Slip-Op 26-21
UNITED STATES COURT OF INTERNATIONAL TRADE
TANGHENAM ELECTRIC WIRE & CABLE CO., LTD.
Plaintiff,
v. Before: Joseph A. Laroski, Jr., UNITED STATES, Judge
Defendant, Court No. 25-00049
and
ENCORE WIRE CORP.,
Defendant-Intervenor.
OPINION AND ORDER
[Sustaining Commerce’s partial application of adverse facts available and remanding Commerce’s determination that respondent was ineligible to participate in the certification process to further explain its decision and, in particular, to address respondent’s arguments regarding its reconstruction-based accounting method for tracing inputs from purchase to sale of the finished goods.] Dated: February 24, 202
Alexander H. Schaefer, Weronika Bukowski, and Pierce Jungwoon Lee, Crowell & Moring LLP, of Washington, D.C., for plaintiff Tanghenam Electric Wire & Cable Co., Ltd.
Brett A. Shumate, Assistant Attorney General, and Patricia M. McCarthy, Director, Civil Division, Commercial Litigation Branch, U.S. Department of Justice of Washington, D.C., for defendant United States. With them on the brief were Claudia Burke, Deputy Director, and Blake Cowman, Trial Attorney. Of counsel on the brief was Danielle Cossey, Office of the Chief Counsel for Trade Enforcement & Compliance, U.S. Department of Commerce. Court No. 25-00049 Page 2
Daniel J. Calhoun, Jack A. Levy, and Noah A. Meyer, of Rock Creek Trade, of Washington, D.C., for defendant-intervenor Encore Wire Corp.
Laroski, Judge: The action before the court is a motion for judgment on the agency
record pursuant to U.S. Court of International Trade Rule 56.2. Tanghenam
Electric Wire & Cable Co., Ltd. (“Tanghenam”), a producer of aluminum wire and
cable products, challenges the U.S. Department of Commerce’s (“Commerce”) final
affirmative determination in an anticircumvention inquiry conducted under § 781 of
the Tariff Act of 1930, as amended, codified at 19 U.S. § 1677j, and the
implementing regulations at 19 C.F.R. § 351.226. Pl. Mot. for J. on the Agency R.,
ECF No. 28 (“Tanghenam Br.”).
Tanghenam raises two principal challenges: (1) Tanghenam contends that
Commerce unlawfully applied adverse facts available (“AFA”) in its circumvention
analysis; and (2) Tanghenam challenges Commerce’s determination that
Tanghenam is ineligible to participate in certification because it is unable to
ascertain that aluminum wire and cable products exported to the United States do
not contain Chinese-origin inputs. Tanghenam Br. at 1–2.
Defendant United States (“the Government”) and defendant-intervenor
Encore Wire Corp. (“Encore Wire”) maintain that Commerce’s conclusions are
supported by substantial evidence and otherwise lawful. Def. Resp. in Opp’n to Pl.
Mot. for J. on the Agency R., ECF No. 32 (“Gov. Br.”); Def.-Int.’s Resp. in Opp’n to
Pl. Mot. for J. on the Agency R., ECF No. 34 (“DI Br.”). Court No. 25-00049 Page 3
For the reasons discussed below, the court sustains Commerce’s application
of AFA. Nevertheless, because Commerce failed to adequately respond to
Tanghenam’s argument that it can trace the country of origin of its inputs to
specific U.S. shipments using a reconstruction-based accounting method, the court
remands Commerce’s certification determination for further consideration and
explanation consistent with this opinion. 1
BACKGROUND
I. The Orders and the Circumvention Inquiry
In December 2019, Commerce issued antidumping and countervailing duty
(“AD/CVD”) orders on aluminum wire and cable (“AWC”) from the People’s Republic
of China. Aluminum Wire and Cable from the People’s Republic of China:
Antidumping Duty and Countervailing Duty Orders, 84 Fed. Reg. 70,496 (Dep’t
Commerce Dec. 23, 2019) (collectively, the “Orders”).
1 The court recognizes that there might appear to be some incongruity between Commerce’s
application of partial AFA and Tanghenam’s potential eligibility to participate in the certification program.
Here, Commerce applied partial AFA for valuation purposes under sections 781(b)(1)(D) and 781(b)(2)(E) of the Act because Tanghenam misreported certain input origin information and failed to provide accurate and reliable corrections by the applicable deadlines, thereby failing to act to the best of its ability to cooperate with the inquiry. See 19 U.S.C. § 1677e(a)–(b). In other words, Commerce’s application of partial AFA addressed the timeliness and reliability of Tanghenam’s reporting, not whether Tanghenam possessed the underlying input origin records in the first place.
Eligibility to participate in the certification program concerns whether a producer can trace the origin of specific inputs to its U.S. shipments. Commerce did not identify Tanghenam’s misreporting of input origin information as a basis for its determination that Tanghenam was not eligible to participate in the certification program. Rather, the sole basis for Commerce’s determination was a verification statement that, once finished goods enter Tanghenam’s finished goods inventory, “there is no way to track which products go to sales.” Verification Report at 24. As discussed, in reaching this determination Commerce failed to address record evidence relating to Tanghenam’s proposed reconstruction-based accounting method for tracing specific inputs to U.S. shipments. Court No. 25-00049 Page 4
In October 2023, Commerce initiated scope and circumvention inquiries
concerning AWC completed in Vietnam using inputs from China pursuant to section
781 of the Tariff Act of 1930, as amended (“the Act”). Aluminum Wire and Cable
from the People’s Republic of China: Initiation of Scope and Circumvention
Inquiries of the Antidumping Duty and Countervailing Duty Orders, 88 Fed. Reg.
72,041, P.R. 26 (Dep’t Commerce Oct. 19, 2023) (“Initiation Notice”). The inquiries
cover entries of subject AWC during the period of inquiry (“POI”) from November 1,
2018, to September 30, 2023. Id. Commerce selected Tanghenam Electric Wire &
Cable Co., Ltd. (“Tanghenam”) as a mandatory respondent in the Vietnam
circumvention inquiry. Respondent Selection Memorandum, P.R. 73 (Feb. 12,
2024).
