Slip Op. 26-59
UNITED STATES COURT OF INTERNATIONAL TRADE
FUZHOU HENGLI PAPER CO., LTD.,
Plaintiff,
v.
UNITED STATES, Before: Jennifer Choe-Groves, Judge
Defendant, Court No. 25-00064
and
AMERICAN PAPER PLATE COALITION,
Defendant-Intervenor.
OPINION AND ORDER
[Remanding the U.S. Department of Commerce’s final determination and antidumping duty order in the 2024 antidumping duty investigation of paper plates from the People’s Republic of China.] Dated: June 11, 2026
Eugene Degnan and Jenny (Shiyu) Liang, Taft, Stettinius & Hollister LLP, of Washington, D.C., argued for Plaintiff Fuzhou Hengli Paper Co., Ltd. With them on the brief were Brady W. Mills, Donald B. Cameron, Jr., Julie C. Mendoza, Rudi W. Planert, Mary S. Hodgins, Jordan L. Fleischer, Jr., Edward J. Thomas, III, and Nicholas C. Duffey, Jr.
Collin T. Mathias, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C., argued for Defendant United States. With him on the brief were Brett A. Shumate, Assistant Attorney General, Court No. 25-00064 Page 2
Patricia M. McCarthy, Director, and Franklin E. White, Jr., Assistant Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C. Of counsel on the brief was Heather Holman, Attorney, Office of the Chief Counsel for Trade Enforcement Compliance, U.S. Department of Commerce, Washington, D.C.
Adam H. Gordon and Scott D. McBride, The Bristol Group PLLC, of Washington, D.C., argued for Defendant-Intervenor American Paper Plate Coalition. With them on the brief was Benjamin J. Bay.
Choe-Groves, Judge: This action concerns the United States Department of
Commerce’s (“Commerce”) final determination and antidumping duty order on
paper plates from the People’s Republic of China (“China”) published in Certain
Paper Plates From the People’s Republic of China (“Final Determination”), 90
Fed. Reg. 8,271 (Dep’t of Commerce Jan. 28, 2025) (final affirmative
determination of sales at less than fair value and final affirmative determination of
critical circumstances, in part) and accompanying Issues and Decision
Memorandum for the Final Affirmative Determination in the Less-Than-Fair-
Value Investigation of Certain Paper Plates from the People’s Republic of China
and Final Affirmative Determination of Critical Circumstances, in Part (Jan. 21,
2025) (“Final IDM”), PR 354.1 Plaintiff Fuzhou Hengli Paper Co., Ltd.
(“Plaintiff” or “Fuzhou”) moves for judgment upon the agency record, challenging
the final determination as neither supported by substantial evidence nor in
1 Citations to the administrative record reflect the public record (“PR”) numbers filed in this case, ECF No. 58. Court No. 25-00064 Page 3
accordance with law. Pl. Fuzhou Hengli Paper Co., Ltd. Mot. J. Agency R. (“Pl.’s
Br.”), ECF Nos. 39, 40. In the final determination, Commerce calculated a
515.40% dumping margin based on total adverse facts available for Fuzhou. Final
Determination, 90 Fed. Reg. at 8,272. Defendant United States (“Defendant” or
“Government”) and Defendant-Intervenor American Paper Plate Coalition
(“Defendant-Intervenor”) contend that the use of total adverse facts available was
warranted. Def.’s Resp. Pl.’s R. 56.2 Mot. J. Agency R. (“Def.’s Resp. Br.”), ECF
No. 44; Def.-Interv.’s Resp. Br., ECF Nos. 42, 43. For the reasons discussed
below, the Court remands Commerce’s Final Determination.
BACKGROUND
In February 2024, Commerce initiated an antidumping investigation of
certain paper plates from China, Thailand, and Vietnam. Certain Paper Plates
From the People’s Republic of China, Thailand, and the Socialist Republic of
Vietnam, 89 Fed. Reg. 14,046 (Dep’t of Commerce Feb. 26, 2024) (initiation of
less-than-fair-value investigations). Commerce selected Fuzhou and Jinhua P&P
Product Co., Ltd. (“Jinhua”) as mandatory respondents. Final IDM at 1.
Commerce issued a request for information on April 24, 2024 that required Fuzhou
to report factors of production, and Fuzhou responded on May 29, 2024 and June
18, 2024. Letter to Sec’y Commerce from Morris, Manning & Martin, LLP,
“Certain Paper Plates from the People’s Republic of China, Case No. A-570-164: Court No. 25-00064 Page 4
Fuzhou Hengli’s Section A Initial Questionnaire Response” (May 29, 2024), PR
185; Letter to Sec’y Commerce from Morris, Manning & Martin, LLP, “Certain
Paper Plates from the People’s Republic of China, Case No. A-570-164: Fuzhou
Hengli’s Sections C and D Initial Questionnaire Responses” (June 18, 2024)
(“Sections C and D Initial Questionnaire Responses”), PR 210. Commerce issued
a supplemental questionnaire on July 26, 2024, requesting that Fuzhou report all
factor consumption rates on a per kilogram basis rather than on a per pack basis,
and Fuzhou responded on August 9, 2024. Letter to Sec’y Commerce from
Morris, Manning & Martin, LLP, “Certain Paper Plates from the People’s Republic
of China, Case No. A-570-164: Fuzhou Hengli’s Supplemental Questionnaire
Response” (Aug. 9, 2024) (“Supplemental Questionnaire Response”), PR 278.
