Case: Union of India &amp; Another Vs. M/s. Kumho Petrochemicals Company Limited &amp; Another

1. On the demand raised by the indigenous industry, original/ordinary investigation concerning imports of Acrylonitrile Butadiene Rubber (hereinafter referred to as the `product) was taken up sometime in March 1996 for the purpose of levy ofduty on the said import from Korea RP and Germany. The primary finding to this effect came to be published on July 17, 1997 whereby the Designated Authority recommended definitiveduty. That resulted into issuance of Notification dated July 30, 1997 by the Central Government wherebyduty was imposed under Section 9A of the Customs Tariff Act, 1975 (for short, the `Act) on the said product. Before the expiry of five years period during whichduty remains operative, the first sunset review investigation was initiated by the Authority which recommended continued levy ofduty. It resulted into another Notification dated October 10, 2002. As per this Notification, theduty was to remain in force till October 10, 2007. Just before that, on October 08, 2007, second sunset review investigation was initiated by the Authority, which resulted in recommendation dated October 04, 2008 for continued imposition ofduty on imports of the product from Koreal RP. On the basis of this recommendation, another Notification dated January 02, 2009 was issued by the Central Government, which was to remain in force till January 01, 2014. On December 31, 2013, that is one day before the aforesaid Notification was to lapse, third sunset review investigation in respect of duty imposed on the imports of the subject product from Korea RP was initiated. Pursuant to the initiation of the said sunset review investigation, the Central Government issued Notification No.dated January 23, 2014 thereby extending the validity of duty by one year, i.e. up to January 01, 2015, pending investigation. This was done in exercise of powers contained in second proviso to(5) of Section 9A of the Act. The aforesaid Notification dated January 23, 2014 came to be challenged by filing writ petitions by M/s. Kumho Petrochemicals Company Limited (respondent No.1 herein), who is a purchaser and exporter of the product from Korea RP, as well as by Fairdeal Polychem LLP (an importer of product from Korea RP). The High Court has, vide impugned judgment dated July 11, 2014, decided both the writ petitions. It has partly allowed these writ petitions holding that the order of continuation ofduty, made after expiry of the duty period, is bad in law. However, another contention of the two writ petitioners, namely, the initiation of theduty investigation was also bad in law on the ground that public notice of initiation was not published in the Official Gazette before January 01, 2014, i.e., before the expiry of theduty at the end of five years period, has not been accepted by the High Court. Repelling this argument, it is held by the High Court that public notice of initiation need not be published in the Official Gazette and that public notice is not afor initiation of an investigation, which can be issued within a proximate period of time after its initiation. Union of India and Automotive Manufacturers Association in India felt aggrieved by that part of the judgment whereby extension ofduty has been allowed to be bad in law. Their appeals challenge that part of the order. On the other hand, writ petitioners are not satisfied with the outcome of the second issue about the initiation ofduty. This part is challenged by these two writ petitioners. M/s. Omnova Solution (Pvt.) Limited is the other appellant which is also a domestic industry and has challenged the orders by filing two writ petitions thereby supporting the stand of Union of India and Manufacturers Association. It is for this reason all these appeals are heard analogously, which we propose to decide by this common judgment.

