SolarWorld Americas, Inc. v. United States , 353 F. Supp. 3d 1315 ( 2018 )

Slip Op. 18-
UNITED STATES COURT OF INTERNATIONAL TRADE
SOLARWORLD AMERICAS, INC.,
Plaintiff,
SINO-AMERICAN SILICON
PRODUCTS INC. and SOLARTECH
ENERGY CORP.,
Consolidated Plaintiffs,
v. Before: Jennifer Choe-Groves, Judge
UNITED STATES, Consol. Court No. 17-00208
Defendant,
and
MOTECH INDUSTRIES, INC.,
KYOCERA SOLAR, INC., and
KYOCERA MEXICANA S.A. DE C.V.,
Defendant-Intervenors.
OPINION AND ORDER
[Sustaining in part and remanding in part the U.S. Department of Commerce’s final results
following an administrative review of the antidumping duty order on certain crystalline silicon
photovoltaic products from Taiwan.]
Dated: November 13, 2018
Timothy C. Brightbill, Laura El-Sabaawi, and Usha Neelakantan, Wiley Rein, LLP, of
Washington, D.C., for Plaintiff SolarWorld Americas, Inc. Adam M. Teslik, Cynthia C. Galvez,
Maureen E. Thorson, and Tessa V. Capeloto also appeared.
Robert G. Gosselink, Jarrod M. Goldfeder, and Jonathan M. Freed, Trade Pacific, PLLC, of
Washington, D.C., for Consolidated Plaintiffs and Defendant-Intervenors Sino-American Silicon
Products Inc. and Solartech Energy Corp. and Defendant-Intervenor Motech Industries, Inc.
Consol. Court No. 17-00208 Page 2
Stephen C. Tosini, Senior Trial Counsel, and Joshua E. Kurland, Trial Attorney, Commercial
Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C., for
Defendant United States. With them on the brief were Chad A. Readler, Acting Assistant
Attorney General, Jeanne E. Davidson, Director, and Reginald T. Blades, Jr., Assistant Director.
Of counsel on the brief was Reza Karamloo, Office of the Chief Counsel for Trade and
Enforcement Compliance, U.S. Department of Commerce, of Washington, D.C.
James K. Horgan and Alexandra H. Salzman, deKieffer & Horgan, PLLC, of Washington, D.C.,
for Defendant-Intervenors Kyocera Solar, Inc. and Kyocera Mexicana S.A. de C.V. Gregory S.
Menegaz and John J. Kenkel also appeared.
Choe-Groves, Judge: This case involves crystalline silicon photovoltaic products
(typically, solar cells) from Taiwan. The Department of Commerce (“Commerce” or
“Department”) conducted an administrative review of the antidumping duty order on crystalline
silicon photovoltaic products, in which Commerce concluded that two producers, Sino-American
Silicon Products Inc. (“SAS”) and its affiliated entity Solartech Energy Corp. (“Solartech”)
(collectively, “SAS-Solartech”), and Motech Industries, Inc. (“Motech”) sold the subject
merchandise at prices below the normal value during the period of review. See Certain
Crystalline Silicon Photovoltaic Products from Taiwan, 82 Fed. Reg. 31,555 (Dep’t Commerce
July 7, 2017) (final results of antidumping duty administrative review; 2014–2016) (“Final
Results”); see also Issues and Decision Memorandum for the Final Results of the 2014–2016
Administrative Review of the Antidumping Duty Order on Certain Crystalline Silicon
Photovoltaic Products from Taiwan, A-583-853, (June 29, 2017), available at
https://enforcement.trade.gov/frn/summary/taiwan/2017-14281-1.pdf (last visited Nov. 7, 2018)
(“Final IDM”). This matter is before the court on the Rule 56.2 motion for judgment on the
agency record filed by Plaintiff SolarWorld Americas, Inc. (“SolarWorld”) and the Rule 56.2
motion for judgment on the agency record filed by SAS-Solartech challenging various aspects of
the Department’s Final Results. See SolarWorld’s Mot. J. Agency R., Feb. 27, 2018, ECF No.
