Insights

Judgement of CESTAT Dated 30^th August 2022

Multiple domestic producers filed appeals raising concerns against rejection of the recommendations made by the Designated Authority for imposition or extension of anti-dumping duty or safeguard duty or countervailing duty by the Central Government without giving any reasons. In some matters, an Office Memorandum was issued stating that the Central Government has decided not to accept the recommendations of the Designated Authority.  In other matters, such an Office Memorandum was not issued by the Central Government.

The appellants sought relief that the Central Government should accept the recommendations, considering that these followed elaborate investigations. It was contended that if the Central Government decides to reject these recommendations, the Government should give reasons for rejecting such recommendations.

Issues:

The issues raised before the Tribunal were as follows: –

1. Whether an appeal against Office Memorandum issued is maintainable under Section 9C of the Customs Tariff Act?
2. Whether a determination by the Central Government is legislative or quasi-judicial in nature?
3. Whether the Office Memorandum issued by the Central Government is in violation of principles of natural justice?

Decision:

Issue 1 – Whether an appeal is maintainable under section 9C of the Customs Tariff Act?

The Tribunal considered whether an appeal under Section 9C of the Customs Tariff Act, 1975 (“Act”) lies only against an “order of determination or review thereof, in respect of the existence, degree and effect of any subsidy or dumping” in relation to import of any article. It was contested by the Central Government that the power to investigate lies with the Designated Authority and hence, the findings issued by the Designated Authority would constitute an order. Therefore, Office Memorandum issued by Central Government can only be described as an order or decision not to impose duty and is an inter-departmental communication, which is not appealable under Section 9C of the Act.

The Tribunal held that an appeal would lie only against such orders which are determinative and final in respect of the existence, degree and effect of any subsidy or dumping in relation to import of any article. The Tribunal has also noted that provision conferring right to appeal have to be read in a manner that the right to appeal should not be restricted or denied, unless such a construction is unavoidable. The Designated Authority performs functions under the Act on behalf of the Central Government and not as an independent authority. Section 9C of the Act does not restrict the right to appeal to specific category of orders, except that the orders should determine the existence, degree and effect of subsidy or dumping in relation to imports of articles in India; and, therefore, the Tribunal concluded that an appeal would lie before CESTAT against the decision of the Central Government to not impose the duties.

Issue 2 – Is determination by the Central Government legislative or quasi-judicial in nature?

The Tribunal considered whether functions concerning imposition of duty are quasi–judicial, or legislative in nature. The Tribunal observed that the Central Government while acting as a delegated legislative body, performs two distinct functions. The first is the function of framing Rules which is clearly legislative and second is the making of a determination which function is quasi-judicial in nature. While the legislative function of making the Rules is not appealable before the Tribunal, the quasi-judicial function of making a determination is expressly made appealable under Section 9C of the Act. The Tribunal also noted that the quasi-judicial function requires the Government to follow the principles of natural justice to reach the conclusion.

Issue 3 – Is the Office Memorandum issued by the Central Government violative of principles of natural justice?

The Tribunal noted that if the Central Government forms a prima facie opinion that the final findings of the Designated Authority recommending the duties are not required to be accepted, reasons for rejection have to be recorded and conveyed to the domestic industry to give them an opportunity to represent their case.

Further, the Tribunal held that by non-communication of the decision within the prescribed time shall be deemed to be a decision taken not accepting recommendations. Thus, such cases would also fall in the category of those cases where an Office Memorandum has actually been issued conveying the decision of the Central Government not to impose anti-dumping duty. Therefore, the Tribunal has held that the decision taken by the Central Government to not impose anti-dumping duty, despite a recommendation made by Designated Authority without recording reasons is not appropriate. The Tribunal has remitted the matter back to the Central Government for taking a fresh decision.