Court's reasoning:
QUESTION NO.19. It is not in dispute that in terms of Section 9A(5) of the Act,duty is effective for a period not exceeding five years from the date of its imposition. The Government is empowered to revoke the duty imposed even before the expiry of five years. In any case, such a duty admittedly ceases to be operative after five years from the date of imposition.It is a common case that such a sunset review is to initiate before the expiry of five years period mentioned in the Notification. In the present case, no doubt, the Notification which is passed initiating sunset review is dated December 31, 2013. Though we have reproduced relevant portion of this Notification, a perusal of the entire Notification reveals that it is a detailed Notification running into almost fifteen pages wherein history of original investigation concerned the imports of the product in question from Korea RP and Germany is traced out leading to the findings that were arrived at by the Authority on the basis of whichduty was imposed on the subject goods vide Notification dated July 30, 1997. This Notification thereafter deals with the second sunset review which led to passing of further Notification dated January 02, 2009. Thereafter, it mentions that M/s. Omnova Solution (Pvt.) Limited had filed a duly substantiated application on November 11, 2013 before the Authority alleging likelihood of continuation of recurrence of dumping of the subject goods, originating in or exported from Korea RP, and a consequent injury to the domestic market and requested for another review. The Notification thereafter deals with the situation of domestic industry, product in question and satisfaction of the Authority that a case was made out for initiation of sunset review investigation to review the need for continued imposition ofduty in force in respect of the product in question. The Notification thereof calls upon the interested parties to submit relevant information in the prescribed form and manner and furnish their views to the Authority for its consideration. Thus, a detailed exercise was done taking into account all the relevant factors in forming the opinion that the sunset review was desirable.The High Court has answered the question in favour of the Government and against the writ petitioners on the ground that Section 9A(5) of the Act and its proviso do not mandate a public notice or a Gazette Notification as afor initiation of sunset review investigation. The reference to publication by Official Gazette is, significantly, in Section 9A(1) which talks of imposition ofe High Court is right that it is in this specific context that the said Rule mentions about issuance of public notice underlying its decision to initiate the investigation. Rule 23 deals with review, i.e. review to see the need for the continued imposition ofduty and inter alia mentions that provisions of Rule 6 shall be mutatis mutandis applicable in the case of review, meaning thereby the procedure which is mentioned in Rule 6 shall be followed while undertaking review as well. Rule 6, thus, encompasses the principles of natural justice that are to be applied by the Designated Authority while undertaking the exercise of investigations qua imposition of dumping duty.First proviso to Section 9A(5) of the Act, when read along with Rule 6 of the Rules, do not lead to the conclusion that the intention to review and extend theduty, in the facts of a given case, have to be necessarily published and made available to all, before the expiry of the original notification. Requirement of Section 9A(5) of the Act is that the sunset review is to be initiated before the expiry of the original period for which theduty prevails. There is no additional requirement of making it public as well, necessarily before the said expiry date.17. We, thus, agree with the conclusion of the High Court that insofar as requirement of public notice or a Gazette Notification is concerned, no such stipulation is made in Section 9A(5) and its proviso. On the other hand, Section 9A(1), which deals with imposition ofduty, specifically refers to such an imposition by way of publication in an Official Gazette. Therefore, as far as initiation of review is concerned, once a decision is taken by the Government on a particular date, that would be the relevant date and not the date on which it is made. From the scheme of Section 9A of the Act, it becomes clear that though the Notification forduty is valid for a maximum period of five years, the said period can be extended further with the issuance of fresh notification. For this purpose, it is necessary to initiate the review exercise before the expiry of the original notification, which review is commonly known as `sunset review. There may be situations where the sunset review is undertaken but the review exercise is not complete before the expiry of the period of original notification. It is because of the reason that the exercise of sunset review also demands complete procedure to be followed, in consonance with the principles of natural justice that was followed while imposing theduty in the first instance. To put it otherwise, this exercise contemplates hearing the views of all stakeholders by giving them adequate opportunity in this behalf and thereafter arriving at a conclusion that the continuation of theduty is justified, otherwise injury to the domestic industry is likely to continue or reoccur, if the saidduty is removed or varied. Since this exercise is likely to take some time and may go beyond the period stipulated in the original notification imposingduty, in order to ensure that there is no vacuum in the interregnum, second proviso to(5) of Section 9A of the Act empowers the Central