U.S. Customs Probing Quartz Transshipping

WASHINGTON – U.S. Customs and Border Protection (CBP) will continue an inquiry involving ten U.S. companies possibly bypassing tariffs with Chinese-made quartz surfaces.

Earlier this month, the CBP found “reasonable suspicion of evasion” of the unfair-trade tariffs by declaring Chinese-origin surfaces as manufactured in Malaysia. The agency also alleged that two Malaysian companies misrepresented themselves as manufacturers of surfaces made in China.

In addition to further investigation, the CBP may require a security bond or cash deposits on future Malaysian quartz shipments involving the 10 U.S. companies. The agency also left open the possibility of collecting tariffs of 300% to 525% on previous shipments.

The action came after U.S. quartz-surface manufacturer Cambria Company LLC filed complaints against the U.S. importers in July and November of last year. The company can identify tariff violations and supply evidence to the CBP under the federal Enforcement and Product Act (EAPA).

The U.S. importers under investigation are:

• Big D LLC (New York);
• Colorquartz New York (North Bergen, N.J.);
• Cumberland Cabinet and Design Inc. (Jacksonville, Fla.):
• Durian Kitchen Depot Inc. (City of Industry, Calif.);
• Flowery Stone Inc. (New York);
• Kat Specialties Inc. (Dallas);
• Kingway Construction Supplier Inc. (San Leandro, Calif.);
• Nio Kitchen Depot Inc. (City of Industry, Calif.);
• Nomadic Barters Inc. (Houston); and
• Opaly USA LLC (Katy, Texas).

All of the companies sourced the quartz surfaces in question from Malaysian companies Ever Stone World SDN BHD or MSW Building Supply SDN BHD and four affiliates.

As part of its EAPA complaints, Cambria used a foreign-market investigator, according to the CBP report, didn’t find evidence of factories for either Ever Stone or MSW. The investigator also spoke with representatives of the Malaysian companies and allegedly confirmed Chinese quartz-surface transshipping.

The CBP also found that documents supplied by the 10 U.S. importers incomplete and vague on specific questions regarding the manufacturing location of quartz surfaces in question. The agency concluded that, based on information received, it couldn’t determine if the material was made in Malaysia, or that the surfaces seemed to be made by specific manufacturers in China.

Read the Full CBP Report

The CBP also noted an arbitration clause in a contract between MSW and one of the importing companies that left anything not covered in “friendly arbitration” to be submitted to “China International Economic and Trade Arbitration Commission in accordance with the provisional rules and procedures.”

“It is unclear,” according to the CBP report, “as to why a business transaction between a Malaysian company and a company in the United States would be arbitrated by the China International Economic and Trade Arbitration Committee.”

The CBP determined, by its investigation, that “there is reasonable suspicion that the importers entered covered merchandise into the United States through evasion, by means of transshipment through Malaysia or by not declaring the correct entry type.

“Consequently, there is reasonable suspicion of evasion.”

The CBP ordered interim measures, pending a final determination on the cases, of not finalizing the imports of Malaysian quartz surfaces received by the 10 U.S. importers as of last November 3, as well as any such imports before that date that haven’t cleared the customs paperwork process. The action – officially called suspension of liquidation – allows the CBP to impose and collect tariffs (and any penalties) on goods where it determines evasion by misrepresentation.

The CBP action, announced Feb. 8 and published on Feb. 22, is separate from the inquiry announced in early February by the U.S. Commerce Department concerning transshipping of Chinese quartz surfaces via Malaysia.

In a related move concerning an earlier EAPA filing by Cambria, CBP in late January found that online furniture retailer Simpli Home Ltd. didn’t report that vanity sets from Vietnam included Chinese-made quartz-surface tops. 

“This is just one in what is now a long line of EAPA investigations where Customs has taken strong and decisive action against illegal evasion,” said Luke Meisner of Washington-based law firm of Schagrin Associates, Cambria’s legal counsel in the case. “We commend Customs for making it clear to companies that trade in illegally traded imports that they will be brought to justice so that American producers and American workers can continue to grow and prosper based on fair competition on a level playing field.”