TMI Blog2021 (1) TMI 1305X X X X Extracts X X X X X X X X Extracts X X X X ..... filed an application before the Designated Authority under the Act read with the Anti-dumping Duty Rules for imposition of anti-dumping duty on the imports of Flexible Slabstock Polyol from the Kingdom of Saudi Arabia and the United Arab Emirates. On the basis of sufficient prima facie evidence submitted by Manali Petrochemicals, a public notice dated 18.09.2019 was published in the Gazette of India initiating the investigation. While detailing the procedure followed in the investigation, it is mentioned that the period of investigation was from 01.04.2018 to 31.03.2019 (12 months) though the injury investigation period covered three years i.e., 2015-16, 2016-17, 2017- 18 plus the period of investigation. Designated Authority provided a copy of the non-confidential version of the application to the known producers / exporters and to the governments of the subject countries. Interestingly, while the name of Dow Chemical as the importer of the subject good has been mentioned, there is no mention about Expanded Polymer Systems as an interested party. However, there is acknowledgment that submissions were received from Indian Polyurethane Association. It further mentions that an or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is to the final findings dated 01.09.2020 of the Designated Authority. As per the final findings, Designated Authority has concluded that the product under consideration has been exported to India from the subject countries below its normal value, thus resulting in dumping. Domestic industry has suffered material injury due to dumping and the material injury has been caused by the dumped imports - Stricto sensu, the final findings of the Designated Authority is a recommendation. Such a recommendation cannot be construed to be an order for the purpose of sub-section (2) of section 9C of the Act. It will become an order only upon acceptance of the recommendation of the Designated Authority by the central government and upon issuance of consequential notification. It is from such date that the period of limitation for filing appeal would commence. Prior to issuance of such notification by the central government, the final findings of the Designated Authority would remain a recommendation which cannot be construed to be an order. Thus, filing of the two writ petitions at this stage appears to be premature. Respondent No. 2 is yet to take a decision on the impugned findings. Certa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overnment of India in Case No.(OI) 14 / 2019. 4. By the said findings, the Designated Authority has recommended imposition of anti-dumping duty on the import of the good Flexible Slabstock Polyol from the Kingdom of Saudi Arabia and the United Arab Emirates. Writ Petition (L) No. 4058 of 2020 5. This petition has been filed by Expanded Polymer Systems Private Limited and by one of its shareholders. Expanded Polymer Systems Private Limited (briefly referred to as Expanded Polymer Systems hereinafter) is a private limited company incorporated under the Companies Act, 1956. It is engaged in the business of manufacturing of various types of polyols. It also imports Voranol 8010G Polyol, which is a higher end of Flexible Slabstok Polyol and which is manufactured by applying a different and advanced technology called DMC technology. 5.1. Respondent No. 4 i.e., Manali Petrochemicals Limited (briefly referred to as Manali Petrochemicals hereinafter) filed an application before respondent No. 1 under the Customs Tariff Act, 1975 (briefly the Act hereinafter) read with the Customs Tariff (Identification, Assessment and Collection of Anti-Dumping Duty on Dumped Articles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions to perpetuate a monopoly; Manali Petrochemicals being the only company manufacturing the product. Various materials and evidence were furnished along with the written submissions. 5.7. At around 14:31 p.m. of 27.08.2020, respondent No. 1 issued an email attaching therewith non-confidential version of the methodology for arriving at non-injurious price calling upon the interested parties to provide additional comments, if any before 11:30 a.m. of 28.08.2020. In effect such comments were required to be furnished by the interested parties in less than 24 hours in a proceeding going on since September, 2019. 5.8. Notwithstanding the above, Expanded Polymer Systems filed its additional written submissions on 28.08.2020. Questions were raised on the methodology applied by the Designated Authority for computation of non- injurious price. It was pointed out that Manali Petrochemicals was using outdated and obsolete KOH technology which led to additional cost of production; besides Manali Petrochemicals had to incur additional cost for undertaking environmental compliance measures on account of use of KOH technology which is stated to be non-eco-friendly. Besides, additional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the final findings dated 01.09.2020; and (iii) for a direction to respondent No. 2 to grant an opportunity of hearing to the petitioner before taking any decision on the final findings dated 01.09.2020. Writ Petition (L) No. 4079 of 2020 6. In this petition Dow Chemical International Private Limited is the petitioner. Here, Manali Petrochemicals is respondent No. 3. 6.1. Dow Chemical International Private Limited (briefly referred to as Dow Chemical hereinafter) is the importer of the product under consideration into India. The product is thereafter resold in the Indian market to domestic consumers / users. 