CESTAT Chennai has held that import of second hand machinery cannot be subjected to imposition of anti- dumping duty (ADD) meant for new machinery. It observed that purpose of anti-dumping is served, in case of second-hand machinery, by way of re-appraisement of declared value, and imposition of ADD would be nothing but double jeopardy.
FULL TEXT OF THE CESTAT JUDGEMENT
The above appeal has been filed by the Department against the Order passed by the Commissioner (Appeals).
2. At the time of hearing, the Ld. AR Shri. K. Veerabhadra Reddy appearing on behalf of the Department submitted that the appeal ought to have been filed and considered by the Anti-Dumping Duty (ADD) Bench at Headquarters, New Delhi. That they have filed an application for transfer of this appeal to the ADD Bench.
3. Ld. Counsel appearing on behalf of the assessee opposed this prayer, stating that the issue pertains to the jurisdiction of this Tribunal itself and that the matter can be considered on merits.
4.1 A copy of letter dated 12.02.2014 issued by Dy. Commissioner of Customs (Review Cell – Sea) addressed to Assistant Registrar, Headquarters, New Delhi is seen produced by the Department. In the said letter, the Department has requested as to a Miscellaneous Application said to have been filed by them seeking transfer of Appeal No. C/263/2010 from Chennai to the Principal Bench, New Delhi. On 11.01.2018, when the matter came up for hearing before this Bench, on the submissions made by the Ld. AR, the Registry was directed to verify the status of such application. The matter was adjourned to 26.02.2018 awaiting report. On 23.02.2018, a letter was received from Dy. Registrar (J) of Headquarters, New Delhi, informing that after serious efforts no such application could be traced out. It was also informed that the above appeal is not pending before the Anti-Dumping Duty Bench at New Delhi. The matter after adjournment came up for hearing on 24.08.2018. The Ld. AR submitted that on 13.03.2018, a fresh Miscellaneous Application was filed by the Department requesting for transfer of this appeal to the ADD Bench at New Delhi. He also furnished a photocopy of the Miscellaneous Application signed as on 13.03.2018. The Bench had directed to enquire about the status of such application, if any, and the matter was adjourned to 30.11.2018. After several adjournments, the matter has come up for hearing today.
4.2 The appeal is of the year 2010 and the alleged Miscellaneous Application was filed by the Department in 2014 for transfer. After such long delay, there has been no outcome of the appeal as well as the application filed by the Department. It is the responsibility of the Department to seek the outcome of the application filed by them. The Department has not been able to say whether the Miscellaneous Application was accepted at Principal Bench, New Delhi or whether numbered. Interestingly, this appeal is filed by the Department before this Tribunal. They cannot object to the jurisdiction of the Tribunal in an appeal filed by them. In any case, if they have any grievance as to lack of jurisdiction, the correct procedure is to withdraw the appeal and file it before the Bench which has jurisdiction. They cannot take the shelter of filing a transfer application and overcome the hurdle of limitation. We therefore find that the contention of the Ld. AR that they have filed an application for transfer and the matter has to be transferred to ADD Bench, New Delhi, deserves to be disregarded in to to.
4.3 We have given our anxious consideration as to whether the issue falls within the jurisdiction of this Tribunal. We find it a fit case within the jurisdiction of the Tribunal and hence, we proceed to discuss and analyse the matter.
5.1 The facts of the case are that the respondents herein had imported one second-hand EVA linear type injection moulding machine with accessories for a declared value of USD 62250 CIF vide Bill-of-Entry filed on 27.11.2009. The goods being second-hand, were subjected to first check in the presence of an approved Chartered Engineer.
5.2 Post such appraisement, the goods were valued at USD 78,000 FOB equivalent to Rs. 39,02,703/-, on which basis the Original Authority re-determined the value in terms of the Valuation Rules, 2007. The Original Authority vide order dated 23.12.2009 also held that the impugned goods are listed in their Anti-Dumping Notification No. 47/2009 dated 12.05.2009 and hence held that Anti-Dumping Duty (ADD) is required to be additionally levied on 223% of the assessable value. In appeal, the Commissioner (Appeals) vide the impugned Order dated 01.02.2010 concluded that neither the findings of the Designated Authority nor the Notification in question had envisaged levy of ADD on used machinery and that therefore ADD is not leviable on the subject goods. On this ground, the order of the Original Authority was set aside and the appeal in respect of ADD was allowed. Aggrieved, the Department has filed this appeal.
6.1 On behalf of the Department, Ld. AR Shri. K. Veerabhadra Reddy submits that there is no specific mention in the Notification of exempting second-hand machinery from the scope of such ADD. Further, once second-hand machinery of this type have been reappraised by a Chartered Engineer and the assessable value under Section 14 has been arrived at, the ADD Notification would be applicable as if it is a new machine.
6.2 He submitted that the imported machinery has come from China and has been specifically listed in the Anti-Dumping Notification No. 47/2009. Hence, even if it is second-hand, the Anti-Dumping Duty will require to be levied on such goods.
