[00:00:00] Speaker 00:
20-1478 Diamond Sawblades versus United States.

[00:00:05] Speaker 00:
Mr. Menegas, if I mispronounced your name, I apologize, but you're up.

[00:00:12] Speaker 03:
May it please the court, both sides maintain records in the normal course that would allow us to determine the origin of the sawblade that's told to an affiliated company in the United States to a certainty, therefore making misinformation on the record.

[00:00:26] Speaker 00:
Excuse me.

[00:00:27] Speaker 00:
Excuse me.

[00:00:28] Speaker 00:
This is Judge Prost.

[00:00:29] Speaker 00:
There's a little bit of an echo in your voice.

[00:00:32] Speaker 00:
So is there anything you can do about that to make it a little cleaner?

[00:00:35] Speaker 03:
Maybe if I speak closer to my speaker, is that okay?

[00:00:41] Speaker 03:
Okay.

[00:00:41] Speaker 03:
Give it a try.

[00:00:42] Speaker 03:
Thank you.

[00:00:43] Speaker 03:
Okay.

[00:00:43] Speaker 03:
I'm holding it right next to me.

[00:00:45] Speaker 03:
So as I started to say, you know, both on tools, China sold through two affiliate sales companies in the United States.

[00:00:54] Speaker 03:
and maintained records in normal course that would allow it to determine the origin of salt blades that sold to the affiliate companies to a certainty.

[00:01:02] Speaker 03:
Therefore, there's no missing information on this record that would permit commerce to resort to facts available, much less adverse facts available.

[00:01:10] Speaker 03:
Therefore, the U.S.

[00:01:11] Speaker 03:
sales universe reported by Boson was reliable.

[00:01:16] Speaker 04:
Now... This is Jeff Toronto.

[00:01:18] Speaker 04:
Can I ask you this question, which is going to take as a premise

[00:01:22] Speaker 04:
Something that I think you just said you disagree with, but I ask you to take this as a premise.

[00:01:28] Speaker 04:
Because as a practical matter, it seems to me there's some difference between the legal principles and what you need to get a large amount of relief.

[00:01:39] Speaker 04:
And here's my question.

[00:01:42] Speaker 04:
I want to ask you to test an information-specific potential interpretation of 1677 EA.

[00:01:50] Speaker 04:
And it's this.

[00:01:52] Speaker 04:
For a fact needed for a commerce determination, 1677 E subsection A authorizes use of substitute information only for missing or compromised information, by which I mean only for missing information or defective, late, unreliable, or unverifiable information.

[00:02:16] Speaker 04:
It does not authorize use of substitutes, so-called facts otherwise available,

[00:02:22] Speaker 04:
for information that is present and is uncompromised in the sense I just mentioned, because there's no information gap to fill as to that submitted uncompromised information.

[00:02:37] Speaker 04:
My question is, does any case or regulation for that matter preclude that information-specific interpretation of 1677E subsection A?

[00:02:51] Speaker 03:
Well, the way I, I'm sorry, Your Honor, the way I understand your question is that if there is valid information on the record to establish a fact that commerce cannot resort to other facts to substitute for that fact.

[00:03:08] Speaker 03:
Does that correct my understanding of your problem?

[00:03:11] Speaker 04:
That would be one, yes, much simplified

[00:03:17] Speaker 04:
version of that, that's right.

[00:03:19] Speaker 04:
So that, for example, and I think you understand what I'm talking about, if 97.5% of the imported units had uncompromised information about their source of origin, then the theory would be the only units, only imported units for which

[00:03:43] Speaker 04:
facts otherwise available to use subsection A's language could be used would be at the outside the universe of the 2.5%.

[00:03:53] Speaker 03:
Well Judge Toronto, you skipped right to the end of my argument brilliantly if I may say.

[00:04:00] Speaker 03:
We would note that Commerce did not criticize the 97.5 at all in its remand in order to the court.

[00:04:09] Speaker 04:
I was actually particularly interested

[00:04:13] Speaker 04:
I tried to ask, is there a case that the government or diamond, saw blades, the domestics will say, oh no, you can't possibly say that.

[00:04:25] Speaker 04:
The following cases explain that, you know, once there's some missing information, then commerce is free under subsection A to resort to facts otherwise available as to the whole universe.

[00:04:41] Speaker 03:
Well, I would submit that these are very fact-intensive driven decisions that are case by case, and that as a general proposition under LAFCO, the Federal Circuit, you know, the margins have to be calculated as accurately as possible.

[00:04:58] Speaker 03:
And so therefore, if there's missing information, the facts available or adverse facts available have to be cabin to the missing information.

[00:05:07] Speaker 03:
And as the hierarchy that BOSUN used to establish the origin was progressive, it essentially created safety at each step for a chunk of the origin of the chunk of the swell blades.

[00:05:22] Speaker 03:
And by the time we got to the end of step two, with that certainty, 97.5% of the blades were safely and accurately designated as to their origin.

[00:05:32] Speaker 04:
Is it a disputed fact?

[00:05:36] Speaker 04:
that the only problems encountered fall within the universe of those entry items that you say represent 2.5%, which is to say the universe of items for which the first two steps of the process for identifying country of origin did not supply an answer and this mysterious FIFO

[00:06:06] Speaker 04:
methodology had to be resorted to?

[00:06:10] Speaker 03:
Right, I would absolutely say that.

[00:06:13] Speaker 03:
There's nothing on the record that the defendants or defendant-intervenors point to to undermine the 97.5%.

