United States Court of International Trade

Remand Determination Sustained  in Both Solar Industries Cases

In Kyocera Solar, Inc. and Kyocera Mexicana S.A. de C.V. v. United States, Court No. 15-81, Slip Op. 17-90 (July 21, 2017),  the Court reviewed the U.S. Department of Commerce’s (“Commerce” or “Department”) remand determination in the antidumping investigation of certain crystalline silicon photovoltaic products from Taiwan, filed pursuant to the court’s order in SunEdison, Inc. v. United States, 40 CIT __, 179 F. Supp. 3d 1309 (2016).

Investigations in to the Chinese and Taiwanese solar industries resulted in two sets of antidumping and countervailing duty orders.  The investigation into the Chinese solar industry resulted in an ADD order and a CVD order covering modules, laminates, and/or panels assembled in China consisting of cells manufactured outside of China, including cells manufactured in Taiwan. Certain Crystalline Silicon Photovoltaic Products from the [PRC], 80 Fed. Reg. 8,592 (Dep’t Commerce Feb. 18, 2015) (ADD order; and amended final affirmative CVD determination and CVD order) (“the Solar IIPRC Orders”). The investigation into the Taiwanese solar industry resulted in an ADD order covering solar cells manufactured in Taiwan, including Taiwanese cells assembled into modules, laminates, and/or panels outside of Taiwan, but excluding Taiwanese cells assembled into modules, laminates, and/or panels in China covered by the Solar II PRC Orders. Certain Crystalline Silicon Photovoltaic Products from Taiwan, 80 Fed. Reg.8,596 (Dep’t Commerce Feb. 18, 2015) (ADD order) (“the Solar II Taiwan Order”).  It is the Solar II Taiwan Order which is at issue in this case.

Kyocera Solar, Inc. and Kyocera Mexicana S.A. de C.V. (collectively “Kyocera”) are affiliated entities within the Kyocera Corporation, and Kyocera Solar, Inc. headquartered in the United States is an importers of solar panels, while Kyocera Mexicana S.A. de C.V. is a Mexico-based foreign manufacturer of solar panels, which it assembles at its plant in Mexico using cells from Taiwan. More specifically, the court in SunEdison asked Commerce to further consider or explain: (1) whether Commerce had departed from its prior practiceof using a single rule of origin for a class or kind of merchandise; (2) whether Commerce treated similarly situated merchandise dissimilarly; and (3) whether Commerce had departed from its prior practice of calculating normal value “in the market where the majority of production of the subject merchandise  took place.”

The Court sustained the remand determination on all these issues finding that there are different origin rules for Solar II PRC and Solar II Taiwan merchandise, because they are different products, and thus they are treated differently. For Solar II PRC, it was reasonable for Commerce to determine country of origin for subject merchandise according to the country of panel assembly, and for Solar II Taiwan, it was reasonable for Commerce to determine the country of origin for subject merchandise was according to the country of cell manufacture. Due to the differences in products between the two investigations, the products were investigated, and reviewed with different rules of origin in mind.  Likewise, because the proper market for normal value is the market of origin determined by the origin test, the Court sustained Commerce’s designation of the home market to be Taiwan. 

In Sunpower Corporation et. al. and Canadian Solar Inc. et al. v. United States and Solar World Americas Inc., Slip Op. 17-89, Court No. 15-00067 (July 21, 2017) the Court reviewed arguments over Commerce’s determinations on remand. Plaintiffs brought this suit to challenge the results of antidumping and countervailing duty investigations regarding solar panel and cell assemblies and from China and Taiwan. The Court previously decided that Commerce had not properly explained its departure from the regular practice of using a single country of origin test for a particular class of merchandise, its potentially dissimilar treatment of similarly situated merchandise, and its departure from the prior practice of calculating normal value using the market where the majority of production took place. The Court ordered the case to be remanded to Commerce for further explanation or reconsideration. For the following reasons Commerce’s determinations on remand were upheld by the Court.

The first issue was whether Commerce deviated from its prior policy of applying only one rule of origin to a single class or kind of merchandise. Commerce explained that the solar panels under investigation belonged to different classes of merchandise and could be subject to different country of origin test. Subject merchandise is defined as “the class or kind of merchandise that is within the scope of an investigation” or review. Id. at 18.  Commerce had initiated numerous different investigations and reviews making the merchandise fit into different subject categories. The various country of origin tests applied by Commerce was to different classes of merchandise because of the separate investigations. The next issue was if Commerce treated similarly situated products differently in the PRC and Taiwan investigations. On remand, Commerce explained that the purpose behind the investigations was different and because of this the merchandise may not be treated similarly. The PRC investigation was initiated to address “injurious pricing decisions for and subsidization of solar panels assembled in China using non-Chinese cells”. Id. at 24. These factors were not present in the Taiwanese investigation. The Court held that this was an adequate explanation of the treatment and upheld the result.  The final issue was Commerce’s departure from the prior policy of calculating normal value using the market where the majority of production took place. Commerce explained to the court all the statute requires is “a fair comparison be made between normal value and export price,” not a comparison on the value of the product in the market where most production occurred. Id. at 25. Commerce stressed that it must be able to “address unfair pricing decisions or unfair subsidization that is taking place in the exporting country where further manufacturing” occurs. Id. at 28.  The Court agreed that Commerce had fulfilled its requirements in calculating normal value.

