TaxTMI 
TaxTMI 
TaxTMI 
2019 (12) TMI 1069
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.... final findings dated 31 December, 2018, concluded that Nitrocellulose, which is the product under consideration, has been imported to India from the aforesaid three countries below normal value; the Domestic Industry has suffered material injury on account of its import from subject countries; and material injury has been caused by the dumped imports of subject goods from the subject countries. It, therefore, recommended imposition of definitive anti dumping duty on the import of subject goods in order to remove injury to the domestic industry. The Central Government, after taking into consideration the aforesaid final findings of the Designated Authority, imposed anti dumping duty by a Notification dated 07 February, 2019 that was published in the Gazette of India. 3. Two issues that have been raised by Shri Naresh Thacker, learned Senior Counsel appearing for the Appellant in the two appeals filed by M/s Nitro Chemical Industry Ltd. Nitro Chemicals and M/s Nobel NC Co. Ltd. Nobel are non-consideration of the submissions advanced on behalf of the Appellants both on normal value and confidentiality. 4. Nitro Chemicals with its subsidiary company is the sole manufacturer of Nitro....
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....he claim of confidentiality. The Appellants also sent a communication dated 27 August, 2018 to the Designated Authority questioning the excessive confidentiality claim made by the Domestic Industry. An onsite verification of the exporters' premises was conducted from 10 September, 2018 to 12 September, 2018. Thereafter, a disclosure statement dated 07 December, 2018 was published disclosing all the essential facts under consideration for the anti dumping investigation which would form the basis for final findings. The interested parties were asked to offer their comments, if any, latest by 14 December, 2018. Comments to the disclosure statement were received, whereafter final findings were notified on 31 December, 2018 recommending imposition of anti dumping duty equal to the lesser of the margin of dumping and the margin of injury, so that the injury caused to the Domestic Industry was removed. This was to be effective from the date of the Notification to be issued by the Central Government and would be for a period of five years. 6. Feeling aggrieved, both the Appellants filed Writ Petitions before the Delhi High Court being Writ Petition (Civil) No. 312 of 2019 and Writ Petitio....
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....Authority. 9. The Central Government thereafter sent a letter dated 01 March, 2019 to the Appellants in connection with the comments dated 15 February, 2019 submitted by them. The letter informed the Appellants that after examination of the comments to the verification report, no change was called for in the final findings issued on 31 December, 2018. 10. These two appeals have been filed by the Appellants on 18 March, 2019 to assail the final findings dated 31 December, 2018 as also the Notification dated 07 February, 2019. 11. Shri Naresh Thacker, learned Senior Counsel for the Appellants made the following submissions on two aspects, namely, (a) non-consideration of the Appellants' submission on 'normal value'; and (b) non-consideration of the Appellants' submission on 'confidentiality'. SUBMISSIONS ON 'NORMAL VALUE' (i) The Designated Authority failed to consider the submissions advanced by the Appellants on 'normal value'. Elaborating this submission, learned Senior Counsel pointed out that the domestic selling price of the product under consideration in Thailand was distorted because of demand-supply crunch resulting from strict licensing requirements imposed by the Th....
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....he communication dated 01 March, 2019 sent by the Central Government in response to the comments submitted by the Appellant also does not deal with the submissions made by the Appellants. SUBMISSIONS ON CONFIDENTIALITY (i) The 1995 Rules provide that the Designated Authority has to disclose all the evidences provided by any of the parties to the opposing parties. In exceptional cases, if the information is confidential in nature, the interested party has still to submit a non-confidential summary of such information or give reasons why a summary cannot be provided. Pursuant to the letter dated 07 August, 2018 submitted by the Domestic Industry after the oral hearing took place on 06 August, 2018, the Designated Authority by a letter dated 16 August, 2018 directed the Appellants to provide reasons for the confidentiality claim or to provide a summary, which directions were duly complied with by the Appellants by letter dated 23 August, 2018; (ii) The Appellants also sent a communication dated 27 August, 2018 objecting to the claim of confidentiality of the Domestic Industry as being excessive. The Domestic Industry had also omitted to fill Forms 'A' to 'L' (barring 'G' & 'H') ....
