Custom, Excise & Service Tax Tribunal
Nitro Chemical Industry Ltd vs Designated Authority Directorate ... on 20 December, 2019
Author: Dilip Gupta
Bench: Dilip Gupta
1 Anti Dumping A.No. 50572 & 50573/19
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH - COURT NO. 1
ANTI DUMPING APPEAL NO. 50572 OF 2019
(Arising out of Final Findings vide Notification No. 6/12/2018-DGAD dated 31 December, 2018 issued by
the Designated Authority, Directorate General of Anti Dumping & Allied Duties, New Delhi)
Nitro Chemical Industry Ltd. ...... Appellant
Mr. Seeharaj Chaikamnerd
24, Rama 1 Road, Rongmuang
Pathumwan, Bangkok
THAILAND -10330
VERSUS
Designated Authority, Directorate ...... Respondent
General of Antidumping & Allied Duties Department of Commerce & Industry Parliament Street Jeevan Tara Building, 4th Floor NEW DELHI - 110 001 WITH ANTI DUMPING APPEAL NO. 50573 OF 2019 (Arising out of Final Findings vide Notification No. 6/12/2018-DGAD dated 31 December, 2018 issued by the Designated Authority, Directorate General of Anti Dumping & Allied Duties, New Delhi) Nobel NC Co. Ltd. ...... Appellant Mr. Seeharaj Chaikamnerd 24, Rama 1 Road, Rongmuang Pathumwan, Bangkok THAILAND -10330 VERSUS Designated Authority, Directorate ...... Respondent General of Antidumping & Allied Duties Department of Commerce & Industry Parliament Street Jeevan Tara Building, 4th Floor NEW DELHI - 110 001 2 Anti Dumping A.No. 50572 & 50573/19 APPEARANCE:
Mr. Naresh Thacker, Mr. Sanjay Notani & Mr. Dhruv Khurana, Advocates for the Appellant Ms. Reena Khair, Shri Rajesh Sharma, Ms. Rita Jha, Ms. Neha Pandey and Ms. Shreya Dahiya, Advocates, for the Respondent Mr. Ameet Singh & Mr. Arun, Advocates for Designated Authority Shri Rakesh Kumar, Authorised Representative for the Revenue CORAM : HON‟BLE MR. JUSTICE DILIP GUPTA, PRESIDENT HON‟BLE DR. D.M. MISRA, MEMBER (JUDICIAL) HON‟BLE MR. C.L. MAHAR, MEMBER (TECHNICAL) FINAL ORDER NO. 51668-51669/2019 DATE OF HEARING : 25 June, 2019 DATE OF DECISION : 20 December, 2019 JUSTICE DILIP GUPTA :
The levy of definitive anti dumping duty on the import of ―Non-Plasticized Industrial Grade Nitrocellulose excluding Nitrocellulose Damped in Ethanol and Waterwet‖ 1 originating in or exported from Brazil, Indonesia and Thailand has led to the filing of these two appeals by the two exporters from Thailand.
2. The Designated Authority, in its final findings dated 31 December, 2018, concluded that Nitrocellulose, which is the product under consideration, has been imported to India from the aforesaid three countries below normal value; the Domestic Industry has 1 Nitrocellulose 3 Anti Dumping A.No. 50572 & 50573/19 suffered material injury on account of its import from subject countries; and material injury has been caused by the dumped imports of subject goods from the subject countries. It, therefore, recommended imposition of definitive anti dumping duty on the import of subject goods in order to remove injury to the domestic industry. The Central Government, after taking into consideration the aforesaid final findings of the Designated Authority, imposed anti dumping duty by a Notification dated 07 February, 2019 that was published in the Gazette of India.
3. Two issues that have been raised by Shri Naresh Thacker, learned Senior Counsel appearing for the Appellant in the two appeals filed by M/s Nitro Chemical Industry Ltd.2 and M/s Nobel NC Co. Ltd.3 are non-consideration of the submissions advanced on behalf of the Appellants both on normal value and confidentiality.
4. Nitro Chemicals with its subsidiary company is the sole manufacturer of Nitrocellulose in Thailand. This product is a flammable compound produced by the reaction of cellulose and Nitric Acid and is used in the manufacture of paints, nail varnishes, printing inks and lacquers if the content of nitrogen is less than 12.2%. 2 Nitro Chemicals 3 Nobel 4 Anti Dumping A.No. 50572 & 50573/19
5. M/s Nitrex Chemicals India Limited4, a producer of subject goods in India, filed an application before the Designated Authority alleging dumping of the product under consideration originating in or exported from Brazil, Indonesia and Thailand. Pursuant to the aforesaid application, the Designated Authority issued a Public Notice by Notification dated 10 April, 2018 initiating investigation in terms of Rule 5 of the Customs Tariff (Identification, Assessment and Collection of Antidumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995 5 . The Appellants filed their response to the exporter's questionnaire on 04 June, 2018. The Designated Authority held an oral hearing on 06 June, 2018. On behalf of the Domestic Industry, a communication dated 07 August, 2018 was submitted before the Designated Authority pointing out that the responding exporters had resorted to excessive confidentiality claim which had prevented the Domestic Industry from offering comments. It was also stated that none of the exporters had even given an indexed version of their performance indicators, whereas the Domestic Industry had provided indexed figures of each parameter showing the trend of injury parameters. A request was, therefore, made to direct the exporters to sufficiently disclose information in the public version filed by them. All the interested parties filed their Written Submissions post public hearing held on 06 August, 2018. Pursuant to the communication dated 07 August, 2018 sent on behalf of the Domestic Industry, the Designated Authority sent an email to 4 NCIL 5 1995 Rules 5 Anti Dumping A.No. 50572 & 50573/19 the exporters mentioning therein that at the time of oral hearing an issue was raised by the Domestic Industry regarding alleged excessive claims of confidentiality and that the Domestic Industry had submitted a letter, of which a copy was attached with the email. The exporters were, therefore, advised to either disclose the information adequately or provide sufficient reason as to why no further disclosure of information was feasible. The Appellants sent a communication dated 22 August, 2018 to the Designated Authority giving a response to the claim of confidentiality. The Appellants also sent a communication dated 27 August, 2018 to the Designated Authority questioning the excessive confidentiality claim made by the Domestic Industry. An onsite verification of the exporters' premises was conducted from 10 September, 2018 to 12 September, 2018. Thereafter, a disclosure statement dated 07 December, 2018 was published disclosing all the essential facts under consideration for the anti dumping investigation which would form the basis for final findings. The interested parties were asked to offer their comments, if any, latest by 14 December, 2018. Comments to the disclosure statement were received, whereafter final findings were notified on 31 December, 2018 recommending imposition of anti dumping duty equal to the lesser of the margin of dumping and the margin of injury, so that the injury caused to the Domestic Industry was removed. This was to be effective from the date of the Notification to be issued by the Central Government and would be for a period of five years. 6 Anti Dumping A.No. 50572 & 50573/19
6. Feeling aggrieved, both the Appellants filed Writ Petitions before the Delhi High Court being Writ Petition (Civil) No. 312 of 2019 and Writ Petition (Civil) No. 313 of 2019 for quashing the final findings dated 31 December, 2018 and the disclosure statement dated 07 December, 2018. A further prayer was made to direct the Respondent to refrain from giving effect to and/or take any action in furtherance to the final findings dated 31 December, 2018. The Petitioners had made a complaint that the verification report of the Designated Authority was not a part of the record. This apprehension of the Appellant was found not to be correct by the High Court, as the records produced before the High Court indicated that the verification report was a part of the record of the Designated Authority. Learned Counsel for the Petitioners then submitted that there were other grounds also dealing inter alia with the issue of confidentiality and the failure on the part of the Designated Authority to deal with its submissions and it was stated on their behalf that they would agitate these issues through a representation to the Central Government, so as to seek its intervention and appropriate action. Learned Counsel appearing for the Designated Authority stated that a copy of the verification report would be furnished to the Petitioner. In such circumstances, the High Court observed that a copy of the verification report shall be furnished to the Writ Petitioners within a week and it would be open to the Petitioners to represent to the Central Government in a suitable manner for appropriate directions, in accordance with law. Learned Senior Counsel for the Petitioner, in 7 Anti Dumping A.No. 50572 & 50573/19 view of the aforesaid submissions, sought liberty to withdraw the Petitions. The Writ Petitions were, accordingly, dismissed as withdrawn on 6 February, 2019.
7. After the dismissal of the Writ Petitions, the Central Government issued the Notification dated 07 February, 2019 exercising powers conferred by sub-sections (1) and (5) of section 9A of the Customs Tariff Act, 1975 6 imposing anti dumping duty on Nitrocellulose originating in and exported from Brazil, Indonesia and Thailand for a period of five years.
