Foshan Shunde Yongjian Housewares & Hardware Co., Ltd. v. United States , 2011 CIT 123 ( 2011 )

Court No. 10-00059 Page 2
International, Inc.
Eaton, Judge: Before the court is plaintiffs’ motion for
judgment on the agency record, challenging the Department of
Commerce’s (“Commerce” or the “Department”) final results of the
Fourth Administrative Review of the antidumping duty order on
Floor Standing Metal-Top Ironing Tables and Certain Parts Thereof
from the People’s Republic of China, 75 Fed. Reg. 3, 201 (Dep’t
of Commerce Jan. 20, 2010) (final results of administrative
review) and the accompanying Issues and Decision Memorandum
(“Issues & Dec. Mem.”) (collectively, the “Final Results”) for
the period of review (“POR”) August 1, 2007 through July 31,
2008. See Plaintiff’s Mem. of Pts. & Auths. in Supp. of Pls.’
Mot. J. on the Agency R. (“Pls.’ Mem.) 2.
The court has jurisdiction pursuant to 28 U.S.C. § 1581(c)
(2006). For the reasons set forth herein, the Final Results are
sustained, in part, and this matter is remanded to the Department
for further proceedings.
BACKGROUND
Plaintiff Foshan Shunde Yongjian Housewares & Hardware Co.,
Ltd. (“Foshan Shunde”) is a producer and exporter of ironing
boards from the People’s Republic of China (“PRC”). Plaintiff
Polder, Inc. (“Polder”) is a domestic importer of ironing boards
from the PRC. Ironing boards exported by Foshan Shunde to the
Court No. 10-00059 Page 3
United States, and imported by Polder, are covered by the
antidumping order on ironing boards from the PRC. See Notice of
Floor-Standing, Metal-Top Ironing Tables and Certain Parts
Thereof from the PRC, 69 Fed. Reg. 47,868 (Dep’t of Commerce Aug.
6, 2004) (amended final determination of sales at less than fair
value and antidumping duty order) (the “Order”).
On August 1, 2008, Commerce published a notice of
opportunity for interested parties to request a fourth
administrative review of the Order. On August 29, 2008, pursuant
to 19 C.F.R. § 351.213(b)(2) (2011), defendant-intervenor Home
Products International, Inc. (“HPI” or “defendant-intervenor”)
asked for a review of ironing board sales made by Foshan Shunde.
On that same date, Foshun Shunde requested a review of its own
sales.
The Department issued the preliminary results of its
administrative review on September 8, 2009. See Floor-Standing,
Metal-Top Ironing Tables and Certan Parts Thereof from the PRC,
74 Fed. Reg. 46,083 (Dep’t of Commerce Sept. 8, 2009)
(preliminary results of antidumping duty administrative review)
(the “Preliminary Results”). In the Preliminary Results, the
Department found that Foshun Shunde’s “unreliable and
inconsistent” responses to questionnaires concerning the
company’s factors of production and sales data warranted the
application of adverse facts available (“AFA”) to all of the
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company’s questionnaire responses when determining its dumping
margin.1 Id. at 46,085; 19 U.S.C. § 1677e(b) (2006).
Commerce further found that Foshan Shunde was not entitled
to separate-rate status,2 concluding that “because the Department
determine[d] that Foshan Shunde’s responses [were] unreliable and
inconsistent, . . . Foshan Shunde has not demonstrated that it
operates free from government control.” Preliminary Results, 74
1
The dumping duty margin is “the amount by which the
normal price exceeds the export price or constructed export price
of the subject merchandise.” 19 U.S.C. § 1677(35)(A). If the
price of an item in the home market (normal value) is higher than
the price for the same item in the United States (export price),
then the dumping margin comparison produces a positive number
that indicates dumping has occurred.
2
Whether Foshan Shunde is entitled to separate-rate
status is an issue because the company operates in the PRC, which
is a non-market economy country. A non-market economy country
includes “any foreign country that the administering authority
[Commerce] determines does not operate on market principles of
cost or pricing structures, so that sales of merchandise in such
country do not reflect the fair value of the merchandise.” 19
U.S.C. § 1677(18)(A); Shandong Huarong Gen. Group Corp. v. United
States, 28 CIT 1624, 1625 n.1 (2004) (not reported in the Federal
Supplement). “Any determination that a foreign country is a
nonmarket economy country shall remain in effect until revoked by
the administering authority.” 19 U.S.C. § 1677(18)(C)(i). The
PRC has been determined to be a non-market economy country and
has been treated as such in all past antidumping investigations.
Zhejiang Native Produce & Animal By-Products Imp. & Exp. Corp. v.
United States, 27 CIT 1827, 1834 n.14 (2003) (not reported in the
Federal Supplement) (citations omitted).
When an exporter operates in a non-market economy country
Commerce presumes it to be part of a country-wide entity
controlled by that country’s government. If that exporter can
establish that it operates free from government control, however,
it is entitled to have its own “separate-rate” based on its own
factors of production and sales data, or if AFA is applicable, by
an acceptable method.
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Fed. Reg. at 46,085. As it has done here, Commerce commonly
refers to its determination to apply AFA to the totality of a
respondent’s submissions as “total AFA.”3
After receiving comments from plaintiffs and defendant-
intervenor, the Department issued the Final Results on January
20, 2010. In the Final Results, Commerce made no changes to its
Preliminary Results and, thus, applied “total AFA” to Foshan
Shunde’s questionnaire responses, retained its determination that
the company was not entitled to a separate rate, and assigned the
PRC-wide antidumping duty margin of 157.68%. See Final Order, 75
Fed. Reg. at 3,202; Issues & Dec. Mem. at 23-24.
Plaintiffs, by their motion, challenge two aspects of the
Final Results. First, they make a pair of related claims: (1)
that the Department’s determination to apply AFA to Foshan
Shunde’s factors of production and sales data was in error; and
(2) that, should they fail in their effort to have the AFA
determination found unlawful, the Department should be directed
to apply only partial AFA. Second, plaintiffs challenge
Commerce’s denial of separate-rate status to Foshan Shunde, and
3
While the phrase “total AFA” is not referenced in either
the statute or the agency's regulations, it can be understood,
within the context of this case, as referring to Commerce’s
application of the “facts otherwise available” and “adverse
inferences” provisions of 19 U.S.C. § 1677e after rejecting as
untrustworthy all information submitted by respondents in this
review.
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the resulting assessment of the PRC-wide antidumping rate of
157.68%.
STANDARD OF REVIEW
The standard of review is set forth in 19 U.S.C.
§ 1516a(b)(1)(B)(i), which provides, in relevant part, that the
court “shall hold unlawful any determination, finding, or
conclusion found . . . to be unsupported by substantial evidence
on the record or otherwise not in accordance with law.”
Accordingly, “Commerce’s determinations of fact must be sustained
unless unsupported by substantial evidence in the record and its
legal conclusions must be sustained unless not in accordance with
law.” Norsk Hydro Canada, Inc. v. United States, 472 F.3d 1347,
1357 (Fed. Cir. 2006).
