TMI Blog2019 (12) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... ined in the aforesaid judgments, precisely is to examine as to whether on removal of anti dumping duty, there is likelihood of recurrence of dumping and injury to the domestic industry. It has also been held that the degree and extent of dumping and consequent injury to the domestic industry during the POI is not of much relevance. The mandate or requirement under Section 9A(5) of CTA,1975 read with Rule 23 of Anti dumping Rules,1995 and Annexure-II (vii) is that the authority has to examine all relevant aspects to ascertain the likelihood of dumping and injury, once the present anti dumping duty is removed. It is obvious that such determination cannot be based on a guess work or on mere assumption presumption, but definitely to rest on the past present facts, influencing the trend of dumping, resultant injury, performance and other relevant economic and other factors relating to the domestic Industries as well as the exporting Industries/countries to analyse and arrive at a probable situation of continuation of dumping and injury in future to the domestic industry. In the present case, admittedly there has been no participation by the exporting industries in the investig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T, DR. D.M. MISRA, MEMBER (JUDICIAL) AND MR. C.L. Mahar, MEMBER (TECHNICAL) For Appellant : Ms.Reena Khair, Ms.Aastha Gupta, Ms.Rita Jha, Ms.Shreya Dhahiya and Mr.Rajesh Sharma Advocates For Respondent : S/Shri Ameet Singh and Amar Anand (Designated Authority), Shri Rakesh Kumar Rai, Authorised Representative, Shri Pramod Kumar MS Pothal, CA. ORDER This appeal is filed by the Domestic Industry(DI), the Appellant herein against the Final Finding Recommendation of the Designated Authority (DA), DGAD, Deptt. of Commerce Industry, New Delhi(File No.7/20/2018-DGAD, dt.11.01.2019,). Background Facts 2. The facts in brief relevant for consideration of the present Appeal are that on an application filed by the Domestic Industry, for imposition of Anti Dumping Duty on the imports of Nonyl Phenol , the subject goods from Chinese Taipei, the subject country, investigation was initiated by the DA on 29.06.2006 and on completion of the investigation, anti-dumping duty on imports of Nonyl Phenol from Chinese Taipei was recommended vide Finding Recommendation dated 25.06.2007. The recommendations were given effect by issuan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atisfied with the evidence placed by the Appellant of likelihood of anti dumping and injury, the DA initiated second sun set review investigation on 12.06.2018 and after conducting necessary investigation, a disclosure statement was issued by the DA on 24.12.2018, where under partial disclosure of essential facts was made. There was no disclosure as to whether any likelihood of continuation or recurrence of dumping and injury was made on the said statement. Consequently, the DA has passed the Final Order on 11.1.2019. 3.1 The learned Advocate assailing the impugned conclusion has submitted that the nature of exercise to be undertaken in the sun set review proceedings is different from the initial exercise which is directed with the objective whether anti dumping duty is warranted or otherwise. She has contended that in original investigation for imposition of anti dumping duty, there must exist dumping, which cause injury to the domestic industry; whereas in the sun set review, the main objective is not to examine for imposition of duty on dumping and injury, but the analysis should be whether there is likelihood of continuation or recurrence of dumping and injury on the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent is to ascertain the likelihood of continuation or recurrence of dumping and injury, in absence of duty. Therefore, analysis of existing anti dumping duty is incorrect and flawed. Though in the present case, the DA has examined the injury parameters, both with and without anti dumping duty, however, the conclusions are based on the current injury with anti dumping duty in force and not on the likely injury to the domestic industry in absence of duty. 3.6 The learned Advocate for the Appellant, rebutting the argument that they had been not able to establish the likelihood of dumping and injury to the domestic industry, submitted that the presence of following factors established likelihood of dumping and injury:- a) Huge surplus production capacity with the exporters. b) Non-availability of alternate markets for additional export, especially China has imposed anti dumping duty on the import from Chinese Taipei. Further, USA and EU have restrictions on the use of Nonyl Phenol. Therefore, India remains largest market for the exporters in Chinese Taipei. c) The demand in India is growing and the price in Indian market is higher than the export pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onomic conditions, the learned Advocate has submitted that it is factually incorrect. The overall profitability is inadequate and indicates injury; there is a clear causal link between the dumped import and decline in profitability of the domestic industry as the landed prices of import were below the cost of production and selling price of the domestic industry since 2016-17 and also during the period under investigation(POI). In any case, the deterioration in the condition of domestic industry is not sine qua non for the extension of duty in sun set review. 