1. This appeal has been preferred by the appellant domestic industry under Section 9C of the Customs Tariff Act, 1975 challenging the Customs Notification No. 69/2005-Cus.dated 19.7.2005 issued by respondent No. 1, Ministry of Finance withdrawing anti-dumping duties in terms of the recommendation of the respondent designated authority by its final findings dated 20.5.2005.
2. Earlier, anti-dumping duties were imposed by notification dated 25.6.2001 on the basis of the final findings of the designated authority notified on 1.6.2001 on the imports of subject goods i.e.
seamless grade alloys and non alloys, steel billets, bars and rounds originating in or exported from Russia and China. Following the request made by the importer M/s Maharashtra Ceramics Ltd. the designated authority initiated a mid term review investigation under Rule 23 of the Customs Tariff (Identification, Assessment and Collection of Anti-Dumping Duty) Rules, 1995, in order to determine whether the continued imposition of the duty was required to off set dumping, and whether injury was likely to continue or recur if the duty were removed or varied, or both.
3. The designated authority followed the required procedure with regard to the investigation as contemplated by Rule 23 of the said rules. The investigation was carried for the period starting from 1.1.2003 to 31.12.2003. However, injury examination was conducted for the years 2000, 2001 and 2002 and the period of investigation. No response to the initiation notification was received from any other exporter, importer or association, except M/s Kunal Corporation, Mumbai and M/s.
Federation of Indian Industries, Steel Re-Rolling Mills Association of India and the applicant for the review. The non-confidential version of evidence presented by various interested parties was made available in the form of a public file kept open for inspection by the interested parties. The authority held a public hearing on 7.12.2004 when the parties attending public hearing were requested to file their written submissions of views expressed orally. The disclosure statement as contemplated by Rule 16 was made known to the interested parties on 10.5.2005 and the comments received were duly considered in the findings, as noted by the designated authority. The designated authority rejected the objection against the initiation of mid term review on the ground that there was positive information with the authority for deciding to initiate the mid-term review on the basis of such information. It was held that the production of evidence to substantiate the claims and counter claims by various parties was a matter of investigation during the course of review proceedings.
4. While determining the dumping margin, the authority noted that the exporters did not respond to the exporter's questionnaire and did not supply any information for rebutting the presumption mentioned in paragraph 8(3) of Annexure I of the said rules pertaining to non-market economy. In the absence of relevant information from the exporters, the authority constructed the normal value as per paragraph 7 of Annexure I of the said rules for all producers/exporters from China PR and Russia.
The export price at ex-factory level was determined on the basis of the weighted average export price to India, taking into account total volume of imports from Russia with the necessary adjustments. As no export price was available in case of imports from China PR, no dumping margin could be determined in respect of imports from China PR. The normal value arrived at for the purpose of determining dumping margin was constructed as per paragraph 7 of Annexure I of the rules and while constructing the normal value, the cost of production in India, duly adjusted including the selling general and administrative overheads along with reasonable profit were taken into account.
5. On the aspect of injury determination, the designated authority, taking note of the fact that there were no imports from China PR during the period of investigation and also three years prior to that, examined the impact of the dumped imports from Russia only with regard to various parameters contemplated by Rule 11 of the said rules.
5.1 The designated authority held that it was evident from the provisions of Rule 23 of the said rules and Articles 11.1 to 11.3 of the Anti-Dumping Agreement that the anti-dumping duty imposed shall be withdrawn in case it is found that there is no justification for the continued imposition of fresh duty. It was observed that the designated authority is required to examine whether there is justification for continued imposition of anti-dumping duty, that is, whether there is no injury to the domestic industry any longer and withdrawal of anti-dumping duty, is likely to result in continuation or recurrence of injury to the domestic industry. The authority conducted the mid-term review in order to examine the degree and extent of dumping and injury and the need for continuation of the duty. For the purpose of injury analysis it examined the volume and price effect of dumped imports of the subject goods on the domestic industry and its effect on the prices and profitability to examine the existence of injury and causal link between the dumping and injury, if any All the exports from the subject countries were treated as dumped imports for the purpose of injury analysis and causal link examination. For determining the price undercutting margin, the designated authority compared the landed value of the subject goods which were non-alloy grade from subject countries with the net sales price for the domestic non alloy grade goods. For all other price effects on the domestic industry, the cost of the production and net sales realization of the domestic like product consisting of all the grades were taken into account. The authority, for the price undercutting margin, compared the dumped import prices (all of which were of non-alloy goods) with the selling prices of non-alloy like goods of the domestic industry for the period of investigation and noted that the data pertaining to the earlier period was not separately available, and hence evaluated the other price effects on the domestic like products as a whole.
