Coalition of American Flange Producers v. United States

Slip Op. 21-
UNITED STATES COURT OF INTERNATIONAL TRADE
COALITION OF AMERICAN FLANGE
PRODUCERS,
Plaintiff,
v.
UNITED STATES,
Defendant.
Before: Gary S. Katzmann, Judge
Court No. 18-00225
PUBLIC VERSION
OPINION
[The court sustains Commerce’s Remand Results.]
Dated: May 13, 2021
Daniel B. Pickard, Stephanie M. Bell, and Cynthia C. Galvez, Wiley Rein LLP, of Washington, DC, for
plaintiff.
Geoffrey M. Long, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of
Justice, of Washington, DC, for defendant. 	With him on the brief were Jeffrey Bossert Clark, Acting
Assistant Attorney General, Jeanne E. Davidson, Director, and Tara K. Hogan, Assistant Director. 	Of
counsel was Kirrin Ashley Hough, Attorney, Office of the Chief Counsel for Trade Enforcement &
Compliance, U.S. Department of Commerce, of Washington, DC.
Katzmann, Judge: The court returns to a challenge to the U.S. Department of Commerce’s
(“Commerce”) classification of a challenged sale as an export sale in an antidumping (“AD”)
investigation and to its associated 19 U.S.C. § 1677b(a)(1)(C) finding of home market non-
viability. 	Before the court is Commerce’s Final Results of Redetermination Pursuant to Court
Remand, Oct. 6, 2020, ECF No. 56 (“Remand Results”), which the court ordered in Coalition of
American Flange Producers v. United States, 44 CIT __, 448 F. Supp. 3d 1340 (2020) (“Coalition
I”). In Coalition I, the court remanded so that Commerce could further explain certain aspects of
its calculation of normal value in determining an AD duty margin for a foreign producer and
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exporter, Chandan Steel Limited (“Chandan”), in the importation of stainless steel flanges from
India into the United States. Id. at 1345. On remand, with explanation, Commerce continued to
conclude that the challenged sale should be excluded from Chandan’s home market sales database
and that Chandan did not have a viable home market for normal value purposes. Remand Results
at 1. Plaintiff Coalition of American Flange Producers (“Coalition”), an ad hoc association whose
members 	manufacture stainless 	steel 	flanges in 	the 	United 	States, 	again 	challenges 	this
determination. Compl. at 2, Dec. 6, 2018, ECF No. 9; Pl.’s Comments on the Results of Remand
Redetermination, Nov. 6, 2020, ECF No. 60 (“Pl.’s Br.”). 	Defendant the United States (“the
Government”) requests that the court affirm Commerce’s Remand Results. Def.’s Reply in Supp.
of the Dep’t of Commerce’s Remand Redetermination, Feb. 2, 2021, ECF No. 67 (“Def.’s Br.”).
The court affirms.
BACKGROUND
The court set out the relevant legal and factual background of the proceedings in further
detail in its previous opinion, Coalition I, 448 F. Supp. 3d at 1345–50. Information relevant to the
instant opinion is set forth below.
On August 16, 2018, Commerce issued Stainless Steel Flanges from India: Final
Affirmative Determination of Sales at Less Than Fair Value and Final Affirmative Critical
Circumstances Determination, 83 Fed. Reg. 40,745 (Dep’t Commerce Aug. 16 2018), P.R. 411
(“Final Determination”) and accompanying issues and decision memorandum (Dep’t Commerce
Aug. 10, 2018), P.R. 406 (“IDM”). As explained in the court’s previous opinion, “‘[t]o determine
whether a sale is a home market sale, Commerce objectively assesses whether, given the particular
facts and circumstances, a producer would have known that the merchandise will be sold
domestically or for export.’ If Commerce concludes that a producer knew or had reason to know,
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at the time of the sale, that the merchandise was destined for export, Commerce may exclude the
sale from the home market database.” Coalition I, 448 F. Supp. 3d at 1346 (first quoting Stupp
Corp. v. United States, 43 CIT __, __, 359 F. Supp. 3d 1293, 1310 (2019); and then citing INA
Walzlager Schaeffler KG v. United States, 21 CIT 110, 123–25, 957 F. Supp. 251, 264–65 (1997)).
