Agro Dutch Industries Ltd. v. United States ( 2007 )

Slip Op. 07 - 185
UNITED STATES COURT OF INTERNATIONAL TRADE
____________________________________
:
AGRO DUTCH INDUSTRIES LIMITED, :
:
Plaintiff, :
:
v. : Before: MUSGRAVE, Senior Judge
: Court. No. 02-00499
UNITED STATES, :
:
Defendant, :
:
and :
:
COALITION FOR FAIR PRESERVED :
MUSHROOM TRADE, :
:
Defendant-Intervenor. :
____________________________________:
OPINION AND ORDER
[On consideration of the results of redetermination of the second administrative review of
mushrooms from India with respect to the plaintiff pursuant to court order by the U.S. Department
of Commerce, International Trade Administration (“Commerce”), wherein Commerce again applied
partial adverse facts available with respect to certain sales involving a customer of the plaintiff,
matter again remanded for redetermination consistent with this opinion.]
Dated: December 26, 2007
Garvey Schubert Barer (Lizbeth R. Levinson, John C. Kalitka, and Ronald M. Wisla) for the
plaintiff.
Jeffrey S. Bucholtz, Acting Assistant Attorney General, Civil Division, United States
Department of Justice, Jeanne E. Davidson, Director, Commercial Litigation Branch, Civil Division,
United States Department of Justice (Richard P. Schroeder); International Office of Chief Counsel
for Import Administration, United States Department of Commerce (Matthew D. Walden), of
counsel, for the defendant.
Collier, Shannon, Scott, PLLC (Adam H. Gordon and Michael J. Coursey) for the defendant-
intervenor.
Court No. 02-00499 Page 2
In Slip Op. 07-25 (Feb. 16, 2007), familiarity with which is presumed, the U.S. Department
of Commerce, International Trade Administration (“Commerce”) was ordered to revisit the
application of partial adverse facts available on certain sales of the plaintiff Agro Dutch Industries,
Ltd. that first resulted in Certain Preserved Mushrooms From India: Final Results of Antidumping
Duty Administrative Review, 67 Fed. Reg. 46172 (July 12, 2002). Now before the Court are the
Results of Redetermination Pursuant to Remand (May 3, 2007) (“Remand Results”) reaffirming the
same application of partial adverse facts available to such sales and the parties’ comments thereon.
As ordered, in the redetermination Commerce explains in greater detail its process of gathering
information with respect to the arrangement between Agro Dutch and “Customer A” and the impact
of the “negative credit period” transactions (“Set X” sales), the remaining sales between Agro Dutch
and Customer A (“Set Y” sales), and also sales from Agro Dutch to other customers for which
Customer A was to receive payment from such other customers (“Set Z” sales).
Generally, the theme of the Remand Results revolves around the determination that Agro
Dutch’s questionnaire responses warranted an adverse inference during the administrative review
proceeding. First, the remand results summarize that
Agro Dutch reported to the Department in its initial questionnaire responses
that it made all sales to the United States on a spot-sale basis and had no
agreements with any U.S. customers. Agro Dutch told the Department that
all sales to the United States were made with payment terms of 90 days after
the bill of lading date and that it had reported the actual date of payment for
all U.S. sales except for the sales unpaid as of the response submission date.
Agro Dutch acknowledged that Customer A had a role different from other
customers because it was a commissioned sales agent, but Agro Dutch
offered no further information on its commission arrangements, although it
was specifically requested to do so.
Remand Results at 4.
Court No. 02-00499 Page 3
The Remand Results next describe the first supplemental questionnaire to Agro Dutch,
wherein Commerce requested responses to the following:
Sales Process
2. Specify whether any sales agreement or contract exists between Agro Dutch
and its U.S. customers.
3. Specify whether or not Agro Dutch and its U.S. customers have any long-
term or multi-purchase contracts or agreements. If so, provide copies of such
agreements applicable to sales during the POR. . . .
38.0 Commissions
1. Explain the basis of the commission rates paid to commissionaires. Provide
more detail to explain what determines the rate paid on each sale. As
examples, show how the commission was determined for sale observations
101 and 500. Provide copies to support how the commission was determined
and paid.
Id. (summarizing Public Record Document (“PDoc”) 80).
The Remand Results note that Agro Dutch responded that it “d[id] not have any binding
contracts or agreements with any U.S. customers during the POR” because “[t]he quantities and
prices of all sales are subject to change until the date of shipment.” Id. (quoting PDoc 91 at 1,
bracketing added). Regarding commissions, Agro Dutch explained that the relevant commissionaire
involved in the sale of observations 101 or 500 was paid a commission based on a percentage of the
cost-insurance-freight (CIF) value of sales booked by a certain entity, or if the sale had been
“discounted by using the Letter of Credit” from Customer A, then based on the free-on-board (FOB)
value of the sale, id. at 5, and the Remand Results state that “[t]his submission was the first time in
this review that Agro Dutch attempted to describe this commission procedure” but that “Agro Dutch
offered no further explanation regarding this arrangement.” Id. at 4.
