Dmt 1 customs appeals 18-09 & ors . IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGNAL CIVIL JURISDICTION CUSTOMS APPEAL NO. 18 OF 2009 The Commissioner of Customs (Import), Mumbai. .. Appellant.. versus M/s. Samarth Industries. .. Respondent. WITH CUSTOMS APPEAL NO. 46 OF 2008 The Commissioner of Customs (Import), Mumbai. .. Appellant.. versus M/s. Abhinav Ceramics. .. Respondent. WITH Dmt 2 customs appeals 18-09 & ors . CUSTOMS APPEAL NO. 49 OF 2008 The Commissioner of Customs (Import), Mumbai. .. Appellant.. versus M/s. Nitco Tiles Ltd., .. Respondent. WITH CUSTOMS APPEAL NO. 50 OF 2008 The Commissioner of Customs (Import), Mumbai. .. Appellant.. versus M/s. Harsh International. .. Respondent. .......... Mr. Pradeep S. Jetly for the Appellants in all Appeals. Mr. V. Sridharan, Sr. Adv. with Mr. Prakash Shah and Mr. Jas Sanghavi i/by PDS Legal for Respondents. WITH WRIT PETITION NO. 2143 OF 2005 Dmt 3 customs appeals 18-09 & ors . Nandlal B. Surekha. .... Petitioner. Versus The Union of India & Ors. .... Respondents. Mr. V. Sridharan, Sr. Adv. with Mr. Prakash Shah and Mr. Jas Sanghavi i/by PDS Legal for Petitioner. Mr. A.S. Rao for Respondents. WITH WRIT PETITION NO. 4027 OF 2004 Shreyas Trading Co. & Anr. .... Petitioners. Versus The Union of India & Ors. .... Respondents. Mr. D.B. Shroff, Sr. Adv. with Mr. Karl Shroff, Mr. RAK Nazam - Es- Sani i/by Mr. V.P. Sawant for the Petitioners. Mr. V.H. Kantharia for Respondents. ..... Dmt 4 customs appeals 18-09 & ors . CORAM : DR.D.Y.CHANDRACHUD & A. A. SAYED, JJ. 15 DECEMBER 2011. ORAL JUDGMENT : (PER DR.D.Y.CHANDRACHUD, J.) This order will govern the Appeals and the Writ Petitions under Article 226, which have been heard together. Learned Counsel stated that the facts in all these matters and, the questions of law raised are similar. Hence, we propose to dispose of this batch of cases by a common judgment. For the sake of convenience, the facts in Customs Appeal 18 of 2009 are discussed. 2. This Appeal by the Commissioner of Customs is against an order of the Customs Excise & Service Tax Appellate Tribunal dated 1 August 2007. The Tribunal has held, inter alia, that no Anti-dumping duty can be levied on imports made Dmt 5 customs appeals 18-09 & ors . during the period of the expiry of a provisional anti-dumping levy and the levy of a final anti-dumping duty under Rule 21 of the Customs Tariff (Identification, Assessment and Collection of Anti-dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995 ( the Anti-Dumping “ Rules ). The Appeal by the Revenue was admitted on 6 April ” 2009. The following substantial questions of law, as modified to elucidate the submissions urged, arise : (1) Whether the CESTAT, Mumbai was justified in setting aside the Anti-Dumping Duty imposed with respect to imports made by the Respondents during the period between the expiry of the provisional anti dumping duty and the imposition of a final anti dumping duty; (2) Whether the CESTAT, Mumbai was justified in law in not granting the differential Anti-Dumping Duty arising out of final findings in view of the Dmt 6 customs appeals 18-09 & ors . provisions of Section 9A(3) of Customs Tariff Act, 1975; (3) Whether the CESTAT, Mumbai was justified in law in not appreciating that a provisional assessment under Section 18 of the Customs Act, 1962 can be resorted to for the purpose of levy and collection of Anti-Dumping Duty ; (4) Whether the CESTAT, Mumbai was justified in law in not appreciating that Section 28 of Customs Act, 1962 can be pressed into service for collection of Anti-Dumping Duty ; (5) Whether the CESTAT, Mumbai was justified in law in deviating from the Order passed by the Principal Bench (Anti-Dumping Branch), New Delhi of the Tribunal in the case of M/s. Nitco Tiles Ltd. ” Dmt 7 customs appeals 18-09 & ors . 2. The learned Counsel appearing on behalf of the Revenue has submitted and this position is not disputed by – learned Counsel appearing on behalf of the Respondent that the first question of law will be dispositive of the issues that arise in the appeals filed by the Revenue. Counsel appearing on behalf of the Revenue states that the second question of law is not pressed. As regards the third and fourth questions, it is now common ground between Counsel appearing on behalf of the Revenue and Counsel appearing on behalf of the Respondents that in view of the provisions of Section 9A(8) of the Customs Tariff Act, 1975, the view which has been taken by the Tribunal is unsustainable. Sub-section (8) of Section 9A was substituted with effect from 1 January 1995 by the Finance Act (No.2), 2009 to provide that the provisions of the Customs Act, 1962 and the Rules and Regulations made thereunder including those relating to the date for the determination of the rate of duty, assessment, non-levy, short levy, refunds, interests, appeals, offences and penalties shall, as far as may be, apply to the duty chargeable under the Section as they apply Dmt 8 customs appeals 18-09 & ors . in relation to the duty leviable under that Act. In view of the amended provisions of Section 9A (8), the third and fourth questions would have to be answered in the negative. The fifth question of law is consequential and relates to the first. 