JUDGMENT OF THE GENERAL COURT (Seventh Chamber)
10 October 2017 (*)
(Dumping — Import of bicycles consigned from Cambodia, Pakistan and the Philippines — Extension to those imports of the definitive anti-dumping duty imposed on imports of bicycles originating in China — Implementing Regulation (EU) 2015/776 — Article 13(2)(a) and (b) of Regulation (EC) No 1225/2009 — Assembly operations — Provenance and origin of bicycle parts — Certificates of origin — Insufficient evidentiary value — Manufacturing costs of bicycle parts)
In Case T‑435/15,
Kolachi Raj Industrial (Private) Ltd, established in Karachi (Pakistan), represented by P. Bentley, QC,
applicant,
v
European Commission, represented by J.-F. Brakeland, M. França and A. Demeneix, acting as Agents,
defendant,
supported by
European Bicycle Manufacturers Association (EBMA), represented by L. Ruessmann, avocat, and J. Beck, Solicitor,
intervener,
APPLICATION pursuant to Article 263 TFEU seeking the annulment of Commission Implementing Regulation (EU) 2015/776 of 18 May 2015 extending the definitive anti-dumping duty imposed by Council Regulation (EU) No 502/2013 on imports of bicycles originating in the People’s Republic of China to imports of bicycles consigned from Cambodia, Pakistan and the Philippines, whether declared as originating in Cambodia, Pakistan and the Philippines or not (OJ 2015, L 122, p. 4), to the extent that it applies to the applicant,
THE GENERAL COURT (Seventh Chamber),
composed of V. Tomljenović, President, A. Marcoulli and A. Kornezov (Rapporteur), Judges,
Registrar: C. Heeren, Administrator,
having regard to the written part of the procedure and further to the hearing on 17 May 2017,
gives the following
Judgment
Background to the dispute
1 By Council Regulation (EEC) No 2474/93 of 8 September 1993 imposing a definitive anti-dumping duty on imports into the Community of bicycles originating in the People’s Republic of China and collecting definitively the provisional anti-dumping duty (OJ 1993 L 228, p. 1), the Council of the European Union imposed a definitive anti-dumping duty of 30.6% on imports of bicycles originating in China.
2 Following an expiry review, pursuant to Article 11(2) of Council Regulation (EC) No 384/96 of 22 December 1995 on protection against dumped imports from countries not members of the European Community (OJ 1996 L 56, p. 1), the Council, by Regulation (EC) No 1524/2000 of 10 July 2000 imposing a definitive anti-dumping duty on imports of bicycles originating in the People’s Republic of China (OJ 2000 L 175, p. 39), decided to maintain the anti-dumping duty of 30.6%.
3 Following an interim review, pursuant to Article 11(3) of Regulation No 384/96, the Council, by Regulation (EC) No 1095/2005 of 12 July 2005 imposing a definitive anti-dumping duty on imports of bicycles originating in Vietnam, and amending Regulation No 1524/2000 (OJ 2005 L 183, p. 1), increased the anti-dumping duty on imports of bicycles originating in China to 48.5%.
4 The Council, by Implementing Regulation (EU) No 990/2011 of 3 October 2011 imposing a definitive anti-dumping duty on imports of bicycles originating in the People’s Republic of China following an expiry review pursuant to Article 11(2) of Regulation (EC) No 1225/2009 (OJ 2011, L 261, p. 2), decided to maintain the anti-dumping duty in force at 48.5%.
5 In May 2013, following an interim review, pursuant to Article 11(3) of Council Regulation (EC) No 1225/2009 of 30 November 2009 on protection against dumped imports from countries not members of the European Community (OJ 2009 L 343, p. 51, corrigendum OJ 2010 L 7, p. 22, ‘the basic regulation’), which was in force at the time, the Council adopted Regulation (EU) No 502/2013 of 29 May 2013 amending Implementing Regulation No 990/2011 (OJ 2013 L 153, p. 17) and decided to maintain the anti-dumping duty in force at 48.5%, except for bicycles exported by three companies, to which individual duty rates were attributed.
6 Following an anti-circumvention investigation, pursuant to Article 13 of the basic regulation, the Council adopted Regulation (EU) No 501/2013 of 29 May 2013 extending the definitive anti-dumping duty imposed by Implementing Regulation No 990/2011 on imports of bicycles originating in the People’s Republic of China to imports of bicycles consigned from Indonesia, Malaysia, Sri Lanka and Tunisia, whether declared as originating in Indonesia, Malaysia, Sri Lanka and Tunisia or not (OJ 2013 L 153, p. 1).
7 Having received a further complaint in 2014, this time concerning possible circumvention of anti-dumping duties involving producers-exporters of bicycles established in Cambodia, Pakistan and the Philippines, the European Commission adopted Implementing Regulation (EU) No 938/2014 of 2 September 2014 initiating an investigation concerning the possible circumvention of anti-dumping measures imposed by Council Regulation No 502/2013 on imports of bicycles originating in the People’s Republic of China by imports of bicycles consigned from Cambodia, Pakistan and the Philippines, whether declared as originating in Cambodia, Pakistan and the Philippines or not, and making such imports subject to registration (OJ 2014 L 263, p. 5, corrigendum OJ 2014 L 341, p. 31). In the course of that investigation, which covered the period from 1 January 2011 to 31 August 2014 (‘the investigation period’), the applicant, Kolachi Raj Industrial (Private) Ltd, a private limited company incorporated in Pakistan, received from the Commission a ‘Form for companies requesting an exemption from possible extended duties’ (‘the form’), which it completed and returned on 17 October 2014.
8 From the information provided in the form, it appeared that the applicant was purchasing bicycle parts from Sri Lanka and China to assemble them into bicycles in Pakistan. Since the applicant had not stated that it was also manufacturing parts in Pakistan, the Commission took the view that the value added to the parts brought in, during the assembly or completion operation, was not greater than 25% of the manufacturing cost in accordance with Article 13(2)(b) of the basic regulation.
9 The applicant enclosed with the form Table F.2 which lists all purchases of parts made by the applicant in the period from 1 September 2013 to 31 August 2014 (‘the reporting period’). That table shows that five companies were designated as suppliers of the applicant, that is to say, Creative Cycles Pvt Ltd, Great Cycles Pvt Ltd, Continental Cycles Pvt Ltd, Kelani Cycles Pvt Ltd and Flying Horse Pvt Ltd. In this regard, although it is true, as the Commission asserts, that the applicant left empty the column ‘related or unrelated’ in the table, which allows for possible relationships with its suppliers to be identified, it should nevertheless be made clear that it did mention the existence of its relationship with Great Cycles, stating on page 11 of the form that its owner and the owner of Great Cycles was one and the same person.
10 On 27 November 2014, a hearing of the applicant was conducted by the Commission, at the applicant’s request, in the course of which the applicant provided a number of clarifications and adhered to the substance of the information contained in the form, namely, that during the reporting period it was carrying out bicycle assembly operations in Pakistan, but that less than 60% of the value of the parts used in those assembly operations came from China and that its assembly operations did not therefore constitute circumvention of the measures in force for the purposes of Article 13(2)(b) of the basic regulation.