8. The Designated Authority also provided a copy of the verification report to the Appellants on 08 February, 2019. On 15 February, 2019, the Appellants submitted a response before the Central Government on the verification report. The Central Government forwarded a copy of the aforesaid comments dated 15 February, 2019 to the Designated Authority.
9. The Central Government thereafter sent a letter dated 01 March, 2019 to the Appellants in connection with the comments dated 15 February, 2019 submitted by them. The letter informed the Appellants that after examination of the comments to the verification report, no change was called for in the final findings issued on 31 December, 2018.
6 Tariff Act 8 Anti Dumping A.No. 50572 & 50573/19
10. These two appeals have been filed by the Appellants on 18 March, 2019 to assail the final findings dated 31 December, 2018 as also the Notification dated 07 February, 2019.
11. Shri Naresh Thacker, learned Senior Counsel for the Appellants made the following submissions on two aspects, namely,
(a) non-consideration of the Appellants' submission on ‗normal value'; and (b) non-consideration of the Appellants' submission on ‗confidentiality'.
SUBMISSIONS ON „NORMAL VALUE‟
(i) The Designated Authority failed to consider the submissions advanced by the Appellants on ‗normal value'. Elaborating this submission, learned Senior Counsel pointed out that the domestic selling price of the product under consideration in Thailand was distorted because of demand-supply crunch resulting from strict licensing requirements imposed by the Thailand Government and, therefore, the normal value should have been calculated on the basis of sales made by the Appellants to third countries or the cost incurred by the Appellants;
(ii) The export price to India is not comparable with the prices in the domestic market because the product under consideration was subject to domestic regulations enforced by the Defence Industrial Department under the Thailand Army on account of which there was a limited supply within the country 9 Anti Dumping A.No. 50572 & 50573/19 leading to an increase in prices. There were also various additional expenses that the Appellants had to incur owing to the nature of the product.
Further, additional services were also provided to its customers by the Appellants which were not provided to their customers in India. Thus, the export price was not directly comparable to the domestic sales price;
(iii) The Appellants had also reiterated the submissions of normal value when site verification took place from 10-12 September, 2018;
(iv) The verification report that was submitted was not shared with the Appellants by the Designated Authority;
(v) In the final findings, the Designated Authority failed to consider the submissions advanced on behalf of the Appellants regarding normal value and the Designated Authority merely reproduced what was stated in the disclosure statement, even though comments had been submitted in response to the disclosure statement;
(vi) The final findings have not appreciated the scope of the licensing regulations and it has been held that mere licensing procedure would not mean that domestic selling prices cannot be in the ordinary course of trade. In this connection, reliance has been placed on the decision of the Appellate Body in US - Anti Dumping measures on certain hot-rolled steel products from Japan;
10 Anti Dumping A.No. 50572 & 50573/19
(vii) In terms of the order passed by the Delhi High Court on 06 February, 2019 in the two Writ Petitions filed by the Appellants, the Central Government should have waited for the Appellants to file a representation to the Central Government so that the Central Government could take a decision but the Central Government issued the Notification on the very next date on 07 February, 2019. Thus, not only have the principles of natural justice been violated, but the Notification is also against the spirit of the order dated 06 February, 2019 passed by the Delhi High Court; and
(viii) The communication dated 01 March, 2019 sent by the Central Government in response to the comments submitted by the Appellant also does not deal with the submissions made by the Appellants. SUBMISSIONS ON CONFIDENTIALITY
(i) The 1995 Rules provide that the Designated Authority has to disclose all the evidences provided by any of the parties to the opposing parties. In exceptional cases, if the information is confidential in nature, the interested party has still to submit a non-confidential summary of such information or give reasons why a summary cannot be provided. Pursuant to the letter dated 07 August, 2018 submitted by the Domestic Industry after the oral hearing took place on 06 August, 2018, the Designated Authority by a letter dated 16 August, 11 Anti Dumping A.No. 50572 & 50573/19 2018 directed the Appellants to provide reasons for the confidentiality claim or to provide a summary, which directions were duly complied with by the Appellants by letter dated 23 August, 2018;
(ii) The Appellants also sent a communication dated 27
August, 2018 objecting to the claim of
confidentiality of the Domestic Industry as being excessive. The Domestic Industry had also omitted to fill Forms ‗A' to ‗L' (barring ‗G' & ‗H') completely, but the Designated Authority did not address this issue;
(iii) Trade Notice dated 09 December, 2013 also
provides that any submission made without a
meaningful non-confidential version thereof or
without a good cause statement on the
confidentiality claim should not be taken on record by the Designated Authority;
(iv) Trade Notice dated 01 February, 2018 also provides
the format to be submitted by the Domestic
Industry;
(v) A conjoint reading of the Trade Notices would
indicate that the data, which is non-confidential, should be made available without fail and where the data is confidential, parties must provide a non- confidential version thereof. However, if it is not possible to provide a non-confidential version, the parties must provide a meaningful summary and/or an indexed version of the documents. However, the 12 Anti Dumping A.No. 50572 & 50573/19 Designated Authority did not issue directions to the Domestic Industry;
(vi) The Central Government in the communication dated 01 March, 2019, has not appreciated the contention of the Appellants and has merely stated that the issue of confidentiality had been dealt with by the Designated Authority in paragraphs 22 and 23 of the final findings; and
(vii) The Designated Authority has unevenly treated the Appellants and the Domestic Industry.
12. Ms. Reena Khair and Shri Rajesh Sharma, learned Counsel appearing for the Domestic Industry have, however, supported the impugned notification and the final findings. Learned Counsel submitted that the Designated Authority has examined the contentions raised by the Appellants both on ‗normal value' and ‗confidentiality'.
SUBMISSIONS ON „NORMAL VALUE‟
(i) The submission of the Appellants that since imports are prevented from entering the Thailand market freely, the limited supply has led to distortion in the domestic market price of the subject goods in Thailand and so the normal value should not be fixed based on sale price in the domestic market, but on exports to other countries is not correct. In this connection, learned Counsel submitted that a license has to be obtained both for domestic and 13 Anti Dumping A.No. 50572 & 50573/19 import procurement and, therefore, the transactions are at par and there is no distortion of price on account of the regulations;
(ii) The Arms Act is essentially an Act for public safety and law and order and is not a trade measure for restricting the quantum of import or for regulation of price in the market. The considerations for issuance of a license have no connection with the domestic procurement or import. The Act merely seeks to regulate the use of the product in Thailand so as to prevent misuse against public safety as well as law and order. Thus, a user will have to obtain a license irrespective of whether Nitrocellulose is imported or procured domestically. The license also covers production and possession of Nitrocellulose;
(iii) The Act is applicable to the article Nitrocellulose, other than non-explosive finished products. Nitrocellulose with Nitrogen below 12.3 percent is used for lacquers, coatings and inks and Nitrogen content above 12.6% is considered as explosive. In the present case, the product under consideration has a Nitrogen content in the range of 10.7% to 12.2%. Thus, it would not qualify as arms under the Arms Act, 1987 and the regulations would not be relevant to the investigation carried out;
(iv) The definition of ‗normal value' contained in Explanation (c) to Section 9A(1) of the Tariff Act provides for different methodologies for fixation of normal value which has to be applied sequentially. The ‗normal value' is the price for the like article 14 Anti Dumping A.No. 50572 & 50573/19 when destined for consumption in the exporting country. In exceptional cases, when there are no sales of the like article in the ordinary course of trade, or when due to a particular market situation or low volume of sale in the domestic market, such sales do not permit a proper comparison, the normal value shall be determined either on the basis of the comparable representative price of the like article, when exported from Thailand to an appropriate third country, or the cost of production of the said article in the country of origin with reasonable addition for administrative, selling and general cost with profit. Thus, the domestic sale price can be rejected only when these two circumstances exist.
