Slip Op. 02-48
UNITED STATES COURT OF INTERNATIONAL TRADE
BEFORE: RICHARD K. EATON
____________________________________
:
KAO HSING CHANG IRON & STEEL :
CORPORATION, :
:
Plaintiff, :
:
and :
:
ACI CHEMICALS, INC., and :
YU DIN STEEL COMPANY, LTD., :
:
Plaintiff-Intervenors, :
:
v. : Consol. Court No. 00-01-00026
:
UNITED STATES, :
:
Defendant, :
:
and :
:
WHEATLAND TUBE COMPANY, :
:
Defendant-Intervenor. :
____________________________________:
Plaintiff foreign exporter brought action contesting final results of administrative review of
antidumping order covering carbon steel pipe from Taiwan. United States Court of International
Trade, Eaton, J. held: United States Department of Commerce’s (“Commerce”) determination
that use of facts available was warranted as to Plaintiff was not supported by substantial evidence
on the record because, contrary to Commerce’s findings, Plaintiff sought clarification of
questionnaire instructions, notified Commerce of difficulties in submitting requested
information, and timely submitted responses.
[Antidumping determination remanded to Commerce.]
May 30, 2002
Consol. Court No. 00-01-00026 Page 2
Ablondi, Foster, Sobin & Davidow, P.C.1 (F. David Foster and Kristen S. Smith), for
Plaintiff.
Holland & Knight, LLP (Frederick P. Waite and Kimberly R. Young), for Plaintiff-
Intervenors.
Robert D. McCallum, Jr., Deputy Assistant Attorney General; David M. Cohen, Director,
Commercial Litigation Branch, Civil Division, United States Department of Justice; Velta A.
Melnbrencis, Assistant Director, Commercial Litigation Branch, Civil Division, United States
Department of Justice; Stephen M. DeLuca, Office of the Chief Counsel for Import
Administration, United States Department of Commerce, of counsel, for Defendant.
Schagrin Associates (Roger B. Schagrin, Nicholas A. Kessler, Andrew B. Knapp, Brian
E. McGill, and Roger Banks), for Defendant-Intervenor.
OPINION
EATON, Judge: This matter is before the court on the motion of Plaintiff Kao Hsing
Chang Iron & Steel Corporation (“KHC”) for judgment upon the agency record pursuant to
USCIT R. 56.2. KHC contests the results of the United States Department of Commerce’s
(“Commerce”) sixth administrative review of the antidumping order2 covering carbon steel pipe
1
Ablondi, Foster, Sobin & Davidow, P.C., merged with Miller & Chevalier,
Chartered, in July of 2001.
2
See Certain Circular Welded Carbon Steel Pipes and Tubes From Taiwan:
Antidumping Duty Order, 49 Fed. Reg. 19,369 (May 7, 1984). By this order KHC’s weighted
average antidumping duty margin was calculated as 9.7 percent for the subject merchandise. Id.
at 5,311. Administrative reviews of this order were conducted for the periods of: 1983–84, see
51 Fed. Reg. 43,946 (Dec. 5, 1986) (final results), amended by 53 Fed. Reg. 51,128 (Dec. 20,
1988); 1985–86, see 53 Fed. Reg. 41,218 (Oct. 20, 1988) (final results), amended by 54 Fed.
Reg. 1,752 (Jan. 17, 1989); 1986–87, see 54 Fed. Reg. 46,432 (Nov. 3, 1989) (final results);
1987–88, see 56 Fed. Reg. 8,741 (Mar. 1, 1991) (final results); and 1995–96, see 62 Fed. Reg.
52,971 (Oct. 10, 1997) (final results). KHC’s margin was reviewed for the periods of 1985–86
(finding zero percent margin) and 1986–87 (adopting 1985–86 margin due to no shipments
during POR). In addition, Commerce conducted an expedited sunset review of the subject
merchandise, in which it noted KHC’s margin, as calculated in the antidumping order, was 9.7
(continued...)
Consol. Court No. 00-01-00026 Page 3
from Taiwan contained in Certain Circular Welded Carbon Steel Pipes and Tubes From Taiwan:
Final Results of Antidumping Duty Administrative Review, 64 Fed. Reg. 69,488 (Dec. 13, 1999)
(“Final Results”), amended by Certain Circular Welded Carbon Steel Pipes and Tubes From
Taiwan; Amended Final Results of Antidumping Duty Administrative Review, 65 Fed. Reg.
