TMI Blog2019 (4) TMI 145X X X X Extracts X X X X X X X X Extracts X X X X ..... s and those likely to be affected, culminating in reasoned final findings. Supreme Court in Automotive Tyre Manufacturers Association v. the Designated Authority Ors [2011 (1) TMI 7 - SUPREME COURT OF INDIA] has held that the DA exercises quasi-judicial functions and is bound to act judicially. The DA determines the rights and obligations of the interested parties by applying objective standards based on the material/information/evidence presented by the exporters, foreign producers and other interested parties by applying the procedure and principles laid down in the 1995 Rules. While determining the existence, degree and effect of the alleged dumping, the Designated Authority determines a lis between persons supporting the levy of duty and those opposing the said levy. According to Rule 4(1) (d) of the Rules, the duty of the Designated Authority is to recommend the amount of anti-dumping duty, which if levied, would remove the injury to the domestic industry. Section 9A of the Customs Tariff Act enables only the Central Government to impose anti-dumping duty. The Customs Tariff Act and the Rules thereunder thus make it clear that the Designated Authority s findings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ha, Ms. Shreya Dahiya and Sh. Geeta Ahuja, Advocates. Respondents Through: Sh. Anurag Ahluwalia, CGSC with Sh. Abhigyan Siddhant, Advocate, for Respondent Nos. 1 and 2. Sh. Arshad Hidaytullah, Sr. Advocate with Sh. Jitendra Singh, Ms. Shailu Kher Hidaytullah and Sh. Anshuman Sahni, Advocates, for Respondent No.3. MR. S. RAVINDRA BHAT 1. The writ petitioner (hereafter Eveready ) questions the decision of the second respondent (the Designated Authority hereafter DA ) in a notification dated 27.09.2016 ( Impugned Final Findings ), recommending against the imposition of anti-dumping duties on imports of AA Dry Cell Batteries (the subject goods hereafter), originating in or exported from the People s Republic of China and Vietnam (hereafter variously subject country , and subject countries ). 2. Eveready is a domestic manufacturer of the subject goods and a member of the domestic industry on whose behalf the application for initiation of anti-dumping investigations was filed. The first respondent (Union Department of Revenue, Ministry of Finance hereafter the Union or the Central Government ), determines whether or not to accept the recommendations of the DA. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ues since the essential facts disclosed in the disclosure statement clearly established dumping, injury and causal link, it merely reiterated its earlier submission and asked for a confirmation of the essential facts and reasoning disclosed. Thereafter, on 27.09.2016, DA issued the impugned final findings which recommended against the imposition of anti-dumping duty, concluding as follows: Having initiated and conducted the present investigation into dumping, injury and causal link in terms of the Anti dumping Rules, the Authority is of the view that the dumped imports have not caused material injury to the domestic industry in view of the facts that the domestic industry has realized much higher selling price as compared to their non-injurious price and also the landed price of the subject goods from the subject countries and earned huge profits. Having concluded as above, the Authority is of the view that imposition of antidumping duty, on the imports of the subject goods, originating in or exported from the subject countries, is not required. 5. Following this, no Gazette Notification imposing anti-dumping duty was issued by the Union. 6. On 01.11.2016, the Petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had clearly concluded that the domestic industry had suffered material injury as a result of dumped imports in the Country. The DA, however, in the final findings concluded that the domestic industry did not suffer material injury. The DA gave different conclusions in disclosure statement and final finding. It is relevant to note in this regard that these different conclusions drawn by Designated Authority after issuance of Disclosure Statement are without any change whatsoever in the underlined factual position. 10. It is argued that the vital conclusions in the disclosure statement were that : i) Imports of the product under consideration from the subject countries were low until 2013-14 in view of the anti-dumping duty in place on subject goods from China PR. However, with the cessation of the anti-dumping duty in May 2013, the imports increased significantly in the current Period of Investigation and caused injury to the domestic industry as established from the detailed analysis in the disclosure statement. ii) Demand for the product under consideration has increased during the POI. However, despite increase in demand, the $hare of the domestic industry in the dom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and still make huge profits, the huge volume of imports may not cause much injury to the domestic industry. 12. It is also submitted that there is complete contradiction in the conclusions of the DA between the final findings and the previous disclosure statement. Besides, there were new facts in the final findings, not shown in the disclosure statement. These were that the DA for the first time made following statements in the final findings. (a) Despite demand in the domestic market more than its capacity, it neither increased its production in line with demand, nor increased its sales in the domestic market matching with its production. This indicates that the domestic industry is not willing to sell its goods in the domestic market despite getting a better price than the landed price from the subject countries. Or it may be due to lack of wide spread marketing network by the domestic industry. (b) the DA noted that the landed price of imports is below the selling price of the domestic industry, resulting in price undercutting. This may be due to the fact that majority of the imports from the subject countries, especially from China, are low value products. (c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Inventories had increased with domestic industry in alarming proportions during the POI despite increase in demand in the domestic market. However, Designated Authority discarded its earlier conclusion on threat of material injury and held that no substantiated information was provided by the domestic industry pertaining to the injury period and the POI of the present investigation. The Domestic industry was kept in dark while relying on earlier finding which, rather prove its case of the domestic industry. The domestic industry was never asked to provide information pertaining to injury period and the POI of the present investigation. The DA should have sought such information or would have disclosed this fact in the disclosure statement. 