                        Slip Op. 11–47

           UNITED STATES COURT OF INTERNATIONAL TRADE

______________________________
                              :
SHANDONG MACHINERY IMPORT &   :
EXPORT COMPANY.,              :
                              :
     Plaintiff,               :
                              : Before: Richard K. Eaton, Judge
          v.                  :
                              : Court No. 07-00355
UNITED STATES,                :
                              :
     Defendant,               :
                              :
and                           :
                              :
AMES TRUE TEMPER and COUNCIL :
TOOL COMPANY, INC.,           :
                              :
     Defendant-Intervenors.   :
______________________________:

                       MEMORANDUM OPINION

[United States Department of Commerce’s Results of
Redetermination Pursuant to Remand affirmed.]

                                            Dated: April 26, 2011

     Hume & Associates LLC (Robert T. Hume), for plaintiff.

     Tony West, Assistant Attorney General; Jeanne E. Davidson,
Director; Patricia M. McCarthy, Assistant Director, Department of
Justice, Commercial Litigation Branch, Civil Division (Michael D.
Panzera); Office of Chief Counsel for Import Administration, U.S.
Department of Commerce (Shana Hofstetter), of counsel, for
defendant.

     Wiley Rein LLP (Alan H. Price, Timothy C. Brightbill,
Maureen E. Thorson), for defendant-intervenor Ames True Temper.

     Kelley Drye & Warren (Eric McClafferty), for defendant-
intervenor Council Tool Company, Inc.


     Eaton, Judge: This matter is before the court following a
07-00355                                                      Page 2

second remand to the Department of Commerce (the “Department” or

“Commerce”).   See Final Results of Redetermination Pursuant to

Court Remand (Dep’t of Commerce Dec. 2, 2010) (“Remand Results”).

The court has jurisdiction pursuant to 28 U.S.C. § 1581(c) and 19

U.S.C. § 1516a(a)(2)(B)(iii) (2006).     For the reasons set forth

below, the Remand Results are sustained.



                        STANDARD OF REVIEW

     When reviewing Commerce’s final antidumping determinations,

the court “shall hold unlawful any determination, finding, or

conclusion found . . . to be unsupported by substantial evidence

on the record, or otherwise not in accordance with law . . . .”

19 U.S.C. § 1516a(b)(1)(B)(i).



                            BACKGROUND

     The case arises out of the Department’s fifteenth

administrative review of the antidumping duty orders covering

heavy forged hand tools (“HFHTs”) from the People’s Republic of

China (the “PRC”) for the period of review February 1, 2005

through January 30, 2006.   See HFHTs, Finished or Unfinished,

With or Without Handles, From the PRC, 72 Fed. Reg. 51,787 (Dep’t

of Commerce Sept. 11, 2007) (final results).    The relevant facts

are set forth fully in the court’s previous opinions in this

case, familiarity with which is presumed.     See Shandong Mach.
07-00355                                                         Page 3

Imp. & Exp. Co. v. United States, 32 CIT __, Slip Op. 09-64 (June

24, 2009) (not reported in Federal Supplement) (“Shandong I”);

Shandong Mach. Imp. & Exp. Co. v. United States, 33 CIT __, Slip

Op. 10-88 (Aug. 11, 2010) (not reported in Federal Supplement)

(“Shandong II”).

     In Shandong I, the court held that the adverse facts

available (“AFA”) rate of 45.25 percent Commerce assigned to the

PRC-wide entity, including plaintiff Shandong Machinery Import

and Export Company (“SMC”), was not corroborated, as required by

19 U.S.C. § 1677e(c).     Shandong I, Slip Op. 09-64 at 19-20.

Accordingly, the court remanded the matter to the Department to

select a corroborated AFA rate, in accordance with § 1677e(c).

On remand, Commerce noted that it could corroborate the 45.25

percent AFA rate using SMC’s sales data from the previous

administrative review.    Final Results of Redeterm. Pursuant to

Court Remand (Dep’t of Commerce Jan. 7, 2010) (“Shandong I Remand

Results”) at 9.    Because the court in Shandong I instructed

Commerce to select a “different” rate, however, the Department

determined that it could not apply the 45.25 percent rate, and

selected a new PRC-wide rate of 109.16 percent.    Shandong I

Remand Results 9-10.    According to Commerce, the 109.16 percent

rate was based on SMC’s single transaction margin from the

previous administrative review that was closest to the 45.25

percent rate.     See Shandong II, Slip Op. 10-88 at 5.
07-00355                                                     Page 4

     In Shandong II, the court found that the 109.16 percent AFA

rate was punitive, and remanded the matter to Commerce to

calculate a new AFA rate.    In remanding the matter to Commerce,

the court noted that:

     If Commerce is capable of corroborating the 45.25
     percent rate, then it may endeavor to do so on remand.
     The Department shall be mindful, however, that whatever
     rate it finds must be in accord with its previous
     finding that the rate of 45.25 percent is sufficient to
     ensure compliance. Should the Department wish, it may
     reopen the record and calculate an AFA rate to be
     applied to the PRC-wide entity for sales of
     hammers/sledges, with an additional amount to deter
     future non-compliance.