3.9 She has further submitted that the authorities have determined the dumping margin in the range of 15% to 25%. It is her contention that if with the duty in force, imports are coming into India at significantly dumping prices, then there is every likelihood that on the expiry of duty, the dumping would further intensify. There can be no doubt regarding the continuation of dumping after the duty has expired. 3.10 She has further submitted that despite the anti dumping duty being in force, the domestic industry has not been able to earn adequate profit as they had been forced to match the landed price of imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e period of investigation, India has been the biggest market for producers in Chinese Taipei since 2012. c) Upto 2011, the biggest market for the producers in the subject country was China. However, since 2007, the subject goods exported from Chinese Taipei and India, attract anti-dumping duty when imported into China. This duty has been continued for a further period of 5 years. d) In 2011, China has added the subject goods to its list of severely restricted toxic substances. Since then, there has been a sharp fall in exports from the subject country to China from 14,559 MT in 2011 to 1,676 MT in 2017. e) Apart from China, there are restrictions on the use of Nonyl Phenol and its derivatives in United States of America, Canada and the European Union. The European Union has introduced further regulations in July, 2017, which has further impacted the market for the subject goods in Europe. f) The exporters in Chinese Taipei are exporting the subject goods to other countries at dumped prices with dumping margin in the range of 15-25%. 3.14 The learned Advocate has submitted that in spite of sufficient evidence on record indicating likeliho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mposition of the anti dumping in China against Chinese Taipei, as a factor for continuation of anti dumping duty in India. On the other hand, the argument was that since the duties have been imposed on exports from Chinese Taipei to China, the Chinese market is not available for additional export from Chinese Taipei, hence it is likely that export in India would increase, in view of huge excess capacity in Chinese Taipei. 3.18 Further, she has submitted that the exporter in Chinese Taipei enjoy lower shipping cost, shows likelihood of increase in export to India post expiry of duty. The low paid cost of freight for exporters means that India would be an attractive market for exporters in Chinese Taipei who will incur less transportation charges for export of the goods to India. The authority failed to appreciate the argument of the Appellant that since Korea is also not an alternate market for absorbing additional export from Chinese Taipei, hence there is possibility of diversion of additional export to India. 3.19 Rebutting the argument of the learned Advocate for the DA that since the protective measures have been in force since 11 years, the market have realig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned Advocate has further submitted that it is well settled position of law that this Tribunal in deciding the appeal filed under Section 9C of Customs Tariff Act,1975 may confirm, modify or annul the order. Therefore, this Tribunal is conferred with all the necessary powers, including remand of the case to render justice. In support, she has referred to the judgment of this Tribunal in the case of Huawei Vs DA 2011 (273) ELT 293 (Tri-Del.) 3.23 The learned Advocate has finally submitted that the findings arrived at by the DA are un-sustainable in law. There is a strong likelihood of continuation or recurrence of the dumping and injury on expiry of anti dumping duty. Therefore, she prays that the anti dumping duty imposed vide Notification No.5/2014-Cus, dt.16.01.2014 be continued for further period of 5 years or in the alternative, when there is likelihood of dumping and injury, the DA be directed to issue final finding recommending imposition of anti dumping duty and Central Government to issue consequent notification imposing anti dumping duty. Submission on behalf of the Designated Authority 5. Per contra, the learned Advocate for the DA, referri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduct and cause injury to the domestic industry. (d) It is submitted that in the present case, even though the investigating authority has considered the present state of domestic industry, it cannot be said that such analysis is inconsistent with Rule 23 of Anti Dumping Rules. The WTO panel in Ukrane-Ammonium Nitrate made distinction between injury on determination in the context of sunset review and considering the state of domestic industry following the imposition of Original duties, held that just because an investigating authority considered the existing status of domestic industries, based, inter