The opinion
Slip Op. 10-108
UNITED STATES COURT OF INTERNATIONAL TRADE
______________________________
:
SINCE HARDWARE (GUANGZHOU) :
CO., LTD., :
:
Plaintiff, : Before: Richard K. Eaton, Judge
:
v. : Court No. 09-00123
:
: Public Version
UNITED STATES, :
:
Defendant, :
:
and :
:
HOME PRODUCTS INTERNATIONAL, :
LTD., :
:
Def.-Int. :
______________________________:
OPINION AND ORDER
[Plaintiff’s motion for judgment on the agency record sustained
in part and remanded.]
Dated: September 27, 2010
Dorsey & Whitney LLP (William E. Perry) for plaintiff.
Tony West, Assistant Attorney General; Jeanne E. Davidson,
Director, Patricia M. McCarthy, Assistant Director, Commercial
Litigation Branch, Civil Division, United States Department of
Justice (David S. Silverbrand and Carrie A. Dunsmore); Office of
Chief Counsel for Import Administration, United States Department
of Commerce (Thomas M. Beline), of counsel, for defendant.
Blank Rome LLP (Frederick L. Ikenson, Peggy A. Clarke, and
Larry Hampel) for defendant-intervenor.
Court No. 09-00123 Page 2
Eaton, Judge: Before the court is plaintiff’s motion for
judgment on the agency record challenging the final results of
the administrative review of the antidumping order for Floor
Standing Metal-Top Ironing Tables and Certain Parts Thereof from
People’s Republic of China (“PRC”), 74 Fed. Reg. 11,085 (Mar. 16,
2009) (final results) and accompanying Issues & Decision
Memorandum (“Issues & Dec. Mem.”) (collectively, “Final Results”)
for the period of review (“POR”) August 1, 2006 through July 31,
2007. See Pl.’s Mem. Supp. Mot. J. Agency R. (“Pl.’s Mem.”).
This is the third administrative review of the order.
Using adverse facts available, the Department of Commerce
(“Commerce” or the “Department”) applied a PRC-wide rate of
157.68 percent to plaintiff’s merchandise in the Final Results.
By its motion, plaintiff asks the court to instruct Commerce “to
treat Since Hardware as a company separate from [the] China-wide
entity and calculate a margin specific to Since Hardware using
the U.S. sales database and factors of production reported by
Since Hardware, as was done in the preliminary results of this
proceeding.” Pl.’s Mem. 12-13. Defendant and defendant-
intervenor oppose plaintiff’s motion. See Def.’s Resp. Pl.’s
Mot. J. Agency R. (“Def.’s Resp.”); Br. Home Products Int’l, Inc.
Opp. to Pl.’s Mot. J. Agency R. (“Def.-Int.’s Opp.”).
The central question in this case is the lawfulness of
Commerce’s conclusion that the inaccuracies in plaintiff’s
Court No. 09-00123 Page 3
questionnaire responses provided a sufficient basis for finding
that Since Hardware provided “‘unreliable and incomplete’
documentation in support of its claimed purchase of market
economy materials” and that “the nature of the unreliable
submission called into question the reliability of questionnaire
responses submitted by Since Hardware in the review, including
its claim of eligibility for separate rate status.” Def.’s Resp.
15 (citing Issues & Dec. Mem. at Comm. 1).
The court has jurisdiction pursuant to 28 U.S.C. § 1581(c)
and 19 U.S.C. § 1516a(a)(2)(B)(iii) (2006). For the reasons that
follow, plaintiff’s motion is granted, in part, and the case is
remanded for further consideration.
STANDARD OF REVIEW
When reviewing the final results of an antidumping duty
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).
