US Can't Ignore Commercial Reality When Arguing Against Allowance for Entries, Importer Tells CIT
The U.S. cannot ignore commercial reality when arguing against the fact that importer Bral Corporation contracted for defect-free merchandise, Bral argued in a Sept. 1 reply brief at the Court of International Trade. Bral is seeking to establish a valid claim for an allowance -- a move the U.S. contests by arguing that the importer failed to produce any documents to detail the quantity, sizes or specifications of its imported plywood. Bral said that while this may be true, it's clear from other evidence that Bral developed the specifications for the imports over a significant period that led to the import of its plywood products (Bral Corporation v. United States, CIT #20-00154).
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Bral originally contracted for the plywood at issue with a Chinese manufacturer, QF, and began importing the subject melamine-coated plywood from China into the U.S. beginning in July 2017. Bral then sold the plywood to Transglobal for use in the manufacture of roll-up doors. Bral said the plywood was supposed to be manufactured according to specifications developed by both Bral and Transglobal.
In 2018, according to Bral, Transglobal learned that the doors were delaminating because of a lower quality glue in the melamine coating. Bral said the remaining inventory of plywood is useless as a construction material and can only be used in limited applications at Transglobal facilities (building of crates and skids) instead of being used in construction and resold as doors. Bral filed a protest against the liquidation of the entries after the defect was discovered, claiming an adjustment to the appraised value. CBP denied the protest.
According to its June motion (see 2206030054), Bral seeks a refund of antidumping and countervailing duties for plywood it says was defective at the time of import and reduced in value. Bral asked the court to issue an order that the plywood at issue be reappraised at 18% of its original value, order the reassessment of duties on reappraisal, and order the refund of all excess duties plus interest. The plaintiff argued that it has satisfied all three criteria for claiming an allowance: it showed that it contracted for defect-free merchandise, linked the defective merchandise to specific entries and proved the amount of the allowance for each entry.
The government said that Bral has not demonstrated that it contracted for "defect-free" plywood because it has not produced product specifications "detailing how the imported plywood must perform," and therefore cannot claim that the imported plywood was defective and overvalued at import (see 2207190042). In its reply, Bral said that the government cannot ignore the commercial reality since it makes no commercial sense for Bral to deal in defective goods.
The U.S. further argued that Bral cannot clear the second hurdle for establishing an allowance since it cannot prove that all the plywood on entry was defective, arguing that Transglobal should have gotten more warranty claims than it did. "This argument is baseless," the brief said. "The number of warranty claims received by Transglobal clearly supported the company’s decision to discontinue production of products using the imported plywood. The commercial risk to do so would have been indefensible."