Shijiazhuang Goodman Trading Co., Ltd. v. United States

Slip Op. 16-
UNITED STATES COURT OF INTERNATIONAL TRADE
Before: Timothy C. Stanceu, Chief Judge
Court No. 14-00101
OPINION AND ORDER
[Remanding an agency decision to rescind a “new shipper” review of an antidumping duty order]
Dated:
Robert T. Hume, Hume & Associates, LLC, of El Prado, NM, for plaintiff Shijiazhuang
Goodman Trading Co., Ltd.
Richard P. Schroeder, Trial Attorney, Commercial Litigation Branch, Civil Division,
U.S. Department of Justice, of Washington, D.C., for defendant United States. With him on the
brief were Joyce R. Branda, Acting Assistant Attorney General, Jeanne E. Davidson, Director,
and Reginald T. Blades, Jr., Assistant Director. Of counsel on the brief was Khalil N. Gharbieh,
Attorney, Office of Chief Counsel for Trade Enforcement and Compliance, U.S. Department of
Commerce.
Michael J. Coursey, Kelley Drye & Warren, LLP, of Washington D.C., argued for
defendant-intervenors Fresh Garlic Producers Association, Vessey and Company, Inc., The
Garlic Company, Christopher Ranch, L.L.C., and Valley Garlic. With him on the brief was John
M. Herrmann II.
SHIJIAZHUANG GOODMAN
TRADING CO., LTD.,
Plaintiff,
v.
UNITED STATES,
Defendant,
and
FRESH GARLIC PRODUCERS
ASSOCIATION, ET AL.,
Defendant-intervenors.
March 22, 2016
24
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Stanceu, Chief Judge: Plaintiff contests a decision by the International Trade
Administration, U.S. Department of Commerce (“Commerce” or the “Department”), to rescind
an administrative “new shipper” review of an antidumping duty order on fresh garlic from the
People’s Republic of China (“China” or the “PRC”). Plaintiff, Shijiazhuang Goodman Trading
Co., Ltd. (“Goodman”), a Chinese garlic exporter, requested the new shipper review, a procedure
that potentially allowed it to be assigned an individually-determined antidumping duty rate on its
garlic exports to the United States.
Before the court is plaintiff’s motion for judgment on the agency record, filed pursuant to
USCIT Rule 56.2. Concluding, inter alia, that Commerce failed to base its decision to rescind
the review on the record evidence considered as a whole, the court orders a remand and directs
Commerce to reconsider its decision.
I. B ACKGROUND
1. The Contested Decision
Contested in this litigation is Fresh Garlic from the People’s Republic of China: Final
Rescission of Antidumping Duty New Shipper Review of Shijiazhuang Goodman Trading Co.,
Ltd., 79 Fed. Reg. 22,098 (Int’l Trade Admin. Apr. 21, 2014) (“Rescission”). The published
decision incorporates by reference an “Issues and Decision Memorandum” that Commerce
described therein as addressing “all issues raised in the case and rebuttal briefs.” Id.; see
Decision Mem. for the Final Results in the Antidumping Duty New Shipper Rev. of Fresh Garlic
from the People’s Republic of China: Shijiazhuang Goodman Trading Co., Ltd., A-570-831,
APR 11-12, at 9 (Apr. 3, 2014) (Admin.R.Doc. No. 190), available at
http://enforcement.trade.gov/frn/summary/prc/2014-09015-1.pdf (last visited March 10, 2016)
(“Final Decision Mem.”).
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Commerce issued the antidumping duty order on fresh garlic from the PRC (the “Order”),
to which the new shipper review pertained, in 1994. Antidumping Duty Order: Fresh Garlic
from the People’s Republic of China, 59 Fed. Reg. 59,209 (Int’l Trade Admin. Nov. 16, 1994).
2. The Department’s New Shipper Review Proceeding
Goodman originally filed its request for a new shipper review on November 27, 2012 and
amended that request on December 6, 2012. Fresh Garlic from the People’s Republic of China –
Re-filing Request for Antidumping New Shipper Review of Shijiazhuang Goodman Trading Co.,
Ltd. 1 n.1 (Dec. 6, 2012) (Admin.R.Doc. No. 4) (“Request”). Goodman based its new shipper
review request on its having made three shipments to the United States of fresh garlic from
China beginning in July 2012. Id. at 1-2. The garlic was produced by, and obtained by
Goodman from, Jinxiang Zhongtian Business Co., Ltd., a Chinese garlic producer. Id. at 3.
On January 2, 2013, Commerce initiated the requested new shipper review according to
section 751(a)(2)(B) of the Tariff Act of 1930, 19 U.S.C. § 1675(a)(2)(B).1 Fresh Garlic from
the People’s Republic of China: Initiation of Antidumping Duty New Shipper Review;
2011-2012, 78 Fed. Reg. 88 (Jan. 2, 2013) (“Initiation”). The review covered the period of
November 1, 2011 through October 31, 2012. Rescission, 79 Fed. Reg. at 22,098.
On November 8, 2013, Commerce issued the preliminary results of the review
(“Preliminary Results”), in which it concluded, preliminarily, that Goodman met the
requirements for a new shipper review and was entitled to an individually-determined
antidumping duty rate. Fresh Garlic From the People’s Republic of China: Preliminary Results
of New Shipper Rev. of Shijiazhuang Goodman Trading Co., Ltd., 78 Fed. Reg. 67,112
1 Statutory citations herein are to the 2012 edition of the United States Code, and citations
to regulations are to the 2014 edition of the Code of Federal Regulations.
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(Nov. 8, 2013) (“Prelim. Results”) and accompanying Decision Mem. for the Preliminary Results
of Antidumping Duty New Shipper Review of Fresh Garlic from the People’s Republic of China:
Shijiazhuang Goodman Trading Co., Ltd., A-570-831, ARP 11-12, at 1-2 (Nov. 4, 2013)
(Admin.R.Doc. No. 141), available at http://enforcement.trade.gov/frn/summary/prc/2013-
26861-1.pdf (last visited Mar. 10, 2016) (“Prelim. Decision Mem.”). Departing from its normal
practice of expressing weighted-average dumping margins in ad valorem terms, Commerce
preliminarily determined a per-unit dumping margin for Goodman, which was $0.44 per kg.
Prelim. Results, 78 Fed. Reg. at 67,112.
3. The Rescission of the New Shipper Review
Reversing the position it had taken in the Preliminary Results, Commerce issued its
rescission of the new shipper review (“Rescission”) on April 21, 2014. Rescission, 79 Fed. Reg.
at 22,098.
In the Rescission, Commerce reached several decisions. It decided, first, that Goodman
had no bona fide U.S. sales during the period of review and on that basis concluded that the
ongoing new shipper review must be rescinded. Id., 79 Fed. Reg. at 22,098; Final Decision
Mem. 9. Second, Commerce decided that, because of the rescission of the new shipper review,
“we are not considering Goodman’s application for a separate rate in this segment of the
proceeding, nor are we reviewing the PRC entity.” Final Decision Mem. 9. Referring to the
eighteenth periodic administrative review of the Order, Commerce added that “[w]e note that
Goodman’s entries are under review in the concurrent administrative review . . . and that we are
considering Goodman’s entitlement to a separate rate in that review.” Id. Third, Commerce
determined that “Goodman remains part of the PRC-wide entity, and the PRC-wide entity cash
deposit rate is the appropriate cash deposit rate for Goodman.” Id. As a consequence, imports of
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Goodman’s subject merchandise have been subjected to a cash deposit requirement at the
PRC-wide rate of $4.71/kg. Rescission, 79 Fed. Reg. at 22,099.