The Preliminary Determination was published on September 5, 2024, and
Commerce determined initially that Fuzhou’s weighted-average margin was below
the threshold sufficient to impute knowledge of dumping. Final IDM at 2, 4.
From November 12–24, 2024, Commerce conducted a verification of the
questionnaire responses of Fuzhou and Jinhua. Id. at 2.
Commerce issued the Final IDM on January 21, 2025, and published the
Final Determination on January 28, 2025, applying total adverse facts available.
See generally Final IDM; Final Determination. Commerce determined that the use
of facts otherwise available was warranted because Fuzhou withheld information, Court No. 25-00064 Page 5
failed to report information in the form or manner requested, and impeded the
investigation regarding Fuzhou’s failure to report control number (“CONNUM”)-
specific factors of production. Final IDM at 7–8. Commerce determined that an
adverse inference was warranted in selecting from the facts otherwise available
because Fuzhou failed to cooperate to the best of its ability. Id. at 8. Commerce
made the adverse inference that Fuzhou dumped “massive imports” over a
“relatively short period” of time and found that critical circumstances existed. Id.
at 4–5. The countervailing duty subsidy rate attributable to Fuzhou’s export
subsidies was deducted from Fuzhou’s dumping margin after determining that the
estimated weighted-average dumping margin was above de minimis. Id. at 5. In
applying adverse facts available, Commerce applied the highest calculated
individual dumping margin rate to Fuzhou and Commerce declined to decide the
issue of surrogate value because Commerce considered Fuzhou’s arguments
regarding which surrogate value to use for paper inputs moot given the application
of total adverse facts available. Id. at 8–9, 18.
JURISDICTION AND STANDARD OF REVIEW
The Court has jurisdiction pursuant to Section 516A(a)(2)(B)(i) of the Tariff
Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(i), and 28 U.S.C. § 1581(c).
The Court will hold unlawful any determination found to be unsupported by Court No. 25-00064 Page 6
substantial evidence on the record or otherwise not in accordance with law. 19
U.S.C. § 1516a(b)(1)(B)(i).
DISCUSSION
I. Commerce’s Application of Total Adverse Facts Available
Section 776 of the Tariff Act, as amended, provides that if “necessary
information is not available on the record” then the agency shall “use the facts
otherwise available in reaching” its determination. 19 U.S.C. § 1667e(a)(1). 19
U.S.C. § 1677e(a)(2) permits Commerce to select from facts otherwise available if
an interested party: (A) withholds information; (B) fails to provide such
information by the deadlines for submission, or in the form and manner requested;
(C) significantly impedes a proceeding; or (D) provides information that cannot be
verified. 19 U.S.C. § 1677e(a)(2). Commerce’s authority to use facts otherwise
available under 19 U.S.C. § 1677e(a) is subject to 19 U.S.C. § 1677m(d), which
states that:
If the administering authority or the Commission determines that a response to a request for information under this subtitle does not comply with the request, the administering authority or the Commission (as the case may be) shall promptly inform the person submitting the response of the nature of the deficiency and shall, to the extent practicable, provide that person with an opportunity to remedy or explain the deficiency in light of the time limits established for the completion of investigations or reviews under this subtitle.
19 U.S.C. § 1677m(d). Court No. 25-00064 Page 7
If Commerce determines that “an interested party has failed to cooperate by
not acting to the best of its ability to comply with a request for information” from
the agency, then Commerce “may use an inference that is adverse to the interests
of that party in selecting from among the facts otherwise available.” Id.
§ 1677e(b)(1)(A). The Court of Appeals for the Federal Circuit (“CAFC”) has
interpreted these two subsections to have different purposes. See Mueller
Comercial de Mexico, S. de R.L. De C.V. v. United States, 753 F.3d 1227, 1232
(Fed. Cir. 2014). Subsection (a) applies “whether or not any party has failed to
cooperate fully with the agency in its inquiry.” Id. (citing Zhejiang DunAn Hetian
Metal Co. v. United States, 652 F.3d 1333, 1346 (Fed. Cir. 2011)). Subsection (b)
applies only when Commerce makes a separate determination that the respondent
failed to cooperate “by not acting to the best of its ability.” Id. (quoting Zhejiang
DunAn Hetian Metal Co., 652 F.3d at 1346).
When determining whether a respondent has complied to the “best of its
ability,” Commerce “assess[es] whether [a] respondent has put forth its maximum
effort to provide Commerce with full and complete answers to all inquiries in an
investigation.” Nippon Steel v. United States, 337 F.3d 1373, 1382 (Fed. Cir.
