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CBP Concludes Three More Importers Evaded Steel Wheel Duties

Lionshead Specialty Tire and Wheel, TexTrail and TRAILSTAR evaded antidumping and countervailing duty orders on imported steel trailer wheels from China, CBP concluded in the results of a recently released Enforce and Protect Act (EAPA) investigation. CBP found that the three importers had entered steel wheels using false statements that they didn't contain covered merchandise even though the importers contended that they believed the wheels were out of scope.

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The long-running investigation began in 2020 with an allegation by Dexstar Wheel. CBP announced the investigation and imposed interim measures in July 2020 when the agency found reasonable suspicion of evasion by transshipment through Thailand.

The case was paused while CBP made a covered merchandise referral to Commerce. The agency already was considering a scope ruling request from Thai supplier Asia Wheel, and it combined the inquiries. Commerce found that the scope language was ambiguous and found it necessary to apply a substantial transformation analysis.

In June, Commerce finally concluded that referral and Asia Wheel's earlier scope request, finding that the wheels manufactured in Thailand using discs and rims produced in Thailand from steel plates from China or a third country weren't subject to the orders but that wheels made using both discs from China and rims made in Thailand were within the scope of the orders along with dual wheels made with both discs produced in Thailand from Chinese disc blanks and rims from China.

All three importers and Asia Wheel have since appealed the ruling to the Court of International Trade (see 2308110057).

The importers have long contended that the production methods used made their imports outside the scope of the orders and argued that CBP must identify a material and false statement or act, or a material omission, to determine that evasion occurred under EAPA. CBP said that the plain statutory language of EAPA does not require it to analyze whether the importers acted with intent when making false statements, only that they falsely claimed that the imported wheels did not contain covered merchandise.

The importers admitted that they imported from Asia Wheel and acknowledged the inclusion of Chinese wheel parts in the steel wheels, though argued that the items were Thai-origin. CBP found arguments that Asia Wheel had the requisite production capacity to produce the wheels irrelevant because Commerce's scope analysis found that processing performed in Thailand didn't change the country of origin of the products and the steel wheels remained Chinese-origin and subject to the orders.

The importers argued that a recent CBP ruling that the country where steel is manufactured into wheel rims conferred origin, not the country of origin of the steel. CBP disagreed, saying that the citation is inappropriate as the ruling referred only to preferential duty treatment under NAFTA and "relates in no way to the issue of whether merchandise is subject to the Orders."

"Trailstar disagrees with CBP’s EAPA finding of duty evasion," said Jordan Kahn of Grunfeld Desiderio Lebowitz on behalf of Trailstar. "Trailstar has at all times understood that the trailer wheels it was purchasing from Asia Wheel were made in Thailand and would not be subject to the AD/CVD order on steel trailer wheels from China. The DOC’s scope interpretation is erroneous and Trailstar intends to pursue all available avenues to negate the EAPA findings and contest the retroactive AD/CVD assessments."

Neither Lionshead, TexTrail nor Dexstar responded to our requests for comment.

CBP recently found evasion in a similar case involving Vanguard National Trailer Corporation. That case was similarly delayed by the same scope ruling request and covered merchandise referrals (see 2308230017).