Court Opinion

ID: 3198841
Source: CourtListenerOpinion
Date Created: 2016-04-28 16:01:39.578236+00
Date Added: 2024-06-11T12:19:33.023693
License: Public Domain

Slip Op. 16-42

              UNITED STATES COURT OF INTERNATIONAL TRADE
____________________________________
                                       :
SINCE HARDWARE (GUANGZHOU)             :
CO., LTD.,                             :
                                       :
                  Plaintiff,           :
                                       :
                          v.           :
                                       :
UNITED STATES,                         : Before: Richard K. Eaton, Judge
                                       :
                  Defendant,           : Court No. 09-00123
                                       :
                          and          :
                                       :
HOME PRODUCTS INTERNATIONAL, :
INC.,                                  :
                                       :
                  Defendant-Intervenor.:
____________________________________:

                                  OPINION and ORDER

[The United States Department of Commerce’s Final Results of Redetermination are sustained.]

                                                                Dated: April 28, 2016

       William E. Perry, Dorsey & Whitney LLP, of Seattle, WA, argued for plaintiff. With
him on the brief was Emily Lawson.

       Michael D. Snyder, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S.
Department of Justice, of Washington, D.C., argued for defendant. With him on the brief were
Benjamin C. Mizer, Principal Deputy Assistant Attorney General, Jeanne E. Davidson, Director,
and Patricia M. McCarthy, Assistant Director. Of counsel on the brief was Amanda T. Lee,
Attorney, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department
of Commerce, of Washington, D.C.

       Frederick L. Ikenson, Blank Rome LLP, of Washington, D.C., argued for defendant-
intervenor. With him on the brief was Larry Hampel.
Court No. 09-00123                                                                           Page 2

               EATON, Judge: Before the court are the objections of plaintiff Since Hardware

(Guangzhou) Co., Ltd. (“Since Hardware”) to the United States Department of Commerce’s

(“the Department” or “Commerce”) Fourth Final Results of Redetermination Pursuant to Court

Remand (Second Corrected Version) dated June 18, 2015 (ECF Dkt. No. 202-2) (“Fourth

Remand Results”). On remand, Commerce was instructed to demonstrate why the rate of 157.68

percent assigned to Since Hardware based on adverse facts available (“AFA”) was relevant to the

company and reflected its commercial reality, or to select and properly corroborate a new rate.

Since Hardware (Guangzhou) Co. v. United States (Since Hardware IV), 39 CIT __, Slip Op. 15-

15, at 24–26 (Feb. 18, 2015).

       In the Fourth Remand Results, Commerce states that it was unable to corroborate 1 the

157.68 percent rate, and instead selected a new rate of 72.29 percent, the rate assigned to the

separate-rate respondents in the underlying less-than-fair-value investigation (“the

       1
                 During the pendency of this case, the Trade Preferences Extension Act of 2015
was signed into law, which, among other things, amends the corroboration requirement under 19
U.S.C. § 1677e. See Pub. L. No. 114-27, 129 Stat. 362 (2015). Specifically, § 502 of the Act
modifies the provisions pertaining to the selection and corroboration of AFA rates. As is
relevant here, the revised corroboration requirement under § 1677e(c) now contains an exception
under which Commerce is not “required to corroborate any dumping margin . . . applied in a
separate segment of the same proceeding.” 19 U.S.C. § 1677e(c)(2) (2015). In addition, the Act
provides that when Commerce uses AFA, it “may . . . use any dumping margin from any
segment of the proceeding under the applicable antidumping order . . . including the highest such
rate or margin.” Id. § 1677e(d)(1)–(2). Further, for purposes of corroborating an AFA rate,
Commerce is no longer required “to estimate what the . . . dumping margin would have been if
the interested party found to have failed to cooperate . . . had cooperated,” or “to demonstrate
that the . . . dumping margin used by [Commerce] reflects an alleged commercial reality of the
interested party.” Id. § 1677e(d)(3). As the Federal Circuit recently noted, however, “the
amendments do not apply to final determinations that Commerce made prior to the date of
enactment.” Nan Ya Plastics Corp. v. United States, 810 F.3d 1333, 1337 n.2 (Fed. Cir. 2016)
(citing Ad Hoc Shrimp Trade Action Comm. v. United States, 802 F.3d 1339, 1348–52 (Fed. Cir.
2015)); see also Fresh Garlic Producers Ass’n v. United States, 39 CIT __, __, 121 F. Supp. 3d
1313, 1332 (2015) (“To apply § 502 on remand would be in effect to apply the law retroactively
by applying it to a determination that occurred before the new law became effective.”).
Court No. 09-00123                                                                            Page 3

Investigation”). Fourth Remand Results at 4–5. Since Hardware challenges this rate, arguing it

was not properly corroborated. See Pl.’s Objs. to Fourth Remand Results (ECF Dkt. No. 208).

