Slip Op. No. 24-143 UNITED STATES COURT OF INTERNATIONAL TRADE
SHANGHAI TAINAI BEARING CO., LTD. and C&U AMERICAS, LLC,
Plaintiffs,
and Before: Stephen Alexander Vaden, ZHEJIANG JINGLI BEARING Judge TECHNOLOGY CO., LTD., Court No. 1:23-cv-00020 (SAV) Plaintiff-Intervenor,
v.
UNITED STATES,
Defendant.
OPINION
[Sustaining the Department of Commerce’s Final Results and Denying Plaintiffs’ Motion for Judgment on the Agency Record.]
Dated: December 18, 2024
David J. Craven, Craven Trade Law LLC, of Chicago, IL, for Plaintiffs Shanghai Tainai Bearing Co., Ltd. and C&U Americas, LLC.
John J. Kenkel, International Trade Law Counselors, PLLC, of Alexandria, VA, for Plaintiff-Intervenor Zhejiang Jingli Bearing Technology Co., Ltd.
Geoffrey M. Long, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, for Defendant United States. With him on the brief were Brian M. Boynton, Principal Deputy Assistant Attorney General; Patricia M. McCarthy, Director, Commercial Litigation Branch; L. Misha Preheim, Assistant Director, Commercial Litigation Branch; Jesus N. Saenz, Court No. 1:23-cv-00020 Page 2
and Benjamin Juvelier, Of Counsel, U.S. Department of Commerce, Office of the Chief Counsel for Trade Enforcement & Compliance.
Vaden, Judge: Plaintiffs Shanghai Tainai Bearing Co., Ltd. and C&U
Americas, LLC (collectively Tainai) filed suit objecting to the Department of
Commerce’s (Commerce) resolution of the thirty-fourth administrative review of the
antidumping order on tapered roller bearings from China. Joined by Plaintiff-
Intervenor Zhejiang Jingli Bearing Technology Co., Ltd. (Jingli), Tainai brings
multiple claims of error against Commerce’s final determination. The Court finds
these claims unavailing. Commerce’s determination to apply a partial adverse
inference based on Tainai’s failure to cooperate to the best of its ability is supported
by substantial evidence. Its determination to exclude from U.S. price additional
revenue that Tainai invoiced as Section 301 duty payments is also supported by
substantial evidence. Tainai’s remaining claims raise similar legal issues to those
advanced in its challenge to the thirty-third administrative review so that the Court’s
legal reasoning in Shanghai Tainai Bearing Co. v. United States (Tainai I), 47 CIT
__, 658 F. Supp. 3d 1269 (2023), as applied to the facts of this case, leads the Court to
reject them as well. The Motion for Judgment on the Agency Record is DENIED,
and Commerce’s Final Results are SUSTAINED. Court No. 1:23-cv-00020 Page 3
BACKGROUND
Tainai is a Chinese manufacturer of tapered roller bearings.1 It purchases
components used in manufacturing tapered roller bearings from a network of
unaffiliated suppliers. See Tainai I, 47 CIT __, 658 F. Supp. 3d at 1284–85. Tapered
roller bearings are made from rollers, cages, cups, and cones. Rollers are steel
cylinders held together in a housing called a cage. Caged rollers are inserted between
two steel rings, allowing movement. The inner ring is the cone, and the outer ring is
the cup. The antidumping order on tapered roller bearings from China (the Order)
has been in place since June 15, 1987, and covers:
[T]apered roller bearings and parts thereof, finished and unfinished, from China; flange, take up cartridge, and hanger units incorporating tapered roller bearings; and tapered roller housings (except pillow blocks) incorporating tapered rollers, with or without spindles, whether or not for automotive use.
Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, from the
People’s Republic of China: Final Results of Review; 2020-2021, 88 Fed. Reg. 1,359,
1,360 (Dep’t of Com. Jan. 10, 2023) (Final Results), and accompanying Issues and
Decisions Mem. (IDM) at 2, J.A. at 1,004, ECF No. 42. Tainai’s Motion for Judgment
on the Agency Record challenges the Final Results of the thirty-fourth administrative
review of the Order, covering imports from China from June 1, 2020 through May 31,
1 Shanghai Tainai Bearing Co., Ltd. brought its Motion together with another entity, C&U
Americas, LLC. Compl. ¶3, ECF No. 8. In earlier proceedings before this Court, Tainai failed to explain the relationship between itself and C&U Americas. See Shanghai Tainai Bearing Co. v. United States, 46 CIT __, 582 F. Supp. 3d 1299, 1308 (2022) (referring to the “recurring mystery” of the relationship between Shanghai Tainai Bearing Co. and C&U Americas and noting that Plaintiffs’ counsel declined the Court’s request to shed light on it). The Court therefore refers generally to Plaintiffs as Tainai. Court No. 1:23-cv-00020 Page 4
2021 (the Period of Review). Initiation of Antidumping and Countervailing Duty
Administrative Reviews, 86 Fed. Reg. 41,821, 41,825 (Dep’t of Com. Aug. 3, 2021).
I. The Disputed Administrative Review
On August 3, 2021, Commerce initiated a review of the Order. Id. at 41,821.
Commerce selected Tainai as a mandatory respondent. Issues and Decisions Mem.
accompanying the Preliminary Results (PDM) at 2, J.A. at 4,154 n.4, ECF No. 42.
Plaintiff-Intervenor Jingli was not selected for individual examination. Second Resp’t
Selection Mem. at 3, J.A. at 1,350, ECF No. 42. Commerce issued its initial
questionnaire to Tainai. Initial Questionnaire, J.A. at 1,353, ECF No. 42. It asked
Tainai to obtain factors of production information from its unaffiliated suppliers. Id.
at 1,406–11. Tainai submitted its response, but Commerce later found that “it does
not appear that Tainai made any attempt to request [factors of production]
information from its unaffiliated suppliers in response to the initial questionnaire,
nor did Tainai alert Commerce of any difficulties in obtaining accurate [factors of
production] information.” IDM at 8, J.A. at 1,010, ECF No. 42.
To calculate a proper dumping margin, Commerce needed complete factors of
production information from Tainai. When dealing with nonmarket economies like
China, Commerce does not typically accept the prices producers pay for inputs as
representing fair market value. Instead, Commerce must determine the value of the
subject merchandise “on the basis of the value of the factors of production utilized in
producing the subject merchandise” and then add “an amount for general expenses
and profit plus the cost of containers, coverings, and other expenses.” 19 U.S.C. § Court No. 1:23-cv-00020 Page 5
1677b(c)(1) (flush language). Commerce does this by using the costs for a producer of
similar merchandise located in a market economy country of comparable development
to the country being examined. 19 C.F.R. § 351.408(a)–(b) (“[Commerce] normally
will calculate normal value by valuing the nonmarket economy producers’ factors of
production in a market economy country.”). In other words, rather than accepting
that the price the non-market economy manufacturer paid represents the fair value
of the sum of (1) the cost of the product’s components; (2) general expenses and profit;
and (3) the cost of containers, coverings, and other expenses, Commerce constructs
this amount itself by determining a value for each individual input. 19 U.S.C. §
1677b(c)(1) (flush language). “Commerce values certain factors of production, such
as selling, general and administrative expenses, factory overhead, and profit, by
using financial ratios derived from financial statements of producers of comparable
merchandise in [a] surrogate country.” Ad Hoc Shrimp Trade Action Comm. v. United
States, 618 F.3d 1316, 1319–20 (Fed. Cir. 2010) (citing Dorbest Ltd. v. United States,
604 F.3d 1363, 1368 (Fed. Cir. 2010)). Ultimately, Commerce’s task is to “attempt to
construct a hypothetical market value” of the subject merchandise. Nation Ford
Chem. Co. v. United States, 166 F.3d 1373, 1375 (Fed. Cir. 1999).
