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2016 (10) TMI 605 - CESTAT NEW DELHI

2016 (10) TMI 605 - CESTAT NEW DELHI - 2016 (342) E.L.T. 465 (Tri. - Del.) - Levy of Anti Dumping duty - challenging the finding of the DA - caustic soda - chlorine - imported from China P.R. and Korea R. P. - costing of chlorine emerging during the manufacture of caustic soda - whether or not the chlorine emerging during the process of manufacture of subject goods has "Equal Economic Importance"? - is chlorine a joint product of the status equal to caustic soda? - Held that: - when more than on .....

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ortance and the producers do realise significant benefit by sale or partly by captive consumption in making derivatives chemicals. However, it is clear, based on the evidence placed that the integrated downstream manufacture resulting in economic consumption of substantial quantum of chlorine in the DI has not reached a level which will make chlorine a product of "Equal Economic Importance" to the producer. - On perusal of the cost audit report, it is seen that Chlorine has been consistently .....

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Chandra, President, Ms. Archana Wadhwa, Member (Judicial) and Mr. B. Ravichandran, Member (Technical) Ms. Reena Khair, Sh. Rajesh Sharma and Ms. Rita Jha, Advocates for the Appellant in AD Appeal No. 521 of 2003 (Alkali) Sh. Gopal Jain, Sr. Advocate, Sh. Suhail Nathani, Sh. Somnath Shukla, Ms. Kriti Awasthi & Ms. Ashwani Chandrasekharan, Advocates in AD Appeal No. 127 of 2004 (HLL) None for AD Appeal No. 616 of 2003 (NALCO) For Respondent Sh. Amit Singh, Advocate for the D.A. Sh. Govind Dix .....

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uthority (DA) proceeded to investigate the matter by issuing Notification dated 14.05.2002. The Period of Investigation (POI) was 01.04.2001 to 31.03.2002. After following the procedure set out in Customs Tariff (Identification, Assessment and Collection of Duty or Additional Duty on Dumped Articles and for Determination of Injury) Rules, 1995 (AD Rules), the DA recommended AD duty on subject goods originating in or exported from the above said countries vide Final Finding dated 04.08.2003. Earl .....

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sed the imposition of AD duty on the subject goods. All these appeals were taken up together for hearing and decided by the Tribunal vide Order No. 26 - 28/2005-AD (PB) dated 23.12.2015. The Tribunal after examining rival contentions concluded that the principle of taking chlorine as co-product for the purpose of arriving at manufacturing cost as adopted in case of M/s Hanhwa Chemical Corporation should have been adopted by the DA in case of domestic industry also. The Tribunal held during the P .....

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42/2003 dated 23.09.2003 as also the Final Finding of the DA on non injurious price and injury margin. The matter was remanded to the DA for a fresh determination of NIP and injury margin by reasonably and equitably distributing the cost of production between chlorine and caustic soda and to issue Final Finding on that basis, afresh, in accordance with law. 3. Two Civil Appeals were filed against the said order of the Tribunal before the Hon'ble Supreme Court. AMAI contested the Final Order .....

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by the Tribunal. The DA challenged the Tribunal's order for remanding the matter back to the DA. It was urged that chlorine has been correctly considered as by-product and the remand order by the Tribunal for re-determination of NIP was not correct. 4. The Hon'ble Supreme Court after considering both the Civil Appeals, passed order dated 07.01.2016. The Hon'ble Supreme Court set-aside the above mentioned order of the Tribunal and remanded the matter for a fresh decision. The Hon' .....

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ine the same. 5. In line with the directions of the Hon'ble Supreme Court as above, the matter was listed before this Tribunal and the submissions of all involved parties were heard elaborately. 6. Ms. Reena Khair, and Sh. Rajesh Sharma, Id. Counsels appearing on behalf of AMAI submitted that electrolysis of solt solution (brine) results in generation of three products simultaneously, namely caustic soda, chlorine gas and hydrogen. Chlorine gas cannot be stored or transported to long distanc .....

