Apiário Diamante Comercial Exportadora Ltda. v. United States , 2024 CIT 64 ( 2024 )

Slip Op. 24-64
UNITED STATES COURT OF INTERNATIONAL TRADE
APIÁRIO DIAMANTE COMERCIAL
EXPORTADORA LTDA. AND
APIÁRIO DIAMANTE PRODUÇÃO E
COMERCIAL DE MEL LTDA.,
Plaintiffs,
v.
Before: Timothy C. Stanceu, Judge
UNITED STATES,
Court No. 22-00185
Defendant,
and
AMERICAN HONEY PRODUCERS
ASSOCIATION AND THE SIOUX
HONEY ASSOCIATION,
Defendant-Intervenors.
OPINION AND ORDER
[Remanding an affirmative agency determination concluding an antidumping
duty investigation of raw honey]
Dated: May 30, 2024
Pierce J. Lee and Daniel J. Cannistra, Crowell & Moring LLP, of Washington, D.C.,
for plaintiffs Apiário Diamante Comercial Exportadora Ltda. and Apiário Diamante
Produção e Comercial de Mel Ltda.
Kara M. Westercamp, Trial Attorney, Commercial Litigation Branch, Civil
Division, U.S. Department of Justice, of Washington, D.C., for defendant. With her on
the brief were Brian M. Boynton, Principal Deputy Assistant Attorney General, Patricia
M. McCarthy, Director, and Reginald T. Blades, Jr., Assistant Director. Of counsel on the
Court No. 22-00185 Page 2
brief was Benjamin Juvelier, Attorney, Office of the Chief Counsel for Trade Enforcement
and Compliance, U.S. Department of Commerce.
R. Alan Luberda, Elizabeth C. Johnson, and Maliha Khan, Kelley Drye & Warren
LLP, of Washington D.C., for defendant-intervenors American Honey Producers
Association and the Sioux Honey Association.
Stanceu, Judge: Plaintiffs contest an affirmative “less-than-fair-value”
determination (“Final Determination”) that the International Trade Administration, U.S.
Department of Commerce (“Commerce” or the “Department”) issued to conclude an
antidumping duty investigation on imported raw honey from several countries. Raw
Honey From Brazil: Final Determination of Sales at Less Than Fair Value, 87 Fed. Reg. 22,182(Int’l Trade Admin. April 14, 2022) P.R. 358 (“Final Determination”).1
In the Final Determination, Commerce assigned plaintiffs an estimated dumping
margin of 83.72% ad valorem. Concluding that Commerce based this rate on findings
unsupported by substantial evidence on the record of the investigation, the court
remands the decision to Commerce for reconsideration.
I. BACKGROUND
A. The Parties
Plaintiffs Apiário Diamante Comercial Exportadora Ltda. (“Apiário Export”) and
Apiário Diamante Produção E Comercial De Mel Ltda. (“Apiário Produção”)
1
Citations to documents from the Joint Appendix (Apr. 18, 2023), ECF Nos. 30
(conf.), 31 (public) (supplemented by ECF Nos. 33 (conf.), 34 (public) filed on Nov. 16,
2023) are referenced herein as “P.R. __” for public versions. All information disclosed
in this Opinion and Order is public information.
Court No. 22-00185 Page 3
(collectively, “Apiário,” operating jointly under the trade name “Supermel”) were
treated as a single entity in the investigation. Memorandum Re Less-Than-Fair-Value
Investigation of Raw Honey from Brazil: Preliminary Affiliation and Single Entity
Memorandum for Apiário Diamante Comercial Exportadora Ltda and Apiário Diamante
Produção e Comercial de Mel Ltda (Int’l Trade Admin. Nov. 17, 2021), P.R. 285. Apiário
Export primarily exported honey to foreign markets and Apiário Produção sold
exclusively into the domestic Brazilian market. Defendant is the United States.
Defendant-intervenors, domestic producers of raw honey and the petitioners in the
investigation, are the American Honey Producers Association and the Sioux Honey
Association (“Petitioners”).
B. Administrative Proceedings
The Final Determination resulted from an antidumping duty petition (“the
Petition”) filed in April of 2021. Petition for the Imposition of Antidumping Duties Against
Imports of Raw Honey from Argentina, Brazil, India, Ukraine, and the Socialist Republic of
Vietnam (Apr. 20, 2021), P.R. 1–17.
On May 18, 2021, Commerce initiated the antidumping duty investigation, which
applied to imports of raw honey (the “subject merchandise”) from several countries
over a time period (the “period of investigation” or “POI”) of April 1, 2020 through
March 31, 2021. Raw Honey from Argentina, Brazil, India, Ukraine, and the Socialist Republic
of Vietnam: Initiation of Less-Than-Fair-Value Investigations, 86 Fed. Reg. 26,897 (Int’l Trade
Court No. 22-00185 Page 4
Admin. May 18, 2021), P.R. 53. Commerce selected Supermel and another Brazilian
company, Melbras lmportadora E Exportadora Agroindustrial Ltda. (“Melbras”) (not a
party to this case), as the two “mandatory respondents” from Brazil, i.e., the
respondents Commerce would investigate individually and assign individual estimated
dumping margins. Department Memorandum to James Maeder re: Less-Than-Fair-Value
Investigation of Raw Honey From Brazil: Respondent Selection (Int’l Trade Admin. June 7,
2021), P.R. 64.
In its preliminary less-than-fair-value determination, which incorporated by
reference a preliminary issues and decision memorandum (“Preliminary I&D
Memorandum”), Commerce used Supermel’s reported data to calculate a preliminary
estimated dumping margin of 29.61%. Raw Honey From Brazil: Preliminary Affirmative
Determination of Sales at Less Than Fair Value, Postponement of Final Determination, and
Extension of Provisional Measures, 86 Fed. Reg. 66,533, 66,534 (Int’l Trade Admin. Nov. 23,
2021), P.R. 292; Decision Memorandum for the Preliminary Determination in the Less-Than-
Fair-Value Investigation of Raw Honey from Brazil at 21, 17 (Int’l Trade Admin. Nov. 17,
2021), P.R. 288 (“Prelim. I&D Mem.”).
Shortly after issuing its preliminary determination, Commerce determined that it
had made ministerial errors within the meaning of 19 CFR 351.224(f) in its preliminary
margin calculation and issued an amended preliminary determination that reduced
Supermel’s estimated dumping margin to 10.52%. Raw Honey From Brazil: Amended
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Preliminary Affirmative Determination of Sales at Less Than Fair Value, 86 Fed. Reg. 71,614(Int’l Trade Admin. Dec. 17, 2021).
On April 14, 2022, Commerce issued the Final Determination, which
incorporated by reference a “Final Issues and Decision Memorandum” (“Final I&D
Memorandum”). Issues and Decision Memorandum for the Final Affirmative Determination
in the Less-Than-Fair-Value Investigation of Raw Honey from Brazil (Int’l Trade Admin.
Apr. 7, 2022), P.R. 354 (“Final I&D Mem.”). Concluding that Supermel withheld
information and impeded the investigation by failing to respond to various
questionnaires with information necessary to allow it to verify “cost-of-production”
(“COP”) data that Commerce used to calculate the 10.52% amended preliminary
estimated dumping margin, Commerce assigned Supermel an estimated dumping
margin of 83.72% in the Final Determination. Final I&D Mem. at 12; Final Determination
at 22,183. Commerce assigned Melbras an estimated dumping margin of 7.89%. Final
Determination at 22,183.
Following an affirmative injury determination by the U.S. International Trade
Commission, Commerce issued an antidumping order on raw honey from Argentina,
Brazil, India, and the Socialist Republic of Vietnam. Raw Honey From Argentina, Brazil,
Court No. 22-00185 Page 6
India, and the Socialist Republic of Vietnam: Antidumping Duty Orders, 87 Fed. Reg. 35,501(Int’l Trade Admin. June 10, 2022) P.R. 362. 2
II. DISCUSSION
A. Jurisdiction and Standard of Review
The court exercises subject matter jurisdiction under section 201 of the Customs
Courts Act of 1980, 28 U.S.C. § 1581(c), which grants this Court exclusive jurisdiction
over civil actions brought under section 516A of the Tariff Act of 1930 (“Tariff Act”), as
amended, 19 U.S.C. § 1516a, and 28 U.S.C. § 1581(c). 3 Among the decisions that may be
contested according to Section 516A are final affirmative determinations of sales at less
than fair value. Id. §§ 1516a(a)(2)(B)(i), 1673d.
