TaxTMI 
TaxTMI 
2011 (1) TMI 7
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.... facts in Civil Appeal No. 949 of 2006 as illustrative: The appellant in this appeal viz. Automotive Tyre Manufacturers Association (for short "ATMA"), is an association representing domestic tyre manufacturing units, who import Nylon Tyre Cord Fabric (for short "NTCF") from various countries, including China, as one of their basic raw materials for manufacture of tyres. Sometime in 2003, the Association of Synthetic Fibre Industry (for short "ASFI"), respondent No. 3 herein, filed an application under the Customs Tariff (Identification, Assessment & Collection of Anti-Dumping Duty on Dumped Articles & for Determination of Injury) Rules, 1995 (for short "the 1995 Rules") before the Designated Authority (hereinafter referred to as "the DA") inter-alia, praying for imposition of anti-dumping duty under Section 9A of the Act, on imports of NTCF from China. In their application, ASFI had specifically contended that China being a non-market economy country, normal value of the export price from that country had to be determined as per the principle contemplated in para 7 of Annexure I to the 1995 Rules. 3. Taking cognizance of the application, on 29th October 2003, t....
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....ubmissions were not examined; the newly appointed DA had failed to grant them a public hearing and some of the new submissions made by the domestic industry formed part of the record. 7. One of the constituent members of ATMA viz. J.K. Industries Ltd. filed a Civil Writ Petition (No.548 of 2005) before the High Court of Rajasthan at Jodhpur challenging the investigation proceedings, preliminary findings and the disclosure statement. On 25th January 2005, the High Court admitted the said writ petition and granted ad- interim stay restraining the DA from issuing final findings in terms of the disclosure statement. 8. Thereafter, on 16th February 2005, the High Court modified the earlier interim stay order dated 25th January 2005 to the extent that the DA was allowed to proceed to record the final findings but the same had to be placed in a sealed cover. 9. On 9th March 2005, the DA issued final findings, vide notification No. 14/20/2003-DGAD, recommending the imposition of anti-dumping duty on NTCF originating from China at the rate of US $ 0.54 per Kg to US $ 0.81 per Kg. 10. AFSI, respondent no. 3 herein, filed SLP (C) No. 6878-6879 of 2005 c....
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....bsp; 16. As afore-mentioned, the Tribunal has dismissed the appeals, preferred by ATMA, Apollo Tyres, J.K. Tyres, ASFI and Ningbo Nylon and confirmed the levy of anti-dumping duty in terms of Notification No. 36/2005-Cus. Dealing with the main grievance of the appellants viz. denial of an opportunity of hearing and thus, violation of the principles of natural justice, the Tribunal has held that:- (i) an anti-dumping duty has all the characteristics of a tax as it is imposed under statutory power without the tax-payers consent, and its payment is enforced by law, therefore, issuance of the notification by the Central Government in the Official Gazette under Rule 18 of the 1995 Rules read with Section 9A(1) of the Tariff Act imposing anti- dumping duty upon importation of the subject article in India is purely a legislative function; (ii) the process of imposing anti-dumping duty which is legislative in nature does not decide any existing dispute or `lis' inter-parties; it only determines whether imposition of anti- dumping duty is called for in relation to dumped imports and if so, at what rate, on the basis of the information collected from the exporters- importers and a large n....
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....iloting the arguments on behalf of the appellants, referring to various provisions of the Tariff Act and 1995 Rules strenuously urged that the functions discharged by the DA are quasi-judicial in nature. Relying on 1 the decisions of this Court in Province of Bombay Vs. Khushaldas S. Advani & Ors.1; Shri Radheshyam Khare & Anr. Vs. The State of Madhya Pradesh & Ors.2; Shivji Nathubhai Vs. Union of India & Ors.3; Shankarlal Aggarwala & Ors. Vs. Shankarlal Poddar & Ors.4 S.K. Bhargava Vs. Collector, Chandigarh & Ors.5, Jaswant Sugar Mills Ltd., Meerut Vs. Lakshmi Chand & Ors.6; Sahara India (Firm), Lucknow Vs. Commissioner of Income Tax, Central-I & Anr.7, learned counsel contended that if a statute empowers an authority, not being a Court in the ordinary sense, to decide disputes arising out of a claim made by one party and disputed by another, on the basis of some objective standards, and is required by the terms of the statute to act judicially, then such authority discharges quasi-judicial functions. Learned counsel submitted that such attributes are in-built in the scheme of the Tariff Act and the 1995 Rules, in as much as:-(i) there are interested parties, some opposing the lev....
