Hitachi Energy USA Inc. v. United States

Case: 20-2114 Document: 66 Page: 1 Filed: 05/24/2022
United States Court of Appeals
for the Federal Circuit
______________________
HITACHI ENERGY USA INC.,
Plaintiff-Appellee
v.
UNITED STATES,
Defendant-Appellee
HYUNDAI HEAVY INDUSTRIES CO., LTD.,
HYUNDAI CORPORATION, USA,
Defendants-Appellants
______________________
2020-2114
______________________
Appeal from the United States Court of International
Trade in No. 1:16-cv-00054-MAB, Judge Mark A. Barnett.
______________________
Decided: May 24, 2022
______________________
MELISSA M. BREWER, Kelley Drye & Warren, LLP,
Washington, DC, argued for plaintiff-appellee. Also repre-
sented by ROBERT ALAN LUBERDA, DAVID C. SMITH, JR.
JOHN JACOB TODOR, Commercial Litigation Branch,
Civil Division, United States Department of Justice, Wash-
ington, DC, argued for defendant-appellee. Also repre-
sented by JEFFREY B. CLARK, JEANNE DAVIDSON, FRANKLIN
E. WHITE, JR.; DAVID W. RICHARDSON, Office of the Chief
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2 HITACHI ENERGY USA INC. v. US
Counsel for Trade Enforcement & Compliance, United
States Department of Commerce, Washington, DC.
RON KENDLER, White & Case LLP, Washington, DC, ar-
gued for defendants-appellants. Also represented by DAVID
EDWARD BOND.
______________________
Before NEWMAN, LOURIE, and DYK, Circuit Judges.
NEWMAN, Circuit Judge.
Appellants Hyundai Heavy Industries Co. and Hyun-
dai Corporation, USA (collectively, “Hyundai”) seek review
of an antidumping duty determination for large power
transformers imported from the Republic of Korea. This is
the second administrative review (“POR2”). The results of
the Original Investigation (“OI”) are reported at Large
Power Transformers from the Republic of Korea: Final De-
termination of Sales at Less Than Fair Value, 77 Fed. Reg.
40857 (July 11, 2012) (“Issues and Decision Memoran-
dum”).
When an administrative review is requested, the anti-
dumping duty is redetermined. 19 U.S.C. § 1675(a)(1)(b).
The first administrative review (“POR1”) is reported at
Large Power Transformers from the Republic of Korea: Fi-
nal Results of Antidumping Administrative Review; 2012-
2013, 80 Fed. Reg. 17034 (Mar. 31, 2015).
The second administrative review was initiated in Au-
gust 2014, and the results are reported at Large Power
Transformers from the Republic of Korea: Final Results of
Antidumping Duty Administrative Review; 2013-2014, 81
Fed. Reg. 14087 (Mar. 16, 2016). This determination was
subject to four appeals to the Court of International Trade,
with three remands to the Department of Commerce
(“Commerce”). The court’s final decision, reported at ABB,
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HITACHI ENERGY USA INC. v. US 3
Inc., v. United States, 443 F. Supp. 3d 1354, 1357 (Ct. Int’l
Trade 2020), is the subject of this appeal. 1
This appeal of the second review concerns the applica-
tion of 19 U.S.C. § 1677m(d), which requires Commerce to
notify and permit a party to remedy or explain any defi-
ciency in information provided during an investigation.
Commerce asserts that this statute did not apply to the cir-
cumstances herein; thus Commerce did not permit Hyun-
dai to provide additional information relevant to
Commerce’s change of methodology concerning normal
value and sales price of service-related revenue. Com-
merce then applied an adverse inference and partial facts
available to increase the dumping margin.
We conclude that Commerce erred in its statutory com-
pliance as a matter of law, and we remand for redetermi-
nation of the antidumping duty applied to Hyundai’s
imports, based on the calculation of service-related reve-
nue. Hyundai has the statutory right to correct the defi-
ciencies that led to the application of adverse inferences
and partial facts available.
BACKGROUND
An antidumping duty may be levied on imported prod-
ucts that are sold or likely to be sold in the United States
at less than fair value, when such sales threaten or cause
material injury to a domestic industry. 19 U.S.C. § 1673.