(v) Clause (2) of Annexure I to the 1995 Rules provides for circumstances under which sale of the like product may be treated as not being in the ordinary course of trade by reason of price. The contention of the foreign exporter that the sales in the domestic market are not in the ordinary course of trade is fallacious since the regulations have no bearing on the terms and conditions of sales in the domestic Thailand market;
(vi) The verification process is only for verification of the information and is not a proper forum or stage for making any submissions. The final findings adequately deal with this issue;
(vii) After the issuance of the final findings on 31 December, 2018, the Appellants filed Writ Petitions in the Delhi High Court contending that the 15 Anti Dumping A.No. 50572 & 50573/19 verification report did not form part of the record of the Designated Authority. The original records were produced before the High Court by the Designated Authority and the High Court found that the records included the verification report. The Designated Authority, however, agreed to provide the verification report to the foreign exporters within a period of one week and only liberty was given to the Writ Petitioners to represent to the Central Government for appropriate directions in accordance with law. No directions were issued to the Central Government not to issue the Notification under Section 9A of the Tariff Act. The final findings recommended imposition of anti dumping duty on imports of the subject good originating in or exported from Brazil, Indonesia and Thailand. Controversy was raised by only two exporters from Thailand. Thus, in the absence of any restraint by the High Court, the Central Government could have issued the Notification and the submission of the Appellants that issuance of the Notification prior to the filing of the representation by the Appellants before the Central Government was prejudicial to the foreign exporters is not correct. In any case, the Central Government was competent to amend the Notification, if so warranted, in terms of Section 9A of the Tariff Act read with Section 21 of the General Clauses Act, 1897.
SUBMISSIONS ON „CONFIDENTIALITY‟
(i) The Domestic Industry had claimed
confidentiality in respect of detailed costing
information since disclosure would adversely impact 16 Anti Dumping A.No. 50572 & 50573/19 the ability of the Domestic Industry to compete with the foreign exporters in Indian and foreign markets. It has been consistently held that the cost of production and related data of Domestic Industry is of confidential nature and commercially sensitive and cannot be made available to others; and
(ii) Domestic Industry furnished complete information in the Forms to the Designated Authority on confidential basis. A meaningful summarization of this information was not possible without disclosure of sensitive information. A summary of the performance parameters was provided in Form ‗H' and the Thailand exporters have also not provided meaningful summarization of cost information, except the performance parameters.
13. Shri Ameet Singh, learned Counsel appearing for the Designated Authority has supported the final findings and the Notification issued by the Central Government and made the following submissions:
(i) The investigation team conducted the verification after which it prepared a report for the Designated Authority. All the figures provided by the exporters were accepted by the verification team and as such there was no obligation on the part of the Designated Authority to supply the verification report to the exporters;
(ii) The verification report was a part of the records placed before the Designated Authority and this fact has also been recorded by the High Court in the 17 Anti Dumping A.No. 50572 & 50573/19 judgment rendered in the two Writ Petitions filed by the Appellants;
(iii) The disclosure statement took into account all the information verified during verification conducted at the premises of the Appellants. All the figures reported by the exporters were adopted in entirety without any modification.
(iv) The claim regarding confidentiality has been duly considered by the Designated Authority and it is incorrect to assert that the Appellants have been discriminated in any manner; and
(v) The Designated Authority has correctly determined the ‗normal value' since the Designated Authority had to first examine whether the domestic sales of the subject goods were representative and viable for permitting the determination of normal value. Both the Appellants had provided domestic sales price of the subject goods. During the period of investigation, Nitro Chemicals sold 4193 MT of the subject goods in the domestic market and all the sales were subjected to ordinary course of trade test. It was found that 99.96% of the sales in the domestic market were profitable.
14. Shri Rakesh Kumar, learned Authorised Representative appearing on behalf of the Central Government has submitted: 18 Anti Dumping A.No. 50572 & 50573/19
i. The Notification was issued by the Central Government after careful examination of the final findings of the Designated Authority; and ii. While issuing the Notification, the Central Government did not violate any direction contained in the Judgment and Order dated 06 February, 2019 of the Delhi High Court. The two main prayers contained in the Writ Petitions were for quashing the final findings dated 31 December, 2018 and also for a direction refraining the Respondents from giving effect to and/or taking any action in furtherance to the final findings dated 31 December, 2018. These two prayers were not accepted and only an opportunity was given to the Appellants to file a representation to the Central Government, which representation was duly considered by the Central Government and in case the representation submitted by the Appellants had any merit, the Central Government would have made suitable amendments in the Notification.
15. The submissions advanced by the learned Counsel for the Appellants, learned Counsel for the Domestic Industry and the Designated Authority and the learned Authorized Representative appearing for the Central Government have been considered.
16. The Domestic Industry had submitted an application before the Designated Authority alleging dumping of "Non- Plasticized Industrial Grade Nitrocellulose excluding Nitrocellulose Damped in Ethanol and Waterwet", having 19 Anti Dumping A.No. 50572 & 50573/19 nitrogen content in the range of 10.7% to 12.2%, originating in or exported from Brazil, Indoneasia and Thailand", which article has been referred to as ‗Nitrocellulose' in this order. The Designated Authority, after being satisfied from the evidence submitted in the application that it justified initiation of anti dumping investigation, issued a Public Notice by Notification dated 10 April, 2018 in terms of Rule 5 of the 1995 Rules to determine the existence, degree and effect of the alleged dumping on the subject goods. Four exporters/producers, including the two Appellants submitted questionnaire responses. Four importers and users of the subject goods also submitted questionnaire responses. The non-confidential version of the evidence presented by the various interested parties was made available for inspection in the form of a public file. Oral hearing was conducted on 06 August, 2018 and all the parties who presented their views in the oral hearing were requested to file written submissions as also rejoinder thereafter. The period of investigation was from April, 2016 to September, 2017. The examination of trends in the context of injury analysis covered the period from April, 2013 to March 2014, April, 2014 to March, 2015 April, 2015 to March, 2016 and the period of investigation.
17. It has been stated in the final findings that information provided by the interested parties on confidential basis was examined with regard to the sufficiency of the confidentiality claim and on being satisfied, the Authority accepted the confidentiality claims wherever warranted and such information has been considered as confidential 20 Anti Dumping A.No. 50572 & 50573/19 and not disclosed to other interested parties. Wherever possible, parties providing information on a confidential basis were directed to provide sufficient non confidential version of the information filed on a confidential basis. The exporters were asked to file a revised non- confidential version of the exporter questionnaire response and provide all necessary and relevant information. A revised non- confidential version of the questionnaire was filed by the responding exporters.
18. A disclosure statement dated 07 December, 2018, as contemplated under Rule 16 of the 1995 Rules, was then published, informing all interested parties of the essential facts with a request to submit the comments by 14 December, 2018. The final findings were notified on 31 December, 2018 recommending imposition of anti dumping duty. The Central Government issued the Notification dated 07 February, 2019 imposing anti dumping duty on Nitrocellulose originating in or exported from Brazil, Indonesia and Thailand for a period of five years.
19. The export of Nitrocellulose by the two Appellants from Thailand is in issue in these Appeals. Broadly, two submissions have been made by the learned Counsel for the Appellants. They relate to non-consideration of the submissions made by the Appellants on ‗Normal Value' and non-consideration of the submissions made by the Appellants on ‗Confidentiality'.
21 Anti Dumping A.No. 50572 & 50573/19
20. It would be appropriate, before proceeding to examine the submissions made on behalf of the Appellants and the Respondents, to reproduce the relevant provisions of the Act and the 1995 Rules.
21. Section 9A of the Tariff Act deals with anti dumping duty on dumped articles. Sub-section (1) of Section 9A, without the Explanation is as follows :
―SECTION 9A(1). Anti- dumping duty on dumped articles --
(1) Where any article is exported by an exporter or producer from any country or territory (hereinafter in this 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.‖
22. The ‗margin of dumping' has been defined in Explanation
(a) to Section 9A(1) of the Tariff Act to mean the difference between the export price and the normal value.
23. ‗Normal Value' has been defined in Explanation (c) to Section 9A(1) of the Tariff Act and it is as follows :
"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 22 Anti Dumping A.No. 50572 & 50573/19
(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 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 transhipped 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.‖
24. Annexure I to the 1995 Rules deals with the principles governing the ‗determination of normal value, export price and margin of dumping'. Paragraph 2 of this Annexure deals with circumstances under which sales of the like product are not treated to be in the ordinary course of trade and the said paragraph is reproduced below :
"2. Sales of the like product in the domestic market of the exporting country or sales to a third country at prices below per unit (fixed and variable) costs of production plus administrative, selling and general costs may be treated as not being in the ordinary course of trade by reason of price. The designated authority may disregard these sales, in determining normal value, provided it has determined that-23 Anti Dumping A.No. 50572 & 50573/19
(i) such sales are made within a reasonable period of time (not less than six months) in substantial quantities, i.e. when the weighted average selling price of the article is below the weighted average per unit costs or when the volume of the sales below per unit costs represents not less than twenty per cent of the volume sold in transactions under consideration, and
(ii) such sales are at prices which do not provide for the recovery of all costs within a reasonable period of time.
