1. By its appeal, Dashiqiao Sanqiang Refractory Materials Co. Ltd (‘Dashiqiao’) seeks to have set aside of the judgment of the General Court of the European Union in Case T-423/09 Dashiqiao Sanqiang Refractory Materials v Council [2011] ECR II-0000 (‘the judgment under appeal’) by which that court dismissed its action seeking annulment of Council Regulation (EC) No 826/2009 of 7 September 2009 amending Regulation (EC) No 1659/2005 imposing a definitive anti-dumping duty on imports of certain magnesia bricks originating in the People’s Republic of China (OJ 2009 L 240, p. 7) (‘the contested regulation’), in so far as the anti-dumping duty it imposes on the applicant exceeds that which would have been applicable if it had been determined using the calculation method applied in the original investigation in order to take account of the non-refund of Chinese export value added tax. Legal context
2. Council Regulation (EC) No 384/96 of 22 December 1995 on protection against dumped imports from countries not members of the European Community (OJ 1996 L 56, p. 1) was replaced and codified by Council Regulation (EC) No 1225/2009 of 30 November 2009 on protection against dumped imports from countries not members of the European Community (OJ 2009 L 343, p. 51, and corrigendum OJ 2010 L 7, p. 22). However, having regard to the date of adoption of the contested regulation, the dispute must be examined on the basis of Regulation No 384/96, as amended by Council Regulation (EC) No 2117/2005 of 21 December 2005 (OJ 2005 L 340, p. 17) (‘the basic regulation’), which provided in the first subparagraph of Article 2(1) and in Article 2(8) and 2(10) that: ‘1. The normal value shall normally be based on the prices paid or payable, in the ordinary course of trade, by independent customers in the exporting country. … 8. The export price shall be the price actually paid or payable for the product when sold for export from the exporting country to the Community. … 10. A fair comparison shall be made between the export price and the normal value. This comparison shall be made at the same level of trade and in respect of sales made at as nearly as possible the same time and with due account taken of other differences which affect price comparability. Where the normal value and the export price as established are not on such a comparable basis due allowance, in the form of adjustments, shall be made in each case, on its merits, for differences in factors which are claimed, and demonstrated, to affect prices and price comparability. Any duplication when making adjustments shall be avoided, in particular in relation to discounts, rebates, quantities and level of trade. When the specified conditions are met, the factors for which adjustment can be made are listed as follows: … (b) Import charges and indirect taxes An adjustment shall be made to normal value for an amount corresponding to any import charges or indirect taxes borne by the like product and by materials physically incorporated therein, when intended for consumption in the exporting country and not collected or refunded in respect of the product exported to the Community. … (k) Other factors An adjustment may also be made for differences in other factors not provided for under subparagraphs (a) to (j) if it is demonstrated that they affect price comparability as required under this paragraph, in particular that customers consistently pay different prices on the domestic market because of the difference in such factors.’
