Custom, Excise & Service Tax Tribunal
M/S. Kanoria Chemicals & Industries Ltd vs Director General Of Anti Dumping And ... on 4 March, 2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST BLOCK NO.II, R.K. PURAM, NEW DELHI-110066.
Appeal No.AD/23/2011-CU[DB]
M/s. Kanoria Chemicals & Industries Ltd.
:
Appellants
Vs.
Designated Authority
Director General of Anti Dumping and Allied Duties
:
Respondents
Present for the Appellants
:
Mrs. Reena Khair, Adv
Mr. Rajesh Sharma, Adv.
Present for the Respondents
:
Mr. Amit Singh, Adv. For D.A.
Mr. Govind Dixit, DR
Coram: Honble Justice G. Raghuram, President
Honble Mrs. Archana Wadhwa, Judicial Member
Honble R.K. Singh, Technical Member
Date of Hearing: 30.10.2014
Date of Pronouncement: 04.03.2015
Final Order No.50526/2015, dated 04.03.2015
PER: R.K. SINGH
By Notification No. 37/2006-Cus dated April 20, 2006 the Central Government imposed anti-dumping duty on the imports of Pentaerythritol, originating in or exported from China PR and Sweden to India. The present appeal has been filed by the domestic industry, (M/s Kanoria chemicals Ltd.), under Section 9C of the Customs Tariff Act, 1975 against the sunset review notification No. 47/2011-Cus dated 14.06.2011 of the Central Government read with Final Findings dated March 25, 2011 of the Designated Authority, in terms of which anti-dumping duty was discontinued in respect of imports of subject goods from Sweden, though anti-dumping duty continued in respect of imports of subject goods from china PR.
2. In the Final Findings dated March 25, 2011 the Authority has held that the total imports from Sweden during the period of investigation were barely 81MT, which can not be treated as a representative volume of import for determination of individual dumping margin. On the issue of likelihood of recurrence of dumping or injury, in the event of revocation of duties, the Authority in para 58 of the final findings held as under:
58. The Authority has taken note of the information on record. It is noted that the margins of both dumping and injury are negative so far as imports from Sweden are concerned besides low volume of imports from Sweden considering total demand in Indian market. No evidence have been placed on record by any interested party that in the event of discontinuation of antidumping duties on imports of subject goods from Sweden, the injury to the domestic industry is likely to recur. It can therefore be concluded that in the event the duty is revoked, there is no likelihood of continuation or recurrence of injury from Sweden.
The Authority thus concluded that there is no likelihood of continuation of recurrence of injury to the domestic industry, and accordingly recommended the duties on imports from Sweden be discontinued.
Arguments on behalf of Appellant Domestic Industry
3. It is contended that the authority was incorrect in drawing an inference of no likelihood of injury, based on the fact that there were negligible imports from Sweden. It is submitted that the reduction in imports was a direct consequence of the antidumping duty in force and gave no indication of the scenario which may emerge, were the duties to be revoked. The Authority also failed to consider the material fact that Perstorp, the sole producer of subject goods in Sweden, had another plant in Germany, from where it was exporting large volumes to India at dumped prices, for which antidumping investigations had already been initiated based on a prima facie satisfaction of the Authority. On the revocation of duties in respect of Sweden and levy of duties in respect of Germany, it was highly probable that Perstorp would resume dumping from Sweden. It was submitted that while Perstorp participated in the investigations relating to its unit in Germany, it chose not to participate in the investigations for its unit in Sweden, even though both investigations were taking place at almost the same time.
4. Pentaerythritol is sold in two grades technical grade and nitration grade; the only difference being of purity. Out of the total imports into India of subject goods from all sources, about 99% is of technical grade and 1% is nitration grade. The Authority has found a positive dumping margin for technical grade as reflected in paragraph 19 of the Findings. This indicates that were the imports to resume in future, they would be predominantly of technical grade, for which dumping continues in spite of antidumping duties being in force. In these circumstances, likelihood of recurrence of dumping and injury can not be ruled out. The appellant also submitted that after revocation of duties by the impugned notification, substantial imports were coming from Sweden. They also stressed the point that in a sunset review, there is a rebuttable presumption that the conditions as they existed at the time of original investigations, continue to exist, and therefore the onus is on the exporter and not the domestic industry to rebut such presumption. They referred to a few case laws etc. which have been taken into account in the analysis below
Arguments of the Designated Authority
5. The counsel for the Designated Authority argued that since the appellant had not filed the comments to the Disclosure Statement, it was estopped from raising any grounds before this Honble Tribunal. The Authority was fully justified in discontinuing the duties, as interested parties had not provided adequate information on the relevant parameters. He supported the reasoning given in the Final Findings of the Authority. He submitted that the Findings were based on the material available before the Authority and that the appeal was without merit.
