Custom, Excise & Service Tax Tribunal
Si Group India Private Limited vs Designated Authority Directorate ... on 28 November, 2019
Author: Dilip Gupta
Bench: Dilip Gupta
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH - COURT NO.1
Anti Dumping Appeal No.50430 of 2019
(with Miscellaneous Application No.50301 of 2019)
[Arising out of: Final findings (File No.7/20/2018-DGAD, dt.11.01.2019,passed by
the Designated Authority, DGAD, Deptt. of Commerce & Industry, New Delhi]
M/s SI Group India Private Limited ......Appellant
Plot No.D-2/1, TTC Industrial Area,
Opp. Juinagar Railway Station, Thane-Belapur Road,
Mumbai 400 705
VERSUS
1. Designated Authority ......Respondents
Directorate General of Anti Dumping& Allied Duties,
Department of Commerce & Industry, Parliament Street,
Jeevan Tara Building, 4th Floor, New Delhi 110 001
2. The Union of India,
Through the Secretary, Ministry of Finance,
Department of Revenue, North Block,
New Delhi 110 001
WITH
Anti Dumping Appeal No.50430 of 2019
(with Miscellaneous Application No.50302 of 2019)
[Arising out of: Final findings (File No.7/20/2018-DGAD, dt.11.01.2019,passed by
the Designated Authority, DGAD, Deptt. of Commerce & Industry, New Delhi]
M/s SI Group India Private Limited ......Appellant
Plot No.D-2/1, TTC Industrial Area,
Opp. Juinagar Railway Station, Thane-Belapur Road,
Mumbai 400 705
VERSUS
1. Designated Authority ......Respondents
Directorate General of Anti Dumping& Allied Duties,
Department of Commerce & Industry, Parliament Street,
Jeevan Tara Building, 4th Floor, New Delhi 110 001
2. The Union of India,
Through the Secretary, Ministry of Finance,
Department of Revenue, North Block,
New Delhi 110 001
2 AD A.No. 50430/2019
CORAM: HON'BLE JUSTICE DILIP GUPTA, PRESIDENT
HON'BLE DR. D.M. MISRA, MEMBER (JUDICIAL)
HON'BLE MR. C.L. Mahar, MEMBER (TECHNICAL)
Appearance:
For Appellant : Ms.Reena Khair, Ms.Aastha Gupta, Ms.Rita Jha,
Ms.Shreya Dhahiya and Mr.Rajesh Sharma -Advocates
For Respondent : S/Shri Ameet Singh and Amar Anand (Designated
Authority),
Shri Rakesh Kumar Rai, Authorised Representative,
Shri Pramod Kumar & MS Pothal, CA.
FINAL ORDER NO.51566/2019
Date of Hearing: 28.05.2019
Date of Decision: 28.11.2019
PER: DR.D.M. MISRA
This appeal is filed by the Domestic Industry(DI), the
Appellant herein against the Final Finding & Recommendation of the
Designated Authority (DA), DGAD, Deptt. of Commerce & Industry,
New Delhi(File No.7/20/2018-DGAD, dt.11.01.2019,).
Background Facts
2. The facts in brief relevant for consideration of the present
Appeal are that on an application filed by the Domestic Industry, for
imposition of Anti Dumping Duty on the imports of "Nonyl Phenol",
the subject goods from Chinese Taipei, the subject country,
investigation was initiated by the DA on 29.06.2006 and on
completion of the investigation, anti-dumping duty on imports of
Nonyl Phenol from Chinese Taipei was recommended vide Finding &
3 AD A.No. 50430/2019
Recommendation dated 25.06.2007. The recommendations were
given effect by issuance of Customs Notification No.94/2007-Cus,
dated 22.08.2007 imposing anti dumping duty on the said goods on
its import from the subject country. Before expiry of 5 years period,
on an application for sun set review by the Appellant, necessary
investigations were initiated by the DA on 09.08.2012 and the
imposition of duty was extended for a further period of one year as
per second proviso to Section 9A(5) of CTA,1975 through
Notification No.39/2012, dated 24.08.2012, pending investigation.
On completion of investigation, the DA recommended continuation of
anti dumping duty for a further period of five years vide final Finding
& Recommendation dated 08.11.2013. The said recommendation
was implemented by the Government by issuance of Notification
No.05/2014-Cus (ADD), dated 16.01.2014 by extending imposition
of duty for a further period of 5 years.
2.1 Since there had been continued dumping of the subject goods,
from the subject country, the Appellant filed another application
requesting initiation of second sun set review investigation on
19.04.2018. The Appellant was allowed hearing on the said
application on 06.06.2018. Consequently, the DA initiated the
second sun set review investigation on 12.06.2018 by issuance of
necessary notification. Pursuant to the said notification dated
12.06.2018, the DA forwarded a copy of the same to the known
exporters of the subject goods in accordance with the Rule 6(2) of
Anti Dumping Duty Rules,1995. But, the exporters did not
participate in the investigation. The DA after considering the
4 AD A.No. 50430/2019
submissions and verification of the data filed by the domestic
industry on 15.11.2018 and 16.11.2018, issued disclosure statement
on 24.12.2018. Thereafter considering the further submission of the
Domestic Industry on the said Disclosure statement, the DA on
11.01.2019 issued the final finding where under he has concluded
that continuation of anti dumping duty is not warranted and
accordingly not recommended extension of anti dumping duty on the
imports of the subject goods from the subject country. Aggrieved by
the said finding, the present appeal is filed by the Domestic
Industry.
Submission on behalf of the Appellant:
3. The learned Advocate Ms. Reena Khair for the Appellant has
submitted that the Appellant is the sole producers of „Nonyl Phenol‟
in India. It is her contention that prima facie, on being satisfied
with the evidence placed by the Appellant of likelihood of anti
dumping and injury, the DA initiated second sun set review
investigation on 12.06.2018 and after conducting necessary
investigation, a disclosure statement was issued by the DA on
24.12.2018, where under partial disclosure of essential facts was
made. There was no disclosure as to whether any likelihood of
continuation or recurrence of dumping and injury was made on the
said statement. Consequently, the DA has passed the Final Order on
11.1.2019.
3.1 The learned Advocate assailing the impugned conclusion has
submitted that the nature of exercise to be undertaken in the sun
5 AD A.No. 50430/2019
set review proceedings is different from the initial exercise which is
directed with the objective whether anti dumping duty is warranted
or otherwise. She has contended that in original investigation for
imposition of anti dumping duty, there must exist dumping, which
cause injury to the domestic industry; whereas in the sun set
review, the main objective is not to examine for imposition of duty
on dumping and injury, but the analysis should be whether there is
likelihood of continuation or recurrence of dumping and injury on the
expiry of anti dumping duty. In support, she has referred to Section
9A(5) of the Customs Tariff Act,1975 and relevant judgments on
the said issue, namely, Union of India Vs Kumho Petrochemicals
Company Ltd - 2017 (351) ELT 65 (SC), Vinati Organics Ltd Vs DA -
2001 (127) ELT 629 (T), Hubei Tri-Ring Forging Co. Ltd Vs DA -
2016 (342) ELT 473 (T), P.T. Asahimas Chemicals Vs Designated
Authority - 2015 (328) ELT 417 (T), Thai Acrylic Fibre Ltd Vs
Designated Authority - 2010 (253) ELT 564 (Tri-Del.).
3.2. She has submitted that the principle in this regard laid down
under various decisions is clear inasmuch as unlike original
investigation sun set review are prospective in nature, therefore, the
fact that current level of dumping is non-existent or minimal has no
relevance. Similarly, the existing injury determination, the objective
assessment is whether injury will continue or recover would entail
counter-factual analysis of future events based on projected level of
dumped imports, prices and impact of domestic producers. Thus,
the authority is required to address the question whether the
6 AD A.No. 50430/2019
domestic industry is likely to be materially injured again if the
duties are discontinued. The test is not whether there is current
dumping or injury, but whether there is likelihood of dumping and
injury in future, in the absence of duty.
