Customs, Excise and Gold Tribunal - Delhi
Jai Corp. Ltd. vs Designated Authority, Ministry Of ... on 19 January, 2000
Equivalent citations: 2000(116)ELT356(TRI-DEL)
ORDER G.A. Brahma Deva, Member (J)
1. These are three appeals. Appeal Nos. C/81,82 and 90/99-AD are filed by the appellants M/s. Jai Corporation Ltd. the importer, M/s. J.S.C. Severstal, Russia, the producer and M/s. Metalsrussia, Russia, the Exporter respectively with reference to the final finding of the Designated Authority No. 14-1-1997/ADD, dated 18th November, 1998.
2. The Designated Authority initiated an investigation into the alleged dumping of Hot Rolled Coils, Sheets, Strips, Plates falling under Heading 7208 of the Customs Tariff originating in or exported from Russia, Kazakhstan and Ukraine vide Notification No.14/1 /97/ADD, dated 6th October, 1997. The investigation resulting in the order impugned was initiated on an application filed by M/s. SAIL and M/s. Essar and supported by M/s. Lloyds and M/s. TISCO. The period of investigation was 1st April, 1996 to 31st March, 1997. The Designated Authority sent questionnaire to the exporters and importers to elicit relevant information. Additional information regarding injury was also sought from the petitioners. On considering the response to the questionnaire and information furnished by the exporters, importers and several other interested parties, the Designated Authority found that since TISCO was related to M/s. Tata SSL, an importer, TISCO would not form part of the domestic Industry. The Authority was also of the view that there was no causal link between the dumped import and the material injury to the domestic Industry observing that there was not enough evidence to suggest that the reasons for declining profitability, rising stock and inability to increase prices could be attributed to the imported goods. Accordingly, preliminary finding was issued by the Auhority on 17th June, 1998. Further public hearing in the above case was held on 4th August, 1998. Opportunity was given to exporters, importers, petitioners and other interested parties to express their views in a public hearing. After hearing the parties/representatives and on consideration of written and oral submissions, the Authority issued the disclosure statement. Comments on the disclosure statement were also filed by the respective parties. Thereafter, the Authority issued its final finding recommending duty equal to the difference between the landed price of imports and the amounts mentioned below for each of the following items except for hot rolled coils originating in or exported from Kazakhstan.
___________________________________________________________
S. Item Description Amount No.
(Rs. per MT)
___________________________________________________________
{1) (2) (3)
___________________________________________________________
1. Hot Rolled Coils 14300
2. Hot Rolled Strips/Sheets/Plates 15000
3. Boiler Quality Plates 22000
___________________________________________________________
It was also specified that anti-dumping duty shall be the difference between amounts mentioned in column 3 and the landed price of imports per MT subject to a minimum of Rs. 481 per M.T.
3. Notification No. 100/98, dated 27-11-1998 was issued by the Finance Ministry accepting the recommendation of the Authority with respect to minimum import price. However the recommendation of the Authority on minimum anti-dumping duty was not notified by the Finance Ministry.
4. Shri V. Lakshmikumaran, learned Counsel, appearing for the appellants assailed the impugned order on the following points :-
1. Volume of dumped imports and their effect not considered.
2. Cumulation of imports from the three countries.
3. SAIL's stockyard prices compared with landed price of imports at the port.
4. Injury to domestic producers due to Essar's entry not evaluated.
5. Di minimus injury argument not considered [Rule 14(1)(e)].
6. Fixation of minimum duty is wrong - this should be maximum.
7. Cost of production in Russia based on the claims of the petitioners is wrong - Why not Khazakhstan cost?
8. Novolipetsk's submission after the preliminary finding and cost of production given as part of questionnaire response not at all considered.
9. No dumping margin shown for Zaporhistal, Ukraine in the final finding, though given in the preliminary finding.
5. The contentions are rebutted by Ms. Pallavi Shroff learned Advocate for the Domestic Industry and Shri Rakesh Tikoo learned Sr. Advocate for the Designated Authority. The learned Counsel for the respective parties have taken us through the details of record of investigation, final findings and the materials available on record.
6. The product under consideration in the present case are hot rolled Coils and hot rolled sheets (plates and strips) originating in or exported from Russia, Kazakhstan and Ukraine.
