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Official Citation: 2024 PTD 872
Court / Jurisdiction: Islamabad High Court
Year of Decision: 2024
Decision Date: 2024-12-31
Parties: Dawn Convertec SMC-Private Limited and others vs National Tariff JUDGMENT
Ruling Summary: This decision was rendered by the Islamabad High Court on 2024-12-31, officially reported as 2024 PTD 872. In this matter between Dawn Convertec SMC-Private Limited and others and National Tariff JUDGMENT, the court adjudicated key questions of statutory construction, procedural regularity, and legal precedent under Pakistani law.
Core Holding: The honorable bench evaluated governing statutory provisions and judicial authorities to establish the rights of the parties, delivering the binding reasoning set out below.
Case cited as 2024 PTD 872
Court Name: Islamabad High Court Judge(s): Miangul Hassan Aurangzeb Title:Dawn Convertec SMC-Private Limited and others vs National Tariff
JUDGMENT
Reported As: 2025 IHC 8 Result: Appeal Dismissed Judgment
JUDGMENT MIANGUL HASSAN AURANGZEB, J:- Through the instant appeal under Section 70(13) of the Anti- Dumping Duties Act, 2015 ("the 2015 Act") the appellants, who are engaged in the business of importing paper and related products, impugn the order dated 29.01.2020 passed by the Anti- Dumping Appellate Tribunal ("the Appellate Tribunal") whereby appeal No.216/2017 preferred by them against the final determination dated 27.07.2017 made by the National Tariff Commission ("the Commission") imposing definitive anti-dumping duties on the import into Pakistan of One Side Coated Duplex Board (Grey Back) classified under Pakistan Customs Tariff Heading No.4810- 9200 and 4810.9900 ("Duplex Board") originating in and/or exported from the Peoples of Republic of China, Republic of Indonesia and Republic of South Korea ("the Exporting Countries"). Duplex Board is mainly used for packing cartons / boxes (folding cartons) of different consumer and industrial products like cigarettes, pharmaceuticals, spices, confectionary, food, tea, biscuit, shoe, auto parts, electric appliances, electronics, etc. 2. The facts essential for the disposal of the instant appeal are that on 21.12.2015, the Commission received an application from respondent No.2, M/s Century Paper and Board Mills Limited ("M/s Century Paper") under Section 20 of the 2015 Act, wherein it was alleged that Duplex Board originating in and/or exported from the Exporting Countries was being dumped in Pakistan, and that such dumping was causing material injury to the domestic industry producing Duplex Board. M/s Century Paper is the domestic producer of Duplex Board.
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3. Section 20 of the 2015 Act provides inter alia that an investigation by the Commission shall only be initiated upon a written application by or on behalf of domestic industry. Section 20(2)(b) requires such application to include evidence of dumping and injury within the meaning of the 2015 Act and the causal link between the dumped imports and the alleged injury, as is reasonably available to the applicant. 4. Section 21 of the 2015 Act requires the Commission to promptly give notice to the government of each exporting country of the receipt of a duly documented application submitted under Section 20. Through a note verbale dated 20.12.2015, the Commission informed the respective embassies of the Exporting Countries in Islamabad as to the filing of said application dated 21.12.2015. 5. Section 23(1) of the 2015 Act requires the Commission to examine the accuracy and adequacy of the evidence provided in an application to determine inter alia whether there is sufficient evidence to justify the initiation of an investigation. Section 23(4) provides that when the Commission is satisfied that an application under Section 20 has been made by or on behalf of domestic industry, and there is sufficient evidence of dumping and injury within the meaning of the 2015 Act, the Commission shall initiate an investigation. On 30.01.2016, the Commission issued a notice of initiation of an anti-dumping investigation with respect to the alleged dumped imports of Duplex Board into Pakistan. The investigation was to determine whether Duplex Board originating in and/or exported from the Exporting Countries was being dumped into Pakistan, and whether such dumping had caused and/or was causing material injury to the domestic industry. The period of investigation for the purpose of determination of dumping was from 01.10.2014 to 30.09.2015, and for the determination of injury from 01.10.2012 to 30.09.2015. All interested parties were invited to make their views known to the Commission, and to submit information and documents not later than 45 days from the date of the publication of the notice under Section 23 of the 2015 Act. 6. Section 37(1) of the 2015 Act empowers the Commission to make a preliminary determination of dumping and injury, if any, not earlier than 60 days and not later than 180 days, after the initiation of an investigation. Section 37(2) requires the Commission to issue a notice of preliminary determination setting forth in sufficient detail the findings