II. Tanghenam’s Questionnaire Responses
Tanghenam describes itself as a Vietnamese producer of AWC with a single
production facility located in Vietnam that exports to certain foreign markets which
include the United States. Initial Questionnaire Response, P.R. 98, at 1, 9 (Mar. 21,
2024) (“Tanghenam IQR”).
In its initial questionnaire response, Tanghenam reported that it purchases
inputs for the manufacture of AWC from multiple sources, including suppliers
located the People’s Republic of China (“China”). Id. at Exs. 16–17. Tanghenam
reported supplier names, purchase quantities, values, and purported countries of
origin for those inputs. Id. at Exs. 16–17. Tanghenam also provided sample Court No. 25-00049 Page 5
purchase invoices, customs documents, and internal accounting records relating to
its input purchases. Id. at Ex. 18.
In March 2024, Tanghenam submitted its Factors of Production (“FOP”)
response, which included revised product-specific data identifying the country of
origin for certain aluminum inputs. Factors of Production Questionnaire Response,
P.R. 104, at 1 (Mar. 28, 2024) (“FOP Submission”).
In May 2024, Tanghenam submitted a supplemental questionnaire response
that revised certain previously reported input-origin information and provided
additional documentation relating to aluminum inputs purchased from Chinese
suppliers. Response to Supplemental Questionnaire, P.R. 142–146 (May 24, 2024).
III. Preliminary Determination
In August 2024, Commerce issued its preliminary determinations in the
Vietnam scope and circumvention inquiries. Aluminum Wire and Cable From the
People’s Republic of China: Preliminary Negative Scope Determinations With
Respect to Cambodia, Korea, and Vietnam; Preliminary Affirmative Determinations
of Circumvention With Respect to Korea and Vietnam; Preliminary Negative
Determination of Circumvention With Respect to Cambodia, 89 Fed. Reg. 64,406,
P.R. 171 (Dep’t Commerce Aug. 7, 2024) (“Preliminary Determinations”);
Antidumping Duty and Countervailing Duty Orders on Aluminum Wire and Cable
from the People’s Republic of China: Preliminary Decision Memorandum for the
Scope Inquiry and Preliminary Decision Memorandum for the Circumvention
Inquiry with Respect to the Socialist Republic of Vietnam, P.R. 168 (Dep’t Court No. 25-00049 Page 6
Commerce July 31, 2024) (“PDM”); Aluminum Wire & Cable: Tanghenam Cable –
Preliminary Analysis Memorandum, P.R. 170 (Dep’t Commerce Jul. 24, 2024)
(“Prelim. Analysis Mem.”).
Commerce preliminarily found that AWC completed by Tanghenam in
Vietnam circumvented the Orders because the completed AWC incorporated certain
Chinese-origin aluminum inputs, and these inputs constituted a significant portion
of the total value of the merchandise that Tanghenam exported to the United
States. PDM at 23–24. Commerce reached its preliminary affirmative
circumvention determination without applying adverse facts available. See PDM at
23–24.
Commerce also established a certification process that would permit
importers and exporters to certify that specific entries of inquiry merchandise do
not contain aluminum wire rod, aluminum wire strand, or aluminum wire produced
in China and therefore are not subject to suspension of liquidation or the collection
of cash deposits under the orders. PDM at 23–24; Preliminary Determinations at
64,410.
IV. Verification and Commerce’s Findings Regarding Input Origins and Tracing
Following the preliminary determination, Commerce conducted on-site
verification of Tanghenam’s questionnaire responses. Verification of the Responses
of Tanghenam Electric and Cable Co., Ltd. in the Circumvention and Scope Inquiry
on the Antidumping Duty Order on Aluminum Wire and Cable from People’s
Republic of China, P.R. 188, at 2–7 (Nov. 25 2024) (“Verification Report”). At the Court No. 25-00049 Page 7
outset of verification, Tanghenam submitted a list of what it referred to as “minor
corrections” to previously reported data, including corrections to the reported
country of origin for certain aluminum inputs. Minor Corrections Presented at
Verification, P.R. 181 (Oct. 7, 2024).
During verification, Commerce examined Tanghenam’s purchase ledgers,
inventory movement records, and accounting documentation. Verification Report at
8–23. Commerce identified additional instances, beyond those that Tanghenam had
corrected at the outset of verification, in which Tanghenam’s reported country-of-
origin information did not correspond to the actual origin of aluminum inputs
reflected in source documents and instead reflected the suppliers’ addresses. Id. at
17–22.
Commerce also reviewed Tanghenam’s inventory and production records to
assess Tanghenam’s ability to track aluminum inputs through production to
finished goods. Id. at 23–24. Tanghenam demonstrated to Commerce how it could
track the movement of inputs through the production stages using inventory
movement records and a reconstruction-based accounting method. Id. Commerce
observed, however, that once finished AWC products enter the finished goods
inventory, “there is no way to track which products go to sales.” Id. at 24.
V. Final Determination
Following verification and briefing by interested parties, Commerce issued its
Final Determination and accompanying Issues and Decision Memorandum.
Aluminum Wire and Cable From the People’s Republic of China: Final Negative Court No. 25-00049 Page 8
Scope Ruling and Final Affirmative Determination of Circumvention With Respect
to the Socialist Republic of Vietnam, 90 Fed. Reg. 8,196, P.R. 203 (Dep’t Commerce
Jan. 27, 2025) (“Final Determination”), accompanying Issues and Decision
Memorandum for the Final Results of the Scope Ruling and Circumvention Inquiry
of the Antidumping and Countervailing Duty Orders on Aluminum Wire and Cable
from the People’s Republic of China with Respect to the Social Republic of Vietnam,
P.R. 202 (Jan. 17, 2025) (“IDM”).