5,310 (Feb. 3, 2000) (“Am. Final Results”). The court has jurisdiction over this matter pursuant
to 28 U.S.C. § 1581(c) (1994) and 19 U.S.C. § 1516a(a)(2)(A)(i)(I) (1994). Where a party
challenges the findings of an antidumping review the court will 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). For the
reasons set forth below, the court remands this matter to Commerce with instructions to conduct
further proceedings in conformity with this opinion.
BACKGROUND
On May 29, 1998, at the request of Allied Tube & Conduit Corp., Wheatland Tube
Company, Sawhill Tubular Division of Armco, Inc., and Laclede Steel Co. (jointly
“Petitioners”), Commerce initiated an administrative review of the order covering the subject
imports for the period of May 1, 1997, through April 30, 1998. See Initiation of Antidumping
and Countervailing Duty Administrative Reviews and Request for Revocation in Part, 63 Fed.
Reg. 35,188 (June 29, 1998). As part of its investigation, Commerce issued its standard
2
(...continued)
percent. See Final Results of Expedited Sunset Review: Small Diameter Carbon Steel Pipes and
Tubes from Taiwan, 64 Fed. Reg. 67,873, 67,875–76 (December 3, 1999).
Consol. Court No. 00-01-00026 Page 4
questionnaire to KHC.3 (See questionnaire of 7/10/98 (“Questionnaire”), Pub. R. Doc. 5,
Attach.) Although initially not required to respond to questions concerning costs of production
as set out in section D of the Questionnaire, Commerce notified KHC that it might be instructed
to do so in the future. (Letter from Commerce to law firm of Dickstein Shapiro & Morin of
7/10/98, Pub. R. Doc. 5 at 2.) KHC responded to section A of the Questionnaire on August 7,
1998, and sections B and C on September 4, 1998. (Letters from law firm of Ablondi, Foster,
Sobin & Davidow (“AFS&D”) to Commerce of 9/4/98, Pub. R. Docs. 20, 32.4)
Thereafter, in response to Petitioners’ further allegations that “KHC made home market
sales below the cost of production . . . during the POR,” Certain Circular Welded Carbon Steel
Pipes and Tubes From Taiwan: Prelim. Results of Antidumping Duty Admin. Review and Partial
Rescission of Review, 64 Fed. Reg. 30,306, 30,307 (June 7, 1999) (“Prelim. Results”),
Commerce “initiated an investigation of sales below cost,” id., and instructed KHC to respond to
section D of the Questionnaire. (Letter from Commerce to AFS&D of 10/20/98, Pub. R. Doc.
46.) In connection with this request, Commerce provided KHC with general instructions for
answering the questions found in section D relating to cost of production (“COP”)5 and
3
The relevant questionnaire sections are: A (general information); B (comparison
market sales–sales in the home market or to third countries); C (sales to the United States); and D
(cost of production/constructed value).
4
The law firm of Dickstein Shapiro & Morin withdrew as attorney of record for
KHC on July 24, 1998 (Pub. R. Doc. 13), after which the law firm of Ablondi, Foster, Sobin &
Davidow entered its appearance on July 28, 1998 (Pub. R. Doc. 14).
5
“Cost of production” was defined as “the total model-specific cost of the foreign
like product sold by your company in the foreign market.” (Questionnaire section D, Pub. R.
(continued...)
Consol. Court No. 00-01-00026 Page 5
constructed value (“CV”).6 These instructions provided guidance as to how various computer
data fields were to be labeled and completed so that COP and CV could be calculated.
(Questionnaire section D, Pub. R. Doc. 5, Attach. at D-10–19.) For COP and CV data,
Commerce directed KHC to report “the quantity produced during the cost calculation period” in a
data field labeled “PRODQTY” for each model identified by an individual model control number
(“CONNUM”). (See id. at D-13, 19 (emphasis added).) KHC filed its section D response on
December 4, 1998, after asking for and receiving an extension of time to do so. (See letters from
Commerce to AFS&D of 11/17/98, Pub. R. Doc. 53A (granting extension of time to Dec. 4,
1998), and 12/7/98, Pub. R. Doc. 56 (referencing filing of preliminary business proprietary
version on December 4, 1998).)
