Background
The U.S. Department of Commerce (“Commerce”) initiated an antidumping duty investigation into certain corrosion-resistant steel products (“CORE”) from Mexico. Galvasid S.A. de C.V. (“Galvasid”), a Mexican producer and exporter, was selected as a mandatory respondent. In its questionnaire responses, Galvasid reported that all its sales to the United States were made on either a Cost, Insurance, and Freight (“CIF”) or Delivered Duty Paid (“DDP”) basis, where a single, all-inclusive price is charged to the customer for the delivered product.
Despite Galvasid’s reporting, Commerce’s final determination concluded that Galvasid had failed to disclose freight and insurance revenue that was purportedly included in its gross unit prices. Commerce based this finding on internal accounting records it discovered during verification. Asserting that this constituted a failure to cooperate, Commerce applied “partial facts available with an adverse inference” (“AFA”), resulting in a substantial weighted-average dumping margin of 24.09% for Galvasid. Galvasid challenged this final determination at the U.S. Court of International Trade.
The Court’s Holding
The Court of International Trade held that Commerce’s application of AFA was unsupported by substantial evidence and not in accordance with law, and remanded the determination. Before reaching the merits, the court rejected a jurisdictional challenge, confirming that for trade cases involving goods from a USMCA country like Mexico, judicial review can be initiated 31 days after the publication of a final determination, without waiting for the subsequent antidumping duty order to be published. Galvasid’s action was therefore timely.
On the central issue, the court found that Commerce had no basis to apply AFA. Commerce’s questionnaires asked respondents to report *separate charges* for services like shipping. Because Galvasid’s sales were made at a single, negotiated DDP or CIF price, there were no separate charges for freight or insurance. The court reasoned that Commerce’s practice of removing excess revenue from such services only applies when the services are negotiated independently from the price of the merchandise. The mere existence of internal accounting entries allocating portions of the lump-sum price to freight and insurance does not constitute evidence that these items were separately negotiated with the customer.
Since Galvasid accurately reported that it had no separately negotiated charges for freight or insurance on its U.S. sales, it did not withhold information or fail to cooperate. The record was not missing necessary information, and Commerce therefore lacked the legal authority to resort to an adverse inference. The court remanded the case for Commerce to redetermine Galvasid’s dumping margin without applying AFA.
Key Takeaways
- For trade cases involving USMCA countries, the deadline to seek judicial review of a final AD/CVD determination begins 31 days after its publication in the Federal Register, not after the publication of the final duty order.
- Commerce cannot apply adverse facts available based on a respondent’s internal accounting allocations for DDP or CIF sales unless there is substantial evidence that service charges like freight and insurance were negotiated separately from the price of the merchandise.
- A respondent in an AD investigation that sells on DDP or CIF terms does not withhold information by reporting a single, all-inclusive price and stating it has no separate charges for freight or insurance.
Why It Matters
This decision reinforces the legal limits on the Department of Commerce’s ability to apply punitive adverse inferences in antidumping investigations. It clarifies that a respondent’s internal bookkeeping for common, all-inclusive sales terms (like DDP or CIF) does not, by itself, create a “gap” in the record or demonstrate a lack of cooperation that would justify the use of AFA. The ruling protects exporters from being penalized for utilizing standard, transparent sales structures where a single price is negotiated for a delivered good.
For trade law practitioners, the opinion underscores that the crucial factor for Commerce’s revenue-capping methodology is whether services were separately negotiated with the customer, not how a company allocates revenue internally after the fact. The decision serves as an important check on potential agency overreach and provides greater certainty for companies participating in antidumping proceedings.