JSW Steel Ltd. et al v. United States

Slip Op. 18- 
UNITED STATES COURT OF INTERNATIONAL TRADE
OPINION
[Remanding the Department of Commerce’s final determination.]
Dated:
Mark D. Davis, Davis & Leiman PC, and Irene Huei-min Chen, Chen Law Group LLC,
of Washington, D.C., argued for plaintiffs. With them on the brief was Mark B. Lehnardt,
Antidumping Defense Group LLC, of Washington, D.C.
Claudia Burke, Assistant Director, Commercial Litigation Branch, Civil Division, U.S.
Department of Justice, and Nikki Kalbing, Office of the Chief Counsel for Trade Enforcement
and Compliance, U.S. Department of Commerce, of Washington, D.C., argued for defendant.
With them on the brief were Chad A. Readler, Acting Assistant Attorney General, Jeanne E.
Davidson, Director, and Elizabeth Speck, Senior Trial Counsel.
John W. Bohn, Schagrin Associates, of Washington, D.C., argued for defendant-
intervenors. With him on the brief was Roger B. Schagrin, Schagrin Associates, of Washington,
D.C.
Goldberg, Senior Judge: This matter concerns the final determination issued by the
Department of Commerce (“Commerce” or the “Department”) in the countervailing duty
JSW STEEL LTD. AND JSW STEEL
COATED PRODUCTS LTD.,
Plaintiffs,
v.
UNITED STATES,
Defendant,
and
AK STEEL CORP.; STEEL DYNAMICS,
INC.; CALIFORNIA STEEL INDUS., INC.;
ARCELORMITTAL USA LLC; AND
NUCOR CORP.,
Defendant-Intervenors.
Before: Richard W. Goldberg, Senior Judge
Court No. 16-00165
.BZ 
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(“CVD”) investigation of certain corrosion-resistant steel products (“CORE”) from India.
Certain Corrosion-Resistant Steel Products from India, 81 Fed. Reg. 35,323 (Dep’t Commerce
June 2, 2016) (“Final Determination”), and accompanying Issues & Decision Mem. (“I&D
Mem.”). Plaintiffs JSW Steel Limited and JSW Steel Coated Products Limited (collectively,
“Plaintiffs” or “JSW”), contest Commerce’s use of adverse facts available (“AFA”) in
connection with a JSW affiliate called JSW Steel (Salav) Limited (“Salav”). Because substantial
evidence does not support Commerce’s determination, the court remands for redetermination in
accordance with this opinion and order.
BACKGROUND
Commerce initiated a CVD investigation into CORE from certain countries, including
India, with a period of investigation (“POI”) of calendar year 2014. Certain Corrosion-Resistant
Steel Products from the People’s Republic of China, India, Italy, the Republic of Korea, and
Taiwan, 80 Fed. Reg. 37,223 (Dep’t Commerce June 30, 2015) (initiation). JSW was selected as
a mandatory respondent.
As part of its investigation, Commerce issued multiple questionnaires seeking
information about JSW and certain affiliates. Questionnaire to the Gov’t of India, P.R. 69 (July
31, 2015) (“First Questionnaire”); 1st Supp. Questionnaire from USDOC to JSW, P.R. 167 (Oct.
20, 2015) (“Second Questionnaire”); see JSW 2nd Supp. Questionnaire Response, P.R. 206
(Dec. 16, 2015) (“Third Questionnaire”). In its First Questionnaire, Commerce requested, in
relevant part, that JSW “provide a complete questionnaire response for those affiliates where
‘cross-ownership’ exists” 1 and “the cross-owned company supplies an input product to you that
is primarily dedicated to the production of the subject merchandise.” I&D Mem. cmt. 11. JSW
1 It is uncontested that cross-ownership exists between JSW and Salav.
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provided full responses on behalf of itself and an affiliate named JSCPL, both producers of
subject merchandise, and also on behalf of ARCL, a cross-owned producer of inputs to subject
merchandise. Id. With its response to the initial questionnaire, JSW also provided a list of 55
affiliated companies, including Salav, and indicated why full questionnaire responses were not
required for those companies. Affiliated Companies Resp. Ex. 1, P.R. 85 (Aug. 24, 2015). This
document stated that Salav was “not in operation” during the POI. Id.
