Mukand, Ltd. v. United States, 2013–1425.

• Citation: 767 F.3d 1300
• Decision Date: 16 September 2014
• Docket Number: No. 2013–1425.,2013–1425.
• Parties: MUKAND, LTD., Plaintiff–Appellant, v. UNITED STATES, Defendant–Appellee, and Carpenter Technology Corporation, Defendant–Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals for the Federal Circuit

767 F.3d 1300

MUKAND, LTD., Plaintiff–Appellant

v. UNITED STATES, Defendant–AppelleeandCarpenter Technology Corporation, Defendant–Appellee.

No. 2013–1425.

United States Court of Appeals, Federal Circuit.

Sept. 16, 2014.

Peter J. Koenig, Squire Sanders (US) LLP, of Washington, DC, argued for plaintiff-appellant.

Eric E. Laufgraben, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-appellee, United States. With him on the brief were Stuart F. Delery, Assistant Attorney General, Jeanne E. Davidson, Director, and Patricia M. McCarthy, Assistant Director. Of counsel on the brief was Justin R. Becker, Attorney, Office of the Chief Counsel for Trade Enforcement and Compliance, United States Department of Commerce, of Washington, DC.

Grace W. Kim, Kelley Drye & Warren LLP, of Washington, DC, argued for defendant-appellee, Carpenter Technology Corporation. With her on the brief were Laurence J. Lasoff and Mary T. Staley.

Before NEWMAN, DYK, and REYNA, Circuit Judges.

Opinion

REYNA, Circuit Judge.

Mukand, Ltd. (“Mukand”) appeals a decision of the Court of International Trade affirming the Department of Commerce's application of adverse facts available in its calculation of an antidumping duty on Mukand's imports of stainless steel bar from India. The Department of Commerce applied adverse facts available (“AFA”) after Mukand failed to provide production cost data broken down by product size as requested on five separate occasions. For the reasons set forth below, we affirm.

I

Upon the receipt of a proper request, the Department of Commerce (“Commerce”) is required to review and reassess its antidumping duty orders at least once each year. 19 U.S.C. § 1675(a). On March 30, 2010, at the request of domestic interested parties, Commerce initiated the current administrative review on an outstanding antidumping duty order on stainless steel bar from India for the period of February 1, 2009, through January 31, 2010. As part of this review, Commerce issued to Mukand a series of questionnaires designed to obtain information necessary to calculate Mukand's dumping margin. These questionnaires asked Mukand to provide, among other things, its costs of producing different sizes of stainless steel bar. Product size is one of six product characteristics determined by Commerce to be significant in differentiating between steel bar products, the other five being general type of finish, grade, re-melting, type of final finish, and shape. Commerce thus sought product-specific cost information to ensure that it compared similar products in its price-to-price comparisons, calculated a correct difference-in-merchandise adjustment, and arrived at an accurate constructed normal value for Mukand's merchandise.

Upon receiving Mukand's response to its initial questionnaire, Commerce discovered that Mukand assigned the same production costs across all product sizes. Mukand did not explain its rationale for this approach despite the questionnaire's request to “quantify and explain” any belief that size, or any other physical characteristic, is an insignificant cost factor. Commerce informed Mukand that it did not consider this approach to be reasonable and asked that Mukand produce size-specific cost information, regardless of whether it tracked such information in its normal accounting records. Alternatively, Commerce again asked Mukand to “quantify and explain” any reasons for believing that size-based cost differentials are insignificant. Mukand responded with a brief statement that where product grade and type of finishing operation are the same, direct material costs do not vary with size. In a second supplemental questionnaire, Commerce reiterated its need for either size-specific cost estimates or a more thorough narrative quantifying and explaining Mukand's belief that size is not a cost factor. Again, Mukand asserted without detailed support that size does not affect costs when all other physical characteristics remain the same. In a third supplemental questionnaire, Commerce again reiterated its need for size-specific cost information, noting:

[I]t is not necessary for Mukand to calculate [control number (“CONNUM”) ] specific costs in its normal books and records in order to differentiate cost differences between CONNUMs that have different physical characteristics when reporting to the Department as long as the cost differences reported to the Department are based on reasonable and verifiable methods.

