Holding

The Supreme Court set aside the Tribunal’s order, holding that the Designated Authority had correctly applied the Rules and that the Tribunal erred in imposing anti‑dumping duty on the appellant.

Summary

The appellant, a Chinese manufacturer of lead‑acid batteries, challenged the imposition of anti‑dumping duty by the Designated Authority (DA) after the Customs, Excise and Gold (Control) Appellate Tribunal set aside the DA’s finding that the company operated on market‑economy principles. The domestic industry had initiated an anti‑dumping investigation, and the DA initially exempted the appellant on the ground that the dumping margin was negative. The Tribunal later held that the DA had failed to apply the procedures for non‑market‑economy (NME) countries under the amended Annexure I of the anti‑dumping Rules and imposed duty. The Supreme Court examined whether China was to be treated as an NME, whether the DA was required to follow paragraphs 7 or 8 of Annexure I, and whether the Tribunal erred in setting aside the DA’s finding. The Court held that the DA had complied with the procedural requirements, that the Tribunal’s reliance on the NME provisions was misplaced, and that there was no basis to remand the matter. Consequently, the Court allowed the appeal and set aside the Tribunal’s order.

Issues considered

Whether China should be treated as a non‑market‑economy country for the period of investigation.
Whether the Designated Authority was obligated to follow paragraphs 7 or 8 of Annexure I of the anti‑dumping Rules in determining normal value.
Whether the appellant could prove that it operated on market‑economy principles and thus be exempt from anti‑dumping duty.
Whether the Tribunal erred in setting aside the Designated Authority’s finding and imposing duty.
Whether the matter should be remanded to the Tribunal after setting aside the Tribunal’s order.

Legislation cited

Customs Tariff Act, 1975s. 9A

Subjects

anti‑dumping dutynormal valuenon‑market economymarket economy principlescustoms lawtribunaldesignated authoritydumping marginChinalead‑acid batteries

Judgment

A SHENYANG MASTSUSHITA S. BA TIERY CO. LTD.
v.
MIS. EXIDE INDUSTRIES LTD. AND ORS.·

FEBRUARY 23, 2005
H I

B [RUMA PAL, ARIJIT PASAYAT AND C.K. THAKKER, JJ.]
' '
,•
. Customs Tariff Act, 1975; Section 9A/Customs Tariff (identification,
Assessment and Collection of Anti-dumping duty on Dumped Articles and for
C determination ofinjuries) Rules, 1995; Annexu.re 1 to the Rules; Notification
dated 15.7.99 and ~1.5.2001 notifying amendments in Annexure-i:

Anti-dumping duty-Filing ofpetition by respondents/domestic industry
for initiation of anti-dumping investigation against foreign companies-
Designated Authority held that anti-dumping duty not lev_iable 'as du~ping
D margin was negative-Challenge to-imposing anti-dumping duty, Tribunal
observed that the Designated Authority hadfailed to conduct the normal value
investigation in accordance with the Rules-On appeal._ held: Sufficient material
furnished by the foreign-company to justify that it was operating in accortJ.ance
with market conditions-Tribunal imposed duty on the foreign company without
examining the injury, if any, caused to the domestic industry by the foreign
E companies-Finding of the Tribunal is erroneous, hence set aside.

'Normal value '-Meaning of in the context of anti-dumping duty.

The question which arose for determination in this appeal was as to
whether the appellant, a foreign company, manufacturer and exporter of
-
F l~ad acid batteries in India, operated on Market Economy Principles for
't'h~ purpose of levy of anti-dumping duty under the Customs Tariff Act
and the Customs Tariff (Identification, Assessment and Collection of Anti-
Dumping Duty on Dumped Articles and for Determination of Injuries)
Rules, 1955.
G Appellant-foreign company contended that since the Designated
Authority did not follow the procedure prescribed either under paragraph
7 or paragraph 8 of the Annexure I to the Rules, it could not subsequently
follow the same provisions for the purpose of levying anti-dumping duty
without serving them any notices.
H 332
SllENYANG MASTSUSHITA S. BATTERY CO. LTD.1·. EXIDE INDUS. LTD. 33J

Respondents submitted that China was in fact a non-market economy A
and there was no question of applying paragraph 8 of the Annexure I to
the Rules as introduced by the second notification for amendment in the
Rules as the period of investigation was prior to the issuance of that
notification; that since non-market economy had to be decided country-
wise, any individual foreign company could not be separately represented; B
and that since the normal value of a non-mark('t economy is country
specific, uniform rate was applicable to all exporters and it was not open
to appellant, an individual foreign company to claim that it was run
according to market econ()my principles.

