Diamond Sawblades Manufacturers' Coal. v. United States

986 F.3d 1351

The DIAMOND SAWBLADES MANUFACTURERS’ COALITION, Plaintiff-Appellee

v.UNITED STATES, Defendant-Appellee

v.Bosun Tools Co., Ltd., Defendant-Appellant

2020-1478

United States Court of Appeals, Federal Circuit.

Decided: January 27, 2021

Maureen E. Thorson, Wiley Rein, LLP, Washington, DC, argued for plaintiff-appellee. Also represented by Stephanie Manaker Bell, Tessa V. Capeloto, Laura El-Sabaawi, Cynthia Cristina Galvez, Derick Holt, Daniel B. Pickard, Adam Milan Teslik.

John Jacob Todor, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC, argued for defendant-appellee. Also represented by Jeffrey B. Clark, Jeanne Davidson, Franklin E. White, Jr. ; Paul Keith, Office of the Chief Counsel for Trade Enforcement and Compliance, United States Department of Commerce, Washington, DC.

Gregory S. Menegaz, DeKieffer & Horgan, PLLC, Washington, DC, argued for defendant-appellant. Also represented by James Kevin Horgan, Alexandra H. Salzman.

Before Prost, Chief Judge, Clevenger and Taranto, Circuit Judges.

Taranto, Circuit Judge.

Since 2006, importation of diamond sawblades from the People's Republic of China (PRC) has been governed by an antidumping duty order issued by the United States Department of Commerce under 19 U.S.C. § 1673. In 2016, Commerce launched an administrative review, under 19 U.S.C. § 1675, of duties owed on subject merchandise sold to unaffiliated U.S. purchasers from November 1, 2014, through October 31, 2015. In that review, Commerce investigated the dumping margin of Bosun Tools Co., Ltd. (Bosun), an exporter and producer of diamond sawblades from the PRC, which it sends directly to one of its two U.S. importer-affiliates for sale to unaffiliated U.S. purchasers. The second importer-affiliate imports diamond sawblades from a Bosun entity in Thailand (which are not covered by the antidumping duty order). The two importer-affiliates trade between themselves, so both end up selling PRC-originating and Thailand-originating sawblades.

To determine the domestic-price component of the dumping margin calculation, Commerce had to identify which diamond sawblades sold by the Bosun importer-affiliates to unaffiliated U.S. purchasers were from the PRC (not Thailand). Because Bosun's affiliates (and Bosun's overall database) did not record the country of origin on each sale to those purchasers, Bosun supplied country-of-origin information from three sources: (1) the particular product code (which was country-specific for some products); (2) the unit price (which allowed origin identification for some products); and (3), for remaining products, an inference as to origin based on the premise that the importer-affiliates generally sold products in the order they received them (the first-in, first-out, or FIFO, inference).

To calculate Bosun's margin, Commerce used the information Bosun provided, finding it sufficiently verified. The domestic-industry Diamond Sawblades Manufacturers’ Coalition challenged Commerce's determination in the Court of International Trade, which remanded the matter to Commerce for further explanation. Diamond Sawblades Mfrs.’ Coalition v. United States , No. 17-00167, 2018 WL 5281941 (Ct. Int'l Trade Oct. 23, 2018) ( DSMC I ). On remand, Commerce noted problems with some of Bosun's information—perhaps only with the small subset of products for which the FIFO-inference step was used for origin identification—and concluded that it would use "the facts otherwise available" under 19 U.S.C. § 1677e(a), and indeed draw adverse inferences under § 1677e(b), as to the totality of the Bosun-sawblade sales during the period of review. The Trade Court affirmed Commerce's determination. Diamond Sawblades Mfrs.’ Coalition v. United States , 415 F. Supp. 3d 1365, 1369 (Ct. Int'l Trade 2019) ( DSMC II ).

We now conclude that some of the bases on which Commerce invoked § 1677e(a) are unsupported by substantial evidence, while some—which involve only a gap in reliable information—are adequately supported. We also conclude, however, that, in light of the limited bases for applying § 1677e(a), Commerce may have applied that subsection—and hence § 1677e(b), which applies only where subsection (a) applies—too broadly by disregarding all of Bosun's country-of-origin information. It appears that the errors Commerce identified in Bosun's information are limited in their reliability-undermining effect to a defined subset of sold sawblades (the subset of sawblades whose origin Bosun identified only through the FIFO-inference step). If the unreliable information is confined to some or all sawblades within such a defined subset, then there is no substantial evidence to support Commerce's determination that all of the Bosun-supplied origin information was unreliable, and Commerce articulated no supported basis for disregarding the reliable portion of the origin information Bosun supplied. We remand for further proceedings to determine the extent to which unreliability is so confined, and the consequence for Bosun's dumping margin. We leave to the Trade Court the decision whether a further remand to Commerce is needed.

