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CASE NO.:

Appeal (civil) 1294 of 2001

PETITIONER:

Reliance Industries Ltd.

RESPONDENT:

Designated Authority and Ors.

DATE OF JUDGMENT: 11/09/2006

BENCH:

Ashok Bhan & Markandey Katju

JUDGMENT:

JUDGMENT

MARKANDEY KATJU, J.

This Appeal has been filed against the impugned final order dated

29.11.2000 passed by the (CEGAT) Customs Excise and Gold (Control)

Appellate Tribunal, New Delhi.

We have heard learned counsel for the parties.

The appellant is a multi-product company and has various business

activities including manufacture of Pure Terephatalic Acid (for short

`PTA'), which is used for the manufacture of polyester yarn (which in turn

is used for manufacture of textiles). Apart from the manufacture of PTA,

the appellant, inter alia, has a captive power plant from which it draws

electricity. The appellant also draws electricity from the Grid for the

manufacture of PTA. The cost of electricity forms a significant part of

the cost of production. For the electricity drawn from the Grid, the

appellant has to pay a tariff rate at the market price of the electricity,

while regarding electricity drawn from the captive power plant the

appellant transfers electricity at the market rate to its PTA unit.

The appellant, M/s. Reliance Industries Ltd. filed an application dated

12.10.1998 seeking the imposition of Anti- Dumping Duty on PTA originating

in, or exported from Japan, Malaysia, Spain and Taiwan. The Designated

Authority (hereinafter referred to as `the DA') in the Ministry of Commerce

initiated investigations on the said application in April 1999. The

investigations culminated in the findings of the DA dated 20.4.2000, and on

that basis there was imposition by the Central Government of anti-dumping

duty on PTA originating or exported from Spain at the rate of Rs.521 per

M.T. vide Customs Notification No.82/2000 dated 30th May, 2000 of the

Department of Revenue. However, no duty was imposed on exports from the

other countries.

The appellant filed an appeal before the CEGAT under Section 9C of the

Customs Tariff Act, 1975 against this Notification seeking enhancement of

duty in the case of the exporter from Spain and imposition of duty on

exports from the other countries mentioned in their petition.

The grievance of the appellant was that while the DA had reached its

findings in the final finding dated 20th April, 2000 upholding the

appellant's contention that exports from Japan and Malaysia were also at

dumped prices and that the domestic Industry had suffered injury, yet no

anti-dumping duty was recommended in respect of imports from Japan and

Malaysia on the ground that the imports from these countries were above the

non-injurious price and, therefore, there was no causal link between the

dumped imports from these countries and the injury to the domestic

industry. The appellant submitted that this finding was inconsistent with

the determination that imports were at dumped prices and that domestic

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industry had suffered injury. They also submitted that the finding that

imports from Japan and Malaysia were at non-injurious prices was also

incorrect and was the result of faulty determination of the fair landed

value in respect of the imported goods and non-injurious price in respect

of the domestic manufacturer. The appellants submitted that they had

placed the cost of production data in respect of PTA manufactured by them

but the designated authority incorrectly determined the non-injurious price

at a lower amount and this led to the incorrect finding that there was no

causal link between injury to domestic industry and imports from these

countries. With regard to the determination of landed value their

submission was that the landed value had been determined at an inflated

amount and that was the reason for the incorrect determination that the

landed value of imports was more than the non-injurious price.

Before dealing with the contention of the learned counsel for the parties,

we may usefully refer to Section 9A of the Customs Tariff Act, 1975, which

was inserted by the Customs Tariff (Second Amendment) Act, 1982. Section

9A was substituted by the Customs Tariff (Amendment) Act, 1995 with effect

from 1.1.1995, and now it reads as follows:-

"SECTION 9A - Anti-dumping duty on dumped articles. - (1) Where any article

is exported from any country or territory (hereinafter in this section

referred to as the exporting country or territory) to India at less than

its normal value, then, upon the importation of such article into India,

the Central Government may, by notification in the Official Gazette, impose

an anti-dumping duty not exceeding the margin of dumping in relation to

such article.