Allowing the appeal, the Court c
HELD : 1.1. It is not necessary to decide whether a Company was
to be treated as a non-market economy during the period of investigation
or whether the normal value should be decided on a country-wise basis,
as respondent No. I-domestic industry is not allowed to take up what is
clearly an inconsistent stand before the Tribunal and also before this Court D
that the final finding of the Designated Authority could not be sustained
because it was in clear violation of the Rules as amended by the
notifications dated 15th July, 1999 and 31st May, 2001. Indeed that was
the basis on which respondent No. 1's appeal had been allowed by the
Tribunal. If the Tribunal was correct, then, even according to the Tribunal, E
under the second notification dated 31st May, 2001, market driven units
in non-market. economy countries could prove that they were operating
according to market principles. This exception has been provided to the
rule of uniform normal value for all exporters in non-market economy
countries. (342-F-G-H; 343-A-BJ
F
Designated Authority v. Haldar Topsoe AIS, 12000) 6 SCC 626, held
inapplicable.

1.2. The only ground on which the Tribunal upset the final finding
of the Designated Authority is that they had not physically verified the
information given by the appellant. That was factually erroneous since the G
appellant-foreign company had already produced sufficient material
before the Designated Authority to justify the finding that the appellant
was operating according to market conditions. The Designated Authority
had already visited the manufacturing units of the appellant in China and
verified the information produced by the appellant and since the H
334 ·SUPREME COURT REPORTS [2005) 2 S.C.R.

A Designated Authority had verified the data prior to submitting its final
finding, there was no question of the Designated Authority re-verifying
the information given by the appellant. (343-C-DI

1.3. Having found that the Designated Authority had violated the
B notifications, the Tribunal chose to rectify the situation by issuing an order
directing the Designated Authority to comply with the notifications. Since
neither of the parties have impugned that order, it was then not open to
the Tribunal to proceed on the basis that there was a violation of the
notifications. (343-GJ

C 1.4. The Tribunal did not address itself to the question whether there
was sufficient evidence to support the Designated Authority's finding that
there was no dumping by the appellant. It held that the appellant was liable
to pay dumping duty without considering the injury, if any, to the domestic
industry and the causal connection between the alleged dumping and the
D inj~ry. (343-H; 344-A)

2. The Designated Authority had initiated, conducted and concluded
the proceedings under Rules 1 to 6. If non-market economy principles have
now to be applied then the entire process would have to start from scratch.
Hence, no purpose would be served in remanding the matter back to the
E Tribunal. (344-A-Bl

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 6371 of2003.

From the Judgment and Order dated 3.6.2003 of the Central Excise,
Customs and Gord (Control) Appellate Tribunal, New Delhi in F.O. No. 4/
F 2003-AD in A.No. C/198 of 2002-AD.

Ms. Meenakshi Arora, Dr. Aman Hingorani, Ms. Priya Hingorani and
Ms. Reema Bhandari for the Appellant.

R.F. Nariman and T.S. Doabia, Ms. Manu Nair, Dhruv Dewan, Manish
G Sharma and D.S. Mahara for the Respondents.
The Judgment of the Court was delivered by

RUMA PAL, J. The appellant-company carries on the business of
manufacturing lead acid batteries in Shenyang, China. It is a· subsidiary of
H Mastsushita S. Electric Industries Corporation, a multinational company
SHENYANGMASTSUSHITAS. BATTERY CO. LTD.v. EXIDE INDUS. LTD.[RUMAPAL,J.J 335

registered in Japan. A
The dispute in this appeal is whether the appellant-company operated
on Market. Economy Principles during the period lst January 2000 to 30th
September 2000 for the purposes of the Customs Tariff Act and the Customs
Tariff (Identification, Assessment and Collection of Anti Dumping Duty on

- Dumped Articles and for Determination of Injuries) Rules, 1995. (referred to
hereafter as 'the Rules').