Defendant-intervenor, Home Products International, Inc. (“HPI”), also objects to the rate,

claiming that Commerce’s selection of a new rate disregarded the court’s instructions in Since

Hardware IV. See Comments of HPI on Fourth Remand Results (ECF Dkt. No. 206).

                                        BACKGROUND

I.   THE FINAL RESULTS

       This matter was originally before the court on Since Hardware’s challenge to the

Department’s Finals Results of the Third Administrative Review of the antidumping duty order

on floor-standing metal-top ironing tables and certain parts thereof from the People’s Republic of

China (“PRC”). See Floor-Standing, Metal-Top Ironing Tables and Certain Parts Thereof from

the PRC, 74 Fed. Reg. 11,805 (Dep’t of Commerce Mar. 16, 2009) (final results of antidumping

duty administrative review) (“Final Results”). The period of review (“POR”) was August 1,

2006 through July 31, 2007. In the Final Results, Commerce determined that Since Hardware

significantly impeded the Department’s investigation by fraudulently reporting the cost and

origin of its inputs. Id. at 11,086. As a result of the company’s failure to cooperate,2 Commerce

applied AFA when selecting from among the available facts, and thus drew inferences adverse to

Since Hardware as to its reported cost and origin data. In addition, Commerce used these

deficiencies as a basis to disregard the information the company offered to demonstrate its

       2
                 “If Commerce finds that a respondent has ‘failed to cooperate by not acting to the
best of its ability to comply with a request for information,’ the statute permits the agency to
draw adverse inferences commonly known as ‘adverse facts available’ when selecting from
among the available facts.” Nan Ya Plastics, 810 F.3d at 1338 (quoting 19 U.S.C. § 1677e(b)
(2006)).
Court No. 09-00123                                                                           Page 4

independence from the PRC government. 3 Because, for Commerce, Since Hardware could not

establish independence from the PRC Government, it assigned plaintiff the PRC-wide

antidumping duty rate of 157.68 percent. See Final Results, 74 Fed. Reg. at 11,806.

       In Since Hardware I, the court sustained Commerce’s determination to apply AFA as to

Since Hardware’s input data, but found the input data was not “relevant to the question of

government control.” Since Hardware (Guangzhou) Co. v. United States (Since Hardware I), 34

CIT __, __, Slip Op. 10-108, at 15 (Sept. 27, 2010). The court therefore remanded the question

of whether Since Hardware was entitled to a separate rate.

II.   THE FIRST REMAND RESULTS

       In the First Remand Results, issued on February 17, 2011, Commerce continued to apply

AFA to Since Hardware’s separate-rate submissions, citing its inability to verify the company’s

de facto independence data. First Results of Redetermination Pursuant to Court Order (ECF Dkt.

No. 108) (“First Remand Results”). The Department therefore again assigned the PRC-wide rate

to Since Hardware. Id. at 2.

       The court found the Department’s position was unsupported by substantial evidence,

pointing to additional information and procedures Commerce could have used to verify the de

facto independence information. Since Hardware (Guangzhou) Co. v. United States (Since

Hardware II), 35 CIT __, __, Slip Op. 11-146, at 14–17, 20–29 (Nov. 29, 2011). Accordingly,

       3
               In reviews involving merchandise from a non-market economy country, such as
the PRC, Commerce presumes all respondents are government-controlled, and therefore subject
to a single country-wide duty rate. Ad Hoc Shrimp, 802 F.3d at 1353. “Respondents may rebut
this presumption and become eligible for a separate rate by establishing the absence of both de
jure and de facto government control. If a respondent fails to establish its independence,
Commerce relies upon the presumption of government control and applies the country-wide rate
to that respondent.” Id. (citation omitted).
 Court No. 09-00123                                                                           Page 5

 the court remanded the First Remand Results, instructing Commerce to reexamine its

 conclusions regarding Since Hardware’s entitlement to a separate rate. Id. at 29–30. Further, if

 upon reexamination Commerce found that Since Hardware was entitled to a separate rate, the

 court instructed the Department to determine that rate. Id. at 30.

