TaxTMI 
TaxTMI 
2002 (5) TMI 68
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....nvestigation concerning imports of certain "PSF" originating in or exported from Korea, R.P., Malaysia, Taiwan and Thailand was initiated. The petitioners have also challenged the order dated 15-10-2001 passed by the Designated Authority in compliance of the orders of the Karnataka High Court in M/s. Madura Coats Limited justifying the initiation of the investigation. The second writ petition being D.B. Civil Writ Petition No. 718/2002 has been filed by the same petitioners, seeking direction to quash the preliminary findings of the Designated Authority dated 16-1-2002 recommending levy of provisional anti-dumping duty on import of subject goods originating in or exported from the subject countries. 2.The facts giving rise to the instant writ petitions are that the Association of Synthetic Fibre Industry on behalf of the Indian Domestic PSF Industry filed an application under sub-rule (1) in accordance with sub-rule (2) of Customs Tariff (Identification, Assessment and Collection of Anti- dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995, hereinafter referred to as 'the Rules of 1995' before the first respondent i.e. the Designated Authority. The applica....
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....nated Authority on the basis of the evidence submitted prima facie found that there was sufficient evidence of dumping of the subject product from the exporters of the four countries excluding Indonesia. The Designated Authority also found the prima facie evidence with respect to the statement on normal value, export price and dumping margin. It was further found that there was significant increase in the market share of the imports of the subject goods from the subject countries; decline in the sales realization; losses of the negligible profits of the domestic industry and failure of the domestic industry to realize fair and reasonable price from sale of the subject goods. This prima facie indicated collectively and cumulatively that the domestic industry suffered material injury on account of dumping. The Designated Authority also found that huge surplus production in the subject countries constitutes a threat of material injury to the domestic industries. Thus, the Designated Authority decided to initiate investigation against the alleged dumped imports of certain PSF originating from the four Countries. Accordingly, the Authority issued impugned public notice dated 25th June, ....
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....t century, there was a movement for multilateral conventions to establish a common code concerning the world trade. The most important among them was "GATT" (General Agreement on Tariff and Trade). It was set up in the year 1948 providing the forum for negotiating lower customs duty rates and other trade barriers. The text of General Agreement spelled out important rules, particularly non-discrimination. The unevenness of tariff levels and application of the number of reciprocal advantages induced the member countries of the "GATT" to devise the new techniques for establishment of new international economic order. Article VI of the GATT, 1994 allows members to apply for anti-dumping measures on imports of a product with an export price below its "normal value", if such imports cause or threaten to cause material injury to a domestic industry. Detailed rules governing the application of such measures, which take the form of either duties or undertakings on pricing by the exporter were negotiated during the Tokyo Round. The agreement was substantially revised during the Uruguay Round, emerging of W.T.O. as successor to GATT with effect from January, 1995. The WTO Agreement provides ....
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....nsatory arrangement between the exporter and the importer or a third party, the export price may be constructed on the basis of the price at which the imported articles are first resold to an independent buyer or if the article is not resold to an independent buyer or not resold in the condition as imported, on such reasonable basis as may be determined in accordance with the rules made under sub-section (6); "normal value", in(c) relation to an article, means - (i) the comparable price, in the ordinary course of trade, for the like article when meant for consumption in the exporting country or territory as determined in accordance with the rules made under sub-section (6); or (ii) when there are no sales of the like article in the ordinary course of trade in the domestic market of the exporting country or territory, or when because of the particular market situation or low volume of the sales in the domestic market of the exporting country or territory, such sales do not permit a proper comparison, the normal value shall be either - (a) comparable....
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.... ordinary course of trade by reason or price and may be disregarded in determining normal value. This is done when the Authority determines that such sales are made within an extended period of time in substantial quantities and are at prices which do not provide for the recovery of all costs within a reasonable period of time. Similarly, if the "export price" of the goods imported into India is the price paid or payable for the goods by the first independent buyer. The export price of the goods allegedly dumped into India means the price at which it is exported to India. It is generally the CIF value minus the adjustments on account of ocean freight, insurance, commission, etc., so as to arrive at the value at ex-factory level. If there is no export price or the export price is not reliable because of association or a compensatory arrangement between the exporter and the importer or a third party, the export price may be constructed on the basis of the price at which the imported articles are first resold to an independent buyer. The margin of dumping refers to the difference between the normal value of the like article and the export price of the product under consideration. Marg....
