Anti-Dumping Duty On Imported Goods: In Case Of ‘Negative Findings” By Designated Authority, Appeal U/S.9C Of Customs Tariff Act Possible Before CESAT: Delhi HC [Read Order]

In an important decision, the Delhi High Court has held that anti-dumping duty on imported goods, in case “negative findings” are recorded by the designated authority of the Central government, then the findings can be appealed against under Section 9C of the Customs Tariff (CT) Act before the Customs Excise and Service Tax Appellate Tribunal (CESAT).

What is Dumping?

In generic terms, dumping is a situation of international price discrimination, where the price of a product, when sold in the importing country, is less than the price of that product in the market of the exporting country. One can identify dumping by simply comparing prices in markets of the two countries.

A division bench of Justice Sanjiv Khanna and Justice Chandar Shekhar was hearing a writ petition filed by Jindal Poly Film Ltd challenging the validity of a termination order passed by the designated authority under Rule 14 of the Customs Tariff (Anti-Dumping) Rules, 1995.

Case Background

In March 2016, Jindal Poly Film Ltd had filed an application for initiation of anti-dumping investigation on imports of non-woven fabric originating and exported from China, Malaysia, Indonesia, Thailand and Saudi Arabia on the ground that they were causing injury to the domestic industry.

Then, the designated authority of the Central government had issued public notice on June 15, 2016 in terms of Rule 5 of the Rules to determine existence, degree and effect of alleged dumping and to decide whether to recommend and specify the amount of anti-dumping duty that would be adequate to remove injury to the domestic industry.

The designated authority selected a nine-month period of investigation. On August 2, 2017, the designated authority had issued a disclosure statement under Rule 16 containing essential facts under consideration that would form the basis of the final findings. However, by the impugned order dated September 2, 2017, the said authority had issued termination order holding that the product under consideration being exported to India from the subject countries (was not below its normal value, except in case of Toray Polytech (Nantong) Company Limited, China and Asahi Kasei Spunbound (Thailand) Company Limited. It was also concluded that there was only one producer from China PR for which dumping and injury margin was positive.

Submissions and Judgment

Senior Advocate Basava Prabhu Patil appeared on behalf of the petitioners in the case. He submitted that the appellate remedy under Section 9C of the CT Act cannot be invoked against the termination order under Rule 14 of the Rules. An appeal under Section 9C of the CT Act lies only against an “order of determination” which requires a positive final finding under Rule 17 by the designated authority recommending imposition of anti-dumping duty and acceptance by the Central Government by way of a notification under Rule 18 of the Rules imposing anti-dumping duty at the rate not exceeding the margin of dumping determined by the designated authority under Rule 17 of the Rules. When the designated authority terminates the proceeding or gives a negative final opinion under Rule 17, or the Central Government does not issue notification under Rule 18, there is no “order of determination” and hence no appeal lies under Section 9C of the CT Act.

Respondent number 3, M/s Fibertex Personal Care SDN BHD, opposed the writ petition and asked the court not to entertain the present petition in view of the alternative statutory appellate remedy available to the petitioner under Section 9C of the CT Act, 1975 before the CESAT.

The court examined Sections 9A and 9C of the CT Act and Rules 3, 4, 14, 17, 18 and 23 of the Rules, i.e., the Customs Tariff (Anti-Dumping) Rules, 1995 and various judgments of the Supreme Court. The court noted-

“Section 9C does not state and provide that an appeal is maintainable against customs notification. However, it refers to and states that an appeal would lie against the "order of determination" regarding existence, degree and effect of dumping. The words "existence, degree and effect of dumping" are significant. The final finding of the Designated Authority in the said aspect can be in positive i.e. when it recommends imposition of anti-dumping duty or may be in negative when it finds and holds that no anti-dumping should be imposed. Upon negative finding by the Designated Authority no further action is contemplated and required by the Central Government.

Contention of the petitioner that the "order of determination" would mean notification imposing anti- dumping tax and not a negative final finding of the Designated Authority under Rule 17, which is not recommendatory but the final determination, is erroneous and bad in law. In case of negative determination, the finding of the Designated Authority is binding, it gives no discretion to the Central Government. Thereupon, the determination becomes the determinative order in the sense that no anti-dumping duty can be imposed.”

Disposing of the petition, the court said-

“In view of the aforesaid discussion we find merit in the preliminary objection raised by the third respondent and hold that the plaintiff has equitable efficacious alternate remedy to challenge the impugned order under Section 9C of the CT Act before the Appellate Tribunal. In the given facts we decline and would not entertain the present writ petition and give liberty to the petitioner to file an appeal under Section 9C of the CT Act.”

Read the Order Here