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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.3889 OF 2006

COMMISSIONER OF CUSTOMS,  BANGALORE …APPELLANT

VERSUS

M/S. G.M. EXPORTS & OTHERS ...RESPONDENTS

WITH

CIVIL APPEAL NO.7814 OF 2012

CIVIL APPEAL NO. 7894 OF 2015 [ARISING OUT OF SLP (CIVIL) NO. 13028 OF 2012]

CIVIL APPEAL NO. 7895 OF 2015 [ARISING OUT OF SLP (CIVIL) NO. 27811 OF 2012]

CIVIL APPEAL NO.5119 OF 2012

CIVIL APPEAL NO.3082 OF 2011

CIVIL APPEAL NO.3086 OF 2011

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J U D G M E N T  

R.F. Nariman, J.

1. Leave granted in  S.L.P. (Civil)  No.  13028 of  2012 and

S.L.P. (Civil) No. 27811 of 2012.

2. Seven appeals are before us; some of them are from the

Bombay High Court judgment dated 15.12.2011  and the Kerala

High Court  judgment  dated 15.07.2009.   Others are appeals

against  a  Karnataka  Tribunal  (Bangalore)  judgment  and  a

Bombay  Tribunal  judgment,  which  follows  the  Bombay  High

Court  judgment  referred  to  above.   Since  all  these  appeals

raise a common question of law of some complexity relating to

anti-dumping  duty,  the  said  appeals  have  been  bunched

together and are being disposed of together.  It  may also be

stated that the preponderant view, that is the view of both the

Bombay and Kerala High Courts and the Bombay Tribunal, is in

favour  of  the  construction  suggested  by  revenue.   Only  the

Karnataka Tribunal  (Bangalore)  has decided in  favour  of  the

assessee.  

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3. The question of law which arises in the instant appeals is

whether  anti-dumping  duty  imposed  with  respect  to  imports

made during the period between the expiry of the provisional

anti-dumping duty and the imposition of the final anti-dumping

duty is legal and valid.  

4. It is necessary in this case to begin at the very beginning.

The General Agreement on Tariffs and Trade (GATT) in Article

VI first laid down how, conceptually, anti-dumping duties were to

be imposed. The relevant part of Article VI reads as under:-

“Article VI

Anti-dumping and Countervailing Duties

1. The contracting parties recognize 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.  For  the purposes  of  this  Article,  a  product  is  to  be considered as being introduced into the commerce of an importing country at less than its normal value, if the price of the product exported from one country to another

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(a) is less than the comparable price, in the ordinary course of trade, for the like product when destined for consumption in the exporting country, or,

(b) in the absence of such domestic price, is less than either

(i)  the  highest  comparable  price  for  the  like product  for  export  to  any  third  country  in  the ordinary course of trade, or

(ii)  the cost of production of  the product in the country of origin plus a reasonable addition for selling cost and profit.

Due  allowance  shall  be  made  in  each  case  for differences  in  conditions  and  terms  of  sale,  for differences  in  taxation,  and  for  other  differences affecting price comparability.

2.  In  order  to  offset  or  prevent  dumping,  a contracting party may levy on any dumped product an anti-dumping duty not greater in amount than the margin of dumping in respect of such product. For the purposes of this Article, the margin of dumping is  the  price  difference  determined  in  accordance with the provisions of paragraph 1.”

5. In  pursuance  of  the  said  Article  VI,  various  member

nations entered into a World Trade Organisation Agreement to

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implement Article VI, in 1994.  The said agreement is referred to

as “Agreement on Implementation of Article VI of the General

Agreement  on  Tariffs  and  Trade,  1994”,  and  in  its  material

aspects,  which are important  in order to decide the question

raised in these appeals, states as follows:-

“Members hereby agree as follows:

PART I

Article 1

Principles

An  anti-dumping  measure  shall  be  applied only under the circumstances provided for in Article VI  of  GATT  1994  and  pursuant  to  investigations initiated  and  conducted  in  accordance  with  the provisions  of  this  Agreement.  The  following provisions  govern  the  application  of  Article  VI  of GATT  1994  in  so  far  as  action  is  taken  under anti-dumping legislation or regulations.”

“Article 10

Retroactivity

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10.1 Provisional measures and anti-dumping duties shall  only  be  applied  to  products  which  enter  for consumption after the time when the decision taken under paragraph 1 of Article 7 and paragraph 1 of Article 9, respectively, enters into force, subject to the exceptions set out in this Article.

10.2 Where a final determination of injury (but not of a threat thereof or of a material retardation of the establishment of an industry) is made or, in the case of a final determination of a threat of injury, where the  effect  of  the  dumped  imports  would,  in  the absence of the provisional measures, have led to a determination of injury, anti-dumping duties may be levied  retroactively  for  the  period  for  which provisional measures, if any, have been applied.

10.3 If  the  definitive  anti-dumping  duty  is  higher than  the  provisional  duty  paid  or  payable,  or  the amount  estimated for  the purpose of  the security, the difference shall not be collected. If the definitive duty  is  lower  than  the  provisional  duty  paid  or payable, or the amount estimated for the purpose of the security, the difference shall  be reimbursed or the duty recalculated, as the case may be.”

“10.6 A definitive anti-dumping duty may be levied on  products  which  were  entered  for  consumption not  more  than  90  days  prior  to  the  date  of application  of  provisional  measures,  when  the authorities  determine  for  the  dumped  product  in question that:

(I) there is a history of dumping which caused injury or  that  the  importer  was,  or  should  have  been,

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aware that the exporter practises dumping and that such dumping would  cause injury, and

(ii) the  injury  is  caused  by  massive  dumped imports of a product in a relatively short time which in light of the timing and the volume of the dumped imports and other circumstances (such as a rapid build-up of  inventories of  the imported product)  is likely to seriously undermine the remedial effect of the  definitive  anti-dumping  duty  to  be  applied, provided that  the importers concerned have been given an opportunity to comment.

10.7 The  authorities  may,  after  initiating  an investigation,  take  such  measures  as  the withholding of appraisement or assessment as may be  necessary  to  collect  anti-dumping  duties retroactively, as provided for in paragraph 6, once they have sufficient evidence that the conditions set forth in that paragraph are satisfied.

10.8 No  duties  shall  be  levied  retroactively pursuant  to  paragraph  6  on  products  entered  for consumption  prior  to  the  date  of  initiation  of  the investigation.”

“18.4 Each Member shall take all necessary steps, of a general or particular character, to ensure, not later than the date of entry into force of the WTO Agreement  for  it,  the  conformity  of  its  laws, regulations and administrative procedures with the provisions of this Agreement as they may apply for the Member in question.”

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6. In  pursuance  of  the  said  Article  VI  and  the  said

Agreement, both of which India is a signatory to, amendments

were made in  the Customs Tariff  Act  in  the  year  1995.  The

amendment  with  which  we  are  directly  concerned  is  the

introduction of a new Section 9A to the said Act which reads as

under:-

“Section  9A.  Anti  -  dumping  duty  on  dumped articles

(1) Where any article is exported by an exporter or producer from any country or territory (hereafter 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  the  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

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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  destined  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  to  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

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administrative,  selling  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 of origin and where  the  article  has  been  merely  transhipped 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.

(1A).  Where  the  Central  Government,  on  such inquiry  as  it  may  consider  necessary,  is  of  the opinion  that  circumvention  of  anti-dumping  duty imposed  under  sub-section  (1)  has  taken  place, either  by  altering  the  description  or  name  or composition  of  the  article  subject  to  such anti-dumping duty or by import of such article in an unassembled  or  dissembled  form or  by  changing the country of  its  origin or  export  or  in  any other manner, whereby the anti-dumping duty so imposed is  rendered  ineffective,  it  may  extend  the anti-dumping  duty  to  such  article  or  an  article originating in or exported from such country, as the case may be.

