Anti-dumping normal value must use per unit cost test, not weighted average cost, and the notified period must be applied correctly.

Domestic sales cannot be disregarded in anti-dumping normal value calculations merely because they fall below weighted average cost of production; the statutory test under Clause 2 of Annexure I is whether sales are below per unit cost of production and satisfy the additional conditions on duration, substantial quantities, and cost recovery. The exporter's records, if maintained in accordance with generally accepted accounting principles and reflecting actual costs, remain the primary basis under Clause 1. The notified period of investigation must also be applied as stated, and duty quantification based on an incorrect period cannot stand. The anti-dumping duty was therefore required to be recomputed on the correct legal basis.

---

---

Issues: (i) Whether sales in the domestic market could be disregarded for determining normal value merely because they were below the weighted average cost of production, and whether Clause 2 of Annexure I required comparison with per unit cost of production. (ii) Whether the Designated Authority was justified in varying or misapplying the notified period of investigation while quantifying anti-dumping duty.

Issue (i): Whether sales in the domestic market could be disregarded for determining normal value merely because they were below the weighted average cost of production, and whether Clause 2 of Annexure I required comparison with per unit cost of production.

Analysis: Clause 1 of Annexure I requires normal value to be determined primarily from the exporter's records where those records are kept in accordance with generally accepted accounting principles and reflect actual costs. Clause 2 permits domestic sales to be treated as not in the ordinary course of trade only when the sales are below per unit costs of production and the further conditions in the provisos are satisfied. The weighted average cost cannot replace the statutory test of per unit cost of production. Sales can be excluded only if they are below the relevant unit cost and also meet the requirements relating to duration, substantial quantities, and recovery of costs within a reasonable period.

Conclusion: The rejection of sales merely because they were below weighted average cost was not justified, and the issue was decided in favour of the appellant.

Issue (ii): Whether the Designated Authority was justified in varying or misapplying the notified period of investigation while quantifying anti-dumping duty.

Analysis: The notified review period had to be applied as stated. The computation initially proceeded on an incorrect period by omitting the relevant final quarter and including an earlier quarter. Once this error was corrected, the authority was required to requantify the duty strictly with reference to the notified period and the proper understanding of Clause 2 of Annexure I.

Conclusion: The quantification based on the wrong period could not stand, and the duty was required to be recalculated in favour of the appellant.

Final Conclusion: The anti-dumping duty determination was modified and recomputed on the correct legal basis, resulting in substantially reduced duty for the appellant.

Ratio Decidendi: For exclusion of domestic sales while determining normal value in anti-dumping proceedings, the governing test is whether the sales are below per unit cost of production and satisfy the statutory conditions in the provisos; weighted average cost of production cannot substitute that test.

---