Judgment — ECLI:EU:T:2011:764
Date: 2011-12-16
Language of the case: French
Court formation: First Chamber
Subject matter: Dumping;External relations;Commercial policy
Procedure: Action for annulment - unfounded

Summary of the grounds for annulment 25 The applicant puts forward two pleas in law in support of its application. 26 The first plea alleges infringement of Article 2(10) of the Basic Regulation, in that the change of method is contrary to the principle that a fair comparison should be made between the normal value and the export price. 27 The second plea alleges infringement of Article 11(9) of the Basic Regulation on the ground that, in the review procedure leading to the adoption of the contested regulation, the Commission did not use the same method as that used in the original investigation. The first plea: infringement of Article 2(10) of the Basic Regulation 28 In support of its first plea, the applicant argues in essence that, in the original investigation, the Commission treated the (partial) non-refund of export VAT as an export cost, since its effect was to reduce the income obtained by the exporter from its export sales. The Commission thus deducted from the export price the unrefunded amount of VAT pursuant to Article 2(10) of the Basic Regulation. On the other hand, in the review procedure, the Commission radically changed the method. 29 According to the applicant, Article 2(10)(b) of the Basic Regulation is not applicable to the present case. That provision applies only to tax rebates granted by certain States whereby duties and taxes collected on inputs used in the various stages of production of a product are reimbursed when the product is exported. In such circumstances, the normal value is adjusted through deduction of an amount corresponding to the refund of the duties and taxes concerned. In contrast, that provision does not apply to the situation in this case, where a tax is levied when the product concerned is exported. The Commission was therefore wrong to consider that it was required, under Article 2(10)(b) of the Basic Regulation, to compare the normal value and the export price on a ‘VAT-inclusive’ basis, a method never previously used by the institutions. The applicant argues that a mere difference in the export VAT refund rates cannot justify that radical change of method, the (partial) non-refund being an export cost which should be deducted from the export price. 30 The applicant criticises the reasoning set out in recitals 31 and 32 to the contested regulation, according to which the comparison made between the normal value and the export price is fair, or indeed neutral, because those two elements are compared on the same basis, namely a ‘VAT‑inclusive’ basis, which produces the same results. Even in a case where the same VAT rates were applied to both domestic sales and export sales, the amount on which that VAT was calculated would be different. In the situations with which anti-dumping procedures are concerned, such as that in the present case, the export price is regularly lower than the normal value, so that the amount of VAT added to the normal value is greater than that paid by the exporter on its export sales. The method of comparing the normal value and the export price, including VAT, therefore has the effect of artificially increasing the dumping margin. The Council thus infringed the principle of fair comparison between the normal value and the export price within the meaning of Article 2(10)(b) of the Basic Regulation. 31 The applicant contends that the comparison method used in this case is incompatible with the institutions’ practice in dumping cases. Thus, in recital 31 to Council Regulation (EC) No 1193/2008 of 1 December 2008 imposing a definitive anti-dumping duty and collecting definitively the provisional duties imposed on imports of citric acid originating in the People’s Republic of China (OJ 2008 L 323, p. 1), the Council itself expressly acknowledged that Article 2(10)(b) of the Basic Regulation was not relevant and that non-refund of export VAT should be the subject of an adjustment based on Article 2(10)(k) of that regulation. 32 The applicant infers from this that the contested regulation infringes Article 2(10) of the Basic Regulation. In its view, the anti-dumping duty imposed on its imports would have been appreciably lower, namely of the order of 4% to 5%, if the Commission had used the same comparison method as that used in the original investigation, which complied with that provision. 33 The Council contends that the present plea should be rejected. 34 First, it is appropriate to examine the Council’s statement that it did not apply Article 2(10)(b) of the Basic Regulation when undertaking its review in order to ‘adjust’ the normal value and/or the export price. 35 It is true that, in the document entitled ‘General Disclosure Document R453’, the Commission referred to Article 2(10)(b) of the Basic Regulation to support its conclusion that ‘the appropriate methodology when indirect taxes are not refunded on exports is to establish normal value inclusive [of] the amount for internal taxes applicable when the like product is sold for consumption in the exporting country’ and ‘[t]herefore, the normal value was determined on a VAT paid or payable basis’ (see paragraph 12 above). Similarly, the Commission repeated that reasoning in the document entitled ‘Annex II Specific Disclosure Document’ (see paragraph 13 above). 36 However, as is clear from the document entitled ‘Orientations of the Commission’s services after your reactions to final disclosure’, it must be acknowledged that the Commission subsequently changed its approach. It considered, essentially, that, in the review, no adjustment either of the export price or of the normal value within the meaning of Article 2(10)(b) of the Basic Regulation was necessary (see paragraph 15 above). It was ultimately that same reasoning which the Council set out in recital 31 to the contested regulation (see paragraph 16 above). 