Under the Indian anti-dumping legal framework, anti-dumping and anti-subsidy investigations are administered by the Directorate General of Trade Remedies (DGTR) under the Ministry of Commerce and Industry and make recommendations to the central government (in particular, the Ministry of Finance) for the imposition of anti-dumping or anti-subsidy measures. It is the central government which levies such duties.
In the past two years, the central government has rejected a large number of recommendations by the DGTR that proposed the imposition of duties.(1) Office memorandums were issued in most of these cases, and they merely stated that the central government had decided not to impose anti-dumping duties. The central government's reluctance to impose duties has caused significant distress among domestic producers, which were already suffering injury on account of dumped imports. Various such domestic producers filed appeals before the Customs Excise and Service Tax Appellate Tribunal (CESTAT) against the central government's decisions. The main grounds raised by the domestic industry were that:
- the central government had acted in an arbitrary manner and declined to impose anti-dumping duties by a non-reasoned order;
- the power exercised by the central government is quasi-judicial in nature; and
- the central government must necessarily take into consideration the purpose behind the imposition of anti-dumping duties while exercising discretion under Rule 18.
In one case, the tribunal remitted the matter back to the central government to take a fresh decision regarding the recommendations made by the DGTR.(2) The same finding was later upheld in other cases where the grounds were similar.(3) The following sections discuss the tribunal ruling in this case.
Was the appeal maintainable against the central government?
The first issue the tribunal considered was whether the appeal was maintainable against the central government, as the appeal was against the order of determination regarding the existence, degree and effect of any subsidy or dumping in relation to the import of any article. The tribunal took support from Supreme Court and High Court judgments(4) and ruled that – since the central government is vested with the discretion to either impose or not impose duties, and since the discretion had been exercised in not imposing the duties recommended – the central government had indeed made a determination regarding the existence, degree and effect of dumping in relation to imports of the article as required under section 9C(1) of the Customs Tariff Act 1975.(5) The tribunal also laid emphasis on the High Court decision while observing that the right to appeal should not be forfeited or abandoned unless the statute so states and it can be inferred on a reasonable and practical interpretation.
Should the central government's determination of not imposing a duty be set aside?
The tribunal addressed the moot question of whether the determination made by the central government to not impose duties should be set aside. The following points can be noted.
Function performed by central government under section 9A of Customs Tariff Act is quasi-judicial in nature
To address this issue, the tribunal first examined the nature of the function performed by the central government under section 9A of the Customs Tariff Act and held that the function is of a quasi-judicial nature, not of a legislative nature, as contended by the central government.
State actions are to be guided by article 14 of Constitution of India
The tribunal referred to Supreme Court precedents which state that the principle of equality enshrined in article 14 of the Constitution of India must guide every state action, whether legislative, executive or quasi-judicial.(6) Precedents also state that such actions cannot be arbitrary.
Central government should record reasons for rejecting recommendations made by DGTR
After ruling that the central government is a quasi-judicial body and the actions taken should not be arbitrary, the tribunal examined the necessity of recording reasons for actions taken by the authority. The tribunal noted that the central government has a discretion to impose the duties, but such discretion needs to be exercised in a judicious manner by a reasoned order. The tribunal also held that "superior public interest", as argued by the central government, can be a reason for not imposing duties. However, an explanation must be provided for holding so. It was also emphasised that since the DGTR had conducted a detailed analysis and had thereafter concluded there was a need for anti-dumping duties, the central government ought to have examined all the relevant aspects necessary for deciding whether that anti-dumping duty was required to be imposed. It also should have dealt with the findings recorded by the DGTR, since the central government was to take a view different from that expressed in the recommendation made by the DGTR.
While the central government's next course of action needs to be carefully observed, the tribunal ruling is not short of a momentous decision in India, as it highlights the responsibilities and obligations of the implementing authority (the central government) when considering the recommendations given by the investigating authority (the DGTR), particularly while rejecting a positive recommendation given by the DGTR. The order has given some respite to the domestic industry, which did not have answers as to why exactly the recommendations by the DGTR had not been implemented.
For further information on this topic please contact Divya Nair at TPM Solicitors & Consultants by telephone (+91 11 4989 2200) or email ([email protected]). The TPM Solicitors & Consultants' website can be accessed at www.tpm.in.
Endnotes
(1) The central government has rejected around 50 recommendations in past two years.
(2) Jubiliant Ingrevia Limited v Union of India, Final Order No. 51899/2021, dated 27 October 2021.
(3) The CESTAT has remitted matters back to the central government to take a fresh decision concerning the recommendations made by the designated authority in the anti-dumping duty investigations relating to imports of acrylic fibre, fully drawn or fully oriented yarn/ flat yarn of polyester, methylene chloride, acrylonitrile butadiene rubber, and nonyl phenol.
(4) Saurashtra Chemicals Ltd v Union of India [2000] (118) ELT 305 (SC); Jindal Poly Film Ltd v Designated Authority [WP (C) No. 8202/2017].
(5) Section 9C of the Customs Tariff Act 1975 states that:
An appeal against the order of determination or review thereof regarding the existence, degree and effect of any subsidy or dumping in relation to import of any article shall lie to the Customs, Excise and Service Tax Appellate Tribunal constituted under section 129 of the Customs Act, 1962. (52 of 1962)
(6) Article 14 of the Constitution of India establishes equality before the law. For the precedents to which the Supreme Court referred, please see:
- Shri Sitaram Sugar Mills Ltd v Union of India [1990] AIR 1277;
- Ramana Dayaram 'Shetty v The International Airport Authority of India [1979] 3 SCR 1014 at 1042;
- Ajay Hasia v Khalid Mujib Sehravardi [1981] 1 SCC 722; and
- DS Nakara v Union of India.