Court No. 09-00123 Page 4
DISCUSSION
I. Legal Framework
A. Presumption of State Control and Commerce’s Preliminary
Findings
Plaintiff operates in the PRC. As a result of the PRC’s
status as a non-market economy1 country, its domestic companies
are presumed to be part of the state-wide entity. See Sigma
Corp. v. United States, 117 F.3d 1401, 1405-06 (Fed. Cir. 1997)
(“[I]t was within Commerce's authority to employ a presumption of
state control for exporters in a nonmarket economy, and to place
the burden on the exporters to demonstrate an absence of central
government control . . . . Moreover, because exporters have the
best access to information pertinent to the ‘state control’
issue, Commerce is justified in placing on them the burden of
showing a lack of state control.” (citing Zenith Elecs. Corp. v.
United States, 988 F.2d 1573, 1583 (Fed. Cir. 1993)). The
1
A non-market economy includes “any foreign country that
the administering authority [Commerce] determines does not
operate on market principles of cost or pricing structures, so
that sales of merchandise in such country do not reflect the fair
value of the merchandise.” 19 U.S.C. § 1677(18)(A); Shandong
Huarong Gen. Group Corp. v. United States, 28 CIT 1624, 1625 n.1
(2004) (not reported in the Federal Supplement).
“Any determination that a foreign country is a nonmarket economy
country shall remain in effect until revoked by the administering
authority.” 19 U.S.C. § 1677(18)(C)(i). The PRC has been
determined to be an NME country. The Department has treated the
PRC as a non-market economy country in all past antidumping
investigations. Zhejiang Native Produce & Animal By-Products
Imp. and Exp. Corp. v. United States, 27 CIT 1827, 1834 n.14,
(not reported in the Federal Supplement) (citations omitted).
Court No. 09-00123 Page 5
presumption, however, can be rebutted. See id. at 1405 (“[T]he
Court of International Trade has ruled that an exporter in a
nonmarket economy country must ‘affirmatively demonstrate’ its
entitlement to a separate, company-specific margin by showing ‘an
absence of central government control, both in law and in fact,
with respect to exports.’ Absence of de jure government control
can be demonstrated by reference to legislation and other
governmental measures that decentralize control. Absence of de
facto government control can be established by evidence that each
exporter sets its prices independently of the government and of
other exporters, and that each exporter keeps the proceeds of its
sales.”) (internal citations omitted).
In this review, Since Hardware provided information relating
both to its separate rate status and the price of its
manufacturing inputs from claimed purchases from market economy
sources. See Def.’s Resp. 3-4 (citing questionnaire responses).
In the preliminary results, based on the company’s questionnaire
responses, Commerce found that the company had demonstrated the
absence of de jure and de facto government control over its
activities, and thus was entitled to separate rate status. See
Floor-Standing, Metal-Top Ironing Tables and Certain Parts
Thereof From the PRC, 73 Fed. Reg. 52,277, 52,279 (Dep’t of
Commerce Sept. 9, 2008) (preliminary results) (“Preliminary
Results”). Also in the Preliminary Results, the Department
Court No. 09-00123 Page 6
calculated an antidumping duty rate of 1.53 percent, based, in
part, on the prices from the claimed market economy purchases.
Preliminary Results, 73 Fed. Reg. at 52,280-82.
B. Factors of Production
Because Commerce has found the PRC to be a non-market
economy, 19 U.S.C § 1677(18) requires the Department, when
calculating an antidumping duty margin,2 to determine normal
value on the basis of the factors of production used in producing
the subject merchandise. 19 U.S.C. § 1677b(c)(1). To value the
factors of production, Commerce generally uses prices or costs
from a market economy country that is at a level of economic
development comparable to that of the nonmarket economy country,
and which is a significant producer of comparable merchandise.
19 U.S.C. § 1677b(c)(4). Accordingly, Commerce normally uses
information and data from a surrogate market economy country to
value the respondent’s inputs used in the production of its
merchandise.
