Garg Tube Export LLP et al v. United States

Slip Op. 21-83
UNITED STATES COURT OF INTERNATIONAL TRADE
GARG TUBE EXPORT LLP and GARG
TUBE LIMITED,
Plaintiffs,
v.
UNITED STATES,
Defendant,
and
WHEATLAND TUBE and NUCOR
TUBULAR PRODUCTS INC.,
Defendant-Intervenors.
Before: Claire R. Kelly, Judge
Court No. 20-00026
PUBLIC VERSION
OPINION AND ORDER
[Remanding the U.S. Department of Commerce’s final determination in the 2017–
2018 administrative review of the antidumping duty order covering welded carbon
steel standard pipes and tubes from India.]
Dated: July 9, 2021
Ned H. Marshak and Dharmendra N. Choudhary, Grunfeld, Desiderio, Lebowitz,
Silverman & Klestadt LLP, of New York, NY, argued for plaintiffs Garg Tube Export
LLP and Garg Tube Limited. Also on the briefs was Jordan C. Kahn.
Robert R. Kiepura, Trial Attorney, Commercial Litigation Branch, Civil Division,
U.S. Department of Justice, of Washington, DC, argued for defendant. 	Also on the
brief 	were 	Jennifer 	B. 	Dickey, 	Acting 	Assistant 	Attorney 	General, 	Jeanne 	E.
Davidson, Director, and Franklin E. White, Jr., Assistant Director. 	Of counsel was
Rachel A. Bogdan, JonZachary Forbes, and Shelby M. Anderson, Attorneys, Office of
the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of
Commerce, of Washington, DC.
Case 1:20-cv-00026-CRK Document 71 Filed 07/19/21 Page 1 of 22

Court No. 20-00026 	Page 2
PUBLIC VERSION
Robert E. DeFrancesco, III and Theodore P. Brackemyre, Wiley Rein LLP, of
Washington, DC, argued for defendant-intervenor Nucor Tubular Products Inc. Also
on the brief were Alan H. Price and Cynthia C. Galvez.
Roger B. Schagrin, Schagrin Associates, of Washington, DC, for defendant-intervenor
Wheatland Tube. 	Also on the brief were Christopher Cloutier, Elizabeth J. Drake,
and Luke A. Meisner.
Kelly, Judge: 	Before the court is Plaintiffs Garg Tube Export LLP and Garg
Tube Limited’s (collectively, “Garg”) motion for judgment on the agency record,
challenging aspects of the U.S. Department of Commerce’s (“Commerce”) final
determination in its 2017–2018 administrative review of the antidumping duty
(“ADD”) order covering welded carbon steel standard pipes and tubes (“CWP”) from
India. 	See Pls.’ Mot. J. Agency R. & accompanying Supp. Memo. Confidential
Version, Aug. 17, 2020, ECF No. 32 (“Pls.’ Mot.” and “Pls.’ Br.”, respectively); see also
[CWP] From India, 85 Fed. Reg. 2715 (Dep’t Commerce Jan. 16, 2020) (final results
of [ADD] admin. review; 2017–2018) (“Final Results”) and accompanying Issues and
Decision Memo., A-533-502, (Jan. 9, 2020), ECF No. 24-5 (“Final Decision Memo”).
Garg challenges as unsupported by substantial evidence Commerce’s finding that a
particular market situation (“PMS”) in India distorts the cost of producing CWP, see
Pls.’ Br. at 4–32, as well as Commerce’s methodology for calculating the PMS
adjustment. 	See id. at 32–36. 	Moreover, Garg challenges as contrary to law
Commerce’s application of the PMS adjustment to Garg’s reported costs for purposes
of examining whether Garg’s home market sales of CWP were made below the cost of
production. 	See id. at 36–38. 	Finally, Garg challenges as unlawful Commerce’s
Case 1:20-cv-00026-CRK Document 71 Filed 07/19/21 Page 2 of 22

Court No. 20-00026 	Page 3
PUBLIC VERSION
application of partial facts available with an adverse inference (“AFA”) 1 in response
to its unaffiliated suppliers’ refusal to cooperate with Commerce’s requests for
information during the administrative review. 	See id. at 38–49. 	For the following
reasons, Commerce’s final determination is remanded for further explanation or
reconsideration.
BACKGROUND
On July 12, 2018, in response to timely requests from interested parties,
Commerce initiated an administrative review of the ADD order covering certain CWP
from India, the period of review (“POR”) covering May 1, 2017 through April 30, 2018.
See generally Initiation of Antidumping and Countervailing Duty Administrative
Reviews, 83 Fed. Reg. 32,270, 32,270 (Dep’t Commerce July 12, 2018). 	Finding it
impractical to subject all companies to individual review,2 Commerce limited its
1 Parties and Commerce sometimes use the shorthand “adverse facts available” or
“AFA” to refer to Commerce’s reliance on facts otherwise available with an adverse
inference to reach a final determination. However, AFA encompasses a two-part
inquiry pursuant to which Commerce must first identify why it needs to rely on facts
otherwise available, and second, explain how a party failed to cooperate to the best of
its ability so as to warrant the use of an adverse inference when “selecting among the
facts otherwise available.” See 19 U.S.C. § 1677e(a)–(b).
2 Commerce is generally required to calculate individual weighted-average dumping
margins for each known exporter and producer of the subject merchandise. 19 U.S.C.
§ 1677f-1(c)(1). 	However, Commerce may limit its examination to a reasonable
number of exporters or producers if it determines that it is not practicable to
determine individual weighted-average dumping margins “because of the large
number of exporters or producers involved in the review.” Id. § 1677f-1(c)(2); 19 C.F.R.
§ 351.204(c)(2) (2019).
Case 1:20-cv-00026-CRK Document 71 Filed 07/19/21 Page 3 of 22

