Jul 3rd, 2024

Trade Update for Week of July 3, 2024

United States Court of International Trade 

Slip Op. 24-69 

Before the Court in Greentech Energy Solutions, Inc. v. United States, Court No. 23-00118, Slip Op. 24-69 (June 10, 2024) was a motion to dismiss for lack of subject matter jurisdiction and failure to state a claim brought forth by the Government. It concerned the U.S. Department of Commerce’s decision in 2012 to impose ongoing certification requirements on importers of solar modules that contain solar cells produced in countries other than the People’s Republic of China (“PRC” or “China”) and U.S. Customs and Border Protection implementation of these certification requirements at Commerce’s direction. Plaintiff, an importer of solar modules exported to the United States from Vietnam and which incorporate solar cells allegedly produced in Vietnam, challenged the agency’s suspension of liquidation as to certain entries subject to antidumping and countervailing duties, the collection of cash deposits, and the liquidation of the entries inclusive of antidumping and countervailing duties. The relevant antidumping and countervailing duty orders are Crystalline Silicon Photovoltaic Cells, Whether or Not Assembled Into Modules, From the People’s Republic of China, 77 Fed. Reg. 73,018 (Dep’t Commerce Dec. 7, 2012) (am. final determination of sales at less than fair value, and antidumping duty order) (“AD Order”) and Crystalline Silicon Photovoltaic Cells, Whether or Not Assembled Into Modules, From the People’s Republic of China, 77 Fed. Reg. 73,017 (Dep’t Commerce Dec. 7, 2012) (countervailing duty order) (“CVD Order”).

The issue turned on the lawfulness of certification requirements in connection with solar cells from China that apply to nonsubject merchandise imported into the United States from countries other than China. Plaintiff argued that Commerce’s certification provision as applied to Greentech’s imports from Vietnam was unlawful, that the imposition of AD/CVD duties based solely on Greentech’s failure to provide contemporaneously dated certificates even though Greentech submitted other substantial documentation showing the imports were not subject to the China AD/CVD orders, was unlawful, and finally that the fines assessed were excessive, in violation of the Eight Amendment of the United States’ Constitution. The provisions in question relate back to Commerce’s 2012 publication of antidumping and countervailing duty instructions to CBP addressing implementation of the exporter certification, which states in relevant part that exporters must certify that “records pertaining to this certification may be subject to verification by Department of Commerce officials and I consent to verification with respect to this certification and these records. Importers and exporters must certify among other things that the certifications “should be completed at the time of the entry” or “at the time of shipment” respectively. The language of the certification further provides”

[t]hat failure to maintain the required certification or failure to substantiate the
claim that the panels/modules do not contain solar cells produced in the People[’s]
Republic of China will result in suspension of all unliquidated entries for which
these requirements were not met and the requirement that the importer post an AD
cash deposit or, where applicable, a bond, on those entries equal to the PRC-wide
rate in effect at the time of the entry and a CVD cash deposit, or where applicable,
a bond rate equal to the all-others rate in effect at the time of the entry.

The instructions also require that the “certifications and supporting documentation must be maintained by the parties described above but will only be provided to CBP by the importer at the request of CBP” and that the “documents should not be provided by the importer as part of the entry document package, unless specifically requested by CBP.” Commerce explained that “CBP may accept the above certifications (and if required by CBP, supporting documentation) to establish that the merchandise is not covered by the scope of this order.” If an importer fails to provide CBP with any requested certifications or documentation, “CBP is instructed to suspend all unliquidated entries for which the certification or documentation requirements were not provided,” and, in antidumping cases, “require the posting of a cash deposit or bond on those entries equal to the PRC-wide rate in effect at the time of entry,” or, for countervailing duty purposes, “require the posting of a cash deposit or bond on those entries equal to the all others rate in effect at the time of entry.” Final CVD Instructions, id.

Judge Mark A. Barnett, writing for the Court, agreed with the Government and granted their motion to dismiss for lack of subject matter jurisdiction under 28 U.S.C. § 1581(i)(1)(B) and (D), which plaintiff used to invoke the court’s jurisdiction. The Court  disagreed with plaintiff’s claim that § 1581(a) jurisdiction was unavailable to resolve the pending claims. To this end, plaintiff had claimed that the action sought to challenge Commerce’s authority to instruct CBP to apply the AD/CVD orders to solar modules that incorporate non-Chinese origin solar cells and, therefore, that this was unlike a “run-of-the-mill challenge to a routine CBP decision.” According to Plaintiff, this action focused on raising the question of whether Commerce exceeded its authority when it imposed the certification requirement – but the Court was unpersuaded. The Court decided to dismiss the case reasoning that “a protestable decision” gives rise to a section 1581(a) challenge and that Greentech’s claims are amendable to protest and, thus, (a) jurisdiction would be available to Greentech and would not be manifestly inadequate.