Explanation - For the purposes of this section, -

(a) "margin of dumping", in relation to an article, means the

difference between its export price and its normal value;

(b) "export price", in relation to an article means the price of

article exported from the exporting country or territory and in

cases where there is no export price or where the export price is

unreliable because of association or a compensatory arrangement

between the exporter and the importer or a third party, the export

price may be constructed on the basis of the price at which the

imported articles are first resold to an independent buyer or if

the article is not resold to an independent buyer, or not resold in

the condition as imported, on such reasonable basis as may be

determined in accordance with the rules made under sub-section (6);

(c) "normal value", in relation to an article, means-

(i) The comparable price, in the ordinary course of trade, for the

like article when meant for consumption in the exporting country or

territory as determined in accordance with the rules made under

sub-section (6); or

(ii) when there are no sales of the like article in the ordinary

course of trade in the domestic market of the exporting country or

territory, or when because of the particular market situation or

low volume of the sales in the domestic market of the exporting

country or territory, such sales do not permit a proper comparison,

the normal value shall be either -

(a) comparable representative price of the like article when

exported from the exporting country or territory or an appropriate

third country as determined in accordance with the rules made under

sub-section (6); or

(b) the cost of production of the said article in the country of

origin along with reasonable addition for administrative, selling

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and general costs, and for profits, as determined in accordance

with the rules made under sub-section (6) :

Provided that in the case of import of the article from a country

other than the country or origin and where the article has been

merely transshipped through the country of export or such article

is not produced in the country of export or there is no comparable

price in the country of export, the normal value shall be

determined with reference to its price in the country of origin.

(2) The Central Government may, pending the determination in accordance

with the provisions of this section and the rules made thereunder of the

normal value and the margin of dumping in relation to any article, impose

on the importation of such article into India an anti-dumping duty on the

basis of a provisional estimate of such value and margin and if such anti-

dumping duty exceeds the margin as so determined :-

(a) the Central Government shall, having regard to such

determination and as soon as may be after such determination,

reduce such anti-dumping duty; and

(b) refund shall be made of so much of the anti-dumping duty which

has been collected as in excess of the anti-dumping duty as so

reduced.

(2A) Notwithstanding anything contained in sub-section (1) and sub-section

(2), a notification issued under sub-section (1) or any anti-dumping duty

imposed under sub-section (2), unless specifically made applicable in such

notification or such imposition, as the case may be, shall not apply to

article imported by a hundred per cent export-oriented undertaking or a

unit in a free trade zone or in a special economic zone.

Explanation. - For the purpose of this section, the expressions

"hundred per cent export-oriented undertaking", "free trade zone"

and "special economic zone" shall have the meaning assigned to them

in explanation 2 to sub-section (1) of Section 3 of the Central

Excise Act, 1944 (1 of 1944).

(3) If the Central Government, in respect of the dumped article under

inquiry, is of the opinion that -

(i) there is a history of dumping which caused injury or that the

importer was, or should have been, aware that the exporter

practices dumping and that such dumping would cause injury; and

(ii) the injury is caused by massive dumping of an article imported

in a relatively short time which in the light of the timing and the

volume of imported article dumped and other circumstances is likely

to seriously undermine the remedial effect of the anti-dumping duty

liable to be levied, the Central Government may, by notification in

the Official Gazette, levy anti-dumping duty retrospectively from a

date prior to the date of imposition of anti-dumping duty under

sub-section (2) but not beyond ninety days from the date of

notification under that sub-section, and notwithstanding anything

contained in any law for the time being in force, such duty shall

be payable at such rate and from such date as may be specified in

the notification.

(4) The anti-dumping duty chargeable under this section shall be in

addition to any other duty imposed under this Act or any other law for the

time being in force.

(5) The anti-dumping duty imposed under this section shall, unless revoked

earlier, cease to have effect on the expiry of five years from the date of

such imposition:

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Provided that if the Central Government, in a review, is of the

opinion that the cessation of such duty is likely to lead to

continuation or recurrence of dumping and injury, it may, from time

to time, extend the period of such imposition for a further period

of five years and such further period shall commence from the date

or order of such extension:

Provided further that where a review initiated before the expiry of

the aforesaid period of five years has not come to a conclusion

before such expiry, the anti-dumping duty may continue to remain in

force pending the outcome of such a review for a further period not

exceeding one year.

