Gujarat High Court
Nirma Limited vs Union Of India & 6 on 23 February, 2017
Author: Harsha Devani
Bench: Harsha Devani, A.S. Supehia
C/SCA/16426/2016 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 16426 of 2016
With
SPECIAL CIVIL APPLICATION NO. 16427 of 2016
TO
SPECIAL CIVIL APPLICATION NO. 16429 of 2016
FOR APPROVAL AND SIGNATURE:
HONOURABLE MS.JUSTICE HARSHA DEVANI
and
HONOURABLE MR.JUSTICE A.S. SUPEHIA
================================================================
1 Whether Reporters of Local Papers may be allowed No
to see the judgment ?
2 To be referred to the Reporter or not ? No
3 Whether their Lordships wish to see the fair copy of No
the judgment ?
4 Whether this case involves a substantial question of No
law as to the interpretation of the Constitution of
India or any order made thereunder ?
================================================================
NIRMA LIMITED....Petitioner(s)
Versus
UNION OF INDIA & 6....Respondent(s)
================================================================
Appearance:
Special Civil Applications No.16426/2016 & 16427/2016
MR MIHIR JOSHI, MR MIHIR THAKORE and MR SN SOPARKAR, SENIOR
ADVOCATES with MS REENA KHAIR, MR RAJESH SHARMA and MR
Page 1 of 118
HC-NIC Page 1 of 118 Created On Sun Aug 13 16:00:43 IST 2017
C/SCA/16426/2016 JUDGMENT
GAURAV S MATHUR, ADVOCATE for the Petitioner(s) No. 1
MR DEVANG VYAS, ASSISTANT SOLICITOR GENERAL with MR NIRZAR S
DESAI, ADVOCATE for the Respondent(s) No.1 2
MR PRAMOD RAI, ADVOCATE with MR VISHAL SEVAK, ADVOCATE for
the Respondent(s) No.3
MR JITENDRA SINGH, ADVOCATE with MR PARITOSH R GUPTA,
ADVOCATE for the Respondent(s) No.4
MR SITHARAMAN, ADVOCATE with MR ANAND NAINAWATI for the
Respondent(s) No.5
MR VIKRAM NANKANI, SR. ADVOCATE with MR HARDIK P MODH, MR
SANJAY NOTANI and MR AMIT LADDHA, ADVOCATES for the
Respondent No.7
NOTICE SERVED BY DS for the Respondent(s) No. 6
Special Civil Applications No.16428/2016 & 16429/2016
MR SN SOPARKAR, SR. ADVOCATE with MS REENA KHAIR,MR RAJESH
SHARMA and MR KUNTAL PARIKH, ADVOCATE for the Petitioner
MR DEVANG VYAS, ASSISTANT SOLICITOR GENERAL with MR NIRZAR S
DESAI, ADVOCATE for the Respondent(s) No.1 2
MR PRAMOD RAI, ADVOCATE with MR VISHAL SEVAK, ADVOCATE for
the Respondent(s) No.3
MR SITHARAMAN, ADVOCATE with MR ANAND NAINAWATI for the
Respondent(s) No.4
MR JITENDRA SINGH, ADVOCATE with MR PARITOSH R GUPTA,
ADVOCATE for the Respondent(s) No.5
================================================================
CORAM: HONOURABLE MS.JUSTICE HARSHA DEVANI
and
HONOURABLE MR.JUSTICE A.S. SUPEHIA
Date : 23/02/2017
ORAL JUDGMENT
(PER : HONOURABLE MS.JUSTICE HARSHA DEVANI)
1. Since common questions of law and facts arise in all these petitions, the same were taken up for hearing together and are decided by this common judgment.
2. For the sake of convenience, reference is made to the facts as appearing in Special Civil Application No.16426 of Page 2 of 118 HC-NIC Page 2 of 118 Created On Sun Aug 13 16:00:43 IST 2017 C/SCA/16426/2016 JUDGMENT 2016.
3. This petition has initially been filed challenging the disclosure statement dated 14.09.2016 (Annexure "J" to the petition) issued by the second respondent - designated authority. However, during the pendency of the petition, the final findings came to be issued on 23.09.2016, and hence, an amendment came to be moved which was granted whereby the petitioners were permitted to challenge the final findings. While granting interim relief in the matter, this court by an order dated 13.12,2016 had permitted the first respondent - Union of India to issue a notification under rule 18 of the Customs Tariff (Identification, Assessment and Collection of Antidumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995 (hereinafter referred to as "the rules" if it deems so fit. Thereafter a notification dated 21.12.2016 came to be issued under rule 18 of the Antidumping Rules whereby the final findings came to be accepted. The petitioners, thereafter moved another amendment and were granted permission to challenge the notification dated 21.12.2016.
4. The petitioners herein are companies engaged, inter alia, in the business of manufacturing Soda Ash in the State of Gujarat. It is the case of the petitioners that Soda Ash is an industrial produce and its main raw materials are high chemical grade limestone and salt which are available largely in the Saurashtra region of the State of Gujarat. On account of availability of raw materials in this area, major manufacturers of Soda Ash, including the petitioners, have set up their plants in Saurashtra region in the State of Gujarat. Soda Ash is a raw material for the Glass manufacturing industry, Soaps and Page 3 of 118 HC-NIC Page 3 of 118 Created On Sun Aug 13 16:00:43 IST 2017 C/SCA/16426/2016 JUDGMENT Detergent industry, Silicate industry and other Sodium based chemical industries.
5. In China PR, European Union, Kenya, Pakistan, Iran, Ukraine, USA (hereinafter referred to as "the Exporting Countries"), the production of Soda Ash is done in large volumes and in any case, much higher than their own domestic consumption. It is the case of the petitioners that surplus capacities with some of the Exporting Countries are higher than the entire Indian demand. Thus, the producers in these countries have a compulsion to export their surplus capacities, even if such exports are at a price lower than the normal price. Since India is a huge market for Soda Ash, the Exporting Countries producers' resorted to dumping Soda Ash in India at prices below the associated normal value, which resulted in dumping and injury to the domestic manufacturers including the petitioners.
6. In this background, representations came to be made on behalf of the petitioners and other industries including the Alkali Manufacturers' Association of India to the designated authority for imposition of anti-dumping duty on exports of Soda Ash from the Exporting Countries. Based on the inquiry conducted by the designated authority, final findings dated 17.2.2012 (hereinafter referred to as the "Final Soda Ash notification") came to be issued, whereby Anti-Dumping Duty came to be levied on exports of Soda Ash from the Exporting Countries to India. It is the case of the petitioners that while issuing the Final Soda Ash notification, the second respondent did not consider it fit to include, inter alia, the cost towards freight incurred for Soda Ash while computing the margin of Page 4 of 118 HC-NIC Page 4 of 118 Created On Sun Aug 13 16:00:43 IST 2017 C/SCA/16426/2016 JUDGMENT injury for deciding the quantum of anti-dumping duty, though it included the freight cost incurred on the imported product up to the Indian ports. Such non-inclusion of freight came to be challenged by the Alkali Manufacturers' Association of India by way of Writ Petition (Civil) No. 4345 of 2013 before the High Court of Delhi, wherein the constitutional and legal validity of the Customs Tariff (Identification, Assessment and Collection of Anti-Dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995 were also challenged. The said petition at the relevant time was pending before the Delhi High Court.
7. It is further the case of the petitioners that the Final Soda Ash notification was followed by the issuance of Notification No. 34/2012-Customs (ADD) dated 3.7.2012 issued by the Department of Revenue, Ministry of Finance, Government of India under section 9A (1) of the Act read with rules 18 and 20 of the Anti-Dumping Rules, notifying anti-dumping duties on import of Soda Ash originating in or exported from the Exporting Countries. Sometime in the year 2015, the All India Glass Manufacturers' Federation (AIGMF), a body purporting to represent importers/users of Soda Ash made an application to the designated authority for initiation of a mid-term review of the anti-dumping duties recommended vide the Final Soda Ash notification and implemented vide the Customs Notification dated 3.7.2012. It is further the case of the petitioners that on the basis of such application, without examining any evidence substantiating that removal of anti-dumping duty would not cause continuance or recurrence of dumping, the designated authority issued a notification dated 21.07.2015 initiating a mid-term review and investigation of the final findings notified in the Final Soda Ash notification purportedly in exercise of Page 5 of 118 HC-NIC Page 5 of 118 Created On Sun Aug 13 16:00:43 IST 2017 C/SCA/16426/2016 JUDGMENT power conferred under rule 23 of the Anti-Dumping Rules. It appears that the designated authority has called upon the exporting countries, manufacturers of exporting countries, importers/users of Soda Ash and associations representing them as well as the domestic industry, including the petitioners, who are protected by virtue of the Final Soda Ash notification. It is the case of the petitioners that they had caused detailed submissions to be filed representing the petitioners and other Soda Ash manufacturers in India before the designated authority. A gist of such submissions given is as under:
a. The initiation of review is improper. There is no change in circumstances warranting a mid-term review more particularly when there is no material to establish that the injury to the domestic industry is not likely to continue or recur in the event of pre mature revocation of the Final Soda Ash notification;
b. The object of mid-term review is not to inquire whether the need for imposition of Anti-Dumping Duty exists but to determine whether the absence of its continuance would lead to injury to the domestic industry;
c. Since Anti-Dumping Duty is for a period of five years unless extended, the change in circumstances ought to be construed with a view that such change is of a lasting nature and not merely a variation in the circumstances whereby the injury on account of dumping may have lessened for an intervening period;
Page 6 of 118
HC-NIC Page 6 of 118 Created On Sun Aug 13 16:00:43 IST 2017
C/SCA/16426/2016 JUDGMENT
d. The designated authority ought to consider the capacity expansion being undertaken by the petitioner and other domestic producers. Details of this capacity expansion were in particular verified by the officers of Directorate General of Anti-Dumping Duty and allied duties at the time of on the spot visit to the factory of the petitioner. Non consideration of expansion being undertaken by the domestic industry would render the entire expansion of the petitioner and other domestic industry unviable;
e. The cost of freight ought to have been included while calculating the margin of injury to the domestic industry. Such non consideration is already challenged before the Delhi High Court which is pending;
f. The designated authority is required to consider the price at which the producers/exporters in Exporting Countries export the concerned article to other countries to determine whether Anti-Dumping Duty is necessary or not, the capacity addition in Exporting Countries and surplus capacity of the manufacturers of Exporting Countries.
8. It is further the case of the petitioners that on 12.09.2016, a hearing/meeting came to be held between the representatives of the domestic industry and the designated authority, where further submissions dated 11.09.2016 were handed over. The Petitioners' representative was, however, asked to furnish the said submissions separately. Accordingly, submissions dated 11.09.2016 were submitted by way of a letter dated 14.09.2016.
Page 7 of 118
HC-NIC Page 7 of 118 Created On Sun Aug 13 16:00:43 IST 2017
C/SCA/16426/2016 JUDGMENT
9. It is also the case of the petitioners that under the provisions of rule 16 of the Anti-Dumping Rules, the designated authority before issuing final notification discloses essential facts received and interpreted by it which are under consideration for the purpose of arriving at a final conclusion. In case of a mid-term review, like the present one, where the preliminary determination is not mandated, the disclosure statement issued under rule 16 of the Anti-Dumping Rules is the first and only opportunity, whereby the petitioners would have the entire data and facts with its tabulation made available so as to offer their comments and if necessary rebut the same with a view to point out why on the basis of the data compiled by the designated authority, no review is mandated. According to the petitioners, the disclosure statement forms the very basis for the petitioners to make comprehensive submissions in order to canvas their case.
10. It is the case of the petitioners that the designated authority, on the very day on which the further submissions were tendered, that is, on 14.09.2016, issued the impugned disclosure statement. The designated authority had given time up to 20.09.2016 to file comments on the impugned disclosure statements. It being the case of the petitioners that the designated authority had finally decided the issues pertaining to mid-term review while issuing the impugned disclosure statement dated 14.09.2016, the petitioners filed the present petitions challenging the legality and validity of the said disclosure statements.
11. By an order dated 26.09.2016, while issuing notice in the matters, which was made returnable on 17.10.2016, in the Page 8 of 118 HC-NIC Page 8 of 118 Created On Sun Aug 13 16:00:43 IST 2017 C/SCA/16426/2016 JUDGMENT meanwhile this court had restrained the respondent No.2- designated authority from rendering the final finding on the mid-term review undertaken pursuant to the notice dated 21.07.2015. The court had observed that it would be open for the respondents to proceed with the inquiry and investigation and it would also be open to the petitioners to place their submissions on record before the authorities so as to avoid any unnecessary wastage of time, but the final findings or any subsequent decision may not be rendered till the next date of hearing.
12. It is the case of the petitioners that vide email dated 26.09.2016 sent at 1:32 p.m., the advocate for the petitioner intimated the designated authority of the above referred order and that at that time the final findings were neither uploaded on the website of the respondents nor communicated to the petitioners or their representative. The designated authority vide email dated 26.09.2016 at 04:28 p.m. intimated that they had vide Notification No.15/28/2015-DGAD dated 23.09.2016 issued the final findings. It is the case of the petitioners that to the extent the final findings are merely a reproduction of the impugned disclosure statement dated 14.09.2016, the same are illegal. The petitioners have alleged that on account of the fact that the issuance of the above notification was communicated by the designated authority after it was informed of the order dated 26.09.2016 passed in this petition, the same appears to be back-dated and the petitioners believe that the final findings are non est in the eye of law. However, out of abundant caution, the petitioners have challenged the legality and validity of the final findings. Subsequent thereto, in view of the liberty granted by this court, the respondent Page 9 of 118 HC-NIC Page 9 of 118 Created On Sun Aug 13 16:00:43 IST 2017 C/SCA/16426/2016 JUDGMENT No.6, Ministry of Finance, Department of Revenue, Government of India has issued Notification No.55/2016-Customs (ADD) dated 21.12.2016, rescinding the Notification No.34/2012- Customs (ADD) dated 03.07.2012 by which anti-dumping duty had been imposed on imports of Soda Ash from the Exporting Countries. The said notification is also subject matter of challenge in the present petitions.
12.1 It may be pertinent to note that insofar as the imports of Soda Ash from Turkey and Russia are concerned, final findings were initially issued on 09.02.2013 and that the customs notification was issued on 18.04.2013. The mid-term review was initiated on 01.10.2015, however, the impugned disclosure statement was issued simultaneously on 14.09.2016 and final findings were issued on 23.09.2016, both of which are subject matter of challenge in Special Civil Applications No.16427 of 2016 and No.16429 of 2016.
13. By an order dated 13.12.2016, this court had heard the matters for admission and grant of interim relief, and had issued rule in the matters and had passed a detailed order holding that the petitions were maintainable and had granted interim relief whereby it had permitted the Central Government to proceed further pursuant to the final findings submitted by the designated authority. However, it was provided that in case pursuant to the final findings recorded by the designated authority, the Central Government publishes a notification in the official gazette under rule 18 of the Anti- Dumping Rules, the same shall not be acted upon till the final disposal of the petitions. Being aggrieved by the above referred order, one of the respondents had approached the Page 10 of 118 HC-NIC Page 10 of 118 Created On Sun Aug 13 16:00:43 IST 2017 C/SCA/16426/2016 JUDGMENT Supreme Court in Petition for Special Leave to Appeal (Civil) No.2194 of 2017. By an order dated 27.01.2017, the Supreme Court had not entertained the special leave petition at that stage and had left it open to the parties to agitate all issues including the maintainability/further continuation of the writ petition in the light of the subsequent notification dated 21.12.2016. The Supreme Court had further observed that it had deemed it proper to take the above view having regard to the time frame fixed by the High Court for disposal of the writ petition i.e. on or before 15.02.2017.
14. Mr. Mihir Joshi, Senior Advocate, learned counsel with Mr. Gaurav Mathur, learned advocate for the petitioners assailed the impugned disclosure statement by submitting that in effect and substance the designated authority has finally decided the issue of continuance of anti-dumping duty and has concluded that though dumping continues and is likely to be intensified in future, there is no warrant for continuing the remedy of anti- dumping duty on Soda Ash since one of the parameters for determining injury, namely price undercutting is absent. According to the learned counsel the designated authority exceeded its jurisdiction under rule 16 of the Anti-Dumping Duty Rules in issuing the disclosure statement inasmuch as the designated authority has no jurisdiction to decide on the issue of continuance of anti-dumping duty. It was submitted that the objective of a disclosure statement is that the designated authority may collate the facts and present them to the parties so as to enable them to respond to and/or object to the same. It was pointed out that the designated authority has in fact called upon the interested parties to respond to the disclosure statement, to submit that while doing so it could not have Page 11 of 118 HC-NIC Page 11 of 118 Created On Sun Aug 13 16:00:43 IST 2017 C/SCA/16426/2016 JUDGMENT decided the mid-term review finally making it fiat accompli for the parties. It was urged that the designated authority while issuing the disclosure statement could not have gone ahead and concluded the issues before the petitioners and other parties had an opportunity to respond to the facts presented in the disclosure statement. It was contended that a plain reading of the conclusions in the disclosure statement shows that the same are final and not tentative and that such approach on the part of the designated authority is clearly in contravention of the principles of natural justice and fairness and amounts to arbitrary exercise of statutory powers.
14.1 Next it was submitted that the action of the designated authority in initiating the mid-term review is without jurisdiction and illegal inasmuch as the initiation notification does not record any finding as to the existence of facts warranting such review, much less consideration of any evidence produced on record which would show that a change of lasting nature has occasioned since the Final Soda Ash notification was issued and that the change is such that there is no likelihood of dumping and/or injury to continue or recur in case the anti-dumping duty is revoked.
14.2 The learned counsel drew the attention of the court to the following facts. The notice of initiation of investigation was issued on 21.07.2015 and public hearing was held on 02.03.2016; the designated authority sought extension of time on 27.06.2016 and vide order dated 15.07.2016, the Central Government extended the time up till 30.09.2016; the disclosure statement was issued on 14.09.2016 and the parties were told to offer their comments by 20.09.2016, that is, Page 12 of 118 HC-NIC Page 12 of 118 Created On Sun Aug 13 16:00:43 IST 2017 C/SCA/16426/2016 JUDGMENT within a short period of six days without granting adequate time to formulate the defence. It was submitted that final findings were required to be issued on or before 30.09.2016 and hence, the designated authority had in all sixteen days' time to call for objections, hearing and consideration of the response of the parties. The attention of the court was invited to the post disclosure comments of the private respondents as recorded by the designated authority in the final findings, to point out that it is also the case of those respondents that no effective opportunity of hearing was given. It was urged that six days' time granted by the designated authority was absolutely inadequate. Reference was made to article 6.9 of the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (hereinafter referred to as the "Anti-Dumping Agreement"), which inter alia provides that such disclosure should take place in sufficient time for the parties to defend their interests, to point out that sufficient time is in-built in rule 16 of the rules read with article 6.9 of the Anti-Dumping Agreement. It was submitted that therefore, the time was insufficient in case of both the parties. As regards what can be said to be a reasonable time, the learned counsel submitted that computation of the non-injurious price as well as certain other essential facts were not provided to the petitioners and that it is the case of the designated authority that if such computation were asked for, the same would have been furnished. It was submitted that if this be the position it is clear that the six days' time for responding to the disclosure statement is highly inadequate. Reference was made to the Dumping and Subsidy Manual, Australia on which reliance was placed on behalf of the fourth respondent, to submit that the same provides for twenty days' time after publication of the Page 13 of 118 HC-NIC Page 13 of 118 Created On Sun Aug 13 16:00:43 IST 2017 C/SCA/16426/2016 JUDGMENT Statement of Essential Facts (SEF) to comment on the SEF, which clearly shows that the time granted by the designated authority can in no manner be said to be adequate. It was further pointed out that while the investigation was initiated on 21.07.2015, and in the ordinary course it was required to be concluded within one year, one fails to comprehend as to why the designated authority waited till the fag end of the extended time to issue the disclosure statement, thereby engineering an urgency whereby no further time could be granted to the parties to defend their interests.
14.3 On the merits of the disclosure statement, reference was made to rule 16 of the rules, to point out that the same requires the designated authority to inform all interested parties of the essential facts under consideration which form the basis for its decision. It was submitted that thus, the designated is required to give the facts on the basis of which the decision as to whether or not definitive measures are required to be taken and not his inferences and conclusions based on such facts. According to the learned counsel, what was required to be disclosed were the essential facts and the designated authority's tentative conclusions on those facts; however, computation of various parameters from essential facts was not warranted and amounts to pre-determination.
