TaxTMI 
TaxTMI 
2005 (9) TMI 145
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....lso the Members of ATMA. It was stated at the outset by the learned Senior Advocate and other advocates appearing for the appellants that the appellants did not press the applications for stay which were to be heard as per the directions of the Supreme Court since the final hearing of the appeals commenced at the request of all the counsels for both the sides. 2. The Appeal No. C/769/2005 has been preferred by the domestic industry against the impugned final findings and the notification to the extent that the rate of anti-dumping duty imposed is lower than the rate of provisional anti-dumping duty. Facts : 3. The Product : The product under consideration was Nylon Tyre Cord Fabric (NTCF) originating in or exported from the Peoples Republic of China. The subject goods are fabric of nylon meant largely for tyre cord. NTCF finds its application in different kinds of automotive tyres such as bus and truck tyres, two-wheeler tyres, cycle tyres, light commercial vehicle tyres, animal driven vehicle tyres, cycles etc. NTCF is produced, using different deniers of yarn, used for reinforcement of tyres. The product is sold as 'grey fabric' and also 'dipped fabric'. All types of NTC....
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....make their views known to the designated authority. The other interested parties were informed in Para 9 of the initiation notification that they may also make their submissions relevant to the investigation, in the prescribed form and manner within the time set out in the notification i.e. not later than forty days from the date of publication of the notification. 3.3 It appears that the designated authority requested the Central Board of Excise and Customs (CBEC) to provide details of imports of NICF. Request was also made to DGCIS, Kolkata to provide details of transaction-wise imports made in India of the said article during the period of investigation along with bills of entries numbers and dates, country of origin, description of the imported subject goods, volume and value of import and the names and addresses of the importers. The designated authority provided copies of the non-confidential version of the application to the known exporters and to the Embassy of China PR in accordance with Rule 6(3) of the said rules and sent a questionnaire, to elicit relevant information, to the known exporters in China PR in accordance with Rule 6(4). A questionnaire for according Mark....
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.... 7 and 8 of Annexure I to the said rules. It was noted that the presumption of a non-market economy could be rebutted if the exporter(s) from China provided information and sufficient evidence on the basis of the criteria specified in sub-para (3) of Para 8 and proved its contents. It was noted in paragraph I.21 that the exporter Ningbo Nylon Company Ltd. (Appeal No. C/773/2005) had stated in reply to the questionnaire that it was a wholly privately owned Chinese Limited liability company. It was stated that 97.67% of common shares were issued to the promoters of the company and 2.33% to the staff and workers. Though the names of promoters of the companies were given as corporations concerned with rural development, local industry, supply and marketing, municipal land reclamation and cultivation, the response did not clearly specify if any of the promoters of the companies were State owned. The designated authority observed that as per information made available by the applicants and on the web site, it appeared that 97.78% of shares in Ningbo Nylon (Appellant) were owned by Kingrin Corporation, which was established in 1982 and that 67.87% of the said Kingrin Corporation was owned....
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....exporters/producers. In Paragraph 33 of the provisional findings after referring to Paragraphs 7 and 8 of Annexure I to the rules and observing that the data on cost of production and domestic sales had discrepancies, that it was not available for the types/grades of the subject goods and that no clear understanding had emerged from the response to the MET questionnaire in respect of cost and pricing structures being in response to market signals, the authority was unable to apply the principles set out in Paragraphs 1 to 6 of Annexure-1 and was constrained to proceed as per provisions of Paragraphs 7 and 8 of Annexure 1 for the purpose of the preliminary findings. It was observed that the issue of granting market economy status or otherwise will be further examined during the course of investigation and subject to compliance of deficiencies and verification of the further information provided. 4.4 Taking into consideration the information available on the estimated cost of production plus selling, administrative and general expenses and a reasonable amount of profit after making reasonable adjustments as the basis for constructing the normal value of the subject goods in China ....
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....ources had declined. It was also found that there was significant decline in weighted average sales realization for all grades of the subject goods by approximately 12.14% in the POI. The landed price of imports from China was found to be significantly lower than the sale prices of the domestic industry. The imports from China were thus significantly undercutting prices of domestic industry in all the three types of the product as noted in Paragraphs 51 and 52 of the preliminary findings. The decline in the weighted average landed prices of subject goods from China was by 16.61% in the POI as compared with the base year 1999-2000. It was also noted that during the POI the weighed average under selling was 18.51% and weighted average undercutting was 6.34%. It was noted that the indexed cost of production declined in the POI compared to the base year by about 9.78% due to decline in the weighted average domestic selling prices of the raw material, caprolactum, for the injury analysis period. The selling prices declined by 12.14% in the POI as compared to the base year. Despite decline in the price of raw material, due to lower sales realization, the weighted average loss was increas....
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....dipped category. The import price in the relevant period of imports from Thailand was Rs. 132/- per kg., while the same was Rs. 126/- per kg. from China. As observed in Para 90 of the preliminary findings, on comparison of transaction-wise import data it was evident that import price from China was lower than the import price from Thailand. As regards Korea, it was noted in Para 91 that exports from Korea were 'nil' after September, 2002. However, after February, 2003 the imports from Korea started again and during this period, the prices were higher than those of China. It was observed that transaction-wise analysis showed that imports in the period of April-September, 2002 were made by Appellant M/s. Apollo Tyres Ltd. (C/768/05), which reflected apparent exports under one contract and one price. Thus, there was no other known factor that appeared to have caused material injury to the domestic industry. The designated authority provisionally found that NTCF of all types which were the subject goods originating in or exported from China PR were exported to India below normal value, resulting in dumping; that the domestic industry had suffered material injury; and that the material ....
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....cating the disclosure that the arguments raised by interested parties after the notification of the preliminary findings and thereafter at the time of the oral hearing were reflected in this disclosure statement to the extent they were considered relevant to these investigations. It was, however, stated that, notwithstanding all facts given in the disclosure (including facts given on confidential basis), the designated authority would consider all replies given, on merits in order to arrive at a final determination. 6.1 In the disclosure statement the procedure adopted by the designated authority was narrated and it was also stated that by DGAD's letter dated 25-8-2004 the exporters were informed that the designated authority intended to carry out on-the-spot investigation as per Article 6.7 of the WTO Agreement which was accepted by the participating exporters. The purpose of on-the-spot investigation was to verify the information provided by the participating exporters in response to the exporters' questionnaire and MET questionnaire by reconciling details as reported with source documents. The general nature of information to be verified and further information which was need....
