Shenyang Yuanda Aluminum Industry Engineering Co. v. United States , 181 F. Supp. 3d 1348 ( 2016 )


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  •                            Slip Op. 16 - 94
    UNITED STATES COURT OF INTERNATIONAL TRADE
    SHENYANG YUANDA ALUMINUM
    INDUSTRY ENGINEERING CO.,         Before: Donald C. Pogue,
    Plaintiff,                        Senior Judge
    v.
    UNITED STATES,                    Consol. Court No. 14-001061
    Defendant.
    OPINION and ORDER
    [Redetermination remanded for further consideration in
    accordance with this opinion.]
    Dated: October 6, 2016
    James R. Cannon, Jr., John D. Greenwald, and Thomas M.
    Beline, Cassidy Levy Kent, LLP, of Washington, DC, for Plaintiff
    Yuanda.
    Kristen S. Smith, Arthur K. Purcell, and Michelle L.
    Mejia, Sandler, Travis, & Rosenberg, P.A., of Washington, DC,
    for Consolidated Plaintiff Jangho.
    William E. Perry, Emily Lawson, and Kate Kennedy,
    Dorsey & Whitney LLP, of Seattle, WA, for Consolidated Plaintiff
    Permasteelisa.
    Douglas G. Edelschick, Trial Attorney, Commercial
    Litigation Branch, Civil Division, U.S. Department of Justice,
    of Washington, DC, for the Defendant. With him on the brief were
    Benjamin C. Mizer, Principal Deputy Assistant Attorney General,
    Jeanne E. Davidson, Director, and Reginald T. Blades, Jr.,
    1 This action is consolidated with court numbers 14-00107 and
    14-00108. Order, July 16, 2014, ECF No. 28.
    Consol. Court No. 14-00106                                    Page 2
    Assistant Director. Of counsel was Scott D. McBride, Senior
    Attorney, Office of the Chief Counsel for Trade Enforcement and
    Compliance, U.S. Department of Commerce, of Washington, DC.
    David M. Spooner and Christine J. Sohar Henter,
    Barnes & Thornburg, LLP, of Washington, DC, for Defendant-
    Intervenor, the Curtain Wall Coalition.
    Pogue, Senior Judge: This action comes again before
    the court following a second remand and redetermination.
    In prior proceedings, the Plaintiffs Shenyang Yuanda
    Aluminum Industry Engineering Co., Ltd. and Yuanda USA
    Corporation (collectively “Yuanda”); Jango Curtain Wall Americas
    Co. (“Jangho”); and Permasteelisa North America Corp.,
    Permasteelisa South China Factory, and Permasteelisa Hong Kong
    Ltd. (collectively “Permasteelisa”), challenged the scope
    determination,2 made by the Defendant, the U.S. Department of
    Commerce (“Commerce”), that Yuanda’s unitized curtain wall,
    i.e., a complete curtain wall, unitized and imported in phases
    pursuant to a sales contract, was within the scope of the
    antidumping and countervailing duty orders (the “AD&CVD Orders”
    or the “Orders”) on aluminum extrusions from the People’s
    Republic of China (“PRC”).3
    2 Compl., ECF No. 9 (Yuanda’s complaint); Compl., Ct. No. 14-
    00107, ECF No. 8 (Jangho’s complaint); Compl., Ct. No. 14-00108,
    ECF No. 8 (Permasteelisa’s complaint).
    3 Aluminum Extrusions from the [PRC], A-570-967 & C-570-968
    (Dep’t of Commerce March 27, 2014) (final scope ruling on
    curtain wall units that are produced and imported pursuant to a
    contract to supply curtain wall), ECF No. 34-1 (“Yuanda Scope
    (footnote continued)
    Consol. Court No. 14-00106                                    Page 3
    In the second redetermination, however, Commerce has,
    under protest, found Yuanda’s unitized curtain wall excluded
    from the scope of the Orders, resulting in a reversal of
    positions.    Now Defendant-Intervenors, Walters & Wolf,
    Architectural Glass & Aluminum Company, and Bagatelos
    Architectural Glass Systems, Inc. (collectively the “Curtain
    Wall Coalition” or “CWC”) challenge Commerce’s determination.
    Def.-Intervenors’ Comments in Opp’n to Commerce’s Final Results
    of Redetermination Filed on May 13, 2016, Pursuant to Ct.
    Remand, ECF No. 113 (“CWC Br.”).
    Review of Commerce’s re-determination involves
    consideration of prior decisions, the descriptions of the
    merchandise contained in the petition, and the requirements of
    Commerce’s subassemblies test for exclusion from the Order, all
    of which will be discussed below.4 The court has jurisdiction
    Ruling”); Final Results of Redetermination Pursuant to Ct.
    Remand, ECF No. 68-1 (“Redetermination”); see Aluminum
    Extrusions from the [PRC], 
    76 Fed. Reg. 30,650
     (Dep’t Commerce
    May 26, 2011) (antidumping duty order) (“AD Order”); Aluminum
    Extrusions from the [PRC], 
    76 Fed. Reg. 30,653
     (Dep’t Commerce
    May 26, 2011) (countervailing duty order) (“CVD Order”). Yuanda
    USA Corp is an importer and Shenyang Yuanda Aluminum Industry
    Engineering Co., Ltd. is a foreign producer and exporter of
    curtain wall units. Jangho is a foreign producer of subject
    merchandise. Permasteelisa North America Corp. is an importer
    and Permasteelisa Hong Kong Ltd. is a foreign producer of
    subject merchandise. Yuanda Scope Ruling, ECF No. 34-1, at 1-2.