3. Article 11 of the basic regulation provides in the first subparagraph of Article 11(3) and Article 11(9): ‘3. The need for the continued imposition of measures may also be reviewed, where warranted, on the initiative of the Commission or at the request of a Member State or, provided that a reasonable period of time of at least one year has elapsed since the imposition of the definitive measure, upon a request by any exporter or importer or by the Community producers which contains sufficient evidence substantiating the need for such an interim review. … 9. In all review or refund investigations carried out pursuant to this Article, the Commission shall, provided that circumstances have not changed, apply the same methodology as in the investigation which led to the duty, with due account being taken of Article 2, and in particular paragraphs 11 and 12 thereof, and of Article 17.’ Background to the proceedings and the contested regulation
4. The relevant points of the factual framework are set out as follows in paragraphs 4 to 6 and 16 of the judgment under appeal: ‘4 On 11 April 2005, the Commission of the European Communities adopted Regulation (EC) No 552/2005 imposing a provisional anti-dumping duty on imports of certain magnesia bricks originating in the People’s Republic of China (OJ 2005 L 93, p. 6) which, among other things, imposed a provisional anti-dumping duty of 66.1% on imports into the European Community of certain magnesia bricks produced by [Dashiqiao]. 5 By Council Regulation (EC) No 1659/2005 of 6 October 2005 imposing a definitive anti-dumping duty and collecting definitively the provisional duty imposed on imports of certain magnesia bricks originating in the People’s Republic of China (OJ 2005 L 267, p. 1), the Council of the European Union imposed a definitive anti-dumping duty of 27.7% on imports into the European Community of certain magnesia bricks produced by [Dashiqiao]. 6 At the request of [Dashiqiao], Regulation No 1659/2005 was the subject of a partial interim review under Article 11(3) of the [b]asic [r]egulation … . On conclusion of that review, the Council adopted [the contested regulation], by which the anti‑dumping duty applicable to certain imports of magnesia bricks produced by [Dashiqiao] was reduced to a rate of 14.4%. … 16 Finally, in recitals 29 to 32 to the contested regulation, the following is stated in paragraph 4, under the heading “Comparison”: “(29) The average normal value and the average export price for each type of the product concerned were compared on an ex-works basis and at the same level of trade and at the same level of indirect taxation. In order to ensure a fair comparison between normal value and export price, account was taken, in accordance with Article 2(10) of the [b]asic [r]egulation, of differences in factors which were claimed and demonstrated to affect prices and price comparability. For this purpose, adjustments for transport costs, insurance, handling and loading charges, credit costs, and actual anti-dumping duties paid were made where applicable and justified. (30) The investigation has established that the VAT paid on export sales was not refunded (not even partially, which was the case in the original investigation). In the disclosure which was provided to [Dashiqiao] pursuant to Article 20 of the [b]asic [r]egulation, it was therefore indicated that both the export price and the normal value would be established on a VAT paid or payable basis. [Dashiqiao] argues that this approach would be unlawful. Regarding its arguments, the following can be noted. (31) Firstly, regarding the argument that in the original investigation another methodology was used (i.e. the deduction of VAT both from the normal value and the export price), it must be emphasised that the circumstances which were applicable during the review investigation period (RIP) were not the same as those applicable during the original investigation period. Whereas during the original investigation period, as stated above, VAT was partially refunded, which necessitated an adjustment pursuant to Article 2(10) [of the basic regulation], during the RIP, no VAT on export sales was refunded. Therefore, no adjustment in respect of VAT, neither to the export price nor to normal value, was necessary. Even if this could be qualified as a change in methodology, it [would be] justified under Article 11(9) of the [b]asic [r]egulation since the circumstances have changed. (32) The second argument which [Dashiqiao] makes is that the method used in this review would artificially inflate the dumping margin. This argument cannot be accepted. In addition, the method used is neutral. Indeed it has the same effect, also if, for instance for certain products or transactions, a company sells to the Community at an export price which does not result in dumping. In other words, even assuming that the inclusion of VAT on both sides of the equation would increase the difference between the two elements, that would also be the case for those models for which there was no dumping.”’ The procedure before the General Court and the judgment under appeal
5. In support of its action before the General Court, Dashiqiao raised two pleas in law alleging, respectively, infringement of Article 2(10) and of Article 11(9) of the basic regulation.
6. Neither of the two pleas raised by Dashiqiao in support of its action having been upheld, the General Court rejected the action in its entirety. Forms of order sought
7. By its appeal, Dashiqiao claims that the Court should: - set aside the judgment under appeal and itself rule on the dispute; - grant the form of order sought at first instance and, therefore, annul the anti-dumping duty imposed on it by the contested regulation in so far as that duty exceeds that which would be applicable if it had been determined on the basis of the method applied in the original investigation in order to take account of the non-refund of Chinese export VAT, in accordance with Article 2(10) of the basic regulation; - order the Council to pay the costs of the proceedings at first instance and on appeal.
