CBP determines Evasion in China - Sri Lanka Transshipment Case

CBP published a notice citing U.S. importer YVC's  evasion of Anti-Dumping (AD) and Countervailing Duties (CVD) under the Enforce and Protect Act (EAPA). YVC exploited transshipment routes via third countries, particularly Sri Lanka, to obscure the Chinese origin of Forged Steel Fittings (FSF). Such practices, if proven, are in direct contravention of U.S. trade laws and regulations.

The case hinges on multiple fronts:

1. Advertising by Kingtrans: A Chinese logistics and shipping company, Kingtrans openly publicizes the option of shipping Chinese-made goods to third countries to alter country-of-origin markings, absent any further processing.

2. Transshipment Scheme: YVC is alleged to have imported Chinese-origin FSF from two Sri Lankan companies, Mass Steel Lanka Industries Pvt., Ltd. ("Mass Steel") and EFL Global, Ltd. ("EFL"), obfuscating the origin to evade duties.

3. Inadequate Documentation: YVC failed to offer evidence confirming that the imported FSF originated from any production in Sri Lanka. Customs and Border Protection (CBP) corroborated this lack of evidence by scrutinizing Mass Steel’s public records, which revealed no manufacturing capability but rather only an office setup.

4. Legal Precedent: A judicial precedent exists where the failure to provide clear documentation or labeling to distinguish the country of origin did not equate to material omission or false statement. YVC maintains that they operated under the belief that accurate country of origin and manufacturing details were part of the submitted customs documentation.

5. Admission by YVC: YVC conceded that it imported merchandise from China without paying applicable AD/CVD duties, further complicating its position.

Actions Taken

Pursuant to the affirmative determination of evasion under 19 U.S.C. § 1517(d) and 19 C.F.R. § 165.28, CBP is taking decisive action:

1. Suspension of Liquidation: CBP will suspend or continue to suspend the liquidation for all relevant entries imported by YVC. This will remain in effect until further instruction.

2. Rate Adjustment: CBP will alter the rates for those entries already subjected to interim measures to type 03, continuing their suspension.

3. Continuous Bonds Evaluation: CBP will review YVC's continuous bonds and may require single transaction bonds, consistent with agency policy

   EAPA Case 7782: YVC USA Inc. (Notice of Determination as to Evasion, August 16, 2023)

   EAPA Case 7782: YVC USA Inc. (Notice of Determination as to Evasion, August 16, 2023)