The principle behind anti dumping laws is to protect the domestic
B

industry from being adversely affected by import of goods at export prices
which are below the normal value of the goods in the domestic market of the C
exporter. Anti dumping duty is leviable under Section 9A of the Customs
Tariff Act, 1975 (referred to as 'the Act') read with ·the Rules which are
framed under Section 9A (6). The duty is calculated on the margin of dumping
which is the difference between the export price and the normal value.

The phrase" 'normal value' in relation to an article has been defined D·
in clause (c) to the Explanation to Section 9A (I) as meaning:

(i) "the comparable price, in the ordinary course of trade, for the
like article when meant for consumption in the exporting country
or territory as determined in accordance with the rules made
under sub-section (6); or E
(ii) when there are no sales of the like article in the ordinary course
of trade in the domestic market of the exporting country or
territory, or when because of the particular market situation or
low volume of the sales in the domestic market of the exporting
country or territory, such sales do not permit a proper comparison, F
the normal value shall be either-

(a) comparable representative price of the like article when
exported from the exporting country or (territory to) an
appropriate third country as determined in accordance with
the rules made under sub-section (6); or G
(b) the cost of production of the said article in the country of
origin along with reasqnable addition for administrative,
selling and general costs, and for profits, as determined in
accordance with the rules made under sub-section(6).
H
336 SUPREME COURT REPORTS (2005) 2 S.C.R.

A The Rules provide inter alia for the assessment of the anti· dumping
duty by the Designated Authority. The principles to be followed by the
Designated Authority for determination of normal value, export price and
margin of dumping have been set out in Annexure I to the Rules.

Initially paragraphs 1 to 6 of Annexure I provided for the principles
B which relate generally to the determination of normal value for all countries
on the assumption that they operate on market economy' principles. A
distinction was drawn in 1999 for the first time between market economies
and non-market economies. Annexure I was amended by two notifications
referred to by the Tribunal which were dated 15.7.1999 and 31.5.2001. The
C first notification introduced paragraph 7 after paragraph 6 in Annexure-1 :

"In case of imports from non-market economy countries, normal value
shall be determined on the basis of the price or constructed value in
a market economy third country, or the price from such a third country
to other countries, including India, or where it is not possible, on any
D other reasonable basis, including the price actually paid or payable in
India for the like product, duly adjusted if necessary, to include a
reasonable profit margin. An appropriate market economy third country
shall be selected by the designated authority in a reasonable manner

E
and due account shall be taken of any reliable information made
available at the time of the selection. Account shall also be taken
within time limits; where appropriate, of the investigation if any made
in similar matter in respect of any other market economy third country.
-
The parties to the investigation shall be informed without u.nreasonable
delay the aforesaid selection of the market economy third country
and shall be given a reasonable period of time to offer their comments."
F
By this notification a separate procedure was prescribed for determining
the normal value of non-market economies. Paragraph 7 to Annexure I now
provides for the determination of the normal value with reference to the price
paid by a third country with a market economy to India of a like product. If
such a third country is selected, the Designated Authority has to inform the
G exporters of the selection and grant them a reasonable period to offer their
comments. It is only if this procedure is not possible that the Designated
Authority can act on any other 'reasonable basis'. In other words, the
Designated Authority must exhaust the first method before moving to the
alternative procedure.
H
SHENYANGMASTSUSHITA S. BATTERY CO. LTD.v. EXIDE INDUS. LTD.[RUMA PAL,.1.] 337

The second notification dated 31.5.2001 inserted a further paragraph A
after paragraph 7 as paragraph 8 in Annexure-1 to the following effect :-

" The term "non market economy country" subject to the Note to this
paragraph means every country listed in that note and includes any
country which the designated authority determines and whi~h does
B
-
not operate on market principles of cost of pricing structures, so that
sales of merchandise in such country do not reflect the fair value of
the merchandise. While making such determination, the designated
authority shall consider as to whether:-

