CBP Announces EAPA Investigation, Interim Measures on Thermal Paper From Germany, South Korea

CBP announced that it has initiated and consolidated two Enforce and Protect Act investigations into whether Gorilla Paper, Inc. and Gorilla Supply (Gorilla) evaded antidumping duty on thermal paper from Germany and South Korea, according to a notice dated Nov. 3. The announcement followed evasion allegations by Paper Receipts Converting Association (PRCA) and the subsequent investigation began on July 29.

Shipping data provided by PRCA shows that Gorilla imported thermal paper from four companies with country-of-origin (COO) Turkey. PRCA alleged two of those companies, Dor Etiket and Engin Kagit, did not produce thermal paper, and were in fact the same entity that simply purchased jumbo rolls from producers in other countries to convert into smaller thermal paper rolls.PRCA supported its claim with a statement on Engin Kagit's own website that the company engaged in a partnership with Hansol Paper Company of South Korea.

PRCA said that another company, Umur Basim, purchased thermal paper rolls from producers in Germany and alleged that Umur Basim advertised production of Blue4est, a patented form of thermal paper produced by Koehler Paper in Germany and subject to the AD order. PRCA further said that a paper industry publication by Laves Chemie showed that there are no Turkish companies producing thermal paper. The conversion of jumbo thermal paper rolls into smaller slit rolls is a minor operation and does not change the country of origin, PRCA argued, citing two CBP rulings, which found that "operations of unrolling, slitting, and rerolling do not change the COO of thermal paper from where it was initially produced." PRCA made similar allegations against WHP Associates for evading orders on thermal paper from China, which CBP is currently investigating (see 2210190019).

In addition to misdeclaring the countries of origin, PRCA further alleges that Gorilla has been entering converted thermal paper into the U.S. using the wrong Harmonized Tariff Schedule classifications. The alleger argued that the appropriate HTS number for direct thermal paper in rolls, not exceeding 15 centimeters in width, is 4811.90.90.30 but that Gorilla's imports from Engin Kagit and Dor Etiket use HTS number 4816.90, which corresponds to “carbon paper, self-copy paper and other copy of transfer papers, other.” For imports from Umur Basim, PRCA also claims that Gorilla has used HTS number 4823.90, which is the HTS code for “Other paper, paperboard, cellulose wadding and webs of cellulose fibers, cut to size or shape; Other, Other.” PRCA provided ship manifest documents that suggest that Gorilla had used the wrong HTS numbers in its entries to the U.S.

CBP found that evidence provided by PRCA reasonably suggested that Gorilla entered merchandise covered by the AD orders into the U.S. through evasion. Noting the two prior CBP rulings, the agency determined that even if there were thermal roll conversion processes available from Engin Kagit and Umur Basim, the country of origin for such goods does not change and, thus, the AD orders would still be applicable to any thermal rolls produced in Germany or South Korea and imported to Turkey for conversion.

CBP then conducted a cargo examination and determined that the entirety of the product, which listed Dor Etiket as the manufacturer, was misclassified. CBP also identified the same "pattern of misclassification" in two of three responses to information requests by Gorilla. CBP said that it found a pattern of labeling merchandise “thermal paper” while classifying it as carbon paper.

Following its initial conclusions, CBP decided to suspend the liquidation of each entry that entered after July 29, 2022, the date of the initiation of the investigation, extended the period for liquidating each entry before the date of the initiation, and may take additional measures, including requiring a single transaction bond or additional security or the posting of a cash deposit. CBP also will require live entry and reject any non-compliant entry summaries, as well as require refiling of entries that are within the entry summary rejection period and evaluation of Gorilla's continuous bonds.