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US, Petitioners Answer CIT’s Questions in Turkish Duty Drawback Adjustment Case

In a Jan. 31 supplemental filing after oral arguments held a week earlier by the Court of International Trade, petitioners again rejected the Commerce Department's calculation of a Turkish exporter's duty drawback adjustment. On the same day, DOJ pushed back in its own supplemental filings on a pair of questions from the court (Assan Aluminyum Sanayi ve Ticaret v. U.S., CIT #21-00246).

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Those duty drawback adjustment calculations resulted in Turkish aluminum sheet exporter Assan Aluminyum Sanayi Ve Ticaret getting a de minimis rate, the Aluminum Association Common Alloy Aluminum Sheet Trade Enforcement Working Group, petitioner in the underlying antidumping duty investigation on common alloy aluminum sheet from Turkey, has said (see 2305310065).

The adjustment was given for a Turkish duty exemption program that provides a duty exemption for inputs imported into Turkey that will be processed for export. These inputs are imported under an “inward processing certificate," which is said to be “open” when they arrive and “closed” once the Turkish government has determined they are on their way to the United States.

On remand, Commerce recalculated a previously applied adjustment by dividing Assan’s total exempted duties under a closed inward processing certificate by its U.S. exports under that certificate, reaching a per-unit duty drawback adjustment that it applied to the company’s U.S. export price (see 2308020023).

The Aluminum Association contested Commerce’s new method in comments on the basis that the adjustment would be applied across all of Assan’s U.S. sales rather than only to those that originated from closed inward processing certificates. In its redetermination, Commerce said to do otherwise would amount to “tracing” imported inputs to ensure they are processed into a specific product that is then exported to the U.S., even though Turkey doesn’t require such links to grant drawbacks. The adjustment was properly applied to all exports “that actually fulfilled the export obligation” imposed by the Turkish government, Commerce said.

In its Jan. 31 supplemental response, the Aluminum Association denied it was advocating tracing.

It was only recommending an alternative calculation “consistent with the statute,” it said, which first reached the same number Commerce did -- by dividing total exempted duties under inward processing certificates by all of Assan’s exports under that inward processing certificate -- but then multiplied that amount by the quantity of Assan’s sales made pursuant to the certificate that are included in Assan’s U.S. sales database.

“This methodology does not involve ‘tracing’ because it does not involve tying specific Turkish imports of inputs to specific exports of finished products,” the Aluminum Association said.

It said its suggested method was one alternative, but Commerce could choose a different one. However, to be lawful and mathematically correct, “Commerce may only assign a per-unit drawback adjustment to a sale if the denominator it used to calculate the per-unit drawback includes that sale,” it said.

In response to Judge Gary Katzmann’s written question, the petitioners said they were “not asking the Court to endorse a strong version of the holding in Habas.”

DOJ also responded to questions from the judge. Katzmann asked whether Commerce had fulfilled its “burden to explain its use of a single closed [inward processing certificate] as its basis for calculating a uniform per-unit adjustment and applying that adjustment to sales made under separate open [inward processing certificates].”

DOJ responded that it had.

To calculate the per-unit adjustment, Commerce relied on a closed inward processing certificate for coil imports that were consumed to produce Assan’s aluminum exports, it said.

“Therefore, the resulting per-unit ratio reflects the correct relationship between the input (coil) and finished product (common alloy aluminum sheet) that is directly relevant to the merchandise under investigation,” it said. “Accordingly, Commerce satisfied its burden to explain its use of a closed [inward processing certificate] as its basis for calculating the per-unit drawback adjustment, a methodology that has been sustained by this Court.”

However, the government doesn't have to explain its decision to apply that adjustment across all U.S. sales rather than just those under the closed certificate because none of the parties raised that question, it said.

Although the petitioners challenged Commerce's application of the agency's calculated per-unit adjustment to all of Assan’s sales, "petitioners’ challenge was not to the application to all United States sales,” it said. “Rather, petitioners’ challenge was to how Commerce calculated the per-unit adjustment.”

It also refused to answer a question about three open IPCs discussed in the case, likewise saying that none of the parties had raised the issue, so “the Court need not consider it for the first time now.”