(6) The margin of dumping as referred to in sub-section (1) or sub-section

(2) shall, from time to time, be ascertained and determined by the Central

Government, after such inquiry as it may consider necessary and the Central

Government may, by notification in the Official Gazette, make rules for the

purposes of this section, and without prejudice to the generality of the

foregoing, such rules may provide for the manner in which articles liable

for any anti-dumping duty under this section may be identified, and for the

manner in which the export price and the normal value of, and the margin of

dumping in relation to, such articles may be determined and for the

assessment and collection of such anti-dumping duty.

(7) Every notification issued under this section shall, as soon as may be

after it is issued, be laid before each House of Parliament.

(8) The provisions of the Customs Act, 1962 (52 of 1962) and the rules and

regulations made thereunder, relating to non-levy, short levy, refunds and

appeals shall, as far as may be, apply to the duty chargeable under this

section as they apply in relation to duties leviable under the Act".

Sub-section (8) of Section 9A was inserted by the Finance Act 2000 and that

Act also inserted Section 9AA. Finance Act 2004 amended Section 9A(8).

In this connection it may be mentioned that up to 1947 there was very

little industrialization in India.

After India became independent in 1947, the Government of Independent

India headed by Prime Minister Jawahar Lal Nehru decided to industrialize

India as it was realized that the country cannot escape from poverty,

unemployment and other social evils unless there is industrialization. It

was also known to them that a country cannot be really independent in

modern times unless it is industrialized. Hence, the Industrial Policy

Resolution was adopted by the Indian government in the early 1950s and

encouragement was given to the growth of heavy industry and other

industries so that India may become economically independent and a

prosperous nation.

The result was that an industrial base was created in India after

independence and this has definitely resulted in some progress. The

purpose of Section 9A can, therefore, easily be seen. The purpose was that

our industries which had been built up after independence with great

difficulties must not be allowed to be destroyed by unfair competition of

some foreign companies. Dumping is a well-known method of unfair

competition which is adopted by the foreign companies. This is done by

selling goods at a very low price for some time so that the domestic

industries cannot compete and are thereby destroyed, and after such

destruction has taken place, prices are again raised.

The purpose of Section 9A is, therefore, to maintain a level-playing field

and prevent dumping, while allowing for healthy competition. The purpose is

not protectionism in the classical sense (as proposed by the German

economist Friedrich List in his famous book `National System of Political

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Economy' published in 1841) but to prevent unfair trade practices. The

1995 Amendment to Section 9A was apparently made in pursuance to Article VI

of the General Agreement on Tariffs and Trade 1994 (GATT 1994) which

permitted anti-dumping measures as an instrument of fair competition.

The concept of anti-dumping is founded on the basis that a foreign

manufacturer sells below the normal value in order to destabilize domestic

manufacturers. Dumping, in the short term, may give some transitory

benefits to the local customers on account of lower priced goods, but in

the long run destroys the local industries and may have a drastic effect on

prices in the long run.

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" - which is

undisputed in this case;

(ii) "Injury" - which is also undisputed in this case;

(iii) Causal Link between dumping and injury to the domestic industry to

establish that injury to the domestic industry is caused by dumping.

The margin of dumping is the difference between the "Normal Value" (viz.

price in the domestic market of the foreign exporter, or if there are no

domestic sales, the price at which it is exported to another country or the

constructed cost of production) and the "export price" at which goods are

exported to India. If goods are exported to India at prices below the

"Normal Value", there is a positive dumping margin.

On the determination of a positive margin, the DA has to ascertain whether

the dumping of goods is causing injury to the domestic industry by

analyzing various injury parameters mentioned in Annexure II to the Rules.

