Mukand, Ltd. v. United States , 767 F.3d 1300 ( 2014 )

United States Court of Appeals
for the Federal Circuit
______________________
MUKAND, LTD.,
Plaintiff-Appellant,
v.
UNITED STATES,
Defendant-Appellee,
AND
CARPENTER TECHNOLOGY CORPORATION,
Defendant-Appellee.
______________________
2013-1425
______________________
Appeal from the United States Court of International
Trade in No. 11-CV-0401, Senior Judge Richard W. Gold-
berg.
______________________
Decided: September 16, 2014
______________________
PETER J. KOENIG, Squire Sanders (US) LLP, of Wash-
ington, DC, argued for plaintiff-appellant.
ERIC E. LAUFGRABEN, Trial Attorney, Commercial Lit-
igation Branch, Civil Division, United States Department
of Justice, of Washington, DC, argued for defendant-
appellee, United States. With him on the brief were
2 MUKAND, LTD. v. US
STUART F. DELERY, Assistant Attorney General, JEANNE
E. DAVIDSON, Director, and PATRICIA M. MCCARTHY,
Assistant Director. Of counsel on the brief was JUSTIN R.
BECKER, Attorney, Office of the Chief Counsel for Trade
Enforcement and Compliance, United States Department
of Commerce, of Washington, DC.
GRACE W. KIM, Kelley Drye & Warren LLP, of Wash-
ington, DC, argued for defendant-appellee, Carpenter
Technology Corporation. With her on the brief were
LAURENCE J. LASOFF and MARY T. STALEY.
______________________
Before NEWMAN, DYK, and REYNA, Circuit Judges.
REYNA, Circuit Judge.
Mukand, Ltd. (“Mukand”) appeals a decision of the
Court of International Trade affirming the Department of
Commerce’s application of adverse facts available in its
calculation of an antidumping duty on Mukand’s imports
of stainless steel bar from India. The Department of
Commerce applied adverse facts available (“AFA”) after
Mukand failed to provide production cost data broken
down by product size as requested on five separate occa-
sions. For the reasons set forth below, we affirm.
I
Upon the receipt of a proper request, the Department
of Commerce (“Commerce”) is required to review and
reassess its antidumping duty orders at least once each
year. 19 U.S.C. § 1675(a). On March 30, 2010, at the
request of domestic interested parties, Commerce initiat-
ed the current administrative review on an outstanding
antidumping duty order on stainless steel bar from India
for the period of February 1, 2009, through January 31,
2010. As part of this review, Commerce issued to Mukand
a series of questionnaires designed to obtain information
necessary to calculate Mukand’s dumping margin. These
MUKAND, LTD. v. US 3
questionnaires asked Mukand to provide, among other
things, its costs of producing different sizes of stainless
steel bar. Product size is one of six product characteris-
tics determined by Commerce to be significant in differen-
tiating between steel bar products, the other five being
general type of finish, grade, re-melting, type of final
finish, and shape. Commerce thus sought product-specific
cost information to ensure that it compared similar prod-
ucts in its price-to-price comparisons, calculated a correct
difference-in-merchandise adjustment, and arrived at an
accurate constructed normal value for Mukand’s mer-
chandise.
Upon receiving Mukand’s response to its initial ques-
tionnaire, Commerce discovered that Mukand assigned
the same production costs across all product sizes.