Court No. 02-00499 Page 4
The Remand Results then state that the petitioner commented that the pattern of payment
dates preceding shipment dates provided a “strong indication” that Agro Dutch had reported an
incorrect year value in the “PATEDATEU” field of electronic data, that Agro Dutch’s responses did
not provide “any indication” of the extent of prepayment, and that “such prepayment would
necessitate a long-term contractual obligation, and would undermine the date of sale currently
reported by Agro Dutch.” Id. at 5 (quoting Confidential Record Document (“CDoc”) 30). The
Remand Results note that Agro Dutch then responded
the reported payment dates are correct. For the referenced observations, Agro
Dutch has reported as the payment date the date that Agro Dutch received
advances provided by [Customer A]. The cash advances were paid in
anticipation of future shipments for which the customer, product and price
were not determined at the time of the advance. [Customer A] arranged for
certain U.S. sales on behalf of Agro Dutch and as reported in Agro Dutch's
Section C questionnaire response, earned a commission of [sic] certain U.S.
sales.
Id. (as quoting CDoc 34 at 2). The Remand Results characterize this response as providing “more
detail about Agro Dutch’s sales to Customer A than was previously disclosed” and highlighting
“Agro Dutch’s continued failure to fully explain its agreement with Customer A.” They also state
that
[a]lthough Agro Dutch maintained in previous submissions that it had no
agreements of any kind with any U.S. customer, this explanation indicated
that, in fact, Agro Dutch and Customer A had some sort of agreement for
which cash advances had been paid. The juxtaposition of this statement with
the statement about Customer A’s commissionaire role added to the apparent
contradiction between Agro Dutch’s statements that no agreements with
customers existed, and all sales were made on a spot basis, and Agro Dutch's
new statement implying that some sort of “agreement” or “understanding”
was in place for which Customer A paid for its canned mushrooms in
advance.
Court No. 02-00499 Page 5
Id. (italics added). The Remand Results then explain that for the preliminary results Commerce
concluded that it “was not able to determine the appropriate date of sale for the U.S. sales covered
by the agreement” because it had “observed a significant number of sales made to Customer A with
payment dates prior to the shipment date” (i.e., the Set X sales). Id. Additionally, the Remand
Results state, “Agro Dutch’s latest explanation regarding the advance payment was at odds with the
statements in its questionnaire responses that all sales were sold subject to payment within 90 days
of the bill of lading.” Id. at 5-6.
The Remand Results then explain that Commerce then issued a second supplemental
questionnaire on March 7, 2002, after publication of the preliminary results. In it, Commerce
requested that Agro Dutch
1. Explain in detail the sales and payment terms for transactions involving
payment advances, as identified on page 2 of the February 11, 2002,
submission. In particular:
a. Specify whether or not any type of written sales agreement or contract
exists with regard to this customer. If so, provide the document(s). Explain
why the agreements were not provided earlier in response to [Commerce’s]
questionnaire and supplemental questionnaire.
b. Explain the apparent contradiction between the description of payment
terms to this customer in the February 11 submission, and the statement at
page C-12 of the May 25, 2001, response that all of Agro Dutch’s U.S. sales
are made with payment terms of 90 days after the bill of lading date.
Id. at 7 (quoting PDoc 129).
At this point, as described in the Remand Results, Agro Dutch explained that Customer A
had asked it to produce a customized product and had provided “advance payment deposits . . . in
effect as security for future sales of a new product.” Elaborating, Agro Dutch explained that
Court No. 02-00499 Page 6
[t]here is no written agreement, only an oral understanding. Moreover, the
advances were provided without regard to definite future sales. Indeed, the
whole idea of the advance was to provide a form of security against future
orders. There was no corresponding contemporaneous agreement to ship
specific quantities to specific customers at specific prices.
As we began shipping A-1 mushrooms, and they were accepted by the
ultimate customer, [Customer A] sought the quick return of its advance
payments. We agreed to credit the deposits against sales of other products as
well as A-1 mushrooms. In addition, we agreed to credit the advance
payments against sales to other customers who would agree to pay the
invoiced amounts to [Customer A] rather than to [Agro Dutch]. This enabled
[Customer A] to recover its advance payments earlier. The invoices at issue
note that the sale was made against advance payment, and where [Customer
A] was not the customer, it is shown as the consignee. For these sales,
[Customer A] collected payment from the ultimate customer. . . .
No written sales agreement or contract between [Agro Dutch] and any
customer, including [Customer A] of any type was in effect during the POR
or regarding sales made during the POR.
[Agro Dutch]’s standard payment terms are 90 days after bill of lading date,
and these terms applied to all customers during the POR. With respect to the
advance payments made by [Customer A], obviously the customer paid in
advance and thus did not have 90 days to pay. For those sales to which the
advance payments were applied, it would have been more accurate to state
that the terms of payment were payment in advance. We apologize for any
confusion this may have caused.
Id. at 7-8 (quoting PDoc 142 at 1-2).
The Remand Results state that Agro Dutch’s explanation “threw into doubt” Commerce’s
assumptions concerning the nature of the sales as U.S. export price sales. Id. at 8. Cf. 19 U.S.C. §§
1677a(a), 1677a(b). This was so, the Remand Results explain, because this was “the first time” Agro
Dutch reported to Commerce that other customers pay Customer A for their purchases rather than
Agro Dutch, and because Agro Dutch still “did not explain how or why its letter of credit was
discounted on certain sales.” Id. According to the Remand Results, this new information when
Court No. 02-00499 Page 7
combined with Agro Dutch’s previous “incomplete responses” purportedly “raised additional issues
which needed to be resolved[,]” specifically that
[a]lthough Agro Dutch claimed that it was not affiliated with Customer A,
Customer A’s role as collection agent and consignee, in addition to
commissionaire, may indicate a relationship equivalent to affiliation that
would bear further examination and analysis to determine whether
transactions involving Customer A were CEP sales, or even whether
Customer A’s sales to its customers, rather than Agro Dutch’s sales to
Customer A, should have been subject to our analysis.
