Commerce Revises Drawback Adjustment Methodology for Turkish Exporter on Remand

The Commerce Department on remand at the Court of International Trade revised the duty drawback adjustment for exporter Assan Aluminyum Sanayi ve Ticaret, resulting in a de minimis antidumping duty rate for the company in the AD investigation on common alloy aluminum sheet from Turkey (Assan Aluminyum Sanayi ve Ticaret v. United States, CIT # 21-00246).

Submitting remand results on July 31, Commerce said it decreased Assan's duty drawback benefit to stay within statutory constraints on duty drawback adjustments that limit drawback benefits to import duties associated only with subject merchandise. Due to the respondent's now-de minimis mark, the "all-others" AD rate jumped from 4.85% to 13.56%.

The issue centers around Turkey's system of rebating import duties paid by Turkish manufacturers on inputs, called the Inward Processing Regime. Under this system, holders of Inward Processing Certificates can either get refunds of import duties when the certificate closes or the holder can pay no duties at the time of importation and submit a guarantee for the amount that's otherwise owed. Under both options, a certificate holder is liable for all import duties until it ships enough goods to close the IPC.

Should a certificate fail to close, the Turkish government retroactively collects all customs duties. Commerce originally decided not to apply a duty drawback adjustment until a certificate closed, though the practice has evolved. Now, the agency requires "some indication from the" Turkish government that the certificate was approved.

In its investigation on Turkish aluminum sheet, Commerce applied the adjustment to all of Assan's U.S. sales even though only some of them directly contributed to the receipt of duty exemptions. The agency set a per-unit drawback rate for the goods attributable to the closed certificate and applied the adjustment to all U.S. sales.

The court rejected this as going beyond a statutory constraint covering drawback benefits (see 2404110062). In particular, the court took issue with the fact that the agency made a drawback adjustment for goods linked to open IPCs, especially since only one IPC closed during the investigation period. Assan claimed drawback adjustments for three other IPCs that were open during this period.

On remand, Commerce reopened the record so Assan could identify its exports to the U.S. that are associated with the sole closed IPC. In its draft remand results, the agency then "calculated a per-unit duty drawback adjustment on the basis of a single closed IPC." Responding to comments on the draft remands, Commerce revised its analysis to use IPCs that closed outside the investigation period for calculating the adjustments "when sufficient evidence exists on the record to demonstrate their closure."

Assessing the three other IPCs that closed outside the investigation period, the agency said "one of the additional IPCs is related to import duty exemptions." As a result, Commerce calculated the drawback adjustment "using both the one IPC that closed during the POI that was addressed in the investigation, and this one additional IPC that closed after the POI but whose duty drawback adjustment is related to sales reported during the POI."