3. On 6 August 2001 a public notice was issued by the Designated Authority initiating proceedings in regard to the import of Vitrified/Porcelain tiles originating in or exported from the People s Republic of China and the United Arab ’ Emirates. The Designated Authority issued preliminary findings on 3 December 2001. Following the preliminary findings, the Union Government imposed by a notification dated 2 May 2002 a provisional anti-dumping duty under Section 9A(2) of the Customs Tariff Act read with Rules 13 and 20 of the Anti- dumping Rules. The Designated Authority rendered its final findings on 4 February 2003 and while concluding that an injury had resulted, recommended the imposition of anti- dumping duty. The Union Government issued a notification on 1 May 2003 imposing a final anti-dumping duty from the date Dmt 9 customs appeals 18-09 & ors . of the imposition of the provisional anti-dumping duty i.e. 2 May 2002. The question before the Court is as to whether the Central Government was within its jurisdiction in imposing a final anti-dumping duty between 2 November 2002 and 30 April 2003. This, according to the Respondents, is the gap period when the provisional duty had come to an end and until a final notification was issued by the Union Government on 1 May 2003. 4. The principal issue which falls for determination in these proceedings is whether the levy of a final anti-dumping duty will cover the entire period from the date of the issuance of the provisional anti-dumping duty as contended by the Revenue or whether, as the Respondents submit, no duty can be levied for the period after the expiry of the imposition of the provisional duty until the final anti-dumping duty has taken effect. 5. The Customs Tariff Act, 1975 ( the Act ) was “ ” Dmt 10 customs appeals 18-09 & ors . amended by substituting Sections 9, 9A and 9B by the Customs (Amendment) Ordinance, 1994. The Ordinance came into force on 1 January 1995. The Ordinance was replaced by an Act. 6. Sub-section (1) of Section 9A provides for an anti- dumping duty on dumped articles. Under the provision, where any article is exported from any country or territory to India at less than its normal value, then, upon the importation of such article in India, the Central Government is empowered by a notification in the Official Gazette, to impose an anti- dumping duty not exceeding the margin of dumping in relation to such article. The expression margin of dumping is defined ‘ ’ in Explanation (a) to mean the difference between the export price and the normal value of the article. Bereft of detail, the export price in relation to an article means the price of the article exported from the exporting country. The normal ‘ value means the comparable price in the ordinary course of ’ trade for a similar article when meant for consumption in the exporting country. Dmt 11 customs appeals 18-09 & ors . 7. Sub-section (2) of Section 9A empowers the Central Government to impose an anti-dumping duty on the basis of a provisional estimate of the normal value and the margin of dumping pending a final determination in accordance with the provisions of the section. Sub-section (2) of Section 9A is as follows: (2) “ The Central Government may, pending the determination in accordance with the provisions of this section and the rules made thereunder 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 of such value and margin and if such anti-dumping duty exceeds the margin as so determined :- (a) the Central Government shall, having Dmt 12 customs appeals 18-09 & ors . regard to such determination and as soon as may be after such determination, reduce such anti-dumping duty; and (b) refund shall be made of so much of the anti-dumping duty which has been collected as is in excess of the anti-dumping duty as so reduced.” 