Case: Automotive Tyre Manufacturers Association Vs. The Designated Authority &amp; Others

The appellant in this appealviz. Automotive Tyre Manufacturers Association (for shortis an association representing domestic tyre manufacturing units, who import Nylon Tyre Cord Fabric (for shortfrom various countries, including China, as one of their basic raw materials for manufacture of tyres.Sometime in 2003, the Association of Synthetic Fibre Industry (forshortrespondent No. 3 herein, filed an application under the Customs Tariff (Identification, Assessment & Collection of Anti-Dumping Duty on Dumped Articles & for Determination of Injury) Rules, 1995 (for shortbefore the Designated Authority (hereinafter referred to as) inter alia, praying for imposition of anti-dumping duty under Section 9A of the Act, on imports of NTCF from China. In their application, ASFI had specifically contended that China being a non-market economy country, normal value of the export price from that country had to be determined as per the principle contemplated in para 7 of Annexure I to the 1995 Rules.3. Taking cognizance of the application, on 29th October, 2003, the DA initiated investigation by issuing notification in terms of Rules 5 and 6 of the 1995 Rules, indicating the period of investigation from 1st April, 2002 to 30th June, 2003. After conducting investigations, the DA recorded preliminary findings and issued public notice in that behalf on 30th June, 2004,vide Notification No. 14/20/2003-DGAD, recommending imposition of provisional anti-dumping duty at the rate of US $ 0.69 per kg on NTCF originating in and exported from China. The recommendations made in the preliminary findings were accepted by the Central Government, and provisional anti-dumping duty was, accordingly, imposedvide Notification No. 72/2004-Cus, published on 26th July, 2004. It would be of some significance to note here that the 2nd proviso to Rule 13 of the 1995 Rules postulates that the levy of provisional duty, in the first instance, can be for a period of six months, which may be extended by a further period of three months on the request of exporters representing a significant percentage of the trade involved.4. Being aggrieved, one of the constituent members of ATMAviz. Apollo Tyres Ltd. filed Writ Petition No. SCA/8747/2004 before the Gujarat High Court, challenging the preliminary findings mainly on the ground that the investigation proceedings were in violation of the principles of natural justice and the procedure prescribed by the 1995 Rules. The said writ petition was dismissed by the High Court on 20th July, 2004, observingdo not think it fit to entertain this petition at this stage, when the interested parties including exporters and importers are provided an opportunity to submit their views and are also assured of oralDA granted a public hearing to all the parties on 1st September, 2004. However, on 1st November, 2004, the officer functioning as the DA, who had conducted the investigations in the instant case was transferred, and a new officer took over as the DA. On 6th January, 2005, the appellants herein, in particular ATMA and Ningbo Nylon, a Chinese exporter, requested the newly appointed DA to grant a fresh public hearing, before finalizing his report/recommendations.6. On 12th January, 2005, the DA sent the disclosure statement to all the parties concerned. On 17th January, 2005, the appellants wrote a letter of protest to the DA, inter alia, contending that their submissions were not examined; the newly appointed DA had failed to grant them a public hearing and some of the new submissions made by the domestic industry formed part of the record.7. One of the constituent members of ATMAviz. J.K. Industries Ltd. filed a Civil Writ Petition (No.548 of 2005) before the High Court of Rajasthan at Jodhpur challenging the investigation proceedings, preliminary findings and the disclosure statement. On 25th January, 2005, the High Court admitted the said writ petition and granted ad interim stay restraining the DA from issuing final findings in terms of the disclosure statement.8. Thereafter, on 16th February, 2005, the High Court modified the earlier interim stay order dated 25th January, 2005 to the extent that the DA was allowed to proceed to record the final findings but the same had to be placed in a sealed cover.9. On 9th March, 2005, the DA issued final findings,vide Notification No. 14/20/2003-DGAD, recommending the imposition of anti-dumping duty on NTCF originating from China at the rate of US $ 0.54 per kg to US $ 0.81 per jg.10. AFSI, respondent No. 3 herein, filed SLP (C) No. 6878-6879 of 2005 challenging the orders of the High Court of Rajasthan dated 25th January 2005 and 16th February, 2005. This Court granted leave in the said SLP, and set aside the said interim orders.11. Ultimately, on 21st April, 2005, the High Court of Rajasthan dismissed the writ petition filed by JK Industries Ltd. observingfindings are not reached by the Designated Authority in exercise of any legislative power vested in it for the purpose of deciding any litigatious contentions between the various interests or to