VUPPALAMRITHA MAGNETIC COMPONENTS LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) TEJAS Network Limited (Tejas), a Bangalore based company lodged an application on 11.1.2009 with Designated Authority (DA), for imposition of anti dumping duty (ADD, for brevity) on SDH (Synchronous Digital Hierarchy) equipment. They alleged that the product is being dumped from China PR and Israel (hereafter, subject countries) that the price reduction is high and that it being a domestic industry their performance deteriorated in terms of profits, return on investment, cash flow and growth besides leaving adverse impact on employment and wages. Acting on said application, DA issued initiation notification dated 21.4.2009 in terms of Rule 5 of the Customs Tariff (Identification, Assessment and Collection of ADD on Dumped Articles and Determination of Injury) Rules, 1995 (the Rules, for brevity) for investigation into the existence, degree and effect of alleged dumping of SDH equipment from the subject countries. M/s. Vuppulamritha Magnetic Components Limited, Hyderabad (VMCL), through their Counsel submitted preliminary objections on 16.6.2009 requesting DA to treat them as Indian producer, call for data/information from other companies to determine whether Tejas is qualified to submit anti -dumping petition and reject the definition/criteria for classifying domestic producers as provided by Tejas in their petition. About three months thereafter DA published preliminary findings vide notification No. -DGAD, dated 07.9.2009. He came to conclusion that subject goods entered Indian market from subject countries at prices less than their normal values in the domestic markets of the exporting countries, that the dumping margins of subject goods are substantial and that the domestic industry suffered material injury caused by volume and price effect of dumped imports. The DA also invited comments on those findings from all interested parties for consideration in the exercise for recording final findings. Aggrieved by the initiation notification and preliminary findings, VMCL filed the instant writ petition seeking their invalidation.

(2.) WHEN the matters are pending, in exercise of powers under Rule 13 of the Rules, the Central Government issued a notification imposing provisional duty on the subject goods. The arguments in this writ petition are completed on 10.12.2009 and we reserved the matter for consideration. At that stage, senior counsel for VMCL informed the Court that miscellaneous application being W.P.M.P. No. 35225 of 2009 has been filed seeking amendment of the writ petition to challenge the provisional ADD notification. As the same is consequential to the two impugned notifications in this writ petition, and as the said miscellaneous application is filed on the day the case is reserved, we decline to accept any miscellaneous application after the case is reserved.

(3.) TEJAS is also manufacturer of optical transmission equipments especially STM -1, STM -4 and STM -16. The fifth respondent M/s. Prithvi Information Solutions Limited (Prithvi, for brevity) is also one such enterprise which is sister concern of VMCL The sixth respondent of M/s. Tata Teleservices Limited is one of many endusers of SDH equipment. In March 2007 and May 2008 BSNL called for tenders for supply of STM -16 MADM equipments. Tejas along with M/s. Odryn Technologies Private Limited became lowest tenderer in respect of March 2007 tender. Prithvi along with Huawei Technologies Limited (Huawei, for brevity) was declared as lowest tenderer in respect of second tender. Statedly Prithvi quoted 7% higher rates than Tejas but BSNL successfully negotiated with Prithvi for price reduction. Perhaps, this compelled Tejas to approach DA for imposition of protective duty on VMCL and others. As required under Rule 5(1) of the Rules, claiming themselves as major domestic industry/manufacturer of SDH, Tejas made an application on 11.01.2009 before DA. In the said application, Tejas alleged that SDH, the product under consideration (PUC), is also known as Multiplexers, Add Drop Multiplexers (ADM), Multiple Add Drop Multiplexers (MADM) and digital cross -connects which can be imported freely from any country either as complete equipment or in CKD/SKD form, that number of accessories required for connecting/installing SDH equipment in the network like El cables, PCM cables, power cables, racks, workstations etc and the software forming integral part come within the scope of PUC. This transmission equipment is governed by international standard such as TL 9000 and technical specification in India are defined by Telecom Engineering Centre (TEC). PUC is classified under Chapter 85 of the Customs Tariff Act, 1975 with complete description therein and the basic customs duty is nil. Tejas stated that PUC is being imported from subject countries for quite some time and that though the market is witnessing price decline of PUC from Chinese producers every year, during April -December 2008, the dumping of PUC was intensified in high proportions. They alleged that foreign manufacturers dropped prices between 60 -75% over their quoted prices in one year's time and consequent material injury inflicted on domestic industry poses a threat. The price effect of imports allegedly caused substantial injury to domestic industry due to significant price depressing effect in the Indian market. Tejas asserted that they have enough capacity to meet the next ten years requirement and demand of India in manufacturing SDH equipment. Tejas requested DA to recommend ADD on SDH transmission equipment imported in India and requested to impose interim duty pending investigation. Be it noted that Tejas did not furnish any information in relation to (a) purchase policy including long term contracts for major materials; (b) sales policy indicating marketing/distribution channels, commission/discount policy, credit terms; (c) store accounting and inventories/stock/WIP valuation; (d) quality control procedure and tests being conducted; (e) details of job work done or got done during the investigation period, and (f) process flow diagram. They claimed that details thereof form business proprietary information.