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....(Anti-Dumping Directorate), Ministry of Commerce Vs. Haldor Topsoe A/S9, learned counsel contended that it is a settled practice that if during the course of investigations, the DA conducting the public hearings is transferred, the new DA grants a fresh hearing before making the final order. 20. Learned counsel urged that in light of the observations made by this Court in Reliance Industries Ltd. Vs. Designated Authority & Ors.10 and J.K. Industries Vs. Union of India (SLP (C) No.11061 of 2005), it is fallacious to contend that the functions discharged by the DA are legislative in nature. Learned counsel submitted that in Tata Chemicals Limited (2) Vs. Union of India & Ors.11 and Tata Chemicals Limited Vs. Union of India & Ors.12, this Court has also held that an appeal before the Tribunal is (2000) 6 SCC 626 10 (2006) 10 SCC 368 11 (2008) 17 SCC 180 12 (2007) 15 SCC 596 maintainable against the determination by the DA together with the Customs Notification. Learned counsel contended that even if the DA's functions are held to be in exercise of conditional legislation, it would be of the nature as mentioned in the third category of cases highlighted in State of T.N. Vs. K....
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....18 18 (1993) 1 SCC 78 19 AIR 1958 SC 308 1 bad in law in as much as it is well settled that the principles of natural justice mandate that the authority who hears, must also decide. Learned counsel urged that the hearing granted by the new DA to the Advocates of Ningbo Nylon, the Chinese Exporter, is of no consequence in so far as the Indian Tyre Manufacturers were concerned, particularly when the hearing granted to Ningbo Nylon was confined to their offer of price undertaking, which otherwise is a confidential hearing not akin to the public hearing, which was requested by ATMA. 24. In relation to the levy of anti-dumping duty during the interregnum period between 26th January, 2005 to 26th April, 2005, Mr. Bagaria contended that the provisions of the Tariff Act or the Rules made thereunder do not contemplate the power to levy duty retrospectively, save and except as provided in Section 9A(3) of the Tariff Act. Relying on the decisions of this Court in The Cannanore Spinning and Weaving Mills Ltd. Vs. Collector of Customs and Central Excise, Cochin & Ors.20; Hukam Chand Etc. Vs. Union of India & Ors.21; Orissa State Electricity Board & Anr. Vs. Indian Aluminum Co. L....
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.... January, 2005. Furthermore, in S&S Enterprise Vs. Designated Authority & Ors.26, this Court had observed that the imposition of anti-dumping duty under Section 9A of the Tariff Act, is the result of the General Agreement on Tariff and Trade and, therefore, the levy of provisional duty should be in accordance with Rule 13 of the 1995 Rules and Article 7.4 of the agreement on Tariffs and Trade, 1994 (for short "the WTO Agreement"), which contemplates that the provisional duty shall be limited to as short a period as possible, and, in fact, provides for the outer limit for the imposition of provisional duty. 26 (2005) 3 SCC 337 27. Learned counsel contended that in the instant case, the provisional levy was finalized and validated by paragraph 2 of the final anti-dumping duty notification dated 27th April, 2005, and by virtue of the said paragraph the provisional duty was merely replaced by the final duty. Rule 20(2)(a) of the 1995 Rules uses the expression "where a provisional duty has been levied" and "in absence of provisional duty", thereby making it clear that the final measure merely validates the provisional duty already levied. The use of the said expression a....
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....and when the said Section itself makes the levy of duty contingent upon the existence of notification, there can be no scope for invoking any concept of continuity in the absence of a notification. 29. Learned counsel urged that Section 9A(5) of the Tariff Act does not have any application in the instant case as the anti-dumping duty referred to in that Section is the final duty, and not the provisional duty. The position is also clarified by the first and second proviso to the said sub-Section, in as much as the first proviso refers to the extension of "such imposition" by five years, and such extension can only be in relation to the final levy, while second proviso relates to the extension of final levy for a further period of one year when the review is initiated before the expiry of five years. Learned counsel urged that the fact that the outer time limit of five years is only contemplated in relation to the final duty and not the provisional duty is also evident from Article 11.3 of the WTO Agreement. Learned counsel contended that the outer limit for the levy of provisional duty cannot be set at naught by an alleged theory of continuity. 30. Learned counse....
