Application for Further Review of Protest No. 4909-21-100585; Section 201 Duties; Section 301 Duties; Antidumping Duties; Countervailing Duties; Solar Modules

HQ H328752 March 1, 2024 OT:RR:CTF:EPDR H328752 JW CATEGORY: Entry Center Director Electronics Center of Excellence and ExpertiseU.S. Customs and Border Protection301 East Ocean Blvd.Long Beach, CA 90802 Attn: Omar De Jesus, Import Specialist Re: Application for Further Review of Protest No. 4909-21-100585; Section 201 Duties; Section 301 Duties; Antidumping Duties; Countervailing Duties; Solar Modules Dear Center Director: This letter is in response to the Application of Further Review (“AFR”) of Protest No. 4909-21-100585, filed on November 23, 2021, by Astronergy Solar (“Astronergy” or “Protestant”). Astronergy is protesting “U.S. Customs and Border Protection’s [ ] liquidation, appraisement and assessment of antidumping duty [ ], countervailing duty [ ], Section 201 Safeguard duty, and Section 301 duty” on an entry of solar modules that Astronergy claims are of Cambodian origin. This protest was designated as the lead protest by Protestant, who claims that “Protest no. 2809-21-108798 concerns the same merchandise and has been suspended[.]” FACTS: This AFR arises from a May 4, 2019 consumption entry of “solar panels” (as described on the commercial invoice) shipped from Enalex Energy (KH) Co., Ltd., located in Cambodia, and that Astronergy entered as the importer of record. Astronergy claims the solar panels are of Cambodian origin but were wrongly liquidated as Chinese origin products and, on this basis, assessed Section 201 duties, Section 301 duties, antidumping duties (“ADD”) and countervailing duties (“CVD”) (collectively, “Additional Duties”). On December 7, 2012, the Department of Commerce (“Commerce”) issued the ADD order in case A-570-979 and the CVD order in case C-570-980 on certain crystalline silicon photovoltaic cells, whether or not assembled into modules, from China. See Crystalline Silicon Photovoltaic Cells, Whether or Not Assembled into Modules, from the People’s Republic of China: Amended Final Determination of Sales at Less Than Fair Value, and Antidumping Duty Order, 77 Fed. Reg. 73,018 (Dec. 7, 2012); Crystalline Silicon Photovoltaic Cells, Whether or Not Assembled into Modules, from the People’s Republic of China: Countervailing Duty Order, 77 Fed. Reg. 73,017 (Dec. 7, 2012). Further, on June 15, 2021 in response to a scope inquiry from another entity, Commerce issued a scope ruling, which noted, inter alia, that “the presence of a p/n junction is the factor which ultimately separates a non-subject solar wafer from a subject solar cell[.]” Final Scope Ruling on the Antidumping and Countervailing Duty Orders on Crystalline Silicon Photovoltaic Cells from the People’s Republic of China: ET Solar Inc., June 15, 2021, Commerce barcode 4133803-01. Prior to the assessment of these Additional Duties, U.S. Customs and Border Protection (“CBP”) issued a Request for Information to Protestant asking for documentation to substantiate the product origin. However, as noted in CBP’s Notice of Action (dated January 16, 2020), Astronergy “failed to respond to the CF28 Document Request for Information issued on 08/03/2019 and a CF29 Proposed Rate Advancement issued 10/04/19[.]” As a result, CBP found that the solar panels were subject to ADD and CVD, along with “Section 201 trade remedies for solar panels and Section 301 duties for articles from China[.]” On March 2, 2020, Commerce noted to CBP in Message No. 0062401 (pertaining to case no. A-570-979) that “Commerce has not received a request for an administrative review of the antidumping duty order for the period and on the merchandise identified below except for the firm(s) listed in paragraph 3.” The identified merchandise was: Product: Crystalline Silicon Photovoltaic Cells, Whether or Not Assembled into Modules Country: People's Republic of China Case number: A-570-979 Period: 12/1/2018 through 11/30/2019 Commerce further instructed CBP in this Message No. 0062401 to, inter alia, “liquidate all entries for all firms except those listed in paragraph 3 and assess antidumping duties on merchandise entered, or withdrawn from warehouse, for consumption at the cash deposit or bonding rate in effect on the date of entry.” While Chint Solar (Zhejiang) Co., Ltd. and Chint Solar (Hong Kong) Company Limited were identified in paragraph 3, Astronergy was not. On March 18, 2021, Commerce Message No. 1077409 (related to case no. C-570-980) instructed CBP to liquidate all entries and assess countervailing duties for subject entries of crystalline silicone photovoltaic cells whether or not assembled into modules entered for consumption between January 1, 2019, and December 31, 2019, that were produced by firms under the listed third-country case numbers except the firms listed in paragraph 3, which included “Astronergy Solar.” For the firms listed in paragraph 3, Commerce instructed CBP that