TMI Blog2003 (12) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... ing duty has been suspended by the impugned notifications with a view to unduly favour a Chinese producer at the cost of violating the statutory Rules which permits only a periodic review. Secondly, the new shipper review has been initiated without even conducting any preliminary investigation to ascertain as to whether the conditions precedent for invoking the new shipper review under Rule 22 have been fulfilled or not and thirdly, by permitting clearance of the subject goods during the new shipper review without payment of anti-dumping duty serious injury would be caused to the domestic industry including the Petitioners. 2.Before dealing with the facts of the case, it would be appropriate to briefly refer to the history and the law relating to anti-dumping duty. 3.The concept of global economy though mooted by some countries in the year 1947, it gathered momentum in the year 1994 when Comprehensive General Agreement on Tariffs and Trade (GATT, 1994) was arrived at by as many as 118 member countries. Thereafter, the World Trade Organisation (W.T.O.) was established on 1st January, 1995 by 104 members nations of GATT. With the formation of the W.T.O., GATT, 1994 became part of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t specific safeguard duty on imports from the Peoples' Republic of China. Section 9 deals with the countervailing duty on subsidized articles. Sections 9A, 9AA, 9B and 9C deal with anti-dumping duty on dumped articles. 6.Generally, a product is said to have been 'dumped' if it is introduced into the commerce of another country at less than the normal value of the product and it causes/threatens material injury to the established domestic industry of that country. In order to offset or prevent dumping, Article VI of the GATT provides that the importing country may levy anti-dumping duty on any product not greater than the margin of dumping. To illustrate, if a camera is exported from China to India, whose export price at the ex-works level is US $ 100/- and the domestic selling price of the camera within China at Ex-works level is US $ 125/-, then the export price being less than the domestic selling price, it is said that China is dumping the camera into India with dumping margin of US $ 25/- and under Section 9A of the CTA, anti-dumping duty to the extent of US $ 25 can be levied. 7.Pending determination of margin of dumping, in relation to any article, the Central Government ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efund of anti-dumping duty if the final anti-dumping duty levied is less than the provisional anti-dumping duty levied. 9.If a product is subject to anti-dumping duties, then under Rule 22, the designated authority is empowered to carry out periodical review to determine the individual margin of dumping for any exporter or producer in the exporting country who had not exported the product to India during the period of investigation and who are not related to any of the exporters or producers in the exporting country who are subject to the anti-dumping duties on the product. Rule 22 which is relevant for the present petition reads as under : "22.Margin of dumping, for exporters not originally investigated. - (1) If a product is subject to anti-dumping duties, the designated authority shall carry out a periodical review for the purpose of determining individual margins of dumping for any exporters or producers in the exporting country in question who have not exported the product to India during the period of investigation, provided that these exporters or producers show that they are not related to any of the exporters or producers in the exporting country who are subject to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in/or exported from U.A.E. and China have been exported to India below the normal value, resulting in dumping, (b) the Indian industry had suffered material injury, (c) the injury has been caused cumulatively by the imports from the subject countries. By the said preliminary findings, the DA recommended imposition of provisional anti-dumping duty, pending final determination on all imports of subject goods originating in or exported from U.A.E. and China. Accordingly, by a Notification No. 50 of 2002 issued on 2nd May, 2002, the Government of India in exercise of its powers under Section 9A(2) of the CTA levied provisional anti-dumping duty on the subject goods originating in or exported from China and U.A.E. at the rate to be calculated at the difference between US $ 13.62 per square metre and the landed value of such imported subject goods in US $ per square metre. The provisional anti-dumping duty levied under the said Notification was to be effective up to 1st November, 2002. 11.During the pendency of the investigation and determination of the margin of dumping, the Respondent No. 4 ('Nanhai' for short) producer/new shipper from China made an application dated 6th September, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered material injury and accordingly recommended anti-dumping duty on all export of subject goods from China at 8.28 US $ per square metre. The DA recommended anti-dumping duty on RAK Ceramics from U.A.E. at 0.74 US $ per square metre and all other exporters from U.A.E. at 5.54 US $ per square metre. The Central Government accepted the final findings of the DA and by a Notification No. 73/2003, dated 1st May, 2003 levied final anti-dumping duty on subject goods under Section 9A(1) of the CTA read with Rules 18 and 20 of the 1995 Rules as follows : China - All exporters 8.28 US $ per square metre. U.A.E. - RAK Ceramics 0.74 US $ per square metre. All others 5.54 US $ per square metre. 