Anti-Dumping Duties

AN ASSIGNMENT ON

―Anti-Dumping Duties‖

SUBMITTED BY:

SHUBHAM TRIPATHI

ROLL. NO. – 143070057 CLASS:7th SEMESTER, B.COM.LL.B (HONS.)

OF

FACULTY OF LAW,

DR. SHAKUNATALA MISRA NATIONAL REHABILITATION UNIVERSITY,

LUCKNOW

IN

2017

UNDER THE GUIDANCE OF

Asst. Prof. Mr. Shail Shakya

(ASSISTANT PROFESSOR)

FACULTY OF LAW

(DR. SHAKUNTALA MISRA NATIONAL REHABILITATION UNIVERSITY, LUCKNOW.)

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 Anti-Dumping Duties

ACKNOWLEDGEMENT
I, SHUBHAM TRIPATHI, I feel myself highly elated, as it gives me tremendous pleasure to
come out with work on the topic “Anti-Dumping Duties”, I started this project two weeks ago on
its completion I feel that I have not only successfully completed it but also earned an invaluable
learning experience.

First of all I express my sincere gratitude to my Professor Mr. Shail Shakya who enlightened me
with such a wonderful and elucidating research topic. Without Him, I think I would have
accomplished only a fraction of what I eventually did. I thank him for putting his trust in me
and giving me a project topic such as this and for having the faith in me to deliver. His sincere
and honest approach have always inspired me and pulled me back on track whenever I went off-
track. Sir, thank you for an opportunity to help me grow. I also express my heartfelt gratitude to
everyone‘s help for the completion of this project.

Next I express my humble gratitude to my parents for their constant motivation and selfless
support. I would thank my brother for guiding me.

I also express my gratitude to all the class mates for helping me as and when required and must
say that working on this project was a great experience. I bow my head to the almighty for being
ever graceful to me

SHUBHAM TRIPATHI

B.Com.LL.B (Hons.),

7th Semester

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 Anti-Dumping Duties

CONTENTS
INTRODUCTION ..................................................................................................................... 4

Rationale behind Dumping..................................................................................................... 4

Meaning of Anti-Dumping ..................................................................................................... 5

Justifications for antidumping duty ........................................................................................ 5

ANTI-DUMPING LAW WITH SPECIFIC REFERENCE TO WTO & GATT ...................... 6

ANTI-DUMPING IN INDIA: INSTITUTIONAL ARRANGEMENT & EXISTING

ADMINISTRATIVE MECHANISM ........................................................................................ 9

Legal Framework Of Anti Dumping In India ........................................................................ 9

Anti-Dumping Duties ........................................................................................................... 10

Procedural Formalities For Applying For Anti Dumping Duties ........................................ 11

Regulatory Framework ......................................................................................................... 12

INTERNATIONAL CASES .................................................................................................... 13

1) European Communities — Definitive Anti-Dumping Measures On Certain Iron Or Steel

Fasteners From China........................................................................................................... 13

2) European Union — Anti-Dumping Measures on Certain Footwear from China ............ 14

3) United States — Customs Bond Directive for Merchandise Subject to Anti-

Dumping/Countervailing Duties .......................................................................................... 15

INDIAN CASES ...................................................................................................................... 17

1) Designated Authority Anti-Dumping Directorate Ministry Of Commerce Vs. M/s. Haldor

Topsoe A/s............................................................................................................................ 17

2) Chhotu Lal Daga (Prop. of Rohit Enterprises) Vs. Commissioner of Customs (Port) .... 19

3) Rishiroop Polymers Pvt. Ltd. Vs. Designated Authority and Additional Secretary ....... 20

CONCLUSION ........................................................................................................................ 23

BIBLIOGRAPHY .................................................................................................................... 24

WEBLIOGRAPHY.................................................................................................................. 24

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 Anti-Dumping Duties

INTRODUCTION
Dumping, is a pricing practice where a firm charges a lower price for exporting goods than it
does for the same goods sold domestically. It is said to be the most common form of price
discrimination in international trade. Dumping can only occur at places where imperfect
competition exist and where the markets are segmented in a way such that domestic residents
cannot easily purchase goods intended for export. Antidumping duties were initiated with the
intention of nullifying the effect of the market distortions created due to such unfair trade
practices adopted by aggressive exports. They are meant to be remedial and not punitive in
nature. As a method of protection to the domestic industries, anti dumping duties are thus levied
on the exporting country which has been accused of dumping goods in another country. As the
antidumping duty is only meant to provide protection to the domestic firms in the initial stages,
as per the international laws, the antidumping legislations may last for a maximum period of five
years. Antidumping measures are of two kinds:

• Antidumping duty: This is imposed at the time of imports, in addition to other customs duties.
The purpose of antidumping duty is to raise the price of the commodity when introduced in the
market of the importing country.

• Price undertaking: If the exporter himself undertakes to raise the price of the product then the
importing country can consider it and accept it instead of imposing antidumping duty.

