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Commerce Properly Denied Solar Panel Mounts Finished Goods Exclusion, DOJ Tells CAFC

The Commerce Department and the Court of International Trade properly held that China Custom Manufacturing's solar panel mounts do not qualify for the finished goods exclusion from the antidumping and countervailing duty orders on aluminum extrusions from China, DOJ argued in an April 18 reply brief at the U.S. Court of Appeals for the Federal Circuit. CCM, along with importer Greentec Engineering, ask Commerce to apply an outdated interpretation of the exclusion that doesn't consider key precedent from the Federal Circuit, the U.S. said (China Custom Manufacturing v. United States, Fed. Cir. #22-1345).

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The case concerns CCM's scope request for its Rock-It 3.0 solar roof mountings. 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 drastically evolved.

Commerce originally found that the roof mounts qualified 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 policy found that its old interpretation of the finished merchandise exclusion could "inadvertently expand the scope of the order," so it changed the exclusion's requirements to require a good to include all the downstream products.

Two Federal Circuit 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 litigation. The plaintiff-appellants 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 at the Court of International Trade. The trade court held that it can't ignore prior case law affirming this standard, ultimately upholding Commerce's decision to not exclude the solar panel roof mounts (see 2112070031).

At the Federal Circuit, CCM and Greentec argued that the appellate court precedential opinions cited by CIT are not applicable to their products (see 2203100036). "In so arguing, CCM effectively seeks to relitigate this Court’s cases that bind Commerce and the trial court," DOJ said. "The trial court correctly determined that CCM’s arguments lack merit and in so doing sustained Commerce’s determination that CCM’s product is not excluded from the Orders pursuant to the finished merchandise exclusion."

In particular, the appellants argued that the Federal Circuit's rulings in the Shenyang 2015 and Shenyang 2019 opinions are not applicable to solar panel mount assemblies since the opinion is limited to the window wall mounts. The appellants cite a 2017 CIT case to argue that the Federal Circuit's decisions were invalid. "The cited 2017 decision, however, concerned the finished goods kit exclusion, not the finished merchandise exclusion at issue in the other Shenyang decisions," the brief argued. "CCM fails to demonstrate how this lower court decision concerning a different exclusion 'invalidates' the 2015 and 2019 Shenyang decisions of this Court, or in any way limits their holding."

Bottom line, Commerce said that the imported mounts are combined with other components, making them not fully assembled at the time of entry. This precluded the goods from qualifying for the finished goods exclusion, the brief said. "Commerce properly determined that CCM’s solar mounts are subassemblies, which act as intermediary products that consist of partially assembled merchandise, and require incorporation into a solar panel mounting system to function," DOJ argued.