Tianjin MacHinery Import & Export Corp. v. United States

slip op. ii-1

UNITED STATES COURT OF INTERNATIONAL TRADE

TIANJIN MAcHINERY IMPoRT &
ExP0RT coRP. and sHANDoNG
HUARoNG MAcHINsRY co., LTD.,

Plaintiffs,
Before: Richard K. Eaton, Judge
v.
Court No. 05-OO522
UNITED STATES,
Public Version
Defendant,

and
AMES TRUE TEMPER,

Deft.~Int.

OPINION AND ORDER

[United States Department of Commerce's Final Results of
Redetermination, as supplemented, are sustained in part and
remanded.]

Dated: January 4, 2011

HumeV& Associates LLC (R0bert T. Hume), for plaintiffs.

Tony West, Assistant Attorney General; Jeanne E. DaVidson,
Director, Patricia M. McCarthy, Assistant Director, Civil
Division, Commeroial Litigation Branch, United States Department
of Justice (Michael D, Panzera); Office of the Chief Counsel for
Import Administration, United States Department of Commerce
(Aaron P. Kleiner), of counsel, for defendant.

Wiley Rein LLP (Timothy C. Brightbill), for defendant-
intervenor.

Eaton, Judge: At issue in this action are the United States

Department of Commerce's (“Commerce” or the “Department”) final

results of the thirteenth administrative review of four

Court No. 05-OO522 Page 2
antidumping duty orders applicable to imports into the Unitedi
States of heavy forged hand tools (“HFHTs”) from the People's

Republic of China (“PRC”). See HFHTs, Finished or Unfinished,

with or Without Handles, From the PRC, 70 Fed. Reg. 54,897 (Dep’t»

of Commerce Sept. 19, 2005) (final Results of antidumping duty
administrative reviews) (the “Final Results”); see also HFHTs,
Finished or Unfinished, With or Without Handles From the PRC, 56
Fed. Reg. 6,622 (Dep't of Commerce Feb. 19, 1991) (notice of
antidumping duty orders) (covering axes/adzes, bars/wedges,
hammers/sledges and picks/mattocks) (the “HFHTs Orders”). In
Tianjin Machinery Import & Export Corp. v. United States, 31 CIT
1416 (2007) (not reported in the Federal Supp1ement) (“Tianjin
I”), the court sustained certain aspects of the Final Results and
remanded several issues to the Department.

Subsequently, the court also ordered the Department to
reopen the record as to one of those issues and to address the
merits of plaintiffs’ chart submissions, which purportedly
demonstrated “that TMC and Huarong's steel type and the steel
surrogate values differed in recent reviews . . . and . . . that
these differences significantly impacted the resulting margins
relied upon by Commerce in its AFA anaylsis ” Tianjin Machinery
Import & EXport Corp. v. Uhited States, Ct. No. 05-OO522, Order
at 4 (June 8, 2009) (directing Commerce to place plaintiffs'

charts on the record and to offer a response to them) (“Tianjin

Court No. 05-O0522 Page 3
II”) .

Now before the court are Commerce's Final Results of
Redetermination as supplemented. See Final Results of
Redetermination (Dep't of Commerce Mar. 11, 2008) (the “First
Remand Results”); Final Results of Redetermination Pursuant to
Court Order (Dep't of Commerce Sept. 16, 2009) (the “Supp1emental
Remand Results”) (collectively, the “Remand Results”). The court
has jurisdiction pursuant to 28 U.S.C. § 1581(c) (2006) and 19
U.S.C. § 1516a(a)(2)(B)(iii). For the following reasons, the

Remand Results are sustained, in part, and remanded.

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).
DISCUSSION
I. Legal Framework for Adverse Facts Available Rates

When periodically reviewing antidumping duties for an
uncooperative party, Commerce “may use an inference that is
adverse to the interests of that party in selecting from among

the facts otherwise available.” 19 U.S.C. § 1677e(b). while the

Court No. 05~00522 Page 4

court has previously sustained1 Commerce's threshold decision to

use Adverse Facts Available2 (“AFA”), questions remain about the

1 The court sustained the application of AFA to TMC's and

Huarong's sales of bars/wedges: “[A]s this Court has previously
held, plaintiffs’ ‘fai1ure initially to provide the relevant
information with respect to their invoicing arrangement,
information that was fully within their command, justified
Commerce's application of AFA' to plaintiffs’ claimed ‘agent’
sales.” Tianjin I, 31 CIT at 1424 (quoting Shandong Huarong
Mach. Co. v. United States, 30 ClT 1269, l278, 435 F. Supp. 2d
1261, 1270 (2006)). As to TMC's sales of picks/mattocks, the
court found that “based on the company’s failure to have
available for inspection at verification its sole supplier's
factors of production data,” “Commerce's application of AFA .
[was] supported by the record ” Tianjin I, 31 CIT at 1437, 1432
(citation omitted).

2 Pursuant to 19 U.S.C. § l677e(a), if:

(1) necessary information is not available on
the record, or

(2) an interested party or any other person-

(A) withholds information that has
been requested by the administering
authority or the Commission under
this subtitle,

(B) fails to provide such
information by the deadlines for
submission of the information or in
the form and manner requested,

(C) significantly impedes a
proceeding under this subtitle, or

(D) provides such information but
the information cannot be verified

- l

the administering authority and the Commission shall,
subject to section 1677m(d) of this title, use the
(continued...)

Court No. 05-00522 Page 5

manner in which the adverse inferences, arising from that
decision, were used “in selecting from among the facts otherwise
available.” 19 U.S.C. § 1677e(b). In particular, plaintiffs
contest the Department's application of adverse inferences when
choosing from the facts otherwise available to select their

individual AFA rates.

II. AFA Rate for TMC's and Huarong's Sales of Bars/Wedges

In Tianjin I, the court found that Commerce did not present
substantial evidence to justify its decision to assign an AFA
rate of 139 31 percent to Tianjin Machinery lmport & Export
Corp.'s (“TMC”) and Shandong Huarong Machinery Co., Ltd.'s
(“Huarong” and, co11ectively, “p1aintiffs”) for their sales of
bars/wedges: This rate had been calculated for TMC in the eighth
administrative review of the HFHTs Orders and is the highest
calculated rate under the Orders. See Tianjin I, 31 CIT at 1434.
On remand, the court directed the Department to either “explain

how the 139 31 percent rate applied to TMC's and Huarong’s

2(...continued)
facts otherwise available in reaching the applicable
determination under this subtitle.

