1. The appellant has challenged that portion of the final finding No.19/2001-DGAD dated 4.1.2002 wherein the Designated Authority has held that the price undertaking offered by the appellant is not acceptable and the impugned Notification No.15/2002-Cus imposing anti-dumping duty on the appellant, seeking modification of the final finding, by accepting the price undertaking offered by the appellant and to the effect that no anti-dumping duty should be imposed and a modification of the Notification on that basis.
2. The appellant, M/s. P.T. Polysindo Eka Prakasa was producing partially oriented yarn (POY) and exporting it from Indonesia to India.
The authority designated under the Customs Tariff (Interpretation), assessment. And Collection of anti-dumping Duty on Dumped Articles And For Determination Injury Rules, 1995 (hereinafter referred to as the Rules of 1995), on a written application received on behalf of the domestic industry alleging dumping of POY originating in or exported from Indonesia, Taiwan, Thailand and Malaysia initiated the anti-dumping investigation concerning imports of POY by issuing a public notice on 10.11.2000, in the gazette of India, Extraordinary, as required by the Rules. Thereafter, the Designated Authority issued a public notice dated 30.03.2001 in the Gazette of India, Extraordinary, publishing its preliminary findings, a copy of which was forwarded to the known interested parties who were requested to furnish their views.
It appears that on 9.11.2001, the appellant offered a price undertaking envisaged by Rule 15 of the Rules of 1995. It also appears that in October 2001, the officers investigating, had visited Indonesia to examine the correctness of the objections raised by the appellant against the preliminary finding. thereafter, on 10.12.2001, the Designated Authority made disclosure of the essential facts in accordance with Rule 16 inviting comments from the interested parties.
In that disclosure, the Designated Authority referred to the price undertaking offered by the appellant. It appears that a meeting was held on 31.12.2001 to discuss the issues connected with the price undertaking offered by the appellant, and the views expressed on behalf of the appellant, and also on behalf of the domestic industry were noted in the office submission prepared by the Director on 3/4.1.2002 putting up a draft of the final findings for approval of the Designated Authority. On 4.1.2002, a further noting was made in which, while placing the draft of the final findings for consideration and approval, the Director observed that "the price undertaking was also offered in this case which could not be accepted as mentioned in the office submission which was on page 66". Below this note, there is a signature of Designated Authority, which means it approved of the draft final findings as well as non-acceptance of the price undertaking which was offered by the appellant.
3. The learned Counsel appearing for the Designated Authority and the domestic industry have raised a preliminary objection to the effect that an appeal under Section 9C of the Customs Tariff Act, 1975 was not maintainable against an order of non-acceptance of a price undertaking because, only an order of determination regarding existence, degree and effect of dumping could be challenged under that provision. It was submitted that since the appellant was not challenging the determination, as regards the existence, degree and effect of dumping could be challenged under that provision. It was submitted that since the appellant was not challenging the determination, as regards the existence, degree and effect of dumping, it could not challenge the non-acceptance of its price undertaking. The learned counsel for the domestic industry further contended that all determinations were not appealable under Section 9C. According to him if a price undertaking was illegally accepted, domestic industry can file an appeal under Section 9C only if the main determination is challenged. He submitted that in the same way, if the price undertaking is illegally rejected, the exporter can file an appeal under Section 9C only if the main determination is challenged. He argued that the price undertaking has absolutely no effect on the dumping of an article by the exporter concerned.
3.1 The learned Counsel for the domestic industry relied upon the decision of the Supreme Court in National Insurance Co. Ltd., chandigarh versus Nicolletta Rohtagi and Others reported in (2002) 7 SCC 456, for the proposition, emanating from paragraph 27 of the judgment, that the right of appeal is not an inherent right or common law right, but it is a statutory right and if the law provides that an appeal can be filed on limited grounds, the grounds of challenge cannot be enlarged on the premise that the insured or the persons against whom a claim has been made have not filed any appeal.
