2017 (2) TMI 1206 - HC - Customs

Court quashes Central Gov't disclosure statements, mandates fresh ones in 60 days, citing violations of natural justice.

The court quashed the disclosure statements, final findings, and notifications issued by the Central Government, directing the designated authority to ... Levy of anti dumping duty (ADD) - import of Soda Ash - disclosure statement - failure to disclose the essential facts - Scope of Rule 16 - threat of material injury - validity and correctness of final finding - violation of Principles of natural justice - Whether or not to impose an antidumping duty in cases where all requirements for the imposition have been fulfilled? - Whether the amount of the anti-dumping duty to be imposed shall be the full margin of dumping or less? Held that: - The disclosure statement should contain the conclusions of the designated authority on those essential facts which would form the basis for its decision as to whether or not to apply definitive measures and not its conclusions on the basis of those essential facts. The conclusions on the basis of the essential facts are to be recorded in the final findings, viz., whether or not on the basis of such facts definitive measures are required to be applied. The contention that the disclosure statement is in the nature of a draft order, therefore, does not merit acceptance, inasmuch as, a draft order would also contain conclusions on whether or not definitive measures are required to be applied. A perusal of the tabular form regarding the data which are reproduced in the disclosure statement reveals that at various places instead of the relevant data the table contains asterisks which would indicate that such information is confidential. While it is true that the such information being confidential in nature, cannot be disclosed in the disclosure statement itself, it appears to be the general practice to provide the same to the parties separately. However, in the facts of the present case, despite the fact that the information has been furnished by the domestic industry itself, the computation of the various factors referred to hereinabove, has not been furnished to the domestic industry. In the opinion of this court, it was incumbent upon the designated authority to furnish the relevant facts which have been used by it as the basis for arriving at its conclusion on the essential facts necessary for the purpose of arriving at a decision as to whether or not the definitive measures are required to be applied. Non-disclosure of the essential facts is, therefore, clearly in breach of the principles of natural justice. It has taken into consideration the capacity of production of the domestic industry; and instead of taking into consideration the existence of inventories of the dumped imports that could meet any increase or future demand for the imports, has taken into consideration the inventories of the domestic industry. Evidently therefore, the designated authority has failed to follow the procedure laid down under clause (vii) of Annexure-II to the rules for the purpose of determination of threat of material injury in the manner prescribed thereunder. Regarding the designated authority having failed to disclose the essential facts as contemplated under rule 16 of the rules - Held that: - while Article 6.9 does not prescribe a particular form for the disclosure of the essential facts, it does require in all cases that the investigating authority disclose those facts in such a manner that an interested party can understand clearly what data the investigating authority has used, and how those data were used to determine the margin of dumping. The disclosure statement, therefore, contains the intermediate findings and conclusions of the designated authority on the essential facts which would form the basis for the decision whether or not to apply definitive measures and not final conclusions on whether or not definite measures are required to be applied - In the opinion of this court, as rightly submitted by the learned counsel for the petitioners, the disclosure statement should contain the conclusions of the designated authority on those essential facts which would form the basis for its decision as to whether or not to apply definitive measures and not its conclusions on the basis of those essential facts. The conclusions on the basis of the essential facts are to be recorded in the final findings, viz., whether or not on the basis of such facts definitive measures are required to be applied - The contention that the disclosure statement is in the nature of a draft order, therefore, does not merit acceptance, inasmuch as, a draft order would also contain conclusions on whether or not definitive measures are required to be applied. In making a determination regarding the existence of material injury, the designated authority shall consider, inter alia, such factors as (a), (b), (c) and (d) enumerated thereunder. - Hence, the language of the rule being mandatory, the designated authority was required to consider the existence of all the four factors. The petitioners are, therefore, wholly justified in contending that the designated authority has failed to follow the relevant statutory provisions laid down in accordance with law while issuing the disclosure statement. Determination of injury margin would come into play only in case the designated authority comes to the conclusion that determinative measures are required to be applied. Where the designated authority comes to the conclusion that no determinative measures are required to be imposed, as in the present case, the question of determining the injury margin would not arise. The NIP computed by the DA was much lower than that computed by the appellant, and the reasons for such variance and detailed calculations were not disclosed by the DA to the appellant. No good reasons were given for reducing the cost price of electricity supplied by the appellant produced in its captive power plant. This was clearly illegal. Rule 7 does not contemplate any right in the DA to claim confidentiality. Rule 7 specifically provides that the right of confidentiality is restricted to the party who has supplied the information, and