Court No. 20-00026 	Page 4
PUBLIC VERSION
examination to Apl Apollo Tubes Limited and Garg 3 as mandatory respondents. See
Resp’t Selection Memo. at 2–4, PD 15, bar code 3743783-01 (Aug. 15, 2018).4
During an administrative review, Commerce calculates the dumping margin
for a respondent’s entries of subject merchandise during the POR by comparing prices
for those U.S. sales to their normal value. See Sections 751 and 773 of the Tariff Act
of 1930, as amended, 19 U.S.C. §§ 1675, 1677b (2018).5 Here, Commerce attributed
to Garg sales of certain unaffiliated suppliers of the foreign like product when
determining the normal value of Garg’s subject merchandise. 6 See [CWP] from India,
3 Commerce determined that Garg Tube Export LLP and Garg Tube Limited were
affiliated and treated the entities as a single collapsed entity for purposes of
Commerce’s dumping margin calculation. 	See, e.g., Prelim. Decision Memo at 8
(citing 19 U.S.C. § 1677(33)(F); 19 C.F.R. § 351.401(f)).
4 	On 	March 	10, 	2020, 	Defendant 	filed 	indices 	to 	the 	public 	and 	confidential
administrative records underlying Commerce’s final determination. 	These indices
are located on the docket at ECF Nos. 24-2 and 24-1. 	All references to documents
from the public and confidential record are identified by the numbers assigned by
Commerce in the March 10 th indices, see ECF Nos. 24-2 and 24-1, and preceded by
“PD” or “CD” to denote public or confidential documents, respectively.
5 Further citations to the Tariff Act of 1930, as amended, are to the relevant
provisions of Title 19 of the U.S. Code, 2018 edition.
6 According to Commerce, it may exclude from calculation of a respondent’s dumping
margin 	sales 	of 	subject 	merchandise 	that 	the 	respondent 	purchased 	from 	an
unaffiliated producer, provided, in relevant part, that the producer knew or should
have known the merchandise was going to the United States. [CWP] from India, 84
Fed. Reg. 33,916 (Dep’t Commerce July 16, 2019) (prelim. results of [ADD] admin.
review; 2017–2018) (“Prelim. Results”) and accompanying Prelim. Decision Memo. at
16, A-533-502, PD 207, bar code 3859225-01 (July 11, 2019) (“Prelim. Decision
Memo”). 	However, Garg reported to Commerce that its unaffiliated suppliers were
not aware (nor had any reason to be aware) of the ultimate use or destination of
(footnote continued)
Case 1:20-cv-00026-CRK Document 71 Filed 07/19/21 Page 4 of 22

Court No. 20-00026 	Page 5
PUBLIC VERSION
84 Fed. Reg. 33,916 (Dep’t Commerce July 16, 2019) (prelim. results of [ADD] admin.
review; 2017–2018) (“Prelim. Results”) and accompanying Prelim. Decision Memo. at
16, A-533-502, PD 207, bar code 3859225-01 (July 11, 2019) (“Prelim. Decision
Memo”). 	On 	November 	30, 	2018, 	Commerce 	issued 	to 	Garg 	a 	supplemental
questionnaire requesting, in relevant part, that Garg obtain information from its
unaffiliated 	suppliers 	regarding 	the 	actual 	costs 	of 	producing 	the 	purchased
merchandise. 	See Letter Re: Suppl. Questionnaire to Garg’s Section A–D Resps. at
12, PD 67, CD 32, bar codes 3778772-01, 3778771-01 (Nov. 30, 2018).
On December 21, 2018, Independence Tube Corporation and Southland Tube,
Incorporated 	(collectively 	“Petitioners”)—later 	consolidated 	into 	Nucor 	Tubular
Products Inc. (“Nucor”)7—submitted to Commerce an allegation that a PMS in India
distorted the cost of producing CWP during the POR, and furnished information
supporting their submission. 	See [PMS] Allegation, Resubmitted Market Viability
Garg’s purchases of pipe and tube. 	See id. (citing Resp. from [Garg] to [Commerce]
Re: Section A Questionnaire Resp. at 35 & Ex. A-14, PDs 33–36, CDs 7-11, bar codes
3754219-01–04, 3754211-01–05 (Sept. 17, 2018)). 	Of the suppliers listed in the
Section 	A 	Questionnaire 	Response, 	Garg 	challenges 	determinations 	made 	by
Commerce based on Garg’s dealings with
See generally Compl., Jan. 30, 2020, ECF No. 6; but see Pls.’ Br. At 41–49; see also
Oral Arg., Apr. 29, 2021, ECF No. 62 and accompanying Digital Audio File, Apr. 30,
2021, ECF No. 63.
7 Defendant-Intervenors state that Independence Tube Corporation and Southland
Tube initially filed written submissions during the underlying administrative review,
and were later consolidated into a single entity—Nucor Tubular Products Inc. 	See
[Def-Intervenors’ Joint] Resp. to [Pls.’ Mot.] Confidential Version at 1 n.1, Jan. 15,
2021, ECF No. 45 (citing Consent Mot. to Intervene as a Matter of Right at 1 n.1, Feb.
28, 2020, ECF No. 17).
[[ 	]].
Case 1:20-cv-00026-CRK Document 71 Filed 07/19/21 Page 5 of 22

