Jinfu Trading Co. v. United States

Slip Op. 07-95

UNITED STATES COURT OF INTERNATIONAL TRADE

:
JINFU TRADING CO., LTD., :
:
Plaintiff, :
:
v. :
: Before: Richard K. Eaton, Judge
UNITED STATES, :
: Court No. 04-00597
Defendant, : Public Version
:
and :
:
AMERICAN HONEY PRODUCERS :
ASSOCIATION and SIOUX HONEY :
ASSOCIATION, :
:
Deft.-Ints. :
:

OPINION AND ORDER

[Commerce’s Final Results of Redetermination Pursuant to Remand
are remanded.]

Dated: June 13, 2007

Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt, LLP (Bruce
M. Mitchell, Paul G. Figueroa and Adam M. Dambrov), for
plaintiff.

Peter D. Keisler, Assistant Attorney General; Jeanne E. Davidson,
Director, Commercial Litigation Branch, Civil Division, United
States Department of Justice; Patricia M. McCarthy, Deputy
Director, International Trade Section, Commercial Litigation
Branch, Civil Division, United States Department of Justice
(David S. Silverbrand); Office of the Chief Counsel, Import
Administration, United States Department of Commerce (Douglas S.
Ierley), of counsel, for defendant.

Collier, Shannon, Scott, PLLC (Michael J. Coursey, Adam H. Gordon
and Jennifer E. McCadney), for defendant-intervenors.
Court No. 04-00597 Page 2
Eaton, Judge: Before the court are the United States

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

results of its redetermination pursuant to the court’s remand

order in Jinfu Trading, Co., Ltd. v. United States, 30 CIT ,

Slip Op. 06-137 (Sept. 7, 2006) (“Jinfu I”).1 See Final Results

of Redetermination Pursuant to Remand (Dep’t of Commerce Dec. 5,

2006) (“Remand Redetermination”). In Jinfu I, the court remanded

Commerce’s decision to rescind plaintiff Jinfu Trading Co.,

Ltd.’s (“Jinfu PRC”) new shipper review upon concluding that

Jinfu PRC was not affiliated with either Yousheng Trading

(U.S.A.) Co., Ltd. (“Yousheng USA”) or its successor Jinfu

Trading (U.S.A.) Co., Ltd. (“Jinfu USA”) within the meaning of 19

U.S.C. § 1677(33)(F) or (G) (2000).2 See Jinfu I, 30 CIT at ,

Slip Op. 06-137 at 32; see also Honey from the People’s Republic

of China (“PRC”), 69 Fed. Reg. 64,029 (Dep’t of Commerce Nov. 3,

1
For purposes of confidentiality, the court will employ
the same shorthand references used in Jinfu I. Specifically,
Jinfu Trading (“U.S.A.”) Co., Ltd.’s sole employee is referred to
as “Mr. A”; the chief executive officer of Jinfu Trading Co.,
Ltd. as “CEO B”; the unaffiliated U.S. buyer as “Customer C”; and
the original owner of what was then Yousheng Trading (“U.S.A.”)
Co., Ltd. (“Yousheng USA”) as “Mr. D.” The attorney retained in
October 2002 to aid in the attempted transfer of ownership of
Yousheng USA to CEO B is referred to as “Attorney E.”
2
Pursuant to 19 U.S.C. § 1677(33)(F), “[t]wo or more
persons directly or indirectly controlling, controlled by, or
under common control with, any person” are considered affiliated.
Under 19 U.S.C. § 1677(33)(G), Commerce will find affiliated
“[a]ny person who controls any other person and such other
person.”
Court No. 04-00597 Page 3
2004) (“Final Results”).3 As a result of the new shipper review

