Canadian Importer Evaded AD/CVD Duties on Silica Fabric From China, CBP Finds
CBP found importer Acmetex evaded antidumping and countervailing duty orders on imported silica fabric from China, according to the results of an Enforce and Protect Act investigation released Jan. 3. CBP used adverse inferences after Acmetex stopped cooperating with the investigation and found that the company likely misrepresented the country of origin and misclassified the silica fabric as "glass cloth fiber" in addition to transshipping covered silica fabric through Canada to the U.S. In the same investigation, CBP found insufficient evidence that a second importer, New Fire, evaded the AD/CVD orders.
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The investigation stemmed from an October 2021 allegation filed by Auburn Manufacturing Inc. (AMI), a domestic producer of silica fabric. In its allegation, AMI claimed that New Fire, a Chinese exporter, had been mislabeling silica fabric as fiberglass fabric and had been supplying Acmetex "for many years." In a series of conversations, representatives from New Fire led AMI to believe that New Fire was advocating schemes to evade the AD/CVD orders by transshipping through Canada. Based on those conversations, AMI then alleged that Acmetex was involved in the evasion scheme by misclassifying and/or transshipping covered silica fabric through Canada.
AMI said it also was led to believe that Acmetex and New Fire were affiliated based on website and address linkages and "identical" photos of company properties. AMI alleged that New Fire's high silica content fabric was the same product as the lower silica content fabric, and that New Fire changed the specification sheets to essentially create a false product for classification purposes.
CBP began its investigation of the allegations in December 2021. Acmetex said that it incorrectly declared one entry with Canada as the country of origin. The company did not provide information regarding its manufacturers' processes, production or financial transaction information, and said that it purchased the finished fabrics from the manufacturer "as is."
CBP found that AMI's allegation reasonably suggested Acmetex and New Fire may have evaded AD/CVD duties but there was insufficient evidence for a reasonable suspicion of evasion when the notice of investigation was announced in March 2022. Therefore, CBP did not impose interim measures at the time. CBP conducted a cargo examination of a New Fire entry in April 2022 to conduct laboratory analysis and found that the samples were not subject to the orders. In its responses to CBP, New Fire said that silica fabric with over 90% silica content is "not allowed to be exported to the U.S." because of the AD/CVD orders.
Acmetex filed a notice of withdrawal in May 2022, saying that it would no longer participate in the investigation and did not respond to further information requests. CBP then contacted New Fire regarding Acmetex purchase orders that identified New Fire as the exporter. New Fire said the original invoices had been "manipulated" with altered product descriptions and unit prices. CBP concluded that Acmetex tampered with invoices provided by New Fire.
CBP concluded that record evidence did not show New Fire entered covered merchandise through evasion -- New Fire only produced and sold covered merchandise to non-U.S. markets during the period of investigation -- and that the company fully cooperated with the investigation. Therefore, the agency said it will reverse any actions taken regarding New Fire's entries covered by the EAPA investigation.
"We are pleased that CBP issued the right decision in this case," said Brittney Powell, lawyer for New Fire. "The company's personnel worked tirelessly to gather the voluminous information requested by CBP, and ultimately vindicate New Fire of the allegations of evasion."
In Acmetex's case, CBP found that despite its initial cooperation with the investigation, the company's May 2022 withdrawal notice forced CBP to apply adverse inferences. "Given Acmetex's failure to participate in the investigation," CBP said it relied on information provided in the allegation that Acmetex misclassified covered silica fabric as "glass cloth fiber" and transshipped covered silica fabric through Canada. Even though there was insufficient evidence to identify the origin of the silica fabric imported by Acmetex, the company's recorded misrepresentation of product origin in at least one instance was enough for CBP to find evidence of evasion.
Given its finding of evasion, CBP will suspend the liquidation of each unliquidated entry that entered on or after Dec. 22, 2021, and will suspend the entries subject to this investigation until instructed to liquidate these entries, extend the period for liquidating each unliquidated entry of such covered merchandise that entered before Dec. 22, 2021, and will rate adjust and change those entries to type 03 and continue suspension until instructed to liquidate these entries. CBP may also take additional measures, including requiring a single transaction bond or additional security or the posting of a cash deposit. Finally, CBP will require live entry, and will reject any entry summaries that do not comply with live entry procedure. CBP also will evaluate Acmetex’s continuous bonds to determine their sufficiency.
When asked for comment, Acmetex President Bill Huang said that the finding is "not true" and that the company originally worked with a lawyer to fight back but withdrew when it could not afford legal fees. Huang said that the company "didn’t import even a piece of the Chinese silica fabric after the Chinese anti-dumping case finalized."