Menteri Kewangan v Natsteel Holdings Pte Limited (W-01(A)-623-10/2021)

6.

ROYAL MALAYSIAN CUSTOMS MALAYSIA GOVERNMENT OF MALAYSIA … APPELLANTS AND NATSTEEL HOLDINGS PTE LTD (Singapore UEN No. 200810196Z) … RESPONDENT In the matter of the High Court of Malaya in Kuala Lumpur Appellate and Special Powers Division Application for Judicial Review No. WA-25-94-02/2020 Between Natsteel Holdings Pte Ltd (Singapore UEN No. 200810196Z) …Appellants

Minister of Finance 2. Ministry of Finance 3. Minister of International Trade and Industry 4. Ministry of International Trade and Industry 5.

Royal Malaysian Customs Malaysia

Government of Malaysia … Respondents CORAM: YA DATUK RAVINTHRAN A/L N. PARAMAGURU, JCA YA DATUK SEE MEE CHUN, JCA YA DATO′ WAN AHMAD FARID BIN WAN SALLEH, JCA

This is an appeal against the decision of the learned High Court Judge in allowing Natsteel Holdings Pte Ltd’s (“Natsteel”) application for judicial review to quash the imposition of anti-dumping duties at the rate of 4.97% on REBAR originating or exported by the Respondent from the Republic of Singapore from 22.1.2020 to 21.1.2025.

The parties will be referred to as they are in the instant appeal.

The Respondent is a company incorporated under the laws of the Republic of Singapore that produces and supplied steel products and services to the construction industry and is the producer and exporter of steel concrete reinforcing bars to Malaysia.

The 1st Appellant is the Minister of Finance, of the 2nd Appellant, who imposed anti-dumping duties at the rate of 4.97% on REBAR Products originating or exported from Natsteel of the Republic of Singapore from 22.1.2020 to 21.1.2025.

The 3rd Appellant is the Minister of International Trade and Industry of the 4th Appellant.

The 5th Appellant is the Director General of the 6th Appellant.

The 6th Appellant is the Royal Malaysian Customs Malaysia who is tasked to collect the anti-dumping duties imposed on imports of REBAR Products originating or exported from Natsteel from 22.1.2020 to 21.1.2025, on behalf of the 7th Appellant.

The 7th Appellant is the Government of Malaysia. Chronology of events

On 29.3.2019, the Malaysia Steel Association (“MSA”) submitted a petition pursuant to sections 4 and 20 of the Countervailing and Anti-Dumping Duties Act 1993 [Act 504] requesting initiation of an anti-dumping investigation on steel concrete reinforcing bar products that are hot rolled steel bars containing indentations, ribs, grooves or other deformation (“REBAR”) originated or exported from the Republic of Singapore and the Republic of Turkey.

Pursuant thereto, on 26.4.2019, the 3rd Appellant initiated the REBAR Anti-Dumping Duties (“AD”) Investigation by issuing and publishing a Notice of Initiation in the Government Gazette No.

The 3rd Appellant then delegated his investigative power to the Trade Practices Section of the 4th Appellant (“Investigation Authority” (IA)).

Natsteel then provided its response to the Foreign Producer’s and Exporter’s Questionnaire.

A report containing the IA’s finding relating to the Preliminary Determination (“Preliminary Determination Report”) on the alleged dumping of the steel concrete reinforcing bar from Singapore and Turkey was submitted to the 3rd Appellant pursuant to section 30(3) of Act 504.

Thereafter, the Government made an affirmative preliminary determination of dumping and injury resulting in the continuance of the investigation and a Notice of Affirmative Preliminary Determination of an Anti-dumping Duty Investigation pursuant to section 23 of Act 504.

The affirmative preliminary determination also resulted in the imposition of provisional anti-dumping duties towards the Respondent as a provisional measure pursuant to section 24(2) of Act 504 which was carried out by the 1st Appellant.

The Respondent submitted its comments to the Preliminary Determination Report and verification visit was carried out by the IA at the foreign producer’s premises.

The IA submitted the essential facts under consideration that form the basis for the Final Determination whether to apply definitive measures and gave all interested parties including the Respondent time to defend its interest pursuant to section 25(2) and (2A) of Act 504.

The Respondent by way of letter dated 23.12.2019 sought explanation from the IA with respect to the numerical breakdown and explanation in arriving at the dumping margin and gave its comments to the Notice of Essential Facts Report on 27.12.2019.

A finding was made by the IA and submitted to the 3rd Appellant pursuant to section 30(3) of Act 504 who shall give his recommendation to the 1st Appellant pursuant to section 30(4) of Act 504.

The Government made an Affirmative Final Determination pursuant to section 25(4) of Act 504. Pursuant to section 25(5) of Act 504 read together with section 11(1) of Customs Act 1967 [Act 235] the Government via the Ministry of Finance imposed anti- dumping duties at the rate of 4.97% on REBAR products originating or exported from Respondent from 22.1.2020 to 21.1.2025.

