TaxTMI 
TaxTMI 
TaxTMI 
2019 (12) TMI 18
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 subject goods, from the subject country, the Appel....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 future events based on projected level of dumped imports, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d 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 on record indicating the propensity of the foreign exporters to dump its products in export market as also the possibility of diversion of such goods to the Indian market on ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ven 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 duty is imposed to off-set the injurious effects of dumping. If the anti dumping duty has a desired effect, the condition of domestic industry would be expected to improve during the period anti dumping duty in forc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ere 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 but may intensify on expiry of duty. 3.15 On the requirements of Para (viii) to Annexure-II to the Anti Dumping Rules, she submits that it has been met, as there is sufficient freely disposal capacity with the exporter. There are also no alternate market which....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e 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 decision as to whether or not to apply measures depends on the fact of likelihood of continuation of recurrence of dumping or injury, the intermediate conclusion of the DA in this regard is required to be disclosed. The learned Advocate further submitted that the disclosur....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 failed to examine the excessive capacity of the exporter while determining the likelihood of continuation or recurrence of injury under Rule 23. However, the Appellant has not disclosed before the DA any clear factual evidence to show the nexus with surplus capacities would be diverted into India in absence of anti dumping duty. It ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd 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 conclusion that excessive or un-utilised capacity is likely to lead to dumping and injury. (h) It is further submitted that a sunset review is a forward looking analysis, however, there can be no presumption of injury in an expiry review and findings must be based on positive evidence. In the present case, excessive capacity of interested party or exporter must ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....strictions. (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 of anti-dumping. Further he has submitted that the claim of the domestic industry that other Asian countries such as Singapore and Malaysia do not offer a steady market policy remains un-substantiated. (v) He has further submitted that the domestic industry is required to demonstrate as to how each of the factors claimed to be relevant by them have linked to the conclusion. It is his further content....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ting 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 comparability. 2. In order to offset or prevent dumping, a contradicting party may levy on any dumped product an anti-dumping duty not greater in amount than the margin of dumping in respect of such product. For the purposes of this Article, the margin of dumping is the price difference determined in accordance with the provisions of paragraph 1. Pursuant to the above, necessary provisions in this regard are enacted under the Customs Tariff Act,1975 and....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d. (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-rule (1) shall be concluded within a period not exceeding twelve months from the date of initiation of such review. (3) The provisions of rules 6,7,8,9,10,11,16,17,18, 19, and 20 shall be mutatis mutandis applicable in the case of review. Annexure (II): ..................................... (ii) While examining the volume of dumped imports, the said authority shall consider whether there has been a significant increase in the dumped imports, either in absolute terms or relative to production or consumption in India. With....
X X X X Extracts X X X X
X X X X Extracts X X X X
....orities 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 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. 11.4 The provisions of Article 6 regarding evidence and procedure shall apply to any review carried out under this Article. Any such review shall be carried out expeditiously and shall normally be concluded within 12 months of the date of initiation of the review. 11.5 The provisions of this Article shall apply mutatis mutandis to price undertakings accepted under Article....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ent 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 case(supra) after analysing various judgments on the subject and relevant WTO agreement observed as follows:- "13. Unlike original investigations, sunset reviews are prospective in nature, as they focus on the likelihood of the continuation or recurrence of dumping and injury, in case antidumping duties are removed. With respect to the question whether dumping is likely to occur in the event that the anti-dumping duties are removed, the D.A. has to consider relevant economic facts which might indicate that in the event the anti-dumping duty is removed, dumping will recur. With respect to the injury determination, if the anti-dumping duty has had the desired effec....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 but to see whether in the absence of such continuance, dumping would increase and the domestic industry suffer." The WTO Panel in the case of CRCS Flat Products from Japan vide WT/DS244/R, dated 14-8-2003 (as quoted in CESTAT judgment in case of Thai Acrylic Fibre Co. Ltd. v. Designated Authority [2010 (253) E.L.T. 564 (Tri. - Del.)] observed as under : "7.168. We thus do not believe that the substantive disciplines in Article 2 governing the calculation of dumping margins in making a determination of dumping apply in making a determination of likelihood of continuation of recurrence of dumping under Article 11.3. To hold otherwise would mean that a new and full determination regarding the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 dumped imports, prices, and impact on domestic producers. Thus the D.A. has to address the question as to whether the domestic industry is likely to be materially injured again, if duties are lifted. 12. Thus, the object and purpose of the sunset review as explained in the aforesaid judgments, precisely is to examine as to whether on removal of anti dumping duty, there is likelihood of recurrence of dumping and injury to the domestic industry. It has also been held that the degree and extent of dumping and consequent injury to the domestic industry during the POI is not of much relevance. 