Warning on stainless steel import fraud

VCN- The situation of commercial fraud related to imported stainless steel has been complicated, especially after Vietnam applied trade remedies.
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warning on stainless steel import fraud
Imported steel. Photo: Thai Binh.

Many tricks

On 5th September 2014, the Ministry of Industry and Trade issued Decision No. 7896 / QD-BCT to apply anti-dumping measures for some cold rolled stainless steel products or sheets with a thickness of 3.5 mm or less, which was tempered, soaked or scraped to remove excess impurities on the surface of stainless steel. These products can be further processed (cut or sawn) as long as the process will not alter the technical specifications of the product. These products belong to HS codes: 7219.32.00; 7219.33.00; 7219.34.00; 7219.35.00; 7219.90.00; 7220.20.10; 7220.20.90; 7220.90.10; 7220.90.90, imported into Vietnam from other countries or regions such as: the People's Republic of China, Republic of Indonesia, Malaysia and Taiwan.

Then, on 29th April 2016, the Ministry of Industry and Trade issued Decision No. 1656 / QD-BCT to continue applying anti-dumping measures for this item imported into Vietnam.

After our country applied anti-dumping measures, commercial fraud in steel imports has increased. Most recently, the Customs Control Team (the Customs Department of Ho Chi Minh City) coordinated with the Customs Branch of Saigon Port Zone 3 (under the Customs Department of Ho Chi Minh City), the Bien Hoa Customs Branch (under the Customs Department of Dong Nai province) and Ho Chi Minh City police to seize more than 6,307 tons of steel, worth nearly US$ 3 million related to tax evasion through Ben Nghe Port, Ho Chi Minh City.

Many tricks used in this case was that when importing cold rolled stainless steel products (subject to anti-dumping duty), enterprises declared it in the form of FullHard type (cold rolled stainless steel but not in annealing or heat treatment). The reason for this was because the decision of the Ministry of Industry and Commerce excluded this item and without experience, it was impossible to distinguish whether the steel was heat-treated or not.

On the other hand, enterprises declared cold rolled stainless steel into hot-rolled stainless steel; with the wrong declaration of origin, from China to Korea or other countries to avoid anti-dumping duty and enjoy an import tax rate of 10% instead of anti-dumping duty from 17% to 25%.

In addition, violating enterprises also declared other types. For example, 304 stainless steel (containing 18% of chromium and 8% of nickel, currently priced at US$ 2,000 per ton) was declared to to 204CU stainless steel (containing 13% of chromium and 1% of nickel at US$ 1,100 per ton) or 430 steel (containing 16% of chromium and 0% of nickel, currently priced at about US$ 1,200 per ton). Or many enterprises declared an incorrect declaration of HS code from stainless steel into a product in other HS code groups.

How to handle the violations

Through the study of fraud, we can provide some background information to help Customs officers identify the origin of the fraud as follows:

In the case of cold rolled stainless steel declared as FullHard, the FullHard surface has hard oil, stain, dark color, rough surface, and no surface treatment. Besides, the surface of stainless steel finished with cold roll because it has gone through many stages of processing. Or, when physical and mechanical tests are performed, cold-rolled stainless steel has a surface hardness of 140 ~ 250 HV (Vickers - HV Hardness Vicker unit for steel hardness testing) while FullHard has a hardnesses of 320 ~ 480 HV.

In the case of import of stainless steel from China to Korea or other countries not subject to an anti-dumping duty to avoid origin, and enjoy a tax rate of 10 % instead of anti-dumping duties from 17% ~ 25%, it was very complicated as Customs officers had to check the flow of goods. In addition, it was necessary to analyze the schedule of ships on the E-manifest; comparing to the name of the ship recording the bill of lading and the name of the vessel on the C / O; and other information on the production capacity of other countries for this item.

In the case where stainless steel imports were declared from 304 stainless steel to 204CU or 430 stainless steel, competent forces may use magnetic testing.

Or when checking the chemical composition of steel, or mechanical and physical tests such as 304 hardened steel with a hardness of 160 ~ 190HV, 204 and 430 steel are softer with a hardness of 130 ~ 165 HV, or 304 steel has double elongation compared to 204 and 430 steel.

For the case of imports of stainless steel declared into a completely different product, it was necessary to classify goods to have the basis for the accurate conclusion.

warning on stainless steel import fraud It costs nearly 600 billion vnd per day to import steel

VCN- From the beginning of 2017 to now, Vietnam spent nearly $US 26.3 million (about 578 billion ...

The above frauds will adversely affect the domestic steel producers due to excessive import, which leads to excess supply and low prices.

By Chu Van/ Hoang Anh

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