Commerce issued a supplemental questionnaire requesting, in relevant part, that JSW
provide information concerning subsidies for any cross-owned companies that “supply any
inputs to the production of CORE or to the production of other inputs to the production of
CORE.” Second Questionnaire; I&D Mem. cmt. 11. In response, JSW explained that no
additional companies beyond ARCL fit this description.
Finally, in its second supplemental questionnaire, Commerce requested that JSW “revise
[its] questionnaire response to cover subsidies received by all of [JSW’s] Indian
subsidiaries . . . or explain why [JSW] believes it is not necessary to report subsidies received by
these other divisions.” Third Questionnaire; I&D Mem. cmt. 11. Again, JSW responded that no
additional companies were responsive to Commerce’s questionnaire. In sum, the three
questionnaires essentially sought information concerning those affiliates of JSW whose subsidies
might be attributable to JSW in this CVD investigation.
Commerce then published its preliminary determination, calculating JSW’s CVD rate at
2.85%. Certain Corrosion-Resistant Steel Products from India, 80 Fed. Reg. 68,854 (Dep’t
Commerce Nov. 6, 2015) (prelim. determ.) (“Preliminary Determination”), and accompanying
Issues & Decision Mem. After the Preliminary Determination, Commerce conducted an on-site
verification at JSW. JSW Verification Report, P.R. 257 (Apr. 12, 2016). After Commerce
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arrived for verification, JSW informed Commerce that JSW had inadvertently and erroneously
reported that Salav had not been operational during the POI. Id. at 5. On this basis, JSW had not
discussed Salav or its subsidies in response to any of Commerce’s questionnaires. However,
JSW explained that, while Salav had in fact been operational for the final two months of the POI,
questionnaire responses were still not required for Salav on the separate basis that Salav does not
produce an input responsive to Commerce’s questionnaires. JSW Case Br. 9–15, P.R. 264 (Apr.
21, 2016).
Commerce rejected JSW’s representations about Salav as untimely “new factual
information” that did not qualify as a “minor correction” and that Commerce was not obligated
to verify. I&D Mem. cmt. 11. Commerce concluded that JSW had withheld requested
information concerning Salav, thereby impeding Commerce’s investigation. Id. On these same
facts, Commerce also determined that JSW had not fully cooperated in the investigation,
warranting the use of adverse facts available (“AFA”). Id.
Thereafter, Commerce issued its Final Determination, calculating JSW’s final CVD rate
at 29.46%, 81 Fed. Reg. at 35,324, 25.22% of which resulted from Commerce’s use of AFA
related to JSW’s alleged failure to disclose requested information concerning Salav, I&D Mem.
Sec. 5. Plaintiffs timely filed this action to contest the CVD rate and Commerce’s determination
that AFA was appropriate.
JURISDICTION AND STANDARD OF REVIEW
The Court has jurisdiction over this action pursuant to 28 U.S.C. § 1581(c) and will
sustain Commerce’s countervailable subsidy determinations unless they are “unsupported by
substantial evidence on the record, or otherwise not in accordance with law,” 19 U.S.C.
§ 1516a(b)(1)(B)(i).
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DISCUSSION
I. Facts Available and Adverse Facts Available
Commerce “shall” fill gaps in the record using “the facts otherwise available” (“facts
available”) when a respondent: (A) “withholds information that has been requested by
[Commerce],” (B) “fails to provide such information by the deadlines for submission of the
information or in the form or manner requested,” (C) “significantly impedes a proceeding,” or
(D) “provides such information but the information cannot be verified.” 19 U.S.C.
§ 1677e(a)(2)(A)–(D).
Further, Commerce may use AFA, that is, it may select from the facts available in a
manner adverse to the respondent, if the gap in the record was caused by the failure of the
respondent to cooperate to the best of its ability. 19 U.S.C. § 1677e(b). Thus, AFA is
appropriate only when Commerce has first made a supported finding under § 1677e(a) that
information is missing from the record for an enumerated reason, followed by a separate finding
under § 1677e(b) that there has been a failure to cooperate.