3.3 Further, she has submitted that normally the following
parameters are adopted for an affirmative review determination in
other jurisdictions viz. Canada, Australia, European Union and USA.
a. Significant production capacity with exporters;
b. Export orientation of the exporters;
c. Continued dumping or subsidization;
d. Failure of respondents to participate in a review;
e. Evidence of third country dumping;
f. Price undercutting by imports with measures (duties) in force;
g. Current injury or vulnerability of the domestic industry;
h. Price attractiveness of the Indian market;
i. Easy transportation distance to the Indian market;
3.4. She has submitted that DA in the present case, solely based
its decision on the existing current situation of the domestic industry
rather than adverting to likely scenario on the expiry of anti
dumping duty on the basis of the present situation.
3.5. In a sunset review, the statutory requirement is to ascertain
the likelihood of continuation or recurrence of dumping and injury, in
absence of duty. Therefore, analysis of existing anti dumping duty
is incorrect and flawed. Though in the present case, the DA has
7 AD A.No. 50430/2019
examined the injury parameters, both with and without anti
dumping duty, however, the conclusions are based on the current
injury with anti dumping duty in force and not on the likely injury to
the domestic industry in absence of duty.
3.6 The learned Advocate for the Appellant, rebutting the
argument that they had been not able to establish the likelihood of
dumping and injury to the domestic industry, submitted that the
presence of following factors established likelihood of dumping and
injury:-
a) Huge surplus production capacity with the exporters.
b) Non-availability of alternate markets for additional export,
especially China has imposed anti dumping duty on the import
from Chinese Taipei. Further, USA and EU have restrictions on
the use of Nonyl Phenol. Therefore, India remains largest
market for the exporters in Chinese Taipei.
c) The demand in India is growing and the price in Indian market
is higher than the export price in other countries making India
a very attractive market for the exporters from Chinese Taipei.
d) The domestic market of the foreign exporter is able to absorb
only 13% of the capacity, the producer in Chinese Taipei have,
therefore, a strong export orientation.
8 AD A.No. 50430/2019
e) The fact of continued dumping despite imposition of duty,
indicate strong likelihood that the dumping will continue
unabated and may intensify.
f) The foreign producers participated in the first sunset review.
Based on the information furnished by them, the Authority
came to a conclusion that there was a likelihood continuation
or recurrence of dumping and injury. The foreign exporters
have failed to participate in the present review and have
withheld the necessary information from the Authority,
possibly because participation could lead to a result which is
less favourable than if the exporter did not cooperate.
g) Evidence of third country dumping is also on record indicating
the propensity of the foreign exporters to dump its products in
export market as also the possibility of diversion of such goods
to the Indian market on expiry of the duty.
h) The landed value of the imports (without anti dumping duty) is
below the selling price of domestic industry.
i) The domestic industry continues to remain vulnerable as its
profit and returns on investment remain well below adequate
level for sustaining its operation in the long run.
j) The Indian market remains price attractive as substantial
quantity of the export made to third country is below the
export price to India.
9 AD A.No. 50430/2019
k) There is ease of transportation of the goods from Chinese
Taipei to India.
3.7 She has submitted that since the dumping continued during
the relevant period, hence the current dumping is best possible
indicator of future dumping on cessation of duty. The landed value
of the import (without anti dumping duty) being below the cost of
production of domestic industry, leads to an inevitable conclusion
that to maintain the sales, they had to further reduce the prices
incurring huge losses. Thus, the likelihood of dumping and injury on
the expiry of duty is imminent.
3.8 Further, assailing the finding that the capacity productions to
domestic sales and overall profitability of the industry do not indicate
existence of injury or deteriorating economic conditions, the learned
Advocate has submitted that it is factually incorrect. The overall
profitability is inadequate and indicates injury; there is a clear causal
link between the dumped import and decline in profitability of the
domestic industry as the landed prices of import were below the cost
of production and selling price of the domestic industry since 2016-
17 and also during the period under investigation(POI). In any case,
the deterioration in the condition of domestic industry is not sine qua
non for the extension of duty in sun set review.
3.9 She has further submitted that the authorities have
determined the dumping margin in the range of 15% to 25%. It is
her contention that if with the duty in force, imports are coming into
10 AD A.No. 50430/2019
India at significantly dumping prices, then there is every likelihood
that on the expiry of duty, the dumping would further intensify.
There can be no doubt regarding the continuation of dumping after
the duty has expired.
3.10 She has further submitted that despite the anti dumping duty
being in force, the domestic industry has not been able to earn
adequate profit as they had been forced to match the landed price
of import. Even though, the Appellant was able to increase its sales
and improve the market share but its profit has gone down; the
price at which the sales are made by the domestic industry, is only
marginally higher than the cost of production. The profit is about
2%, while the return on capital employed is mere 5%; thus due to
negligible returns and profit earned, the domestic industry
continues to be fragile and vulnerable.
3.11 She has further submitted that even on volume front, with the
import under-cutting the prices of domestic industry, the importers
would have a clear preference for the imported product. This would
eventually result in a surge in imports, eating into market share of
domestic industry. Therefore, on the cessation of duty, the
domestic industry would suffer material injury on account of high
volume of imports at low prices resulting into significant losses,
making production of Nonyl Phenol unviable in India.
3.12 She has also submitted that anti dumping duty is imposed to
off-set the injurious effects of dumping. If the anti dumping duty
has a desired effect, the condition of domestic industry would be
11 AD A.No. 50430/2019
expected to improve during the period anti dumping duty in force.
In the present case, the domestic industry remains vulnerable and
any benefit that has been obtained will be wiped out, if it is forced to
compete with significantly increased volume of dumping injury at
prices that under-cut its domestic prices. In support, she has
referred to the decisions delivered in various jurisdictions of other
countries viz. New Zealand, Canada, European Unions etc. where
the accepted parameters in sun set review are different than
adopted by the DA.
3.13 In the context of likelihood of injury on expiry of the duty as
per Para (vii) of Annexure- II to the Anti Dumping Rules, the learned
Advocate referring to the table in the disclosure statement has
submitted that :-
a) One of the producers viz. FUCC had enhanced its capacity from
25000 MT to 30,000 MT. The demand of subject goods in the
subject country is only 8000 MT as against production capacity of
62,000 MT held by the producers therein, the demand being
sufficient to utilise only 13% of the capacity, its evident that the
foreign producers are heavily depending upon the export market
b) Even though there has been a decline in export to India during
the period of investigation, India has been the biggest market for
producers in Chinese Taipei since 2012.
c) Upto 2011, the biggest market for the producers in the subject
country was China. However, since 2007, the subject goods
12 AD A.No. 50430/2019
exported from Chinese Taipei and India, attract anti-dumping duty
when imported into China. This duty has been continued for a
further period of 5 years.
d) In 2011, China has added the subject goods to its list of
severely restricted toxic substances. Since then, there has been a
sharp fall in exports from the subject country to China from 14,559
MT in 2011 to 1,676 MT in 2017.
e) Apart from China, there are restrictions on the use of Nonyl
Phenol and its derivatives in United States of America, Canada and
the European Union. The European Union has introduced further
regulations in July, 2017, which has further impacted the market for
the subject goods in Europe.
f) The exporters in Chinese Taipei are exporting the subject
goods to other countries at dumped prices with dumping margin in
the range of 15-25%.
3.14 The learned Advocate has submitted that in spite of sufficient
evidence on record indicating likelihood of continuation or recurrence
of dumping, the DA has wrongly observed that there is no evidence
to prove that excess capacity will be diverted into India in the event
of revocation of anti-dumping duty. She has submitted that since
there are huge excess capacity with the foreign exporters, and in
absence of any alternate market, there is likelihood that additional
exports will be diverted to India. As per sub-para (b) of Para (vii) of
Annexure II to Anti Dumping Rules, 1995 , there is no requirement
13 AD A.No. 50430/2019
whatsoever to prove the diversion; it is only necessary to establish
existence of alternate market for which the evidence has been
produced. She has contended that the authority on the one hand
held that even with the duty imposed, dumping margin is in the
range of 15 to 25%, whereas on the contrary he concludes that once
duties are withdrawn, there is no likelihood of dumping of goods in
India. She has vehemently argued that the current dumping itself
indicates that not only dumping is likely to continue but may
intensify on expiry of duty.