and conclusions reached on all issues of fact and law considered material. Section 37(3) requires the Commission to publish a copy of the notice of preliminary determination in the official Gazette and in newspapers having wide circulation in Pakistan, whereas 37(4) requires the Commission to forward a copy of the notice of preliminary determination to the Exporting Countries and to other known interested parties. After carrying out an investigation, the Commission, on preliminary basis, determined inter alia that the domestic industry suffered material injury on account of increase in the volume of dumped imports, price undercutting, price depression, decline in production, decline in sales, etc. In making this preliminary determination, the Commission satisfied itself that Duplex Board had been imported from the Exporting Countries into Pakistan at dumped prices. In order to prevent material injury to the domestic industry during the course of the investigation, the Commission, in exercise of the powers conferred upon it under Section 43 of the 2015 Act, decided to impose provisional antidumping duties on the import of Duplex Board for a period of four months effective from 12.05.2017. 7. Section 43(1) empowers the Commission to impose provisional measures if it makes an affirmative preliminary determination of dumping and injury, and determines that the provisional measures are necessary to prevent injury being caused during the course of an investigation. The second proviso to Section 43(1) ibid restricts the Commission from imposing provisional anti- dumping duty for an amount exceeding the margin of dumping as provisionally established. As per the contents of the notice of preliminary determination made under Section 37 of the 2015 Act, the provisional anti-dumping duty on the import of Duplex Board from China was 15.12% on C&F value in ad valorm; from Indonesia at the rate of 12.87%; and from South Korea at the rate of 14.98%.
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8. The said notice of preliminary determination was preceded by report dated 11.05.2017 on the preliminary determination in the anti-dumping investigation against the import of Duplex Board into Pakistan from the Exporting Countries. This report shows that the provisional anti-dumping duty was to be levied in addition to other taxes and duties leviable on import of Duplex Board under any other law. Furthermore, the anti-dumping duties were not to be levied on imports that were to be used as inputs in products destined solely for export. These duties were to be collected in the same manner as customs duties collected under the Customs Act, 1969. 9. Section 39(1) of the 2015 Act requires the Commission to make a final determination of dumping and injury within 180 days of the date of publication of the notice of preliminary determination. Section 39(4) requires the notice of final determination to specify inter alia the amount of dumping margin, if any, found to exist and the basis for such determination; and the amount of the definitive anti-dumping duties to be imposed. The notice of final determination is also required to be published in the official Gazette and in newspapers having wide circulation in Pakistan. Additionally, Section 50 of the 2015 Act provides that when the Commission has established the existence of dumping and injury in accordance with the provisions of the said Act, it shall, by notification in the official Gazette, impose an antidumping duty, the amount whereof shall not exceed the margin of dumping established but it may be less than the margin if such lesser duty would be adequate to remove injury to the domestic industry.10. On 29.07.2017, the Commission issued a notice of final determination under Section 39 of the 2015 Act and imposed anti-dumping duties on the import of Duplex Board originating in and/or exported from the Exporting Countries. The normal values and export prices of Duplex Board imported from the Exporting Countries are said to have been determined on the basis of best information available to the Commission as none of the exporters / foreign producers from the Exporting Countries provided any information to the Commission. It ought to be borne in mind that if, at any time during an investigation, an interested party refuses access to, or otherwise does not provide, necessary information, the Commission is empowered by Section 32 to reach a preliminary or final determination on the basis of the best information available. 11. The Commission, after determining the dumped margins expressed as percentage of the average of C&F price for the exporters / foreign producers from the Exporting Countries, decided to impose definitive anti-dumping duties on the import of Duplex Board from the Exporting Countries for a period of five years with effect from 12.05.2017. This was done in exercise of the powers conferred on the Commission under Section 50 of the 2015 Act. The definitive anti-dumping duties imposed on the import of Duplex Board from each of the Exporting Countries were as follows:- Exporting Countries Definitive Antidumping Duty (%) China 18.57 Indonesia 16.22 South Korea 14.98 12. The said notice of final determination was preceded by report dated 27.07.2017 of the Commission for final determination and levy of definitive anti-dumping duties on the import of Duplex Board into Pakistan from the Exporting Countries. 