7. Dumping, Injury and causal link are the important factors in determining the Anti-dumping duty. Dumping per se will not attract duty unless material injury is caused to the Domestic Industry and causal link in between material injury to the Domestic Industry and dumped imports. Anti-dumping duty shall not exceed the margin of dumping i.e. the difference between the export price and normal value and further amount of duty shall not exceed the amount which has been found adequate to remove the injury to domestic Industry as envisaged under Section 9A(1) of the Customs Tariff Act and under the provisions of Anti-Dumping Rules respectively. It is also settled position now that anti-dumping duty is exporter specific and exporting country specific as it was held in the case of Haldor Topsoe A/S as per Order No. 10/99-AD, dated 13-12-1999 [2000 (116) E.L.T. 377 (Tribunal)] in Appeal No. C/291/98-A. An anti-dumping duty is discriminatory duty levied on specified products originating from specified sources. Rather than a source of revenue, these are looked upon more as protective measures to safeguard the interest of domestic Industry against dumped or subsidised imports. The authorities are, therefore, required to follow the prescribed procedure of law so as to provide fullest opportunities to all the interested parties to present their case and thus ensure justice to all the concerned parties. With this background we shall examine the contentions raised by the parties with reference to the facts of this case to decide the issue herein.
8. Dumping of Imports into India is the starting point to initiate proceedings for the purpose of imposing Anti-Dumping duty. As per the provisions of Section 9 A of the Customs Tariff Act, 1975, if any article is exported from any country to India at less than its normal value, the Govt, may impose an anti-dumping duty not exceeding margin of dumping. Margin of dumping in relation to an article means the difference between its export price and its normal value. Clause C of Section 9A defines normal value. Sub-clause (i) of Clause C states that normal value means the comparable price in the ordinary course of trade for the like article meant for consumption in the exporting country or territory as determined in accordance with the Rules. The comparable price in the ordinary course of trade mentioned in this Sub-clause can only be the comparable price for the like article manufactured by the same exporter against whom investigation is undertaken by the Designated Authority. Price of the like article of any other manufacturer cannot be the basis for finding out the normal value for assessing the dumping margin or normal value. When such comparable price for the like article of the same manufacturer is not available, then Sub-clause (ii) of Clause C comes into operation. This Sub-clause contains two alternatives. The first alternative is comparable representative price of the like article when exported from the exporting country or territory to an appropriate country when particular manufacturer/exporter who is stated to be dumping his produce in India has no sales of like article in the domestic market; then the representative price of that article when he exports to an appropriate country, can be the basis for finding the normal value. Normal value of the article can also be assessed as per the second alternative provided therein, namely, the cost of production of the article in the country of origin along with reasonable addition for administrative selling and general cost and for profits.
9. A proper understanding of Clause C of Section 9A shows that for finding out the normal value, Designated Authority has got three options before it. The first and the foremost option is to find out the comparable price for the like article in the ordinary course of trade when meant for consumption in the exporting country or territory of the same manufacturer or exporter. If the exporter is not having a domestic market in the exporting country, then his price of the article to an appropriate third country can be the basis. In the absence of such an export price to an appropriate third country, then the third alternative that is permissible is to find out the cost of production of the said article in the country of origin incurred by the exporter and add to it administrative, selling and general cost and profits.
10. In the instant case, the normal value was determined by the DA at the first instance in the preliminary finding based upon the information furnished by the appellants/exporters/importers and petitioners. Dumping margin determined by the DA in respect of each exporter is as under :-
___________________________________________________________ Name of Exporter Dumping margin as % of export price ___________________________________________________________
1. Zaporishtal 118.99%
2. Azovstal 8.96%
3. Ispat karmet
- Sheet / 18.46%
- Coil Nil
4. Novolipstech 78.37%
5. JSC Severstal 1%
6. MMK 56.71% ___________________________________________________________
11. In the final findings DA has maintained the dumping margin in respect of other exporters, but, with reference to the appellant M/s. JSC Severstal determined at 113% against 1%. The details are as follows :-
___________________________________________________________ S. Name of the exporters Dumping margin No. (% of export price).
___________________________________________________________
(1) (2) (3)
___________________________________________________________
IN CASE OF RUSSIA
1. JSC Severstal 113.37
2. Novolipstsk Iron & Steel 78,37
Corpn.
3. Magnitogorsk 56.71
metallurgic Plant
IN CASE OF KAZAKHSTAN
4. Ispat Karmat
Hot Rolled Coils De-minimus
Hot Rolled Sheets. 18.46
IN CASE OF UKRAINE.
5. Azovstal Iron & Steel 8.96
Works.
