TaxTMI 
TaxTMI 
2019 (4) TMI 145
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....y is a domestic manufacturer of the subject goods and a member of the domestic industry on whose behalf the application for initiation of anti-dumping investigations was filed. The first respondent (Union Department of Revenue, Ministry of Finance hereafter "the Union" or "the Central Government"), determines whether or not to accept the recommendations of the DA. The Central Government may, within three months of the date of publication of final findings by the Designated Authority, impose by notification in the Official Gazette, anti-dumping duty on the goods originating in or exported from the countries in respect of which suspected dumping activities are confirmed by the DA. The latter (DA) carries out anti-dumping investigations and recommends whether or not to impose anti-dumping duties to the Central Government. It has, in the present case, issued the impugned final findings. The third respondent is Godrej & Boyce Mfg. Co. Ltd (hereafter "Godrej") an interested party in the anti-dumping investigations, who was impleaded in the present proceedings through C.M. No. 39592 of 2017. Brief Facts 3. The facts, in brief, are that in 2015, the Association of Indian Dry Cell Manufac....
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....ned huge profits. Having concluded as above, the Authority is of the view that imposition of antidumping duty, on the imports of the subject goods, originating in or exported from the subject countries, is not required." 5. Following this, no Gazette Notification imposing anti-dumping duty was issued by the Union. 6. On 01.11.2016, the Petitioner filed a representation before Respondent No. l. However, the Union, in its reply to an RTI application dated 23.12.2016, stated that: "In the instant case the DGAD has not recommended imposition of Anti-Dumping duty on imports of AA Dry Cell Batteries originating in or exported from China PR and Vietnam. As there is no further action lying at our end the final findings of the DGAD are put up for perusal and information please." 7. The Petitioner then challenged the impugned final findings before the Customs, Excise & Service Tax Appellate Tribunal, Principal Bench, New Delhi ("CESTAT" or "Appellate Tribunal"), under Section 9C of the Customs Tariff Act, 1975 ("Customs Tariff Act"). The Appellate Tribunal, by Order dated 20.07.2017("Impugned Order"), dismissed the appeal, stating that: "... there is no determination of ADD levy by noti....
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....ificantly in the current Period of Investigation and caused injury to the domestic industry as established from the detailed analysis in the disclosure statement. ii) Demand for the product under consideration has increased during the POI. However, despite increase in demand, the $hare of the domestic industry in the domestic market has substantially declined while the share of the imports from the subject country has significantly increased. (para 43) iii) Capacity utilization of the domestic industry over the injury period declined despite increase in demand, in the face of increase in imports from the subject countries. Production of the domestic industry has increased up to 2013-14, but declined in the POI, whereas demand during the same period has increased significantly. (para 48) iv) Inventory level of the domestic industry has increased. (para 58) v) Presence of dumped imports has resulted in decline in capacity utilization, production and sales, despite increase in demand. (para 79) vi) Imports are undercutting the prices of the domestic industry. Import price is much lower than the level of cost of production of the domestic industry preventing increase in selling....
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....DA noted that the landed price of imports is below the selling price of the domestic industry, resulting in price undercutting. This may be due to the fact that majority of the imports from the subject countries, especially from China, are low value products. (c) The threat of injury was not substantiated by information provided by the domestic industry pertaining to the injury period and the POI of the present investigation. (d) Despite dumping, huge amount of profit is made by the domestic industry with significantly high ROCE position. (e) The landed value of imports is lower than the selling price of the domestic industry. Therefore, Indian price cannot be interpreted as attractive for exports by the subject countries. (f) Net sales realization of the domestic industry is more than the landed price and also the non-injurious price of the domestic industry. Therefore there was no price impact on the domestic industry. (g) Since the domestic industry is able to sell at prices higher than the landed prices and still then make huge profits, the huge volume of imports may not cause much injury to the domestic industry. (h) The level of inventory with the domestic industry ....
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....tly high ROCE position. "The petitioners rely on a table to show that the return on investments earned by the domestic industry over the POI to say that the DA granted 22% return on capital employed for the purpose of determination of NIP and Designated Authority has repeatedly held that this 22% return on capital employed represents reasonable return. The factual basis for stating that the domestic industry has earned huge profits, is contested and it is submitted that the ROI of the domestic industry is below 22%. On one hand the DA considered consistently in more than 500 investigations that 22% return on capital employed is reasonable and is required to be considered in order to determine NIP of the domestic industry, the DA has determined NIP considering 22% return on capital employed, on the other hand, the DA has now held that the domestic industry had earned huge profits. 15. Learned counsel states that the DA in a large number of investigations held that the comparison of NIP with NSR is irrelevant. The DA consistently held that the purpose of NIP determination is limited to the determination of injury margin and the mere fact that the NSR is above NIP is of no relevance.....
