CBP Reverses Evasion Finding in Wooden Cabinets Case

CBP reversed an evasion determination against Scioto Valley Woodworking, after initially having found that Scioto had imported Chinese wooden cabinets and vanities by transshipment through Malaysia using adverse facts available. Upon review, CBP found the use of AFA was unwarranted and said evidence showed the manufacturer, Alno, could and did produce wooden cabinets and vanities in Malaysia.

"The statutory provision on when the application of adverse inferences is appropriate does not require perfection, but rather, it requires acting to the best of one’s ability to comply with a request for information," CBP said in its June 12 decision to reverse the finding, made public June 29.

CBP began the Enforce and Protect Act investigation in March 2022, in response to an evasion allegation by the American Kitchen Cabinet Alliance, a coalition of domestic producers of wooden cabinets and vanities. The coalition alleged that Scioto had entered wooden cabinets and vanities of Chinese origin into the U.S. using transshipment through Malaysia to evade the payment of AD and CVD on wooden cabinets and vanities from China. In July, CBP issued a Notice of Initiation and announced interim measures based upon reasonable suspicion that Scioto had entered covered merchandise.

The goods subject to the investigation were entered between March 2021 and March 2022. During that period, Scioto entered 18 type 01 consumption entries under subheading 9403.40.9060 with a declared country of origin of Malaysia. In January, CBP concluded there was substantial evidence to demonstrate that Scioto had entered goods covered by AD and CVD orders and had falsely declared the items as of Malaysian origin on type 01 entries not subject to those orders. In its decision, CBP used AFA against Alno, the alleged manufacturer of the wooden cabinets and vanities at issue, for Alno’s alleged failure to cooperate with CBP's information requests during an on-site verification.

Two months later, Scioto filed a request for administrative review, arguing that the wooden cabinets and vanities covered by the entries under investigation were manufactured in Malaysia by Alno, not in China. Scioto said the only covered merchandise exported by Alno to the U.S. was entered by CTG, a separate importer not involved in the investigation. It also argued that production tracking inspection reports showed that the goods Scioto entered were manufactured in Malaysia. Scioto pointed to record evidence that showed Alno could produce wooden cabinets and vanities in Malaysia.

Finally, Scioto said CBP misunderstood finished product inbound delivery (FPID) sheets as evidence that Alno purchased finished goods and that the presence of an FPID sheet for a shipment demonstrated that Alno purchased Chinese wooden cabinets and vanities and reexported them to Scioto.

In its review, CBP found that the record contained extensive documentation regarding the presence of raw materials at Alno’s warehouse in Malaysia and Alno’s ability to produce and its production of wooden cabinets and vanities. Substantial evidence also linked Alno’s production records to Scioto’s entries into the U.S. In contrast, the record contained "no evidence" that merchandise produced in China was transshipped through Malaysia and entered into the U.S. via evasion, CBP said. "While Alno and Scioto may not have acted perfectly in responding to information requests by CBP, in our view, when the record is examined as a whole, it supports a conclusion that they cooperated and complied with requests for information made by CBP such that application of a wholesale adverse inference to Scioto is not justified," CBP said on review.