Under the given circumstances of the case and particularly the purport of Rule 22 (2) of the Anti-Dumping Rules and the proviso thereto, the initiation of a new shipper review cannot be with retrospective effect in the case of a first time exporter.
IN THE HIGH COURT OF DELHI AT NEW DELHI
CM 1680/2008 in WP(C) No.850/2008
Decided on: May 14, 2008
M/s H and R Johnson (India) Limited,
1. Union of India
2. The Designated Authority
Directorate General of Anti-Dumping and Allied Duties, Ministry of Commerce, Udyog Bhawan, New Delhi.
3. Foshan Nanhai Jingyu Ceramics Company Ltd.
4. Shye International Ltd.
J U D G M E N T
MADAN B. LOKUR, J. (ORAL)
This is an application filed by the Petitioner for interim relief pending hearing and disposal of the writ petition. The prayer is for staying the operation of the New Shipper Notification No.15/23/06-DGAD dated 25th January, 2007 issued by Respondent No.2.
2. It is also prayed that there should be a stay of operation of Notification No.39/07-Cus dated 9th March, 2007 issued by Respondent No.1 permitting provisional assessment of the goods imported by Respondent Nos. 3 and 4. In our opinion, the second prayer is consequential to the first prayer.
3. The Notification dated 25th January, 2007 concerns itself with the initiation of New Shipper Review under Rule 22 of the Customs Tariff (Identification, Assessment and Collection of Anti-Dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995 (hereinafter referred to as `the Anti-Dumping Rules?).Online GST Certification Course by TaxGuru & MSME- Click here to Join
4. By Notification No.73/2003 Customs dated 1st May, 2003, the Central Government in exercise of powers conferred by sub-section (5) read with sub- section (1) of section 9A of the Customs Tariff Act read with Rules 18 and 20 of the Anti-Dumping Rules imposed anti-dumping duty on all exports of vitrified and porcelain tiles, inter-alia, originating from the People’s Republic of China. The anti-dumping duty imposed was with effect from the date of imposition of the provisional anti-dumping duty, that is, 2nd May, 2002 and was valid for a period of 5 years, that is, 1st May, 2007. We are told that the anti-dumping duty has been extended for another five years.
5. It appears that some exporters from China, that is, Respondent Nos. 3 and 4 filed an application under Rule 22 of the Anti-Dumping Rules requesting for a review of anti-dumping duty on the ground that they were exporters of vitrified and porcelain tiles and were making exports to India for the first time. Apparently on the basis of the representation made by Respondent Nos. 3 and 4, the Designated Authority under the Anti-Dumping Rules decided to initiate a New Shipper Review and the period of initiation of the review was determined from 1st February, 2007 to 31st July, 2007 (6 months). Pending the review, the Designated Authority recommended that provisional assessments be made for all exports of vitrified and porcelain tiles made by Respondents 3 and 4 having regard to Notification No.73/03 Customs dated 1st May, 2003. The recommendation was accepted by the Central Government which then issued the Notification dated 9th March, 2007.
6. According to learned counsel for the Petitioner, on a reading of Rule 22 of the Anti-Dumping Rules as well as a decision of the Customs Excise and Service Tax Appellate Tribunal, Principal Bench, New Delhi in H and R Johnson (India) Ltd. v. Designated Authority, 2007 (218) E.L.T. 273 (the Tribunal), the period of review would have to be retrospective and not prospective as has been prescribed in the New Shipper Review Notification dated 25th January, 2007. In this regard, reliance is placed upon paragraph 12.4 of the judgment delivered by the Tribunal, which holds, inter-alia, as follows:-
“A new shipper review under Rule 22 should normally cover production, exports or sales during the period preceding the initiation of review. Fixing review period, for such investigation, that falls subsequent to the date of the application for such review is not at all warranted, and would be like spreading a red carpet to manipulations by projecting figures during the prospective period of review so tailored as to bring about a dumping margin favourable to the new shipper who can then be a conduit pipe for flowing exports of other exporters and producers whose exports would otherwise have been subjected to the existing anti-dumping duty. Selecting new shipper review for a period subsequent to the application for such review would distort the entire scheme and purpose of imposition of anti-dumping duty, to the grave disadvantage of the domestic industry that had earned the protection of anti-dumping duty. The contention that the new shipper review proceedings are in the nature of ‘advance ruling’ for which the period of review ought to be after the date of initiation of new shipper review is, therefore, totally misconceived.”
