TaxTMI 
TaxTMI 
2015 (9) TMI 715
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....ition of an anti-dumping duty on exports of 6PPD from inter-alia Kumho Petrochemicals Co. Ltd. The Authority found that the exports from Korea were being made below their normal value and the domestic industry had suffered material injury, cumulatively from the subject imports. In respect of the Korean exporter, the Authority constructed its cost of production for 6PPD by considering the international price of the major raw material, that is, 4 ADPA instead of the actual procurement cost of the said raw material from China. 3. Appeal Nos.AD/6 & 9/2009 have been filed by Kumho Petrochemicals Co. Ltd., exporter form Korea and Rishiroop Polymers, importer in India of subject goods, praying for setting aside of the impugned notification and final findings. Appeal No.AD/7/2009 has been filed by domestic industry seeking modification / enhancement of duties on the exports from Korea. Arguments of Exporter and Importer 4. The ld. counsel appearing for the exporter submitted that the normal value for 6PPD had not been appropriately determined by the Designated Authority. The exporter had been sourcing 4ADPA from Sinorghem China PR, which was a cooperating exporte....
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....ales of PX13 (6PPD) works out to US***Kg." Since the international price adopted for 4ADPA had not been made available to the exporter, thjey had no opportunity to offer their comments on such price. They also submitted that no disclosure had been made to them about the average profit added to the constructed cost of production. vii Thus, the findings had been passed in violation of the principles of natural justice and the determination of the normal value was therefore vitiated. Arguments of domestic industry 5. The ld. counsel for the domestic industry submitted that the actual cost of procurement of 4ADPA from Sinorgchem was not reliable, since it did not reflect the instrinsic cost of the input. In this context, they invited attention to Annexure 1 to the Rules, which reads as under:- "The elements of costs referred to in the context of determination of normal value shall normally be determined on the basis of records kept by the exporter or producer under investigation, provided such records are in accordance ewith the generally accepted accounting principles of the exporting country, and such records reasonably reflect the cost associated with prod....
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....1/R (Para 7.393)] 7. They relied on the judgment of the General Court (European Union) in the matter of Acron OAO and Anr Vs. Council of the European Union relating to Ammonium Nitrate (T-235/08) decided on 07.02.2013, wherein it was held that when the prices of raw materials are regulated in such a way that they are artificially low in the domestic market, it may be presumed that the cost of producing the product concerned is affected by a distortion. The General Court considered that under such circumstances, the Union institutions are entitled to conclude that cost of one of the items in the records cannot be regarded as reasonable and that, consequently, the same can be adjusted. They also referred to EU Regulations as under:- i. Council of the European Regulation (EU) No.1194/2013 in the matter of Biodiesel from Argentina and Indonesia followed the judgement of General Court and constructed the cost of production of raw material on the basis of international price. ii. Council Regulation (EEC) No.3836/91 relating to dihydrostretomycin from China, the Commission adjusted the raw material price on the basis of international price due to distortion. iii. C....
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.... of 6PPD. The Authority had correctly revised the cost of sales of 6PPD. On the aspect of inadequate disclosure, it was argued that the international market price was given in Paragraph 58 of the Final Findings as USD 3.09 per Kg, as also in the letters of domestic industry, which were available in the public file. It was also argued that the methodology adopted for fixation of normal value and export price had been appropriately given in the disclosure statement. Arguments on behalf of Revenue 11. Ld. Departmental Representative for Revenue supported the notification on the ground that it was based on valid legal considerations. He referred to the Panel Reports on the point, that where the accounts do not appropriately reflect the intrinsic value of an input, the Authority was justified in adoption of international price. Analysis 12. In the context of the aforesaid arguments, the following issues arise for consideration:- i. Whether the Authority was right in constructing the cost of production of 6PPD, disregarding the cost of 4ADPA. ii. Whether due process has been following by the Designated Authority, with regard to disclosure of relevant....
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.... as well as their legal representatives in India. The Authority therefore concludes that the responding exporter is operating under non-market economy conditions." 14. There is no challenge to the finding that Sinorgchem is not operating under market economy conditions. The decisions of non-market economy firms regarding prices, costs and inputs, including raw materials, cost of technology and labour, output, sales and investment are not made in response to market signals reflecting demand and supply and are often also not free from state interference. The Authority has found that the transformation of Sinorgchem from a state owned concern to a private owned concern was made at a nominal price. The cost of production of both 4ADPA and 6PPD was therefore, affected by non-market considerations. In such a scenario, the Authority rightly rejected the export price of Sinorgchem for 4ADPA as not reliable. The Act and the Rules, envisage determination of a normal value, which reflects the true cost of production. 15. As per paragraph 1 of Annexure 1 to the Anti-Dumping Rules, the elements of costs referred to in the context of normal value shall n....
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....nd records maintained by the company in question so long as these are in keeping with generally accepted accounting principles but that second, the costs to be included are those that reasonably reflect the costs associated with the production and sale of the product under consideration." It is clear that both the requirements must be independently met. 18. In the judgement of the General Court (European Union) in the matter of Acron OAO and Anr Vs Council of the European Union relating to Ammonium Nitrate (T-235/08) decided on 7 February 2013, it has been held as under:- "Since the price of gas in Russia was regulated, it may indeed by presumed that the cost of producing the product concerned was affected by a distortion of the domestic Russian market regarding the price of gas, as that price was not the result of market forces. 45. In addition, the interpretation of the first sentence of Article 2(5) of the basic regulation put forward by the appellants, namely that the costs of production are calculated solely on the basis of the records of the party under consideration, would be tantamount in fact to precluding recourse to the constructed normal value in particular whe....
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....ta for 4ADPA from a market economy country to India, is a fair basis for ascertaining the actual value of 4ADPA. The Apex Court in the case of Reliance Industries [2006 (202) ELT 23 (SC)], held that the normal value is country specific not exporter specific, and hence the accounts of the exporter are to be considered only, where they reflect the normal or ordinary cost of inputs. The Apex Court in para 31 of the judgement observed:- "31. In the present case, the DA has recorded a finding that the normal value is exporter specific. In our opinion this is contrary to the Supreme Court judgement in Designated Authority (Anti-dumping Directorate v. Haldor Topsoe A/S., 2000 (6) SCC 626. In page 635 of the said judgment, this Court observed: "With respect, we are unable to accept this finding of the Tribunal. From a careful reading of section 9A of the Tariff Act and Rule 6 of the Rules, it is clear that the statute has nowhere put such a restriction on the investigating authority. On the contrary, a perusal of the said provisions clearly shows that the "normal value" will have to be determined with reference to comparable price, the words "comparable price" in th....
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....ovisions of a statute, particularly when the order has adverse civil consequences which obviously cover infraction of property, personal rights and material deprivations for the party affected. The principle holds good irrespective of whether the power conferred on a statutory body or Tribunal is administrative or quasi-judicial. It is equally trite that the concept of natural justice can neither be put in a strait-jacket nor is it a general rule of universal application. Undoubtedly, there can be exceptions to the said doctrine. As stated above, the question whether the principle has to be applied or not is to be considered bearing in mind the express language and the basic scheme of the provision conferring the power; the nature of the power conferred and the purpose for which the power is conferred and the final effect of the exercise of that power. It is only upon a consideration of these matters that the question of application of the said principle can be properly determined. [See. : Union of India v. Col. J.N. Sinha & Anr. (1970)2 SCC 458]. 59. In the light of the aforenoted legal position and the elaborate procedure prescribed in Rule 6 of 1995 Rules, which the DA is obl....