| SooperKanoon Citation | sooperkanoon.com/43798 |
| Court | Customs Excise and Service Tax Appellate Tribunal CESTAT Delhi |
| Decided On | Oct-05-2006 |
| Judge | R Abichandani, M Ravindran, S T T.V. |
| Reported in | (2006)(112)ECC578 |
| Appellant | Jindal Stainless Limited |
| Respondent | Designated Authority/Ministry |
2. It was further pleaded that findings in relation to dumping, injury as well as causal link were in favour of the D.I. and yet duties were discontinued arbitrarily against EU and Canada on the ground that the injury margin from these territory/country was negative. It was also pleaded on behalf of the D.I. that injury margin was not a relevant factor under Section 9A(5) or under Rule 23. Further, it was argued that the entire calculation of injury margin was flawed in the absence of relevant information, which should have been supplied only by the exporter.
3. It was further commented that D.A. was handicapped in arriving at the correct export price due to non-cooperation by the applicant - exporter as he had to consider only a selective information as made available in DGCI&S data. It was also submitted that these data contained material particulars which are not comparable with the grade/type of goods which was constitute the subject investigation.
4. It was submitted further that non submission of information by the applicant - exporter should have automatically led to the termination of the proceedings in terms of the law as laid down by the Hon'ble Supreme Court in Rishiroop Polymers (supra) and this Tribunal in Kalyani Steel Ltd., (supra), wherein it has been made clear that, it is for the applicant to establish that the continuation of the duty was no longer warranted. In the absence of such evidence it was argued, the duty should last its normal "life" of five years.
5. By poring over the word "recurrence" appearing in Section 9A(5), it was argued at length on behalf of D.I. that Anti-Dumping duties can be continued even if the dumping and injury have ceased to exist and obviously in such circumstances it would not be appropriate to calculate injury margin when it was not at all necessary. A distinction was sought to be made between fresh imposition under Rule 18 and the criteria laid-down under Section 9A(5) and Rule 23 by referring to the judgment of the Hon'ble the Supreme Court in Rishiroop Polymers case.
6. It was submitted that Rule 23 provided only for full or partial withdrawal of duties imposed for a period of five years, if it was amply demonstrated that the continuation of such duties was no longer warranted. The conspicuous absence of Rule 4(d) which obligates the application of "lesser duty" in Rule 23(3) was also emphasized. On this basis, it was argued by D.I.'s representative that the incorrectly calculated negative injury margin cannot be sustained in law. To support this contention, the ratio of the order of this Tribunal in Saudi Basic Industries Corporation and Ors. v. Designated Authority (Final Order No. 20-24/06-AD dated 4.5.2006) that Rule 14(d) which provides for de-minimis dumping margin, was not applicable for reviews under Rule 23 as the said Rule was conspicuously absent in Rule 23(3).
According to the learned Counsel for the appellant D.I., the Hon'ble the Supreme Court in Rishiroop Polymers case has already held that the "entire purpose of review inquiry was not to see whether there was 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".
7. The learned Counsel for the interested parties (Acerinox- the exporter) submitted that there was no provision, express or implied, in Rule 23(1) which prevented the D.A. from recommending a duty higher or lower based on the "information" received in the review where there was no justification for withdrawal. According to him, the expression "continued imposition" would be at the rates determined in the review.
To support this contention, he would rely on this Tribunal's order in Indian Graphite Manufacturers Association v. Designated Authority reported in 2006 (199) ELT 722 (T), more particularly on paragraph 9, according to which "the purpose of review will be frustrated if D.A.cannot recommend higher or lower anti dumping duty than the original definitive anti dumping duty".
