Restani, Judge:
In this action challenging a United States Department of Commerce (Commerce) Antidumping Duty Investigation Determination regarding Corrosion-Resistant Steel Products (CORE) from Korea, Hyundai Steel Co. (Hyundai) requests that the court hold the final determination unsupported by substantial record evidence and otherwise not in accordance with the law. Hyundai accordingly requests that Commerces determination be remanded for correction of error.
BACKGROUND
Based on petitions filed by defendant-intervenors, various domestic steel producers, on June 30, 2015, Commerce initiated an investigation concerning the possible sale of CORE from various countries at less than fair value (LTFV). Certain Corrosion-Resistant Steel Products From Italy, India, the Peoples Republic of China, the Republic of Korea, and Taiwan: Initiation of Less-Than-Fair-Value Investigations, 80 Fed. Reg. 37,228, 37,228 (Dept Commerce June 30, 2015). Hyundai, a Korean CORE producer and exporter, was selected on July 23, 2015, as one of two mandatory Korean respondents in this investigation. Hyundai accounted for one of the two largest volumes of Korean CORE exports, per U.S. Customs and Border Protection (CBP) entry data for the period of investigation. Respondent Selection for the Antidumping Duty Investigation of Certain Corrosion-Resistant Steel Products from the Republic of Korea, A-580-878, POI 04/01/2014-03/30/2015, at 8 (July 23, 2015). This action concerns Commerces treatment, for computation of the United States sale price, of Hyundais further manufactured products, other than completed automobiles, including skelp, sheets or blanks (SSBs), tailor-welded blanks (TWBs), and after-market auto parts. To manufacture the latter two product categories, Hyundai first sold CORE to its U.S. subsidiary, Hyundai Steel America, Inc. (HSA), in coil form. HSA then sold the imported CORE: (1) in unaltered form; (2) in slightly further manufactured form, e.g., as SSBs; or (3) as TWBs. HSA sold the foregoing products to both affiliated and unaffiliated vendors that performed additional further processing before selling the ultimate product to an affiliated automobile manufacturer. Hyundai Steel Section A Questionnaire Response, A-580-878, POI 04/01/2014-03/31/2015, at 2-3 (Sept. 4, 2015). In almost every case, the CORE sold through HSA is ultimately consumed in the production of automobiles by Hyundai affiliates. Notice of Difficulty in Responding to Questionnaire and Request for Alternate Calculation Method, A-580-878, POI 04/01/2014-03/31/2015, at 3 (Aug. 17, 2015) (Notice of Difficulty).
Early in the investigation, Hyundai unsuccessfully requested Commerce to apply the special rule in valuing Hyundais sales of further manufactured products for the purpose of calculating Constructed Export Price. Instead, Commerce determined that Hyundai must submit a Section E response with cost and sales data for such products. Commerce published its preliminary determination on January 4, 2016, with a preliminary antidumping duty of 3.51 percent for Hyundai. Certain Corrosion-Resistant Steel Products From the Republic of Korea: Affirmative Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination, 81 Fed. Reg. 78, 79 (Dept Commerce Jan. 4, 2016) (Preliminary Determination). Between January and March of 2016, Commerce conducted verifications of Hyundais reported home market sales, U.S. sales, and cost of production data. Over Hyundais objections, however, Commerce, finding Hyundais submissions deficient, declined to verify data associated with Hyundais affiliates U.S. manufacturing operations, or the sales associated with such products. Cancellation of Hyundai Steel Companys Constructed Export Price (CEP) Verification of Further Manufactured Sales, A-580-878, POI 04/01/2014-03/31/2015, at 1-2 (Dept Commerce, Mar. 8, 2016) (Verification Cancellation Letter).
After having issued three supplemental questionnaires regarding Hyundais further manufactured product cost and sales data in November 2015, December 2015, and February 2016, Commerce ultimately issued a final determination and order which applied an adverse inference to the facts available (AFA) in calculating a final dumping margin of 47.8 percent for Hyundai. Final Determination of Sales at Less Than Fair Value and Final Affirmative Determination of Critical Circumstances, 81 Fed. Reg. 35,303, 35,304 (Dept Commerce June 2, 2016) (Final Determination); as amended by Certain Corrosion-Resistant Steel Products From India, Italy, the Peoples Republic of China, the Republic of Korea and Taiwan: Amended Final Affirmative Antidumping Determination for India and Taiwan, and Antidumping Duty Orders, 81 Fed. Reg. 48,390, 48,393 (Dept Commerce July 25, 2016) (Antidumping Duty Order). In the memorandum appended to its Final Determination, Commerce noted myriad problems with Hyundais responses to Commerces information requests. Issues and Decision Memorandum for the Final Affirmative Determination in the Antidumping Duty Investigation of Certain Corrosion-Resistant Steel Products from the Republic of Korea, A-580-878, POI 04/01/2014-03/31/2015, at 7-14, 31-33 (Dept Commerce May 24, 2016) (Final Det. I & D Memo).
Hyundai timely filed a summons to commence this action on August 23, 2016, and filed a complaint on September 6, 2016. Docket Nos. 1, 7. See 19 U.S.C. § 1516a(a)(2)(A) (2006) ; 28 U.S.C. § 2636(c) (1993). Hyundai moved for judgment on the agency record on March 20, 2016. Docket No. 51. This opinion follows briefing and oral argument by the parties and certain defendant-intervenors.
JURISDICTION AND STANDARD OF REVIEW
The court has jurisdiction pursuant to 28 U.S.C. § 1581(c) (2016). Commerces final results in an administrative review of an antidumping duty order are upheld unless they are unsupported by substantial evidence on the record, or otherwise not in accordance with law. 19 U.S.C. § 1516a(b)(1)(B)(i).
DISCUSSION
Hyundai alleges Commerces Final Determination is deficient in two respects. First, it argues Commerce unreasonably failed to apply the special rule applicable to merchandise with value added after importation to Hyundais TWBs and auto parts. Second, Hyundai argues Commerce erred in applying AFA with respect to Hyundais further manufactured TWBs, auto parts, and SSBs.
I. Commerces decision not to apply the special rule applicable to merchandise with value added after importation was reasonable.
