TMI Blog2020 (8) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... second sunset review, individual margins of dumping should be determined for them. It was for the producer / exporter, as noticed above, to have at the initial stage itself not only informed the Designated Authority whether the normal value should be determined on the basis of a non- market economy country or market economy country and which of the three options available under paragraph 7 of Annexure-I to the 1995 Rules should be adopted by the Designated Authority, but for reasons best known to the producer/ exporters, such information was not divulged to the Designated Authority. In such circumstances it does not lie in the mouth of the producer/ exporter to contend that hearing should have been granted to the producer / exporter by the Designated Authority before the issue of the disclosure for taking Qatar as a surrogate country. Determination of the normal value under the second option provided for in paragraph 7 of Annexure-I to the 1995 Rules - HELD THAT:- The contention of the producer and the exporter is that the third country should have been selected by the Designated Authority at the stage of initiation itself. This submission cannot be accepted because as noticed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed:- 5-8-2020 - HON BLE MR. JUSTICE DILIP GUPTA, PRESIDENT HON BLE MR. D M MISRA, MEMBER (JUDICIAL) HON BLE MR. C L MAHAR, MEMBER (TECHNICAL) Ms. Rupali Sharma and Shri Ajay Sharma Advocates for the Appellant Ms. Reena Khair, Ms. Shreya Dahiya, Ms. Anoushka Singh ,Ms. Priyamvada Sinha and Shri Rajesh Sharma, Advocates for the Appellant. Shri Jitender Singh, Shri Akshay Soni Advocates and Shri Jinender Singhvi, Consultant - for the Respondent No. 3 and 4 Shri Ameet Singh Advocate for the Designated Authority Shri Rakesh Kumar, Authorised Representative for the Revenue Shri Rakesh Kumar, Authorized Representatives (DR) for the Revenue ORDER 1. In the matter of import of Melamine [subject goods], originating in or exported from People‟s Republic of China[subject country] to India, the Government of India, in the Ministry of Finance (Department of Revenue), on an application filed by Gujarat State Fertilizers Chemical Limited[Domestic Industry], issued a Customs Notification that was published in the Gazette of India on November 16, 2004 imposing anti-dumping duty on the subject goods for a period of five years. The anti-dumpi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osition of the individual anti-dumping duties by Notification dated June 19, 2019. 3. On the basis of the final findings of the Designated Authority, Customs Notification dated September 06, 2019 was issued by the Government of India for the New Shipper Review that had been initiated, imposing US$ 319.04 per metric ton as individual anti-dumping duty on the exports made by the producer through the exporter and an individual anti-dumping duty of US$ 331.10 per metric ton for the exports made by the producer through any other exporter. 4. This Customs Notification dated September 06, 2019 and the final findings dated June 19, 2019 of the Designated Authority have been assailed by the producer, the exporter, the Domestic Industry and Sunita Commercial Pvt Ltd.[the importer ] in the aforesaid four appeals. 5. Anti-Dumping Appeal No. 52291 of 2019 has been filed by the producer and Anti-Dumping Appeal No. 52292 of 2019 has been filed by the exporter with identical prayers, which are as follows: (a) Modify the Final Findings No. F No. 7/11/2017-DGAD dated 19.06.2019 rendered by Respondent No. 2 herein by incorporating individual dumping margin that ought to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... public of China Any Any 331.10 MT 2. 2933 6100 Melamine Any country other than those subjected to anti-dumping duty People‟s Republic of China Any Any 331.10 MT 3. 2933 6100 Melamine People‟s Republic of China Any country other than those subject to anti-dumping duty Any Any 331.10 MT 9. The Customs Notification dated September 06, 2019 issued on the basis of the final findings in the New Shipper Review made the following amendments in the aforesaid Table of the Customs Notification January 28, 2016: (i) In the Table, after Serial number 3 and the entries relating thereto, the following serial numbers and entries shall be added, namely:- 4. 2933 6100 Melamine People‟s Republic of C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the purpose of initiation of a new shipper review. The new shipper was, therefore, not required to give any information about normal value or export price at the time of making the application; (iii) Even the formats of questionnaire response do not seek any information for any determination in terms of paragraph 7. The market economy questionnaire only seeks information to rebut the presumption contained in the proviso to paragraph 8(2) for those exporters who seek their individual dumping margin based on their own normal value after application of paragraphs 1 to 6. Thus, the Designated Authority is obligated in law to select the market economy third country, whenever deemed appropriate. (iv) While initiating a new shipper review investigation, the Designated Authority is obliged, due to the presumption contained in paragraph 8(2), to seek views of parties on the approach that is