2003). This determination requires both an objective and subjective showing. Id.
Commerce must determine objectively “that a reasonable and responsible
[respondent] would have known that the requested information was required to be Court No. 25-00064 Page 8
kept and maintained under the applicable statutes, rules, and regulations.” Id.
(citing Ta Chen Stainless Steel Pipe, Inc. v. United States, 298 F.3d 1330, 1336
(Fed. Cir. 2002)). Next, Commerce must demonstrate subjectively that the
respondent’s “failure to fully respond is the result of the respondent’s lack of
cooperation in either: (a) failing to keep and maintain all required records, or (b)
failing to put forth its maximum efforts to investigate and obtain the requested
information from its records.” Id. at 1382–83.
Adverse inferences are not warranted “merely from a failure to respond,” but
rather in instances when Commerce reasonably expected that “more forthcoming
responses should have been made.” Id. at 1383. “The statutory trigger for
Commerce’s consideration of an adverse inference is simply a failure to cooperate
to the best of respondent’s ability, regardless of motivation or intent.” Id. To use
an adverse inference when selecting among the facts otherwise available under
Section 1677e(b), Commerce must assess whether the party used its maximum
efforts to secure the missing information. Id. at 1382.
A. Necessary Information Not Available on the Record Pursuant to 19 U.S.C. § 1677e(a)(1)
Plaintiff argues that Commerce’s application of adverse facts available was
unjustified because no necessary information was missing from the record. Pl.’s
Br. at 14. Plaintiff claims that Commerce’s basis for finding that necessary
information was not on the record was that Fuzhou withheld information, could Court No. 25-00064 Page 9
have timely reported CONNUM-specific factors of production, and impeded the
investigation. Id. at 15. The quoted portion of the Final IDM that Plaintiff frames
as Commerce’s basis for finding that necessary information was not on the record
is rather Commerce’s basis for determining that the use of facts available was
“warranted pursuant to sections 776(a)(2)(A), (B) and (C) of the Act.” Final IDM
at 8. The Final IDM did not state that the use of facts otherwise available was
warranted under 19 U.S.C. § 1677e(a)(1) for Fuzhou 2 as suggested by Plaintiff.
The Court concludes that Commerce did not rely on 19 U.S.C. § 1677e(a)(1) to
determine that applying facts otherwise available was warranted because the Final
IDM states that Commerce used facts otherwise available pursuant to 19 U.S.C.
§ 1677e(a)(2). See id. at 12.
B. Information Pursuant to 19 U.S.C. § 1677e(a)(2)
Pursuant to 19 U.S.C. § 1677e(a)(2), Commerce may use facts otherwise
available if an interested party: (A) withholds information; (B) fails to provide
such information by the deadlines for submission, or in the form and manner
requested; (C) significantly impedes a proceeding; or (D) provides such
information but the information cannot be verified. 19 U.S.C. § 1677e(a)(2). In
the Final IDM, Commerce determined that the use of facts otherwise available was
2 Commerce referred to 19 U.S.C. § 1677e(a)(1) in determining that the use of facts otherwise available was warranted to determine the rate of the “China-wide entity” but not for Fuzhou. See Final IDM at 8. Court No. 25-00064 Page 10
warranted pursuant to 19 U.S.C. § 1677e(a)(2)(A), (B), and (C). Final IDM at 12.
Commerce explained that Fuzhou claimed to report factors of production on a
control number or CONNUM-specific basis in its initial questionnaire response.
Id. at 7. Commerce asked Fuzhou to revise its factors of production reporting to be
on a per-kilogram basis. Id. During verification, Commerce identified that Fuzhou
reported that all CONNUMs had the same paperboard input usage rate, but the
reporting was derived from multiple paperboard inputs with different basis
weights. Id.
Commerce determined that Fuzhou withheld requested information because,
by allocating multiple paperboard inputs with different basis weights to a
CONNUM with one basis weight, the reported factors of production were not
CONNUM-specific. Id. at 8. Commerce claimed that Fuzhou did not report data
in the manner requested and failed to notify Commerce that Fuzhou used another
reporting methodology in its initial questionnaire response. Id. The Final IDM
explained that Fuzhou’s production process and records allowed Fuzhou to match
paperboard inputs with produced paper plates on a weight basis, but Fuzhou chose
not to do so. Id. at 14. Given Fuzhou’s ability to report CONNUM-specific
factors of production, and its failure to do so timely, Commerce determined that
Fuzhou significantly impeded the investigation. Id. at 13–14. Court No. 25-00064 Page 11
Plaintiff claims that the record does not show that Fuzhou withheld
requested information, and asserts that Commerce’s determination is contrary to
law and not based on record evidence. Pl.’s Br. at 15–16. Defendant argues that
Commerce reasonably exercised its discretion to determine that Fuzhou withheld
information requested, failed to provide information in the form and manner
requested, and significantly impeded the investigation. Def.’s Resp. Br. at 18.