Based on its application of this knowledge test, Commerce determined that certain reported sales
should not be included in Chandan’s home market sales database and, therefore, Chandan’s home
market of India was not viable as a basis for determining normal value. IDM at 37. Commerce
accordingly used Chandan’s reported third-country market sales to determine its AD duty margin.
Id. During the investigation, Coalition challenged Commerce’s determination to exclude one sale
from Chandan’s home market database -- the “challenged sale.” 1 Letter from Wiley Rein LLP to
Sec’y Commerce, re: Stainless Steel Flanges from India: Case Brief Regarding Chandan Steel at
4 (June 19, 2018), P.R. 401, C.R. 443. 	In its Final Determination, Commerce relied on two
provisions in the contract for the challenged sale to determine that it was not a home market sale:
(1) a provision requiring packaging of export quality and (2) a provision requiring the merchandise
to be stamped with a [[ 	]] logo. 	IDM at 37. 	As a result of using third-country market
sales rather than Chandan’s home market, Commerce calculated an AD margin of 19.16 percent
for Chandan. Final Determination at 40,476.
Coalition filed this action to challenge Commerce’s Final Determination related to the
challenged sale. Summons, Nov. 6, 2018, ECF No. 1; Compl. Specifically, Coalition argued that
“(1) Commerce’s determination that the challenged sale was for export is unsupported by
substantial evidence because Commerce failed to provide an adequate explanation for its findings
1 This and further mentions of the “challenged sale” refer to Chandan’s sale to [[ 	]]. See also
Coalition I, 448 F. Supp. 3d at 1348.
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and failed to demonstrate a rational connection between the facts found and the determination
made; and (2) Commerce did not act in accordance with law because it failed to undertake a
diligent inquiry in response to Coalition’s comments.” Coalition I, 448 F. Supp. 3d at 1351. On
June 17, 2020, the court remanded Commerce’s determination that the challenged sale was for
export because that determination was not adequately explained and thus not supported by
substantial evidence, but (2) concluded that Commerce did meet its obligation to conduct a diligent
inquiry. 	Id. 	The court also noted that it took no position “on the correctness of Commerce’s
determination” on remand. Id. Commerce filed its Remand Results with the court on October 6,
2020. 	Remand Results. 2 	Coalition filed its comments on the Remand Results on November 6,
2020. Pl.’s Br. The Government replied on February 2, 2021. Def.’s Br.
JURISDICTION AND STANDARD OF REVIEW
The court has jurisdiction over this action pursuant to 28 U.S.C. § 1581(c) and 19 U.S.C.
§ 1516a(a)(2)(B)(i). 	The standard of review in this action is set forth in 19 U.S.C. §
1516a(b)(1)(B)(i): “[t]he 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.” A conclusion based on substantial evidence and in accordance with law requires Commerce
to examine the record and provide an adequate explanation for its findings such that the record
demonstrates a rational connection between the facts accepted and the determination made. See
Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto Ins. Co., 463 U.S. 29, 43 (1983); Jindal Poly
Films, Ltd. of India v. United States, 43 CIT __, __, 365 F. Supp. 3d 1379, 1383 (2019).
Commerce’s findings may be supported by substantial evidence despite the existence of
2 Many citations are to confidential filings for clarity in explaining the timeline of events. Public
versions, often filed at later dates, are available on the public docket with corresponding
pagination.
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“contradictory evidence or evidence from which conflicting inferences could be drawn,”
Suramerica de Aleaciones Laminadas, C.A. v. United States, 44 F.3d 978, 985 (Fed. Cir. 1994)
(quoting Universal Camera Corp. v. NLRB, 340 U.S. 474, 487 (1951)), so long as that evidence is
addressed and explained, CS Wind Vietnam Co. v. United States, 832 F.3d 1367, 1373–74 (Fed.
Cir. 2016). The court also reviews the Remand Results “for compliance with the court’s remand
order.” 	See Beijing Tianhai Indus. Co. v. United States, 39 CIT __, __, 106 F. Supp. 3d 1342,
1346 (2015) (citations omitted).
