CFI, 3rd chamber, July 8, 2008, No T-221/05

THE COURT OF FIRST INSTANCE OF THE EUROPEAN COMMUNITIES (Third Chamber)

Legal context

1 Article 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 basic regulation') states as follows:

'Determination of dumping

A. Normal value

1. The normal value shall normally be based on the prices paid or payable, in the ordinary course of trade, by independent customers in the exporting country.

...

B. Export price

8. The export price shall be the price actually paid or payable for the product when sold for export from the exporting country to the Community.

...

C. Comparison

10. A fair comparison shall be made between the export price and the normal value. This comparison shall be made at the same level of trade and in respect of sales made at as nearly as possible the same time and with due account taken of other differences which affect price comparability. Where the normal value and the export price as established are not on such a comparable basis due allowance, in the form of adjustments, shall be made in each case, on its merits, for differences in factors which are claimed, and demonstrated, to affect prices and price comparability. Any duplication when making adjustments shall be avoided, in particular in relation to discounts, rebates, quantities and level of trade. When the specified conditions are met, the factors for which adjustment can be made are listed as follows.

...

(b) Import charges and indirect taxes

An adjustment shall be made to normal value for an amount corresponding to any import charges or indirect taxes borne by the like product and by materials physically incorporated therein, when intended for consumption in the exporting country and not collected or refunded in respect of the product exported to the Community.

...

(g) Credit

An adjustment shall be made for differences in the cost of any credit granted for the sales under consideration, provided that it is a factor taken into account in the determination of the prices charged.

...'

2 Article 11 of the basic regulation provides:

'Duration, reviews and refunds

1. An anti-dumping measure shall remain in force only as long as, and to the extent that, it is necessary to counteract the dumping which is causing injury.

...

3. The need for the continued imposition of measures may also be reviewed, where warranted, on the initiative of the Commission or at the request of a Member State or, provided that a reasonable period of time of at least one year has elapsed since the imposition of the definitive measure, upon a request by any exporter or importer or by the Community producers which contains sufficient evidence substantiating the need for such an interim review.

An interim review shall be initiated where the request contains sufficient evidence that the continued imposition of the measure is no longer necessary to offset dumping and/or that the injury would be unlikely to continue or recur if the measure were removed or varied, or that the existing measure is not, or is no longer, sufficient to counteract the dumping which is causing injury.

In carrying out investigations pursuant to this paragraph, the Commission may, inter alia, consider whether the circumstances with regard to dumping and injury have changed significantly, or whether existing measures are achieving the intended results in removing the injury previously established under Article 3. In these respects, account shall be taken in the final determination of all relevant and duly documented evidence.

...

9. In all review or refund investigations carried out pursuant to this Article, the Commission shall, provided that circumstances have not changed, apply the same methodology as in the investigation which led to the duty, with due account being taken of Article 2, and in particular paragraphs 11 and 12 thereof, and of Article 17.'

3 Article 2.4 of the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (OJ 1994 L 336, p. 103) ('the 1994 Anti-dumping Code'), which features in Annex 1 A to the Agreement establishing the World Trade Organisation (WTO) (OJ 1994 L 336, p. 3), states as follows:

'A fair comparison shall be made between the export price and the normal value. This comparison shall be made at the same level of trade, normally at the ex-factory level, and in respect of sales made at as nearly as possible the same time. Due allowance shall be made in each case, on its merits, for differences which affect price comparability, including differences in conditions and terms of sale, taxation, levels of trade, quantities, physical characteristics, and any other differences which are also demonstrated to affect price comparability ... The authorities shall indicate to the parties in question what information is necessary to ensure a fair comparison and shall not impose an unreasonable burden of proof on those parties.'

Background to the dispute

4 The applicant, Huvis Corp., is a joint venture incorporated under Korean law, established in 2000 and held in equal shares by Samyang Corporation and SK Chemicals. It produces and exports, in particular to the Community, polyester staple fibres ('PSF').

5 On 22 December 2000, the Council adopted Regulation (EC) No 2852-2000 imposing a definitive anti-dumping duty and definitively collecting the provisional duty imposed on imports of PSF originating in India and the Republic of Korea (OJ 2000 L 332, p. 17). The anti-dumping duty rate imposed on the applicant on that basis was 4.8%.

6 Following a request lodged on 10 November 2003 by the Comité International de la Rayonne et des Fibres Synthétiques on behalf of producers representing a major proportion of the Community production of PSF, the Commission announced on 19 December 2003, pursuant to Article 11(3) of the basic regulation, the initiation of an interim review of the definitive anti-dumping duties imposed, inter alia, by Regulation No 2825-2000. Notice of the initiation of that review was published in the Official Journal of the European Union on 19 December 2003 (OJ 2003 C 309, p. 2).

7 Six Community producers participated in the review.

8 At the same time, 12 exporting producers from the countries concerned, including the applicant, five related importers in the Community, one importer in the Community importing the product concerned from Korea, two unrelated importers, two producers other than the complainants behind the initial request for review, two suppliers of raw materials, 10 users and the cooperating producer in the analogue country, namely the United States of America, replied to the questionnaires sent out by the Commission.

