Delhi High Court
Foshan Shansui Romantic Ceramics Co. ... vs Union Of India & Anr. on 20 March, 2017
Author: Najmi Waziri
Bench: S. Ravindra Bhat, Najmi Waziri
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgement delivered on: 20th March, 2017
+ W.P.(C) No.2540/2017 & CM Nos. 10959-60/2017
FOSHAN SHANSUI ROMANTIC CERAMICS CO. LTD. & ORS.
.....Petitioners
Through: Mr. Balbir Singh, Senior Advocate with
Ms.Rubal Maini and Ms. Pramila
Viswanathan, Advocates.
Versus
UNION OF INDIA & ANR. ...... Respondents
Through: Mr. Anurag Ahluwalia, CGSC.
CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
HON'BLE MR. JUSTICE NAJMI WAZIRI
NAJMI WAZIRI, J.:-
CM No. 10959/2017 (for exemption)
1. Allowed, subject to all just exceptions.
2. The application stands disposed off.
W.P.(C) No.2540/2017 & CM No. 10960/2017
3. Issue notice. Mr. Anurag Ahluwalia, CGSC accepts notice on behalf
of the respondents.
4. With the consent of the parties, the petition is taken up for final
hearing.
5. The petitioner seeks quashing of the final order dated 25.01.2017
passed by the Customs Excise & Service Tax Appellate Tribunal (CESTAT)
ITA Nos.547/2013 & other connected matters Page 1 of 17
in the petitioner's appeal, as well as the quashing of the Custom Notification
dated 07.06.2016.
6. The facts of the case are that anti-dumping duties had been imposed
against import of the Vitrified/Porcelain Tiles originating in or exported
from the People's Republic of China (PRC). During the tenure of the said
levy, a New Shipper Review (NSR) under Rule 22 of the Customs Tariff
(Identification, Assessment and Collection of Anti-Dumping Duty on
Dumped Articles and For Determination of Injury) Rules, 1995 (hereinafter
to be referred as 'the Rules') was notified on 01.05.2003. The review was
sought before respondent No.2, the Designated Authority (DA) by the six
petitioners, who are producers, shippers and importers of Vitrified/Porcelain
Tiles. Petitioner Nos. 1 to 4 claimed that they had neither exported the said
goods nor were they related to any of the exporters during the initial period
of investigation, hence, they were eligible for an individual dumping margin
under the aforesaid Rules. The anti-dumping duty continued vide Sunset
Review (SSR) Notification dated 27.06.2008. The review application was
filed on 19.04.2012 i.e. while the second SSR Notification was in existence.
The NSR Investigation was initiated vide Notification dated 18.05.2012 for
determination of the individual dumping margin for imposition of anti-
dumping duties on the imports made by the petitioners No. 1 to 4. The
period of investigation was for six months inter alia from 01.05.2012 to
31.10.2012. During the period of investigation, provisional assessment was
recommended for the petitioners apropos the subject goods till completion
of the review and Customs Notification No. 35/2012 in this regard was
issued on 10.07.2012 imposing a provisional duty on all the imports of the
petitioners originating from PRC till the completion of the review. The
ITA Nos.547/2013 & other connected matters Page 2 of 17
tenure of the levy of anti-dumping duty under the first SSR Notification
dated 27.06.2008 had expired on 26.06.2013. The second SSR application
filed by the Indian Council of Ceramic Tiles and Sanitaryware was rejected
by the DA. Nevertheless, the petitioners' NSR plodded along and a
Verification Report/Disclosure Statement was issued on 07.05.2015 but after
further verification of the data by the DA submitted by the petitioners and/or
the Domestic Industry (DI), a second verification report was released on
16.03.2016. This, according to the petitioners, is an error in procedure and
of substantive law.
7. It is the petitioners' case that only the name of the producer-2
/petitioner No.2 was changed while the company remained in existence from
the year 2000 onwards as per information gathered from the website, and
that it had several related companies, which were involved in the production
and sale of the subject goods. A conclusion was also drawn of the
relationship between petitioner nos. 1 to 4 on the basis that petitioner no.4
(the exporter) was being operated from the office of one M/s Swift
Secretariat Services, a company which was owned by the Company
Secretary. However, this by itself would not, in the absence of documentary
evidence, show that the realization of export proceeds was from its related
buyers. The petitioner nos. 1 to 4 contend that they made no exports during
the earlier period, hence the observations of the DA with respect to either
the exports to India or to the related companies were unfounded and
irrelevant to the aspect of dumping and injury.
