Case: THE DESIGNATED AUTHORITY &amp; ORS Vs. M/S THE ANDHRA PETROCHEMICALS LIMITED

2. The facts are that Andhra Petro applied to the Central Government, seeking imposition of anti-dumping duty on imports of normal Butanol or N-butyl alcohol originating in and exported into India from Saudi Arabia. Butanol is a basic organic chemical and a primary alcohol; it is an excellent solvent for acid-curable lacquers and baking finishes. A large part of normal Butanol is converted into derivatives for use as solvents in coating industries. This application resulted in the initiation of investigation by the designated authority into the import of the subject articles from Saudi Arabia, by notification dated 02.09.2016.3. Andhra Petro furnished import data for the period of three months. The period of investigation was from April, 2015 to March, 2016. The Designated Authority granted a public/oral hearing to interested parties on 23.06.2017 followed by written submissions. Andhra Petro also attended the hearing and filed detailed submissions on 30.06.2017. It alleged that the information given was not only for the period of investigation but also for the entire injury period, 2012-13 to 2014-15. Andhra Petro admitted that dumping from Saudi Arabia occurred in the last three months of the period of investigation, i.e., January to March, 2016, and that there were no imports from Saudi Arabia in the first nine months of the period of investigation, i.e., from April to December, 2015. It claimed that dumping of the same product also took place from Malaysia, Singapore, South Africa, the USA and the European Union. The period of investigation by the Designated Authority covered investigation in respect of imports from these exporting territories too. The application further claimed that though imports from Saudi Arabia started only in January, 2016, the volume of such dumped imports was significant enough to cause material injury to the domestic industry. This was to the extent of capturing 39% of the market share in India.4. Andhra Petro asserted that the exports from Saudi Arabia into India were not casual exports but were made with the intention of grabbing the Indian market. Such exports into India from Saudi Arabia were undercutting and depressing the prices of the domestic industry to a significant extent, according to it, and performance of the domestic industry during the period, January to March, 2016,was adverse in terms of profits and returns on investments. The following parameters, per the petitioner company, demonstrated the causal link between the said exports and the injury caused. The dumped imports from the subject country entered the Indian market in the period Jan-Mar 2016 [last 3 months of the period of investigation (POI)] in such significant volumes that improvement in volume parameters seen in the performance of the domestic industry in the first 9 months of the POI (Apr-Dec 2015), was completely wiped off. There was significant difference between the prices offered by the domestic industry and the foreign producer. Thus, the domestic industry was unable to raise the prices above the costs as a result of dumping of the product in the country.5. The domestic industry was able to increase its sales at the cost of sub-optimal prices in the first 9 months of the POI (Apr-Dec 2015). However, the sales volumes declined drastically in the period Jan-Mar 2016 (last 3 months of the POI) even when the domestic industry offered still lower prices as fresh dumping from Saudi Arabia started in this period. Nevertheless, it was alleged that the imports were significantly undercutting the domestic prices. Resultantly, the price undercutting was creating price pressure on the domestic industry, and the reduction in profits directly resulted in deterioration in returns on capital employed and cash flow. Thus, deterioration in profits, return on capital employed and cash flow was due to the dumped imports.6. In the investigation proceedings, Andhra Petro submitted its written submissions on 27.10.2017, pursuant to the second oral public hearing held on 24.10.2017 owing to the change in the incumbent holding the office of the Designated Authority. It also filed rejoinder submissions on 01.11.2017. In terms of Rule 16 of the Customs Tariff (Identification, Assessment and Collection of Antidumping Duty on Dumped Article and for Determination of Injury) Rules, 1995(hereafter the Rules of 1995), the Designated Authority disclosed essential facts under consideration, which would form the basis for his final conclusion under the Disclosure Statement dated 14.11.2017. Andhra Petro filed its comments on such statement, on 21.11.2017. The Designated Authority issued the Final Findings, by Notification dated 28.11.2017, terminating the investigation under Rule 14(b) of the Rules of 1995.7. The Designated Authority recorded the following findings:(i) Period of last 3 months of POI of exports of subject goods from Saudi Arabia was insufficient to evaluate injury to the domestic industry as material injury determination would require data on imports and domestic industrys sales for a longer duration.