AD Petitioner Rails Against Commerce's Duty Drawback Adjustment Methodology at CIT

The duty drawback methodology applied by the Commerce Department to Turkish exporter Assan Aluminyum Sanayi ve Ticaret is "fundamentally flawed" and cuts against the statute's plain language, antidumping duty petitioner Aluminum Association Common Alloy Aluminum Sheet Trade Enforcement Working Group told the Court of International Trade in a brief on Commerce's remand results on the AD investigation on common alloy aluminum sheet from Turkey (Assan Aluminyum Sanayi ve Ticaret v. U.S., CIT #21-00246).

The AD petitioner said the methodology "significantly overstates the duty drawback adjustment by increasing Assan's U.S. price for all sales by a per-unit amount that is applicable to only a small portion of Assan's U.S. sales."

During the investigation, Commerce made a duty drawback adjustment for some of Assan's inputs that were exempted from duties in Turkey through the country's Inward Processing Regime. In a previous opinion, the trade court upheld the general grant of the adjustment but said the calculation of the adjustment was illegal given U.S. Court of Appeals for the Federal Circuit precedent. Using its "duty neutral" methodology, Commerce initially upwardly adjusted Assan's constructed export price (CEP) based on the uncollected duty amount by allocating the amount not collected to all production for the investigation period.

On remand, the agency ditched the duty neutral methodology and divided the amount of the duties exempted during the investigation period by the total quantity of exports made to "calculate a per-unit duty drawback adjustment that reasonably reflects the duties actually exempted for the exports of subject merchandise made to the United States" (see 2305310065). The result was a de minimis rate for Assan.

The petitioner noted that the statute says the price used to establish the constructed export price shall be increased by the amount of any import duties imposed by the government of the exporting country that have been rebated or not collected due to being exported to the U.S. Commerce's drawback methodology increased Assan's U.S. prices related to the duty liability forgiven by the Turkish government on the company's exports of non-subject merchandise. "Because these exports are by definition not 'subject merchandise,' the Department's methodology is contrary to the statute's plain language," the brief said.

The methodology also violated the statute because the adjustment was made for exports to countries other than the U.S., the brief said. The petitioner added Commerce also ignored the statute's plain language tying the adjustment to the prices used to establish CEP. "Thus, there is a temporal aspect of the statute that the Department's methodology ignores. Indeed, the Department's longstanding practice is to grant a duty drawback adjustment with respect to only those [Inward Processing Certificates (IPCs)] that are closed," the brief said.