Anti-Dumping Regime In Indian Scenario
Dumping in common and general parlance of economics is understood as any kind of predatory pricing. In business and economics, predatory pricing is the practice of selling a product or service at a very low price, intending to drive competitors out of the market, or create barriers to entry for potential new competitors.
The natural corollary of this strategy is that if competitors or potential competitors cannot sustain equal or lower prices without losing money, they go out of business or choose not to enter the business. The predatory merchant then has fewer competitors or is even a de facto monopoly, and hypothetically could then raise prices above what the market would otherwise bear.
Now a days the word is generally used only in the context of international trade law, where dumping is defined as the act of a manufacturer in one country exporting a product to another country at a price which is either below the price it charges in its home market or is below its costs of production.
Anti-Dumping regime in India consist of statutory provisions contained in Section 9A, 9AA, 9B and 9C of Custom Tariff Act, 1975. These provisions were incorporated in the statute by an Amendment to the Parent Act in 1995 under Article 253 when read in light with Entry 14 of ListI of Constitution of India in order to fulfill International Treaty obligation incurred by Republic of India by being signatory to GATT Agreements.
In addition to these provisions in the said Act the general rules of procedure and practice relating to imposition of Anti-Dumping Duty is governed by Customs Tariff (Identification, Assessment And Collection Of Anti-Dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995.
In Indian legal context definition of dumping can be construed from Section 9A (1) of The Custom Tariff Act as export of any article by the exporter or producer of such article either form their native country or any country to Indian domestic market at a price less than normal value.
The export price imply as the price of the article exported from exporting or native country and is generally determined as the CIF value minus the adjustments on account of ocean freight, insurance, commission, etc. so as to arrive at the value at ex-factory level.
The normal value entail price of the article in the domestic market of exporting or producer or native country. In cases of absence of market for the product in the domestic market of exporting, native or producer country the prices are to be determined on the basis of price of the article exported from such country to any other third country or the cost of production of the said article in the country of origin along with reasonable addition for administrative, selling and general costs, and profits on such article.
Initiation Of Investigation
The government under provision of the said Rules has to appoint a Designated Authority which is generally a person of the rank of a Joint Secretary to the Government of India. This Authority on receiving a written application along with supportive evidences of Dumping by or on behalf of domestic industry may at its discretionary satisfaction initiate investigation. Domestic Industry implies to be domestic producer having majority share in total domestic production of that article through their collective output. To be specific their share in total domestic production shall account for at least twenty five per cent of the total production of the said article.
The said application of the domestic industry submitted to the Authority under Rule 5(1) of The Rules mandatorily has to be supported by evidences establishing dumping and injury from such dumping under Sub-Rule 2 of the same Rule 5.
The Authority under Sub-Rule 4 of the said Rule 5 can also initiate an investigation suo moto on its satisfaction based on information received from the Commissioner of Customs appointed under the Customs Act, 1962.
The Authority after being convinced with the evidences attached with the written application and at its discretionary satisfaction of there being a prima facie case of dumping and thereby initiation of investigation to determine the existence, degree and effect of any alleged Dumping of any article, under Sub-Rule 1 of Rule 6 issue a public notice notifying its decision. Such notice by virtue of Sub-Rule 1 of Rule 6 should mandatorily consist name of the exporting country or countries and the article involved, date of initiation of the investigation, basis on which dumping is alleged in the application, summary of the factors on which the allegation of injury is based, address to which representations by interested parties should be directed and the time-limits allowed to interested parties for making their views known.
The Authority under the effect of Sub-Rule 2 of Rule 6 has to also forward a copy of such public notice to the known exporters of the article alleged to have been dumped, the Governments of the exporting countries concerned and other interested parties.
The expression interested parties has to be construed from Clause C of Rule 2 as inclusive of an exporter or a foreign producer or the importer of such article under investigation, business association a majority of the members of which are producers, exporters or importers of such an article, the government of the exporting country and trade and business association a majority of the members of which produce the like article in India.
In order to maintain the integrity of the investigation The Authority under Sub-Rule 4 of Rule 6 is also conferred with power to issue notice to the exporters, foreign producers and other interested parties calling for any information and such information shall be furnished by such persons in writing within thirty days from the date of receipt of the notice.
Further to curtail down any scope of arbitrariness The designated authority is also mandatorily required under Sub-Rule 5 of Rule 6 to provide opportunity to the industrial users of the article under investigation and to representative consumer organizations in cases where the article is commonly sold at the retail level, to furnish information regarding dumping, injury where applicable, and causality which is relevant to the investigation in order to do complete justice by taking all aspects of cases in consideration while arriving at conclusion.
Preliminary Investigation And Measures
Under Sub-Rule 1 of Rule 12 the Authority has to as soon as possible record a preliminary finding containing the determined export price, normal value, margin of dumping, injury to the Domestic Industry, the names of the suppliers, the supplying countries involved, description of the article, margins of dumping established and a full explanation of the reasons for the methodology used in the establishment and comparison of the export price and the normal value, relevant consideration relied on to determine the injury and reasons leading to the determination.
The Authority is required under Sub-Rule 2 of Rule 12 to issue a public notice of its recording of its preliminary recording.
On the basis of Preliminary Findings the central government under Sub-Section 2 of Section 9A of The Act and under Rule 13 of The Rules may impose provisional duty up to amount of margin of dumping. Such imposition as per 1st proviso of Rule 13 should be made within sixty days from the date of issuance of public notice of these findings and in accordance with 2nd proviso should remain in force only for a period six to nine months.
Final Submission And Measures
The Authority under Sub-Rule 1(a) of Rule 17 has to complete the investigation within one year from the date of its initiation. Upon completion of such investigation the Authority has to submit a Final Finding to Central Government determining as to establishment of the fact of Dumping of the article in Question by the exporter and as per Sub-Rule 1(b) also recommendation as to the amount of Duty to be levied in order to remove the injury caused to Domestic Injury by such Dumping.
Under Sub-Rule 1(a) and 2 of Rule 17 the Final Finding submitted by the Authority should consist of determined export price, normal value, margin of dumping, injury to the Domestic Industry, the names of the suppliers, the supplying countries involved, description of the article, margins of dumping established and a full explanation of the reasons for the methodology used in the establishment and comparison of the export price and the normal value, relevant consideration relied on to determine the injury and reasons leading to the determination.
Further The Authority is required under Sub-Rule 4 of Rule 17 to issue a public notice of its recording of its preliminary recording.
On the basis of Final Findings the central government under Sub-Section 1 of Section 9A of The Act and under Sub-Rule 1 of Rule 18 of The Rules may impose anti-dumping duty up to amount of margin of dumping. Such imposition as per Rule 13 should be made within three months from the date of issuance of public notice of these findings and in accordance with Sub-Section 5 of Section 9A of The Act should remain in force only for a period five years.
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