II. Substantial Evidence Does Not Support Commerce’s Use of Facts Available
The court finds that Commerce applied AFA without substantial evidence to support the
required threshold finding that there was a gap in the record warranting the use of facts available.
Commerce premised its use of facts available on two grounds: JSW withheld “requested
information” about Salav, § 1677e(a)(2)(A), thereby impeding the proceedings,
§ 1677e(a)(2)(C). I&D Mem. cmt. 11. 2 Quite simply, Commerce has failed to show that it
requested information concerning Salav that was then withheld by JSW.
2 Because common facts and arguments underlie JSW’s alleged withholding and
impeding, the court will combine its discussion of these two grounds.
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JSW admits that its initial representation—that Salav was not operational during the
POI—was false. However, the operational status of JSW’s various subsidiaries during the POI
was not “requested information.” Rather, Commerce requested, in relevant part, information
concerning cross-owned companies which supply an input “that is primarily dedicated to the
production” of CORE, see First Questionnaire, or is used in the production of an input to CORE,
see Second Questionnaire. Therefore, whether JSW withheld requested information concerning
Salav, as Commerce claims, is a function of whether evidence indicates that Salav supplied an
input for the production of CORE or for the production of an input to CORE.
During verification, JSW informed Commerce that, during the final two months of the
POI, Salav produced direct reduced iron, or DRI, and made a small shipment of DRI to JSW’s
Dolvi facility. JSW Verification Report 5. DRI is an input for a diverse range of products,
including some products that, in turn, could be used in the production of CORE.
However, according to JSW, the Dolvi facility (i) is the only JSW facility capable of
processing DRI, (ii) is incapable of producing subject merchandise, and (iii) did not send any
inputs during the POI to Vijayanagar, the only JSW facility capable of producing subject
merchandise. JSW Case Br. 13–15; Hearing Tr. 33–34, P.R. 277 (May 6, 2016); JSW Am. 56.2
Mot. for Summ. J. 28, ECF No. 48 (Apr. 28, 2017) (“JSW 56.2 Mot.”). Additionally, JSW notes
that “because Salav DRI was sent to Dolvi only at the very end of the POI, even some minuscule
portion of that DRI was theoretically made into hot-rolled coil, which was in turned [sic] rolled
into cold-rolled coil, and then was eventually further converted by JSW Coated into CORE, that
final manufacturing step would necessarily have taken place after the POI.” See JSW 56.2 Mot.
28. Moreover, JSW asserts that Commerce can corroborate this information because Commerce
verified JSW’s responses regarding its production process. See JSW Case Br. 13–14. Thus,
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JSW reasons that, although DRI can generally be an input to products that are inputs to CORE,
Salav did not supply—and could not have supplied—a relevant input at a relevant time. As a
consequence, full questionnaire responses were not required for Salav.
Commerce does not point to any record evidence contradicting JSW’s representations
concerning Salav. Rather, Commerce insists that “JSW’s belated assertion that [Salav]’s input
should not be considered as primarily dedicated to subject merchandise is unsubstantiated” and
“unreliable.” I&D Mem. cmt. 11. But Commerce’s refusal to verify, justified or otherwise, does
not constitute “substantial evidence on the record.” See Olympic Adhesives, Inc. v. United
States, 899 F.2d 1565, 1574 (Fed. Cir. 1990) (“To show that [respondent]’s responses were
incomplete, the [agency] would have to put forth at least some evidence” in support of that
conclusion). 3 If JSW is correct that Salav did not provide an input to subject merchandise or to a
relevant downstream product, then JSW did not withhold requested information about Salav.
In arguing that information concerning Salav was in fact requested, Defendant, the
United States, notes that “[i]t is not within the [sic] JSW’s discretion to determine what
information Commerce needed for the investigation . . . .” Def. Resp. to Pl. Mot. for J. on
Agency R. 16, ECF No. 61 (“Def. Resp.”). This proposition is true, but misplaced here. The
dispute between the parties is not whether certain requested information is necessary. See, e.g.,
Ansaldo Componenti, S.p.A v. United States, 10 CIT 28, 37, 628 F. Supp. 198, 205 (1986)
(respondent was not entitled to withhold requested information on the basis that it believed the
information “could not serve as a basis for Commerce’s administrative review.”). The essential
3 Compare Ozdemir Boru San. v. Tic. Ltd. Sti., 41 CIT __, __, 273 F. Supp. 3d 1225,
1235 (2017) (sustaining Commerce’s use of facts available and AFA in light of record evidence
discovered at verification that, contrary to respondent’s questionnaire responses, respondent
“was eligible for, and did receive” a certain subsidy).