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.... of the anti-dumping duty liable to be levied, the Central Government may, by notification in the Official Gazette, levy anti-dumping duty retrospectively from a date prior to the date of imposition of anti-dumping duty under sub-section (2) but not beyond ninety days from the date of notification under that sub-section, and notwithstanding anything contained in any law for the time being in force, such duty shall be payable at such rate and from such date as may be specified in the notification. Anti-dumping duty in addition to other duty : The(4) anti-dumping duty chargeable under this section shall be in addition to any other duty imposed under this Act or any other law, for the time being in force. Life of anti-dumping duty : The(5) 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 five years and such furt....
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....ertain cases. Section 9B prohibits levy of duty under Section 9 or Section 9A in certain cases. Section 9C provides remedy of appeal against the order of determination or review thereof regarding the existence, degree and effect of any subsidy or dumping in relation to import of any article before the CEGAT. 10.The Central Government in exercise of powers conferred by sub-section (6) of Section 9A and sub-section (2) of Section 9B of the Customs Tariff Act, 1975 and in supersession of Customs Tariff (Identification, Assessment and Collection of Duty or Additional Duty on Dumped Articles and for Determination of Injury) Rules, 1985, has framed the rules in the name of Customs Tariff (Identification, Assessment and Collection of Anti- Dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995, hereinafter referred to as "the Rules of 1995", providing a detailed procedure in the matter of levy of anti-dumping duty. Rule 2 is the definition clause. It, inter alia provides the definition of the expression "domestic industry" and "interested party" as follows : "2.Definitions. - "domestic(b) industry" means the domestic producers as a whole engaged in the manufacture....
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.... and (iii) a producer of the like article in India or a trade and business association a majority of the members of which produce the like article in India;" 11.It is, thus evident that the expression "domestic industry" means the Indian producers of like goods as a whole or those producers whose collective output constitutes a major proportion of total Indian production. Producers who are related to exporters or importers or themselves imports the allegedly dumped goods, may be deemed not to form part of the domestic industry. Similarly, "interested parties" to an anti-dumping investigation include : (i) the domestic industry on whose complaint the proceedings are initiated; (ii) The exporters or the foreign producers of the like articles subject to investigation; (iii) The importers of the same article allegedly dumped into India; (iv) The Government of the exporting country/countries. (v) The trade or business associations of the domes....
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....g, (b) injury, where applicable, and (c) where applicable, a causal link between such dumped imports and alleged injury. The(3) designated authority shall not initiate an investigation pursuant to an application made under sub-rule (1) unless - (a) it determines, on the basis of an examination of the degree of support for, or opposition to the application expressed by domestic producers of the like product, that the application has been made by or on behalf of the domestic industry : Provided that no investigation shall be initiated if domestic producers expressly supporting the application account for less than twenty-five per cent of the total production of the like article by the domestic industry, and (b) it examines the accuracy and adequacy of the evidence provided in the application and satisfies itself that there is sufficient evidence regarding - (i) dumping, (ii) injury, where applicable; and (iii) ....
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....leged to have been dumped, the Governments of the exporting countries concerned and other interested parties. The(3) designated authority shall also provide a copy of the application referred to in sub-rule (1) of Rule 5 to - (i) the known exporters or to the concerned trade association where the number of exporters is large, and (ii) the Governments of the exporting countries : Provided that the designated authority shall also make available a copy of the application to any other interested party who makes a request therefor in writing. The(4) designated authority may issue a notice calling for any information, in such form as may be specified by it, from the exporters, foreign producers and other interested parties and such information shall be furnished by such persons in writing within thirty 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. Explanation : For the purpose of this sub-rule, the notice calling for information and other documents shall be deemed to have been received one week ....