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sed chlorine for the manufacture of downstream products - PVC resin. However, considering the hazardous nature of chlorine and consequent difficulty in marketing the product some of the parties in domestic industry have processed a part of chlorine to produce certain value added products/ derivatives like chloride paraffin, benzyl alcohol etc. None of the parties in domestic industry have the same level of integration as achieved by the producers in subject countries investigated by the DA. In s .....

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on of derivative chemicals of chlorine were manufactured by this unit during POI. M/s Grasim Industries sold 92% of chlorine produced during the POI. M/s DCW Limited, though had a PVC resin plant, have not consumed chlorine for the said purpose. As per records of the company for production of PVC resin the company utilised VCM as a raw material. Though VCM can be made using chlorine the company has not utilised chlorine for this purpose. As such mere existence of PVC resin in the product list of .....

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considered for analysing the injury, the data is submitted only to highlight the treatment of chlorine as by-product by the said industry. 8. Ld. Counsels for AMAI sought to demonstrate by illustrative calculations as to how the treatment of chlorine as a by-product or co product will impact the quantification of injury and thereby AD duty leviable. To sum up it is the case of AMAI that chlorine cannot be considered as a co-product or product of "Equal Economic Importance" for the dom .....

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where chlorine gas is not fully utilised for production of other products or for sale, the company instead allocating joint cost could credit the sales value of the quantities actually utilised. A reference was also made to Cost Accounting Standards, CAS-19 on joint cost. When two or more products produced by the same process, each having a sufficiently high saleable value to merit recognition as a main product, these are to be considered as joint products. 10. Ld. Counsel further submitted that .....

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o account the effect of import of total realisation of both chlorine and caustic soda in the domestic market as both have distinct economic importance. To sum up, it is the case of HLL that chlorine has significant economic importance and NIP of caustic soda has to be determined by treating chlorine as a co-product. 11. NALCO in the written submission explained the process of manufacture of caustic soda. It was contended that two third of chlorine produced is consumed in further production vinyl .....

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le when EOUs are importing the subject goods. There is unreasonable restriction as unequal treatment was given to SEZ, EOU on the one side and NALCO on the other side which is violative of Article 19 as well as Article 14 of the Constitution. NALCO prayed for setting-aside the imposition of AD duty on the subject goods. 12. Ld. Counsel for the DA submitted that the impugned finding by the DA and the consequent customs Notification imposing AD duty has been made strictly in accordance with the pr .....

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osing AD duty on subject goods. 14. We have heard all the sides as above and perused the appeal records. We have also carefully examined the written submissions made by the parties. These appeals are considered afresh in line with the direction of the Hon'ble Supreme Court order dated 07.01.2016. The Hon'ble Supreme Court directed for a fresh consideration of the status of chlorine emerging during the manufacture of caustic soda. This is relevant to arrive at correct methods of costing h .....

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economic importance arises from process, the cost up to the point of separation of products shall be apportioned to joint products on reasonable and equitable basis and shall be applied consistently. The basis on which such joint costs are apportioned to different products arising from the process shall be indicated in the cost records" 15. We note that the term "Equal Economic Importance" has not been defined. The plain meaning of the same is that when more than one product emer .....

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as by-products. However, if all products have equal importance they are regarded as joint products. Keeping this in mind we examine the various submissions made by parties as above. Chlorine and caustic soda are two of the most important inorganic chemicals having industrial use. They are together normally referred to as chlor -alkali. Chorine is largely used in the synthesis of chlorinated organic compound. It is difficult to store and transport economically and hence it is generally produced n .....

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rine is of economic importance and the producers do realise significant benefit by sale or partly by captive consumption in making derivatives chemicals. However, it is clear, based on the evidence placed before us that the integrated downstream manufacture resulting in economic consumption of substantial quantum of chlorine in the DI has not reached a level which will make chlorine a product of "Equal Economic Importance" to the producer. This is mainly due to constraint in full usage .....

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