CIT Awards $9.94 Million Penalty Against UK Exporter Callanish for Abetting False Entry Documentation
The Court of International Trade awarded a penalty of $9.94 million against Callanish, after CBP had tried and failed three times to punish the company for abetting importers of evening primrose oil in violation of Food and Drug Administration directives. The company had been in default since the first hearing of the case in 2009, but the court had taken issue first with CBP’s alleged violations, and then with the amount of penalty sought. Section 592 penalties can’t be set at more than the domestic value, but without a domestic market for the banned primrose oil, CBP had trouble ascertaining the correct amount. This time, CBP used the entered value, reasoning that the importer wouldn’t have sold it for less.
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According to CBP, Callanish was the exporter on 52 entries of evening primrose oil between 1988 and 1992. The product had been under FDA import alert since 1985 as an unapproved supplement. The importers falsely declared on entry documentation that the evening primrose oil was instead Vitamin E, among other things. CBP alleged that Callanish, a company in the United Kingdom, knew importation of the product into the U.S. is illegal, and that the product would be imported under cover of false documents. Callanish didn’t appear or defend itself against CBP’s complaint, it was found to be in default. In cases against defendants in default, all “well-pled” facts alleged are accepted by the court as true.
In its first ruling on the case in 2009¸ the court said the complaint didn’t successfully allege violations of Section 592, but allowed CBP to amend its complaint. Then, in 2010, CIT said Callanish had committed violations, but that the penalty sought by CBP was unjustified (see 10111011). CBP asked for a $17.7 million penalty, but failed to explain how it arrived at the amount. The court again denied CBP’s requested penalty of $17.7 million in 2012, after the agency explained that it got the number by doubling the entered value (see 12021719). The court said the regulations don’t provide for a penalty of double the entered value, instead mandating a penalty equal to the domestic value.
For CBP, the fourth time was the charm. Unable to arrive at a true figure for domestic value, CBP instead used the entered value of $9.94 million as the domestic value. The agency reasoned that the importers wouldn’t have sold the merchandise in the U.S. at below the amount they paid Callanish. CIT said the agency’s presumption was reasonable, and awarded the penalty in full.
(United States v. Callanish Ltd., Slip Op. 13-43, dated 03/28/13, Judge Stanceu)
(Attorneys: Michael Hertz for plaintiff U.S. government; defendant Callanish in default)