Case: Commnr. Of Customs, Bangalore Vs. M/S. G.M. Exports

2. Seven appeals are before us; some of them are from the Bombay High Court judgment dated 15.12.2011 and the Kerala High Court judgment dated 15.07.2009. Others are appeals against a Karnataka Tribunal (Bangalore) judgment and a Bombay Tribunal judgment, which follows the Bombay High Court judgment referred to above. Since all these appeals raise a common question of law of some complexity relating to anti-dumping duty, the said appeals have been bunched together and are being disposed of together. It may also be stated that the preponderant view, that is the view of both the Bombay and Kerala High Courts and the Bombay Tribunal, is in favour of the construction suggested by revenue. Only the Karnataka Tribunal (Bangalore) has decided in favour of the assessee3. The question of law which arises in the instant appeals is whether anti-dumping duty imposed with respect to imports made during the period between the expiry of the provisional anti-dumping duty and the imposition of the final anti-dumping duty is legal and valid4. It is necessary in this case to begin at the very beginning. The General Agreement on Tariffs and Trade (GATT) in Article VI first laid down how, conceptually, anti-dumping duties were to be imposed. The relevant part of Article VI reads as under:-1. The contracting parties recognize that dumping, by which products of one country are introduced into the commerce of another country at less than the normal value of the products, is to be condemned if it causes or threatens material injury to an established industry in the territory of a contracting party or materially retards the establishment of a domestic industry. For the purposes of this Article, a product is to be considered as being introduced into the commerce of an importing country at less than its normal value, if the price of the product exported from one country to another(a) is less than the comparable price, in the ordinary course of trade, for the like product when destined for consumption in the exporting country, or,(b) in the absence of such domestic price, is less than either(i) the highest comparable price for the like product for export to any third country in the ordinary course of trade, or(ii) the cost of production of the product in the country of origin plus a reasonable addition for selling cost and profitDue allowance shall be made in each case for differences in conditions and terms of sale, for differences in taxation, and for other differences affecting price comparability2. In order to offset or prevent dumping, a contracting party may levy on any dumped product an anti-dumping duty not greater in amount than the margin of dumping in respect of such product. For the purposes of this Article, the margin of dumping is the price difference determined in accordance with the provisions of paragraph 15. In pursuance of the said Article VI, various member nations entered into a World Trade Organisation Agreement to implement Article VI, in 1994. The said agreement is referred to as Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade, 1994, and in its material aspects, which are important in order to decide the question raised in these appeals, states as follows:-Members hereby agree as follows:An anti-dumping measure shall be applied only under the circumstances provided for in Article VI of GATT 1994 and pursuant to investigations initiated and conducted in accordance with the provisions of this Agreement. The following provisions govern the application of Article VI of GATT 1994 in so far as action is taken under anti-dumping legislation or regulations10.1 Provisional measures and anti-dumping duties shall only be applied to products which enter for consumption after the time when the decision taken under paragraph 1 of Article 7 and paragraph 1 of Article 9, respectively, enters into force, subject to the exceptions set out in this Article10.2 Where a final determination of injury (but not of a threat thereof or of a material retardation of the establishment of an industry) is made or, in the case of a final determination of a threat of injury, where the effect of the dumped imports would, in the absence of the provisional measures, have led to a determination of injury, anti-dumping duties may be levied retroactively for the period for which provisional measures, if any, have been applied10.3 If the definitive anti-dumping duty is higher than the provisional duty paid or payable, or the amount estimated for the purpose of the security, the difference shall not be collected. If the definitive duty is lower than the provisional duty paid or payable, or the amount estimated for the purpose of the security, the difference shall be reimbursed or the duty recalculated, as the case may be10.6 A definitive anti-dumping duty may be levied on products which were entered for consumption not more than 90 days prior to the date of application of provisional measures, when the authorities determine for the dumped product in question that:(I) there is a history of dumping which caused injury or that the importer was, or should have been, aware that the exporter practises dumping and that such dumping would cause injury, and(ii) the injury is caused by massive dumped imports of a product in a relatively short time which in light of the timing and the volume of the dumped imports and other circumstances (such as a rapid build-up of inventories of the imported product) is likely to seriously undermine the remedial effect of the definitive anti-dumping duty to be applied, provided that the importers concerned have been given an opportunity to comment10.7 The authorities may, after initiating an investigation, take such measures as the withholding of appraisement or assessment as may be necessary to collect anti-dumping duties retroactively, as provided for in paragraph 6, once they have sufficient evidence that the conditions