In the Final Determination, Commerce applied partial adverse facts available
in its analysis of the value of Chinese-origin inputs within Tanghenam’s production
process. Final Determination at 8,196. Commerce explained that although
Tanghenam identified certain minor errors at the outset of verification, Commerce
discovered additional, unreported inaccuracies during verification that reflected
broader and more systemic issues with the reliability of Tanghenam’s reported
input-origin data. See IDM at 4–5. More specifically, Commerce identified
instances in which Tanghenam reported the country associated with the input
supplier’s address, rather than the country of origin of the aluminum input itself.
Id. Having determined that Tanghenam failed to act to the best of its ability to
report consumption quantities in accordance with the country of origin of inputs it
used to produce AWC, Commerce as adverse facts continued to find that the value
of Chinese inputs are a significant portion of the total value of AWC and that
processing performed in Vietnam represents a small proportion of the value of AWC
within the meaning of sections 781(b)(2)(E) and (b)(1)(D) of the Act. Id. Court No. 25-00049 Page 9
Commerce also determined that Tanghenam was ineligible to participate in
the certification process. Final Determination at 8,197. Commerce explained that
certification eligibility requires the ability to identify the country of origin of
aluminum inputs at the time of entry and trace those inputs to specific U.S.
shipments. Id. Commerce determined that while Tanghenam was able to identify
the country of origin of aluminum inputs, it was unable to trace those inputs to U.S.
shipments, Tanghenam has “no way to track which products go to sales” once
finished AWC products enter Tanghenam’s finished goods inventory. IDM at 14–15
(citing Verification Report at 24).
Tanghenam timely commenced this action challenging Commerce’s Final
Determination. Compl., ECF No. 8, at ¶¶ 9–10 (Mar. 28, 2025).
LEGAL FRAMEWORK
I. Jurisdiction
The court exercises jurisdiction in this case pursuant to 28 U.S.C. § 1581(c),
which grants the court authority to review actions brought under section 516A of
the Tariff Act of 1930, as amended (“the Act”), codified at 19 U.S.C. § 1516a, to
contest a final determination that Commerce issues at the conclusion of an
anticircumvention inquiry. 19 U.S.C. § 1516a(a)(2)(B)(vi).
II. Standard of Review
Under section 1516a(b)(1)(B)(i), the court will hold unlawful Commerce’s
determination if it is found “to be unsupported by substantial evidence on the
record, or otherwise not in accordance with law.” Substantial evidence is “such Court No. 25-00049 Page 10
relevant evidence as a reasonable mind might accept as adequate to support a
conclusion.” Consol. Edison Co. v. NLRB, 305 U.S. 197, 229 (1938). Under this
standard of review, the court will not “disturb an agency determination if its factual
findings are reasonable and supported by the record as a whole, even if there is
some evidence that detracts from the agency’s conclusion.” Ashley Furniture
Indus., LLC v. United States, 750 F. Supp. 3d 1329, 1338 (CIT 2024).
Additionally, courts “look for a reasoned analysis or explanation for an
agency’s decision as a way to determine whether a particular decision is arbitrary,
capricious, or an abuse of discretion.” Wheatland Tube Co. v. United States, 161
F.3d 1365, 1369 (Fed. Cir. 1998). In turn, it is “well-established that an agency
action is arbitrary when the agency offers insufficient reasons for treating similar
situations differently.” SKF USA Inc. v. United States, 263 F.3d 1369, 1382 (Fed.
Cir. 2001). Likewise, an “abuse of discretion occurs where the decision is based on
an erroneous interpretation of the law, on factual findings that are not supported by
substantial evidence, or represent an unreasonable judgment in weighing relevant
factors.” WelCom Prods., Inc. v. United States, 865 F. Supp. 2d 1340, 1344 (CIT
2012).
III. Anti-Circumvention Authority & Legal Framework
Section 781 of the Act authorizes Commerce to include within the scope of an
antidumping or countervailing duty order merchandise completed or assembled in a
third country where certain statutory criteria are satisfied. 19 U.S.C. § 1677j(b).
Commerce may do so if: Court No. 25-00049 Page 11
(A) [the] merchandise imported into the United States is of the same class or kind as any merchandise produced in a foreign country that is the subject of [an AD/CVD order], (B) before importation into the United States, such imported merchandise is completed or assembled in another foreign country from merchandise which [is subject to the order or produced in the foreign country subject to the order],
(C) the process of assembly or completion in the foreign country … is minor or insignificant,
(D) the value of [the parts or components] … is a significant portion of the total value of the merchandise exported to the United States, and
(E) [Commerce] determines that action is appropriate … to prevent evasion of such order or finding.
19 U.S.C. § 1677j(b)(1); see also 19 C.F.R. § 351.226(i) (permitting Commerce to
“include within the scope of an antidumping or countervailing duty order …
imported merchandise completed or assembled in a foreign country other than the
country to which the order applies”).
To evaluate whether completion or assembly in a third country is “minor or
insignificant,” Commerce considers:
(A) the level of investment in the foreign country,
(B) the level of research and development in the foreign country,
(C) the nature of the production process in the foreign country,
(D) the extent of production facilities in the foreign country, and
(E) whether the value of the processing performed in the foreign country represents a small proportion of the value of the merchandise imported into the United States. Court No. 25-00049 Page 12
19 U.S.C. § 1677j(b)(2). No one factor controls. See Statement of Administrative
Action Accompanying the Uruguay Round Agreements Act, H.R. Doc No. 103–316
at 892 (1994) (“SAA”).
The statute also identifies three additional factors for Commerce to consider
when conducting a circumvention inquiry. Specifically, Commerce “shall take into
account such factors as —”:
(A) the pattern of trade, including sourcing patterns,
(B) whether the manufacturer or exporter of the parts or components is affiliated with the person who assembles or completes the merchandise sold in the United States from the parts or components produced in the foreign country with respect to which the [antidumping order] applies, and
(C) whether imports into the United States of the parts or components produced in such foreign country have increased after the initiation of the investigation which resulted in the issuance of such order or finding.
