Gujarat High Court
Jindal Saw Limited vs Directorate General Of Anti Dumping And ... on 26 September, 2018
Author: Biren Vaishnav
Bench: Anant S. Dave, Biren Vaishnav
C/SCA/12368/2018 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 12368 of 2018
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE ANANT S. DAVE
and
HONOURABLE MR.JUSTICE BIREN VAISHNAV
==========================================================
1 Whether Reporters of Local Papers may be allowed to NO
see the judgment ?
2 To be referred to the Reporter or not ? YES
3 Whether their Lordships wish to see the fair copy of the NO
judgment ?
4 Whether this case involves a substantial question of law NO
as to the interpretation of the Constitution of India or any
order made thereunder ?
==========================================================
JINDAL SAW LIMITED
Versus
DIRECTORATE GENERAL OF ANTI DUMPING AND ALLIED DUTIES
==========================================================
Appearance:
MR MIHIR JOSHI, SENIOR ADVOCATE WITH MR JITENDRA SINGH AND
MR HARSHADRAY A DAVE(3461) for the PETITIONER(s) No. 1
MR NIRZAR S DESAI(2117) for the RESPONDENT(s) No. 1
==========================================================
CORAM: HONOURABLE MR.JUSTICE ANANT S. DAVE
and
HONOURABLE MR.JUSTICE BIREN VAISHNAV
Date : 26/09/2018
ORAL JUDGMENT
(PER : HONOURABLE MR.JUSTICE BIREN VAISHNAV)
1. Rule. Mr. Nirzar Desai, learned Standing Counsel appearing for the respondent waives service of notice of Rule.
Page 1 of 47C/SCA/12368/2018 JUDGMENT
2. This petition under Article 226 of the Constitution Of India challenges the Order No.7/18/2018-DGAD dated 17/05/2018 passed by the Designated Authority, Director General of Anti-Dumping and Allied Duties - respondent herein by way of which the application of the petitioner to initiate sunset review investigation under Rule 23 of the Customs Tariff (Identification, Assessment and Collection of Anti-Dumping Articles for Determination of Injury) Rules, 1995 (hereinafter referred to as "the Rules") for the purposes of continuing the ant-dumping duty on Ductile Iron Pipes originating in or exported from the Peoples Republic of China, has been rejected.
3. Before we advert to the facts of the case as they unfold and to the grounds of challenge in the petition to the order dated 17/05/2018, by which the application of the petitioner for extension of the anti-dumping duty for a further period had been rejected, the relevant legal provisions need to be reproduced which are as under:
"SECTION 9A . Anti- dumping duty on dumped articles. -- (1) Where any article is exported by an exporter or producer from any country or territory (hereinafter in this section referred to as the exporting country or territory) to India at less than its normal value, then, upon the importation of such article into India, the Central Government may, by notification in the Official Gazette, impose an anti- dumping duty not exceeding the margin of dumping in relation to such article.
Explanation. For the purposes of this section, -
(a) "margin of dumping", in relation to an article, means the difference between its export price and its normal value;
(b) "export price", in relation to an article, Page 2 of 47 C/SCA/12368/2018 JUDGMENT means the price of the article exported from the exporting country or territory and in cases where there is no export price or where the export price is unreliable because of association or a compensatory arrangement between the exporter and the importer or a third party, the export price may be constructed on the basis of the price at which the imported articles are first resold to an independent buyer or if the article is not resold to an independent buyer, or not resold in the condition as imported, on such reasonable basis as may be determined in accordance with the rules made under sub- section (6);
(c) "normal value", in relation to an article, means -
(i) the comparable price, in the ordinary course of trade, for the like article when destined for consumption in the exporting country or territory as determined in accordance with the rules made under sub-section (6); or
(ii) when there are no sales of the like article in the ordinary course of trade in the domestic market of the exporting country or territory, or when because of the particular market situation or low volume of the salses in the domestic market of the exporting country or territory, such sales do not permit a proper comparison, the normal value shall be either -
(a) comparable representative price of the like article when exported from the exporting country or territory to an appropriate third country as determined in accordance with the rules made under sub-section (6); or
(b) the cost of production of the said article in the country of origin along with reasonable addition for administrative, selling and general Page 3 of 47 C/SCA/12368/2018 JUDGMENT costs, and for profits, as determined in accordance with the rules made under sub-section (6) :
Provided that in the case of import of the article from a country other than the country of origin and where the article has been merely transhipped through the country of export or such article is not produced in the country of export or there is no comparable price in the country of export, the normal value shall be determined with reference to its price in the country of origin.
[(1A) Where the Central Government, on such inquiry as it may consider necessary, is of the opinion that circumvention of anti-dumping duty imposed under sub-section (1) has taken place, either by altering the description or name or composition of the article subject to such anti- dumping duty or by import of such article in an unassembled or disassembled form or by changing the country of its origin or export or in any other manner, whereby the antidumping duty so imposed is rendered ineffective, it may extend the anti- dumping duty to such article or an article originating in or exported from such country, as the case may be.] (2) The Central Government may, pending the determination in accordance with the provisions of this section and the rules made thereunder of the normal value and the margin of dumping in relation to any article, impose on the importation of such article into India an anti-dumping duty on the basis of a provisional estimate of such value and margin and if such anti-dumping duty exceeds the margin as so determined :-
(a) the Central Government shall, having regard to such determination and as soon as may be after such determination, reduce such anti-dumping duty; and
(b) refund shall be made of so much of the anti-
dumping duty which has been collected as is in excess of the anti-dumping duty as so reduced. (2A) Notwithstanding anything contained in sub-
Page 4 of 47C/SCA/12368/2018 JUDGMENT section (1) and sub-section (2), a notification issued under sub-section (1) or any anti-dumping duty imposed under sub-section (2), shall not apply to articles imported by a hundred per cent, export- oriented undertaking unless, --
(i) specifically made applicable in such notifications or such impositions, as the case may be; or
(ii) the article imported is either cleared as such into the domestic tariff area or used in the manufacture of any goods that are cleared into the domestic tariff area, and in such cases anti- dumping duty shall be levied on that portion of the article so cleared or so used as was leviable when it was imported into India.
Explanation. -- For the purposes of this sub- section, the expression "hundred per cent export- oriented undertaking" shall have the meaning assigned to it in Explanation 2 to sub-section (1) of section 3 of the Central Excise Act, 1944 (1 of 1944).
(3) If the Central Government, in respect of the dumped article under inquiry, is of the opinion that
-
(i) there is a history of dumping which caused injury or that the importer was, or should have been, aware that the exporter practices dumping and that such dumping would cause injury; and
(ii) the injury is caused by massive dumping of an article imported in a relatively short time which in the light of the timing and the volume of imported article dumped and other circumstances is likely to seriously undermine the remedial effect of the antidumping duty liable to be levied, the Central Government may, by notification in the Official Gazette, levy anti-dumping duty retrospectively from a date prior to the date of imposition of anti- dumping duty under subsection (2) but not beyond ninety days from the date of notification under that sub-section, and notwithstanding anything contained in any law for the time being in force, such duty shall be payable at such rate and from such date as may be specified in the notification. (4) The anti-dumping duty chargeable under this section shall be in addition to any other duty imposed under this Act or any other law for the time being in force.
Page 5 of 47C/SCA/12368/2018 JUDGMENT (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.
(6) The margin of dumping as referred to in sub- section (1) or sub-section (2) shall, from time to time, be ascertained and determined by the Central Government, after such inquiry as it may consider necessary and the Central Government may, by notification in the Official Gazette, make rules for the purposes of this section, and without prejudice to the generality of the foregoing, such rules may provide for the manner in which articles liable for any anti-dumping duty under this section may be identified, and for the manner in which the export price and the normal value of, and the margin of dumping in relation to, such articles may be determined and for the assessment and collection of such anti-dumping duty.
