Commerce Rightly Hit Exporter With 588.43% CVD Rate Over Failure to Disclose Affiliate, CAFC Rules

The Commerce Department properly found that Indian exporter Uttam Galva failed to report an affiliated cross-owned company in a countervailing duty proceeding, warranting the use of adverse facts available and a 588.43% CVD rate, the U.S. Court of Appeals for the Federal Circuit said in a May 5 opinion. Judges Sharon Prost, Richard Taranto and Raymond Chen said the exporter didn't show that the affiliated company's financial statement could rebut the inclusion of 20 subsidy programs supposedly given to it, permitting the subsidies' inclusion in Uttam Galva's rate.

The case concerns the 2016 administrative review of the CVD order on corrosion-resistant steel products from India. In the review, Commerce hit Uttam Galva with a 588.42% AFA rate over its failure to disclose its affiliation with cross-owned producer of subject merchandise Lloyds Steel Industries Ltd. (LSIL). Uttam Galva only conceded the existence of the affiliate after prompting from Commerce and then mischaracterized its acquisition of the company, Commerce said. In April 2021, the Court of International Trade upheld Commerce's decision to give Uttam Galva the high AFA rate (see 2104300045).

Uttam Galva then appealed two elements of the CIT ruling: the use of AFA over its failure to report LSIL as an affiliate and the inclusion of 20 subsidy programs assigned to LSIL in the exporter's CVD rate. Uttam Galva argued the use of AFA is unsupported because Uttam Galva didn't impede Commerce's proceedings. The judges, though, said this point need not be addressed since Commerce established AFA on two other grounds that Uttam Galva didn't address. The agency said AFA was warranted because Uttam Galva withheld requested information and failed to provide this information.

"Although Uttam Galva attempts to contest that it cross-owned LSIL during that time, Commerce’s questionnaire explained how cross-ownership is '[n]ormally ... met where there is a majority voting ownership interest ... or ... common ownership of two (or more) corporations,'" the opinion said. Given that Uttam Galva confirmed that the Miglani family controlled it and LSIL during the review period, ownership was established, the judges ruled.

Prost, who wrote the opinion, then turned to the exporter's challenge to the inclusion of 20 programs in its CVD rate stemming from the affiliation with LSIL. Uttam Galva said LSIL's financial statement has information showing that it could not have used those programs and that Commerce didn't properly evaluate the evidence in reaching that conclusion.

"We disagree," the opinion said. "Like the Court of International Trade, we determine that Uttam Galva failed to demonstrate that LSIL’s financial statement 'could lead Commerce to reach one and only one reasonable outcome on this administrative record, namely that LSIL could not have benefit[]ed from the 20 disputed programs.' ... We therefore conclude that Commerce’s inclusion of the 20 disputed programs is supported by substantial evidence."

(Uttam Galva Steel Ltd. v. U.S. , Fed. Cir. #21-2119, dated 05/05/2022, Judges Sharon Prost, Richard Taranto and Raymond Chen. Attorneys: John Gurley of ArentFox for plaintiff-appellant Uttam Galva; Mollie Finnan for defendant-appellee U.S. government; Roger Schagrin of Schagrin Associates for defendants-appellees California Steel Industries and Steel Dynamics)