As Customer A acted as a collection agent, commissionaire, and consignee
for some of Agro Dutch’s sales to other customers, and its letter of credit was
used to discount certain sales, Customer A may have been involved in the
sales negotiation process. Customer A’s interaction with Agro Dutch’s other
customers required further examination in order to determine whether any
sales negotiations had been completed in the United States and thus whether
these sales constituted CEP sales.
Based on its explanation in [the second supplemental questionnaire
response], for those sales where certain customers paid Customer A instead
of Agro Dutch, Agro Dutch reported the payment date as the date of one of
Customer A’s payment advances, not the date the customer paid Customer
A, nor the date Agro Dutch credited that customer’s accounts receivable
balance. Because the Department applied AFA [adverse facts available] to
these sales, the Department did not address in the Final Results whether use
of this reported payment date was appropriate for calculating imputed credit
expense. Had the Department not applied AFA to these sales and instead had
attempted to calculate a rate, it did not have the information necessary to
calculate the imputed credit expense unless it accepted Agro Dutch’s
methodology.
Id. at 8-9.
The Remand Results then clarify that Commerce responded to Agro Dutch’s response to its
second supplemental questionnaire as proof that Agro Dutch had “withheld” information and/or had
therefore “significantly impeded” the proceeding within the meaning of Section 1677e of Title 19,
United States Code, in its initial and/or supplemental questionnaire responses. See 19 U.S.C. §§
Court No. 02-00499 Page 8
1677e(a)(2)(A), 1677e(a)(2)(C). Hence, Commerce asserts that it was justified in resorting to facts
otherwise available and an adverse inference in the selection thereof.
Agro Dutch argues the matter must be remanded again. The defendant-intervenors provided
no comment, while the government supports the Remand Results as is. For the following reasons
the matter requires further remand.
Discussion
I
As a preliminary matter, the defendant’s argument that Agro Dutch failed to exhaust
administrative remedies is without merit. Also, the record does not contain substantial evidence to
support Commerce’s characterization that “Agro Dutch maintained in previous submissions that it
had no agreements of any kind with any U.S. customer” and that “no agreements with customers
existed.” E.g., Remand Results at 4 (italics added). This is an inaccurate characterization of Agro
Dutch’s earlier responses. In the initial questionnaire, Commerce qualified its request for
“agreement(s)” with “your agreement(s) for sales in the United States.” See PDoc 20 at A-7.
Commerce did not specifically request information regarding Agro Dutch’s “arrangement” with
Customer A in the initial questionnaire, unless that arrangement may be characterized as a “sales”
agreement; however, nothing in the record appears to contradict Agro Dutch’s consistent responses
that it did not have a “sales” agreement with Customer A, and that all its sales, including those to
Customer A, are spot-sales at which point price and quantity are determined. Thus, to the extent
Agro Dutch correctly characterizes its agreement with Customer A as other than a sales agreement,
Agro Dutch’s initial questionnaire response was not untruthful.
Court No. 02-00499 Page 9
Further, Agro Dutch did not “insist” in the first supplemental questionnaire that it did not
have “any” agreements with its customers. The first supplemental questionnaire asked Agro Dutch
to “[s]pecify whether any sales agreement or contract exists between Agro Dutch and its U.S.
customers” or whether “Agro Dutch or its customers have any long-term or multi-purchase contracts
or agreements” and to provide copies of any. Agro Dutch responded that it “d[id] not have any
binding contracts or agreements with any U.S. customers during the POR” and that “[t]he quantities
and prices of all sales are subject to change until the date of shipment.” PDoc 91 at 1 (italics added).
Agro Dutch did not provide a complete answer to the question asked, see supra, but it did not state
that it did not have “any” agreements with its customers. It merely stated that it did not have any
“binding” agreements with its customers, whatever that implies.
Nonetheless, Commerce’s characterizations amount to harmless error. Among other things,
section 1677e requires the use of facts otherwise available as a result of a respondent’s
“withholding” of information. 19 U.S.C. § 1677e(a)(2)(A). The first supplemental questionnaire
specifically asked for information concerning Agro Dutch’s long-term or multi-purchase contracts
without qualification. Agro Dutch responded with the qualification that it had no “binding”
agreements. Whether that statement is true, Agro Dutch could reasonably infer from the question
asked that Commerce desired disclosure of whatever “arrangement” Agro Dutch had with Customer
A. Because Agro Dutch’s response did not answer the question asked and was not unqualified, it
was incomplete. Cf. CDoc 20 with CDoc 47. The record therefore contains substantial evidence
to support the finding that Agro Dutch “withheld” information in accordance with subsection
1677e(a)(2)(A). At this point, however, it is important to note that Commerce never made a
Court No. 02-00499 Page 10
determination of whether Agro Dutch’s arrangement with Customer A, as explained in the second
supplemental response, was in fact a “long-term or multi-purchase agreement.”