If Commerce determines that the above criteria are met, and
makes the separate subjective determination that the respondent
has “failed to cooperate by not acting to the best of its ability
to comply with a request for information,” then, under 19 U.S.C.
§ 1677e(b), the agency “may use an inference that is adverse to
the interests of that party in selecting from among the facts
otherwise available.” 19 U.S.C. § 1677e(b).

Court No. 05-O0522 Page 6

sales of bars/wedges is a reasonably accurate estimate of TMC's
actual rate with a built-in increase to deter non-compliance

and . . . [to] explain in detail how any rate assigned to
Huarong is reliable and bears a rational relationship to the
company itself” or “reopen the record and calculate an AFA rate
to be applied to Huarong's and TMC's sales of bars/wedges, with
an additional amount to deter future non-compliance.” Id. at
l435.

In the First Remand Resu1ts, Commerce did not change the
139.31 percent rate for TMC’s and Huarong's sales of bars/wedges,
nor did it formally reopen the record, as permitted by the court,
to calculate new AFA rates. Instead, the Department insisted
that it complied with the court's remand instructions by further
explaining the applicability of the 139.31 percent rate to TMC
and Huarong, and providing additional factual support for this
determination. See First Remand Results at 2, 6.

Responding to the First Remand Results, plaintiffs claimed
that Commerce's new justifications were based on information not
on the record, Tianjin II, Ct. No. 05-00522, at 4. In making
their argument, plaintiffs primarily objected to Commerce's
reliance on newly produced data from United States Customs and
Border Protection. Id. at 3~4. As a result, they sought an
opportunity to put on the record information of their own,

consisting of several charts purportedly demonstrating “that

Court No. 05-O0522 Page 7

TMC[‘s] and Huarong's steel type and the steel surrogate values
differed in recent reviews[] . . . and . . . these differences
significantly impacted the resulting margins relied upon by
Commerce in its AFA analysis.” Id. at 4.

The court agreed with plaintiffs that Commerce had
“independently accessed Customs data to substantiate its
results.” Id. at 5. Likewise, the court also agreed that the
plaintiffs’ charts were “relevant to the probative value of
Commerce's weighted-average unit value analysis” and that the
information “should be fully vetted by the Department at the
administrative level.” Id. at 5~6. As a result, the court
remanded the matter again, and ordered Commerce to “address the
impact of plaintiffs’ charts . . . to their selection of AFA
rates for TMC[‘s] and Huarong's sales of bars/wedges.” Id. at 6.

In the Supplemental Remand Results, Commerce retained its
initial rates, finding that plaintiffs’ charts and arguments did
not “provide[] information or argument sufficient to change the
Department's selection of l39.31 percent rate for either TMC's or

Huarong's sales of bars/wedges.” Supplemental Remand Results at

2.

A. TMC
In Tianjin I, the court concluded that the l39.31 percent

rate did not bear a rational relationship to TMC's sales of

Court No. 05-O0522 Page 8
bars/wedges during the period of review (“POR”), i.e., February
l, 2003 tO January 3l, 2004. Tianjin I, 31 ClT at 1434-35. ln
reaching this conclusion, the court found that Commerce could not
rely on TMC's rate from the eighth administrative review of the
HFHTs Orders (covering the POR February 1, 1998 to January 31,
1999) without explaining its relevance to the thirteenth
administrative review, which took place some five years later.
On remand, Commerce has chosen to comply with Tianjin I’s

directives by seeking “additional information to determine
whether TMC's sales during the eighth administrative review
continue[] to reflect TMC's commercial activity during the [POR]
for the thirteenth review.” See Def 's Resp. to Comments
Regarding the Remand Redetermination 5 (citing First Remand
Results at 2). In order to demonstrate how the 139 31 percent
rate is reflective of TMC's recent commercial activity, Commerce
cites the following additional factual support:

The Department obtained information from the

Automated Commercial System (ACS) of U.S.

Customs and Border Protection (CBP) regarding

sales values of TMC's merchandise

classifiable under harmonized tariff schedule

subheading 8205.59.30, the subheading

applicable to the merchandise subject to the

bars/wedges order. The Department

specifically queried the two review periods

at issue: February 1, 1998, through January

31, 1999 [the eighth review], and February 1,

2003, through January 31, 2004 [the

thirteenth review]. Using this information,

the Department calculated a weighted-average

unit value (AUV) for each period for TMC's
sales of merchandise subject to the

Court No. 05-O0522 Page 9

bars/wedges order. The Department compared
the AUV from each period and found that TMC's
AUV for the subject merchandise declined

. from the earlier to the later period.
This change in TMC's AUVs contrast[s] with
little to no change in the production process
used by the PRC industry to produce
bars/wedges over the last five years, as
demonstrated by respondent questionnaire
responses and verifications from multiple
administrative proceedings. Thus, because
the production process of the industry has
generally stayed constant, while TMC's U.S.
sales values have declined, the Department
concludes that this information further
substantiates the relevance of the l39.3l
percent margin as AFA for TMC's sales of
merchandise under the bars/wedges order.

First Remand Results at 6-7 (citations omitted). Thus, Commerce
insists that a steep decline3 in the price at which the
merchandise was sold into the United States, while the production
process used to make the bars/wedges stayed constant, is
“probative evidence of TMC's continued dumping of hand tools on
the United States market ” Def.'s Resp. To Court's Letter Dated
June 11, 2010 3 (emphasis removed). ln other words, for Commerce
the price decline from the eighth review to the thirteenth
review, during which period nothing changed in the way the
merchandise was made, indicates that, not only did TMC continue
to dump its products, but that the dumping margin, if anything,

had increased.

3 TMC's AUV “declined by 34.33 percent from the earlier
[eighth review] to the later period [thirteenth review].” First
Remand Results at 7.

Court No. 05-O0522 Page 10

Next, the Department points to, what it calls, the
volatility of TMC’s margins in past reviews as further evidence
of the relevance of the l39.3l percent rate. Specifically,
Commerce notes that: (1) in the seventh review, it assigned TMC
an AFA rate of 47.88 percent; (2) in the eighth review, it
calculated the l39.3l percent rate (an increase of ninety-two
percentage points); (3) in the ninth review, it calculated a 0.56
percent rate (a 248-fold decrease); (4) in the tenth review, it
calculated a 0.48 percent rate (a de minimus change from the
ninth review); and, (5) in the twelfth review, sustained by the
court in Shandong Huarong Machinery Co., Ltd. v. United States,
31 CIT 1815, 1820 (2007) (not reported in the Federal Supplement)
(“Shandong”), Commerce, using AFA, assigned the 139 31 percent
rate calculated in the eighth review. See First Remand Results
at 7~8. Accordingly, for Commerce, the “wide swings” experienced
by TMC in its prior administrative reviews of bars/wedges
demonstrates the continued reliability of the l39.3l percent
rate. Id. at 8; see also id. at 7 (“[A] review of the volatility
of TMC's margins in past reviews provides further factual support
for the relevance of the l39.3l percent rate.”). Thus, Commerce
asserts that the l39.3l percent rate is consistent with TMC's
varying rate history.