Consol. Court No. 17-00208 Page 3
51 (“SolarWorld’s Motion”); Mem. Pl. SolarWorld Americas, Inc. Supp. Mot. J. Agency R.,
Feb. 28, 2018, ECF No. 57 (“SolarWorld’s Br.”); Consol. Pls.’ Rule 56.2 Mot J. Agency R., Feb.
27, 2018, ECF No. 53 (“SAS-Solartech’s Motion”); Mem. Supp. Rule 56.2 Mot. Consol. Pls. J.
Agency R., Feb. 27, 2018, ECF No. 55 (“SAS-Solartech’s Br.”).
ISSUES PRESENTED
The court reviews the following issues:
1. Whether Commerce properly adjusted Motech’s reported per-unit costs when it
declined to apply partial adverse facts available;
2. Whether Commerce properly adjusted SAS-Solartech’s reported costs for
different grades of merchandise when it declined to apply partial adverse facts
available; and
3. Whether Commerce properly determined that all merchandise shipped by SAS
during the period of review were United States sales.
PROCEDURAL HISTORY
Commerce commenced an administrative review of the antidumping duty order on
crystalline silicon photovoltaic products from Taiwan on April 7, 2016 at the request of domestic
petitioners, including SolarWorld. See Initiation of Antidumping and Countervailing Duty
Administrative Reviews, 81 Fed. Reg. 20,324 (Dep’t Commerce Apr. 7, 2016). The
administrative review covered 14 exporters of the subject merchandise, including mandatory
respondents Motech and SAS, which Commerce treated as one entity with Solartech. See
Decision Memorandum for Preliminary Results of the 2014–2016 Antidumping Duty
Administrative Review of Certain Crystalline Silicon Photovoltaic Products from Taiwan, A-
Consol. Court No. 17-00208 Page 4
583-853, (Feb. 28, 2017), available at https://enforcement.trade.gov/frn/summary/taiwan/2017-
04413-1.pdf (last visited Nov. 7, 2018) (“Prelim. IDM”).
Commerce published its preliminary results on March 7, 2017. See Certain Crystalline
Silicon Photovoltaic Products from Taiwan, 82 Fed. Reg. 12,802 (Dep’t Commerce Mar. 7,
2017) (preliminary results of antidumping duty administrative review and partial rescission of
antidumping duty administrative review; 2014–2016) (“Prelim. Results”); see also Prelim. IDM.
The Department labeled Defendant-Intervenor Kyocera Mexicana S.A. de C.V. (“Kyocera”) an
“unexamined respondent” because it was subject to the administrative review, but was not a
mandatory respondent. Prelim. IDM at 5–6. The Department concluded that sales of subject
merchandise by SAS-Solartech and Motech were made below normal value. Id. at 1.
Following the preliminary results, the Department received case briefs and rebuttal briefs
from SolarWorld, SAS-Solartech, and Motech. See Final IDM at 2. Commerce issued its Final
Results on June 29, 2017. See Final Results. The Department assigned a weighted-average
dumping margin of 4.20 percent to Motech and 3.56 percent to SAS-Solartech. Id. at 31,556.
Non-selected companies such as Kyocera were assigned a rate of 4.10 percent. Id.Commerce adjusted the costs for both mandatory respondents. See Final IDM at 23, 36.
Commerce adjusted Motech’s costs for grade B crystalline silicon photovoltaic products to
reflect the full value of prime merchandise, and adjusted all grade Z merchandise to reflect the
reduced value assigned by Motech in its books and records. Id. at 36. Commerce also adjusted
SAS-Solartech’s costs for its grade 4 non-prime crystalline silicon photovoltaic products to
reflect their net realizable values because the market price of grade 4 merchandise was
“considerably less” than production costs. Id. at 25.