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....bo Nylon was in the nature of a public hearing in terms of Rule 6(6), the same cannot be considered as an effective opportunity as it is inconceivable for any counsel to participate in any meaningful discussion unless accompanied by the representative of the concerned exporter. Furthermore, the notice for hearing on 9th March 2005, given on 7th March, 2005 could not be considered as an adequate opportunity keeping in view the time difference between India and China. Submissions made on behalf of the Respondents: 32. Mr. Harin P. Raval, learned Additional Solicitor General, appearing on behalf of the DA, defending the decision of the Tribunal, contended that since the 1995 Rules were in the nature of a "super special legislation", having economic policy overtones, this Court should adopt a policy of judicial deference. Commending us to the decision of this Court in Reserve Bank of India Vs. Peerless General Finance and Investment Co. Ltd. & Ors.31, learned counsel urged that while interpreting a legislation, the Courts should have regard to both the text and context of the legislation, and in light of the fact that the 1995 Rules contemplate adjustment of India's internati....
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....ot adversarial, judicial or quasi-judicial in nature. However, at a later stage of his arguments, the learned counsel candidly conceded that at best the proceedings before the DA could be considered as administrative in nature. 34. Learned counsel urged that it is also well settled that the principles of natural justice will take their color from the context of the statutory provisions under which the issue is to be adjudicated as has been observed in The New Prakash Transport Co. Ltd. Vs. The New Suwarna Transport Co. Ltd.41 and Haryana Financial Corporation & Anr. Vs. Kailash Chandra Ahuja42. Learned counsel submitted that the alleged breach of natural justice principles has to be judged in light of the prejudice caused to the party, and public interest, and not merely on technicalities. Learned counsel asserted that in any event in the instant case, the new DA had afforded an opportunity of hearing to the appellants on 7th March, 2005, which they failed to avail of. 40 (1985) 3 SCC 314 41 AIR 1957 SC 232 42 (2008) 9 SCC 31 2 Learned counsel submitted that at the most the present case may be considered as one in which only a "partial hearing" was granted, and, therefore....
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.... a court of law, but anti-dumping investigation is conducted by governmental agencies through administrative procedures. 35. Mr. Krishnan Venugopal, learned senior counsel appearing on behalf of the ASFI contended that the exact scope and ambit of the principles of natural justice, including the nature of hearing to be accorded must be 2 decided keeping in view the nature and object of the Tariff Act and the 1995 Rules, and therefore, the question as to whether the hearing contemplated under the 1995 Rules is oral or by written representation will have an important bearing on the issue as to whether the new DA was required to conduct a fresh public hearing. According to the learned counsel even if the functions of the DA are held to be quasi-judicial in nature, the new DA isnot required to hold a fresh public hearing as under Rule 6(6) of the 1995 Rules while interested parties are allowed to present information orally, but the DA can take into consideration only that information which is subsequently reproduced in writing and, therefore, the principles enunciated in Gullapalli (supra) are not applicable in the instant case. In that case, the oral hearing was preceded by ....
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....supra). 37. As regards the decision in PTC India (supra), inter-alia, holding that whenever an appeal is provided against an order, the determination becomes quasi-judicial, it was submitted that as the said observations were made in the context of the Electricity Act, which is entirely different in purport and scope from the Tariff Act read with the 1995 Rules, the ratio of the said decision has no bearing on the facts of the present case. Learned counsel stressed that one of the attributes of a quasi-judicial authority is that it must render a binding decision, and if its decision is merely advisory, deliberative, investigatory or conciliatory in character, which has to be confirmed by another authority before it becomes binding, then such a body is administrative in character, as was observed by this Court in Union of India Vs. Mohan Lal Capoor.53, which is the case here, as the role of the DA is 53 (1973) 2 SCC 836 3 merely recommendatory. In support, reliance was placed on the decision of this Court in Tata Chemicals (2) (supra). 38. Relying on the decisions of this Court in P. Sambamurthy & Ors. Vs. State of Andhra Pradesh & Anr.54; Union of India Vs. K.M. Shanka....
