PSC Vsmpo–Avisma Corp. v. United States

• Decision Date: 27 July 2012
• Docket Number: Nos. 2011–1370,2011–1395.,s. 2011–1370
• Parties: PSC VSMPO–AVISMA CORPORATION and VSMPO–Tirus, U.S., Inc., Plaintiffs–Cross Appellants, v. UNITED STATES, Defendant–Appellee, and US Magnesium LLC, Defendant–Appellant.
• Court: U.S. Court of Appeals — Federal Circuit

688 F.3d 751

34 ITRD 1737

PSC VSMPO–AVISMA CORPORATION and VSMPO–Tirus, U.S., Inc., Plaintiffs–Cross Appellants,

v. UNITED STATES, Defendant–Appellee,andUS Magnesium LLC, Defendant–Appellant.

Nos. 2011–1370, 2011–1395.

United States Court of Appeals, Federal Circuit.

July 27, 2012.

Mark P. Lunn, Arent Fox LLP, of Washington, DC, argued for plaintiffs-cross appellants. With him on the brief were John M. Gurley and Diana Dimitric Quaia.

Renee Gerber, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-appellee. With her on the brief were Tony West, Assistant Attorney General, Jeanne E. Davidson, Director, and Claudia Burke, Assistant Director.

Jeffrey M. Telep, King & Spalding LLP, of Washington, DC, argued for defendant-appellant. With him on the brief were Stephen A. Jones and Jeffrey B. Denning.

Before PROST, SCHALL, and REYNA, Circuit Judges.

SCHALL, Circuit Judge.

This is an international trade case. It arises out of the Department of Commerce's (“Commerce”) 2006/2007 administrative review of the antidumping duty order on magnesium metal from the Russian Federation. SeeNotice of Antidumping Duty Order: Magnesium Metal from the Russian Federation, 70 Fed. Reg. 19,930 (Dep't of Commerce Apr. 15, 2005) (“ Antidumping Order ”). Following the review, Commerce imposed an antidumping duty of 15.77 percent on U.S. imports of magnesium metal exported to the United States from the Russian Federation by PSC VSMPO–Avisma Corporation (“Avisma”), a manufacturer of magnesium and titanium sponge. Magnesium Metal from the Russian Federation: Final Results of Antidumping Duty Administrative Review, 73 Fed. Reg. 52,642 (Dep't of Commerce Sept. 10, 2008) (“ Final Results ”); Issues and Decision Memorandum for the Antidumping Duty Administrative Review of Magnesium Metal from the Russian Federation (Sept. 2, 2008) (“ Final Results Memo ”). Commerce imposed this antidumping margin after calculating the normal value of Avisma's sales of magnesium based upon constructed value.

Avisma and its U.S. subsidiary, VSMPO Tirus, U.S. Inc. (“Tirus”), challenged the Final Results in the United States Court of International Trade (“Trade Court”).¹ In doing so, Avisma also challenged Commerce's decision during the administrative review to exclude as untimely, and not consider, the affidavit of its accounting expert, Dr. George Foster (“ Foster Affidavit ”). US Magnesium LLC (“US Magnesium”), a U.S. producer of magnesium, intervened in the proceedings as a defendant. On October 20, 2009, without reaching the merits, the Trade Court remanded the case to Commerce with the instruction that Commerce consider the Foster Affidavit. PSC VSMPO–AVISMA Corp. v. United States, No. 08–00321, 2009 WL 3423021 (Ct. Int'l Trade Oct. 20, 2009) (“ Avisma I ”). On remand, Commerce considered the Foster Affidavit but declined to alter the determination in the Final Results. Results of Redetermination Pursuant to Remand, PSC VSMPO–Avisma Corp. v. United States, (Mar. 30, 2010) (“ First Remand Determination ”). On August 17, 2010, the Trade Court held that the Final Results and First Remand Determination were not in accordance with law and not supported in the record. PSC VSMPO-Avisma Corp. v. United States, 724 F.Supp.2d 1308 (Ct. Int'l Trade 2010) (“ Avisma II ”). The court based its decision on its conclusion that, when determining Avisma's magnesium production costs for purposes of calculating the constructed value of Avisma's magnesium, Commerce was required to take into account Avisma's entire production process, which includes titanium, as well as magnesium. Id. at 1316. In the Final Results and First Remand Determination, Commerce only focused on Avisma's magnesium production process. The court remanded to Commerce for further proceedings. Id.

In its second remand determination, in accordance with Avisma II, Commerce determined the constructed value of Avisma's magnesium by taking into account Avisma's entire production process. Results of Redetermination Pursuant to Remand, PSC VSMPO–Avisma Corp. v. United States, (Nov. 22, 2010) (“ Second Remand Determination ”).² This resulted in an antidumping duty of 8.51 percent for Avisma's magnesium. Id. at 15. On March 1, 2011, the Trade Court sustained Commerce's Second Remand Determination and issued final judgment accordingly. PSC VSMPO–AVISMA Corp. v. United States, No. 08–00321, 2011 WL 769998 (Ct. Int'l Trade Mar. 1, 2011) (“ Avisma III ”).

