Rajasthan High Court - Jodhpur
Acme Solar Holding Ltd vs Union Of India on 13 September, 2019
Bench: S. Ravindra Bhat, Ashok Kumar Gaur
(1 of 18) [CW-13592/2019]
HIGH COURT OF JUDICATURE FOR RAJASTHAN
JODHPUR
D.B. Civil Writ Petition No. 13592/2019
Acme Solar Holding Ltd.
----Petitioner
Versus
Union Of India & Ors.
----Respondents
Connected With
D.B. Civil Writ Petition No. 12257/2019
Acme Solar Holding Ltd.
----Petitioner
Versus
Union Of India & Ors.
----Respondents
For Petitioner(s) : Mr.Darius Shroff, Senior Advocate with
Mr.Vinay Kothari
Ms.Faranaaz Karbhvi
For Respondent(s) : Mr.Rajvendra Saraswat
Mr.Darpan Bhuyan for respondent No.6
HON'BLE THE CHIEF JUSTICE S. RAVINDRA BHAT
HON'BLE MR. JUSTICE ASHOK KUMAR GAUR
Order Reportable 13/09/2019
1. The present Writ Petition (No.13592/2019) was listed on 12.9.2019, when this court was informed that a similar Civil Writ Petition No. 12257/2019 was pending - filed by the present petitioner on the same issue- in which notice was issued and interim order was made on 29.8.2019. In these circumstances, with the consent of the parties, Civil Writ Petition No. 12257/2019 was also directed to be listed today.
2. Issue notice in Writ Petition No.13592/2019. Mr. Saraswat accepts notice on behalf of respondents No.1 to 5. Mr. Darpan Bhuyan accepts notice on behalf of respondent no.6-M/s Jupiter (Downloaded on 15/09/2019 at 08:50:07 PM) (2 of 18) [CW-13592/2019] Solar Power Ltd. (hereafter referred to as the "domestic industry"). Counsel for the parties were heard on the question of grant of interim relief, which the petitioner seeks which is to clear goods imported without payment of safeguard duty.
3. The petitioner challenges a final notification issued on 16.7.2018 by the Director General of Trade Remedies (hereafter referred to as "final findings") recommending the levy of safeguard duty at the rates specified therein. These findings become embodied in notification No.01/2018-Customs (SG) dated 30.7.2018 (hereafter referred to as "impugned notification") which levied safeguard duty at the rates prescribed in regard to the import of solar cells whether or not assembled in modules or panels (hereafter referred to as "the goods").
4. The relevant facts relating to the culmination of the final findings and the imposition of safeguard duty are that at the behest of the domestic industry, investigation was launched for the period 2014-15 to 2017-18, regarding the need to initiate proceedings for the levy of safeguard duty under Section 8B of the Customs Tariff Act, 1975 (hereafter "CTA" or "the Act"). Under Section 8B of the Act the Central Government after enquiry and upon recording a satisfaction that any article imported into India "in such increased quantities and under such conditions so as to cause or threatening to cause serious injury to domestic industry"
can impose safeguard duty. The initiation of proceedings meant issuance of notice and hearing necessary parties. This resulted in the publication of preliminary findings on 5.1.2018.
5. The petitioner, which imports the goods, had after the issuance of the preliminary findings, successfully bid for supply of the goods for the purpose of solar power generation pursuant to a (Downloaded on 15/09/2019 at 08:50:07 PM) (3 of 18) [CW-13592/2019] tender issued by the Maharashtra State Electricity Distribution Company Limited (hereafter "MSEDCL"). It therefore participated in the proceedings and filed its objections to the proposal to impose safeguard duty. On 5.6.2018 the petitioner was declared a successful bidder for development of solar power project of 250 MW capacity at Jodhpur for sale to MSEDCL. On 16.7.2018 i.e. after the petitioner had participated in the proceedings before the Directorate General, the final findings were rendered, recommending imposition of safeguard duty. The notification, imposing safeguard duty, was issued thereafter, on 30-07-2018.