Rationale behind Dumping

Dumping occurs when firms start using price discrimination as a strategy for profit
maximization. The condition mandatory for dumping to take place is the presence of an
imperfect market where price discrimination between markets is possible.

Only if the above condition is satisfied is it profitable for the exporting firm to engage in
dumping. For any firm, price discrimination in favor of exports is more common because the
share of exports is usually lesser than the domestic demand. In the export market, individual
firms have lesser monopoly power and hence choose to keep prices lower in foreign markets
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 Anti-Dumping Duties

while charging higher prices for domestic markets. This can also be explained through the price
elasticity of demand for goods. In areas where the demand is price inelastic, producers tend to
charge a higher price. This is said to be the case in domestic markets. In foreign markets, price
elasticity of demand is elastic and hence prices are low. Thus, if there is high elasticity on export
sales than on domestic sales, firms will dump.

Often, dumping is mistaken and simplified to mean cheap or low priced imports. However, it is a
misunderstanding of the term. Dumping implies low priced imports only in the relative sense
(relative to the normal value1), and not in absolute sense. Import of cheap products through
illegal trade channels like smuggling does not fall within the purview of anti-dumping measures.

Meaning of Anti-Dumping
Anti-dumping can be seen as a protective device available to the states against problems
associated with the free trade. In the recent years a large number countries have become frequent
users of anti-dumping. Many of the heaviest anti-dumping users are countries who did not even
have an anti- dumping statute a decade ago.

Anti- dumping measures are not only legal but they are also flexible in usage. Further, anti-
dumping duties can be presented not as protection but as encounter against ―unfair‖ competition.

Justifications for antidumping duty

Anti-Dumping duties were introduced by the developed countries to protect their industries
against the low priced imports. Developing countries supported the inclusion of the provision
relating to anti-dumping duties under GATT because they wanted to levy of anti-dumping duties
to be under international regulation.

In free trade, firms are allowed to charge different rates in different markets. The result would be
that firms would charge lower prices in foreign leading to material injury to the domestic
producers in the foreign market. Had price discrimination taken place by a monopoly firm within
one economy, the government would have intervened to stop consumer exploitation by enforcing
an Act similar to the MRTP Act, in India. Hence, in the international context, it is the
antidumping duty that protects the domestic producers initially and consumers in the long run.

1
Normal value is the price at which the like articles are sold in the Domestic Market of the exporter.
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Usually, the intentions of charging such low prices to foreign consumers is to be able to wipe out
the domestic industries and eventually acquire monopoly power in the foreign market (i.e. using
predatory pricing). Thus it is on the ground of protecting the domestic industries that the anti
dumping duties have been justified.

ANTI-DUMPING LAW WITH SPECIFIC REFERENCE TO WTO & GATT

The Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade,
1994 (hereinafter referred to as ―the Agreement‖) governs the application of antidumping
measures by Members of the WTO. The provisions of the Agreement were first negotiated
during the Kennedy Round (1967) and later substantially revised during the Tokyo Round (1979)
of GATT negotiations. WTO rules allow the member countries to opt for anti-dumping measures
with specific stipulations. If a country today has anti-dumping legislations, it must be consistent
with the agreement. Anti-dumping measures are unilateral remedies which may be applied by a
Member after an investigation and determination by that Member, in accordance with the
provisions of the Agreement, if it is felt that an imported product is dumped and that the dumped
import is causing material injury to a domestic industry which produces a similar product. 2 The
Agreement applies to trade in goods only. Trade in services is not covered by this agreement.

The agreement contains provisions with respect to the following:

1. The Agreement sets out rules for the conduct of anti-dumping investigations, including
initiation of cases, calculation of dumping margins, the application of remedial measures,
injury determinations, enforcement, reviews, duration of the measure and dispute
settlement.
2. The Agreement provides for the right of contracting parties to apply anti-dumping
measures, i.e. measures against imports of a product at an export price below its ―normal
value‖ (usually the price of the product in the domestic market of the exporting country)
if such dumped imports cause injury to a domestic industry in the territory of the
importing contracting party3.

2
Article 1
3
Article 3.5
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3. The Agreement provides for greater clarity and more detailed rules in relation to the
method of determining whether a product is dumped, the criteria to be taken into account
in determining whether dumped imports cause injury to a domestic industry, and also the
procedures to be followed in initiating and conducting anti-dumping investigations.4 This
investigation can initiate only on receiving an application, containing the nature and
extent of harm to the domestic industry being caused and the complete description of the
dumped products, from the domestic producers of the similar product. If authorities
decide to proceed to initiate an investigation, the authorities shall notify the government
of the exporting Member concerned.5
4. A new provision requires the immediate termination of an anti-dumping investigation in
cases where the authorities determine that the margin of dumping is de-minimis (which is
defined as less than 2 per cent, expressed as a percentage of the export price of the
product) or that the volume of dumped imports is negligible (generally when the volume
of dumped imports from an individual country accounts for less than 3 per cent of the
imports of the product in question into the importing country).6
5. It contains provisions relating to implementation and duration of anti-dumping
measures7. An anti-dumping duty shall remain in force only as long as and to the extent
necessary to counteract dumping which is causing injury.8 The Agreement lays the
―Sunset Provision‖ under which all anti-dumping measures shall expire five years after
the date of imposition (or the most recent review), unless a determination is made by the
authorities that, in the event of termination of the measures, dumping and injury would be
likely to continue or recur.9 The agreement also provides for a judicial, arbitral or
administrative review for the duration such imposition.10
6. From many perspectives, the most significant feature of the WTO anti-dumping
framework is its dispute settlement procedure, which greatly strengthens the ability of
affected nations to challenge anti-dumping actions by other member nations. The