Hyundai first argues Commerce unreasonably declined to apply the special rule applicable to merchandise with value added after importation to its TWBs and auto parts. Pl. Br. at 33-41. Under 19 U.S.C. § 1677a(e) (1994), where the value added to an imported product in the United States is likely to exceed substantially the value of the product upon importation, Commerce shall determine the constructed export price using the price of either identical or other subject merchandise sold by the producer to an unaffiliated entity. Under the applicable regulations, a substantial excess in value requires an estimate[d] excess of at least 65 percent of the price charged to the first unaffiliated purchaser ... in the United States. 19 C.F.R. § 351.402(c)(2) (2013). Though Commerce normally will determine the prerequisite satisfied in such circumstances, id., even where this threshold is met, application of the special rule is left to Commerces reasonable exercise of discretion. RHP Bearings Ltd. v. United States, 288 F.3d 1334, 1344-46 (Fed. Cir. 2002).
On August 15, 2015, Hyundai submitted a letter requesting that Commerce apply the special rule to its further manufactured products sold to unaffiliated purchasers in the United States. Notice of Difficulty at 2. In response, regarding Hyundais sales of TWBs and auto parts, Commerce requested that Hyundai provide a calculation of the percentage of the value added to the imported merchandise under consideration after importation and prior to sale to the unaffiliated vendor. Additional Guidance on information required to substantiate Hyundai Steel Corporations Request for Alternative Calculation Method, A-580-878, POI 04/01/2014-03/31/2015, at Attach. 1 (Dept Commerce Sept. 16, 2015). No specific guidance was provided concerning how to account for the value added to further manufactured products incorporating multiple subject imports. See id. Commerce cannot, however, be expected to provide specific instructions regarding aspects of a respondents manufacturing process of which it is unaware. There is no indication in the record that, at the outset, Commerce was aware of this particular reporting issue.
Nine days later, Hyundai responded with information on its sales of TWBs and auto parts. Response to the Departments Request for Additional Information, A-580-878, POI 04/01/2014-03/31/2015, at Ex.4 (Sept. 25, 2015) (September 25 Response). In a letter dated October 15, 2015, Commerce determined, without explanation, that Hyundai failed to demonstrate that the value added in the United States is equal to or greater than 65 percent of the imported coil with respect to Hyundais further manufactured sales of certain auto parts [and TWBs], and accordingly declined to apply the special rule. Hyundai Steel Companys Exclusion Request, A-580-878, POI 04/01/2014-03/31/2015, at 1 (Dept Commerce Oct. 15, 2015) (Section E Request).
Here, Hyundai first argues that Commerce failed to describe its preferred method for evaluating value added, in violation of the Uruguay Round Agreements Act Statement of Administrative Action (SAA). The SAA indicates Commerce will provide interested parties with a description of the method chosen to evaluate value added. Uruguay Round Agreements Act, Statement of Administrative Action, H.R. Rep. No. 103-316, vol. 1, at 825-26 (1994), reprinted in 1994 U.S.C.C.A.N. 4040, 4165 (SAA). Defendant-intervenors contend that by not mandating a precise calculation, the SAA does not require Commerce to provide a detailed explanation supporting its decision to apply the special rule. Def.-Int. Br. at 16.
In relevant part, the SAA provides:
[F]or purposes of estimating whether the value added in the United States is likely to substantially exceed the value of the imported product, it is the Administrations intent that Commerce not be required to perform a precise calculation of the value added. Requiring such a precise calculation would defeat the purpose of the new rule of saving Commerce the considerable effort of measuring precisely the U.S. value added. Commerce will provide interested parties, normally as part of the preliminary determination, with a description of the method chosen and an explanation regarding the selection of such method.
SAA at 826. Defendant-intervenors interpretation of this passage, which omits the last sentence and focuses on the absence of a need for precise calculation, is unavailing. [P]recise calculation is more logically juxtaposed with estimation. To give meaning to the entire passage, including the last sentence, it is reasonably read as requiring that Commerce provide some description of its method of estimating whether the value added in the United States is likely to substantially exceed the value of the imported product. This likewise serves the purposes underlying the special rule. See Antidumping Duties; Countervailing Duties, 62 Fed. Reg. 27,296, 27,353 (Dept Commerce May 19, 1997) (the purpose of section 772(e) is to reduce the administrative burden on the Department). Neither the special rule statute, nor its regulations, nor the SAA, however, specify a particular method of calculation that could be applicable in all cases.
By clarifying the methods by which respondents submissions will be evaluated, Commerce reduces its administrative burden by warding off inapposite submissions or avoiding the burden of having to recalculate the value added by itself. Here, Commerce contends that the insufficiencies of Hyundais calculations were adequately explained in Commerces Final Determination. See Final Det. I & D Memo at 24-25. See also Decision Memorandum for the Preliminary Determination in the Antidumping Duty Investigation of Certain Corrosion-Resistant Steel Products from the Republic of Korea, A-580-878, POI 04/01/2014-03/31/2015, at 11 (Dept Commerce Dec. 21, 2015) (Prelim. Det. I & D Memo) (providing no further explanation for the insufficiencies of Hyundais calculations). Yet, upon reviewing Hyundais September 25 Response, Commerce likely should have been aware of Hyundais particular reporting complication, and yet it offered no detailed description of its preferred method of estimation before issuing its Final Determinations. In this case, however, if there were a procedural misstep, it is of no moment. Availability of the special rule is to be determined early on, in order to leave time for the main ordinary calculations, if necessary. Its intended beneficiary is Commerce, thus, a respondent has the burden to demonstrate its eligibility. Hyundai failed to satisfy the 65% value-added threshold necessary for application of the special rule.