6. It is highlighted that the petitioner had approached the Orissa High Court in regard to the supply of the product complaining that the safeguard duty was arbitrary; apparently operation of the final findings was stayed by that High Court. The interim order granted by the Orissa High Court was however carried in appeal by the respondents. The Supreme Court stayed the order of the High Court and also stayed the proceedings.
7. Mr. Darius Shroff, learned senior counsel for the petitioner argued that safeguard duty is contrary to the applicable principles and the norms governing the determination of injury and consideration of all other factors set out in the Act as well as Rule 8 of the Rules of 1997; especially Para-1 of the Annexure to the said rules. Arguing that the final findings and the consequent notification imposing the safeguard duty levy are unsustainable in regard to specific contracts and consignments, the writ petitioner approached the Andhra Pradesh High Court and, later, the Bombay High Court- (in the latter case both in the Nagpur Bench and the Principal Seat at Bombay). Learned counsel urged that in all these cases consistently the High Courts granted relief to the extent that (Downloaded on 15/09/2019 at 08:50:07 PM) (4 of 18) [CW-13592/2019] consignments were permitted to be cleared upon payment of 50% of the demand towards safeguard duty and the balance through bank guarantee. It is submitted that a similar approach too should be adopted in this case. It is submitted that in the earlier writ petition (i.e. D.B. Civil Writ Petition No. 12257/2019), a Division Bench of this Court has adopted the same approach and granted interim relief to the same extent.
8. The learned Senior Counsel for the writ petitioner submitted that the conclusion of the second respondent (hereafter "DG") that serious injury was caused to the domestic industry because of large amount of imports from China and Malaysia, is manifestly unreasonable and contrary to the record. It is pointed out that the DG failed to evaluate all relevant factors of objective and quantifiable nature, having regard to the Customs Tariff (Identification and Assessment of Safeguard Duty) Rules, 1997 (hereinafter referred to as "the Rules"). It was argued that the evaluation failed to notice that the Central Government's policy increased the target of solar power generation in the country from 20 GW to 100 GW in 2022 by five times. To achieve such a target, various organizations had bid to establish solar power generating units. The policy resulted in a huge demand for solar cells and panels. It was argued that materials on record- in the form of figures collected in the impugned final findings disclosed that even if the domestic industry (which has now attained 85% production capacity of the installed machinery) works at full capacity yet it cannot meet more than 4% of the total demand.
9. Learned Senior Counsel highlighted that despite the restrictive conditions which had prevailed for four years (2012 to 2016) in the form of a "DCR", which required foreign suppliers to (Downloaded on 15/09/2019 at 08:50:07 PM) (5 of 18) [CW-13592/2019] source indigenous material wherever available, the domestic industry could not increase production to match the demand.
10. It was also argued that the DG considered only the increase in import during the period in consideration without questioning the reasons why there was such increase. This change, it is submitted, was on account of change in the Government policy, the Central Government's commitment in the Paris Agreement to use clean energy and policy of the DLR. It is submitted that in terms of clause (1) of the Annexure to the Rules the relevant and objective considerations to be taken note are the rate and amount of increase in imports of the article concerned in absolute and relevant terms; the share of the domestic market taken by increased imports and changes in the level of sales, production, productivity, capacity utilization, profits and losses and employment.
11. Mr. Shroff, learned Senior Counsel highlighted that the DG failed to consider the factors in the increase in import in absolute terms; similarly no realistic assessment of the profitability of the domestic industry which were represented was undertaken. It was pointed out that all figures showed that capacity utilization had increased yet domestic demand far exceeding the ability of domestic suppliers to cater to it.
