Tianjin Magnesium International Co., Ltd. v. United States

Slip Op. 12-54
UNITED STATES COURT OF INTERNATIONAL TRADE
Before: Nicholas Tsoucalas, Senior Judge
___________________________________
TIANJIN MAGNESIUM INTERNATIONAL 	:
CO., LTD. 	:
:
Plaintiff, 	:
:
v. 	: Consol. Court No.: 09-00012
:
UNITED STATES, 	:
:
Defendant, 	:
:
and 	:
:
US MAGNESIUM, LLC, 	:
:
Defendant-Intervenor. 	:
:
OPINION
Held: 	The 	Final 	Results 	of 	Redetermination 	Pursuant 	to 	Voluntary
Remand issued by the Department of Commerce is affirmed.
Dated: April 25, 2012
Riggle 	& 	Craven, 	(David 	A. 	Riggle) 	for 	Tianjin 	Magnesium
International Co., Ltd., Plaintiff.
Tony 	West, 	Assistant 	Attorney 	General; 	Jeanne 	E. 	Davidson,
Director, Claudia Burke, Assistant Director, Commercial Litigation
Branch, Civil Division, United States Department of Justice, (Renee
Gerber); 	Thomas 	M. 	Beline, 	Office 	of 	Chief 	Counsel 	for 	Import
Administration, United States Department of Commerce, Of Counsel,
for the United States, Defendant.
King 	& 	Spalding, 	LLP, 	(Stephen 	A. 	Jones 	and 	Jeffrey 	B.
Denning) for US Magnesium, LLC, Defendant-Intervenor.
TSOUCALAS, Senior Judge: 	This matter comes before the Court
upon 	the 	Final 	Results 	of 	Redetermination 	Pursuant 	to 	Voluntary
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Remand: Pure Magnesium from the People’s Republic of China (“Second
Redetermination”) issued by the Department of Commerce (“Commerce”)
on 	October 	31, 	2011. 	Plaintiff, 	Tianjin 	Magnesium 	International
Co., 	Ltd. 	(“Tianjin”) 	filed 	Comments 	asserting 	that 	the 	Second
Redetermination was without support and requesting that the Court
remand 	this 	matter 	to 	Commerce 	for 	further 	proceedings.
Defendant-Intervenor, 	US 	Magnesium, 	LLC 	(“US 	Magnesium”) 	filed
Comments stating that Commerce’s decision was well supported, and
urging 	the 	Court 	to 	affirm 	the 	Second 	Redetermination 	without
modification. 	For the reasons set forth below, the Court concludes
that 	the 	Second 	Redetermination 	is 	supported 	by 	substantial
evidence 	and 	otherwise 	in 	accord 	with 	the 	law 	and 	affirms
Commerce’s decision.
BACKGROUND
This case involves an administrative review of the antidumping
order on pure magnesium from the People’s Republic of China for the
period 	from 	May 	1, 	2006, 	through 	April 	30, 	2007. 	See 	Pure
Magnesium 	from 	the 	People’s 	Republic 	of 	China: 	Final 	Results 	of
Antidumping Duty Administrative Review, 73 Fed. Reg. 76,336 (Dec.
16, 	2008) 	(“2006-2007 	Final 	Results”). 	At 	the 	conclusion 	of 	the
administrative 	review, 	Tianjin, 	a 	seller 	of 	pure 	magnesium 	for
export, 	was 	assigned 	a 	rate 	of 	0.63%, 	and 	appeals 	were 	filed 	by
both 	Tianjin 	and 	US 	Magnesium. 	On 	August 	9, 	2010, 	the 	Court
remanded the case for further proceedings after concluding that not
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all 	of 	the 	surrogate 	values 	relied 	on 	in 	the 	2006-2007 	Final
Results were supported. 	See Tianjin Magnesium Int’l Co., Ltd. v.