DISCUSSION
I. Commerce’s AFA Determination on Factors of Production and
Sales Data
A. Legal Framework for Applying AFA
Commerce is charged with administering the antidumping laws,
which includes carrying out the “overriding purpose of . . .
calculat[ing] dumping margins as accurately as possible.”
Parkdale Int'l v. United States, 475 F.3d 1375, 1380 (Fed. Cir.
2007). The Department generally makes its antidumping
determinations based on the information it solicits and receives
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from interested parties concerning the normal value and export
price of the subject merchandise.
The Department may, however, rest its determinations on
“facts otherwise available . . . ‘to fill in the gaps’ when
‘Commerce has received less than the full and complete facts
needed to make a determination’” from the respondents. Gerber
Food (Yunnan) Co., Ltd. V. United States, 29 CIT 753, 767, 387 F.
Supp. 2d 1270, 1283 (2005) (“Gerber I”) (quoting Nippon Steel
Corp. v. United States, 337 F.3d 1373, 1381 (Fed. Cir. 2003)).
Pursuant to 19 U.S.C. § 1677e(a):
If--
(1) Necessary information is not available on the
record, or
(2) an interested party or any other person–
(A) withholds information that has been
requested by the [Department] under this subtitle,
(B) fails to provide such information by the
deadlines for submission of the information or in the
form and manner requested, subject to subsections
(c)(1) and (e) of [19 U.S.C. § 1677m(c)(1) and (e)],
(C) significantly impedes a proceeding under
this subtitle, or
(D) provides such information but the
information cannot be verified as provided in section
1677m(i) of this title,
the [Department] shall, subject to [19 U.S.C. §
1677m(d)], use the facts otherwise available in
reaching the applicable determination . . . .
Pursuant to the language of the statute, Commerce’s authority to
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apply facts otherwise available is circumscribed by § 1677m(d).
Under § 1677m(d), when Commerce “determines that a response
to a request for information under this subtitle does not comply
with the request,” it must “promptly inform the person submitting
the response of the nature of the deficiency and shall, to the
extent practicable, provide that person with an opportunity to
remedy or explain the deficiency.” If further information is
submitted and “(1) [Commerce] finds that such response is not
satisfactory, or (2) such response is not submitted within the
applicable time limits, then [Commerce] may, subject to [section
1677m(e)], disregard all or part of the original and subsequent
responses.” 19 U.S.C. § 1677m(d).
The Department’s use of facts otherwise available,
therefore, generally requires that Commerce (1) find that the
response to a request for information is deficient; (2) provide,
when practicable, an opportunity to the party submitting the
information to explain or correct the deficiency; and (3)
determine whether such explanation or correction is either
unsatisfactory or untimely. Each of these determinations must be
supported by substantial evidence on the record. See Gerber Food
(Yunnan) Co. v. United States, 31 CIT 921, 931, 491 F. Supp. 2d
1326, 1337 (2007) (“Gerber II”).
Once Commerce determines that the use of facts otherwise
available is warranted, pursuant to § 1677e(b), if the Department
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further “finds that an interested party has failed to cooperate
by not acting to the best of its ability to comply with a request
for information,” it “may use an inference that is adverse to the
interests of that party in selecting from among the facts
otherwise available.” 19 U.S.C. § 1677e(b). As the Court of
Appeals for the Federal Circuit has explained:
subsection (b) [of § 1677e] permits Commerce to “use an
inference that is adverse to the interest of [a
respondent] in selecting from among the facts otherwise
available,” only if Commerce makes the separate
determination that the respondent “has failed to
cooperate by not acting to the best of its ability to
comply.” The focus of subsection (b) is respondent’s
failure to cooperate to the best of its ability, not
its failure to provide requested information.
Nippon Steel, 337 F.3d at 1381. Accordingly, Commerce may only
apply AFA if it determines that (1) the use of facts otherwise
available is warranted under §§ 1677e(a) and 1677m, and (2) a
respondent has failed to cooperate to the best of its ability
under § 1677e(b). A respondent fails to act to “the best of its
ability” if it fails to “do the maximum it is able to do.”
Nippon Steel, 337 F.3d at 1382. In selecting an AFA rate, the
Department may rely on secondary information, including “(1) the
petition, (2) a final determination in the investigation under
this subtitle, (3) any previous review under [19 USCS § 1675] or
determination under [19 USCS § 1675b], or (4) any other
information placed on the record.” 19 U.S.C. § 1677e(b).
Court No. 10-00059 Page 10
B. Commerce’s Determination to Apply AFA to Foshan Shunde’s
Factors of Production and Sales Data in the Final Results
According to Commerce, “[t]hroughout this proceeding, the
Department has been concerned that Foshen Shunde has failed to
provide the most specific calculation of its factors of
production permitted by its accounting and production records.”
Memorandum re Use of Adverse Facts Available, A-570-888 (Dep’t of
Commerce August 31, 2009) (C.R. Doc. 19) (“AFA Memo”) at 2. The
Department was particularly concerned that Foshan Shunde was not
providing complete answers to the questions relating to the
amount of each input used in producing its various models of
ironing boards, and that it did not provide specific information
regarding its use of hot-rolled and cold-rolled steel inputs.
Issues & Dec. Mem. at 19-20.
In response to Commerce’s initial questionnaire, Foshan
Shunde, as it had done in the First Administrative Review,
reported its factors of production inputs using a “weight-based”
methodology. The purpose of the “weight-based” allocation
methodology was to assign manufacturing costs incurred by Foshan
Shunde on a range of subject and non-subject products, including
merchandise such as “ashtrays, ladders, trolleys, racks, trash
cans, sleeve racks and other ironing board accessories.” Issues
& Dec. Mem. at 12. Employing this methodology, Foshan Shunde
simply divided all of its inputs, including rolled steel, by
weight among all of the products it produced, and then multiplied
Court No. 10-00059 Page 11
these weights by the cost per kilogram of each input. Thus, this
method provided an estimate of its production costs by product
line, but provided no specific information for each model of
ironing board. Although the Department had accepted this method
of calculating input quantity and cost in the First
Administrative Review, here, it chose to ask more specific
questions. See Issues & Dec. Mem. at 12.
To gather this information, the Department issued multiple
supplemental questionnaires by which it sought to elicit from
Foshan Shunde “information with as much specificity as possible.”