proposed for determination of normal value for non-market economy country in terms of obligations contained in paragraph 7 of Annexure I. This obligation was tested in the case of Shenyang Matsushita S. Battery Co. Ltd. vs. Exide Industries Ltd. [ (2005) 3 SCC 39 ] where the Supr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty to determine the margin of dumping, based on facts available to it. The obligation in a new shipper review is even greater than any other type of investigation, since the investigation is carried out at the instance of a new exporter who claims that the residual duty levied does not accurately represent the margin of dumping for its export to India. It was, therefore, necessary for the Chinese exporter to make a claim and to lead evidence in support of its claim for export price, normal value and dumping margin. Thus, it is in the application or in the course of investigation that the foreign exporter is required to make a specific claim as to its dumping margin. This claim can then be contested by the opposing parties and the Designated Authority can make a determination after examining all aspects of the matter. The Chinese exporter, however, maintained a deliberate silence on the dumping margin. The scope of investigation is, hence confined to the information supplied by the parties. Failure to supply the necessary information itself implies that the Chinese exporter is not at all entitled to individual dumping margin under rule 22 of the 1995 Rules. Even otherwise, having fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re detrimental to the producer or the exporter; (vi) The submission that the level of development of Qatar is not similar to that of China is fallacious. The level of development is relevant only if the domestic sale price or cost of production of a market economy third country is adopted where the level of development affects the price and costs. The price in international trade is dependent on the demand and supply in the international market and is not affected by the level of development of the supplier country. (vii) Neither was it permissible nor advisable for the Designated Authority to fix a prospective period of investigation as it gives the Chinese exporter an opportunity to stage manage the affairs. The fact that the entire exercise is stage managed, is evident from the fact that the importers in India have been indulging in mis-declaration of value. Further, the quantity exported is also not so significant so as to remove the risk of manipulation. The fixing of a prospective period of investigation was, therefore, wholly unjustified, especially since the Chinese exporter had made exports in 2017, which exports have not been taken into consideration for d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alue on the basis of non-market economy; (ii) The contention of the New Shipper that the Designated Authority should have chosen a surrogate country at the time of initiation of the investigation or prior to the oral hearing is only to cover up their failure or initial silence in not informing the Designated Authority that it was not claiming market economy treatment or suggesting a methodology for determination of normal value. The Designated Authority was, therefore, justified in disclosing the proposed normal value methodology at the first opportunity when the disclosure statement was provided and a reasonable time was given to respond; (iii) The Designated Authority had to choose an option available under paragraph 7 of Annexure-I of the 1995 Rules; (iv) The Designated Authority had noted that the volume of imports from Qatar was next to China and other available options were not appropriate. Even if the submission of the New Shipper that Qatar cannot be assumed to be a non-dumped source is considered to be true, then too, this will not cause any prejudice to the New Shipper; (v) The contention of the producer that it was not provided with the no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to as the exporting 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. Explanation- For the purpose of this section, - (a) margin of dumping , in relation to an article, means the difference between its export price and its normal value; (b) export price , in relation to an article, means the price of the article exported from the exporting country or territory and in cases where there is no export price or where the export price is unreliable because of association or a compensatory arrangement between the exporter and the importer or a third party, the export price may be constructed on the basis of the price at which the imported articles are first resold to an independent buyer or if the article is not resold to an independent buyer, or not resold in the condition as imported, on such reasonable basis as may be determined in accordance with the rules made under sub-section (6); (c) normal value , in relation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elation to an article, exported by an exporter or producer, under inquiry under sub-section (6) shall be determined on the basis of records concerning normal value and export price maintained, and information provided, by such exporter or producer: Provided that where an exporter or producer fails to provide such records or information, the margin of dumping for such exporter or producer shall be determined on the basis of facts available. 