Metrod (Malaysia) Sdn Bhd Vs Designated Authority Directorate General of Antidumping & Allied Duties (CESTAT Delhi)
Conclusion: Since it was not possible to sustain the CVD levied for ‘other program’ and if the other program was excluded from the subsidy margin determination, assessee would fall below the de minimis level. The imposition of 2.47% CVD on assessee at serial no. 8 of the notification dated January 8, 2020 was, therefore, liable to be set aside.
Held: Assessee was a manufacturer of copper rods, wire rods, drawn copper wires and strips. Metrod Copper Products Sdn Bhd and Metrod(OFHC) Sdn Bhd were wholly owned subsidiaries of assessee and were inter alia engaged in marketing and selling copper wires manufactured by assessee. Savli Copper Products Pvt Ltd. was an Indian related party of assessee and had imported copper wires manufactured by assessee into India. The notification dated January 08, 2020 that was issued by the Government of India on the recommendation of the Designated Authority imposing countervailing duty of 2.47% on Continuous Cast Copper Wire produced by Metrod Malaysia Sdn Bhd2 originating in Malaysia and exported from any country, including Malaysia, to India. Assessee challenged on two grounds – the first was that if the “other program” was excluded from the subsidy margin determination, assessee would fall below the de minimis level and, therefore, would be excluded from the purview of the impugned notification and the second was “Copper Wire” manufactured by assessee was not akin to “Continuous Cast Copper Wire Rods”, for which Hindalco was a majority producer (Domestic Industry) and in respect of which complaint was filed and an investigation was initiated. As such, no CVD could have been imposed on drawn Copper Wire manufactured by assessee i.e. Copper Wire of less than 6mm manufactured by using the drawing process and falling under CTH 74081990. In the instant case, it was seen that the Designated Authority, at no point of time prior to final findings, suggested or alleged that the Government of Malaysia failed to provide the requisite information. The records indicated that the Government of Malaysia had filed the Questionnaire Response and if there was any doubt, the Designated Authority could have required the Government of Malaysia to provide the information. Thus, it was not possible to sustain the CVD levied for “other program” and if this program was excluded from the subsidy margin determination, assessee would fall below the de minimis level. The imposition of 2.47% CVD on assessee at serial no. 8 of the notification dated January 8, 2020 was, therefore, liable to be set aside. Such being the position, it would not be necessary to examine the submission raised on behalf of the assessee that the drawn “Copper Wire” manufactured by assessee was not akin to “Continuous Cast Copper Wire Rods”. In the result, the imposition of 2.47% CVD on assessee at serial no. 8 of the notification dated January 8, 2020 was set aside.
FULL TEXT OF THE CESTAT JUDGEMENT
1. The notification dated January 08, 2020 that was issued by the Government of India on the recommendation of the Designated Authority imposing countervailing duty1 of 2.47% on Continuous Cast Copper Wire produced by Metrod Malaysia Sdn Bhd2 originating in Malaysia and exported from any country, including Malaysia, to India has led to the filing of these four appeals.
2. The appellant is a manufacturer of copper rods, wire rods, drawn copper wires and strips. Metrod Copper Products Sdn Bhd and Metrod(OFHC) Sdn Bhd are wholly owned subsidiaries of the appellant and are inter alia engaged in marketing and selling copper wires manufactured by the appellant. Savli Copper Products Pvt Ltd. is an Indian related party of the appellant and has imported copper wires manufactured by the appellant into India.
3. The impugned notification also imposes CVD on similar goods manufactured/exported from Indonesia, Vietnam, Thailand and other manufactures in Malaysia, but no appeal has been filed by any other manufacturer/exporter/importer of the subject goods.