entries of merchandise from those firms should not be liquidated until specific instructions are issued and to continue to suspend liquidation. Subsequently, on August 19, 2022, Commerce Message No. 2231401 (related to case no. C-570-980) instructed CBP to “assess countervailing duties on merchandise entered, or withdrawn from warehouse, for consumption during the period 01/01/2019 through 12/31/2019, at the cash deposit rate required at the time of entry,” and liquidate all entries for the identified firms, which included “Astronergy Solar.” This entry was ultimately liquidated with the rate advances on May 28, 2021. General Background Regarding Solar Products Protestant does not provide much background on solar products generally or their production process. However, as Protestant, in part, challenges the imposition of additional duties based on the solar safeguard measure under Section 201, we refer to the background information on solar products available in the report of U.S. International Trade Commission (“ITC” or “Commission”) from Inv. No. TA-201-75, Crystalline Silicon Photovoltaic Cells (Whether or not Partially or Fully Assembled into Other Products), USITC Pub. 4739 (Nov. 2017) that explains solar products generally and their production process. In particular, the Commission explains that: “CSPV [(Crystalline Silicon Photovoltaic)] cells use crystalline silicon to convert sunlight to electricity and are the basic elements of a module[.] They have a positive layer, a negative layer and a positive negative junction (p/n junction). Electricity is generated when sunlight strikes the CSPV cell;” “CSPV laminates consist of the CSPV cells that are connected, encapsulated in an ethyl vinyl acetate [ ] film, and covered with a glass front sheet and a back sheet;” and “CSPV modules typically consist of the laminate that is typically ‘framed’ in aluminum, and then attached to a junction box.” Inv. No. TA-201-75, USITC Pub. 4739, Volume II (Nov. 2017) (Final) at I-11 to I-12. Further, with respect to the manufacturing of such solar products, the Commission describes five principal manufacturing stages: “First, polysilicon is refined, then it is formed into ingots, which are sliced into wafers, converted to CSPV cells, and assembled into the finished product, modules[.]” Id. at I-18. More specifically, the Commission describes the main steps in the cell manufacturing process (from wafers) as follows: • Cleaning and texturing: First, the wafers are cleaned, then the surface of the wafer undergoes a chemical treatment that reduces the reflection of sunlight and increases light absorption[.] • Diffusion: In the next step, “phosphorus is diffused into a thin layer of the wafer surface. The molecular level impregnation occurs as the wafer surface is exposed to phosphorus gas at a high heat, a step that gives the surface a negative potential electrical orientation. The combination of that layer and the boron?doped layer below creates a positive?negative, or P/N, junction–a critical partition in the functioning of a PV cell.” • Edge isolation: A thin layer of silicon is then removed from the edge of the CSPV cell to separate the positive and negative layers. • Coating: Next, a silicon nitride antireflective coating is added to the PV cells to increase the absorption of sunlight. • Printing: Metals are then printed on the solar CSPV cell to collect the electricity. On the front of the CSPV cell these metals are printed in thin metal strips called fingers, which are connected to the rest of the module via busbars. A metal layer, typically aluminum, is also printed on the back of the CSPV cell. • Co?firing: The CSPV cells then enter a furnace, where the “high temperature causes the silver paste to become imbedded in the surface of the silicon layer, forming a reliable electrical contact.” • Testing and sorting: The final step in the process is the testing and sorting of the CSPV cells based on their characteristics and efficiency. Id. at I-22 – I-23 (citations omitted). The cells are then assembled into modules. Id. at I-24. This Protest and AFR Astronergy filed this protest and AFR on November 23, 2021. Astronergy asserts the solar panels are of Cambodian origin and describes the production process of the solar panels as follows: Comalex PV (KH) Technology Co., Ltd. (“Comalex”), a company unrelated to Protestant, located in Cambodia purchases “wafers” from companies located in China. Included with the protest were sales contracts showing the purchase by Comalex of wafers from companies in China. The wafers are then sent from China to Cambodia. Included with the protest were invoices, packing lists, and bills of lading showing that the purchased wafers were sent from China to Comalex in Cambodia. In Cambodia, Comalex uses the wafers to manufacture solar cells, which entails: Cleaning of the wafers and texturing; Diffusion (make a positive-negative junction (“p/n junction”)); Etching; PECVD; Screen