Trade Court Upholds Deduction of Section 232 Duties From US Price, Rejection of Drawback Adjustment

The Court of International Trade on Aug. 23 upheld the Commerce Department's deduction of Section 232 duties paid by Turkish exporter Noksel Celik Boru Sanayi from its U.S. price in the 2018-19 review of the antidumping duty order on light-walled rectangular pipe and tube from Turkey. Judge Jane Restani said she saw "no reason to vary" this finding, as previously made by the U.S. Court of Appeals for the Federal Circuit, regarding the government's move to raise the duties solely on Turkish goods.

Restani made identical rulings in a separate opinion regarding exporter Icdas Celik Enerji Tersane ve Ulasim Sanayi as part of its case against the 2018-19 review of the AD order on steel concrete reinforcing bar from Turkey.

Exporters have repeatedly argued in favor of distinguishing the Section 232 steel and aluminum tariffs from ordinary U.S. import tariffs in an attempt to have them included in their U.S. price as part of AD proceedings. These efforts were thwarted by the Federal Circuit in Borusan Mannesmann Boru Sanayi ve Ticaret v. U.S. In its case, Noksel argued the duty hike on Turkish goods was more akin to Section 201 tariffs, which are included in the U.S. price, because the hike was "temporary and remedial."

Restani disagreed, explaining the "same language the Federal Circuit emphasized is present" in the proclamation raising the duties on Turkish goods. Pointing to the trade court's ruling in Icdas Celik Enerji Tersane ve Ulasim Sanayi v. U.S., the judge said there's no reason to depart from prior holdings.

The judge also upheld Commerce's decision to deny Noksel a duty drawback adjustment. The agency uses a two-prong test to decide whether to grant these adjustments, making sure, one, the duty rebate and import duties are tied to the export of the merchandise and, two, there are sufficient imports of the raw material to account for the drawback upon export. The Turkish Inward Processing Regime exempts duties instead of rebating them, giving a company an inward processing certificate (IPC) that lays out the quantity of raw material allowed to be imported free of duty and the quantity of export required to close the IPC.

In the review, Commerce refused to grant Noksel the adjustment on the grounds that it needs documentation establishing the IPC's closure by the Turkish government. Restani said the agency's practice on granting an adjustment regarding the Inward Processing Regime has varied a lot and Commerce "has not always been clear as to when it will consider an IPC closed." The agency previously has said an IPC is closed when the exporter has applied for closure but has also changed its policy "in recent years" to require "some indication from the" Turkish government "that the IPC was approved."

The judge said "Noksel should have been on notice that this was likely the requirement. It is not unreasonable for Commerce to require more proof than it has in past cases."

Restani clarified that in the case of Icdas and fellow respondent Kaptan, the remaining questions are whether Icdas "did all it reasonably could under Commerce's procedures given the lack of clarity," whether the exporter was harmed by this "lack of clarity" and whether the agency's requirements for a drawback adjustment are fair. The judge saw "two scenarios under which" both parties' actions could be explained.

The first characterizes Icdas' duty drawback submissions as a questionnaire response, which the agency should have found to be deficient, requiring the submission of a notice. The second treats Icdas' submissions as new factual information, though this would fail to comply with the requirements for "such late filed information." The judge said that "Icdas did not fully describe the rejected factual information to the court and make a clear case for finding Commerce’s decision erroneous." Restani added that there's nothing on the record showing that the Turkish government fails to process IPCs and timely grant drawbacks "so as to make Commerce's requirements unfair."

In Icdas' case, Restani also addressed Commerce's denial of the exporter's request for a monthly indexation methodology to address the effects of high inflation in Turkey during the review period. During the review, Icdas noted that inflation jumped over 25%. After the petitioner said that some of this data included time from before the review period, Commerce eventually found inflation to not be sufficiently high, sitting at 22.87% after accounting for just the review period, and rejected the indexation methodology request.

At CIT, Icdas vied for the agency to include data from just before the review, claiming that including it allows for a full 12-month review of the inflation data. Restani sustained Commerce's decision, seeing "no reason for Commerce to include" the extra data for comparing the change in price when this data predates the review period.

(Noksel Celik Boru Sanayi v. U.S., Slip Op. 23-125, CIT # 21-00140, dated 08/23/22; Judge: Jane Restani; Attorneys: Leah Scarpelli of ArentFox for plaintiff Noksel; Eric Singley for defendant U.S. government; Maureen Thorson of Wiley Rein for defendant-intervenor Nucor Tubular Products)

(Icdas Celik Enerji Tersane ve Ulasim Sanayi v. United States, Slip Op. 23-124, CIT # 21-00306, dated 08/23/23; Judge: Jane Restani; Attorneys: Leah Scarpelli of ArentFox Schiff for plaintiffs Icdas and Kaptan; Daniel Roland for defendant U.S. government; Maureen Thorson of Wiley Rein for defendant-intervenors led by Rebar Trade Action Coalition)