Custom, Excise & Service Tax Tribunal
M/S. Huawei Technologies Co. Ltd vs Anti Dumping And Allied Duties on 24 February, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST BLOCK NO.2, R.K. PURAM, NEW DELHI 110 066. Date of Hearing : 18.01.2016 to 21.01.2016 Date of Pronouncement : 24.02.2016 For Approval &Signature : Honble Justice G. Raghuram, President Hon'ble Mr. S.K. Mohanty, Member(Judicial) Honble Mr. R.K. Singh, Member (Technical) 1. Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2. Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? Yes 3. Whether Lordships wish to see the fair copy of the order? Seen 4. Whether order is to be circulated to the Department Authorities? Yes Application Nos.AD/MISC/51252 & 51908/2015] Appeal No.AD/13/2012 [Arising out of Final Findings dated 19.10.2010 and 10.02.2012 issued by Designated Authority] M/s. Huawei Technologies Co. Ltd. Appellant Vs. Designated Authority Directorate General of Anti Dumping and Allied Duties Respondent Application Nos.AD/STAY/966, 987 & 988/2011 Appeal Nos.AD/5 7 & 18/2011 [Arising out of Final Findings dated 19.10.2010 and 10.02.2012 issued by Designated Authority] M/s. U.T. Starcom Inc. M/s. TATA Teleservices Ltd. M/s. Idea Cellular Ltd. M/s. Alcatel-Lucent Sahnghai Bell Ltd. Appellant Vs. Designated Authority Directorate General of Anti Dumping and Allied Duties Respondent Appearance Mr. Balbir Singh, Sr. Advocate Mr. Gopan Jain, Sr. Advocate Mr. Sanjiv Goel, Advocate Ms. Jaya Bharuka, Advocate Ms. Rita Jha, Advocate Mr. A Mathews, Advocate Ms. Arpita, Advocate - For Huawei Technologies Mr. VL Kumaran, Advocate Mr. Atul Gupta, Advocate Mr. S Seetharaman, Advocate Ms. R Sharma, Advocate - For Alcatel-Lucent Mr. Rohan Shah, Advocate Mr. Anay Banhatti, Advocate - For Tata Teleservices & Mr. Udit Jain, Advocate Idea Cellular Mr. Saurabh Kansal, Advocate - For U.T. Starcom Inc. Mr. Amit Singh, Advocate Mr. Ankit Mallik, Advocate - For Designated Authority Mr. Amresh Jain, DR - For Revenue Ms. Reena Khair, Advocate Mr. Rajesh Sharma, Advocate - For Domestic Industry Mr. Jitendra Singh, Advocate Mr. Madhav Rao, Advocate - For Bharti Airtel CORAM: Honble Justice G. Raghuram, President Hon'ble Mr. S.K. Mohanty, Member(Judicial) Honble Mr. R.K. Singh, Member (Technical) Final Order Nos.50853-50857/2016, dated 24.02.2016 Per Mr. R.K. Singh : Appeals are filed against levy of Anti-Dumping Duty on Synchronous Digital Hierarchy System (SDH) vide Notification No.125/2010-Cus, dated 16.12.2010 based on/read with the Designated Authoritys Final Findings with regard thereto. Background in brief:
2. On 21.04.2009, the Designated Authority in the Ministry of Commerce initiated investigations against the imports of SDH Transmission Equipment from China PR and Israel (subject countries). The initiation was made pursuant to an application filed by M/s. Tejas Network Ltd, (Tejas) which claimed status as domestic industry. It was alleged in the application that the SDH product was being dumped from China PR and Israel into India and such import was causing injury to Tejas. On 07.09.2009, the Designated Authority issued preliminary findings recommending levy of provisional duty for a period of six months. M/s. Vuppalamritha Magnetic Components Ltd. (VMCL), challenged the initiation of investigations, as well as the preliminary findings before the Andhra Pradesh High Court on the ground that Tejas is not a domestic producer. The High Court passed an Interim Order dated 21.10.2009 staying the implementation of the preliminary findings for a period of four weeks. The said order was challenged by Tejas before the Supreme Court, which vacated the stay and directed the High Court to expeditiously hear and dispose of the matter. On 08.12.2009, the recommendations of the Designated Authority were given effect to and Customs Notification No.132/2009 dated 08.12.2009 was issued levying provisional Anti-Dumping Duty for a period of six months.
3. Andhra Pradesh High Court by its order dated 22.01.2010, held that Tejas is not a domestic industry and assumption of jurisdiction by the Designated Authority on its application is erroneous and illegal and the notification was set aside. The order of Andhra Pradesh High Court was assailed by Tejas before the Supreme Court. By an order dated 19.03.2010, the Supreme Court held that these matters involve economic consequences and therefore, are required to be decided expeditiously, and that in the meantime, the importer companies were directed to pay interim duty on the equipments. The order is extracted below:
In the meantime, we direct the importer-companies herein to pay interim duty on the following equipments:
1] STM -1;
2] STIM -4;
3] STM 16;
4] STM 64; and 5] STM 256 (In SK,CKD, Sub-assembly and/or parts and components) However, it is made clear that DWDM stands excluded from the above list. Subject to above, the impugned judgments of the High Court are stayed.
The Designated Authority is directed, however, to proceed with the hearing and adjudication of the matter and pass final orders which will be subject to the decisions in these special leave petitions.
4. In view of the directions of the Supreme Court, the Designated Authority continued with its investigations and granted public hearing to all the parties. Before it could make its final determination, the Additional Secretary appointed as Designated Authority was transferred and a new incumbent came in his place. No fresh hearing was afforded to the parties by the New Designated Authority, while passing the final findings, recommending duties on the imports of SDH equipment and its parts and components. The Central Government notified final duties.
5. Against the final findings and notification of the Central Government, the exporters and importers including M/s. Huawei Technologies Co. Ltd (Huawei), VMCL, and M/s. Prithvi Solution Ltd (Prithvi) filed appeals before CESTAT. By an order dated 11.08.2011, CESTAT allowed the appeals by way of remand as under:
15. ?Accordingly we allow these appeals by remand to the DA for affording post-decisional hearing to the appellants and for making such modifications to the final findings as may be necessary as a result of such post-decisional hearing. The respondent-domestic industry and other interested parties, if any, shall also be allowed to participate in such post-decisional hearing. Any modifications made in the final findings would be considered by giving effect to the same by the Government by carrying out the necessary amendments to the impugned notifications imposing anti-dumping duty. This process shall be completed within 6 months from the date of this order and status quo shall be maintained meanwhile. Since we are allowing the main appeals by remand, the MA (EH) and SPs stand disposed off.
6. Against this order of CESTAT, Huawei, VMCL, Idea Cellular, Designated Authority and a number of other parties filed SLPs /appeals, which are pending consideration of the Supreme Court. By on order dated 02.07.2012, the SLP filed by VMCL was dismissed as not pressed [Vuppalamritha Magnetic Component Ltd. Vs. Designated Autority as reported in 2013 (292) ELT A64 (SC)].
7. The appeal filed by Tejas Network against the order of the Andhra Pradesh High Court was finally decided by the Supreme Court vide their Order dated 20.09.2011, as being infructuous. An extract from the decision is given below:
10. ?The undisputed facts are that the Designated Authority has passed its preliminary findings under the provisions of Anti-Dumping Laws. The preliminary findings of the Designated Authority was the subject matter before the Andhra Pradesh High Court in Writ Petition No. 22155 of 2009. The High Court, by passing order dated 22-1-2010, has allowed the writ petition and has set aside the preliminary findings of the Designated Authority. Aggrieved by the said order, the special leave petition is filed by the appellant herein.
11. ?During the pendency of this appeal, the Designated Authority has passed its final findings also. Those final findings were questioned before the CESTAT by the parties to this lis. The CESTAT, though the special leave petition was pending before this Court, maybe because of the directions issued by the Bombay High Court, has disposed of the appeal by remanding the matter to the Designated Authority.
12. ?In view of these developments, in our opinion, it may not be necessary for this Court to go into the issues raised by the appellant herein. All those issues can be agitated by the parties before the Designated Authority itself.
13. ?In view of the above, the appeal is disposed of as having become infructuous. The Designated Authority now will implement the orders passed by the CESTAT dated 11-8-2011 within the time granted. While doing so, the Designated Authority will not be influenced by any of the observations made by the Andhra Pradesh High Court in Writ Petition No. 22155 of 2009 dated 22-1-2010.
8. The prayer for interim relief in the appeals filed by the exporters and importers against the Final Order dated 11.08.2011 of CESTAT before the Supreme Court, was decided as under:
Insofar as interim relief is concerned order dated 31-8-2012 be read as follows:
We have heard learned counsel for the parties on the question of interim relief. Having done so, we direct that the appellants shall continue to deposit the Anti-Dumping Duty in terms of Notifications dated 16th December, 2010, 12th April, 2010, 31st December, 2007 and 7th July, 2010 in an Escrow Account to be opened in the State Bank of India, Parliament Street, New Delhi.
Appropriate orders in relation to the disbursement of the amount in the said account shall be made at the time of final disposal of the appeals. It is agreed that complete details of the amount to be deposited in terms of this order shall be furnished to the Authority concerned. Rest of order dated 31-8-2012 would remain as it is.
9. In the meantime, the Designated Authority implementing the orders of CESTAT, concluded its investigations after granting opportunity of hearing to all interested parties and issued the second Final Findings dated 10.02. 2012, affirming its earlier conclusions. The appeal of Huawei has been filed against the second final findings. All the other appeals pertain to the first final findings.
Arguments on behalf of Huawei Technologies Ltd., China
10. Ld. advocate for Huawei Technologies Ltd. contended that (i) the initiation of the anti-dumping investigations was bad, as the Designated Authority had not complied with the requirements of Rule 5 of Customs Tariff (Identification, Assessment and Collection of Anti-Dumping Duty on Dumped Articles And For Determination of Injury) Rules, 1995. (ii) The copy of Voice and Data Magazine, which formed the basis of the initiation, had not been furnished to appellant and hence, it was unable to verify the basis for initiation of investigations. (iii) Tejas was not carrying out any activities in India, which would constitute production, for the purposes of Rule 2(b) of the Anti-dumping Rules. (iv) The findings of Designated Authority that Tejas was undertaking substantial transformation, was erroneous, especially as its factory at Pondicherry was not operational, as is evident from the decision of Madras High Court in the case of Tejas Networks Vs. Commissioner [2010 (254) ELT 223 (Mad.)]. (v) Designated Authority did not take into account producers of SDH Equipment in India though undertaking research and development, outside India, for ascertaining whether Tejas had a major proportion of production in India. Thus claim of Tejas, that it was an eligible domestic industry, was not appropriately considered, at the stage of initiation, and thereafter. (vi) About 65% of the components / parts used by Tejas were imported and hence, it should be treated as an importer, and not a producer, for the purpose of the anti-dumping investigations. Tejas imported subject goods, namely PCBA from China, and hence was excluded even otherwise from the purview of domestic industry. (vii) The investigations could not have been expanded to include parts and components, since there was no domestic industry for the same, in India. The inclusion of STM 64 was also not justified, as STM 64 was not manufactured and supplied by Tejas during the relevant period. (viii) The disclosure statement, wrongly mentions that Tejas has sold STM 64 to BSNL, and treatment of Tejas as a producer of STM 64 on this basis is erroneous. He produced a letter of BSNL denying purchase of STM 64 from Tejas during the relevant period. In the Final Findings, Designated Authority has changed its stand, and stated that Tejas sold STM 64 to Quicktel, which according to the appellant was a non-existent and thus STM 64 was wrongly included in the investigations. (viii) Designated Authority exceeded his jurisdiction, by including STM 256, and DXC which had not been imported into India, from the subject countries, during the relevant period in-as-much-as anti-dumping duty is attracted on dumped imports, and can not cover items, which are not imported.
