For the reasons that follow, the court sustains Commerce's selection of surrogate values for aluminum frames, nitrogen, polysilicon ingots and blocks, and financial ratios. The court also sustains Commerce's decision to include import data with reported zero quantities in its
BACKGROUND
On February 9, 2016, Commerce initiated the third administrative review of the ADD order on crystalline silicon photovoltaic cells, whether or not assembled into modules, from the PRC, for which the period of review would be December 1, 2014 through November 30, 2015. See Initiation of Antidumping and Countervailing Duty Administrative Reviews,
On December 22, 2016, Commerce published the preliminary results of the third administrative review. See Crystalline Silicon Photovoltaic Cells, Whether or Not Assembled Into Modules, From [the PRC],
On June 27, 2017, Commerce published the final determination. See Final Results,
On July 7, 2017, Plaintiffs Canadian Solar International Limited; Canadian Solar (USA), Inc.; Canadian Solar Manufacturing (Changshu), Inc.; Canadian Solar Manufacturing (Luoyang), Inc.; CSI Cells Co., Ltd.; CSI-GCL Solar Manufacturing (YanCheng) Co., Ltd.; and CSI Solar Power (China) Inc. (collectively, "Canadian Solar") commenced this action pursuant to section 516A of the Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(iii) (2012).
This action was consolidated with actions brought by Qixin, Shanghai BYD Co., Ltd. ("BYD"), Changzhou Trina Solar Energy Co., Ltd. et al. ("Trina"),
JURISDICTION AND STANDARD OF REVIEW
The court has jurisdiction pursuant to 19 U.S.C. § 1516a(a)(2)(B)(iii) and
DISCUSSION
Plaintiffs and Consolidated Plaintiffs challenge a total of five of Commerce's
I. Surrogate Value Selection
Plaintiff and Consolidated Plaintiffs challenge Commerce's surrogate value selection for module glass, aluminum frames, nitrogen, semi-finished polysilicon ingots and blocks, and overhead, selling, general and administrative expenses, and profit as unsupported by substantial evidence. The court addresses each of these challenges in turn.
A. Module Glass
Trina argues that Commerce's selection of tempered glass under Thai HTS 7007.19.90000 over float glass under Thai HTS 7005.29.90001 to value Trina's module glass was unsupported by substantial evidence because the float glass classification specified the thickness of module glass consumed by Trina. See Trina's Br. at 2, 12-14. SolarWorld argues that Commerce's selection of Thai import data for tempered glass over laminated glass was unsupported by substantial evidence because tempered glass fails to account for the additional surface treatments of module glass. See SolarWorld's Br. at 3, 19-21.
Where the subject merchandise is exported from a nonmarket economy
In this review, Canadian Solar reported using solar module glass, and Trina reported using coated glass and tempered glass (collectively, "module glass"), as FOPs. See Final Decision Memo at 45. The record contained Thai import data for tempered glass (HTS 7007.19.90000), float glass (HTS 7005.29.90001), and laminated glass (HTS 7007.29.90).
SolarWorld maintains that Commerce's choice of tempered glass as a surrogate value substantially undervalued the module glass input because only laminated glass captures the additional costs associated with the surface treatments used on the respondents' module glass to increase its strength, safety, and durability. See SolarWorld's Br. at 19-21. SolarWorld's argument fails, however, as SolarWorld does not provide any evidence establishing that this surface treatment is comparable to the layering of laminated glass. See Final Decision Memo at 47.
Commerce also reasonably selected tempered glass over float glass to value Trina's module glass input because, although the float glass subheading more closely aligned with the thickness of Trina's input, the tempered glass subheading's lack of specification as to thickness indicated that it covered all thicknesses, including that consumed by Trina. Final Decision Memo at 46. Trina maintains Commerce failed to weigh the comparative importance of thickness against other factors in favor of selecting tempered glass. See Trina's Br. at 13. However, it is clear from Commerce's explanation that Commerce gave significant weight to the description by the parties that their module glass was tempered. See Final Decision Memo at 45-46. It is also clear that Commerce gave weight to the fact that the tempered glass subheading did not exclude the products with
However, while Commerce's choice of the tempered glass subheading to value Trina's and Canadian Solar's module glass is supported by substantial evidence, Commerce failed to provide a reasonable explanation as to why the Thai import data for tempered glass was not distorted by a small quantity of unusually costly imports from Hong Kong. Hong Kong imports accounted for only 0.4% of the total volume of Thai import data but constituted 60.2% of the total value of Thai imports during the period of review. See Final Decision Memo at 49; see also Thai Tempered Glass [attached as Ex. FR-1 to Canadian Solar's Oct. 31, 2016 Submission], PD 463-64, bar code 3518110-01 (Oct. 31, 2016). The average unit value ("AUV") for tempered glass imported into Thailand was $ 2.79 with the Hong Kong data, whereas excluding the Hong Kong data results in an AUV of only $ 1.11.
The court addressed this same issue in SolarWorld II in the proceedings concerning the second administrative review of the ADD order covering crystalline silicon photovoltaic cells. See Canadian Solar's Br. at 22-24; see also Canadian Solar's Reply Br. at 5; see also SolarWorld Americas, Inc. v. United States, 42 CIT ----,
Commerce unreasonably found that the Hong Kong imports were not low in quantity because Hong Kong ranged fourth in terms of quantity out of 22 countries from which Thailand imported tempered glass. Final Decision Memo at 49. Hong Kong imports account for only 0.4% of the total volume of imports of tempered glass into Thailand. The mere fact that there are other countries which represent an even smaller fraction of the imports into Thailand
Commerce also unreasonably concluded that the Hong Kong imports were not aberrational through reliance on benchmarks based on imports of negligible quantity from Denmark, France, Switzerland, and Mexico. Final Decision Memo at 49. These four other countries exported tempered glass to Thailand at prices equivalent to, or greater than, the Hong Kong imports.