1 There have been third, fourth, and fifth adminis-
trative reviews, and appeals of the third and fifth adminis-
trative reviews previously reached the Federal Circuit.
The subject matter of those appeals is unrelated to the is-
sue now before us. See Hyundai Heavy Indus. Co., Ltd. v.
United States, 819 Fed. Appx. 937 (Fed Cir. 2020) (third
review); Hyundai Elec. & Energy Sys. Co., Ltd. v. United
States, 15 F.4th 1078 (Fed. Cir. 2021) (fifth review).
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4 HITACHI ENERGY USA INC. v. US
To determine whether an imported product is sold at less
than fair value, Commerce determines the normal value of
the product in the home market, and the export (sales)
price in the United States. 19 U.S.C. §§ 1675(a)(2)(A),
1677(b)(a). “Normal value” is “the price at which the for-
eign like product is first sold . . . for consumption in the
exporting country.” 19 U.S.C. § 1677b(a)(1)(B)(i).
This appeal concerns methodology for valuation of ser-
vice-related revenue associated with Korean large power
transformers, in determining normal value and sales price.
In POR2, on a first appeal of Commerce’s decision, the
Court of International Trade remanded this issue to Com-
merce, at the Government’s request. In response, Com-
merce changed its methodology for determination of
service-related revenue.
Hyundai then asked Commerce for permission to pro-
vide additional data and information. Hyundai wrote:
“With respect to the factual flaws discussed above, the De-
partment should reopen the record and issue a supple-
mental questionnaire to collect information regarding the
New Test for service-related revenue.” Appx10067. Hyun-
dai proposed “If the Department continues to apply the
New Test, it must provide Hyundai with an opportunity to
place relevant information on the record, by issuing a sup-
plemental questionnaire.” Id. at 10069. Commerce denied
the request, and calculated the antidumping margin based
on the original information.
Hyundai reported service-related revenue in accord-
ance with the Commerce questionnaire. Antidumping
Duty Questionnaire – Hyundai Heavy Industries, C18 (Nov.
18, 2014) see Response to Supplemental Sections B and C
Questionnaire (Jun. 3, 2015) (“Where the terms of sale re-
quire Hyundai to perform such services, the gross unit
price includes the value of services required.”).
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HITACHI ENERGY USA INC. v. US 5
In the second administrative review, Hyundai followed
the same procedure as previously accepted by Commerce
during the original investigation and the first administra-
tive review. See POR1 Final Results, 80 Fed. Reg. at
17035. ABB Enterprise Software, Inc. (now Hitachi En-
ergy USA, Inc., herein, “ABB”) objected to this methodol-
ogy, stating that it overstated the prices of Hyundai’s
United States sales. Commerce rejected the objection, stat-
ing that it had reviewed Hyundai’s invoices and purchase
orders and that Hyundai had properly responded to the
questionnaire. Commerce stated:
Based on our review of the record evidence at veri-
fication and comments by interested parties, we
have determined to rely upon Hyundai’s reported
[gross unit price] for purposes of calculating net
U.S. price for its sales . . . We find that there is no
evidence, based on the invoices and purchase or-
ders examined at verification, to indicate that
Hyundai has separate revenues which it has failed
to report to Commerce.
Original Investigation, Issues & Decision Memorandum,
Comment 4 (July 2, 2012) (summarized at 77 Fed. Reg.
40857 July 11, 2012).
ABB appealed to the Court of International Trade, ob-
jecting to several aspects of the Commerce procedure, in-
cluding service-related revenues. Commerce requested a
voluntary remand “to reconsider its application of its reve-
nue-capping practice in this case, in light of this practice .
. . [and to] evaluate whether its application of this practice
is consistent with respect to both respondents.” Def.’s
Suppl. Mem. Addressing Standard for Voluntary Remand,
ABB, Inc. v. United States, No. 1:16-cv-00054 (Ct. Int’l
Trade May 19, 2017), ECF No. 79; Appx 9945. The court
stated that “Commerce’s concerns are substantial and le-
gitimate” and remanded for consideration. ABB, Inc. v.
