Hiatus Between Anti-Dumping Duty Notifications Not Fatal if Sunset Review Initiated Pre-Expiry: Madras HC Upholds Levy under Section 9A(5) of Customs Tariff Act

Madras High Court Rejects Challenge to Anti-Dumping Duty, Clarifies Law on 'Hiatus' in Levy Extension

Chennai: The Madras High Court, in a significant ruling on trade remedy laws, has dismissed a series of writ petitions filed by Indonesian company M/s. PT. South Pacific Viscose challenging the imposition and continuation of anti-dumping duty on Viscose Staple Fibre (VSF). A division bench of Justice R. Suresh Kumar and Justice C. Saravanan held that a gap or "hiatus" between the expiry of an anti-dumping duty notification and the issuance of a subsequent extension notification is not fatal, provided the sunset review process was initiated before the original levy expired.

The court also dismissed the petitions on grounds of jurisdiction and the availability of an alternative statutory remedy before the Supreme Court.

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Background of the Dispute

The case revolves around the anti-dumping duty first imposed in 2010 on VSF imported from Indonesia, following a complaint by the domestic industry represented by The Association of Man-Made Fibre Industry of India. The initial five-year duty, effective until July 25, 2015, was the subject of multiple reviews and extensions.

The petitioner, M/s. PT. South Pacific Viscose, challenged several notifications and orders, including those from the Directorate General of Trade Remedies (DGTR) and the Customs, Excise and Service Tax Appellate Tribunal (CESTAT). The core of their argument rested on the contention that the anti-dumping duty could not be legally extended after it had lapsed, even for a few days.

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Petitioner's Arguments: The 'Hiatus' Theory

The petitioner's counsel, Mr. Karthik Sundaram, heavily relied on the Supreme Court's landmark judgment in Union of India Vs. Kumho Petrochemicals Company Limited . He argued that: - Anti-dumping notifications are temporary in nature and cannot be extended retrospectively or after they have expired. - An 11-day gap between the expiry of the initial duty on July 25, 2015, and the issuance of an extension notification on August 6, 2015, rendered the extension invalid. - He claimed that since there was no valid levy in existence when subsequent extensions were notified, the entire continuation of the anti-dumping duty post-2015 was without the authority of law.

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The Court's Interpretation of Kumho Petrochemicals

The High Court meticulously analyzed the Kumho Petrochemicals precedent and found the petitioner's interpretation to be a "skewed and distorted reading" of the Supreme Court's decision. The bench clarified the correct legal position under Section 9A(5) of the Customs Tariff Act, 1975 :

"The decision of the Delhi High Court as affirmed by the Hon’ble Supreme Court in Union of India Vs. Kumho Petrochemicals Company Limited cannot be interpreted to mean that the continuance of anti-dumping levy... was contrary to the law... as both the 1st and the 2nd Sunset Review were initiated before the Notification imposing Anti-Dumping Duty ceased to exist."

The Court explained that the crucial factor is the timing of the initiation of the sunset review. If the review begins before the expiry of the five-year duty period, the government is empowered to extend the duty, even if the notification for extension is issued after a short gap. The Court noted that in the Kumho case, the review itself was initiated after the duty had lapsed, which is what made the extension illegal.

The judgment stated:

"All that is required is that Sunset Review should have commenced before the expiry of the initial period of levy. Notification extending the levy can be issued thereafter. Mere delay in issuance of Notification... is not fatal to the levy."

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Dismissal on Grounds of Jurisdiction

In addition to rejecting the petitioner's case on merits, the High Court also held the writ petitions to be non-maintainable on two preliminary grounds:

1. Forum Conveniens: Since the challenged orders were passed by the CESTAT's Principal Bench in New Delhi and the respondents were also located outside the court's jurisdiction, the petitions should have been filed before the Delhi High Court.
2. Statutory Remedy: Under Section 130E of the Customs Act, 1962, any appeal from a CESTAT order relating to the "rate of duty" lies directly before the Supreme Court. The High Court is specifically barred from hearing such appeals under Section 130 of the Act.

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Final Decision

Finding the petitioner's arguments to be based on a "mistaken notion" and an incorrect interpretation of established law, the High Court dismissed all four writ petitions. The court upheld the actions of the Union of India and the DGTR, validating the continuation of the anti-dumping duty on Viscose Staple Fibre from Indonesia.