III.   THE SECOND REMAND RESULTS

        In the Second Remand Results, issued on November 29, 2011, Commerce determined,

 under protest, that Since Hardware was “entitled to a separate rate.” Second Final Results of

 Redetermination Pursuant to Court Order 1, 4–5 (ECF Dkt. No. 133) (“Second Remand

 Results”). This determination was not challenged by the parties, and is therefore no longer an

 issue in this litigation. Having determined Since Hardware was eligible for a separate rate, the

 Department assigned the company a separate rate of 157.68 percent using AFA. Id. at 2.

        Commerce offered several reasons why this rate was “both reliable and relevant,” and

 therefore properly corroborated. Id. at 7. The Department asserted the rate was relevant because

 it was a calculated rate for another respondent in the same investigation. Id. Furthermore, to

 corroborate its selected rate, Commerce used data from the United States Customs and Border

 Protection Agency (“Customs”) for imports of ironing tables from non-party producers and

 exporters that entered the United States during the POR (“the Customs Data”). Id. at 8–9. The

 Department explained that, because other companies were able to conduct business at the 157.68

 percent rate, the rate was representative of “commercial reality.” Id. at 9.

        Commerce also declined to use a rate calculated for Since Hardware in a prior proceeding

 because the company’s submissions “were subsequently determined to be tainted by material

 fraud.” Id. at 10. In addition, the Department refused to use margins calculated for Since
 Court No. 09-00123                                                                                Page 6

 Hardware in two subsequent reviews because that information was not available at the time the

 Department conducted the proceeding. Id. at 15–16. Commerce also expressly declined to

 reopen the record to gather more information from which to calculate a rate specific to Since

 Hardware. Id. at 13.

        In Since Hardware III, the court sustained Commerce’s determination that the 157.68

 percent rate was reliable, but found the Department failed to demonstrate the relevance of this

 rate to Since Hardware’s “commercial reality.” Since Hardware (Guangzhou) Co. v. United

 States (Since Hardware III), 37 CIT __, __, Slip Op. 13-71, at 11–12 (May 31, 2013).

 Specifically, the court questioned Commerce’s use of the Customs Data to corroborate the rate,

 because the data represented a small number of entries. Id. at 13–14. Accordingly, the court

 once again remanded, instructing Commerce to “explain why the Customs [D]ata represents a

 sufficiently large number of entries to demonstrate the relevance of the selected rate or . . .

 otherwise corroborate its selected rate in a manner supported by substantial evidence and in

 accordance with law.” Id. at 16.

IV.   THE THIRD REMAND RESULTS

        Commerce then issued its Third Results of Redetermination Pursuant to Court Order

 (ECF Dkt. No. 169) (“Third Remand Results”), wherein it determined its selected rate of 157.68

 percent was corroborated, to the extent practicable, by information from independent sources.

 Third Remand Results at 3. In Since Hardware IV, the court remanded the Third Remand

 Results, finding Commerce’s determination to continue to use the AFA rate of 157.68 percent

 remained unsupported by substantial evidence. Since Hardware IV, 39 CIT at __, Slip Op. 15-

 15, at 23 (“Merely stating that the Department has not identified other sources that support its
Court No. 09-00123                                                                                 Page 7

assessment is an inadequate explanation to support the conclusion that the Customs Data is the

only information relevant to Since Hardware.”).