Arguments on behalf of Alcatel-Lucent Shanghai Bell Co. Ltd
11. Ld. advocate for Alcatel-Lucent Shanghai Bell Co. Ltd., China contended that (i) the scope and extent of product under consideration had been altered in the course of investigations, which was not legally permissible. The import data considered during investigation was for SDH equipment, whereas in the final notification, SDH equipment for electrical copper medium and microwave medium is excluded. Determinations relating to injury are also not based on appropriate data, since the scope of product has been changing at every stage. (ii) Activities carried out by Tejas are not adequate for it to acquire the status of manufacturer. (iii) Under Section 9A of the Customs Tariff Act, 1975, the investigations are for a product, and multiple product investigation is not envisaged in the Act. Equipment, parts, components, and software are separate and distinct products, which can not be clubbed and treated as a single product for anti-dumping investigation. (iv) No duty can be levied on STM 256, which was not imported during the relevant period; he cited the decision of CESTAT in the case of Andhra Petrochemicals Ltd. vs Designated Authority [ 2006 (201) ELT 481 (T)]. (v) As regards software, the same is not goods, and is more appropriately dealt with by the laws governing protection of intellectual property rights. The question of imposition of anti-dumping duty on software does not arise, as software developed by Tejas is not compatible with Alcatel / Huawei software. The software made by Tejas is therefore, not like article to the imported product. (vi) It was wrong on the part of Designated Authority to include Populated Circuit Boards as Tejas was not a producer of such boards in India. In this context, reference was made to the decision of the USITC in the case of DRAMS. (vii) The Notification was also challenged on grounds of vagueness. It was contended that the expressions like for SDH application only were too vague to be allowed to be used in taxing provisions. (viii) The levy of duty on SDH equipment contained in broadband / telecom equipment, was contrary to the provisions of Section 12 and Section 14 of the Customs Act, 1962 in-as-much-as under these Sections duty was to be assessed on the goods imported and these sections are not amenable to assessing parts embedded in the goods imported. (ix) The normal value determined for ECI China, should have been taken as normal value for Alcatel-Lucent, since market economy treatment had been extended to ECI China. (x) Software downloaded electronically cannot be charged to customs duty as has been held by CESTAT Final Order No.C/A/52353-52355/2015-CU[DB], dated 29.07.2015 in the case of Oracle India Pvt. Ltd. & Others Vs. C.C.(Export), New Delhi. (xi) The dumping margins have not been properly computed.
Arguments of M/s Idea Cellular Ltd. and M/s. Tata Teleservices Ltd.
12. Ld. counsel for these importers contended that (i) Section 9A ibid envisages, an enquiry in respect of an article and not multiple articles. (ii) Rule 4 of the Customs Tariff (Identification, Assessment & Collection of Anti-Dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995 (hereinafter Anti-dumping Rules) requires DA to identify the article liable for anti-dumping duty and so do Rules 6, 10 and 11 of the Anti-Dumping Rules. Thus, Designated Authority had erred in including within the scope of investigations more than one article. (iii) Where multiple articles are included within the scope of an investigation, there should be a domestic industry for each of such articles, and the applicant must demonstrate that it has a major proportion, in the production in India for each of such articles. A separate dumping margin, is required to be determined for each such article. The Authority has included within the scope of investigation articles, which are unlike each other. (iv) The investigations were liable to be terminated under Rule 14 of the Anti-dumping Rules. (v) Domestic industry, as defined in Rule 2(b), does not require that the IPR in the products must reside in India, and that if the IPR is in some other country, the producer would stand excluded from domestic industry. (vi) Designated Authority failed to consider public interest, while making its determination. The levy of impugned duties has adversely impacted the telecom industry in India, the judgement of Rajasthan High Court in the case of JK Industries Vs. Union of India, [2005 (186) ELT 3 (Raj.)] was cited in this regard.
The ld. counsels for M/s. U.T. Starcom supported the contentions of other appellants.
Submissions by Designated Authority
13. Ld. counsel for DA submitted as under:-
(i) The final findings in the said investigations have been passed after following due procedure including observing principles of natural justice. (ii) The final findings are speaking findings. (iii) On the issue of standing of Tejas Network Ltd as eligible domestic industry, he invited attention to para 24 to 27 of the Final Findings dated 10.02.2012. As regards issue that Tejas did not have production facility at Pondicherry during the POI, he submitted that Tejas had procured an invoice showing sale of the product from its Pondicherry facility. Further the factory of the company was visited by team of officers who confirmed that Tejas was carrying out production activities at Pondicherry during the POI. (iv) In para 18, sub-para viii. of the Final Findings dated 10.02.2012, DA clearly recorded that whereas the interested parties have opposed inclusion of parts and components within the scope of the product under consideration and the domestic industry on the contrary has sought inclusion of parts and components on the premise that their exclusion will leave a big scope for circumvention. DA further noted that parts and components used in SDH equipment have multiple usages and do not have a dedicated usage in SDH equipment alone and that the DA, after going into the details of usage of parts and components, was of the view that including parts and components, when imported on a standalone basis was going to put the whole consumer durable industry to hardship. Further, in para 19 of the Final Findings dated 10.02.2012, while defining the scope of the product under consideration, it was clearly recorded However components/ parts imported on a standalone basis are outside the purview of product under consideration. (v) On the issue of the meaning of production, attention was drawn to para 13 of the Final Findings dated 10.02.2012. (vi) On the issue of polling to be carried out in terms of Rule 5 of the Rules, attention was drawn to para 43 of the second final findings.
Submissions of Domestic Industry
14. Ld. advocate for Domestic Industry pleaded/contended as under:-
(i) Tejas Networks Ltd established in the year 2000, is a pioneering telecommunications company which has over 70% of its workforce deployed in R&D. Tejas has won many awards for excellence and innovation. (ii) Apart from Alcatel Lucent, none of the exporters have disputed the fact of dumping, except to say that the scope of the product had not been appropriately defined, or that there was no properly constituted domestic industry. It is a settled legal position, in cases of dumping, duties must be imposed, subject to the existence of injury. (iii) Dumping is quantified as the difference between the export price to India, and the normal value for the product in China or Israel. The dumping margin in the present case, has been computed on an apple to apple comparison. The Authority has devised a Product Control Number (PCN), and compared the normal value, with the export price, for each PCN. On this basis, the Authority has found dumping margins in the range of 5% to 290%. The exports to India were indisputedly dumped. (iv) The definition clause, uses the words, producers, production, manufacture and output. In this context, it is submitted that Tejas is carrying out activities which result, in a substantial transformation of the inputs, into a distinct and different final product. The activities carried out by Tejas can be summarised as under:
(i) Design Cycle
(ii) Proto Cycle / Prototype
(iii) Product Verification
(iv) EMS Services
(v) Assembly , Testing, Loading of Software and Integration
(vi) Post Shipment Support, up gradation and Bug fixes
(vi) R&D is the primary activity and accounts for a substantial share of overall costs. A prototype of the product, containing all hardware and software, is made in India, and tested for the relevant parameters. On achieving the necessary functionality, the software is sent on carrier media to the EMS, in Thailand, where it is loaded on printed circuit boards (population of circuit boards). The populated circuit boards are then assembled with other components in India, and further software loaded. The system after final testing is ready for supply to customer. The aforesaid activities result in substantial transformation and constitute production and manufacture. Only a part of the production activity is outsourced, and substantial activities are carried out by Tejas, and hence it cannot be said that its identity as producer of the finished article is lost on account of outsourcing of certain processes. (vi) As regards, Prithvi and VMCL, no information was provided by them, as to the nature of activities carried out by them after import of the assemblies/SKD/CKD items as is evident from paragraph 72 of the First Final Findings and Paragraph 32 of second Final Findings. (vii) Tejas has imported standalone components from China, which do not constitute product under consideration, such as bare boards, capacitors, connectors, inductors, transformers, trans-receivers, patch cord. These are dual use items, and are not covered by the notification. The exclusion clause of Rule 2(b) is therefore not attracted. (viii) Without prejudice to the above, it is submitted that even if the imports of standalone components from China are considered to be product under consideration, Tejas would not be disqualified as a domestic industry. At all points of time, DA has had the discretion to exclude or not to exclude producers, who are themselves importers of the dumped article. The total imports from China are about 4% of the total cost of production of the like article, and less than 1% of total imports of the subject goods from China into India. The imports being insignificant, and the principal activity of Tejas not being one of import from China, Tejas retains its status as a producer, and the injury can not be said to be self inflicted. In this context, attention was invited to the decision of the Madras High Court, in the case of Nirma Ltd. Vs. Saint Gobain Glass India Ltd. [2012 (281) ELT 231 (Mad.)] and other decisions of the CESTAT referred to later. (ix) It is permissible for the Authority to include within the purview of the PUC, assemblies, sub-assemblies, parts and components, which if not included, would make the levy ineffective because otherwise the exporters could easily circumvent the duty by importing such items and assembling them in India (which is a simple process). In this context, reference was made to the practice in other jurisdictions, such as USA and EU (referred to later). (x) There is no legal requirement that the product under consideration, should be homogenous or alike. In this context, reliance was placed on the WTO Panel Report in the case of EC Farm Salmon from Norway and WTO Panel Report EC Fasteners. (xi) As regards, STM 256, it is submitted that the duty is on the product, and not its types. As long as the product is imported, duty can be imposed on all types of such product, provided it is in commercial competition, with the like article, and can cause injury on its import. In the present case, STM 256 is a higher version of STM 64, and can easily substitute for it, if it is imported at lower prices. The inclusion of STM 256 is therefore justified. In this context, reliance is placed on the decision of CESTAT in the case of Kajaria Ceramics Vs. Designated Authority [2006 (195) ELT 146 (T)]. (xii) There is no conflict, as far as Section 12 and Section 14 of the Customs Act are concerned, with Section 9A of the Customs Tariff Act, 1975. Section 12 is not applicable to anti-dumping, as the levy is under Section 9A of the Tariff Act. Section 14 can be applied for valuation of the article subject to levy that is SDH. (xiii) Designated Authority has devised a PCN system, which enabled determination of the dumping and injury margin, for each part, component, or type separately, to the extent information was made available by the exporters. It is evident that the DA is required to determine injury to the domestic industry engaged in manufacturing like article. Such being the case, injury to the domestic industry is required to be seen in respect of the article under investigation. The Designated Authority is not required to establish injury in respect of individual types of the product under consideration. (xiv) The initiation of the investigations, was based on information made available along with the petition, and was sufficient for a prima facie satisfaction. (xv) There is no ambiguity in the notification. It covers only those parts and components, which are principally designed for SDH equipment. Typically, this would happen, when certain special processes are carried out on them, to make them usable as part / component of SDH equipment. Populated Circuit Boards / Card containing the proprietary software, would be within the scope of levy, only if they are meant for SDH application.
Submissions of Revenue
15. Ld. Departmental Representative appearing on behalf of Revenue supported the findings and the Notification, on the ground that the Designated Authority had examined the issue in depth and passed a speaking order. It was further submitted, that since the issuance of the notification, many cases of circumvention of duties had come to the notice of the Department, where the equipment was imported as parts, or sub-assemblies in CKD or SKD, intended for use as SDH equipment. In many of these cases, the importers had deposited the duties subsequently. It was further pointed out, that survival of the local telecom equipment manufactures was necessary in public interest, since cases of espionage had been detected in India and other countries. As regards inclusion of parts and components, it was submitted that SDH was a technology, and any part or component containing such technology was subject to the levy. He drew distinction between production and manufacture. He stated that R&D required to manufacture a product will be part of the process of production and in that manner, Tejas is rightly held to be Domestic Industry and not others. Revenue also stated that Huaweis presence may be inimical to India and cited news reports/articles in India and other countries.
Discussions & Findings
16. After conclusion of hearings, the parties were to file written submissions by 27.01.2016. We have considered the contentions of all sides raised during the hearing, and elaborated in the written submissions submitted by the due date. We have also perused the judicial pronouncements cited and have duly referred to them wherever required. The issues which arise for our consideration are analysed and discussed below:-
A. Whether the Authority has satisfied itself as to the accuracy and adequacy of the information furnished, for purposes of initiating investigations under Rule 5 of the Anti-Dumping Rules.
17. We find that Rule 5 of the Anti-Dumping Rules, relating to initiation of investigations reads as under:
5. Initiation of investigation. (1) Except as provided in sub-rule (4), the designated authority shall initiate an investigation to determine the existence, degree and effect of any alleged dumping only upon receipt of a written application by or on behalf of the domestic industry.
(2) An application under sub-rule (1) shall be in the form as maybe specified by the designated authority and the application shall be supported by evidence of
(a) dumping
(b) injury, where applicable, and
(c) where applicable, a causal link between such dumped imports and alleged injury.
(3) The designated authority shall not initiate an investigation pursuant to an application made under sub-rule (1) unless
(a) it determines, on the basis of an examination of the degree of support for, or opposition to the application expressed by domestic producers of the like product, that the application has been made by or on behalf of the domestic industry:
Provided that no investigation shall be initiated if domestic producers expressly supporting the application account for less than twenty five per cent of the total production of the like article by the domestic industry, and
(b) it examines the accuracy and adequacy of the evidence provided in the application and satisfies itself that there is sufficient evidence regarding
(i) dumping,
(ii) injury, where applicable; and
(iii) where applicable, a causal link between such dumped imports and the alleged injury, to justify the initiation of an investigation.
Explanation. - For the purpose of 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.
(4) Notwithstanding anything contained in sub-rule (1) the designated authority may initiate an investigation suo moto 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).
