Rebar Exporter Says US Failed to Support Specificity Finding on Turkish Tax Exemption
Rebar exporter Kaptan Demir argued that the U.S. failed to defend the Commerce Department's position in the 2021 countervailing duty review on steel concrete rebar from Turkey that exemptions from Turkey's Banking and Insurance Transactions Tax (BITT) are de jure specific. Filing a reply brief at the Court of International Trade on March 30, Kaptan said the government's position that Kaptan failed to provide evidence that every Turkish company is eligible for the exemption is "factually incorrect" (Kaptan Demir Celik Endustrisi ve Ticaret v. U.S., CIT #24-00096).
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The exporter said that in fact, "every industrial enterprise is not only eligible for, but is, in fact, required to have," an industrial registry certificate and that all certificate holders are "entitled to the exemption." The government didn't point to a "single type of enterprise that is not covered by" Turkish law's "expansive definition" of who is eligible for the exemption.
The government's position that Kaptan must provide that "every firm actually obtains such a certificate" is "irrelevant," the brief said. "The BITT statute does not exempt any enterprise or industry, and the question of actual usage" is not relevant to de jure specificity, Kaptan claimed. The respondent invoked a recent decision from the trade court that struck down this specificity finding on virtually identical facts.
Kaptan added that the government presents a new legal flaw in this review regarding Kaptan's failure to report its arbitrage transactions of foreign exchange. Commerce said the BITT applies to these transactions -- a decision the respondent challenged as an issue of fact that's entirely unsupported by the record. The U.S. said Commerce's interpretation is "irrelevant" because the agency requested Kaptan to report each benefit it received under the BITT.
In response, Kaptan said the government's position is "tautological." The issue is "whether the BITT exemption on arbitrage transactions constitutes a 'benefit received,'" the brief said. If the arbitrage transactions don't provide a benefit, "then they need not be reported. This, in turn, depends on whether the Turkish statute exempts arbitrage transactions from the tax." If the law only applies to exchanges between Turkish lira and other currencies, "as Kaptan understood, then arbitrage transactions are simply not subject to the tax and therefore Kaptan had no obligation to report them," the brief said.
In its brief, Kaptan went on to argue that Commerce's rejection of the exporter's Cushman and Wakefield (C&W) report regarding the provision of industrial land for less than adequate remuneration to its affiliate Nur was unlawful. The U.S. justified the rejection of the report on the ground that it was prepared for purposes of the review, claiming that Kaptan conceded that this was the point of the report.
"Kaptan admits no such thing," the company replied. "Kaptan acknowledges that it retained C&W to provide a valuation report for the Nur property, but the use to which Kaptan intended to put the report appears nowhere on the record, and, certainly as far as C&W was concerned, the report was for Kaptan’s internal use." There's "no reason to believe" the report was "anything other than what it purports to be, namely, an objective and expert valuation of the Nur lease," the brief said.
The respondent went on to argue that Commerce's use of AFA regarding social security support programs issued under Turkish Law 4447 was unlawful. Kaptan said it first mentioned Law 4447 in its initial questionnaire response, then later tried to provide clarifications about its receipt of benefits under the program. Commerce rejected the later submission for untimeliness, applying AFA for this failure and for a failure to link Law 4447 with Law 6645, the implementing law of Law 4447 for which Kaptan did report benefits.
In its reply brief, Kaptan said, by the government's own admission, "Kaptan reported receipt of benefits under Law 6645," the law implementing Law 4447, after the Turkish government linked these two laws in a supplemental response. "Thus, there was no gap with respect to its reporting under this law," the brief said. "Kaptan asks this Court to find that there was no gap in the record," the brief said.