3.2 He also placed reliance on the decision of this Tribunal in Altek Llammertz Needles Ltd. versus Designated Authority, D.G. of Anti dumping reported in 2000 (115) ELT 266 (T) rendered in the context of the provisions of Section 9C of the Act, in which the Tribunal held in para 9 of the order that, as per clause (1) of Section 9C of the Act, an appeal against the order of determination regarding the existence, degree and effect of any subsidy or dumping in relation to import of an article shall lie to this Tribunal. It was held that only two categories of orders are appealable before the Tribunal and that if the Designated Authority rejected an application on the ground of non-maintainability, there is no finding either in the affirmative or in the negative of the circumstances contemplated under Section 9C and, therefore, such an order cannot fall within the purview of Section 9C as an appealable one. In paragraph 10 of the order, it was held that any affirmative finding or a negative finding can be arrived at only in proceedings, which are initiated properly by a competent body under the Rules and that if the application itself is rejected on the ground of non-maintainability, there is no initiation of investigation by the Designated Authority. It was held that, in the absence of such an initiation of investigation, there was no ground to take the view that an order dismissing the application as non-maintainable will fall within the scope of Section 9C of the Act. Even the learned Counsel appearing for the appellant relied on this very judgment by pointing out the ratio thereof would apply only to a case where there was no initiation of the investigation.
4. As regards the preliminary objection, the learned Counsel appearing for the appellant replied that Section 9C of the said Act only enumerates the two types of orders against which an appeal lies and does not deal with an to what subject matter can be raised in an appeal. According to him, the Notification imposing anti-dumping duty on the appellant and the final findings which led to the notices, can be challenged by the appellant on the ground of non-acceptance of the undertaking which led to imposing of the anti-dumping duty on the appellant. He also submitted that a price undertaking would fall within the scope of "existence, degree and effect of dumping" and, therefore, an order of the determination made by the designated authority by ignoring or rejecting the price undertaking could be challenged under the said provisions.
5. The learned Counsel for the appellant took us through the relevant record and contended that there was ample time for the Designated Authority to have decided upon the price undertaking which was offered by the appellant on 9.11.2001. He submitted that the price undertaking was not rejected on the ground of delay and the Designated Authority had, in fact, called for the comments of the persons interested on 20.11.2001. Comments thereon having been received, the views and counter views were referred to in the disclosure of essential facts under the communication dated 10.12.2001. He submitted that, the Designated Authority never informed the appellant about the non-acceptance of the undertaking and its non-acceptance suddenly appeared in the final findings published under Rule 17, with a cryptic observation that the price undertaking was not accepted. He contended that the stage of offering price undertaking was an important stage which cast a duty on the Designated Authority to apply its mind to the nature of the under5taking and find out whether the revised price offered for export thereunder eliminated the effect of dumping. He stated that the officers of the Designated authority had visited Indonesia on 8/9.10.2001 and they had inspected the records of the appellant. He argued that the rate at which anti-dumping duty has been imposed on the appellant exactly tallied with the revised prices offered by the appellant in its undertaking and, therefore, there was no reason for the Designated Authority to impose anti-dumping duty instead of accepting the price undertaking offered by them. He submitted that as per the scheme of the Rules, particularly Rule 15, when a valid and satisfactory price undertaking is offered, it should ordinarily be accepted. Since the office note prepared by the Director and placed before the Designated Authority with the remarks made below it and the approval recorded thereunder, were not supplied to the appellant, but a copy thereof were placed on record, one copy thereof was also handed over to the learned Counsel for the appellant to enable him to read out the reasons for which the price undertaking was not accepted. After going through them, the learned Counsel for the appellant further contended that it was not spelt out in the said note and its approval as to why it was not "practicable" to accept the undertaking nor was any defect mentioned. He submitted that mere existence of divergent views, as has been stated in the office note, was not a valid ground for non-acceptance of an undertaking because, in most of such cases, there are bound to be divergent views. He also submitted that the Designated Authority was already aware of the fact that investigation was time bound, even at the time when the undertaking was submitted to it on 9.11.2001 and, therefore, it could not have kept it pending till the last moment and then not accepted it on the ground that the investigation was time bound. He finally submitted that the ground that the authority may consider the price undertaking at the time of next review was not at all warranted, because, the authority was bound to consider the price undertaking offered as per Rule 15.
