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Refund of anti-dumping duty as a result of review investigation

By Bhargav Mansatta

Section 9AA [see end note 1] of the Customs Tariff Act, 1975 provides for refund of anti-dumping duty in certain cases. It provides as below:

(1) Where upon determination by an officer authorised in this behalf by the Central Government under clause (ii) of sub-section (2), an importer proves to the satisfaction of the Central Government that he has paid anti-dumping duty imposed under sub-section (1) of section 9A on any article, in excess of the actual margin of dumping in relation to such article, the Central Government shall, as soon as may be, reduce such anti-dumping duty in excess of actual margin of dumping so determined, in relation to such article or such importer, and such importer shall be entitled to refund of such excess duty

Rule 21A [see end note 2] lays down the procedure to determine the amount paid in excess of the actual margin of dumping. Rule 21A (1) provides as below:

(1) Where an importer is of the opinion that he has paid any anti-dumping duty imposed under sub-sections (1) or sub-section (1A) of section 9A of the Act on any imported goods, in excess of the actual margin of dumping in relation to such goods, he may file an application for determination of the actual margin of dumping in relation to such goods before the designated authority in such form and accompanied by such documents as the said authority may specify in this behalf.

An officer authorised by the Central Government i.e. the Designated Authority (DA) is required to determine through an investigation if the importer has paid excess duty than the actual margin of dumping. However, in case of review carried out under Rule 23 of the Anti-dumping Rule, similar exercise of re-determination of dumping margin as well as injury margin is carried out by the DA. Period of Investigation (POI) is ascertained (during which the anti-dumping duty was in force) and margin of dumping and margin of injury is re-determined.

The purpose of the review determination is to assess the need for continuation of duty. However, final determination in the form of final finding will certainly reflect the difference between the actual margin of dumping and injury during the POI as compared to the anti-dumping duty actually paid.

Thus, in both cases, investigation is carried out on a product on which there is already an anti-dumping duty and in both the cases margin of dumping is re-determined for the identified period.

Final finding at the end of the mid-term review may determine a lesser margin of dumping or a lesser margin of injury than the actual duty paid. In such a case, refund of anti-dumping duty, for the period for which no dumping was found, is clearly warranted. The outcome of the mid-term review can give rise to a legitimate claim of refund under Section 9AA [see end note 3].

Section 9A of the Customs Tariff Act provides for imposition of duty not exceeding the margin of dumping. Furthermore, under Rule 17(1)(b) readwith Rule 4(d)(i) of the Anti-dumping Rules, 1995, no duty is to be imposed when the margin of injury is negative. Thus, when the duty is determined to be in excess of the prescribed statutory limit, the same is required to be refunded as the excess duty is now determined to have been collected wrongly and thereby without the authority of law. No tax can be levied or collected without the authority of law [see end note 4].

However, the structure of the Customs Tariff Act and the Anti-dumping Rules under Section 9AA and Rule 21A respectively provides for a separate investigation procedure for refund mechanism. Such investigation, in effect, will not and cannot be materially different from a review. If a mid-term review is carried out at the behest of either of the interested party then, for the purpose of refund of anti-dumping duty, no separate investigation should be required.

Also, it may happen that the review determines that there is margin of dumping but there is no margin of injury during the POI. As noted, a non-injurious dumping is not supposed to be remedied under the Anti-dumping Rules. In express terms, refund rules provide for refund of duty when it is determined that it exceeds the margin of dumping. Thus, a situation may arise that despite the determination of negative injury margin or non-injurious dumping, the authority may still refuse to refund the duty on the ground that the duty is not paid in excess of margin of dumping and hence is not refundable. The fact that the duty was wrongly paid and collected and is now determined to have been without the authority of law cannot be overlooked.

Somewhat similar situation may arise in case of Sunset Review (SSR). Section 9A (5) of the Customs Tariff Act, 1975 provides that the anti-dumping duty ceases to have effect at the end of five years unless the continuation of it is recommended by way of SSR. SSR which is initiated before the expiry of five years, an anti-dumping duty may be extended pending the outcome of a review for a period not exceeding one year. In event, the determination made for discontinuation of duty at the end of the review due to non-existence of margin of dumping/injury or causal link, the anti-dumping duty collected for one year in addition to the five year period also needs to be refunded as the same was collected without any determination of dumping, injury and causal link.

It is very likely, given the non-harmonious framework of the applicable law, that a claim of refund of duty which arises as an outcome of such reviews may be rejected by the authority simply on the ground that a separate investigating mechanism under the rules is required to be fulfilled.

The procedural dichotomy in the law is required to be remedied through harmonious reading of the provisions or else it results in a situation whereby a duty which could not have been imposed could nevertheless be allowed to be retained if already collected.  It prejudices the interest of the exporters/importers, by imposing anti-dumping duty, even though they are not involved in dumping of the subject goods or have caused injury to the domestic industry.

[The author is a Senior Associate, International Trade Team, Lakshmikumaran & Sridharan, New Delhi]

End Notes:
  1. Inserted by Section 89 of the Finance Act, 2000 (10 of 2000).
  2. Inserted by the Customs Tariff (Identification, Assessment and Collection of Anti-dumping Duty on Dumped Articles and for Determination of Injury) Amendment Rules, 2012
  3. Designated Authority may nevertheless recommend continuation of anti-dumping duty if there is likelihood of continuation of injury based on post POI analysis despite negative dumping or injury margin during the POI. In any case, such a determination will not affect the legitimacy of refund claim.
  4. Article 265 of the Constitution of India.
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