CIT Again Sends Back Use of AFA, Failure to Conduct Collapsing Analysis in AD Review on Chinese Xanthan Gum

Choe-Groves also ruled that Commerce erred in not rescinding the review of exporter Deosen Biochemical and failed to conduct a new collapsing analysis of the company. The court said Deosen Biochemical wasn't given adequate notice that parties could request a new collapsing analysis in the review, which covered entries in 2019 and 2020.

In the review, Commerce asked Meihua for information on the duties it paid on its entries, though it later became clear that this information could change given the company's claims for exclusions from the Section 301 duties it paid. The exporter initially provided the requested information on the duties it paid and then submitted supplemental information with the information it gave CBP regarding its claims for the Section 301 duty exclusions.

Commerce said the initial submissions were incomplete since they didn't include the materials sent to CBP regarding the exclusions, and that the supplemental response was untimely since it was submitted just 56 days before the review's preliminary results. Choe-Groves had already rejected that position in the case's first opinion (see 2304200010).

On remand, Commerce continued to use AFA and find that Meihua withheld information about its U.S. duties and sales database. The judge noted that the agency's initial questionnaire only asked for information about Meihua's duties paid, which the company provided. Commerce didn't initially ask if those duty amounts would change.

The court said the question was "poorly worded if Commerce intended to elicit whether the amounts paid would change or whether the amounts paid were correct, when the actual question asked how much duties were paid." Groves said it's "clear" Meihua answered the question that was asked.

The submission also wasn't untimely, since 56 days is a reasonable period in which to "analyze the information rather than disregard it and apply" total AFA, the court said. "Notably," there is no evidence of any missed deadlines, Choe-Groves said. The only standard governing the timeliness of Meihua's supplemental submission is a "vague" one that says it must leave time for interested parties to comment and for Commerce to arrive at a methodology with which to calculate export prices using the information. Choe-Groves said two months before the review's preliminary results "would seem to satisfy this vague standard."

In her first opinion, the judge also said Commerce failed to provide Meihua with notice and a chance to remedy any deficiency. On remand, the agency said notice and a chance to remedy a deficiency are not afforded in situations where the deficiency was due to "intentional misconduct." The court disagreed, noting that there are no allegations of fraud nor any evidence showing that Meihua's supplemental submission was "deficient in any way." As a result, Commerce continued to violate its statutory obligation to provide notice and a chance to remedy a deficiency.

In the review, Deosen Biochemical said it sent a letter to Commerce saying it had no exports, shipments, sales or entries of xanthan gum to the U.S. during the review period and asking for the review to be rescinded. Commerce rejected the letter and a follow-up offer to submit more information, and relied on a collapsing analysis from 2017-18 which said that Deosen Biochemical was affiliated with Deosen Biochemical (Ordos). This decision was remanded as an abuse of discretion.

On remand, the agency again referred to the past collapsing analysis and said Deosen Biochemical is at fault for failing to provide evidence to rebut the presumption of single-entity treatment. Commerce argued that in its initiation notice of the review, it wouldn't carry out any collapsing analyses.

Choe-Groves ruled that a party has a right to attempt to rebut a presumption it is subject to, adding that the initiation notice didn't include any "deadlines or procedures for a party to request a new collapsing analysis during the relevant period of review." The U.S. "seems to suggest that putting parties on notice that they would remain collapsed during respondent selection is the same as providing notice that parties could request a new collapsing analysis during the administrative review," the opinion said. "The Court does not agree that these are synonymous."

The court added that the decision not to rescind the review for Deosen Biochemcial was unsupported since it didn't consider the "totality of circumstances," as required by the U.S. Court of Appeals for the Federal Circuit. The agency didn't look at whether any facts had changed during the review period that would "alter the conclusion that a significant potential for manipulation of price or production to circumvent antiduping duties existed between the Deosen entities during the relevant period of 2019-2020." The exporter's letter was at the very least "an indication of pertinent evidence that some facts had changed," the opinion said.

(Meihua Group International Trading (Hong Kong) v. United States, Slip Op. 24-21, CIT Consol. # 22-00069, dated 02/22/24; Judge: Jennifer Choe-Groves; Attorneys: Mark Lehnardt of Law Office of David Simon for plaintiff Meihua; Chunlian (Lian) Yang of Alston & Bird for consolidated plaintiff Deosen Biochemical; Robert Gosselink of Trade Pacific for consolidated plaintiff Jianlong Biotechnology Co.; Sosun Bae for defendant U.S. government)