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....ion of price in the market. The considerations for issuance of a license have no connection with the domestic procurement or import. The Act merely seeks to regulate the use of the product in Thailand so as to prevent misuse against public safety as well as law and order. Thus, a user will have to obtain a license irrespective of whether Nitrocellulose is imported or procured domestically. The license also covers production and possession of Nitrocellulose; (iii) The Act is applicable to the article Nitrocellulose, other than non-explosive finished products. Nitrocellulose with Nitrogen below 12.3 percent is used for lacquers, coatings and inks and Nitrogen content above 12.6% is considered as explosive. In the present case, the product under consideration has a Nitrogen content in the range of 10.7% to 12.2%. Thus, it would not qualify as arms under the Arms Act, 1987 and the regulations would not be relevant to the investigation carried out; (iv) The definition of 'normal value' contained in Explanation (c) to Section 9A(1) of the Tariff Act provides for different methodologies for fixation of normal value which has to be applied sequentially. The 'normal value' is the price ....
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....High Court, the Central Government could have issued the Notification and the submission of the Appellants that issuance of the Notification prior to the filing of the representation by the Appellants before the Central Government was prejudicial to the foreign exporters is not correct. In any case, the Central Government was competent to amend the Notification, if so warranted, in terms of Section 9A of the Tariff Act read with Section 21 of the General Clauses Act, 1897. SUBMISSIONS ON 'CONFIDENTIALITY' (i) The Domestic Industry had claimed confidentiality in respect of detailed costing information since disclosure would adversely impact the ability of the Domestic Industry to compete with the foreign exporters in Indian and foreign markets. It has been consistently held that the cost of production and related data of Domestic Industry is of confidential nature and commercially sensitive and cannot be made available to others; and (ii) Domestic Industry furnished complete information in the Forms to the Designated Authority on confidential basis. A meaningful summarization of this information was not possible without disclosure of sensitive information. A summary of the per....
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.... contained in the Writ Petitions were for quashing the final findings dated 31 December, 2018 and also for a direction refraining the Respondents from giving effect to and/or taking any action in furtherance to the final findings dated 31 December, 2018. These two prayers were not accepted and only an opportunity was given to the Appellants to file a representation to the Central Government, which representation was duly considered by the Central Government and in case the representation submitted by the Appellants had any merit, the Central Government would have made suitable amendments in the Notification. 15. The submissions advanced by the learned Counsel for the Appellants, learned Counsel for the Domestic Industry and the Designated Authority and the learned Authorized Representative appearing for the Central Government have been considered. 16. The Domestic Industry had submitted an application before the Designated Authority alleging dumping of "Non-Plasticized Industrial Grade Nitrocellulose excluding Nitrocellulose Damped in Ethanol and Waterwet", having nitrogen content in the range of 10.7% to 12.2%, originating in or exported from Brazil, Indoneasia and Thailand", wh....
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....tion dated 07 February, 2019 imposing anti dumping duty on Nitrocellulose originating in or exported from Brazil, Indonesia and Thailand for a period of five years. 19. The export of Nitrocellulose by the two Appellants from Thailand is in issue in these Appeals. Broadly, two submissions have been made by the learned Counsel for the Appellants. They relate to non-consideration of the submissions made by the Appellants on 'Normal Value' and non-consideration of the submissions made by the Appellants on 'Confidentiality'. 20. It would be appropriate, before proceeding to examine the submissions made on behalf of the Appellants and the Respondents, to reproduce the relevant provisions of the Act and the 1995 Rules. 21. Section 9A of the Tariff Act deals with anti dumping duty on dumped articles. Sub-section (1) of Section 9A, without the Explanation is as follows : "SECTION 9A(1). 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 Ind....
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.... per unit (fixed and variable) costs of production plus administrative, selling and general costs may be treated as not being in the ordinary course of trade by reason of price. The designated authority may disregard these sales, in determining normal value, provided it has determined that- (i) such sales are made within a reasonable period of time (not less than six months) in substantial quantities, i.e. when the weighted average selling price of the article is below the weighted average per unit costs or when the volume of the sales below per unit costs represents not less than twenty per cent of the volume sold in transactions under consideration, and (ii) such sales are at prices which do not provide for the recovery of all costs within a reasonable period of time. The said prices will be considered to provide for recovery of costs within a reasonable period of time if they are above weighted average per unit costs for the period of investigation, even though they might have been below per unit costs at the time of sale." 25. 'Designated Authority' is appointed under Rule 3 of the 1995 Rules and the duties of the Designated Authority have been enumerated in Rule 4. Rule 4....