Remand Results Regarding Surrogate Country Selection Sustained

In Tianjin Wanhua Co., Ltd. v. United States, Court No. 15-190, Slip Op. 17-91 (July 24, 2017), the Courtreviewed the Remand Results filed pursuant to Tianjin Wanhua Co., Ltd. v. United States, 40 CIT __, 182 F. Supp. 3d 1301 (2016).  The Court in that decision analyzed the fifth administrative review conducted by the U.S. Department of Commerce (“Commerce”) of the antidumping duty order covering polyethylene terephthalate film, sheet, and strip from the People’s Republic of China (“PRC”). See Polyethylene Terephthalate Film, Sheet, and Strip from the People’s Republic of China, 80 Fed. Reg. 33,241 (Dep’t of Commerce June 11, 2015) (final results admin. review) (“Final Results”). Despite Tianjin Wanhua Co., Ltd. (Wanhua’s) arguments regarding preferring surrogate data from South Africa and untimely Gross National Income (GNI) data from 2013 for purposes of calculating the normal value, Commerce on remand found the Indonesian data and relevant financial statements to be more reliable and usable. Moreover, it came from a producer of “identical” merchandise rather than a producer of “comparable” merchandise.   The court therefore sustained Commerce’s selection of Indonesia as the primary surrogate country.

Assumes Jurisdiction over Lever Rule Challenge, Calls Lever Grant a “Ruling”

The Court of International Trade has subject matter jurisdiction over an importer’s challenge to a grant of “Lever Rule” protection, but has cast the challenge as one to a pre-importation ruling.

In XYZ Corporation v. United States, Slip Op. 17-88 (July 21, ,2017) an importer (bringing suit under an assumed name) challenged Customs’ decision to grant “Lever Rule” protection with respect to genuine DURACELL brand batteries. CBP had published in the March 31, 2017 Customs Bulletin a notice indicating that Customs would exclude and seize genuine batteries which differed from DURACELL batteries sold in the United States in terms of warranty protection, guarantee and warning labeling and customer care information. XYZ sued under the Administrative Procedure Act, claiming that the Lever Rule grant was a substantive legislative “rule” or regulation which may only be imposed after “notice and comment” rulemaking in the Federal Register. The plaintiff also contended that the Lever rule grant was arbitrary and capricious, in that it was unduly vague. It sought a preliminary injunction to block CBP from enforcing the Lever Rule restriction while its case went forward.

XYZ Corporation invoked the Court’s 28 U.S.C.§1581(i) “residual” jurisdiction, and the Government moved to dismiss the case.

The CIT denied the motion to dismiss, holding that it had jurisdiction, but under 28 U.S.C. §1581(h), which empowers the Court to render declaratory judgment regarding pre-importationrulings. Since the Court is limited to granting declaratory relief in such cases, it denied the plaintiff’s request for an injunction, and dissolved the Temporary Restraining Order it has issued. Expect this case to be litigated on a very expedited schedule.

Motions for Summary Judgment Regarding Classification of “Gum Base” Denied.

A lawsuit involving the tariff classification of “gum base” looks headed for trial, after the Court of International Trade denied cross-motions for summary judgment.

The issue in Mondelez Global Inc. v.. United States, Slip Op. 17-91 (July 25, 2017) is whether “gum base” – an odorless, colorless concoction of resins and chemicals used to make chewing gum – was properly classified by the government as a “food preparation” in HTS Heading 2106. This, in turn, depends on whether chewing gum is to be considered a “food”. The court noted that chewing gum is not intended to be ingested as a food. It rejected the government’s contention that the product was a “food preparation” based on the fact that it contained some vegetable oils and other ingredients which had nutritive value. The court held that chewing gum would not be considered a food preparation unless, like tea leaves or bouquet garni, it is designed to leach nutritive substances to be ingested. The Court denied the importer’s cross motion for summary judgment, saying that the government should be permitted to conduct further discovery, including laboratory testing on this point.

It seems unusual to reopen discovery in a case pending for 5 years, but the government moved for summary judgment because it did not want to incur the cost of laboratory testing.  The Court held the government should not be penalized or disadvantaged for trying to save costs.