TMI Blog2015 (9) TMI 1162X X X X Extracts X X X X X X X X Extracts X X X X ..... h not in the same form in sub-rule (2)(a). The same result therefore as is envisaged in clause 10.2 is achieved by the said construction – that is anti-dumping duty may be levied retroactively for the period for which provisional measures have been applied. The said construction is in consonance with the principles already laid down earlier in this judgment in that the WTO Agreement is intended to be applied by the various signatory nations in a uniform manner. This can only be done by construing the language of Section 9A read with the Rules in the same sense as that of the WTO Agreement. If Rule 20(2)(a) were to be construed in the fashion suggested by the High Court, it would be ultra vires Section 9A for the reasons already given by us. Further, the object and purpose of Section 9A is to impose an anti-dumping duty in consonance with the WTO Agreement, which Section 9A gives full effect to. These basic points have been missed by the High Court in arriving at the aforesaid finding. Further, the High Court fails to give due importance in its judgment to Rules 13 and 21. We have already seen how Rule 21(1) envisages precisely the situation spoken of by the High Court, and yet s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommerce of another country at less than the normal value of the products, is to be condemned if it causes or threatens material injury to an established industry in the territory of a contracting party or materially retards the establishment of a domestic industry. For the purposes of this Article, a product is to be considered as being introduced into the commerce of an importing country at less than its normal value, if the price of the product exported from one country to another (a) is less than the comparable price, in the ordinary course of trade, for the like product when destined for consumption in the exporting country, or, (b) in the absence of such domestic price, is less than either (i) the highest comparable price for the like product for export to any third country in the ordinary course of trade, or (ii) the cost of production of the product in the country of origin plus a reasonable addition for selling cost and profit. Due allowance shall be made in each case for differences in conditions and terms of sale, for differences in taxation, and for other differences affecting price comparability. 2. In order to offset or prevent dumpi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve anti-dumping duty may be levied on products which were entered for consumption not more than 90 days prior to the date of application of provisional measures, when the authorities determine for the dumped product in question that: (I) there is a history of dumping which caused injury or that the importer was, or should have been, aware that the exporter practises dumping and that such dumping would cause injury, and (ii) the injury is caused by massive dumped imports of a product in a relatively short time which in light of the timing and the volume of the dumped imports and other circumstances (such as a rapid build-up of inventories of the imported product) is likely to seriously undermine the remedial effect of the definitive anti-dumping duty to be applied, provided that the importers concerned have been given an opportunity to comment. 10.7 The authorities may, after initiating an investigation, take such measures as the withholding of appraisement or assessment as may be necessary to collect anti-dumping duties retroactively, as provided for in paragraph 6, once they have sufficient evidence that the conditions set forth in that paragraph are satisfied. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion (6); or (ii) when there are no sales of the like article in the ordinary course of trade in the domestic market of the exporting country or territory, or when because of the particular market situation or low volume of the sales in the domestic market of the exporting country or territory, such sales do not permit a proper comparison, the normal value shall be either- (a) comparable representative price of the like article when exported from the exporting country or territory to an appropriate third country as determined in accordance with the rules made under sub-section (6); or (b) the cost of production of the said article in the country of origin along with reasonable addition for administrative, selling and general costs, and for profits, as determined in accordance with the rules made under sub- section(6): Provided that in the case of import of the article from a country other than the country of origin and where the article has been merely transhipped through the country of export or such article is not produced in the country of export or there is no comparable price in the country of export, the normal value shall be determined with reference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mping would cause injury; and (ii) the injury is caused by massive dumping of an article imported in a relatively short time which in the light of the timing and the volume of imported article dumped and other circumstances is likely to seriously undermine the remedial effect of the antidumping duty liable to be levied, the Central Government may, by notification in the Official Gazette, levy anti-dumping duty retrospectively from a date prior to the date of imposition of anti-dumping duty under sub-section (2) but not beyond ninety days from the date of notification under that sub-section, and notwithstanding