CAFC Reverses ITC 2006-07 Russia Magnesium AD Remands; Says CIT Misinterpreted Statute, Overstepped Bounds

The Court of Appeals for the Federal Circuit reversed a Court of International Trade remand of the final results of the 2006-07 administrative review of the antidumping duty order on magnesium metal from the Russian Federation, and ordered CIT to reinstate the original final results. In its ruling, CAFC said CIT overstepped its authority by requiring the International Trade Administration to consider factual information that Russian magnesium and titanium manufacturer PSC VSMPA-Avisma submitted beyond the regulatory deadline. CAFC also said CIT misinterpreted the phrase “ordinary course of business” in the statute in requiring the ITA to use a methodology that also accounted for Avisma’s titanium production when allocating costs in the calculation of constructed value for Avisma’s magnesium sales. According to CAFC, the phrase refers to a normal time period, and does not dictate a specific cost accounting methodology.

(In 2009, CIT remanded the final results at issue to consider an untimely filed affidavit supporting Avisma’s proposed methodology for calculating constructed value. Although CIT agreed that the affidavit was filed after the ITA’s regulatory deadline, it nonetheless ordered the ITA to consider it because the question of constructed value in the case represented an issue of first impression. The ITA considered the affidavit in its first remand redetermination, but did not change the 15.77% AD rate it found for Avisma in the original final results. In 2010, CIT again remanded, ordering the ITA to consider Avisma’s entire process, which includes titanium, when determining Avisma’s magnesium production costs for purposes of calculating the constructed value of Avisma’s magnesium. In its second remand redetermination, the ITA found an AD rate of 8.51% for Avisma. In 2011, CIT sustained this second redetermination, and the case subsequently appealed by defendant-appellant U.S. Magnesium.)

CIT Cannot Set Aside Proper Procedure to Achieve Accurate Result

CAFC said that, in ordering the ITA to consider the untimely filed factual information, it improperly intruded upon the ITA’s power to apply its own procedures for the timely resolution of AD reviews. According to CAFC, “the role of judicial review is limited to determining whether the record is adequate to support the administrative action. A court cannot set aside application of a proper administrative procedure because it believes that properly excluded evidence would yield a more accurate result if the evidence were considered.” Just because an antidumping case may present an issue of first impression, does not give CIT or CAFC “license to usurp the role that Congress has delegated” to the ITA, CAFC said.

"Ordinary Course of Business" Refers to Time Horizon, not Normal Manuf. Procedure

With respect to the CIT’s decision to require the ITA to consider Avisma’s entire production process, including titanium production, and not just the magnesium production process when calculating the constructed value of Avisma’s magnesium, CAFC said that CIT misinterpreted the statute.

In its 2010 ruling, CIT cited 19 USC 1677b(e)(1), which provides that one component of constructed value is “the cost of materials and fabrication or other processing of any kind employed in producing the merchandise, during a period which would ordinarily permit the production of the merchandise in the ordinary course of business.” CIT said that titanium production is part of Avisma’s “ordinary course of business”, and ordered the ITA to consider it.

But CAFC said the plain language of the statute indicates that the phrase “during a period which would ordinarily permit the production of the merchandise in the ordinary course of business” aims to ensure that constructed value is based on the costs of production during a normal time period, so as to guard against aberrant costs. The phrase does not dictate that the ITA employ a specific cost accounting methodology that would include Avisma’s entire production process, CAFC said.

Accordingly, CAFC reversed CIT’s decision to set aside the final results and remanded to CIT for entry of judgment reinstating the Final Results.