TaxTMI 
TaxTMI 
2020 (7) TMI 487
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Injury Rules, 1995, Anti-Dumping Rules, 1995 on import of Ductile Iron Pipes, DI Pipes originating in or exported from China PR. This application was rejected by the Designated Authority by the above said Final findings dated 01 April 2019. 3. It is a matter of record that the appellant is engaged in the business of manufacture of Ductile Iron Pipes and products. The appellant made an application under Rule 5 of the Anti-Dumping Rules, 1995 for initiation of Anti-Dumping investigation into imports of DI Pipes originating in or exported from China. In the beginning of 2006. the Designated Authority started investigation by issuing a notification dated 24 February, 2006 with respect to Import of DI pipes from China PR. The Designated Authority vide its Final findings dated 23 August, 2007 recommended imposition of Anti-Dumping Duty upon the imports of DI pipes from China PR for a period of five years. In pursuance to the recommendation of Designated Authority, the Ministry of Finance issued a Customs Notification dated 14 September 2007 levying Anti-Dumping Duty for a period of five years. 4. The appellant filed an application under Rule 23(1B) of Anti-Dumping Rules, 1995 for ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Designated Authority and the Ministry of Finance to take necessary follow up action of its judgement dated 26 September, 2018. After the orders of the Gujarat High Court, the Designated Authority vide Notification initiated the second sunset review investigation concerning imports of the DI pipes from China PR. It is a matter of record that in the meanwhile Ministry of Finance issued a Notification dated 09 October, 2018 whereunder the Anti-Dumping Duty was further extended on import of DI pipes from China PR for further period of six months up to 09 April, 2019. On 01 April, 2019, the Designated Authority issued Final findings concluding that the continuation of the existing anti-dumping duties on the subject goods was not warranted. 8. Being aggrieved by the said Final findings of the Designated Authority, the appellant again filed a Special Civil Application No. 6896 of 2019 before the Gujarat High Court. The High Court vide its two interim orders extended the imposition of Anti-Dumping Duty up to 23 June, 2019. Accordingly, the last notification was issued on 09 May, 2019 for continuation of Anti-Dumping Duty up to 23 June, 2019. 9. In the above background, the contentio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rsion cost and SGA of the most efficient domestic producer. Profit @5% on the cost of production has been added to arrive at the constructed normal value. By adopting this method, the constructed normal value was determined. Present Sunset review Findings As part of the proceedings in this investigation, the Authority had sent questionnaires to the known exporters/producers from the subject country advising them to provide information in the form and manner prescribed. There has been no response to the questionnaire nor has there been any submission by any of the Chinese producers /exports. In the absence of cooperation from the Chinese exporters/producers, the Authority determines to construct the normal value on the basis of facts available. The constructed normal value so determined is as Rs.*** per MT (USD*** per MT) Submissions of the appellant The methodology used for the computation of normal value has not been disclosed to the petitioner as against the full disclosure of methodology in the earlier case. Determination of export price 1st Sunset review Findings The Authority notes that there are no exports of the subject goods to India from the subject....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es are at the price which would have a positive injury margin and around 83% of the quantities sold to other countries are at dumped prices. This proves beyond an iota of doubt that there is every likelihood that at these prices, if the excess capacity is diverted to India, injury to Domestic Industry would be imminent. Non-participation of Chinese Exporters 1st Sunset review Findings All other interested parties who could have given valuable information to the Authority have preferred not to cooperate with the Authority in the present investigations. The Authority notes that the relevant information from the interested parties is more important in sunset review investigations where an assessment of likelihood is required to be made. Present Sunset review Findings No such examination Submissions of the appellant Despite non-cooperation by Government of China and producers, exporters and importers, adverse inference has been drawn against domestic industry for absence of information. Likely export price 1st Sunset review Findings As regards the submission of SGPL that only the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....orter statistics of the this item points to either misclassification of the import item or it not being the like article." Likely export price and dumping margin 1st Sunset review Findings The likely ex-works export price of the exports from China PR is determined by the Authority by making appropriate adjustments to the likely net export price on account of inland freight and insurance, commission, port expenses, bank charges and VAT adjustment. After making these adjustments, the likely adjusted ex-factory export price determined is as US$*** per MT. Likely Dumping Margin during POI is. US$ (per MT) Normal Value *** Net Export Price *** Likely Dumping Margin *** Likely Dumping Margin% *** Likely Dumping 0-10 Margin% Range *** Present Sunset review Findings No such examination Submissions of the appellant Likely export price and likely dumping margin from China has not been computed in the impugned Final Findings though information the regarding the same was submitted by the petitioner. Likelihood of dumping injury. 