Commerce, after reviewing KHC’s section D submission and receiving comments from
interested parties thereon, sent a supplemental questionnaire to KHC. (See letter from
Commerce to AFS&D of 1/21/99, Pub. R. Doc. 66.) Among other things, Commerce instructed
KHC to, “As previously requested, report the quantity produced during the cost calculation
period in the field labeled ‘PRODQTY’ within your COP and CV databases.” (Supplemental
questionnaire of 1/21/99 (“First Supplemental Questionnaire”), Pub. R. Doc. 66, Attach. at ¶ 47
(emphasis added).) Commerce did not, however, more specifically detail the nature of the
5
(...continued)
Doc. 5, Attach. at D-1.)
6
“Constructed value” was defined as “the total model-specific cost of the subject
merchandise sold by your company to the U.S. market, plus an amount for profit.”
(Questionnaire section D, Pub. R. Doc. 5, Attach. at D-1.)
Consol. Court No. 00-01-00026 Page 6
deficiency. (See generally First Supplemental Questionnaire, Pub. R. Doc. 66, Attach.) KHC
timely filed its response to the First Supplemental Questionnaire (see letter from AFS&D to
Commerce of 2/16/99, Conf. R. Doc. 16) after asking for and receiving an extension of time (see
letter from Commerce to AFS&D of 2/3/99, Pub. R. Doc. 70 (granting extension of time to
February 16, 1999)). In this response, KHC stated: “As requested, KHC is reporting the quantity
produced during the cost calculation period in the field labeled ‘PRODQTY’ within its revised
COP and CV databases . . . .” (First Supplemental Questionnaire Resp., Pub. R. Doc. 77, Attach.
at 43 (emphasis added).)
After receiving and reviewing the First Supplemental Questionnaire Response,
Commerce notified KHC that the information provided therein was deficient, and directed it to
complete another supplemental questionnaire. (Letter from Commerce to AFS&D of 3/16/99,
Pub. R. Doc. 86.) In this communication, for the first time, Commerce clearly stated that KHC
had not provided requested information:
For a large number of CONNUMs, including CONNUMs for
which sales are reported in the sales response, data for the field
“PRODQTY” is not provided. As requested in our original and
supplemental questionnaire, report the quantity produced during
the cost calculation period in the field labeled “PRODQTY” within
your COP and CV databases.
(Supplemental questionnaire of 3/16/99 (“Second Supplemental Questionnaire”), Pub. R. Doc.
86, Attach. at ¶ 10(e) (emphasis added).)
Before submitting its response, KHC sought to address the issues raised by the Second
Consol. Court No. 00-01-00026 Page 7
Supplemental Questionnaire. To this end KHC contacted Commerce and, on March 23, 1999, a
meeting was held between counsel for KHC and Commerce officials.7 (See affidavit of F. David
Foster, Pl.’s Mem. Supp. Mot. J. Agency R., Attach. 5 (“Foster Aff.”); affidavit of Johnny Chiu,
Pl.’s Mem. Supp. Mot. J. Agency R., Attach. 6.) At this meeting counsel for KHC stated that
KHC’s sales during the period of review included merchandise produced both prior to the period
of review—i.e. from inventory—and during the period of review. (Foster Aff. at ¶ 4.) KHC’s
counsel explained that, since Commerce requested information only for quantities produced
during the cost calculation period, no production quantity data had been provided for
merchandise sold from inventory. (Id.) KHC’s counsel suggested that, with respect to data for
merchandise sold from inventory, “costs reported for the product most similar to a product not
produced during the review period could be used as surrogate costs for the product not produced”
as this “was normal ITA practice in situations such as KHC’s.” (Id. at ¶ 5.) Commerce did not
consent to KHC’s proposed method but, instead, indicated that the use of surrogate cost data
would depend on a number of factors, including the relative similarity of the surrogate
merchandise and estimated value of U.S. sales involved. (Id. at ¶ 6.) At no point did Commerce
state, however, that KHC’s use of such methodology was unacceptable or, alternatively, suggest
any other approach. (Id. at ¶ 7.)