(i) the decisions of concerned firms in such country regarding prices,
costs and inputs, including raw materials, cost of technology and c
labour, output, sales and investment, are made in response to ,
market signals reflecting supply and demand and without
significant State interference in this regard, and whether costs of
major inputs substantially reflect market values;
(ii) the production costs and financial situation of such firms are D
subject to significant distortions carried over from the former ,
non-market economy system, in particular in relation to
depreciation of assets, other writ-offs, barter trade and payment
viii compensation of debts;
(iii) such firms are subject to bankruptcy and property laws which E
guarantee legal certainty and stability for the operation of the •
firms, and
(iv) the exchange rate inversions are carried out at the market rate :

Provided that in view of the changing economic conditions in
Russia and in the Peoples' Republic of China, where it is shown on F
the basis of sufficient evidence in writing on the factors specified in ·
this paragraph that market conditions prevail for one or more such
firms are subject to anti-dumping investigations, the designated
authority may apply the principles set out in paragraphs 1 to 6 instead
of the principles set out in this paragraph. G
.,i.--
Note :- For the purposes of this paragraph, the list of non market
economy countries is Albania, Armenia, Azerbaijan, Belarus, Peoples'
Republic of China, Georgia, Kazakstan, North Korea, Kyrghyzstan,
Moldova, Mongolia, Russia, Tajikistan, Turkmenistan, Ukraine,
Uzbekistan and Vietnam. Any country among them seeking to establish H
338 SUPREME COURT REPORTS [2005] 2 S.C.R.

A that it is a market economy country as per criteria enunciated in this
paragraph, may provide all necessary information which shall be taken
due account by the designated authority".

China was expressly notified as a non market econoniy by this
Notification. However in recognition of the fact that the economic conditions
B in China and Russia were rapidly changing, paragraph 8 as introduced by the
second notification allows particular units of these two countries to show that
the four conditions mentioned in the paragraph were satisfied in respect of
that unit. If that is done the Designated Authority would then apply the
principles enunciated in paragraphs I to 6 of Annexure-1 which as we have
C said are applicable to market economy countries.'

The respondent Nos. I and 2 representing the domestic industry which
either manufactures or imports lead acid batteries, filed a petition for initiation
of anti dumping investigation concerning import into India of lead acid batteries
from Japan, Republic of Korea, Peoples' Republic of China and Bangladesh
D under Rule 5(I) of the Rules. On 12th January, 200I, an initiation notification
was issued by the Designated Authority of the Directorate General of Anti-
dumping and Allied Duties "being satisfied, prima facie that the nonnal
value of the lead acid batteries in the subject countries was significantly
higher than net export price indicating that the goods were being dumped by
the exporters from the subject countries" and that as a result of the allegedly
E dumped imports, domestic industry had suffered injury. The period for the
purposes of the investigation as indicated· in the initiation notice was 1st
January, 2000 to 30th September, 2000. The Designated Authority sent a
questionnaire to 3 I companies situated in the four named countries. Of the
I I companies located in China, the appellant and two others responded to the
p initiation notice. The other companies did not participate in the investigation.

On 2 I st March, 200 I, the Designated Authority issued its preliminary
findings. As far as the appellant was concerned, it was stated that the appellant
had given no infonnation on the type/model of batteries being manufactured
by them which were not being exported to India. It was noted that on the
G basis of available evidence, the profitability/loss from different types of
batteries varied significantly, which, according to the Designated Authority,
indicated the "possibility of existence of cross subsidization among various
models significantly affecting pricing policy of the company regarding the
different models". It.was noted that the information given by the appellant
H was "selective, incomplete and hence not acceptable". In the circumstances,
SHENYANG MASTSUSHITA S. BA TfERY CO. LTD.v. EXIDE INDUS.LTD. [RUMA PAL, J .) 339

the Designated Authority decided not to ~ake into account the information A
submitted inter a/ia by the appellant on normal value and export price of the
lead batteries in China for the purpose of its preliminary findings but to us~
information given by the domestic industry on the constructed cost of
production as the best infonnation available for the purpose of assessing such
nonnal value and to calculate the dumping margin. On the further prima
facie finding that the domestic industry had suffered material injury and was B
facing further threat of material injury on account of the dumped imports of
the subject goods inter alia, from China, the Designated Authority considered.
it necessary to impose anti dumping duty provisionally subject to a final
determination on all imports of lead acid batteries from China, Korea and
Japan in order to remove the injury to the domestic industry. The rates of C
anti-dumping duty were specified in a chart appended to the order. The
Designated Authority, however, invited comments on these findings from
"all interested parties for the purposes of being considered in the final finding".

