The Court of First Instance finds that the Council failed to give retroactive effect to a review regulation in anti-dumping proceedings
Medici Grimm KG is a company incorporated under German law. It entered into an agreement with Lucci Creation Ltd, a company based in Hong Kong with facilities in China, for the manufacture of leather handbags. The handbags are manufactured using leather and other materials supplied by Medici Grimm.
Following a complaint filed by the European Committee for Leather Goods Industries (CEDIM), on 4 May 1996 the Commission published a notice of initiation of an anti-dumping investigation into imports of handbags from the People's Republic of China. An investigation was therefore initiated, but neither Medici nor Lucci Creation participated in it.
On completion of the procedure the Council, on 3 August 1997, imposed anti-dumping duties of a maximum of 38% on imports of leather handbags from China.
On 13 September 1997, the Commission invited exporting producers who had paid anti-dumping duties to submit new evidence warranting the initiation of an interim review of the anti-dumping measures applicable to them. That review was liable to give rise to a revision of the anti-dumping duties to be paid. Accordingly, the Commission used the same investigation period as that to which the original investigation related.
Lucci Creation, as an exporting producer, responded to the notice by providing the information requested by the Commission.
It used the opportunity of the interim review to ask the Commission for a refund of the anti-dumping duties paid by it since 3 August 1997, and for which it considered itself not liable on the ground that that it had never, it claimed, engaged in dumping during the investigation period. It suggested that a refund could be made possible by giving retroactive effect to the regulation which would be adopted upon completion of the interim review.
On 3 November 1998, on a proposal by the Commission, the Council adopted a new regulation relating, inter alia, to Medici Grimm. It is clear from that regulation that no dumping had been found as regards transactions between Medici Grimm and Lucci Creation during the investigation period prior to 3 August 1997, and that, accordingly, Lucci Creation was entitled to an individual dumping margin of 0%. However, the Council rejected Lucci's request as in its view the interim review could only produce effects in the future. Therefore, the request for retroactive effect was not taken into account by the new regulation.
That being so, Medici Grimm asked the Court to annul the Council regulation on the ground that it failed to grant retroactive effect. Medici Grimm also applied for refunds in respect of the sums received by the German customs authorities from August 1997 (in the amounts of DM 1 046 675 and DM 409 777.34).
The Court finds that there was no change in circumstances which could have provided a reason for the Commission initiating the review investigation on 13 September 1997 and that the purpose of that procedure was merely to enable those companies which did not participate in the original procedure which led to the adoption of the regulation of 3 August 1997 to obtain individual treatment.
In those circumstances, the Court finds that, contrary to its contention, the Council did not in fact review the measures in force, but reopened the original procedure. Since Lucci Creation had not engaged in dumping in the Community during the original investigation period, the necessary conditions for exports to be taxed were not met from the outset.
Accordingly, the Court considers that the institutions are bound to abide by all the consequences flowing from those findings and, since Gucci Creation did not engage in dumping during the investigation period, the Council should have given that finding retroactive effect.
Furthermore, the Council could not invoke the prospective nature of the review regulation to oppose retroactive application of the new regulation which recognised that there had not been any dumping and thus penalise Medici Grimm purely for its failure to participate (participation in any event being voluntary) in the original investigation.
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