Trade Court Tells Commerce to Set Customer-Specific Rate Without EBCP Subsidy Amount for Verified Sales

The Court of International Trade again remanded the Commerce Department's decision to continue using adverse facts available against countervailing duty respondent The Ancientree Cabinet Co. related to its alleged receipt of benefits under China's Export Buyer's Credit Program. In a July 22 decision made public July 30, Judge Richard Eaton instructed the agency to "determine a customer-specific rate that excludes" the EBCP subsidy amount for Ancientree's U.S buyers "whose non-use" of the program was verified.

Luke Meisner, counsel for petitioner American Kitchen Cabinet Alliance, said in an email that he's "disappointed that the court continues to deprive Commerce of the only tool the agency possesses to induce the Government of China to cooperate by providing critical information on the EBCP, namely, the application of AFA.

"Forcing Commerce to verify US customers to obtain information that should’ve been provided by the Government of China is not required by the statute and is a colossal waste of the agency’s limited resources," he added.

In the CVD investigation on wooden cabinets and vanities from China, Commerce hit Ancientree with AFA due to China's failure to provide certain information on the EBCP. During remand proceedings on the issue, Ancientree submitted loan information from 15 of its 27 U.S. customers showing an absence of EBCP loans. The agency conducted in-person verification for 10 of the 15 customers. While Commerce said it didn't find evidence that the 10 companies used the EBCP, it said it couldn't conduct verification of non-use generally since it couldn't verify non-use of over 70% of Ancientree's customers.

Eaton twice remanded the issue, telling Commerce to either "accept the pro rata adjustment proposed by Ancientree" or find that the EBCP wasn't used at all.

In its second remand results, the agency stuck with the use of AFA, including the 10.54% EBCP subsidy rate in Ancientree's final 13.33% CVD rate. Commerce said neither of the court's solutions was viable, since Commerce couldn't verify the sales figures "that form the basis of the pro rating sought by Ancientree" and not all the customer-specific quantity and value numbers Ancientree provided to support its pro rata adjustment matched the customer's own reporting.

The court remanded the issue for a third time, finding that Commerce's "all or nothing" approach to verification "is not called for by the statute." Instead of relying on the non-use information on the record the agency could verify, Commerce used AFA on all of Ancientree's U.S. sales. "Here, Commerce has found a gap in the record where there is not one in fact," the judge said.

For a majority of Ancientree's sales by value, "there is no non-use gap," and in fact there's "verified information of non-use upon which Commerce must rely." The agency "opened the door by requesting additional information," and it now can't "shut the door simply because it does not like the relevant information submitted."

As a solution, Eaton said "the court will treat the use of countervailing duties differently for the sales to customers whose non-use of the Program was verified, from those sales where non-use was not verified." Commerce "must eliminate the subsidy represented in the rate applied to those sales," the court said. Eaton said the agency has taken similar action in the past.

Regarding Ancientree's non-verified U.S. sales, Eaton said facts available is supported since the record declarations "could not be verified." He added that the use of AFA is supported for these sales "based on China's failure to cooperate."

Throughout the decision, the judge likened the case to Risen Energy Co. v. U.S., in which the court said after three remands that Commerce can't include the EBCP rate as part of the overall CVD rate due to "substantial evidence of non-use from Risen and its customers." Eaton said that while the "Risen line of cases is indeed persuasive," they concern CVD reviews and not investigations.

(Dalian Meisen Woodworking Co. v. United States, Slip Op. 24-83, CIT # 20-00110, dated 07/22/24; Judge: Richard Eaton; Attorneys: Stephen Brophy of Husch Blackwell for plaintiff Dalian Meisen Woodworking; Alexandra Salzman of deKieffer & Horgan for plaintiff-intervenor The Ancientree Cabinet Co.; Mark Ludwikowski of Clark Hill for plaintiff-intervenor Cabinets to Go; Ioana Meyer for defendant U.S. government; and Luke Meisner of Schagrin Associates for defendant-intervenor American Kitchen Cabinet Alliance)