Customs, Excise and Gold Tribunal - Delhi
Reliance Industries Ltd. vs Designated Authority on 29 November, 2000
Equivalent citations: 2001(73)ECC762, 2001(127)ELT99(TRI-DEL)
ORDER C.N.B. Nair, Member (T)
1. M/s. Reliance Industries Ltd. filed application dated 12-10-1998 seeking the imposition of Anti Dumping Duty on Pure Terephthalic Acid (FTA) originating in, or exported from Japan, Malaysia, Spain and Taiwan. The Designated Authority in the Ministry of Commerce initiated investigations on the said application in April 1999. The investigations culminated in the imposition of anti-dumping duty on PTA originating or exported from Spain at the rate of Rs. 521/- per M.T. (Customs Notification No. 82/2000, dated 30th May, 2000 of the Department of Revenue). No duty was imposed on exports from the other Countries.
2. The present appeals are directed against this Notification of the Department of Revenue. M/s. Reliance Industries have filed their appeal (numbered as C-267/2000-AD) seeking enhancement of duty in the case of exporter from Spain and imposition of duty on exports from the other countries mentioned in their petition. M/s. Interquisa, Spain has filed their appeal (numbered as C/313/2000-AD) seeking the quashing of the imposition of duty on exports by them. As both the appeals are directed against the same notification, we consider it convenient to deal with both the appeals together and to pass this common order.
3. The grievance of M/s. Reliance Industries is that the Designated Authority had reached findings in the Final Finding dated 20th April 2000 upholding their contention that exports from Japan and Malaysia were also at dumped prices and that the domestic Industry had suffered injury. However, no anti-dumping duty was recommended in respect of imports from Japan and Malaysia on the ground that the imports from these countries were above non-injurious price and, therefore, there was no causal link between dumped imports from these countries and injury to domestic industry. They submit that this finding is inconsistant with the determination that imports were at dumped prices and that domestic industry had suffered injury. They also have submitted that the finding that imports from Japan and Malaysia were at non-injurious prices is also incorrect and is the result of faulty determination of fair landed value in respect of imported goods and non-injurious price in respect of domestic manufacturer. The appellants have submitted that they had placed cost of production data in respect of PTA manufactured by them but the designated authority incorrectly determined the non-injurious price at a lower amount and this has led to the incorrect finding that there is no causal link between injury to domestic industry and imports from these countries. With regard to the determination of landed value their submission is that the landed value has been determined at an inflated amount and that is the reason for the incorrect determination that the landed value of imports is more than non-injurious price.
4. During the hearing of the case, the learned Counsel for M/s. Reliance Industries submitted that they are at a loss to understand as to how the non-injurious price was fixed at a lower amount than the cost of production indicated by them. The learned Counsel stated that the Disclosure Statement issued by the Designated Authority does not state as to what were the elements of costs being disallowed and what is the reason for doing so. He also submitted that in the present case there was no requirement to keep any confidentiality, with the appellant with regard to computation of non-injurious price, as the appellants were the only domestic industry represented in the proceedings before the Designated Authority and the basis of the finding was the cost data furnished by them. The learned Counsel urged that the Tribunal may go into the correctness of the amount determined as non-injurious price by the Designated Authority.
5. With regard to the determination of landed price, the learned Counsel submitted that the law relating to the costs and the other elements required to be included while determining the landed value is quite settled by now. He submitted that the full data as to what are the elements of cost and expense and duties actually taken into account while working out the landed value have not been specified in the Disclosure Statement. He, however, submitted that it is settled law that not all duties paid on imported goods are required to be included while computing the landed value. Similarly, a separate addition towards handling charges is not required to be made. The learned Counsel urged that the Tribunal should go into the correctness of the computation of landed value and refix anti-dumping duties on all the parties who would become liable to anti-dumping duty on such refixation. The learned Counsel also submitted that duty in the present case is also required to be fixed in dollar terms, in confirmity with the previous orders of the Tribunal on the subject.