5.2 On the question of import volumes and share of subject countries in the total demand the authority relied upon the import data published in the secondary sources like IBIS and IMPEX statistics for the relevant period and found that the domestic demand had increased during the period of investigation as compared to the base year by 17%. The share of imports from the subject countries in the total imports had declined by 5.2% during the period of investigation as compared to the base year. Of the subject two countries, the imports from China PR had been 'nil' during the period of investigation and also during three years prior to the period of investigation. From the statistics available the authority found that the CIF prices of the dumped imports had increased by more than 39% during the period of investigation as compared to the base year and the domestic prices had increased by more than 15% during the same period. The authority found that on comparison of the landed value of the subject goods with the net sale price for the domestic industry, the price undercutting though positive was not significant because it was less than 2%. The landed value of the subject goods was determined without taking into account the existing anti-dumping duty.
It was also found that there was no price suppression of the like products of the domestic industry on account of dumped imports from subject countries and that, there was also no price suppression of the like products of the domestic industry on account of such dumped imports. Considering the relevant parameters having bearing on the aspect of assessment of injury, the designated authority concluded that injury indicated did not reflect injury to the domestic industry and though injury parameters like decline in the market share of the domestic production and inadequate return on the capital showed a negative trend, a situation of continuance of injury caused by dumped imports could not be established. It noted that the return on the capital employed had increased by 14% and the cash profit relating to subject goods of the domestic industry had also improved and grown by 50% from the preceding year. The turnover of the domestic industry had increased along with its productivity.
5.3. On the question of likelihood of recurrence of injury the authority concluded that the fall in the market share of the domestic industry was absorbed by the increased market share of other Indian domestic producers and not by dumped imports from abroad. Taking into account the provisions of paragraph (vii) of Annexure-II to the said rules, which deals with threat of injury, the authority held that since the dumped imports had actually come down from the subject countries, the production capacity being in excess in the subject country was not substantiated, the export prices had increased significantly during me review period and no evidence was made available with regard to inventories, the claim of the domestic industry that there will be recurrence of injury was not sustained.
5.4 The designated authority, therefore, concluded that the subject goods had been exported below their normal value from Russia during the period of investigation. There were no imports from China PR. Hence, dumping margin established during the original investigation for China PR was considered for the review investigation. It was, however, held that a situation of continuation of injury caused by the domestic imports to the domestic industry could not be established. It was held that injury was not likely to recur if the anti-dumping duty imposed on the subject goods from the subject countries was removed. The authority, therefore, recommended withdrawal of anti-dumping duty imposed by notification dated 25.6.2001, and the Government accepting the recommendation issued the impugned notification dated 19.7.2005.
6. The learned Counsel appearing for the appellant domestic industry contended that the initiation of mid-term investigation was illegal and liable to be set aside because there was no sufficient positive information to warrant such initiation. It was submitted that the designated authority had committed an error by holding that Section 9A(5) was not applicable to a mid-term review. It was submitted that the designated authority had wrongly limited its investigation analysis under Rule 23 as it failed to consider relevant parameters required to be determined for the purpose of mid-term review investigation. It was further submitted that onus of establishing the need for withdrawal of duty was on the applicant at whose instance the review investigation was being undertaken. If changed circumstances were not evident from the record then no conclusion that there will be no recurrence of dumping and injury could be recorded. It was submitted that positive finding was required to be recorded by the designated authority that there would be no recurrence of injury and then only recommendation for withdrawal of duty could be made. Even the finding that there was no likelihood of injury was not in consonance with the provisions of Rule 23 of the said rules read with Section 9A(5) of the Act. It was submitted that the designated authority had wrongly shifted the onus of proof on the domestic industry. Since no positive evidence was adduced by the applicant for establishing that there was no justification for the continued imposition of duty, no case for withdrawal was made out.
It was also submitted that no finding was given on the causal link aspect. It was further submitted that some of the parameters showed improvement for the domestic industry only because of the protection of the anti-dumping duty. If the anti-dumping duty element was removed, and comparison made that would have demonstrated that there was hardly any improvement in such parameters. It was further argued that the NIP was worked out at Rs. 20161 per M.T. while the landed value was Rs. 18,883/- per M.T. Therefore, there was obviously a pressure on the appellant to sell below the NIP in view of the landed value of the subject goods being lower by Rs. 1,278/- per M.T. The learned Counsel argued that this single factor was sufficient to show existence of injury and the real threat of its recurrence if the duty was removed.
