Hyundai Electric v. United States

Case: 21-1009 Document: 62 Page: 1 Filed: 10/04/2021
United States Court of Appeals
for the Federal Circuit
______________________
HYUNDAI ELECTRIC & ENERGY SYSTEMS CO.,
LTD.,
Plaintiff-Appellant
v.
UNITED STATES, ABB ENTERPRISE SOFTWARE
INC.,
Defendants-Appellees
______________________
2021-1009
______________________
Appeal from the United States Court of International
Trade in No. 1:19-cv-00058-MAB, Judge Mark A. Barnett.
______________________
Decided: October 4, 2021
______________________
RON KENDLER, White & Case LLP, Washington, DC,
argued for plaintiff-appellant. Also represented by DAVID
EDWARD BOND.
KELLY A. KRYSTYNIAK, Commercial Litigation Branch,
Civil Division, United States Department of Justice, Wash-
ington, DC, argued for defendant-appellee United States.
Also represented by BRIAN M. BOYNTON, JEANNE DAVIDSON,
LOREN MISHA PREHEIM; DAVID W. RICHARDSON, Office of
the Chief Counsel, United States Department of Com-
merce, Washington, DC.
Case: 21-1009 Document: 62 Page: 2 Filed: 10/04/2021
2 HYUNDAI ELECTRIC v. US
MELISSA M. BREWER, Kelley Drye & Warren, LLP,
Washington, DC, argued for defendant-appellee ABB En-
terprise Software Inc. Also represented by ROBERT ALAN
LUBERDA, DAVID C. SMITH, JR.
______________________
Before NEWMAN, REYNA, and HUGHES, Circuit Judges.
REYNA, Circuit Judge.
Hyundai Electric & Energy Systems Co. appeals a
judgment of the U.S. Court of International Trade sustain-
ing the U.S. Department of Commerce’s final results in the
fifth administrative review of the antidumping duty order
on large power transformers from the Republic of Korea.
Hyundai challenges Commerce’s decision to cancel verifi-
cation on the grounds that the information submitted by
Hyundai was unverifiable, Commerce’s reliance on facts
otherwise available, and Commerce’s use of an adverse in-
ference in selecting from among the facts otherwise availa-
ble. For the reasons stated below, we affirm.
I
The U.S. Department of Commerce (“Commerce”) im-
poses antidumping duties on imported products that are
sold or likely to be sold in the U.S. at “less than fair value”
(“dumping”) when those sales threaten or cause material
injury to a U.S. industry. 19 U.S.C. § 1673. In general, to
determine whether such products are sold at less than fair
value, Commerce undertakes an investigation to ascertain
the difference between the “normal value” of the imported
goods, i.e., the sales price in the home market, and the price
at which the goods are sold in the U.S. Id. §§ 1677(35),
1677b(a). If Commerce determines that a company is sell-
ing goods in the U.S. for less than their normal value, and
if the U.S. International Trade Commission (“ITC”) deter-
mines that such dumping threatens or causes material
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HYUNDAI ELECTRIC v. US 3
injury to a U.S. industry, 1 Commerce issues an antidump-
ing duty order imposing an appropriate antidumping duty
rate to remedy the threat or injury. Id. §§ 1673d(a)(1),
(b)(1), (c)(2). After Commerce issues such an order, an af-
fected party may request an annual administrative review
so that Commerce can update dumping margins, if appro-
priate, to address continued dumping, if any. See 19 U.S.C.
§ 1675.
Section 1677m governs Commerce’s conduct of admin-
istrative reviews and defines, in certain respects, how Com-
merce must treat information submitted by an interested
party. For example, if an interested party promptly noti-
fies Commerce after receiving an information request that
it is “unable to submit the information requested in the re-
quested form and manner,” and (among other things) pro-
poses an alternative form, Commerce must consider the
party’s proposal and may modify its requirements to avoid
an “unreasonable burden” on the party. Id. § 1677m(c)(1).
Commerce must also notify the interested party of a defi-
ciency in its response and, if practicable, provide the party
an opportunity to rectify the deficiency. Id. § 1677m(d). In
certain circumstances, § 1677m prohibits Commerce from
declining to consider submitted information even though it
does not comply with all of Commerce’s requirements. See
id. § 1677m(e). That prohibition applies where the infor-
mation is “necessary to the determination” and all of the
following requirements are met:
(1) the information is submitted by the deadline es-
tablished for its submission,
(2) the information can be verified,
1 While the respective investigations of Commerce
and the ITC are conducted concurrently, this appeal only
involves Commerce’s less than fair value investigation.