9 The investigation of dumping and injury covered the period from 1 January 2003 to 31 December 2003 ('the investigation period'). The examination of the trends relevant for the determination of injury related to the period from 1 January 2000 to the end of the investigation period.

10 On 11 March 2004, the applicant completed the anti-dumping questionnaire sent to it by the Commission.

11 By letter of 5 July 2004, the Commission sent to the applicant details of the verification visits and the documents required for these. Those verifications were carried out at the applicant's premises in July and August 2004.

12 On 30 November 2004, the Commission informed the applicant of the essential facts and considerations on the basis of which it intended to propose that the definitive anti-dumping duty imposed on PSF imports produced by the applicant be increased to 5.7%. In its determination of the dumping margin, the Commission considerably reduced the adjustment claimed for duty drawback and rejected the adjustment claimed for credit costs.

13 By letter of 30 December 2004, the applicant submitted its observations in that regard.

14 Following a hearing at the Commission's premises on 6 January 2005, the applicant submitted observations to the Commission on 11 January 2005.

15 By letter of 16 February 2005, the Commission replied to the applicant's observations of 30 December 2004 and rejected the latter's requests.

16 By memorandum of 24 February 2005, the applicant submitted observations on the methodology used to calculate the adjustments.

17 By Council Regulation (EC) No 428-2005 of 10 March 2005 imposing a definitive anti-dumping duty on imports of PSF originating in the People's Republic of China and Saudi Arabia, amending Regulation No 2852-2000 imposing a definitive anti-dumping duty on imports of PSF originating in the Republic of Korea and terminating the anti-dumping proceeding in respect of such imports originating in Taiwan (OJ 2005 L 71, p. 1) ('the contested regulation'), the Council amended the anti-dumping duty imposed on the applicant and set the new rate at 5.7%.

18 Recitals (126) to (130) in the preamble to that regulation state:

'(126) All three exporting producers made a claim for duty drawback on the grounds that the import charges were borne by the like product when intended for consumption in the exporting country but were refunded when the product was sold for export to the Community. In each case the amount claimed was found to be higher than the amount of duty borne by the like product in the domestic market and therefore, the allowances were adjusted accordingly.

(127) After disclosure two companies objected to the methodology applied concerning the adjustment for duty drawback, partly on the grounds that it was different to the one used in the original investigation. They claimed that the methodology used in their replies to the questionnaire should be applied instead.

(128) The calculation method used by the companies, similar to the one used in the original investigation, was found to not reflect the actual import level of duties borne by the like product. It was therefore not in line with the requirements of Article 2(10)(b) of the basic regulation and had to be rejected. The methodology used in the present investigation was compatible with the conditions set out in Article 2(10)(b) ... and was therefore considered as the most appropriate and thus maintained.

(129) In addition, all three exporting producers claimed credit costs on the basis of the actual credit period taken by customers under the "open account" payment system used on the Korean domestic market. It was found that under such a system, generally, the exporting producers did not actually grant specific credit periods and, furthermore, the credit periods taken could not be accurately determined, as receipts could not be linked to specific invoices. In these circumstances, these allowances could not be granted.

(130) After disclosure, two companies claimed that the fact that they use an open account system is not in itself a reason to refuse the adjustment for credit costs. However, the investigation has shown that there was no consistent relation between prices and the credit terms reported. The companies could not demonstrate that specific credit terms were agreed with the customer prior to the sale and that they had an effect on prices and price comparability. The exporting producers' claims had therefore to be rejected.'

19 Article 2 of the contested regulation provides:

'The part of the table in Article 1(2) of Regulation ... No 2852-2000 concerning the definitive anti-dumping duty rates applicable on imports of [PSF], not carded, combed or otherwise processed for spinning, falling within CN code 5503 20 00 originating in the Republic of Korea, shall be replaced [with regard to the applicant] by the following: ... 5.7 % ...'.

Procedure and forms of order sought

20 By application lodged at the Registry of the Court on 10 June 2005, the applicant brought the present action.

21 By application lodged at the Registry of the Court on 6 September 2005, the Commission sought leave to intervene in the present proceedings in support of the form of order sought by the Council. By order of the President of the Third Chamber of 28 September 2005, leave for that intervention was granted. However, the Commission waived its right to submit a statement in intervention.

22 By way of measures of organisation of procedure, the applicant and the Council were requested to reply to written questions. They complied with that request within the prescribed time-limits.

23 The parties presented oral argument and replied to the oral questions put by the Court at the hearing on 14 November 2007.

24 The applicant claims that the Court should:

- annul Article 2 of the contested regulation in so far as it imposes a definitive anti-dumping duty on the applicant;

- in so far as necessary, declare inapplicable those provisions of the basic regulation on which the disputed conclusions contained in the contested regulation are based;

- order the Council to pay the costs.