(6A) The margin of dumping in relation to an article, exported by an exporter or producer, under inquiry under sub-section (6) shall be determined on the basis of records concerning normal value and export price maintained, and information provided, by such exporter or producer :
Provided that where an exporter or producer fails to provide such records or information, the margin of dumping for such exporter or producer shall be determined on the basis of facts available. (7) Every notification issued under this section shall, as soon as may be after it is issued, be laid before each House of Parliament.
(8) The provisions of the Customs Act, 1962 (52 of Page 6 of 47 C/SCA/12368/2018 JUDGMENT 1962) and the rules and regulations made thereunder, including those relating to the date for determination of rate of duty, assessment, non-levy, short levy, refunds, interest, appeals, offences and penalties shall, as far as may be, apply to the duty chargeable under this section as they apply in relation to duties leviable under that Act.
SECTION 9C. Appeal. -- (1) An appeal against the order of determination or review thereof regarding the existence, degree and effect of any subsidy or dumping in relation to import of any article shall lie to the Customs, Excise and Service Tax Appellate Tribunal constituted under section 129 of the Customs Act, 1962 (52 of 1962) (hereinafter referred to as the Appellate Tribunal). (1A) An appeal under sub-section (1) shall be accompanied by a fee of fifteen thousand rupees. (1B) Every application made before the Appellate Tribunal,-
(a) in an appeal under sub-section (1), for grant of stay or for rectification of mistake or for any other purpose; or
(b) for restoration of an appeal or an application, shall be accompanied by a fee of five hundred rupees.
(2) Every appeal under this section shall be filed within ninety days of the date of order under appeal :
Provided that the Appellate Tribunal may entertain any appeal after the expiry of the said period of ninety days, if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal in time.
(3) The Appellate Tribunal may, after giving the parties to the appeal, an opportunity of being heard, pass such orders thereon as it thinks fit, confirming, modifying or annulling the order appealed against.
(4) The provisions of sub-sections (1), (2), (5) and (6) of section 129C of the Customs Act, 1962 (52 of 1962) shall apply to the Appellate Tribunal in the discharge of its functions under this Act as they apply to it in the discharge of its functions under the Customs Act, 1962 (52 of 1962).
(5) Every appeal under sub-section (1) shall be Page 7 of 47 C/SCA/12368/2018 JUDGMENT heard by a Special Bench constituted by the President of the Appellate Tribunal for hearing such appeals and such Bench shall consist of the President and not less than two members and shall include one judicial member and one technical member.
3.1 The Relevant Rules i.e. the Customs Tariff Identification, Assessment And Collection of Anti Dumping Duty on Dumped Articles for Determation Of Injury) Rules, 1995 read as under:
3. Appointment of designated authority. - (1) The Central Government may, by notification in the Official Gazette, appoint a person not below the rank of a Joint Secretary to the Government of India or such other person as that Government may think fit as the designated authority for purposes of these rules.
(2) The Central Government may provide to the designated authority the services of such other persons and such other facilities as it deems fit.
4. Duties of the designated authority. - (1) It shall be the duty of the designated authority in accordance with these rules-
(a) to investigate as to the existence, degree and effect of any alleged dumping in relation to import of any article;
(b) to identify the article liable for anti-dumping duty;
(c) to submit its findings, provisional or otherwise to Central Government as to-
(i) normal value, export price and the margin of dumping in relation to the article under investigation, and
(ii) the injury or threat of injury to an industry established in India or material retardation to the establishment of an industry in India consequent upon the import of such article from the specified countries.
(d) to recommend to the State Government -
(i) the amount of anti-dumping duty equal to the margin of dumping or less, which if levied, would remove the injury to the domestic industry, after considering the principles laid down in Annexure Page 8 of 47 C/SCA/12368/2018 JUDGMENT III to these rules; and
(ii) the date of commencement of such duty;
(e) to review the need for continuance of anti- dumping duty.
5. Initiation of investigation. - (1) Except as provided in sub-rule (4), the designated authority shall initiate an investigation to determine the existence, degree and effect of any alleged dumping only upon receipt of a written application by or on behalf of the domestic industry. (2) An application under sub-rule (1) shall be in the form as maybe specified by the designated authority and the application shall be supported by evidence of -
(a) dumping
(b) injury, where applicable, and
(c) where applicable, a causal link between such dumped imports and alleged injury.
(3) The designated authority shall not initiate an investigation pursuant to an application made under sub-rule (1) unless -
(a) it determines, on the basis of an examination of the degree of support for, or opposition to the application expressed by domestic producers of the like product, that the application has been made by or on behalf of the domestic industry :
Provided that no investigation shall be initiated if domestic producers expressly supporting the application account for less than twenty five per cent of the total production of the like article by the domestic industry, and
(b) it examines the accuracy and adequacy of the evidence provided in the application and satisfies itself that there is sufficient evidence regarding -
(i) dumping,
(ii) injury, where applicable; and
(iii) where applicable, a casual link between such dumped imports and the alleged injury, to justify the initiation of an investigation.
Explanation. - For the purpose of this rule the application shall be deemed to have been made by or on behalf of the domestic industry, if it is supported by those domestic producers whose collective output constitute more than fifty per cent Page 9 of 47 C/SCA/12368/2018 JUDGMENT of the total production of the like article produced by that portion of the domestic industry expressing either support for or opposition, as the case may be, to the application.
(4) Notwithstanding anything contained in sub-rule (1) the designated authority may initiate an investigation suo moto if it is satisfied from the information received from the Commissioner of Customs appointed under the Customs Act, 1962 (52 of 1962) or from any other source that sufficient evidence exists as to the existence of the circumstances referred to in clause (b) of sub-rule (3).
(5) The designated authority shall notify the government of the exporting country before proceeding to initiate an investigation.
6. Principles governing investigations.- (1) The designated authority shall, after it has decided to initiate investigation to determine the existence, degree and effect of any alleged dumping of any article, issue a public notice notifying its decision and such public notice shall, inter alia, contain adequate information on the following:-
(i) the name of the exporting country or countries and the article involved;
(ii) the date of initiation of the investigation;
(iii) the basis on which dumping is alleged in the application;
(iv) a summary of the factors on which the allegation of injury is based;
(v) the address to which representations by interested parties should be directed; and
(vi) the time-limits allowed to interested parties for making their views known.
(2) A copy of the public notice shall be forwarded by the designated authority to the known exporters of the article alleged to have been dumped, the Governments of the exporting countries concerned and other interested parties.
(3) The designated authority shall also provide a copy of the application referred to in sub-rule (1) of Rule 5 to -
(i) the known exporters or to the concerned trade association where the number of Page 10 of 47 C/SCA/12368/2018 JUDGMENT exporters is large, and
(ii) the governments of the exporting countries :
Provided that the designated authority shall also make available a copy of the application to any other interested party who makes a request therefor in writing.
(4) The designated authority may issue a notice calling for any information, in such form as may be specified by it, from the exporters, foreign producers and other interested parties and such information shall be furnished by such persons in writing within thirty days from the date of receipt of the notice or within such extended period as the designated authority may allow on sufficient cause being shown.
Explanation : For the purpose of this sub-rule, the notice calling for information and other documents shall be deemed to have been received one week from the date on which it was sent by the 9 designated authority or transmitted to the appropriate diplomatic representative of the exporting country.
(5) The designated authority shall also provide opportunity to the industrial users of the article under investigation, and to representative consumer organizations in cases where the article is commonly sold at the retail level, to furnish information which is relevant to the investigation regarding dumping, injury where applicable, and causality.
(6) The designated authority may allow an interested party or its representative to present the information relevant to the investigation orally but such oral information shall be taken into consideration by the designated authority only when it is subsequently reproduced in writing. (7) The designated authority shall make available the evidence presented to it by one interested party to the other interested parties, participating in the investigation.
