CIT Upholds Total AFA on Pasta Maker, Says Eighth Amendment Can't Touch AD/CVD Rates
The Commerce Department appropriately resorted to total adverse facts available against countervailing duty respondent Pastificio Gentile in the 2021 CVD review of Italian pasta, for failing to report all its affiliated companies, the Court of International Trade held in a decision made public Sept. 3. However, Judge Mark Barnett remanded the review for Commerce to explain the legal basis under which the agency decided to countervail programs it verified were unused during the period of review as part of the AFA treatment.
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The judge also found that Gentile's 88.67% AFA rate didn't violate the Eighth Amendment's prohibition against excessive fines, reiterating the holding of the U.S. Court of Appeals for the Federal Circuit that AD/CVD lawfully set aren't punitive and thus don't fall under the purview of the Eighth Amendment.
Early in the review, Gentile was asked to identify all of its affiliated companies. In response, the respondent identified two: Forno Gentile and Agricola Gentile, though it said neither was involved in pasta production. Preliminarily, Commerce set a 1.79% CVD rate.
During a three-day on-site verification, however, the agency "discovered multiple discrepancies between the information presented at verification" and the information in Gentile's questionnaire responses, including the fact that the respondent failed to report multiple affiliated companies that were active during the review period. After finding this out, Commerce stopped verification without looking at any other information, finding that the failure to disclose the affiliates "rendered the agency unable to examine the full scope of subsidies attributable to any cross-owned and/or trading companies involved with the subject merchandise in a timely manner."
The agency hit Gentile with total AFA, since the company "withheld requested information," failed to provide "timely responses in the requested format," "significantly impeded the proceeding" and failed to cooperate to the best of its ability. Applying the highest non-de minimis rate for each program subject to the review, including programs that Commerce had already verified weren't used during the review period, the agency hit the company with an 88.67% CVD rate.
Barnett held that Commerce permissibly resorted to total AFA. Gentile said it only omitted "two small entities" that wouldn't have been required to "submit a full questionnaire response," adding that this was a "minor flaw and harmless error." The respondent also said it gave Commerce information showing the "minor nature" of the omitted affiliates and that the omitted affiliates were disclosed in the exhibits to the company's supplemental responses.
The judge noted that "Gentile does not dispute that it maintained the information and simply failed to report it in its Affiliated Parties Response." Barnett added that the respondent clearly failed to respond to the best of its ability, since the company didn't fail to keep or maintain the records and it even submitted the two affiliates in "exhibits provided in response to other questions."
Barnett also upheld Commerce's decision to terminate the verification after discovering the discrepancies in Gentile's submission. Verification isn't a time to submit new factual information, but rather is a process by which Commerce looks to confirm the "accuracy and completeness" of the information submitted by the parties. Here, Gentile didn't offer new information about the omitted companies. Instead, the agency discovered the omissions while reviewing Gentile's accounting system.
"Gentile’s arguments regarding the minor or minimal nature of the Omitted Affiliates are wholly misplaced," the judge said. By not reporting the companies, the respondent "left Commerce unable to determine for itself whether the companies would have been required to provide complete questionnaire responses." It's not on a respondent to "substitute its judgment for that of the agency's when deciding what information to report in its questionnaire responses," the brief said.
Gentile claimed the high CVD rate is an excessive fine in violation of the Constitution. Barnett rejected this claim, finding that the Eighth Amendment's ban against excessive fines only applies to "punitive" sanctions and not remedial ones. Invoking key CAFC precedent, the judge said AD/CVD rates set "in accordance with the statutory requirements" aren't punitive.
The respondent "makes no effort" to address the Federal Circuit's prior decisions and instead argued that duty rates based on AFA rates are fines. Barnett said the only question is whether "Commerce complied with the statute when it selected the rates to use as AFA," and on this point, "Gentile raises no substantive arguments," the judge said.
The court ultimately ended up remanding the case on the grounds that Commerce used AFA on programs the agency already had verified as unused during the review period. In addressing this argument in the review, the agency said it decided not to include any terminated or non-countervailable programs from prior reviews. However, the respondent seems to have identified certain programs Commerce verified were unused during this review period, the court said, remanding the case to let the agency reconsider this position.
(Pastificio Gentile v. United States, Slip Op. 25-115, CIT # 24-00037, dated 08/27/25; Judge: Mark Barnett; Attorneys: David Craven of Craven Trade Law for plaintiff Pastificio Gentile; Sosun Bae for defendant U.S. government)