6. Upon consideration of the points raised by the appellants' Counsel regarding non-disclosure of all the details about the elements of cost excluded while fixing the non-injurious price, we directed the representatives of the Designated Authority and the representatives of M/s. Reliance Industries to discuss the matter in a meeting along with their Counsels so that the appellant is made aware of the elements of cost which have been excluded while fixing the non-injurious price, from the cost indicated by them in their cost of production. Accordingly, arguments were resumed after discussions were held between both the sides.
7. In reply to the points raised by the appellants, the learned Counsel representing the designated authority stated that the designated authority had made certain deductions from the cost of production data made available by the appellant while fixing non-injurious price. He stated that these had been explained during the discussions to the appellant. He submitted that the variations were with regard to raw-material and utilities costs and provisions for sales tax and income tax. With regard to price of utilities (mainly electricity) the appellant had wanted electricity tariff price to be the basis while the Designated Authority had taken into account the actual cost incurred by the appellant. The appellants were drawing part of the electricity from the power grid and generating the remaining in their own Plant. The Designated Authority had worked out the cost of electricity taking into account the actual cost incurred by the appellant in respect of both the sources. He submitted that this is the correct method for working out the cost of electricity and adoption of market cost based on the tariff of electricity suppliers would have yielded only an artificial and theoretical cost. With regard to cost of raw materials, the learned Counsel for the Designated Authority stated that the cost has been correctly worked out based on actuals. In respect of sales tax, the learned Counsel for the Designated Authority has submitted that there is no justification to include sales tax while working out the cost of production, as non-injurious price has been worked out on ex-factory basis and sales tax does not enter into such a price. With regard to the claim for inclusion of element for income tax, the learned Counsel submitted that the methodology adopted by the Designated Authority while computing the cost of production is to make a suitable provision for return on capital invested. He submitted that, that method is the correct method to be used, inasmuch as a reasonable return on capital takes care of all elements. The learned Counsel for the Designated Authority submitted that no change is called for in the non-injurious price worked out.
8. With regard to the computation of landed value, the learned Counsel for the Designated Authority stated that the landed cost had been worked out including SAD and 2% towards handling charges. He submitted that these additions would not appear to be warranted as SAD is not one of the duties stipulated for working out landed cost. There was also no requirement for making an addition towards handling charges as the same remained included in the 1% landing charges already included. He, therefore, submitted that the landed value was required to be re-computed after excluding these two elements, and consequent changes made in anti-dumping duty already imposed. Both the Counsels agreed that the position as stated by the learned Counsel for the Designated Authority had been discussed and agreed upon by both sides.
9. Appeal of M/s. Interquisa (Appeal No. 313/2000 AD), seeks quashing of the duty imposed on their exports. Their contentions in support of that plea are that at the time of filing of the application by the domestic industry, no imports had taken place from Spain, that the import of 4025 MTs. during the investigation period was de-minimus and that the imposition of duty is contrary to the Disclosure Statement. The appellant submits that in the application of the Domestic Industry (M/s. Reliance Industry) information about imports upto September, 1998 had been furnished and during this period there were no exports by the appellant. The appellant's complaint is that as there was no export during the period indicated in the application, the designated authority was not justified in starting an investigation against the appellants at all. They further submit that it was irregular on the part of the Designated Authority to fix a period of investigation going beyond the date of application and in the present case the authority fixed the period of investigation from April 1998 to December 1998 while the application was only on 12-10-1998. The appellants also submit that during the investigation period their supplies were only 4025 M.T. while, according to them, total import into India of PTA was 126731 MTs. They submit that the Designated Authority based its decision on the incorrect data submitted by the Director General of Commercial Intelligence which indicated PTA import at 87497 MTs during the investigation period. The appellants submit that their exports would be de-minimus when the correct import figures are taken into account. Learned Counsel for M/s. Inter-quisa also submitted that according to the Disclosure Statement of the Designated Authority there was negative injury margin in respect of their exports. He contended that no anti-dumping duty can be imposed on exports from M/s. Interquisa as anti-dumping duty is not to exceed injury margin.
10. Learned Counsel representing the Designated. Authority has explained that the objections raised by M/s. Interquisa are not sustainable. With regard to the period of investigation, he submitted that the Designated Authority has the discretions to fix a period of investigation and all relevant data for that period are to be considered. In the instant case, as the applicant had submitted that large imports are anticipated from the appellant within a short period of the filing of the application, the authority was fully justified in fixing the period of investigation from 1st April to December 1998 even though that period went beyond the date of application. In fact, the authority had acted appropriately in so fixing the period of investigation as to include a period which included the appellant's imports. He also submitted that the appellants' submission that the exports were de-minimus is not factually correct. The data furnished by the appellants was based on 'forecast' and not data regarding actual imports. The Designated Authority was, therefore, right in rejecting a forecast in favour of data regarding actual imports as maintained by Director General of Commercial Intelligence. The exports of the appellant were much in excess of the de-minimus. Therefore, the Designated Authority was justified in considering imposition of anti-dumping duty on their exports. With regard to the variation in finding regarding injury margin between the Disclosure Statement and the recommendation for imposition of duty in the final findings, the learned Counsel explained that while fixing the landed value in the Disclosure Statement, the Designated Authority had made addition towards SAD and handling charges. However these additions are not liable to be made. The Final Findings excluded SAD; but included provisions for handling charges. The injury margin is, therefore, required to be fixed in the case of the present appellant also after excluding these two elements. He also submitted that the duty is also to be imposed in dollar terms in view of the decisions of the Tribunal in earlier cases.
11. We have perused the records and have considered the submissions made on behalf of the appellants and the Designated Authority. The grievance of M/s. Reliance Industry is that duty has not been imposed in respect of many of the exporters because of an erroneous finding that their exports were above the non-injurious price. They contend that these findings are incorrect on account of the errors committed while computing the non-injurious price and landed value. The Designated Authority has fully explained to M/s. Reliance Industry as well as in the hearing before us the reasons for fixing non-injurious price below the cost of production indicated by M/s. Reliance Industries. The cost of utilities and raw-materials have been fixed by the Designated Authority based on actuals, actuals being lower than the market tariff indicated by M/s. Reliance Industries. Whether the Domestic Industry has suffered injury and if it has suffered injury, whether there is a causal link between the injury and imports are matters of fact to be determined after considering relevant data and not based on assumptions. This is particularly so when the Domestic Industry is already in existence and in production for quite some time. Actual cost of production offers a reliable basis for injury analysis. Assemptions would be valid and permissible in a case where the antidumping duty is sought to be imposed in order to prevent the retardation of the establishment of Domestic Industry or the growth of Domestic Industry. In the present case, since the Domestic Industry is already well established, the Designated Authority was entirely justified in going by the actual data. We, therefore, hold that the Designated Authority acted properly and correctly in going by the actual costs of raw-materials and utilities. Sales Tax is not to form part of ex-factory price. Therefore, the authority was justified in excluding sales tax element while fixing non-injurious price. The authority had provided for fair return on cost of capital while fixing non-injurious price. Such a provision takes care of various elements relating to cost of capital. Therefore, the authority could not be faulted for excluding the element of Income Tax also, which had been claimed by the appellant. For these reasons, we find no error in the method followed by the Designated Authority while computing the non-injurious price and uphold the saine. All the same, we are constrained to observe that the investigation procedure of the Designated Authority requires greater transparency. We are in agreement with the appellants' Counsel that much of the difficulty in the present case is caused by the non-supply of sufficient information in the Disclosure Statement. Through the confidential and non-confidential parts of the Disclosure Statement the Designated Authority is expected to disclose to the parties the basis of determination of non-injurious price and landed value. If care is taken to ensure that the Disclosure Statements fully states the basis of the working out of the non-injurious price, and landed value, the applicants and other parties to the investigations will be in a position to fully comprehend what are the elements of cost proposed to be disallowed by the Designated Authority from the cost of production indicated by them and make informed submissions before conclusion of the investigations. Comprehensive and lucid statement of the basis of computation and the reasons for disallowing the elements not included in the computation of non-injurious price would remove room for mis-understanding and mistakes. This complaint has figured before us in other appeals also. The repeated grievance of the Domestic Industry has been that the Disclosure Statements are neither comprehensive nor clear. They have also pointed out that, in contrast, the Eu-ropeon Union issued Disclosure Statements which clearly indicate the basis of computations and modifications made to the data supplied by the parties. It would advance transparency in the Designated Authoritys' investigations and remove much complaint if the Designated Authority issues comprehensive and clear Disclosure Statements through which it would make known to the parties to the proceedings as to what were the elements added or deleted from the data supplied by them and for what reasons. We trust the Designated Authority would bring about the required improvement in this area and win the confidence of the Domestic Industry and exporters, and finally, make our own appellate work simpler and easier.