7. On the other hand, Ld. Advocate Shri. P. Saravanan appearing on behalf of the assessee made oral and written submissions which are broadly summarized as under :
(i) Investigations carried out by the Designated Authority for the purpose of imposition of ADD, have been carried out only with reference to the new machinery and old/used machinery are not within the scope of the investigations. Therefore, Notification No. 47/2009 covers only new Plastic Processing Machines (PPMs) and not old/used ones;
(ii) He drew our attention to the finding of the Commissioner (Appeals) that from preliminary findings of the Designated Authority dated 10.02.2009, the appellate authority has concluded that “like article” investigated by the Designated Authority is “New Plastic Moulding Machines” and not “second-hand machines”;
(iii) The Chartered Engineer had rejected the declared value as the transaction value and has re-determined the value of the imported second-hand machinery based on the price prevailing during the year of manufacture viz., 2007 and by giving suitable depreciation. Hence, the same should only be adopted as the normal value;
(iv) Section 9A(c) of the Customs Tariff Act prescribes three methods of determining the normal value as given in Section 9A(c)(i), Section 9A(c)(ii)(a) and Section 9A(c)(ii)(b). In the impugned investigations (pertaining to Plastic Processing Machines) due to lack of data or otherwise for determining the normal value under Section 9A(c)(i), Section 9A(c)(ii)(a), as stated in paragraph 31 of the Notification in F. No. 14/12/2008- DGAD dated 10.02.2009 wherein preliminary findings have been published;
(v) Normal value had been constructed based on the domestic (Indian) price of all the major inputs of the Plastic Processing Machinery (PPM) i.e., under Section 9A(c)(ii)(b). As the price adopted for ‘inputs’ is for new ones, the normal value arrived at by the DA would be with reference to new machinery only. That is to say, the investigation had been carried out with reference to new machinery only and the old/used machinery is not within the scope of investigations. Therefore, the goods covered under the Notification is only the new PPMs and not the old/used ones.
8. Heard both sides and have gone through the facts of the matter.
9. The purpose and intent of the Anti-Dumping Duty is recognized and permitted by the World Trade Organization. ‘Dumping’ is said to occur when goods are exported by a country to another country at a price lower than its normal value and that causes injury to the domestic industry. Anti-Dumping measures rectify the situation arising out of such dumping of goods and its trade distortive effect. This is part of the General Agreement on Tariffs and Trade (GATT), 1994, commonly known as ‘The Anti-Dumping Agreement’.
10.1 Ld. Advocate is correct in his assertion that the legal framework for Anti-Dumping measures are enshrined in Sections 9A, 9B and 9C of the Customs Tariff Act, 1975 and the Customs Tariff (Identification, Assessment and Collection of Anti-Dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995 framed thereof.
10.2 Based on representations from the domestic industry whose interests are hurt because of the dumping of goods from other countries, investigation is carried out by the Directorate General of Anti-Dumping and Allied Duties (DGAD), Ministry of Commerce, which only recommends imposition of Anti-Dumping Duty. The margin of dumping is the difference between the normal price and the export price of the goods under complaint. For this reason, the margin is generally expressed as a percentage of the export price which is reflected in the percentage of Anti-Dumping Duty imposed. However, subsequent to such investigation and recommendation made by the DGAD, Ministry of Commerce, the duty is finally imposed/levied by the Notification of the Ministry of Finance, the implementing agency being the Customs.
11. In this background, it is evident that the Anti-Dumping measures are targeted at goods which are dumped by a foreign country and as a resultant, the domestic industry is adversely affected. Obviously, the domestic industry would only be concerned about the products that it releases into the market, namely, the new items thereof and not the second-hand sales of the products that they have sold earlier. Comparison has to be of two comparables, namely, of new domestic products against new imported goods, as there cannot be a comparison between new domestic output and second-hand imported goods. Once we recognize that the basic purpose of the ADD is to serve as a price leveller to protect the domestic industry, we find that the same intent and purpose is served even in case of second-hand machinery imports by way of re-appraisement of the declared value, based on the present condition of the imported item, by the Chartered Engineer.
12. The proposition of the Ld. AR is that after second-hand machinery has been re-appraised by such Chartered Engineer and its value enhanced, it should now be considered as a new machine and ADD imposed. This in one view does not make legal sense. Reappraisement of second-hand machinery and enhancement of its value, and imposition of Anti-Dumping Duty on top of that, is nothing but double jeopardy, if not an overkill. We are therefore of the considered opinion that the import of second-hand machinery cannot be subjected to imposition of Anti-Dumping Duty by the particular Notification, which evidently would only be applicable for the import of new machinery or goods listed therein.
13. It is also pertinent to note that the impugned machinery in question had been manufactured in 2007 and it was first exported to South Africa from where it has made its circuitous journey back to this country. The Anti-Dumping Duty Notification which came about in 2009, cannot be back-pedalled to be imposed on goods which have been manufactured and exported in 2007 from a particular country.
14. In the light of the discussions hereinabove, we do not find any merit in the appeal filed by the Department, for which reason it is dismissed.