12. It is submitted that the DG did not deal with why there was a sudden increase in imports but instead, jumped to conclusions with regard to the restrictions imposed by the European Union (EU) and the USA upon Chinese suppliers and deduced erroneously that Chinese suppliers turned their gaze towards India. It was highlighted that there was no consideration as to what were the reasons for the sudden increase in imports. Counsel (Downloaded on 15/09/2019 at 08:50:07 PM) (6 of 18) [CW-13592/2019] stated that the reason was that the domestic industry was unable to cope with the demand. It was pointed out that the domestic sales of the Indian producers increased by 143 MW in 2014-15 to 785 MW in 2017-18. The demand on the other hand for the relative period, was 1419 MW in 2014-15 as against 10618 in 2017-18. It was argued that the DG held, without basis that the increase in the production capacity of China and imposition of trade remedy measures by the EU and USA on imports from China was unforeseen developments that led to the increase of imports. Such a finding is illogical and flawed and failed to take into consideration the fact that India had committed to achieving solar power of 100 GW by the year 2022 and that this was announced on 1.7.2015. In order to achieve this objective, there was a considerable increase in the number of power projects set up from 6 bids in 2013-14 to 17 bids in the year 2015 and it was this increase that led to the increase in demand. However, the domestic industry could not match this demand. Therefore, the demand had to be met through imports. The increase in imports was therefore due to an increase in demand caused by the policies adopted by Government and cannot be linked to the production capacity of China and the failure of the DI to ramp up capacity during the DCR. He has also only considered the relative terms and not the absolute terms which is mandatory.
13. Mr. Saraswat, appearing for the respondents, urged that this court should not entertain this petition, as it is speculative. Highlighting that the petitioners first approached the Orissa High Court, which granted a blanket stay of the final findings, (which led to intervention by the Supreme Court, and subsequent stay of proceedings before that High Court) counsel argued that the (Downloaded on 15/09/2019 at 08:50:07 PM) (7 of 18) [CW-13592/2019] orders were sought from different High Courts. It was submitted that a plain reading of the orders made by the High Courts of Bombay and Andhra would show that they were unreasoned, and made only on the basis of the petitioners' submission, without recording the prima facie strength of the case, or the balance of convenience. It was argued that the imposition of safeguard duty is after an elaborate inquiry and grant of adequate opportunity to parties likely to be affected. Judicial review, in such cases has to be exercised sparingly, to intervene in such fiscal determinations by expert bodies.
14. Learned counsel urged that this Court has extremely narrow jurisdiction under Article 226 given that unlike in the case of anti dumping, party aggrieved has not been consciously granted statutory appeal. It was pointed out that the liability i.e. 25% safeguard duty is in-fact diminishing in the present case; after one year, the duty is lowered to 20% for six months and further lowered to 15% for the last six months. Learned counsel urges that all these aspects as well as the contractual terms with respect to potential loss being compensated under the "change of law"
condition was not considered in any proceeding.
15. It was argued that the grant of relief would result in serious adverse repercussions to the domestic industry which is already facing severe downturn on account of vastly increased imports that would compel them to lower prices merely to stay in the market. The very object of imposition of safeguard duty, it was submitted would be undercut if interim orders are granted. Counsel also submitted that in somewhat similar circumstances, the Gujarat High Court, in its judgment dated 7.5.2019 in Jupiter Solar Power Limited V/s Union of India (Civil Application (For (Downloaded on 15/09/2019 at 08:50:07 PM) (8 of 18) [CW-13592/2019] Vacating Interim Relief) No.2/2019 in R/Special Civil Application No.20957/2018) vacated an interim order suspending full payment of safeguard duty and had, instead granted the facility of paying 50% of the duty and the balance through bank guarantee. It was submitted that this aspect has been suppressed from this court.
16. The relevant provisions of the Act are as follows:
"SECTION 8B. Power of Central Government to impose safeguard duty. -- (1) If the Central Government, after conducting such enquiry as it deems fit, is satisfied that any article is imported into India in such increased quantities and under such conditions so as to cause or threatening to cause serious injury to domestic industry, then, it may, by notification in the Official Gazette, impose a safeguard duty on that article :
Provided that no such duty shall be imposed on an article originating from a developing country so long as the share of imports of that article from that country does not exceed three per cent or where the article is originating from more than one developing countries, then, so long as the aggregate of the imports from developing Countries each with less than three per cent. import share taken together does not exceed nine per cent of the total imports of that article into India :
Provided further that the Central Government may, by notification in the Official Gazette, exempt such quantity of any article as it may specify in the notification, when imported from any country or territory into India, from payment of the whole or part of the safeguard duty leviable thereon."
