2016 (10) TMI 380 - SC - Customs

Rule 7 protects confidentiality claims but DA must give general reasons and cannot use secrecy to evade duty

Union of India & Another Versus M/s Meghmani Organics Ltd. & Others

SC held that the earlier decision did not narrow Rule 7's statutory confidentiality; the Designated Authority (DA) may not treat its reasons for findings ... Levy of Anti dumping duty - Interpretation of rule 7 - confidentiality of information - Whether the interpretation placed upon Rule 7 of the Rules is correct insofar as it diminishes the rule of confidentiality statutorily provided for under Rule 7? - the decision in the case of Reliance Industries Ltd. v. Designated Authority & Others [2006 (9) TMI 180 - SUPREME COURT OF INDIA] referred to - Held that: - Reliance Industries case did not go into the details of the relevant Rules including Rule 7 but the observations made therein in respect of rule of confidentiality as spelt out in Rule 7 of the Rules does not diminish the scope of Rule 7 as provided. The reasons or findings cannot be equated with the information supplied by a party claiming confidentiality in respect thereto. Hence, Rule 7 does not empower the DA to claim any confidentiality in respect of reasons for its finding given against a party. While dealing with objections or the case of the concerned parties, the DA must not disclose the information which are already held by him to be confidential by duly accepting such a claim of any of the parties providing the information. While taking precautions not to disclose the sensitive confidential informations, the DA can, by adopting a sensible approach indicate reasons on major issues so that parties may in general terms have the knowledge as to why their case or objection has not been accepted in preference to a rival claim. But in the garb of unclaimed confidentiality, the DA cannot shirk from its responsibility to act fairly in its quasi-judicial role and refuse to indicate reasons for its findings. The DA will do well to remember not to treat any information as confidential unless a claim of confidentiality has been made by any of the parties supplying the information. In cases where it is not possible to accept a claim of confidentiality, Rule 7 hardly leaves any option with the DA but to ignore such confidential information if it is of the view that the information is really not confidential and still the concerned party does not agree to its being made public. In such a situation the information cannot be made public but has to be simply ignored and treated as non est. Petition disposed off. Issues Involved:1. Interpretation of Rule 7 of the Customs Tariff (Identification, Assessment and Collection of Anti-Dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995.2. Confidentiality provisions under Rule 7.3. The role and discretion of the Designated Authority (DA) in claiming confidentiality.4. The impact of the judgment in Reliance Industries Ltd. v. Designated Authority & Others on Rule 7.5. The relationship between the rules and the General Agreement on Tariffs and Trade 1994 (GATT 1994).Issue-wise Detailed Analysis:1. Interpretation of Rule 7 of the Customs Tariff Rules:The primary issue was whether the interpretation placed upon Rule 7 of the Rules by the Reliance Industries judgment was correct, particularly concerning the rule of confidentiality. The court examined Rule 7, which deals with the treatment of confidential information provided during anti-dumping investigations. Rule 7 mandates that information provided on a confidential basis must be treated as such if the Designated Authority (DA) is satisfied with its confidentiality. The DA can require non-confidential summaries of such information and may disregard the information if confidentiality is not warranted or if the supplier is unwilling to make it public or provide a summary.2. Confidentiality Provisions Under Rule 7:The court analyzed the confidentiality provisions under Rule 7, emphasizing that the DA must determine on a case-by-case basis whether the information provided is genuinely confidential. The DA is required to ask for non-confidential summaries of the information and reasons if summarization is not possible. The court highlighted that excessive and unwarranted claims of confidentiality could defeat the right to appeal and affect the fairness of the investigation.3. Role and Discretion of the Designated Authority (DA) in Claiming Confidentiality:The court clarified that the DA does not have the right to claim confidentiality independently. The right to claim confidentiality is restricted to the party providing the information, and the DA must be satisfied with the confidentiality claim. The DA cannot assume the role of a party and claim confidentiality for information it gathers. The court stressed that the DA must maintain transparent records and provide reasons for accepting or rejecting confidentiality claims, which can be scrutinized by the appellate authority.4. Impact of the Judgment in Reliance Industries Ltd. v. Designated Authority & Others on Rule 7:The court examined the observations made in the Reliance Industries case, particularly the statement that Rule 7 does not allow the DA to claim confidentiality. The court agreed with the submissions that the observations in Reliance Industries were context-specific and did not diminish the scope of Rule 7. The court found no conflict between the views in Reliance Industries and Sterlite Industries, emphasizing that the DA must act fairly and provide reasons for its findings without misusing the confidentiality provisions.5. Relationship Between the Rules and GATT 1994:The court noted that the Rules are based on the International Agreement on the implementation of Article VI of GATT 1994. The relevant articles of GATT 1994, particularly Article 6, which deals with evidence and confidentiality, were examined. The court concluded that the obligations under GATT 1994 do not require a liberal interpretation of Rule 7 to enlarge its scope. The court stressed that the rules of natural justice and fairness must be upheld, and the DA must not treat any information as confidential unless a claim is made and justified by the party providing it.Conclusion:The court held that the observations in Reliance Industries regarding Rule 7 did not diminish its scope. The DA cannot claim confidentiality independently and must provide reasons for accepting or rejecting confidentiality claims. The DA must act fairly and maintain transparency in its quasi-judicial role. The cases were directed to be posted before an appropriate Bench for disposal on merits in light of the court's answer to the referred question.