Custom, Excise & Service Tax Tribunal
Gujarat Fluorochemicals Ltd vs Designated Authority, Directorate on 16 September, 2016
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Block No.2, R.K.Puram, New Delhi COURT-I Date of hearing: 9.9.2016 Date of pronouncement: 16/09/2016 Anti-Dumping Appeal No.52500 of 2016 Arising out of the Final Findings F.No.15/2/2015-DGAD dated 12th April 2016 passed by the Designated Authority and Customs Notification No.23/2016-Customs (ADD) dated 6th June 2016 passed by the Ministry of Finance, Department of Revenue. Gujarat Fluorochemicals Ltd. Appellant Vs. Designated Authority, Directorate .. Respondent
General of Anti-Dumping and Allied Duties Appearance:
Present Mrs. Reena Khair, with Shri Rajesh Sharma, Ms. Rita Jha, Ms.Shreya Dahiya , Advocates, Mrs. Aashtha Gupta and Mr. Vikram Agarwal, C.As. for the appellants Present Shri Amit Singh, Advocate for the Designated Authority Present Shri Govind Dixit, A.R. for the Revenue Coram: Honble Mr. Justice (Dr.) Satish Chandra, President Honble Ms.S.K. Mohanty, Judicial Member Honble Mr. B. Ravichandran, , Technical Member Final Order No.53592/2016 Per B. Ravichandran:
The appeal is against the Final Findings dated 12.4.2016 on sunset review by the Designated Authority (DA), Directorate General of Anti-Dumping and Allied Duties, Ministry of Commerce and Industry and Customs Notification No.23/2016-Customs (ADD) dated 6.6.2016 of the Ministry of Finance. Through these proceedings, Government has imposed anti-dumping duty on Polytetrafluoroethylene or PTEF (subject goods) originating in or exported from Russia. The appellant is a domestic manufacturer of the subject goods and is aggrieved by the inadequate anti-dumping duty imposed by the Government. The only point argued before us by the ld. Counsel representing the appellant, Domestic Industry, is that non-injurious price (NIP) determined by the DA is low and is inconsistent with the principles laid down in Annexure III of AD Rules and also contrary to consistent position taken by the DA while valuing the inputs captively used for manufacture of subject goods.
2. Ld. Counsel appearing for the appellant elaborating on the above point submitted that there are various captive inputs produced by the appellant like power, AHF, Clorine,Chlorofoam or 22 TFE which are used in the production of subject goods. The appellant have provided detailed statement showing cost of production of these various captive inputs to the DA during investigation.
3. As per consistent practice, the DA adds 22% return on capital employed for asset utilized for producing such inputs if these are transferred at cost of production. The method followed by the DA in the present case is totally at variance and is in violation of Rule 4 and principles in Annexure III of AD Rules. The DA had submitted before the Honble Delhi High Court in response to various Writ Petitions that 22% return on capital employed is allowed while considering cost of production of inputs captively used. The method adopted by the DA in appellants case by applying Rule 8 of Central Excise Valuation Rules, 2000 is without any legal basis and is contrary to the consistent practice followed by DA.
4. Ld. Counsel for the DA submitted that DA has examined the issue raised by the appellant at para 18 of his final findings on sunset review. When asked specifically by the Bench about the past practice and whether the present method of costing is in consonance with past practice. Ld. Counsel fairly admitted that DA has been allowing 22% return on capital employed in case of captively used inputs while considering fixing NIP during investigation.
5. Ld.A.R. reiterated the final findings and supported the AD duties imposed vide Customs Notification cited above.
6. We have carefully examined the appeal records including written submissions and considered the arguments of the interested parties. The only point for determination is correctness of method adopted by the DA while arriving at NIP considering a large number of captively produced and consumed inputs while manufacturing the subject goods by the appellant. Admittedly , in large number of cases, [a list of such cases were provided by both the appellant and the ld. Counsel by the DA], the DA had been adding 22% return on capital employed in producing captive inputs for arriving at price. However, in the present case, as is clear from para 87 of the final findings, the DA has adopted the norms of Rule 8 of Central Excise Valuation Rules, 2000 and CAS-4 governing transfer value and captive excisable inputs. He records that reasonable return on capital employed has already been claimed in the form of profit and hence the appellants claim on return on assets deployed was found to be not tenable. The relevant portion of the final finding is as below:
As regards the claim of the company requesting return on assets deployed for the production of captive inputs as Ranjit Nagar, the company was asked to substantiate its claim with reference to Rule 8 of Central Excise Valuation Rules, 2000 and CAS 4 govering the transfer value of captive excisable inputs from one unit to another unit. The information furnished by the company establishes that an element of product has already been built into the consumption price of Rs.22 (input transferred from Ranjit Nagar) plant to Dahej plant) and which has already been considered in the calculation of NIP. Thus, reasonable return on capital employed for the production of inputs at Ranjit Nagar unit of the company has already been claimed in the form of profit and therefore, the claim of the company on this account is not tenable.
7. We find that neither AD Rule 1995 including Annexure III of the said Rules nor any other statutory provision mandated specifically the method to be adopted in dealing with captively used inputs while arriving at NIP. The admitted practice by the DA of allowing 22% return on capital deployed has been changed in the present case by the DA. We find no reason recorded for such sudden change inpractice. We also note that there is no reason recorded for adopting the Central Excise provision of Valuation (Rules 8) for captively used inputs. Rule 8 as in the present form mandate that the value of excisable goods captively consumed shall be 110% of cost of production. The said Rule is meant for excise duty levied. Admittedly, there is no provision in AD Rules or in Customs Tariff Act which mandates the application of such Rule to calculate NIP in anti-dumping investigations. It is apparent that DA has deviated from the consistent practice of valuation adopted by him in numerous other cases of captively used inputs while fixing NIP for subject goods. We do not find any legal reason for such deviation in the present case. In such a factual matrix, we find that NIP determined in the present case is faulty in so far as it relates to the treatment of captively used goods with specific reference to profit/ return on capital deployed.
8. Accordingly, we are constrained to set aside the final findings of the DA on this account. . The matter has to be re-examined by the DA afresh after giving due opportunity to the interested parties to arrive at a finding in consonance with the legal provision applicable. The reason for arriving at a particular NIP with specific reference to the treatment of captively used input are to be recorded specifically. Thereafter, the injury margin and the AD duties liable to be imposed can be determined as per law in the present case.
9. We note that the final findings on sunset review is with reference to already existing AD duty and the DA has recommended continuation of definitive anti-dumping duty for a further period of 5 years. There is no appeal filed by any paty against imposition of such anti-dumping duty now being levied. The present appeal is only for enhancement of such duty. Considering this position, we direct that anti-dumping duty as being levied now shall continue to be leived on provisional basis for a period six months form the date of this order. Before completion of such period the DA shall complete his sunset review in terms of the direction as above and give final finding to the competent authority of the Government to take action as deemed fit.
10. With the above observation, the matter is remanded back to the Designated Authority for a fresh decision. The appeal is allowed to that extent.
(Pronounced in open Court on 16/09/2016) (Justice Dr. Satish Chandra) President (S.K. Mohanty) Judicial Member (B. Ravichandran) Technical Member scd/ 5