Mukand did not explain its rationale for this approach
despite the questionnaire’s request to “quantify and
explain” any belief that size, or any other physical charac-
teristic, is an insignificant cost factor. Commerce in-
formed Mukand that it did not consider this approach to
be reasonable and asked that Mukand produce size-
specific cost information, regardless of whether it tracked
such information in its normal accounting records. Alter-
natively, Commerce again asked Mukand to “quantify and
explain” any reasons for believing that size-based cost
differentials are insignificant. Mukand responded with a
brief statement that where product grade and type of
finishing operation are the same, direct material costs do
not vary with size. In a second supplemental question-
naire, Commerce reiterated its need for either size-
specific cost estimates or a more thorough narrative
quantifying and explaining Mukand’s belief that size is
not a cost factor. Again, Mukand asserted without de-
tailed support that size does not affect costs when all
other physical characteristics remain the same. In a third
supplemental questionnaire, Commerce again reiterated
its need for size-specific cost information, noting:
4 MUKAND, LTD. v. US
[I]t is not necessary for Mukand to calculate [con-
trol number (“CONNUM”)] specific costs in its
normal books and records in order to differentiate
cost differences between CONNUMs that have dif-
ferent physical characteristics when reporting to
the Department as long as the cost differences re-
ported to the Department are based on reasonable
and verifiable methods.
J.A. 2063 (emphasis added). Mukand responded with a
short statement that it does not keep track of size-specific
costs and reasserted its belief that size-based costs are
insignificant “as smaller sizes can be processed at higher
speed than to [sic] larger size.” J.A. 2064.
Unsatisfied with Mukand’s response, Commerce
sought this information one last time. In a fourth sup-
plemental questionnaire, Commerce noted that it sought
cost data with respect to two factors—rolling time and
weight—and asked a series of specific questions designed
to obtain the elicited information. These questions in-
cluded a sample chart for Mukand to complete regarding
size, weight, and rolling time. Commerce instructed
Mukand to contact it if its request was unclear, if Mukand
was unable to supply the information, or if Commerce was
otherwise mischaracterizing Mukand’s production pro-
cess. Commerce also warned that “[f]ailure to provide the
requested information may result in the Department
deciding to rely on facts available, as required by section
776(a) of the Tariff Act of 1930, as amended, in our pre-
liminary results.” J.A. 2075. In its response, Mukand
again restated its reasons for not reporting size-specific
costs, concluding that there “is no reasonable and verifia-
ble way to do what is requested.” J.A. 2074 (emphasis
altered). Mukand never contacted Commerce directly to
ask for clarification or assistance of any kind.
Commerce determined that Mukand’s responses were
deficient and resorted to facts otherwise available. Pur-
MUKAND, LTD. v. US 5
suant to statute, Commerce may resort to facts otherwise
available to complete the record when an interested party
fails, for whatever reason, to provide requested infor-
mation. 1 Before resorting to facts otherwise available,
Commerce must notify the respondent of the nature of the
deficiency and, to the extent practicable, provide an
opportunity for the respondent to remedy or explain the
deficiency. 19 U.S.C. § 1677m(d). If the respondent’s
explanation is unsatisfactory or untimely, Commerce may
“disregard all or part of the original and subsequent
responses.” Id. Commerce may not, however, refuse to
consider necessary information that satisfies the five
criteria outlined in section 1677m(e).
Commerce may further rely on an adverse inference
against a respondent when selecting among the facts
otherwise available if it concludes that the respondent
failed to cooperate to the best of its ability. 19 U.S.C.
§ 1677e(b). The “best of its ability” standard requires the
respondent to put forth its maximum effort to investigate
and obtain full and complete answers to Commerce’s
inquiries. Nippon Steel, 337 F.3d at 1382. While this
standard does not require perfection on the respondent’s
part, it does not allow for “inattentiveness, carelessness,
or inadequate record keeping.” Id.
In its preliminary results, Commerce applied an ad-
verse inference against Mukand after concluding that
Mukand (i) repeatedly failed to provide product-specific
cost data by size; (ii) failed to provide a meaningful expla-
nation of why it could not provide such data; and (iii)
failed to provide factual information supporting its claim
that product size did not significantly affect production
1 19 U.S.C. § 1677e(a); Nippon Steel Corp. v. United
States, 337 F.3d 1373, 1381 (Fed. Cir. 2003).
6 MUKAND, LTD. v. US
cost. 2 Commerce noted that requesting product-specific
cost data is standard procedure, and that a respondent
has a duty to provide a “full explanation and suggested
alternative forms” if it is unable to provide requested
information. Id. Accordingly, Commerce concluded that
applying AFA against Mukand was justified.
