2020 (2) TMI 1213 - HC - Customs

High Court upholds initiation notification in trade dispute, emphasizing procedural fairness and ongoing investigation

BODAL CHEMICALS LTD. & 1 OTHERS Versus UNION OF INDIA & 2 OTHERS

The High Court held that the initiation notification did not immediately prejudice the petitioners, dismissing their challenge. The court emphasized that ... Levy of Anti-dumping duty on imports of Naphthalene - Validity of Notification No.14/35/2015-DGAD dated 01.06.2016 - allegation that the notification is without authority of law, contrary to the Act and the Rules and based on assumptions and presumptions, without any basis and without examination of preconditions of initiation of a valid investigation - imposition of ADD in respect of imports of Crude and Refined Naphthalene. The petitioners have essentially challenged the Notification dated 01.06.2016, whereunder the respondent no.2 at the behest of respondent no.3 initiated investigation in respect of product called Naphthalene in both its forms namely Crude and Refined Naphthalene being imported from the countries mentioned in the Notification. The respondent no.3 did not fulfill the requisite criterion for being characterized the domestic industries so as to be eligible to seek initiation of investigation in respect of product in question. HELD THAT:- Two important grounds urged on behalf of the petitioners are that the respondent no.3 does not classified to be a domestic industry on account of various reasons especially with the fact that they have alleged to have themselves being importer of the goods in question. This has sought to be countered by the respondent no.3 by indicating that the respondent no.3 is not a regular importer so as to oust the same from the purview of being domestic industry and the counting etc. of the percentage for classifying to be a domestic industry being subject matter of investigation, initiation itself cannot be subject matter of challenge under Article 226 of the Constitution of India. The respondent nos.1 and 2 have also contended that the initiation is not subject matter of any scrutiny as the same is based upon the satisfaction of the authority and there is availability of appeal under Section 9-C of the Customs Tariff Act, 1975. This Court is of the view that the domestic industry for classifying to be a domestic industry has to fulfill the requirement of Rule 2(b) of the Rules and has also to satisfy requirement of Rule 5(3) for seeking initiation. It cannot be disputed that the two supporters who have been named as supporters by the respondent no.3 had subsequently withdrawn their support, but a fine question which is arising for consideration is whether the mere initiation of the investigation can be said to be in any manner prejudicial to the petitioner. If the same is not prejudicial to the petitioner, then the same cannot be interfered with under Article 226 of the Constitution of India. The Court is of the view that the contention qua availability of the appeal for ousting the jurisdiction raised on behalf of the respondents may not be available in a given case and especially in this case also as the provision of 9-C of the Act if read closely would indicate that the same is available against the determination only and not against the investigation. But the Court need not loose sight of the fact that mere initiation can be said to be a prejudicial in a given facts of case where the petitioner also participated initially and put-up its elaborate submissions and when the respondents have clearly contended before this Court with due emphasis that the petitioner's participation has to be viewed appropriately, as the petitioner did put up his submission, the same also is required to be considered for its appropriate light and prospective. The Court is of the view that the petition is filed when challenging the only initiation and when the authority has not concluded, as could be seen from the notification impugned before this Court, the Court would be slow in interfering therewith, as it would rather require embarking upon further probing which may not be appropriate at this stage under the provisions of Article 226 of the Constitution of India - The Court is also of the view that the Court's power under Article 226 are not curtail on account of the existence of remedy of notice, even if one exists. However, the fine principles of law laid down time and again by the Apex Court and reiterated in many judgments needs to be borne in mind while examining the challenge to merely initiation. The Court is of the view that had there been a jurisdictional deficiency going into the root of the initiation, perhaps the matter would have require to be examined differently, but in the instant case the perusal of notification impugned when clearly indicate that the authority has considered the facts which were required to be taken into consideration, the sub-abrasion in the form of withdrawal of submission of those supporters in itself would not be an omission warranting interference by the Court under Article 226 of the Constitution of India. When the notification impugned is not in any manner causing any prejudice to the petitioners, as the petitioners has not pleaded any special prejudice, the Court need not interfere therewith. It goes without saying that the detail observations made hereinabove are only for the purpose of examining the challenge to the notification and the same shall have no bearing upon investigation, if any. Petition dismissed - decided against petitioner. Issues Involved:1. Jurisdiction of the High Court.2. Validity of the initiation notification.3. Eligibility of the respondent as a domestic industry.4. Procedural compliance and natural justice.5. Availability of alternative remedy.Issue-wise Detailed Analysis:1. Jurisdiction of the High Court:The respondent argued that the Gujarat High Court lacks jurisdiction as the initiation notification was issued in New Delhi and does not create or negate any rights within Gujarat. The petitioners countered that their factory and office are located in Gujarat, and the consequences of the investigation will affect them within the state's jurisdiction. The court acknowledged the petitioners' location but emphasized that mere initiation does not cause prejudice, thus limiting the need for jurisdictional interference.2. Validity of the Initiation Notification:The petitioners challenged the initiation notification dated 01.06.2016, arguing it was issued without proper authority and based on incomplete and misleading information. They claimed the respondent no.3 did not qualify as a domestic industry and failed to meet the criteria under Rule 2(b) and Rule 5(3) of the Anti-Dumping Rules. The court noted that the initiation is merely a preliminary step and does not impose any immediate prejudice on the petitioners. The court found that the Designated Authority had considered the necessary facts before issuing the notification and that the subsequent withdrawal of support by certain producers did not invalidate the initiation process.3. Eligibility of the Respondent as a Domestic Industry:The petitioners contended that respondent no.3 did not account for a major proportion of the total domestic production and was also an importer of the subject goods, which disqualified them from being considered a domestic industry. The court observed that the determination of whether respondent no.3 qualifies as a domestic industry involves factual assessments that are part of the ongoing investigation. The court emphasized that such determinations should be made by the Designated Authority and not preemptively by the court.4. Procedural Compliance and Natural Justice:The petitioners argued that the investigation was initiated without proper examination of the preconditions and that the process lacked transparency and fairness. They claimed that the Designated Authority failed to provide complete details of the application and did not address jurisdictional issues upfront. The court noted that the investigation process includes opportunities for interested parties to present their views and that the Designated Authority is yet to issue a Disclosure Statement under Rule 16, which would allow for further comments. The court found no immediate violation of natural justice principles at the initiation stage.5. Availability of Alternative Remedy:The respondents argued that the petitioners have an effective alternative remedy under Section 9C of the Customs Tariff Act, 1975, which provides for an appeal to the CESTAT. The court acknowledged that while the availability of an alternative remedy does not bar the jurisdiction of the High Court under Article 226, it is a relevant consideration. The court emphasized that the initiation of an investigation is a preliminary step and does not warrant judicial interference unless there is a clear jurisdictional deficiency or manifest injustice.Conclusion:The court dismissed the petition, holding that the initiation notification does not cause immediate prejudice to the petitioners and that the ongoing investigation by the Designated Authority should be allowed to proceed. The court emphasized that detailed observations made in the judgment are limited to the challenge against the initiation notification and do not affect the merits of the investigation.