1st Sunset re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dure and conclusions reached in the context of Surplus Capacity in earlier Final Findings are not followed in impugned Final Findings. In fact a diagonally opposite stance has been taken by the Designated Authority despite similar information being on record. Surplus capacities in China 1st Sunset review Findings On the basis of the information made available by the Domestic Industry from the websites of some producers/ exporters as also other reliable websites of some other producers/ex-porters, it is seen that the Chinese producers/exporters have ample production capacities with them. They are also exporting Ductile Iron Pipes around the world. No other interested, party has either controverted the information or provided any counter-factual information. Moreover, it is noted, that the interested parties have failed to give any additional factual information which they wanted the Authority to consider while determining the issue of excess capacities. Thus, there is ample evidence to conclude that the Chinese producers have substantial production capacities. These capacities are in themselves more than the total production capacity of the domesti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....der Cutting During POI. US $ (per MT) NSR **** Landed Value (Likely) **** Likely Under Cutting Margin **** Likely Under Cutting Margin% **** Likely Under Cutting Margin% range 5-15 (iii) The likely export prices from China also clearly indicate the likelihood of injury to the Domestic Industry in the form of price underselling as shown below. US$ (per MT) NSR **** NIP **** Landed Value (Likely) **** Likely Under Selling Margin% **** Likely Under Cutting Margin% range 0-10 (iv) Further, by taking likely prices to India from the same data, the injury margin is also positive. (v) Based on the analysis of information on production capacity of the subject goods of the Chinese producers/ exporters; non-cooperation of the major Chinese producers/exporters in the investigation and the price attractiveness of the domestic market in India, there is every likelihood that if the duties are revoked, the volume of dumped and injurious exports from China to India is likely to increase and likely to cause injury to the domestic industry. Present Sunset review Findings No su....
X X X X Extracts X X X X
X X X X Extracts X X X X
....globally. It has further been stressed that since SGPL was not a significant exporter, the price data of SGPL cannot be considered as a representative export price for analysing the likelihood of dumping and injury in the given circumstances. 13. The main contention of the learned advocate with regard to the likelihood of dumping injury is that the submissions made by them have been completely overlooked or not appropriately examined by the Designated Authority. The contention is that the China PR is one of the major exporters of the subject product namely, DI Pipes to various countries such as Sri Lanka, Vietnam and Turkey and that these countries have similar developments level and infrastructure requirements. The price at which the goods were exported by manufacturers of China PR to these countries can reasonably be considered for calculating the dumping margin and injury margin taking into account all the export transaction from China to other countries for analysis of the price attractiveness to Indian market. It has further been submitted that it was established by the domestic industry by submitting documentary data to establish that 70% of the quantity exported from Chin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e the Designated Authority about existence of surplus production capacities of the product in China PR for manufacture and export of the product under consideration namely DI pipes. The fact of existence of huge surplus capacities was proved by the appellant by submitting evidence before the Designated Authority. It was contended that in case the Anti-Dumping Duty is not continued, there is every likelihood that excess surplus capacities available with the China PR will be used for export of product under consideration namely, the DI pipes at dumping price to India as was being done before the Anti-Dumping Duty was first levied in 2007. The argument of availability of huge surplus capacity was rejected by the Designated Authority by only mentioning that the appellant has not proved "beyond doubt" that surplus capacities are going to find their way for export to India. The contention of the learned advocate is that this finding of the Designated Authority is contrary to the basic meaning of "likelihood" as provided in the Act and Rules. It has further been stressed that the slight improvement in the economic parameters of the domestic industries was primarily on account of Anti-Dump....