(5) The designated authority shall notify the government of the exporting country before proceeding to initiate an investigation. The scope and extent of Rule 5 has been examined in various decisions of the High Courts and CESTAT. In the case of Rajasthan Textile Mills Association Vs. DGAD [2002 (149) ELT 45 (Raj.)], Rajasthan High Court held as under:
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 regard to dumping, injury and causal link. The WTO panel report in the case of Guatemala Grey Portland Cement from Mexico, has observed in para 8.35 as follows:
An anti-dumping investigation is a process where certainty on the existence of all the elements necessary in order to adopt a measure is reached gradually as the investigation moves forward. However, the evidence must be such that an unbiased and objective investigating authority could determine that there was sufficient evidence of dumping within the meaning of Article 2 to justify initiation of an investigation. The Panel dealing with the accuracy and adequacy of evidence observed that if the information supplied in the application is all that reasonably available to the applicant as required by Article 5.2, the investigating authority is justified in initiating the investigation. At the stage of justification of initiation of investigation, the Designated Authority is not required to hold a detailed inquiry but he has to prima facie satisfy as to whether the application is supported by the evidence in relation to dumping, injury and causal link between the dumped import and alleged injury. A reading of the orders of the Designated Authority dated 25-6-2001 and 15-10-2001 individually or collectively clearly shows that the authority has analysed the information and material on record and on being satisfied of adequacy and accuracy of the evidence issued the impugned initiation notification.
The Karnataka High Court in its order dated 04.12.2001 rendered in the case of Madura Coats Limited Vs. Directorate General in W.P. Nos. 41593 to 41596/2001, held that the High Court will normally not disturb the initiation of an investigation, and observed as follows:
The designated authority in its order dated 15-10-2001, commencing from para 50 onwards states, that the applicants have a standing to file an application and further says in its order, that based on the confidential and non-confidential evidence produced before it, the matter requires to be examined. This opinion requires to be framed by the designated authority based on the evidence made available and produced before it by the applicants. This Court normally in exercise of its judicial review would not disturb the opinion of the designated authority or the Central Government. This Court only looks into whether the opinion formed by the designated authority is in consonance with the provisions of the Act and the Rules framed thereunder. This Court also will not interfere with the opinion formed by designated authority or the Central Government unless that opinion is either wholly arbitrary or unreasonable or no reasonable person would come to such a conclusion or if it is in violation of statutory provisions. In my opinion, in the instant case, the designated authority rightly and correctly understanding the scope of Secs. 9A and 9B and also Rule 5(1) to 5(5) of the Rules, has initiated investigation proceedings on the application filed by the domestic industries. In my opinion the designated authority has not committed any error and has not violated any of the statutory provisions, which calls for my interference. The Rajasthan High Court had occasion to consider this issue in the case of Electrolux Kelvinator Vs. UOI, [RLW 2005 (3) Raj 1949] has held as under:
57. I carefully considered rival submissions on this point and examined the judgments referred by the respective parties. Considering the submissions advanced on behalf of the respondents it is not disputed that the petitioner has challenged the initiation notification dated 19.7.2004 and it is also not disputed that the notification dated 19.7.2004 is nothing but mere a show cause notice issued by the Designated Authority to exporters as to why anti-dumping duties should not be levied on their exports of certain compressors originating in or exported from China and Malaysia on the basis that such compressors are being dumped.
58. I carefully considered the judgment of Hon'ble Supreme Court rendered in the case of Dr. Shashank v. Commissioner of Customs (supra) wherein the Hon'ble Supreme Court has held as under:-
"We see no reason to interfere with the order of the High Court which dismissed the writ petition filed challenging the show cause notice that was issued. The High Court should not have entertained the writ petition under Article 226 of the Constitution of India against the show cause notice issued under the Customs Act. The more appropriate remedy for the person aggrieved is to file a reply to the show cause and take recourse to the proceedings available under the Act."
59. The Hon'ble Supreme Court in the case of Union of India v. Polar Marmo Agglomerates (supra) has held that "a High Court should not interfere, in a writ petition, at the stage of the show cause notice to take over a fact finding investigation which is similar to the investigation being conducted by the Designated Authority in the present case. It is also held that the respondents were served with a notice to show cause why the agglomerated marble should not be exigible to excise duty under Tariff heading 68.07. It is further observed that we find that the question involved is a question of fact, "Whether the properties and characteristics of agglomerated marble remain the same as those of excavated marble?" We find that the High Court has gone into questions of fact to resolve this question. The resolution of questions of fact such as this should, we think, be best left to the fact finding authorities constituted under the relevant statue. The High Court should not have interfered, in a writ petition, at the stage of show cause notice to take over that fact finding investigation."
60. The same view has been taken by the Hon'ble Supreme Court in the case of CCE Vs. Charminar (supra) the at the writ petition against the show cause notice is not maintainable.
61. I am fully convinced with the submissions made on behalf of the respondents that it is a mere initiation notification, which is nothing but in the nature of show cause notice.
In the case of Automotive Tyre Manufacturers Association Vs. Designated Authority, [2011 (270) ELT 727 (T)], CESTAT held as under:-
As regards the challenge to the sufficiency of information for initiation of the anti-dumping investigation raised by the appellants, firstly it is rather too late to challenge the initiation when the final findings have been rendered, the same has been accepted by the Government and anti-dumping duty has been notified and further, we were also told during the course of hearing that the changed circumstances review application is pending before the D.A. In any case, as pointed out by the learned Advocate Ms. Reena Khair, initiation of the anti-dumping investigation requires only a prima facie satisfaction of the D.A. regarding dumping, injury and causal link between the two. The nature of evidence required for the purpose of initiation need not be of the same quality and quantity as required for final imposition of the anti-dumping duty. We also find that the D.I. had submitted a detailed petition containing evidence regarding dumping, injury and causal link, a copy of which was submitted to us in the course of hearing and we are satisfied that the D.A. was right in initiating the impugned anti-dumping investigation acting on the petition of the D.I. The evidence regarding normal value furnished on the basis of constructed cost cannot also be faulted with, since the D.I. cannot be expected to have data regarding cost of production of foreign exporters
18. The appellants contended that the initiation of investigation was bad since the authority took no steps for verification of the information / data furnished before it, prior to such initiation and that (i) The reliance on the Letter of CMAI was not justified, for examining standing, as they do not maintain information relating to production of domestic producers. (ii) Voice and Data Magazine was also not dependable as information relating to imports or domestic production could not be located by the appellants in any of the issues of Voice & Data Magazine. The extract provided from the magazine along with the petition was illegible and did not establish that Tejas was a major producer of the dumped article in India. (iiii) There was no legal basis for acceptance of the information in the said magazine, in view of the decision of CESTAT in the case of Dye Stuff Manufacturers Association of India vs. Government of India [2003 (157) ELT 154 (T)].
From the various decisions citied in the preceding para, it is clear that the initiation is to be based on the application filed by the domestic industry. The initiation is in the nature of a show cause notice requiring only a prima-facie satisfaction of DA and no detailed inquiry is required to be carried out at that stage. The initiation is not in the nature of decision but merely a start of an investigation. The certainty on the existence of all the elements necessary to levy a duty is reached gradually as the investigations move forward. The evidence to be furnished for the purposes of initiation is that which is reasonably available to the applicants. The nature of evidence at the stage of initiation need not be of the same quality and quantity as required for final imposition of the Anti-Dumping duty.
We find that the domestic industry submitted a detailed petition containing evidence regarding dumping, injury and causal link, a copy of which was submitted to us in the course of hearing. The petition mentions that there are 4 producers in India:-
(i) Tejas Networks Ltd
(ii) ORDYN Technologies Pvt Ltd
(iii) Measurement and Controls Ltd and
(iv) Bharat Electronics Ltd The share of Tejas during the POI has been given as 84.7%. CMAI (Communication Multimedia and Infrastructure) has given a letter to the Designated Authority stating as under:
While the association does not maintain accurate information, with regard to production or supply by different companies or demand in India. We are confident that production of Tejas Networks Ltd is certainly far more than 50% of Indian production. In fact, in our estimate, production of Tejas Networks can be as high as 75% of Indian Production.
The CMAI is a trade association. Its letter clearly mentions that it does not maintain accurate information with regard to the production of different companies. In our view, the fact that it does not maintain accurate or exact figures of production of each company does not negate the fact that it was well aware that Tejas has a very large share of production in India. As the production details of other producers would be confidential, its letter coupled with the contents of the petition constitutes an adequate basis for purposes of initiation of investigation. Therefore, DA was justified in initiating the investigation. Needless to mention, once the investigations were initiated, opposing parties including other producers had ample opportunity to contest the claim made by Tejas to represent domestic industry having a major proportion in Indian production.
19. As regards the contention that copies of the Voice and Data magazine were not provided to the appellants, we find that these were annexed to the petition itself. We agree with the arguments of the appellants that information contained in trade magazine should normally not form the basis of final determination as regards dumping, injury etc. and such should be made on the basis of the best available information in the record of the Authority including the data provided by the foreign exporters or producers in their responses. At the stage of initiation, however only the applicant domestic industry is before the Designated Authority and requiring the domestic industry to produce the exact facts and figures relating to exporters in a foreign country would be unreasonable at the stage more so because such details are normally in the exclusive knowledge of the foreign parties. The applicant can only be asked to bring before the Authority, evidence as is reasonably available to it for the purpose of initiation of investigation during the course of which other parties would bring all relevant facts before the Authority for making the final determinations. As regards the decision of CESTAT in the case of Dye Stuff Manufacturers Association of India vs. Government of India (supra), the same is distinguishable on facts, since in that case, the journal was used as a basis for determination of normal value in the Final Findings, whereas in the present case, a journal has been used only for prima facie satisfaction, for the purposes of initiation. DA has also dealt with this issue as under in the Second Final Findings:
42.The reasoning of the CESTAT in Dye Stuff Manufacturers Association vs. Designated Authority is not applicable to the present case. In the matter of Dye Stuff Manufacturers Association vs. Designated Authority, the magazine was not periodically reporting the price of Aniline. Instead the magazine had carried an article on Aniline and mentioned the price of Aniline in the market. In the instant case, however, the interested party agreed that Voice and Data magazine regularly mentions the relevant information. Further, the credibility of voice and data magazine gets established if information contained in the journal with regard to operations of Tejas are compared with the actual operations of Tejas.
20. Regarding this issue, the notice of initiation states that the application has been filed by Tejas, who is a major producer of the product in India. It further states that there are four other producers in India, and the petition is supported by Measurement & Controls Ltd, one of the other producers. DA has also determined for the purposes of initiation that (i) products of the applicants constitute a major proportion in Indian production. (ii) Domestic producers expressly supporting the application account for significantly more than 50% of production of the like product produced by the domestic industry. (iii) The application has been made by or on behalf of the domestic industry. It has also satisfied itself as to the criteria of standing in terms of Rule 5 of the Rules.
21. We, therefore, find no infirmity in the initiation of investigations by the Designated Authority based on the Petition filed by Tejas.
B. Whether Tejas is an eligible domestic industry in terms of Rules 2(b) of the Anti-Dumping Rules.
22. The second issue to be decided is Whether Tejas is an eligible domestic industry in terms of Rules 2(b) of the Anti-Dumping Rules. The definition of domestic industry has undergone changes, which has been taken note of by DA in the Final Findings as under:-
43. Prior to 15th July, 1999, Rule 2(b) of the rules read as follows "(b) domestic 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 thereof in which case such producers shall be deemed not to form part of domestic industry.
44. At the time of the initiation of this investigation, Rule 2(b) of the Rules read as follows:- "(b) domestic 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 thereof in which case such producers may be deemed not to form part of domestic industry.
45. However, post initiation, this Rule has been amended as follows: "2(b) domestic 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 thereof in such case the term domestic industry may be construed as referring to the rest of the producers only.
46. Thus, Rule 2(b) of the AD Rules provides that domestic producers which are related to the exporters or importers or which are themselves importers of the allegedly dumped articles may be excluded when determining the domestic industry in certain situations. As the use of the word may in Rule 2(b) suggests, the two types of producers in question, i.e. related producers and producers importing the alleged dumped product, are not automatically excluded from being part of the domestic industry. Rather, it is the consistent practice of the investigating authorities that the exclusion of such producers must be decided on a case-by case basis, on reasonable and equitable grounds, and by taking into consideration all the legal and economic aspects involved.
It has been argued that Tejas is not a producer of the subject goods. The activities carried out by Tejas can be summarized as under:-
(i) Design Cycle
(ii) Proto Cycle
(iii) Product Verification
(iv) EMS Services
(v) Assembly , Testing, Loading of Software and Integration
(vi) Post Shipment Support, up gradation and Bug fixes A detailed description of these activities was submitted by Tajas to Designated Authority as under:-
(i) The products are designed based on customer inputs for their new projects and expansion plans as per Technology Roadmap of the Company.
Following process flow outlines the brief Design & Development Process.
(a) Design Cycle(In-House in Bangalore India )
(i) Marketing Requirement Document (MRD) is prepared by the Marketing/Technical Department. This document captures all the feature sets and technology enhancements required by the products based on market intelligence, customer requirements.
(ii) The MRD is studied in detail and is converted into a Product Requirements Document (PRD) and Software Requirement Document (SRD) by Engineering Teams. These documents very clearly specify the interfaces and feature sets available in the products.
(iii) After review and approval, Engineering Teams comprising of Hardware and Software Teams are assigned for Design & Development of the Product proto-type. Design & Development at Tejas is done by a core team of R&D Engineers.
(iv) The R&D teams influence the component vendors to design the ICs also as per Tejas requirements.
The R & D for development of SDH Technology Software has been carried out in India, by Tejas. The IPR for such technology resides in India.
(b) Proto Cycle(In-House in Bangalore India):
The product proto-type is developed in-house in Bangalore Facility Lab.
(i) Hardware team designs high speed boards by procuring ICs, semi-conductors from manufacturers and develops it for simulation and proto testing for its validation and thus making the hardware ready.
(ii) Programmable device logic implementation (FPGA/CPLD) team implements all the SDH/SONET/ telecom functionality on the hardware platform. This team does logic implementation using hardware descriptive language and does design, coding, testing, simulation of the same.
(iii) Embedded Software team does designing, coding, simulation, target testing, and regression of node software which is the integral part of the equipment for its functioning as various features offered in the products are captured here.
(iv) Mechanical team does Mechanical design, development, simulation and proto testing of the products and modules.
(v) Manufacturing team designs, develops the software, test-jigs used to test the product during mass production.
(vi) Network Management System team does designing, coding, simulation, testing, regression of Element management system software (EMS) and Network management system software (NMS) which is used for managing SDH equipment centrally from a single terminal through Point and Click Provisioning by Graphical User Interface.
A prototype of the SDH Equipment is produced in India, containing all required hardware and software.
(c) Product Verification (In-House in Bangalore India) A core team of Product Verification personnel test both the Hardware and Software on the Product and after testing, approve the Product for final release for manufacturing and availability to Customer.
(d) EMS Services in India and Abroad:
Once the prototype is developed and thoroughly tested in Tejas Labs in India, Tejas uses services of EMS for large scale manufacturing. Tejas uses both Indian and Global EMS depending upon the delivery terms and conditions of the customers without compromising on the quality of the equipment. These EMS are mere job processors who execute the assembly line instructions given by Tejas.
Tejas shares the design, specification and issues assembly line instructions with EMS. The software is provided to the EMS on carrier media. Tejas has overall say in deciding the electronic component vendors for EMS and also controls supplies of components to EMS. Tejas controls the overall assembly line operations by deputing dedicated program managers at the EMS locations.
EMS after processing supplies PCBs meeting the Tejas instructions.
(e) Assembly , Testing, Loading of Software and Integration (In house in Bangalore and Pondicherry , India) :
After Processing, EMS ships raw components like PCBs to Tejas Production facility in Bangalore and Pondicherry. Tejas facility also receives other parts such as mechanical chassis, racks and cables from other suppliers in India. Again, components like Chassis, racks are supplied by various vendors as per Tejas design and specifications.
(i) At the Tejas manufacturing facility in India, these PCBAs and mechanicals are assembled into boxes as per requirement of the purchase order.
(ii) After assembly operation of a box is over, Node Software is installed into boxes which enables it to function as SDH/SONET equipment. An equipment without software is like a scrap and cannot be used as an SDH box. The software is developed by Tejas in India, this software is an essential element without which a SDH equipment cannot function as software contains all the stacks for different protocols.
(iii) SDH equipment after installation of Nodal software are tested and qualified by Testing and Qualification teams using the product verification software developed by Tejas in India.
(iv) Network management system is tested for all these products and modules to deliver FCAPS (Fault Management, Configuration Management, Administration Management, Performance management and Security Management) at Network layer centrally in India.
(v) After completion of Testing, the boxes are packed and shipped to respective locations as specified by the Customer from India.
(vi) On occasions, customers also visits the Tejas manufacturing facility for the testing and Acceptance of the boxes at the manufacturing facility in India.
(f) Post Shipment Support, upgradation and Bug fixes Process (In-House in Bangalore and other customer support centers in India):
Tejas as part of its process has made all efforts to provide full and comprehensive post shipment support to the Customers from India.
23. The above process flow clearly shows that substantial activities are being carried out by Tejas or by job workers on its behalf both in India and outside India. SDH is a technology product where the value arises on account of the knowhow contained in the product. This is evident from the fact that more than 70% of the cost is on account of Research, Design and Development expenses. Tejas has developed the knowhow and technology for the product in India. Based on the knowhow and technology a prototype is prepared. This prototype contains all the necessary hardware and software for SDH equipment. The prototype is tested having regard to the requirement of the customer. In order to make SDH equipment in large numbers the services of job workers are utilized in India as well as abroad. Tejas provides the software to the job workers on carrier media. It also shares the designs, specifications and assembly line instruction with them. After processing the various items are assembled at Tejas factory in Pondicherry and Bangalore. Further software is installed in the boxes so as to enable it to function as a SDH/SONET equipment. We find that the predominant activity is carried out by Tejas and is, therefore, a producer of SDH equipment. About 70% of the total cost of production of the equipment for Tejas is research and development, or cost of development of software, and about 30% is hardware cost. Of the total components used by Tejas, near about 65% are imported. The populated circuit board (containing Tejas software), imported from Thailand, where it is sent for mass production, is the main item of import. The activities carried out by the job worker in Thailand, are only a part of the processes involved in the production of SDH equipment and do not take out Tejas from the category of producer. Relying on the decision of Madras High Court in the case of Tejas Networks Vs. Commissioner (supra), it has been argued by the exporters that there was no manufacturing facility in Pondicherry. However, the said decision of Madras High Court does not relate to the Period of Investigation. We find that the factory of Tejas was duly visited to verify the factual position as it existed during the Period of Investigation. Further, Domestic Industry is defined in Rule 2 of the Rules as under:-
2(b) domestic 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 thereof in which case such producers may be deemed not to form part of domestic industry. As is evident from the above definition, the word producer has connotation wider than a mere manufacturer and includes even those engaged in any connected activity. Therefore, as argued by ld. Departmental Representative with the substantial activities undertaken by Tejas, it is clearly covered within the scope of producer.
24. The second requirement under Rule 2(b) of the Anti-Dumping Rules is that the applicant must have a major proportion in the Indian production. CESTAT, in its judgement in the case of Lubrizol India Pvt. Ltd. Vs. Designated Authority [2005(187) ELT 402 (Tri Del)], has dealt with the term major proportion as under:
15.1 We may? note here that the words major proportion of the total production in Rule 2(b) defining the domestic industry are also capable of being construed so as to mean significant proportion or important part of the total production which may not necessarily exceed 50%. The word major, as per the Oxford Dictionary, means important, serious or significant. The word proportion, in the context, would mean share. Therefore, the expression major proportion would, in the context, of total production of domestic industry, mean significant or important share. Such an interpretation is clearly permissible and going by it, the share of the petitioner in the total domestic production, being more than 31%, was undoubtedly a significant or important share i.e. a major proportion thereof. The words major proportion of total domestic production cannot be viewed from the angle of solving a mathematical sum involving comparative measurements or size of different parts of a whole. The phrase is used in the context of the production output of domestic producers and admits of a broad interpretation so as to take in its sweep collective output that constitutes a significant or important share of the total domestic production of the article by the producers engaged in the manufacture or engaged in any activity connected with the manufacture of such article, as contemplated by Rule 2(b). We find that no party other than Prithvi and VMCL came forward to claim the status of domestic producer but no information was provided as to the nature of activities carried out by them after import of the assemblies/SKD/CKD items from the subject countries. Relevant extracts from the first and second Final Findings in this regard, are reproduced below:
Extract from First Final Findings Response to the Communication Dated 20th July, 2010 . . .. .
The Authority holds that the onus, under the AD Rules, is on the interested parties to provide relevant information with supportive verifiable evidence for consideration by the Authority. The Rules do not either prescribe or bind the Authority to seek inputs / information from any interested party towards later part of the proceedings, so long as the Authority has received relevant information and has provided sufficient time to the parties. The communication dated 20th July was sent to both the above named importers as another opportunity to give them yet another chance to substantiate their claim. Instead of providing the same, they have repeated their earlier submissions without providing any information / evidence to support their claim. While Prithvi has claimed that they are manufacturers of DWDM, (Non-PUC Product), VMCL has claimed to be manufacturers of PUC, once again, without providing any verifiable information on the activities carried out by them supported by the details about their workforce, balance sheet, inputs, R&D etc. Both of them have also not provided any information on imports made by them although an importers questionnaire should have been filed by them (Questionnaire is available on the official website of Department of Commerce). Further they have admitted having imported components but have been silent on the issue of complete equipment as well, which came to the notice of the Authority during the verification of data of one of the responding exporters from China PR. To sum up, apart from seeking extension in time to file a response to the information sought by the Authority, which was allowed by the Authority, nothing of substance was provided to the Authority except repetition of what had been stated by them earlier from time to time. The Authority holds that all the issues raised by them earlier and repeated in their submissions dated 6th August have already been addressed in the paragraphs here-in before and need not be repeated. Extract of Second Final Findings 32. It has been alleged that although there are a number of other manufacturers, Tejas has been considered to have the necessary standing of constituting a major proportion of the total domestic production within the scope of Rule 2(b) of the AD Rules. In this context, the Authority notes that initially, after the initiation of investigation, apart from Prithvi and VMCL, no other so called manufacturer, as highlighted by both Prithvi and VMCL in their submissions, has come forward to claim the status of being a domestic manufacturer. Even Prithvi and VMCL, barring a claim to this effect in a narrative form, never provided any verifiable information about their manufacturing activities. Prithvi / VMCL have not filed questionnaire response in the form and manner prescribed, either as a domestic producer or an importer of the product under consideration. Even when the Authority specifically advised these companies to provide information in the form and manner prescribed, these interested parties have preferred not to provide relevant information. Even otherwise they never furnished any details / data about their set up except the claim that they are manufacturers as they also pay excise duty. Mere payment of excise duty cannot amount to give the status of a manufacturer for the present purpose, as already stated herein before. The Authority notes that these two companies have preferred non-cooperation within the meaning of Rule 6(8). The Authority holds that while it is open for an interested party to advance its argument, it is obligatory on the part of such interested party to provide such information as is requested by the Authority and offer itself for verification, if desired by the Authority. The entire exercise undertaken in the instant case in ascertaining actual status of these entities would have been significantly smoothened, had these interested parties provided relevant information demanded by the Authority and offered themselves to spot verification. In view of conscious non-cooperation preferred by these interested parties, the Authority has been constrained to rely upon available material in this regard. Thus, the claim of VMCL and Prithvi that they are domestic producers was based exclusively on the fact that they were paying duties of excise on their products. However, excise duty can be paid by a person under mistaken belief that it was a manufacturer. Also, in the Central Excise Act, 1944, there are several deeming fictions to treat certain operations as manufacture even if those operations may not amount to manufacture (but for such legal fictions). For example, Note 6 to Section XVI, covering products of Chapter 84 and 85 of the Tariff, reads as under:
In respect of goods covered by this Section, conversion of an article which is incomplete or unfinished but having the essential character of the complete or finished article (including blank, that is an article, not ready for direct use, having the approximate shape or outline of the finished article or part, and which can only be used, other than in exceptional cases, for completion into a finished article or a part), into complete or finished article shall amount to manufacture. Thus, mere fact of payment of excise duty would not entitle Prithvi and VMCL to sustain their claim for grant of status as domestic producer. No material was furnished by them to demonstrate the nature of activities carried out by them. They neither filed importer response nor domestic industry response in the prescribed format. They also did not respond to the specific request of DA for information in this regard. In these circumstances, Designated Authority cannot be faulted for not treating Prithvi and VMCL as domestic producers.
25. It was also argued by the appellants that Tejas being an importer of subject goods from China was excluded from the purview of domestic industry. While the domestic industry contended that it had not imported subject goods from China, even if such imports had been made, DA had the discretion to include or exclude a producer, who is also an importer of subject goods, from domestic industry. DA has given a categorical finding on facts that Tejas had not imported subject goods from the subject country that is China. No material has been brought on record before us to dislodge this finding. The appellants have relied upon the US ITC Findings in the case of DRAMs from Taiwan. In that case, some producers were only making designs and had no fabrication facility in the USA. They were getting the fabrication done entirely in Taiwan (subject country) and importing the products into the USA. Thus, the said decision is clearly distinguishable on facts as Tejas was also carrying out production/fabrication activity in India and was not importing SDH equipment from China and was getting a part of the activity done on job work basis in Thailand which is not the subject country of investigation. That apart, during the relevant period, DA had the discretion to consider Tejas as eligible domestic industry, as held by the Madras High Court in the case of Nirma Ltd. Vs. Saint Gobain Glass India Ltd.(supra). The relevant paragraphs of the said judgement are extracted below:-
56. ?A contrary interpretation taken by the learned Judge in the impugned order in this regard, in our considered view, is not only incorrect, but also against the very aim of the Rule, which is intended to prevent anti-dumping to this country, in order to avoid competition in the internal market by the foreign importers who dump their goods for a lesser price, which will certainly paralyze the economy of the country in the course of time. In fact, the basis for international agreement is to have economic sovereignty of the member countries. While so, the restrictive interpretation given by the learned Judge taking away the discretionary power of the Designated Authority cannot be said to be in accordance with Section 9A of the Act as well as the various provisions of the Rules.
