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False Statement on Entry Documentation Yields Penalty for Importer

Wednesday, May 01, 2019
Sandler, Travis & Rosenberg Trade Report

A U.S. importer has been ordered to pay $146,368.64 in antidumping duties and a $141,984.98 penalty for making materially false statements and omissions in its entry documentation.

According to the Court of International Trade, the company at issue is a small business that does not typically import goods into the U.S. In a one-time importation of stainless steel flanges from India, which were subject to an AD duty order, the company identified the entry type as 01 (consumption entry) rather than 03 (AD entry) and did not deposit any AD duties at the time of entry. In addition, the entry forms falsely stated that the flanges were produced in India.

When U.S. Customs and Border Protection determined that the goods were subject to the AD duty order and issued a pre-penalty notice, the company said the goods were not subject to the order because they were unfinished. The company later abandoned that argument, which it said was an incorrect assertion by prior counsel, and acknowledged that the plain language of the order unambiguously covers unfinished flanges.

After CBP subsequently issued a decision that the company had failed to exercise reasonable care, the company offered a different argument, claiming that the flanges were U.S.-origin goods mistakenly shipped to India and returned and thus exempt from the AD duty order. However, the CIT pointed out that nearly 15 years after the flanges were imported the company has still never submitted all the paperwork necessary to verify this assertion. Instead, the GSP certificate of origin verifies that the flanges were products of India and the entry documentation includes a declaration affirming that the flanges were made in India.

In considering the amount of the penalty to assess the CIT acknowledged the company’s small size and inexperience importing but added that “even small, unsophisticated, first-time importers should understand that knowingly submitting false statements to CBP is illegal.” The court added that the falsification of CBP forms was “particularly egregious” and that the company did not make a good faith effort to comply. However, taking all aggravating and mitigating factors into account, the court decided to impose a penalty amount of 50 percent of the statutory maximum.

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