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Levy of provisional anti-dumping measures in India

By Atul Gupta    

Anti-dumping duty is a trade remedy measure against the unfair practice of injurious dumping. An anti-dumping duty shall be imposed only pursuant to a determination of dumping, injury and causal link made in accordance with the provisions of the Anti-dumping Agreement (ADA). However, to conduct an investigation as required under the provisions of the ADA would require time.  In order to prevent injury being caused during the conduct of the investigation, a provisional measure may be imposed. Since the provisional measure is imposed without completing the investigation, it has to be imposed only for as short a period as possible. Article 7.4 of ADA states as follows:    

“7.4  The application of provisional measures shall be limited to as short a period as possible, not exceeding four months or, on decision of the authorities concerned, upon request by exporters representing a significant percentage of the trade involved, to a period not exceeding six months.  When authorities, in the course of an investigation, examine whether a duty lower than the margin of dumping would be sufficient to remove injury, these periods may be six and nine months, respectively.”    

When countries examine whether a duty lower than the margin of dumping would be sufficient to remove injury, they apply ‘lesser duty’ rule. Thus, when a country applies lesser duty rule, the provisional measure may be imposed for a maximum period of 6 months and if not, for 4 months.  India follows the ‘lesser duty’ rule and accordingly, provisional measures are applied for a maximum period of 6 months in India. Upon completion of the investigation, definitive anti-dumping duty may be imposed.     

In Mexico – Anti-dumping measures on imports of HFCS from USA (see end note 1), Mexico did not revoke the provisional measure after expiry of six months from the date of its imposition. The Panel ruled that in the light of the specific limitation on the period of application of provisional measures contained in Article 7.4, the application of the provisional measure beyond the six month period was inconsistent with Mexico’s obligation under Article 7.4 of the ADA. Mexico argued that Article VI of GATT 1994 condemns dumping if there is threat of injury to the domestic industry; therefore, its decision not to terminate the provisional measure was consistent with the spirit of Article VI.  The Panel  observed  that the  AD Agreement contains specific rules for the implementation of Article VI of GATT 1994 with respect, inter alia, to the period of application of provisional measures (see end note 2).     

Those rules are binding on all members, and arguments based on references to the "spirit" of the GATT 1994 are unavailing to justify a failure to comply with those rules. In India, the provisional anti-dumping duties are notified only for a period of 6 months.  However, if the investigation is not complete and no final duty is levied before the expiry of the provisional duty, no anti-dumping duty needs to be paid by the importer. However, in some cases, the Indian Customs authorities insist that the importer pay provisional duty in order to safeguard the eventual duty liability that may arise upon the notification of final anti-dumping duty. This would amount to extension of the provisional duty beyond the legally permitted period of 6 months. There is no legal sanction for the said practice followed by the Customs authorities and hence, shall not be resorted to.    

Normally, definitive anti-dumping duty shall come into force from the date of its imposition.  However, in the circumstances mentioned in Article 10.2 of ADA, definitive anti-dumping duty may be imposed retroactively for the period for which provisional measures, if any, have been applied. The relevant provision is extracted below:  

“10.2. Where a final determination of injury (but not of a threat thereof or material retardation of the establishment of an industry) is made or, in the case of a final determination of a threat of injury, where the effect of the dumped imports would, in the absence of the provisional measures, have led to a determination of injury, anti-dumping duties may be levied retroactively for the period for which the provisional measures, if any, have been applied.”     

The corresponding Indian legal provisions are contained in Section 9A(2) of the Customs Tariff Act, 1975 read with Rules 13 and 20 of the Customs Tariff (Identification, Assessment and Collection of Anti-dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995 (AD Rules). In terms of Rule 20(1), definitive anti-dumping duty shall take effect from the date of its publication in the official gazette, i.e., from the date of its imposition.  Rule 20(2)(a) talks about the retrospective levy.  The relevant portion is extracted below:    

“20(2)(2) where a provisional duty has been levied and where the designated authority has recorded a final finding of injury or where the designated authority, has recorded a final finding of threat of injury and a further finding that the effect of dumped imports in the absence of provisional duty would have led to injury, the anti-dumping duty may be levied from the date of imposition of provisional duty.”    

Article 10.2 of ADA provides that definitive anti-dumping duty may be applied for the period for which the provisional measures have been applied. Indian Rule 20(2)(a) states that the anti-dumping duty may be levied from the date of imposition of provisional duty.  If the definitive anti-dumping duty is imposed before the expiry of the provisional duty, there will be no difference in the application of these two provisions. If the final anti-dumping duty is imposed after expiry of the provisional duty, under the Indian Rules, the final duty is automatically applied retroactively for the interregnum i.e. the period from the date of expiry of provisional duty till the date of imposition final duty.  The Courts have held that the definitive duty imposed under Rule 18 will fully apply with effect from the date of imposition of provisional duty and that there is no scope of creating a hiatus in the retrospectivity of anti-dumping duty in respect of the interregnum period (see end note 3).  It is necessary to ensure that the provisions of ADA are uniformly applied in all the member countries.  India should review its current laws and practices to make them fully WTO compliant.

End notes:

1. DS 132

2.  Article 1 of the AD Agreement provides:  "An anti‑dumping measure shall be applied only under the circumstances provided for in Article VI of GATT 1994 and pursuant to investigations initiated1 and conducted in accordance with the provisions of this Agreement.  The following provisions govern the application of Article VI of GATT 1994 in so far as action is taken under anti‑dumping legislation or regulations.”  
Further Article 18.1 of the AD Agreement provides:  "No specific action against dumping of exports from another Member can be taken except in accordance with the provisions of  GATT 1994, as interpreted by this Agreement.”

3. Apollo Tyres v. UOI, CESTAT New Delhi, Final Order Nos. 17-21/2005-AD, dated 9-9-2005; Commissioner of Customs v. Akash Trading Co., Kerala High Court, Customs Appeal No. 15, 16, 17 & 24 of 2006, decided on 15-7-2009;  CC v. Samarth Industries, Bombay High Court, Customs Appeal No. 18 of 2009, decided on 15-12-2011. 

[The author is a Principal Associate, International Trade Division, Lakshmikumaran & Sridharan, New Delhi]
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