ACP Manufacturer Association Vs Union of India (CESTAT Delhi)
CESTAT Delhi held that as domestic industry doesn’t manufacture/produce colour coated coil, anti-dumping duty cannot be imposed on the same.
Facts- ACP Manufacturer Association has filed this appeal with a prayer that the final findings dated 07.09.2021 of the designated authority be modified so as to exclude the product ‘colour coated aluminium coils’ from imposition of anti-dumping duty. The second relief that has been claimed is to also modify the consequential customs notification 06.12.2021 issued by the Central Government to exclude ‘colour coated aluminium coils’ from imposition of anti-dumping duty retrospectively w.e.f. 06.12.2021 and for refund of the excess/additional duty so collected on the import of ‘colour coated aluminium coils’ w.e.f. 06.12.2021.
Conclusion- Held that if the domestic industry does not manufacture/produce colour coated coil, this product would have to be excluded from scope of the product on which anti-dumping duty has been imposed under the customs notification dated 06.12.2021 issued by the Central Government on the basis of the final findings dated 07.09.2021 issued by the designated authority.
The customs notification dated 06.12.2021 is, accordingly, modified by excluding the ‘colour coated coil’ from imposition of anti-dumping duty. The appeal is, accordingly, allowed.
FULL TEXT OF THE CESTAT DELHI ORDER
ACP Manufacturer Association, New Delhi1 has filed this appeal with a prayer that the final findings dated 07.09.2021 of the designated authority be modified so as to exclude the product „colour coated aluminium coils‟ from imposition of anti-dumping duty. The second relief that has been claimed is to also modify the consequential customs notification 06.12.2021 issued by the Central Government to exclude „colour coated aluminium coils‟ from imposition of anti-dumping duty retrospectively w.e.f. 06.12.2021 and for refund of the excess/additional duty so collected on the import of „colour coated aluminium coils‟ w.e.f. 06.12.2021.
2. It transpires from the records that Hindalco Industries Limited2, which has been impleaded as respondent no. 3 in this appeal, had filed an application before the designated authority on behalf of the domestic industry under the provisions of the Customs Tariff Act, 19753and the Customs Tariff (Identification, Assessment and Collection of Anti-dumping Duty on Dumped Articles and Determination of Injury) Rules, 19954for initiation of anti-dumping investigation on the imports of certain flat rolled products of aluminium5 originating in or exported from China PR6. The investigation was initiated by the designated authority by a notification dated 08.09.2020 to determine the existence, degree and effect of the alleged dumping and to recommend the amount of anti-dumping duty, which, if levied, would be adequate to remove the injury to the domestic industry. The investigation was conducted for the period from 01.04.2019 to 31.03.2020 and the injury analysis period was notified to be from 01.04.2016 to 31.03.2019 and the period of investigation. The designated authority provided an opportunity to all the interested parties to present their submissions orally in the hearing conducted on 25.05.2021 and the interested parties who presented their views were advised to file written submissions of the views expressed orally by them. The interested parties were also provided an opportunity to file rejoinder submissions to the views expressed by the opposing interested parties. A disclosure statement containing the essential facts which would form the basis for the final findings was issued to the interested parties on 26.08.2021 and the interested parties were allowed time upto 02.09.2021 to give their comments. The final findings of designated authority were notified on 07.09.2021. The conclusion and the recommendation made by the designated authority in the final findings are as follows:
“L. CONCLUSION
127. After examining the submissions made by the domestic industry and the other interested parties and issues raised therein and considering the facts available on record, the Authority concludes that:
a) Considering the normal value and export price for the subject goods, dumping margin for the subject goods from the subject country has been determined, and the margin is positive and significant.
b) The domestic industry has suffered material injury and the injury margin is positive. The examination of the imports of the subject product and the performance of the domestic industry shows that the volume of dumped imports from the subject country has increased in both absolute and relative terms. The volume of the subject goods has increased by more than 60% whereas demand has increased by only 18%. It is also noted that the imports of the subject goods from the subject country are suppressing the prices of the domestic industry. The production and the sales of the domestic industry have remained largely stable in the period of investigation while the capacity utilization remains suboptimal. It is noted that the market share of domestic industry has declined by 12% in the period of investigation whereas market share of the imports from the subject country has increased by 35%. The performance of the domestic industry has significantly deteriorated in respect of profits, cash profits and return on capital employed. The domestic industry has suffered financial losses, cash losses and negative return on investments in the period of investigation.
c) The material injury suffered by the domestic industry has been caused by the dumped imports.
