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Conclusion of normal value review: Upholstered domestic furniture (UDS 2022 UP7)


The Canada Border Services Agency (CBSA) has today concluded a normal value review (review) to update all normal values and export prices applicable to certain upholstered domestic seating (UDS) from China by Zhejiang Kuka Merlin Furniture Co., Ltd. (“Kuka Merlin”).

The review follows a request for re-determination filed by an importer and is part of the CBSA’s enforcement of the Canadian International Trade Tribunal’s (CITT) order issued on September 2, 2021, respecting the dumping and subsidizing of UDS from China and Vietnam in accordance with the Special Import Measures Act (SIMA).

The product definition and the applicable tariff classification numbers of the goods subject to the CITT’s order are contained in Appendix 1 (subject goods).

Period of investigation

For this review, the period of investigation (POI) and the profitability analysis period (PAP) were from July 1, 2021 to June 30, 2022.

Normal value review process

At the initiation of this review, on July 22, 2022, the CBSA sent requests for information (RFIs) to Kuka Merlin and the importer in order to solicit information for purposes of updating all normal values and export prices.

Responses to the CBSA’s RFIs and supplemental RFIs (SRFI) were received from Kuka Merlin. In its RFIFootnote 1 and SRFI #1Footnote 2 responses, Kuka Merlin made several representations on subjectivity and how the CBSA should determine normal values, and that normal values determined in the original investigation should be retained.

As part of the review, counsel on behalf of Palliser Furniture Ltd. (“Palliser”), a Canadian producer, submitted comments on the submissions filed by Kuka Merlin during the course of the reviewFootnote 3Footnote 4, and as case argumentsFootnote 5 after the close of record. The issues raised in Palliser’s comments concerned issues with costing, the reliability of data and information provided by Kuka Merlin, the retroactive application of normal values, and the sectional subjectivity of goods exported by Kuka Merlin.

No reply submissions were received by any party.


Kuka Merlin made comments throughout the review which are summarized as follows:

The CBSA should not determine the normal value based on the final sectional configuration unit and instead, normal values should be determined on the basis of sectional component.

The CBSA should determine normal values for sectional components based on the physical and technical characteristics of the goods at the time of importation into Canada.

The CBSA should retain normal values that have been verified and determined in the original investigation, and only update the normal value for products that have been exported during the POI of the normal value review.

Counsel for Palliser made several arguments, throughout the review and as case arguments after the close of record, in regards to Kuka Merlin’s submissions, which are summarized as follows:

Kuka Merlin’s submission should be considered unreliable since it provided incorrect and misrepresented information throughout the normal value review and only changed its responses when “caught or challenged” by the CBSA.

The CBSA should review all of Kuka Merlin’s costs and decline to provide the exporter with normal values for which costs are unreliable. Palliser argued that should the CBSA decide to use Kuka Merlin’s costs in the determination of normal values, the CBSA should use Kuka Merlin’s highest costs for each product.

Kuka Merlin’s request to retain outdated normal values should be rejected on the basis of significantly increased costs and prices in the UDS market since the investigation, and that previous importations of Kuka Merlin’s shipments should be retroactively reassessed as it did not inform the CBSA of changes in costs and did not price up accordingly.

The CBSA should determine normal values on the basis of full sectionals, and not for sectional components. Palliser argued that Kuka Merlin failed to provide sufficient information for the CBSA to assess whether goods are subject.

CBSA response

The CBSA reviewed the information, including selling prices and costs, provided by Kuka Merlin and adjustments were made when necessary. The CBSA found that the costs provided by Kuka Merlin were generally accurate and reliable. In general, inaccuracies or errors discovered by the CBSA were corrected and/or explained by Kuka Merlin as requested.

The CBSA conducted an analysis of subject imports from Kuka Merlin during the POI, to determine whether a retroactive assessment was warranted. The analysis relied on information provided in the RFI and SRFI responses received. The analysis was focused on determining if export selling prices rose adequately in response to the rising costs of UDS. The CBSA looked at the period from September 3, 2021 to June 30, 2022, which was the period from the CITT’s finding to the end of the POI.

The CBSA compared costs and export prices from the beginning to the end of this period and found that they changed by roughly the same amount, with a few minor exceptions. The CBSA also compared costs and export prices from the original investigation to the end of the period of investigation and found that they changed by roughly the same amount. As a result, retroactive assessments do not appear to be warranted at this time.

The CBSA took the complainant’s comments about the sectional components into consideration and determined normal values for all goods subject to the CITT’s finding.

Normal values for future shipments

Kuka Merlin is a producer and exporter of subject goods, located in Zhejiang, China. Kuka Merlin is associated with a trading company involved in the sales of subject goods, located in Hong Kong.

During the course of the review, Kuka Merlin provided responses to the CBSA’s Dumping RFI as well as four Supplemental RFIs (SRFIs).

Kuka Merlin provided a database of domestic sales of UDS during the POI. However, normal values could not be determined in accordance with section 15 of SIMA as there were not such a number of sales of like goods that complied with all the terms and conditions referred to in sections 15 and 16 of SIMA as to permit a proper comparison with the sales of the goods to the importer in Canada.

Kuka Merlin provided sufficient cost of production and administrative, selling and all other costs to determine normal values pursuant to paragraph 19(b) of SIMA. However, the CBSA was unable to determine an amount for profits under paragraph 11(1)(b) of the Special Import Measures Regulations (SIMR).