As to why the l39.3l percent rate is more accurate than more

recent lower rates calculated for TMC, the Department argues:

court No. 05-00522 l Page ii

Because TMC's sales of bars/wedges are

receiving total adverse facts available4 due

to its involvement in the “agent” sales

scheme, we do not find that using one of

TMC's prior lower rates would be appropriate

as an AFA rate. ln administrative reviews

where TMC received lower rates, not only did

TMC fully participate in those proceedings,

but TMC did not receive total AFA. As a

result, it would be difficult to reconcile

applying a lower rate to TMC as AFA in this

review when those lower rates were not

calculated based on AFA.
First Remand Results at 9.

with respect to the steel valuation charts plaintiffs have

now placed on the record, Commerce maintains that it “cannot
compare the steel used for TMC or Huarong in the [thirteenth]
administrative review with the [eighth] administrative review”
because the Department believes, based on the companies’
participation in the fraudulent invoicing scheme that the new
data, like all of the companies’ questionnaire responses, is not
reliable. Supplemental Remand Results at 8. “As such, the
Department has no reliable information upon which to conclude
that the steel surrogate values would be different~or how they

would be different-than the surrogate values applied in the 8th

administrative review.” Id. Put another way, because of the

4 while the phrase “total adverse facts available” is not
referenced in either the statute or the agency's regulations, it
can be understood, within the context of this case, as referring
to Commerce's application of the “facts otherwise available” and
“adverse inferences” provisions of 19 U.S.C. § 1677e after
rejecting as untrustworthy all information submitted by
respondents in this review.

Court No. 05-O0522 Page 12

plaintiffs’ failure to disclose their true business
relationship,5 Commerce has concluded that it cannot trust any of
the steel valuation data they have offered.

Further, Commerce contends that, even if it did consider the
explanatory charts, they would not be sufficient to explain why
the margin for the thirteenth review would not be the same as or
higher than the eighth. Id. ln making this argument, the
Department stresses that the dumping margin is not derived solely
on the surrogate steel value, but is based on several factors of
production. See id. at 9 (“Plaintiffs’ argument examines only
one component of the normal value . . . . without considering
the differences in consumption rates for all [factors of
production] (e g., material inputs, energy and labor) between
segments, we cannot assume, as plaintiffs argue, that the

difference in margins would simply be due to a change in the

As explained in Tianjin I:

Plaintiffs fail to acknowledge

that Commerce discovered, after the issuance
of several supplemental questionnaires, that
the business relationship between Huarong and
TMC was nothing more than a scheme apparently
directed toward circumventing the antidumping
duties applicable to Huarong's HFHTs sales to
the United States. . . . [T]he mere statement
that sales were made through an agent when,
in reality, the agent's role was simply to
provide the principal with blank invoices, is
not enough to preclude Commerce from
resorting to facts otherwise available.

31 ClT at l423.

Court No. 05-O0522 Page 13

surrogate values for steel.”). Commerce also notes the margin
is sensitive to the U.S. price. See id. at 8-9 (“while
plaintiffs seem to claim that the surrogate values that would
have been used in the 13th administrative review would have been
lower than the surrogate value for steel used in the 8th
administrative review, U.S. prices at least for TMC's bars/wedges
also declined ”). Thus, even if normal value did decrease
between the eighth and thirteenth reviews, Commerce argues that
the margin would not necessarily be smaller, because the U.S.
price also declined.

Finally, the Department claims that plaintiffs’ charts
themselves undermine their theory of a direct correlation between
steel values and margins. Specifically regarding TMC, Commerce
notes that the company's margin declined at a much steeper rate
than its steel surrogate value did from the eighth to the ninth
to the tenth administrative review. See id. at 10 (“while the
surrogate value of steel declined from the 8th administrative
review value of 37.52 Rs/kg to a range of values between 5.43
Rs/kg and 9 327 Rs/kg, the [calculated] margins declined at a
much steeper rates from [a calculated rate of] l39.3l percent in
the 8th administrative review to [calculated rates of] 0.56
percent and 0.48 percent in the 9th and 10th administrative
reviews, respectively.”). As a result, the Department contends

that something other than the surrogate values for steel alone

Court No. 05-O0522 Page 14

influenced the size of TMC's margin.

In support of its challenge to the Remand Results, TMC
states that the Department's l39.3l percent rate is unreliable
because Commerce “merely selected data to support that conclusion
without meaningful and required corroboration.” Comments on the
Department of Commerce's Final Results of Redetermination
Pursuant to Court Remand (“Pls.' Supplemental Comments”) 5.
Central to TMC's various claims is its contention that Commerce
refuses to acknowledge “how important it is to match the input
steel surrogate values with reasonable margins.” Pls.’
Supplemental Comments 10.

TMC relies heavily on its contention that the steel
surrogate value chosen for the eighth administrative review was
“aberrational in comparison to all other input steel surrogate
values.” Pls.' Supplemental Comments 8. In other words, the
company claims that the steel surrogate value used for the eighth
review was markedly more expensive than in other years, because
in the eighth review Commerce chose a specific lndian surrogate
steel value it had not used before, and that it has not used
since. According to TMC, this surrogate value choice resulted in
a much higher antidumping margin in the eighth review than in
subsequent reviews. To support their argument, plaintiffs
present the two charts, described supra, purporting to
demonstrate “that the calculated margins for TMC and Huarong

during the [eighth through thirteenth reviews] varied in direct

COUrt NO. 05-O0522 Page l5

proportion to the steel input surrogate value.” Pls.'
Supplemental Comments 9.

Commerce's selection of the l39.3l percent rate for TMC's
sales of bars/wedges during the POR is sustained. In reaching
this decision, the court notes that many of the arguments made in
this case were made in the earlier Shandong case, where this
Court sustained the l39.3l percent rate for TMC's sales of
bars/wedges in the twelfth administrative review. In that case,
the Court stressed that all of TMC's proffered sales data were
tainted by the company's participation in the fraudulent
invoicing scheme. See Shandong, 31 ClT at 1819-20 (“Because of
TMC's participation in the invoicing scheme, all of its sales
data was necessarily tainted. . . . Accordingly, despite
plaintiffs’ insistence that Commerce should calculate a rate for
TMC's bars/wedges, Commerce had no reliable information from
which to do so.”).