11 Following that hearing, the Commission sent a deficiency letter to which the applicant replied on 16 January 2015, acknowledging that it was related not only to Great Cycles, but also to Creative Cycles and Continental Cycles, and stating, in paragraph 2 of its reply, that it had not originally mentioned these latter two companies because the first ‘had stopped its operations’ and the second was ‘already closed’.
12 A verification visit was conducted on 17 and 18 February 2015, not as originally planned at the applicant’s premises in Karachi (Pakistan), but, for security reasons and with the applicant’s agreement, in Katunayake (Sri Lanka), at the premises of Great Cycles where the accounting documents had been transferred for the purposes of the verification. The purpose of the verification was, inter alia, to determine whether the proportion of parts from China was less than 60% of the value of all the parts used in the assembly operation carried out by the applicant in Pakistan. The Commission decided to focus its investigation on information concerning one of the applicant’s suppliers, Flying Horse, on the ground that the applicant purchased from it 93% of the bicycle parts used in its assembly operations in Pakistan. In that regard, according to the information in Table F.2, that supplier was unrelated to the applicant and, according to information provided by the applicant during the on-spot verification, that supplier was an intermediary which purchased parts in almost equal volumes in China and in Sri Lanka — 46% and 47%, respectively, of all bicycle parts used in the applicant’s assembly operations in Pakistan — and resold them to the applicant. Otherwise, the applicant was supplied directly by Sri Lankan and Cambodian suppliers.
13 It was revealed that Flying Horse purchased a significant volume of frames, forks, alloy rims and plastic wheels from Great Cycles, a bicycle parts manufacturer established in Sri Lanka and related to the applicant, as stated in paragraph 9 above. Tyres and rim strips, on the other hand, were purchased from Vechenson Limited, a bicycle parts manufacturer also established in Sri Lanka and unrelated to the applicant. The Commission found the latter to be a genuine producer of bicycles (paragraph 27 of the defence). Having identified a number of discrepancies, such as the applicant’s outstanding debt of 5 277 325 US dollars (USD) vis-à-vis its supplier Flying Horse, an amount corresponding to more than 90% of the applicant’s sales in the European Union during the reporting period, the attainment by Flying Horse of a very variable mark-up in its sales to the applicant, having regard to the price invoiced to Flying Horse by Great Cycles, ranging from sale below cost to a mark-up of almost 20%, and the existence of multiple invoices, issued either by Flying Horse to the applicant or directly by Great Cycles and addressed to the applicant, with the same number and relating to the same quantities and the same values, the Commission raised doubts about the relationship between the applicant and that supplier.
14 The Commission also questioned whether, in the light of those practices, the bicycle parts from Sri Lanka and declared by the applicant as originating from Sri Lanka did actually come from that country. In that regard, the applicant submitted the ‘Form A’ certificates of origin issued by the Department of Commerce in the Democratic Socialist Republic of Sri Lanka for the bicycle parts purchased, on the one hand, via Flying Horse, from Great Cycles and, on the other, from Vechenson. As part of its investigation, the Commission also requested the submission to it of the supporting documents for the request for ‘Form A’ certificates of origin, a request to which the applicant also acceded.
15 The applicant thus sent to the Commission ‘Form A’ certificates of origin and the relevant supporting documents concerning, first, the exports made by Vechenson and, second, the exports made by Great Cycles. The Commission accepted the certificates for Vechenson as proof of the Sri Lankan origin of the bicycle parts, but rejected those relating to Great Cycles. With regard to the latter ‘Form A’ certificates of origin, the Commission examined two costs statements for frames and forks, the first with a date of 17 December 2012 and the second with a date of 12 December 2013. Both had the stamp of the Department of Commerce of the Democratic Socialist Republic of Sri Lanka. The applicant also submitted costs statements for rims with a date of 27 June 2014. The Commission found a number of purported inconsistencies in that regard, first, relating to the fact that supporting costs statements had not been provided for certain types of frames and forks, second, relating to the fact that the statements in question were not based on real manufacturing costs, but merely on a global projection of manufacturing costs that were valid for an undetermined volume of production for about one year, third, concerning the lack of correlation between the frame and fork sizes mentioned in the ‘Form A’ certificates of origin and the sizes in the costs statements, fourth, concerning the discrepancy between the free-on-board value shown in the ‘Form A’ certificates of origin and the free-on-board value mentioned in Table F.2 annexed to the form and the value in the various invoices examined in the course of the investigation and, fifth, relating to the failure to mention Flying Horse in the ‘Form A’ certificates of origin.
16 In those circumstances, the Commission asked the applicant, during the verification visit, to provide evidence of the manufacturing costs of the parts worked by Great Cycles in Sri Lanka during the reporting period in the format of Table F.4.1 of the form. Acceding to that request, the applicant submitted, in the required format, the requested information on aggregated manufacturing costs for all the parts (frames, forks, alloy rims and plastic wheels) produced by Great Cycles in Sri Lanka during that period. On the basis of that information, the Commission calculated that more than 65% of the total raw materials used for the manufacture of bicycle parts in Sri Lanka came from China, compared with 31% from Sri Lanka, and that less than 25% Sri Lankan value was added to those raw materials in the manufacturing process for those parts in Sri Lanka. It concluded that the applicant was participating in circumvention operations and disclosed its findings on 13 March 2015.
17 On 23 March 2015, the hearing of the applicant was conducted, at its request, by the Hearing Officer.
18 In its written comments of 27 March 2015 on the Commission’s disclosure, the applicant maintained that the Commission was not legally entitled to question the Sri Lankan origin of the parts supplied to it by Great Cycles because, first, the ‘Form A’ certificates of origin issued by the Sri Lankan State attested to that origin and, second, since Article 13(2)(b) of the basic regulation is not a rule of origin, the Commission could not apply it to determine the origin of the parts worked in Sri Lanka.
19 On 18 May 2015, the Commission adopted Implementing Regulation (EU) 2015/776 of 29 May 2013 extending the definitive anti-dumping duty imposed by Regulation No 502/2013 on imports of bicycles originating in the People’s Republic of China to imports of bicycles consigned from Cambodia, Pakistan and the Philippines, whether declared as originating in Cambodia, Pakistan and the Philippines or not (OJ 2013 L 122, p. 4) (‘the contested regulation’).
The contested regulation
20 Recital 13 of the contested regulation states, inter alia, that the question of the ‘evidentiary value’ of the ‘Form A’ certificates of origin for bicycle parts purchased from a company connected with Sri Lanka through a trader and the application, ‘by analogy’, of Article 13(2)(b) of the basic regulation for bicycle parts purchased in Sri Lanka were examined at the hearing of the applicant by the Hearing Officer on 23 March 2015.
21 Recital 22 of the contested regulation refers to the fact that, during the reporting period, the applicant was Pakistan’s sole producer of bicycles, that it completed the form and that its production covered a little over 100% of the total imports of bicycles from Pakistan to the European Union. It also describes the on-spot verification, referred to in paragraph 12 above, and makes it clear that the applicant was considered to be cooperating.