Consol. Court No. 17-00208 Page 5
SolarWorld and SAS-Solartech initiated separate actions contesting Commerce’s Final
Results, which the court consolidated. See Order, Sept. 26, 2017, ECF No. 20. SolarWorld filed
a Rule 56.2 motion for judgment on the agency record challenging Commerce’s decisions not to
apply partial adverse facts available (“AFA”) to SAS-Solartech and Motech as unsupported by
substantial evidence and otherwise contrary to law. See SolarWorld’s Motion. Kyocera joined
Defendant’s opposition to SolarWorld’s motion. See Statement of Kyocera Solar, Inc. and
Kyocera Mexicana S.A. de C.V. Concurring Def.’s Opp’n Pl.’s Rule 56.2 Mot. J. Agency R.,
July 10, 2018, ECF No. 63. SAS-Solartech and Motech filed a joint response in opposition. See
Resp. Def.-Intervenors SAS-Solartech and Motech to SolarWorld’s Mot. J. Agency R., July 10,
2018, ECF No. 64. SolarWorld filed a reply brief. See Reply Br. Pl. SolarWorld, Aug. 8, 2018,
ECF No. 75.
SAS-Solartech filed a Rule 56.2 motion for judgment on the agency record, contesting
Commerce’s decision to include in its margin calculation for the Final Results certain sales made
via United States foreign trade zones (“FTZs”) to Mexico. See SAS-Solartech’s Motion.
Kyocera joined SAS-Solartech’s arguments that Commerce should not include these sales in its
margin calculation. See Notice Statement SAS-Solartech’s Rule 56.2 Mot. Mem. Supp., Feb. 27,
2018, ECF No. 50. Defendant filed a consolidated response to both Rule 56.2 motions. See
Def.’s Resp. Pl.’s Mots. J. Agency R., June 19, 2018, ECF No. 62 (“Def.’s Br.”). SolarWorld
submitted a response brief to statements filed by SAS-Solartech. See Resp. Br. Def.-Intervenor
SolarWorld, July 11, 2018, ECF No. 67. Consolidated Plaintiffs submitted a reply brief. See
Reply Consol. Pls. SAS-Solartech Def.’s SolarWorld’s Mem. Opp’n Consol. Pls.’ Rule 56.2
Mot. J. Agency R., Aug. 7, 2018, ECF No. 72. SolarWorld also submitted a reply brief. See
Reply Br. SolarWorld, Aug. 8, 2018, ECF No. 75 (“SolarWorld’s Reply”).
Consol. Court No. 17-00208 Page 6
JURISDICTION AND STANDARD OF REVIEW
The court has jurisdiction pursuant to 28 U.S.C. § 1581(c) (2012) and Sections
516A(a)(2)(A)(i)(I) and (B)(iii) of the Tariff Act of 1930, as amended, 19 U.S.C.
§§ 1516a(a)(2)(A)(i)(I) and (B)(iii). The court shall hold unlawful any determination, finding, or
conclusion found to be unsupported by substantial evidence on the record, or otherwise not in
accordance with the law. 19 U.S.C. § 1516a(b)(1)(B)(i).
ANALYSIS
I. SolarWorld’s Rule 56.2 Motion for Judgment on the Agency Record
Plaintiff SolarWorld’s Rule 56.2 motion for judgment on the agency record contests
Commerce’s adjustments of Motech’s and SAS-Solartech’s reported costs instead of applying
adverse facts available to Motech and SAS-Solartech in the Final Results. For the following
reasons, the court finds that Commerce properly adjusted both Motech’s and SAS-Solartech’s
costs.
A. Commerce’s Cost Adjustments for Motech
Pursuant to the Tariff Act, Commerce has the authority to conduct antidumping duty
investigations to determine if a class or kind of foreign merchandise is being, or is likely to be,
sold in the United States at less than its fair value, and to impose antidumping duties if
appropriate. Id. § 1673. In order to calculate the dumping duty, Commerce compares the
foreign market value (the normal value) of the product to the United States price (the export
price or constructed export price). See id. If the United States price is greater than the normal
value, dumping has occurred. See id. In determining both the normal value and the United
States price of a product, Commerce makes adjustments to the costs that go into the calculation
of those prices to obtain comparable prices for goods sold in the foreign market and for export to
Consol. Court No. 17-00208 Page 7
the United States. See id. §§ 1677a(c), 1677b(a)(6). The Tariff Act provides that “[c]osts shall
normally be 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 . . . and reasonably reflect the costs associated with the production and sale of
the merchandise.” Id. § 1677b(f)(1)(A). Commerce’s practice in evaluating costs for non-prime
merchandise is to determine if that merchandise can be used in the same applications as prime
merchandise. See Final IDM at 23.