alia, on various factors indices and includes showing the performance of that industry, does not mean that it was seeking to establish that domestic industry was suffering material injury during the period of review. (e) It is also submitted that determination of likelihood of dumping or injury must be based on the present facts and circumstances. The WTO panel in US Corrosion-Resistant Steel sunset review, held that Future facts do not exist; the only type of facts that exists and that may be established with certainty and precision relate to the past and to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urrence of injury. In support, they have referred to the judgment of this Tribunal in the case of Indian Spinners Association Vs 2004 (170) ELT 144 (Tri-Del.). (k) It is submitted that the requirement of Section 9A(5) and Rule 23 (1B) is that the anti-dumping duty imposed under Section 9A shall cease to have effect on the expiry of 5 years from the date of its imposition. The first proviso to Section 9 A(5) is an exceptional and enabling provision, permitting deviation from the primary obligation under Section 9A(5) in limited and specified circumstances. 5.1 The learned Advocate in response to the arguments advanced by the Domestic Industry on the likelihood of dumping and injury, reiterating the finding of the D.A recorded in para 69 and 75 of the final findings; further submitted as: (i) That existence of excess capacity in Chinese Taipei has been there for a long period and the domestic industry did not provide any information as to the impact of so called excess capacity factor by the markets over the years particularly after imposition of anti-dumping duty in China. He has further submitted that effect of duty imposed in 2007 on international market ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g. Therefore it cannot be concluded that there would be any likelihood of recurrence of dumping and injury on removal of the duty. Finding: 6. We have carefully considered the submissions advanced on behalf of the Appellant-Domestic Industry, the Designated Authority, the Revenue and perused the records. The limited question involved for determination in the present appeal is: whether the conclusions and the recommendations of the designated authority dated 11.01.2019 against continuation of anti dumping duty on the subject goods Nonyl Phenol from the subject country Chinese Taipei, pursuant to the sunset review, is correct in law or otherwise. 7. Needless to emphasize, the object of anti dumping duty is a remedial measure in relation to domestic industry to obviate the impact of dumping of goods from other export countries less than the normal value, resulting into injury to the domestic industry, which measure is in consonance with the WTO agreement, which is reproduced below: Article VI Antidumping and Countervailing Duties 1. The contracting parties recognize that dumping, by which products of one country are introduce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Rule 23 (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 the need for the continued imposition of any anti-dumping duty, where warranted, on its own initiative or upon request ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation in which the dumping would cause injury must be clearly foreseen and imminent. In making a determination shall consider, inter alia, such factors as: (a) A significant rate of increase of dumped imports into India indicating the likelihood of substantially increased importation; (b) Sufficient freely disposable, or an imminent, substantial increase in, capacity of the exporter indicating the likelihood of substantially increased dumped exports to Indian markets, taking into account the availability of other export markets to absorb any additional exports; (c) Whether imports are entering at prices that will have a significant depressing or suppressing effect on domestic prices, and would likely increase demand for further imports; and (d) Inventories of the article being investigated. Article 11 : Duration and Review of Anti-Dumping Duties and Price Undertakings. 11.1 An anti-dumping duty shall remain in force only as long as and to the extent necessary to counteract dumping which is causing injury. 11.2 The authorities shall review the need for the continued imposition of the duty, where warranted, on their ow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to revoke the duty imposed even before the expiry of five years. In any case, such a duty admittedly ceases to be operative after five years from the date of imposition. At the same time, the Central Government is empowered to initiate review, called sunset review , and to investigate and decide as to whether it is necessary to continue the levy of anti-dumping duty. As in the case of original Notification imposing such a duty, the Central Government is to satisfy itself that if the period of anti-dumping duty is not extended, it is likely to lead to continuation or recurrence of dumping and injury to the domestic industry. The nature of exercise to be undertaken by the Central Government in a sunset review is somewhat different from the initial exercise to determine whether anti-dumping duty is to be levied at all or not. When it comes to review, the focus would be on the issue as to whether withdrawal of anti-dumping duty would lead to continuation or recurrence of dumping as well as injury to the domestic industry. The nature and scope of this exercise is lucidly explained by this Court in Reliance Industries v. Designated Authorities, (2006) 10 SCC 368 = 2006 (202) E.L.T. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing is obviously not so relevant as is the likelihood of continuance or recurrence of dumping. Moreover, during the investigation period, the anti-dumping duty would be in force and hence, the current level of dumping may be non-existent or minimal. The exporters under investigation may also sell at a non-dumped price during this period knowing fully well that a sunset review would be in progress. Hence, the criteria under Section 9A(1) that the anti-dumping duty should not exceed the dumping margin would have no practical application for continuance of the duty under Section 9A(5). There is also no such warrant in law under the said Section 9A(5) to do so. 11. A similar view was also expressed by the Tribunal in the case of P.T. Asima Chemicals vs DA, Ministry of Finance 2015 (328) ELT 417 (Tri-Delhi). It observed : It is evident from the perusal of the above-quoted Section that unlike original investigations, sunset reviews are prospective in nature as they focus on the likelihood of the continuation or recurrence of dumping and injury in the event of revocation of duties. Sunset review entails a likelihood determination in which present levels of dumping a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing duty and that also based on the information received by him. It seems that the sunset review by its very nature, would be limited to see as to whether conditions which existed at the time of imposition of anti-dumping duty have altered to such an extent that there is no longer justification for continued imposition of duty or to ascertain that if such duty is revoked there is imminent danger of the material injury to the domestic industry. The inquiry is limited to the change in the various parameters like the normal value; export price, dumping margin, fixation of non-injurious price and injury to domestic industry. The sunset review is undertaken for the purpose of not for imposition of anti-dumping duty but to see whether the revocation of such anti-dumping duty, dumping would increase and whether the domestic industry will suffer. In the case of Borax Morarji Limited v. Designated Authority - 2007 (215) E.L.T. 33 (Tri. - Del.), CESTAT noted that : Proviso to Section 9A(5) of Customs Tariff Act, 1975 primarily intends to undertake review to examine whether cessation of duty on the expiry of five years is likely to lead to continuance/recurrence of dumping ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and arrive at a probable situation of continuation of dumping and injury in future to the domestic industry. There is no dispute or quarrel on the fact that it should be on the basis of some tangible evidence. Therefore, the procedure prescribed to address the interest of all interested parties for imposition of anti dumping duty are also applicable to the sun set review proceedings even though with different objective. 14. In the present case, admittedly there has been no participation by the exporting industries in the investigation conducted by the DA. The relevant data have been provided by the Domestic Industry and no serious dispute in this regard i.e. authenticity/correctness of the data raised by the DA or interested opposing parties and the data had been accepted without reservation. 15. The finding and conclusion of the designated authority, reproduced below, in nut shell indicates that since the health and condition of the domestic industry is not in bad shape during the relevant period and also as the Appellant could not prove/establish from the existing facts and evidences that there is any likelihood of dumping and injury to the domestic industry tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clined significantly 4 Low or de minimis dumping margins 5 Any likely increase in production capacity or existing unused production capacity in the exporting country 6 Existing inventories of the subject merchandise, or likely increases in inventories 7 Existence of barriers to the importation of the subject merchandise into countries other than the United States 8 Potential for product shifting if production facilities in the foreign country which can be used to produce the subject merchandise, are currently being used to produce other product 9 Conditions of Competition and the Business Cycle, like demand and supply conditions and substitutability 10 Export orientation Canada 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Existence of price undercutting by imports 6 Significant production capacity of exporters 7 Continued dumping or subsidization 8 Current injury 9 Failure of respondents to participate in review 10 Exporter has retained distribution links in Australia 11 Anti dumping actions by other countries 12 Exporter