Hyundais September 25 submission relied upon an unreasonable calculation method. This is not the first value-added case; in the absence of more specific instructions from Commerce, Hyundai could have adapted an analogous approach from a prior case to calculate the value added to its further manufactured products. Hyundai does cite DRAMS from Korea as support for its approach. Plaintiff Br. at 35, 38; Dynamic Random Access Memory Semiconductors of One Megabit or Above From the Republic of Korea; Preliminary Results of Antidumping Duty Administrative Review, 60 Fed. Reg. 47,149 -03, 47,150 (Dept Commerce Sept. 11, 1995) (DRAMs from Korea). In DRAMS from Korea, a case involving imported DRAMS combined on a circuit board to manufacture memory modules after importation, Commerce applied the following approach: For DRAMs that were further manufactured into memory modules after importation, we deducted all value added in the United States, pursuant to [ § 1677a(e) ]. The value added consists of the costs of the materials, fabrication, and general expenses associated with the portion of the merchandise further manufactured in the United States, as well as a proportional amount of profit or loss attributable to the value added. DRAMS from Korea, 60 Fed. Reg. at 47,150 (emphasis added); see also Dynamic Random Access Memory Semiconductors of One Megabit or Above From the Republic of Korea; Final Results of Antidumping Duty Administrative Review, 61 Fed. Reg. 20,216, 20,216 (Dept Commerce May 6, 1996) (adopting the same calculation method). In calculating the value added, DRAMS from Korea thus included additional materials associated with further manufacturing in the U.S., such as a circuit board, but excluded all imported subject materials, such as the DRAMS affixed to those circuit boards. By contrast, Hyundais calculation method, which counted the value of one subject import as part of the value added to a product made of two subject imports, is not supported by past practice and is unreasonable. September 25 Response at Ex. 4.
By failing to offer any reasonable calculation, whether or not it was one preferred by Commerce, Hyundai did not meet its burden; Hyundai was double-counting a credit. After removing the value of the second CORE, based on the record, Hyundais sales of TWBs and auto parts do not meet the 65-percent threshold. Final Det. I & D Memo at 24-25. Hyundai contends that its November and December data would permit a favorable recalculation, but as described in Part II of this opinion, that data was untimely. As Hyundai failed to satisfy the prerequisites of 19 C.F.R. § 351.402(c)(2), Commerces decision not to apply the special rule to Hyundais sales of TWBs and auto parts was not unreasonable or arbitrary and represented a proper exercise of its discretion. The court now turns to calculations under normal methods.
II. Commerces application of AFA was reasonable as to Hyundais sales of TWBs and auto parts, but unreasonable as to Hyundais sales of SSBs.
Hyundai next challenges Commerces adverse application of facts otherwise available in determining the dumping margin for sales of SSBs, TWBs, and auto parts.
A respondent in an antidumping investigation is obligated to prepare an accurate and complete record in response to questions plainly asked by Commerce. Tung Mung Dev. Co. v. United States, 25 C.I.T. 752, 789 (2001) (citing Olympic Adhesives, Inc. v. United States, 899 F.2d 1565, 1571 (Fed. Cir. 1990) ). Commerce is authorized by 19 U.S.C. § 1677e(a) to make a determination on the basis of facts otherwise available where, inter alia: (1) necessary information is not available in the record; or (2) an interested party (a) withholds requested information; (b) fails to timely provide information in the form requested; (c) significantly impedes proceedings; or (d) provides information which cannot be verified under 19 U.S.C. § 1677m(i). See, e.g., Ningbo Dafa Chem. Fiber Co. v. United States, 580 F.3d 1247, 1251 (Fed. Cir. 2009). In this case, Commerce alleges that recourse to facts otherwise available was proper because certain information was not reasonably available in the record, § 1677e(a)(1), Hyundais December 29 database submissions were untimely, § 1677e(a)(2)(b), and Hyundai significantly impeded the proceeding through delays and the provision of unusable information, § 1677e(a)(2)(c). See Prelim. Det. I & D Memo. at 12; Final Det. I & D Memo at 13; Def. Br. at 24.
All scenarios described in § 1677e(a) are subject to the requirement that Commerce, upon determining that a respondent has submitted non-compliant information, promptly inform that respondent of the nature of the deficiency and, to the extent practicable in view of statutory investigation time-limits, provide an opportunity to remedy or explain the deficiency. 19 U.S.C. § 1677e(a) (2015), 1677m(d) (2015). If respondent is unable to timely remedy the deficiency, Commerce may, subject to 19 U.S.C. § 1677m(e), disregard all or part of the original and subsequent responses. 19 U.S.C. § 1677m(d) ; SAA at 865.
Section 1677m(e) precludes Commerce from ignoring information, even if it doesnt satisfy all requirements established by Commerce, where the interested party can demonstrate: (1) it acted to the best of its ability in supplying compliant information; and (2) the information (a) is timely submitted, (b) is verifiable, (c) is not so incomplete that it cannot furnish a reliable basis for making the determination, and (d) can be used without undue difficulties. 19 U.S.C. § 1677m(e). If these criteria are not satisfied, Commerce is not statutorily obligated to allow respondent to remedy its submission. See Papierfabrik Aug. Koehler SE v. United States, 843 F.3d 1373, 1382 (Fed. Cir. 2016), cert. denied, --- U.S. ----, 138 S.Ct. 555, 199 L.Ed.2d 436(2017).
To resolve this case, the court must first consider whether Commerces determination that, under § 1677e(a), Hyundai failed to provide requested data is supported by substantial evidence. If so, the court must consider whether Commerce met its obligations, under § 1677m(d), to notify Hyundai of deficiencies in its submissions. If Commerce has satisfied its obligations, the court must next determine whether substantial evidence supports a finding that Hyundai failed to satisfy the elements of § 1677m(e). For data which fails to satisfy § 1677m(e), the court must finally consider whether Commerce drew an adverse influence under § 1677e(b) based on substantial evidence and in accordance with the law.
a. Commerce established that requested data regarding Hyundais sales of TWBs, auto parts, and SSBs was missing, such that Commerce had to resort to other facts available.
The court must determine whether substantial evidence indicates that Commerce both made a request and the fact of the missing information. The reason for the failure is of no moment. The mere failure of a respondent to furnish requested information-for any reason-requires Commerce to resort to other sources of information to complete the factual record on which it makes its determination. Nippon Steel Corp. v. United States, 337 F.3d 1373, 1381 (Fed. Cir. 2003). In Commerces Final Determination, it found deficiencies with Hyundais (1) costs and sales data associated with TWBs and auto parts, and (2) costs data associated with SSBs. Final Det. I & D Memo at 7-14, 36-38; Prelim. Det. I & D Memo. at 10-13.