The said prices will be considered to provide for recovery of costs within a reasonable period of time if they are above weighted average per unit costs for the period of investigation, even though they might have been below per unit costs at the time of sale.‖
25. ‗Designated Authority' is appointed under Rule 3 of the 1995 Rules and the duties of the Designated Authority have been enumerated in Rule 4. Rule 4(d) provides that it shall be the duty of the Designated Authority to :
―4(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;‖
26. The investigation is initiated under Rule 5 and the principles governing investigations are contained in Rule 6. Rule 7 deals with ‗confidential information' and is as follows :
"7. Confidential information -
(1) 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 24 Anti Dumping A.No. 50572 & 50573/19 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 no such information shall be disclosed to any other party without specific authorization of the party providing such information.
(2) The designated authority may require the parties providing information on confidential basis to furnish non-confidential summary thereof and if, in the opinion of a party providing such information, such information is not susceptible of summary, such party may submit to the designated authority a statement of reasons why summarisation is not possible.
(3) Notwithstanding anything contained in sub-rule (2), if the designated authority is satisfied that the request for confidentiality is not warranted or the supplier of the information is either unwilling to make the information public or to authorize its disclosure in a generalized or summary form, it may disregard such information.‖
27. Rule 10 deals with ‗determination of normal value, export price and margin of dumping' and is as follows :
"10. Determination of normal value, export price and margin of dumping. - 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 these rules.‖
28. Rule 11 deals with ‗determination of injury'. Rule 16 provides that, the Designated Authority shall, before giving its final findings, inform all interested parties of the essential facts under consideration which form the basis for its decision. Rule 17 deals with ‗final findings' and the relevant portion is as follows : 25 Anti Dumping A.No. 50572 & 50573/19
"17. Final findings -
(1) 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 -
(a) as to, -
(i) the export price, normal value and the margin of dumping of the said article;
(ii) whether import of the said article into India, in the case of imports from specified countries, causes or threatens material injury to any industry established in India or materially retards the establishment of any industry in India;
(iii) a casual link, where applicable, between the dumped imports and injury;
(iv) whether a retrospective levy is called for and if so, the reasons therefor and date of commencement of such retrospective levy:
Provided xxxxxxx Provided xxxxxxx
(b) 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 rules.‖
29. Rule 18 deals with ‗levy of duty' and the relevant portion is as follows :
"18. Levy of duty -
(1) The Central Government may, within three months of the date of publication of final findings by the designated authority under rule 17, impose by notification in the Official Gazette, upon importation into India of the article covered by the final finding, anti-dumping duty not exceeding the margin of dumping as determined under rule 17.‖
30. It is keeping in mind the aforesaid factual position and the relevant provisions of the Act and the Rules that the two 26 Anti Dumping A.No. 50572 & 50573/19 submissions advanced by the learned Counsel for the Appellants have to be considered.
SUBMISSIONS ON „NORMAL VALUE‟
31. The contention of the learned Senior Counsel for the Appellants is that the price of the product under consideration in the domestic market is distorted because of the strict licensing requirements imposed by the Thailand Government. ‗Normal value' should, therefore, have been calculated on the basis of the sales to third countries or the cost of production.
32. To appreciate this contention, the definition of ‗normal value' has to be examined. As noticed above, ‗normal value' in relation to an article means the comparable price, in the ordinary course of trade, for the article when destined for consumption in the exporting country. It is only when there are no sales of the article, in the ordinary course of trade, in the domestic market of the exporting country or when because of the particular market situation or low volume of the sales in the domestic market of the exporting country that the normal value shall be either a comparable representative price of the like article when exported from the exporting country to an appropriate third country or the cost of production of the said article in the country of origin along with reasonable addition for administrative, selling and general costs, and for profits.
27 Anti Dumping A.No. 50572 & 50573/19
33. The contention of the Appellants is that the export price to India is not comparable with the price in the domestic market because the product under consideration is subject to domestic regulations enforced by Defence Industrial Departments because of which there is a limited supply available within the country leading to an increase in the price.
34. The contention of the Domestic Industry is that the Appellants failed to substantiate that there was any distortion in the domestic selling price and mere existence of license regulations cannot lead to a conclusion that there is a distortion in price. The submission is that a licence has to be obtained, both for domestic and import procurement and, therefore, the transactions are at par and there is no distortion of price on account of the regulations imposed by the Thailand Government.
35. It would, therefore, be necessary to examine the provisions of the Arms Control Act, 1987 7 enacted by Thailand, which it is stated by the Appellants contains restrictions in obtaining a licence to sell the article, thereby causing distortion in the price. The preamble to the said Act states that it was considered expedient to revise the laws on arms control. Section 3 provides that all laws, rules and other regulations inconsistent with the provisions of the Act shall be replaced by the Act.
7 the Arms Act 28 Anti Dumping A.No. 50572 & 50573/19
36. ‗Arms' has been defined in Section 4 of the Arms Act and is as follows :
― ―Arms‖ means weapons, weapons accessories, chemical substances, biological substances, radioactive substances or devices or instruments which may be used in combat or warfare as notified by the Minister in the Government Gazette under section 7;‖
37. Section 7 of the Arms Act deals with the notification to be used prescribing weapons, weapons accessories, chemical substances, biological substances, radioactive substance or devices or instruments which may be used in combat or warfare to be arms. It is as follows:
"Section 7 - The Minister with approval of the Council of Ministers shall have the power to publish in the Government Gazette the Notification prescribing weapons, weapon accessories, chemical substances, biological substances, radioactive substance or devices or instruments which may be used in combat or warfare to be arms.‖
38. Sections 15 and 17 of the Arms Act provides as follows:
"Section 15 - No person shall order, import, produce or possess arms without license granted by the Permanent Secretary for Defence. In granting of license under paragraph one, conditions may be imposed therewith. The application for and the grant of license shall be in accordance with the rules, procedure and conditions as prescribed in the Ministerial Regulation.
Section 17 - Licenses are, viz.: (1) order license; (2) import license; (3) produce license; (4) possession license. The order license shall extend to importer of arms under the order license.‖ 29 Anti Dumping A.No. 50572 & 50573/19
39. Section 26 of the Arms Act provides as follows :
"Section 26 - A license issued under this Act shall be valid through the period specified therein, but not exceeding one year as from the date of its issuance or renewal. A licensee who desires to renew license shall apply for the renewal thereof prior to the expiry date specified therein. Upon submission of the application, such licensee may continue his or her business until the Permanent Secretary for Defence refuses to renew license. The application for, and the granting of, the renewal of license shall be in accordance with the rules, procedure and conditions as prescribed in the Ministerial Regulation.‖
40. In terms of section 7 of the Arms Act, a Notification was issued and with regard to ‗Nitrocellulose' it is as follows :
S.NO. CHEMICAL NAME CAS NO. REFERENCE
34 NITROCELLULOSE OR 9004-70-0 Except non-explosive
NITROCELLULOSE finished products. Nitro
WITH ALCOHOL cellulose is a mixture.
41. It would be seen that the Arms Act merely seeks to regulate the use of the product in Thailand and has been enacted to ensure public safety as well as law and order. Section 15 of the Arms Act provides that no person shall order, import, produce or possess arms without a license granted by the Permanent Secretary for Defence. Section 16 bars issuance of a licence to any person convicted of an offence or to a person not of age or to a person of unsound mind. Thus, the consideration for issuance of a license has no connection with the domestic requirement or import of the article. Section 26 provides that the licence shall be valid through the period 30 Anti Dumping A.No. 50572 & 50573/19 specified therein, but not exceeding one year from the date of its issuance or renewal. The restriction is, therefore, on the period and not on the quantity. There is no restriction on the quantity or value of import nor does it contain any mechanism for fixing of a selling price in the domestic market. A user has to obtain a license whether the article is imported or procured from domestic market. The contention of the Appellant that there is a distortion because of the regulations in the domestic market price as a result of which ‗normal value' has not been correctly arrived at, cannot, therefore, be accepted.