3.15 On the requirements of Para (viii) to Annexure-II to the Anti
Dumping Rules, she submits that it has been met, as there is
sufficient freely disposal capacity with the exporter. There are also
no alternate market which can absolve the additional export;
therefore, there is likelihood of substantially increased dumped
export to Indian market. The landed value of import (without anti-
dumping duty) is not only below the selling price of domestic
market, but also its cost. The imports, therefore, would have a
depressing or suppressing effect on domestic prices and would likely
to increase the demand for further import. She has further
submitted that the authority while accepting the fact that Asia is the
only market available for the exporters of Taipei, but held that there
is no evidence that the exporters will dump the subject goods into
India.
3.16 She has submitted that the DA has failed to draw adverse
inference on the non-participation of the foreign exporters. In terms
14 AD A.No. 50430/2019
of Rule 6(8) of anti dumping rules, as interpreted by Hon'ble
Supreme Court in the case of Designated Authority Vs Haldor
Topsoe - 2000 (120) ELT 11 (SC), the authority is required to draw
an adverse inference against foreign exporter.
3.17 She has submitted that the Appellant in their plea before the
DA never equated imposition of the anti dumping in China against
Chinese Taipei, as a factor for continuation of anti dumping duty in
India. On the other hand, the argument was that since the duties
have been imposed on exports from Chinese Taipei to China, the
Chinese market is not available for additional export from Chinese
Taipei, hence it is likely that export in India would increase, in view
of huge excess capacity in Chinese Taipei.
3.18 Further, she has submitted that the exporter in Chinese Taipei
enjoy lower shipping cost, shows likelihood of increase in export to
India post expiry of duty. The low paid cost of freight for exporters
means that India would be an attractive market for exporters in
Chinese Taipei who will incur less transportation charges for export
of the goods to India. The authority failed to appreciate the
argument of the Appellant that since Korea is also not an alternate
market for absorbing additional export from Chinese Taipei, hence
there is possibility of diversion of additional export to India.
3.19 Rebutting the argument of the learned Advocate for the DA
that since the protective measures have been in force since 11
years, the market have realigned to such developments and the
domestic industry ought to have demonstrated as to how the duty
15 AD A.No. 50430/2019
imposed in 2007 would be a factor for making a likelihood analysis in
2018, it is submitted that the said written submissions are beyond
the reasoning given in the impugned final finding and tantamount to
supplementing the reasons recorded in the findings. Further, it is
contended that there is no material on record to show that the
market have realigned themselves and excess capacity of foreign
exporter are no longer relevant for likelihood determination.
3.20 The learned Advocate has contended that the principles of
natural justice have been violated. Under Rule 16 of anti dumping
rules, the DA is required to inform all interested parties of the
essential fact under consideration, which form the basis for its
decision. The disclosure statement should contain the interim
conclusion of the DA on the essential fact which would form the
basis for the decision whether or not to apply the definitive
measures. Since in a sunset review, the decision as to whether or
not to apply measures depends on the fact of likelihood of
continuation of recurrence of dumping or injury, the intermediate
conclusion of the DA in this regard is required to be disclosed. The
learned Advocate further submitted that the disclosure statement
does not meet the requirement of Rule 6 of Anti Dumping Rules. In
support, the learned Advocate has referred to the judgment of
Hon‟ble Gujarat High Court in the case of Nirma Ltd Vs UoI - 2017
(368) ELT 146 (Guj.).
3.21 The learned Advocate referred to the sunset review final
findings by the Government of India in the following cases:-
16 AD A.No. 50430/2019
i) Final finding concerning imports of 1-Phenyl-3-Methyl-5-
Pyrazolone originating in or exported from China PR
dt.29.06.2011
ii) Final finding concerning imports of Front Axel Beam and
steering Knuckles meant for heavy and medium commercial
vehicles originating in exported from China PR dt.11.09.2015.
iii) Final finding concerning imports of Sodium Nitrite
originating in exported from China PR dt.01.12.2005.
iv) Final finding concerning imports of Acrylic Fibre
originating in or exported from Korean and Thailand
dt.23.03.2015.
v) Final finding concerning imports of Caustic Soda
originating in or exported from Chinese Taipei dt.31.07.2017
3.22 The learned Advocate has further submitted that it is well
settled position of law that this Tribunal in deciding the appeal filed
under Section 9C of Customs Tariff Act,1975 may confirm, modify or
annul the order. Therefore, this Tribunal is conferred with all the
necessary powers, including remand of the case to render justice.
In support, she has referred to the judgment of this Tribunal in the
case of Huawei Vs DA - 2011 (273) ELT 293 (Tri-Del.)
3.23 The learned Advocate has finally submitted that the findings
arrived at by the DA are un-sustainable in law. There is a strong
likelihood of continuation or recurrence of the dumping and injury on
expiry of anti dumping duty. Therefore, she prays that the anti
dumping duty imposed vide Notification No.5/2014-Cus,
dt.16.01.2014 be continued for further period of 5 years or in the
alternative, when there is likelihood of dumping and injury, the DA
be directed to issue final finding recommending imposition of anti
dumping duty and Central Government to issue consequent
notification imposing anti dumping duty.
17 AD A.No. 50430/2019
Submission on behalf of the Designated Authority
5. Per contra, the learned Advocate for the DA, referring to
Section 9A(5) of CTA read with Rule 23 of Anti Dumping Rules,1995
submitted that the DA while conducting the sunset review, in an
objective manner, to reach a conclusion i.e. as to whether to extend
anti dumping duty or otherwise, examined the contention of the
Domestic Industry whether there is likelihood of continuation or
recurrence of dumping and injury with specific reference to the
threat or material injury in terms of Annexure- II (viii) of Rules, read
with the judgment of Hon‟ble Gujarat High Court in the case of
Nirma ltd Vs UOI - 2017 (346) ELT 228 (Guj.). He has contended
that in a sunset review examination, several factors need to be
considered which have been dealt in other countries, is summarised
below:-
a) Economic factors required for determination of injury under
Rule 9(2) read with Annexure-II of Anti Dumping Rules are not
necessarily required to be evaluated. In support, he has referred to
the WTO panel report in the case of Eu Footwear(China).
b) In the Appellant‟s argument, it is stated that the investigating
authority has failed to examine the excessive capacity of the
exporter while determining the likelihood of continuation or
recurrence of injury under Rule 23. However, the Appellant has not
disclosed before the DA any clear factual evidence to show the nexus
with surplus capacities would be diverted into India in absence of
18 AD A.No. 50430/2019
anti dumping duty. It is submitted that merely because the exporter
possesses the excessive or un-utilised capacity, it cannot reasonably
be concluded that there is likelihood of dumping injury. In support,
he has referred to the observation of WTO Appellate body in US
Corrosion-Resistant Steel sunset review‟s case.
(c) In the said decision, the panel has also highlighted the need
for sufficient positive evidence on which likelihood determination can
be based. It is held that the requirement to make a determination
concerning likelihood, therefore, precludes investigating authority
from simply assuming that likelihood exists. The investigating
authority must have a sufficient factual basis to allow it to draw
reason and adequate conclusions concerning the likelihood of such
continuation or recurrence. Therefore, in absence of clear factual
evidence, the investigating authority cannot automatically assume
excessive capacity of the exporter is likely to increase import of
dumped product and cause injury to the domestic industry.