retains an excess capacity that may be directed to Australia European Union 1 Evidence of duty absorption 2 Third country dumping of the same merchandise 3 Current injury or vulnerability of the domestic industry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pared to the base year but increased in the POI. But, the landed value without antidumping duty shows that import prices are less than the selling price. Further, on the aspect of price underselling he has noted that on a comparison of the landed value of the subject goods with non-injurious price, price underselling is positive without adding anti dumping duty and negative after adding anti dumping duty. On Scrutiny of economic parameters of domestic industry by the DA, he has commented that the capacity of domestic industry has remained constant as the production and capacity utilisation increased throughout the injury period; also the market share of domestic industry has increased and the share of import from the subject country in demand has declined. On the current profit loss, cash profits and returns on investment of the domestic industry, it is recorded that the profits have decreased but are positive. 19. On the issue of likelihood of continuous or recurrence of dumping and injury in case of cessation of Anti-dumping duty, the DA observed that there is no evidence to prove that the excess capacities available with the exporters of the subject country would be d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ronts in the performance of the domestic industry, but if the duty is withdrawn, negative effect on production would be immediate and whatever benefit obtained would be wiped out. Further, laying emphasis on the surplus capacity with foreign exporters in absence of alternative market, they have argued that it is sufficient indicator in favour of likelihood of increase in dumping of goods in India on expiry of duty. 21. We find merit in the contention of the Advocate for the Appellant. In our view there is a fundamental fallacy in the approach of the DA in the determination of likelihood of recurrence of dumping and injury post removal of the duty on the subject goods from the subject country. There is no dispute of the fact that evidence of past and present circumstances is relevant and necessary to arrive at a reasonable and logical determination of continuation of same scenario in future warranting continuation of antidumping duty or otherwise. However, it is impractical and also illogical to insist on the positive evidences on future events, for determination of the likelihood of dumping and injury in future on removal of duty. The parameters to reach at the conclusion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cases in different countries. Few examples are reproduced below:- (I)In the sunset review investigation by the Ministry of Business, New Zealand in relation to import of canned peaches from Greece, it was observed :- 4.9.3 Likelihood of injury if anti dumping duties are terminated 282. In relation to the likelihood of a recurrence of material injury should anti dumping duties be removed, the Ministry concludes that: - A significant increase in import volumes from Greece is likely as market conditions are more favourable for any likely importers of canned peaches from Greece than they have been previously. - If imports from Greece were to resume in significant volumes, they would likely significantly undercut HWL s prices. HWL is likely to ... resulting in depression and suppression of HWL s prices. - Consequent upon the likely price and volume effects, if duties are removed and imports resume in significant volumes, HWL s sale volume is likely to remain stable while its revenue is likely to decline significantly. - If HWL ...., it would likely also maintain its market share. However, if duties were removed HWL would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot supplying the full demand on the US market. It is also unlikely that the existing spare capacity would be used to increase exports to third countries other than the Union. Currently, as described in detail in recitals (42)-(63) above, the US export prices to third countries are on average 15% below the average domestic price on the US market and also below the average Union price even where transportation costs from the USA to the Union are taken into account. It is therefore likely that US producers would seek another outlet for their spare capacity. (142) Given that the Union market is the biggest market for biodiesel worldwide and with biodiesel prices that are in parity or slightly above the price level on the US domestic market, the Union market would be very attractive for US producers of biodiesel. (143) It is therefore very likely that US producers would use a large part of their spare capacity to re-enter the Union market should the existing measures be allowed to lapse. As established above (recital (46)), it is likely that the US producers will export biodiesel to the Union at dumped price levels in order to compete with Union producers on the Union ..... X X X X Extracts X X X X X X X X Extracts X X X X
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