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....iod of investigation from 1-4-2002 to 30-6-2003 (15 months), and the examination of trends relevant for the analysis of injury covered the period from 1999-2000 to the period of investigation. The authority held that POI kept for the investigations need not be the period for which the data was contained in the petition and that the authority had considered it appropriate to extend the POI by one quarter from the period for which the petitioner had provided the data in the petition. It was also noted that, "opportunity to comment on such data by making it available in the public file had been provided to various interested parties during the course of investigation." The assessment methodology and parameters were indicated and particulars regarding claim for market economy treatment were set out along with the response to MET questionnaire including that of the appellant Ningbo Nylon. It was noted that the said exporter had failed to reveal that Kingring Group was owned by four TVE's or Township and Village Enterprises. In its response, the said exporter had clarified that the official name of principal shareholder company was "Jinlun Group Corporation Ltd." This group was also know....
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.... the State was examined in the context of Articles 5, 6, 7 and 20 of the said Law. It was noted that the role of State appeared not to lie in direct ownership of TVE's but in planning, co-ordination and supervision, and granting of credits and preferred loans on favourable terms, as evident from Articles 5, 6, 7 and 20 of the State Law on Township Enterprises. 6.4 While considering the prices, costs and inputs, the facts considered as essential, as noted in the disclosure, referred to the main raw material which was caprolactum which was purchased by the appellant Ningbo Nylon as stated in its reply to the verification report, from State enterprises and also from its affiliated company NJIE. It was noted that the appellant Ningbo Nylon purchased 80% of caprolactum from State owned/own affiliated enterprises. It was also noted that NJIE was able to purchase caprolactum at comparatively lower rates than the rates prevalent in the international market. It was further noted that, though Ningbo Nylon purchased most of its requirements from China, the rates paid by them were comparatively lower than the rates prevalent in China. Further analysis showed that caprolactum purchased by NJ....
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....ade test. 6.6 In Annexure 4 to the disclosure, the methodology for arriving at non-injurious price (NIP) was indicated, and it was stated that the actual cost of production of the subject goods for the domestic industry was proposed to be used to determine the cost of production on the basis of the Generally Accepted Principles (GAAP). The Authority had made analysis of relevant factors including use of raw materials, usage of utilities, the actual expenses during the POI, the investment, the capacity utilization etc. to arrive at a non-injurious price for the domestic industry. 6.7 It appears that during the investigation the designated authority issuing the initiation notification was succeeded by the authority that reached the preliminary findings and held public hearing on 1-9-2004. The authority that gave the final findings had taken over the investigation proceedings from 1-11-2004. The disclosure statement dated 10-1-2005 was issued by the same authority that ultimately gave the final findings. Admittedly, the on-the-spot verification had started after the said new designated authority took over on 1-11-2004 and on-the-spot verification of the premises of the appellant....
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.... avail the opportunity of a personal hearing that was granted to them pursuant to the disclosure statement". The comments of the appellant Ningbo Nylon were set out and duly considered. 8.1 In Paragraph 27(ii) of the final findings it was observed that verification was conducted by the Authority in order to satisfy on the accuracy of information filed and that the verification report was not a certificate to the party that the information was otherwise complete and acceptable. It was observed that no unnecessary information was called for from the exporter and it was not put to any undue or unnecessary burden. It was also observed that it was not feasible to reproduce verbatim all the submissions of the interested parties, nor was it mandated under the rules and that the Authority was required to record main reasons leading to determination, which was done in this case. It was held that opportunities to comment on the application as also on various submissions made by the interested parties were provided to all the interested parties during the course of investigation proceedings. It was stated that the authority had determined price undercutting category-wise, separately for gr....
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.... It was not clarified that Jinlun Group, having a significant number of Directors from TVEs, was entitled to preferred loans on favourable terms as per Article 20 of the said Law of Township Enterprises and whether the investments in related companies were done with such loans to acquire assets at rates different from the market rates. It was found that the role of the State appeared in planning, co-ordination, supervision and granting of credits and loans on favourbale terms, as was evident from Articles 5, 6, 7 and 20 of the Law relating to Township Enterprises. In the final findings also, the authority reached the same findings regarding the raw material caprolactum that, the appellant Ninbgo Nylon purchased 80% of the caprolactum from State-owned/own affiliated enterprises. The prices paid by Ningbo Nylon, the monthly average domestic prices prevalent in China and the monthly average contract prices prevalent in Asia were compared as stated in Para 33(iii). It was found that NJIE was able to purchase caprolactum comparatively at lower prices than prevalent in the international market. The authority noted that the issue of raw material prices paid by the company was vital to the....
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....id not provide relevant annexures to the Auditor's report, it was not possible to ascertain whether the auditor's report had any qualifications nor could the accounting practices of the company be checked. Caprolactum purchased by Ningbo Nylon was supplied from its own "related" company NJIE, but different rates were reported by NJ and NJIE which had a direct impact on the annual results and no explanation was given by the company for such difference. No group company responded to the main and the MET questionnaires. The designated authority, therefore, could not verify the correctness of the revenues, expenses and profits of Ningbo Nylon and NJIE. As none of the group companies including parent company Ningbo Jinlun (Kingring) had provided their annual reports and clarifications sought by the authority, it was not possible to confirm the financial mechanism followed amount the group companies or arrive at a conclusion that no subsidies had been received by the exporter or that the allegation made by the domestic industry was false. 8.4 Normal value : Methodology for constructing normal value was indicated in Para 41 of the final findings and since the authority was unable to ap....