8. The export price shall be the price actually paid or payable for the product when sold for export from the exporting country to the Community. … 10. A fair comparison shall be made between the export price and the normal value. This comparison shall be made at the same level of trade and in respect of sales made at as nearly as possible the same time and with due account taken of other differences which affect price comparability. Where the normal value and the export price as established are not on such a comparable basis due allowance, in the form of adjustments, shall be made in each case, on its merits, for differences in factors which are claimed, and demonstrated, to affect prices and price comparability. Any duplication when making adjustments shall be avoided, in particular in relation to discounts, rebates, quantities and level of trade. When the specified conditions are met, the factors for which adjustment can be made are listed as follows: … (b) Import charges and indirect taxes An adjustment shall be made to normal value for an amount corresponding to any import charges or indirect taxes borne by the like product and by materials physically incorporated therein, when intended for consumption in the exporting country and not collected or refunded in respect of the product exported to the Community. … (k) Other factors An adjustment may also be made for differences in other factors not provided for under subparagraphs (a) to (j) if it is demonstrated that they affect price comparability as required under this paragraph, in particular that customers consistently pay different prices on the domestic market because of the difference in such factors.’ 3. Article 11 of the basic regulation provides in the first subparagraph of Article 11(3) and Article 11(9): ‘3. The need for the continued imposition of measures may also be reviewed, where warranted, on the initiative of the Commission or at the request of a Member State or, provided that a reasonable period of time of at least one year has elapsed since the imposition of the definitive measure, upon a request by any exporter or importer or by the Community producers which contains sufficient evidence substantiating the need for such an interim review. …
9. In all review or refund investigations carried out pursuant to this Article, the Commission shall, provided that circumstances have not changed, apply the same methodology as in the investigation which led to the duty, with due account being taken of Article 2, and in particular paragraphs 11 and 12 thereof, and of Article 17.’ Background to the proceedings and the contested regulation 4. The relevant points of the factual framework are set out as follows in paragraphs 4 to 6 and 16 of the judgment under appeal: ‘4 On 11 April 2005, the Commission of the European Communities adopted Regulation (EC) No 552/2005 imposing a provisional anti-dumping duty on imports of certain magnesia bricks originating in the People’s Republic of China (OJ 2005 L 93, p. 6) which, among other things, imposed a provisional anti-dumping duty of 66.1% on imports into the European Community of certain magnesia bricks produced by [Dashiqiao]. 5 By Council Regulation (EC) No 1659/2005 of 6 October 2005 imposing a definitive anti-dumping duty and collecting definitively the provisional duty imposed on imports of certain magnesia bricks originating in the People’s Republic of China (OJ 2005 L 267, p. 1), the Council of the European Union imposed a definitive anti-dumping duty of 27.7% on imports into the European Community of certain magnesia bricks produced by [Dashiqiao]. 6 At the request of [Dashiqiao], Regulation No 1659/2005 was the subject of a partial interim review under Article 11(3) of the [b]asic [r]egulation … . On conclusion of that review, the Council adopted [the contested regulation], by which the anti‑dumping duty applicable to certain imports of magnesia bricks produced by [Dashiqiao] was reduced to a rate of 14.4%. … 16 Finally, in recitals 29 to 32 to the contested regulation, the following is stated in paragraph 4, under the heading “Comparison”: “(29) The average normal value and the average export price for each type of the product concerned were compared on an ex-works basis and at the same level of trade and at the same level of indirect taxation. In order to ensure a fair comparison between normal value and export price, account was taken, in accordance with Article 2(10) of the [b]asic [r]egulation, of differences in factors which were claimed and demonstrated to affect prices and price comparability. For this purpose, adjustments for transport costs, insurance, handling and loading charges, credit costs, and actual anti-dumping duties paid were made where applicable and justified. (30) The investigation has established that the VAT paid on export sales was not refunded (not even partially, which was the case in the original investigation). In the disclosure which was provided to [Dashiqiao] pursuant to Article 20 of the [b]asic [r]egulation, it was therefore indicated that both the export price and the normal value would be established on a VAT paid or payable