TMI Blog2019 (6) TMI 864X X X X Extracts X X X X X X X X Extracts X X X X ..... review and investigation was April 2015 to March 2016. A perusal of the section 9A of the Act indicates if any article is exported from any country to India at less than its normal value, then upon the importation of such article into India the Central Government can impose an anti-dumping duty not exceeding the margin of dumping. Margin of dumping has been defined to mean the difference between the export price and the normal value. The export price means the price of the article exported from the exporting country. Normal value has been defined to mean the comparable prices for the like article when destined for consumption in the exporting country. Determination of non-injurious price (NIP) - Principles of natural justice - HELD THAT:- The principles of natural justice not only require the designated authority to grant an opportunity to the party to show cause but the order passed by the designated authority should also give reasons for arriving at conclusions and any violation of these two facets can vitiate the order. In the present case, neither was any information supplied to the Appellant in the disclosure statement nor do the final findings give any reason. The f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the behest of the Appellant and the designated authority notified the final findings recommending change in the anti-dumping duty by notification dated 15 October 2014. The anti-dumping duty that was to be in force upto 16 August 2016 was modified by the said notification dated 15 October 2014. It needs to be noted that the validity of the anti-dumping duty on Sodium Nitrite was also extended by the Central Government upto 16 August 2017 by notification dated 8 August 2016. 3. The Appellant, before the expiry of the aforesaid period, filed an application before the designated authority for initiating another sunset review for extension of anti-dumping duty on imports of Sodium Nitrite. The designated authority on finding that there was sufficient evidence submitted by the Appellant to justify initiation of sunset review investigation, issued a public notice through notification dated 27 July 2016 to examine whether the expiry of the duty on the import of Sodium Nitrite was likely to lead to continuation or recurrence of dumping and injury to domestic industry. 4. The period of investigation for the purpose of review investigation covered the period from A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levant comments on which emphasis has been laid by learned counsel for the Appellant during the course of hearing, relate to the NIP that was determined. These comments are contained in paragraphs 7, 8, 9, 10 and 11. The relevant portions are reproduced below: 7. The non-injurious price determined is too low. The Designated Authority has reduced the non-injurious price by excluding a number of elements of expenses. Petitioner has following submissions with regard to determination of the non-injurious price. a) --- --- --- --- b) The very basic objective of Annexure III is to determine the amount of anti-dumping duty that would remove injury to the domestic industry. The principles laid down under Annexure III are the guiding doctrines to the authority for determination of NIP of the like domestic product. The objective of determining NIP is required to be considered while interpreting Annexure III. The text of Annexure III is required to be interpreted as given and no other practices can be applied. c) The methodology for determination of NIP has been substantially changed from the one adopted by the petitioner, which is clear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat more than 90% production is coming from SNI/SNA, other products are only 5-6% and MAHCL is only 1-2% of production volume. g. MAHCL is a specialized chemical which is manufactured for a particular product, for 100% export purpose and more than 95% of its quantity is sold to only one customer. Thus, DNL is having only two customers and second customer is taking less than 5% of total production. Further, MAHCL is made against the order of this customer and the company has to keep its plant shut in case no order is received from these two customers. h. In sodium Nitrite / Sodium Nitrate, the company is handling more than 100 customers and dealers. Thus, production and sale of these products involves significantly higher degree of efforts as compared to MAHCL. i. MAHCL business is fixed and the market demand is also limited and therefore DNL produces a very small quantity to cater to the particular customers. The company is doing MAHCL business for 6-7 years. MAHCL business is generally long term contract basis and, therefore, involves hardly any marketing efforts. j. All of DNL s resources including manufacturing, man power, adm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 74.38 52,219 72.91 20,789.41 54.40 Sodium Nitrate 13,468 18.08 13,644 19.05 4,604.19 12.05 MAHCL 1,420 1.91 1,410 1.97 12,101.75 31.67 NSA / KNA 4,192 5.63 4,347 6.07 721.83 1.89 p. The maximum resources are deployed by the company for SNI / SNA production. q. Considering above facts, DNL is allocating all expenses on the basis of production quantity. r. Post ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are different, it does not follow that the overhead expenses involved for the two products should also differ in the same ratio. The petitioner finds that the domestic industry is being penalized because the cost accounting principles provide for a number of methodologies. (emphasis supplied) 9. None of the producers / exporters / importers / other interested persons made any submissions to the disclosure statement made by the designated authority. 