CIT Approves High Single Transaction Bond Requirement for China Garlic Importer
The Court of International Trade on June 12 gave CBP the go-ahead to set heavy bonding requirements for an importer of garlic from China (here), after putting the agency’s decision on hold in October. CBP had required Kwo Lee to post a single transaction bond at the $4.71/kg antidumping duty rate for the China-wide entity, rather than the $0.35/kg rate in effect for garlic produced and exported by the Chinese company listed on Kwo Lee’s entry documentation. Despite initially issuing an injunction to save Kwo Lee from bankruptcy while it considered the facts of the case (see 1410220063), CIT ruled that CBP was justified in its distrust that the garlic was actually produced by the exporter in question.
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Kwo Lee had claimed the garlic was produced and exported by Qingdao Tiantaixing Foods Co., Ltd. (QTF), which had been assigned the $0.35/kg rate in a new shipper review that took place in 2006. However, CBP had ordered bonding at the China-wide rate because it said it could not determine that the garlic was produced by QTF. Only garlic both produced and exported by QTF was eligible for the $0.35/kg cash deposit rate. Garlic only exported, and not produced, by QTF was still part of the $4.71/kg China-wide entity.
CBP’s suspicions were raised by “a pattern of omissions and possible discrepancies that made it impossible to verify the identity of the producer, and therefore impossible to verify Plaintiff’s eligibility for QTF’s special rate,” said CIT. Phytosanitary certificates included with Kwo Lee’s entry documentation lacked the China Inspection and quarantine Code (or listed one belonging to a different producer), as well as the production lot number and date. Supplemental information submitted by Kwo Lee in response to a CBP inquiry purportedly showed that QTF had never previously produced and exported such a large quantity of garlic to the U.S., and lacked sufficient employees and facilities to process all the garlic it claimed to produce.
Given the lack of evidence that demonstrated Kwo Lee’s entries should have been subject to the lower cash deposit rate, CBP was within its rights to require a single transaction bond at the China-wide rate to protect its revenue, said CIT. CBP reasonably concluded that it could not verify that Kwo Lee’s entries were subject to the lower rate, it said. And although CBP’s notice to Kwo Lee’s customs broker of the higher bonding requirements was general, lacking detail on why the China-wide rate was being applied, “concurrent and subsequent communications between Plaintiff and Customs, as well as affidavits, documentation, and briefing provided in the course of this action, have served to cure the deficiency,” said CIT.
(Kwo Lee, Inc. v. U.S., Slip Op. 15-56, CIT # 14-00212, dated 06/12/15, Judge Pogue)
(Attorneys: Robert Hume of Hume & Associates for plaintiff Kwo Lee, Inc.; Tara Hogan for defendant U.S. government)