37 It follows that, in the contested regulation, the Council took the view that, in the review procedure, in contrast to the position in the original investigation, the conditions for an adjustment of the normal value and/or of the export price under Article 2(10)(b) of the Basic Regulation were not satisfied, so that that provision could not be applied. Accordingly, notwithstanding the preliminary documents adopted by the Commission, entitled ‘General Disclosure Document R453’ (see paragraph 12 above) and ‘Annex II Specific Disclosure Document’ (see paragraph 13 above), there is no reason to consider that, in the contested regulation, the Council, by using the figure of 17% VAT, applied Article 2(10)(b) of the Basic Regulation and thus made adjustments within the meaning of that provision to the normal value and the export price in order to restore symmetry between that value and that price. 38 The Court must therefore reject the applicant’s argument that the comparison method applied in the contested regulation consisted of adjusting the normal value and the export price under Article 2(10)(b) of the Basic Regulation. The comparison between that value and that price on a ‘VAT-inclusive’ basis was made solely by reference to the general terms of the first and second sentences of Article 2(10) of the same regulation (now the first and second sentences of Article 2(10) of Regulation No 1225/2009). 39 Second, it is necessary to consider whether that comparison method was fair within the meaning of the first sentence of Article 2(10) of the Basic Regulation, a view which the applicant contests, in particular, on the ground that the method used gave rise to an artificial increase of the dumping margin. 40 In that regard, it should be borne in mind that, in the sphere of measures to protect trade, the institutions enjoy a broad discretion by reason of the complexity of the economic, political and legal situations which they have to examine (Case C‑351/04 Ikea Wholesale [2007] ECR I‑7723, paragraph 40; judgment of 8 July 2008 in Case T‑221/05 Huvis v Council, not published in the ECR, paragraph 38; and judgment of 23 September 2009 in Case T‑296/06 Dongguan Nanzha Leco Stationery v Council, not published in the ECR, paragraph 40). 41 That broad discretion extends, in principle, to appraisal of the facts relied on to demonstrate the fairness of the comparison method used, the concept of fairness being vague in character and needing to be narrowed down by the institutions in each individual case having regard to the relevant economic context. It is settled case-law that the choice between the different methods of calculating the dumping margin together with the assessment of the normal value of a product require an appraisal of complex economic situations and the judicial review of such an appraisal must therefore be limited to verifying whether the relevant procedural rules have been complied with, whether the facts on which the contested choice is based have been accurately stated, and whether there has been a manifest error in the appraisal of those facts or a misuse of powers (Ikea Wholesale, paragraph 41; Huvis v Council, paragraph 39; and, to that effect, Dongguan Nanzha Leco Stationery v Council, paragraph 41; all cited in paragraph 40 above). 42 The case-law has further established that it is apparent from both the wording and the scheme of Article 2(10) of the Basic Regulation that an adjustment to the export price or the normal value may be made only in order to take account of differences in factors which affect the prices and therefore their comparability. That means, in other words, that the purpose of an adjustment is to re-establish the symmetry between the normal value and the export price, with the result that, if the adjustment has been validly made, that implies that it has re-established the symmetry between the normal value and the export price. By contrast, if the adjustment has not been validly made, that implies that it has created an asymmetry between the normal value and the export price (see Dongguan Nanzha Leco Stationery v Council, cited in paragraph 40 above, paragraph 42 and the case-law cited). 43 In any assessment of the fairness of the comparison method used, the concept of symmetry between the normal value and the export price thus constitutes a key element reflecting the need to establish the comparability of prices within the meaning of Article 1(2) of the Basic Regulation (now Article 1(2) of Regulation No 1225/2009). By virtue of the first, second and third sentences of Article 2(10) of the same regulation (now the first, second and third sentences of Article 2(10) of Regulation No 1225/2009), a fair comparison between the export price and the normal value must be made, at the same level of trade and in respect of sales made at, as closely as possible, the same time and with due account taken of other differences which affect price comparability and it is only in cases where the normal value and the export price established cannot be compared that the institutions are authorised to make adjustments. 44 Moreover, as the Council submitted at the hearing, it is clear from the definitions in the first subparagraph of Article 2(1) and in Article 2(8) of the Basic Regulation (now the first subparagraph of Article 2(1) and Article 2(8) of Regulation No 1225/2009) first that the normal value is the one that is ‘normally … based on the prices paid or payable, in the ordinary course of trade’ and, second, that the export price is the one that is ‘actually paid or payable’, which means, in principle, that VAT must be included in that value and that price. 