On March 29, 2022, Commerce issued Tainai a supplemental questionnaire
and directed it to forward to its unaffiliated suppliers a letter and questionnaire
requesting factors of production information. Letter Regarding Req. for Information,
J.A. at 2,619, ECF No. 42. Commerce set the response deadline for April 12, 2022.
Id. at 2,623. Tainai sought two extensions, explaining that it was impacted by a Court No. 1:23-cv-00020 Page 6
COVID-19 outbreak in Shanghai, which limited its ability to comply with Commerce’s
requests. Suppl. Questionnaire Extension Req. (Apr. 4, 2022), J.A. at 2,693–94, ECF
No. 42; Suppl. Questionnaire Extension Req. (Apr. 21, 2022), J.A. at 2,705–06, ECF
No. 42. Commerce granted both extension requests and ultimately required the
supplier responses no later than May 10, 2022. See Suppl. Questionnaire Extension
Grant (Apr. 4, 2022), J.A. at 2,701, ECF No. 42; Suppl. Questionnaire Extension
Grant, (Apr. 22, 2022), J.A. at 2,710, ECF No. 42.
On May 10, Tainai submitted its supplemental questionnaire responses.
Tainai stated that it had forwarded Commerce’s request for information to its
suppliers, “but [Tainai had] been unable to obtain full responses.” Suppl.
Questionnaire Resp. at 2, J.A. at 2,911, ECF No. 42. Only one of Tainai’s roller
suppliers provided its production data to Tainai –– thereby cooperating with
Commerce’s request. Id. Tainai also provided an example of a letter –– dated May
5, 2022, five days before the deadline –– that it sent to its unaffiliated suppliers.
Letter of Assistance, J.A. at 84,732, ECF No. 43.
In its Preliminary Results, Commerce identified deficiencies in Tainai’s
reported factors of production information in both the initial and supplemental
questionnaire responses. PDM at 13–15, J.A. at 4,165–67, ECF No. 42. Commerce
concluded that Tainai “did not act to the best of its ability to comply with Commerce’s
requests for [factors of production] information and has demonstrated a pattern of
not providing complete [factors of production] data.” Id. at 15, J.A. at 4,167.
Commerce also concluded that Tainai’s unaffiliated suppliers “failed to cooperate by Court No. 1:23-cv-00020 Page 7
not providing their [factors of production] data, either through Tainai or directly to
Commerce.” Id. Accordingly, Commerce found it appropriate to use partial facts
available with an adverse inference with respect to cages supplied by uncooperative
suppliers. Id. Where Tainai’s unaffiliated, uncooperative suppliers provided all of
the cages for certain control numbers2 during the Period of Review, “[Commerce]
valued the unreported cage [factors of production] using Tainai’s highest [factors of
production] consumption rates for cages for all other [control numbers] based on
product description.” Id.
Commerce also denied Tainai’s request for a by-product offset because “Tainai
was unable to provide either the quantity of scrap actually generated during the
[Period of Review] pursuant to its own production process, or that of its suppliers….”
Id. at 22. Commerce’s “established practice” is to grant an offset to normal value for
the sale of by-products generated during the production of subject merchandise if the
respondent can demonstrate that the by-product is “either resold or has commercial
value and re-enters the respondent’s production process.” Tainai I, 47 CIT __, 658 F.
Supp. 3d at 1296 (quoting Arch Chem., Inc. v. United States, 33 CIT 954, 956 (2009));
see also NTSF Seafoods Joint Stock Co. v. United States, 44 CIT __, 487 F. Supp. 3d
1310, 1322 (2020) (explaining by-products eligible for an offset are those “generated
2 “Control number,” often referred to by the contraction “CONNUM,” denotes a unique product based on relevant physical characteristics. To ensure that Commerce is comparing like products in the home and U.S. markets, it asks respondents to sort merchandise according to key differentiating categories with each number in the product’s control number corresponding to physical characteristic groupings particular to the merchandise under review. Xi’an Metals & Minerals Imp. & Exp. Co. v. United States, 45 CIT __, 520 F. Supp. 3d 1314, 1321 n.4 (2021). As a simple shorthand, a reader may substitute “product” any time he reads “control number” or “CONNUM.” Court No. 1:23-cv-00020 Page 8
during the production process” of subject merchandise). The burden is on the
respondent to provide Commerce with sufficient information to support a by-product
offset claim. Tainai I, 47 CIT __, 658 F. Supp. 3d at 1296 (citing Arch Chem., 33 CIT
at 956). To qualify for a by-product offset, a firm must provide detailed
documentation linking the amount of scrap sold or reused during the period of review
with the amount of scrap generated from the production of subject merchandise
during the period of review. See Am. Tubular Prods., LLC v. United States, 847 F.3d
1354, 1361–62 (Fed. Cir. 2017).
In the Final Results, Commerce continued to find that Tainai and its suppliers
failed to act to the best of their abilities to provide complete responses. IDM at 6, J.A.
at 1,008, ECF No. 42. Commerce also explained its treatment of two issues related
to Section 301 duties, which are a type of duty imposed to combat unfair trade
practices in foreign countries. 19 U.S.C. § 2411. First, Commerce determined that
Section 301 duties are not “special duties” under Wheatland Tube Co. v. United
States, 495 F.3d 1355 (Fed. Cir. 2007), and it accordingly reduced the U.S. price of
subject merchandise by the amount of Section 301 duties paid pursuant to 19 U.S.C.
§ 1677a(c)(2)(A). IDM at 16–17, J.A. at 1,018–19, ECF No. 42. Second, when
calculating U.S. price, Commerce excluded –– or “capped” –– additional revenue
Tainai billed as “additional revenue for 301.” Id. at 17. This additional revenue
exceeded the amount of Section 301 duties Tainai owed. Id. at 17–19. Both actions
had the effect of increasing Tainai’s dumping margin. Third, Commerce continued to
decline to grant Tainai a by-product offset. Id. at 20. Court No. 1:23-cv-00020 Page 9
II. The Present Dispute
On February 21, 2023, Tainai filed its Complaint. Compl., ECF No. 8. The
Court allowed Jingli to intervene as Plaintiff-Intervenor. Order Granting
Intervention, ECF No. 20. In its Motion for Judgment on the Agency Record, Tainai
argues that: (1) Commerce should not have applied facts available with an adverse
inference against Tainai; (2) Commerce improperly selected distortive factors of
production as partial adverse facts; (3) Commerce should not have deducted Section
301 duties from the U.S. price; (4) Commerce should not have excluded from U.S.
