TaxTMI 
TaxTMI 
2020 (7) TMI 426
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....e Revenue Shri Dinesh Aggarwal, Chartered Accountant and Shri Mayank Jain, Advocate for the Respondent. ORDER Anti-Dumping Appeal No. 53285 of 2018 has been filed by Magotteaux Co. Limited [foreign exporter] to assail the final findings Notification dated June 11, 2018 of the Designated Authority, by which a recommendation has been made for continuation of the anti-dumping duty on imports of "Grinding Media Balls" (excluding forged grinding media balls) [subject goods] originating in or exported from China PR and Thailand, on a sunset review investigation initiated at the instance of the domestic producers, namely M/s AIA Engineering Limited and M/s Welcast Steels Limited [Domestic Industry]. The Appellant has also assailed the Notification dated July, 13, 2018 issued by the Government of India imposing anti-dumping duty for a period of five years on the subject goods on the basis of aforesaid recommendation of the Designated Authority. 2. Anti-Dumping Appeal No. 53586 of 2018 has been filed by M/s AIA Engineering Limited, a Domestic Industry, for a direction that the recommendations made in the final findings and the Notification issued by the Central Government may be....
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....s through their Embassy in India, the importers and users in India known to be concerned with the product were separately asked to submit relevant information in the form and manner prescribed to make their views known to Designated Authority. It was further provided that any information relating to the review and any request for hearing should be sent in writing so as to reach the Designated Authority not later than forty days from the date of publication of the Notification. It was also stated that in case any interested party refuses access to and otherwise did not provide necessary information within a reasonable period, or significantly impedes the investigation, the Designated Authority may declare such interested party as non-cooperative and record its findings on the basis of the facts available and make such recommendations to the Central Government as may be deemed fit. 6. The Designated Authority held an oral hearing on March 16, 2018 to provide an opportunity to the interested parties to present relevant information. The representatives who presented their views orally were advised to file written submission of the views expressed by them. The interested parties were....
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....d Authority, therefore, held that Applicants constituted Domestic Industry. (iv) Under the head "miscellaneous issues", the views expressed by the Designated Authority are as follows: "25. With regard to the submission that customs duty should be considered at 10% as against 0% because the exporter enjoys the same under the ASEAN Agreement, the Authority notes that the law is very clear in this regard that the custom duty will be taken as it is. 26. The Authority notes that the law clearly envisages that the anti dumping duty can be extended further from time to time, if it is found that dumping and consequent injury to the Domestic Industry is likely in the event of cessation of anti-dumping duty. Anti-dumping law is for removing unfair trade practice and providing a level playing field to the domestic industry. The Authority recommends anti-dumping duty only after following the requirements prescribed under the laws. 27. On the issue of monopolistic behaviour of the domestic industry, it is noted that the purpose of anti-dumping duty, in general, is to eliminate dumping which is causing or likely to ( in case of SSR) cause injury to the Domestic Industry and to re-est....
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.... Industry. (viii) The magnitude of "injury and injury margin" was also examined by the Designated Authority. It compared the 'non-injurious price' of the subject goods produced by the Domestic Industry with the landed value of the exports from the subject countries for determination of injury margin during the period of investigation. The injury margin so worked out is indicated in the table prepared by the Designated Authority: Table of Injury Margin. S. No Exporter/ producer NIP USD/ MT Landed value USD/MT Injury Margin USD/MT Injury Margin (%) Range 1. M/s Magotteaux Co Ltd., Thailand *** *** *** *** 0-10 2. All exporters/ producers from Thailand *** **** *** *** 0-10 3. All exporters/ producers from China *** *** *** *** 0-10 (ix) On the likelihood of continuation or recurrence of dumping and injury, the Designated Authority made the following disclosure: "81. This parameter for ascertaining the threat of material injury requires evaluation of existing surplus capacities and capacity addition, if any, to explore the possibility of diversion of disposable quant....
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....tes that on the one hand the preferential trade agreements provisions might lower the landed value, but at the same time the exporters could leverage this to increase their export realisation by factoring the zero import duty advantage in export price as compared to other competitiors which would though increase the landed value to some extent on the one hand and also decrease the dumping margin due to increase in export price. Therefore, these aspects may also warrant an adjustment. Therefore, the Authority has adopted its consistent practice of evaluating the landed value with applicable customs duties. 95. The Authority observes that the exporter has contended that the exports have been made at a price higher than the DI price and at the same time it has contended that the Domestic Industry has earned high profit and the profitability thereof, has improved. It is clarified that, the petitioner itself has not claimed that the imports are causing continued injury to the DI. The Authority observes that there exists a strong likelihood of continued dumping and consequently, the dumping of the product is likely to cause injury to the domestic industry. Since the present determinat....
