Dongguan Sunrise Furniture Co., Ltd. v. United States, 2013 WL 4755768

Background

Fairmont (several affiliated Chinese furniture producers) received a 43.23% antidumping rate in the 2008 review, combining reported-sales margins (~34%) and a partial AFA rate (216.01%) for unreported product types.
The Court previously remanded, finding Commerce’s use of 216.01% as AFA unsupported by substantial evidence.
On first remand Commerce selected CONNUM-specific margins (from Fairmont’s own POR data) below 216.01% to set four product-specific partial AFA rates, yielding a revised overall rate of 39.41%; the Court again remanded as those AFA rates were insufficiently connected to Fairmont’s actual rates.
On second remand Commerce tightened its selection rule (requiring the chosen CONNUM margin to account for at least 0.04% of reported sales by quantity) and excluded Insular Rattan’s financial statement from surrogate financial ratio calculations; this produced new partial AFA rates and an overall rate of 41.75%.
The Court in this opinion: (1) sustains Commerce’s exclusion of Insular Rattan’s financial statement; but (2) finds Commerce’s four partial AFA rates still unsupported by substantial evidence and remands for recalculation using a more substantial portion of available record evidence.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Commerce permissibly excluded Insular Rattan’s financial statement from surrogate financial ratio calculations	Fairmont argued Commerce should have used parts of the statement or otherwise not excluded it entirely	Commerce and government defended exclusion as the statement was unreliable overall	Court sustained Commerce’s exclusion as supported by prior findings of unreliability
Whether Commerce’s selected partial AFA rates are supported by substantial evidence	Fairmont argued the AFA rates are unrepresentative—based on tiny fractions of sales and diverge greatly from reported-sale margins	Commerce argued rates reflect Fairmont’s "commercial reality," are tied to POR data, follow Ta Chen precedent (0.04% threshold), and deter noncompliance	Court held AFA rates are not supported: reliance on minuscule percentages of CONNUM/transactional sales fails to show a reasonably accurate estimate of Fairmont’s actual rates; remand required
Proper standard for selecting AFA rates derived from a respondent’s own POR data	Fairmont urged use of a broader, more representative share of reported sales or weighted averages; argued Commerce’s approach improperly substitutes adverse inference for substantial evidence	Commerce argued primary (POR) data need not meet corroboration standards applicable to secondary data and that any POR transaction may reflect commercial reality	Court rejected Commerce’s narrow view; held that even primary POR data must be reliably and relevantly tied to a respondent’s actual rate and that Gallant Ocean principles apply
Whether Commerce may select very high AFA margins for deterrence absent record justification	Fairmont contended deterrence cannot justify selecting rates far beyond what record data support	Commerce asserted deterrence is appropriate and rates chosen are necessary to prevent noncompliance	Court held deterrence cannot justify unreasonably high, uncorroborated margins; Commerce must explain why any increase beyond a reasonable estimate is necessary and proportionate

Key Cases Cited

Gallant Ocean (Thail.) Co. v. United States, 602 F.3d 1319 (Fed. Cir.) (AFA must bear a reasonable relationship to respondent’s actual rate; one sale alone is rarely sufficient)
F.lli De Cecco di Filippo Fara S. Martino S.p.A. v. United States, 216 F.3d 1027 (Fed. Cir.) (AFA rates must be reasonable estimates with limited built-in deterrence)
Ta Chen Stainless Steel Pipe, Inc. v. United States, 298 F.3d 1330 (Fed. Cir.) (discusses relevance of selecting margins tied to a portion of sales)
Yangzhou Bestpak Gifts & Crafts Co. v. United States, 716 F.3d 1370 (Fed. Cir.) (Commerce’s mandate to calculate margins as accurately as possible)
PAM, S.p.A. v. United States, 582 F.3d 1336 (Fed. Cir.) (limits on Commerce’s discretion to impose excessive AFA margins)