price additional revenue Tainai charged its customers for Section 301 duties; and (5)
Commerce should have granted a by-product offset. Pls.’ Mem. in Supp. of Mot. for
J. on Agency R. (Pls.’ Br.) at 12, 26, 27, 29, 32, 37, ECF No. 30.3
On September 14, 2023, the Court issued an opinion in a separate case
involving Tainai, addressing several of these issues as applied to the thirty-third
administrative review of the Order. See Tainai I, 47 CIT __, 658 F. Supp. 3d at 1282–
89, 1291–96 (discussing the application of facts available with an adverse inference
to a cooperating respondent, the deduction of Section 301 duties, the exclusion of
additional revenue from U.S. price, and whether Commerce should grant a by-
product offset). In Tainai I, the Court remanded two issues for further explanation:
(1) Commerce’s use of facts available with an adverse inference against a cooperating
respondent based on the noncooperation of unaffiliated suppliers and (2) Commerce’s
3 Jingli filed a letter in lieu of a brief fully supporting Tainai’s Motion. Pl.-Int.’s Letter Br., ECF No. 32. Court No. 1:23-cv-00020 Page 10
exclusion of additional revenue that Tainai invoiced as Section 301 duty payments.4
Id. at 1296–97. The Court held that Commerce failed to address Tainai’s argument
that it lacked the requisite market power to compel its suppliers to cooperate with
Commerce’s investigation and failed to “carry out a case-specific analysis of the
applicability of deterrence and similar policies.” Id. at 1288 (quoting Mueller
Comercial De Mexico v. United States, 753 F.3d 1227, 1234 (Fed. Cir. 2014)). The
Court also ordered Commerce to further explain its decision to exclude the additional
revenue from U.S. price. Specifically, Commerce was to explain how the additional
revenue is related to profits on the sale of services — and not the sale of merchandise
— and to consider “whether there is any basis to exclude such amounts from the ‘price
adjustments’ described by [19 C.F.R.] § 351.401(c) and [19 C.F.R.] § 351.102(b)(38).”
Id. at 1296.
The Defendant filed its Response in this case, Def.’s Resp., ECF No. 33,
rejecting Tainai’s arguments. The Government argued that (1) it lawfully applied
partial facts available with an adverse inference based on Tainai and its unaffiliated
suppliers’ failure to cooperate; (2) it appropriately deducted Section 301 duties as part
of its margin calculations; (3) it properly excluded from U.S. price additional revenue
Tainai received in relation to Section 301 duties; and (4) it correctly denied Tainai a
by-product offset. Def.’s Resp. at 7–8, ECF No. 33.
4 The Court issued its opinion sustaining Commerce’s remand redetermination for Tainai I
concurrently with this opinion. See Shanghai Tainai Bearing Co. v. United States, 48 CIT __, Slip Op. 24-142 (Dec. 18, 2024). Court No. 1:23-cv-00020 Page 11
The Government distinguished the situation here from Tainai I. It explained
that, in this case, Commerce applied facts available with an adverse inference based
on both Tainai and its suppliers’ failure to cooperate. Compare id. at 11 (“Both Tainai
and its unaffiliated suppliers failed to cooperate to the best of their ability.”)
(capitalization altered), with id. at 19 (“[U]nlike in Tainai [I], here, … Commerce
based its decision on Tainai’s failure to cooperate – not simply on its suppliers’
failure.”). 19 U.S.C. § 1677e(b)(1) provides for the application of facts available with
an adverse inference when an “interested party” fails to cooperate to the best of its
ability with a request for information. Commerce determined that Tainai and its
unaffiliated suppliers are interested parties because they both are “producers of
subject merchandise.” Def.’s Resp. at 11, ECF No. 33 (citing IDM at 6, J.A. at 1,008,
ECF No. 42); see also 19 U.S.C. § 1677(9)(A) (defining “interested party” as “a foreign
… producer … of subject merchandise”). It justified its determination on three
grounds: (1) Commerce used a partial adverse inference to remedy Tainai’s
noncooperation; (2) Tainai’s resulting dumping margin in this case is more
appropriate than the triple-digit margin Commerce assigned in Tainai I; and (3)
Commerce based its partial adverse facts on Tainai’s own data. Def.’s Resp. at 21–
23, ECF No. 33.
In its reply brief, Tainai acknowledged that the Court had ruled against it in
Tainai I with respect to the deduction of Section 301 duties from U.S. price and
whether to grant a by-product offset. Pls.’ Reply at 10, ECF No. 36. Thus, “absent a Court No. 1:23-cv-00020 Page 12
reversal on appeal, plaintiffs have no further argument.”5 Id.; see also Tainai I, 47
CIT __, 658 F. Supp. 3d at 1291–94. Tainai reiterated that Commerce’s
determinations to apply partial facts available with an adverse inference and to
exclude the additional Section 301 duty revenue from U.S. price are not supported by
substantial evidence. Pls.’ Reply at 2–10, ECF No. 36.
The Court held oral argument simultaneously for this case and the remand
determination in Tainai I. See ECF No. 47. To clarify the record, the Court ordered
supplemental briefing on (1) Commerce’s treatment of the data provided by the sole
cooperating unaffiliated supplier and (2) what the record shows is the earliest date
Tainai notified its unaffiliated suppliers about Commerce’s need for the factors of
production information. See ECF No. 46. The Court also invited the parties to direct
the Court to any invoices on the record that reflect one set price for the bearings with
no separate line item for Section 301 duties. Id. In its supplemental letter, Commerce
clarified that it used the cooperating supplier’s information in its calculations. Def.’s
Suppl. Letter at 1–2, ECF No. 49. It did not draw an adverse inference, as it had with
the noncooperating suppliers. Id. (citing Prelim. Calculation Mem. at 2, J.A. at
85,959, ECF No. 43). In response to the Court’s second question, Tainai submitted
5 Tainai mistakenly stated that the capping issue “was provisionally resolved in favor of
Tainai” in Tainai I, “and, absent a reversal on appeal, plaintiffs have no further argument.” Pls.’ Reply at 10, ECF No. 36. In Tainai I the Court remanded the issue for further explanation but ultimately sustained Commerce’s remand determination that continues to exclude Tainai’s additional revenue. Shanghai Tainai Bearing Co. v. United States, 48 CIT __, Slip Op. 24-142 at 24–31 (Dec. 18, 2024). At oral argument for both cases, Tainai’s counsel stated that the legal analysis for the capping issue is the same in this case as in Tainai I. Oral Arg. Tr. at 57:6–16, ECF No. 55. The Court will accordingly sustain Commerce’s capping practice in this case as well. Court No. 1:23-cv-00020 Page 13
copies of its extension requests, which “document the challenges facing [Tainai’s]
discussions with third country suppliers” because of COVID-19-related lockdowns in
China. Pls.’ Suppl. Letter at 1, ECF No. 48; id., Ex. 1 at 3–4. Commerce notes “there
is no record evidence to support Tainai’s suggestion that it contacted its unaffiliated
suppliers to solicit factors of production data prior to May 5, 2022.” Def.’s Suppl.
Letter at 3, ECF No 49. With the record now complete, the Court decides the parties’
claims.