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....hority for grade wise determination. In the event of grossly inadequate exporter questionnaire response, the best available information had led the Authority to proceed on the basis of weighted averages. 99. As regard the contention that the volume of import is quite low in absolute terms or in relation to production and consumption, the Authority notes that in the present investigation petitioner itself has not claimed that imports are causing material injury. Nor has authority examined the case on the ground of continuation of injury. The present investigation has been conducted to determine whether dumping of the PUC is likely to cause injury to the domestic industry. Since the Authority is required to determine recurrence of injury in the present case, the actual volume of import in any case is not the sole relevant information for analysis of likelihood of injury. It is noted in this regard that the exporter has very significant exports of the products to a large number of countries as examined from the details of the questionnaire response filed by the exporter." (emphasis supplied) 7. The conclusions arrived at by the Designated Authority are as follows: "10....
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....is not duly substantiated; (ii) The Designated Authority has incorrectly computed the landed value by considering the Preferential Rate of Duty (Nil Rate), as applicable under the ASEAN Agreement; (iii) The Domestic Industry is earning superlative profits and its "Return on Capital Employed" is in excess of 22% and, therefore, there is no need to continue the anti-dumping duty. In support of this contention, reliance has been placed on the following decisions. a. Alkali Manufacturers Association vs. Designated Authority [2006 (194) ELT 161 (Tri.-Del.)]. b. Merino Panel Products Ltd. vs. Designated Authority [2016 (334) ELT 552 (Tri.-Del.) ]. c. Qingdao Doublestar Tyre Industrial & Co. Ltd. vs. Union of India [2018 (364) ELT 852 (Tri.-Del.)]. (iv) The Domestic Industry has a monopoly and has abused its dominant position in the Indian market. It is exploiting the situation by raising the prices above the international level by taking advantage of the anti-dumping duty. In support of this contention, reliance has been placed on the decision of the Tribunal in Indian Graphite MFRS. ASSCN. Vs. Designated Authority [2006 (199) ELT 722 (Tri.-Del.)]; (v) Non discl....
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....ry is not a monopoly. There are eight producers of the subject goods in India, out of which two are the applicant industry. The remaining producers enjoyed 47.3 % of market share demand during the period of investigation, whereas the applicant Domestic Industry had 52.19% of market share. (v) The decision of the Gujrat High Court in Nirma Limited is not applicable since in that case the calculation was required to be disclosed to the Domestic Industry, on whose data the computation of "non-injuries price" was carried out. In the present, case the Designated Authority was justified in not disclosing the confidential costing information of the Domestic Industry, that formed the basis for determination of non-injurious price, to the foreign exporter. (vi) Low volume of import is not a relevant consideration in a sunset review; (vii) It is incorrect to suggest that the Designated Authority committed an error in recording findings on the issue of likelihood of continuation or recurrence of dumping and injury; (viii) When an affirmative order for extension of anti-dumping duty is made on the basis that there is a likelihood of recurrence of dumping and injury, the rigours of ....
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.... initiated the investigation by Notification dated July 4, 2017, as it found the application filed by the Domestic Industry to be duly substantiated. After examination of the comments submitted by the interested parties to the disclosure statement earlier issued by the Designated Authority, the Designated Authority gave its final findings on June 11, 2018 recommending continuation of imposition of anti-dumping duty and the Central Government, by Notification dated July 16, 2018, imposed anti-dumping duty on the subject goods for a period of five years. 17. In order to appreciate the contentions advanced by learned Counsel for the parties, it would be appropriate to first examine the provisions of the Act and the 1995 Rules relating to sunset review. 18. Section 9A of the Tariff Act deals with anti-dumping duty on dumped articles. Sub-section (1) of section 9A provides that where any article is exported by an exporter or producer from any country or territory to India at less than its normal value, then, upon the importation of such article into India, the Central Government may, by notification in the Official Gazette, impose an anti-dumping duty not exceeding the margin of d....