Printing; and Appearance color and inspection. Included with the protest were “inventory-in slip[s]” and “inventory-out slip[s]” from Comalex showing the movement of wafers into and out of inventory; a chart tracing the production of cells from wafers at Comalex; charts showing the inputs and outputs from the production steps noted above; a chart showing the daily production numbers of solar cells; and a video showing the facility and production steps. Comalex then sells the solar cells to Chint Solar (Hong Kong) Company Limited (“Chint Solar HK”), which is affiliated with Protestant, and both are owned by Chint Solar (Zhejiang) Co., Ltd. Included with the protest was a sales contract and invoice showing the purchase by Chint Solar HK of “solar cells” from Comalex. Chint Solar HK purchases these solar cells from Comalex to supply them to Enalex Energy (KH) Co., Ltd. (“Enalex”), another company unrelated to Protestant, located in Cambodia. Chint Solar HK and Enalex are parties to a “Commissioned Processing Contract” for “the production, procurement and technical support of the crystalline silicon solar modules[.]” According to this contract, Chint HK provides Enalex with solar cells, and Enalex, assembles the solar cells into solar modules. Included with the protest was a copy of this contract. The solar cells that Chint Solar HK purchased are shipped directly in Cambodia from Comalex to Enalex. Included with the protest was a chart from Comalex showing the quantity of cells delivered to Enalex. The solar cells are received and placed into inventory at Enalex. Included with the protest were “inventory-in slip[s]” from Enalex corresponding to the batch numbers identified in the Comalex to Enalex delivery chart identifying the quantity entering into Enalex inventory. The solar cells are withdrawn and consumed for solar module production by Enalex, which are tracked by Enalex’s daily production reports. Included with the protest was a daily production report from Enalex showing the number of solar cells used and the number of solar modules produced from those cells; chart tracing the cells used in solar module production; material sheets from Enalex. The finished solar modules are then exported from Cambodia by Enalex to the Protestant in the United States. Included with the protest were a chart of the delivery schedule; a chart tracing exportation of the solar modules; and the documents from the entry package including the entry summary, commercial invoice, packing list, country of origin certificate, waybill and arrival notice. CBP denied the protest on December 20, 2021, noting that the importer failed to provide sufficient information to substantiate the claim that the country of origin of the solar cells was Cambodia. ISSUES: Whether the solar panels at issue are subject to the Section 201 safeguard measure or the Section 301 duties. Whether the solar panels at issue are subject to ADD and CVD. LAW AND ANALYSIS: As an initial matter, we note that Astronergy timely filed this protest within the 180-day filing deadline set forth by 19 U.S.C. § 1514(c)(3)(A) and 19 C.F.R. § 174.12(e)(1). CBP liquidated the entry at issue on May 28, 2021. Astronergy filed this protest on November 23, 2021. The Center of Excellence and Expertise for Electronics subsequently forwarded the protest to this office for further review. The criterion for further review has been satisfied because this matter involves questions of fact which have not been ruled upon by CBP or the courts. See 19 C.F.R. §§ 174.24(b), 174.26(b)(1)(iv). Further, we note that the analysis and role CBP plays in the Section 201 and 301 trade remedy context is different from the ADD/CVD context. See e.g., ARP Materials, Inc. v. United States, 520 F. Supp. 3d 1341, 1360 (Ct. Int’l Trade, 2021) (“Unlike in [ ] Mitsubishi [v. United States, 44 F.3d 973 (Fed. Cir., 1994) where the Federal Circuit held that because the Commerce Department determined antidumping duty rates, Customs’ role in collecting those duties was ‘ministerial’ rather than a decision under section 1514(a)], Customs here performed more than a passive or ministerial function; in classifying Plaintiffs’ entries under HTSUS subheadings subject to Section 301 duties, it made substantive legal (interpreting the HTSUS subheadings) and factual (determining whether the entries fell within those subheadings) determinations that it had the authority to make. These determinations required Customs to exercise genuine interpretive or comparable judgments.”) (citation omitted) (internal quotation marks omitted). Thus, we will address each separately in the sections below. Whether the solar panels at issue are subject to the Section 201 safeguard measure or the Section 301 duties. Section 201 “Section 201 of the Trade Act of 1974, codified at 19 U.S.C. § 2251, provides the President of the United States with the power to impose ‘safeguards’ (also referred to as ‘safeguard measures’) that protect domestic