US Says AD Respondent Should Know How to Collect FOP Info From Suppliers, Defends AFA at CIT
The Commerce Department properly hit antidumping duty respondent Shanghai Tainai Bearing with partial adverse facts available, saying Tainai should know how to collect factor of production information from its downstream suppliers, given that the agency was conducting the 33rd review of the AD order, the U.S. argued in an Oct. 20 reply brief at the Court of International Trade. The government said Commerce legally deducted Section 301 duties from Tainai's U.S. price and capped Section 301 duty payments (Shanghai Tainai Bearing Co. v. U.S., CIT Consol. #22-00038).
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The case concerns the 2019-2020 administrative review of the AD order on tapered roller bearings from China. In the review, the Commerce Department calculated a 538.79% dumping margin based on adverse facts available. In the review's preliminary results, Commerce identified various "deficiencies and inconsistencies" from the respondent's data over its factors of production. The missing information included direct input bills of materials that Tainai needed to gather from its suppliers. The preliminary rate in the review was 36.75%.
The agency then issued a supplemental questionnaire that Tainai and its suppliers failed to answer. As a result, Commerce finalized the 538.79% rate, given the "magnitude of the missing data." The rate was derived in part from the respondent's position in the tapered roller bearing (TRB) production line. The exporter doesn't develop or add value to the finishing stages in the supply chain and merely buys the components after those stages, so the data from the third-party suppliers was crucial for determining the dumping rate, Commerce said. The agency said that since Tainai could have induced the unaffiliated suppliers to provide the data, AFA was warranted.
DOJ said that by the 33rd administrative review of the AD order, Tainai should have known how to collect this information, "particularly where Tainai does not actually produce any TRBs, but rather purchases and further finishes them." Tainai and its suppliers "are -- or should be -- aware that Commerce requires this data," given that the respondent participated in the 2012-2013 new shipper review of TRBs, the government said. The U.S. said it gave Tainai "multiple opportunities" to provide the requested data, and the respondent's "best efforts" cannot write off the failure to provide this "fundamental data." The respondent failed to get this data from both unaffiliated and affiliated suppliers and made only one "half-hearted attempt to obtain" the data, doing so only after the preliminary determination was published, the government argued.
Tainai argued the use of this high AFA rate was "punitive." In its reply, the U.S. said it used the respondent's own data to fill the gap in the record in determining the normal value of each control number of the TRBs components used to make the TRBs sold to the U.S. during the investigation period.
In its motion for judgment, Tainai also railed against Commerce's decision to deduct Section 301 duties from its U.S. price, arguing the duties are not ordinary duties and more akin to antidumping duties, meaning they should be deducted. The U.S., though, said its "consistent practice is to treat Section 301 duties as import duties" in AD proceedings and it has found that Section 301 duties are normal customs duties because they have been imposed without a termination date.
The government said it properly capped Section 301 duty payments to the actual duty amount, excluding additional revenue. Tainai said revenue associated with the duties should also be deducted, though the U.S. argued the regulation directs it to use a price that is net of price adjustment that is reasonably attributable to the goods in question. The regulation, 19 C.F.R. 351.401(c), defines a "price adjustment" as “a change in the price charged for subject merchandise or the foreign like product ... including, under certain circumstances, a change that is made after the time of sale that is reflected in the purchaser’s net outlay.”
Commerce said this additional revenue should not result in another price adjustment because these revenues do not represent changes in the price for the subject goods such as discounts, rebates and post-sale price adjustments. "Because the additional revenue associated with the Section 301 duties 'represents profit on the sale of services, not profit on the sale of the merchandise,' Commerce’s determination not to do a further price reduction is in accordance with its practice and supported by substantial evidence," the brief said.