TR 2021 UP1: Liquid dielectric transformers
Conclusion of export price review
The Canada Border Services Agency (CBSA) has today concluded an export price review to update all export prices of certain liquid dielectric transformers (large power transformers) having a top power handling capacity equal to or exceeding 60,000 kilovolt amperes (60 megavolt amperes),exported from South Korea by Hyundai Electric & Energy Systems Co., Ltd. (Hyundai Energy) and imported into Canada by Hyundai Electric America Corporation (HE America).
The review follows the receipt of requests for re-determination and is part of the CBSA’s enforcement of the Canadian International Trade Tribunal’s (CITT) order made on May 31, 2018, respecting the dumping of large power transformers from South Korea, in accordance with the Special Import Measures Act (SIMA).
The product definition and the applicable tariff classification numbers of the goods subject to the CITT’s finding are contained in Appendix 1 (subject goods).
Period of investigation
The Period of Investigation (POI) for the export price review was from April 1, 2020 to March 31, 2021.
Export price review process
At the initiation of this export price review, the CBSA sent Requests for Information (RFIs) to Hyundai Energy and HE America to solicit information on the selling prices of subject goods. The information was requested for purposes of updating export prices applicable to subject goods exported from South Korea by Hyundai Energy and imported into Canada by HE America.
As part of the export price review, representationsFootnote 1, case argumentsFootnote 2 and reply submissionsFootnote 3 were submitted by counsel on behalf of the Canadian producer Hitachi Energy Canada Inc.Footnote 4 (previously ABB Power Grids Canada Inc.). Counsel on behalf of Hyundai Energy and HE America also submitted case argumentsFootnote 5 and reply submissionsFootnote 6.
The issues raised by parties mainly concerned the export price determination under paragraph 25(1)(c) versus 25(1)(d), the export price calculation methodology as well as the validity of a reliability test to determine section 24 prices reliability.
In relation to the export price determination, the CBSA’s position is that paragraph 25(1)(d) is applicable as it relates to goods that are imported for the purposes of assembly. This approach is consistent with previous large power transformers decisions.
The reliability test followed by the CBSA in assessing the reliability of the export prices is fully compliant with Canada’s international obligations and is consistent with SIMA. Further, the reliability test is a matter of long-standing CBSA policy and practices.
In order to respect the confidentiality designations made by interested parties, the CBSA is limited in the information that can be divulged in response to arguments made concerning export prices calculations. When calculating sections 24 and 25 export prices for HE America, deductions for non-subject services and other items were made in accordance with section 24 and paragraph 25(1)(d) of SIMA. Ultimately, export prices were found to be unreliable. Additional information on the calculation of export prices is provided to HE America in the confidential conclusion notice issued to the importer.
Note that issues raised by all parties were given due consideration by the CBSA prior to the conclusion of this review.
Export prices for future shipments
Hyundai Energy is located in South Korea and is a manufacturer and exporter of various transformers and related electricity distribution equipment, including large power transformers. The company head office is located in Seoul and its facility is in Ulsan. Before this review, HE America, a new non-resident importerFootnote 7 located in Atlanta, United States, had never participated in a CBSA proceeding. HE America is a wholly-owned subsidiary of Hyundai Energy importing large power transformers in Canada.
During the course of the review, Hyundai Energy provided responses to the CBSA’s Dumping RFI as well as one Supplemental RFI (SRFI). Likewise, HE America provided responses to the CBSA’s Importer RFI and two SRFIs. Based on the information provided, the CBSA was able to calculate the appropriate deductions accordingly to section 24 or section 25 of SIMA and conduct a reliability test of the export prices from Hyundai Energy to HE America. As export sales were also made on credit terms other than cash discounts, prices determined under section 24 and paragraph 25(1)(d) were also adjusted in accordance with subsection 27(2) of SIMA.
The test revealed that the export prices determined in accordance with section 24 were unreliable and, therefore, the export prices for subject goods exported to Canada by Hyundai Energy through HE America, for all future sales of subject goods, will be determined in accordance with paragraph 25(1)(d) of SIMA.