Commerce's selection of the Thai data is remanded for further explanation of why its selection is reasonable in light of the fact that imports from Hong Kong only accounted for 0.4 % of the total volume of Thai imports, but constituted 60.2 % of the average import value during the period of review. The AUV of imports of tempered glass from Hong Kong into Thailand ($ 413.10 per kilogram) is nearly 150 times greater than the AUV of all tempered glass imports into Thailand (including imports from Hong Kong) ($ 2.79 per kilogram). See Canadian Solar's Reply at 3. Commerce's current explanation for not disaggregating data is that it simply does not do so as a matter of policy. It justifies its policy on the grounds of administrative burden and to avoid potentially distortive manipulation of import data. Final Decision Memo at 47, 54 (citing Polyethylene Terephthalate Film, Sheet, and Strip from [the PRC]: Issues and Decision Mem. for the Final Results of the
B. Aluminum Frames
SolarWorld challenges Commerce's valuation of the respondents' aluminum frames using Thai HTS 7604.29.90001, which covers non-hollow aluminum profiles. See SolarWorld's Br. at 11-19; see also Final Decision Memo at 35-38. SolarWorld contends that Commerce's selection is contrary to law and not supported by substantial evidence, arguing that the selection is not in accordance with the HTS, fails to account for the additional manufacturing processes that the frames in question undergo, and runs contrary to CBP rulings on the merchandise in question. SolarWorld's Br. at 11-19. Defendant responds that Commerce's decision is reasonable because Thai HTS 7604.29.90001 represents the most specific proposed surrogate value on the record. Def.'s Br. at 23. For the reasons that follow, Commerce's selection of import data under HTS 7604.29.90001 is supported by substantial evidence.
As discussed above, where the subject merchandise is exported from a nonmarket economy country, Commerce calculates normal value based on FOPs. 19 U.S.C. § 1677b(c)(1). Commerce selects a surrogate value by which it values the FOPs and makes that selection "based on the best available information regarding the values of such factors in a market economy country or countries."
Here, Commerce reasonably concluded that import data under HTS 7604.29.90001, which covers non-hollow aluminum profiles, constitutes the best available information to value Trina's aluminum frames. See Final Decision Memo at 35-38. Commerce noted that Trina sufficiently demonstrated that the aluminum frames in question are non-hollow, aluminum profiles, and that Commerce found no evidence on the record to contradict this description. Final Decision Memo at 35. Moreover, as in the underlying investigation, Commerce emphasized that HTS 7604 presents the best available information to value the inputs in question because it covers alloyed aluminum profiles, whereas HTS 7616.99.90-suggested by SolarWorld-comprises an "other" subheading that includes dissimilar products.
SolarWorld's argument that evidence specific to this review renders the selection of HTS 7604.29 unreasonable is unpersuasive. See SolarWorld's Br. at 11, n.3. SolarWorld first argues that the aluminum frames should not be valued using HTS 7604 because the HTS defines aluminum bars, rods, or profiles as having "a uniform cross section along their whole length ..., [sic] provided that they have not thereby assumed the character of articles or products of other headings."
SolarWorld also argues that the aluminum frames in question cannot be categorized as aluminum profiles due to the extent to which the product undergoes further processing. SolarWorld's Br. at 12-14.
Finally, SolarWorld cites two CBP rulings, N139353 and N238208, which classify aluminum frames for solar panels under HTS 7616.99.5090 and HTS 8541.90.0000, respectively, to support its argument that HTS 7604 is not the best available information. See SolarWorld's Br. at 15-18. Commerce correctly noted, however, that it is not bound by CBP rulings for U.S. imports when selecting import values from surrogate countries, but rather should select the best available information on the record. Final Decision Memo at 37. Moreover, Commerce correctly pointed out that HTS 7616.99 covers an "other" subheading, which would solely comprise aluminum articles not already identified elsewhere.
C. Nitrogen
Commerce valued Trina's and Canadian Solar's nitrogen inputs using Thai import data under HTS 2804.30.00 (i.e, Hydrogen, rare gases and other non-metals; Nitrogen). Final Decision Memo at 52. Trina and Canadian Solar argue that Commerce's selection of the Thai import data is unsupported by substantial evidence because this data is aberrational and unreliable. See Canadian Solar's Br. at 31-39; Canadian Solar's Reply Br. at 12-15; Trina's Br. at 4-12; Trina's Reply Br. at 2-11. In the alternative, Canadian Solar argues that if Commerce uses the Thai import data, then input data from the United States and Switzerland included in the Thai data should be excluded as distortive. See Canadian Solar's Br. at 39-41; Canadian Solar's Reply Br. at 16-17. Defendant responds that Commerce reasonably determined that the Thai import data was not aberrational or unreliable, and that Commerce's selection is supported by substantial evidence. See Def.'s Br. at 26-31.
When analyzing whether data is aberrational, Commerce generally compares that data to (1) the AUV of data on the record for other countries at a level of economic development comparable to the non-market economy in question, and (2) the AUV for that input in the country at issue in prior years. Final Decision Memo at 53. Commerce's practice is to view data based on small quantities as not inherently distorted. Id. at 54.
Commerce's comparison of the Thai data to data from other economically comparable countries and from the past review reveals that this data is within the range of the relevant benchmarks as defined by Commerce's practice. Final Decision Memo at 53. Commerce compared the Thai import data and the import data available on the record for five other countries economically comparable to the PRC and found the Thai data fell within the range of the other AUVs. Id. at 53. Specifically, the Thai AUV ($ 9.36) was greater than the AUVs of three other countries on the record (Bulgaria with $ 0.08, Romania with $ 0.08, and Mexico with $ 0.25), but lower than the remaining two countries (South Africa with $ 26.27, Ecuador with $ 17.16). Id. at 53. Commerce also concluded that the mere fact that the volume of Thai imports was lower than the volume of imports from each of Bulgaria, Romania and Mexico did not, in and of itself, demonstrate distortion. Id. at 54.
Commerce also concluded that a comparison with the nitrogen AUV in the prior administrative review did not indicate that the Thai data was aberrational. Final Decision Memo at 54. The AUV for nitrogen in the Thai import data in the prior administrative review was $ 11.68, around 19% higher than in the present review. Id. at 54. Accordingly, Commerce's determination that the Thai import data is not aberrational is reasonable.
