Fujian Mach. and Equip. Import & Export v. U.S.
| Citation | 276 F.Supp.2d 1371 |
| Decision Date | 28 July 2003 |
| Docket Number | Court No. 99-08-00532.,Slip Op. 03-92. |
| Parties | FUJIAN MACHINERY AND EQUIPMENT IMPORT & EXPORT CORPORATION, and Shandong Machinery Import & Export Corporation, Plaintiffs, v. UNITED STATES, and The United States Department of Commerce, Defendants, and O. Ames Company, Defendant-Intervenor. |
| Court | U.S. Court of International Trade |
Sidley, Austin, Brown & Wood (Lawrence R. Walders and Neil C. Pratt), Washington, DC, for plaintiffs Fujian Machinery and Equipment Import & Export Corporation and Shandong Machinery Import & Export Corporation.
Peter D. Keisler, Assistant Attorney General, David M. Cohen, Director, Patricia McCarthy, Assistant Director, Kenneth S. Kessler, Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, Office of Chief Counsel for Import Administration, United States Department of Commerce (Elizabeth Doyle), for defendants.
Wiley, Rein & Fielding (Charles O. Verrill, Jr. and Eileen P. Bradner), Washington, DC, for defendant-intervenor O. Ames Company.
This case is before the Court following remand to the United States Department of Commerce ("Commerce"). In Fujian Machinery and Equipment Import & Export Corp. v. United States, 25 CIT ___, 178 F.Supp.2d 1305 (2001) ("Fujian I"), familiarity with which is presumed, the Court sustained in part and remanded in part Commerce's determination with respect to plaintiffs Fujian Machinery and Equipment Import & Export Corporation ("FMEC") and Shandong Machinery Import & Export Corporation ("SMC") in Heavy Forged Hand Tools, Finished or Unfinished, With or Without Handles, From the People's Republic of China; Final Results and Partial Recission of Antidumping Duty Admin. Reviews, 64 Fed. Reg. 43,659 (Aug. 11, 1999) ("Final Results").
In Fujian I, the Court found that Commerce had properly determined that SMC had failed verification and that FMEC had failed verification with respect to one of the four classes of subject merchandise, bars/wedges. However, the Court also held that Commerce had not adduced substantial evidence showing that FMEC had failed verification with respect to the other three classes of subject merchandise, or that SMC's and FMEC's supplier factories, "Factory A" and "Factory B" (collectively, the "Factories") had failed verification. In addition, the Court found Commerce's decision to apply adverse facts available ("AFA") and to apply the PRC-wide dumping margins to FMEC and SMC to be unsupported by substantial evidence and not otherwise in accordance with law. The Court remanded the matter to Commerce with instructions to accept certain additional evidence from FMEC and thereupon to reconsider, in light of that evidence and the Court's opinion in Fujian I, whether: (1) FMEC had failed verification with respect to the other three classes of subject merchandise; (2) Factory A and Factory B had failed verification; (3) SMC's verification failure warranted the application of AFA; and (4) if Commerce determined on remand that FMEC had failed verification, reconsider whether the application of AFA to FMEC was warranted.
Commerce duly complied with the Court's order. After accepting FMEC's additional evidence, Commerce issued draft Redetermination Results (Jan. 23, 2002) ("Draft Remand Results") and then, after receiving comments from FMEC and SMC, the Final Results of Redetermination Pursuant to Court Remand (Feb. 20, 2002) ("Remand Results"). In the Remand Results, as in the Draft Remand Results, Commerce answered each of the above four questions in the affirmative. It then calculated separate rates for FMEC and SMC that were identical to the rates originally selected in the Final Results.
FMEC and SMC submitted Comments Regarding the Final Results of Redetermination Pursuant to Court Remand ("Plaintiffs' Comments"), and Commerce submitted its Rebuttal to Plaintiffs' Comments ("Commerce's Rebuttal").
The Court has jurisdiction under 28 U.S.C. § 1581(c) (2000). The Court must uphold Commerce's determination if it is supported by substantial evidence and otherwise in accordance with law. 19 U.S.C. § 1516a(b)(1)(B)(i) (2000). After due consideration of these submissions, the administrative record, and all other papers had herein, and for the reasons that follow, the Court sustains the Remand Results.