As an initial matter, Commerce's AUV analysis tends to
support its contention that “TMC's declining United States sales
values (without commensurate production process changes)
constituted probative evidence of TMC's continued dumping of hand
tools on the United States market.” Def.'s Resp. to Court's
Letter Dated June 11, 2010 3 (emphasis removed). As the
Department explains:

A direct relationship exists between an
industry’s production process and the subject

COurt No. 05-O0522 Page 16

merchandise's cost of production because
significant changes in the production
process, such as the introduction of new
technology, can affect the cost of
production. Hypothetically, if the cost of
production decreases because of new
technologies or efficiencies, such cost
decreases could be reflected in declining
United States sales values. lf no such
changes occurred, however, this would be some
indication that costs may have remained
steady, corroborating, to the extent
practicable, the selected facts available
dumping margin because declining sales values
reflected continued dumping. Accordingly,
Commerce in this case examined whether
changes in the industry’s production process
might have explained some of the decline in
U.S. sales values, and found that there were
no significant changes in the production
process of the industry. Therefore, Commerce
reasonably determined that any change in the
cost of production for the subject
merchandise and the United States sales
values was not attributable to changes in the
production process of the industry.

Def.'s Resp. to Court's Letter Dated June 11, 2010 1-2. while
the analysis does not take into account any changes in the
surrogate cost of manufacturing inputs, it is, as Commerce puts
it, “some indication” that TMC's manufacturing costs remained
steady while its U.S. price declined, thus eliminating production
changes as a cause of the change in price.

Moreover, TMC has a history of significant rate changes
among reviews. That is, the company has received calculated
rates that vary from l39.3l percent in the eighth, to 0.48
percent in the tenth review. Thus, while TMC's more recent rates

have been dramatically lower, the calculated rate of l39.3l

Court No. 05-O0522 Page 17

percent tends to confirm the Department's finding that assigning
this rate in this thirteenth review is not inconsistent with
TMC's calculated rate history. See Shandong, 31 CIT at 1820.
TMC's primary objection to Commerce's analysis is that the

Department has failed to recognize the significance of
differences, across reviews, of the steel surrogate value to the
resulting margin. At the outset, it must be noted that

Commerce's claim that it can ignore plaintiff's charts based on

the use of total AFA overstates the uses of 19 U.S.C. § 1677e(b).

See, e.g., Gerber Food (Yunnan) Co., Ltd. v. United States, 29
CIT 753, 771, 387 F. Supp. 2d l270, 1286-87 (2005) (“COmmerCe
failed to provide a rational explanation of how Green Fresh's
participation in the export agency agreement, and the
circumstances surrounding its reporting of that agreement,
affected the unrelated information needed to calculate an
antidumping duty rate for application to all shipments by Green
Fresh of mushrooms subject to the administrative review.”). Put
another way, the use of AFA resulting from the fraudulent
invoicing scheme may taint TMC's pricing information, but cannot
be used as an excuse to disregard unrelated information. See 19
U.S.C. § l677e(b).

TMC's arguments about the differences in the type of steel
used as an input in various reviews and hence its cost, however,

are not persuasive. The data found in plaintiffs’ charts only

Court No. 05-O0522 Page 18

considers one component of the normal value calculation, i e.,
the input for steel. without looking at all the factors of
production together, eig., the cost of labor, the court has no
way to discover if the reduction in the cost of the steel
surrogate value would have reduced TMC's margin. ln addition,
while the cost of producing the merchandise may have decreased
from review to review, so did the U.S. price. Thus, it is not at
all clear that TMC's margin between the eighth and the thirteenth
review would have decreased based solely on a reduction in the
surrogate value of the steel inputs.6

Next, an examination of TMC's charts reveals that they do no
show a direct correlation between the steel surrogate value and
antidumping margin. According to the charts, TMC's margin
decline was much more exaggerated than the decline in its steel
surrogate values between the eighth, ninth, and tenth reviews.
Therefore, the data suggests that factors other than the cost of
the steel input were at work and resulted in declining prices.

Here, the Department has chosen a rate calculated for TMC in
a prior review. Reliance on a previously calculated rate for the
company itself was reasonable because, although the Department

had no reliable pricing information for the POR, it was able to

6 “while plaintiffs seem to claim that the surrogate values
that would have been used in the 13th administrative review would
have been lower than the surrogate value for steel used in the
8th administrative review, U.S. prices at least for TMC's
bars/wedges also declined.” Supplemental Remand Results at 8-9.

Court NO. 05-O0522 Page 19

look to a rate arrived at using TMC's own verified data in an
earlier review. See Shandong, 31 ClT at 1820. The Department
then took steps to demonstrate that the data remained relevant to
the “commercial reality” of TMC during the thirteenth
administrative review. Gallant Ocean (Thailand) Co., Ltd. v.
United States, 602 F.3d 1319, 1324 tFed. Cir. 20lO) (“Gallant
Ocean”); see also KYD, Inc. v. United States, 607 F.3d 760, 767
(Fed. Cir. 20l0) (reaffirming Gallant Ocean's “commercial
reality” test) (“KYD”).

Specifically, Commerce (1) engaged in an AUV analysis to
demonstrate that a rate calculated using TMC’s data from the
thirteenth review could have been as high or higher than 139 31
percent, and (2) employed a volatility analysis to show that
TMC’s rates have varied greatly in past reviews, and that the
l39.3l percent rate, though high, is consistent with TMC's rate
history. ln the AFA context, Commerce is permitted to add a
“bui1t-in increase intended as a deterrent to non-compliance,” as
long as that increase does not become “punitive, aberrational, or
uncorroborated.” F.lli De Cecco Di Filippo Fara S. Martino
S.p.A. v. United States, 216 F.3d 1027, 1032 (Fed. Cir. 2000)
(“De Cecco”). By using a previously calculated rate for TMC
itself and justifying the rate with substantial evidence, it is
apparent that Commerce has not selected an “unreasonably high

rate[] having no relationship to the respondent's actual dumping

Court No. 05-O0522 Page 20

margin.” Gallant Ocean, 602 F.3d at 1323. Thus, Commerce has
satisfied the instructions in Tianjin I to “explain . . . how the
139.31 percent rate applied to TMC's . . . sales of bars/wedges
is a reasonably accurate estimate of TMC's actual rate with a
built-in increase to deter non-compliance . . . .” Tianjin I, 31
ClT at l435. while hardly overwhelming, taken as a whole, the
Department has martialed sufficient substantial evidence to
support the rate. See Shandong Huarong Gen. Corp. v. United
StateS, 25 ClT 834, 842, 159 F. Supp. 2d 7l4, 722-23 (200l).
Accordingly, the court finds that Commerce's weighing of the
evidence and deriving inferences therefrom was not unreasonable
and sustains the Department's application of the l39.3l percent
rate to TMC's sales of bars/wedges in this thirteenth

administrative review.

