UNITED STATES COURT OF INTERNATIONAL TRADE

Slip Op. 23-91

Before the Court in Skyview Cabinet USA, Inc., v. United States, Court No. 22-08, Slip Op. No. 23-91 (June 20, 2023) was plaintiff, Skyview Cabinet Inc.’s (“Skyview”), motion for judgment on the agency record challenging U.S. Customs and Border Protection’s (“CBP or Customs”) determination that the company was evading the antidumping and countervailing duty orders on wooden cabinets and vanities from China. “Plaintiff alleges the following errors: (1) Customs failed to support its finding that the subject imports were ‘covered merchandise’ at the time of entry; (2) Customs unlawfully applied adverse inferences against Skyview; (3) Customs failed to confer with Commerce in making its country-of-origin assessment, contrary to its statutory obligation to do so; (4) Customs unlawfully shifted the burden of proof onto Skyview; (5) Customs violated Skyview’s due process rights by not giving Skyview access to certain confidential information; and (6) Customs unlawfully considered hearsay;” and (7) that Customs determination was not based on substantial evidence. For the following reasons the Court denied Skyview’s motion.

The court found that Skyview misinterpreted the substantial evidence standard by ignoring that “the possibility of drawing two inconsistent conclusions from the evidence does not preclude the agency’s finding from being supporting by substantial evidence.” Customs evaluated both claims, one from MasterBrand and the other from Skyview, and found that MasterBrand had more credible and reliable evidence. Skyview’s evidence had many discrepancies, omissions, and inconsistencies even with the extensions for evidence from CBP. Skyview failed to dispute MasterBrand’s evidence which claimed Skyview’s goods were rerouted through a third party, designated as Malaysian goods to evade duties for goods that originated in China.

Skyview next argued that Customs application of adverse inferences against it was arbitrary and capricious because it was a third party manufacturer failed to respond to Customs’ request for information. The court was not persuaded by Skyview’s argument that it was impacted through collateral measures. Skyview did not provide persuasive case law nor did

Skyview point to anything on the record which showed it was adversely affected by the diverse inference against the third party. Skyview also did not state why Customs should rescind their adverse inferences against the third party.

The Court next examined Skyview’s claims that Customs was statutorily required to refer the matter to Commerce for a consultation on the goods country of origin. The court noted that according to language of 19 U.S.C. § 1517(b)(4)(A)(i), “Customs “shall … refer the matter to [Commerce] to determine whether the merchandise is covered merchandise” when Customs “is unable to determine whether the merchandise at issue is covered merchandise.” The court found there is no dispute about whether the wooden vanities and cabinets are of the type that would be subject to the antidumping and countervailing duty orders. As such, Skyview’s argument was meritless.

The Court next considered Skyview’s burden shifting argument that Customs’ determination must be reversed because under the statute, the agency “was required to verify the facts presented by both Skyview and Masterbrand.” The Court noted that after Customs gets a plausible allegation of evasion of customs duties, Customs can initiate an investigation and decide based on substantial evidence. The standard of substantial evidence requires the agency to consider the record as a whole and make a decision based on the “evidence as a reasonable mind might accept as adequate to support a conclusion.” The court said that Customs did not shift the burden to Skyview, but rather Customs determination was based substantial evidence to support an evasion claim.

The Court next considered Skyview’s “constitutional challenge under the Due Process Clause to the procedures Customs employed in this investigation.” Customs redacted photos and videos from the third party manufacturer visit and turned it over to Skyview. Skyview contends that “CBP deprived Skyview of the opportunity to review, evaluate, and comment on business confidential data and, consequently, a fair opportunity to defend itself.” “An agency has violated a party’s due process rights by inhibiting the party’s ability to present its case or respond to evidence being used against it.” The Court held that Skyview did not sufficiently prove this standard. Customs provided detailed summaries of the redacted video and photos with enough specificity. Skyview was also put on notice and had an opportunity to offer counterevidence. Skyview claims that they sent an individual to take videos and photographs, however, Customs and the court never received either. As such, Skyview’s due process challenge was denied.

Finally, Skyview argued that the evidence provided through a third-party investigator was hearsay and should not be considered by Customs. The court noted that hearsay is not prohibited in administrative proceedings, so long as it is reliable and probative. Customs ensured that their investigator’s reports were corroborated with credible research and disinterested parties. The court ultimately concluded that since hearsay evidence is permitted in administrative proceedings and Customs adequately explained why it considered the evidence credible, Skyview’s argument was without merit. As such, the court denied Skyview’s Motion for Judgment on the Agency Record.