7. No doubt, the decision of the Tribunal supports the case of the Petitioner to the extent that it is the view of the Tribunal that the new shipper review should cover a period prior to the initiation of review.
8. Learned counsel for the Petitioner has informed us that this is also the practice that is followed in United States of America and China as well as some other jurisdictions and there is no reason why a different practice should be followed in India. It is also submitted by learned counsel for the Petitioner that the decision of the Tribunal appears to have been appealed against by the Designated Authority and the matter is pending before the Supreme Court but no interim stay has been granted by the Supreme Court.
9. We have gone through the provisions of Rule 22 of the Anti-Dumping Rules and this reads as follows:-
“22. Margin of dumping, for exporters not originally investigated. – (1) If a product is subject to anti-dumping duties, the designated authority shall carry out a periodical review for the purpose of determining individual margins or dumping for any exporters or producers in the exporting country in question who have not exported the product to India during the period of investigation, provided that these exporters or producers show that they are not related to any of the exporters or producers in the exporting country who are subject to the anti-dumping duties on the product.
(2) The Central Government shall not levy anti-dumping duties under sub- section (1) of section 9A of the Act, on imports from such exporters or producers during the period of review as referred to in sub-rule (1) of this rule:
Provided that the Central Government may resort to provisional assessment and may ask a guarantee from the importer if the designated authority so recommends and if such a review results in a determination of dumping in respect of such products or exporters, it may levy duty in such cases retrospectively from the date of the initiation of the review.”
10. It appears to us on a reading of Rule 22 of the Anti-Dumping Rules that the Designated Authority is entitled to carry out a periodical review for the purpose of determining individual margins of dumping for any exporter or producer, who has not exported the product to India during the period of investigation (the period of investigation being relatable to the issuance of the Notification imposing anti-dumping duty). The second requirement is that the exporter/producer should not be related to any producer or exporter, who is subject to anti-dumping duties on the product.
11. Insofar as Respondent Nos. 3 and 4 are concerned, there is no doubt that they are making exports into India for the first time. Whether they are related to any of the exporters/producers in China, who are subject to anti- dumping duty on vitrified and porcelain tiles is a question of fact, which will have to be determined at the final hearing of the writ petition (if it becomes necessary) and after we get a copy of the final order of the Designated Authority under the Anti-Dumping Rules, which we are told is now ready. To this extent, it appears that as at present advised the provisions of Rule 22 (1) of the Anti-Dumping Rules do not prohibit the Designated Authority from carrying out a periodic review for determining the individual margin in respect of Respondent Nos. 3 and 4.
12. According to learned counsel for the Petitioner, the apprehension of the Petitioner is that since the review period is prospective, then Respondent Nos. 3 and 4 can manipulate the export price setting the review process at naught. On the other hand, it is contended that if the review period is retrospective, then there is no scope for manipulation and a meaningful review can be conducted.
13. Learned counsel overlooks the provisions of Rule 22(2) of the Anti- Dumping Rules. This very clearly prohibits the Central Government from levying anti-dumping duties on such exporters or producers as are covered by sub-Rule (1) for the period of review. If Respondent Nos. 3 and 4 are permitted to export porcelain/vitreous tiles without any levy of anti-dumping duty, they can wipe out the domestic industry. To avoid this, the proviso to Rule 22 (2) of the Anti-Dumping Rules entitles the Central Government to resort to provisional assessments and to ask for a bond or a guarantee for payment of duty by an importer, if the Designated Authority so recommends, for the period of review. Needless to say, provisional assessments cannot be made with retrospective effect. Therefore, to avoid or at least lessen the chances of manipulation, there are three options available: to permit exports without the levy of anti- dumping duty – this may wipe out the domestic industry; to permit exports after levy of anti-dumping duty- this may financially wipe out first time exporters; to permit exports on the basis of provisional assessments. The Designated Authority has recommended the third option of exports through provisional assessments in respect of all exports of vitrified/porcelain tiles by Respondent Nos. 3 and 4 and this recommendation has been accepted by the Central Government as mentioned in the Notification dated 9th March, 2007. To this extent, there is a check on Respondents No. 3 and 4 and the interest of the domestic industry is protected and the decision is in conformity with Rule 22 (2) of the Anti- Dumping Rules and the proviso thereto.