8. The petitioners contend that without considering or examining the
relevant facts, the DA nevertheless issued Final Findings on 28.03.2016
recommending imposition of anti-dumping duty on all the imports made
ITA Nos.547/2013 & other connected matters Page 3 of 17
through petitioner nos. 1 to 4 on the ground that they could not be treated as
"New Shippers" under Rule 22 of the Rules. Subsequently, respondent No.1
vide Customs Notification dated 07.06.2016 imposed dumping duty on all
imports of the subject goods produced by them.
9. Thereafter, six appeals were filed before the CESTAT by the
petitioners contending that the DA had failed to verify the relevant details
before confirming the levy of anti-dumping duty. The petitioners were
informed of the final hearing of the case vide a notice dated 03.12.2016
wherein the case was listed two days later i.e. on 05.12.2016. The
petitioners' counsel who was located in Chennai had requested for an
adjournment through his colleague in Delhi, the request was acceded to
subject to payment of costs of Rs.1,000/- per petitioner and the case was
adjourned to 12.01.2017. The petitioners further contend that on the said
date of hearing, at the outset, the Departmental Representative had sought an
adjournment on the ground that since the Registry had not served the
relevant appeal files on them, they would not be in a position to effectively
represent the Department. However, the adjournment was not granted, the
petitioners' counsel was heard, the case was reserved for pronouncement of
orders and the Departmental Representative was asked to file its written
submissions. On 25.01.2017, the petitioners' appeals were rejected by a
Common Final Order on the ground that the DGAD had examined all the
details but oddly without recording any contentions relating to filing of
written submissions by the Departmental Representative. The petitioners
contend that although the respondents' written submissions were taken into
consideration in the impugned order, a copy of the same was never supplied
to them, which itself constitutes a breach of natural justice. It is the
ITA Nos.547/2013 & other connected matters Page 4 of 17
petitioners' contention that on merits also, the case against them should have
been dropped because the dumping margin against them as de minimis i.e.
less than 2% and this was clearly demonstrated in the Disclosure Statement.
Yet strangely, the Final Findings had recommended imposed anti-dumping
duty against them without any justification. The petitioners also contend
that the impugned order erred on facts and does not refer to their oral
submissions nor does it truly record their contentions apropos the on-the-
spot verification and other written submissions and pleadings.
10. The Court would note that the written submissions submitted by the
Departmental Representative were taken into consideration for the purposes
of the impugned order (para 7). The reasoning of the CESTAT is contained
in para 9 to 12, which read as follows:-
"9. We note that the DA has examined the status of the
appellants for a claim of New Shipper Review under the
said Rules. It is seen that the appellant No.1 and 2, who are
related producers were not new players in the business but
were actually in existence, in different names, earlier. The
on the spot verification conducted by the DA revealed the
said fact. In fact appellant No.2, though declared to have
been set up in 2009, was in fact, in existence from 2001.
This fact was not disclosed in the declaration filed by the
appellant. Similarly, it was also recorded that these
Producers have a much wider relationship network than
what was declared by them. This puts the whole claim and
basis of New Shipper Review under jeopardy. Further, the
appellant No.3 is actually exporter of subject goods and
realised export proceeds directly from the Indian buyers.
There is no supporting evidence to their sale transaction
with appellant no. 4.
10. After careful consideration of the relationship and
commercial transaction, the DA concluded that it will not be
ITA Nos.547/2013 & other connected matters Page 5 of 17
appropriate to clear the subject goods made by the
applicants without payment of AD duty.
