Commission Implementing Regulation (EU) 2020/444 of 25 March 2020 invalidating invoices issued by Wuxi Suntech Power Co. Ltd in breach of the undertaking repealed by Implementing Regulation (EU) 2017/1570

THE EUROPEAN COMMISSION,

Having regard to the Treaty on the Functioning of the European Union,

Having regard to Regulation (EU) 2016/1036 of the European Parliament and of the Council of 8 June 2016 on protection against dumped imports from countries not members of the European Union (1), and in particular Articles 8 and 14 thereof,

Having regard to Regulation (EU) 2016/1037 of the European Parliament and of the Council of 8 June 2016 on protection against subsidised imports from countries not members of the European Union (2), and in particular Articles 13 and 24 thereof,

Having regard to Council Implementing Regulation (EU) No 1238/2013 of 2 December 2013 (3) imposing a definitive anti-dumping duty and collecting definitively the provisional duty imposed on imports of crystalline silicon photovoltaic modules and key components (i.e. cells) originating in or consigned from the People’s Republic of China, and in particular Article 3 thereof,

Having regard to Council Implementing Regulation (EU) No 1239/2013 of 2 December 2013 (4) imposing a definitive countervailing duty on imports of crystalline silicon photovoltaic modules and key components (i.e. cells) originating in or consigned from the People’s Republic of China, and in particular Article 2 thereof,

Having regard to Commission Implementing Regulation (EU) 2017/366 of 1 March 2017 (5) imposing definitive countervailing duties on imports of crystalline silicon photovoltaic modules and key components (i.e. cells) originating in or consigned from the People’s Republic of China following an expiry review pursuant to Article 18(2) of Regulation (EU) 2016/1037 of the European Parliament and of the Council and terminating the partial interim review investigation pursuant to Article 19(3) of Regulation (EU) 2016/1037,

Having regard to Commission Implementing Regulation (EU) 2017/367 of 1 March 2017 (6) imposing a definitive anti-dumping duty on imports of crystalline silicon photovoltaic modules and key components (i.e. cells) originating in or consigned from the People’s Republic of China following an expiry review pursuant to Article 11(2) of Regulation (EU) 2016/1036 of the European Parliament and of the Council and terminating the partial interim review investigation pursuant to Article 11(3) of Regulation (EU) 2016/1036,

Having regard to Commission Implementing Regulation (EU) 2017/1570 of 15 September 2017 (7) amending Implementing Regulation (EU) 2017/366 and Implementing Regulation (EU) 2017/367 imposing definitive countervailing and anti-dumping duties on imports of crystalline silicon photovoltaic modules and key components (i.e. cells) originating in or consigned from the People’s Republic of China and repealing Implementing Decision 2013/707/EU confirming the acceptance of an undertaking offered in connection with the anti-dumping and anti-subsidy proceedings concerning imports of crystalline silicon photovoltaic modules and key components (i.e. cells) originating in or consigned from the People’s Republic of China for the period of application of definitive measures,

Whereas:

(1) By Implementing Regulation (EU) No 1238/2013, the Council imposed a definitive anti-dumping duty on imports into the Union of modules and cells (‘the product concerned’) originating in or consigned from the People’s Republic of China (the ‘PRC’). By Implementing Regulation (EU) No 1239/2013, the Council also imposed a definitive countervailing duty on imports into the Union of the product concerned.

(2) The China Chamber of Commerce for Import and Export of Machinery and Electronic Products (‘the CCCME’) submitted, on behalf of a group of exporting producers, including their related parties, a price undertaking to the Commission. By Decision 2013/423/EU (8), the Commission accepted that price undertaking with regard to the provisional anti-dumping duty. Following the notification of an amended version of the price undertaking by a group of exporting producers together with the CCCME, the Commission confirmed by Decision 2013/707/EU of 4 December 2013 (9) the acceptance of the price undertaking as amended for the period of application of anti-dumping and countervailing definitive measures (‘the undertaking’). The undertaking was accepted, inter alia, for Wuxi Suntech Power Co. Ltd covered by the TARIC additional code B796 (‘Wuxi Suntech’).

(3) The Commission also adopted a Decision clarifying the implementation of the undertaking (10) and 15 regulations withdrawing the acceptance of the undertaking for several exporting producers and, where applicable, invalidating undertaking invoices (11).