II
When it becomes necessary to fill information gaps in the administrative record, the statutes
governing these type of proceedings require the use of facts otherwise available so that the
investigation or administrative review may proceed. See 19 U.S.C. § 1677e(a). However, any gap-
filling must later give way to actual information obtained during the course of the proceeding,
whether obtained pursuant to section 1677m(d) or received fulfilling the requirements of section
1677m(e). Cf. 19 U.S.C. § 1677e(a) (“subject to” section 1677m(d)) with 19 U.S.C. §§ 1677m(d),
1677m(e). Because Agro Dutch’s previous responses to certain questions had been deficient for
purposes of the proceeding, Commerce sent a second supplemental questionnaire to Agro Dutch,
apparently pursuant to section 1677m(d). That provision required Commerce to inform Agro Dutch
“of the nature of the deficiency,” provide an opportunity “to remedy or explain” the deficiency in
light of the time limit for completing the review, and determine whether the response to the
deficiency notice, as embodied by Agro Dutch’s second supplemental questionnaire, was timely and
satisfactory, or untimely or not satisfactory.1 The provision thus afforded Agro Dutch the
1
If a response is “not satisfactory,” the information must still be considered if it satisfies the
requirements of section m(e), which provides that Commerce shall not decline to consider
information submitted by an interested party that is necessary to the determination but does not meet
all applicable requirements established by Commerce if (1) the information is submitted by the
deadline established for its submission, (2) can be (i.e., is capable of being) verified, (3) is not so
incomplete as to be unreliable, (4) the interested party acts to the best of its ability to provide the
information and meet Commerce’s requirements with respect to the information, and (5) can be used
without undue difficulties. 19 U.S.C. § 1677m(e). The deficiency of the response is not, by itself,
a reason for rejecting other pertinent information therein. See SAA at 865. At any rate, a timely and
(continued...)
Court No. 02-00499 Page 11
opportunity to cure the deficiency of its prior submission(s) prior to the completion of the
proceeding. If the deficiency was cured thereby, whatever reasons for its having been deficient
earlier in the proceeding are rendered irrelevant, because there is now no longer a “gap” in the
information necessary for the proceeding.
Commerce was thus required pursuant to section 1677m(d) to evaluate the four corners of
Agro Dutch’s second supplemental questionnaire response on its own merits. In applying that
provision, the Remand Results describe the second supplemental questionnaire response’s
description of Agro Dutch’s arrangement with Customer A as “not satisfactory” because it
“demonstrated that Agro Dutch’s previous responses [had been] misleading and unreliable with
respect to the terms of sale with Customer A, including the sale dates and payment dates” for the
Sets X, Y, and Z sales. Remand Results at 11, 13, 15. The Remand Results call specific attention
to the fact that Agro Dutch reported in its initial questionnaire response that its standard terms of
payment were 90 days whereas it stated in its second supplemental questionnaire response that “it
would have been more accurate to state that the terms of payment were payment in advance” for
Customer A. Id. at 8 (quoting PDoc 142). The Remand Results insist that “Agro Dutch misled the
Department by stating flatly at page C-12 of [its initial questionnaire response] that ‘[a]ll of our sales
are made [with] payment terms of 90 days after bill of lading date[.]’” Remand Results at 11.
It is arguable whether Commerce can reasonably claim to have been “misled” when the initial
questionnaire requested “terms of payment” information and in response Agro Dutch stated what its
1
(...continued)
satisfactory response to a deficiency notice obviates consideration of the response in accordance with
section 1677m(e).
Court No. 02-00499 Page 12
standard or nominal terms of payment are. In addition, Agro Dutch provided data showing advance
payments from Customer A as part of its initial questionnaire responses.2 In light of such data
elsewhere in the record, at best Commerce could claim Agro Dutch’s specific responses had needed
clarification and had therefore been “deficient,” but the record shows that Commerce did not ask
specifically for clarification of observed discrepancies between actual payment and terms of payment
in its first supplemental questionnaire, it only requested clarification of “commissions.”3 Agro Dutch
did, however, volunteer a clarification when it responded to the petitioner’s comments. That
amounted to an opportunity to remedy the deficiency, and Agro Dutch also provided a more
complete explanation thereof subsequently. Commerce’s stated reasons for its dissatisfaction with
Agro Dutch’s explanation are therefore untenable.
In any event, Commerce’s foregoing analysis of Agro Dutch’s second supplemental
questionnaire response was not a proper application of 19 U.S.C. § 1677m(d). Commerce did not
consider or evaluate the information contained therein on its own merits but instead used the
information in an attempt to defeat Agro Dutch’s earlier responses. That defeats the remedial
purpose of section 1677m(d) to provide notice of deficiency and the opportunity to correct it.
Commerce’s analytical flaws are discussed in greater detail as follows.
2
For Commerce to claim from such circumstance that it had been “misled” at the outset
would amount to an abdication of its analytical responsibilities. Cf. Antidumping (“AD”) Manual,
Ch. 5 at 8 (Dep’t of Comm., ITA, Import Administration) (confounding “payment terms” when
admitting that “[c]laims for differences in credit costs must be based on actual payment experience
rather than nominal payment terms”).
3
“Commissions are payments to parties providing services that relate to the sale of
merchandise.” Id. , Ch. 5 at 29.
Court No. 02-00499 Page 13
A
The Remand Results state that complete information pertaining to Agro Dutch’s arrangement
with Customer A was lacking on the record, such that the Sets X, Y and Z sales could not be fully
analyzed. Information was lacking, according to the Remand Results, because the second
supplemental questionnaire response revealed “for the first time” that other customers pay Customer
A for their purchases rather than Agro Dutch, and therefore “threw into doubt” Commerce’s
“previous assumptions concerning the nature of U.S. sales as EP sales” and “raise[d] more questions
than it answer[ed.]” Specifically, the Remand Results state that “Agro Dutch did not fully answer
previous questions posed in the initial questionnaire and the August 9, 2001, supplemental
questionnaire concerning its commission agreement with Customer A and the terms under which it
received commissions.” Remand Results at 8. That is, Agro Dutch “did not explain how or why
its letter of credit was discounted on certain sales,” id., and Customer A’s role as collection agent,
commissionaire and consignee for some of Agro Dutch’s sales to other customers “may indicate a
relationship equivalent to affiliation” or a degree of involvement in the sales process that requires
further analysis to determine whether Customer A transacted CEP sales and the extent of its
involvement in the “sales negotiation process.” See Remand Results at 8-9. As to the Set Z sales,
the remand results state that application of adverse facts available to these sales obviated
consideration of whether use of the reported payment date was appropriate for calculating imputed
credit expense in the final results. Remand Results at 9.
