Slip. Op. 03-92
UNITED STATES COURT OF INTERNATIONAL TRADE
BEFORE: RICHARD W. GOLDBERG, SENIOR JUDGE
FUJIAN MACHINERY AND EQUIPMENT
IMPORT & EXPORT CORPORATION, and
SHANDONG MACHINERY IMPORT &
EXPORT CORPORATION,
Plaintiffs,
v.
PUBLIC VERSION
UNITED STATES, and THE UNITED
STATES DEPARTMENT OF COMMERCE, Court No. 99-08-00532
Defendants,
and
O. AMES COMPANY,
Defendant-
Intervenor.
[Commerce antidumping duty remand determination sustained.]
Dated: July 28, 2003
Sidley, Austin, Brown & Wood (Lawrence R. Walders and Neil C.
Pratt) for plaintiffs Fujian Machinery and Equipment Import &
Export Corporation and Shandong Machinery Import & Export
Corporation.
Peter D. Keisler, Assistant Attorney General, David M. Cohen,
Director, Patricia McCarthy, Assistant Director, Kenneth S.
Kessler, Attorney, Commercial Litigation Branch, Civil Division,
United States Department of Justice; Office of Chief Counsel for
Import Administration, United States Department of Commerce
(Elizabeth Doyle), for defendants.
Wiley, Rein & Fielding (Charles O. Verrill, Jr. and Eileen P.
Bradner) for defendant-intervenor O. Ames Company.
Court No. 99-08-00532 Page 2
OPINION
GOLDBERG, Judge: This case is before the Court following remand
to the United States Department of Commerce (“Commerce”). In
Fujian Machinery and Equipment Import & Export Corp. v. United
States, 25 CIT __, 178 F. Supp. 2d 1305 (2001) (“Fujian I”),
familiarity with which is presumed, the Court sustained in part
and remanded in part Commerce’s determination with respect to
plaintiffs Fujian Machinery and Equipment Import & Export
Corporation (“FMEC”) and Shandong Machinery Import & Export
Corporation (“SMC”) in Heavy Forged Hand Tools, Finished or
Unfinished, With or Without Handles, From the People’s Republic
of China; Final Results and Partial Recission of Antidumping Duty
Admin. Reviews, 64 Fed. Reg. 43,659 (Aug. 11, 1999) (“Final
Results”).
In Fujian I, the Court found that Commerce had properly
determined that SMC had failed verification and that FMEC had
failed verification with respect to one of the four classes of
subject merchandise, bars/wedges. However, the Court also held
that Commerce had not adduced substantial evidence showing that
FMEC had failed verification with respect to the other three
classes of subject merchandise, or that SMC’s and FMEC’s supplier
factories, “Factory A” and “Factory B” (collectively, the
“Factories”) had failed verification. In addition, the Court
found Commerce’s decision to apply adverse facts available
Court No. 99-08-00532 Page 3
(“AFA”) and to apply the PRC-wide dumping margins to FMEC and SMC
to be unsupported by substantial evidence and not otherwise in
accordance with law. The Court remanded the matter to Commerce
with instructions to accept certain additional evidence from FMEC
and thereupon to reconsider, in light of that evidence and the
Court’s opinion in Fujian I, whether: (1) FMEC had failed
verification with respect to the other three classes of subject
merchandise; (2) Factory A and Factory B had failed verification;
(3) SMC’s verification failure warranted the application of AFA;
and (4) if Commerce determined on remand that FMEC had failed
verification, reconsider whether the application of AFA to FMEC
was warranted.
Commerce duly complied with the Court’s order. After
accepting FMEC’s additional evidence, Commerce issued draft
Redetermination Results (Jan. 23, 2002) (“Draft Remand Results”)
and then, after receiving comments from FMEC and SMC, the Final
Results of Redetermination Pursuant to Court Remand (Feb. 20,
2002) (“Remand Results”). In the Remand Results, as in the Draft
Remand Results, Commerce answered each of the above four
questions in the affirmative. It then calculated separate rates
for FMEC and SMC that were identical to the rates originally
selected in the Final Results.
FMEC and SMC submitted Comments Regarding the Final Results
of Redetermination Pursuant to Court Remand (“Plaintiffs’
Court No. 99-08-00532 Page 4
Comments”), and Commerce submitted its Rebuttal to Plaintiffs’
Comments (“Commerce’s Rebuttal”).