    4 In accordance with the court’s remand, Commerce provided
    explanation of the distinction it has drawn between curtain wall
    and window wall units. 2d Redetermination, ECF No. 109-1, at 32-
    (footnote continued)
    Consol. Court No. 14-00106                                    Page 4
    pursuant to § 516A(a)(2)(B)(vi) of the Tariff Act of 1930, as
    amended, 19 U.S.C. § 1516a(a)(2)(B)(vi) and 
    28 U.S.C. § 1581
    (c)
    (2012).5
    BACKGROUND
    The issues presented here stem from the language of
    Commerce’s AD&CVD Orders on aluminum extrusions from the PRC.
    See Aluminum Extrusions from the [PRC], 
    76 Fed. Reg. 30,650
    (Dep’t Commerce May 26, 2011) (antidumping duty order) (“AD
    Order”); Aluminum Extrusions from the [PRC], 
    76 Fed. Reg. 30,653
    (Dep’t Commerce May 26, 2011) (countervailing duty order) (“CVD
    Order”).   The Orders cover “aluminum extrusions,” defined as
    “shapes and forms, produced by an extrusion process, made from
    [certain] aluminum alloys.” AD Order, 76 Fed. Reg. at 30,650;
    CVD Order, 76 Fed. Reg. at 30,653.   Aluminum extrusions
    “described at the time of importation as parts for final
    finished products” such as “window frames, door frames, solar
    panels, curtain walls, or furniture,” to be “assembled after
    importation,” are subject to the order if such parts “otherwise
    33, 61-65. The reasonableness of this explanation has not been
    challenged, see Consol. Bearings Co. v. United States, 
    348 F.3d 997
    , 1007 (Fed. Cir. 2003) (citation omitted) (“[A]n agency
    action is… arbitrary and capricious” if the agency has treated
    similarly situated parties or products differently “without
    reasonable explanation.”), and as such is affirmed.
    5 All further citations to the Tariff Act of 1930, as amended,
    are to Title 19 of the U. S. Code, 2012 edition.
    Consol. Court No. 14-00106                                    Page 5
    meet the definition of aluminum extrusions,” AD Order, 76 Fed.
    Reg. at 30,650-51; CVD Order, 76 Fed. Reg. at 30,654 (emphasis
    added), that is, they are shapes or forms made from the covered
    aluminum alloys and made by an extrusion process, AD Order, 76
    Fed. Reg. at 30,650; CVD Order, 76 Fed. Reg. at 30,653.6    The
    Orders also cover “aluminum extrusion components that are
    attached (e.g., by welding or fasteners) to form subassemblies,
    i.e., partially assembled merchandise.” AD Order, 76 Fed. Reg.
    at 30,651; CVD Order, 76 Fed. Reg. at 30,654.
    The Orders exclude finished goods – that is, “finished
    merchandise containing aluminum extrusions as parts” – so long
    as such merchandise is “fully and permanently assembled and
    6 Commerce claims that it is significant that the “parts”
    language precedes the “subassembly” language (though the agency
    does not say why or to what effect), and asserts that the Orders
    provide “specific examples of parts of final finished products
    that are assembled after importation: window frames, door
    frames, solar panels, curtain walls and furniture.” 2d
    Redetermination, ECF Nos. 109-1 & 110-1, at 24. However, this
    is not a plain list of example parts. At most, the list
    arguably includes both parts (“window frames” and “door frames”)
    and finished goods the parts of which are covered (“solar
    panels, curtain walls, [and] furniture”). More likely, the list
    is intended to be entirely of finished goods assembled after
    importation. This is because it ordinarily would noy be
    possible to perform an extrusion process on a basic form (bar,
    rod, etc.) to create an entire window or door frame. To
    "extrude" is to push or draw the basic form through the die to
    obtain the desired cross section. And the Order covers only
    aluminum extrusions. Indeed, Commerce itself goes on to list
    “solar panels” as a finished (and therefore excluded) product.
    Id. at 25.
    Consol. Court No. 14-00106                                  Page 6
    completed at the time of entry, such as finished windows with
    glass, doors with glass or vinyl, picture frames with glass pane
    and backing material, and solar panels.” AD Order, 76 Fed. Reg.
    at 30,651; CVD Order, 76 Fed. Reg. at 30,654.7   The Orders also
    exclude “finished goods containing aluminum extrusions that are
    entered unassembled in a ‘finished goods kit.’” Id.   A finished
    goods kit is “a packaged combination of parts that contains, at
    the time of importation, all of the necessary parts to fully
    assemble a final finished good and requires no further finishing
    or fabrication, such as cutting or punching, and is assembled
    ‘as is’ into a finished product.”8
    Subassemblies may also be excluded from the Orders,
    provided that they enter as part of a “finished goods kit.”9
    7 Aluminum extrusions “identified with reference to their end
    use, such as fence posts, electrical conduits, door thresholds,
    carpet trim, or [certain] heat sinks . . . are subject
    merchandise if they otherwise meet the scope definition,
    regardless of whether they are ready for use at the time of
    importation.” Id.
    8 Id. However, “[a]n imported product will not be considered a
    ‘finished goods kit’ and therefore excluded from the scope of
    the investigation merely by including fasteners such as screws,
    bolts, etc. in the packaging with an aluminum extrusion
    product.” Id.
    9 Id.; see Aluminum Extrusions from the [PRC], A-570-967 & C-570-
    968 (Dep’t of Commerce Sept. 24, 2012) (preliminary side mount
    valve controls scope Ruling) at 7 (“SMVC Scope Ruling”) (adopted
    unchanged in Aluminum Extrusions from the [PRC], A-570-967 & C-
    570-968 (Dep’t of Commerce Oct. 26, 2012) (final side mount
    valve controls scope ruling)), reproduced in Def.’s App.
    Accompanying [Def.’s Resp.], ECF No. 86 at Tabs 3 & 4.