11. We also note that Rule 22 did not provide for any time
schedule for completion of New Shipper Review. In the
present case, though there is considerable delay in issuing
the final findings, the backgrounds and circumstance for
such delay has been explained by the DA. First of all, the
appellant refused for on the spot verification. It was only
after the issuance of First disclosure statement, they have
consented for such verification. Later, change of DA
necessitated a second oral hearing. The appellants did not
participate in the first oral hearing. We note that the
appellants did not diligently follow up their application for
review. They did not appear for oral hearing when the case
was posted and did not submit any brief in support of their
case. It is only after the second oral hearing, further
progress could be made in the investigation. Regarding the
reasons for not finding merit in New Shipping Review by the
DA, we have specifically examined the observations of DA
in paras-25 to 27 of the final findings. We find that the
appellants herein did not have supporting facts to counter
the findings recorded by the DA. We also note that the
appellants did not make full and complete declaration
regarding their period of existence and relationship among
themselves. There are several related companies involved in
production and sale of subject goods from China, PR. In the
absence of full and complete disclosure and transparent
cooperation, it will not be possible for the DA to agree with
the plea of the appellant for a New Shipper Review or
individual dumping margin. We note that absence of the
second sunset review or termination of AD duty on the
subject goods is of no direct relevance to the material
period relevant to the present cases. The provisional AD
duty, which was later confirmed if for the period 10.07.2012
to 26.06.2013 only. During that time, AD duty was in force
pursuant to first sunset review.
ITA Nos.547/2013 & other connected matters Page 6 of 17
12. On careful consideration of the grounds of appeal,
we find no reason to interfere with the findings of the DA.
Accordingly, the appeals are dismissed. The misc.
applications and the applications for stay filed in respect of
these appeals are also disposed of."
11. The impugned order refers to the Final Findings of the DA which had
concluded that producers had a much wider relationship network than what
was declared by them in this regard; that the petitioners did not appear for
oral hearing when the case was posted. It also records that the petitioner
neither cooperated in the proceedings nor in the on-the-spot verification and
that the petitioners had failed to submit the relevant documents to make full
and complete declaration regarding their period of existence and the
relationship between them and the related companies. However, the said
conclusion of the Tribunal is not supported by any reasoning except for
mere reference to paras 25 to 27 of the Final Findings. Indeed, there is no
reference to the contentions of the petitioners. For example, in para 5 of
their Appeal before the Tribunal, the petitioners had pleaded that they had
not exported during the earlier investigation period and were not related to
any of the companies/producers, which had exported the subject goods to
India during the investigation period.
12. Mr. Balbir Singh, the learned Senior Advocate for the petitioners
contends that the CESTAT's Final Findings ought to have been concluded
within one year from the date of initiation of the investigation in terms of
Rule 17(1) of the Rules, which reads as under:-
"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
ITA Nos.547/2013 & other connected matters Page 7 of 17
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 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 [after considering the principles laid down in the
Annexure III to these rules.]]
(2) The final finding, if affirmative, shall contain all
ITA Nos.547/2013 & other connected matters Page 8 of 17
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,
ITA Nos.547/2013 & other connected matters Page 9 of 17
determine an individual margin of dumping 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."
13. He further contends that the aforesaid Rule is unambiguous and
clearly mandates that the DA has to issue the Final Findings within one year
from the date of initiation of the investigation except that only in special
circumstances, the said period of one year could be extended by another six
months. He contends that the NSR was initiated on 18.05.2012 and the
Final Findings, instead of being notified by 17.05.2013 or in the extended
period of six months i.e. by 17.11.2013, were actually notified on
09.09.2016; more than four years had elapsed since the promulgation of the
NSR Notification. Hence, both the Final Findings and the Customs
Notification for levy of anti-dumping duty upon the petitioners were not
sustainable in law.
14. The statutory provisions relating to de minimis anti-dumping margin
or to insufficient evidence of injury to the domestic industry, are embodied
in Rule 14 of the Rules. The procedure for calculating dumping margins etc.
in NSR is stipulated in Rule 22. They read as under:
"14. Termination of investigation.-
The designated authority shall, by issue of a public notice,
terminate an investigation immediately if -
ITA Nos.547/2013 & other connected matters Page 10 of 17
(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."
