TaxTMI 
TaxTMI 
2019 (12) TMI 18
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....ubject country, investigation was initiated by the DA on 29.06.2006 and on completion of the investigation, anti-dumping duty on imports of Nonyl Phenol from Chinese Taipei was recommended vide Finding & Recommendation dated 25.06.2007. The recommendations were given effect by issuance of Customs Notification No.94/2007-Cus, dated 22.08.2007 imposing anti dumping duty on the said goods on its import from the subject country. Before expiry of 5 years period, on an application for sun set review by the Appellant, necessary investigations were initiated by the DA on 09.08.2012 and the imposition of duty was extended for a further period of one year as per second proviso to Section 9A(5) of CTA,1975 through Notification No.39/2012, dated 24.08.2012, pending investigation. On completion of investigation, the DA recommended continuation of anti dumping duty for a further period of five years vide final Finding & Recommendation dated 08.11.2013. The said recommendation was implemented by the Government by issuance of Notification No.05/2014-Cus (ADD), dated 16.01.2014 by extending imposition of duty for a further period of 5 years. 2.1 Since there had been continued dumping of the subj....
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....ry to the domestic industry; whereas in the sun set review, the main objective is not to examine for imposition of duty on dumping and injury, but the analysis should be whether there is likelihood of continuation or recurrence of dumping and injury on the expiry of anti dumping duty. In support, she has referred to Section 9A(5) of the Customs Tariff Act,1975 and relevant judgments on the said issue, namely, Union of India Vs Kumho Petrochemicals Company Ltd - 2017 (351) ELT 65 (SC), Vinati Organics Ltd Vs DA - 2001 (127) ELT 629 (T), Hubei Tri-Ring Forging Co. Ltd Vs DA - 2016 (342) ELT 473 (T), P.T. Asahimas Chemicals Vs Designated Authority - 2015 (328) ELT 417 (T), Thai Acrylic Fibre Ltd Vs Designated Authority - 2010 (253) ELT 564 (Tri-Del.). 3.2. She has submitted that the principle in this regard laid down under various decisions is clear inasmuch as unlike original investigation sun set review are prospective in nature, therefore, the fact that current level of dumping is non-existent or minimal has no relevance. Similarly, the existing injury determination, the objective assessment is whether injury will continue or recover would entail counter-factual analysis of futu....
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....U have restrictions on the use of Nonyl Phenol. Therefore, India remains largest market for the exporters in Chinese Taipei. c) The demand in India is growing and the price in Indian market is higher than the export price in other countries making India a very attractive market for the exporters from Chinese Taipei. d) The domestic market of the foreign exporter is able to absorb only 13% of the capacity, the producer in Chinese Taipei have, therefore, a strong export orientation. e) The fact of continued dumping despite imposition of duty, indicate strong likelihood that the dumping will continue unabated and may intensify. f) The foreign producers participated in the first sunset review. Based on the information furnished by them, the Authority came to a conclusion that there was a likelihood continuation or recurrence of dumping and injury. The foreign exporters have failed to participate in the present review and have withheld the necessary information from the Authority, possibly because participation could lead to a result which is less favourable than if the exporter did not cooperate. g) Evidence of third country dumping is also ....
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.... 3.10 She has further submitted that despite the anti dumping duty being in force, the domestic industry has not been able to earn adequate profit as they had been forced to match the landed price of import. Even though, the Appellant was able to increase its sales and improve the market share but its profit has gone down; the price at which the sales are made by the domestic industry, is only marginally higher than the cost of production. The profit is about 2%, while the return on capital employed is mere 5%; thus due to negligible returns and profit earned, the domestic industry continues to be fragile and vulnerable. 3.11 She has further submitted that even on volume front, with the import under-cutting the prices of domestic industry, the importers would have a clear preference for the imported product. This would eventually result in a surge in imports, eating into market share of domestic industry. Therefore, on the cessation of duty, the domestic industry would suffer material injury on account of high volume of imports at low prices resulting into significant losses, making production of Nonyl Phenol unviable in India. 3.12 She has also submitted that anti dumping d....
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....countries at dumped prices with dumping margin in the range of 15-25%. 3.14 The learned Advocate has submitted that in spite of sufficient evidence on record indicating likelihood of continuation or recurrence of dumping, the DA has wrongly observed that there is no evidence to prove that excess capacity will be diverted into India in the event of revocation of anti-dumping duty. She has submitted that since there are huge excess capacity with the foreign exporters, and in absence of any alternate market, there is likelihood that additional exports will be diverted to India. As per sub-para (b) of Para (vii) of Annexure II to Anti Dumping Rules, 1995 , there is no requirement whatsoever to prove the diversion; it is only necessary to establish existence of alternate market for which the evidence has been produced. She has contended that the authority on the one hand held that even with the duty imposed, dumping margin is in the range of 15 to 25%, whereas on the contrary he concludes that once duties are withdrawn, there is no likelihood of dumping of goods in India. She has vehemently argued that the current dumping itself indicates that not only dumping is likely to continue b....
