Latest Expert Exchange Queries

GST Demo Service software link:
Username: demouser Password: demopass
Get your inventory and invoicing software GST Ready from Binarysoft
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
Popular Search: empanelment :: VAT RATES :: cpt :: ACCOUNTING STANDARD :: articles on VAT and GST in India :: Central Excise rule to resale the machines to a new company :: due date for vat payment :: TAX RATES - GOODS TAXABLE @ 4% :: form 3cd :: ARTICLES ON INPUT TAX CREDIT IN VAT :: VAT Audit :: list of goods taxed at 4% :: TDS :: ACCOUNTING STANDARDS :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes
News Headlines »
 How to save income tax? Here are 6 investments with tax free income
 10 Top salary deductions that can save tax for you
 What are the tax saving options beyond Section 80C?
 The penalties for not paying tax on time
 How to make your salary tax efficient
 I-T Department may go into overdrive this quarter
 Ways to reduce the TDS deduction from your salary
 4 Tips for choosing who prepares your 2017 Tax Returns
 Processing of income-tax returns under section 143(1) of the Income-tax Act which were filed in Forms ITR-1 to 6 & applicability of section 143(1)(a)(vi)
 Price Waterhouse gets 2-year ban in Satyam case
 How to save income tax under section 80C

Injury in computing `non-injurious price'
September, 23rd 2006
The real world today is cruel and harsh. "It respects power, not poverty or weakness, and power comes from a high level of industrialisation. Hence, if we wish to get respect in the comity of nations, we must make India a modern, powerful, highly industrialised state." Thus said the apex court on September 11, when concluding its decision in the Reliance Industries Ltd vs Designated Authority case. Story behind the case traces back to October 1998, when Reliance filed an application seeking the imposition of anti-dumping duty on PTA (pure terephthalic acid) imported from Japan, Malaysia, Spain and Taiwan. PTA, for starters, is used in the manufacture of polyester yarn, which in turn is used for manufacture of textiles. Section 9A of the Customs Tariff Act, 1975 is on anti-dumping duty on dumped articles. Dumping, in international trade, occurs "when one country exports a significant amount of goods to another country at prices much lower than in the domestic market," as defines. Anti-dumping duty is "intended to discourage importation and sale of foreign-made goods at prices substantially below domestic prices for the same items." The Central Government can impose such a duty `not exceeding the margin of dumping in relation to such article.' The Designated Authority or the DA in the Ministry of Commerce took up Reliance's application, and conducted investigations. In April 2000, the DA arrived at `findings', on the basis of which the Central Government imposed anti-dumping duty on PTA from Spain at the rate of Rs 521 per tonne. "No duty was imposed on exports from the other countries," informs the text of the Supreme Court's judgment. Reliance averred that the DA had `reached its findings' upholding the contention that exports from Japan and Malaysia were also at dumped prices, and that the domestic industry had suffered injury. "Yet no anti-dumping duty was recommended in respect of imports from Japan and Malaysia on the ground that the imports from these countries were above the `non-injurious price' and, therefore, there was no causal link between the dumped imports from these countries and the injury to the domestic industry." This was "the result of faulty determination of the fair landed value in respect of the imported goods and non-injurious price in respect of the domestic manufacturer," argued Reliance. Landed value had been determined at an inflated amount and that was the reason for the incorrect determination that the landed value of imports was more than the non-injurious price, pointed out Reliance. Antidote to unfair competition Justices Ashok Bhan and Markandey Katju of the Supreme Court studied the purpose of Section 9A and said, "Our industries, which had been built up after Independence with great difficulties must not be allowed to be destroyed by unfair competition of some foreign companies." Dumping is a well-known method of unfair competition adopted by foreign companies, they noted. Dumping is done by selling goods at a very low price for some time so that the domestic industries cannot compete and are, thereby, destroyed, and after such destruction has taken place, prices are again raised, they explained. The text of the verdict speaks of terms used in anti-dumping law. Such as: `margin of dumping', which is the difference between `normal value' (that is, price in the domestic market of the foreign exporter, or if there are no domestic sales, the price at which it is exported to another country or the constructed cost of production) and the `export price' at which goods are exported to India. A `positive dumping margin' arises when goods