6.2. Respondent Nos. 4 and 5 are exporters of the product to India. They purchase the product from respondent No. 6 which is the sole producer of the product in the Kingdom of Saudi Arabia. It is one of the largest chemical production companies in the world with 26 integrated world-scale manufacturing plants equipped with cutting edge technologies within its complex. Thus, the product is produced by respondent No. 6 which is thereafter purchased by respondent Nos. 4 and 5 from whom petitioner - Dow Chemical purchases the product which is then importe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Designated Authority to file comments under disclosure statement. Besides, it was highlighted that no such levy of anti-dumping duty was sought for by Manali Petrochemicals on imports of the product from Singapore. 6.7. However, brushing aside all such concerns, respondent No. 1 issued the final findings on 01.09.2020 recommending levy of anti-dumping duty on the product from the subject countries. 6.8. Aggrieved, the present writ petition has been filed by the petitioner seeking the following reliefs:- (i) to set aside and quash the final findings dated 01.09.2020; and (ii) to direct respondent No. 2 not to proceed further pursuant to the impugned final findings dated 01.09.2020. Court orders 7. Hearing of the two petitions commenced on 08.10.2020. On 13.10.2020 while continuing with the hearing, the following interim order was passed:- 3) Since we are in the midst of hearing, we direct that no decision shall be taken on the final findings (recommendations) dated 01.09.2020 of Respondent No. 1. 7.1. Thereafter, the hearing was concluded on 23.10.2020 with the direction that interim order passed earlier shall continue till delivery of judgment. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owledged, petitioner provided detailed technical and consumer evidence along with other materials. Designated Authority issued an email on 27.08.2020 at 14:31 hours stating that the non-confidential version of section IV i.e., methodology for arriving at non-injurious price was inadvertently omitted in the disclosure statement and, therefore, the same was forwarded with the email. Designated Authority directed that the interested parties should file additional comments on the non-confidential version document on the next day itself i.e., on 28.08.2020 by 11:30 a.m. Following the same, petitioner filed further written submission on 28.08.2020 on the issues raised by the Designated Authority. Thereafter, Designated Authority passed the final findings within a span of just three days on 01.09.2020. 8.2. On the basis of the above factual backdrop Mr. Shah has assailed the impugned findings on the following grounds:- (1) Non-consideration of submissions and evidence on 'like article' in response to comments in the disclosure statement; (2) Violation of the laid down procedure in the computation of non- injurious price; It is submitted that computation of non-injuriou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Mr. Shah, Mr. Shroff, learned senior counsel appearing for the petitioner - Dow Chemical has assailed the impugned findings on the following grounds:- (1) Non-disclosure of essential facts in the disclosure statement; In this connection, he has referred to rule 16 of the Anti-dumping Duty Rules. In the name of providing the petitioner confidential calculations or computations, Designated Authority has merely provided a table with three final figures but without any back-up working or computation. The confidential numbers without any calculation or methodology were provided a day after issuance of the disclosure statement. Documents and evidence placed before the Designated Authority were not considered. Since the Designated Authority has not considered the submissions made, therefore, the disclosure statement is a non-speaking one. Petitioner had all along maintained that the products are not being dumped; relevant records, information and computation were also submitted before the Designated Authority demonstrating nil dumping. Thus, Designated Authority has failed to disclose essential facts besides non-disclosure of costing information, computation and methodology used in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ority has not conducted verification in accordance with the practice and procedure as prescribed; (6) Computation of landed value is in contravention of law; 9.1. Apart from the above, Mr. Shroff has pointed out that there are inherent contradictions in the impugned findings attributing causal link by the Designated Authority to factors such as price end cutting, price suppression, price depression, etc. which are completely opposite to the findings arrived at by the Designated Authority for each of these factors. 9.2. Another point highlighted by Mr. Shroff to suggest that Designated Authority was predisposed towards Manali Petrochemicals is that it had dispatched a notice / letter to the government of the Kingdom of Saudi Arabia on 18.09.2019 on which date itself the investigation was initiated. In this connection, reference has been made to article 5.5 of the agreement on implementation of Article VI of General Agreement on Tariffs and Trade, 1994 and submits that obligation to mandatorily notify the government of the exporting country is not an empty formality. Sufficient time has to be given to the government to respond to the notice before initiating investigation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o, just 21 days before the investigation completion date. Reasonable opportunity of hearing does not mean that investigation carried out by the Designated Authority can be continued ad infinitum beyond the statutory time frame for conclusion of investigation. 11.3. On the issue of 'like article' submission of Ms. Arora is that having regard to the definition of 'like article' in rule 2(d) of the Anti-dumping Duty Rules and the judicial pronouncements, Designated Authority took a conscious decision after dealing with all arguments of the petitioner holding that the product manufactured by Manali Petrochemicals and the product under consideration are 'like article'. Objection of the petitioner was rejected on merit. Since it is a rejection on merit, writ jurisdiction would not be an appropriate forum to highlight grievance on merit or to challenge such rejection. 