Hitachi Energy USA Inc. v. United States

34 F.4th 1375

HITACHI ENERGY USA INC., Plaintiff-Appellee

v.UNITED STATES, Defendant-Appellee

Hyundai Heavy Industries Co., Ltd., Hyundai Corporation, USA, Defendants-Appellants

2020-2114

United States Court of Appeals, Federal Circuit.

Decided: May 24, 2022

Melissa M. Brewer, Kelley Drye & Warren, LLP, Washington, DC, argued for plaintiff-appellee. Also represented by Robert Alan Luberda, David C. Smith, Jr.

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. ; David W. Richardson, Office of the Chief Counsel for Trade Enforcement & Compliance, United States Department of Commerce, Washington, DC.

Ron Kendler, White & Case LLP, Washington, DC, argued for defendants-appellants. Also represented by David Edward Bond.

Before Newman, Lourie, and Dyk, Circuit Judges.

Newman, Circuit Judge.

Appellants Hyundai Heavy Industries Co. and Hyundai Corporation, USA (collectively, "Hyundai") seek review of an antidumping duty determination for large power transformers imported from the Republic of Korea. This is the second administrative review ("POR2"). The results of the Original Investigation ("OI") are reported at Large Power Transformers from the Republic of Korea: Final Determination of Sales at Less Than Fair Value , 77 Fed. Reg. 40857 (July 11, 2012) ("Issues and Decision Memorandum").

When an administrative review is requested, the antidumping duty is redetermined. 19 U.S.C. § 1675(a)(1)(b). The first administrative review ("POR1") is reported at Large Power Transformers from the Republic of Korea: Final Results of Antidumping Administrative Review; 2012-2013 , 80 Fed. Reg. 17034 (Mar. 31, 2015).

The second administrative review was initiated in August 2014, and the results are reported at Large Power Transformers from the Republic of Korea: Final Results of Antidumping Duty Administrative Review; 2013-2014 , 81 Fed. Reg. 14087 (Mar. 16, 2016). This determination was subject to four appeals to the Court of International Trade, with three remands to the Department of Commerce ("Commerce"). The court's final decision, reported at ABB, Inc., v. United States , 443 F. Supp. 3d 1354, 1357 (Ct. Int'l Trade 2020), is the subject of this appeal.¹

This appeal of the second review concerns the application of 19 U.S.C. § 1677m(d), which requires Commerce to notify and permit a party to remedy or explain any deficiency in information provided during an investigation. Commerce asserts that this statute did not apply to the circumstances herein; thus Commerce did not permit Hyundai to provide additional information relevant to Commerce's change of methodology concerning normal value and sales price of service-related revenue. Commerce then applied an adverse inference and partial facts available to increase the dumping margin.

We conclude that Commerce erred in its statutory compliance as a matter of law, and we remand for redetermination of the antidumping duty applied to Hyundai's imports, based on the calculation of service-related revenue. Hyundai has the statutory right to correct the deficiencies that led to the application of adverse inferences and partial facts available.

BACKGROUND

An antidumping duty may be levied on imported products that are sold or likely to be sold in the United States at less than fair value, when such sales threaten or cause material injury to a domestic industry. 19 U.S.C. § 1673. To determine whether an imported product is sold at less than fair value, Commerce determines the normal value of the product in the home market, and the export (sales) price in the United States. 19 U.S.C. §§ 1675(a)(2)(A), 1677(b)(a). "Normal value" is "the price at which the foreign like product is first sold ... for consumption in the exporting country." 19 U.S.C. § 1677b(a)(1)(B)(i).

This appeal concerns methodology for valuation of service-related revenue associated with Korean large power transformers, in determining normal value and sales price. In POR2, on a first appeal of Commerce's decision, the Court of International Trade remanded this issue to Commerce, at the Government's request. In response, Commerce changed its methodology for determination of service-related revenue.

Hyundai then asked Commerce for permission to provide additional data and information. Hyundai wrote: "With respect to the factual flaws discussed above, the Department should reopen the record and issue a supplemental questionnaire to collect information regarding the New Test for service-related revenue." Appx10067. Hyundai proposed "If the Department continues to apply the New Test, it must provide Hyundai with an opportunity to place relevant information on the record, by issuing a supplemental questionnaire." Id. at 10069. Commerce denied the request, and calculated the antidumping margin based on the original information.

