TMI Blog2019 (12) TMI 1069X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of a licence to any person convicted of an offence or to a person not of age or to a person of unsound mind. Thus, the consideration for issuance of a license has no connection with the domestic requirement or import of the article - Section 26 provides that the licence shall be valid through the period specified therein, but not exceeding one year from the date of its issuance or renewal. The restriction is, therefore, on the period and not on the quantity. There is no restriction on the quantity or value of import nor does it contain any mechanism for fixing of a selling price in the domestic market. A user has to obtain a license whether the article is imported or procured from domestic market. The contention of the Appellant that there is a distortion because of the regulations in the domestic market price as a result of which normal value has not been correctly arrived at, cannot, therefore, be accepted. Clause (2) of Annexure 1 of the 1995 Rule provides that sales of the product in the domestic market of the exporting country may be treated as not being in the ordinary course of trade by reason of price and the Designated Authority may disregard these sales in determ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Domestic Industry, did not call upon the Domestic Industry to make any further disclosure. It has been found in the preceding paragraphs of this order that the claim of confidentiality made by the Domestic Industry was justified - The finding of the Designated Authority in regard to confidentiality , therefore, does not suffer from any infirmity so as to call for any interference in this appeal. Appeal dismissed - decided against appellant. - ANTI DUMPING APPEAL NO. 50572 OF 2019, 50573 OF 2019 - FINAL ORDER NO. 51668-51669/2019 - Dated:- 20-12-2019 - HON BLE MR. JUSTICE DILIP GUPTA, PRESIDENT, HON BLE DR. D.M. MISRA, MEMBER (JUDICIAL) AND HON BLE MR. C.L. MAHAR, MEMBER (TECHNICAL) Mr. Naresh Thacker, Mr. Sanjay Notani And Mr. Dhruv Khurana, Advocates for the Appellant Ms. Reena Khair, Shri Rajesh Sharma, Ms. Rita Jha, Ms. Neha Pandey And Ms. Shreya Dahiya, Advocates, for the Respondent Mr. Ameet Singh And Mr. Arun, Advocates for Designated Authority Shri Rakesh Kumar, Authorised Representative for the Revenue ORDER JUSTICE DILIP GUPTA : The levy of definitive anti dumping duty on the import of Non-Plasticized Industrial Grade Nitroce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted Authority held an oral hearing on 06 June, 2018. On behalf of the Domestic Industry, a communication dated 07 August, 2018 was submitted before the Designated Authority pointing out that the responding exporters had resorted to excessive confidentiality claim which had prevented the Domestic Industry from offering comments. It was also stated that none of the exporters had even given an indexed version of their performance indicators, whereas the Domestic Industry had provided indexed figures of each parameter showing the trend of injury parameters. A request was, therefore, made to direct the exporters to sufficiently disclose information in the public version filed by them. All the interested parties filed their Written Submissions post public hearing held on 06 August, 2018. Pursuant to the communication dated 07 August, 2018 sent on behalf of the Domestic Industry, the Designated Authority sent an email to the exporters mentioning therein that at the time of oral hearing an issue was raised by the Domestic Industry regarding alleged excessive claims of confidentiality and that the Domestic Industry had submitted a letter, of which a copy was attached with the email. The exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d agitate these issues through a representation to the Central Government, so as to seek its intervention and appropriate action. Learned Counsel appearing for the Designated Authority stated that a copy of the verification report would be furnished to the Petitioner. In such circumstances, the High Court observed that a copy of the verification report shall be furnished to the Writ Petitioners within a week and it would be open to the Petitioners to represent to the Central Government in a suitable manner for appropriate directions, in accordance with law. Learned Senior Counsel for the Petitioner, in view of the aforesaid submissions, sought liberty to withdraw the Petitions. The Writ Petitions were, accordingly, dismissed as withdrawn on 6 February, 2019. 7. After the dismissal of the Writ Petitions, the Central Government issued the Notification dated 07 February, 2019 exercising powers conferred by sub-sections (1) and (5) of section 9A of the Customs Tariff Act, 1975 Tariff Act imposing anti dumping duty on Nitrocellulose originating in and exported from Brazil, Indonesia and Thailand for a period of five years. 8. The Designated Authority also provided a copy of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of normal value when site verification took place from 10-12 September, 2018; (iv) The verification report that was submitted was not shared with the Appellants by the Designated Authority; (v) In the final findings, the Designated Authority failed to consider the submissions advanced on behalf of the Appellants regarding normal value and the Designated Authority merely reproduced what was stated in the disclosure statement, even though comments had been submitted in response to the disclosure statement; (vi) The final findings have not appreciated the scope of the licensing regulations and it has been held that mere licensing procedure would not mean that domestic selling prices cannot be in the ordinary course of trade. In this connection, reliance has been placed on the decision of the Appellate Body in US Anti Dumping measures on certain hot-rolled steel products from Japan; (vii) In terms of the order passed by the Delhi High Court on 06 February, 2019 in the two Writ Petitions filed by the Appellants, the Central Government should have waited for the Appellants to file a representation to the Central Government so that the Central Government could take a de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions to the Domestic Industry; (vi) The Central Government in the communication dated 01 March, 2019, has not appreciated the contention of the Appellants and has merely stated that the issue of confidentiality had been dealt with by the Designated Authority in paragraphs 22 and 23 of the final findings; and (vii) The Designated Authority has unevenly treated the Appellants and the Domestic Industry. 