25 The Council, supported by the Commission, contends that the Court should:

- dismiss the application;

- in the alternative, should the Court uphold any of the pleas submitted, annul Article 2 of the contested regulation only in so far as it amends Article 1(2) of Regulation No 2852-2000 by setting a rate which exceeds the amount of duty that would apply but for any adjustment which the Court finds was unlawfully refused and dismiss the remainder of the application;

- order the applicant to pay the costs.

Law

26 The applicant, in essence, divides its line of argument into two parts, the first concerning the unlawfulness of the method used to calculate the adjustment for import charges and indirect taxes and the second concerning the unlawfulness of the rejection, by the institutions concerned, of the request for a credit cost adjustment.

The unlawfulness of the method used to calculate the adjustment for import charges and indirect taxes

27 According to the applicant, the Community institutions applied an unlawful method for calculating the adjustment made under the duty drawback scheme for import charges and indirect taxes laid down in Article 2(10)(b) of the basic regulation.

28 The amount of the adjustment is disputed on account of the method used for its calculation, which the applicant calls the residual method ('the residual method'). According to the applicant, the institutions concerned should have applied the method it refers to as the 'advantage method' ('the advantage method') or, in the alternative, a method it refers to as the 'input method', used in the course of the initial investigation ('the "input" method').

29 The applicant divides this part of its argument into several pleas, and claims, in essence, that the institutions concerned infringed Article 2.4 of the 1994 Anti-dumping Code, the general principles of Community law, Article 11(9) of the basic regulation and the obligation to state reasons, and that the institutions, in calculating the adjustment, took into account an excessive period of time. Furthermore, it raises a plea of illegality, claiming that Article 2(10)(b) of the basic regulation is not consistent with Article 2.4 of the 1994 Anti-dumping Code.

30 It is appropriate to begin with an examination of the plea alleging infringement of Article 11(9) of the basic regulation and of the obligation to state reasons.

Arguments of the parties

31 The applicant claims that the institutions concerned infringed Article 11(9) of the basic regulation and failed in their obligation to state reasons. In breach of that provision, the contested regulation applied a different method to that applied in the initial investigation (the 'input' method) without any change in the factual or legal circumstances. The applicant disputes the Council's interpretation according to which, in the applicant's view, a change in the method may be regarded as a change in circumstances. According to the applicant, any exception to a rule must be narrowly construed, and the change of circumstances required by Article 11(9) of the basic regulation in order to allow a change in method must be interpreted as relating only to a change in the factual context. If that were not the case, the reassessment of the original context would be distorted in the interim review.

32 In the alternative, the applicant submits that if the Court considers that the change in method is consistent with Article 11(9) of the basic regulation, it should be allowed only if it is established beyond any reasonable doubt that the method originally used was invalid. That would, in particular, be the case if the Court were to declare such a method unlawful. It is not for the institutions concerned to decide on the legality of a method because, otherwise, they could change the method in an arbitrary fashion, as they did in the present case. Moreover, as the institutions have consistently used the 'input' method, that method cannot be regarded as flawed.

33 The applicant further maintains that both Article 253 EC and Community case-law impose on the institutions a clear and unequivocal obligation to provide reasons which was not complied with by the institutions concerned when they changed the method and simply stated, in recital (128) in the preamble to the contested regulation, that the method used in the original investigation did not reflect the actual level of duties borne by the like product.

34 The Council disputes the applicant's interpretation of Article 11(9) of the basic regulation that a change in the calculation method is permitted only if there is a change in the factual context. That provision refers to a 'change in circumstances' and not to a 'change in the factual context' and its sole purpose is to prevent arbitrary changes of methodology. Thus, according to the Council, the 'change in circumstances' includes situations where the Community institutions become aware that a method used in the original investigation is inaccurate and that an alternative method allows for an accurate adjustment and a fair comparison.

35 In addition, the applicant's interpretation would allow it to justify an infringement of other provisions of the basic regulation, requiring the institutions to continue to apply in an interim review investigation a method which does not allow for a fair comparison, on the sole ground that it was used in the original investigation. According to the Council, the application of the 'input' method, used in the initial investigation, would result, in some cases, in an adjustment even though the duty drawback did not result in a cost difference between exported and domestically sold products and, in other cases, would result in an adjustment exceeding that cost difference.

36 The Council also disputes the alternative claim put forward by the applicant that any change of method under Article 11(9) of the basic regulation must be limited to cases where the method originally applied is proved, beyond any reasonable doubt, to be invalid. According to the Council, there is no legal basis for such a claim and it runs counter to the Community institutions' discretion in anti-dumping cases (Case T-35-01 Shanghai Teraoka Electronic v Council [2004] ECR II-3663, paragraphs 48 and 49).

37 As regards the breach of the obligation to state reasons, the Council argues that there was no such breach, since the applicant was closely involved in the decision-making process and was informed on numerous occasions of the reasons which led the institutions to adopt the residual method, namely, that an adjustment is possible only in relation to duties paid but not refunded. The applicant itself acknowledged that it understood that reasoning in a letter of 30 December 2004. In addition, the Council submits that recital (128) in the preamble to the contested regulation provides sufficient reasons.

