TMI Blog2020 (7) TMI 487X X X X Extracts X X X X X X X X Extracts X X X X ..... t so as to capture the major share of domestic demand resulting in causing grave economic injury to the domestic industry. The provisions of Customs Tariff Act, 1975 as well as rules framed thereunder are in consonance with the guidelines of World Trade Organisation. These guidelines ensure that in case there is any attempt to dump goods, the domestic industry is insulated from injury which may be caused by unscrupulous exporters. It had been established by the Designated Authority that there was dumping by the exporter which had resulted in injury to the domestic industry in the past and, therefore, they initiated detailed investigation and concluded in the year 2007 vide their Final Findings notified vide Notification dated 23 August, 2007 that there was dumping of subject goods namely, DI pipes from China PR, and accordingly, Anti-Dumping Duty on the subject goods imported from China PR was imposed by the notification in September, 2007 - It is also a matter of record that the Designated Authority considered it necessary to continue with the Anti-Dumping Duty in the first sunset review which took place in September, 2013 and accordingly the levy of Anti-Dumping Duty on subjec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -Dumping Rules, 1995 on import of Ductile Iron Pipes, DI Pipes originating in or exported from China PR. This application was rejected by the Designated Authority by the above said Final findings dated 01 April 2019. 3. It is a matter of record that the appellant is engaged in the business of manufacture of Ductile Iron Pipes and products. The appellant made an application under Rule 5 of the Anti-Dumping Rules, 1995 for initiation of Anti-Dumping investigation into imports of DI Pipes originating in or exported from China. In the beginning of 2006. the Designated Authority started investigation by issuing a notification dated 24 February, 2006 with respect to Import of DI pipes from China PR. The Designated Authority vide its Final findings dated 23 August, 2007 recommended imposition of Anti-Dumping Duty upon the imports of DI pipes from China PR for a period of five years. In pursuance to the recommendation of Designated Authority, the Ministry of Finance issued a Customs Notification dated 14 September 2007 levying Anti-Dumping Duty for a period of five years. 4. The appellant filed an application under Rule 23(1B) of Anti-Dumping Rules, 1995 for initiation of a sunset re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Ministry of Finance to take necessary follow up action of its judgement dated 26 September, 2018. After the orders of the Gujarat High Court, the Designated Authority vide Notification initiated the second sunset review investigation concerning imports of the DI pipes from China PR. It is a matter of record that in the meanwhile Ministry of Finance issued a Notification dated 09 October, 2018 whereunder the Anti-Dumping Duty was further extended on import of DI pipes from China PR for further period of six months up to 09 April, 2019. On 01 April, 2019, the Designated Authority issued Final findings concluding that the continuation of the existing anti-dumping duties on the subject goods was not warranted. 8. Being aggrieved by the said Final findings of the Designated Authority, the appellant again filed a Special Civil Application No. 6896 of 2019 before the Gujarat High Court. The High Court vide its two interim orders extended the imposition of Anti-Dumping Duty up to 23 June, 2019. Accordingly, the last notification was issued on 09 May, 2019 for continuation of Anti-Dumping Duty up to 23 June, 2019. 9. In the above background, the contention of the appellant is tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... norms, conversion cost and SGA of the most efficient domestic producer. Profit @5% on the cost of production has been added to arrive at the constructed normal value. By adopting this method, the constructed normal value was determined. Present Sunset review Findings As part of the proceedings in this investigation, the Authority had sent questionnaires to the known exporters/producers from the subject country advising them to provide information in the form and manner prescribed. There has been no response to the questionnaire nor has there been any submission by any of the Chinese producers /exports. In the absence of cooperation from the Chinese exporters/producers, the Authority determines to construct the normal value on the basis of facts available. The constructed normal value so determined is as Rs.