2005 (98) ECC 504 (Tri)

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

New Delhi -- Bench-NB(A)

Hon'ble Justice Smt. K.K. Usha, President, Shri S.S. Kang, Member (J) and Shri C.N.B. Nair, Member (T)

Puneet Resins Ltd. & Ors

Versus

Ministry of Finance, Designated Authority

1-3. C/260/2002-AD, C/596/2002-AD and C/687/2002-AD, 4. C/14/2003-AD & 5. C/125/2003-AD.

[Arising out of Customs Notifications No. 8/2002 dated 18.1.2002 & Ministry of Commerce and Industry Notifications No. 50/1/2001-DGAD dated 1.10.2001, 71/2002 dated 22.7.2002 and 111/2002 dated 10.10.2002, all passed by Ministry of Finance & Ministry of Commerce & Industries, New Delhi]

Final Order No. 14-18/2004-NB(A), dt. 1.7.2004, Certified on 8.7.2004

Anti-Dumping Duty

Variable Duty -- The customs duty is reduced after the period of investigation and in case of variable duty where the `landed value' means the assessable value as determined under the Customs Act and includes all duties of customs and the duty is to be equivalent to the difference between floor price and the landed value of the imported goods. As the customs duty is reduced, therefore, the landed value will be reduced to that extent. Therefore, there will be higher difference between the landed value and the floor price. The imposition of variable duty will cause prejudice to them. Taking into consideration the peculiar facts and circumstances of the case held that DA should have imposed anti dumping duty in respect of the imports made at fixed duty -- Section 9A of CTA.

Anti-Dumping Duty

Sunset Review -- Trade notice No.1/99 dated 21.4.99 which only prohibits an interim review within one year of the imposition of an anti-dumping duty. In respect of sunset review which is necessary at the end of five years as an anti-dumping duty is levied only for five years. The Designated Authority has to review the need for continued imposition of the anti-dumping duty. The trade notice relied upon by the appellants does not cover the situation where sunset review is initiated -- Sec. 9A of CTA.

PRESENT :

S/Shri Prakash Shah, V. Laxmikumaran, S. Sheetha Raman and Rakesh Tikoo, Advs. for the appellants.

S/Shri Krishnan Venugopal & Udai Tewari, Advs. for the respondent.

Per : S.S. Kang

The brief facts of the case are that on an application of M/s. Apar Industries Ltd. Domestic Industries), the Designated Authority under the Customs Tariff Act initiated an enquiry on 15.3.96 into the alleged dumping of Acrylonitrile Butadiene Rubber (hereinafter referred to as NBR) from Germany and Korea. The Designated Authority recorded the preliminary findings vide order dated 30.12.1996. In pursuance to the findings of the Designated Authority, the Central Government issued a Notification imposing an Anti Dumping Duty on the NBR vide Notification No. 9/97 dated 31.3.97. Thereafter, vide order dated 17.7.97, the Designated Authority submitted its final findings under Rule 17 of the Customs Tariff (Anti Dumping Duty on Dumped Articles) Rules, 1995 that the dumping of NBR from Germany and Korea resulted in material injury to the domestic industry. In pursuance to the final findings of the Designated Authority, the Central Government issued Notification No. 62/97 dated 30.7.1997. Being aggrieved by the said Notification, the importer filed an appeal to the Customs Excise and Gold (Control) Appellate Tribunal (now Customs, Excise and Service Tax Appellate Tribunal). The appeal filed by the importer was dismissed. The importer filed Special Leave Petition against the order passed by the Tribunal before the Hon'ble Supreme Court. The appeal is admitted and still pending for disposal.

2. On 30.6.1999, the Designated Authority on the basis of an application made by the domestic industry issued a notification initiating an investigation/review of the Anti Dumping Duty being imposed on the NBR which was notified by the Central Government by notification dated 30.7.1997. The Designated Authority terminated the review investigation on 4.5.2000 in view of the request made by the domestic industry. Thereafter, the Designated Authority issued notification dated 24.5.2000 suo moto initiating another review investigation in respect of NRB. The period of investigation for this review was April 1999 to March 2000. On 20.7.2001, the Designating Authority in terms of Rule 17 of the Rules submitted its final findings and recommended an anti dumping duty in respect of the NBR imported from Germany and Korea. The Union of India issued Notification No. 91/2001 dated 7.9.2001 imposing anti dumping duty in pursuance to the recommendations of the Designated Authority.