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....ket. During verification it was noticed that the company was raising sales invoices for job work. The list was incomplete as it did not provide the job work done by Ningbo Nylon and the money received on this account. The normal value could, therefore, not be worked out as per the principles incorporated in Articles 1 to 6 of Annexure-1. 8.6 Export Price : The appellant Ningbo Nylon furnished information pertaining to sales of subject goods i.e. exports to India, domestic market sales and exports to other countries. The information was furnished for various grades exported to India. The factory costs and profits furnished in Appendices 8, 9 and 10 of the questionnaire were also given for those grades. It was noted that the cost of raw material and other inputs varied significantly between the grades. The adjustment claimed in Appendix 3 (sales prices structure for exports to India) were considered and the weighted average ex-factory export price for grey and dipped categories was worked out. 8.7 Injury : On the issue of injury, after a detailed examination of the material aspects in the context of Rule 11 and the guiding principles incorporated in Annexure-II to the rules, th....
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....ure of the product, it would not be appropriate to accept a price undertaking in the form and manner in which it was given by the appellant Ningbo Nylon. The price undertaking of the other exporter M/s. Shandong was, however, accepted as it had agreed to revise its prices periodically, in line with changes in caprolactum prices. 9. The designated authority decided to recommend the amount of anti-dumping duty equal to the margin of dumping or less which if levied would remove the injury to the domestic industry. It, therefore, proposed that definitive anti-dumping duty be imposed on NTCF originating in or exported from China PR, falling under Customs sub-heading 5902.10 of Chapter 59 of the Customs Tariff Act, 1975 and that the anti-dumping duty shall be the amount mentioned in column 9 of the table which was 0.54 US $ per kg. In respect of the appellant Ningbo Nylon. 10. We are not concerned with the anti-dumping duty imposed on producer Jiangsu Qunfa in his appeal since that party has not challenged the final findings or the notification issued pursuant thereto on 27-4-2005, by the Central Government under Section 9A(1)(5) of the Act read with Rules 18 and 20 of the said rul....
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....a personal hearing to the parties in presence of others and such oral hearing was contemplated under Rule 6(6) of the said rules. It was submitted that the designated authority had consistently assured that such personal hearing would be given, and even in replying before the international forums, the Government of India held out that the designated authority was a quasi-judicial authority and oral hearings are provided by it. It was also pointed out that a Minister of State for Commerce made a statement on the floor of House in the past that "anti-dumping cases are looked by a quasi-judicial body" (Rajya Sabha -synopsis of debate, December 16, 1999 during half hour discussion). The learned Counsel argued that at a public hearing the interested parties had an opportunity to impress the mind of the public authority on the basis of the material on which they relied. It was submitted that giving of personal hearing which was professed by the designated authority, was an established practice in consonance with the provisions of Article 6.2 of the WTO Agreement. The learned Counsel further contended that there was a gross violation of the mandatory requirement of selecting a third marke....
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....iate analogue country as reflected in Paragraph 98. Even from the Council of Regulation of 21-6-99 reported in the said Journal dated 25-6-99 selection of analogue country envisaged in the notice of initiation of the review was pointed out from Paragraph 17. It was also pointed out from the notification dated 4-7-2005 (No. 14/5/05-DGAD) of the Government of India, Ministry of Commerce that in the initiation notification itself, which was for initiating anti-dumping duty investigations concerning import of nylon filament yarn, it was stated in Paragraph 12(b) that interested parties to the investigation who wish to comment may do so on the appropriateness of the USA envisaged as a market economy country as mentioned in Paragraph 5 of the initiation notification. It was then argued that assuming that the designated authority was right in adopting the third alternative of determining the normal value on a reasonable basis as provided under Paragraph 7 of Annexure 1, the basis adopted by the designated authority was not made known and the appellants-exporters were handicapped to respond to the determination of normal value due to confidentiality approach adopted by the designated autho....
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....ry on majority of factors except profit, return on investment, and selling price. It was then submitted that the appellant-exporter had satisfied the criteria of Paragraph 8(3) and should have been treated as a market economy. It was argued that non-disclosure about Kingring Group was of no consequence because it was only a description of a group and not separate entity. It was also submitted that ownership of shares was of TVEs which were like co-operative societies in India and they could independently own shares in the appellant-exporter company which were issued in lieu of their land and, therefore, no State interference could have been inferred. It was submitted that Law of Peoples Republic of China on Town Enterprises, 1976 showed no State interference. It was submitted that the cost of raw material caprolactum, was not underestimated and that since the raw material was procured in bulk, its price was less. There was no interference in the decision making process of the appellant-exporter and hence, no interference of any State agency existed. It was submitted that Township Enterprises are owned by peasants and their ownership was in proportion to the land holding they had co....
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.... The decision of the Delhi High Court in M/s. DCM Ltd. v. Municipal Corporation & Others reported in 1998 AIR (Delhi) (Vol. II) Supreme Court Delhi 348, was also cited for the proposition that the decision has to be given by the concerned officer who hears the person concerned. Considering the decision in G. Nageswara Rao (supra), it was observed that oral hearing leads to clarification of doubt, if any, which the authority has to decide might be having in its mind. It was observed that importance of benefit a healthy discussion can never be over-emphasized and it was a basic tenet of law by which we are governed. (d) The decision of the Punjab and Haryana High Court in Ramsharan Dass v. Commissioner of Income Tax, Patiala reported in AIR 1969 Punjab and Haryana 429, was again cited for the same proposition emanating from paragraph 5 of the judgment that oral hearing by one person cannot possibly be of any advantage to his successor in deciding a case. (e) The decision of the Supreme Court in Narendra Kumar v. Union of India reported in AIR 1989 Supreme Court 2138, was cited....
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.... designated authority can act on any other reasonable basis. In other words, the designated authority must exhaust the first method before moving to the alternative procedure. Reliance was also placed on para 27 of this judgment in which it was observed that if non-market economy principles were to be applied by remanding the matter then the entire process would have to start from the scratch. Arguments on behalf of the respondents 12. The learned Counsel appearing for the respondent - domestic industry contended that there was no 'lis' contemplated by the statute between any of the parties. The statutory provisions of the Customs Tariff Act, 1975, treat anti-dumping duty as a tax and the duty is imposed in relation to the subject article under Section 9A of the said Act. The procedure laid down under the rules made by the Central Government in the exercise of the powers conferred by sub-Section (6) of Section 9A takes into consideration various interested parties, and the domestic industry as a whole, and it is not the type of procedure for a 'lis'. The interested parties are projected, which is more in the nature of investigating in public interest than in the nature of a d....
