from the United States Court of International Trade in No.
12-cv-00006, Senior Judge Richard K. Eaton.
Jeffrey Mark Telep, King & Spalding LLP, Washington, DC,
argued for plaintiff-appellant. Also represented by Stephen
LAUFGRABEN, Commercial Litigation Branch, Civil Division,
United States Department of Justice, Washington, DC, argued
for defendant-appellee United States. Also represented by
BENJAMIN C. MlZER, JEANNE Davidson, Patricia M. McCarthy;
Lydia Caprice Pardini, Office of the Chief Counsel for Trade
Enforcement and Compliance, United States Department of
Commerce, Washington, DC.
Andrew Riggle, Riggle & Craven, Chicago, IL, argued for
defendant-appellee Tianjin Magnesium International Co., Ltd.
Also represented by DAVID J. CRAVEN, Saichang Xu.
Prost, Chief Judge, NEWMAN and Bryson, Circuit Judges.
Bryson, Circuit Judge.
Magnesium LLC appeals from a judgment of the United States
Court of International Trade ("the Trade Court") in
this antidumping duty case. The Trade Court sustained the
Department of Commerce's final determination in an
administrative review of the antidumping duty order on pure
magnesium from the People's Republic of China for the
period of review May 1, 2009, to April 30, 2010. We affirm.
United States imposes duties on foreign goods sold in the
U.S. at less than fair value. 19 U.S.C. § 1673. To
determine whether goods are being sold for less than fair
value, Commerce compares the export price, i.e., the price of
the goods sold in the U.S., to the "normal value"
of the goods, which is ordinarily the price at which such
goods are sold in the exporting country. Id. §
1677b. When merchandise is exported from a nonmarket economy
country, the normal value is constructed from "the value
of the factors of production utilized in producing the
merchandise and to which shall be added an amount for general
expenses and profit plus the cost of containers, coverings,
and other expenses." Id. § 1677b(c)(1)(B).
Costs are generally "calculated based on the records of
the exporter or producer of the merchandise, if such records
are kept in accordance with the generally accepted accounting
principles of the exporting country (or the producing
country, where appropriate) and reasonably reflect the costs
associated with the production and sale of the
merchandise." Id. § 1677b(f)(1)(A).
case concerns the importation of magnesium metal from the
People's Republic of China. The imported magnesium is
produced using a manufacturing process known as the Pidgeon
process. That process begins by crushing dolomite, a mineral
containing magnesium, into granules. The dolomite granules
are then calcinated by roasting them to remove carbon. The
calcinated dolomite is then mixed with ferrosilicon and
fluorite, and the mixture is pressed into individual
briquettes. The briquettes are then loaded into stainless
steel reaction vessels known as retorts. The retorts are
placed under vacuum and heated, resulting in the separation
and vaporization of the magnesium. The magnesium vapor
condenses into crowns of solid magnesium metal. The crowns of
magnesium metal are then removed from the retorts, melted
down, purified, and cast into ingots for sale.
retorts used in the Pidgeon process must be replaced over
time in a commercial operation, as the intense heat and the
chemical reactions gradually degrade the interior of the
retorts. After approximately 60 days of use in multiple
cycles of the manufacturing process, the retorts become
unsuitable for the production of magnesium. The retorts are
then recycled, and the recycled steel is used to produce new
retorts. This appeal focuses on how to classify the
costs of the retorts in constructing the normal value of the
1995, the Commerce Department entered an antidumping order on
magnesium metal from the People's Republic of China.
Pure Magnesium from the People's Republic of
China, 60 Fed. Reg. 25, 691 (Dep't of Commerce May
12, 1995). On May 3, 2010, Commerce provided notice of an
opportunity for the parties to seek review of the antidumping
order. Tianjin Magnesium International ("TMI"), a
foreign exporter of magnesium produced in China, and U.S.
Magnesium ("USM"), a domestic producer of
magnesium, requested that Commerce review TMI's sales.
From June 30, 2010, to May 30, 2011, Commerce solicited
comments and information from the parties, including
TMI's business records, surrogate value and country
selection, and freight rates.