JURISDICTION AND STANDARD OF REVIEW
The Court has jurisdiction over Plaintiffs’ challenge to the Final Results under
19 U.S.C. § 1516a(a)(2)(B)(i) and 28 U.S.C. § 1581(c), which grant the Court authority
to review actions contesting final determinations in antidumping reviews. The Court
must sustain Commerce’s “determinations, findings, or conclusions” unless they are
“unsupported by substantial evidence on the record, or otherwise not in accordance
with the law.” 19 U.S.C. § 1516a(b)(1)(B)(i). “[T]he question is not whether the Court
would have reached the same decision on the same record[;] rather, it is whether the
administrative record as a whole permits Commerce’s conclusion.” New Am. Keg v.
United States, 45 CIT __, No. 20-00008, 2021 Ct. Intl. Trade LEXIS 34, at *15 (Mar.
23, 2021). Furthermore, “the possibility of drawing two inconsistent conclusions from
the evidence does not prevent an administrative agency’s finding from being
supported by substantial evidence.” Matsushita Elec. Indus. Co. v. United States, 750
F.2d 927, 933 (Fed. Cir. 1984) (quoting Consolo v. Fed. Mar. Comm’n, 383 U.S. 607,
619–20 (1966)). Court No. 1:23-cv-00020 Page 14
Reviewing agency determinations, findings, or conclusions for substantial
evidence, the Court assesses whether the agency action is reasonable given the
“record as a whole.” Nippon Steel Corp. v. United States, 458 F.3d 1345, 1351 (Fed.
Cir. 2006); see also Universal Camera Corp. v. NLRB, 340 U.S. 474, 488 (1951) (“The
substantiality of evidence must take into account whatever in the record fairly
detracts from its weight.”). The Federal Circuit has described “substantial evidence”
as “such relevant evidence as a reasonable mind might accept as adequate to support
a conclusion.” Dupont Teijin Films USA v. United States, 407 F.3d 1211, 1215 (Fed.
Cir. 2005) (quoting Consol. Edison Co. v. NLRB, 305 U.S. 197, 229 (1938)).
DISCUSSION
I. Summary
This case involves a straightforward application of an adverse inference
against a non-cooperating respondent. Tainai was aware of its unaffiliated suppliers’
prior non-cooperation and was obligated to attempt to secure their cooperation
through its best efforts. Instead, Tainai delayed reaching out to its suppliers until
well after Commerce requested it do so. Tainai has not directed the Court to other
evidence on the record to show earlier communications with its unaffiliated suppliers.
Therefore, Commerce’s decision to apply adverse inferences based on Tainai’s
noncooperation is supported by substantial evidence. The Court need not reach the
question of whether Commerce could properly apply an adverse inference based on
the unaffiliated suppliers’ noncooperation. Court No. 1:23-cv-00020 Page 15
Other aspects of Commerce’s decision are also in line with the Department’s
legal obligations. Commerce correctly deducted Section 301 duties from U.S. price in
accordance with the Federal Circuit’s decision in Borusan Mannesmann Boru Sanayi
ve Ticaret A.S. v. United States, 63 F.4th 25 (Fed. Cir. 2023), and this Court’s opinion
in Tainai I, 47 CIT __, 658 F. Supp. 3d 1269. The agency’s decision to exclude from
U.S. price additional revenue that Tainai earned by invoicing its customers for
Section 301 duty payments is supported by substantial evidence. Finally, Commerce
properly rejected Tainai’s request for a by-product offset. For these reasons,
Commerce’s Final Results will be SUSTAINED.
II. Application of Partial Facts Available with an Adverse Inference
A.
The first issue is whether Commerce’s decision to apply facts available with an
adverse inference against Tainai is supported by substantial evidence. When foreign
merchandise is sold in the United States at less than fair value, thereby injuring a
domestic industry, Commerce may impose antidumping duties on the merchandise.
19 U.S.C. § 1673 (flush language). Antidumping duties equal the amount that the
foreign market value, known as the “normal value,” of the merchandise exceeds the
U.S. price of the merchandise. Id. When Commerce is missing data needed to
calculate the normal value of subject merchandise, the antidumping statute provides
a two-part process to fill in the gap. 19 U.S.C. § 1677e(a). Under 19 U.S.C. § 1677e(a),
Commerce may use “facts otherwise available” for missing information if:
(1) [N]ecessary information is not available on the record, or (2) [A]n interested party or any other person — Court No. 1:23-cv-00020 Page 16
(A) [W]ithholds information that has been requested by [Commerce] (B) [F]ails to provide such information by the deadlines for submission of the information or in the form and manner requested, … (C) [S]ignificantly impedes a proceeding …, or (D) [P]rovides such information but the information cannot be verified ….
Those facts otherwise available may be chosen with an adverse inference if “an
interested party has failed to cooperate by not acting to the best of its ability to comply
with a request for information from [Commerce]….” 19 U.S.C. § 1677e(b)(1). Section
1677e(a) and 1677e(b) require two distinct analyses.6 First, “Commerce … must
determine that it is missing necessary information[.]” Tainai I, 47 CIT __, 658 F.
Supp. 3d at 1282 (citing Zhejiang DunAn Hetian Metal Co. v. United States, 652 F.3d
1333, 1346 (Fed. Cir. 2011)). Second, if Commerce wishes to fill this gap with “facts
that reflect an adverse inference against an interested party,” it “must … determine
that the party has failed to cooperate by not acting to the best of its ability.” Id. (citing
Zhejiang, 652 F.3d at 1346). For these determinations, Tainai and its suppliers are
considered “interested parties.” See 19 U.S.C. § 1677(9)(A) (defining interested party
to include any “foreign manufacturer, producer, or exporter … of subject
merchandise”).
In Tainai I, Commerce sought to apply facts available with an adverse
inference against Tainai based on the noncooperation of its suppliers. See Tainai I,
6 Sections 1677e(a) and 1677e(b) are often collapsed into “adverse facts available” or “AFA,”
but “the two statutory processes require distinct analyses rather than the single analysis implied by the term ‘AFA.’” Tainai I, 47 CIT __, 658 F. Supp. 3d at 1282; cf. Jiangsu Alcha Aluminum Co. v. United States, 48 CIT __, 712 F. Supp. 3d 1376, 1389–91 (2024) (applying both analyses in a countervailing duty context). Court No. 1:23-cv-00020 Page 17
47 CIT __, 658 F. Supp. 3d at 1282–89. But there Commerce had found that Tainai
cooperated to the best of its ability. Id. at 1276. The Federal Circuit has elucidated
additional requirements to apply an adverse inference against a cooperating party
based on the noncooperation of third-parties. See Mueller, 753 F.3d at 1233
(“Commerce may rely on such policies as part of a margin determination for a
cooperating party … as long as the application of those policies is reasonable on the
particular facts and the predominant interest of accuracy is properly taken into
account as well.”). In other words, to draw an adverse inference against the
cooperating Tainai based on its suppliers’ noncooperation, Commerce needed to: (1)
“make a case-specific determination that the respondent can influence its suppliers’
decision to cooperate,” and (2) “take into account the predominant interest in accuracy
and explain any deterrence-based rationale that is used against the cooperating
party.” Tainai I, 47 CIT __, 658 F. Supp. 3d at 1281.