[00:06:20] Speaker 03:
It's not discussed.

[00:06:21] Speaker 03:
It's not discussed in the second court opinion.

[00:06:25] Speaker 03:
And so that information is good.

[00:06:29] Speaker 03:
It's like if you had three different colored poker chips on a table and the man operating the table takes his

[00:06:35] Speaker 03:
to stick and move the green ones to safety and then the blue ones to safety, what's left is the red chips, the 2.5.

[00:06:43] Speaker 03:
And so that's where we use the CIFO step, which I would be happy to explain.

[00:06:49] Speaker 00:
Can I interrupt you?

[00:06:50] Speaker 00:
Yeah, I think you've answered.

[00:06:52] Speaker 00:
I mean, you're right.

[00:06:53] Speaker 00:
And we can certainly ask the government if their view is that there was some potential or identified problem in verification with respect to the 97.5.

[00:07:03] Speaker 00:
I do see, I look for it in the record, and I did find on appendix 3049, there's some ambiguity.

[00:07:11] Speaker 00:
This is the government's position on remand.

[00:07:14] Speaker 00:
And they say something like, given that the sample sale traces at verification comprise a small number altogether, we cannot be confident there were no other errors with your methodology.

[00:07:26] Speaker 00:
And I don't, it's not clear to me that they were, if they were just talking about FIFO there,

[00:07:31] Speaker 00:
or whether that statement also went to the other first two steps in the process?

[00:07:39] Speaker 00:
Do you have any view on that?

[00:07:41] Speaker 03:
Yes.

[00:07:41] Speaker 03:
I mean, it's absolutely clear that they could have only been talking about SIPHOPE because you will read the original verification report in vain to find any discrepancies for the other 97%.

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Normally, a verification report will go through each material fact in the database of the company

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And if they find at any point in the outline any discrepancies, they'll say so.

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Otherwise, you'll see repeated throughout the verification report, we noted no discrepancy.

[00:08:06] Speaker 03:
So when they discussed the tiny error, which we would love to put in context for you on the FIFO step, first of all, it was four pieces on one invoice for one trading company, Pioneer.

[00:08:18] Speaker 03:
There was no errors for both on that step.

[00:08:22] Speaker 00:
But regardless... Can I ask you just a general question about this process?

[00:08:27] Speaker 00:
this three-step process, do you have a calculation or an assumption upfront as to what percentage of the goods will fall under the FIFO step three, or is it just it could have ended up as being 40% or 50% just as easily as it ended up being 2.5?

[00:08:49] Speaker 03:
Can I direct you to the confidential appendix 3075 where we do have that calculation?

[00:08:57] Speaker 03:
It is the 2.5.

[00:08:58] Speaker 03:
It's actually a smaller number, but we wanted to make it public for your benefit.

[00:09:02] Speaker 00:
I'm sorry, what was the citation?

[00:09:04] Speaker 03:
Confidential Appendix 3075.

[00:09:08] Speaker 03:
Okay.

[00:09:10] Speaker 03:
And if you look at the second full paragraph, third line, you'll see that calculation where they added up the FIFO steps, the two companies, Boson plus Pioneer.

[00:09:26] Speaker 03:
and then divide it by the total of the other steps for Boson and Pioneer.

[00:09:33] Speaker 03:
of the total sales, and that's the percentage of the total sales is 2.4% of the... No, no, no.

[00:09:38] Speaker 00:
I'm not quibbling.

[00:09:39] Speaker 00:
I don't think anybody is disputing the 2.5 FIFO category as it turned out in this case.

[00:09:46] Speaker 00:
My question was more general, which is with this three-step procedure, do you have an inkling when you start running the goods through the process as to what percentage is going to fall out in category three under FIFO?

[00:10:02] Speaker 03:
The company only used FIFO as a default for the residual kind of basket category of items that could not be established by its other records.

[00:10:21] Speaker 03:
So in a perfect universe, they would not have had to resort to FIFO.

[00:10:26] Speaker 03:
But they use FIFO in their normal practice.

[00:10:29] Speaker 03:
And I have a very simple analogy that I think the court could understand.

[00:10:33] Speaker 03:
You know, dinosaur blades are made of metal, and they rust, and they get bad over time.

[00:10:37] Speaker 03:
So it's just like the milk in the supermarket.

[00:10:39] Speaker 03:
The man who manages the supermarket, or whoever, the woman, puts the oldest milk at the front, hoping you'll buy that.

[00:10:45] Speaker 03:
And they'll take the newest milk and tuck it in the back of the refrigerator.

[00:10:49] Speaker 03:
So that's what this company physically did, and Commerce verified that verification.

[00:10:53] Speaker 03:
And so by knowing that and knowing the purchase dates by these trading companies and the entry dates, the company can determine with a certainty which, you know, Thai blades or Chinese blades were purchased first.

[00:11:06] Speaker 03:
And then they applied the logic that they in fact implied in business that then those blades would have been sold first.

[00:11:13] Speaker 03:
And so knowing the year of the period of review, so those 12 months, they could determine using that methodology the origin

[00:11:21] Speaker 03:
of the remaining residual basket category slaves.

[00:11:27] Speaker 05:
Mr. Judge Clevinger, why does purchase date have anything to do with country of origin?

[00:11:33] Speaker 03:
Well, this is just the FIFO method.

[00:11:35] Speaker 03:
They're making an assumption.

[00:11:38] Speaker 05:
My question is, I've never understood, why does FIFO tell you anything about country of origin?