Findings of the Court

38 At the outset, it should be borne in mind that, in the sphere of measures to protect trade, the Community institutions enjoy a broad discretion by reason of the complexity of the economic, political and legal situations which they have to examine (Case C-351-04 Ikea Wholesale [2007] ECR I-7723, paragraph 40; see Shanghai Teraoka Electronic v Council, paragraph 48 and the case-law cited).

39 Furthermore, it is settled case-law that the choice between the different methods of calculating the dumping margin and the assessment of the normal value of a product require an appraisal of complex economic situations, and the judicial review of such an appraisal must therefore be limited to verifying whether relevant procedural rules have been complied with, whether the facts on which the contested choice is based have been accurately stated, and whether there has been a manifest error in the appraisal of those facts or a misuse of powers (see Ikea Wholesale, paragraph 41 and the case-law cited).

40 The applicant claims that the institutions concerned have infringed Article 11(9) of the basic regulation by not applying the same method in the contested regulation as that applied in the initial investigation.

41 It follows from Article 11(9) of the basic regulation that, as a general rule, in the context of a review, the institutions are required to use the same method, including the method for comparing the export price and the normal value pursuant to Article 2(10) of the basic regulation, as the method used in the initial investigation which led to the duty being imposed. That provision provides for an exception allowing the institutions to apply a different method to that used in the initial investigation to the extent to which circumstances have changed. In that regard, any derogation from or exception to a general rule must be interpreted strictly (see Shanghai Teraoka Electronic v Council, paragraph 50 and the case-law cited). It is therefore for the institutions to demonstrate that the circumstances have changed if they intend to apply a different method to that applied in the initial investigation.

42 Moreover, it follows from Article 11(9) of the basic regulation that the method applied must be consistent with Articles 2 and 17 of the basic regulation.

43 In the present case, it should be borne in mind that the institutions concerned used the 'input' method in the initial investigation. In the review, those institutions applied the residual method. It is thus necessary to examine whether those institutions were entitled to apply a different method in the review.

44 For that purpose, it must first be examined whether the institutions concerned have demonstrated that the circumstances had changed in the present case.

45 In regard to the contested regulation, it should be recalled that recital (128) in the preamble to that regulation states:

'The calculation method used by the companies, similar to the one used in the original investigation, was found to not reflect the actual import level of duties borne by the like product. It was therefore not in line with the requirements of Article 2(10)(b) of the basic Regulation and had to be rejected ...'

46 However, that recital does not indicate, any more than the other recitals in the preamble to the contested regulation, what the change in circumstances was, as required by Article 11(9) of the basic regulation, which, where appropriate, could have justified the application, in the contested regulation, of a method different to that used in Regulation No 2852-2000. No provision of the contested regulation indicates what change in circumstances had taken place.

47 In regard to the administrative procedure, it should be borne in mind that, in the final disclosure document sent to the applicant on 30 November 2004 (see paragraph 12 above), the Commission did not mention any change in circumstances linked to the comparison between the export price and the normal value. In the Commission's response of 16 February 2005 (see paragraph 15 above) to the applicant's observations of 30 December 2004 on the final disclosure document, the Commission rejected the applicant's request for use of the method which had been applied in the initial investigation on the grounds that the 'method used by the Commission's services in the present review [was] in line with Article 2(10)(b) of the basic regulation, and should therefore be considered valid in the present case'. It should be noted that that response from the Commission contains no explanation as regards a possible change in circumstances and confines itself to relying on the legality of the new method used in the course of the review.

48 At the hearing, in reply to a question put by the Court, the Council indicated that the change of circumstances, within the meaning of Article 11(9) of the basic regulation, related to the fact that the institutions '[had become] aware that what was appropriate during the initial investigation was no longer appropriate.' Such an assertion is not sufficient to justify the use of a different method, since a change of opinion is not equivalent to a change in circumstances. The possibility that the method used in the initial investigation 'did not reflect the real level of import duties borne by the like product' does not constitute a change in circumstances but concerns whether that method complies with Article 2 of the basic regulation.

49 It must therefore be stated that the institutions concerned have not demonstrated the existence of a change in circumstances within the meaning of Article 11(9) of the basic regulation. That being so, it is still necessary to examine whether the requirement of compliance with Article 2 of the basic regulation precluded application of the 'input' method and justified application of the residual method.

50 As the Commission correctly stated at the hearing, Article 11(9) of the basic regulation must be read in conjunction with Article 2 of that regulation, the requirements of which must be complied with. Thus, if, during the review, it was proved that the use of the 'input' method, applied in the initial investigation in Regulation No 2852-2000, had not been consistent with Article 2(10)(b) of the basic regulation, the institutions would have been obliged not to use that method any longer. In order to justify a change in methodology, it is not sufficient that a new method be more appropriate than the former method, assuming always that the former method is consistent with Article 2 of the basic regulation.

51 In that regard, it is for the institutions concerned to demonstrate that the 'input' method was not consistent with Article 2(10)(b) of the basic regulation.

52 As has been noted above, recital (128) in the preamble to the contested regulation states:

'The calculation method used by the companies, similar to the one used in the original investigation, was found to not reflect the actual import level of duties borne by the like product ...'.

