Judgment
1. Appellants in all these appeals challenge Notification issued by the Government of India, Ministry of Finance on 28th June, 2000 imposing Anti-dumping duty on Optical Fibre originating in or exported form Korea.2. M/s. Sterlite Industries Ltd. filed written application before the Designated Authority constituted in terms of Customs Tariff (Identification, Assessment and Collection of Anti-dumping duty on Dumped Articles and for Determination of Injury) Rules, 1995 (hereinafter referred as the Rules) for initiating investigation to determine the existence, degree and effect of alleged dumping of Optical Fibre originating in or exported from South Korea. On the basis of that application, Authority issued a Public Notice dated 1st July, 1999 in the Gazette of India initiating Anti-dumping investigation. In response to that notification and the questionnaire sent by the Designated Authority, appellants herein and others furnished details.
Authority also conducted on the spot investigation. Preliminary Findings arrived at by the Authority were notified in the Gazette dated 5-11-1999. After completing the further investigations, the Designated Authority got its Final Findings notified in the Gazette dated 14th June, 2000.
3. The period of investigation fixed by the Designated Authority in the instant case was from 1-4-1998 to 28-2-1999. M/s. Sterlite Industries Ltd., as stated earlier, moved the Designated Authority for initiating proceedings under the Anti-dumping law in relation to import of Optical Fibre from Korea Republic. Since the Designated Authority found that the petitioner had imported Optical Fibre, appellants raised a contention that it cannot represent domestic industry. In the absence of competent domestic industry as an applicant before the Designated Authority, it was argued that the Designated Authority could not have initiated an investigation in the instant case. This argument of the learned Counsel representing the appellants is based on the later portion of the definition of domestic industry where certain persons are excluded from that category. The definition makes it clear that domestic industry should mean the domestic producers as a whole. The domestic industry, who figures as the petitioners in an action before the Designated Authority, should constitute major portion of the total domestic production. Those producers who may fall within the category of domestic industry are to be excluded from it, if those producers are related to exporters or importers of the alleged dumped article or are themselves importers thereof. In other words, those domestic producers related to exporters of alleged dumped article or importers of alleged dumped article or are themselves exporters thereof are to be excluded from the category of domestic industry. According to learned Counsel representing the appellants before us, since M/s. Sterlite Industries Ltd. had imported Optical Fibre, they are to be excluded from the definition of domestic industry. M/s. Sterlite Industries Ltd. accounts for nearly 80% of the domestic production. Since they were importing the same goods, they must not form part of domestic industry and, therefore, the Designated Authority was clearly in error in initiating the action.
4. The above argument of Counsel representing the appellants is solely based on the exclusion contained in Rule (b) of the Rules, which defines domestic industry. After stating that domestic industry means domestic producers whose collective output of the article constitutes a major portion of the total domestic production, certain categories are excluded therefrom. The categories excluded are those domestic producers who are related to exporters of the alleged dumped article, those who are related to importers of the alleged dumped article or those who themselves are importers thereof. What is the scope of the words "importers thereof?" This group of domestic producers who are importers thereof are to be grouped along with domestic producers related to exporters of the alleged dumped article and domestic producers related to importers of the alleged dumped article. So taken, the domestic producers who are themselves importers should mean domestic producers who are themselves importers of alleged dumped article. In other words, domestic producers who are not importers of alleged dumped article from the subject country are not to be excluded from the definition of "domestic industry." 5. What is meant by "alleged dumped article?" Alleged dumped article in the instant case can only be Optical Fibre imported from Korea Republic. Korea Republic is the subject country. The article with which investigation was initiated is Optical Fibre. So, the Optical Fibre originating in or exported from Korea Republic alone can be treated "alleged dumped article." Optical Fibre imported to India from other country cannot be taken as "alleged dumped article." Optical Fibre imported to India from other countries are not articles dumped into India. Therefore, domestic producers, who and related to exporters or importers of Optical Fibre from Korea as also those domestic producers who import Optical Fibre from South Korea alone should be excluded from the category of domestic industry. If the argument of learned Counsel representing the appellants is to be accepted, we will have to rewrite the definition by reading the words "are themselves importers of like article." 6. Domestic producers, who are related to exporters or importers of like article from other countries are not taken out of the scope of the definition of domestic industry. A domestic producer may be related to exporter or importer of like article manufactured in another country.
