CIT OKs Decision Not to Countervail India's Advance Drawback Scheme
The Commerce Department permissibly decided not to countervail India's Advanced Authorization Scheme, which is akin to an advance drawback system, in the 2021 administrative review of the countervailing duty order on new pneumatic off-the-road tires, the Court of International Trade held in a decision made public Aug. 29.
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Under the Advance Authorization Scheme, an Indian manufacturer may be relieved of paying import duties on inputs used to make goods that are subsequently exported. Commerce countervails the duty exemption "unless the government in question has an effective, systemic process for verifying the use of such exempted inputs or has carried out an examination of actual inputs to verify their use."
In the 2021 review, the agency said the Indian government "lacks a systemic process to verify use but found that India conducted an examination of actual inputs sufficient for the agency to determine that no benefit was provided in this review." Barnett held that the record shows that the Indian government "conducted an examination of the actual inputs involved" in respondent Balkrishna Industries' production of subject tires to "confirm which inputs were consumed in the production of the exported product and in what quantities."
Commerce based its finding that the Indian government carried out an examination of actual inputs on four pieces of evidence: (1) the Indian government's three-page verification report, which "confirmed" the respondent's "consumption ratios"; (2) the calculations of Balkrishna's consumption ratios; (3) deficiency letters from the Indian government and other documents requiring duty payments for imports that weren't consumed in exported goods; and (4) various other documents, including the “reports of chartered engineers and accountants that conduct additional audits.”
Regarding the three-page verification report, Commerce said its contents "represented an authentic audit and verification" of the Indian government's examination of Balkrishna. While petitioner Titan Tire criticized the length of the report, its criticism doesn't call the report into question, since no detracting evidence was identified, Barnett said.
The judge added that Commerce reasonably found that the Indian government "considered that the deficiency letter" the respondent received from the Indian government supported the limitations of the Advance Authorization Scheme program by "demonstrating the possibility of penalties for non-compliance." Barnett also said the agency's receipt of reports from engineers and accountants that conducted additional audits separate from the Indian government's audit actually "supports, rather than detracts, from Commerce’s conclusion."
Titan Tire argued that the plain language of Commerce's regulation requires the Indian government to have conducted the examination and that the examination must be substantively meaningful and cover the actual inputs and consumption during the review period. Here, the record shows that the Indian government did just that, the opinion said.
While the petitioner disputes the relevance of the deficiency letters and other documents used by the Indian government, Barnett said the Indian government "demonstrated that it substantively and meaningfully examined" Balkrishna's inputs consistent with the regulation by relying on these documents.
Titan Tire also challenged the reliability of the Indian government's verification of Balkrishna by noting that the verification took place after the review period and was "limited to only one of three" Balkrishna facilities. Barnett said the court "will not fault Commerce for relying on a government’s verification that aligns with Commerce’s own practice of verifying data by sampling that data after the period in which it was recorded by the company." In addition, "nowhere does Titan Tire cite legal authority suggesting that verification must take place within" the review period, the judge said.
And while the Indian government only visited one of the respondent's three plants, "the auditors received electronic access to records from all three plants," the court noted. Commerce's own methods don't require it to visit every site for every respondent, and Titan Tire cites no legal authority "that such sampling of data is insufficient," the decision said.
Lastly, while Titan Tire disputed the Indian government's reliance on documents it didn't produce as part of its examination, Barnett said this challenge is "without merit because the examination of actual inputs required by 19 C.F.R. § 351.519(a)(4)(ii) does not prohibit the government in question from considering documents and data submitted by the respondent as part of its examination."
(Titan Tire Corp. v. United States, Slip Op. 25-112, CIT # 23-00233, dated 08/22/25; Judge: Mark Barnett; Attorneys: Adam Gordon of The Bristol Group for plaintiff Titan Tire; Sosun Bae for defendant U.S. government; John Gurley of ArentFox Schiff for defendant-intervenors Balkrishna Industries and the Government of India)