US Defends CBP Ruling That Wooden Cabinet Importer Didn't Dodge AD/CVD

Past evidence of antidumping and countervailing duty evasion doesn't mean an exporter must still be transshipping goods, the U.S. said Jan. 22 in response to an AD/CVD petitioner’s motion for summary judgment in a case challenging the Commerce Department’s determination that wooden cabinet importers were not attempting to evade AD/CVD orders on products from China (American Kitchen Cabinet Alliance v. U.S., CIT # 23-00140).

AD/CVD petitioner American Kitchen Cabinet Alliance accused importer Scioto of evading AD/CVD orders on Chinese wooden cabinets by shipping merchandise through Malaysia. It said it relied on information sent to it by one importer, Cabinets to Go, who had hired inspectors to monitor their shared exporter Alno’s manufacturing processes in Malaysia and determined that its products actually came from China.

CBP’s Trade Remedy and Law Enforcement Directorate investigated and, applying adverse inferences because it held exporter Alno didn't cooperate to the best of its ability, found evidence of evasion by Alno in its shipments to Scioto. However, its ruling was overturned by the same agency’s Office of Regulations and Rulings after a petition filed by one of Alno’s importers, Scioto (see 2307120038).

“R&R explained that there was 'extensive documentation' of raw materials at Alno’s warehouse in Malaysia and Alno’s ability to produce, and production of, wooden cabinets from those raw materials,” DOJ said. “In reversing TRLED’s determination, R&R addressed each of the categories of information that TRLED relied upon to support its finding of evasion.”

Plenty of documents, including shipping invoices, batch records, invoices and entry numbers conclusively showed that Alno had the “factory, raw materials, machinery, and the workforce” needed to produce its cabinets in Malaysia, DOJ said.

“The fact that Alno previously admitted to transshipping to another company does not ‘prove’ that Alno transshipped here,” it said.

The “substantial evidence” standard that CBP applies does not mean that the agency must find that “no other conclusion could possibly be drawn from the record,” DOJ said. It only means that a “rational connection” must be found between evidence and CBP’s conclusion, it said; it said the possibility that another rational conclusion could be reached was not enough.

“AKCA’s assertions to the contrary amount to nothing more than disagreement with how CBP weighed and considered relevant evidence,” the department said.

DOJ also said that CBP needed “substantial evidence” to justify using adverse inferences in an analysis, and that was not available in this case. Although Alno did not initially disclose to CBP existence of a warehouse or provide it certain packing checklists and other documents, as a whole Alno complied with requests made to it and its errors were “not nefarious,” DOJ said.

“Just because CBP can apply adverse inferences, does not mean it must,” the department said.