THE DESIGNATED AUTHORITY v. M/S THE ANDHRA PETROCHEMICALS LIMITED

10. The Central Government, which filed its return, to the Writ proceeding argued that Andhra Petro produced only 2-EH, not INA and 2-PH, and as it filed the combined application for all the said products, the Designated Authority rejected the request of the petitioner. The letters produced by Andhra Petro to show that 2-EH, INA and 2-PH are ‘like articles’, were not issued by any independent/recognised agency/source and hence they could not be considered. It was further stated that though several opportunities were given to Andhra Petro seeking clarifications as to how the acyclic alcohols i.e., 2-EH, INA and 2-PH are ‘like articles’ when it does not produce INA and 2-PH, it did not submit any clarification, and it filed a combined application for imposition of anti-dumping duty for all three products.

11. The High Court disposed of the second writ petition on 28.08.2018 making the following observations and directions: “7. In spite of specific direction of this Court in W.P.No.25988 of 2017 dated 09.02.2018, the second respondent has not dealt with the applications of the petitioner afresh in true letter and spirit of the said order and passed the impugned order. The second respondent, relying upon the order of the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi in Appeal No.C/411/2000 dated 11.04.2001 whereby it held that Normal Hexanol is not one manufactured or produced by domestic industry, passed the impugned order stating that it is decided not to initiate antidumping investigation concerning imports of INA, 2-PH and 2-EH originating in or exported from Saudi Arabia, EU and Singapore, excluding 2-EH having carbon No.8 from EU. While passing the impugned order, the second respondent ignored the final findings dated 29.07.2003 and the order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) dated 13.04.2006 in the case of Andhra Petrochemicals Ltd. Vs. Designated Authority 2006 (201) ELT 481 (Tri.-Del.) with regard to dealing of ‘like articles’ and to accept 2-EH supplied by the domestic industry is ‘like article’ to 2- PH and INA imported from subject countries. The petitioner is the producer of 2-EH which is a ‘like article’ to 2-PH and INA and it falls within the ambit of Rule 2(b) read with Rule 2(d) of the Rules of 1995. Rules 2(b) and 2(d) of the Rules of 1995 read as under. “2(b) ‘domestic industry’means the domestic producers as a whole engaged in the manufacture of the like article and any activity connected therewith or those whose collective output of the said article constitutes a major proportion of the total domestic production of that article except when such producers are related to the exporters or importers of the alleged dumped article or are themselves importers thereof in which case such term ‘domestic industry’may be construed as referring to the rest of the producers: Provided that in exceptional circumstances referred to in sub-rule (3) of Rule 11, the domestic industry in relation to the article in question shall be deemed to comprise two or more competitive markets and the producers within each of such market a separate industry, if –

(i) the producers within such a market sell all or almost all of their production of the article in question in that market; and (ii) the demand in the market is not in any substantial degree supplied by producers of the said article located elsewhere in the territory.” ***************** 2(d) ‘like article’ means an article which is identical or alike in all respects to the article under investigation for being dumped in India or in the absence of such an article, another article which although not alike in all respects, has characteristics closely resembling those of the articles under investigation.”

8. The second respondent has not considered the issue whether the imported products and the domestic products are technically and commercially substitutable and has not come to a conclusion on ‘like article’. This action of the second respondent becomes absolutely ignoring the order of this Court dated 09.02.2018 in W.P. No. 25988 of 2017 and the impugned order is one without application of mind. There is no cogent reason pushing the petitioner to file repeated applications and the second respondent cannot pass orders in a routine and casual manner, in spite of sufficient material available with him.

9. In the light of the above, this writ petition is allowed, setting aside the order of the second respondent dated 05.03.2018. The second respondent is directed to take steps for initiating investigation to determine the anti-dumping in respect of import of INA having carbon No.9 from European Union and Singapore and 2-PH having carbon No.10 from European Union, in accordance with law, as expeditiously as possible. Pending miscellaneous petitions, if any, shall also stand closed. No order as to costs.”