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....principles laid down in Annexure I to these rules." 28. Rule 11 deals with 'determination of injury'. Rule 16 provides that, the Designated Authority shall, before giving its final findings, inform all interested parties of the essential facts under consideration which form the basis for its decision. Rule 17 deals with 'final findings' and the relevant portion is as follows : "17. Final findings - (1) The designated authority shall, within one year from the date of initiation of an investigation, determine 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; (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 retrospecti....
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....ial Departments because of which there is a limited supply available within the country leading to an increase in the price. 34. The contention of the Domestic Industry is that the Appellants failed to substantiate that there was any distortion in the domestic selling price and mere existence of license regulations cannot lead to a conclusion that there is a distortion in price. The submission is that a licence has to be obtained, both for domestic and import procurement and, therefore, the transactions are at par and there is no distortion of price on account of the regulations imposed by the Thailand Government. 35. It would, therefore, be necessary to examine the provisions of the Arms Control Act, 1987 the Arms Act enacted by Thailand, which it is stated by the Appellants contains restrictions in obtaining a licence to sell the article, thereby causing distortion in the price. The preamble to the said Act states that it was considered expedient to revise the laws on arms control. Section 3 provides that all laws, rules and other regulations inconsistent with the provisions of the Act shall be replaced by the Act. 36. 'Arms' has been defined in Section 4 of the Arms Act and i....
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....0-0 Except non-explosive finished products. Nitro cellulose is a mixture. 41. It would be seen that the Arms Act merely seeks to regulate the use of the product in Thailand and has been enacted to ensure public safety as well as law and order. Section 15 of the Arms Act provides that no person shall order, import, produce or possess arms without a license granted by the Permanent Secretary for Defence. Section 16 bars issuance of a licence to any person convicted of an offence or to a person not of age or to a person of unsound mind. Thus, the consideration for issuance of a license has no connection with the domestic requirement or import of the article. Section 26 provides that the licence shall be valid through the period specified therein, but not exceeding one year from the date of its issuance or renewal. The restriction is, therefore, on the period and not on the quantity. There is no restriction on the quantity or value of import nor does it contain any mechanism for fixing of a selling price in the domestic market. A user has to obtain a license whether the article is imported or procured from domestic market. The contention of the Appellant that there is a distortion ....
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....determines Normal Value and Export Price in respect of cooperative exporters. The general methodology adopted by the Authority for determination of Normal Value for these exporters is to first examine whether the domestic sales of the subject goods by the responding exporters in their home markets were representative and viable for permitting determination of Normal Values on the basis of domestic selling prices and whether the ordinary course of trade test was satisfied as per the data provided by the respondents. 42. The questionnaire response has been filed by Nitro Chemical Industry Limited and Nobel NC Co., Ltd, Thailand. Nitro Chemical Industry Ltd. is a producer of a subject goods and is the holding company. Nobel NC Co., Ltd. is also the producer of the subject good and is 100% owned by Nitro Chemical Industries. Both producers/exporters have provided domestic sales price details of the subject goods in Appendix-4 of their response. Nitro Chemical Industry Limited sells the subject goods to customers directly in the domestic market in Thailand. The adjustment of expenses such as inland freight, bank charges, credit cost, and other expenses has been made towards the determ....
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....teel products ("hot-rolled steel") from Japan. This decision of the US Appellate Body refers to Article 2.1 of the Anti-Dumping Agreement which provides that normal value must be established on the basis of sales made, "in the ordinary course of trade". Thus, sales not made "in the ordinary course of trade" must be excluded from the calculation of normal value. It is in this context that the Appellate Body observed as follows : "141. We can envisage many reasons for which transactions might not be "in the ordinary course of trade". For instance, where the parties to a transaction have common ownership, although they are legally distinct persons, usual commercial principles might not be respected between them. Instead of a sale between these parties being a transfer of goods between two enterprises which are economically independent, transacted at market prices, the sale effectively involves a transfer of goods within a single economic enterprise. In that situation, there is reason to suppose that the sales price might be fixed according to criteria which are not those of the marketplace. The sales transaction might be used as a vehicle for transferring resources within the single....
