Since October 5th, the U.S. Department of Justice (DOJ) has initiated four civil actions at the Court of International Trade seeking recovery of revenue lost as the result of schemes alleged to evade the payment of antidumping duties. These four cases, before the Court through its jurisdictional authority pursuant to 28 U.S.C. § 1582, involve a diversity of evasion schemes and products, but all involved merchandise originating in China.
Although illegal and fraudulent evasion of antidumping duties has substantially diminished the effectiveness of trade relief, civil cases brought by the DOJ on behalf of the U.S. Government seeking to recover antidumping duties evaded have been uncommon. These four cases, summarized below, provide a rare window into the enforcement efforts undertaken by U.S. Customs and Border Protection (CBP) while also highlighting the challenges faced in administering antidumping duty orders.
The bulk of the importations at issue in the four cases occurred in 2009 and 2010. Yet, following a lengthy administrative process, civil cases for recovery of owed duties on those entries were not initiated until late 2014. Moreover, the inability of CBP to regulate or limit who may act as an importer of record is evident in these lawsuits. In one of the cases filed, the importer of record was not a valid corporate entity at the time of importation. With the others, the importing entity appears to have disappeared. Reviews of bills of lading indicate, however, that their importing activities continue under different names and identities. For example, bills of lading related to imports made by AMW Trading Inc. indicate that sometime in 2011 the name of the consignee was changed to “New AMW Trading Inc.” Corporate registration information available from the State of New York indicates that “New AMW Trading” was registered as a company in July 2011, after the allegedly false statements were made by AMW Trading regarding imports entered between October 2009 and July 2010 but before AMW Trading itself was dissolved as a corporate entity in November 2011. For its part, “New AMW Trading” was dissolved in September 2013.
Entry Type Misclassification
In United States v. 3A Industrial Supply, LLC (Oct. 5, 2014), the Government alleges that a Texas corporation, 3A Industrial Supply, LLC, attempted to enter a shipment of steel, butt-weld, pipe fittings from China in October 2009 worth $77,028 as a “consumption entry” and, as such, not subject to antidumping duties. The pipe fittings were imported more than a year after 3A Industrial Supply had forfeited its corporate charter in the State of Texas. The misclassification of the entry type is alleged to have resulted in a loss to the Government “in the amount of $42,326.72.” In November 2009, 3A Industrial Supply amended its entry forms to acknowledge that the merchandise was subject to antidumping duties. However, “[a]lthough 3A submitted corrected entry forms, it did not, and since has not, submitted payment for the higher duty amount.” Alleging that 3A Industrial Supply, through the exercise of reasonable care, should have known that the merchandise was subject to antidumping duties, the Government is seeking a penalty in an amount equal to the value of the imported merchandise ($77,028) through the civil action.HTSUS Code Misclassification
In United States v. AMW Trading, Inc (Oct. 8, 2014), the Government alleges that a New York corporation, AMW Trading Inc., made false statements regarding eleven (11) entries of wire hangers from China imported between October 2009 and July 2010. The Government’s complaint asserts that AMW Trading falsely entered wire hangers under the U.S. Harmonized Tariff Schedule (HTSUS) code 9403.20.0020 (“Counter, Locker, Racks”) as not subject to antidumping duties or any other duties. The appropriate HTSUS entry code would have been 7326.20.0020, subject to a duty rate of 3.9 percent and an antidumping duty cash deposit rate of 55.31 percent. In total, the misclassification of these entries is alleged to have resulted in the loss of $80,908.10. Prior to filing suit, CBP issued a penalty notice demanding payment of a penalty in the amount $161,816.20 along with outstanding duties of $80,908.10. AMW Trading did not respond to CBP’s notices.
In United States v. Six Star Wholesale, Inc (Oct. 8, 2014), the Government alleges that a Georgia corporation, Six Star Wholesale, Inc., made false statements regarding twenty-seven (27) entries of wire hangers from China and fourteen (14) entries of polyethylene retail carrier bags (PRCBs) from China imported between October 2009 and August 2010. As with AMW Trading, the Government alleges that Six Star Wholesale falsely entered wire hangers as duty-free under HTSUS code 9403.20.0020 (“Counter, Locker, Racks”) when this merchandise should have been identified under HTSUS code 7326.20.0020. The misclassification of these wire hanger imports is claimed to have resulted in the loss of duties in the amount of $182,092.08. Similarly, Six Star Wholesale is alleged to have entered the PRCBs as not subject to antidumping duties and classified them as “other” plastic bags covered by HTSUS code 3923.29.0000 when the appropriate HTSUS code was 3923.21.0085, encompassing plastic bags made of polyethylene. In total, the misclassification on the PRCBs is alleged to have resulted in the loss of duties in the amount of $54,408.29. Earlier this year, CBP issued two penalty notices to Six Star Wholesale – demanding payment of a penalty in the amount of $364,184.16 and outstanding duties in the amount of $182,092.08 regarding the wire hanger imports and a penalty in the amount of $122,271.88 and outstanding duties in the amount of $54,408.29 regarding the PRCBs imports. Six Star Wholesale did not response to CBP’s notices, but the Government indicated that it had been paid $33,864.06 by Six Star Wholesale’s surety in September 2014.
False Country of Origin Designation
In United States v. CoStar, Inc (Nov. 4 2014), the Government alleges that another Georgia corporation, CoStar Inc., made false statements regarding sixty-one (61) entries of PRCBs from China imported between November 2009 and November 2012. According to the complaint, CoStar claimed at entry that the PRCBs originated in Hong Kong, not China, and classified the PRCBs as falling under HTSUS code 3923.21.0095. The imports are alleged to have been Chinese in origin and should have fallen under HTSUS code 3923.21.0085 (plastic bags made of polyethylene). The false country of origin and misclassification of HTSUS code is claimed to have resulted in the loss of duties in the amount of $879,987.44. Prior to filing suit, CBP issued a penalty notice demanding payment of a penalty in the amount of $1,759,974.88 along with outstanding duties of $879,987.44. CoStar did not respond to CBP’s notices.