19 U.S.C. § 1677j(b)(3).
IV. Facts Otherwise Available and Adverse Inferences
Under section 776 of the Act, Commerce may use “facts otherwise available”
in reaching determinations if it meets certain threshold requirements specified by
statute. 19 U.S.C. § 1677e(a). These statutory requirements include, inter alia, a
finding that (1) “necessary information is not available on the record”; or (2) that an
interested party “withholds” requested information, “fails to provide such
information by the deadlines for submission,” “significantly impedes a proceeding,”
or provides information that “cannot be verified.” 19. U.S.C. § 1677e(a)(1)–(2).
Section 776(b) further authorizes Commerce to draw an “adverse inference” if
it finds that the interested party has “failed to cooperate by not acting to the best of Court No. 25-00049 Page 13
its ability to comply with a request for information.” 19 U.S.C. § 1677e(b). The
statute thus establishes a two-step inquiry: (1) whether Commerce properly
resorted to facts otherwise available under section 776(a), and if so, (2) whether
Commerce permissibly applied AFA under section 776(b). 19 U.S.C. § 1677e(a)–(b).
The “best of its ability” requirement under § 776(b) does not require a
showing of intent or bad faith. See 19 U.S.C. § 1677e(b). Instead, the relevant
inquiry is whether the respondent “has put forth its maximum effort to provide
Commerce with full and complete answers to all inquiries in an investigation.”
Nippon Steel Corp. v. United States, 337 F.3d 1373, 1382 (Fed. Cir. 2003). In other
words, adverse inferences are appropriate where a respondent does not use
“maximum effort” to provide requested information, even if the respondent made
some effort to comply. Id.
In turn, section 782(e) of the Act, codified at 19 U.S.C. § 1677m(e), requires
Commerce to consider information submitted by an interested party that either is
untimely or fails to meet all formal requirements if certain conditions are satisfied,
including (i) that the information is verifiable, (ii) that it can be used without undue
difficulty, and (iii) that it is not so incomplete that it cannot serve as a reliable basis
for a determination. 19 U.S.C. § 1677m(e).
Verification plays a critical role in Commerce’s evaluation of the reliability
and completeness of submitted information. At verification, Commerce is entitled
to assess whether information provided during an investigation or inquiry is
accurate and complete, and whether any deficiencies identified during verification Court No. 25-00049 Page 14
reflect isolated errors or more fundamental problems in a respondent’s reporting.
See 19 CFR § 351.307. Indeed, the purpose of verification is not to collect new
information, but rather for Commerce to “test information provided by a party for
accuracy and completeness.” Micron Tech. v. United States, 117 F.3d 1386, 1396
(Fed. Cir. 1997) (quoting Bomont Indus. v. United States, 733 F. Supp. 1507, 1508
(CIT 1990)) (comparing verification to an audit).
Accordingly, when Commerce concludes that necessary information is
missing or unreliable, and that the respondent did not act to “the best of its ability”
to comply with Commerce’s requests during the relevant period, the statute
empowers Commerce to apply AFA. 19 U.S.C. § 1677e(b).
V. Certification in Circumvention Inquiries
19 C.F.R. § 351.228 establishes procedures for the initiation, conduct, and
resolution of circumvention inquiries. Under section 351.228(a), Commerce may,
under certain circumstances, permit importers or exporters to certify that
merchandise entering the United States is not subject to an affirmative
circumvention determination because it does not contain inputs from the country
subject to the relevant order. Id. § 351.228(a). These certifications operate as an
exception to the application of an AD/CVD order, allowing qualifying merchandise
to enter United States without suspension of liquidation or collection of cash
deposits. See id. § 351.228(b). Court No. 25-00049 Page 15
DISCUSSION
I. Commerce’s application of adverse facts available was supported by substantial evidence and otherwise in accordance with law a. Party Arguments
Tanghenam contends that Commerce unlawfully applied AFA because
Tanghenam identified minor errors in its reported input-origin data at the outset of
verification and Commerce accepted those corrections at verification. Tanghenam
Br. at 2. Tanghenam further asserts that Commerce identified no “gap” in the
record that would have allowed the use of facts otherwise available, because
Commerce ultimately verified Tanghenam’s underlying purchase, inventory, and
accounting records and could have relied on that verified information to complete its
circumvention analysis without resorting to AFA. Id. at 14–16. Tanghenam
maintains that the statute does not permit Commerce to apply AFA where a
respondent timely corrects erroneous representations about information it has
provided and where verification confirms the reliability of the underlying records.
Id. at 10, 18.
Tanghenam further argues that section 782(e) of the Act) – which specifies
certain categories of information that Commerce “shall not decline to consider” –
required Commerce to accept Tanghenam’s submitted information. Tanghenam Br.
at 11 (citing 19 U.S.C. § 1677m(e)). More specifically, Tanghenam argues that
because its country-of-origin reporting was ultimately usable, verifiable, and
available on the record, Commerce had no option but to accept it instead of drawing Court No. 25-00049 Page 16
an adverse inference, even if Tanghenam and Commerce discovered errors at
verification. Id. at 18, 19.
The Government responds that Commerce properly applied partial AFA
because Tanghenam’s initial list of “minor corrections” did not capture the full scope
of inaccurate country-of-origin reporting revealed during verification. Gov. Br. at
11. The Government argues that Commerce independently identified additional,
unreported inaccuracies that reflected systemic deficiencies in Tanghenam’s
reporting practices rather than isolated clerical errors. Id. According to the
Government, these deficiencies demonstrate that Tanghenam failed to act to the
“best of its ability” to comply with Commerce’s requests for information and failed to
provide accurate country of origin information by the deadlines for submission,
warranting the application of partial AFA. Id. at 11, 15.
