TaxTMI 
TaxTMI 
2009 (5) TMI 39
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.... referred to as 'the Director General'), and the consequent notification bearing No.37/2009-Customs dated 20.04.2009 issued by the Government of India, Ministry of Finance, Department of Revenue imposing a provisional safeguard duty at the rate of 20 per cent ad valorem in respect to soda ash falling under sub-heading 283620 of the first schedule to the Act on its import into India from People's Republic of China (in short 'China'). 2. Petitioner No.1 in Writ Petition No. 8749/2009 is a company incorporated under the Companies Act, 1956 (hereinafter referred to as 'Saint-Gobain'). The said petitioner is in the business of manufacturing and marketing Architectural and Automotive Glass. Petitioner No.2 in the said writ petition is an association of float glass manufacturers. The Petitioner in Writ Petition No.8761/2009 is the Federation of glass manufacturers which is incorporated as a non-profit company under the Companies Act, 1956 (hereinafter referred to as 'the Federation'). The Federation claims to represent all segments of the industry which includes large, medium and small scale manufacturers located in different parts of the country. 3. The genesis of the present litig....
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....py of the initiation notification, correspondence exchanged with the interested parties and the domestic industry, copy of the application and updated information, if any, as also a copy of the index to the public file and inspection of the public file. In the very same communication, a request was also made that in the interregnum, in consonance with the principles of natural justice, no steps prejudicial to the interest of the user industry be taken till effective opportunity is given to them to respond to the notice of initiation of safeguard investigation. 5. It transpires that based on the views of the domestic producers, the information supplied by them and the information available with the Director General, came to the conclusion that preliminary findings had revealed that the import of soda ash in increased quantities from China had caused or threatened to cause a market disruption vis-a-vis the domestic industry. He further recommended that in view of the critical circumstances obtaining on account of import of soda ash from China in increased quantities, which, if not stemmed by imposition of provisional safeguard duty for a period of 200 days, pending final determina....
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....his aspect of the matter by the petitioners before us which will be dealt with at a later stage in this judgment. 7.2. Continuing with the narration, the petitioners' stand is that after the conclusion of the public hearing, an opportunity was given to file written submissions. Accordingly, written submissions were filed by the petitioners on 30.03.2009 followed by a rejoinder by the domestic producers on 30.04.2009. 7.3. It seems that Government of India, without awaiting the return of findings by the Director General has decided to accept his recommendation for imposition of provisional duty on import of soda ash into India from China vide Notification no. 37/2009-Customs dated 20.04.2009. By this Notification, the Central Government, in exercise of its powers under Section 8C (2) of the Act, read with Rules 10 and 14, upon consideration of the findings of the Director General, decided to impose a provisional duty at the rate of 20% ad valorem in respect of soda ash falling under sub-heading 283620 of the First Schedule of the Act. The notification dated 20.04.2009 further provides that the said provisional duty shall be effective upto 05.11.2009 unless revoked, superseded ....
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....cal table contained in Section II, paragraph 8 of the application to demonstrate that the allegation of import of increased quantities of soda ash from China, which purportedly caused or threatened to cause market disruption, could not sustain on a plain reading of the data incorporated therein. To appreciate this submission, it would be perhaps relevant to note that comparative data which has been filed by the domestic producers to show import of increased quantities of soda ash from China is for the period April-September, 2008 with respect to quantities and price of soda ash imported from China and countries other than China. The relevant table incorporated in paragraph 8 of the application is extracted hereinbelow:- "Export price: Details of export price of the imported product exporter/country-wise and the basis thereof (provide the f.o.b./ c.i.f. price at which the goods enter into India). Enclosed as Annexure-2 with this petition. these are CIF import prices (as reported to Indian Customs). Summarized position with regard to volume and price is given below: Year Volume MT Price Rs./MT China Other countries Total China Other count....
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....nd Mr. Sandeep Sethi, Sr. Advocate representing the domestic producers, vigorously opposed the admission of the Writ Petition contending that if the submission of petitioners was accepted the entire purpose with which the various provisions and the mechanism for imposition of provisional duty stands incorporated in the Act and Rules would become nugatory. 9.1 The learned counsel for respondents submitted that the procedure for imposition of provisional duty was contained in Rule 9, which provided that if the Director General was of the view that there was evidence to show that increased quantities would cause or threaten to cause market disruption of domestic industry, he would conduct an investigation and proceed to record his preliminary findings, recommending thereby to the Government of India, a suitable course of action to prevent and/or stem market disruption. In view of the imminence of irreparable damage to the domestic industry by virtue of increased quantities of imports, the procedure prescribed under Rule 6(4) was not applicable to the inquiry conducted under Rule 9, and thus no fault could be found with the actions of the Director General, in not awaiting the expiry....
