CBP Finds Evidence That Importer Evaded Order on Aluminum Extrusions From China

CBP issued its EAPA Initiation of Investigation in May 2023 after the Aluminum Extrusions Fair Trade Committee (AEFTC) filed an EAPA allegation against MMC, saying that from January 2021 to March 2022 it was shipping Chinese-origin extruded aluminum automotive parts to Mexico, repackaging the parts in Mexico, and importing them to the U.S. on behalf of a U.S. affiliate. AEFTC said that the parts were listed with Mexico as the country of origin, which was incorrect.

AEFTC said that while MMC had the capability to manufacture millions of extruded aluminum parts each year, MMC's production capacity in Mexico is "insufficient" to fulfill the contractual obligations it agreed to.

MMC acknowledged that it made a mistake in not declaring some merchandise as subject to the AD/CVD orders and that they have given "'corrective instructions'" to make sure that future shipments will be made with the duties paid. The amount of goods that were of Chinese-origin were very small and MMC manufactured the rest of the goods, the company said. MMC said that it would pay the duties in the future and asked for CBP to confirm the evasion and take no additional measures.

AEFTC countered by saying MMC admitted to the evasion, and said that its request for leniency should be denied. The committee also said that it provided evidence that MMC only had two aluminum presses which would not be enough capacity to make the aluminum extrusions required by the contract. The committee also said that MMC's evasion "'scheme'" is much more extensive than MMC admitted.

AEFTC said that the MMC annual contractual obligations to North American automotive manufacturing facilities is 10.3 million parts per year, of which 6.52 million are for U.S. automotive plants and 3.75 million are for their Mexican auto plants. Even if the entire 3.75 million parts per year supplied to Mexican plants are supplied by Chinese production, MMC does not have "sufficient production capacity in Mexico" to account for the 6.52 million parts per year supplied to U.S. plants, AEFTC said. While the nameplate capacity of MMC has been estimated at well in excess of 6.52 million parts per year, its actual production capabilities are only between 5 and 6 million parts per year, MMC said.

CBP found substantial evidence that the aluminum extrusions were imported through evasion. CBP said that it did not identify additional examples of evasion beyond what MMC identified in its response to CBP's request for information and AEFTC's allegation of additional evasion by MMC is not supported by the evidence. The claim that MMC had only two aluminum presses was unfounded as CBP found more during the time of verification, the agency said.

And just because the contract was won by MMC does not mean all the quantity in the contract needed to be "supplied by the seller," CBP said. AEFTC also assumes that MMC acted as the importer for all entries and CBP didn't find evidence to support that.

Regardless, evidence of evasion is not based on the number of entries or volume of merchandise, CBP said. Since MMC evaded the orders and there is a risk it could evade the orders again, further measures are warranted, the agency said.

CBP will suspend or "continue to suspend" the liquidation of all entries that are subject to this EAPA case from MMC, CBP said. For the entries CBP extended for its interim measures, the agency will "rate adjust" and change those entries to type 03 and will continue suspension of liquidation until instructed otherwise, CBP said. The agency also will evaluate MMC's continuous bond and may require single transaction bonds "as appropriate." This doesn't stop CBP or other agencies from taking "additional enforcement actions," CBP said.

MMC didn't respond to our request for comment.