are exported to India at prices below the `normal value'. To determine this margin, the DA has to ascertain whether the dumping of goods is causing injury to domestic industry. For this, there are `injury parameters' mentioned in the Rules. Margin of injury Another phrase is `margin of injury', which is `the difference between the landed value of exports and the fair selling (notional) price of the domestic manufacturer,' which in turn is usually called the `non-injurious price' or NIP. To compute NIP, the DA considers cost of production (less interest); selling, general and administrative expenses (SG&A); and a fixed rate of return on the capital employed of the domestic industry. Though anti-dumping duty can legally be levied up to the full extent of `margin of dumping', in practice it is restricted to `margin of injury' if the injury is lower than the margin of dumping. One learns from the text of the judgment that the DA had found the margins of dumping for manufacturers from Japan was between 29 per cent and 34.26 per cent. For Malaysia it was 68.20 per cent, and in the case of Spain, 15 per cent. The DA also found `material injury to the domestic industry in India on the basis of reduction in the sales realisation and decreases of profitability'. However, the DA held `there was no causal link between dumping and injury as regards Japan and Malaysia.' Joseph Vellapally argued for Reliance. One of the points he mentioned was that the DA had not given any reasoning for coming to its conclusion about NIP. `Disclosure Statement issued by the DA' did not state what elements of cost were being disallowed and what the reasons for doing so were. Why confidentiality from Reliance in NIP computation, he asked. Wrong approach The court was of the view that the DA had `clearly erred in law' by determining injury and computing NIP for a particular company or enterprise, instead of the domestic industry as a whole. "The approach adopted by the DA, in our opinion, will lead to a situation where an artificial discrimination will be created between the integrated and non-integrated companies to the peril of the smaller plants with no backward integration (that is, a factory which also produces its own raw materials, etc)," reasoned the court. The DA's work came in for further criticism thus: "The DA has failed to appreciate that once dumping and injury is established, the existence of an unfair trade practice by the exporters is undisputed and a restrictive view in computing an unduly low NIP would lead to granting a premium to the erring exporters at the cost of the domestic industry, which is suffering injury." And there was more: "For the purpose of computing the NIP, the DA appears to have taken the best capacity utilisation (which is in excess of 100%) over the past three years for the purpose of apportionment of the fixed expenses in preference to the actual capacity utilisation during the period of investigation. In our opinion, this has led to an unusual reduction in the fixed expenses per unit and a consequent reduction in the NIP. This again is clearly untenable." Nothing confidential The court ruled that the DA should be directed not to misuse the Rules `by keeping confidential its findings and that too from the person who has supplied the information to it.' There was nothing confidential in the matter, said the court. Rule 7, which the DA's counsel Nagendra Rai had relied on, "specifically provides that the right of confidentiality is restricted to the party who has supplied the information, and that party has also to satisfy the DA that the matter is really confidential," explained the court. "Excessive and unwarranted claim of confidentiality defeats the right to appeal. In the absence of knowledge of the consequences, grounds, reasoning and methodology by which the DA has arrived at its decision and made its recommendation, the parties to the proceedings cannot effectively exercise their right to appeal either before the Tribunal or this Court," reads a forceful snatch in the judgment. Although the verdict may not benefit Reliance for the past period, the court thought it necessary to lay down the law in this connection "since anti-dumping law operates continuously and on a day-to-day basis." Anti-dumping law is extremely important for the country's industrial progress and hence there should be total transparency and fairness in its implementation, emphasised the court. Tailpiece "The main advantage of e-filing is... " "That it is fast?" "And we don't have to see the tax officials!" D. Murali
Home | About Us | Terms and Conditions | Contact Us
Copyright 2018 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
SEO Company Search Engine Optimization Company US SEO Local SEO Company Website SEO Company Alabama SEO Company Alaska SEO Company Arizona SEO Company Arkansas SEO Company California SEO Company Colorado SEO Company Connecticut SEO Company Delawa

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions