The Chinese solar glass maker, which claimed a positive legal judgement in the European General Court in 2019, has now had that victory set aside by the European Court of Justice, with an advocate-general saying the company benefited from an income tax regime which may have unfairly distorted its operations.
Chinese solar glass manufacturer Xinyi PV Products has been knocked back in a long-running legal case after an advocate-general at the European Court of Justice set aside a General Court ruling made in September 2019 which had gone in the company’s favor.
The case concerns whether the fair price of Xinyi solar products shipped to the EU should have been determined by the European Commission with reference to prices of similar goods made in market-economy nations or whether the manufacturer’s claim to have proved it operated under market conditions should have been upheld, rendering third-party product reference unnecessary.
Xinyi claimed ‘market economy treatment’ (MET) for its products in May 2013, less than three months after the commission started investigating the alleged dumping of solar glass products into the EU from China.
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The commission said, in letters sent to Xinyi in August and September 2013, the manufacturer had failed to prove its market economy status because it had benefited from favorable income tax treatment, and the EU body, in May 2014, rejected all of the MET claims it had received from Chinese companies, including Xinyi, with products made by the latter having a 36.1% anti-dumping duty applied to them.
In August 2014, Xinyi appealed to the European General Court (EGC) and sought annulment of the regulation at issue in the case, with the court upholding the first part of the manufacturer’s appeal in March 2016. When the commission appealed that decision, asking the European Court of Justice (ECJ) to set aside the judgement because of errors in law, the ECJ referred the case back to the General Court, which found in Xinyi’s favor – and against the commission and Austrian-owned GMB Glasmanufaktur Brandenburg GmbH, in September two years ago.
However, ECJ advocate-general Giovanni Pitruzzella on Thursday set aside the decision made by the General Court as to the first plea made by Xinyi in its case, and referred the matter back to the EGC to consider the remaining pleas.
Pitruzzella dismissed Xinyi’s argument any “significant distortion” to its business caused by operating in non-market-economy conditions must be proven to relate specifically to the “manufacture and sale of like product,” in this case, solar glass. Instead, the judge agreed with the commission and GMB that such a distortion to Xinyi’s broader “financial situation,” would be sufficient to bring into play the need to refer to products made in third-party market economies.
The advocate-general agreed a beneficial tax regime could be considered as distorting costs and prices, in the absence of any evidence to the contrary, and agreed with GMB’s claim the burden of proof should lie with the manufacturer, rather than the European Commission. Xinyi had argued the tax benefits it received from Beijing had amounted to just 1.14% of its turnover and 1.34% of its total costs, meaning it could not amount to a significant distortion of its business.
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Source: pv magazine