In this opinion, the Court also discussed due process issues. Initially, the Court held that while noncompliance with the certification requirements may give rise to a rebuttable presumption of Chinese origin solar cells, effectuated by suspension of liquidation, the Government is required to provide recourse for importers to rebut that presumption in order to comply with due process requirements which entitle importers to some form of hearing before an individual is finally deprived of a property interest.” Mathews v. Eldridge, 424 U.S. 319, 333 (1979); Royal Brush Mfg., Inc. v. United States, 75 F. 4 th 1250, 1257 (Fed. Cir. 2023). Greentech claimed to have been unaware of the certification requirements and failed to provide timely-signed certifications when CBP requested them almost two years from the date of entry. Thereafter, Greentech continued to make such entries of solar modules from Vietnam but did not maintain importer or exporter certifications signed and dated as of the date of entry. Over the course of the following two years, CBP issued two extensions of liquidation for each of the subject entries and later issued a request for information (“RFI”) to Greentech regarding two of the subject entries and in which CBP requested “documentation to show the products imported are exempt from AD/CVD duties or out of scope.” Finally, in 2021, CBP issued a Notice of Action to Greentech explaining that it was suspending liquidation of the subject entries and requiring cash deposits at the PRC-wide rate for the AD Order and the all-others rate for the CVD Order. CBP explained that it was acting pursuant to Commerce’s instructions accompanying the agency’s preliminary antidumping and countervailing duty solar cell investigation determinations.

CBP noted that Greentech had provided certificates dated after the RFI and thus failed to provide “the proper document,” and also stated that Greentech was free to “protest the additional duties upon liquidation.” The agency subsequently issued invoices to Greentech in connection with the AD/CVD cash deposits and liquidated the subject entries inclusive of the invoiced AD/CVD duties. In response, Greentech submitted a letter to CBP providing additional information regarding the subject entries and protested CBP’s liquidation of the subject entries and, for one protest, filed an application for further review. Thereafter, in 2023, CBP requested additional information from Greentech regarding two of the subject entries in order to evaluate Greentech’s claimed exemption from AD/CVD duties. Greentech provided CBP with information regarding one entry and informed CBP that it was gathering information regarding the second entry. In turn, CBP suspended action on Greentech’s protests and application for further review when Greentech commenced this case. In the instant case, the Court found that the Government met its due process requirement when CBP informed Greentech via the Notice of Action of the steps taken to suspend liquidation and explained to Plaintiff that it could contest the assessment of AD/CVD duties by protesting the liquidation, since it was shortly after these notices that CBP began liquidating the subject entries.  As to the question of whether CBP erred in liquidating Plaintiff’s entries without first consulting with Commerce about the propriety of doing so, the Court pointed to Commerce’s most recent regulation set forth in 19 C.F.R. § 351.228 which indicates the procedures that should have been followed in light of a failure to provide a certificate. The Court found that the regulation grants Commerce the authority to instruct CBP on assessing duties and indicates that there should be a comprehensive process for determining when these duties do not apply, beyond merely providing certifications. Moreover, in addition to instructing CBP to suspend liquidation and collect cash deposits when an “importer or other interested party” fails to provide certifications or provides certifications containing “materially false, fictitious or fraudulent statements or representations,” 19 C.F.R. § 351.228(b)(1)(i)–(ii), the regulation states that, “[u]nder paragraph (b)(1)(i) or (ii) of this section, [Commerce] may also instruct [CBP] to assess antidumping or countervailing duties, as the case may be, at the applicable rate,” id. §351.228(b)(2). The Court viewed this language as sufficient to suggest that, when presented with noncompliance, Commerce  will determine whether to instruct CBP to liquidate the relevant entries inclusive of AD/CVD duties. Notwithstanding its conclusion, the Court said that CBP must remedy the missteps that occurred before liquidation by working alongside Commerce to review all relevant information in the course of resolving Greentech’s pending protests.

The Court dismissed the case on jurisdictional grounds. Moreover, it dismissed the case as nonjusticiable given that the protest action will produce additional factual developments. Lastly, the Court was not persuaded by the plaintiff’s Eighth Amendment claim because Greentech acknowledged the absence of an Eighth Amendment violation when duties are lawfully determined and, here, Greentech made no allegation that the duties assessed at liquidation rested on violations of the statutory scheme governing AD/CVD duties.