US and Petitioner Say Rebar Exporter Got Specific Tax Exemption

A rebar exporter received a specific subsidy from the Turkish government’s tax exemption program for companies that engage in foreign exchange, the U.S. and countervailing duty petitioner said Jan. 29 in response to that exporter’s motion for summary judgment. They also said the exporter provided unreliable benchmark value data, justifying the Commerce Department’s use of data from the petitioner, the Rebar Trade Action Coalition, instead (Kaptan Demir Celik Endustrisi ve Ticaret v. U.S., CIT #23-00131).

Exporter Kaptan Demir Çelik Endüstrisi ve Ticaret had filed for summary judgment in November challenging two aspects of the results of Commerce’s 2020 administrative review of the countervailing duty order on steel concrete reinforcing bar, or rebar, from Turkey. Kaptan said Commerce was wrong to determine that the company’s exemption from the Turkish government’s Bank and Insurance Transactions Tax on foreign exchange transactions was a de jure specific countervailable subsidy. It also disagreed with the department’s use of the petitioner’s suggested benchmark to value the unimproved land given to Kaptan by the Turkish government. The benchmark was “improved industrial leases in a major industrial and transportation hub in the Istanbul area," Kaptan said.

The U.S. said in response to Kaptan’s first claim that, contrary to what Kaptan said, the tax exemption is not widely available to Turkish companies.

“Because the BITT exemption only benefits entities that both obtain an industrial registry certificate and conduct foreign exchange transactions, it was limited to a group of entities and therefore specific,” DOJ said.

Although Kaptan provided evidence that Turkish law defined “industrial establishments” broadly to allow more companies access to industrial registry certificates, it didn't show that all eligible companies receive them, the U.S. said.

The number of companies that both are eligible for certificates and engage in foreign exchange transactions is even smaller, DOJ said.

“The cross-section of companies who meet one or more of the five conditions established by the law, and that engage in foreign exchange transactions, are the only ones who can benefit from BITT exemptions,” it said. “It was reasonable for Commerce to conclude that the BITT exemption is therefore limited to the group of "'enterprises or industries’ that satisfies both criteria and that the program is therefore specific.”

The government also defended its use of the petitioner’s offered benchmark, saying that the information submitted by Kaptan was unreliable, “was prepared for the purpose of an adjudicative proceeding, and was based on information obtained from third party, nonprivate sources.” It therefore turned to the only other information on the record, the petitioner’s, DOJ said.

The Rebar Trade Action Coalition also responded to Kaptan’s motion for summary judgment, agreeing with the government on the exporter’s first claim and, on the second, saying that Kaptan hadn't also compellingly argued that Commerce erred in judging the exporter’s data's reliability.