United 	States, 	34 	CIT 	__, 	722 	F. 	Supp. 	2d 	1322 	(2010) 	(“Tianjin
I”). 	On 	February 	11, 	2011, 	Commerce 	issued 	its 	Final 	Results 	of
Redetermination 	Pursuant 	to 	Court 	Remand 	Pure 	Magnesium 	from 	the
People’s Republic of China (“First Redetermination”). 	While this
Court’s review of that First Redetermination was pending, Commerce
requested that the matter again be remanded so it could determine
whether to reopen the 2006-2007 administrative review based on the
factors 	announced 	by 	the 	United 	States 	Court 	of 	Appeals 	for 	the
Federal 	Circuit 	in 	Home 	Prods. 	Int’l, 	Inc. 	v. 	United 	States, 	633
F.3d 1369 (Fed. Cir. 2011). 	The Court granted Commerce’s request.
To best understand the issues weighed by Commerce in this most
recent 	remand, 	attention 	must 	be 	given 	to 	events 	that 	occurred
during 	the 	first 	remand. 	The 	Court 	first 	remanded 	this 	case, 	in
part, based on its conclusion that the record contained inadequate
support for the valuation given to waste magnesium, a manufacturing
process byproduct the sale of which could offset the normal value.
Tianjin I, 34 CIT at __, 722 F. Supp. 2d at 1336. 	Whether Tianjin
was entitled to the offset was not in question when this matter was
first remanded.
Following 	the 	Court’s 	remand 	in 	August, 	2010, 	Commerce
concluded 	that 	there 	was 	not 	adequate 	evidence 	in 	the 	record 	to
properly 	value 	the 	waste 	magnesium, 	and 	it 	issued 	to 	Tianjin 	a
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supplemental questionnaire. 	Second Redetermination at 4. 	In its
response to that supplemental questionnaire, Tianjin continued to
claim entitlement to the waste magnesium byproduct offset, and it
provided 	documentation 	supporting 	that 	claim 	such 	as 	sales
invoices, sales ledger entries, and other accounting records. 	See
Response 	to 	the 	Supplemental 	By-product 	Questionnaire 	by 	Tianjin
Magnesium International, Co., Ltd. (Oct. 19, 2010), Public Rec. 6,
Confidential Rec. 2 (“Supplemental Response”). 1
On November 2, 2010, US Magnesium filed its Rebuttal Factual
Information 	and 	Petitioner’s 	Comments 	On 	TMI’s 	Supplemental
Byproduct 	Response 	(Nov. 	2, 	2010), 	PR 	10 	(“Rebuttal”). 	US
Magnesium’s 	Rebuttal 	included 	a 	copy 	of 	Commerce’s 	verification
report from the administrative review for the 2007-2008 period of
review. 	See 	Verification 	of 	the 	Sales 	and 	Factors 	Responses 	of
Tianjin 	Magnesium 	International, 	Ltd. 	in 	the 	2007-2008
Administrative 	Review 	of 	the 	Antidumping 	Duty 	Order 	on 	Pure
Magnesium 	from 	the 	People’s 	Republic 	of 	China 	(Nov. 	4, 	2009),
Rebuttal, 	Exhibit 	1 	(“2007-2008 	Verification 	Report”). 	In 	the
2007-2008 Verification Report, Commerce stated that it was notified
by Tianjin’s suppliers that there had been no byproduct sales prior
to 	April 	2007. 	In 	other 	words, 	there 	were 	no 	byproduct 	sales
during 	the 	2006-2007 	period 	of 	review 	at 	issue 	in 	this 	case.
1 Hereinafter all documents in the public record will be
designated “PR” and all documents in the confidential record
designated “CR.
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Commerce 	stated 	that 	this 	disclosure 	was 	made 	in 	Tianjin’s
presence. 	Second Redetermination at 14.