18. Rule 18(1) of the 1995 Rules deals with levy of duty and is reproduced: 18. Levy of duty.- (1) The Central Government may, within three months of the date of publication of final findings by the designated authority under rule 17, impose by notification in the Official Gazette, upon importation into India of the article covered by the final finding, anti-dumping duty not exceeding the margin of dumping as determined under rule 17. 19. Rule 22 of the 1995 Rules deals with margin of dumping for exporters not originally investigated. It is reproduced below: 22. Margin of dumping, for exporters not originally investigated. - (1) If a product is subject to anti-dumping duties, the designated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... third country shall be selected by the designated authority in a reasonable manner, keeping in view the level of development of the country concerned and the product in question, and due account shall be taken of any reliable information made available at the time of selection. Accounts shall be taken within time limits, where appropriate, of the investigation made in any similar matter in respect of any other market economy third country. The parties to the investigation shall be informed without any unreasonable delay the aforesaid selection of the market economy third country and shall be given a reasonable period of time to offer their comments. 8(1) The term non-market economy country means any country which the designated authority determines as not operating on market principles of cost or pricing structures, so that sales of merchandise in such country do not reflect the fair value of the merchandise, in accordance with the criteria specified in sub-paragraph(3). (2) There shall be a presumption that any country that has been determined to be, or has been treated as, a non-market economy country for purposes of an anti-dumping investigation by the designat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22. A perusal of section 9A of the Tariff Act indicates if any article is exported from any country to India, at less than its normal value, then upon the importation of such article into India, the Central Government can impose an anti-dumping duty not exceeding the margin of dumping. Margin of dumping has been defined to mean the difference between the export price and the normal value. The export price means the price of the article exported from the exporting country. Normal value has also been defined in Explanation (c) to section 9A(1) to mean interalia the comparable price for the like article when destined for consumption in the exporting country determined in accordance with the 1995 Rules. Under sub-section (5) of section 9A, the anti-dumping duty shall, unless revoked earlier, cease to have effect on the expiry of five years from the date of such imposition. However, 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. 23. The determination of normal value, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the light of the aforesaid provisions that the contentions advanced on behalf of the parties have to be examined. 28. As noted above, melamine‟ originating or exporting from China had been subjected to anti-dumping duty for a period of five years by Customs Notification dated November 16, 2004. This anti-dumping duty was continued for a further period of five years by Customs Notification dated February 19, 2010 in the first sunset review and thereafter for another period of five years by Customs Notification dated January 28, 2016 in the second sunset review. The producer (Kuitun Jinjiang Chemical Industry Co. Ltd.) from China and its exporter (Foshan Kaisino Building Material) from China filed an application under rule 22 of the 1995 Rules contending that they had not exported the product to India during the period of investigation and, therefore, the Designated Authority should carry out a review for the purpose of determining individual margins of dumping for them. In the said application dated June 12, 2017 it was stated that Kuitun Jinjiang Chemical Industry Co. Ltd was a producer of melamine from China and it had appointed Foshan Kaisino Building Material as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The procedure followed by Designated Authority, after issuance of the initiation Notification, has been stated in the final findings of the Designated Authority. It has been mentioned that the Designated Authority forwarded a copy of the initiation notification to the New Shipper Review applicants with a copy of the exporter‟s questionnaire and gave them an opportunity to make their views known in writing, and to file the relevant data in the prescribed questionnaire after the expiry of the period of investigation. The Designated Authority also forwarded a copy of the initiation Notification to the Embassy of China and to the known domestic producers in India. It has also been mentioned that in response of the initiation notification, the questionnaire response was filed by the exporter and the producer but they did not claim market economy status. The Designated Authority held a hearing on February 14, 2019 to provide an opportunity to the interested parties to present information orally. The interested parties were