being rescinded, Commerce assigned the country-wide dumping rate

of 183.80 percent to Jinfu PRC’s honey exports to the United

States. See Final Results, 69 Fed. Reg. at 64,030. On remand,

the court directed Commerce to either reinstate plaintiff’s new

shipper review or reopen the record to provide plaintiff with an

opportunity to submit additional evidence concerning the issue of

affiliation. In particular, plaintiff would be provided with an

opportunity to place on the record evidence that the chief

executive officer of Jinfu PRC, CEO B, controlled the pricing4

3
Whether Jinfu PRC was affiliated with either Yousheng
USA or Jinfu USA is relevant because under 19 C.F.R.
§ 351.214(b)(2)(iv)(C) (2005), a party seeking a new shipper
review must provide documentation establishing “[t]he date of the
first sale to an unaffiliated customer in the United
States . . . .” Before Commerce, plaintiff submitted
documentation in support of its claim that the new shipper sale
was made by Jinfu PRC (via Jinfu USA) to Customer C on November
2, 2002. Based on that documentation, Commerce initiated the new
shipper review. Having found the documentation insufficient to
establish that Jinfu PRC was affiliated with either Yousheng USA
or Jinfu USA as of that date, however, Commerce rescinded the
review. Commerce took this action because, absent affiliation,
the sale to Customer C could not be considered a sale by Jinfu
PRC. Thus, it is the absence of documentation supporting
plaintiff’s claim that it was affiliated with either Yousheng USA
or Jinfu USA on November 2, 2002, that resulted in Commerce’s
cessation of the new shipper review.
4
The presence of control may be contingent on the
existence of evidence that one party has the potential to control
the pricing decisions of the other. See 19 C.F.R.
§ 351.102(b); see also Hontex Enters., Inc. v. United States, 27
CIT 272, 296, 248 F. Supp. 2d 1323, 1343 (2003) (holding that
control, and thus affiliation, can only be had if “the
relationship [is] such that it has the potential to impact
decisions concerning production, pricing, or cost of subject
(continued...)
Court No. 04-00597 Page 4
decisions made by Jinfu USA’s sole employee, Mr. A. See Jinfu I,

30 CIT at , Slip Op. 06-137 at 32–33.

On remand, Commerce reopened the record and plaintiff

submitted additional evidence concerning affiliation. See Remand

Redetermination at 2. After considering this additional

evidence, plaintiff’s accompanying explanation of that evidence

and all other comments from interested parties, Commerce

continued to find that neither Yousheng USA nor its successor

Jinfu USA were affiliated with Jinfu PRC at the time of the

claimed new shipper sale. See Remand Redetermination at 3.

Jurisdiction lies pursuant to 28 U.S.C. § 1581(c) (2000) and

19 U.S.C. § 1516a(a)(2)(B)(iii). For the following reasons, the

court remands Commerce’s determination for a second time.

BACKGROUND

Familiarity with this case is presumed. The court sets

forth only those facts relevant to this opinion. At issue in

Jinfu I was plaintiff’s contention that Commerce erroneously

concluded that Jinfu USA and Jinfu PRC were not affiliated on the

date of the claimed new shipper sale, November 2, 2002. The

primary basis for the Department’s conclusion was its finding

that Jinfu PRC did not own either Yousheng USA or Jinfu USA as of

4
(...continued)
merchandise”) (internal quotation marks omitted).
Court No. 04-00597 Page 5
that date. See Issues & Decision Mem. for the Final Results and

Final Rescission, In Part, of the New Shipper Review of the

Antidumping Duty Order on Honey from the PRC (Dep’t of Commerce

Oct. 25, 2004) (“Issues & Decision Mem.”) at 10–11. In Jinfu I,

the court’s review of the record and the parties’ submissions

revealed that, while nothing indicated that CEO B owned either

Yousheng USA or Jinfu USA on or before November 2, 2002, there

was, in fact, evidence that CEO B not only had the potential to

influence what was then Yousheng USA’s pricing decisions, but

actually exercised that control. See Jinfu I, 30 CIT at , Slip

Op. 06-137 at 28.

In reaching this finding, the court relied heavily on the

contents of the Department’s verification report. That report

indicated that, while Mr. A negotiated the price of the honey

with the U.S. customer, Customer C, the final transaction was

consummated only after CEO B approved the sales price. See id.

at , Slip Op. 06-137 at 29. This approval was evidenced by

facsimile transmissions exchanged between Jinfu USA and Jinfu

PRC. See id. at , Slip Op. 06-137 at 30–31 (“[T]he faxes

indicate that Mr. A did not enter into the transaction at the

quoted price before getting the approval of CEO B, and that he

believed he was working for a single enterprise encompassing
Court No. 04-00597 Page 6
Jinfu PRC and Yousheng USA.”).5

5
The faxes were exchanged on November 13, 2002. Mr. A
initiated the discourse in his fax to CEO B:

Firstly, I would like to report [to] you that
the current market price of honey in the
United States is between [[ ]] and
[[ ]] per pound. Because of the sharp
reduction of the export of honey from other
countries, the domestic sales and price of
honey in the United States is very promising.