13.In the meanwhile, on publication of final findings, Nanhai, by their Advocate's letter dated 15th March, 2003 submitted their second new shipper review application dated 28th February, 2003 to the DA once again stating therein that they had not exported goods to India during the period of investigation from April, 2000 to March, 2001, that they are not related to any other exporter or producer from China who may have exported the subject goods to India and that the price at which the Nanhai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with such security and guarantee as the Customs Authorities deem fit. Challenging the said Notification dated 23rd May, 2003 initiating new shipper review and the Notification dated 1st July, 2003 suspending the anti-dumping duty on the subject goods produced by Nanhai during the new shipper review the present petition is filed. We have permitted M/s. NITCO Tiles Limited, who are the importers of the subject to be impleaded as interveners. 15.Mr. Hidaytullah, learned Senior Advocate, appearing for the Petitioners submitted that the impugned Notification dated 23rd May, 2003 and 1st July, 2003 have been issued in mala fide exercise of power on the following grounds :- (a) within 22 days of levying final anti-dumping duty on 1st May, 2003, the impugned Notification initiating new shipper review has been issued on 23rd May, 2003 with undue haste. (b) Rule 22 provides for periodical review and not review within 22 days of levying final anti-dumping duty. (c) When the initiation of first new shipper review was terminated on the ground that the same cannot be entertained before the levy of final levy of anti-dumping duty, the second new shipper review applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia during the period of investigation. In the present case no such declaration has been made by Prestige, the Exporter. (j) In the absence of a declaration by Prestige, that they are not related to the known Exporters in China, who might have exported the goods, the initiation of review is bad in law. (k) There is no declaration by Nanhai that they are not related to any Exporter or Producer in U.A.E. (l) In the absence of a declaration filed by Prestige as required under Rule 22, the DA without holding any preliminary enquiry could not have said that the conditions of Rule 22 are complied with. Thus according to the learned Counsel, there is voluminous evidence on record which conclusively establishes that the impugned Notification has been issued in mala fide exercise of power and, hence, the same is liable to be quashed and set aside. 16.The next submission was that the Notification dated 23rd May, 2003 issued by the DA is ultra vires Rule 22. It was submitted that a Notification is a result of the delegated legislation and such a legislation is valid only if it conforms exactly to the powers granted. Such a legislation must be intra vires the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view under Rule 22 could only be at fixed intervals and not within 22 days of levying anti-dumping-duty. 19.Referring to Article 9.5 of GATT, 1994 which calls for new shipper review on prompt and accelerated basis, it was submitted that when the Indian legislation has consciously departed from the language used in GATT, 1994 and the legislature has chosen the words "periodic review" instead of "prompt review", proper meaning must be given to the words used in the legislation. It was submitted that before initiating the new shipper review, the DA must investigate as to whether the application falls within the period which is ripe for review. If he finds that the application is not ripe for review, he must reject the application forthwith and cannot keep it pending. Similarly, the DA must satisfy himself as to whether the Producer or the Exporter had not exported the produce to India during the period of investigation. Thereafter, the DA has to satisfy himself and/or pursue the evidence produced by the Exporter or the Producer that they are not related to any of the Exporters or the Producers in the exporting country which are subject to the anti-dumping duty. It was submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tage Prestige who has only a Post Office Box Number and no address in Dubai has filed application under Rule 22. However, contrary to the application, the subject goods have been directly exported by Nanhai to NITCO, a consumer in India. The price of the goods to be sold by Nanhai to Prestige ranges from US $ 2.75 to US$ 5.90. It was submitted that even if the FOB price is to be taken for import into India it is apparent that there is gross dumping because the margin of dumping imposed under the Notification dated 1st May, 2003 is US $ 8.28 for China and US $ 5.54 for U.A.E. It was submitted that the dumping has been resorted to by Nanhai, Prestige and NITCO for commercial gains and profits, so that on suspension of anti-dumping duty during new shipper review, huge quantities of subject goods can be imported into India and distributed by NITCO which has All India Dealers Network. As per the purchase order placed before the Court, 15 lakhs square metres of subject goods produced by Nanhai are to be exported to India. 2.14 lakhs square metres of subject goods have already been imported by NITCO in July, 2003 itself and if the remaining quantity is allowed to be imported, injury will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bject to provisional assessment and on investigation if the anti-dumping duty is levied, then the Importer of the said goods is liable to pay the duty with retrospective effect from the day of initiation of new shipper review. Mr. Rana submitted that on account of provisional clearance of the subject goods on initiation of new shipper review, if any prejudice is caused to the domestic industry, it cannot be helped because suspension of the anti-dumping duty during the period of investigation is a statutory requirement. Mr. Rana relied upon the judgment in the case of Walter v. Howe reported in 1881 Chancery Division XVII 707 wherein it was held that the word "any periodical work" would include a newspaper which is published daily. Accordingly, it was submitted that the word "periodic" in Rule 22 should be construed liberally. In any event, Mr. Rana submitted that as the word "periodic" is not defined, it would be proper to look into the provisions contained in the parent document i.e. Article 9.5 of GATT, 1994 which calls for new shipper review on prompt basis. For this purpose, he relied upon the decision in the case of Salomon v. Commissioner of Customs Excise reported in 1966 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... new