5.1 The learned Counsel for the appellant placed reliance on the decision of the Supreme Court in Commissioner of Income Tax, A.P.versus Ashoka engineering Co., Grafik India and Sysed Jaffer and Sons, Secunderabad, AP reported in 1993 Supp (1) SCC 754, in which the Supreme Court held in paragraph 6 of the judgment that, though there was no inherent right of appeal to any assessee and it had to be spelt from the words of the statute, if any, providing for an appeal, it was an equally well-settled proposition of law, that if there is a provision conferring a right of appeal, it should be read in a reasonable, practical and liberal manner.
Arguments on behalf of the Designated Authority and the Domestic Industry: 6. The learned Counsel for the Designated Authority and the domestic industry submitted that the reasons given by the Designated Authority for non-acceptance of the undertaking are valid and the appellants did not have any legal right to get its undertaking accepted. It was also submitted for the domestic industry that the undertaking was not valid and satisfactory. It was submitted on the basis of Rule 15 that, it was left to the discretion of the Designated Authority to proceed with the investigation and give final findings notwithstanding the offer of a price undertaking by any exporter. It was, therefore, submitted that it was not incumbent on the part of the Designated Authority to have communicated any decision on the price undertaking before making of the final findings. It was submitted that the notification of final findings amply communicated the rejection of the price undertaking on the ground that it was not acceptable.
7. The said Rules of 1995, framed under Section 9A (6) of the said Act prescribe the procedure for ascertaining and determining the margin of dumping, manner in which articles liable for anti-dumping duty may be identified, the manner in which the export price and normal value of, and the margin of dumping in relation to such articles may be determined and for the assessment and collection of such anti-dumping duty. The Rules provide an elaborate procedure for investigation, and between the initiation of investigation under Rule 5 and the issuing of the Notification under Rule 18 on the basis of the final findings, there are various stages during the course of investigation. After the preliminary findings are reached under Rule 12 and provisional duty is imposed under Rule 13 the next important stage is that of considering the offer of price undertaking which is dealt with by Rule 15 that provides for the manner of consideration of an offer of price undertaking made by the exporter and orders that may be made thereon by the Designated Authority. Since the controversy has centered around the interpretation of Rule 15 it is reproduced below: "15. Suspension or termination of investigation on price undertaking:- (1) The Designated authority may suspend or terminate an investigation if the exporter of the article in question, (i) furnishes an undertaking in writing to the Designated Authority to revise the prices so that no exports of the said article are made to India at dumped prices, or (ii) in the case of imports from specified countries undertake to revise the prices so that injurious effect of dumping is eliminated and the Designated Authority is satisfied that the injurious effect of the dumping is eliminated.
Provided further that the Designated Authority shall complete the investigation and record its finding, if the exporter so desires, or it so decides.
(2) No undertaking as regards price increase under clause (ii) of the sub-rule (1) shall be accepted from any exporter unless the Designated Authority had made preliminary determination of dumping and the injury.
(3) The Designated Authority may, also not accept undertakings offered by any exporter, if it considers that acceptance of such undertaking is impractical or is unacceptable for any other reason.
(4) The Designated Authority shall intimate the acceptance of an undertaking and suspension or termination of investigation to the Central Government and also issue a public notice in this regard.
The public notice shall, contain inter alia, the non-confidential part of the undertaking.
(5) In cases where an undertaking has been accepted by the Designated Authority the Central Government may not impose a duty under sub-section (2) of section 9A of the Act for such period the undertaking acceptable to the Designated Authority remains valid.