I contacted a US local client who was willing
to order a container of honey at the ex-
warehouse price of [[ ]] USD per ton on
the condition that it can pass the
examination of US customs and FDA. Since the
annual purchasing amount of this client is
relatively significant, if a good
relationship can be established with this
client, it will be of great help to our
company’s sales to the US.

Please let me know you[r] opinion and advise
me further.

Letter from Bruce M. Mitchell to Abdelali Elouaradia, Oct. 23,
2006, Ex. 19 (“Pl.’s Remand Submission”). On the same day CEO B
responded, stating:

We received you[r] letter and felt happy that
there are clients . . . interested in the
honey product of our company. You did a good
job on the report of US market. We finished
a container . . . on November 5.

In order to open the US market and better
understand the marketing information, I agree
with you. We accept the client’s quotation
of [[ ]] USD per ton as ex-warehouse
price on the condition that it passes the
examination of the US customs and FDA.
Please make the preparation and keep in touch
with the client for purpose of long term
cooperation. I hereby authorize you to sign
contract with the client.
(continued...)
Court No. 04-00597 Page 7
Based on the evidence of CEO B’s control of the pricing

decisions of the claimed U.S. affiliate and the absence from the

Final Results of a thorough discussion of the matter, the court

remanded the Final Results to the Department and instructed it

“to either find that Jinfu PRC and Yousheng USA were affiliated

as of November 2, 2002, and to reinstate plaintiff’s new shipper

review, or to provide other record evidence to support its

conclusion that the companies were not affiliated.” Jinfu I, 30

CIT at , Slip Op. 06-137 at 32–33. If the Department chose not

to find the companies affiliated, the court instructed the

Department to “reopen the record to provide plaintiff with an

opportunity to place thereon further evidence with respect to

affiliation and to provide an explanation of that evidence.” Id.

at , Slip Op. 06-137 at 33.

On remand, Commerce chose the court’s second option and

reopened the record. On October 23, 2006, plaintiff submitted

additional evidence regarding the issue of affiliation and

provided an explanation of that evidence. See Remand

Redetermination at 2. On November 13, 2006, the Department,

having considered plaintiff’s additional evidence, issued its

draft remand redetermination in which it again concluded that the

5
(...continued)
Please process as soon as possible.

Pl.’s Remand Submission, Ex. 20.
Court No. 04-00597 Page 8
companies were not affiliated within the meaning of 19 U.S.C.

§ 1677(33) because CEO B did not control the pricing decisions of

either Yousheng USA or Jinfu USA. On November 20, 2006,

plaintiff commented on the draft redetermination. Commerce also

permitted the American Honey Producers Association and the Sioux

Honey Association, as interested parties, to comment on the draft

results, which they did on November 22, 2006.

After considering the additional evidence and the

accompanying comments and explanations, Commerce determined that

it would “not change[] [its] finding of no affiliation between

Jinfu PRC and Yousheng USA/Jinfu USA at the time of the relevant

U.S. sale, i.e., November 2, 2002.” Remand Redetermination at

2–3. Thus, Commerce reaffirmed its earlier determination and

declined to reinstate plaintiff’s new shipper review.

STANDARD OF REVIEW

The court reviews Commerce’s Remand Redetermination for

substantial evidence. See 19 U.S.C. § 1516a(b)(1)(B)(i) (“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.”).

“Substantial evidence is ‘such relevant evidence as a reasonable

mind might accept as adequate to support a conclusion.’” Huaiyin

Foreign Trade Corp. (30) v. United States, 322 F.3d 1369, 1374
Court No. 04-00597 Page 9
(Fed. Cir. 2003) (quoting Consol. Edison Co. v. NLRB, 305 U.S.

197, 229 (1938)). To determine the existence of substantial

evidence, the court must “consider[] the record as a whole,

including evidence that supports as well as evidence that ‘fairly

detracts from the substantiality of the evidence.’” Id. (quoting

Atl. Sugar, Ltd. v. United States, 744 F.2d 1556, 1562 (Fed. Cir.

1984)). The possibility of drawing two opposite yet equally

justified conclusions from the record will not prevent the

agency’s determination from being supported by substantial

evidence. See Consolo v. Fed. Mar. Comm’n, 383 U.S. 607, 620

(1966).