Hyundai argues that Commerce cannot claim the information was missing because it was never properly requested. Indeed, unless the requisite information has been fairly requested [by Commerce], it is inappropriate to take recourse to [other facts available]. Koyo Seiko Co. v. United States, 92 F.3d 1162, 1165 (Fed. Cir. 1996). Compare Allegheny Ludlum Corp. v. United States, 215 F.Supp.2d 1322, 1339, 24 C.I.T. 1424, 1442-43 (2000)
(finding that, where Commerce requested data related to all home market sales and the standards for home market sales were clear, it had not hidden the ball in its initial requests for information ... ); with Ta Chen Stainless Steel Pipe, Ltd. v. United States, 23 C.I.T. 804, 818-19, 1999 WL 1001194 (1999) (finding that, where Commerce had failed to specifically request information regarding a particular affiliates US sales, it had failed to provide respondent with sufficient notice). Hyundai argues that Commerces instructions presented a shifting target as to how Hyundai should have formatted its calculations, and did not account for manufactured products incorporating multiple product control numbers (CONNUMs). Pl. Br. at 23, 28, 30.
As § 1677e(a) allows responses to be set aside based on inadequacy of either form or substance, such a deficiency would preclude finding a proper request. Commerce first requested data on Hyundais further manufactured products on October 15, 2015, in its Section E questionnaire. Section E Request at 1. Three supplemental Section E questionnaires were subsequently issued on November 19, 2015, December 15, 2015, and February 5, 2016.
Although the standards applicable to Hyundais further manufactured goods reporting were less settled than the home market sales at issue in Allegheny Ludlum, it is likewise clear that in this case Commerce has not hidden the ball. See 215 F.Supp.2d at 1339. Commerces October 15 letter requested the following: (1) sales data for TWBs and auto parts, and (2) a section E response and a data base for [TWBs and auto parts], as well as for the products which are coded [SSB] in the section C data base submitted on September 29, 2015. Section E Request at 1. The supplemental request which followed featured twelve questions aimed primarily at clarifying units used, explaining calculation methods, and requesting that certain gaps be filled. Second Supplemental Questionnaire to Sections B & C, and First Supplemental to Further Manufacturing, A-580-878, POI 04/01/2014-03/31/2015, at Attach. 1:1-2 (Dept Commerce Nov. 19, 2015) (First Sec. E Supp. Q.). The December 15, 2015, supplemental request generally focused on manufacturing costs, as well as Hyundais calculations regarding its individual processors and their associated expense ratios. Antidumping Duty Less Than Fair Value Investigation of Certain Corrosion-Resistant Steel Products from the Republic of Korea, A-580-878, POI 04/01/2014-03/31/2015, at 3-4 (Dept Commerce Dec. 15, 2015) (Second Sec. E Supp. Q.).
The final supplemental request sought to clarify Hyundais breakdown of the components incorporated into each further manufactured product. Hyundai claimed to have implemented the same approach used in Mexican Galvanized Wire, wherein respondent was instructed to adapt Commerces standard reporting by breaking down the percentage of each subject and non-subject input in a further manufactured product by weight. Hyundais approach, however, omitted non-subject inputs, a difference for which Commerce sought explanation. See Supplemental Questionnaire to Section E, A-580-878, POI 04/01/2014-03/31/2015, at Attach. 1 (Dept Commerce Feb. 5, 2016) (Third Sec. E Supp. Q.); Galvanized Steel Wire from Mexico: Second Supplemental Questionnaire, A-201-840, POI 01/01/2010-12/31/2010, at 6-8 (Intl Trade Admin. Sept. 16, 2011) (Mexican Galvanized Wire). Though it would have certainly simplified the process for Commerce to have directed Hyundai to apply the Mexican Galvanized Wire approach from the outset, taken together, the foregoing correspondence was sufficiently specific to satisfy Commerces burden to request the information.
Moreover, Hyundais exclusion of non-subject inputs in conducting the Mexican Galvanized Wire calculations for its TWBs and auto parts sales skews subsequent calculations by yielding different percentages when determining the make-up of a finished manufactured product, percentages used to calculate adjusted gross price and manufacturing costs. Hyundai Steels Response to the Departments Supplemental Section E Questionnaire, A-580-878, POI 04/01/2014-03/31/2015, at Attach. 1:1-2 (Feb. 10, 2016) (Hyundais Supp. Sec. E Q. Response). See Def.-Int. Br. at 32-33. This constitutes two violations of § 1677e(a) : First, Hyundai omitted data related to non-subject inputs, violating § 1677e(a)(1) ; and second, Hyundai failed to report data in a form requested by Commerce, violating § 1677e(a)(2)(b). Commerce noted myriad other deficiencies in Hyundais TWB and auto parts data, but having established the above, it is only necessary to note that Hyundais December 29 databases did not fill gaps regarding its TWB, auto part, or SSB data.
Hyundai notes that the request which precipitated Hyundais December 29 response directed it to provide a new further manufacturing cost database. Second Sec. E Supp. Q. at 4. This particular request, however, was limited to changes resulting from the questions above, id., and Commerces Second Supplemental Questionnaire never referred to changes in the costs of SSBs. Hyundais Supp. Sec. E Q. Response. Regarding TWBs and auto parts, Hyundai argues the databases were timely attempts to reconcile its affiliates general and administrative (G & A) expense ratios, revisions it contends were plainly envisioned by Commerces questionnaire, which generally aimed at reconciling individual producers expenses. Second Sec. E Supp. Q. at 4; Pl. Br. at 25. Hyundai went much further than even that interpretation would allow, by, for example, revising its G & A expense ratio further downward (from 2.35 percent to 1.75 percent), instead of explaining how its G & A expense ratio was calculated, as requested. Def. Br. at 29-30. Hyundais non-responsive databases are excludable under § 1677e(a)(2)(b).
Regarding the sufficiency of Hyundais SSB data, Commerce found that Hyundais December 29 submission included significant, unexplained downward adjustments in manufacturing costs and yield loss. There were, furthermore, inconsistencies among Hyundais narratives, exhibits, and databases. Verification Cancellation Letter at 1-2. Both errors fall under either § 1677e(a)(1) or § 1677e(a)(2)(c).
As Hyundai failed to submit fairly requested information regarding its TWBs, auto parts, and SSBs, under § 1677e(a) Commerce reasonably identified a gap in the record.
b. Commerce timely identified Hyundais data deficiencies regarding its TWBs and auto parts, and provided an opportunity to respond, but did not timely identify Hyundais data deficiencies regarding its SSBs.