(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,-

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(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  is  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  articles  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 purposes of this section, the expressions  "hundred  per  cent  export-oriented undertaking",  "free  trade  zone"  and  "special economic zone" shall have the meanings assigned to  them  in  Explanations  2  to  sub-section  (f)  of section 3 of Central Excise Act, 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,

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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  any  thing  contained  in  any  other 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 under 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:

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

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the period of such imposition for a further period of five years and such further period shall commence from the date of 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.

(6A) The margin of dumping in relation to an article, exported by an exporter or producer, under inquiry under sub- section (6) shall be determined on the basis  of  records  concerning  normal  value  and export price maintained, and information provided, by such exporter or producer:

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Provided that where an exporter or producer fails to provide such records or information, the margin of dumping   for  such  exporter  or  producer  shall  be determined on the basis of facts available.;

(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, including those relating to the date for determination of rate of duty, assessment, non-levy, short levy, refunds, interest, appeals, offences and penalties shall, as far as may be, apply to the duty chargeable  under  this  section  as  they  apply  in relation to duties leviable under that Act.”

7. In exercise of powers conferred, inter alia, by Section 9A

(6) of the Customs Tariff Act, the Customs Tariff (Identification,

Assessment and Collection of Anti-Dumping Duty on Dumped

Articles and for Determination of Injury) Rules, 1995 have been

framed.  The Rules relevant to the determination of the present

controversy are set out hereunder:-

“2. Definitions.- In these rules, unless the context otherwise requires-

(e) “provisional duty” means an anti dumping duty imposed under sub-section (2) of section 9A of the Act;

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5.  Initiation  of  investigation. -  (1)  Except  as provided  in  sub-rule  (4),  the  designated  authority shall  initiate  an  investigation  to  determine  the existence,  degree  and  effect  of  any  alleged dumping only upon receipt of a written application by or on behalf of the domestic industry.  

(2) An application under sub-rule (1) shall be in the form  as  may  be  specified  by  the  designated authority and the application shall be supported by evidence of -  

(a) dumping  

(b) injury, where applicable, and  

(c)  where  applicable,  a  causal  link  between such dumped imports and alleged injury.  

(3)  The  designated  authority  shall  not  initiate  an investigation pursuant to an application made under sub-rule (1) unless –  

(a) it determines, on the basis of an examination of the  degree  of  support  for,  or  opposition  to  the application expressed by domestic producers of the like product, that the application has been made by or on behalf of the domestic industry :  

Provided  that  no  investigation  shall  be  initiated  if domestic  producers  expressly  supporting  the application  account  for  less  than  twenty  five  per cent of the total production of the like article by the domestic industry, and  

(b) it examines the accuracy and adequacy of the evidence provided  in  the application and  satisfies itself that there is sufficient evidence regarding -  

(i) dumping,  

(ii) injury, where applicable; and  

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(iii)  where applicable,  a causal  link between such dumped imports and the alleged injury, to justify the initiation of an investigation.

Explanation.  -  For  the  purpose  of  this  rule  the application shall be deemed to have been made by or  on  behalf  of  the  domestic  industry,  if  it  is supported  by  those  domestic  producers  whose collective output constitute more than fifty per cent of the total production of the like article produced by that  portion  of  the  domestic  industry  expressing either support for or opposition, as the case may be, to the application.  

(4) Notwithstanding anything contained in sub-rule (1)  the  designated  authority  may  initiate  an investigation  suo  motu if  it  is  satisfied  from  the information received from the Collector of Customs appointed  under  the  Customs  Act,  1962  (52  of 1962)  or  from  any  other  source  that  sufficient evidence  exists  as  to  the  existence  of  the circumstances referred to in clause (b) of sub-rule (3).  

(5)  The  designated  authority  shall  notify  the government  of  the  exporting  country  before proceeding to initiate an investigation.

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 and a causal link between  dumped  imports  and  injury,  taking  into account all  relevant facts, including the volume of

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dumped  imports,  their  effect  on  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 even where  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 or almost all of the production within such market.  

12.  Preliminary  findings. -  (1)  The  designated authority  shall  proceed  expeditiously  with  the conduct of the investigation and shall, in appropriate cases, record a preliminary finding regarding export price, normal value and margin of dumping, and in respect of imports from specified countries, it shall also record a further finding regarding injury to the domestic  industry  and  such  finding  shall  contain sufficiently  detailed  information  for  the  preliminary determinations  on  dumping  and  injury  and  shall refer to the matters of fact and law which have led to arguments being accepted or rejected. It will also contain:-  

(i)  the  names  of  the  suppliers,  or  when  this  is impracticable, the supplying countries involved;  

(ii) a description of the article which is sufficient for customs purposes;  

(iii)  the margins of dumping established and a full explanation  of  the  reasons  for  the  methodology used in  the establishment  and comparison of  the export price and the normal value;  

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(iv)  considerations  relevant  to  the  injury determination; and  

(v) the main reasons leading to the determination.  

(2). The designated authority shall issue a public  notice recording its preliminary findings.  

13.  Levy  of  provisional  duty -  The  Central Government  may, on the  basis  of  the  preliminary findings  recorded  by  the  designated  authority, impose a provisional duty not exceeding the margin of dumping:  

Provided that no such duty shall be imposed before the expiry of sixty days from the date of the public notice issued by the designated authority regarding its decision to initiate investigations:

Provided further that such duty shall remain in force only for a period not  exceeding six months which may upon request of the exporters representing a significant  percentage  of  the  trade  involved  be extended  by  the  Central  Government  to  nine months.

17. Final findings. -  (1) The designated authority shall, within one year from the date of initiation of an investigation,  determine  as  to  whether  or  not  the article under investigation is being dumped in India and  submit  to  the  Central  Government  its  final finding –  

(a) as to, -  

(i) the export price, normal value and the margin of dumping of the said article;  

(ii)  whether import of the said article into India, in the case of imports from specified countries, causes or  threatens  material  injury  to  any  industry established  in  India  or  materially  retards  the establishment of any industry in India;  

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(iii)  a  causal  link,  where  applicable,  between  the dumped imports and injury;  

(iv) whether a retrospective levy is called for and if so,  the  reasons  therefor  and  date  of commencement of such retrospective levy:  

Provided that  the Central  Government  may, in  its discretion  in  special  circumstances  extend  further the aforesaid period of one year by six months:  

Provided  further  that  in  those  cases  where  the designated  authority  has  suspended  the investigation  on  the  acceptance  of  a  price undertaking  as  provided  in  rule  15  and subsequently resumes the same on violation of the terms of the said undertaking, the period for which investigation was kept under suspension shall  not be taken into account while calculating the period of said one year,

(b)  recommending  the  amount  of  duty  which,  if levied, would remove the injury where applicable, to the domestic industry.  

(2) The final finding, if affirmative, shall contain all information  on  the  matter  of  facts  and  law  and reasons which have led to the conclusion and shall also contain information regarding-  

(i)  the  names  of  the  suppliers,  or  when  this  is impracticable, the supplying countries involved;  

(ii) a description of the product which is sufficient for customs purposes;  

(iii)  the margins of dumping established and a full explanation  of  the  reasons  for  the  methodology used in  the establishment  and comparison of  the export price and the normal value;  

(iv)  considerations  relevant  to  the  injury determination; and  

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(v) the main reasons leading to the determination.  

(3)  The  designated  authority  shall  determine  an individual  margin  of  dumping  for  each  known exporter or producer concerned of the article under investigation:  Provided  that  in  cases  where  the number of exporters, producers, importers or types of articles involved are so large as to make such determination impracticable, it may limit its findings either to a reasonable number of interested parties or articles by using statistically valid samples based on information available at the time of selection, or to  the  largest  percentage  of  the  volume  of  the exports  from  the  country  in  question  which  can reasonably  be  investigated,  and  any  selection,  of exporters,  producers,  or  types  of  articles,  made under  this  proviso  shall  preferably  be  made  in consultation  with  and  with  the  consent  of  the exporters, producers or importers concerned :  

Provided further that the designated authority shall, determine an individual margin of dumping for any exporter  or  producer, though not  selected initially, who submit  necessary information in  time,  except where the number of exporters or producers are so large that  individual  examination would  be unduly burdensome and prevent  the timely completion of the investigation.  

