Since Hardware (Guangzhou) Co., Ltd. v. United States

Slip Op. 15-15
UNITED STATES COURT OF INTERNATIONAL TRADE
____________________________________
:
SINCE HARDWARE (GUANGZHOU) 	:
CO., LTD., 	:
:
Plaintiff, 	:
:
v. 	:
:
UNITED STATES, 	: 	Before: Richard K. Eaton, Senior Judge
:
Defendant, 	: 	Court No. 09-00123
:
and 	:
:
HOME PRODUCTS INTERNATIONAL, 	: 	PUBLIC VERSION
INC., 	:
:
Defendant-Intervenor. 	:
____________________________________:
OPINION and ORDER
[Plaintiff’s motion for judgment on the agency record is granted, and the matter is remanded to
the Department of Commerce.]
Dated: February 18, 2015
William E. Perry, Dorsey & Whitney LLP, of Seattle, WA, argued for plaintiff. With
him on the brief was Emily Lawson.
Carrie A. Dunsmore, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S.
Department of Justice, of Washington, D.C., argued for defendant. With her on the brief were
Stuart F. Delery, Assistant Attorney General, Jeanne E. Davidson, Director, and Patricia M.
McCarthy, Assistant Director. Of counsel on the brief was Nathaniel J. Halvorson, Attorney,
Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of
Commerce, of Washington, D.C.
Frederick L. Ikenson, Blank Rome LLP, of Washington, D.C., argued for defendant-
intervenor. With him on the brief was Larry Hampel.
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EATON, Senior Judge: Before the court are the United States Department of
Commerce’s (“Commerce” or the “Department”) final results, dated October 30, 2013, following
remand of its antidumping review of Floor-Standing, Metal-Top Ironing Tables and Certain
Parts Thereof from the People’s Republic of China, 74 Fed. Reg. 11,085 (Dep’t of Commerce
Mar. 16, 2009) (final results of antidumping duty administrative review), and accompanying
Issues and Decision Memorandum (“Issues & Dec. Mem.”) (collectively, the “Final Results”)
made pursuant to the court’s order in Since Hardware (Guangzhou) Co. v. United States, 37
CIT__, __, Slip Op. 13-71 (2013) (“Since Hardware III”). See Final Results of Redetermination
Pursuant to Ct. Remand (ECF Dkt. No. 169) (“Third Remand Results”).
On this third remand, 1 Commerce was instructed to support with substantial evidence its
claim that the import data from the United States Customs and Border Protection Agency (the
“Customs Data”) corroborated the 157.68-percent rate for plaintiff Since Hardware (Guangzhou)
Co., Ltd.’s (“plaintiff” or “Since Hardware”) subject merchandise. See Since Hardware III, 37
1 	The parties to this 2009 case have, no doubt, reached the point at which they
wonder how much longer it can last, a point identified by a recent law review article:
The continual remands caused partly by the [Federal Circuit’s] refusal to accept, or
discouragement of, appeals following dispositive remands by the [United States
Court of International Trade (“CIT”)], together with lack of clear recognition of the
authority of the CIT to issue a substantive reversal, can result in decisions that have
no effect upon the parties and thus are purely advisory opinions. 	Under current
practice, the CIT’s decisions cease to be advisory and have some effect only when
the administrative agency agrees to accept the CIT’s direction, under protest, often
after several remands, and the case proceeds to a final conclusive result. This is not
a rational system for resolving cases in our constitutional system. 	This Article
suggested various practical remedies, but the one principle that is clear is that
Article III courts reviewing agency action for lawfulness have the power to reverse
the decision of the reviewed agency.
Jane Restani & Ira Bloom, The Nippon Quagmire: Article III Courts and Finality of United
States Court of International Trade Decisions, 39 BROOK. J. INT’ L L. 1005, 1025 (2014).
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CIT at __, Slip Op. 13-71, at 16–17; Ex. 1 to Draft Second Results of Redetermination Pursuant
to Ct. Remand (ECF Dkt. No. 179) (“Customs Data”).
In the Third Remand Results, Commerce determined that its selected rate of 157.68
percent was corroborated, to the extent practicable, by information from independent sources.
See Third Remand Results at 7. The Department then continued to assign the 157.68-percent
rate to Since Hardware’s merchandise. See Third Remand Results at 7. Since Hardware objects
to Commerce’s determination, alleging that the Department failed to corroborate the assigned
rate. See Pl. Since Hardware (Guangzhou) Co., Ltd.’s Objections to the Department of
Commerce’s Redetermination Pursuant to Third Remand 6 (ECF Dkt. No. 174) (“Pl.’s Br.”).
Defendant-intervenor, Home Products International, Inc., urges the court to sustain Commerce’s
determination. See Resp. of Home Products International, Inc., Def.-int., to Pl.’s Objections to
the Department of Commerce’s Third Remand Determination 5 (ECF Dkt. No. 80). For the
following reasons, the court finds that the Third Remand Results are not supported by substantial
evidence and remands this matter to Commerce.
STANDARD OF REVIEW
“The court shall hold unlawful any determination, finding, or conclusion found . . . to be
unsupported by substantial evidence on the record, or otherwise not in accordance with law.” 19
U.S.C. § 1516a(b)(1)(B)(i). “The results of a redetermination pursuant to court remand are also
reviewed for compliance with the court’s remand order.” Yantai Xinke Steel Structure Co. v.
United States, 38 CIT __, __, Slip Op. 14-38, at 4 (2014) (quoting Xinjiamei Furniture
(Zhangzhou) Co. v. United States, 38 CIT __, __, 968 F. Supp. 2d 1255, 1259 (2014)) (internal
quotation marks omitted).
