Solar Cell Exporter Rails Against Commerce's Surrogate Value Picks, Financial Ratio Calculation at CAFC

The Commerce Department failed to rely on the best available information when setting surrogate values for antidumping duty respondent Risen Energy Co.'s backsheet and ethyl vinyl acetate (EVA) inputs in the AD administrative review on solar cells from China in 2017-18, Risen argued in an opening brief at the U.S. Court of Appeals for the Federal Circuit. Risen also challenged the Commerce's calculation of the company's financial ratios (Risen Energy Co. v. United States, Fed. Cir. # 23-1550).

"A reasonable mind, upon consideration of the record as a whole, could not find that the [Harmonized Tariff Schedule] codes relied upon for the two inputs and the financial ratio calculation method are the best available information and therefore the resulting margin is not the most accurate dumping margin possible," the brief said.

Commerce said Risen's backsheet and EVA inputs should be classified as "sheets" and not "films" since the thickness of each input is above 0.25mm. The respondent said the agency went against its past practice and did not justify the differentiation since Commerce "relied on information not relevant to this inquiry or the solar industry, while ignoring the record evidence from Risen’s own experience and the solar industry which used the term film used for these inputs."

The Court of International Trade initially ruled that Commerce arbitrarily departed from its past practice when it used Malaysian data for these two inputs. The agency used Malaysian HTS subheading 3920.62.1000, which covers plates and sheets of polyethylene terephthalate, to value the backsheet, while it has historically used subheading 3920.62.9000, which covers PET not in the form of plates and sheets. The agency then put ASTM abstracts on the record to define the terms "plate," "sheet" and "film," showing that Risen's backsheets fit under sheet rather than film, leading the trade court to uphold the use of the data (see 2301050026). The same was true for the valuation of EVA.

Risen told the Federal Circuit that the use of the ASTM information is contradicted by "Risen’s own purchasing experience and the other information specific to the solar industry," which show that EVA and backsheet used in the solar industry is referred to as "film" even when exceeding 0.25mm of thickness. "However, again, the information provided by Commerce is also not a definition and not even related to the solar industry," the brief said. "Surely, the terms used in the actual industry are the most informative 'best available information' for that industry."

The respondent also argued against Commerce's surrogate financial ratios calculation, claiming that the agency determined that "the inventories note in the financial statement covered all raw material, labor, and energy expenses." This conclusion cut against "accounting principles, Commerce’s usual understanding of ratio calculations, and the information in the financial statement itself," the brief said. As a result, the calculation "significantly overstated the overhead costs."