(d) It is submitted that in the present case, even though the
investigating authority has considered the present state of domestic
industry, it cannot be said that such analysis is inconsistent with
Rule 23 of Anti Dumping Rules. The WTO panel in Ukrane-
Ammonium Nitrate made distinction between injury on
determination in the context of sunset review and considering the
state of domestic industry following the imposition of Original duties,
held that just because an investigating authority considered the
existing status of domestic industries, based, inter alia, on various
19 AD A.No. 50430/2019
factors & indices and includes showing the performance of that
industry, does not mean that it was seeking to establish that
domestic industry was suffering material injury during the period of
review.
(e) It is also submitted that determination of likelihood of dumping
or injury must be based on the present facts and circumstances.
The WTO panel in US Corrosion-Resistant Steel sunset review, held
that „Future facts do not exist; the only type of facts that exists and
that may be established with certainty and precision relate to the
past and to that extent they may be accurately recorded and
evaluated to the present. It is contended that during sunset review,
the investigating authority can only focus on circumstances that can
reasonably be expected to exist in near to medium term and not in
the definite future.
(f) It is submitted that the argument of the domestic industry,
that excessive capacity is indicative of likelihood of continuation or
recurrence of dumping is merely presumptuous. There exists no
factual evidence to reasonably conclude that there is clear casual
link between such excessive capacity and likelihood of injury.
(g) Further, it is submitted that analysis of different factors
conducted during sunset review are only indicative and cannot be
held conclusive of likelihood of continuation or recurrence of
dumping or injury. Therefore, undue reliance on a single factor of
excessive capacity of the exporter cannot be placed in case of sunset
review investigation. Further, there exists no sufficient factual basis
20 AD A.No. 50430/2019
in the present case for the investigating authority to draw a
reasoned conclusion that excessive or un-utilised capacity is likely to
lead to dumping and injury.
(h) It is further submitted that a sunset review is a forward
looking analysis, however, there can be no presumption of injury in
an expiry review and findings must be based on positive evidence.
In the present case, excessive capacity of interested party or
exporter must be likely to cause injury based on an analysis of
present constraints of industry and therefore without factual
evidence, affirmative determination of likelihood of continuance or
recurrence of dumping cannot be drawn based on presumptuous
assertion.
(i) Further, rebutting the contention of the Appellant, he has
submitted that in the event of revocation of duty, there will be a
sudden surge in import and Appellant would again suffer injury, is
incorrect and against the intent of the legislature. If the imports will
increase, the Appellant will have every right to approach the
Directorate. Merely on presumption that imports will increase, duties
cannot be extended for eternity.
(j) Further, it is submitted that if the Appellants had established the
existence of surplus capacity, it was still required to substantiate
that existence of such surplus capacity posed a clear and imminent
threat or likelihood of recurrence of injury. In support, they have
21 AD A.No. 50430/2019
referred to the judgment of this Tribunal in the case of Indian
Spinners Association Vs 2004 (170) ELT 144 (Tri-Del.).
(k) It is submitted that the requirement of Section 9A(5) and Rule
23 (1B) is that the anti-dumping duty imposed under Section 9A
shall cease to have effect on the expiry of 5 years from the date of
its imposition. The first proviso to Section 9 A(5) is an exceptional
and enabling provision, permitting deviation from the primary
obligation under Section 9A(5) in limited and specified
circumstances.
5.1 The learned Advocate in response to the arguments advanced
by the Domestic Industry on the likelihood of dumping and injury,
reiterating the finding of the D.A recorded in para 69 and 75 of the
final findings; further submitted as:
(i) That existence of excess capacity in Chinese Taipei has been
there for a long period and the domestic industry did not provide
any information as to the impact of so called excess capacity factor
by the markets over the years particularly after imposition of anti-
dumping duty in China. He has further submitted that effect of duty
imposed in 2007 on international market after more than 11 years
could not be demonstrated by the domestic industry.
(ii) With regard to the issue of restrictions by markets like U.S.A,
Canada and European Union he has submitted that the appellant has
failed to provide details about the nature of restrictions or the
timings of such restrictions.
22 AD A.No. 50430/2019
(iii)He has also argued that placing the subject case under restricted
Toxic Substances by China in the year 2011 could not be justified by
the domestic industry to show on its impact, the likely exports to
India in the event duties are discontinued. It is his contention that
though the domestic industry has argued that the export to China PR
from Chinese Taipei fell from 15000 M.Ton in 2010 to around 1500
M.Ton in 2016 -17 no explanation or analysis to demonstrate that
the event of 2011 are sufficient to conclude likelihood of injury in the
event duties are discontinued.
(iv) On the argument that Chinese Taipei is the hub of Asian
Transportation routes, he has submitted that any natural advantages
to the purchasers of any country cannot be addressed through the
mechanism of anti-dumping. Further he has submitted that the
claim of the domestic industry that other Asian countries such as
Singapore and Malaysia do not offer a steady market policy remains
un-substantiated.
(v) He has further submitted that the domestic industry is required
to demonstrate as to how each of the factors claimed to be relevant
by them have linked to the conclusion. It is his further contention
that there should be sufficient information and reasoning available
with valid for each of the factors to come to a further conclusion
regarding the likelihood for injury. In support he has referred to the
decision of the Appellate Body in the G.3.4 A.4(BRAZIL)-Rethreaded
Tyre Part 182/W.T/DS322/AB/R. He has also submitted that the
domestic industry did not provide any/sufficient evidence regarding
the likely prices that affects the case in the event the anti-dumping
23 AD A.No. 50430/2019
duty is revoked and the impact of such prices on the final
performance of the domestic industry.
5.2 Finally he has submitted that without sufficient factual
analysis, investigating Authority in India or outside India have been
reluctant to continue their findings in anti-dumping investigation
during sunset reviews unless positive evidences are submitted with
proper logical reasoning. Therefore it cannot be concluded that there
would be any likelihood of recurrence of dumping and injury on
removal of the duty.
Finding:
6. We have carefully considered the submissions advanced on
behalf of the Appellant-Domestic Industry, the Designated Authority,
the Revenue and perused the records. The limited question
involved for determination in the present appeal is: whether the
conclusions and the recommendations of the designated authority
dated 11.01.2019 against continuation of anti dumping duty on the
subject goods Nonyl Phenol from the subject country Chinese Taipei,
pursuant to the sunset review, is correct in law or otherwise.
7. Needless to emphasize, the object of anti dumping duty is a
remedial measure in relation to domestic industry to obviate the
impact of dumping of goods from other export countries less than
the normal value, resulting into injury to the domestic industry,
which measure is in consonance with the WTO agreement, which is
reproduced below:
24 AD A.No. 50430/2019
Article VI
Antidumping and Countervailing Duties
1. The contracting parties recognize that dumping, by which
products of one country are introduced into the commerce of
another country at less than the normal value of the products, is
to be condemned if it causes or threatens material injury to an
established industry in the territory of a contracting party or
materially retards the establishment of a domestic industry. For
the purposes of this Article, a product is to be considered as
being introduced into the commerce of an importing country at
less than its normal value, if the price of the product exported
from one country to another
(a) is less than the comparable price, in the ordinary course of
trade, for the like product when destined for consumption
in the exporting country, or,
(b) in the absence of such domestic price, is less than either
i) the highest comparable price for the like product for
export to any third country in the ordinary course of
trade, or
ii) the cost of production of the product in the country of
origin plus a reasonable addition for selling cost and
profit.
Due allowance shall be made in each case for differences in
conditions and terms of sale, for differences in taxation, and for
other differences affecting price comparability.
2. In order to offset or prevent dumping, a contradicting party
may levy on any dumped product an anti-dumping duty not greater
in amount than the margin of dumping in respect of such product.
For the purposes of this Article, the margin of dumping is the price
difference determined in accordance with the provisions of
paragraph 1.
Pursuant to the above, necessary provisions in this regard are
enacted under the Customs Tariff Act,1975 and Relevant Rules
framed thereunder.
