Usually, the trend in Indian trade remedy investigations has been to accept the recommendations (whether positive or negative) of DGTR by the Ministry of Finance (MoF)(implementing authority) as DGTR had already conducted a detailed investigation on various aspects.
However, during the past 2 years, there has been a new trend whereby positive recommendations of DGTR were increasingly turned down by implementing authority. While MoF does have discretion in accepting or rejecting the recommendation, however, absence of reasons for rejecting the recommendations while issuing Office Memorandums, increasingly becoming a controversial issue.
This act of issuing unreasoned or non-speaking Office Memorandum to reject the recommendations was recently tested in the Appellate Tribunal in the case of Jubilant Ingrevia Limited vs Union of India, where the Tribunal answered the following important questions:
(A) Whether appeal would lie against MoF OM? - Whether Order of MoF an order of determination?
Tribunal noted that under Rule 18, discretion is vested in the Central Government to either impose anti-dumping duty or not impose an anti-dumping duty.
Tribunal held that through Office Memorandum, there was no doubt that the Central Government had made a determination regarding the existence, degree and effect of dumping in relation to import of any article and concluded that an appeal would clearly lie to the Tribunal under section 9C of the Tariff Act.
(B) Whether OM can be set aside if no reasons are provided for non-imposition?
Based on analysis of past landmark decisions, Tribunal held -
(a)Requirement to record reasons should govern decisions of an authority exercising quasi-judicial functions, though the extent and nature of the reasons would depend on the particular facts and circumstances.
(b) Reasons should be clear and explicit so as to indicate that the authority has given due consideration to the points of controversy.
(c) Discretion has to be exercised in a judicious manner and reasons for exercising discretion must be cogent and convincing.
(d) The power, if exercised on non-consideration or non-application of mind to relevant factors, will be regarded as an erroneous exercise of power.
Tribunal further reckoned that in the facts of the present case, it was important for MoF to record reasons as -
(i) No doubt a discretion vested with the Central Government to either accept or not accept the final findings of the designated authority, but that discretion was required to be exercised in a judicious manner by a reasoned order
(ii) Recording of reasons assumes more importance in the present case, because of the fact that the Tariff Act and the AD Rules which such discretion is required to be exercised by the Central Government, themselves provide for a detailed analysis of a host of factors for the imposition of anti-dumping duty.
(iii) The designated authority had, after a detailed analysis, arrived at a conclusion that antidumping duty was required to be imposed and accordingly made a recommendation to the Central Government. It was, therefore, necessary for the Central Government to have examined all the relevant aspects necessary for deciding whether the anti-dumping duty was required to be imposed or not and deal with the findings recorded by the designated authority if the Central Government was to take a view different from the view expressed in the recommendation made by the designated authority.
(iv) It is also necessary for the Central Government to record reasons in such a situation because an appeal lies to the Tribunal against the determination made by the Central
(C) Whether Public Interest be a ground for non-imposition?
Respondents raised an argument that superior public interest can be a ground to refuse imposition of anti-dumping duty.
On this, Tribunal held that no doubt this factor can be taken into consideration by the Central Government in not recommending imposition of anti-dumping duty, but reasons have to be provided for so holding. The decision of the Central Government contained in the Office Memorandum also does not state that superior public interest is a reason for not imposing anti-dumping duty.
(D) What about 3 months' time limit to take a decision?
Rule 18 of AD Rules requires that Central Government has to take a decision on final recommendation made by DGTR. In the matter at hand and other similar cases, the 3 month period had long lapsed.
On this issue, Tribunal held that though Rule 18 provides that the Central Government has to take a decision within three months of the date of publication of final findings by the designated authority, but as the matter is being remitted to the Central Government for taking a fresh decision, this limitation would not apply.
In view of the above, the matter was remitted to the Central Government to take a fresh decision on the recommendation made by the designated authority.
The task for the Ministry of Finance is cut out. It will be interesting to see how the Ministry of Finance responds - whether it will make a U-turn on its own earlier decision and accept recommendations (which will reflect poorly on MoF's decision-making process) or will it issue another notification with a reasoned order or challenge the Tribunal's order (which will most likely see protracted litigation)?
We will have to wait and watch on this development.