basis. [Dashiqiao] argues that this approach would be unlawful. Regarding its arguments, the following can be noted. (31) Firstly, regarding the argument that in the original investigation another methodology was used (i.e. the deduction of VAT both from the normal value and the export price), it must be emphasised that the circumstances which were applicable during the review investigation period (RIP) were not the same as those applicable during the original investigation period. Whereas during the original investigation period, as stated above, VAT was partially refunded, which necessitated an adjustment pursuant to Article 2(10) [of the basic regulation], during the RIP, no VAT on export sales was refunded. Therefore, no adjustment in respect of VAT, neither to the export price nor to normal value, was necessary. Even if this could be qualified as a change in methodology, it [would be] justified under Article 11(9) of the [b]asic [r]egulation since the circumstances have changed. (32) The second argument which [Dashiqiao] makes is that the method used in this review would artificially inflate the dumping margin. This argument cannot be accepted. In addition, the method used is neutral. Indeed it has the same effect, also if, for instance for certain products or transactions, a company sells to the Community at an export price which does not result in dumping. In other words, even assuming that the inclusion of VAT on both sides of the equation would increase the difference between the two elements, that would also be the case for those models for which there was no dumping.”’ The procedure before the General Court and the judgment under appeal 5. In support of its action before the General Court, Dashiqiao raised two pleas in law alleging, respectively, infringement of Article 2(10) and of Article 11(9) of the basic regulation. 6. Neither of the two pleas raised by Dashiqiao in support of its action having been upheld, the General Court rejected the action in its entirety. Forms of order sought 7. By its appeal, Dashiqiao claims that the Court should: - set aside the judgment under appeal and itself rule on the dispute; - grant the form of order sought at first instance and, therefore, annul the anti-dumping duty imposed on it by the contested regulation in so far as that duty exceeds that which would be applicable if it had been determined on the basis of the method applied in the original investigation in order to take account of the non-refund of Chinese export VAT, in accordance with Article 2(10) of the basic regulation; - order the Council to pay the costs of the proceedings at first instance and on appeal. 8. The Council contends that the Court should: - primarily, dismiss the appeal; - in the alternative, refer the case back to the General Court; - in the further alternative, dismiss the action, and - order Dashiqiao to pay the costs. 9. The Commission contends that the appeal should be dismissed and Dashiqiao ordered to pay the costs. The appeal
10. A fair comparison shall be made between the export price and the normal value. This comparison shall be made at the same level of trade and in respect of sales made at as nearly as possible the same time and with due account taken of other differences which affect price comparability. Where the normal value and the export price as established are not on such a comparable basis due allowance, in the form of adjustments, shall be made in each case, on its merits, for differences in factors which are claimed, and demonstrated, to affect prices and price comparability. Any duplication when making adjustments shall be avoided, in particular in relation to discounts, rebates, quantities and level of trade. When the specified conditions are met, the factors for which adjustment can be made are listed as follows: … (b) Import charges and indirect taxes An adjustment shall be made to normal value for an amount corresponding to any import charges or indirect taxes borne by the like product and by materials physically incorporated therein, when intended for consumption in the exporting country and not collected or refunded in respect of the product exported to the Community. … (k) Other factors An adjustment may also be made for differences in other factors not provided for under subparagraphs (a) to (j) if it is demonstrated that they affect price comparability as required under this paragraph, in particular that customers consistently pay different prices on the domestic market because of the difference in such factors.’ 3. Article 11 of the basic regulation provides in the first subparagraph of Article 11(3) and Article 11(9): ‘3. The need for the continued imposition of measures may also be reviewed, where warranted, on the initiative of the Commission or at the request of a Member State or, provided that a reasonable period of time of at least one year has elapsed since the imposition of the definitive measure, upon a request by any exporter or importer or by the Community producers which contains sufficient evidence substantiating the need for such an interim review. … 9. In all review or refund investigations carried out pursuant to this Article, the Commission shall, provided that circumstances have not changed, apply the same methodology as in the investigation which led to the duty, with due account being taken of Article 2, and in particular paragraphs 11 and 12 thereof, and of Article 17.’ Background to the proceedings and the contested regulation 4. The relevant points of the factual framework are set out as follows in paragraphs 4 to 6 and 16 of the judgment under appeal: ‘4 On 11 April 2005, the Commission of the European Communities adopted Regulation (EC) No 552/2005 imposing a provisional anti-dumping duty on imports of certain magnesia bricks originating in the People’s Republic of China (OJ 2005 L 93, p. 6) which, among other things, imposed a provisional anti-dumping duty of 66.1% on imports into the European Community of certain magnesia bricks produced by [Dashiqiao]. 5 By Council Regulation (EC) No 1659/2005 of 6 October 2005 imposing a definitive anti-dumping duty and collecting definitively the provisional duty imposed on imports of certain magnesia bricks originating in the People’s Republic of China (OJ 2005 L 267, p. 1), the Council of the European Union imposed a definitive anti-dumping duty of 27.7% on imports into the European Community of certain magnesia bricks produced by [Dashiqiao]. 6 At the request of [Dashiqiao], Regulation No 1659/2005 was the subject of a partial interim review under Article 11(3) of the [b]asic [r]egulation … . On conclusion of that review, the Council adopted [the contested regulation], by which the anti‑dumping duty applicable to certain imports of magnesia bricks produced by [Dashiqiao] was reduced to a rate of 14.4%. … 16 Finally, in recitals 29 to 32 to the contested regulation, the following is stated in paragraph 4, under the heading “Comparison”: “(29) The average normal value and the average export price for each type of the product concerned were compared on an ex-works basis and at the same level of trade and at the same level of indirect taxation. In order to ensure a fair comparison between normal value and export price, account was taken, in accordance with Article 2(10) of the [b]asic [r]egulation, of differences in factors which were claimed and demonstrated to affect prices and price comparability. For this purpose, adjustments for transport costs, insurance, handling and loading charges, credit costs, and actual anti-dumping duties paid were made where applicable and justified. (30) The investigation has established that the VAT paid on export sales was not refunded (not even partially, which was the case in the original investigation). In the disclosure which was provided to [Dashiqiao] pursuant to Article 20 of the [b]asic [r]egulation, it was therefore indicated that both the export price and the normal value would be established on a VAT paid or payable basis. [Dashiqiao] argues that this approach would be unlawful. Regarding its arguments, the following can be noted. (31) Firstly, regarding the argument that in the original investigation another methodology was used (i.e. the deduction of VAT both from the normal value and the export price), it must be emphasised that the circumstances which were applicable during the review investigation period (RIP) were not the same as those applicable during the original investigation period. Whereas during the original investigation period, as stated above, VAT was partially refunded, which necessitated an adjustment pursuant to Article 2(10) [of the basic regulation], during the RIP, no VAT on export sales was refunded. Therefore, no adjustment in respect of VAT, neither to the export price nor to normal value, was necessary. Even if this could be qualified as a change in methodology, it [would be] justified under Article 11(9) of the [b]asic [r]egulation since the circumstances have changed. (32) The second argument which [Dashiqiao] makes is that the method used in this review would artificially inflate the dumping margin. This argument cannot be accepted. In addition, the method used is neutral. Indeed it has the same effect, also if, for instance for certain products or transactions, a company sells to the Community at an export price which does not result in dumping. In other words, even assuming that the inclusion of VAT on both sides of the equation would increase the difference between the two elements, that would also be the case for those models for which there was no dumping.”’ The procedure before the General Court and the judgment under appeal 5. In support of its action before the General Court, Dashiqiao raised two pleas in law alleging, respectively, infringement of Article 2(10) and of Article 11(9) of the basic regulation. 6. Neither of the two pleas raised by Dashiqiao in support of its action having been upheld, the General Court rejected the action in its entirety. Forms of order sought 7. By its appeal, Dashiqiao claims that the Court should: - set aside the judgment under appeal and itself rule on the dispute; - grant the form of order sought at first instance and, therefore, annul the anti-dumping duty imposed on it by the contested regulation in so far as that duty exceeds that which would be applicable if it had been determined on the basis of the method applied in the original investigation in order to take account of the non-refund of Chinese export VAT, in accordance with Article 2(10) of the basic regulation; - order the Council to pay the costs of the proceedings at first instance and on appeal. 