(ii) The short period of production especially commercial production of just one month also constrained determination of a representative and realistic normal value for cooperating producers/exporters.(iii) Causal link between imports from Saudi Arabia and injury to the domestic industry could not be conclusively established on the basis of three months of export period.(iv) The Authority did not consider it appropriate to recommend levy of Anti-Dumping Duty on the subject goods from Saudi Arabia and terminated the investigation under Rule 14(b) of Anti-Dumping Rules.8. Andhra Petro approached the Telangana High Court, complaining that its two applications, dated 18.10.2016 and 02.12.2016 had not been duly considered in accordance with provisions of the Customs Tariff Act, 1975, especially Rules 2(b) and 2(d) of the Rules of 1995. This writ petition was allowed by order dated 09.02.2018, directing the Designated Authority to consider the applications dated18.10.2016 and 02.12.2016 afresh, after evaluation of the entire information placed before him in accordance with the provisions of the Customs Tariff Act, 1975 and the Rules of 1995, more particularly Rules 2(b) and 2(d) of the Rules of 1995 and pass appropriate orders within a time frame. Further to these directions, the Designated Authority passed an order dated 05.03.2018 declining to initiate anti-dumping investigation. This order was impugned by Andhra Petro in another writ petition (WP 11116/2018, hereafter the second writ petition) before the Telengana High Court.9. Before the High Court, Andhra Petro now contended that it was a producer of 2-EH which is a like article (as defined under Rule 2(d) of the Rules of 1995), to 2-PH and INA. It contended that it satisfied the criteria under Rule 2(b) read with Rule 2(d) of the Rules of 1995 to file a petition for imposition of antidumping duty concerning imports of the said alcohols on behalf of the domestic industry. It was further contended that in spite of a specific direction of this Court dated 09.02.2018 passed in WP 25988/2017, the Designated Authority did not determine whether the dumped products cause injury to the domestic industry in the commercial competition with like articles made in India and passed the impugned order declining to initiate anti-dumping investigation.10. The Central Government, which filed its return, to the Writ proceeding argued that Andhra Petro produced only 2-EH, not INA and 2-PH, and as it filed the combined application for all the said products, the Designated Authority rejected the request of the petitioner. The letters produced by Andhra Petro to show that 2-EH, INA and 2-PH are like articles, were not issued by any independent/recognised agency/source and hence they could not be considered. It was further stated that though several opportunities were given to Andhra Petro seeking clarifications as to how the acyclic alcohols i.e., 2-EH, INA and 2-PH are like articles when it does not produce INA and 2-PH, it did not submit any clarification, and it filed a combined application for imposition of anti-dumping duty for all three products.11. The High Court disposed of the second writ petition on 28.08.2018 making the following observations and directions:7. In spite of specific direction of this Court in W.P.No.25988 of 2017 dated 09.02.2018, the second respondent has not dealt with the applications of the petitioner afresh in true letter and spirit of the said order and passed the impugned order. The second respondent, relying upon the order of the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi in Appeal No.C/411/2000 dated 11.04.2001 whereby it held that Normal Hexanol is not one manufactured or produced by domestic industry, passed the impugned order stating that it is decided not to initiate antidumping investigation concerning imports of INA, 2-PH and 2-EH originating in or exported from Saudi Arabia, EU and Singapore, excluding 2-EH having carbon No.8 from EU. While passing the impugned order, the second respondent ignored the final findings dated 29.07.2003 and the order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) dated 13.04.2006 in the case of Andhra Petrochemicals Ltd. vs. Designated Authority 2006 (201) ELT 481 (Tri.