Based 	on 	this 	information, 	US 	Magnesium 	argued 	that 	Tianjin
was not entitled to the byproduct offset. 	In support, US Magnesium
pointed 	out 	that 	Tianjin’s 	Supplemental 	Response, 	in 	which 	it
asserted its entitlement to a byproduct offset, was filed more than
a 	year 	after 	the 	2007-2008 	Verification 	Report 	was 	issued, 	and
therefore 	Tianjin 	must 	have 	been 	aware 	that 	there 	were 	no 	sales
entitling it to an offset. 	See Rebuttal at 9. 	Commerce decided,
however, 	that 	it 	could 	not 	consider 	the 	2007-2008 	Verification
Report, 	because 	it 	did 	not 	exist 	at 	the 	time 	Commerce 	made 	its
initial 	determination 	in 	the 	2006-2007 	Final 	Results. 	First
Redetermination 	at 	17. 	In 	the 	First 	Redetermination, 	Commerce
still considered Tianjin eligible for the byproduct offset.
Review of this First Redetermination was pending when Commerce
sought 	another 	remand 	to 	consider 	reopening 	the 	2006-2007
administrative 	review 	pursuant 	to 	the 	factors 	in 	Home 	Products,
which 	is 	the 	remand 	currently 	at 	issue. 	On 	remand, 	Commerce
determined 	that 	there 	existed 	clear 	and 	convincing 	evidence
sufficient 	to 	make 	a 	prima 	facie 	case 	that 	the 	2006-2007
administrative review was tainted by fraud. 	Commerce specifically
relied on the information set forth above that there had, in fact,
been 	no 	byproduct 	sales 	during 	the 	2006-2007 	period, 	as 	well 	as
evidence 	that 	the 	vouchers 	submitted 	to 	show 	such 	sales 	were
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fabricated. 	Second 	Redetermination 	at 	9-10. 	This 	evidence 	led
Commerce to conclude that Tianjin intentionally misrepresented its
entitlement to a byproduct offset, and that it did so to lower its
margin. 	Id. at 10. 	Commerce also stated that although it normally
considers 	its 	administrative 	reviews 	final 	and 	conclusive, 	this
case 	presented 	circumstances 	weighing 	in 	favor 	of 	reopening 	the
review. 	Commerce 	noted 	that 	Tianjin’s 	misrepresentations 	were
material 	because 	when 	relied 	on 	by 	Commerce, 	they 	resulted 	in 	a
lower margin for Tianjin. 	Id. at 14-15. 	Commerce also concluded
that Tianjin’s fraud was discovered within a reasonable time, and
noted 	that 	Tianjin’s 	entries 	from 	the 	2006-2007 	period 	of 	review
remained unliquidated because of an injunction. 	Id. at 15-16.
Based 	on 	this 	evidence, 	Commerce 	determined 	that 	it 	was
appropriate 	to 	reopen 	the 	record 	of 	the 	2006-2007 	administrative
review. 	Commerce prepared draft results wherein it concluded that
Tianjin 	was 	not 	entitled 	to 	the 	byproduct 	offset 	and 	calculated
Tianjin’s 	margin 	to 	be 	21.24%. 	Id. 	at 	18. 	However, 	after
receiving 	comments 	from 	the 	parties, 	Commerce 	revised 	its
determination and concluded that Tianjin’s behavior significantly
impeded the review pursuant to Section 766(a)(2)(C) of the Tariff
Act 	of 	1930, 	as 	amended, 	19 	U.S.C. 	§ 	1677e(a)(2)(C) 	(2006). 2
Second 	Redetermination 	at 	27. 	Pursuant 	to 	19 	U.S.C. 	§ 	1677e(b),
2 All further citations to the Tariff Act of 1930 are to the
relevant provisions of Title 19 of the United States Code, 2006
edition.
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Commerce further concluded that Tianjin failed to cooperate to the
best of its ability, and applied an adverse facts available rate of
111.73%, 	which 	rate 	had 	already 	been 	calculated 	for 	a 	respondent
other than Tianjin in the 2006-2007 review.
STANDARD OF REVIEW
As stated in Tianjin I, the Court has jurisdiction over this
matter 	pursuant 	to 	28 	U.S.C. 	§ 	1581(c) 	and 	19 	U.S.C.