any thing contained in any other law for the time being in force, such duty shall be payable at such rate and from such date as may be specified in the notification. (4) The anti-dumping duty chargeable under this section shall be in addition to any other duty imposed under this Act or under any other law for the time being in force. (5) The anti-dumping duty imposed under this section shall, unless revoked earlier, cease to have effect on the expiry of five years from the date of such imposition: Provided that if the Central Government, in a rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter alia, by Section 9A (6) of the Customs Tariff Act, the Customs Tariff (Identification, Assessment and Collection of Anti-Dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995 have been framed. The Rules relevant to the determination of the present controversy are set out hereunder:- 2. Definitions.- In these rules, unless the context otherwise requires- (e) provisional duty means an anti dumping duty imposed under sub-section (2) of section 9A of the Act; 5. Initiation of investigation. - (1) Except as provided in sub-rule (4), the designated authority shall initiate an investigation to determine the existence, degree and effect of any alleged dumping only upon receipt of a written application by or on behalf of the domestic industry. (2) An application under sub-rule (1) shall be in the form as may be specified by the designated authority and the application shall be supported by evidence of - (a) dumping (b) injury, where applicable, and (c) where applicable, a causal link between such dumped imports and alleged injury. (3) The designated authority shall not initiate an investigation pursuant to an applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , taking into account all relevant facts, including the volume of dumped imports, their effect on price in the domestic market for like articles and the consequent effect of such imports on domestic producers of such articles and in accordance with the principles set out in Annexure II to these rules. (3) The designated authority may, in exceptional cases, give a finding as to the existence of injury even where a substantial portion of the domestic industry is not injured, if- (i) there is a concentration of dumped imports into an isolated market, and (ii) the dumped articles are causing injury to the producers of all or almost all of the production within such market. 12. Preliminary findings. - (1) The designated authority shall proceed expeditiously with the conduct of the investigation and shall, in appropriate cases, record a preliminary finding regarding export price, normal value and margin of dumping, and in respect of imports from specified countries, it shall also record a further finding regarding injury to the domestic industry and such finding shall contain sufficiently detailed information for the preliminary determinations on dumping and injur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vided 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 period for which investigation was kept under suspension shall not be taken into account while calculating the period of said one year, (b) recommending the amount of duty which, if levied, would remove the injury where applicable, to the domestic industry. (2) The final finding, if affirmative, shall contain all information on the matter of facts and law and reasons which have led to the conclusion and shall also contain information regarding- (i) the names of the suppliers, or when this is impracticable, the supplying countries involved; (ii) a description of the product which is sufficient for customs purposes; (iii) the margins of dumping established and a full explanation of the reasons for the methodology used in the establishment and comparison of the export price and the normal value; (iv) considerations relevant to the injury determination; and (v) the main reasons leading to the determ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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) of rule 6. The Central Government shall apply individual duties to imports from any exporter or producer not included in the examination who has provided the necessary information during the course of the investigation as referred to in the second proviso to sub-rule (3) of rule 17. (3) Notwithstanding anything contained in sub-rule (1), where a domestic industry has been interpreted according to the proviso to sub-clause (b) of rule 2, a duty shall be levied only after the exporters have been given opportunity to cease exporting at dumped prices to the area concerned or otherwise give an undertaking pursuant to rule 15 and such undertaking has not been promptly given and in such cases duty shall not be levied only on the articles of specific producers which supply the area in question. (4) If the final finding of the designated authority is negative that is contrary to the evidence on whose basis the investigation was initi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f rule 18, the provisional duty already imposed and collected, if any, shall be refunded to the importer. 