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.... 11. We have heard the learned counsels for the parties. In order to adjudicate upon this writ petition, it would be important to take note of certain provisions of the Act and the Rules as well as the basic purpose and object in empowering the Director General and the Government of India to take recourse to the measures provided therein. 12. Under the Act, i.e., Customs Tarrif Act, 1975, the Government of India in order to protect the domestic industry has power to impose broadly; Anti-Dumping Duty, Countervailing Duty or the Safeguard Duty. Broadly, Anti-Dumping duty is imposed by the Government of India where goods are imported into the country at a dumped price. Dumped price is a price less than the normal value which is judged with reference to the comparable price of an article imported to the country in the ordinary course of trade when exported from the exporting country. As against this, Countervailing Duty is imposed generally if goods are subsidized in the country of export. Similarly, resort is taken to imposition of safeguard duty if increased quantities of goods enter the country. The determining factor as to which of the three measures ought to be adopted when t....
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....rhaps be sufficient to indicate that the provisions both under 8B and 8C of the Act as well as the rules framed thereunder are largely based on the provisions of Article XIX of the GATT and the WTO agreement on safeguards. For the purposes of the present writ petition, it may perhaps be convenient to refer to clause 1(a) and 2 of Article XIX. The same read as follows:- "1.(a) If, as a result of unforeseen developments and of the effect of the obligations incurred by a contracting party under this Agreement, including tariff concessions, any product is being imported into the territory of that contracting party in such increased quantities and under such conditions as to cause or threaten serious injury to domestic producers in that territory of like or directly competitive products, the contracting party shall be free, in respect of such product, and to the extent and for such time as may be necessary to prevent or remedy such injury, to suspend the obligation in whole or in part or to withdraw or modify the concession. XXXXXXXXX 2. Before any contracting party shall take action pursuant to the provisions of paragraph 1 of this Article, it shall give notice in writin....
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....uence of increased import of an article into India as also to identify the article liable for safeguard duty under Section 8C of the Act. On conclusion of his findings provisional or otherwise the Director General is required to submit the same to the Central Government with a recommendation as to the quantum of duty to be levied and the duration for which the levy should enure in order to remove market disruption or threat of market disruption to the domestic industry. It is also the duty of the Director General under Sub-Rule (5) of Rule 4 to review from time to time the need for continuance of such safeguard duty. 15.2 Under Rule 5, the Director General on receipt of a written application by or on behalf of the domestic producer of like article or directly competitive article, is required to investigate the existence of market disruption or threat to market disruption. Under Sub-Rule (2) of Rule 5, the applicant is required to give evidence of (i) increased imports; (ii) the market disruption or threat to market disruption caused to the domestic industry in absolute or relative terms to domestic production; (iii) and lastly, the causal link between the imports and th....
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.... reasonable period or impedes the investigation, the Director General under Sub-Rule (8) of Rule 6 would record that fact and make such recommendations to the Central Government as he deems fit under the circumstances. 15.5 The confidentiality of information supplied is protected under Rule 7 unless the Director General comes to a conclusion that the same is unwarranted. In such eventuality, the Director General may call upon the party to give a summary of the non-confidential information. 15.6 The basis for determining market disruption or threat to market disruption is provided in Rule 8 read with Annexure to the Rules, which delineates that determination shall be based on evaluation of all relevant factors of an objective and quantifiable nature having a bearing on the situation of that industry, in particular, the rate and amount of the increase in imports of the article concerned in absolute and relative terms, the share of the domestic market taken up by increased imports, changes in the level of sales, production, productivity, capacity utilisation, profit and loss and employment. Keeping in mind the factors indicated above, it would have to be demonstrated that there ....
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....a safeguard duty not exceeding the amount indicated by the Director General. In the event the Director General's final findings are contrary to the prima facie evidence on which investigation under Section 8C of the Act was initiated, in the first instance, then the Central Government within 30 days of publication of the final findings is obliged to withdraw the provisional duty, if any, imposed under the Act. 15.11 Rule 13 provides for the obligation to impose a safeguard duty on a Non-discriminatory basis, that is, on all imports of such article from China. 15.12 Rule 14 provides that safeguard duty shall take effect whether provisional duty under Rule 10 or duty imposed under Rule 12, from the date of publication of the notification in the Official Gazette imposing such duty. 15.13 Rule 15 provides for refund of safeguard duty in case after the conclusions of the investigations under Section 8C of the Act, the safeguard duty imposed is lower than the provisional duty which has been imposed and collected. The differential amount is to be refunded to the importer. 15.14 Under Rule 16, it has been made clear that the duty shall be imposed only if the period necessary to....
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....as to be returned by the Director General within eight months from the date of initiation of investigation. 18. We are fortified, in our view, if regard is had to the provisions of clause (2) of Article XIX of the GATT which states, in no uncertain terms, that prior consultation is excluded in the event critical circumstances exist which require immediate imposition of provisional duty. However, the affected party should be heard immediately thereafter. In the scheme of the Rules referred to above, by necessary implication, hearing of Petitioner and persons similarly placed is excluded. Mr Ramachandran's submission that even if Rule 6(4) is excluded, since civil consequences follow imposition of provisional duty, the principles of natural justice had to be adhered to even at the stage of imposition of provisional duty is untenable for the reason if the rationale provided in the first instance for exclusion of opportunity is expedition, it cannot be implied in Rule 9 to negate this very purpose. Therefore, in our view the requirement of a hearing followed by consideration of written submission before final findings are returned by the Director General are the sine qua non of the ....