45 In those circumstances, the Council did not commit any manifest error of assessment in considering that, in this case, the comparison between the normal value and the export price on a ‘VAT-inclusive’ basis constituted a fair comparison method because that comparison had been carried out in accordance with the requirement of symmetry between the normal value and the export price at the same level of trade for sales, both domestic and for export, which are all subject to VAT at the rate of 17%. 46 The applicant has not put forward any argument or fact capable of demonstrating the manifestly inappropriate character of that comparison method, merely arguing that there was a change of calculation method as compared with that applied in the original investigation, likely to result in an artificial increase of the dumping margin. However, in view of the broad discretion enjoyed by the institutions, that argument does not substantiate the view that that method, which is based on identical parameters of comparison, was unfair, or that its application was vitiated by a manifest error of assessment. 47 It must be noted that the applicant does not deny that, in the contested regulation, the institutions scrupulously adhered to that comparison method or that that comparison concerned domestic and export sales made as closely as possible at the same time, or that the levying of VAT on those sales took place at the same level of trade within the meaning of the second sentence of Article 2(10) of the Basic Regulation. 48 Similarly, the applicant has failed to demonstrate the existence of a consistent practice on the part of the institutions regarding the deduction of VAT both from the normal value and from the export price for the purposes of a fair comparison thereof within the meaning of Article 2(10) of the Basic Regulation. The examples given in the application do not relate to any situation of that kind but concern cases involving an adjustment of the export price alone by reason of a partial reimbursement of VAT by the Chinese authorities, like the adjustment made during the original investigation in this case, the legality of which is not at issue in the present proceedings. 49 Therefore, when comparing the normal value and the export price on a ‘VAT-inclusive’ basis, the Council did not commit any manifest error of assessment or infringe the requirement of a fair comparison in accordance with the first sentence of Article 2(10) of the Basic Regulation. 50 Consequently, the first plea must be rejected as unfounded. The second plea: infringement of Article 11(9) of the Basic Regulation 51 In support of its second plea, the applicant maintains that the contested regulation also infringes Article 11(9) of the Basic Regulation in so far as it is based on a method for comparison of the normal value and the export price which differs radically from that used in the original investigation. That approach is not in conformity with the relevant case‑law (Huvis v Council, cited in paragraph 40 above, paragraph 41). 52 According to the applicant, the institutions failed to give valid reasons for that change of comparison method. The fact that, between the respective periods covered by the original investigation and the review, the rate of unrefunded VAT rose from 4% to 17% is not a change of circumstances within the meaning of Article 11(9) of the Basic Regulation such as to justify abandoning the method used in the original investigation. Finally, it contends, the institutions have not demonstrated that the method used in the original investigation was not in conformity with Article 2(10) of that regulation. In any event, the applicant claims to have established that the new method was contrary to the principle of fair comparison embodied in that provision and is based on an inconsistent statement of reasons. 53 The Council contends that this plea should be rejected. 54 It is clear from Article 11(9) of the Basic Regulation that as a general rule, in a review, the institutions are required to apply the same method, including the method of comparing the export price and the normal value under Article 2(10) of the Basic Regulation, as that used in the original investigation which led to the imposition of the anti-dumping duty. The same provision contains an exception whereby the institutions may apply a method other than that used in the original investigation only where the circumstances have changed. In that regard, it must be borne in mind that any derogation or exception to a general rule must, however, be interpreted strictly. It is therefore incumbent on the institutions to demonstrate that circumstances have changed if they wish to apply a method different from that used in the original investigation (see Huvis v Council, cited in paragraph 40 above, paragraph 41 and the case-law cited). 55 As noted in paragraphs 10 and 11 above, the Council accepted that it made an adjustment to the export price in the original investigation, within the meaning of Article 2(10)(b) of the Basic Regulation, and that it dispensed with that adjustment in the review procedure on the ground that the conditions laid down in that provision were not fulfilled. 56 It must be pointed out that that difference in the Council’s approach does not derive from a ‘change of method’ within the meaning of Article 11(9) of the Basic Regulation. 