In using the term “separate rate,” Commerce referred to a rate to be applied to exporters
and producers that did not receive an individually-determined rate but qualified for a rate
separate from the “PRC-wide” rate, which is the rate Commerce assigned to the exporters and
producers failing to establish independence from the government of the PRC.
4. Goodman’s Challenge to the Rescission of the New Shipper Review in the Court of
International Trade
Goodman brought this action on April 21, 2014. Summons, ECF No. 1; Compl.,
ECF No. 6. On May 21, 2014, the court granted a motion filed by the Fresh Garlic Producers
Association and its individual members, Christopher Ranch, L.L.C., The Garlic Company,
Valley Garlic, and Vessey and Company, Inc., to intervene on behalf of defendant. Consent
Mot. to Intervene, ECF No. 8; Order, ECF No. 12. Defendant-intervenors are domestic garlic
producers that participated in the new shipper review. See Consent Mot. to Intervene 2, ECF
No. 8.
Goodman moved for judgment on the agency record pursuant to USCIT Rule 56.2 on
August 22, 2014. Mot. of Pl. Shijiazhuang Goodman Trading Co, Ltd. for J. on the Agency R.,
ECF No. 22 (“Pl.’s Mot.”); Mem. in Supp. of Pl.’s Mot. for J. on the Agency R., ECF No. 22
(“Pl.’s Br.”). Defendant and defendant-intervenor filed briefs in opposition to plaintiff’s motion
and plaintiff filed a reply. Def.’s Mem. in Opp’n to Pl.’s R. 56.2 Mot. for J. Upon the Agency
Record (Nov. 6, 2014), ECF No. 31 (“Def.’s Opp’n”); Def.-intervenors’ Resp. in Opp’n to Pl.’s
Mot. for J. on the Agency R. (Nov. 6, 2014), ECF No. 33 (“Def.-intervenor’s Opp’n”); Pl.’s
Reply to the Responses of Def. & Def.-intervenors to Pl.’s R. 56.2 Mot. for J. upon the Agency
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R. (Dec. 10, 2014), ECF No. 37 (“Pl.’s Reply”). The court held oral argument on May 21, 2015.
ECF No. 43.
5. The Eighteenth Administrative Review of the Antidumping Duty Order
The period of review for the requested new shipper review, November 1, 2011 through
October 31, 2012, corresponds to the period of review for the eighteenth periodic administrative
review of the Order, the final results of which Commerce issued on June 30, 2014, 70 days after
the Rescission contested in this case. Fresh Garlic from the People’s Republic of China: Final
Results and Partial Rescission of the 18th Antidumping Duty Administrative Review; 2011-2012,
79 Fed. Reg. 36,721 (Int’l Trade Admin. June 30, 2014) (“Final Results”).
After stating in the Rescission that “we are considering Goodman’s entitlement to a
separate rate in that review,” Final Decision Mem. 9, Commerce, in the final results of the
eighteenth administrative review, rescinded the eighteenth administrative review as to Goodman
on the same ground on which it ruled in the Rescission, Final Results, 79 Fed. Reg. at 36,723
(“Because the sales subject to this review are the same sales found to be non-bona fide in the
new shipper review, the Department is rescinding this administrative review with respect to
Goodman.”).
In the eighteenth review, Commerce retained the PRC-wide rate of $4.71 per kg., the rate
it continued to apply to Goodman, and determined a rate of $1.82 per kg. for the separate rate
respondents in that review. Id. Before this Court, numerous parties, including Goodman,
contested the final results of the eighteenth review; that litigation is ongoing. See Fresh Garlic
Producers Ass’n v. United States, 39 CIT __, Slip Op. 15-133 (Nov. 30, 2015) (“Fresh Garlic
Producers”).
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II. DISCUSSION
A. Jurisdiction and Standard of Review
The court exercises jurisdiction according to section 201 of the Customs Courts Act of
1980, 28 U.S.C. § 1581(c), under which the court may review actions contesting the final results
of an administrative review of an antidumping duty order brought under section 516A of the
Tariff Act of 1930 (“Tariff Act”), 19 U.S.C. § 1516a(a)(2)(B)(iii). The court is required to hold
unlawful any finding, conclusion, or determination that is not supported by substantial evidence
on the record or that is otherwise not in accordance with law. See 19 U.S.C. § 1516a(b)(1)(B)(i).
Substantial evidence is “such relevant evidence as a reasonable mind might accept as adequate to
support a conclusion.” Consol. Edison Co. v. Nat’l Labor Relations Board, 305 U.S. 197, 229
(1938).
B. Goodman’s Claim and Supporting Grounds
Goodman claims that the decision Commerce reached in the Rescission was contrary to
law in several respects. It argues, first, that the Department’s rescinding the new shipper review
was contrary to law because substantial record evidence does not support the determination that
the sales upon which the new shipper review request was based were not bona fide sales.
Pl.’s Br. 20-38, 51. Second, Goodman argues that, even if that determination had been lawful,
Commerce still would have acted unlawfully in subjecting Goodman’s exports to the PRC-wide
rate of $4.71 per kg., an “adverse facts available” (“AFA”) rate reserved by statute for
uncooperative respondents. Id. at 38-40, 51-52. In support of this argument, Goodman asserts
that it “fully cooperated with Commerce and established it was independent of Chinese
government control” and that “[t]here was no evidence to the contrary.” Id. at 51. Third,
Goodman argues that the $4.71/kg. PRC-wide rate, which dates back to 1994 and corresponded
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to an ad valorem rate of 376.67% when it was converted to a specific duty in 2009, is outdated
by more than 20 years, imposed according to a previous version of the antidumping law,
grounded neither in commercial reality nor in record evidence, and unlawfully punitive. Id. at
40-50.
C. The Department Must Reconsider its Decision to Reject Goodman’s Sales
As a general matter, Commerce is required by Section 751(a) of the Tariff Act of 1930
(the “Act”) to conduct, “at least once during each 12-month period beginning on the anniversary
date of publication” of an antidumping duty order, a review of the order “if a request for such a
review has been received.” 19 U.S.C. § 1675(a)(1). In that review, Commerce is required to
determine “the normal value and export price (or constructed export price) of each entry of the
subject merchandise” and “the dumping margin for each such entry.” Id. § 1675(a)(2).
In § 1675(a)(2)(B)(i), the statute requires, further, that Commerce conduct an
administrative review upon the request of an exporter or producer of merchandise subject to an
antidumping duty order who did not export subject merchandise to the United States during the
period of the investigation resulting in that order and who is not affiliated with an exporter or
producer who exported subject merchandise during that period. The purpose of the
Department’s conducting such a “new shipper” review, or “NSR,” is “to establish an individual
weighted average dumping margin . . . for such exporter or producer.” Id.2
2 19 U.S.C. § 1675(a)(2)(B) provides, in pertinent part, as follows:
(B) Determination of antidumping . . . duties for new exporters and producers
(i) In general
If the administering authority [Commerce] receives a request from an exporter or
producer of the subject merchandise establishing that--
(continued . . .)