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....t even if it is assumed that the DA discharges quasi-judicial functions and the principles of natural are held to be applicable to the proceedings before it, still it is not sufficient to merely 3 allege breach of natural justice, and actual prejudice must be demonstrated, as was held in Haryana Financial Corporation (supra) and Managing Director, ECIL, Hyderabad & Ors. Vs. B. Karunakar & Ors.58. It was asserted that in the present case, the appellants have failed to demonstrate any prejudice to them with reference to any material placed by them before the DA. 41. In response to the challenge against the retrospective levy of anti- dumping duty during the interregnum period between 26th January, 2005 to 27th April, 2005, Mr. Venugopal submitted that in absence of the stay granted by the Rajasthan High Court on 25th January, 2005, the Central Government could have, under the second proviso to Rule 13, extended the provisional duty for a further period of nine months from 25th January, 2005. Learned counsel further urged that under Rule 20(2)(a), the DA after recording a finding of actual injury, was empowered to recommend imposition of anti-dumping duty from the date of th....
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....d. 44. Commending us to the definition of the term "determination" as contained in the Webster's Dictionary and the Oxford Dictionary, learned counsel submitted that the use of the said term in Section 9C of the Tariff Act, when understood in the context of the 1995 Rules, leads to the incontrovertible conclusion that it is the determination by the DA that is made appealable, and not the notification levying anti-dumping duty. Therefore, it is manifest that the imposition of duty is legislative in nature. 60 (1990) 3 SCC 223 61 (2005) 5 SCC 337 3 Discussion: 45. Before addressing the contentions advanced on behalf of the parties, it will be necessary and expedient to survey the relevant statutory provisions under which the levy, questioned in these appeals, has been imposed. Section 9A of the Tariff Act contemplates levy of anti-dumping duty on dumped articles. It reads as follows: 9A. Anti-dumping duty on dumped articles.- (1) Where any article is exported from any country or territory (hereinafter in this section referred to as the exporting country or territory) to India at less than its normal value, then, upon the importation of such article into India, the....
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....shall be determined with reference to its price in the country of origin. (2) The Central Government may, pending the determination in accordance with the provisions of this section and the rules made thereunder of the normal value and the margin of dumping in relation to any article, impose on the importation of such article into India an anti-dump ing duty on the basis of a provisional estimate of such value and margin and if such anti-dumping duty exceeds the margin as so determined:- 3 (a) the Central Government shall, having regard to such determination and as soon as may be after such determination, reduce such anti-dumping duty; and (b) refund shall be made of so much of the anti-dumping duty which has been collected as is in excess of the anti- dumping duty as so reduced. (2A) Notwithstanding anything contained in sub-section (1) and sub-section (2), a notification issued under sub-section (1) or any anti-dumping duty imposed under sub-section (2), unless specifically made applicable in such notification or such imposition, as the case may be, shall not apply to articles imported by a hundred per cent. Export-oriented undertaking or a unit in a free trade zone or in a speci....
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....o in sub-section (1) or sub-section (2) shall, from time to time, be ascertained and determined by the Central Government, after such inquiry as it may consider necessary and the Central Government may, by notification in the Official Gazette, make rules for the purposes of this section, and without prejudice to the generality of the foregoing, such rules may provide for the manner in which articles liable for any anti-dumping duty under this section may be identified, and for the manner in which the export price and the normal value of, and the margin of dumping in relation to, such articles may be determined and for the assessment and collection of such anti-dumping duty.4 (7) Every notification issued under this section shall, as soon as may be after it is issued, be laid before each House of Parliament. (8) The provisions of the Customs Act, 1962 (52 of 1962) and the rules and regulations made thereunder, relating to the date for determination of rate of duty, non-levy, short levy, refunds, interest, appeals, offences, and penalties shall, as far as may be, apply to the duty chargeable under this section as they apply in relation to duties leviable und....
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....under investigation, and (ii) the injury or threat of injury to an industry established in India or material retardation to 4 the establishment of an industry in India consequent upon the import of such article from the specified countries. (d) to recommend the amount of anti-dumping duty equal to the margin of dumping or less, which if levied, would remove the injury to the domestic industry, and the date of commencement of such duty; and (e) to review the need for continuance of anti-dumping duty. 5. Initiation of investigation.- (1) Except as provided in sub- rule (4), the designated authority shall initiate an investigation to determine the existence, degree and effect of any alleged dumping only upon receipt of a written application by or on behalf of the domestic industry. (2) An application under sub-rule (1) shall be in the form as may be specified by the designated authority and the application shall be supported by evidence of - (a) dumping (b) injury, where applicable, and (c) where applicable, a causal link between such dumped imports and alleged injury. (3) The designated authority shall not initiate an investigation pursuant to an application made under sub- rul....