In reviewing an agency determination, the court must set aside any
determination, finding, or conclusion found “to be unsupported by substantial evidence
2
The scope of the antidumping duty order is as follows:
The product covered by these orders is raw honey. Raw honey is
honey as it exists in the beehive or as obtained by extraction, settling and
skimming, or coarse straining. Raw honey has not been filtered to a level
that results in the removal of most or all of the pollen, e.g., a level that
removes pollen to below 25 microns. The subject products include all
grades, floral sources and colors of raw honey and also include organic
raw honey.
Excluded from the scope is any honey that is packaged for retail
sale (e.g., in bottles or other retail containers of five (5) lbs. or less).
Raw Honey From Argentina, Brazil, India, and the Socialist Republic of Vietnam:
Antidumping Duty Orders, 87 Fed. Reg. 35,501, 35,504 (Int’l Trade Admin. June 10,
2022) P.R. 362.
3
Citations to the United States Code are to the 2018 edition.
Court No. 22-00185 Page 7
on the record, or otherwise not in accordance with law.” Id. § 1516a(b)(1)(B)(i).
Substantial evidence refers to “such relevant evidence as a reasonable mind might
accept as adequate to support a conclusion.” SKF USA, Inc. v. United States, 537 F.3d
1373, 1378 (Fed. Cir. 2008) (quoting Consol. Edison Co. v. NLRB, 305 U.S. 197, 229 (1938)).
B. Antidumping Duties under the Tariff Act
The Tariff Act provides for an “antidumping duty” to be assessed on imported
merchandise if Commerce determines that the merchandise is being sold at less than
fair value and the International Trade Commission determines that an industry in the
United States is materially injured or is threatened with material injury by reason of that
merchandise or by reason of sales (or likelihood of sales) of that merchandise for
importation. 19 U.S.C. § 1673. The statute provides that the antidumping duty shall
equal the “amount by which the normal value exceeds the export price (or the
constructed export price) for the merchandise.” Id. In the ordinary instance, “[t]he
normal value of the subject merchandise shall be the price . . . at which the foreign like
product is first sold . . . for consumption in the exporting country, in the usual
commercial quantities and in the ordinary course of trade.” Id. §§ 1677b(a)(1)(A), (B)(i).
See id. § 1677(16) (defining “foreign like product” in terms related to comparability to
the subject merchandise).
If Commerce determines that sales of the foreign like product in the market of
the exporting country are “insufficient to permit a proper comparison with the sales of
Court No. 22-00185 Page 8
the subject merchandise to the United States,” Commerce may compare the U.S. sales of
the subject merchandise to sales of the foreign like product in a third country. Id.
§ 1677b(a)(1)(B), (C). A small portion of the honey produced by Apiário Export and all
of that produced by Apiário Produção was sold into the domestic Brazilian market.
Supermel’s Section D Second Supplemental Questionnaire Response at 4 (Nov. 4, 2021), P.R.
265 (“Second Supplemental Questionnaire Response”). Commerce considered those
combined sales to be insufficient to use the Brazilian market as the “comparison”
market. Prelim I&D Mem. at 13. Therefore, in the investigation at issue, Commerce
chose Australia as the third country comparison market. Id.
C. “Cost of Production” in the Normal Value Calculation
“In determining . . . whether subject merchandise is being, or is likely to be, sold
at less than fair value, a fair comparison shall be made between the export price or
constructed export price and normal value.” 19 U.S.C. § 1677b(a). When determining
normal value, Commerce may disregard sales that are not made in the “ordinary course
of trade.” Id. § 1677b(a)(1)(B)(i). The statute defines “ordinary course of trade” to
exclude sales made below the cost of production. Id. §§ 1677(15)(A), 1677b(b)(1)(B)
(referring to sales at prices that do not permit recovery of all costs within a reasonable
period of time). Cost of production includes an exporter’s or producer’s material costs,
amounts for selling and general expenses, and the cost of containers. Id. § 1677b(b)(3).
The statute provides that “[c]osts shall normally be calculated based on the records of
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the exporter or producer of the merchandise, if such records are kept in accordance with
the generally accepted accounting principles of the exporting country (or the producing
country, where appropriate) and reasonably reflect the costs associated with the
production and sale of the merchandise.” Id. § 1677b(f)(1)(A).
D. Verification
Information submitted during an antidumping duty investigation is subject to
verification by Commerce. 19 U.S.C. § 1677m(i)(1). The Department’s regulations
describe verification as a procedure “to verify the accuracy and completeness of
submitted factual information.” 19 C.F.R. § 351.307(d). During verification, “the
Department will request access to all files, records, and personnel which the Secretary
[of Commerce] considers relevant to factual information submitted of . . . [p]roducers,
exporters, or importers.” Id.Commerce ordinarily conducts on-site verifications of submitted information.
Due to the constraints posed by the COVID-19 pandemic that was ongoing throughout
the investigation at issue in this case, Commerce did not follow its ordinary procedure.
After the preliminary phase of the investigation, Commerce sent Supermel an “In Lieu
of Verification Questionnaire” that addressed information placed on the record by
Supermel’s questionnaire responses. Letter from the Department to Supermel re:
Questionnaire in Lieu of Verification (Int’l Trade Admin. Dec. 10, 2021), P.R. 299 (“In Lieu
of Verification Questionnaire”). In its response to this questionnaire, Supermel clarified
Court No. 22-00185 Page 10
some of its responses to previous questionnaires and provided additional supporting
documentation. Letter from Supermel to the Department re: Antidumping Duty Investigation
of Raw Honey from Brazil: Supermel's In Lieu of Verification Questionnaire Response (Dec. 20,
2021) (P.R. 325-331) (“In Lieu of Verification Questionnaire Response”).
E. Supermel’s Claim in this Litigation
The estimated rate ultimately assigned to Supermel in the Final Determination
was not a weighted average estimated dumping margin calculated from Supermel’s
sales during the POI. The 83.72% estimated dumping rate Commerce applied to
Supermel in the Final Determination, after calculating a 10.52% preliminary estimated
rate in the Amended Preliminary Determination, resulted from the Department’s
invoking the “facts otherwise available” provision of section 776(a) of the Tariff Act,
19 U.S.C. § 1677e(a), and the “adverse inference” provision of section 776(b) of the Tariff
Act, 19 U.S.C. § 1677e(b).4 The Department’s principal rationale in doing so was that
Supermel impeded the investigation by withholding information necessary to allow it
to verify Supermel’s reported data on the cost of production of the raw honey it
exported to the comparison market (i.e., Australia).
Before the court is Supermel’s motion for judgment on the agency record,
brought according to USCIT Rule 56.2. Supermel claims that Commerce unlawfully
The term “adverse facts available” (“AFA”) is sometimes used to refer to the
4
combined use of these two provisions.
Court No. 22-00185 Page 11
invoked 19 U.S.C. § 1677e(a) (“facts otherwise available”) and (b) (“adverse inference”)
in assigning Supermel the 83.72% estimated dumping margin. Pl.’s Mem. in Supp. of
Rule 56.2 Mot. for J. on the Agency R. 3 (Dec. 7, 2022), ECF Nos. 22 (conf.), 23 (public)
(“Pl.’s Br.”). Supermel argues that the factual determinations upon which Commerce
invoked these provisions are not supported by substantial evidence on the
administrative record of the investigation. Specifically, Supermel argues that it
“submitted verifiable honey purchase data.” Id. at 32 (citing its responses to the
Department’s questionnaires). Supermel also asserts that to the extent its submissions
were deficient, Commerce failed to provide “an opportunity to remedy or explain the
deficiency” as required by 19 U.S.C. § 1677m(d). Id. at 21.5
F. The Derivation of the 10.52% Rate in the Preliminary Determination
Supermel reported in its questionnaire responses that it purchased raw honey
from more than a thousand individual, unaffiliated beekeepers in Brazil and performed
further processing on that honey to produce raw honey products for its export sales.
