US Defends Commerce's Valuation of Solar Cell Inputs in AD Review at CAFC

The Commerce Department legally selected Malaysian import data to value backsheet and ethyl vinyl acetate (EVA) in an antidumping duty review on solar cells from China because that data best corresponds to the inputs used by exporter Risen Energy Co., the U.S. argued in an Aug. 3 reply brief at the U.S. Court of Appeals for the Federal Circuit (Risen Energy Co. v. United States, Fed. Cir. # 23-11550).

Replying to comments from Risen, the government defended Commerce's calculation of surrogate financial ratios by "allocating materials, labor, and energy (MLE) costs" found in the financial statement of Hanwha QCells to the denominator, while attributing the leftover "cost of sales" to the numerator as overhead expenses.

While more than 200,000 of the over 2 million Malaysian ringgit in sales was "unidentified in the financial statement," the government said the agency "reasonably concluded that this remainder reflects manufacturing overhead, and not MLE expenses." This is evidenced by the financial statement's identification of MLE within "inventories" totaling over 1.6 million Malaysian ringgit that Commerce already dropped from the cost of sales, the brief said.

In the review, Commerce said Risen's backsheet and EVA inputs should be classified as "sheets" and not "films" since the thickness of each is above 0.25 mm. Risen called this contrary to Commerce's past practice and said the agency did not justify the differentiation when it relied on data not relevant to the inquiry or the solar industry. The Court of International Trade initially said Commerce illegally departed from its past practice. The agency further fleshed out its point with industry descriptions of the Malaysian data, and the court sustained the move (see 2301050026).

At the Federal Circuit, Commerce defended its decision using data from Malaysian Harmonized Tariff Schedule subheading 3920.62.1000, covering polyethylene sheet, for the backsheet, and data from subheading 3920.10.1900, providing for ethylene polymer sheet: other than rigid, to value EVA.

Risen continues to fight the use of this data, particularly for backsheet, since the agency supposedly based its finding on an "unsupported definition of the thickness difference between film and sheet." The exporter said industry abstracts are "trumped by marketing materials" showing certain solar firms refer to backsheet as "film." In reply, the government echoed the trade court's ruling, which said at best, these materials give a competing definition and "do not negate the reasonableness of Commerce's determination." The U.S. said "Risen merely disagrees with Commerce's weighing of the record evidence, which is not a proper basis for a legal challenge."

As for the valuation of EVA, Risen said the industry standards for thickness on which the agency relied "are merely guidance," not specific to the Malaysian HTS or the solar industry. The government said the definition of film Commerce put on the record stems from industry language that is a "broad standard covering plastics," adding that there is no evidence that the industry standard is limited to only certain types of plastics.