Likewise, a domestic producer can be an importer of like article from a third country. Like articles manufactured in third countries are not dumped articles. M/s. Sterlite Industries Ltd. got Optical Fibre imported from Malaysia. Goods imported from Malaysia are not dumped articles. Therefore, M/s. Sterlite Industries Ltd. is not debarred from being a domestic industry. In this view of the matter, we overrule the contention raised by the Counsel representing the appellants before us.
The result, therefore, is that M/s. Sterlite Industries Ltd. represented the domestic industry and their output of Optical Fibre constituted major portion of the total domestic product. As a consequence, their application to the Designated Authority was proper and we do not find any illegality in the action of the Designated Authority in initiating the proceedings.
7. Anti-dumping proceedings were initiated against M/s. Samsung Electronics Ltd., M/s. Daewoo Corporation, M/s. L.G. Cable and Machinery Ltd. and M/s. Taihan Electric Wire Co. Ltd. Among those four, M/s. Taihan Electric Wire Company Ltd. alone had sales of their product, namely. Optical Fibre for consumption in Korea. Sales of their produce in Korea were found by the Designated Authority to be in the ordinary course of trade. The price realised on such sale was found to be the normal value. In the Final Findings, the Designated Authority observed : "Since the domestic industry sales of the exporter (Taihan Electric Wire Co. Ltd.) are known to be in the ordinary course of trade in terms of para 2 of Annexure I to the Rules, the same are considered for determination of normal value." According to the learned Counsel representing M/s. Taihan Electric Wire Co. Ltd. the Designated Authority committed a slight error in not taking VAT in fixing the normal value. On going through the records, there appears to be no error in what the Designated Authority did, because the price shown in the invoice was excluding VAT. This fact was not taken into consideration while notifying the Preliminary Findings.
Manufacturer, M/s. Taihan Electric Wire Co. Ltd. admitted before the Designated Authority that VAT was not added in the invoice.
Consequently, the Designated Authority rightly did not exclude VAT from the amounts shown in the invoice. This means that the fixation of normal value of Optical Fibre manufactured by M/s. Taihan Electric Wire Co. Ltd. was correctly done by the Designated Authority.
8. Another argument advanced by all the learned Counsel representing the appellants was that there can be only one normal value for Optical Fibre manufactured in Korea. That normal value having been fixed on the basis of the data furnished by M/s. Taihan Electric Wire Co. Ltd., Designated Authority, according to learned Counsel, went wrong in attempting to find out the normal value in relation to Optical Fibre manufactured by the other three manufacturers. This argument is advanced based on the wordings of Section 9A(1) of the Customs Tariff Act. Section 9A(1), inter alia, states that where any article is exported from any country to India at less than its normal value, then the Central Govt. may impose an Anti-dumping duty not exceeding the margin of dumping in relation to such article. Margin of dumping in relation to an article has been defined in sub-clause (a) of the above section to mean the difference between its export price and its normal value. On the basis of these provisions, it is contended that normal value in relation to an article from a country can only be one. That normal value must be in relation to the article manufactured within the country. When normal value of that article is found, that normal value should apply to the same article manufactured within that country.