57. ?While it is true that the international agreements like WTO and GATT may not be the absolute and only source for interpreting the Indian Law, so long as there is no contradiction between the definition of the agreement in the international law and the terms of the Indian Law, there is absolutely no prohibition for this Court to take note of the terms of the international agreements for the purpose of better appreciation of the term.
58.?We, therefore, hold that the term domestic industry, as it was amended on 27-2-2010, has not taken away the discretionary power of the Designated Authority and the Designated Authority is entitled to proceed further. The Calcutta High Court in the case of State of Gujarat Fertiliser & Chem. Ltd. Vs. Addl. Secretary & D. A., [2012 (286) ELT 348 (Cal.)] held as under: -
13. ?Bearing aforesaid legal position it is incumbent for this Court to see what could be real and rational object for employing the definition of domestic industry and this could be gathered upon reading the object of the said Rule. The Supreme Court has explained why the aforesaid rule has been framed by the legislature. In case of Reliance Industries Ltd. v. Designated Authority and Others reported in (2006) 10 SCC 368 = 2006 (202) E.L.T. 23 (S.C.) in paragraph 48 it is clearly mentioned the object of framing this Rule. We cannot do better than to reproduce the paragraph 48 of the said report:-
The anti-dumping law is, therefore, a salutary measure which prevents destruction of our industries which were built up after independence under the guidance of our patriotic, modern-minded leaders at that time and it is the task of everyone today to see to it that there is further rapid industrialisation in our country, to make India a modern, powerful, highly industrialised nation.
14. ?Thus it is very clear that the definition of the importer as mentioned in Rule 2(b) has to be understood in the context of protecting indigenous industry producing same material. Here we notice on fact of course going by the statement made in the complaint of the appellant made to the appropriate authority that nearly 15% of its total production is imported by it and that too casually and to meet customers demand during the time when the production was disrupted, and this quantity of import is very insignificant portion of the total import from the same exporting countries. According to us realistic and logical meaning should be the person who is carrying on business of import exclusively for trading purpose is the importer under the said Rule. We have examined the object clause of the Memorandum of Association of the appellant and nowhere we find that it carries on business principally, of import of Melamine. We therefore do not find any merit in the contention that Tejas is excluded from the category of domestic producer of subject goods in India in terms of Rule 2(b) of Anti-Dumping Rules.
C. Whether the Product under Consideration (PUC) is properly defined, having regard to the statute.
26. The appellants have contended that (i) STM1, STM4, STM16, STM64, and STM256 are separate and distinct products, and can not be treated as a single product. By including within the PUC, different products, the Authority has erroneously determined the standing of domestic industry, dumping and injury. (ii) Separate investigations ought to have been initiated, and the clubbing of different items in one investigation has resulted in erroneous determinations. It was pointed out that in Section 9A ibid, and the Rules made thereunder, the expression used is an article. Ld. advocate for domestic industry on the other hand argued that all the equipment operate on SDH technology, and the equipment of higher numbers are having greater capacity and speed of transmission of voice and data signals. Therefore, grouping of SDH equipment of different configurations / capacities is appropriate and permissible under the Act and the international agreements.
27. Before dealing with the arguments and counter arguments, we note that the Supreme Court, in its recent decision in the case of G M Exports [2015 (324) ELT 209 (SC)] elucidating the broad principles of interpretation of a statute made to enforce a treaty obligation, held as under:
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 international treaty, and a statute is passed pursuant to the said treaty, it is a legitimate aid to the construction of the provisions of such statute that are vague or ambiguous to have recourse to the terms of the treaty to resolve such ambiguity in favour of a meaning that is consistent with the provisions of the treaty.
(3) ?In a situation where India is a signatory nation to an international treaty, and a statute is made in furtherance of such treaty, a purposive rather than a narrow literal construction of such statute is preferred. The interpretation of such a statute should be construed on broad principles of general acceptance rather than earlier domestic precedents, being intended to carry out treaty obligations, and not to be inconsistent with them.
(4)?In a situation in which India is a signatory nation to an international treaty, and a statute is made to enforce a treaty obligation, and if there be any difference between the language of such statute and a corresponding provision of the treaty, the statutory language should be construed in the same sense as that of the treaty. This is for the reason that in such cases what is sought to be achieved by the international treaty is a uniform international code of law which is to be applied by the courts of all the signatory nations in a manner that leads to the same result in all the signatory nations. In the light of the above observations of the Supreme Court, we note that Section 9Aof the Act is to be construed in the same sense as that of the treaty regarding anti-dumping measures. Ld. counsel for domestic industry referred to the WTO Panel Report in the case of EC- Farmed Salmon from Norway, relevant paras of which are quoted below:-
7.44 In essence, Norway's claims under Articles 2.1 and 2.6 of the AD Agreement are premised on two contentions: First, that these provisions establish an obligation on investigating authorities to ensure that where the goods being investigated comprise groups or categories of goods, all such groups or categories must individually be "like" each other, thereby constituting a single homogenous "product under consideration"; and second, that the facts that were before the investigating authority during the investigation in dispute show that the "product under consideration" investigated by the EC was made up of a broad range of goods that do not constitute a single homogenous "product" because they were not all "like" each other.
7.45 According to Norway, the obligation to ensure that all categories making up the product under consideration are "like" each other follows "as a logical consequence" from what it argues is a requirement under Articles 2.1 and 2.6 for investigating authorities to ensure that any product category making up the "like product" must be individually "like" each and every separate product category making up the product under consideration. Thus, a threshold question for us is whether Norway's premise, that Articles 2.1 and 2.6 require all product categories making up the "like product" to be each individually "like" each and every separate product category making up the product under consideration, is correct. If it is not, then Norway's legal argument is incorrect, and we need not consider its contentions regarding the facts of this case.
. . . .
7.47 Beyond stating that the language of Article 2.1 reveals that a determination of dumping can only be made through a comparison of "the prices of an exported product referred to as the 'product under consideration' and a 'like product'", Norway provides no analysis of the text of this provision. Moreover, Norway identifies no explicit obligation in the text of Article 2.1 to support its claim that the "product under consideration" must consist of a single, internally homogeneous, product or, alternatively, categories that are each individually "like" each other so as to constitute a single homogenous product.
7.48 We agree that Article 2.1 refers to "a product" as being dumped, but cannot agree that there is any obligation concerning the scope of that product in that provision. There is simply nothing in the text of Article 2.1 that provides any guidance whatsoever as to what the parameters of that product should be. The mere fact that a dumping determination is ultimately made with respect to "a product" says nothing about the scope of the relevant product. There is certainly nothing in the text of Article 2.1 that can be understood to require the type of internal consistency posited by Norway.
7.49 At the same time, other provisions of the AD Agreement, relevant as context, suggest that whatever the parameters of "a product" in Article 2.1 may be, the concept is not so limited as Norway argues. For instance, Article 6.10 provides for limited examination in cases where the number of "types of products involved" is so large as to make it impracticable to determine an individual margin of dumping. Similarly, the Appellate Body has recognized that an investigating authority may divide a product into groups or categories of comparable goods for purposes of comparison of normal value and export price the practice of "multiple averaging". Neither of these would be necessary if Norway's view of the meaning of "a product" in Article 2.1 were the only permissible interpretation. There would be no possibility of investigating more than one "type of product" as mentioned in Article 6.10, and no reason to group comparable goods for purposes of making price comparisons for each group in the process of calculating a single dumping margin for the product as a whole. These considerations lead us to conclude that, while Article 2.1 establishes that a dumping determination is to be made for a single product under consideration, there is no guidance for determining the parameters of that product, and certainly no requirement of internal homogeneity of that product, in that Article.
. . . . .
7.53 In our view, even assuming Article 2.6 requires an assessment of likeness with respect to the product under consideration "as a whole" in determining like product, an issue which is not before us and which we do not address, this would not mean that an assessment of "likeness" between categories of goods comprising the product under consideration is required to delineate the scope of the product under consideration. Merely to say that the product under consideration must be treated "as a whole" in addressing the question of like product does not entail the conclusion that the product under consideration must itself be an internally homogenous product. We can see nothing in the paragraph from the Appellate Body Report in US Softwood Lumber V, relied upon by Norway, which would indicate otherwise. Treating the product under consideration "as a whole" means that a single dumping margin is calculated for that product, however defined, but says nothing about the scope of that product.
. . . .
7.56 Norway's position would, in our view, require that any difference between sub-categories, or even individual goods, within a product under consideration would mean that each must be treated individually. As noted, Article 2.6 first refers to whether goods are identical in assessing likeness. Since every article is identical to itself, each such article would have to be considered separately. There would never be occasion to move on to consideration of whether another article has "characteristics closely resembling" it. Thus, a product under consideration could not consist of any grouping of non-identical product categories. This would, in our view, be an absurd result. Norway ignores the concept of "identical" products, arguing that an investigating authority should determine, based on a series of criteria, whether products "resemble one another physically" in determining an appropriate product under consideration. Such an assessment of whether products resemble one another is only permitted, however, in the absence of identity under Article 2.6. Moreover, the possibility of treating non-identical goods as like products to an imported product under consideration makes sense, as it is entirely possible that, for instance, the products manufactured in the importing country are not identical to the imported product under consideration. In such a case, if the AD Agreement did not allow the possibility of treating another, non-identical product, as the like product, there would be no basis for investigation and imposition of anti-dumping duties. But this consideration simply does not arise in the context of delineating the product under consideration, which is necessarily identical to itself.
7.57 We note that, on its face, Article 2.6 does not apply to the question of "determining" a product under consideration at all. Norway asserts that, in order to make a determination of dumping, an investigating authority must make a determination with respect to each of the constituent elements of dumping, including, inter alia, product under consideration. Norway does not argue that there is a specific direction to "determine" product under consideration in the AD Agreement, but asserts that there must be an active step of making a finding. Norway further asserts that specific criteria govern this determination, although, again, there is no specific identification of any relevant criteria in the AD Agreement. While it seems self-evident to us that an investigating authority must, at the time it initiates an anti-dumping investigation, make a decision as to the scope of that investigation, and give notice of the "product involved", we are not persuaded that either Article 2.1 or Article 2.6 of the AD Agreement establish a requirement for making an elaborated determination in that regard.
7.58 Essentially, Norway's argument raises an issue of policy, suggesting that the absence of limits on the scope of the product under consideration might result in erroneous dumping determinations by investigating authorities. Norway argues that, if products that are not "like" are treated as the product under consideration in a single investigation, a dumping determination cannot reveal whether some or all of those products are dumped. Norway gives, as an example, in investigation in which cars and bicycles are treated as one product under investigation. We are not persuaded by Norway's extreme example. Any grouping of products into a single product under consideration will have repercussions throughout the investigation, and the broader such a grouping is, the more serious those repercussions might be, complicating the investigating authority's task of collecting and evaluating relevant information and making determinations consistent with the AD Agreement. Thus, it seems to us that the possibility of an erroneous determination of dumping based on an overly broad product under consideration is remote. That possibility is certainly not enough to persuade us to read obligations into the AD Agreement for which we can find no basis in the text of the Agreement.
7.59 Moreover, Norway's position would result in the absurd situation of requiring fragmentation of the product under consideration, and a consequent fragmentation of the like product, and ultimately the domestic industry, which would render the possibility of imposing dumping duties consistent with the AD Agreement a nullity. We see nothing in Article 2.6, which as discussed, defines "like product", which would support this view. In this regard, it is noteworthy that, while the AD Agreement specifically defines "like product" by requiring a comparison between domestically produced (or foreign) goods and the imported products that are the subject of the investigation, there is no specific definition of "product under consideration". In our view, the very fact that there is a definition of like product in the AD Agreement indicates that Members were well able to define terms carefully and precisely when considered necessary. The absence of a definition of product under consideration indicates that no effort was undertaken in that regard. In our view, this consideration supports the conclusion that it would be absurd to impose the definition of like product from Article 2.6 onto the undefined term product under consideration. We simply see no basis in the text of Articles 2.1 and 2.6 for the obligations Norway seeks to impose on investigating authorities with respect to product under consideration.
7.60 Norway makes a number of additional contextual arguments in support of its interpretation of Article 2.6, none of which persuade us to change our views based on the text. Norway argues that the first comparison methodology for calculating the margin of dumping set out in Article 2.4.2 (weighted average normal value to weighted average export price) confirms that "the group of products under investigation must all be alike". According to Norway, while it is possible under this methodology to sub-divide the product under consideration into segments for the purpose of making the comparison (i.e., "multiple averaging"), all such segments must belong to a group of products meeting the definition of likeness, citing in this respect, a statement by the Appellate Body in EC Bed Linen . . . .