DISCUSSION
The court remanded to Commerce for explanation of material record evidence related to
the challenged sale that was unaddressed and may have undermined its decision to exclude the
challenged sale from the home market database. 	Specifically, the court determined that
“Commerce was obligated to discuss on the record . . . (1) the export quality packaging provision
in Chandan’s [[ 	]], (2) Chandan’s treatment of the agreement’s
logo provision, and (3) the final payment and delivery terms of the sale.” Coalition I, 448 F. Supp.
3d at 1352–53. The court concluded that “the record in this case contained both evidence from
which conflicting inferences concerning Chandan’s knowledge may have been drawn and
arguments from Coalition raising these issues. 	In light of such evidence and arguments,
Commerce was obligated to provide a reasoned analysis of the choices made in support of its
determination.” Id. at 1356 (citations omitted).
On remand, Commerce further explained its decision to exclude the challenged sale from
Chandan’s home market database and addressed each piece of evidence as directed by the court.
Commerce noted that it “evaluated the totality of the evidence on the record, with particular
attention to the evidence highlighted by the CIT.” Remand Results at 6. In addition to the evidence
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highlighted in its Final Determination and discussed in the court’s previous opinion, Commerce
explained that other considerations regarding the challenged sale supported its decision to exclude
that sale from Chandan’s home market database. 	Commerce further analyzed the initial
negotiation terms, circumstances surrounding the negotiations, and the buyer’s main business of
“sales of traded merchandise . . . focused on exports.” Id. at 6–7. Commerce noted that “[w]hile
no one single factor may be considered dispositive,” it found that, “when considered in its totality,
the record supports [its] conclusion regarding Chandan’s knowledge of the ultimate destination for
the merchandise” from the challenged sale. Id. at 8.
Coalition again challenges Commerce’s determination by claiming that its decision was
not reasonably supported or explained because the newly discussed evidence in combination with
the evidence previously identified by Commerce does not “demonstrate that Chandan knew or
should have known that its sales to [[ 	]] were for export.” 	Pl.’s Br. at 4. 	In response, the
Government characterizes Coalition’s renewed claims as “a disagreement with Commerce’s
weighing of the evidence.” Def.’s Br. at 5. The court is not persuaded by Coalition’s challenges
to the Remand Results for the reasons set out below.
I. 	Agreement Provisions
Regarding a provision in the challenged sale contract that required export quality
packaging, the court stated “[b]ecause the evidence in the record suggested that an export quality
packaging provision may be indicative of either a home market or an export sale, Commerce
needed to explain the logic supporting its decision to rely on the provision.” Coalition I, 448 F.
Supp. 3d at 1353 (citations omitted). On remand, Commerce explained that, regardless of some
overlapping provisions in the challenged sale agreement and Chandan’s [[
]], “Commerce had no reason to question Chandan’s knowledge of ultimate destination
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for any sales made to other customers” and disagreed that the evidence “necessarily detract[ed]
from Commerce’s conclusions.” Remand Results. at 8–9; see also id. at 14 (discussing mill testing
certificate provision). For this reason, Commerce explained that it did not place the same weight
on the [[ 	]] provisions as those related to the challenged sale. Id. at 16.
Rather, Commerce explained that this evidence “alone may not conclusively demonstrate
exportation of the merchandise, [but] when viewed in light of other record information, these
provisions are consistent with [Commerce’s] conclusion.” Id. at 8; see also id. at 14.
Coalition challenges Commerce’s conclusion on the overlapping contract provisions as
insufficiently explained and conclusory. 	See Pl.’s Br. at 7–10. 	Coalition argues that “it was
illogical for Commerce to claim that the reason for disregarding the relevance of the sale is the
non-viability of the home market when part of the agency’s reason for taking the sale into account
was to help determine the home market’s viability.” 	Id. at 9. 	In response, the Government
highlights that “Commerce did not assign the same amount of weight to the facts of the [home
market sale] as those related to the [challenged sale].” Def.’s Br. at 14. The Government argues
that despite the overlapping provisions being consistent with either a home market or export sale,
the evidence nevertheless “support[s] Commerce’s conclusion regarding Chandan’s knowledge of
the ultimate destination for the merchandise when the record is considered in its totality.” Id. at
10.