[00:11:45] Speaker 03:
Well, let's just take an example.

[00:11:48] Speaker 03:
You purchased 50 Chinese blades first and then 100 Thai blades second.

[00:11:55] Speaker 03:
And the way they operated their inventory, they take the oldest blades first and sell them to the customer.

[00:12:00] Speaker 03:
So of a particular product type, you get an order for 75 blades.

[00:12:04] Speaker 03:
Well, the first 50 had to be Chinese because you would have sold them first to the downstream US customer.

[00:12:09] Speaker 03:
The last 25 would have been Thai.

[00:12:11] Speaker 04:
So do I understand, I mean, it's just that the arriving shipments are marked by country of origin and you have the dates of the arriving shipments so they correlate.

[00:12:21] Speaker 03:
That's right.

[00:12:23] Speaker 03:
That's right.

[00:12:23] Speaker 03:
It's very important to understand, although I don't think it's the spots of the case, that of course the origin was declared at entry and the origin was stamped on the blade itself that was handed to the customer on the packaging, right?

[00:12:35] Speaker 03:
It's just that they didn't record on the downstream sales invoice the origin on that invoice.

[00:12:41] Speaker 03:
But they didn't really, they didn't seem, it didn't appear necessary to them.

[00:12:48] Speaker 03:
And so for us to back into that origin, we had to use the FICO methodology for that 2.4% of the sales.

[00:12:59] Speaker 03:
And we had other documents that were original source documents of the company to establish the 97.5%.

[00:13:07] Speaker 03:
like their unique product code sold from each country or unique unit prices on a price sheet for each country.

[00:13:14] Speaker 03:
That's how we need thermal certainty and those documents are always necessary.

[00:13:19] Speaker 03:
Yes?

[00:13:20] Speaker 05:
Judge Cleverger, can you describe what it is that Commerce seems to think is the better method of identifying country origin that your company had but did not use?

[00:13:32] Speaker 03:
Right, so it's the downstream invoice by both Sun, USA, or Pioneer that did not mark the origin of the blade on the invoice in their computer system.

[00:13:42] Speaker 03:
So it was physically marked on the blade, but when we had to develop a database, you know, a year after the fact and we were selected for review, that origin was not on that downstream sales invoice.

[00:13:55] Speaker 03:
And so what they're saying is because that one fact, that origin was not on that invoice,

[00:13:59] Speaker 03:
We can't establish the origin at all, but of course that's not lawful because commerce and the courts are required to consider the entire record and based on the entire record and at both times other records and documents kept in the normal course, you can determine with certainty the origin of at least 97.5%.

[00:14:18] Speaker 04:
And the invoice there is the invoice that Boston USA or Pioneer

[00:14:26] Speaker 04:
should have created when they sold to the first domestic customer?

[00:14:32] Speaker 04:
First unaffiliated customer.

[00:14:33] Speaker 03:
So would our life be easier if the origin were on there?

[00:14:36] Speaker 03:
Yes.

[00:14:37] Speaker 03:
But we would have always had to verify and establish the accuracy of every material fact on that invoice.

[00:14:43] Speaker 03:
And we could do it with certainty at 97.5.

[00:14:45] Speaker 03:
And we used a reasonable allocation method, the FIFO, for the remaining 2.4.

[00:14:55] Speaker 00:
I'm sorry, this is Judge Crout.

[00:14:57] Speaker 00:
This is an aside, but it's my recollection that even in the first portion of this case, where commerce sided with you, they did say, this is fine, but don't do it next time.

[00:15:12] Speaker 00:
Go back to the regular country of origin.

[00:15:14] Speaker 00:
Am I correct in my recollection of what the record is?

[00:15:18] Speaker 03:
Yes, you are correct.

[00:15:19] Speaker 03:
I noticed we're past 15 minutes.

[00:15:21] Speaker 03:
I'd love to keep talking, but...

[00:15:23] Speaker 00:
Well, I mean, whether you keep talking is kind of up to us and not up to you, but I appreciate it.

[00:15:29] Speaker 00:
It's because you took a, you retained quite a large chunk for rebuttal.

[00:15:34] Speaker 00:
But let me ask my colleagues if they have any further questions and then we'll let you sit down.

[00:15:39] Speaker 00:
Anything more?

[00:15:40] Speaker 04:
No, thanks.

[00:15:42] Speaker 00:
Okay.

[00:15:44] Speaker 00:
Thank you.

[00:15:44] Speaker 00:
All right.

[00:15:45] Speaker 00:
And you still got time remaining on rebuttal.

[00:15:49] Speaker 00:
Mr. Todor?

[00:15:53] Speaker 02:
Yes, your honor.

[00:15:56] Speaker 02:
You're up.

[00:15:58] Speaker 02:
May I please the court?

[00:15:59] Speaker 02:
We respectfully request that the court affirm the decision of the Court of International Trade, affirming Commerce's remand results.

[00:16:09] Speaker 02:
We believe, based on especially the remand results, pages nine to 12, Commerce discussed its factual basis for concluding that Bozeman's

[00:16:19] Speaker 02:
Reporting was unreliable, and that justified the application of facts otherwise available.

[00:16:24] Speaker 02:
Also discussed at pages 21 through 25 of the remand results, its conclusion that both men failed to act in the best of its ability, both in terms of the FICO methodology.

[00:16:37] Speaker 00:
I'm sorry to interrupt, but we're short in time, and there are lots of provisions here.