14.4 It was submitted that the designated authority has also failed to disclose all essential facts in the disclosure statement which is in violation of the principles of natural justice. In support of such submission, the learned counsel placed reliance upon the decision of the Supreme Court in the case of Union of India and another v. Meghmani Organics Page 14 of 118 HC-NIC Page 14 of 118 Created On Sun Aug 13 16:00:43 IST 2017 C/SCA/16426/2016 JUDGMENT Limited and others, 2016) 10 SCC 28.
14.5 It was contended that non-disclosure of export price, normal value and dumping margin to the extent such information is not protected under rule 7 of the rules, is clearly in breach of the principles of natural justice. Moreover, no information had been furnished by the foreign exporters, in respect of which confidentiality could have been claimed by them. The only confidential information available before the authority was furnished by the domestic industry and therefore, there is no justification for non-disclosure of the figures or the methodology adopted by the authority for determination of export price, normal value and dumping margin to the domestic industry. According to the learned counsel, the following information has wrongly not been disclosed:
(i)While determining the dumping margin, the designated authority has failed to disclose the basis for determining normal value and export price. The designated authority has not disclosed the computation and methodology;
(ii) While determining the price suppression and depression effect, the designated authority has considered the value for cost of sales and selling price based on the data submitted by the domestic industry, but has failed to disclose the data to the domestic industry itself;
(iii) While determining price undercutting, the value for net sales realisation and price undercutting are calculated based on the data provided by the domestic industry, but Page 15 of 118 HC-NIC Page 15 of 118 Created On Sun Aug 13 16:00:43 IST 2017 C/SCA/16426/2016 JUDGMENT actual figures and methodology are not disclosed;
(iv) While determining price underselling, the designated authority has not furnished the Non Injurious Price (NIP) for the Post Period of Investigation;
(v) While determining data relating to inventories, the designated authority has made use of the data submitted by the domestic industry, but has failed to disclose the same to domestic industry;
(vi) While determining profit, actual and potential on cash flow, the figures for profit, return on investments, BPIT etc., are worked out based on the information furnished by domestic industry, but not disclosed to the domestic industry;
(vii) The designated authority has also failed to furnish the employment details;
(viii) While determining the magnitude of injury and injury margin, the designated authority has failed to disclose Post POI NIP and also methodology and calculation;
(ix) Under Annexure IV to the disclosure statement, detailed costing, exact raw materials cost and other constituents of cost of production are not disclosed to the domestic industry.
14.5 The learned counsel further submitted that detailed costing of NIP (Non-Injurious Price) for the POI (Period of Page 16 of 118 HC-NIC Page 16 of 118 Created On Sun Aug 13 16:00:43 IST 2017 C/SCA/16426/2016 JUDGMENT Investigation) and Post POI has not been disclosed. In fact, insofar as the Post POI NIP is concerned, even the figure has not been disclosed. According to the learned counsel, since the NIP is based on information furnished by the petitioner, there can be no confidentiality qua the petitioner. In support of such submission, reliance was placed upon the decision in the case of Reliance Industries v. Designated Authority, (2006) 10 SCC 368 and more particularly, paragraph 43 thereof. The attention of the court was invited to the fact that it is the practice of the designated authority to disclose the NIP and to provide detailed costing information to the domestic industry in the disclosure statement. The attention of the court was invited to the findings recorded by the designated authority in the disclosure statement to submit that the authority has prejudged the issues and the petitioners had no effective opportunity to displace the conclusions arrived at in the disclosure statement.
14.6 The next submission advanced by the learned counsel for the petitioners was that the review investigation is not in consonance with the principles enunciated by the Supreme Court in the case of Rishiroop Polymers (P) Ltd. v. Designated Authority and Additional Secretary, (2006) 4 SCC 303, wherein it has been held that the mid-term review is limited to the information received with respect to the change in the various parameters, and the entire purpose of the review inquiry is not to see whether there is a need for imposition of anti-dumping duty but to see whether in the absence of such continuance, dumping would increase or recur and the domestic industry suffers. It was submitted that the designated authority has failed to confine the investigation to Page 17 of 118 HC-NIC Page 17 of 118 Created On Sun Aug 13 16:00:43 IST 2017 C/SCA/16426/2016 JUDGMENT the grounds for seeking review in the initiation notification and has also not applied correct tests for ascertaining the likelihood. It was contended that the designated authority has put the onus on the petitioners to show that there is need for continuation of duty, whereas it was for the applicant importers to demonstrate that in the absence of duty, there would be no dumping or injury. According to the learned counsel, for the duty to be withdrawn before the expiry of the five-year period, all the factors must indicate that duty is no longer warranted, which implies an 'elimination process'. However, the authority has examined whether there is a need for continuation and not a need for withdrawal of the duty. It was submitted that the examination of the likelihood of injury to the domestic industry on the revocation of duty is based on the threat parameters, such as, production capacity of the foreign exporters, their inventories, etc. and that this information is in the exclusive knowledge of the foreign producers. As the exporters have not cooperated in the investigations and provided relevant information, an adverse inference ought to have been drawn in terms of rule 6(8) of the rules and the principles enunciated in the decision of the Supreme Court in the case of Designated Authority v. Haldor Topsoe A/S., 2000 (120) ELT 11 (SC). It was submitted that instead of drawing an adverse inference, the designated authority has shifted the burden on the domestic industry to establish the need for continuation of duty, even though there is a presumption of continuation of the state of affairs, as they existed at the time of the original imposition.
14.7 The learned counsel further submitted that the designated authority has failed to disclose the details of Page 18 of 118 HC-NIC Page 18 of 118 Created On Sun Aug 13 16:00:43 IST 2017 C/SCA/16426/2016 JUDGMENT Dumping Margin calculations to the petitioners in para-54 of the final findings. The dumping margin is the difference between the export price and the normal price. In the facts of this case, the normal price has been determined based on the information furnished by the petitioners, which ought to have been disclosed to the petitioners. Even in respect of export price, for the countries where no confidentiality has been claimed by any party, the export price ought to have been made available to the petitioner. The failure to provide the relevant details to the petitioner, especially as it is worked out on the information provided by the petitioner himself, the findings are in gross violation of the principles of natural justice and renders the petitioners unable to effectively deal with the conclusions drawn by the designated authority.
14.8 Referring to the final findings recorded by the designated authority, it was submitted that in the final findings reliance has been placed on the data obtained from the World Trade Atlas (WTA), whereas there is no mention of this data in the disclosure statement. It was submitted that neither the data nor the non-confidential summary of such data, has been given in the disclosure statement and hence, the petitioners had had no opportunity to offer their comments on the WTA data, which is clearly in breach of the principles of natural justice. It was contended that the designated authority has not examined the relevant parameters relating to likelihood of injury and that the disclosure statement refers to para (vii) of Annexure-II to the rules as the basis for the likelihood test. Referring to the findings recorded in the disclosure statement, it was pointed out that criteria (i) and (iii) postulated in para
(vii) are admittedly met with in the facts of the present case, Page 19 of 118 HC-NIC Page 19 of 118 Created On Sun Aug 13 16:00:43 IST 2017 C/SCA/16426/2016 JUDGMENT which is sufficient to continue the duty, whereas there is no analysis as regards criteria (ii) and (iv) in the final findings. It was contended that even if one of the parameters indicates likelihood of injury, the duty is to be continued and in fact, it is for the applicant to establish, that there is no likelihood of injury in respect of all the parameters, which it has failed to do so.
14.9 It was further pointed out that the designated authority has heavily relied upon the injury margin as a parameter, whereas the injury margin is not a relevant parameter under section 9A(5) of the Customs Tariff Act, 1975 (hereinafter referred to as the "Act"). It was pointed out that Annexure-II to the rules lists the relevant parameters for determination of injury, however, non-injurious price (NIP) does not figure in this list. It was submitted that Annexure-III to the rules clearly states that NIP is determined only for the purpose of quantification of duty, and is not relevant for the determination regarding existence of injury provided for in Annexure II, and, therefore, the designated authority has wrongly considered NIP as the basis for the likelihood analysis.
14.10 It was next contended that the designated authority has failed to notice or render its findings upon many of the submissions made by the domestic industry. It was submitted that the material to show that the foreign exporters have surplus capacities, which is an indicator of likelihood of dumping and injury was furnished, however, the same was not considered. Detailed calculations of the volume of exports made from the subject countries to third countries, which would shift to India, in the event of revocation of duties were Page 20 of 118 HC-NIC Page 20 of 118 Created On Sun Aug 13 16:00:43 IST 2017 C/SCA/16426/2016 JUDGMENT furnished. The volume of such exports being more than the demand in the domestic Indian market, was an indicator of likelihood of injury in the event of revocation, which has also not been considered. It was submitted that comparison of the import prices with the selling price or cost of domestic industry should be made at the customer end, that is, after inclusion of freight to the customer's premises, as the delivered price is the basis for customer decision, to buy or imported or indigenous product for determination of price undercutting, underselling and likelihood analysis, however, the same have not been duly considered by the designated authority. It was, accordingly, urged that both, the impugned disclosure statement as well as the final findings rendered pursuant thereto, suffer from the breach of principles of natural justice warranting interference by this court under Article 226 of the Constitution of India.
15. Mr. S. N. Soparkar, Senior Advocate, learned counsel with Ms. Reena Khair, learned advocate for the petitioners has adopted the submissions advanced by Mr. Mihir Joshi. The learned counsel further invited the attention of the court to the communication dated 19th September, 2016 of GHCL Limited whereby it had sought two weeks' additional time to submit its comments, to submit that initially a joint reply was filed by the domestic industries thereafter one industry had addressed the above letter. Reference was made to the methodology for determination of non-injurious price, Annexure IV to the disclosure statement to point out that the same does not contain any figures. It was submitted that the designated authority has not taken the figures given by the domestic industry at face value and has made adjustments. The Page 21 of 118 HC-NIC Page 21 of 118 Created On Sun Aug 13 16:00:43 IST 2017 C/SCA/16426/2016 JUDGMENT designated authority has adopted figures according to what it perceived to be correct and has worked out the non-injurious price, under the circumstances, the breakup of the NIP calculation ought to have been given. Reference was made to the decision of the Supreme Court in Reliance Industries Ltd. V. Designated Authority, 2006 (202) ELT 23 (SC), for the proposition that the purpose of section 9A of the Act is to maintain a level-playing field and prevent dumping, while allowing healthy competition. The concept of anti-dumping is founded on the basis that a foreign manufacturer sells below the normal value in order to destabilize domestic manufacturers. Dumping in the short term, may give some transitory benefits to the local customers on account of lower priced goods, but in the long run destroys the local industries and may have a drastic effect on prices in the long run. Reference was also made to paragraph 40 of the decision wherein the court has noted that the DA claimed confidentiality from the appellant about its finding on the data supplied by the appellant itself, and was of the opinion that there was nothing confidential in the matter, and hence the reasons for not accepting the appellant's version should have been stated in the order of the DA. The attention of the court was also invited to paragraph 44 of the decision, wherein the court has expressed the opinion that excessive and unwarranted claim of confidentiality defeats the right of appeal. In the absence of knowledge of the consequences, grounds, reasoning and methodology by which the DA arrived at is decision and made its recommendation, the parties to the proceedings cannot effectively exercise their right to appeal either before the Tribunal or that Court. It was submitted that in the facts of the present case, apart from the fact that the Page 22 of 118 HC-NIC Page 22 of 118 Created On Sun Aug 13 16:00:43 IST 2017 C/SCA/16426/2016 JUDGMENT methodology of computing the NIP has not been provided along with the disclosure statement, even though GHCL had request the designated authority to furnish the same, it was not given. It was further submitted that it is also not the case of the designated authority in the affidavit that had the parties asked for it, it would have been given. It was submitted that therefore, there is a clear breach of the principles of natural justice. Reference was made to the decision of Supreme Court in Union of India v. M/s Meghmani Organics Ltd. & Ors., (2016) 10 SCC 28, wherein the court recorded its agreement with its earlier decision in Reliance Industries (supra) that rule 7 does not postulate that the DA can claim confidentiality and that too not in respect of any information supplied by a party but in respect of its reasons or findings derived from information supplied by the same very party. It was contended that any adjustment of the NIP has to be shared with the them. It was argued that non supply of computation of NIP is clearly in breach of the principles of natural justice as there was an obligation on the designated authority to share the information with the petitioners.
16. Vehemently opposing the petitions, Mr. S. Sitharaman, learned counsel with Mr. Anand Nainavati, learned advocate for the fourth respondent - Detergent Manufacturers Association of India, submitted that the scope of disclosure statement issued under rule 16 of the rules corresponds to article 6.9 of the WTO Anti-Dumping Agreement (ADA). It was pointed out that the first sentence of article 6.9 of the ADA states that:
"The authorities shall, before a final determination is made, inform all interested parties of the essential facts under consideration which form the basis for the decision whether to Page 23 of 118 HC-NIC Page 23 of 118 Created On Sun Aug 13 16:00:43 IST 2017 C/SCA/16426/2016 JUDGMENT apply definitive measures". It was pointed out that this sentence has been interpreted by a Panel of the WTO Dispute Settlement Body (DSB) in case of China - Countervailing and Anti-dumping duties on Grain Oriented Flat Rolled Electrical Steel from United States (WT/DS/414/R) to mean that in order to apply definitive measures at the conclusion of countervailing and anti-dumping investigations, an investigating authority must find dumping or subsidization, injury and a causal link. Therefore, the "essential facts"
underlying the findings and conclusions relating to these elements form the basis of the decision to apply definitive measures and should be disclosed. It was pointed out that the above decision of the Panel was considered by the Appellate Body of the WTO DSB and it was confirmed. The learned advocate also placed reliance upon the decision of the Appellate Body (as reproduced in WT/DS/454/AB/R and WT/DS/460/AB/R), wherein as to the scope of information that must be disclosed, the Appellate Body has explained that Article 6.9 "covers 'facts under consideration', that is, those facts on the record that may be taken into account by an authority in reaching a decision as to whether or not to apply definitive anti-dumping duties". As to what are "essential facts", it has been stated that such facts are first, those that "form the basis for the decision whether to apply definitive measures" and, second, those that ensure the ability of interested parties to defend their interests. Thus, the "essential facts" are those facts that are significant in the process of reaching a decision as to whether or not to apply definitive measures. Such acts are those that are salient for a decision to apply definitive measures, as well as those that are salient for a contrary outcome. Reference was also made to Page 24 of 118 HC-NIC Page 24 of 118 Created On Sun Aug 13 16:00:43 IST 2017 C/SCA/16426/2016 JUDGMENT Australia's Dumping and Subsidy Manual and more particularly, clause 26.3 thereof, which inter alia provides that a statement of "essential facts" does contain proposed recommendations in relation to matters such as export price, normal value and adjustments effecting the normal value however, the SFE is about reporting the facts, analysis and findings rather than detailing proposed recommendations in relation to issues such as causation and the imposition (or otherwise) of measures.
16.1 It was submitted that in the light of the provisions of rule 16 of the rules read with article 6.9 of the ADA, an investigating authority is required by law to disclose "essential facts", that is, findings and conclusions relating to dumping, injury, and causal link. It was contended that in the two investigations impugned in these writ petitions, the designated authority has complied with the law by disclosing its conclusions on all pertinent issues in various parts of the disclosure statement. Therefore, the disclosure of certain conclusions in the disclosure statement cannot be faulted.
16.2 Dealing with the contention raised on behalf of the petitioners that effective opportunity to displace the conclusions arrived at in the disclosure statement was not granted on the grounds that the designated authority had pre- judged the issue; sufficient time was not granted for filing comments; no extension of time for filing comments and no hearing was granted after disclosure; it was submitted that insofar as pre-judging the issue is concerned, all the disclosures made in the said statement should be read and understood in the light of paragraph-3 of the letter forwarding Page 25 of 118 HC-NIC Page 25 of 118 Created On Sun Aug 13 16:00:43 IST 2017 C/SCA/16426/2016 JUDGMENT the disclosure, wherein it has been stated that, "Notwithstanding the facts given in this Disclosure Statement (including facts given on a confidential basis), the Designated Authority would consider all replies given, on merits, in order to arrive at a final determination." It was submitted that the designated authority has reiterated the same once again at the end of the disclosure statement wherein it has been stated that the authority would conclude on the matter after receiving the comments of the interested parties on this disclosure statement. It was submitted that the above observations in the disclosure statement clearly reveal that the conclusions recorded in the disclosure statement are tentative and not conclusive, as sought to be contended on behalf of the petitioners.
16.3 As regards the contention that insufficient time was not granted for filing the comments, it was submitted that the authority had granted six days' time to file comments on the disclosure. It was submitted that the conclusions are coming towards the close of the investigation and are based on the facts presented or arguments raised by every interested party. There is no statutory provision that prescribes the length of time to be given to interested parties to offer their comments. Article 6.9 of the ADA only states that such disclosure should take place in sufficient time for the parties to defend their interests. It was submitted that article 6.9 uses the word 'should' which is directory in nature and not the word 'shall' which is mandatory. It was submitted that the time to be granted is at the discretion of the authority taking into account the statutory deadline for completing the investigation and that unless the period of 6 days is shown to be unreasonable Page 26 of 118 HC-NIC Page 26 of 118 Created On Sun Aug 13 16:00:43 IST 2017 C/SCA/16426/2016 JUDGMENT or highly insufficient, it cannot be faulted with.
16.4 Insofar as the request for grant of extension of time to file comments on the disclosure is concerned, it was submitted that there is no legal provision that mandates the authority to grant extension of time for filing comments on disclosure. It was submitted that under rule 17(1) of the rules, the investigation is to be concluded within one year from the date of initiation. The first proviso to rule 17 of the rules states that the Central Government may in its discretion, in special circumstances, extend further the aforesaid period of one year by six months. Thus, the extension is allowed under special circumstances, that too, by Central Government to the authority and that the authority cannot presume that the Central Government would grant extension to complete the investigation and keep acceding to requests for grant of extension of time to interested parties for filing comments on disclosure. It was submitted that in the absence of any statutory provision, it should be left to the discretion of the authority and the fact that the authority did not grant extension cannot not be a ground for faulting the entire process. It was submitted that in any case, as far as the fourth respondent is aware, no differential time limit was set for different interested parties and all interested parties were treated alike, that is, they were granted the same length of time for filing comments.
16.5 The learned advocate further drew the attention of the court to the fact that in the original investigation, the disclosure statement was issued on 10th February, 2012, whereas the final findings were issued on 17th February, 2012, Page 27 of 118 HC-NIC Page 27 of 118 Created On Sun Aug 13 16:00:43 IST 2017 C/SCA/16426/2016 JUDGMENT to submit that the time limit for comments on disclosure given during the original investigation must have been less than the time given in the current mid-term review.
16.6 As regards the contention that insufficient and inadequate time had been granted for the purpose of defending the interests of the petitioners, reference was made to rule 6(7) of the rules, which corresponds to article 6.4 of the ADA, to submit that the same provides that the authorities shall, whenever practicable, provide timely opportunities for all interested parties to see all information that is relevant to the presentation of their cases, that is not confidential as defined in paragraph 5, and that is used by the authorities in an anti- dumping investigation and to prepare presentations on the basis of this information. It was submitted that the words 'whenever practicable' are noteworthy. It implies that there may be constraints in providing opportunities as and when sought. It was submitted that there is no allegation that the authority did not grant any opportunity during the course of the investigation and that when the disclosure statement is issued at the fag end of the investigation after following the procedure prescribed, there is no reason to provide another opportunity of hearing. It was submitted that the authority has in fact considered the comments on the disclosure statement filed by the interested parties including the ones filed by the petitioners herein and that in view thereof, the contention that there was no effective opportunity to displace the conclusions does not hold any merit and is liable to be rejected.
