In a recent decision the Court of International Trade denied a U.S. government effort to impose a tougher penalty on a U.S. importer that made a single entry error.
This case involves an entry of goods made four days after antidumping and countervailing duty orders on those goods were published. The importer incorrectly categorized the goods as a type 01 entry rather than a type 03 entry, thereby falsely indicating that the goods were not subject to those orders. According to the CIT, this error was material because it resulted in a failure to pay $14,108.87 in AD/CVD cash deposits.
The CIT determined that the importer was negligent in making this misstatement because it “had a history of importing the same class of [goods], and therefore was reasonably expected to have kept abreast of major trade developments affecting those products, including applicable AD and CVD orders.”
However, the CIT rejected CBP’s argument that the error constituted gross negligence; i.e., that the importer acted with actual knowledge of, or wanton disregard for, the relevant facts. CBP asserted that “the timing of the entry, [the company’s] experience as an importer, and its eventual cessation of imports” provide evidence that this standard was met, but the court said the case “involves a single entry and no evidence of prior warnings or repeated misconduct.” At most, the court said, “the facts reflect confusion or administrative neglect during a brief period” by “a relatively unsophisticated importer.”
After considering 14 aggravating and mitigating factors used to determine penalties that are “reasonable, proportional, and sufficient to deter future such violations,” and finding that these factors largely weigh in favor of the importer, the CIT imposed a civil penalty of $14,108.87, the amount of AD/CVD duties that should have been tendered. CBP had issued a penalty notice to the importer for $56,435.48, alleging gross negligence, and had sought from the court either that amount or a penalty of $28,217.74 for negligence.
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