[00:16:45] Speaker 00:
Our focus has been on 2.5 versus the 97.5.

[00:16:48] Speaker 00:
Can we stick to the 97.5?

[00:16:50] Speaker 00:
And let me ask you, what in 677EA, which provision is the government relying on to establish that the SA was a problem with respect to the 97.5?

[00:17:04] Speaker 00:
Before we get to the SA.

[00:17:06] Speaker 02:
We believe that Commerce and its remand results cited two, at least two provisions of EA, those being

[00:17:13] Speaker 02:
failed to provide information in the form and manner requested, which is 2B, and significantly impede the proceeding 2C.

[00:17:22] Speaker 02:
So, it concluded that Boston didn't provide the form and manner for anything, the 97.5 or the 2.5, because it didn't present the direct information commerce requested.

[00:17:33] Speaker 02:
And then also impede the proceeding with respect to the errors that were found at verification.

[00:17:39] Speaker 02:
And on page 2967,

[00:17:42] Speaker 02:
Uh, page 12 of the remand results, uh, commerce found, uh, if you look at, I believe note 37, uh, there were errors... Let me ask you then about... Page 3049.

[00:17:54] Speaker 00:
I'm sorry.

[00:17:55] Speaker 02:
My apologies.

[00:17:57] Speaker 00:
It's not clear to me the B part of it.

[00:18:00] Speaker 00:
You rely on the phrase in the form and the manner requested.

[00:18:06] Speaker 00:
So what in the record of when they were going through providing this information?

[00:18:11] Speaker 00:
Where is, doesn't that contemplate that there was a request from the government, you've got to do it this way and no other way?

[00:18:18] Speaker 00:
And I'd like to know where that is in the record, or if you disagree with how I'm construing this phrase.

[00:18:26] Speaker 02:
Well, we disagree that it needs to be quite as explicit as the court's question implies.

[00:18:31] Speaker 02:
The request was made at page C1 of the initial section C questionnaire to ask that person to identify the subject merchandise.

[00:18:39] Speaker 05:
That page in the record is that?

[00:18:42] Speaker 02:
I didn't see it in the joint appendix when I was reviewing it this morning.

[00:18:46] Speaker 02:
In the CIT appendix, I believe it was at tab four in the CIT appendix and was public document in 167.

[00:19:02] Speaker 02:
And as the court discussed in its remand opinion, both opinions, knowing the country of origin is a basic consideration when you're talking about identifying subject merchandise, which is diamond saw blades from China.

[00:19:16] Speaker 05:
No one disagrees with that.

[00:19:17] Speaker 05:
The question is whether or not there was ever this stated request, quote, direct specific information.

[00:19:25] Speaker 02:
The request was on case C1 there.

[00:19:29] Speaker 02:
It didn't say, you must record on your invoice that it was China as opposed to Thailand.

[00:19:35] Speaker 02:
But it did say, identify your sales of the merchandise, which is the Chinese site.

[00:19:40] Speaker 02:
And then Congress issued two supplemental questionnaires because it felt that Boson's earlier reporting needed clarification on what was from China as opposed to Thailand.

[00:19:51] Speaker 02:
And I'm sorry, I believe the court was starting a question.

[00:19:54] Speaker 05:
But yeah, you're talking really fast as you can basically understand from the question from the presiding chief judge that we're interested to know where did commerce issue an instruction so as to be able to say that Boson didn't comply with the form and manner.

[00:20:10] Speaker 05:
And you're telling us that there's no evidence in the record in front of this court to support your argument.

[00:20:16] Speaker 05:
We have to go back to an appendix.

[00:20:20] Speaker 02:
And so we discussed that in our brief that that was requested, I believe was also discussed in both of the opinions from the Court of International Trade in the appendix before you, but for that specific document that the court has asked here at oral argument, that's my understanding of where it is.

[00:20:37] Speaker 04:
It sounds to me actually as though that document, as you described it, just absolutely does not support the finding.

[00:20:49] Speaker 02:
It doesn't say you have to specify country of origin if you have things from different countries.

[00:20:54] Speaker 02:
It says to identify the subject merchandise.

[00:20:58] Speaker 02:
Okay.

[00:20:58] Speaker 02:
And then Commerce issued supplemental questionnaires asking the person to explain further because it didn't have information.

[00:21:06] Speaker 04:
What about the other grounds under 1677 EA that Commerce invoked?

[00:21:13] Speaker 04:
I thought actually it invoked four of them.

[00:21:15] Speaker 04:
It said under A1,

[00:21:17] Speaker 04:
information is missing and then three of the subsections or paragraphs under A2, impeding the proceeding, the one we just talked about and maybe- Cannot be verified.

[00:21:30] Speaker 02:
Form and manner, impede proceeding and cannot be verified, which is subsection D. And Congress did find this information cannot be verified.

[00:21:38] Speaker 04:
So what's the support for finding those as to the 97.5%

[00:21:45] Speaker 04:
of the entered items that there appears to have been, you know, valid essentially or even actually undisputed identification of the origin, just not in the very, very best document that would have done it.

[00:22:04] Speaker 02:
Right.

[00:22:04] Speaker 02:
And to clarify, it wasn't after the fact methodology.

[00:22:07] Speaker 02:
They were using product codes and unit prices.

[00:22:09] Speaker 02:
They were not.

[00:22:10] Speaker 02:
They didn't have the information.

[00:22:12] Speaker 02:
a country of origin, which it conceded that they had on the warehouse and were stamped on the items.

