CIT Tells ITA to Explain Non-AFA AD Rate for Chinese Magnesium Company w/ Fake Docs

The International Trade Administration’s determination not to apply Adverse Facts Available (AFA) to Plaintiff Tianjin Magnesium International Co., Ltd. (TMI) in the final results of its 2008-09 administrative review of the antidumping duty order on pure magnesium from China (A-570-832), despite knowledge that TMI had submitted falsified documentation to the ITA, was remanded to the ITA by the Court of International Trade for further proceedings. CIT agreed with Defendant-Intervenor U.S. Magnesium’s arguments, and said the ITA’s final results did not provide an adequate basis for its decision.

TMI’s Producers Denied ITA Access, Falsified Documentation in 2007-08 Review; AFA Applied

During an on-site verification of TMI’s submissions in the previous 2007-08 administrative review, the ITA found that certain vouchers had been pasted into TMI’s producers’ voucher books. When the ITA attempted to verify the authenticity of the receipts, the producers locked the ITA out of its accounting offices and threw the requested voucher books out of the window of their accounting office. The ITA subsequently gained access to the accounting offices, and found evidence that the producers were creating documents while the ITA was locked outside. The producers subsequently admitted that they were altering the voucher books. In response to this conduct, the ITA applied an AFA AD rate of 111.73%, citing TMI’s producers’ “altered” voucher books as a failure to cooperate to the best of its ability.

AFA Not Applied to TMI in 2008-09 Review Despite Submission of Same Documentation

In the 2008-09 administrative review at issue in this action, the ITA again conducted an on-site verification of TMI’s submissions, only two months after the verification for the 2007-08 review. TMI, in support of its claim for a byproduct offset, submitted some of the same voucher books that had been discredited during the 2007-08 review. Despite engaging in some of the same falsification it practiced in the 2007-08 review, the ITA declined to apply an AFA rate, saying that, with the exception of its “unreliable” voucher books, TMI otherwise fully cooperated, and applied an AD rate of 0.73%.

CIT Troubled by Possibility that Final Results at Issue Provide Incentive not to Cooperate

CIT said that, although the ITA enjoys broad discretion in its application of AFA, the Court of Appeals for the Federal Circuit has held in separate rulings where a party provides inaccurate or misleading information, it has not cooperated to the best of its ability” standard and the ITA may apply an AFA rate. According to CIT, although TMI’s obfuscation in the 2008-09 review did not rise to the level of that of the 2007-08 review, it was troubled by the possibility that the 2008-09 final results would give TMI, and other respondents, an incentive to submit false information in an attempt to lower their margins without the fear of negative consequences, and would remove the incentive to fully cooperate provided by the threat of AFA rates.

Decision Remanded to ITA to Address CAFC Precedent, Give Further Explanation

Therefore, CIT remanded the ITA’s decision not to apply an AFA rate to TMI in order for the ITA to provide a legitimate basis for its decision to decline to consider TMI’s submission of misleading documentation, and address precedent that establishes that the submission of such documentation is a failure to cooperate. CIT did not address other issues raised in the motions before it, including TMI’s cross-motions, because they could become moot.

(Slip Op. 12-63, dated 05/16/12, Judge Tsoucalas)