The "Margin of Injury" is the difference between the landed value of

exports and the fair selling (notional) price of the domestic manufacturer,

which is usually called the Non-Injurious Price (for short `NIP'). The NIP

is determined by the DA on the basis of cost of production (less interest),

Selling General and Administrative Expenses (SG&A), and a fixed rate of

return on the capital employed of the domestic industry.

Anti-dumping duty can legally be levied up to the full extent of margin of

dumping [Section 9A(1)] but in practice is restricted to the margin of

injury if the injury is lower than the margin of dumping vide Section 9B(1)

(b)(ii) and Rule 18(1).

Section 9B(1) states :

"(1) Notwithstanding anything contained in Section 9 or section 9A,

-

(a)..................

(b) the Central Government shall not levy any countervailing duty or anti-

dumping duty -

(i) ....................

(ii) under sub-section (1) of each of these sections, on the import into

India or any article from a member country of the World Trade Organization

or from a country with whom Government of India has a most favoured nation

agreement (hereinafter referred as a specified country), unless in

accordance with the rules made under sub-section (2) of this section, a

determination has been made that import of such article into India causes

or threatens material injury to any established industry in India or

materially retards the establishment of any industry in India; and

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(iii) under sub-section (2) of each of these sections, on import

into India of any article from the specified countries unless in

accordance with the rules made under sub-section (2) of this

section, a preliminary finding has been made of subsidy or dumping

and consequent injury to domestic industry; and a further

determination has also been made that a duty is necessary to

prevent injury being caused during the investigation :

Provided that nothing contained in sub-clauses (ii) and (iii) of

clause (b) shall apply if a countervailing duty or an anti-dumping

duty has been imposed on any article to prevent injury or threat of

an injury to the domestic industry of a third country exporting the

like articles to India;"

Under the Anti-dumping Rules viz. the Customs Tariff (Identification,

Assessment and Collection of Anti-Dumping Duty on Dumped Articles and for

Determination of Injury) Rules, 1995, the DA is required on a complaint

regarding dumping to carry out investigations and give his findings with

regard to the existence of dumping, injury to the domestic industry and a

causal link between the two. Having determined the existence of dumping,

injury and causal link, the DA determines the quantum of duty. For this

purpose, the DA calculates the NIP for the domestic industry as a whole for

the product under consideration, which, as already stated above, is a

notional fair selling price.

In this connection, we may refer to Rules 10 and 11 of the Anti Dumping

Rules which state as follows :

"10. Determination of normal value, export price and margin of

dumping -

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 and in such circumstances the designated authority

shall determine the normal value, export price and the margin of

dumping taking into account, inter-alia, the principles laid down

in Annexure I to these rules.

11. Determination of injury -

(1) In the case of imports from specified countries, the designated

authority shall record a further finding that import of such

article into India causes or threatens material injury to any

established industry in India or materially retards the

establishment of any industry in India.

(2) The designated authority shall determine the injury to domestic

industry, threat of injury to domestic industry, material

retardation to establishment of domestic industry a causal link

between dumped imports and injury, taking into account all relevant

facts, including the volume of dumped imports their effect or price

in the domestic market for like articles and the consequent effect

of such imports on domestic producers of such articles and in

accordance with the principles set out in Annexure-II to these

rules.

(3) The designated authority may, in exceptional cases, give a

finding as to the existence of injury everywhere a substantial

portion of the domestic industry is not injured, if -

(i) there is a concentration of dumped imports into an isolated

market, and

(ii) the dumped articles are causing injury to the producers of all

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or almost all of the production within such market."

In the present case, the DA in his findings dated 20.4.2000 has found that

there is dumping by the manufacturers from Japan, Malaysia & Spain. The

margins of dumping for manufacturers from Japan was between 29% to 34.26%,

for Malaysia 68.20% and Spain 15%. The DA has also found material injury

to the domestic industry in India on the basis of reduction in the sales

realization and decreases of profitability. It was, however, held by the

DA that there was no causal link between dumping and injury as regards

Japan and Malaysia. As regards Spain, anti-dumping duty was levied as Rs.

521/- PMT. The determination of causal link has been made solely on the

basis of comparison of the landed value of imports and the NIP determined

for the domestic industry.