AFA Memo at 2-3; see, e.g., First Supplemental Questionnaire, A-
570-888 (Dep’t of Commerce Feb. 10, 2009) (C.R. Doc. 5) (“First
Supplemental Questionnaire”) 2; Second Supplemental
Questionnaire, A-570-888 (Dep’t of Commerce Apr. 16, 2009)
(“Second Supplemental Questionnaire”) (C.R. Doc. 8) 1-2. When
the answers to the first three supplemental questionnaires did
not produce the sought after information, Commerce issued the
Fourth Supplemental Questionnaire. Finally, in response to
Commerce’s Fourth Supplemental Questionnaire, Foshan Shunde
produced a sample of its production notes. Response of Foshan
Shunde to the Department’s Fourth Supplemental Questionnaire, A-
570-888 (Dep’t of Commerce August 10, 2009) (C.R. Doc. 16)
(“Fourth Supplemental Questionnaire Response”). Commerce
determined that these production notes, at least with respect to
Court No. 10-00059 Page 12
the ironing board models for which they were actually supplied,
provided a better indication of the quantity of each input
actually used in manufacturing Foshan Shunde’s merchandise than
the weight-based method had. This is because the production
notes broke the inputs down by part (e.g., wire mesh, left/right
rail) and by material (e.g., plate, tube, wire).
Ultimately, the Department found that full disclosure of the
production notes would have cleared up the uncertainty created by
the weight-based calculation. Issues & Dec. Mem. at 13 (quoting
AFA Memo at 6) (“Foshan Shunde’s ‘production notes’ . . . ‘set
forth model-specific usage rates for each of Foshan Shunde’s
material inputs, including the critical inputs of flat-rolled
steel. With these production notes, Foshan Shunde could have
furnished the Department with more specific costs and factors of
production than that which it provided.’”). Because, in its
view, Foshan Shunde had not produced the notes in a timely
fashion, and had provided only a small sample of its notes in
response to the Fourth Supplemental Questionnaire, the Department
determined that the company had not acted to the best of its
ability in providing this necessary information. AFA Memo at 5-
6; Issues & Dec. Mem. at 20. In reaching this conclusion,
Commerce stated:
The most significant obstacle to accepting Foshan
Shunde’s non model specific costs are the ‘production
notes’ which Foshan Shunde provided at exhibit 3 of its
August 10, 2009 submission [in response to the Fourth
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Supplemental Questionnaire]. . . . [T]hose production
notes set forth model-specific usage rates for each of
Foshan Shunde’s material inputs, including the critical
inputs of flat-rolled steel. With these production
notes, it is apparent that Foshan Shunde could have
furnished the Department with more specific costs and
factors of production than what it provided.
AFA Memo at 6. Commerce, thus, concluded that the “existence of
such ‘production notes’ undercut the accuracy and reliability of
previous Foshan Shunde submissions,” and “Foshan Shunde’s partial
disclosure of its ‘production notes’ at a late point in this
proceeding constitutes a failure on Foshan Shunde’s part to
cooperate to the best of its ability and as significantly
impeding this proceeding within the meaning of [§ 1677e].”
Issues & Dec. Mem. at 13-14. In other words, according to
Commerce, the production notes show that Foshan Shunde could have
been more specific in its answers to the Department’s
questionnaire at a much earlier stage in the proceedings, but did
not “do the maximum it [was] able to do” to produce them. Nippon
Steel, 337 F.3d at 1382.
Next, while the failure to provide the production notes is
the primary reason for the Department’s determination to apply
AFA to the factors of production information provided by Foshan
Shunde, Commerce had others. In the Final Results, the
Department also found that “Foshan Shunde provided incomplete and
unreliable information concerning . . . its inputs of hot and
cold rolled steel.” Issues & Dec. Mem. at 19. In response to
Court No. 10-00059 Page 14
Commerce’s initial questionnaire, Foshan Shunde claimed to use
hot-rolled steel for the legs of the ironing boards and cold-
rolled steel for the tops. Because the surrogate value of hot-
rolled steel is less than that for cold-rolled steel, according
to Commerce, Foshan Shunde had an incentive to report inputs of
the former, which would result in a lower normal value
calculation. See AFA Memo at 2; see also 19 U.S.C. § 1677b(c).
Petitioner HPI, however, provided evidence, in the form of a 1990
report on carbon and alloy steels in the PRC (the “Steel
Report”), that suggested that hot-rolled steel was not available
in the PRC in the size and form required to manufacture ironing
boards. In addition, HPI provided a metallurgical analysis of an
ironing board from the PRC, purchased in the United States (the
“Metallurgical Analysis”), which showed that hot-rolled steel was
not used in their manufacture. Because the Department found that
the Steel Report and the Metallurgical Analysis called the
accuracy of Foshan Shunde’s original questionnaire responses into
question, it requested additional information from the company
concerning the types and quantities of steel purchased for its
specific ironing board models.
When asked for more detail about the steel it used, however,
Foshan Shunde claimed that it could not specify the type and
quantity of steel purchased for different models of ironing
boards because its “customers decide the thickness and type of
Court No. 10-00059 Page 15
steel used.” AFA Memo at 6 (quoting Response of Foshan Shunde to
the Department’s Second Supplemental Questionnaire, A-570-888
(Dep’t of Commerce May 1, 2009) (“Second Supplemental
Questionnaire Response”) 2). While not entirely clear, it
appears that the company was claiming that there were no standard
ironing board models, and that the quantity and type of materials
used for each model of ironing board it produced varied with the
specifications of its individual customers. Seemingly, this
response was Foshan Shunde’s effort to convince Commerce that it
was somehow unable to report its own manufacturing inputs because
they were dictated by the ironing board purchasers.
In response to Commerce’s request for samples of the
company’s correspondence with these customers, however, “Foshan
Shunde provided a single photograph which it represented to be
indicative of the correspondence it received from its customers
concerning the steel inputs used in the manufacture of subject
merchandise.” Issues & Dec. Mem. at 13. Upon further inquiry by
the Department, Foshan Shunde “provided portions of customer e-
mails without explaining why it kept those portions and not those
the Department explicitly requested.” Issues & Dec. Mem. at 13.
Moreover, Foshan Shunde produced some product diagrams, but these
omitted information concerning the type of steel used. Nor were
these diagrams translated in their entirety, as required by
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regulation. See AFA Memo at 3.4
Ultimately, Commerce did not draw any conclusion as to what
type of steel Foshan Shunde used. Rather, it determined that,
because the company’s responses lacked specificity and
credibility, they provided additional evidence that Foshan
Shunde’s factors of production responses should be disregarded
and AFA should be employed.
Plaintiffs contend that Commerce based its determination
that Foshan Shunde failed to cooperate to the best of its ability
by failing to fully report the type of steel it used on the Steel
Report and the Metallurgical Analysis provided by HPI. Pls.’
Mem. 16. For plaintiffs, these documents fail to demonstrate
what type of steel Foshan Shunde used to manufacture ironing
boards because the Steel Report did not take into account that
the Chinese manufacturing sector “has grown and evolved
exponentially since 1990,” and the Metallurgical Analysis was
“conducted on an ironing table which did not identify the ironing
table as manufactured by Foshan Shunde and [was] purchased by
4
Pursuant to 19 C.F.R. § 351.303(e):
A document submitted in a foreign language must be
accompanied by an English translation of the entire
document or of only pertinent portions, where
appropriate, unless the Secretary waives this
requirement for an individual document. A party must
obtain the Department’s approval for submission of an
English translation of only portions of a document
prior to submission to the Department.