    Consol. Court No. 14-00106                                    Page 7
    Further, a subassembly may be excluded pursuant to the
    “subassemblies test” exclusion devised by Commerce in Aluminum
    Extrusions from the [PRC], A-570-967 & C-570-968 (Dep’t of
    Commerce Sept. 24, 2012) (preliminary side mount valve controls
    scope Ruling) at 7 (“SMVC Scope Ruling”) (adopted unchanged in
    Aluminum Extrusions from the [PRC], A-570-967 & C-570-968 (Dep’t
    of Commerce Oct. 26, 2012) (final side mount valve controls
    scope ruling)).
    The Orders have been addressed in several relevant
    scope proceedings.   Prior to the Yuanda Scope Ruling at issue
    here, Commerce issued Aluminum Extrusions from the [PRC], A-570-
    967 & C-570-968 (Dep’t of Commerce Nov. 30, 2012) (final scope
    ruling on curtain wall units and other parts of a curtain wall
    system) (“CWC Scope Ruling”).   There, Commerce determined that
    “parts of curtain wall[s],” defined as curtain wall sections,
    that “fall short of the final finished curtain wall that
    envelopes an entire building structure,” including, but not
    limited to individual curtain wall units (i.e., “modules that
    are designed to be interlocked with [each other], like pieces of
    a puzzle”), were within the scope of the Orders. CWC Scope
    Ruling at 3, 10.   Both this Court and the CAFC affirmed, holding
    that “[a] single [curtain wall] unit” is not a whole “curtain
    wall,” and as such, is a “part” or “subassembly” of a curtain
    wall. Shenyang Yuanda Aluminum Indus. Eng’g Co. v. United
    Consol. Court No. 14-00106                                    Page 8
    States, 
    776 F.3d 1351
    , 1357-58 (Fed. Cir. 2015) (“Yuanda II)
    (citing Shenyang Yuanda Aluminum Indus. Eng’g Co. v. United
    States, __ CIT __, 
    961 F. Supp. 2d 1291
    , 1298-99 (2014) (“Yuanda
    I”)).10
    In the Yuanda Scope Ruling, Commerce determined that
    complete curtain wall units sold “pursuant to a contract to
    supply a complete curtain wall system” were within the scope of
    the Orders. Yuanda Scope Ruling at 1 (footnote omitted).
    Yuanda, Jangho, and Permasteelisa appealed the ruling to this
    Court.    In their initial motions for summary judgment on appeal,
    Plaintiffs brought attention to the fact that Commerce had not
    considered the “description of the merchandise contained in the
    [P]etition,” see 
    19 C.F.R. § 351.225
    (k)(1), in particular, an
    exhibit from that Petition that listed “unassembled unitized
    curtain walls” as non-subject merchandise under the “finished
    goods kit” exclusion. Petition, ECF No. 83-3 at Tab 10, at
    Exhibit I-5.11   Commerce requested and was granted a voluntary
    10Commerce has also issued a third scope ruling on curtain wall
    units with non-PRC aluminum extrusions. See Aluminum Extrusions
    from the [PRC], A-570-967 & C-570-968 (Dep’t of Commerce March
    14, 2013) (final scope ruling on Tesla curtain walls with non-
    PRC extrusions). However, this determination is not relevant
    here because, unlike there, the country of origin of Yuanda’s
    aluminum extrusions is not at issue.
    11See Mem. of P. & A. in Supp. of Yuanda’s Mot. for J. on the
    Agency R., ECF No. 38-1, at 4, 14; Mem. in Supp. of Pl. Jangho’s
    Mot. for J. on the Agency R., ECF No. 37-1, at 14;
    [Permasteelisa’s] Rule 56.2 Mot. for J. on the Agency R., ECF
    (footnote continued)
    Consol. Court No. 14-00106                                   Page 9
    remand to consider this evidence. Def.’s Consent Mot. for
    Voluntary Remand, ECF No. 49; Order, Dec. 9, 2014, ECF No. 50.
    On redetermination, Commerce found that, based on the
    Petition, unassembled curtain wall units were within the scope
    of the AD&CVD Orders unless all necessary parts for an entire
    curtain wall were present “at the time of importation,” i.e., in
    the same entry, on a single Customs and Border Protection
    (“CBP”) 7501 Entry Summary form. Redetermination I, ECF No. 68-
    1, at 16.   The court remanded again, finding that Commerce’s
    determination was not in accordance with law and unreasonable.
    Shenyang Yuanda Aluminum Indus. Eng’g Co. v. United States, __
    CIT __, 
    146 F.Supp.3d 1331
     (2016) (“Yuanda III”).   The resultant
    redetermination is now at issue here. Redetermination II, ECF
    Nos. 109-1 (conf. ver.) & 110-1 (pub. ver.).
    STANDARD OF REVIEW
    The court will sustain Commerce’s determination on
    remand if it is in accordance with law, supported by substantial
    evidence on the record, and complies with the court’s remand
    order. 19 U.S.C. § 1516a(b)(1)(B)(i); Jinan Yipin Corp., Ltd. v.
    No. 39, at 4, 24; see also Mot. to Supp. the Admin. Record, ECF
    No. 33 (requesting that the administrative record be amended to
    include the Petition); Order, Sept. 18, 2014, ECF No. 36
    (granting the motion to supplement the administrative record to
    include the Petition).
    Consol. Court No. 14-00106                                   Page 10
    United States, 
    33 CIT 934
    , 936, 
    637 F. Supp. 2d 1183
    , 1185
    (2009).
    DISCUSSION
    Three issues persist following the second
    redetermination: first, whether Commerce’s determination is
    precluded by stare decisis and res judicata; second, whether
    Commerce’s reading of the Orders is based on a reasonable
    reading of the record evidence as laid out in 
    19 C.F.R. § 351.225
    (k)(1), including specifically the descriptions of the
    merchandise contained in the petition; and third, whether
    Commerce’s application of the subassemblies test exclusion is in
    keeping with Commerce’s prior applications.   Each is discussed
    in turn below.