The Court has jurisdiction under 28 U.S.C. § 1581(c) (2000).
The Court must uphold Commerce's determination if it is supported
by substantial evidence and otherwise in accordance with law. 19
U.S.C. § 1516a(b)(1)(B)(i) (2000). After due consideration of
these submissions, the administrative record, and all other
papers had herein, and for the reasons that follow, the Court
sustains the Remand Results.
I. DISCUSSION
A. Commerce’s Determination that FMEC Failed Verification
With Respect to All Four Classes of Subject Merchandise
Is Supported by Substantial Evidence.
In Fujian I, the Court held that FMEC’s total failure to
report any U.S. sales of bars/wedges justified Commerce’s
determination that FMEC failed verification with respect
bars/wedges, but that same failure did not clearly support
Commerce’s finding that FMEC had failed verification with respect
to the other three classes of subject merchandise. In addition,
the Court found that other instances of verification failures
cited by Commerce did not constitute substantial evidence,
because apparent problems during the verification process had
hindered FMEC’s ability to supply the requested data. The Court
ordered Commerce to accept this data and to reconsider its
findings.
Court No. 99-08-00532 Page 5
In the Remand Results, Commerce again found that FMEC had
failed verification with respect to the other three classes of
subject merchandise. Commerce cites the following reasons for
its determination: (1) an overall lack of preparation by FMEC
prior to verification; (2) its lack of confidence in the overall
accuracy of FMEC’s submissions, engendered by FMEC’s total
failure to report its U.S. sale of bars/wedges; (3) FMEC’s
failure to provide timely and sufficient information about its
other branches and subsidiaries, sufficient to prove that those
branches and subsidiaries had no U.S. sales; (4) significant
discrepancies with respect to the sales revenue reported on the
Hand Tools Department’s 1997 financial statements and its income
statements; (5) FMEC’s failure to submit all its February 1997
sales invoices and vouchers; and (6) FMEC’s failure to submit
quantity and value worksheets. See Commerce’s Rebuttal, at 13-
14; see also Remand Results, at 10-14.
1. Insufficient or marginal evidence of FMEC’s
verification failure
The first and second of these reasons do not constitute
substantial evidence supporting Commerce’s determination. A
general reference to a respondent’s lack of advance preparation
is not itself evidence of a verification failure; it is the
manifestations of that unpreparedness that matter. Commerce must
point to specific examples of how the alleged unpreparedness
Court No. 99-08-00532 Page 6
impacted the verification process, rather than rely on such a
vague, unsupported, conclusory assertion.1
The determination that FMEC’s failure to report its one U.S.
sale of bars/wedges casts a similar shadow over the total
veracity of FMEC’s responses is also a form of impermissible
bootstrapping not consistent with the Court’s holding in Fujian
I. Because “a completely errorless investigation is simply not a
reasonable expectation,” Nippon Steel Corp. v. United States, 25
CIT __, __, 146 F. Supp. 2d 835, 841 n.10 (2001), it would be
unfair to a respondent if Commerce were permitted to extrapolate
from a single error, which may well have been an isolated
oversight, a conclusion that the entirety of the respondent’s
submissions concerning other classes of subject merchandise are
unreliable.2
Commerce’s third reason for its determination appears to be
more substantive, but is underdeveloped. Commerce cites problems
related to financial data for FMEC’s branches and affiliates, as
well as its short- and long-term investment records, that FMEC
1
Moreover, a general reference to the respondent’s lack of
preparation is particularly unwarranted in this case, since the
Court already determined that the FMEC verification was marred by
miscommunication.
2
On the other hand, numerous “oversights” would likely suggest
a “pattern of unresponsiveness” justifying not only the
application of facts available (“FA”), but of AFA. See Nippon
Steel, 25 CIT at __, 146 F. Supp. 2d at 840. It is incumbent
upon Commerce specifically to identify such oversights.
Substantial evidence does not comprise broad allusions to the
verifiers’ gut feelings.