Court No. 10-00059 Page 17
[HPI] seven months after the end of the review period.” Pls.’
Mem. 16-17.
Plaintiffs’ claim that the Department based its
determination on the Steel Report and Metallurgical Analysis,
however, is not supported by the record. With regard to Foshan
Shunde’s questionnaire responses concerning steel inputs, the
Department found:
In analyzing Foshan Shunde’s steel inputs, we have
focused primarily upon the reliability of the
information submitted by Foshan Shunde rather than upon
the [Metallurgical Analysis] submitted by Petitioner or
other information concerning the overall state of the
steel industry in China. Review of record evidence
indicates that there are both (1) significant cost
differences between the surrogate values of hot and
cold rolled steel and (2) that Foshan Shunde has
provided conflicting information concerning the type of
steel that it utilizes in production of the subject
merchandise.
Issues & Dec. Mem. at 20 (emphasis added). Thus, while the
Metallurgical Analysis and the Steel Report no doubt heightened
the Department’s awareness of possible problems with Foshan
Shunde’s questionnaire responses, it is apparent that the
responses themselves (i.e., incomplete emails, omitted
information concerning steel type, inadequate translation) led to
Commerce’s determination to disregard the factors of production
questionnaire responses. That is, the determination that Foshan
Shunde failed to cooperate to the best of its ability was based
on the company’s failure to provide complete and credible
responses to Commerce’s questionnaires, and took into
Court No. 10-00059 Page 18
consideration the significant cost differences between hot- and
cold-rolled steel.
Commerce found further evidence to justify its application
of AFA in Foshan Shunde’s answers to questions relating to the
source of steel wire. In its questionnaire responses, Foshan
Shunde represented that the company made steel rod into the wire
it used in making its ironing boards, rather than purchasing
finished steel wire from outside sources. In the Final Results,
Commerce found that there was conflicting evidence as to the
source of the steel wire and, thus, “Foshan Shunde also withheld
information regarding its source of steel wire, another key
input.” Issues & Dec. Mem. at 14. Plaintiffs contend that,
contrary to Commerce’s findings, “Foshan Shunde’s evidence about
its wire drawing operations is not contradictory.” Pls.’ Mem.
19.
Foshan Shunde initially reported that it internally drew
steel rod into the wire used in the production of subject
merchandise. But, according to Commerce, in the investigation of
Kitchen Appliance Shelves and Racks from the PRC (the “KASR
Investigation”), in which Foshan Shunde’s affiliate Guangdong
Wireking was a respondent, Foshan Shunde’s personnel reported
that it “performed no wire drawing but rather purchased finished
wire from an outside supplier.” AFA Memo at 4; Wireking
Verification Report at Attachment 2 (C.R. Doc. 13).
Court No. 10-00059 Page 19
When this apparent contradiction was brought to the
company’s attention by the Department, Foshan Shunde claimed, for
the first time, that it had sold its wire drawing equipment
during the POR. For plaintiffs, the evidence it placed on the
record demonstrates that Foshan Shunde must have had its own wire
drawing equipment because it purchased wire rod that was larger
than the wire used in the manufacture of the subject merchandise.
In addition, plaintiffs insist that two Foshan Shunde employees
operated the wire drawing machinery, and the company provided tax
documents purporting to show that the wire drawing equipment had
been sold. Pls.’ Mem. 19-22.
Despite plaintiffs’ disclosure, the Department asserts that
it did not err in using Foshan Shunde’s responses as evidence
supporting the application of AFA. Issues & Dec. Mem. at 14
(“Foshan Shunde did not report the sale of production equipment
relating to its wire drawing operation until August 13, 2009 and
only then did so after repeated requests from the Department.
Further, on August 27, 2009, at a point still later in the
proceeding, Foshan Shunde provided other supporting documentation
concerning the production and source of its long-wire products. .
. . Foshan Shunde’s failure to disclose this information earlier
in the proceeding has significantly impeded the Department’s
analysis of Foshan Shunde’s long-wire inputs . . . .”); AFA Memo
at 7 (“[I]n its August 10, 2009 submission, Foshan Shunde offered
Court No. 10-00059 Page 20
no documentation of the sale or to whom the equipment was sold.
Moreover, there is no mention of the sale of Foshan Shunde’s wire
drawing operation in the KASR verification report. Based on the
foregoing, we preliminarily find Foshan Shunde’s narrative
concerning its [wire drawing] operation to lack credibility.”).
In addition to asserting that the inadequacy of Foshan
Shunde’s factors of production responses supported the use of
AFA, Commerce determined that the sales data provided by Foshan
Shunde was also unreliable. On November 18, 2008, in response to
Commerce’s initial questionnaire, Foshan Shunde indicated that it
“was not affiliated with any producers or exporters of the
subject merchandise during the POR.” See AFA Memo at 7
(citations omitted). The Department required the disclosure of
information relating to the other companies in order to identify
all relevant sales by Foshan Shunde, and to allow the agency to
accurately calculate the U.S. export price of the ironing boards.
Issues & Dec. Mem. 14; see also 19 U.S.C. § 1677a(a) (defining
export price). In the Final Results, however, Commerce
determined that Foshan Shunde provided conflicting information
concerning its affiliation with another company, Shunde Junbang.
The Department found that “the statements made by Foshan
Shunde in this review are inconsistent with the statements made
by Foshan Shunde personnel in the [KASR Investigation]. During
the course of the KASR investigation, [which was virtually
Court No. 10-00059 Page 21
simultaneous with this investigation,] Shunde Junbang indicated
that it listed ironing boards on its website and forwarded
customer inquiries to Foshan Shunde.” Issues & Dec. Mem. at 21
(quoting AFA Memo at 7) (citations omitted). In addition,
Commerce found that the product codes for ironing boards listed
on Foshan Shunde’s and Shunde Junbang’s respective web sites were
similar. Accordingly, the Department determined that “the
commonality of product codes between the merchandise sold by
Foshan Shunde and the merchandise sold by Shunde Junbang
indicates the latter may have in fact sold Foshan Shunde
merchandise.” Issues & Dec. Mem. at 21.
Commerce found Foshan Shunde’s explanations of these
findings unconvincing. For example, the company attributed the
similarity in the product codes of its products and those listed
by Shunde Junbang to a uniform similarity in product codes across
the ironing board industry. See AFA Memo at 7 (citing Letter
from Foshan Shunde, dated August 10, 2009 at 3). The Department,
however, found that, based on evidence submitted by defendant-
intervenor, only Foshan Shunde’s and Shunde Junbang’s web sites
bore similar product codes. AFA Memo at 7. In other words,
Commerce determined that the similarity in the product codes for
ironing boards sold on Foshan Shunde’s and Shunde Junbang’s
respective web sites indicated that Shunde Junbang was, in fact,
selling subject merchandise on behalf of Foshan Shunde.
