Dalian Hualing Wood Co. v. United States

675 F.Supp.3d 1294

DALIAN HUALING WOOD CO., LTD., Plaintiff, v. UNITED STATES, Defendant,andAmerican Kitchen Cabinet Alliance, Defendant-Intervenor.

Slip Op. 23-179 Court No. 22-00334

United States Court of International Trade

December 18, 2023

Michael S. Holton, Grunfeld Desiderio Lebowitz Silverman & Klestadt, LLP, of Washington DC, argued for plaintiff Dalian Hualing Wood Co., Ltd. With him on the brief was and Jordan C. Kahn.

Emma E. Bond, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, argued for the defendant. With her on the brief were Brian M. Boynton, Principal Deputy Assistant Attorney General, Patricia M. McCarthy, Director, and Tara K. Hogan, Assistant Director. Of counsel on the brief was Alexander P. Fried, Office of the Chief Counsel for Trade Enforcement and Compliance, U.S. Department of Commerce, of Washington DC.

Luke A. Meisner and Michelle R. Avrutin, Schagrin Associates, of Washington DC, argued for defendant-intervenor American Kitchen Cabinet Alliance. With them on the brief was Roger B. Schagrin.

OPINION AND ORDER

Restani, Judge:

Plaintiff Dalian Hualing Wood Co., Ltd. ("Hualing") challenges the decision of the United States Department of Commerce ("Commerce") in the administrative review of the antidumping duty ("AD") order on Wooden Cabinet and Vanities and Components Thereof ("WCV") from the People's Republic of China ("PRC"). Wooden Cabinet and Vanities and Components Thereof from the People's Republic of China: Final Results and Partial Rescission of the Antidumping Duty Administrative Review; 2019-2021, 87 Fed. Reg. 67,674 (Dep't Commerce Nov. 9, 2022) ("Final Results"). Hualing claims that Commerce improperly rejected its lone U.S. sale as not bona fide, contesting both the statutory and evidentiary basis for Commerce's bona fide analysis. The court concludes that Commerce's decision was in accordance with the law and supported by substantial evidence. Hualing's motion for judgment on the agency record is denied. Accordingly, Commerce's Final Results are sustained.

BACKGROUND

On April 21, 2020, Commerce issued an AD order covering WCV from the PRC. Wooden Cabinets and Vanities and Components Thereof From the People's Republic of China: Antidumping Duty Order, 85 Fed. Reg. 22,126 (Dep't Commerce Apr. 21, 2020). Hualing made a single sale of alleged Americans with Disabilities Act ("ADA") compliant cabinets in June 2020. See Dalian Hualing Wood Co., Ltd. Section A Questionnaire Response & Voluntary Response Request at Attach. 1, 14-16, C.R. 67-71, P.R. 147 (Sept. 1, 2021). Hualing, as a manufacturer and exporter of WCV from the PRC, responded to Commerce's AD order in a few ways.

First, pursuant to 19 CFR § 351.214(b), Hualing requested a new shipper review ("NSR") for the period of review ("POR") of April 1, 2020, through September 30, 2020. Wooden Cabinets and Vanities and Components Thereof From the People's Republic of China: Initiation of Antidumping Duty New Shipper Review, 85 Fed. Reg. 77,162 (Dep't Commerce Dec. 1, 2020). Commerce initiated the NSR on December 1, 2020. Id.

A few months later, for the same sale Hualing requested an administrative review ("AR") of the AD order for the POR of October 9, 2019, through March 31, 2021, which Commerce also initiated. Letter from Grunfeld, Desiderio, Lebowitz, Silverman, & Klestadt LLP to U.S. Dep't of Commerce, ECF No. 35 (Apr. 30, 2021); see also Initiation of Antidumping and Countervailing Duty Administrative Reviews, 86 Fed. Reg. 31,282 (Dep't Commerce June 11, 2021).

Lastly, Hualing submitted a separate rate application in the AD AR. Dalian Hualing Wood Co., Ltd. Separate Rate Application, C.R. 50-53, P.R. 105 (July 16, 2021).

Commerce responded with a preliminary decision to rescind Hualing's NSR. Wooden Cabinets and Vanities and Components Thereof from the People's Republic of China: Preliminary Rescission of Antidumping Duty New Shipper Review; 2020, 86 Fed. Reg. 46,178 (Dep't Commerce Aug. 18, 2021). Because Hualing shipped subject merchandise prior to the POR, Commerce ultimately rescinded the new shipper review on November 12, 2021. Wooden Cabinets and Vanities and Components Thereof From the People's Republic of China: Recission of Antidumping Duty New Shipper Review; 2020, 86 Fed. Reg. 62,788 (Dep't Commerce Nov. 12, 2021), and accompanying Issues and Decision Memorandum for the Rescission of the Antidumping Duty New Shipper Review of Wooden Cabinets and Vanities and Components Thereof from the People's Republic of China; 2020, A-570-106, POR 04/01/2020-09/30/2020 at Comment 1 (Dep't Commerce Nov. 12, 2021). This determination is not challenged here.