42. This issue was examined by the Designated Authority in paragraph 101 (ix) of the final findings and it is reproduced below :
"101 (ix) With regard to the contention that the domestic prices of Nobel NC Co., Ltd and Nitro Chemicals Industry Limited should not be considered for determination of normal value, it is noted that the selling price has been determined on the basis of the records Non-Confidential Page 43 of 46 kept by the producers, maintained as per GAAP in Thailand, and the same is found to be appropriate for evaluating whether the sales in domestic market have been made in the ordinary course of trade. In any case, the exporter themselves have admitted that the Thai Army is regulating only the storage and usage of the product concern and the suppliers are required to obtain license before supplying the product in Thai market. Licensing procedure is common in most of the countries where products is of or can be used for explosives or any other hazardous substance. Mere licensing procedure does not mean that the domestic selling prices cannot be in the ordinary course of trade.‖
43. It has, however, been submitted on behalf of the Appellant that the sales in the domestic market are not ‗in the ordinary course of trade' because of the restrictions. 31 Anti Dumping A.No. 50572 & 50573/19
44. This contention cannot also be accepted. Clause (2) of Annexure 1 of the 1995 Rule provides that sales of the product in the domestic market of the exporting country may be treated as not being in the ordinary course of trade by reason of price and the Designated Authority may disregard these sales in determining the normal value, provided the factors enumerated therein exist. The Appellants have not been able to substantiate that these factors exist. The Designated Authority had, however, conducted the ordinary course of trade test in respect of sales made in Thailand. It found that Nitro Chemicals had sold 4193 MT of the subject goods in the domestic market and 99.96% of the sales were profitable.
45. The relevant portions of the findings of the Designated Authority are contained in paragraphs 36 and 42 and are reproduced below:-
―36. Since the above mentioned producers/exporters have filed the questionnaire response, the Authority determines Normal Value and Export Price in respect of cooperative exporters. The general methodology adopted by the Authority for determination of Normal Value for these exporters is to first examine whether the domestic sales of the subject goods by the responding exporters in their home markets were representative and viable for permitting determination of Normal Values on the basis of domestic selling prices and whether the ordinary course of trade test was satisfied as per the data provided by the respondents.
42. The questionnaire response has been filed by Nitro Chemical Industry Limited and Nobel NC Co., Ltd, Thailand. Nitro Chemical Industry Ltd. is a producer of a subject goods and is the holding company. Nobel NC Co., Ltd. is also the producer of the subject good and is 100% owned by Nitro Chemical Industries. Both producers/exporters have provided domestic sales price details of the subject goods in Appendix-4 of their response. Nitro Chemical Industry Limited sells the subject goods to customers directly in 32 Anti Dumping A.No. 50572 & 50573/19 the domestic market in Thailand. The adjustment of expenses such as inland freight, bank charges, credit cost, and other expenses has been made towards the determination of domestic sales price in the foreign producer's country. Nobel NC Co., Ltd, sell the subject goods in the domestic market 100% through the holding company Nitro Chemical Industry. The adjustment of expenses such as inland freight, bank charges, credit cost, storage cost, and other expenses has been made towards the determination of domestic sales price in the foreign producer's country. During the POI Nitro Chemical Industry Limited sold 4193Mt of the subject goods in the domestic market. All these sales were subjected to an ordinary course of trade test. It was found 99.96% of the sales in the domestic market were profitable.
Accordingly, the normal value for the above producers/exporters work out on the basis of total sale is *** US$ per MT. ―
46. The alternative methods for determination of the normal value as provided for in Clause (ii) of Explanation to Section 9A(1) of the Tariff Act can be resorted to only when there are no sales of the article in the ordinary course of trade in the domestic market. Thus, when substantial sales have been made by the exporter in the domestic market and in the absence of any good reason for reduction of the domestic sale price, the ‗normal value' would be the comparable price, in the ordinary course of trade, for the like article when destined for consumption in the exporting country.
47. Learned Senior Counsel for the Appellants has placed reliance upon the decision of Appellate Body in United States - Anti-Dumping Measures on Certain Hot-Rolled Steel Products From Japan. In particular, reliance has been placed on paragraph 145, which is reproduced below :
―145. In our view, the duties of investigating authorities, under Article 2.1 of the Anti-Dumping Agreement, are precisely 33 Anti Dumping A.No. 50572 & 50573/19 the same, whether the sales price is higher or lower than the "ordinary course" price, and irrespective of the reason why the transaction is not "in the ordinary course of trade". Investigating authorities must exclude, from the calculation of normal value, all sales which are not made "in the ordinary course of trade". To include such sales in the calculation, whether the price is high or low, would distort what is defined as "normal value".‖
48. The Panel was established to consider a complaint by Japan with respect to anti-dumping measures imposed by the United States on imports of certain hot-rolled flat-rolled carbon-quality steel products ("hot-rolled steel") from Japan. This decision of the US Appellate Body refers to Article 2.1 of the Anti-Dumping Agreement which provides that normal value must be established on the basis of sales made, ―in the ordinary course of trade‖. Thus, sales not made ―in the ordinary course of trade‖ must be excluded from the calculation of normal value. It is in this context that the Appellate Body observed as follows :
―141. We can envisage many reasons for which transactions might not be "in the ordinary course of trade". For instance, where the parties to a transaction have common ownership, although they are legally distinct persons, usual commercial principles might not be respected between them. Instead of a sale between these parties being a transfer of goods between two enterprises which are economically independent, transacted at market prices, the sale effectively involves a transfer of goods within a single economic enterprise. In that situation, there is reason to suppose that the sales price might be fixed according to criteria which are not those of the marketplace. The sales transaction might be used as a vehicle for transferring resources within the single economic enterprise. Thus, the sales price may be lower than the "ordinary course" price, if the purpose is to shift resources to the buyer, who then receives goods worth more than the actual sales price. Or, conversely, the sales price may be higher than the "ordinary course" price, if the purpose is to shift resources to the seller, who receives higher revenues for the sale than would be the case in the marketplace. There are many reasons relating to corporate law and strategy, and to fiscal law, 34 Anti Dumping A.No. 50572 & 50573/19 which may lead to resources being allocated, in these ways, within a single economic enterprise.
142. We note that determining whether a sales price is higher or lower than the "ordinary course" price is not simply a question of comparing prices. Price is merely one of the terms and conditions of a transaction. To determine whether the price is high or low, the price must be assessed in light of the other terms and conditions of the transaction. Thus, the volume of the sales transaction will affect whether a price is high or low. Or, the seller may undertake additional liability or responsibilities in some transactions, for instance for transport or insurance. These, and a number of other factors, may be expected to affect an assessment of the price.‖
49. In the present case, the contention of the Appellants that there was a distortion in the domestic selling price because of the licensing regulations has not been accepted. The Designated Authority had examined the volume of the sales transaction and found as a fact that the Nitro Chemicals sells the subject goods to the customers directly in the Domestic Market and the adjustment of expenses was made towards the determination of the domestic sales price. It also found that Nitro Chemicals had sold 4193 MT of the subject goods in the Domestic Market at profit. It cannot, therefore, be urged that any error was committed by the Designated Authority in determining the ‗normal value' on the basis of the comparable price. The decision of the US Appellate Body, therefore, does not help the Appellants.
50. In view of the aforesaid discussion, it is not possible to accept the contention of learned Counsel for the Appellants that ―normal value‖ should not have been fixed in relation to the 35 Anti Dumping A.No. 50572 & 50573/19 comparable price for the like article when destined for consumption in the exporting country and should have been the comparable representative price of the like article when exported from the exporting country to an appropriate third country or should have been the cost of production of the said article in the country of origin.
51. Learned Counsel for the Domestic Industry has also made a submission that the licensing regulations for the product under consideration would not be applicable for the reason that it is only when Nitrogen content in ‗Nitrocellulose' is above 12.6%, that it would be considered as explosive. The submission is that since the Nitrogen content in the product under consideration is between 10.7% to 12.2%, it would not be included in the definition of ‗Arms' contained in section 4 of the Arms Act. Be that as it may, it is not necessary to examine this issue since this issue was not raised by the Domestic Industry before the Designated Authority.
52. The submission of learned Senior Counsel for the Appellants that non-furnishing of the verification report has caused great prejudice to the Appellants also, cannot be accepted. The verification is carried out to verify the factual information given in the exporter questionnaire. In the present case, all the factual information provided by the exporter was accepted by the Designated Authority and, therefore, there was no reason to seek any clarification or supply a copy of the verification report. It is only if there was any 36 Anti Dumping A.No. 50572 & 50573/19 doubt at the time of carrying out the inspection or if the data supplied was not in accordance with the inspection, that the Appellants may have been called upon to explain. For the same reason, it is not possible to accept the contention of learned Senior Counsel for the Appellants that the legal submissions made for the exporters during the time of inspection should have been taken into consideration in the verification report.
