CIT Upholds Use of Facts Available in AD Review on Malaysian Retail Bags

The Court of International Trade on Feb. 12 sustained the Commerce Department's use of facts available for antidumping duty respondent Euro SME's inland freight costs for its U.S. sales. Judge Stephen Vaden said that contrary to the exporter's claim that Commerce "threw the book at it," the agency "acted with deliberation, patience, and arguably stayed its hand when it could have drawn adverse inferences more broadly against such a seasoned respondent."

The result was a 6.47% dumping rate for Euro SME in the 2019-20 AD review of retail bags from Malaysia.

In the opinion, Vaden also upheld Commerce's rejection of the company's ministerial error allegation, which said an error was committed by capping the company's freight revenue expenses and not including the freight expenses incurred in the U.S. to ship the goods to their final destination. Vaden said the error was untimely filed since it did not come after the review's preliminary results and that the error wasn't appropriately "ministerial in nature."

Vaden said the U.S. Court of Appeals for the Federal Circuit, when faced with a "similar question," found that only "an arithmetic or clerical error or similar inadvertent mistake" may be considered a "ministerial error." Even if the error allegation was timely filed, "its claim would still fail because the methodological decision made by Commerce to exclude certain costs in its calculations is not 'an arithmetic or clerical error or similar inadvertent mistake,'" the opinion said.

The bulk of the opinion concerned Commerce's use of facts otherwise available in relation to Euro SME's inland freight costs. In the review, Euro SME reported both the standard and actual weight of its goods and the quantity in cartons and in 1,000 bags. Euro SME weighed a single carton from each shipment then multiplied the weight by the total number of cartons in the U.S. sale to get the "actual weight" figure. As a result, the actual weight was an average based on random sampling instead of the actual weight of the product for each sale.

Commerce then elected to use a questionnaire instead of on-site verification, due to COVID-19 restrictions, and asked for supporting documents on six transactions -- three from the U.S. and three from Malaysia. For five of the six, the weight of the overall shipment differed from what Euro SME told Commerce originally in its initial responses. The same was true of the company's inland freight expenses.

The agency decided "to use facts otherwise available in relation to Euro SME’s reporting of actual weight and for gross unit price and sales expenses, which are reported on a per-kilogram actual weight basis across both the home market and U.S. sales databases," the court noted. Vaden approved, ruling that Commerce was left with numerous gaps in the record due to the discrepancies in Euro SME's inland freight and actual weight data.

Euro SME conceded at oral argument that there's a gap on the record regarding actual weight but argued that since it gave the information in other forms in the review, Commerce could have avoided the gap. Vaden found that while it may be true that the agency could have carried out its calculation with a "full and verifiable dataset of either the actual or standard weight, it had neither."

What the agency did have was some data "in the form of standard and actual weight and other data only in terms of actual weight, which proved impossible to verify." There was no conversion ratio on the record that would have allowed Commerce to convert the unverifiable data into a different measurement, Vaden said.

Vaden took Euro SME to task, given that it is an "experienced participant" in AD cases. The company reported its data in terms of actual weight without being asked, since it knew that is what had been used in past reviews. “Experienced respondents are expected to maintain their books in a manner that permits Commerce to glean the necessary data for its analysis," the opinion said. "By its own admission, Euro SME failed to do so and instead sought to use averages instead of actual weights.”

Despite having the option to use adverse facts available for a large chunk of the respondent's submissions, Commerce only used AFA for Euro SME's inland freight costs for U.S. sales. Commerce gave the company multiple chances to correct the discrepancies, though Euro SME "made no serious effort" to do so, the court noted.

Euro SME said that its pre-verification preparations involved making notations on photocopies of sales or other internal records showing and reconciling figures for ease of reference, but the government said the notations are indicative of a bid to "mask" issues in the data. This shows a "fundamental misunderstanding about how the on-site verification process usually works," Commerce said.

Euro SME claimed that the sole use of AFA regarding this data set was unlawful because Commerce treated the issue differently from other discrepancies in the review. Vaden found the agency to have explained why this discrepancy was worse and larger than the others, since it "could not be explained by rounding" and had the hand-written notation showing an attempt to hide the discrepancy's origin.

(Euro SME SDN BhD v. United States, Slip Op. 24-16, CIT # 22-00108, dated 02/12/24; Judge: Stephen Vaden; Attorneys: Kelly Slater of Appleton Luff for plaintiff Euro SME SDN BhD; Meen Geu Oh for defendant U.S. government; Daniel Schneiderman of King & Spalding for defendant-intervenors led by Polyethylene Retail Carrier Bag Committee)