TaxTMI 
TaxTMI 
2019 (12) TMI 1069
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....hailand. 2. The Designated Authority, in its 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....
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...., 2018 to the Designated Authority giving a response to the 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 b....
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....he aforesaid comments dated 15 February, 2019 to the Designated 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....
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....he Notification is also against the spirit of the order dated 06 February, 2019 passed by the Delhi High Court; and (viii) The 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 ....
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....tortion of price on account of the regulations; (ii) The Arms Act is essentially an Act for public safety and law and order and is not a trade measure for restricting the quantum of import or for regulation 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 def....
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....gs recommended imposition of anti dumping duty on imports of the subject good originating in or exported from Brazil, Indonesia and Thailand. Controversy was raised by only two exporters from Thailand. Thus, in the absence of any restraint by the 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 ....
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....was issued by the Central Government after careful examination of the final findings of the Designated Authority; and ii. While issuing the Notification, the Central Government did not violate any direction contained in the Judgment and Order dated 06 February, 2019 of the Delhi High Court. The two main prayers 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 Domes....
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...., as contemplated under Rule 16 of the 1995 Rules, was then published, informing all interested parties of the essential facts with a request to submit the comments by 14 December, 2018. The final findings were notified on 31 December, 2018 recommending imposition of anti dumping duty. The Central Government issued the Notification 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 ....
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....les governing the 'determination of normal value, export price and margin of dumping'. Paragraph 2 of this Annexure deals with circumstances under which sales of the like product are not treated to be in the ordinary course of trade and the said paragraph is reproduced below : "2. Sales of the like product in the domestic market of the exporting country or sales to a third country at prices below 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....
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.... deals with 'determination of normal value, export price and margin of dumping' and is as follows : "10. Determination of normal value, export price and margin of dumping. - An article shall be considered as being dumped if it is exported from a country or territory to India at a price less than its normal value and in such circumstances the designated authority shall determine the normal value, export price and the margin of dumping taking into account, inter alia, the 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 p....
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.... exporting country that the normal value shall be either a comparable representative price of the like article when exported from the exporting country to an appropriate third country or the cost of production of the said article in the country of origin along with reasonable addition for administrative, selling and general costs, and for profits. 33. The contention of the Appellants is that the export price to India is not comparable with the price in the domestic market because the product under consideration is subject to domestic regulations enforced by Defence Industrial 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 Gover....
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....pply for the renewal thereof prior to the expiry date specified therein. Upon submission of the application, such licensee may continue his or her business until the Permanent Secretary for Defence refuses to renew license. The application for, and the granting of, the renewal of license shall be in accordance with the rules, procedure and conditions as prescribed in the Ministerial Regulation." 40. In terms of section 7 of the Arms Act, a Notification was issued and with regard to 'Nitrocellulose' it is as follows : S.NO. CHEMICAL NAME CAS NO. REFERENCE 34 NITROCELLULOSE OR NITROCELLULOSE WITH ALCOHOL 9004-70-0 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 cons....
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....les in determining the normal value, provided the factors enumerated therein exist. The Appellants have not been able to substantiate that these factors exist. The Designated Authority had, however, conducted the ordinary course of trade test in respect of sales made in Thailand. It found that Nitro Chemicals had sold 4193 MT of the subject goods in the domestic market and 99.96% of the sales were profitable. 45. The relevant portions of the findings of the Designated Authority are contained in paragraphs 36 and 42 and are reproduced below:- "36. Since the above mentioned producers/exporters have filed the questionnaire response, the Authority 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. Th....
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....the Anti-Dumping Agreement, are precisely the same, whether the sales price is higher or lower than the "ordinary course" price, and irrespective of the reason why the transaction is not "in the ordinary course of trade". Investigating authorities must exclude, from the calculation of normal value, all sales which are not made "in the ordinary course of trade". To include such sales in the calculation, whether the price is high or low, would distort what is defined as "normal value"." 48. The Panel was established to consider a complaint by Japan with respect to anti-dumping measures imposed by the United States on imports of certain hot-rolled flat-rolled carbon-quality steel 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 ....
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....ion of the domestic sales price. It also found that Nitro Chemicals had sold 4193 MT of the subject goods in the Domestic Market at profit. It cannot, therefore, be urged that any error was committed by the Designated Authority in determining the 'normal value' on the basis of the comparable price. The decision of the US Appellate Body, therefore, does not help the Appellants. 50. In view of the aforesaid discussion, it is not possible to accept the contention of learned Counsel for the Appellants that "normal value" should not have been fixed in relation to the comparable price for the like article when destined for consumption in the exporting country and should have been the comparable representative 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....
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....ver, submitted that apart from the fact that the Appellants are two exporters from Thailand only, whereas the impugned Notification covers exporters from Brazil and Indonesia also the impugned Notification cannot be said to violate any of the directions contained in the order of the High Court. In this connection it has been pointed out that a copy of the verification report was supplied to the Appellants and the representation filed by the Appellants to the Central Government was also duly considered. 55. The submissions advanced by the learned Counsel on this aspect as also the records have been examined. 56. The final findings were notified by the Designated Authority on 31 December, 2018. The Appellants 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 furthera....