    I.   The Effect of Stare Decisis and Res Judicata.
    The CWC argues that the CAFC “in Yuanda II, decided
    that curtain wall units generally, and Yuanda’s curtain wall
    units in particular, are subject to the scope,” such that
    Commerce is precluded “from finding otherwise” pursuant to the
    doctrines of stare decisis and res judicata. Def.’s-Intervenor’s
    Br., ECF No. 113, at 15 (citing Yuanda II, __ CIT at __, 776
    F.3d at 1358-59).   Stare decisis is “the idea that today’s Court
    should stand by yesterday’s decisions,” Kimble v. Marvel Entm't,
    LLC, __ U.S. __
    135 S. Ct. 2401
    , 2409 (2015), and res judicata –
    the doctrine of claim preclusion – “bars ‘repetitious suits
    Consol. Court No. 14-00106                                   Page 11
    involving the same cause of action’ once ‘a court of competent
    jurisdiction has entered a final judgment on the merits,’”
    United States v. Tohono O’Odham Nation, 
    563 U.S. 307
    , 315 (2011)
    (quoting Commissioner v. Sunnen, 
    333 U.S. 591
    , 597 (1948)).
    Here, while the CAFC and the CIT affirmed Commerce’s
    finding, in the scope ruling requested by the CWC, that curtain
    wall units were parts and subassemblies for curtain walls and
    therefore within the scope of the Orders, see Aluminum
    Extrusions from the [PRC], A-570-967 & C-570-968 (Dep’t of
    Commerce Nov. 30, 2012) (final scope ruling on curtain wall
    units and other parts of a curtain wall system) (“CWC Scope
    Ruling”); Yuanda II, 776 F.3d at 1357-58 (citing Yuanda I, __
    CIT __, 961 F. Supp. 2d at 1298-99)),12 Commerce expressly
    12The CWC incorrectly relies on the “parts” language, read in
    isolation. But curtain wall units cannot plausibly be described
    as “parts for final finished products that are assembled after
    importation” that “otherwise meet the definition of aluminum
    extrusions” – i.e., are “shapes and forms, produced by an
    extrusion process, made from [certain] aluminum alloys.” AD
    Order, 76 Fed. Reg. at 30,650-51; CVD Order, 76 Fed. Reg. at
    30,653-54; see Aluminum Extrusions Fair Trade Comm. v. United
    States, 
    37 ITRD 2909
     (Ct. Int'l Trade 2016) (“With respect to
    the first two sentences of the above-quoted language, the screen
    printing frames are not plausibly described as ‘parts for final
    finished products that are assembled after importation’ that
    ‘otherwise meet the definition of aluminum extrusions.’ Even
    were it presumed that the screen printing frames are ‘parts for
    final finished products,’ they would not answer to the
    description ‘parts that otherwise meet the definition of
    aluminum extrusions.’ As discussed above, the definition of
    ‘aluminum extrusions’ is ‘shapes and forms produced by an
    extrusion process ...,’” AD Order, 76 Fed.Reg. at 30,650; CVD
    (footnote continued)
    Consol. Court No. 14-00106                                    Page 12
    declined to consider the finished goods kit exclusion and
    Yuanda’s specific products, CWC Scope Ruling at 9.   The CIT
    affirmed this decision and the CAFC did not consider the issue.
    Yuanda I, 961 F. Supp. 2d at 1301 (“The court finds that
    Commerce properly confined its inquiries to the request made by
    the CWC . . . . That is, an inquiry as to whether a particular
    entry, or even product, would qualify for an exception to the
    scope language simply goes far beyond the CWC's request.”); see
    also Yuanda II, 
    776 F.3d 1351
     (providing no discussion of the
    finished goods kit exclusion).   As such, there is no prior
    decision, much less final judgment, precluding Commerce’s
    determination here.   Commerce is not precluded by stare decisis
    and res judicata from considering the finished goods kit
    exclusion and the subassemblies test as applied to Yuanda’s
    products, or finding one way or the other on these issues.
    II.   The (k)(1) Materials
    When there is a question as to “whether a particular
    product is included within the scope of an antidumping or
    countervailing duty order,” 
    19 C.F.R. § 351.225
    (a), Commerce
    Order, 76 Fed.Reg. at 30,653, which after extrusion may be
    subjected to “drawing, fabricating, and finishing.” AD Order, 76
    Fed.Reg. at 30,650; CVD Order, 76 Fed.Reg. at 30,654.”).
    Notably, the court of appeals did not read or rely on the
    ‘parts’ language in isolation. It follows that proper
    consideration of the reach of Yuanda I and Yuanda II must focus
    on the “subassemblies” language.
    Consol. Court No. 14-00106                                   Page 13
    first looks to the plain language of the underlying order,
    Duferco Steel, Inc. v. United States, 
    296 F.3d 1087
    , 1097 (Fed.
    Cir. 2002).   If the terms of the order are dispositive, then the
    order governs. Tak Fat Trading Co. v. United States, 
    396 F.3d 1378
    , 1383 (Fed. Cir. 2005).   If the order “contains language
    that must be interpreted,” 
    id.,
     then Commerce “consider[s] the
    regulatory history, as contained in the so-called ‘(k)(1)
    materials’” — named for the regulatory subsection in which they
    appear. Mid Continent Nail Corp. v. United States, 
    725 F.3d 1295
    , 1302 (Fed. Cir. 2013).   Specifically, Commerce considers
    “[t]he descriptions of the merchandise contained in the
    petition, the initial investigation, and the determinations of
    [Commerce] (including prior scope determinations) and the
    [International Trade] Commission.” 
    19 C.F.R. § 351.225
    (k)(1).13
    In Yuanda III, the court remanded to Commerce, inter
    alia, because the agency had failed to support its determination
    13SmithCorona Corp. v. United States, 
    915 F.2d 683
    , 685 (Fed.
