Bench of this Court held that the recommendations of the designated authority are not binding on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocedure was followed and the relevant consideration was gone into, therefore, even if the power to rescind is to be conceded to the Government, the rescission of the notification would have to be in the same manner and after satisfying the similar procedure and conditions. 8.3 The words "unless revoked earlier occurring in sub-section (6) in section 9 of the Act would have to be construed accordingly. The same procedure including making of inquiry and ascertaining the aspect injury to the domestic industry, will have to be read into before power to revoke is exercised. It would be reasonable to apply Section 21 by construing the words 'like manner' by equating them, for the purpose of present issue, with the procedure required under the statutory provisions of Customs Tariff Act, 1975 and relating to imposition of countervailing duty. Answers to the Questions & Conclusion 9. In light of foregoing discussion and reasons, the answers to the questions, are as under, (i) The issuance of Notification dated 01.02.2022 by the Central Government rescinding the countervailing duty imposed by the Notification dated 07.09.2017 was a irregular and illegal exercise. The Notification res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rections to compel performance in an appropriate and lawful manner of the discretion conferred upon the Government or a public authority". It further observed, "In appropriate cases, in order to prevent injustice to the parties, the Court may itself pass an order or give directions which the government or the public authorities should have passed, had it properly and lawfully exercised its discretion. In Directors of Settlements, Andhra Pradesh and Others v. M.R. Apparao and Anr.[(2002) 4 SCC 638], observed: "...One of the conditions for exercising power under Article 226 for issuance of a mandamus is that the court must come to the conclusion that the aggrieved person has a legal right, which entitles him to any of the rights and that such right has been infringed. In other words, existence of a legal right of a citizen and performance of any corresponding legal duty by the State or any public authority, could be enforced by issuance of a writ of mandamus, "Mandamus" means a command. It differs form the writs of prohibition or certiorari in its demand for some activity on the part of the body or person to whom it is addressed. Mandamus is a command issued to direct any person, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stic industry in respect of the product in question. (iv) Respondent no. 2 shall thereupon make necessary recommendations to respondent No. 1. Thereafter it would be open for the respondent No. 1 Central Government to take appropriate action and/or decision in accordance with law at its end. (v) As the Notification dated 01.02.2022 is set aside, the original Notification dated 07.09.2017 shall revive and countervailing duty shall become leviable on the product in question. (vi) The Sunset review initiated by Notification dated 08.10.2021 shall be completed in accordance with law. (vii) Since the review process pursuant to Notification dated 08.10.2021 is underway, and is required to be completed by Respondent No. 1-designated authority as per the directions No.(ii), (iii) and (vi) herein, in the interregnum, that is from the date of the Notification dated 01.02.2022, till the respondent No. 1 takes appropriate decision in review, the levy of countervailing duty shall continue." 91. The contention raised on behalf of the respondents are considered by this Court in the aforesaid decision of Realstrips Limited and others (supra) in detail however, the specific contention rais ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued for levy of ADD on the subject products. Therefore, the decisions relied upon by the respondents would not apply to the facts of the present case which are similar to that of the facts of levy of countervailing duty in case of Realstrips Limited and others (supra). 93. As the facts of the present case are similar to the facts which were before the Court in case of Realstrips Limited and others (supra). Adopting the same reasonings and result of the discussion made therein, the present petition is allowed in terms of the following orders and directions: (i) The Notification No. 3/2020-Customs (ADD) dated February 2, 2020 issued by respondent No. 1 rescinding the anti-dumping duty on subject goods is hereby quashed and set aside. (ii) Respondent no. 2 shall immediately proceed to initiate Sunset review process in relation to the continuance or otherwise of the ADD already levied as per Notification No. 28/2019 - Customs (ADD) dated 24th July, 2019. So far as Notification No. 28/2016-Customs (ADD) dated 5th July, 2016, the period of five years is over during the pendency of this petition. (iii) The provisions of the Act and the rules so far as sunset review in case of Noti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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