Court Upholds Safeguard Duty on Epichlorohydrin Imports; Decision Valid, No Illegality Found

TAMILNADU PETROPRODUCTS LTD. Versus UNION OF INDIA

TAMILNADU PETROPRODUCTS LTD. Versus UNION OF INDIA - 2013 (297) E.L.T. 46 (Del.) Issues:
Challenge against imposition of safeguard duty on imports of Epichlorohydrin (ECH) based on the constitution of the Committee and decision-making process.

Analysis:
The appeal was filed against the order of the learned Single Judge in Civil Writ No. 3030 of 2003, challenging the imposition of safeguard duty on ECH imports. The appellant, a manufacturer of ECH, contended that the safeguard duty prescribed in the notification was lower than the recommendation by the Director General (Safeguards). The main ground raised in the appeal was the constitution of the Committee that made the decision. The appellant argued that the Committee was not constituted as per the required standards, as all members should have been Secretaries of the concerned departments. However, the Standing Board of Safeguards, which recommended the safeguard duty, was chaired by the Secretary of the Department of Commerce and included officers from other Ministries as nominees. The decision was made after considering various factors, including the improved position of the domestic industry, leading to the recommendation of a 12% safeguard duty for one year.

The appellant's counsel could not identify any statutory provision for the constitution of the Committee but argued that the decision should have been made only by designated Secretaries. The court examined the minutes of the meeting where the decision was made and found that the Board was constituted with relevant officials, and no objections were raised by other Ministries. The final decision was to be taken by the Minister, and the court concluded that there was no illegality in the decision-making process. Therefore, the appeal was dismissed based on the validity of the Committee's constitution and decision-making process.

Regarding the review of the decision, the appellant argued that the WTO Agreement on Safeguards prohibited a review, citing Rule 7 of the Agreement. However, the court noted that Rule 18 of the Safeguards Duty Rules under the Customs Tariff Act, 1975 provided for a review, and the Director General could exercise the power of review if an application was made by any party. The court disagreed with the contention that the power to review was restricted by the WTO Agreement, emphasizing the statutory provision for review under the Customs Tariff Act.

Additionally, the appellant raised concerns about the decision-making process being quasi-judicial and the need for opportunities to be given in a prescribed manner. The court clarified that the hearing was provided during the inquiry, and the decision-making process was not quasi-judicial. The purpose of safeguard duty was highlighted as being for the protection of units or providing relief, rather than revenue generation, and the court found no merit in this argument. Ultimately, the appeal was dismissed, upholding the imposition of the safeguard duty on ECH imports.