Importer Makes Irrelevant Arguments When Vying for Allowance for Plywood Entries, US Tells CIT
Importer Bral failed to clear the three-prong test needed to make a valid claim for an allowance in value for imports of plywood, the U.S. argued in an Oct. 3 reply brief at the Court of International Trade over its cross-motion for judgment. While Bral is correct that it does not make commercial sense to contract for defective goods, the importer needs to prove at a minimum that it entered into a contract with the overseas plywood producer for a good of specific qualities that is to perform in a certain way -- a bar Bral failed to meet, the brief said (Bral Corporation v. U.S., 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 its customer 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 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 be used only in limited applications at Transglobal facilities (building of crates and skids). 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.
At the trade court, Bral sought a refund of antidumping and countervailing duties for plywood it says was defective at the time of import and reduced in value. The importer asked the court to issue an order reappraising the plywood at 18% of its original value, order the reassessment of duties on reappraisal and order the refund of all excess duties plus interest (see 2209010055). The plaintiff argued it has satisfied all three criteria for claiming an allowance established in the U.S. Court of Appeals for the Federal Circuit case Samsung Elecs. Am. v. U.S. The factors include that importer must prove it showed it contracted for defect-free merchandise, link the defective merchandise to specific entries and prove the amount of the allowance for each entry.
In its cross-motion, the U.S. argued Bral failed to clear these three standards. The importer said in reply, without any evidence, that Transglobal and the foreign manufacturer developed the specifications for the imports that led to the importation of samples for testing and the eventual import of production quantities of the plywood, DOJ said. However, this "casually elides the critical information necessary to establish that it contracted for defect-free merchandise," and thus failed to clear the first Samsung factor, the U.S. replied.
The government also argued Bral failed to respond to the U.S.'s motion that the importer cannot establish what portion of the plywood is actually defective and link any of the plywood to specific entries. "Instead, Bral contends that it would have been commercially indefensible to not discontinue the production of Transglobal’s replacement doors and panels made with the imported plywood," the brief said. "But the issue before the Court with respect to the second Samsung prong is not Bral’s or Transglobal’s business decisions, or when Transglobal should or should not have discontinued its door and panel production, but rather, whether any defective merchandise was actually imported in the specific entries at issue -- which Bral has not shown."