The findings of the DA were appealed against before the Tribunal. The

Tribunal upheld the findings of the DA about dumping and injury. However,

the Tribunal upheld the method adopted by the DA for computing the NIP.

It is the contention of the appellant before us that the findings of the

Tribunal were erroneous in the context of certain imports because of an

incorrect computation of the NIP for the domestic industry.

There are two main issues for determination in the present case - (1) the

correct principles for determination of the NIP of PTA and (2) the scope of

Rule 7 of the Customs Tariff (Identification, Assessment and Collection of

Anti-Dumping Duty on Dumped Articles and For Determination of Injury)

Rules, 1995.

As regards the first contention, learned counsel for the appellant, Mr.

Joseph Vellapally, submitted that while computing the NIP of PTA, the DA

ought to have taken the transfer price (market value) of electricity and

other inputs captively produced by it. Learned counsel for the appellant

submitted that it is not the actual cost of production of electricity by

the appellant which has to be seen in this connection, but the market price

of electricity which has to be seen. In other words, the cost of inputs

has to be seen not for an individual industrial unit which captively

produces it, but the market price of the inputs is to be seen in order to

calculate the NIP. Learned counsel further submitted that the DA has not

given any reasoning for coming to its conclusion for its NIP. The

Disclosure Statement issued by the DA does not state as to what was the

element of cost being disallowed and what was the reason for doing so. It

is submitted that there was no requirement in the present case to keep any

confidentiality from the appellant with regard to computation of NIP.

Learned counsel submitted that the appellant used the market rate of

electricity for determining the cost of production of PTA, but the DA was

of the view that instead of taking the market price of electricity for

determining the NIP of PTA, the appellant should have taken the actual cost

of electricity produced in its captive power plant.

In our opinion, the DA has clearly erred in law because the Authority was

required to carry out the determination of injury and computation of NIP

for the domestic industry as a whole, and not in respect of any particular

company or enterprise. The above is apparent from the definition of

"domestic industry" under Rule 2(b) of the Anti Dumping Rules. Rule 2(b)

states :

"2(b) "domestic industry" means the domestic producers as a whole

engaged in the manufacture of the like article and any activity

connected therewith or those whose collective output of the said

article constitutes a major proportion of the total domestic

production of that article except when such producers are related

to the exporters or importers of the alleged dumped article or are

themselves importers thereof in which case such producers shall be

deemed not to form part of domestic industry;

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Provided that in exceptional circumstances referred to in sub-rule

(3) of rule 11, the domestic industry in relation to the article in

question shall be deemed to comprise two or more competitive

markets and the procedures within each of such market a separate

industry, if-

(i) the producers within such a market sell all or almost all of

their production of the article in question in the market, and

(ii) the deemed in the market is not in any substantial degree

supplied by producers of the said article located elsewhere in the

territory;"

The provisions relating to injury analysis in Annexure II to the Anti-

dumping Rules are also clear that the injury determination is always for

the domestic industry as a whole and not for individual companies.

In our opinion, since the NIP is for the industry as a whole, it is

immaterial if a particular company produces some of its inputs captively.

In our opinion, for the purpose of determination of NIP, the DA is always

required to take into consideration the transfer price (market value) of

the inputs and not their actual cost of captive production. This is because

the entire investigation, analysis, recommendation and imposition are for

the product under consideration for the whole domestic industry and not for

the individual companies and inputs captively manufactured which may be

involved in the production and sales of the goods.

The approach adopted by the DA, in our opinion, will lead to a situation

where an artificial discrimination will be created between the integrated

and non-integrated companies to the peril of the smaller plants with no

backward integration (backward integration means a factory which also

produces its own raw materials etc). In such situations, the result will

be that the companies with no backward integration will suffer adversely.

In our opinion, this was neither envisaged under the law nor can be

considered as a desired result. The Anti-dumping legislation is meant for

protection of the domestic industries as a whole against unfair practice of

dumping, irrespective of whether they are backwardly integrated or not.