Court No. 99-08-00532 Page 7
did not provide at verification but did provide thereafter
pursuant to the Court’s Order in Fujian I. Before this Court,
Commerce argues that FMEC failed to report other branches that
could have had sales of subject merchandise, see Commerce’s
Rebuttal, at 14, but this contention is not borne out by the
record. In the Remand Results, Commerce devotes a single
sentence to a cursory attempt to tie these records to the fourth
and fifth shortcomings outlined supra and discussed infra, but it
does not explicate its reasoning. To the extent that this may be
a disguised attempt to hold FMEC to account for its failure to
provide the data at verification, it contravenes the Court’s
Order in Fujian I. At the same time, the Court observes that
FMEC does not refute Commerce’s finding in any way in the
Plaintiffs’ Comments. The Court thus concludes that Commerce’s
finding on this issue constitutes the proverbial scintilla of
evidence, but no more, to show a verification failure.
2. Substantial evidence of a verification failure
By contrast, the Court views the three remaining bases that
Commerce cites as rationales for its determination to be
particularly probative. Significantly, each of the following
problems relates to data that FMEC was permitted to submit,
pursuant to the Court’s Order in Fujian I, on November 27, 2001,
well after the on-site verification.
Court No. 99-08-00532 Page 8
a. The Hand Tools Department’s financial statements
and income statements
First, Commerce asserts that it could not verify the
quantity and value of FMEC’s U.S. sales for the hand tool
production unit for the period from January through April 1997,
when it was known as the “Hand Tools Department.”3 Commerce
explains that the verifiers could not reconcile the Hand Tools
Department’s sales revenue as reported in its departmental
financial statements, which data was provided at verification,
with the Department's monthly “income statements,” which FMEC
submitted following Fujian I. Confusion over whether a
particular value reported on the income statement for April 1997
was cumulative, bi-monthly, or monthly led Commerce to conclude
that either FMEC had under-reported sales on its financial
statements in the amount of at least [ ] or had
over-reported them in the amount of [ ] -- a
discrepancy of either 15 percent or 47 percent, respectively.
See Remand Results, at 11.
The Court is inclined to credit FMEC’s explanation that the
value is cumulative, but this explanation does nothing to dispel
the inference that FMEC either over- or under-reported its
3
In May 1997, the same department came under new management and
was renamed the “General Machinery & Tools Department.” Commerce
reported no difficulty in reconciling the sales income records of
the department during this later period.
Court No. 99-08-00532 Page 9
sales.4 FMEC offers no colorable excuse for this error. Its
argument that the Hand Tools Department’s financial statement is
not a part of the administrative record is bogus, as the original
FMEC Verification Report5 plainly references the statement and
the value that Commerce cites in its Remand Results. See FMEC
Verification Report, at 8. FMEC also baldly claims that the
income statement can be reconciled with the financial statement,
but it fails to explain how this can be so given the 47 percent
disparity between the reported sales figures in the two
documents.
Consequently, as Commerce reasonably concluded, the “nature
and size of this reconciliation discrepancy alone makes it
impossible for [Commerce] to determine whether FMEC fully and
accurately reported its U.S. sales.” Remand Results, at 24.
Because an accurate determination of U.S. sales is critical to
the calculation of dumping margins, the discrepancies in the Hand
Tools Department’s sales records constitute substantial evidence
4
If, as FMEC maintains, the April 1997 value was cumulative
for the first four months of 1997, the total sales reflected in
the Hand Tools Department’s monthly income statements is [
]. Total sales revenue listed on the Hand Tools
Department’s financial statement for the same period is
indisputably [ ]. Thus, either the financial
statement over-reported sales by 47 percent, the income statement
under-reported sales by 32 percent, or neither statement
accurately reports sales. In any such event, it is plain that
Commerce was unable to determine whether FMEC reported all its
U.S. sales.
5
All defined terms not defined herein have the meaning, if any,
ascribed to them in Fujian I.
Court No. 99-08-00532 Page 10
that FMEC failed verification, particularly when taken with the
remaining deficiencies, which are equally serious.
b. The February 1997 sales invoices and vouchers
The next deficiency cited is FMEC’s failure to submit all
its February 1997 sales invoices and vouchers.6 Commerce sought
the vouchers for all sales of subject and non-subject merchandise
in order to confirm that FMEC had accurately reported its income
from all U.S. sales. Rather than request FMEC’s vouchers for the
entire period of review, however, Commerce sought them only for
the month of February 1997. Because of apparent miscommunication
at the on-site verification of FMEC, FMEC did not provide them
then, but was subsequently granted leave to do so by the Court’s
Order in Fujian I. FMEC turned over only invoices for two U.S.
sales and one voucher from a third U.S. sale.7 In the Remand
Results, Commerce determined that this data was insufficient to
document all U.S. sales, because (1) FMEC substantiated two sales
only by invoices, not vouchers, and (2) FMEC did not provide any
invoices or vouchers for sales of non-subject merchandise.