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....ble. Notwithstanding(3) 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 authorise its disclosure in a generalised or summary form, it may disregard such information." Rule 8 provides for the accuracy of the information. Rule 9 provides for investigation in the territory of other specified countries. Rule 10 provides for the impact and for determination of normal value, export price and margin of dumping, which reads as under : Determination"10. 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 1 to these rules." Rule 11 provides for impact and determination of injury to the domestic industry by dumping of imported goods which reads as fol1ows : Determination"11. of injury....
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....he reasons for the methodology used in the establishment and comparison of the export price and the normal value; (iv) considerations relevant to the injury determination; and (v) the main reasons leading to the determination. The(2) designated authority shall issue a public notice recording its preliminary findings." After receipt of the preliminary findings, the Central Government may, on the basis of the preliminary finding of the Designated Authority, levy a provisional duty not exceeding the margin of dumping under Rule 13. Rule 14 provides for termination of investigation. Rule 15 provides for suspension or termination of investigation on price undertaking. Rule 16 casts a duty on the Designated Authority to inform all interested parties of the essential facts under consideration which form the basis for its decision before giving its final finding. Lastly, Rule 17 provides for final findings of the Designated Authority. Rule 18 provides for levy of duty based on such final finding. 16.Thus, on receipt of an application in prescribed proforma providing requisite information by or on behalf of ....
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....stigation. In the second writ petition, the challenge is to preliminary finding, which is recommendatory in nature. It is submitted that the investigation is still in progress and the final finding is yet to be recorded under Rule 17. The last objection is that the petitioner has a remedy by way of appeal before the CEGAT under Section 9C of the Act of 1975. 19.Mr. K. Venugopal learned Counsel appearing for the domestic industry has supported preliminary objections. It is submitted that the preliminary finding of the Designated Authority is in the nature of recommendation to the Central Government. It is for the Central Government to accept or not to accept the finding. It is submitted that levy of provisional duty under Rule 13 of the Rules of 1995 is the legislative activity intended to protect the domestic PSF industries and any judicial interference with the process of such levy will disturb the time schedule provided under the Rules and may also cause irreparable damage to the domestic PSF industry. It is also submitted by Mr. Venugopal that since the levy of excise duty provisional or final is on the exporter, as such, the user industry has no locus to maintain the writ peti....
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...., 2001 rendered in Madura Coats Limited v. Directorate General "Writ Petition Nos. 41593 to 41596/2001", wherein the learned Judge held that the High Court will normally not disturb the finding of Designated Authority. The learned Judge having looked into the finding of the Designated Authority with respect to the impugned initiation notification, observed as follows : "The designated authority in its order dated 15-10-2001, commencing from para 50 onwards states, that the applicants have a standing to file an application and further says in its order, that based on the confidential and non-confidential evidence produced before it, the matter requires to be examined. This opinion requires to be aframed by the designated authority based on the evidence made available and produced before it by the applicants. This Court normally in exercise of its judicial review would not disturb the opinion of the designated authority or the Central Government. This Court only looks into whether the opinion formed by the designated authority is in consonance with the provisions of the Act and the Rules framed thereunder. This Court also will not interfere with the opinion formed by designated auth....
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....assment and liability. The Court observed thus : "It is, therefore, not reasonable to expect the person served with such an order or notice to ignore it on the ground that it is illegal, for he can only do so at his own risk and peril. This Court has said in the last mentioned case that a person placed in such a situation has the right to be told definitely by the proper legal authority exactly where he stands and what he may or may not do." 24.In Calcutta Discount Co. Ltd. v. Income-tax Officer reported in AIR 1961 SC 372, the Company applied to the High Court for issuing a writ under Article 226 of the Constitution quashing the notice issued under Section 34 of the Income-tax Act on the ground that amendment to the said provision was the not retrospective and, as such, the assessment for a particular year, has become barred. The writ petition was dismissed by the High Court. It was contended before the Supreme Court that the notice was without jurisdiction inasmuch as the condition precedent for the assumption of jurisdiction under Section 34 of the Act was not satisfied. The Court observed that the High Court has power to issue in a fit case an order prohibiting an executive a....