17. The Rules, to the extent they are relevant, state as follows:
"8. Determination of serious injury or threat of serious injury. -
The Director General shall determine serious injury or threat of serious injury to the domestic industry taking into ac- count, inter alia, the principles laid down in Annex to these rules.
9. Preliminary findings. -
(1) The Director General shall proceed expeditiously with the conduct of the investigation and in critical circumstances, he may record a preliminary findings regarding serious injury or threat of serious injury.
(2) The Director General shall issue a public notice regard -
ing his preliminary findings.
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(9 of 18) [CW-13592/2019] (3) The Director General shall send a copy of the public no - tice to the Central Government in the Ministry of Commerce and in the Ministry of Finance.
10. Levy of provisional duty. -
The Central Government may in accordance with the provi- sions of sub-section (2) of section 8B of the Act, impose a provisional duty on the basis of the preliminary findings of the Director General :
Provided that such duty shall remain in force only for a pe- riod not exceeding two hundred days from the date on which it was imposed.
11. Final findings. -
(1) The Director General shall, within 8 months from the date of initiation of the investigation or within such extended period as the Central Government may allow, determine whether, -
(a) the increased imports of the article under investiga- tion has caused or threatened to cause serious injury to the domestic industry, and
(b) a causal link exists between the increased imports and serious injury or threat of serious injury. (2) The Director General shall also give its recommendation regarding amount of duty which, if levied, would be ade- quate to prevent or remedy serious injury and to facilitate positive adjustment.
(3) The Director General shall also make his recommenda - tions regarding the duration of levy of duty :
Provided that where the period recommended is more than one year, the Director General shall also recommend pro- gressive liberalisation adequate to facilitate positive adjust- ment.
(4) The final findings if affirmative, shall contain all infor -
mation on the matter of facts and law and reasons which have led to the conclusion.
(5) The Director General shall issue a public notice record - ing his final findings.
(6) The Director General shall send a copy of the public no - tice regarding his final findings to the Central Government in the Ministry of Commerce and in the Ministry of Finance.
*********** ************
ANNEXURE
(See Rule 8 )
(1) In the investigation to determine whether increased im - ports have caused or are threatening to cause serious injury to a domestic industry, the Director General shall evaluate all relevant factors of an objective and quantifiable nature having a bearing on the situation of that industry, in particu- lar, the rate and amount of the increase in imports of the ar- ticle concerned in absolute and relative terms, the share of the domestic market taken by increased imports, changes in (Downloaded on 15/09/2019 at 08:50:07 PM) (10 of 18) [CW-13592/2019] the level of sales, production, productivity, capacity utiliza- tion, profits and losses, and employment.
(2) The determination referred to in paragraph (1) shall not be made unless the investigation demonstrates, on the basis of objective evidence, the existence of the causal link be- tween increased imports of the article concerned and serious injury or threat thereof. When factors other than increased imports are causing injury to the domestic industry at the same time, such injury shall not be attributed to increased imports. In such a cases, the Director General may refer the complaint to the authority for anti-dumping or countervailing duty investigations, as appropriate."
18. As is discernible from the above narration what the petitioner challenges is the imposition of safeguard duty on the product. Duty imposition was preceded by an application filed on behalf of domestic industry. The investigation conducted covered the period 2014-15 to 2017-18. In January, 2018, the preliminary findings were recorded. In fact, the preliminary findings had recommended imposition of 70% safeguard duty. After the findings were recorded, comments and objections of the interested parties were sought. Interestingly, the petitioner had participated in the pro- ceedings which culminated in the final findings. This is a signifi- cant aspect because the likely prospect as to imposition of safe- guard duty (at the point in time when the petitioner participated in the bid (which opened in April, 2019) in which it was ultimately successful- in June, 2019) was known to it. This aspect, in the opinion of the Court, is important because the petitioner was well aware that imposition of safeguard duty was likely- even the pre- liminary findings had been announced on 5.1.2018.
