CBP Reverses Negative Evasion Finding for Chinese Cabinets, Vanities on Remand
CBP reversed its finding that importer Scioto Valley Woodworking didn't evade the antidumping and countervailing duty orders on wooden cabinets and vanities from China, on remand at the Court of International Trade, finding that the evidence indicates the importer skirted the orders. CBP said that the contents of a "finished goods warehouse" owned by Alno Industry, Scioto's affiliated Malaysian supplier, and the "extent of operational control exercised by Scioto's and Alno's parent company," Qingdao Haiyan Group Co., prompted the reversal (American Kitchen Cabinet Alliance v. United States, CIT # 23-00140).
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The underlying evasion allegation in the proceeding relied in part on information gleaned from Cabinets to Go, an unaffiliated buyer of Alno's products. Alno told Cabinets to Go its goods were made in Malaysia, though an investigation by the buyer showed the goods were made in China. Cabinets to Go filed a breach of contract suit in Tennessee, ultimately discovering evidence of Haiyan Group's ownership of Alno.
The trade court sent back the initial negative evasion finding in November 2024, after declaring that CBP's Office of Regulations and Rulings failed to consider key evidence that detracts from its conclusion (see 2411250023). Judge Lisa Wang told CBP to revisit evidence on the contents of Alno's warehouse and the extent of Haiayn Group's control on Scioto and Alno related to the production and shipment of wooden cabinets and vanities.
First reviewing Alno's operations, CBP noted that Alno bought finished merchandise from a Chinese subsidiary of Haiyan Group, whose name was redacted in the remand results. The agency said evidence of Alno's warehouse detracts from the original negative evasion finding against Scioto, since it shows that Alno "received finished merchandise from China" and maintained a warehouse that had boxes of wooden cabinets and vanities, "some of which were unmarked with respect to country of origin or customer." The agency also found that neither Alno nor Scioto had "sufficient systems in place that would allow either company to confirm which customers received" products made in Malaysia vs. China.
R&R reviewed the packing checklists Haiyan Group subsidiary enclosed in the shipments to Alno, finding that the information on the lists is in line with admissions from Haiyan Group in the Cabinets to Go lawsuit. The agency also reviewed communications between Scioto and the unnamed subsidiary regarding specific entries of subject merchandise, showing "at minimum" a "level of involvement" by the subsidiary regarding the manufacture of the cabinets and vanities due to Scioto's lack of involvement in manufacturing or shipping.
And while the record shows that Alno had the capacity to make subject merchandise in Malaysia, "neither Alno nor Scioto can substantiate that only [wooden cabinets and venities] that [were] produced in Malaysia [were] used for all of Alno’s shipments to Scioto," CBP said. In addition, CBP's R&R said it can't "distinguish which of Alno’s customers received Chinese merchandise transshipped through Malaysia." Alno failed to "make a complete document production," and, in reviewing documents submitted by Scioto, R&R said it found "instances of hidden data," raising reliability concerns on the data that was submitted.
The agency then found that Alno fulfilled purchase orders from a warehouse that had "unmarked, commingled Chinese and Malaysian" cabinets and vanities. The supplier didn't have a "production tracking system" that would have allowed for the tracking of which customers received products made in Malaysia vs. China, R&R said. The record has photographs of the warehouse, showing products with no country of origin or intended customer markings. Alno only marked the packaging of the products with the country of origin, not the products themselves, the agency said.
Scioto argued that to the extent there's ambiguity on the record, the blame is on CBP for not identifying the ambiguity. In response, the agency said Scioto failed to provide enough evidence for its claim that Alno had an adequate tracking system, additionally emphasizing the trade court's finding that "the burden is on the warehouse owner to demonstrate to Customs a clear delineation between the three categories of goods" in instances where a warehouse has potentially transhipped goods commingled with "non transshipped and unlabeled goods."
CBP additionally found that Haiyan Group "exercised complete control" over the production of cabinets and vanities, including whether Scioto received Chinese or Malaysian-made products. The agency said this control existed even prior to July 1, 2022, when Scioto owned Alno, since Haiyan Group "funded Alno’s operations and directed Alno on how to produce the goods made at Alno’s facilities," the agency said.
Scioto claimed that even if Haiyan Group has control over the production of the products, the evidence shows that the Chinese company ensured that the products shipped to Scioto were made in Malaysia. R&R said there's nothing on the record to "support this assertion."