DISCUSSION

The court must now decide whether Commerce has, on remand,

supported with substantial evidence from the record its

conclusion that Jinfu PRC did not control or have the potential

to control the pricing decisions of Yousheng USA or its successor

Jinfu USA as of November 2, 2002.

In its Remand Redetermination, Commerce found that “the

record d[id] not support a finding that CEO B had control over

Mr. A’s business decisions, particularly those dealing with

pricing.” Remand Redetermination at 7. The Department

maintained this position despite the presence on the record of

the faxes exchanged between Mr. A and CEO B.
Court No. 04-00597 Page 10
Commerce first took issue with the faxes’ credibility.

At verification, Department officials
questioned the credibility of the exchanged
facsimiles given that neither document
contained any fax communications commonly
found at the top of most faxed transmissions.
Mr. A stated that he did not have a facsimile
report recording the date and time he
transmitted the letter to CEO B. The lack of
transmission information on the faxes, when
viewed in the context of credibility
problems6 regarding corporate ownership
documents submitted by Jinfu PRC to the
Department, raises questions regarding the
veracity and reliability of the facsimiles.

Remand Redetermination at 10. Commerce, therefore, appeared to

take the view that, because it was justified in suspecting the

reliability of plaintiff’s proffered evidence of ownership, it

was entitled to view all evidence relating to the claimed new

shipper sale with skepticism.

The Department also concluded that even if the faxes were to

be found credible, they would not support a finding of control

because they were exchanged after the subject honey was shipped.

The Department observes that the subject shipment, “[p]er the

bill of lading, . . . left the port of Shanghai for Oakland [,

6
A primary reason for Commerce’s conclusion in the Final
Results that CEO B did not own Jinfu USA on November 2, 2002, was
its finding that the evidence supporting plaintiff’s ownership
claim was incredible. See Issues & Decision Mem. at 26. In
particular, Commerce found that plaintiff’s “corporate
resolutions, a certificate of transfer of stocks, amended
articles of incorporation and by-laws, and a receipt for legal
services preparing these documents,” were backdated. Def.’s
Resp. to Comments Upon Final Results of Redetermination Pursuant
to Remand (“Def’s Resp.”) 12 n.4.
Court No. 04-00597 Page 11
California] on November 5, 2002,” and that the facsimiles were

exchanged on November 13, 2002. Remand Redetermination at 9.

Commerce explained:

According to the facsimiles, CEO B agreed to
the price negotiated by Mr. A on November 13,
2002 (the date of the fax from CEO B to Mr.
A), subsequent to which Mr. A entered into a
sales contract with the U.S. customer. The
price, according to statements at
verification and as noted above, was reached
through negotiations between Mr. A and the
U.S. customer at a time that coincided with
Jinfu PRC’s sale to Mr. A. . . .

Given that the goods were on the water headed
for Oakland . . . at the time the alleged
facsimiles were exchanged between Mr. A and
CEO B, these documents are irrelevant in
establishing that Mr. A’s price negotiations
were subject to the approval of CEO B.

Remand Redetermination at 10. Commerce, then, concluded that in

light of “the timeline presented above, the U.S. resale price was

established and agreed upon prior to the date of the alleged

facsimiles, i.e., November 13, 2002.” Remand Redetermination at

11.

Commerce further discounted the faxes’ probative value by

stating that, “even if considered credible or reliable, [the

faxes] merely indicate that Mr. A found a customer willing to pay

X price per [metric ton] for the honey and that CEO B agreed to

this price.” Remand Redetermination at 11 (footnote omitted).

The Department apparently concluded that, because the price of

the honey remained unchanged from the original price negotiated

by Mr. A, CEO B’s approval could not be considered evidence of
Court No. 04-00597 Page 12
his control over Mr. A’s pricing decisions. See Remand

Redetermination at 11 (“The contract with the U.S. customer is

signed on November 15, 2002, on terms that d[id] not change

between then and the shipment to the end-user. . . . The terms

of this sale also did not change between contract and receipt of

payment.”). In reaching its conclusion, though, Commerce does

not discuss the sentence in CEO B’s fax to Mr. A “I hereby

authorize you to sign contract with the client.” Letter from

Bruce M. Mitchell to Abdelali Elouaradia, Oct. 23, 2006, Ex. 20

(“Pl.’s Remand Submission”).