SolarWorld argues that Commerce’s adjustments of Motech’s reported per-unit costs are
not supported by substantial evidence because Commerce relied on Motech’s assignment of
grades to its crystalline silicon photovoltaic products, but Motech failed to provide a complete
and accurate description of these grades. SolarWorld’s Br. 12. The court disagrees. In its
Supplemental Section D Questionnaire Response, Motech explained the difference between its
prime grade A merchandise, and grade B merchandise, stating that “Grade B cells have full
efficiency and electrical function. They are distinguished from Grade A cells by certain
cosmetic defects,” and “[b]ecause of these defects, Grade B cells are often sold to module
producers that do not care about these defects, generally in non-prime markets.” Motech
Supplemental Section D Questionnaire Response at 4, PD 241, bar code 3537552-01 (Jan. 18,
2017). Motech reported that its grade B crystalline silicon photovoltaic products had the same
use as prime merchandise “in addition [to being] used in street lights, small modules or
calculators.” See id. (emphasis added). Because both grades of crystalline silicon photovoltaic
products can be used in the same applications, Commerce adjusted Motech’s grade B
merchandise to reflect the full value of prime merchandise. The court concludes that
Commerce’s adjustment is reasonable and supported by substantial evidence.
Consol. Court No. 17-00208 Page 8
SolarWorld argues that Commerce’s reliance on Motech’s assignments of grades to its
merchandise is unreasonable and unsupported by substantial evidence because Motech identified
a number of product grades in its Initial Section B Questionnaire Response that were not in its
Initial or Supplemental Section D Questionnaire Response. See SolarWorld’s Br. 12–15.
Commerce found in its Final Results that Motech’s reporting was consistent because “[a]lthough
additional grades are noted in [Motech’s Initial Section B Questionnaire Response], these grades
relate to the same below top-grade products (i.e., products with either cosmetic or electrical
defects).” Final IDM at 36. The additional grades outlined in Motech’s Initial Section B
Questionnaire Response list defective crystalline silicon photovoltaic products by type of defect
such as cosmetic, whereas the grades in Motech’s Initial Section D Questionnaire Response
combine merchandise with these types of defects. See Final IDM at 36 (citing Motech Sections
B and C Questionnaire Response at Exhibit B-11, PD 134, bar code 3485696-02 (July 8, 2016),
Motech Section D Questionnaire Response at D-25, PD 141, bar code 3487335-01 (July 14,
2016)). The difference in type of defect would not change the cost adjustments, which are based
on the merchandise’s end-use, and Commerce’s reliance on Motech’s grade reporting is
therefore reasonable and supported by substantial evidence on the record.
B. Commerce’s Cost Adjustments for SAS-Solartech
SolarWorld argues that Commerce erred in reallocating SAS-Solartech’s reported costs
for certain non-prime merchandise in the Final Results because Commerce applied a flawed
calculation of the total costs to assign to grade 4 crystalline silicon photovoltaic products. See
SolarWorld’s Reply 8. Specifically, SolarWorld contends that Commerce based the costs for
grade 4 merchandise on the control numbers for which “no power output” was reported in the
cost file and there is not a one-to-one correlation between code “04” and “no power output.” See
Consol. Court No. 17-00208 Page 9
id. SolarWorld agrees that an adjustment needed to be made to SAS-Solartech’s costs. See Final
IDM at 22. The fact that there is not a “one-to-one correlation” between grade 4 merchandise
and crystalline silicon photovoltaic products that had no power output is not enough to conclude
that Commerce’s reallocation is unreasonable. Even though merchandise with no power output
can be found under multiple codes and not just under code “04,” Commerce’s reallocation of the
costs of grade 4 crystalline silicon photovoltaic products based on control numbers is reasonable
because Commerce’s analysis of grade 4 merchandise demonstrated that their market prices were
“considerably less than the full production costs that the company assigns to them in the normal
course of business.” Id. at 25. Even though a “precise reallocation” is not possible, it is
reasonable for Commerce to reduce the costs for grade 4 crystalline silicon photovoltaic products
based on evidence on the record that the grade 4 merchandise could not be used for the same
applications as prime merchandise. See id. at 24. Commerce’s reallocation is therefore
reasonable and supported by substantial evidence.