It is the appellant's case that pursuant to this preliminary finding the
appellant paid the anti dumping duty at the rate specified after the same was D
notified by the Central Government. The appellant also submitted further
material to the Designated Authority.

In the course of the investigation two officers of the Directorate General
of Anti Dumping of Allied Duties visited the appellant's manufacturing
facilities in China. A disclosure statement was furnished by the authority to E
all the parties. After investigation and verification, the Designated Authority
noted that the appellant had furnished the required information which had
been verified. It was held that anti dumping duty was not applicable to the
appellant as the dumping margin was negative. A notification was issued to
this effect by the Central Government. F
The respondent No. l challenged the final order of the Designated
Authority dated 7th December, 200 l before the Customs Excise and Gold
(Control Appellate Tribunal) (CEGA T). One of the points raised by the
respondent Nos. I and 2 before the Tribunal was that the Peoples' Republic
of China was a non-market economy and, therefore, the normal value should G
be determined on the basis of the amendments effected to the Rules relating
to non-market economies.

During the pendency of the respondent's appeal before the Tribunal, on
25th November, 2002, an order was passed by the Designated Authority
which reads as follows. H
340 SUPREME COURT REPORTS [2005} 2 S.C.R.

A "........ As per the Appellants the designated authority failed to proceed
as per the Rules ........ .

The Ld. Counsel appearing on behalf of Chinese exporters would
submit that they are entitled to an opportunity to produce data to
rebut any presumption against the country as non market economy.
B They further submit that the data made available to designated
authority would be sufficient to rebut any presumption against the
country or individual exporter as one following one marketing
conditions. They would further contend that inspite of their providing
such data, the designated authority had failed to consider the same
for which they should not be visited with adverse consequences.
c
After hearing both the sides, we feel in the interest of justice certain
directions are to be issued to the designated authority before we come
to final decision in the matter. We therefore, direct the designated
authority to examine the data made available by the Chinese exporter
& file a statement before this Tribunal as to have satisfied the tests
·D
under Rule 8 as amended by notification 31.5.2001. Since, the matter
has been hanging fire for some time & the appellants are complaining
that they are facing irreparable injury by continuing dumping by
Chinese exporter, we further direct that the report shall be filed by
designated authority on or before 2.12.2002. The matter to come up
E for hearing on 3.12.2002."

The Designated Authority submitted a report on the available data on
2nd December, 2002 in compliance with the order of the Tribunal reiterating
the stand taken by it earlier and stating that the appellant had complied with
all the criteria set. out in paragraph 8 in Annexure-1 to the Rules. In other
F words the conclusion of the Designated Authority was that the appellant
operated on market economy principles therefore market economy principles
contained in paragraphs 1 to 6 would apply. The final finding submitted
earlier was therefore supported and reaffirmed.

G_ -On ~rd June, 2003 the Tribunal allowed the appeals filed by the
Respondent No. 1 accepting its submission and holding that the Designated
Authority had failed to conduct the normal value investigation in accordance
with the Rules applicable to non-market economy units. It was said that the
applicable notifications for the determination of normal value and in particular
notification dated 31.5.2001 provided that even in non market economy
H countries, market driven units coulp prove that they were operating acc~rding
SHENYANG MASTSUSHITA S BATTERY CO l.TD.r. EXIDE INDUS. LTD. [RUMA PAL..1134 J