Shandong II, Slip Op. 10-88 at 11.

     On remand, Commerce selected the 45.25 percent AFA rate.

Remand Results at 12.   Commerce found that the highest weighted-

average dumping margin for any respondent under the order on

HFHTs was 34.56 percent, which was also SMC’s own rate in the

fourteenth administrative review.    The Department determined that

45.25 percent was, therefore, an appropriate rate because

     [t]his rate complies both with the order of the Court to
     assign a non-punitive rate to hammers/sledges that has been
     ‘corroborated according to its reliability and relevance to
     the country-wide entity as a whole’ and the requirement that
     we ensure the PRC-wide entity (and SMC as a part of it) does
     not obtain a more favorable result by failing to cooperate
     than if it had cooperated fully. This was a calculated rate
     reflecting the commercial activities of SMC just one year
     prior to the administrative review currently at issue here.

Remand Results at 11.

     Neither SMC nor the defendant-intervenors challenge

Commerce’s Remand Results.
07-00355                                                          Page 5



                             DISCUSSION

I.   Legal Framework

      Where, as here, Commerce determines that a respondent in an

antidumping investigation has failed to cooperate to “the best of

its ability,” it may calculate the dumping margin for that

respondent based on AFA.    See 19 U.S.C. § 1677e(b).   In

determining a PRC-wide rate based on AFA, Commerce may use

information from a source identified in 19 U.S.C. § 1677e(b),

which includes information derived from the petition, a final

determination in the investigation, any prior administrative

review, or any other information placed on the record.       If

Commerce relies on secondary information such as calculated rates

from previous reviews, it must “to the extent practicable,

corroborate that information from independent sources that are

reasonably at [its] disposal.”    Id. at § 1677e(c).

      To corroborate secondary information means to “examine

whether the secondary information to be used has probative

value.”    See 19 C.F.R. § 351.308(d) (2010).   A rate has probative

value when it is both reliable and relevant.     See Ferro Union,

Inc. v. United States, 23 CIT 178, 202, 44 F. Supp. 2d 1310, 1333

(1999).    Thus, “[i]n order to corroborate an AFA rate, Commerce

must show that it used ‘reliable facts’ that had ‘some grounding

in commercial reality.’”     PSC VSMPO-AVISMA Corp. v. United
07-00355                                                       Page 6

States, 34 CIT __, Slip Op. 2011-25, at 6 (2011) (quoting Gallant

Ocean (Thail.) Co. v. United States, 602 F.3d 1319, 1324 (Fed.

Cir. 2010)).

      Although Commerce is given broad discretion in selecting an

AFA rate, this discretion is “not unbounded.”   See F.Lii de Cecco

di Filippo Fara S. Martino S.p.A. v. United States, 216 F.3d

1027, 1032 (Fed. Cir. 2000).   As the Federal Circuit has

explained:

      the purpose of section 1677e(b) is to provide
      respondents with an incentive to cooperate, not to
      impose punitive, aberrational, or uncorroborated
      margins. It is clear from Congress's imposition of the
      corroboration requirement in 19 U.S.C. § 1677e(c) that
      it intended for an adverse facts available rate to be a
      reasonably accurate estimate of the respondent's actual
      rate, albeit with some built-in increase intended as a
      deterrent to non-compliance. Congress could not have
      intended for Commerce's discretion to include the
      ability to select unreasonably high rates with no
      relationship to the respondent's actual dumping margin.
      Obviously a higher adverse margin creates a stronger
      deterrent, but Congress tempered deterrent value with
      the corroboration requirement.

Id.



II.   The Department’s Application of the 45.42 Percent AFA Rate

      The 45.42 percent rate was originally derived from the

petition in connection with the original less-than-fair-value

investigation in 1991.   The Department, however, demonstrated the

reliability and relevance of that rate by using transaction

specific rates for SMC during the immediately preceding
07-00355                                                         Page 7

fourteenth administrative review.    Remand Results at 10.    In

doing so, Commerce found that “the majority of positive

individual transaction margins from the [fourteenth

administrative review] are higher than 45.42 percent.”    Remand

Results at 11.   Therefore, 45.42 percent represents a reasonable

AFA rate, which is reflective of the PRC-wide entity’s, including

SMC’s, actual commercial activity.

                            CONCLUSION

     For the foregoing reasons, the court finds that Commerce’s

selection of 45.42 percent as the AFA rate for the PRC-wide

entity, including plaintiff SMC, is supported by substantial

evidence and in accordance with law.     Therefore, the Remand

Results are sustained, and judgment will be entered accordingly.




                                       /s/ Richard K. Eaton
                                           Richard K. Eaton

Dated: April 26, 2011
       New York, New York