The processing included “1-6 hours of heat treatment, homogenization (involving
5
Additionally, Supermel contests the Department’s decision to treat the
beekeeper suppliers, rather than Supermel, as the producers of the subject merchandise,
arguing that this formed the basis for the application of facts otherwise available with
an adverse inference under 19 U.S.C. § 1677e to Supermel. Pl.’s Mem. in Supp. of Rule
56.2 Mot. for J. on the Agency R. 41—42 (Dec. 7, 2022), ECF Nos. 22 (conf.), 23 (public).
Because the court concludes that certain of the Department’s findings for applying
19 U.S.C. § 1677e lacked required support in the record evidence, the court does not
reach the question of whether Commerce improperly designated the beekeepers as the
“producers.”
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additional heat treatment), filtration, organic certification, and inspection.” Pl.’s Br. 16,
6 (citing Supermel’s Response to the Initial Request for Information (June 17, 2021), P.R. 79).
At the onset of the investigation, considering “the numerous nonaffiliated
middlemen and beekeepers involved in the cost of producing raw honey,” Commerce
sought input from the parties on methods of determining the cost of raw honey
production. Letter from the Department to All Interested Parties Re: Antidumping Duty
Investigations of Raw Honey from India, Argentina, Brazil, and Ukraine: Request for Comments
on the Raw Honey Cost of Production Reporting Methodology at 1 (July 22, 2021), P.R. 108;
Prelim. I&D Mem. at 16—17. After receiving comments from the parties, Commerce
“selected and requested cost information from two direct beekeeper suppliers to
Supermel with the aim of determining whether reliance on Melbras[’s] and Supermel’s
acquisition costs as a proxy for the actual COP of the raw honey purchased was
reasonable.” Prelim. I&D Mem. at 17.
Between June and October of 2021, Commerce issued a series of questionnaires
to Supermel and two beekeepers that Supermel identified as its largest suppliers,
referred to in the submissions as “Beekeeper 1 and Beekeeper 2” (collectively, “the
beekeeper suppliers”) for whose identity Supermel claims business proprietary
treatment. Supermel and both beekeeper suppliers timely responded to those
questionnaires. As did Supermel, the beekeepers reported their sales prices and their
costs of production.
Court No. 22-00185 Page 13
Commerce explained in the Final I&D Memorandum that “[i]n the Preliminary
Determination, we relied on the respondents’ honey acquisition costs as a proxy for the
cost of producing raw honey. We relied on Supermel’s reported cost information and
applied its acquisition costs plus Supermel’s own processing costs as a reasonable proxy
for the total cost of production (COP) because the acquisition prices Supermel paid
were higher than the honey producers’ reported COP.” Final I&D Mem. at 4.
In arriving at the amended preliminary margin of 10.54% for Supermel,
Commerce removed from Supermel’s comparison market sales database certain sales it
determined to have been made below the cost of production. Prelim. I&D Mem. at 19
(“We found that, for certain products, more than 20 percent of Melbras[’s] and
Supermel’s comparison sales during the POI were at prices less than the COP and, in
addition, such sales did not provide for the recovery of costs within a reasonable period
of time.”).
G. The Department’s Application of 19 U.S.C. § 1677e on Findings that Supermel
Withheld Information, Impeded the Investigation, and Provided Cost-of-Production
Data that Could Not Be Verified
Commerce decided that it could not use any of Supermel’s reported data on the
cost of production of the foreign like product as sold in the third country market of
Australia, finding as a fact that it lacked the information necessary to verify the cost of
Court No. 22-00185 Page 14
production data that Supermel submitted.6 Substituting “facts otherwise available” for
Supermel’s entire comparison market sales database, Commerce further concluded that
Supermel withheld information, impeded the investigation, and failed to cooperate by
not acting to the best of its ability in responding to certain of its questionnaires.
Commerce assigned Supermel a rate of 83.72% as an adverse inference, using a rate it
determined from the Petition. Final Determination at 22,183.
This case presents, first, the issue of whether substantial record evidence
supported the findings that the record lacked sufficient information for verification of
some or all of Supermel’s reported cost of production data, that Supermel withheld
information, and that Supermel impeded the Department’s investigation. If it did not,
then Commerce was not authorized by the Tariff Act to substitute facts otherwise
available for that cost information. If, on the other hand, one or more of these findings
are valid, the issue is whether Commerce permissibly applied an adverse inference in
selecting from among facts otherwise available.
1. Misplaced Reliance on Differences between the Information Submitted by
Supermel and its Two Largest Beekeeper Suppliers
Commerce based its application of 19 U.S.C. § 1677e(a) in part on a factual
finding that there were “unexplained and unreconciled differences between the
6
Commerce is directed to use “the facts otherwise available” if a party provides
requested information “but the information cannot be verified as provided in section
1677m(i) of this title.” 19 U.S.C. § 1677e(a)(2)(D).
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information submitted by Supermel and its beekeeper suppliers.” Final I&D Mem. at 18.
As discussed below, the Department’s finding of “unexplained and unreconciled
differences” lends no support to the use of facts otherwise available under § 1677e(a).
Commerce found that “both Supermel and the beekeepers provided conflicting
information regarding the quantity and value of honey reported, which further
supports our finding that Supermel’s reported costs cannot be verified.” Id. at 16—17.
This finding is contradicted by the record evidence in two respects. First, the
discrepancies were insignificant in the context of the cost of production data Supermel
provided and, therefore, could not have precluded verification of those data. Second,
these discrepancies, which pertained to the quantities and values of purchases from the
two largest beekeepers who supplied Supermel raw honey, must be viewed along with
the record evidence consisting of the two beekeepers’ own admissions that their “labor
is almost entirely dedicated to production activities and virtually no time is spent on
administrative activities.”7 Antidumping Duty Investigation of Raw Honey From Brazil:
Beekeeper Questionnaire for [Beekeeper 1] at 14 (Sept. 9, 2021), P.R. 198 (“Beekeeper 1 Initial
Questionnaire Response”). Accordingly, the record does not support a finding that the
7
Both beekeepers invoked 19 U.S.C. § 1677m(c), requesting that their difficulties
be “taken into account, particularly as a small company.” Antidumping Duty
Investigation of Raw Honey From Brazil: Section D Supplemental Questionnaire for
[Beekeeper 1] at 2 (Oct. 26, 2021), P.R. 241 Antidumping Duty Investigation of Raw Honey
From Brazil: Section D Supplemental Questionnaire for [Beekeeper 2] at 2 (Oct. 26, 2021), P.R.
242.
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beekeepers’ records, which understandably may have been less than perfect, called
Supermel’s reported costs into question. The beekeepers’ questionnaire responses,
considered in the context of the evidence about the nature of the beekeepers’ businesses,
did not support a finding or inference that Supermel under-reported its own honey
acquisition costs.
Commerce collected information from Supermel’s two largest beekeeper
suppliers, Beekeeper 1 and Beekeeper 2, with the stated aim of determining whether
reliance on “Supermel’s acquisition costs as a proxy for the actual COP of the raw
honey purchased was reasonable.” Prelim. I&D Mem. at 17. Beekeepers 1 and 2
provided 2.5% and 2% of Supermel’s total honey, respectively. Pl.’s Br. 9 (citing
Supermel's Section D Questionnaire Response at Ex. D-5a (Aug. 3, 2021), P.R. 133—152
(“Supermel’s Initial Questionnaire Response”)).
In his response, Beekeeper 1 (Supermel’s largest supplier of honey) noted that
while he operates under a trade name, “there is no incorporated company. All the
operations are conducted by me and my family.” Beekeeper 1 Initial Questionnaire
Response at 2. Because Beekeeper 1’s business was not incorporated, he did not file a
corporate tax return. Id. at 9. Instead, Beekeeper 1 provided tax returns for himself, his
wife, and his child. Beekeeper 2 informed Commerce that he operated with no formal
accounting or inventory system and noted that “I have no incorporated company. All
the operations are conducted by me and my wife.” Antidumping Duty Investigation of
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Raw Honey From Brazil: Beekeeper Questionnaire for [Beekeeper 2] at 2 (Sept. 9, 2021), P.R.