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LEGAL FRAMEWORK
Pursuant to 19 U.S.C. § 1677e(a)(2)(C), the Department, when a party “significantly
impedes a proceeding,” must use “‘facts otherwise available . . . to fill in the gaps when
Commerce has received less than the full and complete facts needed to make a determination’
from the respondents.” See 19 U.S.C. § 1677e(a)(2)(C); Foshan Shunde Yongjian Housewares
& Hardware Co. v. United States, 35 CIT __, __, Slip Op. 11-123, at 7 (2011) (alteration in
original) (quoting Gerber Food (Yunnan) Co. v. United States, 29 CIT 753, 767, 387 F. Supp. 2d
1270, 1283 (2005)) (internal quotation marks omitted). When Commerce has made the further
finding that a party has failed to cooperate to the best of its ability, it “may use an inference that
is adverse to the interests of that party in selecting from among the facts otherwise available,” to
determine that party’s antidumping duty rate. 19 U.S.C. § 1677e(b). The use of this inference
by Commerce is referred to as adverse facts available (“AFA”).
When determining a rate based on an adverse inference, Commerce may use appropriate
“secondary information.” See Uruguay Round Agreements Act, Statement of Administrative
Action, H.R. DOC . NO. 103-316, at 870 (1994), reprinted in 1994 U.S.C.C.A.N. 4040, 4199
(“SAA”) (“Secondary information is information derived from the petition that gave rise to the
investigation or review, the final determination concerning the subject merchandise, or any
previous review under section 751 [(19 U.S.C. § 1675)] concerning the subject merchandise.”).
Although the Department is authorized to use an adverse inference with respect to the
facts used to determine rates for uncooperative parties, Congress has expressly established
limitations on the Department when it relies on secondary information to assign a rate. See 19
U.S.C. § 1677e(c) (“When the [Department] . . . relies on secondary information rather than on
information obtained in the course of an investigation or review, [Commerce] . . . shall, to the
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extent practicable, corroborate that information from independent sources that are reasonably at
their disposal.”). This corroboration requirement intentionally restricts the Department’s ability
to select questionable secondary information when it assigns a rate based on adverse inferences.
See SAA, H.R. DOC . NO. 103-316, at 870, reprinted in 1994 U.S.C.C.A.N. at 4199; see also
Hubscher Ribbon Corp. v. United States, 38 CIT __, __, Slip Op. 14-43, at 8 (2014) (“In practice
‘corroboration’ involves confirming that secondary information has ‘probative value,’ by
examining its ‘reliability and relevance.’” (quoting 19 C.F.R. § 351.308(d); Mittal Steel Galati
S.A. v. United States, 31 CIT 730, 734, 491 F. Supp. 2d 1273, 1278 (2007))).
In order to satisfy the relevance requirement, the information used to corroborate a rate
must bear some relationship to the respondent. That is, where a rate based on adverse inferences
is derived from secondary information, Commerce must support the rate by demonstrating that
the information “has some grounding in [the] commercial reality” of the respondent during the
period of review (“POR”). See Gallant Ocean (Thai.) Co. v. United States, 602 F.3d 1319, 1324
(Fed. Cir. 2010). Therefore, “the assignment of a rate resulting from an adverse inference [must
be] based on secondary information [that is] corroborated by evidence showing that the rate is
‘reliable and relevant to the particular respondent.’” Foshan Shunde Yongjian Housewares &
Hardware Co. v. United States, 38 CIT __, __, Slip Op. 14-69, at 9 (2014) (emphasis added)
(quoting Foshan Shunde Yongjian Housewares & Hardware Co. v. United States, 37 CIT __, __,
Slip Op. 13-47, at 8 (2013)); see also F.lli De Cecco di Filippo Fara S. Martino S.p.A. v. United
States, 216 F.3d 1027, 1032 (Fed. Cir. 2000) (“It is clear from Congress’s imposition of the
corroboration requirement in 19 U.S.C. § 1677e(c) that it intended for an adverse facts available
rate to be a reasonably accurate estimate of the respondent’s actual rate, albeit with some built-in
increase intended as a deterrent to non-compliance. Congress could not have intended for
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Commerce’s discretion to include the ability to select unreasonably high rates with no
relationship to the respondent’s actual dumping margin.”). In addition, unlike the remainder of
the record, it is the responsibility of the Department to develop the corroborating information.
See Foshan Shunde, 38 CIT at __, Slip Op. 14-69, at 10 (“It is important to note that Congress
placed the obligation to corroborate secondary information using independent sources on the
Department, not on the interested parties who are normally responsible for generating the
administrative record.”).
DISCUSSION
I. 	B ACKGROUND
This case involves Since Hardware’s challenge of the Department’s final results of the
third administrative review of the antidumping duty order on floor-standing, metal-top ironing
tables and certain parts thereof from the People’s Republic of China (“PRC”) (the “Order”) for
the POR, August 1, 2006 through July 31, 2007. See Final Results, 74 Fed. Reg. at 11,085. In
the Final Results, Commerce found the use of facts available appropriate because “Since
Hardware . . . provided unreliable and incomplete documentation in support of its claimed
purchases of market economy inputs,” and thereby significantly impeded Commerce’s
investigation. See Issues & Dec. Mem. at cmt. 1 (citing 19 U.S.C. § 1677e(a)(2)(C)). As a result
of Since Hardware’s failure to cooperate, Commerce further applied AFA in selecting the facts
relating to Since Hardware’s independence from the PRC government as well as to those facts
surrounding Since Hardware’s cost and country of origin information. See Issues & Dec. Mem.
at cmt. 1. This led the Department to determine that Since Hardware could not establish its
independence from the PRC government, and as a result, the Department assigned Since
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Hardware the PRC-wide antidumping duty rate of 157.68 percent. See Issues & Dec. Mem. at
cmt. 1.
The court questioned the use of an adverse inference with respect to the information
relating to Since Hardware’s entitlement to a separate rate, and remanded the question twice.