    Cir. 1990) (“The class or kind of merchandise encompassed by a
    final antidumping order is determined by the order, which is
    interpreted with the aid of the antidumping petition, the
    factual findings and legal conclusions adduced from the
    administrative investigations, and the preliminary order.”). If
    the (k)(1) materials “are not dispositive,” then Commerce “will
    further consider: (i) [t]he physical characteristics of the
    product; (ii) [t]he expectations of the ultimate purchasers;
    (iii) [t]he ultimate use of the product; (iv) [t]he channels of
    trade in which the product is sold; and (v) [t]he manner in
    which the product is advertised and displayed.” 
    19 C.F.R. § 351.225
    (k)(2).
    Consol. Court No. 14-00106                                    Page 14
    that only single-entry, unitized curtain walls were excluded
    from the scope of the Orders with substantial evidence – i.e.,
    with a reasonable reading of the (k)(1) materials. Yuanda III,
    __ CIT at __, 146 F. Supp. 3d at 1349-1354.
    In its first redetermination, Commerce relied on the
    Petition, which listed “unassembled unitized curtain walls” as
    an example of a product excluded as a finished goods kit, to
    reach the conclusion that only single-entry, unitized curtain
    walls could be excluded from the scope of the Orders.
    Redetermination I, ECF No. 68-1, at 16; id. at 10.   The court
    remanded because Commerce’s reading of the Petition, and
    therefore Orders pursuant to 
    19 C.F.R. § 351.225
    (k)(1), was not
    informed by the record.   Specifically, Petitioners themselves
    had conceded that there is no such thing as a single-entry,
    unitized curtain wall. Yuanda III, __ CIT at __, 146 F. Supp. 3d
    at 1349-1354.14   It follows that Petitioners could not have
    intended to use a product as an example that, by Petitioners’
    own admission, does not exist. Id.   By ignoring the actual
    nature of the product at issue, by failing to consider the
    14CWC Scope Ruling at 6 (“Petitioners reiterate CW[C]’s
    contention that it is simply not possible for a complete curtain
    wall to enter as a ‘kit’ because the entire installation process
    is designed to work with other parts to form a larger structure
    and represent a collection of individual parts that comprise a
    single element as opposed to complete system.” (footnotes
    omitted)).
    Consol. Court No. 14-00106                                   Page 15
    evidence on the administrative record defining and explaining
    the product, Commerce made a counterfactual reading of the
    Petition and then supported its interpretation of the Orders
    with that counterfactual reading. Id.   Commerce must contend
    with the actual record evidence before it and offer a reasoned
    explanation for its determination based on that evidence.
    Commerce did not do so in the first redetermination, making
    remand appropriate.
    In its second redetermination, rather than actually
    address these evidentiary problems, Commerce quotes a narrow
    portion of Yuanda III out of context, and concludes:
    [I]t appears the Court’s holding is clear that if the
    only way a particular product in a particular
    industry, in this case the curtain wall industry, can
    benefit from the “finished goods kit” exclusion, as
    interpreted by [Commerce], is to fulfill criteria
    which the evidence on the record does not suggest
    anyone in that industry currently fulfills, then
    [Commerce’s] determination is flawed and unreasonable,
    even if other industries currently fulfill those
    criteria and benefit from the exclusion.
    Redetermination II, ECF No. 109-1, at 103; see id. at 34-38.
    The agency thereby finds itself compelled to exclude Yuanda’s
    unitized curtain wall from the scope of the Orders “absent
    evidence that any exporter or importer in the curtain wall
    industry ships its curtain wall units in a manner that would
    permit parties to benefit from the ‘finished goods kit’
    Consol. Court No. 14-00106                                   Page 16
    exclusion to the [Orders]” and “[n]o such evidence is present on
    the record.” Id. at 104.
    Commerce’s analysis here is both too broad and too
    narrow.   Too broad in that it creates a general rule rather than
    choosing to follow applicable regulatory provisions, see 
    19 C.F.R. § 351.225
    (k), and address the specific evidentiary
    problem put before it on remand that prevented its determination
    from being supported by substantial evidence, King Supply Co.,
    LLC v. United States, 
    674 F.3d 1343
    , 1349-50 (Fed. Cir. 2012)
    (reviewing consideration of (k)(1) materials under the
    substantial evidence standard); Yuanda III, __ CIT at __, 146 F.
    Supp. 3d at 1349-1354 (discussing the evidentiary problems
    presented by Commerce’s analysis of the (k)(1) materials).    Too
    narrow in that, while it, correctly, goes so far as to find that
    there is no such product as a single-entry, unitized curtain
    wall, see Redetermination II, ECF No. 109-1, at 104, it fails to
    address what this means in the context of the (k)(1) materials
    – specifically, the express exclusion of “unassembled unitized
    curtain wall,” which, based on reality (or at least the
    administrative record) must be something other than a single-
    entry, whole curtain wall, in the Petition, see Petition, ECF
    No. 83-3 at Tab 10, at Exhibit I-5, because no such product
    exists.
    Consol. Court No. 14-00106                                  Page 17
    Commerce must “consider the regulatory history, as
    contained in the [] ‘(k)(1) materials.’” Mid Continent Nail, 725
    F.3d at 1302.15   This includes an informed16 and meaningful17
    assessment of the Petition. 
    19 C.F.R. § 351.225
    (k)(1).18
    15In making a scope determination, Commerce must “utilize[] and
    abide[] by the statutory and regulatory provisions that
    authorize [it] to investigate [scope issues].” AMS Associates,
    Inc. v. United States, 
    737 F.3d 1338
    , 1344 (2013).
    16See Universal Camera, 340 U.S. at 488 (“The substantiality of
    evidence must take into account whatever in the record fairly
    detracts from its weight.”); State Farm, 463 U.S. at 43
    (“Normally, an agency rule would be arbitrary and capricious if
    the agency has . . . entirely failed to consider an important
    aspect of the problem [or] offered an explanation for its
    decision that runs counter to the evidence before the agency . .
