Gujarat High Court
Nirma Limited vs Union Of India & on 30 June, 2017
Author: S.R.Brahmbhatt
Bench: S.R.Brahmbhatt, A.G.Uraizee
C/SCA/12249/2017 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 12249 of 2017
With
SPECIAL CIVIL APPLICATION NO. 12251 of 2017
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NIRMA LIMITED....Petitioner
Versus
UNION OF INDIA & 1....Respondents
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Appearance in SCA No. 12249 of 2017:
MR MIHIR JOSHI, SR. ADVOCATE WITH MR. RAJESH SHARMA,
ADVOCATE WITH MR GAURAV S MATHUR, ADVOCATE for the Petitioner
Appearance in SCA No. 12251 of 2017:
MR SN SOPARKAR, SR. ADVOCATE WITH MR. RAJESH SHARMA,
ADVOCATE WITH MR GAURAV S MATHUR, ADVOCATE for the Petitioner
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CORAM: HONOURABLE MR.JUSTICE S.R.BRAHMBHATT
and
HONOURABLE MR.JUSTICE A.G.URAIZEE
Date : 30/06/2017
COMMON ORAL ORDER
(PER : HONOURABLE MR.JUSTICE S.R.BRAHMBHATT)
1. These matters were mentioned in the morning for urgent circulation today itself, as the notification dated 3.7.2012 enuring for anti-dumping duty on the product in question was expiring on 2.7.2017 and the entire exercise undertaken by the concerned authorities for mid-term review and sun-set review for continuing the anti-dumping duty for safe guarding the Indian industry engaged in manufacturing the product would have been of no avail at all. Hence, the permission as sought for is granted and matters Page 1 of 10 HC-NIC Page 1 of 10 Created On Fri Jun 30 23:50:32 IST 2017 C/SCA/12249/2017 ORDER were taken up today.
2. The counsel for the petitioners submitted that as per the order of this Court, the mid-term review has in fact been undertaken and the disclosure statement dated 7.5.2017 has already been published. This statement of disclosure contains prima-facie findings going in favour of continuing anti-dumping duty. They read as under:
"Examination by the Authority
87. The Authority examined the likelihood of continuation or recurrence of injury consiering the parameters relating to the threat of material injury in terms of Annexure II (vii) of the Rules as per the directions of the Hon'ble High Court of Gujarat. The Hon'ble High Court, inter alia, has observed as under :
Thus, though most of the factos which are required to be taken into consideration for the purpsoe of determination of injury, namely, increase in volume, increase in dumping, increase in margin of dumping and price undercutting are all positive and only price suppression and price depression are absent, the designated authoirty, instead of relying upon the said factors for the purpose of basing his decision as to whether or not to continue with the determinative measures, has plaed reliance upon an irrelevant factor, viz., injury margin, which is not required to be taken into consideration while considering the likelihood aspect under clause (vii) of Annexure II to the rules. Clause (vii) of Annexure II to the rules provides for four factors which are required to be taken into consideration, viz. : (a) a significant rate of increase of dumped imports into India Page 2 of 10 HC-NIC Page 2 of 10 Created On Fri Jun 30 23:50:32 IST 2017 C/SCA/12249/2017 ORDER 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, 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.
Out of the above four factors, the designated authority has taken into consideration the factors prescribed under subclauses (a) and
(c). However, insofar as sub-clause (c) is concerned, the designated authority has placed reliance upon incorrect facts, namely, though the price undercutting is positive, it has considered the same to be negative and drawn its conclusions accordingly.
Insofar as the factors prescribed under sub- clauses (b) and (d) of clause (vii) of Annexure II to the rules are concerned, it, however, has been contended on behalf of the respondents that the designated authority has also considered those factors. In this regard, a perusal of the disclousre statement shows that while the designated authority has taken into consideration the above two factors, it is manifest that while doing so, it has taken into consideration incorrect facts, inasmuch as, instead of considering the capacity of production of the exporters indicating the likelihood of substantially increased dumped exports to Indian markets, as contemplated under sub-clause (b), it has taken into consideration the capacity of production of the domestic industry; and instead of taking into consideration the existene of inventories of the dumped imports that could meet any increase or future demand for the imports, has taken into consideration the inventories Page 3 of 10 HC-NIC Page 3 of 10 Created On Fri Jun 30 23:50:32 IST 2017 C/SCA/12249/2017 ORDER of the domestic industry. Evidently, therefore, the designated authority has failed to follow the procedure laid down under clause (vii) of Annexure-II to the rules for the purpose of determination of threat of material injury in the manner prescribed thereunder.
