Customs Acts on Kitchen Cabinet Duty Evasion
On January 27, 2022, U.S. Customs and Border Protection ("Customs") issued an affirmative determination that the U.S. importer BGI Group (doing business as U.S. Cabinet Depot) evaded the antidumping and countervailing duty (“AD/CVD”) orders on wooden cabinets and vanities and components thereof from China. Customs made this determination pursuant to an investigation under the Enforce and Protect Act (“EAPA”). The EAPA investigation was initiated based on evidence provided to Customs by Schagrin Associates on behalf of the American Kitchen Cabinet Alliance ("AKCA").
After the AD/CVD orders were imposed, BGI began importing ready-to-assemble (“RTA”) cabinets from HOCA Vietnam. Evidence showed that HOCA Vietnam was affiliated with a Chinese cabinets producer. Customs found that the BGI Group’s cabinets included Chinese components (e.g., doors and frames) that HOCA Vietnam combined with Vietnamese components (e.g., cabinet boxes) before exporting complete RTA cabinets to the United States. Customs found that even if the Chinese components were further processed in Vietnam before being combined with other components, they would still properly be considered of Chinese origin and thus subject to the AD/CVD orders.
As part of its enforcement action, Customs will suspend or continue to suspend the imports subject to its investigation until Commerce instructs it on the applicable AD/CVD duties that must be paid for these imports. The applicable duties will likely range from 58.89% to 83.89%. Customs’ action against BGI Group will address a huge volume of Chinese cabinets for which duties should have been paid, including all imports by BGI Group from March 2020 to the present. Customs’ determination discloses that the imports subject to investigation include “millions” of cabinet components from China. Moreover, Schagrin Associates estimates that BGI Group imported over $40 million of cabinets from Vietnam in 2020 alone.
This final affirmative EAPA determination concludes more than a year’s worth of extensive efforts by the AKCA and Schagrin Associates. The determination should serve as a strong deterrent to others that are currently or considering evading the orders put in place in April 2020.