Trade Court Sustains Finding That Chinese Exporter Didn't Make Bona Fide Sale to US

The Commerce Department "did not err" when it found exporter Dalian Hualing Wood Co.'s lone U.S. sale was bona fide in a countervailing duty review but not bona fine in the antidumping duty review on the same goods, the Court of International Trade ruled on Dec. 18. Sustaining a 251.65% China-wide AD rate on Hualing's lone sale in the 2019-21 AD review of wooden cabinets and vanities from China, Judge Jane Restani said nothing in the new shipper review statute, nor any other statute, "compels Commerce to reach the same conclusion in distinct administrative proceedings, even if based upon the same sale."

The judge also said Commerce wasn't bound by statute or its prior practice from conducting the bona fide analysis and that the analysis was based on "substantial evidence."

During the review period, Hualing made a lone sale to the U.S., requesting a new shipper review for the April-September 2020 period and submitting a separate rate application in the AD review for the sale. Commerce ultimately rescinded the new shipper review for the company since it shipped subject goods before the review period and rejected the separate rate application since the lone sale was not bona fide.

Hualing challenged the consistency of the bona fide analysis, since, in the parallel CVD review, Commerce received an individual rate. Restani said that CVD and AD proceedings "remedy different behaviors" and involve different questionnaire responses for different business practices. As a result, nothing requires the outcome in one to be related to the outcome in the other, the court said.

Hualing also said, under the new shipper review statute, Commerce should have looked only at whether Hualing had a suspended entry during the review period and conducted a separate rate analysis on those grounds. The agency agreed that it doesn't normally conduct bona fide analyses for separate rate applications, but only because "doing so for every separate rate applicant would strain Commerce’s resources." Commerce carried out the analysis because it had "already collected relevant information."

Restani then turned to whether the bona fide analysis was backed by substantial evidence, reviewing Hualing's sales price, commercial quantities, timing of sales and expenses stemming from the sales, among other factors. Regarding the price, Restani noted that Commerce examined various data sets, starting first with CBP import data. Commerce noted that Hualing's average unit value was multiple times higher than the AUVs of goods imported under the Harmonized Tariff Schedule subheading. A comparison of the mandatory respondents' quantity and value numbers with Hualing's showed that the company's sales price was "exceptionally high."

This raised questions about the "bona fide nature" of the sale, Restani said, adding that the fact that the exporter "did not make any subsequent sales" called into question whether the single sale was made in commercial quantities. "Extremely low quantity is one indication of a non-bona fide sale; there is no evidence of ongoing cabinet sales by Hualing," Restani said. Although a single sale alone is not "inherently unreasonable," Commerce "did not err in finding the quantity of Hualing’s sale not indicative of its normal commercial practice."

(Dalian Hualing Wood Co. v. United States, Slip Op. 23-179, CIT # 22-00334, dated 12/18/23; Judge: Jane Restani; Attorneys: Michael Holton of Grunfeld Desiderio for plaintiff Dalian Hualing Wood Co.; Emma Bond for defendant U.S. government; Luke Meisner of Schagrin Associates for defendant-intervenor American Kitchen Cabinet Alliance)