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It is undisputed that the two express requirements of § 1675(a)(2)(B)(i), i.e., that the
exporter/producer not have exported subject merchandise to the United States during the period
of investigation and not be affiliated with a party who did, have been satisfied in this case. In its
notice initiating the new shipper review, Commerce found “that Goodman’s request meets the
threshold requirements for initiation of an NSR.” Initiation, 78 Fed. Reg. at 89. The notice
informed the public that Goodman and the producer of the garlic exported by Goodman each had
certified that (1) it did not export fresh garlic for sale to the United States during the period of
investigation; and (2) since initiation of the investigation it had not been affiliated with any
exporter or producer who did so. Id. Throughout the new shipper review, Commerce did not
reach any findings contradicting these certifications.
In its regulations, Commerce imposes a third requirement for initiation of a new shipper
review: the exporter or producer must have “exported, or sold for export, subject merchandise to
the United States.” 19 C.F.R. § 351.214(b)(1). Commerce determined that Goodman met this
requirement as well. In the initiation notice, Commerce stated that “Goodman submitted
documentation establishing the following: (1) The date on which fresh garlic was first entered;
(2) the volume of that and subsequent shipments; and (3) the date of the first sale to an
unaffiliated customer in the United States.” Initiation, 78 Fed. Reg. at 89. Commerce added that
it had “queried the database of U.S. Customs and Border Protection (CBP) in an attempt to
(I) such exporter or producer did not export the merchandise that was the subject
of an antidumping duty . . . order to the United States . . . during the period of
investigation, and
(II) such exporter or producer is not affiliated (within the meaning of
section 1677(33) of this title) with any exporter or producer who exported the
subject merchandise to the United States . . . during that period, the administering
authority shall conduct a review under this subsection to establish an individual
weighted average dumping margin . . . for such exporter or producer.
(. . . continued)
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confirm that shipments reported by Goodman had entered the United States for consumption and
that liquidation had been properly suspended for antidumping duties” and that this examined
information “was consistent with that provided by Goodman in its request.” Id. (footnote
omitted). Commerce treated Goodman’s information on exports of subject merchandise as
sufficient, at least, to “meet[ ] the threshold requirements for initiation of an NSR.” Id.
The regulations apply an additional requirement where there is, as here, an “antidumping
proceeding involving imports from a nonmarket economy country.” 19 C.F.R.
§ 351.214(b)(2)(iii)(B). In such a proceeding, the exporter or producer must provide “a
certification that the export activities of such exporter or producer are not controlled by the
central government.” Id. The initiation notice announced that Commerce would “issue a
questionnaire to Goodman that includes a separate rate section” and that the new shipper review
“will proceed if the response provides sufficient indication that the exporter and producer are not
subject to either de jure or de facto government control with respect to their export of fresh
garlic.” Initiation, 78 Fed. Reg. at 89. Here also, Commerce found that Goodman met the
regulatory requirement. For the Preliminary Results, Commerce preliminarily found that
Goodman qualified for a separate rate based on its de jure and de facto independence from
control of the government of the PRC, Prelim. Decision Mem. 5, a finding Commerce did not
rescind or alter in the remainder of the new shipper review.
The Commerce regulations further provide, however, that “[t]he Secretary may rescind a
new shipper review” if Commerce concludes that two conditions have been met. 19 C.F.R.
§ 351.214(f)(2). Of the two conditions, the one at issue in this case is that “there has not been an
entry and sale to an unaffiliated customer in the United States of subject merchandise.” Id.
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§ 351.214(f)(2)(i).3 It is not contested that entries of subject merchandise exported by Goodman
occurred during the POR and that the subject merchandise involved three transactions between
Goodman and an unrelated U.S. customer. Goodman claims, essentially, that Commerce
unlawfully rescinded the new shipper review according to a finding that these transactions did
not qualify as “sales” within the meaning of § 351.214(f)(2)(i).
In applying § 351.214(f)(2)(i) in this and other new shipper review proceedings,
Commerce has considered whether a reported sale is “commercially reasonable, and therefore
bona fide.” Prelim. Decision Mem. 3. For the Preliminary Results, Commerce stated that it
“considers, inter alia, such factors as: (1) the timing of the sale; (2) the price and quantity; (3) the
expenses arising from the transaction; (4) whether the goods were resold at a profit; and
(5) whether the transaction was made on an arm’s-length basis.” Id. (footnote omitted). See also
Bona Fide Nature of the Sales in the Antidumping Duty New Shipper Review of Fresh Garlic
from the People’s Republic of China (PRC): Shijiazhuang Goodman Trading Co., Ltd. 2
(Nov. 4, 2013), ECF No. 24-2 (footnotes omitted) (“Bona Fide Analysis Mem.”).
Four entries of merchandise exported by Goodman occurred during the POR, in July,
September, and October of 2012, stemming from Goodman’s three sales of subject merchandise
for export to the United States.4 See Request 1-2; Pl.’s Br. 9. Certain facts pertaining to the
3 The second condition is that “[a]n expansion of the normal period of review to include
an entry and sale to an unaffiliated customer in the United States of subject merchandise would
be likely to prevent the completion of the review within the time limits set forth in paragraph (i)
of this section.” 19 C.F.R. § 351.214(f)(2)(ii). Goodman’s claim does not involve this second
condition.
4 The garlic that was the subject of Goodman’s third sale resulted in two entries into the
United States; each of the first two sales was associated with a single entry. See Request for New
Shipper Review 1, App. 6.
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three sales are not at issue in this litigation. All three sales were of garlic produced by Jinxiang
Zhongtian Business Co., Ltd., a Chinese garlic producer unrelated to Goodman, and were made
to the same buyer in the United States. See Bona Fide Analysis Mem. 3. The U.S. buyer, which
was the importer on the four entries associated with the three sales, was an established reseller of
garlic as well as other products. Pl.’s Br. 18. The buyer and Goodman, who are not related
parties, had a business relationship preceding the POR of the new shipper review, the buyer
previously having purchased from Goodman subject garlic and another food product. Bona Fide
Analysis Mem. 3. Commerce found, specifically, that the business relationship between
Goodman and the buyer began in November 2010 and that the two parties had “met in Canton at
a trade fair.” Id.
In the Preliminary Results, Commerce preliminarily determined that Goodman’s sales
were bona fide. See Prelim. Results, 78 Fed. Reg. at 67,112. Commerce concluded that each of
its five factors supported a finding that the sales were bona fide, as follows:
The Department preliminarily finds that the sale of subject merchandise made by
Goodman was made on a bona fide basis. Specifically, the Department
preliminarily finds that: (1) the timing of the sale by itself does not indicate that
the sale might not be bona fide; (2) record evidence indicates that the prices and
quantities of the sales are commercially reasonable and not atypical of normal
business practices of fresh garlic exporters; (3) Goodman did not incur any
extraordinary expenses arising from the transaction; (4) the goods were resold by
Goodman’s unaffiliated U.S. customer for a profit; and (5) the new shipper sales
were made between Goodman and its unaffiliated U.S. customer at arm’s length.
Therefore, the Department has preliminarily found that Goodman’s sales of
subject merchandise to the United States were bona fide for the purposes of this
NSR.
Prelim. Decision Mem. 3 (footnote omitted).