Arguments of Revenue
6. The learned Authorised Representative invited attention to various paragraphs of the Final Findings, and added that the appellant had not filed comments on the Disclosure Statement. He submitted that the Authority had passed a reasoned order, setting out clearly the grounds for the discontinuance of the duty, which did not warrant any interference.
Analysis
7. In a sunset review, Section 9A (5) of the Customs Tariff Act, 1975 requires the examination of the likelihood of continuation or recurrence of dumping and injury in the event of revocation of the duties. The relevant provision in the WTO Agreement on Anti-Dumping is Article 11.3, which reads as under:
11.3 Notwithstanding the provisions of paragraphs 1 and 2, any definitive antidumping duty shall be terminated on a date not later than five years from its imposition (or from the date of the most recent review under paragraph 2 if that review has covered both dumping and injury, or under this paragraph), unless the authorities determine, in a review initiated before that date on their own initiative or upon a duly substantiated request made by or on behalf of the domestic industry within a reasonable period of time prior to that date, that the expiry of the duty would be likely to lead to continuation or recurrence of dumping and injury. The duty may remain in force pending the outcome of such a review.
In the Report USA Anti-dumping Duty on DRAMS, the WTO Panel has interpreted Article 11.3 of the Agreement as under:
We note that, with regard to dumping, the sunset provision in Article 11.3 of the AD Agreement envisages inter alia an examination of whether the expiry of an anti-dumping duty would be likely to lead to continuation or recurrence of dumping. If, as argued by Korea, an anti-dumping duty must be revoked as soon as present dumping is found to have ceased, the possibility (explicitly envisaged by Article 11.3) of the expiry of that duty causing dumping to recur could never arise. This is because the reference to expiry in Article 11.3 assumes that the duty is still in force, and the reference to recurrence of dumping assumes that dumping has ceased, but may recur as a result of revocation. Koreas textual interpretation of Article 11.2 would effectively exclude the possibility of an Article 11.3 review in circumstances where dumping has ceased but the duty remains in force. Koreas interpretation therefore renders part of Article 11.3 ineffective. As stated by the Appellate Body in Gasoline, [a]n interpreter is not free to adopt a reading that would result in reducing whole clauses or paragraphs of a treaty to redundancy or inutility. An interpretation of Article 11.2 which renders part of Article 11.3 meaningless is contrary to the customary or general rules of treaty interpretation, and thus should be rejected.
In the present case, Perstorp is a producer, having its plants in multiple locations, including in Sweden and Germany. It is argued by the appellants that after imposition of duties on Sweden, the exports of Perstorp to India from Sweden reduced to insignificant levels, whereas there was a substantial increase in the exports from Germany, for which a second investigation was initiated by the Authority. Perstorp has co-operated which the Authority, in so far its exports from Germany are concerned, but has chosen to not provide information relating to its operations in Sweden, in the review proceedings. It is contended by the appellant that (i) Perstorp was earlier dumping from Sweden, and once the duties were imposed on Sweden, it started dumping its goods into India from Germany and that this being a sunset review, the Authority was required to look into the likelihood or recurrence of dumping and injury, based on the pattern of exports of the foreign exporter, (ii) The fact that Perstorp was earlier dumping from Sweden, and shifted to exporting substantial quantities from Germany at dumped prices, indicates that in the event of revocation of duties from Sweden, Perstorp is likely to resume dumping from Sweden, so argued the appellant.
