Home Products Int'l Inc. v. United States

• Decision Date: 07 February 2011
• Docket Number: No. 2010–1184.,2010–1184.
• Citation: 633 F.3d 1369
• Parties: HOME PRODUCTS INTERNATIONAL, INC., Plaintiff–Appellant,v.UNITED STATES, Defendant–Appellee,andSince Hardware (Guangzhou) Co., Ltd., Defendant.
• Court: U.S. Court of Appeals — Federal Circuit

633 F.3d 1369

32 ITRD 1897

HOME PRODUCTS INTERNATIONAL, INC., Plaintiff–Appellant,

v.UNITED STATES, Defendant–Appellee,andSince Hardware (Guangzhou) Co., Ltd., Defendant.

No. 2010–1184.

United States Court of Appeals, Federal Circuit.

Feb. 7, 2011.

Frederick L. Ikenson, Blank Rome LLP, of Washington, DC, argued for plaintiff-appellant.Patricia M. McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-appellee. With her on the brief were Tony West, Assistant Attorney General, Jeanne E. Davidson, Director, and Carrie Dunsmore, Attorney.Before BRYSON, DYK, and MOORE, Circuit Judges.DYK, Circuit Judge.

This case concerns the obligation of a court to remand a case to an administrative agency when new evidence indicates that the agency's proceedings were tainted by material fraud. We hold that the Court of International Trade (“Trade Court”) abused its discretion in declining to remand this case to the Department of Commerce (“Commerce”), and accordingly we reverse and remand with instructions that the case be remanded to Commerce for further proceedings consistent with this opinion.

Background

I

This case concerns an antidumping duty order issued in 2004 covering floor-standing, metal-top ironing tables and certain parts thereof from the People's Republic of China. Commerce determined that Since Hardware (Guangzhou) Co., Ltd. (“Since Hardware”) and other Chinese exporters were selling ironing tables in the United States at less than fair value, and the International Trade Commission (“ITC”) found material injury.¹ Thereafter, in the first and second administrative reviews of that antidumping order, Commerce calculated dumping margins for Since Hardware of 0.45 percent ² and 0.34 percent ³ respectively. Because the agency considers dumping margins of less than 0.5 percent to be de minimis, Commerce accordingly did not impose any antidumping duties on Since Hardware for these review periods.

In March 2008, plaintiff-appellant Home Products International, Inc. (“Home Products”) initiated an action in the Trade Court challenging the results of Commerce's second administrative review on the grounds that Commerce calculated an improperly low dumping margin. Since Hardware, the respondent in the Commerce proceeding, intervened in support of the government. The sole issue raised in Home Products' complaint was whether Commerce had erred in using a surrogate manufacturer's outdated financial statements to value Since Hardware's factory overhead, administrative expenses, and profit. The Trade Court ultimately rejected Home Products' contentions regarding this issue—a ruling which Home Products does not contest and that is not relevant to the present appeal.

While Home Products' challenge to the second administrative review was pending in the Trade Court, Commerce was conducting its third administrative review of the same antidumping order. See Floor–Standing, Metal–Top Ironing Tables and Certain Parts Thereof from the People's Republic of China: Final Results of Antidumping Duty Administrative Review, 74 Fed.Reg. 11,085 (Dep't of Commerce Mar. 16, 2009) [hereinafter AR3 Final Results ] (covering imports from August 1, 2006, through July 31, 2007). During that proceeding, new evidence was brought to light that indicated Since Hardware had submitted falsified documents to Commerce during the third administrative review. Commerce concluded that the documents were unreliable and inaccurate. Commerce's findings regarding this alleged conduct were detailed in two memoranda that the agency adopted in its final results. See AR3 Final Results, at 11086 (adopting Issues and Decision Memorandum for the Final Results in the Administrative Review of Floor–Standing, Metal–Top Ironing Tables and Certain Parts Thereof from the People's Republic of China, available at http:// ia. ita. doc. gov/ frn/ summary/ PRC/ E 9– 5627– 1. pdf, J.A. 1007–18 [hereinafter I & D Memo ]; Since Hardware (Guangzhou) Co., Ltd.'s Claim Regarding Market Economy Purchases, and Use of Adverse Facts Available, J.A. 1020–38 [hereinafter AFA Memo ] ). Understanding the nature of the alleged falsifications requires a brief overview of certain aspects of antidumping law.