shipper investigation are in accordance with law. 26.Mr. Shreedharan, learned Counsel, appearing on behalf of Nanhai, from China and Prestige from U.A.E. (Respondent Nos. 4 and 5) submitted that the plain and unambiguous words used in Rule 22 are that during the period of investigation under new shipper review, the Revenue cannot levy anti-dumping duty. He submitted that the contention of the Petitioners that even during such investigation, the anti-dumping duty must be collected from the new shipper amounts to rewriting the section in a way which will destroy the very purpose for which Rule 22 was enacted. He submitted that the submissions of the Petitioners that the Importer must pay now and later on claim refund, runs counter to the basic concept of Rule 22. He submitted that the DA while initiating new shipper review on 23rd May, 2003 had categorically recorded that he is prima facie satisfied that the conditions precedent set out in Rule 22 are complied with and, therefore, he is initiating the review to determine a separate margin of dumping in the case of Nanhai and Prestige. Once the new shipper review is initiated under Rule 22(1), it is obligatory on the part of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erment made in the petition. After the initiation, of new shipper review the domestic industries including the Petitioners were called upon to give their say in the matter. The Petitioners accordingly made three representations and in none of those representations it was stated that there was no prima facie satisfaction on the part of the DA before initiating the new shipper review. He submitted that both the requirements contained in Rule 22 set out hereinabove were fulfilled in the present case and there is no statutory requirement to find out whether the new shipper is dumping the goods or not, or, whether such imports would cause injury to the domestic industry in India, or not. He submitted that Rule 22(1) does not require the DA to form an opinion or record satisfaction that he has reason to believe that the conditions precedent for invoking the new shipper review under Rule 22 are satisfied. According to the Counsel, the statements made by the new shipper that he has not exported the goods during the period of investigation and that he is not related to the producer or the exporter in the exporting country were sufficient for the DA to initiate the new shipper review. 29.A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioners that the application of Nanhai dated 28th February, 2003 is non est, Mr. Shreedharan submitted that Rule 22 does not require that at the time of making the application seeking new shipper review, the anti-dumping duty should be in force. He submitted that Rule 22 requires that on the date of initiating new shipper the duty should be in force. In the present case when the new shipper review was initiated on 23rd May, 2003, the anti-dumping duty levied on 1st May, 2003 was already in force and hence, the initiation of new shipper review is in accordance with law. 32.With reference to the grievance of the Petitioners that the new shipper review can be initiated after six months or one year of levying anti-dumping duty, Mr. Shreedharan submitted that the proper context of the words "periodical review" in Rule 22 would be to initiate new shipper review "as and when" the application is made by a new shipper. He referred to Section 9A(6) of the CTA which provides that the margin of dumping referred to in Section 9A(1) is to be ascertained from time-to-time by making such inquiry as the Central Government considers necessary and for that purpose the Central Government was empower ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s on the duty element to the customer while selling the subject goods in the market. 35.Mr. Shreedharan submitted that the proviso to Rule 22(2) which empowers the Central Government to ask for guarantee at the time of provisional assessment cannot be construed to mean cash payment of duty, especially when Rule 22(2) specifically provide that the Central Government shall not levy anti-dumping duty during the period of investigation. Relying upon the decision of the Apex Court in the case of Director of Education (Secondary) v. Pushpendra Kumar reported in AIR 1998 SC 2230 at 2234 and the decision of the Apex Court in the case of Madan Gopal v. Additional District Judge reported in AIR 1989 SC 155 at 157 he submitted that a proviso cannot be interpreted in a manner so as to defeat the main provision. 36.Relying upon the decision of the Apex Court in the case of Subhash Photographics v. Union of India reported in 1993 (66) E.L.T. 3 (S.C.) at para 15. Mr. Shreedharan submitted that the statutes like the Customs Act and Customs Tariff Act can be administered only by constantly adjusting it to the needs of the situation. This calls for good amount of discretion to be allowed to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 new shipper review could be initiated only after the completion of the investigation and levy of final anti-dumping duty under Section 9A(1) of the C.T.A. Thus, the new shipper who has been requesting the DA to investigate and determine the margin of dumping in respect of his goods since 6th September, 2002 had to wait till completion of investigation and levy of duty on 1st May, 2003. Therefore, the DA was justified in taking up the case of Nanhai for investigation under Rule 22 immediately after the levy of duty. Any further delay in initiating the new shipper review would have caused great injustice to Nanhai, because, it would mean refusing to investigate the case of Nanhai before and after the levy of anti-dumping duty and at the same time subjecting the new shipper to the levy of duty. Mr. Dada submitted that this type of damnifying an exporter without the facts relating his product and prices being considered or investigated, is not what is contemplated in law. He further submitted that there was no requirement in law that the new shipper review application should be made after the levy of final anti-dumping duty and, therefore, the initiation under Rule 22 on the basis of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S.C.) and submitted that even if for any reason it is held that the impugned notifications cannot be sustained, then, appropriate orders be passed in the matter so that without any investigation the anti-dumping duty is not required to be paid on the subject goods produced by Nanhai and imported by the intervenors. 