The parties frame Hyundai and Commerces exchange of information quite differently. Commerce characterizes its supplemental Section E questionnaires as providing Hyundai an opportunity to correct deficiencies in its initial Section E response of November 2, 2015. Commerce thus argues that § 1677m(d) does not require it provide Hyundai with a further opportunity to correct the deficiencies in its supplemental responses. Hyundai, on the other hand, characterizes the supplemental questionnaires as requesting new information, rather than identifying prior errors. It therefore contends the questionnaires are themselves subject to § 1677m(d)s requirement that a respondent be given an opportunity to correct deficiencies in a response. See Final Det. I & D Memo at 30. Supplemental questionnaires do not, by their nature, necessarily indicate error in a respondents earlier submission. A questionnaire may, for example, simply reflect the agencys determination that new information would aid in its decision-making. To determine whether Commerces characterization of the questionnaires is supported by substantial evidence, the court turns to the questionnaires themselves.
Commerces characterization of the supplemental questionnaires at issue is indeed persuasive. Although portions of Commerces first supplemental questionnaire could be construed as simply requesting new information, see, e.g., First Sec. E Supp. Q. at Questions 1-3, others are clearly aimed at remedying deficiencies in Hyundais November 2, 2015, response, see, e.g., id. at Questions 4, 6-8, 10 (identifying inconsistencies and overlap in Hyundais data, requesting Hyundai comply with Commerces original reporting instructions to report each component as a separate sale, and further requesting Hyundai specify units for a number of its figures). Commerces Second Supplemental Questionnaire concerns Hyundais November 30, 2015, response and again identifies specific deficiencies. Second Sec. E Supp. Q. at Questions 3-4 (noting the downward adjustment in TWB processing costs and the ambiguity as to which cost buildup related to which processor); Final Det. I & D Memo at 30. It furthermore requested Hyundai explain its reporting and provide further production expense breakdowns. Id. at Questions 6-7. Finally, Commerces Third Supplemental Questionnaire concerned Hyundais December 29, 2015, submission, and noted inconsistencies among two of Hyundais variables, requesting Hyundai to explain and document why these variables were different. Third Sec. E Supp. Q. at Attach. 1. Commerces questionnaires thus constitute opportunities for Hyundai to correct data deficiencies under § 1677m(d).
Commerce is obligated to notify Hyundai promptly of the nature of its data deficiencies. 19 U.S.C. § 1677m(d). Hyundai argues Commerces five-week delay in responding to its December 29 submission fails to satisfy this standard, considering the limited statutory timeframe for an antidumping investigation. Pl. Br. at 29-30. As Hyundais December 29 submission was itself a correction of earlier deficient submissions, it falls outside the strictures of § 1677m(d). Commerces Third Supplemental Questionnaire was aimed at fixing deficiencies in Hyundais attempts to revise its initial responses. Furthermore, Hyundai was notified of the particular issue addressed by the Third Questionnaire in Commerces Preliminary Determination. Compare Prelim. Det. I & D Memo at 11; with Third Sec. E Supp. Q. at Attach. 1. Commerces First and Second Supplemental Questionnaires, which are subject to § 1677m(d), followed mere weeks after the submissions to which they referred and were certainly prompt. Furthermore, these supplemental questionnaires adequately notified Hyundai of the nature of its deficiencies, and requested specific corrections.
Between issuing its Second and Third Supplemental Questionnaire, Commerce in its Preliminary Determination indicated further deficiencies in Hyundais initial reporting, including unexplained and unsolicited changes to Hyundais further manufacturing costs, inconsistencies between Hyundais narrative response and database, and a mathematically incorrect methodology for reporting sales quantity. See Prelim Det. I & D Memo at 11-13. Hyundai never addressed these concerns, but contends it was never given the opportunity to do so. Commerces Preliminary Determination indicated that: We intend to provide Hyundai with such an opportunity [to remedy these reporting deficiencies] in the weeks ahead. Id. at 12. Commerces Preliminary Determination was announced on December 21, 2015, and was followed on December 29, 2015, by Hyundais Second Supplemental Questionnaire response. Commerce alleges that the quoted phrase from its Preliminary Determination I & D Memo was a reference to Hyundais then-forthcoming December 29 response, whereas Hyundai argues Commerce effectively promised an additional opportunity to respond which never materialized.
In other circumstances, the court has noted that Commerce should do its utmost to be fair in selecting the data it uses. Husteel Co., Ltd. v. United States, 98 F.Supp.3d 1315, 1345 n.20 (CIT 2015), opinion after remand, 180 F.Supp.3d 1330, appeal docketed for opinion after remand, No. 17-1013 (Fed. Cir. Oct. 5, 2016). Promising a further opportunity to address deficiencies and failing to provide it does not satisfy this standard. Commerces Second Supplemental Questionnaire indeed requests additional data regarding Hyundais further manufacturing costs, see Second Sec. E Supp. Q. at Questions 3-4, 6-7, however it does not mention inconsistencies between Hyundais narrative response and database, or a mathematically incorrect methodology for reporting sales quantity. The single question on Commerces Third Supplemental Questionnaire implicates one issue identified in the Preliminary Determination, but is not the broader opportunity to remedy its further manufactured sales responses which Commerce appeared to suggest. Prelim. Det. I & D Memo at 12; Third Sec. E Supp. Q. at Attach. 1. Thus, Commerce created an expectation and failed to deliver.
For most of Hyundais excludable data, this failure does not alter the analysis. Hyundai was indeed provided an opportunity to remedy some excludable data. Commerces Second Supplemental Questionnaire allowed Hyundai to remedy or explain its downward revision of its TWB costs and rectify issues with its average processing costs. Second Sec. E Supp. Q. at Questions 3-4, 6-7. Hyundai was likewise afforded the chance to address discrepancies among its quantity variables in Commerces Third Supplemental Questionnaire. Third Sec. E Supp. Q. at Attach. 1. Other excludable data fell outside the scope of any remedial opportunity alluded to by Commerce in its Preliminary Determination. Most importantly, Hyundais unsolicited December 29 databases were not presented as a response to Commerces Preliminary Determination, but rather as a response to an earlier Supplemental Questionnaire. As an unsolicited portion of a questionnaire response not yet submitted at the time of the Preliminary Determination, these databases could not have been what Commerce had in mind when referencing an opportunity to cure then-existing deficiencies. Under § 1677m(d), this data was reasonably excluded.