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.... before the Rajasthan High Court challenging initiation, preliminary findings and disclosure. The provisional duty came to an end on 25-1-2005 and an ex parte stay was obtained on that day which was modified on 16-2-2005. He submitted that the Hon'ble Supreme Court vacated the interim relief granted on 25-1-2005 by its order dated 4-4-2005. The High Court of Rajasthan dismissed the petition on 25-4-2005 and the Supreme Court dismissed the SLP against that judgment since the notification under Rule 17 imposing duty was by that time issued and it was statutorily appealable. On 12th July, 2005, the appellant Apollo Tyres, who was also the Member of appellant ATMA, moved the Kerala High Court challenging the final findings and the notification despite the said order of the Supreme Court, and the Kerala High Court suspended the recovery of duty for two months giving directions because it felt ".... one more opportunity can be given to the petitioner to point out the issues raised by the petitioner". That order was stayed by the Hon'ble Supreme Court on 12-8-2005 and was set aside on 22-8-2005 relegating the parties to the proceedings which were before the Tribunal. He submitted that suc....
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....d the material facts and suggested falsely that it was a wholly private limited company and the fact that the four TVEs had an ultimate control over its management was not disclosed. It was submitted on the basis of the provisions of the Constitution of China P.R. that, there was persuasive State control over the TVEs for the purposes of the State which demonstrated that they cannot function purely on market economy principles and these TVEs were instrumentalities of State policy to develop State economy and they were not pursuing private mechanism. It was submitted that the Central Government was justified in imposing the anti-dumping duty with effect from the date on which the provisional duty was imposed, in view of the provisions of Rule 20(1) of the rules. 12.1 In the appeal filed by the domestic industry (C/769/05), the learned Counsel submitted that there was no reason to reduce the rate of anti-dumping duty in the final findings and that it should have been imposed at the higher rate at which it was imposed under the provisional findings since there was no meaningful co-operation by the exporter. 12.2 The learned Counsel for the domestic industry relied on the followi....
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....l in Sree Karpagambal Mills v. Director General of Anti-Dumping & Allied Duties reported in 2002 (150) E.L.T. 1349 (Mad.), was cited for the same proposition that Rule 6(6) did not provide that it was mandatory for the designated authority to allow an opportunity of presenting the information. It was held in paragraph 15 of the judgment that the question of applicability and the extent of principles of natural justice and the manner in which they were to be complied with, would depend upon the provisions of the relevant Act or Statue or the Rules and the facts and circumstances of each case and it cannot be said that in every case an authority while deciding a matter administratively or even quasi-judicially, was bound to give an opportunity of personal hearing. (e) The decision of the Rajasthan High Court in Rajasthan Textile Mills Association v. Director General of Anti-Dumping reported in 2002 (149) E.L.T. 45 (Raj.) was cited to point out that in the context of provisions of Rules 6(5) and 6(6), the Court held in paragraph 41 of the judgment that if an oral information was not followed by presentation in writing then no grievance coul....
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....nbsp; The decision of the Supreme Court in Union of India and Another v. Cynamide India Ltd. and Another reported in (1987) 2 SCC 720, was cited for the proposition, that legislative action, plenary or subordinate, was not subject to rules of natural justice, laid down in paragraph 5 of the judgment. It was held that in the parliamentary legislation, the proposition is self-evident. In the case of subordinate legislation, it may happen that Parliament may itself provide for a notice and for a hearing - there are several instances of the legislature requiring the subordinate legislating authority to give public notice and a public hearing before say, for example, levying a municipal rate - in which case the substantial non-observance of the statutorily prescribed mode of observing natural justice may have the effect of invalidating the subordinate legislation. In paragraph 6 it was held that, where it was left to the subordinate body to make such enquiry as it thinks fit, the nature and extent of the enquiry was in the discretion of the subordinate legislating body and the subordinate legislation was not open to question on the ground that the enquiry was not as full as it might hav....
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....nates from the exercise of delegated legislative power which is the part of the administrative process resembling the enactment of law by the legislature. 13. The learned senior advocate for the respondent SRF Ltd. adopted the contentions raised on behalf of the domestic industry and further contended that imposition of anti-dumping duty was a legislative act and the issuance of notification under the rules was an instance of delegated legislation. He further contended that the entire process of final findings and the issuance of the notification imposing the anti-dumping duty was a continuous legislative process and, therefore, it made no difference that the investigation was done by the designated authority who gave the final findings and the notification was issued by the Central Government on its recommendation. It was also submitted that there was no 'lis' decided by the designated authority in the very nature of the proceedings under the rules. What was envisaged was a general rate of anti-dumping duty for all dumped imports which are subjected to duty and not any specific import. It was submitted that under Rules 17(2) and (3), when the exporters are so large, the designa....
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....n and Others reported in 1988 (7) SCC 66, was cited for the proposition emanating from paragraphs 24 of the judgment that whether the expectation of the claimant is reasonable or legitimate in the context, is a question of fact in each case and that such question is to be determined not according to the claimant's perception but in larger public interest wherein other more important considerations may outweigh what would otherwise have been the legitimate expectation of the claimant. (d) The decision of the Supreme Court in Saurashtra Chemicals Ltd. v. Union of India reported in 2000 (118) E.L.T. 305 (S.C.), was cited to point out that it was observed by the Supreme Court therein that it was perfectly clear from the provisions of the Act that the order of the designated authority was purely recommendatory and that the determination has to be made by the Central Government against which an appeal could lie. (e) The decision of the Supreme Court in Visakhapatnam Port Trust and Another v. Ram Bahadur Thakur Private Ltd. and Others reported in (1997) 4 SCC 582, was cited to point out that it was held in par....
