Dhruv GuptaPartner
Bhargav MansattaCounsel
Bhava SharmaConsultant
Key Developments
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Trade remedy actions on imports into India in the second quarter of 2024
Trade remedy actions in the second quarter of 2024 highlight India’s continued focus on protecting domestic industries from unfair trade practices, particularly those originating from China. These actions include initiating new trade remedy investigations, issuing recommendations for imposition of trade remedy measures on certain products and imposing trade remedy measures. These are discussed in detail below.
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Trade remedy investigations initiated
The Directorate General of Trade Remedies (DGTR) initiated eight new trade remedy investigations covering various products from certain countries. These investigations focus on the potential dumping of products, namely, Acrylic Fibre, Liquid Epoxy Resins, Glufosinate, Lift Guide Rails, Glass Fibre, and Thiram. Additionally, sunset review of anti-dumping duty on Purified Terephthalic Acid and countervailing duty on Continuous Cast Copper Wire Rods is also underway. Notably, China is a subject country in six out of these eight investigations.
Governments of exporting countries, exporters, and Indian importers of these products are expected to actively participate in the investigations to minimise potential negative impact on their businesses.
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Recommendations issued for imposition of trade remedy measures
The DGTR has recommended definitive anti-dumping duties on Anodized aluminium frames for solar panels/modules, Isobutylene-Isoprene Rubber and Chlorinated Polyvinyl Chloride (CPVC), and definitive countervailing duties on Welded Stainless-Steel Pipes and Tubes, Atrazine Technical and New Pneumatic Radial Tyres for buses and lorries. Safeguard (quantitative restriction) measures on Low Ash Metallurgical Coke have also been recommended.
The implementation of these recommendations is awaited.
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Anti-dumping duties imposed
The Ministry of Finance (MoF) has confirmed definitive anti-dumping duties on four imported products from specific countries for five years, following recommendations by the DGTR. Notably, the MoF did not impose duties on one product despite DGTR's recommendation. Additionally, provisional anti-dumping duties were imposed on two products for six months based on the recommendation of the DGTR.
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Appeals against trade remedy measures on hold as recent amendment adds to uncertainty surrounding the appeal process
The process for appealing trade remedy decisions in India has come to a standstill, raising concerns for businesses seeking legal recourse. Till November 2023, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) used to constitute an anti-dumping bench every month to hear appeals against imposition or non-imposition of trade remedy measures. However, no such bench has been constituted since December 2023 nor has any decision been pronounced by the CESTAT on any trade remedy matter since then. All existing and fresh appeals before CESTAT have remained pending. There is no communication from CESTAT explaining this long absence of an anti-dumping duty bench. This has resulted in a backlog of pending appeals, leaving companies with no avenue to challenge trade remedy decisions.
The possible reason for this long absence of anti-dumping duty bench may be the recent amendment to the Customs Tariff Act, 1975 made through the Finance Act, 2023. This amendment seemingly restricts CESTAT's jurisdiction to only reviewing the DGTR’s recommendations, and not the final decision by the MoF. Prior to this amendment, CESTAT had jurisdiction to review the decisions taken by the MoF pursuant to the DGTR’s recommendations. Thus, the decision of MoF was also ‘appealable’ before CESTAT prior to the amendment made through the Finance Act, 2023 and CESTAT routinely upheld, modified and set aside the decision of MoF regarding trade remedy measures. This amendment has created ambiguity regarding:
- Scope of judicial review and CESTAT’s authority: The extent of CESTAT's power to review trade remedy measures is unclear. It is also not known whether CESTAT can uphold, modify, or set aside trade remedy measures.
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Role and obligation of MoF:
- The role and legal obligation of MoF as a respondent in appeal proceedings now becomes uncertain. If CESTAT can only uphold, modify, or set aside a recommendation of the DGTR and not entertain appeals against the decisions taken by the MoF, the MoF may not be required to be respondent party in the appeal proceedings.
- It is clear that the MoF has the discretion to either accept or reject the recommendations of the DGTR and no change has been made to this discretionary power as of now. However, how this discretionary power will be applied to a DGTR recommendation which has been modified, upheld or set aside by CESAT in appeal now becomes unclear. Questions arise on whether the MoF can still reject a DGTR recommendation if it has been either modified or upheld by the CESTAT. If yes, then it is unclear as to the purpose this appeal process is serving. The discretion becomes even more ambiguous in cases where the CESTAT’s ruling has been further appealed before a High Court or the Supreme Court of India.
- Timeline for filing appeals: The prescribed time for filing any appeal before the CESTAT is 90 days. The prescribed time for MoF to accept or reject the recommendation of DGTR is also 90 days (three months). Therefore, an appeal filed against a DGTR recommendation before the 90-day period is up may become redundant if the recommendation is not accepted by the MoF and consequently no final trade remedy measure is imposed. On the other hand, filing an appeal after the MoF’s decision may result in the appeal being filed after the 90-day limitation period, creating the risk of dismissal for being time barred.
In view of these concerns and others that may arise due to the ambiguous process, clarity on the appeals process under the amended Customs Tariff Act, 1975 becomes necessary through judicial pronouncement or further amendment. Businesses involved in trade remedy matters should closely monitor developments to navigate the current uncertainties.
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Directorate General of Foreign Trade expands the scope of exemption from domestic quality standards for goods used in export manufacturing
The Directorate General of Foreign Trade (DGFT) can allow exemptions from prescribed domestic standards and quality specifications for goods used in export manufacturing. This exemption significantly reduces the compliance burden on exporters by allowing them to use inputs that may not comply with certain domestic Quality Control Orders issued by specific ministries listed in Appendix 2Y of the Foreign Trade Policy. To further expand the benefit of this exemption, the DGFT has recently added the Ministry of Mines and the Department of Chemicals and Petrochemicals to the list of exempting ministries. This is a welcome move for the concerned exporters as it will reduce their production costs and provide flexibility in sourcing manufacturing inputs.
