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TMI Blog2002 (5) TMI 68X X X X Extracts X X X X X X X X Extracts X X X X ..... tion concerning imports of certain "PSF" originating in or exported from Korea, R.P., Malaysia, Taiwan and Thailand was initiated. The petitioners have also challenged the order dated 15-10-2001 passed by the Designated Authority in compliance of the orders of the Karnataka High Court in M/s. Madura Coats Limited justifying the initiation of the investigation. The second writ petition being D.B. Civil Writ Petition No. 718/2002 has been filed by the same petitioners, seeking direction to quash the preliminary findings of the Designated Authority dated 16-1-2002 recommending levy of provisional anti-dumping duty on import of subject goods originating in or exported from the subject countries. 2.The facts giving rise to the instant writ petitions are that the Association of Synthetic Fibre Industry on behalf of the Indian Domestic PSF Industry filed an application under sub-rule (1) in accordance with sub-rule (2) of Customs Tariff (Identification, Assessment and Collection of Anti- dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995, hereinafter referred to as 'the Rules of 1995' before the first respondent i.e. the Designated Authority. The applicant resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the exporters of the four countries excluding Indonesia. The Designated Authority also found the prima facie evidence with respect to the statement on normal value, export price and dumping margin. It was further found that there was significant increase in the market share of the imports of the subject goods from the subject countries; decline in the sales realization; losses of the negligible profits of the domestic industry and failure of the domestic industry to realize fair and reasonable price from sale of the subject goods. This prima facie indicated collectively and cumulatively that the domestic industry suffered material injury on account of dumping. The Designated Authority also found that huge surplus production in the subject countries constitutes a threat of material injury to the domestic industries. Thus, the Designated Authority decided to initiate investigation against the alleged dumped imports of certain PSF originating from the four Countries. Accordingly, the Authority issued impugned public notice dated 25th June, 2001 initiating anti-dumping investigation concerning import of certain PSF being cleared under Chapter 55 of the Customs Tariff Act, 1975 ori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... them was "GATT" (General Agreement on Tariff and Trade). It was set up in the year 1948 providing the forum for negotiating lower customs duty rates and other trade barriers. The text of General Agreement spelled out important rules, particularly non-discrimination. The unevenness of tariff levels and application of the number of reciprocal advantages induced the member countries of the "GATT" to devise the new techniques for establishment of new international economic order. Article VI of the GATT, 1994 allows members to apply for anti-dumping measures on imports of a product with an export price below its "normal value", if such imports cause or threaten to cause material injury to a domestic industry. Detailed rules governing the application of such measures, which take the form of either duties or undertakings on pricing by the exporter were negotiated during the Tokyo Round. The agreement was substantially revised during the Uruguay Round, emerging of W.T.O. as successor to GATT with effect from January, 1995. The WTO Agreement provides for greater clarity and more detailed rules in relation to the method of determining whether a product is, dumped, including the calculatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rice at which the imported articles are first resold to an independent buyer or if the article is not resold to an independent buyer or not resold in the condition as imported, on such reasonable basis as may be determined in accordance with the rules made under sub-section (6); "normal value", in(c) relation to an article, means - (i) the comparable price, in the ordinary course of trade, for the like article when meant for consumption in the exporting country or territory as determined in accordance with the rules made under sub-section (6); or (ii) when there are no sales of the like article in the ordinary course of trade in the domestic market of the exporting country or territory, or when because of the particular market situation or low volume of the sales in the domestic market of the exporting country or territory, such sales do not permit a proper comparison, the normal value shall be either - (a) comparable representative price of the like article when exported from the exporting country or territory or an appropriate third country as determined in accordance with the rules made under sub-section (6); or (b) the cost of production o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the price paid or payable for the goods by the first independent buyer. The export price of the goods allegedly dumped into India means the price at which it is exported to India. It is generally the CIF value minus the adjustments on account of ocean freight, insurance, commission, etc., so as to arrive at the value at ex-factory level. If there is no export price or the export price is not reliable because of association or a compensatory arrangement between the exporter and the importer or a third party, the export price may be constructed on the basis of the price at which the imported articles are first resold to an independent buyer. The margin of dumping refers to the difference between the normal value of the like article and the export price of the product under consideration. Margin of dumping is normally