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6 HITACHI ENERGY USA INC. v. US
United States, 273 F. Supp. 3d 1200, 1205 (Ct. Int’l Trade
2017).
On remand, Commerce revised its methodology for de-
termining service-related revenue:
Commerce’s capping methodology is not dependent
upon whether a respondent must provide the ser-
vice under the terms of sale as Hyundai contends,
but whether such services were provided and
whether the revenue amounts collected for the pro-
vision of such services exceed the cost of those ser-
vices. Neither is Commerce’s capping methodology
dependent upon whether the service-related ex-
penses and revenues are separate line-items on an
invoice to the unrelated customer . . . Commerce’s
capping methodology, generally, may nevertheless
be applied notwithstanding whether the amounts
are specified in sales contracts with, or invoices to,
the customer. If a respondent collects, as a portion
of the final price to the customer, a portion of reve-
nue which is dedicated to covering a service-related
expense, and that service-related expense is less
than the revenue set aside to cover the expense,
then this is service-related revenue which is part of
the material terms of sale and must be capped.
Final Results of Redetermination Pursuant To Court Re-
mand, ABB, Inc. v. United States, No. 1:16-cv-00054 (Ct.
Int’l Trade Feb. 7, 2018), ECF No. 95; Appx105-06. Com-
merce stated:
Hyundai cannot prevent the application of Com-
merce’s capping methodology based on a technical-
ity concerning whether a respondent chooses to
separately itemize service-related charges in sales
contracts or invoices. Commerce’s determination
in this remand redetermination is not a change in
methodology, but is instead an appropriate
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HITACHI ENERGY USA INC. v. US 7
application of our capping methodology pursuant to
the statute and past practice.
Appx106.
Commerce changed the way it was evaluating the data,
for these changes required identification of which services
were provided, and cost and price information regardless of
whether they were separately negotiated or part of the
sales price. Since Commerce found Hyundai’s original sub-
missions inadequate to determine the service-related reve-
nue in this adjusted manner, Hyundai requested
permission to provide additional information in conformity
with 19 U.S.C. § 1677m(d). See Letter from Hyundai Heavy
Indus. Co. to Wilbur L. Ross, Jr., Secretary of Commerce,
Case No. A-580-867 (Dep’t of Commerce Jan. 16, 2018) (Re-
questing Reopening of the Record in Order to Submit New
Information); Appx10064-100102. The statute provides:
(d) Deficient submissions.
If the administering authority or the Commission
determines that a response to a request for infor-
mation under this subtitle does not comply with the
request, the administering authority or the Com-
mission (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.
19 U.S.C. § 1677m(d)
In its first remand Commerce applied a new test. As
described by Hyundai, “Under the New Test, which the De-
partment now seeks to apply in the Draft Remand, service-
related revenue exists if certain sales documents identified
revenue for the service, regardless of whether Hyundai was
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8 HITACHI ENERGY USA INC. v. US
required to provide the service under the terms of sale.”
Appx10069. Commerce applied its new method of deter-
mining whether service-related revenue existed for Hyun-
dai, and then “the Department immediately states that
‘information is missing from the record due to Hyundai’s
failure to report service-related revenues’ and that this jus-
tifies the application of partial facts available.” Id.
In its request to submit additional information, Hyun-
dai stated that “the Department appears to view its Origi-
nal Test for service-related revenue to be incorrect.
Reopening the factual record is therefore not only within
the Department’s discretion, it is necessary.” Id. at 10085.
Denying Hyundai’s request to provide additional infor-
mation, Commerce stated that its “determination in this
remand redetermination is not a change in methodology,
but is instead an appropriate application of our capping
methodology pursuant to the statute and past practice.”
Id. at 106. Commerce characterizes Hyundai’s responses
as “avoidance,” stating that “Hyundai cannot prevent the
application of Commerce’s capping methodology based on a
technicality concerning whether a respondent chooses to
separately itemize service-related charges in sales con-
tracts or invoices.” Id.
