CBP Looking at AD Evasions Allegations for Imported Pencils

Royal Brush Manufacturing is being investigated after allegations of evasion of antidumping duties required on imported pencils from China, CBP said in a June 26 notice. The investigation stems from allegations filed under the Enforce and Protect Act (EAPA) by Dixon Ticonderoga Company, a Florida office and art supplies maker, CBP said. The company alleged that RBM evaded antidumping duties through transshipment.

Cased pencils from China are subject to an antidumping order (A-570-827) and Dixon alleged that RBM sent covered pencils through the Philippines to avoid the duties. CBP began an investigation on March 27. Pencils made in China are subject to the AD duties "if they feature cores of graphite or other materials and are encased in wood and/or man-made materials" and "are properly classified under subheading 9609.10.00," CBP said. Dixon provided CBP with a purchase contract the company obtained that is between a Chinese manufacturer and another company "with instructions to mark the merchandise as 'Made in Philippines,'" CBP said. That contract also "required the products to be certified to U.S. standards for levels of heavy metals and phthalates, and to bear RBM’s trademark 'Royal & Langnickel,'” CBP said.

Dixon also said those batches of pencils "which originated in China, were imported into the U.S. customs territory by RBM and claimed to be of Philippines origin." Following a CBP inquiry and RBM response, a CBP official visited the listed facility in the Philippines and found employees "making minor alterations (e.g., sharpening) to fully manufactured pencils," CBP said. There also was "no significant evidence of the raw materials necessary to manufacture pencils according to the process indicated by RBM." Also found were "repacking operations for finished pencils from China."

The evidence from the allegation and the CBP visit are enough to "collectively create a reasonable suspicion as to evasion," the agency said. As a result, CBP said it will impose interim measures, including rate adjustments and suspended liquidations for unliquidated entries under investigation.