B. Huarong

In Tianjin I, the court found that in applying TMC’s l39.3l
percent rate from the eighth review to Huarong, the Department
did not “articulate[] how the l39.3l percent rate is a reasonable
estimate of what Huarong's rate would have been had it complied
together with a built-in increase as a deterrent,” and,
therefore, directed Commerce to “explain in detail how any rate
assigned to Huarong is reliable and bears a rational relationship

to the company itself ” 31 CIT at l435.

Court No. 05-O0522 Page 21

On remand, the Department insists that the volatility of
Huarong's margins in past reviews provides factual support for
the relevance of the l39.3l percent rate to the company. First
Remand Results at 11; Supplemental Remand Results at l1.

Specifically, the Remand Results state that: (1) in the
sixth review, Huarong received a calculated rate of 34.00
percent; (2) in the seventh review, a calculated rate of l.27
percent; (3) in the eighth review, a calculated rate of 27.28
percent; (4) in the ninth review, an assigned AFA rate of 47.88
percent; (5) in the tenth review, a calculated rate of 18.99
percent; (6) in the eleventh review, a calculated rate of 30.02
percent; and, (7) in the twelfth review, Huarong was assigned the
l39.3l percent AFA rate.7 See First Remand Results at 11. For
Commerce, these “wide swings” justified the continued relevance
of the l39.3l percent rate to Huarong. First Remand Results at
11. The Department maintains this position even though Huarong
has never had a calculated rate higher than 30.02 percent.

ln addition, the Department examined Huarong's sales data
from the eleventh review (in which the company cooperated and
received its highest calculated rate of 30.02 percent) in order
to demonstrate the relevance of the l39.3l percent to Huarong's
sales during this POR. First Remand Results at 11-12; Supplement

Remand Results at l1. ln doing so, the Department noted that

7 _Huarong’s rate for the twelfth review was not judicially
reviewed.

Court No. 05-O0522 Page 22

Huarong had some transaction-specific margins in the eleventh
review that were nearly as high as 139 31 percent and claims that
those transactions did “not appear to be aberrant or unusual in
any way ” First Remand Results at 12.3 For the Department,
these transactions were “representative of the margins [it] would
have calculated for . . . [Huarong] in the thirteenth review
(with a built-in incentive to encourage cooperation) had it not
received total AFA.” First Remand Results at 12. In other
words, the Department claims that the l39.3l percent rate is
shown to be relevant to Huarong's commercial activity during the
POR by looking only at the high end of a selected group of sales
for a time period two years removed from the POR. For Commerce,
this analysis was significant because it not only relied upon
Huarong's relatively recent data, but also served to support a
rate high enough to deter future non-cooperation.

Finally, the Department asserts “that if an uncooperative
respondent could have demonstrated that its dumping margin is
lower than the highest prior margin[,] it would have provided
information showing the margin to be less.” First Remand Results

at 12-13 (citation omitted). To justify this approach, the

8 The Department examined 447 transactions from the eleventh
review. None were as high l39.3l percent, and only twelve, or
roughly .03 percent of the transactions, were above 130 percent.
ln addition, only fifty-two of the sales, or approximately twelve
percent of the sample, rose above one hundred percent. More than
seventy-five percent of sales had less than a fifty percent
margin. First Remand Results at App. 3.

Court No. 05-O0522 Page 23

Department relies on the “common sense” presumption first
confirmed by the Federal Circuit in Rhone Poulenc, Inc. v. United
States, 899 F.2d 1185 (Fed. Cir. 1990) (“Rhone Poulenc”). See
First Remand Results at 12-13; Rhone Poulenc, 899 F.2d at 1l90.
Huarong's arguments in response to Commerce's conclusions

concerning Huarong are not entirely dissimilar to those made by
TMC. Thus, the company asserts that there is a direct
correlation between the surrogate steel values from its various
reviews and its calculated antidumping margins. Pls.'
Supplemental Comments 9. Moreover, Huarong insists that Commerce
did not comply with the court's remand instruction to explain how
TMC's prior rate is rationally related to Huarong. The company
argues that the Department's analysis was “inadequate and
selective,” and that Commerce “improperly used TMC's prior rate
as a benchmark for Huarong.” Comments on the Dept. of Commerce's
Final Results of Redetermination Pursuant to Court Remand (“Pls.'
First Comments”) 25. Additionally, Huarong claims that
Commerce's volatility analysis does not provide substantial
evidence that Huarong should receive a 109.29 percentage point
increase from its last calculated rate in the eleventh review.
Pls.' First Comments 28. lt also notes that this Court
invalidated the l39.3l percent AFA rate for Huarong in the ninth
review. Pls.' Supplemental Comments 14; see also Shandong

Huarong Gen. Grp. Corp. v. United States, 29 CIT 1227, 1237

Court No. 05-O0522 Page 24

(2005) (not reported in the Federal 8upplement) (“Huarong”)
(characterizing the use of the 139 31 percent rate in the ninth
review as “punitive in nature” based on Commerce's “strained
efforts to demonstrate [its] validity”).