See Since Hardware (Guangzhou) Co. v. United States, 34 CIT __, __, Slip Op. 10-108, at 22–23
(2010) (“Since Hardware I”); Since Hardware (Guangzhou) Co. v. United States, 35 CIT __, __,
Slip Op. 11-146, at 29–30 (2011). The Department issued its Second Remand Results on
November 29, 2011. Final Results of Redetermination Pursuant to Ct. Remand (ECF Dkt. No.
133) (“Second Remand Results”). In the Second Remand Results, Commerce found that Since
Hardware was “entitled to a separate rate.” See Second Remand Results at 5. Commerce then
determined a separate rate of 157.68 percent for Since Hardware, based on the rate of a
cooperative respondent in the investigation. See Second Remand Results at 7–8. Commerce
supported its selection of that rate, in part, by explaining the importance of incentivizing future
cooperation. See Second Remand Results at 9.
Commerce also offered several reasons why the rate was “both reliable and relevant,” and
therefore corroborated. 2 See Second Remand Results at 7. First, the Department asserted that
the rate was reliable because it was calculated for a respondent during the investigation. Second
Remand Results at 7–8. To corroborate the relevance of its selected rate to Since Hardware,
Commerce used the Customs Data derived from rates at which imports of the ironing tables, that
entered into the United States during the POR from non-party producers and exporters, were
2 	In Since Hardware III, the court found that the rate was reliable. See Since
Hardware III, 37 CIT at __, Slip Op. 13-71, at 11 (“Plaintiff has neither placed evidence on the
record to challenge the reliability of the selected rate, nor pointed to any court’s holding
declaring the selected rate to be unreliable. Thus, Commerce has sufficiently demonstrated
reliability.”).
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eventually liquidated. See Second Remand Results at 8. In doing so, it argued that, because
other companies were able to import and presumably sell ironing tables subject to the 157.68-
percent rate, this meant that the rate was representative of the commercial reality of companies in
the same business as plaintiff. See Second Remand Results at 8–9. In other words, Commerce
contends that the liquidation rate for other exporters’ entries of ironing tables, made during the
POR, is indicative of their commercial reality, and thus that of Since Hardware, during that time
period.
Commerce also expressly declined to reopen the record of the proceeding to gather more
information and calculate a rate specific to Since Hardware. See Second Remand Results at 13.
Plaintiff challenged Commerce’s assigned rate of 157.68 percent, arguing that the rate did not
reflect plaintiff’s commercial reality during the POR. Second Remand Results at 11.
In Since Hardware III, the court rejected plaintiff’s claim that Commerce was required to
reopen the record, holding that “nothing in th[e] court’s order directed that the Department must
reopen the record.” Since Hardware III, 37 CIT at __, Slip Op. 13-71, at 8 (citations omitted).
Further, the court found that the rate of 157.68 percent was reliable, but found that Commerce
did not demonstrate the relevance of that rate to plaintiff’s commercial reality. See id. at __, Slip
Op. 13-71, at 11. Accordingly, the court remanded the Second Remand Results. Id. at __, Slip
Op. 13-71, at 16.
II. 	ANALYSIS
A. Commerce May Not Presume that the Highest Prior Margin Is Relevant
In this remand, Commerce endeavors to demonstrate that the assigned rate is relevant to
plaintiff’s commercial reality in several ways. First, it reasserts its position that the court should
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permit it to apply a modified version of the Rhone Poulenc presumption. See Third Remand
Results at 10 (“[E]ven before looking to the corroborative evidence, the 157.68 percent rate is
relevant to Since Hardware by virtue of its choice not to cooperate to the best of its ability.”
(citing SAA, H.R. DOC . NO. 103-316, at 870, reprinted in 1994 U.S.C.C.A.N. at 4199)). By
using this presumption, Commerce attempts to assume that the highest previously calculated rate
in the history of the antidumping duty order is automatically relevant to a party that has failed to
cooperate with Commerce’s investigation. “In other words, Since Hardware’s actions
demonstrate that it preferred to avoid providing to the Department the necessary information for
calculating its true margin. Instead of providing that information, Since Hardware knowingly
chose to risk incurring an AFA rate of 157.68 percent.” Third Remand Results at 10. Thus, the
Department initially seeks to corroborate an assigned rate by means of a presumption rather than
by using direct evidence.
The Rhone Poulenc presumption, which was first found in the Federal Circuit’s case,
Rhone Poulenc v. United States, confirmed Commerce’s use of the “best information available” 3
to determine a rate in those instances where a respondent had refused to answer the
questionnaires or where the answers were highly deficient. See Rhone Poulenc, Inc. v. United
States, 899 F.2d 1185, 1190 (Fed. Cir. 1990). Put differently, “the case stands for the
3 	The Rhone Poulenc presumption allowed Commerce to assign a previously
established rate to a respondent that did not supply current information from which a rate could
be calculated. Thus, the Department could assign a prior margin as the “best information
available,” where a party had refused to respond to the Department’s questionnaires. See Rhone
Poulenc, Inc. v. United States, 899 F.2d 1185, 1190 (Fed. Cir. 1990). The “best information
available” standard was superseded by the “facts available” and “adverse facts available”
provisions following the Uruguay Round Agreements Act in 1994. See SAA, H.R. DOC . NO.
103-316, at 869–70, reprinted in 1994 U.S.C.C.A.N. at 4198–99; see also Shandong Mach. Imp.
& Exp. Co. v. United States, 34 CIT __, __ n.3, Slip Op. 10-88, at 3 n.3 (2010) (citing SAA, H.R.
DOC . NO. 103-316, at 868, reprinted in 1994 U.S.C.C.A.N. at 4198; Shandong Huarong Mach.
Co. v. United States, 30 CIT 1269, 1282 n.9, 435 F. Supp. 2d 1261, 1274 n.9 (2006)).
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proposition that a respondent can be assumed to make a rational decision to either respond or not
respond to Commerce’s questionnaires, based on which choice will result in the lower rate.”
Tianjin Mach. Imp. & Exp. Corp. v. United States, 35 CIT __, __, 752 F. Supp. 2d 1336, 1347
(2011).
