Anti-dumping duty can be levied in India for a period not exceeding five years in terms of Section 9A(5) of the Customs Tariff Act, 1975. This levy can be extended for a further period of five years only if a conclusion is arrived at by the Designated Authority pursuant to a sunset review that removal of the anti-dumping duty shall result in continued dumping and injury. The question as to whether a sunset review is mandatorily required to be undertaken was considered by the Delhi High Court in the case of Indian Metal and Ferro Alloys Ltd. v. Designated Authority [2008 (224) E.L.T. 375 (Del.)] wherein it was held that a sunset review needs to be conducted mandatorily.
In the year 2017, the concerned domestic industries, for whom the anti-dumping duty protection was set to expire, submitted applications to the Designated Authority seeking initiation of sunset reviews. One such case was the anti-dumping duty levied on cellophane transparent film from China PR which was set to expire on the 12th of January, 2017. Accordingly, the concerned domestic industry, filed an application for initiation of sunset review. However, the Designated Authority refused to initiate the sunset review as it was of the view that the facts of the case did not reveal any injury or likelihood of injury to the company. Being aggrieved by non-initiation of the sunset review, the company representing domestic industry filed a writ petition in the Delhi High Court and prayed for a direction to the Designated Authority to initiate the sunset review. It was contended that it was mandatory on the part of the Designated Authority to initiate a sunset review in view of the earlier judgment in the case of Indian Metal and Ferro Alloys.
Pending final hearing of the writ petition, the Delhi High Court gave the domestic industry interim relief and directed the Designated Authority to initiate and conduct the sunset review. Directions were also issued that pending the sunset review, the anti-dumping duty would be extended for a further period of 1 year in terms of the second proviso to Section 9A(5) of the Customs Tariff Act, 1975. However, the Delhi High Court also clarified that the outcome of the investigation would be contingent on its final decision in the matter and the duties collected from importers would be refunded in case the contention of the domestic industry was rejected. While the case was still pending before the Delhi High Court, the Designated Authority refused to initiate sunset reviews on certain other products as well such as Phosphoric Acid, Geostraps made of polyester or glass fibre, and Metronidazole. Consequently, the domestic industries of these products also approached the Delhi High Court and all these matters were tagged along with the earlier writ petition. Interim relief in the same nature as that given to the petitioner in the case of cellophane transparent film was also given to the domestic industries of these products.
The questions with which the Delhi High Court was finally confronted with were whether:
1. The Designated Authority must be satisfied that prima facie some case is made out before initiating the sunset review and thereby, answer it in the negative without having actually conducted the investigation?
2. In the facts and circumstances of the present cases, the Designated Authority was justified in doing so?
While answering the first question, the Delhi High Court opined that a sunset review involved a two-step process. The first step was to form a prima facie opinion that a sunset review is required on the basis of the material furnished by the domestic industry in its application. The second step involved actually conducting the sunset review.
Having answered the first question in the affirmative, the Delhi High Court proceeded to examine whether the Designated Authority was justified in refusing to initiate the sunset reviews. The Delhi High Court however noted that the scope of such examination under writ jurisdiction would not involve a scrutiny on whether the refusal to initiate the sunset reviews was correct but rather, whether the same was reasoned and based on relevant considerations. The Delhi High Court noticed the fact that the Designated Authority had sent questionnaires to the various domestic industries to elicit further information, clarifications and inputs regarding their applications, had calculated their non-injurious price by considering all the relevant parameters and overall, had undertaken a very detailed analysis in arriving at its conclusions. Therefore, the Delhi High Court held that the Designated Authority had acted within its jurisdiction in refusing to initiate the sunset reviews.
In reaching the conclusion regarding the first question, the Delhi High Court placed reliance upon Rule 23 of the Anti-Dumping Rules, 1995, which lays down the manner in which sunset reviews are to be conducted and its requirements. Rule 23(3) provides that Rules 6 to 11 and 16 to 20 are mutatis mutandis applicable in the case of a sunset review. The Delhi High Court took note of the fact that Rule 6, which sets out the principles for conducting an original investigation, started with the phrase “The Designated Authority shall, after it has decided to initiate the investigation to determine the existence, degree and effect of any alleged dumping of articles,…”. Accordingly, it held that the Designated Authority has to first decide whether or not the sunset review is required to be undertaken.
However, in the case of an original investigation, the decision to initiate it is taken by the Designated Authority under Rule 5 which is not applicable to sunset reviews. Rule 5 provides that the Designated Authority shall not initiate an investigation unless it examines the accuracy and adequacy of the evidence provided in the application and satisfies itself that it is sufficient to justify the initiation of the investigation.
As the application of the mutatis mutandis rule contemplates making necessary changes in detail for adaptation without sacrificing the main point at issue which, in the case of Rule 6, are the principles to be followed while conducting the investigation, the fact that it starts with the phrase “after it has decided” may not have much relevance in the absence of the application of Rule 5 to sunset reviews. In the present case, the Delhi High Court did consider the views expressed in the case of Indian Metal and Ferro Alloys whereby it had held that a sunset review had to be mandatorily conducted, and opined that it was rendered at a time when the judgment of the Supreme Court in the case of Kumho Petrochemicals v. Union of India & Ors [(2017) 8 SCC 307] was not in existence which is now the authoritative judgment on the issue. In the case of Kumho Petrochemicals, the Apex Court had dealt with the question of whether a sunset review could be initiated and notification extending the levy pending the review could be issued after expiry of the original anti-dumping duty. However, the question of whether the initiation of a sunset review involved a two-step procedure was not an issue either directly or incidentally in Kumho.
In view of the fact that the Delhi High Court had earlier considered sunset review to be mandatory and the Supreme Court decision in Kumho Petrochemicals did not expressly overrule the law laid down in Indian Metal Ferro Alloys, it could perhaps have been more appropriate if the matter was referred to a larger Bench for deciding the said issue.
However, the decision of the Delhi High Court in the present case cannot be faulted with though the reasons given for arriving at the said conclusion may not be entirely adequate. Rule 23(1B) of the Anti-Dumping Rules 1995 and Article 11.3 does provide that the request for a sunset review by the Domestic Industry must be ‘duly substantiated’. This indicates that there should indeed be an application of mind by the Designated Authority before initiating the sunset review to decide whether the request for review is substantiated in a given case. Otherwise, in case a sunset review is considered to be mandatory despite all indicators to the contrary, it would waste precious time and effort of not only the interested parties who would be required to participate in the investigation, but also the Designated Authority, who is saddled with the responsibility of conducting a massive number of investigations with India being one of the largest users of anti-dumping measures.