       Accordingly, the court ordered the Department to: (1) “support the rate assigned to Since

Hardware by demonstrating that the information has some grounding in the commercial reality

of plaintiff during the POR”; (2) discontinue its reliance “on the presumption that, because the

157.68 percent rate had already been calculated in a prior segment of the proceeding at the time

Since Hardware took the risk of providing unreliable, incomplete, and unusable data, it could

have anticipated the assignment of that rate, to corroborate the assigned rate to Since Hardware”

(i.e., the Rhone Poulenc presumption), see Rhone Poulenc, Inc. v. United States, 899 F.2d 1185

(Fed. Cir. 1990); and (3) if it continued to rely upon the Customs Data, “clarify all apparent

inconsistencies in the data and conclusively establish the cash-deposit rate for the relevant

entries,” and “explain with specificity”: (a) why the cash-deposit rates for other market

participants tend to corroborate the selected rate,4 (b) “why the Customs Data represents a

       4
             With regard to cash-deposit rates, as explained in a related case, Foshan Shunde
Yongjian Housewares & Hardware Co. v. United States,

       after an investigation results in the issuance of an antidumping duty order,
       Commerce directs Customs to collect estimated antidumping duties (i.e., cash
       deposits) on entries of merchandise subject to the order. These deposit rates,
       however, are only estimates of the eventual liability to which importers might be
       subject for entries of merchandise that are covered by an antidumping duty order.
       As frequently noted by this Court, the antidumping duty regime is retrospective in
       nature, and interested parties may request annual reviews to better approximate
       their duty rates for a period of time that has already ended. Hence, in the event a
       review results in a rate that differs from the cash deposit rate, an importer’s liability
       may require an adjustment.

Foshan Shunde Yongjian Housewares & Hardware Co. v. United States, 40 CIT __, __, Slip Op.
16-35, at 25 (Apr. 7, 2016) (citing 19 U.S.C. §§ 1673b(d)(1)(B), 1675; 19 C.F.R. § 351.213).
Accordingly, in Since Hardware IV, the court expressed its concern regarding whether the cash-
deposit rates of other market participants could be used to corroborate the 157.68 percent rate
assigned to Since Hardware. Since Hardware IV, 39 CIT at __, Slip Op. 15-15, at 25.
Court No. 09-00123                                                                             Page 8

sufficient quantity of exports of the subject merchandise to be relevant to Since Hardware,” and

(c) “the significance, if any, of the subject merchandise being entered at rates below the selected

rate.” Id. at __, Slip Op. 15-15, at 24–25. The court also permitted the Department to “reopen

the record to solicit any information it finds to be necessary to make its determination,” and, if it

did so, to “seek clarification and further information from [Customs] regarding the Customs Data

and what the data represents.” Id. at 25. The court also suggested Commerce could select a new

rate for Since Hardware and corroborate that rate. Id.

V.   THE FOURTH REMAND RESULTS

       Commerce’s approach in its Fourth Remand Results is largely identical to that employed

in the related case, Foshan Shunde Yongjian Housewares & Hardware Co. v. United States, 40

CIT __, Slip Op. 16-35 (Apr. 7, 2016), which involves the subsequent (fourth) administrative

review of the antidumping duty order at issue. Specifically, on remand, Commerce contends it

searched for independent sources that would bear on the relevance of the 157.68 percent rate to

Since Hardware, but, despite running internet searches and searching beyond the Customs Data,

“found no additional information to potentially corroborate an AFA rate for Since Hardware.”

Fourth Remand Results at 4. Therefore, under protest, the Department assigned Since Hardware

a revised AFA rate of 72.29 percent, which is the weighted average of the rates calculated for the

two mandatory respondents in the Investigation (i.e., 157.68 percent and 9.47 percent). Id. at 4–

5, 12–13. This rate was also the rate in effect for all separate-rate companies during the POR.

Id. at 13. The Department explained this revised rate better addresses the court’s concerns

regarding “relevance” and “commercial reality” as compared to a single rate calculated for a

single company. Id. at 13.
Court No. 09-00123                                                                              Page 9

                                   STANDARD OF REVIEW

       “The court shall hold unlawful any determination, finding, or conclusion found . . . to be

unsupported by substantial evidence on the record, or otherwise not in accordance with law.” 19

U.S.C. § 1516a(b)(1)(B)(i). “‘The results of a redetermination pursuant to court remand are also

reviewed for compliance with the court’s remand order.’” Yantai Xinke Steel Structure Co. v.

United States, 38 CIT __, __, Slip Op. 14-38, at 4 (Apr. 9, 2014) (quoting Xinjiamei Furniture

(Zhangzhou) Co. v. United States, 38 CIT __, __, 968 F. Supp. 2d 1255, 1259 (2014)).