Commerce does not use surrogate values, however, if a
2
In antidumping investigations, Commerce must ultimately
calculate or assign a dumping margin, i.e., “the amount by which
the normal value exceeds the export price or constructed export
price of the subject merchandise.” 19 U.S.C. § 1677(35)(A). If
the price of an item in the home market (normal value) is higher
than the price for the same item in the United States (export
price), then the dumping margin comparison produces a positive
number that indicates dumping has occurred.
Court No. 09-00123 Page 7
respondent purchases inputs from a market economy country at the
market economy purchase price. See Antidumping Methodologies:
Market Economy Inputs, Expected Non-Market Economy Wages, Duty
Drawback; and Request for Comments, 71 Fed. Reg. 61,716, 61,716-
19 (Dep’t of Commerce Oct. 19, 2006) (notice) (“Market Economy
Inputs Methodology”). As to these purchases, Commerce has
instituted a
rebuttable presumption that market economy
input prices are the best available
information for valuing an entire input when
the total volume of the input purchased from
all market economy sources during the period
of investigation or review exceeds 33 percent
of the total volume of the input purchased
from all sources during the period. In these
cases, unless case-specific facts provide
adequate grounds to rebut the Department's
presumption, the Department will use the
weighted-average market economy purchase
price to value the entire input.
Market Economy Input Methodology, 71 Fed. Reg. at 61,717-18. In
other words, Commerce’s policy is to presume that market economy
purchase prices are the best available information, and thus,
where possible, to use them to value the total quantity of an
input.
Here, in accordance with its policies, Commerce used the
reported market economy purchase prices to value plaintiff’s
inputs of cold-rolled steel, hot-rolled steel, steel wire rod,
powder coating, cotton fabric, springs, bolts, center nail and
nail heads, rivets, cartons, corrugated paper, and labels.
Court No. 09-00123 Page 8
Def.’s Resp. (citing Preliminary Results, 73 Fed. Reg. at
52,280). Home Products International (“HPI”), the petitioner and
currently the defendant-intervenor, challenged Since Hardware’s
market economy purchases, as it had in each of the prior segments
of this antidumping duty order. See Def.’s Resp. 4-5; Mem. to
File Regarding July 15, 2008 and Aug. 7, 2008 Meetings with Fred
Ikenson, dated Aug. 12, 2008, Public Record (“PR”) 47.
Petitioner met with Commerce to discuss its concerns, and
Commerce subsequently responded to this challenge by issuing five
supplemental questionnaires.
As a result of these questionnaires, it came to light that
the company had submitted false and fraudulent documentation
regarding the country of origin and valuation of the claimed
market economy purchases. See Def.’s Resp. 5-14 (citing to
record). Commerce stated:
The certificates submitted by Since Hardware
relating to its claimed purchases of a steel
input from a market economy supplier are
clearly not used by the regulatory agency
responsible for certifying the origin of the
input. These certificates constitute the
entire basis for establishing that Since
Hardware purchased the steel input from a
market economy supplier. In its October 31,
2008 letter, the Department asked Since
Hardware to explain the discrepancies
detailed by Petitioner in the certificate of
origin forms which Since Hardware submitted.
However, Since Hardware failed to address the
discrepancies . . . .
Issues & Dec. Mem. at Comm. 1. The discrepancies, which have to
Court No. 09-00123 Page 9
do with the country of origin of various inputs, are further
detailed in the Memorandum Regarding Since Hardware (Guangzhou)
Co., Ltd.’s Claim Re: Market Economy Purchases, and Use of
Adverse Facts Available, dated Mar. 9, 2009, Confidential Record
(“CR”) 870 (“AFA Memo”).3 Further, Commerce found that the
3
The most serious issues related to Since Hardware’s
claimed market purchases of [[ ]] steel.
AFA Memo at 3. Commerce noted:
Since Hardware’s claim of [[ ]]
steel purchases is inconsistent with World Trade Atlas
[[ ]] export data for Harmonized Commodity
Description and Coding System (HS) item [[ ]]
([[ ]] is the HS classification number for
[[ ]] steel). Since Hardware claimed it
purchased [[ ]] metric tons of [[ ]]
steel from [[ ]] during calendar 2007.