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....nd efficacious remedy is available, the High Court would not normally exercise its jurisdiction. But the alternative remedy has been consistently held by this Court not to operate as a bar in at least three contingencies, namely, where the Writ Petition has been filed for the enforcement of any of the Fundamental Rights or where there has been a violation of the principle of natural justice or where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged." 28.In Rohtas Industries Ltd. v. S.D. Agarwal reported in AIR 1969 SC 707, the appointment of Inspector to investigate the affairs of the Company and to report thereon under Section 237(b) came up for consideration. Before appointment of Inspector under Section 237(b) by the Central Government, certain pre-conditions were also required to be satisfied as provided under Section 235. On examining the provisions of Sections 235 and 236, the Court found that the investigation required was of serious nature. The writ petition was opposed by the Government on the ground that the report of the Inspector being of recommendatory nature, was not binding. Further finding of the Inspector being finding o....
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....ce but it is neither necessary nor desirable to traverse all the cases, as broad principles which govern the decision with respect to the preliminary objections can be conveniently culled out. There can be no doubt that following the normal rule, the finding of the Designated Authority initiating investigation and recording of preliminary finding does not call for interference in a petition under Article 226 of the Constitution, more particularly looking to the object and the nature of the proceedings, it would not be proper to tamper with the investigation midway, except in three contingencies referred to above, Under the Scheme of the Rules of 1995, the Designated Authority acquires jurisdiction to initiate investigation only on satisfaction that there exists evidence in the application with regard to dumping, material injury and causal link. At this stage i.e. under Rule 5, the Designated Authority is required to examine the accuracy and adequacy of evidence produced in the application. Thus, in a case where there is a challenge to the initiation of investigation on the ground of jurisdictional error, the petition under Article 226 of the Constitution of India is maintainable. H....
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....nflict injury to the interested party. Though, the preliminary and final finding are only recommendatory in nature and it is for the Central Government to accept or not to accept but still such findings are bound to influence the decision making process. The possibility of provisional levy being used by indigenous manufacturer to hike the price or the artificial increase in price making the article uncompetitive, adversely affecting the competitiveness of the interested party or industrial user, cannot be ruled out. In addition to the conflicting interest of the parties, the consequence may cause large injury to rest of the citizenry. It will be travesty of justice, if in such a matter of serious consequence, even limited judicial review is refused, on the ground of writ petition being premature or existence of alternate remedy or locus. There can be no harm, if the writ Court keeping in mind urgency of the matter spares some time in the larger public interest and grants limited judicial review. 34.It is contended by Dr. Abhishek Manu Singhvi, learned Counsel appearing for the petitioner that the impugned initiation notification is patently without jurisdiction inasmuch as it has ....
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....of investigation as March, 2000 to November, 2000. The November data was considered most recent data available on the subject, while the March data was included in the POI as the customs duty on PSF which was reduced from 35% to 20% w.e.f. 1-3-2000. Since the duties became effective immediately after the presentation of budget, the applicants considered that the real effect of the injury would be captured if the POI starts from 1-3-2000. It was added that the importers as well as the exporters from the subject countries were fully aware of the reduction of duties as the same were brought down due to Indo-US and Indo-EU MOU. The Designated Authority considered the said view and instead suggested that the POI be revised emphasizing that the POI should be on quarterwise basis as that would help in making appropriate analysis. While considering the proposed POI, due regard was given to the various draft recommendations of the WTO's Committee on anti-dumping practices. Accordingly, the applicants submitted revised petition taking 1-1-2000 to 30-9-2000 as the "period of investigation". The application was found to be properly documented. The Designated Authority on examining the applicat....
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....vestigation." The Panel dealing with the accuracy and adequacy of evidence observed that if the information supplied in the application is all that reasonably available to the applicant as required by Article 5.2, the investigating authority is justified in initiating the investigation. At the stage of justification of initiation of investigation, the Designated Authority is not required to hold a detailed inquiry but he has to prima facie satisfy as to whether the application is supported by the evidence in relation to dumping, injury and causal link between the dumped import and alleged injury. A reading of the orders of the Designated Authority dated 25-6-2001 and 15-10-2001 individually or collectively clearly shows that the authority has analysed the information and material on record and on being satisfied of adequacy and accuracy of the evidence issued the impugned initiation notification. The Designated Authority found that the applicants on the basis of data published by the leading consultancy firms made out a case of massive surplus capacity of 14,85,000 M.T. in the four countries mentioned in the application. The growth of consumption taking cumulatively in the said co....
