IMPORTANT POINT
The Anti Dumping Law is extremely important for the country’s industrial progress and hence there should be total transparency and fairness in its implementation.

Headnote:Customs Tariff Act, 1975 - Section 9A as Inserted by the Customs Tariff (Second Amendment) Act, 1982 and as Substituted by the Customs Tariff (Amendment) Act, 1995 - Section 9C - Customs Tariff (Identification Assessment and Collection of Anti Dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995 - Rules 4, 7, 17 - Levy of Anti-Dumping Duty - Justifiability - Appellant is a multi product company having various business activities including manufacture of Pure Terephatalic Acid (PTA) which is used for manufacture of polyester yarn - Appellant also has a captive power plant from which it draws electricity - Appellant also draws electricity from the grid for manufacture of PTA - Appellant filed an application seeking imposition of Anti Dumping Duty on PTA originating in, or exported from Japan, Malaysia, Spain and Taiwan - Imposition by Central Government of anti dumping duty on PTA originating or exported from Spain - However, no duty was imposed on exports from the other countries - Designated Authority failed to provide the detailed costing information to appellant on basis of which it computed NIP even though appellant was the sole producer of the product under consideration, in the country - No reasons were given for reducing cost price of electricity supplied by appellant produced in its captive power plant - Whether the Designated Authority applied correct principles in computation of NIP of PTA - (No).
       Held : There are two main issues for determination in the present case - (1) the correct principles for determination of the NIP of PTA and (2) the scope of Rule 7 of the Customs Tariff (Identification, Assessment and Collection of Anti-Dumping Duty on Dumped Articles and For Determination of Injury) Rules, 1995.(Para 23)
       In our opinion, since the NIP is for the industry as a whole, it is immaterial if a particular company produces some of its inputs captively. In our opinion, for the purpose of determination of NIP, the DA is always required to take into consideration the transfer price (market value) of the inputs and not their actual cost of captive production. This is because the entire investigation, analysis, recommendation and imposition are for the product under consideration for the whole domestic industry and not for the individual companies and inputs captively manufactured which may be involved in the production and sales of the goods.(Para 28)
       In our opinion there has to be a single NIP for a product as envisaged by the Rules, and not several NIPs for the same product. The approach adopted by the DA and the Tribunal would, however, result in several NIPs for the same product, because if actual cost of the input is seen for individual units it will differ between units captively producing their inputs and those buying it from the market. This is clearly untenable. In the present case, the DA has recorded a finding that the normal value is exporter specific. In our opinion this is contrary to the Supreme Court judgment in Designated Authority (Anti-Dumping Directorate vs. Haldor Topsoe A/S., 2000(6) SCC 626.(Paras 30 and 31)
       In our opinion, both normal value and NIP are not exporter or domestic industry specific respectively but exporting country specific and importing country specific (India). Once dumping of specific goods from a country is established, dumping duty can be imposed on all exports of those goods from that country to India under Section 9A, irrespective of the exporter. The rate of duty may vary from exporter to exporter depending upon the export price. Similarly, as regards the matter of NIP it is the reasonable price which the subject goods can be produced by the domestic industry as a whole in India that is relevant. Special advantages and disadvantages that one or more domestic producers may have, as a result of manufacture of raw material or utilities that are going into the production of the commodity under investigation, should, in our opinion, be ignored for determination of the NIP for the domestic industry as a whole.(Para 31)
       The DA has clearly ignored the purpose for which the NIP is computed. The DA has failed to appreciate that once dumping and injury is established, the existence of an unfair trade practice by the exporters is undisputed and a restrictive view in computing an unduly low NIP would lead to granting a premium to the erring exporters at the cost of the domestic industry, which is suffering injury.(Para 33)
       34. In our opinion, the DA’s determination of NIP was arbitrary and misguided, as the DA has not considered the actual production achieved by the domestic industry for the purpose of apportionment of fixed costs. On the contrary, it was revealed during the hearing that the DA computes the NIP on the basis of the best capacity utilization achieved in the preceding three years. In fact, there is no established practice of the DA in this regard, and the level of capacity utilization taken into account by the DA varies from case to case leading to total arbitrariness and unguided use of power. In our opinion, there is no basis to adopt the best capacity utilization achieved in the past period as the industry is generally bound to achieve higher capacity utilization if it is not affected by injurious dumping. The appointment of the fixed costs has to be necessarily done on the basis of actual production during the period of investigation and not an assumed level of capacity utilization to avoid all arbitrariness. Thus, in our opinion, the DA’s approach is clearly incorrect inasmuch as it is not the determination of optimum capacity utilization of the domestic industry, but the actual capacity utilization which would be the correct approach. Even as a matter of principle the use of capacity or capacity utilization level in computing the cost of production is unworkable for another reason. The capacity of a particular plant is wholly dependent upon the product mix.(Para 34)
       In our opinion, the NIP needs to be revised by taking the market price of electricity and the actual capacity utilization during the period of investigation. Further, the DA should be directed not to misuse Rule 7, by keeping confidential its findings and that too from the person who has supplied the information to it.(Para 36)
        In the present case, the NIP computed by the DA was much lower than that computed by the appellant, and the reasons for such variance and detailed calculations were not disclosed by the DA to the appellant. No good reasons were given for reducing the cost price of electricity supplied by the appellant produced in its captive power plant. This was clearly illegal.(Para 39)
       The DA claimed confidentiality from the appellant about its finding on the data supplied by the appellant itself. In our opinion, there was nothing confidential in the matter, and hence reasons for not accepting the appellant’s version should have been stated in the order of the DA.(Para 40)
       The Anti Dumping Law is, therefore, a salutary measure which prevents destruction of our industries which were built up after independence under the guidance of our patriotic, modern minded leaders at that time and it is the task of everyone today to see to it that there is further rapid industrialization in our country, to make India a modern, powerful, highly industrialized nation.(Para 47)

