S And S Enterprise vs Designated Authority

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2005 Supreme(SC) 303

2005(2) Supreme 194
Supreme Court of India
(From Central Excise, Customs & Gold (Control) Appellate Tribunal, New Delhi)
Mrs. Ruma Pal, Arijit Pasayat and C.K. Thakker, JJ.
M/s. S & S. Enterprise —Appellant
versus
Designated Authority & Ors. —Respondents
Civil Appeal No. 9012 of 2003
Decided on 22-2-2005
Counsel for the Parties :
For the Appellant : Dr. Aman Hingorani, Ms. Priya Hingorani, Ms. Reema Bhandari, Advocates for M/s. Hingorani and Associates, Advocates.
For the Respondents : T.S. Doabia, Sr. Advocate, Manish Sharma and D.S. Mahara, Advocates.

Headnote:Customs Tariff (Anti-Dumping Duty on Dumped Articles and Determination of Injuries) Rules, 1995—Rule 14(d)—Dumping duty—Imposition of—Purpose is to curb unfair trade practices resorted to by exporters of a particular country of flooding the domestic markets with goods at rates which were lower than the rate at which exporter normally sold same goods in their own countries—Dumping duty was the method recognized by GATT—Factors to constitute “dumping”—Import at prices which were lower than normal value of goods in exporting country and export must be sufficient to cause injury to domestic industry—Distinction between volume as meaning quantity on one hand and price on the other—Investigation must be terminated if volume of dumped imports was less than 3% of imports of like products—Findings by Designated Authority that quantity of imports of Battery by appellant from Bangladesh was less than 3% of total imports of like article to India—It was incumbent on respondent to have closed the investigation under Rule 14(d).
Held : The imposition of dumping duty is under Section 9A of the Customs Tariff Act 1975 and the Rules and is the outcome of the General Agreement on Tariff and Trade (GATT) to which India is a party. The purpose behind the imposition of the duty is to curb unfair trade practices resorted to by exporters of a particular country of flooding the domestic markets with goods at rates which are lower than the rate at which the exporters normally sell the same or like goods in their own countries so as to cause or be likely to cause injury to the domestic market. The levy of dumping duty is a method recognized by GATT which seeks to remedy the injury and at the same time balances the right of exporters from other countries to sell their products within the country with the interest of the domestic markets. Thus the factors to constitute ‘dumping’, is (i) an import at prices which are lower than the normal value of the goods in the exporting country; (ii) the exports must be sufficient to cause injury to the domestic industry. (Para 4)
Therefore, when Rule 14(d) says that the investigation must be terminated if the ‘volume’ of the dumped imports is less than 3% of the imports of the like product, it must mean that the quantity of dumped imports must account for less than 3% of the total imports. To hold otherwise would mean that if the price is lower than 3%, irrespective of the quantity imported, the investigation would be dropped and it would, as submitted by the appellant, lead to the absurd situation that a small number of expensive imports would invite anti-dumping investigation but cheap imports flooding the domestic markets would not. In fact such a situation is exactly what the dumping rules have been framed to prevent. Nobody has questioned the preliminary finding of the Designated Authority that the quantity of the imports from Bangladesh during the period of investigation was less than 3% of the total imports of the ‘like article’ to India. The investigation therefore should have been promptly dropped against Bangladesh. (Paras 11 and 12)

Judgment

Ruma Pal, J.—The appellant imported lead acid batteries from Bangladesh during the period 1.2.2000 to 13.9.2001. The total number of batteries so imported were found to be less than 3% of the total imports of such batteries into India during that period. This was so found by the Designated Authority (the respondent No. 1), on an investigation consequent upon a complaint lodged by the private respondent under Rule 5 of the Customs Tariff (Anti-Dumping Duty on Dumped Articles and for Determination of Injuries) Rules 1955 (referred to as ‘the Rules’).

2. Rule 14(d) inter alia provides that if the Designated Authority determines that the volume of the dumped imports actual or potential from a particular country accounts for less than 3% of the imports of the like product, he shall terminate the investigation immediately. Nevertheless the respondent No. 1 continued the investigation in respect of the imports from Bangladesh on the finding that the value of imports made from Bangladesh was more than 6% which was more than the de minimis limit of 3% as provided under Rule 14(d). On 7th December, 2001 the Respondent No. 1 published the final finding determining that anti-dumping duty was payable in respect of such imports of batteries during the period under investigation. The Ministry of Finance accepted the recommendation of the respondent No. 1 and notified the Anti-dumping Duty by Notification dated 2.1.2002.

3. The appellant preferred an appeal before the Central Excise & Gold (Control Appellate Tribunal CEGAT). The Tribunal rejected the submission of the appellant that the Designated Authority should have computed the volume of exports on the basis of quantity rather than on the basis of price. It held that the word “volume” in the context of Rule 14 meant value.

4. In our opinion, the interpretation of Rule 14(d) by the respondent No. 1 and the Tribunal is incorrect and contrary to its language. The imposition of dumping duty is under Section 9A of the Customs Tariff Act 1975 and the Rules and is the outcome of the General Agreement on Tariff and Trade (GATT) to which India is a party. The purpose behind the imposition of the duty is to curb unfair trade practices resorted to by exporters of a particular country of flooding the domestic markets with goods at rates which are lower than the rate at which the exporters normally sell the same or like goods in their own countries so as to cause or be likely to cause injury to the domestic market. The levy of dumping duty is a method recognized by GATT which seeks to remedy the injury and at the same time balances the right of exporters from other countries to sell their products within the country with the interest of the domestic markets. Thus the factors to constitute ‘dumping’, is (i) an import at prices which are lower than the normal value of the goods in the exporting country; (ii) the exports must be sufficient to cause injury to the domestic industry.

5. However a negligible quantity of imports would not be sufficient to cause such injury. Article 5.8 of the Agreement on Implementation of Article VI of the GATT, 1994 makes this clear :

“An application under paragraph 1 shall be rejected and an investigation shall be terminated promptly as soon as the authorities concerned are satisfied that there is no sufficient evidence of either dumping or of injury to justify proceeding with the case. There shall be immediate termination in cases where the authorities determine that the margin of dumping is de minimis, or that the volume of dumped imports, actual or potential, or the injury, is negligible. The margin of dumping shall be considered to be de minimis if this margin is less than 2%, expressed as a percentage of the export price. The volume of dumped imports shall normally be regarded as negligible if the volume of dumped imports from a particular country is found to account for less than 3% of imports of the like product in the importing Member, unless countries which ind

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