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4 HYUNDAI ELECTRIC v. US
(3) the information is not so incomplete that it can-
not serve as a reliable basis for reaching the appli-
cable determination,
(4) the interested party has demonstrated that it
acted to the best of its ability in providing the in-
formation and meeting the requirements estab-
lished by the administering authority or the
Commission with respect to the information, and
(5) the information can be used without undue dif-
ficulties.
Id.
Commerce is required to “verify all information relied
upon” in making a final determination in an administra-
tive review in certain circumstances, i.e., when a specified
domestic interested party files a timely verification request
and no verification was conducted in the two immediately
preceding administrative reviews. Id. § 1677m(i);
19 C.F.R. § 351.307(b)(1)(v). Commerce’s regulations also
provide that Commerce will conduct a verification when
good cause exists. 19 C.F.R. § 351.307(b)(1)(iv). The regu-
lations further set deadlines for the submission of “factual
information,” which vary depending on the type of infor-
mation. Id. § 351.301(c). For factual information other
than the types specified in § 351.301(c)(1)-(4),
§ 351.301(c)(5) sets a submission deadline of “30 days be-
fore the scheduled date of the preliminary results in an ad-
ministrative review, or 14 days before verification,
whichever is earlier.” Id. § 351.301(c)(5).
Section 1677e applies when information requested by
Commerce is incomplete or inaccurate. Under that section,
Commerce must make determinations based on “facts oth-
erwise available” when “necessary information is not avail-
able on the record,” id. § 1677e(a)(1), or when a party
engages in the following conduct:
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HYUNDAI ELECTRIC v. US 5
(A) withholds information that has been requested
by the administering authority or the Commission
under this subtitle,
(B) fails to provide such information by the dead-
lines 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,
id. § 1677e(a)(2). 2
Section 1677e also permits Commerce to draw an ad-
verse inference “in selecting from among the facts other-
wise available” when “an interested party has failed to
cooperate by not acting to the best of its ability to comply
with a request for information.” Id. § 1677e(b)(1)(A). In
such a case, Commerce is not required to determine a
dumping margin as if the interested party had complied.
Id. § 1677e(b)(1)(B). Commerce may draw an adverse in-
ference from various sources of information, including the
petition, a final determination in the underlying investiga-
tion, any previous administrative review, or “any other in-
formation placed on the record.” Id. § 1677e(b)(2). If
Commerce properly draws an adverse inference, then it
may “use any dumping margin from any segment of the
2 Section 1677e(a) further specifies that the require-
ment to rely on facts otherwise available is subject to the
requirements in Section 1677m(d), which requires Com-
merce to provide notice and, if practicable, an opportunity
to rectify a deficiency in a party’s response to a request for
information from Commerce.
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6 HYUNDAI ELECTRIC v. US
proceeding under the applicable antidumping order,” id.
§ 1677e(d)(1)(B); it may exercise discretion to apply “the
highest” dumping margin if warranted based on “the situ-
ation that resulted in the administering authority using an
adverse inference,” id. § 1677e(d)(2); and it is not required
to estimate what the dumping margin would have been if
the interested party had cooperated or to demonstrate that
the dumping margin selected reflects the alleged commer-
cial reality of the interested party, id. § 1677e(d)(3).
II
A
On October 16, 2017, Commerce initiated its fifth ad-
ministrative review of the antidumping duty order on large
power transformers (“LPTs”) from the Republic of Korea for
the period of review (i.e., “POR”) of August 1, 2016, to
July 31, 2017. Initiation of Antidumping and Countervail-
ing Duty Administrative Reviews, 82 Fed. Reg. 48,051(Oct. 16, 2017) (J.A. 26). Commerce selected Hyundai
Heavy Industries Co. as a mandatory respondent. Hyun-
dai Electric & Energy Systems Co. (“Hyundai”) later be-
came the successor-in-interest to Hyundai Heavy
Industries Co. J.A. 27985 n.1.
On December 13, 2017, Commerce issued its initial
questionnaire seeking specific information related to
Hyundai’s U.S. and home market sales of LPTs during the
POR. This case involves two categories of information that
Commerce requested from Hyundai, namely product-spe-
cific cost information and cost-reconciliation information.
