Your Imported Aluminum Parts May Be Subject to Over 400% Duty

Due to the breadth of the antidumping (AD) and countervailing (CVD) duty orders on aluminum extrusions from China, many importers, although they initially imported their aluminum parts without AD and CVD cash deposits, are finding that their aluminum parts are being subjected to AD and CVD cash deposits of over 400 percent.  As explained below, importers have the opportunity this month to initiate a strategy to reduce their liability for these potential crippling duties.  

Background

In May 2011, the Department of Commerce (DOC) and the International Trade Commission finished their AD and CVD investigation of imports of aluminum extrusions from China.  As a result of the investigations, DOC required almost all importers of aluminum extrusions to post: (1) AD cash deposits of approximately 33 percent, and (2) CVD cash deposits of 374 percent.

Scope of the Orders

Since that time, many importers have submitted scope determinations to see whether their products are included within the scope of the AD and CVD cases.  The reason is that the scope of the case is quite broad and covers many goods that importers did not believe were covered.  Essentially, any part that was made from an aluminum extrusion in China is covered unless it is subject to one of the exclusions.

Finished Goods and Kits Exclusions

Many companies believe that their products were exempt based on the “finished merchandise” and ”finished kit” exclusions.  However, DOC has interpreted these exclusions very narrowly and almost all products that they have examined have been determined by DOC to be within the scope.

• Although many products may be sold to retailers as finished parts, DOC has found that if they are incorporated into some larger product, then they do not qualify for the finished merchandise exclusion.  For example, DOC found that, although an importer may sell fence posts as a stand-alone product, the fact that they are used to produce a fencing system means that they are not finished merchandise.  
• In addition, DOC has taken a very stringent view of what constitutes a finished goods kit.  For example, although drapery rail kits are sold independently to retailers, DOC found that they are not finished goods kits because they did not include draperies.

Customs Investigations

Many companies have entered aluminum parts without AD or CVD cash deposits because
they did not realize they were included within the scope.  Customs knows this and is aggressively investigating whether importers’ products are included in the scope of the AD and CVD orders.  We know of several on-going investigations.  Therefore, it is prudent for companies that import products containing aluminum to use due diligence to determine whether their parts are included with the scope of the AD and CVD orders.

Reducing Your Liability

400 percent AD and CVD duties are significant by any measure.  If you determine that your products are covered by the scope of the AD and CVD orders, you can reduce your liability by having your Chinese supplier participate in the upcoming administrative reviews.  Almost all of the companies will have to supply very little information.  Therefore, the burden, along with the legal fees to participate, is not high.  However, the deadline for participating is the end of May 2012.