FMEC’s explanation for these shortcomings is that it
substantially complied with Commerce’s information request
6
Whereas an invoice is a bill of sale, FMEC’s sales vouchers
indicate the amount of income that FMEC actually receives from a
sale.
7
The invoices and the voucher showed sales in the amount of [
], [ ], and [ ], respectively,
as against total departmental sales of [ ].
Court No. 99-08-00532 Page 11
because the invoices and voucher it provided are “samples” of its
sales documentation and should be deemed sufficient, since
verification is only a “spot check” and a “selective examination
rather than testing of an entire universe.” See Plaintiffs’
Comments, at 18-19 (quoting respectively Micron Tech., Inc. v.
United States, 117 F.3d 1386, 1396 (Fed. Cir. 1997) (citing
Monsanto Co. v. United States, 12 CIT 937, 698 F. Supp. 275, 281
(1988)), and Bomont Indus. v. United States, 14 CIT 208, 733 F.
Supp. 1507, 1508 (1990)).
The most charitable view of this argument is that it
reflects an outsized optimism about the respondent's role in the
verification process. The cases FMEC cites involved claims by
various domestic petitioners that Commerce should have conducted
more extensive verifications of the foreign respondents. The
courts merely pointed out the obvious: time and resources are
finite, and Commerce’s proven methodology is to survey only a
portion of a respondent’s data. See Department of Commerce
Antidumping Manual, chapter 13 § II.D.1, at p.5, available at
http://ia.ita.doc.gov/admanual/index.html. The choice of which
data to sample, however, always rests with Commerce,8 not the
8
Of course, this presumes the verifiers’ good faith. One can
postulate a verification request so unreasonably burdensome as to
be arbitrary or capricious, but Commerce’s request here for the
Hand Tools Department’s February 1997 sales documentation is far
removed from that hypothetical extreme. Otherwise, as suggested
by Fujian I, the verifiers can require whatever relevant
information they wish so long as they afford the respondents a
reasonable opportunity to provide it.
Court No. 99-08-00532 Page 12
respondent. See Micron Tech., 117 F.3d at 1395 ("Commerce has
'the discretionary authority to determine the extent of
investigation and information it needs.'") (quoting PPG Indus.,
Inc. v. United States, 978 F.2d 1232, 1238 (Fed. Cir. 1992).
Commerce quite reasonably chose to sample the Hand Tools
Departments’ sales documentation by requesting such documentation
for only a single month,9 and having issued that request, it was
entitled to FMEC’s full compliance. Cf. Thyssen Stahl AG v.
United States, 19 CIT 605, 606, 608, 886 F. Supp. 23, 25, 26-27
(sustaining determination that respondent failed verification
where respondent "provided only one, self-selected, freight
invoice to support its calculations").
Commerce is likewise entitled to infer from FMEC’s failure
to provide the requested documentation for February 1997 that
FMEC’s related data for the remaining period of review would be
similarly unreliable. Because this documentation is important to
tracing all U.S. sales, this shortcoming constitutes substantial
evidence in support of Commerce’s finding that FMEC failed
verification.
c. Quantity and value worksheets
9
In fact, the record suggests that in response to the
limitations of FMEC’s accounting system, Commerce narrowed its
original request to encompass only the February 1997
documentation.
Court No. 99-08-00532 Page 13
Finally, FMEC failed altogether to submit any of the
quantity and value worksheets that Commerce requested,
notwithstanding the Court’s express invitation for it to do so in
Fujian I. See 25 CIT at __, 178 F. Supp. 2d at 1321. FMEC has
not offered any reason for this omission, either to Commerce in
its response to the Draft Remand Results, or to the Court in the
Plaintiffs’ Comments. As Commerce has explained, quantity and
value worksheets are the “working basis” by which a respondent
prepares its response to the verifiers’ questionnaires and
subsequent inquiries. See Remand Results, at 8. Failure to
submit such worksheets, despite several opportunities to do so,
is the sort of lapse that Commerce may legitimately regard as
casting doubt on the quality of FMEC’s underlying data.