-Del.) with regard to dealing of like articles and to accept 2-EH supplied by the domestic industry is like article to 2-PH and INA imported from subject countries. The petitioner is the producer of 2-EH which is a like article to 2-PH and INA and it falls within the ambit of Rule 2(b) read with Rule 2(d) of the Rules of 1995. Rules 2(b) and 2(d) of the Rules of 1995 read as under.2(b) domestic industry means the domestic producers as a whole engaged in the manufacture of the like article and any activity connected therewith or those whose collective output of the said article constitutes a major proportion of the total domestic production of that article except when such producers are related to the exporters or importers of the alleged dumped article or are themselves importers thereof in which case such term domestic industry may be construed as referring to the rest of the producers:Provided that in exceptional circumstances referred to in sub-rule (3) of Rule 11, the domestic industry in relation to the article in question shall be deemed to comprise two or more competitive markets and the producers within each of such market a separate industry, if-(i) the producers within such a market sell all or almost all of their production of the article in question in that market; and (ii) the demand in the market is not in any substantial degree supplied by producers of the said article located elsewhere in the territory.2(d) like article means an article which is identical or alike in all respects to the article under investigation for being dumped in India or in the absence of such an article, another article which although not alike in all respects, has characteristics closely resembling those of the articles under investigation.8. The second respondent has not considered the issue whether the imported products and the domestic products are technically and commercially substitutable and has not come to a conclusion on like article. This action of the second respondent becomes absolutely ignoring the order of this Court dated 09.02.2018 in W.P. No. 25988 of 2017 and the impugned order is one without application of mind. There is no cogent reason pushing the petitioner to file repeated applications and the second respondent cannot pass orders in a routine and casual manner, in spite of sufficient material available with him.9. In the light of the above, this writ petition is allowed, setting aside the order of the second respondent dated 05.03.2018. The second respondent is directed to take steps for initiating investigation to determine the anti-dumping in respect of import of INA having carbon No.9 from European Union and Singapore and 2-PH having carbon No. 10 from European Union, in accordance with law, as expeditiously as possible. Pending miscellaneous petitions, if any, shall also stand closed. No order as to costs.12. Pursuant to the High Courts directions, the DA issued notices on 28.09.2018, 24.10.2018 and 03.12.2018. After noticing that Andhra Petros initial application was in 2016 (i.e.18.10.2016 and 02.12.2016), the DA issued letters seeking updated data from Andhra Petro. However, Andhra Petro filed WP No.2639/2019 before the High Court against the DAs letters of 28.09.2018, 24.10.2018 and 03.12.2018. The DA filed its reply before the High Court, contending inter alia that first, the High Courts order dated 28.8.2018 did not prohibit it from calling for updated data and had directed it (DA) to initiate investigation in accordance with law; second, that it sought updated data to evaluate and comply with the High Courts order fairly; and lastly that Andhra Petro was silent on the fact that the data filed by it was 30 months old.13. Apparently, in view of certain observations made during the proceedings by the High Court, the DA felt constrained to issue a notice of investigation on 09.07.2019 which inter alia, stated as follows:8. The writ petition was listed on 3.7.2019 wherein the Honble High Court advised the law officer representing the Authority that requesting the industry to file fully documented application as per the prescribed proforma available on the website including all data related to recent, updated, period of injury and POl etc., is in violation of the orders passed by the Honble High Court dated 28.8.2018 in WP No.11116/2017 and therefore was inclined to initiate suo moto contempt proceedings and directing the Designated Authority to appear before the Honble High Court. The Honble Court granted one weeks time and posted the matter on 9.7.2019.9. In view of the above, the Authority hereby initiates an AD investigation into the alleged dumping and consequent injury to the domestic industry in terms of rule 5 of AD rules to determine the existence, degree and effect of alleged dumping and to consider recommending the amount of anti-dumping duty which if levied, would be adequate to remove the injury to the domestic industry.14. Para 12 of the