This Court, however, has continually rejected the expansion of Rhone Poulenc-type
presumptions beyond what has been permitted by the Federal Circuit. See, e.g., Tianjin Mach.,
35 CIT at __, 752 F. Supp. 2d at 1348. This restriction of the inference reflects the Federal
Circuit’s reasoning that the use of a Rhone Poulenc-type presumption must be based on the
“common sense inference” found in the case itself. See Rhone Poulenc, 899 F.2d at 1190 (“It
reflects a common sense inference that the highest prior margin is the most probative evidence of
current margins because, if it were not so, the importer, knowing of the [“best information
available”] rule, would have produced current information showing the margin to be less.”
(internal quotation marks omitted)).
The presumption, though, is particularly ill-suited as a substitute for corroboration. As
this Court noted in Tianjin Machinery, Rhone Poulenc was decided before the Uruguay Round
Agreements Act, which, for the first time, required corroboration of AFA rates based on
secondary information. Tianjin Mach., 35 CIT at __, 752 F. Supp. 2d at 1347–48 (“Congress
directed Commerce to make additional findings in AFA cases.” (citing 19 U.S.C. § 1677e(c));
see also Foshan Shunde, 38 CIT at __ n.6, Slip Op. 14-69, at 9 n.6 (noting that the corroboration
requirement of 19 U.S.C. § 1677e(c) was added as part of the Uruguay Round Agreements Act
(citing SAA, H.R. DOC . NO. 103-316, at 869–70, reprinted in 1994 U.S.C.C.A.N. at 4198–99)).
Thus, while Rhone Poulenc may provide a rationale for assigning a particular rate when a
respondent has failed to adequately answer Commerce’s questionnaires, it says nothing about
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whether that rate represents a respondent’s commercial reality. 4 First, because corroboration was
not a requirement when Rhone Poulenc was decided, the case’s application to the corroboration
of a rate is beyond the scope of the Federal Circuit’s holding. Second, “common sense” does not
support the idea that a respondent who has been found to be uncooperative can be presumed to
know that there is a “rule” that the assignment of a rate previously calculated for another
respondent in an earlier segment of the proceeding is self-corroborating. This is because there is
no such rule and it is difficult to see how there could be one. That is, the manner in which a
respondent decides to behave with respect to answering questionnaires simply tells Commerce
nothing about the market conditions in which the respondent operates. Thus, this Court has held
that, when a respondent fails to cooperate when answering Commerce’s questionnaires,
Commerce cannot “dispense with [the] corroboration requirement by employing the Rhone
Poulenc presumption.” Tianjin Mach., 35 CIT at __, 752 F. Supp. 2d at 1348. Indeed, the court
has found unlawful the use of the presumption in Since Hardware III, and finds no reason to
revisit its conclusion. See Since Hardware III, 37 CIT at __ n.4, Slip Op. 13-71, at 11 n.4.
Thus, the Department’s reliance on the Rhone Poulenc presumption does nothing to
satisfy its duty of corroboration. Therefore, the Department may not rely on this presumption to
corroborate the 157.68-percent rate.
4 	The recent case of Dongtai Peak Honey Indus. Co. v. United States does not
conflict with this conclusion. See Dongtai Peak Honey Indus. Co. v. United States, Appeal No.
14-1479 (Fed. Cir. Jan. 30, 2015). In that case, the Federal Circuit cites KYD, Inc. v. United
States for the proposition that a rate determined in a prior segment is reliable. See id. at 20–21
(citing KYD, Inc. v. United States, 607 F.3d 760, 766–77 (Fed. Cir. 2010)). The Court, however,
did not authorize the use of the presumption as a substitute for actual evidence of a respondent’s
commercial reality.
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B. Commerce Has Not Supported with Substantial Evidence its Conclusions
Relating to Liquidation Rates
In addition, the Department has not supported with substantial evidence its conclusions
drawn from the Customs Data. The Customs Data placed on the record by Commerce comprises
information for imports of ironing tables into the United States during the POR. The summary
spreadsheet, from which the Customs Data is derived, is made up of numerous columns,
including a column that lists the antidumping duty order to which the merchandise is subject, the
liquidation rate, the value of the shipment subject to the antidumping duty order, the quantity of
merchandise liquidated at that particular rate, and a description of the primary items invoiced in
that shipment. See Customs Data at Tab 1. The Department relies on this data to corroborate the
157.68-percent rate 5 by arguing that the “AD_DUTY” column in the Customs Data “shows that
the entries at issue contained subject merchandise that was liquidated at the 157.68 percent
rate.” 6 See Third Remand Results at 18. As Commerce explains, the values in this column are
equal to the “AD_VALUE” column multiplied by the “AD_RATE” column. See Third Remand
5 	The Customs Data has thirty-two columns: “CASENBR,” “CNTRYOR,”
“CNTRYEX,” “ORGNAME,” “EXPNAME,” “ENTRYNO,” “ENTRYDTE,” “CREDTE,”
“LIQDTE,” “EXPDTE,” “HTS,” “DESCRIPTION,” “TYPE,” “TYPEDESC,” “UOM,”
“MFRNBR,” “MFRNAME,” “IMPORTER,” “CONSIGNEE,” “IMPNAME,”
“AD_DUTY_BOND,” “AD_DEPOSIT_VALUE,” “AD_QTY,” “AD_VALUE,” “AD_RATE,”
“DISTPOR,” “DPNAME,” “PORTLAD,” “PLADCNTRY,” “PLADNAME,” “YEAR,” and
“MONTH.” Commerce relies on the “AD_DUTY_BOND” column (column 21). See Customs
Data at Tab 1. Since Hardware relies on the “AD_DEPOSIT_VALUE” column (column 22).
See Customs Data at 25. The court has an obligation to review the data as a whole, and other
columns appear to be relevant to whether the Customs Data supports Commerce’s
Determination. The court refers to the “AD_QTY” column (column 23) and the “AD_VALUE”
column (column 24). See Customs Data at 25.