M. RECOMMENDATION
128. The Authority notes that the investigation was initiated and notified to all the interested parties and adequate opportunity was given to the domestic industry, the exporters, the importers and the other interested parties to provide information on the aspects of the dumping, the injury and the causal link. Having initiated and conducted the investigation into dumping, injury and causal link in terms of the provisions laid down under the Rules, the Authority is of the view that imposition of anti-dumping duty is required to offset the dumping and the injury. Therefore, the Authority recommends imposition of the anti-dumping duty on the imports of subject goods originating in or exported from the subject country.
129. Having regard to the lesser duty rule followed by the Authority, the Authority recommends imposition of the anti-dumping duty equal to the lesser of the margin of dumping and the margin of injury so as to remove the injury to the domestic industry. The Authority, therefore, considers it necessary to recommend imposition of the definitive anti-dumping duty equal to the amount mentioned in the column (7), on all imports of the subject goods described at Column (3) of the duty table, originating in or exported from China PR, from the date of notification to be issued in this regard by the Central Government.”
3. The Central Government, thereafter, issued the customs notification dated 06.12.2021 imposing anti-dumping duty on flat rolled products of aluminium for a period of 5 years from the date of publication of the notification. However, the following two products were excluded from the scope of the subject goods.
“i. Can-body Stock–also includes Can End Stock (CES) used to make aluminium cans.
ii. Aluminium Foil up to 80 microns.”
4. The appellant is an Association of Manufacturers of Aluminium Composite Panel7sheets in India and represents more than 80% of ACP manufacturers who are using different types of colour coated coils as a raw material to manufacture the finish goods i.e. ACP. According to the appellant, the subject goods include the product „colour coated coils‟, which was neither produced in commercial volumes nor sold in commercial volumes by the domestic industry and was being imported into India in significant volumes because of absence of domestic production. The appellant, therefore, contends that the subject goods includes products such as ACP stock, and colour coated coils but the domestic industry does not produce color coated coils for which the demand in the domestic market is about 40,000 MT and the domestic industry only produces ACP stock, which is a raw material for the production of colour coated coils. According to the appellant, the process of converting ACP stock to colour coated aluminium coils is not a minor process since it requires installation of production facilities and would involve significant investment to the extent of Rs. 100 crores for installing 20 coating machines to meet the demand of 40,000 MT. According to the appellant, Hindalco, as a domestic industry, does not produce colour coated coil since it produces ACP stock only which requires further processing for making colour coated aluminium coils. The appellant also contends that colour coated aluminium coil was earlier excluded from the final findings notification dated 29.05.2009 issued in connection with the safeguard duty investigation against imports of aluminium flat rolled products and aluminium foil into India from China PR. The appellant also contends that colour coated aluminium coil was also excluded from the scope of product in the decision of the Tribunal rendered on 09.10.2017 in M/s. G.M. Alloys Pvt. Ltd. vs. Union of India and others8
5. Based on these facts, Shri Pragyan Sharma, learned counsel for the appellant, made the following submissions:
(i) The designated authority committed an error in including colour coated aluminium coils within the scope of the subject goods ignoring the fact that the domestic industry did not manufacture/produce colour coated aluminium coils in any commercial volumes nor they were sold in the market in commercial volumes and in fact the domestic industry does not even have the capacity/capability/own plant and equipment to manufacture it and the appellant had been importing it only for this reason;
(ii) The designated authority committed an error in including colour coated aluminium coils in the subject goods only on the basis of a statement made by Hindalco, without even verifying the claim which was based only on one invoice provided by Hindalco;
(iii) The designated authority committed an error in not following its own Manual of Standard Operating Practices according to which the product under consideration should include only those products which are produced and sold by the domestic industry commercially;
(iv) The present determination made by the designated authority is contrary to the safeguard duty investigation against import of aluminium flat rolled products from China PR initiated at the instance of the Hindalco, where colour coated aluminium coil was excluded from the scope of the product under consideration;
