CBP Finds AD/CVD Evasion Despite No Transshipment or Misclassification; Importer Says It Followed CBP Guidance

CBP recently found an importer evaded antidumping and countervailing duties on aluminum extrusions, despite a pending scope ruling request and no allegations of transshipment or misclassification. In a final determination issued Sept. 18 to close out an Enforce and Protect Act investigation, CBP said Worldwide Door Components evaded AD/CV duties by importing door thresholds that the agency says were clearly listed in the scope as subject merchandise. Worldwide says it was simply following instructions in CBP’s own written correspondence.

CBP began its EAPA investigation in July 2018, and in November issued its notice of initiation and a preliminary finding that it had “reasonable suspicion” Worldwide was evading AD/CV duties (see 1812100009). Worldwide took the position that the door thresholds, which included extruded aluminum as well as non-aluminum parts, qualified for the “finished merchandise” exemption in the scope of AD/CV duties on aluminum extrusions from China.

In its final determination, CBP says Worldwide should have known during the period it was importing the thresholds without paying AD/CV duties that they were subject merchandise. Not only does the scope mention door thresholds as examples of aluminum extrusions identified by their end use but still covered by AD/CV duties, but Worldwide’s affiliated Chinese manufacturer evidently thought it prudent to participate in the Commerce Department’s original 2011 AD/CV investigation. CBP also in 2011 issued a classification ruling that found the extruded aluminum component imparted essential character to a multicomponent door threshold, classifying it as an aluminum extrusion. That’s “not determinative,” but should have at least indicated to Worldwide the possibility that its goods were subject, CBP said.

What is covered by the “finished merchandise” exemption has long been debated between importers and the domestic aluminum extrusions industry. A series of court cases dating back to Commerce’s AD/CV duty order, and still ongoing (see 1901140012), have attempted to tackle the issue. Worldwide requested a Commerce scope ruling on whether its door thresholds qualified for the exemption in August 2017.

But Worldwide says it asked CBP for guidance even before that. “Prior to requesting the scope ruling, Worldwide Door sought guidance from CBP regarding how it should declare this merchandise at the time of entry,” said Worldwide’s lawyer John Foote of Baker McKenzie. The importer “presented CBP with detailed information about its products,” he said. “That information was examined by multiple CBP senior and supervisory import specialists at different [Centers of Excellence and Expertise]. Upon review, CBP instructed Worldwide Door, in writing, that the door threshold assemblies should be entered via Type 01 entries, as CBP believed the merchandise was not subject to the orders,” Foote said.

“CBP has now determined that during the period of time when Worldwide Door was following the written guidance it received from CBP, and while the Company's scope ruling request was pending with the Department of Commerce, Worldwide Door was ‘evading’ antidumping duties,” Foote said. “Worldwide Door respectfully, but forcefully, disagrees with this conclusion.”

Commerce would eventually find Worldwide’s door thresholds -- and all door thresholds -- do not qualify for the exemption and are subject to aluminum extrusions duties (see 1901150033), but not until well after the period covered by CBP’s EAPA investigation. In the ruling, Commerce found the scope’s coverage of the door thresholds so unambiguous that it told CBP to “continue to suspend liquidation” of entries even before Worldwide’s scope request was filed.

Though Worldwide takes issue with CBP’s finding that it was evading duties even though it hadn’t yet heard from Commerce, it’s that lack of ambiguity based on the mention of door thresholds in the scope -- and the potential for importers to abuse the scope process -- that justified CBP’s decision not to wait, according to Robert DeFrancesco of Wiley Rein, who represents Endura, the domestic manufacturer that requested the EAPA investigation.

“CBP’s recent decision confirms what the courts have made clear -- importers cannot feign ignorance and avoid paying antidumping/countervailing duties on products that are clearly subject to duties,” DeFrancesco said. “This is the precise type of activity that the EAPA statute was intended to cover. Importers cannot escape liability for duty evasion by making faulty claims that they did not need to pay duties on products until a scope determination specific to their products was issued, particularly when the decision confirms that such products have always been covered by the scope of such orders since the beginning.”

Email ITTNews@warren-news.com for a copy of the EAPA final determination.