22 In point 2.5.3 of the contested regulation, entitled ‘Pakistan’, recitals 94 to 106 of that regulation are given over to the Commission’s investigation of the applicant. As a preliminary point, the Commission, in recital 94 of the contested regulation, draws attention to the links between the applicant and ‘a company in Sri Lanka that was subject to the previous anti-circumvention investigation and is subject to the extended measures’, adding that the shareholders in that company had set up a company in Cambodia which was also involved in the exports of bicycles to the Union and which ‘did not cooperate in the current investigation, although it exported the product under investigation to the Union market in 2013’. The Commission adds, also in recital 94 of the contested regulation, that the Cambodian company ceased its operations in Cambodia during the reporting period and moved its activities to the related company in Pakistan.
23 In recital 96 of the contested regulation, the Commission states that the investigation did not reveal any transhipment practices of Chinese-origin products via Pakistan, and in recitals 98 and 99 of that regulation it outlines the anomalies which it revealed in the course of that investigation, which are set out in paragraphs 13 and 15 above. Next, in recitals 100 and 101 of the contested regulation, it deals with the issue of the evidentiary value of the ‘Form A’ certificates of origin and the proportion of raw materials from China used for the manufacture of bicycle parts in Sri Lanka. Those recitals are drafted as follows:
‘100 After disclosure, the [applicant] disagreed with the Commission’s assessment that the [“Form A”] certificates of origin submitted for the bicycle parts purchased from Sri Lanka could not be considered sufficient evidence to demonstrate the origin of the bicycle parts. The [applicant] argued that the costs statements were prepared by a firm of chartered accountants and that the importers should be able to rely on [“Form A”] certificates of origin issued by the Sri Lankan Department of Commerce. The [applicant] confirmed that the costs statements were not supported by real manufacturing costs for parts but a mere projection of future costs valid for about 1 year. Moreover, the [applicant] claimed that Article 13(2)(b) of the basic regulation is not a rule of origin and, therefore, that it cannot be applied to assess the origin of the bicycle parts purchased from Sri Lanka.
101 As explained in recital 98, the [“Form A”] certificates of origin were not considered sufficient evidence to demonstrate the origin of the bicycle parts purchased from Sri Lanka because they were not issued on the basis of actual manufacturing costs but on a projection of manufacturing costs for the future which does not provide any guarantees that the bicycle parts were indeed manufactured in compliance with the projected costs. Moreover, it should be made clear that the Commission is not disputing in general the methodology for the issuance of the [“Form A”] certificates of origin in Sri Lanka, which is beyond the scope of this investigation, but only assessing whether the conditions of Article 13(2) of the basic regulation are met in the present case. In these circumstances, while noting that Article 13(2)(b) of the basic regulation is indeed not as such a rule of origin, the Commission was justified in considering that as these parts were manufactured for more than 60% with raw materials from China and the value added was less than 25% of the manufacturing costs, it could conclude that these parts themselves come from China. Therefore, all the above claims were rejected.’
24 The Commission therefore considered, in recital 104 of the contested regulation, that the investigation had not revealed ‘any due cause or economic justification for the assembly operations other than the avoidance of the existing measures on the product concerned.’
25 Recitals 144 to 147 of the contested regulation, in the context of evidence of dumping, are given over to the methodology used by the Commission, consisting of, in the first instance, determining the weighted average export price used in the reporting period, and then, in the second instance, comparing that with the weighted average normal value. The Commission concludes that, in the case of Pakistan, there was ‘significant dumping’ (recital 147 of the contested regulation).
26 In recital 163 of the contested regulation, which refers to recital 102 of that regulation, the Commission dismissed the possibility of exempting the applicant from any extended measures on the ground that, since it was ‘found to be involved in circumvention practices … under Article 13(4) of the basic regulation, an exemption [could] not be granted to [that] company’.
27 The Commission therefore decided, in Article 1 of the contested decision, to extend the definitive anti-dumping duty of 48.5% applicable to imports of bicycles originating in China, referred to in paragraph 3 above, to the imports of bicycles consigned, in particular, from Pakistan, stating in Article 1(3) of that regulation that the ‘duty extended by paragraph 1 of this Article shall be collected on imports consigned from Cambodia, Pakistan and the Philippines, whether declared as originating in Cambodia, Pakistan and the Philippines or not, registered in accordance with Article 2 of [Implementing] Regulation No 938/2014 and Articles 13(3) and 14(5) of [the basic regulation] with the exception of those produced by the companies listed in paragraph 1.’
Procedure and forms of order sought
28 By application lodged at the Court Registry on 29 July 2015, the applicant brought the present action.
29 The Commission lodged its defence at the Court Registry on 12 October 2015.
30 By document lodged at the Court Registry on 16 November 2015, the European Bicycle Manufacturers Association (EBMA) applied for leave to intervene in support of the form of order sought by the Commission.
31 On 7 and 18 December 2015, the Commission and then the applicant informed the Court that they had no objection to the intervention by the EBMA.
32 Also on 18 December 2015, the Commission sent the Court a request for confidential treatment of the defence and provided a non-confidential version of the defence. On the same date, the applicant sent the Court a request for confidential treatment of the annexes to the application and the annexes to the defence, enclosing with that request a non-confidential version of those annexes.
33 Still on 18 December 2015, the applicant lodged the reply at the Court Registry.
34 On 25 January 2016, the applicant sent the Court Registry a non-confidential version of the application.
35 By order of the President of the Seventh Chamber of 9 March 2016, the EBMA was granted leave to intervene and the requests for confidential treatment made by the main parties were granted.
36 On 18 March 2016, the Commission lodged the rejoinder at the Court Registry.
37 By letter lodged at the Court Registry on 1 April 2016, the applicant confirmed that the rejoinder did not contain confidential information.
38 By letter lodged at the Court Registry on 4 April 2016, the intervener confirmed that it did not have any objection to the confidential treatment of the application, the defence and the reply.
39 By letter of 20 April 2016, the Court invited the main parties to present their observations on a possible stay of the proceedings on account of the existence of six appeals before the Court of Justice which might be relevant to the resolution of the present dispute.
40 On 26 April and 10 May 2016 respectively, the Commission and the applicant replied, in the case of the former, that those appeals concerned the examination sequence to be observed in interpreting and applying Article 13 of the basic regulation and the proper allocation of the burden of proof in anti-circumvention investigations, a question that did not arise in the present case, and, in the case of the latter, that, having regard to the grounds of appeal, those appeals did not seem to be relevant to the outcome of the present case.
41 On 2 May 2016, the intervener lodged the statement in intervention at the Court Registry.
42 On 26 May 2016, the President of the Seventh Chamber decided not to stay the proceedings.
43 On 17 June and 8 July 2016, the Commission and the applicant lodged their respective observations on the statement in intervention at the Court Registry.
44 Following a change in the composition of the Chambers of the General Court, the case was reassigned to a new Judge-Rapporteur within the Seventh Chamber.
45 The applicant claims, in essence, that the Court should:
– annul the contested regulation in so far as it concerns the applicant;
– order the Commission to pay the costs.
46 The Commission, supported by the intervener, contends that the Court should:
– dismiss the action as unfounded;
– order the applicant to pay the costs.