The court concludes that Commerce’s explanation and analysis of the overlapping
provisions is reasonable. As Commerce explained, conflicting inferences may be made based on
this evidence in isolation, but in light of the entire record and the lesser weight Commerce placed
on the home market sale, Commerce reached a reasonable conclusion. See Remand Results at 14,
16; Suramerica de Aleaciones Laminadas, 44 F.3d at 985 (stating that substantial evidence includes
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“evidence from which conflicting inferences could be drawn”). 	Given Commerce’s additional
explanation, the court defers to Commerce’s conclusion regarding this potentially conflicting
evidence. 	Fujitsu Gen. Ltd. v. United States, 88 F.3d 1034, 1039 (Fed. Cir. 1996) (requiring
deference to Commerce’s experience and expertise when reviewing AD determinations) (citations
omitted); CS Wind Vietnam, 832 F.3d at 1377 	(“The requirement of explanation presumes the
expertise and experience of the agency and still demands an adequate explanation in the particular
matter.”) (citation omitted).
II. 	Logo Requirements
In its original opinion, the court noted that “[b]ecause the logo provision contained in the
challenged sale agreement could indicate either that Chandan knew the sale was destined for export
or that Chandan would not have been able to indicate its final destination, whether in its home
market or abroad, Commerce was required to explain its choice between reasonable alternatives.”
Coalition I, 448 F. Supp. 3d at 1354–55. On remand, Commerce concluded that this logo provision
was “consistent with a sale destined for outside of India” because sales to Indian customers and
other customers abroad generally had different markings. Remand Results at 16. Commerce also
noted that, because the logo provision did not indicate shipment to any particular destination, the
destination of the sales merchandise “would not alter [its] ultimate conclusion” regarding the
comparison market. 	Id. at 9. 	Again, Commerce noted that while not dispositive alone, “when
considered in its totality, the record supports [its] conclusion.” Id. at 16.
On this point, Coalition argues that Commerce erroneously “disregarded the argument that
the logo is not indicative of an export sale.” Pl.’s Br. at 10. Rather Coalition contends that “this
conclusion only makes sense if (1) the logo is indicative of a sale to a particular non-Indian market
(or group of markets) or (2) the logo cannot be used for sale in India.” Id. at 10. Thus, Coalition
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argues that the logo provision “provides no reasonable support for a finding that the sales were
destined for export.” Id. at 11. The Government responds that “Commerce reasonably concluded
that a requirement for a [[ 	]], as was the case here, is consistent for a
sale destined for outside of India.” Def.’s Br. at 15.
The court concludes that Commerce’s explanation of the logo provision was reasonable
and adequately addressed on remand. Commerce’s explanation of the differing logo requirements
for the challenged sale and Chandan’s other sales is based on a reasonable inference that the
provision supported Chandan’s knowledge that the challenged sale was destined for export. See
Motor Vehicle Mfrs. Ass’n, 463 U.S. at 43 (requiring a demonstration of a rational connection
between the agency’s conclusion and the facts found). The court does not disagree with Coalition’s
contention that Commerce’s conclusion must indicate that the logo indicates the goods were
destined for export to a non-Indian market. 	Rather, the court recognizes that Commerce’s
explanation indicates that Commerce understood Chandan to know that the goods were destined
for non-Indian markets, regardless of whether Chandan knew the exact export market. 	This is
consistent with Commerce’s knowledge test, which does not require knowledge of a particular
destination for exported goods. See INA Walzlager Schaeffler KG, 957 F. Supp. at 263–64.