Defendant-Intervenor agrees that Commerce correctly determined that the use of
facts otherwise available was reasonable pursuant to 19 U.S.C. § 1677e(a)(2)(A),
(B), and (C). See Def.-Interv.’s Br. at 24.
In the Final IDM, Commerce discussed the discrepancies in Fuzhou’s
CONNUM-specific reporting of factors of production and cited Fuzhou’s initial
questionnaire responses, the supplemental questionnaire response, and the
verification report to support this determination. Id. at 7–8; see Sections C and D
Initial Questionnaire Responses; Supplemental Questionnaire Response; Memo. to
The File from Jose Rivera and Lingjun Wang, Int’l Trade Compliance Analysts,
AD/CVD Operations, Office VII, “Verification of the Questionnaire Responses of
Hengli Paper Co., Ltd. (Hengli) and its producer Guangdong Ecosource
Environmental Technology Co., Ltd. (Ecosource)” (Dec. 17, 2024) (“Verification
Report”), PR 335. Court No. 25-00064 Page 12
The record documents show that Section D(I)(E) of Commerce’s initial
questionnaire provided instructions for reporting factors of production and stated:
If you are not reporting factors of production (FOPs) using actual quantities consumed to produce the merchandise under investigation on a CONNUM-specific basis, please provide a detailed explanation of all efforts undertaken to report the actual quantity of each FOP consumed to produce the merchandise under investigation on a CONNUM- specific basis. Additionally, please provide a detailed explanation of how you derived your estimated FOP consumption for merchandise under investigation on a CONNUM-specific basis and explain why the methodology you selected is the best way to accurately demonstrate an accurate consumption amount. For the most significant material input, for electricity, and for labor, please reconcile with worksheets the estimated consumption of these FOPs for a specific CONNUM to your cost-of-production (COP) ledger or the equivalent production ledger.
Letter from Lana Nigro, Program Manager, AD/CVD Operations, Office VII, to
Donald B. Cameron, Morris, Manning & Martin, LLP, “Less-Than-Fair-Value
Investigation of Certain Paper Plates from China: Request for Information” (Dep’t
Commerce Apr. 24, 2024) (“Initial Questionnaire”) at D-2, PR 146. Section D(V)
of the initial questionnaire provided the following instructions for submitting
factors of production:
Report all [factors of production], by-product or co-product offsets, and [market economy purchases] quantities on a consistent basis, i.e., for the same unit of the merchandise. For example, you might report [factors of production] or [market economy purchases] for one kilogram, or one piece, of the merchandise. This should be the unit in which factors are reported in your database; if this is not the same in which factors are recorded in your books and records, please explain. Indicate the unit used at the top of the spreadsheet.
Initial Questionnaire at D-4, D-5. Court No. 25-00064 Page 13
In response to Section D(I)(E), Fuzhou stated that this was “not applicable”
because the producers of Fuzhou’s merchandise, Guangdong Ecosource and
Ningbo Hongtai, reported factors of production “using actual quantities consumed
to produce the merchandise under investigation on a CONNUM specific basis.”
Sections C and D Initial Questionnaire Responses at D-4. In response to Section
D(V), Fuzhou stated that its producers reported the factors of production on a
consistent basis, “kilograms,” for all material factors. Id. at D-9. Fuzhou
explained that “[f]or the final product that calculates the unit consumption of
production factors, Guangdong Ecosource and Ningbo Hongtai use ‘packages’ as
the unit of measurement for the final subject merchandise.” Id. Fuzhou filed a
company certification attesting to the accuracy of the initial questionnaire
responses. Id.
Commerce issued a supplemental questionnaire acknowledging that Fuzhou
initially reported factors of production on a per pack basis, but requested that
Fuzhou report all factor consumption usage rates on a per-kilogram basis and
revise the factors of production databases accordingly. Fuzhou Hengli Paper Co.,
Ltd, c/o Eugene Degnan, Morris Manning & Martin, LLP, “Less-Than-Fair-Value
Investigation of Certain Paper Plates from the People’s Republic of China:
Supplemental Questionnaire for Fuzhou Hengli Paper Co., Ltd.” (Dep’t Commerce
Jul. 26, 2024) (“Supplemental Questionnaire”) at 6, PR 265. Fuzhou responded by Court No. 25-00064 Page 14
reporting all factor consumption usage rates on a per kilogram basis. Supplemental
Questionnaire Response at 7, Ex. SQR-12.1, Ex. SQR 12.2.
Commerce visited Fuzhou and its producer Guangdong Ecosource to verify
Fuzhou’s questionnaire responses in November 2024. Verification Report at 1. In
the verification report, Commerce noted that Guangdong Ecosource’s methodology
used total production quantity in kilograms as the denominator, and total
consumption quantity in kilograms of each material as numerators. Id. at 16.
