The imposition of trade remedial measures in India is a two-step process – the investigation conducted by the Directorate General of Trade Remedies (‘DGTR’) under the Ministry of Commerce and the final imposition of measures by the Department of Revenue under the Ministry of Finance (‘MoF’). This division of powers is clearly laid out in the Customs Tariff Act (‘CT Act’) read with the rules issued thereunder.

The appeal provision for any trade remedial measure is contained in Section 9C of the CT Act. It provides for an appeal to the Customs Excise and Service Tax Appellate Tribunal (‘Tribunal’) against the ‘order of determination or review’ regarding the existence, degree and effect of any subsidy or dumping. The last two to three years have seen a vigorous court battle on the powers of Tribunal to entertain appeals under Section 9C against the MoF’s refusal to impose the measures inspite of receiving positive recommendations from the DGTR. Much controversy has centred around interpretation of the phrase ‘order of determination’ – whether this phrase covers the orders issued by the DGTR or the decision of the MoF? The retrospective amendments proposed by the Finance Bill, 2023 to Section 9C and other related provisions have made an attempt to resolve this dispute. This article traces the background of the issue, the previous jurisprudence thereon, the amendments made and finally concludes with some comments for the readers.

Background

Under the law, DGTR is tasked with the responsibility to investigate and, if necessary, recommend the imposition of measures, such as the anti-dumping duties. If it reaches a positive determination regarding the existence of conditions for imposition of measures, it issues an order in the form of a ‘final finding’ which is a recommendation to the MoF to impose the measure. The law provides final decision-making power to the MoF who may then decide to impose or not to impose the measure.

The history shows that between 1995 and 2020, MoF has mostly accepted the recommendations of DGTR barring a few instances such as Penicillin-G[1] and Newsprint[2] cases wherein the MoF decided not to impose the measure despite a positive finding from the DGTR. The two contrary decisions of MoF were arguably on the grounds of larger public interest considering the nature of commodities involved and its impact on people at large.

However, this position changed drastically between 2020 and 2022. During this period, the MoF has not only rejected numerous positive findings of the DGTR but also rescinded several existing trade remedy measures on commodities such as steel. In several sectors, ranging from rubber chemicals to pharma and textile among others, the MoF either did not issue any notification imposing the duty within the prescribed timeline of three months or simply issued an inter-departmental communication to the DGTR in the form of an office memorandum stating that MoF has decided not to accept the recommendations of the DGTR.

Aggrieved by the MoF’s decision, the domestic industry has appealed the MoF’s decisions in several cases before the Tribunal.

Court interventions

Section 9C of the CT Act confers appellate jurisdiction to the Tribunal against the orders of determination regarding the existence, degree and effect of any subsidy or dumping. Section 9C, as it stands today, is as follows –

‘SECTION 9C. Appeal. — (1) An appeal against the order of determination or review thereof regarding the existence, degree and effect of any subsidy or dumping in relation to import of any article shall lie to the Customs, Excise and Service Tax Appellate Tribunal constituted under section 129 of the Customs Act, 1962 (52 of 1962) (hereinafter referred to as the Appellate Tribunal).’

Before the Tribunal, the preliminary issue was whether the MoF’s decision refusing imposition of measures amounted to an ‘order of determination’ which dealt with the existence, degree, or effect of dumping or subsidy.

In some cases the domestic industry challenged the office memorandum while in other cases it was claimed that silence of MoF amounted to a decision refusing to impose the measure. In both cases, the decisions of MoF were challenged under Section 9C of the CT Act.

Relying on the Hon’ble Supreme Court’s decision in Saurashtra Chemicals[3], the Tribunal in a series of decisions, including in the cases of Jubilant Ingrevia[4] and Apcotex[5], interpreted the phrase ‘order of determination’ as the final determination of the Central Government (MoF), against which an appeal shall lie to the Tribunal under Section 9C of the CT Act. In Saurashtra Chemicals, the Supreme Court held that the DGTR’s orders are only recommendatory and hence an appeal shall lie against the final determination of the Central Government.