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....n. He submitted that opportunity of hearing was given to all the interested parties including the appellant as per the rules. He adopted the contentions raised by the other learned counsel for the respondents and also contended that the exporter did not satisfy the criteria of paragraph 8(3) of Annexure I to the Rules for claiming market economy treatment. He submitted that the anti-dumping duty should be levied from the date of the imposition of provisional duty under Rule 20(2)(a) of the rules. It was also submitted that no prejudice had been shown to have been caused nor could it be presumed. It was also submitted that there was no uniform practice of giving a fresh hearing when the officer changed. As regard the statement of Minister of State, on which reliance was placed on behalf of the appellants, he submitted that the statement of individual Minister expressing opinion was not binding on the Court while interpreting the rules, and the interpretation of the statutory provisions ultimately rests with the Court and judicial Tribunals. He contended that the function of the designated authority was quasi-legislative. He submitted that any expression by a dignitary on interpretat....
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.... to be equated with evidence, opinion or advice received from sources outside the department after the enquiry had been closed and was not required to be communicated to the objectors of the enquiry. (c) The decision of the Supreme Court in P.N. Eswara Iyer, etc. v. The Registrar, Supreme Court of India reported in AIR 1980 SC 808, was cited for the proposition contained in para 18 of the judgment that where oral persuasiveness is necessary, it is unfair to exclude it and therefore, arbitrary too; but where oral presentation is not that essential, its exclusion is not obnoxious. (d) The decision of the Supreme Court in Bar Council of India v. High Court of Kerala reported in (2004) 6 SCC 11, was cited to point out that contained in paragraph 45 of the judgment that the principles of natural justice cannot be stretched too far and that their application may be subject to the provisions of a statute or statutory rule and it was held in paragraph 47 of the judgment that Rule 11 framed by the Kerala High Court was legislative in character and it cannot be said that the same by itself, having not provided fo....
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....the need for it in the interest of the domestic industry. However, that does not denude the imposition of duty, of its legislative character because, it nonetheless is a "tax" which cannot be levied or collected except by authority of law. 15.1 The anti-dumping duty has all the characteristics of a tax. It is imposed under statutory power without the tax-payers' consent, and its payment is enforced by law. It is an imposition made for public purpose which is of safeguarding the interest of the domestic industry, without reference to any special benefit to confer on the tax-payer. The word "tax" includes any impost, general, special or local as defined in Article 366(28) of the Constitution of India. The words "levy and collection" are used in Article 265 in a comprehensive sense and encompass the entire process of taxation commencing from taxing statute to the recovery of the amount from the tax payer who may be liable. Therefore, issuance of the notification by the Central Government in the Official Gazette under Rule 18 of the said rules read with Section 9A(1) of the said Act imposing anti-dumping duty upon importation of the subject article in India is purely a legislative f....
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....etermine the margin of dumping "from time to time" in relation to the subject articles as per the procedure laid down under the rules made by the Central Government under sub-section (6) of Section 9A of the Act. Section 9A(1) does not itself prescribe the imposition of duty on any article nor its rate and the anti-dumping will come into existence only when there are dumped imports of any such article into India with additional requirement in case of dumped imports from a member country of the WTO, of their causing "injury" to the domestic industry. The duty rates will be guided by the upper limit laid down in Section 9A(1) which is "duty not exceeding the margin of dumping in relation to articles", and in case of WTO Members or existence of most favoured nation status, "a duty that is necessary to prevent injury being caused", as provided in Section 9B(1)(iii) of the said Act. Since imposition of anti-dumping duty has nexus with the dumping margin of the subject article and the extent of injury to the domestic industry, imposition of duty and its rate is contingent on those factors, which the Parliament has left to the Central Government to determine in aid of this legislative pro....
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....red by a decision making process. When statutory provisions do not regulate or guide the reviewing authority to test the decision on the anvil of natural justice and/or fair-play for the reason of the context of natural justice or fair-play not being spelt out, the nature of the function exercised in making of the decision, and the type of legal interests that are adversely affected or would be jeopardized, would be the guiding factors for deciding upon the validity of the decision under review. Different considerations would, however, apply when the legislative decisions are taken on the basis of legislative process as devised by the law makers. 17. The process of imposing anti-dumping duty which is a legislative matter does not decide any existing dispute or 'lis' inter-partes; it only determines whether imposition of anti-dumping duty is called for in relation to dumped imports and if so, at what rate, on the basis of the information collected from the exporters-importers and a large number of other interested parties. There are bound to be conflicting interests between various sections of public or in various business, professional or vocational fields and for good governanc....
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....d parties given in writing coupled with the data furnished by them constitute material for consideration in the law making process leading to imposition of anti-dumping duty and declaration of its rates in relation to imports of the subject article and not for adjudicating upon any rights and duties of the parties. 17.2 According to historical analysis, the essence of the distinction between legislative power and judicial power is that the legislature makes new law which becomes binding on all persons over whom the legislature exercises legislative power, the judicature applies already existing law in the resolution of disputes between particular parties, and the judges are under an obligation to apply and enforce rules. A judicial enquiry investigates, declares and enforces liabilities as they stand on present or past facts under laws supposed already to exist. That is its purpose and end. This stands in sharp contrast from the obligation to make rules or modify existing rules of binding nature. The delegate of the legislature is a sort of inferior experimental legislature continually employed in finding and providing law remedies for those new species of cases that may arise f....
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....ill have to be modified in its application to litigation involving public bodies, and the types of participation involved in an investigative process under the anti-dumping rules, cannot be equated with the former. The process of gathering material by devising investigative procedure under the anti-dumping rules in aid of the legislative function instead of the exercise being undertaken as per the in-house legislative procedural rules that would seal them from scrutiny of courts in view of the provisions of Article 122 is made participative and transparent by openly gathering information and ascertaining the views of the interested parties to enable a decision about imposition and rate of anti-dumping duty. The extent of participation cannot, therefore, be judged from the classical concept of hearing as applicable to a typical adjudicatory order deciding upon the rights and obligations of the parties at dispute, but only as per the type and extent of participation envisaged by the rules in the context of their legislative outcome, that is imposition of the tax and fixing its rate for the subject articles. 18. That leads us to consideration of the relevant provisions of the rules....