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Based on these findings, the Department concluded that
“[d]espite the opportunities afforded to the company to clarify
the conflicting accounts played by Shunde Junbang in the sale of
the subject merchandise, significant discrepancies remain between
the account that Foshan Shunde rendered of Shunde Junbang
activities in this proceeding and the account that Foshan Shunde
offered in the [KASR] investigation.” Issues & Dec. Mem. at 21.
Accordingly, Commerce found that Foshan Shunde’s questionnaire
responses concerning its affiliation with Shunde Junbang were
unreliable and, therefore, constituted substantial evidence
supporting the application of AFA to Foshan Shunde’s sales data.
Plaintiffs do not contest the Department’s determination to
apply AFA to its sales data. Rather, they object that, even if
Foshan Shunde’s failure to explain its relationship with Shunde
Junbang “rises to the level of misconduct, the Department is
still not empowered to use total adverse facts available for an
entire investigation on that basis alone.” Pls.’ Mem. 35. As
discussed infra, the Department’s determination to apply AFA to
all of Foshan Shunde’s factors of production and sales data was
reasonable on the record before it.
C. Commerce’s Determination to Apply AFA to Foshan Shunde’s
Factors of Production and Sales Data is Sustained
Commerce has some discretion to decide what information it
needs to accurately calculate a respondent’s dumping margin. See
Court No. 10-00059 Page 23
Guangdong Chems. Imp. & Exp. Corp. v. United States, 30 CIT 85,
96, 414 F. Supp. 2d 1300, 1310 (2006) (“Commerce is given wide
discretion in the selection of data sources for use in
administrative review.”). The Department makes its decision as
to the information it needs and implements it by requesting such
information through its questionnaires. Respondents have an
obligation to act to the best of their ability to provide the
requested information. See 19 U.S.C. 1677e(b).
In this case, Commerce reasonably determined that the record
was incomplete because Foshan Shunde did not provide adequate
information concerning the quantity of materials and the nature
of the steel actually used in producing the subject merchandise.
Additionally, the company did not timely produce information
relating to the source of its steel wire inputs. This
information was necessary to determine the surrogate values of
these materials in order to calculate the normal value of Foshan
Shunde’s merchandise. Accordingly, the absence of this
information created a gap in the record that warranted the use of
facts otherwise available under 19 U.S.C. § 1677e(a).
Moreover, Commerce’s determination that Foshan Shunde’s
failure to provide this information in a timely fashion supported
the application of AFA was reasonable. First, by withholding the
production notes, Foshan Shunde did not cooperate to the best of
its ability in responding to Commerce’s questionnaires seeking
Court No. 10-00059 Page 24
the specifics of its manufacturing inputs. That is, while it may
have been reasonable for Foshan Shunde to reply to the initial
questionnaire using the same methodology it used in the First
Review, it was not reasonable for the company to fail to produce
the production notes in response to the supplemental
questionnaires. See, e.g., First Supplemental Questionnaire,
Sec. D(1) (“For each model of the subject merchandise, separately
detail the grade of steel and dimensions (length, width and
thickness) of every hot-rolled or cold-rolled coil used in the
production process . . . .”); Second Supplemental Questionnaire,
Sec. D(7)(a) (“Provide the source documentation for models
1454TC2-25 and 1454TC1-28 which support the listed standard
weights.”); Third Supplemental Questionnaire, A-570-888 (Dep’t of
Commerce July 27, 2009) (C.R. Doc. 11) Sec. D(4) (“[P]rovide any
and all accounting and production records . . . that establish
the claimed amount of production material for each of the
following inputs for . . . [list of cold- and hot-rolled inputs
of various thicknesses].”). Accordingly, the Department did not
err in concluding that “Foshan Shunde’s partial disclosure of its
‘production notes’ at a late point in this proceeding constitutes
a failure on Foshan Shunde’s part to cooperate to the best of its
ability and as significantly impeding this proceeding.” See
Issues & Dec. Mem. at 14.
This conclusion is further supported by Foshan Shunde’s
Court No. 10-00059 Page 25
failure to provide adequate responses to Commerce’s questions
concerning the type of steel used in making the ironing boards.
As noted supra, Commerce consistently asked questions about the
use of hot-rolled and cold-rolled steel in its supplemental
questionnaires. Foshan Shunde insisted that this information was
unavailable because its customers directed the type of steel used
in a particular ironing board model. The company, however, did
not produce any credible evidence to support this claim. AFA
Memo at 6 (“Foshan Shunde failed to provide any correspondence
from its customers to demonstrate that the customer, in fact,
specifie[d] the type of thickness of steel materials used. Also,
in responding to the Department’s [] request for supplemental
information, Foshan Shunde provided no documentation to suggest
that customer correspondence governed its acquisition of steel
inputs.”); see Quingdao Taifa Group Co. v. United States, 33 CIT
__, __, 637 F. Supp. 2d 1231, 1239 (2009) (“A reasonable and
responsible foreign producer would have known that it must keep
and maintain documents such as factory-out slips, production
notices, and production subledgers, and [respondent’s] officials’
efforts to avoid producing the requested documents demonstrates
that Taifa failed to put forth maximum efforts to investigate and
obtain the documents.”). Based on the record, Commerce has
supported with substantial evidence its finding that Foshan
Shunde did not cooperate to the best of its ability to produce
Court No. 10-00059 Page 26
evidence demonstrating the type of steel used to make subject
merchandise.
Although not as substantial as the evidence relating to the
production notes and the type of steel used to make the ironing
boards, Foshan Shunde’s problematic questionnaire responses
concerning its source of steel wire also supports the application
of AFA. As an initial matter, Commerce found that purchased wire
was significantly more costly than drawn wire. Next, despite the
company’s representation that it made its own steel wire from
steel rod, evidence from the parallel KASR Investigation
indicated that the wire had been purchased. During verification
in the KASR Investigation, the Department confirmed that Foshan
Shunde had no wire drawing equipment.
The Department, was correct in finding that the company did
not provide a timely explanation for these apparent
inconsistencies. As defendant notes,
Foshan Shunde did not report the sale of production
equipment relating to its wire drawing operation until
August 13, 2009 [i.e., in response to the Fourth
Supplemental Questionnaire] and only then after
repeated requests from the Department. Further, on
August 27, 2009, at a point still later in the
proceeding, Foshan Shunde provided other supporting
documentation concerning the production and source of
its long-wire production.
Issues & Dec. Mem. at 14.
Thus, the evidence plaintiffs now point to was not supplied
until after the Department questioned the accuracy of Foshan
Court No. 10-00059 Page 27
Shunde’s questionnaire responses, following the contradictory
statements that its employees made during the KASR Investigation.
See Issues & Dec. Mem. at 21 (“Foshan Shunde’s tardiness in
providing documentation concerning the disposition of the wire
production equipment precluded any analysis that the Department
might have undertaken in the Preliminary Results”); AFA Memo at 7
(“As in past submissions, Foshan Shunde indicated in its August
10, 2009 letter that it drew wire during the POR. Yet, when the
Department questioned Foshan Shunde about the observations of the
[KASR Investigation] verification team, Foshan Shunde indicated
that it sold its wire drawing operation in February 2009.
