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Order of Continuation of Anti-Dumping duty made After Expiry of Duty Period is Invalid: SC [Read Judgment]

A two-judge bench of the Supreme Court held that the order of continuation of Anti-dumping duty, made after expiry of the duty period is invalid under the law.

While confirming the High Court order, the bench clarified that no public notice is required while the Government issuing such a Notification after the expiry date of the original Notification.

Before the High court, the petitioners, M/S. Kumho Petrochemicals Company Limited And Another, made two submissions. Firstly, the order of continuation of anti-dumping duty, made after expiry of the duty period, is bad in law. Secondly, the initiation of the anti-dumping duty investigation was also bad in law on the ground that public notice of initiation was not published in the Official Gazette before January 01, 2014, i.e., before the expiry of the anti-dumping duty at the end of five years period. Though the High Court allowed the first contention, it rejected the second one and held that public notice of initiation need not be published in the Official Gazette and that public notice is not a pre-requisite for initiation of an investigation, which can be issued within a proximate period of time after its initiation.

Both the petitioners and the Revenue preferred an appeal against the above order.

The questions before the apex Court was that, (1) whether the order of continuation of anti-dumping duty, made after expiry of the duty period, is bad in law? (2) Whether such a Notification issued after the expiry date of the original Notification is without any legal authority and is, therefore, null and void?

The bench noted that as per Section 9A(5) of the Customs Tariff Act, anti-dumping duty is effective for a period not exceeding five years from the date of its imposition. As per the provision, the government can revoke the duty imposed even before the expiry of five years. In any case, such a duty admittedly ceases to be operative after five years from the date of imposition. At the same time, the Central Government is empowered to initiate review, and to investigate and decide as to whether it is necessary to continue the levy of anti-dumping duty.

“As in the case of original Notification imposing such a duty, the Central Government is to satisfy itself that if the period of anti-dumping duty is not extended, it is likely to lead to continuation or recurrence of dumping and injury to the domestic industry. The nature of exercise to be undertaken by the Central Government in a ‘sunset review’ is somewhat different from the initial exercise to determine whether anti-dumping duty is to be levied at all or not. When it comes to review, the focus would be on the issue as to whether withdrawal of anti-dumping duty would lead to continuation or recurrence of dumping as well as injury to the domestic industry.”

Concurring with the finding of the High Court, it was observed that Sectiosn 9A(5)(1) of the Customs Tariff Act, r/w Rule 6 of the Rules, do not imply that the intention to review and extend the anti-dumping duty, in the facts of a given case, have to be necessarily published and made available to all, before the expiry of the original notification. The bench noted that what the section requires is the sunset review is must be initiated before the expiry of the original period for which the anti-dumping duty prevails. Hence, there is no additional requirement of making it public as well, necessarily before the said expiry date.

Regarding the next question, the bench aligned with the findings of the High Court that proviso to sub-section (5) of Section 9A of the Customs Tariff Act is an enabling provision.

The two judge bench comprising of Justice A.K Sikri and Justice Ashok Bhushan upheld the finding of the High Court that once the earlier Notification by which anti-dumping duty was extended by five years, i.e. up to January 01, 2014, expired, the Central Government was not empowered to issue any Notification after the said date, namely, on January 23, 2014, inasmuch as there was no Notification in existence the period whereof could be extended. It was also held that the High Court, has rightly held that the Notification extending anti-dumping duty by five years, i.e. up to January 01, 2014 was in the nature of temporary legislation and validity thereof could be extended, in exercise of powers contained in second proviso to sub-section (5) of Section 9A of the Act only before January 01, 2014.

Two things which follow from the reading of the Section 9A(5) of the Act are that not only the continuation of duty is not automatic, such a duty during the period of review has to be imposed before the expiry of the period of five years, which is the life of the Notification imposing anti-dumping duty. Even otherwise, Notification dated January 23, 2014 amends the earlier Notification dated January 02, 2009, which is clear from its language, and has been reproduced above. However, when Notification dated January 02, 2009 itself had lapsed on the expiry of five years, i.e. on January 01, 2014, and was not in existence on January 23, 2014 question of amending a non-existing Notification does not arise at all. As a sequitur, amendment was to be carried out during the lifetime of the Notification dated January 02, 2009. The High Court, thus, rightly remarked that Notification dated January 02, 2009 was in the nature of temporary legislation and could not be amended after it lapsed.”

Read the full text of the Judgment below.

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