Supreme Court Clarifies Anti-Dumping Duty on Stainless Steel Imports: Commissioner of Customs vs. Mascot International (2017)

Date of the Judgment: July 3, 2017

Citation: 2017 INSC 606

Judges: A.K. Sikri, J., Ashok Bhushan, J.

Can a slight variation in the width of imported stainless steel products exempt them from anti-dumping duties? The Supreme Court of India recently addressed this question, focusing on whether tolerance limits should be considered when determining the applicability of anti-dumping duties on imported goods. This case clarifies the interpretation of notifications related to anti-dumping duties, particularly concerning the width specifications of imported stainless steel flat products. The judgment was delivered by a bench comprising Justice A.K. Sikri and Justice Ashok Bhushan, with the opinion authored by Justice A.K. Sikri.

Case Background

The case revolves around the imposition of anti-dumping duties on imported cold-rolled flat products of stainless steel. The Central Government, through Notification No. 14/2010-Cus., dated 20.02.2010, had imposed these duties on products with a width between 600 mm and 1250 mm. However, the notification did not specify any tolerance limits for these measurements.

Indian manufacturers argued that importers were circumventing these duties by declaring products with widths slightly exceeding 1250 mm, thus avoiding the levy. To address this, a mid-term review led to the issuance of Notification dated 08.06.2011, which introduced tolerance limits. For products with a specified width of 1000mm or more but not exceeding 1250mm, a width tolerance of (+) 30mm was applied for mill-edged products and (+) 4mm for rim-edged products.

M/s. Mascot International, the respondent, imported stainless steel products with widths greater than 1250 mm but less than 1300 mm. They contended that they were not liable for anti-dumping duty, as the original notification specified a maximum width of 1250 mm. The Customs, Excise & Service Tax Appellate Tribunal (CESTAT) initially sided with the respondent. The Commissioner of Customs then appealed to the Supreme Court of India.

Timeline

Course of Proceedings

The Customs Department initially rejected the respondent’s contention that their imported goods were not subject to anti-dumping duty. Aggrieved, the respondents appealed to the Customs, Excise & Service Tax Appellate Tribunal (CESTAT). The CESTAT ruled in favor of the respondents, holding that the original notification specified a maximum width of 1250 mm, and thus, the imported goods were not subject to the anti-dumping duty. The Commissioner of Customs then appealed to the Supreme Court against the CESTAT order.

Legal Framework

The core of the legal framework in this case is based on the notifications issued by the Central Government under the Customs Act, 1962, specifically concerning anti-dumping duties.

Notification No. 14/2010-Cus., dated 20.02.2010, imposed anti-dumping duty on “cold-rolled flat products of stainless steel of the width of 600mm upto 1250 mm of all series further worked then Cold Rolled (cold reduced) with a thickness of up to 4 mm“. This notification did not specify any tolerance limits for the width of the products.

Subsequently, Notification dated 08.06.2011, amended the earlier notification by inserting tolerance limits. It stated:

• “(a) width tolerance of (+) 30mm shall apply to Mil edged cold rolled flat products of stainless steel of specified width of 1000mm or more but not exceeding 1250mm.”
• “(b) width tolerance of (+) 4 mm shall apply to rim edged cold rolled flat products of stainless steel of specified width exceeding 1000mm but not exceeding 1250mm.”

Arguments

Arguments by the Commissioner of Customs:

• The Commissioner argued that the mid-term review and subsequent Notification dated 06.09.2011, which introduced tolerance limits, should be considered. According to this notification, a tolerance of +30 mm should be applied to the specified width of 1250 mm for mill-edged products. Therefore, products with a width between 1251 mm and 1280 mm should also be subject to anti-dumping duty.

• The Commissioner pointed out that the imports in question occurred after the issuance of the Notification dated 06.09.2011, and the width of the imported products fell within the range of 1251 mm to 1280 mm. Thus, the anti-dumping duty was applicable.

Arguments by M/s. Mascot International:

• The respondent contended that the original Notification No. 14/2010-Cus., dated 20.02.2010, clearly specified that anti-dumping duty was applicable only to stainless steel products with a width between 600 mm and 1250 mm. Since their imported products had a width exceeding 1250 mm, they should not be subject to the duty.

• They argued that the tolerance limits introduced by the subsequent notification should not be applied retrospectively to their imports.

The innovativeness of the argument by the Commissioner of Customs lies in the interpretation of the tolerance limits introduced by the subsequent notification, arguing that it should be applied to determine the applicability of anti-dumping duties.