Commerce reported that there are many types of paper input by combination of
different widths and basis weights, and each has a unique material code. Id. Each
of the types of paper input are allocated to each of the types of finished paper
plates. Id. This reportedly resulted in paper inputs with a range of basis weights
being allocated inaccurately as paper plates all with the same basis weight. Id.
Commerce claimed that this allocation was inconsistent with the production
process that “a paper plate with basis weight of 270g/m2 is made only from paper
input with basis weight of 270g/m2.” Id.
Commerce stated that after Fuzhou revised the consumption reporting on a
per-kilogram basis, Fuzhou’s reported consumption of paperboard was identical
for every product produced by Guangdong Ecosource in its supplemental
questionnaire response and that these reported consumption rates did not reflect
product-specific consumption rates, but rather reflected consumption as a whole Court No. 25-00064 Page 15
based on the total quantity of products. Final IDM at 13. Commerce asserted that
Fuzhou provided the same paperboard input consumption rate for all CONNUMs,
which was incorrect because the same basis weight was not used for all products.
Id. Regarding the statement that Fuzhou made in the initial questionnaire response
that Fuzhou “tracks the monthly consumptions of inputs and outputs on a product-
specific basis,” id., Commerce determined that Fuzhou had the ability to match
paperboard inputs to paper plates by basis weight to report a CONNUM-specific
consumption rate but declined to do so, and thus impeded the investigation by
failing to timely report CONNUM-specific factors of production. Id. at 13–14.
i. Fuzhou’s Initial Factors of Production Reporting
“Product-specific information is a fundamental element in the dumping
analysis, and it is standard procedure for Commerce to request product-specific
data in antidumping investigations.” Mukand Ltd. v. United States (“Mukand”),
767 F.3d 1300, 1307 (Fed. Cir. 2014). Plaintiff claims that it complied with the
initial questionnaire when it reported paperboard, varnish, ink, flexo stabilizer, and
various packing materials as the specific factors used to produce the merchandise.
Pl.’s Br. at 17. Fuzhou reported these specific factors of production in packages
because that was the unit of measurement used by Guangdong Ecosource and
Ningbo Hongtai for the final subject merchandise. Sections C and D Initial
Questionnaire Responses at D-9. Defendant argues that the initial questionnaire Court No. 25-00064 Page 16
requested reporting input consumption on a per unit basis, which meant that
Fuzhou had to submit how many kilograms of input went into producing a certain
number of kilograms of the finished product or CONNUM. Def.’s Resp. Br. at 12.
Defendant-Intervenor states that Fuzhou’s reporting was not CONNUM-specific
because when reporting the specific factors (paper/paperboard input, varnish, ink,
flexion stabilizer, and packing materials), Fuzhou took the total amount of each
input in kilograms and divided it by total output of all products in kilograms. Def.-
Interv.’s Resp. Br. at 21. Defendant and Defendant-Intervenor describe this as
“comingling” the paper board inputs with differing basis weights when Fuzhou
reported the rates of material consumption for each wrapped package of paper
plates, and both argue that this was not reporting on a CONNUM-basis as
Commerce requested. Def.’s Resp. Br. at 13; Def.-Interv.’s Resp. Br. at 23.
Commerce’s initial questionnaire requested that Fuzhou report factors of
production on a CONNUM-specific basis in Section D(I)(E) and a consistent basis
of the same unit of merchandise in Section D(V). Initial Questionnaire at D2, D-5.
Fuzhou used packages as the unit of merchandise in reporting the material
allocation of products from Guangdong Ecosource. See Sections C and D Initial
Questionnaire Responses, Ex. D-6. For example, Exhibit D-6 reported the
kilograms of “[w]hite card paper” and “[f]lexo gloss varnish” materials used per
package for twelve different CONNUMs. Id. Although, in accordance with the Court No. 25-00064 Page 17
initial questionnaire, Fuzhou reported on a consistent unit of measurement by using
packages as the unit of measurement, Fuzhou’s CONNUM reporting did not reflect
that the packages contained different products made from materials of different
dimensions. Thus, the CONNUMs reported did not encompass one specific
product but a blend, and the Court agrees with the argument of Defendant and
Defendant-Intervenor that this showed “comingling” of the inputs.
For example, the consumption rate of white card paper materials reported
was on a kilograms per pack basis for each CONNUM, which did not account for
the fact that Fuzhou reported many different white card paper materials of different
dimensions. Sections C and D Initial Questionnaire Responses, Ex. D-6. For
white card paper and varnish, Fuzhou explained that it calculated the consumption
quantity by dividing the quantity of raw material withdrawn from the warehouse
by the total production quantity for all products multiplied by a finished product’s
production quantity. Sections C and D Initial Questionnaire Responses at D-13.
Fuzhou’s reporting was not truly CONNUM-specific because the finished products
contained materials of various sizes and weights. Sections C and D Initial
Questionnaire Responses, Ex. D-6 (documenting multiple white card paper
materials with a range of dimensions). Defendant and Defendant-Intervenor argue
that the reported factors of production were not CONNUM-specific as Commerce Court No. 25-00064 Page 18
requested, and the Court agrees. Def.’s Resp. Br. at 12–13; Def-Interv.’s Resp. Br.
at 16.
Commerce’s initial questionnaire indicated a preference for CONNUM-
specific reporting for factors of production and explicitly requested that detailed
explanations be provided if CONNUM-specific reporting was not being provided.
Initial Questionnaire at D-2. Fuzhou’s reporting was organized by CONNUM, but
the information allocated to each CONNUM was not CONNUM-specific as
Commerce requested. By not accounting for differences in the material factors
used in each product, Fuzhhou reported material allocation by CONNUM that
generalized the material consumption data and did not report the actual quantity of
each factor of production consumed to produce the merchandise. See id.
Under 19 U.S.C. § 1677e(a)(2), Commerce may use facts otherwise
available if a party withholds information that has been requested. Commerce
determined that Fuzhou did not report CONNUM-specific factors of production by
including paperboard inputs with different basis weights in the consumption
calculations. Final IDM at 13. The Final IDM noted that Commerce verified
Fuzhou’s statement from the initial questionnaire response that it “tracks the
monthly consumptions of inputs and outputs on a product-specific basis[.]” Final
IDM at 13. From this statement, Commerce determined that Fuzhou could have
reported CONNUM-specific factors of production as requested. Id. Thus, Court No. 25-00064 Page 19
Commerce determined that Fuzhou withheld information, failed to provide
information in the form and manner requested, and impeded the investigation. See
id. The Court agrees that Fuzhou failed to provide information in the form and
manner requested by not providing CONNUM-specific factors of production
reporting.
However, the initial questionnaire also instructed that all factors of
production could be reported in the unit in which factors are reported in the
respondent’s database, which Fuzhou did by using packages. See Initial
Questionnaire at D-5. This problem may have impeded the investigation because
although Commerce requested CONNUM-specific reporting, Fuzhou’s reporting
was not truly CONNUM-specific given the variety of basis weights “comingled”
and not accurately reflected in the reporting. The Court concludes that substantial
evidence on the record supports Commerce’s determination that Fuzhou failed to
report CONNUM-specific information as requested by Commerce.
C. Notice and Opportunity to Remedy or Explain Deficiencies
Commerce’s authority under 19 U.S.C. § 1677e(a) to use facts otherwise
available is subject to a statutory obligation under 19 U.S.C. § 1677m(d) that
requires Commerce to notify a respondent promptly of the nature of a deficiency in
the record and to provide the respondent with an opportunity to remedy or explain
the deficiency. 19 U.S.C. § 1677e(a); 19 U.S.C. § 1677m(d). If the party submits Court No. 25-00064 Page 20
a response that Commerce determines is unsatisfactory or the response is not filed
by the deadline set by Commerce, then Commerce may disregard all or part of the
original and subsequent responses. 19 U.S.C. § 1677m(d). Commerce can satisfy
its obligations under 19 U.S.C. § 1677m(d) when it issues a supplemental
questionnaire specifically pointing out and requesting clarification on deficient
responses. NSK Ltd. v. United States, 481 F.3d 1355, 1360 n.1 (Fed. Cir. 2007).
Plaintiff claims that it fully complied with Commerce’s requests for
information and that Commerce failed to provide Fuzhou with notice of any
deficiencies as required by 19 U.S.C. § 1677m(d). Pl.’s Br. at 17, 24–26; Pl.’s
Reply Br. Supp. Mot. J. Agency R. at 16, ECF No. 54. Commerce stated that it
provided Fuzhou with an opportunity to remedy “the pre-wrapped package
reporting and granted the requested extension in full.” See Final IDM at 14.
Commerce’s supplemental questionnaire stated that Fuzhou reported certain
factors of production on a per pack basis and requested that Fuzhou “report all
factor consumption usage rates on a per [kilogram] basis and revise the individual
and combined [factors of production] databases accordingly.” Supplemental
Questionnaire at 6. Commerce also requested that Fuzhou “add the individual
product matching characteristics in the [factors of production] database.” Id.
Plaintiff argues that this question did not notify Fuzhou of any deficiency
regarding the specificity of paperboard weight. Pl.’s Br. at 26. Defendant claims Court No. 25-00064 Page 21
that the supplemental questionnaire alerted Fuzhou to Commerce’s concerns with
the reporting and provided an opportunity to correct the issues. Def.’s Resp. Br. at
20. Defendant argues that what led to Commerce issuing the supplemental
questionnaire was Fuzhou’s initial deficient reporting, and that both questionnaires
must be viewed in conjunction. Id. at 21. Defendant asserts that the supplemental
questionnaire identified that Fuzhou’s “product matching characteristics were
deficient,” and requested clarification of the deficient response. Id. at 21–22.