(8) In a case where an interested party refuses access to, or otherwise does not provide necessary information within a reasonable period, or significantly impedes the investigation, the designated authority may record its findings on the Page 11 of 47 C/SCA/12368/2018 JUDGMENT basis of the facts available to it and make such recommendations to the Central Government as it deems fit under such circumstances.
7. Confidential information- (1) Notwithstanding anything contained in sub-rules (2), (3) and (7) of rule 6, sub-rule (2) of rule 12, sub-rule (4) of rule 15 and sub-rule (4) of rule 17, the copies of applications received under sub-rule (1) of rule 5, or any other information provided to the designated authority on a confidential basis by any party in the course of investigation, shall, upon the designated authority being satisfied as to its confidentiality, be treated as such by it and no such information shall be disclosed to any other party without specific authorization of the party providing such information.
(2) The designated authority may require the parties providing information on confidential basis to furnish non-confidential summary thereof and if, in the opinion of a party providing such information, such information is not susceptible of summary, such party may submit to the designated authority a statement of reasons why summarisation is not possible.
(3) Notwithstanding anything contained in sub-rule (2), if the designated authority is satisfied that the request for confidentiality is not warranted or the supplier of the information is either unwilling to make the information public or to authorize its disclosure in a generalized or summary form, it may disregard such information.
8. Accuracy of the information. - Except in cases referred to in sub-rule (8) of rule 6, the designated authority shall during the course of investigation satisfy itself as to the accuracy of the information supplied by the interested parties upon which its findings are based.
10. Determination of normal value, export price and margin of dumping. - An article shall be considered as being dumped if it is exported from a country or territory to India at a price less than its normal value and in such circumstances Page 12 of 47 C/SCA/12368/2018 JUDGMENT the designated authority shall determine the normal value, export price and the margin of dumping taking into account, inter alia, the principles laid down in Annexure I to these rules.
11. Determination of injury. - (1) In the case of imports from specified countries, the designated authority shall record a further finding that import of such article into India causes or threatens material injury to any established industry in India or materially retards the establishment of any industry in India.
(2) The designated authority shall determine the injury to domestic industry, threat of injury to domestic industry, material retardation to establishment of domestic industry and a causal link between dumped imports and injury, taking into account all relevant facts, including the volume of dumped imports, their effect on price in the domestic market for like articles and the consequent effect of such imports on domestic producers of such articles and in accordance with the principles set out in Annexure II to these rules. (3) The designated authority may, in exceptional cases, give a finding as to the existence of injury even where a substantial portion of the domestic industry is not injured, if-
(i) there is a concentration of dumped imports into an isolated market, and
(ii) the dumped articles are causing injury to the producers of all or almost all of the production within such market.
12. Preliminary findings. - (1) The designated authority shall proceed expeditiously with the conduct of the investigation and shall, in appropriate cases, record a preliminary finding regarding export price, normal value and margin of dumping, and in respect of imports from specified countries, it shall also record a further finding regarding injury to the domestic industry and such finding shall contain sufficiently detailed information for the preliminary determinations on dumping and injury and shall refer to the matters of fact and law which have led to arguments being accepted or rejected. It will also contain:-
Page 13 of 47C/SCA/12368/2018 JUDGMENT
(i) the names of the suppliers, or when this is impracticable, the supplying countries involved;
(ii) a description of the article which is sufficient for customs purposes;
(iii) the margins of dumping established and a full explanation of the reasons for the methodology used in the establishment and comparison of the export price and the normal value;
(iv) considerations relevant to the injury determination; and
(v) the main reasons leading to the determination. 2. The designated authority shall issue a public notice recording its preliminary findings.
14. Termination of investigation. - The designated authority shall, by issue of a public notice, terminate an investigation immediately if -
(a) it receives a request in writing for doing so from or on behalf of the domestic industry affected, at whose instance the investigation was initiated;
(b) it is satisfied in the course of an investigation, that there is not sufficient evidence of dumping or, where applicable, injury to justify the continuation of the investigation;
(c) it determines that the margin of dumping is less than two per cent of the export price;
(d) it determines that the volume of the dumped imports, actual or potential, from a particular country accounts for less than three per cent of the imports of the like product, unless, the countries which individually account for less than three per cent of the imports of the like product, collectively account for more than seven per cent of the import of the like product; or
(e) it determines that the injury where applicable, is negligible.
15. Suspension or termination of investigation on price undertaking - (1) The designated authority may suspend or terminate an Page 14 of 47 C/SCA/12368/2018 JUDGMENT investigation if the exporter of the article in question, -
(i) furnishes an undertaking in writing to the designated authority to revise the prices so that no exports of the said article are made to India at dumped prices, or
(ii) in the case of imports from specified countries undertake to revise the prices so that injurious effect of dumping is eliminated and the designated authority is satisfied that the injurious effect of the dumping is eliminated:
Provided further that the designated authority shall complete the investigation and record its finding, if the exporter so desires, or it so decides. (2) No undertaking as regards price increase under clause (ii) of the sub-rule (1) shall be accepted from any exporter unless the designated authority had made preliminary determination of dumping and the injury.
(3) The designated authority may, also not accept undertakings offered by any exporter, if it considers that acceptance of such undertaking is impractical or is unacceptable for any other reason. (4) The designated authority shall intimate the acceptance of an undertaking and suspension or termination of investigation to the Central Government and also issue a public notice in this regard. The public notice shall, contain inter alia, the non-confidential part of the undertaking. (5) In cases where an undertaking has been accepted by the designated authority the Central Government may not impose a duty under sub-
section (2) of section 9A of the Act for such period the undertaking acceptable to the designated authority remains valid.
(6) Where the designated authority has accepted any undertaking under sub-rule (1), it may require the exporter from whom such undertaking has been accepted to provide from time to time information relevant to the fulfilment of the undertaking and to permit verification of relevant data:
Provided that in case of any violation of an undertaking, the designated authority shall, as soon as may be possible, inform the Central Government of the violation of the undertaking and recommend imposition of provisional duty from the date of such Page 15 of 47 C/SCA/12368/2018 JUDGMENT violation in accordance with the provisions of these rules.
(7) The designated authority shall, suo moto or on the basis of any request received from exporters or importers of the article in question or any other interested party, review from time to time the need for the continuance of any undertaking given earlier.
16. Disclosure of information. - The designated authority shall, before giving its final findings, inform all interested parties of the essential facts under consideration which form the basis for its decision.
17. Final findings. - (1) The designated authority shall, within one year from the date of initiation of an investigation, determine as to whether or not the article under investigation is being dumped in India and submit to the Central Government its final finding -
(a) as to, -
(i) the export price, normal value and the margin of dumping of the said article;
(ii) whether import of the said article into India, in the case of imports from specified countries, causes or threatens material injury to any industry established in India or materially retards the establishment of any industry in India;
(iii) a casual link, where applicable, between the dumped imports and injury;
(iv) whether a retrospective levy is called for and if so, the reasons therefor and date of commencement of such retrospective levy:
Provided that the Central Government may, in its discretion in special circumstances extend further the aforesaid period of one year by six months:
Provided further that in those cases where the designated authority has suspended the investigation on the acceptance of a price undertaking as provided in rule 15 and subsequently resumes the same on violation of the Page 16 of 47 C/SCA/12368/2018 JUDGMENT terms of the said undertaking, the period for which investigation was kept under suspension shall not be taken into account while calculating the period of said one year,
(b) recommending the amount of duty which, if levied, would remove the injury where applicable, to the domestic industry. (2) The final finding, if affirmative, shall contain all information on the matter of facts and law and reasons which have led to the conclusion and shall also contain information regarding-
(i) the names of the suppliers, or when this is impracticable, the supplying countries involved;
(ii) a description of the product which is sufficient for customs purposes;
(iii) the margins of dumping established and a full explanation of the reasons for the methodology used in the establishment and comparison of the export price and the normal value;
(iv) Considerations relevant to the injury determination; and
(v) the main reasons leading to the determination.