11.4. Similar arguments have been made by Ms. Arora with regard to the submissions on non-disclosure of essential information in relation to non- injurious price of the domestic industry. Regarding cost incurred in effluent treatment plant, she submits that the Anti-dumping Duty Rules do not con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is an effective and efficacious remedy to a person who feels aggrieved by such recommendation. When petitioners have an adequate and efficacious alternative remedy, the Writ Court may not invoke its extra- ordinary jurisdiction to determine a lis centering around levy of anti-dumping duty. In support of her submissions, she has placed before the Court several decisions of the Supreme Court and of various High Courts. 12. In his reply submissions, Mr. Shah reiterates what he had submitted and in addition contends that there is clear violation of the principles of natural justice; in this case, by the Designated Authority. Law is settled that notwithstanding availability of alternative remedy, if there is violation of the principles of natural justice then the Writ Court can certainly invoke its jurisdiction and interfere in the matter. In support of his submissions, he has referred to several decisions of the Gujarat High Court and of the Gauhati High Court. Further referring to the decision of the Supreme Court in Whirlpool Corporation Vs. Registrar of Trade Marks, (1998) 8 SCC 1, he submits that availability of alternative remedy would not operate as a bar to the exercise of j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld not be efficacious; besides it would be a jurisdictional issue. 14. Submissions made by learned counsel for the parties have been duly considered. Also perused the materials on record and considered the judgments cited at the bar. Historical background and statutory framework 15. The General Agreement on Tariffs and Trade (GATT) came into force on 1st January, 1948. Initially 23 countries including India had signed the said agreement. As per the recital to the agreement recognizing that their relations in the field of trade and economic endeavour should be conducted with a view to raising standards of living, ensuring full employment and the large and steadily growing volume of real income and effective demand, developing the full use of the resources of the world and expanding production and exchange of goods; and being desirous of contributing to these objectives by entering into reciprocal and mutually advantageous arrangements directed to the substantial reduction of tariffs and other barriers to trade and to the elimination of discriminatory treatment in international commerce, the 23 countries had entered into the said agreement. 15.1. Article VI of the Gen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly of the movements of export prices, which results at times in the sale of the commodity for export at a price lower than the comparable price charged for the like commodity to buyers in the domestic market would not result in material injury if it is determined by consultation amongst the contracting parties substantially interested in the commodities concerned. 16. This is followed by an agreement on implementation of Article VI of the General Agreement on Tariffs and Trade, 1994. As per article 1, an anti- dumping measure shall be applied only under the circumstances provided for in Article VI of the General Agreement on Tariffs and Trade and pursuant to investigations initiated and conducted in accordance with the provisions of the said agreement. Articles 2 to 18 are the provisions governing the application of Article VI of the General Agreement on Tariffs and Trade in so far action is taken under anti-dumping law. 16.1. Article 2 deals with determination of dumping. As per article 2.1, a product is to be considered as being dumped i.e., introduced into the commerce of another country at less than its normal value, if the export price of the product exported from one c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ays that the authorities shall examine the accuracy and adequacy of the evidence provided in the application to determine whether there is sufficient evidence to justify initiation of an investigation. Further, as per article 5.4, an investigation shall not be initiated unless the authorities have determined on the basis of an examination of the degree of support for, or opposition to the application expressed by domestic producers of the like product, that the application has been made by or on behalf of the domestic industry. However, a negligible quantity of imports would not be sufficient to cause such injury. This is made clear by article 5.8 which says that there shall be immediate termination in cases where the authorities determine that the margin of dumping is de minimis or that the volume of dumped imports, actual or potential, or the injury is negligible. Moreover, article 5.9 clarifies that an anti-dumping proceeding shall not hinder the procedures of customs clearance besides mandating in article 5.10 that investigations shall except in special circumstances be concluded within one year and in no case more than 18 months, after initiation. 16.5. Article 6 lays down ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of anti-dumping duty shall not exceed the margin of dumping. 16.7. Article 10 makes it clear that anti-dumping duty shall only be applied to products which enter for consumption after the decision taken under article 9.1 comes into force. 16.8. Article 11 speaks about duration and review of anti-dumping duties. It says that an anti-dumping duty shall remain in force as long as and to the extent necessary to counteract dumping which is causing injury; besides, the authorities shall review the need for the continued imposition of the duty either on its own initiative or upon request by any interested party. If upon such review, the authorities determine that the anti-dumping duty is no longer warranted, it shall be terminated immediately. 