Importer WHP Evaded AD/CVD Orders on Thermal Paper, CBP Says in Evasion Finding
Importer WHP Associates evaded antidumping and countervailing duty orders on thermal paper from China, Germany and Korea by transshipment through Malaysia, according to a recently released notice from CBP. In an Enforce and Protect Act investigation, CBP found substantial evidence showed that Malaysian company Actan transshipped Korean, German,and Chinese-origin thermal paper through Malaysia that was then imported by WHP with a false country of origin claim.
Sign up for a free preview to unlock the rest of this article
Export Compliance Daily combines U.S. export control news, foreign border import regulation and policy developments into a single daily information service that reliably informs its trade professional readers about important current issues affecting their operations.
The investigation followed an April 2022 allegation by the Paper Receipts Converting Association (PRCA). The allegation stated that Actan merely imported thermal paper in jumbo rolls from Germany, China and Korea, and converted those rolls into smaller rolls before reexporting to the U.S. via WHP. CBP initiated an EAPA investigation in June and announced the investigation and interim measures in October (see 2210190019).
CBP said that "the evidence clearly demonstrates that Actan does not produce thermal paper but converts jumbo rolls to smaller sized rolls" and that the only remaining question was whether the thermal paper imported into the U.S. was of Chinese-origin, German-origin, or South Korean-origin. In two rulings, CBP found that no substantial transformation occurs by cutting jumbo rolls into smaller rolls.
Purchasing documents provided by Actan showed that it does not produce thermal paper jumbo rolls and pictures of the production process "show Actan unrolling jumbo rolls of thermal paper that it then slits and rerolls into smaller rolls." Actan also admitted that it had only machinery useful for cutting and dividing rolls and did not report having the equipment or raw materials necessary for manufacturing thermal paper.
Malaysian Customs data showed that Actan imported thermal paper jumbo rolls from two Chinese companies, one German and one Korean company between 2021 and 2022. Actan claimed that none of its China-sourced paper was used to produce thermal rolls sold to WHP but did not provide any specific information regarding its customers and sales that would have allowed CBP to verify that claim, the agency said.
WHP submitted an affidavit from Actan, which stated that the raw materials used to produce products sold to WHP were sourced from South Korea, including commercial invoices, packing lists, bills of lading, and Korean certificates of origin. Actan admitted that it had two containers of material from Germany and provided shipping documents but CBP said that Actan failed to provide information on where that paper was sold to.
CBP used adverse inferences because Actan did not provide requested sales orders or production records or about thermal paper imported from Germany. CBP asked Actan for documentation on the purchase of raw materials for specific orders but Actan said that it uses "first in, first out" practice and that it was "not practical to tie specific raw materials to specific orders." Due to Actan's "lack of cooperation and unwillingness to provide requested information" CBP drew inferences adverse to the interests of Actan in its evasion determination and would use the highest rates for commingled paper.
Based on CBP's determination that WHP imported covered merchandise through evasion, the agency said it will suspend the entries covered by the investigation until instructed by Commerce to liquidate. For entries extended in accordance with the interim measures, CBP will rate-adjust the entries, change their type to 03, and continue suspension. CBP will also continue to evaluate WHP's continuous bonds and may pursue additional enforcement actions or penalties.