The Authority has duly examined this aspect in the Disclosure Statement as under:
24. The Authority has considered that in the absence of any information / co-operation by the Swedish exporter, the data provided in World Trade Atlas was also analysed to examine the likelihood of dumping. The World Trade Atlas compiles data based on calendar year. It was seen that export volumes from EU to world increased 9 times (from ***MT to ***MT), for the calendar year 2009 over 2008. During the same period the export to India increased from nil to *** MT. The data shows highest quantity of exports to India at **% of the total export in the POI. This shows the potential of diversion of material to India, in case of withdrawal of duty. In the event for withdrawal of duty, the possibility of diversion of cheaper export to India can not be ruled out. The Authority has also compiled the information concerning the available capacity in Sweden. It is noted that the capacity of Swedish producer is 27000 MT per annum. As regards China PR, the Authority notes that existing volumes of exports to India is substantial. Further considering freely disposable capacity available in China PR and Indian demand the surge in dumped imports from China can not be ruled out.
The freely disposable capacity with Chinese producers is mentioned to be 150000 tons in para 22 of the Disclosure Statement.
8. After the imposition of duties on Sweden, there has been almost a cessation of exports from Sweden. It has been argued that the exporter needs to dump to sell substantial volumes in India. Attention was invited to the international practice, where the decline in import volumes or cessation of exports after the imposition of duties is considered to be highly probative of the likelihood of continuation of recurrence of dumping. We find that while the exports from Sweden have declined to negligible levels, the exports from Germany have increased. However, the Authority also notes that the exports from Sweden to other countries are also negligible, and therefore, cessation of exports to India is not indicative of likelihood of dumping and injury if antidumping duty was removed. Indeed, in such a situation, it can not be said, notwithstanding the contention of the appellant, that exports to India dropped to negligible level due to anti-dumping duty when exports from Sweden to other countries too were negligible.
The Apex Court in the case of Rishiroop Polymers, 2006 (196) ELT (SC) has held as under:
35. Otherwise also, we are of the opinion that scope of the review inquiry by the Designated Authority is limited to the satisfaction as to whether there is justification for continued imposition of such duty on the information received by it. By its very nature, the review inquiry would be limited to see as to whether the conditions which existed at the time of imposition of anti-dumping duty have altered to such an extent that there is not longer justification for continued imposition of the duty. The inquiry is limited to the change in the various parameters like the normal value, export price, dumping margin, fixation of non-injury price and injury to domestic industry. The said inquiry has to be limited to the information received with respect to change in the various parameters. The entire purpose of the review inquiry is not to see whether there is a need for imposition of anti-dumping duty but to see whether in the absence of such continuance, dumping would increase and the domestic industry suffer.
36. It is of vital importance to note that in the initial imposition of duty, the appellant has accepted the position that determination of injury by the Designated Authority was proper and in conformity with the requirements of Annexure-II of the Anti-Dumping Rules. The appellant did not challenge the final finding of the Designated Authority before the Tribunal that parameters mentioned in para (iv) of Annexure-II had not been considered or satisfied. We have declined the permission to the appellant to raise this point before us in Civil Appeal Nos. 773 and 774 of 2001 which were directed against the final findings recorded by the Designated Authority based on which the Government of India had imposed the anti-dumping duty for a period of five years. Under Section 9A (1), the said initial imposition of anti-dumping duty is ordinarily contemplated to be continued and remain in effect for a full period of five years, at the end of which it would be subject to sunset review, the possible consequence of which would be the extension of the operation of the period of anti-dumping duty for another period of five years. This is subject to the provisions of sub-rule (1) of Rule 23 of the Anti-Dumping Rules, under which the Designated Authority is empowered to review the anti-dumping duty imposed from time to time. Having regard to the scheme of the above mentioned provisions of the statute, once anti-dumping duty has been initially imposed, it would be ordinarily continued for five years unless on a review it is found by the Designated Authority that there has been such a significant change in the facts and circumstances, that it is considered necessary either to withdraw or modify appropriately the anti-dumping duty which has been imposed. It is, therefore, clear that unless the Designated Authority suo-motu or the applicant for review is in a position to establish clearly that there has been a significant change in the facts and circumstances relating to each of the basic requirements or conditions precedent for imposing duty, the finding given by the Designated Authority at the time of initial imposition of anti-dumping duty must be considered to continue to hold the field.