Mukand responded to the preliminary results and
claimed that it materially complied with Commerce’s
requests. Mukand argued that it could not report size-
specific production costs because any information it would
generate would not be subject to reasonable verification.
At the same time, Mukand offered to submit the same
information it previously declared was not reasonably
available, and that it could do so “immediately on re-
quest.” Commerce refused to consider this new infor-
mation because it lacked time to review and solicit
comments on the data within the statutory deadlines.
Commerce also noted that Mukand had numerous oppor-
tunities during the questionnaire process to provide this
data. Commerce further found that Mukand’s failure to
provide size-specific cost information rendered its re-
sponse “so incomplete that it could not serve as a reliable
basis for reaching a final determination” and could not be
used without undue difficulty. Commerce thus continued
to apply AFA to all of Mukand’s sales under review and
assigned Mukand an AFA rate of 21.02 percent ad val-
orem. 3
Mukand appealed to the Court of International Trade
(“Trade Court”), and the court affirmed Commerce’s
2 Stainless Steel Bar from India, 76 Fed. Reg.
12,044, 12,048 (Dep’t of Commerce Mar. 4, 2011) (prelim.
results).
3 Stainless Steel Bar from India, 76 Fed. Reg.
56,401, 56,403 (Dep’t of Commerce Sept. 13, 2011) (final
results).
MUKAND, LTD. v. US 7
application of AFA. 4 The Trade Court noted that Com-
merce asked for size-specific cost information on five
separate occasions, and Commerce explained on four of
those occasions that it was unsatisfied with Mukand’s
response and reiterated both the type of information it
needed and why it was important. The Trade Court also
rejected Mukand’s assertion that it complied with Com-
merce’s questionnaires when it explained that it had no
reasonable and verifiable way to report size-specific costs.
The Trade Court agreed with Commerce that Mukand’s
responses consisted of vague, unsupported assertions that
the requested information was not reasonably available
and that size was not a significant cost factor. The Trade
Court also noted that, despite these repeated assertions,
Mukand was suddenly willing and able to provide the
requested information after Commerce issued its prelimi-
nary results. The Trade Court thus affirmed Commerce’s
conclusion that Mukand failed to cooperate to the best of
its ability.
The Trade Court also rejected Mukand’s argument
that Commerce should have applied “partial” AFA be-
cause Mukand’s deficiency did not infect the entire record.
The Trade Court noted that the use of partial AFA may be
appropriate to fill gaps in a record that otherwise contains
usable data and is incomplete with respect to only a
discrete category of information. 5 In contrast, Commerce
applies total AFA when none of the reported data is
reliable or usable because, for example, the data contains
pervasive and persistent deficiencies that cut across the
entire record. In such situations, Commerce applies an
4 Mukand, Ltd. v. United States, No. 11-00401,
2013 WL 1339399 (Ct. Int’l Trade Mar. 25, 2013).
5 See Zhejiang DunAn Hetian Metal Co. v. United
States, 652 F.3d 1333, 1347-48 (Fed. Cir. 2011).
8 MUKAND, LTD. v. US
adverse inference to all of the respondent’s sales covered
by the relevant antidumping duty order. 6
The Trade Court held that Commerce did not err in
applying total AFA against Mukand because Mukand’s
failure to provide size-specific cost information rendered
its responses so incomplete that they could not be used
without undue difficulty. Without size-specific cost in-
formation, Commerce could not conduct an adequate
sales-below-cost test, accurately calculate a difference-in-
merchandise adjustment for size, or arrive at an accurate
constructed value for any of Mukand’s sales. As the
Trade Court noted, the absence of information so vital to
the antidumping determination rendered Mukand’s
responses too incomplete for Commerce to calculate a
reliable margin. The Trade Court thus affirmed Com-
merce’s application of total AFA.