    . .”); see also 
    19 C.F.R. § 351.225
    (k)(1) (“in considering
    whether a particular product is included within the scope of an
    order . . . the Secretary will take into account . . . [t]he
    descriptions of the merchandise contained in the petition, the
    initial investigation, and the determinations of [Commerce].”)
    17Nippon Steel Corp. v. United States, 
    458 F.3d 1345
    , 1351 (Fed.
    Cir. 2006) (“[T]he substantial evidence standard requires review
    of the entire administrative record” and asks, in light of that
    evidence, whether Commerce’s determination was reasonable.); Cf.
    Polites v. United States, __ CIT __, 
    755 F. Supp. 2d 1352
    , 1357
    (2011) (finding that Commerce’s interpretation of an order was
    “unreasonable” because Commerce read the express exclusion of
    “finished scaffolding” in an Order with “nothing in the record
    [to] demonstrate[] merchandise matching [its] definition is
    imported into the United States or is even possibly imported
    into the United States”).
    18Cf. Fedmet Res. Corp. v. United States, 
    755 F.3d 912
    , 919
    (Fed. Cir. 2014) (“The (k)(1) sources are dispositive and
    unequivocally confirm that Fedmet's MAC bricks are not within
    the scope of the orders. [T]hese sources contain multiple
    representations made by Resco disclaiming coverage of all MAC
    bricks in general.”).
    Consol. Court No. 14-00106                                   Page 18
    Commerce has yet to do so here.   Remand, accordingly, remains
    appropriate.
    III. The Subassemblies Test
    While Commerce premises its ultimate determination on
    its “obligat[ion] to make a conclusion on remand that is
    consistent with [its misinterpretation of the court’s] holding
    [in Yuanda III],” in registering its “respectful[]
    disagree[ment] with the Court’s finding,” Commerce “provide[s]
    the reasons in [its] remand redetermination behind [this]
    disagreement.” 2d Redetermination, ECF No. 109-1, at 103.    Chief
    among these reasons is Commerce’s application of its
    subassemblies test.
    Specifically, Commerce asserts that “[u]nder [its]
    subassemblies test, [Commerce] first must determine if a
    subassembly is a finished good, either fully assembled or
    shipped in pieces as a kit, capable of installation in the
    ultimate downstream product upon importation.” 2d
    Redetermination, ECF No. 109-1, at 28.   And second, whether the
    product at issue “’require[s] no further finishing or
    fabrication, such as cutting or punching’ to be installed in the
    downstream product” – whether it is “ready for installation ‘as
    is.’” 
    Id. at 30
    .
    Commerce reasons that since the “finished good” here
    must be an entire curtain wall, then Yuanda’s curtain wall
    Consol. Court No. 14-00106                                   Page 19
    units, being something less than an entire curtain wall, “cannot
    pass the subassemblies test.” 
    Id.
     at 27 (citing Yuanda I, 961 F.
    Supp. 2d at 1298-99, referencing, without citation, Yuanda II);
    see also id. at 79 (“The [CAFC’s] holding in Yuanda II that
    curtain wall units are not finished merchandise, but are parts
    of curtain walls subject to the Orders, is binding precedent.”)
    (citing Yuanda I, 961 F. Supp. 2d at 1298; Yuanda II, 776 F.3d
    at 1358)).    Commerce goes on to find that “curtain wall units
    are not ready to be installed upon importation ‘as is.’” Id. at
    30.
    However, Commerce continues to miss the point of its
    own subassemblies test.    To wit: The subassemblies test
    “revise[s] the manner in which [Commerce] determines whether a
    given product is a ‘finished good’ or ‘finished goods kit.’”
    SMVC Scope Ruling at 6-7.    It scales back the definition of
    ‘final’ and ‘finished,’ from a question of the “ultimate
    downstream product” to the subassembly itself, to allow for the
    exclusion of final, finished subassemblies from the scope of the
    Orders. Id.19
    19Commerce has itself articulated this difference elsewhere in
    the redetermination at issue here, as a question of the
    “ultimate downstream product” versus “finished
    good/subassembly.” Redetermination II, ECF No. 109-1, at 68.
    Consol. Court No. 14-00106                                   Page 20
    When Commerce devised the subassemblies test, it
    explained its reasoning as follows:
    In prior scope rulings, [Commerce] found that
    merchandise could not be considered a ‘finished good’
    or ‘finished good kit’ if it was designed to work with
    other parts to form a larger structure or system. . .
    However, upon further reflection of the language in
    the scope of the Orders and for purposes of [the SMVC
    Scope Ruling], [Commerce] is revising the manner in
    which it determines whether a given product is a
    ‘finished good’ or ‘finished goods kit.’ [Commerce]
    has identified a concern with this analysis, namely
    that it may lead to unreasonable results. An
    interpretation of ‘finished goods kit’ which requires
    all parts to assemble the ultimate downstream product
    may lead to absurd results, particularly where the
    ultimate downstream product is, for example, a fire
    truck. This interpretation may expand the scope of
    the Orders, which are intended to cover aluminum
    extrusions.
    SMVC Scope Ruling at 6-7. Given this, Commerce, reading the
    definition of subassemblies – “partially assembled merchandise,”
    AD Order, 76 Fed. Reg. at 30,651; CVD Order, 76 Fed. Reg. at
    30,654 – and the exclusion of subassemblies as part of a
    finished goods kit20 in concert, devised a test, whereby
    subassemblies, in keeping with the intent and purpose of the
    Orders,21 may be considered a discrete subunit and excluded from
    the scope of the Orders if finished and ready for installation
    20A subassembly may be excluded if it is a “part” of “a finished
    goods ‘kit.’” Id. at 5.
