Holding

The Designated Authority must compute the NIP for the domestic industry as a whole using market prices of inputs and actual capacity utilisation, and it cannot claim confidentiality over information supplied by the appellant; its proceedings are quasi‑judicial.

Summary

Reliance Industries Ltd., a PTA manufacturer with a captive power plant, challenged the Designated Authority’s (DA) anti‑dumping duty order which imposed duty only on imports from Spain. The appellant argued that the DA wrongly computed the Non‑Injurious Price (NIP) by using the actual cost of captive electricity rather than its market price and by apportioning fixed costs on assumed optimum capacity utilisation, and that the DA illegally claimed confidentiality over information supplied by the appellant. The Supreme Court held that the NIP must be calculated for the domestic industry as a whole using market values of inputs and actual production figures, that the DA cannot invoke confidentiality under Rule 7 for information supplied by the party, and that the DA’s proceedings are quasi‑judicial, not legislative. Consequently, the Court set aside the DA’s NIP computation and directed a revision, while dismissing the appeal.

Issues considered

The correct method for computing the Non‑Injurious Price (NIP) for the domestic industry under the anti‑dumping rules
Whether the Designated Authority may claim confidentiality over information supplied by the appellant under Rule 7 of the Anti‑Dumping Rules
Whether the notification under Section 9A of the Customs Tariff Act is a legislative act or a quasi‑judicial proceeding

Legislation cited

Customs Tariff Act, 1975s. 9A, s. 9B
Customs Tariff (Identification, Assessment and Collection of Anti‑dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995s. Rule 10, s. Rule 11, s. Rule 17, s. Rule 4, s. Rule 7

Subjects

anti‑dumping dutyNon‑Injurious Pricedomestic industryconfidentialityRule 7quasi‑judicialCustoms Tariff Actcapacity utilisationmarket price of inputs

Judgment

RELIANCE INDUSTRIES LTD. A
v.
DESIGNATED AUTHORITY AND ORS.

SEPTEMBER 11, 2006

[ASHOK BHAN AND MARKANDEY KA TJU, JJ.] B

Customs Tariff Act, 1975/Customs Tariff (Identification, Assessment and
Collection of Anti-dumping Duty on Dumped Articles and for Determination
of Injury) Rules, 1995:
c
Ss. 9-A and 9-B/Rules 4, 7 and I 7-Anti-dumping duty-Levy of-
Computation of Non-Injurious Price (NIP)-Designated Authority taking
into account actual cost of electricity captively produced and not its market
price-D.A. also computing NIP on the basis of best capacity utilization
achieved in preceding three years-DA computing NIP much lower than D
computed by the company and claiming confidentiality in disclosing reasons
and detailed calculations to company-Held, for determining NIP, DA is
required to take into account market value of inputs and not their actual
cost of captive production-lnjw)' determination is for the domestic industry
as a whole and not for individual companies-Apportionment of fixed cost
has to be done on basis of actual production during the period of investigation E
and not on optimum capacity utilization-Notification of Central Government
uls 9-A is quasi-/udicial-Rule 7 does not contemplate any right in DA to
claim confidentiality, particularly, regarding information which pertains to
the party which has supplied the same-Failure of DA to provide detailed
costing information to appellant was illegal.
F
s.9-A-Anti-dumping duty-Object of-discussed.

) Words and Phrases:

"Margin of dumping", "margin of injWJ' ", "normal value"', "non-
injurious price"(NJP), "Positive dumping margin"-Connotation of in the G
context of anti-dumping law.

Appellant-company was, manufacturing inter alia, Pure Terophatalic
Acid (PTA). It had a captive power plant from which it drew electricity for
manufacturing PTA. For this purpose it also drew electricity from Grid. It
H
2 SUPREME COURT REPORTS [20061 SUPP. 6 S.C.R.

A transferred the electricity drawn from its captive power plant to its PTA unit
at the market rate. The appellant filed an application seeking imposition of
anti-dumping duty on PTA originated or exported to India from Japan, Malaysia,
Spain and Taiwan. Resultantly, on the basis of the findings of the Designated
Authority, the Central Government imposed anti-dumping duty on PTA
B originated in or exported to India from Spain. However, no such duty was
imposed on exports from the other countries. The appeal of the company filed
before the CEGA T seeking enhancement of the duty in case of export from
Spain and imposition of duty on exports from the said other countries was
dismissed. Aggrieved, the company filed the present appeal.

c It was contended for the appellant that the findings of the Tribunal were
erroneous in the context of certain imports because of an incorrect
computation of the NIP for the domestic industry made by the Designated
Authority. It was s1 1 bmitted that while computing the NIP of PTA, the DA ought
to have taken the transfer price (market value) of electricity and other inputs •.
captively produced by the company; and not the actual cost of production, in
D other words, the cost of inputs was to be seen not for an individual unit, but
the market price of the inputs was to be seen in order to calculate the NIP. It
was further contended that the DA has not given any reasoning for coming to
its conclusion with regard to NIP; and the Disclosure Statement issued by
the DA does not state as to what was the element of cost being disallowed and
E what was the reason for doing so. It was submitted that there was no
requirement in the present case to keep any confidentiality from the appellant
with regard to computation of NIP.

Disposing of the appeal, the Court

F HELD: I. The purpose ofs.9-A of the Customs Tariff Act, 1975, which
was inserted by the Customs Tariff (Second Amendment) Act, 1982, providing
for imposition of anti-dumping duty, was that our industries which had been
built up after independence with great difficulties must not be allowed to be
destroyed by unfair competition of some foreign companies. The purpose of
the section is, therefore, to maintain a level-playing field and prevent dumping,
G while allowing for healthy competition. The purpose is not protectionism in
the classical sense but to prevent unfair trade practices. The 1995
! ?
Amendment to Section 9A was apparently made in pursuance to Article VI of
the General Agreement on Tariffs and Trade 1994 (GA TT 1994) which
permitted anti-dumping measures as an instrument of fair competition.
H [12-C-Fl
RELIANCE INDUSTRIES LTD. 1•. DESIGNATED AUTHORITY 3

'National System of Political Economy' published in 1841 and General A
Agreement on Tariffs and Trade 1994, referred to.

2.1. In order to levy anti-dumping duty it is essential in terms of Rules
4 and 17 of the Customs Tariff(ldentification, Assessment and Collection of
~ Anti-dumping Duty on Dumped Articles and for Determination of Injury)
Rules, 1995 to establish: (i) Dumping, which is reflected by a "Margin of B
Dumping" - which is undisputed in this case; (ii)"lnjury"-which is also
undisputed in this case; and (iii) Causal link between dumping and injury to
the domestic industry to establish that injury to the domestic industry is
caused by dumping. (12-G-H; 13-A-B)

2.2. The margin of dumping is the difference between the "Normal
c
Value" (viz. price in the domestic market of the foreign exporter, or if there
are no domestic sales, the price at which it is exported to another country or
the constructed cost of production) and the "export price" at which goods are
exported to India. If goods are exported to India at prices below the "Normal
Value", there is a positive dumping margin. (13-8-C) D
2.3. On the determination of a positive margin, the Determining
Authority has to ascertain whether the dumping of goods is causing injury to·
the domestic industry by analyzing various injury parameters mentioned in
Annexure II to the Rules. The "Margin of Injury" is the difference between
the landed value of exports and the fair selling (notional) price of the domestic E
manufacturer, which is usually called the Non-Injurious Price. The NIP is
determined by the DA on the basis of cost of production (less interest), Selling
General and Administrative Expenses (SG&A), and a fixed rate of return on
the capital employed of the domestic industry. (13-C-D)

3.1. In the present case, the DA has clearly erred in law because the
F
Authority was required, as is apparent from the definition of "domestic
industry" under Rule 2(b) of the Anti Dumping Rules, to carry out the
determination of injury and computation of NIP for the domestic industry as
a whole, and not in respect of any particular company or enterprise. The
provisions relating to injury analysis in Annexure II to the Anti-dumping Rules G
are also clear that the injury determination is always for the domestic industry
as a whole and/10tfor individual companies. (16-G-H; 17-A; E(

3.2. Since the NIP is for the industry as a whole, it is immaterial if a
particular company produces some of its inputs captively. For the purpose of
determination of NIP, the DA is always required to take into consideration H
4 SUPREME COllRT REPORTS [2006[ SUPP. 6 S.C.R.

A the transfer price (market value) of the inputs and not their actual cost of
captive production. This is because the entire investigation, analysis,
recommendation and imposition are for the product under consideration for
the whule domestic industry and not for the individual companies and inputs
captively manufactured which may be involved in the production and sales of
B the goods. [17-F-G)

4.1. Both normal value and NIP are not exporter or domestic industry
specific respectively but exporting country specific and importing country
specific (India). Once dumping of specific goods from a country is established,
dumping duty can be imposed on all exports of those goods from that country
C to India under Section 9A, irrespective of the exporter. The rate of duty may
vary from exporter to exporter depending upon the export price. (18-G[

*Designated Authority (Anti-Dumping) Directorate v. Haldor Topsoe
AIS., (2000) ti SCC 626, relied on.

D 4.2. The purpose of imposition of duty is both to redress injury and to
prevent material retardation of the establishment or growth of the domestic
industry, as is in:ticated in s.9-B(i)(ii), Rule I 7(a)(ii) and Annexure II. In the
pres~nt case by fixing an NIP based upon specific advantages in the matter of
electricity that the appellant company processed, and permitting dumping of
the PTA into India, the DA has ensured that no other company can set up PT A
E manufacturing facilities without also being in a positio\i to generate its own
electricity at a price less than the price of electricity generally available in
the domestic market. This is surely not tenable, as it will result in
discrimination. fl 9-B-C)

4.3. The DA has clearly ignored the purpose for which the NIP is •
F computed. The DA has failed to appreciate that once dumping and injury is
established, the existence of an unfair trade practice by the exporters is

G
undisputed and a restrictive view in computing an unduly low NIP would lead
to granting a premium to the erring exporters at the cost of the domestic
industry, which is suffering injury. [19-D-Ef
-
5.1. The DA's determination of NIP was arbitrary and misguided, as it
has not considered the actual production achieved by the domestic industry
for the purpose of apportionment of fixed costs. On the contrary, it was ~ ,
revealed during the hearing that the DA computes the NIP on the basis of the
best capacity utilization achieved in the preceding three years. In fact, there
H is no established practice of the DA in this regard, aud the level of capacity
RELIANCE INDUSTRIES LTD. i-. DESIGNATED AUTHORITY 5
utilization taken into account by the DA varies from case to case leading to A
. total arbitrariness and unguided use of power. There is no basis to adopt the
best capacity utilization achieved in the past period as the industry is generally
bound to achieve higher capacity utilization if it is not affected by injurious
dumping. (19-E-GI

5.2. The apportionment of the fixed costs has to be necessarily done on B
the basis of actual production during the period of investigation and not an
assumed level of capacity utilization to avoid all arbitrariness. Thus, the DA's
approach is clearly incorrect inasmuch as it is not the determination of
optimum capacity utilization of the domestic industry, but the actual capacity
utilization which would be the correct approach. The NIP needs to be revised C
by taking the market price of elect:icity and the actual capacity utilization
during the period of investigation. (19-G-H; 20-A; E(

6.t. The nature of the proceedings before the DA are quasi-judicial, and
it is well-settled that a quasi-judid~I decision, or even an administrative
decision which has civil consequences, must be in accordance with the T)
principles of natural justice, and hence reasons have to be disclosed by the
authority in that decision. (20-FI

S.N. Mukherjee v. Union of India, I19901 4 SCC 594, relied on.

6.2. The Tribunal was not right in holding that the notification of the E
Central Government under Section 9A is a legislative Act. It is clearly quasi-
judicial. The proceedings before the DA is to determine the /is between the
domestic industry on the one hand and the importer of foreign goods from
the foreign supplier on the other. The determination of the recommendation
of the DA and the Government notification on its basis is subject to an appeal
before the CESTAT. This also makes it clear that the proceedings before the F
DA are quasi-judicial. (20-G-H; 21-AI

6.3. In the present case, the NIP computed by the DA was much lower
than that computed by the appellant, and the reasons for such variance and
detailed calculations were not disclosed by the DA to the appellant. No good G
reasons were given for reducing the cost price of electricity supplied by the
appellant produced in its captive power_ plant. This was clearly illegal.
(21-A-BI

6.4. The DA claimed confidentiality from the appellant about its finding
on the data supplied by the appellant itself. There was nothing confidential in H
6 SUPREME COURT REPORTS [20061 SUPP. 6 S.C.R.

A the matter, and hence reasons for not accepting the appellant's version should
have been stated in the order of the DA. Rule 7 does not contemplate any
right in the DA to claim confidentiality. Rule 7 specifically provides that the
right of confidentiality is restricted to the party who has supplied the
information, and that party has also to satisfy the DA that the matter is really
B confidential. Nowhere in the rule has it been provided that the DA has the
right to claim confidentiality, particularly regarding information which
pertains to the party which has supplied the same. 121-B-C; 22-A-BI

6.5. Excessive and unwarranted claim of confidentiality defeats the right
to appeal. In the absence of knowledge of the consequenc~s, grounds,
C reasoning and methodology by which the DA has arrived at its decision and
made its recommendation, the parties to the proceedings cannot effectively
exercise their right to appeal either before the Tribunal or this Court. The
Anti Dumping Law is extremely important for the country's industrial
progress and hence there should be total transparency and fairness in its
implementation. (23-C-El
D
Sterlite Industries (India) Ltd v. Designated Authority, (2003),158 ELT
673, relied on.

"India" by Rajni Palme Duu. referred to.

E CIVIL APPEL LAT JURISDICTION: Civil Appeal No. 1294 of200 I.

From the Order No. 44/2000-AD dated 29.11.2000 of the Customs, Excise
and Gold (Control) Appellate Tribunal, New Delhi in Appeal No. D/267/2000-
AD.

F Joseph Vellapally, K.R. Sasiprabhu, Ashvin Dave, Tarun Gulati and
Chandrachud, Raghvesh for the Appellant.

Nagendra Rai. Satyakam and Vijay Kr. Venna for Shreekant N. Terdal for
the Respondents.
-
G The Judgment of the Court was delivered by

MARKANDEY KATJU, J. This Appeal has been filed against the
impugned final order dated 29.11.2000 passed by the (CEGA T) Customs Excise
and Gold (Control) Appellate Tribunal, New Delhi.

H We have heard learned counsel for the paities.
RELIANCE INDUSTRIES LTD.''· DESIGNATED AUTHORITY [MARKANDEY KA TJU. J.] 7
The appellant is a multi-product company and has various business A
activities including manufacture of Pure Terephatalic Acid (for short 'PTA'),
which is used for the manufacture of polyester yarn (which in turn is used
for manufacture of textiles). Apart from the manufacture of PTA. the appellant,
inter a!ia, has a captive power plant from which it draws electricity. The
appellant also draws electricity from the Grid for the manufacture of PTA. The B
cost of electricity forms a significant part of the cost of production. For the
electricity drawn from the Grid, the appellant has to pay a tariff rate at the
market price of the electricity, while regarding electricity drawn from the
captive power plant the appellant transfers electricity at the market rate to its
PTA unit.

The appellant, Mis. Rdiance Industries Ltd. filed an application dated
c
12.10.1998 seeking the imposition of Anti- Dumping Duty on PTA originating
in, or exported from Japan, Malaysia, Spain and Taiwan. The Designated
Authority (hereinafter referred to as 'the DA') in the Ministry of Commerce
initiated investigations on the said application in April 1999. The investigations
culminated in the findings of the DA dated 20.4.2000, and on that basis :here D
was imposition by the Central Government of anti-dumping duty O!l PTA
originating or exported from Spain at the rate of Rs.521 per M.T. vide Customs
Notification No.82/2000 dated 30th May, 2000 of the Department of Revenue.
However, no duty was imposed on exports from the other countries.

The appellant filed an appeal before the CEGA T under Section 9C of the E
Customs Tariff Act, 1975 against this Notification seeking enhancement of
duty in the case of the exporter from Spain and imposition of duty on exports
from the other countries mentioned in their petition.

The grievance of the appellant was that while the DA had reached its F
findings in the final finding dated 20th April, 2000 upholding the appellant's
contention that exports from Japan and Malaysia were also at dumped prices
and that the domestic Industry had suffered injury, yet no anti-dumping duty
was recommended in respect of imports from Japan and Malaysia on the
ground that the imports from these countries were above the non-injurious
price and, therefore, there was no causal link between the dumped imports G
from these countries and the injury to the domestic industry. The appellant
submitted that this finding was inconsistent with the determination that
imports were at dumped prices and that domestic industry had suffered injury.
They also submitted that the finding that imports from Japan and Malaysia
were at non-injurious prices was also incorrect and was the result of faulty H
8 SUPREME COURT REPORTS (2006] SUPP. 6 S.C.R.

A determination of the fair landed value in respect of the imported goods and
non-injurious price in respect of the domestic manufacturer. The appellants
submitted that they had placed the cost of production data in respect of PTA
manufactured by them but the designated authority incorrectly determined
the non-injurious price at a lower amount and this led to the incorrect finding
B that there was no causal link between injury to domestic industry and imports
from these countries. With regard to the determination of landed value their
submission was that the landed value had been determined at an inflated
amount and that was the reason for the incorrect determination that the
landed value of imports was more than the non-injurious price.

c we mayBefore dealing with the contention of the learned counsel for the parties,
usefully refer to Section 9A of the Customs Tariff Act, 1975, which
was inserted by the Customs Tariff (Second Amendment) Act, 1982. Section
9A was substituted by the Customs Tariff (Amendment) Act, 1995 with effect
from 1.1.1995, and now it reads as follows:-

D "SECTION 9A - Anti-dumping duty on dumped articles. - (I) Where
any article is exported from any country or territory (hereinafter in this
section referred to as the exporting country or territory) to India at
less than its normal value, then, upon the importation of such article
into India, the Central Government may, by notification in the Official
Gazette, impose an anti-dumping duty not exceeding the margin of
E dumping in relation to such article.

Explanation - For the purposes of this section, -

(a) "margin of dumping", in relation to an article, means the
difference between its export price and its normal value;
F
(b) ''export price", in relation to an article means the price of article
exported from the exporting country or territory and in cases where
there is no export price or where the export price is unreliable because
of association or a compensatory arrangement between the exporter
and the importer or a third party, the export price may be constructed
G on the basis of the price at which the imported articles are first resold
to an independent buyer or if the article is not resold to an independent
buyer, or not resold in the condition as imported, on such reasonable
basis as may be determined in accordance with the rules made under
sub-section (6);
H (c) "normal value", in relation to an article, means-
RELIANCE INDUSTRIES LTD. 1•. DESIGNATED AUTHORITY [MARKANDEY KA TJU, J.] 9

(i) The comparable price, in the ordinary course of trade, for the A
like article when meant for consumption in the exporting country or
terrifory as determined in accordance with the rules made under sub-
section (6); or
t(
(ii) when there are no sales of the like article in the ordinary
course of trade in the domestic market of the exporting country or B
territory. or when because of the particular market situation or low
volume of the sales in the domestic market of the exporting country
or territory, such sales do not permit a proper comparison, the normal
value shall be either -

(a) comparable representative price of the like article when exported c
from the exporting country or territory or an appropriate third country
as determined in accordance with the rules made under sub-section
(6); or

(b) the cost of production of the said article iii the country of
origin along \vith reasonable addition for administrative, selling and D
general costs, and for profits, as determined in accordance with the
rules made under sub-section (6) :

Provided that in the case of import of the article from a country
other than the country or origin and where the article has been merely
transshipped through the country of export or such article is not E
produced in the country of export or there is no comparable price in
the country of export, the no;mal value shall be determined with
reference to its price in the country of origin .
...
(2) The Central Government may, pending the determination in
accordance with the provisions· of this section and the rules made F
thereunder of the normal value and the margin of dumping in relation ·
to any article, impose on the importation of such article into India an
anti-dumping duty on the basis of a -provisional estimate of such
value and margin and if such anti-dumping duty exceeds the margin
as so determined :- G
,. (a) the Central Government shall, having regard to such
determination and as soon as may be after such determination, reduce
such anti-dumping duty; and

(b) refund shall be made of so much of the anti-dumping duty
H
10 SUPREME COURT REPORTS (20061 SUPP. 6 S.C.R.

A which has been collected as in excess of the anti-dumping duty as so
reduced.

(2A) Notwithstanding anything contained in sub-section (I) and sub-
section (2). a notification issued under sub-section (I) or any anti-
dumping duty imposed under sub-section (2), unless specifically made
B applicable in such notification or such imposition, as the case may be,
shall not apply to article imported by a hundred per cent export-
oriented undertaking or a unit in a free trade zone or in a special
economic zone.

Explanation. - For the purpose of this section, the expressions
C "hundred per cent export-oriented undertaking", "free trade zone" and
"special economic zone" shall have the meaning assigned to them in
explanation 2 to sub-section (I) of Section 3 of the Central Excise Act,
1944 (I of 1944).

(3) If the Central Government, in respect of the dumped article under
D inquiry, is of the opinion that -

(i) there is a history of dumping which caused injury or that the
importer was, or should have been, aware that the exporter practices
dumping and that such dumping would cause injury; and

E (ii) the injury is caused by 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 anti-dumping duty
liable to be levied, the Central Government may, by notification in the
Official Gazette, levy anti-dumping duty retrospectively from a date
F 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.
G (4) The anti-dumping duty chargeable under this section shall be in
addition to any other duty imposed under this Act or any other law
for the time being in force.

(5) The anti-dumping duty imposed under this section shall, unless
revoked earlier, cease to have effect on the expiry of five years from
H
RELIANCE INDUSTRIES LTD. 1·. DESIGNATED AUTHORITY [MAR KAN DEY KA T.IU, .!.] II
the date of such imposition: A
Provided that if the Central Government, in a review, is of the

-
opinion that the cessation of such duty is likely to lead to continuation
~
or recurrence .of dumping and injury, it may, from time to time, extend
the period of such imposition for a further .period of five years and
such further period shall commence from the date or order of such B
extension:

Provided further 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 c
one year.

(6) The margin of dumping as referred to in sub-section (I) or sub-
>
section (2) shall, from time to time, be ascemined and determined by
the Central Government, after such inquiry as it may consider
necessary and the Central Government may, by notification in the D
O,fficial Gazette, make rules for the purposes cif this section, and
without prejudice to the generality of the foregoing, such rules may
provide for the manner in which articles liable for any anti-dumping
duty under this section may be identified, and for the manner in which
the export price and the normal value of, and the margin of dumping E
in relation to, such articles may be determined and for the assessment
and collection of such anti-dumping duty.

(7) Every notification issued under this section shall, as soon as may
... be after it is issued, be laid before each House of Parliament

(8) The provisions of the Customs Act, 1962 (52of1962) and the rules F
and regulations. made thereunder, relating to non-levy, short levy,
refunds and appeais shall, as far as may be, apply to t.he duty
chargeable under this section as they apply in relatiC'n to duties
le"iable under the Act".

Sub-section (8) of Section 9A was inserted by the Finance Act 2000 and
G
.,., '.hat Act also inserted Section 9AA. Finance Act 2004 amended Section
9A(8).

In this connection it may be mentioned that up to 194 7 there was very
little industrialization in India. H
12 SUPREME COl'Rl REPORTS 120061 Sl;PP. 6 'i.t .R.

A After India became independent in 1947, the Government of lndcrc·n(knt
India headed by Prime Minister Jawahar Lal Nehru decided to industrialize
India as it was realized that the country cannot escape from p(•\ ..:rt}.

-
unemployment and other social evils unless there is industrialization. It was
also known to them that a country caimot be really independent in mod.:rn
B times unless it is industrialized. Hence, the Industrial Policy Resolution was
adopted by the Indian government in the early 1950s and encouragement was
given to the growth of heavy indu-;tr} and other industries so that India ma:
become economically independent and a prosperous nation.

The result was that an industrial base was created in India after
C independence and this has definitely resulted in some progress. The purpoo.:
of Section 9A can, therefore, easily be seen. The purpose was that our
industries which had been built up after independence with great difficulties
must not be allowed to be destroyed by unfair competition of some foreign
companies. Dumping is a well-known method of unfair competition which is "
adopted by the foreign companies. This is done by selling goods at a very
D low price for some time so that the domestic industries cannot compete and
are thereby destroyed, and after such destruction has tak.~n place. prices are
again raised.

The purpose of Section 9A is, therefore. to maintain a level-playing field
and prevent dumping, while allowing for healthy competition. The purpose is
E not protectionism in the classical sense (as proposed by the German economist
Friedrich list in his famous book 'National System of Political Econumy'
published in 1841) but to prevent unfair trade practices. The 1995 Am<!ndm..:nt
to Section 9A was apparently made in pursuance to Article VI of the General
Agreement on Tariffs and Trade 1994 (GA TT 1994) which permitted anti-
F dumping measures as an instrument of fair competition.

The concept of anti-dumping is founded on the b<.sis that a foreign
manufacturer sells below the normal value in order to destabilize domestic
manufacturers. Dumping, in the short term, may give some transitory benefits
to the local customers on account of lower priced goods, but in the long run
G destroys the local industries and may have a drastic effect on prices in the
long run.

To levy anti-dumping duty it is essential in terms of Rule 4 and Rule
17 of the Rules to establish:

Il (i) Dumping, which is reflected by a "Margin of Dumping" - which
RELIANCE INDUSTRIES LTD. r. DESIGNATED AUTHORITY [MARKANDEY KA TJU. J.] J 3

is undisputed in this case; A
(ii) "Injury" - which is also undisputed iri this case;

(iii) Causal Link between dumping and injury to the domestic industry
to establish that injury to the domestic industry is caused by
dumping. B
The margin of dumping is the difference between the "Nonna! Value"
(viz. price in the domestic market of the foreign exporter, or if there are no
domestic sales, the price at which it is exported to another country or the
constructed cost of production) and the "export price" at which goods are C
exported to India. If goods are exported to India at prices below the "Normal
Value'', there is a positive dumping margin.

,. On the determination of a positive margin, the DA has to ascertain
whether the dumping of goods is causing injury to the domestic industry by
analyzing various injury parameters mentioned in Annexure II to the Rules. D
The "Margin of Injury" is the difference between the landed value of exports
and the fair selling (notional) price of the domestic manufacturer, which is
usually called the Non-Injurious Price (for short 'NIP'). The NIP is detennined
by the DA on the basis of cost of production (less interest), Selling General
and Administrative Expenses (SG&A), and a fixed rate of return on the capital
employed of the domestic industry. E
Anti-dumping duty can legally be levied up to the full extent of margin
of dumping [Section 9A(l )] but in practice is restricted to the margin of injury
ifthe injury is lower than the margin of dumping vide Section 98( I)(b)(ii) and
Rule 18(1).
F
Section 98(1) states :

"(1) Notwithstanding anything contained in Section 9 or section
9A, -

(a) ................. . G
(b) the Central Government shall not levy any countervailing duty or
anti-dumping duty -

(i) ................... .

(ii) under sub-section (I) of each of these sections, on the import into H
14 SUPREME COURT REPORTS (2006) SUPP. 6 S.C.R.

A India or any article from a member country of the World Trade
Organization or from a country with whom Government of India has
a most favoured nation agreement (hereinafter referred as a specified
country), unless in accordance with the rules made under sub-section
(2) of this section, a determination has been made that import of such ,
article into India causes or threatens material injury to any established
B industry in India or materially retards the estabbhment of any industry
in India; and

(iii) under sub-section (2) of each of these sections, on import into
India of any article from the specified countries unless in accordance
with the rules made under sub-section (2) of this section, a preliminary
c finding has been made of subsidy or dumping and consequent injury
to domestic industry; and a further determination has also been made
that a duty is necessary to prevent injury being caused during the
investigation : ...
Provided that nothing contained in sub-clauses (ii) and (iii) of
D clause (b) shall apply if a countervailing duty or an anti-dumping duty
has been imposed on any article to prevent injury or threat of an
injury to the domestic industry of a third country exporting the like
articles to India;"

E Under the Anti-dumping Rules viz. the Customs Tariff (Identification,
Assessment and Collection of Anti-Dumping Duty on Dumped Articles and
for Determination of Injury) Rules, 1995, the DA is required on a complaint
regarding dumping to carry out investigations and give his findings with
regard to the existence of dumping, injury to the domestic industry and a
causal link between the two. Having detem1ined the existence of dumping,
F injury and causal link, the DA determines the quantum of duty. For this
purpose, the DA calculates the NIP for the domestic industry as a whole for
the product under consideration, which, as already stated above, is a notional
fair selling price.

G In this connection, we may refer to Rules I0 and 11 of the Anti Dumping
Rules which state as follows :

"I 0. Determination of normal value, export price and margin of
dumping -

An article shall be considered as being dumped if it is exported
H from a country or territory to India at a price less than its normal value
RELIANCE INDUSTRIES LTD. v. DESIGNATED AUTHORITY [MARKANDEY KATJU, J.] 15

and in such circumstances the designated authority shall determine A
the normal value, export price and the margin of dumping taj<.ing into
account, inter-alia, the principles laid down in Annexure I to these
rules.

11. Determination of injury -
B
(I) In the case of imports from specified countries, the designated
authority shall record a further finding that import of such article into
India causes or threatens material injury to any established industry
in India or materially retards the establishment of any industry in
India.

(2) The designated authority shall determine the injury to domestic
c
industry, threat of injury to domestic industry, material retardation to
establishment of domestic industry a causal link between dumped
imports and injury, taking into account all relevant facts, including the
volume of dumped imports their effect or price in the domestic market
for like articles and the consequent effect of such imports on domestic D
producers of such articles and in accordance with the principles set
out in Annexure-11 to these rules.

(3) The designated authority may, in exceptional cases, give a ·
finding as to the existence of injury everywhere a substantial portion
of the domestic industry is not injured, if - E
(i) there is a concentration of dumped imports into an isolated
market, and

(ii) the dumped articles are causing injury to the producers of all
or almost all of the production within such market." F
In the present case, the DA in his findings dated 20.4.2000 has found
that there is dumping by the manufacturers from Japan, Malaysia & Spain.
The margins of dumping for manufacturers from Japan was between 29% to
34.26%, for Malaysia 68.20% and Spain 15%. The DA has also found material
injury to the domestic industry in India on the basis of reduction in the sales G
realization and decreases of profitability. It was, however, held by the DA that
there was no causal link between dumping and injury as regards Jafian and
Malaysia. As regards Spain, anti-dumping duty was levied as Rs. 52 ii- PMT.
The determination of causal link has been made solely on the basis of
comparison of the landed value of imports and the NIP determined for the H
16 SUPREME cm:RT REPORT? [20061 SlJPP. 6 S.C.R.

A domestic industry.
The findings of the DA were appealed against bt:fore the Tribunal. The
Tribunal upheld the findings of the DA about dumping and injury. However.
the Tribunal upheld the method adopted b) the DA for computing the NIP.
,
B It is the contention of the appellant before us that the findings of the
Tribunal were erroneous in the context of certain imports because of an
incorrect computation of the NIP for the domestic industry.

There are two main issues for determination in the present case - (I) the
correct principles for determination of the NIP of PTA and (2) the scope of
C Rule 7 of the Customs Tariff (Identification, Assessment and Collection of
Anti-Dumping Duty on Dumped Articles and For Determination of Injury)
Rules, 1995.

As regards the first contention, learned counsel for the appellant, Mr. .,
D Joseph Vellapa)ly, submitted that while computing the NIP of PTA. the DA
ought to have taken the transfer price (market value) of electricity and other
inputs captively produced by it. Learned counsel for the appellant submitted
that it is not the actual cost of production of electricity by the appellant which
has to be seen in this connection, but the market price of electricity which
has to be seen. In other words, the cost of inputs has to be seen not for
E an individual industrial unit which captively produces it, but the market price
of the inputs is to be seen in order to calculate the NIP. Learned counsel
further submitted that the DA has not given any reasoning for coming to its
conclusion for its NIP. The Disclosure Statement issued by the DA does not
state as to what was the element of cost being disallowed and what was the
reason for doing so. It is submitted that there was no requirement in the
F present case to keep any confidentiality from the appellant with regard to
computation of NIP.

Learned counsel submitted that the appellant used the market rate of
electricity for determining the cost of production of PTA, but the DA was of
G the view that instead of taking the market price of electricity for determining
the NIP of PTA, the appellant should have taken the actual cost of electricity
produced in its captive power plant.

In our opinion, the DA has clearly erred in law because the Authority
was required to carry out the determination of injury and computation of NIP
H for the dumestic industry as a whole, and not in respect of any particular
RELIANCE INDUSTRIES LTD. 1·. DESIGNATED AUTHORITY [MARKANDEY KATJU. .I.] 17

company or enterprise. The above is apparent from the definition of'·domestic A
industry" under Rule 2(b) of the Anti Dumping Rules. Rule 2(b) states:

"2(b) "domestic industry" means the domestic producers as a
whole engaged in the manufacture of the like article and any activity
~. connected therewith or those whose collective output of the said
article constitutes a major proportion of the total domestic production B
of that article except when such producers are related to the exporters .
or impo11ers of the alleged dumped article or are themselves importers

- thereof in which case such producers shall be deemed not to fonn
pa1t of domestic industry;

Provided that in exceptional circumstances referred to in sub-rule C
(3) of rule 11, the domestic industry in relation to the article in
question shall be deemed to comprise two or more competitive markets
and the procedures within each of such market a separate industry,
if-

(i) the producers within such a market sell all or almost all of their D
production of the article in question in the market, and

(ii) the deemed in the market is not in any substantial degree
supplied by producers of the said article located elsewhere in the
territory;"
E
The provisions relating to injury analysis in Annexure II to the Anti-
dumping Rules are also clear that the injury determination is always for the
domestic industry as a whole and not for individual companies.

In our opinion, since the NIP· is for the industry as a whole, 1t 1s
immaterial if a particular company produces some of its inputs captively. In F
our opinion, for the purpose of determination of NIP, the DA is always
required to take into consideration the transfer price (market value) of the
inputs· and not their actual cost of captive production. This is because the
entire irivestigation, analysis, recommendation and imposition are for the
product under consideration for the whole domestic industry and not for the G
individual companies and inputs captively manufactured which may be involved
in the production and sales of the goods.

· The approach adopted by the DA, in our opinion, will lead to a situation
where an artificial discrimination will be created between the integrated and
non-integrated companies to the peril of the smaller plants with no backward H
18 SUPREME COURT REPORTS [2006j SUPP. 6 S.C.R.

A integration (backward integration means a factory which also produces its
own raw materials etc). In such situations, the result will be that the companies
with no backward integration will sufter adversely. In our opinion, this was
neither envisaged under the law nor can be considered as a desired result.
The Anti-dumping legislation is meant for protection of the domestic industries
B as a whole against unfair practice of dumping, irrespective of whether they
are backwardly integrated or not.

In our opinion there has to be a single NIP for a product as envisaged
by the Rules, and not several N!Ps for the same product. The approach
adopted by the DA and the Tribunal would, however, result in several NIPs ..
C for the same product, because if actual cost of the input is seen for individual
units it will differ between units captively producing their inputs and those
buying it from the market. This is clearly untenable.

In the present case, the DA has recorded a finding that the normal value
...,
is· exporter specific. In our opinion this is contrary to the Supreme Court
O judgment in Designated Authority (Anti-Dumping Dii·ectorate v. Haldor Topsoe
A1S., [2000[ 6 SCC 626. In page 635 of the said judgment. this Court observed:

"With respect, we are unable to accept this finding of the Tribunal.
From a careful reading of Section 9-A of the Tariff Act and Rule 6 of
the Rules, it is clear that the statute has nowhere put such a restriction
E on the investigatirig authority. On the contrary, a perusal of the said
provisions clearly shows that the "normal value" will have to be
determiner! with reference to comparable price, the words ''comparable
price" in the context can only be with reference to the price of similar
articles sold 4nder similar circumstances irrespective of the
manufacturer. By holding anti-dumping duty to be export-specific, the
F Tribunal cou Id 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 t'1e statute". ·

G In our opinion, both normal value and NIP are not exporter or domestic
-
industry specific respectively but exporting country specific and importing
country specific (India). Once dumping of srecific goods from a country is
established, dumping duty can be imposed on all exports of those goods from
that country to India under Section 9A, irrespective of the exporter. The rate
of duty may vary from exporter to exporter depending upon the export price.
H Similarly, as regards the matter of NIP it is the reasonable price which the
RELIANCE INDUSTRIES LTD. r. DESIGNATED AUTHORITY [MARKANDEY KA TJU, .1.] 19

subject goods can be produced by the domestic industry as a whole in India A
that is relevant. Special advantages and disadvantages that one or more
domestic producers may have, as a result of manufacture of raw material or
utilities that are going into the production of the commodity under
investigation, should, in our opinion, be ignored for determination of the NIP
for the domestic industry as a whole.
B
The purpose of imposition of duty is both to redress injury and to
prevent material retardation of the establishment or growth of that industry
(vide S. 98(1) (b)(ii), rules 11, I7(a)(ii) and Annexure II). In the present case
by fixing an NIP based upon specific advantages in the matter of electricity
that the appellant company processed, and permitting dumping of the PTA C
into India, the DA has ensured that no other company can set up PTA
manufacturing facilities without also being in a position to generate its own
electricity at a price less than the price of electricity generally available in the
domestic market. This, in our opinion, is surely not tenable, as it will result
in discrimination.
D
· In our opinion the DA has clearly ignored the purpose for which the
NIP is computed. The DA has failed to appreciate that once dumping and
injury is established, the existence of an unfair trade practice by the exporters
is undisputed and a restrictive view in computing an unduly low NIP would
lead to granting a premium to the erring exporters at the cost of the domestic
industry, which is suffering injury. 'E

In our opinion, the DA' s determination of NIP was arbitrary and
misguided, as the DA has not considered the actual production achieved by
the domestic industry for the purpose of apportionment of fixed costs. On
the contrary, it was revealed during the hearing that the DA computes the NIP F
on the basis of the best capacity utilization achieved in the preceding three
years. In fact, there is no established practice of the DA in this regard, and
•. the level of capacity utilizatior. taken into account by the DA varies from case
to case leading to total arbitrariness and unguided use of power. In our
opinion, there is no basis to adopt the best capacity utilization achieved in
the past period as the industry is generally bound to achieve higher capacity G
utilization if it is not affected by injurious dumping. The apportionment of the
fixed costs has to be necessarily done on the basis of actual production
during the period of investigation anc: not an assumed level of capacity
utilization to avoid all arbitrariness. Thus, in our opinion, the DA's approach
is clearly incorrect inasmuch as it is not the determination of optimum capacity H
20 SUPREME COURT REPORTS [2006] SUPP. 6 S.C.R.

A utilization of the domestic industry. but the actual capacity utilization which
would be the correct approach. Even as a matter of principle the use of
capacity or capacity utilization level in computing the cost of production is
unworkable for another reason. The capacity of a particular plant i~ wholly
dependent upon the product mix. For example. the production of a fabric
B plant in square meters or tonnage basis will be less if the design is intricate.
On the other hand. if the fabric is plain, the production expressed in square
meters or tonnage basis would be much higher. If the approach of the DA
is accepted. it would in our opinion lead to a strange situation wl1ere the
capacity utilization of the same plant would vary from month to month and
from batch to batch of production. In other words, the capacity itself would
C be indeterminate for plants where the product mix itself is variable. It is for
this reason that in our opinion the actual production would be the only and
the most appropriate mdhod for arriving at the cost of production.

For the purpose of computing the NIP, the DA appears to have taken
the best capacity utilization (which is in excess of I 00%) over the past three
D years for the purpost: of apportionment of the fixed expenses in preference
to the actual capacity utilization during the period of investigation. In our
opinion. this has lt:d to an unusual reduction in the fixed expenses per unit
and a consequent rt:duction in the NIP. This again is clearly untenable.

In our opinion, the NIP needs to be revised by taking the market price
E of electricity and che 1ctual capacity utilization during the period of
investigation. Further, the DA should be directed not to misuse Rule 7, by
keeping confidential its findings and that too from the person who has
supplied the information to it.

We are of the opinion that the natun: of the proceedings before the DA
F
are quasi-judicial, and it is well-settled that a quasi-judicial decision, or even
an administrative decision which has civil consequences, must be in accordance
with the principles of natural justice, and hence reasons have to be disclosed 1

by the authority in that decision vide S.N. Mukherjee v. Union uf India, [ 1990]
4 sec 594.
G
We do not agree with thr Tribunal that the notification of the Central
Government under Section 9A is a legislative Act. In our opinion, it is clearly
quasi-judicial. The proceedings before the DA is to determine the lis between
the domestic industry on the one hand and the importer of foreign goods from
the foreign supplier on the other. The determination of the recommendation
H
RELIANCE INDUSTRIES LTD. r. DESIGNATED AUTHORITY [MARKANDEY KA TJU, J.] 2 J

of the DA and the Government notification on its basis is subject to an appeal A
before the CESTA T. This also makes it clear that the proceedings before the
DA are quasi-judicial.

In the present case, the NIP computed by the DA was much lower than
that computed by the appellant, wd the reasons for such variance and
detailed calculations were not disclosed by the DA to the appellant No good B
reasons were given for reducing the cost price of elect~icity supplied by the
appellant produced in its captive power plant This was clearly illegal.

The DA claimed confidentiality from the appellant about its finding on
the data supplied by the appellant itself. In our opinion, there was nothing C
confidential in the matter, and hence n.:asons for not accepting the appellant's
version should have been stated in the order of the DA.

Learned counsel for the respondent has relied on Rule 7 of the Customs
Tariff (Identification, Assessment and Collection of Anti-dumping Duty on
Dumped Articles and for Deterniination of Injury) Rules, 1995, which states r
as under:

'"7. Confidential informations

(I) Notwithstanding anything contained in sub-rules (2), (3) and (7)
of rule 6, sub-rule (2) ofrule 12, sub-rule (4) of rule 15 and sub-ruie
(4) of rule 17, the copies of applications received under sub-rt1le (I) E
of rule 5, or any other information provided to tlie designated authority
on a confidential basis by any party in the course of investigation,
. shall, upon the designated authority being satisfied as to its
confidentiality, be treated as such by it and no such infonnation shall
be disclosed to any other party without specific authorization of the F
party providing such information.

(2) The designated authority may require the parties providing
information on confidential basis to furnish non confidential summary
thereof and if, in the opinion of a party providing such information,
such information is not susceptible of summary, such party may, G
submit to the designated authority a statement of reasons why
summarization is not possible.

(3) Notwithstanding anything contained in sub-rule (2), if the
designated authority is satisfied that the request for confidentiality is
not warranted or the supplier of the inforniation is either unwilling to H
22 SUPREME COURT REPORTS (2006] SUPP. 6 S.C.R.

A make the information public or to authorize its disclosure in a
generalized or summary from, it may disregard such information".

In our opinion, Rule 7 does not contemplate any right in the DA to claim
confidentiality. Rule 7 specifically provides that the right of confidentiality
is restricted to the party who has supplied the information, and that party has '
B also to satisfy the DA that the matter is really confidential. Nowhere in the
rule has it been provided that the DA has the right to claim confidentiality,
particularly regarding information which pertains to the party which has
supplied the same. In the present case, the DA failed to provide the detailed
costing information to the appellant on the basis of which it computed the
C NIP, even though the appellant was the sole producer of the product under
consideration, in the country. In our opinion this was clearly illegal, and not
contemplated by Rule 7.

In this connection, this Court in Sterlite Industries (India) Ltd. v.
Designated Authority, (2003) 158 ELT 673 observed thus:
D "In our view, it is not necessary for us to go into the merits of
this matter as we propose to send the matter back to CEGA T after
laying down certain guidelines. From what has been argued before
us, it appears that in pursuance of Rule 7 of the Customs Tariff
(Identification, Assessment and Collection of Anti-Dumping Duty on
E Dumped Articles and for Determination of Injury) Rules, I 995 the
Designated Authority is treating all material submitted to it as
confidential merely on a party asking that it be treated confidential.
In our view, that is not the purport of Rule 7. Under Rule 7, the
Designated Authority has to be satisfied as to the confidentiality of
that material. Even if the material is confidential the Designated
F Authority has to ask the parties providing information, on confidential
basis, to furnish a non-confidential summary thereof. If such a
statement is not being furnished then that party should submit to the
Designated Authority a statement of reasons why summarization is
not possible. In any event, under Rule 7(3) the Designated Authority
G can come to the conclusion that confidentiality is not warranted and
it may, in certain cases, disregard that information. It must be
remembered that not making relevant material available to the other
side affects the other side, as they get handicapped in filing an
effective appeal. Therefore, confidentiality under Rule 7 is not -
something, which must be automatically assumed. Of course, in such
H
RELIANCE INDUSTRIES LTD. v. DESIGNATED AUTHORITY [MARKANDEY KAT JU, J.] 23

cases there is need for confidentiality, as otherwise trade competitors A
would obtain confidential ir.formation, which they cannot otherwise
get. But whether information supplied is required to be kept
confidential has to be considered on a case-to-case basis. It is for
the Designated Authority to decide whether a particular material is
required to be kept confidential. Even where confidentiality is required, B
it will always be open for the appellate authority, namely, CEGA T to
look into the relevant files".

(emphasis supplied)

In our opinion, excessive and unwarranted claim of confidentiality defeats
the right to appeal. In the absence of knowledge of the consequences, C
grounds, reasoning and methodology by which the DA has arrived at its
decision and made its recommendation, the parties to the proceedings cannot
• effectively exercise their right to appeal either before the Tribunal or this
Court. This is contrary to the view taken by the Constitution Bench of this
Court in S.N. Mukherjee 's case (supra). D
Although this judgment may not benefit the appellant for. the past
period, we have thought it necessary to lay down the law in this connection
since the Anti Dumping Law operates continuously and on a day-to-day
basis and hence its principles have to be clarified. The Anti Dumping Law
is extremely important for the country's industrial progress and hence there E·
should be total transparency and fairness in its implementation.

Before parting with this case, we would like to state that our national
aim must be to create India as a modern, highly industrialized, powerful state.
The real world today is cruel and harsh. It respects power, not poverty or
weakness, and power comes from a high level of industrialization. Hence, if F
we wish to get respect in the comity of nations, we must make India a modern,
powerful, highly industrialized state. The truth is that today Ind_ia is poor. As
Rajni Palme Dutt wrote in his book 'India', 'India is a rich country with poor
people'. We are rich in raw materials, rich in industrial skills, we have
outstanding scientists, engineers, technicians and managers. Despite all this G
we are a poor nation. Hence, if we want to command respect in the comity
of nations, we must rapidly industrialize and make India a powerful, modern,
highly industrialized nation. It is industrialization alone which can generate
the wealth which we require for the welfare of our people and for progress.
Hence our national aim must be rapid industrialization as that is the solution
to our country's problems. Industrialization will also provide large scale H
24 sL:PREMI- nn Kl RLl'OIUS 12006j S[;l'f'. () S.C.R.

.\ ~mploy mcnt to our people. and will help the gnmth of ;,cience and technology.
\I hi..:11 is absolutely essential to our progres>.

The Anti Dumping Law is. therefore. a salutary measure which prevents
destruction of our industries which wen: built up atier independrnce under

B
the guidance of our patriotic. modern minded leaders at that time and it is the
task of everyone today to see to it that there is further rapid industrialization
'
in our country. to make India a modern. po ,..1 .:rful. highly industrialized nation.

With the above observations this appeal stands disposed of. There
shall be no order a~ to costs.

C RP. Appeal disposed of.

'

..

.

'