Commerce Can't 'Continue' CBP's Improper Suspension of Liquidation in AD/CVD Case, CIT Says

The hybrid solar cells imported by Sunpreme included both a thin-film layer of amorphous silicon and a substrate of crystalline silicon. The scope of AD/CV duties on solar cells from China expressly covers crystalline silicon cells, but specifically exempts thin film cells. Nonetheless, CBP suspended liquidation of the hybrid cells in April 2015. Despite the exemption, CBP said Sunpreme’s hybrid cells were subject to duties because they also had the physical characteristics of products covered by the scope. Commerce eventually came to the same conclusion in a scope ruling it began in December 2015.

CIT in January ruled CBP did not have the authority to interpret the “ambiguous” scope, saying the agency should have waited for the scope ruling (see 1601190080). It issued an injunction stopping CBP from collecting cash deposits on its modules containing thin film cells until Commerce issued its scope ruling, though it did not stop CBP from suspending liquidation. But after Commerce’s final ruling came out in July (see 1608030041), causing the injunction to expire, Commerce told CBP to continue to suspend liquidation on the entries, including those before the scope ruling, and collect cash deposits. In a related case, CIT has since issued a second injunction replacing the expired one (see 1610120072).

In this latest decision, CIT reaffirmed that CBP cannot suspend liquidation of entries based on its own interpretation of an ambiguous scope. “In order to act within its designated role, CBP must be able to point to clear language in the scope of the Orders, including any exclusions, that places goods within the scope based upon observable facts,” it said. “Where factual determinations alone do not permit CBP to determine that a good falls within exclusionary language in an order, the good must be considered outside of the scope until Commerce interprets the order and clarifies that the merchandise should be included.” Here, though the scope explicitly covered crystalline silicon, CBP impermissibly interpreted the thin-film exemption by concluding it applies only to some thin-films, CIT said.

That doesn’t mean any importer can claim any scope is ambiguous to avoid paying duties, CIT said. “Where merchandise is prima facie covered by both the inclusive and exclusive words of the order, CBP may suspend liquidation and collect cash deposits even in a case where an importer claims there is ambiguity in an order,” it said. “In this case, even if the merchandise was prima facie a crystalline silicon photovoltaic cell, it also had thin films” and was exempted by exclusive words. “Without a definition of the term ‘thin film products,’ CBP could not have given effect to the exclusionary language without concluding some products with thin films were not thin film products.”

Arguing that it could nonetheless assess duties on the improperly suspended entries, Commerce again pointed to two provisions in its regulations that say it may continue, during and after scope proceedings, to suspend liquidation of entries already suspended. CIT disagreed. “Commerce’s regulations must presume suspension of liquidation is lawful.” Here, where CBP illegally suspended liquidations, Commerce’s regulations cannot be read to permit the continued illegal suspension of liquidation, it said.

(Sunpreme Inc. v. U.S., Slip Op. 16-97, CIT # 15-00315, dated 10/11/16, Judge Kelly)