set forth in that paragraph are satisfied10.8 No duties shall be levied retroactively pursuant to paragraph 6 on products entered for consumption prior to the date of initiation of the investigation18.4 Each Member shall take all necessary steps, of a general or particular character, to ensure, not later than the date of entry into force of the WTO Agreement for it, the conformity of its laws, regulations and administrative procedures with the provisions of this Agreement as they may apply for the Member in question6. In pursuance of the said Article VI and the said Agreement, both of which India is a signatory to, amendments were made in the Customs Tariff Act in the year 1995. The amendment with which we are directly concerned is the introduction of a new Section 9A to the said Act which reads as under:-Section 9A. Anti - dumping duty on dumped articles(1) Where any article is exported by an exporter or producer from any country or territory (hereafter in this section 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 articleExplanation.-For the purposes 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 to an article, means-(i) the comparable price, in the ordinary course of trade, for the like article when destined for consumption in the exporting country or territory as determined in accordance with the rules made under sub-section (6); or(ii) when there are no sales of the like article in the ordinary course of trade in the domestic market of the exporting country or territory, or when because of the particular market situation or low volume of the sales in the domestic market of the exporting country or territory, such sales do not permit a proper comparison, the normal value shall be either-(a) comparable representative price of the like article when exported from the exporting country or territory to an appropriate third country as determined in accordance with the rules made under sub-section (6); or(b) the cost of production of the said article in the country of origin along with reasonable addition for administrative, selling and general costs, and for profits, as determined in accordance with the rules made under sub- section(6):Provided that in the case of import of the article from a country other than the country of origin and where the article has been merely transhipped through the country of export or such article is not produced in the country of export or there is no comparable price in the country of export, the normal value shall be determined with reference to its price in the country of origin(1A). Where the Central Government, on such inquiry as it may consider necessary, is of the opinion that circumvention of anti-dumping duty imposed under sub-section (1) has taken place, either by altering the description or name or composition of the article subject to such anti-dumping duty or by import of such article in an unassembled or dissembled form or by changing the country of its origin or export or in any other manner, whereby the anti-dumping duty so imposed is rendered ineffective, it may extend the anti-dumping duty to such article or an article originating in or exported from such country, as the case may be(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 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 antidumping duty which has been collected as is in excess of the anti-dumping duty as so reduced(2A) Notwithstanding anything contained in sub-section (1) and sub-section (2), a notification issued under sub-section (1) or any anti-dumping duty imposed under sub-section (2), unless specifically made applicable in such notification or such imposition, as the case may be, shall not apply to articles imported by a hundred per cent export-oriented undertaking or a unit in a free trade zone or in a special economic zoneExplanation. - For the purposes of this section, the expressions hundred per cent export-oriented undertaking, free trade zone and special economic zone shall have the meanings assigned to them in Explanations 2 to sub-section (f) of section 3 of Central Excise Act, 1944(3) If the Central Government, in respect of the dumped article under inquiry, is of the opinion that –(i) there is a history of dumping which caused injury or that the importer was, or should have 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 antidumping duty liable to be levied, the Central Government may, by notification in the Official Gazette, levy anti-dumping duty retrospectively from a date prior to the date of imposition of anti-dumping duty under sub-section (2) but not beyond ninety days from the date of notification under that sub-section, and notwithstanding any thing contained in any other law for the time being in force, such duty shall be payable at such rate and from such date as may be specified in the notification(4) The anti-dumping duty chargeable under this section shall be in addition to any other duty imposed under this Act or under any other law for the time being in force(5) The anti-dumping duty imposed under this section shall, unless revoked earlier, cease to have effect on the expiry of five years from the date of such imposition:Provided that 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 and such further period shall commence from the date of order of such extensionProvided further that where a review initiated before the expiry of the aforesaid period of five years has not come to a conclusion before such expiry, the anti-dumping duty may continue to remain in force pending the outcome of such a review for a further period not exceeding one year(6) The margin of dumping as referred to in subsection (1) or sub-section (2) 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 purposes of this section, and without prejudice to the generality of the foregoing such rules may provide for the manner in which articles liable for any anti-dumping duty under this section may be identified and for 