12. Ms. Reena Khair and Shri Rajesh Sharma, learned Counsel appearing for the Domestic Industry have, however, supported the impugned notification and the final findings. Learned Counsel submitted that the Designated Authority has examined the contentions raised by the Appellants both on normal value and confidentiality . SUBMISSIONS ON NORMAL VALUE (i) The submission of the Appellants that since imports are prevented from entering the Thailand market freely, the limited supply has led to distortion in the domestic market price of the subject goods in Thailand and so the normal value should not be fixed based on sale price in the domestic market, but on exports to other countries is not correct. In this connection, learned Counsel submitted that a license has t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the ordinary course of trade by reason of price. The contention of the foreign exporter that the sales in the domestic market are not in the ordinary course of trade is fallacious since the regulations have no bearing on the terms and conditions of sales in the domestic Thailand market; (vi) The verification process is only for verification of the information and is not a proper forum or stage for making any submissions. The final findings adequately deal with this issue; (vii) After the issuance of the final findings on 31 December, 2018, the Appellants filed Writ Petitions in the Delhi High Court contending that the verification report did not form part of the record of the Designated Authority. The original records were produced before the High Court by the Designated Authority and the High Court found that the records included the verification report. The Designated Authority, however, agreed to provide the verification report to the foreign exporters within a period of one week and only liberty was given to the Writ Petitioners to represent to the Central Government for appropriate directions in accordance with law. No directions were issued to the Central Government ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he judgment rendered in the two Writ Petitions filed by the Appellants; (iii) The disclosure statement took into account all the information verified during verification conducted at the premises of the Appellants. All the figures reported by the exporters were adopted in entirety without any modification. (iv) The claim regarding confidentiality has been duly considered by the Designated Authority and it is incorrect to assert that the Appellants have been discriminated in any manner; and (v) The Designated Authority has correctly determined the normal value since the Designated Authority had to first examine whether the domestic sales of the subject goods were representative and viable for permitting the determination of normal value. Both the Appellants had provided domestic sales price of the subject goods. During the period of investigation, Nitro Chemicals sold 4193 MT of the subject goods in the domestic market and all the sales were subjected to ordinary course of trade test. It was found that 99.96% of the sales in the domestic market were profitable. 14. Shri Rakesh Kumar, learned Authorised Representative appearing on behalf of the Central Government has su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring were requested to file written submissions as also rejoinder thereafter. The period of investigation was from April, 2016 to September, 2017. The examination of trends in the context of injury analysis covered the period from April, 2013 to March 2014, April, 2014 to March, 2015 April, 2015 to March, 2016 and the period of investigation. 17. It has been stated in the final findings that information provided by the interested parties on confidential basis was examined with regard to the sufficiency of the confidentiality claim and on being satisfied, the Authority accepted the confidentiality claims wherever warranted and such information has been considered as confidential and not disclosed to other interested parties. Wherever possible, parties providing information on a confidential basis were directed to provide sufficient non confidential version of the information filed on a confidential basis. The exporters were asked to file a revised non-confidential version of the exporter questionnaire response and provide all necessary and relevant information. A revised non-confidential version of the questionnaire was filed by the responding exporters. 18. A disclosure state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estic 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 to its price in the country of origin. 24. Annexure I to the 1995 Rules deals with the principles governing th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received under sub-rule (1) of rule 5, or any other information provided to the designated authority on a confidential basis by any party in the course of investigation, shall, upon the designated authority being satisfied as to its confidentiality, be treated as such by it and no such information shall be disclosed to any other party without specific authorization of the party providing such information. (2) The designated authority may require the parties providing information on confidential basis to furnish non-confidential summary thereof and if, in the opinion of a party providing such information, such information is not susceptible of summary, such party may submit to the designated authority a statement of reasons why summarisation is not possible. (3) Notwithstanding anything contained in sub-rule (2), if the designated authority is satisfied that the request for confidentiality is not warranted or the supplier of the information is either unwilling to make the information public or to authorize its disclosure in a generalized or summary form, it may disregard such information. 