25 AD A.No. 50430/2019
8. In the present case, we are not concerned with the imposition
of anti dumping duty on the subject goods(nonyl phenol) form the
subject country(Chinese Taipei) which was initially imposed in 2007
and thereafter extended for a period of five years. The present
proceeding is for second sunset review of the duty which was
initiated at the behest of Appellant-domestic industry following the
laid down procedures. Before proceeding to analyse various
aspects of the case, it is necessary to have a glance of the provisions
relevant to sunset review of duty under the Customs Tariff Act, Anti
Dumping Rules and articles of WTO agreement, which are
reproduced below:
Section 9A(5)
The anti-dumping duty imposed under this section shall, unless
revoked earlier, cease to have effect on the expiry of five years from
the date of such imposition :
Provided that if the Central Government, in a review, is of the
opinion that the cessation of such duty is likely to lead to
continuation or recurrence of dumping and injury, it may, from time
to time, extend the period of such imposition for a further period of
five years and such further period shall commence from the date of
order of such extension :
Provided further that where a review initiated before the expiry of
the aforesaid period of five years has not come to a conclusion
before such expiry, the anti-dumping duty may continue to remain
in force pending the outcome of such a review for a further period
not exceeding one year.
Rule 23
(1) Any anti-dumping duty imposed under the provision of
Section 9A of the Act, shall remain in force, so long as and to the
extent necessary, to counteract dumping, which is causing injury.
(1A) The designated authority shall review the need for the
continued imposition of any anti-dumping duty, where warranted, on
its own initiative or upon request by any interested party who
submits positive information substantiating the need for such
review, and a reasonable period of time has elapsed since the
26 AD A.No. 50430/2019
imposition of the definitive anti-dumping duty and upon such
review, the designated authority shall recommend to the Central
Government for its withdrawal, where it comes to a conclusion that
the injury to the domestic industry is not likely to continue or recur,
if the said anti-dumping duty is removed or varied and is therefore
no longer warranted.
(1B) Notwithstanding anything contained in sub-rule (1) or (1A),
any definitive anti dumping duty levied under the Act, shall be
effective for a period not exceeding five years from the date of its
imposition, unless the designated authority comes to a conclusion,
on a review initiated before that period on its own initiative or upon
a duly substantiated request made by or on behalf of the domestic
industry within a reasonable period of time prior to the expiry of that
period, that the expiry of the said anti dumping duty is likely to lead
to continuation or recurrence of dumping and injury to the domestic
industry.
(2) Any review initiated under sub-rule (1) shall be concluded
within a period not exceeding twelve months from the date of
initiation of such review.
(3) The provisions of rules 6,7,8,9,10,11,16,17,18, 19, and 20
shall be mutatis mutandis applicable in the case of review.
Annexure (II):
.....................................
(ii) While examining the volume of dumped imports, the said authority shall consider whether there has been a significant increase in the dumped imports, either in absolute terms or relative to production or consumption in India. With regard to the affect of the dumped imports on prices as referred to in sub-rule (2) to rule 18 the designated authority shall consider whether there has been a significant price under cutting by the dumped imports as compared with the price of like product in India, or whether the effect of such imports is otherwise to depress prices to a significant degree or prevent price increase which otherwise would have occurred, to a significant degree.
................................................
(vii) A determination of a threat of material injury shall be based on facts and not merely on allegation, conjecture or remote possibility. The change in circumstances which would create a situation in which the dumping would cause injury must be clearly foreseen and imminent. In making a determination shall consider, inter alia, such factors as:
(a) A significant rate of increase of dumped imports into India indicating the likelihood of substantially increased importation;
(b) Sufficient freely disposable, or an imminent, substantial increase in, capacity of the exporter indicating the likelihood of substantially increased dumped exports to Indian markets, 27 AD A.No. 50430/2019 taking into account the availability of other export markets to absorb any additional exports;
(c) Whether imports are entering at prices that will have a significant depressing or suppressing effect on domestic prices, and would likely increase demand for further imports;
and
(d) Inventories of the article being investigated. Article 11 : Duration and Review of Anti-Dumping Duties and Price Undertakings.
11.1 "An anti-dumping duty shall remain in force only as long as and to the extent necessary to counteract dumping which is causing injury.
11.2 The authorities shall review the need for the continued imposition of the duty, where warranted, on their own initiative or, provided that a reasonable period of time has elapsed since the imposition of the definitive anti-dumping duty, upon request by any interested party which submits positive information substantiating the need for a review. Interested parties shall have the right to request the authorities to examine whether the continued imposition of the duty is necessary to offset dumping, whether the injury would be likely to continue or recur if the duty were removed or varied, or both. If, as a result of the review under this paragraph, the authorities determine that the anti-dumping duty is no longer warranted, it shall be terminated immediately. 11.3 Notwithstanding the provisions of paragraphs 1 and 2, any definitive anti-dumping duty shall be terminated on a date not later than five years from its imposition (or from the date of the most recent review under paragraph 2 if that review has covered both dumping and injury, or under this paragraph), unless the authorities determine, in a review initiated before that date on their own initiative or upon a duly substantiated request made by or on behalf of the domestic industry within a reasonable period of time prior to that date, that the expiry of the duty would be likely to lead to continuation or recurrence of dumping and injury. The duty may remain in force pending the outcome of such a review. 11.4 The provisions of Article 6 regarding evidence and procedure shall apply to any review carried out under this Article. Any such review shall be carried out expeditiously and shall normally be concluded within 12 months of the date of initiation of the review. 11.5 The provisions of this Article shall apply mutatis mutandis to price undertakings accepted under Article 8."
9. The advocates appearing for the respective parties have fairly conceded that the requirement/conditions necessary for imposing anti dumping duty is quite different for the purpose of sunset review of the existing duty. We need not dwell much on the said issue, as 28 AD A.No. 50430/2019 it has been considered by the Hon‟ble Supreme Court in Kumoh Petorchemicals Company Ltd.‟s case (supra). Their Lordships observed as :
"9. It is not in dispute that in terms of Section 9A(5) of the Act, anti-dumping duty is effective for a period not exceeding five years from the date of its imposition. The Government is empowered to revoke the duty imposed even before the expiry of five years. In any case, such a duty admittedly ceases to be operative after five years from the date of imposition. At the same time, the Central Government is empowered to initiate review, called „sunset review‟, and to investigate and decide as to whether it is necessary to continue the levy of anti-dumping duty. As in the case of original Notification imposing such a duty, the Central Government is to satisfy itself that if the period of anti-dumping duty is not extended, it is likely to lead to continuation or recurrence of dumping and injury to the domestic industry. The nature of exercise to be undertaken by the Central Government in a „sunset review‟ is somewhat different from the initial exercise to determine whether anti-dumping duty is to be levied at all or not. When it comes to review, the focus would be on the issue as to whether withdrawal of anti-dumping duty would lead to continuation or recurrence of dumping as well as injury to the domestic industry. The nature and scope of this exercise is lucidly explained by this Court in Reliance Industries v. Designated Authorities, (2006) 10 SCC 368 = 2006 (202) E.L.T. 23 (S.C.) in the following manner :-
"38. We are of the opinion that the nature of the proceedings before the DA are quasi-judicial, and it is well settled that a quasi-judicial decision, or even an administrative decision which has civil consequences, must be in accordance with the principles of natural justice, and hence reasons have to be disclosed by the Authority in that decision vide S.N. Mukherjee v. Union of India [(1990) 4 SCC 594 : 1990 SCC (Cri) 669 : 1991 SCC (L&S) 242 : (1991) 16 ATC 445].