It was further argued that dumping margin from China was worked out, though there was no import, on the basis of the imports in the earlier period of investigation pursuant to which the duty was first imposed.
There was no challenge to the determination on the issue of dumping margin which was held against the exporter. It was submitted that merely because there were no exports of China, likelihood of injury was not ruled out. The learned Counsel for the appellant argued that the likelihood of injury would be reflected from factors such as exports to third country, emergence of new markets, change in prices in domestic market, surplus capacity of the exporting country and its stock/inventories. These relevant aspects were not taken into account, and, therefore, the findings of the designated authority recommending withdrawal of duty were vitiated.
6.1 The learned Counsel in support of her contention in the context of scope of the review enquiry referred to the decision of Hon'ble the Supreme Court in Rishiroop Polymers Pvt. Ltd. v. Designated authority and Additional Secretary reported in 2006(196) ELT 385(SC), for the proposition that by its very nature the review enquiry should be limited to see as to whether the conditions which existed at the time of imposition of anti-dumping duty have altered to such an extent that there is no longer justification for continued imposition of the duty.
The Supreme Court held that the enquiry was limited to the change in the various parameters like the normal value, export price, dumping margin, fixation of non-injurious price and injury to domestic industry. The said enquiry had to be limited to the information received with respect to change in various parameters. It was held that the entire purpose of the review enquiry is not to see whether there is a need for imposition of antidumping duty but to see whether in the absence of such continuance dumping would increase and the domestic industry suffer (see paragraph 35 of the judgment). It was held that final findings recorded by the designated authority at the time of initial imposition of anti-dumping duty on the existence of injury to the domestic industry must be considered to continue to remain valid, unless it is proved to be otherwise, either by the designated authority in suo moto review or by the applicant seeking the review. The Supreme Court further observed that in the absence of new material the designated authority was not required to apply afresh parameters or criteria enumerated in paragraph (iv) of Annexure II, which had already been done at the initial stage of imposition of anti-dumping duty (see paragraph 37 of the judgment).
Arguments on behalf of the Respondents-importer and the Designated Authority: 7. The learned Counsel appearing for the respondent-importer argued that the designated authority on the basis of the information on record has rightly found that there was no justification for continued imposition of duty and that its revocation was not likely to lead to continuation or recurrence of dumping injury. It was submitted that the interested party had submitted positive information substantiating the need for a review and the designated authority was required to examine in such mid-term review whether the continued imposition of the duty is necessary to off set dumping, whether the injury was likely to continue or recur if the duty were removed or varied or both. If it appeared to the determining authority that the anti-dumping duty was no longer warranted it was required to be withdrawn immediately. He submitted that the guidelines ingrained in Article 11.2 of the anti-dumping agreement though not specifically mentioned in Rule 23 are to be implied and the mid-term review under Rule 23 was required to be done keeping in view the internationally agreed guidelines reflected in Article 11.2. According to him, Rule 23(1) does not throw any light on the question of burden of proof. He submitted that, in the investigation of this nature where interested parties are required to furnish information in response to questionnaire, the question of burden of proof may loose significance in the context of making of determinations on the basis of the available material. It was submitted that the continued imposition of duty did not in any manner suggest that the existing duty may neither be increased nor decreased. The duty imposition will continue even when the duty imposed is increased or decreased. If there is no justification for withdrawal of duty and determinations warrant upward revision, it would be open for the designated authority to recommend higher duty in a mid-term review. He submitted that the Supreme Court in Rishiroop case (supra) has indicated in paragraph 35 of the judgment that the review enquiry was to be in respect of the change in the various parameters like the normal value, export price, dumping margin, fixation of non-injury price and injury to domestic industry which was to be done on the basis of the information received with respect to change in the various parameters. He further argued that the imports had increased from Russia during the period of investigation because the domestic industry was not in a position to satisfy the domestic demand despite its full capacity utilization. It was contended that on recurrence aspect, the designated authority had applied the correct principles of paragraph (vii) of Annexure II to the rules and had also followed all the requirements of paragraphs (i) to (vi) of Annexure II. It was then submitted that it was too simplistic to say that all determinations will be unnecessary and the matter should be decided by inferring injury and threat of injury only on the basis of the landed value being less than the non-injurious price. He submitted that independent of the landed value being less than NIP there could still be a finding of no injury or no causal link. It was submitted that the difference between the NIP and the landed value has a bearing only on quantum of duty which was required to be imposed and cannot constitute a sole criteria for determining injury or threat of injury to the domestic industry.
