US Customs Determination Signals Evasion of Antidumping Duties

SEATTLE (Scrap Monster): U.S. Customs and Border Protection (CBP or Customs) announced the first Final Determination in an antidumping duty evasion case brought under the Enforce and Protect Act (EAPA) of 2016 on August 14, 2017. CBP found that Eastern Trading NY, Inc. had evaded antidumping duties on steel wire garment hangers produced in China and transshipped through Thailand. In addition to imposing AD cash deposits at the China –wide rate, live entry, and a higher continuous bond level, Customs also indicated that it would pursue additional enforcement actions such as initiating a 1592 penalty proceeding and/or referring the matter to ICE for civil and/or criminal investigation, as appropriate.

The decision provides insight into several aspects of CBP’s enforcement activities under EAPA. First, the importer claimed that it was an innocent victim of an evasion scheme, of which it had no knowledge and from which it did not profit. CBP noted that the statutory definition of evasion is limited to whether the cash deposits or bonds were insufficient, and the culpability of the parties does not matter (although it would for some of the other enforcement investigations). Second, cash deposits were applied at the highest available rate, even though the importer was able to show during the investigation that the goods might have come from a Chinese producer subject to a lower rate. Because the original entries did not claim that lower rate the goods cannot be tied to such specific producer. Third, documentation that might be required to demonstrate that an importer did not evade AD duties will often be more extensive than the records ordinarily required for entry filing. This may include company import policies and procedures, purchase and sales records, corporate structure, and detailed transaction documents, as well as information from the supplier on its facilities, manufacturing process, suppliers, workforce, source of raw materials, and relationship with other parties.

The primary basis for the Determination appears to be the lack of sufficient production facilities at the alleged supplier, the relationship of that supplier to a Chinese manufacturer, and Thai import records for wire hangers from that manufacturer to the Thailand firm, coupled with the lack of adequate production process and production records for the Thailand firm.

CBP also announced on August 17 Interim Measures in a consolidated investigation of eight importers of steel wire garment hangers from Malaysia, based on an allegation from the same U. S. producer involved in the Thailand case. Other pending EAPA investigations that have reached the Interim Measures stage involve diamond sawblades from China alleged to have been transshipped through Thailand, and wooden bedroom furniture from China alleged to have been produced by a high rate company but shipped by a company with a lower AD rate.

Importers of goods of the same class or kind as goods subject to AD and CVD Orders, whether buying from third countries or from exporters claiming favorable rates in the subject country, should exercise caution, investigate their suppliers thoroughly, and require substantial documentation supporting actual production by the claimed producer. Evasion requires no culpability, and the costs can be high.

Courtesy: AIIS