Government Not Limited to Info on CBP Penalty Notices in Penalty Cases, CIT Says
The government is not limited to facts CBP includes in penalty notices when it seeks penalties from importers in court, the Court of International Trade said in a decision issued Dec. 22 (here). Rather, it can rely on facts and evidence gathered during the court case itself, CIT said. However, the court declined to rule against an importer accused of duty evasion based on those facts and evidence in a Section 1592 penalty case, finding neither side had established enough of a case either way.
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The government argued the importer, Univar, brought in saccharin from China that was transshipped through Taiwan to avoid AD duties on Chinese saccharin, and misrepresented Taiwan as the country of origin. Through an investigation carried out by ICE, CBP determined that Univar’s supplier in Taiwan was not licensed to manufacture saccharin and operated out of a residential building, and that the sole licensed manufacturer in Taiwan only sold limited quantities of saccharin to Univar’s supplier. It also found customs data evidenced a transshipment scheme.
Univar claimed the government was impermissibly relying on facts and evidence that had not been included on the pre-penalty and penalty notices sent to the importer. It cited a recent case involving Nitek Electronics, in which the Federal Circuit found the government cannot bring a Section 1592 case involving a different level of culpability -- negligence, gross negligence or fraud -- if it does not first allege that level of culpability in the penalty notice (see 1512030019).
CIT ruled Nitek does not apply, finding the government is free to rely on evidence unmentioned by CBP. The Nitek case applied to new levels of culpability, which is different from new evidence, CIT said. CBP is only required to provide the importer with enough information to form a response to the penalty notice in defense, it said. Section 1592 cases are not reviews of how CBP conducted its penalty proceeding, but entirely new actions based on a claim made by CBP, it said. The government “is not barred from introducing evidence developed during discovery solely because it was not before CBP during the administrative proceeding and specifically disclosed in the penalty notice,” the court said.
However, based on the facts of the case, CIT declined to declare victory for either the government or Univar. Though the government does not currently have enough undisputed evidence to rule that Univar made misstatements in violation of Section 1592, the case is still in its early stages, the court said. The government is still waiting on potentially useful evidence, including certified statements from the Taiwanese government addressing which companies are authorized to manufacture or repackage saccharin in Taiwan. Univar, meanwhile, has said it needs to gather additional information to defend itself against the government’s claims.
(U.S. v. Univar USA, Slip Op. 16-119, CIT # 15-00215, dated 12/22/16, Judge Barnett)
(Attorneys: Stephen Tosini for plaintiff U.S. government; Lucius Lau for defendant Univar USA, Inc.)