14. When this writ petition was listed on 13th February, 2008 an interim order was passed to the effect that till the next date of hearing, no final order shall be passed by the Respondents namely Respondent Nos. 1 and 2 as a result of the Notification dated 25th January, 2007. This interim order has continued till today. Respondent Nos. 1 and 2 have, however, moved an application being CM 4328/2008 seeking recall of the order dated 13th March, 2008 whereby CM No.3822/2008 was dismissed in default. In CM No.3822/2008, the prayer of Respondent Nos. 1 and 2 is for recall of the order dated 13th February, 2008 granting an interim stay in respect of passing of final orders by Respondent Nos.1 and 2.
15. On a reading of Rule 22 of the Anti-Dumping Rules, we are not entirely in agreement with the view expressed by the Tribunal in H and R Johnson (India) Ltd. since it overlooks the language and purport of that Rule. Of course the decision needs to be looked at in greater detail but in our opinion, the language and intention of Rule 22 of the Anti-Dumping Rules does not prima facie, support the conclusion arrived at by the Tribunal. Consequently, in our opinion, no prima facie case has been made out by the Petitioner for continuance of the interim order.
16. There are several other reasons for coming to the conclusion that the Petitioner has not made out a prima facie case for grant of interim relief, one of them being that Respondent Nos. 1 and 2 have already completed the new shipper review in terms of the Notification dated 25th January, 2007 and a final order appears to have been passed by the Designated Authority prior to our interim stay being communicated. The final order, however, has not been published. It will be in the interests of all concerned if the final order is made known, which is not possible if the interim stay continues. Moreover, no harm is caused to the domestic industry if the final order is published because in any case the interests of the domestic industry are protected, at least for the time being, by provisional assessments made in respect of the imports by Respondent Nos. 3 and 4.
17. The final order passed by the Designated Authority is only in the nature of a recommendation made to the Central Government and is not necessarily binding upon the Central Government, which may or may not accept the recommendation of the Designated Authority. In the event the Central Government decides to accept the recommendation of the Designated Authority which, for example, may be that Respondent Nos. 3 and 4 are liable to pay anti-dumping duty then the provisional assessments that have been made can always be finalized and the duty due from Respondent Nos. 3 and 4 may be recovered. Surely, the Petitioner cannot object to this. However, if the recommendation made to the Central Government is that there is no dumping by Respondent Nos. 3 and 4 or that their individual margins do not fall foul of the provisions of law, the Petitioner is entitled to challenge that recommendation if it is accepted by the Central Government. In either case, the Petitioner would not be disadvantaged. On the other hand, continuation of the interim stay does not really benefit anybody.
18. We have already indicated our tentative view on the interpretation of Rule 22 of the Anti-Dumping Rules and our disagreement with the decision of the Tribunal. We are of the opinion that under the given circumstances of the case and particularly the purport of Rule 22 (2) of the Anti-Dumping Rules and the proviso thereto, the initiation of a new shipper review cannot be with retrospective effect in the case of a first time exporter. The Petitioner may be entitled to succeed if Rule 22 (2) of the Anti-Dumping Rules is struck down (and that may bring us in line with the practice followed in USA, China and some other countries) but that is not the relief claimed.
19. Learned counsel for the Petitioner contended that the Designated Authority has been over cautious in terms of grant of confidentiality of information disclosed by Respondent Nos. 3 and 4. While it may be so, that by itself may not be sufficient for granting the interim relief prayed for by the Petitioner. However, we do not express any final opinion on the confidentiality issue. We also make it clear that we have also not expressed any final opinion on the correctness or otherwise of the view expressed by the Tribunal but are only expressing our prima facie opinion for the purposes of the disposal of the application for interim relief.
20. For the reasons indicated by us above, the application for interim relief is dismissed and both the applications filed by Respondent Nos. 1 and 2 being CM Nos. 3822/2008 and 4328/2008 are allowed.