U.S. Magnesium LLC v. United States, Slip Op. 15–47.

• Decision Date: 21 May 2015
• Docket Number: Court No. 12–00006.,Slip Op. 15–47.
• Citation: 72 F.Supp.3d 1341
• Parties: US MAGNESIUM LLC, Plaintiff, v. UNITED STATES, Defendant, and Tianjin Magnesium International Co., Ltd., Defendant–Intervenor.
• Court: U.S. Court of International Trade

72 F.Supp.3d 1341

US MAGNESIUM LLC, Plaintiff

v. UNITED STATES, DefendantandTianjin Magnesium International Co., Ltd., Defendant–Intervenor.

Slip Op. 15–47.

Court No. 12–00006.

United States Court of International Trade.

May 21, 2015.

Jeffery B. Denning, King & Spalding LLP, of Washington, D.C., argued for plaintiff. With him on the brief was Stephen A. Jones.

Eric E. Laufgraben, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C., argued for defendant. With him on the brief were Stuart F. Delery, Assistant Attorney General, Jeanne E. Davidson, Director, and Patricia M. McCarthy, Assistant Director. Of counsel on the brief was Melissa M. Brewer, Attorney–International, Office of the Chief Counsel for Import Administration, U.S. Department of Commerce, of Washington, D.C.

David A. Riggle, Riggle & Craven, of Chicago, IL, argued for defendant-intervenor. With him on the brief was David J. Craven.

OPINION

EATON, Judge:

Before the court are the final results of redetermination pursuant to court remand, dated July 11, 2013, of the administrative review of the antidumping duty order on pure magnesium from the People's Republic of China (“PRC”) for the period of review May 1, 2009 through April 30, 2010 (“POR”). See Final Results of Redetermination Pursuant to Ct. Remand at 3 (ECF Dkt. No. 86–1) (“Remand Results”); US Magnesium LLC v. United States, 37 CIT ––––, 895 F.Supp.2d 1319 (2013) (Tsoucalas, J.) (“USM I ”); see also Pure Magnesium From the PRC, 76 Fed.Reg. 76,945 (Dep't of Commerce Dec. 9, 2011) (final results of the 2009–2010 antidumping duty administrative review of the antidumping duty order), and accompanying Issues and Decision Memorandum, PD 28 (Part 2), ECF Dkt. No. 25 (“Issues & Dec. Mem.”) (collectively, the “Final Results”); Pure Magnesium From the PRC, the Russian Federation and Ukraine, 60 Fed.Reg. 25,691 (Dep't of Commerce May 12, 1995) (notice of antidumping duty orders). For the reasons set forth below, the Department of Commerce's (“Commerce” or the “Department”) Remand Results are sustained.

BACKGROUND

Defendant-intervenor Tianjin Magnesium International Co., Ltd. (“Tianjin”) is an importer of pure magnesium supplied by its sole producer, Company A.¹ On January 18, 2012, plaintiff U.S. Magnesium LLC (“USM”), a domestic producer of pure magnesium, commenced this action, challenging several determinations made by the Department in the Final Results. Compl. (ECF Dkt. No. 9). The challenged determinations were made in the Final Results as part of the Department's factors of production (“FOP”) methodology for calculating normal value. First, Commerce characterized the retorts used in Company A's manufacturing process as an indirect material input and treated expenses associated with the retorts as part of factory overhead. Issues & Dec. Mem. at 8. In making that finding, Commerce rejected, as untimely, information submitted by USM (the “untimely submission”) that it claimed provided prima facie evidence that Tianjin had submitted fraudulent information regarding whether Company A rented retorts, rather than self- produced them. See Mem. from Eve Wang, Case Analyst, to The File at 2, PD 11 (Part 2) (Sept. 20, 2011), ECF Dkt. No. 25 (“Submission Rejection Mem.”). Second, Commerce selected the surrogate values used to calculate financial ratios, labor rates, and truck freight based on (1) Hindalco Industry Limited's (“Hindalco”)² 2009–2010 audited financial statements, (2) data from the 2007–2008 Indian Annual Survey of Industries³ (“ASI”), and (3) Infobanc⁴ data, respectively. Issues & Dec. Mem. at 6, 11, 18.

The USM I Court (1) remanded the issue of USM's untimely submission and instructed the Department to consider whether it should be placed on the record, (2) deferred considering the issue of whether the retorts were properly treated as an indirect material input and valued as factory overhead, or whether the Department should have treated the retorts as a direct material input, “in order to allow Commerce to revisit its [characterization] ... in light of its decision concerning USM's untimely submission,” and (3) held that the Department's selection of the surrogate for truck freight was unclear and remanded for the Department to “explain its rationale ... or select a new surrogate for truck freight rates.” See USM I, 37 CIT at ––––, 895 F.Supp.2d at 1326, 1327, 1330 (citation omitted). The USM I Court also granted the Department's request for a voluntary remand regarding the surrogate values for financial ratios and labor rates. See id. at ––––, 895 F.Supp.2d at 1330, 1331.

