TMI Blog2007 (11) TMI 204X X X X Extracts X X X X X X X X Extracts X X X X ..... whether the Designated Authority(Respondent No. 1) appointed under Rule 3 of the Rules, if called upon to do so,is obliged to carry out what is commonly known as a "sunset review" or can it decline to do so. 2. In our opinion, if it is called upon to do so, the Designated Authority is under an obligation to conduct a sunset review and the Central Government (Respondent No. 2) must consider the recommendation made by the Designated Authority and take a decision thereon. The facts: 3. The broad facts of the case, as have been pointed out to us during the course of hearing on 24th and 25th September, 2007 are that the Petitioner and others jointly petitioned the Designated Authority (Respondent No.1), appointed under Rule 3 of the Rules, alleging that ferro alloys originating in or exported , inter alia , from China and Russia are being dumped in India. It was requested that the Designated Authority may initiate investigations into the allegations and thereafter impose anti-dumping duties under the Act. 4. As a result of the joint petition, the Designated Authority, acting under Rule 5 of the Rules, decided to initiate anti-dumping investigations concerning the import ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . On 5th January, 2004 Respondent No. 2 (the Central Government) issued a Trade Notice with reference to Section 9A (5) of the Act read with Rule 23 of the Rules. It was stated in the Notice that henceforth the Director General of Anti-Dumping and Allied Duties would consider initiating a sunset review of anti- dumping duty on receiving an appropriate request six months before the date of expiry of the anti-dumping duty. The delay in making a request could be condoned if there was sufficient justification for it. 10. The Petitioner made a request to the Central Government on 18th July, 2005 for a sunset review. The Petitioner also gave its reasons for the request. The prima facie delay on the part of the Petitioners appears to have been condoned by the Central Government since no issue was joined in this regard before us nor was such an issue raised by the Central Government. On the contrary, the Central Government, by a letter dated 17th November, 2005 requested the Petitioner to supply some details, evidence and information in support of its case. 11. By a letter dated 13th December, 2005 the Petitioner gave to the Designated Authority all the further necessary informa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on before us are Section 9A (5) of the Act and Rule 23 of the Rules. They read as follows : "9A. Anti-dumping duty on dumped articles. (1) to (4) xxx xxx xxx (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 review, is of the opinion that the cessation of such duty is likely to lead to continuation or recurrence of dumping and injury, it may, from time to time, extend the period of such imposition for a further period of five years and such further period shall commence from the date of order of such extension: Provided further that where a review initiated before the expiry of the aforesaid period of five years has not come to a conclusion before such expiry, the anti-dumping duty may continue to remain in force pending the outcome of such a review for a further period not exceeding one year. (6) to (8) xxx xxx xxx 23. Review. - (1) The designated authority shall, from time to time, review the need for the continued imposition of the anti-dumping duty and shall, if it is satisfied on the basis of inf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court. In Rishiroop Polymers (P) Ltd. v. Designated Authority and Others , [2006(196) E.L.T. 385(SC)=(2006) 4 SCC 303 the Supreme Court considered the scope of Section 9A(5) of the Act and observed as follows: "Under Section 9-A(5), the said initial imposition of anti-dumping duty is ordinarily contemplated to be continued and remain in effect for a full period of five years, at the end of which it would be subject to Sunset Review, the possible consequence of which would be the extension of the operation of the period of anti-dumping duty for another period of five years. This is subject to the provisions of sub-rule (1) of Rule 23 of the Anti-Dumping Rules, under which the Designated Authority is empowered to review the anti-dumping duty imposed from time to time. Having regard to the scheme of the abovementioned provisions of the statute, once anti-dumping duty has been initially imposed, it would be ordinarily continued for five years unless on a review it is found by the Designated Authority that there has been such a significant change in the facts and circumstances, that it is considered necessary either to withdraw or modify appropriately the anti-dumping dut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given by the learned Additional Solicitor General would mean that even though the concept of a sunset review is recognized, neither the Act nor the Rules provide for a procedure for carrying out a sunset review - a situation which is surely not intended either by Parliament or the Central Government" 23. More importantly, the substantive part of Section 9A (5) clearly mandates that anti-dumping duty shall cease to have effect on the expiry of five years from the date of imposition (unless revoked earlier). The Central Government may, however, extend the period of five years if (in a review) it is of the opinion that "the cessation of such duty is likely to lead to continuation or recurrence of dumping and injury "Two important pre-requisites are postulated by the first proviso, namely ,A review being conducted, and Thereafter the formation of an opinion (by the Central Government) on the basis of that review that the cessation of anti-dumping duty would lead to "continuation or recurrence of dumping and injury" 24. Who is to conduct the review? It could be argued, though that does not arise for consideration, that the Central Government may itself conduct the review suo mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... industry but to avoid repetitive exercises that a review is mandated by the Act and the Rules. 