Customs, Excise and Gold Tribunal - Delhi
M/S. Reliance Industries Ltd. vs The Designated Authority The Ministry ... on 23 April, 2001
ORDER
C.N.B. Nair
1. Ministry of Finance, Department of Revenue, imposed anti-dumping duty on Pure Terephthalic Acid (PTA) originating in or exported from Korea RP, Thialand and Indonesia under Notification No. 13/92 dated 28.4.98. The rate of duty so imposed on Korean Supplies varied from Rs.1130/- PMT to Rs. 1490/- PMT. This was done based o n the final Findings and recommendations arrived at by Designated Authority, Ministry of Commerce vide his Final order No. 14/1/94 ADD Dated 19.3.98. The Final Findings were reached byu the Designated Authority after investigating imports and domestic production for the period April, 1996 to October, 1996 with regard to export prices and Indian manufacturing cost of PTA. The investigation had revealed a dumping margin varying from 6.65% to 9.63% in respect of various exporters of PTA from Korea RP.
2. Rule 23 of Customs Tariff (Identification< Assessment and Collection of Anti-Dumping on Dumped Articles and for Determination of Injury) Rules 1995 provides that the Designated Authority shall review the anti dumping duty imposed on dumped article periodically. In teams of this review provision, Reliance Industries Ltd., the leading domestic manufacturer of PTA, filed an application before the Designated Authority seeking upward revision of anti-dumping duty. The application contended that the margin of dumping of PTA from Korea RP had increased subsequent to the imposition of anti dumping duty under Notification No. 13/92 and that domestice industry producing PTA was suffering greater injury on account of such increased dumping margin. The application, therefore, urged that rate of anti-dumping duty imposed on PTA originating in or exported from Korea RP be suitably increased. The Designated Authority undertook a review which culminated in the Final Findings dated 29th May, 2000. This Final Finding recommended imposition of anti dumping duty in respect of exports by M/s Samsung Petrochemical Co. Limited @ US$ 16.07 PMT and in respect of any other exporter f rom Korea RP @ 17.04 US$ PMT. Pursuant to this recommendation, Government of India issued Notification No. 99/2000-Cus dated 11.7.2000 revising the anti dumping duty on PTA originating in or exported from Korea RP at the revised rates recommended in the Final Findings of the Designated Authority. The effect of this Notification was to lower the anti dumping duty in respect of exports from South Korea since the revised duty worked out in Indian Rupees to Rs. 678/ PMT and Rs. 719/- PMT as against the duties ranging from Rs. 1130/- to Rs. 1490/- imposed under Notification No. 13/92-Cus dated 28.4.98. M/s Reliance Industries Ltd. has filed the present appeal, being aggrieved with the reduction of duty (strangely though on an application filed by them) made under Notification Mo. 99/2000 dated 11.7.2000.
3. The appeal submits that the rate of duty arrived at is entirely inconsistent with the relevant facts of the case and the findings reached by the Designated Authority itself. The appeal submits that the findings and the recommended rates of duty can not go together. The appellants have pointed out that the Final Findings, after investigating imports from Korea PR and domestic production for the period from April 1998 to September, 1998 had reached the conclusion that dumping margin had increased and was in the range of 14.5% to 26.76% during the review period as against the dumping margin of 9.25% to 9.63% during the initial investigation. The steep increase in dumping margin, the appellants contend, called for increase (and not reduction) in the rate for anti-dumping duty to offset the increased adverse effect on domestic industry. The appellants have also pointed out that the designated Authority had also reached the finding that Indian industry had suffered injury on account of the increased dumping margin in respect of imports of PTA from Korea RP. The Designated Authority had found at the end of the investigation that there was decline in the net realisation on the manufacture of PTA by the domestic industry, that on account of matching of the selling price with the landed value of dumped impart, Indian industry had been selling below non-injurious price, that sales below non-injurious price was causing financial loses to the domestic industry, that imports from Korea RP had led to price depression in the selling price of the product. The appellants have submitted that despite such findings in favour of the domestic industry, the Designated Authority recommended reduction in the rates of anti-dumping duty than was enforce. It is the submission of the appellants that the Designated Authority has grossly erred in determining the rate of duty required to be imposed on the dumped imports of PTA.
4. During the argument of the appeal, the learned Counsel for the appellants stressed that the reason for the incorrect determination of the rate of anti-dumping duty is the errors committed by the designated Authority in determining the correct Landed Value of the imported PTA and Non-Injurious Price for the domestically manufactured PTA. The learned Counsel also submitted that since elements of cost included or excluded while determining the Landed Value and Non-injurious Price have not been disclose to the appellant by the Designated Authority during the investigation proceedings, they were not in a position to pin point the exact errors in the working of the Designated Authority; but it remains clear that while determining the Non-injurious Prince, the Designated Authority committed a grave mistake in working out the cost of electricity consumed by the appellant in the manufacture of PTA. On this point, the learned Counsel submitted that the appellant purchases as well as generates electricity for use in the manufacture of PTA. The Designated Authority chose to go by the appellants' cost of generates of the electricity while determining the Non-injurious price of PTA. However, cost of production has been worked out in a grossly erroneous manner by excluding Return on Investment made in the power plant by the appellant. The appellant has submitted that the Designated Authority should have either worked o ut the cost of power, including the element towards Return on Investment, or should have gone by the transfer cost of power. The learned Counsel pointed out that the designated Authority could have gone by the cost at which the appellants sold electricity to another unconnected industrial unit namely NOCIL and could have adopted that price as the basis for determining the cost of electricity in the manufacture of PTA. The learned Counsel pointed out that the error by the Designated Authority in discarding the transfer cost in respect of electricity is made all the more clear by the fact that such transfer cost was adopted as the basis for the computation of cost of another input, namely paraxylene. The learned Counsel pointed out that the Designated Authority adopted the transfer price of paraxylene as the basis for computing its cost, discarding its higher cost of production in the hands of the appellants. The learned Counsel stressed that such inconsistent cost computation practices adopted by the Designated Authority led to the determination of artificially lower Non-Injurious Price and recommendation of lower rate of duty as the duty has determined as the difference between the Non-Injurious Price of domestically produced PTA and Landed Cost of Imported PTA. learned Counsel also submitted that the Designated Authority as committed an error while determining the landed cost also, in as much as provision has been made for handling charge @ 2% of the price of imported PTA.