In our opinion there has to be a single NIP for a product as envisaged by

the Rules, and not several NIPs for the same product. The approach adopted

by the DA and the Tribunal would, however, result in several NIPs for the

same product, because if actual cost of the input is seen for individual

units it will differ between units captively producing their inputs and

those buying it from the market. This is clearly untenable.

In the present case, the DA has recorded a finding that the normal value is

exporter specific. In our opinion this is contrary to the Supreme Court

judgment in Designated Authority (Anti-Dumping Directorate v. Haldor Topsoe

A/S., [2000[ 6 SCC 626. In page 635 of the said judgment, this Court

observed:

"With respect, we are unable to accept this finding of the

Tribunal. From a careful reading of Section 9-A of the Tariff Act

and Rule 6 of the Rules, it is clear that the statute has nowhere

put such a restriction on the investigating authority. On the

contrary, a perusal of the said provisions clearly shows that the

"normal value" will have to be determined with reference to

comparable price, the words "comparable price" in the context can

only be with reference to the price of similar articles sold under

similar circumstances irrespective of the manufacturer. By holding

anti-dumping duty to be export-specific, the Tribunal could not

have restricted the scope of the investigation only to materials to

be produced by a party against whom an investigation is being

conducted. Such an interpretation of the statute is wholly

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contrary to the very scheme of the statute".

In our opinion, both normal value and NIP are not exporter or domestic

industry specific respectively but exporting country specific and importing

country specific (India). Once dumping of specific goods from a country is

established, dumping duty can be imposed on all exports of those goods from

that country to India under Section 9A, irrespective of the exporter. The

rate of duty may vary from exporter to exporter depending upon the export

price. Similarly, as regards the matter of NIP it is the reasonable price

which the subject goods can be produced by the domestic industry as a whole

in India that is relevant. Special advantages and disadvantages that one

or more domestic producers may have, as a result of manufacture of raw

material or utilities that are going into the production of the commodity

under investigation, should, in our opinion, be ignored for determination

of the NIP for the domestic industry as a whole.

The purpose of imposition of duty is both to redress injury and to prevent

material retardation of the establishment or growth of that industry (vide

S. 9B(1) (b)(ii), rules 11, 17(a)(ii) and Annexure II). In the present

case by fixing an NIP based upon specific advantages in the matter of

electricity that the appellant company processed, and permitting dumping of

the PTA into India, the DA has ensured that no other company can set up PTA

manufacturing facilities without also being in a position to generate its

own electricity at a price less than the price of electricity generally

available in the domestic market. This, in our opinion, is surely not

tenable, as it will result in discrimination.

In our opinion the DA has clearly ignored the purpose for which the NIP is

computed. The DA has failed to appreciate that once dumping and injury is

established, the existence of an unfair trade practice by the exporters is

undisputed and a restrictive view in computing an unduly low NIP would lead

to granting a premium to the erring exporters at the cost of the domestic

industry, which is suffering injury.

In our opinion, the DA's determination of NIP was arbitrary and misguided,

as the DA has not considered the actual production achieved by the domestic

industry for the purpose of apportionment of fixed costs. On the contrary,

it was revealed during the hearing that the DA computes the NIP on the

basis of the best capacity utilization achieved in the preceding three

years. In fact, there is no established practice of the DA in this regard,

and the level of capacity utilization taken into account by the DA varies

from case to case leading to total arbitrariness and unguided use of power.

In our opinion, there is no basis to adopt the best capacity utilization

achieved in the past period as the industry is generally bound to achieve

higher capacity utilization if it is not affected by injurious dumping. The

apportionment of the fixed costs has to be necessarily done on the basis of

actual production during the period of investigation and not an assumed

level of capacity utilization to avoid all arbitrariness. Thus, in our

opinion, the DA's approach is clearly incorrect inasmuch as it is not the

determination of optimum capacity utilization of the domestic industry, but

the actual capacity utilization which would be the correct approach. Even

as a matter of principle the use of capacity or capacity utilization level

in computing the cost of production is unworkable for another reason. The

capacity of a particular plant is wholly dependent upon the product mix.