8. Under sub-section (3) of Section 9A, the Central Government is empowered by a notification in the Gazette to levy an anti-dumping duty retrospectively even from a date prior to the imposition of the anti-dumping duty under sub- section (2) but not beyond the ninety days from the date of the notification where in the opinion of the Central Government two conditions are satisfied : (i) “ there is a history of dumping which caused injury or that the importer was, or should have Dmt 13 customs appeals 18-09 & ors . been, aware that the exporter practices dumping and that such dumping would cause injury; and (ii) the injury is caused by massive dumping of an article imported in a relatively short time which in the light of the timing and the volume of imported article dumped and other circumstances is likely to seriously undermine the remedial effect of the anti-dumping duty liable to be levied.” 9. Under sub-section (5), the anti-dumping duty imposed unless revoked earlier, ceases to have effect on the expiry of five years from the date of imposition. Sub-section (6) of Section 9A stipulates that the margin of dumping is to be ascertained and determined by the Central Government after such inquiry as it may consider necessary. The Central Government is empowered to make rules for the purpose of the section. The Rules may provide for the manner in which articles liable to be subject to anti-dumping duty may be Dmt 14 customs appeals 18-09 & ors . identified, 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 anti-dumping duty. As now substituted, sub- section (8) of Section 9A provides that the provisions of the Customs Act and the Rules and Regulations made thereunder shall, as far as may be, apply to the duty chargeable under the Section as they apply in relation to the duty leviable under that Act. 10. In exercise of the powers conferred by Section 9A, the Union Government notified with effect from 1 January 1995, the Customs Tariff (Identification, Assessment and Collection of Anti-dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995. A Designated Authority is constituted by Rule 3. Under Rule 4 the Designated Authority is, inter alia, vested with the duty (i) to investigate as to the existence, degree and effect of any alleged dumping in relation to import of any article; (ii) to identify the articles liable for Dmt 15 customs appeals 18-09 & ors . anti-dumping duty; (iii) to submit findings, provisional or otherwise, to the Central Government inter alia as regards the normal value, export price and the margin of dumping and as regards the injury or threat of injury to an industry established in India or material retardation to the establishment of an industry in India consequent upon the import of the article; (iv) to recommend the amount of anti-dumping duty equal to the margin of dumping or less, which if levied, would remove the injury to the domestic industry and the date of commencement of such duty; and (v) to review the need for continuance of anti-dumping duty. Under Rule 12, the Designated Authority has to render, in appropriate cases, a preliminary finding regarding export price, normal value and margin of dumping, and in respect of imports from specified countries, to also record a further finding regarding injury to the domestic industry. Rule 13 provides for the levy of provisional duty. Under that Rule, the Central Government may on the basis of the preliminary findings recorded by the Designated Authority, impose a provisional duty not exceeding Dmt 16 customs appeals 18-09 & ors . the margin of dumping. Under the first proviso to Rule 13, no such duty can be imposed before the expiry of sixty days from the date of a public notice issued by the Designated Authority regarding its decision to initiate investigations. Under the Second proviso to Rule 13, the provisional duty is to remain in force only for a period not exceeding six months which can upon the request of exporters representing a significant percentage of the trade involved be extended to nine months. Rule 17 empowers the Designated Authority to issue final findings within one year from the date of initiation of an investigation. The Designated Authority is required to determine as to whether the article under investigation is being dumped in India. The final finding determines : (i) the export price, normal value and the margin of dumping of the article; (ii) whether the import of the article in India, in the case of imports from specified countries, causes or Dmt 17 customs appeals 18-09 & ors . threatens material injury to any industry established in India or materially retards the establishment of any industry in India; (iii) a causal link, where applicable, between the dumped imports and injury; and (iv) whether a retrospective levy is called for and if so, the reasons therefor and the date of commencement of such retrospective levy. The Central Government is empowered in its discretion to extend the aforesaid period of one year by six months. 