Importer, Exporter Contest AFA Over Steel FOP Reporting in AD Review
The Commerce Department erred in assigning total adverse facts available to respondent Vinlong Stainless Steel (Vietnam) in the 2022-23 administrative review of the antidumping duty order on welded stainless steel pressure pipe from Vietnam, Vinlong and importer Norca Industrial argued in a Dec. 23 motion for judgment at the Court of International Trade (Norca Industrial Company v. United States, CIT # 25-00132).
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In their motion, Vinlong and Norca also contested Commerce's selection of Morocco over Indonesia as the primary surrogate country, arguing that the agency had "no basis for finding Morocco a substantial producer of comparable merchandise" and that the reasons for picking Morocco over Indonesia "do not withstand scrutiny."
In the review, Commerce preliminarily decided to use facts available against Vinlong, since the respondent was "unable to provide correct consumption rates for its material inputs” and thus wasn't able to provide an "accurate factors of production" database. From this same finding, Commerce also said the respondent failed to act to the best of its ability, warranting an adverse inference. Vinlong was ultimately hit with a 144.51% AD rate.
Norca and Vinlong said Commerce based its decision to use facts available on a "single factor of production (FOP): conversion of steel material into welded stainless steel pressure pipe." However, the agency misconstrued Vinlong's questionnaire responses and "improperly rejected verifiable information Vinlong supplied for this FOP," the brief said.
The respondent reported the per-unit factor amount of steel material based on the input of material into production that Vinlong records into its accounting system. The company did so by allocating the quantity of material consumed by each steel grade to the production quantity of the corresponding steel grade. While Vinlong acknowledged that there was a gap in the company's reporting, it said the discrepancy existed due to "the review spanning a period that does not align with the company’s fiscal year."
During the review, Vinlong gave Commerce an alternative to report a higher factor of production for steel material provided by the accounting records, the brief said. This "scrap method" established an "upward adjustment multiplier calculated by dividing the total production output quantity and an allocated quantity of corresponding scrap during the [review period] over the total quantity of [subject merchandise] output during the [review period]."
Commerce rejected this method, since it's dependent on a "narrow subset" of Vinlong's production data and is based on the respondent's "own inaccurate books and records." Norca and Vinlong said this conclusion is unsupported, since the "low per unit consumption Vinlong calculated was a result of timing issues," the scrap method uses scrap sales that are supported by documents and reflected in Vinlong's accounting system and the respondent gave Commerce "a complete reconciliation for its steel consumption" that the agency didn't ask any further questions about.
Even if Commerce was justified in rejecting Vinlong's steel conversion factor of production, it wasn't justified in rejecting all the other data provided by the respondent, the brief said. The other factors of production "are reliable, can be verified from Vinlong records (e.g., purchase records), and their reliability has not been questioned," Norca and Vinlong said. “Any deficiency was limited to a discrete category of information: the steel conversion FOP, as to which Vinlong provided a solution.”
Turning to Commerce's use of an adverse inference, Norca and Vinlong said no such inference was warranted, since the respondent clearly didn't fail to act to the best of its ability. The respondent "timely responded to the initial questionnaire and the supplemental questionnaires Commerce issued during the review," and it was the respondent itself that "brought to Commerce’s attention a perceived issue with the calculated steel conversion FOP."