Section 9A of the Customs Tariff Act, 1975 (hereinafter referred to as “the Act”) 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 Anti-Dumping Rules”).
Custom Notification # 10/2021-Customs (N.T.) dated 1st of February’2021 ushered in a number of changes to the Anti-Dumping rules. One of the changes was the introduction of a sub-Rule 4A in Rule 26 which has the following provisions:

“(4A) The Central Government may, on recommendation of the designated authority, resort to provisional assessment of the imports of the article alleged to be circumventing an antidumping duty in force and may ask a guarantee from the importer, till the time a decision under sub-rule (3) of rule 27 is taken by the Central Government.”

This change was incorporated to provide for a scenario where the Central government, acting on the recommendations of the Designated Authority recommends the extension of the anti-dumping duty to the articles found to be circumventing the duty from the date of initiation of anti-circumvention investigation under Rule 26. The addition of Rule 4A is meant to safeguard the revenue interests of the Central government in the event of retrospective application of anti-circumvention duties.

A similar scenario of retrospective application is also envisaged in Section 9A (3) of the Act wherein it is stated that (complete contents not being reproduced for the sake of brevity) “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 anything contained in any 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.”

Since it is possible to levy the provisional anti-dumping duty retrospectively, there is a requirement for an enabling legal provision for provisional assessment and requisition of bank guarantee, if so required. This will help to safeguard the revenue interest of the Central government on similar lines as anti-circumvention duty.
The second proviso to Section 9A(5) of the Act states 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.”

However, as per Customs Notification #10/2021-Customs (N.T.), a proviso has been introduced in Rule 23, sub-rule (2) of the Anti-Dumping Rules which is as follows:

“Provided that notwithstanding anything contained in rule 17, such review shall be completed at least three months prior to expiry of the anti-dumping duty under review.”i>

It is apparent that there is a lack of congruence between the Act and the Rules. While the Act seeks to keep the issue of timelines (for conducting a sunset review investigation) open ended, the Rule forecloses the option of extending the review investigation beyond the expiry of the anti-dumping duty. As per the second proviso to Section 9A (5) of the Act, the extension of the anti-dumping duty for a period of up to 1 year is not mandatory but completely the prerogative of the Central government. However, there is no doubting the fact that there is an innate provision in this section to deal with a scenario where the review investigation does not get completed before the expiry of duty. However, the amendment in the Anti-Dumping Rule seeks to completely rule out such a scenario.

In this context, it would also be instructive to examine the provisions of Article 11.3 of the Agreement on implementation of Article VI of the General Agreement on Trade and Tariffs, 1994 and the degree of consonance between the provisions enshrined therein and the national legislation.

The amendment to the anti-dumping Rules is well intentioned as in all fairness it seeks a timely completion of the review investigation and also seeks to prevent extended and unwarranted protection to the domestic industry. However, the apparent mismatch between the Act and the Anti-Dumping Rules should at best be avoided.
Section 9 (A) (5) of the Act states that “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”.

However, Rule 23 (1B) of the Anti-Dumping Rules provides that “any definitive antidumping duty levied under the Act, shall be effective for a period not exceeding five years from the date of its imposition, unless ....... continuation or recurrence of dumping and injury to the domestic industry.”

A very simple reading of the aforementioned Section of the Act would suggest that the anti-dumping duty would be effective for a period of 5 years from the date of imposition provided there is no prior revocation.

However, the rule would suggest that even without revocation, an anti-dumping duty may be imposed for a period of less than 5 years and 5 years is only the maximum timeline suggested. This argument is further bolstered by Rule 23 (1) of the Anti-Dumping Rules which states that any ant-dumping duty imposed under the provisions of Section 9 (A), shall remain in force, as long as and to the extent necessary, to counteract dumping, which is causing injury. Therefore, a tenure of 5 years is only a maximum limit and the duty may be imposed for a shorter tenure. A reading of Article 11 of the Agreement on the implementation of Article VI of the General Agreement on Trade and Tariffs, 1994 leads one to the same inference.

It would be advisable to amend Section 9 (A) (5) of the Act by insertion of the word “maximum” before “five years” to ensure congruity between the Act and the Ant-Dumping Rules.
Rule 23 (1A) of the Anti-Dumping Rules provides that “the designated authority shall review the need for the continued imposition of any anti-dumping duty, where warranted, on its own initiative or upon request by any interested party who submits positive information substantiating the need for such review, and a reasonable period of time has elapsed since the imposition of the definitive anti-dumping duty and upon such review, the designated authority shall recommend to the Central Government for its withdrawal, where it comes to a conclusion that the injury to the domestic industry is not likely to continue or recur, if the said anti -dumping duty is removed or varied and is therefore no longer warranted.”

The outcome of the review may be either the removal of the duty or the modification of the duty. As such the recommendation cannot be for just withdrawal alone when the Rule itself says “removed or varied”. If the argument is that a variation in the rate of duty also implies a termination of the existing anti-dumping duty, then the concept of review itself needs examination.

Going by the aforementioned Rule, anti-dumping duty is terminated where it is no longer warranted. However, if the Designated Authority in a review comes to the conclusion that termination of the duty is likely to lead to continuation or recurrence of injury, it may recommend the continuation of duty but in a modified form (e.g. modified form or rates).This implies that duty is warranted but in a modified form. Modification of duties is implicit because the circumstances which prevailed during the original investigation will not be the same as the circumstances which prevail during the review.

The question which needs to be examined is whether the modification of the duty amounts to a termination of the duty or the termination of a certain rate or form of duty. If it is to be considered as a termination of the duty, then the new duty should be the outcome of a fresh investigation and not a sunset review investigation. Any duty being imposed after review itself implies that injury or threat thereof is continuing and the therefore the duty is warranted but in a modified form as opposed to a situation where injury or threat of injury is no longer there and therefore the duty stands terminated ( as it is no longer warranted).

Accordingly, an examination of the language of the aforementioned Rule may be of interest to the Directorate.
In the Finance Bill of 2021, a proviso has been added to Section 9A (5) of the Act which states the following:

“Provided also that if the said duty is revoked temporarily, the period of such revocation shall not exceed one year at a time.”

Prior to this amendment there was no provision for temporary for temporary revocation, either in the Act or in the Ant-Dumping Rules. Similarly, an examination of the Agreement on implementation of Article VI of the General Agreement on Trade and Tariffs, 1994 does not reveal any such provision.

The term revocation is currently based on the premise that on account of changed circumstances (as established through a review), there is no possibility of either continuation or recurrence of injury if the duty is withdrawn. Therefore, the continuation of duty is not warranted and accordingly it is terminated. If at some point of time in the future, there is either injury or threat thereof on account of dumped imports, it calls for a fresh investigation and the imposition of a fresh duty if the situation warrants. There can never be a case where the earlier duty is re-imposed after temporary revocation because the current set of circumstances would be very different from the circumstances which prevailed prior to the revocation. Therefore, one is at a complete loss to understand how a duty may be revoked temporarily and then restored.

The legal framework needs to spell out in no uncertain terms the grounds for temporary revocation of duties and the rules/procedure that need to be followed for arriving at a decision on temporary revocation. Certain duties related to the steel sector were recently subjected to partial revocation. However, no review was carried out and neither were the grounds for temporary revocation enumerated. Any such temporary revocation is therefore bad in law.

The Directorate is requested to kindly examine this issue from all possible dimensions so that the legal framework may be made more robust to effectively deal with such scenarios.