(6) Where the Designated Authority has accepted any undertaking under sub-rule (1), it may require the exporter from whom such undertaking has been accepted to provide from time to time information relevant to the fulfilment of the undertaking and to permit verification of relevant data: (Provided that in case of any violation of an undertaking, the Designated Authority shall, as soon as may be possible, inform the Central Government of the violation of the undertaking and recommend imposition of provisional of the violation of the undertaking and recommend imposition of provisional duty from the date of such violation in accordance with the provisions of these rules) (7) The Designated Authority shall, suo motu or on the basis of any request received from exporters or importers of the article in question or any other interested party, review from time to time the need for the continuance of any undertaking given earlier." 8. The learned Counsel for the respondents have raised a preliminary objection to the effect that no appeal lies under Section 9C of the said Act against non-acceptance of the undertaking offered under Rule 15. They have submitted that an order of non-acceptance of an undertaking was not an order of determination regarding the "existence, degree wand effect" of dumping in relation to the subject article, against which alone an appeal can lie. According to them, the appeal was, therefore, not maintainable. The learned Counsel for the appellant on the other hand has argued that the appellant has, in the amended prayer of the appeal memo challenged the portion of the impugned Notification that imposes antidumping duty on the appellant and has sought for a modification in the final findings and the impugned notification by accepting thereunder the price undertaking offered by the appellant and holding that no anti-dumping duty was, therefore, leviable on the exports of POY to India by the appellant.
8.1 Anti-dumping duty can be imposed on dumped articles not exceeding the margin of dumping in relation to such articles under Section 9A of the Act. It is impossible to determine whether a good is being dumped just by knowing its export price. A product may be cheap but not "dumped", or may be expensive and yet "dumped", A comparison must, therefore, be made between the 'export price' of the product and the 'normal value' of the like product in the exporting country. If the 'export price' is less than the 'normal value', then the product is considered to be dumped. The difference between the two is the dumping margin. Therefore, any order of determination regarding the "existence, degree and effect" of dumping in relation to any article must necessarily be based upon the finding of the authorities on the determination of the 'margin of dumping' of the article exported to India which entails ascertaining its 'export price' and 'normal value', as the terms are defined in Section 9A of the Act.
8.2 The process of ascertainment and determination of margin of dumping has to be done by the Central Government as per the Rules made under sub-section (6) of Section 9A. The Designated Authority is required to act as per the rules prescribed for investigation and if any illegality is committed by the Designated Authority by not following the Rules for determination of the margin of dumping, the order of the determination of 'margin of dumping' will be liable to be challenged under Section 9C in appeal would necessarily be an order made in the context of the "existence, degree and effect" of dumping. An investigation into the "existence" of dumping calls for ascertaining the 'export price' and 'normal value' of the article and finding out the difference, if any, to determine the 'margin of dumping'. The "degree" of dumping is reflected by the margin of dumping judged by the quantum element of dumping that is, whether it is voluminous so as to cause material injury to the domestic industry or de minimis. The "effect" of dumping has reference to the impact of dumping on the domestic industry in the context of injury caused by the volume of dumping of the article under enquiry.
9. Section 9C only determines the jurisdiction of the Appellate Tribunal to examine the validity of the order of determination regarding the 'existence, degree or effect' of dumping of the article and does not specify the possible grounds on which it can be challenged. The challenge against such order of determination is to be judged on the anvil of statutory provisions governing the exercise of the power. If the power of determination is exercised de hors the provisions of the Act or the Rules made thereunder, then the order would be amenable to the appellate review. When the rules prescribed the manner of exercise of the power to make determination of the 'margin of dumping' and for making the final determination, breach thereof will expose the order to a challenge by way of an appeal under Section 9C.10. The Designated Authority is under a duty to act in accordance with the rules to investigate into the 'existence, degree and effect' of any alleged dumping in relation to import of any article, as provided under Rule 4(1)(a). Rules 5 and 6 prescribe the manner of initiation of investigation and the principles governing investigation. Rule 11 requires the Designated Authority to determine the injury and threat of injury to the domestic industry, material retardation to establishment of domestic industry and a causal link between dumped imports and the injury, taking into account the relevant facts, including the volume of dumped imports, their effect on price in the domestic market for like articles and the consequent effect of such imports on domestic producers of such articles in accordance with the principles set out in annexure II to these Rules. The Designated Authority is required to proceed expeditiously with the conduct of the investigation.