8. The Council contends that the Court should: - primarily, dismiss the appeal; - in the alternative, refer the case back to the General Court; - in the further alternative, dismiss the action, and - order Dashiqiao to pay the costs. 9. The Commission contends that the appeal should be dismissed and Dashiqiao ordered to pay the costs. The appeal 10. In support of its appeal, directed against the judgment under appeal only in so far as it rejects its second plea in law alleging infringement of Article 11(9) of the basic regulation, Dashiqiao puts forward three grounds of appeal. The first two grounds of appeal Arguments of the parties
11. By its first ground of appeal, Dashiqiao claims that the General Court erred in law inasmuch as it refused to rule on the question of which method of comparing the export price and the normal value had been applied in the original investigation and therefore could not legitimately conclude that there had been no change of method for the purposes of Article 11(9) of the basic regulation in the review procedure. In this respect, it argues that it is apparent from that provision that only a change in circumstances would allow the institutions to apply a method different from that used in the original investigation.
12. Dashiqiao maintains that the General Court confused, in paragraph 57 of the judgment under appeal, the notion of change of ‘adjustment method’ with that of change of ‘comparison method’. In its view, it is not disputed that the anti-dumping duty imposed on its imports following the review procedure would have been lower had the institutions applied, in that procedure, the same method of comparing the export price and the normal value as that used in the original investigation.
13. By its second ground of appeal, Dashiqiao argues that the General Court erred in law inasmuch as it held that the institutions would be bound no longer to apply the method of comparing export price and normal value applied in the original investigation if that led to an adjustment not authorised under Article 2(10)(b) of the basic regulation. According to Dashiqiao, the General Court confused the concepts of ‘adjustment’ and ‘method of comparison’. It would be sufficient that the method of comparing export price and normal value used during the original investigation was consistent with Article 2(10) for the institutions to be required to apply it in the review procedure under Article 11(9) of that regulation too. However, according to Dashiqiao, the institutions did not apply an adjustment within the meaning of Article 2(10) since the method of comparison used was based on a normal value excluding VAT for which such an adjustment is not envisaged.
14. Dashiqiao submits that the method of comparison on the ‘VAT included’ basis used during the review does not enable the effect of the export VAT to be taken into account in the comparison of the export price and the normal value. It is the method of comparison on the ‘VAT excluded’ basis that is neutral. In addition, it challenges the application of Article 2(10)(b) to an indirect tax levied at the stage of the final sale which is used as a basis for determining normal value. In that regard, it adds that the use of a normal value excluding VAT is not incompatible with Article 2 of the basic regulation. Consequently, the General Court was incorrect in ruling that the only method of comparison consistent with Article 2 was a method based on an adjustment founded on Article 2(10)(b) of the basic regulation.
15. The Council and the Commission dispute the admissibility and merits of those grounds and contend that they should be rejected. Findings of the Court
16. According to the wording of Article 11(9) of the basic regulation, in all review investigations within the meaning of that article the Commission must, provided that circumstances have not changed, apply the same methodology as that used in the original investigation leading to the imposition of the duty in question, with due account’s being taken of, inter alia, Article 2 of that regulation.
17. It must be observed that the exception whereby the institutions may, in the review procedure, apply a method different from that used in the original investigation when the circumstances have changed must be interpreted strictly, for a derogation from or exception to a general rule must be interpreted narrowly (see judgment of 29 September 2011 in Case C‑82/10 Commission v Ireland , paragraph 44 and the case-law cited).
18. In this connection, it is to be emphasised that the burden of proof lies with the institutions, which must prove that the circumstances have changed in order to apply, in the review investigation, a method different from that implemented during the original investigation.