In the Rescission, Commerce reversed its earlier determination, stating that “[d]ue to the
totality of the circumstances, including price, quantity, and concerns regarding the relationship
with another garlic exporter located in the PRC, as detailed in the Goodman Final Analysis
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Memorandum, the Department finds that Goodman’s sales are not bona fide.” Rescission,
79 Fed. Reg. at 22,098 (citing New Shipper Review of the Antidumping Duty Order on Fresh
Garlic from the People’s Republic of China: Final Analysis of Shijiazhuang Goodman Trading
Co., Ltd. (Apr. 3, 2014) (“Final Analysis Mem.”)). In the Decision Memorandum, Commerce
described the test it applied in reaching its determination that Goodman’s sales were not bona
fide. Commerce stated that it “employs a totality of the circumstances test” under which it
“looks to whether the transaction is ‘commercially unreasonable’ or ‘atypical of normal business
practices.’” Final Decision Mem. 4 (footnote omitted).
In support of its conclusion that none of Goodman’s sales was bona fide, Commerce
found that the sales were “not reflective of normal business practices” and not “indicative of
future selling practices.” Id. Specifically, Commerce reversed its earlier finding that “record
evidence indicates that the prices and quantities of the sales are commercially reasonable and not
atypical of normal business practices of fresh garlic exporters.” Prelim. Decision Mem. 3. In the
Final Decision Memorandum, Commerce stated that “we find the average unit value and the
quantity of Goodman’s sales to be atypical and, thus, commercially unreasonable,” adding that
“[i]n particular, we find that Goodman’s entry prices to be [sic] exceptionally high in comparison
to other entries of garlic during the POR.” Final Decision Mem. 4. Further, Commerce stated
that “we find that its entry quantities to be [sic] lower than the most other [sic] POR entries of
garlic during the POR.” Id. Referring to its analysis of price and quantity, Commerce stated in
the Final Analysis Memorandum that “[o]n this basis, we find that the price and quantity of
Goodman’s new shipper entries are aberrational and are therefore, indicate that [sic] the sales
were not bona fide.” Final Analysis Mem. 8.
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Concerning the four factors in its five-factor test other than the “prices and quantities”
factor, Commerce stated in the Final Analysis Memorandum that “we adhere to our preliminary
results.” Id. at 9. In the Preliminary Results, Commerce had found that the timing of the sales,
by itself, did not indicate that the sales were not bona fide and that there were no extraordinary
expenses. Bona Fide Analysis Mem. 4, 6. For the Preliminary Results, Commerce also found
that “[a]ll information indicates that the transactions were on an arm’s length basis” and that
“[n]o information on the record supports a conclusion otherwise.” Id. at 7. In the Final Analysis
Memorandum, Commerce stated that “it was unclear whether the U.S. customer resold the garlic
at a profit.” Final Analysis Mem. 9. Commerce had reached inconsistent conclusions in the
preliminary phase of the new shipper review, finding on November 4, 2013 that it was unclear
whether the resales were made at a profit, Bona Fide Analysis Mem. 7, and also finding, in a
document issued the same date, that the goods were resold at a profit, Prelim. Decision Mem. 3.5
Commerce offered one additional reason in support of its conclusion that Goodman’s
sales were not bona fide. Commerce stated in the Final Analysis Memorandum that it “inferred”
that a person employed by Goodman during the POR, whom Commerce identified as “Ms. Gao,”
conducted activities on behalf of Goodman “in making the relevant shipments to the United
States . . . ” that were not conducted solely, if at all, in “Goodman’s interests.” Final Analysis
Mem. 8.
5 Plaintiff argues there is record evidence that the importer sold all of Goodman’s garlic
at a profit. See Pl.’s Br. 21. However, the chart showing the resale prices of Goodman’s
importer that plaintiff attached to its brief in support of this argument differs from the chart
Goodman submitted as an exhibit to its 4th Supplemental Questionnaire Response. Compare
Pl.’s Br. App. 18, with Goodman’s 4th Supplemental Questionnaire Response dated
September 30, 2013 at Ex. 3 (Sept. 30, 2013), ECF No. 24-9. The chart Goodman placed on the
record during the administrative proceeding lacks units for price and quantity and thus does not
permit derivation of a per-kilogram unit price for each of the importer’s sales.
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During the administrative proceeding, defendant-intervenors argued that Goodman did
not qualify as a new shipper, alleging an affiliation between Goodman and Hebei Golden Bird
Trading Co., Ltd. (“Golden Bird”), a mandatory respondent that was a party to prior
administrative reviews, through a common sales person, Ms. Gao. See id. at 1. The Department
found that there was “insufficient information on the record to find that Goodman and Golden
Bird are affiliated.” Id. at 4. The Department also found that “there is inconclusive evidence
that Ms. Gao was employed during the POR of this review by Golden Bird,” when she was
employed by Goodman, and that “[e]ven if the Department were to find that Ms. Gao was
employed by Golden Bird during the relevant time period, there is nothing on the record
indicating that she exercised any control over Golden Bird” within the meaning of
section 771(33)(F) of the Tariff Act, 19 U.S.C. § 1677(33)(F)6 and 19 C.F.R. § 351.102(b)(3).7
Id. Nevertheless, Commerce concluded in the Decision Memorandum that “the Department has
6 19 U.S.C. § 1677(33)(F) provides as follows: “[T]he following persons shall be
considered to be “affiliated” or “affiliated persons”: . . Two or more persons directly or indirectly
controlling, controlled by, or under common control with, any person.”
7 19 C.F.R. § 351.102(b)(3) provides as follows:
Affiliated persons; affiliated parties. “Affiliated persons” and “affiliated parties”
have the same meaning as in section 771(33) of the Act. In determining whether
control over another person exists, within the meaning of section 771(33) of the
Act, the Secretary will consider the following factors, among others: Corporate or
family groupings; franchise or joint venture agreements; debt financing; and close
supplier relationships. The Secretary will not find that control exists on the basis
of these factors unless the relationship has the potential to impact decisions
concerning the production, pricing, or cost of the subject merchandise or foreign
like product. The Secretary will consider the temporal aspect of a relationship in
determining whether control exists; normally, temporary circumstances will not
suffice as evidence of control.
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Court No. 14-00101 	Page 16
concerns with regards to the reliability of responses provide [sic] by Goodman with regards to
Ms. Gao’s employment at Golden Bird.” Final Decision Mem. 4.
1. The Department’s Authority to Rescind a New Shipper Review upon Rejecting Sales
Transactions Is Limited to Exceptional Circumstances
The regulation by which Commerce rescinded the new shipper review makes no mention
of a “bona fide” requirement. In pertinent part, the regulation provides simply that Commerce
may rescind a review if “there has not been an entry and sale to an unaffiliated customer in the
United States of subject merchandise.” 19 C.F.R. § 351.214(f)(2)(i). In effect, Commerce
interprets the term “sale” in § 351.214(f)(2)(i) to mean that a transaction it determines not to be a
bona fide sale is, for purposes of the regulation, not a sale at all.