Notwithstanding that it was given four previous opportunities to
describe its production process, Foshan Shunde’s August 10, 2009
submission was the first mention . . . of the sale of its wire
drawing operation.”).
As a result, the Department found that “Foshan Shunde’s
narrative concerning its wire drawing operation [lacked]
credibility.” AFA Memo at 7; Issues & Dec. Mem. at 20-21. When
confronted with this inconsistency, Foshan Shunde ultimately
claimed that it had sold its wire drawing equipment in February
2009. This claim, however, was first advanced on August 10,
2009, after the Department was well along in drafting the
Preliminary Results issued on September 8, 2009. Based on the
sequence of events, and Foshan Shunde’s incentive to report that
Court No. 10-00059 Page 28
it made the wire itself, it was reasonable for Commerce to
conclude that Foshan Shunde’s questionnaire responses were
untimely and lacked credibility.
D. The Department’s Rejection of the Weight-Based
Methodology Was Proper
In addition to their objections to Commerce’s findings with
respect to Foshan Shunde’s questionnaire response, plaintiffs
insist that Commerce acted unlawfully by refusing to accept the
weighted average calculation used by Foshan Shunde in the First
Administrative Review. For plaintiffs, “this method was good
enough for the Department in [the First Administrative Review] in
which Foshan Shunde participated, . . . [and] Foshan Shunde’s
method of production had not materially changed since [the First
Review] . . . .” Pls.’ Mem. 31. Plainitff, therefore, insists
that “the Department should use the data which Foshan Shunde
calculated using the same method and timely provided to the
Department.” Pls.’ Mem. 31. It is, however, clear that Commerce
had the authority to ask more specific questions about the inputs
that went into manufacturing Foshan Shunde’s ironing boards.
When the Department changes its methodology it “need only
show that its methodology is permissible under the statute and
that it had good reasons for the new methodology.” Huvis Corp.
v. United States, 570 F.3d 1347, 1353 (Fed. Cir. 2009). Here, in
order to calculate a more accurate margin, Commerce requested
Court No. 10-00059 Page 29
input information specific to the subject merchandise to obtain a
more accurate valuation of Foshan Shunde’s input costs. See Id.
at 1355 (“Improving accuracy is generally a good reason for a
change in methodology.”). Thus, the Department has supplied a
good reason for changing its methodology, and plaintiffs make no
claim that the more specific questions were not permissible under
the statute.
Morever, Commerce’s decision to apply AFA was based on
Foshan Shunde’s failure to provide information it had in its
possession, i.e., the production notes, the correspondence with
customers, the sale of the wire drawing equipment. Accordingly,
even if Foshan Shunde did have some reasonable expectation that
it was not obligated to maintain specific kinds of input data,
here, Commerce’s decision was based on Foshan Shunde’s failure to
timely and fully produce records the company actually had.
Foshan Shunde’s failure to produce this information in the
Supplemental Questionnaires, therefore, could not be attributable
to reliance on Commerce’s prior use of a different methodology.
Thus, even though the weight based method may have been “good
enough” for the First Administrative Review, Commerce was not
prohibited from attempting to calculate a more accurate dumping
margin by making more specific inquiries.5
5
As noted, under 19 U.S.C. § 1677m(d), Commerce must
afford a respondent whose questionnaire responses are deemed
(continued...)
Court No. 10-00059 Page 30
E. Commerce’s Decision to Apply AFA to All of Foshan
Shunde’s Factors of Production and Sales Responses was
Supported by Substantial Evidence and Otherwise in
Accordance with Law.
In the event that the Department’s decision to apply AFA to
certain of Foshan Shunde’s questionnaire responses is sustained
by the court, plaintiffs argue that Commerce should have applied
AFA to only that portion of its questionnaire responses that were
found wanting. Therefore, plaintiffs challenge the Department’s
determination to reject Foshan Shunde’s factors of production and
sales databases in their entirety in determining the dumping
margin. According to plaintiffs:
[T]he statute does not authorize the Department to use
total adverse facts available based solely on its
finding that Foshan Shunde submitted unreliable and
incomplete documentation in support of its purchases
and use of steel inputs, wire-drawing operation, and
one disputed affiliation. . . . Under the
circumstances of this case, the statute and judicial
precedent require that the Department apply partial
adverse facts available, if anything, and thereby
limit the application of adverse facts available only
to information submitted by Foshan Shunde that is
missing or otherwise incomplete. It may not reject
Foshan Shunde’s factors of production and U.S. sales
databases in toto.
Pls.’ Mem. 9.
In other words, for plaintiff, even if Commerce’s
5
(...continued)
deficient an opportunity to explain and/or correct the
deficiencies before it can apply AFA. Here, the Supplemental
Questionnaires afforded Foshan Shunde that opportunity and,
therefore, Commerce complied with its obligation under
§ 1677m(d).
Court No. 10-00059 Page 31
determination to apply AFA was lawful with regard to certain
information, the application of AFA should have been limited to
the specific missing information rather than the totality of
Foshan Shunde’s factors of production and sales information.
In defending its decision, defendant argues that:
Commerce reasonably concluded that significant
deficiencies and inconsistencies existed in Foshan
Shunde’s responses regarding inputs (specifically, the
types and amount of steel used in producing ironing
tables, and the source of the drawn wire used), as well
as the role of an affiliate in the sales of the subject
merchandise. The proper valuation of inputs and the
accuracy of information regarding sales of the subject
merchandise are core issues in determining an anti-
dumping duty, and given the general problematic nature
of Foshan Shunde’s submissions during the review
period, it was well within Commerce’s discretion to
determine that partial facts could not be substituted.
Def.’s Mem. 19.
The court finds that the application of AFA to all of Foshan
Shunde’s factors of production and sales information is supported
by substantial evidence and otherwise in accordance with law.
See Gerber II, 31 CIT at 930-931, 491 F. Supp. 2d at 1337 (“When
construed together, §§ 1677e and 1677m afford Commerce recourse
if a party fails to cooperate by filing initial and subsequent
questionnaire responses that are so unsatisfactory as to support
a finding that the party withheld requested information or
significantly impeded the review proceeding by providing those
responses. Nevertheless, when invoking facts otherwise available
under § 1677e(a)(2)(A) or (C), Commerce must support with
Court No. 10-00059 Page 32
substantial record evidence its findings that a party withheld
requested information or significantly impeded a proceeding.”).
As set forth above, Commerce found that Foshan Shunde failed
to adequately respond to requests for information concerning its
factors of production. Specifically, plaintiff failed to supply
the production notes until it responded to the Fourth
Supplemental Questionnaire, supplied insufficient information as
to the type of steel used, and gave contradictory accounts
regarding its source of steel wire. In addition to its findings
that Foshan Shunde’s factors of production questionnaire
responses were deficient, Commerce also found that Foshan Shunde
did not act to the best of its ability in providing information
regarding the company’s sales data. Specifically, Commerce found
wanting its answers with respect to its affiliation with Shunde
Junbang.