16.7 As regards the contention about non-consideration of certain factors in the disclosure statement or the final findings, Page 28 of 118 HC-NIC Page 28 of 118 Created On Sun Aug 13 16:00:43 IST 2017 C/SCA/16426/2016 JUDGMENT the learned advocate submitted that it has been alleged that the factors relating to 'threat of material injury' were not considered by the authority. It was submitted that in terms of rule 23(1A), the designated authority is required to recommend withdrawal of duties where it comes to a conclusion that the injury to the domestic industry is not likely to continue or recur if the said duty is removed or varied and is therefore, no longer warranted. It was submitted that as regards the question as to how to determine whether the injury is not likely to continue or recur, the petitioners have alleged that the authority shall consider the factors mentioned in paragraph (vii) of Annexure II to the rules and have also relied upon the statement of the authority in the disclosure statement that the authority examined the likelihood of continuation or recurrence of dumping and injury considering the parameters relating to the threat of material injury in terms of Annexure II (vii) of the rules.
16.8 It was further submitted that section 9B(1)(b)(ii) of the Customs Tariff Act 1975 requires a determination that import of such article into India causes or threatens material injury to any established industry in India or materially retards the establishment of any industry in India. These are commonly referred to as material injury, threat of material injury and material retardation. In the original investigation the designated authority determined that the domestic industry had suffered material injury. According to the learned counsel, when an industry has suffered material injury and anti- dumping duties have been imposed to remedy such material injury, while reviewing such measures, the designated authority is required to consider whether the said material Page 29 of 118 HC-NIC Page 29 of 118 Created On Sun Aug 13 16:00:43 IST 2017 C/SCA/16426/2016 JUDGMENT injury is likely to continue or recur. It was contended that the question of continuation will arise when the domestic industry is still suffering material injury, however, when the industry is not suffering material injury currently, one must examine whether the injury is likely to recur, if the duties are withdrawn.
16.9 It was submitted that in this case, as the domestic industry was not suffering any material injury, it was incumbent upon the designated authority to consider whether it is likely to recur. It was submitted that there is no guidance in the law either in the anti-dumping agreement or in the Indian provisions about the way a likelihood of recurrence of injury is to be conducted and that the law has left it to the wisdom of the investigating authority. According to the learned counsel, the relevant question is whether an analysis of the likelihood of recurrence of injury is the same as or somewhat similar to an analysis of threat of injury. It may not be appropriate to equate likelihood of recurrence of injury to that of threat of material injury. A likelihood of recurrence determination is wider in its scope and ambit than a determination of threat of injury and that even if all the four factors mentioned in the relevant rules are absent, likelihood of recurrence of injury may be present. One or two of the factors of threat of injury may also indicate a strong likelihood of recurrence. It was urged that therefore, the factors mentioned for a threat of material injury determination are not mandatory for a likelihood of recurrence of injury analysis.
16.10 It was argued that the designated authority in its wisdom has considered some of the factors mentioned for a Page 30 of 118 HC-NIC Page 30 of 118 Created On Sun Aug 13 16:00:43 IST 2017 C/SCA/16426/2016 JUDGMENT threat of material injury analysis and that non-consideration of all the factors does not vitiate the analysis. It was contended that the word 'injury' would cover all the three situations of injury and a reference was made to footnote 9 to the title of Article 3-Determination of injury, in the AD, which reads as under:
"Footnote 9. Under this Agreement the term "injury"
shall, unless otherwise specified, be taken to mean material injury to a domestic industry, threat of material injury to a domestic industry or material retardation of the establishment of such an industry and shall be interpreted in accordance with the provisions of this Article."
16.11 It was submitted that the words 'unless otherwise specified' are noteworthy. This implies that the word 'injury' may not cover all the three situations of injury in all cases. When there is a threat of injury, duties may be imposed. When there is only a likelihood of threat of injury, whether duties could be imposed is another issue that would arise. The case of a likelihood of a threat of injury would go against the first sentence of Article 3.7 which states that a determination of a threat of material injury shall be based on facts and not merely on allegation, conjecture, or remote possibility. Further, the third sentence of Article 3.7 of ADA states: ".... In making a determination regarding the existence of a threat of material injury, the authorities should consider, inter alia, such factors as...." This sentence uses the word 'should' and not 'shall'. Thus, the factors mentioned in respect of threat of material injury are not mandatory. It was urged that therefore, the question of the authority failing to consider some of the factors mentioned would not amount to a violation of the principles of Page 31 of 118 HC-NIC Page 31 of 118 Created On Sun Aug 13 16:00:43 IST 2017 C/SCA/16426/2016 JUDGMENT natural justice that would vitiate the final findings, much less, the disclosure statement.
16.12 It was further submitted that the designated authority has, in its wisdom, considered a number of other factors such as volume of exports post POI, market share of subject countries in the Indian market, price attractiveness of Indian market, export orientation of foreign producers, level of current and past dumping margin, etc., in the likelihood analysis. According to the learned counsel, if at all, such issue may be agitated in an appeal before the appellate authority and not before the High Court while invoking its writ jurisdiction.
16.13 On the question of use of Non-Injurious Price in the injury analysis, it was submitted that the petitioners have alleged that the authority has used the Non-Injurious Price (NIP) determined for the domestic industry in the injury analysis and that has vitiated the analysis and that NIP is an irrelevant factor in the injury analysis. According to the learned counsel, nothing could be farther from the truth. It was submitted that in this regard, it is necessary to examine the scope and ambit of the injury analysis as prescribed under the rules. Reference was made to Annexure II to the rules which prescribe the principles for determination of injury. It was submitted that determination of injury involves examination of three distinct aspects, viz., (1) volume of dumped imports; (2) effect of dumped imports on prices in the domestic market for the like article; and (3) consequent impact of these imports on the domestic producers of such products. It was submitted that in respect of the first aspect, the designated authority must Page 32 of 118 HC-NIC Page 32 of 118 Created On Sun Aug 13 16:00:43 IST 2017 C/SCA/16426/2016 JUDGMENT consider whether there has been a significant increase in dumped imports either in absolute terms or relative to production or consumption in India. It was submitted that the second aspect has two sub-aspects, namely, (1) whether there is a significant price undercutting; or (2) whether the effect of such imports is otherwise to depress prices to a significant degree (referred to "price depression") or prevent price increase which otherwise would have occurred (referred to as "price suppression"), to a significant degree and that the third aspect involves evaluation of all relevant economic parameters and indices having a bearing on the state of the industry and lists out fifteen parameters which are considered mandatory injury parameters.
16.14 Referring to the impugned disclosure statement, it was submitted that while examining whether there is a significant increase in the volume of dumped imports, NIP has not been used; while examining price undercutting, NIP has not been used and that the designated authority has only compared the landed value of imports to the Net Sales Realisation(NSR) which is quite different from NIP. NSR is the actual price realised by the domestic industry during period in question. It was pointed out that while examining 'Price depression' only the trend of prices over the injury period is seen and that in this case, selling price has moved up and up and up, from 100 to 108 to 113 to 123 to 125 over the injury period and that NIP has not been used in this analysis. It was further pointed out that for price suppression, the trend of cost of sales and selling price have been used and that in this case, while cost of sales has increased from 100 to 101 to 110 to 106 and then to 102, selling prices kept on increasing as Page 33 of 118 HC-NIC Page 33 of 118 Created On Sun Aug 13 16:00:43 IST 2017 C/SCA/16426/2016 JUDGMENT stated earlier. Thus, NIP has not been used for this analysis also.
16.15 The learned counsel further submitted that while examining the third aspect, that is, mandatory injury parameters, the designated authority has only examined the relevant parameters such as production, capacity, sales, capacity utilisation, inventories, etc., and that NIP has not been used at all. It was submitted that in fact, the factor relating to profits requires special attention in this regard. It was pointed out that the designated authority examines the actual profit earned by the domestic industry. In indexed terms, profit per MT has increased from Rs.100 in 2011-12 to Rs.176 in 2012-13, it has declined marginally to Rs.146 in 2013-14 and has then increased to Rs.293 during POI and has further increased to Rs.356 during post POI. This increase relates to actual profits and not notional profits and there is no use of NIP for this analysis also. Even the return on investment examined here is based on actuals and not based on NIP. It was, accordingly, argued that the contention that an irrelevant factor named NIP has been used in the injury analysis is without any factual basis and is liable to be rejected.
16.16 As regards where exactly NIP has been used and how, it was submitted that for this purpose it is necessary to look as to what use the NIP has been put to. It was submitted that NIP has been used to determine what is known as 'injury margin'. This may also be called 'price underselling'. Mathematically both are the same. It was pointed out that the difference between the NIP and the landed value of imports and the difference is also expressed as a percentage of landed Page 34 of 118 HC-NIC Page 34 of 118 Created On Sun Aug 13 16:00:43 IST 2017 C/SCA/16426/2016 JUDGMENT value. Price underselling analysis is shown next to price undercutting analysis and the same gets repeated once again under the heading magnitude of injury and injury margin. It was further submitted that it is also important to note the context in which Injury margin is determined. It was submitted that India follows what is known as 'lesser duty rule'. Reference was made Article 9.1 of the ADA, which reads thus:
9.1. The decision whether or not to impose an anti-
dumping duty in cases where all requirements for the imposition have been fulfilled, and the decision whether the amount of the anti-dumping duty to be imposed shall be the full margin of dumping or less, are decisions to be made by the authorities of the importing Member. It is desirable that the imposition be permissive in the territory of all Members, and that the duty be less than the margin if such lesser duty would be adequate to remove the injury to the domestic industry.
It was submitted that the concept of 'lesser duty rule' (viz., the duty shall be equal to dumping margin or injury margin, whichever is less) has been incorporated in Indian law vide rule 4 (1)(d)(i) and rule 17(1)(b) of the rules, both of which refer to the amount of duty which, if levied, would remove the injury to the domestic industry. This concept has been introduced in India on the rationale that users of the imported products as well as producers of the like article in India constitute two eyes of the Indian economy; and that to protect one eye, thou shall not hit another. It was submitted that to determine the amount of duty that would aim to protect the interests of both the parties, the injury margin is determined and the duty equal to the dumping margin or the injury margin, whichever is less, is fixed. It was submitted that it is Page 35 of 118 HC-NIC Page 35 of 118 Created On Sun Aug 13 16:00:43 IST 2017 C/SCA/16426/2016 JUDGMENT necessary to look at the distinction between price undercutting and price underselling. As price undercutting indicates the difference between the Net Sales Realisation of the domestic industry and the landed value of imports, it indicates the extent to which import prices are affecting the domestic industry. On the other hand, price underselling is the parameter to see whether the imports are coming even below the NIP.
16.17 Reverting to the facts of the present case it was submitted that price undercutting was 5%-10 % during the POI and 0%-5% during the Post POI. During the POI, landed values of imports coming into India were in the range of USD 253.18 PMT to USD 308.52 PMT. At this landed value, they were below the Net Sales realisation of the domestic industry in the range of 5%-10%. Weighted average landed value of imports from all the countries was Rs.16820 PMT (or USD 272.65 PMT). Taking the midpoint of the range as the price undercutting, that is, 7.5%, actual net sales realisation was USD 293.10 PMT. It was submitted that the price underselling was negative even at the lowest landed value of USD 253.18 implying that the non- injurious price was well below USD 253.18. It was submitted that it is not known how much lower the NIP was, however, assuming it to be USD 250, which is marginally less than the available numbers, the price realised by the domestic industry was more than USD 43 per MT. It was urged that the designated authority took this into account and concluded that there is a need to withdraw the duty. It was contended that the petitioners have been trying to challenge this determination on certain non-existing lacunae in the disclosure statement and/or the final findings and that there being no merit in the Page 36 of 118 HC-NIC Page 36 of 118 Created On Sun Aug 13 16:00:43 IST 2017 C/SCA/16426/2016 JUDGMENT submissions of the petitioners the writ petition deserves to be dismissed.
16.18 It was next submitted that when the injury margin is negative, the amount of duty to be imposed is indeterminable. The existing duty cannot be continued as it would be in excess of the amounts permitted under rule 4(d) and rule 17(1)(b) of the rules. It was submitted that in several cases, the existing duties have been withdrawn where injury margin was negative and where duty was withdrawn by the authority but injury margin was positive, the Tribunal has restored the duty. In support of such submission, the learned counsel placed reliance upon the following decisions of the Customs Excise and Service Tax Appellate Tribunal (Delhi):
i. Indian Graphite Manufacturers Association Vs DA [2006 (199) ELT 722 Tri.Del.] ii. Jindal stainless Ltd Vs DA [2006 (204) ELT 267 Tri.Del.] iii.Kalyani Steel Ltd Vs DA [2006 (203) ELT 418 Tri.Del].
16.19 As regards the conclusions recorded by the designated authority on material injury, the learned counsel submitted that the petitioners contend that the conclusions on material injury show non-application of mind as the authority has stated that both price undercutting and price underselling effects are negative. It was submitted that the conclusion does not cover only that issue and that in this regard it is important to look at the conclusion on material injury, conclusion on other known factors and causal link, which are relevant in this regard. It was submitted that the conclusion on material injury Page 37 of 118 HC-NIC Page 37 of 118 Created On Sun Aug 13 16:00:43 IST 2017 C/SCA/16426/2016 JUDGMENT notes that the performance of the domestic industry has improved remarkably in terms of production, sales volume, profit, cash profit, return on capital employed and inventory; it records that market share has declined during POI as compared to base year; it goes on to add that during the post POI, the economic parameters have shown continued improvement including increased trend in the market share; it does state that net sales realisation is more than the landed price from the subject countries during the POI and the post POI; and that it is partially correct in the sense that the NSR was more than the landed price of imports from Pakistan only during POI and NSR was more than the landed price of imports from both Pakistan and EU during post POI and not from all the subject countries. It was submitted that apart from this one error, the petitioners have not pointed out any other errors.
16.20 The learned counsel for the fourth respondent further submitted that while evaluating the impact of this error which may be a ministerial error, conclusions on other factors shall also have to be kept in mind. Referring to the disclosure statement it was pointed out that the designated authority has recorded as follows:
"From the above analysis, the Authority notes that neither the listed known parameters nor the other factors analysed above show any injury to the domestic industry either during POI or post POI. The economic health of the domestic industry has improved remarkably during POI as compared to the base year despite continued dumping of subject goods from the subject countries. Further, the post POI performance of the domestic industry also shows positive trends despite continued dumping. Therefore, it's a scenario of Page 38 of 118 HC-NIC Page 38 of 118 Created On Sun Aug 13 16:00:43 IST 2017 C/SCA/16426/2016 JUDGMENT continued dumping without injurious effects on the domestic industry."
According to the learned counsel, the error committed by the designated authority may be treated as a ministerial error which does not vitiate the overall conclusion nor does it amount to non-application of mind and that for this one error, it cannot be said that the entire disclosure statement or the final finding stands vitiated.
16.21 Another submission advance by the learned counsel for the fourth respondent was that there is no argument or ground raised in the writ petition about the above issues and that the same appears to be an afterthought. It was contended that at this late stage of the proceedings when pleadings are complete, such grounds should not be allowed to be raised.
16.22 Dealing with the submissions advanced on behalf of the petitioners that non-inclusion of freight and non-inclusion of investments being made in an ongoing expansion project in calculating capital employed amounts to a violation of the principles of natural justice, it was submitted that the designated authority has dealt with those claims of the domestic industry and if the petitioners are aggrieved, they may file an appeal before the Tribunal and get it adjudicated. In any case, injury margin is calculated by comparing the NIP at ex-factory level and landed value at ex-port level. This is a proper comparison as per Annexure III. It was argued that if the expansion project is not yet over and the new assets have not yet been put into operation for the production of the product concerned, one cannot say that the capital employed Page 39 of 118 HC-NIC Page 39 of 118 Created On Sun Aug 13 16:00:43 IST 2017 C/SCA/16426/2016 JUDGMENT in such expansion project is the capital employed for the product concerned and, therefore, there is no merit in this argument and for this reason one cannot say that the disclosure statement is vitiated. It was contended that this is nothing but an attempt on the part of the petitioners to somehow inflate the NIP and to arrive at a low or nil injury margin to suit their purposes.
16.23 Dealing with the contention of the petitioners that the action of the designated authority in initiating the mid- term review is without jurisdiction and illegal and that the initiation notice does not record any finding as to the existence of facts warranting such review, the learned counsel submitted that this is factually incorrect. It was submitted that the grounds for review submitted by the applicant, that is, the All India Glass Manufacturers' Federation and the decision of the authority on the said grounds are given in the initiation notice itself. The attention of the court was invited to paragraphs 2, 3, 10 and 11 of the initiation notice to submit that in view thereof, there is no merit in the contentions raised by the petitioners.
16.24 As regards the contention of the petitioners that the WTA data used by the designated authority in the final findings had not been disclosed to them, the learned counsel submitted that when certain issues are raised by an interested party as a part of the comments to the disclosure statement, the authority must consider them. It was pointed out that in this case, the domestic industry commented that prices for export from subject countries to third countries have not been considered, to which the designated authority has responded Page 40 of 118 HC-NIC Page 40 of 118 Created On Sun Aug 13 16:00:43 IST 2017 C/SCA/16426/2016 JUDGMENT by collecting the relevant data and giving his evaluation in the final findings. It was further submitted that in this case, that data also supported the conclusions already made. It was also submitted that it is not mandatory to issue a second disclosure statement or to make it available to all interested parties at that late stage. According to the learned counsel, in this regard, a parallel may be drawn to the provisions contained in Paragraph 6 of Annex II to the ADA which reads thus:
"6. If evidence or information is not accepted, the supplying party should be informed forthwith of the reasons therefor, and should have an opportunity to provide further explanations within a reasonable period, due account being taken of the time-limits of the investigation. If the explanations are considered by the authorities, the reasons for the rejection of such evidence or information should be given in any published determinations".
16.25 It was urged that considering the time-limits of the investigation, the analysis of the new facts that have emerged after the disclosure stage may be made known in the published final findings. According to the learned counsel, this is an exceptional situation and not a normal during-course-of
-investigation situation, and therefore, non-disclosure of WTA data cannot be considered as a violation of the principles of governing the investigation contained in rule 6 or of the principles of natural justice.
16.26 The learned counsel for the fourth respondents further submitted that just before conclusion of the arguments by the learned counsel for the petitioner, certain propositions Page 41 of 118 HC-NIC Page 41 of 118 Created On Sun Aug 13 16:00:43 IST 2017 C/SCA/16426/2016 JUDGMENT were presented, which included, inter alia, a list of facts that were not disclosed and reliance was also placed on the decision of the Supreme Court in Reliance Industries Ltd v. DA, 2006 (202) ELT 23 (SC). It was submitted that the list of facts alleged to have not been disclosed may be grouped into -
(1) Non-disclosure of facts relating to normal value, export price and dumping margin of exporters (2) Non-disclosure of certain data of the domestic industry used in the injury analysis (3) Non-disclosure of calculation of NIP for POI; (4) Non-disclosure of NIP as such and its calculation for post POI;
16.27 Lastly it was submitted that when the petition was filed and initially taken up for consideration, the customs notification had not been issued. Accordingly, at that point of time, there was no alternate remedy available. However, now that the determination has been by the Central Government by issuing the customs notification withdrawing the duty, a statutory alternate remedy is available and therefore, the petitioners should be directed to exhaust the alternate remedy and that for this reason also, these writ petitions deserve to be dismissed. It was also submitted that anti-dumping duty being an economic measure, as has been held by this court in the case of Alembic Ltd, 2013 (291) ELT 327 (Guj), the petition may not be entertained.
17. Mr. Vikram Nankani, Senior Advocate, learned counsel with Mr. Hardik Modh, learned advocate for the seventh respondent submitted that in a matter of this kind, the scope Page 42 of 118 HC-NIC Page 42 of 118 Created On Sun Aug 13 16:00:43 IST 2017 C/SCA/16426/2016 JUDGMENT of judicial review is very narrow and confined only to the decision making process and not to the decision itself. It was submitted that the investigation or review in relation to anti- dumping levy or withdrawal of anti-dumping involves adherence to strict time lines and interference with the same frustrates the very object of the statutory provisions. Therefore, the scope of judicial review of the disclosure statement is very narrow.