4
Article 6
5
Article 12
6
Article 5.8
7
Article 11
8
Id 7 Para 1
9
Id 7 Para 3
10
Article 13
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Agreement clarifies the role of dispute settlement panels in disputes relating to anti-
dumping actions taken by domestic authorities. Under the WTO's DSB (Dispute
Settlement Body), a case generally has to first proceed through a panel stage, then an
appeal to the Appellate Body. The Dispute Settlement Body has to accept or reject the
Appellate Body report within 30 days — and rejection is only possible by consensus.
7. The Agreement strengthens the requirement for the importing country to establish a clear
causal relationship between dumped imports and injury to the ―domestic industry‖ 11 by
evaluating all relevant economic factors related to the industry concerned.
8. Provisions on the application of provisional measures12 are given. These measures are
applied when an investigation as per article 5 has been initiated or a preliminary
affirmative determination has been made of dumping and consequent injury to a domestic
industry
9. Provisions in respect of the use of price undertakings13 in anti-dumping cases have been
strengthened. Here proceedings may be suspended or terminated without the imposition
of provisional measures or anti-dumping duties upon receipt of satisfactory voluntary
undertakings from any exporter to revise its prices or to cease exports to the area in
question at dumped prices so that the authorities are satisfied that the injurious effect of
the dumping is eliminated.
10. The agreement provides that the provisional measures and anti-dumping duties shall only
be applied to products which enter for consumption after the time when the decision for
imposition of these measures enters into force. However, where a final determination of
injury is such that the effect of the dumped imports would, in the absence of the
provisional measures, have led to an injury to domestic producers, anti-dumping duties
may be levied retroactively for the period for which provisional measures have been
applied.14

11
According to article 4 “Domestic industry” refers to the domestic producers as a whole of the like products or to
those of them whose collective output of the products constitutes a major proportion of the total domestic
production of those products
12
Article 7
13
Article 8
14
Article 12
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ANTI-DUMPING IN INDIA: INSTITUTIONAL ARRANGEMENT & EXISTING

ADMINISTRATIVE MECHANISM
India is a founding member of the GATT and the WTO. Until the 1990‘s, India was not affected
by anti-dumping policies as her markets were sufficiently protected by a high tariff rate and
quantitative restrictions. However, after Liberalization in 1991, India has become a major user of
Anti-dumping policies as those used by developing countries. India‘s anti-dumping laws are in
compliance with their WTO treaty obligations and are hence based on the Agreement on
Implementation of Article VI of GATT 199915. India has implemented, rather than challenged,
the existing international legal standards which were originally drafted to serve American and
European interests. In fact, despite the large numbers of antidumping measures implemented by
India, no WTO case has ever been brought against India‘s antidumping laws.16

LEGAL FRAMEWORK OF ANTI DUMPING IN INDIA

Section 9A of the Customs Tariff Act, 1975 (hereinafter referred to as ―the Act‖) as amended in
1995 and the Customs Tariff (Identification, Assessment and Collection of Anti-dumping Duty
on Dumped Articles and for Determination of Injury) Rules, 1995 (hereinafter referred to as ―the
Rules‖) framed hereunder, form the legal basis for anti-dumping investigations and for the levy
of anti-dumping duties. These are in consonance with the WTO Agreement on anti-dumping
measures. These rules form the legislative framework for all matters relating to dumping of
products, which include the substantive rules, rules relating to practice, procedure, regulatory
mechanism and administration.

1. The principle of imposition of anti-dumping duties was propounded by the Article VI of

General Agreement on Tariffs & Trade (GATT) 1994 – Uruguay Round

2. Indian legislation in this regard is contained in Section 9A and 9B (as amended in 1995) of the
Customs Tariff Act, 1975.

15
Press Information Bureau, “ Anti-dumping – checking unfair trade practices”, Available at
http://pib.nic.in/focus/fomar99/wto-7.pdf (22th September 2017)
16
Mark Wu , “Antidumping in Asia’s Emerging Giants”, Volume 53, Number 1, Winter 2012, Harvard International
Law Journal
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3. Further regulations are contained in the Anti-Dumping Rules [Customs Tariff (Identification,
Assessment and Collection of Anti-Dumping Duty on Dumped Articles and for Determination of
Injury) Rules, 1995]

4. The Ministry of Commerce, Government of India is the Designated Authority for conducting
investigations pertaining to Anti-Dumping issues and forwarding its recommendations.

