Importer Seeks AD/CVD Refunds at Trade Court for Defective Plywood Imports

A case involving allegedly defective plywood should be dismissed from consideration at the Court of International Trade because the importer has failed to show evidence of actual defect or specific value lost, the government said in a July 18 cross-motion for summary judgement (Bral Corporation v. United States, CIT # 20-00154).

Bral originally contracted for the plywood at issue with a Chinese manufacturer, QF, and began importing the subject melamine-coated plywood from China into the U.S. beginning in July 2017. Bral then sold the plywood to Transglobal for use in the manufacture of roll-up doors. Bral said the plywood was supposed to be manufactured according to specifications developed by both Bral and Transglobal. In 2018, according to Bral, Transglobal learned that the doors were delaminating because of a lower quality glue in the melamine coating. Bral said the remaining inventory of plywood is useless as a construction material and can only be used in limited applications at Transglobal facilities (building of crates and skids) instead of being used in construction and resold as doors. Bral filed a protest against the liquidation of the entries after the defect was discovered, claiming an adjustment to the appraised value. CBP denied the protest.

According to its June 3 motion (see 2206030054), Bral seeks a refund of antidumping and countervailing duties for plywood it says is defective at the time of import and reduced in value. Bral asked the court to issue an order that the plywood at issue be reappraised at 18% of its original value, order the reassessment of duties on reappraisal, and order the refund of all excess duties plus interest.

Bral argued that it has satisfied all three criteria for claiming an allowance and that CBP improperly denied its protest. Bral said it can show that it contracted for “defect-free” merchandise, and the fact that the defect was not identified until after importation is not relevant.

The government said that Bral has not demonstrated that it contracted for "defect-free" plywood because it has not produced product specifications "detailing how the imported plywood must perform," and therefore cannot claim that the imported plywood was defective and overvalued at import. It also said Bral is unable to show what portion, if any, of the plywood is defective or if those defects existed at the time of import. Bral also has not provided evidence to support a reappraisal at 18% value, the government said.

The government also argued that the 18% figure for reappraisal is incorrect. Bral relies on testimony of Mark Schroeder, president of Transglobal, who claimed that 18% was "the lowest wholesale amount that it would cost Transglobal to purchase non-marine grade lumber from its local supplier." However, Schroeder explained that currently the wholesale or retail salvage value of the unused imported plywood would likely be 25%-40% of the original value, meaning that Bral cannot set a fixed value for the plywood, the government said.

Ultimately, Bral "imported a plywood product of unknown quality" from an overseas manufacturer that may have cut corners on the components, the government said. "Rather than request that QF replace any of the uninsured imported plywood, sue QF or the unknown glue supplier to recover any of its costs, or file a product liability claim for any doors or panels under warranty, plaintiff attempts to have the Government underwrite and absolve Bral and Transglobal of inherent business risk."