Provisions concerning the review of anti-dumping measures imposed under the Customs Tariff Act, 1975 (‘Act’) are contained, inter-alia, in Rule 23 of the Anti-Dumping Rules, 1995 (‘AD Rules’). Rule 23(1) provides that any anti-dumping duty imposed under Section 9A of the Act shall remain in force, so long as and to the extent necessary, to counteract dumping, which is causing injury. Rule 23(1A), however, recognizes the possibility of reviewing the continued need for such anti-dumping duty.
As per Rule 23(1A), the Directorate General of Trade Remedies (‘DGTR’) shall review the need for continuation, modification or revocation of anti-dumping duty and upon completing such review, the DGTR shall recommend to the Central Government accordingly, if it comes to a conclusion that the injury to the domestic industry is not likely to continue or recur if the anti-dumping duty is removed or varied and is therefore no longer warranted. These reviews are better known as Mid-Term Review (‘MTR’) or Changed Circumstances Review.
Though the grounds for seeking or initiating an MTR are not specified in the Act or AD Rules, the DGTR in its decision of Cold-Rolled Flat Products of Stainless Steel[1] (Final Findings dated 08-06-2011) noted that nothing in Rule 23 suggests that the powers of the DGTR under the said Rule needs to be read in a restrictive or limited manner. Nonetheless, one may get some guidance regarding specific factors constituting changed circumstances from the application proforma for MTRs available on the DGTR’s official website.[2]
The factors stated in the application proforma include, but are not limited to, change in Non-Injurious Price of the domestic industry, change in normal value, export value, landed value, domestic production pattern, change in legal status of the domestic producer or exporter, change in condition of the domestic industry/producers or any other relevant factors.
MTRs can even be requested by the user industry for excluding certain products from the scope of the product under consideration on which anti-dumping duty has been recommended, where such product is of a technical grade that is not or cannot be produced by the domestic industry for the specific user requirements. Such an exclusion was recently permitted in the final findings dated 14-10-2020 issued by the DGTR in the MTR concerning product scope of definitive Anti-Dumping duty imposed on Dimethylacetamide’ [N,N-Dimethylacetamide] (‘DMAC’) from China PR and Turkey.
In this MTR, Indorama Industries Ltd., (‘Applicant’) an importer/user of DMAC in India, had requested the DGTR to initiate an MTR limited to the scope of the product under consideration defined in the original anti-dumping investigation against imports of DMAC from China PR and Turkey, wherein the DGTR had recommended the imposition of anti-dumping duty by its final findings dated 21-2-2018. In its MTR application, the Applicant requested the DGTR to exclude DMAC of a specific grade having all of the following technical specification:
- Minimum Purity (99.9% min.) and Maximum Alkalinity level (0.003% max)
- Maximum Acidity level (0.005% max)
- Maximum iron ppm as (0.05)
- Maximum Water (0.01% max)
- Conductivity (0.1 micro-semens/cm max)
In the MTR, the Applicant submitted that the above grade was not produced by the domestic industry and was critical to the Applicant’s manufacturing of elastomeric yarn (spandex) in the textile segment. The domestic industry on the other hand argued that it was possible for the domestic producers to produce the required technical grade of DMAC sought by the Applicant by fine tuning their manufacturing capabilities.
In its findings, the DGTR analysed relevant commercial and technical factors because of which it was necessary for the Applicant to import the particular grade of DMAC rather than source it domestically.
- In examining the commercial aspects, the DGTR considered the selling prices of the like article sold by the domestic industry in India (pre and post levy of anti-dumping duty) and the landed value of the particular grade of DMAC imported by the Applicant from subject and non-subject countries. The DGTR found that the Applicant had made considerable number of imports from non-subject countries too. In this regard, the DGTR noted that the Applicant’s imports were not exactly ‘commercial decisions’ of the Applicant but in fact a necessity owing to the technical inability of the domestic producers.
- In examining the technical aspects, the DGTR noted that the DMAC produced by the domestic industry contains micro-level impurities which results into higher conductivity of the subject goods, thereby leading to certain undesirable chemical reactions that may affect the criticality of the spandex manufacturing process. Interestingly, in its investigation, the DGTR had requested the Indian Institute of Technology – Delhi to analyse the technical specification of DMAC required for manufacturing elastomeric yarn through spandex process, which indicated that the production of fibre grade polyurethane requires specific technical parameters of DMAC.
It is also relevant to note that the domestic industry argued that the particular grade exclusion may lead to circumvention of the anti-dumping duty by other users/importers of the product under consideration in India who could also use the specific technical grade of DMAC required by the Applicant. The DGTR addressed this issue by referring to the anti-circumvention investigation concerning imports of Cold Rolled Flat Products of Stainless Steel (Final Findings dated 18-08-2017). In that investigation, the DGTR cautioned against saddling bona fide users of the product grade included in the product scope with the anti-dumping duty. On this basis, the Authority implicitly noted that as long as the requirement for a specific product grade was genuine and bona fide, the same merited exclusion from the scope of the product scope.
It is important to point out the slight difference in the present findings and Cold-Rolled Flat Products of Stainless Steel (Final Findings dated 08-06-2011).[3] In the present case, the exclusion had to be carved out from the product scope on the basis of technical specification for a textile segment. In the anti-circumvention findings stated above, the issue was one of product scope clarification and not exclusion, with regard to which the domestic industry wanted the product scope to also specify the tolerance level for the width of the product under consideration.
On the basis of the foregoing analysis, the DGTR was convinced that the product scope exclusion sought by the Applicant was genuine and accordingly allowed the same. However, it is important to note that the product exclusion has been granted only to actual users of the said technical grade, who would be spandex yarn manufacturers, when imported for spandex yarn manufacturing.
The DGTR has in its findings specifically stated that the actual user eligibility shall be assessed at the time of import when the user is required to provide declarations to Customs. The DGTR has recognized the possibility of verification of actual user requirement by requiring the actual users to maintain monthly records in the form of consumption register which can be verified by the concerned authorities at any time. Besides ensuring only bona fide users avail of this exclusion, this requirement would also address the anti-circumvention concerns raised by the domestic industry.
It is relevant to note that though the Applicant did not participate in the original investigation, the DGTR nonetheless did not object to the Applicant’s MTR request. This confirms the understanding that participation in an MTR in case of product scope exclusions is not limited only to those parties who had participated in the original investigation.
[The author is an Associate in International Trade Practice, Lakshmikumaran & Sridharan Attorneys, New Delhi]
[1] F.No. No. 15/16/2010DGAD, Final Findings in the Anti-dumping (Mid-term Review) investigation limited to the product scope of definitive Anti-dumping Duty imposed on ‘Cold-Rolled Flat Products of Stainless Steel of the width of 600 mm upto 1250mm of all series further worked then Cold Rolled (cold reduced) with a thickness of up to 4mm’, originating in or exported from China PR, Japan, Korea, European Union, South Africa, Taiwan , Thailand and USA.
[2] Available at: http://www.dgtr.gov.in/sites/default/files/APPL_FORMAT_MID_TERM_REVIEW_ANTI_DUMPING_DUTY.pdf, Last visited on 20-10-2020.
[3] Supra note 1.