11. Under Rule 18, the Central Government is, within three months from the date of publication of final findings by the Designated Authority, empowered to impose by notification in the Official Gazette, an anti-dumping duty, upon importation in India of the article covered by the final finding, not Dmt 18 customs appeals 18-09 & ors . exceeding the margin of dumping determined under Rule 17. Under sub-rule (4) of Rule 18, if the final finding of the Designated Authority is negative that is contrary to the evidence on the basis of which the investigation was initiated, the Central Government is under an obligation to withdraw the provisional duty imposed within forty-five days of the publication of final findings. 12. The controversy in the present case turns upon the interpretation of Rule 20 and it would, therefore, be necessary to extract the provision in its entirety. 20. “ Commencement of duty.- (1) The anti-dumping duty levied under rule 13 and rule 19 shall take effect from the date of its publication in the Official Gazette. (2) Notwithstanding anything contained in sub- rule (1) - Dmt 19 customs appeals 18-09 & ors . (a) where a provisional duty has been levied and where the designated authority has recorded a final finding of injury or where the designated authority has recorded a final finding of threat of injury and a further finding that the effect of dumped imports in the absence of provisional duty would have led to injury, the anti-dumping duty may be levied from the date of imposition of provisional duty; (b) in the circumstances referred to in sub- section (3) of section 9A of the Act, the anti- dumping duty may be levied retrospectively from the date commencing ninety days prior to the imposition of such provisional duty; Provided that no duty shall be levied Dmt 20 customs appeals 18-09 & ors . retrospectively on imports entered for home consumption before initiation of the investigation; Provided further that in the cases of violation of price undertaking referred to in sub-rule (6) of rule 15, no duty shall be levied retrospectively on the imports which have entered for home consumption before the violation of the terms of such undertaking. [Provided also that notwithstanding anything contained in the foregoing proviso, in case of violation of such undertaking, the provisional duty shall be deemed to have been levied from the date of violation of the undertaking or such date as the Central Government may specify in each case.]” Rule 21 provides for refund of duty and is as follows : Dmt 21 customs appeals 18-09 & ors . 21. “ Refund of duty. - (1) If the anti-dumping duty imposed by the Central Government on the basis of the final findings of the investigation conducted by the designated authority is higher than the provisional duty already imposed and collected, the differential shall not be collected from the importer. (2) if, the anti-dumping duty fixed after the conclusion of the investigation is lower than the provisional duty already imposed and collected, the difference shall be refunded to the importer. (3) If the provisional duty imposed by the Central Government is withdrawn in accordance with the provisions of sub-rule (4) of rule 18, the provisional duty already imposed and collected, if any, shall be refunded to the importer.” Dmt 22 customs appeals 18-09 & ors . 13. On behalf of the Appellants, it has been submitted by learned Counsel that : (i) The issue which arises before the Court is not res integra but is covered by a decision of a Division Bench of the Kerala High Court in Commissioner of Customs vs. Akash Trading Co. 1; (ii) Under sub-section (2) of Section 9A the Central Government is empowered, pending the determination in accordance with the provisions of the Section of the normal value and the margin of dumping to impose an anti-dumping duty on the basis of a provisional estimate of such value and margin ; (iii) Under Rule 13 which provides for the levy of a 1 2010 (253) E.L.T. 734 (Ker.) Dmt 23 customs appeals 18-09 & ors . provisional duty, the Central Government is empowered to impose a provisional duty on the basis of the preliminary findings recorded by the Designated Authority, albeit for a period of six months; (iv) Upon the publication of the final findings by the Designated Authority, the Central Government may impose an anti-dumping duty not exceeding the margin of dumping as determined under Rule 17; (v) Both, the provisional duty and the final anti- dumping duty, take effect from the publication