The Respondent then filed a Judicial Review application under order 53 rule 3(1) of Rules of Court 2012 (“ROC 2012”) to seek for a Certiorari Order to quash the following impugned decisions:

The 1st Appellant’s (Minister of Finance) decision to impose anti-dumping duties at the rate of 4.97% on REBAR originating or exported from the Applicant of the Republic of Singapore from 22.1.2020 to 21.1.2025 as set out in the Customs (Anti-Dumping Duties) Order 2020 following the recommendation or proposal of the 3rd Appellant arising from an Anti-Dumping Duty Investigation with regard to the imports of REBAR originating or exported from the Republic of Singapore and the

The 3rd Appellant’s decision and/or recommendation to impose antidumping duties at the rate of 4.97% on REBAR originating or exported from the Respondent of the Republic of Singapore as set out in the Notice of Affirmative Final Determination and the Final Determination Report of an Anti-Dumping Duty Investigation with regard to the imports of REBAR originating or exported from the Republic of Singapore and the Republic of Turkey both dated 21.1.2020 and 7.1.2020 respectively.

The learned Judge, with whom learned counsel for the Respondent deferred, made the following findings:

The Appellants, suddenly departing from their long-established practice, had unjustifiably withheld from Natsteel the details, breakdown and computation of how the normal value and dumping margin were calculated. According to the learned Judge, IA had failed to act with procedural fairness and had breached the principles of natural justice by departing, without prior public notification of the change, from its long-established practice of providing details, breakdown and computation of normal value and dumping margin to exporters subject to anti-dumping duties. There is therefore a breach of legitimate expectation.

It is mandatory for the Appellants to disclose the details, breakdown and computation of how the normal value and dumping margin were calculated pursuant to Art 12 and 6.9 of the WTO Agreement on the Implementation of Article VI GATT 1 (“Anti-Dumping Agreement”), and the Appellants’ continuous refusal to do so amounts to a breach of the principles of natural justice.

The IA’s construction of normal value is incorrect and cannot be justified because the IA had accounted for an unrealistically high profit margin of 4.75% – when gross profit margins of commodity steel products such as the REBAR products are only between 3% to 4%.

The IA’s finding that the imports had caused injury to the Domestic Industry due to price suppression.

Let us begin by highlighting the requirements of Art 12.2 and Art 6.9 of the WTO Anti-Dumping Agreement. By Art 12.2, the Appellants are required to provide all relevant information on the matters of fact and law and reasons which have led to the imposition of the final measures. Art 6.9 requires the authorities, before final determination, to inform all parties of the essential facts under consideration, which form the basis for the impugned decision on whether to apply the definitive measures.

Have the provisions in the two relevant Articles been complied with? The learned Judge answered this in the negative. However, we do not find any provision in the WTO Anti-Dumping Agreement which makes it mandatory for the authorities to provide actual mathematical determination.

In the instant appeal, the Appellants had issued the Preliminary Determination Report – Anti-Dumping Investigation dated 5.9.2019 and the Notice of Essential Facts dated 23.12.2019.

Natsteel, through its solicitors, Messrs Skrine, requested the breakdown of the calculations of the constructed normal value from the IA. In reply, the 4th Appellant, MITI, stated that in determining the dumping margin, the calculation made by the IA was based on the information provided by Natsteel. A dumping margin is the difference between the normal value of a product and its export price, expressed as a percentage of the export price.

More importantly, learned counsel submitted that, during the IA’s verification visit at Natsteel’s premises in Singapore, Natsteel requested the IA for the breakdown and methodology on the constructed normal value and how IA derived Natsteel’s assets below the costs of the like product represented 80.79%. A constructed value in the country of origin, is the cost of production in the country of origin, plus a reasonable amount for administrative and selling costs and margin of profits.

This was refused, which, according to Natsteel, is against Art 12.2.1 of the WTO Anti-Dumping Agreement.

Before us, the learned FC contended that the IA, via Part F of the Preliminary Determination Report dated 5.9.2019 (“PD Report”) and also Part E of the Notice of Essential Facts dated 23.12.2019 had provided sufficient explanation on how the IA arrived at a finding that 80.79% of the volume of sales of the like product in the domestic market was made below cost throughout the Period of Investigation (“POI”).

In our view, it is not accurate to suggest, as the learned Judge did, that the IA had merely provided the dumping margin. We note in Part D of the PD Report and Part E of the Notice of Essential Facts that the IA had explained how it arrived at a finding that 80.79% of the volume of sales of the like product in the domestic market was made below-cost throughout the POI. Moreover, the IA had explained the methodology used in determining normal value. It had also explained the data that had been selected for the purposes of determining the percentage of sales below the cost of the like product in the domestic market throughout the POI, whereby the IA had selected sales to all domestic customers based on the same product codes sold to Malaysia during the POI.