The situation here is different. See Shenzhen Xinboda Indus. Co. v. United
States, 44 CIT __, 456 F. Supp. 3d 1272, 1285 n.22 (2020) (citing e.g., Jiaxing Brother
Fastener Co. v. United States, 822 F.3d 1289, 1299 (Fed. Cir. 2016)) (“[E]ach
administrative review is a separate segment of an antidumping proceeding … with
its own, unique administrative record[.]”). In this review, Commerce found that
Tainai and its suppliers failed to cooperate to the best of their abilities. Compare
Tainai I, 47 CIT __, 658 F. Supp. 3d at 1276 (“Commerce did not find that [Tainai] …
failed to cooperate to the best of its ability. Instead, it based its decision to apply an
adverse inference on the lack of cooperation from [its] suppliers.”), with IDM at 7, Court No. 1:23-cv-00020 Page 18
J.A. at 1,009, ECF No. 42 (“Tainai failed to put forth its maximum efforts to
investigate and obtain the requested [factors of production] information.”), and IDM
at 9–10, J.A. at 1,011–12 (“Tainai did not attempt to avoid non-cooperation by
selecting other suppliers or by providing adequate time for its suppliers to respond to
Commerce’s requests for information.”). Because Commerce’s determination that
Tainai did not cooperate to the best of its ability is supported by substantial evidence,
the Court will sustain Commerce’s use of facts available with an adverse inference.
In its Final Results, Commerce identified a gap in the record –– factors of
production information from Tainai’s unaffiliated suppliers. IDM at 9, J.A. at 1,011,
ECF No. 42. Commerce explained that it:
requests [factors of production] to approximate the manufacturing process for producing subject merchandise and to determine the normal value … of the imported goods in question. Without this information, Commerce is unable to accurately approximate the manufacturing process of the respondent or its suppliers and must rely on a suitable alternative through the application of facts available or [adverse facts available].
Id. It is undisputed that all but one of Tainai’s suppliers failed to provide the
information Commerce requested. Thus, there was a gap requiring Commerce to
resort to facts available in the record. 19 U.S.C. § 1677e(a); see Pls.’ Reply at 4, ECF
No. 36 (“[W]hile a gap [in the record] may exist, it should have been [filled] with facts
available without adverse inferences.”)
The next question is whether Tainai failed to cooperate to the best of its
ability.7 “Compliance with the ‘best of its ability’ standard is determined by assessing
7 Tainai asserts that, because it was eligible for a separate rate from the China-wide rate,
Commerce “necessarily found that Tainai was cooperative.” Pls.’ Br. at 20, ECF No. 30. This Court No. 1:23-cv-00020 Page 19
whether [the] respondent has put forth its maximum effort to provide Commerce with
full and complete answers ….” Nippon Steel Corp. v. United States, 337 F.3d 1373,
1382 (Fed. Cir. 2003). Commerce faults Tainai for not taking additional actions in
response to its suppliers’ previous noncooperation and for failing to give its suppliers
adequate time to respond to the questionnaires. IDM at 8–10, J.A. at 1,010–12, ECF
No. 42. Tainai responds that it lacks the “market power” to compel its unaffiliated
suppliers to cooperate. Pls.’ Br. at 20, ECF No. 30. But that argument is relevant to
the question of whether Commerce can apply an adverse inference against a
cooperating party based on the noncooperation of its unaffiliated suppliers. See, e.g.,
Tainai I, 47 CIT __, 658 F. Supp. 3d at 1284–85. It does not excuse Tainai from its
independent obligation to “put forth its maximum effort” to comply with Commerce’s
investigation –– especially given the preexisting history of noncooperation from its
suppliers. See id. at 1276–77; see also Nippon Steel, 337 F.3d at 1382 (finding a party
failed to cooperate to the best of its ability because it did not “do the maximum it
[was] able to do”). Commerce discussed that history in its decision:
[E]ven if Tainai does not control its suppliers, given its history as a respondent in this proceeding and its past inability to secure [factors of production] information from its suppliers of TRBs after the fact, or when the administrative review is underway, we believe that taking steps to preemptively avoid non-cooperation of producers is within the
is incorrect. As Commerce explained, Tainai was entitled to a separate rate based on “Tainai’s demonstration of the absence of de jure and de facto governmental control over its export activities.” Def.’s Resp. at 12, ECF No. 33 (citing PDM at 10, J.A. at 4,162, ECF No. 42); see also Ad Hoc Shrimp Trade Action Comm. v. United States, 802 F.3d 1339, 1353 (Fed. Cir. 2015) (setting the same standard). Meanwhile, Commerce’s determination of the normal value of Tainai’s goods was based on “the value of the factors of production utilized in producing the subject merchandise” plus other related production expenses. 19 U.S.C. § 1677b(c)(1) (flush language). These are logically distinct inquiries. A company could comply with the former without having complied with the latter. Court No. 1:23-cv-00020 Page 20
realm of actions Tainai should have taken to demonstrate that it put forth its maximum effort to comply with its reporting responsibility. However, Tainai did not attempt to avoid non-cooperation by selecting other suppliers or by providing adequate time for its suppliers to respond to Commerce’s requests for information.
IDM at 9, J.A. at 1,011, ECF No. 42; see also Pls.’ Br. at 19, ECF No. 30 (“Tainai was
aware of the potential consequences of failing to obtain this cooperation.”).
Tainai knew the consequences of failing to cooperate, but the record shows it
did not act accordingly. Commerce issued a supplemental questionnaire to Tainai for
it to forward to its unaffiliated suppliers on March 29, 2022. Letter Regarding Req.
for Information, J.A. at 2,619, ECF No. 42. It granted Tainai two extensions on that
questionnaire. Suppl. Questionnaire Extension Grant (Apr. 4, 2022), J.A. at 2,701,
ECF No. 42; Suppl. Questionnaire Extension Grant (Apr. 22, 2022), J.A. at 2,710,
ECF No. 42. Commerce found that Tainai delayed sending Commerce’s requests to
its suppliers for more than a month. IDM at 8, J.A. at 1,010, ECF No. 42. When
Tainai did transmit the request, its suppliers had only three business days to respond
before the May 10 deadline. Id. (“Tainai failed to request the information from its
unaffiliated suppliers until nine days after the second extension, thereby only
providing three business days for its unaffiliated suppliers to complete the response
before the extended response deadline.”). This delay falls well short of Tainai’s
“put[ting] forth its maximum effort” to provide Commerce with full and complete
answers. Nippon Steel, 337 F.3d at 1382.
Tainai claims that there are other communications with its suppliers that show
May 5 was not the earliest date it transmitted the questionnaires to its suppliers. Court No. 1:23-cv-00020 Page 21
But when asked to file supplemental briefing detailing when Tainai first contacted
its suppliers to request the data, Tainai only directed the Court to its extension
requests. See generally Pls.’ Suppl. Letter, ECF No. 48 (citing Suppl. Questionnaire
Extension Req. (Apr. 4, 2022), J.A. at 2,693, ECF No. 42 and Suppl. Questionnaire
Extension Req. (Apr. 21, 2022), J.A. at 2,705, ECF No. 42). Those requests went to
Commerce and do not include any prior communications with its suppliers. Thus,
Commerce is correct that “there is no record evidence to support Tainai’s suggestion
that it contacted its unaffiliated suppliers … prior to May 5, 2022.” Def.’s Suppl.