adjudicate or to decide upon rights of any party toby the said order, JK Industries preferred SLP (C) 11061 of 2005 before this Court. The said SLP was dismissed on 13th May, 2005 in view of the alternative remedy available to the appellant. The Court, inter alia, observedwe clarify that the following observations made in the impugned judgment by the Division Bench of the High Court-by the Designated Authority is in aid of legislative— shall not come in the way of the hearing by the Appellate Authority of any judicial review sought for thereafter by either party.The Central Government accepted the final findings of the DA, and issued Notification No. 36/2005-Cus dated 27th April, 2005 levying anti-dumping duty at different rates varying from US $ 0.54 per kg to US $ 0.81 per kg on NTCF w.e.f. 26th July, 2004.13. M/s. Apollo Tyres filed W.P. No. 19896 of 2005 before the High Court of Kerala for quashing the final findings of the DA. The High Court observed that since the petitioners had been represented by ATMA before the DA, ATMA should approach the High Court. Thereafter, ATMA filed W.P. No. 20587 of 2005 before the High Court.14. By a common order dated 12th July, 2005, the High Court of Kerala disposed of both the writ petitions, directing the incumbent DA to grant hearing on the issues raised in the writ petition, and issue orders modifying the final findings to the extent required.15. ASFI filed S.L.P. (C) No. 15704-15705 of 2005 before this Court challenging the said order of the High Court of Kerala. This Court disposed of the SLPvide order dated 12th August, 2005, suspending the operation of the judgment of the High Court of Kerala, and directing the parties to pursue the remedy before the Tribunal under Section 9C of the Act.16. As afore-mentioned, the Tribunal has dismissed the appeals, preferred by ATMA, Apollo Tyres, J.K. Tyres, ASFI and Ningbo Nylon and confirmed the levy of anti-dumping duty in terms of Notification No. 36/2005-Cus. Dealing with the main grievance of the appellantsviz. denial of an opportunity of hearing and thus, violation of the principles of natural justice, the Tribunal has held that:— (i) an anti-dumping duty has all the characteristics of a tax as it is imposed under statutory power without the tax-payers consent, and its payment is enforced by law, therefore, issuance of the notification by the Central Government in the Official Gazette under Rule 18 of the 1995 Rules read with Section 9A(1) of the Tariff Act imposing anti-dumping duty upon importation of the subject article in India is purely a legislative function; (ii) the process of imposing anti-dumping duty which is legislative in nature does not decide any existing dispute orinter-parties; it only determines whether imposition of anti-dumping duty is called for in relation to dumped imports and if so, at what rate, on the basis of the information collected from the exporters-importers and a large number of other interested parties; (iii) there can never be abetween the State and its citizens in the matter of exercise of legislative power to impose tax as there is norelationship between the Central Government imposing anti-dumping duty under the Tariff Act and the 1995 Rules, and the exporters or importers who are given an opportunity to give information under the Rules and that the principles of natural justice are not applicable to a legislative process for enactment of law and the persons affected have no right to an opportunity to be heard before the enactment; (iv) if, however, the Parliament, in its wisdom, for an impost like the anti-dumping duty, which arises due to and has nexus with the interest of domestic industry, provides a mechanism for taking into consideration the views of those who will be affected and the other interested parties, that will not amount to vesting in them a right to be heard personally, arising as a consequence of the principles of natural justice, against taking legislative action of imposing anti-dumping duty and fixing its rate for the subject article; and (v) in cases where investigative procedure leading to determination of the rates of taxes is undertaken by the Parliament, through its agencies, as per its rules of business, there will be absolutely no scope for any judicial Tribunal to examine whether any procedural irregularity was committed by not consulting any particular section of the public likely to be adversely affected by such law. This is precisely why legislative enactments are not generally made subject to the principles of natural justice, as doing so may lead to a finding of irregularity of procedure which is prohibited by the constitutional scheme of law making. It is settled law that there is no right to be heard before the making of legislation, whether primary or delegated, unless specifically provided by the Statute.17. Thus, the Tribunal held that the imposition of anti-dumping duty being legislative in character, the principles of natural justice were not applicable to the proceedings before the DA and, therefore, persons affected had no right to be heard before the imposition of duty.18. Hence the present appeals.