7
A memorialization of this meeting was not initially included as part the
administrative record. The court granted Plaintiff’s motion to include two affidavits in the record
describing the events that transpired during that meeting. See Kao Hsing Chang Iron & Steel
Corp. v. United States, 25 CIT __, Slip Op. 01-51 (Apr. 19, 2001) (granting Plaintiff’s motion to
amend administrative record). There is no dispute that these affidavits, now part of the
administrative record, accurately reflect the substance of that meeting. Id., 25 CIT at __, Slip.
Op. 01-51 at 2.
Consol. Court No. 00-01-00026 Page 8
After this meeting, KHC requested and was granted an extension of time to respond to the
Second Supplemental Questionnaire. (See letter from Commerce to AFS&D of 4/8/99, Pub. R.
Doc. 102 (granting extension of time to April 12, 1999).) KHC then timely filed its response to
the Second Supplemental Questionnaire (Second Supplemental Questionnaire Resp. of 4/12/99,
Pub. R. Doc. 105, Attach) explaining that it had:
reported the quantity produced during the cost calculation period in
the field labeled “PRODQTY” in the COP and CV databases. For
some U.S. and home market sales (about 5% of the sales records in
both the U.S. and home market data sets), there was no production
during the POR; sales were from inventory. Exhibit 6 hereto sets
forth those product numbers/CONNUMS where this is the case,
and indicates for each such case the control number/CONNUM
which is closest in characteristics for which production did occur,
and whose costs KHC believes closely represents the costs of such
product if it had been produced.
(Id., Pub. R. Doc. 105, Attach. at 11.) Exhibit 68 was a printed chart with handwritten notations
of CONNUMs with “U.S. sales with no POR production, and closest product with production,”
and CONNUMs with “Home market sales with no POR production, and closest product with
production.” (See Second Supplemental Questionnaire Resp., Conf. R. Doc. 24, Attach. at Ex.
6.)9 After filing the Second Supplemental Questionnaire Response KHC received no further
inquiries or requests for information from Commerce. (Pl.’s Mem. Supp. Mot. J. Agency R. at
6.)
8
Exhibit 6 as filed on April 12, 1999, contained information deemed incorrect by
KHC and was subsequently replaced. (See letter from AFS&D to Commerce of 4/13/99, Pub. R.
Doc. 104 at 2.)
9
The chart, which cross-referenced CONNUMs of merchandise sold from
inventory with CONNUMs of merchandise produced during the period of review, did not
provide specific production quantity data for CONNUMs sold from inventory.
Consol. Court No. 00-01-00026 Page 9
Commerce then published the Preliminary Results. Therein, it explained that the use of
facts available as to certain merchandise was warranted because KHC “failed to provide any
costs for certain models,” Preliminary Results, 64 Fed. Reg. at 30,308, and “failed to provide any
constructed value data for certain models . . . .” Id. Therefore, for both cost of production and
constructed value Commerce used the “highest average cost for the same category of product.”
Id.
On December 13, 1999, Commerce published the Final Results. Therein, it explained
that “[w]here KHC failed to provide cost data, [Commerce] used the highest average costs of
models for which KHC did provide data. The facts . . . used constitute partial adverse facts
available, and are also the least adverse facts available on the record.” Final Results, 64 Fed.
Reg. at 69,489. Commerce explained that the use of facts available was warranted because:
KHC withheld information requested by the Department, then
belatedly offered different information, which did not fulfill the
request, in an unacceptable format. . . . KHC did not consult the
Department on this matter, and did not explain its omission of
quantity or cost data until its April 13, 1999 addendum to its April
12, 1999 supplemental response, where it mentioned in passing
that the models were not produced during the POR.
Id. (emphasis added). In addition, Commerce found that:
KHC chose to ignore both the instructions in the questionnaire . . .
and basic statutory guidelines: [19 U.S.C. § 1677m(c)(1)] requires
that an interested party promptly notify the Department if it is
unable to submit information in the form and manner requested,
and that it provide a “full explanation and suggested alternate
forms” in which it is able to provide the information. KHC
provided no such notification or explanation.
