CAFC Sustains AFA Over Hyundai's Cost Shifting in AD Review on Large Power Transformers
The Commerce Department properly hit antidumping respondent Hyundai Electric & Energy Systems Co. with adverse facts available for its failure to produce information on its cost shifting practice, the U.S. Court of Appeals for the Federal Circuit said in an Oct. 4 opinion. Upholding a decision of the Court of International Trade, a three-judge panel at the appellate court agreed that Commerce's decision to cancel verification of Hyundai's information was properly supported.
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The case stems from the fifth administrative review of the antidumping duty order on large power transformers from South Korea. During the review, Hyundai admitted shifting costs among its transformer projects in the ordinary course of business to show that each project was profitable. Commerce then asked Hyundai for more information on this cost shifting practice, to which Hyundai answered with a worksheet dividing the total cost differences by transformer project for reconciliation purposes into six categories.
Of these six, Hyundai gave adequate information for only “other material costs,” Commerce concluded. For silicon steel costs, Hyundai said it is not possible to trace its projects to determine which silicon steel cost might have been shifted. Commerce still maintained AFA on the silicon steel costs, holding that “Hyundai failed to demonstrate and support how each project’s reported silicon steel consumption quantities and per-unit input values were calculated, that they truly represent actual consumption, and how the per-unit input valuations differed from those recorded in SAP,” which is Hyundai's accounting system.
CIT had held that Hyundai had given adequate product-specific cost information only for the other material costs, failing to provide sufficient information on the other five categories. CIT also pointed to Commerce's finding on the silicon steel costs, holding that Hyundai had not properly tracked the shifting of silicon steel costs from one project to another. The court said that although Hyundai didn't adequately report its cost-reconciliation and product-specific costs, this data “had to be available to Hyundai if it had accurately recaptured all costs -- and indeed, in limited instances, Hyundai provided discrete samples detailing the adjustments for short periods of time and for limited categories of expenses.”
The Federal Circuit agreed with CIT, saying Hyundai provided the requested level of detail for only a single category of the six reconciled cost categories. Hyundai argued that Commerce never asked for details on each category of non-considered merchandise for the purpose of cost reconciliation and that the respondent properly satisfied Commerce's requests to demonstrate its cost shiftings. The panel held that Commerce did ask for such details and that Hyundai did not provide the level of detail Commerce requested.
The appellate court also held that Commerce's decision to cancel verification was properly supported. The agency has the right to do so when the “information is so incomplete as to be unreliable, or the interested party has not acted to the bet of its ability to meet Commerce's requirements,” it ruled. With this condition satisfied, verification was not needed. Lastly, the court said Commerce properly used an adverse inference in selecting from among the facts otherwise available because Hyundai did not act to the best of its ability when responding to Commerce.
(Hyundai Electric & Energy Systems Co., Ltd. v. United States, et al., Fed. Cir. #21-1009, dated 10/04/21, Judges Pauline Newman, Jimmie Reyna and Todd Hughes. Attorneys: Ron Kendler of White & Case for plaintiff-appellant Hyundai; Kelly Krystyniak for defendant-appellee U.S. government)