Review anti-dumping duty on cheap rubber chemicals, Gujarat High Court directs Centre

The Gujarat High Court has directed the Centre to evaluate the anti-dumping duty on rubber chemical imports from China and Korea and suitably extend its imposition. The order to the Union government came in response to a petition filed by Mumbai-based Nocil Limited which said that the domestic industry would be hit hard on the cessation of the anti-dumping duty in July.

The company had approached the Centre to initiate a "sunset review" and for the continuation of the anti-dumping tariff on rubber chemicals. But the government rejected the plea in December 2018 on the grounds that the duty had been in place for 10 years and it had greatly aided domestic players. The Centre said there is a demand-supply gap which needed to be met through imports.

Nocil contended in the HC that imports are inevitable in the case of a demand-supply gap, but that should not happen at unfair prices. Countering the Centre's claim that the company is exporting its products rather than selling them within the country despite profitability in the latter, the counsel for Nocil said that their export is the fallout of lack of local demand as China and South Korea are selling the products in India at dumped prices – lower than the rates in their own countries.

The company also contended that the import of rubber chemicals from these countries will intensify if the anti-dumping duty ceases to exist. It also submitted that the export of rubber chemicals by China and Korea to third countries is relatively higher than to India and that too at lower prices. It claimed that once the anti-dumping duty discontinued, the manufacturers in these countries will divert their products to India to get better prices.

Nocil said the US has already sanctioned a 15% tariff in addition to the 10% customs duty on rubber chemicals due to which Chinese producers will lose a significant market, which would lead to increased dumping of these goods in India. The Centre, however, argued that the imports from these countries are not likely to affect the domestic industry.

The court held that the government's assumption that imports at dumped prices are not going to affect the domestic industry is 'not proper'. It said that a demand-supply gap couldn't be the basis for allowing such imports at dumped prices. It set aside the government's 2018 order rejecting Nocil's plea for a sunset review.

The court directed the authorities to initiate the review and suitably extend anti-dumping duties as per law.

WHY THE DIRECTIVE

• The directive came on a petition by a Mumbai-based firm that had appealed to the Centre to continue with the duty but it was rejected.
   
• The firm said producers from China and Korea are selling rubber chemicals dirt cheap. If the duty goes away, local players will be hit, it said.