27. Rule 10 deals with determination of normal value, export price and margin of dum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of the Act and the Rules that the two submissions advanced by the learned Counsel for the Appellants have to be considered. SUBMISSIONS ON NORMAL VALUE 31. The contention of the learned Senior Counsel for the Appellants is that the price of the product under consideration in the domestic market is distorted because of the strict licensing requirements imposed by the Thailand Government. Normal value should, therefore, have been calculated on the basis of the sales to third countries or the cost of production. 32. To appreciate this contention, the definition of normal value has to be examined. As noticed above, normal value in relation to an article means the comparable price, in the ordinary course of trade, for the article when destined for consumption in the exporting country. It is only when there are no sales of the article, in the ordinary course of trade, in the domestic market of the exporting country or when because of the particular market situation or low volume of the sales in the domestic market of the exporting country that the normal value shall be either a comparable representative price of the like article when exported from the exporting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ological substances, radioactive substance or devices or instruments which may be used in combat or warfare to be arms. 38. Sections 15 and 17 of the Arms Act provides as follows: Section 15 - No person shall order, import, produce or possess arms without license granted by the Permanent Secretary for Defence. In granting of license under paragraph one, conditions may be imposed therewith. The application for and the grant of license shall be in accordance with the rules, procedure and conditions as prescribed in the Ministerial Regulation. Section 17 - Licenses are, viz.: (1) order license; (2) import license; (3) produce license; (4) possession license. The order license shall extend to importer of arms under the order license. 39. Section 26 of the Arms Act provides as follows : Section 26 - A license issued under this Act shall be valid through the period specified therein, but not exceeding one year as from the date of its issuance or renewal. A licensee who desires to renew license shall apply for the renewal thereof prior to the expiry date specified therein. Upon submission of the application, such licensee may continue his or her business until t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Confidential Page 43 of 46 kept by the producers, maintained as per GAAP in Thailand, and the same is found to be appropriate for evaluating whether the sales in domestic market have been made in the ordinary course of trade. In any case, the exporter themselves have admitted that the Thai Army is regulating only the storage and usage of the product concern and the suppliers are required to obtain license before supplying the product in Thai market. Licensing procedure is common in most of the countries where products is of or can be used for explosives or any other hazardous substance. Mere licensing procedure does not mean that the domestic selling prices cannot be in the ordinary course of trade. 43. It has, however, been submitted on behalf of the Appellant that the sales in the domestic market are not in the ordinary course of trade because of the restrictions. 44. This contention cannot also be accepted. Clause (2) of Annexure 1 of the 1995 Rule provides that sales of the product in the domestic market of the exporting country may be treated as not being in the ordinary course of trade by reason of price and the Designated Authority may disregard these sales in deter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rse of trade test. It was found 99.96% of the sales in the domestic market were profitable. Accordingly, the normal value for the above producers/exporters work out on the basis of total sale is *** US$ per MT. 46. The alternative methods for determination of the normal value as provided for in Clause (ii) of Explanation to Section 9A(1) of the Tariff Act can be resorted to only when there are no sales of the article in the ordinary course of trade in the domestic market. Thus, when substantial sales have been made by the exporter in the domestic market and in the absence of any good reason for reduction of the domestic sale price, the normal value would be the comparable price, in the ordinary course of trade, for the like article when destined for consumption in the exporting country. 47. Learned Senior Counsel for the Appellants has placed reliance upon the decision of Appellate Body in United States Anti-Dumping Measures on Certain Hot-Rolled Steel Products From Japan. In particular, reliance has been placed on paragraph 145, which is reproduced below : 145. In our view, the duties of investigating authorities, under Article 2.1 of the Anti-Dumping Agreement, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... located, in these ways, within a single economic enterprise. 142. We note that determining whether a sales price is higher or lower than the ordinary course price is not simply a question of comparing prices. Price is merely one of the terms and conditions of a transaction. To determine whether the price is high or low, the price must be assessed in light of the other terms and conditions of the transaction. Thus, the volume of the sales transaction will affect whether a price is high or low. Or, the seller may undertake additional liability or responsibilities in some transactions, for instance for transport or insurance. These, and a number of other factors, may be expected to affect an assessment of the price. 