Trade Court Sends Back Commerce's Cross-Owned Input Supplier Analysis in Case on CVD Review

The Commerce Department did not adequately explain its finding that ship building company Nur Gemicilik ve Tic, an affiliate of countervailing duty respondent Kaptan Demir Celik Endustrisi ve Ticaret, was a cross-owned input supplier of primarily dedicated inputs, the Court of International Trade ruled. Sending back the 2018 administrative review of the CVD order on rebar from Turkey, Judge Gary Katzmann said Commerce erroneously relied on prior segments of the review and a past CIT decision to say that "scrap" is an input primarily dedicated to the production of downstream steel products.

Katzmann said prior portions of the proceeding and the CIT case, Icdas Celik Enedi Tersane ve Ulasim Sanayi v. U.S., are fact specific and not applicable to the present proceeding. The judge said conclusions from earlier segments don't stand as controlling precedent in the instant review and that these determinations were made for different companies within the Kaptan group.

"These determinations did not involve Nur, nor the specific factual circumstances surrounding Nur’s generation of scrap and the sale of these products to Kaptan, and the use of the inputs in Kaptan’s productions," the opinion said. The Icdas opinion also applied to a different entity, so that court holding "does not stand for the proposition that all cross-owned vendors of scrap, by definition, would be considered a supplier of input primarily dedicated to the production of steel products."

"We are very pleased with the Court’s decision," said Andrew Schutz, counsel for Kaptan. Schutz said the judge "correctly focused on two aspects of Commerce’s decision that unfortunately we see all too often from Commerce -- cursory reasoning and a failure to follow its own past precedent. Commerce’s treatment of the 'primarily dedicated' language is critical in so many cases; how it analyzes that term should be both consistent case-to-case and fact-based. We are hopeful that Commerce will now bring its decision in this case in line with the Preamble and past precedent and issue a thoughtful and fact-based determination that Nur is not a cross-owned input supplier of Kaptan’s in this review."

The judge ruled that Commerce must further explain why the input product, scrap, "is in fact primarily dedicated to the production of downstream products in this case. This is especially true considering record evidence that the scrap may have been used for the production of products other than the subject merchandise."

The petitioners raised a host of points before the court "on the nature of rebar and Commerce's familiarity with rebar production." While the court considered these post hoc rationalizations not permissibly made, Katzmann said even if they were considered, "such general trends cannot explain why Nur’s generation of scrap and subsequent sale to Kaptan in the instant case is a production of input product primarily dedicated to the production of a downstream product."

(Kaptan Demir Celik Endustrisi ve Ticaret v. United States, Slip Op. 23-62, CIT # 21-00565, dated 04/26/23; Judge" Gary Katzmann; Attorneys: Andrew Schutz of Grunfeld Desiderio for plaintiff Kaptan; Matthew Nolan of ArentFox for plaintiff-intervenors Colakoglu Dis Ticaret and Colakoglu Metalurji; Sosun Bae for defendant U.S. government; Maureen Thorson of Wiley Rein for defendant-intervenor Rebar Trade Action Coalition)