11. Even the preliminary findings regarding the export price, normal value and margin of dumping are required to contain sufficiently detailed information for the preliminary determinations on dumping and injury and it shall refer to matters of fact and law which have led to arguments being accepted or rejected. It will, inter-alia, contain the margins of dumping established and a full explanation of the reasons for the methodology used in the establishment and comparison of the export price and the normal value, considerations relevant to the injury determination and the main reasons leading to the determination, as required by Rule 12. Investigation can be terminated by issue of a public notice on the grounds enumerated in Rule 14. Investigation may be suspended or terminated under Rule 15 on a price undertaking, furnished by the exporter of the article in question, to revise the prices so that no exports of the said article are made to India at dumped prices. This termination of investigation is permissible because, by a satisfactory and valid price undertaking assuring revised prices in the context of the preliminary determinations on dumping and injury made against such exporter, the exports by such exporter at the revised prices will put an end to dumping so far as such exporter is concerned and, there will not be any "degree" of "effect" of dumping, as dumping by such exporter will cease to "exist".
12. The undertaking as regards the price increase can be accepted by the Designated Authority only after the preliminary determination of dumping and injury as laid down in Rule 15(2). Acceptance or rejection of an undertaking is, therefore, a matter which will have a direct bearing on the existence, degree and effect of dumping by exporter giving such undertaking because, if accepted the revised prices will eliminate dumping and its degree and effect, leaving no scope for the imposition of any anti-dumping duty on such exporter in the order of determination. We are, therefore, of the view that the order of determination can be challenged by the appellant on the ground that the price undertaking was rejected arbitrarily and contrary to the Rules.
The preliminary objection against the maintainability of this appeal, therefore, fails.
13. An undertaking under Rule 15 is an offer made voluntarily by an exporter to the Designated authority to increase the selling price of goods so that the margin of dumping or injury to the Indian domestic industry is eliminated. An undertaking takes the form of written commitment to adhere to specific conditions in exporting the goods subjected to an investigation.
13.1 The national authorities are not primarily obligated to accept such price undertakings though the Designated Authority is required to objectively consider a satisfactory and voluntarily given undertaking, as per Rule 15 of the Rules of 1995. If it considers that acceptance of such undertaking is impractical or is unacceptable for any other reason, which may include reasons of general policy, it may not accept the undertaking, as contemplated by Rule 15(3) which corresponds to Article 8.3 of the GATT AD Agreement. If an undertaking is accepted then, the benefit of higher price is captured by the exporting enterprise as opposed to the benefit from the duty being captured by the government of the importing country. The petitioning industry in the country of importation would benefit in either of thee two events.
The point in favour of acceptance of a valid and satisfactory undertaking however, is that, it eliminates dumping and its injurious effect so far as the articles exported by the exporter giving the price undertaking are concerned and that the imposition of anti-dumping duty on such exporter is primarily meant for the protection of domestic industry and not just for raising the revenue.
13.2 Before accepting an undertaking aimed at the elimination of injury, the Designated Authority would normally consult with the complainant to seek its views on the levels of pricing necessary to eliminate the injury caused by dumping. Such consultations are necessarily general in nature because of the need to protect confidential information submitted by the exporter. Such discussions may not be needed before accepting an undertaking that proposes to fully eliminate the estimated margin of dumping. A price undertaking, by its very nature, can be accepted by the Designated Authority only after the preliminary determination of dumping has been made. The Designated Authority cannot, however, entertain an undertaking after issuance of a final determination of dumping in the final findings under rule 17, though it may be open for the Central Government to consider the same in its wider powers under Section 9B (1) (c) (ii) of the said act.
13.3 to allow sufficient time for a complete analysis, price undertakings should be offered as early as possible after the preliminary determination of dumping. In some countries, guidelines prescribe, 45 or 63 days' period after the preliminary determination for offering such price undertakings.
14. While considering the acceptance of price undertaking offered by an exporter the following aspects would be relevant for deciding whether it should be accepted or not: b) whether there exist effective measures to monitor its fulfillment; d) whether there exists any possibility of circumvention of the undertaking in any way; and e) any other relevant factor that the Designated Authority may consider necessary to examine.