47 The parties presented oral argument and answered the questions put to them by the Court at the hearing on 17 May 2017, which was partially heard in camera so the main parties could be questioned about annexes containing confidential information.
48 At the hearing, the intervener submitted an observation on the report for the hearing, formal note of which was made in the minutes of the hearing.
Law
Admissibility of the action
49 While not raising a formal objection of inadmissibility, the Commission claims that if ‘the Applicant was a mere trader in bicycles, it would not be individually concerned by the collection of duties as from the date of registration’. It accepts, however, that ‘in the specific circumstances of the case, the application could be admissible to the extent that the extended duties apply to bicycles not only consigned but also produced by the applicant itself’ and that it is ‘only in its quality of (alleged) producer of bicycles that the applicant has been involved in the investigation and that its data have been used by the investigating authority’ (paragraph 92 of the defence).
50 The condition laid down in the fourth paragraph of Article 263 TFEU that proceedings brought by a natural or legal person against a decision addressed to another person are admissible only if the decision is of direct and individual concern to the former raises an absolute bar to proceedings which the European Union judicature may consider at any time, even of its own motion (order of 5 July 2001, Conseil national des professions de l'automobile and Others v Commission, C‑341/00 P, EU:C:2001:387, paragraph 32, and judgment of 29 November 2007, Stadtwerke Schwäbisch Hall and Others v Commission, C‑176/06 P, not published, EU:C:2007:730, paragraph 18).
51 It should be recalled at the outset that, under the fourth paragraph of Article 263 TFEU, any natural or legal person may, under the conditions laid down in the first and second paragraphs, institute proceedings against an act addressed to that person or which is of direct and individual concern to them, and against a regulatory act which is of direct concern to them and does not entail implementing measures.
52 In that regard, it suffices to note that, in the first place, as regards the applicant’s individual concern, the European Union judicature has held that particular provisions of regulations imposing or extending anti-dumping duties may be of individual concern to the producers and exporters of the product in question, which are charged with dumping on the basis of data relating to their commercial activities. That is the case, in general, for producers or exporters which are able to demonstrate that they were identified in the measures adopted by the Commission or the Council, or that they were concerned by the preliminary investigations (see, to that effect, judgments of 21 February 1984, Allied Corporation and Others v Commission, 239/82 and 275/82, EU:C:1984:68, paragraph 11, and of 13 September 2013, Huvis v Council, T‑536/08, not published, EU:T:2013:432, paragraph 25).
53 In the light of that case-law, it must be concluded, not only that the applicant was the subject of the investigation, as has been recalled in paragraphs 7 to 18 above, but also that it was identified, in recital 22 of the contested regulation, as the sole producer of bicycles established in Pakistan. Furthermore, a number of other recitals in that regulation refer to the applicant’s factual and legal situation (see paragraphs 21 to 27 above). It cannot therefore be disputed that the applicant is individually concerned by the contested regulation, including inasmuch as it orders the levying of the extended anti-dumping duty from the date of registration.
54 In the second place, it should be observed that the applicant is directly affected by the contested regulation. In that regard, it suffices to note that the customs authorities of the Member States are required, without having any margin of discretion, to levy the duties imposed by an anti-dumping regulation (see, to that effect, judgment of 16 January 2014, BP Products North America v Council, T‑385/11, EU:T:2014:7, paragraph 72 and the case-law cited).
55 Since the applicant is directly and individually concerned by the contested regulation, it follows that the action for annulment of that regulation is admissible.
Admissibility of some of the ‘pleas in law’
56 In support of its action, the applicant raises a single plea in law, alleging the infringement of Article 13(2)(b) of the basic regulation. It claims that, in the application of that provision, the Commission committed procedural and substantive errors, revealing incoherent reasoning. The plea in the action is presented as follows:
– the Commission applied Article 13(2)(b) of the basic regulation to manufacturing operations for bicycle parts in Sri Lanka, when the object of the investigation at issue was alleged circumvention of anti-dumping measures by assembly operations in Pakistan;
– it applied that provision as a rule of origin, which it is not;
– it has not coherently demonstrated that the ‘Form A’ certificates of origin constitute insufficient proof;
– it did not take any steps to apply the rules of origin prescribed by Union customs legislation.
57 The Commission submits that the applicant is in reality raising three pleas, because it is successively questioning the rejection of its exemption request, the extension of the definitive anti-dumping duty to imports of bicycles consigned by it from Pakistan and the collection of that duty. It asserts that the first and third of these ‘pleas’ are inadmissible in the absence of supporting arguments and considers in any event that they are unfounded.
58 The Commission’s interpretation of the application cannot be accepted. The applicant submits a single plea in law in support of its claim for annulment, in which it claims that, having committed various ‘errors of procedure, law and reasoning’, the Commission extended to it the definitive anti-dumping duty of 48.5%. The refusal to grant an exemption, the extension of that duty and its collection are inextricably linked in the present case, given that, as is indicated in recital 22 of the contested regulation, referred to in paragraph 21 above, ‘during the reporting period one company produced bicycles in Pakistan’, that is to say, the applicant, which was responsible for all exports of bicycles from Pakistan to the Union. The extension of the initial anti-dumping duty of 48.5% to that country was therefore, first, an unavoidable consequence of the refusal to grant the applicant an exemption, and secondly, led directly to the collection of the duty.
59 This is also reflected in the actual wording of the contested regulation. It is clear from recital 163 of the contested regulation, which refers to recital 102 of that regulation, that the request for an exemption was refused on the sole ground that the applicant ‘was found to be involved in circumvention practices’, for the purposes of Article 13(2)(b) of the basic regulation. It is clear from Article 1(3) of the contested regulation, cited in paragraph 27 above, that the levying of the definitive anti-dumping duty itself stemmed directly from the extension decided upon in Article 1(1) of that regulation.
60 The Court therefore considers that those three ‘pleas in law’ are merely one single plea seeking annulment of the contested regulation in so far as it concerns the applicant, and consequently rejects the plea of inadmissibility relating to both the abovementioned ‘pleas in law’ raised by the Commission.
Substance
61 Before examining the substance of the single plea in law, the Court considers it appropriate to set out some preliminary observations.
Preliminary observations
62 In the first place, the Commission maintains that ‘the order in which the application is made does not respect the sequence laid down in Article 13 of the basic regulation’ (paragraph 60 of the defence), namely (i) the obligation to establish that the four conditions set by Article 13(1) of the basic regulation are fulfilled at the level of the country and (ii) the assessment of the evidence provided by producers-exporters in support of their individual request for exemption. It recognises, however, that in the case at hand the distinction established by Article 13 of the basic regulation between the first two paragraphs ‘is somewhat blurred by the fact that the applicant is the only assembler of bicycles in Pakistan’ (paragraph 66 of the defence).