28. The key words in Section 9A(5) of the Act are contained in the first proviso thereto, namely, ?the cessation of such duty is likely to lead to continuation or recurrence of dumping and injury." It is possible that imposition of anti-dumping duty may control the problem, insofar as the domestic industry is concerned, during the five-year period when the anti-dumping duty is exigible, but the problem may recur after the anti-dumping duty is withdrawn. If this is coupled with injury to the domestic industry, then the anti-dumping duty should continue. It is for this reason that a proper assessment, through a review, is necessary to determine whether anti-dumping duty should continue or not. 29. In so far as international obligations are concerned, Article VI Clause 1 of the General Agreement on Tariffs and Trade, 1947 (GATT) recognizes that dumping, "by which products of one country are introduced into the commerce 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 terri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ti-dumping duty shall remain in force only as long as and to the extent necessary to counteract dumping which is causing injury. Article 11.2 deals , inter alia , with a review for the need to continue the imposition of anti-dumping duty, either suo motu by the authorities concerned or on a request by an interested party which submits positive information substantiating the need for a review. Article 11.3 provides that definitive anti-dumping duty shall be terminated on the expiry of five years (subject to a review postulated by Article 11.2) unless the authorities determine on a suo motu review or on the basis of a duly substantiated request of the domestic industry that the expiry of the duty 'would be likely to lead to continuation or recurrence of dumping and injury.' In other words, a review is necessary, by the authorities suo motu or on a request made to the appropriate authorities to determine whether the anti-dumping duty should continue or not and whether withdrawal of the duty would result in recurrence of dumping. 32. Therefore, our conclusion on the first part of the issue before us is that there is a well-recognized and accepted concept of a sunset review; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it must be a duly substantiated request (as mentioned in Article 11.3 of the Implementation Agreement). Indeed, even the counter affidavit highlights the necessity of a duly substantiated request. However, what the counter affidavit seems to suggest is that the request made in the present case was not 'duly substantiated' and that is why it was rejected. Unfortunately, that is not what the Designated Authority states in its rejection letter dated 21 st December, 2005, the relevant extract of which has been quoted by us earlier. The order dated 20th July, 2006 passed by the Central Government is, no doubt, far more elaborate, but that rejects on merits the 'initiation of review' and even that does not seem to have been passed in conformity with the procedures laid down in Rule 23(3) read in conjunction with the other Rules. In other words, a two stage procedure seems to have been introduced by the Respondents 'first, taking a decision whether a sunset review should at all be initiated and Secondly, if such review is decided to be undertaken then deciding on merits if ,the anti-dumping duty requires to be continued. The contention is that the request for a sunset review in the insta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 18.8.2000 in Iso Butile Benzene case [since reported as Vinati Organics Ltd. v. Designated Authority , 2001 (127) ELT 629 (Tri - Delhi)] wherein the CEGAT in the pen ultimate para has observed that the Central Government has to form an opinion as to whether discontinuance of anti dumping duty will create a situation wherein injury to domestic industry may recur or not.? These observations would seem to imply that the finding should be arrived by the designated authority only after due notice to the concerned parties and after providing them due opportunity to be heard and thereafter forming its subjective opinion as to whether a possible injury may becaused or threat of injury in case of discontinuation of anti dumping duty' In the counter affidavit filed by the Respondents, it has been stated that the opinion of the Law Ministry is "still under examination." 39. In this context, we may add only two more reasons that suggest that a sunset review is mandatory. Firstly, the Trade Notice dated 5th January, 2004 lays down a time frame within which a request should be made for continuing with the anti-dumping duty. Secondly, even Article 11.3 of the Implementation ..... X X X X Extracts X X X X X X X X Extracts X X X X
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