Customs Seeks Voluntary Remand to Address Evasion Finding

Aug. 20, 2022
By: Ashley J. Bodden

Importers have started to become more familiar with the Enforce and Protect Act (EAPA), often to their sorrow. This is the law that Customs uses to investigate whether importers have evaded payment of antidumping or countervailing duties. One of the criticisms of the law has been that importers generally do not know they subject to an EAPA investigation until Customs already has substantial evidence of evasion (defined as the failure to pay applicable duties). Because of this there have been very few successful challenges to evasion findings.

However, earlier this month, the U.S. Court of International Trade (CIT) granted a joint motion for entry of judgement in the case Global Aluminum Distributor LLC, et. al v. United States following a voluntary remand to U.S. Customs and Border Protection (“Customs”) for reconsideration of its evasion determination. Customs is allowed to make determination of evasion under 19 C.F.R. § 165.6(a), if an alleger, importer or foreign producer or exporter of the covered merchandise “fails to cooperate and comply to the best of its ability with a request for information made by Customs.” This was the basis for the original Customs determination. However, after a review of the evidence on record in the context of litigation, Customs sought the opportunity to revisit its decision.

During the investigation, Customs determined that there were significant discrepancies with the foreign producer Kingtom Aluminum Supply, Inc.’s responses to Customs’ requests for information, and that Kingtom did not cooperate with Customs’ requests to the best of its ability. As a result, Customs relied on an adverse inference to find that there was substantial evidence demonstrating that Chinese aluminum extrusions were being transshipped to the United States through the Dominican Republic. This alleged transshipment avoided the payment of duties and allegedly benefitted importers Global Aluminum and Hialeah by allowing them to pay lower prices without paying hefty duties on Chinese extrusions. Global Aluminum and Hialeah successfully challenged this conclusion.

First, the companies pointed out that the alleged discrepancies all had reasonable explanations that the companies were able to show with record evidence. Second, the companies were able to demonstrate that all requests for information had been fully responded to by the companies. Third, the companies noted that no alleged discrepancies were the subject of any supplemental questioning prior to the evasion determination.

Taken together these factors made the application of an adverse inference and conclusion of evasion unsupported by the record. Customs further noted that based on the administrative record, it could not deduce whether an earlier affidavit from the Alleger’s (i.e. the company that complained of evasion) expert even existed. Furthermore, the affidavit Customs did have access to did not demonstrate deep knowledge of Kingtom’s operations. Thus, Customs requested a very rare voluntary remand in an EAPA case.

If you have any questions or would like more information about the antidumping or countervailing duties, do not hesitate to contact any attorney at Barnes, Richardson & Colburn, LLP.