Anti-dumping duty – Non cooperative exporter – Related party – Existence of Pledge Agreement is not a relevant factor for determining relationship

In a case where the foreign exporter (‘appellant’) was considered as ‘non-cooperative’ because another company (‘other company’), which was alleged as related party to the appellant, had not participated in the anti-dumping investigation, the CESTAT Anti-dumping Bench has held that existence of a Pledge Agreement is not a relevant factor for determining relationship between the appellant and the other company.

The appellant in Essilorluxottica Asia Pacific Pte Ltd. v. Designated Authority [2026 VIL 727 CESTAT DEL CU] had sold the shares of the other company to a third party and were pledged to appellant through a Pledge Agreement. This was to secure repayment of loans the appellants had rendered to the other company when they were related parties. 

According to the Tribunal, the existence of the Pledge Agreement is not a relevant factor for determining the relationship between the appellant and the other company because a pledge does not create any ownership or control rights by virtue of pledged shares or equity. 

Taking note of Section 172 of the Indian Contract Act, 1872, the Tribunal observed that a pledge is a bailment of property as security for a debt. Relying upon various case law, distinguishing pledge from ownership, the Tribunal observed that 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. The other company was also not found to be related to the appellant as per Rule 2(2) of the Customs Valuation Rules, 2007. 

The Designated Authority had earlier held the appellant to be non-cooperative as it had not supplied the Annual Reports of the other company and hence the DA could not examine the terms and conditions of the working capital loans and the relationship between the two. The Tribunal in this regard stated that the DA could not have compelled performance of an impossible task. 

Also, in respect of the question as to whether information relating to the other company and few different companies of the same group was irrelevant for the purpose of determining dumping margin for the appellant, the Tribunal observed that the past relationship between the appellant and the other company was an irrelevant fact at the time of filing Exporter’s Questionnaire Response. It was also noted that the appellant had made it clear that these companies did not export the subject goods to India during the period of investigation. It was noted for this purpose that filing of information by non-exporting producers is not necessary because it does not affect the normal value in case of exports by non market-economy countries. 

The appeals were allowed directing the Designated Authority to consider the cases of the appellant group afresh without treating it as non-cooperative. 

The appellant was represented by Lakshmikumaran & Sridharan Attorneys here.