However, Petitioner noted that World Trade Atlas (WTA)
data for these same twelve months for HS [[ ]]
indicate a total of only [[ ]] tons of [[
]] steel were exported from [[ ]] to
Hong Kong. Further, Since Hardware claims all of its
[[ ]] metric tons were purchased between the
months of [[ ]]. That claim is not
consistent with WTA data, which indicate
[[ ]] shipments of just [[ ]] metric tons
to Hong Kong in April 2007, with no shipments at all
during [[ ]] or [[ ]] 2007. Further the data
shows only [[ ]] metric tons in shipment of HS
[[ ]] followed in [[ ]] . . . .
More importantly, Petitioner noted that major
discrepancies exist between the documentation submitted
by Since Hardware and the certificate of origin form
employed by the [[ ]] licensing board, the
[[ ]]
. . . .
AFA Memo at 3. Moreover, the Department concluded, inter alia:
The [[ ]] certificates submitted by Since Hardware
are clearly not forms used by the [[ ]]. These
Court No. 09-00123 Page 10
identical typographical errors and other
discrepancies appear on documentation
submitted from multiple, independent,
unaffiliated suppliers. Since Hardware has
never explained the source of these
typographical errors and discrepancies, and
has provided no credible explanation as to
why the same set of typographical errors
appear in the documentation submitted from
multiple independent, unaffiliated suppliers.
Issues & Dec. Mem. at Comm. 1. In other words, Commerce found the
forms submitted by Since Hardware to substantiate its market
economy purchases were fraudulent.
After the questionnaire responses revealed that the
company’s documentation of these inputs appeared to be false,
Commerce asked for, among other things, mill certificates from
[[ ]] certificates constitute the entire basis for
establishing that Since Hardware’s [[ ]]
steel was of [[ ]] origin. In its October
31, 2008, letter, the Department asked Since Hardware
to explain the discrepancies detailed by Petitioners in
the [[ ]] forms which it submitted. However,
Since Hardware failed to address the discrepancies
enumerated in Petitioners’ September 2, 2008, letter
and summarized above. These discrepancies include
numerous and inexplicable errors including the
misspelling of “[[ ]];” an easily
discernible discrepancy between the signature of the
[[ ]] official and that official’s actual
signature; and unrecognizable [[ ]] signature/date
stamp; and an alpha-numeric numbering protocol
different from the sequential numbering employed by
[[ ]]. In addition, one of the certificates on
the record in the first administrative review was
purportedly signed by a specific [[ ]] official
long before she began her employment with the
[[ ]].
AFA Memo at 11.
Court No. 09-00123 Page 11
the input manufacturers in order to determine the origin of the
inputs (e.g., the steel) used in the production of the subject
merchandise. See Def.’s Resp. 12 (citing PR 73, CR 25). Since
Hardware claimed it had no mill certificates to identify the type
of steel it bought or, for that matter, to verify any of the
other inputs it had purchased and used in its products. Def.’s
Resp. 6 (citing PR 48, CR 14). It further insisted that it
relied on its suppliers for country of origin information, and
indeed, relied on its suppliers for all the documentation it
submitted to Commerce. Def.’s Resp. 12-13 (citing PR 61; CR 21).
The company then provided ledger entries that it claimed
documented its purchases. Def.’s Resp. 10 (citing PR 57; CR 19).
The accounting ledgers included the disputed market economy
purchases. AFA Memo at 11. With respect to these ledger
entries, Commerce noted that they
were purportedly associated with its market
economy purchases . . . which were consistent
with “the now-discredited . . . documentation
submitted by Since Hardware.” Holding that
“[t]his evinces that the pervasive errors in
the . . . documents infect Since Hardware’s
own books and accounting records,” and that
Since Hardware’s accounting records “reflect
unreliable and inaccurate information”
Commerce determined that it was unable to
rely on the accuracy and validity of the data
which Since Hardware retrieved from its
accounting system.