Defendant-intervenor Encore Wire similarly argues that Commerce acted
within its discretion in applying partial AFA because the verification findings
revealed broader reliability concerns related to Tanghenam’s input country-of-origin
reporting, demonstrating that Tanghenam withheld information, failed to provide
requested information by the deadlines for submission, significantly impeded the
circumvention inquiry, and failed to act to the “best of its ability” when responding
to Commerce’s requests for information. DI Br. at 8. Encore Wire contends that the
statute does not require Commerce to excuse pervasive, unreported inaccuracies
simply because a respondent identifies some minor errors at verification. Id. Court No. 25-00049 Page 17
b. Legal Framework and Analysis
Section 776(a) of Act, as amended, authorizes Commerce to rely on facts
otherwise available when, inter alia, necessary information is missing from the
record or when an interested party withholds information, fails to provide
information by the deadlines for submission, or significantly impedes the
proceeding. 19 U.S.C. § 1677e(a)(1)–(2). The statute does not require that
information is entirely absent from the record; it is sufficient that the information
Commerce requires to perform its analysis is unreliable or unavailable within
timeframe requested. See id.
Here, substantial evidence supports Commerce’s conclusion that Tanghenam
did not place accurate, reliable country-of-origin information on the record by the
deadline for submission. Commerce set a deadline of June 12, 2024 – months before
verification – for Tanghenam to provide accurate and reliable country-of-origin data
in its factors of production (“FOP”) database. Extension of Deadlines for the Final
Determinations in Circumvention Inquiries, P.R. 149, at 2 (June 5, 2024).
Commerce also warned Tanghenam that verification is “not intended to be an
opportunity for the submission of new factual information.” Verification Agenda,
P.R. 178, at 2 (Sep. 21, 2024). While Tanghenam disclosed certain limited reporting
errors at the outset of verification, Commerce later identified additional, more
systemic deficiencies through its own examination of source documentation,
including purchase and accounting records. Verification Report at 17–22. More
specifically, Commerce found that when Tanghenam purported to disclose the Court No. 25-00049 Page 18
country of origin of its aluminum inputs, it actually listed the countries where the
input suppliers were located, rather than the countries where the aluminum inputs
themselves originated. Id. at 22. At verification, Commerce found that this error
affected multiple purchases and extended beyond the scope of the initial corrections
that Tanghenam submitted at the outset of verification, demonstrating a deeper,
systemic issue with Tanghenam’s country-of-origin reporting. See id. at 21–22; Gov.
Br. at 7, 14; Tanghenam Br. at 7.
Section 776 of the Act does not require Commerce to treat information
disclosed or discovered for the first time at verification as timely, nor does
verification cure systemic reporting errors and deficiencies in a respondent’s prior
reporting. See 19 U.S.C. § 1677e. As the Federal Circuit has emphasized,
“[v]erification represents a point of no return” beyond which new information may
not be considered. Goodluck India Ltd., 11 F.4th 1335, 1343 (Fed. Cir. 2021). In
this proceeding, Commerce explicitly warned Tanghenam that verification “is not
intended to be an opportunity for the submission of new factual information.”
Verification Agenda, P.R. 178 (Sep. 21, 2024). By the time Commerce discovered
systemic issues with Tanghenam’s country-of-origin reporting at verification, it was
too late for Tanghenam to cure its deficiencies. Commerce therefore permissibly
concluded that, during the relevant period of the proceeding, the record lacked
reliable country-of-origin information – providing sufficient basis for the use of facts
otherwise available. See 19 U.S.C. §§ 1677e(a)(1), 1677e(a)(2)(B). Court No. 25-00049 Page 19
Once Commerce relies on facts otherwise available, section 776(b) of the Act
permits Commerce to draw an “adverse inference” if the interested party fails to
cooperate by not acting to “the best of its ability” to comply with Commerce’s
requests for information. 19 U.S.C. § 1677e(b). The statute does not require
Commerce to find intent or bad faith in order to draw an adverse inference.
See Nippon Steel Corp, 337 F.3d 1373, 1383 (Fed. Cir. 2003) (explaining that “the
statute does not contain an intent element”). Instead, the relevant inquiry is
whether the respondent “put forth its maximum effort” to provide Commerce with
full and complete answers to all inquiries. Id. at 1382. A respondent fails to act to
“the best of its ability” when it does not “take reasonable steps” to ensure the
accuracy of its submissions, particularly when the respondent possesses the
information necessary to do so. Id.
Here, Commerce reasonably concluded that Tanghenam did not act to the
“best of its ability” to provide accurate and reliable country-of-origin information,
which justifies the application of partial AFA. As previously noted, after
Tanghenam identified the initial set of reporting errors, Commerce independently
identified additional, more systemic deficiencies that Tanghenam had not
previously disclosed. See Verification Report at 17–22. Critically, Commerce also
determined that Tanghenam possessed the underlying information necessary to
report accurate country-of-origin data both before and after disclosing the initial
errors, yet failed to use the relevant function in Excel – which Tanghenam had Court No. 25-00049 Page 20
already used prior to verification 2 – to discover the deeper, more systemic reporting
errors that Commerce unearthed at verification. Id. at 4, 17–18. The statute
requires a respondent to act to the “best of its ability,” which entails appreciably
more than partial disclosure of errors after verification has already begun. After
Tanghenam identified its initial reporting mistakes, the “best of its ability”
standard required Tanghenam to, at the very least, take reasonable steps to
investigate whether any deeper or more systemic reporting errors existed.
Tanghenam’s failure to do so supports Commerce’s conclusion that Tanghenam did
not act to the “best of its ability,” justifying the application of partial AFA. See
Nippon Steel, 337 F.3d at 1380–82.