Court No. 20-00026 	Page 6
PUBLIC VERSION
Allegation, & Supp. Info., PDs 72–99, CDs 33–61, bar codes 3785365-01–28, 3785322-
01–29 	(Dec. 	21, 	2018) 	(“PMS 	Allegation”). 	On 	February 	1, 	2019, 	Petitioners
supplemented their PMS allegation. See Letter Re: Other Factual Info. – Alternative
PMS Valuation Calculation, PDs 102–04, CDs 62–68, bar codes 3789235-01–03,
3789217-01–07 (Feb. 1, 2019) (“PMS Allegation Suppl.”). 	Petitioners proposed
various regression models for Commerce to use to quantify any adjustment made to
the dumping margin should Commerce determine that a PMS in India distorted the
cost of producing CWP in India during the POR. See, e.g., PMS Allegation Suppl. at
14–17 & Ex. 1.1.
On February 19, 2019, Garg submitted its response to Commerce’s initial
supplemental questionnaire. 	See Resp. to Commerce Re: Section A–D Suppl.
Questionnaire, PDs 110–34, CDs 69–101, bar codes 3794286-01–25, 3794250-01–33
(Feb. 19, 2019) (“Garg’s Suppl. Resp.”). 	Pertinent here, Garg detailed unsuccessful
efforts to persuade one of its unaffiliated suppliers to provide the cost information
requested by Commerce. 8 	See Garg’s Suppl. Resp. at 51–53. 	On April 30, 2019,
8 Garg explained that it sought to persuade 	to cooperate by:
[having] 	several 	personal 	meetings 	with 	its 	senior 	management,
wherein Garg Tube explained in detail the acute necessity to provide the
specific CONNUM wise cost of production data and relevant company
information . . . communicat[ing] with 	through numerous
emails 	and 	telephonic 	conversations, 	further 	elaborating 	its
requirements . . . threaten[ing] to discontinue its ongoing business with
(footnote continued)
[[ 	]]
[[ 	]]
Case 1:20-cv-00026-CRK Document 71 Filed 07/19/21 Page 6 of 22

Court No. 20-00026 	Page 7
PUBLIC VERSION
Commerce sent a second supplemental questionnaire to Garg, see Letter from
Commerce Re: Second Suppl. Questionnaire, PD 173, CD 131, bar codes 3827345-01,
3827342-01 (Apr. 30, 2019), and, on May 2, 2021, Commerce directly requested
information from Garg’s unaffiliated supplier. See Letter Re: Req. for Cost Info. from
Supplier 1, PD 174, CD 132, bar code 3828743-01, 3828737-01 (May 2, 2019). 	Garg
responded to the second supplemental questionnaire on May 16, 2019. See [Garg’s]
Resp. to Commerce’s Second Suppl. Questionnaire, PDs 178–181, CDs 134–141, bar
codes 3834711-01–04, 3834703-01–08 (May 16, 2019). 	Shortly thereafter, Garg
submitted to Commerce copies of its communications with the unaffiliated supplier.
See Letter from [Garg] Re: Supplier Communications, PD 182, CD 142, bar codes
3836053-01, 3836052-01 (May 20, 2019) (“Garg’s Letter”). 	According to Garg, these
email communications document attempts to persuade the unaffiliated supplier to
cooperate with Commerce’s examination.9 See Garg’s Letter at 1–3.
. . . [and s]imultaneously . . . obtain[ing] 	financial
statements and Cost Audit reports[.]
Garg’s Suppl. Resp. at 51 (citations omitted). Garg informed Commerce that, despite
these efforts, 	“finally communicated on December 31, 2018 its inability to
comply with the necessary data and information[.]” 	Garg’s Suppl. Resp. at 52
(citation omitted). 	According to Garg, 	indicated that “it was not within
[its] best interests to [cooperate.]” Id. at 52 (citation omitted).
9 Exhibit 1 of Garg’s submission contains a May 9, 2019 email to 	“urg[ing]
[the company] to respond to [Commerce’s questionnaire] and submit the required
information directly to [Commerce.]” See Garg’s Letter at Ex. 1. Exhibit 3 of Garg’s
submission contains 	response, in which the company appears to decline,
referring Garg instead to information the supplier already submitted as well as
publicly available information, and stating further that the supplier is “not a[n]
exporter.” See Garg’s Letter at Ex. 2.
[[ 	]] 	[[ 	]]
[[ 	]]
[[ 	]]
[[ 	]]
[[ 	]]
Case 1:20-cv-00026-CRK Document 71 Filed 07/19/21 Page 7 of 22

Court No. 20-00026 	Page 8
PUBLIC VERSION
On July 16, 2019, Commerce published its preliminary determination. 	See
generally Prelim. Results, 84 Fed. Reg. 33,916. Based on evidence cited by Petitioners
in their PMS submissions regarding the collective impact on the Indian market of
global steel overcapacity, Government of India trade interventions, and Garg’s non-
payment of antidumping and safeguard duties on imports of hot-rolled coil (“HRC”),
Commerce determined that a PMS in India distorted the cost of producing CWP
during the POR. See Prelim. Decision Memo at 19–21; see also Memo. Re: Decisions
on [PMS] Allegations at 18–27, PD 209, bar code 3859233-01 (July 10, 2019) (“PMS
Memo”). 	Commerce accounted for the distortion by upwardly adjusting Garg’s
reported costs for HRC, a primary input in the production of subject CWP. 	See
Prelim. Decision Memo at 19–21; Memo. Re: Prelim. Analysis for [Garg] at 5–6, PD
212, bar code 3859260-01 (July 10, 2019) (“Prelim. Analysis Memo”). Relevant here,
Commerce made the adjustment for purposes of determining which of Garg’s sales
were made below cost. 10
10 When calculating normal value using home market sales, the statute permits
Commerce to disregard sales made below the cost of production during an extended
period of time and in substantial quantities. 19 U.S.C. § 1677b(b). 	Commerce later
states that it “accounts for the cost-based PMS through its adjustment of the
respondent’s COPs, which are then reflected in Commerce’s dumping calculations,
including in the sales-below-costs test to identify comparison market sales which may
be outside of the ordinary course of trade.” 	Final Decision Memo at 50. 	Garg
challenges Commerce’s PMS adjustment in the context of its below cost sales
analysis. See Compl. ¶ 24, Jan. 30, 2020, ECF No. 6.
Case 1:20-cv-00026-CRK Document 71 Filed 07/19/21 Page 8 of 22