22. Margin of dumping, for exporters not originally
investigated.-
(1) If a product is subject to anti-dumping duties, the
designated authority shall carry out a periodical review for
the purpose of determining individual margins of dumping
for any exporters or producers in the exporting country in
question who have not exported the product to India during
the period of investigation, provided that these exporters or
producers show that they are not related to any of the
exporters or producers in the exporting country who are
subject to the anti-dumping duties on the product.
(2) The Central Government shall not levy anti-
ITA Nos.547/2013 & other connected matters Page 11 of 17
dumping duties under sub-section (1) of section 9A of the
Act on imports from such exporters or producers during the
period of review as referred to in sub-rule (1) of this
rule:
Provided that the Central Government may resort to
provisional assessment and may ask a guarantee from the
importer if the designated authority so recommends and if
such a review results in a determination of dumping in
respect of such products or exporters, it may levy duty in
such cases retrospectively from the date of the initiation of
the review."
15. The learned counsel for the respondents submits that since appeals of
the Domestic Industry against the aforesaid Final Findings and the Customs
Notification are pending before the CESTAT, therefore, any order passed by
this Court on the merits of the case could well jeopardise or affect those
appeals.
16. Having examined the aforesaid contentions, and the Court being
mindful of the fact that the CESTAT was set up as a judicial body for
hearing the appeals i.e. to deal with an order impugned before it on merits
after discussing the details of the case. It is supposed to return a finding on
the issues framed or raised before it. The impugned order evidently is shorn
of such details or the rationale for arriving at the conclusion it has. Mere
reference to paragraphs numbers of the Final Findings ex facie does not
satisfy the requirements of passing a reasoned order.
17. The impugned order has not examined either the specified procedure,
the strict timelines or the matter or merits; especially the de minimis claim.
Furthermore, when the DI's second SSR request was rejected by the DA and
ITA Nos.547/2013 & other connected matters Page 12 of 17
the subject goods were no more subject to anti-dumping duty, then what
would be the effect of the NSR which was to be only for the remainder
period of the five years of the 1st SSR anti-dumping duty levy? Could the
NSR or its corollary provisional anti-dumping duty be sustained when the
main anti-dumping duty itself was not payable after June, 2013?
Furthermore, the written submission of the respondents could not have been
taken into consideration by the Tribunal without a copy of the same being
furnished on the petitioners. This deprived the latter of an opportunity for
effective representation, hence there was denial of natural justice.
18. Recently, while dealing with another impugned order of the CESTAT,
this Court in Manali Petrochemicals Ltd. vs Union of India & Ors. in
WP(C) 11548/2016 decided on 06.12.2016, had observed:
"..... 8. It is axiomatic that every order of a judicial or
quasi judicial authority who is responsible for deciding
disputes concerning citizens as well as myriad body of
litigants before it, should indicate the reasons which
impelled the decision maker (judicial authority, judge, etc)
to hold what it did. Courts rigorously enforce - as an
attendant value to the rule of law minimum standards of
fairness of procedure (adequate notice, fair opportunity of
hearing, a decision on the merits, by an unbiased tribunal
or authority, based on reasons). These values are in fact the
bedrock of judicial functioning. Bereft of reasons, an order,
which might have momentous consequences to those
affected by it, is incapable of redress; its sphinx like
inscrutability would likely mask untenable reasons and
considerations that lay buried forever in the mind of the
maker. Unlike the executive and legislative branches whose
functioning does not always mandate open scrutiny, courts
are always obliged to dispense justice in the public gaze.
Rather than ply this order with a surfeit of judgments and
ITA Nos.547/2013 & other connected matters Page 13 of 17
past wisdom, this court prefers to quote one decision, apt
under the circumstances, of the Supreme Court, M/S Kranti
Asso. Pvt. Ltd. & Anr vs Masood Ahmed Khan & Ors (2010)
9 SCC 496, which observed as follows, after considering a
welter of previous authorities:
"47. Summarizing the above discussion, this Court
holds:
a. In India the judicial trend has always been to
record reasons, even in administrative decisions, if
such decisions affect anyone prejudicially.
b. A quasi-judicial authority must record reasons in
support of its conclusions.
c. Insistence on recording of reasons is meant to
serve the wider principle of justice that justice must
not only be done it must also appear to be done as
well.