201 (“Beekeeper 2 Initial Questionnaire Response”). Like Beekeeper 1, Beekeeper 2 was able
to provide detailed information about the physical processes by which he harvests
honey but was unable to answer the Department’s questions that required a formal
inventory or accounting system.
In his initial questionnaire response, responding to the Department’s request for
“a schedule for FY 2020 listing major honey customers with quantity and value by types
of honey sold[,]” Beekeeper 1 provided his records of the total quantity and value of his
sales to Supermel during the POI. Beekeeper 1 Initial Questionnaire Response at 10. The
total quantity was within 1% of the total quantity reported by Supermel for purchases
made from Beekeeper 1 during the POI, and the total value was 3% less than the total
value reported by Supermel. Pl.’s Br. 10 (citing Beekeeper 1 Initial Questionnaire Response
at 10). Beekeeper 2 did not provide quantity or value figures in response to the same
question, instead reiterating that he does not keep detailed business records. Beekeeper 2
Initial Questionnaire Response at 10.
Tax invoices provided by Beekeeper 1 in response to the supplemental
questionnaire showed the same minor discrepancies as to the quantity and value of the
sales to Supermel. Antidumping Duty Investigation of Raw Honey From Brazil: Section D
Supplemental Questionnaire for [Beekeeper 1] at Ex. SUP-1 (Oct. 26, 2021), P.R. 241
(“Beekeeper 1 Supplemental Questionnaire Response”). Tax invoices provided by
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Beekeeper 2 showed that the total quantity reported matched Supermel’s reported data
within 0.02%, but they listed values that were 6% less than the total value reported by
Supermel for purchases made from him during the POI. Antidumping Duty Investigation
of Raw Honey From Brazil: Section D Supplemental Questionnaire for [Beekeeper 2] at SUP-1
(Oct. 26, 2021), P.R. 242. (“Beekeeper 2 Supplemental Questionnaire Response”). Viewed
cumulatively, these discrepancies were less than 5% as to the total transactions between
Supermel and the two parties and were spread over multiple transactions.
In blaming Supermel for what it described as “discrepancies” between the
beekeepers’ and Supermel’s data pertaining to Supermel’s acquisition costs, Commerce
did not find as a fact that Supermel failed to maintain COP data in accordance with
Brazilian accounting requirements. See 19 U.S.C. § 1677b(f)(1)(A) (directing that “[c]osts
shall normally be calculated based on the records of the exporter or producer of the
merchandise, if such records are kept in accordance with the generally accepted
accounting principles of the exporting country (or the producing country, where
appropriate) and reasonably reflect the costs associated with the production and sale of
the merchandise.”). Although Supermel operated under the Brazilian tax regime for
“micro and small businesses,” (and, like the beekeepers, invoked 19 U.S.C. § 1677m(c)),
it was incorporated as a business and operated during the POI under tax and
accounting requirements provided for under Brazilian law. Id., Pl.’s Br. 13. Supermel ‘s
responses to Commerce were based, necessarily, on its production costs as shown in the
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business records it kept in the ordinary course of business. Commerce attached
unwarranted significance to the fact that the values of the purchases from the two
sampled beekeepers as shown in records or tax returns of those beekeepers did not
agree exactly with the records of acquisition costs maintained by Supermel.
Supermel suggested that one source of the discrepancy may be that the “issue
dates” on the tax invoices provided by the Beekeepers came before the date on which
the beekeepers signed the invoices provided by Supermel, which could indicate that
negotiation occurred and shifted prices in the days immediately preceding the
finalization of the transactions. Pl.’s Br. at 26 (citing Beekeeper 1 Supplemental
Questionnaire Response at SUP-1) Commerce rejected an explanation provided by
Supermel that “third-party freight charges” account for the difference by pointing out
that that explanation merely raises another discrepancy between information provided
by Supermel and the beekeepers as to which party pays the freight charges. Final I&D
Mem. at 13—14. Commerce found that “this explanation still does not address the
differences in Supermel’s reported quantities of honey purchased from the unaffiliated
beekeepers compared to the beekeeper reported quantities sold to Supermel[,]” an
apparent reference to the discrepancy of reported quantity of less than 1% for Beekeeper
1 and .02% for Beekeeper 2. Id. at 14.
The court need not dwell on the possible reasons for the minor discrepancies
between the data reported by Supermel and by its suppliers, who admit to spending
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“virtually no time” on administration and recordkeeping. Beekeeper 1 Initial
Questionnaire Response at 14. Only in the most literal and technical sense was Commerce
correct in finding that “the information provided by both beekeepers contradicted
Supermel’s reporting.” Final I&D Mem. at 14; see also Final I&D Mem. at 13 (“We agree
with the petitioners that Supermel’s reported unprocessed honey purchases do not
agree with the unaffiliated beekeeper suppliers’ sales invoices.”). Contrary to the
Department’s finding and inference, the record evidence showed that Supermel’s data
and the data of Beekeepers 1 and 2 were relatively consistent.
In conclusion, the evidence on the administrative record, viewed as a whole,
does not support the Department’s reliance on what it termed “unexplained and
unreconciled differences between the information submitted by Supermel and its
beekeeper suppliers,” Final I&D Mem. at 18, for invoking 19 U.S.C. § 1677e(a)(2)(D) and
setting aside Supermel’s cost-of-production data and, ultimately, its entire comparison
market database, as unverifiable.
2. Failure to Identify Deficient Responses to Question 25 of the Second
Supplemental Questionnaire as Required by 19 U.S.C. § 1677m(d)
Supermel argues that Commerce failed to identify alleged deficiencies in
questionnaire responses and failed to provide an opportunity to remedy or explain
those deficiencies, as required by 19 U.S.C. § 1677m(d). 8 Pl.’s Br. 20—21. With respect
8
19 U.S.C. § 1677m(d) provides in relevant part that:
(continued . . .)
Court No. 22-00185 Page 21
to a question in the Second Supplemental Questionnaire, “Question 25,” the court
agrees. Second Supplemental Questionnaire Response at 13—14.
For its application of 19 U.S.C. § 1677e, Commerce relied in part on Supermel’s
response to Question 25. Final I&D Mem. at 13. Commerce found that despite its
request for such documentation, “Supermel did not provide copies of correspondence
with the beekeepers that would corroborate the quantity and value Supermel reported,
copies or screenshots of any journal entries used to record the transactions in
Supermel’s accounting system, or proof of payment confirming the amount Supermel
paid to the beekeepers” and that Supermel failed to “state why it had not submitted or
could not submit the required documentation.” Id. The question was as follows:
Commerce selected two beekeepers ([Beekeeper 1] and [Beekeeper 2])
whom you have purchased honey from during the POI. Based on the
information provided by the beekeepers there is a discrepancy between
the quantity and value of unprocessed honey you have reported as
If the administering authority or the Commission (as the case may be)
determines that a response to a request for information under this subtitle
does not comply with the request, the administering authority or the
Commission (as the case may be) shall 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 in light of the time limits established for the
completion of investigations or reviews under this subtitle. If that person
submits further information in response to such a deficiency and either—
(1) the administering authority or the Commission (as the case may be)
finds that such response is not satisfactory, or (2) such response is not
submitted within the applicable time limits, then the administering
authority or the Commission (as the case may be) may, subject to
subsection (e), disregard all or part of the original and subsequent
responses.
Court No. 22-00185 Page 22
procured from the beekeepers. Confirm that you have purchased
[quantity] kg and R$ [value] of honey from [Beekeeper 1] and [quantity]
kg and R$ [value] from [Beekeeper 2]. Provide all relevant supporting
documentation including correspondence with the beekeepers that
corroborate the quantity and value you have reported, copies or
screenshots of any journal entries you have prepared to record the
transactions and proof of payment confirming the amount you have paid.
Letter from the Department to Supermel re: Less Than Fair Value Investigation of Raw Honey
From Brazil at 8—9 (Oct. 20, 2021), P.R. 236 (“Second Supplemental Questionnaire”). This
question solicited four things from Supermel. The first was a confirmation of the
quantities and values of purchases from Beekeepers 1 and 2. The latter three were
subcategories of the request for “all relevant supporting documentation,” which
included (1) “correspondence with the beekeepers that corroborate the quantity and
value you have reported;” (2) “copies or screenshots of any journal entries you have
prepared to record the transactions”; and (3) “proof of payment confirming the amount
you have paid.” Id.