Commerces failure to provide its promised opportunity to address deficiencies does, however, affect Commerces recourse to facts otherwise available in lieu of Hyundais SSB data. As Hyundai has noted, issues with this data were not meaningfully highlighted until Commerces Verification Cancellation Letter. See Verification Cancellation Letter at 2; Final Det. I & D Memo at 29-30. This failure to timely notify is itself a violation of § 1677m(d). Furthermore, the issues ultimately highlighted included discrepancies between the narratives and associated exhibits, exactly the sorts of discrepancies referred to in the Preliminary Determination. Prelim. Det. I & D Memo at 12. In the Preliminary Determination, however, these discrepancies were not specifically linked to Hyundais SSB data. Id. Thus, Commerce both failed to provide prompt notice of a deficiency and acted unreasonably in promising an opportunity to remedy this discrepancy, failing to provide such an opportunity, and then holding the discrepancy against Hyundai. Further, Commerces Third Supplemental Questionnaire precluded Hyundai from submitting any new or revised sales, cost, or further manufacturing databases in response. Third Sec. E Supp. Q. at Attach. 1. Thus, Hyundais forbearance in not affirmatively moving for exceptional treatment after the Preliminary Determination to submit more information was reasonable. Accordingly, this matter will be remanded for Commerce to address Hyundais SSB cost data, and to recalculate the overall margin as necessary.
c. Hyundai did not submit verifiable information concerning its sales of TWBs and auto parts, and thus Commerce was not required to utilize this information despite its deficiencies.
Hyundai argues its TWB and auto part data satisfies the five-part test under § 1677m(e) and should nonetheless be included, even if it did not satisfy Commerces reporting requirements. The extra databases included in Hyundais December 29 report did not, as discussed above, fairly fall within the confines of Commerces Second Supplemental Questionnaire. Thus, those databases do not satisfy the timeliness prong of § 1677m(e).
Hyundais repeated downward revisions of its TWB costs, the issues associated with its TWB and auto part processing costs, and the discrepancies in its quantity variables will be assessed together as follows. The parties strongly disagree as to whether this data was verifiable within the meaning of § 1677m(i). If so, this data satisfies one prong of § 1677m(e), and the remaining prongs must be assessed. Verification is typically regarded as a spot check of a respondents submissions. See Micron Tech., Inc. v. United States, 117 F.3d 1386, 1396 (Fed. Cir. 1997). Despite Hyundais contention to the contrary, Commerce need not accept information it declines to verify on its face. Under § 1677m(i), Commerce is obligated only to verify information it uses in making a final determination. Naturally, the ability to be verified is a prerequisite. See JTEKT Corp. v. United States, 675 F.Supp.2d 1206, 1252, 33 C.I.T. 1797, 1849-50 (2009).
Hyundai argues that, because Commerce had already verified other data at the facility containing Hyundais further manufactured goods data, that it was both possible and feasible for Commerce to verify both. Pl. Br. at 33. Commerce and defendant-intervenors contend that Hyundais further manufactured goods data was so fundamentally flawed that it was unverifiable. Def. Br. at 39; see generally Verification Cancellation Letter. Hyundai responds that if Commerce found the data unverifiable, it would have been easy enough to submit it to verification to test this hypothesis. Pl. Br. at 33. This pithy argument, however, ignores the fact that Commerces cited grounds for unverifiability included inconsistencies, and ... multiple unexplained, or insufficiently explained, changes in Hyundais data. Verification Cancellation Letter at 1. Commerce again cited these errors in more depth in its Final Determination Memo. Final Det. I & D Memo at 29-30. As Section II(a) of this opinion indicated, these findings are supported by substantial evidence. See JTEKT Corp., 675 F.Supp.2d at 1252. Such deficiencies are not fairly testable, as the crux of the deficiency is that Commerce, upon reviewing the submissions in question, cannot discern which data is meant to be tested. Thus, the remaining data at issue does not satisfy the verifiability prong of § 1677m(e). Commerce was not required to consider Hyundais TWB or auto part data under § 1677m(e), and thus its recourse to other facts available regarding this data was reasonable.
d. Commerces application of an adverse inference when calculating Hyundais antidumping margin was reasonable with regards to Hyundais TWB and auto part data.
Commerce is authorized to use an inference that is adverse to the interests of [a] party in selecting from among the facts otherwise available where that party has failed to cooperate to the best of its ability. 19 U.S.C. § 1677e(b)(1). See SAA at 870. An adverse inference is thus predicated upon an information request directed to an interested party and that partys failure to cooperate to the best of its ability. The existence of a request for information from Commerce was established as discussed, supra. The remaining issue is whether Hyundai cooperated with these requests to the best of its ability.
A respondent satisfies the best of its ability standard when it put[s] forth its maximum effort to provide Commerce with full and complete answers to all inquiries in an investigation. See Nippon Steel, 337 F.3d at 1382. The Federal Circuit noted this standard does not demand perfection, but does not condone inattentiveness, carelessness, or inadequate record keeping. Id. Instead, the statutory framework requires the respondent to do the maximum it is able to do. Id. A respondents attempts to avoid supplying requested information generally preclude a best of its ability finding. See Qingdao Taifa Grp. Co., Ltd. v. U.S., 637 F.Supp.2d 1231, 1239-40, 33 CIT 1090, 1096-97 (2009).
The purpose of the adverse facts statute is to provide respondents with an incentive to cooperate with Commerces investigation, not to impose punitive damages. Essar Steel Ltd. v. United States, 678 F.3d 1268, 1276 (Fed. Cir. 2012) (quoting F.lli De Cecco Di Filippo Fara S. Martino S.p.A. v. United States, 216 F.3d 1027, 1032 (Fed. Cir. 2000).). Accordingly, [i]n employing adverse inferences, one factor the agencies will consider is the extent to which a party may benefit from its own lack of cooperation. SAA at 870.
Hyundai emphasizes that it submitted fifteen responses, participated in three separate verifications wherein only minor issues were found, and repeatedly sought guidance from Commerce regarding its reporting difficulties. Pl. Br. at 20-22. Furthermore, Hyundai notes, it made every effort to devise allocation methods to account for the subject CORE portion of the final product prices, despite the fact that certain aspects of its production process were not represented easily in Commerces standard questionnaire. Pl. Br. at 23-24. Hyundai alleges Commerce has rarely, if ever, attempted to account for such a complex further manufacturing process in its dumping margin calculations. Id. at 23.
