CBP Affirms Evasion Decision on Transshipment of Thermal Paper From Germany

CBP affirmed an August 2023 Enforce and Protect Act decision that thermal paper from Germany transshipped through Mexico was covered by the scope of, and evaded, an antidumping duty order, the agency said in a de novo administrative review on Dec. 22.

The de novo review request was filed after an EAPA allegation filed by the Paper Receipts Converting Association, who accused A2 Labels and 13 other importers of importing thermal paper from Germany or South Korea into the U.S. and transshipping the thermal paper through Mexico (see 2301250051). CBP found substantial evidence of evasion of duties on thermal paper from Germany, but didn't find evidence of evasion on thermal paper from Korea.

In the review, A2 Labels argued that the thermal paper was from Mexico and can't be covered by the order on thermal paper from Germany. A2 specifically said that no transshipment occurred because, based on the USMCA rules of origin, the country of origin for the paper is Mexico, not Germany.

In affirming their decision, CBP said there is substantial evidence that the thermal paper was covered merchandise. The plain language of the order clearly covers the jumbo rolls made in Germany, CBP said. CBP found substantial evidence that the thermal paper rolls were from Germany and were transshipped, through evidence, and that this was covered by the order. The order also clearly states that thermal paper converted into rolls is covered by the order, CBP said.

CBP said the focus on country of origin for the converted rolls is inappropriate and doesn't apply. The question is whether the paper imported by A2 Labels is covered by the AD order.

"It is well-settled law that the country of origin of a good from a customs law perspective is not the same as whether the good falls within the scope of an AD or CVD order with respect to a certain country," the agency said. The order also doesn't require the country of origin to be Germany. The order states "that jumbo rolls made in Germany are covered, and remain covered, where that merchandise is subsequently converted into rolls with an actual width of less than 4.5 inches and with an actual basis weight of 70 gsm or less in a third country such as Mexico," CBP said.

CBP also said that there was substantial evidence that A2 Labels entered the merchandise by evasion. The merchandise was incorrectly typed as "01" consumption instead of "03", the agency said. "These constitute false statements that are also material because the applicable AD cash deposits were not paid."

A2 also omitted "Case No. A-428-850" from their entry summary documentation, CBP said. This omission is "material" because it interfered with the government's ability to track down the thermal paper imports, the agency said.

Other arguments A2 Labels gave lacked merit, the agency said. A2 Labels said that CIT has held that a "degree of culpability" in the false statement or omission having been made is required for an evasion finding. The EAPA statute only requires that the omission or false statement exist, leading to nonpayment or underpayment of the AD/CVD duties, CBP said.

A2 also argued that their due process rights were violated as CBP relied on "redacted business confidential information" to come to their determination. The agency said that this argument had no merit because CBP's decision is entirely based on public versions of documents "on the administrative record."

A2 Labels and PRCA didn't respond to our requests for comment.