A Detailed Guide For
Anti-Dumping Laws in India
By Ricky Chopra, Advocate
INDEX Background Introduction Indian Legal Framework for Anti-Dumping Understanding the various Aspects relating to Anti-Dumping Duty Procedure for Commencement of Investigation Imposition of Provisional Duty Imposition of Anti-dumping Duty Te r m i n a t i o n o f I n v e s t i g a t i o n Appeal Case Studies for Anti-Dumping Duty in India R C I C’s P r a c t i c e A r e a o n Anti-Dumping Conclusion
Background The growing emphasis on free trade over the second half of the 20th century led to many countries opening their markets for global trade without substantial barriers. However, this liberalization came at a cost of its own. Countries which manufactured excess of products often resorted to practices like dumping of their products in other jurisdictions at significantly lower prices. Evidently, this caused a severe blow to the domestic players. Therefore, the need was felt at an international level to introduce measures for protection of the domestic industry and anti-dumping duties came to be the most preferred of such protectionist mechanisms.
Introduction Members of the World Trade Organisation found it extremely crucial to include a provision for barriers against such unethical practices like dumping. Therefore, Article VI of the General Agreement on Tariffs and Trade, 1947 provides that, “dumping, by which products of one country are introduced into the commerce of another country at less than the normal value of the products, is to be condemned if it causes or threatens material injury to an established industry in the territory of a contracting party or materially retards the establishment of a domestic industry”. After the conclusion of the Tokyo Round in 1979, parties came to agree upon an Agreement for the Implementation of Article VI of GATT, 1947. It was finally at the end of the Uruguay Round negotiations in 1994 that the certain changes were introduced and the final form of the Agreement was agreed upon, which was binding on all members of the World Trade Organisation. www.rcic.in.
Indian Legal Framework for Anti-Dumping Being a signatory to the Marrakesh Agreement and a member of the World Trade Organisation, India was obliged to enact domestic legal provisions for safeguards against dumping. The WTO regime prescribes three kinds of duties, anti-dumping duties, counter-vailing duties and safeguard duties. Counter-vailing duty is levied to tackle export subsidies, whereas safeguard duties are levied only in certain emergency situations as a response to the sudden surge in the imports of a particular item. India has an elaborate framework for imposition of anti-dumping duties under the Customs Tariff Act, 1975 (the Act), supplemented by the Customs Tariff (Identification, Assessment and Collection of Anti-dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995 (the Rules). The Indian Ministry of Commerce & Industry defines dumping as, “when the goods are exported by a country to another country at a price lower than its normal value”. It is considered as an unfair trade practice which is injurious to Indian entities and is therefore tackled with the help of anti-dumping duties.
Understanding the Various Aspects relating to Anti-Dumping Duty Before we move on to the detailed procedure for imposition of anti-dumping duties, it would be beneficial if we first acquaint ourselves with certain key aspects relating to the same and which shall be referred to frequently thereafter. Explanation to Section 9A of the Customs Tariffs Act, 1975 and the Rules thereunder provide that:
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Dumping: Rule 10 of the 1995 Rules reads that “an article shall be considered as being dumped if it is exported from a country or territory to India at a price less than its normal value”. Margin of Dumping:It is the difference between the price at which an article is exported and its normal value. Normal Value: Normal Value is calculated on the basis of the price of the article in the exporting country during ordinary course of trade. However, that is unascertainable, it shall then be determined based on the highest comparable price of the article from the exporting country sold in any third country in ordinary course of trade, or lastly, on the basis of the cost of production of the said article in the country of origin along with reasonable addition for selling and any other cost, and for profits. Material Injury:Under Section 9B(1), anti-dumping duty can only be imposed when the central Government after being satisfied on investigation, declares by notification in the official gazette that importation of the product in India either: Causes material injury, Threatens to cause material injury, or Materially affects the establishment of a domestic industry. Like Article: It is 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. Ordinary course of trade: A transaction in the ordinary course of trade refers to one between an independent buyer and seller where the buyer and seller are not related and price is the sole consideration for the sale. If there is a special or favoured buyer from whom the seller charges an especially low price, it can be termed as dumping.
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Procedure for Commencement of Investigation An investigation into an alleged case of dumping can be initiated under two circumstances. Under Rule 4, the Designated Authority, that is, the Directorate General of Anti-Dumping (DGAD) is obliged to beware of any dumping actions by exporting countries and take suo moto cognizance of the matter for investigation. Alternatively, under Rule 5 (3), an investigation can be initiated by the DGAD f an application is preferred in this regard by domestic producers whose cumulative output amounts to at least 50% of the total domestic production of that article in India. For such investigation, it has also been vested with the authority to carry out its investigation in other countries under Rule 9. On being satisfied of the appropriateness of the application, the DGAD commences its investigation with respect to the normal value, the export price, the margin of dumping, material injury etc. and is supposed to submit its finding to the Central Government within a period of 12 months.
