US Customs and Border Protection (CBP) has a "reasonable suspicion" that US chassis maker Pitts Enterprises evaded duties on Vietnamese chassis containing Chinese components, but allows itself more than a year to conclude its investigation, reports IHS Media.
Curiously, the probe appears to have been prompted by the Chinese component maker to disrupt the US anti-China trade war efforts. US duties include a 188.05 per cent antidumping duty and a 39.14 per cent countervailing duty.
As a result, Pitts will stop importing marine chassis into the US until further notice, according to a letter sent to its customers.
The investigation also stands to hurt South Carolina Ports Authority (SC Ports), which ordered 11,000 chassis from Pitts Enterprises subsidiary Dorsey Intermodal to launch a chassis pool in March 2023.
It will also cause delays for others buying chassis, including cargo owners, chassis lessors, and trucking companies, said the report.
At issue is whether axles, landing gear legs, and other components made in China that were discovered and shipped to the US are subject to the duties enacted by the Department of Commerce in 2021.
Ironically, CIE Manufacturing, formerly known as China Intermodal Marine Containers (CIMC), filed a complaint with US Customs alleging Pitts Enterprises was evading crippling duties targeting chassis imported from China.
CIE argued that Pitts' subcontractor, Thaco Special Vehicles, bought axles and landing gear legs made in China, transported the parts to Vietnam, constructed the chassis there, and then delivered the finished product to the US - labeled as "made in Vietnam" - to avoid paying duties.
Ed Gill, vice president of Pitts subsidiary Dorsey Intermodal, wrote in a October 28 letter to customers that while Chinese components are used in its chassis, CIE is misinterpreting the Commerce Department's intentions regarding the duties.
The US Commerce Department ruled duties do not apply to components "entered and sold by themselves," but that duties must be paid on components "entered with or for further assembly" on a chassis. Pitts argues the components in question fall under the former, while CIE argues the latter.
Barbara Melvin, CEO of SC Ports, said the commitment to a port authority-run pool is unchanged because chassis are sorely needed in the US. But she did not elaborate on how the CBP investigation of Pitts will affect the launch of the new pool.
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