5. The responsibility for Imposition and Collection of duties as imposed /recommended by the
Adjudicating authority is upon the Ministry of Finance, Government of India.

ANTI-DUMPING DUTIES
The relief to the domestic industry against dumping of goods from a particular country is in the
form of anti-dumping duty imposed against that country, which could go up to the dumping
margin. Under the WTO arrangement, the national authorities can impose duties up to the margin
of dumping i.e. the difference between the normal value and the export price. The Indian law
also provides that the anti-dumping duty to be recommended / levied shall not exceed the
dumping margin. An anti-dumping duty imposed under the Act unless revoked earlier remains in
force for 5 years from the date of imposition. The Designated Authority by the process of mid
review is empowered to review the need for the continued imposition of the anti-dumping duty
from time to time. Such a review can be done suo-moto or on the basis of request received from
an interested party in view of the changed circumstances.17 The WTO Agreement as well as the
Indian law provides that the injured domestic industry is permitted to file for relief under both
anti-dumping and countervailing duties. However, no article will be subjected to both
countervailing and anti-dumping duties to compensate for the same situation of dumping.

ALTERNATIVE REMEDIES: The remedy against dumping is not always in the form of anti-
dumping duty. The investigation may be terminated or suspended after the preliminary findings
if the exporter concerned furnishes an undertaking to revise his price to remove the dumping or
the injurious effect of dumping as the case may be. No anti-dumping duty is recommended on
such exporters from whom price undertaking has been accepted.18

17
Rule 23(1) of the Anti-Dumping Rules
18
Rule 15 of the Anti-Dumping Rules
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INTERIM REMEDIES: An interim relief in the form of a provisional anti-dumping duty,

pending the finalization of investigation proceedings, can also be provided to the affected
domestic industry. The provisional duty can be imposed only after the expiry of 60 days from the
date of initiation of investigation and will remain in force only for a period not exceeding 6
months, extendable to 9 months under certain circumstances.19 If the final duty levied is less than
the provisional duty which has already been levied and collected, the differential amount already
collected as provisional duty shall be refunded. If the final duty imposed is more than the
provisional duty already imposed and collected, the difference shall not be collected.20

RETROSPECTIVE ANTI DUMPING DUTIES: Anti-dumping duty can also be levied on a

retrospective basis in cases where injury is caused due to 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
antidumping duty liable to be levied. However, the anti-dumping duty cannot be levied
retrospectively beyond 90 days from the date of issue of notification imposing duty. 21

PROCEDURAL FORMALITIES FOR APPLYING FOR ANTI DUMPING DUTIES

Applications for anti- dumping protection can be made by or on behalf of the concerned
domestic industry to the Designated Authority (officer of level of Additional Secretary to the
Government of India who heads the DGAD) in the Dept. of Commerce for an investigation into
alleged dumping of a product into India. As per the regulations set by the DGAD, an application
for protection can be made either by an individual petitioner (domestic producer) commanding
25% of the production capacity of the entire market or by a group of producers who collectively
hold 50% of the total market capacity.

Any industry is subject to protection if and only if there is sufficient evidence furnished by the
petitioner/s regarding;

i. Dumping of goods in question;

ii. Injury to the domestic industry; and

19
Rule 13 of the Anti-Dumping Rules
20
Rule 21 of the Anti-Dumping Rules
21
Section 9A (3) of the Customs Tariff Act, 1975
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iii. A causal link between the dumped imports and alleged injury to the domestic industry.

Broadly, injury may be analyzed in terms of the volume effect and price effect of the dumped
imports. Economic indicators having a bearing upon the state of industry as the magnitude of
dumping, and the decline in sales, selling price, profits, market share, production, utilization of
capacity etc. are some of the parameters by which injury to the domestic industry is to be
assessed. Existence of dumping can be estimated by calculating the dumping margin which is the
difference between the Normal Value of the like article and the export Price of the product under
consideration.

Dumping margin= Normal value- Export price

The normal value is the comparable price at which the goods under complaint are sold, in the
ordinary course of trade, in the domestic market of the exporting country or territory while the
export price of goods imported into India is the price paid or payable for the goods by the first
independent buyer.

REGULATORY FRAMEWORK
Anti-dumping, anti-subsidies & countervailing measures in India are administered by the
Directorate General of Anti-dumping and Allied Duties (―DGAD‖) functioning in the
Department of Commerce in the Ministry of Commerce and Industry and the same is headed by
the ―Designated Authority‖. The Central Government may, by notification in the Official
Gazette, appoint a person not below the rank of a Joint Secretary to the Government of India or
such other person as that Government may think fit as the Designated Authority.22

The Designated Authority is a quasi-judicial authority notified under the Customs Act, 1962
which is designated to initiate necessary action for investigations and subsequent imposition of
anti-dumping duties.23 A senior level Joint Secretary and Director, four investigating officers and
four costing officers assist the DGAD. Besides, there is a section under the DGAD headed by the
Section-Officer to deal with the monitoring and coordination of the functioning of the DGAD.

22
Rule 3 (1)
23
Though the WTO Agreement does not require the authorities for dumping and injury determination to be
Distinct and separate, national practices in this respect van`. Generally, while the developing countries have
single authority to deal with both dumping and injury, developed countries like the US, Canada and the EU
have elaborate anti-dumping machinery
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The Designated Authority‘s function, however, is only to conduct anti-dumping/anti-subsidy &

countervailing duty investigation and make recommendation to the Government for imposition
of anti-dumping or anti-subsidy measures. Such duty is finally levied by a Notification of the
Ministry of Finance.

The law provides that an order of determination of existence, degree and effect of dumping is
appealable before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT),
formerly the (Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT)) — a judicial
tribunal, within 90 days. It reviews final measures and is independent of administrative
authorities. This is consistent with the WTO provision of independent tribunals for appeal
against final determination and reviews.

However, many petitions are also filed before the High court (under Article 226 of the
Constitution) and also the Supreme Court of India. Due to large pendency in both these courts, it
causes disruptions in trade during the interim period. Thus there have been demands for a
specially designated bench in the Supreme Court for this purpose.24

INTERNATIONAL CASES
1) European Communities — Definitive Anti-Dumping Measures On Certain
Iron or Steel Fasteners from China25

On December 4, 2008, within the European Union, 15 members were in favor and 12 votes were
against the adoption of imposing a five-year average of 80 percent anti-dumping duties on the
screw and nut products from China. In 2009, the EU decided to impose anti-dumping duties of
up to 87 percent for the next five years on fasteners imported from China and required Chinese
exporters to prove that they meet with the ―single duty‖ requirements when they responded to
anti-dumping cases, bringing a heavy burden and unfair treatment to Chinese companies.

24
Raju, K. D., “World trade Organization Agreement on Anti-dumping”, Wolter Kluwer Law & Business Series,
Aspen Publishers, Inc., p. 233
25
DISPUTE DS397
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On January 28, 2009, the Ministry of Commerce spokesman Yao Jian made a speech on the EU's
final decision regarding anti-dumping measures on China's export of fasteners. Yao said the
Chinese government and industries had expressed strong dissatisfaction and that there were
many discrepancies in the European Union's case filing, investigation and adjudication process
with regard to WTO rules. He added that the EU anti-dumping practice, lacking fairness and
transparency, leaned towards trade protection, which greatly hurt the legitimate rights of Chinese
fastener enterprises. China resorted to the WTO to resolve the issue.

FINDINGS OF THE PANEL

The WTO set up an expert panel on Oct 23, 2009 after China initiated the WTO case on July 31,
2009. On July 15, 2011, the WTO issued a final ruling on the case concluding that the section 5,
Article 9 of the EU Anti-dumping Law against China was in violation of WTO rules; the anti-
dumping measures taken against Chinese fastener by the European Union in January 2009 were
contrary to the provisions of the WTO Anti-Dumping Agreement, and that the EU should
withdraw the anti-dumping order. The WTO ruled the EU's single duty requirements and
practices are discriminatory and violated WTO rules.

2) European Union — Anti-Dumping Measures on Certain Footwear from

China26

The shoe dumping case was the second brought by China against the EU at the WTO. China
launched the shoe case in February 2010 after the EU decided to extend the duties on shoes from
China and Vietnam, after shoemakers in Spain and Italy complained they could not compete
against the cheap imports. The duties also faced opposition within Europe, since they forced
consumers to pay more for their shoes. The Federation of the European Sporting Goods Industry,
whose members include companies such as Adidas, Puma and Nike, launched a legal case
against the European Union complaining they had suffered losses as a result of the duties on
shoes from China and Vietnam.

FINDINGS OF THE PANEL

26
DISPUTE DS405
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The WTO dispute panel largely backed the complaint by China that anti-dumping duties
imposed by the European Union (EU) on certain leather footwear imports breached global rules
and held that the anti-dumping duties were inconsistent with the EU's obligations under the
WTO and that some aspects of the original investigation and expiry review were out of step with
the anti-dumping agreement.

The WTO panel also upheld China's challenge to the EU's method for calculating the anti-
dumping duties, saying the EU's approach systematically produced a result which punished
normal pricing behavior. It also concluded that the EU calculated and imposed the anti-dumping
duties in a way which impermissibly discriminated against the vast majority of Chinese suppliers
solely because they were Chinese, thus violating the cornerstone non-discrimination provision of
the WTO Agreement.

3) United States — Customs Bond Directive for Merchandise Subject to Anti-

Dumping/Countervailing Duties27

The US Southern Shrimp Alliance (SSA) – an alliance of eight southern coastal States
representing the harvesters, processors and distributors of US wild caught shrimp, filed a petition
in 2003 in the US Department of Commerce (DOC) and the US International Trade Commission
(ITC). The petitioners alleged that the exporters from Thailand, China, Vietnam, India, Brazil
and Ecuador were selling shrimp at lower prices than in their home markets and were materially
injuring the domestic industry in the US. This they justified by showing the sudden drop in the
harvest by more than half from $1.25bn in 2000 to $560mn in 2002. In short, they alleged that
these countries are dumping their shrimps in the US market.

Under a 1991 Customs Bond Directive, the US required importers subject to antidumping action
to post a custom bond equivalent to the greater of US$50,000 or 10 percent of the duties paid
during the preceding year. As per a 2004 US Customs and Border Protection enactment, (the
Enhanced Bond Requirement, or EBR) exporters were additionally required to post a minimum
bond equivalent to the anti-dumping duty margin, multiplied by the value of imports of shrimp in

27
DISPUTE DS345
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the preceding year as well as pay cash deposit equal to the amount of anti-dumping duty per
entry. India also claimed that in order to post these bonds, the shrimp exporters had to put up a
surety equivalent to the bond amount to the banks that financed the bonds. Apart from causing
excessive financial burden on exporters paying the anti-dumping duties, this enhanced bond
requirement was claimed to be illegal since WTO rules do not allow an importer to counter
dumping with specific measures besides antidumping duties.

In January 2005, ITC confirmed the US DOC‘s determination and slapped anti-dumping duties
equal to dumping margins (i.e. by how much the normal value price exceeds the export price) on
non-canned shrimp that the DOC calculated to range from 2.35 percent to 67.8 percent for
Brazil, Ecuador, India and Thailand; up to 25.76 percent for Vietnam; and up to 112.81 percent
for China. Although the above tariffs were not as high as the Alliance had requested (up to 200
percent), they hailed this decision.

On 6 June 2006 India requested separate consultations with the US on the amended bond
directive and the EBR imposed by the US on imports of frozen warm water shrimp from India.

In its request, India claimed that the measures under the amended directive were in violation of
the WTO ADM as well as the GATT. However this consultation also failed to resolve the
dispute and subsequently the DSB established another separate panel allowing Brazil, China,
European Communities, Japan and Thailand to act as third parties.

The main issues in these disputes were that the imposition of EBR and application of the practice
known as ‗zeroing‘ by the US on importers of shrimp products from India were inconsistent with
WTO agreements. In the absence of an agreement between the parties, the WTO Director-
General composed a three member Panel. The Panel issued the Interim Report to the parties on 9
October 2007 and the Final Report to the parties on 13 November 2007.

FINDINGS OF THE PANEL

In its findings, the three member panel held that the applications of EBR on Indian shrimp
exports were inconsistent with the rules of the WTO Anti-dumping Agreement as well as the
GATT and due to this bond, the Indian shrimp exporters had to incur prohibitive costs on their
exports. Further on, it held that the US violated both the Anti-dumping and the Subsidies and

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 Anti-Dumping Duties

Countervailing Measures (SCM) Agreement because it failed to notify the amended Custom
Bond Directive to the Anti-dumping and SCM Committees.

Also, it was concluded that the use of ‗zeroing‘ by the US breached US obligations under the
Anti-dumping Agreement for the reason that the US did not calculate dumping margins on the
basis of the ‗product as a whole‘. Consequently, the panel‘s conclusion and recommendation was
that the US had to bring its measures into conformity with its obligations under the WTO Anti-
dumping Agreement and the GATT 1994.

INDIAN CASES
1) Designated Authority Anti-Dumping Directorate Ministry Of Commerce Vs.
M/s. Haldor Topsoe A/s.28

FACTS

Catalysts were imported from Denmark. A complaint of dumping was lodged with the
designated authority. The designated authority undertook to cause investigation. However, the
exporter did not furnish information about the export price of the catalyst to the other third
countries when no domestic sales were made in them.

The exporter insisted that normal price be determined on cost of production basis. The authority
rejected this. The designated authority, instead, proceeded to rely upon the price of like catalyst
sold by a German manufacturer. On this basis, the designated authority gave its finding and
recommended imposition of anti-dumping duty. It recommended two rates, depending upon the
end-use of the catalysts in India.

The exporter challenged the finding in appeal to the tribunal. It was argued that the anti-
dumping duty is country-specific and exporter-specific and therefore, the price of the German
exporter cannot be relied upon. The tribunal accepted the argument of the appellant. The tribunal

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concluded that the action of the designated authority is clearly in violation of the specific
provisions contained in section 9A of the Act.

Even though the appellant did not co-operate to provide the information, the tribunal refused to
be persuaded to recognize the price of another exporter for like article. According to the tribunal,
it was wrong for the Central Government to extend the time of one year for completing the
investigation, without providing an opportunity to the appellant.

Yet another question was agitated in appeal. Was it legal to recommend two rates of anti-
dumping duty for the same product? The tribunal answered the question in the negative, saying,
“We are not able to up hold the action of the designated authority.”

The designated authority decided to contest the order of the tribunal in the Supreme Court.