Court No. 20-00026 	Page 9
PUBLIC VERSION
Commerce calculated the adjustment by using a regression model provided in
Petitioners’ PMS submissions. See Prelim. Analysis Memo at 6 & n. 12 (citing Letter
from Petitioners Re: Revised PMS Valuation Methodology, PDs 152–64, CDs 107–26,
bar 	codes 	3810691-01–13, 	3810640-01–20 	(Mar. 	22, 	2019) 	(“Revised 	PMS
Methodology Memo”)); see also Revised PMS Methodology Memo at 18–22, Ex. 1.1.
The regression model, called “Ordinary Least Squares” (“OLS”), seeks to predict a
counterfactual AUV for HRC imports into India in 2017, representing what the AUV
would be “if the global steel industry had operated at a utilization rate of 85 percent.”
Revised PMS Methodology Memo at Ex. 1.1. 	Regressing data drawn from 38
countries, covering a period from 2008 through 2017, the OLS model predicted that
the counterfactual AUV would be “38.54 percent higher than the actual 2017 Indian
import AUV of $575.12.” Id. Thus, Commerce increased the reported costs of Garg’s
HRC inputs by using an adjustment factor of 38.54 percent. 	See Prelim. Analysis
Memo at 6 & n. 12 (citing Revised PMS Methodology Memo).
Moreover, when calculating Garg’s dumping margin, Commerce purported to
apply partial AFA to fill the gap in the record stemming from the refusal of Garg’s
unaffiliated suppliers to provide the requested cost information. See Prelim. Decision
Memo at 16–17. Commerce found that Garg’s unaffiliated suppliers were interested
parties within the meaning of 19 U.S.C. § 1677(9)(A) because “they are producers of
pipe and tube, which is merchandise subject to the [ADD] Order.” Id. at 17. Pursuant
to 	19 	U.S.C. 	§ 	1677e(a), 	Commerce 	found 	the 	unaffiliated suppliers 	withheld
Case 1:20-cv-00026-CRK Document 71 Filed 07/19/21 Page 9 of 22

Court No. 20-00026 	Page 10
PUBLIC VERSION
information, failed to timely provide information, and significantly impeded the
investigation because the suppliers “did not provide the cost information at issue[.]”
Id. (citing 19 U.S.C. § 1677e(a)(2)(A)–(C)). Further, Commerce found it “appropriate
to resort to partial facts available with adverse inferences regarding said suppliers’
missing cost information, pursuant to [19 U.S.C. § 1677e(b)]” when selecting amongst
the available facts it would use to calculate surrogate costs because “the suppliers in
question, as interested parties to this review, failed to cooperate to the best of their
ability in responding to Commerce’s requests for information, given that they refused
to provide the cost information on two separate occasions.” Id. Commerce calculated
surrogate 	costs 	for 	the 	unaffiliated 	suppliers’ 	pipe 	and 	tube 	based 	on 	Garg’s
“acquisition costs for the supplier-produced pipe and tube[,] plus amounts for Garg
Tube’s 	further 	processing 	expenses, 	general 	and administrative 	expenses, 	and
financial expenses, adjusted based on Garg Tube’s home market sale on which it
realized the largest loss.” Id. (citing Prelim. Analysis Memo).
On 	January 	16, 	2020, 	Commerce 	published 	the 	final 	results 	of 	its
administrative review. See Final Results, 85 Fed. Reg. 2715; see also Final Decision
Memo. 	Commerce continued to quantify the adjustment to HRC costs based on the
regression analysis, albeit with certain changes. 11 	See Final Decision Memo at 63–
11 Instead of AUVs of HRC imports into 38 countries (including India), Commerce
used an OLS model that regresses domestic HRC prices from eight countries
(footnote continued)
Case 1:20-cv-00026-CRK Document 71 Filed 07/19/21 Page 10 of 22

Court No. 20-00026 	Page 11
PUBLIC VERSION
66. 	Commerce made no other changes to its preliminary determination that are
relevant to this dispute. 	Commerce assigned to Garg a weighted-average dumping
margin of 11.83 percent. See Final Results, 85 Fed. Reg. at 2715–16.
On January 30, 2020, Garg commenced this action challenging Commerce’s
final determination. See generally Summons, Jan. 30, 2020, ECF No. 1; Compl., Jan.
30, 2020, ECF No. 6. 	On August 17, 2020, pursuant to U.S. Court of International
Trade Rule 56.2, Garg moved for judgment on the agency record. See generally Pls.’
Mot. 	By February 1, 2021, Defendant and Defendant-Intervenors submitted their
responses. 	See Def.’s Resp. to [Pls.’ Mot.] Confidential Version, Jan. 15, 2021, ECF
No. 46 (“Def.’s Br.”); [Def-Intervenors’ Joint] Resp. to [Pls.’ Mot.] Confidential
Version, Jan. 15, 2021, ECF No. 45 (“Def-Intervenors’ Joint Br.”). 	On February 26,
2021, Garg submitted its reply in support of its motion for judgment. 	Pls.’ Reply to
Def. & Def.-Intervenors’ Resps. to [Pls.’ Mot.] Confidential Version, Feb. 26, 2021,
ECF No. 48. On April 29, 2021, the court heard oral argument. See Oral Arg., Apr.
29, 2021, ECF No. 62 and accompanying Digital Audio File, Apr. 30, 2021, ECF No.
63 (“Oral Arg.”).
(including India). Final Decision Memo at 65. Additionally, “rather than calculating
a counterfactual Indian HRC import AUV in 2017,” Commerce used an “estimated
regression coefficient” to calculate the PMS adjustment factor, which it derived from
the domestic-price based OLS model. See id. at 65. Finally, Commerce adjusted its
desired level of uneconomic capacity from 85 percent to 80 percent. Id.
Case 1:20-cv-00026-CRK Document 71 Filed 07/19/21 Page 11 of 22

