Continuation of ADD u/s 9A(5) is not automatic & has to be imposed before expiry of 5-yr period: SC
By TIOL News Service
NEW DELHI, JUNE 14, 2017: The overseas taxpayers were engaged in the export of Acrylonitrile Butadiene Rubber. On representation by the Domestic Industry (DI), Anti Dumping Duty (ADD) was imposed for a period of five years. Subsequently, such ADD was extended for five year period on two occasions, after proper sunset review procedure. Such extensions were made before the expiry of the preceding five year period, as was mandated by law. However, when the Govt. launched a review of the ADD for the third time, the ADD was subsequently declared after the expiry of the five year period.
Subsequently, it was held in a writ petition that such extension was bad in law as it was made after the expiry of the five year period. This brought the case to the premises of the Apex Court.
The question of law before the Bench was - whether the extension of the ADD for a period of one year under the mandate of Section 9A(5) of the Customs Act, during the interregnum period between the sunset review and its outcome, would be automatic.
The Court went on to examine the scope and ambit of Section 9A of the Act, and held that it permitted, vide a Notfn. in the official gazette, the imposition of ADD for a maximum period of five years, and such period could be extended upon issue of a fresh Notification. Naturally, the sunset review had to be done before the expiry of the original Notfn. imposing or extending the ADD. However, the Court envisaged that there could be situations where the sunset review was undertaken but the review exercise could not be completed before the expiry of the period of original Notfn.
The Court took note of the fact that the conducting a sunset review was a time consuming process owing to multiple procedural compliances and factors to be accounted for, such as the impact on all the stakeholders as well as on the DI. Therefore, it was understandable if the Govt. exceeded the period stipulated in the original Notfn. for conducting such review. Thereby, to ensure no vacuum in the interregnum, second proviso to sub-section (5) of Section 9A of the Act empowered the Govt. to continue the ADD for a further period not exceeding one year, pending the outcome of such a review.
With regard to whether or not such extension was automatic, once the decision to conduct sunset review had been taken, the Court held that where maximum period of one year was prescribed for this purpose, impliedly, the period could be lesser as well. Thus, the Govt. was obliged to necessarily form an opinion as to for how long it needed to continue the ADD pending outcome of such a review. Moreover, as the maximum period was one year & where the review exercise could not be completed within one year, the effect of that would be that after the lapse of one year there would not be any ADD even if the review is pending - Thereby, in such case, it is only after completion of the review exercise that the Central Govt. forms the opinion that the cessation of such a duty is likely to lead to continuation or recurrence of dumping and injury, it would issue a Notfn. extending the period of imposition of duty. Therefore, situations could arise where even when the power is exercised under second proviso and duty period extended by full one year, the review exercise could not be completed within that period. Thereby, in such situations, the vacuum would still be created in the interregnum beyond the period of one year and till the review exercise is complete and fresh notification is issued. Hence such a situation belies the argument that extension under second proviso was to be treated as automatic to avoid the hiatus or vacuum in between. Therefore the continuation of duty was not automatic & such duty, during the period of review, must be imposed before the expiry of five years, which was the life of the Notfn. imposing ADD.
Hence the Court summed up by holding that since the Notfn. for the third extension of ADD was issued after the expiry of the five year period of the preceeding extension, and given that such extension of ADD for an additional one year period was not automatic, the High Court was correct in holding that the extension of ADD was bad in law.
(See 2017-TIOL-232-SC-CUS)