As further evidence that CEO B did not have the potential to

control Mr. A’s pricing decisions, the Department relied on

specific business-related actions taken by Mr. A without first

consulting CEO B. See Remand Redetermination at 12. In

particular, the Department asserted that, unbeknownst to CEO B,

“the U.S. customer was financing the entire U.S. transaction in

question.” Remand Redetermination at 12. Commerce stated:

The total amount paid by the U.S. customer by
November 20, 2002, . . . was received by Mr.
A prior to paying the bill from the freight
forwarding company. Moreover, in reviewing
Jinfu USA’s checkbook registers at
verification, Department officials discovered
that Mr. A had also borrowed money from the
U.S. customer in order to pay Jinfu USA’s
freight forwarding bill for a later sale.
There is no evidence on the record to suggest
that Mr. A requested approval from CEO B
prior to receiving the loan, nor is there
evidence on the record to suggest that Jinfu
PRC sent money to its alleged affiliate to
Court No. 04-00597 Page 13
repay the loan.

Remand Redetermination at 12 (citation omitted). The Department,

thus, concluded that CEO B could not be in a position to exercise

control over Mr. A and Jinfu USA if Mr. A could receive the

advance payment and obtain the loan without CEO B’s approval.

Finally, the Department found the contents of affidavits of

Mr. A, CEO B and Jinfu PRC’s account manager submitted to

establish that Mr. A believed he was under CEO B’s control to be

“contradicted by record evidence.” Remand Redetermination at 20;

see Mr. A Aff. ¶¶ 9, 12 (explaining that at the time of the new

shipper sale, “I was working for and being paid by [CEO B],” and

that “[i]t ha[d] always been my understanding that Jinfu USA was

owned by [CEO B] at the time that Jinfu USA purchased honey from

[CEO B’s] company in China, and resold the honey to our customer

in the U.S.”).

According to Commerce, the statements made by these

individuals at verification, in particular those of Mr. A, tell a

different story from that presented in the newly submitted

affidavits. For instance, Commerce observed that at

verification, “Mr. A stated that he did not want CEO B to have

direct access to Jinfu USA’s U.S. customers because of the

possibility that Jinfu PRC would sell directly to the customers.”

Remand Redetermination at 20 (citation omitted). As another

example, the Department repeated its assertion that Mr. A

“obtained a loan from the U.S. customer to pay for his freight
Court No. 04-00597 Page 14
forwarding bill without first seeking CEO B’s approval.” Remand

Redetermination at 21 (citation omitted). Based on its

conclusion that the statements in the newly submitted affidavits

concerning Mr. A’s belief that he was under the control of CEO B

were not supported by the evidence already on the record, the

Department found that they failed to justify a finding of

affiliation by way of control.

Thus, after considering the additional evidence plaintiff

placed on the record regarding the question of affiliation and

comparing it with earlier submitted record evidence, the

Department concluded that “[t]here is substantial evidence on the

record that demonstrates . . . that Mr. A made the sale of honey

to the U.S. customer without the approval of CEO B . . . .”

Remand Redetermination at 18. Commerce, therefore, continued to

find that Jinfu PRC was not affiliated with either Yousheng USA

or its successor Jinfu USA as of the date of the claimed new

shipper sale and that, as a result, plaintiff was not entitled to

a new shipper review.

Plaintiff makes both factual and procedural objections to

the Department’s Remand Redetermination, insisting at all times

that the record supports a finding of affiliation. See generally

Pl.’s Comments Resp. Commerce’s Final Results of Redetermination

(“Pl.’s Comments”). In contesting Commerce’s factual

determinations, plaintiff reasserts its argument in Jinfu I that
Court No. 04-00597 Page 15
CEO B actually owned Jinfu USA on November 2, 2002. That is,

plaintiff maintains that the evidence it claims shows ownership

demonstrates, at a minimum, that CEO B controlled the company as

of the date of the claimed new shipper sale.