C. Commerce’s Decisions Not to Apply AFA to Motech and SAS-
Solartech
Section 776 of the Tariff Act provides that if necessary information is not available on
the record or if a respondent fails to provide such information by the deadline for submission of
the information or in the form and manner requested, then the agency shall use the facts
otherwise available in reaching its determination. 19 U.S.C. §§ 1677e(a)(1), (a)(2)(B). If the
Department 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 from the agency, then the Department may use
an inference that is adverse to the interests of that party in selecting from among the facts
otherwise available. Id. § 1677e(b)(1)(A). Commerce may rely on information derived from the
petition, a final determination in the investigation, a previous administrative review, or any other
Consol. Court No. 17-00208 Page 10
information placed on the record when making an adverse inference. See id. § 1677e(b)(2); 19
C.F.R. § 351.308(c) (2015). 19 U.S.C. § 1677e grants the Department discretion to decide
whether to apply AFA in each case. See 19 U.S.C. § 1677e. When Commerce can
independently fill in gaps in the record, adverse inferences are not appropriate. See Zhejiang
DunAn Hetian Metal Co. v. United States, 652 F.3d 1333, 1348 (Fed. Cir. 2011).
SolarWorld argues that Commerce should have applied partial AFA to Motech because
Motech failed to provide a complete and accurate description of the grades it assigned to its cells,
and therefore failed to cooperate with Commerce. See SolarWorld’s Br. 2, 12. SolarWorld
contends that “Motech clearly maintained clear and extensive information and data on its
products by grade, which it did not provide to the agency, thus failing to cooperate.” Id. at 17.
Because Commerce did not have this data, SolarWorld argues that Commerce’s failure to apply
partial AFA is “unsupported by substantial evidence, arbitrary, and an abuse of discretion.” See
id. at 18. In this case, Commerce was able to fill in the gaps regarding the different grades
Motech reported in its Initial Section B and Section D Questionnaire Responses. See Final IDM
at 36. Because Commerce found that the record data provided by Motech allowed Commerce to
reallocate costs, adverse inferences are not warranted. The court concludes that substantial
evidence supports the Department’s decision not to apply partial AFA to Motech.
SolarWorld argues that AFA should have been applied to SAS-Solartech’s reported costs.
See SolarWorld’s Br. 2–3. As with Motech, Commerce determined in the review that SAS-
Solartech was “fully responsive to [Commerce’s] supplemental questions with regard to non-
prime merchandise” and explained any “anomalies” in its reporting. See Final IDM at 25.
Because SAS-Solartech complied with Commerce’s requests, Commerce declined to apply AFA.
Consol. Court No. 17-00208 Page 11
Id. The court concludes that substantial evidence supports the Department’s decision not to
apply AFA because SAS-Solartech complied fully with Commerce’s requests.
II. SAS-Solartech’s Rule 56.2 Motion for Judgment on the Agency Record
Consolidated Plaintiff SAS-Solartech’s Rule 56.2 motion for judgment on the agency
record contests Commerce’s decision to include in its margin calculations certain sales made by
SAS because the sales were destined for Mexico via transit through United States FTZs. For the
following reasons, the court finds that Commerce’s inclusion of certain SAS sales as destined for
the United States in its antidumping duty calculation is unreasonable and not supported by
substantial evidence.
A. Commerce’s Inclusion of the Sales at Issue in its Dumping Calculation
The court shall hold unlawful any determination, finding, or conclusion found to be
unsupported by substantial evidence on the record, or otherwise not in accordance with the law.
19 U.S.C. § 1516a(b)(1)(B)(i). The court must determine whether the evidence and reasonable
inferences from the record support Commerce’s findings. Daewoo Elecs. Co. v. Int’l Union, 6
F.3d 1511, 1520 (Fed. Cir. 1993) (citing Matsushita Elec. Indus. Co. v. United States, 750 F.2d
927, 933 (Fed. Cir. 1984)). The court reviews whether Commerce has taken the record evidence
into account and provided an adequate explanation for its reasonable determination. See Cleo
Inc. v. United States, 501 F.3d 1291, 1296 (Fed. Cir. 2007).
