CIT Says Commerce Not Required to Broaden Use of AFA Based on Small Errors
The Court of International Trade on June 2 sustained the Commerce Department's second remand results in the antidumping duty investigation on Indian forged steel fluid end blocks, rejecting claims from the petitioners, led by Ellwood City Forge Co., that the agency should have expanded its use of adverse facts available. Judge Stephen Vaden said "neither statute nor case law requires such an inequitable result," given the limited nature of the gaps on the record.
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The result is a 0% dumping rate for respondent Bharat Forge Limited.
Vaden initially remanded the investigation after the petitioners objected to Commerce's decision not to conduct on-site verification due to COVID-19-related travel restrictions (see 2308110049). Following a second remand order, the agency conducted on-site verification, though it identified two errors in Bharat's data and used partial AFA to address them.
The first error concerned the company's mill certificates. At verification, Commerce couldn't verify the content of molybdenum, a "chemical element often used in steel production," for one steel grade the respondent sold. The AD order only covers fluid end blocks that have between .15% and 3% molybdenum content by weight. For two products with the same steel grade, the respondent submitted documentation showing both products as having "out-of-scope molybdenum content."
At verification, the respondent said this wasn't correct and submitted updated documents from a third party "showing the steel grade to have in-scope molybdenum content." Commerce thus used AFA to fill the gap on the record, finding all sales of this steel grade to have in-scope molybdenum and assigning the highest individual dumping margin calculated for Bharat's other U.S. sales to all sales of this steel grade.
Ellwood City argued that this error raises "broader reliability concerns," arguing that the agency can't be sure the other steel grades don't have the same issue. And while Commerce tried to account for this error by looking at mill certificates for other steel grades, the petitioner said this doesn't tell the agency whether the certificate or Bharat's information accurately conveys the molybdenum content of certain steel grades.
Vaden said these claims "miss the mark," since the "steel grade at issue accounted for only a tiny percentage of Bharat’s overall sales." The judge said Commerce appropriately looked at mill certificates for every steel grade and found there to be no further mismatches. "The statute does not force Commerce to create implied gaps in the rest of the record based on narrow errors," the judge said.
While Ellwood City wants Commerce to test every steel grade to prove its molybdenum content, Vaden said this request "misunderstand[s] verification," since verification is a spot check and not an "unending haystack search for a needle." The judge ruled that errors only found in a "subset of the data do not mandate that Commerce conclude that all the data is inaccurate." The failure of mill certificates to match doesn't require that Commerce "dig deeper into mill certificates that do match."
The second error Commerce found at verification concerned Bharat's failure to report "parts" costs for two control numbers. For two products, the respondent reported each with a physical characteristic for parts but "failed to report the corresponding costs." Commerce said this created a gap in the record, and, as an exercise in AFA, increased the "direct material costs" for each missing parts cost by the highest reported parts costs for any control number.
Ellwood City similarly argued that these errors call the rest of Bharat's cost reporting into question, claiming that even if parts costs were a "small share of overall costs, the importance of accurate cost reporting" requires questioning the rest of the respondent's information.
Vaden rejected this claim, finding Commerce "acted within the bounds of its latitude." The agency only found errors in two of 15 control numbers, "which accounted for a very small share of Bharat’s overall sales," adding that parts costs "were only a tiny percentage of Bharat’s overall costs." The petitioner's claim that "accurate cost reporting is important" doesn't alone "make small errors more serious," the judge said. Hammering small errors with a broader use of AFA is only justified when there's a "particularly strong need to deter non-compliance, which would have to rest on a particularly serious failure to cooperate," the judge said, holding that this isn't the case here.
(Ellwood City Forge Co. v. United States, Slip Op. 25-68, CIT # 21-00007, dated 06/02/25; Judge: Stephen Vaden; Attorneys: Paul Keith of Rock Creek Trade for plaintiffs led by Ellwood City Forge Co.; Kara Westercamp for defendant U.S. government; Alexander Keyser of Fox Rothschild for defendant-intervenor Bharat Forge Limited)