2000 (2) TMI 96 - HC - Customs

Summary

Issues:
Claim of serious injury by domestic producers due to imports of yellow phosphorous; Challenge to Director General's final findings on imposition of Safeguard Duty.

Analysis:
The petitioners, claiming to be domestic producers of yellow phosphorous, alleged serious injury due to imports of the item and approached the Director General (Safeguards) as per the Safeguard Duty Rules under the Customs Tariff Act, 1975. The Director General's final findings stated that serious injury was caused to domestic producers by increased imports of yellow phosphorous but recommended against imposing Safeguard Duty on the imports, citing public interest. The petitioners challenged this decision, arguing that the Director General was obligated to recommend Safeguard Duty to prevent injury to the domestic industry, as per Rules 4 and 11 of the Safeguard Duty Rules.

The petitioners contended that Rule 11 mandates the Director General to recommend Safeguard Duty in case of serious injury to the domestic industry. They pointed out sub-rule (2) of Rule 11, emphasizing that the Director General must also recommend the amount of duty necessary to prevent or remedy the injury. The petitioners argued that the Director General's duty goes beyond merely identifying serious injury and includes assessing the impact of increased imports and the causal link to the injury before deciding on recommending Safeguard Duty.

The Director General's report highlighted concerns about the competitiveness of domestic producers even with proposed cost reduction measures, indicating challenges in producing yellow phosphorous at competitive prices compared to imports. The decision not to recommend Safeguard Duty was based on these observations, suggesting that domestic production might not be competitive even after three years. The court considered these aspects and ruled that the Director General, under Rules 4 and 11, has the discretion to recommend or not recommend Safeguard Duty based on a comprehensive assessment of the situation. The court rejected the petitioners' argument that the Director General was obligated to recommend Safeguard Duty upon finding serious injury, concluding that the Director General's decision not to recommend Safeguard Duty was valid. Consequently, the petition was dismissed.