9. Normal value of an article is to be determined in accordance with the Rules framed by the Central Govt. under Sub-section (6) of Section 9A. Rule 17(3) enjoins the Designated Authority to determine individual margin of dumping for each known exporter or producer concerned with the article. When that Rule casts such a burden on the Designated Authority, it means that there can be individual margin of dumping for each known exporter. As stated earlier, margin of dumping is the difference between the export price and the normal value. When there can only be one normal value of an article in relation to a particular country, the margin of dumping can be the difference between that normal value and the export price of different manufactures. Difference between these two is easily assessable. In other words, the Designated Authority should only find out the export price of exporters or importers. But the proviso to clause (3) of Rule 17 throws further light on this aspect. The Designated Authority is not to rest on its oars when it finds the normal value in relation to one producer. The Designated Authority has to find out the normal value in relation to other exporters or producers. Therefore, the argument advanced by the learned Counsel representing the appellants that the normal value found by the Designated Authority in relation to Optical Fibre manufactured by M/s. Taihan Electric Wire Co. Ltd. should have been taken as the normal value of Optical Fibre manufactured by the other four manufacturers cannot be accepted. Different Normal values in relation to the goods manufactured by different producers have to be found out.
10. Learned Counsel representing the appellant, M/s. Samsung Electronics Ltd., attacked the manner in which normal value for their goods: was fixed by the Designated Authority. In finding out the normal value, the Designated Authority adopted the comparable representative price on exports to China and Hong Kong. The cash credit given to the Chinese importers, according to Counsel, should have been deducted.
This having not been done, it is contended that the Designated Authority was not correct in fixing the normal value of the Optical Fibre manufactured by M/s. Samsung Electronics Ltd. We do not find any merit in this contention. The entire invoice evidencing sale to China as also to India were seen in the records of the Designated Authority.
The price of the goods shown in the invoice was on "terms of delivery and payment - CIF Shantou COD 90 day from shipment date." This means the credit was inbuilt in the price itself. Sales to India were also on identical terms. Therefore, there is no merit in the contention that the normal price should have been lower than the price shown in the invoice on account of the credit made available to purchaser.
11. On behalf of M/s. Samsung Electronics Co. Ltd. it was further contended that the Designated Authority should have accepted cost of production method for finding out the normal value. According to learned Counsel, in the absence of comparable price in the ordinary course of trade of the article meant for consumption in Korea, Designated Authority had two options, namely, comparable representative price when exported to appropriate third country or cost of production.
These two options being placed virtually on identical footing, according to Counsel, the Designated Authority should have examined cost of production for finding out the normal value. In other words, the contention is that fixation of the normal value without a proper examination of the cost of production was erroneous. In view of the decision of the Supreme Court in Designated Authority v. Haldor Topsoe A/S., 2000 (120) E.L.T. 11, we do not find much force in this argument.
The guidelines given in Section 9A(1)(c) have been placed to some extent in a preferential sequence. This preferential sequence has been followed by the Designated Authority. The cost of production is the last in the preferential sequence. When there was comparable representative price in relation to export to third country, the Designated Authority cannot be faulted in not resorting to the cost of production method for finding out the normal value. In the circumstances detailed above, we overrule the contention of the appellant, M/s. Samsung Electronics Co. Ltd. that the Designated Authority went wrong in refusing to consider the cost of production for fixing the normal value.
12. Learned Counsel representing the appellants voiced grievance against the Final Findings rendered by the Designated Authority which was not made known to the parties. This attack was based on the lack of details in the order. According to Counsel the final order furnished to parties did not contain any valuable data to enable them to make an effective appeal to this Tribunal. All figures concerning normal value, injury margin, dumping margin, fair sale price, non-injurious price, etc. were kept blank in the order. As a result of this non-disclosure of material data, it was contended that the appellants were incapacitated from putting forth a proper case before this Tribunal.
This contention was replied by the learned Counsel representing the Designated Authority by referring to Rule 7 of the Rules. According to the learned Counsel, Rule 7 prevents the Designated Authority from disclosing any such detail that may adversely affect the producers, exporters and importers as also the domestic industry. The stand taken by the Designated Authority was that before giving Final Findings, essential facts which were being considered by the Authority which form the basis or its decision were divulged to the parties as contemplated by Rule 16 and so each one was aware of the details of the decision.
Consequently, it was argued that each party was told by the Designated Authority about the final conclusions arrived at on the data furnished by each of them.