Def.’s Resp. 16-17 (internal citation omitted).
When a respondent in an administrative review “significantly
Court No. 09-00123 Page 12
impedes” the proceeding, Commerce is permitted to “fill [ ] gaps
in the record” using facts otherwise available. See Statement of
Administrative Action, Uruguay Round Agreements Act, accompanying
H.R. Rep. No. 103-316, 656, 830-31 (1994), reprinted in 1994
U.S.C.C.A.N. 4040, 4199; see also 19 U.S.C. § 1677e(a)(2)(C).4
Based on the submission of false questionnaire responses,
“Commerce determined, pursuant to its statutory authority, to use
facts otherwise available because Since Hardware withheld
information requested by Commerce and significantly impeded the
investigation.” Def.’s Resp. 18 (citations omitted).
Once it has determined that the use of facts otherwise
available is required, Commerce may make findings to determine if
the “use [of] an inference that is adverse to the interests of [a
respondent] in selecting from among the facts otherwise
available,” is authorized. Commerce may make an affirmative
4
If-
(1) necessary information is not available on
the record, or
(2) an interested party or other person . . .
(C) significantly impedes a proceeding under
this subtitle, . . .
the administering authority . . . shall,
subject to section 1677m(d) of this title,
use the facts otherwise available in reaching
the applicable determination under this
subtitle.
19 U.S.C. § 1677e(a)(C).
Court No. 09-00123 Page 13
determination if it finds that the respondent “has failed to
cooperate by not acting to the best of its ability to comply”
with a request for information. Nippon Steel Corp. v. United
States, 337 F. 3d 1373 (Fed. Cir. 2003) (“Nippon Steel”); 19
U.S.C. § 1677e(b).5
Because it found that, as a result of its unreliable
questionnaire responses, plaintiff “failed to cooperate to the
best of its ability,” Commerce applied adverse facts available
(“AFA”), and assigned an antidumping duty rate to the company
that was equal to the highest rate calculated for a respondent in
prior segments of the proceeding. Def.’s Resp. 15 (citing Issues
5
Pursuant to 19 U.S.C. § 1677e(b):
If the administering authority ... finds that an
interested party has failed to cooperate by not acting
to the best of its ability to comply with a request for
information from the administering authority ..., the
administering authority ..., in reaching the applicable
determination under this subtitle, may use an inference
that is adverse to the interests of that party in
selecting from among the facts otherwise available.
Such adverse inference may include reliance on
information derived from—
(1) the petition,
(2) a final determination in the investigation under
this subtitle,
(3) any previous review under section 1675 of this
title [periodic review] or determination under section
1675b of this title [countervailing duty injury
investigations], or
4) any other information placed on the record.
Court No. 09-00123 Page 14
& Dec. Mem. at Comm. 1). Commerce explained: “Since Hardware’s
conduct in this review . . . significantly impeded the
proceeding” by producing false information for market economy
purchases that “constitute a major portion of the production
inputs of the subject merchandise” to the effect that the
company’s responses “are no longer reliable for purposes of
determining Since Hardware’s margin of dumping.” AFA Memo at 10.
Commerce then found:
We have determined that the documentation
submitted by Since Hardware to support its
claimed purchases of market economy inputs to
be unreliable and inaccurate. The
deficiencies in Since Hardware’s response
establish a pattern of behavior that
undermines the reliability and credibility of
Since Hardware’s entire questionnaire
response, including Since Hardware’s claim of
eligibility for separate rate status.
Issues & Dec. Mem. at Comm. 1. Commerce thus put aside the
entirety of Since Hardware’s submissions, including evidence
relating to separate rate status, and assigned the PRC-wide
entity antidumping duty rate of 157.68 percent. See Def.’s Resp.
15, 18.
