ADD is imposed to protect the domestic industry from cheaper imports due to dumping i.e. export at a price lower than the ‘normal value’ that usually is the price at which the goods are sold in the exporting country. CVD is imposed to protect the domestic industry from cheaper imports that are subsidized by the government in the exporting country.
Where ADD or CVD is imposed on an article and still the resale price of that article in India remains the same, effectively the domestic industry does not get any relief. This can happen if the exporter lowers the price i.e. absorbs the effect of ADD or CVD. In such situations, the government can, after necessary investigations, increase the ADD or CVD with a view to nullify the effect of such ‘absorption’. The enabling legal provisions for such ‘anti-absorption’ measures were introduced by amending Sections 9 and 9A of the Customs Tariff Act, 1975 through the Finance Act, 2021. Now, the DGTR has framed the draft rules outlining the processes that will be followed for conducting the necessary investigations.
The proposed rules say that the Designated Authority (DA) may initiate investigations regarding absorption of ADD or CVD suo moto based on any credible information from Commissioner of Customs or any other source or upon receipt of a written application by or on behalf of the domestic industry or by any other interested party, with suitable justification and evidences, within 2 years of imposition of ADD or CVD. In exceptional cases, he may accept an application after 2 years but not when less than 18 months remain for ADD or CVD to expire. The DA must normally conclude the investigations within 6 months or in exceptional circumstances within 9 months. Based on his recommendations, the government may modify the form or basis and/or the quantum of ADD or CVD applicable to the imports of the article under investigation retrospectively from the date of initiation of the investigation or such date as the DA may recommend.
Till then, the government may, on recommendation of DA, resort to provisional assessment of the imports of the article alleged to be absorbing the ADD or CVD in force and may ask a bank guarantee from the importer, say the proposed rules. The processes for initiation of investigations or principles of investigations about anti-absorption will remain the same as those for imposition of ADD or CVD.
Once these draft rules are finalized, they will be incorporated as Rules 29, 30 and 31 in the Customs Tariff (Identification, Assessment and Collection of Anti-dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995 and as Rules 25, 26 and 27 in the Customs Tariff (Identification, Assessment and Collection of Countervailing Duty on Subsidized Articles and for Determination of Injury) Rules, 1995.
So, the importers should take careful note of the proposed changes and be prepared to cope with uncertainties even after paying ADD or CVD at the rates prevailing at the time of imports.
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