By TIOL News Service    

NEW DELHI, SEPT 06, 2017: THE petitioner challenges the order dated 22nd August 2017 passed by the Designated Authority (DA) declining to initiate a Sun Set Review ('SSR') concerning continuation of Anti-dumping Duty (ADD) on imports of 'Metronidazole' originating in or exported from China to India.

When the writ petition was listed for hearing on 25th August 2017, an order was passed and reported as -  2017-TIOL-1699-HC-DEL-CUS.

The application was listed on 29 August to consider whether the ADD that was imposed by the Notification  No. 40/2012 -Customs dated 30th August 2012 and which expires on 29th August 2017, should be continued as a consequence of this Court having directed the Respondents to initiate the SSR.

The DA in his order inter alia concluded that:

(i) There does not exist any "significant rate of increase of dumped imports into India indicating the likelihood of substantially increased importation"

(ii) There is scant evidence of substantial increase in the capacity of the exporter indicating the likelihood of substantially increased dumped exports to the Indian market, taking into account the availability of other export markets to absorb any additional exports.

(iii) The present data available showed that "there is no price suppression or depression impact" if the ADD were to cease to operate.

(iv) Adequate/dependable data is not available with the DA "about the stock in hand with the exporters in China PR."

The petitioner submitted that in terms of the second proviso to Section 9A(5) of the CTA, 1975where the Sun Set review (SSR) is initiated before the expiry of the period of five years of the ADD being in force and such SSR has not come to a conclusion before such expiry, the ADD shall be deemed "to remain in force pending the outcome of such a review for a further period not exceeding one year". Reliance is placed on the decision in Kumho Petrochemicals Company Limited -  2017-TIOL-232-SC-CUS.

It is also submitted that the Petitioner had given sufficient details to show what impact of the cessation of ADD is likely to be on the domestic industry. In particular, they refer to Table 6 which sets out dumping margin in past investigations and Table 7 regarding "capacity with Chinese importers" to demonstrate that the surviving domestic industry which is essentially the Petitioner, which is both manufacturing and exporting Metronidazole will be snuffed out if the ADD were to be withdrawn. The two other domestic manufacturers have ceased to do so and have resorted to importing of the product in order to survive. It is further urged that in order to balance the equities, this Court may direct that in the event it is ultimately found that the decision not to initiate the SSR was justified in law, then the ADD collected during the period of the SSR could be refunded to the importers of the product from China PR. [Indian Metal and Ferro Alloys Ltd. -  2007-TIOL-682-HC-DEL-AD  refers.]

The counsel for the Revenue negated the submissions made by the petitioner.

The High Court inter alia observed -

++ It must be noted that in all earlier instances when the domestic industry came to the court seeking relief against a decision of the Central Government declining to initiate the SSR for some reason, it was not prior to the expiry of the notification imposing the ADD. In fact, in Kumho there was a considerable gap between the expiry of the notification imposing ADD and the decision of the Central Government extending the validity of the imposition of the ADD.

++ Having, by an interim order, directed the initiation of the SSR subject to the final outcome of the writ petition, the question that arises is whether again by an ad interim order, the Court should direct the continuation of ADD. The Court is conscious that under Section 9A of the CTA, it is the Central Government that has to take a call whether it wants to initiate the SSR and again whether it wants to continue the ADD. However, that very decision of the Central Government taken in the context of Section 9A of the CTA is undoubtedly subject to judicial review.

++ On a perusal of the impugned order dated 22nd August, 2017, the Court finds that the conclusions reached by the DA, which have been summarised hereinbefore, do not prima facie appear to have accounted for the detailed statistics placed before the DA by the Petitioner some of which have been referred to earlier by the Court. In particular, the possibility of the undercutting of the price at which the product may be sold by the domestic industry has not been adverted to by the DA. Also, the present annual capacity of the entities in China PR which are unutilized and which far exceed the Indian demand of 2200 MT per year does not appear to have been discussed by the DA.

++ It appears to the Court that the factors that should weigh with the Central Government both for the initiation of the SSR and for continuation of ADD cannot be said to be unconnected. The Court is satisfied that a prima facie case does exist in favour of the Petitioner for continuation of the ADD.

Balance of convenience:

++ Petitioner is right in his submission that the loss that the domestic industry might suffer on account of the cessation of the ADD cannot possibly be compensated if later it is held that the SSR ought to have been initiated by the Central Government and the ADD ought to have been continued.

++ Court is satisfied that the balance of convenience in directing continuation of the ADD pending the conclusion of the SSR subject, of course, to the outer limit of one year as stipulated in the 2nd proviso to Section 9A(5) of the CTA, is in favour of the Petitioner.

++ By way of balancing the equities, in the event ultimately it is found that the decision of the Central Government not to initiate the SSR was correct, the ADD collected from the importers of the product from China PR during the period of the SSR can be refunded to such importers.

Conclusion:

++ Court directs that the ADD that was initiated by Notification No.40/2012 dated 31st August, 2012 will continue till the conclusion of the SSR initiated by the Central Government on the direction of this Court by the order dated 25th August, 2017. The consequential notification in terms of this order will be issued by the Central Government...

The application was disposed of.

The matter is listed for today.

Stop Press:

Notification 41/2017-Cus(ADD) dated August 29, 2017 issued accordingly.

(See 2017-TIOL-1775-HC-DEL-CUS)