Canadian Solar argues that high value imports from the United States and Switzerland distort the value of Thai imports and should be excluded. See Canadian Solar's Br. at 39-41; Canadian Solar's Reply Br. at 16-17. Imports from these two countries account for 1.57% of imports into Thailand during the POR but comprise 22.6% of the total value of Thai imports. Canadian Solar's Br. at 39. Commerce reasonably declined to disaggregate the Global Trade Atlas ("GTA") data for nitrogen and exclude the imports from the United States and Switzerland on the basis of its preference for using a full dataset to avoid "cherry-picked import data in a[ ] [surrogate value] calculation." Final Decision Memo at 54. While Commerce's policy of
Trina further argues that the Thai data should be treated as unreliable due to a "significant and inexplicable discrepancy" between the quantity and value of nitrogen imports reported from the United States into Thailand, and nitrogen exports recorded from the United States to Thailand by the ITC Dataweb. See Trina's Br. at 7-10; Trina's Reply Br. at 9-10. The ITC data shows that the United States exported 788,319 kilograms of nitrogen to Thailand during the period of review. See Analysis of U.S. Origin Nitrogen Included in Thai Imports of Nitrogen [attached as Enclosure 2 to Trina's Administrative Case Br.], PD 533, CD 588, bar code 3538946-01 (Jan. 25, 2017). By contrast, the Thai data shows that only 2,070 kilograms of nitrogen were imported from the United States during the period of review. Id. The U.S. data contains an AUV of approximately $ 0.15 per kilogram, while the AUV for the U.S. component of the Thai import data contains an AUV of approximately $ 140 per
D. Semi-Finished Polysilicon Ingots and Blocks
In the Final Results, Commerce determined that the best available information by which to value the respondents' semi-finished polysilicon ingots was the international price for solar-grade polysilicon. Final Decision Memo at 21-22. SolarWorld challenges Commerce's decision, arguing that the surrogate value does not reflect the substantial additional processing and value added by turning raw polysilicon into an ingot or block. SolarWorld's Br. at 29-32. SolarWorld proposes that Commerce instead construct a cost, starting with the world-market price of raw polysilicon and adding the costs required to produce a unit of ingot or block. Id. at 31-32. Defendant responds that, considering the available data on the record, Commerce reasonably chose to value respondents' ingots and blocks using a surrogate for the primary raw input. Def.'s Br. at 21-23. For the reasons that follow, Commerce's determination to value respondents' semi-finished polysilicon ingots and blocks with the world market price for raw polysilicon is reasonable.
Here, Commerce determined that the world market price for raw polysilicon constituted the best available information for valuing respondents' semi-finished polysilicon ingots and blocks. Final Decision Memo at 21-22. In the absence of data values for ingots and blocks, Commerce used a value for raw polysilicon because respondents' ingots and blocks are primarily composed of polysilicon. Id. With respect to SolarWorld's contention that the world market price for polysilicon is missing certain processing costs, Commerce explained that most of the processing required to produce ingots and blocks from raw polysilicon is performed by large, expensive machinery and is thus accounted for in the manufacturing costs. Id. Indeed, Commerce stated that the record did not present sufficient evidence to show that the additional processing stages add a significant amount of value beyond the original cost of polysilicon. Id. Given Commerce's decision to use a value for the main component of the good, it is reasonably discernible that Commerce viewed the option as imperfect but recognized that it would result in a more accurate surrogate value than would a value for a component that is not the main component of the good. See Rhone Poulenc, Inc.,
In the Final Results, Commerce determined that Styromatic's 2015 financial statements constituted the best available information to calculate respondents' overhead, selling, general and administrative expenses, and profit. Final Decision Memo at 66-71. SolarWorld challenges Commerce's decision, arguing that Commerce should have selected the available financial statements of Thai company Ekarat Engineering Public Company Limited ("Ekarat") because Ekarat is a producer of identical merchandise, thus making it the best available information. SolarWorld's Br. at 21. Defendant responds that Commerce reasonably selected Styromatic's 2015 financial statements, as they constituted the best available information considering they were complete and contemporaneous with the period of review, and Styromatic's primary business is the production of comparable merchandise. Def.'s Br. at 34. For the reasons that follow, Commerce's determination is supported by substantial evidence.
As discussed, Commerce determines the normal value of the subject merchandise based on the FOPs utilized. 19 U.S.C. § 1677b(c)(1). Commerce values the FOPs using the best available information, to which it adds "an amount for general expenses and profit."
Commerce selected Styromatic's 2015 financial statements as the best available information because they were contemporaneous, audited, and came from a company that produced merchandise comparable to the subject merchandise during the period of review. Final Decision Memo at 71. SolarWorld asserts that Ekarat's financial statements are the best available information because the company is the only Thai manufacturer that produces identical merchandise. SolarWorld's Br. at 21. Defendant responds that Commerce reasonably explained that the majority of Ekarat's revenue comes from distribution transformers and services, which are not comparable to the subject merchandise. Def.'s Br. at 32-33.
Commerce reasonably concluded that Styromatic's 2015 financial statements constituted the best available information. Although Commerce acknowledged that Ekarat's 2015 consolidated financial statements indicate that Ekarat is a manufacturer of solar modules, Commerce reasonably
Moreover, Commerce's practice is to decline to use financial statements of companies that are not profitable, and Ekarat Solar Co., Ltd., Ekarat's subsidiary described as a solar cell producer, operated at a loss in 2015. See Final Decision Memo at 69 (citing Canadian Solar Rebuttal Surrogate Value Comments at Ex. SVR-1, PD 391, CD 474, bar code 3490637-01 (July 25, 2016) ). Accordingly, Commerce's conclusion that Styromatic's 2015 financial statements-rather than those of Ekarat-represented the best available information is reasonable.
Canadian Solar challenges Commerce's application of partial AFA as unlawful and unsupported by substantial evidence. Canadian Solar's Br. at 10-19. Canadian Solar argues that because it cooperated with Commerce in the administrative proceedings, application of partial AFA was unlawful.
To calculate accurate dumping margins, Commerce requests information from respondents. Where information necessary to calculate a respondent's dumping margin is not available on the record, Commerce applies "facts otherwise available" in place of the missing information. See 19 U.S.C. § 1677e(a). Where Commerce "finds that an interested party has failed to cooperate by not acting to the best of its ability to comply with a request for information," Commerce may apply "an inference that is adverse to the interests of that party in selecting among the facts otherwise available."
In Mueller, Mueller was a cooperative respondent but did not possess all the production cost information Commerce needed to calculate its antidumping margin.
Although premised on the adverse inference that [Mueller's uncooperative supplier's]
actual cost information would not be favorable - otherwise [the supplier] may not have elected to withhold it from the Department - the selected facts available are intended to produce an accurate, non-punitive, dumping margin for Mueller.