The Tribunal in Jubilant Ingrevia went on to hold that the MoF exercises a quasi-judicial function while making its decision to impose or not to impose the measures, repelling the contention that the MoF’s powers are legislative in nature. Hence, the office memorandum was set aside with a direction to the MoF to issue a reasoned order. What is noticeable is that the MoF has not issued any reasoned orders till date despite a series of Tribunal orders following Jubilant Ingrevia and Apcotex. A writ against the Tribunal’s decision in Jubilant Ingrevia is also currently pending before the Hon’ble Delhi High Court[6].

Retrospective amendments introduced through the Finance Bill, 2023

While the above litigation ensues, the Parliament, under the Finance Bill, 2023, has sought to make retrospective amendments to Section 9C and other relevant provisions of the CT Act. These changes are sought to be introduced as clarificatory amendments with an objective to bring an end to the ensuing litigation discussed above. The amendments are as under:

1. Amendments to Section 8B, 9, and 9A (trade remedial provisions concerning safeguards, countervailing and anti-dumping duties):

The amendments to Section 8B, 9, and 9A clarify that the Central Government (MoF) merely ‘considers’ the ‘determination’ or ‘review’ that is conducted by the DGTR under the rules framed under these sections.

1. Addition of an explanation under Section 9C which states that:

‘Explanation. – For the purposes of this section, ‘determination’ or ‘review’ means the determination or review done in such manner as may be specified in the rules made under sections 8B, 9, 9A and 9B.’

It is noteworthy that the rules framed under Sections 8B, 9, and 9A provide for ‘determination’ or ‘review’ to be conducted by the DGTR. Hence, the explanation intends to clarify that an appeal shall only lie against the ‘determination’ or ‘review’ by the DGTR. In other words, the amendments intend to imply that an appeal shall not lie against the decisions of the MoF wherein MoF only considers (and not determines) the imposition of measures. These proposed amendments are applicable retrospectively from 1 January 1995 (i.e., the day on which CT Act was amended to add provisions relating to trade remedial measures).

Conclusion

The amendments seek to clarify legislative intent that the Tribunal never had the jurisdiction to entertain the appeals against the MoF decisions. What the amendments could also mean is that in case the Tribunal had such an appellate jurisdiction (subject to the outcome of the Delhi High Court’s decision in Jubilant Ingrevia), the Parliament has retrospectively taken away the appellate powers of the Tribunal to entertain such appeals.

If the amendments have their intended effect, the domestic industry in India will not have a statutory appeal remedy against the MoF’s decisions not to impose the measures despite going through the full rigors of the investigation process before the DGTR. However, it is possible that such decisions can still be questioned before the constitutional courts under Article 226 of the Constitution of India. It will have to be seen whether such a remedy is effective given the discretion of courts to entertain such petitions, time taken to pursue the matter and the appreciation of nuanced facts relating to trade remedial measures.

The amendments leave some questions unanswered. First, what happens to the earlier judgments passed by the Tribunal on the same issue? Second, whether the timeline of 90 days to file the appeal before the Tribunal begin from the date of DGTR’s final findings? The second question assume significance since the appeals filed by importers / exporters against the DGTR’s decision could become infructuous if the MoF refuses to impose the measures. The precedents on the issue and the wordings of amendment could also give rise to further litigation. It is possible for the domestic industry to still argue based on the Supreme Court’s ruling in Saurashtra Chemicals that the DGTR’s decisions are only recommendatory and hence an appeal shall still lie against the final decision of MoF. Only time will tell as to how these issues are resolved in courts.

[The authors are Partner and Senior Associate, respectively, in WTO and International Trade Division in Lakshmikumaran & Sridharan Attorneys, New Delhi]

1. [1] Anti-Dumping Investigation concerning imports of Penicillin-G Potassium originating in or exported from China PR and Mexico and 6-APA originating in or exported from China PR, Final Findings dated 20 January 2011.
2. [2] Anti-dumping investigation concerning import of Newsprint from the United States of America, Canada and Russia, Final Findings dated 20 December 1996.
3. [3] Saurashtra Chemicals Ltd. v. Union of India, 2000 (118) ELT 305 SC.
4. [4] Jubilant Ingrevia Limited v. the Union of India, Final order in Anti-Dumping Appeal No. 50461 of 2021.
5. [5] Apcotex Industries Limited v. Designated Authority, Final order in Anti-Dumping Appeal No. 51048 of 2021.
6. [6] Writ Petition (Civil) No. 5185 of 2022.