8. It was also submitted on behalf of the exporter that Rule 4 dealing with the duties of the Designated Authority will be applicable in all situations - whether it is initial investigation, midterm review or sunset review. It was also submitted that any other interpretation on this would undermine the role of the D.A. as if he had no duty in mid-term review or sunset review. According to the learned Counsel of the exporter, determination of injury as contemplated under Rule 11 would be made applicable mutatis mutandis in review proceedings. It was also emphasized that dumping, material injury and causal link between the dumping and material injury have to be evaluated in all types of investigation -initial, mid term and sunset review.Hindustan Lever Limited v. Designated Authority - to put forward the proposition that when the landed value of imports from a particular country was higher than the non-injurious price determined for D.I. than the casual link between the dumping and material injury was absent.Indian Graphite Manufacturers Association v. Designated Authority reported in 2006 (199) ELT 722 (T). Excerpts from paragraph 6 of the said judgment relied upon for the interpretation of 'recurrence' of injuries are reproduced below: 6. Under Section 9A(5) of the Customs Tariff Act, 1975, the anti-dumping duty imposed shall, unless revoked earlier, cease to have effect on the expiry of five years from the date of such imposition subject to condition 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. The review is done by the Designated Authority under Rule 23 of Anti Dumping Rules. According to Rule 23 of Anti Dumping Rules, the Designated Authority shall from time to time, review the need for continued imposition of anti-dumping duty and shall, if it is satisfied on the basis of information received by it that there is no justification for continued imposition of such duty recommend to Central Government for its withdrawal. In case of review, the provisions of Rules 6 to 11 and 16 to 20 of the Anti Dumping Rules are applicable. The sunset review has therefore to be undertaken under Section 9A(5) before expiry of five years and for recommending continuation or cessation of such duty. The Designated Authority has to frame opinion whether cessation of such duty is likely to lead to continuation or recurrence of dumping and injury. Thus, the test required for framing the opinion whether the cessation of anti-dumping duty is likely to lead to continuation or recurrence of dumping and injury, the relevant factors to come to such conclusion have to be taken into consideration. The relevant factors may be the change in the pattern of the production, demand and requirement of the dumped product in the importing country since the imposition of anti-dumping duty. The change in the prices in the exporting countries and International market has also to be considered. The prescribed parameter for injury to the domestic industry and also whether domestic industry is exploiting the situation by raising the prices above the International level by taking advantage of anti-dumping duty, is also required to be considered. After taking into consideration these relevant factors, the Designated Authority has to analyse and project the effect of repeal or expiry of antidumping measures by examining the various factors injuring the domestic industry within the reasonable foreseeable future and frame the opinion whether discontinuation of the anti-dumping duty will lead to continuation or recurrence of dumping and injury.
10. The learned Advocate for the respondent reiterates the ratio of the impugned notifications issued by the D.A. as well as the Ministry.
11. We have heard all and examined the records. The two issues in this appeal are: i) Whether the mid-term review has been rightly initiated by the Designated Authority under Rule 23; and ii) Whether the withdrawal of duty on imports from EU and Canada is justified on the ground that landed value was found higher than the non-injurious price.
12. At the outset we do not find any objection in respect of the existing mechanism for recommending the withdrawal of duty under Rule 23(1), especially when the landed value was found higher than NIP as this would ipso-facto mean that causal link between dumping and material injury is severed and hence absent. We find that even in the case of review, the duty was to be imposed in terms of Section 9A(1) read with Section 9A(5) and Rule 23. As Section 9A specifically provides that the duty should not exceed the margin of dumping, it implies that a determination was required as to whether a duty lower than the margin of dumping was adequate to address the injury suffered by the domestic industry. It was, therefore, mandatory for the Designated Authority to determine the injury margin both in the case of mid term review as well as in sun set review.