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....o which representations by interested parties should be directed; and (vi) the time-limits allowed to interested parties for making their views known. (2) A copy of the public notice shall be forwarded by the designated authority to the known exporters of the article alleged to have been dumped, the Governments of the exporting countries concerned and other interested parties. (3) The designated authority shall also provide a copy of the application referred to in sub-rule (1) of Rule 5 to - (i) the known exporters or to the concerned trade association where the number of exporters is large, and (ii) the governments of the exporting countries: Provided that the designated authority shall also make available a copy of the application to any other interested party who makes a request therefor in writing. (4) The designated authority may issue a notice calling for any information, in such form as may be specified by it, from the exporters, foreign producers and other interested parties and such information shall be furnished by such persons in writing within thirty days from the date of receipt of the notice or within such extended period as the designated authority may allow on suffi....
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....he designated authority a statement of reasons why summarisation is not possible. 4 (3) Notwithstanding anything contained in sub-rule (2), if the designated authority is satisfied that the request for confidentiality is not warranted or the supplier of the information is either unwilling to make the information public or to authorize its disclosure in a generalized or summary form, it may disregard such information. 10. Determination of normal value, export price and margin of dumping. - An article shall be considered as being dumped if it is exported from a country or territory to India at a price less than its normal value and in such circumstances the designated authority shall determine the normal value, export price and the margin of dumping taking into account, inter alia, the principles laid down in Annexure I to these rules. 11. Determination of injury. - (1) In the case of imports from specified countries, the designated authority shall record a further finding that import of such article into India causes or threatens material injury to any established industry in India or materially retards the establishment of any industry in India. (2) The designated authority shall d....
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....as to whether or not the article under investigation is being dumped in India and submit to the Central Government its final finding - (a) as to, - (i) the export price, normal value and the margin of dumping of the said article; 4 (ii) whether import of the said article into India, in the case of imports from specified countries, causes or threatens material injury to any industry established in India or materially retards the establishment of any industry in India; (iii) a casual link, where applicable, between the dumped imports and injury; (iv) whether a retrospective levy is called for and if so, the reasons therefor and date of commencement of such retrospective levy: Provided that the Central Government may, in its discretion in special circumstances extend further the aforesaid period of one year by six months: Provided further that in those cases where the designated authority has suspended the investigation on the acceptance of a price undertaking as provided in rule 15 and subsequently resumes the same on violation of the terms of the said undertaking, the period for which investigation was kept under suspension shall not be taken into account while calculating....
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....ed authority has recorded a final finding of injury or where the designated authority has recorded a final finding of 5 threat of injury and a further finding that the effect of dumped imports in the absence of provisional duty would have led to injury, the anti-dumping duty may be levied from the date of imposition of provisional duty; (b) in the circumstances referred to in sub-section (3) ofsection 9A of the Act, the anti-dumping duty may be levied retrospectively from the date commencing ninety days prior to the imposition of such provisional duty: Provided that no duty shall be levied retrospectively on imports entered for home consumption before initiation of the investigation: Provided further that in the cases of violation of price undertaking referred to in sub-rule (6) of rule 15, no duty shall be levied retrospectively on the imports which have entered for home consumption before the violation of the terms of such undertaking. Provided also that notwithstanding anything contained in the foregoing proviso, in case of violation of such undertaking, the provisional duty shall be deemed to have been levied from the date of violation of the undertaking or such date ....
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.... exercised. 50. The first leading case decided by this Court on the point was Khushaldas S. Advani (supra). In that case, while dealing with the question whether the governmental function of requisitioning property under Section 3 of the Bombay Land Requisition Ordinance, 1947 was an administrative or quasi-judicial function, Das J. (as His Lordship then was), while concurring with the majority, in his separate judgment, upon reference to a long line of cases expressing divergent views, deduced the following principles, which could be applied for determining the question posed in para 48 supra: "(i) that if a statute empowers an authority, not being a Court in the ordinary sense, to decide disputes arising out of a claim made by one party under the statute which claim is opposed by another party and to determine the respective rights of the contesting parties who are opposed to each other, there is a lis and prima facie, and in the absence of anything in the statute to the contrary it is the duty of the authority to act judicially and the decision of the authority is a quasi-judicial act; and (ii) that if a statutory authority has power to do any act w....