On remand, the Department continued to treat retorts as an indirect material input covered by the value of overhead expenses, found no evidence of fraud by Tianjin based on evidence contained in USM's untimely submission, used World Bank⁵ data to calculate the surrogate value for truck freight, relied on the 2006–2007 financial statements of aluminum producer Madras Aluminium Limited Company (“MALCO”) as the basis for calculating the financial ratios, and made an adjustment to its labor rate calculation. Remand Results at 2, 3, 21, 30, 31. These changes resulted in a 51.26 percent margin for Tianjin.⁶ Remand Results at 3.

STANDARD OF REVIEW

“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). “The results of a redetermination pursuant to court remand are also reviewed for compliance with the court's remand order.” Yantai Xinke Steel Structure Co. v. United States, 38 CIT ––––, ––––, Slip Op. 14–38, at 4, 2014 WL 1387529 (2014) (quoting Xinjiamei Furniture (Zhangzhou) Co. v. United States, 38 CIT ––––, ––––, Slip Op. 14–17, at 3, 968 F.Supp.2d 1255, 2014 WL 594073 (2014) ) (internal quotation marks omitted).

DISCUSSION

I. Legal Framework

“The United States imposes duties on foreign-produced goods that are sold in the United States at less-than-fair value.” Jacobi Carbons AB v. United States, 38 CIT ––––, ––––, 992 F.Supp.2d 1360, 1365 (2014) (quoting Clearon Corp. v. United States, 37 CIT ––––, ––––, Slip Op. 13–22, at 4, 2013 WL 646390 (2013) ) (internal quotation marks omitted). When making the fair value determination, Commerce is required to make “a fair comparison ... between the export price ^{[ 7 ]} or constructed export price ^{[ 8 ]} and normal value.” See 19 U.S.C. § 1677b(a).

Ordinarily, in a case such as this where the subject merchandise is exported from a nonmarket economy country,⁹ “the normal value of the subject merchandise [is determined based on] the value of the factors of production utilized in producing the merchandise and [an] added ... amount for general expenses and profit plus the cost of containers, coverings, and other expenses.” See id. § 1677b(c)(1). By statute, to find these surrogate values, Commerce is directed to use, “to the extent possible, the prices or costs of factors of production in one or more market economy countries that are ... at a level of economic development comparable to that of the nonmarket economy country[ ] and ... significant producers of comparable merchandise.” Id. § 1677b(c)(4). When valuing factors of production, Commerce must use “the best available information regarding the values of such factors in a market economy country or countries considered to be appropriate by the [Department].” Id. § 1677b(c)(1). In selecting the best available information, Commerce's practice “is to ‘choose surrogate values that represent broad market-average prices, prices specific to the input, prices that are net of taxes and import duties, prices that are contemporaneous with the POR, and publicly available non-aberrational data from a single surrogate market-economy.’ ” Jacobi Carbons, 38 CIT at ––––, 992 F.Supp.2d at 1366 (quoting Clearon, 37 CIT at ––––, Slip Op. 13–22, at 7) (citing 19 C.F.R. § 351.408(c)(2) ). Thus, to determine normal value of subject merchandise exported from a nonmarket economy country, Commerce first must “assess the ‘price or costs' of factors of production of [the product at issue] in [a surrogate market economy country] in an attempt to construct a hypothetical market value of that product in [the nonmarket economy country].” See Nation Ford Chem. Co. v. United States, 166 F.3d 1373, 1375 (Fed.Cir.1999).

As to financial ratios, “[i]n non-market economy antidumping cases, such as this, in selecting financial statements to calculate the financial ratios used to determine an exporter's dumping margin, ‘Commerce looks to specificity, contemporaneity, and quality of the data.’ ” Yantai, 38 CIT at ––––, Slip Op. 14–38, at 23 (quoting Dongguan Sunrise Furniture Co. v. United States, 37 CIT ––––, ––––, 904 F.Supp.2d 1359, 1366 (2013) ).

II. Labor Rate Adjustment

In the Remand Results, Commerce made two corrections to the surrogate value for labor. See Remand Results at 3, 21 (“The Department agrees with USM that it erred when inflating the labor rate with respect to the base period and used the incorrect index to adjust for inflation in the Final Results. Accordingly, the Department ... corrected those two errors for [the] draft results of redetermination.”). First, the Department corrected the base period it had used to adjust for inflation by changing the period from May 1, 2007 through April 30, 2008 to a period contemporaneous with that of the data itself, April 1, 2007 through March 31, 2008. See Remand Results at 21. Second, Commerce selected “the consumer price index typically used to adjust for inflation in accordance with the Department's labor policy bulletin,” rather than the wholesale price index from India that Commerce had used in the Final Results. See Remand Results at 21.

Because Commerce was reasonable in choosing a time period more contemporaneous with the data and used the consumer price index in accordance with its past practice, and because neither...