53. It has also been submitted by learned Senior Counsel appearing for the Appellants that the impugned Notification issued by the Central Government is not only in violation of the principles of natural justice but is also against the spirit of the order passed by the Delhi High Court on 06 February, 2019 in the two Writ Petitions filed by the Appellants. In this connection, it has been submitted that the High Court had directed the Respondent to furnish a copy of the verification report within a week to the learned Counsel appearing for the Writ Petitioners and it would be open to the Petitioners to represent to the Central Government in a suitable manner for appropriate directions in accordance with law, but the impugned Notification was issued by the Central Government immediately on the next day on 07 February, 2019 without even giving an opportunity to the Appellants to make a representation to the Central Government after a copy of the verification report was furnished to it. 37 Anti Dumping A.No. 50572 & 50573/19
54. Learned Counsel appearing for the Central Government has, however, submitted that apart from the fact that the Appellants are two exporters from Thailand only, whereas the impugned Notification covers exporters from Brazil and Indonesia also the impugned Notification cannot be said to violate any of the directions contained in the order of the High Court. In this connection it has been pointed out that a copy of the verification report was supplied to the Appellants and the representation filed by the Appellants to the Central Government was also duly considered.
55. The submissions advanced by the learned Counsel on this aspect as also the records have been examined.
56. The final findings were notified by the Designated Authority on 31 December, 2018. The Appellants had not filed any representation to the Central Government to assail the final findings. Writ Petitions were, however, filed by each of the two Appellants on 14 January, 2019 before the Delhi High Court. The main prayers contained in the Writ Petitions are :
―(i) To quash the final findings dated 31 December, 2018 and the disclosure statement dated 07 December, 2018;
(i) To refrain the Respondents from giving effect to and/or taking any action in furtherance to the final findings dated 31 December, 2018; and 38 Anti Dumping A.No. 50572 & 50573/19
(ii) To decide the matter afresh after taking into account the submissions made by the Petitioners. ―
57. It clearly transpires from the order dated 06 February, 2019 passed by the Delhi High Court that the main submission advanced by the Petitioners was that the verification report was not a part of the record placed before the Designated Authority when it gave the final findings on 31 December, 2018. It is for this reason that the records placed before the Designated Authority were directed to be produced by the High Court. The High Court found as a fact that the verification report with details of the verification carried out in the premises of the petitioners between 10 to 12 September, 2018 was a part of the records placed before the Designated Authority. The High Court thereafter noted the statement made by the learned Counsel appearing for the Designated Authority that a copy of the verification report shall be furnished to the Petitioners. It is at that stage that learned Senior Counsel appearing for the Petitioners made a submission that there were other grounds dealing with the issue of confidentiality and the failure on the part of the Designated Authority to deal with the submissions, which submissions the Petitioners would agitate through a representation to the Central Government for seeking its intervention and appropriate action. The High Court, therefore, directed the Respondents to furnish a copy of the verification report within a week to the learned Counsel for the Petitioners and left it open to the Petitioners to represent to the 39 Anti Dumping A.No. 50572 & 50573/19 Central Government in a suitable manner for appropriate directions in accordance with law. The learned Senior Counsel for the Petitioners, sought liberty to withdraw the Writ Petitions, in the light of the submissions made. The Writ Petitions were ultimately dismissed as withdrawn.
58. A copy of the order dated 06 February, 2019 passed by the Delhi High Court in Writ Petition (C) No. 312/2019 and Writ Petition (C) No. 313/2019 filed by the two Appellants is reproduced below :
―Further to the previous order, the records considered by the Designated Authority (DA) were produced in Court; the records include the Verification Report carried out by the DA.
The petitioners had complained that this verification was not part of the record. The exporter's Verification Report is part of the record along with the details of verification carried out in the premises of the petitioners between 10th and 12th September 2018.
Learned counsel for the DA submits, on instructions, that a copy of the Verification Report will be furnished to the petitioners. Learned senior counsel for the petitioners submits that, besides, there are other grounds (dealing inter alia with the issue of confidentiality and the DA's failure to deal with its submission) which it would agitate through representation to the Central Government, seeking its intervention and appropriate action.
The respondents shall furnish a copy of the Verification Report within a week to the petitioners' counsel. It is open to the petitioners to represent to the Central Government in a suitable manner for appropriate directions in accordance with law.
Learned senior counsel for the petitioners seeks liberty to withdraw these petitions in the light of these submissions. The writ petitions are accordingly dismissed as withdrawn along with the pending applications.‖ 40 Anti Dumping A.No. 50572 & 50573/19
59. The Central Government could have waited for a representation from the two Writ Petitioners (the Appellants in this Appeal) after furnishing a copy of the verification report, but in the facts and circumstances of the case, it cannot be said that the issuance of the Notification by the Central Government on 07 February, 2019 is contrary to the directions issued by the High Court on 06 February, 2019. What needs to be noticed is that anti dumping duty was imposed on the import of Nitrocellulose originating in and exported from Brazil, Indonesia and Thailand. The Appellants are only two exporters from Thailand. The other exporters from Brazil and Indonesia had not assailed the final findings. A specific prayer had also been made in the Writ Petitions for quashing the final findings and to restrain the Respondent from giving effect and/or taking any action in furtherance to the final findings. This relief was not granted to the Writ Petitioners by the Delhi High Court. A submission was made by learned Senior Counsel for the Petitioners, once the main submission regarding the verification report not being a part of the records placed before the Designated Authority was found to be incorrect after examination of the records, that there were other submissions relating to confidentiality and failure on the part of the Designated Authority to deal with this submission, which would be agitated by filing a representation to the Central Government. It is for this reason that the High Court left it open to the Petitioners to file a representation to the Central Government. A verification report was furnished to the Writ Petitioners within a week and the Writ 41 Anti Dumping A.No. 50572 & 50573/19 Petitioners had also filed a representation dated 15 February, 2019 before the Designated Authority as also to the Joint Secretary in the Government of India. These representations were received on 18 February, 2019. The Central Government issued an Office Memorandum dated 20 February, 2019 requiring the Designated Authority to take appropriate action. The comments submitted by the Petitioners were examined by the Central Government and a communication dated 01 March, 2019 was sent to the Appellants informing them that there was no change in the final findings issued on 31 December, 2018. The communication is reproduced below :
―Your comments on the verification report are examined and observations are as under :
1. In the Verification Report, an inadvertent error had crept in the Table indicating the quantity and invoice value for invoice number SIE1600450, No. SIE1600854, No. SIE1601105 and No. SIE1600980 but the same was detected and suitably rectified at the time of issuance of Disclosure and Final Findings. In view of that, there is no change in the disclosure statement or in the Final Finding issued dated 31.12.2018.
2. Regarding Normal Value, authority determined Normal Value and issues regarding the Normal Value, these have been addressed in para no. 42 and 43 of the Final Finding issued on 31.12.2018.
3. The issue of confidentiality has been dealt with by the Authority in para no. 22 and 23 of the Final Finding issued on 31.12.2018.
In view of the above, there is no change in the Final Finding issued on 31.12.2018.
This issues with the approval of the Authority.‖ 42 Anti Dumping A.No. 50572 & 50573/19
60. It is not the case of the Central Government that the comments dated 15 February, 2019 submitted by the two Writ Petitioners were not considered because a Notification had earlier been issued on 07 February, 2019. On the other hand, the comments were duly examined by the Central Government.
61. Thus, the Appellants are not justified in asserting that the principles of natural justice have been violated or that the impugned Notification dated 07 February, 2019 issued by the Central Government has violated the order dated 06 February, 2019 passed by the Delhi High Court.
62. The fixation of ‗normal value' in the final findings of the Designated Authority, therefore, does not suffer from any error.
63. The issue as to whether the submissions raised by the Appellants about ‗confidentiality' have been correctly appreciated by the Central Government would be seen while dealing with the submissions relating to ‗confidentiality' made by learned Senior Counsel for the Appellants.
CONFIDENTIALITY
64. The contention of the learned Senior Counsel for the Appellants is that the Designated Authority is required to make available all the evidences presented to it by one party to the other 43 Anti Dumping A.No. 50572 & 50573/19 interested parties participating in the investigation, except in cases when information is considered confidential in nature, but even in such a case the interested party should submit a non-confidential summary of such information or give adequate reasons as to why even a summary cannot be provided.
65. It has been pointed out that the Appellants had sent a communication dated 27 August, 2018 to the Designated Authority questioning the excessive confidentiality claimed by the Domestic Industry and also the fact that it had even omitted the formats A to L (barring G & H) completely, which it was required to submit, but this issue raised by the Appellants has not been addressed by the Designated Authority. It has been submitted that the information claimed as confidential by the Domestic Industry was critical for the determination of injury and in the absence of the said information, a meaningful analysis could not be made by the interested parties. To support this connection, reliance has been placed on the decisions of the Supreme Court in Reliance Industries Ltd. vs Designated Authority and Others 8 and Union of India and Another Vs Meghmani Organics Limited and Others 9 and the two Trade Notices dated 09 December, 2013 and 01 February, 2018. The submission in short is that the issue of confidentiality has not been properly appreciated either by the Designated Authority or by the Central Government.