III. 	Sale’s Terms & Context
Finally, in its prior opinion, the court concluded that “Commerce [did not] indicate[] how
or why the terms of the initial offer negate the terms on which the sale was ultimately
consummated” given that the challenged sale was negotiated with terms that would indicate an
export sale, but the final contract terms may have indicated a home market sale. Coalition I, 448
F. Supp. 3d at 1356 (citation omitted). On remand, Commerce explained that the final sales terms
may weigh in favor of finding a domestic sale in many instances. However, in light
of the various factors considered above, as well as the fact that the sales were
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negotiated with [[ 	]] of an India-based affiliate, which
for extended periods prior to the [period of investigation] did not sell [[
]], we find that the record indicates otherwise.
Remand Results at 9–10. 	In further support of this inference, Commerce “conclude[d] that
Chandan had knowledge of sales behavior of its customers (and particular knowledge regarding
these sales, given all of the factors explained above, including the particular negotiation history).”
Id. at 15. Commerce rejected Coalition’s arguments regarding the final sales terms as a dispute
over the weight that should be accorded to this piece of evidence. Id. at 13.
Coalition contends that the initial offer or circumstances of negotiation of the challenged
sale were not properly considered by Commerce. First, Coalition argues that Commerce failed to
address Chandan’s statement that it did not believe the sale was destined for [[ 	]] or any
of the top three export markets and that Commerce’s conclusion was thus “incomplete and
unreasonable.” 	Pl.’s Br. at 6. 	Further, as it also argued to Commerce, Coalition asserts that
Chandan’s statement that it obtained public information regarding the Indian-affiliate company of
the buyer for the challenged sale after it made the sale “strongly suggests that Chandan did not
have the information at the time of the sale” and thus Chandan could not be presumed to have
familiarity with its customer’s main business of export sales. Id. at 7. Rather, Coalition argues
that Commerce’s analysis on this point was “based on speculation and a bootstrapping of tenuous
conclusions with one another.” Id.; see also id. at 11. The Government responds that Coalition’s
opposition to Commerce’s remand explanation is based upon the possibility of drawing two
inconsistent conclusions from the evidence. 	Def.’s Br. at 8. 	The Government also argues that
“[c]onsistent with its practice and application of its knowledge test, Commerce did not presume
that Chandan’s knowledge regarding [[ 	]]’s sales patterns was obtained at the time it acquired
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the financial statement,” but that instead “Commerce reasonably concluded that Chandan had
knowledge of the sales behavior of its customers.” Id. at 12 (citation omitted).
The court accepts Commerce’s explanation of this evidence on remand and concludes that
the inferences it drew from the record were reasonable. As the Government correctly notes, “the
possibility of drawing two inconsistent conclusions form the evidence does not preclude the
agency’s finding from being supported by substantial evidence.” Matsushita Elec. Indus. Co. v.
United States, 750 F.2d 927, 933 (Fed. Cir. 1984) (quoting Consolo v. Fed. Maritime Comm’n,
383 U.S. 607, 619–20 (1966)); see also Suramerica de Aleaciones Laminadas, 44 F.3d at 985;
Def.’s Br. at 8. Thus, Commerce’s conclusion that the initially negotiated terms, in light of the
totality of the evidence and the circumstances of the negotiation, indicated that the challenged sale
was for export was based on reasonable inferences and supported by substantial evidence. 	Id.;
Motor Vehicle Mfrs. Ass’n, 463 U.S. at 43. 	Coalition’s contention that Commerce disregarded
Chandan’s assertion that it did not know the particular final destination of the challenged sale is
unpersuasive. Similarly, the court defers to Commerce’s reasonable inference that Chandan was
familiar with the behavior of its customer in light of the negotiation history. 	As discussed,
Commerce enumerated the evidence that supported its conclusion that Chandan knew the sale was
for export. That was all that was required of Commerce. See INA Walzlager Schaeffler KG, 957
F. Supp. at 263–64.
In short, the court accepts Commerce’s explanation of the previously unaddressed evidence
and concludes that, given the totality of the evidence, Commerce’s Remand Results were based on
substantial evidence.
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CONCLUSION
For the reasons stated above, the court sustains Commerce’s Remand Results and enters
judgment in favor of the Government.
SO ORDERED.
/s/ Gary S. Katzmann
Gary S. Katzmann, Judge
Dated: May 13, 2021
New York, New York
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