At this point, it becomes apparent that the Remand Results confound proper analysis of Agro
Dutch’s second supplemental questionnaire response with analysis of the evidence of record as a
Court No. 02-00499 Page 14
whole, because the points raised concern information provided for the record much earlier in the
proceeding than the second supplemental questionnaire response. A response necessitating further
explanation is, by definition, deficient, but the second supplemental questionnaire did not request
explanation of how or why Agro Dutch’s letter of credit was discounted on certain sales, nor did it
ask for additional information related to a commission agreement with Customer A. The only
apparent fact the second supplemental questionnaire response clarifies is with respect to invoices
already provided to Commerce earlier in the proceeding and on which Customer A is reflected as
the consignee. The explanation provided in the second supplemental questionnaire indicated that
for sales Agro Dutch made to certain customers it settled the account receivable balance by a
corresponding reduction in the security-payment or advance-payment liability being maintained with
respect to Customer A, in effect transferring the account receivable balance owed from such other
customer to Customer A. The only obvious impact such a clarification ought to have is with respect
to the so-called Set Z sales, and Commerce does not adequately explain why this clarification is fatal
to export price analysis of all sales involving Customer A (Sets X, Y and Z sales). Commerce
merely implies that this is so. Cf. Remand Results at 11 (“particularly for those sales where other
customers paid Customer A”). Nonetheless, Commerce apparently felt justified in concluding from
Agro Dutch’s second supplemental questionnaire response that it was proof of Agro Dutch’s earlier
“withholding” of information, and that such circumstance was sufficient to cause it to doubt Agro
Dutch’s explanation of the entire arrangement between Agro Dutch and Customer A and prevented
determination(s) of the date of sale and/or date of payment in respect of all sales involving Customer
A. The court, however, discerns no contradiction, only clarification, between Agro Dutch’s earlier
Court No. 02-00499 Page 15
responses and the second supplemental questionnaire response concerning Agro Dutch’s
arrangement with Customer A and concerning the reported dates of sale and reported dates of
payment. Cf. World Finer Foods, Inc. v. United States, 24 CIT 541, 550 (2000) (unreasonable to
conclude a submission contained new factual information, although it involved factual or
methodological change, where respondent claimed clerical error and sought to correct record).
Regarding date of sale, the only indication on the record of Commerce’s understanding of
what “agreement(s) for sales in the United States” encompasses is reflected in the glossary of terms
accompanying the initial questionnaire, which explains that the “date of a sale” is normally the
invoice date unless Commerce is “satisfied that a different date better reflects the date on which the
exporter or producer established the material terms of sale (e.g. price, quantity).” PDoc 20, App. I
at I-5 (referencing 19 C.F.R. § 351.401(i)). See Remand Results at 2. According to Commerce’s
antidumping manual, “the date of the invoice is the presumptive date of sale, although this
presumption may be overcome.” AD Manual, Ch. 8 at 7. In other words, “date of sale,” normally
presumed to be the invoice date, is that date on which all material terms of sale are agreed. Once
determined, the date of sale must be used consistently. See, e.g., Mittal Steel Point Lisas Ltd. v.
United States, 31 CIT __, 502 F. Supp. 2d 1345 (2007) (Commerce conceding that it was inconsistent
to use the date of shipment as the date of sale for purposes of determining imputed credit expenses
while using the date of invoice as the date of sale in other contexts of the proceeding). The Remand
Results also state that “[w]hile the Department normally relies on invoice date as the date of sale,
a different date may be appropriate if an agreement exists between the respondent and the customer
which establishes the key terms of sale – price and quantity – prior to invoicing. See 19 CFR
Court No. 02-00499 Page 16
351.401(i).” Remand Results at 2. But, Commerce does not point to any information of record to
contradict Agro Dutch’s explanation that its arrangement with Customer A did not amount to an
“agreement . . . which establishes the key terms of sale,” it does not adequately explain why the
second supplemental questionnaire response created such uncertainty as to overcome the
presumption that the invoices for the Set X, Set Y or Set Z sales constituted the date of their
respective sales, and it did not determine that the information of record sufficed to establish the date
of sale for purchases pursuant to Agro Dutch’s arrangement with Customer A as the date the
arrangement was agreed.