Id. at 69,490. Commerce explained that it used adverse inferences because:
Consol. Court No. 00-01-00026 Page 10
the facts we used are only partial adverse facts available and are the
least adverse verified facts available on the record which would not
reward non-compliance. Rather than applying the highest
calculated margin for the sales with unreported cost data, we
simply inserted the highest costs in order to complete the costs test
and leave the price-to-price analysis intact. We have relied upon
KHC’s own verified data as our source of facts available. Use of
costs other than those we have used, such as KHC’s overall, non-
product specific average costs, could reward KHC for failure to
fully cooperate in this review because use of such data could
potentially result in a lower margin than would have resulted from
use of KHC’s actual costs. Our application of partial adverse facts
available in this manner is consistent with established practice
because it is based on verified data and is sufficiently adverse to
induce KHC’s cooperation in future reviews.
Id. After correcting certain ministerial errors, Commerce set KHC’s antidumping duty margin at
24.80 percent. Am. Final Results, 65 Fed. Reg. at 5,311.
DISCUSSION
KHC raises several issues in support of its motion. First, it argues that Commerce
improperly resorted to the use of facts available because Commerce did not provide KHC with an
adequate opportunity to correct deficiencies in its filings. Next, KHC contends that, even if the
use of facts available were warranted, Commerce improperly resorted to the use of adverse
inferences because KHC acted to the best of its ability to comply with Commerce’s requests.
Finally, KHC argues that the adverse inferences selected by Commerce from facts available were
not in accordance with law because they were punitive in nature.10
10
Plaintiff-Intervenors contend that since Yu Din’s antidumping margin was
“linked” to KHC’s, if KHC’s margin is adjusted then Yu Din’s must be as well. (See Pl.-
Intervenors’ Mem. Supp. Mot. J. Agency R. at 2.) Yu Din’s margin was “linked” to KHC’s
because it “did not respond to [Commerce’s] requests for information and [was] assigned, as
(continued...)
Consol. Court No. 00-01-00026 Page 11
The United States (“Government”), on behalf of Commerce, claims that the Final Results
are supported by substantial evidence on the record and otherwise in accordance with law. The
Government argues that the use of partial facts available was warranted because KHC failed to
submit COP and CV data for several models and, in addition, that the data KHC did submit was
properly rejected by Commerce because it was not usable. The Government further argues that
Commerce’s selection of adverse inferences was proper since Commerce is allowed great
discretion in selecting such inferences from facts otherwise available, and here those inferences
selected were not punitive in nature but, rather, furthered the interests of the antidumping laws.
In order to be found proper, Commerce’s findings must be supported by substantial
evidence. See 19 U.S.C. § 1516a(b)(1)(B)(i). Substantial evidence consists of “such relevant
evidence as a reasonable mind might accept as adequate to support a conclusion.” Consol.
Edison v. Nat’l Labor Relations Bd., 305 U.S. 197, 229 (1938); Daewoo Elecs. Ltd. v. United
States, 6 F.3d 1511, 1520 (Fed. Cir. 1993). In reviewing an agency’s findings the court must
determine “whether the evidence and reasonable inferences from the record support the
[agency’s] finding.” Matsushita Elec. Indus. Co. v. United States, 750 F.2d 927, 933 (Fed. Cir.
10
(...continued)
facts available, the highest rate in any segment of this proceeding . . . ,” see Am. Final Results, 65
Fed. Reg. at 5,310, and KHC’s margin was the highest calculated rate. Id. at 5,311. The
Government agrees with Plaintiff-Intervenors, stating that “in the event this Court remand[s]
KHC’s action to Commerce to redetermine KHC’s margin and KHC’s current margin was
ultimately discredited, that Yu Din’s margin should be reconsidered as well because it has
challenged the facts available margin in the current review. However, Commerce need . . .
revise Yu Din’s margin only if KHC’s margin is disqualified in a final court determination
following a remand in KHC’s action.” (Def.’s Mem. Opp’n to Pl.-Intervenor’s Mem. Supp. Mot.
J. Agency R. at 3.)
Consol. Court No. 00-01-00026 Page 12
1984). Finally, “the possibility of drawing two inconsistent conclusions from the evidence does
not prevent an administrative agency’s finding from being supported by substantial evidence.”