7.64 Article 3.6 is a provision about what information an investigating authority may evaluate in considering the effects of dumped imports for the purpose of determining injury to a domestic industry.244 It simply has no bearing on the question of product under consideration. Article 3.6 addresses a particular question about the data to be considered in an investigating authority's inquiry into the effects of dumping. This happens, in every investigation, after the product under consideration has been defined, the domestic like product has been determined pursuant to Article 2.6, and the relevant domestic industry has been determined pursuant to Article 4.1, which defines "domestic industry" for the purposes of the AD Agreement. Article 4.1 makes clear that the starting point for the identification of the domestic industry is the "like product". Norway's argument, on the other hand, would entail a consideration of the production activities of the domestic industry in the definition of the like product, and of the product under consideration, introducing a circularity into the analysis which is untenable. Thus, we consider, Norway's reliance on Article 3.6 to be misplaced and unpersuasive.
. . . . .
7.70 The most significant discussion of the issue of product under consideration was in the US Softwood Lumber V dispute, which involved facts and arguments very similar to those in the case at hand. In the underlying investigation, the US Department of Commerce (USDOC) had identified the "product under consideration" as all "softwood lumber, flooring and siding (softwood lumber products)", comprising numerous types of softwood lumber products, including certain products (bed frame components, finger-jointed flange stock, Eastern White Pine and Western Red Cedar) that Canada argued should have been excluded from the investigation. The "like product" identified by the USDOC for purposes of the dumping determination was described in exactly the same terms as the "product under consideration" - all "softwood lumber, flooring and siding (softwood lumber products)". Thus, the product under consideration and the "like product" both included a variety of product types, but exactly the same product types in each case, as is true in the case at hand. There is no dispute in this case that the like products (Norwegian farmed salmon and EC farmed salmon) are coextensive with the product identified by the EC as the product under consideration, farmed salmon.
A similar view has been taken in the WTO Panel Report in the case of EC Fasteners, the relevant portion of which is reproduced below: -
7.259 To recall briefly the relevant facts, in this case, the Commission defined the "product concerned" in the investigation, as: "certain iron or steel fasteners, other than of stainless steel, i.e. wood screws (excluding coach screws), self-tapping screws, other screws and bolts with heads (whether or not with their nuts or washers, but excluding screws turned from bars, rods, profiles or wire, of solid section, of a shank thickness not exceeding 6 mm and excluding screws and bolts for fixing railway track construction material), and washers, originating in the People's Republic of China (all together hereinafter referred to as fasteners or product concerned). The product concerned is normally declared within CN codes 7318 12 90, 7318 14 91, 7318 14 99, 7318 15 59, 7318 15 69, 7318 15 81, 7318 15 89, ex 7318 15 90, ex 7318 21 00 and ex 7318 22 00. Fasteners are used to mechanically join two or more elements in construction, engineering, etc., and are used in a wide variety of industrial sectors, as well as by consumers. Based on their basic physical and technical characteristics and end uses, all fasteners are considered to constitute a single product for the purpose of the proceeding. Within the same national or international standards, fasteners should comply with the same basic physical and technical characteristics including notably strength, tolerance, finishing and coating. The Commission went on to consider, and reject, arguments by the parties, concerning the scope of the product under consideration.
7.263 Beyond noting that Article 2.1 requires that the comparison that must be made to determine whether there is dumping must be carried out between the export price of a product and the price for the "like product ... in the exporting country", China does not address this provision in its arguments. We agree that Article 2.1 refers to "a product" as being dumped, but cannot see that it establishes any specific obligation concerning the scope of that product. Nothing in the text of Article 2.1 provides any guidance as to what the parameters of "a product" with respect to which a determination of dumping is made should be. The mere fact that a dumping determination is ultimately made with respect to "a product" says nothing about the scope of that product. There is certainly nothing in the text of Article 2.1 that can be understood to require any consideration of "likeness" in the scope of the exported product investigated, contrary to China's argument 7.267 It is clear to us that the subject of Article 2.6 is not the scope of the product that is the subject of an anti-dumping investigation at all. Rather, the purpose of Article 2.6, apparent from its plain language, is to define the term "like product" for purposes of the AD Agreement. The plain language of Article 2.6 calls for an assessment of "likeness" between some group of goods and "the product under consideration" in order to identify a "like product". Thus, logically, the scope of the "product under consideration" referred to in Article 2.6 must already be known before the provisions of Article 2.6 regarding "likeness" come into play. That is, it must be known what the comparator is, before any comparison can be made to assess whether another product is "identical" to or, in the absence of an identical product, "has characteristics closely resembling those of", the imported "product under consideration". China's position would, in our view, require that any difference between categories of goods, and potentially even between individual goods, within a product under consideration would require that each such category or individual good be treated individually, as a separate product under consideration. This would be problematic, as, given that a "domestic industry" for purposes of the AD Agreement is defined as producers of a like product, such a fragmented product under consideration, and correspondingly fragmented like products, would result in the definition of, and determination of injury to, multiple, narrowly defined "industries" which may bear little if any resemblance to the economic realities of the production of those goods in the importing country.
.
7.269 Essentially, China's argument raises an issue of policy, suggesting that the absence of limits on the scope of the product under consideration might result in erroneous dumping determinations by investigating authorities. China argues that, if products that are not "like" are treated as the product under consideration in a single investigation, a dumping determination would not reflect a comparison between a product's export price and the domestic price of its like product. China gives, as an example, an investigation in which apples and tomatoes are treated as one product under investigation. China argues that the investigating authority could compare the prices of the apples and find they are dumped, and could compare the prices of the tomatoes and find they are not dumped, but an anti-dumping duty would nonetheless be imposed on both apples and tomatoes, which would be an unfair result.
.
7.271 Moreover, we consider it noteworthy that, while the AD Agreement specifically defines "like product" by requiring a comparison between domestically-produced or foreign goods and the imported goods that are the product under consideration, there is no specific definition of "product under consideration". In our view, the very fact that there is a definition of like product in the AD Agreement indicates that Members were well able to define terms carefully and precisely when they considered it necessary. Their failure to provide any definition of product under consideration, much less to require that the scope of that product be determined on the basis of the concept of likeness set out in Article 2.6, indicates that they did not intend to do so. This implies to us that the Members intended to allow investigating authorities wide discretion to determine a product under consideration.574 In our view, this supports the conclusion that it would be absurd to impose the definition of like product from Article 2.6 onto the undefined term product under consideration. We simply see no basis in the text of Articles 2.1 and 2.6 of the AD Agreement for the obligation China seeks to impose on investigating authorities with respect to product under consideration.
7.272 Thus, we conclude that, contrary to China's claim, Articles 2.1 and 2.6 of the AD Agreement do not establish an obligation on investigating authorities to ensure that the product under consideration include only "like" products. We therefore do not consider it necessary to address China's arguments concerning the facts. Whether standard and special fasteners are or are not "like" each other within the meaning of Article 2.6 is not a relevant question with respect to the product under consideration, in light of our decision on the interpretation of Articles 2.1 and 2.6.
.
7.278 Based on the foregoing, and in the light of standard set out in Article 17.6(i) of the AD Agreement, we do not accept China's view that Articles 2.1 and 2.6 must be interpreted to require the European Union to have defined the product under consideration to include only products that are "like". As a consequence, we dismiss China's claim that the product under consideration identified by the European Union was inconsistent with the requirements of Articles 2.1 and 2.6 of the AD Agreement. The above WTO Panel reports make it amply clear that it is not necessary that all types covered by PUC must be alike to each other or even necessarily constitute a homogenous group. In the present case, the various STMs, are all having SDH technology and are upgradations of the models having lower numerical value. They are different types of SDH Equipment, which is the product under consideration. Thus, in our view, the determination of product scope by Designated Authority is sustainable. Regarding the contention that the scope of PUC has been altered during the course of investigations, Designated Authority is required to come to a final determination only after consideration of the contentions of all interested parties and in the process, the scope of PUC may get altered but that would not vitiate the proceedings so long as the principles of natural justice are complied with in respect of the interested parties which has been done in this case.
28. As regards the parts and components, it is contended by the appellants that there is no domestic industry for the part and components, and hence no duty can be imposed on their import. Ld. advocate for the domestic industry contended that (i) the course of production of SDH Equipment by Tejas, various parts, components and sub-assemblies come into existence. Tejas is a producer of all the items, which arise in the manufacturing process, even though these items are not produced for sale, but for captive consumption. (ii) DA has devised a PCN system, which enables determination of the dumping and injury margin, for each part, component, or type separately, to the extent information has been made available by the exporters. (iii) As regards injury to the domestic industry, Rule 2(b), 11 and Annexure II of the Anti-dumping Rules and WTO decisions were referred to. (iv) It is evident that the Designated Authority is required to determine injury to the domestic industry engaged in manufacturing like article. Such being the case, injury to the domestic industry is required to be seen in respect of the article under investigation.
29. In our view it is permissible for the Authority to include within the purview of the PUC, parts and components, which if not included, would make the levy ineffective. The coverage of the product for levy of duty should be such that the purpose and intent of the levy is achieved. Anti-dumping duty is levied to safeguard the domestic producers from ill effects of dumping. If the parts and components meant for SDH application are excluded, the importers could simply bring the items in different consignments, in unassembled form, and assemble the same in India and defeat the levy. Indeed, including parts and components is consistent with the global practice of defining the PUC in a manner so as to prevent avoidance or circumvention of the levy by the exporters as is evident from the USITC decisions cited by ld. advocate for domestic industry and reproduced below:-
(a) Certain Tow-Behind Lawn Groomers and Parts Thereof from China Commerce has defined the imported merchandise within the scope of these investigations as follows:
The scope of this investigation covers certain non-motorized tow behind lawn groomers (lawn groomers), manufactured from any material, and certain parts thereof. Lawn groomers are defined as lawn sweepers, aerators, dethatchers, and spreaders. Unless specifically excluded, lawn groomers that are designed to perform at least one of the functions listed above are included in the scope of this investigation, even if the lawn groomer is designed to perform additional non-subject functions (e.g., mowing).
All lawn groomers are designed to incorporate a hitch, of any configuration, which allows the product to be towed behind a vehicle. Lawn groomers that are designed to incorporate both a hitch and a push handle, of any type, are also covered by the scope of this investigation. The hitch and handle may be permanently attached or removable, and they may be attached on opposite sides or on the same side of the lawn groomer. Lawn groomers designed to incorporate a hitch, but where the hitch is not attached to the lawn groomer, are also included in the scope of the investigation.
Lawn sweepers consist of a frame, as well as a series of brushes attached to an axle or shaft which allows the brushing component to rotate. Lawn sweepers also include a container (which is a receptacle into which debris swept from the lawn or turf is deposited) supported by the frame. Aerators consist of a frame, as well as an aerating component that is attached to an axle or shaft, which allows the aerating component to rotate. The aerating component is made up of a set of knives fixed to a plate (known as a plug aerator), a series of discs with protruding spikes (a spike aerator), or any other configuration, that are designed to create holes or cavities in a lawn or turf surface. Dethatchers consist of a frame, as well as a series of tines designed to remove material (e.g., dead grass or leaves) or other debris from the lawn or turf. The dethatcher tines are attached to and suspended from the frame. Lawn spreaders consist of a frame, as well as a hopper (i.e., a container of any size, shape, or material) that holds a media to be spread on the lawn or turf. The media can be distributed by means of a rotating spreader plate that broadcasts the media (broadcast spreader), a rotating agitator that allows the media to be released at a consistent rate (drop spreader), or any other configuration.
Lawn dethatchers with a net fully-assembled weight (i.e., without packing, additional weights, or accessories) of 100 pounds or less are covered by the scope of the investigation. Other lawn groomers- sweepers, aerators, and spreaders-with a net fully assembled weight (i.e., without packing, additional weights, or accessories) of 200 pounds or less are covered by the scope of the investigation.
Also included in the scope of the investigation are modular units, consisting of a chassis that is designed to incorporate a hitch, where the hitch may or may not be included, which allows modules that perform sweeping, aerating, dethatching, or spreading operations to be interchanged. Modular units-when imported with one or more lawn grooming modules-with a fully assembled net weight (i.e., without packing, additional weights, or accessories) of 200 pounds or less when including a single module, are included in the scope of the investigation. Modular unit chasses, imported without a lawn grooming module and with a fully assembled net weight (i.e., without packing, additional weights, or accessories) of 125 pounds or less, are also covered by the scope of the order. When imported separately, modules that are designed to perform subject lawn grooming functions (i.e., sweeping, aerating, dethatching, or spreading), with a fully assembled net weight (i.e., without packing, additional weights, or accessories) of 75 pounds or less, and that are imported with or without a hitch, are also covered by the scope.
