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TMI Blog2020 (7) TMI 426X X X X Extracts X X X X X X X X Extracts X X X X ..... ountant and Shri Mayank Jain, Advocate for the Respondent. ORDER Anti-Dumping Appeal No. 53285 of 2018 has been filed by Magotteaux Co. Limited [foreign exporter] to assail the final findings Notification dated June 11, 2018 of the Designated Authority, by which a recommendation has been made for continuation of the anti-dumping duty on imports of "Grinding Media Balls" (excluding forged grinding media balls) [subject goods] originating in or exported from China PR and Thailand, on a sunset review investigation initiated at the instance of the domestic producers, namely M/s AIA Engineering Limited and M/s Welcast Steels Limited [Domestic Industry]. The Appellant has also assailed the Notification dated July, 13, 2018 issued by the Government of India imposing anti-dumping duty for a period of five years on the subject goods on the basis of aforesaid recommendation of the Designated Authority. 2. Anti-Dumping Appeal No. 53586 of 2018 has been filed by M/s AIA Engineering Limited, a Domestic Industry, for a direction that the recommendations made in the final findings and the Notification issued by the Central Government may be modified by enhancing the quantum of anti-dumping du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in India known to be concerned with the product were separately asked to submit relevant information in the form and manner prescribed to make their views known to Designated Authority. It was further provided that any information relating to the review and any request for hearing should be sent in writing so as to reach the Designated Authority not later than forty days from the date of publication of the Notification. It was also stated that in case any interested party refuses access to and otherwise did not provide necessary information within a reasonable period, or significantly impedes the investigation, the Designated Authority may declare such interested party as non-cooperative and record its findings on the basis of the facts available and make such recommendations to the Central Government as may be deemed fit. 6. The Designated Authority held an oral hearing on March 16, 2018 to provide an opportunity to the interested parties to present relevant information. The representatives who presented their views orally were advised to file written submission of the views expressed by them. The interested parties were also provided an opportunity to offer rejoinder submissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s: "25. With regard to the submission that customs duty should be considered at 10% as against 0% because the exporter enjoys the same under the ASEAN Agreement, the Authority notes that the law is very clear in this regard that the custom duty will be taken as it is. 26. The Authority notes that the law clearly envisages that the anti dumping duty can be extended further from time to time, if it is found that dumping and consequent injury to the Domestic Industry is likely in the event of cessation of anti-dumping duty. Anti-dumping law is for removing unfair trade practice and providing a level playing field to the domestic industry. The Authority recommends anti-dumping duty only after following the requirements prescribed under the laws. 27. On the issue of monopolistic behaviour of the domestic industry, it is noted that the purpose of anti-dumping duty, in general, is to eliminate dumping which is causing or likely to ( in case of SSR) cause injury to the Domestic Industry and to re-establish a situation of open and fair competition in the Indian market which is in general interest of the country. From the anti-dumping rules, it is not borne out that a company, even if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the period of investigation. The injury margin so worked out is indicated in the table prepared by the Designated Authority: Table of Injury Margin. S. No Exporter/ producer NIP USD/ MT Landed value USD/MT Injury Margin USD/MT Injury Margin (%) Range 1. M/s Magotteaux Co Ltd., Thailand *** *** *** *** 0-10 2. All exporters/ producers from Thailand *** **** *** *** 0-10 3. All exporters/ producers from China *** *** *** *** 0-10 (ix) On the likelihood of continuation or recurrence of dumping and injury, the Designated Authority made the following disclosure: "81. This parameter for ascertaining the threat of material injury requires evaluation of existing surplus capacities and capacity addition, if any, to explore the possibility of diversion of disposable quantity to Indian market. Domestic Industry has claimed that the producers in subject countries are already faced with significant surplus capacities. Further, these producers have accepted that they are exporting the products to a large number of countries, currently a very small proportion is being exported to India which is being exported at a price belo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd and also decrease the dumping margin due to increase in export price. Therefore, these aspects may also warrant an adjustment. Therefore, the Authority has adopted its consistent practice of evaluating the landed value with applicable customs duties. 95. The Authority observes that the exporter has contended that the exports have been made at a price higher than the DI price and at the same time it has contended that the Domestic Industry has earned high profit and the profitability thereof, has improved. It is clarified that, the petitioner itself has not claimed that the imports are causing continued injury to the DI. The Authority observes that there exists a strong likelihood of continued dumping and consequently, the dumping of the product is likely to cause injury to the domestic industry. Since the present determination is based on threat to likelihood/ recurrence of dumping, the actual parameters relevant to actual injury are not substantially relevant. 96. Regarding the contention that the cost of production should be compared with international price to determine the injury margin and not rely on realised prices of the DI, the Authority has considered net sales rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the present investigation petitioner itself has not claimed that imports are causing material injury. Nor has authority examined the case on the ground of continuation of injury. The present investigation has been conducted to determine whether dumping of the PUC is likely to cause injury to the domestic industry. Since the Authority is required to determine recurrence of injury in the present case, the actual volume of import in any case is not the sole relevant information for analysis of likelihood of injury. It is noted in this regard that the exporter has very significant exports of the products to a large number of countries as examined from the details of the questionnaire response filed by the exporter." (emphasis supplied) 7. The conclusions arrived at by the Designated Authority are as follows: "101. Having regard to the contentions raised, information provided and submissions made by the interested parties and facts available before the Authority as recorded in the above findings and on the basis of the above analysis of the likelihood of recurrence of dumping and consequent injury, the Authority concludes that: a) The subject goods are likely to enter th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g duty. In support of this contention, reliance has been placed on the following decisions. a. Alkali Manufacturers Association vs. Designated Authority [2006 (194) ELT 161 (Tri.-Del.)]. b. Merino Panel Products Ltd. vs. Designated Authority [2016 (334) ELT 552 (Tri.-Del.) ]. c. Qingdao Doublestar Tyre Industrial & Co. Ltd. vs. Union of India [2018 (364) ELT 852 (Tri.-Del.)]. (iv) The Domestic Industry has a monopoly and has abused its dominant position in the Indian market. It is exploiting the situation by raising the prices above the international level by taking advantage of the anti-dumping duty. In support of this contention, reliance has been placed on the decision of the Tribunal in Indian Graphite MFRS. ASSCN. Vs. Designated Authority [2006 (199) ELT 722 (Tri.-Del.)]; (v) Non disclosure of "Non-Injuries Price" calculation sheet has resulted in a denial of natural justice. In this connection, reliance has been placed on a decision of the Gujarat High Court in Nirma Limited vs. Union of India [2017 (358) ELT 146 (Guj.)]; (vi) Insignificant imports could not have caused any injury to the Domestic Industry warranting extension of duties in the sunset review; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alculation was required to be disclosed to the Domestic Industry, on whose data the computation of "non-injuries price" was carried out. In the present, case the Designated Authority was justified in not disclosing the confidential costing information of the Domestic Industry, that formed the basis for determination of non-injurious price, to the foreign exporter. (vi) Low volume of import is not a relevant consideration in a sunset review; (vii) It is incorrect to suggest that the Designated Authority committed an error in recording findings on the issue of likelihood of continuation or recurrence of dumping and injury; (viii) When an affirmative order for extension of anti-dumping duty is made on the basis that there is a likelihood of recurrence of dumping and injury, the rigours of section 9A(1) of the Tariff Act would not be attracted; and (ix) In a sunset review, the Designated Authority is required to examine whether the expiry of the period for which duty is imposed is likely to lead to continuation or recurrence of dumping and injury to the Domestic Industry. The causal link in a sunset review is not required to be re-established as the same has already been establ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nti-dumping duty and the Central Government, by Notification dated July 16, 2018, imposed anti-dumping duty on the subject goods for a period of five years. 17. In order to appreciate the contentions advanced by learned Counsel for the parties, it would be appropriate to first examine the provisions of the Act and the 1995 Rules relating to sunset review. 18. Section 9A of the Tariff Act deals with anti-dumping duty on dumped articles. Sub-section (1) of section 9A provides that where any article is exported by an exporter or producer from any country or territory to India at less than its normal value, then, upon the importation of such article into India, the Central Government may, by notification in the Official Gazette, impose an anti-dumping duty not exceeding the margin of dumping in relation to such article. 19. Sub-section (5) of section 9A of the Tariff Act provides that the anti-dumping duty imposed under section 9A shall, unless revoked earlier, cease to have effect on the expiry of five years from the date of such imposition. However, the proviso to sub-section (5) section 9A provides for extension of the period of such imposition. Section 9A(5) with the two prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iate to refer to the relevant provisions of Annexure-II to the 1995 Rules that deal with the "Principles for Determination of Injury" and clauses (ii) and (vii), which are relevant, are reproduced below: "(ii) While examining the volume of dumped imports, the said authority shall consider whether there has been a significant increase in the dumped imports, either in absolute terms or relative to production or consumption in India. With regard to the affect of the dumped imports on prices as referred to in sub-rule (2) of rule 18 the Designated Authority shall consider whether there has been a significant price under cutting by the dumped imports as compared with the price of like product in India, or whether the effect of such imports is otherwise to depress prices to a significant degree or prevent price increase which otherwise would have occurred, to a significant degree. (vii) A determination of a threat of material injury shall be based on facts and not merely on allegation, conjecture or remote possibility. The change in circumstances which would create a situation in which the dumping would cause injury must be clearly foreseen and imminent. In making a determination reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal (Procedure) Rules, 1982 shall be deemed to be a part of these rules." 