Anti-dumping law in India
Anti-dumping duty is a measure to rectify the situation arising out of the dumping of goods and its distorting effect on domestic producers of similar goods. The concept of dumping and subsidisation has long been known. Rapid industrialisation has resulted in large-scale production – and in this situation dumping enables the producer to establish a dominant position in the market. It is common in international commercial practice for export prices to be lower than the domestic ones so there is, as such, nothing inherently illegal or immoral about the practice of dumping. However, when dumping causes or threatens to cause, material injury to the domestic industry it is viewed seriously.
The effect of dumping has been felt by India’s domestic industries recently with the removal of ‘quantitative restriction’ and lowering of custom duty. Indian laws were amended with effect from 1 January 1995 to bring them in line with the provisions of the respective GATT agreements. Sections 9A, 9B and 9C of the Customs Tariff Act 1975 as amended in 1995 and the Customs Tariff (Identification, Assessment and Collection of Anti-dumping Duty on Dumped Articles and for Determination of Injury) Rules 1995, form the legal basis for anti-dumping investigations and imposition of duty.
Section 9A of the Customs Tariff Act, 1975 (hereinafter referred to as “the Act”) as amended in 1995 and the Customs Tariff (Identification, Assessment and Collection of anti-dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995 (hereinafter referred to as “the Rules”) framed thereunder form the legal basis for anti-dumping investigations and for the levy of anti-dumping duties. These are in consonance with the WTO Agreement on anti-dumping measures. These rules form the legislative framework for all matters relating to dumping of products, which include the substantive rules, rules relating to practice, procedure, regulatory mechanism and administration.
“Dumping” means export of goods by one country/territory to the market of another country/territory at a price lower than the normal value. If the export price is lower than the normal value, it constitutes dumping. Thus, there are two fundamental parameters used for determination of dumping, namely, the normal value and the export price. Both these elements have to be compared at the same level of trade, generally at ex-factory level, for assessment of dumping.
“Normal value” is the comparable price at which the goods under complaint are sold, in the ordinary course of trade, in the domestic market of the exporting country. If the normal value can not be determined by means of the domestic sales, the following two alternative methods may be employed to determine the normal value:
Comparable representative export price to an appropriate third country.
Constructed normal value, i.e. the cost of production in the country of origin with reasonable addition for administrative, selling and general costs and reasonable profits.
The “export price” of the goods allegedly dumped into India means the price at which it is exported to India. It is generally the CIF value minus the adjustments on account of ocean freight, insurance, commission, etc. so as to arrive at the value at ex-factory level. The “margin of dumping” is the difference between the normal value and the export price of the goods under complaint. It is generally expressed as a percentage of the export price.
“Domestic industry” means the domestic producers as a whole engaged in the manufacture of die 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 of that article except when such producers are related to the exporters or importers of the alleged dumped article or are themselves importers thereof in which case such producers may be deemed not to form part of domestic industry.
In regard to injury to the domestic industry, the industry must be able to show that dumped imports are causing or are threatening to cause “material injury” to the domestic industry. Material retardation to the establishment of an industry is also regarded as injury. The material injury or threat thereof cannot be based on mere allegation, statement or conjecture. Sufficient evidence must be provided to support die contention of material injury.
An anti-dumping measure may not be imposed unless it is determined, pursuant to an investigation conducted in conformity with the procedural requirements, that:
there is existence of dumped imports;
there is material injury to a domestic industry; and
there is a causal link between the dumped imports and the injury.
The basic requirement for determination of injury is that there is an objective examination, based on positive evidence of the volume and price effects of dumped imports and the consequent impact of dumped imports on the domestic industry such as decline in sales, selling price, market shares, profits, production etc. The establishment of the causal link between the dumping and injury to the domestic industry is a sine qua non for imposition of anti-dumping duty. The causal link is generally explained in terms of volume and price effects of dumping. The volume effect of dumping relates to the market share of the domestic industry vis-à-vis the dumped imports from the subject country while with regard to the price effect, it has to be considered whether there has been a significant price under cutting by the dumped imports as compared with the price of the like product in India, or whether the effect of such imports is otherwise to depress prices to a significant degree or prevent price increase which otherwise would have occurred to a significant degree.
The relief to the domestic industry against dumping of goods from a particular country is in the form of anti-dumping duty imposed against that country, which could go up to the dumping margin. Such duties are exporter specific and country specific. Under the WTO arrangement, the national authorities can impose duties up to the margin of dumping i.e. the difference between the normal value and the export price. The Indian law also provides that the anti- dumping duty to be recommended/levied shall not exceed the dumping margin. An anti- dumping duty imposed under the Act unless revoked earlier remains in force for 5 years from the date of imposition. The Designated Authority is empowered to review the need for the continued imposition of the anti-dumping duty, from time to time. Such a review can be done suo motu or on the basis of request received from an interested party in view of the changed circumstances.