Issues and Decision Mem. for Final Results of [ADD] Administrative Review: Certain Circular Welded Non-Alloy Steel Pipe from Mexico at 16, A-201-805, June 13, 2011, ECF No. 59 (Mueller Comercial de Mexico, S. de R.L. de C.V. v. United States, Ct. No. 11-00319) ("Mueller IDM"). Commerce selected the most discounted transaction data from the responsive supplier, inferring that all merchandise sold to Mueller by the uncooperative supplier came at such a discount. Mueller,
The Court of Appeals examined whether Commerce's determination could be sustained under 19 U.S.C. § 1677e(a).
A close reading of section 1677e(b) and Mueller reveals that application of an inference adverse to the interests of a cooperating respondent under subsection (b) is not contemplated by the statute nor the Court of Appeals. First, the plain language of section 1677e(b) expressly limits Commerce's application of an adverse inference to the interests of the party that failed to cooperate. 19 U.S.C. § 1677e(b)(1) (where an interested party fails to cooperate, Commerce "may use an inference that is adverse to the interests of that party"). Second, in the determination giving rise to Mueller, Commerce expressly disavowed imposing an adverse inference against a cooperating party:
The Department has found that the necessary information is absent from the record because [Mueller's uncooperative supplier] failed to cooperate, and has not made a finding that Mueller failed to cooperate. Accordingly, the Department has not applied an adverse inference against the interest of Mueller. Instead, the Department has selected from the facts otherwise available, the best information to use in place of [the uncooperative supplier's] withheld cost data.
Mueller IDM at 16. The Court of Appeals did not reject Commerce's selection of facts available under subsection (a) despite its adverse effect on Mueller. The Court of Appeals' key observation-that subsection (a) "does not provide for the specific facts that should be used as a gap-filling mechanism"-set the stage for Mueller's lasting insight-that policy rationales are not reserved exclusively for the realm of subsection (b). See Mueller,
Here, several of Canadian Solar's unaffiliated suppliers of solar modules did not report information on their FOPs, information Commerce needed to calculate Canadian Solar's antidumping rate.
Commerce's application of an adverse inference under subsection 1677e(b) is contrary to law. The plain meaning of the statute, as confirmed by Mueller, does not provide for an adverse inference against a cooperative respondent under subsection 1677e(b). It is undisputed that Canadian Solar cooperated in the administrative review. See Canadian Solar's Br. at 10; Def.'s Br. at 34-41; Oral Arg. at 00:14:45-00:15:00 (Defendant agreeing that Canadian Solar was a cooperative respondent); See also Unreported [FOPs] Mem. at 5, PD 517, CD 585, bar code 3533043-01 (Dec. 16, 2016) (stating that Commerce may apply AFA in determining a cooperative respondent's dumping margin to induce cooperation of the uncooperative party). As discussed, the statute allows Commerce to select facts available under subsection (a), not apply an adverse inference against a cooperating party under subsection (b). Commerce may consider inducement and evasion rationales in selecting amongst facts available under subsection (a), so long as accuracy remains the predominant concern. Mueller,
To the extent Commerce purports to rely on 19 U.S.C. § 1677e(a) for its application of partial AFA, its determination that Canadian Solar could have potentially induced its uncooperative suppliers to cooperate is unsupported by substantial evidence. Commerce cites both subsections 1677e(a) and (b) in its determination, but found, "pursuant to [ section 1677e(b) ] of the Act, that the application of partial AFA is warranted." Final Decision Memo at 18. The statute makes clear that Commerce must invoke subsection (a) to reach subsection (b). Therefore, Commerce's invocation of subsection (a) would seem to be solely in service of its subsection (b) analysis. Nonetheless, in its determination Commerce discusses and purports to rely upon Mueller throughout, see Final Decision Memo at 16-17, a case that relies on a subsection (a) analysis. See Mueller,
Although the Court of Appeals in Mueller does not expound upon what constitutes an "existing relationship," surely more is required than what is present here.
III. Commerce's Decision to Include Zero Quantity Import Data
In its final determination, Commerce opted to include in the average unit surrogate value calculations import data with quantities of zero, finding "no basis to conclude that the zero quantity import data included in our [surrogate value] calculations are errors or that these zero quantity imports result in unreliable and distortive [surrogate values]." Final Decision Memo at 86. Rather, Commerce found these imports attributable to rounding small import quantities down to zero. Final Decision Memo at 86. Trina argues the record contains no evidence that shipments of low quantities were rounded down to zero, and that including such data is distortive. Trina's Br. at 14-17. Defendant responds that Commerce reasonably determined that the record lacked any basis to conclude that the zero quantity data were the result of errors. Def.'s Br. at 41-42. For the reasons that follow, Commerce's determination is supported by substantial evidence.
Commerce found in its final determination that the zero quantity imports in the data set were attributable to rounding small import quantities down to zero. Final Decision Memo at 86. Commerce addressed Trina's counter argument that if the zeros were attributable to rounding that one would expect a greater number of quantities rounded to one than to zero because quantities from 0.5 units to 1.49 would round to one. Trina's Br. at 16 (citing Trina's Administrative Case Br. at 21-22, PD 531-532, CD 588, bar code 3538943-02 (Jan. 25, 2017) ). Commerce found no reason to expect such a neat distribution of data as Trina describes. Trina's argument regarding how the data points should distribute does not detract from Commerce's otherwise reasonable determination that the zero quantity data are the result of rounding. Further, Commerce explained that if the zero quantity entries constituted error, it would expect similar errors to occur with respect to the reported import values, and the record contained no such errors. Final Decision Memo at 86. Additionally, if the entries were error, Commerce reasoned, such errors would suggest serious flaws with the GTA data Commerce utilized, and no party suggested that such fundamental flaws existed.
IV. Calculation of TUS's U.S. Indirect Selling Expense Ratio
In calculating Trina's constructed export price, Commerce declined to use debt restructuring income reported by Trina to offset Trina's indirect selling expenses. Final Decision Memo at 84. Trina challenges this decision as unsupported by substantial evidence and arbitrary. Trina's Br. at 18. Trina also argues that Commerce failed to alert Trina to its concerns about the claimed debt restructuring income during the administrative proceeding. Id. at 19. Defendant responds that Commerce reasonably determined not to offset Trina's indirect selling expense by the claimed debt restructuring income. Def.'s Br. at 43-44.