This Court has upheld the Department’s applying the bona fide test in the context of a
new shipper review but in doing so has cautioned that “Commerce’s authority to exclude sales as
not bona fide is limited to ‘exceptional circumstances when those sales are unrepresentative and
extremely distortive.’” Hebei New Donghua Amino Acid Co., Ltd. v. United States, 29 CIT 603,
610, 374 F. Supp. 2d 1333, 1339 (2005) (quoting Am. Silicon Techs. v. United States,
24 CIT 612, 616, 110 F. Supp. 2d 992, 995 (2000) (in turn quoting FAG U.K. Ltd. v. United
States, 20 CIT 1277, 1281-82, 945 F. Supp. 260, 265 (1996))). The statement in Hebei New
Donghua Amino Acid finding an implied “exceptional circumstances” limitation on the
Department’s authority is well founded. The regulation itself, by stating without qualification
that rescission requires an absence of a “sale,” implies such a limitation. Further support is
found in the statutory directive that Commerce conduct a review of an exporter that did not
export subject merchandise during the period of investigation, and was not affiliated with an
exporter or producer that did, for the purpose of establishing an individual weighted average
dumping margin. See 19 U.S.C. § 1675(a)(2)(B)(i). In order to calculate an individual dumping
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Court No. 14-00101 	Page 17
margin for an exporter or producer, there must be a sale by which such a margin may be
calculated, but where a sale of subject merchandise for export actually has occurred, the plain
meaning of the statute and the regulation support the conclusion that the Department’s rejection
of that sale must be the exception, not the ordinary circumstance.
2. In Finding that Goodman’s Sales Prices Were “Aberrational” and Not “Commercially
Reasonable,” Commerce Did Not Analyze All Relevant Record Evidence
Goodman does not challenge the Department’s authority to impose its bona fide test
when considering whether there has been a sale. Instead, it argues that Commerce, in applying
that test and rescinding the review, reached a decision that is unsupported by substantial
evidence on the administrative record and otherwise not in accordance with law. Pl.’s Br. 20-22,
24-38.
A court reviewing an agency’s factual determination must consider whether that
determination is based upon the record evidence considered as a whole. Universal Camera
Corp. v. Nat’l Labor Rev. Bd., 340 U.S. 474, 488 (1951) (“The substantiality of evidence must
take into account whatever in the record fairly detracts from its weight.”); Sango Int’l, L.P. v.
United States, 484 F.3d 1371, 1378 (Fed. Cir. 2007) (“The substantial evidence inquiry takes
into account both the evidence that supports and detracts from the conclusion reached.”) (citing
Nippon Steel Corp. v. United States, 458 F.3d 1345, 1352 (Fed. Cir. 2006)). In deciding whether
to disqualify Goodman’s transactions from serving as “sales” within the meaning of
§ 351.214(f)(2)(i), Commerce was required to consider the evidence on the record as a whole,
including record evidence that fairly detracted from its conclusion. In this case, some of the
record evidence did not support a finding that Goodman’s transactions were “exceptional” or
commercially unreasonable. Instead, this evidence detracted from such a finding by indicating
that the transactions occurred under ordinary commercial circumstances. Because the analysis
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presented in the Rescission and the incorporated decision documents does not address all of this
evidence, the court cannot conclude that Commerce based its ultimate decision to rescind the
review on the record considered as a whole. Moreover, as discussed later in this Opinion and
Order, one of the findings upon which Commerce reached that ultimate decision is not supported
by substantial evidence on that record.
Commerce found that the prices at which Goodman sold subject merchandise during the
POR were “aberrational” and not “commercially reasonable” by comparing the average unit
values (“AUV”) of the subject merchandise on Goodman’s four entries, and a single weighted
AUV calculated from these values, with a weighted average unit value obtained from Customs
and Border Protection (“Customs”) data on U.S. imports of garlic from China for the one-year
POR. Final Analysis Mem. 7. Commerce found that individual AUVs of the merchandise on
Goodman’s four entries and the weighted AUV derived from these entry data were “significantly
higher” than the one-year AUV derived from the Customs data and that this fact “indicates that
these entries were not typical of the sales Goodman will make in the future.” Id. (footnote
omitted).8 In basing its findings solely on a simple comparison of Goodman’s prices with the
one-year AUV from the Customs data, Commerce failed to analyze certain record data that were
relevant to, and indeed probative of, the issue of whether Goodman’s prices were aberrational or
commercially unreasonable.
8 Commerce reported that “[t]he average unit value (AUV) for Goodman’s four entries
during the POR were $2.67/kg., $2.83/kg., $2.83/kg., and $3.16/kg.” and that “[t]he AUV for all
whole garlic entries during the POR was $1.58/kg.[ ], whereas the weighted AUV of Goodman’s
four entries during the POR was $2.85/kg.” Final Analysis Mem. 7 (brackets enclosing public
information omitted).
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Court No. 14-00101 	Page 19
The Department’s analysis, for example, does not address the record data showing the
prices at which Goodman purchased the subject garlic from the unrelated Chinese producer.
These purchase prices are not comparable to the general AUV Commerce obtained from the
Customs data.9 Further, these purchase prices, when compared to Goodman’s resale prices,
would not support a finding that Goodman’s three sales during the POR—which Commerce
itself found to have been made at arm’s length—were extraordinary, rather than ordinary,
commercial resale transactions.10
In basing its comparison solely on a POR-wide average unit value for all imports of
whole garlic from China, Commerce also failed to analyze record data showing that a significant
increase in garlic prices occurred during the POR. The Customs import data upon which
Commerce relied in finding that Goodman’s garlic prices were aberrational also show that the
AUV of garlic imports from China was markedly higher during the last eight months of the
period of review than it had been during the first four months of that twelve-month period and
that the AUV in the last five months, when Goodman’s sales and entries occurred, remained at
that higher level.11 See Petitioners’ Comments on Goodman’s Second Supplemental
9 Record data show that the weighted average unit value for Goodman’s purchases of the
garlic from the unrelated producer was $2.52/kg., or nearly a dollar per kilogram higher than the
AUV for all Chinese whole garlic imports during the POR. See Goodman’s Supplemental
Questionnaire Response dated May 27, 2013 at Ex. 7, “Copies of Purchase Contract between
Goodman and Zhongtian”; Goodman’s Rebuttal Case Brief dated January 21, 2014 at App. 1
(Jan. 21, 2014) (Admin.R.Doc. No. 187).
10 The data show a weighted-average mark-up of $0.33/kg. ($2.85-$2.52), or 13%. See
Goodman’s Rebuttal Case Brief dated January 21, 2014 at App. 1 (Jan. 21, 2014)
(Admin.R.Doc. No. 187); Goodman’s Case Brief dated January 13, 2014 at Apps. 1 & 2
(Jan. 13, 2014) (Admin.R.Doc. No. 184).
11 The AUV shown in the Customs data for June 2012, the month of Goodman’s first of
three sales, was $2.06/kg. Goodman’s per-kilogram prices on that sale, by bulb size, were $2.20
(continued . . .)
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Court No. 14-00101 	Page 20
Questionnaire, dated August 19, 2013 at Attach. 2 (Aug. 19, 2013) (Admin.R.Doc. No. 128).