8. The learned Counsel appearing for the designated authority supported the reasoning and findings reached by the designated authority and submitted that the initiation of mid-term review was done on the basis of positive information supplied by the applicant- importer. He submitted that though there were dumped imports, in the absence of injury or likelihood of injury to the domestic industry there was no justification for continuation of the duty imposed. He referred to the material on the record for contending that the findings reached for recommending withdrawal of duty were justified. It was submitted that the injury indicators did not reflect injury to the domestic industry during the period of investigation and there was improvement in the position of the domestic industry in terms of price increase and the domestic industry was back into profit from the position of significant losses with its turnover increased along with productivity. The cash profit had improved showing growth by 50% from the preceding year. It was submitted that the designated authority had rightly concluded that the claim of the domestic industry that there will be recurrence of injury was not substantiated.
9. The mid-term review was initiated on the basis of the positive information received by the authority from the importer M/s.
Maharasthra Seamless Steel and Alloys Ltd. According to the applicant, the landed value of the goods was far in excess of the NIP determined originally and therefore, there was no injury to the domestic industry and that the injury margin had turned negative as the landed value of imports was higher than NIP for the domestic industry. This was reiterated by the applicant in their written submissions pursuant to the public hearing held on 7.12.2004, more particularly in paragraph 1.8 of the said submissions dated 3.1.2005. In paragraph 14 of the request for review it had been stated that steel prices had shown a significant increase in the international market and that it was an opportune time to review the continued need for imposition of anti-dumping duty on the subject goods. There was reference made also to China in paragraph 2 of the review request. Though at the end of the review investigation, the authority may, on its determinations based on the information placed before it during the review proceedings, either withdraw the anti-dumping duty measures or allow them to continue, the requirement for initiation of mid-term review was of placing before the authority sufficient information that would enable it to take up the matter for review investigation. If the authority is satisfied, as contemplated in Rule 23 of the said rules, on the basis of information received by it that there is no justification for the continued imposition of such duty, it would recommend to the Central Government for its withdrawal. It appears from the record that there was sufficient positive information placed before the authority to justify initiation of the review proceedings, though the outcome of the proceedings would depend upon the information gathered during the proceedings and the determination that may be made by the designated authority under Rule 23 on the issue of withdrawal.
10. The provisions to Section 9A(5) of the Customs Tariff Act, 1975 and Rule 23 of the said rules which have a bearing on review for "earlier revocation" and also on the review for continued imposition of duty on expiry of five years are reproduced hereunder: Section 9A(5)-The anti-dumping duty imposed under this section shall, unless revoked earlier, cease to have effect on the expiry of five years from the date of such imposition: Provided that if the Central Government, in a review, is of the opinion that the cessation of such duty is likely to lead to continuation or recurrence of dumping and injury, it may, from time to time, extend the period of such imposition for a further period of five years and such further period shall commence from the date of order of such extension: Provided further that where a review initiated before the expiry of the aforesaid period of five years has not come to a conclusion before such expiry, the anti-dumping duty may continue to remain in force pending the outcome of such a review for a further period not exceeding one year.
Rule 23. Review.- (1) The designated authority shall, from time to time, review the need for the continued imposition of the anti-dumping duty and shall, if it is satisfied on the basis of information received by it that there is no justification for the continued imposition of such duty recommend to the Central Government for its withdrawal.
(2) Any review initiated under Sub-rule (1) shall be concluded within a period not exceeding twelve months from the date of initiation of such review.
(3) The provisions of Rules 6.7.8. 9/10, 11, 16, 17, 18, 19 and 20 shall be mutatis mutandis applicable in the case of review.
10.1 Under Rule 23, recommendation of withdrawal of duty can be made by the designated authority when on the basis of information received by it, the authority is satisfied that there is no justification for the continued imposition. Such satisfaction should be reached on the basis of objective material placed in the form of information gathered for the purpose of the mid-term review. The provision of Rule 23 is relatable to Section 9A(5) because the latter contains power of what is come to be traditionally known as "mid-term review" in the phrase "unless otherwise revoked earlier", and what is known as "sunset review" on cessation of such duty, as contra-distinguished from the "earlier revocation", in the two provisos of Section 9A(5), which provide for extending the period of imposition beyond five years, when cessation of duty on expiry of five years is likely to lead to continuation or recurrence of dumping and injury which were the basis of the impost. The fixed duration of five years can only be cut short by earlier revocation as may be warranted by the review determinations on margin of dumping and injury.
