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Customs Issues Rate Advances Significantly Increasing Antidumping Duties

February 16, 2007

During the last several months, U.S. Customs and Border Protection has begun issuing rate advances to the various importers, which have resulted in significant antidumping duty ("AD") increases. These rate advances are due to U.S. Commerce's "clarification" of certain antidumping policies published in 2003. Many importers of antifriction bearings were the recipients of these rate advances.

The Reseller Transactions

On May 6, 2003, Commerce issued a Federal Register notice (68 FR 23954) involving the antidumping rate on reseller transactions. Commerce stated that it would apply the producer's rate during an administrative review if it determined that the producer knew, or should have known, that the merchandise sold to the reseller was destined for exportation to the United States. Commerce indicated that this policy was effective for antidumping administrative reviews commenced in May 2003 or later.

Because administrative reviews involve entries made in the 12 months prior to the request, this policy change could affect bearing entries that were made April 2002 and thereafter. Prior to the May 6, 2003, Federal Register notice, an importer was allowed to deposit AD duties at the producer's rate, providing the reseller did not have its own rate. Thus, under the new policy, if the importer is unable to establish during an administrative review that the bearings were going to be sold to the United States, Customs will use the "all other" antidumping rate, which is generally much higher than the specific rate for a particular producer.

Although this policy change was issued in 2003, due to the lengthy time it takes to complete administrative reviews, particularly on bearings, Customs has in general not issued rate advances until recently. In effect, Customs' rate advances are changing the AD rate from the lower producer's rate to the much higher "all others" AD rate. The bills include the increase in AD duties and compound interest. While this rule applies to all merchandise subject to antidumping duties, it appears that bearing importers are the most affected.

Verification of Basis Of the Correctness And The Timeliness of Bills for Additional Antidumping Duties

If a company has received bills from Customs for additional AD duties, companies should review the reason for the additional duties and verify that the bills were issued on a timely basis. Untimely billings of additional antidumping duties should be contested by filing timely protests with Customs.

Customs is required to liquidate the entries on which antidumping duties were deposited for the period in issue within 6 months after receiving notice of the margins from the Department of Commerce. Commerce has 15 days after the publication of the Final Determination to issue instructions to Customs of the antidumping margins to be assessed.

If this action is not taken timely, the entries will be deemed liquidated at the entered antidumping margin. If, however, the Final Determination of Commerce is contested in the Court of International Trade, the plaintiff must file a preliminary injunction to prevent the liquidation of the entries.

Actions to Reduce Antidumping Duty Assessments

Importers should review whether they can modify current transactions to make deposits at the producer's lower rate, or obtain this information to provide to Commerce during the administrative review. The facts regarding the knowledge of the seller and reseller must be identified.

Importers should also consider requesting an Administrative Review with Commerce to potentially obtain a lower antidumping duty rate for specific suppliers where this evidence is available.

The request for the administrative review must be filed during the "anniversary month" of the particular antidumping order. For anti-friction bearings, the anniversary month is May of each year. Once Commerce initiates administrative review, detailed questionnaires will be issued to the supplier, who must complete them and file them in a timely manner. It is recommended that outside expertise be engaged to assist in responding to an antidumping questionnaire.

If you have any questions with regard to this newsletter, please contact Stephen Spraitzar at (415) 288-0427 or sss@tuttlelaw.com, or George Tuttle at (415) 288-0425 or grt@tuttlelaw.com.

Stephen Spraitzar and George Tuttle are attorneys with the Law Offices of George R. Tuttle in San Francisco.

The information in this article is general in nature, and is not intended to constitute legal advice or to create an attorney-client relationship with respect to any event or occurrence, and may not be considered as such.

Copyright 2007 by Tuttle Law Offices.

All rights reserved. Information has been obtained from sources believed to be reliable. However, because of the possibility of human or mechanical error by our offices or by others, we do not guarantee the accuracy, adequacy, or completeness of any information and are not responsible for any errors, omissions, or for the results obtained from the use of such information.

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