Mukand appealed the Trade Court’s decision to this
court. We have jurisdiction pursuant to 28 U.S.C.
§ 1295(a)(5).
II
We review decisions of the Trade Court de novo and
apply anew the same standard used by the Trade Court. 7
Commerce’s antidumping determinations are reviewed for
substantial evidence. 19 U.S.C. § 1516a(b)(1)(B)(i).
Substantial evidence is defined as “more than a mere
scintilla,” as well as evidence that a “reasonable mind
might accept as adequate to support a conclusion.” 8 Our
review is limited to the record before Commerce in the
6 Shandong Huarong Mach. Co. v. United States,
435 F. Supp. 2d 1261, 1265 n.2 (Ct. Int’l Trade 2006).
7 Mittal Steel Point Lisas Ltd. v. United States, 548
F.3d 1375, 1380 (Fed. Cir. 2008).
8 Consol. Edison Co. of N.Y. v. NLRB, 305 U.S. 197,
229 (1938).
MUKAND, LTD. v. US 9
particular review proceeding at issue and includes all
evidence that supports or detracts from Commerce’s
conclusion. 9 An agency finding may still be supported by
substantial evidence even if two inconsistent conclusions
can be drawn from the evidence. 10
A
Mukand argues that Commerce erred in applying
AFA because it “fully answered Commerce’s specific
questions on this issue and so acted to the best of its
ability.” Appellant Br. 4. According to Mukand, the
wording of Commerce’s questionnaires suggested that it
should submit size-specific cost information only if it
could be obtained in a reasonable and verifiable way. We
disagree.
Commerce’s decision to resort to facts otherwise
available and to apply an adverse inference against
Mukand is supported by substantial evidence. Mukand’s
narrow focus on the exact wording of Commerce’s ques-
tionnaires ignores the main import of Commerce’s repeat-
ed attempts to obtain size-specific cost information.
Commerce requested this information from Mukand on
five separate occasions—in the initial questionnaire and
in four supplemental questionnaires. In each of the
supplemental questionnaires, Commerce explained why it
was unsatisfied with Mukand’s response and reiterated
both the type of information it needed and why it was
important. Commerce even went so far as to provide
Mukand with a sample chart to complete and encouraged
9 Sango Int’l L.P. v. United States, 567 F.3d 1356,
1362 (Fed. Cir. 2009); see also QVD Food Co. v. United
States, 658 F.3d 1318, 1324-25 (Fed. Cir. 2011) (citing
19 U.S.C. § 1516a(b)(2)(A)).
10 Consolo v. Fed. Mar. Comm’n, 383 U.S. 607, 620
(1966).
10 MUKAND, LTD. v. US
Mukand to reach out if it needed assistance or additional
clarification. Commerce further warned Mukand that its
continued failure to provide the requested information
may force Commerce to resort to facts otherwise availa-
ble. Commerce was thus justified in resorting to facts
otherwise available based on Mukand’s repeated failures
to provide the requested size-specific cost data.
Commerce’s decision to adopt an adverse inference
against Mukand is also supported by substantial evi-
dence. Commerce reasonably concluded that Mukand
failed to cooperate to the best of its ability when respond-
ing to Commerce’s requests for information. To avoid the
risk of an adverse inference, respondents must take
reasonable steps to maintain full and complete records
and put forth maximum effort to investigate and obtain
all requested information. Nippon Steel, 337 F.3d at
1382. Mukand thus had a duty to account for size-specific
cost differences in its responses using reasonably availa-
ble information or explain why such information was not
available. As Commerce highlighted in its Issues and
Decision Memorandum, Mukand failed to provide any of
the requested information:
We provided Mukand with several opportunities
to submit factual information to support its claim
that cost differences between sizes were insignifi-
cant. We requested the weight to length conver-
sion factors, rolling times, and separate
conversion cost fields for the rolling and other fin-
ishing stages of production in an attempt to ana-
lyze the potential significance or insignificance of
cost differences due to size. Mukand provided
none of the requested data.