Commerce found that “Hyundai failed to cooperate to
the best of its ability by not providing the information re-
quested. Therefore, partial adverse facts available is war-
ranted.” Id. at 108. Commerce then determined the normal
value and sales price for service-related revenue, on ad-
verse inference and partial facts available, and increased
Hyundai’s dumping margin to 25.51 percent. Id. at 116.
Commerce acknowledged Hyundai’s request to reopen the
investigation and allow the submission of information re-
lated to the new methodology but did not respond, stating
only that Hyundai failed to cooperate. Id. at 108.
Hyundai appealed, stating that “the Department’s con-
clusions rest on the unreasonable assertion that Hyundai
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HITACHI ENERGY USA INC. v. US 9
should have known that the Department would retroac-
tively revise its test with respect to service-related revenue
two years after it issued the Final Results.” Defendant-In-
tervenors' Comments in Opposition to the Final Results of
Redetermination Pursuant to Court Remand, ABB Inc. v.
United States, No. 1:16-cv-00054 (Ct. Int’l Trade Mar. 20,
2018), ECF No. 106. It is not disputed that Hyundai re-
sponded fully to Commerce’s questionnaire.
Hyundai also argued that the additional information
Commerce was requesting was contained in previously
submitted “invoices listing separate line items for ser-
vices[.]” Final Results of Redetermination Pursuant to
Court Remand, ABB Inc. v. United States, No. 1:16-cv-
00054 (Ct. Int’l Trade Apr. 26, 2019), ECF No. 150;
Appx41-42. However, Commerce refused to consider infor-
mation from this source, stating that Hyundai “did not
alert” Commerce to “invoices listing separate line items for
services” and therefore “failed to cooperate to the best of its
ability.” Id. at 41-42.
The Court of International Trade observed that
§ 1677m(d) requires Commerce to notify and permit rem-
edy of any deficiency: “The Government further argues that
Commerce did not have an obligation to comply with
§ 1677m(d) because the agency was not aware of the defi-
ciencies in Hyundai's reporting until it discovered the un-
derlying information evincing Hyundai’s misreporting for
the first time at verification.” 2 ABB Inc. v. United States,
2 “Verification” is conducted, 19 U.S.C. § 1677m(i)(3),
by visiting the foreign company’s facilities to review “all
files, records and personnel” relevant to the inquiry. See
19 C.F.R. § 351.307(d). Commerce conducted onsite verifi-
cation at Seoul and Ulsan, Korea from July 16 through July
24, 2015. Mem. from Dep’t of Commerce to File, Case No.
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10 HITACHI ENERGY USA INC. v. US
355 F. Supp. 3d 1206, 1216 (Ct. Int’l Trade 2018). The court
stated: “When a respondent provides seemingly complete,
albeit completely inaccurate, information, § 1677m(d) does
not require Commerce to issue a supplemental question-
naire seeking assurances that the initial response was
complete and accurate.” Id. at 1222.
However, the court found: “It was not until Commerce
sorted through Hyundai's sales documentation that the
agency recognized that Hyundai's documentation was in-
consistent with its reporting.” Id. The court concluded,
“under these circumstances, Commerce was not statutorily
mandated to provide Hyundai a subsequent opportunity to
remedy the deficiency.” Id. at 1223.
The court remanded for redetermination, explaining
that Commerce had impermissibly relied on internal
Hyundai communications as evidence of service-related
revenue. Id. The remand included instructions “that the
agency may not apply its capping methodology to those
transactions or services for which Commerce relied only on
internal communications among Hyundai employees or af-
filiates” to determine service-related revenue. Id.
In response to this second remand, Commerce applied
the court’s ruling that Hyundai’s internal communications
were not evidence of service-related revenue. Final Results
of Redetermination Pursuant to Court Remand ABB Inc. v.
United States, No. 1:16-cv-00054 (Ct. Int’l Trade Apr. 26,
2016), ECF No. 150; Appx46. Commerce accepted Hyun-
dai’s argument that certain revenues were not service re-
lated, and Commerce did not apply the “capping”
methodology to these revenues. “The documentation for
SEQU 1 does not contain any service-related revenue.” Id.
at 42. However, Commerce did not accept Hyundai’s
A-580-867 (Dep’t of Commerce Aug. 31, 2015) (on file with
author). Appx9264.