Meanwhile, Hualing continued to submit information to Commerce in the administrative review. See Dalian Hualing Wood Co., Ltd. Voluntary Section C & D Questionnaire Response, C.R. 74-76, P.R. 159-160 (Sept. 17, 2021); Dalian Hualing Wood Co., Ltd. Voluntary Supplemental Response, C.R. 118-122, P.R. 211 (Dec. 30, 2021). Based upon this information and the information Hualing submitted as part of the NSR, Commerce gave notice of its intent to rescind the AR with respect to Hualing, finding that its single sale was not bona fide. Wooden Cabinets and Vanities and Components Thereof From the People's Republic of China: Preliminary Results and Partial Recission of the Antidumping Duty Administrative Review; 2019-2021, 87 Fed. Reg. 27,090, 27,092 (Dep't Commerce May 6, 2022); see also U.S. Department of Commerce Memorandum: Preliminary Bona Fides Sale Analysis, C.R. 127, P.R. 257 (May 2, 2022) ("Preliminary Bona Fides Sales Analysis").

That same day, Commerce issued its preliminary findings in the concurrent AR of the countervailing duty ("CVD") order, to which Hualing was a mandatory respondent. Wooden Cabinets and Vanities and Components Thereof From the People's Republic of China: Preliminary Results of Countervailing Duty Administrative Review, Rescission and Intent To Rescind Administrative Review, in Part; 2019-2020, 87 Fed. Reg. 27,099, 27,100 (Dep't Commerce May 6, 2022). In the CVD AR, Hualing was initially assigned a subsidy rate of 16.91% for 2020; Hualing's rate was lowered to 2.78% in the Final CVD Results. Id.; Wooden Cabinets and Vanities and Components Thereof From the People's Republic of China: Final Results and Partial Rescission of Countervailing Duty Administrative Review; 2019-2020, 87 Fed. Reg. 51,967, 51,968 (Dep't Commerce Aug. 24, 2022) ("CVD Final Results").

Hualing challenged Commerce's preliminary results in the AD AR in its administrative case brief. Dalian Hualing Wood Co., Ltd. Administrative Case Brief, C.R. 138-139, P.R. 281 (July 1, 2022). Namely, Hualing claimed Commerce's bona fide sales analysis was "not supported by practice, precedent, record evidence and was otherwise unlawful." Id. at 1. Commerce rejected Hualing's arguments, however, and published its Final Results, rescinding the AR with respect to Hualing based upon the determination that Hualing made no bona fide sales during the POR. Final Results, 87 Fed. Reg. at 67,675. Because Hualing had not previously qualified as independent of China, Hualing defaulted to the China-wide AD assessment rate of 251.65%. See id. at 67,675-76. Hualing appealed the Final Results to this court.

JURISDICTION AND STANDARD OF REVIEW

The court has jurisdiction pursuant to 28 U.S.C. § 1581(c) and 19 U.S.C. § 1516a(a)(2). The court sustains Commerce's results of an administrative review of an AD duty order 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

Hualing primarily challenges Commerce's Final Results on three grounds. First, Hualing notes that Commerce, in the parallel CVD AR, calculated an individual CVD rate based upon the same sale that Commerce found to be non-bona fide in the AD AR. This apparent inconsistency, Hualing claims, violates 19 U.S.C. § 1675(a)(2)(B)(iv) (2016)—"[s]tatutorily, the same sale cannot be bona fide in one proceeding and not the other . . . ." Pls. Mot. For J. on the Agency R. at 13, ECF No. 26 (June 22, 2023) ("Hualing Br."). Second, Hualing contests Commerce's decision to conduct a bona fide analysis of Hualing's sale in the AD AR. According to Hualing, Commerce arbitrarily departed from its "well-established practice" to not perform a bona fide analysis on sales made by separate rate applicants who are not mandatory respondents in an AR. Id. at 13. Last, Hualing challenges Commerce's bona fide analysis itself as unsupported by substantial evidence. Id. at 24.

The United States ("Government") argues that Hualing failed to exhaust its first two claims at the administrative level, and that this court should decline to hear them. Def.'s Resp. to Pls. R. 56.2 Mot. For J. on the Agency R. at 17-22, ECF No. 31 (Aug. 24, 2023) (quoting Qingdao Sea-Line Trading Co. v. United States, 766 F.3d 1378, 1388 (Fed. Cir. 2014)) ("[A] party's failure to raise an argument before Commerce constitutes a failure to exhaust its administrative remedies."). Hualing replied that it properly contested Commerce's seemingly inconsistent results in the AD and CVD reviews, and Commerce's authority to conduct a bona fide analysis in the AR, respectively, in its administrative case brief. Pls. Reply Br. at 1, ECF No. 33 (Sept. 21, 2023) ("Hualing Reply Br.").

In an action challenging Commerce's final results in an unfair trade matter, the court "shall, where appropriate, require the exhaustion of administrative remedies." 28 U.S.C. § 2637(d). In this context, whether a party is required to exhaust its administrative remedies is within the court's sound discretion.¹ Consistent with other courts, the Federal Circuit has recognized a "pure legal question" exception to the exhaustion doctrine. See, e.g., Agro Dutch Indus., 508 F.3d at 1029 (citations omitted). Thus, "where the issue for the court is a 'pure question of law' that can be addressed...