Letter at 3, ECF No. 49; see also id. (noting that Tainai “requested an extension …
and stated [in its supplemental questionnaire response] that it had ‘forwarded this
information … to its suppliers,’” yet “Tainai’s letters to its unaffiliated suppliers are
all dated May 5, 2022”) (citing Letter of Assistance, J.A. at 2,920, ECF No. 42).
Moreover, “The burden of creating an adequate record lies with the interested
parties, not with Commerce.” Qingdao Sea-Line Trading Co. v. United States, 766
F.3d 1378, 1386 (Fed. Cir. 2014). If Tainai made prior communications with its
unaffiliated suppliers to induce, cajole, or otherwise encourage cooperation, it bore
the burden of placing those communications on the record. Cf. Nippon Steel Corp. v.
United States, 48 CIT __, Nos. 1:21-cv-00533, 1:22-cv-00183, 1:23-cv-00112 (SAV),
2024 Ct. Intl. Trade LEXIS 114, at *27–30 (Oct. 10, 2024) (remanding Commerce’s
determination to use facts available with an adverse inference when a respondent
provided e-mail and call logs documenting its multiple attempts to secure cooperation
from a reseller). Instead, the record supports Commerce’s finding that Tainai delayed Court No. 1:23-cv-00020 Page 22
sending Commerce’s request for information until May 5, 2022. See IDM at 8, J.A. at
1,010, ECF No. 42. And where one of Tainai’s suppliers did submit factors of
production information, Commerce used that data instead of drawing an adverse
inference. Prelim. Calculation Mem. at 2, J.A. at 85,959, ECF No. 43; see also Def.’s
Suppl. Letter at 1–2, ECF No. 49. The Court will not entertain Tainai’s unsupported
argument that the cooperation of one supplier indicates that Tainai must have made
earlier attempts to secure the cooperation of its other suppliers. The Court may only
base its review on the record Tainai created. Because that record supports
Commerce’s determination that Tainai failed to act to the best of its ability, the Court
will sustain Commerce’s use of facts available with an adverse inference on that basis.
B.
Tainai separately argues that, even if Commerce properly drew an adverse
inference, the facts Commerce used to do so produce an inaccurate result that yields
an “unduly punitive” rate. Pls.’ Reply at 9, ECF No. 36; see also Pls.’ Br. at 28, ECF
No. 30 (“This important goal [of] calculating the dumping margins as accurately as
possibly was not met in the case.”). According to Tainai, “the primary flaw with
[Commerce’s] selection of adverse facts, is that [it] selected data without considering
the relative sizes of the components, finding articles of diverse sizes were
comparable.” Pls.’ Reply at 9, ECF No. 36. In Tainai’s account, Commerce “ignored
all of the physical properties, dimensional measures[,] and [control number] factors
in assigning substitute factors of production” and “defie[d] commercial reality.” Pls.’
Br. at 28–29, ECF No. 30. Court No. 1:23-cv-00020 Page 23
Commerce needed to fill gaps in the record because some of Tainai’s suppliers
did not provide factors of production information. To fill these gaps, Commerce used
Tainai’s submitted factors of production data to determine the normal value for each
control number of the cage components used to produce tapered roller bearings. IDM
at 10–11, J.A. at 1,012–13, ECF No. 42. Commerce based its gap-filling calculations
on the more general “product descriptions” that Tainai submitted as part of its factors
of production data, ignoring other data Tainai submitted about the size, dimensions,
and weight of individual components. Id.; Oral Arg. Tr. at 46:14–19, ECF No. 55
(THE COURT: “[Y]ou kind of looked at a little higher level of drawing your
differences based on product groupings, as I recall, rather than individual product
characteristics, which I took to mean the individual components of the control
number.” MR. LONG: “Right.”). Product descriptions are “one of [the] four fields
that Commerce use[s] to create” control numbers. See Tainai I, 47 CIT __, 658 F.
Supp. 3d at 1288 n.8. The three other, more specific fields are “outer diameter, inner
diameter, and weight.” Id. at 1277 n.6. Generally, all four fields help Commerce
understand the components described by each control number, which in turn
produces a more accurate calculation of each control number’s normal value.
The Federal Circuit has clarified that there is no independent economic or
commercial reality test. See Nan Ya Plastics Corp. v. United States, 810 F.3d 1333,
1344 (Fed. Cir. 2016). “When Congress directs the agency to measure pricing
behavior and otherwise execute its duties in a particular manner, Commerce need
not examine the economic or commercial reality of the parties specifically, or of the Court No. 1:23-cv-00020 Page 24
industry more generally, in some broader sense.” Id. Commerce’s determination
“reflects ‘commercial reality’ if it is consistent with the method provided in the
statute” and thus is “in accordance with the law.” Id.
Commerce found Tainai did not cooperate, and that finding was supported by
substantial evidence. Therefore, it was statutorily authorized to fill the gap created
by the missing factors of production information by drawing an adverse inference.
See 19 U.S.C. § 1677e(b)(1) (permitting facts otherwise available to be chosen with an
adverse inference if “an interested party has failed to cooperate by not acting to the
best of its ability to comply with a request for information from [Commerce]”). Unlike
in Tainai I, where Tainai received an “eye-popping” margin of 538.79 percent,
Commerce here assigned Tainai a margin of 36.03 percent –– well below the margin
in Tainai I or the China-wide margin of 92.84 percent from this administrative
review. Compare Tainai I, 47 CIT __, 658 F. Supp. 3d at 1286, with Final Results, 88
Fed. Reg. at 1,360, J.A. at 1,001, ECF No. 42. Commerce adequately explained its
rationale for how it applied partially adverse facts:
[W]e relied on the product description (i.e., PRODUCTU) to determine the partial [adverse facts available] rate because using all of the product characteristics would have amounted to an application of neutral facts available … [B]ecause Tainai and its unaffiliated suppliers failed to act to the best of their abilities to provide the missing [factors of production] information, we find that the application of neutral facts available is not appropriate. Therefore, we relied on the product description to apply partial [adverse facts available] to the missing cage [factors of production] because it is accurate to group each of the products by their description and functions to induce cooperation while limiting the breadth of the application of [adverse facts available]. Court No. 1:23-cv-00020 Page 25
IDM at 10–11, J.A. at 1,012–13, ECF No. 42; see also Def.’s Resp. at 23, ECF No. 33
(stating that Commerce’s approach “served to avoid rewarding the noncooperation of
both Tainai and its suppliers”).
