Ask the expert

Sharad Bhansali
Ex-Indian Revenue Services
Former Director (Anti-Dumping & Trade Policy)
Ministry of Commerce

If above information is found to be incorrect/incomplete, ASL deserves its right to respond to the same.

Note: Response to the queries are at the sole discretion of ASL. Please ensure your queries are not specific to any case and are limited to questions of law or practice.

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Q & A's
Deepak

What are the implications of the proposed amendments in Section 9, 9A and 9C through the Finance Bill 2023?

Deepak

The proposed amendments in Sections 9(6) and 9A(5) seek to make a clear distinction between the central government and the Designated Authority. By substituting the words “on consideration of a review” in place of “in a review” in both the sections, the government’s objective seems to clarify that the Central Government is required only to consider the review (to be carried out by the Designated Authority) and not to carry it out itself. The intent perhaps is to reiterate its stance that the Central Government, while considering the review, shall not be required to follow the procedures and disciplines mandated for the Designated Authority.

As regards the removal of the phrase “and determined” in Sections 9(7) and 9A(6), it appears that the Central Government intends to clarify that it is not a part of the “determination” process which stands delegated to the Designated Authority. Yet again, the objective seems to keep the Central Government out of the quasi-judicial process mandated for the Designated Authority.

There are reasons to apprehend that the manner in which the aforesaid objectives are sought to be achieved will lead to further legal complications. Ministry of Finance should seek comments of the stakeholders before the bill is enacted.

In Section 9C(1), by removing the words “order of”, the government is clearly implying that the CESTAT shall be entitled to look only into the “determination or review” carried out by the designated authority. In other words, the customs notification or the office memorandum issued by the Ministry of Finance would not be a subject matter of appeal. The amendments in Section 9C(2) and 9C(3)and the insertion of the Explanation after Section 9C(5) confirm the above position.

It appears that the proposed amendments in Section 9C are aimed to restrict CESTAT from entertaining challenge to the notification or any order issued by the Central Government pursuant to the powers conferred under Customs Tariff Act.

Since the proposed amendments have been made with retrospective effect, all those cases where appeals were filed before the tribunal to get orders against the Office Memorandums issued by the Ministry of Finance, may be adversely affected. However, the amendments would not affect the cases where Domestic Industry has approached the respective high court seeking relief under Article 226 of the Constitution of India.

Prashant

How Installed capacity is defined for PUC?

Prashant

Under the current practices followed by the DGTR, there is no hard and fast rule for determining the installed capacity. It needs to be understood that the concept of capacity itself is extremely tenuous. Generally, capacity is an indicative number given by the technology supplier which itself is based on a number of variables predominant of which is the product mix. For instance, if the particular line decides to produce only one product type, the production would be much higher. On the other hand, if multiple types are produced on the very same machinery, the production may be much less. It is for this reason that the Hon’ble Supreme Court in Reliance Industries Vs, Designated Authority [2006 (202) E.L.T. 23 (SC)] directed that the authority should take into account the actual production for its analysis and not any arbitrary number. Unfortunately, the principles laid down by the apex court are not being followed. The insistence on capacity or installed capacity leads to other complications when declared installed capacities are different for different purposes.

Anonymous

Can anti-dumping duties be levied retrospectively?

Anonymous

Anti-dumping duties can be imposed retrospectively under the following circumstances:

(1) When there is a history of dumping which caused injury or that the importer was, or should have been, aware that the exporter practices dumping and that such dumping would cause injury; and

(2) When the injury is caused by massive dumping of an article imported in a relatively short time which in the light of the timing and the volume of imported article dumped and other circumstances is likely to seriously undermine the remedial effect of the anti-dumping duty liable to be levied.

Anonymous

Can a product type not manufactured by the Indian Industry be subjected to anti-dumping duties?

Anonymous

Product types imported but not manufactured by the Indian Industry can be subjected to anti-dumping duties provided they are technically and commercially substitutable with the product types manufactured by the Domestic Industry.

Anonymous

I am an exporter of a product upon which anti-dumping duty has been imposed by the Ministry of Finance. I did not participate in the investigation. Is there a way to get an individual dumping margin determination now?

Anonymous

Rule 22 provides for a situation where a producer/exporter is entitled to seek an individual dumping margin provided that he did not export to India during the period of investigation and is not related to any exporter or the producer of the subject goods in the exporting country. Any exporter who had exported during the original period of investigation but did not participate in the investigations, will not be able to seek individual dumping margin until the Designated Authority initiates a full mid-term review or during the course of a sunset review. It may not be out of place to mention that an individual dumping margin during sunset review investigation is not guaranteed as the Authority has taken different approaches in the sense that in some cases duties are redetermined while in some others, merely the period of existing duties is extended.

Anonymous

What is the difference between product under consideration and like article?

Anonymous

A Product under Consideration is the product the import of which is under investigation by the authorities. Once the investigations prove the existence of dumping, injury and causal link, it is the PUC (as defined) which shall be subject to anti-dumping or anti-subsidy duties. On the other hand, the concept of “like article” relates to the products which are identified for the purpose of normal value or dumping margin as well as for injury margin. Therefore, under the current practices followed by India, any PUC will have two sets of like articles, one that is sold by the responding exporter in the country of export (for normal value) and another on which the Domestic Industry is claiming injury (for injury margin).

Anonymous

Why does India impose fixed duties in a majority of the cases as compared to ad valorem duties?

Anonymous

While conceptually an ad valorem duty is the most efficient way of taxation, India has been imposing fixed anti-dumping duties under the apprehension that ad valorem duties may become less effective if the erring exporters resort to lowering of export prices consequent to the imposition of anti-dumping duties. However, it may be mentioned that the approach is based solely on assumptions and there has been no study or analysis to support such an assumption. Interestingly, with the introduction of the anti-absorption laws in the country, the insistence on fixed duty as the sole or principal form of duty requires fresh deliberations.

Anonymous

Why does the DGTR use ex-factory price for computation of NIP?

Anonymous

Since the injury margin requires comparison with the ex-customs prices, it becomes necessary to compute the Non-injurious Price or the target price at the ex-factory level. Conceptually, both the elements of injury margin have to be at the first or same level where they enter into the mainstream commerce of the country or into the market. Any comparison subsequent to the ex-factory or ex-customs level may lead to comparison at disparate levels.

Anonymous

How is landed value calculated and what is the rationale of such a calculation?

Anonymous

Landed value is calculated as the sum of the CIF value and the Basic Customs Duties (BCD) and the surcharges, if any. The basic idea is to include all expenses including the duties till the stage of clearance from the customs area which cannot be reimbursed or adjusted in any form in the further course of business. This is important for the purposes of “fair comparison” while calculating the injury margin where the landed value is compared with the ex-factory price. While Article 2.4 of the Anti-dumping Agreement dealing with fair comparison is not applicable for injury margin, the principles of fair comparison are equally applicable for injury margin calculation as well.

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