High Court Quashes Moser Baer Anti-dumping Finding in Pen Drive Case

• DGAD Erred in Violating Natural Justice

• Revenue Holds Up Notification to Implement finding of DGAD on Court Order

(See also World Trade Scanner of 19-20 Jan 2015, Issue No. 43 - Anti-dumping Duty of Rs. 200 per Piece on Pen Drives Recommended

WP(C) 744/2015 & CM Nos. 1319/2015, 2662/2015

SANDISK INTERNATIONAL LTD ....Petitioner

Versus

THE DESIGNATED AUTHORITY & ORS. ....Respondents

Case Highlights:

CORAM:- HON’BLE MR JUSTICE BADAR DURREZ AHMED

HON’BLE MR JUSTICE SANJEEV SACHDEVA

Judgment

New Delhi, 18 March 2015

SanDisk, a Company established in Ireland has impugned the final findings dated 19.12.2014 issued by the Designated Authority (DA). The subject goods in respect of which the final findings have been rendered are “USB Flash Drives.”

Following the decision of the Supreme Court in Automotive Tyre Manufactures Association held that the Designated Authority functions as a quasi-judicial authority and decides a “lis” between persons supporting the levy of duty and those opposing the levy. Furthermore, the DA is bound to follow the principles of natural justice and to give an opportunity of hearing to all interested parties, in fact, “to all the parties, who have filed objections and adduced evidence”.

In the present case, the Designated Authority has disregarded the transaction-by-transaction import statistics submitted by the domestic industry alongwith the application seeking initiation and introduced fresh data and relied on the transactions-by-transactions imports statistics obtained by him from the respondent No.4 (Moser Baer) at the very fag end of the investigation. The data was introduced after a period of seventeen months of initiation of investigation. Neither the copy of the said data relied upon by the Designated Authority nor the non confidential summary thereof was not supplied to the petitioners despite the same being demanded on the ground of confidentiality.

The hearing required to be provided to an interested party cannot be an empty formality. It has to be an effective hearing. Since the investigation and determination is based on positive evidence and involves an objective examination of both the volume and the effect of the dumped imports on prices in the domestic market for like products and the material submitted by the parties has to be objectively examined, the DA is required to make available the evidence presented to it by one party to other interested parties, participating in the investigation and also the evidence or the material sourced by the DA from other sources to the parties.

The Rules make it obligatory on the part of the Designated Authority to share all material with the interested parties subject to the confidentiality provisions. The Designated Authority has not only refused to supply the non confidential summary of the data sourced from respondent No. 4 but has also not disclosed the non injurious price of the subject goods as determined by him. Determination of the non-injurious price is a primary feature of the investigation conducted by the Designated Authority. Unless the data, being relied upon, is shared with the interested parties, there cannot be an effective opportunity of a hearing. Non-sharing of information mandatorily required to be shared under the Rules vitiates the findings. Failure to supply the data (subject to the rules of confidentiality) has curtailed the rights of and amounted to denial of an opportunity of effective participation to the petitioner and violates the principles of natural justice. The Final Findings dated 19.12.2014 rendered in violation of the principles of natural justice are thus liable to be quashed.

There is no merit in the contention of the respondent that since, the Final Finding are only recommendatory in nature, the petition is premature. It is no longer res-integra that this court in exercise of powers under Article 226 of the Constitution of India is empowered to entertain a petition challenging the Final Findings even prior to the same being accepted by the central government more so in a case where the principles of natural justice have not been complied with.

Further contention raised that the petitioner itself had supplied data by scoring out of confidential information and thus could not raise a grievance with regard to the non supply of data to the petitioner also does not have any merit. The Designated Authority has accepted the claim of confidentiality of the petitioner and the said upholding of claim has not been challenged by the respondent domestic industry. If the Designated Authority is not satisfied with the claim of confidentiality by one of the parties, the Designated

Authority is empowered by the Rules to disregard and refuse to take into consideration the data furnished by that party but the Designated Authority cannot refuse to supply data furnished by others to the said party. The fact that the Rules prescribe that if the Designated Authority is satisfied that the request for confidentiality is not warranted or the supplier of the information is either unwilling to make the information public or to authorize its disclosure in a generalized or summary form, it may disregard such information, further emphasises the fact that for an investigation to comply with the principles of natural justice, it mandatorily entails sharing with the interested parties, the information/data being considered by the Designated Authority.

With regard to the alternative submission of the learned Senior Counsel for the respondent that the matter could be remanded to the Designated Authority for a post decisional hearing, we need to look at the various timelines prescribed by the Rules.

As noted hereinabove under Rule 17 it is mandatory on the Designated Authority to determine within one year from the date of initiation of an investigation, as to whether or not the article under investigation is being dumped in India and submit its Final Findings to the Central Government. The Central Government in special circumstances has been empowered to extend the aforesaid period of one year by six months.

Rule 18 also lays down a time limit for the central government to impose the anti dumping duty i.e. a period of three months of the date of the publication of the final findings by the Designated Authority.

In the present case the investigation commenced on 21.06.2013. Under Rule 17, the period would have expired on 20.06.2014. The Central Government had the power to extend the said period by another six months i.e. till 20.12.2014. The Final Findings have been issued on 19.12.2014. Even the extended period of investigation is long over. The Rules make a solitary exception and that also in the case of the investigation being suspended on the acceptance of a price undertaking by the exporter of the article in question. In view of the fact that the statutory period is over, the matter cannot be remanded to the Designated Authority for a fresh consideration.

In view of the above, we hold that the DA, in not providing the information/material considered by him, has violated the principles of natural justice and the same is fatal to the Final Findings rendered. Consequently, the Final Findings, having been rendered in violation of the principles of natural justice, stand vitiated and cannot be sustained. As a result, the impugned Final Findings are quashed. The writ petition is allowed to this extent. There shall be no order as to costs.