Government to continue theduty for a further period not exceeding one year, pending the outcome of such a review. The question, however, is as to whetherthis extension to fill the void that may be created during the pendency of the sunset review is exercised is automatic, once the decision is taken to have sunset review of theduty or the continuation of such anduty has to be by a propernotification. As noted above, the High Court has held that second proviso is only an enabling provision and, therefore, power vested in the Central Government under the said proviso has to be specifically exercised, without which theduty cannot continue to remain in force with the lapse of original notification.31. After giving due consideration to the arguments advanced by the learned counsel for the parties, we are inclined to agree with the High Court that proviso to(5) of Section 9A of the Act is an enabling provision. That is very clear from the language of the said provision itself.(5) of Section 9A gives maximum life of five years to the imposition ofduty by issuing a particular notification. Of course, this can be extended by issuing fresh notification. However, the words `unless revoked earlier in(5) clearly indicate that the period of five years can be curtailed by revoking the imposition ofduty earlier. Of course, provision for review is there, as mentioned above, and the Central Government may extend the period if after undertaking the review it forms an opinion that continuation of such anduty is necessary in public interest. When such a notification is issued after review, period of imposition gets extended by another five years. That is the effect of first proviso to(5) of Section 9A. However, what we intend to emphasise here is that even as per(5) it is not necessary that in all casesduty shall be imposed for a full period of five years as it can be revoked earlier. Likewise, when a review is initiated but final conclusion is not arrived at and the period of five years stipulated in the original notification expires in the meantime, as per second proviso `theduty may continue to remain in force. However, it cannot be said that the duty would automatically get continued after the expiry of five years simply because review exercise is initiated before the expiry of the aforesaid period. It cannot be denied, which was not even disputed before us, that issuance of a notification is necessary for extending the period ofduty. Reason is simple. There no duty or tax can be imposed without the authority of `law. Here, such a law has to be in the form of an appropriate notification and in the absence thereof the duty, which is in the form of a tax, cannot be extracted as, otherwise, it would violate the provisions of Article 265 of the Constitution of India. As a fortiorari, it becomes apparent that the Government is to exercise its power to issue a requisite notification. In this hue, the expression `may in the second proviso to(5) has to be read as enabling power which gives discretion to the Central Government to determine as to whether to exercise such a power or not. It, thus, becomes an enabling provision.32. We are conscious of the fact that once sunset review is initiated, such initiation takes place only after a substantiated application/request is filed by the indigenous industry which is examined and a prima facie view is formed by the Central Government to the effect that such a review is necessitated as withdrawal ofduty or cessation thereof may be prejudicial to the indigenous industry. Once such an opinion is formed and the sunset review is initiated, in all likelihood the Central Government would make use of second proviso and issue notification for continuing the saidduty. At the same time, it cannot be said that without any overt act on the part of the Central Government, there is an automatic continuation. The learned counsel for respondent rightfully pointed out that the legislature has consciously used the expression `may and `shall at different places in the same Section, i.e., Section 9A of the Act. In such a scenario, it has to be presumed that different expressions were consciously chosen by the Legislature to be used, and it clearly understood the implications thereof, therefore, when the word `may is used in the same Section in contradistinction to the word `shall at other places in that very Section, it is difficult to interpret the word `may as `shall. Therefore, it is difficult to read the word `may as `shall. Our conclusion gets strengthened when we keep in mind following additional factors:33. Theduty may continue, pending the outcome of the review, for a further period not exceeding one year. Thus, maximum period of one year is prescribed for this purpose which implies that the period can be lesser as well. The Government is, thus, to necessarily form an opinion as to for how much period it wants to continue theduty pending outcome of such a review. Moreover, since the maximum period is one year, if the review exercise is not completed within one year, the effect of that would be that after the lapse of one year there would not be anyduty even if the review is pending. In that eventuality, it is only after the review exercise is complete and the Central Government forms the opinion that the cessation of such a duty is likely to lead to continuation or recurrence of dumping and injury, it would issue a notification extending the period of imposition of duty. Therefore, there may be a situation where even when the power is exercised under second proviso and duty period extended by full one year, the review exercise could not be completed within that period. In that situation, vacuum shall still be created in the interregnum beyond the period of