14. It is further pointed out that the DA concluded erroneously that the domestic industry made huge profits. The findings concluded that despite dumping, huge amount of profit is made by the domestic industry with significantly high ROCE position. The petitioners rely on a table to show that the return on investments earned by the domestic industry over the POI to say that the DA granted 22% return on capital employed for the purpose of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... like product in India, or whether the effect of such imports is otherwise to depress prices to a significant degree prevent price increase which otherwise would have occurred, to a significant degree. 17. It is submitted that three elements have been provided in the relevant provision to examine price effect (i) price undercutting (ii) price depression and (iii) price suppression. There is no requirement that all these parameters should individually show price effect. Even one element is sufficient to prove price effect. Further and in any case, NIP comparison with NSR has not been prescribed as a parameter under Annexure-11. In fact, this comparison cannot be relevant for the simple reasons that (a) Indian Rules are consistent with WTO Agreement, (b) NIP determination is peculiar to only India, whereas the WTO provision exists in all WTO member countries practicing this law. If other Investigating Authorities are making determination without NIP law, it is only because NIP comparison with NSR is entirely immaterial. More importantly, the final findings is contradictory on this account because DA at one place found price effect, and held otherwise at other place. Relevant part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not; it is only when those findings are acted upon, that the duty imposed becomes the occasion for a challenge. On the merits, it is urged that the DA considered all the relevant factors and applied the rules framed in this regard under the Customs Tariff Act, to conclude that though there was dumping, there was no injurious effect. The respondent also stated that according to the DA s report, the domestic industry had not utilized its capacities, despite increase in demand. It was lastly urged that a disclosure statement does not in any manner create a vested right that the final findings should be according to what is disclosed; even that statement is not appealable inasmuch as it is a step, an aid in the final process of decision making. Findings of the Designated Authority 22. The relevant extracts of the DA s findings in this case are extracted below: The Authority notes that demand for the product under consideration has marginally increased during the POI as compared to the base year. While the domestic industry holds significant share in the market throughout the injury period including the POI, the rest of the suppliers including the subject countries co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17,89,225 17,78,384 18,27,803 17,82,890 Trend Indexed 100 99 102 100 Demand 000 Pcs 20,79,040 20,21,551 20,13,593 21,79,064 Trend Indexed 100 97 97 105 Import Volume and Market Share: 46. With regard to volume of the dumped imports, the Authority is required to consider whether there has been a significant increase in dumped imports either in absolute terms or relative to production or consumption in India. Annexure II(ii) of the anti-dumping rules provides as under: While examining the volume of dumped imports, the said authority shall consider whether there has been significant increase in the dumped imports either in absolute terms or relative in production or consumption in India. 47. The import volumes for the injury period, considering the transacti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 78.63 43.72 18.69 0.30 Total % 100.00 100.00 100.00 100.00 ********** ******** Capacity, Production, Capacity, utilization and Sales Volume 50. As noted from the table below, there is an enhancement of capacity of the domestic industry in the period 2012-13 and 2013-14 in line with increase in demand, put during POI, the domestic industry abstained from increasing its capacity further despite increasing demand. Production of the domestic industry has increased up to 2013-14, but declined in the POI, whereas demand during the same period has increased significantly. This is the situation despite the domestic industry realising a better price than the landed price. Particulars UOM 2011-12 2012-13 2013-14 POI Installed capacity 000 Pcs 21,50,400 23,09,400 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant indicator of assessment of injury; thus, the Authority has worked out a non-injurious price and compared the same with the landed value of imports to arrive at the extent of price underselling. The non-injurious price has been evaluated for the domestic industry in terms of Annexure III of the Anti-Dumping Rules. The position is as follows: Price Undercutting 52. Price undercutting has been assessed by comparing the landed value with the domestic selling price in India of the subject goods during the injury period as follows: Particulars Unit 2011-12 2012-13 2013-14 POI China PR Landed price of imports Rs./ 000Pcs 2,869 3,012 1,115 1,007 Net Sales Realisation Rs./ 000Pcs *** *** *** *** Price Undercutting Rs./ 000Pcs *** ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.14 -2.25 Domestic Sales % - -0.61 2.78 -2.46 Selling Price % - 3.43 9.85 18.29 Cost of Sales % - 3.32 2.53 9.62 Profit/Loss % - 0.09 235.29 238.54 Conclusion on Injury 64. Having regard to the contentions raised, information provided and submissions made by the interested parties and facts available before the Authority as recorded in this finding and on the basis of the above analysis of the state of dumping and consequent injury, the Authority concludes that: i. There is dumping of the product concerned from China PR and Vietnam. ii. Both dumping margin and injury margin are positive with positive undercutting. iii. Despite dumping, huge amount of profit is made by the domestic industry with significantly high ROCE position. iv. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis of information provided by the domestic industry, in the earlier sunset review final findings issued on 20th May, 2013, at Para 66, the Authority had held as follows: 66. The domestic industry in its submissions has claimed that the producers in China are having significant surplus capacities as compared to the demand of subject goods in the domestic market. Domestic industry submitted that there are over 100 producers of Dry Cell Batteries in China. However, the below table data for 20 major producers of subject goods for which data is available. As per information furnished by the Domestic Industry, around 47.12% of the production represents the share of production of AA batteries (subject goods). Based on the same the table below shows the production, consumption and exports of the product under consideration: SN Particular 2009 2010 1 Installed Capacity in Million Pcs 18,090 18,090 2 Subject goods volume (AA share of Total Capacity is 47.12%) in Million Pcs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Chinese batteries and the consumers obtain the batteries at the same price as offered by the domestic industry. vi. Petitioners request the authority to recommend benchmark form of duties in the present case since the product was earlier attracting benchmark form of duty. Moreover, while the he imports have been reported at significantly different prices, costs of production do not have significant variations. Therefore, it would be appropriate to have benchmark form of duty. vii. The duty should be imposed in terms of US$. RECOMMENDATIONS 79. The Authority notes that the investigation was initiated and notified to all interested parties and adequate opportunity was given to the exporters, importers and other interested parties to provide positive information on the aspect of dumping, injury and causal link. Having initiated and conducted the present investigation into dumping, injury and causal link in terms of the Antidumping Rules, the Authority is of the view that the dumped imports have not caused material injury to the domestic industry in view of the facts that the domestic industry has realized much higher selling price as compared to their non-in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Duties of the designated authority. - (1) It shall be the duty of the designated authority in accordance with these rules: (d) 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, and the date of commencement of such duty; and.. .. .. 10. Determination of normal value, export price and margin of dumping. - An article shall be considered as being dumped if it is exported from a country or territory to India at a price less than its normal value and in such circumstances the designated authority shall determine the normal value, export price and the margin of dumping taking into account, inter alia, the principles laid down in Annexure I to these rules. 11. Determination of injury. -(1) In the case of imports from specified countries, the designated authority shall record a further finding that import of such article into India causes or threatens material injury to any established industry in India or materially retards the establishment of any industry in India. (2) The designated authority shall determine the injury to do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall, within one year from the date of initiation of an investigation, determine as to whether or not the article under investigation is being dumped in India and submit to the Central Government its final finding - (a) as to, - (i) the export price, normal value and the margin of dumping of the said article; (ii) whether import of the said article into India, in the case of imports from specified countries, causes or threatens material injury to any industry established in India or materially retards the establishment of any industry in India; (iii) a casual link, where applicable, between the dumped imports and injury; (iv) whether a retrospective levy is called for and if so, the reasons therefor and date of commencement of such retrospective levy: Provided that the Central Government may,in its discretion in special circumstances extend further the aforesaid period of one year by six months: Provided further that in those cases where the designated authority has suspended the investigation on the acceptance of a price undertaking as provided in rule 15 and subsequently resumes the same on violation of the terms of the said undertaking, the per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he designated authority under rule 17, impose by notification in the Official Gazette, upon importation into India of the article covered by the final finding, anti-dumping duty not exceeding the margin of dumping as determined under rule 17. (2) In cases where the designated authority has selected percentage of the volume of the exports from a particular country, as referred to sub-rule (3) of rule 17, any antidumping duty applied to imports from exporters or producers not included in the examination shall not exceed - (i) the weighted average margin of dumping established with respect to the selected exporters or producers or, (ii) where the liability for payment of anti-dumping duties is calculated on the basis of a prospective normal value/ the difference between the weighted average normal value of the selected exporters or producers and the export prices of exporters or producers not individually examined: Provided that the Central Government shall disregard for the purpose of this sub-rule any zero margin, margins which are less than 2 per cent expressed as the percentage of export price and margins established in the circumstances detailed in sub-rule (8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Review of Anti-Dumping Duties and Price Undertakings 11.1 An anti-dumping duty shall remain in force only as long as and to the extent necessary to counteract dumping which is causing injury. 