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....Rebutting the argument of the learned Advocate for the DA that since the protective measures have been in force since 11 years, the market have realigned to such developments and the domestic industry ought to have demonstrated as to how the duty imposed in 2007 would be a factor for making a likelihood analysis in 2018, it is submitted that the said written submissions are beyond the reasoning given in the impugned final finding and tantamount to supplementing the reasons recorded in the findings. Further, it is contended that there is no material on record to show that the market have realigned themselves and excess capacity of foreign exporter are no longer relevant for likelihood determination. 3.20 The learned Advocate has contended that the principles of natural justice have been violated. Under Rule 16 of anti dumping rules, the DA is required to inform all interested parties of the essential fact under consideration, which form the basis for its decision. The disclosure statement should contain the interim conclusion of the DA on the essential fact which would form the basis for the decision whether or not to apply the definitive measures. Since in a sunset review, the d....
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..... Submission on behalf of the Designated Authority 5. Per contra, the learned Advocate for the DA, referring to Section 9A(5) of CTA read with Rule 23 of Anti Dumping Rules,1995 submitted that the DA while conducting the sunset review, in an objective manner, to reach a conclusion i.e. as to whether to extend anti dumping duty or otherwise, examined the contention of the Domestic Industry whether there is likelihood of continuation or recurrence of dumping and injury with specific reference to the threat or material injury in terms of Annexure- II (viii) of Rules, read with the judgment of Hon'ble Gujarat High Court in the case of Nirma ltd Vs UOI - 2017 (346) ELT 228 (Guj.). He has contended that in a sunset review examination, several factors need to be considered which have been dealt in other countries, is summarised below:- a) Economic factors required for determination of injury under Rule 9(2) read with Annexure-II of Anti Dumping Rules are not necessarily required to be evaluated. In support, he has referred to the WTO panel report in the case of Eu Footwear(China). b) In the Appellant's argument, it is stated that the investigating authority has fai....
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.... type of facts that exists and that may be established with certainty and precision relate to the past and to that extent they may be accurately recorded and evaluated to the present. It is contended that during sunset review, the investigating authority can only focus on circumstances that can reasonably be expected to exist in near to medium term and not in the definite future. (f) It is submitted that the argument of the domestic industry, that excessive capacity is indicative of likelihood of continuation or recurrence of dumping is merely presumptuous. There exists no factual evidence to reasonably conclude that there is clear casual link between such excessive capacity and likelihood of injury. (g) Further, it is submitted that analysis of different factors conducted during sunset review are only indicative and cannot be held conclusive of likelihood of continuation or recurrence of dumping or injury. Therefore, undue reliance on a single factor of excessive capacity of the exporter cannot be placed in case of sunset review investigation. Further, there exists no sufficient factual basis in the present case for the investigating authority to draw a reasoned ....
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.... duty in China. He has further submitted that effect of duty imposed in 2007 on international market after more than 11 years could not be demonstrated by the domestic industry. (ii) With regard to the issue of restrictions by markets like U.S.A, Canada and European Union he has submitted that the appellant has failed to provide details about the nature of restrictions or the timings of such restrictions. (iii)He has also argued that placing the subject case under restricted Toxic Substances by China in the year 2011 could not be justified by the domestic industry to show on its impact, the likely exports to India in the event duties are discontinued. It is his contention that though the domestic industry has argued that the export to China PR from Chinese Taipei fell from 15000 M.Ton in 2010 to around 1500 M.Ton in 2016 -17 no explanation or analysis to demonstrate that the event of 2011 are sufficient to conclude likelihood of injury in the event duties are discontinued. (iv) On the argument that Chinese Taipei is the hub of Asian Transportation routes, he has submitted that any natural advantages to the purchasers of any country cannot be addressed through the mechanism....
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....ducts of one country are introduced into the commerce of another country at less than the normal value of the products, is to be condemned if it causes or threatens material injury to an established industry in the territory of a contracting party or materially retards the establishment of a domestic industry. For the purposes of this Article, a product is to be considered as being introduced into the commerce of an importing country at less than its normal value, if the price of the product exported from one country to another (a) is less than the comparable price, in the ordinary course of trade, for the like product when destined for consumption in the exporting country, or, (b) in the absence of such domestic price, is less than either i) the highest comparable price for the like product for export to any third country in the ordinary course of trade, or ii) the cost of production of the product in the country of origin plus a reasonable addition for selling cost and profit. Due allowance shall be made in each case for differences in conditions and terms of sale, for differences in taxation, and for other differences affecting price ....
