CBP Issues New Regulations on AD/CVD Evasion Investigations

U.S. Customs and Border Protection (“CBP”) has published “interim” regulations detailing a new framework and legal procedures for investigating potential evasion of antidumping (“AD”) and countervailing duty (“CVD”) liability. 

A process has now been put in place that allows domestic manufacturers or competitors to file allegations of AD/CVD evasion and participate in the investigation thereof. The new framework provides for strict time deadlines that will require immediate and comprehensive responses from the targeted importers. These interim regulations are effective immediately. Interested parties have 60 days to file comments, which CBP will review before it issues final regulations.

The new regulations have a dramatic impact on CBP’s oversight of entries potentially subject to AD/CVD and the manner in which importers will need to respond to allegations that they have not paid the correct amount of AD/CVD upon entry.  Critical provisions of these new regulations are summarized below:

• Domestic interested parties (e.g., domestic manufacturers and trade unions) who allege that importers are evading payment of AD/CVD have the right to participate directly in CBP evasion proceedings.  Importers also have the right to allege that their competitors are guilty of evasion and to participate in enforcement proceedings targeting their competitors.
• CBP is now required to investigate allegations that reasonably suggest evasion is taking place.
• CBP is required to render decisions within strict timelines and is authorized to draw adverse inferences for failure to cooperate during the investigation.  Thus, an importer who fails to respond to a CBP request for information in a timely and complete manner will be deemed non-cooperative, which can result in an affirmative finding of evasion.
• In determining whether evasion is taking place, CBP will not consider whether an importer acted with reasonable care in filing its entry documents.  An importer who did not deposit the “correct” amount of AD/CVD, as determined by CBP, will be guilty of evasion.
• Parties to an evasion investigation have the right to challenge CBP’s determinations both administratively to Customs Headquarters and in the Court of International Trade (“CIT”); however, all reviews are limited to the information generated during CBP’s investigation and any other information that CBP specifically requests during the review process.  Thus, parties to the investigation must create a complete factual record in order to effectively challenge CBP’s determinations during subsequent administrative or judicial proceedings.  Importers will not be accorded a second chance to submit information on appeal to Customs Headquarters or to the CIT.
• CBP will commence evasion investigations, and grant “provisional” relief to the petitioning party, if it determines that there is a “reasonable suspicion” evasion is taking place.  Based on a finding of a “reasonable suspicion” CBP can suspend liquidation of covered merchandise entered after the investigation began, extend the liquidation period of previously-entered unliquidated entries, and require single entry bonds, additional security or even cash deposits.  CBP is authorized to take these interim measure before notifying the alleged evader that an investigation has been initiated.
• CBP can initiate additional enforcement actions (e.g., commencing a penalty investigation under 19 U.S.C. §1592 which could result in AD/CVD liability, plus potential penalties, for entries during the last five years) in addition to an affirmative finding of evasion.  It is unclear from the new regulations whether an importer will be entitled to file a prior disclosure after CBP has initiated an evasion inquiry.

In light of these new regulations, it is essential that importers with potential AD/CVD concerns take all necessary precautions to ensure compliance with applicable AD/CVD Orders.  As noted above, importers subjected to evasion proceedings will need to take immediate action to fully comply with CBP requests for information, and will not be accorded a second chance. Importers should review the new regulations carefully in order to fully understand the procedures and deadlines involved if an evasion investigation is commenced.  Upon request, GDLSK will provide a more detailed analysis of these regulations.

Compliments of Grundfeld, Desiderio, Lebowitz,  Silverman & Klestadt – a member of the EACCNY