3. By notification dated 1.10.2001, the Designated Authority initiated the sunset review investigation to review the need for continued imposition of the anti dumping duty in respect of the NBR imported from Germany and Korea. By Notification No. 8/2002 dated 18.1.2002, the Central Government amended Notification No. 91/2001 dated 7.9.2001, extending the imposition of anti dumping duty pending the sunset review findings till 30.7.2002. Thereafter, by Notification No. 71/2002 dated 22.7.2002, the Central Government further amended the Notification No. 91/2001 dated 7.9.2001 extending the imposition of anti dumping duty till 30.9.2002. On 21.9.2002, the Designated Authority in terms of Rule 23 of the Anti Dumping Rules submitted its final findings in respect of the sunset review and recommended an anti dumping duty in respect of the NBR imported from Germany and Korea based on a variable duty methodology as the difference between the reference price and the landed value of the goods after taking into account the customs duty. In pursuance to the recommendations made by the Designated Authority, the Central Government by Notification No. 111/2002 dated 10.10.2002 imposed anti dumping duty on the NBR originating in or exported from Korea and Germany and imported into India at the rate which is equivalent to the differential amount mentioned in column (4) of the table therein and the landed value of imports per metric ton for a further period of 5 years. The relevant portion of the impugned notification is reproduced below:

"Now, therefore, in exercise of the powers conferred by sub-sections (1) and (5) of section 9A of the said Customs Tariff Act, read with Rule 23 of the Customs Tariff (Identification, Assessment and Collection of Anti-dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995, the Central Government after considering the aforesaid findings of the designated authority, hereby imposes on acrylonitrile butadiene rubber, falling under Chapter 40 of the First Schedule to the said Customs Tariff Act, originating in, or exported from, Korea RP and Germany, and imported into India, an anti-dumping duty at the rate which is equivalent to the difference between the amount mentioned in column (4) of the Table below and the landed value of imports per metric tonne.

TABLE

S.No. | Name of Country | Exporter/producer | Amount (US $/(MT)
(1) | (2) | (3) | (4)
1. | Korea RP | Korea Kumho Petrochemical Co. | 1692.12
|  | Hyundai Petrochemical Co Ltd. | 1908.28
|  | All other exporters producers | 1902.28
2. | Germany | Bayer AG | 2314.8
|  | All other exporters/producers | 2314.8

Explanation. -- For the purpose of this notification --

(a) "landed value" means the assessable value as determined under the Customs Act, 1962 (52 of 1962) and includes all duties of customs except duties levied under Sections 3, 3A, 8B, 9 and 9A of the said Customs Tariff Act."

4. M/s. Puneet Resins filed three appeals. Appeal No. C/596/02-AD challenges the initiation of sunset review. Appeal No. C/260/02-AD challenges the sunset review and Notification No. 8/2002 dated 18.1.2002 vide which the period of imposition of anti dumping duty was extended to 30.7.2002 during pendency of sunset review and Appeal No. C/687/2002-AD was filed challenging the Notification No. 111/2002 dated 10.10.2002 whereby anti dumping duty was imposed in pursuance to the sunset review for further period of five years.

5. M/s. Apar Industries Limited (domestic industries) filed Appeal No. C/125/03-AD with the prayer to re-determine the normal value, dumping margin and reference price.

6. M/s. Korea Kumho Petrochemicals Co. Ltd. file Appeal No. C/14/03-AD challenging the initiation of sunset review as well as Notification No. 111/2002 dated 10.10.2002.