In response to Question 25, Supermel provided a table representing the
quantities and values it purchased from the beekeepers, thereby responding only to the
“confirmation of the quantities and values” part of the question. Because Supermel did
not provide the supporting documentation in its response to Question 25, that response
was deficient.
Supermel argues that “Commerce only described the discrepancies for the first
time in the Final Determination” and thereby failed to notify Supermel of the deficiency
Court No. 22-00185 Page 23
and afford an opportunity to cure as required by 19 U.S.C. § 1677m(d). Pl.’s Reply
Mem. in Supp. of Rule 56.2 Mot. for J. on the Agency R. 23 (April 4, 2023), ECF No. 29.
Defendant argues that “Commerce’s obligations under § 1677m(d) can be satisfied
when it issues a supplemental questionnaire ‘specifically pointing out and requesting
clarification’ of a respondent’s deficient responses.” Def.’s Resp. In Opp’n to Pls.’ Mot.
for J. Upon the Admin. R. 26 (Feb. 10, 2023), ECF No. 24 (“Def.’s Resp.”) (quoting NSK
Ltd. v. United States, 481 F.3d 1355, 1360 n.1 (Fed. Cir. 2007)). Defendant points to the
“two supplemental questionnaires on the topic of verifying its cost information with
respect to purchases from the beekeepers, including specific reference to acceptable
types of documentation that Commerce deemed appropriate to remedy the missing
information.” Def.’s Resp. 26 (citing Final I&D Mem. at 14—16).
The government’s argument is unavailing. Defendant is correct that one or more
supplemental questionnaires can fulfill the Department’s obligation to provide an
opportunity to remedy deficient submissions pursuant to 19 U.S.C. § 1677m(d). Def.’s
Resp. 26 (quoting NSK Ltd. v. United States, 481 F.3d 1355, 1360 n.1 (Fed. Cir. 2007)). But
this requires that a subsequent questionnaire have given the submitter actual notice of
the deficiency or reiterated the initial request. The Department’s In Lieu of Verification
Questionnaire, the only questionnaire Commerce issued following the Second
Supplemental Questionnaire, did not notify Supermel that Commerce had determined
that Supermel’s response to Question 25 of the Second Supplemental Questionnaire was
Court No. 22-00185 Page 24
deficient. Commerce had the opportunity to do so in the In Lieu of Verification
Questionnaire but in fact did not bring the deficiency to Supermel’s attention prior to
identifying it in the Final Issues and Decision Memorandum. Nor did Commerce issue
a second request for the “correspondence with the beekeepers” or “proof of payment” it
requested in Question 25.
Defendant cites a large portion of the Final I&D Memorandum in arguing that
Commerce met its obligations under § 1677m(d) by issuing multiple supplemental
questionnaires referring to “acceptable types of documentation.” Def.’s Resp. 26 (citing
Final I&D Mem. at 14—16). The cited portion of the Final I&D Memorandum does not
support defendant’s argument because none of the questions it identifies from the In
Lieu of Verification Questionnaire actually reiterated the requests it made in Question
25 for correspondence with Beekeepers 1 and 2 and proof of payment.
The court notes that, as an incidental matter, Supermel later provided, in
response to a request by Commerce, “screenshots of any journal entries” that
corroborated, inter alia, the purchases of raw honey from Beekeepers 1 and 2. This
question appeared in the In Lieu of Verification Questionnaire cited in the Final I&D
Memorandum, question 5.a., but did not relate specifically to Beekeepers 1 and 2. In
Lieu of Verification Questionnaire at 12, Ex. VC-4.1. Instead, it pertained to “inventory
movement schedules,” which were documents provided by Supermel relating to honey
inventory. A portion of that question included a request for “copies of spreadsheets,
Court No. 22-00185 Page 25
handwritten journals and screen prints from your accounting system as support.”
Commerce further requested that Supermel “[d]emonstrate how the POI . . . inventory
values reflected on the inventory movement schedules at exhibit 2SD-14 of the 2SDQR
tie to Apiario Diamante Comercial Exportadora Ltda’s (Apiario Export.) and Apiario
Diamante Producao’s (Apiario Prod.) POI trial balances.” In Lieu of Verification
Questionnaire at 6. In responding, Supermel provided Commerce a complete set of its
journal entries for raw material purchases during the POI, including all of the journal
entries that recorded transactions between Supermel and Beekeepers 1 and 2. In Lieu of
Verification Questionnaire Response at 12, VC-4.1.
In conclusion, the deficiencies in Supermel’s responses to Question 25, viewed
according to the record evidence on the whole, did not provide an adequate basis for
the Department’s invoking 19 U.S.C. §1677e.
3. Question 3(a)(iii) of the First Supplemental Questionnaire
Question 3(a)(iii) of the First Supplemental Questionnaire (“Question 3.a.iii”)
directed Supermel to:
Provide excerpts from your accounting system that shows [sic] how
you have recorded the purchases of the honey from the
independent beekeepers, the transfer of the unprocessed honey
from Apiário Export. to Apiário Prod. and the transfer of the
processed honey from Apiário Prod. back to Apiário Export. (e.g.,
journal entries corroborating the purchases and transfer of the
unprocessed honey, invoices etc.).
Court No. 22-00185 Page 26
Letter from the Department to Supermel re: Less Than Fair Value Investigation of Raw Honey
From Brazil at 4 (Sept. 1, 2021), P.R. 195 (“First Supplemental Questionnaire”). Supermel
provided this narrative response:
Apiário Export records its purchases of honey from beekeepers as debit
entries in the raw material stock account (41). Apiário Export does not sell
the unprocessed honey to Apiário Producao. There has not been any
transfer of unprocessed honey from Apiário Export to Apiário Prod. and
the processed honey from Apiário Prod. back to Apiário Export.
Supermel’s Section A- D Supplemental Questionnaire Response at 4 (Sept. 15, 2021), P.R. 205
(“First Supplemental Questionnaire Response”). Thus, Supermel described how it recorded
the purchases from beekeepers in its accounting system and clarified for Commerce that
the supposed transfers of honey between the companies did not occur. But it did not
provide, in response to Question 3.a.iii, “excerpts” from its accounting system.
Commerce found as facts that “Supermel did not provide the requested journal
entries or any other supporting documents, nor did Supermel explain why it did not
submit the requested documentation” and “Supermel ignored Commerce’s request.”
Final I&D Mem. at 15. These findings are correct when viewed solely as to the response
to Question 3.a.iii, but they are unsupported by the record considered on the whole.
On the previous page of the questionnaire, in subpart a.i. of the same question and in
response to a request that it “[d]iscuss how the honey purchased from the independent
beekeepers are recorded in your normal books and records,” Supermel referred to, and
Court No. 22-00185 Page 27
provided as exhibits, excerpts from its accounting system as it listed the steps it took
after it “manually record[ed] its honey purchases” from the beekeepers:
Honey purchased for international sales is recorded as debit entries in the
“stock: raw materials” account (41) in Apiario Export’s books. Honey
purchased for domestic sales is recorded in entries in the “stock: raw
materials” account (41) in Apiario Producao’s books. The reconciliation of
the raw material purchase cost is provided as Exhibit SD-12. As shown in the
reconciliation, Supermel’s raw material accounts also capture purchases of
pollen, propolis and beeswax.[9] Pollen and propolis are used as the raw
materials for the domestic products sold by Apiario Producao. Beeswax is
provided to beekeepers to support their production activities . . . In the
revised COP data provided as Exhibits SD-1a (monthly), Exhibit SD-1b
(quarterly) and Exhibit 1c (POI), Supermel included the cost of beeswax in
the reported [variable overhead costs]. The revised processing cost
calculation is provided as Exhibit SD-3.