In addition to that previously placed on the record,

plaintiff cites two pieces of new evidence it submitted on remand

to support its position. First, plaintiff points to an affidavit

from Attorney E. According to Attorney E, he “was retained in

October 2002 to transfer ownership of Jinfu USA to CEO B and that

in October 2002 he drafted and provided to Mr. A and CEO B

documents which, if they had been promptly and properly executed,

actually transferred legal ownership of Yousheng/Jinfu USA to CEO

B.” Pl.’s Comments 12. Second, plaintiff asserts that

affidavits of CEO B, Mr. D (the previous owner of Yousheng USA)

and Mr. A each reveal that CEO B owned or controlled Jinfu USA as

early as October 2002. See Pl.’s Comments 8–9. As plaintiff

explains, the affidavits repeat its claims in Jinfu I regarding

Mr. D’s intention to transfer ownership to CEO B and CEO B’s

intention to purchase the company. Moreover, the affidavits are

pointed to as proof of Mr. A’s understanding that he needed CEO

B’s approval on all pricing and sales decisions. Plaintiff,

therefore, contends that while

the additional documents submitted [on
remand] on October 23, 2006, are sufficient
to establish that CEO B actually owned Jinfu
USA prior to [Jinfu PRC]’s initial sale to
Court No. 04-00597 Page 16
the United States . . . this Court need not
reconsider this issue at this time, since
these documents also reconfirm that
operational control of Yousheng/Jinfu USA had
been transferred to CEO B, notwithstanding
that legal ownership arguably remained with
Mr. D.

Pl.’s Comments 12 n.4; see also Pl.’s Comments 12–13 (insisting

that the new submissions “constitute[] compelling evidence that

CEO B actually had operational control of Yousheng/Jinfu USA at

the end of October 2002”). Thus, plaintiff takes the position

that the evidence, if not demonstrating ownership, at least

establishes that CEO B actually controlled Mr. A’s pricing

decisions.

Plaintiff next takes issue with the Department’s conclusion

that Mr. A finalized the sales price of the honey with Customer C

without obtaining CEO B’s approval. See Pl.’s Comments 14. For

plaintiff, “[t]his determination is simply wrong.” Pl.’s

Comments 14. The key pieces of evidence for plaintiff’s position

remain the faxes transmitted between Mr. A and CEO B. Plaintiff

characterizes as baseless the Department’s decision not to attach

substantial weight to these transmissions “because of their

failure to have fax communications commonly found at the top of

most transmissions.” Pl.’s Comments 15 (internal quotation marks

& citation omitted). For plaintiff:

The facsimile exchange clearly conveys the
message which the parties intended to convey
— that Mr. A was seeking CEO B’s approval of
a sales price to a particular customer and
Court No. 04-00597 Page 17
that CEO B approved this price and agreed to
the sale. And as the Department implies,
while “fax communication” may “normally” have
notations at the top, the absence of such
notation does not compel a conclusion (as the
Department now suggests) that the facsimiles
were never sent or received.

Pl.’s Comments 15 (footnote omitted).

Plaintiff further challenges the Department’s

characterization of the evidence that the honey was shipped

before Mr. A received CEO B’s approval of the price.

The Department suggests that evidence
supporting its claim is found in the facts
that: (1) Mr. A negotiated prices with
Customer C in late October and early November
2002; and (2) the merchandise was already on
the water destined for Oakland prior to
November 13, 2002. These facts do not
constitute evidence that CEO B did not
exercise operational control over
Yousheng/Jinfu USA. In this regard, Mr. A
and Customer C did not enter into a formal
agreement for Jinfu USA to sell honey to
Customer C until November 15, 2002. Contrary
to the Department’s suggestion, there does
not exist a scintilla of evidence that this
resale was consummated, and the material
terms of sale established with certainty
prior to this date. Merchandise is often
resold by a U.S. importer (e.g., Jinfu USA)
to an ultimate consumer (e.g., Customer C)
while in-transit to the United States, and as
Mr. A advised the Department at verification,
“he was confident that if . . . {Customer C}
. . . had not purchased the . . . honey, he
would be able to find another buyer through
his relationships with sales representatives/
importers . . . .”

Pl.’s Comments 15–16 (footnotes & citations omitted). Put

another way, it is plaintiff’s view that the honey’s shipment

prior to November 13, 2002, the date CEO B agreed to the purchase
Court No. 04-00597 Page 18
price, bore no relationship to a finding that CEO B controlled

the price of the honey sold to Customer C.

