EAPA Investigation Finds Duty Evasion by Xanthan Gum Imports

Adi Chemtech evaded an antidumping duty order on xanthan gum from China, CBP said in the final determination of an Enforce and Protect Act investigation. The agency said it found substantial evidence that the importers had transshipped Chinese-origin xanthan gum through India, necessitating the imposition of interim measures.

The Dec. 11 announcement concluded an EAPA investigation that began on Sept. 5, initiated based on an allegation from CP Kelco U.S. filed in July, the agency said. CP Kelco has previously filed allegations that other importers were evading the AD order on xanthan gum, leading to prior EAPA investigations (see 2309290006, 2311150038 and 2312070033). The investigation covers entries starting Aug. 16, 2022, through the "pendency of the investigation," the agency said.

CP Kelco claimed that "significant volumes" of xanthan gum were transshipped through Prachin Chemical in India by Adi Chemtech. CP Kelco provided evidence that showed several shipments of xanthan gum, reported as Indian origin, departing "ports in India" and arriving in Houston during the period of investigation. CP Kelco also said that xanthan gun is not manufactured in India and is only manufactured in four countries worldwide. CP Kelco also produced evidence that China is the largest producer of xanthan gum going to India, accounting for approximately "81% of all Indian imports," the agency said.

CP Kelco also said neither Adi Chemtech nor Prachin engaged in the "trade or manufacture" of xanthan gum. The company said that Adi Chemtech’s website described itself as a supplier of “golden rare and exceptional essential oils,” and that Prachin’s website doesn't list xanthan gum as a product it sells.

CBP found that the allegation reasonably suggested evasion by Adi Chemtech and issued a questionnaire. CBP said the information could have enabled it to verify factory capabilities, production processes and country of origin, and to confirm the identity of the manufacturers of the imported merchandise.

Adi Chemtech didn't submit any of the payment information CBP requested, the agency said. The documentation submitted showed that each entry was for xanthan gum and the country of origin was claimed as India, CBP said.

Adi Chemtech provided a chart and identified Prachin, but the only other information provided was a chart of Prachin's organization, names of managers in the company, and an indication that the company was founded in 1989, CBP said.

Adi Chemtech also provided a "production flow chart" to CBP, but that flow chart didn't demonstrate how raw materials were tied to the finished xanthan gum nor list any raw materials, CBP said. Adi Chemtech provided a video illustrating Prachin's production of "pharmaceutical excipients," but didn't mention production of xanthan gum. Prachin told Adi Chemtech that the requested information was "confidential" and couldn't be shared, the agency said.

"In sum, Adi Chemtech’s CF-28 Response contains no information on the equipment used in the production of xanthan gum, no production records or capacity information, no documentation which traces raw materials through the production process to the entries in question, no list of raw materials used to produce xanthan gum or the requested raw material invoices, and no documents related to transportation and container load plans," CBP said. Without this information, there is no evidence that Prachin produced xanthan gums for the "entries at issue," CBP said.

CBP found "reasonable suspicion" that Adi Chemtech evaded the order and imposed interim measures on Adi Chemtech's imports covered by the investigation. That includes suspending liquidation for each "unliquidated entry" of covered merchandise that entered on or after Sept. 5, extending the period for liquidating each unliquidated entry of such covered merchandise that entered before Sept. 5, and any additional measures CBP deems necessary.

CBP also said that it will require live entry and "reject any entry summaries that do not comply with live entry procedure."

Prachin Chemical responded to our request for comment with a denial of their involvement, calling the allegations "totally false" and noting that it's a "reputed pharmaceutical company" that has been working for 35 years. "We have got all the required data to be provided as the manufacturer," Prachin said. "We have submitted all the documents which indicates that we have done manufacturing at our [site] with images and dedicated facilities regarding the same," the company said.

Adi Chemtech didn't respond to our request for comment.