First Supplemental Questionnaire Response at 3 (emphasis added). Supermel did not write
“see response in previous subpart,” or words to that effect or otherwise indicate that it
already had provided responsive documentation. Nevertheless, its answer to subpart
a.i directed Commerce to the exhibits responsive to the request for documentation that
Commerce included in subpart a.iii, which Supermel provided voluntarily in addition
to the information specifically requested in subpart a.i. The record, therefore, is
inconsistent with the Department’s findings that it had not been provided the requested
9
The raw material purchases that Apiário Export made during the POI were of
honey and beeswax. Honey was processed and sold whereas the beeswax was
“provided to beekeepers to support their production activities.” Both categories of raw
material purchases were recorded in the “stock: raw materials account (41)” of Apiário
Export’s accounting system. Supermel considered the beeswax purchased during the
POI to be a variable overhead cost. Supermel’s Section A- D Supplemental Questionnaire
Response at 3 (Sept. 15, 2021), P.R. 205 (“First Supplemental Questionnaire Response”).
Court No. 22-00185 Page 28
information and that its request that Supermel “demonstrate how the purchase
database ties to Supermel’s accounting system” had been “ignored.” Supermel
reasonably could have presumed the Department’s familiarity with its response to
subpart a.i. Moreover, as discussed later in this Opinion and Order, Supermel informed
Commerce repeatedly during the investigation that all raw honey purchases, recorded
on a complete set of documents that Supermel provided Commerce in screenshots,
were entered in a specific cost account in Apiario Export’s accounting system.
4. Question 18 of the First Supplemental Questionnaire
After discussing Question 3.a.iii, Commerce stated in its Final I&D
Memorandum that it “also requested in the same First Supplemental Section D
Questionnaire that Supermel demonstrate how the purchase database ties to Supermel’s
accounting system. Supermel ignored Commerce’s request.” Final I&D Mem at 15. For
this finding, Commerce cited page 18 of the First Supplemental Section D
Questionnaire.
The only question on page 18 pertinent to this issue was question 18(c) of that
Questionnaire (“Question 18(c)”).10 That question asked Supermel to provide the
following:
10
This document was not initially included in the Joint Appendix for this case,
requiring the court to request additional record documentation from the parties. The
incomplete status of the Joint Appendix delayed the court’s review of the relevant
record evidence.
Court No. 22-00185 Page 29
a. Discuss how Supermel’s accounting system normally captures
production costs by product.
b. Explain how the product-specific costs recorded in your accounting
system compare to the weighted-average CONNUM specific costs
reported for COP and CV.
c. Supermel stated on page 10 that the honey purchase database is
sufficiently detailed to track all production characteristics identified in this
investigation. Provide sample copies of the honey purchase database
which shows all the production characteristics normally captured in your
ordinary course of business and demonstrate how the database ties to
your accounting system.
First Supplemental Questionnaire at 8. In response to this three-part question, Supermel
stated that its “accounting system does not capture production costs by product. Since
there is no difference in production process for honey based on product characteristics,
Supermel allocated its total processing cost over all of its production quantity during
the POR [sic]. Supermel reported the same per-unit processing costs for all of its
CONNUMs.” First Supplemental Questionnaire Response at 18.
Question 18 is redundant with other requests in the same questionnaire, for
which Commerce requested and received such a description and sample documentation
from Supermel’s purchase database. One such instance was on the previous page, in
response to the preceding question, question 17, and others occurred in questions 3.a.i
and 3.a.iii, discussed above. First Supplemental Questionnaire Response at 3—4, 17, 22, 25,
Ex. SD-15. Contrary to the Department’s finding, Final I&D Mem. at 18, that such
information was “withheld,” the record contains complete purchase databases covering
Court No. 22-00185 Page 30
all purchases of honey and beeswax made by Apiário Export during the POI. See Second
Supplemental Questionnaire at 2SD-11c; In Lieu of Verification Questionnaire Response at
Ex. VC-4.1.
5. Question 10 of the Second Supplemental Questionnaire
Commerce identified Supermel’s response to question 10 of the Second
Supplemental Questionnaire (“Question 10”) as part of its basis for applying facts
otherwise available with an adverse inference. Question 10, which referred to question
3.a.iii of the First Supplemental Questionnaire, was as follows:
As requested at question 3.a.iii of SDQ, provide excerpts from your
accounting system that shows [sic] how you have recorded the purchases
of the honey from the independent beekeepers, the transfer of the
unprocessed honey from Apiário Export to Apiário Producao and the
transfer of the processed honey from Apiário Producao back to Apiário
Export (e.g., journal entries corroborating the purchases and transfer of
the unprocessed honey, invoices etc.). In addition, provide copies of the
accounting entries for Apiário Producao purchases of unprocessed honey.
Second Supplemental Questionnaire at 6—7. In response, Supermel stated as follows:
The screenshots of the journal entries used to record honey
purchases made by Apiario Export and Apiario Producao are
provided as Exhibit 2SD-13a and Exhibit 2SD-13b. Because this is a
tolling operation. [sic] the transfer of the unprocessed honey for toll
processing is not recorded as a sale. Once the processing is
finished, Apiario Producao issues an invoice for processing fees to
Apiario Export. The sample invoices for toll processing fees are
provided at Exhibit 2SD-17c.
Second Supplemental Questionnaire at 7. Throughout its analysis, Commerce
characterized as deficient the documents provided by Supermel in response to requests
Court No. 22-00185 Page 31
for “journal entries.” Final I&D Mem. 14—16. Commerce described in this way its
objections to the screenshots of documents Supermel identified as “journal entries” in
the submissions:
As noted by the petitioners, the screenshots do not reflect any
accounting data. Instead, the screenshots simply show a list of
honey purchases by date, name of supplier, address of supplier,
weight, value and per-unit price. The screenshots do not show the
name or number of Supermel’s “stock: raw materials” account nor
do they reflect debits and credits or account balances.
Final I&D Mem. at 15. The “screenshots” to which Commerce referred contained
individual information for each of more than two thousand purchases of unprocessed
honey that Supermel made during the POI. Supermel explained repeatedly in the
investigation that each of its raw honey and beeswax purchases reflected in those
journal entries is recorded as a debit in the “stock: raw materials (41)” account in the
accounting records maintained by Apiário Export, First Supplemental Questionnaire
Response at 2—4, Ex. SD-6; Second Supplemental Questionnaire at 4, and provided a visual
aid in the form of a flowchart on that process. Initial Questionnaire Response at Ex. D-3.
The record evidence refutes the Department’s finding that the screenshots “do not
reflect any accounting data.” The amounts paid for the individual raw honey purchases
are the very data that were recorded in “stock: raw materials (41),” which refers to a
specific cost account in Supermel’s accounting system.
The Department’s finding that the “screenshots do not show the name or number
of Supermel’s “stock: raw materials” account is true with respect to the individual
Court No. 22-00185 Page 32
screenshots, but Supermel provided these screenshots of records that were in the form
in which Supermel maintained them. At the urging of the petitioners, Commerce
objected that these individual records of purchase transactions did not reference the
“stock: raw materials” account, but that objection is meritless in light of Supermel’s
informing Commerce that all of these purchases were recorded as “debits” in the same
account, i.e., the “stock: raw materials (41)” account of Apiário Export.
In accordance with instructions from Commerce, Supermel provided a “trial
balance” that contained accounting information pertaining to the POI. First
Supplemental Questionnaire Response at Ex. 2SA-5. Supermel described the trial balance
as “exactly the same as the financial statements but more detailed.” Initial Questionnaire
Response at 22. Also at the Department’s request, Supermel provided “a worksheet
reconciling all items on the fiscal year income statement (e.g., revenues, cost of sales,
selling and administrative expenses, and non-operating expenses) in the audited
financial statements to the total costs in the financial accounting system (i.e., the
summary trial balance).” Initial Questionnaire Response at 20—21, Ex. D-11. Contrary to
the Department’s objections, the record shows that the trial balance presented
information from Supermel’s “financial accounting system” that related directly to the
individual purchases from the beekeepers. Id., First Supplemental Questionnaire Response
at Ex. 2SA-5.
Court No. 22-00185 Page 33
The court has examined the evidence consisting of the trial balance and
compared it to the evidence consisting of screenshots of individual records of the more
than two thousand individual raw honey purchases Supermel made during the POI.