10. The post disclosure comments / submissions made by the domestic industry were then examined by the designated authority in paragraph 93 of the final findings and the same are reproduced below: 93. The Authority notes that post-disclosure comments / submission made by the domestic industry are mostly reiterations of earlier submissions, which have already been examined suitably and adequately and properly addressed in the disclosure statement or relevant paras of the present finding. The Authority further considers as follows with regard to fresh issues raised by the domestic industry: i) As regards the submissions of the domestic industry concerning determinatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Item Description of Goods Country of origin Country of Export Producer Exporter Duty Amount Unit of Measure Currency 1 2 3 4 5 6 7 8 9 10 1 2834.1010 Sodium Nitrite China PR China PR Any Any 72.95 MT US$ 2 -Do- -Do- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dit Reports which were prepared by an external Cost Auditor in terms of the Cost Accounting Standards and which were duly submitted to the Central Government in terms of Section 148 of The Companies Act 2013; and vi) The order passed by the designated authority is liable to be set aside as no reasons have been indicated in the order for not accepting the methodology adopted by the domestic industry for apportionment of common expenses. 14. Shri Amit Singh, learned counsel appearing for the designated authority has made the following submissions: i) The final findings have been recorded by the designated authority for determination of NIP in accordance with the principles set out in Annexure III to the 1995 Rules; ii) The methodology prescribed in Annexure III is in conformity with the guidelines prescribed by the Cost Accounting Institution through Cost Accounting Standards and in particular to Cost Accounting Standard 3 and Cost Accounting Standard 11; iii) The Appellant manufactures different products from different plants and machines installed in the same campus of the manufacturing unit at Nandeswari Division ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e; (b) export price , in relation to an article, means the price of the article exported from the exporting country or territory and in cases where there is no export price or where the export price is unreliable because of association or a compensatory arrangement between the exporter and the importer or a third party, the export price may be constructed on the basis of the price at which the imported articles are first resold to an independent buyer or if the article is not resold to an independent buyer, or not resold in the condition as imported, on such reasonable basis as may be determined in accordance with the rules made under sub-section (6); (c) normal value , in relation to an article, means - (i) the comparable price , in the ordinary course of trade, for the like article when destined for consumption in the exporting country or territory as determined in accordance with the rules made under sub-section (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 v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India at a price less than its normal value and in such circumstances the designated authority shall determine the normal value, export price and the margin of dumping taking into account, inter alia, the principles laid down in Annexure I to these rules. 22. Rule 11 of the 1995 Rules deals with determination of injury and is reproduced below: 11. Determination of injury. (1) In the case of imports from specified countries, the designated authority shall record a further finding that import of such article into India causes or threatens material injury to any established industry in India or materially retards the establishment of any industry in India. (2) The designated authority shall determine the injury to domestic industry, threat of injury to domestic industry, material retardation to establishment of domestic industry and a causal link between dumped imports and injury, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mstances extend further the aforesaid period of one year by six months: Provided 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 after considering the principles laid down in the Annexure III to rules. --- --- --- --- (4) The designated authority shall issue a public notice recording its final findings. (emphasis supplied) 25. Rule 23 deals with Review and is as follows: 23. Review . (1) Any anti-dumping duty imposed under the provision of section 9A of the Act, shall remain in force, so long as and to the extent necessary, to counteract dumping, which is causing injury. (1A) The designated authority shall review ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... non-injurious price is required to be determined by considering the information or data relating to cost of production for the period of investigation in respect of the producers constituting domestic industry. Detailed analysis or examination and reconciliation of the financial and cost records maintained by the constituents of the domestic industry are to be carried out for this purpose. (4) The following elements of cost of production are required to be examined for working out the non-injurious price, namely : - --- --- --- --- (vi) The expenses to the extent identified to the product are to be directly allocated and common expenses or overheads classified under factory, administrative and selling overheads may be apportioned on reasonable and scientific basis such as machine hours, vessel occupancy hours, direct labour hours, production quantity, sales value, etc., as applied consistently by domestic producers and the reasonableness and justification of various expenses claimed for the period of investigation may be examined and scrutinised by comparing with the corresponding amounts in the immediate preceding year. --- - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to handle more than 100 customers and dealers. Thus, the production and sale of these two products involves a significantly higher degree of effort as compared to MAHCL. The sale price of MAHCL of sodium nitrite and sodium nitrate is also not comparable since sodium nitrite was sold at ₹ 38.72 per kg while MAHCL was sold at ₹ 852.26 per kg during the period of investigation. Thus, during the period of one year, the sale in terms of value is 31.67% from MAHCL and 68.33% from the remaining products, while on volume basis, 90% of sales is for sodium nitrate / sodium nitrite and only 1-2% sales is for MAHCL. The Appellants have also placed a table showing the volume and value details for the period under investigation. This chart has been reproduced in paragraph eight of this order dealing with the comments filed by the Appellant to the disclosure statement. The employees involved for production of sodium nitrite and sodium nitrate are about 