TaxTMI 
TaxTMI 
2002 (5) TMI 68
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....h June, 2001 by which anti- dumping investigation 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....
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....r, 2000 as the period of investigation. The Designated 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 Authorit....
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....eral Agreement on Tariff and Trade), 1994. In the last 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....
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....the export price is unreliable 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 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 shal....
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....uction plus administrative, selling and general costs are treated as not being in the 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 va....
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....e of the imported article dumped and other circumstances is likely to seriously undermine the remedial effect 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....
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....ment to frame the rules providing the manner of levy of anti-dumping duty. 9.Section 9AA provides for refund of anti-dumping duty in certain 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 "i....
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....members of which are producers, exporters or importers of such an article; (ii) the Government of the exporting country; 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) ....
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....ation under sub-rule (1) shall be in the form as may be specified by the designated authority and the application shall be supported by evidence of - (a) dumping, (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 sati....
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....d; and (vi) the time-limits allowed to interested parties for making their views known. A(2) copy of the public notice shall be forwarded by the designated authority to the known exporters of the article alleged 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 no....
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....nfidential basis to furnish non-confidential summary thereof and if, in the opinion of a party providing such information, such information is not susceptible of summary, such party may submit to the designated authority a statement of reasons why summarisation is not possible. 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 pri....
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....suppliers, or when this is impracticable, the supplying countries involved; (ii) a description of the article which is sufficient for customs purposes; (iii) the margins of dumping established and a full explanation of the 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 ....
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....t is submitted that the instant writ petition has been filed at the instance of M/s. Madura Coats Limited having failed before the Karnataka High Court. It is vehemently argued that the writ petition is premature inasmuch as so far as the first writ petition is concerned, only a decision has been taken to initiate investigation. 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 pr....
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....ry and eliminating dumping. Tampering with the process midway, may delay the imposition of provisional duty, which if warranted otherwise would itself amount to causing on injury not capable of being repaired at all." 21.Learned Counsel has also invited our attention to the order of the Karnataka High Court dated 4th December, 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 ....
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....shing to the court. The Apex Court did not agree with the view expressed by the High Court. It was observed that the High Court ignored the fact that the notice calling upon the Company to forthwith get it registered as a dealer and to submit a return and to deposit the tax in a treasury, shall place upon it considerable hardship, harassment 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 w....
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....ot operate bar, in spite of existence of statutory remedy. The Court held thus : Under Article 226"15. of the Constitution, the High Court, having regard to the facts of the case, has a discretion to entertain or not to entertain a Writ Petition. But the High Court has imposed upon itself certain restrictions one of which is that if an effective and 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 sat....
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....he Company or towards any of its member was the condition precedent for the Government to form the required opinion. The Court further observed that if the existence of those conditions is challenged, the Courts are entitled to examine whether those circumstances were existing when the order was made. There are series of decisions on the point for our guidance 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 ....
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....dings are wholly without jurisdiction. 33.As regards the locus, suffice it to say that the petitioner industry falls within the definition of the interested party. They are entitled to present the information during investigation under Rule 6. The consequence of levy of anti-dumping duty either on the basis of the preliminary finding or the final finding, may inflict 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 r....
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....ority in writing by M/s. Association of Synthetic Fibres Industry representing the Indian Domestic PSF Industry alleging dumping of certain PSF originating in or exported from Indonesia, Korea R.P., Malaysia, Taiwan and Thailand, was made. Certain deficiencies were pointed out which were subsequently rectified. The applicants in their application suggested the period 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 analy....
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.... is a process where certainty on the existence of all the elements necessary in order to adopt a measure is reached gradually as the investigation moves forward. However, the evidence must be such that an unbiased and objective investigating authority could determine that there was sufficient evidence of dumping within the meaning of Article 2 to justify initiation of an investigation." 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 satisfi....
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....t refer but suffice it to say that they confirm and justify the claim of domestic industry with regard to the normal value based on the cost of production. Thus the Designated Authority on analysis of the material in the application found that the market share of the subject goods from the subject countries had increased significantly forcing the domestic industry to market their 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....
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....e to the known importers of the article alleged to have been dumped, the Governments of the exporting countries concerned and other interested parties. The Designated Authority also provides a copy of the non-confidential version of the application filed by the domestic industry to the known trade Association, the Government of the exporting countries and also the other interested 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 Designa....
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....ports from the subject countries in accordance with Rule 6(4). As required by Rule 6(5), the Authority provided adequate opportunity to all the known users of the article under investigation, inter alia, seeking information relevant to the investigation. 41.Dealing with the contention of violation of principles of natural justice in not giving an opportunity of hearing to the interested 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 '....
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....-factory normal value and the ex-factory export price after adjustments on account of ocean freight, marine insurance charges, commission inland freight and Load Port, expenses etc., found the dumping margin on the basis of facts available before it. The Designated Authority comparing the normal value and export price, accordingly, worked out the dumping margin as follows : US $ per Kg. 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 de....