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dispute is whether the information was requested at all. In other words, while Commerce has
latitude to request a wide range of information, it is only entitled to receive what it actually
requests. See Olympic Adhesives, Inc., 899 F.2d at 1572–75 (“[A] submitter need only provide
complete answers to the questions presented in an information request.”).
Defendant also insists that JSW’s arguments concerning Salav are irrelevant because
Commerce is not required to trace specific inputs into specific subject merchandise. But that is
also not the issue. Rather, JSW’s asserts that Salav-produced DRI could not have been a part of
the production of any subject merchandise during the POI. Defendant has pointed to no specific
evidence casting doubt on this assertion.
Citing past practice, Defendant goes one step further and argues that JSW should have
interpreted the questionnaire to include an affiliate “even if the [affiliate’s] inputs are not actually
used [to produce subject merchandise] during a given period of investigation or review.” Def.
Resp. 19. While this may be Commerce’s practice in ultimately attributing subsidies, the idea
that Commerce requested such information from JSW in this proceeding is belied by the fact that
Commerce permitted JSW to provide no questionnaire responses for certain companies—
including, initially, Salav—on the basis that those companies were “not in operation” during the
POI. See Affiliated Companies Response Ex. 1; JSW Verification Report 4. This would clearly
be an inadequate response under Defendant’s theory that the POI has no limiting effect on JSW’s
questionnaire responses.
Certainly JSW put Commerce in a predicament. The eleventh hour timing of JSW’s
correction concerning Salav made it difficult for Commerce to fully verify the new information.
And on this basis, Commerce refused to verify JSW’s representations concerning Salav. But the
fact remains: the essence of JSW’s belated assertion is that it never withheld “requested
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information” concerning Salav. Therefore, Commerce must point to something on the record to
support its determination, under § 1677e(a), that in fact JSW withheld requested information.
Adverse inferences are not record evidence. A desire to punish untimely corrections is not
record evidence. Without substantial evidence that requested information was withheld,
Commerce was not permitted to supplement the record with facts available under § 1677e(a).
Consequently, Commerce was also not permitted to use AFA under § 1677e(b).
Because Commerce failed to support its use of facts available under § 1677e(a), the court
does not reach the merits of Commerce’s determination that JSW also failed to cooperate to the
best of its ability per § 1677e(b). The court also does not reach the arguments raised by JSW as
to the reasonableness of the CVD rate applied by Commerce.
CONCLUSION AND ORDER
Commerce may have been entitled to refuse to verify the belated information concerning
Salav. But that decision had consequences, namely, there is no record evidence to support
Commerce’s use of facts available. Commerce cannot cherry-pick those parts of JSW’s
correction that it hopes will support the application of AFA and reject the rest as untimely. The
record is closed on Salav. Thus, on remand, Commerce must recalculate JSW’s CVD rate
without regard to Salav.
Upon consideration of all papers and proceedings herein, it is hereby:
ORDERED that the Final Determination is remanded to Commerce for redetermination
in accordance with this Opinion and Order that is in all respects supported by substantial
evidence, in accordance with law, and supported by adequate reasoning; it is further
ORDERED that Commerce shall recalculate JSW’s CVD rate without regard to Salav or
any subsidies Salav may have received; it is further
ORDERED that Commerce shall have ninety (90) days from the date of this Opinion and
Order in which to file its remand redetermination, which shall comply with all directives in this
Opinion and Order; that the Plaintiff and Defendant-Intervenor shall have thirty (30) days from
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the filing of the Remand Redetermination in which to file comments thereon; and that the
Defendant shall have thirty (30) days from the filing of Plaintiff and Defendant-Intervenor’s
comments to file comments.
/s/ Richard W. Goldberg
Richard W. Goldberg
Senior Judge
Dated:
New York, New York
.BZ 
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