EAPA Investigation Finds Duty Evasion by Xanthan Gum Imports
Colony Gums and Marine Hydrocolloids evaded an antidumping duty order on xanthan gum from China, CBP said in the final determination of an Enforce and Protect Act investigation. The agency said it found substantial evidence that the importers had transshipped Chinese-origin xanthan gum through India, necessitating the imposition of interim measures.
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The Dec. 4 announcement concluded an EAPA investigation that began on May 15, initiated by an allegation from CP Kelco filed in October 2022 accusing the importer of evading the AD order on xanthan gum from China, the agency said. CBP then began its investigation of the conduct on Feb. 6. CP Kelco has previously filed complaints about other importers evading the AD order on xanthan gum, leading to earlier EAPA investigations (see 2309290006 and 2311150038).
CBP found that the allegation reasonably suggested evasion by Colony Gums and issued questionnaires to both importers. CBP said the information could have enabled it to verify factory capabilities, production processes and country of origin, and to confirm the identity of the manufacturers of the imported merchandise.
In the investigation, Colony Gums initially identified Marine Hydrocolloids as its manufacturer, seller and shipper. Colony Gums told CBP that it didn't complete on-site verification of Marine Hydrocolloids. CBP said that there was "no apparent evidence" that Marine Hydrocolloids manufactures or produces xanthan gum. Marine Hydrocolloids provided a flowchart of its equipment, none of which was capable of fermenting Xanthomonas campestris, meaning the company couldn't produce xanthan gum.
CBP found substantial evidence that Marine Hyrdocolloids imported "commercial grade" xanthan gum and than processed it into a "food-grade" form of xanthan gum. Marine Hydrocolloids doesn't "actually produce the xanthan gum itself by conducting the necessary chemical reactions and fermentation process," the agency said.
In response to CBP's request for information, Marine Hydrocolloids said that it sourced commercial grade xanthan gun from three Chinese factories.
Colony Gums didn't declare the merchandise was covered by the order on entry, so the "requisite cash deposits" were not collected at the beginning of the investigation. CBP is suspending or will continue to suspend entries covered by the investigation, "until instructed to liquidate," the agency said. For entries previously extended in "accordance with Interim Measures, CBP will rate adjust and change those entries to type 03 and continue suspension until instructed to liquidate these entries," the agency said. CBP said they may also look at Colony Gums' bonds "in accordance with CBP’s policies."
CBP said that this doesn't stop other agencies from "pursuing additional enforcement actions or penalties." Colony Gums and Marine Hydrocolloids didn't respond to our request for comment.