CAFC Upholds AFA AD Rate for Inadequate Explanation of Revised Cost Data Submission

The U.S. Court of Appeals for the Federal Circuit recently upheld a lower court decision that found the Commerce Department correctly applied adverse facts available to a Mexican exporter after it submitted corrected cost data without adequate information in an antidumping duty administrative review.

In a decision publicly released April 30 but decided weeks earlier, CAFC agreed with Commerce that the 40.52% AFA rate applied to Deacero in the 2014-15 AD duty administrative review on carbon and certain alloy steel wire rod from Mexico was justified, holding that the requirement that Commerce accept corrected data does not extend when those corrections are not adequately explained. “Deacero’s ‘significant failing’ was not that it submitted corrected information; rather, it was that Deacero failed to timely notify Commerce of the nature and import of those corrections, and failed to adequately explain the corrections when given the opportunity to do so,” the Federal Circuit said.

As a mandatory respondent in the review, Deacero was required to submit cost data. As part of its initial submission it said it did not need to submit cost variance information because its cost accounting system was based on actual costs, not planned production. Months later, in response to a supplemental questionnaire, Deacero submitted unsolicited cost data that ended up having a significant effect on its AD rate. Deacero, however, characterized the changes as minor corrections, and said they were needed because its first response was based on planned production.

After some back and forth over the actual rate Commerce assigned to Deacero as a result of AFA, the Court of International Trade sustained Commerce’s final results in a 2020 decision. Deacero appealed.

Deacero says AFA was unwarranted because it provided complete, accurate and timely information. CAFC disagreed. The exporter mischaracterized its revisions to the cost data as minor, and withheld critical information from Commerce by characterizing them as such. After Commerce requested further clarification from Deacero in the review, the exporter again filed to adequately explain the revisions. Commerce was justified in having no confidence that it could rely on either the original cost data or the revised cost data later submitted by Deacero, the CAFC said.

“Deacero’s conduct ‘points to why the use of an adverse inference is a useful tool in antidumping determinations,’” CAFC said, quoting a previous, unrelated decision issued by the court. “An adverse inference is appropriate not only when an interested party fails to respond, but also where ‘it is reasonable for Commerce to expect that more forthcoming responses should have been made,’” it said.

(Deacero S.A.P.I. de C.V. v. U.S., CAFC # 2020-1918, CIT # 17-00183, Judges Wallach, Chen and Hughes. Attorneys: Sonali Dohale for plaintiff-appellants Deacero S.A.P.I. de C.V. and Deacero USA, Inc.; Kelly Krystyniak for defendant-appellee DOJ; Derick Holt of Wiley Rein for defendant-appellee Nucor Corporation.)