INTRODUCTION

 

Under Section 9A (5) of the Act, an anti-dumping duty imposed on a product shall cease to have effect on the expiry of five years from date of such imposition. Further in line with Article 11 of the ADA a duty shall remain in force only as long as and to the extent necessary to counteract dumping which is causing injury.

 

There are three types of methodology provided in the ADA and the Rules by which an Authority can carry out review of anti-dumping duties. These are as follows:

 

SN	Review	Provisions
		ADA	Rules
1	Sunset Review	Article 11.3	Rule 23 (1B)
2	Mid-Term Review	Article 11.2	Rule 23 (1A)
3	New-Shipper Review	Article 9.5	Rule 22 (1)

 

1. LEGAL PROVISIONS

 

Section 9A(5) of the Act provides that:

 

“(5) The anti-dumping duty imposed under this section shall, unless revoked earlier, cease to have effect on the expiry of five years from the date of such imposition:

 

Provided that if the Central Government, in a review, is of the opinion that the cessation of such duty is likely to lead to continuation or recurrence of dumping and injury, it may, from time to time, extend the period of such imposition for a further period of five years and such further period shall commence from the date of order of such  extension:

 

Provided further that where a review initiated before the expiry of the aforesaid period of five years has not come to a conclusion before such expiry, the anti-dumping duty may continue to remain in force pending the outcome of such a review for a further period not exceeding one  year.”

 

In addition to the above provision, Rule 23(1B) provides that:

 

“(1B) Notwithstanding anything contained in sub-rule (1) or (1A), any definitive antidumping duty levied under the Act, shall be effective for a period not exceeding five years from the date of its imposition, unless the designated authority comes to a conclusion, on a review initiated before that period on its own initiative or upon a duly substantiated request made by or on behalf of the domestic industry within a reasonable period of time prior to the expiry of that period, that the expiry of the said anti-dumping duty is likely to lead to continuation or recurrence of dumping and injury to the domestic industry.

 

Further, Rule 23 (2) and (3) provide that:

 

(1) Any review initiated under sub-rule (1) shall be concluded within a period not exceeding twelve months from the date of initiation of such review.

 

(2) The provisions of rules 6, 7, 8, 9, 10, 11, 16, 17, 18, 19, and 20 shall be mutatis mutandis applicable in the case of review.

 

In the absence of a separate procedure, the authority broadly follows the procedure prescribed for original investigation for conducting review investigations also, with some variations as discussed in the following paragraphs.

 

2. OPERATING PRACTICES

 

The SSR can be initiated by the Authority on its own initiative4 or on receipt of Application by or on behalf of domestic industry.

 

The SSR can be initiated only during the tenure of the existing duty. The application must be filed prior to the termination date of AD as per the timeline given in Trade Notice No.2/2017 dated 12th December 2017.

 

The PUC cannot be modified in a Sunset Review investigation6. However, the scope of product can be restricted on specific request from interested parties, after due consideration. In no case can the scope of product be widened or enlarged. (Chapter-2 may be referred for discussion on PUC).

 

An application to extend the period of duties can be filed by the domestic producers who account for the major portion of the Indian producers producing PUC and like articles covered by those measures. These may or may not be the same applicants as in the original or any previous investigation.

 

It may be noted that as per the provisions in Rule 23(3) governing sunset review, there is no necessity to carry out the “standing” test, however, as a matter of practice in the Directorate domestic industry standing test is normally carried out for all review investigations at the time of initiation of investigation.

 

The methodology for conducting review investigation, is broadly similar to that of original antidumping investigation.

 

The domestic industry is required to substantiate the application with sufficient evidence showing the need for continuation of anti-dumping duties. The Applicant is required to make a case that cessation of anti-dumping duty would result in recurrence of dumping and injury to the domestic industry.

 

The Application can be filed against all the subject countries or against only some countries depending on the facts and circumstances of case.

 

The important distinguishing feature in initiation of Sunset review Investigation vis-à-vis original investigation is that the Authority must also undertake likelihood analysis to examine whether cessation of duty will result in recurrence of dumping as well as injury. Other relevant factors that must be considered are the change in pattern of production, demand and requirement of the dumped product in the importing country since the imposition of the anti-dumping duty and the change in prices in the exporting market and the international market.

 

The sunset review is limited to evaluate whether conditions which existed at the time of imposition of anti-dumping duty have altered to such an extent that there is no longer justification for continued imposition of duty or to ascertain that if such duty is revoked, there is imminent danger of the material injury to the domestic industry.

 

The examination of sunset review application may also consider any changes in the constitution/ ownership of the applicant domestic industry if such applicant was also the domestic industry in the earlier investigation(s). It may be examined whether such change was duly informed to the Authority and has an impact on the economic parameters of the company. Similar exercise will be followed regarding the Producer Exporter(s) from the subject countries as detailed in Trade Notice No. 12/2018 dated 17.09.2018.

 

While considering the case for initiation, an opportunity of personal hearing should be given to the Applicant for presenting their case to the Designated Authority.

 

In case sufficient evidence is not found and the Authority comes to a conclusion after examination of the submissions and the presentation made by the applicant domestic industry during hearing that the case is not fit for initiation of sunset review investigation,a speaking order for termination/closure stating the reasons therein, must be communicated to the applicant.

 

In case sufficient evidence is found in the application for consideration of initiation of Sunset Review, a Notification should be issued with the approval of the DG. The procedure for issue of notification is described in Chapter 6 of this Manual.