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....ed opportunity to furnish information relevant to investigation regarding dumping, injury and causal link. 19. The learned counsel for the appellants have placed heavy reliance on sub-rules (6) and (7) of Rule 6 for emphasizing that personal hearing was contemplated thereunder and though admittedly a hearing was given earlier by the designated authority, the successor-in-office who continued the investigation did not give a fresh hearing to the appellant. It was submitted that whenever the designated authority changed, the interested parties were heard afresh and therefore, there was breach of natural justice by denial of a fresh hearing, which the appellant legitimately expected to be given in view of the past practice. Reference was made to EC Regulations and the WTO AD Agreement in support of the claim for personal hearing. It will, however, be seen that the extent of participation during investigation as provided in Rule 6 of the said rules, is not identical as in the WTO AD Agreement and is also different from the corresponding EC Regulations. The relevant sub-rules (4), (5), (6) and (7) of Rule 6 of the said rules which govern the investigative procedure are reproduced her....
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.... law which have led to arguments being accepted or rejected along with the main reasons leading to the determinations. The designated authority is bound to comply with the rules which require it to make preliminary determinations on dumping and injury under Rule 12 and determine as to whether or not article under investigation is dumped in India, and submit to the Central Government its final findings on matters specified in Rule 17. The requirement of giving reasons for the final findings under Rule 17(2) is provided since the order of determination regarding the existence, degree and effect of any anti-dumping duty in relation to the import of any article is subject to an appellate review under Section 9C, and requirement of oral hearing, much less a second or fresh hearing, cannot be superadded on the provisions requiring reasons to be given for the investigative findings. 19.2 When the issue of interpretation of the rules on the type and contents of hearing is under consideration, the fact that in some other cases the designated authority had given a second or fresh hearing is of no consequence as it neither constitutes a binding precedent nor renders any guidance on the que....
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....s. After the imposition of provisional duty under Rule 13 read with Section 9A(2), the interested parties file their responses to the preliminary findings and opportunity is provided to them to submit the facts and figures to the designated authority at the stage of verification of their information if the same has been already filed in response to the notice of initiation. In the public hearing, interested parties get an opportunity to present their information "relevant to investigation orally", but such "oral information" can be considered by the designated authority only when it is subsequently reproduced in writing, as provided by sub-rule (6) of Rule 6. The evidence presented to the designated authority is made available, subject to confidentiality provisions of Rule 7, to the interested parties. Under Rule 8 the designated authority satisfies itself during the course of investigation as to the accuracy of the information supplied by the interested parties. No oral hearing, as it is understood in legal parlance, can be spelt out from Rules 6(6) and (7) nor its element of "oral argument" from the provision that enables the interested parties to "present the information relevan....
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....e designated authority would consider all replies given, on merits in order to arrive at a final determination". This was, therefore, a crucial and important opportunity given to all the interested parties under the rules for their responses on the entire record of investigation existing at that stage. It was stated in the communication inviting comments to the disclosure of essential facts under consideration of the designated authority that, "the arguments raised by the interested parties after the notification of the preliminary findings and thereafter at the time of the oral hearing are reflected in this disclosure statement to the extent they are considered relevant to these investigations". Admittedly, this designated authority who called for the comments of interested parties on disclosure for making final determinations actually made the final determinations on the basis of the entire record of investigation including the response contained in the comments addressed to it on 24th January, 2005 by the appellant. In paragraph 8 of the said comments, the request for "a fresh hearing in accordance with the principles of law on administrative law as well as principles of natural....
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....hile considering whether hearing was required before extending time under proviso to Rule 17 has, in terms, held in the same decision in paragraph 25 of the judgment : "that the decisions relied upon by the respondent ... have no bearing on the facts of this case since in those cases, the proceedings were quasi-criminal in nature where application of principles of natural justice was inherent, unlike the present case where the application of principles of natural justice is limited to the provisions already made in the Statute. 22. Thus, the appellants cannot claim oral hearing or a fresh oral hearing that is not al all contemplated under the rules. Resort to the so called practice of hearing is misconceived, because it depends upon each case whether the stage of hearing as contemplated under the rules is complete and whether the succeeding designated authority finds it necessary to hear the matter afresh as per the rules and the state of the record. There was a virtual tug of war to show instances where fresh hearing was given and not given, leading us nowhere beyond the option of the succeeding designated authority who would know whether he needed one or could study the rec....
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....ties in the form of a public file kept open for inspection by the interested parties". In paragraph 1.1, (iv) it was stated that, "The data for entire POI, made available in the non-confidential version of the application was placed in the public file. The IBIS data was also available in the public file....". The views expressed in public hearing on 1-9-2004 were set out in paragraph 1.7 of the disclosure statement. It was specifically stated in paragraph 1.11 that "the authority considered it appropriate to extend the POI by one quarter from the period for which the petitioner had provided data in the petition. Opportunity to comment on such data by making it available in the public file has been provided to various interested parties during the course of investigation". We have no valid reason to suspect that the public file did not contain the relevant non-confidential information. We are satisfied that there has been no denial of opportunity to the appellants to participate in the investigation in the manner laid down by the rules. The contentions to the contrary, therefore, fail. 25. The learned counsel for the appellants argued that the third market economy country should ....
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....n their submission dated 29-12-2003, made in response to the petition and initiation notification, that the third market economy country should be selected under paragraph 7 even before considering the appellants' case as per paragraph 8(3). 25.3 There is nothing in the scheme of rules requiring the section of a third market economy country under paragraph 7 of Annexure-I to the rules even before giving an opportunity to the exporter from non-market economy country to rebut the presumption by resorting to the proviso to paragraph 8(2) read with sub-para (3) thereof. Paragraphs 7 and 8 of Annexure-I to the rules read as under : "7. In case of imports from non-market economy countries, normal value shall be determined on the basis of the price or constructed value in a market economy third country, or the price from such a third country to other countries, including India, or where it is not possible, on any other reasonable basis, including the price actually paid or payable in India for the like product, duly adjusted if necessary, to include a reasonable profit margin. An appropriate market economy third country shall be selected by the designated authority in a reasonable m....
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.... via compensation of debts; (c) such firms are subject to bankruptcy and property laws which guarantee legal certainty and stability for the operation of the firms, and (d) the exchange rate conversions are carried out at the market rate : Provided, however, that where it is shown by sufficient evidence in writing on the basis of criteria specified in this paragraph that market conditions prevail for one or more such firms subject to anti-dumping investigations, the designated authority may apply the principles set out in paragraphs 1 to 6 instead of the principles set out in paragraph 7 and in this paragraph." 25.4 Para 8(1) of annexure I defines the expression "non-market economy country" that occurs in para 7. A non-market economy country is a country which according to the designated authority does not operate on "market principles" of cost or pricing structures, the result of which deviation is that the sales of merchandise in such country do not reflect the fair value of the merchandise. The definition is in the context of determination of "normal value" in relation to the subject ....
