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Trade Court Sends Back Commerce's Explanation Not to Use Adverse Inference Over Billing Adjustments

The Court of International Trade remanded the Commerce Department's decision not to use adverse facts available for Assan Aluminyum Sanayi ve Ticaret's billing adjustments in an antidumping duty investigation on common alloy aluminum sheet from Turkey, in a March 1 opinion made public March 8.

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During the investigation, Assan had sought two different billing adjustments to its constructed export price in the investigation -- an upward invoicing error adjustment due to billing errors and a downward product quality adjustment due to quality errors. Commerce asked Assan to create a separate field for each type of adjustment, though Assan initially reported all the adjustments in a single field. In a later questionnaire response, however, Assan separated the billing adjustments into different fields.

The agency at first rejected two of Assan's adjustments because Assan failed to provide sample documentation, setting the upward adjustment to zero and the downward adjustment at the lowest reported value. However, in the final determination, Commerce used Assan's specific reported information instead of the lowest reported value for the downward adjustment, explaining that an adverse inference was not warranted since Assan responded to the best of its ability.

Katzmann ruled against the agency's "conclusory statements" and failure to reconcile detracting evidence. "The agency may have a reason as to why such a failure to provide the requested information is not inconsistent with its assessment that Assan acted to 'the best of its ability,' but any such rationale is not, as of now, reasonably discernible," the judge said.

Commerce also granted Assan's bid for a duty drawback adjustment for various imports of inputs which were exempted from duties in Turkey via the Inward Processing Regime because Assan's goods were meant for export. The Aluminum Association Common Alloy Aluminum Sheet Trade Enforcement Group, which was the original petitioner in the investigation and filed the CIT challenge, had argued that Assan was ineligible for the adjustment, relying on a Federal Circuit decision involving Maverick Tube to argue that the relevant input imports must be "capable of" making the exported merchandise.

But Katzmann ruled that the petitioner overstated the implications of the decision. In that case, the U.S. Court of Appeals for the Federal Circuit denied a duty drawback adjustment because none of the inputs for which duties were exempted could be used in the production of the merchandise. Katzmann said this decision did not impose a threshold "capability" test but "merely held that Commerce’s own requirement of 'capability' was a permissible interpretation of 19 U.S.C. § 1677a(c)(1)(B)." The court said it was satisfied that at least one imported input under the Inward Processing Regime could be used in the production of common alloy aluminum sheet.

"In sum, it is not that parties disagree that imports must be 'capable of' producing the exported subject merchandise in order to merit a duty drawback adjustment, but rather that parties disagree as to the definition of 'capable of,'" the opinion said. "The Association posits that 'capable of' means demonstrably capable of … whereas Commerce’s decisional document suggests that ‘capable of’ means potentially capable of, or in other words, not demonstrably incapable of." However, the court remanded, per Commerce's request, the agency's allocation of the exempted duties over Assan's total production rather than over its total exports of the merchandise -- a position rejected by the Federal Circuit in Uttam Galva Steels v. U.S.

Katzmann also upheld Commerce's denial of a home market rebate adjustment over Assan's objections, finding that Assan's sample documents did not show that its customers met the required sales threshold to be eligible for the adjustment. The judge also upheld Commerce's reliance on Assan's costs for inland freight services it received from an affiliate.

(Assan Aluminyum Sanayi ve Ticaret v. United States, Slip Op. 23-26, CIT Consol. #21-00246, dated 03/01/23, Judge Gary Katzmann. Attorneys: Leah Scarpelli of Arent Fox for plaintiff Assan; Kyle Beckrich for defendant U.S. government; Johsua Morey of Kelley Drye for defendant-intervenor Aluminum Association Common Alloy Aluminum Sheet Trade Enforcement Working Group and its Individual Members)