*** per MT (USD*** per MT) Submissions of the appellant The methodology used for the computation of normal value has not been disclosed to the petitioner as against the full disclosure of methodology in the earlier case. Determination of export price 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Chinese producers to other countries, the Authority made no such Analysis. In paragraph 64(iv) of the impugned Final Findings, the Authority has noted the submission and evidences presented by the appellant that more than 70% of the quantities exported from China to other countries are at the price which would have a positive injury margin and around 83% of the quantities sold to other countries are at dumped prices. This proves beyond an iota of doubt that there is every likelihood that at these prices, if the excess capacity is diverted to India, injury to Domestic Industry would be imminent. Non-participation of Chinese Exporters 1st Sunset review Findings All other interested parties who could have given valuable information to the Authority have preferred not to cooperate with the Authority in the present investigations. The Authority notes that the relevant information from the interested parties is more important in sunset review investigations where an assessment of likelihood is required to be made. Present Sunset review Findings No such examination ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry to the domestic industry. Present Sunset review Findings No such examination Submissions of the appellant Likely export price from China has not been computed in the impugned Final Findings though information regarding the same was submitted by the petitioner. In fact export price for 73 MT has been taken into account though it was specifically recorded that the price of export was abnormal. It was also recorded in paragraph 35 of impugned Final Findings that the importer statistics of the this item points to either misclassification of the import item or it not being the like article. Likely export price and dumping margin 1st Sunset review Findings The likely ex-works export price of the exports from China PR is determined by the Authority by making appropriate adjustments to the likely net export price on account of inland freight and insurance, commission, port expenses, bank charges and VAT adjustment. After making these adjustments, the likely adjusted ex-factory export price determined is as US$*** per MT. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e considering the fact that there is huge capacity available in China; none of the major producers/exporters from China as well as importers in India have responded to the investigation and if the total demand in India is seen, there is every likelihood that if the anti-dumping duties are revoked, the percentage of dumped as well as injurious exports to India are likely to increase and take away major portion of the India demand. Further, even if the export behaviour and production capacity of the only responding interested party SGPL is seen it is noted that as per the information available with the Authority the known capacity of SGPL is 17,00,000 MT and the production during the POI is only 3,25,367 MT. This leaves surplus capacity of 13,74,633 MT with SGPL alone which is almost double the demand in India. This available surplus capacity can be utilised by SGPL for likely exports to India at the minimum dumped and injurious export price to the world so determined above (Emphasis Added) Present Sunset review Findings No such examination Submissions of the appellant The procedure and conclusi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the major producers/exporters from China as well as importers in India have responded to the investigation the Authority determines that if the existing duties are removed, there is every likelihood of the subject goods coming to India at dumped prices which are further likely to cause injury to the domestic industry Present Sunset review Findings No such examination Submissions of the appellant Despite similar facts and circumstances, a contradictory approach taken by the Authority in the impugned Final Findings. Likely price undercutting and price underselling 1st Sunset review Findings Having regard to the contentions raised, information provided and submissions made by the interested parties and facts available before the Authority and on the basis of above analysis including analysis of likelihood of continuation of dumping and injury, the Authority determines that: i) The constructed Normal Value and the likely net export price to India clearly indicate the likelihood of dumping from China PR if the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been further pleaded by the appellant that there was no import of the subject goods to India from China PR in the entire injury investigation period including POI and post POI. In the absence of exports to India from any Chinese exporter, except a minor quantity exported by M/s. SGPL from China, this can not be taken as basis of calculation of export prices. Since there were no exports of the subject goods namely, DI pipes to India from China PR for the entire injury investigation period including the period of investigation, Designated Authority has not been able to determine export price and dumping margin for POI and post POI. It has further been stressed by the learned advocate that the Designated Authority grossly erred in keeping the dumping margin confidential from the appellant. Thus, material information was withheld from the appellant on the ground of confidentiality under Rule 7 of Anti-Dumping Duty Rules in utter disregard to the principles of natural justice and in violation of the principles set out by the Supreme Court in the Reliance Industries. It has further been stressed that in the present investigations, none of the producer/ exporters from China PR, except ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty is not continued on imports from China on DI pipes, there is every likelihood that Chinese manufacturer/exporters to India will certainly again resort to dumping of product as they have been doing before levy of Anti-Dumping Duty. 14. The learned advocate has taken us through the table which indicates the margin of dumping and price underselling by the Chinese exporters in case of exports made to Sri Lanka, Vietnam and Turkey. The same is as follows: 6. The Domestic Industry has carried out the Price underselling analysis on the basis of the actual exports made by Chinese exporters to Turkey, Vietnam and Sri Lanka. The position emerges as follows: Sri Lanka Turkey Vietnam Landed Value RS/MT 44520 40502 42451 NIP Rs/MT 56359 56359 56359 Price underselling Rs/MT 11839 15857 13908 Price underselling % 27% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the appellant has not proved beyond doubt that surplus capacities are going to find their way for export to India. The contention of the learned advocate is that this finding of the Designated Authority is contrary to the basic meaning of likelihood as provided in the Act and Rules. It has further been stressed that the slight improvement in the economic parameters of the domestic industries was primarily on account of Anti-Dumping Duty being in place on the import of DI pipes from China PR. It has vehemently been contended by the learned Advocate that injury is going to be faced by the domestic industry in case the Anti-Dumping Duty is removed. The little improvement in economic parameters which took place will immediately disappear and the basic purpose of likelihood assessment will get defeated if such an attitude is sustained and Anti-Dumping Duty levied on such products is allowed to be removed. 16. It has further been submitted that after the disclosure statement was given by the Designated Authority as per the provisions of Rule 16, the objections which were raised by the appellant have been rejected in a perfunctory manner without giving any thought to the same. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to India in case of revocation of duties, the mere existence of surplus capacity does not establish the likelihood of diversion of surplus production to India to prove the likelihood of imports, if anti-dumping duties were to be revoked. (v) The facts and circumstances of the second sunset review investigation when compared to that of the previous sunset review investigation are not entirely similar. There are key difference between the previous sunset review investigation and the impugned sunset review investigation. They have been elaborated as follows: (a) Firstly, at the time of the previous sunset review investigation, anti-dumping duties against the subject imports were in force for five years. At the time of impugned sunset review investigation, anti-dumping duty was in force for more than 10 years. (b) Secondly, in the previous sunset review investigation, the economic parameters of the domestic industry had not improved and were weak. However, in the current sunset review investigation, the economic performance of the domestic industry had improved. (c) In the previous review, the domestic industry, was incurring losses, faced declining cash profits, low ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in 2013. To analyse the issue at hand, it will be appropriate to have a glance of the necessary legal provisions concerning sunset review of Anti-Dumping Duty under the Customs Tariff Act, 1975 and Rules framed thereunder. 22. Section 9A(5) of the Customs Tariff Act, 1975 is as follows: The anti-dumping 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. 23. Rule 23 of Rules, 1995 is as follows: (1) Any anti-dumping duty imposed under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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; (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. 25. It had been established by the Designated Authority that there was dumping by the exporter which had resulted in injury to the domestic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 23 (S.C.) in the following manner :- 38. We are of the opinion that the nature of the proceedings before the DESIGNATED AUTHORITY are quasi-judicial, and it is well settled that a quasi-judicial decision, or even an administrative decision which has civil consequences, must be in accordance with the principles of natural justice, and hence reasons have to be disclosed by the Authority in that decision vide S.N. Mukherjee v. Union of India [(1990) 4 SCC 594 : 1990 SCC (Cri) 669 : 1991 SCC (L S) 242 : (1991) 16 ATC 445]. 39. We do not agree with the Tribunal that the notification of the Central Government under Section 9A is a legislative act. In our opinion, it is clearly quasi-judicial. The proceedings before the Designated Authority are to determine the lis between the domestic industry on the one hand and the importer of foreign goods from the foreign supplier on the other. The determination of the recommendation of the Designated Authority and the government notification on its basis is subject to an appeal before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry to the domestic industry is likely to take place again or not. It is relevant to mention here that in the likelihood analysis, the degree and extent of dumping and consequent injury to the domestic industry during the period of investigation is not much relevant or important. 