(v) The finding recorded by the designated authority that the domestic industry was manufacturing colour coated aluminium coils is contrary to the records as it was not even the case of the domestic industry that it was manufacturing colour coated coils. In fact, the case set up by Hindalco was that it was engaging job workers for applying colour to the product which clearly means that Hindalco did not have the capacity to produce colour coated coil for ACP manufacturers;
(vi) The findings recorded by the designated authority that the domestic industry was producing colour coated coils is also perverse as Hindalco had not placed any record which would give the details of its capacity or the number and type of plant and machinery used for colour coating. This is for the reason that manufacture of colour coated coils is quite elaborate, requires separate plant and investment and involves significant value addition. The product in question is highly technical and the domestic industry does not have the technical know-how or technology to produce the product;
(vii) The final findings recorded by the designated authority are in violation of the principles of natural justice as the domestic industry had neither responded to the submissions of the appellant at the stage of initiation nor responded to the submissions of the appellant at the time of oral hearing or post hearing written submissions and the designated authority, for the first time in the disclosure statement, stated that the domestic industry has shown some sale invoices. In fact, the designated authority only in the final findings disclosed that the domestic industry has given evidence that it produces the product and engages job worker for merely applying the colour to the products based on customer specifications;
(viii) The designated authority has relied upon certain material and facts, which facts did not form part of the disclosure statement and to which the appellant had no opportunity to respond;
(ix) The findings of the designated authority are in violation of the 1995 Rules; and
(x) The determination made in the present case is contrary to the past determination made by the designated authority.
6. Shri S. Seetharaman assisted by Shri Atul Sharma and Shri Darpan Bhuyan, learned counsel appearing for the Hindalco, which is the domestic industry, however, supported the final findings of the designated authority and made the following submissions:
(i) Colour coated aluminium coil was produced and sold by the domestic industry during the period of investigation. Hindalco had provided evidence to the effect that it had produced and sold colour coated aluminium coils to an interested party in the investigation;
(ii) The dumped imports of colour coated aluminium coils from China PR is preventing the domestic industry from competing with imports of colour coated aluminium coils;
(iii) The anti-dumping duty levied on colour coated aluminium coils will counteract the effects of dumping and ensure that colour coated aluminium coils are imported at fair and undumped prices;
(iv) If certain grades of the product under consideration are exempted on the basis that they cannot cater to the entire demand/requirement of that particular grade in India and cheap dumped imports at unfair prices are allowed to continue as they did before the imposition of anti-dumping duty through the impugned notification, the domestic industry would never be able to increase capacity with respect to such grades;
(v) The cases cited by the appellant are not applicable to the facts and circumstances of the present case as in the said cases, the domestic industry was not manufacturing a like article to the imported article under investigation. In the present case, the domestic industry has produced and sold colour coated aluminium coils during the period of investigation and, therefore, the question of exclusion from the scope of the product under consideration does not arise; and
(vi) Non-disclosure of factum of job work does not violate principles of natural justice.
7. Shri Ameet Singh, learned counsel for the designated authority and Shri Nagendra Yadav learned authorized representative appearing for the Central Government have, however, supported the final findings of the designated authority and the notification issued by the Central Government.
8. The submissions advanced by the learned counsel for the appellant and the learned counsel and the authorized representative appearing for the respondents have been considered.
9. The sole issue that arises for consideration in this appeal is as to whether colour coated coils should be excluded from the product on which anti-dumping duty has been levied. Anti-dumping duty has been levied on imports of flat rolled products of aluminium originating in or exported from China PR. The appellant is a manufacturer of Aluminium Composite Panel sheets in India, and uses different types of colour coated coils as a raw material to manufacture the finish goods i.e. ACP. Thus, imposition of anti-dumping duty on colour coated coils would work to the prejudice of the appellant. The main contention urged by the learned counsel for the appellant is that the domestic industry produces only ACP stock, which is a raw material for the production of colour coated coil and the domestic industry does not produce colour coated coil.
10. It would, therefore, be useful to reproduce the paragraphs of disclosure statement of the designated authority that deal with product under consideration.