[00:22:19] Speaker 02:
Commerce, I mean, you look at page 12 of the remand results, as Commerce's explanation, I believe, of the confidence in the record as a whole.

[00:22:27] Speaker 02:
And it concluded that there was lack of confidence.

[00:22:31] Speaker 02:
And they also note in note 37 on that page, on appendix 3, 3049, the CIP observed that Bozeman's errors in reporting physical characteristics

[00:22:42] Speaker 02:
affected 3 out of 15 transactions identified at verification and related to multiple other product characteristics, which we find further support our determination not to rely on Bozeman's information.

[00:22:53] Speaker 02:
Commerce, at least here, didn't explicitly state whether that was in the 2.5 or the 97.5, but there was not an affirmative statement that we know of.

[00:23:03] Speaker 02:
The Commerce said that they have no possible inkling that there could have been anything wrong with the 97.5.

[00:23:09] Speaker 02:
It's rather the opposite.

[00:23:11] Speaker 02:
The errors they found on both ends methodology led them to determine that the reporting on the whole was unreliable.

[00:23:20] Speaker 04:
We still don't, you can't point to anything in the record that says here is a problem that we discovered whether on these three traces or elsewhere that applies to a entry item

[00:23:38] Speaker 04:
that for which the first two steps, what the product was and what the code was, otherwise resolved the origin question?

[00:23:54] Speaker 02:
Okay, so the only statements that seem to go to potential errors in the 97.5 as opposed to the 2.5 was that footnote that I just

[00:24:04] Speaker 02:
read to the court, but the larger point is that... And that's page... I'm sorry.

[00:24:08] Speaker 04:
That's page... That's page what of the Joint Appendix, please?

[00:24:11] Speaker 02:
3049... Oh, okay.

[00:24:13] Speaker 02:
That's what... ...no.

[00:24:14] Speaker 02:
37.

[00:24:16] Speaker 02:
Okay.

[00:24:17] Speaker 02:
Yeah.

[00:24:17] Speaker 02:
Um, and then Commerce was conducting... Yes, I'm confused.

[00:24:20] Speaker 00:
I'm sorry.

[00:24:20] Speaker 00:
I've been looking... I'm sorry to interrupt, but let me get my question in here, too, because I'm quite confused.

[00:24:28] Speaker 00:
3049 is what I asked your friend about because that was the only thing I could find in the record that arguably raised some question about the 97.5%.

[00:24:38] Speaker 00:
But it doesn't get me there.

[00:24:41] Speaker 00:
If you're relying on the main paragraph in the middle of that page, so what sentence are you relying on to suggest that there were problems with something other beyond the FIFO methodology?

[00:24:56] Speaker 02:
So it's the sentence in the middle that says, given that the sample sales traces at verification comprise the solid number of transactions altogether, we cannot be confident that there were no other errors with Botham's methodology, even if we were to accept it.

[00:25:11] Speaker 02:
And then there's a reference to note 37.

[00:25:14] Speaker 02:
And note 37 discusses the errors on physical characteristics of commerce discovery verification.

[00:25:23] Speaker 00:
Right.

[00:25:24] Speaker 00:
And so that's ambiguous.

[00:25:26] Speaker 00:
But look at your last sentence in the paragraph, which I think maybe gives it some clarity.

[00:25:32] Speaker 00:
Because the last sentence in the paragraph says, for this reason, we now find that based on our verification process, their supplemental responses explaining FIFO were not satisfactory.

[00:25:46] Speaker 00:
Which leads me to conclude that even though that sentence may be ambiguous,

[00:25:50] Speaker 00:
all this paragraph was talking about were potential and actual problems with the FIFO methodology, but not with respect to the remaining 97.5% of the data.

[00:26:02] Speaker 00:
Am I, are you reading it a different way than me?

[00:26:05] Speaker 00:
What about that last sentence?

[00:26:06] Speaker 00:
That takes us back to really talking about FIFO and only FIFO, correct?

[00:26:12] Speaker 00:
Is that a fear?

[00:26:14] Speaker 02:
That sentence certainly discusses that there for that particular finding, but we also know that Congress's overall finding was it resulted to, you know, facts otherwise available for the entirety of the reporting because it ultimately led to the conclusion that it felt that the reporting on the whole was unreliable in part due to the specific errors with the FIFO methodology found, as well as these fiscal characteristic errors, which it doesn't specify there whether they were only the FIFO portion or not.

[00:26:40] Speaker 05:
Can I ask a question?

[00:26:41] Speaker 05:
Judge Clevenger,

[00:26:42] Speaker 05:
Assuming you're arguing that because some error was found as to the FIFO, that supports a reasoning that you could be suspicious as to the 97.5 being verifiable.

[00:26:58] Speaker 05:
What's the rationale for suspecting there could be a problem with 97.5, which is not FIFO, because there had been a problem with FIFO?

[00:27:12] Speaker 05:
Other than the fact that the FICO situation shows that it's humanly possible to have committed error.

[00:27:23] Speaker 02:
So, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and

[00:27:38] Speaker 05:
I don't, you're not answering my question.

[00:27:41] Speaker 05:
My question is why does, why does poison with regard to 2.5 necessarily require poisoning of 97.5 as a matter of law?

[00:27:56] Speaker 02:
We're not saying it's required in all cases.

[00:27:59] Speaker 02:
We're saying that commerce ultimately concluded that here based on lack of confidence and reporting and that was supported by potential evidence.