Defendant claims that “Commerce did not discover the full extent of Fuzhou
Hengli’s deficient reporting until verification,” and insists that discovery of
additional information not previously reported until verification justifies the
application of an adverse inference. Id. at 22. Defendant-Intervenor also insists
that “[i]t was only later, at verification, that Commerce recognized the extent of
Hengli’s inaccurate reporting[,]” and cites Reiner Brach GmbH & Co.KG v.
United States (“Reiner Brach”), 26 CIT 549, 206 F. Supp. 1323 (2002), appeal
dismissed sub nom., 49 F. App’x 296 (Fed. Cir. 2002), to argue that “absent
Commerce’s knowledge that a deficiency existed, no obligation to alert a
respondent as to a deficiency existed in the first place.” Def.-Interv.’s Resp. Br. at
31–32.
Commerce must inform a respondent of the nature of the deficiency. 19
U.S.C. § 1677m(d); see Mukand, 767 F.3d at 1304. In Mukand, the CAFC held Court No. 25-00064 Page 22
that resorting to facts otherwise available was justified when a respondent
repeatedly failed to provide size-specific cost data that Commerce requested. 767
F.3d at 1306. In that case, Commerce sought product-specific cost information
when calculating the respondent’s dumping margin for an administrative review of
an antidumping order. Id. at 1302–03. The respondent’s initial questionnaire
response assigned the same production costs across all product sizes and did not
explain its rationale for this approach, despite Commerce requesting such an
explanation. Id. at 1303. Commerce informed the respondent “that it did not
consider this approach to be reasonable and asked that Mukand produce size-
specific cost information[.]” Id. Commerce reiterated the need for size-specific
cost information in four supplemental questionnaires. Id. at 1303–06. In
concluding that Commerce’s decision to resort to facts otherwise available and
apply an adverse inference was supported by substantial evidence, the Court noted
that “[i]n each of the supplemental questionnaires, Commerce explained why it
was unsatisfied with Mukand’s response and reiterated both the type of
information it needed and why it was important.” Id. at 1306.
The Court disagrees with Defendant and Defendant-Intervenor that the
supplemental questionnaire sufficiently provided Fuzhou with notice of a
deficiency. The supplemental questionnaire requested that Fuzhou report all
consumption rates on a per kilogram basis, but Commerce did not explicitly notify Court No. 25-00064 Page 23
Fuzhou of the deficiency—that the factors of production reporting was not truly
CONNUM-specific because it did not account for the different materials of
different basis weights. See Supplemental Questionnaire at 6. Failing to identify
the deficiency and instruct Fuzhou on how to cure the deficiency in the
supplemental questionnaire denied Fuzhou the opportunity to remedy or explain
the deficiency. See Ta Chen Stainless Steel Pipe v. United States, 23 CIT 804, *17
(1999); Baroque Timber Indus. (Zhongshan) Co. v. United States, 49 CIT __, __,
776 F. Supp. 3d 1290, 1309–10 (2025) (concluding that Commerce’s application
of adverse facts available was not in accordance with law when Commerce failed
to satisfy its obligation under 19 U.S.C. § 1677m(d) because Commerce did not
specifically point out and request clarification of a deficiency).
Defendant argues that Fuzhou’s “deficient reporting led to Commerce’s
supplemental questionnaire,” and that the supplemental questionnaire “point[ed]
out” the deficiency with product matching characteristics and requested
clarifications of this “deficient response.” Def.’s Resp. Br. at 21–22. Questions 12
and 13 in Section D of the supplemental questionnaire state the following:
Section D
12. Fuzhou Hengli reported certain factors of production on a per pack basis (see Exhibits D-6 and D-7). Please report all factor consumption usage rates on a per KG basis and revise the individual and combined FOP databases accordingly. Court No. 25-00064 Page 24
13. Please add the individual product matching characteristics in the FOB database.
Supplemental Questionnaire at 6. In Mukand, Commerce informed the respondent
that it did not consider the respondent’s questionnaire response to be reasonable in
the supplemental questionnaire and why, but Commerce did not state anything
equivalent to that with respect to Fuzhou in this case. 767 F.3d at 1303. The
supplemental questionnaire failed to inform Fuzhou that there was any deficiency,
much less the nature of the deficiency. See Hyundai Steel Co. v. United States, 45
CIT __, __, 518 F. Supp. 3d 1309, 1326 (2021) (“Commerce’s broadly drawn
Supplemental Questionnaire did not satisfy the notice requirement in § 1677m(d)
because it failed to identify the nature of the alleged ‘deficiency’ in Hyundai’s
response with any specificity.”).