In Fujian I, the Court held that FMEC's total failure to report any U.S. sales of bars/wedges justified Commerce's determination that FMEC failed verification with respect bars/wedges, but that same failure did not clearly support Commerce's finding that FMEC had failed verification with respect to the other three classes of subject merchandise. In addition, the Court found that other instances of verification failures cited by Commerce did not constitute substantial evidence, because apparent problems during the verification process had hindered FMEC's ability to supply the requested data. The Court ordered Commerce to accept this data and to reconsider its findings.
In the Remand Results, Commerce again found that FMEC had failed verification with respect to the other three classes of subject merchandise. Commerce cites the following reasons for its determination: (1) an overall lack of preparation by FMEC prior to verification; (2) its lack of confidence in the overall accuracy of FMEC's submissions, engendered by FMEC's total failure to report its U.S. sale of bars/wedges; (3) FMEC's failure to provide timely and sufficient information about its other branches and subsidiaries, sufficient to prove that those branches and subsidiaries had no U.S. sales; (4) significant discrepancies with respect to the sales revenue reported on the Hand Tools Department's 1997 financial statements and its income statements; (5) FMEC's failure to submit all its February 1997 sales invoices and vouchers; and (6) FMEC's failure to submit quantity and value worksheets. See Commerce's Rebuttal, at 13-14; see also Remand Results, at 10-14.
The first and second of these reasons do not constitute substantial evidence supporting Commerce's determination. A general reference to a respondent's lack of advance preparation is not itself evidence of a verification failure; it is the manifestations of that unpreparedness that matter. Commerce must point to specific examples of how the alleged unpreparedness impacted the verification process, rather than rely on such a vague, unsupported, conclusory assertion.1
The determination that FMEC's failure to report its one U.S. sale of bars/wedges casts a similar shadow over the total veracity of FMEC's responses is also a form of impermissible bootstrapping not consistent with the Court's holding in Fujian I. Because "a completely errorless investigation is simply not a reasonable expectation," Nippon Steel Corp. v. United States, 25 CIT ___, ___, 146 F.Supp.2d 835, 841 n. 10 (2001), it would be unfair to a respondent if Commerce were permitted to extrapolate from a single error, which may well have been an isolated oversight, a conclusion that the entirety of the respondent's submissions concerning other classes of subject merchandise are unreliable.2
Commerce's third reason for its determination appears to be more substantive, but is underdeveloped. Commerce cites problems related to financial data for FMEC's branches and affiliates, as well as its short- and long-term investment records, that FMEC did not provide at verification but did provide thereafter pursuant to the Court's Order in Fujian I. Before this Court, Commerce argues that FMEC failed to report other branches that could have had sales of subject merchandise, see Commerce's Rebuttal, at 14, but this contention is not borne out by the record. In the Remand Results, Commerce devotes a single sentence to a cursory attempt to tie these records to the fourth and fifth shortcomings outlined supra and discussed infra, but it does not explicate its reasoning. To the extent that this may be a disguised attempt to hold FMEC to account for its failure to provide the data at verification, it contravenes the Court's Order in Fujian I. At the same time, the Court observes that FMEC does not refute Commerce's finding in any way in the Plaintiffs' Comments. The Court thus concludes that Commerce's finding on this issue constitutes the proverbial scintilla of evidence, but no more, to show a verification failure.
By contrast, the Court views the three remaining bases that Commerce cites as rationales for its determination to be particularly probative. Significantly, each of the following problems relates to data that FMEC was permitted to submit, pursuant to the Court's Order in Fujian I, on November 27, 2001, well after the on-site verification.
First, Commerce asserts that it could not verify the quantity and value of FMEC's U.S. sales for the hand tool production unit for the period from January through April 1997, when it was known as the "Hand Tools Department."3 Commerce explains that the verifiers could not reconcile the Hand Tools Department's sales revenue as reported in its departmental financial statements, which data was provided at verification, with the Department's monthly "income statements," which FMEC submitted following Fujian I. Confusion over whether a particular value reported on the income statement for April 1997 was cumulative, bi-monthly, or monthly led Commerce to conclude that either FMEC had under-reported sales on its financial statements in the amount of at least [ ] or had over-reported them in the amount of [ ] — a discrepancy of either 15 percent or 47 percent,...
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