Forfeiture Complaint on Aluminum Pallets Alleges $1.5 Billion in AD/CVD Evasion by Chinese Company
A Chinese aluminum company and its owner evaded more than $1.5 billion in antidumping and countervailing duties by importing aluminum extrusions masked as pallets, according to allegations in a complaint filed by the government on Sept. 14 in Central California U.S. District Court. The complaint seeks the forfeiture of 549 containers of extruded aluminum pallets imported by Perfectus Aluminum and detained by CBP at the Port of Los Angeles-Long Beach in 2016.
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Perfectus and its owner, Zhongtian Liu, had intended to melt the pallets down and sell the aluminum in the U.S., buying a New Jersey company to carry out the processing, the complaint said. A web of predecessor companies controlled by Liu that would eventually be merged to form Perfectus had been importing aluminum extrusions in the form of bars, tubes and other parts until 2011, when the Commerce Department issued its AD/CV duty orders on aluminum extrusion from China.
The predecessor companies switched to importing “mass quantities of what were purported to be aluminum pallets,” eventually bringing in “approximately 2,190,000 aluminum 'pallets' into the United States from China in an effort to avoid AD/CVD.” Subsequent CBP lab testing determined that the pallets were made of extruded 6-series aluminum alloy, spot-welded into the shape of a pallet, “making them subject to the AD/CVD orders because the 'pallet' was simply a collection of aluminum extrusions assembled in the shape of a pallet, and was not in fact a ‘finished product,'” the complaint said. The pallet CBP tested weighed around 170 pounds, as compared to a real aluminum pallet, which would weigh about 50 pounds, CBP said
At the time of importation, Perfectus told its customs broker that the pallets were not subject to AD/CV duties, so the broker designated the entries as type 01 on entry documentation. CBP in June found aluminum pallets made from 6-series alloy extrusions is subject to AD/CV duties (see 1707100006), after reaching the same result on pallets made of 1-series aluminum in December 2016 (see 1612220051).
According to the complaint, Liu’s plan to melt down the aluminum and resell it was thwarted when Dupre Analytics published a report in 2015 that alleged market fraud in the U.S. and China. Liu decided to instead export the pallets to Vietnam, melt them down there, then re-export the pallets to the U.S. as products of Vietnam. “As part of this plan, Perfectus would eventually export 6,337 containers of bogus pallets out of the U.S. during 2016,” the complaint said. Shippers export declarations for the containers declared them as containing aluminum extrusions, not pallets.
The pallets are subject to forfeiture because they were “used to aid in or facilitate the commission” of entry of goods by means of a false statement, smuggling, unlawful export information activities and conspiracy, the complaint said. Perfectus is challenging the seizure in a related case before the same federal court (see 1701130033). A federal judge in May gave the government a 90-day deadline to either file a civil or criminal forfeiture complaint or release the pallets (see 1705010024). Perfectus did not immediately comment on the government’s forfeiture complaint.