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....heir goods at a selling price lower than their cost of production or at negligible profits. Thus, the Designated Authority prima facie satisfied itself of the existence of evidence to the effect that import of certain PSF originating in or exported from Korea R.P., Malaysia, Taiwan and Thailand constituted dumping and have caused injury to the domestic industry. Thus, in our opinion there is no illegality in the order of initiation of investigation, much less the jurisdictional error. Accordingly the Designated Authority rightly issued a public notice of initiation of investigation dated 25-6-2001 which calls for no interference by this Court in exercise of powers under Article 226 or 227 of the Constitution of India. 38.At this stage, it is necessary to clarify that the Karnataka High Court by order dated 6-9-2001 on a petition filed by M/s. Madura Coats while dismissing the petition, gave liberty to the interested parties to file their objections before the Designated Authority. The objections filed by the interested parties were disposed of by order dated 15-10-2001. Thus, the order dated 15-10-2001 is nothing but a confirmation of notification dated 25-6-2001 in view of the or....
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....d parties, who make a request thereof in writing. The Designated Authority as required by sub-rule (2) of Rule 6, issues notice calling for the relevant information in the prescribed form as specified by it from the exporters, foreign producers and other interested parties giving them adequate opportunity to respond. Sub-rule (5) also provides an opportunity to the industrial users to furnish information which is relevant to the investigation regarding the dumping injury where applicable and causal link. Under sub-rule (6), the Designated Authority may allow an interested party or its representative to present the information relevant to investigation orally but such oral information can be taken into consideration only when it is subsequently re-produced in writing. Sub-rule (7) casts a duty on the Designated Authority to make available the evidence presented to it by one interested party to other interested parties participating in the investigation. A careful reading of this rule will show that it only contemplates an opportunity of presentation of information relevant to the investigation orally followed by submission in writing. The provision cannot mean to say that all the re....
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....rested parties or the industrial users, in our view, a reading of the scheme under Rule 6 makes it clear that it only provides an opportunity to present the information and nothing more. Under sub-rule (5), the opportunity is provided to the industrial users of the article under investigation to furnish an information, which is relevant to the investigation regarding the dumping, injury where applicable and causal link. Under sub-rule (6), the Authority may allow an interested party or its representative to present information relevant to the investigation orally, which is to be subsequently reproduced in writing. Thus, a discretion is vested in the Authority to permit a person interested to make a submission orally. It is significant to notice that under sub-rule (6) instead of word 'shall', the word 'may' has been used. If the Authority is satisfied with the presentation of the oral information, he may ask him to produce the same in writing. Thus, if a person has been permitted to give an oral information and if he has given the same, the information is further required to be given in writing. Thus, if an oral information is not followed by presentation in writing, then no grieva....
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.... Korea RP (all exporters) M/s. Penfibre SDN BHD Malaysia Malaysia (All other exporters) Taiwan (All exporters) M/s. Tuntex (Thailand Public Co. Ltd. Thailand. Ms. Teijin Polyester (Thailand) Ltd. M/s. Teijin (Thailand) Ltd. Thailand (All other exporters) Normal value 1,282 0.9016 1.1620 1.152 0.803 0.893 0.893 1.198 Export 0.754 0.8299 0.824 0.786 0.759 0.877 0.789 0.802 Dumping 70.03% 8.64% 41.02% 46.56% 5.78% 1.75% 13.21% 49.38% For the purpose of fair comparison between normal value and export price, the Authority took into account the information furnished by the petitioner and some of the exporters and other information available with the Authority. The normal value and export prices determined as detailed above are at ex-factory level. 44.On appreciation of the entire material on record, the Designated Authority concluded the injury and causal link as follows : Injury (a) the quantum of imports from the subject countries has increased in absolute as well as in relative terms; (b) the market share of the Petitioner-Companies has gone down; (c) &nbs....