Product-Specific Cost Information
In Section D of its initial questionnaire, Commerce re-
quested information regarding Hyundai’s costs of produc-
ing LPTs. See J.A. 205–69. That section specifically sought
information about, inter alia, Hyundai’s cost accounting
system, including for example “the level of product speci-
ficity over which [Hyundai’s] cost accounting system
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HYUNDAI ELECTRIC v. US 7
normally captures production costs.” J.A. 211. It also
asked Hyundai to “[i]dentify and quantify” the “differences
between the reporting methodology and the normal books
and records.” J.A. 217. In other words, Commerce sought
information regarding any discrepancies between the cost
data reported to Commerce and the cost data actually kept
in Hyundai’s normal books and records. Id. In response,
Hyundai disclosed that it had shifted costs among projects
in the ordinary course of business to show that each LPT
project was profitable. J.A. 7687; Appellant’s Br. 30.
On May 24, 2018, Commerce issued a supplemental
questionnaire. J.A. 16748–50. In question 9, Commerce
referenced Hyundai’s cost shifting and requested a detailed
disclosure of “the total costs recorded in [Hyundai’s SAP
accounting system], the total costs reported to the Depart-
ment, and an itemization of the materials and related costs
making up the difference” for each sale in the U.S. market
and home market. J.A. 16748. Commerce also asked
Hyundai to “[e]xplain in detail how [it] was able to identify
and quantify the costs that were miss-recorded [sic] in [its]
SAP system” and to “show how the adjustments in each
project offset each other and reconcile in total.”
J.A. 16748–49.
In response, Hyundai submitted Attachment SD-16,
which included (i) a “Breakdown of Direct Material Cost by
Material Type” on an annual basis from 2015 to 2017; (ii) a
“Monthly Direct Material Cost” for the same three years;
and (iii) a “Breakdown of Direct Material Cost by Project
Number” for the month of March 2016, which preceded the
period of review. J.A. 16909–12. Hyundai explained that
the attachment showed the differences between the LPT
projects’ SAP bills of materials and their actual bills of ma-
terials. J.A. 16788. Hyundai further explained, “To pre-
pare the reconciliation, Hyundai downloaded the BOMs
[i.e., bills of materials] from both systems and by computer
program was able to trace all materials in the [actual]
BOMs to the SAP BOMs.” J.A. 16788–89.
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8 HYUNDAI ELECTRIC v. US
On July 12, 2018, Commerce sent Hyundai a second
supplemental questionnaire. J.A. 25047–50. Commerce
explained, “You did not provide a response to question 9,”
and it listed a schedule of required items:
a. Total POR costs recorded in SAP and the total
POR costs reported to [Commerce]. Ensure the to-
tal POR cost reported to [Commerce] agrees [with
Hyundai’s cost of production] file.
b. For the difference between the SAP costs and the
reported costs . . . itemize each specific material
and conversion cost item which make up that dif-
ference. For example, identify all parts and raw
materials that are included or excluded from other
LPTs.
c. For all SAP and reported cost itemized material
and [conversion] cost differences, show which LPT
project the itemized items were shifted to / from in
SAP.
d. Explain in detail how [Hyundai was] able to
identify and [quantify] the costs which were miss-
recorded [sic] in SAP.
J.A. 25049.
Hyundai responded again on July 23, 2018.
J.A. 27355–57, 27366–86. This time, Hyundai provided At-
tachment 2SD-1, a worksheet that divided the total cost
differences by LPT project for reconciliation purposes into
six categories: “(1) expenses recorded after the year of cost
of goods sold (‘COGS’) recognition for the project; (2) recal-
culated silicon steel cost; (3) recalculated other material
costs; (4) material costs incurred after the year of COGS
recognition; (5) recalculated scrap; and (6) recalculated
fixed overhead.” J.A. 27355–56, 27369. For a single cate-
gory, “other material costs,” Attachment 2SD-1 purported
to show given costs shifted to particular projects and
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HYUNDAI ELECTRIC v. US 9
described the corresponding types of materials. See
J.A. 27370.
Regarding silicon steel costs, Hyundai explained that,
“[u]nlike all other materials, silicon steel is fungible and it
is not possible to trace the projects to and from which sili-
con steel cost might have been shifted.” J.A. 27356. Hyun-
dai further stated that “actual silicon steel consumption is
not recorded on a project basis, and only can be calculated
manually by reference to the silicon steel processing re-
ports.” Id. In Attachment 2SD-1, Hyundai provided data
on shifting of steel costs for one sample LPT project.
J.A. 27369–70. Hyundai also referenced earlier-submitted
Attachment SD-18, which compared, for one LPT project,
the “projected consumption” (calculated by engineers to
“achieve the desired electrical properties”) and the “actual
consumption” as stated in the steel processing report.