We also take cognisance that both the PD Report and Notice of Essential Facts explained that:

The normal value had been constructed pursuant to section 16(2) of the Anti-Dumping and Countervailing Measure Act 1993 (the “Anti-Dumping Act”) and regulation 26 of the

The normal value had been constructed by the IA by referring to the cost of production plus a reasonable amount for Sales, General & Administrative Expenses (“SG&A”) and profit margin; and

In the instant case, in arriving at the constructed normal value of SGD816.49, the IA had taken the cost of production plus a reasonable amount for SG&A and profit margin as stated in the Respondent’s Foreign Exporter’s Questionnaire. 11 32. The IA had referred to the cost of production and the reasonable amount for SG&A and the profit margin. In our view, the learned Judge had erred in concluding that the IA had taken into consideration a profit margin of 4.75% in constructing the normal value. On the contrary, the IA had applied the profit margin as supplied by the Respondent in the Respondent’s Foreign Exporter’s Questionnaire, whereby the margin profit that the Respondent had set during the Period of Investigation is at the rate of 4%.

Was the Respondent denied the right to be heard by the IA before it arrived at its Final Determination? We do not think so. We take note that before the Final Determination was made, the Respondent had been given the opportunity to be heard as required under the Anti-Dumping Act through various means. They are as follows:

Foreign Exporter’s Questionnaire, upon a Petition being presented by Malaysia Steel Association.

The Respondent was also invited to comment on the PD Report and the Notice of Essential Facts before the IA prepared the Final Determination Report.

Having appraised these facts, we do not think that there was a breach of natural justice on the part of the IA and the Respondents.

Before us, learned counsel for the Respondent submitted that the Appellants had departed from their long-established practice in unjustifiably withholding the details, breakdown and computation of how normal value was constructed and their calculation of the dumping margin. There was therefore a breach of legitimate expectation.

This argument on breach of legitimate expectation was not raised by the Respondent in the Statement made under order 53 rule 3(2) of the ROC 2012. At best, it was raised in para 33 by the affidavit in support affirmed by Mr Lim Siew Har. Mr Lim alluded to the fact that the previous practice of IA was to provide detailed calculations regarding Galvanized Iron Coils/Sheet or Galvanized Steel Coils/Sheets originating or exported from the People’s Republic of China and the Socialist Republic of Viet Nam. There was, however, no mention of a breach of legitimate expectation in the affidavit in support.

There are two things to be noted here. First, the previous practice of IA has no force of law.

Secondly, even if the breach of legitimate expectation is clearly pleaded in the Statement and positively asserted in the affidavit in support of Mr Lim, for it to arise, there must be evidence of a promise or undertaking made by the Appellants to that effect; see Zakiah bte Ishak v Majlis Daerah Hulu Selangor Darul Ehsan [2005] 6 MLJ 517 CA.

We are of the view that the past practices of the IA on other unrelated Notice of Affirmative Preliminary Determination, Notice of Essential Facts and Final Determination, if at all, can hardly be construed as a specific undertaking made by the IA to the Respondent on the issue of REBAR. They are unrelated.

As to the findings of injury and causal link by the learned Judge, again, this was not one of the grounds raised in the Statement made under order 53 rule 3(2) of the ROC 2012. The law can be found in the judgment of the Court of Appeal in Lembaga Tatatertib Kumpulan Sokongan (No 1) Jabatan Perlindungan Hidupan Liar dan Taman Negara & Ors v Mariani bt Ramli [2021] 5 MLJ 857 CA. It was held that the learned Judge had committed an error of law when he decided on issues not pleaded in the grounds of the application as reflected in the Statement under order 53 rule 3(2) of the ROC 2012.

For the aforesaid reasons, we would therefore make the following findings:

The so-called long-established practice of the IA has no force of law that binds the Appellants in any way. In the circumstances, the alleged failure to provide the details, breakdown, and computation of how the normal value and dumping margin were calculated, if at all, should not be legitimate grounds for judicial review. In the same breath, there is therefore no breach of legitimate expectation.

The IA had sufficiently explained the methodology used in determining normal value. The data that had been selected for the purposes of determining the percentage of sales below the cost of the like product in the domestic market throughout the POI had also been sufficiently disclosed. Before the Final Determination was made, the Respondent had been given the opportunity to be heard. There was, therefore, no breach of the principles of natural justice.

The IA’s construction of normal value is correct and justifiable because the IA had applied the profit margin as supplied by the Respondent in the Respondent’s Foreign Exporter’s Questionnaire Response. The profit that had been set by the Respondent during the Period of Investigation was at the rate of 4%.

The learned Judge had erred in considering the issue that the imports had caused injury to the Domestic Industry due to price suppression when it was not pleaded in the Statement made under order 53 rule 3(2) of the ROC 2012.

The learned Judge failed to consider the relevant case laws on the subject and to analyse the issues before him prior to arriving at his conclusion in allowing the Respondent’s application for judicial review. For all the foregoing reasons we find there are merits in the appeal which compelled us to exercise our appellate intervention.

The appeal is allowed and the order of the High Court is set aside with costs of RM15,000. Dated: 3 December 2024 -sgd- (WAN AHMAD FARID BIN WAN SALLEH) Judge Court of Appeal Counsels/Solicitors Appellants Kogilambigai Muthusamy Peguam Persekutuan [Jabatan Peguam Negara] Respondent Ho Pui Yan Manshan Singh [Tetuan Skrine]