Custom, Excise & Service Tax Tribunal
M/S Indian Wind Turbine Manufacturers ... vs Designated Authority, Dgad, Mof on 7 September, 2016
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No.2, R. K. Puram, New Delhi, Court No. 1 Date of hearing: 02.09.2016 Date of decision: 07.09.2016 Anti Dumping Stay No. 50726 of 2016 and Anti Dumping Appeal No. 51295 of 2016 (Arising out of Final Finding No. 17/6/2013-DGAD dated 27.11.2015 issued vide Customs Notification No. 1/2016-Cus dated 19.01.2016 issued by the Ministry of Finance, Department of Revenue). M/s Indian Wind Turbine Manufacturers Association Appellant Vs. Designated Authority, DGAD, MoF. Respondent
Appearance:
For Appellant Sh. S. Seetharaman, Sh. Aman B, Ms. Radhika Sharma and Sh. Ankur Sharma, Advocates for the Appellant Sh. Amit Singh, Advocate for DA Sh. Govind Dixit, DR for Revenue Ms. Reena Khair, Sh. Rajesh Sharma, Ms. Rita Jha, Ms. Richa Shukl, & Ms. Shreya Dahiya, Advocates for the interested party.
Coram:
Honble Mr. Justice (Dr.) Satish Chandra, President Honble Ms. Archana Wadhwa, Member (Judicial) Honble Mr. B. Ravichandran, Member (Technical) Final Order Nos. 53401/2016 Per: B. Ravichandran:
The appeal is to challenge the imposition of Countervailing Duty (CVD) by Notification No. 1/2016-Cus (CVD) dated 19.01.2016 as per Final Findings of the Designated Authority (the DA), Directorate General of Anti-Dumping and Allied Duties, Ministry of Commerce and Industry.
2. The brief facts of the case are that M/s Larsen & Toubro Limited (Petitioner /DI) approached the DA for initiation of anti-subsidy Countervailing Duty investigation concerning imports of Castings for Wind Operated Electricity Generators (subject goods) originating in or exported from China PR. The DA initiated such investigation vide Public Notice dated 29.05.2014. After following the procedure as set out in Customs Tariff (Identification, Assessment and Collection of Countervailing Duty on Subsidised Articles and for Determination of Injury) Rules, 1995 the DA recommended definitive CVD as a percentage of the landed value of imports of subject goods, originating in or exported from China PR. The present appeal is restricted only to CVD imposed on producers/ exporters other than Zhejiang Jiali Wind Power Technology Company Limited.
3. The appellant is an Association of importers of subject goods. The ld. Counsel for the appellant submitted that as per Rule 6 of CVD Rules the petition should be supported by evidence of subject, injury and the causal link. The DA initiated the investigation without sound basis and supporting evidence.
4. The ld. Counsel argued that the basis and principles adopted in calculating the subsidy margin are erroneous. In relation to grants, the subsidy margin should have been calculated for every program as per provisions of Annexure-IV paragraph B. Totalling the subsidy margin of all programs under grants is not correct. While the DA determined that Jiali Wind Power did not benefit from some of the programs, he proceeded to arrive at subsidy margin based on financial benefits received by the parent company. There is no evidence as to how much allocation has been made to Jiali out of such grants.
5. The ld. Counsel further submitted that under program No. 43, there is no specific supporting evidence to conclude that supply of raw materials (scrap and pig iron) has been made by public body for less than adequate remuneration. The Finding of the DA is vague, as to the exact nature of public body and private intermediaries who are involved in the grant of such benefits. The support drawn from U.S. authorities Finding is misplaced. The raw materials involved there were wire rod and zinc. Further, the subsidy margin cannot be arrived at based on world market prices as benchmark.
6. The subsidy margins for various programs Nos. 8 to 13, 25 have been arrived at without any specific supporting data. There is no evidence to indicate that any of them are countervailable.
7. The ld. Counsel also submitted that adequate opportunity was not given to the appellant to clarify and defend their position before the DA.