(4) By Implementing Regulations (EU) 2016/185 (12) and (EU) 2016/184 (13), the Commission extended the definitive anti-dumping and countervailing duties on imports of crystalline silicon photovoltaic modules and key components (i.e. cells) originating in or consigned from the PRC to imports of crystalline silicon photovoltaic modules and key components (i.e. cells) consigned from Malaysia and Taiwan with the exception of a number of genuine producers.

(5) By Implementing Regulation (EU) 2017/367 (the ‘expiry review anti-dumping Regulation’), the Commission extended the definitive anti-dumping duty on imports of crystalline silicon photovoltaic modules and key components (i.e. cells) originating in or consigned from the PRC following an expiry review and terminating the partial interim review investigation pursuant to respectively, Article 11(2) and Article 11(3) of Regulation (EU) 2016/1036 (the ‘basic anti-dumping Regulation’).

(6) By Implementing Regulation (EU) 2017/366 (the ‘expiry review anti-subsidy Regulation’), the Commission extended a definitive countervailing duty on imports of crystalline silicon photovoltaic modules and key components (i.e. cells) originating in or consigned from the PRC following an expiry review and terminating the partial interim review investigation pursuant to respectively, Article 18(2) and Article 19(3) of Regulation (EU) 2016/1037 (the ‘basic anti- subsidy Regulation’).

(7) By Implementing Regulation (EU) 2017/1570 (the ‘repeal Regulation’) the Commission repealed the undertaking.

(8) By Notices 2018/C 310/06 (14) and 2018/C 310/07 (15) the Commission gave notice that the anti-dumping duty and the anti-subsidy duty on imports of crystalline silicon photovoltaic modules and key components (i.e. cells) originating in or consigned from the PRC expired on 3 September 2018.

(9) Under the terms of the undertaking, the exporting producers agreed, inter alia, not to sell the product concerned to the first independent customer in the Union below a certain minimum import price (‘the MIP’). The MIP was subject to a quarterly adjustment mechanism by reference to international spot prices of modules as reported by the Bloomberg database.

(10) The exporting producers also agreed to sell the product concerned only by means of direct sales. For the purpose of the undertaking, a direct sale was defined as a sale either to the first independent customer in the Union or via a related party in the Union listed in the undertaking.

(11) The undertaking terms also detailed the exporter’s reporting obligations to the Commission and that non-compliance with these obligations constituted a breach of the undertaking.

(12) The undertaking reporting obligations stipulated that each exporter submitted to the Commission, inter alia, quarterly reports of its direct sales to independent customers in the Union, of its sales to related parties, as recorded in the undertaking, in the Union and of the sales of its related parties, as recorded in the undertaking, to the first independent customer in the Union. This implied that the data submitted in these quarterly reports must be complete and correct and that the reported transactions fully complied with the terms of the undertaking. Reporting of re-sales in the Union was a particular obligation when the product concerned was sold to the first independent customer through a related importer, as recorded in the undertaking. Only these reports enabled the Commission to monitor whether the re-sale price of the related importer to the first independent customer was in accordance with the MIP.

(13) According to the undertaking, each exporting producer would also be liable for the breach of any of its related parties, whether or not listed in the undertaking.

(14) Similarly, the exporting producers undertook to consult the Commission regarding any difficulties or questions, technical or otherwise, which might arise during the implementation of the undertaking.

(15) The undertaking was initially accepted from more than 120 companies/company groups. In the meantime, the Commission withdrew its acceptance of the undertaking for 19 companies. Seventeen of these were found to have breached the undertaking while the remaining two companies had business models that made it impracticable to monitor their compliance with the undertaking. In addition, 16 other Chinese companies voluntarily withdrew from the undertaking.

(16) By the repeal Regulation, the Commission repealed the undertaking and introduced a variable duty in the form of a minimum import price (‘the variable duty MIP’). The variable duty MIP had the effect that eligible imports with a declared value at, or above, the MIP would not be subject to duties. In addition, the customs authorities would levy duties immediately if the product is imported at a price below the variable duty MIP. The repeal Regulation entered into force on 1 October 2017, and hence is applicable ratione temporis only to imports that take place on or after that date.