Tanghenam’s argument that no informational “gap” existed to justify AFA
overlooks the temporal and procedural nature of the statutory inquiry. Section 776
of the Act asks whether necessary information was provided on the record during
the relevant period of the proceeding, in the form and manner requested, such that
Commerce could rely on that information in a timely fashion when conducting its
analysis. See 19 U.S.C. § 1677e(a)(2). During the relevant period, Tanghenam’s
country-of-origin reporting contained unreported, systemic inaccuracies that
Commerce only discovered through independent examination of source
2 The Verification Report notes that, “in preparation for verification,” Tanghenam used an Excel formula to “track the source of each material” – which is how Tanghenam noticed the initial set of inaccuracies in the first place. Verification Report at 4. Nevertheless, after disclosing these initial inaccuracies to Commerce, Tanghenam apparently failed to use the same Excel formula to discover the deeper, more systemic reporting deficiencies that Commerce later identified of its own accord at verification. Tanghenam does not dispute that Tanghenam could have used the Excel function to provide accurate country-of-origin information. Gov. Br. at 15–16 (citing Verification Report at 17– 18). Court No. 25-00049 Page 21
documentation at verification. See Verification Report at 21–22. That Commerce
later discovered the correct country-of-origin information through its own efforts
does not cure the information gap that existed at the time when Commerce
requested accurate reporting to conduct its circumvention analysis.
Likewise, Tanghenam’s argument that the deficiencies at issue were “minor”
is unavailing. See Tanghenam Br. at 2. Because a circumvention inquiry focuses
precisely on whether inputs from the subject country are used in the completion of
the downstream merchandise in a third country, accurate identification of input
origins is hardly “minor” or peripheral; rather it goes to the core of the
circumvention analysis itself. See 19 U.S.C. § 1677j(b). Here, Commerce applied
partial AFA to the value comparison between Chinese-origin inputs and processing
performed in Vietnam: an element that relies entirely on accurate country-of-origin
reporting for each input. See IDM at 5–6. Given the centrality of country-of-origin
reporting to Commerce’s circumvention analysis, Commerce reasonably declined to
treat systemic reporting deficiencies on this issue as “minor.”
As for Tanghenam’s contention that section 782(e) of the Act requires
Commerce to accept Tanghenam’s submitted information regardless of the errors
identified at verification, Tanghenam Br. at 11, this argument fails for the same
reason Commerce was entitled to draw an adverse inference in the first place:
Tanghenam failed to cooperate to the best of its ability. Section 782(e) only
obligates Commerce to consider a respondent’s information if the respondent
demonstrates, among other things, that it has acted “to the best of its ability” in Court No. 25-00049 Page 22
complying with Commerce’s requests for information. 19 U.S.C. § 1677m(e)(4). The
Federal Circuit and the Court of International Trade (“CIT”) have explained that
this “best of its ability” language in section 782(e) carries the same meaning, and
requires the same analysis, as the identically worded “best of its ability” language
in section 776(b) about adverse inferences. 3 Accordingly, a respondent’s claim
under section 782(e) “stands or falls” with whether that respondent has cooperated
to the “best of its ability” with Commerce’s circumvention inquiry. NSK Ltd. v.
United States, 481 F.3d 1355, 1360 (Fed. Cir. 2007).
Here, as discussed above, Commerce reasonably concluded that Tanghenam
failed to cooperate to the “best of its ability,” because after identifying an initial set
of reporting errors, Tanghenam failed to perform routine database checks that
would have revealed the systemic inaccuracies that Commerce discovered at
verification. See Verification Report at 4, 17–18. Because Commerce permissibly
found that Tanghenam did not satisfy the best-of-its-ability standard, section
1677m(e) does not require Commerce to accept Tanghenam’s corrections instead of
drawing an adverse inference.
Given the nature, scope, and timing of the inaccuracies that Commerce
identified during verification, substantial evidence supports Commerce’s decision to
apply partial AFA. See 19 U.S. § 1677e(b); Consol. Edison, 305 U.S. at 229.
3 See NSK Ltd. v. United States, 481 F.3d 1355, 1361 n.1 (Fed. Cir. 2007) (noting that failure to
“satisfy the ‘best ability requirement’ requirement of section 1677e(b) … also fail[s] to satisfy the ‘best ability’ requirement of 1677m(e)”); see also Hung Vuong Corp. v. United States, 483 F. Supp. 3d 1321, 1359 n.40 (CIT 2020) (explaining that these two identical statutory phrases about best ability “have the same meaning, and are subject to the same analysis”). Court No. 25-00049 Page 23
Verification is not an opportunity to disclose foundational reporting errors for the
first time, much less an opportunity to partially disclose some reporting errors while
leaving readily discernible, systemic deficiencies for Commerce to discover during
its own review.
Finally, the court notes Encore Wire’s contention that Commerce’s
application of partial AFA did not materially affect the ultimate circumvention
determination because Commerce already reached an affirmative finding at the
preliminary stage, even before applying adverse inferences. DI Br. at 9. Because
the court sustains Commerce’s application of partial AFA, it does not address the
counterfactual question of whether Commerce would have reached a different final
determination on circumvention absent the application of partial AFA.
II. Commerce’s denial of certification eligibility was not adequately explained and must be remanded
a. Party Arguments
Tanghenam contends that Commerce unlawfully denied its eligibility to
participate in the certification regime associated with the circumvention
determination. Tanghenam Br. at 20. Tanghenam asserts that it can trace
aluminum input purchases to specific U.S. export shipments by applying a
reconstruction-based accounting method to its purchase ledgers, inventory
movement records, production records, and sales documentation. Pl. Reply Br. in
Supp. of Mot. for J. on Agency R., ECF No. 36, at 2–4 (“Tanghenam Reply”).
Tanghenam further contends that the administrative record contains a Court No. 25-00049 Page 24
“comprehensive trail demonstrating the step-by-step process by which Tanghenam
connects exported products to the origin of their underlying inputs.” Id. at 2.
Additionally, Tanghenam argues that Commerce’s refusal to allow
Tanghenam to certify is contrary to law and exceeds Commerce’s authority.
According to Tanghenam, Commerce’s approach of barring “all parties that receive
AFA” from certification unlawfully compels Tanghenam to “report all Vietnamese
AWC entries as Chinese-origin, even in cases where the AWC demonstrably has
zero percent Chinese-origin content.” Id. at 22, 24. Tanghenam asserts that this
outcome is arbitrary, capricious, and inconsistent with Customs’ country-of-origin
reporting framework under its marking statute and implementing regulations. Id.
at 23 (citing 19 U.S.C. § 1304 and 19 C.F.R. § 134).