In response, Commerce notes that despite multiple attempts, Hyundais repeatedly unusable or deficient responses indicate inattentiveness. Final Det. I & D Memo at 38. Commerce further notes that Hyundai later rescinded many of its claimed reporting difficulties, and underestimated the percentage of its sales affected by faulty submissions. Def. Br. at 36-37. Whereas Hyundai claimed only one percent of sales were affected, Commerce later discovered that ten percent of sales were affected. See Final Det. I & D Memo at 38. Commerce further argues that it attempted to accommodate Hyundai by offering filing extensions, agreeing to ex parte meetings when requested, and providing multiple chances for Hyundai to remedy its filing deficiencies. Final Det. I & D Memo at 13-15, 29-30. There is, however, no indication, other than unsubstantiated allegations that Hyundai engaged in delay tactics, Def.-Int. Br. at 38, that Hyundai deliberately concealed or withheld information, so that a broader use of AFA might be applicable.
Commerce did not act arbitrarily or contrary to law in determining to apply an adverse inference in applying facts otherwise available, restricted to Hyundais further manufactured sales of TWBs and auto parts. Although Hyundai appears to have been diligent in many ways, it did not act to the best of its ability in complying with Commerces requests for TWB and auto parts data. Minor delays and inaccuracies may be excusable where a respondents complex supply chain is difficult to translate into Commerces standard forms.
Nevertheless, [i]n preparing a response to an inquiry from Commerce, it is presumed that respondents are familiar with their own records. Nippon Steel, 337 F.3d at 1383. The most significant shortcomings in Hyundais performance are its repeated retractions of claimed reporting difficulties and its inaccurate estimation of how many sales were affected by its reporting errors. These suggest, at minimum, the sort of inattentiveness Nippon Steel held not to satisfy the best of its ability standard.
CONCLUSION
For the foregoing reasons, Hyundais motion for judgment on the agency record is GRANTED , in part, and DENIED , in part. This matter is REMANDED for Commerce to provide Hyundai the opportunity to remedy data deficiencies as to SSBs, and to recalculate Hyundais antidumping margin as appropriate.
In determining whether the subject merchandise is being sold at less than fair value, a fair comparison shall be made between the export price or constructed export price and normal value. 19 U.S.C. § 1677b(a) (2015). Normal value is defined as the price at which the foreign like product is first sold ... for consumption in the exporting country, in the usual commercial quantities and in the ordinary course of trade and, to the extent practicable, at the same level of trade as the export price or constructed export price. 19 U.S.C. § 1677b(a)(1)(B)(i).
SSBs are products created by splitting, shearing, or stamping CORE coils. See Hyundai Steels Section E and Additional Sales Data Response, A-580-878, POI 04/01/2014-03/31/2015, at Ex. E-2 (Nov. 2, 2015). Skelp is produced by splitting coil, sheet is produced by shearing skelp or coil, and blanks are produced by stamping (or pressing) skelp or coil. Id. TWBs are produced by welding sheet or blanks in a butt joint configuration. Id.; Issues and Decision Memorandum for the Final Affirmative Determination in the Antidumping Duty Investigation of Certain Corrosion-Resistant Steel Products from the Republic of Korea, A-580-878, POI 04/01/2014-03/31/2015, at 7 n. 9 (Dept Commerce, May 24, 2016) (Final Det. I & D Memo) (Hyundai uses TWBs in automobile doors). [[ CONFIDENTIAL INFORMATION OMITTED ]]
In an ordinary case, the constructed export price (CEP) is the: price at which the subject merchandise is first sold (or agreed to be sold) in the United States ... by or for the account of the producer or exporter of such merchandise or by a seller affiliated with the producer or exporter, to a purchaser not affiliated with the producer or exporter. 19 U.S.C. § 1677a(b) (1994).
The special rule applies where Commerce is seeking to determine the CEP of products imported by the exporter or producers affiliate and with value added to the imported product in the United States. See 19 U.S.C. § 1677a(e). If the value added by the affiliate is likely to exceed substantially the value of the product upon importation, then Commerce shall determine the CEP by using either (1) [t]he price of identical [products] sold by the exporter or producer to an unaffiliated person, or (2) [t]he price of other [products] sold by the exporter or producer to an unaffiliated person. 19 U.S.C. § 1677a(e)(1)-(2). The rule requires a sufficient quantity of sales to provide a reasonable basis for comparison and that Commerce determines that the use of such sales is appropriate. 19 U.S.C. § 1677a(e).
Under the special rule, therefore, Commerce would not use the actual sales price of the specific sales. Instead, Commerce would substitute prices from sales of identical or other merchandise. For example, where an importer sold a total of 90 identical units of CORE, 50 of which did not qualify for the special rule and 40 of which did qualify for the special rule, if Commerce were to apply the special rule to the latter units, the CEP applicable to all 90 units would be the average sales price of the first 50 units. Whether this price would be higher or lower than it would be without the special rule would depend upon the specific product, but it nevertheless saves the respondent a significant reporting burden while easing Commerces administrative burden.
Commerce did apply the special rule when the first sale of corrosion-resistant steel to an unaffiliated party [wa]s a completed automobile produced by Hyundai Motor Manufacturing Group (HMMG) or Kia Motor Manufacturing Group (KMMG). Decision Memorandum for the Preliminary Determination in the Antidumping Duty Investigation of Certain Corrosion-Resistant Steel Products from the Republic of Korea, A-580-878, POR: 04/01/2014-03/31/2015, at 11 n.35 (Dec. 21, 2015) (Prelim. Det. I & D Memo). Hyundai does not argue here that its sales of SSBs qualify for the special rule. Pl. Br. at 33-35.
Hereafter, citations to the titles of documents related to Commerces investigation of Korean CORE will omit the portion of the title which precedes the colon.
Although Hyundai alleges otherwise, Pl. Br. at 21, the record of an earlier ex-parte meeting involving Commerce and Hyundai does not mention any particular issue. Ex Parte Meeting with Hyundai Steel Company, A-580-878, POI 04/01/2014-03/31/2015, at 1 (Dept Commerce Aug. 21, 2015). The Notice of Difficulty which preceded this meeting referenced only reporting issues regarding a possible Section E submission. Notice of Difficulty at 9-14.
