FAQ’s on Anti-Dumping Duty (Section 9A, 9AA, 9B of the Customs Tariff Act, 1975)

1. Why is dumping a concern?

• Dumping is when a foreign entity exports goods to India at much lower prices than the prevailing prices in the domestic market. This action will cripple the domestic players since they cannot offer the same goods at such lower prices.

2. What is the reason for the levy of anti-dumping duty?

• Anti-dumping duty is levied by the government to curb the dumping of goods by foreign entities in the local market.

3. How does the levy of anti-dumping duty curb the action of dumping goods by foreign entities?

• The levy of anti-dumping duty will increase the overall import cost forcing importers of such goods to sell at a price higher than the import price to make a profit, thereby neutralizing the effect of such dumping in the domestic market.
• This will lead to rectification of the trade distortive effect of dumping & will re-establish fair trade practices.

4. What is the extent to which anti-dumping duty can be levied by a country?

• The Central Government can levy ADD not exceeding the Margin of dumping.
• Margin of dumping is the difference between the normal price and the export price.

5. How is ADD computed?

• Anti-dumping duty is the lower of,
  1. The margin of dumping (or)
  2. The Injury margin
• Where,
  1. Margin of dumping = Normal value – Export price
  2. Injury Margin = Non-injurious price due to the domestic industry – landed value of the dumped imports.

6. What is the normal value of goods?

• As per section 9A of the Customs Tariff Act, 1975, normal value is the comparable price at which the goods are sold, in the ordinary course of trade, in the domestic market of the exporting country.
• If the normal value cannot be determined using domestic sales, the following two alternative methods may be employed to determine the normal value: –
  1. Comparable representative export price to an appropriate third country.
  2. Constructed normal value, i.e. the cost of production in the country of origin with reasonable addition for administrative, selling, general costs, and reasonable profits.

7. How is the export price calculated for determining the margin of dumping?

• It is the price at which the goods are exported to India.
• It is generally the CIF value minus the adjustments on account of ocean freight, insurance, commission, etc. so as to arrive at the value at ex-factory level.

8. What do you mean by Non-injurious price due to the domestic industry?

• Non-Injurious Price (NIP) is the level of price, which the industry is, expected to have charged under normal circumstances in the Indian market during the defined period.
• This price would have enabled reasonable recovery of the cost of production and profit after nullifying the adverse impact of those factors of production which could have adversely affected the company and for which dumped imports cannot be held responsible.

9. How is the landed value computed to determine the injury margin?

• It is the assessable value under the Customs Act.
• It includes Basic Customs duties except for CVD, SAD, and other special duties.

10. What is the period of validity of the Anti-Dumping duty imposed?

• Generally Anti-dumping duty is imposed for a period of 5 years from the day of publication of notification in the Union Gazette.
• However, the government has the power to revoke, supersede or amend the notification before the expiry of the 5 years.

11. Is IGST applicable on the Anti-dumping duty?

• In cases where imported goods are liable to Anti-Dumping Duty or Safeguard Duty, value for calculation of IGST, as well as Compensation Cess, shall also include Anti-Dumping Duty amount and Safeguard duty amount.

12. How do I know that the goods I am importing are subject to Anti-dumping duty?

• At present, a consolidated list/circular is not available to know whether the goods are subject to Anti-dumping duty or not, however,
• An importer/exporter can make use of the Anti-dumping duty notifications published on the CBIC website (https://www.cbic.gov.in/Customs-Notifications) to know whether ADD is applicable.

13. Will the importer be granted a refund of the Anti-dumping duty paid?

• As per Section 9AA of the Customs Tariff Act, 1975, If an importer proves to the satisfaction of the Central Government that he has paid ADD in excess of the actual margin of dumping, excess ADD paid shall be refunded within 90 days of the receipt of application.

14. What are the essential requirements for initiating an Anti-dumping investigation?

• Sufficient evidence to the effect that
  1. there is dumping
  2. there is an injury to the domestic industry, and
  3. there is a causal link between dumping and the injury, (i.e. sufficient evidence to say that the injury was actually caused by the dumped imports and not any other factors).

15. Can the domestic producers/manufacturers demand an Anti-dumping investigation?

• The domestic producers expressly supporting the anti-dumping application must account for not less than 25% of the total production of the like article by the domestic industry.
• The application is deemed to have been made by or on behalf of the domestic industry, if it is supported by those domestic producers whose collective output constitutes more than 50% of the total production of the like article produced by that portion of the domestic industry expressing either support or opposition as the case may be, to the application.
• Note: The domestic industry, which seeks relief, should give sufficient evidence concerning the above parameters (FAQ no 14). Unless the above parameters are satisfied, it will not be possible for the Authority to initiate an anti-dumping investigation.

16. Is there any threshold limit for dumping that will not warrant any investigation?

• In the case of an Individual exporter:
  1. Any exporter whose margin of dumping is less than 2% of the export price shall
     be excluded from the purview of anti-dumping duties even if all the parameters given in FAQ no 14 is established.
• In the case of a Country:
  1. Further, the investigation against any country will be terminated if the volume of the dumped imports, actual or potential, from a particular country accounts for less than 3% of the total imports of the like product.

Note: However, in such a case, the cumulative imports of the like product from all these countries who individually account for less than 3%, should not exceed 7% of the import of the like product

17. Situations where no Anti-dumping duty will be levied

• No article shall be subjected to both countervailing duty or anti-dumping duty to compensate for the same situation of dumping or export subsidization.
• Import into India of any article from a member country of the World Trade Organization or from a country with whom the Government of India has a most favored nation agreement
  1. Exception: Determination has been made that import of such an article into India causes or threatens to cause material injury to any established industry in India or materially retards the establishment of any industry in India