Lawn groomers, assembled or unassembled, are covered by this investigation. For purposes of this investigation, unassembled lawn groomers consist of either 1) all parts necessary to make a fully assembled lawn groomer, or 2) any combination of parts, constituting a less than complete, unassembled lawn groomer, with a minimum of two of the following major components-:
1) an assembled or unassembled brush housing designed to be used in a lawn sweeper, where a brush housing is defined as a component housing the brush assembly, and consisting of a wrapper which covers the brush assembly and two end plates attached to the wrapper;
2) a sweeper brush;
3) an aerator or dethatcher weight tray, or similar component designed to allow weights of any sort to be added to the unit;
4) a spreader hopper;
5) a rotating spreader plate or agitator, or other component designed for distributing media in a lawn spreader;
6) dethatcher tines;
7) aerator spikes, plugs, or other aerating component; or
8) a hitch. b. Diamond Sawblades and Parts Thereof From China and Korea All finished circular sawblades, whether slotted or not, with a working part that is comprised of a diamond segment or segments, and parts thereof, regardless of specification or size, except as specifically excluded below. C. Gray Portland Cement and Cement Clinker from Japan;
The products covered are cement and cement clinker. Cement is a hydraulic cement and the primary component of concrete. Cement Clinker, an intermediate material produced when manufacturing cement, has no use other than grinding into finished cement.
d. Hand Trucks and Certain Parts Thereof From China:
The product covers hand trucks manufactured from any material, whether assembled or unassembled, complete or incomplete, suitable for any use, and certain parts thereof, namely the vertical frame, the handling area and the projecting edges or toe plate, and any combination thereof.
e. Large Newspaper Printing Presses and Components Thereof, Whether Assembled or Unassembled, From Japan:
The products covered in these investigation are large newspaper printing presses, including press systems, press additions and components, whether assembled or unassembled, whether complete or incomplete, that are capable of printing or otherwise manipulating a roll or paper more than two pages across. Further, the following European Commission decisions also support inclusion of parts and components:-
f. Ironing boards:
The product concerned is ironing boards, whether or not free-standing, with or without a steam soaking and/or heating top and/or blowing top, including sleeve boards, and essential parts thereof, i.e. the legs, the top and the iron rest originating in the People's Republic of China and Ukraine (the product concerned), normally declared within CN codes ex 3924 90 90, ex 4421 90 98, ex 7323 93 90, ex 7323 99 91, ex 7323 99 99, ex 8516 79 70 and ex 8516 90 00.
There are different types of ironing boards and their essential parts depending mainly on their construction and size, their construction material and accessories. However, all different types have the same basic physical characteristics and uses. Consequently, all existing types are considered as one product for the purposes of this investigation.
g. Steel tube and pipe fittings:-
EC in the matter of steel tube and pipe fittings kept the scope of the product under consideration as tube and pipe fittings of iron or steel, which comprised of elbows, tees, reducers and caps. It is a matter of common knowledge that elbows, tees, reducers and caps can never be interchangeable. However, the Investigating Authority has held tube and pipe fittings as one like product. The DA has dealt with the contentions of the appellants in the second Final Finding as under:-
18. The investigation has shown that following types of SDH equipment were either in use or in development during the investigation period. The Authority considered the arguments of the interested parties on exclusion of some of these types and holds as follows in this regard:
i. STM-1, 4, 16 There is no dispute that these products are rightly included within the scope of the product under consideration;
ii. STM-64 The interested parties argued that the petitioner has not offered STM-64 in commercial volumes. It has also been argued that largest Public Sector Company operator (BSNL) has not bought STM-64 from the petitioner. The Authority, however, holds that STM-64 is rightly within the scope of the product under consideration for the following reasons
(a) Tejas has produced and sold STM-64 in Indian and overseas markets as was verified by the Authority through its investigating team; (b) Even if Tejas has sold some volumes in the export markets, the product type cannot be excluded, as the fact of like article produced by the domestic industry gets established (the Authority notes that rule 2(b) read with 2(d) implies that the domestic industry should have manufactured like article. It is unnecessary to require that the domestic industry should have sold like article in domestic market). On the spot verification conducted at the premises of the petitioner, in fact, showed production of STM-64 in commercial volumes, i.e., also for Quiktel.
iii. STM-256 Admittedly, STM-256 was neither imported during the investigation period nor supplied by the domestic industry. The responding exporter from China claimed that STM-256 was not deployed in China also (which means that this was not sold in China as well). The responding exporter also claimed that deployment of STM-256 in India is not even feasible so far, as necessary permission for its deployment have not been given by the competent Govt. of India authority. Investigation conducted at the premises of the petitioner and foreign producers clearly showed that STM-256 can be described as the new generation SDH equipment. The investigation has not shown that if STM-256 was exported by foreign producers, the domestic industry did not offer STM-256. In fact, the interested parties agreed that technical approvals/ permissions to deploy SDH-256 are not even in place in the country. The Authority observes that a claim for exclusion of a particular type can not be entertained unless the same has been exported to India during the relevant period, as the fact of non supply of like article by the domestic industry cannot be established unless the type is exported to India and is permitted to be used in India. The Authority holds that no grounds have been made out justifying exclusion of STM-256. Moreover, the investigating team was given access to STM-256 equipment, manufactured by Tejas and available in their premises in Bangalore. Tejas showed that it has made significant investment (Rs. ***** crores) so far in development of this product and claimed that the equipment could be sold only if some party placed an order for the same. No consumer in India has given any order to the domestic industry for supply of SDH-256.
iv. Digital Cross Connects The interested parties repeatedly argued for exclusion of digital cross connect. The investigation has shown that digital cross connect are actually the equipment used in telecommunications networks, that allows lower- level signals to be rearranged and interconnected amongst higher-level signals. Digital cross connect can be produced in SDH technology and other technologies. Digital cross connect equipment of SDH technology is clearly SDH equipment. Record verified by the investigating team establishes that Digital Cross Connect of SDH technology has been produced and supplied by the petitioner during the investigation period. The cost and price information included in the injury information and injury margin assessment includes the production and sale of digital cross connect of SDH technology. The Authority, therefore, holds that digital cross connect of SDH technology are rightly within the scope of the product under consideration. However, since digital cross connects are produced in other technology as well, it is clarified as a matter of abundant precaution that digital cross connect of other technologies are beyond the purview of the product under consideration and present investigations.
v. SKD/CKD form of SDH equipment Interested parties largely concede that SKD/CKD form of SDH is rightly within the scope of the product under consideration. As is seen from the production process, the product is an assembly of a number of cards, components, assemblies and sub-assemblies. It is quite possible that the product is transported in its SKD/CKD form. In fact, the product is in general invoiced in SKD/CKD form only. The producers do not raise invoice for fully functional and operational SDH equipment. The production process from SKD/CKD form is a very insignificant assembly line operation requiring only screw driver technology. In fact, it is possible (and in fact is a practice largely adopted) to first produce the complete equipment, including necessary testing etc. and instead of transporting in a finished form, it is dispatched after dismantling in a SKD/CKD form. Exports of such SKD/CKD, thus, tantamount to exports of the product under consideration itself. In fact, the product has been shipped from China in SKD/CKD form as well. The Authority, therefore, confirms that the scope of the product under consideration includes SKD/CKD form of the product.
vi. Assemblies and Sub-assemblies The verification of the records of various exporters from China PR and Israel revealed that the Equipment is shipped in the form of assemblies and sub-assemblies and each of these assemblies and subassemblies are priced individually. Therefore, the equipment imported as a unit or in the form of assemblies / sub-assemblies is within the scope of the product under consideration.
vii. Populated Circuit Boards / Cards The cards/PCBs are populated as per the design developed by the manufacturer and thereafter, apart from loading of software, there is only a need to arrange them in a shelf and adjust them to a circuit. Since Printed Circuit Boards are propriety of the manufacturer, the same are within the scope of the product under consideration. It is, however, clarified that in case PCBs or cards are meant for production/assembly of a product other than SDH equipment, the same is beyond the scope of the product under consideration. PCB and cards are within the scope of the product under consideration only if such PCBs or cards are meant for production of SDH equipment.
viii. Parts and Components Interested parties have heavily opposed inclusion of parts and components within the scope of the product under consideration. The interested parties have argued, inter-alia, that (i) parts/components are different products, (ii) parts & components have not been offered by domestic industry, (iii) production from the stage of parts/components is quite significant and, in fact, constitutes production, (iv) imposition of anti-dumping duties on parts/components is inoperable or may even lead to harassment at the stage of implementation or might lead to demand for collection of duty even when the same may not be justified. The domestic industry on the contrary has sought inclusion of parts and components on the premise that their exclusion will leave a big scope for circumvention. They have pleaded that imports of components as raw material or inputs must be distinguished and differentiated with imports of SDH in component form (with IPR being supplied without customs check/control/clearance). They have further submitted that the domestic industry is not against imports of components as inputs. Domestic industry is against import of product in the form of components, using the same Chinese IPR and then assembling the product in India as this tantamounts to continued dumping in different form. The Authority has taken note of the fact that parts and components are not manufactured by the Domestic Industry, and the domestic industry for parts and components is not before the Authority. The Authority further notes that parts and components used in SDH equipment have multiple usages and do not have a dedicated usage in SDH equipment alone. The Authority, after going into the details of usage of parts and components, is of the view that including parts and components, when imported on a standalone basis is going to put the whole consumer durable industry to hardship.
ix. SDH equipment as part of another equipment - The Authority notes that the product under consideration eventually forms part of Broadband or Cellular equipment. It is quite possible to import SDH equipment as part of such Broadband or Cellular equipment. If the scope of the product under consideration is not kept to include imports of SDH equipment forming part of such Broadband or Cellular equipment, the entire process of undertaking present investigations and proposed measures can be defeated. Further, no justified grounds have been brought out by any interested party as to why such import should not be chargeable to duty. The only concern of the interested party may be that the Customs Port Authorities should not demand anti-dumping duties on the entire Broadband or Cellular equipment. It is, therefore, clarified that the scope of the duty shall only be to the extent of the value of SDH equipment included in such Broadband/Cellular equipment. The scope of the duty shall not extend to the entire equipment. The importers are expected to declare and the Customs Port Authorities are expected to apply due diligence in ascertain/bifurcating the value of SDH equipment.
x. Software Software is an essential part of the product under consideration in as much as the equipment is totally non-functional without such software. Such software can be developed by the producer itself or producer may get the same developed from other agencies. It is possible to invoice such software either as part of the equipment or separately. The scope of the product under consideration rightly includes the software and the Authority confirms the same.
xi. DWDM Lot of interested parties have sought exclusion of DWDM. DWDM is different technology transmission equipment. It is not SDH technology equipment. Since DWDM is not an SDH technology equipment, the same was beyond the scope of present investigation and proposed measures. However, in view of the repeated arguments of the interested parties and their claim of possible demands of antidumping duties in future by Customs Port Authorities, it is clarified that DWDM transmission equipment are beyond the scope of product under consideration.
30. The appellants argued that the domestic industry has not offered STM-64, and therefore, it should be excluded from the scope of PUC, as the largest Public Sector Company (BSNL) has not bought STM-64 from Tejas. We note that the DA has found that Tejas has produced and sold STM-64 in Indian and overseas markets including to QuickTel, which is an Egyptian Telecom Company. The argument of the appellant that Quicktel is nonexistent is without basis as copies of the purchase order of Quicktel, as well as extracts from media reports concerning Quicktel were shown to us.