industries from serious injury caused by imports.” Solar Energy Indus. Ass’n v. United States, 2023 U.S. App. LEXIS 30058, *4 (Fed. Cir., 2023). Under Section 201, upon petitions from domestic entities or industries, (a) the U.S. International Trade Commission (“ITC” or “Commission”) may make an affirmative determination that serious injury or a threat of serious injury to that industry exists; and (b) the President may then authorize “safeguards,” to provide a domestic industry temporary relief from serious injury. Id. at * 5-6 (citing 19 U.S.C. §§ 2252 and 2253). The President issued Presidential Proclamation 9693 on January 23, 2018 authorizing a safeguard measure against imports of solar panels into the United States. Solar Energy Indus., 2023 U.S. App. LEXIS 30058 *2 (citing Proclamation 9693: To Facilitate Positive Adjustment to Competition from Imports of Certain Crystalline Silicon Photovoltaic Cells (Whether or Not Partially or Fully Assembled into Other Products) and for Other Purposes). The Presidential Proclamation imposed temporary safeguard duties of 30% on certain Crystalline Silicon Photovoltaic (“CSPV”) products, to decrease by five percent each year until 2022. Invenergy Renewables LLC v. United States, 422 F. Supp. 3d 1255, 1266 (citing U.S. Int'l Trade Comm’n, Crystalline Silicon Photovoltaic Cells (Whether or not Partially or Fully Assembled into Other Products), Inv. No. TA-201-75, USITC Pub. 4739 (Nov. 2017)); see also 83 Fed. Reg. 3541 (January 25, 2018). Among the CSPV products subject to this safeguard measure are “solar cells, whether or not assembled into modules or made up into panels provided for in subheading 8541.40.60 in Annex 1 to this proclamation[.]” 83 Fed. Reg. at 3542. Annex 1 to Presidential Proclamation 9693 modifies subchapter III of chapter 99 of the Harmonized Tariff Schedule of the United States (“HTSUS”) by inserting a new U.S. note, i.e., Note 18, and provisions. See Annex 1 of 83 Fed. Reg. 3541. This modification is effective with respect to goods entered, or withdrawn from warehouse for consumption, from February 7, 2018 through February 6, 2022. Id. Under Note 18, products classified under subheading 8541.40, HTSUS, unless specifically excluded, are subject to the additional duties. See Note 18 to Chapter 99 and subheadings 9903.45.21 through 9903.45.25, HTSUS. According to Note 18(g) to Chapter 99, “modules” within the meaning of subheading 9903.45.25, HTSUS, include, inter alia, products of subheading 8541.40.60 of the permanent HTSUS consisting of “a joined group of CSPV cells…capable of generating electricity.” See Note 18 to Chapter 99 and subheadings 9903.45.21 through 9903.45.25, HTSUS. Regarding the latter criterion, CSPV cells are defined in Note 18(c) as “crystalline silicon photovoltaic cells of a thickness equal to or greater than 20 micrometers…having a p/n junction.” Id. Subheading 9903.45.25, HTSUS, applies to modules which are “the product or originating good of a country other than a country described in note 18(b).” Note 18(b) in turn provides that “for the purposes of this note and the application of subheadings 9903.45.21 through 9903.45.25,” certain enumerated “developing countries that are members of the World Trade Organization shall not be subject to the rates of duty…?provided for therein.” Among the list of countries exempt from the rates of duty appertaining to subheading 9903.45.25, HTSUS is Cambodia. The solar panels at issue entered on May 4, 2019, when the safeguard measure, as implemented by Note 18, remained in effect. The solar panels at issue were entered under subheading 8541.40.6015. However, Protestant does not dispute that unless the solar panels at issue are considered a product of Cambodia, they would be subject to the increased duties imposed by the safeguard measure. Accordingly, the applicability of the safeguard measure turns on whether the solar panels are a product of Cambodia for purposes of Section 201 of the Trade Act of 1974 (19 U.S.C. § 2251). Section 301 “Section 301 of the Trade Act of 1974 authorizes the [U.S. Trade Representative (“USTR”)] to take various actions to protect U.S. interests when foreign trade partners violate trade agreements or otherwise take actions adverse to U.S. trade interests.”  ARP Materials, Inc. v. United States, 520 F. Supp. 3d 1341, 1347 (Ct. Int’l Trade, 2021) (citing 19 U.S.C. § 2411(a)(1)). In 2017, under this authority, the USTR initiated a Section 301 investigation concerning certain Chinese trade practices. Id. at 1347-1348 (citing Initiation of Section 301 Investigation; Hearing; and Request for Public Comments: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, 82 Fed. Reg. 40,213, 40,213 (USTR Aug. 24, 2017)). The USTR found that China’s conduct was actionable under Section 301 and proposed an additional 25 percent ad valorem duty on various products originating in that country.  Id. at 1348 (citing Notice of Determination and Request for Public Comment Con