Although the court finds Huarong's arguments concerning the
correlation between steel surrogate values and its antidumping
margins unconvincing for the same reasons set out in the TMC
discussion supra, the question of Huarong's rate must again be
remanded. First, the court is not persuaded by the Department's
citation of Rhone Poulenc for the idea that the use of AFA
dispenses with the Department's statutory mandate to corroborate
secondary information. See 19 U.S.C. § 1677e(c). The Rhone
Poulenc case is most often cited for its statement on the
assignment of the highest prior margin to an uncooperative
respondent: “[l]t reflects a common sense inference that the
highest prior margin is the most probative evidence of current
margins because, if it were not so, the importer, knowing of the
rule, would have produced current information showing the margin
to be less.” Rhone Poulenc, 899 F.2d at 1190. ln other words,
the case stands for the proposition that a respondent can be
assumed to make a rational decision to either respond or not
respond to Commerce's questionnaires, based on which choice will
result in the lower rate.

lt is important to keep in mind, however, that Rhone Poulenc

Court No. 05-O0522 Page 25

was a pre-Uruguay Round Agreements case. As a result, it
reflected the state of the law prior to the enactment of the Act9
that implemented the Agreements’ negotiated terms. See generally
Gerber Food (Yunnan) Co., Ltd. v. United States, 31 ClT 921, 947,
491 F. Supp. 2d 1326, 1351 (2007) (“Rhone Poulenc . . . involved
the application of the ‘best information available' standard
under 19 U.S.C. § l677e prior to the substantial amendment of
that statutory provision by the Uruguay Round Agreements Act

.”). As part of the implementing legislation, however,
Congress directed Commerce to make additional findings in AFA
cases. See 19 U.S.C. § 1677e(c) (“when the administering
authority or the Commission relies on secondary information
rather than on information obtained in the course of an
investigation or review, the administering authority or the
Commission, as the case may be, shall, to the extent practicable,
corroborate that information from independent sources that are
reasonably at their disposal ”). lt appears that Commerce is now
trying to dispense with this corroboration requirement by
employing the Rhone Poulenc presumption. Because the case
predated the Uruguay Round Agreements.Act additions to § 1677e,

however, it necessarily did not hold that the presumption could

9 The Uruguay Round Agreements Act, Pub. L. No. 103-465, 108
Stat. 4809 (1994), changed United States law to conform to the
provisions agreed upon at the Uruguay Round of negotiations of
the General Agreement on Tariffs and Trade.

Court No. 05-O0522 Page 26

replace actual corroboration.

ln addition, in the most recent cases where the presumption
is mentioned, the Federal Circuit appears to restrict its use to
situations where a respondent has not answered Commerce's
questionnaire at all, rather than when the questionnaire
responses were found wanting for one reason or another. ln fact,
in the most recent case citing the Rhone Poulenc presumption, the
Federal Circuit paid particular attention to the fact that the
exporter put nothing on the record. See KYD, 607 F.3d at 764
(“King Pac had elected not to cooperate at all in the review.”);
see also id. at 767 (“King Pac's failure to cooperate deprived
Commerce of the most direct evidence of King Pac's actual dumping
margin.”). Thus, the KYD case seems to confirm that “common
sense” restricts the Rhone Poulenc presumption to cases where a
respondent can be assumed to have chosen not to respond to a
questionnaire at all, in order to achieve a lower rate.

Furthermore, the Federal Circuit recently analyzed the outer
limits of Commerce's discretion in assigning AFA rates. ln
Gallant Ocean, the plaintiff was a Thai exporter of shrimp that
refused to participate in an administrative review. Gallant
Ocean, 602 F.3d at 1321-22. Having no company-specific
information to use, Commerce assigned Gallant a 57.64 percent AFA
rate, based on the petition rate. Commerce claimed that the rate

was corroborated by transaction-specific margins for three other

court No. 05-00522 " Page 27

cooperating exporters. Id. at 1322. The rate, however, was ten
times higher than the average rate for all cooperating
respondents and five times higher than the highest rate
calculated for any cooperating respondent. Id. at 1324. The
Federal Circuit rejected Commerce's chosen rate because “nothing
in the record tie[d] the . . . rate to Gallant,” making the rate
“unrelated to [Gallant's] commercial activity.” Id. ln
addition, the Gallant Ocean Court characterized the rate as
“‘punitive, aberrational, or uncorroborated'” because of the
large disparity between the assigned rate and the cooperative
respondents' calculated dumping rates. Id. (quoting De Cecco,
216 F.3d at 1032). On remand, the Court instructed Commerce that
it “must select secondary information [i e., a rate] that has
some grounding in [Gallant’s] commercial reality.” Id.
ln the subsequent KYD case, the Federal Circuit reaffirmed

the “commercial reality” requirement. See KYD, 607 F.3d at 767
(“Moreover, in Gallant Ocean this court concluded that the AFA
margin that Commerce selected ‘did not and does not represent
commercial reality’ and ruled that Commerce ‘may not use the
petition rate to establish the dumping margin when its own
investigation revealed that the petition rate was not
credible.’”). Thus, KYD and Gallant Ocean, taken together,
confirm that an AFA rate must be shown by substantial evidence to

have a rational relationship to the “commercial reality” of the

Court No. 05-O0522 Page 28

respondent during the POR.

Other Federal Circuit AFA decisions bolster the conclusion
that Commerce must establish the relevance of a chosen rate to
the respondent. ln De Cecco, the court stressed that Commerce's
discretion is “not unbounded” and that “Congress could not have
intended for Commerce's discretion to include the ability to
select unreasonably high rates with no relationship to the
respondent's actual dumping margin.” 216 F.3d at 1032. ln
particular, the De Cecco Court noted that “the statute has no
requirement that Commerce is limited to the highest rate imposed
on a cooperating company when selecting a rate for a non-
cooperating respondent.” Id.

The Federal Circuit did uphold an AFA rate corroborated by a
small percentage of a company's transactions in PAM, S.p.A. v.
United StateS, 582 F.3d l336, 1340 (Fed. Cir. 2009) (“PAM”). The
Court, however, discussed PAM in Gallant Ocean, noting that
“[s]ubstantial evidence [stil1] requires Commerce to show some
relationship between the AFA rate and the actual dumping margin”
of the company being reviewed. Gallant Ocean, 602 F.3d at 1325.
The Gallant Ocean Court emphasized that an analysis of selected
transactions was not sufficient to constitute substantial
evidence of what a calculated rate would be when “a large body of
reliable information suggest{s] the application of a much lower

margin.” Id.; see also id. at 1324 (“Commerce used a very small

court No. 05-00522 Page 29

percentage of the mandatory respondents' transactions as
corroborative evidence even though most transactions during the
period of review had significantly lower dumping margins.”).
Here, Commerce's justifications recall the Department's

reasoning in the litigation following the final determination in
the ninth administrative review, where the Department also
selected the l39.3l percent AFA rate for Huarong. Huarong, 29
ClT at 1230. As in this case, in Huarong, Commerce relied on
volatility and a limited number of transaction-specific margins
to justify the same 139 31 percent rate. Id. at 1233~35. The
Huarong Court noted, however, that “[w]hile changes in
antidumping duty rates from one review to the next may be
consistent with the ‘volatile nature’ of the rates for
bars/wedges, Commerce has still failed to demonstrate the
validity of such a large absolute increase.” Id. at l233. That
is, the jump from calculated rates ranging from 1.27 percent to
34.00 percent to a l39.3l percent AFA rate needed a thorough
explanation backed by substantial evidence, Thus, the Huarong
Court concluded that “Commerce has failed to justify the 139.31%
rate with substantial evidence” and found the rate to be
“punitive in nature.” Id. at l237; see also id. (“[T]he court
finds that Commerce has failed to justify the 139.31% rate
assigned to the Companies, and further finds that the rate is

punitive . , . .”). Since it had remanded the case twice, the

COUrt NO. 05-O0522 ' Page 30

Court directed Commerce “to no longer employ [the 139 31 percent]
rate.” Id.i Commerce then selected a 47 88 percent rate on the
third remand, The Huarong Court found that Commerce had finally
“explained adequately the reliability and relevance of the