J.A. 16789–90, 16925. Hyundai explained that “there can
be differences between the core steel purchased for a par-
ticular transformer and the [silicon] steel consumed,” and
it disclosed the “yield loss” for the sample provided in At-
tachment SD-18. J.A. 16789–90. With respect to the re-
maining four categories, Hyundai disclosed aggregate cost
data.
Cost-Reconciliation Information
In its initial questionnaire, Commerce asked Hyundai
to provide worksheets, similar to the sample Commerce
provided, “that illustrate how the costs reported on the fi-
nancial statements reconcile to the general ledger or trial
balance, to the cost accounting system (i.e., the source used
to derive the reported costs), and to the reported costs.”
J.A. 216–18. Hyundai responded by providing a worksheet
called WS2 in Attachment D-20 that identified nine cate-
gories of costs and, for each category, distinguished be-
tween “Subject Merchandise” and “Non-subject
Merchandise.” J.A. 8033; see also J.A. 8.
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10 HYUNDAI ELECTRIC v. US
Commerce issued a supplemental questionnaire that
requested Hyundai to “[d]iscuss how [it] separated cost of
sales on tab WS2 between MUC and non-MUC” 3 and to
“[d]emonstrate and provide supporting documentation for
the MUC and non-MUC breakout for [transformers].”
J.A. 16750. Hyundai responded by providing Attachment
SD-23, which showed the same information as that pro-
vided in Hyundai’s initial response. J.A. 17076.
Subsequently, after Commerce issued its preliminary
results, Hyundai submitted a case brief in which it clarified
for the first time that the line item for non-MUC for trans-
formers included the cost of manufacturing for “1) non-sub-
ject merchandise; 2) third-country sales; 3) U.S. shipments
that did not enter the United States during the POR; and,
4) home market shipments made outside the POR and win-
dow periods.” J.A. 28309. Hyundai did not separately
identify these reconciliation items in its questionnaire re-
sponses.
B
Commerce issued its preliminary results on August 31,
2018, assigning Hyundai a 60.81 percent ad valorem anti-
dumping margin, the same margin assigned in the previ-
ous administrative review. J.A. 27985–8008. Commerce
explained that it used an adverse inference in selecting
from the facts otherwise available because Hyundai “had
failed to cooperate by not acting to the best of its ability to
comply with a request for information to reconcile reported
costs at the individual LPT project-level to its normal rec-
ords.” J.A. 27998. Commerce found that “[t]he missing in-
formation [wa]s necessary for Commerce to analyze
Hyundai’s section D responses and to calculate a margin.”
3 “MUC” refers to merchandise under consideration,
and “Non-MUC” refers to merchandise not under consider-
ation.
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HYUNDAI ELECTRIC v. US 11
Id. Specifically, regarding product-specific costs, Com-
merce explained that Hyundai “failed to provide part-spe-
cific itemized cost differences.” J.A. 28002–03. In
submitting Attachment 2SD-1, Hyundai “only provided the
cost differences in aggregate” and averred that “it [wa]s not
possible to trace” cost differences for silicon steel, the larg-
est material input. J.A. 28003.
Commerce also explained, regarding cost reconcilia-
tion, that Hyundai had “failed to provide its cost reconcili-
ation in the format requested” and failed to adjust the cost
of production figures from fiscal year cost of goods sold to
period-of-review cost of goods sold. Id. Commerce con-
cluded that, despite having “many opportunities,” Hyundai
“failed to provide support for the cost differences or an ac-
curate cost reconciliation” and therefore “Commerce was
left with unreliable cost data.” J.A. 28004. Commerce also
stated that “the information submitted by the established
deadline cannot be verified,” id., and shortly thereafter it
sent Hyundai a letter confirming that it had decided not to
conduct a verification. J.A. 28097.
On April 12, 2019, after the parties had submitted their
case briefs following Commerce’s preliminary results, Com-
merce published its final results and an accompanying is-
sues and decision memorandum. J.A. 28295–321.
Commerce again assigned Hyundai a dumping margin of
60.81 percent ad valorem, J.A. 28320, and it “continue[d]
to find that Hyundai failed to provide the information as
requested, or to sufficiently address its manipulation of
transformer costs, within its own normal books and rec-
ords,” J.A. 28301.