(3) The designated authority shall determine an individual margin of dumping for each known exporter or producer concerned of the article under investigation: Provided that in cases where the number of exporters, producers, importers or types of articles involved are so large as to make such determination impracticable, it may limit its findings either to a reasonable number of interested parties or articles by using statistically valid samples based on information available at the time of selection, or to the largest percentage of the volume of the exports from the country in question which can reasonably be investigated, and any selection, of exporters, producers, or types of articles, made under this proviso shall preferably be made in consultation with and with the consent of the exporters, producers or importers concerned :
Provided further that the designated authority shall, determine an individual margin of dumping Page 17 of 47 C/SCA/12368/2018 JUDGMENT for any exporter or producer, though not selected initially, who submit necessary information in time, except where the number of exporters or producers are so large that individual examination would be unduly burdensome and prevent the timely completion of the investigation.
(4) The designated authority shall issue a public notice recording its final findings.
23. Review. - (1) Any anti-dumping duty imposed under the provision of section 9A of hte Act, shall remain in force, so long as to the extent necessary, to counteract dumping, which is causing injury. (1A) The designated authority shall review the need for the continued imposition of the 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 hte 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 hte 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 hte 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. 2 Page 18 of 47 C/SCA/12368/2018 JUDGMENT Annexure- I (See Rule 8) Principles governing the determination of normal value, export price and margin of dumping The designated authority while determining the normal value, export price and margin of dumping shall take into account inter alia, the following principles -
1. The elements of costs referred to in the context of determination of normal value shall normally be determined on the basis of records kept by the exporter or producer under investigation, provided such records are in accordance with the generally accepted accounting principles of the exporting country, and such records reasonably reflect the cost associated with production and sale of the article under consideration.
2. Sales of the like product in the domestic market of the exporting country or sales to a third country at prices below per unit (fixed and variable) costs of production plus administrative, selling and general costs may be treated as not being in the ordinary course of trade by reason of price. The designated authority may disregard these sales, in determining normal value, provided it has determined that-
(i) such sales are made within a reasonable period of time (not less than six months) in substantial quantities, i.e. when the weighted average selling price of the article is below the weighted average per unit costs or when the volume of the sales below per unit costs represents not less than twenty per cent of the volume sold in transactions under consideration, and
(ii) such sales are at prices which do not provide for the recovery of all costs within a reasonable period of time. The said prices will be considered to provide for recovery of costs within a reasonable period of time if they are above weighted average per unit costs for the period of investigation, even though they might have been below per unit costs at the time of sale.
3. (i) The said authority in the course of investigation shall consider all available evidence Page 19 of 47 C/SCA/12368/2018 JUDGMENT on the proper allocation of costs, including that which is made available by the exporter or producer provided that such allocation has been historically utilized by the exporter or producer, in relation to establishing appropriate amortization and depreciation periods and allowances for capital expenditure and other development costs.
(ii) unless already reflected in allocation of costs referred to in clause (1) and subclause (i) above, the designated authority, will also make appropriate adjustments for those non-recurring items of cost which benefits further and/or current production, or for circumstances in which costs during the period of investigation are affected by start up operation.
4. The amounts for administrative, selling and general costs and for profits as referred to in sub- section (1) of section 9A of the Act, shall be based on actual data pertaining to production and sales in the ordinary course of trade, of the like article by the exporter or producer under investigation. When such amounts cannot be determined on this basis, the amounts may be determined on the basis of:
(i) the actual amounts incurred and realized by the exporter or producer in question, in respect of production and sales in the domestic market of the country of origin of the same general category of article;
(ii) the weighted average of the actual amounts incurred and realized by other exporters or producers subject to investigation in respect of production and sales of the like article in the domestic market of the country of origin; or
(iii) any other reasonable method, provided that the amount for profit so established shall not exceed the profit normally realized by the exporters or producers on sales of products of the same general category in the domestic market of the country of origin.
5. The designated authority, while arriving at a constructed export price, shall give due allowance for costs including duties and taxes, incurred between importation and resale and for profits.
6. (i) While arriving at margin of dumping, the designated authority shall make a fair comparison Page 20 of 47 C/SCA/12368/2018 JUDGMENT between the export price and the normal value. The comparison shall be made at the same level of trade, normally at the ex-factory level, and in respect of sales made at as nearly as possibly the same time. Due allowance shall be made in each case, on its merits, for differences which affect price comparability, including differences in conditions and in terms of sale, taxation, levels of trade, quantities, physical characteristics, and any other differences which are demonstrated to affect price comparability.
(ii) In the cases where export prices is a constructed one, the comparison shall be made only after establishing the normal value at equivalent level of trade.
(iii) When the comparison under this para requires a conversion of currencies, such conversion should be made by using the rate of exchange on the date of sale, provided that when a sale on foreign currency on forward markets is directly linked to the export sale involved the rate of exchange in the forward sale shall be used. Fluctuations in exchange rates shall be ignored and in an investigation the exporters shall be given at least sixty days to have adjusted their export prices to reflect the sustained movements in exchange rates during the period of investigation.
(iv) Subject to the provisions governing comparison in this paragraph, the existence of margin dumping during the investigation phase shall normally be established on the basis of comparison of a weighted average normal value and export prices on a transaction-to-transaction basis. A normal value established on a weighted average basis may be compared to the prices of the individual export transactions if it is found that the pattern of export prices which differs significantly among different purchasers, regions or time periods and if an explanation is provided as to why such differences cannot be taken into account appropriately by the use of weighted average-to-weighted average or transaction-to-transaction comparison.
7. In case of imports from non-market economy countries, normal value shall be determined on the basis if the price or constructed value in the market economy third country, or the price from such a Page 21 of 47 C/SCA/12368/2018 JUDGMENT third country to other countries, including India or where it is not possible, or on any other reasonable basis, including the price actually paid or payable in India for the like product, duly adjusted if necessary, to include a reasonable profit margin. An appropriate market economy third country shall be selected by the designated authority in a reasonable manner, keeping in view the level of development of the country concerned and the product in question, and due account shall be taken of any reliable information made available at the time of selection. Accounts shall be taken within time limits, where appropriate, of the investigation made in any similar matter in respect of any other market economy third country. The parties to the investigation shall be informed without any unreasonable delay the aforesaid selection of the market economy third country and shall be given a reasonable period of time to offer their comments.
8. (1) The term "non-market economy country"
means any country which the designated authority determines as not operating on market principles of cost or pricing structures, so that sales of merchandise in such country do not reflect the fair value of the merchandise, in accordance with the criteria specified in sub-paragraph (3) (2) There shall be a presumption that any country that has been determined to be, or has been treated as, a non-market economy country for purposes of an anti-dumping investigation by the designated authority or by the competent authority of any WTO member country during the three year period preceding the investigation is a nonmarket economy country.
Provided, however, that the non-market economy country or the concerned firms from such country may rebut such a presumption by providing information and evidence to the designated authority that establishes that such country is not a non-market economy country on the basis of the criteria specified in sub-paragraph (3). (3) The designated authority shall consider in each case the following criteria as to whether:
(a) the decisions of the concerned firms in such country regarding prices, costs and inputs, including raw materials, cost of Page 22 of 47 C/SCA/12368/2018 JUDGMENT technology and labour, output, sales and investment, are made in response to market signals reflecting supply and demand and without significant State interference in this regard, and whether costs of major inputs substantially reflect market values;
(b) the production costs and financial situation of such firms are subject to significant distortions carried over from the former non-market economy system, in particular in relation to depreciation of assets, other write-offs, barter trade and payment via compensation of debts;
(c) such firms are subject to bankruptcy and property laws which guarantee legal certainty and stability for the operation of the firms, and
(d) the exchange rate conversions are carried out at the market rate.