AFA rate” by selecting a rate that was l3.88 percent higher than
Huarong's previous highest calculated rate in order to encourage
future compliance. Shandong Huarong Gen. Grp. Corp. v. United
States, 31 ClT 42, 45-46 (2007) (not reported in the Federal
Supplement).

Based on the foregoing, it is clear that Commerce has again
failed to support with substantial evidence the l39.3l percent
rate for Huarong. ln choosing an AFA rate on remand, Commerce
must select one grounded in the “commercial reality” of the
company under review during the POR. Commerce has failed to do
so here. First, the volatility argument for Huarong is weak,
considering that the company has never had a calculated rate
anywhere near l39.3l percent. That is, Huarong's calculated
rates in earlier reviews varied from 1.27 percent to 34.00
percent. Thus, while Huarong has had various calculated rates,
none has approached the rate assigned by Commerce.

Moreover, considering the persuasive evidence represented by
these lower calculated rates, Commerce's decision to look only at
selected sales to justify a rate over one hundred points higher

than Huarong's highest calculated rate does not constitute

Court No. 05-O0522 4 Page 31

substantial evidence of what Huarong's calculated rate would have
been. See, e.g., Gallant Ocean, 602 F.3d at 1325 (stating that
“a small percentage of . . . transactions [does not] represent[]
a reasonably accurate estimate of Gallant's actual dumping
margin” when “a large body of reliable information suggest[] the
application of a much lower margin.”). This is particularly the
case where an examination of Commerce's analysis reveals that the
Department looked at 447 transactions, of which 395 (or roughly
eighty-eight percent) had margins of less than one hundred
percent, while over 75 percent of the sample had margins below
fifty percent. First Remand Results at App. 3.
As this Court recently noted, to “avoid imposition of a

punitive rate,” the court must consider whether “the AFA rate

[is] so far from what has been demonstrated by actual rates

that it must be rejected.” Qingdao Taifa Grp. Co., Ltd., v.
United States, 34 ClT __, __, Slip Op. 10-126 at 12, ll (Nov. 12,
20l0). Furthermore, this Court has held that more than doubling

a previously-determined AFA rate “must necessarily be punitive.”
Shandong Mach. Imp. & Exp. Co. v. United States, 34 ClT __, __,
Slip Op. 10-88 at 10 (Augi 11, 20l0). Thus, a rate that is over
one hundred percentage points higher and more than four times
greater than Huarong's highest previously calculated rate, as

well as a rate dramatically higher than the vast majority of

specific transactions Commerce looked at, renders Commerce's

Court No. 05-O0522 ' Page 32

choice “punitive in nature” based on Commerce's “strained efforts
to demonstrate [its] validity.” Huarong, 29 ClT at l237. See
also De Cecco, 216 F.3d at 1032 (affirming the rejection of a
punitive AFA rate that “was many times higher than [the
company’s] actual dumping margin”).

Because the court finds that Commerce has failed to justify
with substantial evidence the l39.3l percent rate after having
had two previous opportunities to do so, and further finds that
the rate is punitive, the Department is directed, on remand, to
no longer employ this rate and to choose a lower rate.

Therefore, Commerce shall choose and support, with substantial
evidence, one of the following: (1) a calculated rate from a
previous review, that reflects the actual rate during the POR,
with a built-in increase to deter non-compliance; or (2) reopen
the record and calculate a rate that accurately reflects what the
rate would have been had Huarong cooperated, with a built-in

increase as a deterrent to non-compliance.

ll. AFA Rate for TMC’s Sales of Picks/Mattocks

ln Tianjin I, the court found unsupported by substantial
evidence Commerce's selection, as the AFA rate for TMC’s sales of
picks/mattocks, a 98.77 percent rate calculated in the fifth
review for a different respondent, Funjian Machinery lmport and

EXpOJ_”t COrp. (“FMEC") . 31 CI'I' at 1437-38; P1S. FirSt Comments

Court No. 05-O0522 Page 33

34. Commerce applied AFA to TMC's sales of picks/mattocks “based
on the company's failure to have available for inspection at
verification its sole supplier’s factors of production data,”
Id. at 1437. The court found that Commerce's justification that
the rate was “calculated for another respondent in a prior
segment of these proceedings” was “not sufficient for the court
to find that the selected rate was a reasonably accurate
reflection of what TMC's actual rate would be during the POR,”
together with a built-in increase to deter non-compliance. Id.
The court remanded the issue to the Department with instructions
tO:

(1) explain (a) how the 98.77 percent rate

for TMC's picks/maddocks is a reasonably

accurate estimate of TMC's actual rate with a

built-in increase to deter non-compliance;

and (b) why it did not select as an AFA rate

for TMC's sales of picks/mattocks one of the

previously assigned lower rates, albeit with

a built-in increase to deter future

non-compliance; or (2) reopen the record and

obtain evidence to support an actual

calculated rate for TMC's sales of

picks/mattocks.
Id. at l438.

On remand, the Department claims that it did not reopen the
record. Nonetheless, it did place on the record additional
factual support in an effort to demonstrate that the 98.77
percent rate was relevant to TMC. Specifically, Commerce

analyzed the company's sales in the twelfth review and found that

TMC had transaction-specific margins in that review that were

Court No. 05-O0522 Page 34

considerably above 98.77 percent.N First Remand Results at 14.
The Department added:

we also compared the [twelfth review]
transactions that approximate the proposed
AFA rate of 98.77 percent to other U.S. sales
of [picks/mattocks] made by TMC. The U.S.
transactions corroborating the AFA rate do
not appear to be aberrant or unusual in any
way, They appear to be made in commercial
quantities. Because we are making an adverse
inference with regard to TMC, we regard these
transactions as representative of the margins
we would have calculated for this company in
the thirteenth review (with a built-in
incentive to encourage cooperation) had it
not received total AFA.