7. The contention of M/s. Puneet Resins Limited who is importer of NBR is that initiation of sunset review by the Designated Authority is untenable and unsustainable in law and liable to be set aside. The sunset review was initiated within 23 days of the publication of customs Notification No. 91/2001 dated 7.9.2001 based on earlier review regarding which the final findings was published by the Designating Authority on 20.7.2001. This sunset review was initiated contrary to the Trade Notice No. 1/99 dated 21.4.99 issued by the Ministry of Commerce whereby it was clarified that application for interim review can be accepted provided at least one year has been passed from the order of imposition of anti dumping duty by the Central Government. The contention is that the Designated Authority is bound by this trade notice. M/s. Puneet Resins also submitted that the Designated Authority erred in arriving at material injury to the domestic industry due to imports from subject countries during the period of investigation under review. The contention is that the anti dumping duty measures were already in force on the subject countries and an anti dumping duty is also being collected. Therefore, there could be no injury caused to the domestic industry during the period of investigation. The contention is also that the levy of anti dumping duty based on the variable duty method without qualifying it with a maximum cap equal to the amount of dumping margin determined is in violation of Section 9A(1) of the Customs Tariff Act.

8. The contention on behalf of Korea Kumho Petrochemicals Co. Ltd. who are manufacturer/ exporter of NBR is also that during the pendency of sunset review the imposition of an anti dumping duty was extended upto 30.9.2002 vide Notification No. 8/2002 whereas the present notification was issued on 10.10.2002 for continuation of an anti dumping duty and the same is not sustainable.

9. The contention of M/s. Korea Komho Petrochemical Co. Ltd. is also that the information supplied to the Designated Authority on confidential basis was disclosed to the interested parties. Therefore, the Designating Authority contravened the provisions of Rule 7 of the Rules and the whole proceedings are vitiated on this account only. The contention of the exporter is also that the Designated Authority without any evidence inflated the cost of production during the period of investigation by disallowing the eligible adjustment for advertisement, research and development expenses which resulted in findings based on the inflated cost of production as compared to the actual cost of production during the period in question. They also pleaded that the Designated Authority has no power to base the quantum of anti dumping duty based on landed value concept. The contention is that in case the landed value is reduced due to reduction in customs duty then gap between the reference price and the landed value will increase, hence the concept of basing an anti dumping duty on landed value basis is incorrect, particularly in the present case when the customs duty is reduced after the period of investigation.

10. We have also heard Kothari Sugars Chemicals Limited as an Intervener in respect of levy of variable duty.

11. The counsel for the Designating Authority and for the domestic industry supported the final findings.

12. The arguments of Importer and Exporter of NBR is that anti dumping duty was up to 30.9.2002. Therefore, the impugned notification issued on 10.10.2002 is not sustainable on the ground that in terms of Rule 23 of the Anti Dumping Rules, the Designating Authority is to review the need for continued imposition of the anti dumping duty. As there was no anti dumping duty on 10.10.2002, therefore, there is no question for continuation of anti dumping duty. We find that vide Notification No. 111/2002 dated 10.10.2002, an anti dumping duty was imposed on NBR. The relevant portion of the notification is reproduced below:

"Now, therefore, in exercise of the power conferred by sub-sections (1) and (5) of section 9A of the said Customs Tariff Act, read with Rule 23 of the Customs Tariff (Identification, Assessment and Collection of Anti-dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995, the Central Government after considering the aforesaid findings of the designated authority, thereby imposes on acrylonitrile butadiene rubber, falling under Chapter 40 of the First Schedule to the said Customs Tariff Act, originating in, or exported from, Korea RP and Germany, and imported into India, an anti-dumping duty at the rate which is equivalent to the difference between the amount mentioned in column (4) of the Table below and the landed value of imports per metric tonne."

As the Government of India imposed an anti dumping duty in terms of Section 9A of the Customs Tariff Act which is permissible, therefore, we find no merits in the arguments of the appellants in this respect.

13. The other argument of the appellants and the Intervener is in respect of levy of variable duty. Anti Dumping duty can be levied in any one of the following forms:

(i) Fixed duty,

(ii) Ad valorem duty, and

(iii) Variable duty.

14. The fixed duty is the difference between the normal value and export price or the difference between the non-injurious price and the landed cost of the article, whichever is lower. Ad valorem duty is expressed as percentage of CIF value of imported goods. Variable duty is based on a reference price which will be the export price during the period of investigation plus customs duty plus the fixed duty as determined. The anti-dumping duty payable on any consignment will be the difference between the reference price so determined and the landed value of the consignment in question.