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(6A) The margin of dumping in relation 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.;(7) Every notification issued under this section shall, as soon as may be after it is issued, be laid before each House of Parliament(8) The provisions of the Customs Act, 1962, (52 of 1962) and the rules and regulations made thereunder, including those relating to the date for determination of rate of duty, assessment, non-levy, short levy, refunds, interest, appeals, offences and penalties shall, as far as may be, apply to the duty chargeable under this section as they apply in relation to duties leviable under that Act7. In exercise of powers conferred, inter alia, by Section 9A (6) of the Customs Tariff Act, the Customs Tariff (Identification, Assessment and Collection of Anti-Dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995 have been framed. The Rules relevant to the determination of the present controversy are set out hereunder:-2. Definitions.- In these rules, unless the context otherwise requires-(e) provisional duty means an anti dumping duty imposed under sub-section (2) of section 9A of the Act;5. Initiation of investigation. –(1) Except as provided in sub-rule (4), the designated authority shall initiate an investigation to determine the existence, degree and effect of any alleged dumping only upon receipt of a written application by or on behalf of the domestic industry(2) An application under sub-rule (1) shall be in the form as may be specified by the designated authority and the application shall be supported by evidence of –(b) injury, where applicable, and(c) where applicable, a causal link between such dumped imports and alleged injury(3) The designated authority shall not initiate an investigation pursuant to an application made under sub-rule (1) unless –(a) it determines, 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 :Provided that no investigation shall be initiated if domestic producers expressly supporting the application account for less than twenty five per cent of the total production of the like article by the domestic industry, and(b) it examines the accuracy and adequacy of the evidence provided in the application and satisfies itself that there is sufficient evidence regarding –(ii) injury, where applicable; and(iii) where applicable, a causal link between such dumped imports and the alleged injury, to justify the initiation of an investigationExplanation. - For the purpose of this rule the application shall be deemed to have been made by or on behalf of the domestic industry, if it is supported by those domestic producers whose collective output constitute more than fifty per cent of the total production of the like article produced by that portion of the domestic industry expressing either support for or opposition, as the case may be, to the application(4) Notwithstanding anything contained in sub-rule (1) the designated authority may initiate an investigation suo motu if it is satisfied from the information received from the Collector of Customs appointed under the Customs Act, 1962 (52 of 1962) or from any other source that sufficient evidence exists as to the existence of the circumstances referred to in clause (b) of sub-rule (3)(5) The designated authority shall notify the government of the exporting country before proceeding to initiate an investigation11. 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 for like articles and the consequent effect of such imports on domestic producers of such articles and in accordance with the principles set out in Annexure II to these rules(3) The designated authority may, in exceptional cases, give a finding as to the existence of injury even where a substantial portion of the domestic industry is not injured, if-(i) there is a concentration of dumped imports into an isolated market, and(ii) the dumped articles are causing injury to the producers of all or almost all of the production within such market(1) The designated authority shall proceed expeditiously with the conduct of the investigation and shall, in appropriate cases, record a preliminary finding regarding export price, normal value and margin of dumping, and in respect of imports from specified countries, it shall also record a further finding regarding injury to the domestic industry and such finding shall contain sufficiently detailed information for the preliminary determinations on dumping and injury and shall refer to the matters of fact and law which have led to arguments being accepted or rejected. It will also contain:-(i) the names of the suppliers, or when this is impracticable, the supplying countries involved;(ii) a description of the article which is sufficient for customs purposes;(iii) the margins of dumping established and a full explanation of the reasons for the methodology used in the establishment and comparison of the export price and the normal value;(iv) considerations relevant to the injury determination; and(v) the main reasons leading to the determination(2). The designated authority shall issue a public notice recording its preliminary findings13. Levy of provisional duty –The Central Government may, on the basis of the preliminary findings recorded by the designated authority, impose a provisional duty not exceeding the margin of dumping:Provided that no such duty shall be imposed before the expiry of sixty days from the date of the public notice issued by the designated authority regarding its decision to initiate investigations:Provided further that such duty shall remain in force only for a period not exceeding six months which may upon request of the exporters representing a significant percentage of the trade involved be extended by the Central Government to nine months(1) The designated authority shall, within one year from the date of initiation of an investigation, determine as to whether or not the article under investigation is