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HITACHI ENERGY USA INC. v. US 11
renewed request for permission to provide additional infor-
mation on service-related revenue to comport with Com-
merce’s new procedures.
Based on the continued application of adverse facts
available, and applying changes to other factors, Com-
merce assessed a dumping margin of 16.58 %. Id. at 57.
On Hyundai’s appeal, the court again remanded to Com-
merce on issues not challenged on this appeal. On this re-
mand, Commerce addressed those issues and set the
dumping margin at 16.13%. Final Results of Redetermina-
tion Pursuant to Court Remand, ABB Inc. v. United States,
No. 1:16-cv-00054 (Ct. Int’l Trade Apr. 14, 2020), ECF No.
182; Appx4-14. Hyundai appealed a fourth time, and the
court sustained Commerce’s Third Remand Results. ABB,
Inc. v. United States, 437 F. Supp.3d 1289 (Ct. Int’l Trade
2020).
Now, before us, Hyundai presses its objection to Com-
merce’s refusal to allow correction of any deficiencies in the
information previously submitted, as required by 19 U.S.C.
§ 1677m(d). We conclude that Hyundai is correct that the
statute requires the opportunity to remedy any deficiencies
in the information of record.
DISCUSSION
Standard of Review
On appeal of a decision of the Court of International
Trade concerning an antidumping duty determination of
the Department of Commerce, we review the decision of
Commerce on the same standard that is applied by the
Court of International Trade. “Commerce's determination
should therefore be upheld unless it is unsupported by sub-
stantial evidence on the record or is not in accordance with
law.” Dupont Teijin Films USA, LP v. United States, 407
F.3d 1211, 1215 (Fed. Cir. 2005); see also SNR Roulements
v. United States, 402 F.3d 1358, 1361 (Fed. Cir. 2005).
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12 HITACHI ENERGY USA INC. v. US
“[T]his court must review the entire record for substan-
tial evidence and compliance with the law. Substantial ev-
idence is ‘such relevant evidence as a reasonable mind
might accept as adequate to support a conclusion.’” Am.
Silicon Techs. v. United States, 334 F.3d 1033, 1036-37
(Fed Cir. 2003) (citing Universal Camera Corp. v. N.L.R.B.,
340 U.S. 474, 477 (1951)). “The court shall hold unlawful
any determination, finding, or conclusion found . . . to be
unsupported by substantial evidence on the record, or oth-
erwise not in accordance with law[.]” 19 U.S.C. §
1516a(b)(1)(B)(i).
The Issues on Appeal
Hyundai appeals three rulings of Commerce that were
sustained by the Court of International Trade: (1) Com-
merce’s refusal to permit Hyundai to remedy the an-
nounced deficiency in reported information about service-
related revenue, as required by 19 U.S.C. § 1677m(d);
(2) Commerce’s ruling that Hyundai had not cooperated to
the best of its ability, thereby supporting use of adverse in-
ferences, 19 U.S.C. § 1677e(b); and (3) Commerce’s use of
adverse facts available in these circumstances.
A
Hyundai’s Request to Supplement the Record
Hyundai’s request to supplement the record is in ac-
cordance with law. After Commerce modified its method-
ology for determination of service-related revenue after the
first remand, Hyundai sought to provide data and infor-
mation related to the new methodology. See Final Results
of Redetermination Pursuant to Court Remand, ABB Inc. v.
United States, No. 1:16-cv-00054 (Ct. Int’l Trade Apr. 26,
2019), ECF No. 150; Appx28-57.
Hyundai states that its record documents already
showed the break-out information now required by
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HITACHI ENERGY USA INC. v. US 13
Commerce. In response to Commerce’s original question-
naire and “consistent with prior segments of this proceed-
ing,” Hyundai separately reported service-related revenue
where there existed “a separate purchase order for . . . the
transformer (e.g., supervision) but that related to the
transformer.” Letter from Hyundai to Commerce Re: Anti-
dumping Administrative Review of Large Power Trans-
formers from Korea - Response to Sections B and C
Questionnaires (Jan. 26, 2015); Appx2408. Hyundai ex-
plained that the relevant service-related revenue was pro-
vided in separate fields as Commerce had requested.