Plaintiff also contends that in reaching its conclusion that

CEO B was not in a position to exercise control over Jinfu USA,

the Department gave undue credit to evidence indicating that: (1)

Mr. A received pre-payment from Customer C for the new shipper

sale; and (2) that he also obtained a loan from Customer C to

finance a later transaction. See Pl.’s Comments 16–17. First,

with respect to Mr. A’s receipt of the advance payment, plaintiff

insists that “the fact that Customer C may have financed the

transaction by paying Jinfu USA for the merchandise prior to such

time as Jinfu USA paid its freight forwarding company is

completely unrelated to whether CEO B exercised operational

control over Jinfu USA.” Pl.’s Comments 17. Second, with regard

to Customer C’s loan to Mr. A, plaintiff argues that, because

“the loan to which the Department refers relates to a transaction

which took place in August 2003, . . . [t]he fact that there may

be no evidence on this . . . record to suggest that Mr. A

requested approval from CEO B prior to receiving the loan . . .

is neither surprising nor significant.” Pl.’s Comments 17. As

plaintiff states, “a sales transaction subsequent to the [new

shipper review] . . . normally is not subject to analysis in a

verification of a [new shipper review].” Pl.’s Comments 17.

That is, because the loan was for a sale that took place after
Court No. 04-00597 Page 19
Commerce initiated the new shipper review, the absence of any

record evidence concerning the loan was to be expected.

Finally, plaintiff claims that the Department made a

procedural error in rendering the Remand Redetermination without

providing plaintiff an opportunity to place on the record

additional evidence intended to address Commerce’s concerns

regarding the credibility and reliability of the faxes and the

circumstances surrounding the advance payment and loan by

Customer C to Jinfu USA. See Pl.’s Comments 18. Plaintiff

claims that it was prejudiced because the Department’s primary

reliance on the faxes, the Customer C pre-payment of the sales

price for the claimed shipper transaction and the later loan was

not made known until the issuance of the draft results of the

remand redetermination. That is, plaintiff claims that while it

was given the opportunity to, and in fact did submit comments on

the draft redetermination, it was not allowed to place on the

record specific evidence rebutting the Department’s new

conclusions. See Pl.’s Comments 18 (“[Plaintiff], not

surprisingly, was unable to read the Department’s mind and to

provide documentation addressing certain factors which the

Department now considers relevant . . . .”). Thus, plaintiff

asks that “in the event that this Court decides that the

Department’s Redetermination should not be reversed,” it be

allowed to supplement the record with additional evidence “which
Court No. 04-00597 Page 20
directly addresses the Department’s rationale.” Pl.’s Comments

20.

As the court noted in Jinfu I, “[i]n its affiliation

analysis, Commerce must examine the subject relationship in

accordance with 19 U.S.C. § 1677(33).” Jinfu I, 30 CIT at ,

Slip Op. 06-137 at 12–13 (footnote omitted). The court further

stated that, in this case, under 19 U.S.C. § 1677(33), a finding

of control, and thus affiliation requires “proof that one

person . . . ‘ha[s] the potential to impact the decisions

concerning the . . . pricing . . . of the subject merchandise.’”

Jinfu I, 30 CIT at , Slip Op, 06-136 at 27 (quoting TIJID, Inc.

v. United States, 29 CIT , , 366 F. Supp. 2d 1286, 1293

(2005)); see also 19 C.F.R. § 351.102(b) (“The Secretary will not

find that control exists . . . unless the relationship has the

potential to impact decisions concerning the production, pricing,

or cost of the subject merchandise . . . .”). Thus, as was its

charge in Jinfu I, the court now “must determine whether Commerce

reasonably concluded that the evidence [on remand] failed to

demonstrate that on November 2, 2002, CEO B had, at a minimum,

the potential to exercise control over the pricing decisions of

Yousheng USA.” Jinfu I, 30 CIT at , Slip Op. 06-137 at 16.

The Court of Appeals for the Federal Circuit has made it

clear that, when reviewing an agency determination for

substantial evidence, this Court “do[es] not make the
Court No. 04-00597 Page 21
determination; [it] merely vet[s] the determination.” Nippon

Steel Corp. v. United States, 458 F.3d 1345, 1352 (Fed. Cir.

2006). In other words, the Court “must affirm a [Commerce]

determination if it is reasonable and supported by the record as

a whole, even if some evidence detracts from the [Department]’s

conclusion.” Id. (internal quotation marks & citation omitted).

In its Remand Redetermination, Commerce has again found that

the evidence, including that newly submitted on remand by

plaintiff, fails to demonstrate that CEO B had the potential to

control or actually controlled Jinfu USA as of November 2, 2002.

On remand, the Department took into consideration affidavits of

CEO B, Mr. A, Mr. D and Attorney E. In addition, the Department

emphasized the faxed communications between Mr. A and CEO B

regarding the price Mr. A was to charge Customer C for the honey.