16.9. Article 12 provides for public notice and explanation of determinations. As per article 12.1, when the authorities are satisfied that there is sufficient evidence to justify initiation of an anti-dumping investigation, the interested parties shall be notified and a public notice shall be given regarding initiation of investigation making available adequate information, such as, name of the exporting country and the product involve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 to sub-section (1) defines the expressions margin of dumping , export price and normal value . Sub-section (2) says that the central government may, pending the determination of the normal value and the margin of dumping in relation to any article, impose on the importation of such article into India an anti-dumping duty on the basis of a provisional estimate. As per sub-section (6), the margin of dumping shall from time to time be ascertained and determined by the central government after such inquiry as it may consider necessary and the central government may by notification in the Official Gazette make rules for the purpose of this section; such rules may provide for the manner in which articles liable for any anti-dumping duty may be identified, and the manner in which the export price and the normal value of, and the margin of dumping in relation to, such articles may be determined and for the assessment and collection of such anti-dumping duty. At this stage, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntral government is empowered to make rules providing for the manner in which investigation may be made and the factors to be taken into consideration while making such investigation. 17.3. Section 9C deals with appeal. As per sub-section (1), an appeal against the order of determination or review thereof regarding the existence, degree and effect of subsidy or dumping in relation to the import of any article shall lie to the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) constituted under section 129 of the Customs Act, 1962. Under sub-section (2), such an appeal is required to be filed within 90 days of the date of the order under appeal which period may be extended by the CESTAT if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal in time. In terms of sub-section (3), CESTAT may after giving the parties to the appeal an opportunity of being heard pass such orders thereon as it thinks fit confirming, modifying or annulling the order appealed against. Sub-section (5) provides that such an appeal shall be heard by a Special Bench of the CESTAT consisting of the president and not less than two members and shall include one ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section (6) of section 9A and sub-section (2) of section 9B of the Act, the central government has made the Customs Tariff (Identification, Assessment and Collection of Anti- dumping Duty on Dumped Articles and for Identification of Injury) Rules, 1995 (already referred to as the Anti-dumping Duty Rules ). 18.1. Rule 2 defines various words and expressions used in the Act and in the Anti-dumping Duty Rules. Words and expressions like 'domestic industry', 'interested party' and 'like article' have been defined. 18.2. Appointment of Designated Authority is provided in rule 3. Central government may by notification in the Official Gazette appoint a person not below the rank of a joint secretary to the Government of India or such other person as the government may think fit as the Designated Authority. 18.3. Rule 4 deals with duties of the Designated Authority which includes investigation as to the existence, degree and effect of any alleged dumping in relation to import of any article, besides making recommendation about levy of anti-dumping duty. 18.4. Initiation of investigation is dealt with in rule 5. As per sub-rule (1), such an investigation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rule 11. Since these two provisions are relevant, those are extracted hereunder:- 10. Determination of normal value, export price and margin of dumping.- An Article shall be considered as being dumped if it is exported from a country or territory to India at a price less than its normal value and in such circumstances the Designated Authority shall determine the normal value, export price and the margin of dumping taking into account, inter alia, the principles laid down in Annexure I to these rules. 11. Determination of injury.- (1) In the case of imports from specified countries, the Designated Authority shall record a further finding that import of such article into India causes or threatens material injury to any established industry in India or materially retards the establishment of any industry in India. (2) The Designated Authority shall determine the injury to domestic industry, threat of injury to domestic industry, material retardation to establishment of domestic industry and a causal link between dumped imports and injury, taking into account all relevant facts, including the volume of dumped imports, their effect on price in the domestic market ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 findings, anti-dumping duty not exceeding the margin of dumping as determined under rule 17. 