The record also shows that Goodman explained to Commerce during the administrative
proceeding that it had renegotiated one of its contracts in response to the market trend. See Pl.’s
Br. 14 (“Due to changes in the market situation in China and noted in the Supplementary
Contract, the parties agreed to changes in prices and sizes.”); see also id. at 17-18 (citing
Goodman’s 3rd Supplemental Questionnaire Response, dated August 29, 2013 at Attachs. 2-3
(Aug. 29, 2013) (Admin.R.Doc. No. 52)). In concluding that Goodman’s prices were
“aberrational” compared to the AUV for the entire POR, and therefore commercially
unreasonable, without considering the AUV prevailing at the time of sale, Commerce failed to
consider a commercially significant aspect of the comparison it was attempting to make.12
for 5.5 cm garlic, $2.57 for 6 cm garlic, and $2.86 for 6.5 cm garlic. For August 2012, the month
of Goodman’s second sale, the Customs AUV was $2.17/kg. Goodman’s per-kilogram prices on
that sale, by bulb size, were $1.91 for 5 cm garlic and $2.72 for 6 cm garlic. For September
2012, the month of the third sale, the Customs AUV was $2.09/kg. Goodman’s per-kilogram
prices on the third sale, by bulb size, were $2.86 for 6.5 cm garlic and $3.16 for 7 cm garlic. See
Goodman’s Rebuttal Case Brief dated January 21, 2014 at App. 1 (Jan. 21, 2014)
(Admin.R.Doc. No. 187); Goodman’s Case Brief dated January 13, 2014 at App. 1
(Jan. 13, 2014) (Admin.R.Doc. No. 184); Pl.’s Br. App. 20A, U.S. Import Statistics Showing
Quantity and Value of Garlic Imports from China in HTS Category 0730.20 During 2011 and
2012 (Aug. 27, 2014), ECF No. 24-12.
12 Defendant and defendant-intervenor argue that the court should refuse, on grounds of
failure to exhaust administrative remedies, to hear Goodman’s argument that garlic prices
fluctuated during the POR, contending that Goodman failed to raise this argument during the
new shipper review. Def.’s Opp’n 15-16; Def.-intervenor’s Opp’n 24-25. The court rejects this
argument. Given the Department’s preliminary finding that Goodman’s prices were not
aberrational, the court will not require Goodman to have anticipated every possible ground by
which the Department might reverse its decision as to the bona fides of its sales. Moreover, the
court notes that Goodman referenced fluctuating prices in the Chinese garlic market in its
questionnaire responses in the context of the two contracts it renegotiated due to rising garlic
prices. See Goodman’s 3 rd Supplemental Questionnaire Response dated August 29, 2013 at
Attach. 3 (Aug. 29, 2013) (Admin.R.Doc. No. 52) (“As with agricultural products generally,
prices fluctuate.”); see also Petitioners’ Comments on Goodman’s Second Supplemental
(. . . continued)
(continued . . .)
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Court No. 14-00101 	Page 21
Commerce also did not address an apparent anomaly presented by Customs entry data
that itself appears to involve aberrational values for garlic. The data in question are reported for
one of the exporters and appear to have distorted the weighted average unit value derived from
those data.13
Finally, Commerce did not address the possibility that its comparison of Goodman’s
prices with the weighted average unit value from the Customs data could have been affected by
price variation due to bulb size.14 The record evidence shows that almost all of Goodman’s POR
sales consisted of garlic with a bulb size of 6.0-7.0 cm. in diameter. See Pl.’s Br. 14-16;
Goodman’s Supplemental Questionnaire Response dated May 27, 2013 at Ex. 7,“Copies of
Purchase Contract between Goodman and Zhongtian” (May 27, 2013) (Admin.R.Doc. No. 55).
The record does not contain information indicating what bulb sizes characterized the sales in the
Customs data, so it cannot be presumed that the Customs data, in that respect, are a good
Questionnaire dated August 19, 2013 at Attach. 2 (Aug. 19, 2013) (Admin.R.Doc. No. 128)
(submitting Customs data on the record showing trends in AUV of U.S. imports of garlic from
China during the period of review).
13 The AUV shown in the Customs data for imports of garlic exported by [
], which is approximately [
] of the weighted-average unit value for all POR exports of Chinese garlic. Pl.’s
Br. App. 19, Charts Showing the CBP Database Exporter (Aug. 27, 2014), ECF No. 24-11. The
values for this exporter are shown as ranging from [ 	] Id. Excluding these data
from the AUV for all POR exports from China would result in an increase in the general
weighted-average unit value from $1.58/kg. to [ 	] Id.
14 Commerce recognized that “specificity is of particular importance when selecting a
surrogate value for raw garlic bulb inputs” and that “[d]uring the course of past reviews, the
Department has concluded that size and quality have significant influence on the value of the raw
garlic bulb inputs.” New Shipper Review of the Antidumping Duty Order on Fresh Garlic from
the People’s Republic of China: Surrogate Values for the Preliminary Results, A-570-831,
ARP11-12, at 4 (Nov. 1, 2013) (Admin.R.Doc. No. 143) (footnote omitted); see also Pl.’s Br. 29.
(. . . continued)
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Court No. 14-00101 	Page 22
comparison with Goodman’s price data. The record, however, does contain evidence that
Goodman’s garlic was viewed in the marketplace as being of relatively large bulb size.15 The
record also contains data showing that, on the three sales during the POR, Goodman’s prices for
garlic in the 6 and 7 cm. sizes were significantly higher than its prices for other garlic sizes. See
Goodman’s Rebuttal Case Brief dated January 21, 2014 at App. 1 (Jan. 21, 2014)
(Admin.R.Doc. No. 187); Goodman’s Case Brief dated January 13, 2014 at App. 1
(Jan. 13, 2014) (Admin.R.Doc. No. 184). Goodman’s purchase prices also showed that the per-
kilogram prices increased with bulb size. See Goodman’s Case Brief dated January 13, 2014
at App. 2 (Jan. 13, 2014) (Admin.R.Doc. No. 184). Because bulb size is a merchandise
characteristic shown by record data to be commercially important, it must inform any finding as
to whether Goodman’s sales were “aberrational” or not “commercially reasonable.”
In conclusion, the analysis by which Commerce found that Goodman’s prices were
aberrational and not commercially reasonable failed to consider all relevant and probative record
evidence. When viewed in the context of the evidence viewed as a whole, the POR-wide
weighted average unit value for all Chinese garlic exports upon which Commerce based its
finding could provide only a superficial basis for comparison.
3. The Finding that the Quantities of Goodman’s Sales Were “Aberrational” Is Not Supported
by Substantial Evidence on the Record
In rejecting Goodman’s sales, Commerce cited the Customs import data on Chinese
garlic entries showing that the average quantity on Goodman’s entries during the POR was less
than half the average quantity for all entries of Chinese garlic during the period of review, which
15 Goodman’s purchaser “wanted different specifications of fresh garlic, especially the
large garlic bulbs, and required Goodman to ensure the quality.” Goodman’s 4 th Supplemental
Questionnaire Response dated Sept. 30, 2013, Appendix IX – Importer Specific 5
(Sept. 30, 2013) (Admin.R.Doc. No. 135).
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Court No. 14-00101 	Page 23
it described as the “normal entry size.” Final Analysis Mem. 7. Commerce acknowledged that
“the quantity of a sale may not be sufficient, by itself, to warrant a finding that a transaction is
not bona fide,” id. at 7, but nevertheless relied on its average quantity comparison to support its
rejection of the sales.
Substantial evidence is not available on this record to support a finding that the quantities
of Goodman’s sales were, in the Department’s words, “aberrational” and not “commercially
reasonable.” The quantities on the four entries, while smaller than the average shown in the
Customs import data, cannot be described truthfully as commercially insignificant or
exceptional, whether considered individually or collectively. See Pl.’s Br. App. 19, Charts
Showing the CBP Database Exporter (Aug. 27, 2014), ECF No. 24-11. Nor were Goodman’s
quantities “aberrational,” as Commerce characterized them to be. The Customs import data
shows that the aggregate quantity and value of Goodman’s POR shipments were larger than
those of several other Chinese exporters. Also, in judging the quantities on the individual entries
of Goodman’s subject merchandise to be unacceptable because they are less than half of what
Commerce considered to be the “normal entry size,” Commerce unfavorably compared
Goodman’s quantities with a concept, i.e., “normal entry size,” that it failed to ground in record
evidence. For these reasons, the court must reject as unsupported by substantial evidence the
Department’s finding that the quantities on entries of Goodman’s merchandise during the POR
“are aberrational and are therefore [sic], indicate that the sales were not bona fide.” Final
Analysis Mem. 8.