5. As against the aforesaid submissions on behalf of the appellant, the Counsel for the Designated Authority submitted that the practice of the Designated Authority with regard to determination of non-injurious price is to adopt the lower of the costs of inputs, namely, transfer cost or cost of production. It was, however, admitted that, while determining the cost of production of electricity, no provision was made towards Return On Investment. Learned Counsel submitted that this was no account of the fact that the appellant had not furnished information about the capital deployed on electricity generation during the investigation. With regard to the determination of Landed Cost of imported PTA, the learned Counsel of the Designated Authority submitted that the only error could be with regard to addition of 2% as handling charges. He submitted that this was also in conformity with the normal practice of the designated Authority, even though the Tribunal had held in subsequent decisions that handling charges are not to form part of landed value of imported goods inasmuch as those charges being subsequent to landing of the goods in India are not relevant to computing landed cost, which is required to be compared with the ex-factory Non-Injurious Price of domestic goods.
6. In the present case there in no dispute about increased dumping margins in respect of PTA originating or exported from Korea RP. There is also no dispute about increased dumping margins in respect of PTA originating or exported from korea RP. There is also no dispute about it deleterious effect on the Indian industry inasmuch as the designated Authority as clearly held that the domestic industry has suffered financial losses by trying to match the dumped prices. The authority has also clearly held that the appellant has suffered financial losses on account of the dumping of PTA by the Korean exports. Thus, the scope of the dispute is narrow and is limited to the correct computation of the rate of anti-dumping duty required to counter balance the effect of dumping. In the present case, anti dumping duty has been fixed as the injury margins, i.e. the difference between the Non-Injurious sale price of the domestic industry and the Landed cost of dumped goods. In such a situation, a correct determination of Landed cost and Non-Injurious Price is very vital to ensure that the anti-dumping duty imposed matches the injury caused to the domestic industry. It is clear that the Designated Authority adopted different norm for working out the cost of two inputs i.e. transfer price in respect of paraxylene and cost of production in respect of electricity. Further, while determining the cost of production of electricity no provision was made for Return On Investment. Such inconsistency cannot have any justification. We, therefore, directed the representatives of the Designated Authority to re-compute the Non-Injurious Price of PTA manufactured by the appellant by including the cost of capital also in the cost of generating electricity and by adopting cost of production of paraxylene (and not its transfer price). Similarly, there is no justification for making a provision for handling charges in the computation of Landed Cost of imported goods. Therefore, Landed cost of PTA exports from Korea RP was also required to be re-determined after excluding handling charges at the rate of 2%. We have had occasion to consider these issues in earlier appeals relating to anti-dumping. In the appellant's own case 2001 (127) ELT 99 we held that cost of inputs is to be worked out based on actuals and not of assumed cost. In Automotive Tyre Manufacturers Association Vs. Designated Authority 2000 (122) ELT 412 we held that handling charges are not to form part of the landed cost of imported materials. The revision of Non-injurious price of PTA manufactured by the domestic industry on the basis of actual cost of inputs and re-computation of Landed Cost after excluding 2% handling charges are requred to be done in the present case in view of those decisions.
7. At the end of the appeal proceedings, the Designated Authority made available to us re-computed Injury Margin, i.e. the difference between the Non-Injurious Price worked out for the domestic industry and Landed Value of imported goods. Consequent to redetermination of Landed Value after excluding 2% handling charges, and Non-Injurious Price based on the cost of production of both electricity and paraxylane, the injury margins for PTA originating in or exported from Korea RP are found to be US $ 33.72 in respect of exports by M/s Samsung Petrochemicals Co. Ltd. (SPC) and US $ 34.67 in respect of exports by other non-co-operating exporters.
8. In the present case, anti-dumping duty is required to be imposed on all imports of PTA originating in or exports from Korea RP at rates equal to the Injury margins indicated in the para above. Accordingly, we order the following amendments in Notification No. 99/2000 dated 11th July 2000:
In the table annexed to Notification No. 99/2000 dated 11th July 2000:
(i) entry "33.72" shall substitute for the existing entry "16.07" under Column (3) against Sl.No.1 and
(ii) entry "34.67" shall substitute for the existing entry "17.04" under Column (3) against Sl.No.2.
9. The appeal is allowed by revising the rate of anti-dumping duty on PTA imported into India as indicated above.
Promoted today.