Court No. 20-00026 	Page 12
PUBLIC VERSION
JURISDICTION AND STANDARD OF REVIEW
This court has jurisdiction pursuant to 19 U.S.C. § 1516a(a)(2)(B)(iii) and 28
U.S.C. § 1581(c) (2018), 12 which grant the court authority to review actions contesting
the final determination in an administrative review of an ADD order. The court will
uphold Commerce’s determination unless it is “unsupported by substantial evidence
on the record, or otherwise not in accordance with law.” 19 U.S.C. § 1516a(b)(1)(B)(i).
DISCUSSION
I. 	Adjustment to Below Cost Sales
Pointing to rulings of this Court, Garg argues that Commerce’s adjustment to
its reported costs for purposes of determining which of its sales were made below cost
contravenes the statute. 	See Pls.’ Br. at 36–38 (citing, inter alia, Husteel Co. v.
United States, 44 CIT __, 426 F. Supp. 3d 1376 (2020) (“Husteel”); Saha Thai Steel
Pipe Pub. Co. v. United States, 43 CIT __, __, 422 F. Supp. 3d 1363, 1368–69 (2019)
(“Saha”); Borusan Mannesmann Boru Sanayi v. Ticaret A.S., 44 CIT __, __, 426 F.
Supp. 3d 1395, 1411 (2020) (“Borusan”)). 	Defendant and Defendant-Intervenors
submit that this Court’s rulings are not final or binding, and maintain that Commerce
has authority to adjust reported costs to account for a PMS when determining which
sales to disregard. 13 	See Def.’s Br. at 21–24; Def-Intervenors’ Joint Br. at 30–33.
12 Further citations to Title 28 of the U.S. Code are to the 2018 edition.
13 This Court has addressed the issue of Commerce’s statutory authority to account
(footnote continued)
Case 1:20-cv-00026-CRK Document 71 Filed 07/19/21 Page 12 of 22

Court No. 20-00026 	Page 13
PUBLIC VERSION
Defendant-Intervenors add that Garg failed to exhaust its remedies with respect to
this 	point.14 	Def-Intervenors’ 	Joint 	Br. 	at 	33–35. 	For 	the 	following 	reasons,
Commerce’s adjustment to reported costs is remanded for further explanation or
reconsideration.
Commerce generally determines the normal value of a respondent’s entries of
subject merchandise based on the price at which the foreign like product is sold in
either the respondent’s home market, or a third country comparator market. See 19
U.S.C. § 1677b(a)(1). 	However, the statute permits Commerce to determine the
normal value of the subject merchandise based on a constructed value where there is
a PMS that prevents a proper comparison between prices in the foreign market and
for a PMS by adjusting the reported costs of a respondent’s home market sales for
purposes of determining which of those sales were made below cost. See Husteel, 44
CIT at __, 426 F. Supp. 3d at 1383–89; Saha, 43 CIT at __, 422 F. Supp. 3d at 1368–
70; Borusan, 44 CIT at __, 426 F. Supp. 3d at 1411–12. 	Defendant and Nucor
acknowledge that this case is not meaningfully different from those previously
decided by this Court. 	See Oral Arg. at 00:02:35–00:04:48 (counsel for Nucor
submitting that this case is distinct in its procedural posture because Plaintiffs did
not argue the legality of the PMS adjustment in the context of determining costs of
production).
14 With respect to Defendant-Intervenors’ argument that Garg failed to exhaust its
administrative remedies, see Def-Intervenors’ Joint Br. at 33–35, the issue of
Commerce’s adjustment to Garg’s reported costs is a pure legal question. The court
has discretion not to require exhaustion of administrative remedies where a pure
legal question arises. 28 U.S.C. § 2637(d); see also Agro Dutch Indus. Ltd. v. United
States, 508 F.3d 1024, 1029–30 (Fed. Cir. 2007). As explained above, the Court has
ruled on Commerce’s authority to adjust the reported costs of a respondent’s home
market sales in order to account for a cost-based PMS under 19 U.S.C. § 1677b(e).
Def-Intervenors’ Joint Br. at 34. Since the adjustment is unambiguously prohibited
by the statute, see, e.g., Husteel, 44 CIT at __, 426 F. Supp. 3d at 1383–89, Defendant-
Intervenors’ argument that the pure legal exception does not apply is unavailing.
Case 1:20-cv-00026-CRK Document 71 Filed 07/19/21 Page 13 of 22