6 	The “AD_DUTY” column, to which Commerce refers, appears to be an excerpt
from the Customs Data containing the same data as the “AD_DUTY_BOND” column in the full
exhibit. See Customs Data at 18.
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Results at 18; Customs Data at 25. From this, Commerce concludes that the values in the
“AD_DUTY_BOND” column represent both the amount of duty deposit and the amount at
which the merchandise was liquidated. 7 See Third Remand Results at 11–12 (“The Customs
[D]ata available in this review consist of a summary spreadsheet that lists, inter alia, . . . the
antidumping duty liquidation rate (variable AD_Duty) . . . . However, regarding the tariff
classification for all of the entries that were liquidated at the 157.68 percent rate, we note that the
variable ‘CASENBR’ lists the ironing tables case number of ‘A-570-888-000,’ and that the
column ‘AD_Duty’ specifically includes the antidumping duty that was collected on the
shipment.” (quoting Customs Data at 4, 18)). Assuming the “AD_DUTY_BOND” column
represents both the amount of the deposit and the liquidated amount, the Department posits that
the “AD_RATE” column would represent both the cash-deposit rate and the ultimate liquidation
rate. See Third Remand Results at 12; Customs Data at 18, 25. In other words, Commerce infers
from the Customs Data that importers actually paid cash deposits at the 157.68-percent rate
during the POR and that the merchandise was eventually liquidated at that rate.
Since Hardware disputes that the Customs Data shows that the importers actually paid
cash deposits at the 157.68-percent rate. For instance, Since Hardware points to the
“AD_DEPOSIT_VALUE” column, which does not reflect that 157.68-percent deposits were
made on most of the entries. 8 See Pl.’s Br. 8; Customs Data at 25. More, importantly, plaintiff
7 	“Liquidation means the final computation or ascertainment of duties on entries for
consumption or drawback entries.” 19 C.F.R. § 159.1; see also Shinyei Corp. of Am. v. United
States, 524 F.3d 1274, 1276 (Fed. Cir. 2008).
8 	The “AD_DEPOSIT_VALUE” column reflects [[ 	]] as the amount deposited
and paid for all but [[ 	]]. See Customs Data at 37. Plaintiff argues that this indicates
that a cash deposit was actually paid on only [[ 	]], and that the cash-deposit rate for the
other entries must have been [[ 	]]. See Pl.’s Br. 9.
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asserts that the deposit rate, not the ultimate liquidation rate, is what could be representative of
the commercial reality of exporters during the POR. Pl.’s Br. 8. Plaintiff contends that, if the
cash-deposit rate for the relied upon entries during the POR was not 157.68 percent, then doubt
is cast on whether the rate of 157.68 percent is representative of plaintiff’s commercial reality
during the POR. See Pl.’s Br. 9.
The parties have drawn conflicting conclusions from the Customs Data, and it appears
that none of them know with certainty whether a cash deposit was actually paid on any of the
relevant entries, or, if paid, the amount of the cash-deposit rate assessed. 9 During oral argument,
both Commerce and plaintiff conceded that they do not know what the
“AD_DEPOSIT_VALUE” column represents. When pressed on the issue, counsel for
Commerce admitted that she did not know whether a cash deposit was actually paid. See
Confidential Oral Arg. at 6:05–6:55, Since Hardware (Guangzhou) Co. v. United States, Court
No. 09-00123 (June 10, 2014).
Because Commerce has chosen to rely on the Customs Data as its primary source for
corroborating the secondary information, the Department has the burden of explaining how this
data serves to corroborate the assigned rate. See Foshan Shunde, 38 CIT at __, Slip Op. 14-69,
at 10 (“It is important to note that Congress placed the obligation to corroborate secondary
information using independent sources on the Department, not on the interested parties who are
normally responsible for generating the administrative record.”). By statute, each “determination
by Commerce must include ‘an explanation of the basis for its determination.’” See NMB Sing.
Ltd. v. United States, 557 F.3d 1316, 1320 (Fed. Cir. 2009) (quoting 19 U.S.C. 1677f(i)(3)(A)).
9 	There were [[ 	]] relevant entries relied upon by Commerce. Third Remand
Results at 12.
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Court No. 09-00123 	Page 15
Thus, where, as here, “the Department has reached important conclusions that are not fully
explained with reference to record evidence [and relevant statutes or regulations], remand is
appropriate for Commerce to ‘explain its rationale . . . such that a court may follow and review
its line of analysis, its reasonable assumptions, and other relevant considerations.’” See Since
Hardware III, 37 CIT at __, Slip Op. 13-71, at 15 (alteration in original) (quoting Clearon Corp.
v. United States, 35 CIT __, __, Slip Op. 11-142, at 27–28 (2011)) (internal quotation marks
omitted).
The Federal Circuit in Gallant Ocean held that, “[a]lthough Commerce has discretion in
choosing from a list of secondary information to support its adverse inferences, Commerce must
select secondary information that has some grounding in commercial reality.” Gallant Ocean,
602 F.3d at 1324. Thus, in order to have probative value, Commerce must at least prove that its
interpretation of the data is more than mere guesswork. Accordingly, should the Department
continue to rely on the Customs Data to corroborate the rate assigned to plaintiff, it must (1)
provide a full explanation of what the data represents and (2) supply substantial evidence tending
to demonstrate the amounts deposited during the POR. Based on the evidence now before the
court, however, the Department has failed to show that substantial evidence supports its
conclusion that the Customs Data corroborates the 157.68-percent rate.
C. The Ultimate Liquidation Rate Is Not Indicative of Commercial Reality During
the POR
The Department contends that the 157.68-percent rate is reflective of plaintiff’s
commercial reality because, according to Commerce, at liquidation, importers actually paid
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Court No. 09-00123 	Page 16
duties assessed at this rate on entries made during the POR. 10 See Third Remand Results at 19.