X X X X Extracts X X X X
X X X X Extracts X X X X
....producer/exporter is understood to have participated in any contract for supply of the subject goods to India. Thus, there was no question of increase of imports, let alone significant increase in imports from China PR. (iii) The Designated Authority noted that there is no question of imports causing suppressing or depressing effect on domestic prices. (iv) In relation to the surplus capacity and the likelihood of its diversion to India in case of revocation of duties, the mere existence of surplus capacity does not establish the likelihood of diversion of surplus production to India to prove the likelihood of imports, if anti-dumping duties were to be revoked. (v) The facts and circumstances of the second sunset review investigation when compared to that of the previous sunset review investigation are not entirely similar. There are key difference between the previous sunset review investigation and the impugned sunset review investigation. They have been elaborated as follows: (a) Firstly, at the time of the previous sunset review investigation, anti-dumping duties against the subject imports were in force for five years. At the time of impugned sunset review in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ttempt to dump goods, the domestic industry is insulated from injury which may be caused by unscrupulous exporters. However, action can be taken within the guidelines of the Customs Tariff Act, 1975 and the 1995 Rules. 21. As mentioned above, the present proceedings are for a second sunset review for levy of Anti-Dumping Duty which was imposed on the subject goods namely, the DI pipes at the behest of the appellant domestic industry in 2007 and continued in 2013. To analyse the issue at hand, it will be appropriate to have a glance of the necessary legal provisions concerning sunset review of Anti-Dumping Duty under the Customs Tariff Act, 1975 and Rules framed thereunder. 22. Section 9A(5) of the Customs Tariff Act, 1975 is as follows: "The anti-dumping duty imposed under this section shall, unless revoked earlier, cease to have effect on the expiry of five years from the date of such imposition : Provided that if the Central Government, in a review, is of the opinion that the cessation of such duty is likely to lead to continuation or recurrence of dumping and injury, it may, from time to time, extend the period of such imposition for a further period of f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e 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) to 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 a significant degree or prevent price increase which otherwise would have occurred, to a significant degree. ................................................ (vii) A determination of a threat of material injury shall be based on facts and not merely on allegation, conjecture or remote possibility. The change in circumstances which would create a situation in which the dumping would cause injury must be clearly foreseen and imminent. In making a determination shall consider, inter alia, such factors as: (a) A significant rate of increase of dumped imports into India indicating the likelihood of substantially increased impo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Central Government is to satisfy itself that if the period of anti-dumping duty is not extended, it is likely to lead to continuation or recurrence of dumping and injury to the domestic industry. The nature of exercise to be undertaken by the Central Government in a 'sunset review' is somewhat different from the initial exercise to determine whether anti-dumping duty is to be levied at all or not. When it comes to review, the focus would be on the issue as to whether withdrawal of anti-dumping duty would lead to continuation or recurrence of dumping as well as injury to the domestic industry. The nature and scope of this exercise is lucidly explained by this Court in Reliance Industries v. Designated Authorities, (2006) 10 SCC 368 = 2006 (202) E.L.T. 23 (S.C.) in the following manner :- "38. We are of the opinion that the nature of the proceedings before the DESIGNATED AUTHORITY are quasi-judicial, and it is well settled that a quasi-judicial decision, or even an administrative decision which has civil consequences, must be in accordance with the principles of natural justice, and hence reasons have to be disclosed by the Authority in that decision vide S.N. Mukherjee v....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed price during this period knowing fully well that a sunset review would be in progress. Hence, the criteria under Section 9A(1) that the anti-dumping duty should not exceed the dumping margin would have no practical application for continuance of the duty under Section 9A(5). There is also no such warrant in law under the said Section 9A(5) to do so." 28. It is clear from the aforesaid observation of the Supreme Court and the provisions of the Act and the Rules that the objective and purpose of sunset review is to examine whether on removal of Anti-Dumping Duty, the incidence of recurrence of the dumping and injury to the domestic industry is likely to take place again or not. It is relevant to mention here that in the likelihood analysis, the degree and extent of dumping and consequent injury to the domestic industry during the period of investigation is not much relevant or important. 