53 Although, in the final disclosure document of 30 November 2004 (see paragraph 12 above), it is true that the Commission indicated that the amount claimed by the applicant was higher than the total amount of duty borne by the like product, it must nevertheless be noted that that statement concerned only the amount resulting from the application of the advantage method, that is to say, the method which the applicant had requested be applied in its response to the Commission's questionnaire of 11 March 2004 (see paragraph 10 above). By contrast, in that final disclosure document the Commission did not set out any grounds establishing the unlawful nature of the 'input' method, which it had used in the initial investigation, nor did it explain why it was appropriate, from that point on, to use a new method, namely, the residual method.

54 It is apparent from the letter of 30 December 2004 (see paragraph 13 above) that the applicant specifically requested application of the method used in the initial investigation in the event that the Commission would not use the advantage method. The applicant reiterated that request in its observations of 11 January 2005 (see paragraph 14 above).

55 As stated at paragraph 47 above, in the letter of 16 February 2005 (see paragraph 15 above), the Commission rejected the applicant's request for use of the 'input' method on the ground that application of the residual method was consistent with Article 2(10)(b) of the basic regulation and should, therefore, be considered valid. It must be noted that such a statement does not demonstrate in what respect the 'input' method was not consistent with that provision in the present case.

56 In its written pleadings before the Court, the Council justified not using the 'input' method again by the fact that that method 'did not always allow a fair comparison'. At the hearing, in reply to a question from the Court, the Council explained that the 'input' method could 'in certain cases' lead to the granting of an adjustment greater than the cost borne by the product sold on the domestic market and that it appeared, in the present case, that an adjustment had been made for costs which were, in reality, not borne by the like product sold on the domestic market. Thus, according to the Council, that method can sometimes lead to higher adjustments which take account of duties actually paid but which have been reimbursed. The Commission confirmed that the 'input' method might indeed lead to an adjustment higher than the cost borne.

57 In the present case, however, neither the Commission nor the Council has specifically demonstrated that the use of the 'input' method had actually led to overcompensation.

58 Consequently, it must be stated that none of the explanations provided by those institutions demonstrates that, in the present case, the application of the same method as that used in the initial investigation, that is to say, the 'input' method, at the time of the examination which led to the imposition of an anti-dumping duty rate of 5.7% for the applicant, had not been consistent with Article 2(10)(b) of the basic regulation.

59 It must be held that neither the Commission nor the Council has demonstrated, either at the administrative procedure stage or in the contested regulation, that the method used in the initial investigation infringed Article 2(10)(b) of the basic regulation.

60 It follows that the institutions concerned have infringed Article 11(9) of the basic regulation in so far as they did not apply the same method in the review as that which they had used in the initial investigation.

61 In those circumstances, there is no need to examine the applicant's other pleas and arguments concerning the unlawfulness of the method for calculating the adjustment for import charges and indirect taxes.

62 It follows that the contested regulation must be annulled to the extent to which the institutions concerned applied a different calculation methodology to that applied in the initial investigation with regard to the adjustment for import charges and indirect taxes.

63 The applicant's line of argument concerning the alleged unlawfulness of the rejection of the credit cost adjustment must still be examined.

The unlawful nature of the rejection of the credit cost adjustment

Arguments of the parties

64 The applicant claims that the institutions concerned infringed Article 2.4 of the 1994 Anti-dumping Code and the principle of sound administration by rejecting its claim for a credit cost adjustment for domestic sales, as provided for in Article 2(10)(g) of the basic regulation.

65 The credit costs which the applicant relies on result from the use of the open account system, in accordance with the customary rules in force in Korea, under which deliveries take place throughout the month but invoices are issued only at the end of the month. It is only at that point that the revenue is recorded in the applicant's accounting books. In that way, customers thus enjoy an average credit period of 15 days, to which is added, in accordance with commercial practice in Korea, a further period of 30 days from the date on which the invoice was issued, namely, a total credit period of 45 days on average. It is on the basis of that period that the applicant claimed an adjustment, calculated according to the following formula: turnover multiplied by 45 days ÷ 365 days multiplied by the short-term borrowing interest rate.

66 The applicant asserts that the conclusion of the institutions concerned, set out in recital (129) in the preamble to the contested regulation, that, by using an open account system, the producers did not grant specific credit periods and the credit period could not be accurately determined, since payments could not be linked to specific invoices, is incorrect. As deferral of payment may be agreed orally on the basis of customary rules in force in Korea, written evidence of the periods allowed is not required and the rejection of the credit cost adjustment on that ground alone is contrary to the principle that there should be a fair comparison between the export price and the normal value set out in Article 2.4 of the 1994 Anti-dumping Code. To carry out such a comparison, differences which affect price comparability should have been taken into account, which include payment periods agreed with the applicant's customers in the domestic market in accordance with the customary rules in force in Korea.