in the Official Gazette under Rule 20 (1); (vi) However, Rule 20(2) which overrides sub-rule (1) stipulates that in certain circumstances the anti- dumping duty may be levied from the date of the imposition of the provisional duty. Once the Dmt 24 customs appeals 18-09 & ors . conditions which are spelt out in Rule 20(2)(a) are fulfilled, the date of commencement of the definitive anti-dumping duty has to be the date of imposition of the provisional anti-dumping duty and the definitive duty will remain in force for a period of five years. The definitive anti-dumping duty would cover the period of five years commencing from the provisional anti-dumping duty without any break or hiatus. Any other construction would defeat the object and purpose of imposing a definitive anti-dumping duty after investigation has found that the statutory requirements for the imposition have been duly fulfilled. (vii) In the present case, there is a finding by the Designated Authority that the conditions which have been provided for in Rule 20(2)(a) were fulfilled. Hence, the levy of the final anti-dumping duty would take effect from the date of the Dmt 25 customs appeals 18-09 & ors . imposition of the provisional duty and would cover the entire period without any break. 14. On the other hand, it has been urged on behalf of the Respondents that : (i) Rule 20(2)(a) should be interpreted in the light of the WTO agreement particularly clause 10.2 thereof since the object of enacting the provisions of Section 9A was to enforce the obligations cast upon India as a member of the World Trade Organisation; (ii) Even if there is a deviation in the language used in the rules from the words of the WTO agreement, if one of the meanings of Rule 20(2)(a) is consistent with the WTO agreement, that must be preferred; Dmt 26 customs appeals 18-09 & ors . (iii) The word levied in the context of Rule 20(2)(a) “ ” means the period for which the provisional duty was imposed and collected; (iv) On the date when the imports took place, there was no liability to pay provisional duty because the period of six months had expired. The final duty has been imposed later and is, therefore, retrospective. Subordinate legislation cannot be retrospective unless the statute under which it is enacted authorises retrospectivity. If a construction which does not make a subordinate legislation retrospective is available, that must be preferred; (v) When the Act was enacted, Parliament had before it both, the provisions of the Ordinance and the Rules which were brought into force on 1 January 1995. Consequently, Parliament must be attributed with an intent to enforce the obligations contained Dmt 27 customs appeals 18-09 & ors . in the WTO agreement; (vi) The expression pending in Section 9A(2) refers to “ ” the condition for the exercise of the power and not the duration for which a provisional duty can be imposed; (vii) Alternatively, it has been urged that if the contention which is urged on behalf of the Revenue is accepted, that would result in a situation where the definitive anti-dumping duty is rendered retrospective. The Customs Tariff Act, 1975 does not authorise the imposition of a retrospective duty which must, therefore, be held to be ultra vires. (This submission has been urged in support of the Petitions under Article 226). The rival submissions now fall for determination. Dmt 28 customs appeals 18-09 & ors . 15. Under Sub-section (1) of Section 9A of the Customs Tariff Act, 1975 Parliament empowered the Central Government to impose anti-dumping duty not exceeding the margin of dumping on an article exported into India by an exporting country at less than its normal value. In sub-section (2) of Section 9A Parliament made a provision empowering the Union Government to impose an anti-dumping duty on a provisional estimate of the normal value and the margin of dumping. The duty under sub-section (2) of Section 9A is an interim measure because it is to be enforced pending the determination in accordance with the provisions of the Section. The imposition of a duty under Section 9A (2) is on a provisional estimate. A provisional estimate is a tentative evaluation which gives way to and merges in a final determination. The duty under Section 9A (2) is pending the ultimate determination. An enabling provision is made by Parliament authorising the Central Government to impose a duty under Section 9A (2) to protect the public interest which the statute protects, till a final determination is made. The enabling provision covers the Dmt 29 customs appeals 18-09 & ors . period until the determination in accordance with the provisions