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....ld be excluded. It could also be excluded where the nature of the action to be taken, its object and purpose and the scheme of the relevant statutory provisions warrant its exclusion. The maxim audi alteram partem could not be invoked if import of such maxim would have the effect of paralyzing the administrative process or where the need for promptitude or the urgency so demands. The Court stated that if legislation and the necessities of a situation can exclude the principles of natural justice including the audi alteram partem rule, a fortiori so can a provision of the Constitution, for a constitutional provision has a far greater and all pervading sanctity than a statutory provision. It also stated that the principles of natural justice having been expressly excluded by a constitutional provision, namely, the second proviso to Article 311(2), it could not be reintroduced by a side door by providing for the enquiry. The Court, however, hastened to add that where the second proviso to Article 311(2) is applied on an extraneous ground or a ground having no relation to the situation envisaged in that clause, the action would be mala fide and void. In such a case, invalidating factor....
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....y must be confined within their limits and cannot be allowed to run wild. It has been stated ; "To do a great right after all, it is permissible sometimes to do a little wrong". [Per Mukharji, C.J. in Charan Lal Sahu v. Union of India, (Bhopal Gas Disaster); (1990) 1 SCC 613. While interpreting legal provisions, a court of law cannot be unmindful of hard realities of life. In our opinion, the approach of the Court in dealing with such cases should be pragmatic rather than pedantic, realistic rather than doctrinaire, functional rather than formal and practical rather than 'precedential'." 21. This brings us to the submission of the petitioner that there were discrepancies in the data supplied and that the bare reading of the data supplied by domestic producers would show that the test of import of increased quantities of soda ash to an extent that it caused or threatened to cause market disruption of the domestic industry was not fulfilled. The learned counsel for the petitioners' comparison of quantity and price of figures of import of soda ash into India for the period April-September, 2008 between those from China and other countries, is misconceived for the following reasons.....
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....ures of the same product. This has led to significant increase in imports from China at low prices. (iv) There is not only an increase in imports from China in absolute terms, but also, a significant increase in share of imports from China in relation to domestic production. The share of imports from China in relation to domestic production has increased from 0.44%, in 2005-06 to 2.59% in April-September, 2008, which has sharply increased thereafter to 10.13%. Accordingly, there is market disruption in relation to domestic production. While domestic manufacturers commanded nearly 92.64% of the market share as against 0.44% by Chinese imports in 2005-06; this share of the Chinese imports has gone up to 10.13% during October-December, 2008 while the share of domestic producers has fallen to 83.20% during the same period. (v) The level of inventories of domestic production has increased significantly from 47721 MT in the first week of November, 2008 to 1,10,082 MT in the second week of January, 2009. The increase is 132% in just eight weeks. Result and effect on production is that average weekly production has declined from 42329 in November, 2008 to 37976 between 8th to 14th Ja....
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....f provisional duty imposed was 20% ad valorem as against the recommended rate of 31% ad valorem; (iv) the decision to levy provisional duty is transitory, which is required to be followed by a final finding by the Director General within a stated time frame after which the levy would dissolve. 21.4 Keeping the aforesaid data referred to in the preliminary findings in mind and, the analysis of the Director General which has been further considered by the Government, we have no doubt that the decision of the Central Government to impose provisional duty cannot be found fault with. In any event, this is not a case of no material or no evidence or a complete non-application of mind which would call for interference by a Writ Court. It is trite law that the Writ Court is, in fact, concerned with only the decision making process and not with the final decision. The Court cannot re-appreciate the primary or perceptive facts found by an authority acting under a statute. (See H.B. Gandhi, Excise and Taxation Officer cum Assessing Authority, Karnal & Ors vs M/s Gopi Nath & Sons & Ors 1992 Supp. (2) SCC 312 and Indian Overseas Bank vs I.O.B Staff Canteen Workers' Union & Anr. (2000) 4 S....
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....domain of the Director General. Upon reading of the notification containing the preliminary findings, we have not been able to persuade ourselves, as indicated hereinabove, that there was no material for the Director General to come to a conclusion that critical circumstances did not obtain in the matter calling for imposition of provisional duty. Whether the final findings support the preliminary findings is a matter which the Director General is empowered to consider and make suitable recommendation to the Central Government. Therefore, in our view, the said submission of the petitioners deserves to be rejected at the very threshold. The submission that the domestic producers in their application have categorically stated that the imported soda ash from China is High Density soda ash but the relief for imposing provisional duty has been sought for and granted even with respect to Low Density soda ash, is also without substance for more than one reason. First, this submission assumes that the Director General has based his investigation only on the basis of material supplied by the domestic producers. Second, there is material in the application of the domestic producers which ind....