Anti-dumping: Reliance wins case for industry

Reliance Industries has won several points in favour of Indian manufacturers when the Supreme Court conceded its arguments regarding the determination of anti-dumping duty on exporters from other countries.

The court ruled that the method adopted by the designated authority for determining non-injurious price was 'arbitrary and misguided'.

The Customs, Excise & Gold (Control) Appellate Tribunal (CEGAT) also had gone wrong, according to the Bench comprising Justice Ashok Bhan and Justice Markeandey Katju.

The case related to the import of PTA, a material used for the manufacture of textiles. Reliance used electricity from its captive plant. It had filed an application seeking anti-dumping duty on PTA originating from Japan, Malaysia, Spain and Taiwan.

The commerce ministry, on its part, imposed duty on PTA originating only from Spain. Reliance appealed to the CEGAT, which dismissed the company's contentions.

On appeal, the Supreme Court stated that the designated authority had clearly erred in law as it did not consider the injury to the whole domestic industry. The authority did not consider the injury suffered by units which had no captive power plants, the court said.

The court explained that for computing non-injurious price, the authority must take into consideration the transfer price (market value) of the inputs and not their actual cost of captive production. Otherwise, there would be artificial discrimination between integrated and non-integrated units, to the peril of small units, it added.

The court also criticised the authority for not considering the actual production achieved by the domestic industry for the purpose of apportionment of fixed costs. It computed non-injurious price on the basis of the best capacity utilisation achieved in the preceding three years.

Since there is no established practice, and the level of capacity utilisation varies from case to case, it led to total arbitrariness. The approach is clearly incorrect, Justice Katju asserted in his judgment.

Also the authority claimed confidentiality about its finding on the data supplied by Reliance itself.

"In our opinion, there was nothing confidential in the matter, and hence reasons for not accepting its version should have been stated in the authority's order," the judgment said.

It emphasised the importance of transparency in the matter. Though the judgment would not benefit Reliance for the past period, the court felt it necessary to lay down the law as the anti-dumping law operated on a continuous basis.