(4)  The  designated  authority  shall  issue  a  public notice recording its final findings.

18.  Levy of  duty. -  (1)  The  Central  Government may, within three months of the date of publication of final findings by the designated authority under rule  17,  impose  by  notification  in  the  Official Gazette,  upon importation into  India of  the article covered by the final finding, anti-dumping duty not exceeding  the  margin  of  dumping  as  determined under rule 17.  

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(2)  In  cases  where  the  designated  authority  has selected percentage of  the volume of  the exports from a particular country, as referred to sub-rule (3) of rule 17, any anti-dumping duty applied to imports from  exporters  or  producers  not  included  in  the examination shall not exceed –  

(i)  the  weighted  average  margin  of  dumping established with respect to the selected exporters or producers or,  

(ii)  where the liability  for  payment of anti-dumping duties is  calculated on the basis of  a prospective normal value/ the difference between the weighted average normal value of the selected exporters or producers  and  the  export  prices  of  exporters  or producers not individually examined:  

Provided  that  the  Central  Government  shall disregard for the purpose of this sub-rule any zero margin,  margins  which  are  less  than  2  per  cent expressed as  the  percentage of  export  price  and margins established in the circumstances detailed in sub-rule (8) of rule 6. The Central Government shall apply individual duties to imports from any exporter or  producer  not  included  in  the  examination  who has provided the necessary information during the course  of  the  investigation  as  referred  to  in  the second proviso to sub-rule (3) of rule 17.  

(3) Notwithstanding anything contained in sub-rule (1), where a domestic industry has been interpreted according to the proviso to sub-clause (b) of rule 2, a duty shall be levied only after the exporters have been  given  opportunity  to  cease  exporting  at dumped prices to the area concerned or otherwise give an undertaking pursuant to rule 15 and such undertaking  has  not  been  promptly  given  and  in such  cases  duty  shall  not  be  levied  only  on  the articles of specific producers which supply the area in question.  

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(4) If the final finding of the designated authority is negative that is contrary to the evidence on whose basis  the  investigation  was  initiated,  the  Central Government  shall,  within  forty-five  days  of  the publication  of  final  findings  by  the  designated authority  under  rule  17,  withdraw  the  provisional duty imposed, if any.  

20.  Commencement  of  duty. -  (1)  The anti-dumping duty levied under rule 13 and rule 19 shall take effect from the date of its publication in the Official Gazette.  

(2) Notwithstanding anything contained in sub-rule (1) –  

(a)  where a provisional  duty has been levied and where the designated authority has recorded a final finding of injury or where the designated authority has recorded a final finding of threat of injury and a further finding that the effect of dumped imports in the absence of provisional duty would have led to injury, the anti-dumping duty may be levied from the date of imposition of provisional duty;  

(b) in the circumstances referred to in sub-section (3) of section 9A of the Act,  the antidumping duty may  be  levied  retrospectively  from  the  date commencing ninety days prior to the imposition of such provisional duty:  

Provided that no duty shall be levied retrospectively on  imports  entered  for  home consumption  before initiation of the investigation:  

Provided  further  that  in  the  cases  of  violation  of price undertaking referred to in sub-rule (6) of rule 15,  no duty shall  be levied retrospectively  on the imports which have entered for home consumption before  the  violation  of  the  terms  of  such undertaking.

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Provided  also  that  notwithstanding  anything contained  in  the  foregoing  proviso,  in  case  of violation of  such undertaking,  the provisional  duty shall be deemed to have been levied from the date of violation of the undertaking or such date as the Central Government may specify in each case.  

21. Refund of duty. - (1) If the anti-dumping duty imposed by the Central Government on the basis of the final findings of the investigation conducted by the  designated  authority  is  higher  than  the provisional duty already imposed and collected, the differential shall not be collected from the importer.  

(2)  If,  the  anti-dumping  duty  fixed  after  the conclusion  of  the  investigation  is  lower  than  the provisional duty already imposed and collected, the differential shall be refunded to the importer.  

(3)  If  the provisional  duty imposed by the Central Government  is  withdrawn  in  accordance  with  the provisions of sub-rule (4) of rule 18, the provisional duty already imposed and collected, if any, shall be refunded to the importer.”

8. We will  take the facts contained in the judgment of the

Bombay High Court  dated 15.12.2011,  in  the case of  Harsh

International v. Commissioner of Customs, Civil Appeal No.

5119 of 2012, which explain how the question which has to be

determined  by  this  judgment  arose.   On  6th August,  2001 a

public notice was issued by the Designated Authority initiating

proceedings in regard to the import  of Vitrified/Porcelain tiles

originating in or exported from the People’s Republic of China

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and the United Arab Emirates.  The Designated Authority issued

preliminary  findings  on  3rd December,  2001.   Following  the

preliminary  findings,  the  Union  Government  imposed,  by  a

notification dated 2nd May, 2002, a provisional antidumping duty

under Section 9A(2) of the Customs Tariff Act read with Rules

13 and 20 of the Antidumping Rules.  The Designated Authority

rendered  its  final  findings  on  4th February,  2003  and  while

concluding  that  material  injury  had  resulted  to  the  domestic

industry recommended the imposition of antidumping duty.  The

Union  Government  issued  a  notification  on  1st May,  2003

imposing a final antidumping duty with effect from the date of

the imposition of the provisional antidumping duty i.e. 2nd May,

2002.   The  question  before  the  Court  is  as  to  whether  the

Central  Government  was within  its  jurisdiction  in  imposing  a

final  antidumping duty between 2nd November, 2002 and 30th

April,  2003.   This,  according  to  the  assessees,  is  the  “gap

period”  when the provisional duty had come to an end by efflux

of six months until a final notification was issued by the Union

Government on 1st May, 2003.

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9. The stage is now set for setting out the arguments of the

learned counsel both for the revenue and for the assessees.  

10. Ms.  Pinky  Anand,  learned  Additional  Solicitor  General

appearing on behalf  of  the revenue argued that  both literally

and  purposively  Rule  20  leads  to  one  conclusion  and  one

conclusion  alone  –  that  final  anti-dumping  duty  would  take

effect from the date of imposition of the provisional duty, which

would  necessarily  include  the  “gap”  period  i.e.  the  period

between the lapse of the provisional duty and the imposition of

the  final  duty.  According  to  learned  counsel,  any  other

construction would defeat the object and purpose of imposing a

final  anti-dumping  duty  after  the  Designated  Authority  has

found, post investigation, that there is dumping of goods and

material  injury  to  the  domestic  industry  as  a  result.   Thus,

despite  dumping  and  material  injury  being  present,  no

anti-dumping duty would be leviable in the interregnum period

which would be wholly subversive of the object sought to be

achieved; that is, saving the domestic industry from unfair trade

practices of foreign exporters.  She also argued that a literal

reading of Rule 20 is called for which makes it clear that the

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final  anti-dumping  duty  is  to  be  levied  from  the  date  of

imposition of provisional duty which would necessarily include

the “gap” period.  Further, since the final duty is made to relate

back to the date of the provisional duty imposition, a fiction is

employed which must be allowed to have full play and the mind

should not boggle in giving such fiction its logical consequence.

According  to  learned  counsel,  “levied”  in  Rule  20(2)(a)

obviously  does  not  include  “collection”  as  has  been  held  in

several Supreme Court judgments and therefore, “levy” would

not include “collection” for which reason Rule 20 has to be read

on its own without reference to the consequence that is found in

Rule 21.  She further argued that it is true that laws that are

made  in  pursuance  of  international  treaties  ought  to  be

construed  in  accordance  with  such  treaties,  but  where  the

Indian  law  deviates  from  the  treaty  agreement,  Indian  law

prevails. It is clear that unlike Article 10 of the WTO Agreement,

Rule  20(2)(a)  only  speaks of  anti-dumping  duty  being  levied

from the date of  imposition of  provisional  duty and does not

speak of the period for which the provisional duty applied, thus

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making  it  clear  that  anti-dumping  duty  can  be  levied  and

collected for the “gap” or interregnum period.  