8. The ld. Counsel for DI took preliminary objection about the maintainability of appeal stating the Association is not representing interested parties. Further, the appellant cannot challenge the Finding which is based on Financial/ material transactions between public body and producer / exporter in China.
9. On the merits of present appeal, the ld. Counsel for DI submitted that neither the Government of China nor the producers in China (except Jiali) co-operated fully with the DA by furnishing complete details. She drew our attention to Rule 7(8) of CVD Rules which provides the DA to record his Findings on the basis of available information. It was further argued that programs for grant cannot be denied as details are ascertained by the DI and furnished to the DA. When the producers / exporters not co-operated in any manner, it is not open to the appellant who has apparently no access to any material data nor submitted any contrary evidence, to challenge the veracity of the Finding.
10. Ld. Counsel for DA submitted that the Government of China did not allow access to any relevant document and record to ascertain the true picture of various programs for financial grants and sale of raw materials for less than adequate remuneration. Even on status of various institutions, the information was not forthcoming. In such scenario the DA followed the options available as per CVD Rules and also on findings, wherever relevant, of other country authorities.
11. Ld. AR for Revenue supported the customs notification. In view of non-cooperation by the producers and China, it is for the DA to follow the legal option available to draw adverse conclusions based on available information.
12. We have heard all the parties as above, perused the appeal records and written submissions. The CVD levied on subject goods from China is under challenge. We note that the appellant is an Association of user industry in India of subject goods. They were issued with notice by DA alongwith many of the members. Some of the importers, who are also members of Association did file questionnaire response and were part of the proceedings before the DA. To that extend appellants connection to the proceedings cannot be disputed. However, it is pertinent to note that none of the producers/ exporters of subject goods challenged the imposition CVD. The importers in India are only contesting the same. This creates a peculiar situation wherein, the importer though suffers CVD, has no supporting material evidence of their own to put up a clear and precise challenge to the Findings of the DA. In the present appeal, the grounds focus mainly on purported incorrect calculation of subsidy margin attributable to various programs in China. As could be seen, the appellant repeatedly states that there is no clear empherical evidence to conclude that countervailable subsidy has been enjoyed by producers. We note that the appellant did not provide any data or counter evidence of any kind to contest the Findings.
13. We have examined the Findings of the DA in detail. We note that the scope of investigation by DA was to find out whether or not the producers/ exporters of the subject goods have benefitted from the actionable subsidies provided by various levels in the Government of China. After prima-facie satisfaction about the existence of a case for investigation, the DA issued notice to all the interested parties for providing information. He had also listed 45 programs which are claimed to be connected to actionable subsidies.
14. It is relevant to note here that full and comprehensive information on all the related parameters like existence of such program, connection to producer/ exporter, connection to subject goods, quantum of financial / material support, the status and role of institution providing such support, countervailability of such subsidy as per the terms of CVD Rules and international agreements etc. is of paramount importance to arrive at a finding. In the present case, we note that Government of China neither provided the complete information, nor consented for the on the spot verification offered by the DA. The Chinese Government did not permit the DA to visit China to conduct on the spot verification of data/ information furnished by the sole respondent producer/ exporter. In para 6 of the Findings the DA records:
6. The Authority notes that despite adequate opportunities provided to the Government of China(GOC) through the deficiency letters and otherwise, to provide detailed information concerning the various alleged subsidy schemes, the benefits provided to the Chinese producers/ exporters under the same and the countervalability of the same vis-a-vis the Subsidy Agreement, the GOC neither provided the complete information, nor consented for the on the spot verification offered by the Authority. The GOC did not permit the Authority to visit China to conduct on the sport verification of the data/ information furnished by the sole Chinese respondent producers/ exporter. Had the GOC cooperated and allowed on the spot verification of their information/ documents/ records and that of the sole respondent Chinese producer/ exporter, the Authority would have been in a better position to establish whether the alleged programs exist, whether the SOEs involved in the alleged programs are pubic bodies and whether the alleged programs are countervailable under the law. Since GOC did not extent the required cooperation, the Authority had to look for and rely upon other best available information.