Id.

ln addition, as in its bars/wedges analysis, Commerce relies
on the Rhone Poulenc presumption to corroborate the 98.77 percent
rate. Id. at 15. Commerce argues that if TMC could have
demonstrated that its rate would have been lower than the highest
previous margin, it would have provided such information.
Further, to explain why the Department did not select one of
TMC's previously assigned lower rates as an AFA rate, the
Department maintains that it has discretion to choose the
information on which it relies. ld. at 15. (“Because TMC's
sales of picks/mattocks are receiving total AFA because it could
not provide factors of production information, we do not find

that using one of TMC's prior rates would be appropriate as an

w The First Remand Results cites two sales with a margin of

363.91 percent. First Remand Results at 14.

Court No. 05-O0522 Page 35

AFA rate. ln administrative reviews where TMC received
calculated rates, TMC fully participated in those proceedings and
received a calculated rate based on its own data. As a result,
it would be inappropriate to apply a lower rate to TMC as AFA in
this review ”).

For TMC, Commerce has still not demonstrated the reliability
nor the relevance of the rate to the company. TMC argues that
using a different company's rate from a review almost a decade
removed from the POR is not reflective of TMC's commercial
activity during the POR. Pls ' First Comments 35.

ln addition, TMC claims that the Department has not
adequately explained why it did not select one of TMC's
previously assigned lower rates and add to it a built-in increase
for non-compliance. More specifically, TMC notes that the
highest prior margin for a review in which TMC fully participated
was 4.76 percent, and that 4.76 percent should have been the
starting point for a margin in this case, plus an addition to
deter future non-compliance. See Pls.' First Comments 39.

The court is not persuaded that Commerce has supplied the
substantial evidence to sustain the 98.77 percent AFA rate for
TMC's sales of picks/mattocks. First, as TMC argues, “nothing in
the record ties the . . . rate to” TMC, as Commerce chose a rate
calculated for a different party in a completely different

review. See Gallant Ocean, 602 F.3d at 1324. By not using a

court No. 05-O0522 3 Page 36

rate calculated for TMC, but rather one calculated for another
company, Commerce must produce evidence that this rate is
relevant to TMC. “Although Commerce has discretion in choosing
from a list of secondary information to support its adverse
inferences, Commerce must select secondary information that has
some grounding in commercial reality.” Id.

Second, Commerce's analysis of a small fraction of TMC's
sales in a time period outside of the POR does not constitute
substantial evidence that FMEC's rate from another POR was
relevant to TMC during the POR. This is because the selected
sales from the twelfth review simply do not corroborate a rate of
98.77 percent. Of the twenty-two sales Commerce examined, only
two had a margin in excess of 98.77 percent, and those margins
were for only one of the six products included in the analysis.
Furthermore, fourteen of the twenty-two sales showed no dumping,
and the six other sales had margins close to zero. First Remand
Results at App. 4. Thus, the selected sales do not constitute
substantial evidence, or indeed very much evidence at all, that
TMC's margin during the POR was anything approaching 98.77
percent.

while the Department has been sustained in its use of a
small number of sales to corroborate rates in the past, the
manner in which these sales were used in this case distinguishes

it from cases like la Chen and PAM. For instance, in la Chen,

Court No. 05-O0522 Page 37

Commerce-used the company's “sales data from the relevant review
period.” Gallant Ocean, 602 F.3d at l324. Thus, the rate was
corroborated by Ta Chen's own sales for the POR. Furthermore, as
the Federal Circuit noted in Gallant Ocean, “[u]nlike PAM,
Commerce in the present [Gallant Ocean] case did not show that a
small percentage of the mandatory respondents' transactions
represented a reasonably accurate estimate of Gallant's actual
dumping margin.” ld. at 1325. That is, in PAM, the Federal
Circuit found that “in view of the entire record, . . . the
transactions were reasonably tied to PAM‘s actual dumping
margin.” Id. Such is not the case here where the selected
transactions point to a substantially lower rate than the one
assigned.

Moreover, as TMC also emphasizes, there is an even wider
gulf here than in Gallant Ocean between the AFA rate for this
review and TMC's previous non-AFA rates. TMC's highest previous
calculated rate was 4.76 percent. The rate chosen here is
ninety-four percentage points greater than the highest calculated
rate for TMC and almost twenty times greater than that rate.
This disparity, together with Commerce's failure to cite any
serious evidence corroborating it, is enough for the court to
conclude that the 98.77 percent AFA rate chosen by Commerce is
aberrational and punitive. See id. at 1324 (stressing the

difference between cooperating respondents' actual dumping

COurt NO. 05-O0522 Page 38

margins of 2.58 to 10.75 percent and Gallant's AFA rate of 57.64
percent). Although Commerce insists that it could not use one of
TMC's previous rates as a baseline because none of them were AFA
rates, that argument does not justify Commercefs selection of a
punitive rate. See also Huarong, 29 ClT at 1237 (finding a
l39.3l percent AFA rate punitive when the highest prior rate was
34.00 percent).

lt is also worth noting that Commerce's reliance on Rhone
Poulenc in this context continues to be misplaced. First, as
noted, the Rhone Poulenc presumption does not excuse Commerce
from corroborating secondary evidence as required by statute.
Second, no common sense inference can be drawn from TMC's making
the effort to answer Commerce's questionnaires and then being
unable to produce its supplier’s records at verification because
they were seized by local authorities.

Because the court finds that Commerce has twice failed to
produce substantial evidence demonstrating the relevance of the
98.77 percent rate to TMC during the POR, and because it further
finds that the rate is punitive, Commerce is directed upon remand
to no longer employ this rate and to choose a lower rate. On
remand, Commerce must choose an AFA rate based on the “commercial
reality” of TMC's sales of picks/mattocks. Therefore, Commerce
shall choose and support, with substantial evidence, one of the

following: (1) select a calculated rate from a previous review,

Court No. 05-O0522 Page 39

that reflects TMC's actual rate during the POR, with a built-in
increase to deter non-compliance; or (2) reopen the record and
calculate a rate that accurately reflects what the rate would
have been had TMC cooperated, with a built-in increase as a

deterrent to non-compliance.

CONCLUSlON
For the foregoing reasons, Commerce's First Remand Results
and Supplemental Remand Results are sustained in part and
remanded. The remand results shall be due on May 4, 2011;
comments to the remand results shall be due on June 3, 2011; and

replies to such comments shall be due on June l7, 20ll.

/s/ Richard K. Eaton
Richard K. Eaton

Dated: January 4, 2011
New York, New York