Commerce first addressed the reliability of Hyundai’s
product-specific costs and found that Hyundai inade-
quately responded to the initial questionnaire by “only
identif[ying] the cost difference in aggregate for each [LPT]
project” and by “fail[ing] to fully distinguish each quantity
and value difference between its SAP[] costs and the costs
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12 HYUNDAI ELECTRIC v. US
reported to Commerce by cost type (i.e., raw materials, di-
rect labor, etc.).” J.A. 28304. It further found that Hyundai
inadequately responded to Commerce’s supplemental
questionnaire because “Hyundai again identified only the
total POR cost differences” and, for one sample month out-
side the period of review, “Hyundai provided a table show-
ing the difference between each project’s SAP[] BOM and
the [actual] BOM, and not between SAP[] and the reported
costs.” J.A. 28304.
Commerce likewise found that Hyundai inadequately
responded to its second supplemental questionnaire by
providing the requested level of detail for “only one of the
six categories of cost, i.e., other materials, that it identified
as being manipulated.” J.A. 28305. Regarding the silicon
steel category, Commerce explained that “Hyundai failed
to demonstrate and support how each project’s reported sil-
icon steel consumption quantities and per-unit input val-
ues were calculated, that they truly represent actual
consumption, and how the per-unit input valuations dif-
fered from those recorded in SAP[].” Id. “Hyundai simply
attributed the difference in quantities between the silicon
steel processing report and the engineering calculations to
yield losses”; however, Commerce rejected that attribution
because “[y]ield losses are typically based on the difference
between the consumption for the job and the actual amount
in the final product, not between consumption at a prelim-
inary processing stage and theoretical quantities.”
J.A. 28306. Commerce further found that Hyundai had
failed to show cost differences as requested for the remain-
ing four categories of costs identified by Hyundai. Id.Commerce also rejected Hyundai’s argument that the
information provided was sufficient because “Commerce
has previously relied on the very same information which
Commerce now considers unreliable.” Id. Commerce ex-
plained that in the earlier proceedings “Hyundai claimed
that it was stopping the practice, however the shifting re-
occurred in this segment.” Id. Further, Commerce found
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HYUNDAI ELECTRIC v. US 13
reason in this administrative review to “take a closer look
at [Hyundai’s] continuing practice and [its] attempt to cor-
rect the manipulation” because, in the earlier proceedings,
unlike these, “Hyundai indicated the manipulation was
limited to select parts of the SAP[] system only.”
J.A. 28307.
Commerce then turned to Hyundai’s cost reconcilia-
tion. Id. It found that Hyundai provided a cost reconcilia-
tion in response to Commerce’s initial questionnaire that
“a) did not comply with the format requested and b) did not
provide requested details.” J.A. 28309. Specifically, Com-
merce had asked Hyundai to “[l]ist each category of non-
MUC separately” and reiterated that request in a supple-
mental questionnaire. Id. In the reconciliations Hyundai
provided, however, Hyundai “did not provide details on
each category of non-MUC” but instead “included a single
line titled ‘Non-MUC from Transformer’ as a reconciling
item with no explanation or support.” Id. Commerce found
it was not until Hyundai’s case brief after the preliminary
results that Hyundai explained that the single reconciling
item included “1) non-subject merchandise; 2) third-coun-
try sales; 3) U.S. shipments that did not enter the United
States during the POR; and, 4) home market shipments
made outside the POR and window periods.” Id. Com-
merce rejected as “nonsensical” Hyundai’s argument that
details on these [non-MUC] items are not relevant because
Commerce would ultimately exclude them.” J.A. 28310.
Commerce stated that it “routinely analyze[s] costs ex-
cluded from reporting and request[s] supporting docu-
ments and detailed explanations of why the cost is
appropriate to exclude.” Id. Commerce also explained
that, in a case such as this “where the respondent admits
to manipulating its normal books and records, and the ex-
cluded costs include LPTs sold to third countries and mer-
chandise made at the same facilities, it was even more
crucial for Commerce to identify the detailed reconciling
categories and related costs.” Id.Case: 21-1009 Document: 62 Page: 14 Filed: 10/04/2021
14 HYUNDAI ELECTRIC v. US
Commerce next found that Hyundai had not acted to
the best of its ability, and thus an adverse inference was
warranted. J.A. 28312. Commerce explained that “Hyun-
dai failed to provide the basic information necessary to per-
form the dumping calculations as described in the
preceding comments and to substantiate what the actual
costs were for its transformers.” J.A. 28317. Hyundai’s
failure to provide the basic information, Commerce found,
prevented Commerce from calculating an accurate anti-
dumping margin and from reversing the effects of Hyun-
dai’s cost shifting. Id. Commerce found that Hyundai’s
failures to disclose the requested information rendered ver-
ification “meaningless,” and it rejected Hyundai’s argu-
ment that it should conduct verification to accept new
information that would establish the accuracy of its data
and resolve the issues stemming from its cost shifting,
J.A. 28313.