to market principles. It was noted that pursuant to the interim order of tl}e A
Tribunal, the Designated Authority had examined the matter from the
perspective of requirements under the amended provisions for non market
economy countries and had placed a statement before the Tribunal. But the
Tribunal rejected the report of the Designated Authority on the ground that
it.was incumbent on the appellant and the other two units excluded from anti
du~ping duty to establish that they are run according to market principles B
and that no verification had been carried out at the premises of the exporters
to satisfy itself that the data summary filed in the questionnaire responses
correctly reflected the transaction as per the books of account of the individual
units and that the accounts satisfied Generally Accepted Accounting Standards
(GAAS) of the country. The exclusion of the appellant from the purview of C
anti-dumping duty, had, according to the Tribunal been done without the
necessary scrutiny and, therefore, it was unsustainable. The Tribunal therefore
came to the conclusion that the appellant and the other two units h.ad to be
treated in the same manner as other manufacturers located in the Peoples
Republic of China. In conformity with the provisions of Section 9-A(l)(c) of
the Customs Tariff Act. The Tribunal, however, made it clear that if the units D
(including the appellant) were convinced about the merits of their claim that
they are run according to market economy principles they could seek a review
of their cases before the Designated Authority. In the circumstances the
exemption from anti dumping duty granted to the three Chinese exporters
including the appellants by the Designated Authority was set aside and the E
three units including the appellant were subjected to anti dumping duty.

There is no dispute that the first notification was operative before the
initiation notice was issued. The second notification was issued during the
investigation proceedings.
F
There is also no dispute that the Designated Authority followed
paragraphs 1 to 6 of Annexure I not only in connection with the investigation
but also with regard to the final finding. The appellant's grievance is that the
Designated Authority not having followed the procedure prescribed either
under paragraph 7 or paragraph 8 its case could not subsequently be considered
according to those paragraphs as neither any notice was given by the G
Designated Authority that the appellant would be treated according to non
market economy principles nor was any specific issue raised in this regard.
This is admitted in the counter affidavit filed on behalf of the respondent No.
l where it is said that the respondent No. 1 did not raise the issue of non
market economy in its written submissions because the domestic industry H
342 SUPREME COURT REPORTS (2005) 2 S.C.R.

A was not aggrieved by the preliminary finding which imposed anti-dumping
duties on exports from China. However, it is stated that the respondent No.
I had mentioned in its petition and rejoinder that China was a non market
economy. In fact it was the respondent No. 1's stand in its appeal from the.
final finding of the Designated Authority that the Designated Authority had
B failed to apply the principles applicable to non-market economy countries to
the Chinese exporters including the appellant as introduced by the two
notifications. J
'
Learned co1:1nsel appearing on behalfofthe respondent No. 1 submitted
strenuously that China was in fact a non-market economy and there was no
C question of applying paragraph 8 as introduced by the second notification on
3 LS.2001 as the period of investigation was prior to the issuance of that
notification. It is submitted that since non• market economy had to he decided
on a country wise basis, individual concerns could not be separately
represented. According to the Respo_ndent No. l iri the decision of this Court
Designated Authority v. Haldar Topsoe AIS, [2000] 6 SCC 626 it has been
D held that the normal value of a non-market economy is country specific.
Therefore a uniform rate was to be taken for all Chinese exporters and it was
not open to an individual unit to claim that it was run according to market
economy principles. It is submitted that the preliminary finding of .the
Designated Authority was in the circumstances correct. According to the
E respondent No. I, the verification conducted by the Designated Authority at
the appellant's unit in China was questionable.
l
It is not necessary to decide whether China was to be treated as a non- t
market economy during the period of investigation or whether the normal
value should be decided on a country-wise basis, as we are not prepared to - I

F allow the respondent No. 1 to take up what is clearly an inconsistent stand.
Its submission before the Tribunal as recorded in the Tribunal's order was
that the final finding of the Designated Authority could not be sustained .
because it was in clear violation of the Rules as amended by the notifications
dated 15th July, 1999 and 3 lst May, 2001. The stand has been reiterated ·
before this Court in the counter affidavit filed by the respondent No. 1 where
G it is categorically averred that the notification dated 31st May, 2001 had been
violated by the Designated Authority and that the Tribunal had rightly come
to the conclusion that the Designated Authority had failed to determine the
normal v~lue of the Appellants exports in accordance with the Rules applicable
to non-market economy units as provided inter alia in the notification dated·
H 31st May, 200 l. Indeed that was the basis on which the respondent No. 1's
r
~
SHENYANGMASTSUSHITA S. BATTERY CO. LTD 1·. EXIDE INDUS. LTD. [RUMA PAL.l) 343