24. Rule 10 of the 1982 Procedure Rules is reproduced below: "10. Grounds which may be taken in appeal: The appellant shall not, except by leave of the Tribunal urge or be heard in support of any grounds not set forth in the memorandum or appeal, but the Tribunal, in deciding the appeal, shall not be confined to the grounds set forth in the memorandum of appeal or those taken by leave of the Tribunal under these rules." 25. It is clear from the aforesaid provisions that though the anti-dumping duty imposed under the original investigation shall cease to have effect on the expiry of five years from the date of such imposition, but if the Central Government, in a review, is of the opinion that cessation of such duty is likely to lead to continuation or recurrence of dumping and injury, it may extend the period of such imposition of duty for a further period of five years. Under rule 23 (1B) of the 1995 Rules, a duly substantiated request can be made by or on behalf of the Domestic Industry within a reasonable period of time prior to the expiry of the period for which duty has been levied in the origin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c Industry is likely to be materially injured again, if duties are lifted. 14. Sunset review entails a likelihood determination in which present levels of dumping 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. 28. The Tribunal in Borax Moraji Limited vs Designated Authority [2007 (215) ELT 33 (Tri.-Del.) ] also examined the scope of a sunset review in an anti-dumping appeal and the observations are: "Section 9A(1) contemplates imposition of anti-dumping duty, which does not exceed the margin of dumping and sub-section (6) of Section 9 contemplates that such margin of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat, the provisions of Rule 23 assume significance. As noted above, sub-section (6) of Section 9 in its opening part contemplates ascertaining and determining the margin of dumping from time to time. Rule 23(1) enables the designated authority to undertake review from time to time as regards the need for the continued imposition of anti-dumping duty." 29. It is keeping in mind the above mentioned principles that the contentions advanced by learned Chartered Accountant for the Appellant and learned Counsel for the respondent have to be examined. 30. The first contention advanced by learned Chartered Accountant for the Appellant is the application that had been filed by the Domestic Industry for initiation of sunset investigation was not duly substantiated. 31. It is not possible to accept this submission. Such a ground has not been taken in this anti-dumping appeal filed by the Thailand exporter and, therefore, we find substance in the submission advanced by learned Counsel for the Respondents that in such a situation the Appellant should not be permitted to raise this issue in this Appeal. As noticed above, rule 7 of the 1996 Procedure Rules applies rule 10 of the 1982 Proced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Apart from the fact that EBIDTA is not one of the listed injury parameters in Annexure-II of the 1995 Rules, the figures in the annual report contain details of all the products, including the product under consideration, and, therefore, the figures in the annual report cannot be made the basis for determining the profitability of the product under consideration in the domestic market. It needs to be noted that the anti-dumping investigations are confined to the product under consideration and, therefore, the profitability of the company as a whole has not to be seen. The Domestic Industry has also stated that the sales of the product under consideration in the domestic market constitute only 9% of the total sales of AIA Engineering Limited. On behalf of the Domestic Industry, it has also been stated that actually the capital employed of the Domestic Industry is 13%, which is well below the bench mark of 22% that has been consistently adopted by the Designated Authority. It has also been stated by the Domestic Industry that the profits are below 10%, which cannot be termed to be "superlative". 36. The Appellant has relied upon decisions of the Tribunal in Alkali Manufacturer Asso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jury, the relevant factors to come to such conclusion have to be taken into consideration. The relevant factors may be the change in the pattern of the production, demand and requirement of the dumped product in the importing country since the imposition of anti-dumping duty. The change in the prices in the exporting countries and International market has also to be considered. The prescribed parameter for injury to the domestic industry and also whether domestic industry is exploiting the situation by raising the prices above the International level by taking advantage of anti-dumping duty, is also required to be considered." 42. This decision will not come to the aid of the Appellant as no factual foundation has been laid by the Appellant to substantiate that the Domestic Industry has been exploiting the Indian market. 43. The fourth submission of the Appellant cannot, therefore, be accepted. 44. The fifth submission advanced by learned Chartered Accountant for the Appellant is that non-disclosure of "non-injurious price" calculation sheet has resulted in denial of principles of natural justice and in this connection, reliance has been placed on the decision of the Gujarat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erroneous finding has been recorded by the Designated Authority on the issue of likelihood of continuation or recurrence of dumping and injury. It has been submitted that though there was surplus capacities, no examination has been carried out by the Designated Authority to consider the price attractiveness of the Indian market. This submission cannot be accepted. 