Nevertheless, the mechanism for imposing anti-dumping duty is not as discretionary as the flexibility available to increase the normal import duty.

Anti-dumping duty has the implication both for the indigenous producers as also for the exporters abroad looking for taking advantage of the process of globalisation. Result: Quite often imposition of anti dumping duty is a bone of contention between the rival interests. What is incentive for one is disincentive for the other: The duty is also significant in that it is not to be taken into account for the purposes of bound rate under the WTO negotiations.

The designated authority goes into the complaint of anti-dumping and gives its finding after detailed investigation of the evidence produced. The authority acts as a juridical authority and follows the principles of natural justice. The findings of the designated authority are appealable to the tribunal.

Acting on the recommendation of the designated authority, the government may impose anti dumping duty. The rate of anti-dumping duty cannot exceed the margin of dumping determined by the designated authority. While recommending imposition of anti dumping, the designated authority has to ensure that dumping has caused injury to the domestic producers.

Quite simply, one of the most important jobs of the designated authority is to determine the normal value at which the exporters sells the goods in his own country.

Normal value is defined in section 9A(1)(c) of the Customs Tariff Act. It means the comparable price, in the ordinary course of trade for the like article when meant for consumption in the exporting country or territory.

If there are no sales for consumption of like articles in the exporting country or territory, the normal value shall be either comparable to the representative price of the like article when exported from the exporting country or territory or an appropriate third country or the cost of production of the said article in the country of origin.

The legal provisions are further supplemented by rules providing guidelines for proceeding in each alternative method of determining the normal value.

Rules also provide for using best judgment method in case an exporter does not co-operate in furnishing the price information or significantly impedes the investigation.

A question was raised whether best judgment method necessarily involves determination of normal price on cost of production basis. The tribunal answered this question in the affirmative and allowed the appeal of the exporter. However, the Supreme Court laid down the legal proposition holding that no such restriction is cast by the statute on the designated authority.

In the context of normal value, a recent case should be of interest to exporters, importers and tax consultants alike.

The facts of the case are as follows:
Catalysts were imported from Denmark. A complaint of dumping was lodged with the designated authority. The designated authority undertook to cause investigation.

However, the exporter did not furnish information about the export price of the catalyst to the other third countries when no domestic sales were made in them.

The exporter insisted that normal price be determined on cost of production basis. The authority rejected this.

The designated authority, instead, proceeded to rely upon the price of like catalyst sold by a German manufacturer. On this basis, the designated authority gave its finding and recommended imposition of anti-dumping duty.

It recommended two rates, depending upon the end-use of the catalysts in India. The exporter challenged the finding in appeal to the tribunal. It was argued that the anti-dumping duty is country-specific and exporter-specific and, therefore, the price of the German exporter cannot be relied upon.

The tribunal accepted the argument of the appellant. The tribunal concluded that the action of the designated authority is clearly in violation of the specific provisions contained in section 9A of the Act.

Even though the appellant did not co-operate to provide the information, the tribunal refused to be persuaded to recognize the price of another exporter for like article.

"The price list of the German exporter in relation to similar catalysts manufactured by them in Germany has no relevance for deciding the present case. This, we say, because anti-dumping is country specific."

On certain other aspects also, the tribunal dismissed the finding of the authority. According to the tribunal, it was wrong for the Central Government to extend the time of one year for completing the investigation, without providing an opportunity to the appellant.

Yet another question was agitated in appeal. Was it legal to recommend two rates of anti-dumping duty for the same product? The tribunal answered the question in the negative, saying, "We are not able to up hold the action of the designated authority.

The designated authority decided to contest the order of the tribunal in the Supreme Court. The judgment of the apex court has the effect of setting aside the order of the tribunal on more that one count.

On the basic question whether reliance upon the price of the other exporter falls within the domain of correctness, the Supreme Court reversed the finding of the tribunal.

The court rejected the theory of exporter-specific or country-specific argument. The court observed: "By holding anti dumping duty to be exporter-specific, the tribunal could 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 the statute."

It felt that the legal provisions did not call for any doubt or confusion. "On a careful reading of section 9A of the Tariff Act and Rule 6 of the rules, it is clear that the statute has no where put such a restriction on the investigating authority. On the contrary, the perusal of the said provisions clearly shows that the normal value will have to be determined with reference to comparable price, the word comparable price in the context can only be with reference to the price of similar articles sold under similar circumstances irrespective of the manufacturer."

The court also condemned the attitude of the exporter in first not co-operating with the designated authority and then claiming advantages of an incorrect interpretation of the rules.

The court observed "In such a situation we are of the opinion that the complaint of the respondent against the material relied upon by the designated authority cannot be countenance."

The apex court rejected the tribunal's finding on the question of two different rates of anti-dumping duty. The tribunal did not given any specific reason why the two different margins cannot be made applicable based on different import duties applicable to the concerned catalyst, observed the Supreme Court.

On the question whether it was necessary to follow the principles of natural justice before time limit of one year for investigation was extended, the Supreme Court observed that this decision is an administrative decision based on exigencies of the case.

Anti-dumping law is a relatively new law in India. The judgment of the Supreme Court in this case has corrected the interpretation of the tribunal on some of the fundamental issues. What is heartening is that the judgment has come much sooner and avoided the uncertainty that would have otherwise continued for quite some time.

(The author is Joint Secretary, Ministry of Finance)