8 2006 (202)ELT 23 (SC) 9 2016 (34) ELT 449 (SC) 44 Anti Dumping A.No. 50572 & 50573/19
66. Learned Counsel appearing for the Domestic Industry has, however, refuted the submissions advanced by learned Senior Counsel for the Appellants. It has been submitted that confidentiality was claimed by the Domestic Industry on the cost of production, which is commercially sensitive and a disclosure would adversely impact the interest of the Domestic Industry. It has also been submitted that the information was also not capable of summarization and wherever possible, a summary was provided. The Domestic Industry had given a non-confidential summary of performance parameters, which contained the relevant parameters for analysis on injury. Learned Counsel also pointed out that the issue of confidentiality has been properly appreciated by the Designated Authority in paragraphs 100(xii) and 101 (viii) of the final findings. In this connection, reliance has been placed upon a Division Bench decision of the Principal Bench at Delhi in Anwar Jute Spinning Mills Ltd. vs Union of India 10 . It has also been submitted that complete information in the Format was submitted by the Domestic Industry on confidential basis and that even the Appellants had not provided a meaningful summarization of cost production and had only provided the performance parameters.
67. Learned Authorized Representative of the Department appearing for the Central Government and the learned Counsel appearing for the Designated Authority have also submitted that the 10 2018 (363) ELT 724 (Tri.-Del) 45 Anti Dumping A.No. 50572 & 50573/19 objections to the claim of confidentiality of the Domestic Industry have been properly appreciated, both by the Designated Authority and the Central Government.
68. Rule 7 of the 1995 Rules deals with confidential information. It provides that notwithstanding anything contained in sub-rules (2), (3) and (7) of Rule 6 or sub-rule (2) of Rule 12 or sub- rule (4) of Rule 15 or 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 no such information shall be disclosed to any other party without specific authorization of the party providing such information. Sub-rule (2) of Rule 7 provides that the Designated Authority may require the parties providing information on confidential basis to furnish non-confidential summary thereof and if, in the opinion of a party providing such information, such information is not susceptible of summary, such party may submit to the Designated Authority a statement of reasons why summarization is not possible. Sub-rule (3) of Rule 7 provides that notwithstanding anything contained in sub-rule (2) of Rule 7, if the Designated Authority is satisfied that the request for confidentiality is not warranted or the supplier of the information is either unwilling to 46 Anti Dumping A.No. 50572 & 50573/19 make the information public or to authorize its disclosure in a generalized or summary form, it may disregard such information.
69. The issue relating to confidentiality was noted by the Designated Authority in paragraphs 20, 21, 22 and 23 of the final findings. After reproducing Rule 7 of the 1995 Rules in paragraph 22 of the findings, the Designated Authority made the following observations in paragraph 23 :
―23. Submissions made by the interested parties with regard to confidentiality and considered relevant by the Authority are examined and addressed accordingly. Information provided by the interested parties on confidential basis was examined with regard to the sufficiency of the confidentiality claim. The Authority notes that any information which is available in the public domain cannot be treated as confidential. The Authority directed the exporters to file a revised non-confidential version of questionnaire response and provide a meaningful response. The responding exporters filed a revised response. On being satisfied, the Authority has accepted the confidentiality claims, wherever warranted and such information has been considered confidential and not disclosed to other interested parties. The Authority made available the non-confidential version of the evidence submitted by various interested parties in the form of a public file.‖
70. In the communication dated 01 March, 2019 sent by the Central Government to the Appellants in regard to the letter dated 15 February, 2019, it has been noted that the issue of confidentiality had been dealt with by the Designated Authority in paragraphs 22 and 23 of the final findings notified on 31 December, 2018.
71. As noted above, paragraph 22 of the final findings reproduces Rule 7 of the 1995 Rules and paragraph 23 states that on 47 Anti Dumping A.No. 50572 & 50573/19 being satisfied the Authority has accepted the confidentiality claims, wherever warranted and such information has been considered confidential and not disclosed to the other parties. It also mentions that the Authority made available the non-confidential version of the evidence submitted by the various interested parties in the form of a public file.
72. Emphasis of learned Senior Counsel for the Appellants is on the observations made in paragraph 21 of the final findings that no submissions regarding confidentiality were made by the opposing interested parties and it has been submitted that the Designated Authority had not even cared to examine the submissions made by the opposing interested parties on the confidentiality claim.
73. The statement made in paragraph 21 of the final findings is apparently not correct since the exporters had made submissions, which submissions were noted by the Designated Authority in paragraph 100 (xii). These submissions have been considered in paragraph 100 (viii) of the final findings. Thus, the mistake that crept in paragraph 21 of the final findings has not caused any prejudice to the Appellants.
74. On merits, it has been submitted that the Domestic Industry omitted formats A to L (barring G & H) completely, which they were required to submit.
48 Anti Dumping A.No. 50572 & 50573/19
75. It is not possible to accept the contention of the learned Senior Counsel for the Appellants. The formats said to have been omitted contain the following information :
Format A - Statement of Consumption Raw materials, packing materials and Utilities Format B - Statement of Raw Material Consumption Format C - Allocation and Apportionment of Expenses Format D - Statement of Consumption of Utilities Format E - Statement of Sales Realizations Format I - PCN wise summarized statement of expenses Format J - Related party transactions Format K - Calculation of Capital Employed Format L - Calculation of claimed NIP
76. The Domestic Industry asserts that complete information in connection with these formats was submitted to the Designated Authority on a confidential basis and a meaningful summarization of this information was not possible without disclosure of sensitive information and information relating to cost of production and related data. The information relating to cost of production and related data of the Domestic Industry and exporters has always been treated as confidential. This is what was observed by the Tribunal in paragraph 25 of the decision rendered in Anwar Jute Spinning Mills Ltd. The same is reproduced below :
49 Anti Dumping A.No. 50572 & 50573/19
―25. The appellants also questioned the claim of confidentiality in respect of DGCIS data. It is claimed that the data should have been disclosed under Rule 7 of AD Rules. We note that the DA had placed the DGCIS data in the public file and there was adequate opportunity for the appellants to examine and provide their comments. The cost of production and related data of the DI are necessarily of confidential nature and commercially sensitive. The same cannot be made available to others.‖
77. It has also been stated on behalf of the Domestic Industry that a summary of the performance parameters was provided in format ‗H' of the petition filed by the Domestic Industry before the Designated Authority and this contained the salient details for injury analysis and even the two Appellants had not provided a meaningful summarization of cost information except the performance parameters.
78. It is thus not possible to accept the contention of learned Senior Counsel for the Appellants that the Domestic Industry had wrongly claimed confidentiality with regard to the information required to be furnished in the aforesaid formats or that the Domestic Industry was not justified in not providing even a summarization of the information. The Appellants are, therefore, not justified in asserting that they have been unevenly treated by the Designated Authority.
79. Learned Senior Counsel for the Appellants has placed reliance on the judgment of the Supreme Court in Reliance Industries Ltd. The Supreme Court examined whether Rule 7 of the 50 Anti Dumping A.No. 50572 & 50573/19 1995 Rules contemplates any right in the Designated Authority to claim confidentiality and the observation is as follows:
―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 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.‖
80. The aforesaid decision in Reliance Industries deals with a case where the Designated Authority had claimed confidentiality.
The Court held that the Rules do not provide that the Designated Authority has a right to claim confidentiality, particularly regarding information which pertains to a party which has supplied the information.
81. The decision of the Supreme Court in Reliance Industries has placed reliance upon the decision of the Supreme Court in Sterlite Industries (India) Ltd. vs Designated Authority 11 . It would, therefore, be appropriate to reproduce paragraph 3 of this judgment, which is as follows:
"3. In our view, it is not necessary for us to go into the merits of this matter as we propose to send the matter back to CEGAT after laying down certain guidelines. From what has been argued 11 2003 (158) ELT 673 (SC) 51 Anti Dumping A.No. 50572 & 50573/19 before us, it appears that in pursuance of Rule 7 of the Customs Tariff (Identification, Assessment and Collection of Anti-Dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995 the Designated Authority is treating all material submitted to it as confidential merely on a party asking that it be treated confidential. In our view, that is not the purport of Rule 7. Under Rule 7, the Designated Authority has to be satisfied as to the confidentiality of that material. Even if the material is confidential the Designated Authority has to ask the parties providing information, on confidential basis, to furnish a non- confidential summary thereof. If such a statement is not being furnished then that party should submit to the Designated Authority a statement of reasons why summarization is not possible. In any event, under Rule 7(3) the Designated Authority can come to the conclusion that confidentiality is not warranted and it may, in certain cases, disregard that information. It must be remembered that not making relevant material available to the other side affects the other side, as they get handicapped in filing an effective appeal. Therefore, confidentiality under Rule 7 is not something, which must be automatically assumed. Of course, in such cases there is need for confidentiality, as otherwise trade competitors would obtain confidential information, which they cannot otherwise get. But whether information supplied is required to be kept confidential has to be considered on a case-to-case basis. It is for the Designated Authority to decide whether a particular material is required to be kept confidential. Even where confidentiality is required, it will always be open for the appellate authority, namely, CEGAT to look into the relevant files".