13. According to the learned Counsel for the exporter, the determination of NIP has never been challenged in this case and that the landed value was determined in respect of series 300 400 based on the data identified from DGCI&S data. In view of this, the findings on causal link can never be questioned. A perusal of D.A's record by us indicates that sufficient information was made available by the exporter, enough to ignite the process of review. It is our considered opinion that it is for the Designated Authority to find the information adequate or inadequate and that in this case the information supplied was found adequate enough to trigger the review proceedings. The applicant had fairly demonstrated that the landed value was much fatter than the minimum import price and that the moods of inflation were also taken into account to ascertain that exports from these two countries were not likely to cause injury, it appear to us that this factor alone was sufficient ground to erect the edifice for review. This Tribunal in Korea Kumho v. Designated Authority (Final order No. 37-39/06-AD dated 22.9.2006) and again in Indian Graphite Mfrs. Association v. Designated Authority case (Supra), has firmly stood by the ratio of the D.A. in withdrawing the duty imposed on the ground that the landed value was found greater and greasier than NIP.14. In Forum of Acrylic Fibre Ltd., v. DA (decided on 02.08.2006 in Customs Appeal No. 848 & 849 of 2005-AD), tackling a similar situation wherein the landed value being higher than NIP, this Tribunal had reached conclusion that there was obviously no likelihood of material injury to the domestic industry on the basis of such data.
15. Scanning the pregnant record maintained by the Designated Authority while issuing notification dated 13th September 2005 containing final findings indicates that a proper procedure has been indeed followed with regard to the current investigation in question and the various arguments and contentions of the D.I. alleging that no proper procedure was followed are found to be not proper. We on the other hand, find that a request for review of anti-dumping measures filed by the applicant- exporter (as enclosed in its letter dated 13th October 2004 by the Designated Authority) contains enough details and grounds which may necessitate action on the part of the D.A. It is also noted that the grounds for review made by the applicant exporter relates to changed circumstances both with regard to dumping and injury. Complete change in the situation of the original petitioner company due to the corporate changes in the petitioner's stainless steel operation has found a prominent mention to muster strength for a review and re-evaluation. Enclosing adequate data, there is an emphasis on the turning-of-the-table by the petitioner's company heading towards healthy and profitable times ahead. The consequence of restructuring of Jindal (D.I.) based not only the press report but also its annual report (2002-2003), reflecting the profitability of its core operation stood highlighted. In addition data relating to series 300-430 to support the contention of the applicant exporter that its export prices were above the non-injurious price level was also found adequate mention.
16. The details indicated hereinabove in our view can not be brushed aside as inadequate grounds and sketchy data as argued before us. Miles and miles of forests can be burnt into ash, with just a spark of fire.
While a heap of data can prove meaningless, a word or a syllable can work wonders as a mool mantra or beej mantra.
17. Coming back to the essential reasons to introduce a favourable treatment to the EU and Canada, the impugned notification has made detailed analysis. During the review proceedings, the appellant D.I.had furnished information regarding injury, cost of production besides arguments, valid enough to treat the appellant company as domestic industry within the meaning of Rule 2(b). It is also on record that some exporters namely M/s Acerinox SA Spain, M/s JFE Steel Corporation, Japan and M/s Otokumpu had raised certain points before D.A. though none of them or any other exporter has furnished questionnaire response. This in no way can prevent the application of mind on the part of D.A., who is, in our opinion, adequately armed vide Rule 4 to establish dharma. He is rather bound by the duties assigned to him under vide 4(1)(e) as it shall be his duty to review the need for continuance of anti-dumping duty or otherwise. There is, therefore, hardly any anomaly in terms of law or procedure followed in this case.
18. As M/s Acerinox SA Spain, the applicant -exporter had given over-all comments regarding the export of different grades of stainless steel and the grades produced by the others including the appellant domestic industry, the domestic industry furnished information and its side of the story on normal value in the written submission subsequent to the public hearing. In the absence of any questionnaire-response from the applicant-exporter, the authority did hold the exporter as non-cooperative and was constrained to resort to fact available as per Rule 6(8) read with Article 6.8 and Annexure-II of the anti-dumping Rules. The domestic industry had also sought an adjustment of US$ 190 PMT on account of thickness of C.R. coil taking 0.8mm as an average on the ground that the reported price of stainless steel review was for 2mm thickness. As the authority found that in respect of domestic sales the domestic industry had not furnished data regarding sales in terms of thickness of the product, this request was not found to be justified by the authority and the authority determined the normal value for EU on the basis of the average price of stainless steel of C.R. coil as reported in steel review for the period April 2003 to March 2004 and claimed by the domestic industry in their written submissions dated 11.2.2005.