JUDGEMENT

The judgment of the apex court set aside the order of the tribunal on more than one count. On the
basic question whether reliance upon the price of the other exporter falls within the domain of
correctness, the Supreme Court reversed the finding of the tribunal. The court rejected the theory
of exporter-specific or country-specific argument. The court observed:

“By holding anti-dumping duty to be exporter-specific, the tribunal could not have restricted the
scope of the investigation only to materials to be produced by a party against whom an
investigation is being conducted. Such an interpretation of the statute is wholly contrary to the
very scheme of the statute.”

It felt that the legal provisions did not call for any doubt or confusion.

“On a careful reading of section 9A of the Tariff Act and Rule 6 of the rules, it is clear that the
statute has nowhere put such a restriction on the investigating authority. On the contrary, the
perusal of the said provisions clearly shows that the normal value will have to be determined
with reference to comparable price, the word comparable price in the context can only be with
reference to the price of similar articles sold under similar circumstances irrespective of the
manufacturer.”
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The apex court rejected the tribunal's finding on the question of two different rates of anti-
dumping duty. The Supreme Court observed that the tribunal did not give any specific reason
why the two different margins cannot be made applicable based on different import duties
applicable to the concerned catalyst.

2) Chhotu Lal Daga (Prop. of Rohit Enterprises) Vs. Commissioner of Customs

(Port)29

FACTS

Central Government imposed anti-dumping duty on Compact Fluorescent Lamps (CFL)

originating in or exported from China under Notification No. 128/2001-Cus. dated 21.12.2001.
Imposition of anti-dumping duty was made on a provisional basis pending final determination
and such provisional duty was effective up to and inclusive of 20.06.2002. The Notification
provided for separate anti-dumping duty on CFL without choke and with choke. The same
Notification also imposed anti-dumping duty on CFL without choke originating in or exported
from Hong Kong. Subsequently, definitive anti-dumping duty was imposed by Notification No.
138/2002-Cus. dated 10.12.2002. The anti-dumping duty on CFL with choke originating in or
exported from Hong Kong was imposed for the first time under Notification No. 138/2002. The
appellant imported the impugned CFL with choke of Chinese origin from a supplier in Hong
Kong. The bill of entry was noted on prior entry basis on 02.12.02 and the vessel carrying the
said goods was granted Entry Inwards on 09.12.2002. The main issue in dispute in this case is
whether the anti-dumping duty is payable on such imports made during the interregnum, i.e.,
between 21.06.2002 and 09.12.2002, after the provisional duty lapsed but before the definitive
duty was notified.

JUDGEMENT

The Supreme Court noted that ―...the erstwhile GATT and its successor WTO, through multi-
lateral negotiations, have been bringing down tariff barriers and liberalizing international trade.
However, to prevent unfair trade under liberalized trading systems, WTO has mandated trade

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2008(120)ECC277
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remedy measures such as anti-dumping duty against dumped imports, countervailing duty
against subsidized imports and safeguard measures against surge in imports. Such measures are
necessary to prevent unfair trade by foreign suppliers to the detriment of domestic industry in the
absence of a protective import tariff wall. That anti-dumping duty is not so much of a revenue
measure, is evident from the fact that some of the WTO member-countries have made provisions
for making payments from the collected anti-dumping duty to the injured domestic industry.”

The appellant contended that since the import has taken place from a supplier in Hong Kong, in
terms of paragraph 2 of the Notification No. 138/2002, the anti-dumping duty for CFL with
choke exported from Hong Kong, should be charged only with effect from the date of the
Notification i.e. 10.12.02. The Supreme Court rejected this contention. In the case of the
appellant, the goods were of Chinese origin and hence, these satisfy the condition of 'originating
in, or exported from China', notwithstanding the fact that they were re-exported from Hong
Kong. Since the anti-dumping duty in respect of CFL with choke originating in, or exported from
China was levied from 21.12.2001, thus impugned import made by the appellant had to pay the
anti-dumping duty notified under Notification No. 138/2002.

The Appellant also pleaded that the quantum of anti-dumping duty was very high and he was not
in a position to pay the same. Rejecting his contention, the court held that “...one of the purposes
of levying anti-dumping duty on a provisional basis for a period of six months on preliminary
determination is to make aware all exporters and importers concerned regarding the initiation
and continuance of anti-dumping investigation against dumped imports from specific
countries/exporters... In any case, the purpose of anti-dumping duty is to remove the injury
caused by dumped imports...the plea that the anti-dumping duty is excessive and that the same
cannot be borne by the importer, cannot be a basis for not demanding it from the subject
imports.‖

3) Rishiroop Polymers Pvt. Ltd. Vs. Designated Authority and Additional

Secretary30

FACTS

30
(2006) 4 SCC 303 : MANU/SC/1451/2006
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The Appellant was the sole agent of Acrylonitrile Butadiene Rubber [for short "NBR"] as
manufactured by Korea Kumho Petrochemicals Limited [for short "KKPC"].

The subject goods were being imported into India for near about a decade. The subject anti-
dumping duty proceedings were related to NBR31 which was a synthetic rubber mainly used in
the manufacture of other rubber articles such as oil seals, hoses, automobile product, rice
dehusking rolls etc.