265, while that for production of MAHCL is about 20. It is for this reason that the Appellant had apportioned the common expenses on the basis of production quantity. The aforesaid information provided by the Appellant was also certif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Government its final finding on factors enumerated in (a) and (b) of sub-rule (1) of Rule 17. Sub-rule (b)provides that the designated authority shall recommend the amount of duty which, if levied, would remove the injury to the domestic industry after considering the principles laid down in Annexure III to the Rules. It was therefore, imperative for the designated authority, in its final findings, to have determined the amount of duty that would remove the injury in accordance with the principles contained in Annexure III to the 1995 Rules. Clause (2) of Annexure III provides that for the purpose of making the recommendations under Rule 17(i), the designated authority shall determine the NIP of the like domestic product taking into account the principles specified in the subsequent clauses. Clause 4(vi) gives the various elements of cost of production that are required to be examined for working out the NIP. In regard to common expenses or overheads classified under factory, administrative and selling overheads it has been provided that they may be apportioned on a reasonable and scientific basis. Both production quantity and sales value have been mentioned for this purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ropriate to examine the order on the basis of reasons not contained in the final findings recorded by designated authority. The reasons contained in the order can only be seen, but as noticed above, no reasons are contained in final findings as to why the basis for determining the common expenses pointed out by the Appellant have not been considered and another basis has been taken into consideration. 36. The determination of a correct NIP went to the root of the matter because the amount of duty to be levied would depend upon it. In this connection, it would be appropriate to refer to the decision of the Supreme Court in Reliance Industries Ltd. Vs. Designated Authority and others reported in (2006) 10 SCC 368 . The Supreme Court observed as follows: 33. The purpose of imposition of duty is both to redress injury and to prevent material retardation of the establishment or growth of that industry (vide S. 9B(1) (b)(ii), rules 11, 17(a)(ii) and Annexure II). In the present case by fixing an NIP based upon specific advantages in the matter of electricity that the Appellant company processed, and permitting dumping of the PTA into India, the DA has ensure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... si-judicial. 40. In the present case, the NIP computed by the DA was much lower than that computed by the Appellant, and the reasons for such variance and detailed calculations were not disclosed by the DA to the Appellant. No good reasons were given for reducing the cost price of electricity supplied by the Appellant produced in its captive power plant. This was clearly illegal. ... ... ... 45. In our opinion, excessive and unwarranted claim of confidentiality defeats the right to appeal. In the absence of knowledge of the consequences, grounds, reasoning and methodology by which the DA has arrived at its decision and made its recommendation, the parties to the proceedings cannot effectively exercise their right to appeal either before the Tribunal or this Court. This is contrary to the view taken by the Constitution Bench of this Court in S.N. Mukherjee's case. (emphasis supplied) 39. In Asstt. Commr. Commercial Tax Department Vs. Shukla Brothers reported in 2010 (254) ELT 6 (SC) , the Supreme Court, in regard to determination of NIP, again observed that the proceedings before the designated authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion will be able to justify their existence and carry credibility with the people by inspiring confidence in the adjudicatory process. The rule requiring reasons to be given in support of an order is, like the principle of audi alteram partem, a basic principle of natural justice which must inform every quasi-judicial process and this rule must be observed in its proper spirit and mere pretence of compliance with it would not satisfy the requirement of law. ... (emphasis supplied) 40. In Kranti Associates Pvt. Ltd. Vs. Masood Ahmed Khan reported in 2011 (273) ELT 345 (SC), the Supreme Court after referring to the earlier decisions that hold that a quasi judicial authority must record reasons in support of its conclusion because reasons assure that the discretion has been exercised by the decision maker on relevant grounds and by disregarding irrelevant considerations, also observed that recording of reasons operates as a valid restraint on any possible arbitrary exercise of quasi judicial power. In paragraph 51 of the judgement, the Supreme Court summarised the position of law and the said paragraph is reproduced below: 51. Summarizing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... abuse of judicial powers. Transparency in decision making not only makes the judges and decision makers less prone to errors but also makes them subject to broader scrutiny. (See David Shapiro in Defence of Judicial Candor (1987) 100 Harward Law Review 731-737). (n) Since the requirement to record reasons emanates from the broad doctrine of fairness in decision making, the said requirement is now virtually a component of human rights and was considered part of Strasbourg Jurisprudence. See (1994) 19 EHRR 553, at 562 para 29 and Anya v. University of Oxford, 2001 EWCA Civ 405, wherein the Court referred to Article 6 of European Convention of Human Rights which requires, adequate and intelligent reasons must be given for judicial decisions . (o) In all common law jurisdictions judgments play a vital role in setting up precedents for the future. Therefore, for development of law, requirement of giving reasons for the decision is of the essence and is virtually a part of Due Process . 41. Thus, it is clear from the aforesaid decisions of the Supreme Court that the principles of natural justice not only require the designated authority to grant a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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