Thus, Commerce believes that the “data do establish that some importers paid antidumping
duties of 157.68 percent” and, as a result, the rate is relevant to plaintiff because “other
companies were able to participate in the U.S. Market while their imports were liquidated at a
rate of 157.68 percent of the value of the entered merchandise.” See Third Remand Results at
12, 13.
Plaintiff argues that “[t]he antidumping rate [at which] the entries of subject merchandise
may ultimately be liquidated does not establish the commercial reality for a respondent during a
review period.” Pl.’s Br. 8. That is, according to plaintiff, it is the cash-deposit rate, which is
assessed during the relevant period, and not the ultimate liquidation rate, which is assessed after
the POR, that could be representative of an exporter’s commercial reality during the POR. See
Pl.’s Br. 8. Thus, for plaintiff, commercial reality, at least for other exporters, is demonstrated
by the amount paid when the merchandise entered the United States, not the rate at which the
merchandise was ultimately liquidated months or years later. Put another way, plaintiff argues
that, the fact that the entries were ultimately liquidated at an antidumping duty rate of 157.68
percent does not offer any insight into plaintiff’s commercial reality during the POR.
Plaintiff is correct that, regardless of whether the liquidation rate of 157.68 percent may
have been eventually paid by importers, that alone is not indicative of plaintiff’s commercial
reality during the POR. As noted, the Department conceded at oral argument that it did not
know whether the Customs Data contained information as to the cash-deposit rate, which would
10 	According to the Department, [[ 	]] of ironing tables came into the
United States during the POR. See Third Remand Results at 18. The Department claims that all
of these entries were ultimately liquidated at the 157.68-percent rate. See Third Remand Results
at 18.
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Court No. 09-00123 	Page 17
have been the rate at which Since Hardware or other exporters of subject merchandise would
have willingly made sales into the United States. The subsequently imposed liquidation rates of
entries imported during the POR does not necessarily show that exporters were able to export
subject merchandise at a 157.68-percent rate.
This is because, during the POR, only the cash-deposit rates were known to the market
participants. Therefore, when making a decision to import the ironing tables, an importer (who
normally pays the duties) would only know how much was being paid as a cash deposit and,
based on that amount, reach a judgment as to whether it could make a profit. The ultimate
liquidation rate of merchandise is not determined until after the completion of the review of the
antidumping duty order. Because liquidation rates are only known after the review is completed,
neither a respondent nor any potential importer would have had that information at the time of its
decision to participate in the U.S. market. See Foshan Shunde, 38 CIT at __, Slip Op. 14-69, at
17 (“At the time of importation only the cash-deposit rates were known. The ultimate liquidation
rate of merchandise subject to a review of an antidumping duty order is unknown until after the
completion of the review itself. Thus, for Commerce to assert that [the respondent] or other
exporters ‘chose’ to participate in the U.S. market knowing that its products were subject to a
157.68 percent rate simply assumes too much.”).
Thus, despite the Department’s arguments to the contrary, any liquidation rate that differs
from the cash-deposit rate of imports subject to the Order sheds no light on whether exporters
willingly participated in the U.S. market while being aware that they were likely to be assessed
antidumping duties of 157.68 percent. As a result, these liquidation rates do not serve to
corroborate the 157.68-percent rate because they do not constitute substantial evidence of the
commercial reality of plaintiff or other importers during the POR.
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Court No. 09-00123 	Page 18
D. Commerce Failed to Support with Substantial Evidence its Reliance on the
Small Quantity of the Entries
On remand, Commerce was directed to “either identify record evidence indicating that
the Customs Data represents a relevant quantity of exports of the subject merchandise or reopen
the record to place such additional evidence thereon.” Since Hardware III, 37 CIT at __, Slip
Op. 13-71, at 17. Thus, Commerce was required to explain why its reliance on a small number
of entries of limited value supplied it with the substantial evidence necessary to support its
determination that the 157.68-percent rate was sufficiently corroborated. Id. at __, Slip Op. 13-
71, at 16 (“[T]he Department shall explain why the Customs Data represents a sufficiently large
number of entries to demonstrate the relevance of the selected rate or . . . otherwise corroborate
its selected rate in a manner supported by substantial evidence and in accordance with law.”).
When Commerce relies on minimal data, courts have held that the Department must establish
why that data is sufficient to be considered relevant. For example, in Gallant Ocean, the Federal
Circuit held that, “[b]ecause Commerce did not identify any relationship between the small
number of unusually high dumping transactions with [the plaintiff’s] actual rate, those
transactions cannot corroborate the . . . rate.” Gallant Ocean, 602 F.3d at 1324. In this case, as
in Gallant Ocean, if the Department is relying upon a small amount of data, from a small number
of entries, 11 which substantially deviates from the rest of the data as a whole, it must explain why
that minority of data merits reliance.
The Department argues that, “when corroborating a margin selected based on adverse
inferences, Commerce is not required to establish that the selected AFA rate is paid by most,
11 	Commerce relied upon a total of [[ 	]] entries made during the POR, that
were liquidated at the 157.68-percent rate, upon which [[ 	]] different importers paid
antidumping duties, to determine that this rate was “reflective of the commercial reality during
the instant review period for these [[ 	]] importers.” See Third Remand Results at 12–13.
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Court No. 09-00123 	Page 19
all[,] or a specific number of the importers. . . . Commerce is required to establish only that the
secondary information has probative value.” Def.’s Resp. to Comments on the Remand
Redetermination 14 (ECF Dkt. No. 183) (“Def.’s Br.”). If by this, Commerce means “some
probative value” or “a little probative value,” then it misstates its responsibility. Commerce’s
responsibility is to corroborate its use of secondary information with substantial evidence. See
Consol. Edison Co. of N.Y. v. Nat’l Labor Relations Bd., 305 U.S. 197, 229 (1938) (“Substantial
evidence is more than a mere scintilla. It means such relevant evidence as a reasonable mind
might accept as adequate to support a conclusion.” (citations omitted)). A small amount of data
can be insufficiently probative of plaintiff’s commercial reality. This does not mean that
Commerce is required to provide a certain number of entries for that information to have
probative value, but it is required to explain why the limited data in this case is sufficient to
substantiate the Department’s reliance thereon. See Yangzhou Bestpak Gifts & Crafts Co. v.
United States, 716 F.3d 1370, 1380 (Fed. Cir. 2013) (“What could have been a coincidental
correlation of the three data points is not enough to be substantial supporting evidence of
economic reality.”); Gallant Ocean, 602 F.3d at 1324 (“Because Commerce did not identify any
relationship between the small number of unusually high dumping transactions with Gallant’s
actual rate, those transactions cannot corroborate the adjusted petition rate.”). The Department
has not done so here. Should the Department continue to rely upon the Customs Data on
remand, it must provide a sufficient explanation as to why its small quantity amounts to
substantial evidence.
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Court No. 09-00123 	Page 20
E. Commerce Did Not Adequately Explain the Relevance of the Subject
Merchandise that Entered at Lower Rates
On remand, the court also directed Commerce to explain “the significance, if any, of the
subject merchandise being entered at rates below the selected rate.” Since Hardware III, 37 CIT
at __, Slip Op. 13-71, at 16. In other words, the Department was required to explain why the
large quantity of entries that purportedly entered the United States at lower rates than 157.68
percent did not also provide evidence of the commercial reality of many market participants and
thus give some indication of plaintiff’s commercial reality.
The Department argues that the entries liquidated at lower rates do not reflect plaintiff’s
commercial reality because they were assigned rates rather than calculated rates. 12 Third
Remand Results at 22 (explaining that the selected, lower “rate was not a calculated rate,” and
that, “[r]ather than a calculated rate, this [selected, lower] rate represents the separate rate
assigned to [other respondents] during the [less-than-fair-value investigation], and is the
weighted-average rate for Since Hardware and” the 157.68-percent rate assigned to a cooperating
party). Further, according to Commerce, Since Hardware’s filing of unreliable and incomplete
“information has precluded the Department from determining Since Hardware’s actual margin or
from considering whether Since Hardware’s commercial reality differed from the commercial
reality of those companies detailed in the Customs [D]ata.” Third Remand Results at 22. That
is, for Commerce, Since Hardware’s filing of unreliable and incomplete documentation
“rendered the calculation of a ‘true’ margin for Since Hardware impossible. Lacking
12 	The “separate rate” ([[ 	]]), which plaintiff urges as the rate that
should have been assigned to Since Hardware in this review as AFA, was the highest rate at
which entries of subject merchandise were liquidated during the POR, and is the weighted-
average of the rates calculated for Since Hardware and Shunde Yongjian Housewares Co., Ltd.,
which were the two respondents in the less-than-fair-value investigation. This was also the rate
assigned to other separate rate companies that were not individually investigated.
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Court No. 09-00123 	Page 21
information to determine Since Hardware’s own commercial reality, Commerce [thus] used a
calculated rate from the [less-than-fair-value] investigation as it [was] representative of the
market for the subject merchandise.” Third Remand Results at 22–23. Moreover, the
Department insists that, because the lower, selected “rate is not a calculated rate and, because the
rate must serve as a deterrent, selecting a rate that is indicative of commercial reality is not the
only . . . consideration when selecting an AFA rate.” Def.’s Br. 17 (citations omitted).
Plaintiff contends that the Department was unwarranted in concluding that the lower rates
were irrelevant to Since Hardware merely because they were assigned rates, rather than
calculated rates. See Pl.’s Br. 15 (“The Department’s very conclusion in this proceeding is that
the 157.68 percent rate is reflective of the commercial reality during the instant review because
importers paid the rate and exporters participated in the market while their merchandise is
assessed at the [157.68] percent rate. As directly provided in the Customs Data, the [separate
rate] is also a rate paid by importers and a rate by which exporters participated in the market.
The Department has not provided explanation for why its conclusion should somehow be
different for a separate rate . . . as opposed to a calculated rate. This is particularly the case here
where the [separate] rate is based, in part, on Since Hardware’s rate. This Court should find the
Department’s redetermination in this regard unsupported, and remand to the Department to
consider the additional lower rates in the Customs Data.” (footnote omitted)).
The Department defends its finding, claiming that the rates at which subject merchandise
were liquidated, which are lower than 157.68 percent, were not appropriate as an AFA rate.
Def.’s Br. 17, 18 (“[A]s explained by Commerce, the [rate urged by plaintiff, which is] . . . the
weighted-average rate of the two respondents in the less than fair value investigation, . . . is not a
calculated rate and, because the rate must serve as a deterrent, selecting a rate that is indicative of
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Court No. 09-00123 	Page 22
commercial reality is not the only . . . consideration when selecting an AFA rate. . . . Thus, while
[the rate sought by plaintiff] was the rate assigned to separate rate respondents in the less than
fair value investigation, [that] rate would provide an uncooperative respondent, like Since
Hardware, with a lower margin than the highest previously published rate which it had the
opportunity to rebut and does not provide proper inducement for cooperation with Commerce’s
proceedings.” (citations omitted)).
