Supreme Court Recalls another Bench Order Levying Anti-dumping Duty on LDPE

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[TRU Office Memorandum F.No. CBIC-190354/211/2021-TRU Section-CBEC dated 6 June, 2022]

On April 24, a division bench of the Supreme Court recalled an order issued by another division bench on April 13, directing the Union government to impose a provisional anti-dumping duty on imports of Low Density Polyethylene.

On April 24, a Supreme Court division bench of Justices Sanjiv Khanna and M.M. Sundresh recalled an interim order, which had been issued by another bench of the court comprising Justices Krishna Murari and Sanjay Karol, directing the Union government to impose a provisional anti-dumping duty (ADD) on imports of Low Density Polyethylene (LDPE). Observers say that it is unusual that a recall application is listed before a bench whose composition is completely different from the bench which had first issued the interim order in the case, and the new bench – also of the same strength as the previous one – recalling the order at the end of the preliminary hearing.

On April 15, Supreme Court’s bench of Justices Murari and Karol granting an interim order on April 13 directing the Union government to impose a provisional ADD on imports of LDPE from foreign countries. The bench had issued the order recording the additional solicitor general Vikramjit Banerjee’s vehement opposition to it.

The petitioner, the Chemical and Petrochemical Manufacturer Association (CPMA), sought the order in view of the Union government’s failure to impose ADD despite the final determination of significant dumping and consequent material injury to the Indian industry by the Designated Authority of the Directorate General of Trade Remedies (DGTR) of the Department of Commerce of the Union Ministry of Commerce and Industry last year. The bench had also taken note of the fact that interim orders granted by various high courts in such matters directing provisional assessment had not been implemented by the government – despite the apex court’s confirmation of such orders by dismissing the government’s challenge.

The Murari-Karol bench, therefore, directed the imposition of ADD under Section 9A(2) of the Customs Tariff Act, 1975 at the rate determined by the DGTR in its Final Finding, issued through a gazette notification on March 31, 2022. The bench made it clear that the levy of such ADD shall be subject to final adjudication in these proceedings.

Impropriety?

Following the April 13 interim order, the Union of India acted swiftly and filed a recall application on April 20, and the matter was listed on April 24, not before the same bench, but before another bench, comprising Justices Sanjiv Khanna and M.M. Sundresh. This has surprised observers, according to whom, it is against established convention in the court, as a part-heard matter cannot be taken away from one bench and assigned to another, without any valid reason, even if it is done with the consent of the Chief Justice of India, (CJI) who is the master of the roster. According to observers, the recall application ought to have been listed before the same bench.

Observers say that even if there is a valid reason for reassigning the case to another bench, it should have been done in a transparent manner, with the Murari-Karol bench recusing to hear the matter first, so that it could be placed before the CJI for his administrative decision as the master of the roster, for listing it before another bench. The failure to follow this time-tested procedure in this matter is considered a grave impropriety.

One of the law officers of the Union Government involved in the case, however, told this writer: “The relevant internal procedure has been followed. This much I can say. Let the judgment come, then I will speak.”

Contents of recall application

In its recall application, the Union government has contended that the CPMA’s writ petition was listed for admission hearing on April 13 before Court No.12, presided by Justice Krishna Murari, as item 27. “No prior notice was given to the Respondent and therefore, when the matter was called, the Respondent could not be present. However, on the direction of this Hon’ble Court, the matter was presented by one of the Ld. ASG and prayed for time as he had to read the papers and also needed to take instructions,” the application reads. However, the bench of Justices Murari and Karol proceeded to pass the interim order, despite the concerns expressed by the Union Government, it says.

The Union government has also submitted in the recall application that vital aspects on facts, provisions of law and the constitutional scheme – including the Basic Structure Doctrine of Separation of Powers – had not been brought to the notice of the court in this matter.

The Union government has submitted that the April 13 interim order runs contrary to several judgments of the Supreme Court and none of the judgments were either cited by the petitioners in their writ petition or was the previous bench assisted with these judgments by them during the hearing on that day.

In particular, the Union government has made the following fresh submissions in its recall application:

On May 11, 2000, the Supreme Court rendered its judgment in Saurashtra Chemicals Ltd vs Union of India, in which it was held that the order of the Designated Authority is purely recommendatory. The appeal lies against the determination, which could be made by the Central Government only. The Supreme Court had declined to exercise jurisdiction under Article 136 of the Constitution and dismissed the Special Leave Petitions in this case.