39. We do not agree with the Tribunal that the notification of the Central Government under Section 9A is a legislative act. In our opinion, it is clearly quasi-judicial. The proceedings before the DA are to determine the lis between the domestic industry on the one hand and the importer of foreign goods from the foreign supplier on the other. The determination of the recommendation of the DA and the government notification on its basis is subject to an appeal before CESTAT. This also makes it clear that the proceedings before the DA are quasi-judicial."29 AD A.No. 50430/2019
10. This Tribunal in Thai Acrylic Fibre Ltd.‟s case(supra) after analysing various judgments on the subject and relevant WTO agreement observed as follows:-
"13. Unlike original investigations, sunset reviews are prospective in nature, as they focus on the likelihood of the continuation or recurrence of dumping and injury, in case antidumping duties are removed. With respect to the question whether dumping is likely to occur in the event that the anti-dumping duties are removed, the D.A. has to consider relevant economic facts which might indicate that in the event the anti-dumping duty is removed, dumping will recur. With respect to the injury determination, if the anti-dumping duty has had the desired effect, the condition of the domestic industry would be expected to have improved during the period the anti-dumping duty was in effect. Therefore, the assessment whether injury will continue, or recur, would entail a counter-factual analysis of future events, based on projected levels of dumped imports, prices, and impact on domestic producers. Thus the D.A. has to address the question as to whether the domestic industry is likely to be materially injured again, if duties are lifted.
14. Sunset review entails a likelihood determination in which present levels of dumping is obviously not so relevant as is the likelihood of continuance or recurrence of dumping. Moreover, during the investigation period, the anti-dumping duty would be in force and hence, the current level of dumping may be non-existent or minimal. The exporters under investigation may also sell at a non-dumped price during this period knowing fully well that a sunset review would be in progress. Hence, the criteria under Section 9A(1) that the anti-dumping duty should not exceed the dumping margin would have no practical application for continuance of the duty under Section 9A(5). There is also no such warrant in law under the said Section 9A(5) to do so."
11. A similar view was also expressed by the Tribunal in the case of P.T. Asima Chemicals vs DA, Ministry of Finance - 2015 (328) ELT 417 (Tri-Delhi). It observed :
"...It is evident from the perusal of the above-quoted Section that unlike original investigations, sunset reviews are prospective in nature as they focus on the likelihood of the continuation or recurrence of dumping and injury in the event of revocation of duties. Sunset review entails a likelihood determination in which present levels of dumping are obviously not so relevant as is the likelihood of continuance or recurrence of dumping. In the case of Rishiroop Polymers Pvt. Ltd. v. Designated Authority - 2006 (196) E.L.T. 385 (S.C.), the Supreme Court held as under :30 AD A.No. 50430/2019
"Otherwise also, we are of the opinion that scope of the review inquiry by the Designated Authority is limited to the satisfaction as to whether there is justification for continued imposition of such duty on the information received by it. By its very nature, the review inquiry would be limited to see as to whether the conditions which existed at the time of imposition of anti-dumping duty have altered to such an extent that there is no longer justification for continued imposition of the duty. The inquiry is limited to the change in the various parameters like the normal value, export price, dumping margin, fixation of non-injury price and injury to domestic industry. The said inquiry has to be limited to the information received with respect to change in the various parameters. The entire purpose of the review inquiry is not to see whether there is a need for imposition of anti-dumping duty but to see whether in the absence of such continuance, dumping would increase and the domestic industry suffer."
The WTO Panel in the case of CRCS Flat Products from Japan vide WT/DS244/R, dated 14-8-2003 (as quoted in CESTAT judgment in case of Thai Acrylic Fibre Co. Ltd. v. Designated Authority [2010 (253) E.L.T. 564 (Tri. - Del.)] observed as under :
"7.168. We thus do not believe that the substantive disciplines in Article 2 governing the calculation of dumping margins in making a determination of dumping apply in making a determination of likelihood of continuation of recurrence of dumping under Article 11.3. To hold otherwise would mean that a new and full determination regarding the existence of dumping since the imposition of the order would be necessary in a sunset review. We find no such obligation in the text of Article 11.3 nor in Article 2 of the Anti-dumping Agreement."
In case of APAR Industries Ltd. v. Designated Authority - 2006 (200) E.L.T. 34 (Tri. - Del.), CESTAT also held as under :
"It is to be borne in mind that the scope of the sunset review by the designated authority is limited. He has to satisfy himself as to whether there is justification for continued imposition of anti-dumping duty and that also based on the information received by him. It seems that the sunset review by its very nature, would be limited to see as to whether conditions which existed at the time of imposition of anti- dumping duty have altered to such an extent that there is no longer justification for continued imposition of duty or to ascertain that if such duty is revoked there is imminent danger of the material injury to the domestic industry. The inquiry is limited to the change in the various parameters like the normal value; export price, dumping margin, fixation of non-injurious price and injury to domestic industry. The sunset review is undertaken for the purpose of not for imposition of anti-dumping duty but to see whether the revocation of such anti-dumping duty, dumping would increase and whether the domestic industry will suffer."31 AD A.No. 50430/2019
In the case of Borax Morarji Limited v. Designated Authority - 2007 (215) E.L.T. 33 (Tri. - Del.), CESTAT noted that :
"Proviso to Section 9A(5) of Customs Tariff Act, 1975 primarily intends to undertake review to examine whether cessation of duty on the expiry of five years is likely to lead to continuance/recurrence of dumping and injury - Expression "likely to lead to recurrence" would cover situation where dumping and injury may not exist at time of review due to continuance of anti-dumping duty."
During the period of investigation, the anti-dumping duty would be in force and hence, the "current" level of dumping may be non- existent or minimal. The exporters under investigation may also sell at a non-dumped price during this period knowing fully well that a sunset review would be in progress. Hence, the criteria under Section 9A(1) that the anti-dumping duty should not exceed the dumping margin would have no practical application for continuance of the duty under Section 9A(5). There is also no such warrant in law under the said Section 9A(5) to do so.
10. With respect to the injury determination, if the anti-dumping duty had the desired effect, the condition of the domestic industry would be expected to have improved during the period the anti- dumping duty was in effect. Therefore, the assessment whether injury will continue, or recur, would entail a counter-factual analysis of future events, based on projected levels of dumped imports, prices, and impact on domestic producers. Thus the D.A. has to address the question as to whether the domestic industry is likely to be materially injured again, if duties are lifted.
12. Thus, the object and purpose of the sunset review as explained in the aforesaid judgments, precisely is to examine as to whether on removal of anti dumping duty, there is likelihood of recurrence of dumping and injury to the domestic industry. It has also been held that the degree and extent of dumping and consequent injury to the domestic industry during the POI is not of much relevance.
13. The mandate or requirement under Section 9A(5) of CTA,1975 read with Rule 23 of Anti dumping Rules,1995 and Annexure-II (vii) is that the authority has to examine all relevant aspects to ascertain 32 AD A.No. 50430/2019 the likelihood of dumping and injury, once the present anti dumping duty is removed. It is obvious that such determination cannot be based on a guess work or on mere assumption & presumption, but definitely to rest on the past & present facts, influencing the trend of dumping, resultant injury, performance and other relevant economic and other factors relating to the domestic Industries as well as the exporting Industries/countries to analyse and arrive at a probable situation of continuation of dumping and injury in future to the domestic industry. There is no dispute or quarrel on the fact that it should be on the basis of some tangible evidence. Therefore, the procedure prescribed to address the interest of all interested parties for imposition of anti dumping duty are also applicable to the sun set review proceedings even though with different objective.
14. In the present case, admittedly there has been no participation by the exporting industries in the investigation conducted by the DA. The relevant data have been provided by the Domestic Industry and no serious dispute in this regard i.e. authenticity/correctness of the data raised by the DA or interested opposing parties and the data had been accepted without reservation.
15. The finding and conclusion of the designated authority, reproduced below, in nut shell indicates that since the health and condition of the domestic industry is not in bad shape during the relevant period and also as the Appellant could not prove/establish from the existing facts and evidences that there is any likelihood of 33 AD A.No. 50430/2019 dumping and injury to the domestic industry that would recur in future once the duty is removed extension of antidumping duty is not warranted.