For example, the production of a fabric plant in square meters or tonnage

basis will be less if the design is intricate. On the other hand, if the

fabric is plain, the production expressed in square meters or tonnage basis

would be much higher. If the approach of the DA is accepted, it would in

our opinion lead to a strange situation where the capacity utilization of

the same plant would vary from month to month and from batch to batch of

production. In other words, the capacity itself would be indeterminate for

plants where the product mix itself is variable. It is for this reason

that in our opinion the actual production would be the only and the most

appropriate method for arriving at the cost of production.

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For the purpose of computing the NIP, the DA appears to have taken the best

capacity utilization (which is in excess of 100%) over the past three years

for the purpose of apportionment of the fixed expenses in preference to the

actual capacity utilization during the period of investigation. In our

opinion, this has led to an unusual reduction in the fixed expenses per

unit and a consequent reduction in the NIP. This again is clearly

untenable.

In our opinion, the NIP needs to be revised by taking the market price of

electricity and the actual capacity utilization during the period of

investigation. Further, the DA should be directed not to misuse Rule 7, by

keeping confidential its findings and that too from the person who has

supplied the information to it.

We are of the opinion that the nature of the proceedings before the DA are

quasi-judicial, and it is well-settled that a quasi-judicial decision, or

even an administrative decision which has civil consequences, must be in

accordance with the principles of natural justice, and hence reasons have

to be disclosed by the authority in that decision vide S.N. Mukherjee v.

Union of India, [1990] 4 SCC 594.

We do not agree with the Tribunal that the notification of the Central

Government under Section 9A is a legislative Act. In our opinion, it is

clearly quasi-judicial. The proceedings before the DA is to determine the

lis between the domestic industry on the one hand and the importer of

foreign goods from the foreign supplier on the other. The determination of

the recommendation of the DA and the Government notification on its basis

is subject to an appeal before the CESTAT. This also makes it clear that

the proceedings before the DA are quasi-judicial.

In the present case, the NIP computed by the DA was much lower than that

computed by the appellant, and the reasons for such variance and detailed

calculations were not disclosed by the DA to the appellant. No good

reasons were given for reducing the cost price of electricity supplied by

the appellant produced in its captive power plant. This was clearly

illegal.

The DA claimed confidentiality from the appellant about its finding on the

data supplied by the appellant itself. In our opinion, there was nothing

confidential in the matter, and hence reasons for not accepting the

appellant's version should have been stated in the order of the DA.

Learned counsel for the respondent has relied on Rule 7 of the Customs

Tariff (Identification, Assessment and Collection of Anti-dumping Duty on

Dumped Articles and for Determination of Injury) Rules, 1995, which states

as under:

"7. Confidential informations

(1) Notwithstanding anything contained in sub-rules (2), (3) and (7) of

rule 6, sub-rule (2) of rule 12, sub-rule (4) of rule 15 and sub-rule (4)

of rule 17, the copies of applications received under sub-rule (1) of rule

5, or any other information provided to the designated authority on a

confidential basis by any party in the course of investigation, shall, upon

the designated authority being satisfied as to its confidentiality, be

treated as such by it and no such information shall be disclosed to any

other party without specific authorization of the party providing such

information.

(2) The designated authority may require the parties providing information

on confidential basis to furnish non confidential summary thereof and if,

in the opinion of a party providing such information, such information is

not susceptible of summary, such party may, submit to the designated

authority a statement of reasons why summarization is not possible.

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(3) Notwithstanding anything contained in sub-rule (2), if the designated

authority is satisfied that the request for confidentiality is not

warranted or the supplier of the information is either unwilling to make

the information public or to authorize its disclosure in a generalized or

summary from, it may disregard such information".

In our opinion, Rule 7 does not contemplate any right in the DA to claim

confidentiality. Rule 7 specifically provides that the right of

confidentiality is restricted to the party who has supplied the

information, and that party has also to satisfy the DA that the matter is

really confidential. Nowhere in the rule has it been provided that the DA

has the right to claim confidentiality, particularly regarding information

which pertains to the party which has supplied the same. In the present

case, the DA failed to provide the detailed costing information to the

appellant on the basis of which it computed the NIP, even though the

appellant was the sole producer of the product under consideration, in the

country. In our opinion this was clearly illegal, and not contemplated by

Rule 7.