11. On  the  other  hand,  learned  counsel  for  the  various

assessees  have  argued  that  Rule  20(2)(a)  should  be

interpreted  in  the  light  of  the  WTO  Agreement,  and  so

interpreted would necessarily be interpreted as meaning only

the  period  for  which  the  provisional  duty  is  levied,  and  not

beyond.  It  has been argued with  some vehemence that  this

also follows from a reading of clause 18.4 of the Agreement and

a reading of the Central Government’s own website which was

referred  to  us  in  the  course  of  arguments  stating  that  the

anti-dumping  rules  are  in  consonance  with  the  WTO

Agreements on anti-dumping.  Further, it has been argued that

the word “levied” under Rule 20(2)(a), in the context includes

even  “collection”  and  this  being  so,  whatever  has  not  been

“collected”  in  the  interregnum  period  obviously  cannot  be

collected  retrospectively.  It  was  also  argued  before  us  that

Section  9A(3)  alone  empowers  the  rule  making  authority  to

impose  a  retrospective  anti-dumping  duty  within  the  strict

confines of the said rule. Section 9A(2) and (6), in contrast, do

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not allow any imposition, retrospectively, of anti-dumping duty,

and  therefore  if  Rule  20  were  to  be  read  in  the  manner

suggested by revenue, it would be ultra vires the parent statute.

It was further argued that the levy of anti-dumping duty is not

automatic and is only levied by the Central Government taking

into account a series of complex economic factors.  This being

so,  the  continuity  of  such  levy  can  only  be  for  the  period

indicated  in  the  provisional  duty  levy  notification  and  not

beyond.  It was also argued that, on a true construction of Rule

20(2)(a),  the  said  rule  merely  validates  a  provisional  duty

already levied, and nothing beyond.  It was further argued that

Rule 20(2)(a) has to be harmoniously construed with both Rules

13 and 21, or else, the suggested construction by revenue of

Rule 20(2)(a) would render Rules 13 and 21 nugatory.  In this

context, it was further argued that no duty can be levied in the

interregnum period as the  Government  would  then  be doing

indirectly  what  it  is  prohibited  from  doing  directly  –  namely,

extending the period of  six months of  the levy of  provisional

duty beyond six months and until the notification imposing the

final anti-dumping duty.   

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12. Two earlier  judgments  of  this  Court  have  stated  as  to

what  exactly  was  the  object  sought  to  be  achieved  by  the

introduction of Section 9A of the Customs Tariff Act read with

the  Anti-Dumping  Rules.  But  before  we  come  to  these

judgments,  it  is  important  to  refer  to  our  basic  law,  and  in

particular Article 51(c) of the Constitution of India, which reads

as follows:

“51. Promotion of international peace and security. —The State shall endeavour to —  

(c)  foster  respect  for  international  law  and  treaty obligations in the dealings of organised peoples with one another; and”

13. In S&S Enterprise v. Designated Authority and others,

(2005) 3 SCC 337, this Court said:

“In our opinion, the interpretation of Rule 14(d) by Respondent No.1 and the Tribunal is incorrect and contrary to its language. The imposition of dumping duty is under Section 9A of the Customs Tariff Act, 1975  and  the  Rules  and  is  the  outcome  of  the General Agreement on Tariff  and Trade (GATT) to which  India  is  a  party.  The  purpose  behind  the imposition  of  the  duty  is  to  curb  unfair  trade practices  resorted  to  by  exporters  of  a  particular country of flooding the domestic markets with goods at rates which are lower than the rate at which the exporters normally  sell  the same or  like goods in

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their  own countries so as to cause or be likely to cause injury  to  the  domestic  market.  The  levy  of dumping  duty  is  a  method  recognized  by  GATT which seeks to remedy the injury and at the same time  balances  the  right  of  exporters  from  other countries  to  sell  their  products  within  the  country with the interest of the domestic markets. Thus the factors to constitute 'dumping', are (i) an import at prices which are lower than the normal value of the goods in the exporting country; (ii) the exports must be  sufficient  to  cause  injury  to  the  domestic industry.” [at para 4]

14. To similar effect is the judgment of  Reliance Industries

Ltd. v. Designated Authority and others, (2006) 10 SCC 368:

“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 9-A 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 9-A 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  destabilise  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.” [at paras 10, 11 & 12]

15. A number of  judgments,  both English and Indian,  have

laid down as to what is the correct approach to the construction

of  a  statute  made  in  response  to  an  international  treaty

obligation  by  a  member  nation.   Thus,  in  The  Jade  The

Eschersheim  Owners  of  the  motor  vessel  Erkowit v.

Owners of the ship Jade, [1976] 1 All ER 920, the House of

Lords stated:

“As  the  Act  was  passed  to  enable  Her  Majesty’s government  to  give  effect  to  the  obligations  in international law which it would assume on ratifying the convention to which it was a signatory, the rule of statutory  construction  laid  down  in  Salomon  v. Customs and Excise Commissioners [1966] 3 All ER

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871 and Post Office v. Estuary Radio Ltd. [1967] 3 All ER 633 is applicable.  If there be any difference between the language of the statutory provision and that  of  the  corresponding  provision  of  the convention,  the  statutory  language  should  be construed  in  the  same  sense  as  that  of  the convention if the words of the statute are reasonably capable of bearing that meaning.” [at page 924]

16. Similarly  in  Quazi v.  Quazi,  [1979]  3  All  ER  897,  the

House of Lords put it thus:

“In the instant case, however, this does not help the respondent  wife;  it  helps  the  appellant  husband. The  purpose  for  which  the  Recognition  Act  was passed is  declared by the preamble to be with a view to the ratification by the United Kingdom of the Recognition  Convention  and  for  other  purposes. Where  Parliament  passes  an  Act  amending  the domestic  law  of  the  United  Kingdom  in  order  to enable this country to ratify an international treaty and thereby assume towards other states that are parties to the treaty an obligation in international law to  observe  its  terms,  it  is  a  legitimate  aid  to  the construction of  any provisions of  the Act  that  are ambiguous or vague to have recourse to the terms of the treaty in order to see what was the obligation in  international  law  that  Parliament  intended  that this  country  should  be  enabled  to  assume.  The ambiguity or obscurity is to be resolved in favour of that meaning that is consistent with the provisions of the  treaty:  see  Salomon  v.  Customs  and  Excise Commissioners [1966] 3 All ER 871 and Post Office v. Estuary Radio Ltd. [1967] 3 All ER 633.” [at page 903]

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17. In Garland v. British Rail Engineering Ltd., [1982] 2 All

ER 402, the same Rule was set out with an addition – that not

only  should  municipal  law carry  out  treaty  obligations,  but  it

should also not be inconsistent with the terms of a treaty. This

was put by the House of Lords in the following words:-

“My  Lords,  even  if  the  obligation  to  observe  the provisions  of  article  119  were  an  obligation assumed by the United Kingdom under an ordinary international treaty or convention and there were no question  of  the  treaty  obligation  being  directly applicable as part of the law to be applied by the courts in this country without need for any further enactment, it is a principle of construction of United Kingdom statutes, now too well established to call for citation of authority, that the words of a statute passed  after  the  Treaty  has  been  signed  and dealing with the subject matter of the international obligation  of  the  United  Kingdom,  are  to  be construed, if they are reasonably capable of bearing such  a  meaning,  as  intended  to  carry  out  the obligation,  and  not  to  be  inconsistent  with  it.”  [at page 415]

18. Another interesting aspect was brought out by the House

of Lords in  The Hollandia’s case [1982] 3 All  ER 1141, and

that is that a treaty provision embodied in a statute needs to be

construed  uniformly  in  all  the  member  nations  who  are  its

signatories, and should therefore not be controlled by domestic

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precedents but should be construed on its own terms on broad

principles  of  general  application in  a  purposive and not  in  a

narrow literal manner.  This is stated in the following words:

“My Lords, the provisions in section 1 of the Act that I  have quoted appear  to me to be free from any ambiguity perceptible to even the most ingenious of legal  minds.  The Hague-Visby Rules,  or rather all those of them that are included in the Schedule, are to have the force of law in the United Kingdom: they are  to  be  treated  as  if  they  were  part  of  directly enacted statute law. But since they form part of an international convention which must come under the consideration of foreign as well as English courts, it is,  as  Lord  Macmillan  said  of  the  Hague  Rules themselves in Stag Line Ltd. v. Foscolo, Mango and Co. Ltd.[1932] A.C. 328 at 350, [1931] All ER Rep 666 at 677 -  

“desirable  in  the  interests  of  uniformity  that their  interpretation  should  not  be  rigidly controlled  by  domestic  precedents  of antecedent date, but rather that the language of  the  rules  should  be  construed  on  broad principles of general acceptation.”