The antidumping statute requires Commerce to make certain adjustments to a respondent's reported constructed export price. See 19 U.S.C. § 1677a(c) - (d). One of the adjustments made to constructed export price is to deduct indirect selling expenses. See Final Decision Memo at 83-84; see also 19 U.S.C. § 1677a(d)(1)(D). Indirect selling expenses are those costs that "would be incurred by the seller regardless of whether the particular sales in question are made, but reasonably may be attributed (at least in part) to such sales," while direct selling expenses are expenses that "bear a direct relationship to" the particular sales in question. See Uruguay Round Agreements Act, Statement of Administrative Action, H.R. Doc. No. 103-316, at 823-4 (1994), reprinted in 1994 U.S.C.C.A.N. 4040, 4164. It is Commerce's practice to allow income gained through debt restructuring to be used to offset indirect selling expenses (thus minimizing the reduction in constructed export price). Final Decision Memo at 84.
Commerce reasonably declined to offset Trina's indirect selling expense by the claimed debt restructuring income because there was insufficient information available on the record for Commerce to determine what portion of the gain was attributable to the period of review. Final Decision Memo at 84-85. Commerce's stated practice is to only allow such an offset for gain attributable to the period of review. Id. (citing Issues and Decision Mem. for the Final Determination in the [ADD] Investigation of Structural Steel Beams from South Korea at Comment 26, A-580-841, (July 5, 2000) available at https://enforcement.trade.gov/frn/summary/korea-south/00-16952-1.txt (last visited Apr. 11, 2019); Issues and Decision Mem. for the Final Determination in the [ADD] Investigation of Light-Walled Rectangular Pipe and Tube from Mexico at 69-70, A-201-832, (Aug. 26, 2004) available at https://enforcement.trade.gov/frn/summary/mexico/E4-2045-1.pdf (last visited Apr. 11, 2019) ). Trina's claim for debt restructuring income is based solely on a single line item in its 2015 income statement. See Trina's Sec. C Questionnaire Resp. at Ex. C-10, PR 232-34, CD 188-205, bar code 3468547-01 (May 12, 2016) ("Trina's Sec. C Questionnaire Resp."). Trina complains that Commerce made no further inquiry regarding whether "income might not relate entirely to the current period" and therefore argues that Commerce's determination
V. Commerce's Rejection of Qixin's Separate Rate Application
In this administrative review, Qixin was not selected as a mandatory respondent. On March 10, 2016, Qixin submitted a separate rate application. See Qixin's Separate Rate Application, PD 107-109, bar code 3447985 (Mar. 10, 2016). Commerce issued a first and second supplemental questionnaire to Qixin, see First Suppl. Questionnaire to Qixin, PD 300, bar code 3481536-01 (June 24, 2016); Second Suppl. Questionnaire to Qixin, PD 474, bar code 3521534 (Nov. 10, 2016), to which Qixin timely submitted responses. See Qixin's First Suppl. Questionnaire Resp., PD 332, CD 392, bar code 3486020-01 (July 12, 2016); Qixin's Second Suppl. Questionnaire Resp., PD 481, CD 553, bar code 3523945-01 (Nov. 21, 2016). Commerce issued the Preliminary Results on December 16, 2016, which did not mention Qixin. See Preliminary Results. Qixin filed an administrative brief on January 25, 2017 challenging the Preliminary Results and requesting an explanation for Commerce's omission of Qixin from the Preliminary Results. See Qixin Administrative Case Brief, PD 536, bar code 3538956-01 (Jan. 25, 2017). Commerce did not respond to Qixin's request for an explanation, and on June 20, 2017, Commerce published the Final Results, in which Commerce explained that Qixin's separate rate application had been rejected. See Final Decision Memo at 90-92.
Commerce acknowledged that it "inadvertently omitted a discussion of [Qixin's] separate rate status from the Preliminary Results," but reasoned that Qixin "became aware of the issue through the Department's supplemental questionnaires." Final Decision Memo at 91. Commerce further explained that the fact that it did not mention Qixin in the Preliminary Results should have served as an indicator to Qixin that its application had been rejected.
Defendant now acknowledges that Qixin had no opportunity to respond to Commerce's denial of its separate rate application and, likewise, Commerce lacked the opportunity to respond to the arguments Qixin may have made, had it had the opportunity. Def.'s Br. at 44-45. Defendant accordingly requests that the court remand the issue to Commerce for reconsideration.
The court has discretion in deciding whether to grant a request for remand. See SFK USA Inc. v. United States,
CONCLUSION
For the foregoing reasons, it is
ORDERED that Commerce's surrogate value selections for valuing respondents' aluminum frames, nitrogen, polysilicon ingots and blocks, and financial ratios are sustained; and it is further
ORDERED that Commerce's decision to include import data with reported quantities of zero in the surrogate value calculations is sustained; and it is further
ORDERED that Commerce's decision to deny an offset for Trina U.S.'s debt restructuring income is sustained; and it is further
ORDERED that Commerce's surrogate value selection for valuing respondents' module glass is remanded to the agency for reconsideration or further explanation; and it is further
ORDERED that Commerce's application of an adverse inference in calculating Canadian Solar's dumping rate is remanded to the agency for reconsideration; and it is further
ORDERED that Commerce's decision to reject Qixin's separate rate application is remanded to the agency for reconsideration; and it is further
ORDERED that Commerce shall file its remand determination with the court within 90 days of this date; and it is further
ORDERED that the parties shall have 30 days thereafter to file comments on the remand determination; and it is further
ORDERED that the parties shall have 30 days thereafter to file a reply to comments on the remand determination.
Notes
Commerce initially selected Canadian Solar International Limited, Respondent Selection Mem. at 5-6, PD 155, CD 104, bar code 3452853-01 (Mar. 28, 2016), but subsequently determined that the following companies were affiliated and should be treated as a single entity for the purposes of the administrative review: Canadian Solar International Limited, Canadian Solar Manufacturing (Changshu), Inc., Canadian Solar Manufacturing (Luoyang), Inc., CSI Cells Co., Ltd., CSI-GCL Solar Manufacturing (YanCheng) Co., Ltd., and CSI Solar Power (China) Inc. See Decision Mem. for Preliminary Results of the 2014-2015 [ADD] Administrative Review of Crystalline Silicon Photovoltaic Cells, Whether or not Assembled into Modules, From [the PRC] at 6, A-570-979, PD 499, bar code 3530538-01 (Dec. 16, 2016) ("Prelim. Decision Memo"); see also Affiliation & Single Entity Mem. for Canadian Solar International Limited at 8, PD 516, CD 582, bar code 3533001-01 (Dec. 16, 2016).