67 Moreover, during the verifications carried out by the Commission at the applicant's premises, the latter provided the Commission with documentary evidence showing that an average credit period of 45 days had been granted to its customers. First, it thus provided the institutions concerned with evidence proving that, for a randomly selected domestic sale bearing No 1923 on the list of domestic sales, the credit period granted was 42 days, including 30 days granted for payment upon issue of the invoice, to which is added the period resulting from the time differential between the delivery date and the date of the invoice. Second, in its observations of 30 December 2004 on the final disclosure document, the applicant showed that, for 10 transactions selected by the Commission during the verification visit, the average period resulting from the time differential between the date of the invoice and the delivery date was 14.5 days. The applicant claims that the institutions concerned refused to take that additional evidence into account.

68 Lastly, according to the applicant, the fact that the institutions concerned refused to take account of evidence, other than written evidence, linking payments to specific invoices imposes an unreasonable burden of proof on the applicant, which is not imposed either by Article 2.4 of the 1994 Anti-dumping Code or by the basic regulation, and which breaches, moreover, the principle of sound administration. In addition, in its reply, the applicant claims that the Commission failed to indicate to it during the investigation what information was necessary to be able to carry out a fair comparison, thereby infringing Article 2.4 of the 1994 Anti-dumping Code.

69 The Council, supported by the Commission, disputes the applicant's interpretation of Article 2(10)(g) of the basic regulation and of Article 2.4 of the 1994 Anti-dumping Code.

Findings of the Court

70 The applicant claims that the institutions concerned infringed Article 2.4 of the 1994 Anti-dumping Code and the principle of sound administration in rejecting its request for a credit cost adjustment for sales on the domestic market, as provided for in Article 2(10)(g) of the basic regulation.

71 It must be recalled at the outset that, according to settled case-law, having regard to their nature and structure, the WTO Agreements are not in principle among the rules in the light of which the Community Courts are to review the legality of measures adopted by the Community institutions (Case C-76-00 P Petrotub and Republica v Council [2003] ECR I-79, paragraph 53; Case C-93-02 P Biret International v Council [2003] ECR I-10497, paragraph 52; and Ikea Wholesale, paragraph 29).

72 It is only where the Community intended to implement a particular obligation assumed in the context of the WTO, or where the Community measure refers expressly to the precise provisions of the WTO Agreements, that it is for the Community Courts to review the legality of the Community measure in question in the light of the WTO rules (Case C-149-96 Portugal v Council [1999] ECR I-8395, paragraph 49; Petrotub and Republica v Council, paragraph 54; Biret International v Council, paragraph 53; and Ikea Wholesale, paragraph 30).

73 In the present case, the Community adopted the basic regulation in order to meet its international obligations arising from the 1994 Anti-dumping Code (Petrotuband Republica v Council, paragraph 56). Furthermore, by means of Article 2(10) of the basic regulation, it intended to implement the particular obligations laid down by Article 2.4 of that code. To that extent, it is for the Court to review the legality of the contested regulation in the light of that latter provision (see, to that effect, Petrotub and Republica v Council, paragraph 56).

74 Thus, in order to assess the validity of the contested regulation, it is necessary to examine the interpretation by the institutions concerned of Article 2(10)(g) of the basic regulation in the light of Article 2.4 of the 1994 Anti-dumping Code.

75 Pursuant to Article 2(10)(g) of the basic regulation, an adjustment is made on the basis of the differences in credit costs for the relevant sales, provided that that factor is taken into account in determining the prices charged.

76 It should be borne in mind that adjustments may not be made automatically; it is for the party which seeks to benefit from them to prove that they are justified (Case 255-84 Nachi Fujikoshi v Council [1987] ECR 1861, paragraph 33; Case T-48-96 Acme v Council [1999] ECR II-3089, paragraph 133). That follows from Article 2(10) of the basic regulation and from Article 2.4 of the 1994 Anti-dumping Code, both of which refer to differences which are shown to affect the prices and, therefore, their comparability.

77 In contrast to Article 2(10) of the basic regulation, Article 2.4 of the 1994 Anti-dumping Code states that the 'authorities shall indicate to the parties in question what information is necessary to ensure a fair comparison and shall not impose an unreasonable burden of proof on those parties'. Those requirements are not expressly restated in Article 2(10) of the basic regulation. However, they form part of the general principles of Community law and, in particular, of the principle of sound administration, also set out in Article 41 of the Charter of Fundamental Rights of the European Union, proclaimed at Nice on 7 December 2000 (OJ 2000 C 364, p. 1). Thus, it is for the Court to determine whether the institutions have taken account of those requirements in their application of Article 2(10)(g) of the basic regulation.

78 It follows from the foregoing that it is for the party claiming an adjustment under Article 2(10)(g) of the basic regulation to demonstrate, first, that a credit has been granted and, second, that it affects the prices and their comparability. By contrast, it is for the institutions to indicate to that party what information is necessary and not to impose on it an unreasonable burden of proof.

