CBP Finds Eastern Trading NY Evaded AD Duties in First EAPA Final Determination

CBP found Eastern Trading NY "engaged in evasion" of antidumping duties on steel wire garment hangers from China, the agency said its Aug. 14 final determination. The decision marks the first publicly released final determination resulting from an investigation under CBP's Enforce and Protect Act (EAPA) evasion enforcement processes (see 1608190014). CBP announced late last year that it was investigating Eastern Trading NY following allegations submitted by M&B Metal, imposing cash deposit requirements after finding a "reasonable suspicion" of evasion (see 1612190004).

The finding means that CBP will "continue to suspend the liquidation for any entry that has entered on or after" the date the investigation began and "will continue to extend the period for liquidation for all unliquidated entries that entered before that date," it said. The agency will also "continue to request that Eastern Trading post cash deposits in the amount of 187.25 percent of its entries of steel wire hangers, and for any future imports of covered hangers, CBP will require live entry," CBP said. "Finally, Eastern Trading's continuous bond will remain at the increased level and will be reviewed in accordance with CBP's policies." Lawyers for Eastern Trading and M&B Metal didn't immediately comment.

Soon after CBP sent notices to Eastern Trading about the initiation of investigation in December, the agency sent Requests for Information (RFIs) to Eastern Trading and Everbright Clothes Hanger, which Eastern named as its supplier in Thailand. "Neither Eastern Trading nor Everbright responded to the respective RFIs, despite communication from Eastern Trading indicating it would be cooperating with the investigation," CBP said. Eastern Trading only submitted two filings in the proceeding, though one was rejected by CBP as "untimely," the agency said

CBP used various data "to link over 80 percent of Eastern Trading's imports of hangers into the United States to shipments of hangers from China into Thailand," it said. The agency also used Commerce Department New Shipper Review information to compare ownership information, which included some overlaps with redacted Chinese companies, "providing additional support that Everbright was used to transship hangers from China through Thailand and to Eastern Trading," CBP said.

Eastern Trading argued in a July 24 filing that it "was an innocent victim in this evasion scheme, had no knowledge of it, and did not profit from it," the agency said. CBP should instead go after the companies that created and profited from the scheme, "namely R&X Industries, Hang Ren, and Everbright," the company told CBP. "However, Eastern Trading's argument ignores the statute's definition of evasion, which only focuses on whether insufficient cash deposits or bonds were made, not the culpability of the parties."

There was some dispute between the parties as to the duty assessment rate that should apply, CBP said. Eastern Trading said that the separate 40.99 rate applicable to Yingqing and Qingqing should apply, whereas M&B pushed for the 187.25 percent China-wide rate. CBP sided with M&B because "it failed to provide amended entry documents to CBP and responses to the RFI that would establish the source of its imports," the agency said. M&B also requested that CBP take further actions under EAPA, including Section 1592 penalty proceedings and a referral to ICE for "civil and/or criminal investigation," CBP said.