2005 (2) TMI 135 - SC - Customs

Whether the appellant-company operated on Market Economy Principles during the period 1st January 2000 to 30th September 2000 for the purposes of the Customs Tariff Act and the Customs Tariff (Identification Assessment and Collection of Anti Dumping Duty on Dumped Articles and for Determination of Injuries) Rules 1995? Held that - no purpose would be served in remanding the matter back to the Tribunal after setting aside the order at this stage. Admittedly the Designated Authority had initiated conducted and concluded the proceedings under Rules 1 to 6. If non-market economy principles have now to be applied then the entire process would have to start from scratch. Indeed whether China should have been treated as a non-market economy for the period in question is itself in dispute. Under Rule 17 the Designated Authority is required to submit its final finding within one year from the date of initiation of the notice or at the most by another six months if the Central Government is satisfied that there are special circumstances. The period has long since expired. The appeal is accordingly allowed and the decision of the Tribunal is set aside without any order as to costs.

Summary

Issues Involved:
1. Market Economy Principles
2. Determination of Normal Value
3. Anti-Dumping Duty
4. Non-Market Economy Classification
5. Verification of Information

Detailed Analysis:

1. Market Economy Principles:
The core dispute revolves around whether the appellant-company operated on Market Economy Principles during the specified period for the purposes of the Customs Tariff Act and the Customs Tariff (Identification, Assessment and Collection of Anti Dumping Duty on Dumped Articles and for Determination of Injuries) Rules, 1995. The principle behind anti-dumping laws is to protect the domestic industry from being adversely affected by import of goods at export prices which are below the normal value of the goods in the domestic market of the exporter.

2. Determination of Normal Value:
The phrase "normal value" in relation to an article has been defined under Clause (c) to the Explanation to Section 9A(1) of the Customs Tariff Act. The Rules provide for the assessment of the anti-dumping duty by the Designated Authority, who follows principles set out in Annexure I to the Rules. Initially, Paragraphs 1 to 6 of Annexure I provided principles for determining normal value for all countries assuming they operate on market economy principles. A distinction was introduced in 1999 between market economies and non-market economies, with specific procedures prescribed for non-market economies.

3. Anti-Dumping Duty:
The Designated Authority issued preliminary findings stating that the appellant had not provided complete information, leading to the use of domestic industry data to assess normal value and calculate the dumping margin. Consequently, provisional anti-dumping duty was imposed on imports from China, Korea, and Japan. The appellant paid the duty and submitted further material. After investigation and verification, it was found that the appellant was not liable for anti-dumping duty as the dumping margin was negative.

4. Non-Market Economy Classification:
China was expressly notified as a non-market economy, but units within China could show they operated on market economy principles. The respondent Nos. 1 and 2 filed a petition for anti-dumping investigation, leading to a preliminary finding that imposed duties. The Designated Authority followed Paragraphs 1 to 6 of Annexure I, treating China as a market economy. The Tribunal later held that the Designated Authority failed to follow the rules applicable to non-market economies and required verification of data under Paragraph 8 of Annexure I.

5. Verification of Information:
The Tribunal found that the Designated Authority had not physically verified the information provided by the appellant, which was factually incorrect as the Designated Authority had already visited the manufacturing units in China. The Tribunal's order for re-verification was impractical given the time constraints. The Designated Authority's final finding was supported by sufficient evidence, and the Tribunal's decision was set aside.

Conclusion:
The Supreme Court allowed the appeal, setting aside the Tribunal's decision. It was concluded that the Designated Authority had followed the correct procedures and verified the necessary information. The Tribunal's requirement for re-verification was deemed unnecessary. The appeal was not considered infructuous despite a mid-term review finding a negative dumping margin for the appellant, as issues of refund and procedural correctness remained relevant.