In this connection, this Court in Sterlite Industries (India) Ltd. v.

Designated Authority, (2003) 158 ELT 673 observed thus:

"In our view, it is not necessary for us to go into the merits of

this matter as we propose to send the matter back to CEGAT after

laying down certain guidelines. From what has been argued before

us, it appears that in pursuance of Rule 7 of the Customs Tariff

(Identification, Assessment and Collection of Anti-Dumping Duty on

Dumped Articles and for Determination of Injury) Rules, 1995 the

Designated Authority is treating all material submitted to it as

confidential merely on a party asking that it be treated

confidential. In our view, that is not the purport of Rule 7.

Under Rule 7, the Designated Authority has to be satisfied as to

the confidentiality of that material. Even if the material is

confidential the Designated Authority has to ask the parties

providing information, on confidential basis, to furnish a non-

confidential summary thereof. If such a statement is not being

furnished then that party should submit to the Designated Authority

a statement of reasons why summarization is not possible. In any

event, under Rule 7(3) the Designated Authority can come to the

conclusion that confidentiality is not warranted and it may, in

certain cases, disregard that information. It must be remembered

that not making relevant material available to the other side

affects the other side, as they get handicapped in filing an

effective appeal. Therefore, confidentiality under Rule 7 is not

something, which must be automatically assumed. Of course, in such

cases there is need for confidentiality, as otherwise trade

competitors would obtain confidential information, which they

cannot otherwise get. But whether information supplied is required

to be kept confidential has to be considered on a case-to-case

basis. It is for the Designated Authority to decide whether a

particular material is required to be kept confidential. Even

where confidentiality is required, it will always be open for the

appellate authority, namely, CEGAT to look into the relevant

files".

(emphasis supplied)

In our opinion, excessive and unwarranted claim of confidentiality defeats

the right to appeal. In the absence of knowledge of the consequences,

grounds, reasoning and methodology by which the DA has arrived at its

decision and made its recommendation, the parties to the proceedings cannot

effectively exercise their right to appeal either before the Tribunal or

this Court. This is contrary to the view taken by the Constitution Bench

of this Court in S.N. Mukherjee's case (supra).

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Although this judgment may not benefit the appellant for the past period,

we have thought it necessary to lay down the law in this connection since

the Anti Dumping Law operates continuously and on a day-to-day basis and

hence its principles have to be clarified. The Anti Dumping Law is

extremely important for the country's industrial progress and hence there

should be total transparency and fairness in its implementation.

Before parting with this case, we would like to state that our national aim

must be to create India as a modern, highly industrialized, powerful state.

The real world today is cruel and harsh. It respects power, not poverty or

weakness, and power comes from a high level of industrialization. Hence, if

we wish to get respect in the comity of nations, we must make India a

modern, powerful, highly industrialized state. The truth is that today

India is poor. As Rajni Palme Dutt wrote in his book `India', `India is a

rich country with poor people'. We are rich in raw materials, rich in

industrial skills, we have outstanding scientists, engineers, technicians

and managers. Despite all this we are a poor nation. Hence, if we want to

command respect in the comity of nations, we must rapidly industrialize and

make India a powerful, modern, highly industrialized nation. It is

industrialization alone which can generate the wealth which we require for

the welfare of our people and for progress. Hence our national aim must

be rapid industrialization as that is the solution to our country's

problems. Industrialization will also provide large scale employment to

our people, and will help the growth of science and technology, which is

absolutely essential to our progress.

The Anti Dumping Law is, therefore, a salutary measure which prevents

destruction of our industries which were built up after independence under

the guidance of our patriotic, modern minded leaders at that time and it is

the task of everyone today to see to it that there is further rapid

industrialization in our country, to make India a modern, powerful, highly

industrialized nation.

With the above observations this appeal stands disposed of. There shall be

no order as to costs.