The SAA is an authoritative expression when interpreting and applying the Uruguay Round Agreements Act. 19 U.S.C. § 3512(d) (1994). See also Micron Tech., Inc. v. U.S., 243 F.3d 1301, 1309 (Fed. Cir. 2001).
The applicable regulation states generally: The Secretary normally will estimate the value added based on the difference between the price charged to the first unaffiliated purchaser for the merchandise as sold in the United States and the price paid for the subject merchandise by the affiliated person. 19 C.F.R. § 351.402(c)(2).
In its Final Determination, Commerce interpreted the special rule regulation as indicating that the appropriate value added calculation for further manufacturing compares: (i) the total value of the Hyundai-produced CORE used to produce the TWB (or auto part); and (ii) the price charged to the first unaffiliated purchaser for the TWB (or auto part). Final Det. I & D Memo at 24 (emphasis added).
Although Commerce rightly notes that the special rule statute was not in effect at the time DRAMs from Korea was decided, Def. Br. at 20, the special rule statute does not preclude recourse to methods of calculation which predated its adoption, to the extent that basic concepts such as further manufacturing remain the same. Even though it was obvious in DRAMS from Korea that there were multiple DRAMS on each memory module sold in the United States, Hyundai asserts that Commerce permitted the total adjusted U.S. price for a memory module to be compared to the constructed foreign market value (FMV) for a single DRAM. This was not Commerces approach in DRAMS from Korea, and in any case it would be nonsensical to proceed in such a manner, before or after the special rule. In DRAMS from Korea, Commerce found no foreign market sales of memory modules featuring the same configurations of DRAMS as the memory modules produced and sold in the U.S. To construct the FMV, Commerce thus, inter alia, summed the cost of production for each DRAM included on each type of module to obtain the cost of all the imported components included on the module. DRAMS from Korea, 61 Fed. Reg. at 20,219. The constructed FMV was then compared with the U.S. sales price for a memory module featuring identical DRAMS, minus, inter alia, the value added by U.S. further manufacturing. Id. It would thus defeat the purpose of this calculation, meant to compare identical groups of DRAMS, to subtract the value of one or more foreign-produced DRAMS as part of the value added by U.S. further manufacturing.
Moreover, this was indicated to Hyundai in defendant-intervenors comments on its September 25, 2015, submission. U.S. Steel Comments, A-580-878, POI 04/01/2014-03/31/2015, at 2-6 (Oct. 2, 2015).
This conclusion is also supported by a study commissioned by Defendant-Intervenors for purposes of their August 20, 2015, comments on Hyundais August 15, 2015, letter. Def.-Int. Br. at 17; U.S. Steel Comments Regarding Hyundais August 17, 2015 Notice of Difficulty, A-580-878, POI 04/01/2014-03/31/2015, at Ex. 2 (Aug. 20, 2015).
Hyundais argument that the complexities associated with reporting on its further manufactured products justify Commerces application of the special rule likewise fail. Section 1677a(e) does not require application of the special rule based on complexity alone. Although Commerce has applied the special rule in past cases where respondent encountered reporting difficulties, all cases cited by Hyundai are distinguishable. In HRS from the Netherlands, respondent had already satisfied the 65-percent threshold. Decision Memorandum for the Preliminary Determination in the Less-Than-Fair-Value Investigation of Certain Hot-Rolled Steel Flat Products from the Netherlands, A-421-813, POI 07/01/2014-06/31/2015, at 11-12 (Dept Commerce Mar. 14, 2016), unchanged in Certain Hot-Rolled Steel Flat Products From the Netherlands: Final Determination of Sales at Less Than Fair Value and Negative Final Determination of Critical Circumstances, 81 Fed. Reg. 53,421 (Dept Commerce Aug. 12, 2016). In CRS from Korea, Commerce applied the special rule because it was able to verify respondents reporting with respect to the further manufactured products in question. Issues and Decision Memorandum for the Final Affirmative Determination in the Antidumping Duty Investigation of Certain Cold-Rolled Steel Products from the Republic of Korea, A-580-881, POI 07/01/2014-06/30/2015, at 65-66 (Dept Commerce July 20, 2016). In PET Film from Thailand, the manufacturer bought film from many producers, including respondent, whereas HSA only purchased CORE from Hyundai. Use of Hyundais CORE was, at least in theory, thus significantly easier to track. Notice of Preliminary Determination of Sales at Not Less Than Fair Value: Polyethylene Terephthalate Film, Sheet, and Strip from Thailand, 73 Fed. Reg. 24,565, 24,568 -69 (Dept Commerce May 5, 2008), unchanged in Notice of Final Determination of Sales at Less Than Fair Value: Polyethylene Terephthalate Film, Sheet, and Strip from Thailand, 73 Fed. Reg. 55,043 (Dept Commerce Sept. 24, 2008).
These included the following: Contrary to Hyundais narrative responses, the quantity of subject inputs used to produce a further manufactured product did not equal the sales quantity of the subject input. Prelim. Det. I & D Memo at 11. Hyundai twice revised the manufacturing cost of TWBs downward without explanation. Prelim. Det. I & D Memo at 12. When asked for an explanation, see Second Sec. E Supp. Q. at 3, Hyundai magnified the problem by making additional, unrequested changes, see Hyundai Steels Response to the Departments Supplemental Section E Questionnaire, A-580-878, POI 04/01/2014-03/31/2015 (Dec. 29, 2015) (Hyundais Supp. Sec. E Q. Response); Verification Cancellation Letter at 1-2. Finally, Hyundais incorporation of processing costs incorrectly reported weighted averages and omitted shearing costs, despite the fact roughly one-third of Hyundais TWB inputs require shearing. Verification Cancellation Letter at 2; Def. Br. at 26.
As an omission grounded only in § 1677e(a)(2)(b), a full analysis would consider whether Commerce acted in accordance with § 1677m(c)(1), which requires Commerce to consider the ability of a respondent who promptly notifies Commerce of its inability to submit information in the requested form and manner, together with a full explanation and suggested alternative forms. As Commerce has other grounds for omitting Hyundais TWB, auto part and SSB data, which Hyundai does not claim are remedied by the additional databases, the court need not reach this issue. Even if this were considered, Commerces ex parte correspondence with Hyundai over the course of the investigation, indicates that it acted in accordance with the law by considering Hyundais reporting difficulties, which were in any event repeatedly overstated by Hyundai.