[emphasis upplied]
82. The Supreme Court in the aforesaid decision in Sterlite Industries, which has been referred to in Reliance Industries, held that the Designated Authority has to satisfy itself about the confidentiality and even if the material is confidential, the Designated Authority has to ask the parties providing information on a confidential basis, to furnish a non-confidential summary thereof. If such statement has not been furnished, then the party should submit to the Designated Authority a statement of reasons why 52 Anti Dumping A.No. 50572 & 50573/19 summarization was not possible. The Supreme Court also observed that there was a need for confidentiality, as otherwise trade competitors would obtain confidential information which they cannot otherwise get and that the Designated Authority has to consider, on a case to case basis, whether a particular material is required to be kept confidential.
83. In Meghmani Organics Limited, the Supreme Court also examined the provisions of Rule 7 of 1997 Rules relating to confidentiality and observed as follows :
"30. We may only explain here that while dealing with objections or the case of the concerned parties, the DA must not disclose the information which are already held by him to be confidential by duly accepting such a claim of any of the parties providing the information. While taking precautions not to disclose the sensitive confidential informations, the DA can, by adopting a sensible approach indicate reasons on major issues so that parties may in general terms have the knowledge as to why their case or objection has not been accepted in preference to a rival claim. But in the garb of unclaimed confidentiality, the DA cannot shirk from its responsibility to act fairly in its quasi-judicial role and refuse to indicate reasons for its findings. The DA will do well to remember not to treat any information as confidential unless a claim of confidentiality has been made by any of the parties supplying the information. In cases where it is not possible to accept a claim of confidentiality, Rule 7 hardly leaves any option with the DA but to ignore such confidential information if it is of the view that the information is really not confidential and still the concerned party does not agree to its being made public. In such a situation the information cannot be made public but has to be simply ignored and treated as non est.‖ (emphasis supplied)
84. Learned Senior Counsel for the Appellants has also placed reliance upon the Trade Notice No. 1/2013 dated 09 December, 53 Anti Dumping A.No. 50572 & 50573/19 2013. The relevant portion on which reliance has been placed is reproduced below :
―2. In pursuance to the provision of Rule 7 of the above Rules, all interested parties to anti-dumping investigation are advised to comply with the following requirements while submitting ―confidential information‖ before the Designated Authority in an anti-dumping investigation:
i. The parties making any submission (including Appendixes/Annexures attached thereto) before the authority including questionnaire response, are required to file the same in two separate sets, in case ‗confidentiality' is claimed on any part thereof:-
(a) One set marked as Confidential (with title, number of pages, index, etc.) and
(b) The other set marked as Non-Confidential (with title, number of pages, index, etc.) Any submission made without such marking shall be deemed as non-confidential. Soft copy of both the versions will also be required to be submitted, along with the hard copies, to the authority.
ii. The Confidential version shall contain all information which are by nature confidential and/or other information which the supplier of such information claims as confidential. For information which are claimed to be confidential by nature or the information of which confidentiality is claimed because of other reasons, the supplier of the information is required to provide a good cause statement along with the supplied information as to why such information cannot be disclosed.
iii. The non-confidential version is required to be a replica of the confidential version with the confidential information indexed or blanked out (in case indexation is not feasible) and summarized depending upon the information on which confidentiality is claimed. The non-confidential summary must be in sufficient detail to permit a reasonable understanding of the substance of the information furnished on confidential basis. However, in exceptional circumstances, party submitting the confidential information may indicate that such information is not susceptible of summary, a statement of reasons why 54 Anti Dumping A.No. 50572 & 50573/19 summarization is not possible, must be provided to the satisfaction of the Designated Authority.‖
85. Annexure I to the aforesaid Trade Notice deals with guidelines on confidentiality on information/data contained in the petition, response, questionnaire or other submissions and paragraphs 2, 3 and 4(i) are reproduced below :
―2. The claim of confidentiality on any information/data should be submitted in the following format as a forwarding letter of the NCV :
S.N. Issue/data on Reason/justification Page No. Of Whether which for claiming the NCV at information is confidentiality is confidentiality which non- available in the claimed confidential Public domain or summary is with any Govt.
provided Authority from
whom the same
can be obtained by
the public with or
without payment of
fee
1. 2. 3. 4. 5.
3. The reason/justification should be on the basis of criteria laid down in Article 6.5 of the Anti-Dumping Agreement. The reason/justification should be specific clearly demonstrating/establishing that disadvantage would occur by disclosure of information.
4. The confidentiality claims and decision thereon are case-
specific. Therefore, precedence of any previous cases would not be considered as justification for claiming confidentiality. In this regard attention is invited to the following :
(i) The following are examples of information which may be treated as confidential :
(a) Information of significant competitive advantage to a competitor, production costs, distribution costs, upstream and downstream pricing data, profit and loss margins, certain conditions of sale, research/investigation data, technical designs, business or trade 55 Anti Dumping A.No. 50572 & 50573/19 secrets concerning the nature of a product or production process, specification of components, performance/profitability data, details of margin of dumping and adjustments claimed by the party etc. are some examples of such type of information. List is not exhaustive.
(b) Information, the disclosure of which would have a significant adverse effect upon the party who submitted the information or the party from whom the information was acquired by the party who submitted the information. Some examples are - customer and supplier lists, letters from buyers on price negotiations, details of technical collaboration.‖
86. A perusal of the aforesaid Annexure does indicate that the claims of confidentiality have to be decided on a case to case basis and examples have also been given as to when information can be treated as confidential. The records indicate that the Domestic Industry had filed the claim of confidentiality in the format provided above.
87. Learned Senior Counsel for the Appellants has also placed reliance upon the Trade Notice No. 02/2018 dated 01 February, 2018 relating to streamlining of the Anti Dumping Investigation Process. It provides that the Domestic Industry, in order to avoid delay, should submit information in the formats A to L. The relevant portion is reproduced below :
―Attention of Trade and Industry is invited to the existing domestic industry's questionnaire and to state that the following revised 56 Anti Dumping A.No. 50572 & 50573/19 formats should be submitted by the domestic industry while filing the petition to avoid delays caused by subsequent requests for additional information:
S.No. Format Brief Description
Number
1. A Statement of Consumption of Raw Materials,
Packing Materials and Utilities
2. B Statement of Raw Material Consumption
3. C Allocation of Apportionment of Expenses
4. D Statement of Consumption of Utilities
5. E Statement of Sales Realizations
6. F Certificate by the Chief Executive or a duly
authorized representative of the Domestic
Industry
7. G Declaration by Legal Representative
8. H Performance Parameters of Domestic
Industry
9. I PCN wise summarised Statement of Expenses
10. J Related Party Transactions
11. K Calculation of Capital Employed
12. L Calculation of claimed NIP
88. This Trade Notice does not mention that information supplied in the aforesaid formats has to be disclosed and cannot be claimed as confidential. A party can claim confidentiality, which of course has to be examined by the Designated Authority.
89. Thus, what has to be seen is, whether the satisfaction of the Designated Authority regarding confidentiality was proper and whether the Domestic Industry was justified in not providing summarization under Rule 7 of the 1995 Rules. The Designated 57 Anti Dumping A.No. 50572 & 50573/19 Authority, in the present case, on being satisfied about the claims of confidentiality made by the Domestic Industry, did not call upon the Domestic Industry to make any further disclosure. It has been found in the preceding paragraphs of this order that the claim of confidentiality made by the Domestic Industry was justified.
90. The finding of the Designated Authority in regard to ‗confidentiality', therefore, does not suffer from any infirmity so as to call for any interference in this appeal.
91. Thus, for all the reasons stated above, there is no merit in the appeals. They are, accordingly, dismissed.
(Pronounced in the open Court on 20 December, 2019) (JUSTICE DILIP GUPTA) PRESIDENT (Dr. D.M. MISRA) MEMBER (JUDICIAL) (C.L. MAHAR) MEMBER (TECHNICAL) Golay