In large part because it found this evidence to be incredible,

the Department continued to find that CEO B did not control Jinfu

USA’s pricing decisions. Commerce, however, failed to explain

adequately why the evidence on the record as supplemented on

remand supports its finding that CEO B was not in control of

Jinfu USA at the time of the claimed new shipper sale.

In particular, Commerce has not explained why its finding

that the faxes, “even if considered credible or reliable, merely

indicate that Mr. A found a customer willing to pay X price per

[metric ton] for the honey and that CEO B agreed to this price.”
Court No. 04-00597 Page 22
Remand Redetermination at 11 (footnote omitted). That is,

Commerce has not articulated a rational connection between its

conclusion that CEO B did not control Jinfu USA’s pricing

decisions and its statement that the faxes, if valid, would not

evidence control. Of particular concern is Commerce’s failure to

expressly state why CEO B’s approval of the sales price and

authorization to execute the contract do not evidence control.

See Pl.’s Remand Submission, Ex. 20 (“We accept the client’s

quotation . . . as ex-warehouse price on the condition that it

passes the examination of the US customs and FDA. . . . I hereby

authorize you to sign contract with the client.”). Indeed, it is

difficult to read the facsimiles without concluding that, if they

are authentic, they are evidence that Mr. A sought CEO B’s

approval of the transaction and the price, and that he received

it. Therefore, the court remands this matter to Commerce to

permit the agency to explain why, if proven to be genuine, the

contents of that exchange would not demonstrate that CEO B

controlled Jinfu USA.

In addition, the court also finds it proper to allow

plaintiff, on remand, to put on the record specific evidence

aimed at rebutting Commerce’s conclusions, which were first made

known in the draft remand redetermination, regarding: (1) the

credibility and reliability of the faxes; and (2) the

circumstances surrounding Customer C’s pre-payment of the sales

price and the loan. This situation is not unlike those presented
Court No. 04-00597 Page 23
in AK Steel Corporation v. United States, 22 CIT 1070, 34 F.

Supp. 2d 756 (1998) and Böwe-Passat v. United States, 17 CIT 335

(1993) (not reported in the Federal Supplement). Here, as in

those cases, plaintiff was first made aware of the prominent role

played by certain evidence in Commerce’s decision after the

record was closed. See AK Steel Corp., 22 CIT at 1092, 34 F.

Supp. 2d at 773 (sustaining Commerce’s use of respondent’s

explanation of data discrepancy as record evidence because

respondent “first became aware that reconciliation was in dispute

upon receiving a copy of [d]omestic [p]roducers’ [c]ase

[b]rief”); Böwe-Passat, 17 CIT at 343 (remanding matter, and

holding that Commerce’s refusal to permit respondent to address

previously unknown deficiencies in its submissions, made known

after record was closed, was a “predatory ‘gotcha’ policy”).

Plaintiff rightly complains that it had no way of knowing that

the lack of a reference date would be pivotal to its case. Also,

nothing in any of the proceedings had before the draft remand

redetermination indicated that the Department would rely so

heavily on Customer C’s having made early and full payment for

the claimed new shipper sale and having loaned Mr. A money to

finance a later transaction without the latter having secured CEO

B’s approval. Therefore, on remand, Commerce is instructed to

reopen the record and permit plaintiff to submit new evidence

with respect to these matters.
Court No. 04-00597 Page 24
CONCLUSION

Based on the foregoing, the court finds to be unsupported by

substantial evidence Commerce’s Remand Redetermination and

remands this case for a second time. On remand, Commerce is to:

(1) take into account the court’s opinion and provide an

explanation as to why the contents of the faxes exchanged between

Mr. A and CEO B, if credible and reliable, do not support a

conclusion that CEO B controlled Jinfu USA; and (2) reopen the

record to allow plaintiff to put on the record new evidence

regarding the credibility and reliability of the faxes, the

circumstances surrounding Customer C’s pre-payment of the sales

price for the claimed new shipper sale and the facts behind Mr.

A’s obtaining a loan from Customer C for a later transaction

without first obtaining CEO B’s approval. Remand results are due

September 11, 2007. Comments to the remand results are due

October 11, 2007. Replies to such comments are due October 22,

2007.

/s/Richard K. Eaton
Richard K. Eaton

Dated: June 13, 2007
New York, New York