established on the basis of : (i) a comparison of weighted average normal value with a weighted average of prices of comparable export transactions; or (ii) comparison of normal values and export prices on a transaction to transaction basis. A normal value established on a weighted average basis may be compared to prices of individual export transac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on shall be in addition to any other duty imposed under this Act or any other law, for the time being in force. Life of anti-dumping duty : The(5) anti-dumping 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 recurrence of dumping and injury, it may, from time to time, extend the period of such imposition for a further period of five years and such further period shall commence from the date of order of such extension : Provided 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 anti-dumping duty may continue to remain in force pending the outcome of such a review for a further period not exceeding one year. Power to make rules providing manner of levy of anti-dumping duty : (6) The margin of dumping 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les and for Determination of Injury) Rules, 1985, has framed the rules in the name of Customs Tariff (Identification, Assessment and Collection of Anti- Dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995, hereinafter referred to as "the Rules of 1995", providing a detailed procedure in the matter of levy of anti-dumping duty. Rule 2 is the definition clause. It, inter alia provides the definition of the expression "domestic industry" and "interested party" as follows : "2.Definitions. - "domestic(b) industry" means the domestic producers as a whole engaged in the manufacture of the like article and any activity connected therewith or those whose collective output of the said article constitutes a major proportion of the total domestic production of that article except when such producers are related to the exporters or importers of the alleged dumped article or are themselves importers of the alleged dumped article or are themselves importers thereof in which case such producers may be deemed not to form part of domestic industry : Provided that in exceptional circumstances referred to in sub-rule (3) of Rule 11, the domestic industry in relation to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ped into India; (iv) The Government of the exporting country/countries. (v) The trade or business associations of the domestic producers/ importers/user industries of the dumped product. 12.Rule 3 provides for appointment of the Designated Authority. The Central Government may, by notification in the Official Gazette, appoint a person not below the rank of a Joint Secretary to the Government of India or such other person as the Central Government deems fit as the designated authority for purposes of these rules. In the instant case, the second respondent i.e. the Designated Authority is appointed under the said rules. He functions in the Ministry of Commerce of the Government of India. 13.Rule 4 imposes certain duties on the Designated Authority. The rule is extracted as follows : Duties of the"4. designated authority. - (1) It shall be the duty of the designated authority in accordance with these rules - to(a) investigate as to the existence, degree and effect of any alleged dumping, in relation to import of any article; to(b) identify the article liable for anti-dumping duty; to(c) submit its findings, provisional or otherwise to Central Government as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this rule the application shall be deemed to have been made by or on behalf of the domestic industry, if it is supported by those domestic producers whose collective output constitute more than fifty per cent of the total production of the like article produced by that portion of the domestic industry expressing either support for or opposition, as the case may be, to the application. Notwithstanding(4) anything contained in sub-rule (1) the designated authority may initiate an investigation suo motu if it is satisfied from the information received from the Commissioner of Customs appointed under the Customs Act, 1962 (52 of 1962) or from any other source that sufficient evidence exists as to the existence of the circumstances referred to in clause (b) of sub-rule (3). The(5) designated authority shall notify the Government of the exporting country before proceeding to initiate an investigation." 15.After the decision is taken to initiate the investigation, the Designated Authority proceeds in the manner provided under Rule 6, which reads as follows : Principles"6. governing investigations. - The designated authority shall after it has(1) decided to initiate investigation t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding dumping, injury where applicable, and casualty. (6)The designated authority may allow an interested party or its representative to present the information relevant to the investigation orally but such oral information shall be taken into consideration by the designated authority only when it is subsequently reproduced in writing. The(7) designated authority shall make available the evidence presented to it by one interested party to the other interested parties, participating in the investigation. In(8) a case where an interested party refuses access to, or otherwise does not provide necessary information within a reasonable period or significantly impedes the investigation, the designated authority may record its finding on the basis of the facts available to it and make such recommendations to the Central Government as it deems fit under such circumstances." Rule 7 of the Rules of 1995 provides for confidential information which reads as follows : Confidential"7. information. - (1) Notwithstanding anything contained in