Based on this history, Commerce determined that “[t]hese
deficiencies render the entirety of Foshan Shunde’s questionnaire
responses an unsuitable basis for calculating a margin.” Issues
& Dec. Mem. at 12. The Department, thus, found that “Foshan
Shunde has withheld information requested by the Department and
has significantly impeded the conduct of this proceeding” and,
therefore, it decided to apply AFA to Foshan Shunde’s entire
factors of production and sales databases. See Issues & Dec.
Mem. at 11.
Court No. 10-00059 Page 33
This is not a case where the responses were deficient with
respect to a discrete category of information, such that partial
AFA would be required. See, e.g., Krupp Thyssen Nirosta GMBH v.
United States, 24 CIT 666, 672-673 (2000) (not reported in
Federal Supplement) (“Commerce may find on remand that it is
appropriate to apply partial facts available to fill any gaps in
the sales data it could not successfully verify, but it may not
disregard the sales data absent evidence in the record that the
sales data was fatally tainted by the errors in the computer
program.”). Rather, in light of the “pervasiveness of the
inaccuracies” in Foshan Shunde’s questionnaire responses, and
because “[s]uch information is core, not tangential,” Commerce
acted reasonably in determining that the deficiencies in Foshan
Shunde’s responses were so great that it could not rely on any of
the company’s factors of production or sales information. Since
Hardware, 34 CIT at __, Slip Op. 10-108, at 22; Shanghai Taoen
Int’l Trading Co. v. United States, 29 CIT 189, 199 n.13, 360 F.
Supp. 2d 1339, 1348 n.13 (2005) (“This is not a case of partial
gaps in the record. Commerce determined that Taoen failed to
provide a credible explanation for the inconsistencies between
Customs’ entry documents and Taoen’s questionnaire responses
which concerned the identity of suppliers. Such information is
core, not tangential, and there is little room for substitution
of partial facts. Total facts available is therefore appropriate
Court No. 10-00059 Page 34
because Commerce has no reliable factors of production
information with which to calculate Taoen’s antidumping
margin.”); see also Qingdao Taifa, 33 CIT at __, 637 F. Supp. 2d
at 1239-40.
Here, it is apparent that Foshan Shunde’s inadequate and
misleading responses involved a substantial portion of the inputs
that went into making the ironing boards. In addition, Foshan
Shunde’s problematic responses concerning its affiliation with a
related company undermined the reliability of its sales data.
That is, it is clear that Commerce was not in a position to
determine if Foshan Shunde reported all of its sales. As this
Court has previously held, when Commerce determines that
deficiencies and inconsistencies call into question the
credibility of the entirety of a respondent’s questionnaire
responses with regard to its factors of production and sales,
Commerce acts reasonably in applying AFA to the totality of those
responses and determining a rate without regard to the
information contained in the responses. See Since Hardware, 34
CIT at __, Slip Op. 10-108 at 22. Accordingly, the Department’s
application of AFA to all of Foshan Shunde’s factors of
production and sales submissions is sustained.
II. Commerce’s Denial of Separate-Rate Status to Foshan Shunde
A. Legal Framework
Court No. 10-00059 Page 35
Where, as here, Commerce conducts an antidumping
investigation or review of products from a non-market economy
country (“NME”) such as the PRC, the Department employs a
presumption of state control. See Huaiyin Foreign Trade Corp. v.
United States, 322 F.3d 1369, 1372 (Fed. Cir. 2003) (“The
Department [has] adopted . . . a presumption that the PRC [i]s a
nonmarket economy ("NME") country pursuant to 19 U.S.C. §
1677(18)(A), requiring companies desiring an individualized
antidumping duty margin to so request and to demonstrate an
absence of state control.”). Based on this presumption, all
producers from the PRC are deemed to be part of one, state-wide
entity and, therefore, unless the presumption is rebutted, they
are all assigned a country-wide antidumping duty rate.
A producer may rebut this presumption by “affirmatively
demonstrat[ing] its entitlement to a separate, company specific
margin.” Sigma Corp. v. United States, 117 F.3d 1401, 1405 (Fed.
Cir. 1997) (citation and quotation omitted). If the presumption
is successfully rebutted, the Department will determine a
company-specific antidumping duty rate.
To demonstrate its entitlement to a separate rate, a
producer must establish that it is independent from the country-
wide entity by demonstrating the absence of both de jure and de
facto government control over its activities. See Peer Bearing
Co.-Changshan v. United States, 32 CIT __, __, 587 F. Supp. 2d
Court No. 10-00059 Page 36
1319, 1324 (2008); see also Sparklers from the PRC, 56 Fed. Reg.
20,588, 20,589 (Dep’t of Commerce May 6, 1991). If a producer
fails to rebut the presumption, Commerce will apply the PRC-wide
rate. See Sigma, 117 F.3d at 1405.
B. Commerce’s Denial of Separate-Rate Status to Foshan
Shunde is Contrary to Law and Unsupported by Substantial
Evidence.
Plaintiffs argue that Commerce erred in applying AFA to deny
Foshan Shunde separate-rate status because “the Department’s
findings as to the need to resort to facts available and the
application of adverse inferences were made with respect to
Foshan Shunde’s factors of production and sales data and not its
responses to inquiries establishing its entitlement to a separate
rate.” Pls.’ Mem. 46. The court agrees.
According to the Department, it denied Foshan Shunde
separate-rate status because
when a respondent in an NME proceeding has failed to
cooperate to the best of its ability with respect to
all requests for information and has been assigned a
margin based on total AFA, established Department
practice is to determine that the respondent has failed
to demonstrate that it operates free from government
control.
Issues & Dec. Mem. at 5. In other words, Commerce relied upon
its past practice to determine that Foshan Shunde’s failure to
cooperate in responding to questionnaires regarding factors of
production and sales necessarily meant that it had failed to
Court No. 10-00059 Page 37
rebut the presumption of government control. Issues & Dec. Mem.
at 5 (“Foshan Shunde’s conduct in this review has changed its
status from that of a cooperative respondent to that of a
respondent which we have determined to be uncooperative and to
have impeded the conduct of this proceeding. Thus, through its
actions in this review, Foshan Shunde has called into question
its separate rate status. Indeed because of Foshan Shunde’s own
conduct . . . the Department is unable to ascertain which part,
if any, of Foshan Shunde’s submissions are credible and
reliable.”).
As this Court held in Shandong Huarong Gen. Group Corp. v.
United States, 27 CIT 1568, 1595-96 (2003) (not reported in
Federal Supplement), and subsequently reaffirmed, Commerce may
not deny separate-rate status to a respondent by applying AFA
based solely upon the unreliability of that respondent’s
questionnaire responses regarding its factors of production
and/or sales data. See Qindago Taifa, 33 CIT at __, 637 F. Supp.