13. The appellants preferred an appeal under Section 70(1)(ii) of the 2015 Act against the notice of final determination dated 29.07.2017 before the Appellate Tribunal. Vide judgment dated 29.01.2020, the said appeal was dismissed. The said notice of final determination and the judgment of the Appellate Tribunal have been assailed by the appellants in the instant appeal. 14. It may be mentioned that by virtue of the final determination dated 27.07.2017, definitive anti- dumping duties at the rates mentioned in the said determination were imposed on the import of Duplex Board from the Exporting Countries for a period of five years with effect from 12.05.2017. Section 58(1) of the 2015 Act provides that any definitive anti-dumping duty imposed under the
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said Act shall be terminated on a date not later than five years from the date of its imposition or from the date of the most recent review under Section 59, if such review has covered both dumping and injury, whereas Section 58(3) provides that a definitive antidumping duty shall not expire if the Commission determines, in a review initiated before the date of expiry on its own initiative or upon a duly substantiated request made by or on behalf of the domestic industry within 45 days from public notice of impending termination of the definitive anti-dumping duty concerned, that the expiry of such anti-dumping duty would be likely to lead to continuation or recurrence of dumping and injury and such anti-dumping duty shall remain in force pending the outcome of such a review. 15. The sunset review proceedings under Section 58 of the 2015 Act are initiated to see whether there is a need for the duties to continue or not. In this case, on conclusion of the sunset review proceedings, the anti-dumping duties on the import of Duplex Board from the Exporting Countries were continued vide the Commission's review order dated 28.10.2022, which the appellants challenged before the Appellate Tribunal in appeal No.554/2022. The Appellate Tribunal vide order dated 22.09.2023 set-aside the review order. 16. Learned counsel for the appellants, after narrating the facts leading to the filing of the instant appeal, submitted that the Commission did not fulfill the requirements under Section 18 of the 2015 Act; that M/s Century Paper, in its annual report, had stated that it could not have 100% production due to unavailability of gas; that this crucial fact escaped the Commission while making the final determination of dumping and injury; that M/s Century Paper has 58% share in the domestic production of Duplex Board; that if the share of M/s Century Paper is excluded, the requirements of Sections 20 and 24 of the 2015 Act for filing an application on behalf of the domestic industry are not fulfilled; that Section 20 provides that an investigation by the Commission shall only be initiated upon a written application by or on behalf of the domestic industry, whereas Section 24 provides that an application shall be considered to have been made by or on behalf of domestic industry only if it supported by those domestic producers whose collective output constitutes more than 50% of the total production of a domestic like product produced by that portion of the domestic industry expressing either support for or opposition to the application; that the final determination made by the Commission under Section 39 of the 2015 Act was not within 180 days of the preliminary determination; that the Commission was supposed to satisfy itself that there was a causal link between the dumping and the injury to the domestic industry; that the Commission could only impose duty in the quantum that would remove the injury; that the Commission did not carry out attribution analysis; and that the Commission did not consider factors such as shortage of natural gas that had contributed to lower sales by the domestic industry. 17. Furthermore, it was submitted that an entity called Merit Packaging is an importer of Duplex Board; that Merit Packaging and M/s Century Paper are related companies in that they have common directors; that on this basis it can be said that M/s Century Paper comes within the meaning of "domestic Industry" as defined in Section 2(d) of the 2015 Act, and therefore it could file an application under Section 20; that the Commission's finding that the relationship between the said two entities did not take M/s Century Paper out the definition of "domestic Industry" was not based on any justifiable reasoning; and that the Commission did not check the market behavior with respect to the said two entities during the investigation period. Learned counsel for the appellants prayed for the appeal to be allowed. 18. On the other hand, learned counsel for M/s Century Paper as well as the NTC submitted that a public hearing in the matter took place between 12.05.2017 and 29.05.2017 in compliance with Rule 14 of the Dumping Duties Rules, 2001; that the statement of essential facts was shared by the Commission with all the essential parties in terms of Rule 14(5); that the information sought by the Commission from the importers of Duplex Board was not provided; that the appellants have the