Commerce initially selected the collapsed entity of Changzhou Trina Solar Energy Co., Ltd. and Trina Solar (Changzhou) Science and Technology Co., Ltd., but subsequently determined the following companies were affiliated and treated them as a single entity: Changzhou Trina Solar Energy Co., Ltd., Trina Solar (Changzhou) Science and Technology Co., Ltd., Yancheng Trina Solar Energy Technology Co., Ltd., Changzhou Trina Solar Yabang Energy Co., Ltd., Turpan Trina Solar Energy Co., Ltd., Hubei Trina Solar Energy Co., Ltd. Final Decision Memo at 2 n.3; see also Prelim. Decision Memo at 1.
On October 26, 2017, Defendant submitted indices to the public and confidential administrative records underlying Commerce's final determination. These indices are located on the docket at ECF No. 44-2-3. Citations to the administrative record documents in this opinion are to the numbers assigned to the documents by Commerce in these indices. References to the public administrative record are in the form of "PD," and references to the confidential administrative record are in the form of "CD."
Further citations to the Tariff Act of 1930, as amended, are to the relevant provisions of Title 19 of the U.S. Code, 2012 edition.
The following parties are plaintiffs in the action Changzhou Trina Solar Energy Co., Ltd. v. United States, Ct. No. 17-00197, which has been consolidated with the present action: Changzhou Trina Solar Energy Co., Ltd.; Trina Solar (Changzhou) Science & Technology Co., Ltd.; Yancheng Trina Solar Energy Technology Co., Ltd.; Changzhou Trina Solar Yabang Energy Co., Ltd.; Turpan Trina Solar Energy Co., Ltd.; Hubei Trina Solar Energy Co., Ltd.; and Trina Solar (U.S.) Inc.
SolarWorld is a Defendant-Intervenor in the present action, as well as each of the consolidated actions other than SolarWorld Americas, Inc. v. United States (Ct. No. 17-00200), in which it is the plaintiff.
The court's September 25, 2017 order consolidated the following cases under the present action: Ningbo Qixin Solar Electrical Appliance Co., Ltd. v. United States, Ct. No. 17-00187; Shanghai BYD Co., Ltd. v. United States, Ct. No. 17-00193; Changzhou Trina Solar Energy Co., Ltd. et al. v. United States, Ct. No. 17-00197; SolarWorld Americas, Inc. v. United States, Ct. No. 17-00200; and Sunpreme Inc. v. United States, Ct. No. 17-00201. Order, Sept. 26, 2017, ECF No. 41. Sunpreme Inc.'s action was severed from the present consolidated case on March 8, 2018. See Order, Mar. 8, 2018, ECF No. 61 (severing Ct. No. 17-00201 from Consol. Ct. No. 17-00173).
As separate rate respondents in the third administrative review, Consolidated Plaintiff-Intervenors Yingli Green Energy Holding Co., Ltd.; Yingli Green Energy Americas, Inc.; YIngli Energy (China) Co., Ltd.; Baoding Tianwei Yingli New Energy Resources Co., Ltd.; Tianjin Yingli New Energy Resources Co., Ltd.; Hengshui Yingli New Energy Resources Co., Ltd.; Lixian Yingli New Energy Resources Co., Ltd.; Baoding Jiasheng Photovoltaic Technology Co., Ltd.; Beijing Tianneng Yingli New Energy Resources Co., Ltd.; Hainan Yingli New Energy Resources Co., Ltd.; Shenzhen Yingli New Energy Resources Co., Ltd.; and Yingli Green Energy International Trading Co., Ltd. (collectively "Yingli") and Plaintiff-Intervenor and Consolidated Plaintiff-Intervenor BYD support the arguments made by Canadian Solar and Trina. Mot. J. Agency R. at 2, Mar. 7, 2018, ECF No. 56 ; Mem. Supp. R. 56.2 Mot. J. Agency R. Pl.-Intervenor & Consol. Pl.-Intervenor [BYD] at 9-10, Mar. 7, 2018, ECF No. 60-1.
In SolarWorld's response to the arguments of the plaintiffs and consolidated plaintiffs that Commerce's valuation of module glass was unreasonable, SolarWorld states that it "believes Commerce's surrogate valuation of module glass should be affirmed." See Resp. Br. of Def.-Int. SolarWorld Americas, Inc. at 29, July 31, 2018, ECF No. 73 ("SolarWorld's Resp."). SolarWorld does not clarify whether in making this statement it intended to abandon its claim that the laminated glass subheading should have been used to value the respondents' module glass input. As SolarWorld restates in its reply its argument that Commerce's selection of tempered glass subheading to value module glass "substantially undervalued this input," the court understands SolarWorld to not have abandoned its challenge to Commerce's use of the tempered glass subheading. See Reply Br. of Pl. SolarWorld Americas Inc. at 9-10, Oct. 5, 2018, ECF No. 84.
Trina joined and incorporated Canadian Solar's arguments with respect to the unreliability of Commerce's selected surrogate value data. See Trina's Br. at 14.
SolarWorld argues that SolarWorld II is not relevant because in that case "the court appears to have been principally concerned with Commerce's citation of, and reliance on, [Wood Flooring], which did not appear to support the agency's characterization of its practice of considering AUV data in the aggregate." See SolarWorld's Resp. at 25. In the remand results considered in SolarWorld II, Commerce sought to rely on Wood Flooring as evidence that it was Commerce's practice only to consider the aggregate AUV of a data source in assessing whether it is aberrational. See SolarWorld II, 42 CIT at ----,
SolarWorld correctly notes that in these proceedings Commerce does not seek to rely on Wood Flooring as evidence of a practice of only assessing allegedly aberrational data in the aggregate. SolarWorld's Resp. at 25. SolarWorld America's argument fails, however, as the court in SolarWorld II was not solely concerned with Commerce's reliance on Wood Flooring. Here, as in Wood Flooring, it is not clear what reliance Commerce sought to place on this claimed practice of exclusively reviewing allegedly aberrational data in the aggregate because in these proceedings Commerce did, in fact, analyze the component elements of the Thai data to determine that the Hong Kong imports were not distortive. See Final Decision Memo at 49. In SolarWorld II the court also expressed concern with Commerce's failure to address the apparent tension between Commerce's stated preference to base surrogate values on broad data reflective of the surrogate country's market as a whole and the fact "that the Hong Kong data skews the Thai AUV in a way that renders the Thai AUV unrepresentative of the Thai market." See SolarWorld II, 42 CIT at ----,
Commerce cites Certain Hot-Rolled Carbon Steel Flat Products from Romania as a case "where the Department explained that to test the reliability of [surrogate values] alleged to be aberrational, it is appropriate to compare the selected [surrogate value] to the AUVs calculated for the same period using data from the other designated surrogate countries." See Final Decision Memo at 47 (citing Certain Hot-Rolled Carbon Steel Flat Products from Romania: Final Results of [ADD] Administrative Review, 70 FR 34448 (June 14, 2005) and accompanying Issues and Decision Mem. at 8-23, A-485-806, (June 6, 2005), available at https://enforcement.trade.gov/frn/summary/romania/E5-3067-1.pdf (last visited Apr. 11, 2019 ("Hot-Rolled Carbon"). This determination responded to challenges to data sources used in the preliminary results to calculate surrogate values for a wide range of FOPs. See Hot-Rolled Carbon at 19-23. It did not, however, directly address the question of whether the distortive impact of component items on the total average cost of a surrogate value can be considered if that component is alleged to be aberrational. Hot-Rolled Carbon does not, therefore, evidence a consistent practice of exclusively considering allegedly aberrational data in the aggregate.
In this case, imports from Hong Kong account for only 60.2% of the total value of Thai imports of tempered glass, as opposed to 75% in SolarWorld II. See SolarWorld II, 42 CIT at ----,
Commerce used Thai data from the second administrative review as a benchmark against which to assess the Thai data for tempered glass from the present period of review. Final Decision Memo at 47-8 (citing Decision Mem. for the Final Results of the 2013-2014 [ADD] Admin. Review of Crystalline Silicon Photovoltaic Cells, Whether or Not Assembled into Modules, from [the PRC], A-570-979, (June 13, 2016) available at https://enforcement.trade.gov/frn/summary/prc/2016-14532-1.pdf (last visited Apr. 11, 2019) ("Solar Cells AR2 Memo") ). Canadian Solar argues that it was unreasonable for Commerce to use Thai data from the prior administrative review as a benchmark because Commerce's use of this value was remanded by the Court. See Canadian Solar's Br. at 26-27; see also SolarWorld II, 42 CIT at ----,
Nonetheless Canadian Solar also argues it was unreasonable of Commerce to only use Thai data from the second administrative review ($ 4.14 per kilogram) as a benchmark without also considering historical data from the first administrative review ($ 0.98 per kilogram) and initial investigation ($ 0.86 per kilogram). See Canadian Solar's Br. at 26-27 (citing Solar Cells AR2 Memo at 29-31). Defendant responds that Canadian Solar waived this argument because it failed to raise it at the administrative level. Def.'s Br. at 19. Defendant further argues that a comparison with the earlier administrative proceedings does not indicate that the Thai data for the present proceedings is aberrational.
Commerce also reasonably declined to compare the Thai import data for module glass against Canadian Solar's market economy purchases. Final Decision Memo at 48. Canadian Solar argues that Commerce unreasonably rejected this data even though it was the best available information on the record to act as a benchmark and Commerce had not identified any evidence that undermined its reliability. Canadian Solar's Br. at 31. Canadian Solar's argument fails as Commerce reasonably explained that its practice is to not use a respondent's market economy purchase price as a benchmark because such information is not public and not necessarily reflective of industry-wide prices. Final Decision Memo at 49.
Canadian Solar also asserts that Commerce should have used the AUV of the float glass subheading as a benchmark against which to assess whether the AUV for Thai imports of tempered glass were aberrational. See Canadian Solar's Br. at 20; Canadian Solar's Reply at 9-10. Canadian Solar's argument fails, however, as Canadian Solar did not substantiate why it was unreasonable for Commerce to decline to use data relating to an entirely different HTS subheading as a benchmark against which to assess Thai imports of tempered glass.
To the extent possible, Commerce uses "the prices or costs of [FOPs] in one or more market economy countries that are-- (A) at a level of economic development comparable to that of the nonmarket economy country, and (B) significant producers of comparable merchandise." 19 U.S.C. §§ 1677b(c)(4)(A)-(B). Commerce also has a regulatory preference for valuing all FOPs using surrogate value data from a single surrogate country where practicable.
Specifically, SolarWorld asserts that the record demonstrates that Trina's aluminum solar frames are [[ ]] SolarWorld's Br. at 11-12.
For example, SolarWorld argues that the aluminum frames undergo a [[ ]] resulting in [[ ]], SolarWorld's Br. at 12-13, and that the frames "undergo multiple fabrication processes to complete them for final use, such as drilling, cutting, punching, bending, coating, and stamping before assembly with solar cells and backing materials."
SolarWorld also argues that CBP rulings classifying unfinished aluminum articles under HTS 7604 detract from Commerce's conclusion that the aluminum frames in question are best valued under HTS 7604. SolarWorld's Br. at 16-17. The argument is unavailing, however, given that Commerce did not find that HTS 7604 applied exclusively to finished aluminum profiles. Final Decision Memo at 37. "The fact that HTS category 7604 has been applied in the past to unfinished articles does not support the conclusion that Thai HTS category 7604 covers solely unfinished merchandise that is different in nature and value from the aluminum frames at issue." Jiangsu, 38 CIT ----, ----,
Further, the price multiple of the U.S. and Swiss nitrogen imports is many times lower than that represented by the imports of tempered glass from Hong Kong discussed above, which were nearly 150 times the AUV for all imports of tempered glass into Thailand. See Section A above.