sub-rules (2), (3) and (7) of Rule 6, sub-rule (2) of Rule 12, sub-rule (4) of Rule 15 and sub-rule (1) of Rule 17, the copies of applications recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tablishment of domestic industry and a causal link between dumped imports and injury, taking into account all relevant facts, including the volume of dumped imports, their effect on price in the domestic market for like articles and the consequent effect of such imports on domestic producers of such articles and in accordance with the principles set out in Annexure II to these rules. The(3) designated authority may, in exceptional cases, give a finding as to the existence of injury even where a substantial portion of the domestic industry is not injured, if - (i) there is a concentration of dumped imports into an isolated market, and (ii) the dumped articles are causing injury to the producers of all or almost all of the production within such market." Under Rule 12, the Designated Authority is required to give a preliminary finding. The rule reads as follows : "12. Preliminary findings. - (1) The designated authority shall proceed expeditiously with the conduct of the investigation and shall, in appropriate cases, record a preliminary finding regarding export price, normal value and margin of dumping and in respect of imports from specified countries, it s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... justice. The process of investigation, inter alia, envisages declaration of preliminary finding under Rule 12. On the basis of the preliminary finding recorded by the Designated Authority, the Central Government may impose a provisional duty not exceeding the margin of dumping. Subsequent to the preliminary findings, the Designated Authority provides the adequate opportunity of written as well as oral submissions to all the interested parties and after detailed verification, disclosure, etc., the investigation is finalised. After the Designated Authority makes its final recommendation in accordance with Rule 17, the Central Government may levy anti-dumping duty not exceeding the margin of dumping. 17.The findings of the Designated Authority are in the nature of recommendations and it is not obligatory on the Central Government to accept the same. A remedy of appeal against the decision of the Central Government is provided under Section 9C of the Act of 1975 before the CEGAT. 18. Mr. N.M. Lodha, learned Senior Central Government Standing Counsel has raised number of preliminary objections with respect to maintainability of the writ petition. The objection is as to non-maintaina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diction under Article 136 of the Constitution of India and dismiss the special leave petitions." 20.Learned Counsel has also relied on an unreported decision of the Delhi High Court dated 7-8-97 rendered in the case of The Indian Express Newspaper v. Union of India. In the said case, the preliminary finding on anti- dumping investigation concerning imports of newspaper prints was challenged. The maintainability of the writ petition was objected on the similar grounds. The Court held thus - "We are not impressed by the several submission so forcefully advanced by the learned Counsel for the petitioners. (In our opinion, the petitions are pre-mature. The petitioners are at liberty to raise their contentions whatever they may be before the Designated Authority who is still seized of the investigation and is admittedly holding a hearing today. In spite of the preliminary finding having been submitted to the Central Govt. imposition of duty, whether provisional or otherwise, would not follow as a matter of course or routine). The Central Government may or may not impose duty. If the Central Government may decide on favour of imposing duty, whether provisional or otherwise, the petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vocate appearing for the petitioners, submitted that the High Court has power to issue in a fit case a writ prohibiting executive quasi-judicial authority from acting without jurisdiction. It is argued that a statutory authority cannot enlarge the scope on jurisdictional fact. It is contended that when the jurisdiction of the authority depends upon a preliminary finding of fact, the High Court can independently determine upon its independent judgment as to whether the finding is correct or not. In support of the submission, he has relied upon number of decisions of the Apex Court. 23.In Bengal Immunity Company v. State of Bihar reported in AIR 1955 SC 661, the writ petition was filed under Article 226 of the Constitution challenging the notice issued under Section 13 of the Bihar Sales Tax Act by the Superintendent, Commercial Taxes calling upon the Company to apply for registration and to submit returns showing its turn over for the specified period. The reason for issuing the notice as recited in the notice was that on information which had come to his possession the Superintendent was satisfied that the Company was liable to pay tax but had nevertheless wilfully failed to appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ws : "It is well established that where the jurisdiction of an administrative authority depends upon a preliminary finding of fact the High Court is entitled, in a proceeding of writ of certiorari to determine, upon its independent judgment, whether or not that finding of fact is correct." 