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Evasion of AD Duties on Sawblades Under Investigation by CBP

Thursday, September 28, 2017
Sandler, Travis & Rosenberg Trade Report

U.S. Customs and Border Protection has taken interim measures to prevent evasion of the antidumping duty order on diamond sawblades from China.

On July 18, 2017, CBP initiated two investigations (which have since been consolidated into one because one of the companies is alleged to be the successor to the other) to examine allegations from a coalition of U.S. sawblade producers that this order is being evaded. The coalition argued that when the AD cash deposit rate the first importer was paying increased from 2.34 percent to 29.76 percent it stopped classifying its diamond sawblades as such and began classifying them as millstone products or segments. The coalition provided evidence that the importer did not increase its sales prices to reflect this increase and that the per unit weights of its shipments did not change despite the change in product description. The coalition further claimed that the importer’s relationship with its Chinese supplier evidenced evasion (although details were redacted from CBP’s notice) and that the second importer is the successor to the first because it is importing the same goods from the same Chinese manufacturer and has the same physical address.

CBP conducted a cargo exam of an entry by the second importer and found undeclared diamond sawblades from China that were falsely classified. This entry “establishes the pattern of evasion” alleged by the coalition, CBP states, and along with the information in the allegations establishes a reasonable suspicion of evasion.  

As a result, CBP is imposing the following interim measures.

- rate adjusting unliquidated entries of subject goods that had been entered as not subject to the AD duty order and requiring AD cash deposits

- requiring live entry for all future imports by the two importers

- suspending liquidation of any entry entered on or after July 18

- extending the liquidation period for all unliquidated entries entered before that date.

CBP will also be evaluating the importers’ continuous bonds and will require single transaction bonds as appropriate.

The Enforce and Protect Act, part of the Trade Facilitation and Trade Enforcement Act, gave CBP a significantly expanded role in investigating AD/CV duty evasion and the authorities to match. Under CBP regulations implementing the EAPA any interested party, including competing importers and federal government agencies, may submit allegations that AD/CV duties are being evaded; e.g., through misrepresentation of the goods’ true country of origin, false or incorrect shipping and entry documentation, or misreporting of the goods’ physical characteristics.

CBP has broad authority to conduct investigations of these claims and can impose initial remedial measures that could interrupt a supply chain in as little as 90 days. Any final determination of evasion may be met with not only AD/CV duties but also other enforcement measures such as civil or criminal investigations.

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