11.2 The authorities shall review the need for the continued imposition of the duty, where warranted, on their own initiative or, provided that a reasonable period of time has elapsed since the imposition of the definitive anti-dumping duty, upon request by any interested party which submits positive information substantiating the need for a review.(21) Interested parties shall have the right to request the authorities to examine whether the continued imposition of the duty is necessary to offset dumping, whether the injury would be likely to continue or recur if the duty were removed or varied, or both. If, as a result of the review under this paragraph, the authorities determine that the anti-dumping duty is no longer warranted, it shall be terminated immediately. 11.3. Notwithstanding the provisions of paragraphs 1 and 2, any definitive anti-dumping duty shall be terminated on a date not later than five years from its imposition (or from the date of the most recent revi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the normal value, export price and margin of dumping, while Rule 11 deals with the determination of injury which according to Annexure II to the 1995 Rules is based on positive evidence and involves an objective examination of both: (a) the volume and the effect of the dumped imports on prices in the domestic market for like products; and (b) the consequent impact of these imports on domestic producers of such products. It is evident that the determination of injury is premised on an objective examination of the material submitted by the parties. Moreover, under Rule 6(7) of the 1995 Rules, the DA is required to make available the evidence presented to it by one party to other interested parties, participating in the investigation. The court also held that the DA is obliged to adhere to the Rules while conducting investigations and is duty bound to follow the principles of natural justice in the exercise of power conferred on it; the DA also has to afford to all the parties, who have filed objections and adduced evidence, a personal hearing before taking a final decision in the matter. 28. A Division Bench of this Court, in Deepak Fertilizers v. Designated Authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment, after taking note of relevant factors, decided that it would not be in public interest to impose anti-dumping duty, despite the recommendations made by the Designated Authority. The Court was of the opinion that the Designated Authority, under Rule 3,acts for and on behalf of the Government, to determine the existence, degree and effect of any alleged dumping and that in that view of the matter, its findings with respect to such issues may not be open to question by the Central Government. However, the Court clarified, this did not mean that even the recommendations of the Designated Authority are binding on the Central Government. In explaining its rationale, the court reasoned as follows: We are conscious that DA had come to certain conclusions which were not disputed by the Central Government. Insofar as factual findings are concerned, such findings were perhaps not even open to challenge by the Central Government. However, in the present case, we are of the opinion that the Central Government has taken into consideration various factors and come to the conclusion that it is not in public interest to impose Anti-dumping duty. Such factors are additional an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 34. The Andhra Pradesh High Court, in Vuppalamritha Magnetic Components Limited v. Union of India 2010 (256) ELT 487 (A.P.), has interpreted this section as requiring the Central Government to decide regarding material injury. The Designated Authority is not made mention of. The Central Government is thus found to be at liberty to impose antidumping duty, even in the absence of a positive finding by the Designated Authority. 35. The combined effect of the statutory provisions contained in the Act and the rules shows that the DA - under Rule 3 of acts for and on behalf of the Government while carrying out the investigation to determine the existence, degree and effect of the alleged dumping. In that view of the matter, the findings of the designated authority with respect to such issues may not be open to question by the Central Government. In the opinion of this court, when it is not open to the Central Government to question the final findings recorded by the designated authority on account of a negative recommendation to it by the statutorily designated expert body, not to exercise the sovereign power of imposing tax, the body of individuals and entities who are l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were to be accepted, the window period for the DA to have reconsidered the matter after judgment, under Article 226 would have been between 27.9.2016 and 20 April 2017. Even if, arguendo anti-dumping duty were justified, the matter would necessarily have to be remanded back before the DA for reconsideration. Anti-dumping duty will only be imposed once both the DA and the Central Government agree that it is warranted. However, as the period of investigation is from 01.04.2014 to 31.03.2015, all determinations will only concern this 12-month period. 40. On the merits of the decision, the court notices that the DA in this case, considered all the facts relevant for it to decide whether there was incidence of dumping of the subject goods. The DA noted that the domestic industry is offering product of different varieties and types with different price ranges. Similarly, the Chinese batteries are also being sold in the market at different price ranges. Therefore, the prices of the domestic industry were found to be comparable with the retail prices of Chinese batteries. Furthermore, the DA noted, on the aspect of injury that: i. There is dumping of the product concerned from Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X
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