19. The petitioner's argument that relevant factors and considerations were not taken into account and that wholly irrelevant factors weighed with the DG while recommending safeguard duty, in the opinion of the Court, cannot be accepted. (Downloaded on 15/09/2019 at 08:50:07 PM)
(11 of 18) [CW-13592/2019] The final findings dealt with the objections of all parties (including the petitioner). The petitioner's objections to the preliminary findings are recorded in extenso (para 14 (ix) (a) to (v) of the final findings).
20. The DG's final findings recorded elaborate reasons from para-45 onwards after analyzing the rival contentions that India had committed to address global warming and consequently set a target of achieving 100 GW through solar power by 2022, an aspect which pushed up the demand of solar power generation projects. At the same time, the DG noticed that imports of the product took place at a very low price. Per watt cost of cells had diminished significantly from ₹ 18.96 (in 2014-15) to ₹ 13.61 (in 2017-18). Solar modules likewise came down from ₹ 36.18 per unit to ₹ 22.63 per unit for the same period. It was further noticed that the market share of the domestic sale which stood at 10% in 2014-15 had dipped as much low as 4% in 2015-16 and remained stable in the last year 2017-2018. The domestic demand correspondingly had increased from 1419 MW to 10618 MW.
21. The observations in para 49(2), in the opinion of the Court belies the submission made that the sales were not taken into account in terms of absolute figures. The Director General took note of the fact that domestic sales increased from 115 MW to 314 MW; however, correspondingly imports also increased by 8558 MW. Domestic capacity utilization too had increased from 48 to 85%.
22. Having regard to the above background, the Director General in the final findings noticed as follows:-
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(12 of 18) [CW-13592/2019] "(viii) Inventory: The inventory carried by the DI increased by more than 2 times during the POI, as indicated in the table below.
Particulars 2014-15 2015-16 2016-17 2017-18 (upto Sept. 2017) Closing 100 114 243 251 Inventory (Indexed)
(ix) Price Undercutting: There was a significant price undercutting by the imported goods throughout the POI, as borne out from the table below. It is evident that the high level of price undercutting prevented the DI from increasing their prices as a result of which they suffered losses.
2017-18 2017-18
Particulars Unit 2014-15 2015-16 2016-17 (April- (Oct.-March-
Sept.2017) 2018)
Landed value of imports
Solar Cells Rs./Watt 18.96 18.99 15.58 13.61 13.96
Solar
Rs./Watt 36.18 36.53 29.49 22.63 22.96
Modules
Net Sales realisation of Domestic Industry
Solar Cells
Rs./Watt 100 87 82 60 48
(Indexed)
Price Undercutting
Solar Cells
Rs./Watt 100 61 83 36 4
(Indexed)
23. The conclusions of the Director General are as follows:-
"75. On the basis of the above examination and analysis, it is concluded that:
i. There has been a significant increase in imports of the PUC in absolute terms as well as in relation to total Indian domestic production over the entire POI.
ii. The domestic industry has suffered serious injury, considering overall performance, on the basis of listed economic parameters such as market share and profitability, which have sharply declined over the injury period 2014-2015 to 2017-2018 (Annualised) whereas market share of imports have increased during the same period. This has caused significant overall impairment to the domestic industry. The rise in imports and coinciding serious injury caused to the domestic industry during the injury period, establishes causality.
iii. The domestic industry has been able to demonstrate that the developments in the market on surge in imports of the PUC were unforeseen in the context of Article XIX of GATT. iv. There will be some impact on the Solar Power Developers and also ultimate consumer as a result of safeguard duty on the PUC.