31. As regards STM256, it has been argued that this product was neither produced in India nor imported into India from the subject countries during the period of investigation. This in our view is not material as the investigation is qua the product, and not the types of the product. We agree with the counsel for the domestic industry that as long as the product is imported duty can be imposed on all types of such product provided such type is in commercial competition with the like article made in India and can cause injury on its import. STM 256 is a higher version of STM 64. STM256 if offered at a lower price can substitute for STM64 and cause injury to Tejas qua its market for STM64 in India. In the case of Kajaria Ceramics Vs. Designated Authority (supra) this view was supported, para 6.6 of the said judgement is reproduced below:-
6.6?under the scheme of the imposition of Anti-Dumping Duty, the Designated Authority is required to determine whether the dumped products caused injury to the Domestic Industry. In this case it is evident that the products imported by the appellants can be substituted for the products manufactured by the Domestic Industries. The imported products viz. 2 x 2 vitrified/porcelain tiles can definitely replace the 1 x 1 vitrified/porcelain tiles manufactured by the Domestic Industry, inasmuch as the user will prefer to use the dumped low cost imported tiles of a bigger size to substitute his requirement of tiles of smaller size. The dumped imports of vitrified/porcelain tiles would be an efficient substitute for the vitrified/porcelain tiles manufactured by the D.I. A consumer would readily compromise on the size/pattern of tiles as long as it satisfies his need for vitrified/porcelain tiles. The products imported by the appellant would technically substitute the D.I.s product of vitrified/porcelain tiles and commercially also the product imported would substitute the D.I.s products. When there is a variety of grades available in vitrified/porcelain tiles, that would in itself, give a leverage to the consumer to substitute from one type/size/pattern to another type/size/pattern of vitrified/porcelain tiles. In technical terms a vitrified/porcelain tile of 1000 x 1000 mm will equivalent to four vitrified/porcelain tiles of size of 500 x 500 mm but the price of the 1000 x 1000 mm tiles will not be the price of four tiles of 500 x 500 mm. It would be lesser then the price of the four tiles of smaller size. Hence technically and commercially the dumped imports of different sizes may substitute the vitrified/porcelain tiles manufactured by D.I., even though the D.I. may not manufacture the particular size of tile which is dumped. As held in the above decision, it is not necessary that tiles of every size or dimension are imported into India for levy of duty. There may be many types / sizes / dimensions, which may be manufactured in China and not exported to India. As long as such types form part of PUC are in commercial competition with like article and can cause injury to the domestic producer they can be covered by the scope of levy. The decision in the case of Andhra Petrochemicals Ltd. Vs. Designated Authority (supra) relied upon by the appellants is distinguishable on facts. In that case, CESTAT found that the product under consideration or article, had not been correctly defined, and that each Acyclic Oxo-alcohol was a separate article, for which separate dumping and injury was required to be examined. It is in that context that CESTAT held that an article, which has not been imported, can not be subject to levy. CESTAT decision in the case of Andhra Petrochemicals Ltd. Vs. Designated Authority (supra) is not applicable here as in the present case, STM256 is not a distinct or separate product, but one type of SDH equipment, that is PUC.
32. The appellants also contended that Section 12/14 ibid deal with the levy of duty and valuation of goods imported and not with the parts/components constituting those goods and therefore levy of anti-dumping duty would fail in respect of goods not imported (e.g. STM 256) or SDH equipment which came embedded in the goods imported. In this regard, it is pertinent to note that duty on STM 256 will be levied only when it is imported and not otherwise and whenever the same is imported, its value will be determined under the provisions of Section 14 of Customs Act, 1962 and the Customs Valuation (Determination of Value of Imported Goods) Rules framed thereunder.
As regard the contention that provision of Sections 12/14 of the Customs Act, 1962 are applicable only with reference to goods imported and therefore, the levy of anti-dumping duty would fail on PUC when imported as a part embedded in the goods imported for want of availability of the machinery provisions and cited the Supreme Court judgement in the case of C.I.T., Bangalore vs. B.C. Srinivasa Setty [(1981) 2 SCC 460]. In this regard, we note that Section 12 Customs Act, 1962 has no applicability or relevance to the levy of the anti-dumping duty which is levied in terms of Section 9A of the Customs Tariff Act, 1975. As regards the valuation of goods/items which are imported as parts/components embedded in some other goods, it is pertinent to mention that the provisions of Customs Valuation Rules framed under Section 14 of the Customs Act, 1962 are clearly capable of valuing even such imported goods which are found lying unclaimed in the middle of nowhere even embedded in other goods. It is quite possible, nay likely, that when PUC is imported as part/component embedded in other goods, separate transaction value thereof, (i.e. of the PUC) will not be available but non-availability of transaction value does not in the least lead to failure of assessment of value because Customs Valuation Rules are clearly capable of dealing with such situations. Thus, an efficacious machinery to assess value of PUC in all sorts of such situations exists in the form of Customs Valuation Rules and therefore the ratio of the Supreme Court judgement in the case of C.I.T., Bangalore vs. B.C. Srinivasa Setty (supra) does not adversely impinge in this case. Thus this contention of the appellants is not sustainable.
Under Section 9A of the Customs Tariff Act, 1975, the Central Government is fully empowered to levy the duty in the manner it considers fit. It can prescribe a method for identifying the product subject to levy. In the instant notification, the duty is to be applied on the % of CIF Value of Imports, as is indicated in Column 9 of the Notification. The exporter can declare the transaction value for the SDH Equipment separately. If such declaration is not found to be true or the transaction value is simply not available, the Customs Authorities can/would resort to the Customs Valuation Rules for the item subject to levy of anti-dumping duty. We do not therefore, find any merit in the contention of the appellants.
D Other issues:-
33. The appellants also pleaded that the post decisional hearing was a mere formality and in violation of the direction of the Tribunal. In this context, we note that in the original (first) investigations, hearing was held before one officer and order was passed by another and therefore the matter was remanded by CESTAT for affording hearing to all the parties. In terms of Rule 6(6) of the Anti-Dumping Rules, what is orally presented before the Designated Authority is to be taken into consideration only when the same is subsequently reproduced in writing. We find that the arguments raised in the original proceedings as well as in the remand proceedings were essentially the same. None of the appellants brought to our notice any new facts or grounds presented in the second round which were not presented in the first round. DA examined all the issues afresh in the light of the submissions made. The conclusions of DA in the second round on the issue dumping, injury, causal link between the dumped imports and injury to the domestic industry and other legal issues raised by the parties have remained unchanged and consequently no modification of the notification was warranted in the wake of the remand order of CESTAT. DA having considered the pleas raised before it in the remand proceedings after granting due opportunity of hearing to all interested parties passed the impugned second Final Findings. Thus, there has been no infirmity in the procedure followed by Designated Authority while passing the second Final Findings.
34. It was contended by the appellants in the written submissions filed after conclusion of the hearing that the claim of Tejas regarding production of prototype is false. We note that the fact that Tejas made prototype is mentioned in Paragraph 15 of the First Final Findings. We do not find from the findings, that any objection was raised by the parties as to this factual aspect. No such objection is found in the appeals filed by the appellants. Quite to the contrary in the appeal of Huawei, Ground No. E5 reads as under:
Respondent No. 3 was a design and development house, and they undertook development of design, and prototype of the product, and outsourced the actual production of the goods, to EMS providers. As the Authority had verified the production process at the factory of Tejas and in view of the admission of this fact by Huawei, we are unable to sustain this contention of the appellants at this stage.
35. The appellants also raised the contention that rejection of price undertaking without affording an opportunity to comment on the reasons for rejection was inconsistent with obligations under Article 8.3. We find that this aspect has been examined in Paragraph 111-114 and 186 of the First Final Findings as under:
111. Huawei Technologies has revised its export sales statement a number of times. The company also pleaded that the systems followed by the company are different from the PCN system followed by the Authority and argued that the company would have faced no difficulties in providing export sales information had the company followed companys internal product coding systems. The company revised its export sales statement a number of times. As brought out in the verification report sent to the company, the export sales information of the company remained un-verified. The Authority is unable to accept the argument that the product coding system followed by the Authority was too complicated and prevented the company from providing the desired information. Indeed, a number of producers in subject countries have participated in the present investigations and have 69 provided information without expressing the kind of difficulties expressed by the company. Notwithstanding, the Authority had clearly stated while informing product coding system to the interested parties that the exporters were free to modify product coding system or use their own system, should they find the system proposed by the Authority is insufficient/ inadequate or cumbersome. In any case, nothing prevented the exporter from providing information on both the basis the product coding system followed by the Authority and product coding system followed by the company.
112. The product under consideration is essentially an assembly of a number of electronic cards and sub-assemblies. In fact, the producers tend to invoice the sales in terms of SKD/CKD/cards/sub-assemblies of the product. Investigation has shown that all the companies follow some system for design and development of the product, for which some product coding system is followed. It is noted that the export sales information has been so drastically revised by the company that even sub-assemblies/cards composition has also been altered in different responses.
113. As per response filed with the Authority, they had claimed to have exported *** PCN Variants to India during POI, comprising of *** Nos. Out of these *** PCNs were cards. No quantity had been mentioned in respect of these *** PCNs and therefore these were excluded for the purpose of determination of NEP for preliminary determination. These PCNs were basically extracted from POs executed with different customers in India. Although the Authority gave necessary opportunity to them to get their data verified during verification visit, the PCN details claimed by them could not be verified as there appeared mismatch in subfields identified against each PCN as per the nomenclature prescribed by the Authority. This was pointed out to them in the verification report. In response to the verification report, they submitted the updated PCN details, claiming to have corrected the anomaly and sought acceptance of the same for determination of NEP. According to this they had exported *** sets / nos. of *** different PCN variants to India during POI. That apart they also claimed to have exported a few more PCNs against loan contract to Prithvi etc. against which they had failed to provide proper accounting during verification.
114. Considering the above, the Authority holds that claim on export sales to India remained unverified in spite of reasonable and adequate opportunity having been provided to them. The Authority is therefore unable to determine individual Export Price and NEP for determination of either individual DM or Injury Margin in respect of the subject producer exporter.
.
186. The Authority also takes note of the submissions made by Huawei Technologies, proposing a price undertaking and seeking information on export price, normal value, dumping and injury margins so as to enable them to submit a suitable undertaking. The Authority notes that the details about non-determination of export price in respect of the subject exporter have already been explained in the disclosure statement as well as in these findings. Consequently it has also not been possible for the Authority to determine the individual DM and IM for the subject exporter. Moreover, the product under consideration is not a simple homogeneous product but a complex one with a number of variants. Therefore the Authority holds that such an undertaking, proposed by them is impractical; Rule 15(3)) refers. Given such non-cooperation on the part of Huawei as recorded by Designated Authority, it cannot be faulted for rejecting the undertaking.
36. As regards the contention that market economy treatment was wrongly denied to Alcatel Lucent Shanghai Bell Co. Ltd and normal value was incorrectly determined. We find that DA has dealt with this aspect in Paragraph 93 of the findings: -
93. The Authority notes that, the company, during the course of verification submitted that the decision making is not affected or influenced by the government nominees on the Board. However the Authority also notes that the company has, since inception, significant Govt. presence through share holdings by State departments. Over a period of time, the govt. shareholding pattern remained ***% being Government Owned. Presently, the board of directors also has ***% (*** nominees) nominees of State departments including the *** having a casting vote. In view of the above, with this significant state participation, the state interference cannot be ruled out and therefore the Authority holds that the Company cannot be granted market economy status. No new material has been brought on record to dislodge the above findings of Designated Authority and therefore we do not find any unreasonableness in the findings on this aspect and the Authority was not irrational not to adopt the information provided by ECI China for determination of normal value of Alcatel-Lucent because if this information was taken into consideration, it would/may incentivise exporters not to reply to the questionnaire, if they consider that the information provided by other investigated producer or exporter would yield a more advantageous result. Paragraph 7 of Annexure I to the Rules provides that where market economy status is not granted to a firm, normal value can be determined on any other reasonable basis. The contention of Alcatel Lucent is therefore not well founded and the Authority was justified in determining the normal value based on facts available.
37. It was argued that inclusion of software and SDH Equipment fitted with cellular equipment on the ground of circumvention was not correct since the Rules concerning circumvention were brought into force only in 2012. We find that Rules 25 to 28 of the Rules, which came into effect from 19.01.2012 deal with circumvention of anti-dumping duty. However, nothing can be read in these Rules to mean that Designated Authority should not levy the duty in a manner so as to ensure that it is not circumvented. After all, when duty is levied by Central Govt., it has to ensure that the same is effective in counteracting the injurious effects of dumping which implies that Designated Authority should ensure that the levy of duty is not amenable to unintended circumvention. The above said Rules 25 to 28 regarding circumvention only deal with situations where circumvention is found to be taking place and provide mechanism to identify, investigate and determine circumvention and review thereof and do not imply that the Designated Authority is debarred from so recommending the levy as to avoid circumvention as far as possible plugging the possible/obvious loopholes which can lead to circumvention.
38. According to the appellants, the notification is liable to be set aside on the ground of vagueness and they argued that the expression like for SDH application only is too vague to be acceptable in a taxing statute or exemption notification. We are unable to agree with this contention because expression for SDH application only is quite comprehensible and there is nothing too esoteric about it. In our view there is nothing so vague or incomprehensible about expressions like for SDH application only as to make it impossible or impractical to implement the anti-dumping notification.
39. The appellants also argued that software downloaded electronically cannot be subjected to anti-dumping duty due to absence of mechanism to levy and collect duty as has been held by CESTAT in the case of Oracle India Pvt. Ltd. & Others Vs. C.C.(Export), New Delhi. (supra). We agree with the contention and find it pertinent to add that as no duty can be levied and collected on such downloads (as has been held by CESTAT in the case of Oracle India Pvt. Ltd.), the appellants can have no grievance on that count.
40. In view of the analysis above, we do not find any such infirmity in the final findings of the Designated Authority as to invite appellate intervention. The appeals are dismissed.
(Pronounced in the Open Court on 24.02.2016) (Justice G. Raghuram) President (S.K. Mohanty) Member (Judicial) (R.K. Singh) Member (Technical) SSK -15-