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....e or upon request by any interested party who submits positive information substantiating the need for such review, and a reasonable period of time has elapsed since the imposition of the definitive anti-dumping duty and upon such review, the designated authority shall recommend to the Central Government for its withdrawal, where it comes to a conclusion that the injury to the domestic industry is not likely to continue or recur, if the said anti-dumping duty is removed or varied and is therefore no longer warranted. (1B) Notwithstanding anything contained in sub-rule (1) or (1A), any definitive anti dumping duty levied under the Act, shall be effective for a period not exceeding five years from the date of its imposition, unless the designated authority comes to a conclusion, on a review initiated before that period on its 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 the expiry of that period, that the expiry of the said anti dumping duty is likely to lead to continuation or recurrence of dumping and injury to the domestic industry. (2) Any review initiated under sub-....
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....for the continued imposition of the duty, where warranted, on their own initiative or, provided that a reasonable period of time has elapsed since the imposition of the definitive anti-dumping duty, upon request by any interested party which submits positive information substantiating the need for a review. Interested parties shall have the right to request the authorities to examine whether the continued imposition of the duty is necessary to offset dumping, whether the injury would be likely to continue or recur if the duty were removed or varied, or both. If, as a result of the review under this paragraph, the authorities determine that the anti-dumping duty is no longer warranted, it shall be terminated immediately. 11.3 Notwithstanding 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 behal....
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....esignated Authorities, (2006) 10 SCC 368 = 2006 (202) E.L.T. 23 (S.C.) in the following manner :- "38. We are of the opinion that the nature of the proceedings before the DA are quasi-judicial, and it is well settled that a quasi-judicial decision, or even an administrative decision which has civil consequences, must be in accordance with the principles of natural justice, and hence reasons have to be disclosed by the Authority in that decision vide S.N. Mukherjee v. Union of India [(1990) 4 SCC 594 : 1990 SCC (Cri) 669 : 1991 SCC (L&S) 242 : (1991) 16 ATC 445]. 39. We do not agree with the Tribunal that the notification of the Central Government under Section 9A is a legislative act. In our opinion, it is clearly quasi-judicial. The proceedings before the DA are to determine the lis between the domestic industry on the one hand and the importer of foreign goods from the foreign supplier on the other. The determination of the recommendation of the DA and the government notification on its basis is subject to an appeal before CESTAT. This also makes it clear that the proceedings before the DA are quasi-judicial." 10. This Tribunal in Thai Acrylic Fibre Ltd.'s ca....
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....d determination in which present levels of dumping are obviously not so relevant as is the likelihood of continuance or recurrence of dumping. In the case of Rishiroop Polymers Pvt. Ltd. v. Designated Authority - 2006 (196) E.L.T. 385 (S.C.), the Supreme Court held as under : "Otherwise also, we are of the opinion that scope of the review inquiry by the Designated Authority is limited to the satisfaction as to whether there is justification for continued imposition of such duty on the information received by it. By its very nature, the review inquiry would be limited to see as to whether the conditions which existed at the time of imposition of anti-dumping duty have altered to such an extent that there is no longer justification for continued imposition of the duty. The inquiry is limited to the change in the various parameters like the normal value, export price, dumping margin, fixation of non-injury price and injury to domestic industry. The said inquiry has to be limited to the information received with respect to change in the various parameters. The entire purpose of the review inquiry is not to see whether there is a need for imposition of anti-dumping duty b....
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....rs is likely to lead to continuance/recurrence of dumping and injury - Expression "likely to lead to recurrence" would cover situation where dumping and injury may not exist at time of review due to continuance of anti-dumping duty." During the period of investigation, the anti-dumping duty would be in force and hence, the "current" level of dumping may be non-existent or minimal. The exporters under investigation may also sell at a non-dumped price during this period knowing fully well that a sunset review would be in progress. Hence, the criteria under Section 9A(1) that the anti-dumping duty should not exceed the dumping margin would have no practical application for continuance of the duty under Section 9A(5). There is also no such warrant in law under the said Section 9A(5) to do so. 10. With respect to the injury determination, if the anti-dumping duty had the desired effect, the condition of the domestic industry would be expected to have improved during the period the anti-dumping duty was in effect. Therefore, the assessment whether injury will continue, or recur, would entail a counter-factual analysis of future events, based on projected levels of dumpe....
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....jury to the domestic industry that would recur in future once the duty is removed extension of antidumping duty is not warranted. "I. CONCLUSIONS AND RECOMMENDATIONS 76. Having examined the contentions of various interested parties and on the basis of the above facts, circumstances, and analysis, the Authority concludes as under: i) The financial and economic parameters of Domestic Industry (both volume and price) are stable and not evidencing deterioration requiring extension of anti dumping duty. ii) The Petitioners have performed well during the injury period including the POI in terms of its financial parameters. iii) Petitioners have not been able to establish likelihood of dumping and injury to the Domestic Industry in the event anti dumping duty were to be revoked on the subject goods. iv) Capacity, production, domestic sales and overall profitability of the industry do not indicate existence of injury or a deteriorated economic condition." v) The factors submitted by the Petitioners on likelihood of recurrence of injury on withdrawal of ADD are not supported by the price realizations and price trends of the subj....