___________________________________________________________
12. The reason given by the DA for determining 113% is that the exporter has withheld the information and, accordingly, determined based upon the information furnished by other Co-operating exporters from Russia. In case the Authority was not satisfied either with the information furnished by the party or even for non-furnishing any information, the only course open to the Authority is to determine the invoice value based upon the best information available to him as prescribed under the Rules. Having gone through the records, we have not cothe across any better or improved information, but on the set of facts and figures, the DA has come to a different conclusion. Emphasis was on volume of imports in the preliminary findings whereas in the final findings, emphasis was only on price dehors volume of imports in the domestic Industry as it was pointed out by the appellants' Counsel. It was submitted by the Counsel that the DA has gone wrong in comparing the selling prices of SAIL at stockyard level with the landed price of import at Port level. It was further said that the production, capacity utilisation, sales volumes, market share held by the Indian Industry does not indicate that domestic Industry has suffered any injury. Declining of profitability due to increase in stock of SAIL was due to new entrant i.e., ESSAR which has taken major share of production, consumption and market share.
13. As regards volume of Dumped Imports, the DA has held in para 20 of the preliminary findings that dumping margin is of 1% by the appellant/Exporter JSC Severstal. With reference to the injury analysis and causal link, she observed in para 25 of the preliminary findings that "the Authority.notes that factors like decrease in volume of imports in absolute terms, increase in production and sales, capacity utilisation as analysed do not show injury to the domestic industry. Factors such as increase in closing stocks, inability to increase selling price and decline in profitability shows that the domestic industry has suffered some injury". She also held that profitability of SAIL declined not due to imports but due to lesser sales realisation compared to other Domestic Industries such as Essar & TISCO and declining profitability cannot be attributed to deemed imports in causing material injury to the Domestic Industries. It was argued on behalf of the respondents/other interested parties that DA was wrong at the first instance in determining 1% dumping margin in the preliminary finding without taking into consideration of price effect of volume of imported goods but corrected herself in determining 113% dumping margin with reference to goods imported from Russia and substantial injury caused to Domestic Industry based upon the available material in the final findings. It was also submitted that she was wrong in holding imports show a declining trend compared to immediate previous year 94-95 but corrected in the final finding assessing trends over a period of tithe and not with the imthediate previous year. On the other hand, it was urged on behalf of the appellants that there was no significant increase in the dumped imports during the year 1996-97 nor there was causal link between the alleged dumping and material injury and in fact the DA has reversed its finding in the preliminary findings on sathe set of facts and figures and authority based its finding on various information said to have been provided by the petitioners. We are not convinced with the arguthents advanced on behalf of the Designated Authority and interested parties that while determining the injury in terms of Rule 11(2) of 'Determination Injury Rules', DA is to consider the price effect on the dothestic market and without reference to the voluthe imported. In terms of Rule 11(2) while determining the injury, DA should take into account all the relevant facts including voluthe of dumped imports and their effect on price in the domestic market. We find that DA has referred to 'volume' while giving preliminary finding and without disturbing the volume of the imports she has considered the effect of price of imported goods in the final findings.
14. If the export price is less than the fair selling price in the domestic Industry and to that extent it causes injury to the domestic Industry i.e. Injury margin. If the injury is caused due to factors other than those attributable to imports no anti-dumping duty can be levied as there was no injury due to such imports. While determining the injury to domestic Industry and causal link between dumped imports and injury, the DA should take all relevant factors including the volume of dumped imports and their effect on the price in the domestic market as stated in 11(2) of Customs Tariff (Determination of Injury D.A.) Rules. Rule 11(2) is as under :-
"The designated authority shall determine the injury to domestic industry, threat of injury to domestic industry, material retardation to establishment 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."
15. It was contended on behalf of the appellants that DA was in error in cumulating volume of imports from the three countries i.e., Russia, Ukraine and Kazakhstan in determining the Injury and the causal link. Since the volume of import from Kazakhstan was less than 2% same should have been excluded and on such exclusion, volume of imports from Russia and Ukraine should have been compared with domestic Industry on its effect and in this context, he referred to the Clauses (iii) and (v) of Annexure-II (Principles for Determination of Injury). They are as under :-
"(iii) In cases where imports of a product from more than one country are being simultaneously subjected to anti-dumping investigation, the designated authority will cumulatively assess the effect of such imports, only when it determines that (a) the margin of dumping established in relation to the imports from each country is more than two per cent expressed as percentage of export price and the volume of the imports from each country is three per cent of the import of like article or where the export of individual countries less than three per cent, the imports collectively accounts for more than seven percent of the import of like article and (b) cumulative assessment of the effect of imports is appropriate in light of the conditions of competition between the imported article and the like domestic articles.
