By TIOL News Service

NEW DELHI, JUNE 05, 2018: THE GOI had imposed Anti-Dumping Duty on imports of rubber chemicals known as PX-13 (6PPD) originating in or exported from China PR and Korea PR for a period of five years. The levy expired on 04.05.2013. [92/2011-Cus refers]

Four days prior thereto, on 30.04.2013, Sunset Review proceedings were initiated by the respondents, on a petition by the Domestic Industry, which had contended that continuation of Anti-Dumping Duty for a further period of five years would be necessary.

As of 05.05.2013 there was no levy of Anti-Dumping Duty in force. After a gap of 60 days from the date of expiry of the levy, the Central Government by Customs Notification No. 17/2013 retrospectively revived the Anti-Dumping Duty with effect from 05.05.2013 and extended it till 04.05.2014. The Sunset Review concluded with the declaration of the Final Findings on 29.04.2014.

According to the petitioners, since the Final Findings were published in the Official Gazette only on 28.07.2014, the latter date would be reckoned as its notified date. The Anti-Dumping Duty levied during the Sunset Review period ended on 04.05.2014. By Customs Notification no. 35/2014 dated 24.07.2014, the Government of India re-imposed the Anti-Dumping Duty for another term of five years. There was a gap of 80 days or a levy-free period between the expiry of Anti-Dumping Duty which was applicable during the Sunset Review period, and a fresh levy as a result of Final Findings.

The petitioner has challenged: (i) the extension of Anti-Dumping Duty for the one year pending the Sunset Review, as well as (ii) for the five years pursuant to the Sunset Review determination.

They rely on the decision in Kumho Petrochemicals Co. Ltd. - 2014-TIOL-1130-HC-DEL-AD, G.M. Exports - 2015-TIOL-209-SC-CUS, Ambali karthikeyan - 2003-TIOL-94-HC-KERALA-CUS.

After considering the elaborate submissions made by both sides, the High Court observed that the questions that arise for determination are:-

(i) whether with the initiation of Sunset Review before expiry of the five year levy, there is an automatic extension of Anti-Dumping Duty for the Sunset Review period;

(ii) would a separate notification be required extending the levy of Anti-Dumping Duty before expiry of the original five year period, and

(iii) would a notification of levy of anti-dumping duty for another five years after the expiry of the Sunset-Review Period be valid?

The High Court further observed -

+ It is seen that the Notification No. 17/2013 issued 60 days after the expiry of the levy of Anti-Dumping Duty under the first five year period, would be non-est because it sought to extend a levy which had lapsed on 04.05.2013.

+ The phrase "may continue to remain in force" (in section 9A(5)), assumes that there is a levy which exists and its continuance i.e. it's carrying forward - without a break in its existence, is necessary. The moment the levy comes to an end or there is a break in its continuance, it cannot be revived in the Sunset Review exercise. Extending the levy is like stretching the fabric of the levy to cover the extended period for another year. In the present case, the original levy came to an end on 04.05.2013. The levy had a limited life and unless fresh life was infused in it before its pre-determined expiry date, it could not be deemed to have been extended. Infusion of fresh life into the levy for a period of one year requires a fresh notification, in addition to the notification for initiation of the Sunset Review. That not being so, in the present case the levy under impugned Notification is without authority, hence it has to be and is set aside.

+ Likewise, the second notification imposing Anti-Dumping Duty for a period of five years too cannot be sustained because it has to be issued within the period of first five years or in the extended one year period of Sunset Review in which the earlier existing duty has been extended.

+ In other words, there would have to be a duty in existence for it to be extended. In the present case, there was cessation of duty on 05.05.2013 and again on 05.05.2014, therefore, there was no duty on two dates which could have been extended.

+ There was cessation of levy for 60 days from 05.05.2013 and for 80 days from 05.05.2014. The Domestic Industry would subsequently have been subjected to the world of unhindered international trade without protection. Therefore, the nature of injury suffered in this period would have to be assessed for the correct levy of Anti-Dumping Duty.

+ In view of the aforesaid cessation of duty for two long phases, there could be no imposition of Anti-Dumping Duty for a further period of five years under the first proviso of Section 9A(5) of the Act.

+ The Court would note that under Rule 18(1), the Central Government may within three months from the date of publication of the Final Findings impose Anti-Dumping Duty by Notification in the Official Gazette, however, this three month period is not a stand-alone authorization to the Government. It has to be harmoniously read with the strict timeline fixed in the statute under section 9A(5) of the Act.

+ The Rule cannot override the Act. The Act has fixed a period for completion of Sunset Review within one year from the date of expiry of the initial five year levy and it is in this one year period that the Government must form a view that the cessation of duty would lead to continuation or recurrence of dumping and injury. Therefore, it is only within this period that it may extend i.e. without breaking the continuity of the previous duty or its modified version, for a further period of five years.

+ The thread of the existing duty has to continue from the initial five year levy to the one year extended period of Sunset Review to the proposed five year period. There should be no break in between. However, in the present case, there are two breaks. Therefore, Rule 18(1) does not and cannot be read to lend any authority or power to the Central Government to issue Customs Notification No. 35/2014. It is illegal and, accordingly, set aside.

Accordingly, Initiation Notification No. 15/1/2013-DGAD dated 30.04.2013, Final Finding dated 29.04.2014 and the Customs Notification Nos. 17/2013 and 35/2014 issued on 05.07.2013 and 24.07.2014 respectively are set aside.

The petitions were allowed.

(See 2018-TIOL-1061-HC-DEL-CUS)