CIT Finds Importer Due Process Issues in EAPA Evasion Investigation

The Court of International Trade on Dec. 1 sent an Enforce and Protect Act (EAPA) evasion determination back down to CBP for reconsideration, finding the agency failed to properly disclose information to the accused that it relied on to find the importer guilty of evasion. CBP’s regulations require the agency to make available public summaries of any redacted or business confidential information on the record of an EAPA investigation, but CBP did not do so during a proceeding involving Royal Brush Manufacturing, a pencil importer alleged to have transshipped Chinese pencils through the Philippines to avoid antidumping duties, CIT said.

CBP issued its final determination in the case in 2019, after making an initial determination to impose AD duties on Royal Brush a year earlier (see 1807020031). Crucially, CBP determined during an unannounced site visit and a subsequent on-site verification that Royal Brush’s supplier in the Philippines was incapable of manufacturing pencils in the amounts imported. CBP officials also found evidence that the supplier was repackaging Chinese-origin pencils into boxes marked, “Made in Philippines.”

Royal Brush sued, arguing that its due process rights were violated. The importer said it was unable to properly defend itself because of extensive redactions to the original allegation of evasion and reports on the agency’s visits to its supplier’s facility. Royal Brush also cited CBP’s rejection of a brief filed to contest the verification report, which the agency said could not be rebutted because it included no new factual information.

CIT stopped short of a finding that CBP should have shared confidential information with Royal Brush, as the Commerce Department does during antidumping and countervailing duty proceedings. “The court does not hold that Royal Brush is entitled to receive business confidential information. Congress has not mandated that Royal Brush be afforded such access and Royal Brush has not shown that due process requires it,” the trade court said.

But it found CBP failed to abide by even the less forthright standard in its own EAPA regulations. Under 19 CFR 165.4, confidential business information placed on the record of an EAPA proceeding must, where possible, include a summary of the redacted information made available to the public. “The court’s review of the administrative record reveals CBP’s inattention to the requirement for a public summary of information designated business confidential,” CIT said.

Specifically, the trade court cited a lack of a public summary for portions of the original allegation of evasion against Royal Bush filed by Dixon Ticonderoga. CBP also failed to provide public summaries of redacted information in its site visit reports, which was “particularly concerning” because of the agency’s reliance on them to find Royal Brush was evading AD duties.

The trade court also took issue with CBP’s rejection of Royal Brush’s rebuttal brief on the verification report. While CBP said it couldn’t accept the brief because the verification report had no factual information, the agency’s EAPA regulations don’t define the term “factual information,” and CBP failed to articulate a standard or a complete explanation as to why it found the verification report had none, CIT said.

“Accordingly, the court remands the matter to Customs to address and remedy the lack of public summaries by providing Royal Brush an opportunity to participate on the basis of information that it should have received during the underlying proceeding,” CIT said.