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option of purchasing Duplex Board which is not imported into Pakistan from the Exporting Counties; that the causal link between the dumping and the injury to the domestic industry has been adequately addressed by the Commission in the final determination dated 27.07.2017; that the Commission concluded that there was no contraction in demand for Duplex Board in the market during the investigation period; that the Commission carried out the attribution and non- attribution analysis in accordance with Section 18 of the 2015 Act; and that the final determination has been made within the permissible timeframe provided in Section 39 of the 2015 Act. Learned counsel for the respondents prayed for the appeal to be dismissed. 19. I have heard the contentions of the learned counsel for the contesting parties and have perused the record with their able assistance. The facts leading to the filing of the instant appeal have been set out in sufficient detail in paragraphs 2 to 15 above and need not be recapitulated. 20. Anti-dumping duty is not a tax but a trade remedial measure the purpose whereof is to offset the injurious effect of the dumping of imported products. It is to protect the domestic industry from such injurious effects. Section 3 of the 2015 Act empowers the Commission to impose anti- dumping measures on products imported into Pakistan when it determines, pursuant to an investigation initiated and conducted in accordance with the provisions of the said Act that (a) an investigated product is dumped within the meaning of the said Act; (b) injury is being caused to domestic industry within the meaning of the said Act. Section 2(d) defines "domestic industry" to mean domestic producers as a whole of a domestic like product or those whose collective output of that product constitutes a major proportion of the total domestic production of that product except when any such domestic producers are related to the exporters or importers, or are themselves importers of the allegedly dumped investigated product. For dumping, an applicant has to show that the imported product is sold at rates less than the normal export price in the country from which the export took place. Section 2(f) of the 2015 Act defines "dumping margin" in relation to a product to mean the amount by which its normal value exceeds its export price. 21. The Commission received application dated 21.12.2015 under Section 20 of the 2015 Act from M/s Century Paper on behalf of the domestic industry manufacturing Duplex Board. M/s Century Paper alleged that Duplex Board was being exported to Pakistan at dumped prices from the Exporting Countries. M/s Century Paper had also asserted that the dumped imports of Duplex Board had caused and was causing material injury to the domestic industry of Pakistan manufacturing Duplex Board. The Commission initiated the investigation by issuing notice dated 30.01.2016 under Section 27 of the 2015 Act. The said notice was published in the official Gazette and newspapers having wide circulation in Pakistan. On 11.05.2017, the Commission made a preliminary determination in the investigation in terms of Section 37 and issued a notice of preliminary determination which was also published in the official Gazette and two newspapers of wide circulation in Pakistan. The Commission had imposed provisional anti-dumping duties at the rates ranging from 12.87% to 15.12% on the import of Duplex Board from the Exporting Countries. 22. On 29.07.2017, the Commission issued a notice of final determination under Section 39 of the 2015 Act. This notice was also published in the official Gazette and two newspapers having wide circulation in Pakistan. The Commission had imposed definitive anti-dumping duties on the import of Duplex Board from the Exporting Countries at rates ranging from 14.98% to 18.57%. 23. The appeal preferred by the appellants against the final determination was dismissed by the Appellate Tribunal vide judgment dated 29.01.2020, which has been assailed by the appellants in the instant appeal. 24. The primary ground agitated by the appellants was that the Commission, while issuing notice of a final determination, did not consider whether injury to the domestic industry was caused by other factors or by the dumped imports, and in this way the requirements of Section 18 of the 2015 Act were violated. Section 18(1) provides inter alia that the consideration of a causal relationship