US Magnesium now appeals the decision of the Trade Court. It contends that the court erred (1) in requiring Commerce to consider the Foster Affidavit; and (2) in rejecting the Final Results. For its part, Avisma cross-appeals part of the decision in Avisma III; it contends that the Trade Court erred in affirming Commerce's selection of the cost database it used in the Second Remand Determination. The United States urges affirmance of the final judgment in Avisma III.

For the reasons set forth below, we hold that the Trade Court erred in requiring Commerce to consider the Foster Affidavit. We also hold that the court erred in rejecting the Final Results. Accordingly, we reverse Avisma III and remand the case to the Trade Court, which is instructed to enter judgment reinstating the Final Results. Because of our disposition of the case, it is not necessary for us to reach Avisma's cross-appeal.

Background

I.

A brief description of Avisma's magnesium and titanium sponge production processes is necessary in order to understand the issues presented in this appeal. At its facility located in the city of Berezniki in Perm Krai, Russia, Avisma produces magnesium and titanium sponge, along with other products. Final Results Memo at 2. In the magnesium production process, enriched carnallite is first refined through dehydration and then through electrolysis to produce raw magnesium and chlorine gas.³Id. Most of the resultant raw magnesium is then processed into pure and alloyed magnesium, which is the subject merchandise of the antidumping order. Id. However, a portion of the raw magnesium is used in the titanium sponge production process. Id. Some of the chlorine gas produced in the carnallite refinement process also is used in the production of titanium sponge. Id.

The titanium sponge production process, which takes place at OPU–3, uses ilmenite ore as the major input. Id. After the ilmenite ore is reduced to a slag consisting of iron, titanium oxide, and carbon dioxide, the chlorine gas generated in the magnesium production process is used to separate titanium from the titanium oxide, forming titanium tetrachloride. Id. The raw magnesium from the magnesium production process is then used to separate the chlorine gas from the titanium tetrachloride, which produces titanium and magnesium dichloride. Id. The titanium is further refined to produce titanium powder and titanium sponge. Finally, chlorine gas resulting from the magnesium production process and not used in the production of titanium sponge is either recycled back into the carnallite refinement process or used to produce calcium chloride, a de-icer. Id.

II.

On February 27, 2004, a coalition of domestic magnesium producers, including U.S. Magnesium, filed an antidumping duty petition. Notice of Initiation of Antidumping Duty Investigations: Magnesium Metal from the People's Republic of China and the Russian Federation, 69 Fed. Reg. 15,293, 15,293 (Dep't of Commerce Mar. 25, 2004). The petition related to imports of pure and alloy magnesium metal from the Russian Federation and the People's Republic of China. Id. at 15293–94. In 2005, Commerce issued an antidumping order on magnesium metal from the Russian Federation. Antidumping Order. Pursuant to that order, Commerceimposed an antidumping duty of 21.71 percent on magnesium metal imported by Avisma. Id., 70 Fed. Reg. at 19,931. Commerce subsequently instituted a second administrative review of the antidumping order with respect to Avisma, among others, for the period from April 1, 2006, through March 31, 2007. Initiation of Antidumping and Countervailing Duty Administrative Reviews and Request for Revocation in Part, 72 Fed. Reg. 29,968 (Dep't of Commerce May 30, 2007). As noted, after conducting the administrative review, Commerce established an antidumping duty rate of 15.77 percent ad valorem on Avisma's U.S. imports of magnesium made during the period of review.

An antidumping duty represents the amount by which the normal value of subject merchandise exceeds its export price. 19 U.S.C. § 1673. Normal value is the price at which the merchandise is sold for consumption within the exporting country. Id. § 1677b(a)(1). Export price is the price at which the merchandise is sold for importation into the United States. Id. § 1677a(a). When Commerce cannot determine normal value based on actual sales of the subject merchandise in the home market, it may base normal value on a constructed value as a proxy for the sale price in the home market. Id. § 1677b(a)(4). Constructed value for merchandise represents the sum of (1) the cost of materials and fabrication or other processing; (2) selling, general and administrative expenses, and profit; and (3) the cost of containers and coverings. Id. § 1677b(e). In the Final Results, Commerce based its determination of the normal value of Avisma's magnesium on constructed value.

III.

As described above, Avisma's production process does not yield magnesium as a distinct product until after enriched carnallite has been refined through dehydration at OPU–1 and then electrolysis at OPU–2. At that point, raw magnesium and chlorine gas emerge as joint products—two dissimilar end products that are produced from a single production process. See Robert A. Anthony & James S. Reece, Accounting Principles 442 (5th ed. 1983). During the administrative review, in its preliminary results, in arriving at a constructed value for magnesium, Commerce...