    21The Orders “are intended to cover aluminum extrusions.” SMVC
    Scope Ruling at 7. Again, aluminum extrusions are “shapes and
    forms, produced by an extrusion process, made from [certain]
    aluminum alloys.” AD Order, 76 Fed. Reg. at 30,650; CVD Order,
    76 Fed. Reg. at 30,653.
    Consol. Court No. 14-00106                                   Page 21
    in the final downstream product.    Commerce explains the
    subassemblies test as follows:
    [T]he “subassemblies test” . . . considers whether the
    product subject to a scope proceeding constitutes a
    subassembly, i.e., “merchandise that is ‘partially
    assembled’ and inherently part of a larger whole.’
    The Department explained that aluminum extrusion
    subassemblies may be excluded from the scope of the
    Orders as “finished goods” or “finished goods kits”
    provided that they require no further “finishing” or
    “fabrication” prior to assembly, contain all the
    necessary hardware and components for assembly, and
    are ready for instillation at the time of entry.
    [Valeo] Final Results of Redetermination Pursuant to Ct. Remand,
    Ct. No. 12-00381, ECF No. 20-1 (“Valeo Redetermination”), at 8
    (quoting SMVC Scope Ruling at 7).
    To be clear, by Commerce’s own explanation, the
    subassemblies test requires (1) that the product at issue meets
    the definition of subassembly – i.e., “merchandise that is
    ‘partially assembled’ and inherently part of a larger whole” and
    (2) such subassemblies “require no further ‘finishing’ or
    ‘fabrication’ prior to assembly, contain all the necessary
    hardware and components for assembly, and are ready for
    installation at the time of entry.” Id.   If it is, then it will
    be considered a “finished good” or “finished good kit”
    irrespective of Commerce’s previous definition of the finished
    good or finished good kit exclusions. SMVC Scope Ruling at 7;
    Valeo Redetermination at 10 (finding a product subject to the
    Consol. Court No. 14-00106                                   Page 22
    Orders under the standard finished good exclusion, but excluded
    under the subassemblies test).22
    Commerce, to its own confusion, has shorthanded its
    subassemblies test both here and elsewhere as a question of
    whether the subassemblies “enter the United States as ‘finished
    goods’ or ‘finished goods kits’” and whether those
    “‘subassemblies’ require no further ‘finishing’ or
    ‘fabrication.’” SMVC Scope Ruling at 7; 2d Redetermination, ECF
    No. 109-1, at 28.   But, this summary must be read in the context
    of Commerce’s intent to “revis[e] the manner in which [Commerce]
    determines whether a given product is a ‘finished good’ or
    ‘finished goods kit’” from a question of the “ultimate
    downstream product” to focus on the subassembly itself. SMVC
    Scope Ruling at 6-7.   Commerce’s own application of the test
    22If Commerce intends to change the subassemblies test here,
    then it must provide a reasoned explanation for that change,
    rather than denying the existence thereof. See F.C.C. v. Fox
    Television Stations, Inc., 
    556 U.S. 502
    , 515-16, (2009) (“To be
    sure, the requirement that an agency provide reasoned
    explanation for its action would ordinarily demand that it
    display awareness that it is changing position. An agency may
    not, for example, depart from a prior policy sub silentio or
    simply disregard rules that are still on the books.”); Consol.
    Bearings Co. v. United States, 
    348 F.3d 997
    , 1007 (Fed. Cir.
    2003) (“the proper mode of analysis requires comparison of
    Commerce's actions before this case with Commerce's actions in
    this case. If that analysis shows that Commerce acted
    differently in this case than it has consistently acted in
    similar circumstances without reasonable explanation, then
    Commerce's actions will have been arbitrary.”).
    Consol. Court No. 14-00106                                Page 23
    elsewhere reflects this,23 to the point of excluding products
    that had previously failed the finished goods test. See [Valeo]
    Final Results of Redetermination Pursuant to Ct. Remand, Ct. No.
    12-00381, ECF No. 20-1.
    23For example, in Aluminum Extrusions from the [PRC], A-570-967
    & C-570-968 (Dep’t of Commerce Nov. 19, 2012) (final scope
    ruling on motor cases, assembled and housing stators), Commerce
    parallel to its arguments here, explained that “[i]n the SMVC
    scope ruling, the Department found that ‘subassemblies’ (i.e.
    ‘partially assembled merchandise’) may be excluded from the
    scope provided that they enter the United States as ‘finished
    goods’ or ‘finished goods kits’ and that the ‘subassemblies’
    require no further ‘finishing’ or ‘fabrication.’” Id. at 14.
    However, in actual application, Commerce did not determine
    whether the product at issue was a “finished good” or “finished
    good kit” by the terms of the Orders, but rather found that the
    product at issue, assembled motor cases housing stators, were
    “analogous to the merchandise examined in the scope ruling on
    SMVCs” (that is, a subassembly) and “meet[] the criteria for
    exclusion” because they were not made entirely of aluminum and
    “require no further finishing or fabrication upon importation.”
    Id. Commerce thus considered them “finished goods” under the
    subassembly test (not the standard finished goods test that
    requires a final, finished product). Id. For similar
    applications see Aluminum Extrusions from the [PRC], A–570–967 &
    C–570–968 (Dep't of Commerce July 25, 2014) (final scope ruling
    on fan blade assemblies) at 16 (“We disagree with Petitioners'
    argument that the fan blade assemblies are not "final finished
    goods" because they are a component of cooling towers and
    because they are imported as “parts” of such larger systems. As
    explained above, based on our examination of the language of the
    scope and our determination in the SMVC Scope Rulings, we find
    that the product in question is a "subassembly" that meets the
    criteria for a "finished good" and is therefore excluded from
    the scope of the Orders.”); Aluminum Extrusions from the
    [PRC], A–570–967 & C–570–968 (Dep't of Commerce Nov. 23, 2015)
    (final scope ruling on Dometic Corp.'s lateral arm assemblies)
    at 12 (“[T]he lateral arm assemblies satisfy the finished
    merchandise exclusion as subassemblies.”).