8, 2011, Commerce released its preliminary results for the
2009-2010 review. Pure Magnesium from the People's
Republic of China: Preliminary Results of the 2009-2010
Antidumping Duty Administrative Review, 76 Fed. Reg. 33,
194 (Dep't of Commerce June 8, 2011). As part of its
nonmarket economy review, Commerce constructed a normal value
for magnesium by creating surrogate values for the raw
materials used in the manufacturing process. It considered
ferrosilicon, fluorite powder, dolomite, flux, and coal to be
direct materials, and it included them directly in the
calculation of normal value. However, it did not include a
surrogate value for steel retorts, because it did not regard
the retorts as direct materials. Instead, it treated the
retorts as indirect materials and accounted for the cost of
the retorts as manufacturing overhead.
memorandum accompanying the preliminary results, Commerce
explained why it classified retorts as indirect inputs and
accounted for them as a component of overhead rather than as
direct materials. Pure Magnesium from the People's
Republic of China, 76 Fed. Reg. 76, 945, 76 ITADOC 76,
945, Issues & Decision Memorandum, at Comment 4
(Dep't of Commerce December 9, 2011). First, Commerce
explained that "retorts are not physically incorporated
into the final product." While noting that retorts are
necessary to the production process, Commerce stated that
"they are more similar to a kiln or furnace, " the
costs of which Commerce generally treats as manufacturing
overhead. Commerce also found that retorts are reusable and
"are not replaced so regularly as to represent a direct
factor rather than overhead." Finally, Commerce found
that it was "unclear how retorts are typically treated
in the industry."
the preliminary results, USM continued to argue that retorts
should be classified as direct materials rather than as
overhead. In the final results, however, Commerce stood by
its classification, explaining that the retorts are best
classified as overhead "because they are not physically
incorporated into the final product and are replaced too
infrequently to be a direct material." Commerce
concluded that "retorts are not an input added into the
production process; rather, they are manufacturing equipment,
like an oven or crucible, all of which are necessary
components of the production line to produce pure
magnesium." Consequently, Commerce declined to treat
retorts as a direct material.
the closing of the administrative record in the review, USM
sought to submit new evidence contradicting one of the
answers TMI provided to Commerce. USM contended that the new
evidence was indicative of fraud on TMI's part. Commerce
rejected USM's submission as untimely. The Trade Court,
however, remanded the case to Commerce for consideration of
the new evidence.
remand, Commerce found that USM's newly submitted
evidence did not constitute prima facie evidence of fraud.
Commerce also found that the new evidence did not call into
question its finding that retorts are properly treated as
Trade Court affirmed Commerce's remand results. U.S.
Magnesium LLC v. United States, 72 F.Supp.3d 1341 (Ct.
Int'l Trade 2015). After reviewing the financial records
of TMI's supplier, the court sustained Commerce's
conclusion that the supplier did not treat retorts as a
direct material. The court also upheld Commerce's finding
that the evidence was inconclusive as to whether the industry
as a whole treated retorts as a direct material input. And
the court held that Commerce was "right in its claim
that treating the retorts as an indirect material is
consistent with its past practice of characterizing materials
as overhead when 'they are not physically incorporated
into the final product and are replaced too infrequently to
be a direct material.'"
appealed to this court from the Trade Court's judgment.
determinations in an antidumping duty case must be upheld
unless they are "unsupported by substantial evidence on
the record, or otherwise not in accordance with law." 19
U.S.C. § 1516a(b)(1)(B)(i). Substantial evidence means
"such relevant evidence as a reasonable mind might
accept as adequate to support a conclusion." Consol.
Edison Co. v. NLRB, 305 U.S. 197, 229 (1938).
conducting substantial evidence review of Commerce's
determinations, we apply the same standard of review that the
Trade Court used in reviewing the administrative record.
Downhole Pipe & Equip., L.P. v. United States,776 F.3d 1369, 1373 (Fed. Cir. 2015). As we have explained,
however, we "will not ignore the informed opinion of the
Court of International Trade." Diamond Sawblades
Mfrs. Coalition v. United States,612 F.3d 1348, 1356
(Fed. Cir. 2010) ...