Court No. 20-00026 	Page 14
PUBLIC VERSION
prices for U.S. sales. 	See 19 U.S.C. § 1677b(a)(1)(B)(ii)(III), 1677b(a)(1)(C)(iii),
1677b(a)(4), 1677b(e); see also, e.g., Husteel, 44 CIT at __, 426 F. Supp. 3d at 1382–
89. 	Parties 	and 	Commerce 	sometimes 	refer 	to 	determinations 	made 	under
§ 1677b(a)(1)(B)(ii)(III) and 1677b(a)(1)(C)(iii) as “sales-based” PMS determinations.
See, e.g., Final Decision Memo at 48; see also, e.g., Saha Thai Steel Pipe Pub. Co. v.
United States, 44 CIT __, 487 F. Supp. 3d 1323, 1329 (2020) (“Saha II”).
Commerce 	determines 	the 	constructed 	value 	of 	a 	respondent’s 	subject
merchandise based on the sum of various costs incurred in the production of that
merchandise. 	See 19 U.S.C. § 1677b(a)(4), (e). 	If, however, Commerce determines
that a PMS interferes with its calculation of those costs, it may use any reasonable
methodology when determining the constructed value of the subject merchandise.
See 19 U.S.C. § 1677b(e); see also, e.g., Husteel, 44 CIT at __, 426 F. Supp. 3d at
1386–67. 	Such determinations are sometimes referred to as “cost-based” PMS
determinations. See, e.g., Final Decision Memo at 50; see also, e.g., Saha II, 44 CIT
at __, 487 F. Supp. 3d at 1329.
Although 	Commerce 	may 	use 	any 	reasonable 	methodology 	to 	determine
constructed value where a cost-based PMS interferes with its calculations under 19
U.S.C. § 1677b(e), the statute does not empower Commerce to adjust a respondent’s
reported costs to account for a cost-based PMS when Commerce relies on home
Case 1:20-cv-00026-CRK Document 71 Filed 07/19/21 Page 14 of 22

Court No. 20-00026 	Page 15
PUBLIC VERSION
market or third country market sales to determine normal value. 15 See Husteel, 44
CIT at __, 426 F. Supp. 3d at 1387. As explained by this court in Husteel:
the plain language of the statute provides: a definition of normal value
as based on home market sales, third country sales, or constructed
value, 	19 	U.S.C. 	§ 	1677b(a)(1), 	(4); 	sales 	to 	be 	disregarded,
§ 1677b(a)(1)(B)(i), (b)(1); available adjustments, § 1677b(a)(6), (7); and,
alternatives where a PMS prevents a proper 	comparison between
normal 	value 	and 	export 	price 	or 	constructed 	export 	price,
§ 1677b(a)(1)(B), (C); 1677b(a)(4). The statute separately provides that
when Commerce is using constructed value and encounters a PMS that
15 Defendant-Intervenors submit that this Court has erred in its analysis of this issue
by failing to properly apply the Chevron framework. 	See Oral Arg. at 00:04:53; see
also Def-Intervenors’ Joint Br. at 30–33; Chevron, U.S.A., Inc. v. Nat. Res. Def.
Council, Inc., 467 U.S. 837 (1984) (“Chevron”). Nucor argues that silence in one part
of the statute does not necessarily mean that Congress has affirmatively spoken to
an issue. 	See Oral Arg. at 00:04:53–00:07:52 (citing, inter alia, Van Hollen v. FEC,
421 U.S. App. D.C. 36, 811 F.3d 486, 492–95 (2016)). 	Nucor observes that the PMS
language under 19 U.S.C. § 1677b(a), which directs Commerce not to use home
market or third country sales where a PMS “prevents a proper comparison” between
those sales and U.S. prices, existed prior to the Trade Preferences Extension Act of
2015’s (“TPEA”) amendments, and that it is not clear what Commerce means by
“comparison.” 	See Oral Arg. at 00:07:52–00:10:58. 	Nucor submits that the below-
cost sales provision of the statute “rolls into” the normal value and third country
provisions 	of 	the 	statute, 	and 	that 	Congress’s 	use 	of 	the 	ambiguous 	word
“comparison” 	could 	encompass 	a 	price-to-price 	comparison 	or 	a 	price-to-cost
comparison. See id. at 00:07:52–00:12:15.
Nucor’s submission fails to persuade. 	The TPEA’s amendments to 19 U.S.C
§§ 1677 and 1677b(e) did not change the wording of 19 U.S.C. § 1677b(a)(1)(B)(i),
which instructs Commerce to determine the normal value of the subject merchandise
based on the “price at which the foreign like product is first sold (or, in the absence of
a sale, offered for sale) for consumption in the exporting country, in the usual
commercial quantities and in the ordinary course of trade and, to the extent
practicable, at the same level of trade as the export price or constructed export
price[.]” 	Id. 	And although § 1677b(b)(1) directs Commerce to disregard foreign
market sales that “were made at less than the cost of production[,]” nothing in the
statute empowers Commerce to adjust a respondent’s reported costs to account for a
PMS without having made a determination to base normal value on constructed
value.
Case 1:20-cv-00026-CRK Document 71 Filed 07/19/21 Page 15 of 22

Court No. 20-00026 	Page 16
PUBLIC VERSION
it 	may 	resort 	to 	“any 	other 	calculation 	methodology.” 	19 	U.S.C.
§ 1677b(e).
44 CIT at __, 426 F. Supp. 3d at 1387. 	Unlike the constructed value provisions of the
statute, Congress has not enacted any amendments to the framework under 19 U.S.C.
§ 1677b for determining normal value based on foreign market sales that would
enable Commerce to make a PMS adjustment to a respondent’s reported costs for
purposes of determining whether those sales were made below cost. 	See, e.g.,
Husteel, 44 CIT at __, 426 F. Supp. 3d at 1383–89; Saha, 43 CIT at __, 422 F. Supp.
3d at 1368–70; Borusan, 44 CIT at __, 426 F. Supp. 3d at 1411–12. Thus, Commerce’s
adjustment 	to 	Garg’s 	reported 	costs 	is 	remanded 	for 	further 	explanation 	or
reconsideration. 	Since the court is remanding Commerce’s adjustment to Garg’s
reported costs when determining which home market sales were made below cost, the
court does not reach the issue of whether or not Commerce’s PMS finding is supported
by substantial evidence. 	The court also does not reach the issue of whether
Commerce’s methodology for calculating the PMS adjustment is reasonable.
II. 	Partial AFA
Garg argues that Commerce erred in applying partial AFA because the record
shows that there was nothing more it could have done to induce the cooperation of its
unaffiliated supplier, and that valuing the supplier’s inputs using Garg’s costs would
be a more accurate way to determine whether Garg is dumping. See Pls.’ Br. at 41–
47. 	Nonetheless, Garg submits that Commerce failed to justify its decision to
Case 1:20-cv-00026-CRK Document 71 Filed 07/19/21 Page 16 of 22