13. The mandate or requirement under Section 9A(5) of CTA,1975 read with Rule 23 of Anti dumping Rules,1995 and Annexure-II (vii) is that the authority has to exami....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng 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 subject goods during the POI." 16. The Appellant has vehemently argued that the conclusion arrived at by the DA on the present condition of the domestic industries is contrary to facts and he also erred in requiring positive future evidence for the determination of likelihood of dumping and injury, in the event cessation of duty. According to the learned Counsel this is contrary to the principles & practice followed and the laid down parameters required to be analysed in a sunset review proceeding. 17. We find that in the book "WTO Antidumping and Subsidy Agreements - A Practitioner's Guide to "Sunset" Reviews in Australia, Canada, the European Union, and the United States by Terence P. Stewart and Amy S. Dwyer, the summary of factors that typically weigh in favour of an affirmative expiry review in diffe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....apacity 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 investment in future production by domestic industry 5 Significant price undercutting by imports with current measures in force 6 Ample production capacity of exporters 7 Significant market share of imports 8 Significant rate of increased imports 9 Increased market share 10 Circumvention of the current measures 11 Community interest would be served by retaining measure 12 Failure of respondents to participate in review 13 Affirmative finding that dumping continued 14 Market conditions and circumstances of exporters 15 Level of current dumping margins 16 Affirmative finding that dumping margins have increased 18. The DA after analysing the data during the course of investigation, observed that the dumping margin is positive and is in the range of 15-25% and above de-minimis level. Also, he observed that there is an increase in the demand for the product throughout the injury period and the subject goods import has been reduced.....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 deciding the present case. He has also commented that being the hub of Asia transport routes Chinese Taipei enjoys lower shipping cost or bulk shipping cannot be held against them. Further he has observed that importance of India as a market is accentuated by the fact that the demands in India is growing and is expected to increase, therefore revocation of duty will have no adverse impact. He has finally observed that imports are not likely to increase both in absolute terms as in relation to production and consumption in the event of anti-dumping duty is removed. 20. The domestic industry, on the other hand, has contended that dumping margin has been determined by the authority in the range of 15-25% when the duties were in force. Thus, there is likelihood on the expiry of the duty, the dumping of goods would further intensify. It is their contention that the domestic industry had not earned adequate profit even during the period when the dumping duty is in force as they had to match and manage the sales ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lant 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 range of 10-15% and is positive and above de-minimis. Despite anti dumping duty, the earning of domestic industry is meagre 2% and return of capital is around 5% against the normal return of 22%. The landed value of import without anti dumping duty are below the cost of production of domestic industry. The Appellant was able to show that there is a demand of around 17,216 MT in domestic market, whereas the ideal capacities of foreign exporters are around 24,376 MT. Export restrictions are placed on subject goods in other international markets viz. USA, Canada and European Unions, leaving major market only in Asia. The subject goods restriction in China PR being added to the list of restricted toxic substance would find its way in Indian market. There is growing Indian market in the sense that per capita consumption surfactant is expected to increase. Further, they could show that the export from Chinese Taipei to other countries have been made at dumped prices. Besides, the most important factor is that the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eece is likely to recur." (II) European Commission, while initiating the sunset review investigation of the anti dumping measures in force on the imports of bio-diesel originating from USA observed as follows:- "5. Likelihood of recurrence of injury (138) To assess the likelihood of recurrence of injury to the Union Industry should the existing measures be allowed to lapse, the Commission analysed the likely impact of imports from the USA on the Union market and on the Union industry pursuant to Article 11(2) of the basic Regulation. In particular, the Commission analysed the likelihood of recurrence of dumped imports, the volumes and the likely price levels thereof, spare capacity, the attractiveness of the union market and price behaviour of US producers. (139) As concluded above (recital 92)), it is likely that dumped imports from the USA would recur should the existing measures be allowed to lapse. The Commission has established that producers of biodiesel in the USA are currently dumping at other third country markets at price levels that are below the Union prices. Since the Union prices are slightly higher than those in other third country markets it is likely t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....going recovery of the Union industry and would in all likelihood cause recurrence of material injury. 5.1 Conclusion (146) On the basis of the above, the Commission has concluded that material injury to the Union industry would most likely recur should the existing measures against imports of biodiesel from USA be allowed to lapse." (III) While initiating sunset review investigation on imports of certain aluminium wheels originating from Peoples Republic of China, the Commission observed as follows:- "(241) The investigation showed that significant volumes of Chinese exports are likely to be re-directed to the Union given its attractiveness (recitals 75 to 88). In addition there are high spare capacities in China that could also be directed to the Union market. Therefore the Chinese exporting producers will be able to take over not only the increased consumption but also sales volumes of the Union producers. Consequently even under he scenario of increased consumption there is a high likelihood that the Chinese exports would take over sales volumes and market share to the detriment of the Union industry. Moreover, concerning prices, these are likely to be at a level lower th....