"I. CONCLUSIONS AND RECOMMENDATIONS
76. Having examined the contentions of various interested parties and on the basis of the above facts, circumstances, and analysis, the Authority concludes as under:
i) The financial and economic parameters of Domestic Industry (both volume and price) are stable and not evidencing deterioration requiring extension of anti dumping duty.
ii) The Petitioners have performed well during the injury period including the POI in terms of its financial parameters.
iii) Petitioners have not been able to establish likelihood of dumping and injury to the Domestic Industry in the event anti dumping duty were to be revoked on the subject goods.
iv) Capacity, production, domestic sales and overall profitability of the industry do not indicate existence of injury or a deteriorated economic condition."
v) The factors submitted by the Petitioners on likelihood of recurrence of injury on withdrawal of ADD are not supported by the price realizations and price trends of the subject goods during the POI."
16. The Appellant has vehemently argued that the conclusion arrived at by the DA on the present condition of the domestic industries is contrary to facts and he also erred in requiring positive future evidence for the determination of likelihood of dumping and injury, in the event cessation of duty. According to the learned Counsel this is contrary to the principles & practice followed and the laid down parameters required to be analysed in a sunset review proceeding.
34 AD A.No. 50430/2019
17. We find that in the book "WTO Antidumping and Subsidy Agreements - A Practitioner‟s Guide to "Sunset" Reviews in Australia, Canada, the European Union, and the United States by Terence P. Stewart and Amy S. Dwyer, the summary of factors that typically weigh in favour of an affirmative expiry review in different countries has been explained :-
US 1 Dumping continued at any level above de minimis 2 Imports of the subject merchandise ceased after issuance of the order 3 Dumping eliminated and import volumes declined significantly 4 Low or de minimis dumping margins 5 Any likely increase in production capacity or existing unused production capacity in the exporting country 6 Existing inventories of the subject merchandise, or likely increases in inventories 7 Existence of barriers to the importation of the subject merchandise into countries other than the United States 8 Potential for product shifting if production facilities in the foreign country which can be used to produce the subject merchandise, are currently being used to produce other product 9 Conditions of Competition and the Business Cycle, like demand and supply conditions and substitutability 10 Export orientation Canada 1 Current injury or vulnerability of the domestic industry 2 Significant production capacity and inventories of exporters 3 Worldwide overcapacity 4 Export orientation of the foreign producers 5 Price attractiveness of Canadian market 6 Easy transportation distance to the Canadian market 7 Inability of domestic producers to meet demand of market 8 Third country dumping on same or related merchandise 9 Level of continued dumping (Pup Joint case 84) 10 Evidence of sales below cost by exporters 11 Strong price competition in the Canadian market (Piling Pipe
75) 12 Significant investment in future production by domestic industry 13 Exporters have lost market share in their domestic market 14 Declining demand in exporters domestic market 15 High degree of dependence on export markets by exporters 16 Circumvention of the current measures 35 AD A.No. 50430/2019 17 Elimination of imports after finding Australia 1 Increased or significant market share for imports 2 Significant rate of increased imports 3 Elimination of imports after measure 4 Evidence of third country dumping 5 Existence of price undercutting by imports 6 Significant production capacity of exporters 7 Continued dumping or subsidization 8 Current injury 9 Failure of respondents to participate in review 10 Exporter has retained distribution links in Australia 11 Anti dumping actions by other countries 12 Exporter retains an excess capacity that may be directed to Australia European Union 1 Evidence of duty absorption 2 Third country dumping of the same merchandise 3 Current injury or vulnerability of the domestic industry 4 Significant investment in future production by domestic industry 5 Significant price undercutting by imports with current measures in force 6 Ample production capacity of exporters 7 Significant market share of imports 8 Significant rate of increased imports 9 Increased market share 10 Circumvention of the current measures 11 Community interest would be served by retaining measure 12 Failure of respondents to participate in review 13 Affirmative finding that dumping continued 14 Market conditions and circumstances of exporters 15 Level of current dumping margins 16 Affirmative finding that dumping margins have increased
18. The DA after analysing the data during the course of investigation, observed that the dumping margin is positive and is in the range of 15-25% and above de-minimis level. Also, he observed that there is an increase in the demand for the product throughout the injury period and the subject goods import has been reduced. Analysing the price effect, the authority has observed that the landed price of import without anti dumping duty is Rs.96,361/- 36 AD A.No. 50430/2019 during POI and the price undercutting in the range of 0-10% which is positive when calculated without anti dumping duty and is negative when calculated after taking into account the anti dumping duty. On the aspect of price suppression and depression, he has remarked that the landed price (with anti dumping duty) of the import is above the selling price as well as the cost of domestic industry. The cost of sale, selling price and import price declined till 2016-17 as compared to the base year but increased in the POI. But, the landed value without antidumping duty shows that import prices are less than the selling price. Further, on the aspect of price underselling he has noted that on a comparison of the landed value of the subject goods with non-injurious price, price underselling is positive without adding anti dumping duty and negative after adding anti dumping duty. On Scrutiny of economic parameters of domestic industry by the DA, he has commented that the capacity of domestic industry has remained constant as the production and capacity utilisation increased throughout the injury period; also the market share of domestic industry has increased and the share of import from the subject country in demand has declined. On the current profit & loss, cash profits and returns on investment of the domestic industry, it is recorded that the profits have decreased but are positive.
19. On the issue of likelihood of continuous or recurrence of dumping and injury in case of cessation of Anti-dumping duty, the DA observed that there is no evidence to prove that the excess capacities available with the exporters of the subject country would 37 AD A.No. 50430/2019 be diverted into India in the event of revocation of anti-dumping duty. Also, he has observed that insufficient demand in the subject country and un-utilised capacity will be utilised to dump goods into India cannot be a factor to draw adverse inference against the exporters from such country. Further, he has observed that export restrictions by USA, Canada and European Union on the subject goods would make Asia being the only market available and the goods would be dumped in India, in the absence of evidence cannot lead to an adverse impact against the exporters. With regard to anti- dumping measures initiated in China and its market for exporters from Chinese Taipei it is noted that the facts and circumstances of investigations are different, therefore cannot be equated in deciding the present case. He has also commented that being the hub of Asia transport routes Chinese Taipei enjoys lower shipping cost or bulk shipping cannot be held against them. Further he has observed that importance of India as a market is accentuated by the fact that the demands in India is growing and is expected to increase, therefore revocation of duty will have no adverse impact. He has finally observed that imports are not likely to increase both in absolute terms as in relation to production and consumption in the event of anti-dumping duty is removed.
20. The domestic industry, on the other hand, has contended that dumping margin has been determined by the authority in the range of 15-25% when the duties were in force. Thus, there is likelihood on the expiry of the duty, the dumping of goods would further intensify. It is their contention that the domestic industry had not 38 AD A.No. 50430/2019 earned adequate profit even during the period when the dumping duty is in force as they had to match and manage the sales prices with the landed price of the imported goods even though the market share has been slightly improved. It is their contention that the profit is meagre at 2% while the returns on capital employed is merely 5% during the POI, when 22% on such return is considered as normal. Further, they have argued that in the circumstance of undercutting of the prices of domestic industry, the importers in India would have clear preference for the imported product being dumped which would result in surge in import. They have submitted that even though there is marginal improvement on certain fronts in the performance of the domestic industry, but if the duty is withdrawn, negative effect on production would be immediate and whatever benefit obtained would be wiped out. Further, laying emphasis on the surplus capacity with foreign exporters in absence of alternative market, they have argued that it is sufficient indicator in favour of likelihood of increase in dumping of goods in India on expiry of duty.
21. We find merit in the contention of the Advocate for the Appellant. In our view there is a fundamental fallacy in the approach of the DA in the determination of likelihood of recurrence of dumping and injury post removal of the duty on the subject goods from the subject country. There is no dispute of the fact that evidence of past and present circumstances is relevant and necessary to arrive at a reasonable and logical determination of continuation of same scenario in future warranting continuation of antidumping duty or 39 AD A.No. 50430/2019 otherwise. However, it is impractical and also illogical to insist on the positive evidences on future events, for determination of the likelihood of dumping and injury in future on removal of duty. The parameters to reach at the conclusion on likelihood of dumping and injury adopted in the Sunset Review proceeding by various countries mentioned above are: to name a few, current dumping and injury, significant production capacity and inventories of exporters, existence of barriers for import of such goods in other countries, failure of respondents to participate in review proceeding, declining demand in exporters domestic market, high degree of dependence on export market by exporters, etc.. We also find that more or similar parameters are appearing under the Annexure-II of the Anti Dumping Rules,1995.
