Brief of the Case
Supreme Court held In the case of Commissioner of Customs vs. M/S. G.M. Exports & Others that the final anti-dumping duty only incorporates the provisional anti-dumping duty within itself, but in the manner provided by Rule 13 of Anti-dumping rules. As per Rule 13, provisional anti-dumping rule will remain in force for a period of 6 months only which can be extended up to 9 months. Thus, it is clear that such incorporation can only be the period up to which the provisional duty can be levied and not beyond. Thus understood, it is clear that both literally, and in keeping with the object sought to be achieved – that is the making of laws in conformity with the WTO Agreement, there can be no levy of anti-dumping duty in the “gap” or interregnum period between the lapse of the provisional duty and the imposition of the final duty.
Facts of the Case
The facts are taken from the judgment of the Bombay High Court dated 15.12.2011, in the case of Harsh International v. Commissioner of Customs, Civil Appeal No. 5119 of 2012, which explain how the question which has to be determined by this judgment arose. On 6th August, 2001 a public notice was issued by the Designated Authority initiating proceedings in regard to the import of Vitrified/Porcelain tiles originating in or exported from the People’s Republic of China and the United Arab Emirates. The Designated Authority issued preliminary findings on 3rd December, 2001. Following the preliminary findings, the Union Government imposed, by a notification dated 2nd May, 2002, a provisional antidumping duty under Section 9A(2) of the Customs Tariff Act read with Rules 13 and 20 of the Antidumping Rules.
The Designated Authority rendered its final findings on 4th February, 2003 and while concluding that material injury had resulted to the domestic industry recommended the imposition of antidumping duty. The Union Government issued a notification on 1st May, 2003 imposing a final antidumping duty with effect from the date of the imposition of the provisional antidumping duty i.e. 2nd May, 2002. The question before the Court is as to whether the Central Government was within its jurisdiction in imposing a final antidumping duty between 2nd November, 2002 and 30th April, 2003. This, according to the assessee, is the “gap period” when the provisional duty had come to an end by efflux of six months until a final notification was issued by the Union Government on 1st May, 2003.
Contention of the Assessee
The ld counsel of the assessee submitted that Rule 20(2)(a) should be interpreted in the light of the WTO Agreement, and so interpreted would necessarily be interpreted as meaning only the period for which the provisional duty is levied, and not beyond. It has been argued with some vehemence that this also follows from a reading of clause 18.4 of the Agreement and a reading of the Central Government’s own website which was referred to us in the course of arguments stating that the anti-dumping rules are in consonance with the WTO Agreements on anti-dumping.
He further submitted that word “levied” under Rule 20(2)(a), in the context includes even “collection” and this being so, whatever has not been “collected” in the interregnum period obviously cannot be collected retrospectively. Further submitted that Section 9A(3) alone empowers the rule making authority to impose a retrospective anti-dumping duty within the strict confines of the said rule. Section 9A(2) and (6), in contrast, do not allow any imposition, retrospectively, of anti-dumping duty, and therefore if Rule 20 were to be read in the manner suggested by revenue, it would be ultra vires the parent statute.
It was further argued that the levy of anti-dumping duty is not automatic and is only levied by the Central Government taking into account a series of complex economic factors. This being so, the continuity of such levy can only be for the period indicated in the provisional duty levy notification and not beyond. It was also argued that, on a true construction of Rule 20(2)(a), the said rule merely validates a provisional duty already levied, and nothing beyond. It was further argued that Rule 20(2)(a) has to be harmoniously construed with both Rules 13 and 21, or else, the suggested construction by revenue of Rule 20(2)(a) would render Rules 13 and 21 nugatory.
It was further argued that no duty can be levied in the interregnum period as the Government would then be doing indirectly what it is prohibited from doing directly – namely, extending the period of six months of the levy of provisional duty beyond six months and until the notification imposing the final anti-dumping duty.
Contention of the Revenue
The ld counsel of the revenue submitted that both literally and purposively Rule 20 leads to one conclusion and one conclusion alone – that final anti-dumping duty would take effect from the date of imposition of the provisional duty, which would necessarily include the “gap” period i.e. the period between the lapse of the provisional duty and the imposition of the final duty. Any other construction would defeat the object and purpose of imposing a final anti-dumping duty after the Designated Authority has found, post investigation, that there is dumping of goods and material injury to the domestic industry as a result.
She also submitted that since the final duty is made to relate back to the date of the provisional duty imposition, a fiction is employed which must be allowed to have full play and the mind should not boggle in giving such fiction its logical consequence. According to learned counsel, “levied” in Rule 20(2)(a) obviously does not include “collection” as has been held in several Supreme Court judgments and therefore, “levy” would not include “collection” for which reason Rule 20 has to be read on its own without reference to the consequence that is found in Rule 21.