29. Before proceeding further it is appropriate to have a glance of the findings which have been given by the Designated Authority for non-continuation of Anti-Dumping Duty on the subject DI Pipes. 67. The examination of post-disclosure comments is as under: i. As regards the submission that the Authority has not carried out sufficient analysis on likelihood or recurrence of dumping and injury, it is noted that the Authority has carried out detailed analysis in this regard at appropriate places of the present findings. ii. The Authority notes that there have been negligible imports of the Product under Consideration during the period of investigation and therefore the price attractiveness analysis for the Indian market based on such miniscule import would be inappropriate. iii. The domestic industry has itself submitted that even in post-POI period there is no likelihood of any import of sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the period of investigation i.e. 2017-2018. The purpose of importing such a small quantity at a high price may have been to distort price undercutting. However, the fact remains that after imposition of Anti-Dumping Duty on the DI pipes imported from China PR, the imports from the subject country were reduced drastically and this provided a protective shield to the domestic industry. 32. For the purpose of analysing whether there is any likelihood of continuation of Anti-Dumping Duty, in case the Anti-Dumping Duty is removed from the import of DI pipes from China PR, it has to be noted that China is not only an exporter to India but it has also been exporting the subject goods to various other countries, such as Turkey, Vietnam and Sri Lanka. The appellant domestic industry had provided detailed data of price underselling, dumping margin etc. with regard to imports by China to these countries. It is relevant to examine the analysis carried and provided by the Domestic Industry with regard to price undercutting and dumping margin of exports of DI pipes by China PR to countries namely, Sri Lanka, Turkey and Vietnam. 33. The Domestic Industry has carried out the Price underse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... drawn any conclusion on these submissions. 37. The appellant Domestic industry had also provided concrete evidence of excess capacities available in China for manufacture of subject goods namely DI pipes. The Table below basically makes it very clear that China exporters have a huge capacity to manufacture and export the goods to India. The Domestic Industry has compared the domestic capacities in China with capacities, production, sales and demand in India to provide an insight into the potential danger and the imminent likelihood of dumped imports into the country in large volumes, as shown below: Particulars Chinese capacity (MT) 7520000 Capacity of Domestic Producers (MT) 2235000 Demand in India (MT) 1576776 Production of Domestic industry (MT) 1724624 Sales of Domestic industry (MT) 1576368 Chinese capacity as a % of capacity of domestic industry (%) 336% Chinese capacity as a % of demand in India (%) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ket. It has also to be seen whether the exporting country namely China PR resorted to dumping of their product in other countries as during the POI and post POI there are no exports to India from China PR. This fact is of great relevance in analysing the likelihood situation, if Anti-Dumping duty ceases to be levied, as there are no dumped imports after imposition of Anti-Dumping Duty. 41. We take note of two important facts here, firstly that the Domestic Industry has substantial demand of the subject product, and that the exporters from China PR have been exporting their product i.e. DI pipe to other countries such as Sri Lanka, Turkey and Vietnam at substantial price underselling varying between 27% to 39%. As indicated in the above Tables there has been huge dumping margins varying from 50% to 67%. These two factors obviously indicate that if the Anti-Dumping Duty is not imposed on the imports of DI pipes from China PR, the Chinese exporters would certainly dump their product to capture the demand of Indian domestic markets of DI pipes by reducing the price competitiveness of goods manufactured in India. 42. As mentioned earlier, the Chinese producers /exporters have hu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 summarization 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 . 42. In our opinion, Rule 7 does not contemplate any right in the Designated Authority to claim confidentiality. Rule 7 specifically provides that the right of confidentiality is restricted to the party who has supplied the information, and that party has also to satisfy the Designated Authority that the matter is really confidential. Nowhere in the rule has it been provided that the Designated Authority has the right to claim confidentiality, particularly regarding information which pertains to the party whic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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