Provided, however, that where it is shown by sufficient evidence in writing on the basis of the criteria specified in this paragraph that market conditions prevail for one or more such firms subject to anti-dumping investigations, the designated authority may apply the principles set out in paragraphs 1 to 6 instead of the principles set out in paragraph 7 and in this paragraph. (4) Notwithstanding, anything contained in sub- paragraph (2), the designated authority may treat such country as market economy country which, on the basis of the latest detailed evaluation of relevant criteria, which includes the criteria specified in sub paragraph (3), has been, by publication of such evaluation in a public document, treated or determined to be treated as a market economy country for the purposes of anti dumping investigations, by a country which is a member of the World Trade Organization.
Annexure- II See Rule 9(2) Principles for determination of injury The designated authority while determining the injury or threat of material injury to domestic industry or material retardation of the Page 23 of 47 C/SCA/12368/2018 JUDGMENT establishment of such an industry, hereinafter referred to as "injury" and casual link between dumped imports and such injury, shall inter alia, take following principles under consideration-
(i) A determination of injury shall involve an objective examination of both (a) the volume of the dumped imports and the affect of the dumped imports on prices in the domestic market for like article and (b) the consequent impact of these imports on domestic producers of such products.
(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) of 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.
(iii) In cases where imports of a product from more than one country are being simultaneously subjected to anti-dumping investigation, the designated authority will cumulatively assess the effect of such imports, only when it determines that
(a) the margin of dumping established in relation to the imports from each country is more than two per cent expressed as percentage of export price and the volume of the imports from each country is three per cent of the import of like article or where the export of individual countries less than three per cent, the imports collectively accounts for more than seven per cent of the import of like article and
(b) cumulative assessment of the effect of imports is appropriate in light of the conditions of competition between the imported article and the like domestic articles.
(iv) The examination of the impact of the dumped imports on the domestic industry concerned, shall include an evaluation of all relevant economic factors and indices having a bearing on the state of the industry, including natural and 1 0potential Page 24 of 47 C/SCA/12368/2018 JUDGMENT decline in sales, profits, output, market share, productivity, return on investments or utilization of capacity; factors affecting domestic prices; the magnitude of the margin of dumping; actual and potential negative effects on cash flow, inventories, employment, wages, growth, ability to raise capital investments.
(v) It must be demonstrated that the dumped imports are, through the effects of dumping, as set forth in paragraphs (ii) and (iv) above, causing injury to the domestic industry. The demonstration of a casual relationship between the dumped imports and the injury to the domestic industry shall be based on an examination of relevant evidence before the 20 10. designated authority. The designated authority shall also examine any known factors other than the dumped imports which at the same time are injuring the domestic industry, and the injury caused by these other factors must not be attributed to the dumped imports. Factors which may be relevant in this respect include, inter alia, the volume and prices of imports not sold at dumping prices, contraction in demand or changes in the patterns of consumption, trade restrictive practices of and competition between the foreign and domestic producers, developments in technology and the export performance and the productivity of the domestic industry.
(vi) The effect of the dumped imports shall be assessed in relation to the domestic production of the like article when available data permit the separate identification of that production on the basis of such criteria as the production process, producers' sales and profits. If such separate identification of that production is not possible, the effects of the dumped imports shall be assessed by the examination of the production of the narrowest group or range of products, which includes the like product, for which the necessary information can be provided.
(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 Page 25 of 47 C/SCA/12368/2018 JUDGMENT must be clearly foreseen and imminent. In making a determination regarding the existence of a threat of material injury, the designated authority 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, 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."
4. The petition arises under the following background of facts:
4.1 The Government Of India in the Ministry of Finance (Department Of Revenue), by a Notification dated 14/09/2007 imposed an anti-dumping duty on imports of ductile iron pipes originating in or exported from Peoples Republic of China.
The anti-dumping duty was so imposed for a period of five years. By a notification dated 7/09/2012, a review had been initiated in the matter of continuation of anti-dumping duty on such subject goods. On such a review, the Designated Authority came to the conclusion that in the event the anti- dumping duty on ductile iron pipes are allowed to be revoked, the volume of dumped and injurious exports of the subject goods from the subject country i.e China, is likely to increase and likely to cause injury to the domestic industry.
Page 26 of 47C/SCA/12368/2018 JUDGMENT Considering the demand for the product in India, considering the consequential injury that could be caused by dumping, the Central Government had extended the anti-dumping duty initially levied for a period of 5 years vide notification dated 7/09/2007, for a further period of five years vide notification dated 13/09/2012. The Notification published in the Official Gazette dated 10/10/2013 at Annexure P3 stated that in exercise of powers conferred by sub-sections (91) and (5) of Section 9A of the Customs Tariff Act, 1975 read with Rules 18 and 23 of the Customs Tariff (Identification, Assessment and Collection of Anti-Dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995, the Central Government after considering the final findings of the designated authority extended the anti-dumping duty for a period of five years (unless revoked, superseded or amended earlier) from the date of publication of the notification. Hence the anti-dumping duty, on ductile pipes originating and exported from China, is in force upto 9/10/2018. In other words, the anti dumping duty imposed on the ductile iron pipes which was initially imposed in September 2007 is in force upto 9/10/2018.
4.2 The petitioner - Jindal Saw Ltd, alongwith one Electrosteel Casting Ltd (ECL), Srikalahasti Pipes Ltd (SPL) filed an Application for Sunset Review of Anti-Dumping Duty imposed against the imports of Ductile Iron Pipes. They in all were 54% stake holders in the Indian Market. The Application for Review was filed under Rule 23(1B) of The Rules. The Rule provides that a Review can be filed, on its own initiative or upon a duly substantiated request made by or on behalf of the domestic industry, that the expiry of anti-dumping and its removal is likely to lead to continuation or recurrence of Page 27 of 47 C/SCA/12368/2018 JUDGMENT dumping and injury to domestic industry and therefore the same may be further extended. On such a review being filed within a reasonable period of time prior to the expiry of that period when the duty period is to expire, the designated authority shall conclude the review within a period not exceeding twelve months from the date of initiation of such review.
4.3 Since the extended duty period of the anti-dumping duty imposed by the Notification dated 10/10/2013 is to expire on 9/10/2018, by virtue of which the anti-dumping duty would cease and the protection to the domestic industry would cease, the petitioner filed such a Review Application before the designated authority on 31/3/2018, six months before it was to expire and by the impugned order dated 17/5/2018 the same has been rejected.
5. Mr Mihir Joshi, learned Senior Counsel appearing with Mr. Jitendra Singh and Mr. H.A Dave, learned advocates for the petitioner has drawn our attention to the Sunset Review Application so filed and annexed with the Paper Book and an additional application filed by the petitioner on 14/05/2018. By such application, the petitioner made out a case that the anti-dumping duty ought to be continued further. According to the petitioner, the cessation of duty is likely to lead to continuation or recurrence of dumping and injury. A request, therefore, to extend such imposition for a further period of five years.
5.1 Reading of the Application so filed for Sunset Review would suggest that according to the perception of the Page 28 of 47 C/SCA/12368/2018 JUDGMENT applicants, the anti-dumping duty be continued for the following reasons:
• The proposed investments in water and sanitation schemes, especially in rural areas and new states like Telengana as well as development of 100 smart cities in the country, the demand for DI Pipes will grow at a rapid pace. Removal of anti-dumping duties would clearly hamper the growth of the industry to a great extent. China would most certainly attempt to export their surplus production in the Indian market considering the fact that there are huge investments taking place in the infrastructure of India. The application was divided into various subject parameters to support the extension of anti-dumping duty.