(v) It must be demonstrated that the dumped imports are, through the effects of dumping, as set forth in paragraphs (ii) and (iv) above, causing injury to the domestic industry. The demonstration of a casual relationship between the dumped imports and the injury to the domestic industry shall be based on an examination of relevant evidence before the designated authority. The designated authority shall also examine any known factors other than the dumped imports which at the same time are injuring the domestic industry, and the injury caused by these other factors must not be attributed to the dumped imports. Factors which may be relevant in this respect include, inter alia, the volume and prices of imports not sold at dumping prices, contraction in demand or changes in the patterns of consumption, trade restrictive practices of and competition between the foreign and domestic producers, developments in technology and the export performance and the productivity of the domestic industry."
16. This plea was objected to by other side on the ground that neither this point was raised before the DA nor was taken in the grounds of appeal before the Tribunal. On being ruled out the objections as it was purely point of law, and DA should have looked into the relevant Rules as they were, the action of the DA was justified in cumulating for the purpose of assessment referring to the finding in para 5 of the final findings. The issue of each of these hot rolled products being different assumes importance only from the view point of determination of dumping margin and injury margin. The Authority has, for the purpose of determination of dumping or injury margin, considered each hot rolled product as separate item for those exporters who have furnished necessary information separately. In case an exporter has furnished combined information, the Authority has had no choice but to assess such exporter collectively. The Authority has merely combined the four products for the purpose of assessment of injury, as stated in the preliminary findings, for the reason set out in the para relating to injury.
17. It was urged on behalf of the appellants that determination of injury and causal link should have been with reference to country wise/ productwise and even if products are combined i.e. Hot rolled coils and Hot rolled sheets together, still dumping margin from Kazakhstan will be 1.6% only.
18. On going through the submissions made by both sides on this issue, we are of the view that DA should have considered the cumulative assessment for the purpose of determining injury as enumerated in Clause (iii) (supra). In view of clear finding by the DA that import of Hot rolled coils from Kazakhstan is de-minimus, and did not recommend anti-dumping duty, same should have been excluded from total volume and on such exclusion she should have determined the injury to domestic Industry with reference to the remaining volume of imports. Having not done so, and in the absence of finding for such inclusion, there is an error in the order as it was rightly pointed out by the appellants.
19. In para 18 of the final findings, the DA has observed that it is appropriate to determine normal value for JSC Severstal based on information furnished by other co-operating exporters from Russia. It cannot be done for the simple reason that anti-dumping duty is manufacturer specific. Since the anti-dumping duty is exporter specific or manufacturer specific, price of similar article manufactured by other exporters/manufacturers cannot be the basis for finding out the normal value as it was held in the case of M/s. Haldor Topsoe A/S (supra). On going through the records of DA placed before us, we find that D.A. has not determined the normal price based upon the information furnished by other exporters but determined based upon the figures submitted by the petitioners. This is clearly contrary to the provisions of Anti-dumping Rules. We also take note that the total market demand for the product under consideration during the period of investigation was 68,84,733 MT. The total volume of imports from the three countries including Kazakhstan was 1,93,128 MT. This is negligible and effect of volume of such imports with reference to the requirement of domestic Industry has not been considered while determining the injury analysis. ESSAR is a new entrant who has taken a major share in the production, consumption and market share of Hot rolled coils during the period and the injury to domestic Industry due to Essar's entry was also not evaluated as it was urged by the appellants.
20. As we have already observed that Dumping, Material injury and Causal link are the important factors to determine anti-dumping duty. In the instant case, D.A. determined dumping margin at 1% against the appellants M/s. JSC Severstal in the preliminary finding and at 113% in the final findings. We have already held in the preceding paragraphs that determination of dumping margin at 113% is not correct as it is not based upon any better or improved information. Apart from that since it is not established that injury has been caused to domestic Industry due to such imports and in the absence of causal link no anti-dumping duty can be levied. In the facts and circumstances and particularly in the absence of causal link between injury to domestic Industry and such dumped imports the impugned order/final finding of the Designated Authority is not sustainable. In the result, we set aside the impugned order and, accordingly, these three appeals are allowed.