Unfinished Chinese Solar Cells Finished in Vietnam Still Subject to AD/CV Duties, Commerce Says

Solar modules made from unfinished solar cells imported from China into Vietnam for finishing are likely subject to antidumping and countervailing duties on crystalline silicon photovoltaic cells, whether or not assembled into modules, from China (A-570-979/C-570-980), the Commerce Department said in a preliminary scope ruling issued March 30. The country where the p/n junction is formed on the cells determines country of origin, which in the case of these cells is China, Commerce said.

ET Solar imported the modules from Vietnam. The production process begins in China, where, among other things, silicon wafers are doped to form the p/n junction. The unfinished cells are then bought by a Vietnamese company, where in Vietnam aluminum and silver pastes are printed onto the surface of the cells to create an electrical grid capable of collecting the energy generated by the cells. The cells are then incorporated into modules in Vietnam, before being purchased by ET Solar for importation into the United States.

The scope of the AD/CVD orders says that it does not cover modules manufactured from non-Chinese origin solar cells. ET Solar argued that the solar cells are substantially transformed in Vietnam by the production processes that took place there, and as a result the modules containing them cannot be subject to AD/CV duties on solar cells from China.

Commerce noted that the scope of the AD/CVD orders defines solar cells as “having a p/n junction formed by any means, whether or not the cell has undergone other processing, including, but not limited to, cleaning, etching, coating, and/or addition of materials (including, but not limited to, metallization and conductor patterns) to collect and forward the electricity that is generated by the cell.” Under that definition, Commerce preliminarily found that the unfinished solar cells imported into Vietnam for further processing are covered by the solar cells duties.

Commerce then looked to whether those solar cells were substantially transformed into Vietnamese-origin cells by the further processing that took place in Vietnam. It relied on a five-part test for substantial transformation: “1) whether the processed downstream product falls into a different class or kind of product when compared to the upstream product; 2) whether processing in a third country changes the important qualities or use of the component; 3) the nature and sophistication of processing; 4) the cost of production/value added to the product; and 5) the level of investment.”

The agency preliminarily found that the cells are not substantially transformed in Vietnam. As the p/n junction in the cells is the component that generates electricity when hit by the sun, it is the cells’ essential component, and is added in China, Commerce said. The addition of wires to channel electricity does not change the class or kind of merchandise., or change the use of the cells. Commerce also found that the production processes in China were more intensive than those that took place in Vietnam.

Under Commerce’s regulations, when a scope ruling presents particularly complicated issues, the agency can issue a preliminary scope ruling for comment. It did so here. Commerce is giving participants in the scope inquiry until April 9 to submit any more factual information, before it opens a 20-day comment period on the preliminary scope ruling.

Email ITTNews@warren-news.com for a copy of the scope ruling.