I

A

Under 19 U.S.C. § 1673, Commerce must determine whether merchandise at issue is being sold or is likely to be sold in the United States "at less than fair value," which the statute identifies as "dumping," id. § 1677(34). To make that determination, Commerce must assess the difference between the "normal value" of the goods at issue (reflecting the home-market value) and the "export price or constructed export price" of those goods (reflecting the price at which they are sold into the United States). See id. § 1677b(a) (stating that the determination of the existence of sales "at less than fair value" is to be based on a comparison of "the export price or constructed export price and normal value"); see also id. § 1677a (addressing "export price" and "constructed export price"); id. § 1677b (addressing "normal value"). That difference is the "dumping margin." Id. § 1677(35)(A) (defining "dumping margin"). If Commerce finds dumping, and the International Trade Commission makes specified findings about injury to domestic industries, Commerce is to issue an antidumping duty order that imposes duties to offset the dumping. Id. § 1673.

Thereafter, Commerce typically conducts annual reviews to determine the antidumping duty margin for a given 12-month period for relevant exporters. Id. § 1675. In particular, § 1675(a)(1)(B) states that "[a]t least once during each 12-month period beginning on the anniversary of the date of publication[,] ... [Commerce], if a request for such a review has been received and after publication of notice of such review in the Federal Register, shall ... review, and determine (in accordance with paragraph (2)), the amount of any antidumping duty," and, under subsection (a)(2), "(i) the normal value and export price (or constructed export price) of each entry of the subject merchandise, and (ii) the dumping margin for each such entry." Commerce then "shall determine the individual weighted average dumping margin for each known exporter and producer of the subject merchandise," id. § 1677f–1(c)(1), and may elect to rely on "a sample of exporters, producers, or types of products that is statistically valid based on the information available" or "exporters and producers accounting for the largest volume of the subject merchandise" if "it is not practicable to make individual [determinations] because of the large number of exporters or producers involved in the investigation or review," id. § 1677f–1(c)(2).

In the administrative-review context, Commerce's use of the collected information is guided in part by 19 U.S.C. § 1677e. Subsection (a) states:

If—

(1) necessary information is not available on the record, or

(2) an interested party or any other person—

(A) withholds information that has been requested by the administering authority or the Commission under this subtitle,

(B) fails to provide such information by the deadlines for submission of the information or in the form and manner requested, subject to subsections (c)(1) and (e) of section 1677m of this title,

(C) significantly impedes a proceeding under this subtitle, or

(D) provides such information but the information cannot be verified as provided in section 1677m(i) of this title,

[Commerce] shall, subject to section 1677m(d) of this title, use the facts otherwise available in reaching the applicable determination under this subtitle.

Id. § 1677e(a). Where subsection (a) applies, subsection (b) adds that if an additional condition is also met, Commerce "may" draw inferences adverse to an interested party "in selecting from among the facts otherwise available" whose use subsection (a) authorizes:

If [Commerce] finds that an interested party has failed to cooperate by not acting to the best of its ability to comply with a request for information from [Commerce], [Commerce], in reaching the applicable determination under this subtitle, may use an inference that is adverse to the interests of that party in selecting from among the facts otherwise available[.]

Id. § 1677e(b).

Section 1677e(a) refers to four portions of 19 U.S.C. § 1677m. Two of those are referred to in § 1677e(a)(2)(B). One is § 1677m(c)(1), which says that, in certain circumstances, Commerce must consider an interested party's inability to submit requested information "in the requested form and manner" and may modify the requirements to avoid an unreasonable burden on the party. The other is § 1677m(e), which provides that, in a § 1675 review (among other proceedings), Commerce "shall not decline to consider" party-submitted information needed for Commerce's determination, even though the submission does not meet all Commerce-established requirements, if certain conditions keyed to reliability are nevertheless met.¹

The third subsection of § 1677m to which § 1677e(a) refers (in § 1677e(a)(2)(D) ) is § 1677m(i). That...