In Ground F of the writ petition, the petitioners have cited the decision of the apex court in Reliance Industries vs Designated Authority (2006) to project that the act of issuing the notification under Section 9A of the Customs Tariff Act, 1975 is quasi-judicial and not legislative. This is nothing short of a misrepresentation, as the same decision had been referred by another bench for reconsideration by a larger bench in 2009. This reference, the government claimed, was not brought to the notice of the Supreme Court by the petitioners.

In Union of India vs Meghmani Organics, a three-judge bench of the Supreme Court reconsidered the previous decision in Reliance Industries and held that only proceedings before the Designated Authority are quasi-judicial. In this case, the Supreme Court had held that the Union government “appears to have a discretion” in the matter of determining the quantum of provisional duty as well as final duty but a clear limitation that ADD cannot exceed the margin of dumping as determined by the DA.

On September 1, 2020, a larger bench of the Supreme Court consisting of three Judges, rendered the judgment in Designated Authority vs The M/s Andhra Petrochemicals Limited in which it was held as follows: “The DA, no doubt, follows a prescribed quasi-judicial procedure where a determination on whether to impose or not to impose anti-dumping duty takes place (through a report). However, this proceeding culminates with a recommendation; the Central Government finally decides whether to impose such a duty, the extent of such duty, and its dudration…Also, the power to levy duty is discretionary,… which leaves it to the Central Government to levy ADD…”

The recall application claimed that not bringing to the attention of the Supreme Court, all the above decisions including those favourable to it as rendered by various high courts, has resulted in the passing of the interim order on April 13.

The recall application also has provided a short summary of the effects and consequences of the April 13 interim order as follows:

The finance minister’s policy decision not to give effect to the recommendation of the Designated Authority dated March 31, 2022, and thereby not to impose either provisional or final ADD, has not been impugned, challenged or questioned before the Supreme Court. The April 13 interim order, therefore, runs contrary to the decision taken by the Union government creating a complete hiatus between the executive branch and the judicial branch of the Constitution.

It is a well-settled legal position that a Writ of Mandamus would not lie either against the Parliament or against the Union government either to legislate a law or issue a notification. A Mandamus would issue only when there is a duty to be performed by an authority, and there has been a failure or a dereliction in compliance of the said duty imposed by law. When the final relief is not one which can be granted by the Supreme Court, it is unprecedented that the petitioners have persuaded the court to grant an interim relief by way of imposing a provisional duty which requires both the Union government to issue a notification and both Houses of Parliament to approve the same.

The April 13 order requires an issuance of a notification and placing the same before both Houses of Parliament, and this has created a hiatus not only between the executive and the judicial branches but also the legislative branch.

Issuance of notification is a legislative power delegated to the Union government. It does not precede seeking any public opinion or a public hearing. The Union government, as part of political governance, makes policy choices based on the needs and circumstances including public interest and issues notifications from time to time. Issuance of a notification is a matter of legislative exercise of discretion.

It is a solemn mandate through Article 265 of the constitution that there shall be no levy and collection of taxes without the authority of law. The expression ‘law’ under the constitution has been interpreted repeatedly to mean a law through a legislation or delegated legislation. Neither Executive instructions nor judicial orders can create either a charging section or exemption from the charge. The authority to levy and collect taxes should be through the process of law and not through judicial orders.

Constitutional architecture makes a clear distinction between the quasi-judicial and judicial exercise of power vis-a-vis the exercise of legislative/delegated legislative power. This is foundational and constitutes a Basic Structure Doctrine under Article 50 of the constitution through the Doctrine of Separation of Powers.

Interestingly, the recall application has not made a specific request to list it before another bench of the Supreme Court, although it was listed before the bench of Justices Sanjiv Khanna and Sundresh – apparently with the consent of CJI D.Y.Chandrachud – in the cause list for April 24 as item no. 38. Both on April 13 and 24, the petitioner was represented by senior advocate, Mukul Rohatgi, while N. Venkatraman, ASG, apart from Vikramjit Banerjee, represented the Union government on April 24.

Incidentally, Justice Murari retires on July 8, and even if he retires before hearing and deciding this case finally, the matter ought to have been placed before a bench in which Justice Karol, the second judge on the bench, presided by him, is a member, according to the convention in the Supreme Court. The failure to follow this convention in listing the case before another bench – whose composition is completely different from the earlier bench – is considered an impropriety of sorts in legal circles. Ironically, the Office Report of the case for April 24, released on April 21, is also silent on the change of bench hearing the case.