2019 (5) TMI 1142 - HC - Customs

Court vacates interim order, citing harm to domestic industry. Importers' relief denied. Safeguard duty impact considered.

JUPITER SOLAR POWER LIMITED THROUGH DIRECTOR ALOK S/O RAJ KUMAR GARODIA Versus UNION OF INDIA (DEPARTMENT OF REVENUE)

The court allowed the application to vacate the interim order dated 28.12.2018, emphasizing that the domestic industry would suffer irreparable harm if ... Imposition of safeguard duty - vires of N/N. 30.7.2018 as also Instruction No.14/2018-Customs dated 13.9.2018 - increased imports of Solar Cells - scope of “domestic industry” as defined under section 8B(6)(b) of the Customs Tariff Act, 1975 - HELD THAT:- The Director General after considering the material on record has recorded a categorical finding that the two applicant units meet with the requirement of major share of Indian industry. At this stage of considering the question of confirmation or vacation of the interim relief, the issue need not be gone into in detail. However, having regard to the above findings recorded by the Director General, prima facie, at this stage, without a detailed inquiry, it cannot be said that the applicants before the Director General do not meet with the requirements of domestic industry as contemplated under section 8B(6)(b) of the Customs Tariff Act. While it is true that from the record, it emerges that the capacity utilisation has increased from 48% in 2014-15 to 85% in 2017- 18, and the domestic sales have also increased from 115 MW in 2014-15 to 314 in 2017-18 and the production of the domestic industry has increased from 141 MW in 2014-15 to 318 in 2017-18 (annualized), it is equally true that the volume of the imports has grown from 1275 MW in 2014-15 to 9833 in 2017-18 (annualized) that is an increase of 671% in comparison to the production of the domestic industry which has increased by 126% during the same period. Moreover, though the total sales of the domestic industry have increased, the percentage of sales has decreased from 8% to 3%. Though the capacity utilisation has increased, the Director General has recorded that when compared with the growth in demand which increased to 10618 MW in 2017-18, the domestic industry's total capacity should have got utilised. The capacity remaining below 100% even in such enhanced demand indicates a clear preference for the imported product under consideration. The Director General (Safeguard) has examined all the relevant parameters and has given his findings thereon. The Director General has found that domestic industry suffered serious injury during the POI and that there is threat of serious injury in future to the domestic industry. The importers are duly protected from the increase in the change in domestic duties, levies, cess and taxes imposed by the Central Government, State Government or the Union Territories. Besides, if the petitioner ultimately succeeds it would be entitled to the refund of the safeguard duty paid by it, whereas if the applicant (original respondent No.8) succeeds in the petition, it would not be possible to reverse the injury done to it if the ad interim relief granted earlier is continued. Under the circumstances, the balance of convenience lies in favour of the domestic industry. Having regard to the findings recorded by the Director General in the final findings, the court is further of the view that the domestic industry would suffer irreparable injury if the ad interim relief granted earlier is permitted to continue. Application allowed - The ad interim relief granted vide order dated 28.12.2018 is hereby vacated. Issues Involved:1. Validity of the interim order dated 28.12.2018.2. Eligibility of the applicants as 'domestic industry' under section 8B(6)(b) of the Customs Tariff Act, 1975.3. Justification for the imposition of safeguard duty.4. Allegations of judicial adventurism by the petitioner.5. Balance of convenience and irreparable injury.Detailed Analysis:1. Validity of the Interim Order Dated 28.12.2018:The applicant sought to vacate the interim order dated 28.12.2018, which allowed the petitioner to import goods without paying safeguard duty upon executing a bond. The court had initially granted this relief ex parte, as the applicant was not impleaded as a party at that time.2. Eligibility of the Applicants as 'Domestic Industry':The court examined whether the applicants, M/s. Indosolar Limited and M/s. Jupiter Solar Power Limited, met the definition of 'domestic industry' under section 8B(6)(b) of the Customs Tariff Act, 1975. The Director General had determined that these two companies collectively accounted for 38% of the total domestic production in the DTA, supported by ISMA, thus meeting the requirements of a major share of Indian industry. The court found no prima facie reason to dispute this finding at the interim stage.3. Justification for the Imposition of Safeguard Duty:The Director General's final findings indicated that increased imports of solar cells had caused and threatened to cause serious injury to the domestic industry. The findings showed significant growth in imports compared to domestic production, which had not kept pace with demand. The Director General also noted severe price undercutting by imports, leading to losses and increased inventory for domestic producers. The court found that the Director General had considered all relevant factors and justified the imposition of safeguard duty.4. Allegations of Judicial Adventurism:The applicant alleged that the petitioner engaged in judicial adventurism by filing multiple petitions in different courts to avoid caveats. The court found that since the petitioner imported goods through a port in Gujarat, it was within its rights to file the petition in the Gujarat High Court. The court also noted that the petitioner was represented through its association in the proceedings before the Director General, and thus, the locus standi was not an issue.5. Balance of Convenience and Irreparable Injury:The court considered the balance of convenience and potential irreparable injury to both parties. It noted that if the interim relief continued, the domestic industry would suffer irreparable injury and might collapse due to the onslaught of imports. On the other hand, the importers were protected by a government directive allowing them to pass through any changes in duties and levies. The court concluded that the balance of convenience favored the domestic industry, and the interim relief granted earlier was vacated.Conclusion:The application to vacate the interim order dated 28.12.2018 was allowed, and the interim relief was vacated. The court emphasized that the domestic industry would suffer irreparable harm if the interim relief continued, while the importers were sufficiently protected by existing regulations. The court also declined the request to stay the order for four weeks, considering the limited duration of the safeguard duty and the prejudice to the domestic industry.