J.A. 1815. Product-specific information is a fundamental
element in the dumping analysis, and it is standard
procedure for Commerce to request product-specific data
in antidumping investigations. It was thus reasonable for
MUKAND, LTD. v. US 11
Commerce to expect from Mukand more accurate and
responsive answers to the questionnaire. Relevant here is
that Mukand evaded providing a direct response to Com-
merce’s specific questions, and it was not until Mukand
responded to the third supplemental questionnaire that it
informed Commerce it did not maintain cost accounting
records on the basis of product size. Indeed, Mukand was
suddenly able to provide the requested information after
Commerce published its preliminary results and applied
an adverse inference despite repeated claims that the
data was not reasonably available.
We agree with Commerce that Mukand’s change in
position further demonstrated its failure to cooperate to
the best of its ability. This circumstance points to why
the use of an adverse inference is a useful tool in anti-
dumping determinations. The statement of administra-
tive action on the Uruguay Round Agreements Act
(“URAA”) provides that the purpose of the adverse infer-
ence provision is to encourage future cooperation and
ensure that a respondent does not obtain a more favorable
antidumping rate by failing to cooperate. 11 Absent the
threat of an adverse inference, respondents could sit out
the preliminary phase of the investigation and submit
requested data only when the resulting preliminary
antidumping rates are higher than the rate that would
have been established with the withheld data. Hence, we
hold that Commerce’s decision to apply AFA against
Mukand is supported by substantial evidence.
11 H.R. Rep. No. 103-316, at 200 (1994), reprinted in
1994 U.S.C.C.A.N. 4040, 4199; see also Fine Furniture
(Shanghai) Ltd. v. United States, 748 F.3d 1365, 1373
(Fed. Cir. 2014). Pursuant to statute, the statement of
administrative action is the United States’ “authoritative
expression” on the interpretation and application of the
URAA. 19 U.S.C. § 3512(d).
12 MUKAND, LTD. v. US
B
Mukand argues in the alternative that Commerce
erred in applying total AFA. According to Mukand,
Commerce should have applied partial AFA because it
complied with the majority of Commerce’s requests for
information on U.S. and home market sales and costs.
Again, we do not agree.
Commerce’s decision to apply total AFA is supported
by substantial evidence. Commerce noted that the “re-
quirement to report product-specific sales and cost data is
one of the most basic and significant requirements in
performing the dumping analysis and margin calcula-
tion.” J.A. 1808. Hence, Mukand’s refusal to break down
its cost information by product size prevented Commerce
from conducting an adequate sales-below-cost test, accu-
rately calculating a difference-in-merchandise adjustment
for size, or arriving at an accurate constructed value for
any of Mukand’s sales. Commerce thus reasonably con-
cluded that Mukand’s submissions were so incomplete
that they could not be used without undue difficulty.
Contrary to Mukand’s argument, the deficiencies in
its responses were not limited to a discrete category of
information. As Commerce noted, Mukand assigned the
“same amount of conversion costs per kilogram of bar
produced, irrespective of the final size of the product
produced.” J.A. 1604. Mukand thus premised all of its
production cost data on the assumption that product size
is not a significant cost factor—an assumption it failed to
support. In general, use of partial facts available is not
appropriate when the missing information is core to the
antidumping analysis and leaves little room for the sub-
stitution of partial facts without undue difficulty. 12
12See Shanghai Taoen Int’l Co. v. United States, 360
F. Supp. 2d 1339, 1348 n.13 (Ct. Int’l Trade 2005).
MUKAND, LTD. v. US 13
Without cost data broken down by product size, Com-
merce was unable to differentiate between different types
of steel bar products and could not calculate an accurate
constructed value for any of Mukand’s products. We
therefore hold that Commerce’s reliance on total AFA is
supported by substantial evidence.
III
For the reasons set forth above, we affirm the decision
of the Trade Court.
AFFIRMED