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....ic 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) xxx xxx xxx (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" 21. At this stage, it may also be appropriate to refer to the relevant provisions of Annexure-II to the 1995 Rules that deal with the "Principles for Determination of Injury" and clauses (ii) and (vii), which are relevant, are reproduced below: "(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 regard to the affect of the dumped imports on prices as referred to in sub-rule (2) of rule 18 the Designated Authority shall consider whether there has been a significant price under cutting by the dumped imports as compared with the price of like product in India, or whether the effect of such imports is otherwise to depress prices to....
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....p; ] have been framed by the Tribunal. Rule 7 applies certain provisions of the "Customs Excise and Gold (Control) Appellate Tribunal (Procedure) Rules, 1982"[ 1982 Procedure Rules ] to the 1996 Procedure Rules. It is reproduced below: "7. The provisions of Rules 7, 8, 9, 10, 11, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 35, 38, 39, 40 and 41 of the Customs, Excise and Gold (Control) Appellate Tribunal (Procedure) Rules, 1982 shall be deemed to be a part of these rules." 24. Rule 10 of the 1982 Procedure Rules is reproduced below: "10. Grounds which may be taken in appeal: The appellant shall not, except by leave of the Tribunal urge or be heard in support of any grounds not set forth in the memorandum or appeal, but the Tribunal, in deciding the appeal, shall not be confined to the grounds set forth in the memorandum of appeal or those taken by leave of the Tribunal under these rules." 25. It is clear from the aforesaid provisions that though the anti-dumping duty imposed under the original investigation shall cease to have effect on the expiry of five years from the date of such imposition, but if the Central Government, in a review, is of ....
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....has 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. 14. Sunset review entails a likelihood determination in which present levels of dumping is obviously not so relevant as is the likelihood of continuance or recurrence of dumping. Moreover, during the investigation period, 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....
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....nce of anti-dumping duty which, if allowed to cease to have effect on the expiry of five years, is likely to lead to recurrence of dumping and injury. The said two provisos do not specifically deal with the situation where the anti-dumping duty is revoked earlier than the period of its normal duration of five years. It is, however, clear that even for such earlier revocation the review has to be undertaken, and it is in this context that, the provisions of Rule 23 assume significance. As noted above, sub-section (6) of Section 9 in its opening part contemplates ascertaining and determining the margin of dumping from time to time. Rule 23(1) enables the designated authority to undertake review from time to time as regards the need for the continued imposition of anti-dumping duty." 29. It is keeping in mind the above mentioned principles that the contentions advanced by learned Chartered Accountant for the Appellant and learned Counsel for the respondent have to be examined. 30. The first contention advanced by learned Chartered Accountant for the Appellant is the application that had been filed by the Domestic Industry for initiation of sunset investigation was not duly subst....
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....dustry is earning "superlative" profits and its "Return on Capital Employed" is in excess of 22%. In support of this contention learned Counsel for the Appellant has placed the figures given in the Profit and Loss Account and the balance sheet of the Domestic Producers and the figures for "Earnings before Interest Depreciation Taxes and Amortisation"[ EBIDTA] have been taken as reflection of the profit and return on capital employed. 35. Apart from the fact that EBIDTA is not one of the listed injury parameters in Annexure-II of the 1995 Rules, the figures in the annual report contain details of all the products, including the product under consideration, and, therefore, the figures in the annual report cannot be made the basis for determining the profitability of the product under consideration in the domestic market. It needs to be noted that the anti-dumping investigations are confined to the product under consideration and, therefore, the profitability of the company as a whole has not to be seen. The Domestic Industry has also stated that the sales of the product under consideration in the domestic market constitute only 9% of the total sales of AIA Engineering Limited. On ....
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....ite MFRS ASSCN, on which reliance has been placed by learned Counsel for the Appellant, the Tribunal made the following observations; "6.........The Designated Authority has to frame opinion whether cessation of such duty is likely to lead to continuation or recurrence of dumping and injury. Thus, the test required for framing the opinion whether the cessation of anti-dumping duty is likely to lead to continuation or recurrence of dumping and injury, the relevant factors to come to such conclusion have to be taken into consideration. The relevant factors may be the change in the pattern of the production, demand and requirement of the dumped product in the importing country since the imposition of anti-dumping duty. The change in the prices in the exporting countries and International market has also to be considered. The prescribed parameter for injury to the domestic industry and also whether domestic industry is exploiting the situation by raising the prices above the International level by taking advantage of anti-dumping duty, is also required to be considered." 42. This decision will not come to the aid of the Appellant as no factual foundation has been laid by the Appe....