As such, the CBSA established specific deductions to determine HE America’s export prices based on HE America’s resale prices of the imported goods to unrelated purchasers in Canada, less deductions for all additional costs, charges and expenses incurred in preparing, shipping and exporting the goods to Canada, all costs, charges and expenses included in the resale prices that were incurred in reselling the goods in Canada or associated with the assembly and/or installation of the good in Canada, and an amount representative of the industry profit pursuant paragraph 22(a) of the Special Import Measures Regulations (SIMR). These specific export price adjustments are effective for goods released on or after February 8, 2022.
The export price deductions determined as a result of this review for HE America may be applied to any requests for re-determination of importations of subject goods that have not been processed prior to the conclusion of this review, regardless of the date that the requests were received. The export price parameters determined as a result of this review may be applied retroactively where the conditions described below are met.
Please note that exporters with normal values are required to promptly inform the CBSA in writing of changes to domestic prices, costs, market conditions or terms of sale associated with the production and sales of the goods. If there are changes to the exporter’s domestic prices, costs, market conditions or terms of sale associated with the production and sales of the goods, and where the CBSA considers such changes to be significant, the normal values and export prices will be updated to reflect current conditions. All parties are cautioned that where there are increases in domestic prices, and/or costs as noted above, the export price should be increased accordingly to ensure that any sale made to Canada is not only above the normal value but at or above selling prices and full costs and profit of the goods in the exporter’s domestic market. If exporters do not properly notify the CBSA of any such changes, do not adjust export prices accordingly, or do not provide the information required to make any necessary adjustments to normal values and export prices, retroactive assessments will be applied where such action is warranted.
Importers are reminded that it is their responsibility to calculate and declare their anti-dumping duty liability. If importers are using the services of a customs broker to clear importations, the brokerage firm should be advised that the goods are subject to SIMA measures and be provided with sufficient information necessary to clear the shipments. To determine their anti-dumping liability, importers should contact the exporters to obtain the applicable normal values. For further information on this matter, refer to Memorandum D14-1-2, Disclosure of Normal Values, Export Prices, and Amounts of Subsidy Established under the Special Import Measures Act.
The Customs Act (Act) applies, with any modifications that the circumstances require, with respect to the accounting and payment of anti-dumping duties. As such, failure to pay the duties within the prescribed time will result in the application of the interest provisions of the Act.
Should the importer disagree with the determination made on any importation of goods, a request for re-determination may be filed. For more information on how to file a request for re-determination please refer to the Guide for Appealing a Duty Assessment.
Any questions concerning the above should be directed to:
SIMA Registry and Disclosure Unit
Trade and Anti-dumping Programs Directorate
Canada Border Services Agency
11-100 Metcalfe St
Ottawa ON K1A 0L8
- Laurie Trempe: 343-553-1588
Appendix 1—product definition
Subject goods definition
Additional product information
Large Power Transformers are used to increase, maintain or decrease electric voltage in high voltage transmission and distribution systems. Incomplete Large Power Transformers are subassemblies consisting of the active part and any other parts attached to, imported with or invoiced with the active part of the Large Power Transformer. The active part of the Large Power Transformer consists of one or more of the following when attached to or otherwise assembled with one another: the steel core or shell, the windings, electrical insulation between the windings and/or the mechanical frame for a Large Power Transformer.
The product definition encompasses all Large Power Transformers regardless of name designation, including but not limited to: step-up transformers, step-down transformers, auto-transformers, interconnection transformers, voltage regulator transformers, high voltage direct current transformers and rectifier transformers.
Tariff classification numbers
Beginning January 1, 2019, under the revised customs tariff schedule, subject goods are normally classified under the following tariff classification numbers:
- 8504.23.00.20 – Liquid dielectric transformers, having a power handling capacity exceeding 59,000 kVA but not exceeding 100,000 kVA
- 8504.23.00.30 – Liquid dielectric transformers, having a power handling a power handling capacity exceeding 100,000 kVA
Unassembled or incomplete subject goods may also be imported under the following HS codes:
- 8504.90.90.10 – Parts - Printed circuit assemblies, of electric transformers and other inductors, other, of electric transformers
- 8504.90.90.82 – Parts - Having a power handling capacity of 500 kVA or more
- 8504.90.90.90 – Parts – Other
This listing of tariff classification numbers is for convenience of reference only. Refer to the product definition for authoritative details regarding the subject goods.
- Date modified: