Commissioner of Customs, Bangalore v. M/S. G.M. Exports & Others: A Case Review
This article studies Section 9A of Customs Tariff Act, 1975, which deals with anti-dumping duty in the light of Supreme Court´s recent judgment in the case of Commissioner of Customs, Bangalore v. M/S. G.M. Exports & Others [Commissioner of Customs, Bangalore v. M/S. G.M. Exports & Others, 2015(10) SCALE 169]. In the batch of appeals filed by the Department before the Supreme Court, an important question of law arose as to whether anti-dumping duty imposed with respect to imports made during the period between the expiry of the period of levy of provisional anti-dumping duty and the period of imposition of the final anti-dumping duty is legal and valid. A thorough analysis of dumping rules in general and Rule 13, Rule 20 and Rule 21 in particular has been undertaken in order to answer the question raised in the issue.
Contentions on behalf of the Department
Before the Supreme Court, the Department argued that interpretation of Rule 20 clearly suggests that final anti-dumping duty would take effect from the date of imposition of the provisional duty, which would necessarily include the ¨gap¨, i.e. the period between the lapse of the provisional duty and the imposition of the final duty. It was further argued that any other construction would lead to a situation where despite dumping and material injury being present, no anti-dumping duty would be leviable in the interregnum, which itself would be wholly subversive of the object sought to be achieved by the Act. Another leg of the Department´s argument was that Rule 20(2)(a) makes a departure from Article 10 of the WTO Agreement inasmuch as it only provides for levy of anti-dumping duty from the date of imposition of provisional duty and does not spell out the period for which the provisional duty is to be applied, thus making it clear that anti-dumping duty can be levied and collected for the ¨gap¨ or interregnum period.
Contentions on behalf of the assessee
On behalf of the assessee it was submitted that Rule 20(2)(a) should be interpreted in the light of the WTO Agreement. Such interpretation would necessarily mean that the final anti-dumping duty can be only levied for the period for which the provisional duty is levied, and not beyond. It was further submitted that Rule 20(2)(a) needs to be harmoniously construed with both Rules 13 and 21, or else, the suggested construction by the Department of Rule 20(2)(a) would render both Rules 13 and 21 nugatory. It was further argued that no duty can be levied in the interregnum period as the Government would then be doing indirectly what it is prohibited from doing directly - namely, extending the period of six months of the levy of provisional duty until the notification imposing the final anti-dumping duty is issued.
Observations of the Supreme Court
The Supreme Court observed that where India is a signatory to an international treaty and a statute is made to enforce that treaty obligation, if there is any difference between the language of such statute and a corresponding provision of the treaty, the statutory language should be construed in the same sense as that of the treaty. [The Supreme Court made this observation keeping in view Article 51(c) of the Constitution, which reads as follows: ¨51. Promotion of international peace and security: The State shall endeavour to - (c) foster respect for international law and treaty obligations in the dealings of organised people with one another; and¨ The Supreme Court also referred to both Indian and English judgements which have laid down as to what is the correct approach to the construction of a statute made in response to an international treaty obligation by a member nation: Reliance Industries Ltd. v. Designated Authority and others, (2006) 10 SCC 368; S&S Enterprise v. Designated Authority and others, (2005) 3 SCC 337; The Jade The Eschersheim Owners of the motor vessel Erkowit v. Owners of the ship Jade,  1 All ER 920; Quazi v. Quazi,  3 All ER 897;Vellore Citizens´ Welfare Forum v. Union of India and others, (1996) 5 SCC 647 etc.]
Construction of Section 9A
The Supreme Court observed that sub-section (1) refers to a ¨final¨ or ¨definitive¨ duty, and has to be read with sub-section (3) thereof, which authorizes the levy of the ¨final¨ or ¨definitive¨ anti-dumping duty retrospectively in the circumstances mentioned in sub-section (3). The scheme, therefore of Section 9A(1) and (3) is that an anti-dumping duty is normally to be imposed with prospective effect unless, inter alia, because of massive dumping of an article in a relatively short time, the remedial effect of the anti-dumping duty to be levied would be seriously undermined.[ Supra note 1, at 41.] The Supreme Court further observed that other than the above no part of Section 9A authorizes the Central Government to levy anti-dumping duty with retrospective effect.
It is noteworthy that Section 9A(2) provides for imposition of provisional anti-dumping duty. Sub-section (6) provides the Central Government the power to make rules to assess and collect anti-dumping duty. The Supreme Court noted that neither sub-section (2) nor sub-section (6) authorizes the Central Government, either expressly or by necessary implication, to make rules and/or to levy anti-dumping duty with retrospective effect.
Interpretation of Anti-Dumping Rules
The Supreme Court observed that a harmonious construction of Rule 13 with Rules 20 and 21 is necessary in order to arrive at the correct interpretation of the provisions. It was further observed that Rule 13 enables the Central Government to impose provisional anti-dumping duty not exceeding the margin of dumping. Further, the reading of provisos to Rule 13 clearly points out that no provisional duty can be imposed before the expiry of 60 days from the date of public notice issued by the designated authority regarding its decision to initiate investigations and such duty cannot remain in force for a period of more than six months, which is only extendable to a maximum period of 9 months. The Supreme Court noted that the time period mentioned in the said proviso is mandatory and does not give discretion to the authorities to extend the levy beyond the stipulated period.
The Supreme Court further observed that Rule 20 is concerned only with the date of commencement of duty, wherein, sub-rule (1) speaks about anti-dumping duties levied under Rule 13 and Rule 19 and states that they shall take effect only prospectively, i.e. from the date of publication in the official gazette. The same follows for the final anti-dumping duty levied under Rule 18.
Supreme Court further held that sub-rule (2)(a) of Rule 20 deals with the date of commencement of an anti-dumping duty, having due regard to a provisional duty that has been levied. Sub-rule (2)(b) specifically deals with the retrospective imposition of duty prior to the imposition of a provisional duty. The Supreme Court specifically observed that sub-clause (a) does not purport to be the imposition of anti-dumping duty with retrospective effect. The word ¨levied¨ in sub-clause (a) has to be read as levied in accordance with Rule 13 which provides for the ¨levy¨ of provisional duty. Under second proviso of Rule 13, such levy cannot be for a period exceeding 6 months. The Supreme Court, thus, observed that sub-rule (2)(a) merely enables the levy of a final anti-dumping duty from the date of imposition of a provisional duty so as to convert the provisional measure into a final measure.[Supra note 1, at 49.] The Court further observed such incorporation can only be for the period up to which the provisional duty can be levied and not beyond. Hence the Court concluded that there can be no levy of anti-dumping duty in the ¨gap¨ or interregnum period between the lapse of the provisional duty and the imposition of the final duty.[Supra note 1, at 50.] The Supreme Court has further stated that any duty levied by a final duty notification during the interregnum period would necessarily amount to a retrospective levy of duty for the reason that such period is not covered by the provisional duty notification, being beyond 6 months which would render sub-rule (2) (a) of Rule 20 ultra vires Section 9A. [Supra note 1, at 54.]
In conclusion, it is submitted that there can be no levy of anti-dumping duty in the interregnum period between the lapse of the provisional duty and the imposition of the final duty. Any duty levied by a final duty notification during the interregnum period would necessarily amount to a retrospective levy of duty for the reason that such period is not covered by the provisional duty notification, being beyond 6 months which would render sub-rule (2)(a) of Rule 20 ultra vires to Section 9A. The judgment of the Supreme Court has reaffirmed the primacy of the Treaty Obligations while interpreting the domestic laws.
Authors: Alok Yadav, Partner and Somnath Shukla, Associate Manager, Economic Laws Practice (ELP), Advocates & Solicitors.
The information provided in the article is intended for informational purposes only and does not constitute legal opinion or advice. Readers are requested to seek formal legal advice prior to acting upon any of the information provided herein.