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....visions of paragraphs 7 and 8 of Annexure I to the rules are more concerned with the working of the economic system in the context of determination of the "normal value" of the subject articles than the economic system that the country of export may have chosen to adopt for its governance. The enquiry is in respect of imports from a non-market economy country and is to be focused on the question whether or not such non-market economy country operates on market principles or market principles of cost and pricing structures. 25.6 A "market", as per the theory of perfect competition would be a free market place where large number of buyers and sellers communicate freely with each other and traded in commodities that are readily transferable; and prices in such markets were determined only by supply and demand. This theory of classical economics got diluted since 1930s, as the economists focused more often on the theory of imperfect competition in which supply and demand are not the only factors that influence the operation of the market. In imperfect competition, the number of sellers or buyers are limited, rival products are differentiated by their design, quality, brand name, etc....
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....change with the level of output. Economic decisions are based on marginal cost, the additional cost of an incremental unit of production or consumption. 25.10 The market principles of costs structure and pricing structure are to be considered to be operating if sales of the merchandise in the domestic market reflect their fair value. These principles are indicated in the criteria specified in sub-para (3) of para 8. As per the market principles indicated in para 8(3) - (i) the economic decisions of the concerned "firms" (producers) in such market economy country regarding prices, costs and inputs, output, sales and investment are made in response to supply and demand position; (ii) there is no State interference to any significant extent in the making of such decision in response to supply and demand signals; (iii) costs of major inputs should substantially reflect market values of such inputs; (iv) there are no significant distortions in production costs and financial situation of such "firms" carried over from the previo....
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....ntry for selection by the designated authority. Throughout the proceedings the focus remained on para 8(3), the exporter insisting that it satisfied that criteria. This is why the verification was undertaken by the officials of the designated authority to find out whether market conditions prevailed so as to attract the principles set out in paragraphs 1 to 6 of Annexure I. The designated authority undertook a very elaborate exercise for this purpose to verify the assertions made by the appellant-exporter in writing. It was for the Chinese producers-exporters to establish that their economic decisions were governed by the supply and demand forces, that, there was no significant State interference, and that the costs of major input caprolactum, substantially reflected its market value. On the issue of State interference, the appellants (producers/exporters) did not provide evidence to substantiate their claim for market economy treatment except by their bare assertion. In case of the appellant Ningbo Nylon it was not possible to conclude that the State owned shares in its holding company Jinlun (also known as Kingring) which was a collective entity controlled by four TVEs, were sold....
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.... 26.2 The learned Counsel for the appellants strongly contended that TVEs were like co-operative societies in India and their control in shareholdings should be treated as a private control since profits were distributed to the peasants. 26.3 The concept of township becomes clear from the Constitution of the People's Republic of China to which the learned counsel for both the sides also referred. Under Article 1 thereof, the People's Republic of China is proclaimed to be "……..a socialist state under the people's democratic dictatorship led by the working class and based on the alliance of workers and peasants". The basis of socialistic economy system of the People's Republic of China is socialist public ownership of the means of production, namely, the ownership of the whole people and collective ownership by the working people, as provided in Article 6. Under Article 7, the State owned economy i.e., the socialist economy with ownership by the people as a whole, is the leading force in the national economy ….." The various forms of co-operative economy in the cities and towns, all belong to the sector of socialist economy under collective ownership by the working people, ....
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....ist system of responsibility in various forms and improving organization of work. The state practices strict economy and combats waste. The state properly apportions accumulation and consumption, pays attention to the interest of the collective and the individual as well as of the state and, on the basis of expanded production, gradually improves the material and cultural life of the people. Article 15. - The state practices socialist market economy. The state shall enhance economic legislation and improve macro-control of the economy. The state shall, in accordance with the law, prohibit disturbance of the socio-economic order by any organization or individual. Article 16. - The state owned enterprises have decision making power with regard to operations within the limits prescribed by law. State-owned enterprises practice democratic management through congresses of workers and staff and in other ways in accordance with the law. Article 17. - Collective economic organizations have decision-making power in conducting independent economic activities, on condition that they abide by the relevant laws. Collective economic organizations practice democratic manageme....
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....re divided into counties, autonomous counties, and cities. All autonomous regions, autonomous prefectures and autonomous counties are national autonomous areas." 26.6 The State Council exercises functions and powers enumerated in Article 89 including power to approve, under clause (15), the geographic division of provinces, autonomous regions and municipalities directly under the Central Government, and to approve the establishment and geographic divisions of autonomous prefectures, counties, autonomous counties and cities. The auditing body established by the State under Article 91, inter alia, supervise through auditing the revenue and expenditure of all department of the local Government at different levels, and those of State financial and monetary organisation and of enterprises and undertaking. Under Article 105 local people's Government at different levels are the executive bodies of local organisations of state power as well as the local organs of State administration at the corresponding level. Under Article 101 the people's congresses elect the township level heads who have the overall responsibility under Article 105. There are people's Government of townships unde....
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....n the set up of their constitutional position as regulate by the Township Regulations, the onus on the part of the appellant-exporter to establish by sufficient evidence that there was no State interference i.e. no interference by the People's Government of Township (Article 107) that owned the enterprises which held Jinlun group which in turn owned the appellant Ningbo Nylon. The record of the investigation reveals that the appellants (producer and exporter) have miserably failed in establishing non-interference, and the finding that the issue of State interference through the officials of the townships cannot be ruled, is fully justified. 26.9 For verification of response of co-operative Chinese company to the questionnaire for according market economy treatment, on the spot verification in the premises of the appellant Ningbo Nylon took place on 8th and 9th November, 2004. The verification report was sent to the exporter who have responses to that report which are placed on record. The exporters sent comments on 18-12-2004 to the verification reports against the various heading of the report which have been relied on behalf of the appellant exporter for the contention that ma....
