Kalpesh Gupta Namrita Raghuwanshi September 23 2022 CESTAT finds unjustified rejection of DGTR recommendations improper TPM Solicitors & Consultants | International Trade - India Kalpesh Gupta, Namrita Raghuwanshi International Trade IntroductionFactsDecisionA Customs Excise and Service Tax Appellate Tribunal (CESTAT) judgment concerning the case of Apcotex Industries Limited v Union of India was released on 30 August 2022.Introduction Multiple domestic producers recently filed appeals raising concerns against the rejection of recommendations made by the designated authority, for the imposition or extension of anti-dumping duty, safeguard duty or countervailing duty by the central government for no given reason. For some matters, an office memorandum was issued, stating that government had decided not to accept the recommendations of the designated authority. For others, the government did not issue a memorandum at all.FactsThe appellants sought relief, claiming that the government should accept the recommendations of the designated authority, considering that these followed elaborate investigations. It was contended that if the government decided to reject these recommendations, it should give reasons for doing so.The issues raised before the CESTAT were whether:an appeal against an office memorandum is maintainable under section 9C of the Customs Tariff Act;a determination by the government is legislative or quasi-judicial in nature; andthe office memorandum issued by the government is in violation of the principles of natural justice.DecisionIs an appeal maintainable under section 9C of the Customs Tariff Act?The CESTAT considered whether an appeal under section 9C of the Customs Tariff Act 1975 lies only against an "order of determination or review thereof, in respect of the existence, degree and effect of any subsidy or dumping" in relation to import of any article. The government contested that the power to investigate lies with the designated authority and that, therefore, the findings issued by the designated authority would constitute an order. An office memorandum issued by the government can only be described as an order or decision not to impose a duty and is an inter-departmental communication, which is not appealable under section 9C of the Act.The CESTAT held that an appeal would lie only against orders that are determinative and final in respect of the existence, degree and effect of any subsidy or dumping in relation to import of any article. The CESTAT also noted that provision conferring the right to appeal must be read to signify that the right to appeal should not be restricted or denied, unless such a construction is unavoidable. The designated authority performs functions under the Act on behalf of the government and not as an independent authority. Section 9C of the Act does not restrict the right to appeal to a specific category of orders; rather, the restriction is that the orders should determine the existence, degree and effect of subsidy or dumping in relation to imports of articles. Therefore, the CESTAT concluded that an appeal would lie before them against the decision of the government not to impose the duties.Is a determination by the government legislative or quasi-judicial in nature?The CESTAT considered whether functions concerning the imposition of duty are quasi-judicial or legislative in nature. The CESTAT observed that government, while acting as a delegated legislative body, performs two distinct functions. The first is the function of framing rules, which is clearly legislative, and the second is the making of a determination, which is a function that is quasi-judicial in nature. While the legislative function of making the rules is not appealable before the CESTAT, the quasi-judicial function of making a determination is expressly rendered appealable under section 9C of the Act. The CESTAT also noted that the quasi-judicial function requires the government to follow the principles of natural justice to reach their conclusion.Does the office memorandum issued by the government violate principles of natural justice?The CESTAT noted that if the government forms a prima facie opinion that the final findings of the designated authority recommending the duties are not required to be accepted, the reasons for rejection must be recorded and conveyed to the domestic industry to give them an opportunity to represent their case.Further, the CESTAT held that not communicating the decision within the prescribed time will equate to a decision to not accept recommendations. Thus, these cases would also fall into the category of cases where an office memorandum conveys the government decision not to impose the anti-dumping duty.Therefore, the CESTAT held that the government decision not to impose anti-dumping duty, despite a recommendation made by the designated authority and without recording any reasons, is not appropriate. The CESTAT has remitted the matter back to the government to issue a new decision.For further information on this topic please contact Kalpesh Gupta or Namrita Raghuwanshi at TPM Solicitors & Consultants by telephone (+91 11 4989 2200) or email ([email protected] or [email protected]). The TPM Solicitors & Consultants' website can be accessed at www.tpm.in.