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....ecord. The exporter's Verification Report is part of the record along with the details of verification carried out in the premises of the petitioners between 10th and 12th September 2018. Learned counsel for the DA submits, on instructions, that a copy of the Verification Report will be furnished to the petitioners. Learned senior counsel for the petitioners submits that, besides, there are other grounds (dealing inter alia with the issue of confidentiality and the DA's failure to deal with its submission) which it would agitate through representation to the Central Government, seeking its intervention and appropriate action. The respondents shall furnish a copy of the Verification Report within a week to the petitioners' counsel. It is open 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 t....
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....had crept in the Table indicating the quantity and invoice value for invoice number SIE1600450, No. SIE1600854, No. SIE1601105 and No. SIE1600980 but the same was detected and suitably rectified at the time of issuance of Disclosure and Final Findings. In view of that, there is no change in the disclosure statement or in the Final Finding issued dated 31.12.2018. 2. Regarding Normal Value, authority determined Normal Value and issues regarding the Normal Value, these have been addressed in para no. 42 and 43 of the Final Finding issued on 31.12.2018. 3. The issue of confidentiality has been dealt with by the Authority in para no. 22 and 23 of the Final Finding issued on 31.12.2018. In view of the above, there is no change in the Final Finding issued on 31.12.2018. This issues 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 justi....
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....ry has, however, refuted the submissions advanced by learned Senior Counsel for the Appellants. It has been submitted that confidentiality was claimed by the Domestic Industry on the cost of production, which is commercially sensitive and a disclosure would adversely impact the interest of the Domestic Industry. It has also been submitted that the information was also not capable of summarization and wherever possible, a summary was provided. The Domestic Industry had given a non-confidential summary of performance parameters, which contained the relevant parameters for analysis on injury. Learned Counsel also pointed out that the issue of confidentiality has been properly appreciated by the Designated Authority in paragraphs 100(xii) and 101 (viii) of the final findings. In this connection, reliance has been placed upon a 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 ha....
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....he sufficiency of the confidentiality claim. The Authority notes that any information which is available in the public domain cannot be treated as confidential. The Authority directed the exporters to file a revised non-confidential version of questionnaire response and provide a meaningful response. The responding exporters filed a revised response. On being satisfied, the Authority has accepted the confidentiality claims, wherever warranted and such information has been considered confidential and not disclosed to other interested parties. The Authority made available the non-confidential version of the evidence submitted by various interested parties in the form of a public file." 70. In the communication dated 01 March, 2019 sent by the Central Government to the Appellants in regard to the letter dated 15 February, 2019, it has been 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 confidenti....
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.... has always been treated as confidential. This is what was observed by the Tribunal in paragraph 25 of the decision rendered in Anwar Jute Spinning Mills Ltd. The same is reproduced below : "25. The appellants also questioned the claim of confidentiality in respect of DGCIS data. It is claimed that the data should have been disclosed under Rule 7 of AD Rules. We note that the DA had placed the DGCIS data in the public file and there was adequate opportunity for the appellants to examine and provide their comments. The cost of production and related data of the DI are necessarily of confidential nature and commercially sensitive. The same cannot be made available to others." 77. It has also been stated on behalf of the Domestic Industry that a summary of the performance parameters was provided in format 'H' of the petition filed by the Domestic Industry before the Designated 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....
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.... (Identification, Assessment and Collection of Anti-Dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995 the Designated Authority is treating all material submitted to it as confidential merely on a party asking that it be treated confidential. In our view, that is not the purport of Rule 7. Under Rule 7, the Designated Authority has to be satisfied as to the confidentiality of that material. Even if the material is confidential the Designated Authority has to ask the parties providing information, on confidential basis, to furnish a non- confidential summary thereof. If such a statement is not being furnished then that party should submit to the Designated Authority a statement of reasons why summarization is not possible. In any event, under Rule 7(3) the Designated Authority can come to the conclusion that confidentiality is not warranted and it may, in certain cases, disregard that 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 cou....
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....ion as confidential unless a claim of confidentiality has been made by any of the parties supplying the information. In cases where it is not possible to accept a claim of confidentiality, Rule 7 hardly leaves any option with the DA but to ignore such confidential information if it is of the view that the information is really not confidential and still the concerned party does not agree to its being made public. In such a situation the information cannot be made public but has to be simply ignored and treated as non est." (emphasis supplied) 84. Learned Senior Counsel for the Appellants has also placed reliance upon the Trade Notice No. 1/2013 dated 09 December, 2013. The relevant portion on which reliance has been placed is reproduced below : "2. In pursuance to the provision of Rule 7 of the above Rules, all interested parties to anti-dumping investigation are advised to comply with the following requirements while 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....
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.... public with or without payment of fee 1. 2. 3. 4. 5. 3. The reason/justification should be on the basis of criteria laid down in Article 6.5 of the Anti-Dumping Agreement. The reason/justification should be specific clearly demonstrating/establishing that disadvantage would occur by disclosure of information. 4. The confidentiality claims and decision thereon are case-specific. Therefore, precedence of any previous cases would not be considered as justification for claiming confidentiality. In this regard attention is invited to the following : (i) The following are examples of information which may be treated as confidential : (a) Information of significant competitive advantage to a competitor, production costs, distribution costs, upstream and downstream pricing data, profit and loss margins, certain conditions of sale, research/investigation data, technical designs, business or trade secrets concerning the nature of a product or production process, specification of components, performance/profitability data, details of margin of dumping and adjustments claimed by the party etc.....