Wood Cabinets Importer Pushes Back Against New Evasion Finding in Remand Results

The evasion investigation on Scioto was launched when an unrelated importer, Cabinets to Go, discovered its exporter, Alno, had misrepresented Cabinet Group’s imports as Malaysian in origin when evidence showed they came from China. Cabinets to Go discovered Alno had purchased finished products from an undisclosed Chinese subsidiary of Haiyan Group, the parent company of both Alno and Scioto.

Scioto also purchased its products from Alno. Further, communications showed that the same Chinese subsidiary also had communicated with Scioto regarding the manufacture and sale of Scioto’s imports, even though Scioto maintained that its imports came from Malaysia, not China.

Court of International Trade Judge Lisa Wang sent CBP's initial negative finding back for the department’s failure to consider evidence that contradicted its conclusion (see 2411250023). Wang told Commerce that it had failed to properly consider evidence regarding both the contents of a “finished goods warehouse” owned by Alno and the extent of control parent company Haiyan Group exercised over Alno and Scioto. On remand, CBP reversed course and found Scioto had evaded AD/CVD.

Scioto argued April 2 that CBP “seems to be applying adverse inferences, even though it does not claim to be doing so” and hadn’t made any determination that Scioto or Alno weren’t participating to the best of their ability. Further, CIT only remanded so that CBP could directly address “two issues,” it said, calling the nature of the remand “limited.”

It also agreed that Alno had purchased some finished product from China, but it said that those particular shipments were intended for a customer other than Scioto. It noted the shipments had different stock keeping units than shipments meant for Scioto.

The importer also said CBP wrongly claimed that neither importer nor exporter could “substantiate that only WCV [wooden cabinets and vanities] that was produced in Malaysia was used for all of Alno’s shipments to Scioto.” But this “is contrary to CBP's own findings in its administrative review determination,” it said. CBP based those findings on production documentation from Alno, reliance upon which CIT had upheld as reasonable.

Alno does have the records to “trace the production of a particular product in Malaysia to a shipment of that product to a particular customer in the United States,” Scioto said; but CBP never asked for them. Despite this, the agency found in its remand results that some of those documents were missing, the importer said.

Saying the agency also “questions the reliability of the information Scioto produced as it apparently discovered instance of hidden data in the emails submitted by Scioto, where columns of information were redacted or obscured by view,” it accused CBP of “insinuating” Scioto had altered certain communications before submitting them.

Rather, Scioto had been asked to “download an immense amount of information from its server,” it said.

“[T]he emails were downloaded as is,” the importer said. “If certain columns in a table were hidden or obscured, then that is how it appeared in the original email. Moreover, the fact that CBP discovered [t]his information demonstrates that Scioto was not trying to hide anything and that all requested information was provided to CBP in its original form.”

And it said CBP based its decision on the fact that Alno couldn’t track the progress of its inventory from inputs to finished goods, but that “this is irrelevant” because CBP was alleging Alno purchased already finished products from a Chinese producer.

“This is not a circumvention case involving the completion or assembly of merchandise in a foreign country,” it said.

It also took aim at CBP’s examination of a finished goods warehouse operated by Alno. It said nothing on the record demonstrated the location was a “primary” rather than an “additional warehouse,” nor supported the contention that U.S. customer orders were fulfilled from the site.

And although the agency claimed that some of the boxes in the warehouse were unmarked, “the record only contains pictures of a single box,” Scioto said. The fact that the box didn’t have a customer identifier, either, meant it could have been the case that the box wasn’t intended for shipment, it said.

“It is important to remember that this is just a warehouse in Malaysia,” it said. “None of these goods have been entered into the United States.”

It noted approvingly that CBP, after remand, "still agrees that Scioto’s and Alno’s ownership by a Chinese company alone is insufficient to establish transshipment or evasion. But it said that the agency "still takes this remand as an opportunity to reverse its administrative review determination, which was based on actual evidence such as Alno’s production and shipment documentation, and has reverted to the same inuendo [sic], inferences, and suppositions that was used in [CBP’s Trade Remedy Law Enforcement Directorate (TRLED)]’s original determination."