[00:28:07] Speaker 05:
I'm asking whether that conclusion is sustainable as a matter of reasoning.

[00:28:13] Speaker 02:
We believe it is because Boson's entire reporting scheme was indirect and after the fact, and that FIFO was part of that so that if there are errors, even if isolated to what they describe as step three of that process, this is all part of an indirect after the fact process and commerce lost confidence in that process.

[00:28:31] Speaker 05:
Assume we disagree with you on 1677E1.

[00:28:38] Speaker 05:
and say that necessary available was available, then that argument doesn't fly at all.

[00:28:45] Speaker 02:
That's, I believe, the prerequisite for 1670-70A.

[00:28:48] Speaker 02:
So if the court disagrees that there's necessary information not available on the record, then obviously the second step doesn't happen.

[00:28:58] Speaker 05:
The 97.5 information was clearly on the record.

[00:29:04] Speaker 05:
The question is whether or not it was insufficient.

[00:29:07] Speaker 05:
to accomplish the task of identifying country of origin.

[00:29:11] Speaker 05:
And commerce earlier decided that it was sufficient, and then now only tells us that it was insufficient because there was a better method available.

[00:29:24] Speaker 02:
And Meyers, our understanding is, okay.

[00:29:28] Speaker 02:
Sorry, I thought the court was finished, please continue.

[00:29:31] Speaker 05:
I just don't see the, I don't see the rational connection between saying because

[00:29:36] Speaker 05:
The FICO method may have a problem.

[00:29:38] Speaker 05:
The other methods of identifying it are not trustworthy in a situation where you can't point to any verification problems in connection with the 97.5.

[00:29:49] Speaker 02:
We would point the court to, you know, Congress's reasoning in the remand results that this was part of an overall after the fact reconstruction on the part of BOCES because it didn't keep the

[00:30:05] Speaker 02:
the records in the normal course of business and commerce lost confidence in its reporting as a whole due to that.

[00:30:15] Speaker 02:
And it believed that the necessary information would have been reporting the actual country of origin at the time.

[00:30:20] Speaker 05:
And that was... You're using 1677B.

[00:30:29] Speaker 05:
putting that cart in front of the horse.

[00:30:31] Speaker 05:
You're using B to answer questions in A. We would respectfully disagree with that because we believe that the necessary information.

[00:30:41] Speaker 05:
Why isn't that so?

[00:30:42] Speaker 05:
The entirety of the remand decision is based on the fact that Boson had a better method of doing things and didn't do it.

[00:30:51] Speaker 05:
And for that reason, you can't trust the information they put in.

[00:30:59] Speaker 02:
we would say that the necessary information missing from the record was the country of origin, which origin Boston didn't report in the form of manner that commerce initially requested constructed it after the fact and commerce concluded that the method it used was faulty.

[00:31:17] Speaker 00:
Can I just sum up just Mr. Toder, just to see where we are on this one very narrow question.

[00:31:24] Speaker 00:
If hypothetically we were to conclude

[00:31:27] Speaker 00:
that if you want to include the 97.5%, you've got to come up with some identifiable problem with that data.

[00:31:39] Speaker 00:
Should we be demanding it and based on the existing record, would the government want another crack or think it would be worthwhile because there is a likely further possibility that the government could come up with those problems or are you willing to concede kind of now

[00:31:57] Speaker 00:
that the record does not contain identifiable problems with unverification with respect to the 97.5?

[00:32:04] Speaker 02:
I don't think we can concede that right now because of the ambiguity regarding the errors on the physical characteristics that we discussed in response to the court's question and whether there are other potential errors discussed in the verification report that were not previously

[00:32:27] Speaker 02:
briefed by the parties at the CIT, we need to look at that as well.

[00:32:32] Speaker 00:
Okay, thank you.

[00:32:34] Speaker 00:
Now, we've exhausted all of the time for the appellee, but Ms.

[00:32:39] Speaker 00:
Thorson, you had originally allocated three minutes, and if you have something relevant or important to say, we'll give you that time.

[00:32:49] Speaker 01:
Yes, thank you, Your Honor.

[00:32:51] Speaker 01:
I'd like to direct the Court's attention to the fact that

[00:32:54] Speaker 01:
19 or 19 USC 1677 EA contains sections one and section two.

[00:33:02] Speaker 01:
Necessary information not being available on the record or any of a number of things can justify a resort to the facts available, including one that commerce found here and that we didn't discuss, which is significantly impede the proceeding.

[00:33:17] Speaker 01:
This is a case in which even in its original final results, Commerce understood and treated Bozen's reporting as deficient, referred to the absence from the record of the country of origin information it had requested, and treated country of origin information in a direct fashion as necessary.

[00:33:37] Speaker 01:
But also, they had to issue two supplemental questionnaires.

[00:33:42] Speaker 01:
They had to conduct a origin-specific verification

[00:33:47] Speaker 01:
just to try and figure out what the heck Bozen was doing with its reporting, this was not normal.

[00:33:54] Speaker 00:
Ms.

[00:33:55] Speaker 00:
Thorson, let me ask you.

[00:33:57] Speaker 00:
On this third ground, in the record, my read of the record is what All Commerce said about this third ground was that 3046 and its comments were completely contradictory.

[00:34:14] Speaker 00:
missing something in the record, can you point me to something else that Commerce said, which would illuminate what it was, you know, how it significantly impeded the proceeding under the third category?

[00:34:27] Speaker 01:
Yes.