§1516a(a)(2)(B)(iii). 	Additionally, 	the 	Court 	will 	uphold
Commerce’s determinations in administrative reviews 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).
ANALYSIS
Whether 	Commerce 	was 	justified 	in 	reopening 	the 	2006-2007
review turns on an interpretation of the Home Products decision.
In that decision, the Court of Appeals dealt with the question of
whether 	remand 	is 	required 	when 	evidence 	is 	presented 	that 	the
proceedings below were tainted by material fraud. 	Stating that the
Court of International Trade’s discretion on whether to remand is
not unlimited, the Court of Appeals held that
where 	a 	party 	brings 	to 	light 	clear 	and 	convincing 	new
evidence sufficient to make a prima facie case that the
agency proceedings under review were tainted by material
fraud, 	the 	Trade 	Court 	abuses 	its 	discretion 	when 	it
declines 	to 	order 	a 	remand 	to 	require 	the 	agency 	to
reconsider its decision in light of the new evidence.
Home Prods., 633 F.3d at 1378. 	The Court of Appeals clarified that
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Commerce 	need 	not 	reopen 	the 	administrative 	proceedings 	just
because 	evidence 	of 	fraud 	existed, 	and 	stated 	that 	in 	making 	the
decision to reopen or not, Commerce can consider “the interests in
finality, 	the 	extent 	of 	the 	inaccuracies 	in 	the 	. 	. 	.
administrative 	review, 	whether 	fraud 	existed 	in 	the 	. 	. 	.
administrative review, the strength of the evidence of fraud, the
level of materiality, and other appropriate factors.” 	Id. at 1381.
The 	posture 	of 	this 	case 	is 	different 	than 	Home 	Products 	in
that 	here, 	the 	evidence 	of 	Tianjin’s 	fraud 	was 	raised 	before
Commerce at the administrative level instead of before the court as
it 	was 	in 	Home 	Products. 	See 	id. 	at 	1375. 	Tianjin 	argues 	that
Commerce erred in two primary ways when it made the threshold fraud
finding 	and 	reopened 	the 	review: 	(1) 	Commerce 	did 	not 	conduct 	an
analysis 	of 	the 	elements 	of 	fraud, 	and 	(2) 	Tianjin’s 	conduct 	did
not rise to the level of fraud.
Taking up Tianjin’s first argument, the Court concludes that
there 	is 	nothing 	in 	the 	Home 	Products 	decision 	that 	requires 	a
threshold 	analysis 	and 	finding 	regarding 	each 	of 	the 	elements 	of
fraud. 	First, 	Home 	Products 	itself 	does 	not 	engage 	in 	such 	a
rigorous 	analysis. 	Furtermore, 	the 	Court 	of 	Appeals 	did 	not
require remand only when evidence is presented that a participant
in the administrative proceedings committed fraud, either at common
law as proposed by Tianjin, or otherwise. 	Home Products sets forth
a 	less 	rigorous 	standard, 	requiring 	remand 	when 	“evidence
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sufficient to make a prima facie case that the agency proceedings
under review were tainted by material fraud” is presented. 	Id. at
1378. 	The 	“prima 	facie 	case” 	prescribed 	by 	Home 	Products 	is 	not
whether a party has committed common law fraud, but rather whether
the proceedings themselves were “tainted by material fraud.” 3 	This
inquiry 	is 	broader, 	and 	less 	exacting, 	than 	a 	determination
regarding whether the conduct of a party has met the legal elements
of fraud.
Given 	this 	conclusion 	regarding 	the 	Home 	Products 	standard,
the 	Court 	concludes 	that 	Commerce’s 	determination 	that 	the
proceedings 	below 	were 	“tainted 	by 	material 	fraud” 	is 	well
supported by substantial evidence in the record. 	Throughout these
proceedings, Tianjin attempted to insulate itself from the lack of
byproduct sales by stating that it was Tianjin’s suppliers who sold
byproduct 	and 	kept 	the 	requisite 	paperwork. 	See, 	e.g., 	Pl.’s
Comments on the Second Redetermination of October 31, 2011 at 6.
