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Solar Roof Mountings Don't Qualify for Finished Goods Exclusion of AD/CVD Orders, CIT Rules

The Court of International Trade cannot set aside case law finding that subassemblies do not qualify for the finished merchandise exclusion in antidumping and countervailing duty order scope rulings, Judge Stephen Vaden said in a Dec. 6 opinion. Siding with the Commerce Department over plaintiffs China Customs Manufacturing and Greentec Engineering, the court said the plaintiffs' solar roof mountings fall within the scope of the AD/CVD orders on aluminum extrusion from China.

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The case concerns China Customs Manufacturing's scope request for its Rock-It 3.0 solar roof mountings over the aluminum extrusions AD/CVD orders. Made with aluminum extrusion parts, the products are used to mount solar panels on a roof and with other parts of the plaintiffs' EcoFasten Rock-It System 3.0. Since the AD/CVD orders' issue date in 2011, Commerce's interpretation of the scope of the orders has "evolved extensively," the court pointed out.

Commerce originally found that the roof mounts qualify for the finished merchandise exclusion of the orders because they required no further assembly. However, during that same year, the agency revised the way it finds whether a good qualifies as finished merchandise. The new regulation found that its old interpretation of the finished merchandise exclusion could "inadvertently expand the scope of the order," so it changed the exclusion's qualifications to require a good to include all the downstream products.

Two court cases shored up this interpretation, eventually determining that a good found to be a subassembly cannot qualify for the finished merchandise exclusion. It was under this standard that Commerce made its scope ruling now subject to the plaintiffs' CIT challenge. The plaintiffs conceded that, as the interpretation stands now, their products constitute a subassembly and thus do not qualify for the finished merchandise exception to the extrusion orders. Instead, they challenged the interpretation of the exclusion itself.

The judge held that CIT cannot toss prior case law affirming this standard. "Plaintiffs’ argument can be essentially reduced to 'Because an earlier scope request would have likely resulted in Plaintiffs receiving a different scope ruling, they should receive that ruling now,'" Vaden said. "Unfortunately for China Custom Manufacturing, timing matters; and neither this Court nor Commerce may disregard [U.S. Court of Appeals for the Federal Circuit] precedent. Commerce followed the relevant caselaw when making its scope determination and reached the only result it could consistent with the rulings of the Federal Circuit. Substantial evidence therefore supports Commerce’s determination, and the Court will not disturb it."

"The Aluminum Extruders Fair Trade Committee (AEFTC) is gratified by yesterday’s decision from the CIT that solar panel mounting brackets are subassemblies and therefore remain subject to the scope of the orders," said Robert DeFrancesco, counsel for AEFTC, the defendant-intervenor in the case. "The Court in its decision appropriately recognized the evolution of the Commerce Department’s interpretation of the scope in response to direction from the Federal Circuit. We believe this takes the current interpretation back to something closer to the original intent of the petition to cover downstream products that include aluminum extrusions as parts."

The plaintiffs also made two other arguments: that its non-aluminum extrusion components should be excluded from the orders and that the administrative record was insufficient. During litigation, Commerce resolved both of these points by finding that the non-aluminum extrusion components are not included in the scope of the orders and including a Federal Circuit decision on the record.

(China Customs Manufacturing, Inc., et al. v. United States, Slip Op. 21-163, CIT #20-00121, dated 12/06/21, Judge Stephen Vaden. Attorneys: George Tuttle of Law Offices of George R. Tuttle for plaintiffs; Patricia McCarthy for defendant U.S. government; Robert DeFrancesco of Wiley for defendant-intervenor Aluminum Extrusions Fair Trade Committee)