79 In the present case, in its response to the Commission's questionnaire (see paragraph 10 above), the applicant indicated that it granted, in general, a 30-day credit period to its customers but that, like the majority of Korean companies, it relied on the open account system to manage the outstanding payments due to it. It added that, given that invoices were normally issued at the end of each month even though the deliveries had taken place throughout the month, an additional credit period of, on average, 15 days was allowed. The applicant indicated that, as a consequence, it had taken account of a credit period of 45 days to calculate the credit costs for domestic sales.

80 In the final disclosure document of 30 November 2004 (see paragraph 12 above), the Commission stated that, in general, in that type of system, exporting producers did not really grant a specific credit period and that, furthermore, it was not possible to determine that period precisely, since the amounts paid could not be linked to specific invoices. The Commission indicated that, in those circumstances, it had not been able to grant an adjustment.

81 In its observations of 30 December 2004 (see paragraph 13 above) on the final disclosure document of 30 November 2004, the applicant limited itself to repeating that the credit period which it normally granted was 30 days, without, however, providing any evidence in that regard. It simply admitted that, having regard to the open account system, it was difficult to show the exact payment for each transaction. The applicant also stated that, even if it could not provide such evidence, it took account of the credit costs in determining prices.

82 In that regard, it must be stated that neither in its response to the Commission's questionnaire (see paragraph 10 above), nor in its observations on the final disclosure document (see paragraph 13 above), did the applicant state that a credit period of 30 days was customary in Korea, although it relied on that assertion before the Court. It simply pointed out, during the administrative procedure, that it normally granted such a credit period. That remains a mere assertion which is not supported by any evidence. Even if the applicant had already indicated during the administrative procedure that customary commercial rules in force in Korea provided for a credit period of 30 days, the onus was on it to demonstrate that such a practice existed, something which it did not do, as it admitted in its responses and observations.

83 The applicant's argument, pleaded at the hearing, that the institutions concerned had indicated - in the context of a procedure which gave rise to Council Regulation (EEC) No 2306-92 of 4 August 1992 imposing a definitive anti-dumping duty on imports of radio-broadcast receivers of a kind used in motor vehicles, originating in the Republic of Korea (OJ 1992 L 222, p. 8) - that a credit period of 30 days could be granted to Korean companies given that that period represented the normal credit period granted to purchasers, is not relevant in the present case. That procedure cannot be considered, in the present case, as sufficient evidence of the existence of a custom in the relevant sector and of a normal credit period of 30 days, which the applicant claims to have granted to its customers.

84 Next, it must be borne in mind that the applicant relied on an additional credit period of 15 days to be added to the 30 days. It is for that reason necessary to examine whether the applicant has demonstrated the existence of a credit period of 15 days and the effect which that might have on the determination of prices.

85 In that respect, the applicant points out that, as invoices are issued at the end of each month and deliveries take place throughout the month, an additional period of 15 days on average is granted to its customers and is 'naturally' taken into account in the determination of its prices. In its observations of 30 December 2004, the applicant produced a table showing 10 sales, chosen by the Commission during the verification visits, and the corresponding dates of delivery and dates of invoice. On the basis of those examples, the applicant obtained an average period of 14.5 days, between the date of delivery and the date of invoice. It should be stated that the supposed credit periods relating to those 10 examples are so varied, as the Council correctly stated, since they involve periods ranging from three to 28 days, that the alleged existence of a credit period scheme of 15 or 14.5 days has not been proved.

86 In any event, the applicant has failed entirely to demonstrate how such an average credit period affected the determination of its prices. The purchase price can normally be affected only by a credit period agreed at the time of sale. Thus, given that the period in question was three days for some customers and 28 days for others, such variations in the credit period do not allow for a finding that an average credit period of 15 days had been taken into account for each sale.

87 Furthermore, the applicant contradicts itself in its observations of 30 December 2004 (see paragraph 13 above) on the final disclosure document, in which it claims that customers usually pay promptly following receipt of the invoice. If that were the case, the credit period would be practically non-existent.

88 As regards the applicant's argument that, during the verification visits, it provided the Commission with evidence proving that, for a domestic sale, chosen at random, bearing No 1923, the credit period granted to the customer was 42 days, suffice it to note that the applicant is contradicting itself. It must be stated, first, that the applicant produced no document concerning the payment dates. However, supposing that the payment date indicated by the applicant (13 August 2003) was established, it is apparent from the table showing the 10 examples provided in the observations of 30 December 2004 on the final disclosure document, that, for an invoice issued on 30 June 2003, the date of delivery would have been 10 June 2003. According to the explanation provided by the applicant regarding the average credit period of 15 days, between the date of delivery and the date of issuing the invoice, an additional period of 20 days arises in the example in question. As a consequence, in that example, the credit period was effectively 62 days. Moreover, that example also contradicts the alleged existence of a practice whereby a normal credit period of 30 days is granted, since, supposing that such a practice had existed and had been applied by both the vendor and the purchaser, the invoice would have had to have been paid on 30 July 2003.

89 In any event, a single example cannot constitute proof that the applicant's normal practice was to grant a credit period of 45 days or that that period had an effect on the level of the sale prices on the domestic market.