v. It is however concluded that imposition of safeguard duty in this case would be in public interest because it will prevent complete erosion of manufacturing base of Solar industry in the country which is upcoming and holds promise for a stronger manufacturing base in the country in future, at the same time, it is also in the public interest, to prevent undue escalation of Solar power cost, tariff to the final customer and that attainment of the target of 100 GW of Solar Power (Downloaded on 15/09/2019 at 08:50:07 PM) (13 of 18) [CW-13592/2019] Deployment by 2022 is not derailed. The consideration of two competing interests require a balanced view. vi. From the analysis of post POI data, it has been observed that the position of domestic industry further deteriorated on account of continued low price of import of PUC which continued price injury to the domestic industry, thereby establishing the threat of injury as well."
24. It is evident from the above extracts and discussions that the Director General took note of various relevant facts. At this stage it would be necessary to notice that in terms of Rule 8B of the Rules the Director General has to mandatorily determine serious injury or threat of serious injury to the domestic industry taking into account the principles laid down in the annexure to the Rules. Annexure to the Rules inter-alia state that in the investigation to determine whether increase imports have caused or threatening to cause injury to a domestic industry, the Director General has to "evaluate all relevant factors of objective and quantifiable nature having a bearing on the situation of that industry, in particular the rate and amount of the increase in imports of the article concerned in absolute and relative terms, the share of the domestic market taken by the increased imports, changes in the level of sales, production, productivity, capacity utilization, profits and losses and employment".
25. In the opinion of this Court, on a prima facie reading of the elaborate findings, all relevant factors which the Director General had to take into account, were indeed considered when the impugned final findings were issued.
26. This Court is of the opinion that apart from the above facts, what is also important is that the power purchase agreement entered into between MSEDCL and the petitioner on 27 th of July, 2018, i.e. after the final findings were rendered clearly provided under the change of law clause (Article 9.1) that if there is any change in the rates of tax, duties, cess etc. which have a direct (Downloaded on 15/09/2019 at 08:50:07 PM) (14 of 18) [CW-13592/2019] effect on the project, they would be taken into consideration. Article 9.2.1 in fact compensates the power producers (i.e. the petitioner) in the following terms:-
"9.2.1 In the event a Change in Law results in any adverse financial loss/ gain to the Power Producer then, in order to ensure that the Power Producer is placed in the same financial position as it would have been had it not been for the occurrence of the Change in Law, the Power Producer/ Procurer shall be entitled to compensation by the other party, as the case may be, subject to the condition that the quantum and mechanism of compensation payment shall be determined and shall be effective from such date as may be decided by the MERC."
Therefore, it is evident that the petitioner would not be prejudiced, because it has negotiated a condition that the impact of the levy is not borne by it. Furthermore, this court also notices that being an indirect tax, the levy is borne by the ultimate consumer; the petitioner, as supplier would factor in the tax impact in the cost.
27. This Court is unpersuaded with the submission that the Bom- bay High Court and its Nagpur Bench granted interim relief or that the Andhra Pradesh High Court granted certain interim relief whereby a facility of clearing goods by only paying 50% duty was granted- balance was to be secured by bank guarantee. A careful reading of those orders reveal that the concerned High Court, with respect did not choose to adduce any reason, but took into consid- eration, solely the impact of the safeguard duty. No consideration about the prima facie strength of the petitioner's arguments, or how the balance of convenience was in its favour, has been recorded in those orders.
28. This aspect and the other relevant aspects were considered by the Gujarat High Court in Jupiter Solar Power Ltd. (supra) where the Court while vacating the previously granted interim order inter-alia observed as follows:
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(15 of 18) [CW-13592/2019] "18. Thus, the Director General after considering the material on record has recorded a categorical finding that the two applicant units meet with the requirement of major share of Indian industry. At this stage of considering the question of confirmation or vacation of the interim relief, the issue need not be gone into in detail. However, having regard to the above findings recorded by the Director General, prima facie, at this stage, without a detailed inquiry, it cannot be said that the applicants before the Director General do not meet with the requirements of domestic industry as contemplated under section 8B(6)(b) of the Customs Tariff Act.
