Recently, the CESTAT (‘Court‘) upheld an appeal against the decision of the Ministry of Finance rejecting the designated authority’s recommendation to impose anti-dumping duties (‘TO ADD‘) on imports of choline chloride originating in or exported from the PR of China. This decision of the Court is important because it is the first time that an appeal has been allowed against such a decision of the Ministry of Finance.
This article aims to briefly discuss the decision rendered by the Tribunal and the implications of such a decision.
Jubilant Ingrevia Ltd. (‘Appellant‘), a domestic producer of choline chloride filed an anti-dumping application with the DGTR regarding imports of choline chloride in all its forms (‘goods in issue‘) of the PR of China. In the final finding dated August 25, 2020, the DGTR found that imports of the subject goods were dumped and causing material injury to the domestic industry. The DGTR therefore recommended the imposition of a TDA on imports of the subject goods from the PR of China.
Under Rule 18 of the Anti-Dumping Rules 1995, the central government may, within three months from the date of publication of the final findings, impose the ADD. In this case, the Ministry of Finance decided not to impose the ADD and indicated its decision to the DGTR. see Memorandum of December 14, 2020 (‘OM‘). The OM did not specify the reasons for the decision taken by the central government.
Damaged by the decision of the Ministry of Finance, the Appellant applied to the Tribunal for annulment of the OM, alleging that it had been rendered arbitrarily by an unjustified order.
Questions referred to the Tribunal
One of the first questions submitted to the Tribunal was whether the appeal against OM was admissible before it. Reference was made to Article 9C of the Customs Tariff Act 1975 (‘CT law‘), which confers appellate jurisdiction on the Tribunal and under which the appeal was brought by the appellant. Article 9C states –
ARTICLE 9C. Appeal. – (1) An appeal against the determination or review order relating to the existence, degree and effect of any subsidy or dumping in connection with the importation of any item shall be brought to the Tribunal Customs, Excise and Service Tax Appeal Established under Section 129 of the Customs Act, 1962 (52 of 1962) (hereinafter referred to as the Appeals Tribunal).
The appellant argued that an appeal was admissible against the OM being a final determination order issued by the central government communicating its decision not to impose the ADD. In the event that the first issue was found in favor of the appellant, the second issue before the Tribunal was the nature of the remedy to be granted to the appellant.
In India, the functions under the CT Act relating to anti-dumping duties are divided between two government agencies, the DGTR and the MOF. The DGTR is a quasi-judicial authority which investigates the existence, degree and effect of dumping and issues its recommendations accordingly in the form of preliminary or final findings.
If the final findings recommend the imposition of anti-dumping duties, they are referred to the Ministry of Finance, which has the power to impose anti-dumping duties. Rule 18 of the Customs Tariff (Identification, Valuation and Collection of Anti-Dumping Duties on Dumped Articles and for Determination of Injury), 1995 (‘Anti-dumping rules‘) empowers the central government to impose anti-dumping duties, within three months from the date of publication of the final findings.
In its examination of whether OM was a “Order of determination regarding the existence, degree and effect of dumping”, the Tribunal held that it was for the central government to impose or not to impose an anti-dumping duty. The Tribunal found that, since the OM stated that the central government had decided not to impose an anti-dumping duty, such a decision was a decision by the central government on the existence, degree and effect of dumping. In support of this, the Tribunal relied on the Supreme Court’s decision in Saurashtra Chemicals Ltd. v. Union of India [2000 (118) E.L.T. 305 (S.C.)] and that of the High Court of Delhi in Jindal Poly Film Ltd. v. Designated authority [2018 (362) E.L.T. 994 (Del.)].
After determining that the OM issued by the central government was a “determination order”, the Tribunal considered the second issue of whether the OM was eligible for annulment.
The appellant argued that the decision of the Ministry of Finance was an exercise of powers conferred by Section 9A, which empowers the central government to impose ADDs on goods exported to India at a price below their normal value. The appellant further argued that the OM issued was arbitrary and contrary to the principles of natural justice, as it did not even reveal any reason for its decision and was therefore liable to be overturned. On the other hand, the central government claimed in court that the decision was taken in the public interest.
The Tribunal following the reasoning of the Supreme Court in SN Mukherjee v. Union of India [(1990) 4 SCC 594] stated that if a function is exercised in the exercise of quasi-judicial powers, the principles of natural justice should be followed.
The appellant examined the nature of the functions performed by the central government to determine whether the OM was issued in the exercise of a quasi-judicial or legislative function. Based on the observations of the Supreme Court in Trusted industries v. Designated authority [2006 (137) ECR 477 (SC)], the Tribunal held that the function exercised by the central government under Article 9A is of a quasi-judicial and not a legislative nature.
After qualifying the function exercised by the central government as quasi-judicial, the Tribunal allowed the appeal on the grounds that the OM was a determination order which did not explain the reasons for not imposing the ADD.
The Tribunal held that although the central government had the discretion to accept or reject the DGTR’s final submissions, this discretion should be exercised judiciously by a reasoned order.
Over the past two years, the Ministry of Finance has rejected several DGTR recommendations to impose ADD. However, none of the MOs issued by the Ministry of Finance indicates the reasons for such a rejection. It is understood that these decisions are taken taking into account among others the broader interests of users and downstream industries and are recorded in the internal files of the Ministry of Finance. It would be for the sake of transparency for the Ministry of Finance to record the reasons in the MOs that it has issued. Interestingly, in the Board’s recent memorandum, issued by the Ministry of Finance, refusing to impose ADD on imports of caprolactam, the Ministry of Finance expressly stated that the same applied to “interest. public ”. This reasoning raises another relevant question. Is the reference to mere “public interest” sufficient reason to withstand the scrutiny of the courts? This issue is far from settled since in the event that the OM is found to be an appealable order under Article 9C of the CT Act, it must contain detailed reasoning for the courts to exercise their appellate jurisdiction.
The Tribunal’s decision raises two other relevant questions. First, can the decision of the Ministry of Finance to impose or not to impose ADD be characterized as ‘order of determination regarding the existence, degree and effect of dumping‘? Since the DGTR has already ruled on the existence, degree and effect of dumping see final conclusions, can the finance ministry make such a decision?
Second, can the issuance of a customs notification by the central government imposing ADD qualify as a quasi-judicial act? Regardless of the purpose or nature of the ADD, it is basically a tax or duty imposed on the importation of goods into India. Article 265 orders that no tax shall be levied and collected except by the authority of the law. Expression ‘law‘within the meaning of article 265, an act of the legislator is understood. Through Article 9A, the Parliament has delegated the power to impose an ADD by issuing a notice in the Official Gazette to the central government. Consequently, can such a function consisting in imposing ADD under the power delegated by Parliament be qualified as a quasi-judicial function?
A bench of three Supreme Court justices in Haridas exports v. All float glass manufacturers from India. Association and Ors. [AIR 2002 SC 2728] had held that the collection or non-collection of an anti-dumping duty was a legislative act. This opinion was also expressed by the High Court of Rajasthan in J.K. Industries Ltd. v. Union of India [2005 (127) ECR 274 (Rajasthan)]. However, the Tribunal’s decision has now blurred the line between a quasi-judicial function and a legislative function.
In such a situation, is the Tribunal’s jurisdiction properly exercised – only time will tell when the matter reaches higher courts. In the meantime, the Tribunal’s decision has enabled other aggrieved parties to appeal to the Tribunal against such decisions of the Ministry of Finance.