2d at 1240-41 (“Because the PRC-wide rate thus presumes
government control, Commerce may not apply the PRC-wide rate as
the AFA rate where AFA is warranted for sales and [factors of
production] data, but the respondent has established independence
from government control”); Since Hardware, 33 CIT at __, Slip Op.
10-108, at 16 (“Commerce has found that [respondent’s] responses
failed to report accurately information, such as prices and
Court No. 10-00059 Page 38
country of origin, for inputs purchased in market economy
countries. The Department, however, made no specific finding
that the responses concerning state control were inaccurate.
. . . Consequently, remand is warranted.”); See Shandong
Huarong, 27 CIT at 1594 (“the findings that justified the use of
facts available and a resort to adverse facts available with
respect to the [respondent’s] sales data and factors of
production, cannot be used to accord similar treatment to issues
relating to the [respondent’s] evidence of independence from
state control.”); Gerber I, 29 CIT at 772, 387 F. Supp. 2d at
1287.
Faced with these contrary holdings, Commerce nonetheless
insists that it may rely on its “established practice” to deny
separate-rate status to respondents that fail to cooperate to the
best of their ability. Issues & Dec. Mem. at 5. In doing so,
the defendant seeks to distinguish this case from those cited by
arguing that, “[u]nlike all of those cases, here Commerce made no
determination (preliminary or otherwise) regarding Foshan
Shunde’s entitlement to a separate rate during this review.”
Def.’s Mem. 27. It is, indeed, accurate that in each of the
prior cases rejecting the approach Commerce has taken here there
was a preliminary finding that the respondent had rebutted the
presumption of government control, while in this case, Commerce
Court No. 10-00059 Page 39
made no such finding.6 See Qindago Taifa, 33 CIT at __, 637 F.
Supp. 2d at 1241; Since Hardware, 33 CIT at __, Slip Op. 10-108,
at 16; Gerber I, 29 CIT at 771, 387 F. Supp. 2d at 1287; Shandong
Huarong, 27 CIT at 1572. This distinction, however, does not
justify the Department’s use of AFA to deny Foshan Shunde
separate-rate status. Rather, Commerce’s application of AFA to
deny separate-rate status to Foshan Shunde must be remanded
because it is not based on record evidence specific to the
question of whether the company is subject to state control. See
Gerber I, 29 CIT at 772, 387 F. Supp. 2d at 1287 (rejecting the
use of AFA to find government control where “Commerce neither
cited record evidence showing that, nor made a finding of fact
that, either plaintiff was subject to the control of the PRC
government”).
As noted above, the Department may only resort to AFA when
it finds that use of facts otherwise available under 19 U.S.C.
6
Plaintiffs point out that Foshan Shunde had been
granted separate-rate status in a prior review under the Order
and, thus, argue that “when the Department has assigned a
separate rate to a respondent in a prior review, then once the
respondent has certified that its status has not changed, it is
not necessary for that company to resubmit data supporting a
separate rate during subsequent reviews.” Pls.’ Mem. 40. As the
Department correctly explained in the Final Results, however,
“Foshan Shunde’s claim that it received a separate rate in a
prior segment of this proceeding and is therefore entitled to one
here” is unavailing because “each segment of the proceeding is
separate with separate administrative records.” Issues & Dec.
Mem. at 5; see Shandong Huarong Machinery Co. v. United States,
29 CIT 484, 491 (2005) (not reported in Federal Supplement).
Court No. 10-00059 Page 40
§ 1677e(a) is permitted, and it determines that a respondent has
failed to cooperate to the best of its ability. In this case,
however, the Department has made no finding that Foshan Shunde’s
questionnaire responses regarding government control were in any
way deficient. In other words, it is not known if there existed
a “gap” in the record concerning Foshan Shunde’s separate rate
status. Because this fact is an antecedent requirement to
Commerce’s application of AFA, it was contrary to law for the
Department to apply AFA to this determination. See Zhejiang
Dunan Hetian Metal Co. v. United States, No. 09-cv-0217, Slip Op.
2010-1367 at 26 (Fed. Cir. June 22, 2011) (“Commerce first must
determine that it is proper to use facts otherwise available
before it may apply an adverse inference.”).
Similarly, there is no finding that Foshan Shunde failed to
act to the best of its ability in responding to the Department’s
separate-rate questionnaires. Indeed, Commerce acknowledges that
its decision to apply AFA in denying Foshan Shunde separate-rate
status was based entirely on its finding that the company failed
to cooperate to the best of its ability in responding to the
Department’s questionnaires regarding its factors of production
and sales. Issues & Dec. Mem. at 5. Accordingly, Commerce’s use
of AFA to deny Foshan Shunde separate-rate status is neither
lawful nor supported by substantial evidence.
In addition, the record indicates that Commerce did not
Court No. 10-00059 Page 41
notify Foshan Shunde that its questionnaire responses concerning
government control were deficient, inform it of the nature of any
such deficiency, or provide it with an opportunity to remedy or
explain any such deficiency. Section 1677m(d), however, requires
that Commerce “shall promptly inform” a respondent of any
deficiency in its responses, and “provide that person with an
opportunity to remedy or explain the deficiency.”7 See
Mannesmannrohren-Werke AG & Mannesmann Pipe & Steel Corp. v.
United States, 23 C.I.T. 826, 838, 77 F. Supp. 2d 1302, 1313
(1999) (“[B]efore Commerce may use facts available, [section
1677m(d)] requires that Commerce give a party an opportunity to
remedy or explain deficiencies in its submission.”). Therefore,
Commerce’s reliance on AFA to deny Foshan Shunde separate-rate
status is contrary to law.
CONCLUSION
For the foregoing reasons, the Final Results are sustained
in part and remanded. On remand, the Department is to consider
evidence on the record concerning Foshan Shunde’s independence
7
Although § 1677m(d) only requires that Commerce provide
an opportunity to explain any deficiency “when practicable,”
there is nothing on the record in this proceeding that would
indicate that providing this opportunity to Foshan Shunde was
impracticable. To the contrary, the Department never made an
initial determination as to whether there was a deficiency in
Foshan Shunde’s submissions concerning government control, but
rather, presumed a deficiency based on questionnaire responses
concerning factors of production and sales price.
Court No. 10-00059 Page 42
from state control to determine whether the company is entitled
to separate-rate status based solely on that evidence. In
addition, if it finds that the record is insufficient to make
such a determination, it shall open the record and permit the
plaintiffs to place the needed information on the record. If,
upon remand, Commerce determines that Foshan Shunde is entitled
to separate-rate status, the Department is to determine an
appropriate dumping margin specific to Foshan Shunde, taking into
consideration the Department’s determination, sustained here, to
apply AFA to Foshan Shunde’s factors of production and sales
data.
The remand results shall be due on February 13, 2012;
comments to the remand results shall be due on March 28, 2012;
and replies to such comments shall be due on April 12, 2012.
/s/ Richard K. Eaton
Richard K. Eaton
Dated: October 12, 2011
New York, New York