17.1 As regards the nature and scope of the disclosure statement, it was submitted that the same is in the nature of a draft order. According to the learned counsel, the disclosure statement under rule 16 of the rules, at best, is an intermediary stage in the final decision and cannot be subjected to judicial review at all. It was submitted that section 9A(5) of the Customs Tariff Act, 1975 is the charging section and section 9C of the Act provides that an appeal against the order of determination or review thereof regarding the existence, degree and effect of any subsidy or dumping in relation to import of any article shall lie to the Customs, Excise and Service Tax Tribunal constituted under section 129 of the Customs Act, 1962. It was submitted that therefore, the remedy against a notification levying or withdrawing anti- dumping duty is by way of an appeal under section 9C of the Act and that no remedy is provided at the intermediary stage. Reference was made to rule 17 of the rules, which provides for final findings, to submit that the designated authority is required to render the final findings within a period of one year from the date of initiation of investigation and that under the proviso thereto, it is permissible for the Central Government in its discretion to further extend such period of one year by six Page 43 of 118 HC-NIC Page 43 of 118 Created On Sun Aug 13 16:00:43 IST 2017 C/SCA/16426/2016 JUDGMENT months and, therefore, the total period for completion of the investigation, issuance of disclosure statement and final findings is eighteen months. It was submitted that rule 23 of the rules has its own time-frame, viz., twelve months from the date of initiation of review. It was submitted that where the remedy of appeal is only against a final notification and strict time lines are laid down for the interim proceedings, judicial review would interfere with the strict time lines laid down under the statutory provisions and that in any case, the scope of the judicial review should be confined only to the decision- making process.
17.2 It was submitted that insofar as the decision-making process is concerned, it has to be found in law and for that, recourse has to be made to the scheme of the Act and the rules. It was submitted that the court would see that no prejudice is caused to the party by the authority in following due process; however, insofar as the sufficiency and adequacy of the findings recorded by the authority is concerned, the same would come at the final stage. It was submitted that by virtue of a disclosure statement under rule 16 of the rules, only information of the essential facts is required to be given to the parties and that no lis is decided and that the designated authority only discloses the essential facts under consideration which formed the basis of its decision. It was urged that the disclosure statement is, therefore, only a intermediary stage of the decision-making process and hence, at this stage, there would be no warrant for exercise of powers of judicial review. Reference was made to the decision of the Supreme Court in the case of Union of India and another v. Meghmani Organics Limited and others, (supra) and more particularly, Page 44 of 118 HC-NIC Page 44 of 118 Created On Sun Aug 13 16:00:43 IST 2017 C/SCA/16426/2016 JUDGMENT paragraph-5 thereof, wherein the court has recorded that the appellate authority, namely, CEGAT will always have the power to look into the relevant files including the materials treated as confidential for deciding the issues raised in appeal. It was submitted that therefore, the appellate authority has wide powers under section 9C of the Act and that the wider the scope of powers of the appellate authority, narrower is scope of judicial review. It was emphatically argued that the disclosure statement issued under rule 16 of the rules is not enforceable and is merely a step in aid of completion of investigation, and, therefore, does not give rise to any civil or penal consequences so as to warrant invocation of the extraordinary jurisdiction of this court under Article 226 of the Constitution of India. It was submitted that rule 16 of the rules.
17.3 Dealing with the contention regarding breach of the principles of natural justice, it was submitted that the principles of natural justice would be applicable only to the extent the law expressly allows, and no more. Reliance was placed upon the decision of the Supreme Court in the case of Union of India v. Col. J. N. Sinha and another, (1970) 2 SCC 458, wherein the court had held thus:
"8. Fundamental Rule 56(i) in terms does not require that any opportunity should be given to the concerned government servant to show cause against his compuls- ory retirement. A government servant serving under the Union of India holds his office at the pleasure of the President as provided in Article 310 of the Constitution. But this "pleasure" doctrine is subject to the rules or law made under Article 309 as well as to the conditions pre- scribed under Article 311. Rules of natural justice are not embodied rules nor can they be elevated to the pos- ition of fundamental rights. As observed by this Court in Page 45 of 118 HC-NIC Page 45 of 118 Created On Sun Aug 13 16:00:43 IST 2017 C/SCA/16426/2016 JUDGMENT A.K. Kraipak v. Union of India, (1969) 2 SCC 262, "the aim of rules of natural justice is to secure justice or to put it negatively to prevent miscarriage of justice. These rules can operate only in areas not covered by any law validly made. In other words they do not supplant the law but supplement it". It is true that if a statutory provi- sion can be read consistently with the principles of nat- ural justice, the courts should do so because it must be presumed that the Legislatures and the statutory au- thorities intend to act in accordance with the principles of natural justice. But if on the other hand a statutory provision either specifically or by necessary implication excludes the application of any or all the principles of natural justice then the court cannot ignore the man- date of the Legislature or the statutory authority and read into the concerned provision the principles of nat- ural justice. Whether the exercise of a power conferred should be made in accordance with any of the principles of natural justice or not depends upon the express words of the provision conferring the power, the nature of the power conferred, the purpose for which it is con- ferred and the effect of the exercise of that power."
17.4 Reliance was also placed upon the decision of the Supreme Court in the case of Union of India and others v. Sanjay Jethi and another, (2013) 16 SCC 116, for the proposition that natural justice cannot be permitted to become an unruly horse. Reference was also made to the decision of the Supreme Court in the case of Vardhman Industries Limited v. Commissioner of Central Excise, Chandigarh, (2015) 13 SCC 400, wherein it was held that an order which does not give rise to any legal rights, cannot be a subject matter of challenge under Article 226 of the Constitution of India. Reference was also made to the decision of the Supreme Court in the case of Uttar Pradesh Power Corporation Limited v. National Thermal Power Corporation Limited and others, (2011) 12 SCC 400, wherein the court placed reliance upon its earlier decision in the case of W. B. Page 46 of 118 HC-NIC Page 46 of 118 Created On Sun Aug 13 16:00:43 IST 2017 C/SCA/16426/2016 JUDGMENT Electricity Regulatory Commission v. CESC Ltd., (2002) 8 SCC 715, for the proposition that the Commission constituted under section 17 of the Electricity Regulatory Commissions Act, 1998 is an expert body and the determination of tariff which has to be made by the Commission involves a very highly technical procedure, requiring working knowledge of law, engineering, finance, commerce, economics and management. That neither the High Court nor the Supreme Court would in reality be appropriate appellate forums in dealing with these type of factual and technical matters. It was submitted that therefore, the rules of natural justice have their own limitations.
17.5 As regards the contention raised on behalf of the petitioners that detailed costing of NIP for the period of investigation and post POI had not been disclosed, reference was made to Annexure-IV to the disclosure statement, to submit that the methodology for determination of the non- injurious price had been given by the designated authority.
17.6 The learned counsel further drew the attention of the court to the final findings recorded by the designated authority, to point out that the post disclosure comments submitted by the domestic industry had been duly considered while recording the final findings. It was submitted that the petitioners have, therefore, not suffered from any handicap on account of the fact that only six days' time was granted for filing the comments in response to the disclosure statement.
17.7 As regards the contention that in the final findings, the designated authority had relied upon WTA data which was not Page 47 of 118 HC-NIC Page 47 of 118 Created On Sun Aug 13 16:00:43 IST 2017 C/SCA/16426/2016 JUDGMENT disclosed earlier, the learned counsel invited the attention of the court to the post disclosure comments made by the domestic industry, to submit that it was in respect to the comments made by the domestic industry that the designated authority, in its findings, has considered the data availed from the WTA. Referring to the comments of the domestic industry as recorded in the final findings that the authority had wrongly applied the principles given in Annexure-III and has drastically reduced the NIP without disclosing any circumstances, it was submitted that the circumstances are duly disclosed in Annexure IV to the disclosure statement. It was submitted that in any case, all the contentions raised before this court are contentions which could be raised before the Tribunal and hence, the petitioners ought to be remanded before the Tribunal where they may raise all such contentions.
17.8 Mr. Nankani submitted that keeping in mind the nature of the information disclosed under rule 16 of the rules, it is apparent that it is only a step in the investigation process, and hence, judicial review is not warranted at this stage as it cannot be said that there is any breach of the principles of natural justice, as reasonable and adequate opportunity has been granted to the petitioners. It was submitted that in these circumstances, the petitioners should not be permitted to take recourse to Article 226 of the Constitution of India.
17.9 Insofar as the submission with regard to necessity of granting sufficient time for the purpose of giving a response to the disclosure statement based on Article 6.9 of the ADA is concerned, the learned counsel submitted that the words "such disclosure should take place in sufficient time for the Page 48 of 118 HC-NIC Page 48 of 118 Created On Sun Aug 13 16:00:43 IST 2017 C/SCA/16426/2016 JUDGMENT purpose to defend their interests" as found in Article 6.9 are clearly missing in the rules. It was submitted that therefore, the words which are not found in the rules cannot be read into them and hence, the words "such disclosure should take place in sufficient time for the purpose to defend their interests"
cannot be read in rule 16 of the rules. In support of such contention, the learned counsel placed reliance upon the decision of the Supreme Court in case of case Gramophone Company of India Ltd. v. Birendra Bahadur Pandey and others, (1984) 2 SCC 534, for the proposition that the doctrine of incorporation also recognises the position that the rules of international law are incorporated into national law and considered to be part of the national law, unless they are in conflict with an Act of Parliament. Comity of nations or no, municipal law must prevail in case of conflict. National courts cannot say yes if Parliament has said no to a principle of international law. National courts will endorse international law but not if it conflicts with national law. National courts being organs of the national State and not organs of international law must perforce apply national law if international law conflicts with it. But the courts are under an obligation within legitimate limits, to so interpret the municipal statute as to avoid confrontation with the comity of nations or the well-established principles of international law. But if conflict is inevitable, the latter must yield. Reliance was also placed upon the decision of the Supreme Court in the case of Commissioner of Customs, Bangalore v. G. M. Exports and others, (2016) 1 SCC 91, for the proposition that 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 Page 49 of 118 HC-NIC Page 49 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT 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. It was submitted that therefore, what is absent in rule 16 of the rules cannot be imported in the rule from the international treaty. It was, accordingly, urged that the petitioners have an efficacious alternative statutory remedy available by way of an appeal under section 9C of the Act, and in the absence of any breach of the principles of natural justice or lack of jurisdiction on the part of the designated authority, the petition deserves to be dismissed on this count alone.
18 Mr. Pramod Kumar Rai, learned advocate with Mr. Vishal Sevak, learned advocate for the third respondent, submitted that the disclosure statement dated 10.08.2012 issued through the original investigation based on which the duty was imposed in 2012 shows that the time for submitting comments to the disclosure statement was shorter as compared to the time given in response to the impugned disclosure dated 14.09.2016. The earlier disclosure dated 10.8.2012, if not more, is equally conclusive and suggestive of imposition of anti-dumping duty because in para 147 of the disclosure statement it is stated that there is dumping, there is injury to Domestic Industry and injury is caused by dumping. Dumping Margin and Injury Margin is also shown to be positive in the earlier paragraphs. It was submitted that with these observations, even though the disclosure statement does not Page 50 of 118 HC-NIC Page 50 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT recommend duty in express terms, imposition of anti-dumping duty is inevitable because the disclosure statement establishes dumping, injury and casual link. It was submitted that seen in this context, the impugned disclosure dated 14.9.2016 also does not recommend withdrawal of duty in express terms. In fact, in para 60 of the disclosure statement, it has been expressly stated that the designated authority would conclude the matter after receiving comments from the interested parties.
18.1 The learned counsel further submitted that the disclosure statement under rule 16 of the rules was issued after completing all the stages of investigation under rule 6, including public hearing and after getting written submissions as well as rejoinder submissions of interested parties. It was submitted that it is at the fag end of the investigation, that the designated authority must discuss and conclude on every issue, otherwise the whole purpose of making submissions by interested parties would get frustrated. It was submitted that this is the practice which is being adopted worldwide, and, therefore, the disclosure statement cannot be faulted with because the designated authority has formed an opinion in the said disclosure. It was pointed out that thought a similar opinion has been formed by the designated authority in the original disclosure statement dated 10.08.2012, the petitioner has not raised any objection against the same.
18.2 The learned counsel further submitted that the disclosure statement under rule 16 read with Article 6.9 of WTO Agreement on Anti-dumping is a disclosure of essential facts and thus the scope of response by interested parties is Page 51 of 118 HC-NIC Page 51 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT limited to rectification of mistake in those essential facts and not a full-fledged response assailing the discussions and methodology adopted by designated authority. It was submitted that it must be noted that an apparent error in essential facts also must be first brought to the notice of designated authority and not directly to this court and that the petitioners having failed to point out any apparent error in the facts given in the disclosure statement to the designated authority, they have no locus standi to challenge such disclosure before this court.
18.3 It was vehemently argued that before the designated authority, Nirma Limited had never represented in its individual capacity and all the submissions had been made as part of Alkali Manufacturers Association (Domestic Industry) through their counsel. It was contended that now by filing a one-page letter post disclosure, the petitioners are seeking the indulgence of this court just with a view to delay the withdrawal of duty and to derive an undue advantage for which they have no locus standi. It was pointed out that even in the affidavit filed on 8.2.2017 the petitioner has not referred to any document submitted by them.
18.4 The learned counsel further submitted that the association of the domestic industry had represented its case before designated authority and has challenged the disclosure statement before the Delhi High Court in WP no. 8514 & 8628 of 2016, which came to be withdrawn subsequently on 27.9.2016. It was submitted that the association of the domestic industry has also filed its comments on the disclosure statement which has been taken on record and has Page 52 of 118 HC-NIC Page 52 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT been duly considered by designated authority; however, the association of the domestic industry is not before the court and the petitioner does not derive a locus standi in the case by filing a one-page letter.
18.5 Next it was submitted that the submission of petitioners that they have not been communicated the calculation sheet for NIP calculation is not correct, inasmuch as at no point of time, have they sought for a copy of the calculation sheet. It was submitted this this is not a case where the petitioners have sought for a copy of the calculation sheet and same has been denied by the designated authority. According to the learned counsel, if the calculation sheet was really not given to them, and if it was vital for them to make comments on disclosure, the petitioners should have requested a copy thereof.
18.6 It was further submitted that the petitioner-Nirma Limited in its letter above-referred letter dated 16th September, 2016 has not complained of non-supply of the NIP calculation and has merely sought extra time. It was also submitted that the counsel representing the domestic industry was fully aware of the NIP calculation and that is why, in the submissions he has emphasized on inclusion of post manufacture freight and cost attributable to capacity expansion.
18.7 It was contended that the submission of petitioner that freight incurred beyond the factory and expenses attributable to capacity expansion which is yet to be installed and which is not part of their books of accounts, should be included in NIP calculation, has no basis because it is specifically excluded under clause 4 of Annexure III of Ant-dumping Rules,1995. It Page 53 of 118 HC-NIC Page 53 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT was submitted that the submission that expenses which are not included under Annexure III should still be included for analyzing injury under Annexure II is also misplaced, inasmuch as both the Annexures must be read in harmony. Annexure II basically deals with causal relationship between dumping and injury and scope of Annexure II is not just one parameter, but rather multiple parameters relating to price and volume effect of dumping, but in no way does it contradict the calculation provided under Annexure III.
18.8 The learned counsel further submitted that the petitioners do not have even a prima facie case because they have suffered neither any volume injury nor price injury. Their absolute sale figure, production and capacity utilization has gone up. There is a slight fluctuation in their market share which is basically attributable to their decision not to reduce the price and their inability to produce more. It was submitted that whatever the petitioners are able to produce, they are able to sell and that there is no injury on price front also because dumped imports have not forced them to reduce prices. It was submitted that the petitioners have continued to increase the price much more as compared to the increase in cost of sales resulting into exponential growth in their profits.
18.9 It was next contended that the petitioners are simply trying to block the imports from all significant producers of Soda Ash overseas. In this regard reference was made to the list of countries in the two impugned notifications, to point out that EU itself has got so many countries. It was emphatically argued that the case of the petitioners is that India should not allow any import at a price lower than their selling price, even Page 54 of 118 HC-NIC Page 54 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT though they fix a very high selling price arbitrarily, which cannot be allowed because in an open market economy, the respondents have right to procure raw materials from competitive sources.
18.10 The learned counsel further submitted that all the asterisk marks in the disclosure are actually attributable to claim of confidentiality with respect to net sale realization and NIP calculation by the petitioners' Association. Apart from this, the asterisks appearing in the dumping margin calculation are on account of the fact that every exporter claims his selling price as confidential, the way the domestic industry has claimed confidentiality in their selling price. It was submitted that there is no asterisk mark in the disclosure statement which can be attributed to confidentiality claimed by third respondent or any of the other respondents before the court. Therefore, the disclosure statement does disclose all the essential facts in detail including method of NIP calculation and the asterisk marks in the NIP calculation, price undercutting and injury margin are all attributable to confidentiality claims of the association of the domestic industry.
18.11 It was further submitted that with the addition of anti-dumping duty, the landed value is very high as compared to the NIP; that even without addition of anti-dumping duty, the landed value of imports is above the NIP of domestic industries, and thus injury margin is negative. It was submitted that this calculation is not going to change with the withdrawal of anti-dumping duty and hence, there is no likelihood of recurrence of injury to the domestic industry. It was urged that the decision making process is flawless and the entire Page 55 of 118 HC-NIC Page 55 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT procedure of investigation including compliance with the principles of natural justice as enshrined in rule 6 of the rules has been followed.
18.12 Dealing with the contention raised on behalf of the petitioners that the time granted for responding to the disclosure statement was too short, the learned counsel submitted that the time to be given for commenting on the disclosure statement has to be seen in the context of time available with the designated authority for the investigation. Further as a matter of fact, the association of the domestic industry has submitted its comments within the time given by the designated authority, which has been duly considered by it in the final findings dated 23.9.2016 and thus on ground of insufficient time period, the decision making process cannot be faulted with. It was further submitted that Article 6.14 of WTO Agreement on Anti-dumping, states that the procedure set out in the Article 6 (which includes article 6.9 which dealing with the disclosure statement) are not intended to prevent authorities from proceeding expeditiously. It was submitted that, therefore, where the designated authority has tried to complete the proceeding within time, it should not be interfered with on the ground of insufficient time, more so, when the association of petitioners has actually submitted its response within the time given.
18.13 Lastly, it was submitted that it was the association of the domestic industry which requested for an analysis of likelihood of injury based on third country export data which has been taken from World Trade Atlas (WTA) and it is disclosed in final findings and it is the NIP and injury margin Page 56 of 118 HC-NIC Page 56 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT calculation which has been treated as confidential because domestic industry has claimed confidentiality in those calculations. The discussion in paragraphs 99 and 100 of the final findings supports the analysis done in the disclosure statement and thus the final findings cannot be faulted with on this ground. It was contended that if at all, the petitioners find this analysis to be faulty, the proper remedy is by way of an appeal before CESTAT under section 9C of the Customs Tariff Act, 1975, where the reasoning adopted in final findings can be assailed.
18.14 It was also submitted that the petitioners filed a WP within 6 days, and their association also filed a WP before Delhi HC within 6 days, wherein the impugned disclosure statement has been commented upon at length. Therefore, assailing the time of 6 days given for submitting comments to the disclosure statement before this court is not justified and is being done with ill-will.
19 Mr. Nirzar Desai, learned senior standing counsel for the second respondent - designated authority invited the attention of the court to the averments made in the affidavit-in-reply filed by the second respondent wherein, it has been denied that there was any irregularity in the process of publication of final findings on 23.09.2016. It was pointed out that no attempts have been made to overreach the orders of this court and the final findings have been sent and published on 23.09.2016 itself.
19.1 It was submitted that the contention that the petitioners were not given adequate opportunity to deal with the Page 57 of 118 HC-NIC Page 57 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT disclosure statement has no merit and that the petitioner had all the opportunities to rebut the facts and observations of the designated authority as disclosed in the disclosure statement like all other interested parties and that the post disclosure comments of the petitioners were also examined while notifying the final findings. It was submitted that the final findings were issued at the end of a long process of investigation which covered examination of facts and legal provisions, necessary verification of facts so submitted by various parties, including the petitioners, to the extent found necessary, granting opportunity of hearing, etc. 19.2 It was submitted that the likelihood determination that the injury to the domestic industry is not likely to continue or recur if the existing anti-dumping duty is removed or varied is not a standalone examination of threat of injury parameters provided in Annexure-II to the rules as indicative parameters of likelihood also. The examination inter alia covers various other aspects also and the designated authority is bound to take into consideration all such parameters. It was submitted that the designated authority has clearly concluded that dumping continued, but there was no likelihood of injury if the duties are removed, thus, the contention that criteria (ii) and (iv) of Annexure-II was not considered is of no relevance in the factual matrix of the present case. Reference was made to the findings recorded by the designated authority in the final findings to point out that various parameters have been considered by it to come to the conclusion that if anti-dumping duties imposed on the imports of subject goods originating in or exported from the subject countries are removed, the injury to the domestic industry is not likely to recur.