J.A.2063 (emphasis added). Mukand responded with a short statement that it does not keep track of size-specific costs and reasserted its belief that size-based costs are insignificant “as smaller sizes can be processed at higher speed than to [sic] larger size.” J.A.2064.

Unsatisfied with Mukand's response, Commerce sought this information one last time. In a fourth supplemental questionnaire, Commerce noted that it sought cost data with respect to two factors—rolling time and weight—and asked a series of specific questions designed to obtain the elicited information. These questions included a sample chart for Mukand to complete regarding size, weight, and rolling time. Commerce instructed Mukand to contact it if its request was unclear, if Mukand was unable to supply the information, or if Commerce was otherwise mischaracterizing Mukand's production process. Commerce also warned that “[f]ailure to provide the requested information may result in the Department deciding to rely on facts available, as required by section 776(a) of the Tariff Act of 1930, as amended, in our preliminary results.” J.A.2075. In its response, Mukand again restated its reasons for not reporting size-specific costs, concluding that there “is no reasonable and verifiable way to do what is requested.” J.A.2074 (emphasis altered). Mukand never contacted Commerce directly to ask for clarification or assistance of any kind.

Commerce determined that Mukand's responses were deficient and resorted to facts otherwise available. Pursuant to statute, Commerce may resort to facts otherwise available to complete the record when an interested party fails, for whatever reason, to provide requested information.¹ Before resorting to facts otherwise available, Commerce must notify the respondent of the nature of the deficiency and, to the extent practicable, provide an opportunity for the respondent to remedy or explain the deficiency. 19 U.S.C. § 1677m(d). If the respondent's explanation is unsatisfactory or untimely, Commerce may “disregard all or part of the original and subsequent responses.” Id. Commerce may not, however, refuse to consider necessary information that satisfies the five criteria outlined in section 1677m(e).

Commerce may further rely on an adverse inference against a respondent when selecting among the facts otherwise available if it concludes that the respondent failed to cooperate to the best of its ability. 19 U.S.C. § 1677e(b). The “best of its ability” standard requires the respondent to put forth its maximum effort to investigate and obtain full and complete answers to Commerce's inquiries. Nippon Steel, 337 F.3d at 1382. While this standard does not require perfection on the respondent's part, it does not allow for “inattentiveness, carelessness, or inadequate record keeping.” Id.

In its preliminary results, Commerce applied an adverse inference against Mukand after concluding that Mukand (i) repeatedly failed to provide product-specific cost data by size; (ii) failed to provide a meaningful explanation of why it could not provide such data; and (iii) failed to provide factual information supporting its claim that product size did not significantly affect production cost.² Commerce noted that requesting product-specific cost data is standard procedure, and that a respondent has a duty to provide a “full explanation and suggested alternative forms” if it is unable to provide requested information. Id. Accordingly, Commerce concluded that applying AFA against Mukand was justified.

Mukand responded to the preliminary results and claimed that it materially complied with Commerce's requests. Mukand argued that it could not report size-specific production costs because any information it would generate would not be subject to reasonable verification. At the same time, Mukand offered to submit the same information it previously declared was not reasonably available, and that it could do so “immediately on request.” Commerce refused to consider this new information because it lacked time to review and solicit comments on the data within the statutory deadlines. Commerce also noted that Mukand had numerous opportunities during the questionnaire process to provide this data. Commerce further found that Mukand's failure to provide size-specific cost information rendered its response “so incomplete that it could not serve as a reliable basis for reaching a final determination” and could not be used without undue difficulty. Commerce thus continued to apply AFA to all of Mukand's sales under review and assigned Mukand an AFA rate of 21.02 percent ad valorem.³

Mukand appealed to the Court of International Trade (“Trade Court”), and the court affirmed Commerce's application of AFA.⁴ The Trade Court noted that Commerce asked for size-specific cost information on five separate occasions, and Commerce explained on four of those occasions that it was unsatisfied with Mukand's response and reiterated both the type of information it needed and why it was important. The Trade Court also rejected Mukand's assertion that it complied with Commerce's questionnaires when it explained that it had no reasonable and verifiable way to report size-specific costs. The Trade Court agreed with Commerce that Mukand's responses consisted of vague, unsupported assertions that the requested information was not reasonably available and that size was not a significant cost factor. The Trade Court also noted that, despite...