CIT Upholds AFA for Respondent's Failure to Keep Proper Country of Origin Information

The Commerce Department properly applied adverse facts available when weighing antidumping respondent Bosun Tool's country of origin information using a first-in, first-out (FIFO) methodology, the Court of International Trade said in an Oct. 27 opinion. Judge Claire Kelly found that although Bosun cooperated to the best of its ability with the AD review, the use of AFA was warranted because an exporter is reasonably expected to keep documents that properly document country of origin -- something that the FIFO methodology does not do.

The case, brought by the Diamond Sawblades Manufacturers' Coalition, stems from the sixth administrative review of the antidumping duty order on diamond sawblades from China. The review found that Bosun exported diamond sawblades from China and Thailand to its U.S. affiliates. However, the exporter did not maintain a record of the country of origin of each sawblade. Instead, Bosun identified the country of origin using three alternative sales identification methods: the particular product code, the unit price and the FIFO methodology. Commerce originally found these COO tracking methods acceptable.

Following the initial litigation in CIT, Commerce reversed its position, applying AFA for Bosun's failure to keep track of the COO for the sawblades and applying an 82.05% AD duty rate. Bosun then successfully appealed this ruling. The U.S. Court of Appeals for the Federal Circuit said there "appears to be no basis for Commerce to disregard the Bosun-supplied origin information for the sales to unaffiliated U.S. customers during the [period of review (POR)] for which Bosun did not assign the country of origin using its FIFO methodology," remanding the first redetermination from the CIT case.

In response, Commerce reversed course on the application of AFA for Bosun's sales in which the exporter used the product code and unit price for the COO (see 2107140053). The agency maintained the application of AFA, however, just on sales in which the FIFO methodology was employed. Such an adverse inference is warranted, Commerce said, because Bosun "failed to maintain full and complete records regarding country of origin, despite its apparent ability to do so, and despite its familiarity with Commerce proceedings and awareness of the need for distinguishing the country of origin of its merchandise for export."

In the Oct. 27 ruling, Kelly upheld this finding from Commerce. The judge said the application of AFA for the FIFO sales is in line with the Federal Circuit's instructions because the appellate court didn't touch CIT's first opinion on the FIFO sales, which backed AFA for exporters failing to keep proper COO information. In all, Bosun was hit with a 15.91% dumping margin on remand -- down from 82.05%.

"As a result of Bosun’s appeal, the rate was reduced from 82% to 15.91% so that is a major achievement that takes into consideration Bosun’s hard work and accuracy in its reporting in this review period," said Gregory Menegaz of deKieffer & Horgan, counsel for Bosun.

Said Stephanie Bell of Wiley Rein, counsel for the Diamond Sawblades Manufacturers' Coalition: "The U.S. industry is pleased with today’s decision, which confirms that Chinese diamond sawblades continue to be dumped in the U.S. market at significant levels. This decision is consistent with the Department of Commerce’s determinations in recent years, which have resulted in the imposition of significant duties for essentially all Chinese diamond sawblade exporters and demonstrate the extent of unfair competition the domestic industry has faced."

In comments on the remand, Bosun also argued against Commerce's decision to apply a per unit AFA rate to all the FIFO sales. The respondent said that Commerce should rather apply an adverse inference stating that all the FIFO sales are of Chinese origin. The agency should also use the U.S. sales data because it is available, Bosun said. However, the FIFO methodology does not provide reliable country of origin information, Commerce countered. Kelly agreed.

"In light of the identified reliability issues, Commerce reasonably concluded it could not be certain that the FIFO Sales included in the U.S. sales database were Chinese, nor could it be certain that all of the FIFO Sales excluded from the U.S. sales database were Thai," the judge said. "... Thus, Commerce reasonably concludes that the inability to reliably identify the country of origin for the FIFO Sales means that the corresponding price data in the U.S. sales database is also unreliable because Commerce cannot accurately pair price data with the correct country of origin."

Bosun also argued that the AFA per unit rate for all the FIFO sales shouldn't stand because some of them were intracompany sales. Commerce should have removed these sales from the FIFO sales, it said. However, the Federal Circuit "did not instruct Commerce to revisit its FIFO analysis," the judge said. "Although Bosun argues that Commerce has acted contrary to law by ignoring evidence of intracompany sales, it is reasonably discernable that Commerce did not ignore the evidence, but rather found that it was not within the scope of the Court of Appeals’ instructions and further would not be relevant as it was unverifiable."

(The Diamond Sawblades Manufacturers' Coalition v. United States, Slip Op. 21-150, CIT #17-00167, dated 10/27/21, Judge Claire Kelly. Attorneys: Daniel Pickard of Wiley Rein for plaintiff DSMC; John Todor for defendant U.S. government; Gregory Menegaz of deKieffer & Horgan for defendant-intervenor Bosun Tools Co.)