88. The Hon'ble Court further observed that:
Thus, the designated authority has based its findings on essential facts based upon the "injury margin" and "price underselling" as well as the fact that price undercutting is negative. As noted hereinabove, insofar as the injury margin and price underselling are concerned, the same are not relevant factors at the stage of examination of likelihood of injury in a disclosure statement. The designated authority was, therefore, not justified in placing reliance upon factors like "injury margin" and the "price underselling" while considering the question of likelihood of injury to the domestic industry in case of revocation of duties.
89. In view of the above, while considering the likelihood aspect, under clause (vii) of Annexure -II to the Rules the authority considered inter-alia following factors:
"90. present and continued imports The Authority has undertaken analysis of the volume of exports of the subject goods to India from the subject country during the injury period and post-POI period as well. The Authority notes that the volume of the exports from subject countries to India during the injury period and post POI on the basis of DGCI&S date shows increase in imports from 0.329 million MT to 0.694 million MT, as evident from the Page 4 of 10 HC-NIC Page 4 of 10 Created On Fri Jun 30 23:50:32 IST 2017 C/SCA/12249/2017 ORDER table above. This enhanced import is taking place at dumped prices since the dumping margin is positive during the post POI as well.
The Authority further notes that the market share of the dumped imports has increased over the injury period and the quantum of dumped import has increased further during the post POI. The market share of some the subject countries has declined whereas the same has increased for some of the subject countries, thereby indicating inter-se substitution of dumped imports from one source with the dumped imports from other dumped sources.
91.Surplus Capacities This parameter for ascertaining the threat of material injury requires evaluation of existing surplus capacities and capacity addition, if any, to explore the possibility of diversion of disposable quantity to Indian market. Domestic industry has claimed that the producers in subject countries are already faced with significant surplus capacities. Further, these producers are exporting the product to a large number of countries, a very significant proportion of which is being exported at a price below the prices in respect of India, thus showing likelihood of diversion of these exports to India in the vent of withdrawal of Anti- Dumping duty. While none of the interested parties have provided any verifiable evidence and information with regard to existing surplus capacities, and consequent likelihood/possibility of increased dumped exports to Indian Market the domestic industry has furnished copies of I H S Chemical journal which provides significant information regarding Soda Ash Manufacturing in the subject countries viz. existing capacity, existing production, unutilized capacity Page 5 of 10 HC-NIC Page 5 of 10 Created On Fri Jun 30 23:50:32 IST 2017 C/SCA/12249/2017 ORDER and capacity expansion etc. As would be obvious from the table below that against Indian demand of approx. 3 million MT, the unutilized capacity in the subject countries is approx. 9.26 million MR(300.90% of demand in India) and capacity expansion (undertaken already as well as upcoming) is to the extent of 4.55 million MT(147.71% of demand in India).
The Authority further notes that the interested parties have not established absence of sufficient freely disposable, or substantial increase in capacity with the exporters in subject countries."xxxxxxx
92. Present and Continued Dumping Price undercutting without anti-dumping duty is positive and significant for all subject countries as a whole. The domestic industry contended that the Authority should determine price undercutting after including freight costs. The price undercutting was determined at the time of original investigations without adding freight and present investigation being only a midterm review of existing ADD, it would be appropriate to determine price undercutting without adding freight.
However, given positive price undercutting, the applicant and other interested parties have not established that if anti-dumping duties are withdrawn at this stage; the imports would cause significant price undercutting and would not lead to significant suppressing and depressing effect on the prices in the market. The Authority also notes that the domestic industry has heavily contended that exports from a number of subject countries are at a price materially below export price to India. Therefore, if the price undercutting is positive and significant even considering the present export price, the price undercutting would Page 6 of 10 HC-NIC Page 6 of 10 Created On Fri Jun 30 23:50:32 IST 2017 C/SCA/12249/2017 ORDER be further positive and significant, if these third countries lower export prices are considered. Volume of Exports to third countries which were at price lower than export price to India- is 2.23 Million MT amounting to 72.42% of existing demand in India.
93. Level of inventories The level of inventories available with the producers in subject countries could not be ascertained in view of lack of sufficient cooperation. The applicant and interested parties have however not established that volume of imports would not significantly increase in the event of withdrawal of ADD.