[00:34:28] Speaker 01:
I think if you look at the original determination at 2966 through 2969, it discusses the efforts that Commerce went to

[00:34:39] Speaker 01:
simply to determine and evaluate this after-the-fact indirect origin methodology, and none of that would have been necessary at all, had Bozen kept records directly of origin, which was certainly the normal and standard expectation, particularly for a party that had been a respondent in several prior reviews and the investigation.

[00:35:02] Speaker 01:
And a major point that we haven't discussed is that even in its original final results,

[00:35:07] Speaker 01:
where commerce relied on the reporting that Boson provided.

[00:35:11] Speaker 01:
It did so pursuant to its understanding of 19 U.S.C.

[00:35:15] Speaker 01:
1677 M.E., which states that commerce will rely on reporting that it isn't otherwise happy with, so long as certain conditions are in effect.

[00:35:26] Speaker 01:
But one of those conditions is that the respondent has acted to the best of its ability

[00:35:33] Speaker 01:
And that standard has been elucidated by this court as requiring a respondent to maintain full and complete records of all the information it would reasonably anticipate being called upon to provide here.

[00:35:46] Speaker 01:
That has to include encouraging information.

[00:35:49] Speaker 00:
I'm sorry to interrupt again.

[00:35:51] Speaker 00:
This is Judge Prost.

[00:35:52] Speaker 00:
But maybe we're reading the statute differently and you probably have more experience than I in interpreting it.

[00:35:59] Speaker 00:
But under

[00:36:01] Speaker 00:
PA, it lists the significantly impede others.

[00:36:06] Speaker 00:
It seems that then there's an exception that says where best of its ability comes in is sort of the exception to if you've done that.

[00:36:19] Speaker 00:
It's not a sort of first off category that you look at.

[00:36:24] Speaker 00:
It's a way you can defend yourself if you've messed up on the earlier categories.

[00:36:29] Speaker 00:
Am I reading the statutory provisions correctly?

[00:36:32] Speaker 01:
I'm not sure that you are.

[00:36:34] Speaker 01:
They are interestingly chicken and egg in some ways because one way you can defend yourself against the application of facts available or

[00:36:47] Speaker 01:
one of the ways you can not exactly defend yourself against facts available, but call upon commerce to use information and rely on it, even if it isn't exactly the standard type of information that it normally relies on.

[00:37:00] Speaker 01:
You could say, well, I acted to the best of my ability in supplying this information.

[00:37:05] Speaker 01:
The information you have is what I can provide you while acting to the best of my ability.

[00:37:10] Speaker 01:
And then commerce must use that deficient

[00:37:13] Speaker 01:
information or what it would normally consider to be deficient data.

[00:37:17] Speaker 01:
And commerce directly relied on that statute here.

[00:37:21] Speaker 01:
One of the things that the Court of International Trade pointed out to them in the opinion remanding the case originally was that didn't make sense since the I'm relying on your deficient information statute of 1677 M.E.

[00:37:34] Speaker 01:
has as a prerequisite acting to the best of your ability.

[00:37:38] Speaker 01:
And that requires you to maintain full and complete records of all the information you're reasonably anticipating being called upon to produce.

[00:37:46] Speaker 01:
Boeing simply didn't do that here.

[00:37:48] Speaker 01:
They had the information and failed to maintain and track it.

[00:37:52] Speaker 00:
All right.

[00:37:53] Speaker 00:
Thank you very much.

[00:37:54] Speaker 00:
We'll turn back to Mr. Negus.

[00:37:57] Speaker 00:
And I don't know how much time you have left, but we'll restore five minutes of your rebuttal that you had initially reserved.

[00:38:06] Speaker 03:
Okay, I appreciate it, Your Honor.

[00:38:08] Speaker 03:
Just to clarify some sites for the record, if you turn to appendix 732, that is the generic questionnaire in our response to it.

[00:38:18] Speaker 03:
So in counsel for the defendant, it's saying, well, you know, we asked them the question directly.

[00:38:22] Speaker 03:
You'll read that generic questionnaire, and it doesn't say anything as specific as counsel or defense is maintaining.

[00:38:29] Speaker 03:
And that is because responding to the dumping questionnaire is more art and science.

[00:38:34] Speaker 03:
Every company has different records and different challenges meeting the requirements of the questionnaire.

[00:38:38] Speaker 03:
So, commerce leads some flexibility in how they answer the questionnaire.

[00:38:42] Speaker 03:
So, that's, you know, that gives you the... And we track through that in our initial brief that then they asked two very limited small supplemental questionnaires to us.

[00:38:53] Speaker 03:
So, they always accepted this methodology and the explanations.

[00:38:56] Speaker 03:
They were just saying, can you give us a little bit more documentation?

[00:38:59] Speaker 03:
I've been through cases with nine supplemental questionnaires.

[00:39:02] Speaker 03:
If you read the flow of how commerce treated both son and the investigation leading up and through the verification, it's clear that they fully accepted and understood this methodology throughout.

[00:39:13] Speaker 03:
Now, when you get to that slip note cited by the counsel for the defendant on the page of interest for the chief judge, it concerns a completely different issue that has nothing to do with the country of origin.

[00:39:24] Speaker 03:
And the country of origin is the absolute focus of the department's remand and of the second court's opinion, the lower court's opinion.

[00:39:32] Speaker 03:
So that is a side issue that commerce basically relegated to the footnote.

[00:39:37] Speaker 03:
That's evidence alone.

[00:39:38] Speaker 03:
But when you look at the verification report, it was a minor issue that commonly comes up in verification.

