The Court of International Trade on Jan. 11 ordered an importer to pay a $51,102 penalty for negligent misclassification of wearing apparel that was brought to CBP’s attention by way of a prior disclosure. Selecta (dba Dickies Medical Uniforms) had paid $839,694.38 to the government in 2009-10 as part of a valid prior disclosure of its misclassification of medical scrubs and lab coats. That represented the lost revenue to the government as a result of Selecta’s negligence. But the company did not respond to a subsequent CBP penalty notice seeking $51,102, which was the interest that accrued up until the prior disclosure on the unpaid duties, taxes and fees. Selecta didn’t answer the government’s court complaint either. As a result, CIT found the importer to be in default, and ruled that it has “no basis to conclude that the penalty the government seeks, calculated as the amount of the interest from the dates of liquidation to the dates of payment, would be inequitable.”
The following lawsuits were filed at the Court of International Trade during the week of Jan. 7-13:
The Court of International Trade could be a venue for at least two more big cases involving constitutional implications this year, Crowell & Moring lawyer Daniel Cannistra said in the firm's litigation forecast for 2019. The next challenge may involve the Section 301 tariffs and whether a president "can unilaterally rewrite the tariff schedule for the purpose of negotiating trade agreements," Cannistra said. "The other constitutional issues that appear to be on the CIT’s horizon include the new United States-Mexico-Canada Agreement, which is sure to contain questions concerning executive authority over trade." The CIT is currently considering the constitutionality of the Section 232 tariffs on steel and aluminum (see 1812190044), and that case is "likely to be resolved in 2019," Cannistra said. According to Cannistra, "the consequences of these decisions will be profound. For example, if the CIT upholds one of these administration trade policies, what will it mean to a company’s global supply chain? Will production need to be relocated from one country to another? These shifts are not made overnight; the court’s decisions will affect companies for years."
The owners of Blue Furniture are facing federal criminal charges for alleged evasion of antidumping duties on wooden bedroom furniture, according to an indictment filed Jan. 8 in the U.S. District Court for South Carolina. The owners, Yingquin Zeng and Alexander Cheng, are charged with conspiracy to defraud the U.S. and entry of goods by means of false statements, the indictment said. The federal prosecutors allege that Zeng and Cheng imported wooden furniture through the Port of Charleston and knowingly submitted documents that "falsely represented the furniture being imported from China was not subject to anti-dumping duties." The Florida company was previously hit with a False Claims Act civil lawsuit over the alleged evasion (see 1708150066). That lawsuit, which is at the U.S. District Court for the Western District of Texas, was stayed until Jan. 31 due to the criminal grand jury investigation in South Carolina, according to a Jan. 3 court filing.
Fiat Chrysler will pay a $6 million civil penalty "to resolve allegations of illegally importing 1,700 noncompliant vehicles" under an "administrative agreement" with CBP, the Justice Department said in a news release. The CBP agreement is part of multiple settlements totaling more than $500 million related to allegations that the company used devices to cheat emission tests. The civil settlements do not resolve any potential criminal liability, the DOJ said. While the DOJ posted a settlement consent decree, the details of the CBP settlement were not included. The case is somewhat similar to a Volkswagen settlement over violations of U.S. emissions requirements (see 1701110027) announced a year ago. In that case, VW reached a separate settlement with CBP.
The Court of International Trade “will remain open to business” for the time being, despite the ongoing partial federal government shutdown, it said in a notice on its website on Jan. 8. CIT “will be staffed to provide all normal judicial business functions until further notice from the court,” it said. “All filing deadlines will remain in effect and [the Case Management/Electronic Case Files system] CM/ECF will remain operational for filing of all documents.”
The following lawsuits were filed at the Court of International Trade during the week of Dec. 31 - Jan. 6:
The following lawsuits were filed at the Court of International Trade during the week of Dec. 24-30:
Two Chinese citizens were sentenced to prison for a scheme to sell mislabeled dietary supplements, the Justice Department said in a news release. Zhang Xiao Dong, sales manager for Genabolix USA, was given 24 months in prison on Dec. 20 after pleading guilty in the Northern District of Texas to a count of mail fraud, the DOJ said. Gao Mei Fang, the supply chain manager for Genabolix, received a year and a day prison sentence in July, it said. "Zhang and Gao admitted that they agreed to help sell synthetic stimulant ingredients to a purported dietary supplement manufacturer in the United States," the DOJ said. "According to an indictment returned in October 2017, Zhang, Gao, and another co-defendant agreed with a confidential government informant to either mislabel the synthetic ingredients or to otherwise help hide the true nature of a proposed dietary supplement from retailers. Zhang and Gao admitted that they knew major American dietary supplement retailers would refuse to carry supplements known to contain certain stimulants, such as [amphetamine derivative 1,3-dimethylamylamine, also known as] DMAA. Gao also admitted to making false statements to FDA’s import division regarding a shipment of synthetic stimulants." Both were arrested in 2017 while at a dietary supplement trade show in Las Vegas.
Bonds covering antidumping duties were not retroactively declared invalid by a 2006 law that temporarily suspended the option to post bonds instead of cash deposits for goods subject to new shipper reviews, the Court of International Trade said in a Dec. 14 decision. Hartford Fire Insurance had argued it didn’t owe CBP uncollected duties on entries of fresh garlic from China because the Pension Protection Act, passed in August 2016, retroactively nullified existing bonds going back to April of that year. The trade court disagreed, finding the law’s retroactive application only barred importers from relying on new bonds instead of cash deposits for entries subject to new shipper reviews. Existing bonds issued before the law was enacted remained in effect, it said. “In sum, the PPA does not alter the status of bonds already lawfully filed with Customs, or the ability of Customs to collect against those bonds,” CIT said. The Trade Facilitation and Trade Enforcement Act of 2015 has since permanently ended the bond option in new shipper reviews (see 1606070008).