C
On May 8, 2019, Hyundai sought judicial review in the
U.S. Court of International Trade (“CIT”). Hyundai chal-
lenged certain aspects of Commerce’s final determination,
including its (1) cancellation of verification, (2) application
of facts otherwise available, and (3) use of an adverse in-
ference. Hyundai Elec. & Energy Sys. Co. v. United States,
466 F. Supp. 3d 1303, 1307 (Ct. Int’l Trade 2020). On Au-
gust 4, 2020, the CIT issued a decision sustaining Com-
merce’s final results in their entirety. Id. The CIT first
determined that substantial evidence supported Com-
merce’s decisions to rely on facts otherwise available and
cancel verification. Id. at 1309–18. The CIT pointed to
Commerce’s findings that Hyundai had failed to provide
adequate information on product-specific costs and cost
reconciliation. Id.Regarding Hyundai’s product-specific cost disclosures,
the CIT noted Commerce’s finding that Hyundai had only
provided adequate product specific cost information for one
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HYUNDAI ELECTRIC v. US 15
of the six cost categories identified by Hyundai, namely
other material costs. See id. at 1310–13. The CIT also
pointed to Commerce’s finding that Hyundai had not
tracked the shifting of silicon steel costs from one project to
another and had not properly accounted for the differences
between the amounts reported in the silicon steel pro-
cessing reports and the engineering documents. Id. at
1313–14. The CIT explained, as Commerce had found,
Hyundai had also failed to adequately report product-spe-
cific costs on the four remaining cost categories identified
by Hyundai; instead, Hyundai had provided sample and
aggregate data. Id. at 1314–15.
Regarding Hyundai’s cost-reconciliation disclosures,
the CIT rejected Hyundai’s arguments that it had provided
information satisfying Commerce’s requests and that Com-
merce did not ask Hyundai for the level of detail that Com-
merce contends it did. Id. at 1316–17.
The CIT also determined that substantial evidence
supported Commerce’s use of an adverse inference. Id. at
1318–20. The CIT rejected Hyundai’s argument that Com-
merce, in determining that Hyundai had failed to comply
to the best of its ability, improperly overlooked the limita-
tions of Hyundai’s cost accounting system. Id. at 1318–19.
The CIT reasoned that, although Hyundai did not ade-
quately report its cost-reconciliation and product-specific
costs, that information “had to be available to Hyundai if it
had accurately recaptured all costs—and indeed, in limited
instances, Hyundai provided discrete samples detailing the
adjustments for short periods of time and for limited cate-
gories of expenses.” Id. at 1319.
Hyundai appealed. We have jurisdiction under
28 U.S.C. § 1295(a)(5).
III
We apply the same standard of review applied by the
CIT. Dupont Teijin Films USA, LP v. United States,
Case: 21-1009 Document: 62 Page: 16 Filed: 10/04/2021
16 HYUNDAI ELECTRIC v. US
407 F.3d 1211, 1215 (Fed. Cir. 2005); SNR Roulements v.
United States, 402 F.3d 1358, 1361 (Fed. Cir. 2005). Ac-
cordingly, we uphold a determination by Commerce unless
it is “unsupported by substantial evidence . . . or otherwise
not in accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i);
Dupont, 407 F.3d at 1215; SNR Roulements, 402 F.3d at
1361; see also Fujitsu Gen. Ltd. v. United States, 88 F.3d
1034, 1038 (Fed. Cir. 1996). Substantial evidence means
“such relevant evidence as a reasonable mind might accept
as adequate to support a conclusion.” Matsushita Elec. In-
dus. Co. v. United States, 750 F.2d 927, 933 (Fed. Cir. 1984)
(quoting Universal Camera Corp. v. NLRB, 340 U.S. 474,
477 (1951)).
A
Commerce’s decision to rely on facts otherwise availa-
ble was supported by substantial evidence and not contrary
to law. Section 1677e instructs Commerce to rely on facts
otherwise available when, for example, “necessary infor-
mation is not available on the record.” 19 U.S.C.
§ 1677e(a)(1). Commerce explained that information per-
taining to both product-specific costs and reconciliation
was missing from the record and prevented it from under-
standing Hyundai’s cost shifting and determining an anti-
dumping margin. Regarding Hyundai’s product-specific
costs, Commerce itemized the specific information it
needed from Hyundai in the second supplemental ques-
tionnaire. In response, Hyundai identified six categories of
costs but only provided the requested level of detail for a
single category, other materials.