11. The key submissions made by the domestic industry have been recorded by the designated authority in the following manner:
“5. The following are the key submissions made by the domestic industry with regard to the product under consideration and the like article:
a. The product under consideration is “Flat Rolled Products of Aluminium” (FRP). FRP is made in the form of ALuminium Rolled Coils, or Aluminium Rolled Sheets of various dimensions. FRP is made from primary or secondary aluminium which may undergo several processes such as melting & allyoing, slab casting (slabs/concast), hot rolling, cold rolling, and other finishing processes and used for a variety of applications depending upon the gauge, temper, alloy, width, finish etc.
*****
e. Exclusion requests: With regard to exclusion requests made by the interested parties, the domestic industry has submitted as follows:
*****
Colour Coated Aluminium Coil
ix. The domestic industry has supplied Colour Coated Aluminiuk Coil to various customers in the POI.”
12. The submissions made by the other interested parties on colour coated aluminium coils are as follows:
“C.2 Submissions made by the other interested parties
6. The following are the submission made by the other interested parties with regard to the product under consideration and like article:
a to c *****
d. Exclusion requests: Following exclusions have been requested by the opposing interested parties:
*****
Colour Coated Aluminium Coils
i to ix *****
x. The domestic industry does not have the capacity to produce colour coated coils. Production of colour coated coil from ACP stock / ACP mill finish requires a separate plant and entails an investment to the tune of ₹ 5 crores, which the domestic industry has not done even though it is an insignificant cost to it.
xi. Consumers are not in a position to undertake the significant investment needed to produce colour coated coil themselves.
xii. Colour coated aluminium coil was excluded in the previous safeguard investigation concerning imports of Aluminium Flat Rolled Products. Colour coated aluminium foil was also excluded from the scope of the product under consideration by the CESTAT in the anti-dumping investigation concerning imports of aluminium foil originating in and exported from China PR. Accordingly, colour coated aluminium coil should be excluded from the present investigation as well.
xiii. The domestic industry has not sold any colour coated coil to the consumers despite such a large demand in the country. This can be verified from the PCN wise sales information that must have been provided by the present domestic industry.”
13. The designated authority examined the matter in the following manner:
“C.3 Examination by the Authority
7. Various interest parties have raised a number of issues with regard to the scope of the product under consideration in the present case. Interested parties have sought exclusion of certain products from the scope of the PUC on the grounds that the domestic industry is not capable of producing the product type or supply the product in the desired product type, or the quality of the product produced and supplied by the domestic industry is not satisfactory. The arguments of interested parties have been examined after calling relevant information from the parties and examined the same during the table verification and also taking into account the evidence submitted on record by the interested parties.”
8 to 20 *****
“Colour Coated Aluminium Coil
21. The interested parties have argued that the domestic industry does not have the capacity to produce colour coated coils. However, the domestic industry has provided evidence that it has supplied Colour Coated Aluminium Coil to various customers, including an interested party in this case in the POI.
22. With respect to the exclusion of Colour Coated Aluminium Coil in past investigations, the Authority notes that for the purposes of the current investigation, the Authority has looked at the evidence and data provided by the domestic industry and the Authority notes that the domestic industry is manufacturing and has supplied colour coated aluminium coil to customers and, therefore, they are included within the scope of the PUC.”
14. The appellant filed comments to the disclosure statement and submitted a list of 21 members of ACP Manufacturers who had not been supplied the said product by the domestic industry to controvert the claim made by the domestic industry regarding sale „to various customers‟. An affidavit was also filed by the appellant before the designated authority to the effect that none of the members had ever purchased any quantity of colour coated aluminium coil from Hindalco, and in fact, they were not even aware that Hindalco was producing or selling the said product nor Hindalco had ever approached them for supply of the goods. A number of questions were also raised with regard to the fact that it was not possible for Hindalco to produce colour coated coil since it did not have coating facilities and that Hindalco should be asked to give a certificate that it has in-house coating facilities for production of colour coated coils. It was also categorically stated that the annual requirement of colour coated coils in India is 40,000 MT and since one coil machine can produce only 150 MT per month, the production of 40,000 MT would require more than 20 colour coating machines.
15. The designated authority recorded the following final findings with regard to colour coated coils:
“I.3 Examination by the Authority