Page 58 of 118
HC-NIC Page 58 of 118 Created On Sun Aug 13 16:00:44 IST 2017
C/SCA/16426/2016 JUDGMENT
19.3 Next, it was submitted that the WTA data relied upon to examine specific claims of the parties as a matter of practice is not disclosed in any of the cases and the designated authority gets information from WTA under an agreement and the same is not freely published. It was submitted that the issue of non- disclosure of WTA data is without merit since the petitioners could not establish how the injuries would have recurred if the duties were removed when the domestic industry had been showing remarkable performance in terms of various injury parameters.
19.4 Insofar as the contention that the time that was granted from the date of issuance of disclosure statement to the date for filing the comments on the disclosure being very short is concerned, it was submitted that two mid-term reviews were pending before the designated authority in connection with the same product, viz., soda ash, both of which are subject matter of challenge in the present petitions, viz., the mid-term review in relation to China PR, EU, Iran, USA, Ukraine, Pakistan and in relation to Turkey and Russia. It was submitted that insofar as the investigation in respect of Turkey and Russia is concerned, the proceedings were initiated on 01.10.2016 and no extension was sought and hence, the period of twelve months was to come to an end on 30.09.2016 and hence, to avoid the complications which would arise if in one case, the final findings on similar issues are declared on or before 30.09.2016 and in the present case it is delayed beyond that period, the Central Government had accorded permission for extension of time up to 30th September, 2016 for completing the subject investigation and notifying the final findings. It was submitted Page 59 of 118 HC-NIC Page 59 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT that therefore, the decision to grant extension only up to 30.09.2016 is a well-considered decision and the period has not been arbitrarily extended up to 30.09.2016 only, and that there is a valid reason behind the same.
19.5 It was further submitted that neither of the petitioners, viz., NIRMA Limited, nor DCW Limited have appeared before the designated authority in their individual capacities and that the domestic industry has been represented as a whole. It was submitted that against the final findings, an appeal lies before the CESTAT against the notification notifying final findings and hence, the petitioners are required to be relegated to avail of the statutory remedy available under section 9C of the Customs Tariff Act. It was submitted that there is no breach of the principles of natural justice as urged by the learned counsel for the petitioners, nor has the decision been taken in a haste. It was submitted that the procedure in terms of Annexures I, II and III to the rules has been duly followed. It was submitted that this court while considering the validity of the disclosure statement of the final findings, would only examine whether the procedure has been duly followed and would only examine as to whether the decision-making process is in accordance with law. Reference was made to paragraph-21 of the additional affidavit of the designated authority to submit that all the relevant parameters have been duly considered by it. Reliance was placed upon the decision of the Supreme Court in the case of Rishiroop Polymers (P) Ltd. v. Designated Authority and Additional Secretary, (2006) 4 SCC 303, to submit that the scope of a mid-term review is limited to examining whether the conditions existing at the time of imposition of anti-dumping duty had altered to Page 60 of 118 HC-NIC Page 60 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT an extent rendering the continued imposition of duty, unjustified. Moreover, the said inquiry is limited to the information received with respect to the changes in various parameters in para (iv) of Annexure-II to the rules. The purpose of the review is not to ascertain the need for imposition of anti- dumping duty, but to ascertain the facts and discontinue such duty. Reliance was also placed upon the decision of the Supreme Court in the case of Designated Authority v. Haldor Topsoe A/S. (supra) and more particularly, paragraph- 19 thereof. It was submitted that whether to extend the time or not is an administrative decision of the designated authority and he may exercise his prudence. It was submitted that the principles of natural justice have been duly complied with and the procedure has been followed and all information and objections have been objectively considered and hence, there is no warrant for interference by this court.
20 Mr. Paritosh Gupta, learned advocate for the fifth respondent adopted the submissions advanced by Mr. Sitharaman, Mr. Nankani and Mr. Pramod Kumar Rai. He further submitted that the determination of injury under rule 11 of the rules in respect of whether there is any material retardation would apply only in case of a new industry being established and would not apply to an extension. It was submitted that rule 17 of the rules provides for a period of one year for issuing final findings and that the Central Government has a discretion to extend the time limit under special circumstances which it may exercise. It was submitted that no special circumstances have been made out in the facts of the present case to extend the time limit any further. As regards the submission advanced on behalf of the petitioners that initiation of mid-term review Page 61 of 118 HC-NIC Page 61 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT was not valid, it was submitted that initiation was not challenged at the relevant time and that the petitioners having participated in the proceedings are now barred from raising such a challenge at this stage. It was submitted that the entire purpose of rule 16 of the rules is to ascertain that the data before the designated authority is correct and complete and mere clarifications are required at this stage and there is no question of a full-fledged hearing. Insofar as reliance placed by the designated authority upon the WTA data is concerned, it was submitted that the designated authority was required to rely upon such data for the purpose of supporting its decision in reply to a contention raised by the petitioners. It was submitted that the scope of a review under rule 23 of the rules is limited and that review would entail investigation of the factors relevant at the time of imposition of duty and no other factors. It was submitted that rule 11 of the rules has to be applied to the extent of the scope of rule 23 of the rules only.
21. In rejoinder, Mr. Mihir Joshi, learned counsel for the petitioners submitted that the disclosure statement is something on the basis of which the interested party can defend its interests and is not merely a draft. Referring to the provisions of section 9A(5) of the Act it was submitted that in a review the Central Government is required to form an opinion as to whether cessation of such duty is likely to lead to continuance or recurrence of dumping and injury. It was submitted that if there is a finding that there is injury, what is required to be examined is whether it is likely to continue but if there is no injury, then the question as to whether the injury is likely to recur is required to be examined. It was submitted that essential facts are those facts on the basis of which the Page 62 of 118 HC-NIC Page 62 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT designated authority can decide whether there is any injury and whether there is likelihood of continuance or recurrence thereof.
21.1 Reference to the report of the Appellate Body of the World Trade Organization in WT/DS454/AB/R, WT/DS460/AB/R dated 14th October, 2015 in China-Measures Imposing Anti- Dumping Duties on High-Performance Stainless Steel Seamless Tubes ("HP-SSST") from Japan and China-Measures Imposing Anti-Dumping Duties on High-Performance Stainless Steel Seamless Tubes ("HP-SSST") from the European Union (para 5.133), to point out that in the facts of the said case the WTO Panel had considered that a determination of whether an investigating authority has complied with its obligations under that provision hinges largely on whether the essential facts under consideration by the investigating authority were in the possession of an interested party affected by the determination. The Appellate Body held that contrary to what the Panel stated it does not suffice for an investigating authority to disclose "the essential facts under consideration"
but, rather, it must disclose the essential facts under consideration that "form the basis for the decision whether to apply definitive measures". The Appellate Body disagreed with the suggestion of the Panel that a narrative description of the data would constitute sufficient disclosure simply because the essential facts that the authority is referred to "are in the possession of the respondent". The appellate body agreed with the European Union that "when the investigating authority has selected from amongst the facts originally provided by the interested party, [that] party has no way of knowing which facts have been selected. The appellate body was of the view Page 63 of 118 HC-NIC Page 63 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT that the mere fact that the investigating authority may be referring to data that are in the possession of an interested party would not mean that it has disclosed essential facts "that are salient for a decision to apply definitive measures, as well as those that are salient for a contrary outcome. An authority must disclose such facts in a coherent way, so as to permit an interested party to understand the basis for the decision whether or not to apply definitive measures and to defend its interests.
21.2 It was submitted that thus essential facts are those facts on which the decision as to whether or not to apply definitive measures would be based. The designated authority may while disclosing the essential facts give his tentative conclusions on those facts but not his conclusions from those facts as to whether or not definitive measures are required to be applied. Such conclusions can find place only in the final findings after considering the response of the parties to the disclosure statement. It was submitted that the conclusions recorded by the designated authority in the disclosure statement clearly reveal a pre-determined mind and that a pre-determination on the part of the designated authority would also amount to a bias and would, therefore, be in breach of the principles of natural justice.
21.3 It was next submitted that in the facts of the present case, the notification notifying the mid-term review was issued on 21.07.2015, therefore, the period of one year would come to an end on 20.07.2016. The designated authority made an application for extension of such period as late as on 27.06.2016, that is, three weeks before the expiry of the Page 64 of 118 HC-NIC Page 64 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT period of one year when he was still at the stage of rule 16 of the rules, viz., at the stage of issuance of disclosure statement, whereby he sought an extension of two months. Thereafter also, he took his own time in issuing the disclosure statement as late as on 14.09.2016, leaving a period of only fourteen to sixteen days for issuance of the final findings. It was submitted that the designated authority has thus, created an artificial urgency by seeking a shorter extension in one case and no extension in the other case to deny the petitioners sufficient opportunity. It was submitted that the conduct of the authority is contrary to the purpose of the rules, inasmuch as nothing stopped the designated authority from seeking an extension in the second case also. It urged that breach of principles of natural justice is essentially considered as an exception to appellate remedies, which goes to the root of the matter and makes it a clear case for invocation of article 226 of the Constitution of India.
21.4 As regards the contention that there are no civil consequences qua a disclosure statement, reference was made to article 6.9 of the ADA, to submit that the disclosure statement is the first opportunity of essential facts being put to the respective parties to enable them to defend their interest, and hence, is clearly part of the adjudicatory process. The designated authority is essentially rendering quasi-judicial functions, which would permeate at every stage. It was submitted that from the evidence/facts produced by the parties, the designated authority gleans out essential facts. The first stage of the proceeding is the stage at which the designated authority applies his own mind and gleans out essential facts. This is the only stage at which response is Page 65 of 118 HC-NIC Page 65 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT sought for to the facts recorded by the designated authority. It was submitted that if final findings are merely recommendatory, the question is at what stage would the parties be heard. Besides, in a mid-term review if the recommendation is negative, namely, that there is no injury, the entire basis for levy of anti-dumping duty goes and the Central Government cannot continue with the levy. It was submitted that for the purpose of mid-term review, which entails withdrawal of the anti-dumping duty, in view of the provisions of section 9A(5)of the Act, the authority is required to consider the likelihood of continuation of recurrence of dumping and injury which factors are enumerated in Annexure- II to the rules, which give a guidance to what facts the designated authority should take into account.
21.5 Referring to the findings recorded by the designated authority in the disclosure statement under the heading "Price attractiveness of Indian Market" (paragraph 58), wherein it has recorded that the authority notes that the landed value from the subject countries is more than the NIP and both undercutting and underselling are negative during POI as well as post POI; thus, in the event of the revocation of anti- dumping duties, the Indian prices would not be too attractive to the foreign producers and there is no likelihood that Indian customers would import substantially due to increasing demand; it was pointed out that during the period of protection, the volume of dumping has increased. It was pointed out that the latter part of the para records the conclusions of the designated authority but there is nothing to show as to what are the essential facts, to submit that the opinion of the designated authority is not an essential fact. It Page 66 of 118 HC-NIC Page 66 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT was submitted that apart from the above, the designated authority has relied upon the non-injurious price for the purpose of drawing this conclusion. It was contended that it is not possible for the petitioners to defend its interest against a conclusion and that the disclosure statement does not set out essential facts as contemplated under rule 16 of the rules and hence, fails on this count.
21.6 Referring to the total demand of soda ash in India and the surplus in China PR and USA, it was pointed out that both the countries have huge surplus of soda ash. It was further submitted that the volume of export to third countries has not been considered by the designated authority; who has also failed to consider the aspect of freight as well as capacity expansion of domestic industries which in fact was placed before it.
21.7 It was further submitted that the likelihood analysis made by the designated authority is based on the current NIP. It was pointed out that the NIP which is computed under Annexure III to the rules is for the determination of quantum under rule 17(1) of the rules and Annexure-III does not find place in the injury determination. According to the learned counsel, at the stage of injury determination, the NIP does not come into picture and that for the likelihood of injury, the designated authority should have taken into consideration the factors of freight also and that on the basis of Annexure-III, the designated authority could not have discarded the contention of the petitioners that freight also should be taken into account both in the case of domestic industry as well as exporters.
Page 67 of 118
HC-NIC Page 67 of 118 Created On Sun Aug 13 16:00:44 IST 2017
C/SCA/16426/2016 JUDGMENT
21.8 Referring to the final findings dated 23rd September,
2016, it was submitted that all the contentions contained in the disclosure statement have been reiterated verbatim. It was submitted that the designated authority has held that any data concerning expansion should be duly reflected in the books of account of the domestic industry, failing which such data cannot be relied upon, to submit that the books of account did reflect the data concerning the expansion, only it was not capitalized. It was submitted that both China and USA have huge surplus which is likely to be diverted to India if the anti- dumping duty is withdrawn. It was urged that on account of stability during the protective period, huge investments had been made for enhancing the production capacity, and that withdrawal of anti-dumping duty at this stage would have a huge impact and the petitioners would not be in a position to recover the cost of investments for a long period. It was submitted that in this background, the petitioners are entitled to contend that the relevant factors provided under the statute have not been considered.
21.9 Dealing with the decision of the Supreme Court in the case of Haridas Exports v. All India Float Glass Manufacturers' Association, (2002) 6 SCC 600, on which reliance had been placed on behalf of the respondents, it was submitted that the same was rendered in the context of completely different facts and would have not applicability to the facts of the present case.
21.10 It was emphatically argued that it is not domestic industry which was required to establish how the injury would have recurred if the duties were removed, but it was for the Page 68 of 118 HC-NIC Page 68 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT applicants at whose instance mid-term review was initiated to establish that if the duties were removed, the injury would not recur. It was submitted that the designated authority has applied wrong principles in the proceedings.
21.11 As regards the contention that the petitions were not maintainable on the ground that there is an efficacious alternative remedy available under the statute, Mr. Joshi submitted that the proceedings before the designated authority are quasi-judicial in nature and that in case there is a breach of the principles of natural justice, a writ petition would lie before this court. In support of such submission, reliance was placed upon the decisions of the Supreme Court in Popcorn Entertainment and another v. City Industrial Development Corporation and another, (2007) 9 SCC 593 (paragraph 20), and Automotive Tyre Manufacturers Association v. Designated Authority and others, (2011) 2 SCC 258, (paragraphs 64 to 75).
22. In the backdrop of the facts and contentions noted hereinabove, reference may be made to the relevant provisions of the Customs Tariff Act, 1975 (hereinafter referred to as "the Act"). Section 9A of the Act provides for "Anti- dumping duty on dumped articles" and lays down that where any article is exported by an exporter or producer from any country or territory (hereafter in the section referred to as the exporting country or territory) to India at less than its normal value, then, upon the importation of such article into India, the Central Government may, by notification in the Official Gazette, impose an anti-dumping duty not exceeding the margin of dumping in relation to such article. The explanation Page 69 of 118 HC-NIC Page 69 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT thereto, to the extent the same is relevant for the present purpose, reads thus:
"Explanation. - For the purposes of this section, -
(a) "margin of dumping" in relation to an article, means the difference between its export price and its normal value;
(b) "export price", in relation to an article, means the price of the article exported from the exporting country or territory and in cases where there is no export price or where the export price is unreliable because of association or a compensatory arrangement between the exporter and the importer or a third party, the export price may be constructed on the basis of the price at which the imported articles are first resold to an independent buyer or if the article is not resold to an independent buyer, or not resold in the condition as imported, on such reasonable basis as may be determined in accordance with the rules made under sub-section (6);
(c) "normal value", in relation to an article, means-
(i) the comparable price, in the ordinary course of trade, for the like article when destined for consumption in the exporting country or territory as determined in accordance with the rules made under sub-section (6);
or,
(ii) when there are no sales of the like article in the ordinary course of trade in the domestic market of the exporting country or territory, or when because of the particular market situation or low volume of the sales in the domestic market of the exporting country or territory, such sales do not permit a proper comparison, the normal value shall be either-
(a) comparable representative price of the like article when exported from the exporting country or territory to an appropriate third country as determined in accordance with the rules made under sub-section (6); or,
(b) the cost of production of the said article in the Page 70 of 118 HC-NIC Page 70 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT country of origin along with reasonable addition for administrative, selling and general costs, and for profits, as determined in accordance with the rules made under sub-section (6):
Provided that in the case of import of the article from a country other than the country of origin and where the article has been merely transshipped through the country of export or such article is not produced in the country of export or there is no comparable price in the country of export, the normal value shall be determined with reference to its price in the country of origin."
23. Sub-section (5) of section 9A of the Act provides that the anti-dumping duty imposed under that section shall, unless revoked earlier, cease to have effect on the expiry of five years from the date of such imposition. The proviso thereto says that if the Central Government, in a review, is of the opinion that the cessation of such duty is likely to lead to continuation or recurrence of dumping and injury, it may, from time to time, extend the period of such imposition for a further period of five years and such further period shall commence from the date of order of such extension.
24. Section 9B of the Act, to the extent the same is relevant for the present purpose, reads thus:
"9B. No levy under section 9 or section 9A in certain cases.
(1) Notwithstanding anything contained in section 9 or section 9A, -
(a) no article shall be subjected to both countervailing duty and anti-dumping duty to compensate for the same situation of dumping or export subsidization;
(b) the Central Government shall not levy any countervailing duty or anti-dumping duty -Page 71 of 118
HC-NIC Page 71 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT
(i) under section 9 or section 9A by reasons of exemption of such articles from duties or taxes borne by the like article when meant for consumption in the country of origin or exportation or by reasons of refund of such duties or taxes;
(ii) under sub-section (1) of either of section 9 and section 9A, on the import into India of any article from a member country of the World Trade Organisation or from a country with whom Government of India has a most favoured nation agreement (hereafter referred to as a specified country), unless in accordance with the rules made under sub-section (2) of this section, a determination has been made that import of such article into India causes or threatens material injury to any established industry in India or materially retards the establishment of any industry in India; and
(iii) xxxx"
25. Section 9C of the Act provides for an appeal against the order of determination or review thereof regarding the existence, degree and effect of any subsidy or dumping in relation to import of any article to the Customs, Excise and Service Tax Appellate Tribunal constituted under section 129 of the Customs Act, 1962 (hereafter referred to as "the Appellate Tribunal").
26. In the facts of the present case, pursuant to representations made by the petitioners and other industries to the designated authority for imposition of anti-dumping duty on exports of Soda Ash from the exporting countries, a notification dated 17.02.2012 came to be issued recommending levy of anti-dumping duty on such exports, which was followed by a notification dated 03.07.2012 issued by the Central Government under section 9A(1) of the Act read with rules 18 and 20 of the rules notifying anti-dumping duties on import of the Soda Ash from the exporting countries, which Page 72 of 118 HC-NIC Page 72 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT was to operate for a period of five years ending on 02.07.2017. Sometime in the year 2015, the All India Glass Manufacturers Federation made an application for a mid-term review to the designated authority as contemplated under section 9A(5) of the Act read with rule 23 of the rules, in pursuance whereof, a mid-term review came to be initiated by a notification dated 21.07.2015. A public hearing came to be held on 09.03.2016. The petitioners and other members constituting the domestic industry filed written submissions before the designated authority opposing the mid-term review. It appears that the applicants at whose instance the mid-term review came to be initiated also filed their written submissions and the process as contemplated under the rules came to be followed. In terms of sub-rule (2) of rule 23 of the rules, any review initiated under sub-rule (1) thereof shall be concluded within a period not exceeding twelve months from the date of initiation of such review. Therefore, the review was required to be completed on 02.07.2016. The proviso to rule 17 of the rules provides that the Central Government may, in its discretion in special circumstances extend the period of one year by six months. On 27.06.2016, the designated authority sought extension of time under the proviso to rule 17 of the rules read with sub- rule (3) of rule 23 of the rules.
27. By an order dated 15.07.2016, the Central Government extended the time to 30.09.2016. The designated authority issued the disclosure statement under rule 16 of the rules on 14.09.2016 and the parties were told to offer their comments by 20.09.2016, that is, within a period of six days and the final findings were required to be issued on or before 30.09.2016. It is at this stage that the petitioners have approached this court.