Anti-dumping duty is a source-specific duty i.e. imposed only against dumped imports Anti-dumping duty is imposed on a non-discriminatory basis, applicable to all imports of such articles from whatever sources found dumped and causing injury to domestic industry except in the cases from those sources from which price undertaking has been accepted.
The WTO Agreement as well as the Indian law provides that the injured domestic industry is permitted to file for relief under the anti-dumping as well as countervailing duties. However, no article shall be subjected to both countervailing and anti-dumping duties to compensate for the same situation of dumping or export subsidization.
Practice and Procedure
One objective of the procedural requirements is to ensure transparency of proceedings, a full opportunity for parties to defend their interests, and adequate explanations by investigating authorities of their determinations. The extensive and detailed procedural requirements relating to investigations focus on the sufficiency of petitions to ensure that merit less investigations are not initiated, on the establishment of time periods for the completion of investigations, and on the provision of access to information to all interested parties, along with reasonable opportunities to present their views and arguments. Additional procedural requirements relate to the offering, acceptance, and administration of price undertakings by exporters in lieu of the imposition of anti-dumping measures. The Rules also provide for the timing of the imposition of anti-dumping duties, the duration of such duties, and obliges Designated Authority to periodically review the continuing need for anti-dumping duties and price undertakings. It is also provided that India may, at its discretion, take anti-dumping actions on behalf of and at the request of a third country, which is a member of the World Trade Organization.
The anti-dumping proceedings are initiated based on an application made by or on behalf of the concerned domestic industry to die Designated Authority in the Department of Commerce for an investigation into alleged dumping of a product into India. Under the Rules a valid application can be made only by those petitioners/domestic producers who expressly support the application, and account for more than 25% of total domestic production of the like article in question. The application is deemed to have been made by or on behalf of the domestic industry, if it is supported by those domestic producers whose collective output constitutes more than fifty- percent of the total production of the like article produced by that portion of the domestic industry expressing either support for or opposition as the case may be, to the application.
However, such producers may exclude those who are related to die exporters or importers of the alleged dumped article or are themselves importers thereof. In other words, a domestic producer who is related to the exporter or importer of die dumped article or is himself an importer thereof may not be treated as part of the domestic industry even if he files or supports an anti-dumping petition.
The interested parties to an dumping investigation include:
The domestic industry’ on whose complaint the proceedings are initiated;
The exporters or the foreign producers of the like articles subject to investigation;
The importers of the same article allegedly dumped into India;
The Government of the exporting country/countries.
The trade or business associations of the domestic producers/importers/user industries of the dumped product.35
As a rule, the Designated Authority initiates the proceedings for anti-dumping action on the basis of a petition received from the domestic industry alleging dumping of certain goods and the injury caused to it by such dumping. However, Rule 5(4) provides for suo motu initiation of anti-dumping proceedings by the Designated Authority on the basis of information received from the Collector of Customs appointed under the Customs Act, 1962 or from any other source. In such circumstances, the Authority initiates the antidumping investigation on its own without any complaint/petition filed in this regard provided the Authority is satisfied that sufficient evidence exists as to the existence of dumping, injury and causal link between the dumped imports and the alleged injury. After initiation of the suo motu investigation the same procedure, as the one based on a petition as mentioned in the Rules, is followed.
The remedy against anti-dumping is not always in the form of anti-dumping duty. The investigation may be terminated or suspended after the preliminary findings if the exporter concerned furnishes an undertaking to revise his price to remove the dumping or the injurious effect of dumping as the case may be. No antidumping duty is recommended on such exporters from whom price undertaking has been accepted.
An interim relief in the form of a provisional anti-dumping duty, pending the finalization of investigation proceedings, can also be provided to the affected domestic industry. Such provisional duty not exceeding the margin of dumping may be imposed by the Central Government on the basis of the preliminary finding recorded by the Designated Authority. The provisional duty can be imposed only after the expiry of 60 days from the date of initiation of investigation and will remain in force only for a period not exceeding 6 months, extendable to 9 months under certain circumstances.
If the final duty levied is less than the provisional duty which has already been levied and collected, the differential amount already collected as provisional duty shall be refunded. If the final duty imposed is more than the provisional duty already imposed and collected, the difference shall not be collected. If the provisional duty is withdrawn, based on the final findings of the Designated Authority, than the provisional duty already collected shall be refunded.
Anti-dumping duty can also be levied on a retrospective basis in case:
· 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
· the injury 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 antidumping duty liable to be levied.
However, the anti-dumping duty cannot be levied retrospectively beyond 90 days from the date of issue of notification imposing duty.