Whether anti-dumping duty imposed with respect to imports made during period between expiry of provisional anti-dumping duty and imposition of final anti-dumping duty is legal and valid - NO: Supreme Court
By TIOL News Service
NEW DELHI, SEPT 24, 2015: THE representative facts:
1. The Union Government imposed, by a notification dated 2nd May, 2002, a provisional antidumping duty under Section 9 A ( 2) of the Customs Tariff Act read with Rules 13 and 20 of the Antidumping Rules.
2. The Union Government issued a notification on 1st May, 2003 imposing a final anti-dumping duty with effect from the date of the imposition of the provisional antidumping duty i.e. 2nd May, 2002.
The question before the Court is as to whether the Central Government was within its jurisdiction in imposing a final antidumping duty between 2nd November, 2002 and 30th April, 2003. This, according to the assessees, is the "gap period" when the provisional duty had come to an end by efflux of six months until a final notification was issued by the Union Government on 1st May, 2003.
The Supreme Court has in detail examined the submissions of the Counsel, various provisions of the Law, International agreements and orders of various courts.
The Supreme Court explained the legal provisions as:
Section 9A .
Section 9 A ( 1) refers to an anti-dumping duty. Such duty is only imposed when an article is exported from a country outside India to India at less than its normal value. Such duty can, in the Central Government's discretion, be imposed at a rate that does not exceed the margin of dumping, which only means the difference between the export price and the normal value of such article in international trade. It is clear that sub-section (1) refers to a "final" or "definitive" duty, and has to be read with sub-section (3) thereof, which authorises the levy of the "final" or "definitive" anti-dumping duty retrospectively in the circumstances mentioned in sub-section (3). The scheme therefore of Section 9 A ( 1) and (3) is that an anti-dumping duty is normally to be imposed with prospective effect unless, inter alia, because of massive dumping of an article in a relatively short time the remedial effect of the anti-dumping duty to be levied would be seriously undermined. This would therefore require a retrospective duty being levied, but not beyond a period of 90 days, to undo the effect of undermining the anti-dumping duty to be levied. Short of sub-section (3), no other part of Section 9A authorises the Central Government to levy an anti-dumping duty with retrospective effect.
Section 9 A ( 2) speaks of an anti-dumping duty which the Central Government levies on the basis of a provisional estimate, thus referring to a provisional anti-dumping duty. The Section further goes on to say that after a final determination is made in accordance with the Rules, the Central Government may reduce such provisional anti-dumping duty, having regard to the final determination made by the designated authority under the Rules. If and when this happens, what is important to note is that refund shall be made of so much of the anti-dumping duty which has been collected in excess of the final anti-dumping duty so reduced. Under sub-section (5), a maximum period of five years is allowable on the anti-dumping duty imposed. This is extendable only for a further period of five years and not beyond. Sub-section (6) in turn refers to the Central Government's power to make rules, inter alia, to assess and collect anti-dumping duty.
It is important to note that neither sub-section (2) nor sub-section (6) authorises the Central Government, either expressly or by necessary implication, to make rules and/or to levy anti-dumping duty with retrospective effect. This is in contrast with sub-section (3) which expressly so authorises the Central Government in the circumstances mentioned in the sub-section.
Anti-Dumping Rules
The first thing to notice about Rule 20 is, as its marginal note states, that it is concerned only with the date of commencement of duty. Once this is appreciated, it becomes clear that its focus is only on when anti-dumping duties are to commence. In sub-rule (1), it speaks of anti-dumping duties levied under Rule 13 and Rule 19, and states that they shall take effect only prospectively, i.e. from the date of publication in the official gazette. It is clear that Rule 19 is a mistake made by the draftsman of the Rules. Rule 18 is obviously referred to. Thus, under sub-rule (1), the provisional anti-dumping duty takes effect on and from the date of its publication in the official gazette. Same is the case with the final anti-dumping duty levied under Rule 18.
The final anti-dumping duty only incorporates the provisional anti-dumping duty within itself, but in the manner provided by Rule 13. Thus, it is clear that such incorporation can only be the period upto which the provisional duty can be levied and not beyond. Thus understood, it is clear that both literally, and in keeping with the object sought to be achieved – that is the making of laws in conformity with the WTO Agreement, there can be no levy of anti-dumping duty in the "gap" or interregnum period between the lapse of the provisional duty and the imposition of the final duty. Such interpretation makes it clear that clause 10.2 of the WTO Agreement is reproduced in the same sense though not in the same form in sub-rule (2)(a).
The American Position:
The Supreme Court noted that interestingly enough, in the United States Manual dealing with anti-dumping duties, the following is the statement of law:-
"Therefore, a period of time, known sometimes as the "gap period" may exist between the expiration of the end of the provisional measures, even if extended, and the publication of the ITC's final determination (the starting of definitive duties) where the DOC cannot require CBP to collect cash deposits, bonds, or other securities. (The gap period begins the day after the end of the 4- or 6-month period, and ends the day before the ITC's final determination is published). The DOC normally administers this problem in one of two ways. We either send instructions to CBP towards the beginning of the gap period, instructing them to stop collecting cash deposits or bonds, or we wait until the order has been published, then instruct CBP to liquidate all entries during the gap period without regard to antidumping duties."
The Supreme Court was heartened to note that one other signatory nation has taken the stand that no duty can be collected during the "gap period".
The Supreme Court emphatically held that levy of anti-dumping duty during the interregnum between the expiry of a provisional duty notification and the imposition of a final anti-dumping duty, is not valid.
(See 2015-TIOL-209-SC-CUS)