She further argued that it is true that laws that are made in pursuance of international treaties ought to be construed in accordance with such treaties, but where the Indian law deviates from the treaty agreement, Indian law prevails. It is clear that unlike Article 10 of the WTO Agreement, Rule 20(2)(a) only speaks of anti-dumping duty being levied from the date of imposition of provisional duty and does not speak of the period for which the provisional duty applied, thus making it clear that anti-dumping duty can be levied and collected for the “gap” or interregnum period.
Held by High Courts
Both the Bombay and Kerala High Courts and the Bombay Tribunal, is in favour of the construction suggested by revenue that anti-dumping duty can be charged for the gap period. Only the Karnataka Tribunal (Bangalore) has decided in favour of the assessee.
Held by Supreme Court
A number of judgments, both English and Indian, have laid down as to what is the correct approach to the construction of a statute made in response to an international treaty obligation by a member nation. Thus, in The Jade The Eschersheim Owners of the motor vessel Erkowit v. Owners of the ship Jade,  1 All ER 920, the House of Lords stated: If there be any difference between the language of the statutory provision and that of the corresponding provision of the convention, the statutory language should be construed in the same sense as that of the convention if the words of the statute are reasonably capable of bearing that meaning. Similar views were expressed in Quazi v. Quazi,  3 All ER 897.
In Garland v. British Rail Engineering Ltd.,  2 All ER 402, the same Rule was set out with an addition – that not only should municipal law carry out treaty obligations, but it should also not be inconsistent with the terms of a treaty. Also in The Hollandia’s case  3 All ER 1141, it was held that a treaty provision embodied in a statute needs to be construed uniformly in all the member nations who are its signatories, and should therefore not be controlled by domestic precedents but should be construed on its own terms on broad principles of general application in a purposive and not in a narrow literal manner.
In Vellore Citizens’ Welfare Forum v. Union of India and others, (1996) 5 SCC 647, when dealing with the Environment Protection Act, this Court stated that It is almost an accepted proposition of law that the rules of Customary International Law which are not contrary to the municipal law shall be deemed to have been incorporated in the domestic law and shall be followed by the Courts of Law. Similar views were expressed in Daya Singh Lahoria v. Union of India and others, (2001) 4 SCC 516.
In judgment of S&S Enterprise v. Designated Authority and others, (2005) 3 SCC 337, already referred to, this Court construed Rule 14(d) of the very anti-dumping rules with which we are concerned, in the light of the very agreement on implementation of Article VI of GATT. A conspectus of the aforesaid authorities would lead to the following conclusions: (1) Article 51(c) of the Constitution of India is a Directive Principle of State Policy which states that the State shall endeavour to foster respect for international law and treaty obligations. As a result, rules of international law which are not contrary to domestic law are followed by the courts in this country. This is a situation in which there is an international treaty to which India is not a signatory or general rules of international law are made applicable. It is in this situation that if there happens to be a conflict between domestic law and international law, domestic law will prevail. (2) In a situation where India is a signatory nation to an international treaty, and a statute is passed pursuant to the said treaty, it is a legitimate aid to the construction of the provisions of such statute that are vague or ambiguous to have recourse to the terms of the treaty to resolve such ambiguity in favour of a meaning that is consistent with the provisions of the treaty. (3) In a situation where India is a signatory nation to an international treaty and a statute is made in furtherance of such treaty, a purposive rather than a narrow literal construction of such statute is preferred. The interpretation of such a statute should be construed on broad principles of general acceptance rather than earlier domestic precedents, being intended to carry out treaty obligations, and not to be inconsistent with them. (4) In a situation in which India is a signatory nation to an international treaty and a statute is made to enforce a treaty obligation, and if there be any difference between the language of such statute and a corresponding provision of the treaty, the statutory language should be construed in the same sense as that of the treaty. This is for the reason that in such cases what is sought to be achieved by the international treaty is a uniform international code of law which is to be applied by the courts of all the signatory nations in a manner that leads to the same result in all the signatory nations.
It is important to note that neither sub-section (2) nor sub-section (6) of section 9A authorizes the Central Government, either expressly or by necessary implication, to make rules and/or to levy anti-dumping duty with retrospective effect. This is in contrast with sub-section (3) which expressly so authorizes the Central Government in the circumstances mentioned in the sub-section.
A reading of the Anti-Dumping Rules would show that they have been framed keeping in view the WTO Agreement of 1994 strictly in mind. It will thus be seen that the determination of material injury to domestic industry depends on a series of complex economic factors which are to be segregated from other factors which may also cause injury to the said industry. Under Rule 12, the designated authority is to “proceed expeditiously” with the conduct of the investigation and shall in appropriate cases record his preliminary findings on all the aspects delineated above. No time frame is indicated except that utmost dispatch is the order of the day.
Rule 13, in line with clause 7.4 of the WTO Agreement, enables the Central Government to impose provisional anti-dumping duty not exceeding the margin of dumping, with two provisos. First, no such duty can be imposed before the expiry of 60 days from the date of public notice issued by the designated authority regarding its decision to initiate investigations. And second, such duty cannot remain in force for a period of more than six months, which is only extendable on request made by the foreign exporters who represent a significant percentage of the trade involved, to a maximum period of 9 months. The important words used in the second proviso are “shall”, “only”, and “not exceeding”, all of which point to the fact that the time period mentioned in the said proviso is mandatory and cannot be exceeded by even a single day.