Commerce explained that it sought to balance accuracy with an incentive for
future cooperation. IDM at 11, J.A. at 1,013, ECF No. 42. In doing so, it used Tainai’s
own data. Id. at 10, J.A. at 1,012 (“Indeed, the cage [factors of production] data we
are using as partial [adverse facts available] are Tainai’s own extrapolation that we
relied on in the Preliminary Results.”); see also Pls.’ Reply at 9, ECF No. 36 (“While
it is true that the data in question is that of Tainai, such data is for a range of bearings
of a specific size and weight.”). Although Tainai wishes Commerce would draw a
more “favorable” adverse inference, Commerce explained that doing so would amount
to applying neutral facts available and not provide a sufficient incentive for Tainai to
cooperate in future reviews. IDM at 10, J.A. at 1,012, ECF No. 42; see also F.lli De
Cecco Di Filippo Fara S. Martino S.p.A. v. United States, 216 F.3d 1027, 1032 (Fed.
Cir. 2000) (describing “an adverse facts available rate” as “a reasonably accurate
estimate of the respondent’s actual rate, albeit with some built-in increase intended
as a deterrent to non-compliance”); Tainai I, 47 CIT __, 658 F. Supp. 3d at 1286
(“Commerce must appropriately balance the competing goals of accuracy and
deterrence when it selects facts otherwise available with an adverse inference.”).
Commerce’s decision reasonably balances the statutory factors required to draw an
adverse inference. Because Commerce’s application of partial adverse facts available Court No. 1:23-cv-00020 Page 26
is consistent with the statute and supported by substantial evidence, the Court will
sustain its determination.8
III. Section 301 Duties
A. Deduction of Section 301 Duties from U.S. Price
When calculating Tainai’s dumping margin, Commerce deducted Section 301
duty payments from the U.S. price of the subject merchandise. IDM at 17, J.A. at
1,019, ECF No. 42; see also 19 U.S.C. § 1677a(c)(2) (“[U.S. price shall] be reduced by
the amount, if any, included in such price, attributable to any … United States import
duties, which are incident to bringing the subject merchandise from the original place
of shipment in the exporting country to the place of delivery in the United States[.]”).
This deduction “helps ensure an ‘apples [to] apples’ comparison between the
merchandise sold in the home market and the U.S. market by deducting costs
associated with transporting merchandise to the United States.” Tainai I, 47 CIT __,
658 F. Supp. 3d at 1291.
In determining whether a specific duty is intended to qualify as a “United
States import duty,” the Federal Circuit requires this Court to use a “proclamation-
specific approach” that focuses “on the character” of the “authorized governmental
action that actually prescribed the duty on imports at issue.” Borusan, 63 F.4th at
8 Tainai also challenged Commerce’s decision to value certain inputs with surrogate values
for finished components. See Pls.’ Br. at 26–27, ECF No. 30. In the remand opinion for Tainai I, the Court sustained Commerce’s use of surrogate values for completed components as supported by substantial evidence based on Tainai and its suppliers’ operation in a nonmarket economy. Shanghai Tainai Bearing Co. v. United States, 48 CIT __, Slip Op. 24- 142 at 23–24 (Dec. 18, 2024). Tainai cites no additional authority for why Commerce’s practice is improper here. Court No. 1:23-cv-00020 Page 27
33–34. In Tainai I, the Court examined Borusan’s analysis of Proclamation 9705,
which enacted the Section 232 duties at issue in the Federal Circuit case, and
compared the language in that proclamation to the proclamation that enacted the
Section 301 duties here. Tainai I, 47 CIT __, 658 F. Supp. 3d at 1291–94. Compare
Borusan, 63 F.4th at 34 (“This rate of duty, which is in addition to any other duties,
fees, exactions, and charges ….”) (emphasis omitted), with Tainai I, 47 CIT __, 658 F.
Supp. 3d at 1293 (applying the rate of the Section 301 duty “in addition to all other
applicable duties, fees, exactions, and charges”) (emphasis omitted). The Court
concluded that “‘the particular exercise of the authority’ to enact the Section 301
duties at issue intended for these duties to be additional to antidumping duties.”
Tainai I, 47 CIT __, 658 F. Supp. at 1294. Therefore, it sustained Commerce’s
determination to deduct Section 301 duties from U.S. price. Id.; see also Jinko Solar
Imp. and Exp. Co. v. United States, 48 CIT __, 701 F. Supp. 3d 1367, 1391 (CIT 2024)
(applying the reasoning in Tainai I to sustain Commerce’s deduction of Section 301
duties). Tainai acknowledges “[t]his issue was provisionally resolved against Tainai
… and absent a reversal on appeal, plaintiffs have no further argument.” Pls.’ Reply
at 10, ECF No. 36. For the same reasons stated in Tainai I, the Court sustains
Commerce’s decision to deduct the Section 301 duties from U.S. price here.
B. Capping of Amounts Denominated as “Additional Revenue for 301”
As it had in the previous administrative review, Commerce also excluded, or
“capped,” from U.S. price any other revenue Tainai received in connection with Court No. 1:23-cv-00020 Page 28
Section 301 duties.9 According to Tainai, “for certain sales[,] an additional amount
was reported as additional compensation intended to off-set the additional expense,
including the duty, incurred for the [Section] 301 duties.” Pls.’ Br. at 32, ECF No. 30.
In other words, for some of its U.S. sales, Tainai charged its customers for the
applicable Section 301 duties plus an amount of “additional compensation” for Tainai
related to those Section 301 duties. Id. Commerce refused to include this additional
compensation in Tainai’s U.S. price, which increased Tainai’s dumping margin. At
oral argument, Tainai’s counsel stated that the legal analysis of this issue is the same
for this case as Tainai I. Oral Arg. Tr. at 57:6–16, ECF No. 55 (THE COURT: “It’s
my understanding … that essentially for the remand case and the new case, different
transactions but the basic legal analysis is the same for both?” MR. CRAVEN: “Yes,
Your Honor … there’s no … distinction. It’s the same company. It’s the same pricing
practices.”). Accordingly, the Court applies its analysis in Tainai I and the remand
opinion for that case to hold that Commerce’s determination to exclude Tainai’s
excess revenue from U.S. price is supported by substantial evidence. See Shanghai
9 At oral argument, the parties discussed whether the issue should be characterized as Commerce reducing Tainai’s U.S. price by the additional revenue amount or refusing to add it to the U.S. sales price. Compare Oral Arg. Tr. at 59:13–15, ECF No. 55 (MR. CRAVEN: “The problem [is] that the additional [revenue is] being deducted from our price on the basis that those monies were not related to the sale.”), with id. at 61:5–11, 61:23–24 (THE COURT: “[F]rom [Commerce’s] perspective[,] [Commerce] wouldn’t be deducting anything from U.S. price because [Tainai] took in that extra revenue. But [Commerce] also wouldn’t be adding anything to [Tainai’s] U.S. price because [it] wouldn’t be agreeing with you that the [additional revenue] was a profit on the merchandise as opposed to a profit on the duty.” … MR. LONG: “I understand Your Honor’s articulation of the practice to be correct[.]”). Government counsel noted, “[W]e sometimes flip our conversation between sides [of the] ledger. But ultimately, … if there’s profit from 301 duties, that is not being built into an increase in U.S. price.” Id. at 62:24–63:4. For the sake of consistency, the Court will refer to Commerce’s practice as refusing to include the additional revenue in the U.S. sales price. Court No. 1:23-cv-00020 Page 29
Tainai Bearing Co. v. United States, 48 CIT __, Slip Op. 24-142 at 24–31 (Dec. 18,
2024) (holding that Commerce properly excluded the additional Section 301-related
revenue that Tainai charged some of its customers from U.S. price).