The court notes that these records are essentially in agreement. When the total value of
the beeswax transactions provided at exhibit 2SD-11c to the Second Supplemental
Questionnaire and the total value of the honey transactions provided at exhibit VC-4.1
to the In Lieu of Verification Questionnaire are combined, the total figure is within
99.9999% of the total for line 41, “stock: raw materials” in Apiário Export’s trial balance
provided at Ex. 2SA-5 to the First Supplemental Questionnaire. Thus, the cost data on
the “journal entries” provided by Supermel substantially equal the cost data on the
“stock: raw materials” line on Supermel’s trial balance.
Like the government, defendant-intervenor characterizes the “journal entries” as
inadequate, arguing that they “contain no accounting information” and are not
responsive to a request for “journal entries for honey purchases.” Def.-Int.’s Resp. in
Opp’n to Pl.’s Mot. for J. on the Agency R. 14, 16 (Mar. 6, 2023), ECF Nos. 26 (conf.),
27 (public). Neither defendant-intervenor nor the government explained how writing
“debit stock: raw materials account” atop the journal entries would have converted
what they maintain are deficient submissions into responsive ones. Nor do they explain
the purported inadequacy of Supermel’s narrative description of how the transactions
listed in the “journal entries” tie to its accounting records, i.e., that they are all recorded
Court No. 22-00185 Page 34
as debit entries in the “stock: raw materials” account of Apiário Export’s trial balance.
This narrative description is supported by the record evidence that the total of the
values Supermel recorded for each transaction is nearly identical to the value reported
in the debit “stock: raw materials” account of Apiario Export’s accounting records. The
record shows that Commerce, at the instigation of the petitioners, based its use of
19 U.S.C. § 1677e in part on business records that were submitted in the form in which
they were maintained.
The Department’s characterization of the journal entries provided by Supermel
as inadequate appears to have developed at some point after it issued the In Lieu of
Verification Questionnaire but before the promulgation of the Final Determination.
During the investigation, Commerce did not identify the journal entries as inadequate
for recording Supermel’s purchase data or unresponsive to a request for journal entries.
Commerce never defined or described “journal entries” in its requests for them. Absent
such a definition, Supermel apparently presumed, quite reasonably, that its journal
entry screenshots, coupled with its descriptions of how those entries were recorded into
a specific cost account within its accounting records, were responsive to the
Department’s request for journal entries or demonstrations of how the purchase data
they reflect “tie” to their accounting records. See, inter alia: First Supplemental
Questionnaire at 4, 7, 10; Second Supplemental Questionnaire at 5, 6, 8, 9. For this reason as
Court No. 22-00185 Page 35
well, the Department’s ex post facto finding of “deficiencies” in Supermel’s journal
entries is unsupported by the record evidence.11
6. Question 7(b) in the Second Supplemental Questionnaire
Commerce stated in the Final I&D Memorandum that it “asked Supermel to
select any honey purchase transaction from its purchase database spreadsheet
submitted in Exhibit D-5a to demonstrate how Supermel prepared and recorded the
raw honey purchases in the stock raw materials general ledger account.” Final I&D
Mem. at 15. Commerce further stated that “[i]n response, Supermel provided
screenshots similar to the ones described above that only list Supermel’s unprocessed
honey purchases.” Id. Here also, Commerce found these screenshots deficient because
11
Commerce characterized the journal entries provided in response to requests
for Supermel’s sales information as responsive while rejecting the journal entries
provided for cost information, stating that “Supermel provided screenshots of
supporting general ledger accounts and journal entries from its accounting system in
response to the sales verification questions. However, Supermel failed to provide
similarly requested support related to selected raw honey purchase transactions.” Issues
and Decision Memorandum for the Final Affirmative Determination in the Less-Than-Fair-
Value Investigation of Raw Honey from Brazil at 16 (Int’l Trade Admin. Apr. 7, 2022), P.R.
354 (“Final I&D Mem.”) (citing Supermel's In Lieu of Verification Questionnaire Response at
Exs. VE-3.9—VE-8.9 (Dec. 20, 2021), P.R. 325-331 (“In Lieu of Verification Questionnaire
Response”)). The sales journal entries provided by Supermel and cited favorably by
Commerce match the form of the cost journal entries that Commerce rejected. In Lieu of
Verification Questionnaire Response at Ex. VE-3.10, VE-4.11, VE-5.11. The record does
support a finding that the sales information provided by Supermel was more detailed
than the purchase information. Regardless, that finding does not establish that the
purchase information was not tied to the accounting system.
Court No. 22-00185 Page 36
they “do not show the name or number of Supermel’s ‘stock: raw materials’ account,
nor do they reflect debits and credits or account balances.” Id.
The Department’s analysis of this question and response presents two
unsupported findings, one relating the Department’s question and the other related to
Supermel’s response. Question 7(b) in the Second Supplemental Questionnaire was as
follows:
Using one of the honey purchase transactions you have provided at
exhibit D-5a of the [Initial Questionnaire Response], provide a sample of
the journal entries you have prepared and recorded in the “stock: raw
materials” account for honey procured for domestic sales.
Second Supplemental Questionnaire Response at 4. Contrary to the Department’s
characterization of question 7(b) in the Final I&D Memorandum, the question does not
ask Supermel to “demonstrate how [it] prepared and recorded the raw honey purchases
in the stock raw materials general ledger account.” Final I&D Mem. at 15. The
information solicited by the question is a “sample of the journal entries you have
prepared and recorded” drawn from “one of the honey purchase transactions you have
provided as exhibit D-5a of the [Initial Questionnaire Response],” related to domestic
sales.12
As the court has pointed out, the “verification” issue Commerce raised in this
12
case pertained only to cost-of-production information relating to sales made in the
comparison market of Australia, Commerce having concluded that the domestic
Brazilian market sales were insufficient for use as a comparison market. It is not clear
why Commerce based its resort to 19 U.S.C. § 1677e in part on information relating to
(continued . . .)
Court No. 22-00185 Page 37
The second unsupported finding in the Department’s discussion of Question 7(b)
in the second supplemental questionnaire was that Supermel failed to respond
adequately. In response to this question, Supermel provided sample journal entries
from both Apiário Export and Apiário Produção. The deficiency that Commerce
identifies in Supermel’s response to this question is the same that it identified in
Question 10, discussed above: “The screenshots do not show the name or number of
Supermel’s ‘stock: raw materials’ account, nor do they reflect debits and credits or
account balances.” Final I&D Mem. at 15. The finding that Supermel’s journal entry
screenshots were unresponsive to the Department’s request for “journal entries” is
equally unsupported in each of Supermel’s responses that Commerce identified as
deficient in that regard.13
domestic sales in Brazil. Regardless, the substantive basis for Department’s objection to
Supermel’s response to its request pertaining to records of domestic sales is not
apparent to the court. Supermel told Commerce that “Apiário Export and Apiário
Producao have separate accounting systems. They do not share the same books or
records” and that “[h]oney purchased for international sales is recorded as debit entries
in the ‘stock: raw materials’ account (41) in Apiario Export’s books. Honey purchased
for domestic sales is recorded in entries in the ‘stock: raw materials’ account (41) in
Apiario Producao’s books.” First Supplemental Questionnaire Response at 3, 5.
Supermel’s questionnaire response related the raw honey purchases for honey
produced for the domestic market, and the purchases for honey produced for the
comparison market, to the respective, separate accounting systems of the two
companies.
13
In addition to the questions discussed here, Commerce based its application of
facts otherwise available and an adverse inference on the same journal entries Supermel
provided in response to question 21 of the Second Supplemental Questionnaire and
(continued . . .)
Court No. 22-00185 Page 38
7. The Department’s Finding that It Could Not Rely on the CONNUM-Specific Costs
Reported by Supermel
Commerce requested data on Supermel’s U.S. sales and comparison market sales
that were organized according to “CONNUM” (or “control number”), an identifier for a
product, or a group of products, with a unique and specifically-defined set of physical
characteristics. Here, “Commerce identified five criteria for the physical characteristics
of the subject merchandise: (1) color; (2) organic versus non-organic;
(3) homogenization; (4) straining/filtering; and (5) honey source.” Prelim. I&D Mem.
at 11. Using information from its purchase database and processing details, Supermel
reported “CONNUM-specific” costs for different types of honey it had sold to the U.S.
and comparison markets based on those physical characteristics. Initial Questionnaire
Response at 17, Ex. D-5a.