Page 73 of 118
HC-NIC Page 73 of 118 Created On Sun Aug 13 16:00:44 IST 2017
C/SCA/16426/2016 JUDGMENT
During the pendency of the petitions, the final findings under rule 17 of the rules have been issued on 23.09.2016 and in the light of the interim order dated 13.12.2016 passed by this court permitting the Central Government to issue the notification under rule 18 of the rules, such notification has been issued on 21st December, 2016, withdrawing the levy of anti-dumping duty, but is kept in abeyance till the final disposal of these petitions in view of the above interim order. In view of the subsequent events, the petitions came to be amended and the final findings dated 23.09.2016 as well as the notification dated 21.12.2016 are also subject matter of challenge in these petitions.
28. Since these petitions had initially been filed against the disclosure statements issued by the designated authority in both the mid-term review proceedings, the principal contentions raised by the petitioners relate to the disclosure statements. The principal ground on which the disclosure statement has been assailed is that it does not disclose the essential facts as contemplated under rule 16 of the rules, inasmuch as, the computation of various essential facts and the methodology has not been provided therein, which is in breach of the principles of natural justice; that the designated authority instead of merely setting out essential facts in the disclosure statement has also recorded conclusions which are conclusive and that the disclosure statement indicates conclusive findings on various aspects which discloses a pre- determined mind; the designated authority has not followed due procedure in accordance with the rules, inasmuch as, in terms of rule 23(1A) of the rules, for the purpose of recommending withdrawal of anti-dumping duty, the Page 74 of 118 HC-NIC Page 74 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT designated authority has to come to the conclusion that the injury to the domestic industry is not likely to continue or recur, if the said anti-dumping duty is removed or varied and is, therefore, no longer warranted, and is, therefore, required to examine the threat of likelihood of dumping by considering the parameters set out in Annexure II to the rules and more particularly, clause (vii) thereof, whereas the designated authority has failed to consider the relevant factors; it is also the case of the petitioners that the designated authority has based its conclusions on incorrect facts and irrelevant factors, which goes to the root of the matter and vitiates the disclosure statement.
29. Each of the above contentions assailing the validity of the disclosure statements may be tested independently.
30. Insofar as the breach of principles of natural justice is concerned, since such breach has been alleged on various grounds, the same is not being dealt with separately, but shall be considered together with each such ground.
31. While considering the first contention regarding the designated authority having failed to disclose the essential facts as contemplated under rule 16 of the rules, before embarking upon a discussion as to whether there is any failure to disclose essential facts, it would first be necessary to understand the meaning of the expression "essential facts" as appearing in rule 16 of the rules. Rule 16 of the rules, which deals with disclosure statement, mandates that the designated authority shall, before giving its final findings, inform all interested parties of the essential facts under consideration Page 75 of 118 HC-NIC Page 75 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT which form the basis of its decision.
31.1 Insofar as the interpretation of rule 16 of the rules is concerned, the learned counsel for the respective parties have placed reliance upon the decisions of the WTO Panel and appellate body of the WTO relating to the interpretation of Article 6.9 of the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade, 1994 (ADA). Article 6.9 says that the authority shall, before a final determination is made, inform all interested parties of the essential facts under consideration which form the basis for the decision whether to apply definitive measures. Additionally, Article 6.9 also provides that such disclosure should take place in sufficient time for the parties to defend their interests.
31.2 In WTO Panel Report, WT/DS-414/R in China - Countervailing and Anti-Dumping Duties on Grain Oriented Flat-Rolled Electrical Steel from the United States, on which reliance has been placed on behalf of the fourth respondent, it has been observed that in order to apply definitive measures at the conclusion of anti-dumping investigations, an investigating authority must find dumping, injury and a causal link. Therefore, the "essential facts" underlying the findings and conclusions relating to these elements form the basis of the decision to apply definitive measures and should be disclosed. It is further observed that the disclosure requirement applies to the "essential facts under consideration", rather than the essential facts that should reasonably be considered in resolving the claim. The purpose of Article 6.9 is to allow parties to defend their interests. In Page 76 of 118 HC-NIC Page 76 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT order for this to be meaningful, the actual facts under consideration are the relevant facts to be disclosed, so that omissions or the use of incorrect facts can be challenged.
31.3 In WT/DS-337/R in European Communities - Anti- dumping Measure on Farmed Salmon from Norway, on which reliance has been placed on behalf of the petitioners, a WTO Panel has observed that the word "fact" is defined variously as "Truth; reality" and "A thing known for certain to have occurred or to be true; a datum of experience" and "A thing assumed or alleged as a basis for inference" and "Events or circumstances as distinct from their legal interpretation" and expressed the view that essential facts to be disclosed under Article 6.9 may qualify under any of these meanings of the word fact. The purpose of disclosure under Article 6.9 is to provide the interested parties with the necessary information to enable them to comment on the completeness and correctness of the facts being considered by the investigating authority, provide additional information or correct perceived errors, and comment on or make arguments as to the proper interpretation of those facts. Article 6.9 requires disclosure of "essential facts" that are "under consideration" and "which form the basis for the decision whether to apply definitive measures". This requirement is not necessarily satisfied by the disclosure of the investigating authorities' conclusions on issues of fact that must be resolved before a decision to apply definitive measures is taken. The Panel considered that "essential facts under consideration which form the basis of the decision whether to apply definitive measures" are the body of facts essential to the determinations that must be Page 77 of 118 HC-NIC Page 77 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT made by the investigating authority before it can decide whether to apply definitive measures. That is, they are the facts necessary to the process of analysis and decision-making by the investigating authority, not only those that support the decision ultimately reached.
31.4 The Appellate Body of WTO in WT/DS-454/AB/R, WT/DS- 460/AB/R, in the context of scope of information that must be disclosed, has explained that Article 6.9 covers "facts under consideration", that is, those facts on the record that may be taken into account by an authority in reaching a decision as to whether or not to apply definitive anti-dumping duties. Thus, the "essential facts" referred to those facts that are significant in the process of reaching a decision as to whether or not to apply definitive measures. Such facts are those that are salient for a decision to apply definitive measures, as well as those that are salient for a contrary outcome. An authority must disclose such facts, in a coherent way, so as to permit an interested party to understand the basis for the decision whether or not to apply definitive measures. The Appellate Body was of the view that disclosing the essential facts under consideration pursuant to Article 6.9 is paramount for ensuring the ability for the parties concerned to defend their interests.
31.5 Thus, while Article 6.9 does not prescribe a particular form for the disclosure of the essential facts, it does require in all cases that the investigating authority disclose those facts in such a manner that an interested party can understand clearly what data the investigating authority has used, and how those data were used to determine the margin of dumping. The disclosure statement, therefore, contains the intermediate Page 78 of 118 HC-NIC Page 78 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT findings and conclusions of the designated authority on the essential facts which would form the basis for the decision whether or not to apply definitive measures and not final conclusions on whether or not definite measures are required to be applied. In the opinion of this court, as rightly submitted by the learned counsel for the petitioners, the disclosure statement should contain the conclusions of the designated authority on those essential facts which would form the basis for its decision as to whether or not to apply definitive measures and not its conclusions on the basis of those essential facts. The conclusions on the basis of the essential facts are to be recorded in the final findings, viz., whether or not on the basis of such facts definitive measures are required to be applied. The contention that the disclosure statement is in the nature of a draft order, therefore, does not merit acceptance, inasmuch as, a draft order would also contain conclusions on whether or not definitive measures are required to be applied.
32. The next question that arises for consideration is whether or not the essential facts have been disclosed in the disclosure statement.
32.1 Before examining this issue, it may be germane to refer to the findings recorded by the designated authority in the disclosure statement to ascertain the factors taken into consideration and the facts disclosed in respect thereof. It may be noted that the findings recorded by the designated authority in the disclosure statements in both the reviews in question are almost identical and hence, for the sake of convenience and with a view to avoid prolix, reference is made Page 79 of 118 HC-NIC Page 79 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT to the findings recorded in the disclosure statement in the review relating to imports from China PR, EU, Kenya, Iran, Pakistan, USA and Ukraine.
32.2 The designated authority has, in the disclosure statement, determined the non-injurious price of the domestic industry as per the guidelines laid down under Annexure-III of the Anti-Dumping Rules. As regards the contention that freight incurred by the domestic industry should be taken into consideration as one of the factors in injury analysis, the designated authority has observed that Annexure-III does not permit such a practice and that the issue is sub-judice before the CESTAT as well as the Delhi High Court.
32.3 Under the heading of cumulative assessment, the designated authority has observed that (i) the margins of dumping from each of the subject countries are more than the limits prescribed; and (ii) the volume of imports from each of the subject countries is more than the limits prescribed. The designated authority has considered it appropriate to cumulatively assess the effects of the dumped imports of the subject goods from China PR, EU, Kenya, Iran, Pakistan, USA and Ukraine on the domestic industry in the light of the conditions of competition between the imported product and like domestic goods. Upon cumulatively assessing the imports from the subject countries, the designated authority has come to the conclusion that the margin of dumping and quantum of imports from the subject countries are more than the limits prescribed.
32.4 For the purpose of assessment of domestic
Page 80 of 118
HC-NIC Page 80 of 118 Created On Sun Aug 13 16:00:44 IST 2017
C/SCA/16426/2016 JUDGMENT
consumption/demand of the subject goods, the sales volume of the domestic industry and other Indian producers has been added to the total imports into India and the same has been summarized in a tabular form in the disclosure statement. The designated authority has noted that the demand has increased during the POI as compared to the base year and that the growth in demand during the POI over base year was 17%. The demand has shown increasing trend during the post POI as well. On the contrary, the market share of the domestic industry as well as other Indian producers has fallen during the POI as compared to the base year (54.49 in the base year and 51.98 in the POI). However, during the post POI, the market share of the domestic industry has shown a marginal increase (52.40). The market share of the subject countries has increased from 12.55% during the base year to 21.87% during the POI and during the post POI, the market share of the subject countries has shown further increasing trend. (22.13).
32.5 As regards the volume effects of dumped imports, the designated authority has noted that from the subject countries, imports have increased in absolute terms from 3,29,828 MT in the base year to 6,73,706 MT in the POI in consonance with the increasing demand in India. Imports from subject countries has shown further increasing trend during post POI as well.
32.6 Insofar as the price effect of dumped imports on the domestic industry is concerned, the designated authority has examined the impact on the prices of the domestic industry on account of the dumped imports from the subject countries with reference to price undercutting, price underselling, price Page 81 of 118 HC-NIC Page 81 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT suppression and price depression. For the purpose of this analysis, the designated authority has compared the cost of production, net sales realisation (NSR) and the non-injurious price (NIP) of the domestic industry with the landed cost of imports from the subject countries. As regards the price suppression and price depression effect of the dumped imports, the designated authority has examined the same with reference to cost of production, net sales realisation and landed values of the subject goods from the subject countries in relation to the injury period including POI and post POI. The designated authority has noted that the landed price of the imports from the subject countries had increased from 12,939 MT during the base year to 16,820 MT during the POI. The landed price of the subject goods has also increased during the post POI as well. The cost of sales of the domestic industry has also increased during the POI as compared to the base year, but, the increase in cost of sales of domestic industry is much less as compared to the increase in the landed price. During the post POI, while the landed price has significantly increased, the cost of sales of the domestic industry has fallen. As regards price undercutting, the designated authority has worked out the net sales realisation of the domestic industry and the landed value of imports in the manner stated in paragraph 71 of the disclosure statement and found that price undercutting was negative in the post POI for EU and Pakistan and in the POI for Pakistan and was positive for China, Kenya, Iran, Ukraine, USA and EU for the POI and also for the post POI except EU. The designated authority computed the price undercutting for the subject countries as a whole and found that it was positive for the POI as well as post POI.
Page 82 of 118
HC-NIC Page 82 of 118 Created On Sun Aug 13 16:00:44 IST 2017
C/SCA/16426/2016 JUDGMENT
32.7 For the purpose of price underselling, the designated authority has compared the landed prices of the imports from the subject countries with the non-injurious price of the domestic industry and has found that the price underselling is negative for the POI as well as post POI. The designated authority has, thereafter, examined the other economic parameters of the domestic industry, viz., production capacity, sales and capacity utilization. The designated authority has found that the capacity of production of the domestic industry has remained constant during the injury period including the POI and capacity utilisation has increased during the POI as compared to the base year in line with increase in demand. As regards inventories, the designated authority has noted that the average inventories have remarkably decreased during the POI as compared to earlier years, however, the average inventory has shown increasing trend during the post POI. As regards profits and actual potential effects on the cash flow, the designated authority has noted that the profitability of domestic industry in terms of profit before tax and interest and cash profit has remarkably increased in the POI as compared to base year. In respect of the employment, wages and productivity, the designated authority has noted that there was a marginal increase in the number of employees as well as productivity during the POI and post POI as compared to the base year. But, wages have increased significantly during the POI as well as post POI as compared to the base year.
32.8 As regards the magnitude of dumping, the designated authority has observed that dumping margins in respect of import of the subject goods from the subject countries are positive and substantial during the POI. The designated Page 83 of 118 HC-NIC Page 83 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT authority has noted that the growth of the domestic industry was positive during POI as well as post POI. As regards ability to raise funds, the designated authority has noted that the domestic industry has not enhanced its capacity of production of the subject goods from the base year, which according to it signifies that their ability to raise capital investment has not been affected. The designated authority has worked out the magnitude of injury and injury margin and has noted that the injury margin is negative in respect of the subject countries during the POI as well as post POI. The designated authority has thereafter recorded its conclusions on material injury as follows:
"R. Conclusion on material injury:
82. The Authority notes that while the capacity of production has remained constant throughout the injury period including the POI, the performance of the domestic industry has improved remarkably in terms of production, sales volumes, profit, cash profit, return on capital employed and inventory. The market share has declined during the POI as compared to the base year. During the post POI, the economic parameters has shown continued improvement including increased trend in the market share. Further, the net sales realization is more than the landed price from the subject countries during the POI as well post POI. Moreover, while the price undercutting and underselling effects are negative and price depression and suppression effects are absent during POI as well as post POI. Thus, the Authority notes that the tremendous improvement in the economic health of the domestic industry during POI and continued improvement during post POI period do not exhibit any material injury."
32.9 The designated authority has also taken into account other known factors and causal link and has, inter alia, considered export performance of domestic industry and noted Page 84 of 118 HC-NIC Page 84 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT that the export performance of the domestic industry has fallen drastically during the POI as compared to the base year. During the POI, the export performance has shown some improvement vis-a-vis the POI, but remained much below the performance during the base year.
32.10 Insofar as likelihood of continuation or recurrence of injury, which is of utmost importance insofar as the mid-term review is concerned, the designated authority has observed thus:
"T. Likelihood of continuation or recurrence of injury:
52. In a review investigation, the Authority has to determine as to whether the subject goods are continuing to enter the Indian market at dumped prices or are likely to be exported at dumped prices from the subject countries in the event of withdrawal of anti dumping duties. It is also pertinent to examine whether injury to the domestic industry is likely to recur due to these dumped imports if the duty is removed or varied.
The Authority examined the likelihood of continuation or recurrence dumping and injury considering the parameters relating to the threat of material injury in terms of Annexure II (vii) of the Rules, which states as under:
"A determination of a threat of material injury shall be based on facts and not merely on allegation, conjecture or remote possibility. The change in circumstances, which would create a situation in which the dumping would cause injury, must be clearly foreseen and imminent. In making a determination regarding the existence of a threat of material injury, the Designated Authority shall consider, inter alia, such factors and; a. a significant rate of increase of dumped imports into India indicating the likelihood of substantially increased importation.
Page 85 of 118
HC-NIC Page 85 of 118 Created On Sun Aug 13 16:00:44 IST 2017
C/SCA/16426/2016 JUDGMENT
b. Sufficient freely disposable or an imminent, substantial increase in capacity of the exporter indicating the likelihood of substantially increased dumped exports to Indian market, taking into account the availability of other export markets to absorb any additional exports.
c. Whether imports are entering at prices that will have a significant depressing or suppressing effect on domestic prices, and would likely to increase demand for further imports and, d. Inventories of the article being investigated."
"
Examination by the Authority
53. Rule 23 of Anti-dumping Rules of India requires the Authority to examine the need for continued imposition of the duty from time to time. In this regard, the Authority notes as under:
Volume of Exports Post- POI
54. In order to examine, the likelihood of injury to the domestic industry due to dumping of the subject goods from the subject countries, the Authority has undertaken analysis of the volume of exports of the subject goods to India from the subject countries during the POI and post- POI periods. The Authority notes that the volume of the exports from subject countries to India during the POI and post POI on the basis of DGCI&S data was 49071 MT and 38611 MT (Annualised), showing a decline in exports. But, mere growth in exports, even at dumped prices, does not indicate a likely situation justifying continued imposition of anti-dumping duty, unless of course, such imports are likely to cause injury to the domestic industry.
Market share of Subject Countries in the Indian market
55. The Authority notes that the market share of the subject countries has drastically fallen during the POI as Page 86 of 118 HC-NIC Page 86 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT compared to the base year and the declining trend continued during the post POI as well. On the contrary, the market share of the domestic industry has also declined during the POI as compared to the base year, but showing upward trend during the post POI. Thus, the position indicates that the market share of the domestic industry has not been impacted by the imports from the subject countries.
Price attractiveness of Indian market
56. The Authority notes that the landed value from the subject countries is more than the NIP. However, the undercutting effect is positive during POI and post POI from the subject countries. The underselling effects are negative during POI as well as post POI. Thus, in the event of the revocation of anti-dumping duties, the Indian prices would not be too attractive to the foreign producers and there is no likelihood that Indian consumers would import substantially due to increasing demand.
Export orientation of foreign producers
57. Even if the subject countries are export oriented, export orientation among the producers of the subject goods in the subject countries itself cannot be a strong likelihood factor unless backed by favorable market conditions and weak domestic industry in India. Although there is high demand for the subject goods in India, the prices prevailing in Indian market and the strong domestic industry base may not be conducive for the subject countries to target Indian market in the event of revocation of the duties.
Level of current and past dumping margin
58. The Authority notes that during the POI, the dumping margin in the original investigation as well as the present MTR are positive. In the post POI, the dumping margin in respect of the cooperative exporters of Turkey is negative, but the country as a whole, it is positive. In case of Russia, the dumping margin is positive both during the POI as well as post POI. But, dumping of any magnitude has no relevance under the Page 87 of 118 HC-NIC Page 87 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT Indian anti-dumping law as long as it does not cause injury to the domestic industry. In the present investigation, injury margin is negative in the POI as well as post POI periods, thereby indicating no injury to the domestic industry and no likelihood of injury as well in the event of revocation of the duties.
59. The essential facts of the investigation, as analysed by the Authority in this finding, sufficiently prove that the despite continued dumping of subject goods from the subject countries, the economic condition of the domestic industries has improved remarkably and indicate further improvement during the post POI. Thus, the changed circumstances, as alleged by the applicant, are not transient but there to stay in favour of the domestic industries in the event of revocation of the duties.
60. The Authority would conclude on the matter after receiving the comments of the interested parties on this disclosure statement."
32.11 Thus, the designated authority has taken into consideration the aforesaid factors while coming to the conclusion as to whether or not definitive measures are required to be applied. In this regard, it may be noted that the designated authority has not disclosed the details of dumping margin calculations to the petitioner, viz., the difference between the Export Price and Normal Value. The designated authority has not disclosed the basis for determining Normal Value and Export Price and has also not disclosed the methodology and computation. The designated authority has considered the value of Cost of Sales and Selling Price based on the data submitted by the domestic industry, but has not disclosed what data has been used by it while determining the price suppression and price depression effect. While determining the price undercutting, the value for Net Sales Page 88 of 118 HC-NIC Page 88 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT Realisation is calculated on the basis of data provided by the domestic industry but the actual figures and methodology are not disclosed. The non-injurious price for the post POI has not been disclosed while determining the Price Underselling and the computation of the NIP has not been furnished for the POI as well as the post POI. The designated authority has used the data supplied by the domestic industry while determining data relating to inventories but has failed to disclose the same. While determining profits and actual and potential on cash flow, the figures of profit, return on investments, BPIT etc. are worked out on the basis of the information submitted by the domestic industry, but not disclosed to the domestic industry. While determining magnitude of injury and injury margin, the designated authority has failed to disclose post POI NIP as well as methodology and calculation.