Court's reasoning:
It is thus, well settled that unless a statutory provision, either specifically or by necessary implication excludes the application of principles of natural justice, because in that event the Court would not ignore the legislative mandate, the requirement of giving reasonable opportunity of being heard before an order is made, is generally read into the provisions of a statute, particularly when the order has adverse civil consequences which obviously cover infraction of property, personal rights and material deprivations for the party affected. The principle holds good irrespective of whether the power conferred on a statutory body or Tribunal is administrative or quasi-judicial. It is equally trite that the concept of natural justice can neither be put in a strait-jacket nor is it a general rule of universal application. Undoubtedly, there can be exceptions to the said doctrine. As stated above, the question whether the principle has to be applied or not is to be considered bearing in mind the express language and the basic scheme of the provision conferring the power; the nature of the power conferred and the purpose for which the power is conferred and the final effect of the exercise of that power. It is only upon a consideration of these matters that the question of application of the said principle can be properly determined.In light of the aforenoted legal position and the elaborate procedure prescribed in Rule 6 of 1995 Rules, which the DA is obliged to adhere to while conducting investigations, we are convinced that duty to follow the principles of natural justice is implicit in the exercise of power conferred on him under the said Rules. Insofar as the instant case is concerned, though it was sought to be pleaded on behalf of the respondents that the incumbent DA had issued a common notice to the Advocates for ATMA and Ningbo Nylon, for oral hearing on 9th March 2005, however, there is no document on record indicating that pursuant toletter dated 24th January 2005, notice for oral hearing was issued to them by the incumbent DA. Moreover, the alleged opportunity of oral hearing on 9th March, 2005, being in relation to the price undertaking offer by Ningbo Nylon, cannot be likened to a public hearing contemplated under Rule 6(6) of the 1995 Rules. The procedure prescribed in the 1995 Rules imposes a duty on the DA to afford to all the parties, who have filed objections and adduced evidence, a personal hearing before taking a final decision in the matter. Even written arguments are no substitute for an oral hearing. A personal hearing enables the authority concerned to watch the demeanour of the witnesses, etc. and also clear up his doubts during the course of the arguments. Moreover, it was also observed in Gullapalli (supra), if one person hears and other decides, then personal hearing becomes an empty formality. In the present case, admittedly, the entire material had been collected by the predecessor of the DA; he had allowed the interested parties and/or their representatives to present the relevant information before him in terms of Rule 6(6) but the final findings in the form of an order were recorded by the successor DA, who had no occasion to hear the appellants herein. In our opinion, the final order passed by the new DA offends the basic principle of natural justice. Thus, the impugned notification having been issued on the basis of the final findings of the DA, who failed to follow the principles of natural justice, cannot be sustained. It is quashedview of our finding that the recommendation of the DA stands vitiated on account of non-compliance with the basic principle of audi alteram partem, the appeals must succeed. However, the question for consideration is whether the appellants will be entitled to the refund of the duty already paid and collected. It is trite law that in the case of indirect taxes like central excise duties and customs duties, the tax collected by the State without the authority of law, shall not be refunded to the petitioner unless he alleges and establishes that he has himself borne the burden of the said duty and that he has not passed on the burden of duty to a third party. In such a situation, the doctrine of unjust enrichment comes intoappellants cannot claim refund of duty already levied in as much as they have not specifically challenged the findings of the sunset review, and therefore, the findings in relation to the existence of dumped imports, material injury to domestic industry and causal link between dumped imports and material injury to domestic industry remain unchallenged. In that view of the matter, particularly when the existence of dumping has not been put in issue, we are of the opinion that refund of the duty to any of the appellants would be inconsistent with the object and scheme of the Tariff Act and the 1995 Rules.