appeal had been allowed by the Tribunal. If the Tribunal was correct, then.. A
even according to the Tribunal, under the second notification dated 31st
May, 200 I, market driven units in non-market economy countries could prove
that they were operating according to market principles. This exception has
been provided to the rule of uniform normal value for all exporters in non-
market economy countries. The decision in Haldor Topsoe (supra) is
inapplicable as it was not rendered with reference to paragraphs 7 or 8 of B
Annexure I to the Rules.

The only ground on which the Tribunal upset the final finding of the
Designated Authority that the appellant operated according to market economy
principles was that the Designated Authority had not physically verified the C
information given by the appellant. That was factually erroneous. It was the
clear case of the appellant that it had already produced sufficient material
before the Designated Authority to justify a finding that the appellant was
operating according to market conditions. It must be remembered that the
Designated Authority had already visited the manufacturing units of the
appellant in China and verified the information produced by the appellant. D
The Tribunal had only directed the Designated Authority to consider the data
already made available by the appellant in the light of paragraphs 7 and 8 of
Annexure I. That is exactly what the Designated Authority did. Since the
Designated Authority had verified the data prior to submitting its final finding,
there was no question of the Designated Authority re-verifying the information E
given by the appellant. That this could not have been even within the
contemplation of the Tribunal is clear from the fact that the Tribunal had
granted only seven days time within which the Designated Authority was to
submit its report. The respondent No. I's contention that the verification was
improperly done cannot be gone into at this stage. It is a question of fact,
which should have been clearly raised and proved. In fact it does not appear F
that such a grievance was made before the Tribunal by the respondent No.
1.

Having found that the Designated Authority had violated the
notifications, the Tribunal chose to rectify the situation by issuing the order
dated 25th November, 2002 which we have quoted earlier. Neither of the G
parties have impugned that order by which the Designated Authority was
directed to comply with the notifications. It was then not open to the Tribunal
to proceed on the basis that there was a violation of the notifications.

The Tribunal did not address itself to the question whether there was H
344 SUPREME COURT REPORTS (2005] 2 S.C.R.

A sufficient evidence to support the Designated Authority's finding that there
was no dumping by the appellant. It held that the appellant was liable to pay
dumping duty without considering the injury if any to the domestic industry
and the causal connection between the alleged dumping and the injury.

While the matter was pending before this Court, on 26th October, 2004
B a mid term review was held by the Designated Authority. The Designated
Authority detennined the normal value of the export from Chin~ as per the .............,.

Rules relating to the non market economy contained in paragraph 7 of
Annexure-1 to the Rules, but found that in fact there was a negative dumping
margin as far as the appellant was concerned and that therefore it was not
C liable to pay anti dumping duty. This mid tenn review which was carried on
26th October, 2004 is not the subject matter of challenge in this appeal, but
it has been contended by the Respondent No. I that t~e appeal has beco~e
infructucius.

We think not. For one there may be a question of refund of the anti
D dumping duty paid by the appellant pursuant to the preliminary notification.
For another we are of the finn view for the reasons stated earlier that the
decision of the Tribunal cannot be allowed to stand .. The only question that
remains is whether the matter should b~ rerp.anded back to the Tribunal after
setting aside the order.

E ln our opinion no purpose would be served in remanding the matter
back to the Tribunal after setting aside the order at this stage. Admittedly the
Designated Authority had initiated, conducted and concluded the proceedings
under Rules I to 6. If non market economy principles have now to be applied
then' the entire process would have to start from scratch. [ndeed whether
F China should have been treated as a non-market economy for the period in
question· is itself in dispute. Under Rule 17, the Designated Authority is
required to submit its final finding within one year from the date of initiation
of the notice or at the most by another six months if the Central Government
is satisfied that there are special circumstances. The period has long since
expired.
G
The appeal is accordingly aliowed and the decision of the Tribunal is
set aside without any order as to costs. ·

SKS. Appeal allowed. ·