New Delhi, Feb. 23: The Supreme Court has ruled that the government cannot impose an anti-dumping duty if the product accounts for less than 3 per cent of the total imports of an importer.

A three-judge bench of Justices Ruma Pal, Arijit Pasayat and C. K. Thakker has ruled that if the designated authority concluded after an investigation under rule 14(d) of the anti-dumping rules that the volume of dumped imports was less than 3 per cent of the total imports, anti-dumping duty could not be imposed.

The court set aside the ant-dumping duty slapped on S&S Enterprise, which imported lead acid batteries from Bangladesh during the period between February 1, 2000 and September 13, 2001.

The judges said under the anti-dumping rules, if the designated authority determined that the volume of the dumped imports 'actual or potential' from a particular country 'account for less than 3 per cent of the total imports, he (the authority) shall terminate the investigation immediately.'

However, in the case of S&S Enterprise, the designated authority 'continued the investigation' and came to the conclusion that the volume of imports was more than 6 per cent on the basis of 'price' of the product rather than on the basis of the 'quantity'. The company argued that the authority should have computed the volume of exports on the basis of quantity and not on the basis of price. The designated authority counter argued that the word 'volume' in the rule meant value.

The judges said this interpretation was wrong and pointed out that the anti-dumping duty was aimed at curbing unfair trade practices of exporters of a particular country flooding the domestic markets with goods at rates which are lower than that at which the exporters normally sell similar goods in their own countries. This causes injury to the domestic market.

'The levy of dumping duty is a method recognised by the GATT, which seeks to find a remedy for the injury and at the same time balances the right of exporters from other countries to sell their products within the country with the interest of the domestic markets. Thus the factors to constitute dumping are (i) imports should be at prices lower than the normal value of the goods in the exporting country, and (ii) the exports must be sufficient to cause injury to the domestic industry.

'However a negligible quantity of imports would not be sufficient to cause such injury,' the judges said, pointing to article 5.8 of the GATT.

'The exporter is selling the goods in India at almost the same price as he does in his country. As far as quantity is concerned, if the export accounts for less than 3 per cent of the total imports of the like article in India, it is treated as too trivial for the law and is ignored,' Justice Ruma Pal observed in the judgment that she wrote on behalf of the bench.

The judges said nobody had questioned the preliminary finding of the designated authority that the quantity of imports from Bangladesh during the period of investigation was less than 3 per cent of the total imports of the 'like article' to India. 'The investigation, therefore, should have been promptly dropped against Bangladesh,' the court said.

'The designated authority is required in appropriate cases to record a preliminary finding regarding export price, normal value and margin of dumping and the injury to the domestic industry' under the rule, the judges said.