The Department has not sufficiently explained why the lower rates are not relevant for
purposes of corroboration. While it may be that the Department has provided some explanation
for why it did not use the separate rates as the basis for assigning a rate to Since Hardware, it has
not explained why the rates lack probative value for purposes of corroboration. Instead,
Commerce asserts that the entries were assigned rates, rather than calculated rates, but does not
explain why this difference makes the lower rates irrelevant. If the relevance of the 157.68-
percent rate is, as the Department argues, established by the fact that market participants are
paying the rate, why does merchandise entered at an assigned rate also give some indication of
commercial reality? That is, what is important here is the entered rate—the rate at which
importers are willing to participate in the U.S. market—i.e., whether they believe that, despite
paying the rate, they can make a profit. The Department, however, has not sufficiently explained
the significance of the subject merchandise entered at lower rates, as directed on remand. See
Since Hardware III, 37 CIT at __, Slip Op. 13-71, at 16. The Department was required to
explain why the assigned rate represented Since Hardware’s commercial reality. See id. at __,
Slip Op. 13-71, at 17. Should the Department continue to rely on the Customs Data on remand,
it must fully explain why merchandise entered at rates less than 157.68 percent is not relevant to
this inquiry.
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Court No. 09-00123 	Page 23
F. 	The Department Has Not Satisfied its Burden of Corroboration
Commerce maintains that it has satisfied its burden to corroborate the rate to the extent
practicable. Third Remand Results at 10 (“The question of relevance, then, is whether the
157.68 percent rate has any basis in reality that corresponds with the POR. As we explain below,
our examination of the evidence here demonstrates that the limited independent information on
the record of this proceeding supports the selected rate and, therefore, that rate is corroborated to
the extent practicable.”). The court is unpersuaded. Merely stating that the Department has not
identified other sources that support its assessment is an inadequate explanation to support the
conclusion that the Customs Data is the only information relevant to Since Hardware. “[T]he
Department is not excused from its obligation to corroborate secondary information used to draw
an adverse inference simply because the interested parties have placed no corroborative
information on the record.” Foshan Shunde, 38 CIT at __, Slip Op. 14-69, at 11 (citing Wash.
Int’l Ins. Co. v. United States, 34 CIT __, __ n.3, Slip Op. 10-16, at 5 n.3 (2010)). If, on remand,
Commerce continues to maintain that there are no other independent sources reasonably at its
disposal that could corroborate the assigned rate, Commerce “must describe the steps that it has
taken so that a reviewing [c]ourt can determine if the Department’s finding that corroboration
was not practicable is supported by substantial evidence and in accordance with law.” Foshan
Shunde, 38 CIT at __, Slip Op. 14-69, at 19–20 (citing Toyota Motor Sales, U.S.A., Inc. v. United
States, 22 CIT 643, 651, 15 F. Supp. 2d 872, 877–79 (1998)). Thus, given the Department’s
scant explanation in the Third Remand Results of the steps it took to corroborate the assigned
rate of 157.68 percent, the court must conclude that Commerce did not satisfy its burden.
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Court No. 09-00123 	Page 24
G. Plaintiff’s Claim that the Rate Is Inconsistent with the Remedial Nature of the
Statute Is Waived
Plaintiff claims that “the Department[’s] decisions do not provide U.S. importers full due
process of law because the Department[’s] investigations and reviews are not conducted pursuant
to the Administrative Procedure[] Act.” Pl.’s Br. 16. Plaintiff appears to assert that the rate is
inconsistent with the remedial nature of the statute. See Pl.’s Br. 16. Commerce responds that
the Federal Circuit has already rejected a similar argument. Def.’s Br. 19 (citing KYD, Inc. v.
United States, 607 F.3d 760, 768 (Fed. Cir. 2010)). In any event, because plaintiff raises this
argument here for the first time in its papers, after three remands, it has waived this argument.
See Yantai, 38 CIT at __, Slip Op. 14-38, at 18 (“Moreover, plaintiff waived its claim that
Commerce used the wrong type of steel for the steel input by failing to raise it before the court
prior to the remand. Because plaintiff did not raise this issue until after remand, the court’s
instructions necessarily did not direct the Department to reconsider its selection of the input
itself.”).
CONCLUSION and ORDER
For the foregoing reasons, it is hereby
ORDERED that the Third Remand Results are remanded; it is further
ORDERED that, on remand, Commerce shall issue a redetermination that complies in all
respects with this Opinion and Order, is based on determinations that are supported by
substantial record evidence, and is in all respects in accordance with law; it is further
ORDERED that Commerce support the rate assigned to Since Hardware by
demonstrating that the information has some grounding in the commercial reality of plaintiff
during the POR; it is further
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Court No. 09-00123 	Page 25
ORDERED that Commerce no longer rely on the presumption that, because the 157.68
percent rate had already been calculated in a prior segment of the proceeding at the time Since
Hardware took the risk of providing unreliable, incomplete, and unusable data, it could have
anticipated the assignment of that rate, to corroborate the assigned rate to Since Hardware; it is
further
ORDERED that, should the Department continue to rely upon the Customs Data, the
Department shall clarify all apparent inconsistencies in the data and conclusively establish the
cash-deposit rate for the relevant entries; it is further
ORDERED that the Department shall explain with specificity why the cash-deposit rates
for other market participants during the POR tend to corroborate the selected rate; it is further
ORDERED that, should the Department continue to rely upon the Customs Data, the
Department shall explain with specificity why the Customs Data represents a sufficient quantity
of exports of the subject merchandise to be relevant to Since Hardware; it is further
ORDERED that, should the Department continue to rely upon the Customs Data, the
Department shall explain with specificity the significance, if any, of the subject merchandise
being entered at rates below the selected rate; it is further
ORDERED that the Department may reopen the record to solicit any information it finds
to be necessary to make its determination; it is further
ORDERED that, if Commerce reopens the record, it may seek clarification and further
information from the U.S. Customs and Border Protection Agency regarding the Customs Data
and what the data represents; it is further
ORDERED that Commerce may select a new antidumping duty rate for Since Hardware
and corroborate that rate; and it is further
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Court No. 09-00123 	Page 26
ORDERED that the remand results shall be due on June 18, 2015; comments to the
remand results shall be due thirty (30) days following filing of the remand results; and replies to
such comments shall be due fifteen (15) days following filing of the comments.
Dated: 	February 18, 2015
New York, New York
/s/ Richard K. Eaton
Richard K. Eaton
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