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between dumped imports and injury to domestic industry shall be based on an examination by the Commission of all relevant evidence before it. Section 18(2) requires the Commission to examine any known factors other than dumped imports which caused injury to domestic industry and injuries caused by such other factors shall not be attributed by the Commission to the dumped imports. 25. Once the Commission determines that there is injury to domestic industry due to the dumped imports then Section 18 requires the Commission to link the injury to the domestic industry with the dumped imports. This is known as the attribution analysis. For attribution the factors mentioned in Section 18(3) are to be seen. These factors are reproduced herein below:- "(a) volume and price of imports not sold at dumping prices; (b) contraction in demand or changes in the patterns of consumption; (c) trade restrictive practices of and competition between foreign and domestic producers; (d) developments in technology; and (e) export performance and productivity of domestic industry." 26. The appellants assert that the Commission failed to consider factors such as gas shortage, power outage, portfolio management, plant shut down for maintenance, etc. which had adversely affected the operation of the domestic industry. To demonstrate that injury to M/s Century Paper had been caused by factors other than the import of Duplex Board by the appellants, the appellants referred to M/s Century Paper's Director's Report for the year 2010 wherein it is mentioned that the optimized operation of its machines could not be achieved due to frequent stoppages (77 days) in the supply of natural gas, although the company had standby arrangements for alternate fuel, but due to insufficient margins the company did not find it feasible to use these for production. In the Director's Report for the year 2011, it is mentioned that optimal operation of machines could not be achieved due to frequent stoppages in the supply of natural gas during the winter months. In this report, it is also mentioned that the company used the expensive option of continuing production on alternate fuel as better margins of the products supported by the demand in the market made it feasible to use this option. In M/s Century Paper's annual report for the year 2015, the Chairman of the said company, in his message to the shareholders, had stated that the company had gone through difficult time in the year 2013 14 as its original planning was disturbed due to the total closure of gas supply from the end of December 2013 to March 2014. It was also stated that in the summer as well gas was supplied for just two days in a week and this had caused the company to revert to expensive alternate fuels which seriously impacted on the company's performance. It ought to be borne in mind that the Chairman, in his message, had also stated that the year for the paper board industry in Pakistan was hostile due to the international slump in the paper board prices which led to the influx of Chinese product in the market and this had hit the company hard. 27. Article 3 titled "Determination of Injury" in Part I of the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade, 1994 provides inter alia that the demonstration of a causal relationship between the dumped imports and the injury to the domestic industry shall be based on an examination of all relevant evidence before the authorities, and that the authorities shall also examine any known factors other than dumped imports which at the same time are injuring the domestic industry, and the injuries caused by these other factors must not be attributed to dumped imports. The factors which could be relevant in this respect include inter alia the volume and prices of imports not sold at dumping prices, contraction in demand or changes in the patterns of consumption, trade restrictive practices of and competition between foreign and domestic producers, developments in technology, and the export performance and productivity of domestic industries.
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28. Heavy reliance was placed by the learned counsel for the respondents on the finding of the Commission recorded in the final determination that as per the data regarding installed capacity, quantity produced and the capacity utilization for the period from 2012 to 2015, the installed capacity of M/s Century Paper remained the same over the period of time and its production had reduced over time and so did the capacity utilization. This was taken as evidence of injury caused to the domestic industry due to the dumped imports of Duplex Board from the Exporting Countries. 29. There is no denying the fact that the Commission, in its report dated 27.07.2017, determined that the imports of Duplex Board increased significantly compared to the domestic consumption during the period of investigation. This determination was made after the Commission discussed the volume of dumped imports, price effect, price undercutting, price depression, and price suppression of Duplex Board in Pakistan. The Commission also determined that the landed cost of Duplex Board undercut the prices of Duplex Board produced domestically throughout the period of investigation and that this had resulted in decrease in the price by the domestic industry by 5.21% in the year 2014-15 so that it could compete with the price of Duplex Board imported into Pakistan. It was also determined that the increased volume of dumped…
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