For Importers, Ignorance is not Bliss

Aug. 24, 2023
By: Pietro N. Bianchi

In a recent Enforce and Protect Act (EAPA) investigation, CBP determined that YVC USA, Inc. (“YVC”) evaded antidumping duties (“AD”) and countervailing duties (“CVD”) on imports of forged steel fittings from China. The CBP findings indicate that YVC purchased the goods from a Chinese supplier. YVC gave the Chinese supplier its importer of record number so that the Chinese supplier could file the entry documents. The Chinese supplier transshipped the Chinese-origin goods through Sri Lanka, asserted that they were manufactured by a Sri Lankan manufacturer, and claimed the goods were of Sri Lankan origin on entry documentation. CBP determined that YVC, not the Chinese supplier, was responsible for the transshipment scheme because it was the importer of record.

In its defense, YVC claimed it had no knowledge of the evasion because its Chinese supplier filed the entries and asserted it was not even aware that Sri Lanka was being claimed as the country of origin for its imported goods. CBP’s position was that “EAPA is a strict liability statute and as such, the state of mind of the importer is not relevant to the determination of evasion.” Since YVC was the importer of record, it was responsible for the evasion.

YVC’s integrity was further damaged by the fact that the website of a Chinese logistics company involved in the transshipment scheme marketed transshipping Chinese-origin goods through South Asia and Southeast Asia. The website specifically listed Sri Lanka as a point of transshipment. CBP stated that YVC “acknowledged” that it did not require a factory profile, verify production capabilities, or have any training, policies, or procedures to ensure compliance with import obligations or prevention of transshipment during the EAPA investigation.

CBP’s statement indicates what measures it believes importers should be taking to ensure compliance. The message from the determination is clear: the importer of record has the burden of ensuring that imports comply with CBP statutory and regulatory obligations. Ignorance is no defense. Diligent importers should consider mapping out supply chains, reviewing importation documents, and creating customs compliance procedures as ordinary business tasks.

If you have questions about importer liability or supply chain due diligence do not hesitate to contact an attorney at Barnes Richardson, & Colburn LLP.