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.... (Piling Pipe 75) 12 Significant investment in future production by domestic industry 13 Exporters have lost market share in their domestic market 14 Declining demand in exporters domestic market 15 High degree of dependence on export markets by exporters 16 Circumvention of the current measures 17 Elimination of imports after finding Australia 1 Increased or significant market share for imports 2 Significant rate of increased imports 3 Elimination of imports after measure 4 Evidence of third country dumping 5 Existence of price undercutting by imports 6 Significant production capacity of exporters 7 Continued dumping or subsidization 8 Current injury 9 Failure of respondents to participate in review 10 Exporter has retained distribution links in Australia 11 Anti dumping actions by other countries 12 Exporter retains an excess capacity that may be directed to Australia European Union 1 Evidence of duty absorption 2 Third country dumping of the same merchandise 3 Current injury or vulnerability of the domestic industry 4 Significant i....
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.... profit & loss, cash profits and returns on investment of the domestic industry, it is recorded that the profits have decreased but are positive. 19. On the issue of likelihood of continuous or recurrence of dumping and injury in case of cessation of Anti-dumping duty, the DA observed that there is no evidence to prove that the excess capacities available with the exporters of the subject country would be diverted into India in the event of revocation of anti-dumping duty. Also, he has observed that insufficient demand in the subject country and un-utilised capacity will be utilised to dump goods into India cannot be a factor to draw adverse inference against the exporters from such country. Further, he has observed that export restrictions by USA, Canada and European Union on the subject goods would make Asia being the only market available and the goods would be dumped in India, in the absence of evidence cannot lead to an adverse impact against the exporters. With regard to anti-dumping measures initiated in China and its market for exporters from Chinese Taipei it is noted that the facts and circumstances of investigations are different, therefore cannot be equated in decidi....
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....ant and necessary to arrive at a reasonable and logical determination of continuation of same scenario in future warranting continuation of antidumping duty or otherwise. However, it is impractical and also illogical to insist on the positive evidences on future events, for determination of the likelihood of dumping and injury in future on removal of duty. The parameters to reach at the conclusion on likelihood of dumping and injury adopted in the Sunset Review proceeding by various countries mentioned above are: to name a few, current dumping and injury, significant production capacity and inventories of exporters, existence of barriers for import of such goods in other countries, failure of respondents to participate in review proceeding, declining demand in exporters domestic market, high degree of dependence on export market by exporters, etc.. We also find that more or similar parameters are appearing under the Annexure-II of the Anti Dumping Rules,1995. 22. In this back drop, we find that the Appellant domestic industry could reasonably establish through present and past evidence that most of these parameters are satisfied in the present case. The dumping margin is in the ....
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....ession and suppression of HWL's prices. - Consequent upon the likely price and volume effects, if duties are removed and imports resume in significant volumes, HWL's sale volume is likely to remain stable while its revenue is likely to decline significantly. - If HWL ...., it would likely also maintain its market share. However, if duties were removed HWL would ..... - As a result of the likely price effects, HWL's profits would likely decline. - As a consequence of the adverse economic impacts set out above, including a significant decline in revenue, HWL is likely to experience adverse impacts on return on investments, cash flow, growth and ability to raise capital and investments. - There is unlikely to be an adverse impact on productivity, utilisation of production capacity, inventories, employment and wages unless HWL ..... 283. On the basis of the above considerations, the Ministry concludes that if the anti dumping duties were to be removed, material injury to the industry due to dumped imports of canned peaches from Greece is likely to recur." (II) European Commission, while initiating the sunset review investigation ....
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....iesel. (143) It is therefore very likely that US producers would use a large part of their spare capacity to re-enter the Union market should the existing measures be allowed to lapse. As established above (recital (46)), it is likely that the US producers will export biodiesel to the Union at dumped price levels in order to compete with Union producers on the Union market. Given their current pricing behaviour on other export markets (recitals (57)-(58) above) and the large spare capacity available it is very likely that significant volumes of US biodiesel would re-enter the Union market at dumped prices equal to, or below the Union prices. (144) Such import s would exercise a significant pressure and even downwards price pressure on Union industry, which at current price levels, is only making a very small profit, which is significantly below its target profit. This would most likely result in a decrease of production and sales volumes, less profitability and loss of market share. (145) Given the fragile economic situation of the Union industry, such likely scenario would have a significant adverse effect on the ongoing recovery of the Union industry an....