                                          DISCUSSION

  I.   LEGAL FRAMEWORK

       During administrative reviews, Commerce requests information from respondents, and if

a respondent “withholds information that has been requested by [Commerce],” “fails to provide

such information by the deadlines . . . or in the form and manner requested,” “significantly

impedes a proceeding,” or “provides such information but the information cannot be verified,”

Commerce is permitted to “use the facts otherwise available” in making its determinations. 19

U.S.C. § 1677e(a)(2)(A)–(D). If Commerce further finds a respondent has “failed to cooperate

by not acting to the best of its ability to comply with a request for information,” then it “may use

an inference that is adverse to the interests of that party in selecting from among the facts

otherwise available” (i.e., it may apply AFA). Id. § 1677e(b).

       In selecting an AFA rate, Commerce may use information from the petition, the

investigation, prior administrative reviews, or “any other information placed on the record.” Id.

§ 1677e(b)(1)–(4); see Gallant Ocean (Thai.) Co. v. United States, 602 F.3d 1319, 1323 (Fed.

Cir. 2010) (“[I]n the case of uncooperative respondents,” Commerce has discretion to “select
Court No. 09-00123                                                                            Page 10

from a list of secondary sources as a basis for its adverse inferences.”); see also Statement of

Administrative Action Accompanying Uruguay Round Agreements Act, H.R. Doc. No. 103-316,

at 870, reprinted in 1994 U.S.C.C.A.N. 4040, 4199 (1994) (“SAA”) 5 (“Secondary information is

information derived from the petition that gave rise to the investigation or review, the final

determination concerning the subject merchandise, or any previous review under section 751

[(19 U.S.C. § 1675)] concerning the subject merchandise.”). In addition, “in selecting a

reasonabl[e] [AFA] rate, Commerce must balance the statutory objectives of finding an accurate

dumping margin and inducing compliance, rather than creating an overly punitive result.”

Timken Co. v. United States, 354 F.3d 1334, 1345 (Fed. Cir. 2004).

       When Commerce relies on secondary information, “rather than on information obtained

in the course of an investigation or review,” it “shall, to the extent practicable, corroborate that

information from independent sources that are reasonably at [its] disposal.” 19 U.S.C.

§ 1677e(c) (emphasis added). “To corroborate secondary information, Commerce must find the

information has ‘probative value,’ by demonstrating the rate is both reliable and relevant.” Ad

Hoc Shrimp Trade Action Comm. v. United States, 802 F.3d 1339, 1354 (Fed. Cir. 2015)

(quoting KYD, Inc. v. United States, 607 F.3d 760, 765 (Fed. Cir. 2010)) (citing Gallant Ocean,
602 F.3d at 1323–25); see also F.lli De Cecco di Filippo Fara S. Martino S.p.A. v. United States,

216 F.3d 1027, 1032 (Fed. Cir. 2000) (“It is clear from Congress’s imposition of the

corroboration requirement in 19 U.S.C. § 1677e(c) that it intended for an adverse facts available

rate to be a reasonably accurate estimate of the respondent’s actual rate, albeit with some built-

       5
                “[T]he SAA is ‘an authoritative expression by the United States concerning the
interpretation and application of the Uruguay Round Agreements and this Act in any judicial
proceeding in which a question arises concerning such interpretation or application.’” Micron
Tech., Inc. v. United States, 243 F.3d 1301, 1305 n.3 (Fed. Cir. 2001) (quoting 19 U.S.C.
§ 3512(d)).
Court No. 09-00123                                                                           Page 11

in increase intended as a deterrent to non-compliance.” (emphasis added)); Hubscher Ribbon

Corp. v. United States, 38 CIT __, __, 979 F. Supp. 2d 1360, 1365 (2014) (“In practice

‘corroboration’ involves confirming that secondary information has ‘probative value,’ by

examining its ‘reliability and relevance.’” (citations omitted)). In other words, “Commerce must

select secondary information that has some grounding in commercial reality.” Gallant Ocean,
602 F.3d at 1324; see also Nan Ya Plastics Corp. v. United States, 810 F.3d 1333, 1343 (Fed.

Cir. 2016) (“We clarify that ‘commercial reality’ and ‘accurate’ represent reliable guideposts for

Commerce’s determinations. Those terms must be considered against what the antidumping

statutory scheme demands.”).