Defendant-Intervenor cites Reiner Brach as an analogous case of when the
full extent of a deficiency was not discovered until verification, but Reiner Brach is
distinguishable from the facts of this case. In Reiner Brach, the Court found that
Commerce complied with the requirements of § 1677m(d) because the initial
questionnaire issued was clear as to the information requested, Commerce raised
discrepancies in a supplemental questionnaire and gave the respondent an
opportunity to respond, and the respondent provided such a vague response that
“Commerce did not have notice or reason to believe a deficiency existed” until it Court No. 25-00064 Page 25
was discovered at verification.3 Reiner Brach, 26 CIT at 557, 206 F. Supp. at
1332. In Reiner Brach, the supplemental questionnaire issued by Commerce
expressly stated that it discovered discrepancies in the respondent’s initial
questionnaire response. Id. (“In its May 25, 2000 supplemental questionnaire,
Commerce stated, ‘According to your Section A response, total quantity for Home
Market sales sold is [* * *] kilograms and the total value is $ [* * *]. However,
your sales data indicates that total quantity for Home Market sales is [* * *] MT or
([* * *] kg) and total sales value is $ [* * *]. Please explain these
discrepancies.’”).
In contrast, Commerce did not inform Fuzhou that it considered the original
reporting to be deficient or unreasonable.4 The initial questionnaire requested
reporting of factors of production on a CONNUM-specific basis and all factors of
production quantities on a consistent basis, specifically the unit in which factors
were reported in Fuzhou’s database. Initial Questionnaire at D-2, D-5. Commerce
3 Defendant and Defendant-Intervenor’s insistence on this being a case of discovering deficiencies at verification does not align with Defendant’s claim that Fuzhou’s “deficient reporting led to Commerce’s supplemental questionnaire[.]” Def.’s Resp. Br. at 21. 4 Defendant claims that the supplemental questionnaire served as a deficiency notice pursuant to 19 U.S.C. § 1677m(d) and that Commerce notified Fuzhou of its deficient response of reporting factors of production on a per-pack basis, rather than a per-unit basis. Def.’s Resp. Br. at 13. However, this disregards the initial questionnaire’s instruction that factors of production could be reported in the unit which factors are reported in the respondent’s database. Initial Questionnaire at D- 5. Court No. 25-00064 Page 26
had knowledge of Fuzhou’s reporting methods because Fuzhou included a step-by-
step explanation of how it reported factors of production in the initial questionnaire
response, weakening the claim that Commerce lacked notice of the type of factors
of production reporting that Fuzhou provided. See Initial Questionnaire Response
at D-12–D-15. The supplemental questionnaire only asked for factor consumption
rates to be reported on a different basis, per kilogram, and to revise the factors of
production databases accordingly. The Court concludes that Commerce failed to
satisfy 19 U.S.C. § 1677m(d) because the supplemental questionnaire issued did
not distinctly inform Fuzhou of a deficiency. See Meihua Grp. Int’l Trading (Hong
Kong) Ltd. v. United States, 47 CIT __,__, 633 F. Supp. 3d 1203, 1212 (2023)
(concluding that Commerce did not fulfill its statutory obligation under 19 U.S.C.
§ 1677m(d) when Commerce failed to provide notice of a deficiency).
The Court concludes that Commerce failed to satisfy its statutory obligation
under 19 U.S.C. § 1677m(d) to provide notice of a deficiency and an opportunity
to correct the deficiency. Accordingly, the Court holds that Commerce’s
application of facts otherwise available under U.S.C. 19 § 1677e(a) and an adverse
inference under 19 U.S.C. § 1677e(b) are not in accordance with law. The Court
concludes that Commerce’s application of adverse facts available was not
supported by substantial evidence or in accordance with law. Court No. 25-00064 Page 27
On remand, Commerce must provide Fuzhou with sufficient notice of the
deficiencies in the factors of production reporting and must provide Fuzhou with
the opportunity to cure the deficiencies. The Court remands Commerce’s
application of adverse facts available for further consideration in accordance with
this Opinion.
II. Surrogate Value
Commerce considered Fuzhou’s arguments on surrogate value moot after
Commerce applied total adverse facts available and declined to make a surrogate
value determination for Fuzhou. Final IDM at 18. The Court may revisit this issue
after remand as appropriate.
III. Critical Circumstances
After applying total adverse facts available to Fuzhou, Commerce determined
that critical circumstances existed. Final IDM at 4. The Court may revisit this
issue after remand as appropriate.
CONCLUSION
For the foregoing reasons, the Court concludes that Commerce’s application
of total adverse facts available was not supported by substantial evidence and not
in accordance with law. Accordingly, it is hereby
ORDERED that Commerce’s Final Determination is remanded for
reconsideration consistent with this Opinion; and it is further Court No. 25-00064 Page 28
ORDERED that this case shall proceed according to the following schedule:
1. Commerce shall file its remand redetermination on or before August 7,
2026;
2. Commerce shall file the administrative record on or before August 21,
3. Comments in opposition to the remand redetermination shall be filed on
or before September 4, 2026;
4. Comments in support of the remand redetermination shall be filed on or
before September 18, 2026; and
5. The joint appendix shall be filed on or before September 25, 2026.
/s/ Jennifer Choe-Groves Jennifer Choe-Groves, Judge
Dated: June 11, 2026 New York, New York