In its motion for judgment on the agency record, plaintiff
contends: (1) that Commerce should not have rescinded the
separate rate status plaintiff was afforded in the Preliminary
Results; and (2) that Commerce should have applied partial
adverse facts available only to valuing the inputs found to be
based on unreliable information, rather than total adverse facts
Court No. 09-00123 Page 15
available.6 Pl.’s Mem. 11-13. In pleading its case, plaintiff
does not contest the application of facts available, nor that
partial adverse inferences should be applied. Pl.’s Mem. 11.
II. Analysis
A. Separate Rate Status
In the Final Results, Commerce concluded that the
“unreliable and inaccurate” information regarding market economy
purchases called into question all of Since Hardware’s responses
including the record evidence regarding state control. An
examination of the record, however, reveals that none of the
unreliable information submitted by the company is relevant to
the question of government control. That is, while many of
plaintiff’s answers to questions dealing with market economy
purchases were untrue, there is nothing to suggest that the
company was other than truthful when answering questions relating
to government control. Put another way, the evidence that the
company was not controlled by the government (e.g., documentation
6
The term “total adverse facts available” is not
referenced in either the statute or the agency's regulations. The
phrase can be understood within the context of this case to be
referring to Commerce's application of adverse facts available
not only to the facts pertaining to market economy purchases for
which false and fraudulent information was found to be provided,
but also to the facts respecting all of Since Hardware’s sales
encompassed by the relevant antidumping duty order and evidence
relating to separate rate status. See Shandong Mach. Imp. & Exp.
Corp. v. United States, 33 CIT ___, Slip Op. 09-64 at 14 n.5
(2009) (not reported in Federal Supplement) (citation omitted).
Court No. 09-00123 Page 16
substantiating its claims that it is a wholly foreign-owned
enterprise registered in PRC— such as the “Foreign Trade Law of
the People's Republic of China” and copies of its business
licenses— and evidence regarding de facto control over its export
activities) is far removed from questions relating to the origin
of the factors of production and their cost. See, e.g.,
Preliminary Results, 73 Fed. Reg. at 52,278-9.
This Court has previously faced a similar situation relating
to questionnaire responses. In Qingdao Taifa Group Co. v. United
States, 33 CIT __, 637 F. Supp. 2d 1231 (2009)(“Qingdao”), the
Court found:
Commerce may not apply the PRC-wide rate as
the AFA rate where AFA is warranted for sales
and [factors of production] data, but the
respondent has established independence from
government control.
33 CIT at __, 647 F. Supp. 2d at 1240-41 (citation omitted).
In Qingdao, as here, Commerce found an absence of government
control in the preliminary results, and subsequently discovered
the respondent’s failure to report accurately factors of
production data. The Court remanded the matter to Commerce to
determine whether substantial evidence supported a finding of
government control, and stated that if there was a sufficient
link to the PRC, Commerce could apply the PRC-wide rate; if not,
Commerce was directed to calculate a separate AFA rate for the
respondent. Qingdao, 33 CIT at __, 637 F. Supp. 2d at 1240-41,
Court No. 09-00123 Page 17
1244; see Gerber Food (Yunnan) Co., Ltd. v. United States, 29 CIT
753, 772, 387 F. Supp. 2d 1270, 1287 (2005)(“Gerber”) (finding
application of adverse facts available unsupported by substantial
evidence where Commerce imposed a rate that presumed government
control when respondent was found to be independent of government
control); Shandong Huarong Gen. Group Corp. v. United States, 27
CIT 1568, 1595-6 (2003)(not reported in Federal
Supplement)(same).
Similarly, here, Commerce has found that Since Hardware’s
responses failed to report accurately information, such as prices
and country of origin, for inputs purchased in market economy
countries. The Department, however, made no specific finding
that the responses concerning state control were inaccurate.