Imposition of Provisional Duty The DGAD must give public notice of its preliminary findings. Under Rule 12, such preliminary findings must contain details pertaining to the names of exporters or suppliers engaging in dumping, the countries involved in the action supported by explanations regarding the methodology used for arriving at the findings. On the basis of these preliminary findings, a provisional anti-dumping duty may be imposed by the Central Government for a period not exceeding 9 months.
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Imposition of Anti-Dumping Duty Within one year from the commencement of the investigation, the DGAD is required to submit its final findings to the Central Government, along with mention of factum of dumping, material injury, the causal link between the injury and import of that article. Thereafter, within 3 months of submission of such final findings, the central Government may impose Anti-dumping Duty not exceeding the margin of dumping. This anti-dumping duty is imposed over and above the usual customs duties and is aimed at having a deterrent effect on exporters who wish to dump their unsold goods at extremely low prices in India. Such anti-dumping duty shall be imposed on a non-discriminatory basis on all sources from which the like article is being dumped in India. A duty once imposed shall be valid for a period of 5 years from its publication in the official gazette. The Rules also provide for interim review of the duty during the period of five years for the purpose of examining the need for continued existence of the duty.
Termination of Investigation Rules 14 of the Rules 1995 also provides the grounds on which an on-going investigation by the DGAD may be terminated. These include an intimation by the domestic industry that the injury or threat to material injury no longer exists, personal satisfaction of the DGAD with respect to non-existence of injury, a fining that the injury though present is negligible or a determination that the margin of dumping is less than 2% of the export price.
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Appeal An aggrieved who is dissatisfied by the orders of the DGAD may also appeal against it to the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) within 90 days accompanied by a fee of INR 15,000. Now that we have become familiar with the procedure, let us have a look at some of the landmark rulings by Indian courts on anti-dumping.
Case Studies for Anti-Dumping Duty in India Material Injury: In Bridgestone Tyre Manufacturing v. Designated Authority, it was held that the domestic industry saw an improvement in its sales during the period of investigation and therefore, it could not be satisfactorily established that material injury was being caused to the domestic producers. Determination of Normal Value of Article: In Designated Authority Anti-Dumping Directorate Ministry Of Commerce v. HaldorTopsoe A/s. The Supreme Court held that, “normal value' will have to be determined with reference to comparable price, the word "comparable price" in the context can only be with reference to the price of similar articles sold under similar circumstances irrespective of the manufacturer”. Right of Interested Party to Be Participate in Investigation: In J.K. Industries Limited v. Union of India, the Rajasthan High Court held that, “an interested party who is mandatorily required to be offered an opportunity to participate in the investigation by the Designated Authority, cannot be held to be stranger to proceedings and denied locus standi.
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Off-setting Provisional Duty Against Final Duty: In Commissioner of Customs, Bangalore v. G.M. Exports & Others, the Supreme Court observed that, “if provisional anti-dumping duty is found to be higher than the final anti-dumping duty, the differential shall be refunded to the importer. But Sub-rule (1) goes a step further and states that if the anti-dumping duty finally imposed is higher than the provisional duty already imposed and collected, the differential shall not be collected from the importer”. Like Article: In Oxo Alcohols Industry Association v. designated Authority, it was held that “Mere substitutability of the product is not sufficient. The imported article and the like article should have characteristics closely resembling each other”. Essential for Imposing Anti-Dumping Duty: In Reliance Industries Ltd. v. Designated Authority and Ors., the Supreme Court laid down the sine qua non for imposition of anti-dumping duty. It observed that: “To levy anti-dumping duty it is essential in terms of Rule 4 and Rule 17 of the Rules to establish: (i) Dumping, which is reflected by a "Margin of Dumping”; (ii) "Injury"; and (iii) Causal Link between dumping and injury to the domestic industry to establish that injury to the domestic industry is caused by dumping.”
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Ricky Chopra International Counsels’ Practice Area on Anti-Dumping RCIC is one the leading corporate law firms in India with more than 4 decades of experience. Like most other full-service law firms, RCIC also has a specialized team dedicated to the practice of anti-dumping headed by industry veterans in the area of indirect tax, which renders expert advice relating to precise business and policy decisions.On the other hand, our dynamic and committed team of young lawyers assists our clients in ensuring compliance to all the regulatory requirements. This has helped us garner the faith of our clients, who continue to prefer us as their reliable law firm.
Conclusion Though of late, several scholars have been calling for a separate law devoted exclusively to anti-dumping and counter-vailing duties, no significant step has yet been taken by the legislature in that regard. The above-described procedure is the law relating to anti-dumping as it currently stands in India. Though India does not follow a very strict protectionist policy and has given exporters access to its domestic markets with far less trade barriers compared to some other nations, it is also clear from the above cases that it shall not tolerate significant damage to its domestic industries either. In fact, on November 28, 2016 itself, the Central Government had declared that 353 anti-dumping investigations had been initiated. As of now, there are at least 62 anti-dumping investigations going on for articles like float glass, rubber chemicals, acids etc. from countries like China, Korea, and Malaysia etc. This is only reflective of India’s stand that though it respects the ideal of free trade, it cannot be done at the cost of compromising with a level playing field for the domestic players.
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