14.1 The price undertaking that is pending shall automatically lapse if the investigation results in a negative determination of dumping.
However, when it results in an affirmative determination of dumping and injury, the price undertaking shall remain effective subject to its being accepted when the final determination is made. The price undertaking would ordinarily be subject to the same time limit as anti-dumping duty.
14.2 Where the acceptance of a price undertaking is considered impractical, or unacceptable, the Designated Authority should notify the exporter offering such undertaking, of the reasons for such non-acceptance and give it an opportunity to make its comments thereon.
The reasons of non-acceptance of a price-undertaking ought to be explicitly written in the final determination to enable a meaningful consideration of such quasi-judicial act of the administrative officer by a higher judicial forum.
14.3 The level of price increase under a satisfactory price undertaking would be equivalent to a dumping margin established in the preliminary determination. Where, however, the level of price increase in a price undertaking is less than the dumping margin established but sufficient to remove the injury to the domestic industry, such price increase may be less than the dumping margin. This aspect is required to be examined by the Designated Authority while accepting or rejecting the undertaking when there is no other reason under Rule 15(3) for not considering the undertaking on merits. The office note on the basis of which the price undertaking of the appellant was held to be not acceptable, mentioned that it may not be "practicable" to accept the undertaking. The Designated Authority may not accept the undertaking, when acceptance is impractical to do so. The word impractical as per its Dictionary meaning (Oxford) means, "not adapted for use or action; not sensible or realistic"; and chiefly in the U.S. it means, "impossible to do; - impracticable". The Designated Authority cannot act arbitrarily while exercising the power of rejection of a price undertaking and since a price undertaking has the effect of redressing the grievance of the domestic industry, it should ordinarily be accepted when valid and satisfactory, in the absence of a reasonable ground for rejecting the same. In short, the consideration of price undertaking would be a serious exercise to be undertaken by the Designated Authority and a validly given undertaking cannot be brushed aside casually.
15. In the present case, the price undertaking was filed by the appellant on 9.11.2001. In the said price undertaking, it was stated that it was offered by the appellant to the Designated Authority in respect of POY which was the subject matter of a dumping investigation initiated on 10.11.2001 and the preliminary findings notified by the authority on 30.3.2001. In clause 3 of the price undertaking, it was stated that the company agreed not to sell the subject goods for export to India at prices lower than the prices stipulated in the grid in appendix A. In clause 4, the company agreed not to circumvent this undertaking in any way including the shipment of the subject goods to India through a subsidiary, branch agent or other company, or by the direct shipment of the subject goods to India from a country other than Indonesia. The company also agreed to provide on the undertaking invoice and/or the commercial invoice submitted to meet the Authority's invoicing requirements, the information described in Appendix B, as stated in clause 5. It also agreed to provide information as may be required by the Authority to demonstrate adherence to this undertaking, as stated in clause 7.
15.1 The Designated Authority, on receiving the said price undertaking offered by the appellant, invited comments thereon and, the domestic industry on 20.11.2001 (Annexure 8) objected against it on the ground that the offer was without any indication of price and that the exporter did not link the price to the raw-material price movements. On these comments the Designated Authority invited the comments of the appellants on 23.11.2001 which were offered on the same day (Annexure 9), by stating that the non-confidential version of the price undertaking cannot indicate the price, and that the essential fact that the appellant had undertaken to export POY at a price which is "undumped", and had undertaken to export POY at or above the normal value determined for the period of investigation, which information was adequate for the domestic industry. The appellant also stated in its comment that, in case the authorities decide to impose a fixed anti-dumping duty, the fixed quantum is not dependent on the subsequent movements of raw-material prices.
15.2 It was stated by the learned Counsel for the appellant and the Designated Authority that the officers of the Designated Authority had on 8th and 9th October 2001, visited Indonesia after preliminary determinations during the investigation and they examined the relevant record of the appellants. After seeing the original record, the learned Counsel for the Designated Authority stated before us that the revised export price in the price undertaking of the appellant exactly tallied with the rate of anti-dumping duty imposed on the appellant under the impugned final findings and the Notification. Even the learned Counsel for the appellants stated that the revised price of export tallied with the rate of anti-dumping duty ultimately imposed on the appellant. In other words, if the price undertaking of the appellant was accepted as valid it would have fully neutralised the margin of dumping in respect of the exports made, as per the assurances made therein, and there would have been no dumping.