8. We will take the facts contained in the judgment of the Bombay High Court dated 15.12.2011, in the case of Harsh International v. Commissioner of Customs, Civil Appeal No. 5119 of 2012, which explain how the question which has to be determined by this judgment arose. On 6th August, 2001 a public notice was issued by the Designated Authority initiating proceedings in regard to the import of Vitrified/Porcelain tiles originating in or exported from the People s Republic of China and the United Arab Emirates. The Designated Authority issued preliminary findings on 3rd December, 2001. Following the preliminary findings, the Union Government imposed, by a notification dated 2nd May, 2002, a provisional antidumping duty under Section 9A(2) of the Customs Tariff Act read with Rules 13 and 20 of the Antidumping Rules. The Designated Authority rendered its final findings on 4th February, 2003 and while concluding that material injury had resulted to the domestic industry recommended the imposition of antidumping duty. The Union Government issued a notification on 1st May, 2003 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sequence that is found in Rule 21. She further argued that it is true that laws that are made in pursuance of international treaties ought to be construed in accordance with such treaties, but where the Indian law deviates from the treaty agreement, Indian law prevails. It is clear that unlike Article 10 of the WTO Agreement, Rule 20(2)(a) only speaks of anti-dumping duty being levied from the date of imposition of provisional duty and does not speak of the period for which the provisional duty applied, thus making it clear that anti-dumping duty can be levied and collected for the gap or interregnum period. 11. On the other hand, learned counsel for the various assessees have argued that Rule 20(2)(a) should be interpreted in the light of the WTO Agreement, and so interpreted would necessarily be interpreted as meaning only the period for which the provisional duty is levied, and not beyond. It has been argued with some vehemence that this also follows from a reading of clause 18.4 of the Agreement and a reading of the Central Government s own website which was referred to us in the course of arguments stating that the anti-dumping rules are in consonance with the WTO Agreeme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terpretation of Rule 14(d) by Respondent No.1 and the Tribunal is incorrect and contrary to its language. The imposition of dumping duty is under Section 9A of the Customs Tariff Act, 1975 and the Rules and is the outcome of the General Agreement on Tariff and Trade (GATT) to which India is a party. The purpose behind the imposition of the duty is to curb unfair trade practices resorted to by exporters of a particular country of flooding the domestic markets with goods at rates which are lower than the rate at which the exporters normally sell the same or like goods in their own countries so as to cause or be likely to cause injury to the domestic market. The levy of dumping duty is a method recognized by GATT which seeks to remedy the injury and at the same time balances the right of exporters from other countries to sell their products within the country with the interest of the domestic markets. Thus the factors to constitute 'dumping', are (i) an import at prices which are lower than the normal value of the goods in the exporting country; (ii) the exports must be sufficient to cause injury to the domestic industry. [at para 4] 14. To similar effect is the judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Excise Commissioners [1966] 3 All ER 871 and Post Office v. Estuary Radio Ltd. [1967] 3 All ER 633 is applicable. If there be any difference between the language of the statutory provision and that of the corresponding provision of the convention, the statutory language should be construed in the same sense as that of the convention if the words of the statute are reasonably capable of bearing that meaning. [at page 924] 16. Similarly in Quazi v. Quazi, [1979] 3 All ER 897, the House of Lords put it thus: In the instant case, however, this does not help the respondent wife; it helps the appellant husband. The purpose for which the Recognition Act was passed is declared by the preamble to be with a view to the ratification by the United Kingdom of the Recognition Convention and for other purposes. Where Parliament passes an Act amending the domestic law of the United Kingdom in order to enable this country to ratify an international treaty and thereby assume towards other states that are parties to the treaty an obligation in international law to observe its terms, it is a legitimate aid to the construction of any provisions of the Act that are ambiguous or vague to ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they were part of directly enacted statute law. But since they form part of an international convention which must come under the consideration of foreign as well as English courts, it is, as Lord Macmillan said of the Hague Rules themselves in Stag Line Ltd. v. Foscolo, Mango and Co. Ltd.[1932] A.C. 328 at 350, [1931] All ER Rep 666 at 677 - desirable in the interests of uniformity that their interpretation should not be rigidly controlled by domestic precedents of antecedent date, but rather that the language of the rules should be construed on broad principles of general acceptation. They should be given a purposive rather than a narrow literalistic construction, particularly wherever the adoption of a literalistic construction would enable the stated purpose of the international convention, viz., the unification of domestic laws of the contracting states relating to bills of lading, to be evaded by the use of colourable devices that, not being expressly referred to in the Rules, are not specifically prohibited. [at page No.1145] 19. In Sidhu and others v. British Airways plc Abnett (known as Sykes) v. British Airways plc, [1997] 1 All ER 193, the same though ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t apply to crimes or offences committed after the extradition. The aforesaid Article unequivocally indicates that the person concerned cannot be tried for any other crime or offence than those for which the extradition shall have taken place until he has been restored or has had the opportunity of returning to the territories of the High Contracting Party by whom he has been surrendered. The provisions of Section 21 of the Extradition Act are in consonance with the aforesaid Article of the Extradition Treaty . [at para 3] 22. In yet another judgment of this Court, i.e. S S Enterprise, already referred to, this Court construed Rule 14(d) of the very anti-dumping rules with which we are concerned, in the light of the very agreement on implementation of Article VI of GATT. This Court was asked to compute the volume of exports on the basis of price and not on the basis of quantity. In repelling this contention, this Court referred to Article 5.8 of the Agreement on implementation of Article VI and held:- However a negligible quantity of imports would not be sufficient to cause such injury. Article 5.8 of the Agreement on Implementation of Article VI of the GATT, 1994 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that if there happens to be a conflict between domestic law and international law, domestic law will prevail. (2) In a situation where India is a signatory nation to an international treaty, and a statute is passed pursuant to the said treaty, it is a legitimate aid to the construction of the provisions of such statute that are vague or ambiguous to have recourse to the terms of the treaty to resolve such ambiguity in favour of a meaning that is consistent with the provisions of the treaty. (3) In a situation where India is a signatory nation to an international treaty, and a statute is made in furtherance of such treaty, a purposive rather than a narrow literal construction of such statute is preferred. The interpretation of such a statute should be construed on broad principles of general acceptance rather than earlier domestic precedents, being intended to carry out treaty obligations, and not to be inconsistent with them. (4) In a situation in which India is a signatory nation to an international treaty, and a statute is made to enforce a treaty obligation, and if there be any difference between the language of such statute and a corresponding provision of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -dumping duty so reduced. Under sub-section (5), a maximum period of five years is allowable on the anti-dumping duty imposed. This is extendable only for a further period of five years and not beyond. Sub-section (6) in turn refers to the Central Government s power to make rules, inter alia, to assess and collect anti-dumping duty. 26. It is important to note that neither sub-section (2) nor sub-section (6) authorises the Central Government, either expressly or by necessary implication, to make rules and/or to levy anti-dumping duty with retrospective effect. This is in contrast with sub-section (3) which expressly so authorises the Central Government in the circumstances mentioned in the sub-section. Interpretation of the Anti-Dumping Rules 27. A reading of the Anti-Dumping Rules would show that they have been framed keeping in view the WTO Agreement of 1994 strictly in mind. A designated authority is appointed under Rule 3 who, under Rule 4, is to investigate the existence, degree, and effect of dumping in relation to import of any article and to submit its findings, provisional or final as the case may be, to the Central Government. The designated authority is to initi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich are to be segregated from other factors which may also cause injury to the said industry. 29. Under Rule 12, the designated authority is to proceed expeditiously with the conduct of the investigation and shall in appropriate cases record his preliminary findings on all the aspects delineated above. No time frame is indicated except that utmost dispatch is the order of the day. 30. Rule 13 is very important and when Rule 20 is read harmoniously with both Rules 13 and 21, all the dark clouds which come in on account of the suggested construction of Rule 20 by revenue get dispelled by the sunlight of harmonious construction of all the three Rules read together. 31. Rule 13, in line with clause 7.4 of the WTO Agreement, enables the Central Government to impose provisional anti-dumping duty not exceeding the margin of dumping, with two provisos. First, no such duty can be imposed before the expiry of 60 days from the date of public notice issued by the designated authority regarding its decision to initiate investigations. And second, such duty cannot remain in force for a period of more than six months, which is only extendable on request made by the foreign exporters wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egard to a provisional duty that has been levied, whereas sub-clause (b) specifically deals with duty to be retrospectively imposed, that is a retrospective imposition prior to the imposition of a provisional duty. It will immediately be noticed that the subject matter of sub-clause (a) does not purport to be the imposition of an anti-dumping duty with retrospective effect. This is because it seeks to give effect to clause 10.2 of the WTO Agreement. As has been argued by learned counsel on both sides, the key to the understanding of the import of sub-clause (a) is the expression where a provisional duty has been levied . Obviously, the word levied has to be read as levied in accordance with Rule 13 which, as its marginal note indicates, provides for the levy of provisional duty. Once this is clear and the word levied is to be understood as levied under Rule 13, the second proviso of Rule 13 gets attracted, and under this proviso such levy cannot be for a period exceeding 6 months (on facts in these cases, such period has not in fact been extended beyond 6 months). Thus, it is clear that all that sub-rule (2)(a) does is to enable the levy of a final anti-dumping duty from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consonance with the principles already laid down earlier in this judgment in that the WTO Agreement is intended to be applied by the various signatory nations in a uniform manner. This can only be done by construing the language of Section 9A read with the Rules in the same sense as that of the WTO Agreement. 37. At this juncture, it is interesting to note that a number of member countries of the WTO agreement have opted for the Rule by which anti-dumping duty is levied to the full extent of the margin of dumping. Such nations like Argentina, Mexico and USA therefore have, under the WTO Agreement, only a period of 4 months extendable upto a maximum period of 6 months (instead of 6 months and 9 months respectively) so far as the life span of a provisional duty is concerned. Most of Europe and the rest of the world have opted to impose duties upto the margin of dumping depending upon the extent of injury caused to their domestic industry. Interestingly, the European Community Council Regulation No. 1225 of 2009 dated 30.11.2009 on protection against dumped imports from countries not members of the European Community has this to say: Article 9 Termination without measure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the suggested construction by revenue would render Rule 2(a) ultra vires Section 9A. It has already been seen that sub-section (2) and sub-section (6) of Section 9A do not authorize the imposition of a duty with retrospective effect, in contrast with sub-section (3) thereof. Any duty levied by a final duty notification during the interregnum period would necessarily amount to a retrospective levy of duty for the reason that such period is not covered by the provisional duty notification, being beyond 6 months. This would therefore render sub-rule (2)(a) ultra vires Section 9A. A construction which is both in consonance with international law and treaty obligations, which Article 51(c) of the Constitution states as a directive principle of State policy; and with the application of the doctrine of harmonious construction is to be preferred to a narrow doctrinaire meaning which would lead to the Rule being read in such a manner that it is ultra vires the parent statute. 42. One other interesting thing remains. Most of the debate at the Bar was centered around the expression levied in Rule 20 sub-rule (2)(a), revenue contending, based on two judgments of this Court in N.B. Sanja ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al duty is ₹ 100/- PMT, the difference of ₹ 50/- PMT cannot be recovered from the importer for the period that the provisional notification is in force. Therefore, for the first 6 months in the aforesaid example, the importer is liable to pay nil duty. However, for the next 6 months, that is in the interregnum period between the expiry of the provisional duty and the date of imposition of the final duty, the importer becomes liable to pay ₹ 100/- PMT. The said example demonstrates how the arguments of the revenue would lead to an absurdity such as this. 45. Rule 21(1) also answers the contention of the Revenue that the object of anti-dumping laws would be defeated if it were found that dumping and material injury having been found, yet no anti-dumping duty can be levied. By application of this Rule, it is clear that for the period that the provisional duty notification is in force, the difference of ₹ 50/-, in the example just given, cannot be collected from the importer despite ₹ 50/- having been imposed because of dumping and material injury to the domestic industry. Therefore, it is clear that there already exists, within the scheme of the anti-d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he construction suggested on behalf of the assessee would lead to a manifest absurdity as there would be no reason or justification to hold that the levy of anti-dumping duty must sustain a break during the period between the expiry of the provisional duty notification and the issuance of a notification imposing a final anti-dumping duty. The High Court went on to hold that the object and purpose underlying Section 9A would be defeated, as for the interregnum period where both dumping and material injury to domestic industry are found, no anti-dumping duty can be issued. This conclusion again cannot be countenanced for the simple reason that if Rule 20(2)(a) were to be construed n the fashion suggested by the High Court, it would be ultra vires Section 9A for the reasons already given by us. Further, the object and purpose of Section 9A is to impose an anti-dumping duty in consonance with the WTO Agreement, which Section 9A gives full effect to. These basic points have been missed by the High Court in arriving at the aforesaid finding. Further, the High Court fails to give due importance in its judgment to Rules 13 and 21. We have already seen how Rule 21(1) envisages precisely the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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