They  should  be  given  a  purposive  rather  than  a narrow literalistic construction, particularly wherever the  adoption  of  a  literalistic  construction  would enable  the  stated  purpose  of  the  international convention, viz., the unification of domestic laws of the contracting states relating to bills of lading, to be evaded by the use of colourable devices that, not being  expressly  referred  to  in  the  Rules,  are  not specifically prohibited.” [at page No.1145]

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19. In  Sidhu  and  others v.  British  Airways  plc  Abnett

(known as Sykes) v. British Airways plc, [1997] 1 All ER 193,

the same thought was echoed in the following words:-

“I believe that the answer to the question raised in the present case is to be found in the objects and structure of the convention.  The language used and the subject matter with which it deals demonstrate that what was sought to be achieved was a uniform international  code,  which could be applied by the courts  of  all  the  High  Contracting  Parties  without reference to the rules of their own domestic law.” [at page No.212]

20. To similar effect are some of the judgments of our court.

In  Vellore  Citizens’ Welfare  Forum v.  Union  of  India  and

others, (1996) 5 SCC 647, when dealing with the Environment

Protection Act, this Court stated:

“Even otherwise once these principles are accepted as  part  of  the  Customary  International  Law there would be no difficulty in accepting them as part of the  domestic  law.  It  is  almost  an  accepted proposition  of  law  that  the  rules  of  Customary International  Law  which  are  not  contrary  to  the municipal  law  shall  be  deemed  to  have  been incorporated  in  the  domestic  law  and  shall  be followed by the Courts of Law. To support we may refer to Justice H.R. Khanna's opinion in Addl. Distt. Magistrate Jabalpur  v. Shivakant  Shukla [(1976)  2 SCC  521  :  AIR  1976  SC  1207],  Jolly  George

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Varghese v.  Bank of  Cochin [(1980) 2 SCC 360 : AIR 1980 SC 470] and  Gramophone Co. of India Ltd.  v. Birendra  Bahadur  Pandey, [(1984)  2  SCC 534 : 1984 SCC (Cri) 313 : AIR 1984 SC 667].” [at para 15]

21. Similarly in  Daya Singh Lahoria v.  Union of India and

others, (2001) 4 SCC 516, when construing Section 21 of the

Extradition  Act,  1962,  this  Court  referred  to  the  Extradition

Treaty and construed Section 21 in the light of the international

position then obtained.  This Court said:

“…. The Extradition Treaty contains several articles of  which  Article  7  is  rather  significant  for  our purpose,  which  may  be  quoted  hereinbelow  in extenso:  

"7. A person surrendered can in no case be kept  in  custody or  be brought  to  trial  in  the territories  of  the  High  Contracting  Party  to whom the surrender has been made for any other crime or offence, or on account of any other  matters,  than  those  for  which  the extradition shall have taken place, until he has been restored, or  has had an opportunity of returning,  to  the  territories  of  the  High Contracting  Party  by  whom  he  has  been surrendered.  

This stipulation does not apply to crimes or offences committed after the extradition."  

The aforesaid Article unequivocally indicates that the  person  concerned  cannot  be  tried  for  any other crime or offence than those for which the

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extradition  shall  have  taken  place  until  he  has been  restored  or  has  had  the  opportunity  of returning to the territories of the High Contracting Party by whom he has been surrendered.  The provisions of Section 21 of the Extradition Act are in consonance with the aforesaid Article  of  the Extradition Treaty….” [at para 3]

22. In  yet  another  judgment  of  this  Court,  i.e.  S&S

Enterprise, already referred to, this Court construed Rule 14(d)

of the very anti-dumping rules with which we are concerned, in

the light of the very agreement on implementation of Article VI

of  GATT.  This  Court  was  asked  to  compute  the  volume of

exports on the basis of price and not on the basis of quantity.  In

repelling this contention, this Court referred to Article 5.8 of the

Agreement on implementation of Article VI and held:-

“However a negligible quantity of imports would not be sufficient to cause such injury. Article 5.8 of the Agreement  on Implementation of  Article  VI  of  the GATT, 1994 makes this clear:

"An application under paragraph 1 shall be rejected  and  an  investigation  shall  be terminated promptly as soon as the authorities concerned  are  satisfied  that  there  is  no sufficient  evidence  of  either  dumping  or  of injury  to  justify  proceeding  with  the  case. There shall be immediate termination in cases where  the  authorities  determine  that  the margin of dumping is  de minimis, or that the

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volume of dumped imports, actual or potential, or  the  injury,  is  negligible.  The  margin  of dumping shall be considered to be de minimis if this margin is less than 2%, expressed as a percentage of the export price. The volume of dumped imports shall normally be regarded as negligible  if  the  volume  of  dumped  imports from a particular country is found to account for less than 3% of imports of the like product in  the  importing  member,  unless  countries which individually account for less than 3% of the imports of the like product in the importing member collectively account for more than 7% of imports of the like product in the importing member." [para 5]

“Therefore,  when  Rule  14(d)  says  that  the investigation must be terminated if  the 'volume' of the dumped imports is less than 3% of the imports of the like product, it must mean that the quantity of dumped imports must account for less than 3% of the total imports. To hold otherwise would mean that if  the  price  is  lower  than  3%,  irrespective  of  the quantity  imported,  the  investigation  would  be dropped and it would, as submitted by the appellant, lead to the absurd situation that a small number of expensive  imports  would  invite  anti-dumping investigation  but  cheap  imports  flooding  the domestic markets would not. In fact such a situation is exactly what the dumping rules have been framed to prevent.” [para 10]

23. A conspectus of the aforesaid authorities would lead to

the following conclusions:

(1) Article  51(c)  of  the  Constitution  of  India  is  a

Directive Principle of  State Policy which states that  the

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State shall  endeavour to foster  respect for  international

law  and  treaty  obligations.   As  a  result,  rules  of

international law which are not contrary to domestic law

are  followed  by  the  courts  in  this  country.   This  is  a

situation in which there is an international treaty to which

India is not a signatory or general rules of international

law are made applicable.  It is in this situation that if there

happens  to  be  a  conflict  between  domestic  law  and

international law, domestic law will prevail.  

(2) In a situation where India is a signatory nation to an

international treaty, and a statute is passed pursuant to

the said treaty, it is a legitimate aid to the construction of

the  provisions  of  such  statute  that  are  vague  or

ambiguous to have recourse to the terms of the treaty to

resolve  such  ambiguity  in  favour  of  a  meaning  that  is

consistent with the provisions of the treaty.  

(3) In a situation where India is a signatory nation to an

international treaty, and a statute is made in furtherance

of  such treaty, a  purposive rather  than a  narrow literal

construction  of  such  statute  is  preferred.   The 39

Page 40

interpretation of  such a statute should be construed on

broad principles of general acceptance rather than earlier

domestic precedents, being intended to carry out treaty

obligations, and not to be inconsistent with them.  

(4) In a situation in which India is a signatory nation to

an international treaty, and a statute is made to enforce a

treaty obligation, and if there be any difference between

the  language  of  such  statute  and  a  corresponding

provision of the treaty, the statutory language should be

construed in the same sense as that of the treaty.  This is

for the reason that in such cases what is sought to be

achieved  by  the  international  treaty  is  a  uniform

international  code of  law which is  to  be applied by the

courts of all the signatory nations in a manner that leads

to the same result in all the signatory nations.