also allowed time to present rejoinders on the views/ information provided in writing by the other interested parties. The disclosure statement was issued by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nable opportunity had been provided to the interested parties, including the producer/ exporter, to respond to the choice of methodology to determine the normal value. (vi) The objections of the producer/ exporter stated that the Designated Authority had not followed the established process to select surrogate country, which should have been done at the beginning of the investigation. The Designated Authority reiterates that New Shipper Review, being an investigation on a prospective period of investigation of 1 year and with completion period of 18 months, the count down starts only after the response is filed by the producer/ exporter. The suggestions on normal value computation were made both by producer/ exporter and the domestic industry post oral hearing which the Designated Authority examined, keeping in view the prescribed hierarchy in paragraph 7 of Annexure -1 of the 1995 Rules. (vii) As regards Qatar not being an appropriate country for determination of normal value in view of the level of development being different, the Authority holds that Qatar exports to India are next to China in terms of quantum. The level of development‟ comparison as stated in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ual margins of dumping are determined by the Designated Authority at the behest of such producers/ exporters who have not exported the product to India during the period of investigation in the original or sunset review. Thus, burden lies on such producers/ exporters and not on the Domestic Industry to substantiate facts by evidence for determination of individual margins of dumping for the product that is already subjected to anti-dumping duty either because of the original investigation or the sunset review. The margin of dumping, in relation to an article, means the difference between its export price and its normal price. The producers / exporters, therefore, have to substantiate what would be the export price of the article and what would be its normal value so that the Designated Authority can determine whether individual margins of dumping should be levied for the producers/ exporters. The principles for determination of normal value, export price and margins of dumping are contained in Annexure-I to the 1995 Rules. Paragraphs 1 to 6 of Annexure-I relate to determination of normal value in the case of a market economy country, while paragraph 7 relates to determination in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b. xxxxxxxxxxx c. xxxxxxxxxxx Para 7 lays down hierarchy for determination of normal value and provides that normal value shall be determined on the basis of the price or constructed value in a market economy third country, or the price from such a third country to other countries, including India, or where it is not possible, on any other reasonable basis, including the price actually paid or payable in India for the like product, duly adjusted if necessary, to include a reasonable profit margin. Thus, the Authority notes that the normal value is required to be determined having regard to the various sequential alternatives provided under Annexure 7; d. xxxxxxxxxxxxx e. There is no information provided by any Interested Party to consider application of the first proviso of para 7 nor any material is available with the Authority for the same. However as regards the next proviso in para 7, the Authority notes that information on import volume and prices of subject goods from countries other than China during POI is available from the DGCIS data. It is noted that while China accounts for 30303 MT, 44% of total imports of subject goods during POI, the next highe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led by the producer / exporter on 8/2/2019. In the rejoinder submissions dated 28/2/2019, the producer / exporter stated that Authority may determine normal value on the basis of the cost of production of the subject goods produced in India methodology for constructing normal value for China while the Domestic Industry claimed market economy third country export price to India. The Authority undertook desk study of the applicant‟s questionnaire response to verify the data filed by the exporter and the producer. The Authority holds that in case of a NSR investigation which provides a prospective POI of 1 year, the time to respond to the option of market economy third country selection is quite reasonable with the case completion dated being 30/06/2019 as stated above. (emphasis supplied) 40. The Domestic Industry filed comments to the disclosure statement of the Designated Authority. It was stated by it that by reason of prospective period of investigation, the applicant has been able to manipulate and doctor the petition by exporting to India at higher prices since the two importers importing the material from the applicants have imported at relatively higher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ho had filed an application for determination of individual margins of dumping for them since anti-dumping duty on the subject goods from the subject country had already been levied earlier in the original investigation and the