• According to the applicant, China has been considered as a non-market economy and therefore the normal value for China is required to be determined as per the procedure described as per details provided by the applicant in Annexure 8 to the application. • Similarly, evidence of the likelihood of continuance or recurrence of dumping and the threat of injury was also extensively produced. Evidence of causal link analysis though not mandatory for the purposes of Sunset Review was also produced by the petitioner. According to the petitioner, the test for extension of the period of duties under investigation was laid out under Section 9A(5) which was satisfied in the present context. • Though during the cessation of dumping as a result of the enforcement of anti-dumping duty, the imports were Page 29 of 47 C/SCA/12368/2018 JUDGMENT negligible and were therefore not causing injury to the domestic market, the applicant explained the effect it would have lest the duty is withdrawn. • In accordance with the prescribed rules, basis for constructing normal value was produced and the same is reproduced hereunder:
"
Constructed Normal Value Basis for constructing normal value:
a) The raw material cost for DI Pipes is calculated on the basis of the weighted cost of raw material of the domestic industry. We reckon that the manufacturers' cost in the subject country will be similar to the cost incurred in the domestic industry.
b) The utility and consumables cost has been taken on the basis of the cost incurred by the domestic industry.
c) The depreciation, labor cost and other costs for the above subject country is taken based on the cost incurred by the domestic industry.
A profit margin of 5% is added to cost to arrive at the normal value Normal Value Calculation :-
Production Normal Value
JSL 368508 ******
ECL 295581 ******
SKL 271779 ******
Wt. Average NIP 935868 48098
• The dumping margin based on such computed normal Page 30 of 47 C/SCA/12368/2018 JUDGMENT value was also shown which is as follows:
"Dumping Margin The Dumping Margin based on the above computed normal value and the export price is as follows :
Calculation of dumping margin Particulars Unit To India Turkey Vietnam Sri Lanka Normal Rs/MT ****** ****** ****** ******* Value Ex-Factory Rs/MT ****** ****** ****** ******* price Dumping Rs/MT ****** ****** ****** ******* Margin Dumping % -60% 67% 58% 50% Margin • With regard to the evidence of likelihood of continuance or recurrence of dumping and injury relevant statistical date was produced which is at Page 112 of the Paper Book. According to the applicant, if the duties are not extended, imports from China would result in surging of imports to the detriment of the domestic industry. A table was produced showing effect of dumped imports on domestic prices. The relevant portion of the table reads as under:
"4.2 Effect of Dumped Imports on Domestic Prices It is submitted that the prices of the imported goods cannot be relied upon, as the associated quantities are negligible and are in nature of samples only. A Table indicating the comparative Page 31 of 47 C/SCA/12368/2018 JUDGMENT prices of the negligible imports from China to India, their worldwide prices and the domestic prices in India is given below:
India Sri Turkey Vietnam World*
Lanka (TR)* (VN)*
(LK)*
Quantity MT 73 11838 7982 28923 178565
FOB RS/MT 136150 37973 34367 36116 46155
Prices
Ocean RS/MT 1981 1981 1981 1981 1981
Freight
Ocean RS/MT 346 9 9 9 12
Insurance
CIF RS/MT 138477 39963 36356 38106 48148
Ass. RS/MT 139862 40363 36720 38487 48629
Value
Landed RS/MT 154268 44520 40502 42451 53638
Value
It may be seen from the above that the prices of Chinese exports to India are completely out of sync as compared to the prevailing prices in India and their prices to similarly placed countries. In view therefore, any comparison of the landed value with selling price and cost of the Domestic Industry will not only reflect an incorrect picture but would also be grossly misleading. Domestic Industry is unable to appreciate that when the domestic producers are offering their products in the range of Rs. **** to **** per MT, then why would any prudent customer buy the Chinese products in price in the vicinity of Rs. 154000 per MT. It is absolutely inconceivable that any customer would buy the imported products at virtually more than **** times the prices offered Page 32 of 47 C/SCA/12368/2018 JUDGMENT by the Indian producers. The only conclusion that can be drawn is that the Chinese prices to India cannot be relied upon for any analysis. It is also important to note that the Indian producers have sufficient capacities to cater to the complete demand in India and, therefore, there are no supply side constraints. Further, it is also important to note that the FOB price from China to other countries is arond Rs.46155 per MT. This further proves that the current prices from China are contrived prices, which cannot be used for any analytical purpose."
• Positive effects of anti-dumping duty in force was shown showing that the domestic market had increased by 69% and therefore if the duty is lifted the manufacturers and exporters of the subject goods from China would increase the imports. The plea therefore is that the anti- dumping duty be continued.
5.2 Mr. Mihir Joshi invited our attention to the additional material made available by the application dated 14/05/2018 to suggest that in case the anti-dumping duty is withdrawn the domestic market would be inundated by Chinese subject goods as the capacity of China is 477% of sales of domestic industry. Keeping these parameters in view the Application for Sunset Review was made.
5.3 Mr. Mihir Joshi then invited our attention to the Rules under which the designated authority is to decide and the Page 33 of 47 C/SCA/12368/2018 JUDGMENT mode and the manner in which such a decision making process was envisaged under the Rules.
5.4 Inviting our attention to Section 9A(5) of the Customs Tariff Act,1975, Mr Joshi submitted that either the Government undertakes a mid-term review on the aspect of continuing the duty or undertakes a review at the end of five years. While deciding the review, the Central Government, as a designated authority under the Rules has to form an opinion that the cessation of such duty is likely to lead to continuation or recurrence of dumping and injury. In other words, when a review is made under the rules by a duly substantiated application, the decision ought to reflect the formation of such an opinion either to continue or revoke the continuation of the anti-dumping duty. According to Mr. Joshi, reading of the impugned decision would suggest absence of any reasons. When a specific case was made out in the Sunset Review Application, by the impugned order, the application was rejected without undertaking any exercise to suggest that an inquiry was made as stipulated under the Rules.
5.5 Once an application for Sunset Review was made and there were facts duly substantiating, a case for extension of the period of anti-dumping duty, not initiating an investigation for a review was not sustainable. Attention was drawn to Rule 4 of the Rules especially Rule 4(e) thereof to suggest that a review when made on a duly substantiated application, the designated authority is to consider the need for continuance of the anti-dumping duty. When the earlier provisions of Rule 4 are read in context, it would suggest that the parameters for imposing the duty would have to be gone into to decide Page 34 of 47 C/SCA/12368/2018 JUDGMENT continuance thereof, which if the impugned order is read, suggest complete absence of examination of such parameters.
5.6 Rule 6 of the Rules provides for principles governing investigation, which a designated authority is mandated to follow. Rules 10 and 11 provide that an article shall be considered as being dumped if it is exported from a country or territory to India at a price less than its normal value and in such circumstances the designated authority shall determine the normal value,export price and margin of dumping. Similarly, the designated authority shall record a finding that the import of such article causes or threatens material injury or materially retards any establishment and also shall determine the injury to domestic market etc taking into account relevant facts. The procedure thereof has been laid out in Annexure 1 and Annexure 2 of the Rules. In the decision making process, as reflected from reading the impugned order, according to Mr Joshi, consideration of such factors is absent.
5.7 Rule 23(1B) clearly stipulated that the designated authority has to come to a conclusion that the expiry of the said duty is likely to lead to continuation or recurrence of dumping and injury. Sub-rule (3) of Rule 23 specifically provides that the provisions of Rules 6, 7, 8, 9, 10, 11, 16, 17, 18, 19 and 20 shall mutatis mutandis apply in a case of review and therefore the order on such a review should reflect consideration of such parameters. While refusing to even initiate an investigation, by the impugned order, none of these considerations have been gone into by the designated authority and the order therefore is without reasons and must Page 35 of 47 C/SCA/12368/2018 JUDGMENT be struck down as illegal.
5.8 In the submission of Mr. Joshi, the order reflects that the designated authority without even conducting such an investigation has perfunctorily decided the application on the ground that the petitioner has failed to provide sufficient and satisfactory evidence in support of the application, when in fact it has been so provided. The Designated Authority ought to have called for additional evidences as required and with the material that was even provided by the additional letter, the authority could not have ignored such material. It ought to have called for such materials from exporting countries to arrive at an export value and detailed investigation carried out and refusal to even initiate investigation on the basis of material at hand or calling for further material, was an arbitrary exercise of power and the impugned decision therefore deserved to be set aside.