However, by the time Tianjin submitted its Supplemental Response in
October 	2010, 	it 	was 	undoubtedly 	aware 	that 	there 	had 	been 	no
byproduct sales during the 2006-2007 administrative review period.
Only 	Tianjin 	claimed 	entitlement 	to 	a 	byproduct 	offset 	in 	its
October 	2010 	Supplemental 	Response, 	and 	only 	Tianjin 	filed 	the
3 “Taint” is defined as “(1) To imbue with a noxious quality
or principle. (2) To contaminate or corrupt. (3) To tinge or
affect slightly for the worse.” 	Black’s Law Dictionary 1466 (7th
ed. 1999).
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paperwork 	with 	Commerce 	purporting 	to 	justify 	that 	claim.
Furthermore, 	as 	can 	be 	seen 	by 	the 	disparity 	in 	0.63% 	margin
imposed on Tianjin in the 2006-2007 Final Results, and the 21.24%
margin 	Commerce 	was 	going 	to 	impose 	before 	deciding 	to 	apply
adverse facts available, Tianjin’s claimed offset was material in
that it stood to benefit from a greatly reduced margin if Commerce
applied the byproduct offset.
Finally, 	the 	Court 	concludes 	that 	Tianjin’s 	conduct 	was
egregious enough to warrant Commerce’s determinations that Tianjin
had impeded its investigation and failed to act to the best of its
ability. 	See Nippon Steel Corp. v. United States, 337 F.3d 1373,
1382 (Fed. Cir. 2003) (“While the [‘best of its ability’] standard
does not require perfection and recognizes that mistakes sometimes
occur, 	it 	does 	not 	condone 	inattentiveness, 	carelessness, 	or
inadequate record keeping.”). 4
Based on the foregoing, and the Court’s review of the Second
Redetermination and all other pleadings and papers filed herein, it
is hereby
ORDERED that the Final Results of Redetermination Pursuant to
Voluntary Remand issued by the Department of Commerce is affirmed
4 The Court notes that in addition to its arguments against
Commerce’s interpretation of Home Products, Tianjin also argues
that Commerce erroneously applied zeroing in the Second
Redetermination. 	Given Commerce’s application of adverse facts
available, and the Court’s conclusion that this determination was
supported by substantial evidence, the Court need not reach the
issue of zeroing.
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without modification, and this matter is dismissed.
/s/ NICHOLAS TSOUCALAS
Nicholas Tsoucalas
Senior Judge
Dated: April 25, 2012
New York, New York
Case 1:09-cv-00012-NT Document 170 Filed 04/25/12 Page 11 of 12

Slip Op. 12-54
UNITED STATES COURT OF INTERNATIONAL TRADE
Before: Nicholas Tsoucalas, Senior Judge
___________________________________
TIANJIN MAGNESIUM INTERNATIONAL 	:
CO., LTD. 	:
:
Plaintiff, 	:
:
v. 	: Consol. Court No.: 09-00012
:
UNITED STATES, 	:
:
Defendant, 	:
:
and 	:
:
US MAGNESIUM, LLC, 	:
:
Defendant-Intervenor. 	:
:
JUDGMENT
This 	case 	having 	been 	duly 	submitted 	for 	decision 	and 	the
Court, after due deliberation, having rendered a decision herein,
now, in accordance with said decision, it is hereby
ORDERED that the Final Results of Redetermination Pursuant to
Voluntary 	Remand 	issued 	by 	the 	Department 	of 	Commerce 	on 	October
31, 2011, is affirmed without modification; and it is further
ORDERED that this matter is dismissed.
/s/ NICHOLAS TSOUCALAS
Nicholas Tsoucalas
Senior Judge
Dated: April 25, 2012
New York, New York
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