13. Rule 16 enjoins the Designated Authority to inform all interested parties of the essential facts under consideration which form the basis of its decision before giving its Final Finding. As a matter of practice, this disclosure is not made immediately before the final decision. After making the disclosure statement available to interested parties, they are allowed to represent to the Authority. On the basis of that representation, the Authority comes to its own conclusion. The said conclusion arrived at on the basis of the representation made by each producer, exporter or importer are admittedly not intimated to them. A producer, exporter, importer or domestic industry when represents on the informations disclosed, it is the bounden duty on the part of the Designated Authority to inform them the manner in which their data have been processed and finalised. If such an information was given to each of the parties in relation to the datas furnished by them immediately prior to the pronouncement of the final finding they would be having sufficient data to make effective appeal to this Tribunal. It is conceded before us that the Designated Authority was not informing each of the exporter, importer and the domestic industry or the Designated Authority's decision on the data supplied by them.
The parties are kept in the dark. This situation leads the situation of keeping the parties in the dark as to how the final conclusions have been arrived at on the data furnished by them. This practice certainly undermines the principle of fair play.
14. Rule 7 of the Rules, on which reliance was placed, prevents the Designated Authority from divulging the confidential information furnished by one to another. It does not prevent the Designated Authority from telling the person who supplied the information as to how that information was acted upon by that authority. The Designated Authority's decision on the facts supplied by one should be intimated to that party. We do not find anything in the rules which restrains the Designated Authority from informing his decision on the data furnished by a party to the proceedings.
15. Final Findings to be given by the Designated Authority should contain the various data mentioned in clause (1) of Rule 17. The data required for the Final Findings as contemplated by that Rule cannot be treated as confidential. The party adversely affected by the final decision rendered by the Designated Authority should be told the ground on which the conclusions are based. If those reasons and grounds are not intimated to the party that party will not get the opportunity to successfully challenge the same in appeal. The Statutory appeal provided will become cease to be an effective remedy. Designated Authority cannot defeat the right of the aggrieved party to appeal to this tribunal by keeping all conclusions reached by him as confidential. The decision of the Designated Authority adversely affects the civil rights of the parties before it. The party so aggrieved has a statutory right of appeal to this Tribunal. For making an effective appeal, the conclusions reached by the authority, on the basis of materials collected and acted upon in the proceedings will have to be made public. This is more so when it is seen that at no point of time the Authority had informed the parties about its conclusions arrived at on the datas provided by them even.
16. We are now to examine whether the Designated Authority considered the non-injurious price of the dumped article so as to save the domestic industry in a proper manner. It is also worthwhile to examine whether the Designated Authority properly appreciated the injury caused to domestic industry on account of the alleged dumped imports from Korea Republic. In the Preliminary Finding, while dealing with production capacity and capacity utilisation of the domestic industry, namely, M/s. Sterlite Industries Ltd., it was observed : "The Authority notes that the installed capacity of the petitioner, which was 2,00,000 KM per annum during the periods 1996-97 and 1997-98, has been increased to 10,00,000 KM per annum during the year 1998-99. Further, it is seen that though the production has increased in absolute terms during the period of investigation compared to previous two years, the capacity utilisation has declined to 25.63% during the period of investigation as compared to 67.25% during the previous year, i.e., 1997-98." In the Final Finding also the Designated Authority proceeded on the basis that M/s. Sterlite Industries Ltd. had enhanced its annual capacity to 10 lakh KMs. This assumption made by the Designated Authority that M/s. Sterlite Industries Ltd. had its annual capacity enhanced to 10 lakh KMs during the period of investigation is factually incorrect. Note on increase in installed capacity submitted to the Designated Authority by "Industry Consultants and Commercial House" specifically stated that the installed capacity of 10 lakh KMs per annum was achieved after February, 1999. That shows that the capacity increase to 10 lakh KMs came into effect only on a day subsequent to the period of investigation. Till February, 1999, their annual capacity was only 7.50 lakh KMs. per annum. In fact the capacity augmentation was in slow stages. In the first Quarter of 1998-99 there was no additions in the second quarter, capacity was increased to 5.75 lakh KMs. in the third quarter marginally to 6.25 lakh KMs. and only in January 1999 capacity reached 7.5 lakh KMs. Thus, for most of the investigation period, actual capacity was far below 10,000 lakh KMs per year. The injury that was caused to the domestic industry should have been assessed accordingly. Instead, its injury was assessed as if their installed capacity was 10 lakh KMs per annum.