When determining whether subject merchandise is being sold at less than fair
value, Commerce must make a “fair comparison” between a good’s export price or
constructed export price and its normal value. See 19 U.S.C. § 1677b(a). Export price
and constructed export price reflect the price of the good when it is sold “in the United
States.” 19 U.S.C. § 1677a(a)–(b). To determine this U.S. price, Commerce must
reduce the price that U.S. customers paid for the subject merchandise by “the amount,
if any, included in such price, attributable to any additional costs, charges, or
expenses, and United States import duties, which are incident to bringing the subject
merchandise from the original place of shipment in the exporting country to the place
of delivery in the United States[.]” 19 U.S.C. § 1677a(c)(2)(A). These adjustments
“help[] ensure an ‘apples [to] apples’ comparison between merchandise sold in the
home market and the U.S. market by deducting costs associated with transporting
merchandise to the United States.” Tainai I, 47 CIT __, 658 F. Supp. 3d at 1291
(quoting Smith-Corona Grp. v. United States, 713 F.2d 1568, 1578 (Fed. Cir. 1983)).
Like in the prior administrative review, Commerce analyzed Tainai’s billing
practices to make these statutorily mandated adjustments. IDM at 17–19, J.A. at
1,019–21, ECF No. 42. Tainai explained to Commerce that it used one of three kinds
of invoices to charge its U.S. clients. Tainai’s Resp. to Suppl. Section A, C, and D,
Questionnaire (May 3, 2022), J.A. at 82,056–57, ECF No. 43. First, for some U.S. Court No. 1:23-cv-00020 Page 30
customers, Tainai charged a “gross unit price” that included both the price of the
subject merchandise and a “[t]ariff charge.” Id. at 82,057. Second, for other U.S.
customers, Tainai charged a “gross unit price” that only included the price of the
subject merchandise and then – on the same invoice – included a “separate line item
only for the tariff charge.” Id. Third, for yet other U.S. customers, Tainai provided
one invoice for the cost of the subject merchandise and another “separate monthly
invoice only for the tariff charge.” Id. at 82,056.
When Tainai’s invoices separated out the tariff charge from the “unit price,”
Tainai “bifurcated” the price it charged its customers “into a unit price [for the subject
merchandise] and an additional charge representing additional revenue to offset the
added cost of the seller resulting from the imposition of the Section 301 duties.” Pls.’
Br. at 32, ECF No. 30 (emphasis added). This additional Section 301-related charge
exceeded the actual amount of Section 301 duties paid when importing the subject
merchandise. See IDM at 18, J.A. at 1,020, ECF No. 42 (noting these tariff charges
included “excess [S]ection 301 duty revenue”). The parties disputed whether this
additional revenue should be excluded from or included in the U.S. price. Id. at 17,
J.A. at 1,019.
As before, Commerce decided that this additional revenue should not be
included in U.S. price when Tainai bifurcated its invoices. It explained this additional
revenue should not be included because “these additional revenues directly relate to
U.S. import duties (i.e., [S]ection 301 duties) and not the [tapered roller bearings]
themselves.” IDM at 19, J.A. at 1,021, ECF No. 42; see also 19 U.S.C. § 1677a(c)(2)(A) Court No. 1:23-cv-00020 Page 31
(requiring Commerce to make deductions to U.S. price for certain expenses).
Commerce believes that excluding the additional revenue is analogous to its practice
of excluding other services an exporter might provide and charge to its U.S. customer,
such as arranging freight. Def.’s Resp. at 34, ECF No. 33 (citing IDM at 18–19, J.A.
at 1,020–21, ECF No. 42); Shanghai Tainai Bearing Co. v. United States, 48 CIT __,
Slip Op. 24-142 at 29 (Dec. 18, 2024). At oral argument, the Government
characterized the “service” as being akin to a handling fee for collecting Section 301
duties. Oral Arg. Tr. at 62:19–23, ECF No. 55 (THE COURT: “According to you, [the
additional revenue is] attributable to a service or perhaps better categorized as the
frustration and expense of serving as a tax collection agent for the federal
Government.” MR. LONG: “Yes, Your Honor.”).
Tainai has given the Court no reason to question its prior analysis. Tainai’s
own characterization of its business practice reinforces the Court’s understanding
that the additional revenue is attributable to Tainai’s Section 301 duty obligations
and not a change in the sale price for subject merchandise. Tainai explained, “[F]or
certain sales[,] an additional amount was reported as additional compensation
intended to off-set the additional expense, including the duty incurred for the 301
duties. It was not a pass-through, it was a fixed amount.” Pls.’ Br. at 32, ECF No. 30
(emphasis added). This characterization bolsters Commerce’s determination that
this kind of additional revenue is not attributable to an increase in price for the good
itself. Compare id., with Oral Arg. Tr. at 62:19–23, ECF No. 55. Consistent with the
analysis of the remand results in Tainai I, the Court sustains Commerce’s decision Court No. 1:23-cv-00020 Page 32
to exclude the additional revenue Tainai received in connection with its Section 301
duties.
IV. By-Product Offset
Commerce’s “established practice is to ‘grant an offset to normal value, for
sales of by-products generated during the production of subject merchandise, if the
respondent can demonstrate that the by-product is either resold or has commercial
value and re-enters the respondent’s production process.’” Tainai I, 47 CIT __, 658
F. Supp. 3d at 1296 (quoting Arch Chem., 33 CIT at 956). Tainai bears the burden to
provide Commerce with sufficient information to support a by-product offset claim.
Id. A respondent will not carry its burden if “it fails to ‘document the quantity of
scrap produced during the [Period of Review]’ and merely ‘equate[s] total scrap sold
during the [Period of Review] with total scrap produced during the [Period of
Review].’” Id. (quoting Am. Tubular Prods., 847 F.3d at 1361). Tainai concedes that
“the quantity of scrap produced is not directly recorded[,]” but it argues “the quantity
of scrap produced is the same as the quantity of scrap sold ….” Pls.’ Br. at 37, ECF
No. 30. As in Tainai I, the Court continues to follow Federal Circuit precedent and
finds that Tainai’s argument is insufficient as a matter of law. Commerce’s decision
to deny Tainai a by-product offset is SUSTAINED.
CONCLUSION
Every case turns on its own record. Tainai had an independent obligation to
cooperate to the best of its ability with Commerce’s request for information. The
evidence shows that it did not do so in this case. Commerce appropriately applied Court No. l:23-cv-00020 Page 33
facts available with an adverse inference against Tainai based on its failure to
cooperate to the best of its ability. The agency's decision to exclude from U.S. price
the additional revenue Tainai charged for its Section 301 duties is also supported by
substantial evidence. Tainai's remaining claims fail under this Court's reasoning in
Tainai I. Therefore, Tainai's Motion for Judgment on the Agency Record is DENIED
and Commerce's Final Results are SUSTAINED.
Dated: @~ / l.oz.<, I
New York, New York