          Furthermore, the information used to corroborate a rate must bear some relationship to a

particular respondent in order to satisfy the relevance requirement. See Gallant Ocean, 602 F.3d

at 1323; see also Changzhou Wujin Fine Chem. Factory Co. v. United States, 701 F.3d 1367,

1384 (Fed. Cir. 2012) (Observing that “[b]ecause nothing in the record . . . tied the AFA rate . . .

to [the respondent], we concluded that the AFA rate was unrelated to commercial reality and not

a reasonabl[y] accurate estimate of [the respondent’s] actual dumping, hence, not supported by

substantial evidence.”).

 II.      THE DEPARTMENT’S SELECTION OF THE 72.29 PERCENT AFA RATE IS SUSTAINED

          As noted, the Fourth Remand Results now before the court are largely identical to the

Remand Results filed in Foshan Shunde, 40 CIT __, Slip Op. 16-35. In that case, the court

stated:

          [F]ive holdings can be found in the remands in this case: (1) “the decision in Rhone
          Poulenc ‘necessarily did not hold that the presumption could replace actual
          corroboration,’” and the presumption’s use is limited to situations where the rate
          “was calculated in a prior review segment for the party now failing to cooperate”
Court No. 09-00123                                                                          Page 12

       and the uncooperative party failed to respond to the Department’s questionnaires
       altogether; (2) evidence that a respondent’s merchandise was liquidated at a
       particular rate is not probative of its commercial reality unless it can be shown that
       the entries were of subject merchandise; (3) because at the time of importation
       importers are unaware of what their ultimate liquidation rates will be, liquidation
       rates are not probative of an importer’s commercial reality during the POR; (4) it
       is Commerce’s “obligation to corroborate secondary information using independent
       sources” and build the record for that purpose, “not . . . the interested parties who
       are normally responsible for generating the administrative record”; and (5) the
       Department may not simply rely on a claimed absence of independent information
       to support its conclusion that corroboration is impracticable: “Rather, the
       Department must still seek relevant independent sources to corroborate its
       secondary information, and if it cannot locate such information, it must describe
       the steps that it has taken so that a reviewing Court can determine if the
       Department’s finding that corroboration was not practicable is supported by
       substantial evidence and in accordance with law.”

Id. at __, Slip Op. 16-35, at 11–12 (citations omitted). These holdings apply with equal force to

the case at hand.

       In addition, Since Hardware raises the same arguments as those addressed in the opinion

for the related case, Foshan Shunde. The court finds no reason to revisit these arguments as it

has already determined Commerce’s assignment of the 72.29 percent AFA rate is supported by

substantial evidence and is in accordance with law. Id. at __, Slip Op. 16-35, at 23 (“[D]espite

Commerce’s difficulty in locating independent sources to corroborate the remaining duty rates

assigned over the course of the proceedings under the Order, it is evident that the Department has

corroborated the 72.29 percent rate to the extent practicable. As the Department correctly

observed, unlike the 157.68 percent rate that was repeatedly rejected by the court, in part because

it was calculated for a single company during a prior review, this deficiency is less pronounced

with the 72.29 percent rate. Rather, the 72.29 percent rate is derived from two calculated rates

. . . , and was also the rate in effect for all companies which have demonstrated they are separate

from the PRC-wide entity. . . . This rate is therefore reflective of Foshan Shunde’s commercial

reality because similar exporters of subject merchandise were able to, and actually did, import
Court No. 09-00123                                                                        Page 13

subject merchandise into the United States at this rate. Furthermore, assigning an AFA rate to an

uncooperative party that is lower than the separate rate assigned to cooperative respondents runs

contrary to the purpose of the AFA statute—to incentivize future compliance on the part of

uncooperative respondents.” (internal quotation marks and citations omitted)). Accordingly,

Commerce’s Fourth Remand Results are sustained.

                                          CONCLUSION

         For the foregoing reasons, it is hereby

         ORDERED that the Department of Commerce’s Fourth Final Results of Redetermination

Pursuant to Court Remand are sustained. Judgment will be entered accordingly.

Dated:          April 28, 2016
                New York, New York

                                                             /s/ Richard K. Eaton
                                                       ________________________________
                                                                 Richard K. Eaton