10.2. The anti-dumping duty imposed under Section 9A shall cease to have effect on the expiry of five years from the date of such imposition unless revoked earlier as laid down in Section 9A(5). The two provisos to Section 9A(5) by their very nature, will apply in relation to the review undertaken to decide upon extension of impost beyond its cessation on expiry of five years. If the anti- dumping duty is required to be revoked earlier than expiry of five years, there can obviously be no question of extending it beyond five years. The words "unless revoked earlier" in Section 9A(5) empower revocation of the existing anti-dumping duty earlier than five years and, therefore, it is called a mid-term review. In a mid-term review, enquiry will be whether the case is made out for revocation of antidumping duty imposed, the duration of which will normally be five yeas unless revoked earlier. Duty can be revoked earlier if the very basis on which it was imposed no more exists. Mid-term review would necessarily entail investigation into the issues whether the pre-condition for imposition, namely, margin of dumping no more exists [Section 9A(1)] and whether the import does not cause or threaten material injury anymore to any established industry in India or no longer materially retards the establishment of any industry in India, as envisaged in Section 9B(1)(b)(ii), Thus, an inquiry into earlier revocation is necessarily an examination of existence of dumping margin and injury caused or threat of material injury. If the dumped imports no more cause or threaten material injury, a case for revocation will be made out, but not otherwise.
10.3 The case of revocation will not be made out when dumping margin exists in the POI of review and imports cause injury or threat of material injury, and a mere marginal decrease in these basic factors, which can be attributed to the existing anti-dumping duty, will not justify earlier revocation. The extent of protection given to the domestic industry by the rate of duty imposed should be demonstrated to have become unnecessary, so as to warrant revocation of the entire anti-dumping duty imposed or a partial revocation pursuant to the recommendation of the Designated Authority in an investigation under Rule 23.
11. Power of mid-term review under Rule 23 flows from the provisions of the parent statute [Section 9A(5)] as denoted by the expression "unless revoked earlier". It is, therefore, an investigation in the direction of withdrawal by checking up whether the basis on which the duty was imposed no longer existed and there was no injury or its threat existing or their level is so very reduced as to justify partial withdrawal of the duty imposed. In this context we may refer to the following paragraphs of the decision of Hon'ble the Supreme Court decision in Rishiroop Polymers Pvt. Ltd. v. Designated authority and Additional Secretary (paragraphs 35 and 35. Otherwise also, we are of the opinion that scope of the review inquiry by the Designated authority is limited to the satisfaction as to whether there is justification for continued imposition of such duty on the information received by it. By its very nature, the review inquiry would be limited to see as to whether the conditions which existed at the time of imposition of anti-dumping duty have altered to such an extent that there is no longer justification for continued imposition of the duty. The inquiry is limited to the change in the various parameters like the normal value, export price, dumping margin, fixation of non-injury price and injury to domestic industry. The said inquiry has to be limited to the information received with respect to change in the various parameters. The entire purpose of the review inquiry is not to see whether there is a need for imposition of anti-dumping duty but to see whether in the absence of such continuance, dumping would increase and the domestic industry suffer.
37. The final findings recorded by the Designated authority at the time of initial imposition of anti-dumping duty on the existence of injury to the domestic industry must be considered to continue to remain valid, unless it is proved to be otherwise, either by the Designated authority in suo motu review or by the applicant seeking review. In the present case, the review had been initiated by the Designated authority. Neither the Designated authority nor the appellant had placed any material on record which could possibly displace the findings given by the Designated authority at the stage of initial antidumping duty. In the absence of any new material, the Designated authority is not required to apply afresh all parameters or criteria enumerated in para (iv) of Annexure-II. which had already been done at the initial stage of imposition of anti-dumping duty. There is no material on record to show that there was a change in the parameters or the criteria relating to the injury which would warrant withdrawal of anti-dumping duty. Nevertheless, the Designated authority has still analyzed the issue of injury in detail in the Mid Term Review findings and has considered all the criteria or parameters enumerated in Annexure-II. There is, therefore, no merit or substance in the appellant's contention regarding non-compliance with Annexure-II.11.1 Necessarily therefore, the party asserting earlier revocation of anti-dumping duty has to make out a case by showing that dumping margin does not exist or is significantly reduced and there is no injury nor any threat of material injury anymore and therefore, recommendation for withdrawal of anti-dumping duty, full or partial, and consequent earlier revocation was called for. If the amount of duty less than the margin of dumping would remove injury to the domestic industry, that is to be recommended under Rule 4(d) read with Section 9A(6). While reviewing for an earlier revocation, it is required to be borne in mind that marginally improved performance of the domestic industry should be attributed to the beneficial effect of duty imposed and ought not to be made a ground for revocation unless the dumping margin does not exist, and if it does, there no longer exists any injury or threat of material injury to the domestic industry even if its protective umbrella of anti- dumping duty were to be removed.
