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CBP Finds Steel Flange Importers Used Transshipment to Evade AD/CV Duty Orders

Two importers evaded antidumping and countervailing duties on stainless steel flanges from China, CBP said in a recent final determination from an Enforce and Protect Act proceeding that the agency hasn't posted yet. The final determination, dated Oct. 9, is a result of an investigation initiated by CBP last year (see 1812100009) into possible evasion of AD order A-570-064 and CVD order C-570-065. Core Pipe Products, which is represented by Wiley Rein lawyer Daniel Pickard, filed the allegation that set off the proceeding.

CBP conducted a site visit in the Philippines to verify information provided as part of the investigation, the agency said. After reviewing the foreign supplier's "departmental procedures" and testimony from staff, "CBP was able to identify instances where imported quantities of Chinese stainless steel flanges were repackaged, and exported to the United States as goods produced in the Philippines," it said. "Both Prime Stainless and H & H Machine entered Chinese forged flanges into the United States as non-subject Philippines products through ENC, their foreign supplier," CBP said.

Although Prime and H & H argued that ENC was able to demonstrate production capability, "the verification report noted ENC could not produce sufficient quantities to fill the orders of the importers in this case," the agency said. "More generally, at the verification, CBP was not able to trace production from the acquisition of raw materials to finished goods (flanges)."

Both of the importers "acknowledged that some of the fittings they imported from ENC were of Chinese origin" within written arguments, CBP said. After the investigation started, "ENC filed an initial prior disclosure (PD), acknowledging that it, as an United States importer, had entered Chinese-origin flanges without identifying them as subject to the AD and CVD orders on stainless steel flanges from China" and "listed entries that ENC had exported to other importers."

While Prime said it filed a perfected PD, CBP said it hadn't. "Also, H & H claimed that ENC’s PD would have covered its entries, however, ENC’s PD was never perfected during this investigation." There's "substantial evidence" that demonstrates the importers "entered covered merchandise by means of false statements or omissions," the agency said. As a result, CBP "will continue to suspend the liquidation for any entry imported by Prime Stainless or H & H, assembled, shipped or otherwise processed by ENC, that has entered on or after August 30, 2018, the date of initiation," it said. CBP will also continue to require live entry for future entries from the importers.

CBP's finding "reinforces to importers the importance of exercising caution in doing business with foreign suppliers involving the importation, directly or indirectly, of Chinese or Indian stainless steel flanges," Pickard said in an emailed statement. An appeal of the decision appears likely. "It was a complex case and we are not happy with the results," said Paula Connelly, a lawyer at Sandler Travis who represents H & H. "We believe there are issues that should be reviewed on appeal." Prime's lawyer, Sydney Mintzer of Mayer Brown, didn't comment.

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