Canadian Solar argues that the South African and Ecuadorian data are unsuitable as benchmarks because they have lower volumes and higher values than the data from Romania, Bulgaria and Mexico. See Canadian Solar's Br. at 37-39; Canadian Solar's Reply at 12-15. The South African data provides an AUV of $ 26.27 based on imports of 12,894 kilograms of nitrogen, while the data from Ecuador provides an AUV of $ 17.16 based on 6,498 kilograms of imports. See Summary of Import Data for Nitrogen & Oxygen from Economically Comparable Countries [attached as Ex. 3 to SolarWorld's Rebuttal Surrogate Value Comments] at 1, PD 397-98, CD 482-84, bar code 3490795-02 (July 26, 2016). In contrast, the data from Bulgaria, Romania and Mexico all provide an AUV between $ 0.08-25 and are drawn from volumes of between approximately 6.5-28 million kilograms. Id. at 1-2. Canadian Solar argues that this court has recognized that "a very small relative quantity triggers an obligation for Commerce to explain why data is not aberrational," and that Commerce did not provide any such explanation. Canadian Solar's Br. at 38; Canadian Solar's Reply at 15 (quoting Xinjiamei Furniture (Zhangzhou) Co. v. United States, 37 CIT ----, ----, Slip Op. 13-30 at 13,
Nonetheless, Commerce explained why it did not consider the Ecuadorian and South African data aberrational. Commerce explained that where there are low import volumes but no other indication that a value is aberrational, Commerce will not treat the relevant data as aberrational. As discussed below, Commerce reasonably decided not to employ price quotes and invoices as benchmarks and reasonably decided to use the South Africa and Ecuador data as benchmarks. Final Decision Memo at 54 (citing Decision Mem. for the Final Results of the 2013-2014 [ADD] Admin. Review of Crystalline Silicon Photovoltaic Cells, Whether or Not Assembled into Modules, from [the PRC] at 29-34, A-570-979, (June 13, 2016) available at https://enforcement.trade.gov/frn/summary/prc/2016-14532-1.pdf (last visited Apr. 11, 2019)). It is reasonably discernible from Commerce's reasoning that it did not consider there to be any other indication that the Ecuadorian or South African data were aberrational. It is also reasonably discernible from Commerce's discussion of how Thai data falls "within the range" of other AUVs that it did not consider the mere fact that the South African and Ecuadorian data were the highest on the record to indicate those data were aberrational. Final Decision Memo at 53. Commerce thus reasonably determined that the South African and Ecuadorian data were not aberrational and were appropriate to use as benchmarks to assess the reliability of the Thai import data.
Canadian Solar further argues that the Thai data should be treated as aberrational because it diverges from credible benchmarks to a greater degree than did the data in Frozen Warmwater Shrimp. Canadian Solar's Br. at 33 (citing Admin. Review of Certain Frozen Warmwater Shrimp from [the PRC]: Final Results, Partial Rescission of Sixth [ADD] Administrative Review and Determination Not to Revoke in Part,
Trina submitted three invoices for the purchase of nitrogen in Thailand which reflect an average price of $ 0.1187 per kilogram (derived from a total value of $ 4,598.61 and total quantity of 38,739.09 kilograms). See Summary of Nitrogen Values on the Record [attached as Enclosure 1 to Trina's Administrative Case Br.], PD 533, CD 588, bar code 3538946-01 (Jan. 25, 2017). Trina further provided a price quote for nitrogen in Thailand that offered a price of $ 0.0679 per kilogram.
Specifically, Commerce concluded that "Ekarat's financial statements support that more than 99 percent of its revenue came from sales of distribution transformers and services, and the remaining revenue came from sales of electricity." Final Decision Memo at 68.
SolarWorld argues that Commerce's assertion that the majority of Ekarat's revenue came from distribution transformer sales is not supported by the record. SolarWorld's Br. at 22-23. SolarWorld points out that Commerce cites to page 113 of Ekarat's financial statements, which does not clearly support Commerce's assertion.
SolarWorld also points to evidence that Ekarat's assets for cell manufacturing totaled 646.31 million baht, whereas its assets for transformer sales and services and for electricity were lower. SolarWorld's Br. at 22. However, Ekarat's assets for solar cell production do not establish that it is primarily a manufacturer of identical merchandise, particularly in light of evidence showing that the vast majority of revenue comes from elsewhere.
Although the statute provides separately for the use of facts otherwise available and the subsequent application of an adverse inference regarding those facts, parties often use the term "adverse facts available" or "AFA" to refer to the application of the "facts otherwise available" and "adverse inferences" provisions of 19 U.S.C. § 1677e. See, e.g., Final Decision Memo at 15 (explaining Commerce's approach to applying AFA when an interested party fails to cooperate by not acting to the best of its ability in responding to Commerce's requests for information).
The Court of Appeals acknowledged that Commerce justified its determination of Mueller's margin "primarily under subsection (a)." Mueller,
After explaining Commerce's authority to act under subsection (a), the Court of Appeals notes that its ruling in Mueller is consistent with its precedents applying subsection (b) (which it describes as "properly directed to non-cooperating parties"), referring to those cases as constituting a separate body of law. See Mueller,
The unaffiliated suppliers are interested parties for purposes of the statute. See
The Court of Appeals referred specifically to the situation where Commerce makes an adverse inference to calculate the rate of a non-cooperating party, and that rate may be used in calculating the rate of a cooperating party. Mueller,
Defendant invokes this court's review of Commerce's final determination in the second administrative review ("AR2") of the ADD order covering crystalline silicon photovoltaic cells, whether or not assembled into modules, from the PRC, as support for the argument that Canadian Solar could have induced its suppliers to cooperate. Def.'s Br. at 36 (quoting SolarWorld Americas, Inc. v. United States, 41 CIT ----, ----,
Defendant points out that "Canadian Solar does not aver that it ever threatened to end its business relationship with any of these suppliers." Def.'s Br. at 37. Although the Court of Appeals in Mueller contemplated a threat to end business as a mechanism for exercising leverage, the Court did not require it. See Mueller,
Trina further argues that it was arbitrary of Commerce to acknowledge that debt restructuring income can be used to offset indirect selling expenses, but then to disallow the offset in the entirety. Trina's Br. at 18. This argument fails for the same reason that Commerce's determination is supported by substantial evidence. Commerce acknowledged that Trina's debt restructuring income could potentially be used to offset its indirect selling expenses. Final Decision Memo at 85. However, Commerce did not have sufficient record evidence to determine what portion, if any, of the recorded income from debt restructuring related to the period of review. Id.; see also Trina's Sec. C Questionnaire Resp. at Ex. C-10. It is not inconsistent or arbitrary of Commerce to recognize it would make an offset for debt restructuring income, but to decline to do so where there is insufficient evidence to determine that deduction in a particular instance.