With respect to the silicon steel category, Hyundai
failed to provide the details requested. Instead, it ex-
plained that it was “not possible to trace” cost shifting for
silicon steel. Hyundai also attributed discrepancies be-
tween projected consumption and actual consumption to
“yield losses.” But as Commerce pointed out, Hyundai’s
comparison of the projected consumption to the silicon steel
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HYUNDAI ELECTRIC v. US 17
processing reports would not result in a yield loss figure.
And for the four remaining cost categories, Commerce ob-
served that Hyundai had provided aggregate-level infor-
mation that did not satisfy Commerce’s request.
As for Hyundai’s cost reconciliations, Hyundai pro-
vided the same single line item twice, and only after Com-
merce’s preliminary results did Hyundai articulate what
that line item included. Commerce’s determination that
necessary information was missing from the record and its
decision to rely on facts otherwise available were supported
by substantial evidence.
Hyundai argues that Commerce did not actually re-
quest details on each category of non-MUC for purposes of
cost reconciliation. Appellant’s Br. 35. We are not per-
suaded. In its supplemental questionnaire, Commerce
asked Hyundai to “[d]iscuss how you separated cost of sales
on tab WS2 between MUC and non-MUC” and to “[d]emon-
strate and provide supporting documentation for the MUC
and non-MUC breakout for [transformers].” J.A. 16750.
By their plain terms, these requests seek more detail than
just the “category” of non-MUC as Hyundai contends.
Hyundai also contends that it in fact satisfied Com-
merce’s requests to fully demonstrate Hyundai’s cost shift-
ing. Appellant’s Br. 37. But the record belies Hyundai’s
argument. While there is no doubt that Hyundai provided
certain information relating to its cost-shifting, we are not
persuaded that Hyundai disclosed information that satis-
fied Commerce’s requests. Indeed, Hyundai provided the
level of detail that Commerce requested with respect to one
of the six cost categories, namely “other materials,” that
Hyundai identified in its response to Commerce’s second
supplemental questionnaire. Hyundai’s repeated disclo-
sure of partial, aggregate, or sample information rather
than complete and itemized information establishes that
Commerce’s decision to rely on facts otherwise available
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18 HYUNDAI ELECTRIC v. US
was reasonable and supported by substantial evidence. See
19 U.S.C. § 1677e(a)(1).
B
Commerce’s decision to cancel verification was also
supported by substantial evidence and not contrary to law.
Section 1677m(e) provides that Commerce is not obligated
to conduct verification when, for example, the information
cannot be verified, the information is so incomplete as to be
unreliable, or the interested party has not acted to the best
of its ability to meet Commerce’s requirements. 19 U.S.C.
§ 1677m(e). Such is the case here because Hyundai failed
to provide the information necessary for Commerce’s anal-
ysis despite being given multiple opportunities to do so.
Where necessary information is absent, Commerce need
not conduct a verification in an attempt to obtain the miss-
ing information. AMS Assocs., Inc. v. United States,
719 F.3d 1376, 1380 (Fed. Cir. 2013) (concluding that Com-
merce did not err in declining to conduct verification where,
“[w]ithout verifiable information on those matters, Aifudi
was necessarily unable to carry its burden”); Qingdao Sea-
Line Trading Co. v. United States, 766 F.3d 1378, 1386
(Fed. Cir. 2014) (“Commerce was unable to verify the index
because Sea-line did not provide the correct source of the
data.”). Indeed, as the CIT has explained, consistent with
Commerce’s objective to verify the accuracy and complete-
ness of submitted factual information under 19 C.F.R.
§ 351.307(d), Commerce typically accepts new information
at verification under limited circumstances, i.e., “only
when: (1) the need for that information was not evident
previously; (2) the information makes minor corrections to
information already on the record; or (3) the information
corroborates, supports, or clarifies information already on
the record.’” Jinko Solar Co. v. United States,
229 F. Supp. 3d 1333, 1356 (Ct. Int’l Trade 2017). Hyundai
does not persuasively show that these circumstances are
present.
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HYUNDAI ELECTRIC v. US 19
Hyundai argues that Commerce erred in finding Hyun-
dai’s cost information unverifiable because, in the past,
Commerce conducted verifications on submitted infor-
mation similar to that submitted by Hyundai in this case.
Appellant’s Br. 29. We are not persuaded. We have re-
jected the notion that “Commerce is forever bound by its
past practices.” Jiaxing Bro. Fastener Co. v. United States,
822 F.3d 1289, 1299 (Fed. Cir. 2016). Instead, “each ad-
ministrative review is a separate exercise of Commerce’s
authority that allows for different conclusions based on dif-
ferent facts in the record.” Qingdao, 766 F.3d at 1387.
Here, Commerce articulated sound reasons for seeking
more detailed information regarding Hyundai’s cost-shift-
ing in this administrative review than in prior reviews, in-
cluding its observation that cost shifting had a larger
impact on this administrative review. J.A. 28306–07. Such
concerns support the reasonableness of Commerce’s re-
quests for a greater amount of detail in this administrative
review.
C
Commerce’s decision to use an adverse inference in se-
lecting from among the facts otherwise available is also
reasonable and supported by substantial evidence, and not
contrary to law. The statement of administrative action on
the Uruguay Round Agreements Act provides that “the
purpose of the adverse inference provision is to encourage
future cooperation and ensure that a respondent does not
obtain a more favorable antidumping rate by failing to co-
operate.” Mukand, Ltd. v. United States, 767 F.3d 1300,
1307 (Fed. Cir. 2014) (citing H.R. Rep. No. 103–316, at 200
(1994), reprinted in 1994 U.S.C.C.A.N. 4040, 4199). An ad-
verse inference is warranted where an interested party
fails to act to the best of its ability in responding to Com-
merce’s request. 19 U.S.C. § 1677e(b)(1)(A); Nippon Steel
Corp. v. United States, 337 F.3d 1373, 1382 (Fed. Cir.
2003). The “best of its ability” standard requires an inter-
ested party to “put forth its maximum effort to provide
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20 HYUNDAI ELECTRIC v. US
Commerce with full and complete answers to all inquiries
in an investigation.” Nippon, 337 F.3d at 1382; see also
Mukand, 767 F.3d at 1306. The standard “does not con-
done inattentiveness, carelessness, or inadequate record
keeping.” Nippon, 337 F.3d at 1382. “An adverse inference
may not be drawn merely from a failure to respond, but
only under circumstances in which it is reasonable for
Commerce to expect that more forthcoming responses
should have been made . . . .” Id. at 1383.
We have held that an adverse inference may be appro-
priate where an interested party has been notified of a de-
fect in its questionnaire response yet continues to provide
a defective response. Maverick Tube Corp. v. United
States, 857 F.3d 1353, 1361 (Fed. Cir. 2017) (“Borusan had
already failed to provide the information requested in Com-
merce’s original questionnaire, and the supplemental ques-
tionnaire notified Borusan of that defect. § 1677m(d) does
not require more.”). Hyundai did so here when, in response
to Commerce’s second supplemental questionnaire, it only
provided the requested level of detail for one out of six cost
categories of product-specific cost information. It also did
so when it twice provided the same single line item for non-
MUC with respect to transformers in its responses pertain-
ing to cost reconciliation. Given these circumstances, Com-
merce’s determination that Hyundai did not act to the best
of its ability in responding to Commerce’s requests is sup-
ported by substantial evidence.
Hyundai contends that it acted to the best of its ability
in responding to Commerce’s requests. Hyundai states
that it engaged in a “comprehensive effort to provide [Com-
merce] with” cost reconciliation information. Appellant’s
Br. 48. Hyundai also contends that it could not have been
more forthcoming in providing Commerce with product-
specific cost tracing given the nature of its accounting. Id.
at 49. We are not persuaded. To the extent that the short-
comings of Hyundai’s responses are attributable to its rec-
ord keeping, that alone does not avoid an adverse
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HYUNDAI ELECTRIC v. US 21
inference. Nippon, 337 F.3d at 1382. That is all the more
true where, as here, Commerce clearly and repeatedly re-
quested the information and identified the defects in Hyun-
dai’s responses, and the information that was ultimately
missing from the record was foundational to Commerce’s
ability to perform the antidumping duty calculations in a
sound manner. See, e.g., Mukand, 767 F.3d at 1307 (“Prod-
uct-specific information is a necessary element in the
dumping analysis, and it is standard procedure for Com-
merce to request product-specific data in antidumping in-
vestigations. It was thus reasonable for Commerce to
expect from Mukand more accurate and responsive an-
swers to the questionnaire.”).
IV
We hold that Commerce’s determinations to rely on
facts otherwise available, to cancel verification, and to
draw an adverse inference in selecting from among the
facts otherwise available are supported by substantial evi-
dence and otherwise not contrary to law. We therefore af-
firm the CIT’s decision sustaining Commerce’s final
results. We have considered Hyundai’s remaining and ar-
guments and find them unpersuasive.
AFFIRMED
COSTS
No costs.