It  is  in  the  light  of  these  principles  that  we  must  now

examine the statute in question.  

Construction of Section 9A.

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24. Section 9A(1) refers to an anti-dumping duty.  Such duty

is  only  imposed when an  article  is  exported  from a  country

outside India to India at less than its normal value.  Such duty

can, in the Central Government’s discretion, be imposed at a

rate that does not exceed the margin of dumping, which only

means the difference between the export price and the normal

value  of  such  article  in  international  trade.   It  is  clear  that

sub-section (1) refers to a “final” or “definitive” duty, and has to

be read with sub-section (3) thereof, which authorises the levy

of the “final” or “definitive” anti-dumping duty retrospectively in

the circumstances mentioned in sub-section (3).  The scheme

therefore of Section 9A(1) and (3) is that an anti-dumping duty

is normally to be imposed with prospective effect unless,  inter

alia, because of massive dumping of an article in a relatively

short time the remedial effect  of the anti-dumping duty to be

levied  would  be  seriously  undermined.  This  would  therefore

require  a  retrospective  duty  being  levied,  but  not  beyond  a

period  of  90  days,  to  undo  the  effect  of  undermining  the

anti-dumping  duty  to  be  levied.  Short  of  sub-section  (3),  no

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other part of Section 9A authorises the Central Government to

levy an anti-dumping duty with retrospective effect.  

25. Section 9A(2) speaks of an anti-dumping duty which the

Central  Government  levies  on  the  basis  of  a  provisional

estimate, thus referring to a provisional anti-dumping duty.  The

Section further goes on to say that after a final determination is

made in accordance with the Rules, the Central Government

may reduce such provisional anti-dumping duty, having regard

to  the  final  determination  made  by  the  designated  authority

under the Rules.  If and when this happens, what is important to

note  is  that  refund  shall  be  made  of  so  much  of  the

anti-dumping duty which has been collected in excess of the

final  anti-dumping duty so reduced.  Under  sub-section (5),  a

maximum period of five years is allowable on the anti-dumping

duty imposed.  This is extendable only for a further period of

five years and not beyond.  Sub-section (6) in turn refers to the

Central Government’s power to make rules, inter alia, to assess

and collect anti-dumping duty.  

26. It  is  important  to  note  that  neither  sub-section  (2)  nor

sub-section  (6)  authorises  the  Central  Government,  either 42

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expressly or by necessary implication, to make rules and/or to

levy  anti-dumping  duty  with  retrospective  effect.   This  is  in

contrast with sub-section (3) which expressly so authorises the

Central  Government  in  the  circumstances  mentioned  in  the

sub-section.  

Interpretation of the Anti-Dumping Rules  

27. A reading  of  the  Anti-Dumping  Rules  would  show that

they have been framed keeping in view the WTO Agreement of

1994 strictly in mind.  A designated authority is appointed under

Rule  3  who,  under  Rule  4,  is  to  investigate  the  existence,

degree, and effect of dumping in relation to import of any article

and to submit its findings, provisional or final as the case may

be, to the Central Government.  The designated authority is to

initiate an investigation either  suo motu  or upon receipt of a

written application by or on behalf of the domestic industry into

(i) dumping (ii) material injury to the domestic industry and (iii)

where applicable, a causal link between such dumped imports

and the material injury – see Rule 5.  Such investigation is to be

initiated by issue of a public notice under rule 6.  Since material

injury to an established domestic injury or material retardation 43

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of the establishment of any such industry is an important aspect

in levying anti dumping duty, the designated authority is to be

guided, under Rule 11, by Annexure II of the Rules, paragraphs

(iv) and (v) of which read as under:-

“(iv) The examination of the impact of the dumped imports on the domestic industry concerned, shall include  an  evaluation  of  all  relevant  economic factors and indices having a bearing on the state of the industry, including natural and potential decline in sales, profits, output, market share, productivity, return  on  investments  or  utilization  of  capacity; factors affecting domestic prices; the magnitude of the  margin  of  dumping;  actual  and  potential negative  effects  on  cash  flow,  inventories, employment, wages, growth, ability to raise capital investments.  

(v)  It  must  be  demonstrated  that  the  dumped imports are, through the effects of dumping, as set forth in paragraphs (ii) and (iv) above, causing injury to  the  domestic  industry. The  demonstration  of  a causal  relationship  between  the  dumped  imports and  the  injury  to  the  domestic  industry  shall  be based  on  an  examination  of  relevant  evidence before  the  designated  authority.  The  designated authority  shall  also  examine  any  known  factors other than the dumped imports which at the same time  are  injuring  the  domestic  industry,  and  the injury  caused by these other  factors  must  not  be attributed  to  the  dumped  imports.  Factors  which may be relevant in this respect include,  inter alia, the  volume  and  prices  of  imports  not  sold  at dumping prices, contraction in demand or changes in  the  patterns  of  consumption,  trade  restrictive practices  of  and  competition  between  the  foreign and  domestic  producers,  developments  in

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technology  and  the  export  performance  and  the productivity of the domestic industry.”

28. It  will  thus  be  seen  that  the  determination  of  material

injury  to  domestic  industry  depends  on  a  series  of  complex

economic factors which are to be segregated from other factors

which may also cause injury to the said industry.  

29. Under  Rule 12,  the designated authority  is to “proceed

expeditiously” with the conduct of the investigation and shall in

appropriate  cases  record  his  preliminary  findings  on  all  the

aspects delineated above. No time frame is  indicated except

that utmost dispatch is the order of the day.  

30. Rule  13  is  very  important  and  when  Rule  20  is  read

harmoniously with both Rules 13 and 21, all  the dark clouds

which  come in  on  account  of  the  suggested  construction  of

Rule 20 by revenue get dispelled by the sunlight of harmonious

construction of all the three Rules read together.  

31. Rule 13, in line with clause 7.4 of the WTO Agreement,

enables  the  Central  Government  to  impose  provisional

anti-dumping duty not exceeding the margin of dumping, with

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two provisos. First,  no such duty can be imposed before the

expiry of 60 days from the date of public notice issued by the

designated  authority  regarding  its  decision  to  initiate

investigations. And second, such duty cannot remain in force

for a period of more than six months, which is only extendable

on  request  made  by  the  foreign  exporters  who  represent  a

significant  percentage  of  the  trade  involved,  to  a  maximum

period of 9 months. The important words used in the second

proviso  are  “shall”,  “only”,  and  “not  exceeding”,  all  of  which

point  to  the  fact  that  the  time  period  mentioned  in  the  said

proviso is mandatory and cannot be exceeded by even a single

day.  

32. Under Rule 17, the designated authority is given one year

from the date of initiation of an investigation to come out with its

final  findings.  This  is  extendable  by the Central  Government

only in special circumstances, and only by a further period of 6

months,  and no more (Clause 5.10 of  the WTO Agreement).

Significantly, the designated authority, in its final finding, may

also  provide  for  a  retrospective  levy  of  duty,  the  reasons

therefor, and the date of commencement of such retrospective

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levy.  This  is  obviously  referable  to  Section  9A(3),  which

reproduces clause 10.6 of the WTO Agreement.  The reasons

must be the reasons mentioned in the said sub-section, and, as

mentioned  in  the  said  sub-section,  such  retrospective  levy

cannot  commence  beyond  90  days  from  the  date  of  the

notification imposing provisional duty.  

33. Under  Rule  18,  the  Central  Government  may  in  its

discretion, and within a maximum period of three months from

the date of publication of the final findings by the designated

authority, impose a final anti-dumping duty.  

34. This  brings  us  to  Rule  20,  the  correct  construction  of

which is determinative of the question raised in these appeals.