12. Anti-dumping duty imposed under Section 9A(1) read with 9A(5)(i) for duration of five years cannot cease earlier unless it is revoked and will cease by efflux of time after five years if not earlier revoked. Inquiry in both types of review would necessarily revolve around margin of dumping and injury: to decide, in a midterm review, whether these factors no longer exist, so as to justify earlier revocation, and, in a sunset review, whether cessation is likely to lead to continuation or recurrence of dumping and injury. There is therefore, sufficient guideline in Section 9A(5) itself, to the designated authority while exercising powers under Rule 23, (which was being searched for by the learned Counsel for the respondent in Article 11.2 of the Anti-dumping Agreement which also spoke of termination of duty), if as a result of the mid-term review under that paragraph, the authorities determined that the anti-dumping duty was no longer warranted. It will, however, be too pedantic to construe recommendation for withdrawal as one for total withdrawal only and not partial. Even partial withdrawal reflecting in reduction of the duty imposed is clearly contemplated in Rule 23(1) read with Section 9A(5).
13. Let us now see whether the above criteria for withdrawal/partial withdrawal of duty and consequential revocation are satisfied in the present case where there has been total withdrawal by earlier revocation of anti-dumping duty by the impugned final findings and the Notification.
14. In the case of review under Rule 23, the provisions prescribed for determination of injury under Rule 11 have to be followed and the designated authority shall determine injury to domestic industry, threat of injury to domestic industry, material retardation to establishment of domestic industry and causal link between dumped imports and injury, taking into account "all 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 the rules.
14.1 The effect of volume of dumped imports on the price of the like articles in the domestic market is a relevant fact and, therefore, where the quantity of dumped imports in relation to the volume of domestic production is so insignificant that it can hardly have any effect on the price of like articles in the domestic market in a situation of sufficient demand, there would result no injury to the domestic industry. The principle for determination of injury laid down in paragraph (ii) of Annexure II of the rules requires the designated authority to, inter alia, consider whether there has been a significant increase in the dumped imports relative to production and consumption in India. The authority is required to consider with regard to effect of the dumped imports on prices, whether there has been significant price undercutting by the dumped imports as compared with the price of the like product in India or whether the effect of such imports is otherwise to depress prices to a significant degree. The words "relative to production" in paragraph (ii) of Annexure II of the Rules clearly warrant taking into account the magnitude of domestic production vis-a-vis the quantity of the dumped imports during the period of investigation. If the quantity of dumped imports is insignificant in the context of the volume of domestic production then it can hardly pose any significant threat of injury on the basis of POI data. For example, if dumped imports are only a few hundred metric tones of the subject goods during the period of investigation with volume of domestic production of several lac metric tones of like article, the injurious effect, if at all, will be confined to the small extent of volume of dumped imports and it would not affect the domestic industry in Its sales beyond that quantity. Assuming that there is a demand for the entire quantity of the domestic production in the domestic market, the injury if any, by such a small quantity of dumped imports, cannot be construed to be impacting the price of a huge quantity of the domestic sales of like articles.
14.2 In the present case, the quantity of dumped imports during the period of investigation of 27312 MTs was, in the context of the domestic production of 165343 MTs, significant both in absolute terms as well as "relative to production or consumption" in India as contemplated by paragraph (ii) of Annexure II of the said Rules.
