Case: Alkali Manufacturers Assn. of India and Ors Vs. Designated Authority, D.A.D.A.S. and Ors

India is a party. The purpose behind the imposition of the duty is to curb unfair trade practices resorted to by exporters of a particular country of flooding the domestic markets with goods at rates which are lower than the rate at which the exporters normally sell the same or like goods in their own countries so as to cause or be likely to cause injury to the domestic market. The levy of dumping duty is a method recognized by GATT which seeks to remedy the injury and at the same time balances the right of exporters from other countries to sell their products within the country with the interest of the domestic markets. Thus the factors to constitute dumping, are (i) an import at prices which are lower than the normal value of the goods in the exporting country; (ii) the exports must be sufficient to cause injury to the domestic industry. 17. In Reliance Industries Ltd. v. Designated Authority and Ors. (2006) 10 SCC 368 this Court has observed thus: The result was that an industrial base was created in India after independence and this has definitely resulted in some progress. The purpose of Section 9-A can, therefore, easily be seen. The purpose was that our industries which had been built up after independence with great difficulties must not be allowed to be destroyed by unfair competition of some foreign companies. Dumping is a well-known method of unfair competition which is adopted by the foreign companies. This is done by selling goods at a very low price for some time so that the domestic industries cannot compete and are thereby destroyed, and after such destruction has taken place, prices are again raised. The purpose of Section 9-A is, therefore, to maintain a level playing field and prevent dumping, while allowing for healthy competition. The purpose is not protectionism in the classical sense (as proposed by the German economist Friedrich List in his famous book National System of Political Economy published in 1841) but to prevent unfair trade practices. The 1995 Amendment to Section 9A was apparently made in pursuance to Article VI of the General Agreement on Tariffs and Trade 1994 (GATT 1994) which permitted anti-dumping measures as an instrument of fair competition. The concept of anti-dumping is founded on the basis that a foreign manufacturer sells below the normal value in order to destabilise domestic manufacturers. Dumping, in the short term, may give some transitory benefits to the local customers on account of lower priced goods, but in the long run destroys the local industries and may have a drastic effect on prices in the long run. 18. Recently in Commissioner of Customs, Bangalore v. G.M. Exports and Ors. 2015 (1) SCALE 169 , while dealing with the concept of injury, a two-Judge Bench has observed: It will thus be seen that the determination of material injury to domestic industry depends on a series of complex economic factors which are to be segregated from other factors which may also cause injury to the said industry. 19. It is pertinent to note that except M/s. Hanwha Chemical Corporation, the other exporters did not cooperate. However, it was the obligation of the complainant to establish that there was an injury to the domestic industry. For the said purpose, the endeavour was made to establish before the DA that it was a by-product and it succeeded in the said attempt. The tribunal, on being approached by the 7th Respondent, has set aside the order and the notification. As is noticeable, the reversal has taken place on two counts, namely, the principle determined in M/s. Hanwha Chemical Corporations case, and further by taking notice of the fact that the cost of Chlorine was substantial during the said period and, therefore, it deserved to be treated as a co-product as per the 1967 Rules. The approach of the tribunal, as we see, is fallacious. It has observed that M/s. Hanwha Chemical Corporations case is absolutely different. In such a situation, it should not have mechanically adopted the said principle. That apart, as submitted by Mr. Patil, it has followed a general principle of the rise in price but has not dwelt upon the issue with regard to the concept, i.e., Equal Economic Importance. The Equal Economic Importance, as is canvassed, is the price almost similar to the main product, i.e. caustic soda. Mr. Patil, learned senior Counsel, would contend that it would depend upon the realization of amount from sales. It is submitted by him that the Appellant had received 82% from sales of caustic soda and 18% from the sale of Chlorine subject to certain variations. 20. Mr. Bagaria, learned senior Counsel, has put forth that the amount reflected in the accounts may be correct for the purpose of accounting as provided under the Companies Act, 1956 and other purposes but the words Equal Economic Importance being not defined in Paragraph 12 to Schedule III of the 1967 Rules, it has to be determined on the facts of each case. Learned Counsel would contend that the use of chlorine and its commercial use should have gone into by the tribunal. Elaborating the same, it is contended that the Chlorine can be used for some other production. 21. In our considered opinion, the tribunal should have dwelled upon the said facet before it recorded the finding whether it is a co-product or a by-product. It is because the Equal Economic Importance has to be considered on a rational and pragmatic basis. It is the duty of the tribunal to see whether the DA had considered the said aspects or proceeded on hypothetical basis. The tribunal has the jurisdiction to appreciate the evidence in entirety and arrive at a conclusion and that having not been done and the entire judgment having been based on the application of M/s. Hanwha Chemical Corporations case and the price rise in the price of Chlorine, we are constrained to dislodge the judgment and order of the tribunal.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]19. It is pertinent to note that except M/s. Hanwha Chemical Corporation, the other exporters did not cooperate. However, it was the obligation of the complainant to establish that there was an injury to the domestic industry. For the said purpose, the endeavour was made to establish before the DA that it was a by-product and it succeeded in the said attempt. The tribunal, on being approached by the 7th Respondent, has set aside the order and the notification. As is noticeable, the reversal has taken place on two counts, namely, the principle determined in M/s. Hanwha Chemical Corporations case, and further by taking notice of the fact that the cost of Chlorine was substantial during the said period and, therefore, it deserved to be treated as a co-product as per the 1967 Rules. The approach of the tribunal, as we see, is fallacious. It has observed that M/s. Hanwha Chemical Corporations case is absolutely different. In such a situation, it should not have mechanically adopted the said principle. That apart, as submitted by Mr. Patil, it has followed a general principle of the rise in price but has not dwelt upon the issue with regard to the concept, i.e., Equal Economic Importance. The Equal Economic Importance, as is canvassed, is the price almost similar to the main product, i.e. caustic soda.21. In our considered opinion, the tribunal should have dwelled upon the said facet before it recorded the finding whether it is a co-product or a by-product. It is because the Equal Economic Importance has to be considered on a rational and pragmatic basis. It is the duty of the tribunal to see whether the DA had considered the said aspects or proceeded on hypothetical basis. The tribunal has the jurisdiction to appreciate the evidence in entirety and arrive at a conclusion and that having not been done and the entire judgment having been based on the application of M/s. Hanwha Chemical Corporations case and the price rise in the price of Chlorine, we are constrained to dislodge the judgment and order of the tribunal.