63 In that regard, first, it should be pointed out that the applicant does not challenge the order in which the Commission, in the contested regulation, implemented respectively Article 13(1) and (2) of the basic regulation concerning the existence of circumvention practices in Pakistan, and then the assessment of its exemption request. Secondly, the Commission itself acknowledged, as is stated in paragraph 62 above, that that distinction was unclear in the present case and also stated, in its observations on the possibility of a suspension of the procedure, referred to in paragraph 40 above, that, unlike the cases which gave rise to the judgments of 26 January 2017, Maxcom v Chin Haur Indonesia (C‑247/15 P, C‑253/15 P and C‑259/15 P, EU:C:2017:61) and Maxcom v City Cycle Industries (C‑248/15 P, C‑254/15 P and C‑260/15 P, EU:C:2017:62), the issue of the order of the examination initiated by Article 13(1) and (2) of the basic regulation did not arise in the present case.
64 In the second place, the intervener submitted in its statement in intervention and at the hearing that the notion of a ‘country subject to measures’ in Article 13(2)(a) of the basic regulation must be understood as referring, not only to China, but also to Sri Lanka, to which the initial measures were extended.
65 It must be observed, in that regard, that the contested regulation is not based on an interpretation of Article 13(2)(a) of the basic regulation, as suggested by the intervener, and that the Commission has neither raised, reprised, nor commented on that interpretation in the present case. It is clear from a reading of that regulation in its entirety that only China was regarded as being the ‘country subject to measures’ for the purposes of Article 13(2)(a) of the basic regulation. Moreover, it is important to point out that the investigation period in the present case concerned, in part, a phase in which the anti-dumping measures imposed on bicycles originating in China were still not extended to those consigned from Sri Lanka, which demonstrates, as if it was not already clear, that Sri Lanka could not be regarded, in the contested regulation, as being the ‘country subject to measures’, for the purposes of Article 13(2)(a) of the basic regulation.
66 It is settled case-law that, in an action for annulment, the General Court cannot substitute its own reasoning for that of the author of the contested act (see judgment of 26 October 2016, PT Musim Mas v Council, C‑468/15 P, EU:C:2016:803, paragraph 64 and the case-law cited; see also, to that effect, judgment of 14 December 2005, General Electric v Commission, T‑210/01, EU:T:2005:456, paragraph 359), which it would be required to do if the intervener’s argument were to succeed. That argument therefore cannot succeed.
67 In the third place, it is common ground that, in the present case, the Commission did not apply Article 18 of the basic regulation relating to non-cooperation. It found, as is recalled in paragraph 21 above, that the applicant had indeed cooperated. Consequently, the intervener’s argument that the Commission was entitled to apply that article must be dismissed as irrelevant.
68 In the fourth place, the intervener stresses the fact that Great Cycles and the applicant form a ‘single economic entity’ for the purposes of interpreting the test of 60% or more of the total value of the parts of the assembly product in Article 13(2)(b) of the basic regulation. However, it must be pointed out that, following the reasoning in paragraph 65 above, the contested regulation is not based on such a reason and that the intervener’s contention, even if it were established, cannot be substituted on the grounds given by the Commission in that regulation. That argument, submitted in the alternative, cannot succeed either.
The single plea in law
69 In the first place, the applicant claims that it is clear, both from the wording of Article 13(2) of the basic regulation and from the case-law (judgment of 26 September 2000, Starway v Council, T‑80/97, EU:T:2000:216, paragraph 88), that that provision refers to parts of the assembled product being ‘from’ the country subject to measures, without the word ‘from’ having to be interpreted as requiring that the parts actually originate in that country. In the present case, the fact that those parts were worked in Sri Lanka and consigned from that country to Pakistan is sufficient, therefore, to establish that they should not be considered as being ‘from’ China, for the purposes of Article 13(2) of that regulation (paragraphs 22 and 23 of the application).
70 Secondly, during the on-spot verification, the applicant produced ‘Form A’ certificates of origin issued by the Department of Commerce of the Democratic Socialist Republic of Sri Lanka in order to demonstrate that the parts produced in Sri Lanka and consigned to Pakistan from that country originated in Sri Lanka. Since those certificates are prescribed by Union customs legislation, economic operators would be entitled to rely on them, unless they are formally declared invalid as a result of an official investigation by the Union customs authorities. It thus considers that it discharged its burden of proof, referred to in paragraph 88 of the judgment of 26 September 2000, Starway v Council (T‑80/97, EU:T:2000:216). It states that the costs statements prepared by chartered accountants were accompanied by an undertaking on its part to open its factory to any inspection and to maintain up-to-date accounting records. In the reply, the applicant states, in paragraph 20, that ‘it is reasonable for a small country with limited resources such as Sri Lanka to adopt a system whereby [“Form A” certificates of origin] are issued on the basis of projected costs subject to ex post verification’. It adds, in paragraphs 52 to 54 of the reply, that Article 97t of Commission Regulation (EEC) No 2454/93 of 2 July 1993 laying down provisions for the implementation of Council Regulation (EEC) No 2913/92 establishing the Community Customs Code (OJ 1993 L 253, p. 1, ‘the Customs Code Implementing Regulation’), then in force, organises a procedure for ex post verification of those certificates of origin. According to the applicant, the Commission did not state in the contested regulation why the ‘Form A’ certificates of origin (paragraph 53 of the reply) could not be relied upon, when it must produce ‘coherent reasoning’ as to why they cannot be treated as valid (paragraph 55, in fine, of the reply).
71 Thirdly, the Commission committed errors of procedure, law and reasoning by applying Article 13(2) of the basic regulation to manufacturing operations which took place in Sri Lanka and not Pakistan. In so doing, the Commission acted outside the territorial scope of the investigation since it applied that provision to a country other than Pakistan. In addition, the Commission applied the wrong rule, in that the provision applied is not a rule of origin, in order to determine erroneously that the bicycle parts manufactured in Sri Lanka were not of Sri Lankan origin and therefore could be deemed to be from China. Moreover, the Commission’s reasoning is incoherent in that it correctly recognises that the provision at issue is not a rule of origin, but nevertheless applied it as such to the bicycle parts in question.
72 In those circumstances, since the Commission intended to reject the ‘Form A’ certificates of origin as insufficient evidence, the principles of good administration and diligent investigation would require at least some verification of the origin of the bicycle parts in question by applying the preferential or non-preferential rules of origin laid down in Council Regulation (EEC) No 2913/92 of 12 October 1992 establishing the Common Customs Code (OJ 1992, L 302, p. 1) and the Customs Code Implementing Regulation. However, no such checks were carried out.
73 The Commission contends, in the first place, that Article 13(2)(a) of the basic regulation does not refer in any way to the ‘origin’ of the parts, but merely uses the factual term ‘are from the country’. Thus, nowhere does that provision make any reference to the fact that it must be applied having recourse to the rules of origin laid down by the Union customs legislation, unlike other provisions of that regulation, such as the second subparagraph of Article 13(1) which refers to ‘the slight modification of the product concerned to make it fall under customs codes which are normally not subject to the measures’. Therefore, Article 13 of the basic regulation creates a separate legal regime, with separate thresholds, designed to ensure the predictability of Union action against circumvention.
74 Secondly, as regards the certificates of origin produced by the applicant, the Commission contends that they did not constitute sufficient evidence to demonstrate the Sri Lankan origin of those parts on the basis of the factors summarised in paragraph 15 above.