“ADDPOPRU is sales amount under a separate purchase
order for services that were not included in the purchase
order for the transformer (e.g., supervision), but that are
related to the transformer. ADDPOEXPU is the expense
associated with the additional services.” Id.
In response to Hyundai’s submission, Commerce sent a
supplemental questionnaire directed to several items. U.S.
Department of Commerce, Supplemental Questionnaire for
Sections B and C of Hyundai Heavy Industries and Hyun-
dai Corporation USA's Responses to the Antidumping Duty
Questionnaire (May 22, 2015); Appx6140. Hyundai re-
sponded to each question. Concerning service-related rev-
enue, Hyundai explained, “Where the terms of sale require
Hyundai to perform such services, the gross unit price in-
cludes the value of services required.” Hyundai Heavy In-
dustries Co, Ltd., Antidumping Administrative Review of
Large Power Transformers from South Korea - Response to
Supplemental Sections B and C Questionnaires (Jun. 3,
2015); Appx6162.
Commerce had previously rejected ABB’s objections to
Hyundai’s responses in Commerce’s initial action on the
second administrative review:
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14 HITACHI ENERGY USA INC. v. US
We cannot conclude that necessary information is
not available on the record, nor can we find that
Hyundai withheld information requested by the
Department, that it failed to provide such infor-
mation in the form or manner requested, that it
acted to significantly impede the proceeding, or
that it provided requested information that could
not be verified.
Issues and Decision Memorandum for Final Results of An-
tidumping Duty Administrative Review: Large Power
Transformers from the Republic of Korea: 2013-2014, Com-
ment 15 (Mar. 8, 2016); Appx9649. Commerce stated that
Hyundai’s documentation “show[s] no indication that
Hyundai improperly reported its sales data.” Id.
These findings cannot be reconciled with Commerce’s
later ruling that Hyundai had “not cooperate[d] to the best
of its ability.” Commerce supported its refusal to permit
Hyundai to provide additional information, by stating that
Hyundai had not previously provided information to the
best of its ability: “We have determined not to allow Hyun-
dai to submit such information because Hyundai had [am-
ple] opportunity to submit the factual information during
the course of the original proceeding, pursuant to 19 CFR
351.301.” Letter from Dep’t of Commerce to Hyundai Heavy
Industries Co., Ltd. & Hyundai Corporation USA, Re: Re-
mand Order of the U.S. Court of International Trade for
ABB Inc. v. United States concerning Antidumping Duty
Administrative Review of Large Power Transformers from
the Republic of Korea; 2013- 2014: Request to Submit Ser-
vice-Related Revenue Data from Hyundai Heavy Industries
Co., Ltd. and Hyundai Corporation USA, No. 1:16-cv-
00054, Slip Op. 18-156 (Mar. 22, 2019); Appx10368.
After the first remand, Commerce determined that ser-
vice-related revenue would no longer be defined by the
terms of the sale as it was in the original investigation, the
first review, and the initial findings of the second review.
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HITACHI ENERGY USA INC. v. US 15
“Commerce’s capping methodology is not depend-
ent upon whether a respondent must provide the
service under the terms of sale as Hyundai con-
tends, but whether such services were provided
and whether the revenue amounts collected for the
provision of such services exceed the cost of those
services. Neither is Commerce’s capping method-
ology dependent upon whether the service-related
expenses and revenues are separate line-items on
an invoice to the unrelated customer.”
Final Results of Redetermination Pursuant To Court Re-
mand, ABB Inc. v. United States, No. 1:16-cv-00054 (Ct.
Int’l Trade Feb. 7, 2018), ECF No. 95; Appx105-106. Thus
documentation of the line-item breakouts became a factor
in the administrative review.