[00:39:44] Speaker 03:
So in sum, they never asked us to report the information in some specific way.

[00:39:50] Speaker 03:
It's just when they got it back on remand, they decided to use that as a pretext for their decision.

[00:39:56] Speaker 03:
And, you know, there could have been five different ways we could have identified this information differently with different facts and circumstances.

[00:40:03] Speaker 03:
But based on our circumstances, this is how we did it.

[00:40:07] Speaker 05:
And, you know... Judge Clemson, are you saying that footnote 37 on page 3049 is not pertinent to country of origin?

[00:40:17] Speaker 03:
Absolutely not.

[00:40:18] Speaker 03:
It had to do with the baskets you put the products into to match them for cost and sales price to calculate a dumping margin.

[00:40:25] Speaker 03:
Because they calculate the dumping margins on like apples to apples.

[00:40:29] Speaker 03:
Like product group one, it cost product group one sales.

[00:40:33] Speaker 03:
And so we had misidentified some of the product matching to misclassify three of those items on those sales traces.

[00:40:41] Speaker 03:
But they were unique.

[00:40:43] Speaker 03:
And then they fell into a unique category when they were corrected.

[00:40:46] Speaker 03:
So their costs still match them exactly, and it has no impact on the margin.

[00:40:51] Speaker 03:
Commerce clause is insignificant.

[00:40:52] Speaker 03:
It happens in almost every case, because these product matching estimations are very complicated.

[00:40:59] Speaker 03:
And so anyway, it has nothing to do with origin.

[00:41:02] Speaker 03:
They've made this whole case about origin.

[00:41:04] Speaker 03:
And as the panel, I think, is pointing out, they have no evidence whatsoever to point to a discrepancy of the 97.5%.

[00:41:12] Speaker 03:
And when you read through the verification report, I think you've come to the same conclusion.

[00:41:16] Speaker 03:
And I would, you know, advise revisiting that report.

[00:41:20] Speaker 04:
Can I, this is Judge Taranto.

[00:41:22] Speaker 04:
Can I just follow up on something the chief asked?

[00:41:24] Speaker 04:
Except for that sort of single sentence, I think 3046, where in the re-determination decision, Commerce mentions the impede the proceeding.

[00:41:39] Speaker 04:
Did Commerce either flesh that out

[00:41:42] Speaker 04:
elsewhere or make a, say anything else that would fall under that heading of impede the proceeding?

[00:41:51] Speaker 03:
No.

[00:41:52] Speaker 03:
And the original, you know, the flow of the original questionnaire and supplemental questionnaire's verification report and issues memo makes it clear that we didn't impede the proceeding at all.

[00:42:03] Speaker 03:
Congress didn't think so.

[00:42:04] Speaker 03:
The people who came to visit us didn't think so.

[00:42:06] Speaker 03:
You know, it might help you to understand this is not just like 25% of the FICO data that

[00:42:11] Speaker 03:
this law of verification.

[00:42:13] Speaker 03:
This is four pieces on one invoice that had multiple pieces on it.

[00:42:17] Speaker 03:
In other words, four pieces out of 170,000 pieces of small blade.

[00:42:22] Speaker 03:
And they had 16 sales traces, because the sales traces contain most of the information in the US sales database.

[00:42:30] Speaker 03:
They might have like 60 columns of data, and they have to verify all of them.

[00:42:33] Speaker 03:
They're not going to take a single thing on the sales invoice as state's value.

[00:42:38] Speaker 03:
They have to trace back to original records, just like we did for origin.

[00:42:41] Speaker 03:
And so what they did is they took 16 sales traces for the overall database, but they tested many more of these invoices for the origin issue.

[00:42:50] Speaker 03:
What do you think three people did for three days?

[00:42:53] Speaker 03:
16 sales traces, you can wipe them out in a day.

[00:42:56] Speaker 03:
So they did a lot more testing than the lower court understood, and that's one of the reasons we thought the lower court acted to abuse the suppression of remanding in the first place.

[00:43:07] Speaker 00:
Council, let me ask you one final question on my part, which is that even in the original AFA analysis where commerce found in your favor, they did say they did direct Boson to maintain country of origin records and future anti-dumping proceedings in which you may be selected for examination.

[00:43:30] Speaker 00:
So that may be telling or not telling for this case,

[00:43:34] Speaker 00:
But is there any dispute on your part that going forward, Commerce has the right to order you to do that and that you have the obligation to comply with regard to the country of origin records?

[00:43:49] Speaker 00:
Correct.

[00:43:49] Speaker 03:
It would be preferable and it would have been easier for us here.

[00:43:53] Speaker 03:
But whatever we put on an invoice, we always have to verify back to original records.

[00:43:57] Speaker 03:
And that's what we did.

[00:44:03] Speaker 00:
Do my colleagues have any further questions?

[00:44:05] Speaker 04:
No, nothing for me.

[00:44:06] Speaker 04:
Thank you.

[00:44:07] Speaker 05:
No, nothing for me.

[00:44:08] Speaker 05:
Thank you.

[00:44:11] Speaker 00:
All right.

[00:44:12] Speaker 00:
Then that will conclude our proceedings.

[00:44:14] Speaker 00:
We thank both sides and the case is submitted.

[00:44:18] Speaker 00:
Thank you.

[00:44:19] Speaker 03:
Thank you, Your Honor.

[00:44:22] Speaker 02:
The Honorable Court is adjourned from day to day.