12. Pursuant to the High Court’s directions, the DA issued notices on 28.09.2018, 24.10.2018 and 03.12.2018. After noticing that Andhra Petro’s initial application was in 2016 (i.e.18.10.2016 and 02.12.2016), the DA issued letters seeking updated data from Andhra Petro. However, Andhra Petro filed WP No.2639/2019 before the High Court against the DA's letters of 28.09.2018, 24.10.2018 and 03.12.2018. The DA filed its reply before the High Court, contending inter alia that first, the High Court's order dated 28.8.2018 did not prohibit it from calling for updated data and had directed it (DA) to initiate investigation in accordance with law; second, that it sought updated data to evaluate and comply with the High Court's order fairly; and lastly that Andhra Petro was silent on the fact that the data filed by it was 30 months old.

13. Apparently, in view of certain observations made during the proceedings by the High Court, the DA felt constrained to issue a notice of investigation on 09.07.2019 which inter alia, stated as follows:

21. Mr. Mukul Rohatgi, learned senior counsel appearing for Andhra Petro argued that the impugned orders do not call for interference. It was argued that the DA, despite repeated directions, failed to appreciate the submission by Andhra Petro, that the material on record disclosing that 2-Ethyl Hexanon (2-EH) supplied by the domestic industry is an article like 2-Propytheptyl Alcohol (2-PH) and Isononanol (INA) imported from the concerned countries. It is urged that commercially and technically, the two products can fall within the description of "like product" relatable to 2-Ethyl Hexanol offered by Andhra Petrochemicals Limited. Therefore, for a valid initiation of investigation, Andhra Petrochemicals Limited satisfied the criteria enumerated under Rule 2(8).

22. It was contended that the DA failed to appreciate that as long as the product is imported, duty can be imposed on all types of goods, provided such type of goods is in commercial competition with a like article. Highlighting that the domestic producer in terms of Rule 2(8) should be engaged in the manufacture of like articles to enable the filing of a complaint and seeking imposition of antidumping duty upon the dumped article, learned counsel submitted that the two products in question were kept out of the investigation. Mr. Rohatgi argued that the scope of the term "like article" includes those which have closely resembling characters with the one in question.

23. It was submitted that the deliberate and persistent omission of the DA to comply with the High Court's directions was contumacious and invited stringent action, meted out by the impugned order. Learned Senior Counsel highlighted that so far as the period of investigation was concerned, in none of the previous proceedings did the DA ever disclose that data other than the period mentioned in the complaint too required inclusion for the purposes of investigation. Not having done that in the earlier proceedings, the DA was precluded from insisting that a period or periods other than what were the subject of complaint too had to be included and relevant data for that end had to be given. The approach of the DA likewise in regard to the question of "like article" is contrary to law. Analysis & Conclusions

24. The relevant provision, i.e. Section 9A of the Customs Tariff Act is extracted in the footnote below[1]. Section 9C of the Customs Tariff Act provides for an appeal to the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) against an order “of determination or review thereof regarding the existence, degree and effect of any subsidy or dumping in relation to import of any article.”

25. This court, in S&S Enterprise v. Designated Authority[2], observed that “the purpose behind the imposition of the duty is to curb unfair trade practices resorted to by exporters of a particular country of flooding the domestic markets with goods at rates which are lower than the rate at which the exporters normally sell the same or like goods in their own countries so as to cause or be likely to cause injury to the domestic market.” It was noted that levy of anti-dumping duty is a move to remedy injury, recognized by GATT that balances 1 “Section 9A. Anti-dumping duty on dumped articles. — (1) Where any article is exported by an exporter or producer from any country or territory (hereinafter in this section referred to as the exporting country or territory) to India at less than its normal value, then, upon the importation of such article into India, the Central Government may, by notification in the Official Gazette, impose an anti-dumping duty not exceeding the margin of dumping in relation to such article. ********************** (5) The anti-dumping duty imposed under this section shall, unless revoked earlier, cease to have effect on the expiry of five years from the date of such imposition: Provided that if the Central Government, in a review, is of the opinion that the cessation of such duty is likely to lead to continuation or recurrence of dumping and injury, it may, from time to time, extend the period of such imposition for a further period of five years and such further period shall commence from the date of order of such extension: Provided further that where a review initiated before the expiry of the aforesaid period of five years has not come to a conclusion before such expiry, the antidumping duty may continue to remain in force pending the outcome of such a review for a further period not exceeding one year. ******************