The Government responds that Commerce reasonably denied eligibility to
Tanghenam because certification requires the ability to tie specific inputs to specific
exports at the time of entry. Gov. Br. at 10. The Government argues that
Commerce’s verification findings establish that once goods enter Tanghenam’s
finished goods inventory, Tanghenam cannot track which finished goods correspond
to specific U.S. shipments or incorporate specific inputs. Id. at 10–11. According to
the Government, that inability independently supports Commerce’s conclusion that
Tanghenam could not certify that its exports did not contain Chinese-origin
aluminum inputs. Id.
The Government also rejects Tanghenam’s argument that Commerce’s
certification practices unlawfully compel false entries. According to the Court No. 25-00049 Page 25
Government, Commerce did not exclude Tanghenam from certification because it
received partial AFA, but rather because Tanghenam failed, in Commerce’s view, to
demonstrate its ability to trace the origins of specific inputs to U.S. shipments.
Gov. Br. at 24–25; IDM at 14–15. According to the Government, Tanghenam has
conflated the AFA issue with the certification issue by incorrectly asserting that
AFA formed the basis of Tanghenam’s exclusion from certification.
Defendant-intervenor Encore Wire similarly argues that Commerce
reasonably denied Tanghenam from certification because Tanghenam commingled
finished goods in a manner that precluded reliable tracing of inputs to U.S.
shipments, and not because Tanghenam received partial AFA. See DI Br. at 9.
Encore Wire contends that Commerce acted “well within its legal authority and
consistent with its established practice in precluding Tanghenam from participating
in the certification process given Tanghenam’s demonstrated inability to tie specific
inputs to specific exports.” Id.
In its Final Determination, Commerce included specific certification language
requiring certifying parties to attest, inter alia, that: “The aluminum wire and cable
covered by this certification does not contain aluminum wire rod, aluminum wire
strand, or aluminum wire produced in the People’s Republic of China.” Final
Determination at 8,199.
In doing so, Commerce conditioned eligibility for certification on an
importer’s ability to (1) identify the country of origin of aluminum inputs used to Court No. 25-00049 Page 26
produce the finished goods, and (2) “trace” those inputs to specific U.S. shipments,
all to ascertain that products entering the United States do not contain aluminum
wire rod, aluminum wire strand, or aluminum wire produced in China. The court
notes that neither section 781 of the Act nor Commerce’s implementing regulations
prescribes a specific, required methodology for “tracing” input origins to specific
U.S. shipments, such as by physical segregation of finished goods based on input
country of origin, by reconstruction-based accounting methods, or by some other
method. See 19 U.S.C. § 1677j; 19 C.F.R. §§ 351.226, 351.228. In other words, the
statute and regulations do not expressly require the physical segregation of finished
goods based on input country of origin, nor do they expressly prohibit
reconstruction-based tracing. Id.
In the Final Determination, Commerce denied Tanghenam eligibility for
certification based on its verification finding that once finished goods entered the
finished goods inventory, Tanghenam had “no way” to track which finished goods
corresponded to which U.S. shipments. IDM at 14 (citing Verification Report at 24).
Commerce relied on that observation to conclude that Tanghenam could not “tie
specific inputs to specific exports” for purposes of certification. IDM at 14.
The record reflects, however, that Tanghenam did argue during the
proceeding before Commerce that it could (1) identify the country of origin of
aluminum inputs used to produce the finished goods, and (2) “trace” those inputs to
specific U.S. shipments using inventory records and reconstruction-based
accounting methods. In its rebuttal brief before Commerce, Tanghenam explained Court No. 25-00049 Page 27
that it can utilize a reconstruction-based accounting method to connect batches of
exported finished products to their underlying inputs using purchase ledgers
identifying input origins, inventory movement records, and sales records associating
finished goods with prior inventory receipts. See Tanghenam’s Rebuttal Br., P.R.
198, at 12–14, 20, (Dec. 16, 2024) (“Tanghenam Rebuttal Br.”); see also Tanghenam
Reply at 2–3. More specifically, Tanghenam asserted that it has “the full ability to
track the information of material inputs used for its AWC production, including
both country of suppliers and country of origin.” Tanghenam’s Case Br. at 14.
Tanghenam likewise demonstrated to Commerce how it uses a reconstruction-based
accounting method to “track the country of origin for its input materials” using
Tanghenam’s purchase ledgers from 2020 to 2023. Tanghenam Rebuttal Br. at 13.
Tanghenam explained that it can apply this method to the company’s inventory
movement ledger in order to “precisely match each input material used for
production with the corresponding purchasing transaction, thereby obtaining … the
country source and the origin of the material, if needed.” Id. at 20. In short,
Tanghenam argued before Commerce with supporting documentation that it could
use a reconstruction-based accounting method to both (1) identify the origins of its
inputs, and (2) trace those inputs to specific U.S. shipments – as required for
certification.
Commerce’s Final Determination and Issues and Decision Memorandum do
not meaningfully engage with this reconstruction-based tracing argument. In
reaching its determination, Commerce did not explain why the use of Tanghenam’s Court No. 25-00049 Page 28
proposed reconstruction-based accounting method for tracing fails to meet the
certification standard that it articulated and applied. See IDM at 14. Instead,
Commerce cited to a single sentence in the verification report that observed
commingling in the finished goods inventory, all without addressing Tanghenam’s
core contention that commingling does not inherently preclude tracing. Id. (citing
Verification Report at 24).
When reviewing an agency determination, the court’s role is to review the
agency’s reasoning, not to supply it. See Motor Vehicle Mfrs. Ass’n. v. State Farm
Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983). Here, Commerce denied certification
without addressing Tanghenam’s principal argument: that it could trace inputs to
U.S. shipments through reconstruction-based accounting methods and information
provided in the record. See IDM at 14.