19. However, as regards the fact that such a change in circumstances for the purposes of Article 11(9) of the basic regulation constitutes an exception, it must be held that the requirement that a provision be interpreted strictly cannot permit the institutions to interpret and apply the provision in a manner inconsistent with its wording and purpose (see, to that effect, Case C-337/09 P Council v Zhejiang Xinan Chemical Industrial Group [2012] ECR I-0000, paragraph 93). In this respect, it must be observed that that provision prescribes in particular that the method applied must be consistent with Article 2 of the basic regulation.
20. It is apparent from paragraph 55 of the judgment under appeal that an adjustment had been made to the export price in the original investigation, for the purposes of Article 2(10)(b) of the basic regulation, and that such an adjustment was not made in the review procedure, on the ground that the conditions laid down in that provision were not fulfilled. According to paragraph 56 of that judgment, that difference does not constitute a ‘change of method’ for the purposes of Article 11(9) of that regulation.
21. Dashiqiao claims in essence that the General Court, in refusing to rule on the question of what method of comparing export price and normal value had been applied in the original investigation, could not reasonably conclude that there was no ‘change of method’ for the purposes of Article 11(9) of the basic regulation.
22. The General Court answered the question of the method of comparing export price and normal value applied in the review investigation and in the original investigation when answering the first plea submitted in the action, alleging the infringement of Article 2(10) of the basic regulation, which answer, as stated in paragraph 13 above, has not been challenged by Dashiqiao in this appeal. The General Court observed, in paragraph 37 of the judgment under appeal, that it was apparent from the contested regulation that the Council took the view that, in the review procedure, in contrast to the position in the original investigation, the conditions for an adjustment to the normal value and/or the export price under Article 2(10)(b) of the basic regulation were not satisfied, so that that provision could not be applied.
23. The General Court also stated, in paragraphs 35 and 38 of the judgment under appeal, first, that in the original investigation, the normal value and the export price were adjusted under Article 2(10)(b) of that regulation, taking into account the amount of VAT paid or to be paid and, secondly, that the methodology applied in the review consisted in a comparison of the normal value and the export price on a ‘VAT-inclusive’ basis solely by reference to the general terms of the first and second sentences of Article 2(10) of that regulation.
24. Consequently, the first ground of appeal, lacking in factual basis, must be rejected as unfounded.
25. As regards the second ground of appeal, in paragraph 56 of the judgment under appeal the General Court concluded that the difference in the Council’s approach challenged by Dashiqiao is not the result of a ‘change of method’ for the purposes of Article 11(9) of the basic regulation. In paragraph 57 of that judgment, the General Court held that the concepts of ‘method’ and ‘adjustment’ are not coterminous and that merely to abandon an adjustment that was not justified in the circumstances of the case cannot be regarded as a change of method within the meaning of that provision.
26. The General Court also observed in that paragraph that, in those circumstances, the conditions laid down in Article 2(10)(b) of the basic regulation were no longer satisfied. The General Court also held, in paragraph 58 of the judgment under appeal, that Article 11(9) of the basic regulation requires the method applied to be consistent with Article 2 of that regulation and that, if it should be found at the review stage that application of the method used in the original investigation was not consistent with Article 2(10)(b) of that regulation, the institutions would be required no longer to apply that method.
27. The General Court was correct in holding, in paragraph 59 of the judgment under appeal that, given that Article 11(9) of that regulation expressly requires the method applied in the review to comply with the requirements of Article 2 of the basic regulation, such a review may not give rise to an adjustment that is not authorised, in particular, by Article 2(10)(b) of that regulation.
28. It was in that context that the General Court also considered, in paragraph 60 of the judgment under appeal, that, in those circumstances, it was unnecessary to deal with the question whether, in this case, the method applied in the original investigation was consistent with Article 2(10)(b) of the basic regulation when, in the review, such an application was not consistent with that provision, for the conditions required were not fulfilled.
29. At the time of the review, it was no longer necessary to re-establish the symmetry between normal value and export price, which is the aim of any adjustment under Article 2(10) of the basic regulation, because the asymmetry which was the reason for the adjustment made in the original investigation, namely, the refund in part of the export VAT, had ceased to exist.