32.12 As can be seen from the findings recorded by the designated authority on various parameters relevant for the purpose of coming to the conclusion as to whether or not definitive measures are required to be applied, it has placed reliance on certain information for the purpose of arriving at its findings which are essential facts. All the information which are relied upon by the designated authority to the extent the same is not protected by rule 7 of the rules, was in the nature of necessary information which should have been disclosed to the interested parties to enable them to comment on the completeness and correctness of the facts that were being considered by the designated authority, and to provide additional information or correct the perceived errors and comment on or make arguments as to the proper interpretation of those facts. The entire body of facts essential Page 89 of 118 HC-NIC Page 89 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT to the determinations that must be made by the designated authority before it can decide whether to apply definitive measures are required to be disclosed to the interested parties. A perusal of the tabular form regarding the data which are reproduced in the disclosure statement reveals that at various places instead of the relevant data the table contains asterisks which would indicate that such information is confidential. While it is true that the such information being confidential in nature, cannot be disclosed in the disclosure statement itself, it appears to be the general practice to provide the same to the parties separately. However, in the facts of the present case, despite the fact that the information has been furnished by the domestic industry itself, the computation of the various factors referred to hereinabove, has not been furnished to the domestic industry. In the opinion of this court, it was incumbent upon the designated authority to furnish the relevant facts which have been used by it as the basis for arriving at its conclusion on the essential facts necessary for the purpose of arriving at a decision as to whether or not the definitive measures are required to be applied. Non-disclosure of the essential facts is, therefore, clearly in breach of the principles of natural justice.
33. The second contention for assailing the disclosure statement is that there is failure to comply with the statutory requirements. In this regard, it may be necessary to refer to certain provisions of the Anti-Dumping Rules.
33.1 Rule 4 of the rules provides for the duties of the designated authority and reads thus: -
Page 90 of 118HC-NIC Page 90 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT "4. Duties of the designated authority. - (1) It shall be the duty of the designated authority in accordance with the rules -
(a) to investigate as to the existence, degree and effect of any alleged dumping in relation to import of any article;
(b) to identify the article liable for anti-dumping duty;
(c) to submit its findings, provisional or otherwise to Central Government as to -
(i) normal value, export price and the margin of dumping in relation to the article under investigation, and
(ii) the injury or threat of injury to an industry established in India or material retardation to the establishment of an industry in India consequent upon the import of such article from the specified countries.
(d) to recommend to the Central Government -
(i) the amount of anti-dumping duty equal to the margin of dumping or less, which if levied, would remove the injury to the domestic industry, after considering the principles laid down in the Annexure III to these rules; and
(ii) the date of commencement of such duty;
(e) to review the need for continuance of anti-dumping duty."
33.2 Rule 6 of the rules lays down the principles governing investigations. Rule 7 of the rules bears the heading "Confidential information" and lays down that notwithstanding anything contained in sub-rules (2), (3) and (7) of rule 6, sub- rule (2) of rule 12, sub-rule (4) of rule 15 and sub-rule (4) of rule 17, the copies of applications received under sub-rule (1) of rule 5, or any other information provided to the designated authority on a confidential basis by any party in the course of investigation, shall, upon the designated authority being satisfied as to its confidentiality, be treated as such by it and Page 91 of 118 HC-NIC Page 91 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT no such information shall be disclosed to any other party without specific authorization of the party providing such information.
33.3 Rule 10 of the rules provides for determination of normal value, export price and margin of dumping, and postulates that an article shall be considered as being dumped if it is exported from a country or territory to India at a price less than its normal value and in such circumstances, the designated authority shall determine the normal value, export price and the margin of dumping taking into account, inter alia, the principles laid down in Annexure I to the rules. Rule 11 of the rules provides for determination of injury. Sub-rule (1) thereof provides that in the case of imports from specified countries, the designated authority shall record a further finding that import of such article into India (i)causes or threatens material injury to any established industry in India; or (ii) materially retards the establishment of any industry in India. Under sub-rule (2) of rule 11 of the rules, the designated authority is required to determine (i) the injury to domestic industry; (ii) threat of injury to domestic industry; (iii) material retardation to establishment of domestic industry; and (iv) a causal link between dumped imports and injury, and for this purpose, the designated authority is required to take into account all relevant facts, including (i) volume of dumped imports, (ii) their effect on price in the domestic article for like articles, and (iii) consequent effect of such imports on domestic producers of such articles, in accordance with the principles set out in Annexure II to the rules. Therefore, the authority is required to determine the parameters laid down in sub-rule (2) of rule 11 of the rules in terms of the principles set Page 92 of 118 HC-NIC Page 92 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT out in Annexure-II to the rules.
33.4 Annexure-II to the rules lays down the principles for determination of injury and provides that the designated authority while determining (i) the injury, or (ii) threat of material injury to domestic industry or (iii) material retardation of the establishment of such an industry (hereinafter referred to as "injury" and causal link between dumped imports and such injury, shall, inter alia, take the following principles under consideration. The principles relevant for purpose of the present case, are as under:
"(i) A determination of injury shall involve an objective examination of both (a) volume of the dumped imports and the affect of the dumped imports on prices in the domestic market of like article and (b) the consequent impact of these imports on domestic producers of such products.
(ii) While examining the volume of dumped imports, the authority shall consider whether there has been a significant increase in the dumped imports, either in absolute terms or relative to production and consumption in India. With regard to the effect of the dumped imports on prices as referred to in sub-rule (2) of rule 18, the designated authority shall consider whether there has been a significant price undercutting by the dumped articles as compared to the price of like product in India, or whether the effect of such imports is otherwise to depress prices to a significant degree or prevent price increase which otherwise would have occurred, to a significant degree.
(iii) Xxxx
(iv) The examination of impact of the dumped imports on the domestic industry concerned, shall include (i) an evaluation of all relevant economic factors and indices having a bearing on the state of the industry, including natural and potential decline in sales, profits, output, Page 93 of 118 HC-NIC Page 93 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT market share, productivity, return of investments or utilization of capacity; factors affecting domestic prices;
the magnitude of the margin of dumping; actual and potential negative effects on cash flow, inventories, employment, wages, growth, ability to raise capital investments.
(v) Xxxx
(vi) xxxx
(vii) A determination of threat of material injury shall be based on facts and not merely on allegation, conjecture or remote possibility. The change in circumstances which would create a situation in which the dumping would cause injury must be clearly foreseen and imminent. In making a determination regarding the existence of a threat of material injury, the designated authority shall consider, inter alia, such factors as:
(a) A significant rate of increase of dumped imports into India indicating likelihood of substantially increased importation;
(b) Sufficient freely disposable, or an imminent, substantial increase in capacity of the exporter indicating the likelihood of substantially increased dumped exports to Indian markets, taking into account the availability of other export markets to absorb any additional exports;
(c) Whether imports are entering at prices which will have a significant depressing or suppressing effect on domestic prices, and would likely increase demand for further imports, and
(d) Inventories of the article being investigated."
33.5 One of the main submissions of the learned counsel for the petitioners is that while examining the likelihood parameters, the designated authority has not complied with the provisions of clause (vii) of Annexure-II to the rules.
33.6 At this juncture, it may be germane to refer to the additional affidavit filed on behalf of the designated authority.
Page 94 of 118
HC-NIC Page 94 of 118 Created On Sun Aug 13 16:00:44 IST 2017
C/SCA/16426/2016 JUDGMENT
In paragraph-24 thereof, it has been stated thus: "Considering the nature of Review, a likelihood of injury test also has been conducted specifically in para 86 to 95 of the final findings. It is also pertinent to examine whether injury to the domestic industry is likely to recur due to these dumped imports if the duty is removed or varied. The Authority examined the likelihood of continuation or recurrence of dumping and injury considering the parameters relating to the threat of material injury in terms of Annexure II (vii) of the rules". It is emphasized that examination of relevant facts on likelihood of injury led to the conclusions set out in detail thereunder. Briefly stated such conclusions are: -
(i)Analysis has been undertaken of volume of exports of subject goods to India from the subject countries during the POI and post POI. The Authority has found massive growth in exports and also at dumped prices since dumping margin is positive during the post POI as well. But mere growth in exports, even at dumped prices, does not indicate a likely situation justifying imposition of anti-dumping duty, unless of course, such imports are likely to cause injury to the domestic industry.
(ii) Market share of subject countries in the Indian market has significantly increased during POI and has further improved during post POI, whereas market share of domestic industry has marginally declined during POI but shown a positive trend during post POI. Since market share of the domestic industry has remained more or less the same, their market share has not been impacted by the imports from the subject countries.Page 95 of 118
HC-NIC Page 95 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT
(iii) Price attractiveness of the Indian market: For this purpose, the designated authority has relied upon the NIP and has noted that both price undercutting and price underselling are negative during POI as well as post POI.
(iv) Export orientation of foreign producers. Even if the subject countries are export oriented, that by itself cannot be a strong likelihood factor unless backed by favourable market conditions and weak domestic industry in India. Although there is a high demand for the subject goods in India, the prices prevailing in the Indian market and the strong domestic industry base may not be conducive for the subject countries to target Indian market in the event of revocation of the duties.
(v) Level of current and past dumping margin: The designated has, inter alia, noted that in the present investigation, injury margin is negative in the POI as well as post POI periods, thereby indicating no injury to the domestic industry and there is no likelihood of injury as well in the event of revocation of the duties.
33.7 Thus, though most of the factors which are required to be taken into consideration for the purpose of determination of injury, namely, increase in volume, increase in dumping, increase in margin of dumping and price undercutting are all positive and only price suppression and price depression are absent, the designated authority, instead of relying upon the said factors for the purpose of basing his decision as to whether or not to continue with the determinative measures, Page 96 of 118 HC-NIC Page 96 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT has placed reliance upon an irrelevant factor, viz., injury margin, which is not required to be taken into consideration while considering the likelihood aspect under clause (vii) of Annexure II to the rules. Clause (vii) of Annexure II to the rules provides for four factors which are required to be taken into consideration, viz.:
(a) a significant rate of increase of dumped imports into India indicating the likelihood of substantially increased importation;
(b) sufficient freely disposable, or an imminent, substantial in-
crease in, capacity of the exporter indicating the likelihood of substantially increased dumped exports to Indian markets, tak- ing into account the availability of other export markets to ab- sorb any additional exports;
(c) whether imports are entering at prices that will have a sig- nificant depressing or suppressing effect on domestic prices, and would likely increase demand for further imports; and
(d) inventories of the article being investigated.
Out of the above four factors, the designated authority has taken into consideration the factors prescribed under sub- clauses (a) and (c). However, insofar as sub-clause (c) is concerned, the designated authority has placed reliance upon incorrect facts, namely, though the price undercutting is positive, it has considered the same to be negative and drawn its conclusions accordingly.
33.8 Insofar as the factors prescribed under sub-clauses (b) and (d) of clause (vii) of Annexure II to the rules are concerned, it, however, has been contended on behalf of the respondents that the designated authority has also considered those factors. In this regard, a perusal of the disclosure statement shows that while the designated authority has taken into Page 97 of 118 HC-NIC Page 97 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT consideration the above two factors, it is manifest that while doing so, it has taken into consideration incorrect facts, inasmuch as, instead of considering the capacity of production of the exporters indicating the likelihood of substantially increased dumped exports to Indian markets, as contemplated under sub-clause (b), it has taken into consideration the capacity of production of the domestic industry; and instead of taking into consideration the existence of inventories of the dumped imports that could meet any increase or future demand for the imports, has taken into consideration the inventories of the domestic industry. Evidently therefore, the designated authority has failed to follow the procedure laid down under clause (vii) of Annexure-II to the rules for the purpose of determination of threat of material injury in the manner prescribed thereunder.
33.9 On behalf of the respondents it has been contended that the factors mentioned for a threat of material injury determination are not mandatory for a likelihood of recurrence of injury analysis. That the designated authority in its wisdom has considered some of the factors mentioned for a threat of material injury analysis and that non-consideration of all the factors does not vitiate the analysis. To test this contention reference may be made to clause (vii) of Annexure II to the rules, which says that in making a determination regarding the existence of material injury, the designated authority shall consider, inter alia, such factors as (a), (b), (c) and (d) enumerated thereunder. In the opinion of this court, in view of the use of the expression inter alia in the said clause, the inquiry may not be limited only to the four factors specified thereunder. However, the provision mandates that the Page 98 of 118 HC-NIC Page 98 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT designated authority shall take into consideration the factors stated therein. It has also been contended on behalf of the petitioners that clause (vii) should be read in conjunction with Article 3.7 of the ADA which provides that "... In making a determination regarding existence of a threat of material injury, the authorities should consider, inter alia, such factors as ..." That this sentence used the word "should" and not "shall" and therefore, the factors mentioned in respect of threat of material injury are not mandatory. In the opinion of this court, such contention does not merit acceptance for the reason that the expression "should" is merely the past tense of the word shall and that is how the rule making body appears to have construed the same. Hence, the language of the rule being mandatory, the designated authority was required to consider the existence of all the four factors. The petitioners are, therefore, wholly justified in contending that the designated authority has failed to follow the relevant statutory provisions laid down in accordance with law while issuing the disclosure statement.
34. Another significant aspect of the matter is that the designated authority while recording its conclusions on material injury, has recorded that the net sales realisation is more than the landed price from the subject countries during the POIO as well as PIO; while price undercutting and underselling effects are negative and price depression and suppression effects are absent during POI as well as post POI. On the basis thereof, the designated authority has concluded that there is tremendous improvement in the economic health of the domestic industry during the POI and continued improvement during post POI period do not exhibit any Page 99 of 118 HC-NIC Page 99 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT material injury. It may therefore be apposite to refer to the meaning of the above terms. Price undercutting is stated to be the difference between sales realisation of the domestic industry at factory gate net of taxes and landed value of imports. If the sales realisation is more than the landed price the same indicates positive price undercutting and if the sales realisation is less than the landed price, the same indicates negative price undercutting. In the present case, the designated authority has recorded that the sales realisation is more than the landed price, which itself is a pointer to the fact that the price undercutting is positive, and while recording the essential facts the designated authority has accordingly, come to the conclusion that price undercutting is positive. However, the designated authority while coming to the conclusion that there is no material injury has taken into consideration incorrect facts, viz. that the price undercutting is negative. Insofar as "injury margin" and "price underselling" are concerned, both are based upon the non-injurious price. The difference between non-injurious price and landed value of imports is referred to as "injury margin" to the domestic industry and "price underselling" is the difference between NIP of the domestic industry and landed value of imports. It may be noted that injury margin is required to be determined when the designated authority comes to the conclusion that there is material injury requiring imposition of anti-dumping duty, whereupon the quantum of anti-dumping duty to be levied is based upon the injury margin. Therefore, determination of injury margin would come into play only in case the designated authority comes to the conclusion that determinative measures are required to be applied. Where the designated authority comes to the conclusion that no determinative Page 100 of 118 HC-NIC Page 100 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT measures are required to be imposed, as in the present case, the question of determining the injury margin would not arise.
34.1 Under the scheme of the rules, the concept of non- injurious price comes into play at the stage of rule 17 thereof, viz., at the stage of recording the final findings. Sub-rule (1) of rule 17 of the rules provides that the designated authority shall, within one year from the date of initiation of an investigation, determine as to whether or not the article under investigation is being dumped in India and submit to the Central Government its final finding as to the factors enumerated thereunder. Clause (b) to sub-rule (1) of rule 17 of the rules provides for recommending the amount of duty which, if levied, would remove the injury where applicable, to the domestic industry after considering the principles laid down in the Annexure III to the rules. Thus, the designated authority, under sub-rule (1) of rule 17 of the rules, is required to recommend the amount of anti-dumping duty which, if levied, would remove the injury where applicable, to the domestic industry and for the purpose of making such recommendation, the designated authority is required to consider the principles laid down in the Annexure III to the rules which lays down the principles for determination of non- injurious price. It is therefore, manifest that the stage of determination of the non-injurious price is at the stage of sub- rule (1) of rule 17 of the rules, viz., recommending the amount of duty which, if levied, would remove the injury where applicable to the domestic industry. However, for the purpose of rule 16 which requires the designated authority to disclose the essential facts under consideration which form the basis for its decision whether or not to apply determinative measure, Page 101 of 118 HC-NIC Page 101 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT determination of non-injurious price is irrelevant, as the same has no relevance so far as determination of injury is concerned. While the designated authority may compute the non-injurious price for the purpose of giving the parties an opportunity to make their comments in respect of such computation at the stage of disclosure statement, however, such non-injurious price cannot be taken into consideration for the purpose of determination of injury. Non-injurious price having no relevance insofar as determination of injury is concerned, would not form an essential fact for the purpose of arriving at a decision as to whether or not determinative measures are required to be applied. It is only after coming to the conclusion that there is injury necessitating imposition of or continuance of anti-dumping duty, that the designated authority is required to determine the injury margin, for which purpose it has to determine the non-injurious price as per the principles laid down in Annexure III to the rules for the purpose of fixing the quantum of anti-dumping duty to be imposed. The designated authority has recorded findings in the disclosure statement to the effect that since the injury margin is negative in the POI as well as post POI, domestic industry was not injured during POI and post POI and hence, there is no likelihood of injury to the domestic industry in case of revocation of duty. The designated authority has also recorded that the landed price is more than the NIP and both price undercutting and price underselling are negative during POI and post POI. Thus, the designated authority has based its findings on essential facts based upon the "injury margin" and "price underselling" as well as the fact that price undercutting is negative. As noted hereinabove, insofar as the injury margin and price underselling are concerned, the same are not Page 102 of 118 HC-NIC Page 102 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT relevant factors at the stage of examination of likelihood of injury in a disclosure statement. The designated authority was, therefore, not justified in placing reliance upon factors like "injury margin" and the "price underselling" while considering the question of likelihood of injury to the domestic industry in case of revocation of duties. Insofar as "price undercutting" is concerned, the designated authority has specifically recorded a finding that the that price undercutting is positive during the POI as well as post POI, whereas it has based its conclusions on an incorrect fact, viz. that price undercutting is negative. Therefore, it cannot be said as to what extent such irrelevant factors and incorrect facts have weighed upon the designated authority while coming to the conclusion that there is no injury or likelihood of injury to the domestic industry. Under the circumstances, the findings recorded by the designated authority being based upon incorrect facts and irrelevant factors, stand vitiated.
35. As discussed earlier, the designated authority has based its findings on the injury margin, which in turn is based upon the non-injurious price, it, however, has not provided the computation of such non-injurious price to the petitioners. It is an accepted position that the non-injurious price has been determined on the basis of information provided by the petitioners. At this juncture it may be apposite to refer to the decision of the Supreme Court in Reliance Industries Ltd. v. Designated Authority, (2006) 10 SCC 368, wherein it has been held thus:
"39. We do not agree with the Tribunal that the notification of the Central Government under Section 9A Page 103 of 118 HC-NIC Page 103 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT is a legislative Act. In our opinion, it is clearly quasi- judicial. The proceedings before the DA is to determine the lis between the domestic industry on the one hand and the importer of foreign goods from the foreign supplier on the other. The determination of the recommendation of the DA and the Government notification on its basis is subject to an appeal before the CESTAT. This also makes it clear that the proceedings before the DA are quasi- judicial.
40. In the present case, the NIP computed by the DA was much lower than that computed by the appellant, and the reasons for such variance and detailed calculations were not disclosed by the DA to the appellant. No good reasons were given for reducing the cost price of electricity supplied by the appellant produced in its captive power plant. This was clearly illegal.
41. The DA claimed confidentiality from the appellant about its finding on the data supplied by the appellant itself. In our opinion, there was nothing confidential in the matter, and hence reasons for not accepting the appellant's version should have been stated in the order of the DA.
43. In our opinion, Rule 7 does not contemplate any right in the DA to claim confidentiality. Rule 7 specifically provides that the right of confidentiality is restricted to the party who has supplied the information, and that party has also to satisfy the DA that the matter is really confidential. Nowhere in the rule has it been provided that the DA has the right to claim confidentiality, particularly regarding information which pertains to the party which has supplied the same. In the present case, the DA failed to provide the detailed costing information to the appellant on the basis of which it computed the NIP, even though the appellant was the sole producer of the product under consideration, in the country. In our opinion this was clearly illegal, and not contemplated by Rule 7."
