Hot topics in international trade – February 2022: I have just found out that my imported goods are subject to anti-dumping duties – what should I do? | Braumiller Law Group, PLLC
Dumping is “the sale or probable sale of goods at less than fair value”, and the purpose of anti-dumping laws is to provide a remedy against unfairly traded imports that cause injury to a domestic industry. Countervailing duties are duties levied on an imported good to offset subsidies to producers or exporters of that good in the exporting country. The remedy for both is in the form of additional duties levied on products deemed unfairly traded or unfairly subsidized to “level the playing field”.
Under CBP’s “due diligence” standard, importers must exercise due diligence and understand the full range of regulatory requirements that may apply to their goods when importing. However, in many cases, importers may not be aware that their products are subject to anti-dumping and countervailing duties for various reasons. Unsophisticated importers, with little or no customs compliance processes and procedures, are often unaware that anti-dumping and countervailing duties exist, let alone that they apply to their products.
A very common scenario involves a Recorded Importer receiving a notice from CBP such as a Customs Information Request Form 28 or Notice of Rejection of Entry and requesting to re-file an AD/CVD entry with payment. of AD/CVD functions. This may be the first step in a process that may turn out to have lasting consequences. AD/CVD duties can be very high, in some cases exceeding 400% of the value of the shipment. Also, in many cases, importers may have previous shipments of the same product or similar products imported without knowing that AD/CVD may apply. Under the U.S. Customs Section 592 Penalties Act, CBP can go back up to five years (the applicable statute of limitations) to collect unpaid AD/CVDs, as well as impose significant penalties. The resulting liability here can be more than enough to put a small business out of business.
In these cases, it is very important that the importer seek a qualified attorney to navigate the situation. As a general rule, as a first step, the importer will have to carefully examine the claim that the imported products are subject to anti-dumping and countervailing duties and either verify that the products are “within the scope” of the order specific anti-dumping or countervailing action, or determine if there are arguments that the products are not covered, and AD/CVD does not apply. In most cases, once CBP has determined that the AD/CVD applies to a product, rebuttal arguments, no matter how compelling, will not result in the reversal of the determination. Instead, CBP will require that a formal scope ruling be obtained from the Department of Commerce (DOC) to decide the matter. This in itself is a complex undertaking requiring the assistance of an experienced lawyer and can be quite expensive.
Because the scope of many AD/CVD orders is designed broadly, when a product is flagged as being covered by an AD/CVD order, in many cases the above review confirms that the product is “in scope” and that the DA/CVD applies. In this case, a review is necessary to determine whether this is an isolated event or whether there have been prior imports of the same merchandise that would also be subject to anti-dumping or countervailing duties. In cases where the results of the product examination are unclear as to whether the goods are in fact subject to anti-dumping or countervailing duties, it may be helpful to request a scope ruling from the DOC in the purpose of obtaining a decision that the products are out of scope. For some AD/CVD cases, due to the nature of the different products potentially covered or the difficulty in interpreting the scope of orders, there may be hundreds of scope ruling requests related to one only AD/CVD case.
If the importer determines that he has imported products that are in fact covered by anti-dumping and countervailing duties, in most cases it is advisable to submit a voluntary disclosure to CBP. The Customs Section 592 Penalty Act allows importers to voluntarily disclose errors related to previous imports, even if they were reported by CBP in the form of a CF-28 notice or notice. refusal of entry. By law, provided the importer makes full and complete disclosure of all potential errors dating back five years, only unpaid duty must be paid, together with statutory interest from the date of entry, and no penalty will be imposed. It is important to note, however, that all voluntary disclosures are subject to audit by CBP, and all disclosable errors discovered during the five-year retrospective review must be disclosed, even if they are unrelated to the AD/CVD. or remain under CBP investigation and potential. penalties.
In worst-case scenarios involving importers with multiple prior imports involving significant AD/CVD liability, importers may determine that they simply cannot absorb the AD/CVD and remain in business. Short of reorganizing AD/CVD liabilities through bankruptcy (which may end up being the only viable option), CBP allowed companies to enter into payment plans lasting two to three years with rates of modest interests. CBP requires proof of inability to pay by requesting tax returns and audited financial statements for the previous year and requires importers to sign a promissory note.
In cases where an importer does not have the assets to pay its outstanding AD/CVD debts, even under a payment plan, but does not wish to seek bankruptcy protection, pursuant to 19 USC §1617 and 19 CFR §161.5, an importer may submit an offer in compromise to attempt to settle liability. An Offer in Compromise is a request that CBP accept less than the full AD/CVD liability amount in order to resolve the claim when the importer cannot otherwise afford to pay the full amount. The importer must demonstrate that he does not have the means to pay by submitting previous tax declarations, financial statements and bank account statements, and must attach to the request either the total amount of the offer in payment of compromise, or the first payment if he proposes to pay the amount in several installments according to a payment plan. If CBP accepts the offer, the case is closed. In case of refusal, the amount of any payment is returned to the importer.
In conclusion, discovering that current and possibly past imports of goods are subject to anti-dumping and countervailing duties presents a difficult and possibly financially difficult situation for an importer, which can jeopardize the livelihood of the business. It is therefore essential to handle CBP claims carefully and understand all options to ensure the best possible outcome.