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....a dispute be on questions of fact, and if the dispute be on question of law on the presentation of legal argument, and a decision resulting in the disposal of the matter on findings based upon those questions of law and fact." 52. Having examined the scheme of the Tariff Act read with the 1995 Rules on the touchstone of the aforenoted principles, particularly the first principle enunciated in Khushaldas S. Advani (supra), we have no hesitation in coming to the conclusion that this is an obvious case where the DA exercises quasi-judicial functions and is bound to act judicially. A cursory look at the relevant Rules would show that the DA determines the rights and obligations of the `interested parties' by applying objective standards based on the material/information/evidence presented by the exporters, foreign producers and other `interested parties' by applying the procedure and principles laid down in the 1995 Rules. Rule 5 of the 1995 Rules provides that the DA shall initiate an investigation so as to determine the existence, degree and effect of any alleged dumping upon the receipt of a written application by or on behalf of the domestic industry; sub-rule (4) thereof....
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....arguments being accepted or rejected." A similar stipulation is found in relation to the final findings recorded by the DA under Rule 17(2) of the 1995 Rules. Above all, Section 9C of the Tariff Act provides for an appeal to the Tribunal against the order of determination or review thereof regarding the existence, degree and effect of dumping in relation to imports of any article, which order, obviously has to be based on the determination and findings of the DA. The cumulative effect of all 64 (2005) 3 SCC 337 5 these factors leads us to an irresistible conclusion that the DA performs quasi-judicial functions under the Tariff Act read with the 1995 Rules. 54. Having come to the conclusion that the DA is entrusted with a quasi-judicial function, the next question for consideration is whether or not the decision of the DA dated 9th March 2005, returning the final findings in terms of Rule 17 of the 1995 Rules is in breach of the principles of natural justice, resulting in vitiating the subject notification under Rule 18 of the said Rules? 55. It is trite that rules of "natural justice" are not embodied rules. The phrase "natural justice" is also not capable....
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....ce of the case to be met; and (b) opportunity to explain. This rule cannot be sacrificed at the altar of administrative convenience or celerity. The general principle--as distinguished from an absolute rule 65 (1981) 1 SCC 664 5 of uniform application--seems to be that where a statute does not, in terms, exclude this rule of prior hearing but contemplates a post-decisional hearing amounting to a full review of the original order on merits, then such a statute would be construed as excluding the audi alteram partem rule at the pre-decisional stage. Conversely if the statute conferring the power is silent with regard to the giving of a pre-decisional hearing to the person affected and the administrative decision taken by the authority involves civil consequences of a grave nature, and no full review or appeal on merits against that decision is provided, courts will be extremely reluctant to construe such a statute as excluding the duty of affording even a minimal hearing, shorn of all its formal trappings and dilatory features at the pre-decisional stage, unless, viewed pragmatically, it would paralyse the administrative process or frustrate the need for utmost promptitude. In short,....
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....notice to the Advocates for ATMA and Ningbo Nylon, for oral hearing on 9th March 2005, however, there is no document on 66 (1970) 2 SCC 458 6 record indicating that pursuant to ATMA's letter dated 24th January 2005, notice for oral hearing was issued to them by the incumbent DA. Moreover, the alleged opportunity of oral hearing on 9th March, 2005, being in relation to the price undertaking offer by Ningbo Nylon, cannot be likened to a public hearing contemplated under Rule 6(6) of the 1995 Rules. The procedure prescribed in the 1995 Rules imposes a duty on the DA to afford to all the parties, who have filed objections and adduced evidence, a personal hearing before taking a final decision in the matter. Even written arguments are no substitute for an oral hearing. A personal hearing enables the authority concerned to watch the demeanour of the witnesses etc. and also clear up his doubts during the course of the arguments. Moreover, it was also observed in Gullapalli (supra), if one person hears and other decides, then personal hearing becomes an empty formality. In the present case, admittedly, the entire material had been collected by the predecessor of the DA; he had allowed the ....