94. Export Orientation-
Export orientation of all subject countries as a whole comes to 22% for USA, the export orientation is as high as 56%.
Price attractiveness of Indian market
95. The Authority notes that the landed value of imports from the subject countries as a whole is lower than selling price of the domestic industry thus showing positive price undercutting during POI as well as post POI. Further WTA (World Trade Atlas) data establishes that exports from subject countries to a number of other countries have been found at a price lower than the export price from these countries to India. The volume of such exports is 2.23 Million MT amounting to 72.42% of existing demand in India. Thus, in the event of the revocation of anti-dumping duties, the Indian market would be price attractive to the foreign producers.
96. Level of current and post POI dumping margin The Authority notes that dumping margin in the original investigation as well as the present MTR are positive and the dumping Page 7 of 10 HC-NIC Page 7 of 10 Created On Fri Jun 30 23:50:32 IST 2017 C/SCA/12249/2017 ORDER margin in the post POI of the present investigation is also positive. Thus, in the event of revocation of the anti-dumping duties, in most likelihood, dumping may continue and may also get intensified."
The counsel for the petitioner further submitted that during pendency of consideration on disclosure statement released pursuant to mid-term review ( hereinafter referrd to as "MTR" ), the authorities have also undertaken exercise of sun-set review. The earlier notification for anti-dumping duties dated 3.7.2012 was to expire on 2.7.2017, which if lapsed without either extension or reimposing of anti- dumping duty by way of notification, would have ended the protective umbrella available to the indigent industries. Therefore, the sun-set review for continuing anti-dumping duty or otherwise is undertaken as per notification dated 16.6.2017, copy whereof is produced at page-247.
In case if the exercise of sun-set review continues beyond 2.7.2017, then the earlier notification dated 3.7.2012 would lapse. However, as per the (ii) proviso to Section 9 (A)(5) of Customs Tariff (Identification, Assessment and Collection of Anti-Dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995; it is open to the Government of India to issue the notification extending the anti-dumping duty for further period of 1 year or part thereof so as to prevent lapsing of the anti-dumping duty notification leaving the indigent industry in lurch.
3. As the Sun-set Review had began as per the notification dated 16.6.2017 and as the anti-dumping duty earlier notification dated 2.7.2012 was to lapse on 2.7.2017, the petitioners of one of petition Page 8 of 10 HC-NIC Page 8 of 10 Created On Fri Jun 30 23:50:32 IST 2017 C/SCA/12249/2017 ORDER being SCA No. 12249 of 2017 made representation, copy whereof is produced at page nos. 252 and 253 to authorities to exercise power under proviso (ii) to Section 9(A)(5) so the interest of indigent industry may not be jeopardize.
4. On perusal of the findings recorded in the disclosure statement pursuant to mid-term review, we are of the prima-facie view that those findings were going in favour of the justification for imposing or continuing anti-dumping duty which in-vogue pursuant to notification dated 3.7.2012.
5. The Court, therefore, requested learned ASG Shri Devang Vyas to take instructions from the concerned in respect of the prayers made in these petitions and attending urgency for taking prompt action.
6. Shri Vyas, learned ASG accordingly received instructions and as per the instructions, he submitted that most probably the petitioners grievances may not survive. However, he was not in a position to make any positive concrete statement in view of lack of any written instructions to him. Hence, we are of the view that let learned ASG receives copy of these petitions so that he may obtain appropriate instructions without any undue delay to see to it that entire exercise of mid-term review and sun-set review may not leave the indigent industries hie and dry and may continue enjoying the protection which enures to them under the earlier notification dated 3.7.2012 and the Government of India may issue appropriate notification of extension of anti-dumping duty in exercise of powers in terms of
(ii) proviso to Section 9(A)(5).
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7. Hence we issue notice, returnable on 3.7.2017 with a liberty to all the concerned to approach the Court even prior to the next date of hearing i.e. 3.7.2017 in case of difficulty so that appropriate orders can be passed. Mr. Vyas, learned ASG waives service of notice on behalf of respondent No. 1.
8. Direct service permitted today.
(S.R.BRAHMBHATT, J.) (A.G.URAIZEE,J) pallav Page 10 of 10 HC-NIC Page 10 of 10 Created On Fri Jun 30 23:50:32 IST 2017