Respondent Contests Commerce's 'Hypocrisy' in Losing Submission, Resorting to AFA

Specifically, the respondent challenged the government's claim that the company was on notice of the alleged deficiencies due to two questions in a supplemental questionnaire and argued that Commerce was hypocritical in finding that the respondent didn't respond to the best of its ability, when the agency "was negligent" in losing an exhibit submitted by the respondent in its rebuttal brief.

Fuzhou Hengli launched its case to challenge Commerce's use of adverse facts available against the respondent in the AD investigation on paper plates from China due to alleged insufficiencies in the respondent's submissions regarding the "commingling" of paperboard inputs. The agency said "Fuzhou Hengli grouped multiple 'basis-weights' of the paperboard input folding box board together, rather than reporting each [folding box board] basis-weight as a separate and distinct [factor of production]."

In the investigation, Commerce said Fuzhou Hengli's reported consumption rate of paper plate inputs weren't specific to the different weights of folding box board used for production of differing products, ultimately using AFA against the respondent.

Fuzhou Hengli said in court that the agency didn't provide adequate notice of the supposed deficiencies in the company's reporting. In response, the government said Commerce put the respondent on notice through two questions in a supplemental questionnaire.

The respondent said in response that the agency "did not once inform Fuzhou Hengli of any alleged deficiency" in its reporting. The company first clarified that factors of production are reported as a ratio, with the denominator being the unit of the reported merchandise and the numerator being the "quantity of each factor that is used in the production of the quantity in the denominator."

The exporter said it initially reported its factors of production in kg per package, which is "completely in compliance with the instructions in the Initial Questionnaire." In the sole supplemental questionnaire, Commerce told the respondent "to change its reporting to a per-kg basis, i.e., using kg in the denominator."

This question "does not in any way address the numerator (or the alleged 'commingling' issue)" and "only concerns the denominator, i.e., the type of unit used in the denominator," the brief said. Thus, no notice was given of any deficiency in the numerator of the factors of production reporting, "i.e., the basis by which Commerce applied FA," the exporter argued. Commerce's question in the supplemental questionnaire, which merely asked for a "change in the formatting of the database to add columns that explicitly identify each of the physical characteristics which comprise the [control number] being reported," has "no bearing on the issue of 'commingling' in the numerator of the reported [factors of production]," the brief said.

Fuzhou Hengli said the trade court shouldn't be "deceived into believing it has implications regarding the content of the numerator of the [factors of production], or the substantive reporting of [factor of production] figures at all." The respondent added that the case law fully supports its position, noting that the case law says a supplemental questionnaire can only constitute notice when it specifically points out and requests clarification of the deficient responses.

In its reply brief, the respondent also argued that Commerce was on notice of any supposed deficiency in the company's submissions, responding to the government's claim that it couldn't notify the respondent of the alleged deficiency, since it wasn't aware of it in time. Dubbing this defense "disingenuous," Fuzhou Hengli said it "strains credulity" to believe the government's claim that it only learned that "a paper plate with a given basis weight can only be made with a paperboard input with that same basis weight" at verification.

The respondent argued that it's "common sense that different weight basis paper plates would necessarily be made with different weight basis paperboard," adding that the government's defense here contradicts its claim that it actually did direct the respondent to report inputs by basis-weight.

Fuzhou Hengli also noted that it was able to provide "the inputs in the manner that Commerce demanded" in its rebuttal brief. The respondent submitted an exhibit "based on record evidence" that shows that only "miniscule [sic] differences exist between its reporting method and the method Commerce required, post-hoc."

But Commerce lost this submission and didn't even realize it did so. The respondent said it's an "accurate microcosm of this investigation" that Commerce clearly never examined the rebuttal brief "closely enough to know that this exhibit was submitted but lost by Commerce." The agency now asks that "this information it overlooked be ignored by the Court" and it refused to consent to the respondent's motion to add this exhibit to the record.

"Commerce’s initial negligence in not reviewing the record information and subsequent excuses to shift the blame to Fuzhou Hengli further reveal the hypocrisy of its assertion that Fuzhou Hengli was not cooperative, rather than that Commerce was negligent," the brief said.