15.3 Thereafter, on 10.12.2001, the Designated Authority, in accordance with Rule 16 of the Anti-dumping Rules, made disclosure of essential facts in the matter relating to anti-dumping investigation. Interested parties were asked to comment on the same latest by 20.12.2001. In the said disclosure statement it was stated in paragraph 2.4.1. as under: "2.4.1. M/s Polysindo has indicated their interest in having a price undertaking with the authority" 15.4 The Designated Authority is required under the Rules to take a decision on the question of acceptance of the undertaking. The admitted facts disclose that the price undertaking was not rejected on the ground of delay in offering it. The procedure for consideration of the price undertaking was started by the Designated Authority and there was no objection raised against it even by the domestic industry on the ground of delay. We are, therefore, not called upon to decide the issue of delay in the filing of the undertaking, which, having regard to the nature of the investigation proceedings, ought to be offered within a reasonable time from the date of preliminary determination in the absence of any statutorily laid down time limit as has been done in some nations which have prescribed under their rules time limits of 45 or 60 days.
15.5 Admittedly the order rejecting the price undertaking of the appellant which was made on 4.1.2002 was not disclosed to any one till the note, prepared by the Director and placed before the Designated Authority with the draft of the final findings, was produced before the Court and also shown to the learned Counsel for the appellant, It appears from the said note with its endorsements, that a meeting was convened on 31.12.2001 to discuss the issue in connection with the price undertaking offered by the appellant. It was reiterated at the meeting that the exporter had undertaken to export POY price which is at "undumped" level, and at or above normal value determined for the period of investigation. The domestic industry also put across its argument that the price undertaking would be acceptable only if the raw-material price movement was indexed and the reference price was the landed value instead of CIF level. They also objected, inter-alia, on the ground that the "dumping margin" as assessed was low, and that the price undertaking did not take care of the injurious effect of dumping.
The writing below the note submitting the draft final findings, before the Designated Authority only stated, in the context of the price undertaking: "price undertaking was also offered in this case which could not be accepted as mentioned on page 66". The reasons for non-acceptance of the price undertaking in the office note prepared by the director at page 66 (as per the zerox copy placed on record by the learned Counsel for the Designated Authority) read as under: "It may be noted that there has been a very divergent views on the issue by both the interested parties. Further, the exporter have offered price undertaking at CIF price and not at landed price. It may not be practicable to accept the undertaking in the present form and circumstances. As the present investigation is time bound and we are in the extended period, the investigation has to be completed before 9.1.2002, Authority may consider the issue at the time of next review" 15.6 It will be seen that the said office note was prepared to put up the draft notification of the final findings, which as per the final findings on record, rejected the price undertaking in paragraph 12.1 thereof in the following terms: "The price undertaking proposal given by the exporter was considered by the Authority. However, the Authority holds that the price undertaking offered is not acceptable".
16. Thus the Designated Authority, on consideration of the price undertaking offered by the appellant, merely held that the price undertaking was not acceptable, without mentioning any reason for rejection in the final findings presumably by placing reliance on the office note of the Director. The said office note did not indicate why was it "not practicable" to accept the undertaking nor did it refer to any defect in its "form" nor to any "circumstance" that called for its non-acceptance. Merely because there were "very divergent views on the issue by both the interested parties" the price undertaking cannot be rejected without considering it on merits and making a determination as to the effect of such undertaking on dumping provisionally attributed to such exporter. The office note concluded the consideration of the undertaking by simply stating that the "Authority may consider the issue at the time of next review". It is clear to us, and even the learned Counsel for the Designated Authority has submitted, that no decision on the merits of the price undertaking was taken. The learned Counsel for the Designated Authority however, submitted that the Authority found it not "practicable" to accept the same, as investigation was to be completed before 9.1.2002 being the extended period for giving final findings.