The first thing to notice about Rule 20 is, as its marginal note

states, that it is concerned only with the date of commencement

of duty.  Once this is appreciated, it becomes clear that its focus

is  only  on  when  anti-dumping  duties  are  to  commence.  In

sub-rule (1), it speaks of anti-dumping duties levied under Rule

13  and  Rule  19,  and  states  that  they  shall  take  effect  only

prospectively,  i.e.  from  the  date  of  publication  in  the  official

gazette.  It  is  clear  that  Rule  19  is  a  mistake  made  by  the 47

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draftsman of the Rules. Rule 18 is obviously referred  to.  Thus,

under  sub-rule  (1),  the  provisional  anti-dumping  duty  takes

effect  on  and  from  the  date  of  its  publication  in  the  official

gazette.  Same  is  the  case  with  the  final  anti-dumping  duty

levied under Rule 18.  

35. Sub-rule (2) is in two parts.  Sub-clause (a) deals with the

date of  commencement  of  an anti-dumping duty, having due

regard  to  a  provisional  duty  that  has  been  levied,  whereas

sub-clause (b) specifically deals with duty to be retrospectively

imposed,  that  is  a  retrospective  imposition  prior  to  the

imposition of a provisional duty.  It will immediately be noticed

that the subject matter of sub-clause (a) does not purport to be

the imposition of an anti-dumping duty with retrospective effect.

This is because it  seeks to give effect  to clause 10.2 of  the

WTO Agreement.  As has been argued by learned counsel on

both  sides,  the  key  to  the  understanding  of  the  import  of

sub-clause (a) is the expression “where a provisional duty has

been levied….”  Obviously, the word “levied” has to be read as

levied in accordance with Rule 13 which, as its marginal note

indicates, provides for the “levy” of provisional duty.  Once this

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is  clear  and the word “levied”  is  to  be understood as levied

under Rule 13, the second proviso of Rule 13 gets attracted,

and  under  this  proviso  such  levy  cannot  be  for  a  period

exceeding 6 months (on facts in these cases, such period has

not in fact been extended beyond 6 months).  Thus, it is clear

that all that sub-rule (2)(a) does is to enable the levy of a final

anti-dumping duty from the date of imposition of a provisional

duty  so  as  to  convert  the  provisional  measure  into  a  final

measure,  or  so  as  to  take  within  its  ken  the  provisional

anti-dumping duty already imposed.  This aspect is succinctly

put by “A Handbook on Anti-Dumping Investigations” by Judith

Czako,  Johann  Human  and  Jorge  Miranda.   The  learned

authors state:

“L. RETROACTIVE  COLLECTION  OF DEFINITIVE DUTIES

The  normal  rule  for  application  of  definitive duties, set out in Article 10.1 of the AD Agreement, is  that  duties  shall  only  be  collected  on  imports made (“entered for consumption”) after the effective date of  the final  determination.   Articles 10.2 and 10.6 establish two exceptions to this general rule, providing for  the retroactive collection of  definitive duties (that is, for the collection of definitive duties before the effective date of the final determination) in two situations:  

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• The  first  such  situation  involves  the collection  of  definitive  duties  for  the period  during  which  provisional measures  were  applied  (and  for  all practical  purposes  “converts”  the provisional  measure  into  a  definitive measure); and

• The  other  involves  the  collection  of definitive duties up to 90 days prior  to the  date  of  application  of  provisional measures, although no definitive duties can  be  collected  on  imports  that  took place before initiation.”

36. On a correct reading of the said sub-rule, therefore, the

final  anti-dumping  duty  only  incorporates  the  provisional

anti-dumping duty within itself, but in the manner provided by

Rule 13.  Thus, it is clear that such incorporation can only be

the period upto which the provisional duty can be levied and not

beyond.  Thus understood, it is clear that both literally, and in

keeping with  the object  sought  to  be achieved –  that  is  the

making of laws in conformity with the WTO Agreement, there

can be no levy of anti-dumping duty in the “gap” or interregnum

period  between  the  lapse  of  the  provisional  duty  and  the

imposition of the final duty.  Such interpretation makes it clear

that clause 10.2 of the WTO Agreement is reproduced in the

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same sense though not in the same form in sub-rule (2)(a). The

same  result  therefore  as  is  envisaged  in  clause  10.2  is

achieved by the said construction – that is anti-dumping duty

may be levied retroactively for the period for which provisional

measures  have  been  applied.   The  said  construction  is  in

consonance with the principles already laid down earlier in this

judgment in that the WTO Agreement is intended to be applied

by the various signatory nations in a uniform manner.  This can

only be done by construing the language of Section 9A read

with  the  Rules  in  the  same  sense  as  that  of  the  WTO

Agreement.  

37. At this juncture, it is interesting to note that a number of

member countries of the WTO agreement have opted for the

Rule by which anti-dumping duty is levied to the full extent of

the margin of dumping.  Such nations like Argentina, Mexico

and USA therefore have, under  the WTO Agreement,  only a

period of  4 months extendable upto a maximum period of  6

months (instead of 6 months and 9 months respectively) so far

as the life span of a provisional  duty is concerned.  Most of

Europe and the rest of the world have opted to impose duties

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upto the margin of dumping depending upon the extent of injury

caused to their domestic industry.  Interestingly, the European

Community  Council  Regulation  No.  1225  of  2009  dated

30.11.2009  on  protection  against  dumped  imports  from

countries not members of the European Community has this to

say:

“Article 9

Termination without measures; imposition of definitive duties

4. Where the facts as finally established show that there is dumping and injury caused thereby, and the Community  interest  calls  for  intervention  in accordance with Article 21, a definitive anti-dumping duty shall be imposed by the Council, acting on a proposal  submitted  by  the  Commission  after consultation  of  the  Advisory  Committee.  The proposal shall be adopted by the Council unless it decides by a simple majority to reject the proposal, within a period of one month after its submission by the  Commission.  Where  provisional  duties  are  in force,  a  proposal  for  definitive  action  shall  be submitted no later than one month before the expiry of such duties. The amount of the anti-dumping duty shall not exceed the margin of dumping established but it should be less than the margin if such lesser duty would be adequate to remove the injury to the Community industry.”

38. It will be seen from this that an inflexible rule is laid down

that would ensure that  no “gap” or  intervening period occurs

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between the expiry of the provisional duty and the imposition of

the final duty, inasmuch as a proposal to levy final duty has to

be submitted no later than one month before the expiry of a

provisional duty.  

39. However,  interestingly  enough,  in  the  United  States

Manual  dealing with anti-dumping duties,  the following is the

statement of law:-

“Therefore, a period of time, known sometimes as the “gap period,” may exist between the expiration of  the  end  of  the  provisional  measures,  even  if extended,  and  the  publication  of  the  ITC’s  final determination  (the  starting  of  definitive  duties) where the DOC cannot require CBP to collect cash deposits,  bonds,  or  other  securities.   (The  gap period  begins  the  day  after  the  end  of  the  4-  or 6-month period, and ends the day before the ITC’s final  determination  is  published).   The  DOC normally  administers  this  problem  in  one  of  two ways.  We either send instructions to CBP towards the beginning of the gap period, instructing them to stop collecting cash deposits or bonds, or we wait until  the  order  has  been  published,  then  instruct CBP to liquidate all  entries during the gap period without regard to antidumping duties.”

40. We are heartened to note that one other signatory nation

has taken the stand that no duty can be collected during the

“gap period”.  

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41. Viewed slightly differently, the suggested construction by

revenue would render Rule 2(a)  ultra vires Section 9A.  It has

already been seen that sub-section (2) and sub-section (6) of

Section  9A  do  not  authorize  the  imposition  of  a  duty  with

retrospective  effect,  in  contrast  with  sub-section  (3)  thereof.

Any  duty  levied  by  a  final  duty  notification  during  the

interregnum period would necessarily amount to a retrospective

levy of duty for the reason that such period is not covered by

the provisional duty notification, being beyond 6 months. This

would  therefore  render  sub-rule  (2)(a) ultra vires Section 9A.

A construction  which  is  both  in  consonance with international

law  and  treaty  obligations,  which  Article  51(c)  of  the

Constitution states as a directive principle of State policy; and

with the application of the doctrine of harmonious construction

is to be preferred to a narrow doctrinaire meaning which would

lead to the Rule being read in such a manner that it  is  ultra

vires the parent statute.  