SAS-Solartech argues that Commerce unreasonably ignored evidence establishing that
SAS knew at the time of sale that its merchandise entered United States FTZs in transit, but was
destined for sale in Mexico. SAS-Solartech’s Br. 3. SAS-Solartech alleges that Commerce
unreasonably included the sales to Mexico in its United States price calculations, despite no
evidence on the record demonstrating that the merchandise actually entered the United States for
Consol. Court No. 17-00208 Page 12
consumption. Id. at 14–15. SAS-Solartech claims also that Commerce’s determination to base
export price on sales to a third country directly violated Commerce’s statutory mandate. See id.
at 17.
SAS-Solartech argues that sufficient evidence demonstrates that SAS knew at the time of
sale that its merchandise was ultimately shipped to Mexico, including: (1) verbal instruction
from its customers that the final destination of the merchandise was Mexico; (2) SAS’
knowledge that its customers had manufacturing facilities in Mexico; (3) the sales documentation
generated at the time of sale listed “Mexico as the ultimate ‘ship to’ destination and a Mexican
entity as the ‘notify’ party, meaning that a Mexican entity was the intended recipient of the
merchandise;” and (4) the United States addresses on the sales documentation were of
“consignee freight forwarders that operated within approved” United States FTZs. See SAS-
Solartech Br. 10; SAS-Solartech’s Reply 5. Defendant contends that Commerce need not take
this evidence into consideration because it is neither physical evidence nor contemporaneous,
and SAS obtained the sales documentation “after the fact.” See Def.’s Br. 18. Commerce argues
also that the sales documentation only “relat[es] to a few of the sales at issue.” Id.
The court notes that the four documents cited by SAS-Solartech are evidence on the
record. In its Supplemental Section A Response, SAS writes that during the sales process its
“customers verbally advised SAS that the sales were ultimately destined for Mexico.” SAS’
Supplemental Section A Response at SA-3, PD 166, bar code 3497125-01 (Aug. 11, 2016). SAS
states that it “knows that both customers had factories” in a non-United States country and that
its customers did not intend for the merchandise to enter into the United States customs territory.
See id. at SA-4. Commerce acknowledged that “[t]he sales and shipping documentation at the
time of the sales indicate the names of Mexican entities to be notified.” Final IDM at 10–11
Consol. Court No. 17-00208 Page 13
(emphasis added). Commerce acknowledged also that the “shipping addresses are FTZ-
designated addresses.” Id. at 10. SAS is not able to provide all sales information because one of
its customers filed for bankruptcy. SAS’ Supplemental Section A Response at SA-3–SA-4, PD
166, bar code 3497125-01 (Aug. 11, 2016). Because evidence on the record establishes sales to
customers in Mexico and demonstrates that the merchandise was shipped to United States FTZ
addresses, with no actual United States customers identified and no evidence showing that
merchandise entered the United States customs territory for sale, the court concludes that it is
unreasonable for Commerce to have ignored the record evidence regarding SAS sales shipped
through United States FTZs destined for sale in Mexico. The court concludes that Commerce’s
decision to include certain SAS sales as sales to United States customers is unreasonable and not
supported by substantial evidence.
CONCLUSION
For the foregoing reasons, the court concludes that:
1. Commerce’s adjustments of Motech’s and SAS-Solartech’s costs are proper;
2. Commerce’s decisions not to apply AFA against Motech and SAS-Solartech are
proper; and
3. Commerce’s decision to include certain SAS sales as sales to United States customers
is unreasonable and not supported by substantial evidence.
The court remands the Final Results for redetermination on the issue of United States
sales consistent with this opinion. Accordingly, it is hereby
ORDERED that Commerce shall file its remand redetermination on or before January
11, 2019; and it is further
Consol. Court No. 17-00208 Page 14
ORDERED that Commerce shall file the administrative record on remand on or before
January 24, 2019; and it is further
ORDERED that the Parties shall file any comments on the remand redetermination on or
before February 11, 2019; and it is further
ORDERED that the Parties shall file replies to the comments on or before March 13,
2019; and it is further
ORDERED that the joint appendix shall be filed on or before March 27, 2019.
/s/ Jennifer Choe-Groves
Jennifer Choe-Groves, Judge
Dated: November 13, 2018
New York, New York