26.In Vatticherukuru Village Panchayat v. Nori Venkatarama Deekshithulu reported in 1991 Supp (2) SCC 228, the Court observed that the jurisdiction of a tribunal created under statute may depend upon fulfilment of some condition precedent or upon existence of some particular fact. The Court further observed that a tribunal cannot by a wrong decision with regard to collateral fact, give itself a jurisdiction, which it would not otherwise have had. 27.Dealing with the question of alternate remedy, the Apex Court in Raja Anand's case (supra) held that the existence of alternate remedy is always not a sufficient reason for refusing a party quick relief by a writ or order prohibiting an authority acting without jurisdiction or continuing such action. It is not necessary to trace all the judgments on the point involved. Suffice it to refer the decision of the Apex Court in Whirlpool Corporation v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Law Board reported in AIR 1967 SC 295 dealing with the provisions of Section 237(b), the Apex Court observed that though the power under Sec. 237(b) is discretionary but the first requirement for its existence is the honest formation of the opinion that the investigation is necessary. The Court further observed that - "the formation of opinion is subjective but the existence of circumstances relevant to the inference as the sine qua non for action must be demonstrable. If the action is questioned on the ground that no circumstances leading to an inference of the kind contemplated by the section exists, the action might be exposed to interference unless the existence of the circumstances is made out. Since the existence of "circumstances" is a condition fundamental to the making of an opinion, the existence of the circumstances, if questioned, has to be proved at least prima facie. It is not sufficient to assert that the circumstances exist and give no clue to what they are because the circumstances must be such as to lead to conclusion of certain definiteness." 30.Thus, in Barium Chemical's case (supra), the Court arrived at the conclusion that the existence of circumstances su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ides an opportunity to the industrial users as well as interested parties or its representatives to present an information relevant to the investigation, the limited interference is called for to satisfy if the preliminary finding has been recorded after following the statutory provision. It is of course true that it is for the Central Government to levy or not to levy a provisional duty on the basis of the preliminary finding but as laid down by the Apex Court in Raja Anand Brahma Shah's case (supra) that where the jurisdiction of an administrative authority depends upon a preliminary finding of fact, the High Court is entitled in a proceeding of writ of certiorari to determine upon its independent judgment whether or not that finding of fact is correct. Once an anti-dumping duty is levied, though it may be provisional, it may adversely affect the trade or business of the parties like the petitioner. Though, there is provision for refund of anti-dumping duty but that in itself is not sufficient as the injury which may be caused to a trade or business, cannot be compensated by refund of the amount recovered as duty on anti-dumping. 32.As regards the alternate remedy, it is well e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d normal value in their application which is based on estimate of cost of production and fair margin in the exporting countries. According to the learned Counsel in the absence of any evidence regarding the normal value and/or export price, there is really no evidence regarding dumping and, therefore, there could not be any further examination or satisfaction regarding the injury or causal link. It is also submitted that the application contains no evidence regarding the injury to the domestic PSF industry. It is also submitted that the applicants' own data shows that it is not a domestic industry. It is pointed out that the domestic industry has command market share which is not declining. The import of PSF from the subject countries has declined and continued to be less than 2% of the total domestic production of the PSF in India. The sales volume of the applicants has increased significantly. It is also submitted that there is no evidence of causal link between the alleged dumped imports and the alleged injury to the domestic industry. It is submitted that the third respondent is the largest producer of the key raw material. 35.In the counter filed by the department supported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation, is concerned, the Designated Authority has considered the same in para 3 of the initiation notification. He has found that there is an unsubstantiated and misdirected allegation that the application viz; Reliance Industries, has admitted that they are importers on the basis of response to query at S. No. 6 of the proforma. The Designated Authority found that there is no such indication of admission in response to query at S. No. 6. The Designated Authority also found that the applicants have the support of unit accounting for more than 83% of the production during investigation. Thus, there is no substance in the contention raised by the petitioner on the question of standing or locus of the applicants in filing the application before the Designated Authority. 