30. Consequently, Dashiqiao’s assertion, that the General Court erred in law in ruling that the only method of comparison applicable in the review consistent with Article 2 of the basic regulation is the method of making an adjustment based on Article 2(10)(b), is ineffective against the straightforward finding by the General Court that no further adjustment was in itself necessary.
31. In the light of the foregoing considerations, those two grounds of appeal must be rejected as unfounded. The third plea in law Arguments of the parties
32. Dashiqiao contests the General Court’s finding, in paragraph 62 of the judgment under appeal, that the Council had demonstrated that the circumstances had changed between the two investigations and that that change was of such a nature as to warrant abandoning the application of the adjustment which had been used in the original investigation. In its opinion, that finding is manifestly incorrect in so far as the change in circumstances relied on by the Council, as summarised in paragraph 63 of that judgment, does not in any way support the conclusion that that change would have rendered inapplicable the method of comparison used in the original investigation. Dashiqiao claims that, as it stated in the arguments expounded in support of its first ground of appeal, the only consequence of the fact that the rate of Chinese export VAT actually levied increased from 4% to 17% between the original investigation and the review procedure is that the adjustment of the export price to be made under Article 2(10)(k) is of 17% rather than of 4%. The difference in the rate of VAT refund could therefore have been fully taken into account by the method of comparison applied in the original investigation. Furthermore, it takes the view that that approach is not consistent with the requirement that the exception in respect of a change of circumstances, referred to in paragraph 54 above, must be strictly interpreted.
33. The Council submits that the third ground of appeal is at once ineffective, inadmissible and unfounded. The Commission contends that that ground is ineffective and unfounded. Findings of the Court
34. In paragraph 62 of the judgment under appeal, the General Court held that in any event, even if it were accepted that the Council, in the review procedure, had adopted a method of comparison different from that used in the original investigation, that institution has demonstrated, first, that between the original investigation and the review procedure the circumstances had changed and, second, that that change was of such a nature as to warrant abandoning such an adjustment. The General Court itself observed in paragraph 63 of that judgment that while, in the original investigation, the Chinese VAT was refunded in part on export sales of the products concerned whereas that VAT was levied in full on domestic sales, that was no longer the case in the period covered by the review procedure, so that there had been a change in circumstances for the purposes of Article 11(9) of the basic regulation.
35. The General Court could, without erring in law, infer from that finding, in paragraph 64 of its judgment, that, in view of that change of 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 for it to make a fair comparison of that value and that price on a ‘VAT-inclusive’ basis.
36. Suffice it to note that the adjustment made by the institutions in the original investigation was intended to take account of the partial refund of the Chinese export VAT giving rise to asymmetry between the normal value and the export price, which Dashiqiao does not dispute.
37. As was observed in paragraph 28 above, from the moment the factor that caused the asymmetry in the original investigation, namely, the partial refund of the export VAT, ceased to exist, it was no longer necessary to correct that asymmetry or therefore to make any adjustment, regardless of the method of adjustment actually applied.
38. Accordingly, the circumstances that justified an adjustment having changed, the General Court was fully entitled to hold, primarily, that the point was not whether there had been any change of method but rather that the conditions for such an adjustment were not satisfied and, for the sake of completeness, that, even if there had been a change of method, it would have been warranted by changing circumstances.
39. Since none of the three grounds of appeal relied on by Dashiqiao in support of its appeal can be upheld, the appeal must be dismissed. Costs
40. Under Article 138(1) of the Rules of Procedure of the Court of Justice, which applies to appeal proceedings by virtue of Article 184(1) of those Rules, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since Dashiqiao has been unsuccessful and the Council has applied for an order for costs, Dashiqiao must be ordered to pay the costs of the appeal. In accordance with Article 140(1) of those Rules, also applicable to appeal proceedings by virtue of Article 184(1), it must be held that the Commission is to bear its own costs.