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....epresentative price of the like article when exported from the exporting country to an appropriate third country or should have been the cost of production of the said article in the country of origin. 51. Learned Counsel for the Domestic Industry has also made a submission that the licensing regulations for the product under consideration would not be applicable for the reason that it is only when Nitrogen content in 'Nitrocellulose' is above 12.6%, that it would be considered as explosive. The submission is that since the Nitrogen content in the product under consideration is between 10.7% to 12.2%, it would not be included in the definition of 'Arms' contained in section 4 of the Arms Act. Be that as it may, it is not necessary to examine this issue since this issue was not raised by the Domestic Industry before the Designated Authority. 52. The submission of learned Senior Counsel for the Appellants that non-furnishing of the verification report has caused great prejudice to the Appellants also, cannot be accepted. The verification is carried out to verify the factual information given in the exporter questionnaire. In the present case, all the factual information provided by....
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....pellants had not filed any representation to the Central Government to assail the final findings. Writ Petitions were, however, filed by each of the two Appellants on 14 January, 2019 before the Delhi High Court. The main prayers contained in the Writ Petitions are : "(i) To quash the final findings dated 31 December, 2018 and the disclosure statement dated 07 December, 2018; (i) To refrain the Respondents from giving effect to and/or taking any action in furtherance to the final findings dated 31 December, 2018; and (ii) To decide the matter afresh after taking into account the submissions made by the Petitioners." 57. It clearly transpires from the order dated 06 February, 2019 passed by the Delhi High Court that the main submission advanced by the Petitioners was that the verification report was not a part of the record placed before the Designated Authority when it gave the final findings on 31 December, 2018. It is for this reason that the records placed before the Designated Authority were directed to be produced by the High Court. The High Court found as a fact that the verification report with details of the verification carried out in the premises of the petitioners....
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....en to the petitioners to represent to the Central Government in a suitable manner for appropriate directions in accordance with law. Learned senior counsel for the petitioners seeks liberty to withdraw these petitions in the light of these submissions. The writ petitions are accordingly dismissed as withdrawn along with the pending applications." 59. The Central Government could have waited for a representation from the two Writ Petitioners (the Appellants in this Appeal) after furnishing a copy of the verification report, but in the facts and circumstances of the case, it cannot be said that the issuance of the Notification by the Central Government on 07 February, 2019 is contrary to the directions issued by the High Court on 06 February, 2019. What needs to be noticed is that anti dumping duty was imposed on the import of Nitrocellulose originating in and exported from Brazil, Indonesia and Thailand. The Appellants are only two exporters from Thailand. The other exporters from Brazil and Indonesia had not assailed the final findings. A specific prayer had also been made in the Writ Petitions for quashing the final findings and to restrain the Respondent from giving effect and....
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....sues with the approval of the Authority." 60. It is not the case of the Central Government that the comments dated 15 February, 2019 submitted by the two Writ Petitioners were not considered because a Notification had earlier been issued on 07 February, 2019. On the other hand, the comments were duly examined by the Central Government. 61. Thus, the Appellants are not justified in asserting that the principles of natural justice have been violated or that the impugned Notification dated 07 February, 2019 issued by the Central Government has violated the order dated 06 February, 2019 passed by the Delhi High Court. 62. The fixation of 'normal value' in the final findings of the Designated Authority, therefore, does not suffer from any error. 63. The issue as to whether the submissions raised by the Appellants about 'confidentiality' have been correctly appreciated by the Central Government would be seen while dealing with the submissions relating to 'confidentiality' made by learned Senior Counsel for the Appellants. CONFIDENTIALITY 64. The contention of the learned Senior Counsel for the Appellants is that the Designated Authority is required to make available all the evidenc....
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.... Division Bench decision of the Principal Bench at Delhi in Anwar Jute Spinning Mills Ltd. vs Union of India 2018 (363) ELT 724 (Tri.-Del). It has also been submitted that complete information in the Format was submitted by the Domestic Industry on confidential basis and that even the Appellants had not provided a meaningful summarization of cost production and had only provided the performance parameters. 67. Learned Authorized Representative of the Department appearing for the Central Government and the learned Counsel appearing for the Designated Authority have also submitted that the objections to the claim of confidentiality of the Domestic Industry have been properly appreciated, both by the Designated Authority and the Central Government. 68. Rule 7 of the 1995 Rules deals with confidential information. It provides that notwithstanding anything contained in sub-rules (2), (3) and (7) of Rule 6 or sub-rule (2) of Rule 12 or sub-rule (4) of Rule 15 or sub-rule (4) of Rule 17, the copies of applications received under sub-rule (1) of Rule 5, or any other information provided to the Designated Authority on a confidential basis by any party in the course of investigation, shall....