4. The Department’s Implied Findings and Inference as to Ms. Gao Cannot Be Sustained on
This Record
Commerce “inferred” that “Ms. Gao’s activities on behalf of Goodman in making the
relevant shipments to the United States . . . .” were not conducted solely, if at all, in “Goodman’s
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Court No. 14-00101 	Page 24
interests.” Final Analysis Mem. 8. Commerce also expressed in the Decision Memorandum that
“the Department has concerns with regards to the reliability of responses provide [sic] by
Goodman with regards to Ms. Gao’s employment at Golden Bird.” Final Decision Mem. 4.
Commerce relied on its inference and “concern” in concluding that Goodman’s sales were not
“commercially reasonable, and therefore bona fide.” Id. Goodman characterizes the
Department’s reliance on Ms. Gao’s role as “irrelevant,” Pl.’s Br. iii, or “tangential,” id. at 38, to
the issue of whether Goodman’s sales were bona fide.
To be sustained upon judicial review, a determination must be based on findings
supported by substantial record evidence. Moreover, there must be reasoning by which a court
may ascertain the connection between the “facts found and the choice made.” See Burlington
Truck Lines v. United States, 371 U.S. 156, 168 (1962). Commerce expressed what it
characterizes as an inference that Goodman’s POR sales were not entirely, if at all, conducted in
Goodman’s interest, but an inference is not a finding, and this particular inference is vague and
conclusory. An agency may draw a reasonable inference so long as it is drawn from record
evidence or a finding based on record evidence, but this inference is drawn from neither. The
Department’s expressed “concern” about the reliability of Goodman’s questionnaire responses is
also vague, and Commerce fails to link its concern to specific information Goodman provided
during the new shipper review that Commerce deems unreliable or that could be shown to be
relevant to the question of whether the prices and quantities in Goodman’s sales were
aberrational.16
16 Commerce based its inference and concern on certain conclusions it draws from
a noncompete agreement which the court is unable to find on the record of this proceeding. The
concern and inference as to Ms. Gao are grounded in the subject matter of Goodman’s response
to a question in a Commerce questionnaire. See Goodman’s Supplemental Questionnaire
(continued . . .)
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Court No. 14-00101 	Page 25
5. On Remand, Commerce Must Reconsider Its Rescission of the Review and Base a
Redetermination on the Record as a Whole
To summarize the discussion above, Commerce rescinded the new shipper review
because it found that the prices and quantities in the sales were not commercially reasonable and
therefore not bona fide because they were aberrational, not reflective of normal business
practices, and not indicative of future selling practices. Also, Commerce inferred that
Goodman’s employee, Ms. Gao, did not act solely or at all in Goodman’s interests and expressed
concerns regarding Goodman’s questionnaire responses regarding Ms. Gao’s employment with
Golden Bird.
The analysis by which Commerce found that the prices were not commercially
reasonable did not address record evidence on the specifics of Goodman’s purchase of the
merchandise from its unrelated supplier and its sale of that same merchandise to its unrelated
customer, on the increase in market prices during the latter months of the POR, on an apparent
distortion caused by aberrational values for a specific exporter shown in the Customs data, and
on the relationship of price to garlic bulb size. The finding that the quantities were aberrational
and commercially unreasonable lacks evidentiary support in the record. Finally, the court cannot
sustain the Department’s analysis as to Ms. Gao. Commerce made no express findings and
stated only an inference and a concern with respect to the role of Ms. Gao in Goodman’s sales
and failed to link its inference and concern to specific information provided by Goodman.
Even though describing its result as based on a totality of the circumstances, Commerce
has not based its ultimate decision to rescind the new shipper review on a consideration of the
Response dated May 27, 2013 at Ex. 2 (May 27, 2013) (Admin.R.Doc. No. 53). Commerce
draws an inference from the documentation to which that questionnaire response refers.
(. . . continued)
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Court No. 14-00101 	Page 26
record evidence as a whole. Commerce itself found that Goodman’s sales met three of the five
criteria in its bona fides test. Specifically, Commerce found that the timing of the sales did not
indicate that the sales were not bona fide (although, as discussed above, it failed to consider
record evidence showing that the timing of the sales was important to a consideration of price).
It also found that Goodman’s expenses on the three sales were not extraordinary, and, most
significantly, that all information indicated that the transactions were conducted on an arms-
length basis. Certain other, uncontested, facts support a finding that the transactions between
Goodman and its U.S. customer were made in ordinary, rather than exceptional, commercial
circumstances but received little if any attention in the Department’s analysis. For example, the
record shows that the U.S. customer was an established reseller and that it previously had
purchased garlic, and another food product, from Goodman.17
In summary, the flaws the court has identified require it to order Commerce to reconsider
its decision to reject the sales Goodman made during the POR. This reconsideration must be
based on a full and fair consideration of the relevant evidence on the record viewed as a whole.
D. Commerce Gave Only an Invalid Reason for its Decision to Refuse to Assign Goodman a
Rate that Was Not Based on an Adverse Inference
In the Rescission, Commerce did not assign Goodman a “separate rate,” i.e., an “all
others” rate that it assigns to respondents that have demonstrating independence from the
government of the PRC but that do not qualify for an individually-determined rate. Challenging
this decision, Goodman argues before the court that the $4.71 per kilogram PRC-wide rate was
selected as the “adverse inference rate” that is authorized in the antidumping law only if the party
affected by it failed to cooperate by not acting to the best of its ability. Pl.’s Br. 39 (citing
17 See Goodman’s 4th Supplemental Questionnaire Response dated Sept. 30, 2013,
Appendix IX – Importer Specific 5 (Sept. 30, 2013) (Admin.R.Doc. No. 135).
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Court No. 14-00101 	Page 27
19 U.S.C. § 1677e(b)). Goodman submits that Commerce “failed to establish on the record that
Goodman met the adverse inferences conditions.” Id. at 40. In subjecting Goodman to the PRC-
wide rate, Commerce made no finding under 19 U.S.C. § 1677e(b) that Goodman failed to
cooperate in responding to its requests for information.
Commerce gave four reasons for its decision. Commerce stated that “we are considering
Goodman’s entitlement to a separate rate” in the eighteenth periodic review of the Order, Final
Decision Mem. 9, for which the period of review is the same as the POR for the new shipper
review. In deferring any decision on the issue, Commerce explained that it would “evaluate the
information placed on the record of the 18th administrative review to determine whether
Goodman is eligible for separate rate status in that segment of the proceeding.” Id. at 8. Second,
Commerce reasoned that “[b]ecause we are rescinding this NSR, we are not further considering
whether Goodman is entitled to a separate rate, and this issue is moot.” Id. Third, Commerce
pointed out that “Goodman has cited no case in which we rescinded an NSR and then granted a
separate rate to the company covered by the rescission.” Id. Finally, Commerce reasoned that
upon its rescission of the new shipper review “Goodman remains part of the PRC-wide entity,
and the PRC-wide entity cash deposit rate is the appropriate cash deposit rate for Goodman.” Id.
at 9.