 

A DO Letter should be sent to TRU enclosing the initiation notification with a request to take necessary action for extension of duty by one year (or less) in terms of Section 9 A(5). In case the sunset review has been initiated when the existing duties are still valid for many more months, TRU may be advised not to issue a notification for extension of duty and the same may followed up subsequently depending on the need to take extension in issuance of final finding.

 

At all times, the final finding should be issued well within the validity of duty notification so that there is no time gap in the existing and extended duties. There have been directions by the Hon’ble Supreme Court and High Court of Delhi that extension can take place only when the duty notification to be extended is valid on the day of extension11. This becomes complicated because in terms of the second proviso to Section 9A(5), the anti-dumping duty may continue to remain in force pending the outcome of such a review for a further period not exceeding one year, whereas the period available for completion of the investigation is 12 months which could be extended by 6 months i.e. up to 18 months with the approval of Government in special circumstances. In such a situation while the Authority has a legal backing to issue final finding in 18 months, but duty can only be extended for 12 months. This issue is sub-judice as on date.

 

The Authority has the discretion to initiate the case against all the subject countries or only against some  countries, even though application could have been made against all the countries. Further, even when the initiation is done against many subject countries, the investigation could result in recommendation of duty against some or all, depending on the facts and merit of the case.

 

The sunset review investigation requires the likelihood analysis(as described in following para), of continuation or recurrence of dumping and injury therefore presence/absence of dumping and injury is not of sole significance unlike in an original investigation. However, presence of dumping and injury makes the case unequivocally strong.

 

The importance of likelihood analysis in sunset review investigation was emphasized by CESTAT Delhi and also Hon’ble High Court of Gujarat, which has set the guidelines for Sunset Reviews.

 

It is not obligatory to carry out the causal link analysis in a sunset review investigation. However, as a matter of practice, the Authority does address the issue in its findings. It may be mentioned that absence of causal link or breaking of the causal link in a sunset review may not have a direct bearing on the outcome of the sunset review.

 

Generally speaking, the duties can be modified or revised under a review investigation because the Rule 23 (1) provides that “any anti-dumping duty imposed shall remain in force so long as and to the extent necessary”. Further, Rule 23 (3) makes provisions of Rule 17 applicable in the case of review wherein it is provided that duty to be recommended should be such that if levied it would remove the injury where applicable to the Domestic Industry after considering the principles laid down in Annexure III. Duties cannot be imposed on a retrospective basis pursuant to a sunset review.

 

Likelihood Analysis

 

In assessing the likelihood of continuing or recurrence of dumping and injury, the inquiry may consider the following facts (the list is non-exhaustive):

 

(i) For assessing dumping the following indicators could be examined;

 

- volumes and values of the imported goods during the POI and post POI (6 months subsequent to the POI);

- effectiveness of the duties in terms of the improvement in the performance of the Domestic Industry;

- volume of imports before and after measures were imposed;

- Producer exporters’ (in the exporting country) actual production;

- capacity in the exporting country;

- demand in the exporting country;

- excess capacity in the exporting country, if any;

- plans for capacity expansion and capital expenditure;

- exporters’ supply chains/ channels of export to other markets and the international prices, if available in a comparable form;

- changes in technology that may impact the market dynamics;

- duty absorption by the exporters (or other means of circumventing measures);

- normal values in the exporting country;

- evidence of sales below costs;

- level of dumping margins during POI & post POI (6 months subsequent to POI);

- change in end users’ preferences;

- exporters’ domestic profit on sales of like goods;

- availability of other markets including the fact if other markets have been affected due to any trade remedial measures. There should be demonstrable evidence and reasoning as to why the subject goods are likely to find their way into the Indian market if the duties are not continued.

 

(ii) For assessing the injury following indicators could be examined:

 

 - an overview of the Indian industry;

- production capacity and changes post imposition of anti-dumping duties;

- market share;

- any structural changes in the market or the operations of the Domestic Industry since the duties were imposed;

- landed value trends;

- Price Suppression & Depression;

- comparison of landed value of imports with selling Price of DI;

- comparison of landed value with NIP during POI and Post POI (6 months subsequent to POI);

- other causes of injury;

- changes in technology, product types, consumer preferences, demand and supply.

 

(iii) Dumping margin determined in all previous investigations including the trends in the dumping margin over the period;

 

(iv) Dumping determination for exports to third country;

 

(v) Volume of dumped imports;

 

(vi) Price attractiveness of the Indian market;

 

(vii) Level of inventories with exporters;

 

(viii) Capacity expansion by domestic industry;

 

(ix) Decline in demand for subject goods in subject country;

 

(x) Demand supply gap in subject countries;

 

(xi) Price undercutting in the absence of measures;

 

(xii) Vulnerability of the domestic industry;

 

(xiii) Market share held by the subject country in the Indian market;

 

(xiv) The potential for product-shifting with the producers from subject country;

 

(xv) Effectiveness of the duties in terms of the improvement in the performance of the domestic industry;

 

Sunset Review On Suo Motu Basis

 

The Rule provides that the Authority can initiate a sun set review investigation on suo motu basis also.

 

The Authority has undertaken suo motu initiations in past17 either on the directions of the Hon’ble Court or as per the past practice that the Authority is required to undertake review investigation automatically. However, subsequently it became clear that review investigation is not a mandatory requirement or duty of the Authority, rather it has to be done on merits in terms of Rule 23. Thereafter, the Authority has initiated or rejected the initiation on case to case basis. This view has been confirmed by Hon’ble High Court of Delhi.

 

As a matter of practice, it is normally preferred that initiation is based on an application filed by the domestic industry after examination of prima facie existence of sufficient grounds to do so.

 

Source: Manual Of Operating Practices For Trade Remedy Investigations