two sunset reviews. The producer/exporter came out with a case that they had not exported the product to India during the original period of investigation or the sunset reviews and, therefore, instead of imposing the anti-dumping duty as was contained in the Customs Notification dated January 28, 2016 issued on the basis of the second sunset review, individual margins of dumping should be determined for them. It was for the producer / exporter, as noticed above, to have at the initial stage itself not only informed the Designated Authority whether the normal value should be determined on the basis of a non- market economy country or market economy country and which of the three options available under paragraph 7 of Annexure-I to the 1995 Rules should be adopted by the Designated Authority, but for reasons best known to the producer/ exporters, such information was not divulged to the Designated Authority. In such circumstances it does not lie in the mouth o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he normal value by the Designated Authority by resorting to the second method mentioned in paragraph 7 of Annexure-I to the 1995 Rules as none of the parties had suggested applying the first criteria set out in paragraph 7. The Designated Authority noted that exports from Qatar are next to China in terms of quantum as China accounted for 30303 metric tons and Qatar accounted for 16479 metric tons. Details have been stated in the disclosure statement of the Designated Authority which has been reproduced above in paragraph 39. No anti-dumping duty was imposed on goods from Qatar nor any anti-dumping investigation was in process and, therefore, the normal value of subject goods was correctly constructed by the Designated Authority after making the necessary adjustments. 48. The producer / exporter is also not justified in asserting that Qatar could not have been taken as a surrogate country as the level of development is not similar to that of China. The level of development would be relevant only if the domestic sale price or cost of production of a market economy third country is adopted since the level of development affects the price and cost. The price in international trad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st a surrogate country in these cases and the normal value was computed for non-market economy on the cost basis. 52. It has been pointed out by the Domestic Industry that in all the cases, except at serial no. 1, the Chinese exporter was either granted market economy treatment and normal value was determined on basis of the data given by the Chinese exporter or the request for individual dumping margin was rejected. The factual position has been explained by the Domestic Industry in the following manner: Sr No. File NO. Particulars Date Computation of Normal Value Comments by the Domestic Industry. 1 F No. 7/8/2018-DGAD New/unused pneumatic Radial Tyres 2.5.2019 Not on surrogate country basis Not on surrogate country basis 2 F No. 14/26/2002-DGAD Lead Acid Batteries 1.4.2004 Not on surrogate country basis Exporter has claimed MET treatment. Exporte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as granted Market economy treatment and normal value was determined based on the Chinese exporter‟s data. 10 No. 15/23/2008-DGAD Vitrified/Porcelain Tiles 25.04.2009 Not on surrogate Country basis Exporter has claimed MET treatment. Exporter was granted Market economy treatment and normal value was determined based on the Chinese exporter‟s data. 11 No. 15/29/2010-DGAD Vitrified/Porcelain Tiles 28.09.2012 Not on surrogate Country basis Exporter has claimed Market economy treatment and normal value was determined based on the Chinese exporter‟s data itself. 12 No. 15/20/2011-DGAD Vitrified/Porcelain Tiles 24.07.2013 Not on surrogate Country basis Exporter failed to file MET questionnaire but claimed MET during the verification process. The Authority rejected the same and consequently rejected the request for individual dumping margin a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g in relation to an article on the basis of the facts available on record, it will not be prudent to set aside the final findings of the Designated Authority or the Customs Notification merely for the reason that the producer/ exporter did not apprise the Designated Authority at the initial stages about the method to be adopted for determination of normal value. The appeal filed by the Domestic Industry, therefore, also deserves to be dismissed. 57. The importer has also filed Anti-Dumping Appeal No. 50100 of 2020 with a prayer that the application filed by the producer before the Designated authority under rule 22 of the 1995 Rules was not maintainable for the reason that the export price claim by the applicant was fictitiously high and so the final findings of the Designated Authority and the Customs Notification should be set aside. 58. The export price that has been calculated by the Designated Authority is not the price of the exporter, which as noticed above, was increased substantially in order to lower the anti-dumping duty, but on the basis of the ex-factory price of the producer. There is, therefore, no merit in this appeal. 59. Thus, for all the reasons stated a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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