CIT OKs Decision Not to Countervail Turkish Tax Exemption
The Commerce Department properly decided on remand not to countervail an exemption from Turkey's Banking and Insurance Transactions Tax on foreign exchange transactions, the Court of International Trade held in an Oct. 6 decision. In upholding the 2023 administrative review of the countervailing duty order on steel concrete reinforcing bar from Turkey, Judge Gary Katzmann also sustained Commerce's decision to use a report from Colliers International as the benchmark for valuing the rent-free lease of land to respondent Kaptan's affiliate Nur over a report from Cushman & Wakefield.
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In the review, Commerce initially found that the tax exemption was de jure specific, since the exemption was limited to a “cross-section of companies that fulfill one of the five requirements and make foreign exchange transactions.” Katzmann remanded this finding, holding that the Turkish law's express terms instead appear to support a finding of "broad, economy-wide eligibility for the subsidy."
The judge remanded the issue for further explanation and, on remand, Commerce issued additional questionnaires to the parties. The Turkish government didn't respond to many of the questions on the grounds that it lacked the relevant information. The agency opted not to use adverse facts available and said the tax exemption was neither de facto nor de jure specific.
The petitioner, the Rebar Trade Action Coalition, challenged this conclusion, arguing that the tax exemption is de jure specific. Katzmann said the claims advanced by the petitioner were already rejected by the court in its previous decision.
The coalition additionally argued that Commerce erred in not finding the tax exemption to be de facto specific, since the agency had a "statutory obligation to conduct further investigation into the de facto specificity" of the exemption after the Turkish government failed to provide certain information and Commerce "failed to sufficiently explain its decision not to" use AFA.
On both claims, Katzmann said the agency has broad discretion. While Commerce may not act "arbitrarily or unreasonably," the petitioner "has failed to demonstrate that Commerce’s decision to not conduct further investigation was unreasonable," the judge said. The agency "offered ample justification" for the decision not to conduct further investigation. “While there could be an endless number of ways in which a subsidy operates as specific in fact, Commerce inevitably has limited time to investigate specificity and cannot entirely exhaust each and every avenue of investigation -- especially when the investigation hinges upon answers provided by a foreign government," the court said.
Likewise, Commerce has significant discretion in deciding whether to use AFA, Katzmann held. Here, the agency "offered sufficient explanation for its decision not to apply adverse inferences," when it found "no reasonable basis to conclude that the Government of Turkey withheld information that has been requested by Commerce," the court said.
Regarding the selection of the land use benchmark, Katzmann remanded Commerce's pick of the Colliers report over the Cushman & Wakefield report, since the agency failed to address Kaptan's concerns on the "reliability of the Cerkezkoy benchmark in the Colliers report." Specifically, Commerce didn't address Kaptan's arguments that the Cerkezkoy data wasn't reflective of the rental values in Trabzon, which is where the lease in question was located.
However, on remand, Commerce "rectified its initial failure," Katzmann said. The agency said "Kaptan did not place adequate information in the record to suggest that the factors it raised -- like GDP, industrial development, distance from Surmene, and value of foreign trade -- detracted from the validity of the Cerkezkoy benchmark."
The judge said the burden is on Kaptan to show the "impact of the factors it raises." Katzmann said that "without the requirement that parties demonstrate the relevance of the factors they raise in comments, Commerce would be trapped -- or at the very least, slowed -- by spaghetti thrown at the wall."
(Kaptan Demir Celik Endustrisi ve Ticaret v. United States, Slip Op. 25-130, CIT # 23-00131, dated 10/06/25; Judge: Gary Katzmann; Attorneys: David Simon of Law Office of David Simon for plaintiff Kaptan Demir Celik Endustrisi ve Ticaret; Leah Scarpelli of ArentFox Schiff for plaintiff-intervenor Icdas Celik Enerji Tersane ve Ulasim Sanayi; Collin Mathias for defendant U.S. government; Maureen Thorson of Wiley Rein for defendant-intervenor Rebar Trade Action Coalition)