When, as here, the use of AFA is justified, Commerce may “use an
inference that is adverse to the interests of [a respondent] in
selecting among the facts otherwise available.” Nippon Steel,
337 F. 3d at 1381; 19 U.S.C. § 1677e(b). When making this
selection, however, Commerce may not stray too far from the
questionnaire responses that justified the use of AFA. Neither
Commerce nor defendant-intervenor has presented any information
tending to lead to the conclusion that Since Hardware’s
questionnaire responses relating to government control were other
than truthful. Consequently, remand is warranted.
Court No. 09-00123 Page 18
B. Adverse Facts Available Applied to Entirety of Since
Hardware’s Responses
As previously noted, by rejecting all of the company’s
questionnaire responses, Commerce applied inferences adverse to
Since Hardware‘s interests in selecting from the facts available.
Def.’s Resp. 15 (citing Issues & Dec. Mem. at Comm. 1). Since
Hardware contends that it
is no[t] challenging either the Department’s
determination to apply facts available or the
Department’s determination to utilize an
adverse inference as to Since Hardware in the
application of facts available. Since
Hardware is challenging only the manner in
which the Department applied adverse facts
available to Since Hardware.
Pl.’s Mem. 11. Specifically, the company contends that Commerce
overreached by finding that its production information was
unreliable not only as to the country of origin and cost of its
factors of production, but also as to the identification of each
factor and its quantity:
The record in this case established that the
Department may have been correct in
determining that it was appropriate for the
Department to rely upon facts available and
to make adverse inferences with respect to
Since Hardware’s reported market economy
purchases. However, under the statutory
scheme, the Department’s application of
adverse facts available should have been
limited strictly to the offending
information. The Department’s application of
total adverse facts available, and its
rejection of all of Since Hardware’s
responses, overreached the manner in which
the statute authorizes the application of
adverse facts available.
Court No. 09-00123 Page 19
Pl.’s Mem. 20. Therefore, while Since Hardware does not dispute
that the information it submitted as to the country of origin and
valuation of certain inputs was unreliable, it objects to
Commerce extending its finding of unreliability to all of
plaintiff’s other factors of production responses. Accordingly,
plaintiff argues, the court should “remand the action to the
Department with instructions for the Department to apply partial
adverse facts available and limit the impact of adverse facts
available only to the offending information relating to Since
Hardware’s market economy purchases.” Pl.’s Mem. 20. Plaintiff
further contends that Commerce, rather than being permitted to
assign a rate, should be instructed to use surrogate values to
value Since Hardware’s other reported factors of production and
then calculate an individual rate for the company.
Commerce submits that its determinations are supported by
substantial evidence.
Since Hardware submitted contradictory and
unreliable information and these
discrepancies permeated Since Hardware’s
responses. By including the discredited and
unsubstantiated market economy purchase
prices in its accounting ledgers, Since
Hardware rendered its entire submission
inaccurate. By failing to adequately explain
the discrepancies in its supporting
documentation to Commerce and provide
requested alternative documentation, Since
Hardware failed to cooperate with the
administrative review. Accordingly, Commerce
applied total adverse facts available to
Since Hardware.
Court No. 09-00123 Page 20
Def.’s Resp. 21. Further, Commerce found that the “problems with
the market economy input purchases pervaded Since Hardware’s
entire responses.” Def.’s Resp. 16 (citing AFA Memo at 11).
Indeed, Commerce points out that after it questioned Since
Hardware’s early submission, the company
provided copies of ledger entries that were
purportedly associated with its market
economy purchases . . . , which were
consistent with “the now-discredited . . .
documentation submitted by Since Hardware.”
Holding that “[t]his evinces that the
pervasive errors in the . . . documents
infect Since Hardware’s own books and
accounting records,” and that Since
Hardware’s accounting records “reflect
unreliable and inaccurate information[,]”
Commerce determined that it was unable to
rely on the accuracy and validity of the data
which Since Hardware retrieved from its
accounting system.
Def.’s Resp. 16-17 (internal citations omitted). Consequently,
Commerce insists that it cannot rely on Since Hardware’s
submission in its entirety.