37. The final findings recorded by the Designated Authority at the time of initial imposition of anti-dumping duty on the existence of injury to the domestic industry must be considered to continue to remain valid, unless it is proved to be otherwise, either by the Designated Authority in suo motu review or by the applicant seeking review.
Although the above observations are in the context of a midterm review, the Delhi High Court in the case of Indian Metal and Ferro Alloys Ltd. Vs DA - 2008(224) ELT 375 (Del), has clearly held that this ratio is equally applicable to Sunset reviews as is evident from the following paragraphs quoted from the said judgment.
A sunset review:
20. The concept of a sunset review has been recognized by the Supreme Court. In Rishiroop Polymers (p) Ltd. V. Designated Authority and Others, [2006 (196) E.L.T. 385 (S.C.) =(2006) 4 SCC 303] the Supreme Court considered the scope of Section 9A (5) of the Act and observed as follows:
Under Section 9-A (5), the said initial imposition of anti-dumping duty is ordinarily contemplated to be continued and remain in effect for a full period of five years, at the end of which it would be subject to Sunset Review, the possible consequence of which would be the extension of the operation of the period of anti-dumping duty for another period of five years. This is subject to the provisions of sub-rule (1) of Rule 23 of the Anti-Dumping Rules, under which the Designated Authority is empowered to review the anti-dumping duty imposed form time to time. Having regard to the scheme of the abovementioned provisions of the statute, once anti-dumping duty has been initially imposed it would be ordinarily continued for five years unless on a review it is found by the Designated Authority that there has been such a significant change in the facts and circumstances, that it is considered necessary either to withdraw or modify appropriately the anti-dumping duty which has been imposed. It is therefore, clear that unless the Designated Authority suo motu or the applicant for review is in a position to establish clearly that there has been a significant change in the facts and circumstances relating to each of the basic requirements or conditions precedent for imposing duty, the finding given by the Designated Authority at the time of initial imposition of anti-dumping duty must be considered to continue to hold the field.
21. Learned Counsel for the Petitioner drew our attention to a decision rendered by the Appellate Body of the World Trade Organization in United States & Sunset Review of Anti-Dumping Duties on Corrosion-Resistant Carbon Steel Flat Products from Japan (AB-2003-5 decided on 28th November, 2003) in which India was the Third Participant. The question in that appeal related to a complaint by Japan against the United States regarding the continuation of anti-dumping duties on certain corrosion-resistant carbon steel flat products from Japan following the conduct of a five-year, or sunset, review of those duties. This is being mentioned to show that the concept of a sunset review or a review of the continuation of anti-dumping duties at the end of the initial period of five years is not a concept that is alien to the Indian legal system and it hardly matters if there is no specific mention of such a review in the Act or the Rules, Consequently, a review mentioned in the Act and the Rules must, where the context so requires, have reference to both a mid-term and a sunset review.
The ratio of the Apex Court has been applied to sunset reviews, by the Tribunal in case of Kumho Petrochemicals Company Limited vs. DA [2011 (280) ELT 720]; and Thai Acrylic Fiber Company Limited vs. DA [2010 (253) ELT 564 (T)].
9. The D.A after his analysis, in respect of Sweden (in paras 23, 24 of the Final Findings quoted below and Para 58 thereof re-quoted below) notes as under:-
23. As regards Sweden, it has been submitted that the sole producer of Pentaerythritol in Sweden has a facility for production of the product under consideration in Germany. It is noted that the company is already exporting significant volumes from Germany. In view of prima-facie evidence of imports from Europe (excluding Sweden) causing injury to the domestic industry, the Authority has already initiated investigations in respect of imports from Europe (excluding Sweden).