Dumping occurs when a foreign firm sells a product in the United States at a price lower than the product's normal value (“NV”); the amount by which NV exceeds the U.S. price (the “export price”) is the “dumping margin.” See 19 U.S.C. § 1673. For exporters based in market economy (“ME”) countries, NV is generally the price at which the firm sells the product in its home market. See 19 U.S.C. § 1677b(a)(1)(B)(i). However, Since Hardware is located in China, a non-market-economy (“NME”) country. Where, as here, the exporter is located in an NME country, the default rule is that NV is calculated based on a factors-of-production analysis whereby each input is valued based on data from a surrogate ME country. See 19 U.S.C. § 1677b(a)(1)(B)(ii), (c). However, if an NME exporter purchases a portion of a given input from an ME supplier and pays in ME currency, Commerce will generally value that portion of the input according to the actual price paid to the ME supplier (even if the supplier is located in an ME country other than the chosen surrogate country). See 19 C.F.R. § 351.408(c)(1). Furthermore, if an NME exporter purchases at least thirty-three percent of a given input from ME suppliers, Commerce will use the weighted-average price of those ME purchases (rather than a surrogate value) to value the remainder of the input purchased from NME suppliers. See Antidumping Methodologies: Market Economy Inputs, Expected Non–Market Economy Wages, Duty Drawback; and Request for Comments, 71 Fed.Reg. 61,716, 61,717—18 (Dep't of Commerce Oct. 19, 2006). In such situations, if the weighted-average ME purchase price is lower than the surrogate value that would otherwise be assigned to an input, the result would be a lower NV and a correspondingly smaller dumping margin.

During the third administrative review, Home Products contended that Since Hardware had submitted falsified certificates of origin to Commerce that inaccurately reported that it had purchased portions of certain steel inputs from ME suppliers. These certificates of origin were material because they made it appear that Since Hardware had purchased more than the key thirty-three percent threshold of the inputs in question from ME suppliers, thereby qualifying the entirety of those inputs to be valued based on the weighted-average price of Since Hardware's (purported) ME purchases. See AFA Memo, at 2; see also Floor–Standing, Metal–Top Ironing Tables and Certain Parts Thereof from the People's Republic of China: Preliminary Results of Antidumping Duty Administrative Review, 73 Fed.Reg. 52,277, 52,280 (Dep't of Commerce Sept. 9, 2008) [hereinafter AR3 Preliminary Results ]. Furthermore, this was significant because the steel inputs in question were “the primary inputs” for producing floor-standing, metal-top ironing tables. AFA Memo, at 2. Presumably, Since Hardware's purported ME purchase prices were lower than the alternative surrogate values. This likely allowed Since Hardware to obtain a decreased dumping margin. See I & D Memo, J.A. 1015.

As described by Commerce in the third administrative review, the evidence of misrepresentations by Since Hardware in the third administrative review is quite substantial. See I & D Memo; AFA Memo.

First, the certificates of origin submitted by Since Hardware contained typographical errors that were inconsistent with genuine exemplar certificates of origin supplied by the certifying agency of the purported country of origin. For instance, several words were misspelled, the business identification number of the certifying agency was misprinted, and several phrases were altered in wording. AFA Memo, at 3–4, 11.

Second, the certificates submitted by Since Hardware each bore a six-digit alpha-numeric certificate number (e.g., “B6B326”), whereas the official forms employed a basic sequential numbering system (e.g., six numbers, with a single letter suffix). Id. at 4, 11.

Third, the date stamp appearing on Since Hardware's certificates differed from the official stamp used by the certifying agency in that it lacked an official logo and employed a different date format (e.g., the official stamp used a “28 NOV 2006” format, whereas the stamp on Since Hardware's certificates used a “2005. 11. 25” format). Id.

Fourth, the signature on Since Hardware's certificates of origin was noticeably different from the actual signature of the corresponding certifying agency official, whose signature was unique. Id. at 4–5, 11. Moreover, one of the certificates Since Hardware submitted during the first administrative review was purportedly signed by the same official long before she had even begun her employment with the certifying agency. Id. at 5, 11.

Fifth, the amounts of steel reported on Since Hardware's certificates of origin were inconsistent with relevant market data. In particular, Commerce noted that “[n]either the data on steel exports from [the purported country of origin], nor the data on steel imports by [the purported destination country] support the levels of purchases claimed by Since Hardware.” Id. at 12. In fact, “Since Hardware['s] claimed purchases alone exceed[ed] the total inputs of [the type of steel at issue] shipped to all potential customers in these countries.” Id.

In light of this evidence, Since Hardware did not argue that the challenged certificates of origin were authentic, but rather attempted to shift blame for the apparent forgeries by arguing that the certificates of origin were provided to it by its unaffiliated suppliers. Id. at 6–7. However, Commerce found this contention to be implausible, as the same falsifications appeared in the certificates purportedly submitted by multiple...