3. Summary
In Fujian I, the Court sustained Commerce’s determination in
the Final Results that FMEC failed verification with respect to
bars/wedges. The Court now sustains Commerce’s determination in
the Remand Results that FMEC failed verification with respect to
the other three classes of subject merchandise. Commerce has
adduced substantial evidence showing that, with respect to each
such class of merchandise, FMEC was unable to comply with
significant information requests, and thus could not demonstrate
that it had fully and accurately reported all U.S. sales.
Because of the importance of U.S. sale data, Commerce’s
Court No. 99-08-00532 Page 14
determination that FMEC failed verification, and that this
failure warranted the application of total FA, is in accordance
with law. Cf. Branco Peres Citrus, S.A. v. United States, 25 CIT
__, __, 173 F. Supp. 2d 1363, 1370 n.5 (2001) ("Commerce was
justified in its use of facts available by virtue of Plaintiff's
cost data not having been provided. Indeed, a party's failure to
provide requested information is sufficient grounds for the use
of facts available.")
4. Irrelevance of the Factories’ verifications
As noted, in Fujian I the Court sustained Commerce’s
determination that SMC had failed verification. Because the
Court has now found Commerce’s determination that FMEC likewise
failed verification to be supported by substantial evidence, the
Court deems it unnecessary to decide whether the Factories also
failed verification. Commerce has emphasized, and the Court
agrees, that FMEC’s and SMC’s verification failures are
sufficient to warrant the use of FA (or AFA, as the case may be)
regardless of its determination with respect to the Factories.
See, e.g., Remand Results, at 18. Furthermore, Commerce did not
cite the alleged verification failures of the Factories as
support for its decision in the Remand Results to apply AFA to
FMEC and SMC. Because a review of Commerce’s determination with
respect to the Factories would have no bearing on the outcome of
Court No. 99-08-00532 Page 15
this case, and would thus be dicta, the Court declines to
undertake such a review.
B. Commerce’s Determination to Apply AFA to FMEC and SMC
Is Supported by Substantial Evidence and Is Otherwise
in Accordance with Law.
If a respondent in an antidumping investigation withholds or
fails to provide information requested by Commerce, significantly
impedes a proceeding, or provides information that is not
verifiable, Commerce is directed to "use the facts otherwise
available in reaching the applicable determination." 19 U.S.C. §
1677e(a)(2) (2000); see also Fujian I, 25 CIT at __, 1332; Reiner
Branch GmbH & Co. KG v. United States, 26 CIT __, __, 206 F.
Supp. 2d 1323, 1336 (2002). If Commerce determines that the
respondent "has failed to cooperate by not acting to the best of
its ability to comply with a request for information . . .
[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); see also Fujian I, 25 CIT at
__, 178 F. Supp. 2d at 1332; American Silicon Techs. v. United
States, 26 CIT __, __, 240 F. Supp. 2d 1306, 1308 (2002).
FMEC and SMC failed verification by failing to provide
requested information and providing unverifiable information,
Commerce is required to use the facts available.10 The sole
10
In addition, these failures were sufficiently extensive that
the gaps in the record may not be remedied by the partial use of
adverse facts available.
Court No. 99-08-00532 Page 16
remaining issue, therefore, is whether in using the facts
available Commerce may draw adverse inferences, or in the
vernacular, use AFA. "In order for its finding to be supported
by substantial evidence, Commerce needs to articulate why it
concluded that a party failed to act to the best of its ability,
and explain why the absence of this information is of
significance to the progress of its investigation." American
Silicon Techs., 26 CIT at __, 240 F. Supp. 2d at 1311 (citations
and internal quotation marks omitted); see also Branco Peres, 25
CIT at __, 173 F. Supp. 2d at 1371-72 (citing Nippon Steel Corp.
v. United States, 24 CIT __, __, 118 F. Supp. 2d 1366, 1378
(2000)). "However, the function of this Court is not to reweigh
the evidence, but rather to ascertain whether Commerce's
determination is unsupported by substantial evidence on the
record." A.K. Steel Corp. v. United States, 21 CIT 1265, 1271,
988 F. Supp. 594, 601 (internal brackets, quotation marks, and
ellipses omitted) (quoting Metallverken Nederland B.V. v. United
States, 13 CIT 1013, 1017, 728 F. Supp. 730, 734 (1989)).