Hyundai reported service-related revenue in accordance with the Commerce questionnaire. Antidumping Duty Questionnaire – Hyundai Heavy Industries , C18 (Nov. 18, 2014) see Response to Supplemental Sections B and C Questionnaire (Jun. 3, 2015) ("Where the terms of sale require Hyundai to perform such services, the gross unit price includes the value of services required.").

In the second administrative review, Hyundai followed the same procedure as previously accepted by Commerce during the original investigation and the first administrative review. See POR1 Final Results , 80 Fed. Reg. at 17035. ABB Enterprise Software, Inc. (now Hitachi Energy USA, Inc., herein, "ABB") objected to this methodology, stating that it overstated the prices of Hyundai's United States sales. Commerce rejected the objection, stating that it had reviewed Hyundai's invoices and purchase orders and that Hyundai had properly responded to the questionnaire. Commerce stated:

Based on our review of the record evidence at verification and comments by interested parties, we have determined to rely upon Hyundai's reported [gross unit price] for purposes of calculating net U.S. price for its sales ... We find that there is no evidence, based on the invoices and purchase orders examined at verification, to indicate that Hyundai has separate revenues which it has failed to report to Commerce.

Original Investigation, Issues & Decision Memorandum , Comment 4 (July 2, 2012) (summarized at 77 Fed. Reg. 40857 July 11, 2012).

ABB appealed to the Court of International Trade, objecting to several aspects of the Commerce procedure, including service-related revenues. Commerce requested a voluntary remand "to reconsider its application of its revenue-capping practice in this case, in light of this practice ... [and to] evaluate whether its application of this practice is consistent with respect to both respondents." Def.'s Suppl. Mem. Addressing Standard for Voluntary Remand, ABB, Inc. v. United States , No. 1:16-cv-00054 (Ct. Int'l Trade May 19, 2017), ECF No. 79; Appx 9945. The court stated that "Commerce's concerns are substantial and legitimate" and remanded for consideration. ABB, Inc. v. United States , 273 F. Supp. 3d 1200, 1205 (Ct. Int'l Trade 2017).

On remand, Commerce revised its methodology for determining service-related revenue:

Commerce's capping methodology is not dependent upon whether a respondent must provide the service under the terms of sale as Hyundai contends, but whether such services were provided and whether the revenue amounts collected for the provision of such services exceed the cost of those services. Neither is Commerce's capping methodology dependent upon whether the service-related expenses and revenues are separate line-items on an invoice to the unrelated customer ... Commerce's capping methodology, generally, may nevertheless be applied notwithstanding whether the amounts are specified in sales contracts with, or invoices to, the customer. If a respondent collects, as a portion of the final price to the customer, a portion of revenue which is dedicated to covering a service-related expense, and that service-related expense is less than the revenue set aside to cover the expense, then this is service-related revenue which is part of the material terms of sale and must be capped.

Final Results of Redetermination Pursuant To Court Remand, ABB, Inc. v. United

States , No. 1:16-cv-00054 (Ct. Int'l Trade Feb. 7, 2018), ECF No. 95; Appx105-06. Commerce stated:

Hyundai cannot prevent the application of Commerce's capping methodology based on a technicality concerning whether a respondent chooses to separately itemize service-related charges in sales contracts or invoices. Commerce's determination in this remand redetermination is not a change in methodology, but is instead an appropriate application of our capping methodology pursuant to the statute and past practice.

Appx106.

Commerce changed the way it was evaluating the data, for these changes required identification of which services were provided, and cost and price information regardless of whether they were separately negotiated or part of the sales price. Since Commerce found Hyundai's original submissions inadequate to determine the service-related revenue in this adjusted manner, Hyundai requested permission to provide additional information in conformity with 19 U.S.C. § 1677m(d). See Letter from Hyundai Heavy Indus. Co. to Wilbur L. Ross, Jr., Secretary of Commerce , Case No. A-580-867 (Dep't of Commerce Jan. 16, 2018) (Requesting Reopening of the Record in Order to Submit New Information ); Appx10064-100102. The statute provides:

(d) Deficient submissions .

If the administering authority or the Commission determines that a response to a request for information under this subtitle does not comply with the request, the administering authority or the Commission (as the case may be) shall promptly inform the person submitting the response of the nature of the deficiency and shall, to the extent practicable,

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