24. The Authority has considered the submissions as above. As regards the submission of domestic industry that Swedish producer, Perstrop is having capacity of 27,000 MT per annum. However, no evidence in support has been placed before the Authority substantiating dumping evidence of subject goods from Sweden. As already detailed above, the total imports from Sweden during POI, as reported in IBIS data source is barely, 81 MT, which cannot be treated as a representative volume of imports for determination and reliance on the individual DM. In absence of any information/ cooperation by the Swedish exporters, the data provided in the World Trade Atlas was also analyzed to examine the likelihood of dumping. On the basis of world trade atlas data it is seen that there is no exports volume from Sweden to other countries during POI and previous year. Thus, it is noted that there is no substantiated evidence on record which signifies that in the event of revocation of duty on Sweden, the import of subject goods would start coming at dumped prices. The authority, therefore, holds that there is no likelihood of continuation/ recurrence of dumping from Sweden. As regards the China PR, the Authority notes that existing volumes of exports to India is substantial. Further, considering freely disposable capacities available in China PR and Indian demand, the surge in dumped imports from China cannot be ruled out. This fact is apart from the establishment of continued dumping from China PR is likely to lead to recurrence of dumping.
Likelihood of Continuation/ recurrence of injury.
58. The Authority has taken note of the information on record. It is noted that the margins of both dumping and injury are negative so far as imports from Sweden are concerned besides low volume of imports from Sweden considering total demand in Indian market. No evidence have been placed on record by any interested party that in the event of discontinuation of anti-dumping duties on imports of subject goods from Sweden, the injury to the domestic industry is likely to recur. It can therefore be concluded that in the event the duty is revoked, there is no likelihood of continuation of recurrence of injury from Sweden.
It is evident that there was significant change in the situation vis-`-vis the situation obtaining at the time of imposition of A.D. duty. The exports from Sweden came down to negligible levels. Also, there can scarcely be any reasonable basis to infer that this drastic reduction in imports from Sweden to India was necessarily a consequence of anti-dumping duty, because, as noted by the D.A. the exports from Sweden to other countries were also negligible. Thus in the given facts and circumstances the findings/conclusion of the D.A. are by no means devoid of reason, logic or rationale.
We may in passing note here that while failure of the exporter to participate in review is a factor which typically weighs in favour of an affirmative Australian expiry review, as does worldwide over capacity in Canadian expiry review (as mentioned in A Practitioners Guide to Sunset Reviews in Australia, Canada, EU and the U.S. by Tereace P. Stewart and Amy Dwyer), in the present case, even these factors, in our view, are far from weighing enough to alter the DAs findings/ conclusion. It needs to be noted again that the appellant had not filed any written submission to the Disclosure Statement and the DAs findings/ conclusion were based on the material available to him. As has been reiterated in the recent judgment of the Delhi High Court in the case of M.P. Goenka Vs. CC (Preventive) [2015-TIOL-282-HC-Del-Cus], it is not the task of the court exercising appellate power to review or second guess (or even third guess, at times) the factual findings based on evidence considered by the lower authorities but only to correct an order if it is based on irrelevant or manifestly incorrect construction of the facts or if based on mis-appreciation of law or non-application of mind.
10. It was attempted to be stated that there is contradiction in the contents of para 24 of the Disclosure Statement wherein it was inter- alia stated that in the event of withdrawal of duty possibility of diversion of cheaper exports to India can not be ruled out and para 24 of the Final Findings wherein it was held by the DA that there is no likelihood of continuation/recurrence of dumping from Sweden. We do not see any contradiction here as possibility only means a thing may happen while likelihood connotes that a thing would happen rather than not happen. The existence of possibility does not necessarily mean the existence of likelihood. Thus, the DA was in no way contracting himself when he found the possibility but not likelihood of dumping. As has been reiterated in the recent judgment of the Delhi High Court in the case of M.P. Goenka vs. CC, (Preventive) [2015-TIOL-282-HC-DEL-CUS], it is not the task of the Court exercising appellate power to review or second guess (or even third guess, at times) the factual findings based on evidence considered by the lower authorities but only to correct an order if it is based on irrelevant or manifestly incorrect construction of the facts or if based on mis-appreciation of law or non-appreciation of mind.
11. In view of the foregoing, we do not find sufficient merit/ basis to warrant any appellate intervention vis-`-vis the DAs findings/ conclusion and the consequent discontinuation of antidumping duty in respect of imports of subject goods from Sweden. The appeal is therefore rejected.
.
(Pronounced in Open Court on 04.03.2015) (Justice G. Raghuram) President (Archana Wadhwa) Member (Judicial) (R.K. Singh) Member (Technical) SSK 13