Holding

The Court held that “volume” in Rule 14(d) means the quantity of dumped imports, so the investigation must be terminated when that quantity is less than 3% of total imports, rendering the anti‑dumping duty invalid.

Summary

The appellant imported lead‑acid batteries from Bangladesh and the Designated Authority found that the quantity of these imports was less than 3% of total imports of like batteries, which under Rule 14(d) should have led to immediate termination of the anti‑dumping investigation. The Authority instead relied on the value of the imports, which exceeded 6%, continued the investigation and imposed an anti‑dumping duty. The appellant appealed the decision, and the CEGA Tribunal upheld the Authority’s interpretation that “volume” meant value. The Supreme Court held that “volume” in Rule 14(d) refers to quantity of imports, not their value, and that a de‑minimis share of less than 3% mandates termination of the investigation. Accordingly, the anti‑dumping duty was set aside and the appeal was allowed.

Issues considered

Whether the term “volume” in Rule 14(d) of the Custom Tariff (Anti‑Dumping) Rules, 1995 denotes quantity of imports or the value of imports.
Whether the Designated Authority was obliged to terminate the anti‑dumping investigation when the quantity of dumped imports was less than 3% of total imports of the like product.
Whether the anti‑dumping duty imposed on the appellant was valid in view of the de minimis rule.

Legislation cited

Customs Tariff Act, 1975s. 9A

Subjects

anti‑dumpingde minimisvolumequantitycustoms dutyinvestigation terminationGATTdumping margin

Judgment

MIS. S & S. ENTERPRISE A
v.
DESIGNATED AUTHORITY AND ORS.

FEBRUARY 22, 2005

. [RUMA PAL, ARIJIT PASAYAT AND C.K. THAKKER, JJ.] B
-
Anti-dumping laws : .

Custom Tariff (Anti-Dumping Duty on Dumped Articles and for
Determination of Injuries) Rules 1995-Rules 14(d) & Rule 5 : C
Investigation under Rule 14(d)-When terminable-Held, the Designated
Authority to terminate the investigation, if volume of dumped imports found to
be less than the de minimis of 3% of total imports.

'Volume ofimports'-Basis of computation-Held, volume of imports is D
to be computed on the basis of the quantity of imports and not the price of
imports-Customs Tariff Act, 1975-Section 9A.

Anti-dumping duty-Imposition of-Purpose and object of-Discussed

The appellant imported batteries from Bangladesh. On a complaint, E
Respondent no. l conducted investigation and found that the total number
of imports made by the appellant was less than 3% of total imports of

- such batteries. Inspite of such finding, Respondent no. I continued the
investigation and held that the value of imports made by the appellant
was exceeding 6% which was more than the de minimis limit of 3% as F
provided under Rule 14(d) of Custom Tariff (Anti-Dumping Duty on
Dumped Articles and for Determination of In;uries) Rules 1995. On
appeal, the Central Excise & Gold Control Appellate Tribunal (CEGA T)
upheld the order holding that the word 'volume' in the context of Rule
14 meant value. Hence the appeal.
G
Allowing the appeal, the Court

HELD : 1. The interpretation of Rule 14(d) of the Custom Tariff
(Anti-Dumping Duty on Dumped Articles and for Determination of
Injuries) Rules, 1995 by Respondent No. 1 and the Tribunal is incorrect
255 H
256 SUPREME COURT REPORTS [2005] 2 S.C.R.

A and contrary to its language. The imposition of dumping duty is under
Section 9A of the Customs Tariff Act 1975 and the Rules and is the
outcome of the General Agreement on Tariff and Trade (GATT) to which
India is a party. The purpose behind the imposition of the duty is to curb ·
unfair trade practices resorted to by exporters of a particular country of
flooding the domestic markets with goods at rates which are lower than
B the rate at which the exporters normally sell the same or like goods in
their own countries so as to cause or be likely to cause injury to the
domestic market. The levy of dumping duty is a method recognized by
GATT which seeks to remedy the injury and at the same time balances
the right of exporters from other countries to sell their products within
C the country with the interest of the domestic markets. However a negligible
quantity of imports would not be sufficient to cause such injury.
1258-H; 259-A-B, Cl

Agreement on implementation of Article VJ of the GATT, 1994, Article
5. 8, referred to.
D
2.1. There shall be immediate termination of investigation in cases
where the authorities determine that the margin of dumping is de minimis,
or that the volume of dumped imports, actual or potential, or the injury,
is negligible. The volume of dumped imports shall normally be regarded
as negligible if the volume of dumped imports from a particular country
E is found to account for less than 3% of imports of the like product in the
importing country. 1259-D, El

F
2.2. The de minim is rule as far as the price is concerned is when the
dumping margin or the difference between the export price of the article
and its normal value, is less than 2%. In other words the exporter is selling
--
the goods in India at almost the same price that it does in its country. As
far as quantity is concerned, if the export accounts for less than 3% of
the total imports of the like article into .India, it is treated as too trivial
for the law and is ignored. The Rules have also distinguished between
volume as meaning quantity on the one hand and price on the other. ·
G 1259-G-H; 260-AJ

3. The percentage of 3% vis-a-vis the quantity is not broad based
but determined, with reference to a 'like article'. The consideration of
volume would also he limited to such "like articles". Therefore, when Rule
14(d) says that the investigation must be terminated if the 'volume' of the
H
S & S. ENTERPRISE 1·. DESIGNATED AUTHORITY 257
dumped imports is less than 3% of the imports of the like product, it must A
mean that the quantity of dumped imports must account for less than 3°/.1
of the total imports. To hold otherwise would mean that if the price is
lower than 3'Yo; irrespective of the quantity imported, the investigation
would be dropped and it would, lead to the absurd situation that a small
number of expensive imports would invite anti-dumping investigation but B
cheap imports flooding the domestic markets would not. In fact such a
situation is exactly what the dumping rules have been framed to prevent.
1260-E, G-H; 261-AI

4. Nobody has questioned the preliminary finding of the Designated
Authority that the quantity of the imports from Bangladesh during the C
period of investigation was less than 3% of the total imports of the 'like
article' to India. The investigation therefore should have been promptly
dropped against the appellant. The respondents' submission that the
preliminary finding was not conclusive of the matter and was subject to a
final finding is unacceptable and is against the language of Rule 14(d).
The proceedings for investigation, are, under Rule 5, initiated on a written D
application by the domestic industry. The application is required to be
supported by evidence of (a) dumping; (b) injury where applicable; and
(c) a causal link between dumping of imports and the alleged injury. The
Designated Authority is required on the basis of the evidence as adduced
by the domestic industry, to arrive at a primafacie conclusion even before E
initiating the investigation. After collecting such evidence and information
which pertain to the ingredients of dumping, the Designated Authority is
required "in appropriate cases" to record a preliminary finding regarding
export price, normal value and margin of dumping and the injury to the
domestic industry under Rule 12. If the Designated Authority is of the
opinion on the basis of its preliminary finding that there has been dumping F
which has caused injury to the domestic industry, it may make a
preliminary determination of the margin of dumping. On the basis of the
preliminary finding, the Cen~ral Government may, under Rule 13, levy
provisional duty. It is at this stage that Rule 14 comes into operation when
the investigation is yet to be completed finally and the final findings G
published under Rule 17. As it was incumbent on Respondent No. 1 to
have closed the investigation under Rule 14(d) once it held that the volume
of dumped imports was less than 3 11.1 of the total imports, it is sufficient
to set aside the anti dumping duty imposed on the appellant.
1261-B-D, F-H; 262-AI
H
258 SUPREME COURT REPORTS [2005] 2 S.C.R.

A CIVIL APPELLATE JURISDICTION: Civil Appeal No. 9012 of2003.

From the Judgment and Order dated 3.6.2003 of the Central Excise,
Customs and Gold (Control) Appellate Tribunal, New Delhi in F.O. Nos. 4-
6/2003-AD in A. No. C/2004/2002-AD.

B Dr. Aman Hingorani, Ms. Priya Hingorani, Ms. Reema Bhandari, M/s.
Hingorani & Associates the Appellant.

T.S. Doabia, Manish Sharma and D.S. Mahara Respondents.

The Judgment of the Court ~as delivered by
c RUMA PAL, J. The appellant imported lead acid batteries from
Bangladesh during the period 1.2.2000 to 13.9.2001. The total number of
batteries so imported were found to be less than 3% of the total imports of
such batteries into India during that period. This was so found by the
Designated Authority (the Respondent No. I), on an investigation consequent
D upon a complaint lodged by the private respondent under Rule 5 of the
Customs Tariff (Anti-Dumping Duty on Dumped Articles and for
Determination of Injuries) Rules 1995 (referred to as 'the Rules').

Rule 14(d) inter a/ia provides that ifthe Designated Authority determines
that the volume of the dumped imports actual or potential from a particular
E country accounts for less than 3% of the imports of the like product, he shall
terminate the investigation immediately. Nevertheless the Respondent No. I
continued the investigation in respect of the imports from Bangladesh on· the
finding that the value of imports made from Bangladesh was more than 6%
which was more than the de minimis limit of 3% as provided under Rule
F 14(d). On 7th December, 2001 the Respondent No.I published the final
finding determining that anti-dumping duty was payable in respect of such
imports of batteries during the period under investigation. The Ministry of
Finance accepted the recommendation of the Respondent No. I and notified
the Anti-dumping Duty by Notification dated 2.1.2002,

G The appellant preferred an appeal before the Central Excise & Gold
(Control Appellate Tribunal (CEGA T). The Tribunal rejected the submission
of the appellant that the Designated Authority should have computed the
volume of exports on the basis of quantity rather than on the basis of price.
It held that the word "volume" in the context of Rule 14 meant value.

H
S & S. ENTERPRISE v. DESIGNATED AUTHORITY [RUMA PAL. J.) 259

In our opinion, the interpretation of Rule 14(d) by the respondent No. I A
and the Tribunal is incorrect and contrary to its language. The imposition of
dumping duty is under Section 9A of the Customs Tariff Act 1975 and the
Rules and is the outcome of the General Agreement on Tariff and Trade
(GA TT) to which India is a party. The purpose behind the imposition of the
duty is to curb unfair trade practices resorted to by exporters of a particular .B
country of flooding the domestic markets with goods at rate:; which are lower
than the rate at which the exporters normally sell the same or like goods in
their own countries so as to cause or be likely to cause injury to the domestic
rriarket. The levy of dumping duty is a method recognized by GA TT which
seeks to remedy the injury and at the same time balances the right of exporters
from other countries to sell their products within the country with the interest C
of the domestic markets. Thus the factors to constitute 'dumping', is (i) an
import at prices which are lower than the normal value of the goods in the
exporting country; (ii) the exports must be sufficient to cause injury to the
domestic industry.

However a negligible quantity of imports would not be sufficient to D
cause such injury. Article 5.8 of the Agreement on Implementation of Article
VI of the GA TT, 1994 makes this clear :

"An application under paragraph l shall be rejected and an
investigation shall be terminated promptly as soon as the authorities
concerned are satisfied that there is no sufficient evidence of either E
dumping or of injury to justify proceeding with the case. There shall
be immediate termination in cases where the authorities determine
that the margin of dumping is de minimis, or that the volume of
dumped imports, actual or potential, or the injury, is negligible. The
margin of dumping shall be considered to. be de minim is if this margin F
is less than 2%, expressed as a percentage of the export price. The
volume of dumped imports shall normally be regarded as negligible
if the volume of dumped imports from a particular country is found
to account for less than 3% of imports of the like product in the
importing Member, unless countries which individually account for
less than 3% of the imports of the like product in the importing G
Member collectively account for more than 7% of imports of the like
product in the importing Member."

The de minimis rule as far as the price is concerned is when the dumpino
margin or the difference between the export price of the article and its norma~
H
260 SUPREME COURT REPORTS [2005] 2 S.C.R.

A value, is less than 2%. In other words the expo11er is selling the goods in
India at almost the same price that it does in its country. As far as quantity
is concerned, if the export accounts for less than 3% of the total imports of
the like article into India, it is treated as too trivial for the law and is ignored.

The Rules have also distinguished betwe~n volume as meaning quantity
B on the one hand and price on the other. For example under Rule I 1(2), the
Designated Authority is required to determine the injury to the. domestic
industry taking into account, inter-alia, the volume of dumped imports and
their effect on the price in the domestic market for like articles. In Section
14 itself, such distinction is maintained in Rule 14 (c) and (d). Of particular
C significance is Annexure II to the Rules, whichdeals with the principles for
determination of injury. Paragraph I provides that :

"A determination of injury shall involve an objective examination of
both (a) the volume of the dumped imports and the effect of the
dumped imports on prices in the domestic market for like article and
D (b) the consequent impact of these imports on domestic producers of
such products."

Paragraph 2 speaks of the consideration of whether there has been a
significant increase in the dumped imports while examining the volume of
dumped imports and whether there has been a significant price under cutting
E by the dumped imports in order to assess the effect on the prices in the
domestic market i.e. an increase in quantity and a decrease in the export
prices. Again Paragraph 5 which deals with t~e, causal relationship between
dumping and the injury to the domestic industry speaks of "the volume and
prices of imports" as one of the relevant factors.

F The percentage of 3% vis-a-vis the quantity is not broad based but
determined, we emphasise, with reference· to a 'like article'. The word "like
article" has been defined in Rule (2) (d) as :- ·

" (d) "like article" means an article which is identical or alike in
all respects to tl}e article under investigation for being dumped in
G India or in the absence of such an article, another article which although
not alike in all respects, has characteristics closely resembling those
of the articles under investigation."

The consideration of volume would also be limited to such "like articles".

H Therefore, when Rule 14(d) says that the investigation must be
S & S. ENTERPRISE v. DESIGNATED AUTHORITY [RUMA PAL, J.] 26 J

terminated if the 'volume' of the dumped imports is less than 3% of the A
impo1ts of the like product, it must mean that the quantity of dumped imports
must account for less than 3% of the total imports. To hold otherwise would
mean that ifthe price is lower than 3%, irrespective of the quantity imported,
the investigation would be dropped and it would, as submitted by the appellant,
lead to the absurd situation that a small number of expensive imports would B
invite anti-dumping investigation but cheap imports flooding the domestic
markets would not. In fact such a situation is exactly what the dumping rules
have been framed to prevent.

Nobody has questioned the preliminary finding of the Designated
Authority that the quantity of the imports from Bangladesh during the period C
of investigation was less than 3% of the total imports of the 'like article' to
India. The investigation therefore should have been promptly dropped against
the appellant who imported from Bangladesh.

The respondents' submission that the preliminary finding was not
conclusive of the matter and was subject to a final finding is unacceptable D
and is against the language of Rule 14(d). The proceedings for investigation,
are, under Rule 5, initiated on a written application by the domestic industry.
The application is required to be supported by evidence of (a) dumping; (b)
injury where applicable; and (c) a causal link between dumping of imports
and the alleged injury. The Designated Authority is required on the basis of
the evidence as adduced by the domestic industry, to arrive at a prima fade E
conclusion even before initiating the invtstigation. The initiation ·of the
investigation is then publicly notified with copies being sent to the known
exporters of the articles alleged to be dumped as well as to the Government
of exporting countries and other interested parties, [Rule 6(2)]. Information
may be required by the Designated Authority from such persons who are F
required to supply the same, normally within 30 days from the date of the
receipt of the notice. After collecting such evidence and information which
pertain to the ingredients of dumping, the Designated Authority is required
"in appropriate cases" to record a preliminary finding regarding export price,
normal value and margin of dumping and the injury to the domestic industry
under Rule 12. If the Designated Authority is of the opinion on the basis of G
its preliminary finding that there has been dumping which has caused injury
to the domestic industry, it may make a preliminary determination of the
margin of dumping. On the basis of the preliminary finding the Central
Government may, under Rule 13, levy provisional duty. It is at this stage that
Rule 14 comes into operation when the investigation is yet to be completed H
262 SUPREME COURT REPORTS

A finally and the final findings published under Rule 17.
[2005] 2 S.C.R.
--·
As we hold that it was incumbent on the Respondent No. I to have
closed the investigation under Rule 14(d) once it came to the conclusion that
the volume of dumped imports was less than 3% of the total imports it is
sufficient to upset the finding of the Tribunal and the Respondent No. I to set
B aside the anti dumping duty imposed on the appellant. In the circumstances,
it is unnecessary to decide on the further challenge raised by the appellant on
the basis of violation of Rule 16.
-
The appeal is accordingly allowed and the impugned decisions of the
Tribunal and the Designated Authority are set aside.

O.G. Appeal allowed.