5.9 The application had given enough material showing the likelihood of injury and therefore without even considering these facts the decision was rendered failing to appreciate that if the anti-dumping duty is lifted, the domestic market would be inundated and the market would cripple looking to the Chinese capacity as the % of sales of domestic industry which was projected at 477%.
5.10 Mr Joshi placed reliance on an interim order passed by this Court, by virtue of which, the Court, in exercise of its powers under Article 226 of the Constitution Of India had powers to sit over the decision making process where an order of the designated authority declining the request for Page 36 of 47 C/SCA/12368/2018 JUDGMENT initiating Sunset Review has been rejected. It is open for the court to issue directions for initiating Sunset Review and also issue interim directions for issuing a notification for extending and continuing anti-dumping duty. In the case on hand, Mr Joshi submitted that if such interim or final directions were not issued, the notification of anti-dumping duties would cease to be effective from 9/10/2018 and therefore the domestic market would be seriously affected, in the event of cessation of anti-dumping duty. Looking at the manner and the method in which the impugned order is made, this Court should exercise such powers and interim directions ought to be issued that the anti-dumping duty be extended and the Sunset Review be initiated, while quashing the order. That the perfunctory manner in which the decision is arrived is evident from the fact that on an additional application made on 14.05.2018, within three days a decision is taken on 17.05.2018 to refuse initiation of investigation on the application.
5.11 Mr. Joshi submitted that the petitioner, cannot approach the CESTAT, under Section 9C of the Act by way of appeal as such an appeal can only be filed against an order of determination or review thereof and not against an order refusing to exercise Sunset Review. Reliance was placed on a decision of the Supreme Court in the case of Saurashtra Chemicals Ltd versus Union Of India reported in 2000(118) ELT 305.
6. Mr. Nirzar Desai has appeared on behalf of the Union Of India. He has supported the order of the Designated Authority. It is his case that taking into consideration the Page 37 of 47 C/SCA/12368/2018 JUDGMENT relevant factors under the Act and the Rules, the designated authority has come to a conclusion that no review is warranted. Once such a policy decision by a quasi judicial authority has been taken, this Court, in exercise of powers under Article 226 of the Constitution of India, ought not to substitute its own views.
6.1 Mr Desai has invited our attention to the impugned order and suggested that that it is on examination of facts in detail that the authority has come to the conclusion that the during the injury period the imports have been miniscule. That the price cutting also has been negative and the economic parameters such as sales, production, capacity utilisation profits and cash profits have consistently improved and therefore there is no material injury being suffered. Further, as regards likelihood of recurrence of injury on cessation, the authority has observed that the argument of the petitioner is not valid as no evidence has been given with regard to likelihood of price suppression and the petitioners have not been able to provide sufficient and satisfactory evidence in support of their prayer to initiate sunset review.
6.2 Reliance is placed on the affidavit-in-reply dated 17/09/2018 filed on behalf of the Respondent. That the anti- dumping duty has been in force for 11 years. In accordance with the provisions of Section 9A (5) of the Act, the facts have been considered and as held by the Supreme Court in the case of Union Of India versus Kumho Petrochemicals Company Ltd (2017) 3521 E.L.T 65, the proviso to sub- section 5 of Section 9A is an enabling provision. A prima-facie Page 38 of 47 C/SCA/12368/2018 JUDGMENT opinion has been formed on an opportunity of hearing given on 15/5/2018, and having considered that a decision has been arrived at, which cannot be faulted. In absence of substantial and sufficient evidence provided there was no reason to continue the anti-dumping duty. No case has been made out for continued protection as the applicant failed to make out a case that China's capacities were in excess of its own demands.
7. Having considered the submissions of the learned advocates for the respective parties, the issue that arises for our consideration is, whether the impugned order dated 17.5.2018 refusing to initiate a Sunset Review, on an application made by the petitioner, stands the test of it being so passed within the prescribed legal parameters.
8. On facts, as is evident from the Notification dated 10/10/2013, that for the first time, anti-dumping duty on ductile pipes was imposed by a notification dated 14/09/2007. The Central Government had extended the anti-dumping duty on the subject goods i.e. ductile pipes originating in or exported from China for a further period of five years vide a notification dated 10/10/2013. This was done on an assessment of facts in exercise of powers under sub-sections (91) and (5) of Section 9 of the Customs Tariff Act, 1975 read with Rules 18 and 23 of the Customs and Tariff (Identification, Assessment and Collection of Anti-dumping Duty of Dumped Articles for Determination of Injury) Rules, 1995.
8.1 Section 9A provides for imposition of anti-dumping duty and also stipulates that it shall remain in fore for a period of Page 39 of 47 C/SCA/12368/2018 JUDGMENT five years, unless revoked earlier. Sub-section (5) provides that the anti-dumping duty shall cease to have effect on the expiry of five years. The first proviso provides 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. Therefore, there is power to review the necessity of continuing the enforcement or period of anti-dumping duty on a review so initiated.
8.2 Rule 23 of the Rules provides that the review, either can be on the Central Government's own initiative or upon a request by any interested party who submits positive information substantiating the need for such review. Moreover, such an application has to be duly substantiated. What is evident from the facts on hand is that the anti- dumping duty was initially imposed in 2007 and was initially extended by a period of five years. It was to cease to have effect in 2012, however the designated authority on a review, by a notification dated 10/10/2013 extended the anti-dumping duty for a period of five years and the same is set to expire on and from 9/10/2018. From 10/10/2018, unless the period of anti-dumping duty is further extended, the same shall cease to have effect.
9. The petitioner, together with two other industry representatives, who in all, are 54% stake holders of the domestic industry, therefore made a duly substantiated request, on an application, for review filed as envisaged under the Act and the Rules, on 31/3/2018, requesting for an Page 40 of 47 C/SCA/12368/2018 JUDGMENT extension of the anti-dumping duty. This application was followed up by another additional application providing further data, by such application dated 14.05.2018.
10. The principles governing investigation, that the designated authority is to follow are laid out in Rule 6 of the Rules. According to this Rule, the designated authority, in order to determine the existence, degree and effect of any alleged dumping of any article, issues a public notice notifying its decision and such public notice shall contain adequate information such as: name of the exporting country and the article involved; the basis on which the dumping alleged is based: a summary of factors on which the allegation of injury is based: etc. The Rule further provides that shall also provide a copy of the application to the known exporters or to the concerned trade associations where the number of exporters is large and the government of the exporting countries. The designated authority may issue notice calling for information from the exporters, foreign producers and other interested parties.
10.1 Rule10 provides that an article shall be considered as dumped if it is exported from a country or territory to India at a price less than the normal value and the margin of dumping, the designated authority shall determine the normal value, export price and the margin of dumping taking into consideration principles laid out in Annexure I. 10.2 Rule 11 provides that in order to determine injury the designated authority shall record a further finding that the import of such article causes or threatens to cause material Page 41 of 47 C/SCA/12368/2018 JUDGMENT injury to any established industry or materially retards the establishment of such industry. All relevant facts will be taken into account including the volume of dumped imports, their effect on price and their effect in accordance with principles set out in Annexure II. In an appropriate case the designated authority can record preliminary findings also.
10.3 Rule 17 provides that the designated authority shall record its final findings and the final findings so determined will be submitted to the Central Government. The final findings should reflect determination as to whether or not the article under investigation is being dumped and the finding should show as to: the export price, normal value and the margin of dumping; whether the import of the said article causes or threatens to cause material injury or retards the establishment of such industry: a causal link. The final findings should reflect certain established facts as laid out in sub-rule (20) of Rule 17.