(17) At the time of entry into force of the repeal Regulation on 1 October 2017, the Commission continued to conduct investigations concerning the compliance with the undertaking for undertaking invoices issued prior to that date, and considered appropriate to open new investigations for invoices issued while the undertaking was still in force. For those investigations, a customs debt would be incurred at the time of acceptance of the declaration for release into free circulation: (a) whenever established, in respect of imports invoiced by companies subject to the undertaking, that one or more of the conditions of the undertaking were not fulfilled; or (b) when the Commission finds that the undertaking was breached, in a regulation or decision which refers to particular transactions and declares the relevant undertaking invoices as invalid. Similarly, invoices issued prior to 1 October 2017 under the old regime, which were relied upon as commercial invoices for imports on or after 1 October 2017, may be invalidated.

(18) By Implementing Regulation (EU) 2018/1551 (16) and Implementing Regulation (EU) 2019/1329 (17), the Commission invalidated invoices issued by three exporting producers in breach of the undertaking while it was still in force.

(19) On the basis of Articles 8(7), 8(9) and 14(7) of the basic anti-dumping Regulation and Articles 13(7), 13(9) and 24(7) of the basic anti-subsidy Regulation, the Commission became aware of evidence presented by Wuxi Suntech before the German customs authorities regarding its compliance with the undertaking. The Commission further analysed information submitted to it by Wuxi Suntech under its reporting obligations.

(20) The findings listed in recitals (21) to (23) below address the alleged breaches by Wuxi Suntech of the undertaking while it was still in force.

(21) While the undertaking was in force Wuxi Suntech had three related importers in the Union, namely Suntech Power Deutschland GmbH (‘Suntech Deutschland’) in Germany, Suntech Power Italy Co, Srl (‘Suntech Italy’) in Italy, and Suntech Europe France (‘Suntech France’) in France. Those companies are recorded in the undertaking as related parties to Wuxi Suntech. Wuxi Suntech never requested that the undertaking be withdrawn for those related parties.

(22) In 2018, in the context of court case C-226/18 (18), it became known to the Commission that several invoices from Wuxi Suntech to Suntech Deutschland dated from 2014 were presented for customs clearance in Germany without ever being reported to the Commission as re-sales in the framework of the undertaking, thus breaching the provisions of the undertaking as described in recitals (9) and (12) above.

(23) Further to a detailed examination performed in its undertaking monitoring system, the Commission has identified 28 transactions from Wuxi Suntech to Suntech Deutschland, two transactions from Wuxi Suntech to Suntech Italy, and eight transactions from Wuxi Suntech to Suntech France that were not reported at resales level (19) as required under the terms of the undertaking.

(25) Interested parties were informed of the findings, in particular the intention to invalidate the undertaking invoices. Interested parties were granted the opportunity to be heard and to comment pursuant to Article 8(9) of the basic anti-dumping Regulation and Article 13(9) of the basic anti-subsidy Regulation.

(26) Wuxi Suntech made written submissions on 29 July 2019, 4 September 2019, 26 September 2019, 20 January 2020 and 3 March 2020.

(27) On 28 August 2019 and 7 February 2020, hearings took place with the Commission services following a request of Wuxi Suntech.

(28) Wuxi Suntech claimed its ownership changed on 11 March 2014 when, following a restructuring plan approved by a Chinese Intermediate People’s Court, Jiangsu Shunfeng Photovoltaic Technology Co., Ltd, a subsidiary of Shunfeng Photovoltaic International Limited (20), acquired all Wuxi Suntech’s shares.

(29) According to Wuxi Suntech, this shareholding restructuring removed Suntech Power Holdings Co., Ltd (‘Suntech Holdings’) (21) as Wuxi Suntech’s ultimate holding company. Since Suntech Holdings was also the ultimate owner of Suntech France, Suntech Deutschland and Suntech Italy, Wuxi Suntech submits that, as from 11 March 2014, these European companies ceased to be related to Wuxi Suntech. Consequently, from that moment on, Wuxi Suntech was under no obligation to report the transactions at stake as re-sales in the framework of the undertaking. Wuxi Suntech submits it did not breach its reporting obligations under the undertaking.