Under Rule 17, the designated authority is given one year from the date of initiation of an investigation to come out with its final findings. This is extendable by the Central Government only in special circumstances, and only by a further period of 6 months, and no more (Clause 5.10 of the WTO Agreement). Significantly, the designated authority, in its final finding, may also provide for a retrospective levy of duty, the reasons therefore, and the date of commencement of such retrospective levy. This is obviously referable to Section 9A (3), which reproduces clause 10.6 of the WTO Agreement. The reasons must be the reasons mentioned in the said sub-section, and, as mentioned in the said sub-section, such retrospective levy cannot commence beyond 90 days from the date of the notification imposing provisional duty. Under Rule 18, the Central Government may in its discretion, and within a maximum period of three months from the date of publication of the final findings by the designated authority, impose a final anti-dumping duty.
The first thing to notice about Rule 20 is, as its marginal note states, that it is concerned only with the date of commencement of duty. under sub-rule (1), the provisional anti-dumping duty takes effect on and from the date of its publication in the official gazette. Same is the case with the final anti-dumping duty levied under Rule 18. Sub-rule (2) is in two parts. Sub-clause (a) deals with the date of commencement of an anti-dumping duty, having due regard to a provisional duty that has been levied, whereas sub-clause (b) specifically deals with duty to be retrospectively imposed, that is a retrospective imposition prior to the imposition of a provisional duty. It will immediately be noticed that the subject matter of sub-clause (a) does not purport to be the imposition of an anti-dumping duty with retrospective effect.
Obviously, the word “levied” has to be read as levied in accordance with Rule 13 which, as its marginal note indicates, provides for the “levy” of provisional duty. Once this is clear and the word “levied” is to be understood as levied under Rule 13, the second proviso of Rule 13 gets attracted, and under this proviso such levy cannot be for a period exceeding 6 months (on facts in these cases, such period has not in fact been extended beyond 6 months). Thus, it is clear that all that sub-rule (2)(a) does is to enable the levy of a final anti-dumping duty from the date of imposition of a provisional duty so as to convert the provisional measure into a final measure, or so as to take within its ken the provisional anti-dumping duty already imposed.
On a correct reading of the said sub-rule, therefore, the final anti-dumping duty only incorporates the provisional anti-dumping duty within itself, but in the manner provided by Rule 13. Thus, it is clear that such incorporation can only be the period upto which the provisional duty can be levied and not beyond. Thus understood, it is clear that both literally, and in keeping with the object sought to be achieved – that is the making of laws in conformity with the WTO Agreement, there can be no levy of anti-dumping duty in the “gap” or interregnum period between the lapse of the provisional duty and the imposition of the final duty. Such interpretation makes it clear that clause 10.2 of the WTO Agreement is reproduced in the same sense though not in the same form in sub-rule (2)(a). The same result therefore as is envisaged in clause 10.2 is achieved by the said construction – that is anti-dumping duty may be levied retroactively for the period for which provisional measures have been applied.
The suggested construction by revenue would render Rule 2(a) ultra vires Section 9A. It has already been seen that sub-section (2) and sub-section (6) of Section 9A do not authorize the imposition of a duty with retrospective effect, in contrast with sub-section (3) thereof. Any duty levied by a final duty notification during the interregnum period would necessarily amount to a retrospective levy of duty for the reason that such period is not covered by the provisional duty notification, being beyond 6 months. This would therefore render sub-rule (2)(a) ultra vires Section 9A. A construction which is both in consonance with international law and treaty obligations, which Article 51(c) of the Constitution states as a directive principle of State policy; and with the application of the doctrine of harmonious construction is to be preferred to a narrow doctrinaire meaning which would lead to the Rule being read in such a manner that it is ultra vires the parent statute.
The object and purpose of Section 9A is to impose an anti-dumping duty in consonance with the WTO Agreement, which Section 9A gives full effect to. These basic points have been missed by the High Court in arriving at the aforesaid finding. Further, the High Court fails to give due importance in its judgment to Rules 13 and 21. We have already seen how Rule 21(1) envisages precisely the situation spoken of by the High Court, and yet states that, in the circumstances mentioned therein, despite dumping and material injury to the domestic industry, differential duty cannot be collected from the importer. In fact, the High Court goes on to say that the expression “imposed and collected” in Rule 21, not being there in Rule 20(2)(a), cannot therefore be imported into the said sub-rule, so that “levied” cannot mean “imposed and collected”. We have already held, in view of our construction of Rule 20(2)(a), that this need not be gone into. What has been missed by the High Court is that the expression “levied” has to be understood as “levied” under Rule 13 and once this is so, it becomes clear that such levy cannot exceed a period of 6 months or a maximum period of 9 months, as the case may be.
Accordingly appeal of the assessee allowed.