15. The designated authority on the basis of the material on record worked out the dumping margin of the subject goods from Russia at 36.56%. As there were no exports from China PR during the POI, no new dumping margin was determined during the review investigations and dumping margin from China as determined during the original investigations of 105% was, therefore, not required to be changed and kept under consideration for the purpose of review, as observed in paragraph 18 of the final findings. Thus, in the present case, the determinations in connection with the dumping margin weighed in favour of continuance of anti-dumping duty, since the existence of dumping margin to a very significant degree, did not warrant revocation of the anti-dumping duty. In fact, under Section 9A of the Act anti-dumping duty is required to be imposed to the extent that it may not exceed the margin of dumping in relation to the dumped articles. It is only when the imports are from a member country of the World Trade Organization or from a country with whom Government of India has a most favoured agreement that over and above the dumping margin, determination has also to be made in accordance with the rules that import of such article into India causes threat of material injury to any established industry in India or retards the establishment of any industry in India, and a further finding on the aspect of injury is required to be given in respect of such specified countries under Rule 11(1) of the said rules. Thus, the significance of continued dumped imports remains paramount while considering whether the duty should be revoked or not before the cessation of its normal duration of five years.
15.1 The effect of dumped imports on prices in their domestic market for like articles by the volume of dumped imports is of paramount consideration for the determination of injury under Rule 11(2) read with paragraph (ii) of Annexure II. It is also required to be considered whether the effect of such imports would otherwise depress prices of like articles in the domestic market to a significant degree or prevent price increase, which otherwise would have been due, to a significant degree. Paragraph (ii) deals with the effect of dumped imports on prices of like articles in the domestic market, while paragraph (iv) of Annexure II indicates relevant economic factors and indices that have a bearing on the state of the industry, while examining the impact of imports on the domestic industry concerned. The causal relationship between the dumped imports and the injury to the domestic industry is to be demonstrated in light of the effects of dumping on prices and on state of the industry under paragraphs (ii) and (iv) of Annexure II. It is obvious from the statutory scheme of imposition of anti-dumping duty and the guidelines indicated for determination of injury that any one, or more factors may sufficiently demonstrate injury to the domestic industry. Decisive injury demonstrated by adverse effect of dumped imports on price would not be brushed aside by counting some marginal improvements of economic factors and indices on the state of industry due to imposition of the anti-dumping duty.
15.2 Decline in sales, profits, output, market share, productivity, return on investments or utilization of capacity are some of the economic factors and indices which are required to be evaluated for determining the impact of dumped imports on the domestic industry. The impact of dumped imports has its basis in the landed value of such imports vis-a-vis the price at which like articles are sold in the domestic market. The landed price of dumped imports if lower than the domestic sale price of like articles would gravitate the sale price of like articles downwards. The undercutting by lower landed price of dumped imports will also have the potential of depressing the domestic sale price. What may not be significant price undercutting or significant degree of effect to depress prices or prevent their due increase when there was no duty imposed, may be considered significant when observed in a midterm review for revocation of duty, because of the distinct possibility of material injury being caused to the domestic industry on the removal of the anti-dumping duty which removal will have the tendency of decrease in prices further to the extent of the quantum of duty removed which will have a simultaneous cut in the profits. Therefore, the price undercutting determined by the designated authority could not have been brushed aside as insufficient on the ground that it was slightly less than 2%. The rule of de minis i.e.
below 2% is not applied under the rules to such price undercutting and its application would be erroneous in a mid-term review. In a mid-term review when such trend is evident, it should ring as an alarm bell against revocation of the anti-dumping duty because the threat of injury would be writ large and the removal of the protective umbrella of the existing anti-dumping duty will translate the threat of material injury into a stark reality.
15.3 The impact of dumped imports on the domestic industry can be judged from the state of profits. The concept of profit ingrains in it the idea of sufficient return to enable the entrepreneur to initiate and continue its venture. Absence of reasonable profit because of the lower landed price of the dumped goods would be a sure sign of injury.
If as a result of imposition of anti-dumping duty domestic industry is in the process of coming out of the losses, then a mere marginal profit in the period of investigation would not justify revocation of the duty imposed, because the moment the duty is revoked that portion of the amount will directly cut into such marginal profit due to a further pull downwards of the sale price to match the compelling lower landed price of the dumped goods in order to retain the consumers who will now be able to get the dumped goods still cheaper by the amount of duty removed.
