CIT Bucks Use of AFA on Brazilian Honey Exporter

The Court of International Trade on May 30 rejected the Commerce Department's use of adverse facts available against Apiario Diamante Comercial Exportadora and Apiario Diamante Producao e Comercial de Mel, collectively doing business as Supermel, in the antidumping duty investigation on raw honey from Brazil. The decision sends back the 83.72% AD rate levied against the exporter.

Judge Timothy Stanceu said that minor discrepancies between data submitted from two small, unaffiliated beekeepers and Supermel can't stand as a reason to scrap the use of the respondent's acquisition costs as a proxy for the costs of production. In addition, the judge rejected Commerce's claims that Supermel's responses to five questionnaire inquiries were deficient.

In the investigation, Supermel noted that it couldn't supply the proper cost of production data since it sourced its honey from thousands of independent, small beekeepers. As a result, Commerce elected to use the respondent's acquisition costs as a stand-in for these figures. To test the validity of this data, the agency got the two largest of Supermel's suppliers to provide data on its sales to the exporter.

Commerce identified discrepancies between the beekeepers' information and Supermel's, rejecting the exporter's acquisition costs. Stanceu said that the "discrepancies were insignificant in the context of the cost of production data Supermel provided" and that they must be viewed in the context that the tiny beekeepers spend "virtually no time" on "administrative activities."

Stanceu held that the agency "attached unwarranted significance to the fact" that the beekeepers' data and Supermel's "did not agree exactly." He said that only "in the most literal and technical sense was Commerce correct" in identifying the discrepancies, since the data between the parties was "relatively consistent."

As the basis for using AFA in the investigation, Commerce pointed to Supermel's responses to five different questionnaire questions, which it said were deficient. Stanceu disagreed, for varying reasons, on all five accounts.

For instance, Commerce said Supermel failed to provide copies of its correspondence with the beekeepers that would corroborate the quantity and value data the company reported, along with copies or screenshots of any journal entries or proof of payment confirming the amounts Supermel paid to the beekeepers. The court noted that while Supermel failed to submit the supporting documentation requested by Commerce, the agency failed to notify the respondent of this deficiency.

Despite the deficiency, Commerce must provide "actual notice of the deficiency or" reiterate the initial request in a later questionnaire. This the agency didn't do, the judge said.

Another question from Commerce asked Supermel to provide excerpts from its accounting system showing how it recorded honey purchases from the beekeepers, the transfer of the unprocessed honey from Apiario Export to Apiario Producao and the transfer back to Apiario Export. In response, the respondent sent screenshots of journal entries used to record honey purchases.

Commerce took issue with the journal entries by claiming they didn't have any accounting data, including the name or number of the company's "stock: raw materials" account. Supermel said in response and at the court that each of its honey purchases shown in the journal entries is recorded as a debit in its "stock: raw materials" account in its accounting records.

In light of this explanation, Stanceu said that Commerce's objection "is meritless." The judge additionally found it suspect that the agency developed its objection "at some point after it issued the In Lieu of Verification Questionnaire but before the promulgation of the Final Determination." Thus, the agency's "ex post facto finding of 'deficiencies' in Supermel's journal entries is unsupported by the evidence."

As a result of these findings, the trade court also found that Commerce inadequately rejected Supermel's reporting of its costs on a control number-specific basis and used AFA against the exporter. The "principal information that Commerce found Supermel to have withheld was provided in full by the complete set of journal entries for raw honey purchases from the beekeepers and the related responses," disclosing the placement of all costs in the "stock: raw materials" cost account, the court said.

Supermel asked the court to bar Commerce from using AFA in future proceedings based on unaffiliated beekeepers' failure to provide requested cost information. Stanceu declined to do so, noting that the respondent is asking the court to issue an "advisory opinion" -- something it's categorically barred from doing based on limits imposed on the judiciary.

"We are pleased with the court’s decision in this case," Pierce Lee, counsel for Supermel, said in an email. "We are glad that the court recognized Commerce’s misplaced reliance on the beekeeper suppliers’ information when evaluating our client’s business records. We also appreciate the court’s thorough review of the record evidence in assessing our arguments in this proceeding."

(Apiario Diamante Comercial Exportadora v. United States, Slip Op. 24-64, CIT # 22-00185, dated 05/30/24; Judge: Timothy Stanceu; Attorneys: Pierce Lee of Crowell & Moring for plaintiff Apiário Diamante Comercial Exportadora and Apiario Diamante Producao e Comercial de Mel; Kara Westercamp for defendant U.S. government; R. Alan Luberda of Kelley Drye for defendant-intervenors American Honey Producers Association and Sioux Honey Association)