This week, the Court of International Trade released the public version of its decision Max Fortune Industrial Co. v. United States. In 2011, the Department of Commerce determined that Max Fortune had circumvented the antidumping duty order on tissue paper products from China. At the request of a domestic paper company, Commerce had in 2010 initiated a review to assess whether Max Fortune had converted jumbo rolls of Chinese-origin tissue paper in Vietnam between 2005 and 2010 to avoid antidumping duties. Max Fortune acknowledged the possibility that it may have done so before 2008, but denied having done so afterwards.
During the on-site verification of Max Fortune in Vietnam, Commerce discovered that Chinese jumbo rolls were in inventory through March 2010. Although Max Fortune attempted to belatedly provide documentation as to these rolls, Commerce refused to accept the untimely information. Commerce instead applied statutory “adverse facts available” (AFA) to determine that tissue paper produced and exported by Max Fortune in Vietnam circumvented the antidumping duty order. The CIT affirmed this determination:
- “Commerce’s decision not to use the information Max Fortune offered is reasonable and consistent with its practice.”;
- “Commerce’s refusal to accept new information in the last hour of the last day of verification was a proper exercise of its discretion.”; and
- “Commerce properly applied AFA because Max Fortune failed to provide necessary information and failed to cooperate to the best of its ability.”
This decision is the latest development in a recent series of determinations by Commerce to apply AFA after discovering misconduct. The CIT found that Commerce’s findings were supported by substantial evidence, particularly because Max Fortune’s record keeping failed to comply with Vietnamese accounting law. Commerce properly exercised its discretion not only in applying AFA, but also by requiring that Customs and Border Protection collect cash deposits on all tissue paper produced and exported by Max Fortune in Vietnam. This ruling is a welcome addition to the growing jurisprudence recognizing Commerce’s authority to take strong action in response to documented duty evasion.