Commerce Can't Use AFA Based on Data Submitted by Third Party, Honey Exporter Tells CIT

The case concerns the antidumping duty investigation on raw honey from Brazil. Commerce treated two companies, Apiario Diamante Comercial Esportadora and Apiario Diamante Producao e Comercial de Mel, as a single entity, given they are connected through family ownership and both operate under the name Supermel. During the investigation, Supermel said it sources its honey from over 1,000 unaffiliated beekeepers in Brazil. From there, the respondent processes the honey with a heat treatment, homogenization, filtration, organic certification and inspection, then ships it abroad.

During the investigation, the respondent submitted cost of production data based on its acquisition costs from the beekeepers, giving the company's entire honey purchase data with information about each transaction such as the name of the supplier, purchase date, quantity and value, and physical characteristics. The respondent made it clear how difficult it would be if Commerce required the cost of production data from the unaffiliated beekeepers since there are thousands of them, and they are nearly all small, mom-and-pop shops.

Commerce said there is a discrepancy between the quantity and value data of unprocessed honey reported as procured from the beekeepers. In the complaint at the trade court, the respondent said that these figures that Commerce asked the company to verify, "were neither the total quantity and value reported by Supermel nor the beekeepers" (see 2207270053). Supermel then provided its honey purchase data to clear up the record. The respondent, though, acknowledged discrepancies between its data and data from tax invoices submitted to Commerce by two of the respondent's many beekeepers. However, the respondent said the discrepancies represented only 0.2% of the total value of the honey it bought.

Commerce found the beekeepers are the actual producers of the subject merchandise, using the respondent's acquisition costs as a proxy for the beekeepers' cost of production since it could not sample the beekeepers. The result was an AFA rate of 83.72%, prompting Supermel to take to CIT. In its motion for judgment, the respondent now challenges the basis for the application of AFA and the agency's decision to investigate processor, Supermel, only to find that beekeepers were the actual producers of the raw honey. Supermel said it did not fail to act to the best of its ability in submitting data to Commerce, precluding the use of AFA.

The respondent said it was taxed in Brazil under the "micro and small businesses" label, meaning it "was not required to maintain inventory or consumption values for raw materials in its accounting books." Supermel requested assistance in submitting its answer to Commerce's information request, but the agency never clearly described the discrepancies that triggered the information request, the brief said. Commerce failed to take into account the respondent is a small company that could not meet all the agency's demands, so Supermel did put forth "maximum effort to fully cooperate in the" investigation, making the use of AFA illegal.

Supermel further argued that Commerce illegally said all beekeepers are now "on notice that they will be required to submit accurate cost information that is fully supported" by evidence and verifiable by Commerce officials and that failure to submit this data could result in AFA. "To apply AFA to an otherwise cooperative respondent based on an unaffiliated supplier's failure to comply, Commerce 'must link [the cooperative respondent] to its supplier's failures, as a matter of fact,'" Supermel said. "Commerce should not be permitted in the future administrative reviews to rely on this statement from the investigation to apply AFA to an otherwise cooperative processor-respondent based on an unaffiliated beekeeper supplier's failure to provide requested cost information."