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Another big incident happened.
The US Customs investigated CNC Associates or CNC Cabinetry, another large cabinet importer, for re-export trade and tax evasion investigations.
Initiation of Investigation
Heres comes the formal declare :
EAPA Case 7618: CNC Associates N.Y., Inc. dba CNC Cabinetry (Notice of Initiation of Investigation and Interim Measures, September 9, 2021)
Publications
Document Posting Date Tue, 09/21/2021 - 12:00
EAPA Case 7618: CNC Associates N.Y., Inc. dba CNC Cabinetry (Notice of Initiation of Investigation and Interim Measures, September 9, 2021)
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EAPA Case 7618: CNC Associates N.Y., Inc. dba CNC Cabinetry
PUBLIC VERSION
May 5, 2021
Timothy C. Brightbill, Esq.
Counsel to MasterBrand Cabinets, Inc.
Wiley Rein LLP 1776 K Street NW Washington, DC 20006
CNC Associates (CNC Cabinetry)
and/or Direct Builders Supply Inc.
101 Kentile Road South Plainfield, NJ 07080
Re: Notice of Initiation of Investigation and Interim Measures - EAPA Case 7583
The purpose of this notice is to inform you that U.S. Customs and Border Protection (CBP) has commenced a formal investigation under Title IV, Section 421 of the Trade Facilitation and Trade Enforcement Act of 2015, commonly referred to as the Enforce and Protect Act (EAPA), against CNC Associates (also known as CNC Cabinetry and/or Direct Builders Supply Inc.)
(“CNC” or “the Importer”)
1. CBP is investigating whether the Importer evaded antidumping (AD) and countervailing duty (CVD) orders A-570-106 and C-570-107 (collectively, the “AD/CVD orders”), on wooden cabinets and vanities and components thereof (“WCV”) from the People’s Republic of China (“China”) when importing WCV into the United States.
2 CBP has imposed interim measures because evidence supports a reasonable suspicion that the Importer entered merchandise covered by the AD/CVD orders into the customs territory of the United States through evasion.
Determination
EAPA Case 7618: CNC Associates N.Y., Inc. dba CNC Cabinetry (Notice of Determination as to Evasion, June 7, 2022)
Conclusion:
Therefore, there is substantial evidence on the record which demonstrates the WCV imported
[ name ] are, at the very least, being comingled with any Indonesian WCV being made from
raw materials. Since the information on the administrative record is insufficient to determine
which entries filed with CBP contain the subject merchandise, it is reasonable to conclude, based
on the [ name ] trade data, that the majority of imports contained Chinese-origin WCV. CBP
determines that the WCV imported by the Importer and exported to the United States from
Supplier 1 and Supplier 2 are, in fact, transshipped merchandise from China and entered the
customs territory of the United States through evasion.
Actions Taken Pursuant to the Affirmative Determination as to Evasion
In light of CBP’s determination that the Importer entered merchandise into the customs territory
of the United States through evasion, and pursuant to 19 USC 1517(d) and 19 CFR 165.28, CBP
will suspend or continue to suspend the liquidation for the entries imported by the Importer and
subject to EAPA Case 7618, until instructed to liquidate. For those entries previously extended
and for all future entries subject to EAPA Case 7618, CBP will rate adjust and change those
entries to type 03, using the “all others” AD/CVD rates for China unless the Department of
Commerce determines a separate rate applies to that entry, and will continue suspension until
instructed to liquidate. CBP will also evaluate the Importer’s continuous bonds in accordance
with CBP’s policies and may require single transaction bonds, as appropriate. None of the above
actions preclude CBP or other agencies from pursuing additional enforcement actions or
penalties.
Official update link , here
Download file:
Background Information
This company has a huge number of suppliers and imports a large number of wooden cabinets.
Here comes a link for one of CNC Cabinetry's suppliers , who has cooperated in transhipping wood kitchen cabinets for quite long time.
https://www.cabinet.trade/transhipping-under-way-jiangsu-sunwell-cabinetry-co-ltd/
Competitor Reaction
Masterbrand
Cabinet importers are evading Chinese duties by transshipping through Malaysia, says MasterBrand
Some importers are now evading duties by transshipping cabinets through Malaysia, Vietnam, and Indonesia, according to MasterBrand.
"There has been a massive surge in illegal transshipments to avoid the AD/CVD duties," said Wiley Rein's Tim Brightbill, an attorney working for MasterBrand. "We have seen increases of cabinet imports from countries like Vietnam, Malaysia, and Indonesia of 1000 percent or more.
Through a hired private investigator, MasterBrand has submitted documentation to Customs suggesting wooden cabinets and vanities produced in China are being repackaged in Malaysia and then shipped to the U.S. for entry by importers. The importers are then misrepresenting such merchandise as products of Malaysia rather than China and failing to declare such merchandise as subject to the aforementioned duties.
"The precision you’ve gotta have to make high-quality cabinets cannot be easily set up in countries like Malaysia, which lack the ability and infrastructure," said Bob Biggart, senior VP of Fortune Brands Home & Security, MasterBrand's parent company. "This is evidence of transshipment."
"We are a global company ourselves, with insight to the capabilities of what countries can and cannot do. We know that the vast majority (if not all) cabinets from countries like Malaysia and Indonesia are transshipped, because these countries simply do not have the capability or capacity to scale up production in such a short amount of time, especially in light of COVID restrictions."
Customs and Border Patrol seems to agree.
"We’ve had some success," continued Biggart. "We’ve filed 11 EAPAs (requests for investigations under the Enforce and Protect Act). Five of them have come to fruition."
One of those investigations, though still in a preliminary stage, is against New Jersey-based distributor CNC Cabinetry - who MasterBrand regards as one of the primary culprits.
"Customs has determined there is a reasonable likelihood that CNC has been transshipping through Malaysia," says Brightbill. "With over 1 million square feet of warehouse space and relationships with cabinet dealers all over the country, CNC has built a business around these illegal transshipments."
"Hopefully we put CNC Cabinetry out of business," said Biggart.
"CNC cabinetry will cooperate fully with the CBP in their investigation," CNC wrote to us in an email. "We look forward to a positive outcome for us."
Four more are against Chinese companies Pacific Building Material, Deco Kitchen, Skyview Cabinet, and Greentree Trading for allegedly falsely entering Chinese-origin wooden cabinets and vanities as Malaysian-origin.
Customs also considers these allegations reasonable. Investigations are underway.
But MasterBrand says more needs to be done.
"Customs can’t prevent this," says Biggart. "We need them to go into the country. Go into the places in Malaysia and find out if there’s actually a cabinet plant. They don't do this. They have no ability to go in and check. We had to hire a private investigator to get the job done ourselves."
MasterBrand hopes to draw more attention to the matter - perhaps incentivizing Customs to put in more resources, enabling more rigorous investigations. The company also hopes to deter this from happening in the first place.
"We want to encourage people who are on the fence to do the right thing. Companies who are thinking about doing this need to be on notice," continued Biggart.
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