Issues Framed by the Supreme Court

The Supreme Court framed the following substantial question of law:

1. “Whether Anti Dumping Duty is applicable on flat roll product of stainless steel having width between 1250 mm to 1280 mm under Notification No. 14/2010-Cus., dated 20.02.2010 as amended by Notification 86/2011-Cus, dated 06.09.2011?”

Treatment of the Issue by the Court

Authorities

The Court considered the following legal provisions:

• Notification No. 14/2010-Cus., dated 20.02.2010: This notification imposed anti-dumping duty on cold-rolled flat products of stainless steel with a width between 600 mm and 1250 mm.
• Notification dated 08.06.2011: This notification introduced tolerance limits for the width of stainless steel products, specifying a tolerance of +30 mm for mill-edged products with a specified width of 1000 mm or more but not exceeding 1250 mm.
• Notification 86/2011-Cus, dated 06.09.2011: This notification is the amendment notification to the notification dated 08.06.2011.

Judgment

How each authority was viewed by the Court?

• Notification No. 14/2010-Cus., dated 20.02.2010: The court acknowledged this notification as the basis for imposing anti-dumping duties but noted that it lacked tolerance limits.
• Notification dated 08.06.2011: The court viewed this notification as the one introducing tolerance limits, clarifying the scope of the anti-dumping duty.
• Notification 86/2011-Cus, dated 06.09.2011: The court viewed this notification as the amendment notification to the notification dated 08.06.2011, which clarified the scope of the anti-dumping duty.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the need to interpret the notifications in a manner that prevents circumvention of anti-dumping duties. The Court emphasized that the tolerance limits introduced by the Notification dated 06.09.2011, were crucial for determining the applicability of the duty. The Court noted that the imports occurred after the issuance of this notification and, therefore, the tolerance limits should apply.

The Court’s reasoning was primarily based on the legal interpretation of the notifications and the need to prevent circumvention of anti-dumping duties. The factual aspects of the case, such as the specific width of the imported goods, were considered in light of these legal interpretations.

The Court did not consider any alternative interpretations. The final decision was based on the clear language of the notifications and the intent to prevent circumvention of anti-dumping duties.

The Supreme Court held that the anti-dumping duty was applicable to the imported products. The court reasoned that the tolerance limits introduced by the Notification dated 06.09.2011, should be applied, and the imports were after the notification dated 06.09.2011. The Court stated:

“It becomes clear from the aforesaid that those products where the width is 1250 mm, tolerance level up to 1250 mm is to be applied meaning thereby the products’ width between 1251 mm to 1300 mm were also supposed to bear anti dumping duty.”

“In this manner, if the width is between 1251 mm to 1280 mm, the anti dumping duty would be payable as per the Notification.”

“The CESTAT while deciding the appeal in favour of the responents did not consider the impact of review Notification dated 06.09.2011 in its proper prospects as indicated above.”

There were no dissenting opinions in this case. The decision was unanimous.

Key Takeaways

• Anti-dumping duties on imported goods are to be determined based on the specified width and the tolerance limits, as clarified by subsequent notifications.

• Importers cannot circumvent anti-dumping duties by importing products with widths slightly exceeding the specified limits, if tolerance limits are applicable.

• Notifications introducing tolerance limits are applicable to imports made after the date of such notification.

• The judgment clarifies that tolerance limits specified in notifications are to be strictly applied when determining the applicability of anti-dumping duties.

Directions

The Supreme Court allowed the appeal of the Commissioner of Customs and set aside the order of the CESTAT in Civil Appeal No(s). 10483/2013. However, in Civil Appeal Nos. 2407-2408/2014, the Court dismissed the appeals, as the goods had been re-exported.

Development of Law

The ratio decidendi of this case is that anti-dumping duties are applicable to imported goods based on the specified width and the tolerance limits, as clarified by subsequent notifications. This judgment clarifies that tolerance limits specified in notifications are to be strictly applied when determining the applicability of anti-dumping duties.

The judgment clarifies the interpretation of notifications related to anti-dumping duties, particularly concerning the width specifications of imported stainless steel flat products. It emphasizes that tolerance limits specified in subsequent notifications are to be applied when determining the applicability of anti-dumping duties.

Conclusion

The Supreme Court’s decision in Commissioner of Customs (Export) Nhava Sheva vs. M/s. Mascot International clarifies that anti-dumping duties on imported stainless steel products are applicable based on the specified width and tolerance limits, as introduced by subsequent notifications. The Court emphasized that tolerance limits should be applied to prevent circumvention of anti-dumping duties. The judgment provides a clear guideline for the interpretation of notifications related to anti-dumping duties and ensures that importers cannot evade these duties by importing products with widths slightly exceeding the specified limits.