49. In this connection, it needs to be noted that relevant parameters have been prescribed in clause (vii) of Annexure-II to the 1995 Rules. This clause (vii) has been reproduced above. The Designated Authority has examined this aspect at length and the findings have been reproduced above. The Designated Authority noted that it was required to evaluate the existing surplus capacities of the foreign exporter to explore the possibility of diversion to the Indian market. The Designated Authority found as a fact that the Thailand exporter had ample production capacities and it was also exporting the product under consideration to other countries in the world. 50. On a consideration of the materials on record, the following factual position would amply indicate the likelihood of recurrence of dumping and injury, in the eve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing made at dumped/ injurious prices 51. The eighth contention of learned Chartered Accountant for the Appellant is that the rate of duty was required to be modified, having regard to the current dumping margin and injury margin in terms of section 9A of the Tariff Act. 52. Section 9A(1) of the Tariff Act, therefore, needs to be reproduced and it is as follows: "9A(1). Where any article is exported by an exporter or producer from any country or territory (hereinafter in this section referred to as the exporting country of territory) to India at less than its normal value, then, upon the importation of such article into India, the Central Government may, by notification in the Official Gazette, impose an anti-dumping duty not exceeding the margin of dumping in relation to such article." 53. The issue, that arises for consideration is whether in a sunset review, where an affirmative order for extension of anti-dumping duty is made on the basis that there is a likelihood of recurrence of dumping and injury, the rigours of section 9A(1) of the Tariff would still apply. 54. The scope of a sunset review was examined by the Supreme Court in Kumho Petrochemical and by the Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cle 11 of GATT refers to "duration and review of anti-dumping duty and price undertakings". 59. Rule 11 of the 1995 Rules deals with "determination of injury", while duration of anti-dumping duty and review of anti-dumping duties is contained in the rule 23(1B) of the 1995 Rules. Article 11.3 of GATT is similar to rule 23 (1B) of the 1995 Rules. 60. The report of the Appellate Body extensively deals with "causation in sunset reviews". Mexico argued before the Panel that the USITC's likelihood-of-injury determination with respect to the anti-dumping duty order on OCTG from Mexico was inconsistent with several provisions of Article 3 of the Anti-Dumping Agreement. Based on its analysis, the Panel found that "the obligations set out in Article 3 are not directly applicable in sunset reviews". Mexico challenged this interpretation of Article 11.3 of the Anti-Dumping Agreement and its failure to address the "inherent" causation requirements under that Article. The Appellant Body noticed that on its face, Article 11.3 does not require investigating authorities to establish the existence of a "causal link" between likely dumping and likely injury. Instead, by its terms, Article 11.3 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umstances of the case under review. Furthermore, as the Appellate Body has emphasized previously, determinations under Article 11.3 must rest on a "sufficient factual basis" that allows the investigating authority to draw "reasoned and adequate conclusions". These being the requirements for a sunset review under Article 11.3, we do not see that the requirement of establishing a causal link between likely dumping and likely injury flows into that Article from other provisions of the GATT 1994 and the Anti-Dumping Agreement. Indeed, adding such a requirement would have the effect of converting the sunset review into an original investigation, which cannot be justified. Our conclusion, that the establishment of a causal link between likely dumping and likely injury is not required in a sunset review determination does not imply that the causal link between dumping and injury envisaged by Article VI of the GATT 1994 and the Anti-Dumping Agreement is severed in a sunset review. In only means that re-establishing such a link is not required, as a matter of legal obligation, in a sunset review." (emphasis supplied) 62. Thus, in view of the nature of the exercise that has to be underta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to, or otherwise does not provide necessary information within a reasonable period, or significantly impedes the investigation, the Designated Authority may record its findings on the basis of the facts available to it and make such recommendations to the Central Government as it deems fit under such circumstances. 68. In paragraph 82 of the final findings, after noticing that the foreign exporter had not provided all relevant information in the form and manner prescribed with regard to transaction wise detail of its export to third countries as prescribed in the questionnaire, the Designated Authority itself carried out an analysis on the basis of available information. Paragraph 82 of the final findings of the Designated Authority has been reproduced in paragraph 6(ix) of this order. In paragraphs 97 and 98 of the final findings, the Designated Authority also noted that because of grossly inadequate exporter questionnaire response, the best available information led the Authority to proceed on the basis of weighted averages. Paragraphs 97 and 98 of the final findings have also been reproduced in paragraph 6(x) of this order. 69. Thus, once the Designated Authority had exerci ..... X X X X Extracts X X X X X X X X Extracts X X X X
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