“the right of exporters from other countries to sell their products within the country with the interest of the domestic markets.” Thus the factors to constitute ‘dumping’, are (i) an import at prices which are lower than the normal value of the goods in the exporting country; (ii) the exports must be sufficient to cause injury to the domestic industry.”

26. Reliance Industries Ltd. v. Designated Authority[3] explained that industries built after independence with great difficulty should not be allowed “to be destroyed by unfair competition of some foreign companies. Dumping is a wellknown method of unfair competition which is adopted by the foreign companies.” The Court also said that,“The purpose of Section 9-A is, therefore, to maintain a level playing field and prevent dumping while allowing for healthy competition.”

27. The DA, no doubt, follows a prescribed quasi-judicial procedure where a determination on whether to impose or not to impose anti-dumping duty takes place (through a report).[4] However, this proceeding culminates with a recommendation; the Central Government finally decides whether to impose such a duty, the extent of such duty, and its duration.[5] Under Rule 4, the DA is duty bound to conduct i) investigation of the existence, degree and effect of any alleged dumping in relation to imports of any article; (ii) identify the article(s) on which anti-dumping duty is to be imposed; (iii) submit findings, provisional or otherwise to Central Government; (iv) determine the normal value, export price and the margin of dumping in relation to the article under investigation; and (v) determine the injury or threat of injury to an industry established in India or material retardation to the establishment of an industry in India consequent upon the import of article from specified countries. The meaning

4 Tata Chemicals v. Union of India, (2008) 17 SCC 180; Automotive Tyre Manufacturers Association v. the Designated Authority (2011) 2 SCC 258 5 Rule 17 which speaks of “recommendation” by the DA. Also, the power to levy duty is discretionary, evident from Rule 18 which leaves it to the Central Government to levy anti-dumping duty, by following the prescribed methods of dumping is defined by Rule 10.[6] Rule 17, which speaks of the findings of the DA, obliges that authority to make its final findings “not later than one year from the initiation of investigation” through a report that outlines the export price, normal value and margin of dumping, whether import of the article into India from specified countries causes material injury, or threatens injury, or materially retards the establishment of any industry in India, the causal link between the dumped import, etc. The proviso to Rule 17 (1) empowers the Central Government in its “discretion in special circumstances” to extend further the said period of one year by six months, within which the investigation is to be completed.

28. Rule 20 is important, and reads as follows:

29. Section 9A of the Customs Tariff Act and the procedure prescribed by the Rules of 1995, clearly disclose an intent that investigations should be completed within pre-determined time limits and the levy itself (which can be specific to foreign exporter or country – or combination of both-) cannot be more than five years – which may, after due review in accordance with prescribed procedure, before expiry of the said period, be extended by another period not more than five years. These timelines are crucial; the DA is duty bound to follow them. The analysis of the particular market behaviour by the allegedly offending foreign exporters, involves sifting of a great deal of evidence, such as manufacturing capacity, financial abilities, overall capacity of the country in the like field, prices, and the margin of acceptable delinquent behaviour, as well as domestic capacity, efficiency, etc, while determining if an injury exists, the margin of such injury and its likely duration. The judgment of this court in Union of India v. Kumho Petrochemicals[7] has noticed that as a signatory to GATT and the Marrakesh Agreement, the Anti-Dumping Rules (ADA) are to be assimilated into domestic laws. The provision of Article 5.10 of the Marrakesh Agreement is strict with respect to the timeline for taking up and conclusion of investigation.[8] Article 10

8 Article 5.10 reads as follows: “5.10 Investigations shall, except in special circumstances, be concluded within one year, and in no case more than 18 months, after their initiation.” empowers states to levy duties, with retrospective effect, only for a limited period (90 days subject to fulfilment of prescribed conditions) “prior to the date of application of provisional measures, when the authorities determine for the dumped product in question that:..”9 This has been given effect to by Rules 17 and 20 of the Rules of 199510.

