CBP Affirms Previous Determination Importer Engaged in Evasion by Transshipping Via Malaysia

CBP affirmed a February determination that found substantial evidence of evasion of countervailing duties and antidumping duties on wooden cabinets from China by two importers, after a review of the case, according to a recently released notice.

Domestic producer MasterBrand Cabinets filed an Enforce and Protect Act allegation in January 2021 claiming that Superior Granite and Marble and Splendid Trading had evaded the antidumping and countervailing duty orders on wooden cabinets and vanities (WCV) from China. In February this year, the investigation found substantial evidence of evasion by the two companies and that they engaged in a scheme to transship Chinese wooden cabinets through Malaysia (see 2202280031).

On April 6, Vivaldi Commercial, parent company of Superior Granite and Marble, filed a review request, arguing the company didn't enter covered merchandise into the U.S. through evasion because Grand Supremacy in Malaysia produced the entered merchandise. Vivaldi said the investigation relied solely on “isolated tidbits of data which suggest a result contrary to the clear weight of the evidence" and the data presents only a "non-specific picture" of trade flows between China, Malaysia and the U.S., which is insufficient evidence of transshipment.

In its analysis, CBP noted Vivaldi didn't dispute that the subject cabinets, if of Chinese origin, would be within the scope of the AD/CVD orders and therefore, the only issue is whether the cabinets are of Chinese origin.

Grand Supremacy incorporated Chinese-origin components into the wooden cabinets and vanities shipped from its Malaysia facility. Vivaldi argued that even if Chinese-origin components had been incorporated into the subject cabinets, the manufacturing process in Malaysia resulted in a “substantial transformation” of the items to create products of Malaysian origin. CBP said the AD/CVD orders extend "not only to finished WCV units but also to in-scope components that have been further processed in a third country ...,” meaning the scope specifically covers the type of Chinese-origin components imported by Grand Supremacy. Finally, CBP determined that Grand Supremacy's claim it had the manufacturing capacity to produce wooden cabinets and vanities in Malaysia isn't supported by its labor force or operational machinery.

Upholding the original finding of evasion, CBP said, "Vivaldi does not dispute the accuracy of this data. Instead, Vivaldi asserts that import statistics ... do not constitute substantial evidence of evasion." MasterBrand's data is corroborated by other evidence, CBP said, none of which was viewed in isolation for making an affirmative evasion determination.

“Since the imposition of these trade remedy orders, there has been rampant duty evasion," said Timothy Brightbill, lawyer for MasterBrand. “We are pleased that CBP carefully reviewed and strongly affirmed its initial determination of evasion... . The evidence strongly indicated that these companies imported Chinese merchandise that was transshipped through Malaysia to improperly avoid paying duties.” Vivaldi didn't comment.