CBP Finds Evasion in Forged Steel Fittings EAPA Investigation

An importer of forged steel fittings told CBP it was never aware its Chinese supplier was participating in a scheme to transship forged steel fittings, covered by antidumping and countervailing duty orders, from China through Sri Lanka, yet CBP concluded its Enforce and Protect Act (EAPA) investigation with the determination that the importer, YVC USA, had evaded the duties, according to a recently posted notice.

YVC claimed it had no knowledge of the evasion because its Chinese supplier allegedly used the company’s importer of record number to file the entries at issue claiming Sri Lankan origin. CBP found that because EAPA is a strict liability statute, the importer's state of mind was not relevant to the determination of evasion. "Although YVC claimed that all materially false statements about these entries were made by the Chinese Supplier, this does not change the fact that YVC acted as the importer of record for these entries without making any effort to ensure that the correct country of origin was declared and that applicable AD/CVD were paid," CBP said.

The finding followed a yearlong investigation that began with a Sept. 6, 2022, filing by Flatlands Holdings, which alleged that two exporters in Sri Lanka, Mass Steel and EFL Global Freeport, imported forged steel fittings into Sri Lanka from China before exporting them to the U.S. Data in the filing showed that for some shipments made by Chinese company Kingtrans Container Line, the volume, product description and Harmonized Tariff Schedule numbers of merchandise listed EFL as the shipper and YVC as the consignee. According to the allegation, Kingtrans openly advertised sending Chinese-made products to South Asia and Southeast Asia for transshipment to the U.S., with older versions of its website listing Sri Lanka and Malaysia.

In YVC's initial questionnaire responses, CBP said, the company omitted information pertaining to Mass Steel's management and manufacturing capabilities or processes. This contributed to a reasonable suspicion that Mass Steel may not have produced the forged steel fittings imported by YVC in at least three entries. Using that information, CBP announced the investigation and interim measures in January (see 2301250018).

CBP issued information requests to both YVC and Mass Steel, and YVC "stated explicitly that it purchased [forged steel fittings] from China" in its questionnaire response, while Mass Steel did not respond, the agency said. YVC did not dispute that evasion occurred and "provided extensive evidence of evasion," CBP said.

YVC said it never required factory profiles or verified production capabilities of Mass Steel, and it had no training, policies or procedures to prevent transshipment of covered merchandise without the payment of applicable AD/CVD. The importer told CBP that it was never aware that Sri Lanka was the declared country of origin for its entries and that its Chinese supplier provided all the declaration information and documents to YVC's customs broker.

The importer contested one entry that it said was outside the scope of the order. CBP agreed and discounted that entry in its final determination.

CBP said it will suspend or continue to suspend liquidation for all entries imported by YVC that are subject to the investigation and continue suspension until instructed to liquidate these entries. For entries previously extended by the interim measures, CBP will rate-adjust and change those entries to type 03 and continue suspension. CBP said that it also will evaluate YVC's continuous bonds and may require single transaction bonds, as appropriate.