United States: Clients Should Be Alert To A Pending Complaint At The United States International Trade Court Which Could Result In Retroactive Anti-Dumping And Countervailing Duties On Certain Solar Panels

A solar panel and semiconductor manufacturer have jointly filed a lawsuit in the United States Court of International Trade challenging a moratorium on the collection of anti-dumping and countervailing duties (AD/CVD) on Chinese-branded crystalline silicon photovoltaic (CSPV) solar modules and cells imported from Malaysia, Thailand, Vietnam, and Cambodia. The matter is Auxim Solar, Inc. and Concept Clean Energy, Inc. v. United States, et. al., 1:23-cv-00274-TMR.

Plaintiffs contend in the complaint that the United States solar manufacturing base has been "gutted" by unfair Chinese trade practices, including intellectual property theft to state-sponsored industrial subsidization and predatory pricing. They contend that although the current administration found that Chinese solar producers are evading U.S. trade measures using third country export platforms, the administration nonetheless has provided a tariff holiday with importers, consequently stockpiling dumped imports while import volumes are at record levels.

The complaint challenges the decision of the United States Department of Commerce (Commerce) to suspend the collection of AD/CVD on CSPV cells and modules found to be circumventing the antidumping and countervailing duty orders that cover these materials. Plaintiffs contend that by not requiring cash deposits of estimated AD/CVDs, Commerce is not enforcing its findings that CSPV cells and modules from Malaysia, Thailand, Vietnam, and Cambodia were circumventing the established AD/CVD orders covering CSPV cells and modules from China. Although Commerce made affirmative determinations of circumvention, Commerce contends that it properly relied upon the administration's June 2022 Proclamation 10414, which declared "an emergency to exist with respect to the threats to the availability of sufficient electricity generation capacity to meet customer demand" in order to extend and waive liquidation and application of certain AD/CVD duties.¹

The complaint was filed on Dec. 29, 2023. The complaint seeks declaratory judgment that Commerce's actions are contrary to the law; Commerce must suspend liquidation of previously suspended entries and apply cash deposits of estimated AD/CVD until appropriate liquidation instructions are issued. Generally, estimated duties are paid by importers when the goods first enter the U.S. About 314 days after the date of entry, which is referred to as the liquidation date, Customs finalizes the duty amount owed. The plaintiffs subsequently filed a Motion for Preliminary Injunction, which the court denied pursuant to a Joint Stipulation of the Parties wherein the parties agreed that the court has the jurisdiction and power to order the reliquidation of unliquidated entries as of Jan. 25, 2024. Any court order that directs Commerce to resume estimated cash deposits or further suspends the liquidation date could mean retroactive AD/CVD liability.

The defendants have filed a Motion to Dismiss the matter, arguing that the court lacks subject matter jurisdiction over the complaint because the plaintiffs should have pursued their arguments during the underlying circumvention inquiries – and in fact, the defendants note that the plaintiffs raised many of the same arguments in those proceedings which Commerce addressed and rejected.

Solar developers, owners, utilities, and EPC contractors should remain alert to the risk of additional import duties that could have to be paid on some solar panels imported after April 2022. Generally, traders or importers of these items are the importer of record and are responsible for the payment of the duties. However, downstream users of solar panels should be alert to any contractual assumption of risk undertaken in the supply chain, PPAs, EPCs, or similar arrangements where such costs can be passed through to a counter-party.

Clients should be alert and aware of this matter and should understand the contractual landscape with regard to solar power facilities where the company is an owner, operator, developer, or purchaser and which party, if any, directly or indirectly bears the risk of retroactive AD/CVD duty payments; or, whether the risk of retroactive liability is addressed at all.

To follow further developments of this Proceeding, visit Auxim Solar Inc., et.al. v. United States, et.al., United States Court of International Trade, Docket 1:23-CV-00274-TMR (Dec. 29, 2023)

Footnotes

1. Declaration of Emergency and Authorization for Temporary Extensions of Time and Duty-Free Importation of Solar Cells and Modules from Southeast Asia, 87 Fed.Reg. 35,067, 35,067-68 (June 9, 2022) (Proclamation 10414); Procedures Covering Suspension of Liquidation, Duties and Estimated Duties In Accord With Presidential Proclamation 10414, 87 Fed.Reg. 56,868 (Dep't of Commerce Sept. 16, 2022)

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