75 Thirdly, since the case-law recognises that the Union institutions are able to act on the basis of a body of consistent evidence, it must be inferred that Article 13 of the basic regulation has been interpreted as not restricting the type of evidence upon which the investigating authorities can rely in order to establish circumventing practices.
76 In paragraphs 3 and 42 of the rejoinder, the Commission asserts that the application ‘by analogy’ of Article 13(2)(b) of the basic regulation is not an essential foundation to its findings, but an ‘additional test’ which it was under no obligation to conduct, since ‘the unreliability of the [“Form A” certificates of origin]’ and ‘the absence of manufacturing equipment were already sufficient for enabling the Commission to conclude that the information provided by the applicant was unreliable’. It states that the term ‘moreover’ in recital 101 of the contested regulation confirms that recourse to that provision is an ‘additional tool’.
77 As a preliminary point, it must be recalled that, under Article 13(1) of the basic regulation, anti-dumping duties imposed pursuant to that regulation may be extended to imports from third countries of like products, slightly modified or not, or parts thereof, when circumvention of the measures in force is taking place. Article 13(2) of that regulation provides that an assembly operation, such as that carried out by the applicant in the present case, is to be considered to circumvent the measures in force where the conditions set out in subparagraphs (a) to (c) are satisfied (judgment of 26 September 2000, Starway v Council, T‑80/97, EU:T:2000:216, paragraph 78).
78 More particularly, it follows from Article 13(2)(a) and (b) of the basic regulation that an assembly operation is to be deemed to constitute circumvention where parts having a value of 60% or more of the total value of the parts of the assembled product are ‘from the country subject to measures’ (judgment of 26 September 2000, Starway v Council, T‑80/97, EU:T:2000:216, paragraph 79).
79 Accordingly, under Article 13(2) of the basic regulation, the Union institutions, as well as satisfying the other conditions listed there, must show that the parts constituting 60% or more of the total value of the parts of the assembled product are from the country subject to measures. However, they are not required to prove that those parts also originate in that country (judgment of 26 September 2000, Starway v Council, T‑80/97, EU:T:2000:216, paragraph 84).
80 Consequently, it follows from the basic regulation, and in particular from Article 13, that the purpose of a regulation extending an anti-dumping duty is to ensure the effectiveness of that measure and to prevent it being circumvented, in particular, by assembly operations in the Union or a non-member country. Thus, a measure extending an anti-dumping duty is merely ancillary to the initial measure imposing that duty. It would therefore be contrary to the purpose and general scheme of Article 13 of that regulation to impose an anti-dumping duty, initially imposed on imports of a product originating in certain countries, on imports of parts of that product from the country subject to measures where the operators carrying out the assembly operations investigated by the Commission prove that those parts, constituting 60% or more of the total value of the parts of the assembled product, originated in another country. In such a situation, the assembly operations cannot be considered to circumvent the anti-dumping duty initially imposed, within the meaning of Article 13 of the basic regulation (judgment of 26 September 2000, Starway v Council, T‑80/97, EU:T:2000:216, paragraph 85).
81 Consequently, Article 13(2) of the basic regulation must be interpreted to the effect that an assembly operation on Union territory or in a non-member country is to be regarded as circumventing the measures in force where, as well as satisfying the other conditions referred to in that provision, the parts constituting 60% or more of the total value of the parts of the assembled product are from countries subject to the measures, unless the trader concerned provides the Union institutions with proof that those parts originated in another country (judgment of 26 September 2000, Starway v Council, T‑80/97, EU:T:2000:216, paragraph 88).
82 Such proof may be provided in different situations, and not just in the case of a transhipment (see, to that effect, judgment of 26 September 2000, Starway v Council, T‑80/97, EU:T:2000:216, paragraph 87).
83 It follows that, as a general rule, although it is sufficient to refer simply to where the parts used for assembling the final product are ‘from’ for the purposes of applying Article 13(2)(b) of the basic regulation, it may be necessary, in case of doubt, to verify whether the parts ‘from’ a third country in actual fact originate in another country.
84 As regards the term ‘from’, used in Article 13(2)(a) of the basic regulation, it should be pointed out that, although that regulation does not define that term, it makes repeated use of it by consistently combining it with the term ‘imports’. Thus, the expression ‘imports from’ appears, for example, in recital 8, Article 2(7)(a), Article 3(4), Article 9(5) and (6), and Article 13(1) of that regulation. Furthermore, a variant of that expression was used in recital 54 of the contested regulation. In addition, that expression is translated in the same way in other linguistic versions of those provisions of the basic regulation. That is the case, for example, in the versions in German (Einfuhren aus), Bulgarian (внос от), Croatian (uvoza iz) and Lithuanian (importui iš). It follows that the term ‘are from’, for the purposes of Article 13(2)(a) of the basic regulation, must be understood as referring to the imports concerned and, therefore, the export country.
85 Moreover, that interpretation is consistent with the objective underlying Article 13 of the basic regulation of ensuring that measures to counter circumvention are effective, in that it provides an effective and practical solution enabling the Commission to refer simply to where the parts used for assembling the final product are ‘from’, for the purposes of applying Article 13(2)(b) of the basic regulation.
86 In the present case, it is apparent from the case-file, and in particular Table F.2 attached to the form, which, moreover, is not disputed by the parties, that at least 47% of the parts used for assembling bicycles in Pakistan were imported from Sri Lanka after having been worked in that country. The assumption of a mere transhipment via that country does not correspond to the circumstances of the case. Therefore, it must be concluded that those parts could be regarded as being ‘from’ Sri Lanka.
87 However, as is apparent from the case-law summarised in paragraphs 79 to 82 above, that finding cannot prevent the Commission from verifying, in case of doubt, whether the parts ‘from’ Sri Lanka in actual fact originate in another country, such as the country subject to measures, in the present case China.
88 In that regard, it must be noted that the Commission’s argument that the ‘origin’ of the parts is not relevant for the purposes of applying Article 13(2) of the basic regulation does not fully reflect the interpretation which the European Union judicature gave to that provision.
89 In addition, that argument is at odds with the fact that the Commission itself examined the origin of the bicycle parts at issue. In the first place, Table F.2 of the form, on which the Commission incidentally concentrated a significant part of its verification, requires, in particular, that the ‘origin’ of the bicycle parts used for the assembly operations in Pakistan be identified. Secondly, it is clear from recitals 98 and 101 of the contested regulation that the Commission verified whether the ‘Form A’ certificates of origin for the goods in question were sufficient evidence to establish the ‘origin’ of the bicycle parts at issue. Thirdly, after finding that those certificates of origin did not constitute sufficient evidence to demonstrate the ‘origin’ of the bicycle parts, the Commission applied the criteria in Article 13(2)(b) of the basic regulation in order to verify the ‘origin’ of those parts, as the Commission itself stated at the hearing before the Hearing Officer, and which is apparent from the minutes of that hearing.
90 Although it follows from the wording of recital 101, in fine, of the contested regulation that the Commission concluded that the bicycle parts in question ‘come from’ China, in that they were manufactured for more than 60% with raw materials from China and the value added was less than 25% of the manufacturing costs, it is apparent from various pieces of information in the court-file, in particular the information referred to in paragraph 89 above, that the Commission applied the criteria in Article 13(2)(b) of the basic regulation in order to verify the ‘origin’ of those parts. Those terminological variations thus demonstrate a certain degree of confusion on the part of the Commission with regard to the respective notions of ‘from’ and ‘origin’.