1. Application of AFA to FMEC
In the Remand Results, Commerce determined that the
application of AFA to FMEC was warranted because FMEC had the
ability to comply with Commerce's information requests, and that
its multiple failures to do so suggest a pattern of
nonresponsiveness. Specifically, Commerce found that the
Court No. 99-08-00532 Page 17
information sought must have existed because FMEC would have
relied on it in generating its questionnaire responses. Commerce
concluded that FMEC's failure to provide such documents at
verification, and thereafter as permitted by the Court's Order in
Fujian I, as well as the fact that FMEC would have benefitted by
not providing data related to U.S. sales, suggests a pattern of
non-responsiveness. Commerce also emphasizes FMEC's lack of
preparation at verification.
FMEC argues that the law requires Commerce to show willful
or deliberate noncompliance, and that Commerce has failed to do
so. FMEC also objects that Commerce is not entitled to cite its
preparedness for and conduct at verification as a basis to impose
AFA. FMEC understands Fujian I to have conclusively determined
that the deficiencies at verification were due to inadvertent
errors.
These arguments are unconvincing. As an initial matter, the
Court notes that FMEC misstates Commerce's obligation. Commerce
need not prove willful or deliberate noncompliance; rather,
Commerce must find that [the respondent] could comply,
or would have had the capability of complying if it
knowingly did not place itself in a condition where it
could not comply. Commerce must also find either a
willful decision not to comply or behavior below the
standard for a reasonable respondent.
Branco Peres, 173 F. Supp. 2d at 1372.
Moreover, the Court sees no need to resolve the question of
the adequacy of FMEC's actions at verification. Aside from the
Court No. 99-08-00532 Page 18
insufficient state of the record on this point,11 the issue
became irrelevant once the Court afforded FMEC the opportunity to
submit documents post-verification. Had FMEC used that
opportunity to furnish Commerce with all requested documents,
Commerce would have no basis to find that FMEC did not comply to
the best of its ability. On the other hand, it is precisely
because FMEC had this extra time that its noncompliance is
particularly egregious. FMEC specifically represented to
Commerce and the Court that it would have provided all necessary
documents if only the verification had progressed more smoothly.
Ipso facto, FMEC could comply with Commerce's information
requests, or believed that it did. Accordingly, its failure to
provide the various data constitutes behavior below the standard
for a reasonable respondent. See Reiner Brach, 26 CIT at __, 206
F. Supp. 2d at 1337-38 (upholding choice of AFA against
respondent who failed to provide information about home market
sales and assumed that the information it submitted was
sufficient, and supplied vague answers to other questions).
11
Both sides devote considerable effort to debating essentially
factual issues such as what the verifiers told a particular
employee or FMEC's counsel. In Fujian I, the Court considered
FMEC's consistent and uncontested assertions on this point
sufficient to order a remand. In order to issue a final judgment
that turned in part on such a factual issue, however, the Court
would at a minimum expect to see affidavits from the relevant
persons, which neither party has furnished, or else take the
extraordinary step of trying the matter.
Court No. 99-08-00532 Page 19
Therefore, the Court sustains Commerce's use of AFA to calculate
FMEC's dumping margin.
2. Application of AFA to SMC
The validity of Commerce's decision to apply AFA to SMC
requires closer scrutiny, as SMC did not enjoy the opportunity
afforded FMEC to submit documents post-verification. Commerce
justifies its decision to impose AFA for the following reasons:
(1) SMC admitted that it had relied on quantity and value
worksheets in preparing its questionnaire responses, yet never
disclosed such worksheets to Commerce; (2) SMC did not reconcile
certain sales data with its departments' financial statements,
because (a) they could not complete the task within the time
frame of verification because their computerized accounting
records did not distinguish sales by market, yet SMC never
requested the opportunity to submit the information later, and
(b) the two statements are normally reconciled three months after
the release of the departmental statements; (3) SMC failed to
provide invoices and other sales documentation for transactions
involving non-subject merchandise, on the grounds that the sales
personnel with the information were absent; (4) SMC failed to
report the existence of several departments, which thus prevented
Commerce from verifying that the departments had no U.S. sales;
and (5) these shortcomings indicate a lack of preparation for
Court No. 99-08-00532 Page 20
verification.12 See Remand Results, at 6-8. Commerce thus
concludes that SMC had the ability to furnish the various missing
data, and that its failure to do so reflects a pattern of non-
responsiveness as well as serious inattention to its statutory
obligations.
SMC's response to these arguments is not persuasive. It
cites the SMC Verification Report as proof that it did furnish
the requested quantity and value worksheets, but as Commerce
notes, the quoted excerpt is selective and misleading.13 While
SMC explains that its accounting records do not distinguish sales
by market, this limitation does not justify its failure to first
turn over the source documents during verification, and then
request the opportunity to manual reconcile the information.
SMC also claims that it was able to reconcile the
departmental and company-wide financial statements, and that the
only discrepancy was due to a [ ] and it
appends to the Plaintiffs' Comments certain record evidence
purporting to show this. Commerce, however, disputes this
12
From this, Commerce infers that both that SMC could have
accelerated the reconciliation and performed it before
verification, and that such a reconciliation should in any event
have already been performed as Commerce was requesting 1997 data
in late 1998.
13
The sentence in the SMC Verification Report immediately
preceding the one that SMC quotes expressly states that "SMC did
not prepare for the verification any of the quantity and value
worksheets requested in the Department's sales verification
outline." See SMC Verification Report, at 7.
Court No. 99-08-00532 Page 21
interpretation of the appended documents. Accordingly, the Court
must defer to Commerce as the finder of fact, and decline SMC's
invitation to resolve this issue. Cf. Hoogovens Staal BV v.
United States, 25 CIT __, __, 93 F. Supp. 2d 1303, 1307-08 (2000)
(observing that Court may not "reweigh or reinterpret the
evidence of record").
Finally, SMC does not justify the absence of certain
personnel with sole access to records, or its failure to disclose
the existence of certain departments. Instead, SMC details the
information that it did supply, and suggests that "[t]his record
does not demonstrate the type of willful withholding of evidence
that warrants the application of AFA." Plaintiffs' Comments, at
14. As explained supra, see Part I.B.2, however, respondents do
not have the right to respond selectively to relevant information
requests, and SMC cannot show that its noncompliance was due to
mere inadvertence or oversight. As this information, along with
the other information SMC insufficiently disclosed, was necessary
to show that SMC reported all U.S. sales, its relevance cannot be
disputed.
Collectively, this evidence is substantial enough to show
that SMC had the ability to comply with relevant information
requests, but did not do so out of insufficient attention to its
statutory obligations. The Court thus finds that in the Remand
Results, unlike in the Final Results, Commerce has adequately
Court No. 99-08-00532 Page 22
articulated its conclusion that SMC failed to cooperate to the
best of its ability, and has explained why the absence of this
information is significant. See Branco Peres, 25 CIT at __, 173
F. Supp. 2d at 1372-73 (upholding use of AFA because Commerce
found that respondent possessed necessary sales and cost data at
outset of review, but failed to retain such data despite notice
that it might be required); Pacific Giant, Inc. v. United States
of America, 26 CIT __, __, 223 F. Supp. 2d 1336, 1343 (2002)
(upholding Commerce's use of AFA where respondent and its
supplier were unable to "demonstrate how they calculated any of
the ten factors of production" reported to Commerce, as such
behavior indicated a "reckless disregard of compliance standards
that warrants adverse treatment"); Reiner Brach, 26 CIT at __,
206 F. Supp. 2d at 1337-38.
3. Selection of the dumping margin
In the Remand Results, Commerce stated that it complied with
the Court's instruction to calculate separate dumping margins for
FMEC and SMC, and then proceeded to impose duty rates identical
to those applicable to the PRC entity. The Court recognizes that
it is not uncommon for Commerce to assign uncooperative
respondents the highest margin assigned to any respondent in an
antidumping review. Because neither FMEC or SMC object to the
margin selected, there is no need to consider whether the margin
is unduly punitive.
Court No. 99-08-00532 Page 23
II. Conclusion
For all the foregoing reasons, the Court sustains Commerce’s
Remand Results. A separate order will be entered accordingly.
________________________________
Senior Judge Richard W. Goldberg
Date: July 28, 2003
New York, New York