42. One other interesting thing remains. Most of the debate at

the Bar was centered around the expression “levied” in Rule 20

sub-rule (2)(a), revenue contending, based on two judgments of

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this  Court  in  N.B.  Sanjana,  Assistant  Collector  of  Central

Excise,  Bombay and others v.  The Elphinstone Spinning

and Weaving Mills  Company Ltd.,  1971 (1)  SCC 337 and

Assistant Collector of Central Excise, Calcutta Division v.

National Tobacco Co. of India Ltd., (1972) 2 SCC 560, that

“levy” does not include “collection”.  This has been countered by

arguments on behalf of the assessees that the word “levied” in

the said  sub-rule  has  been used in  the  same sense as the

expression “imposed and collected” in Rule 21(1), and would

therefore include “collection” as well.  In view of what has been

held  by  us  above,  we  find  it  unnecessary  to  decide  this

contention.  

43. The effect  of  Rule  21  on  the  aforesaid  construction  of

Rule 20 now needs to be adverted to. Rule 21, in turn, is made

to  carry  out  what  is  stated  in  clause  10.3  of  the  WTO

Agreement.   Rule  21(2)  echoes  what  is  already  found  in

Section 9A(2).  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

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than the provisional  duty already imposed and collected,  the

differential shall not be collected from the importer.  

44. It is obvious that this Rule has been framed in the interest

of international trade.  It is well known that export contracts are

entered into long before anti-dumping duties may be imposed,

and in the interests of international trade, the importer should

not be put to a loss in case a final duty happens to be higher

than  the  provisional  duty  already  imposed.  The  delicate

balancing act between protection of domestic industry and the

hardship caused in the course of international trade has thus

been tilted  in  favour  of  the  latter.  If  learned counsel  for  the

revenue were right, despite the fact that such differential cannot

be collected from the importer under Rule 21(1) for the period

that  the  provisional  duty  notification  is  in  force,  during  the

interregnum period, the full amount of final duty is liable to be

recovered from the importer. This would turn Rule 21(1) on its

head and result in an absurdity.  A simple example will suffice.

If provisional duty already imposed and collected is Rs. 50/- per

metric ton (PMT), and final duty imposed say one year later with

retroactive effect from the date of imposition of the provisional

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duty is Rs. 100/- PMT, the difference of Rs. 50/- PMT cannot be

recovered from the importer for the period that the provisional

notification is in force. Therefore, for the first 6 months in the

aforesaid  example,  the  importer  is  liable  to  pay  nil  duty.

However,  for  the  next  6  months,  that  is  in  the  interregnum

period between the expiry of the provisional duty and the date

of imposition of the final duty, the importer becomes liable to

pay Rs.100/- PMT.  The said example demonstrates how the

arguments of the revenue would lead to an absurdity such as

this.   

45. Rule 21(1) also answers the contention of the Revenue

that the object of anti-dumping laws would be defeated if it were

found that dumping and material injury having been found, yet

no anti-dumping duty can be levied.  By application of this Rule,

it is clear that for the period that the provisional duty notification

is in force, the difference of Rs.50/-, in the example just given,

cannot be collected from the importer despite Rs.50/-  having

been imposed because of dumping and material injury to the

domestic  industry.   Therefore,  it  is  clear  that  there  already

exists, within the scheme of the anti-dumping law, a situation in

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which  there  is  dumping  and  material  injury  to  the  domestic

industry, for which an anti-dumping duty is levied,  but which

cannot  be  collected.   There  is,  therefore,  a  balance  struck

between  material  injury  to  the  domestic  industry  and

retrospective levy of duty in favour of the latter.  

46. We also find force in the submission of learned counsel

for the assessees that the revenue’s construction of Rule 20

would  achieve  indirectly  what  cannot  be  achieved  directly,

having regard to the mandatory language contained in Rule 13

second proviso.  Here again a simple example would suffice.

Say the provisional duty is levied at the rate of Rs. 50/- PMT

and comes to an end after 6 months.  6 months later, a final

duty is imposed again at the same rate of Rs. 50/- PMT with

effect from the date of levy of the provisional duty.  If learned

counsel  for  the  revenue  were  right,  Rs.  50/-  PMT could  be

recovered under  Rule 20(2)(a)  for  the interregnum period as

well  which  would,  in  effect,  destroy  the  scheme  of  Rule  13

second proviso by extending the period of the provisional duty

notification beyond a period of 6 months, which clearly cannot

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be  done.   We  find  therefore  that  on  all  these  counts,  the

arguments of revenue cannot be countenanced.  

47. It remains now to deal with the impugned judgment of the

Bombay High  Court.  After  setting  out  the  contentions  of  the

respective  parties  and  referring  to  the  relevant  statutory

provisions and the WTO Agreement, the Bombay High Court

arrives at a finding that Parliament has made a departure from

the language used in the WTO Agreement and the Court must

therefore give effect to such departure.   

48. We have already held that this would fly in the face of all

the judgments referred to in paragraphs 15 to 22 hereinabove,

and principles  (3)  and  (4)  of  paragraph 23  of  this  judgment

which  speak  of  how domestic  legislation  must  be  construed

when it  is  made in furtherance of  an international  treaty.  In

particular, in the facts of these cases, it would also ignore the

effect of Article 18.4 of the WTO Agreement, which expressly

states that all the signatory member nations have to make their

laws  “conform”  to  the  provisions  of  the  WTO  Agreement,

something  which  the  Central  Government  itself  states  in  its

internet website which deals with the law of anti-dumping.  59

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49. The  High  Court  goes  on  to  state  that  the  construction

suggested on behalf of the assessee would lead to a manifest

absurdity as there would be no reason or justification to hold

that the levy of anti-dumping duty must sustain a break during

the period between the expiry of the provisional duty notification

and the issuance of a notification imposing a final anti-dumping

duty.  The  High  Court  went  on  to  hold  that  the  object  and

purpose underlying Section 9A would be defeated, as for the

interregnum period where both dumping and material injury to

domestic  industry  are  found,  no  anti-dumping  duty  can  be

issued.  This conclusion again cannot be countenanced for the

simple reason that if Rule 20(2)(a) were to be construed n the

fashion suggested by the High Court,  it  would be  ultra vires

Section 9A for  the reasons already given by us.  Further, the

object and purpose of Section 9A is to impose an anti-dumping

duty in consonance with the WTO Agreement, which Section 9A

gives full effect to. These basic points have been missed by the

High Court in arriving at the aforesaid finding.  Further, the High

Court fails to give due importance in its judgment to Rules 13

and  21.  We  have  already  seen  how  Rule  21(1)  envisages

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precisely  the situation spoken of  by the High Court,  and yet

states  that,  in  the  circumstances  mentioned  therein,  despite

dumping and material injury to the domestic industry, differential

duty cannot be collected from the importer.  In fact, the High

Court  goes  on  to  say  that  the  expression  “imposed  and

collected” in Rule 21, not being there in Rule 20(2)(a), cannot

therefore  be imported into  the said  sub-rule,  so that  “levied”

cannot mean “imposed and collected”.  We have already held,

in view of our construction of Rule 20(2)(a), that this need not

be gone into.  What has been missed by the High Court is that

the expression “levied” has to be understood as “levied” under

Rule 13 and once this is so, it  becomes clear that such levy

cannot exceed a period of 6 months or a maximum period of 9

months, as the case may be.  

50. The Bombay High Court  follows the Kerala High Court

reasoning, which is to the same effect.  For the reasons given

by us in  this  judgment,  we find it  difficult  to  accede to such

reasoning. We, therefore, allow the appeals of the assessees

and dismiss Civil Appeal No. 3889 of 2006 of the revenue.  We

make it  clear that we have only decided the point of levy of

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anti-dumping duty during the interregnum between the expiry of

a  provisional  duty  notification  and  the  imposition  of  a  final

anti-dumping duty.  If either the assessees or the revenue have

succeeded on any other point, such point will remain untouched

by this judgment.  With these observations, all the said appeals

are disposed of.

……………………J. (A.K. Sikri)

……………………J. (R.F. Nariman)

New Delhi; September 23, 2015.  

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