notice read as follows:The Petitioner has filed data for the period January 2016 to December 2016. In view of the High Courts order, the Authority initiates the investigation by prima facie evaluating dumping and injury based on the data provided by the applicant. However, to investigate further the POI is proposed to be considered, as 1.4.2018 to 31.3.2019 to evaluate dumping, injury and causality of injury to the petitioner due to alleged dumping.15. Later, on the same date, a corrigendum was issued and para 12 was amended by adding the following in the last line:The injury investigation period will however cover the periods April 2015-March 2016, April 16-March 2017, April 2017-March 2018 and the period of investigation.16. By the first impugned order, the High Court initiated suo motu contempt proceedings after recounting the previous litigation and its directions, in those petitions. It noted that the DA, after disposal of the first petition, undertook the exercise only in relation to the period of investigation sought by Andhra Petro without enlarging it (i.e. the period); this led to the order of the DA rejecting the application on 5 March, 2018, and the filing of the second writ petition, which led to the second remand. The High Court said that the notification (dated 09-07-2019) therefore, cannot be countenanced and further observed that:The action of the Designated Authority in seeking to enlarge the period of investigation pursuant to the second remand order when it did not find any such necessity in relation to the first remand order clearly indicates its lack of bonafides, if not worse, and its intent to tamper with judicial orders.9. Further, the tone and tenor of the language used in para 8 of the Initiation Notification dated 09.07.2019, set out supra, clearly demonstrate the Designated Authoritys disrespect towards the Court. It is indeed shocking to note that the Designated Authority thinks that the High Court is advising it in the scheme of things! Further, having termed the direction of this Court to be mere advice, the Designated Authority then proceeded to brush it aside.10. In these circumstances, we deem it appropriate to initiate suo motu contempt proceedings against Sri Sunil Kumar, Additional Secretary & Designated Authority, Directorate General of Trade Remedies, Department of willful and deliberate disobedience to the order dated 28.08.2018 in W.P. No.11116 of 2018, as indicated supra, and for his utter lack of respect towards the Court. Registry is directed to take necessary steps in this regard and place the suo motu contempt case before this Court after numbering the same.17. Close on the heels of the order (dated 22.07.2009) initiating suo motu contempt, the High Court, by the second impugned order disposed of the writ petition [W.P.(C) 2639/2019]. The Court observed inter alia as follows:2. We may note at this stage that the matter arises under the Customs Tariff (Identification, Assessment and Collection of Antidumping Duty on Dumped Article and for Determination of Injury) Rules, 1995. After filing of this writ petition, we were informed that Mr. Sunil Kumar, the present Additional Secretary & Designated Authority, Directorate General of Trade Remedies, Department of Commerce and Industry, Government of India, issued Initiation Notification dated 09.07.2019, demonstrating that the apprehension of the petitioner company was not without foundation. In the light of this development, this Court was constrained to initiate suo motu contempt proceedings against the said authority by name.3. That being so, we are of the opinion that it would not be proper for the said authority to undertake the necessary exercise pursuant to the order dated 28.08.2018 passed in W.P. No.11116 of 2018. Weare informed that there are three officers, viz. Mr. Mithileshwar Thakur, Mr. Satish Kumar and Ms. Shubhra, all of the rank of Additional Director General in the Department, who would be competent to take up the exercise pursuant to the aforesaid order.4. Sri K. Lakshman, learned Assistant Solicitor General for India, would inform this Court that the designated authority would have to be appointed by the Union of India.5. We accordingly dispose of the writ petition directing the Union of India, the third respondent herein, to choose one of the aforestated officers and appoint him/her as the designated authority to do the needful and undertake the exercise pursuant to the order dated 28.08.2018 passed in W.P. No.11116 of 2018. This exercise shall be completed expeditiously by the Union of India and in any event, not later than two weeks from the date of receipt of a copy of this order. Pending miscellaneous petitions, if any, shall stand closed in the light of this final order. No order as to costs.