Regarding date of payment, Commerce’s stated preference according to its antidumping
manual is to use actual rather than imputed credit cost information if it is available. See AD
Manual, Ch. 8 at 19. Date of payment is important for determining, e.g., the proper exchange rate
that should be applied to the analysis of a respondent’s transactions or for determining credit
expenses,4 but the record here is of “payment” of funds that Agro Dutch already possessed. Advance
payments are the inverse of credit expenses in that they result not in credit by the respondent but in
money to the respondent – and negative credit observations – but, in any event, the disclosure of that
circumstance in this instance ought to have impacted only the Set X and Set Z sales, not the Set Y
sales. For that matter, Commerce does not explain why “the date the customer paid Customer
4
See, e.g., Viraj Group, Ltd. v United States, 343 F.3d 1371, 1377 (Fed. Cir. 2003); NTN
Bearing Corp. of America v. United States, 26 CIT 53, 67-70, 186 F. Supp. 2d 1257, 1273-75
(2002); Mitsubishi Heavy Industries, Ltd. v. United States, 23 CIT 326, 330-32, 54 F. Supp. 2d 1183,
1188-90 (1999). Cf. 19 C.F.R. § 351.410 (circumstances of sale adjustments). A sale may be
deemed aberrant and excluded from analysis if too much time elapses between the date of sale and
the date of payment. See, e.g, Tianjin Tiancheng Pharmaceutical Co., Ltd. v. United States, 29 CIT
___, ___, 366 F. Supp. 2d 1246, 1258-61 (2005).
Court No. 02-00499 Page 17
A[ ]or the date Agro Dutch credited that customer’s accounts receivable balance” are rational
choices for determining the exchange rate and imputed credit expense, as opposed to the record
evidence of the actual date of payment, which is when Agro Dutch actually received the funds, nor
does Commerce otherwise explain what information contradicts the information of record. That is,
Commerce does not explain why the “new” disclosure of payments owed from other customers to
Agro Dutch and transferred to Customer A necessarily and materially altered the determination of
imputed credit in the context of funds that have been received in advance and that may subsequently
be deemed “payments” for merchandise transacted. Insofar as the court can discern, the agreed
settlements of those accounts would have had no apparent impact on Agro Dutch’s cash account, nor
can the court discern any impact on the relevant terms of sale, for purposes of antidumping analysis,
involving customers affected by a transfer of the payee from Agro Dutch to Customer A.
Further, it is erroneous to characterize this as “the first time” the matter was disclosed, since
Agro Dutch, in response to previous requests for information, had already provided information for
the record to show that Customer A was a “consignee” on certain sales and therefore, in the use of
such term, implicated the receipt of payment from other customers for such sales. The fact of the
matter is, for Agro Dutch internally it was merely a matter of bookkeeping to transfer an account
receivable to Customer A. Commerce does not explain why, but it appears to conclude that, the
mere act of collection agency on the part of Customer A (which had been previously disclosed, albeit
indirectly) is sufficient to transmogrify an apparent product development agreement between Agro
Dutch and Customer A into something other than as represented by Agro Dutch. Cf., e.g., 19 U.S.C.
§ 1677(33) (definition of “affiliated persons”). Substantial evidence therefore does not support the
Court No. 02-00499 Page 18
conclusion that Agro Dutch’s second supplemental questionnaire response was a “wholesale
revision” of what Agro Dutch had previously provided for the record.
Certainly an interested party has an obligation to create an accurate record and to provide
Commerce with requested information in order to ensure the determination of an accurate dumping
margin. See, e.g., Yamaha Motor Co., Ltd. v. United States, 19 CIT 1349, 1359, 910 F. Supp. 679,
687 (1995) (referencing Chinsung Indus. Co., Ltd. v. United States, 13 CIT 103, 106, 705 F. Supp.
598, 601 (1989)). But, Commerce also has the duty of administering the proceeding properly and
fairly, and agency action can only be upheld on the basis articulated by the agency. SEC v. Chenery
Corp., 318 U.S. 80, 95 (1943). Again, to the extent practicable, Agro Dutch was to be allowed the
opportunity to remedy or explain any deficient response pursuant to section 1677m(d). If Commerce
was unclear as to the invoices or information Agro Dutch submitted or needed further information
concerning consignment and commission relationships, then it was incumbent upon Commerce to
ask relevant questions upon receipt of such information. If, following the second supplemental
questionnaire response, information was still missing and necessary to the proceeding, then
Commerce must resort to facts otherwise available. It could also seek to fill the gap by sending Agro
Dutch an additional supplemental questionnaire with precise questions to address such missing and
necessary information. Regardless, if there remained, following the second supplemental
questionnaire, a misunderstanding as to the information conveyed by the time of the final
determination, the responsibility therefor can hardly be said to have been solely that of Agro Dutch.
Cf. China Kingdom Import & Export Co., Ltd. v. United States, 31 CIT ___, ___, 507 F.Supp.2d
Court No. 02-00499 Page 19
1337, 1363 (2007) (Commerce bearing responsibility for the “unsatisfactory state of the record”due
to failure to comply with § 1677m(d)).
B
As mentioned, Commerce did ask for clarification of Agro Dutch’s commission
arrangements in the first supplemental questionnaire. If Commerce implicitly determined that the
first supplemental questionnaire response had been “not satisfactory” in response to questions
concerning the letter of credit and commission arrangements, that did not end Commerce’s analytical
obligation. Commerce either should have asked for clarification in its second supplemental
questionnaire, or else it should have conducted an analysis of the first supplemental questionnaire
response pursuant to 19 U.S.C. § 1677m(e). It does not appear that Commerce did either. The
second supplemental questionnaire asked for a detailed explanation of the sales and payment terms
for transactions involving payment advances, whether any written contract or agreement exists
regarding Customer A, and an explanation of the “apparent contradiction” between the payment
terms described for Customer A in the February 11th submission and the earlier statement that all
of Agro Dutch’s U.S. sales are made with payment terms of 90 days. It did not ask for further
information regarding the letter of credit or consignments or commissions. From the fact that
Commerce sent out a second supplemental questionnaire at all, the court concludes that it is
indication that the information sought amounted to the sum and substance of what Commerce
regarded as the deficiency of Agro Dutch’s response(s) at that point in time, i.e., that Commerce did
not regard the first supplemental questionnaire response as deficient as to the information provided
therein via Agro Dutch’s explanation of its commission arrangements.
