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To impose (or not to impose) anti-dumping duty: Budget’s retrospective amendment may impact domestic industry

Feb 28, 2023

It will now be very interesting to witness how the proposed amendment will impact the past CESTAT decisions.

Union Budget 2023 proposed many amendments to the Indirect tax laws to promote exports, boost domestic manufacturing, enhance domestic value addition and encourage green energy and mobility. The amendments focused on simplifying the tax structure and improving the efficiency of tax administration.

Though the industry has been expecting a few major announcements viz. amnesty scheme under Customs Law and Foreign Trade Regulations, roadmap on the SEZ law amendments as announced in the previous budget, clarifications on MOOWR scheme, extending RODTEP benefits to all exports, etc., it remained silent on these demands. However, one significant change introduced in the Budget relates to amendments in Sections 9 and 9A of the Customs Tariff Act, 1975, retrospectively with effect from 1 January 1995.

This amendment has been introduced to clarify the intent and scope of these provisions to the effect that the Central Government has been vested with discretionary powers to accept (or not) the finding in the review conducted by the Designated Authority [DA], now known as the Directorate General of Trade Remedies [DGTR] for the imposition of Safeguard duty/Anti-Dumping Duty and that the Central Government shall only ascertain the amount of subsidy/margin of dumping as determined by DGTR after necessary inquiry and is not bound to provide any reasoning for acceptance or rejection of the recommendations of the DA.

A corresponding amendment was also proposed in appeal provisions in Section 9C to provide that an appeal can be filed before the CESTAT only against the final findings of the DA, who determines the amount of subsidy/dumping in the investigation and not against the notification issued by the Central Government for the levy of Countervailing and Anti-Dumping duty.
In India, a two-tier mechanism is followed for the levy of the anti-dumping/safeguard duty. First DGTR, through the DA, conducts a detailed investigation with respect to the amount of subsidy/margin of dumping involved, injury caused to domestic industries, etc., thereafter making a recommendation to the Central Government (Ministry of Finance) for the levy of duty. Thereafter, the Central Government decides with respect to the imposition (or not) of levy within 3 months from the date of such a recommendation.

Such levy is periodically reviewed, either after 5 years as a sunset review or even before 5 years as a mid-term review. Until 2019, the Central Government largely accepted the recommendations made by the DA and imposed the duty, accepting findings in a sunset or mid-term review. However, recently, many of the recommendations of the DA for continuation/imposition of the levy have not been pursued by the Ministry of Finance. This led to the filing of numerous appeals by aggrieved, domestic manufacturers before the CESTAT against the decisions of the Ministry of Finance. Apart from that, several Writ petitions have also been filed before High Courts and the Supreme Court, challenging the decisions of the Ministry of Finance against non-imposition of levy or not acceptance of the recommendations of the DA in the review.

In the case of Indian Steel Association Vs. UOI in appeal no:51207 of 2022, the CESTAT remanded a case back to the Ministry of Finance to reconsider the recommendation made by the DGTR with respect to the continuation of levy of the anti-dumping duty in the absence of a detailed reasoning for non-acceptance, following the principle of natural justice. Further, CESTAT, in the case of Jubilant Ingreiva Limited Vs. UOI in appeal no:50461 of 2021 held that the decision of the Ministry of Finance not to levy the duty is an "order of determination" under Section 9C of the CTA, whereby an appeal does lie against such an order.

The proposed amendments will validate the decision of the Central Government to impose (or not to impose) Countervailing duty/Anti-Dumping duty that shall become final and stand beyond appeal remedy. It would now be very interesting to see the impact of the proposed amendment on the past CESTAT decisions on whether an appeal lies against the decision of the Ministry of Finance with respect to non-levy of duty.

Further, it would also be keenly watched as to how the Supreme Court and High Courts may interpret the aforesaid amendments in the pending matters. Though the above amendment provides discretionary powers to the Ministry of Finance, the same will deprive the domestic industry of a suitable appeal mechanism against the decision of the Ministry of Finance for non-imposition of safeguard/anti-dumping duty, despite recommendations of the DA. The domestic industry may be left with no option but to repeat the entire process, in case of hardships or genuine injury caused by dumping/subsidies or may be compelled to explore the option of Writ Petitions.

[The Economic Times]

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