Commerce found that “because we find that Supermel failed to tie its purchases
to its accounting system, we find that Commerce cannot rely on Supermel’s purchase
information as support for its CONNUM-specific costs.” Final I&D Mem. at 17. Because
the Department’s finding that Supermel “failed to tie its purchases to its accounting
system” is invalidated by the evidentiary record when viewed as a whole, so too is the
question 5 of the In Lieu of Verification Questionnaire, which Commerce, without
evidentiary foundation, characterized as “deficient.” Final I&D Mem. at 15—16 (citing
Supermel’s Section D Second Supplemental Questionnaire Response at 12 (Nov. 4, 2021), P.R.
265; In Lieu of Verification Questionnaire Response at 10—16.
Court No. 22-00185 Page 39
finding that Commerce “cannot rely on Supermel’s purchase information as support for
its CONNUM-specific costs.” Id.
8. The Department’s Unsupported Findings for Applying 19 U.S.C. § 1677e(a)
As the court noted, rather than assign Supermel a weighted average dumping
margin calculated from Supermel’s sales during the POI as it did in the preliminary
stage of the investigation, Commerce ultimately applied subsections (a) and (b) of
19 U.S.C. § 1677e. This statutory provision directs Commerce to invoke “facts otherwise
available” when “necessary information is not available on the record” or when any of
four conditions specified in subparagraph (a)(2) is met. The four conditions apply to
situations where an interested party:
(A) withholds information that has been requested by the administering
authority . . . 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 section 1677m of this title,
(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.
19 U.S.C. § 1677e(a)(2). Where a respondent meets any of these four conditions, the
statute provides that Commerce shall, subject to § 1677m(d), “use the facts otherwise
available in reaching the applicable determination.” 19 U.S.C. § 1677e(a).
In the Final Determination, Commerce concluded that condition (A) of 19 U.S.C.
§ 1677e(a), regarding the withholding of information, had been satisfied because
Supermel “withheld information in its ILVQ [In Lieu of Verification Questionnaire]
Court No. 22-00185 Page 40
Response (i.e., screenshots showing that its purchases tie to its accounting system);” as
well as (C), concerning significantly impeding a proceeding, which Commerce claims
Supermel did “by not substantiating its reported costs, an integral part of Commerce’s
margin analysis;” and (D), with respect to information that was provided but cannot be
verified because “Supermel’s purchase information as reflected in its accounting system
could not be verified because Supermel failed to provide that information in its ILVQ
Response.” Final I&D Mem. at 18.
Though ostensibly based upon three separate subsections of 19 U.S.C. § 1677e(a),
each of the reasons Commerce states for its application of that statutory provision rests
upon the Department’s rejection of Supermel’s reported cost information for its raw
honey acquisitions from the numerous beekeepers. Commerce based each of these
determinations principally on its finding that Supermel failed to “tie” these data on raw
honey acquisitions to its accounting system.
Commerce made no finding that it could not rely upon Supermel’s cost data for
the processing it performed on the raw honey it purchased. To combine with those data
on processing costs for the calculation of cost of production, Commerce had been
provided: (1) a complete database of all purchases of raw honey and beeswax Supermel
made from its many unaffiliated beekeepers during the POI, (2) total values for those
two categories of purchases that when added together were substantially equal to the
total value recorded in Supermel’s accounting system, and (3) a breakdown of costs by
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CONNUM and an explanation that “Supermel reported the same per-unit processing
costs for all of its CONNUMs.” First Supplemental Questionnaire Response at 18. Still,
Commerce relied upon a finding that Supermel “failed to tie” its raw honey acquisition
costs to its accounting system in developing its CONNUM-specific costs of production
and thus (1) withheld information, (2) impeded the investigation, and (3) provided
information that could not be verified. Based on its own examination of the
questionnaire responses and included exhibits, the court concludes that these findings
are not supported by substantial evidence on the record of the antidumping duty
investigation.
As the court has explained, the principal information that Commerce found
Supermel to have withheld was provided in full by the complete set of journal entries
for raw honey purchases from the beekeepers and the related responses disclosing the
placement of all of the recorded costs in the “stock: raw materials (41)” cost account
maintained in the accounting system of Apiário Export. See Initial Questionnaire
Response at Ex. D-3; First Supplemental Questionnaire Response at 2—4, Exs. SD-6, 2SA-5,
Second Supplemental Questionnaire Response at 4, 2SD-11c; In Lieu of Verification
Questionnaire Response at VC-4.1. The only requested information Supermel did not
provide, which was the “correspondence” with the beekeepers related to raw honey
purchases from Beekeepers 1 and 2 and proof of payment to those beekeepers, was not
again requested or identified as deficient, as required by 19 U.S.C. § 1677m(d). Thus,
Court No. 22-00185 Page 42
the record viewed in the entirety does not contain substantial evidence to support the
finding that resort to 19 U.S.C. § 1677e was warranted by Supermel’s having withheld
requested information. The ancillary findings that “Supermel significantly impeded the
proceeding by not substantiating its reported costs” and that “Supermel’s purchase
information as reflected in its accounting system could not be verified because
Supermel failed to provide that information in its ILVQ Response,” Final I&D Mem.
at 18, are, for the same reason, lacking evidentiary support in the administrative record.
H. The Department’s Potential Application of 19 U.S.C. § 1677e in Future
Proceedings
Supermel claims that Commerce acted unlawfully when it stated in the
Preliminary Issues & Decision Memorandum that “all beekeepers are now ‘on notice
that they will be required to submit accurate cost information that is fully supported by
documentary evidence and is verifiable by Commerce officials’ and ‘[f]ailure to provide
such information [in the future administrative reviews] could result in the application
of AFA.’” Pl.’s Br. 45 (quoting Prelim. I&D Mem. at 18). Supermel asks the Court to
disallow Commerce “in the future administrative reviews to rely on this statement from
the investigation to apply AFA to an otherwise cooperative processor-respondent based
on an unaffiliated beekeeper supplier’s failure to provide requested cost information.”
Id. (citing Tianjin Magnesium Intern. Co., Ltd. v. United States, 35 CIT 187 (2011)).
Supermel understandably objects to the Department’s threatened future
application of an adverse inference against it for the future actions of an unaffiliated
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party. Nevertheless, this claim is not directed to an alleged injury resulting from the
determination contested in this litigation but to a potential finding in a future
determination. See Lujan v. Defs. of Wildlife, 504 U.S. 2130, 2134 (1992). In seeking a
remedy for future harm, Supermel in effect is asking the court for an advisory opinion
that the court cannot provide. See Flast v. Cohen, 392 U.S. 83, 96 (1968) (stating that “the
implicit policies embodied in Article III, and not history alone, impose the rule against
advisory opinions on federal courts”).
III. CONCLUSION
The court must remand the Final Determination to Commerce for
reconsideration of the determination to apply 19 U.S.C. § 1677e, which was based on
multiple findings of fact for which the record does not contain substantial evidence, and
for determination of a new estimated dumping margin for Supermel.
Upon consideration of all papers and proceedings had herein, and upon due
deliberation, it is hereby
ORDERED that plaintiff’s motion for judgment on the agency record (Dec. 7,
2022), ECF Nos. 22 (Conf.), 23 (Public) be, and hereby is, granted in part and denied in
part; it is further
ORDERED that Commerce shall submit to the court a redetermination upon
remand (“Remand Redetermination”) that reconsiders, based on the existing record,
the Department’s determination on the application of 19 U.S.C. § 1677e to Supermel;
that determines a new estimated dumping margin for Supermel; and that is in
accordance with this Opinion and Order; it is further
Court No. 22-00185 Page 44
ORDERED that Commerce shall submit the Remand Redetermination to the
court within 60 days of the date of this Opinion and Order; it is further
ORDERED that plaintiffs shall have 30 days from the date of submission of the
Remand Redetermination to submit to the court comments thereon; and it is further
ORDERED that defendant shall have 15 days from the submission of plaintiffs’
comments on the Remand Redetermination to submit to the court a response to those
comments.
/s/ Timothy C. Stanceu
Timothy C. Stanceu
Judge
Dated: May 30, 2024
New York, New York