15. The DA proceeded stage by stage and followed the procedure set out in CVD Rules before Final Findings. The appellant who were also issued notice before initiation of investigation as well as disclosure details also did not submit any supporting data to sustain their contest against CVD on subject goods. Apparently, they could not obtain any such supporting data/ information relevant to investigation from their Chinese exporters/ producers of subject goods.
16. Having considered the case in the above factual matrix, we have to examine the correctness of Finding by the DA. We note, though the initiating of investigation was notified for 45 programs, the DA terminated enquiry in respect of many programs, restricting the final investigation only to 23 programs. Each one of these programs has been individually dealt with, though with limited data available. We have perused programewise findings.
17. We note that based on the information furnished by the only co-operating producers/ exporter (Jiali Wind Power) and after analysis, the DA fixed a programwise as well as total subsidy margin to the said exporter. For, others who did not co-operate, based on legal option the subsidy margins were constructed by the DA. Neither the co-operated exporter nor the non-co-operated exporters have challenged the CVD levy.
18. We have also examined the Findings with reference to subsidy margin, injury to DI and causal link. We have taken note of relevant provisions of CVD Rules as recorded in the findings:-
112. Rule 13(1) of the Countervailing Duty Rules states:
13. Determination of Injury (1) In the case of imports from specified countries, the designated authority shall give a further finding that the import of such article into India causes or threatens material injury to any industry established in India, or materially retards the establishment of an industry in India.
113. Annexure I to the Countervailing Duty Rules, 1995, as amended in 2006, deals with the principles governing the determination of injury. Paragraph 1(1), (2) and (3) of the Annexure read as follows:
1. (1) A determination of injury for purposes of rule 13 shall be based on positive evidence and involve an objective examination of both (a) the volume of the subsidized imports and the effect of the subsidized imports on prices in the domestic market for like products and (b) the consequent impact of these imports on the domestic producers of such products.
(2) With regard to the volume of subsidized imports, the designated authority shall inter alia consider whether there has been a significant increase in subsidized imports, either in absolute terms or relative to production or consumption in India.
(3) With regard to the effect of the subsidized import on prices, the designated authority shall, consider whether there has been a significant price undercutting by the subsidized imports as compared with the price of a like article in India, or whether the effect of such imports is otherwise to depress prices to a significant degree or to prevent price increases, which otherwise would have occurred, to a significant degree.
114. Para 1(5) of the Annexure I to the Rules lists relevant economic parameters to the evaluated by the designated authority:
( 5) The designated authority while examining the impact of the subsidized imports on the domestic industry shall include an evaluation of all relevant economic facts and indices having a hearing on the state of the industry, including actual and potential decline in output, sales, market share, profits, productivity, return on investments, or utilisation of capacity; factors affecting domestic prices; actual and potential negative effects on cash flow, inventories, employment, wages, growth, ability to raise capital investments and, in the case of agriculture, whether there has been an increased burden on government support programmes.
19. The DA had examined volume effect of the subsidised imports on domestic industry, price effect (underselling), other economic parameters. When the interested parties do not co-operate to the fullest extent, then reliance upon best available facts is acceptable alternative for the DAs worldwide, while proceedings with investigation. We note that the DA went ahead with investigation only where sufficient, prima-facie data was provided by DI. The investigation was terminated wherever such data was not provided by DI. Adequate opportunities were provided to the interested parties by the DA to make submissions. The DA had also examined the question regarding scope of the term public body in terms of Article 1 of Agreement on Subsidies and Countervailing measures.
20. After careful analysis of all the issues agitated before us we find that the present appeal is devoid of merit. Accordingly, the same is rejected. The connected stay application also disposed of.
(Pronounced on 7.9.2016).
(Justice (Dr.) Satish Chandra) President (Archana Wadhwa) Member (Judicial) (B. Ravichandran) Member (Technical) Ckp 1