91 In any event, it follows from paragraphs 81 to 86 above that, in the present case, the bicycle parts in question ‘come from’ Sri Lanka, but that it remained open to the Commission to ask the applicant to provide evidence that those parts, not only ‘come from’ Sri Lanka, but also originated in that country.
92 In those circumstances, it is necessary to verify whether the Commission could, without committing an error of law, conclude that the bicycle parts from Sri Lanka actually originated in China.
93 In that regard, it is necessary to examine, in the first place, the evidentiary value of the ‘Form A’ certificates of origin presented by the applicant as evidence of the Sri Lankan origin of the bicycle parts at issue, but dismissed by the Commission (‘the disputed certificates’), and secondly, the costs of manufacturing those parts, submitted by the applicant at the request of the Commission, to which the Commission applied, by analogy, Article 13(2)(b) of the basic regulation.
– The evidentiary value of the disputed certificates
94 Inasmuch as some of the applicant’s arguments could be interpreted as calling into question the reasoning of the contested regulation as regards the Commission’s examination of the evidentiary value of the ‘Form A’ certificates of origin, it must be observed that it is clear from recitals 98, 100 and 101 of the contested regulation, the content of which is set out in paragraph 23 above, that the Commission outlined in a clear and comprehensive manner the reasons why, in the present case, it could not give credence to some of the ‘Form A’ certificates of origin submitted to it by the applicant. The statement of reasons in the contested regulation therefore satisfies the requirement laid down in Article 296 TFEU.
95 As to the substance, in the first place, it must be recalled that the ‘Form A’ certificates of origin are preferential certificates of origin, which were governed, at the material time, as regards the European Union, by Articles 97k to 97u of the Customs Code Implementing Regulation, and which enable the exporter to prove the origin of the product which he is exporting. In that regard, it is important to point out that it falls to the beneficiary country, under Article 97k(1) of the Customs Code Implementing Regulation, to comply or to ensure compliance with the rules of origin and with the rules for completion and issue of ‘Form A’ certificates of origin.
96 The ‘Form A’ certificates of origin are thus currently used in international trade as a means of certifying the origin of the goods to which they relate. Furthermore, the Union institutions often demand that they be produced, including in anti-dumping procedures, in order to guarantee the origin of the product concerned. This is evidenced, in the present case, as was confirmed at the hearing, by the fact that the Commission accepted the ‘Form A’ certificates of origin presented by the applicant, relating to the bicycle parts manufactured by Vechenson, as sufficient proof of their Sri Lankan origin (see paragraph 15 above).
97 Nevertheless, it must be pointed out that, in accordance with Article 26 of Regulation No 2913/92, as it applied at the material time, the customs authorities may, in the event of serious doubts, require any additional proof to ensure that the indication of origin does indeed follow the rules laid down by the relevant Union legislation. To that end, Article 97t of the Customs Code Implementing Regulation, as applied at the material time, establishes a procedure for the subsequent verification of ‘Form A’ certificates of origin, to be carried out at random or whenever the customs authorities of the Member States have reasonable doubts as to their authenticity.
98 It may be inferred from those provisions that, although the ‘Form A’ certificates of origin have evidentiary value in relation to the origin of the goods to which they relate, that is not absolute. Such a certificate, completed by a third country, cannot bind the Union authorities with regard to the origin of those goods by preventing them from verifying the origin by other means where there is objective, sound and consistent evidence creating a doubt as to the true origin of the goods covered by those certificates. In that regard, it is clear from the case-law that the verifications carried out after importation would in large measure be deprived of their usefulness if the use of such certificates could, of itself, justify granting a remission of customs duties (judgment of 11 July 2002, Hyper v Commission, T‑205/99, EU:T:2002:189, paragraph 102, and of 16 December 2010, HIT Trading and Berkman Forwarding v Commission, T‑191/09, not published, EU:T:2010:535, paragraph 97).
99 In the second place, it is clear from Article 6(8) of the basic regulation that, except in the circumstances provided for in Article 18 of that regulation, relating to non-cooperation — which was not applied to the present case, as was pointed out in paragraph 67 above — the information which is supplied by interested parties and upon which the Commission intends to base its findings must be examined for accuracy as far as possible. Accordingly, that provision, in like manner, justifies, not only the possibility, but also the duty on the part of the Commission to verify the documents submitted to it. Understandably, that duty, as far as anti-dumping is concerned, is to be performed without prejudice to the specific procedures laid down for that purpose in favour of the customs authorities, especially since, in this instance, the Commission did not call into question the disputed certificates as such, but only the issue of whether they were of sufficient evidentiary value.
100 In the present case, the Commission concluded that the disputed certificates could not be regarded as sufficient evidence to demonstrate the origin of the bicycle parts at issue, relying on a range of objective, sound and consistent evidence which was not refuted by the applicant.
101 In that regard, first, the Commission found that the disputed certificates had been issued, not on the basis of actual manufacturing costs, but on the basis of a projection of manufacturing costs for the future which does not provide any guarantees that the bicycle parts were actually manufactured in compliance with the projected costs. It was merely a global projection of manufacturing costs that were valid for an undetermined volume of production for about one year, which was confirmed, incidentally, by the applicant itself (recitals 98 and 101 of the contested regulation). Furthermore, the Commission noted that, for certain types of frames and forks in respect of which contested certificates had been issued, supporting costs statements were missing (recital 98 of the contested regulation), for example, for the 24- and 26-inch frames and forks, and that some of those certificates had been issued without a supporting costs statement, as was the case, in particular, for the 10-inch handlebars.
102 Secondly, the Sri Lankan authorities confirmed to the Commission that they had applied that general methodology to Great Cycles without carrying out an ex post verification.
103 Thirdly, the Commission stressed the fact that the costs statements produced in support of the application for the issue of the disputed certificates were drawn up by size of bicycle parts — frames, forks, wheel rims and wheels — and not by individualised products.
104 Fourthly, the free-on-board value indicated on the disputed certificates did not correspond to the one appearing in other data communicated by the applicant, such as those in Table F.2 (see paragraphs 9 and 12 above) or some invoices relating to business relations between Great Cycles and the applicant, Flying Horse and the applicant or Great Cycles and Flying Horse. With regard to some of those invoices, the applicant wrongly claims that the reference made to 10 of those invoices in the defence pleading is inadmissible on the ground that they were not disclosed in the Commission’s findings. It is clear from the case-file that it was the applicant itself who gave those invoices to the Commission at the on-spot verification and that those items, referenced in Table F.2, were the subject of exchanges between the parties during the administrative procedure. The Commission was therefore entitled to refer to them, including in the present proceedings.
105 The Commission was therefore right, in the particular circumstances of the case and in view of all the information set out paragraphs 101 to 104 above, to consider that the disputed certificates did not constitute sufficient evidence to demonstrate the origin of the bicycle parts.