49. In the present case, the contention of the Appellants that there was a distortion in the domestic selling price because of the licensing regulations has not been accepted. The Designated Authority had examined the volume of the sales transaction and found as a fact that the Nitro Chemicals sells the subject goods to the customers directly in the Domestic Market and the adjustment of expenses was made towards the determination of the domestic sales price. It al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the time of inspection should have been taken into consideration in the verification report. 53. It has also been submitted by learned Senior Counsel appearing for the Appellants that the impugned Notification issued by the Central Government is not only in violation of the principles of natural justice but is also against the spirit of the order passed by the Delhi High Court on 06 February, 2019 in the two Writ Petitions filed by the Appellants. In this connection, it has been submitted that the High Court had directed the Respondent to furnish a copy of the verification report within a week to the learned Counsel appearing for the Writ Petitioners and it would be open to the Petitioners to represent to the Central Government in a suitable manner for appropriate directions in accordance with law, but the impugned Notification was issued by the Central Government immediately on the next day on 07 February, 2019 without even giving an opportunity to the Appellants to make a representation to the Central Government after a copy of the verification report was furnished to it. 54. Learned Counsel appearing for the Central Government has, however, submitted that apart from the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deal with the submissions, which submissions the Petitioners would agitate through a representation to the Central Government for seeking its intervention and appropriate action. The High Court, therefore, directed the Respondents to furnish a copy of the verification report within a week to the learned Counsel for the Petitioners and left it open to the Petitioners to represent to the Central Government in a suitable manner for appropriate directions in accordance with law. The learned Senior Counsel for the Petitioners, sought liberty to withdraw the Writ Petitions, in the light of the submissions made. The Writ Petitions were ultimately dismissed as withdrawn. 58. A copy of the order dated 06 February, 2019 passed by the Delhi High Court in Writ Petition (C) No. 312/2019 and Writ Petition (C) No. 313/2019 filed by the two Appellants is reproduced below : Further to the previous order, the records considered by the Designated Authority (DA) were produced in Court; the records include the Verification Report carried out by the DA. The petitioners had complained that this verification was not part of the record. The exporter s Verification Report is part of the record al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y to deal with this submission, which would be agitated by filing a representation to the Central Government. It is for this reason that the High Court left it open to the Petitioners to file a representation to the Central Government. A verification report was furnished to the Writ Petitioners within a week and the Writ Petitioners had also filed a representation dated 15 February, 2019 before the Designated Authority as also to the Joint Secretary in the Government of India. These representations were received on 18 February, 2019. The Central Government issued an Office Memorandum dated 20 February, 2019 requiring the Designated Authority to take appropriate action. The comments submitted by the Petitioners were examined by the Central Government and a communication dated 01 March, 2019 was sent to the Appellants informing them that there was no change in the final findings issued on 31 December, 2018. The communication is reproduced below : Your comments on the verification report are examined and observations are as under : 1. In the Verification Report, an inadvertent error had crept in the Table indicating the quantity and invoice value for invoice number SIE1600450, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he excessive confidentiality claimed by the Domestic Industry and also the fact that it had even omitted the formats A to L (barring G H) completely, which it was required to submit, but this issue raised by the Appellants has not been addressed by the Designated Authority. It has been submitted that the information claimed as confidential by the Domestic Industry was critical for the determination of injury and in the absence of the said information, a meaningful analysis could not be made by the interested parties. To support this connection, reliance has been placed on the decisions of the Supreme Court in Reliance Industries Ltd. vs Designated Authority and Others 2006 (202)ELT 23 (SC) and Union of India and Another Vs Meghmani Organics Limited and Others 2016 (34) ELT 449 (SC) and the two Trade Notices dated 09 December, 2013 and 01 February, 2018. The submission in short is that the issue of confidentiality has not been properly appreciated either by the Designated Authority or by the Central Government. 66. Learned Counsel appearing for the Domestic Industry has, however, refuted the submissions advanced by learned Senior Counsel for the Appellants. It has been subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch information is not susceptible of summary, such party may submit to the Designated Authority a statement of reasons why summarization is not possible. Sub-rule (3) of Rule 7 provides that notwithstanding anything contained in sub-rule (2) of Rule 7, if the Designated Authority is satisfied that the request for confidentiality is not warranted or the supplier of the information is either unwilling to make the information public or to authorize its disclosure in a generalized or summary form, it may disregard such information. 