Consolo v. Fed. Mar. Comm’n, 383 U.S. 607, 620 (1966); Daewoo, 6 F.3d at 1520 (“The
questions is whether the record adequately supports the decision of the [agency], not whether
some other inference could reasonably be drawn.”). Here, Commerce’s conclusions supporting
its use of facts available was warranted are not supported by substantial evidence.11
First, the conclusion that KHC “withheld information requested by the Department, then
belatedly offered different information, which did not fulfill the request, in an unacceptable
format,” Final Results, 64 Fed. Reg. at 69,489, is not supported by the record. The information
KHC allegedly “withheld” is the PRODQTY data for CONNUMs sold from inventory. The
clear wording of the questionnaire instructions, however, directed KHC to supply PRODQTY
data for CONNUMs produced during the cost calculation period. While it may have been
Commerce’s intention to request PRODQTY data for all CONNUMs sold during the cost
calculation period, this was not made clear to KHC until it received the Second Supplemental
Questionnaire, thus prompting KHC to request the meeting that was held on March 23, 1999. In
addition, KHC did not “belatedly” offer this information to Commerce. KHC informed
Commerce of the difficulties it was having reconstructing the PRODQTY data for CONNUMs
sold from inventory nearly three weeks prior to the April 12 deadline for the submission of the
11
It is unclear whether Commerce based its use of facts available on KHC’s alleged
withholding of information pursuant to 19 U.S.C. § 1677e(a)(2)(A), or failure to provide
information pursuant to 19 U.S.C. § 1677e(a)(2)(B). Whatever the basis, however, the court
finds Commerce’s conclusions are not supported by the record.
Consol. Court No. 00-01-00026 Page 13
Second Supplemental Questionnaire response.
Next, the conclusion that KHC failed to provide requested information, in that it “did not
consult the Department on [the submission of surrogate data], and did not explain its omission of
quantity or cost data until its April 13, 1999 addendum . . . where it mentioned in passing that the
models were not produced during the POR,” Final Results, 64 Fed. Reg. at 69,489, is not in
accord with the evidence now on the record. Following receipt of the Second Supplemental
Questionnaire, KHC’s counsel sought a meeting with Commerce officials and, on March 23,
1999, such meeting took place. (Foster Aff. at ¶ 2.) At that time KHC’s counsel consulted with
Commerce officials about the missing data, explained to them why the data had not been
provided, and sought guidance from them as to how to comply with the data request. (See id. at
¶¶ 4–5.) Moreover, Commerce’s further contention that KHC failed to comply with statutory
and regulatory guidelines is also not in accordance with the record. In support of this conclusion
Commerce stated:
KHC chose to ignore both the instructions in the questionnaire . . .
and basic statutory guidelines: [19 U.S.C. § 1677m(c)(1)] requires
that an interested party promptly notify the Department if it is
unable to submit information in the form and manner requested,
and that it provide a “full explanation and suggested alternate
forms” in which it is able to provide the information. KHC
provided no such notification or explanation.
Final Results, 64 Fed. Reg. at 69,490. The record, however, shows that KHC, after receiving the
Second Supplemental Questionnaire—which for the first time alerted it to the nature its
response’s deficiencies—promptly notified Commerce that it needed clarification of the
instructions and was having difficulty providing the requested information. (Foster Aff. at ¶ 4.)
Consol. Court No. 00-01-00026 Page 14
KHC also explained why it had not previously supplied such data, and suggested an arguably
reasonable means for completing the COP and CV databases with surrogate data. (Id. at ¶ 5.)
Therefore, because Commerce’s findings in the Final Results are not based on the
evidence on the record, its determination that the use of facts available was warranted as to KHC
in the Final Results is not supported by substantial evidence.
CONCLUSION
The court remands this action so that Commerce may conduct further proceedings in
conformity with this opinion, including consulting with KHC to develop an acceptable method
for providing missing production quantity data for KHC’s COP and CV databases. Such remand
results are due within ninety days from the date of this opinion. KHC shall have thirty days
thereafter within which to file comments and Commerce may reply to any such comments within
eleven days of their filing.
___________________________
Richard K. Eaton
Dated: May 30, 2002
New York, New York