that party has also to satisfy the DA that the matter is really confidential. Nowhere in the rule has it been provided that the DA has the right to claim confidentiality, particularly regarding information which pertains to the party which has supplied the same. In the present case, the DA failed to provide the detailed costing information to the appellant on the basis of which it computed the NIP, even though the appellant was the sole producer of the product under consideration, in the country. In our opinion this was clearly illegal, and not contemplated by Rule 7. The power to quash an order under Article 226 can be exercised not merely when the order sought to be quashed is one made without jurisdiction in which case there can be no room for the same authority to be directed to deal with it. But in the circumstances of a case the court might take the view that another authority has the jurisdiction to deal with the matter and may direct that authority to deal with it or where the order of the authority which has the jurisdiction is vitiated by circumstances like failure to observe the principles of natural justice the court may quash the order and direct the authority to dispose of the matter afresh after giving the aggrieved party a reasonable opportunity of putting forward its case. Otherwise, it would mean that where a court quashes an order because the principles of natural justice have not been complied with it should not while passing that order permit the Tribunal or the authority to deal with it again irrespective of the merits of the case. The court having held that the disclosure statements stand vitiated for the detailed reasons set out hereinabove, would be required to set aside the disclosure statements as well as all proceedings pursuant thereto and restore the proceeding to the file of the designated authority for issuance of a fresh disclosure statement in accordance with law. Petition allowed - matter restored before Designated authority. Issues Involved:1. Disclosure Statement: Whether the designated authority disclosed essential facts and followed due process.2. Principles of Natural Justice: Whether the principles of natural justice were adhered to.3. Statutory Compliance: Compliance with statutory requirements under the Anti-Dumping Rules.4. Adequacy of Time: Whether sufficient time was provided for responding to the disclosure statement.5. Reliance on Additional Data: Use of World Trade Atlas (WTA) data in final findings.6. Pre-determination: Whether the designated authority exhibited pre-determination in the disclosure statement.7. Maintainability: Maintainability of the petitions in light of available alternative statutory remedies.Issue-wise Detailed Analysis:1. Disclosure Statement:The court examined whether the designated authority disclosed essential facts under Rule 16 of the Anti-Dumping Rules. Essential facts are those that form the basis for the decision on whether to apply definitive measures. The court found that the designated authority failed to disclose several essential facts, such as the basis for determining normal value, export price, and dumping margin, which were necessary for the petitioners to defend their interests. The court held that non-disclosure of these essential facts violated the principles of natural justice.2. Principles of Natural Justice:The court observed that the designated authority did not provide the computation of non-injurious price (NIP) and other relevant data to the petitioners, despite this information being based on data provided by the petitioners themselves. The court held that the non-disclosure of such information was in breach of the principles of natural justice, as it deprived the petitioners of an opportunity to effectively respond to the disclosure statement.3. Statutory Compliance:The court found that the designated authority did not comply with the statutory requirements under the Anti-Dumping Rules, particularly Annexure II, which mandates consideration of specific factors for determining the threat of material injury. The designated authority incorrectly relied on irrelevant factors such as injury margin and price underselling, which are not relevant for determining the likelihood of injury.4. Adequacy of Time:The court held that the six-day period provided by the designated authority for responding to the disclosure statement was insufficient. The court noted that the designated authority took its own time in issuing the disclosure statement and created an artificial urgency, thereby denying the petitioners a reasonable opportunity to defend their interests.5. Reliance on Additional Data:The court found that the designated authority relied on data from the World Trade Atlas (WTA) in the final findings, which was not disclosed to the petitioners in the disclosure statement. This reliance on undisclosed data was held to be a violation of the principles of natural justice, as the petitioners had no opportunity to address this information.6. Pre-determination:The court observed that the designated authority had already made up its mind regarding the application of definitive measures in the disclosure statement, as evidenced by the conclusions drawn therein. This pre-determination was found to be indicative of bias and a breach of the principles of natural justice.7. Maintainability:The court rejected the argument that the petitions were not maintainable due to the availability of an alternative statutory remedy. The court held that the principal challenge was to the disclosure statement, for which no alternative remedy was available. The court further noted that breach of principles of natural justice is an exception to the requirement of exhausting alternative remedies.Conclusion:The court quashed the impugned disclosure statements, final findings, and subsequent notifications issued by the Central Government. The proceedings were restored to the file of the designated authority, who was directed to issue fresh disclosure statements in compliance with the relevant statutory provisions and the observations made in the judgment. The designated authority was given sixty days to complete the entire exercise, including the issuance of final findings.