42.In rejoinder, Mr. Hidaytullah submitted that the power given to the DA under Rule 22 is a discretionary power based on subjective satisfaction which is reviewable in a writ jurisdiction. He submitted that the DA should have conducted at least prima facie investigation especially when there was another company in China with the name Nanhai who was already investigated. In India unlike in U.S.A. and U.K. where the Rules itself provide that the applicant himself can certify that he is not related to other exporters, there is no such Rule and, therefore, it was obligatory on the part of Nanhai to show that it is not related to other exporters and the DA must have subjective satisfaction that the new shipper is not related to the other exporters. In the absence of any such satisfaction the entire action on the part of the DA must fail. Relying on the decision of the Apex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew the individual margin of dumping is determined for exporters who were not originally investigated. In other words, the basic purpose for providing new shipper review is to see that in a global economy the exporters whose margin of dumping has not been determined are not burdened with the anti-dumping duty levied by the importing country. Unlike the general review provided under Ru1e 23, initiation of periodic review under Rule 22 for determination of individual margin depends upon the applications made for new shipper review. If there are no applications made, there is no question of initiating new shipper review at regular intervals. Therefore, the periodic review under Rule 22 although means review at regular intervals, it cannot be construed too rigidly so as to refuse new shipper review in a deserving case. In the present case, Nanhai has been seeking new shipper review since 6th September, 2002. However, the same could not be considered till the original investigation was completed and anti-dumping duty was levied on 1st May, 2003. The case of Nanhai could not be considered under the original investigation because Nanhai had n o t exported the goods during the period under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew shipper review and the Prestige had not declared that it had not exported the subject goods to India and is not related to the exporters who might have exported the subject goods to India, the initiation of new shipper review is bad in law. For determining the margin of dumping what is relevant is the ex-factory export price and the ex-factory sale price or the normal value of the subject goods in the domestic market for domestic consumption. If the export price is lower than the normal value, than it amounts to dumping. Therefore, determination of the normal value of the subject goods in the country of origin i.e. the country in which the subject goods are produced assumes greater importance in determining the margin of dumping. Whether the producer or the exporter, as the case may be, are from the same country or from different country is not relevant for determining the normal value of the subject goods. In this view of the matter to determine the individual margin of dumping in the case of Nanhai by way of new shipper review, what is relevant is, whether the subject goods produced by Nanhai were exported to India during the original investigation period and whether Nanhai is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gospel truth. It will be open to the DA to look into the evidence collected at the time of original investigation or any other material that is available to him to prima facie ascertain the veracity of the statements made by the new shipper. If there is material evidence to contradict the statements made in the application, then the DA can refuse to initiate new shipper review. In the present case, on the date of initiation of new shipper review, there was no material on record to show that the statements made by Nanhai were not correct. Neither in the petition nor at the time of arguments any material has been produced by the Petitioners to show that the declaration made by the new shipper is not correct. In this view of the matter no fault can be found with the order of DA in recommending initiation of new shipper review. Once the statements made in the application filed by Nanhai were prima facie found to be correct, the D.A. was justified in initiating the new shipper review. In our opinion, there was no requirement under the Rules for the DA to ascertain the linkage between the exporter and the producer or any other exporters in UAE before initiating new shipper review. Neithe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng. The fact that the price of the new shipper is less than the anti-dumping duty levied under Section 9A(1) of the CTA cannot a ground to levy anti-dumping duty on the new shipper. It is the margin of dumping which is relevant for levying anti-dumping duty. In the present case, there is no prima facie material to show that the goods of the new shipper are dumped into India. The margin of dumping can be ascertained only after the detail investigation. In a free market economy, the domestic industry cannot complain about the competitive price of the exporter. However, on account of the competitive price of the new shipper if the domestic industry is seriously prejudiced, there are other provisions under the CTA which can be invoked to safeguard the domestic industry. However, anti-dumping duty can be levied only if there is dumping and to the extent of margin of dumping. The apprehension of the Petitioners that the goods of the new shipper cleared on guarantee may be sold in the market at a much lesser price so as to cause material injury to the domestic industry cannot be a ground for levying provisional anti-dumping duty. The price at which the imported goods are sold in India is ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