12. With regard to the fixing of landed value in the present value, we find that the authority has included two elements which were not required to be included. SAD is not one of the duties liable to be included while fixing landed value. Similarly, there is no justification for addition of 2% towards cost of handling. We have already held in our Final Order Nos. 37-40/2000-AD, dated 6-11-2000 [2000 (122) E.L.T. 412 (T)] in the case of Automotive Tyre Manufacturers Association v. The Designated Authority & Ministry of Finance that further addition towards landing charges are not to be made while fixing landed value. In the present case the addition of SAD and handling charges has inflated the landed cost and brought down injury margin, leading to erroneous findings regarding causal link also. Therefore, landed value is required to be refixed after excluding these elements. After such refixing of landed value, the same is required to be compared with non-injurious price to identify the exporters who have caused injury and to what extend (injury margin). The investigation proceedings have clearly held that dumping takes place in the exports from all the parties named in the application except Taiwan from which country, there were no exports. Anti-dumping duty is the lessor of dumping margin and injury margin. In the present case dumping margins are found to be much higher than the injury margins. Therefore, injury margin which represents the extend of injury to the Domestic Industry from the dumped exports i.e. the difference between the revised landed value and non-injurious price, are required to be fixed as duty.
13. Consequent to a revision of the landed value on the lines indicated above, the following injury margins are noticed in respect of exporters who took part in the investigations.
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Country Exporter Injury Margin
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1. Japan 1. M/s. Mitsui Chemical US $ 7.11 Per M.T. Corporation
2. Mitsubishi Chemical Inc. Negative
2. Malayasia 1. M/s. Amoco Chemical Negative
3. Spain 1. M/s. Interquisa US $ 19.90 per M.T.
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14. Since injury margins as aforesaid are observed in respect of exports from the above countries definitive anti-dumping duties equal to the injury margins are required to be imposed on the exporters found to be causing injury to the domestic industry by dumping their goods. A definitive antidumping duty equal to the highest anti-dumping duty imposed on the exporters from each of the subject exporting countries is also required to be imposed on all other exporters who did not participate in the investigations. Antidumping duties are also required to be imposed in US $ terms (CEGATs' Final Orders in the cases of (1) Automotive Tyre Manufacturers' Association and Anr. v. Designated Authority [2000 (117) E.L.T. 625 (Tri.) - 2000 (38) RLT 19 (CEGAT)] (2) Oswal Woollen Mills Ltd. and Anr. v. The Designated Authority 2000 (38) RLT 132 (CEGAT) (3) Pig Iron Mfrs. Association v. Designated Authority, Ministry of Commerce [2000 (116) E.L.T. 67 (CEGAT)]. Accordingly, the following anti-dumping duties are imposed on the PTA exported from or originating in Japan and Spain in modifications of the anti-dumping duties imposed under Customs Notification No. 82/2000, dated 30th May, 2000.
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Sl. Exporting Exporter/ Amount of Antidumping
No. Country Producer duty in US $ per Metric
Tonne.
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1. Spain (1) M/s. Interquisa 19.90 (2) All others 19.90
2. Japan (1) M/s. Mitsui Chemicals. 7.11 (2) M/s. Mitsubishi Corporation Nil (3) All Others 7.11
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14. Both the appeals are disposed of as indicated above.