one year and till the review exercise is complete and fresh notification is issued. This situation belies the argument that extension under second proviso is to be treated as automatic to avoid the hiatus or vacuum in between.34. Judgment in the case of Rishiroop Polymers (P) Ltd. has no application to the issue which we are dealing with, namely, interpretation of second proviso to(5) of Section 9A. The said judgment only deals with the nature of review exercise that has to be undertaken and mentions that the entire purpose for the review investigation is not to see whether there is a need for imposition ofduty but to see whether in the absence of such continuance, dumping would increase and the domestic industry suffers. In fact, even in the instant case, review exercise was completed much after the expiry of one year from the date when the earlier notification, on completion of five years term, came to an end. Likewise, the reliance on Section 24 of the General Clauses Act, 1897 is also of no consequence. This provision concerns with the orders, etc. which have already been issued under some enactments and in the meantime those enactments are repealed orIn those situations, Section 24 of the General Clauses Act provides that such orders and regulations issued under the old Act would remain in force so far as they are not inconsistent with the provisions of theAct. Such a provision again has no relevance with the issue which we are dealing with. Since judgment in the case of Fibre Boards Private Limited, Bangalore concerns with the interpretation of Section 24 of the General Clauses Act, that also would be of no help.Judgment in the case of Rishiroop Polymers (P) Ltd. has no application to the issue which we are dealing with, namely, interpretation of second proviso to(5) of Section 9A. The said judgment only deals with the nature of review exercise that has to be undertaken and mentions that the entire purpose for the review investigation is not to see whether there is a need for imposition ofduty but to see whether in the absence of such continuance, dumping would increase and the domestic industry suffers. In fact, even in the instant case, review exercise was completed much after the expiry of one year from the date when the earlier notification, on completion of five years term, came to an end. Likewise, the reliance on Section 24 of the General Clauses Act, 1897 is also of no consequence. This provision concerns with the orders, etc. which have already been issued under some enactments and in the meantime those enactments are repealed orn those situations, Section 24 of the General Clauses Act provides that such orders and regulations issued under the old Act would remain in force so far as they are not inconsistent with the provisions of the. Such a provision again has no relevance with the issue which we are dealing with. Since judgment in the case of Fibre Boards Private Limited, Bangalore concerns with the interpretation of Section 24 of the General Clauses Act, that also would be of no help.As noticed above, the High Court has held that once the earlier Notification by whichduty was extended by five years, i.e. up to January 01, 2014, expired, the Central Government was not empowered to issue any Notification after the said date, namely, on January 23, 2014, inasmuch as there was no Notification in existence the period whereof could be extended. The High Court, in the process, has also held that the Notification extendingduty by five years, i.e. up to January 01, 2014 was in the nature of temporary legislation and validity thereof could be extended, in exercise of powers contained in second proviso to(5) of Section 9A of the Act only before January 01, 2014.37. We do not find any infirmity in the aforesaid approach of the High Court in interpreting the second proviso to Section 9A(5) of the Act. The High Court has rightly interpreted the aforesaid provision in the light of Article 11.1, 11.2 and 11.3 of the Agreement for Implementation and Article VI of the GATT, commonly known as `Implementation Agreement.on (5) of Section 9A is in tune with the aforesaid Articles of Implementation Agreement and is to be interpreted in that hue.39. India is a signatory to the Marrakesh Agreement establishing the World Trade Organization in 1994. Pursuant to this, it has implemented the Agreement on Implementation of Article VI of the GATT 1994 referred to as theAgreement (ADA), which is one of the Agreements that forms part of the WTO treaty. In terms of Article 18.4 of the ADA, each Member country is required to ensure the conformity of its laws, regulations and administrative procedures with the provisions of the ADA. As a consequence, Sections 9A, Section 9AA, Section 9B and Section 9C of the Act were enacted.40. Two things which follow from the reading of the Section 9A(5) of the Act are that not only the continuation of duty is not automatic, such a duty during the period of review has to be imposed before the expiry of the period of five years, which is the life of the Notification imposingduty. Even otherwise, Notification dated January 23, 2014 amends the earlier Notification dated January 02, 2009, which is clear from its language, and has been reproduced above. However, when Notification dated January 02, 2009 itself had lapsed on the expiry of five years, i.e. on January 01, 2014, and was not in existence on January 23, 2014 question of amending aNotification does not arise at all. As a sequitur, amendment was to be carried out during the lifetime of the Notification dated January 02, 2009. The High Court, thus, rightly remarked that Notification dated January 02, 2009 was in the nature of temporary legislation and could not be amended after it lapsed.