Yarn Exporter Challenges Commerce's Lack of On-Site Verification in AD Case at CIT

A respondent in an antidumping duty investigation says Commerce's failure to conduct on-site verification cost it the opportunity to correct deficiencies in questionnaires sent by the agency instead, causing the respondent, Asia Pacific Fibers, to get a total adverse facts available AD rate, the company said in a Feb. 14 complaint at the Court of International Trade (PT. Asia Pacific Fibers TBK v. United States, CIT #22-00007).

The case concerns the antidumping duty investigation into polyester textured yarn from Indonesia. Preliminarily, Commerce assigned Asia Pacific a 9.21% dumping rate. But during the investigation, Commerce decided not to conduct on-site verification due to COVID-19 concerns in Indonesia, instead issuing a questionnaire. Commerce took issue with the sales portion of Asia Pacific's responses. The agency said that certain segments were illegible or untranslated, hitting the respondent with a total AFA rate of 26.07%.

"By issuing a questionnaire in lieu of an on-site verification, Commerce denied Asia Pacific the opportunity to explain or clarify its documentation to Commerce personnel conducting the verification, and upon Commerce’s consent, to provide corrective information during the on-site verification," the complaint said. "Commerce’s failure to afford to Asia Pacific the same opportunities provided in on-site verifications when using the verification questionnaire procedure in this proceeding constituted an abuse of administrative discretion and was otherwise not in accordance with law."

The lack of on-site verification has been raised as a concern in a number of recent cases at CIT. In at least one of these cases, the court has shown sympathy with companies challenging the lack of verification. Recently, the trade court remanded an AD case, telling Commerce it must either conduct verification, even if virtually, or more fully explain why it didn't conduct even virtual verification and merely issued a questionnaire (see 2202030024).

Commerce also hit Asia Pacific with AFA because its reported product-specific costs were not backed by supporting documentation requested by Commerce. The requested information included financial system documents and screenshots of the company's accounting and production systems. Throughout the investigation, however, Asia Pacific said it didn't have a formal cost accounting system that was integrated with its financial accounting system. Instead, the respondent reported actual costs consumed for each primary yarn product and allocated all other costs to product-specific control numbers as laid out in the financial accounting system, the complaint said.

"It is apparent that Commerce either misinterpreted or did not understand Asia Pacific’s questionnaire responses," Asia Pacific said. "Commerce’s repeatedly requested that Asia Pacific provide source accounting records and screen shots from the accounting system -- documents that simply do not exist." The respondent used this same rationale to contest Commerce's position that AFA was warranted over Asia Pacific's failure to hand over supporting documents from its financial system to confirm the amounts of raw materials used to make its yarn.