The court concludes that the Department’s decision to subject Goodman to the PRC-wide
rate was arbitrary and capricious, and therefore contrary to law, because Commerce failed to
address the merits of the question before it. Commerce provided no explanation that was
grounded in the antidumping statute, or in the administrative record of this proceeding, as to why
entries of Goodman’s merchandise did not qualify under the antidumping law for a rate other
than the adverse-inference-based, PRC-wide rate of $4.71 per kg. That record included a finding
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Court No. 14-00101 	Page 28
that Goodman had demonstrated de jure and de facto independence from the government of the
PRC and lacked any finding that Goodman had failed to cooperate in responding to the
Department’s inquiries during the new shipper review. At the same time as it was deciding to
rescind the review, Commerce also concluded, in the Final Analysis Memorandum, that
“Goodman qualifies as a new shipper.” Final Analysis Mem. 4.
None of the reasons Commerce provided saves its decision from being arbitrary and
capricious. The first reason given, that Commerce would consider the separate rate question in
the ongoing eighteenth periodic review, did not explain why the antidumping law allowed it to
defer its decision on a matter that was before it. The second reason, that the separate rate issue
was moot, was plainly wrong. The Department’s resolution of that issue was the basis for the
Department’s decision in the Rescission to subject entries of Goodman’s merchandise to the
PRC-wide rate as a cash deposit rate, immediately upon publication of the Rescission.
Rescission, 79 Fed. Reg. at 22,099 (“Cash deposits will be required for exports of subject
merchandise by Goodman entered, or withdrawn from warehouse, for consumption on or after
the publication date at the per-unit PRC-wide rate, $4.71 per kilogram.”). The Department’s
third reason, that Goodman had not cited any precedent in the Department’s own past decisions,
was a non sequitur that avoided the issue. The issue called for a decision based on the statute
and on the administrative record of this individual proceeding, and Commerce, on a premise it
grounded in its administrative practice, declined to provide one. The Department’s final reason,
that “Goodman remains part of the PRC-wide entity, and the PRC-wide entity cash deposit rate
is the appropriate cash deposit rate for Goodman,” is entirely conclusory. It also begs the
question as to how Goodman can remain part of the PRC-wide entity even though Commerce
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Court No. 14-00101 	Page 29
determined that Goodman, in establishing that it qualified as a new shipper, demonstrated its
independence from the government of the PRC.
Defendant United States (“defendant”) and defendant-intervenor provide rationales for
the Department’s applying the PRC-wide rate that go beyond that which Commerce put forth.
Def.’s Opp’n 20-21; Def.-intervenor’s Opp’n 31-34. These rationales, therefore, are post-hoc
rationalizations rather than reasoning the Department offered. The court must judge a decision
according to the reasoning the agency put forth. See Burlington Truck Lines, 371 U.S. at 168-69.
Moreover, even were defendant’s rationale before the court, the court would find it
unconvincing. Defendant fails to explain why the PRC-wide rate is in accord with the statute
when considered on the specific record of this case, which includes a finding that Goodman was
independent of government control and lacks a finding of non-cooperation. Defendant argues
that “Commerce did the only thing that it reasonably could” in rescinding the review in the
absence of “a commercially viable sale” and proceeds to conclude, without an analysis of the
record facts and the statutory provisions involved, that “[t]he rescission of the review resulted in
Goodman[’s] remaining part of the China-wide entity.” Def.’s Opp’n 20-21. Defendant adds
that “the China-wide entity was not under review in this proceeding.” Id. at 21. This was a point
Commerce also made, Final Decision Mem. 9, without explaining why this limitation on the
scope of the new shipper review justified its decision.
Defendant-intervenors’ proffered rationale essentially parallels defendant’s.
Def.-intervenor’s Opp’n 28-31. Defendant-intervenors make the additional point that “[b]ecause
the Department concluded that Goodman had not completed a bona fide transaction during the
new shipper review’s POR, the agency did not evaluate whether Goodman operates
independently of the Chinese government (i.e., whether there is an absence of de jure and de
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Court No. 14-00101 	Page 30
facto government control over Goodman’s export activities).” Id. at 30-31. This argument
mischaracterizes the Department’s decisions in this case. Commerce expressly found that
Goodman qualified as a new shipper even as it was rescinding the review. Final Analysis
Mem. 4. Under its regulation, Commerce could not have so found without also finding that
Goodman had established independence from the government of China. See 19 C.F.R.
§ 351.214(b)(2)(iii)(B). Commerce made the required findings as to Goodman’s de jure and de
facto independence from government control in the Preliminary Results, Prelim. Decision
Mem. 5, and did not alter these findings in the remainder of the new shipper review. Defendant-
intervenors’ argument fails to recognize that the Department’s finding that Goodman’s sales
were not bona fide had no factual relationship to its finding that Goodman operated its garlic
export business independently from the control of the government of China.
Additionally, the court notes that Commerce explained in the Preliminary Decision
Memorandum that its basis for imposing a “single antidumping duty rate” on all companies
within a nonmarket economy (“NME”) country is a “rebuttable presumption that all companies
within” a nonmarket economy country “are subject to government control.” Preliminary
Decision Mem. 4. The Preliminary Decision Memorandum further explained that “[i]t is the
Department’s policy to assign all exporters of subject merchandise in an NME country this single
rate unless an exporter can demonstrate that it is sufficiently independent so as to be entitled to a
separate rate.” Id. (footnote omitted). Commerce added that “[e]xporters can demonstrate this
independence through the absence of both de jure and de facto government control over export
activities.” Id. (footnote omitted). Neither defendant nor defendant-intervenors address the
problem that Goodman rebutted the very presumption upon which, according to the
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Court No. 14-00101 	Page 31
Department’s own policy as described in the Preliminary Decision Memorandum, Commerce
imposes the PRC-wide rate.
III. CONCLUSION AND O RDER
For the reasons discussed in the foregoing, the court is required by the standard of review
applicable in this case to set aside as unlawful and remand to the International Trade
Administration, U.S. Department of Commerce (“Commerce” or the “Department”) for
reconsideration the decision published as Fresh Garlic from the People’s Republic of China:
Final Rescission of Antidumping Duty New Shipper Review of Shijiazhuang Goodman Trading
Co., Ltd., 79 Fed. Reg. 22,098 (Int’l Trade Admin. Apr. 21, 2014) (“Rescission”). Therefore,
upon consideration of all papers and proceedings in this case, and upon due deliberation, it is
hereby
ORDERED that the Rescission be, and hereby is, set aside as unlawful and remanded for
reconsideration and redetermination in accordance with this Opinion and Order; it is further
ORDERED that Commerce shall issue, within sixty (60) days of the date of this Opinion
and Order, a new determination upon remand (“Remand Redetermination”) that conforms to this
Opinion and Order; it is further
ORDERED that Goodman and defendant-intervenors, Fresh Garlic Producers
Association, et al., may file comments on the Remand Redetermination within thirty (30) days
from the date on which the Remand Redetermination is filed with the court; and it is further
ORDERED that defendant may file a response within fifteen (15) days from the date on
which the last of any such comments is filed with the court.
/s/ Timothy C. Stanceu
Timothy C. Stanceu
Chief Judge
Dated:
New York, New York
March 22, 2016
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