30. Keeping the imperative of completion of investigation within a pre-determined timeline, the guidelines contained in the Manual of Operation for Trade Remedy Investigations (Period of Investigation and Injury Investigation period) as to the contemporaneousness of the data necessary to carry out the investigation, assume importance. The relevant provisions of the Manual are extracted below: "5.[9] The POI proposed in the application should be as latest as possible, and in any case not more than six months old as on date of initiation. If the proposed POI is more than six months old, then applicant may be asked to furnish revised application with fresh data.

5.10 The POI should normally be twelve months. As far as possible attempt should be made to identify POI as per the financial year, as it will make analysis easier and more accurate. An attempt should be made to select POI in such a way that at least one complete financial year is included in the POI to ensure availability of audited details at least for a part period of POI. It is always desirable to add period in terms of quarters (as the financial results

10 Ref Commr. of Customs v. G.M. Exports, (2016) 1 SCC 91at page 118, where it was observed that: “32. Under Rule 17, the Designated Authority is given one year from the date of initiation of an investigation to come out with its final findings. This is extendable by the Central Government only in special circumstances, and only by a further period of 6 months, and no more (Clause 5.10 of the WTO Agreement). Significantly, the Designated Authority, in its final finding, may also provide for a retrospective levy of duty, the reasons therefor, and the date of commencement of such retrospective levy. This is obviously referable to Section 9-A(3), which reproduces Clause 10.[6] of the WTO Agreement. The reasons must be the reasons mentioned in the said sub-section, and, as mentioned in the said sub-section, such retrospective levy cannot commence beyond 90 days from the date of the notification imposing provisional duty.” are prepared quarter wise only) instead of any odd number of months as it may be difficult for other interested parties to submit their audited figures for such odd period."

31. The rationale for these guidelines is self-evident: any investigation carried out for past periods would in all likelihood, result in minimal levy. For instance, if in 2020, investigation is initiated for the period 2013-14, with the object of determining anti-dumping, even if injurious behavior is found, the levy can be only of limited duration. Further, to levy duty for the period after findings are rendered, the POI would yield stale results, and cannot justify levy for later periods. Keeping this in mind, the DA, apparently in the present case, having regard to Para 5.[9] (quoted above) required Andhra Petro to furnish relatively contemporary data. Such an action cannot be termed as arbitrary. In this court’s opinion, the impugned orders were plainly erroneous in chastising the DA, and even directing his replacement, for what appears to be his adherence to prescribed procedure.

32. Access to judicial review is a valuable right conferred upon citizens and persons aggrieved; the Constitution arms the High Courts and this court with powers under Articles 226 and 32. At the same time, barring exceptional features necessitating intervention in an ongoing investigation triggered by a complaint by the concerned domestic industry, judicial review should not be exercised virtually as a continuous oversight of the DA’s functions. This court has cautioned more than once, that judicial review is to be exercised in a circumspect manner, especially where final findings are rendered by the DA.11

33. For the foregoing reasons, this court is of the opinion that the impugned orders, i.e., the order dated 28.08.2018 issuing specific directions for anti-dumping investigation into articles imported from EU; the order dated 22.07.2019 (initiating

11 Directorate General of Anti-Dumping v Sandik International (2018) 13 SCC 402; Association of Synthetic Fibre Industries v Apollo Tyres Ltd (2010) 13 SCC 733. contempt proceedings against the DA) and the order dated 05.08.2019 have to be set aside. The first two orders are accordingly set aside. The third order (dated 05.08.2019), to the extent that it directs the replacement of the incumbent DA, is set aside. The appeals are allowed in the above terms, without order on costs ............................................... J. [ARUN MISHRA] ............................................. J. [VINEET SARAN] ............................................. J. [S. RAVINDRA BHAT] New Delhi, September 1, 2020.