    Consol. Court No. 14-00106                                    Page 24
    This shorthand creates difficulties for Commerce here
    because it leads Commerce to adopt the approach that the
    subassemblies test expressly rejects. Commerce finds that “parts
    of curtain walls, such as Yuanda’s curtain wall units, cannot
    pass the subassemblies test because the scope specifically
    provides that they are not a finished good under the Orders” – a
    determination it premises on the fact that “the scope itself
    states that the ‘finished good’ is the curtain wall.” 2d
    Redetermination, ECF No. 109-1, at 27.   That is, Commerce has
    simply examined whether the product at issue is “a part of a
    larger structure or system” (a curtain wall), rather than
    actually applying the subassembly test outlined above.   As
    Commerce has already explained, “determining whether a product
    meets the exclusions for ‘finished goods’ and ‘finished goods
    kit’ simply by examining whether it is a part of a larger
    structure or system fails to account for the scope language that
    expressly allows for the exclusion of ‘subassemblies,’ i.e.
    merchandise that is ‘partially assembled’ and inherently part of
    a larger whole.” SMVC Scope Ruling at 7 (quoting AD Order, 76
    Fed. Reg. at 30,651; CVD Order, 76 Fed. Reg. at 30,654).
    Instead, based on its own prior explanation and
    application of the subassemblies test, Commerce should have
    determined (1) whether Yuanda’s curtain wall units are a
    Consol. Court No. 14-00106                                   Page 25
    subassembly,24 and then (2) whether Yuanda’s curtain wall units
    require “further ‘finishing’ or ‘fabrication’ prior to assembly,
    contain all the necessary hardware and components for assembly,
    and are ready for installation at the time of entry.” Valeo
    Redetermination at 8.
    As it seems to bear repeating,25 “parts for . . .
    curtain walls” are included within the scope of the Orders only
    insofar as they “otherwise meet the definition of aluminum
    extrusions.” AD Order, 76 Fed. Reg. at 30,650-51; CVD Order, 76
    Fed. Reg. at 30,654.    The exclusions that inform the meaning of
    this definition must be considered.   That is, even if a curtain
    wall is the final downstream product, as indicated by this Court
    and the CAFC,26 that does not prevent curtain wall units from
    24Both this Court and the CAFC have already found that curtain
    wall units generally are subassemblies. See Yuanda II, 776 F.3d
    at 1357-58 (citing Yuanda I, __ CIT __, 961 F. Supp. 2d at 1298-
    99).
    25The CWC also argues again that excluding Yuanda’s unitized
    curtain wall would render the “parts for . . . curtain walls”
    language in the Orders a nullity. This issue has already been
    addressed by the court. It does not bear further discussion.
    See Shenyang Yuanda Aluminum Indus. Eng'g Co. v. United States,
    __ CIT __, 
    146 F. Supp. 3d 1331
    , 1346 n. 105 (2016).
    26See Yuanda II, 776 F.3d at 1357-58 (citing Yuanda I, __ CIT
    __, 961 F. Supp. 2d at 1298-99) (“A single [curtain wall] unit”
    is not a whole “curtain wall,” and as such, is a “part” or
    “subassembly” of a curtain wall.)
    Consol. Court No. 14-00106                                      Page 26
    being a subassembly27 and from being potentially excluded under
    the subassembly test.28
    In its analysis, Commerce finds a number of facts
    suggesting that Yuanda’s curtain wall units may not meet the
    second requirement of the subassemblies test (that the
    subassemblies “require no further ‘finishing’ or ‘fabrication’
    prior to assembly, contain all the necessary hardware and
    components for assembly, and are ready for inst[a]llation at the
    time of entry,” [Valeo] Final Results of Redetermination
    Pursuant to Ct. Remand, Ct. No. 12-00381, ECF No. 20-1        at 8
    (quoting SMVC Scope Ruling at 7)). 2d Redetermination, ECF No.
    109-1, at 29-31, 42-53.      However, given that Commerce’s
    articulated standard for organizing and evaluating those facts
    is incorrect, remand is appropriate. Sec. & Exch. Comm’n v.
    Chenery Corp., 
    332 U.S. 194
    , 196 (1947) (“[A] reviewing court,
    in dealing with a determination or judgment which an
    administrative agency alone is authorized to make, must judge
    27   See 
    id.
    28Yuanda I, __ CIT at __, 961 F. Supp. 2d at 1301; see CWC Scope
    Ruling at 9; Yuanda I, 961 F. Supp. 2d at 1301 (“The court finds
    that Commerce properly confined its inquiries to the request
    made by the CWC . . . . That is, an inquiry as to whether a
    particular entry, or even product, would qualify for an
    exception to the scope language simply goes far beyond the CWC's
    request.”); Yuanda II, 
    776 F.3d 1351
     (providing no discussion of
    the finished goods kit exclusion nor the subassemblies test);
    see also 
    28 U.S.C. § 2637
    (d) (requiring exhaustion of
    administrative remedies for jurisdiction).
    Consol. Court No. 14-00106                                       Page 27
    the propriety of such action solely by the grounds invoked by
    the agency. If those grounds are inadequate or improper, the
    court is powerless to affirm the administrative action by
    substituting what it considers to be a more adequate or proper
    basis.”).
    CONCLUSION
    For the foregoing reasons, Commerce’s determination
    must again be remanded.
    Accordingly, the court remands to Commerce for further
    consideration in accordance with this opinion.       Commerce shall
    have until November 16, 2016 to complete and file its remand
    redetermination.    Plaintiffs shall have until November 30, 2016
    to file comments.   Defendant and Defendant-Intervenor shall have
    until December 12, 2016 to file any reply.
    IT IS SO ORDERED.
    /s/   'RQDOG&3RJXH
    Donald C. Pogue, Senior Judge
    Dated: October 6, 2016
    New York, NY