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.... comparison with NSR is entirely immaterial. More importantly, the final findings is contradictory on this account because DA at one place found price effect, and held otherwise at other place. Relevant part of the final findings are as follows: "Para 53 - From the above information, the Authority notes that the landed price of imports (including basic customs duty) is below the selling price of the domestic industry, resulting in price undercutting. This may be due to the fact that majority of the imports from the subject countries, especially from China, are low valve products. 54. It is noted that the price underselling effect of the dumped imports from China PR is significant. This may be again due to the fact that majority of the imports from the subject countries, especially from China, are low value products..." 18. It is argued that the DA failed to consider its own position taken in another case and its own arguments before the Tribunal, that too just few days before the decision in that case. This is a clear case of contradictory and discriminatory approach. The Designated Authority ignored its past established precedents where it held that NIP being below NSR does not....
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....se year. While the domestic industry holds significant share in the market throughout the injury period including the POI, the rest of the suppliers including the subject countries contribute to the market minimally. From the aforesaid data, the only concern appear to be the increase of the market share of the subject countries from1.23% in the base year to 12.87% in the POI, whereas the market share of the domestic industry has declined from 89.87% during the base year to 82.97%during the POI. But, this trend needs to be analyzed with reference to the production capacity of the domestic industry and their actual production during the injury period including the POI. As per the information given in the relevant Para of this finding, the domestic industry has increased its production capacity throughout the injury period. It increased its production capacity from 2150400 thousand pcs in the base year to 2418400 thousand pcs in the POI. Bit, despite demand in the domestic market more than its capacity, it neither increased its production in line with demand, nor increased its sales in the domestic market matching with its production. This indicates that the domestic industry is not w....
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....Capacity, utilization and Sales Volume 50. As noted from the table below, there is an enhancement of capacity of the domestic industry in the period 2012-13 and 2013-14 in line with increase in demand, put during POI, the domestic industry abstained from increasing its capacity further despite increasing demand. Production of the domestic industry has increased up to 2013-14, but declined in the POI, whereas demand during the same period has increased significantly. This is the situation despite the domestic industry realising a better price than the landed price. Particulars UOM 2011-12 2012-13 2013-14 POI Installed capacity 000 Pcs 21,50,400 23,09,400 24,18,400 24,18,400 Trend Indexed 100 107 112 112 Production 000 Pcs 18,12,289 18,70,943 18,92,327 18,49,807 Trend Indexed 100 103 104 102 Capacity Utilization % 84.28% 81.01% 78.25% 76.49% Trend Indexed 100 96 93 91 Domestic Sales 000 Pcs 17,89,225 17,78,384 18,27,803 17,82,890 Trend Indexed 100 99 102 100 Demand 000 Pcs 20,79,040 20,21,551 20,13,593 21,79,064 Trend Indexed 100 97 97 105 PRICE EFFECT Pric....
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.... Magnitude of dumping 61. The Authority notes that the dumping margin of the imports from subject countries is more than de-minimus and substantial. Growth 62. The Authority notes that the domestic industry has shown negative growth interms of production and sales. However, profit has shown significant improvement. Growth UOM 201112 2012-13 2013-14 POI Production % - 3.24 1.14 -2.25 Domestic Sales % - -0.61 2.78 -2.46 Selling Price % - 3.43 9.85 18.29 Cost of Sales % - 3.32 2.53 9.62 Profit/Loss % - 0.09 235.29 238.54 Conclusion on Injury 64. Having regard to the contentions raised, information provided and submissions made by the interested parties and facts available before the Authority as recorded in this finding and on the basis of the above analysis of the state of dumping and consequent injury, the Authority concludes that: i. There is dumping of the product concerned from China PR and Vietnam. ii. Both dumping margin and injury margin are positive with positive undercutting. iii. Despite dumping, huge amount of profit is made by the domestic industry with significantly high ROCE position. iv. Net sales realisation of the dom....
