H & R Johnson loses challenge against withdrawal of anti-dumping duty on vitrified and porcelain tiles
By TIOL News Service
NEW DELHI, MAR 21, 2007 : BASED on the request made by M/s. Southern Building Materials and Sanitary Co. Ltd., and M/s New Zhong Yuan Ceramics Import & Export Co. Ltd, People's Republic of China for review in terms of rule 22 of the Customs Tariff (Identification, Assessment and Collection of Anti-dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995, as a new shipper, the designated authority had undertaken a review of the anti dumping duty imposed on vitrified and porcelain tiles and recommended that there was no dumping of the subject goods by the above exporters. Consequently, Notification 73/2003 (Cus) was amended vide Notification 06/2006 dated 13.02.2006 and the following proviso has been inserted.
Provided further that no anti-dumping duty shall be imposed on the imports into India of subject goods falling under chapter 69 of the First Schedule to the said Customs tariff Act, produced by M/s. Southern Building Materials and Sanitary Co. Ltd., Qingyan City, People's Republic of China and exported by M/s. New Zhong Yuan Ceramics Import & Export Co. Ltd., Guangdong, People's Republic of China."
This amendment has been appealed against by M/s H&R Johnson, the domestic manufacturer of the subject goods. The issue mainly centered on the interpretation of the proviso in rule 22 which reads as
"Provided that these exporters or producers show that they are not related to any of the exporters or producers in the exporting country who are subject to the anti-dumping duties on the product"
It was the submission of the appellant that since the condition of rule 22 only stipulated that the goods of exporters or producers should be "subject to" anti-dumping duties irrespective of whether the goods have actually been "subjected to" antidumping duties or not. It was submitted that all producers or exporters from China were subject to anti-dumping duties even though they may not be actually subjected to anti-dumping duties. (Notification 73/2003 imposing the Anti dumping duty is country specific but not exporter specific) They have also submitted that:
The Designated Authority committed an error in commencing investigation for a new shipper review under rule 22 as in the present case the new shipper did not satisfy the preconditions of rule 22 of the said rules.
There was no declaration by the exporter/producer that they were not related to any exporter or producer who was subject to anti-dumping duty. It was also submitted that the declaration by SBM that they were not related to any producer, who had exported the product to India in the investigation period was wholly irrelevant and misleading
The declarations made by SBM and NZYC were found to be false and incorrect even by the Designated Authority, during the proceedings and therefore, this review was not warranted
The material on record established that SBM was directly related to NZYC Co. Ltd. which had participated in the previous investigation proceedings and was subject to anti-dumping duties in force.
The respondent exporter has countered these arguments on the ground that
Rules 2, 17 and 22 were to be construed harmoniously and that rule 22 extended a facility to exporters or producers who were not initially eligible to seek separate dumping margin under rule 17, for the reason that their article was not exported to India during the period of investigation.
The applicant under rule 22 was not to be related to any exporter or producer, whose article was exported to India during the period of investigation, and subject matter of the initial-investigation.
The interpretation proposed by the appellant would result in imposition of anti-dumping duty without an opportunity to represent and seek individual dumping margin at either the initial or review stage.
Exporters not subject to anti-dumping duty were necessarily the exporters who exported during the period of investigation, but were able to establish absence of dumping and were, therefore, not made subject to anti-dumping duty. Any other interpretation will make the last phrase rule 22 redundant, contended the learned counsel. It was submitted that those who had not exported during the period of investigation were all made eligible to seek review and they should not be related to those who exported during the earlier period of investigation and were subject to anti-dumping duty.
After considering all the submissions, the Bench has analysed the phrase " Provided that these exporters or producers show that they are not related to any of the exporters or producers in the exporting country who are subject to the anti-dumping duties on the product" contained in Rule 22 at length and held that the designated authority was right in initiating the review under Rule 22 as requested by the exporters and upheld the finding that no anti-dumping be imposed on imports of vitrified/porcelain tiles produced by SBM and exported through NZYC.
Some interesting observations of the Bench on Rule 22:
- The phrase "not related to any of the exporters or producers in the exporting country who are subject to the anti-dumping duty on their product", evoked much debate on the meaning of the expression 'subject to anti-dumping duty'; the domestic industry contending that all exporters/producers from the date of import would be considered to be 'subject to anti-dumping duty', while the exporter contending that only those who actually exported in the initial period of investigation and in whose case dumping margin was determined, can alone be considered to be 'subject to anti-dumping duty' and that, those exporters who did not dump cannot be considered to be 'subject to anti-dumping duty'.
- When the exporters /producers who exported during the initial period of investigation who are made subject to anti-dumping duty for exports of the subject products are specified in the notification, it becomes very easy to find out whether the new exporters/producers whose dumping margin is required to be determined under rule 22, were related to those who are specified in the notification. Those who exported but did not dump were obviously not subject to anti-dumping duty under such notification which applied only to the specific exporters/producers who were made subject to anti-dumping duty imposed thereunder.
- The real difficulty of determining whether the "new shipper" was related to the exporters/producers would, however, arise when the notification imposing anti-dumping duty, imposes it on imports from all the exporters/producers from the exporting country. It is obvious that the antidumping duty, in such an event, will be imposed on exports by any exporter from such country upon importation into India, irrespective of the fact whether such exporter of the subject article had made exports before or subsequent to the period of investigation. All the exports made by any such exporters/producers can be said to be subject to anti-dumping duty upon importation into India after the imposition of such duty.
- Those who did not export in the earlier period of investigation and were exporting thereafter if also treated as being subject to the anti-dumping duty, the question whether they are "related" will become meaningless, because relationship issue will have to be decided not only inter se between the exporters who did not export in the earlier period, but also with those who exported during the earlier period of investigation, and the distinction made in rule 22 between exporters who did not export in the earlier period of investigation and those who did, will get blurred, and no meaningful inquiry can be made while undertaking & colossal task of examining relationship of a "new shipper" with the entire community of the exporters of that country known and un-known.
- The very purpose of rule 22 to give succor to non-dumping "new shippers" will be frustrated if the relationship is required to be judged in the context of all the exporters irrespective of whether they exported during the initial period of investigation or not, simply because the notification applied to all imports from the exporting country making the product subject to anti-dumping duty.
(See 2007-TIOL-368-CESTAT-DEL-LB in 'Customs' + 2007-TIOL-368-CESTAT-DEL-LB in 'Legal Corner')