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....en noted that the issue of confidentiality had been dealt with by the Designated Authority in paragraphs 22 and 23 of the final findings notified on 31 December, 2018. 71. As noted above, paragraph 22 of the final findings reproduces Rule 7 of the 1995 Rules and paragraph 23 states that on being satisfied the Authority has accepted the confidentiality claims, wherever warranted and such information has been considered confidential and not disclosed to the other parties. It also mentions that the Authority made available the non-confidential version of the evidence submitted by the various interested parties in the form of a public file. 72. Emphasis of learned Senior Counsel for the Appellants is on the observations made in paragraph 21 of the final findings that no submissions regarding confidentiality were made by the opposing interested parties and it has been submitted that the Designated Authority had not even cared to examine the submissions made by the opposing interested parties on the confidentiality claim. 73. The statement made in paragraph 21 of the final findings is apparently not correct since the exporters had made submissions, which submissions were noted by the ....
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....d Authority and this contained the salient details for injury analysis and even the two Appellants had not provided a meaningful summarization of cost information except the performance parameters. 78. It is thus not possible to accept the contention of learned Senior Counsel for the Appellants that the Domestic Industry had wrongly claimed confidentiality with regard to the information required to be furnished in the aforesaid formats or that the Domestic Industry was not justified in not providing even a summarization of the information. The Appellants are, therefore, not justified in asserting that they have been unevenly treated by the Designated Authority. 79. Learned Senior Counsel for the Appellants has placed reliance on the judgment of the Supreme Court in Reliance Industries Ltd. The Supreme Court examined whether Rule 7 of the 1995 Rules contemplates any right in the Designated Authority to claim confidentiality and the observation is as follows: "43. In our opinion, Rule 7 does not contemplate any right in the DA to claim confidentiality. Rule 7 specifically provides that the right of confidentiality is restricted to the party who has supplied the information, and t....
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....hat information. It must be remembered that not making relevant material available to the other side affects the other side, as they get handicapped in filing an effective appeal. Therefore, confidentiality under Rule 7 is not something, which must be automatically assumed. Of course, in such cases there is need for confidentiality, as otherwise trade competitors would obtain confidential information, which they cannot otherwise get. But whether information supplied is required to be kept confidential has to be considered on a case-to-case basis. It is for the Designated Authority to decide whether a particular material is required to be kept confidential. Even where confidentiality is required, it will always be open for the appellate authority, namely, CEGAT to look into the relevant files". [emphasis upplied] 82. The Supreme Court in the aforesaid decision in Sterlite Industries, which has been referred to in Reliance Industries, held that the Designated Authority has to satisfy itself about the confidentiality and even if the material is confidential, the Designated Authority has to ask the parties providing information on a confidential basis, to furnish a non-confidential s....
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....ile submitting "confidential information" before the Designated Authority in an anti-dumping investigation: i. The parties making any submission (including Appendixes/Annexures attached thereto) before the authority including questionnaire response, are required to file the same in two separate sets, in case 'confidentiality' is claimed on any part thereof:- (a) One set marked as Confidential (with title, number of pages, index, etc.) and (b) The other set marked as Non-Confidential (with title, number of pages, index, etc.) Any submission made without such marking shall be deemed as non-confidential. Soft copy of both the versions will also be required to be submitted, along with the hard copies, to the authority. ii. The Confidential version shall contain all information which are by nature confidential and/or other information which the supplier of such information claims as confidential. For information which are claimed to be confidential by nature or the information of which confidentiality is claimed because of other reasons, the supplier of the information is required to provide a good cause statement along with the supplied information as to why such information ....
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....uct or production process, specification of components, performance/profitability data, details of margin of dumping and adjustments claimed by the party etc. are some examples of such type of information. List is not exhaustive. (b) Information, the disclosure of which would have a significant adverse effect upon the party who submitted the information or the party from whom the information was acquired by the party who submitted the information. Some examples are - customer and supplier lists, letters from buyers on price negotiations, details of technical collaboration." 86. A perusal of the aforesaid Annexure does indicate that the claims of confidentiality have to be decided on a case to case basis and examples have also been given as to when information can be treated as confidential. The records indicate that the Domestic Industry had filed the claim of confidentiality in the format provided above. 87. Learned Senior Counsel for the Appellants has also placed reliance upon the Trade Notice No. 02/2018 dated 01 February, 2018 relating to streamlining of the Anti Dumping Investigation Process. It provides that the Domestic Industry, in order to avoid delay, should submit i....