Gujarat Apar Polymers Ltd. (GAPL), hereinafter referred to Respondent No. 3, were the
manufacturers of some grades of NBR. Respondent No. 3 by means of complaint dated
3.11.1995 addressed to the Additional Secretary being the designated authority under Section 9
of the Tariff Act in the Ministry of Commerce, stated that the import of bales of the said
consignment from Germany was causing injury to its productions. Proceedings were initiated by
the Public Notice dated 1.3.1995 against export of NBR from Germany and Korea. The period of
investigation was 1.10.1994 to 31.3.1995.

The designated authority after considering the entire data of facts came to the conclusion that

1) NBR originating in or exported from Germany and Korea had been exported to India below its
normal value;

2) Consequently, the domestic industry had suffered material injury;

Thus, anti-dumping provisions were imposed and the designated authority confirmed its
preliminary finding dated 3012.1996.

In 2001, the designated authority received requests for Mid-term review of the dumping
provisions carried out under Rule 23 of the Rules. The Authority concluded that the domestic
industry, during the review period of investigation, had faced injury due to continued dumping
by the plaintiff despite anti-dumping measures. Thus, the authority recognized the need for
continuation of imposition of definitive anti-dumping duty on all imports of SB.

Additionally, the authority also turned down the appellant‘s request for a Sunset review on the
same grounds that the dumping of the subject goods is continuing from the subject countries and

31
NBR is a generic term and has various grades and physical forms.
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thus domestic industry was suffering material injury; Further, the authority also observed that the
material injury to the domestic industry would intensify if anti-dumping duty is removed.

The designated authority‘s decision was challenged by the appellant that all the 14 parameters
given in Para (iv) of Annexure-II relating to principles of determination of injury were required
to be determined but had not been taken into account and that only some of the parameters were
considered.

JUDGEMENT

The Supreme Court, while rejecting the appellant‘s contention, held that the review enquiry
should be limited to see as to whether the conditions which existed at the time of imposition of
anti-dumping duty have altered to such an extent that there is no longer justification for
continued imposition of the duty. The Supreme Court held that the enquiry was limited to the
change in the various parameters like the normal value, export price, dumping margin, fixation
of non-injurious price and injury to domestic industry. The said enquiry had to be limited to the
information received with respect to change in various parameters. It was said that the entire
purpose of the review enquiry is not to see whether there is a need for imposition of antidumping
duty but to see whether in the absence of such continuance dumping would increase and the
domestic industry suffer. It was also held that final findings recorded by the designated authority
at the time of initial imposition of anti-dumping duty on the existence of injury to the domestic
industry must be considered to continue to remain valid, unless it is proved to be otherwise,
either by the designated authority in suo moto review or by the applicant seeking the review.

The Supreme Court further observed that in the absence of new material, the designated
authority was not required to apply afresh parameters or criteria enumerated in paragraph (iv) of
Annexure II, which had already been done at the initial stage of imposition of anti-dumping duty.

In the current case, the Designated Authority in its findings in the Mid Term Review proceedings
and also the Sunset review proceedings had categorically stated that all the factors have been
taken into consideration while determining continuance of the anti-dumping duty. Thus it was
held that the argument of the appellant that all relevant factors have not been considered had no
factual foundation.

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CONCLUSION
Today large numbers of countries have become frequent users of anti-dumping measures. Anti-
dumping has unique combination of political and economic manipulability. During the last
fourteen years of WTO, the use of anti- dumping has become rampant that it is criticized as
threatening to limit the market access achieved under GATT/WTO trade negotiations over the
last fifty years or so. On the one hand, there is fear that anti – dumping measures are used for
protectionist purpose. On the other hand, many support it because it can be used as encounter
against ‗unfair‘ trade practices.

It has been seen that Anti-dumping policies are being initiated mostly by major players in the
business. These dominants producers lobby and litigate antidumping cases. In the process, they
incur huge expenditure sacrificing economic efficiency. Thus, antidumping policies that are
designed to ensure fair competition and improve economic efficiency may in fact reduce them.
To minimize the manipulation of the law for protectionist purpose and to limit discretionary
powers of the authorities, more explicit rules should be developed and definitions of different
concepts used in the process should be given clearly and the procedure of determining dumping
should be made more transparent.

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BIBLIOGRAPHY
1. Aggarwal, Aradhna., “The anti-dumping agreement and developing countries”, Oxford
University Press, (New Delhi : | New York )

2. Raju, K. D., ―World trade Organization Agreement on Anti-dumping”, Wolter Kluwer Law &
Business Series, Aspen Publishers, Inc.

WEBLIOGRAPHY

1. Mark Wu , “Antidumping in Asia’s Emerging Giants”, Volume 53, Number 1, Winter 2012,
Harvard International Law Journal, Available at www.harvardilj.org/2012/01/issue_53-1_wu/

2. www.cci.gov.in/

3. www.jusprudentia.com/jusacademics

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