Commerce’s denial of Hyundai’s request to provide any
necessary information was contrary to the statute, which
states in relevant part that Commerce “shall promptly in-
form 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.” 19 U.S.C. § 1677m(d). The Court of Interna-
tional Trade has previously interpreted the statute to per-
mit supplementation. See SKF USA Inc. v. United States,
391 F. Supp. 2d 1327, 1336 (Ct. Int’l Trade 2005) (“Clarity
regarding what information is requested by Commerce is
important, especially in cases such as this where there was
confusion as to whether or not requests for data were made
and whether or not these requests were refused.”). In SKF
the court admonished that it is impermissible for Com-
merce to delay reporting that a respondent has provided
insufficient information until after it is too late to correct.
“Pursuant to 19 U.S.C. § 1677m(d), if the Department
wished to place the burden of error on SKF, it had to make
clear and give SKF a chance to correct the error prior to the
issuance of a final decision.” Id. at 1336-37.
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16 HITACHI ENERGY USA INC. v. US
In a separate proceeding on a later administrative re-
view and a different issue, Hyundai Steel Co. v. United
States, 282 F. Supp. 3d 1332, 1349 (Ct. Int’l Trade 2018),
the court held that Commerce’s failure to timely notify a
party of deficiency “is itself a violation of § 1677m(d).” It is
undisputed that no such notification was given. The gov-
ernment states in its brief that Commerce was not required
to permit Hyundai to provide additional information be-
cause the deficiency in question was not determined until
“verification.” Gov’t Br. 31. However, the statutory entitle-
ment to notice and opportunity to remedy any deficiency is
unqualified. Hyundai also observes that data with the
breakouts of revenue in separate line items were already
in Commerce’s possession, although it was not required by
Commerce’s questionnaire. Commerce erred, in denying
the opportunity to remedy the asserted deficiency.
B
Adverse Inferences and Applied
Partial Facts Available
Commerce drew adverse inferences and applied partial
facts. When necessary information is missing or unavaila-
ble, Commerce is authorized to consider whatever facts are
available, 19 U.S.C. § 1677e(a), and to “use an inference
that is adverse to the interests of that party in selecting
from among the facts otherwise available” when the party
has “failed to cooperate by not acting to the best of its abil-
ity to comply with a request for information.” 19 U.S.C. §
1677e(b)(1). See Nat'l Nail Corp. v. United States, 390 F.
Supp. 3d 1356, 1373 (Ct. Int’l Trade 2019) (“[T]he use of
‘facts otherwise available,’ to fill in gaps, applies when nec-
essary information is lacking, regardless of the reason for
its absence . . . An adverse inference, on the other hand,
may only be drawn where the reason underlying the ab-
sence of necessary information was the respondent's failure
to cooperate to ‘the best of its ability,’ that is, where the
Case: 20-2114 Document: 66 Page: 17 Filed: 05/24/2022
HITACHI ENERGY USA INC. v. US 17
respondent failed to do the maximum it was able to do.”)
(citation omitted).
Commerce is authorized to draw an adverse inference
and to apply the highest dumping margin when the re-
spondent fails to do the maximum. See Maverick Tube
Corp. v. United States, 857 F.3d 1353, 1361 (Fed. Cir. 2017)
(adverse inference based on adverse facts available may be
appropriate when an interested party has been notified of
a defect in its questionnaire response yet continues to pro-
vide a defective response).
Section 1677e(a)(2)(D) requires that the authorization
to rely on adverse facts available is subject to § 1677m(d),
which requires Commerce to provide notice and an oppor-
tunity to remedy a deficiency. Commerce has no authority
to apply adverse facts and inferences unless the respondent
has failed to provide requested information when notified
of the deficiency, and has not acted to the best of its ability
in responding to such requests. 19 U.S.C. § 1677e(a). See
also Canadian Solar Inc. v. United States, 537 F. Supp. 3d
1380, 1398 (Ct. Int’l Trade 2021) (holding that “Commerce
must give Canadian Solar an opportunity to correct any de-
ficient information”); Shelter Forest Int'l Acquisition, Inc.
v. United States, 497 F. Supp. 3d 1388, 1401 (Ct Int’l Trade
2021) (“Commerce must raise identified deficiencies such
as this one and provide respondents with an opportunity to
explain, correct or supplement it.”).