37.The main thrust of the contention of learned Counsel for the petitioner is the lack of jurisdiction on the ground that the evidence available wan inadequate and inaccurate for issuing the initiation notification. Rule 5(3) (b) of the Anti-Dumping Rules requires the Designated Authority, before it initiates an investigation to examine the accuracy and adequacy of the evidence provided in the application with regar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pinion of the Designated Authority, there was prima facie evidence to show that the Indian industry has not only suffered material injury at the hands of the four dumping countries but the dumping continues to be threat of material injury to the Indian industry. It was further found that there is import from other countries also but the same is negligible or de-minus, therefore, the imports from other countries did not cause injury to the domestic industry. Thus there is continuous increase in the demand and hence contraction in demand is not possible reason for injury. The applicant claims to have suffered losses from sale of subject goods from the subject countries and has failed to realise the fair price for subject goods due to dumped imports. This has indicated the causal link between the dumping and injury to the domestic industry. The Designated Authority also found that the normal value as claimed by the applicants i.e. the domestic industry on constructed cost of production of the like article with reasonable addition for administrative selling cost and for profits. The Designated Authority found that the price has been determined on the basis of the international price of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n as required by Rule 6(6). It is further submitted that the Designated Authority did not make available the evidence presented to it by the interested parties participating in the investigation and, therefore, violated the provisions of Rule 6(7). Some of the contentions which were raised by challenge to the initiation of investigation, have been re-agitated. It is vehemently argued that since the domestic industry commands 98% market share and imports of PSF from the subject countries, are merely 2% of the domestic production of the PSF, the same cannot conceivably cause any injury to the domestic industry. It is argued that the domestic industry has been complaining that they have suffered material injury, while the balance sheets of the Reliance Industries and Indo Rama do not support the said contention. At this stage, it will be relevant to re-capitulate the investigation process after the initiation notification under the Anti-dumping Rules. When the Designated Authority is satisfied that there is sufficient evidence in the application with regard to dumping, material injury and causal link, a public notice is issued initiating an investigation to determine the existence and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at in a case where interested parties refuse access during or otherwise, does not provide necessary information within a reasonable period or significantly impedes the investigation, the Designated Authority may record its finding on the basis of facts available to it and make such recommendations to the Central Government, as it deems fit under such circumstances. 40. In the counter filed by the Department submitted by Mr. Siddharth, IAS, Director in the Ministry of Commerce and Industry, has averred that the Authority issued the public notice of initiation of investigation dated 25-6-2001 in the Gazette of India, Extraordinary. The Authority forwarded a copy of the public notice to the Association of manufacturers in the respective countries of the exporters and also to the known importers and known users of certain PSF and gave them opportunity to make their views known in writing within a period of 40 days from the date of the letter. A request was also made to the Central Board of Excise and Customs to arrange the details of imports of certain PSF. The Authority provided copies of the non-confidential version of the petitioner to the known exporters and the Embassies of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the said Authority. Thus, in our opinion, the Designated Authority has undertaken the exercise and shown fairness more than what is required under the scheme of investigation under Rule 6. As regards sub-rule (7) of Rule 6, the Authority may make available the evidence presented to it by one interested party to other interested party participating in the investigation in the form of inspection of public file. This public file was made available to every interested party, who wanted to inspect it on the date decided as per the mutual convenience. Thus, the Designated Authority has recorded the finding after adhering to both the substantive as well as procedural requirements of the Anti-Dumping Rules. 42.As regards the contention to the effect that the imports of PSF from the subject countries are mere 2% of the domestic production of PSF and the same cannot cause injury to the domestic industry, suffice it to say that it is submitted by the learned Counsel for the respondents that a small quantity of 2% is used by the importers to negotiate the price thereby resulting the suppressing effect on the price realization of the domestic industry. There appears to be substance in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the Causal Link, the Authority held that the increase in market share of imports from Korea R.P., Malaysia, Taiwan and Thailand resulted in decline in the market share of the petitioner domestic industry. In his view, the imports significantly depress the prices of the domestic product forcing the domestic industry to sell at unremunerative prices. Resultantly, the domestic industry incurred losses. On the basis of the 'facts available', it was observed that the imports of the subject goods from "other countries" are below the deminimis level during the period of investigation. It was further observed that contraction of demand is not apparent and no technological development in the industry or any other such factor which could have resulted in injury to the domestic industry was noticed. To ascertain the extent of anti-dumping duty necessary to remove the injury to the domestic industry, the Authority relied upon reasonable selling price of the subject goods in India for the domestic industry, by considering the optimum cost of production at optimum level of capacity utilization for the domestic industry. The Designated Authority further observed that since the fair selling pri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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