106 It is therefore appropriate, on this point, to reject the plea in law as unfounded.
– The application ‘by analogy’ of Article 13(2)(b) of the basic regulation
107 After having rejected the disputed certificates as insufficient evidence to demonstrate the Sri Lankan origin of the bicycle parts at issue, the Commission requested, and the applicant produced, the manufacturing costs statement for those parts during the reporting period in the form required. The Commission then applied ‘by analogy’ the criteria in Article 13(2)(b) of the basic regulation in order to verify, by relying on their manufacturing costs, the ‘origin’ of those parts (according to the minutes of the hearing before the Hearing Officer) or where they ‘come from’ (according to the wording of recital 101, in fine, of the contested regulation, see paragraphs 89 and 90 above).
108 As was pointed out in paragraph 86 above, in the present case, those parts ‘come from’ Sri Lanka. It therefore remains to be verified whether the Commission could, without committing an error of law, apply ‘by analogy’ Article 13(2)(b) of the basic regulation to the present case in order to verify the origin of the parts.
109 In that regard, it should be pointed out that the manufacturing costs presented to that end by the applicant were not rejected by the Commission as insufficient or unreliable. On the contrary, it is clear from the case-file and from recitals 13 and 101 of the contested regulation that the Commission specifically relied on that information in order to apply ‘by analogy’ Article 13(2)(b) of the basic regulation.
110 First, in applying ‘by analogy’ Article 13(2)(b) of the basic regulation, the Commission, in fact, examined whether the manufacture of the bicycle parts in Sri Lanka circumvented the anti-dumping measures on bicycles originating in China, which was not, however, the aim of the investigation that gave rise to the adoption of the contested regulation.
111 It is clear from the actual wording of Article 13(2)(b) of the basic regulation that it is to be applied to ‘assembly operations’, since the 60% rule laid down in that provision thus applies to the total value of the parts of the ‘assembled product’. It is common ground that, in the present case, the investigation was not aimed at the bicycle ‘assembly operations’ in Sri Lanka, nor did it target in any way ‘assembled’ bicycles in that country.
112 Secondly, Article 13(2)(b) of the basic regulation does not constitute a rule of origin, as indeed the Commission itself acknowledges in recital 101 of the contested regulation, and which it confirms in its records. It cannot therefore be applied ‘by analogy’ in order to determine the origin of a product, all the more so since the criteria laid down in Article 13(2)(b) of the basic regulation are substantially different from those relating to the rules of origin. If it were to be concluded that more than 40% of the total value of the parts of the assembled product is made up of parts originating in a country other than the one which is subject to measures, the assembly operations could not be considered to circumvent the anti-dumping duty initially imposed, within the meaning of Article 13 of the basic regulation (see, to that effect, judgment of 26 September 2000, Starway v Council, T‑80/97, EU:T:2000:216, paragraph 85).
113 Moreover, it follows from Article 14(3) of the basic regulation that ‘special provisions, in particular with regard to the common definition of the concept of origin, as contained in [Regulation No 2913/92], may be adopted pursuant to this Regulation.’ However, it is common ground that, before the contested regulation entered into force, those provisions had not been adopted (see, to that effect, judgment of 26 September 2000, Starway v Council, T‑80/97, EU:T:2000:216, paragraph 108).
114 Therefore, the Commission committed an error of law in applying ‘by analogy’ Article 13(2)(b) of the basic regulation to the bicycle parts purchased in Sri Lanka in order to verify their origin in assembly operations in Pakistan.
115 None of the arguments put forward by the Commission calls that conclusion into question. First, with regard to the argument, advanced in the rejoinder, that the Commission was not obliged to examine other information, since the fact that the disputed certificates were not sufficiently probative enabled it to reject the exemption request on that basis alone, it must be pointed out that it does not follow from any provision of the contested regulation that the application ‘by analogy’ of Article 13(2)(b) of the basic regulation to the bicycle parts purchased in Sri Lanka was done for the sake of completeness. On the contrary, it is clear from a number of recitals in the contested regulation, such as recitals 13, 98, 100 and 101, that that ground constituted an essential element in the examination carried out by the Commission, given that it was also raised and discussed throughout the procedure which led to the adoption of the contested regulation. The Commission cannot base any serious argument in that respect on the use of the term ‘moreover’ in recital 101 of the contested regulation, given that that ground appears in a number of other recitals where that term refers only to the addition of an argument, without implying that that addition is superfluous.
116 Secondly, the Commission itself acknowledges that the circumstances surrounding the present case, although admittedly doubtful, are not sufficient in themselves ‘to establish conclusively that the applicant [had] been engaged in circumvention practices in Pakistan during the investigation period’ (paragraph 11 in limine of the rejoinder). Therefore, the Commission cannot merely rely on a ‘body of … evidence’ without, however, demonstrating that the conditions laid down in Article 13(2)(b) of the basic regulation had been met, all the more so since the applicant was considered to be cooperating, as has been pointed out in paragraph 21 above.
117 Thirdly, and in any event, it is clear from the case-law that the Commission must examine, not cursorily, but carefully and impartially, the documents delivered by the economic operator concerned during the investigation in order to prove the accuracy of the information given (see, to that effect, judgment of 26 September 2000, Starway v Council, T‑80/97, EU:T:2000:216, paragraph 115). The Commission cannot therefore disregard the information provided by the applicant in order to demonstrate the origin of the bicycle parts at issue under the pretext that such an examination was not required, all the more so since the Commission itself relied on that information, as it appears in Table F.4.1, without calling into question its reliability, in order to apply ‘by analogy’ Article 13(2)(b) of the basic regulation.
118 Finally, the fact that the verification of the costs of manufacturing the parts at issue was carried out ‘on paper’, because the production tools had been relocated, is not decisive, given that the Commission does not dispute the fact that, during the reporting period, the parts at issue were worked in Sri Lanka. In any event, that circumstance alone is not capable of alleviating the error of law committed by the Commission.
119 It follows from all the foregoing that the single plea in law is well founded. It is therefore appropriate to uphold the plea and accordingly annul the contested regulation to the extent that it applies to the applicant.
Costs
120 Under Article 134(1) of the Rules of Procedure of the General Court, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings.
121 In the present case, since the Commission has been unsuccessful, it must be ordered to pay the costs in accordance with the form of order sought by the applicant.
122 The intervener must bear its own costs in accordance with Article 138(3) of the Rules of Procedure.
On those grounds,
THE GENERAL COURT (Seventh Chamber)
hereby:
1. Annuls Commission Implementing Regulation (EU) 2015/776 of 18 May 2015 extending the definitive anti-dumping duties imposed by Council Regulation (EU) No 502/2013 on imports of bicycles originating in the People’s Republic of China to imports of bicycles consigned from Cambodia, Pakistan and the Philippines, whether declared as originating in Cambodia, Pakistan and the Philippines or not, to the extent that it applies to Kolachi Raj Industrial (Private) Ltd;
2. Orders the European Commission to bear its own costs and to pay those of Kolachi Raj Industrial (Private) Ltd;
3. Orders the European Bicycle Manufacturers Association (EBMA) to bear its own costs.
Tomljenović | Marcoulli | Kornezov |
Delivered in open court in Luxembourg on 10 October 2017.