Court No. 20-00026 	Page 17
PUBLIC VERSION
calculate Garg’s AFA rate using the home market sale on which it realized the largest
loss. 	See 	id. 	at 	47–49. 	Defendant 	and 	Defendant-Intervenor 	contend 	that
Commerce’s application of partial AFA, as well as Commerce’s calculation of Garg’s
rate, was reasonable in this instance. See Def.’s Br. at 35–45; Def-Intervenors’ Joint
Br. at 35–43. For the following reasons, Commerce’s application of partial AFA and
adjustment to Garg’s rate is remanded for further explanation or reconsideration.
During an administrative review, Commerce normally seeks to calculate an
accurate dumping margin based on information submitted by parties. 	See Nan Ya
Plastics Corp. v. United States, 810 F.3d 1333, 1344 (Fed. Cir. 2016) (“accurate”
means accurate as a mathematical and factual matter, and thus supported by
substantial evidence). 	However, the statute directs Commerce to consider other
available information in certain situations. See 19 U.S.C. § 1677e; cf., also 19 U.S.C.
§ 1677m. 	Under § 1677e(a), Commerce shall use “facts otherwise available” where
information necessary to calculate a respondent’s dumping margin is not available
on the record; or, where an “interested party or any other person” withholds
information requested by Commerce, untimely fails to provide such information,
significantly impedes a proceeding, or provides information that cannot be verified,
Commerce shall use “facts otherwise available” in place of the missing information.
See 19 U.S.C. § 1677e(a). 	Under § 1677e(b), once Commerce decides to act under
§ 1677e(a), Commerce may then apply “an inference that is adverse to the interests
of 	that 	party 	in 	selecting 	from 	among 	the 	facts 	otherwise 	available[.]” 	Id.
Case 1:20-cv-00026-CRK Document 71 Filed 07/19/21 Page 17 of 22

Court No. 20-00026 	Page 18
PUBLIC VERSION
§ 1677e(b)(1). 	However, 19 U.S.C. § 1677e(b) requires Commerce to “find[ ] that an
interested party has failed to cooperate by not acting to the best of its ability to comply
with a request for information[.]” 	Id. § 1677e(b)(1). 	A respondent cooperates to the
“best of its ability” when it “has put forth its maximum effort to provide Commerce
with full and complete answers to all inquiries in an investigation.” 	Nippon Steel
Corp. v. United States, 337 F.3d 1373, 1382 (Fed. Cir. 2003).
In some instances, Commerce may use adverse inferences under 19 U.S.C.
§ 1677e(a). 	In Mueller Comercial De Mexico v. United States, the Court of Appeals
for the Federal Circuit (“Court of Appeals”) held that, when acting pursuant to 19
U.S.C. 	§ 	1677e(a), 	Commerce 	may 	incorporate 	adverse 	inferences 	against 	a
cooperative respondent, if doing so will yield an accurate rate, promote cooperation,
and thwart duty evasion. 753 F.3d 1227, 1332–36 (Fed. Cir. 2014) (“Mueller”). There,
Commerce sought to incorporate adverse inferences against a cooperative respondent
under the theory that the cooperative respondent could have induced the cooperation
of a supplier that was also a mandatory respondent to the proceeding. 	Id. at 1229–
30. 	The Court of Appeals concluded that Commerce may invoke such rationales
under 19 U.S.C. § 1677e(a) but must balance its consideration against its obligation
to calculate an accurate dumping margin. 	Mueller, 753 F.3d at 1332–36. 	If
Commerce seeks to induce the cooperation of a non-cooperating supplier through a
cooperating 	party, 	there 	must 	be, 	for 	example, 	substantial 	evidence 	that 	the
cooperating party has leverage over 	the non-cooperating supplier, and that if
Case 1:20-cv-00026-CRK Document 71 Filed 07/19/21 Page 18 of 22

Court No. 20-00026 	Page 19
PUBLIC VERSION
Commerce is constrained from employing adverse inferences, the non-cooperating
party will have an incentive to evade duties by selling merchandise into the United
States through the cooperating party. 	See, e.g., Canadian Solar Int’l Ltd. v. United
States, 43 CIT __, 415 F. Supp. 3d 1326, 1334–35 (2019).
The court must remand Commerce’s determination because it is not discernible
from Commerce’s analysis how it is applying 19 U.S.C. § 1677e in this instance.
Commerce explains that it is defining Garg’s unaffiliated supplier as a producer of
the foreign like product and an interested party within the meaning of 19 U.S.C.
§ 1677(9)(A), and that it is “resort[ing] to partial facts available with adverse
inferences regarding said suppliers’ missing production cost information, pursuant to
[19 U.S.C. § 1677e(b)].” Final Decision Memo at 37. 	Then, Commerce cites Mueller
as “controlling judicial precedent for the circumstances at hand[.]” Id. at 39; see also,
id. at 40 (stating that Commerce’s rationale rests on findings in Mueller). However,
Mueller governs Commerce’s incorporation of adverse inferences under subsection
(a), not subsection (b). 	See Mueller, 753 F.3d at 1332–36. 	Yet, Commerce later
invokes the wording of 19 U.S.C. § 1677e(b) when observing that “[Garg] did not act
to the best of its ability in attempting to obtain the suppliers’ costs.” Final Decision
Memo at 41. 	It is unclear whether this statement indicates that Commerce is
applying § 1677e(b) against the unaffiliated supplier, against Garg, or whether
Commerce here acts pursuant to some other interpretation of 19 U.S.C. § 1677e(b).
The court cannot discern Commerce’s analytical pathway, and thus Commerce’s final
Case 1:20-cv-00026-CRK Document 71 Filed 07/19/21 Page 19 of 22