d. Recording of reasons also operates as a valid
restraint on any possible arbitrary exercise of
judicial and quasi-judicial or even administrative
power.
e. Reasons reassure that discretion has been
exercised by the decision maker on relevant grounds
and by disregarding extraneous considerations.
f. Reasons have virtually become as indispensable a
component of a decision making process as
observing principles of natural justice by judicial,
quasi-judicial and even by administrative bodies.
g. Reasons facilitate the process of judicial review
by superior Courts.
h. The ongoing judicial trend in all countries
committed to rule of law and constitutional
governance is in favour of reasoned decisions based
on relevant facts. This is virtually the life blood of
judicial decision making justifying the principle that
reason is the soul of justice.
i. Judicial or even quasi-judicial opinions these days
can be as different as the judges and authorities who
deliver them. All these decisions serve one common
ITA Nos.547/2013 & other connected matters Page 14 of 17
purpose which is to demonstrate by reason that the
relevant factors have been objectively considered.
This is important for sustaining the litigants' faith in
the justice delivery system.
j. Insistence on reason is a requirement for both
judicial accountability and transparency.
k. If a Judge or a quasi-judicial authority is not
candid enough about his/her decision making
process then it is impossible to know whether the
person deciding is faithful to the doctrine of
precedent or to principles of incrementalism.
l. Reasons in support of decisions must be cogent,
clear and succinct. A pretence of reasons or
`rubber-stamp reasons' is not to be equated with a
valid decision making process.
m. It cannot be doubted that transparency is the sine
qua non of restraint on abuse of judicial powers.
Transparency in decision making not only makes the
judges and decision makers less prone to errors but
also makes them subject to broader scrutiny."
9. There is no doubt that the provision empowering
CESTAT to act as an appellate forum is an appeal of right;
Section 9C of the CTA reads as follows:
"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).
(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
ITA Nos.547/2013 & other connected matters Page 15 of 17
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
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."
10. Parliamentary intent in the creation of an
appellate forum in respect of findings by the designated
authority was to provide meaningful redress by a competent
appellate body. The order impugned is not only cryptic but
mistaken in its assumption that the pending writ petitions (of
others) can provide adequate redress to the petitioner- an
entirely erroneous assumption, because those writ petitions
are merely pending and depend upon exercise of discretion.
The availability of an appellate remedy in this case, is
conferment of a right to approach the higher forum for
correction, on facts and law, whereas exercise of judicial
review is within a restricted canvas. The CESTAT has in
essence, treated an appellate remedy (otherwise a
compulsive jurisdiction) to be alternative and discretionary,
robbing it of substantial content..."
19. For the aforesaid reasons, the impugned order and the petitioners'
case warrant a deep analysis and thorough adjudication. However,
considering that the order on merits by this Court could well affect the
ITA Nos.547/2013 & other connected matters Page 16 of 17
pending appeals of the Domestic Industry, the Court is of the view that the
case be remanded back to be heard and disposed off on its merits.
Accordingly, the order of the CESTAT is hereby set aside. The case is
remanded back to the CESTAT, which shall decide the appeals on the merits
after dealing with all submissions of the parties including the period of
limitation etc. as discussed in para 11 and 17 supra. As regards the
petitioners contention that neither the Final Findings nor the Customs
Notification could have been notified after the lapse of 18 months and that it
fell outside the purview of such levy because its dumping/injury margin was
diminished i.e. less than 2% would be adjudicated upon as a preliminary
issue de hors the contentions of the Domestic Industry in its appeal before
the CESTAT. Since the period of anti-dumping duty is itself limited, and
lest the anti-dumping appeals become partially infructuous, the CESTAT
would endeavour to hear the parties and dispose of the appeals by
30.06.2017. Nothing stated in this order shall be construed as an
expression of the merits; the parties' liberty to canvass all contentions are
reserved.
21. The writ petition alongwith pending application stands disposed off
on the above terms.
NAJMI WAZIRI, J.
S. RAVINDRA BHAT, J. MARCH 20, 2016 sb ITA Nos.547/2013 & other connected matters Page 17 of 17