29. Before proceeding further it is appropriate to have a glance of the findings which have been given by the Designated Authority for non-continuation of Anti-Dumping Duty on the subject DI Pipes. "67. The examination of post-disclosure comments is as under: i. As regards ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t domestic industry have not been properly considered by the Designated Authority. We take note of the fact that imposition of Anti-Dumping Duty on the subject DI pipes imported from China PR have made a definite impact on the health of the domestic industry. A perusal of various key economic parameters indicate that the health of domestic DI pipe manufacturing industry has been showing improvement only after imposition of Anti-Dumping Duty on the subject goods. 31. We also find that after imposition of Anti-Dumping Duty, the imports from China PR of the DI pipes became almost negligible as only a small quantity of 73 MT was reported to have been imported during the period of investigation i.e. 2017-2018. The purpose of importing such a small quantity at a high price may have been to distort price undercutting. However, the fact remains that after imposition of Anti-Dumping Duty on the DI pipes imported from China PR, the imports from the subject country were reduced drastically and this provided a protective shield to the domestic industry. 32. For the purpose of analysing whether there is any likelihood of continuation of Anti-Dumping Duty, in case the Anti-Dumping Duty is ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....submissions. 37. The appellant Domestic industry had also provided concrete evidence of excess capacities available in China for manufacture of subject goods namely DI pipes. The Table below basically makes it very clear that China exporters have a huge capacity to manufacture and export the goods to India. The Domestic Industry has compared the domestic capacities in China with capacities, production, sales and demand in India to provide an insight into the potential danger and the imminent likelihood of dumped imports into the country in large volumes, as shown below: Particulars Chinese capacity (MT) 7520000 Capacity of Domestic Producers (MT) 2235000 Demand in India (MT) 1576776 Production of Domestic industry (MT) 1724624 Sales of Domestic industry (MT) 1576368 Chinese capacity as a % of capacity of domestic industry (%) 336% Chinese capacity as a % of demand in India (%) 477% Chinese capacity as a % of production of domestic industry (%) 436% Chinese capacity as a % of sales of domestic industry (%) 477% 38. From the above Table it is amply clear that the capacity of the subject goods in China is 3.36 times of the....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... are no dumped imports after imposition of Anti-Dumping Duty. 41. We take note of two important facts here, firstly that the Domestic Industry has substantial demand of the subject product, and that the exporters from China PR have been exporting their product i.e. DI pipe to other countries such as Sri Lanka, Turkey and Vietnam at substantial price underselling varying between 27% to 39%. As indicated in the above Tables there has been huge dumping margins varying from 50% to 67%. These two factors obviously indicate that if the Anti-Dumping Duty is not imposed on the imports of DI pipes from China PR, the Chinese exporters would certainly dump their product to capture the demand of Indian domestic markets of DI pipes by reducing the price competitiveness of goods manufactured in India. 42. As mentioned earlier, the Chinese producers /exporters have huge excess production capacities with them. The production capacities of Chinese producers are much above their local demand and it is as high as four times of the Indian capacities as can be seen from the Table in paragraph 37. These excess production capacities in excess of the Chinese demand are certainly not for decorative p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....summarization is not possible. (3) Notwithstanding anything contained in sub-rule (2), if the designated authority is satisfied that the request for confidentiality is not warranted or the supplier of the information is either unwilling to make the information public or to authorize its disclosure in a generalized or summary form, it may disregard such information". 42. In our opinion, Rule 7 does not contemplate any right in the Designated Authority to claim confidentiality. Rule 7 specifically provides that the right of confidentiality is restricted to the party who has supplied the information, and that party has also to satisfy the Designated Authority that the matter is really confidential. Nowhere in the rule has it been provided that the Designated Authority has the right to claim confidentiality, particularly regarding information which pertains to the party which has supplied the same. In the present case, the Designated Authority failed to provide the detailed costing information to the appellant on the basis of which it computed the NIP, even though the appellant was the sole producer of the product under consideration, in the country. In our opinion th....