Court No. 20-00026 	Page 20
PUBLIC VERSION
determination cannot be sustained. See SEC v. Chenery Corp., 332 U.S. 194, 196–97
(1947).
To the extent that Commerce applies 19 U.S.C. § 1677e(a) against Garg,
Commerce must do more to support its determination. 	Commerce states that a
partial AFA rate “potentially induces the cooperation” of Garg’s unaffiliated supplier.
Final Decision Memo at 40 (quoting Prelim. Decision Memo at 40). 	However, Garg
proffered evidence that it had insufficient market power to induce the cooperation of
the unaffiliated supplier. See Garg’s Suppl. Resp. at Ex. S1-D-2(f) Part-1 at 30, Part-
2; Resp. from [Garg] to [Commerce] Re: Section A Questionnaire Resp. at Ex.A-
11(b),(d), PDs 33–36, CDs 7-11, bar codes 3754219-01–04, 3754211-01–05 (Sept. 17,
2018) 	(“Garg’s 	Section 	A 	Questionnaire 	Resp.”); 	see 	also 	Garg’s 	Section 	A
Questionnaire Resp. at Part-1. Commerce responds that it is “reasonable to assume
that [Garg] maintained sufficient control [over the unaffiliated supplier]” because “it
sourced a substantial volume of pipe and tube” from the supplier, see Final Decision
Memo at 40; but whether or not that is a reasonable assumption to make, Commerce
should reconcile that assumption with detracting evidence proffered by Garg. 	And
with respect to Garg’s attempts to induce the unaffiliated supplier’s cooperation,
Garg’s Suppl. Resp. at 51, Commerce faults Garg for “merely threaten[ing] once (by
e-mail) to cancel all pending orders[.]” 	Id. at 41. However, not only does the record
show that Garg took several actions leading up to the email that Commerce singles
out and characterizes as a mere threat to cancel all orders, see id. (citing Garg’s Suppl.
Case 1:20-cv-00026-CRK Document 71 Filed 07/19/21 Page 20 of 22

Court No. 20-00026 	Page 21
PUBLIC VERSION
Resp. at 51), the email itself—which Garg described as an “ultimatum”—appears to
be an explicit request to cancel all pending orders with the unaffiliated supplier. See
Garg’s Suppl. Resp. at 51.
Insofar as Commerce seeks to apply 19 U.S.C. § 1677e(b) to Garg, Commerce
simply does not explain whether it is finding that Garg was an uncooperative party
during the administrative review. 16 	It may be that Commerce’s finding that Garg
“failed to put forth its maximum efforts in inducing the suppliers in question to
cooperate” is the basis for applying AFA against Garg. 	See Final Decision Memo at
41. 	However, since Commerce discusses Garg’s efforts in the context of applying
Mueller’s framework, the court cannot say that it is reasonably discernible either
way. Id. If Commerce means to apply § 1677e(b), it must indicate whether Garg was
16 Regarding the requirement under Mueller that Commerce balance its policy
considerations against its obligation to calculate an accurate dumping margin for a
cooperative party under 19 U.S.C. § 1677e(a), see 753 F.3d at 1332–36, it is unclear
whether Commerce’s analysis relates to its determination of Garg’s normal value,
which here Commerce calculates based on home-market sales, see Final Decision
Memo at 48–50, or whether it relates to Commerce’s apparent decision to calculate a
constructed value for Garg’s unaffiliated suppliers. 	See Final Decision Memo at 48
(“Moreover, without the unaffiliated suppliers’ costs, we cannot accurately calculate
[constructed value] . . . [w]ithout 	actual costs of production underlying
such [constructed value] comparisons, it is unknown whether and to what extent the
[constructed value] for such comparisons is accurate.”). 	On remand, if Commerce
continues to apply partial AFA, it must clarify its methodology; it must clearly
identify to what end it seeks to resort to facts available with an adverse inference. If
it is employing partial AFA to calculate Garg’s dumping margin, it should clearly
explain how using the acquisition costs for the sale upon which Garg realized its
largest 	loss 	as 	a 	surrogate 	for 	missing 	cost 	information 	furthers 	Commerce’s
predominant interest in calculating an accurate normal value for Garg’s sales of
subject merchandise. See Mueller, 753 F.3d at 1233.
[[ 	]]
Case 1:20-cv-00026-CRK Document 71 Filed 07/19/21 Page 21 of 22

Court No. 20-00026 	Page 22
PUBLIC VERSION
a cooperative respondent, and support any such determination with substantial
evidence. 	Commerce’s final determination is remanded for further explanation or
reconsideration.
CONCLUSION
For the foregoing reasons, it is
ORDERED that Commerce’s final determination is remanded for further
explanation or reconsideration consistent with this opinion; and it is further
ORDERED that Commerce shall file its remand redetermination with the
court within 90 days of this date; and it is further
ORDERED that the parties shall have 30 days thereafter to file comments on
the remand redetermination; and it is further
ORDERED that the parties shall have 30 days to file their replies to
comments on the remand redetermination; and it is further
ORDERED that the parties shall have 14 days thereafter to file the Joint
Appendix; and it is further
ORDERED that Commerce shall file the administrative record within 14 days
of the date of filing its remand redetermination.
/s/ Claire R. Kelly
Claire R. Kelly, Judge
Dated: 	July 9, 2021
New York, New York
Case 1:20-cv-00026-CRK Document 71 Filed 07/19/21 Page 22 of 22