As such, normal values were determined pursuant to section 29 of SIMA using a method similar to that of paragraph 19(b), based on the aggregate of adjusted production cost of the goods, a reasonable amount for administrative, selling and all other costs, and a reasonable amount for profits determined by ministerial specification.

For the subject goods exported by Kuka Merlin to Canada, export prices are determined in accordance with section 24 of SIMA.

These specific normal values and export prices for future shipments are effective today, March 27, 2023. The normal values and export prices determined as a result of this review may be applied to any requests for re-determination of importations of subject goods that have not been processed prior to the conclusion of this review, regardless of the date that the requests were received. The normal values and export prices determined as a result of this review may be applied retroactively where the conditions described below are met.

Exporter responsibility

Please note that exporters with normal values are required to promptly inform the CBSA in writing of changes to domestic prices, costs, market conditions or terms of sale associated with the production and sales of the goods. If there are changes to the exporter’s domestic prices, costs, market conditions or terms of sale associated with the production and sales of the goods, and where the CBSA considers such changes to be significant, the normal values and export prices will be updated to reflect current conditions. All parties are cautioned that where there are increases in domestic prices, and/or costs as noted above, the export price should be increased accordingly to ensure that any sale made to Canada is not only above the normal value but at or above selling prices and full costs and profit of the goods in the exporter’s domestic market. If exporters do not properly notify the CBSA of any such changes, do not adjust export prices accordingly, or do not provide the information required to make any necessary adjustments to normal values and export prices, retroactive assessments will be applied where such action is warranted.

Importer responsibility

Importers are reminded that it is their responsibility to calculate and declare their anti-dumping duty liability. If importers are using the services of a customs broker to clear importations, the brokerage firm should be advised that the goods are subject to SIMA measures and be provided with sufficient information necessary to clear the shipments. To determine their anti-dumping liability, importers should contact the exporter(s) to obtain the applicable normal values. For further information on this matter, please refer to Memorandum D14-1-2, Disclosure of normal values, export prices, and amounts of subsidy established under the Special Import Measures Act.

The Customs Act (Act) applies, with any modifications that the circumstances require, with respect to the accounting and payment of anti-dumping duties. As such, failure to pay the duties within the prescribed time will result in the application of the interest provisions of the Act.

Should the importer disagree with the determination made on any importation of goods, a request for re-determination may be filed. For more information on how to file a request for re determination, please refer to the Guide for appealing a duty assessment.

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Appendix 1—product definition

Subject goods definition

“Upholstered seating for domestic purposes originating in or exported from the People’s Republic of China and the Socialist Republic of Vietnam, whether motion (including reclining, swivel and other motion features) or stationary, whether upholstered with a covering of leather (either full or partial), fabric (including leather-substitutes) or both, including, but not limited to seating such as sofas, chairs, loveseats, sofa-beds, day-beds, futons, ottomans, stools and home-theatre seating.


  1. Stationary (i.e. non-motion) seating upholstered only with fabric (rather than leather), even if the fabric is a leather-substitute (such as leather-like or leather-look polyurethane or vinyl)
  2. dining table chairs or benches (with or without arms) that are manufactured for dining room end-use, which are commonly paired with dining table sets
  3. upholstered stools with a seating height greater than 24 inches (commonly referred to as “bar stools” or “counter stools”), with or without backs, and/or foldable
  4. seating manufactured for outdoor use (e.g. patio or swing chairs)
  5. bean bag seating and
  6. foldable or stackable seating

For greater certainty, the product definition includes:

  1. Upholstered motion seating with reclining, swivel, rocking, zero-gravity, gliding, adjustable headrest, massage functions or similar functions
  2. seating with frames constructed from metal, wood or both
  3. seating produced as sectional items or parts of sectional items
  4. seating with or without arms, whether part of sectional items or not and
  5. foot rests and foot stools (with or without storage)”

On September 2, 2021, the Canadian International Trade Tribunal excluded the following products from its finding:

  1. Specialized reclining massage chairs, not intended to be used for general seating purposes, with padded seat, headrest, back, and footrest, and containing built-in motorized mechanical components that operate by way of computerized controls to provide a full body massage for a single person, including to the head and/or neck, shoulders, back, buttocks, arms, and legs and/or feet
  2. Medical lift chairs containing electric motion mechanisms and motorized positioning controls, designed to carefully lift, lower and tilt (by raising or lowering the base and back of the seating) the occupant, and otherwise adjust the occupant’s seating position by adjusting one or more of the headrest, footrest, and seat; designed, manufactured, and tested to meet or exceed the requirements of Health Canada’s Medical Devices Regulations (SOR/98-282) applicable thereto and conforming with the following, or equivalent, standards and testing methodologies: EN12182, ANSI/AAMI/ISO10993, ANSI/AAMI/ES60601-1, CAL117, BSEN1021, ISO8191, ANSI/AAMI/ES60601-1-2, ISO14971
  3. Height-adjustable ergonomic gaming chairs for use with a desk and intended to be used primarily while playing video games, upholstered in leather or a leather-substitute, with armrests, headrests, lumbar support pillows, five-star swivel bases, and wheels or castors

Tariff classification numbers

The importation of the subject goods are usually classified under the following tariff classification numbers:

  1. 9401.41.00.00
  2. 9401.49.00.00
  3. 9401.61.10.10
  4. 9401.61.10.90
  5. 9401.71.10.10
  6. 9401.71.10.90

This listing of tariff classification numbers is for convenience of reference only. Refer to the product definition for authoritative details regarding the subject goods.

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