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....spect has been considered by the Designated Authority in Paragraph 99 of the final findings. The Designated Authority has recorded a categorical finding that since it was required to determine recurrence of injury, the actual volume of import would not be relevant for analysis of likelihood of injury. It is, therefore, not possible to accept the sixth submission of the Appellant. 48. The seventh submission advanced on behalf of the Appellant is that an erroneous finding has been recorded by the Designated Authority on the issue of likelihood of continuation or recurrence of dumping and injury. It has been submitted that though there was surplus capacities, no examination has been carried out by the Designated Authority to consider the price attractiveness of the Indian market. This submission cannot be accepted. 49. In this connection, it needs to be noted that relevant parameters have been prescribed in clause (vii) of Annexure-II to the 1995 Rules. This clause (vii) has been reproduced above. The Designated Authority has examined this aspect at length and the findings have been reproduced above. The Designated Authority noted that it was required to evaluate the existing su....
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....the likelihood of future dumping. (f) The fact that the exports to India and third countries have been made at dumped prices, coupled with the unutilized capacity and substantial inventories, leaves no manner of any doubt that India is an attractive market for the Appellant (g) The Appellant has failed to provide transaction wise export information for third countries, which information was necessary to establish that the exports to other countries were not being made at dumped/ injurious prices 51. The eighth contention of learned Chartered Accountant for the Appellant is that the rate of duty was required to be modified, having regard to the current dumping margin and injury margin in terms of section 9A of the Tariff Act. 52. Section 9A(1) of the Tariff Act, therefore, needs to be reproduced and it is as follows: "9A(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 of territory) to India at less than its normal value, then, upon the importation of such article into India, the Central Government may, by notification in the Official Gazette, impose an anti-dum....
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....ti-dumping duty. Thus, causal link in a sunset review is not required to be re-established, as the same had been established at the time of original investigation. 58. In this connection, it would be useful to refer to the report dated November 2, 2005 of the Appellate Body in United States- Anti-Dumping Measures. The said report refers to Article 3 and Article 11.3 of GATT. It needs to be remembered that Article 3 of GATT relates to "determination of injury", while Article 11 of GATT refers to "duration and review of anti-dumping duty and price undertakings". 59. Rule 11 of the 1995 Rules deals with "determination of injury", while duration of anti-dumping duty and review of anti-dumping duties is contained in the rule 23(1B) of the 1995 Rules. Article 11.3 of GATT is similar to rule 23 (1B) of the 1995 Rules. 60. The report of the Appellate Body extensively deals with "causation in sunset reviews". Mexico argued before the Panel that the USITC's likelihood-of-injury determination with respect to the anti-dumping duty order on OCTG from Mexico was inconsistent with several provisions of Article 3 of the Anti-Dumping Agreement. Based on its analysis, the Panel found that "....
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.... expressly postulates that, at the time of a sunset review, dumping and injury, or either of them, may have ceased, but that expiration of the duty may be likely to lead to "recurrence of dumping and injury". Therefore, what is essential for an affirmative determination under Article 11.3 is proof of likelihood of continuation or recurrence of dumping and injury, if the duty expires. The nature and extent of the evidence required for such proof will vary with the facts and circumstances of the case under review. Furthermore, as the Appellate Body has emphasized previously, determinations under Article 11.3 must rest on a "sufficient factual basis" that allows the investigating authority to draw "reasoned and adequate conclusions". These being the requirements for a sunset review under Article 11.3, we do not see that the requirement of establishing a causal link between likely dumping and likely injury flows into that Article from other provisions of the GATT 1994 and the Anti-Dumping Agreement. Indeed, adding such a requirement would have the effect of converting the sunset review into an original investigation, which cannot be justified. Our conclusion, that the establishment of ....
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....s. Under rule 6(4), the Designated Authority issues a notice calling for information, in such form as may be specified by it, from the exporter, foreign producers and other interested parties and such information shall be furnished by such persons in writing within 30 days from the date of receipt of the notice or within such extended period as the Designated Authority may allow on sufficient cause being shown. Rule 6(8) provides that in a case where an interested party refuses access to, or otherwise does not provide necessary information within a reasonable period, or significantly impedes the investigation, the Designated Authority may record its findings on the basis of the facts available to it and make such recommendations to the Central Government as it deems fit under such circumstances. 68. In paragraph 82 of the final findings, after noticing that the foreign exporter had not provided all relevant information in the form and manner prescribed with regard to transaction wise detail of its export to third countries as prescribed in the questionnaire, the Designated Authority itself carried out an analysis on the basis of available information. Paragraph 82 of the final f....