17. The files of the Designated Authority produced before us show that the domestic industry was asked to make available the Project Report relating to the enhanced production capacity. Surprisingly, for reasons best known to the domestic industry, no project report was made available to the Designated Authority. Instead, some prospectus and project note alone were submitted by the consultant of the domestic industry. On the basis of these documents, it appears that the Designated Authority came to the conclusion that the capacity of 10 lakh KMs was installed during the period of investigation itself. Page 5 of the notes file maintained by the Designated Authority states: "One of the peculiar situation in the case of Sterlite Industries was that company has expanded the capacity from 2 lakh KMs to 10 lakh KMs during the POI. The capacity has been installed in a phased manner during the POI itself." This is a clearly erroneous conclusion arrived at by the Designated Authority.
18. Designated Authority did not correctly decide the non-injurious price to be fixed for protecting domestic industry. In finding out the non-injurious price and the fair selling price the Designated Authority should have had considered the actual production capacity and the injury that is caused to domestic industry on account of alleged dumping. As stated earlier, Designated Authority fell in error in presuming that the capacity of the domestic industry was 10 lakh KMs per year. When that authority wrongly fixed actual capacity of the domestic industry at 10 lakhs KM per year all resultant conclusions must fail.
19. Regarding the non-availability of the project report, the note file states: "However, it is stated that only one internal appraisal was made by the company for which relevant papers have been provided by the company." It is the case of Sterlite Industries Ltd. that they had not prepared a separate project report for the expansion, because they had not availed of any loan from any bank and that they had utilised the surplus amount collected while floating the shares. This contention of M/s. Sterlite Industries Ltd. is also incorrect, because the project note kept in the file of the Designated Authority shows: "The cost of the project is proposed to be financed by availing rupee term loan of Rs. four thousand lakhs from American Express Bank and the balance of Rs. thirty-five thousand lakhs from internal approvals." From these circumstances it is clear that M/s. Sterlite Industries Ltd. did not place all the records before the Designated Authority to substantiate their case of injury on account of the dumping of Optical Fibre from Korea. Designated Authority appears to have not taken proper care in assessing the alleged injury.
20. Files of the Designated Authority show that M/s. Sterlite Industries Ltd. were consistently being asked to make available copy of the project report for the expansion project expanding capacity from 2 lakh KMs. to 10 lakh KMs. M/s. Sterlite Industries Ltd. did not make available that project report. In the absence of Project Report, there was no knowing as to when production was expected to reach and stabilise at the augmented capacity, at what capacity utilisation and at what price the project would break even and in which year of increased capacity. Best available data was kept away from the Designated Authority. As a result of this, Designated Authority made assessment of injury as though Sterlite Industries Ltd. got their capacity expanded to 10 lakh KMs. within the period of investigation.
This was clearly erroneous. And the findings have no reliable basis.
So, we do not find our way to uphold the Final Findings reached by the Designated Authority. In such a situation, the notification imposing Anti-dumping duty has necessarily to fail.
20. In view of what has been stated above, we allow these appeals on the ground that the Designated Authority did not properly assess the injury caused to domestic industry, namely, M/s. Sterlite Industries Ltd., on account of the alleged dumping of Optical Fibre from Korea.
Govt. of India notification No. 94/2000-Customs, dated 28-6-2000 imposing Anti-dumping duty on Optical Fibre originating in or exported from Korea is set aside.