90 In addition, the applicant does not dispute that the institutions concerned could not establish a link between the bank statements, the delivery lists and the invoices, which made it impossible to verify the existence of an actual link between the payment received and the invoice drafted.

91 Furthermore, the applicant was not able to respond to the Court's question at the hearing regarding the impact of a possible credit period on the determination of prices and their comparability.

92 In those circumstances, it must be held that the applicant has not proven that, during the period investigated, it systematically granted a credit period of 45, 30, or 15 days to its customers, affecting the determination of the sale prices.

93 It is still, however, necessary to establish whether the burden of proof imposed on the applicant by the institutions concerned was unreasonable.

94 As regards the admissibility of the applicant's argument, submitted in its reply, that the institutions concerned did not indicate to it what information it should provide to substantiate its request for an adjustment, suffice it to state that, contrary to what the Council claims, this is a development of the applicant's claim of an unreasonable burden or proof submitted in the application and is, therefore, admissible.

95 However, that claim by the applicant must be rejected as unfounded. It is clear from the case-file that the institutions concerned informed the applicant on several occasions of the information necessary for granting an adjustment. First, the Commission's questionnaire contained specific instructions as regards the details which exporters had to provide in order to obtain an adjustment.

96 Second, in its letter of 5 July 2004, sent before the verification visits (see paragraph 11 above), the Commission explicitly requested the applicant to ensure that all the documentary evidence for the purposes of the investigation was available, to be in a position to justify each request for an adjustment, and to retain all documents of probative value which it held.

97 Third, in the final disclosure document of 30 November 2004 (see paragraph 12 above), the Commission rejected the request for a credit cost adjustment, basing that rejection, in particular, on the inadequacy of the evidence. The Commission stated that the credit periods could not be correctly ascertained, as it was not possible to establish a link between a specific payment and the corresponding invoice. In the details of the dumping calculation it stated:

'During the on-the-spot verification[s], it was highlighted that in order to grant this adjustment, the influence on price comparability should be demonstrated. This was not possible since the payments and the credits for individual transactions could not be traced.'

98 It is apparent from those documents that the institutions concerned informed the applicant on several occasions that it had not properly established that a credit cost adjustment was justified, thus giving it a further opportunity to substantiate its request. Consequently, the institutions concerned acted in accordance with the requirements in Article 2.4 of the 1994 Anti-dumping Code and the principle of sound administration in their application of Article 2(10)(g) of the basic regulation.

99 Furthermore, it should be noted that the institutions concerned did not impose an unreasonable burden of proof on the applicant. As the Council confirmed at the hearing, although the institutions concerned asked the applicant to provide them with more evidence regarding the credit period, they did not demand the production of written agreements. However, the applicant should have proven that there was a link between the different payments and invoices, something which it did not do. As has already been stated, mere assertions do not suffice as justification for an adjustment.

100 Consequently, the institutions concerned did not commit a manifest error of assessment in refusing to grant to the applicant the adjustment claimed for credit costs.

101 In those circumstances, the institutions concerned did not infringe Article 2(10)(g) of the basic regulation, as interpreted in the light of Article 2.4 of the 1994 Anti-dumping Code. Therefore, they did not breach the principle of sound administration either.

102 It follows that the applicant's arguments concerning the alleged unlawfulness of the rejection of the credit cost adjustment must be dismissed.

103 It follows from all of the foregoing that Article 2 of the contested regulation must be annulled to the extent to which the anti-dumping duty imposed on exports into the Community of goods produced and exported by the applicant exceeds that which would be applicable if the 'input' method had been used to calculate the adjustment to the normal value for import charges and indirect taxes, and that the remainder of the action must be dismissed.

Costs

104 In accordance with Article 87(3) of the Rules of Procedure of the Court of First Instance, where each party succeeds on some and fails on other heads, the Court may order that the costs be shared or that each party bear its own costs.

105 In the present case, the applicant's claim for annulment has been upheld in part. The Court considers it to be fair in the circumstances of the case to order the Council to bear its own costs and 70% of the costs of the applicant and to order the applicant to bear 30% of its own costs.

106 In accordance with Article 87(4) of the Rules of Procedure, the Commission shall bear its own costs.

On those grounds,

THE COURT OF FIRST INSTANCE (Third Chamber)

hereby:

1. Annuls Article 2 of Council Regulation (EC) No 428-2005 of 10 March 2005 imposing a definitive anti-dumping duty on imports of polyester staple fibres originating in the People's Republic of China and Saudi Arabia, amending Regulation (EC) No 2852-2000 imposing a definitive anti-dumping duty on imports of polyester staple fibres originating in the Republic of Korea and terminating the anti-dumping proceeding in respect of such imports originating in Taiwan, to the extent to which the anti-dumping duty imposed on exports into the European Community of goods produced and exported by Huvis Corp. exceeds that which would be applicable if the 'input' method, used in the initial investigation, had been used to calculate the adjustment to the normal value for import charges and indirect taxes;

2. Dismisses the action as to the remainder;

3. Orders the Council to bear its own costs and to pay 70% of the costs incurred by Huvis Corp.;

4. Orders the Commission to bear its own costs.