17. Examining price undertakings is a major stage in the investigation process that culminates into final findings. If the Designated Authority is satisfied on consideration of the price undertaking that it effectively revises the export prices so that no exports of the subject article would be made at dumped prices, it may even terminate the investigation, because, the dumping margin attributed to such exporter will get neutralised by the revised export price committed in the price undertaking and the injurious effect that would have, but for the revised prices, resulted to the domestic industry will no more occur. The consideration of the price undertaking under Rule 15 is, therefore, a most crucial exercise to be undertaken by the Designated Authority for deciding whether to suspend or terminate the investigation or to reject it and impose the anti-dumping duty. Any arbitrary action of a non-acceptance of a price undertaking will amount to flouting the scheme of the Rules that contemplates a fair consideration of an offer of a price undertaking 17.1 It was argued on behalf of the Domestic Industry that the determination of 'existence, degree and extent of dumping' was in respect of the period under investigation only and, therefore, a challenge against the price undertaking was not relateable to the determination of 'existence, degree and extent of dumping' which cannot be altered unless it was challenged. This contention is misconceived, because a period of investigation is chosen not for imposing anti-dumping duty for that period but to detect the existence, degree and effect of dumping of the identified article which is imported and its injurious effect, so that the anti-dumping duty rate can be determined to neutralise the effect of dumping, in respect of future exports. Both, the imposition of anti-dumping duty and acceptance of the price undertaking, have the effect of granting relief to the domestic industry against the injurious effect of dumping, the existence of which was detected by investigating into it for the period chosen. Therefore, if a final finding/Notification can be challenged under Section 9C, a fortiori, illegal and arbitrary non-acceptance of a price undertaking can also be challenged thereunder as it has a direct bearing on the order of the determination regarding existence, degree and extent of dumping.
18. In the present case when the price undertaking was offered on 9.11.2001, it was not rejected on the ground of delay as noted above, and the Designated Authority proceeded to invite comments of the interested persons who also never objected to it on the ground of delay. The investigating agency that visited Indonesia for ascertaining the facts came back with the calculations which admittedly matched with the revised prices which were offered later by the exporter in the price undertaking Admittedly, the revised prices in the undertaking tallied with the extent of anti-dumping duty which came to be imposed on this importer. There was, therefore, every reason to consider the price undertaking of this exporter on merits along with the objections raised against it. There was nothing indicated to show how the acceptance of the undertaking was not practicable. The Designated Authority, therefore, ought to have given a decision on merits on the acceptance or otherwise of the price undertaking offered by the appellant before issuing the notification of final findings. The stand taken in the office note, which was made the basis for non-consideration of the price undertaking on merits, that, it may be considered at the next review, was wholly unwarranted under the rules which required the Designated Authority to consider the same and decide on its acceptability before issuing the final findings. In our view, therefore, the Designated Authority acted arbitrarily by non-acceptance of the price undertaking offered by the appellant and failed in its statutory duty to consider it on merits for deciding whether it would eliminate the injurious effect of dumping. The important aspect, that the imposition of anti-dumping duty is primarily to safeguard the interests of the domestic industry and not merely to raise revenue underlies the consideration of a price undertaking in which the exporter has undertaken to export at revised prices so that no exports of such product are made to India at "dumped prices". The arbitrary refusal on the part of the Designated Authority to consider the price undertaking of the appellant on merits is violative of the fundamental right to equality, of the appellant, guaranteed by the Article 14 of the Constitution, against the rules and, therefore, unconstitutional and void.
19. The price undertaking of the appellant, therefore, requires to be considered on merits as per Rule 15 and that part of the impugned Notification and the final findings, in which the price undertaking is held to be not acceptable is hereby set aside with a direction to the Designated Authority and the Central Government to reconsider the price undertaking offered by the appellant and take a fresh decision thereon, in accordance with law, as regards its acceptance, in the light of this judgment and modify the final findings and the impugned Notification relating to imposition of anti-dumping duty on the appellant to the extent that it may become necessary on the basis of such fresh decision, within two months from today. The appeal is accordingly, partly allowed.