Court No. 02-00499 Page 20
Agro Dutch’s second supplemental questionnaire response appears to have complied with
the information requested insofar as the information requests were framed by Commerce.
“Deficiency” in 19 U.S.C. § 1677m(d) presumes clarity in the original question asked. The same
is true with respect to a proper determination of “not satisfactory” regarding a response to a
deficiency notice: the propriety of the determination depends upon the clarity of the question asked.
A complete answer that is responsive to the question asked but which does not answer the question
Commerce (erroneously) assumes it had asked cannot lawfully be considered the respondent’s
“deficiency” or a “not satisfactory” remedial response thereto. Cf. Olympic Adhesives v. United
States, 899 F.2d 1565 (Fed. Cir. 1990) (under predecessor statute to facts otherwise available, a
failure to comply with a request for information must be evaluated in the context of the request
before an adverse inference may arise). The record does not show, and Commerce does not
otherwise suggest, that Agro Dutch’s second supplemental questionnaire response was incomplete
or that Agro Dutch had been non-cooperative with respect to the questions asked. The record
therefore does not contain substantial evidence to support the conclusion that Agro Dutch’s second
supplemental questionnaire response was “not satisfactory” in accordance with 19 U.S.C. §
1677m(d), and the matter must be remanded so that Commerce may make an accurate determination
on the record with respect to it.
C
Nonetheless, Commerce maintains it did not have all the information it needed to properly
determine what the appropriate date of sale should be or what payment date should be used for
calculating imputed credit “unless it accepted Agro Dutch’s methodology.” See generally Remand
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Results (referencing inter alia Initial Questionnaire Response §§ A at 10-12, CD at C-11, C-12,
C-24). A finding that a respondent “withheld” information or “significantly impeded” the
proceeding necessarily presumes that Commerce was hindered from obtaining necessary information
for the record and that the information is missing from the record. Quite simply, there must be a gap
in the record that requires filling in order to justify resort to facts otherwise available. Information
must therefore be “necessary” to and “missing” from the proceeding in order for there to be a failure
on the part of a respondent to comply with a request therefor. See 19 U.S.C. § 1677e(a). The
Statement of Administrative Action accompanying Pub.L. 103-465 states that “[w]here a party has
not cooperated, Commerce . . . may employ adverse inferences about the missing information to
ensure that the party does not obtain a more favorable result by failing to cooperate than if it had
cooperated fully.” H.R. Doc. No. 103-316 (1994) at 870, as reprinted in 1994 U.S.C.C.A.N. 4040,
4199 (and as italicized in Gerber Food (Yunnan) Co., Ltd. v. United States, 29 CIT ___, ___, 387
F. Supp. 2d 1270, 1287-88 (2005)). In any event, a finding that a respondent “withheld” information
or “significantly impeded” the proceeding is subject to subsection m(d).
During the proceeding, Commerce asked certain questions and received certain answers to
those questions. In particular, as discussed, Commerce received apparently complete answers to its
final supplemental questionnaire. Once again, if Commerce needed further information, it could
simply have asked for it, or substituted facts available, but on this record, it cannot justifiably punt
and then claim that Agro Dutch was responsible for the record’s state. Cf. China Kingdom, supra.
In the end, Commerce merely implies that information is missing from the record without stating
specifically what information was necessary to and missing from the record. The Remand Results
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merely state that complete information concerning Agro Dutch’s arrangement with Customer A,
including an accurate description of the crediting of sales to other customers against Customer A’s
advances, was necessary for a proper determination of the dates of sale and the dates of payment;
however, they then state that Ago Dutch’s disclosure of such information (that other customers pay
Customer A for the purchases rather than Agro Dutch) caused Commerce to wonder whether Agro
Dutch’s relationship with Customer A was “equivalent to affiliation”and to further speculate about
the extent of Customer A’s involvement in the sales negotiation process with other customers in the
United States – all of which “required further examination” in order to determine whether those sales
constituted EP or CEP sales because of Customer A’s role as collection agent, commissionaire, and
consignee for some of Agro Dutch’s sales to other customers. See Remand Results at 8-9.
As previously noted, Commerce never determined whether Agro Dutch’s arrangement with
Customer A amounted to a “long term or multi-purchase agreement,” but the determination would
not have affected Agro Dutch’s claim that all of its sales were export price sales in any event.
Further, Agro Dutch stated that it was not affiliated with Customer A, and it provided apparently
complete responses to the questions asked in the second supplemental questionnaire, including the
explanation that some other customers paid Customer A for their purchases rather than Agro Dutch.
Commerce characterizes this arrangement as involving collection agency, but Agro Dutch was
already in possession of the funds to which such agency purportedly pertained. Whatever collection
“agency” transpired between Customer A and Agro Dutch’s other customers would seem, insofar
as this court can discern, irrelevant to that circumstance. More importantly, when all was said and
done, Commerce itself recognized that “the record information does not support th[e] conclusion”
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that the sales should be treated as constructed export price sales rather than export price sales. 67
Fed. Reg. 46172 (Issues and Decision Memorandum at cmt 2). Commerce cannot disown that
recognition and ground a final determination on the basis of mere speculation – that the sales might
really be CEP sales – ostensibly substituting for facts otherwise available. Cf. Nippon Steel Corp.
v. United States, 458 F.3d 1345, 1351-52 (Fed. Cir. 2006).5 Furthermore, not only do the Remand
Results not state what is incomplete about Agro Dutch’s responses to the questions asked, they
essentially concede that necessary information was not missing from the record when the final results
were issued. See, e.g., Remand Results at 13 (“with respect to the Set Z sales, Agro Dutch withheld
information[, . . . and a]s with the Set X and [Set] Y sales, it was not until the [second supplemental
questionnaire response] that Agro Dutch provided the information”) (italics added).