The court finds that Commerce’s use of AFA to assign a
dumping rate to Since Hardware’s merchandise is in accordance
with law and supported by substantial evidence. First, it is
clear that the Department acted reasonably in determining that it
could not rely on the material the company placed on the record
relating to the country of origin and valuation of the factors of
production. Plaintiff submitted forged and altered documents on
its market economy purchases. Then it submitted accounting
Court No. 09-00123 Page 21
ledgers that contained information taken from the forged and
altered documents. As Commerce stated:
Since Hardware submitted contradictory and
unreliable information and these
discrepancies permeated Since Hardware’s
responses. By including the discredited and
unsubstantiated market economy purchase
prices in its accounting ledgers, Since
Hardware rendered its entire submission
inaccurate. By failing to adequately explain
the discrepancies in its supporting
documentation to Commerce and provide
requested alternative documentation, Since
Hardware failed to cooperate with the
administrative review.
Def.’s Resp. 21.
Here, Commerce’s determination rests on credibility. This
Court in Shanghai Taoen Int’l Trading Co. v. United States, 29
CIT 189, 360 F. Supp. 2d 1339 (2005) (“Shanghai Taoen”), upheld
the application of adverse facts available to an entire
submission in similar circumstances. The Court noted that the
application of partial adverse facts available was not
appropriate because
[t]his is not a case of partial gaps in the
record. Commerce determined that
[respondent] failed to provide a credible
explanation for the inconsistencies between
Customs’ entry documents and [respondent’s]
questionnaire responses which concerned the
identity of suppliers. Such information is
core, not tangential, and there is little
room for substitution of partial facts.
Shanghai Taoen, 29 CIT at 199 n.13, 360 F. Supp. 2d at 1348 n.13.
As in Shanghai Taoen, here the missing information on production
Court No. 09-00123 Page 22
inputs goes to the core of the antidumping duty rate
determination, i.e., the inputs at issue are a “major portion of
the production inputs of the subject merchandise.” AFA Memo at
10. Since Hardware insists that its sales and factors of
production data were not tainted by its market economy input
purchases. However, the unsubstantiated market economy purchase
prices were included in Since Hardware’s accounting ledgers,
themselves found to “reflect unreliable and inaccurate
information.” AFA Memo at 11. This being the case, it can
hardly be said that Commerce was unreasonable in determining not
to rely on these documents. Thus, the court finds that, given
the pervasiveness of the inaccuracies in Since Hardware’s
questionnaire responses, Commerce acted reasonably in determining
it could not rely on any of the company’s financial information.
Accordingly, Commerce’s application of adverse facts available to
all of plaintiff’s input submissions is sustained.
CONCLUSION
For the foregoing reasons, the court grants plaintiff’s
motion, in part, and remands a portion of Commerce’s
determination. On remand Commerce shall reexamine the record to
again determine if Since Hardware has produced evidence
sufficient to qualify for application of a separate rate. In
doing so, Commerce may not assume that the portion of the record
Court No. 09-00123 Page 23
relating to independence from government control has been
impacted by Since Hardware’s questionnaire responses to unrelated
matters. If the record supports application of a separate rate,
Commerce must determine a separate AFA rate for Since Hardware;
if not, Commerce may apply the PRC-wide rate. The remand results
shall be due on January 27, 2011; comments to the remand results
shall be due on February 28, 2011; and replies to such comments
shall be due on March 14, 2011.
/s/ Richard K. Eaton
Richard K. Eaton
Dated: September 27, 2010
New York, New York
Errata
Since Hardware (Guangzhou) Co., Ltd. v. United States, Court No.
09-00123, Slip Op. 10-108 (Sept. 27, 2010)
Page 1, caption: “HOME PRODUCTS INTERNATIONAL, LTD.”
should read “HOME PRODUCTS
INTERNATIONAL, INC.”.