19. As regards the normal value of Canada, the domestic industry furnished information as above taking into account all the available and reliable data in respect of 304, 316 and 430. The authority worked out normal value in respect of EU, Japan, Canada and USA. Dumping margins were determined by comparing the normal value and export grade wise within each series to the extent grade wise data was available.
Based on the normal value and export price determined, the authority determined the following dumping margins in respect of EU 19.90% and Canada 150.90% respectively. In their arguments before the Designated Authority, the D.I. had been emphatic that the export price of the exporter being above the NIP of the domestic industry was not sufficient ground to initiate review. It was also argued that the exporter could seek refund of duty under Section 9AA of the Customs Tariff Act if they felt that their dumping margin during a particular period was less than the dumping margin ascertained during the original POI.20. We find that the authority has analyzed the various injury parameters of domestic industry on aggregate basis in respect of like articles of subject goods; this is as per the requirement of Rule 11(2). He has also relied upon the data relating to volume of imports as per DGCI&S data. While examining the price undercutting, the authority considered the sales realization of the domestic industry for subject goods and compared it with the landed value of imports from subject countries. The price undercutting in respect of two series namely 300 - 400 indicated negative value in respect of EU. He also examined the price undercutting on an aggregate basis by comparing the weightedge average sales realization of domestic industry for all series. It was found that there was negative price undercutting in respect of imports from EU and marginal negative price undercutting imports from Canada. It was also found that the domestic industry had increased its production capacity in a substantial manner and had showed improvement and increased the output. The capacity utilization also showed significant improvement besides the market share as the import from subject countries came down in a time frame work between 2000-2001 and 2003-2004. Sales, demand and market share of EU and Canada also came down during the said period. As regards the profitability of the domestic industry the same was analysed in respect of 200, 300 and 400 series and their aggregate for the injury period.
The authority had found that the loses of domestic industry had come down during POI, though it continued to have losses during the POI. As regards the return on capital employed, the domestic industry showed negative return on capital employed though there was some improvement as the extent of loss declared. The sales realization however, improved during POI. Some improvement in cash proposition of the domestic industry and improvement in sale performance were also noted.
21. As regards the overall assessment of injury and causal link and likelihood of recurrence of dumping and injury the following observations made by the Designated Authority are relevant here.
The authority found that the parameters like output, sales, market share and productivity have shown improved performance by the domestic industry during the POI. Against the increased production capacity of 90,000 MT, the domestic industry achieved a capacity utilization of 61.61% during POI. Inventories have declined in the face of increased production. The available data regarding imports showed dumping from subject countries in different magnitude. The exports from subject countries were found to be dumped with a dumping margin ranging from 19.90% to 150.90%. The market share of the imports from subject countries in total demand has declined to 19.4% during POI from 33.77% during 2000-01. the share of domestic industry in total demand has also increased to 63.51% from 54.64%.
The exports from EU and Canada had not caused any price undercutting on the domestic sales of the industry. There was Price undercutting in the case of dumped imports from Japan and USA. Cash flow has improved. There is also no price underselling from the imports from EU and Canada. The losses in sales of subject product have declined.
These trends indicate that the domestic industry is in the path to recovery. The improved performance by the domestic industry on parameters like production, capacity utilization, sales, improved market share, higher productivity and growth can also be attributed to the anti dumping duty imposed in year 2001 as well as to the general improvement in the state of steel industry worldover. The domestic industry continued to suffer losses in the sale of subject goods, though the losses have declined significantly. Thus the domestic industry continued to suffer material injury.