Because Commerce did not address Tanghenam’s reconstruction-based
tracing argument or explain why commingling of finished goods forecloses
certification eligibility, the court cannot sustain Commerce’s certification
determination on this record. Commerce’s conclusory reference to a single
verification observation when the respondent has advanced a specific, alternative
tracing methodology grounded in record evidence does not meet the substantial
evidence standard. See Consol. Edison, 305 U.S. at 229 (noting that “[s]ubstantial
evidence is more than a mere scintilla”). Accordingly, the court remands
Commerce’s certification determination for further consideration and explanation. Court No. 25-00049 Page 29
At the same time, the court rejects Tanghenam’s argument that Commerce
unlawfully compelled false entries by excluding AFA respondents such as
Tanghenam from the certification process. Tanghenam’s argument rests on a
premise that Commerce did not adopt; Commerce did not deny certification because
Tanghenam received partial AFA, as Tanghenam inaccurately suggests, 4 nor did
Commerce apply a categorical rule barring respondents subject to AFA or partial
AFA from certification. IDM at 14–15. Instead, Commerce found Tanghenam
ineligible to certify because, in Commerce’s view, Tanghenam could not
demonstrate the ability to trace its production inputs to specific U.S. shipments. Id.
As Commerce expressly stated in its Issues and Decision Memorandum,
“Tanghenam cannot participate in the certification process given that Tanghenam
uses Chinese-inputs and could not tie inputs to specific exports.” IDM at 14
(emphasis added). In sum, Commerce did not require Tanghenam or Customs to
engage in a “legal fiction,” nor did it compel false entries. Tanghenam Reply at 6.
Instead, Commerce concluded that, absent a tracing method that it recognized,
Tanghenam could not satisfy the premise of certification itself: the ability to attest
that shipments to the United States do not contain inputs from the AD/CVD subject
country at issue, in this case China.
4 In its opening brief, Tanghenam inaccurately suggests that Commerce excluded Tanghenam from
certification because Tanghenam received AFA. See, e.g., Tanghenam Br. at 22 (claiming that “Tanghenam, and all parties that receive AFA, are completely barred from this process”); Id. at 20 (suggesting that, “as part of its application of total AFA on Tanghenam, Commerce found that Tanghenam is ineligible for the certification process”); Id. at 25 (claiming that “Commerce applied AFA to respondent’s exports and, as a result did not allow the respondent to certify the origin of its exports”) (emphasis added). Court No. 25-00049 Page 30
The court therefore remands not because Commerce lacked the legal
authority to block certification for AFA recipients (as Tanghenam suggests), but
rather because Commerce did not adequately address Tanghenam’s specific,
reconstruction-based tracing argument before reaching a final determination.
Finally, the court notes that nothing in today’s remand order prevents
Tanghenam from simultaneously seeking reconsideration on certification in pending
or future AWC administrative reviews or changed circumstances reviews. 5 See
IDM at 14. Indeed, the court recognizes that Tanghenam has already begun to
pursue such opportunities through its participation in ongoing administrative
reviews of both AWC orders. Initiation of Antidumping and Countervailing Duty
Administrative Reviews, 90 Fed. Reg. 8,187, 8,190–92 (Dep’t Commerce Jan. 27,
2025). The court expresses no view on the merits of any such proceedings.
CONCLUSION AND ORDER
For the foregoing reasons, the court sustains Commerce’s application of
partial AFA to Tanghenam in reaching determinations under sections 781(b)(1)(D)
and 781(b)(2)(E) of the Act, as amended. See IDM at 5–6 (limiting the application of
AFA to valuation determinations under 19 U.S.C. § 1677j(b)(1)(D) and 19 U.S.C. §
1677j(b)(2)(E)).
5 In OCTG from China, Commerce determined that it could reconsider the respondent’s eligibility for
certification “in a future segment of the proceeding … i.e., a changed circumstances review or an administrative review.” Oil Country Tubular Goods from the People’s Republic of China: Final Affirmative Determinations of Circumvention, 86 Fed. Reg. 67,444 (Dep’t Commerce Nov. 26, 2021) (“OCTG from China”). Court No. 25-00049 Page 31
However, the court remands Commerce’s determination that Tanghenam is
ineligible to participate in Commerce’s certification regime. Commerce rested that
determination solely on a verification statement that, once finished goods enter
Tanghenam’s finished goods inventory, “there is no way to track which products go
to sales.” Verification Report at 24. Nevertheless, Tanghenam points to evidence
and arguments made before Commerce and this court that it can, in fact, trace
inputs to specific U.S. shipments using its sales ledger, inventory movement ledger,
and purchase ledger, including by mapping export shipments to specific warehouse-
received batches and linking those batches (via document numbers) back to input
purchases and their origin information. Tanghenam’s Case Br. at 12–14, 20;
Tanghenam Reply at 2–3. Commerce’s determination does not adequately engage
with this reconstruction-based accounting method for tracing, nor does it
adequately explain why the verification team’s observation about commingled
finished goods necessarily forecloses certification eligibility for Tanghenam. The
court therefore remands for Commerce to address, with specificity, Tanghenam’s
arguments relating to its reconstruction-based accounting method for tracing inputs
to sales of finished goods and explain – based on record evidence and the relevant
statutory and regulatory provisions – whether and why Tanghenam proposed
methodology satisfies or fails to satisfy the relevant criteria for certification
eligibility. Therefore, upon consideration of all papers and proceedings herein, it is
hereby Court No. 25-00049 Page 32
ORDERED that Commerce, within 90 days from the date of issuance of this
Opinion and Order, shall submit a redetermination upon remand (“Remand
Redetermination”) that complies with this Opinion and Order; it is further
ORDERED that defendant shall supplement the administrative record with
documents, or portions thereof, considered by Commerce in reaching the decision in
the Remand Redetermination within 14 days of the Remand Determination; it is
further
ORDERED that subsequent proceedings shall be governed by USCIT Rule
56.2(h); and it is further
ORDERED that the parties shall file the joint appendix within 14 days after
the filing of replies to the comments on the Remand Redetermination.
/s/ Joseph A. Laroski, Jr.
Joseph A. Laroski, Jr., Judge
Dated: February 24, 202
New York, New York