18.13. From a reading of rule 18(1), we find that the word 'may' has been used while conferring jurisdiction on the central government to levy anti-dumping duty as per recommendation of the Designated Authority. Ordinarily, the word 'may' denotes exercise of power in discretion in contradistinction to the obligatory nature of the exercise of power when the word 'shall' is used. Therefore, while learned counsel for the petitioners had submitted that central government is bound to issue the consequential notification following final findings recorded by the Designated Authority, we however feel that a discretion is vested in the central government to apply its mind and thereafter take a conscious decision on the final findings recorded by the Designated Authority. While the central government may not exercise its power unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stock Polyol from the Kingdom of Saudi Arabia and the United Arab Emirates. On the basis of sufficient prima facie evidence submitted by Manali Petrochemicals, a public notice dated 18.09.2019 was published in the Gazette of India initiating the investigation. While detailing the procedure followed in the investigation, it is mentioned that the period of investigation was from 01.04.2018 to 31.03.2019 (12 months) though the injury investigation period covered three years i.e., 2015-16, 2016-17, 2017- 18 plus the period of investigation. Designated Authority provided a copy of the non-confidential version of the application to the known producers / exporters and to the governments of the subject countries. Interestingly, while the name of Dow Chemical as the importer of the subject good has been mentioned, there is no mention about Expanded Polymer Systems as an interested party. However, there is acknowledgment that submissions were received from Indian Polyurethane Association. It further mentions that an oral hearing had taken place on 04.03.2020 but another oral hearing was held on 15.07.2020 in view of change of the Designated Authority. It is also stated that the essential fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rties providing information on confidential basis were directed to provide sufficient non-confidential version of the information filed on confidential basis. 21.4. In so far normal value, export price and determination of dumping margin are concerned, it is stated that Designated Authority considered the views of the domestic industry and of the interested parties whereafter normal value, export price and dumping margin were determined and disclosed in the form of a table. Designated Authority observed that the dumping margins are more than the de minimis limits. The following is the table provided by the Designated Authority:- 36. Based on the above, the dumping margin is determined as under: Country Producer Normal Value/ CNV (US$/MT) Export Price (US$/MT) Dumping Margin (US$/MT) Dumping Margin % Dumping Margin Range Saudi Arabia Sadara Chemical Company *** *** *** *** 20-30 Others *** ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng his findings as under:- a. The product under consideration has been exported to India from the subject countries below its associated normal value, thus resulting in dumping. b. The Domestic Industry has suffered material injury due to dumping of the product under consideration from the subject countries. c. The material injury has been caused by the dumped imports from the subject countries. 21.10. After recording the findings as above, Designated Authority took the view that imposition of definitive anti-dumping duty is required to offset dumping and injury and that the authority therefore considers it necessary to recommend imposition of anti-dumping duty on imports of the subject good from the subject countries whereafter the following recommendations have been made:- 109. In terms of provision contained in Rule 17(1)(b) read with Rule 4(d) of the Rules, the Authority recommends imposition of anti-dumping duty equal to the lesser of margin of dumping and the margin of injury, so as to remove the injury to the Domestic Industry. Accordingly, definitive anti-dumping duty equal to the amount mentioned in Column 7 of the duty table below recommended to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sfies the CESTAT that it was prevented by sufficient cause from filing the appeal in time. Admittedly, in both the petitions the challenge is to the final findings dated 01.09.2020 of the Designated Authority. As per the final findings, Designated Authority has concluded that the product under consideration has been exported to India from the subject countries below its normal value, thus resulting in dumping. Domestic industry has suffered material injury due to dumping and the material injury has been caused by the dumped imports. On the basis of such conclusions, Designated Authority has recommended to the central government that anti-dumping duty should be levied on the product imported from the subject countries. It has recommended that imposition of anti-dumping duty should be equal to the lesser of margin of dumping and the margin of injury, so as to remove the injury to the domestic industry. 26. Stricto sensu, the final findings of the Designated Authority is a recommendation. Such a recommendation cannot be construed to be an order for the purpose of sub-section (2) of section 9C of the Act. It will become an order only upon acceptance of the recommendation of the Desi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... those are complex in the face of violation of the principles of natural justice but the moot point is that having regard to the nature of the lis and the complexities involved, Court is of the view that the aggrieved party should exhaust the remedy provided by the statute because the remedy of appeal provided will be adjudicated by a specialized body competent to deal with such intricate commercial disputes. 29. In the course of the hearing, we also found that in Designated Authority Vs. Sandisk International Limited, (2018) 13 SCC 402, Supreme Court set aside the judgment of the Delhi High Court which had interfered with the final findings of the Designated Authority. Noting that there are seriously disputed questions, it was held in the facts of the said case that the High Court was not justified in exercising its writ jurisdiction and in setting aside the final findings of the Designated Authority; rather the High Court should have asked the petitioner to await issuance of the final notification and to challenge the same before the appellate forum under section 9C. In such an eventuality, the final findings of the Designated Authority were bound to be considered by the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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