being dumped in India and submit to the Central Government its final finding –(i) the export price, normal value and the margin of dumping of the said article;(ii) whether import of the said article into India, in the case of imports from specified countries, causes or 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;(iv) whether a retrospective levy is called for and if so, the reasons therefor and date of commencement of such retrospective levy:Provided that the Central Government may, in its discretion in special circumstances extend further the aforesaid period of one year by six months:Provided further that in those cases where the designated authority has suspended the investigation on the acceptance of a price undertaking as provided in rule 15 and subsequently resumes the same on violation of the terms of the said undertaking, the period for which investigation was kept under suspension shall not be taken into account while calculating the period of said one year,(b) recommending the amount of duty which, if levied, would remove the injury where applicable, to the domestic industry(2) The final finding, if affirmative, shall contain all information on the matter of facts and law and reasons which have led to the conclusion and shall also contain information regarding-(i) the names of the suppliers, or when this is impracticable, the supplying countries involved;(ii) a description of the product which is sufficient for customs purposes;(iii) the margins of dumping established and a full explanation of the reasons for the methodology used in the establishment and comparison of the export price and the normal value;(iv) considerations relevant to the injury determination; and

Reasoning:
46. We also find force in the submission of learned counsel for the assessees that the revenues construction of Rule 20 would achieve indirectly what cannot be achieved directly, having regard to the mandatory language contained in Rule 13 second proviso. Here again a simple example would suffice. Say the provisional duty is levied at the rate of Rs. 50/- PMT and comes to an end after 6 months. 6 months later, a final duty is imposed again at the same rate of Rs. 50/- PMT with effect from the date of levy of the provisional duty. If learned counsel for the revenue were right, Rs. 50/- PMT could be recovered under Rule 20(2)(a) for the interregnum period as well which would, in effect, destroy the scheme of Rule 13 second proviso by extending the period of the provisional duty notification beyond a period of 6 months, which clearly cannot be done. We find therefore that on all these counts, the arguments of revenue cannot be countenanced47. It remains now to deal with the impugned judgment of the Bombay High Court. After setting out the contentions of the respective parties and referring to the relevant statutory provisions and the WTO Agreement, the Bombay High Court arrives at a finding that Parliament has made a departure from the language used in the WTO Agreement and the Court must therefore give effect to such departure48. We have already held that this would fly in the face of all the judgments referred to in paragraphs 15 to 22 hereinabove, and principles (3) and (4) of paragraph 23 of this judgment which speak of how domestic legislation must be construed when it is made in furtherance of an international treaty. In particular, in the facts of these cases, it would also ignore the effect of Article 18.4 of the WTO Agreement, which expressly states that all the signatory member nations have to make their laws conform to the provisions of the WTO Agreement, something which the Central Government itself states in its internet website which deals with the law of anti-dumping49. The High Court goes on to state that the construction suggested on behalf of the assessee would lead to a manifest absurdity as there would be no reason or justification to hold that the levy of anti-dumping duty must sustain a break during the period between the expiry of the provisional duty notification and the issuance of a notification imposing a final anti-dumping duty. The High Court went on to hold that the object and purpose underlying Section 9A would be defeated, as for the interregnum period where both dumping and material injury to domestic industry are found, no anti-dumping duty can be issued. This conclusion again cannot be countenanced for the simple reason that if Rule 20(2)(a) were to be construed n the fashion suggested by the High Court, it would be ultra vires Section 9A for the reasons already given by us. Further, the object and purpose of Section 9A is to impose an anti-dumping duty in consonance with the WTO Agreement, which Section 9A gives full effect to. These basic points have been missed by the High Court in arriving at the aforesaid finding. Further, the High Court fails to give due importance in its judgment to Rules 13 and 21. We have already seen how Rule 21(1) envisages precisely the situation spoken of by the High Court, and yet states that, in the circumstances mentioned therein, despite dumping and material injury to the domestic industry, differential duty cannot be collected from the importer. In fact, the High Court goes on to say that the expression imposed and collected in Rule 21, not being there in Rule 20(2)(a), cannot therefore be imported into the said sub-rule, so that levied cannot mean imposed and collected. We have already held, in view of our construction of Rule 20(2)(a), that this need not be gone into. What has been missed by the High Court is that the expression levied has to be understood as levied under Rule 13 and once this is so, it becomes clear that such levy cannot exceed a period of 6 months or a maximum period of 9 months, as the case may be50. The Bombay High Court follows the Kerala High Court reasoning, which is to the same effect. For the reasons given by us in this judgment, we find it difficult to accede to such reasoning.