III
Similarly, the record is devoid of substantial evidence to support an adverse inference in the
selection of facts otherwise available pursuant to 19 U.S.C. § 1677e(b). The ability to draw an
adverse inference depends upon (1) the necessity of using facts otherwise available and (2) a
5
As a matter of language, substantial evidence would seem to be an
adequate expression of law. The difficulty comes about in the practice
of agencies to rely upon (and of courts to tacitly approve) something
less–to rely upon suspicion, surmise, implications, or plainly
incredible evidence. It will be the duty of the courts to determine in
the final analysis and in the exercise of their independent judgment,
whether on the whole record the evidence in a given instance is
sufficiently substantial to support a finding, conclusion, or other
agency action as a matter of law.
Nippon Steel, 458 F.3d at 1351-52 (quoting S. Rep. No. 752, 79th Cong., 1st Sess. 28, 30-31, as
quoted in Universal Camera Corp. v. NLRB, 340 U.S. 474, 484 n.17 (1951)).
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respondent’s behavior during the proceeding that led to such necessity. Cf. Nippon Steel Corp. v.
United States, 337 F.3d 1373, 1382-83 (Fed. Cir. 2003) (failure to fully respond must be due to
failure either to keep and maintain all required records or to put forth maximum efforts to investigate
and obtain the requested information from records); NSK Ltd. v. United States, 28 CIT 1535, 1569-
70, 346 F. Supp. 2d 1312, 1342-43 (2004) (upholding use of adverse inference after two specific
requests for information in response to which respondent NTN did not provide useable data), aff’d,
481 F.3d 1355, 1361 (Fed. Cir. 2007); Mannesmannrohren-Werke AG v. United States, 23 CIT 826,
839, 77 F. Supp. 2d 1302, 1313-14 (1999) (Commerce must “articulate why it concluded that a party
failed to act to the best of its ability, and explain why the absence of this information is of
significance to the progress of its investigation”) (citation omitted). Here, Commerce has not
justified resort to facts otherwise available as a result of Agro Dutch’s responses, let alone an adverse
inference in the selection thereof. Mere insufficiency in a response or the mere absence of necessary
information on the record is not sufficient to show that a party has not cooperated to the best of its
ability, Commerce must point to evidence of record demonstrating “circumstances in which it is
reasonable for Commerce to expect that more forthcoming responses should have been made, i.e.,
. . . circumstances in which it is reasonable to conclude that less than full cooperation has been
shown.” Nippon Steel, 337 F.3d at 1382. Cf. Olympic Adhesives, supra.6 Further, the adverse
6
Commerce may not penalize a respondent for a failure to respond in any event. See, e.g.,
Fratelli De Cecco di Filippo Fara San Martino S.p.A. v. United States, 216 F.3d 1027, 1033 (Fed.
Cir. 2000) (Commerce cannot impose an “unjustifiably high, punitive rate” pursuant to 19 U.S.C.
§ 1677e(b) that ignores facts discovered in the course of its own investigation). Commerce may only
use an adverse inference when resort to facts otherwise available is required. See, e.g., Ta Chen
Stainless Steel Pipe, Inc., 298 F.3d at 1340 (“[i]t is clear . . . that [Congress] intended for an adverse
(continued...)
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inference provision, subsection 1677e(b), is subject to the applicability of the facts-available
provision, subsection 1677e(a), which in turn is subject to subsection 1677m(d). Hence, it is only
after application of subsection 1677m(d) and, if applicable, subsection 1677m(e), that a
determination of non-cooperation could be made, but the record here does not support the
determination that Agro Dutch was non-cooperative when that determination was made. The only
“withholding” of record was obviated by the apparent completeness of Agro Dutch’s response to the
second supplemental questionnaire.
Conclusion
This matter must again be remanded for redetermination of Agro Dutch’s antidumping duty
margin in accordance with this opinion and based on the facts of record with respect to the affected
sales involving Customer A. If Commerce determines that the record evidence is not sufficient to
answer whether Customer A is affiliated with Agro Dutch or to answer the extent of Customer A’s
supposed “involvement in the sales process” of Agro Dutch’s sales to other customers for which
Customer A received payment, then Commerce shall either reopen the proceeding for the limited
purpose of obtaining satisfactory answers to those questions, or it shall make its determination on
the basis of facts available without imputing an adverse inference on the record evidence obtained
thus far. Commerce shall file the results of this remand within forty days of the date of this opinion;
6
(...continued)
facts available rate to be a reasonably accurate estimate of the respondent’s actual rate, albeit with
some built-in increase intended as a deterrent to non-compliance”).
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all parties may submit comments to the remand results within 15 days of filing; and all parties may
file responses to any such comments within 10 days after the submission thereof.
SO ORDERED.
/s/ R. Kenton Musgrave
R. KENTON MUSGRAVE, SENIOR JUDGE
Dated: December 26, 2007
New York, New York