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....ad claimed higher cost of production on account of caprolactum in the home market. It was found that the company was entitled to duty free imports for sales of the materials for exports. However, the exact mechanism of the system of duty free imports was not clear. Even though, it appeared that such benefit of duty free import had been availed only on caprolactum imported for exports, there was no specific information from the company in this regard. As regards the interest cost, it was found that the company had claimed significantly different costs on account of interest in the domestic and export market. No justifiable reason appeared for the difference in the costs in this count. It was noted in the verification report that the company did not provide the detailed financial report along with Directors reports, Auditors reports, Note to account, Annexures, etc., usually found in annual reports, for the period 2001, 2002 and up to June, 2003 both for the appellant Ningbo Nylon and for NJIE. The processing charges shown in the cost of production statement were not shown in type wise cost of production statement. 26.10 For the above reasons, and those given by the designated aut....
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....deration involved a number of different types which vary in associated costs and prices; (b) price adjustments to determine ex-factory prices are not available; (c) these price could not be considered representative given the claims that prices from third countries to India were inappropriate due to dumping from China. While disputing the claim of the domestic industry to treat Chinese producers as non-market economy, the Chinese producers, or importers or an other interested party made no claim not advance any evidence either with regard to price or constructed value in a market economy third country. Under the circumstances, the Authority is of the opinion that the only option available is to determine normal value considering price actually paid or payable in India for the like product, duly adjusted, to include a reasonable profit margin. Price actually paid in India could not have been considered for the reason that the same were below cost of production in India, duly adjusted, to reflect international raw material prices and optimum conversion costs, selling, general and administrative expenses and reasonable profits." We are in full agreement with the reasons that the de....
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....omestic market coupled with the steep decline in the landed price of the Chinese imports during the period of investigation resulting in reduction of share of other countries who did not resort to such price undercutting. The authority noted that as per the information given by the participating exporters, the volume of the subject articles NTCF exported during the period of investigation by them was 8404 MTs. and that there could be not dispute over the fact that the said quantity was imported in the period of investigation. It was noted that in the injury analysis period, the demand for the product had increased by 23.17%, the production increased by 17.89% and sales of domestic industry increased by 18.73%. It was tried to be argued that the increase in production and sales of the domestic industry was indicative of the fact that the dumped imports from China did not cause any injury. This is a misconceived submission, because, despite the increased demand, production and sales, the domestic industry had suffered losses. The domestic industry's share in demand declined and the share of dumped imports had increased. The increase in the production of the domestic industry did not ....
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....as undercutting the prices of domestic industry throughout the injury period. It was observed that the landed price of the subject goods from other countries was higher, except in 2001-2002, than the import prices from China. The price difference between the Chinese prices and domestic industry prices which was 1.72% in 1999-2000 increased to about 6.18% in the period of investigation. The authority compared the selling price of the domestic industry with the landed price of imports separately for grey, dipped and CTC and noted that the weighted average under selling was 15.67% and weighted average undercutting was 9.50%. On the basis of index, cost of production decline in the period of investigation of 9.78% was noticed as compared to the base year. This was due to decline in the weighted average domestic price of the raw material caprolactum. This should ordinarily have raised profitability but for the undercutting by the dumped imports by China. The selling prices declined by about 12.14% in the period of investigation as compared to 1999-2000, despite the decline in the domestic prices of caprolactum. Due to lower sales realization, the weighted average profitability decline b....
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....is-impact of the data. The so-called inverse co-relation is illusive and scales appear to be faulty. The matter has to be viewed on the basis of the information collected and discussed by the designated authority and not by looking at these graphs prepared on behalf of the appellants. 31. The contention that figures for the year 1999-2000 taken into consideration for trend analysis were not supplied to the appellants (producer/exporter) and that since they were not contained in the petition, a complete copy of the petition cannot be said to have been given to the exporters as required by the rules, is misconceived. First of all, no such objection against the inclusion of the year 1999-2000 for the purpose of trend analysis was taken till now. Moreover, a Trade Notice No. 2/2004, dated 12-5-2004 (4/9/04-DGAD GOI-Ministry of Commerce and Industry) was admittedly issued advising the trade and industry to follow the requirements, inter alia, of the application containing information and data relating to the proposed period of investigation and previous three financial years. It was stated that the data for the previous three financial years would be utilized for trend analysis for d....
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....nd analysis, which established that dumped imports from China increased from 1.60% in 1999-2000 to 6.40% in the annualized period of investigation. 33. It was argued on behalf of the appellants (producer/exporter) that during the interregnum period (i.e. between 25-1-2004 when the period of six months contemplated by the proviso to Rule 13 expired and the date of the publication of the notification imposing anti-dumping duty i.e. 20-7-2004), no anti-dumping duty could have been imposed. Under Section 9A(2) of the said Act anti-dumping duty can be imposed on provisional assessment of normal value and margin of dumping by the Central Government. If upon final determination the anti-dumping duty imposed, on provisional estimates exceeds the margin so finally determined, the anti-dumping duty will be reduced and excess of anti-dumping duty will be refunded to the extent of reduction. Under Section 9A(3), anti-dumping duty may be levied retrospectively from a date prior to the date of imposition of the provisional anti-dumping duty under Section 9A(2), but not beyond ninety days. If the definitive anti-dumping duty imposed by the Central Government under Rule 18 read with Section 9A(....
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....iolation of the terms of such undertaking. Provide also that notwithstanding anything contained in the foregoing proviso, in case of violation of such undertaking, the provisional duty shall be deemed to have been levied from the date of violation of the undertaking or such date as the Central Government may specify in each case. 21. Refund of duty. - (1) If the anti-dumping duty imposed by the Central Government on the basis of final finding of the investigation conducted by the designated authority is higher than the provisional duty already imposed and collected, the differential shall not be collected from the importer. (2) If the anti-dumping duty fixed after the conclusions of the investigation is lower than the provisional duty already imposed and collected, the differential shall be refunded to the importer. (3) If the provisional duty imposed by the Central Government is withdrawn in accordance with the provisions of sub-rule (4) of Rule 18, the provisional duty already imposed and collected, if any, shall be refunded to the importer." 33.2 The provision of sub-ru....