69. The issue relating to confidentiality was noted by the Designated Authority in paragraphs 20, 21, 22 and 23 of the final findings. After reproducing Rule 7 of the 1995 Rules in paragraph 22 of the findings, the Designated Authority made the following observations in paragraph 23 : 23. Submissions made by the interested parties with regard to confidentiality and considered relevant by the Authority are examined and addressed accordingly. Information provided by the interested parties on confidential basis was examined with regard to the sufficiency of the confidentiality claim. The Authority notes that any information which is available in the publ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned Senior Counsel for the Appellants. The formats said to have been omitted contain the following information : Format A - Statement of Consumption Raw materials, packing materials and Utilities Format B - Statement of Raw Material Consumption Format C - Allocation and Apportionment of Expenses Format D - Statement of Consumption of Utilities Format E - Statement of Sales Realizations Format I - PCN wise summarized statement of expenses Format J - Related party transactions Format K - Calculation of Capital Employed Format L - Calculation of claimed NIP 76. The Domestic Industry asserts that complete information in con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ality is restricted to the party who has supplied the information, and that party has also to satisfy the DA that the matter is really confidential. Nowhere in the rule has it been provided that the DA has the right to claim confidentiality, particularly regarding information which pertains to the party which has supplied the same. In the present case, the DA failed to provide the detailed costing information to the appellant on the basis of which it computed NIP, even though the appellant was the sole producer of the product under consideration, in the country. In our opinion this was clearly illegal, and not contemplated by Rule 7. 80. The aforesaid decision in Reliance Industries deals with a case where the Designated Authority had claimed confidentiality. The Court held that the Rules do not provide that the Designated Authority has a right to claim confidentiality, particularly regarding information which pertains to a party which has supplied the information. 81. The decision of the Supreme Court in Reliance Industries has placed reliance upon the decision of the Supreme Court in Sterlite Industries (India) Ltd. vs Designated Authority 2003 (158) ELT 673 (SC). It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to ask the parties providing information on a confidential basis, to furnish a non-confidential summary thereof. If such statement has not been furnished, then the party should submit to the Designated Authority a statement of reasons why summarization was not possible. The Supreme Court also observed that there was a need for confidentiality, as otherwise trade competitors would obtain confidential information which they cannot otherwise get and that the Designated Authority has to consider, on a case to case basis, whether a particular material is required to be kept confidential. 83. In Meghmani Organics Limited, the Supreme Court also examined the provisions of Rule 7 of 1997 Rules relating to confidentiality and observed as follows : 30. We may only explain here that while dealing with objections or the case of the concerned parties, the DA must not disclose the information which are already held by him to be confidential by duly accepting such a claim of any of the parties providing the information. While taking precautions not to disclose the sensitive confidential informations, the DA can, by adopting a sensible approach indicate reasons on major issues so that par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ormation is required to provide a good cause statement along with the supplied information as to why such information cannot be disclosed. iii. The non-confidential version is required to be a replica of the confidential version with the confidential information indexed or blanked out (in case indexation is not feasible) and summarized depending upon the information on which confidentiality is claimed. The non-confidential summary must be in sufficient detail to permit a reasonable understanding of the substance of the information furnished on confidential basis. However, in exceptional circumstances, party submitting the confidential information may indicate that such information is not susceptible of summary, a statement of reasons why summarization is not possible, must be provided to the satisfaction of the Designated Authority. 85. Annexure I to the aforesaid Trade Notice deals with guidelines on confidentiality on information/data contained in the petition, response, questionnaire or other submissions and paragraphs 2, 3 and 4(i) are reproduced below : 2. The claim of confidentiality on any information/data should be submitted in the following format as a forwardin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Domestic Industry had filed the claim of confidentiality in the format provided above. 87. Learned Senior Counsel for the Appellants has also placed reliance upon the Trade Notice No. 02/2018 dated 01 February, 2018 relating to streamlining of the Anti Dumping Investigation Process. It provides that the Domestic Industry, in order to avoid delay, should submit information in the formats A to L. The relevant portion is reproduced below : Attention of Trade and Industry is invited to the existing domestic industry s questionnaire and to state that the following revised formats should be submitted by the domestic industry while filing the petition to avoid delays caused by subsequent requests for additional information: S.No. Format Number Brief Description 1. A Statement of Consumption of Raw Materials, Packing Materials and Utilities 2. B Statement of Raw Material Consumption 3. C Allocation of Apportionment of Expenses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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