Intent Not Needed to Establish ADD/CVD Evasion, CBP Tells Trade Court

CBP doesn't need to establish intent to defraud the U.S. in order to find an importer evaded antidumping and countervailing duties under the Enforce and Protect Act statute, CBP told the Court of International Trade in its Jan. 27 remand results. Continuing to find that Diamond Tools Technology (DTT) evaded the ADD/CVD order on diamond sawblades from China, CBP said that it only needs to show that DTT submitted false statements to prove evasion. This is in line with the purpose of the law, CBP said, since the purpose is to merely collect AD/CV duties owed to the U.S. (Diamond Tools Technology v. U.S., CIT #20-00060)

The EAPA determination was based on allegations from Diamond Sawblades Manufacturers' Coalition that DTT was transshipping diamond sawblades from China through Thailand. DTT challenged CBP's evasion finding at CIT, arguing CBP violated its due process rights in the investigation and that no "material and false statement" was made.

CIT said that no due process violations were found but that the case ultimately needed a remand since no material or false statement was made (see 2111050040). In the EAPA inquiry, CBP used the results of a separate circumvention inquiry to find that DTT's entries were covered merchandise -- a position the court found to be a novel one in EAPA cases. The judge further found CBP's position unclear as to whether DTT's failure to distinguish the country of origin of the sawblades' cores and segments joined in Thailand constitutes a material and false statement. In the case, CBP relied on a scope ruling from the Commerce Department that said that DTT's sawblades made using Chinese cores and segments -- and assembled in Thailand -- were subject to the order but that the sawblades using Thai cores and segments were not.

In its remand results, CBP said that intent to defraud the U.S. does not matter when finding if an importer evaded ADD/CVD orders. "To the contrary, the statute indicates that if other elements are met, false statements or omissions will subject an importer to a finding of evasion without regard to whether the importer had any intent," the brief said. If Congress had intended to require that intent be established, it would have mandated it, CBP argued.

If the opposite were true, importers could argue that, if CBP couldn't determine whether merchandise is subject to an ADD or CVD order, they should not be expected to have known the merchandise was covered at the time of importation and are thus excluded from any evasion penalty. "To the contrary, the statute requires that CBP stay the deadlines in the EAPA investigation while Commerce determines whether merchandise is in scope, which implies that if Commerce finds that merchandise is covered, CBP will continue the EAPA investigation and may find evasion," CBP said.

CBP further suggests, as it did in litigation before the court's opinion, that DTT should have requested a scope ruling to ensure it wasn't evading the orders. Instead, DTT employed a "blind reliance" on a Commerce Issues and Decision Memorandum from 2006, which essentially found that its diamond sawblades were non-subject merchandise.

"DTT could have and should have requested a scope ruling and ensured that its statements to CBP on entry documentation, that it was importing non-subject merchandise, were correct," the brief said. "DTT could have also engaged CBP and requested clarification. DTT cannot now be rewarded for its failure to exercise due diligence required by statute from any importer. Such result would create perverse incentive for importers, who would be encouraged to delay seeking clarification from Commerce and CBP with hopes that they would only be liable for duties prospectively and after they have been caught, giving such importers ample time to invent a different scheme to avoid payment of duties."