19. As regards the other contentions raised by the learned counsel for the respective parties, reference may be made to the final findings recorded by the Director General. While it is true that from the record, it emerges that the capacity utilisation has increased from 48% in 2014-15 to 85% in 2017-18, and the domestic sales have also increased from 115 MW in 2014-15 to 314 in 2017-18 and the production of the domestic industry has increased from 141 MW in 2014-15 to 318 in 2017-18 (annualized), it is equally true that the volume of the imports has grown from 1275 MW in 2014-15 to 9833 in 2017-18 (annualized) that is an increase of 671% in comparison to the production of the domestic industry which has increased by 126% during the same period. Moreover, though the total sales of the domestic industry have increased, the percentage of sales has decreased from 8% to 3%. Though the capacity utilisation has increased, the Director General has recorded that when compared with the growth in demand which increased to 10618 MW in 2017-18, the domestic industry's total capacity should have got utilised. The capacity remaining below 100% even in such enhanced demand indicates a clear preference for the imported product under consideration.
20. The Director General has further found that the profitability per watt was severely impacted during April 2017 - September 2017 period as compared to the previous year and even the base year of injury period. He has also found that the inventory carried by the domestic industry increased by more than two times during the period of investigation and that there was a significant price undercutting by the imported goods throughout the POI and that it was evident that the high level of price undercutting prevented the domestic industry from increasing their prices as a result of which they suffered losses. The Director General has further found that the continued price undercutting has finally led to a situation where the domestic industry is not able to raise prices above the landed value and that the threat of serious injury is established. In paragraph 52 of the final findings, the Director General has recorded the factors relevant in regard to determining the cause and effect relationship of increased imports and the serious injury during the POI and the threat of serious injury in the future to domestic industry, wherein it has been inter alia recorded that the imports have increased significantly in absolute terms; the market share of imports has increased and consequently the market share of domestic industry had declined:
the imports are available at prices lower than the selling price of the domestic industry and are also decreasing over the time, the consumers are switching over to the imported PUC with the effect (Downloaded on 15/09/2019 at 08:50:07 PM) (16 of 18) [CW-13592/2019] that the domestic industry are unable to not only sustain their prices but also have to face rising inventories (of the PUC); another impact of the increased imports at low prices is that the domestic industry are unable to increase their production and sales as compared to the rate of increase in demand/consumption of the PUC in India; though the Indian industry including the domestic industry established capacities to contribute towards meeting the growing demand for the PUC, the substantially increased imports at consistently reducing landed prices have led to idle production capacities, falling sales realization etc; and the domestic industry is incurring significant losses. Thus, the contention of the learned counsel for the petitioner that the condition of the domestic industry has improved without protection, prima facie does not appear to be correct.
21. Insofar as the unforeseen circumstances are concerned, the Director General has recorded that India could not have expected that both EU and the United States would simultaneously levy trade remedy measures against China and certain other countries which would also coincide with the increase in demand due to commitments undertaken under COP21 (Paris Agreement). The Director General has further recorded that the surge in imports at consistently falling landed price changed the competitive relationship between imports and domestic production, to the disadvantage of the latter. This has hampered the domestic industry's ability to compete and make and sell the PUC and that it is but evident that this change in the competitive relationship was entirely unforeseen.
22. Thus, the Director General (Safeguard) has examined all the relevant parameters and has given his findings thereon. The Director General has found that domestic industry suffered serious injury during the POI and that there is threat of serious injury in future to the domestic industry.