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....ier sunset review final findings issued on 20th May, 2013, at Para 66, the Authority had held as follows: "66. The domestic industry in its submissions has claimed that the producers in China are having significant surplus capacities as compared to the demand of subject goods in the domestic market. Domestic industry submitted that there are over 100 producers of Dry Cell Batteries in China. However, the below table data for 20 major producers of subject goods for which data is available. As per information furnished by the Domestic Industry, around 47.12% of the production represents the share of production of AA batteries (subject goods). Based on the same the table below shows the production, consumption and exports of the product under consideration: SN Particular 2009 2010 1 Installed Capacity in Million Pcs 18,090 18,090 2 Subject goods volume (AA share of Total Capacity is 47.12%) in Million Pcs 8,524 8,524 3 Production in China in Million Pcs 5,527 6,435 4 Global Export in Million Pcs 2,545 2,846 5 Consumption in China in Million Pcs (5- 4) 2,982 3,589 6 Unutilised Capacity in Million Pcs (2- 3) 2,997 2,089 7 Surplus a....
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.... domestic industry in view of the facts that the domestic industry has realized much higher selling price as compared to their non-injurious price and also the landed price of the subject goods from the subject countries and earned huge profits. Having concluded as above, the Authority is of the view that imposition of anti-dumping duty, on the imports of the subject goods, originating in or exported from the subject countries, is not required." Relevant Provisions 23. The relevant provisions of the Customs Tariff Act, 1975 are extracted below: "Section 9A. Anti- dumping duty on dumped articles. - (1) Where any article is exported by an exporter or producer 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 Central Government may, by notification in the Official Gazette, impose an anti-dumping duty not exceeding the margin of dumping in relation to such article. ************** ************* (5) The antidumping duty imposed under this section shall, unless revoked earlier, cease t....
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....cle 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 determine the injury to domestic industry, threat of injury to domestic industry, material retardation to establishment of domestic industry and a causal link between dumped imports and injury, taking into account all relevant facts, including the volume of dumped imports, their effect on price in the domestic market for like articles and the consequent effect of such imports on domestic producers of such articles and in accordance with the principles set out in Annexure II to these rules. (3) The designated authority may, in exceptional cases, give a finding as to the existence of injury even where a substantial portion of the domestic industry is not injured, if- (i) there is a concentration of dumped imports into an isolated market, and (ii) the dumped articles are causing injury to the producers of all or almost all of the production within such market. 12. Preliminary findings. - (1) The designated authority shall proceed expeditiously with the conduct of the investigation and shall, ....
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....ose 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 the period of said one year, (b) recommending the amount of duty which, if levied, would remove the injury where applicable, to the domestic industry. (2) The final finding, if affirmative, shall contain all information on the matter of facts and law and reasons which have led to the conclusion and shall also contain information regarding- (i) the names of the suppliers, or when this is impracticable, the supplying countries involved; (ii) a description of the product which is sufficient for customs purposes; (iii) the margins of dumping established and a full explanation of the reasons for the methodology used in the establishment and comparison of the export price and the normal value; (iv) Considerations relevant to the injury determination; and (v) the main reasons leading to the determination. (3) The designated authority shall determine....
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....any zero margin, margins which are less than 2 per cent expressed as the percentage of export price and margins established in the circumstances detailed in sub-rule (8) of rule 6. The Central Government shall apply individual duties to imports from any exporter or producer not included in the examination who has provided the necessary information during the course of the investigation as referred to in the second proviso to sub-rule (3) of rule 17. (3) Notwithstanding anything contained in sub-rule (1), where a domestic industry has been interpreted according to the proviso to sub-clause (b) of rule 2, a duty shall be levied only after the exporters have been given opportunity to cease exporting at dumped prices to the area concerned or otherwise give an undertaking pursuant to rule 15 and such undertaking has not been promptly given and in such cases duty shall not be levied only on the articles of specific producers which supply the area in question. (4) If the final finding of the designated authority is negative that is contrary to the evidence on whose basis the investigation was initiated, the Central Government shall, within forty-five days of the publication of final fin....