57 In that regard, it must be observed that the concepts of ‘method’ and ‘adjustment’ are not coterminous. However, even if it were accepted that the term ‘adjustment’ in Article 2(10) of the Basic Regulation could be considered the same as the term ‘method’ as used in Article 11(9) of the same regulation, it is clear from the grounds set out in recital 31 to the contested regulation and from the considerations set out in paragraphs 34 to 38 above that, in this case, the institutions did not ‘change’ the ‘adjustment method’ as between the original investigation and the review procedure, within the meaning of the case-law (see Huvis v Council, cited in paragraph 40 above, paragraphs 27, 28 and 43, concerning the change between the ‘advantage’ or ‘input’ method and the ‘residual’ method), but merely dispensed with any adjustment on the ground that, in contrast to the situation obtaining in the original investigation, the conditions laid down in Article 2(10)(b) of the Basic Regulation for such an adjustment to be justified were not fulfilled at the time of the review. The mere abandonment of an adjustment that was not justified in the circumstances of this case cannot be regarded as a change of method within the meaning of Article 11(9) of the Basic Regulation. 58 Article 11(9) of the Basic Regulation requires that the method concerned conform with Article 2 and Article 17 of the same regulation (now Article 2 and Article 17 of Regulation No 1225/2009), the requirements of which must be complied with in all cases. Thus, the General Court has already held that, if it should be found at the review stage that application of the method used in the original investigation was not in conformity with Article 2(10)(b) of the Basic Regulation, the institutions would no longer be required to apply that method (see, to that effect, Huvis v Council, cited in paragraph 40 above, paragraphs 42 and 50) even though that might imply a ‘change of method’ in the strict sense. 59 Thus, where, in the review procedure, the institutions are not authorised to make an adjustment under Article 2(10) of the Basic Regulation, they cannot be compelled, under Article 11(9) of the same regulation, nevertheless to do so, merely because such an adjustment was made in the original investigation. In other words, given that the latter provision expressly requires that the method applied in the review comply with the requirements of Article 2 of the Basic Regulation, such a review must not give rise to an adjustment which is not authorised, in particular, by Article 2(10)(b) of that regulation. 60 However, as the applicant itself accepts (see paragraphs 29 and 31 above), Article 2(10)(b) of the Basic Regulation, which was applied by the institutions in the original investigation, is not the appropriate legal basis for making, in the review, any adjustments, in particular, of the export price, which is not covered by that provision. In these circumstances, it is unnecessary to deal with the question whether, in this case, the method applied in the original investigation was in conformity with Article 2(10)(b) of that regulation, a matter about which the Council itself raised doubts at the hearing (see paragraph 11 above). 61 It follows that the Council did not infringe Article 11(9) of the Basic Regulation by comparing the normal value and the export price of the products concerned on a ‘VAT-inclusive’ basis. 62 In any event, even if it were accepted that, in the review procedure, the Council adopted a method of comparing the normal value and the export price of the products concerned different from that used in the original investigation, it has demonstrated, first, that, between the original investigation and the review procedure, the circumstances had changed and, second, that that change was such that the abandonment of such an adjustment was justified. 63 It is common ground that, in the original investigation, the Chinese VAT on export sales of the products concerned was partially refunded, whereas that VAT was levied in full on domestic sales. On the other hand, during the period covered by the review procedure, both domestic sales and export sales were fully subject to such VAT. As stated in recital 31 to the contested regulation, that difference between the two situations constitutes a change of circumstances within the meaning of Article 11(9) of the Basic Regulation. 64 Moreover, in view of that change in circumstances, the Council was entitled to dispense with an adjustment of the normal value and the export price in the review procedure because it was possible to make a fair comparison between that value and that price on a ‘VAT-inclusive’ basis, whilst, in the original investigation, it had considered it necessary to make an adjustment to restore the symmetry of the relevant parameters of comparison since the products that were exported attracted a partial reimbursement of VAT. 65 Consequently, the comparison method adopted by the Council in the review procedure does not infringe Article 11(9) of the Basic Regulation. 66 The second plea must therefore be rejected as unfounded. 67 In the light of all the above considerations, the action must be dismissed in its entirety. Costs 68 Under Article 87(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the applicant has been unsuccessful, it must be ordered, in accordance with the form of order sought by the Council, to bear its own costs and to pay those of the Council. 69 Under the first subparagraph of Article 87(4) of the Rules of Procedure, institutions which have intervened in the proceedings are to bear their own costs. Consequently, the Commission must bear its own costs. On those grounds, THE GENERAL COURT (First Chamber) hereby: 1. Dismisses the action; 2. Orders Dashiqiao Sanqiang Refractory Materials Co. Ltd to bear its own costs and to pay those incurred by the Council of the European Union; 3. Orders the European Commission to bear its own costs. Azizi Vadapalas Frimodt Nielsen Delivered in open court in Luxembourg on 16 December 2011. [Signatures] Table of contents Legal context Background to the dispute Relevant anti-dumping regulations Chinese VAT legislation Administrative procedures Procedure and forms of order sought Law Summary of the grounds for annulment The first plea: infringement of Article 2(10) of the Basic Regulation The second plea: infringement of Article 11(9) of the Basic Regulation Costs * Language of the case: French.