Turkish Aluminum Foil Exporter Challenges Commerce's Limit on Duty Drawback Adjustment
Four related exporters, led by Assan Aluminyum Sanayi ve Ticaret, filed a complaint at the Court of International Trade on July 23, arguing that the Commerce Department illegally decided to limit the full duty drawback adjustment to which Assan is entitled by statute in the 2022-23 administrative review of the antidumping duty order on aluminum foil from Turkey. The result of the review was a 2.34% AD rate for Assan (Assan Aluminyum Sanayi ve Ticaret A.S. v. United States, CIT # 25-00137).
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In its complaint, Assan noted the relevance of the suit it brought that's currently before the trade court that concerns the amount of the exporter's duty drawback adjustment in the underlying AD investigation (see 2409060031). In that case, CIT granted Commerce's request for a voluntary remand to let the agency reconsider or further explain its duty drawback methodology. Assan said this remand is "currently pending before the Court" and involves the "same legal provisions and the essential facts" as its new case on the 2022-23 review.
Both cases revolve around Turkey's system of rebating import duties paid by Turkish manufacturers on inputs, called the Inward Processing Regime. Under this system, holders of Inward Processing Certificates (IPCs) can either get refunds of import duties when the certificate closes or the holder can pay no duties at the time of importation and submit a guarantee for the amount that's otherwise owed. Under both options, a certificate holder is liable for all import duties until it ships enough goods to close the IPC.
Should a certificate fail to close, the Turkish government retroactively collects all customs duties. After developing its approach to the scheme, Commerce now requires some indication the certificate was approved.
In the 2022-23 AD review, Commerce calculated Assan's duty drawback adjustment to its U.S. sales based only on closed IPC data, only applying the adjustment to U.S. sales linked with the same closed IPC. Specifically, the agency calculated the total amount of the duty drawback benefit for exempted duties realized by Assan for exports to the U.S. during the review period under a single closed IPC, then allocated this amount to U.S. sales associated with the same closed IPC, Assan said.
Instead, "Commerce should have applied the duty drawback adjustments to all of Assan Group’s U.S. sales," pursuant to the "plain language of the statute and record evidence demonstrating that all of Assan Group’s sales were made pursuant to an IPC," the complaint said.
The agency's methodology, which presumes an IPC that's open or under closure during the review period will not close at some point in the future, "is contradicted by record evidence establishing (1) each U.S. sale was made pursuant to an IPC, (2) the last 25 certificates used by Assan Group have all closed successfully, and (3) that Assan Group has completed its import and export commitments under IPC’s used during the [period of review] such that those IPC’s listed as 'open' or 'under closure' will close," Assan said.