JUDGMENT

Markandey Katju, J. - This Appeal has been filed against the impugned final order dated 29.11.2000 passed by the (CEGAT) Customs Excise and Gold (Control) Appellate Tribunal, New Delhi.

2. We have heard learned counsel for the parties.

The appellant is a multi-product company and has various business activities including manufacture of Pure Terephatalic Acid (for short ‘PTA’), which is used for the manufacture of polyester yarn (which in turn is used for manufacture of textiles). Apart from the manufacture of PTA, the appellant, inter alia, has a captive power plant from which it draws electricity. The appellant also draws electricity from the Grid for the manufacture of PTA. The cost of electricity forms a significant part of the cost of production. For the electricity drawn from the Grid, the appellant has to pay a tariff rate at the market price of the electricity, while regarding electricity drawn from the captive power plant the appellant transfers electricity at the market rate to its PTA unit.

3. The appellant, M/s. Reliance Industries Ltd. filed an application dated 12.10.1998 seeking the imposition of Anti- Dumping Duty on PTA originating in, or exported from Japan, Malaysia, Spain and Taiwan. The Designated Authority (hereinafter referred to as ‘the DA’) in the Ministry of Commerce initiated investigations on the said application in April 1999. The investigations culminated in the findings of the DA dated 20.4.2000, and on that basis there was imposition by the Central Government of anti-dumping duty on PTA originating or exported from Spain at the rate of Rs. 521 per M.T. vide Customs Notification No. 82/2000 dated 30th May, 2000 of the Department of Revenue. However, no duty was imposed on exports from the other countries.

4. The appellant filed an appeal before the CEGAT under Section 9C of the Customs Tariff Act, 1975 against this Notification seeking enhancement of duty in the case of the exporter from Spain and imposition of duty on exports from the other countries mentioned in their petition.

5. The grievance of the appellant was that while the DA had reached its findings in the final finding dated 20th April, 2000 upholding the appellant’s contention that exports from Japan and Malaysia were also at dumped prices and that the domestic Industry had suffered injury, yet no anti-dumping duty was recommended in respect of imports from Japan and Malaysia on the ground that the imports from these countries were above the non-injurious price and, therefore, there was no causal link between the dumped imports from these countries and the injury to the domestic industry. The appellant submitted that this finding was inconsistent with the determination that imports were at dumped prices and that domestic industry had suffered injury. They also submitted that the finding that imports from Japan and Malaysia were at non-injurious prices was also incorrect and was the result of faulty determination of the fair landed value in respect of the imported goods and non-injurious price in respect of the domestic manufacturer. The appellants submitted that they had placed the cost of production data in respect of PTA manufactured by them but the designated authority incorrectly determined the non-injurious price at a lower amount and this led to the incorrect finding that there was no causal link between injury to domestic industry and imports from these countries. With regard to the determination of landed value their submission was that the landed value had been determined at an inflated amount and that was the reason for the incorrect determination that the landed value of imports was more than the non-injurious price.

6. Before dealing with the contention of the learned counsel for the parties, we may usefully refer to Section 9A of the Customs Tariff Act, 1975, which was inserted by the Customs Tariff (Second Amendment) Act, 1982. Section 9A was substituted by the Customs Tariff (Amendment) Act, 1995 with effect from 1.1.1

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2006 Supreme(SC) 834

IMPORTANT POINTThe Anti Dumping Law is extremely important for the country’s industrial progress and hence there should be total transparency and fairness in its implementation.

Cases Referred (2)

IMPORTANT POINT
The Anti Dumping Law is extremely important for the country’s industrial progress and hence there should be total transparency and fairness in its implementation.