15. The contention of the appellants and the Intervener is that the landed value includes all duties of customs. In case, there is a variation in customs duty after the period of investigation, in such a case, the importer has to pay higher duty. We find that as there are three forms of levying an anti dumping duty and the duty is levied by adopting one of the form, the appellants cannot say that they are prejudiced by adopting a particular form in respect of levy of duty. In the present case, the customs duty is reduced after the period of investigation and in case of variable duty where the "landed value" means the assessable value as determined under the Customs Act and includes all duties of customs and the duty is to be equivalent to the difference between floor price and the landed value of the imported goods. As the customs duty is reduced, therefore, the landed value will be reduced to that extent. Therefore, there will be higher difference between the landed value and the floor price. In these circumstances, we find force in the argument of the manufacturer/exporter that the imposition of variable duty will cause prejudice to them. It is also contended by the appellants that in the first notification as well as in the review proceedings, fixed duty was imposed. We find from the record of the Designating Authority that there was no material which requires change from fixed duty to variable duty in the sunset proceedings. Taking into consideration the peculiar facts and circumstances of the case we hold that DA should have imposed anti dumping duty in respect of the imports made from Korea Kumho Petrochemicals Co. Ltd. as fixed duty.

16. The manufacturer-exporter also raised an issue of confidentiality on the ground that the Designated Authority disclosed the information supplied by the appellants on confidential basis. We find that this issue is pending in the Hon'ble Delhi High Court in a Writ Petition (CWP 6384 of 2002) filed by Korea Kumho Petro Chemicals, the present appellants. As the issue is pending before the Hon'ble Delhi High Court, therefore, we are not going into this issue.

17. The contention of the manufacturer-exporter is also that the Designated Authority had not taken all the facts into consideration while fixing the normal price. We find that the Designated Authority while determining the normal value has taken into consideration the data furnished by the appellants in response to the questionnaire regarding advertisement expenses. As the appellants failed to substantiate their claim, therefore, it was not considered by the Designated Authority. The claim in respect of research and development expenses was considered as part of the SGA expenses. The cost of production was provided by the exporter on the weighted average ex-factory basis for all grades and during verification, it was found that there is a narrow band of variation in the cost of production of various grades and the Designated Authority adopted the methodology of weighted average to weighted average grade comparison for the purpose of evaluation of normal value, cost of production and the export price to India. The Designated Authority also while evaluating the normal value for domestic sales, had excluded all those transactions which were not made in the ordinary course of trade after evaluating the weighted average cost of production. The export price was also fixed after taking into consideration the adjustments claimed by the appellants. In these circumstances, we find no merits in the contention of the appellants in this regard also.

18. The appellants also submitted that the initiation of sunset review is not sustainable in view of the trade notice issued by the Ministry of Commerce. We have perused the Trade Notice No. 1/99 dated 21.4.99 which only prohibits an interim review within one year of the imposition of an anti dumping duty. The present proceedings are in respect of sunset review which is necessary at the end of five years as an anti dumping duty is levied only for five years. The Designated Authority has to review the need for continued imposition of the anti dumping duty. The trade notice relied upon by the appellants does not cover the situation where sunset review is initiated.

19. In view of the above discussions, after taking into consideration the injury and the dumping margin in the case of exports from Korea R.P. by M/s. Korea Kumho Petro-chemicals Co. Ltd., it is ordered that the entry in Sl. No. 1 in Notification No. 111/2002-Cus dated 10.10.2002 relating to M/s. Korea Kumho Petro-chemicals Co. Ltd. shall remain deleted and all imports of Acrylonitrile butadiene rubber into India from Korea R.P. and exported by M/s. Korea Kumho Petro-chemicals Co. Ltd. shall be subjected to anti-dumping duty at the rate of US$ 106.16 per Metric Tonne.

20. The appeal filed by M/s. Korea Kumho Petrochemicals Co. Ltd. is allowed as indicated above and other appeals are dismissed.

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