CESTAT New Delhi Sets Aside Non-Cooperative Finding In Anti-Dumping Investigation Against Essilor

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi, has set aside the finding treating Essilor Group as “non-cooperative” in an anti-dumping investigation on imports of semi-finished ophthalmic lenses from China, holding that such a finding was not justified.

"The recommendation made by the designated authority for imposing anti-dumping duty on Essilor Group by treating it to be non-cooperative is not justified. It is, accordingly, set aside. The designated authority shall consider the cases of the Essilor Group afresh without treating the Essilor Group as noncooperative."

A Bench of President Justice Dilip Gupta, Judicial Member Binu Tamta, and Technical Member P.V. Subba Rao held that the Designated Authority had relied on irrelevant considerations in treating Essilor Group as non-cooperative.

The investigation concerned imports of semi-finished ophthalmic lenses from China, where Essilor Group was exporting the subject goods to India, including through arrangements involving supply from Danyang ILT.

The dispute arose from final findings dated September 29, 2022, where the authority treated Essilor Group as non-cooperative and recommended anti-dumping duty, primarily on the ground that Danyang ILT, an earlier part of the group but whose shares were subsequently sold and pledged back as security, continued to be a related party and that certain entities were not disclosed.

The tribunal noted that this alleged relationship was central to the finding of non-cooperation, since treating Danyang ILT as a related producer would require disclosure of its data and justify adverse inference for its non-participation.

On the issue of Danyang ILT, the Tribunal held that the share sale had ended Essilor Group's ownership, and the subsequent pledge arrangement did not confer control and therefore could not be used to treat the entities as related.

“A pledge is a bailment of property as security for a debt. A security does not grant ownership rights over the property which is pledged and only grants the pledgee the right to dispose of the property in order to retrieve the dues/debt owed by the pledgor.”

Rejecting the authority's reasoning, the tribunal held that the existence of a pledge did not mean Essilor Group retained control over Danyang ILT and therefore the conclusion of a related-party relationship was unsustainable.

The tribunal also held that adverse inference could not be drawn for failure to produce documents that were not within the possession or control of the appellant.

“The designated authority could not have compelled performance of an impossible task to seek production of a document not within the possession and control of Essilor Group. An adverse inference could have been drawn only if Essilor Group was in possession of or in a position to provide the Annual reports of Danyang ILT..”

On the non-disclosure of certain entities, the tribunal held that information relating to non-exporting producers was not relevant for determining dumping margin, particularly in the case of imports from a non-market economy like China.

“The filing of information by non-exporting producers is not necessary because it does not affect the normal value.”

It emphasised that only information relating to export price and normal value during the period of investigation is relevant for determining dumping margin.

The tribunal found that Essilor Group had provided all relevant data required for determining dumping margin and that non-participation of unrelated or non-exporting entities could not justify treating the group as non-cooperative.

It also rejected reliance on alleged non-disclosure relating to financial or contractual links, holding that such information was not relevant to the anti-dumping investigation.

In conclusion, the tribunal set aside the findings to the extent they treated Essilor Group as non-cooperative and directed the Designated Authority to undertake a fresh determination without relying on those grounds.

For Petitioner: Advocate V. Lakshmikumaran, Advocate Darpan Bhuyan, Advocate Pareesha Gupta, Advocate Yashovarham Singh

For Respondents: Advocate Ameet Singh, Advocate Manav Bharti, Advocate Anuvrat Bhatnagar for Directorate General of Trade Remedies; Advocate Reena Asthana Khair, Advocate Shreya Dahiya for the Domestic Industry; Authorized Representative Nikhil Mohan Goyal for the Central Government