Commerce is permitted by 19 U.S.C. § 1677e(b)(1)(A) to
draw adverse inferences “in selecting from the facts avail-
able” when “an interested party has failed to cooperate by
not acting to the best of its ability to comply with a request
for information.” Taian Ziyang Food Co. v. United States,
637 F. Supp.2d 1093, 1118 (Ct. Int’l Trade 2009). To this
end, Commerce “must make a finding that a party has
failed to act to the best of its ability when complying with
a request for information from Commerce.” Id. Here,
Case: 20-2114 Document: 66 Page: 18 Filed: 05/24/2022
18 HITACHI ENERGY USA INC. v. US
Commerce made adverse inferences and relied on adverse
facts, although there was no refusal to provide the infor-
mation whose absence created a gap that required the use
of facts available. Hyundai explains how this error in-
creased the dumping margin:
[B]ecause it rejected Hyundai’s request to submit
additional information, the Department was una-
ble to determine whether there was SRR for the re-
maining sales. As partial adverse FA, the
Department reduced all other U.S. gross unit
prices “by the highest percentage difference be-
tween service-related revenue and the service-re-
lated expenses from the SEQUs with usable
service-related expenses” on the record. This sub-
stantially increased the dumping margin.
Hyundai Br. 29 (internal citations omitted). “Before mak-
ing adverse inference, Commerce must examine a respond-
ent’s actions and assess the extent of the respondent’s
abilities, efforts, and cooperation in responding to Com-
merce requests for information.” Nippon Steel Corp. v.
United States, 337 F.3d 1373, 1382 (Fed Circ. 2003). Com-
merce made no such examination, and on this appeal, the
only excuse offered for Commerce’s failure to provide
Hyundai with a notice of deficiency and the opportunity for
remedy, was that Commerce “discovered” the deficiency
only on “verification.” This argument does not track Com-
merce’s prior position that the deficiency arose when Com-
merce changed its methodology to satisfy a prior remand
from the Court of International Trade.
The government does not assert that Hyundai withheld
information, or committed any of the transgressions in §
1677e(a)(1) or (2). The government agrees that Commerce
changed its methodology, and the government acknowl-
edges that “Commerce’s analysis has evolved in this pro-
ceeding.” Gov’t Br. 29.
Case: 20-2114 Document: 66 Page: 19 Filed: 05/24/2022
HITACHI ENERGY USA INC. v. US 19
The Court of International Trade affirmed Commerce’s
departure from the statute, and departed from its own
precedent; See Borusan Mannesmann Boru Sanayi ve Ti-
caret A.S. v. United States, 61 F. Supp. 3d 1306, 1345-48
(Ct. Int’l Trade 2015), aff’d sub nom Maverick Tube Corp.
v. United States, 857 F.3d 1353 (Fed. Cir. 2017) (Commerce
must provide a sufficiently detailed explanation of the “na-
ture of the deficiency” and must permit the respondent to
correct the deficiency).
The record herein provides no basis for an adverse in-
ference and recourse to adverse facts available. It is undis-
puted that any incompleteness of sales data and
information could have been remedied by the proffered in-
formation, but for Commerce’s refusal to permit Hyundai
to provide this information. No reasonable justification
has been offered for that refusal despite Hyundai’s re-
peated requests. The invocation of adverse inferences and
use of partial facts available is unsupported by substantial
evidence in the record.
CONCLUSION
Commerce erred in law, refusing to permit Hyundai to
supplement the record with information concerning ser-
vice-related revenue. Commerce thus relied on incomplete
data to determine antidumping duties. The Court of Inter-
national Trade erred in ratifying that refusal. We vacate
the Court of International Trade’s affirmance on this issue,
and we vacate the court’s affirmance of Commerce’s re-
course to adverse inferences and partial facts available, for
that action was a result of the erroneous exclusion of infor-
mation. We remand with instructions for redetermination
of any dumping margin, on complete information provided
in conformity with law.
VACATED AND REMANDED
COSTS