22. In this back drop, we find that the Appellant domestic industry could reasonably establish through present and past evidence that most of these parameters are satisfied in the present case. The dumping margin is in the range of 10-15% and is positive and above de-minimis. Despite anti dumping duty, the earning of domestic industry is meagre 2% and return of capital is around 5% against the normal return of 22%. The landed value of import without anti dumping duty are below the cost of production of domestic industry. The Appellant was able to show that there is a demand of around 17,216 MT in domestic market, whereas the ideal capacities of foreign exporters are around 24,376 MT. Export restrictions are placed on subject goods in other international markets viz. USA, Canada and European Unions, leaving major market only in Asia. 40 AD A.No. 50430/2019 The subject goods restriction in China PR being added to the list of restricted toxic substance would find its way in Indian market. There is growing Indian market in the sense that per capita consumption surfactant is expected to increase. Further, they could show that the export from Chinese Taipei to other countries have been made at dumped prices. Besides, the most important factor is that there has been no participation/response by the exporters of the subject goods on the proposed continuation of anti dumping duty. Therefore, cumulatively considering all these parameters which are normally adopted internationally and also in line with Annexure II(vii) of the Anti Dumping Rules,1995, in Sun Set Review proceedings, we are of the view that on removal of the anti dumping duty there will be likelihood of recurrence of dumping and injury to the domestic Industries.
23. We find that, more or less, a similar approach has been adopted in sun set review cases in different countries. Few examples are reproduced below:-
(I)In the sunset review investigation by the Ministry of Business, New Zealand in relation to import of canned peaches from Greece, it was observed :-
" 4.9.3 Likelihood of injury if anti dumping duties are terminated
282. In relation to the likelihood of a recurrence of material injury should anti dumping duties be removed, the Ministry concludes that:41 AD A.No. 50430/2019
- A significant increase in import volumes from Greece is likely as market conditions are more favourable for any likely importers of canned peaches from Greece than they have been previously.
- If imports from Greece were to resume in significant volumes, they would likely significantly undercut HWL‟s prices. HWL is likely to ... resulting in depression and suppression of HWL‟s prices.
- Consequent upon the likely price and volume effects, if duties are removed and imports resume in significant volumes, HWL‟s sale volume is likely to remain stable while its revenue is likely to decline significantly.
- If HWL ...., it would likely also maintain its market share. However, if duties were removed HWL would .....
- As a result of the likely price effects, HWL‟s profits would likely decline.
- As a consequence of the adverse economic impacts set out above, including a significant decline in revenue, HWL is likely to experience adverse impacts on return on investments, cash flow, growth and ability to raise capital and investments.
- There is unlikely to be an adverse impact on productivity, utilisation of production capacity, inventories, employment and wages unless HWL .....
283. On the basis of the above considerations, the Ministry concludes that if the anti dumping duties were to be removed, material injury to the industry due to dumped imports of canned peaches from Greece is likely to recur."
(II) European Commission, while initiating the sunset review investigation of the anti dumping measures in force on the imports of bio-diesel originating from USA observed as follows:-
"5. Likelihood of recurrence of injury (138) To assess the likelihood of recurrence of injury to the Union Industry should the existing measures be allowed to lapse, the Commission analysed the likely impact of imports from the USA on the Union market and on the Union industry pursuant to Article 11(2) of the basic Regulation. In particular, the Commission analysed the likelihood of recurrence of dumped imports, the volumes and the likely price levels thereof, spare capacity, the attractiveness of the union market and price behaviour of US producers.42 AD A.No. 50430/2019
(139) As concluded above (recital 92)), it is likely that dumped imports from the USA would recur should the existing measures be allowed to lapse. The Commission has established that producers of biodiesel in the USA are currently dumping at other third country markets at price levels that are below the Union prices.
Since the Union prices are slightly higher than those in other third country markets it is likely that at least some of those exports may be redirected to the Union should the existing measures lapse. (140) The Commission has established that US producers have a large space capacity amounting to around 2 678 000 tonnes equivalent to around 22 % of the total Union consumption. (141) The spare capacity available in the USA is not likely to be absorbed by its domestic market. Already today, despite sufficient capacity, US producers are not supplying the full demand on the US market. It is also unlikely that the existing spare capacity would be used to increase exports to third countries other than the Union. Currently, as described in detail in recitals (42)-(63) above, the US export prices to third countries are on average 15% below the average domestic price on the US market and also below the average Union price even where transportation costs from the USA to the Union are taken into account. It is therefore likely that US producers would seek another outlet for their spare capacity. (142) Given that the Union market is the biggest market for biodiesel worldwide and with biodiesel prices that are in parity or slightly above the price level on the US domestic market, the Union market would be very attractive for US producers of biodiesel. (143) It is therefore very likely that US producers would use a large part of their spare capacity to re-enter the Union market should the existing measures be allowed to lapse. As established above (recital (46)), it is likely that the US producers will export biodiesel to the Union at dumped price levels in order to compete with Union producers on the Union market. Given their current pricing behaviour on other export markets (recitals (57)-(58) above) and the large spare capacity available it is very likely that significant volumes of US biodiesel would re-enter the Union market at dumped prices equal to, or below the Union prices.
(144) Such import s would exercise a significant pressure and even downwards price pressure on Union industry, which at current price levels, is only making a very small profit, which is significantly below its target profit. This would most likely result in a decrease of production and sales volumes, less profitability and loss of market share.
(145) Given the fragile economic situation of the Union industry, such likely scenario would have a significant adverse effect 43 AD A.No. 50430/2019 on the ongoing recovery of the Union industry and would in all likelihood cause recurrence of material injury. 5.1 Conclusion (146) On the basis of the above, the Commission has concluded that material injury to the Union industry would most likely recur should the existing measures against imports of biodiesel from USA be allowed to lapse."
(III) While initiating sunset review investigation on imports of certain aluminium wheels originating from Peoples Republic of China, the Commission observed as follows:-
"(241) The investigation showed that significant volumes of Chinese exports are likely to be re-directed to the Union given its attractiveness (recitals 75 to 88). In addition there are high spare capacities in China that could also be directed to the Union market.
Therefore the Chinese exporting producers will be able to take over not only the increased consumption but also sales volumes of the Union producers. Consequently even under he scenario of increased consumption there is a high likelihood that the Chinese exports would take over sales volumes and market share to the detriment of the Union industry. Moreover, concerning prices, these are likely to be at a level lower than Union industry‟s prices between 8 to 30% as described in recital 191 and with the effects described in recital 192 that is resulting in a likely recurrence of material injury for the Union industry. This claim is therefore rejected.
(242) On the basis of the above, the Commission concluded that the repeal of the measures would in all likelihood result in a recurrence of injury to the Union industry."
24. In view of above, we do not agree with the conclusions and the recommendations of the Designated Authority dated 11.01.2019. The same is liable to be set aside and consequently we set aside the conclusions and recommendations and remand the matter to the Designated Authority to calculate the appropriate anti dumping duty while taking note of overall circumstances of the case. Since, we have set aside the conclusions and recommendation of the DA on 44 AD A.No. 50430/2019 merit, hence discussion of other ancillary issues raised in the Appeal would be more of academic, hence not delved into.
25. In the result, the Appeal is allowed and the matter is remanded with a direction that DA shall analyse the relevant data and after determining the anti-dumping duty which needs to be levied on the subject goods when imported from Chinese Taipei, recommend the same to Government of India. The Miscellaneous Applications stand disposed of accordingly.
(Order pronounced in the open court on 28.11.2019) (Justice Dilip Gupta) President (Dr. D.M. Misra) Member (Judicial) (C.L. Mahar) Member (Technical) Bahalkar