Court's reasoning:
25. This court, in S&S Enterprise vs. Designated Authority, (2005) 3 SCC 337 observed that 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. It was noted that levy of anti-dumping duty is a move to remedy injury, recognized by GATT that balancesthe 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.26. Reliance Industries Ltd. vs. Designated Authority, (2006) 10 SCC 368 explained that industries built after independence with great difficulty should 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. The Court also said that, The purpose of Section 9-A is, therefore, to maintain a level playing field and prevent dumping while allowing for healthy competition.27. The DA, no doubt, follows a prescribed quasi-judicial procedure where a determination on whether to impose or not to impose anti-dumping duty takes place (through a report).(Tata Chemicals vs. Union of India, (2008) 17 SCC 180 ; Automotive Tyre Manufacturers Association vs. the Designated Authority (2011) 2 SCC 258 ) However, this proceeding culminates with a recommendation; the Central Government finally decides whether to impose such a duty, the extent of such duty, and its duration.(Rule 17 which speaks of recommendationby the DA. Also, the power to levy duty is discretionary, evident from Rule 18 which leaves it to the Central Government to levy anti-dumping duty, by following the prescribed methods) Under Rule 4, the DA is duty bound to conduct i) investigation of the existence, degree and effect of any alleged dumping in relation to imports of any article ; (ii) identify the article(s) on which anti-dumping duty is to be imposed; (iii) submit findings, provisional or otherwise to Central Government; (iv) determine the normal value, export price and the margin of dumping in relation to the article under investigation; and (v) determine 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 article from specified countries. The meaning of dumping is defined by Rule 10. Rule 17, which speaks of the findings of the DA, obliges that authority to make its final findings not later than one year from the initiation of investigation through a report that outlines the export price, normal value and margin of dumping, whether import of the article into India from specified countries causes material injury, or threatens injury, or materially retards the establishment of any industry in India, the causal link between the dumped import, etc. The proviso to Rule 17 (1) empowers the Central Government in its discretion in special circumstances to extend further the said period of one year by six months, within which the investigation is to be completed.29. Section 9A of the Customs Tariff Act and the procedure prescribed by the Rules of 1995, clearly disclose an intent that investigations should be completed within pre-determined time limits and the levy itself (which can be specific to foreign exporter or country - or combination of both-) cannot be more than five years - which may, after due review in accordance with prescribed procedure, before expiry of the said period, be extended by another period not more than five years. These timelines are crucial; the DA is duty bound to follow them. The analysis of the particular market behaviour by the allegedly offending foreign exporters, involves sifting of a great deal of evidence, such as manufacturing capacity, financial abilities, overall capacity of the country in the like field, prices, and the margin of acceptable delinquent behaviour, as well as domestic capacity, efficiency, etc, while determining if an injury exists, the margin of such injury and its likely duration. The judgment of this court in Union of India vs. Kumho Petrochemicals, (2017) 8 SCC 307. has noticed that as a signatory to GATT and the Marrakesh Agreement, the Anti-Dumping Rules (ADA) are to be assimilated into domestic laws. The provision of Article 5.10 of the Marrakesh Agreement is strict with respect to the timeline for taking up and conclusion of investigation. Article 10 empowers states to levy duties, with retrospective effect, only for a limited period (90 days subject to fulfilment of prescribed conditions) prior to the date of application of provisional measures, when the authorities determine for the dumped product in question that:.. (Article 10.6, Marrakesh Agreement.) This has been given effect to by Rules 17 and 20 of the Rules of 1995.31. The rationale for these guidelines is self-evident: any investigation carried out for past periods would in all likelihood, result in minimal levy. For instance, if in 2020, investigation is initiated for the period 2013-14, with the object of determining anti-dumping, even if injurious behavior is found, the levy can be only of limited duration. Further, to levy duty for the period after findings are rendered, the POI would yield stale results, and cannot justify levy for later periods. Keeping this in mind, the DA, apparently in the present case, having regard to Para 5.9 (quoted above) required Andhra Petro to furnish relatively contemporary data. Such an action cannot be termed as arbitrary. In this courts opinion, the impugned orders were plainly erroneous in chastising the DA, and even directing his replacement, for what appears to be his adherence to prescribed procedure.32. Access to judicial review is a valuable right conferred upon citizens and persons aggrieved; the Constitution arms the High Courts and this court with powers under Articles 226 and 32. At the same time, barring exceptional features necessitating intervention in an ongoing investigation triggered by a complaint by the concerned domestic industry, judicial review should not be exercised virtually as a continuous oversight of the DAs functions. This court has cautioned more than once, that judicial review is to be exercised in a circumspect manner, especially where final findings are rendered by the DA.(Directorate General of Anti-Dumping vs. Sandik International (2018) 13 SCC 402 ; Association of Synthetic Fibre Industries vs. Apollo Tyres Ltd (2010) 13 SCC 733.)