23. In paragraph 63 of the final findings, the Director General has evaluated the impact of safeguard measure comprehensively on various stakeholders like (i) the domestic producers of solar cells,
(ii) the domestic manufacturers of solar modules who do not manufacture cells themselves and rely upon domestic and imported cells, and (iii) the power developers and (iv) the consumer of electricity who may bear the brunt of safeguard measures in form of increased electricity tariff. Thus, from the facts as emerging from the record it is clear that the Director General has considered all relevant parameters in the final findings. As to whether such findings are justified having regard to the material on record, would be required to be gone into at the stage of final hearing of the petition.
24. Insofar as the question of balance of convenience is concerned, if the petitioner continues to make imports by simply executing a bond, the operation of the final findings in effect and substance remain stayed and the domestic industry does not get any benefit under the impugned notification and final findings. In the opinion of this court, when the Director General (Safeguard) has found that the domestic industry has suffered injury and also faces threat of serious injury, if the ad interim relief granted earlier is continued, the domestic industry would continue to suffer such injury and may collapse under the impact of the onslaught of imports. On the other hand, insofar as the importers (Downloaded on 15/09/2019 at 08:50:07 PM) (17 of 18) [CW-13592/2019] are concerned, the Government of India in the Ministry of Power by a communication dated 27.8.2018 addressed to the Chairperson of the Central Electricity Regulatory Commission has directed thus:-
"(a) Any change in domestic duties, levies, cess and taxes imposed by Central Government, State Governments/Union Territories or by any Government instrumentality leading to corresponding changes in the cost, may be treated as "Change in Law" and may unless provided otherwise in the PPA, be allowed to pass through."
25. Therefore, the importers are duly protected from the increase in the change in domestic duties, levies, cess and taxes imposed by the Central Government, State Government or the Union Territories. Besides, if the petitioner ultimately succeeds it would be entitled to the refund of the safeguard duty paid by it, whereas if the applicant (original respondent No.8) succeeds in the petition, it would not be possible to reverse the injury done to it if the ad interim relief granted earlier is continued. Under the circumstances, the balance of convenience lies in favour of the domestic industry. Having regard to the findings recorded by the Director General in the final findings, the court is further of the view that the domestic industry would suffer irreparable injury if the ad interim relief granted earlier is permitted to continue.
26. For the foregoing reasons, the application succeeds and is, accordingly, allowed. The ad interim relief granted vide order dated 28.12.2018 is hereby vacated.
27. At this stage, the learned advocate for the opponent No.8 (original petitioner) has requested that this order be stayed for a period of four weeks so as to enable the petitioner to approach the higher forum. Considering the fact that the duration of the levy of safeguard duty is limited and the petitioner has already enjoyed interim relief for a period of more than four months, immense prejudice would be caused to the domestic industry if the interim relief is continued any further. The request is, therefore, declined."
29. This court also notices that the primary object of imposing safeguard duty is to eliminate injury or real threat of injury, posed by import of the product. That objective would be entirely defeated if the court were to blindly endorse a claim of illegality regarding imposition of the duty, which was preceded by elaborate hearing of all parties- including the petitioner, and a reasoned order, which culminated in the impugned notification. Granting such a stay or interim order would facilitate entry of the goods at vastly lower prices, precisely what Parliament intended to curb through the levy. Clearly, the balance of convenience is not in (Downloaded on 15/09/2019 at 08:50:07 PM) (18 of 18) [CW-13592/2019] favour of the petitioner, for grant of such relief. The Court is therefore, of the opinion that no interim orders are called for. The stay application (No.13681/2019 in DBCWP 13592/2019) is dismissed.
30. During the hearing in D.B. Civil W.P. No. 12257/2019 it was brought to the notice of the Court that two sets of bills of entry were involved (date 8.8.2019 and 9.8.2019) an interim order granted in those proceedings (i.e. D.B. Civil Writ Petition No. 12257/2019) have been worked out by the petitioner. In the circumstances, no further orders are to be made in D.B. Civil Writ Petition No. 12257/2019.
31. List both the writ petitions for final hearing on 22.10.2019.
(ASHOK KUMAR GAUR),J (S. RAVINDRA BHAT),CJ
138-Parmar/-
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