As per the above evaluation, the authority found that the demand of the subject goods has been rising. There was an increase of 71% in demand during the POI over the year 2000-2001. The domestic industry has increased the production capacity of 90,000 MT, the domestic industry achieved a capacity utilization of 61.61% during POI. Their share in total demand has also increased to 63.51% from 54.64%.
These trends indicate that the domestic industry is on the path to recovery. However, the available data regarding imports showed dumping from subject countries in different magnitude. The improved performance by the domestic industry on parameters like production, capacity utilization, sales, improved market share, higher productivity and growth can also be attributed to the anti dumping duty imposed in year 2001 as well as to the general improvement in the state of steel industry worldover. The domestic industry continued to suffer losses in the sale of subject goods, though the losses have declined significantly. The current injury is attributable to the dumped imports from subject countries. The industry could not achieve higher capacity utilization due to significant quantity of dumped imports. The demand of the product has been increasing continuously and thus decline in demand cannot be a cause of injury to the domestic industry. No technological development of trade restrictive practice has been found to be the cause of the injury. Productivity of the domestic industry has improved and can not be a cause of injury. The losses of domestic industry have been found in the domestic sales of subject goods and cannot be attributed to exports. The authority however, is of the view that imposition of anti dumping duty has helped the domestic industry in recovery and improved performance. The dumping of subject goods has continued. Withdrawal of anti dumping duty may lead to intensified dumping and recurrence of injury to the domestic industry. The authority, therefore, considers it appropriate to not withdraw the anti dumping duty. Having regard to the Lesser Duty Rule followed by the authority, the authority recommends imposition of anti dumping duty equal to the margin of dumping or margin of injury, whichever is lesser. The authority found that the injury margin in respect of imports from EU are negative as the landed value of dumped imports are higher than the non-injurious price of the domestic industry for subject goods in the comparisons made both at the aggregate level of imports as well as on the basis of series-wise data to the extent available. Regarding the argument of the domestic industry about certain share of imports from EU being at less than NIP, the Authority did not find the averment as correct as the total imports from EU as per injury analysis were 14984 MT and not 8079 MT as contended by the domestic industry. The share of 1786 MT allegedly claimed to be sold at below NIP is 11.9% and not 22% as contended by the domestic industry. Even assuring this as correct, this is not considered significant by the Authority. In addition the Authority also found the trend of sales realization of the domestic industry increasing during POI. In respect of imports from Canada also the Authority found that the injury margin in respect of imports from Canada is negative as the landed value of dumped imports is higher than the Non-injurious Price of the domestic industry for subject goods in the comparison made at the aggregate level of imports. As regards the argument of the domestic industry that price-underselling evaluation is of no relevance in this review investigation due to the existing duties on a reference price basis, the Authority's views are that the Authority invariably determines NIP in every review investigation. Moreover, the same export prices have been used for determining dumping margins.
Therefore, the export prices are relevant and so also the analysis of price under cutting and price underselling. The Authority therefore, is of the view that since the injury margin is negative in respect of imports from EU and Canada, anti dumping duty may not be recommended on imports of subject goods from EU and Canada. The Authority recommends continuation of anti dumping duty, in pursuance to this review on imports from USA and Japan.
22. While concluding that the domestic industry continued to suffer material injury taking into consideration that there existed a negative injury margin in respect of imports from EU and Canada, the anti dumping duty on EU and Canada was ordered to be withdrawn and anti-dumping duty in respect of USA and Japan was ordered to remain in force. The foregoing findings of D.A. indicate that the material on record has not established any causal link between the material injury and dumped imports as the landed value was found higher than NIP and it is obvious that no loss could be attributed to imports from these exporting countries namely EU and Canada whose prices ruled higher than NIP, as got verified in original record of D.A. The conclusion reached therefore appears to us is based on reasons and hence fully justifiable.
23. For the foregoing reasons, there is no warrant for interference with the impugned notification on the basis of any of the contentions raised in the appeal and on behalf of the appellant. The appeal is therefore, dismissed.