(Emphasis supplied)"
35.1 Having regard to the principles enunciated in the above decision, it was incumbent upon the designated authority to Page 104 of 118 HC-NIC Page 104 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT furnish the computation of non-injurious price and other factors which was based upon the information provided by the petitioners and could not have claimed any confidentiality in respect of such information. Non-furnishing of the computation of non-injurious price is therefore, clearly violative of the principles of natural justice inasmuch as, the petitioners were deprived of an opportunity to deal with the same while filing their response to the disclosure statement.
36. As noticed earlier, the petitioners had approached this court challenging the disclosure statement and also contending the that time of six days granted to the parties to deal with the same prior to recording the final findings was highly inadequate and amounted to non-grant of adequate opportunity of hearing to the petitioners. On behalf of the respondents it has been contended that the period granted by the designated authority is adequate and that at the time of proceedings for imposition of anti-dumping duty, even lesser time was granted. In the opinion of this court, the adequacy or otherwise of the time granted would vary from case to case. In the present case, the facts reveal that though the mid-term review was initiated vide a notification dated 21.07.2015. In view of the provisions of sub-rule (1) of rule 17 of the rules, the designated authority was required to issue its final finding within one year from the date of initiation of investigation. Accordingly, the final findings were required to be submitted to the Central Government on or before 02.07.2016. However, the proviso to rule 17 (1) of the rules provides that the Central Government may, in its discretion in special circumstances extend the period of one year by six months. On 27.06.2016, the designated authority sought extension of time under the Page 105 of 118 HC-NIC Page 105 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT proviso to rule 17 of the rules read with sub-rule (3) of rule 23 of the rules and by an order dated 15.07.2016, the Central Government extended the time to 30.09.2016. The designated authority issued the disclosure statement under rule 16 of the rules on 14.09.2016 and the parties were told to offer their comments by 20.09.2016, that is, within a period of six days and the final findings were required to be issued on or before 30.09.2016. The petitioners submitted their response dated 11.9.2016 by a letter dated 14.9.2016 and requested for more time. However, such request was not acceded to and the final findings came to be submitted on 23.09.2016. Thus, the designated authority took its own time in submitting the disclosure statement on 14.09.2016, leaving a maximum period of 16 days for rendering its final findings. The short time granted for issuance of final findings is sought to be explained on the ground that in the case of the second review, the period under sub-rule (1) of rule 17 of the rules was expiring on 30.09.2016 and since, both the reviews involved similar facts, it was deemed fit to ensure that final findings in both the cases were rendered simultaneously. The above explanation is not very palatable for the reason that under the proviso to sub-rule (1) of rule 17, it was permissible for the designated authority to seek extension in the second review also, instead of curtailing the time that could be provided to the parties to deal with the disclosure statement. Besides, it has been contended on behalf of the respondents that the computation of non-
injurious price would have been provided on demand. Apart from the fact that the petitioners have contended that despite the fact that GHCL had requested for supply of the calculation of NIP, the same was not provided to it, if the submission of the respondents were to be expected at face value, the time Page 106 of 118 HC-NIC Page 106 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT limit of six days in such circumstances, cannot by any means be said to be reasonable, inasmuch as after the disclosure statement is issued, the petitioners would have to study the same to first become aware that the computation of NIP has not been provided; they would thereafter, be required to request the designated authority to furnish the same to them, in response to which the designated authority would supply the computation of NIP, whereafter the petitioners would be required to offer their comments to the disclosure statement. It cannot be gainsaid that a period of six days for completed in the aforesaid procedure is highly inadequate. When sufficient time could easily have been granted to the parties by extending the time for submitting final findings for a slightly longer period, the respondents on the ground of parallel review proceedings, were not justified in not granting sufficient time to the parties to make their comments on the disclosure statement. At the time of the initial proceedings for levy of anti-dumping duty, it appears that Division Bench of the Madras High Court in writ appeals had in view of the fact that the last date for passing of final finding by the designated authority was coming to an end on 18th February, 2012, by an order dated 1st February, 2012 had modified the interim order passed by the learned Single Judge and permitted the designated authority to proceed further. It is in these circumstances, that the disclosure statement was issued on 10th February, 2012 and final findings were rendered on 17 th February, 2012. Thus, it was due to intervening circumstances that an emergent situation had arisen at the relevant time. However, in the facts of the present case, though no such situation had arisen and it was possible for the designated authority to ensure that sufficient time was available to the Page 107 of 118 HC-NIC Page 107 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT parties to comment on the disclosure statement, an urgency has been created whereby no further time could be granted to the parties to defend their interests.
36.1 The challenge to the final findings is principally based upon the contention that the designated authority has placed reliance upon material and facts for concluding the issue against the petitioners which did not form part of the disclosure statement and that the petitioners, therefore, did not have any opportunity to deal with the same. Such contention is mainly based upon the fact that the designated authority in paragraph 98 of the final findings, has placed reliance upon the data available from the WTA for the POI. It has been contended on behalf of the petitioners that the designated authority has referred to data obtained from the World Trade Atlas, whereas no reference was made to this essential fact in the disclosure statement, nor has this information been made available to the petitioners in the course of investigation and that the failure to make available to the parties the material on which the decision is based, is in violation of the principles of natural justice and reliance on such data is nothing but an attempt to circumvent the correct and relevant facts in order to support a decision already taken. It is an accepted position that the designated authority has, at the stage of final findings, placed reliance upon the data available in the WTA which information has not been shared with the domestic industry.
37.1 On behalf of the respondents, it has been contended that reliance has been placed by the designated authority on the WTA data with a view to deal with the comments made by Page 108 of 118 HC-NIC Page 108 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT the domestic industry in response to the disclosure statement. As is discernible from the scheme of the Act and the rules, there is no further stage of hearing or submitting comments after the final findings are rendered. Under the rules, the Central Government may under sub-rule (1) of rule 18 of the rules impose anti-dumping duty pursuant to the final findings recorded by the designated authority which should not exceed the margin of dumping as determined under rule 17. Therefore, the parties would have no opportunity to meet with any additional material that is taken into consideration while recording the final findings, therefore, reliance on any material in respect of which the parties have not been granted any opportunity to deal with, would be violative of the principles of natural justice. The designated authority at the stage of final findings, therefore, could not have placed reliance upon any material which was extraneous to the material which was furnished to the parties and considered at the relevant time while issuing disclosure statement. In case any additional data or information was to be used, it was incumbent upon the designated authority to put the parties to notice in respect of such additional information. Therefore, non-sharing of the data available in the WTA, on which reliance has been placed by the designated authority while recording the final findings, also amounts to breach of the principles of natural justice.
37. It has been contended on behalf of the petitioners that the disclosure statement suffers from pre-determination, inasmuch as, the designated authority has already recorded its conclusions as regards whether or not definitive measures are required to be applied, which are conclusions that can be arrived at only at the stage of final findings, after considering Page 109 of 118 HC-NIC Page 109 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT the comments on the disclosure statement. As already discussed hereinabove, the disclosure statement is required to record only the essential facts which are necessary for the purpose of determining as to whether or not the definitive measures are required to be applied or not. The designated authority is required to record its conclusions on those facts but not its conclusions based upon those facts. The conclusion as to whether or not the definitive measures are required to be applied is a conclusion based upon the essential facts and hence, could not have found place in the disclosure statement. Besides as to whether or not definitive measures are required to be applied is a conclusion that has to be recorded after receipt of the comments on the disclosure statement. The conclusion recorded by the designated authority in the disclosure statement that levy of anti-dumping duty is no longer justified, amounts to arriving at a decision as to whether or not to apply definitive measures based upon essential facts recorded by it. The very fact that the designated authority without waiting for the comments on the disclosure statement has recorded its conclusions as to whether or not to apply definitive measures, is clearly indicative of the fact that the designated authority has already made up its mind prior to receipt and consideration of the comments of the parties to the disclosure statement. The learned counsel for the petitioners are therefore wholly justified in contending the disclosure statement suffers from pre-determination and that in view of the conclusions drawn in the disclosure statement, consideration of the comments of the petitioners in the final findings is mere lip service as the designated authority has already made up its mind at the stage of disclosure statement.
Page 110 of 118
HC-NIC Page 110 of 118 Created On Sun Aug 13 16:00:44 IST 2017
C/SCA/16426/2016 JUDGMENT
38. On the question of maintainability of these petitions on the ground of availability of an alternative statutory remedy, on behalf of the petitioners, it has been submitted that once the court has dealt with the aspect of maintainability and at that stage has held the petitions to be maintainable against the disclosure statement and the final findings and has admitted the matters, the question of examining the aspect of maintainability at the stage of final hearing would not arise. Reference was made to the order dated 27.01.2017 passed by the Supreme Court in the special leave petition filed by Hindustan Lever Limited against the interim order dated 13.12.2016 passed by this court, to submit that the Supreme Court has not touched on the aspect of maintainability qua the disclosure statement and the final findings and has permitted them to raise the contention in view of the notification. It was contended that if the petition was maintainable at the stage of disclosure statement and final findings, the notification under rule 18 of the rules does not change the situation, as it is entirely based on the disclosure statement and final findings. Therefore, if the disclosure statement and the final findings are held to be vitiated, the petitioners need not even challenge the final notification. It was contended that the precedential value of the order passed at the first stage would operate as res judicata in respect of the disclosure statement and final findings, and hence, the ground of maintainability is purely academic. It was submitted that res judicata applies at different stages of the same proceedings. To bolster such submission, the learned counsel placed reliance upon the decision of the Supreme Court in the case of Barkat Ali v. Badrinarain, (2008) 4 SCC 615, wherein the court held thus:
Page 111 of 118HC-NIC Page 111 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT "The principles of res judicata not only apply in respect of separate proceedings but the general principles also apply at the subsequent stage of the same proceedings also and the same court is precluded to go into that question again which has been decided or deemed to have been decided by it at an early stage.
14. In Arjun Singh v. Mohindra Kumar, AIR 1964 SC 993,it was observed as follows:
"10. ... Scope of principle of res judicata is not confined to what is contained in Section 11 but is of more general application. Again, res judicata could be as much applic- able to different stages of the same suit as to findings on issues in different suits. ...
11. ... where the principle of res judicata is invoked in the case of the different stages of proceedings in the same suit, the nature of the proceedings, the scope of the enquiry which the adjectival law provides, the de- cision being reached, as well as the specific provisions made on matters touching such decision are some of the material and the relevant factors to be considered before the principle is held applicable."
15. In Satyadhyan Ghosal v. Deorajin Debi, AIR 1960 SC 941, it was observed as follows:
"8. The principle of res judicata applies also as between two stages in the same litigation to this extent that a court, whether the trial court or a higher court having at an earlier stage decided a matter in one way will not al- low the parties to reagitate the matter again at a sub- sequent stage of the same proceedings."
38.1 It was further submitted that the Supreme Court, in the above order dated 27.01.2017, has not made any observations and that a subsequent fact, namely, the issuance of the notification under rule 18 of the rules, which occurs with the permission of the court cannot prejudice the petitioners. It was submitted that a petition which was maintainable at the admission stage, cannot be rendered non-maintainable by a subsequent fact, more importantly when the subsequent fact has been specifically permitted by the court. It was contended Page 112 of 118 HC-NIC Page 112 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT that the final notification was subject to the final outcome of the petitions and hence, the same cannot render the petitions non-maintainable. It was urged that an order passed to protect the time limit may not be construed as rendering the petitions non-maintainable. In support of such submissions, reliance was placed upon the decision of the Supreme Court in the case of Dale & Carrington Invt. (P) Ltd. v. P. K. Prathapan, (2005) 1 SCC 212, wherein it has been held thus:
"32. On the question of locus standi, the learned coun- sel for the respondent cited Rajahmundry Electric Sup- ply Corpn. Ltd. v. A. Nageshwara Rao, AIR 1956 SC 213, wherein it was held that the validity of a petition must be judged from the facts as they were at the time of its presentation, and a petition which was valid when presented cannot cease to be maintainable by reason of events subsequent to its presentation. In S. Varadarajan v. Venkateswara Solvent Extraction (P) Ltd., (1994) 80 Company Cases 693, a petition was filed by the applic- ant and four others under Sections 397 and 398 of the Companies Act. During the pendency of the petition, the four other persons who had joined the applicant in filing the petition sold their shares thereby ceasing to be shareholders of the company. It was held that the ap- plication could not be rejected as not maintainable on the ground that the four shareholders ceased to be shareholders of the company. The requirement about qualification shares is relevant only at the time of insti- tution of proceeding. In Jawahar Singh Bikram Singh (P) Ltd. v. Sharda Talwar, (1974) 44 Company Cases 552, a Division Bench of the Delhi High Court held that for the purposes of petition under Sections 397/398 it was only necessary that members who were already construct- ively before the court should continue the proceedings. It is a case in which the petitioner who had filed a peti- tion died during the pendency of the petition. While fil- ing the petition he had obtained consent of requisite number of shareholders of the company, among them his wife was also there. The Court further observed that since the wife of the petitioner was already construct- ively a petitioner in the original proceedings, by virtue of Page 113 of 118 HC-NIC Page 113 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT her having given consent in writing, she was entitled to be transposed as petitioner in place of her husband."
38.2 Insofar as the maintainability of the petition in view of an alternative statutory remedy of appeal against the notification issued by the Central Government is concerned, the scope of inquiry before the appellate authority would be the notification issued by the Central Government and the final findings on which the same is based. The appellate authority while considering the validity of the notification under section 18 of the Act, would not go into the validity or otherwise of the disclosure statement issued under rule 16 of the rules. Therefore, insofar as the challenge to the disclosure statement is concerned, as observed by this court in the interim order dated 13.12.2016, the petitioners do not have any alternative statutory remedy and the only remedy available is by way of a writ petition under Article 226 of the Constitution of India. Besides, the disclosure statement forms the foundation of the final findings and the final notification withdrawing the anti- dumping duty and when the foundation falls, everything construction thereupon also falls. Having regard to the fact that the principal challenge in the petitions is to the disclosure statement, the submission that in view of the notification issued by the Central Government against which there is a statutory remedy available, the court may not exercise its writ jurisdiction under Article 226 of the Constitution of India does not merit acceptance. For the reasons set out in the earlier order dated 13.12.2016, this court does not find any reason to relegate the petitioners to the alternative statutory remedy. In any case, breach of principles of natural justice has always been considered to be an exception to appellate remedies and Page 114 of 118 HC-NIC Page 114 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT hence, in view of the above findings recorded by this court regarding violation of the principles of natural justice at the stage of issuance of the disclosure statement as well as the final findings, it is not possible to say that these petitions are not maintainable.
39. As regards the nature of the ultimate relief that can be granted in the petitions, it has been submitted by the learned counsel for the petitioners that insofar as grant of relief is concerned, the breach of principles of natural justice would not terminate the proceedings once the prescribed schedule has been followed. It was submitted that if the court is convinced of a procedural flaw and remands the case, it would be restored to the stage at which it is remanded and the time limits would apply accordingly. The petitioners would have to face proceeding at the stage which it stands vitiated. In support of such submission, the learned counsel placed reliance upon the decision of the Supreme Court in the case of Director of Inspection of Income Tax (Investigation) v. Pooran Mal & Sons, (1975) 4 SCC 568, wherein it has been held thus:
"6. Even if the period of time fixed under Section 132(5) is held to be mandatory that was satisfied when the first order was made. Thereafter if any direction is given un- der Section 132(12) or by a court in writ proceedings, as in this case, we do not think an order made in pursuance of such a direction would be subject to the limitations prescribed under Section 132(5). Once the order has been made within ninety days the aggrieved person has got the right to approach the notified authority under Section 132(11) within thirty days and that authority can direct the Income Tax Officer to pass a fresh order. We cannot accept the contention on behalf of the respond- ents that even such a fresh order should be passed with-
Page 115 of 118
HC-NIC Page 115 of 118 Created On Sun Aug 13 16:00:44 IST 2017
C/SCA/16426/2016 JUDGMENT
in ninety days. It would make the sub-sections (11) and (12) of Section 132 ridiculous and useless. It cannot be said that what the notified authority could direct under Section 132 could not be done by a court which exer-
cises its powers under Article 226 of the Constitution. To hold otherwise would make the powers of courts under Article 226 wholly ineffective. The court in exercising its powers under Article 226 has to mould the remedy to suit the facts of a case. If in a particular case a court takes the view that the Income Tax Officer while passing an order under Section 132(5) did not give an adequate opportunity to the party concerned it should not be left with the only option of quashing it and putting the party at an advantage even though it may be satisfied that on the material before him the conclusion arrived at by the Income Tax Officer was correct or dismissing the petition because otherwise the party would get unfair advant- age. The power to quash an order under Article 226 can be exercised not merely when the order sought to be quashed is one made without jurisdiction in which case there can be no room for the same authority to be direc- ted to deal with it. But in the circumstances of a case the court might take the view that another authority has the jurisdiction to deal with the matter and may direct that authority to deal with it or where the order of the authority which has the jurisdiction is vitiated by circum- stances like failure to observe the principles of natural justice the court may quash the order and direct the au- thority to dispose of the matter afresh after giving the aggrieved party a reasonable opportunity of putting for- ward its case. Otherwise, it would mean that where a court quashes an order because the principles of natural justice have not been complied with it should not while passing that order permit the Tribunal or the authority to deal with it again irrespective of the merits of the case. A Division Bench of the Punjab High Court in CIT v. Ramesh Chander, 93 ITR 450, took the view that what the notified authority could do under Section 132(12) a court could do in writ proceedings. Though the observa- tion was obiter we consider that it is correct. In this con- nection we must refer to the decision of the Gujarat High Court, relied upon by the respondents, in Ramjibhai Kalidas v. I.G. Desai, ITO, 80 ITR 721. In that case it was held that Rule 112-A, which provides that a show-cause notice in respect of an inquiry under Section 132(5) is to be made within 15 days from the date of the seizure, is Page 116 of 118 HC-NIC Page 116 of 118 Created On Sun Aug 13 16:00:44 IST 2017 C/SCA/16426/2016 JUDGMENT mandatory and if that is not done no order under Sec- tion 132(5) can be passed. It seems to have been admit- ted before the Bench by the Advocate-General who ap- peared on behalf of the Revenue that he did not dispute that the period of ninety days prescribed under Section 132(5) is a mandatory period. That decision is, there- fore, no authority for the proposition that the period fixed under Section 132(5) is mandatory. But even if it were the decision that Rule 112-A is also mandatory is clearly erroneous. When Section 132(5) permits an In- come Tax Officer to pass an order within ninety days that power cannot be in any way whittled down by a rule made under that section."
39.1 Reference was also made to the decision of the Supreme Court in the case of Bombay Metropolitan Region Development Authority v. Gokak Patel Volkart Ltd., (1995) 1 SCC 642, wherein it has been held that the period of time fixed for passing an order applies only to the initial order and not to any subsequent order that may have to be passed under the directions given by a statutory authority or by a court in a writ proceeding. The court held that, to hold otherwise would make the powers of courts under Article 226 wholly ineffective. The court in exercising its powers under Article 226 has to mould the remedy to suit the facts of a case.
39.2 Keeping in mind the principles propounded in the above decisions, the court having held that the disclosure statements stand vitiated for the detailed reasons set out hereinabove, would be required to set aside the disclosure statements as well as all proceedings pursuant thereto and restore the proceeding to the file of the designated authority for issuance of a fresh disclosure statement in accordance with law keeping in mind the observations made hereinabove.
Page 117 of 118
HC-NIC Page 117 of 118 Created On Sun Aug 13 16:00:44 IST 2017
C/SCA/16426/2016 JUDGMENT
40. For the foregoing reasons, the petitions succeed and are, accordingly, allowed. The impugned disclosure statements dated 14.09.2016 in all these petitions are hereby quashed and set aside. Consequently, the subsequent notifications notifying final findings as well as subsequent notifications issued by the Central Government under rule 18 of the rules are also quashed and set aside. The proceedings are restored to the file of the designated authority, who shall issue fresh disclosure statements, in consonance with the relevant statutory provisions and in the light of the observations made in this judgment. The designated authority shall complete the entire exercise, including the issuance of final findings, within a period of sixty days from the date of receipt of a copy of this judgment. Rule is made absolute accordingly in each of the petitions, with no order as to costs.
(HARSHA DEVANI, J.) (A. S. SUPEHIA, J.) parmar* Page 118 of 118 HC-NIC Page 118 of 118 Created On Sun Aug 13 16:00:44 IST 2017