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....standing the provisions of paragraphs 1 and 2, any definitive anti-dumping duty shall be terminated on a date not later than five years from its imposition (or from the date of the most recent review under paragraph 2 if that review has covered both dumping and injury, or under this paragraph), unless the authorities determine, in a review initiated before that date on their own initiative or upon a duly substantiated request made by or on behalf of the domestic industry within a reasonable period of time prior to that date, that the expiry of the duty would be likely to lead to continuation or recurrence of dumping and injury. The duty may remain in force pending the outcome of such a review." (emphasis added) Analysis and Conclusion 25. The issue arising for consideration in the present case is whether the Designated Authority's negative Final findings recommending no anti dumping duty on the ground of it not being in accord with the disclosure statement published by it, can in the circumstances of this case, be interfered with in judicial review. 26. Supreme Court judgments, and several decisions of High Courts, have clarified that the Designated Authority is only an investig....
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....uced evidence, a personal hearing before taking a final decision in the matter. 28. A Division Bench of this Court, in Deepak Fertilizers v. Designated Authority, 2006 SCC OnLine Del 38, after noticing Rule 3 of the Rules further clarified that the Designated Authority only assists the Central Government in making its determination. According to Rule 4(1) (d) of the Rules, the duty of the Designated Authority is to recommend the amount of anti-dumping duty, which if levied, would remove the injury to the domestic industry. Section 9A of the Customs Tariff Act enables only the Central Government to impose anti-dumping duty. The Customs Tariff Act and the Rules thereunder thus make it clear that the Designated Authority's findings are mere recommendations intended to assist the Central Government. Reference, in this regard, may also be made to the CEGAT's decision in Indian Spinners Association v. Designated Authority, 2000 (119) ELT 299 (Tri. - Delhi). 29. The report of the Designated Authority is only a recommendation, it does not create any rights or liabilities and is therefore not binding on the Central Government. A bare reading of the Customs Tariff Act and its Rules reveal....
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....tors and come to the conclusion that it is not in public interest to impose Anti-dumping duty. Such factors are additional and besides those taken into account by DA for recommending Anti-dumping duty. As noted earlier, task of DA is limited of ascertainment of various factors such as factum of dumping if at all, ascertainment of extent of dumping, injury to the domestic market and amount of dumping duty [that] in his opinion would eliminate injury. These are issues which necessarily would be governed by material that may be brought on record and ascertainment of relevant factors on basis of facts presented. DA while examining these issues would not be involved in ascertaining other consequences of imposition or otherwise of Anti-dumping duty. It is necessarily the task of the Central Government to ascertain such factors and to come to conclusion whether despite such recommendations, Antidumping duty should be imposed or not." 33. This court is conscious of the separate roles that the Designated Authority and the Central Government perform in deciding whether or not to impose anti-dumping duty. The Central Government is restricted from imposing anti-dumping duty in certain circums....
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....o exercise the sovereign power of imposing tax, the body of individuals and entities who are likely to be affected (and were issued notice of a possible adverse report, such as foreign exporters and domestic importers of such products from foreign origin) the standard of review, under Article 226 has to be of a different order. 36. Section 9A(5) of the Customs Tariff Act is modeled after Article 11 of the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994. India, having acceded to the World Trade Organization with effect from 1995 was required to align its laws relating to countervailing duty and anti-dumping duty with the results of the Uruguay Round of Multilateral Trade Negotiations. Therefore, on 31.12.1994, an Ordinance to amend the Customs Tariff Act, 1975 was promulgated by the President, which, inter alia, introduced Section 9A into the Customs Tariff Act. 37. To understand the rationale behind the 5-year period provided under Section 9A (5), reference must be made to Article 11.3 of the Anti-Dumping Agreement. Article 11.3 has been drafted in response to the practice of some countries who were levying anti-dumping duties indefini....
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....the aspect of injury that: "i. There is dumping of the product concerned from China PR and Vietnam. (ii) Both dumping margin and injury margin are positive with positive undercutting. (iii) Despite dumping, huge amount of profit is made by the domestic industry with significantly high ROCE position. iv. Net sales realisation of the domestic industry is more than the landed price and also the non-injurious price of the domestic industry. Therefore no price impact on the domestic industry. v. Although huge volume of subject goods have entered Indian market during the POI, there is marginal decline in sales of the domestic industry and they do not appear to have had any injurious effect on the domestic industry in terms of price parameters since their net sales realization is much more than the landed value and profit position is phenomenal. vi. Therefore, the dumped imports from China PR and Vietnam cannot be dubbed as causing material injury to the domestic industry. Since the domestic industry is able to sale at prices higher than the landed prices and still then make huge profits, the huge volume of imports may not cause much injury to the domestic industry. vii. Therefore....