(30) Wuxi Suntech further claimed that it informed the Commission about this ownership change. According to it, Wuxi Suntech, already in December 2013, through its counsel, informed the Commission about an impending change in the company structure. It derived this understanding from an email of 6 January 2014, which mentioned a December 2013 communication without providing further details on this point. Wuxi Suntech continued that, on 22 May 2014, via a reply to a name change questionnaire sent to it by the Commission, Wuxi Suntech informed the Commission that it was no longer related to the three companies in Europe.

(31) Furthermore, according to Wuxi Suntech, its notification obligation set out in clause 5.16 of the undertaking as regards the changes to its corporate structure was duly complied with at the very latest by its disclosure of information of 22 May 2014.

(32) As an alternative argument, Wuxi Suntech submitted that the Commission could not invalidate undertaking invoices and order an alleged retroactive collection of duties on past imports already released to free circulation. According to Wuxi Suntech, retroactive collection of anti-dumping and countervailing duties without having registered and re-imposed a provisional duty on those imports beforehand would be a violation of Article 8(1), (9) and (10) and Article 10(5) of the basic anti-dumping Regulation and of Article 13(1), (9) and (10) and Article 16(5) of the basic anti-subsidy Regulation.

(33) Lastly, Wuxi Suntech submitted that even if the Commission could impose duties retroactively, the enabling provisions of Article 3(2)(b) of Implementing Regulation (EU) No 1238/2013, Article 2(2)(b) of Implementing Regulation (EU) 2017/367, Article 2(2)(b) of Implementing Regulation (EU) No 1239/2013 and Article 2(2)(b) of Implementing Regulation (EU) 2017/366) expired and were revoked by Implementing Regulation (EU) 2017/1570, meaning that there is no legal provision permitting today the invalidation of undertaking invoices.

(34) The Commission considered the comments submitted by the exporting producer and addressed them below.

(35) The Commission first addressed the claim according to which Suntech France, Suntech Deutschland and Suntech Italy were not related parties of Wuxi Suntech since 11 March 2014, and that therefore the company was under no obligation to report resales. In support of its claim, Wuxi Suntech attached a circular of 21 March 2014 (22) by which the Hong Kong Exchange and Clearing Limited and the Stock Exchange of Hong Kong Limited (‘HK stock exchange’) made known to the shareholders of Shunfeng Photovoltaic International Limited a proposed ‘acquisition of equity interests in Wuxi Suntech’ (‘the acquisition’).

(36) According to that circular, the acquisition was subject to two conditions: a) that it was approved by the Chinese court, which indeed happened on 15 November 2013, and b) that it was approved by the shareholders in a general meeting that took place on 7 April 2014. As described in the circular, only after the shareholders’ vote would the acquisition become effective.

(37) The circular of 21 March 2014 was first brought to the attention of the Commission on 29 July 2019, as Annex 5 of Wuxi Suntech’s submissions of the same date. The confirmation that the general meeting indeed took place on 7 April 2014 was brought later to the attention of the Commission following the Commission’s request at the hearing that took place on 28 August 2019. Wuxi Suntech submitted evidence of the date when that shareholders meeting took place only on 4 September 2019, by way of annex 4 to an email sent by the counsel of Wuxi Suntech of the same date.

(38) However, the Commission is under no obligation to monitor on its own motion changes in corporate structure of companies having provided an undertaking. Rather, it clearly follows from clauses 5.16 and 9.6 of the undertaking that it is the duty of the relevant company to inform the Commission of such changes and to comply with the undertaking until the actual undertaking has been modified so as to incorporate the change, i.e. until the names of the formerly-related companies have been removed from the undertaking.

(39) Therefore, regardless of the actual date in which the acquisition took place, it remains essential to assess whether Wuxi Suntech fulfilled the obligations undertaken under clauses 5.16 and 9.6 of the undertaking.

(40) The Commission first observed that it was only informed of the fact that Wuxi Suntech was no longer related to Suntech France, Suntech Deutschland and Suntech Italy on 22 May 2014. Hence, at the very least for the invoices of 13 March 2014 and 21 May 2014, there can be no doubt that there has been a violation of the reporting obligations.

(41) The Commission considers that Wuxi Suntech remained also bound by its reporting obligations for the time after 22 May 2014. As a matter of fact, the three related companies have never formally been removed from the undertaking. Hence, Wuxi Suntech remained bound to report on them until 1 October 2017.