4. M/s Hindalco Industries Limited3 (respondent no. 3) and M/s Vedanta Industries (Sterlite Copper)4 (respondent no. 4) had filed an application, as a Domestic Industry, under the provisions of the Customs Tariff Act, 19755 and The Customs Tariff (Identification, Assessment and Collection of Countervailing Duty on Subsidized Articles and for Determination of Injury) Rules, 19956 before the Designated Authority for imposition of CVD on imports of Continuous Cast Copper Wire Rods from Indonesia, Malaysia, Thailand and Vietnam. It needs to the noted that where any country bestows any subsidy upon the manufacture or production of any article, then, upon the importation of such article into India, the Central Government may impose a CVD not exceeding the amount of such subsidy.
5. The Designated Authority, by a notification dated September 10, 2018, initiated investigation to determine the existence, degree and effect of the alleged subsidy and to recommend the amount of countervailing duty, which if levied, would be adequate to remove the alleged injury to the Domestic Industry. The product under consideration in the investigation was described Continuous Cast Copper Wire Rods classifiable under customs sub-headings 7407. 1010, 7407.1020, 7408.1990, 7408.1920, 7408.1990, 7409.11 and 7409.19. The period of investigation was notified to be from April, 2017 to March, 2018.
6. The Designated Authority provided an opportunity to all the interested parties to present their views orally in the hearing held on March 29, 2019 and the parties who attended the oral hearing were advised to file their written submission on the views expressed by them orally at the hearing.
7. The disclosure statement was issued to the interested parties on October 21, 2019. It consisted of four Annexures namely, Annexure I: General Disclosure; Annexure II: Assessment of Subsidy- Methodology, Parameters, Countervailability and Subsidy Margins; Annexure III: Assessment of Injury and Causal Link; and Annexure IV: Methodology for arriving at non-injurious price. It was stated that the aforesaid Annexures contained the essential facts under consideration of the Designated Authority, which would form the basis for the Final Findings. The interested parties were asked to offer their comments by October 29, 2019. The gist of the disclosure statement is as follows :
(i) The product under consideration is Continuous Cast Copper Wire Rods falling under Tariff Heading 7408. The product includes Copper Wire of which the maximum cross-sectional dimension exceeds 6mm as well as 6mm and below. The Customs classification is indicative only and in no way binding upon the product scope. Continuous Cast Copper Wire Rods produced by the Domestic Industry is a like article to the Continuous Cast Copper Wire Rods imported from the subject countries;
(ii) A Product Control Number7 methodology would be adopted;
(iii) Vedanta imported the subject goods during the period of investigation. It is, therefore, ineligible to be a part of the Domestic Industry. Vedanta has also not submitted the requisite information to the Designated Authority for considering it to be a part of the Domestic Industry. However, Hindalco constitutes Domestic Industry; and
(iv) Subsidy program no. 24 in relation to Malaysia provides for import duty exemption to qualified manufacturer on raw material that is not locally available. Further, the program provides financial contribution in the form of revenue foregone, which is otherwise due and benefit is thereby conferred. The program is also specific because it is limited to enterprises that use raw material that are not locally available.
8. The comments were submitted by the parties to the disclosure statement and ultimately the final findings were notified by the Designated Authority on January 8, 2020. The gist of the final findings are as follows:
(i) The finding in regard to the Vedanta not being a Domestic Industry remains the same. Hindalco would constitute the Domestic Industry;
(ii) However, the scope of the product under consideration is narrowed down to Continuous Cast Copper Wire falling under Tariff Heading 7408. The product would include Copper Wire of which maximum cross-sectional dimension exceeds 6mm as well as 6mm and below;
(iii) It had inadvertently been noted in the disclosure statement that subsidy benefit had been availed by the appellant under program No. 24, though the benefit had been obtained under “other program” that provided financial contribution in the form of revenue foregone, which is otherwise due through exemption from import duty on raw materials and thereby conferring a benefit to the appellant;
(iv) The import of raw material for use in the production of exported goods cannot be considered as countervailable subsidy if there is sufficient evidence to demonstrate that there is a verification mechanism to ensure that there is no excess remission;
(v) The appellant had merely claimed existence of a mechanism and absence of excess remission, without providing sufficient evidence or step-by-step explanation of such verification mechanism;
(vi) Name of the subsidy program and the corresponding subsidy margin is indicated in a table, which is reproduced below :
