The source for trade compliance news

Commerce Finds Solar Mounts Subject to Aluminum Extrusions Duties, Applying New 'Subassembly' Test

Solar roof mountings made from extruded aluminum parts and steel fasteners do not qualify for the “finished merchandise” exemption from antidumping and countervailing duties on aluminum extrusions from China (A-570-967/C-570-968), the Commerce Department said in a recent scope ruling that marks the agency’s first application of a new definition for the exemption born from years of litigation on the subject.

Previously, fasteners had been invisible for the purposes of the finished merchandise exemption; finished goods consisting of only extruded aluminum parts and fasteners could not qualify. But the Court of International Trade and, on appeal, the Federal Circuit, rejected that longstanding interpretation by Commerce in a series of decisions involving appliance door handles imported by Whirlpool and Meridian (see 1512080012 and 1805250031). Fasteners are not considered for the “finished goods kit” exemption from aluminum extrusions duties, but Commerce had erred in applying the same test to its finished merchandise exemption, the courts had said.

Commerce laid out its new test in a brief filed in the Meridian case, and CIT in April 2020 sustained the new definition. The 60-day period to appeal expired June 5.

The new framework delineates assembled “subassemblies” that are intended for incorporation into a larger downstream product from goods that are “fully and permanently assembled and completed at the time of entry.” Subassemblies that include extruded aluminum components, even though they are assembled, do not qualify for the “finished merchandise” exemption and are subject to AD/CV duties. On the other hand, goods containing both extruded aluminum parts and parts made from other materials that are “completed at the time of entry” are exempt under the exclusion, Commerce said.

And while subassemblies can’t qualify for the finished merchandise exemption, subassemblies that are imported unassembled in a packaged combination of parts do qualify for the “finished goods kit” exemption from aluminum extrusions duties, Commerce said.

As directed by the courts, and in a change from its longstanding practice, Commerce found fasteners are included in the analysis. Steel bolts, for example, count as non-extruded aluminum parts, and can qualify a product for the finished merchandise exemption if it is otherwise “completed at the time of entry.”

Commerce also found that subassemblies, while not eligible for the finished merchandise exemption, are only subject to AD/CV duties on their extruded aluminum parts. The filing says entry filers should use the AD/CVD special value fields in ACE to specify the proportion of the subassembly covered by aluminum extrusions duties. Misuse of the special value fields “’will be considered for penalty action pursuant to 16 USC 1641,”’ Commerce said, quoting a CBP CSMS message.

In its first application of the new framework, Commerce found the solar mountings, imported by China Customs Manufacturing and Greentec Engineering, don’t qualify for the “finished merchandise” exemption because they are subassemblies. “CCM’s solar mounts are intermediary products that require incorporation in a downstream product to function,” Commerce said. “CCM stated that its solar mounts are part of a solar panel mounting system which, in addition to the solar mounts, includes a Rock-It Slide, a level nut cap, a Rock-It 3.0 Coupling, a load bearing foot, and a Rock-It 3.0 Array Skirt. In other words, the other parts of the mounting system are required in order for the solar mounts to be functional,” it said.

The solar mounts “are not ‘fully and permanently assembled and completed at the time of entry,’ and, thus, do not qualify for the finished merchandise exclusion,” Commerce said. “Similarly, they also do not qualify for the finished goods kits exclusion because they lack ‘at the time of importation, all of the necessary parts to fully assemble a final finished good.’ For these reasons, we determine that CCM’s solar mounts are included within the scope of the Orders,” the agency said.

Email for a copy of the Meridian scope filing and the CCM scope ruling.