10.4 As stated earlier, the review is carried out under Rule 23 of the Rules. Importantly, sub-rule(3) of Rule 23 states the provisions of Rules 6, 7, 8, 9, 10, 11, 16, 17, 19 and 20 shall mutates mutandis apply in the case of review. Therefore, while deciding an application for a review, the designated authority's order should reflect in such decision making process, the parameters of determination, as laid out under Rules 10, 11, 16 and 17. For the sake of convenience, the order impugned is reproduced herein below:
"
Dated 17.05.2018 To, Page 42 of 47 C/SCA/12368/2018 JUDGMENT M/s. Electrosteel Casting Limited, M/s. Srikalahasti Pipes Ltd. (SPL) and M/s. Jindal Saw Limited Through : APJ-SLG Law Offices, F-21, Geetanjali Enclave, New Delhi- 17 Subject: Order in respect of application for Initiation of Sunset Review Investigation on imports of "Ductile Iron Pipes" from China PR.
Whereas, M/s. Electrosteel Casting Limited, M/s. Srikalahasti Pipes Ltd. (SPL) and M/s. Jindal Saw Limited (hereinafter referred to as "petitioners") have filed an application for initiation of Sunset Review investigation for continuation of existing Anti-Dumping Duty on Ductile Iron Pipe (hereinafter referred as "Product Under Consideration" or "PUC" or "Subject Goods") originating in or exported from China PR. It has been claimed by the petitioners that cessation of present anti-dumping duties is likely to lead to continuation or recurrence of dumping and/or injury. The petitioners have proposed the POI (Period of Investigation) as January 17-December
17.
2. The Designated Authority decided to give an opportunity of hearing to the petitioners to present their case and substantiate their claim for initiation of sunset review investigation as the examination of application had prima facie shown improvement of various economic parameters over the injury period and apparently there was no material injury to the domestic industry.
3. Whereas, the petitioners availed the opportunity of oral hearing before the Designated Authority on 15.05.2018 to present their case and make their submissions.
The petitioner during the hearing made the following submissions:
a) Significant exports have been made by subject country China to Vietnam, Sri Lanka and Turkey at fairly low prices (FOB prices Rs.36616/MT, Rs 37973/MT, and Rs34367/MT respectively). Even after adjustment of ocean freight, insurance, landing charges etc. the constructed landed value Page 43 of 47 C/SCA/12368/2018 JUDGMENT to India would be around Rs.42451/MT, Rs.
44520/MT and Rs.40502/MT respectively which are below the domestic selling price (Rs. 45,163/MT) of subject goods by the Domestic Industry in India and therefore in the event of cessation of duty, there is likelihood of subject goods getting diverted to India and hurting local industry.
b) Producers in the subject countries have significant capacity (75, 20,000 MT), which is 336% of Indian capacity of 22,35,000 MT and 477% of Indian demand of 15,76,776 MT. Surplus capacity of this magnitude with teh exporting country poses a threat of dumped import and injury to the domestic industry.
c) Indian producers and exporters of DI Pipes have been the target of anti-dumping and other unreasonable trade measures in EU and Brazil over the last few years. The actions by EU are the behest of M/s. Saint - Gobain PAM International (SG PAM), which happens to be one of the biggest producers of the DI pipes in the world. SG PAM has multiple facilities around the world with significant presence in China. The imposition of anti-dumping and anti-subsidy duties and the subsequent action is clearly a retaliatory action by SG PAM against Indian exporters as they are not in a position to supply to the Indian market at fair and undumped prices.
d) The DI pipes supply market is largely tender based and thus highly price-sensitive since any loss in price competitiveness may result in bidder losing out the entire contract.
e) There has been acceleration in growth for the domestic DI pipe industry, largely on account of water and sewerage infrastructure development in Indian urban, suburban and rural sector. With only around 31% of India's population currently urbanized, India's urbanization trends have scope to significantly accelerate and likely to be around 40% by 2030 and a healthy domestic DI pipe industry is an absolute must for any growing economy like India where supply of potable water would remain a top priority.
4. Whereas, on examination of the facts in detail, the Authority notes as under:
Page 44 of 47C/SCA/12368/2018 JUDGMENT
a) The volume of imports of the subject goods during the injury period has been very miniscule. In fact, during the first two years of the injury period there were no imports of the subject goods from the subject country at all. Thus, there is no volume effect of injury.
b) The price undercutting also has been negative since the landed value of the imported goods is much higher than the selling price of the domestic goods. Thus, there is no price effect of injury as well.
c) Economic parameters such as sales, production, capacity, capacity utilization, profits and cash profits have also consistently improved. Thus, there is no material injury being suffered by the petitioners.
5. In so far as the likelihood of recurrence of injury on cessation of anti-dumping duty is concerned, the Authority notes as under:
i. The argument that there is likelihood of subject goods exported to Sri Lanka, Turkey and Vietnam getting diverted to India and hurting local industry on the premise that constructed landed value(s) are below the current selling price of the subjects by the Domestic Industry is not entirely valid on the following grounds:
a) There is only marginal difference between the domestic selling price and the landed value constructed from the Sri Lankan prices.
b) The exports to Vietname, Sri Lanka and Turkey taken together constitute only 27% of exports of the subject goods from China.
c) Similarly, the constructed landed value to India of Rs.42451/Mt, Rs. 44520/Mt and Rs. 40502/MT is based on average export prices for Vietnam, Sri Lanka and Turkey respectively whereas the price attractiveness would depend on volume of only those individual transactions which have values lower than the domestic selling price.
ii. The submission made by the petitioner regarding surplus capacities also is incomplete/inconclusive because it neither takes into account domestic demand in China PR nor the exports of hte PUC from China to the rest of the world. In fact, the transaction wise export details furnished by the Page 45 of 47 C/SCA/12368/2018 JUDGMENT petitioners indicate exports to the tune of Rs.5,38,267 MT from China to the rest of the world. Moreover, mere creation of additional capacity in China may not be reason enough for diversion and dumping of subject goods into India.
iii. No evidence has hitherto been given with regard to likelihood of price suppression/price depression caused by the imports of subject goods from China PR.
6. In view of the above, the Authority notes that the applicant has not been able to provide sufficient and satisfactory evidence in support of its prayer to initiate sunset review investigation. Therefore, the Authority decides that the case is not fit for initiation of sunset review investigation."
11. Examination of the impugned order in the background of these significant mandate as required under the Rules would suggest the absence of following factors:
• Nothing is evident to suggest that the designated authority called for information by supplying such copy of the application to known exporters or to the concerned trade associations, foreign producers, calling for information factors on which the allegations of injury were made by the Review Applicants. • Nothing is evident to suggest that there was any determination of normal value, export price and margin of dumping and its assessment in accordance with the principles laid out in Annexure I of the Rules; • Similarly, whether the determination of injury was done in accordance with the principles laid out in Annexure II is also not discernible from the reading of the impugned order;
• Extensive material in terms of annexures was placed before the designated authority to make out a case for a Page 46 of 47 C/SCA/12368/2018 JUDGMENT review and continuance of the anti-dumping duty, in accordance with the Rules, particularly Rules 6, 7, 10 &
11. That these Rules applied even in carrying out a review is clear from sub-rule(3) of Rule 23.
• The Order only records the submissions of the applicant without disclosing whether the data has been called for from exporting countries. A casual finding refusing to initiate sunset review investigation is recorded by stating that the applicant has failed to provide sufficient and satisfactory evidence in support of its prayer to initiate sunset review investigation. • The order therefore fails the test of having considered the application, as required under the mandate of the Section i.e. Section 9A(5) read with the Rules thereunder.
12. Accordingly, impugned order dated 17.05.2018 is set aside, as the same is without reasons. The respondent authority shall decide the application requesting a sunset review afresh, in accordance with law, within six months from the date of receipt of this order. Till such a decision is taken, the period of anti-dumping duty, which ceases to have effect on and from 9/10/2018, shall stand extended. Petition is allowed accordingly. Rule is made absolute. Direct service is permitted.
(ANANT S. DAVE, J) (BIREN VAISHNAV, J) DIVYA Page 47 of 47