15.4 The designated authority is required to recommend the amount of anti-dumping duty equal to the margin of dumping or less, which if levied, would remove the injury to the domestic industry. Therefore, if the landed value of the dumped imports is lower than the non-injurious price of like articles in the domestic market, the difference would indicate the margin of injury which is required to be removed by imposing anti-dumping duty. If the prices are not volatile, then a flat rate may be imposed, but if they are volatile and numerous types of goods are involved, reference price will have to be worked out and variable duty can be imposed for safeguarding the interest of the domestic industry whenever the landed value is less than the non-injurious price of like articles in the domestic market. The idea behind working out non-injurious price of imports is precisely to bring about a situation where the dumped imports would be sold by virtue of imposition of antidumping duty at a price not lower than their non-injurious price, to achieve the object of removal of injury to the domestic industry. For working out non-injurious price for the domestic industry, the cost of production and reasonable profit would be reflected in the price which could be called non-injurious for the dumped imports that may come at that price. When the landed value goes above the non-injurious price there obviously would be no injury and when the landed value is lower than the non-injurious price, then by assistance of the adequate rate of anti-dumping duty, injury could be warded off. In the present case, the designated authority seems to have overlooked in its final finding the fact that the landed value of the dumped imports was significantly lower than the non-injurious price of the like articles worked out during the review proceedings as reflected from the disclosure statement (Annexure IV). In paragraph (ii) of Annexure (IV) to the disclosure statement, the authority had determined a non-injurious price for the subject goods after a detailed analysis and scrutiny of information provided by the domestic industry and duly verified by the authority and held that: "Accordingly, weighted average non-injurious price for the domestic industry has been determined by the authority as Rs. 20,161/- for non-alloy grades...." In the final findings the landed value of dumped imports is worked out for the period of investigation at Rs. 18,883/- per metric tonne for non-alloy grades, which means that, if the dumped imports continued to come at that landed value, such dumped imports would be lower than the non-injurious price of Rs. 20,161/- for non-alloy grades. Thus, there would be a situation where the domestic industry will be compelled to pull downwards the price of domestic like goods below the non-injurious price if the dumped imports continued at such lower landed value; and this situation causing injury would continue and intensify if the anti-dumping duty was to be withdrawn, since the injury margin was lower than the dumping margin. In a mid-term review this was a very clear and sufficient indication of likelihood of material injury due to dumped imports, if the anti-dumping duty were to be earlier revoked. In face of this positive indicator showing that there was absolutely no valid reason to revoke the anti-dumping duty, the designated authority has just counted minor improvements in paragraph 54 which can never outweigh the significance of the continued dumped imports at non-injurious price during the period of investigation even while the anti-dumping duty existed. The significance of the landed value at non-injurious price has not been overlooked even by the applicant for review. As noted above, in paragraph 1.8 of the written submissions dated 3.1.2005, it was stated that, "the injury margin has turned negative as the landed value of imports is higher than the NIP for the domestic industry". The reference was made in the context of landed value being excess of the NIP "determined originally" as stated in the said paragraph. However, the landed value was required to be judged in the context of the NIP now determined as per which, it is obvious to us that the dumped imports would have caused injury and that there was a likelihood of material injury if the duty was to be revoked. In our opinion, therefore, even on the grounds mentioned in the final findings on the aspect of injury and likelihood of injury, there was no valid reason to revoke anti-dumping duty in view of the above factors which far out-weighed some minor improvements in the state of the domestic industry. The impugned final findings and the notification withdrawing the duty contrary to the provisions of the Act and the rules are therefore, illegal and deserve to be set aside. As a result, the anti-dumping duty, which was imposed initially, would be deemed to have continued till the end of the original period of five years.
16. The contention that we should extend the imposition of duty for a further period of five years cannot be countenanced. When the review is initiated for determining whether as a result thereof, anti dumping duty should be revoked before the expiry of the period of five years, obviously its continuance beyond five years can never be a matter under consideration in such a review, because, the impost itself was for a statutory duration of five years, and the question of continuance can arise only beyond that. Since we are concerned only with mid-term review in which duty could only be revoked earlier, and there would be no new imposition of duty, the provisions of continuing the duty beyond five years as contained in the two provisos to Section 9A(5) would not be attracted. In a midterm review the real question is whether duty should be revoked earlier than the period of five years of its statutory duration and not whether it should be continued beyond the period of five years, which would be the scope of enquiry in a "sunset review". We, therefore reject the contention that on our finding that there was no case made out for earlier revocation, we should be directing the continuance of duty beyond five years in a mid term review.
17. For the foregoing reasons, we set aside the impugned final findings dated 20.5.2005 and the impugned Notification No. 69/2005-Cus. dated 19.7.2005. The appeal is accordingly allowed.