CIT Orders Maximum Penalty for Negligence on Apparel Importer for False Country of Origin
An importer will pay more than $80,000 in penalties for misdeclaring the country of origin on its entries of apparel products, the Court of International Trade said in a May 24 decision. The court ordered Active Frontier International to pay the maximum penalty for negligent customs violations under 19 USC 1592, partly because the importer did not exercise a minimum of reasonable care.
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Active Frontier did not defend itself in the case, causing CIT to declare it in default and accept the government’s factual allegations as true. According to the government, Active Frontier declared on entry documentation that its Chinese origin capris and jackets originated in Indonesia, South Korea and the Philippines.
The court had previously denied the government’s penalty motions in the case, questioning whether the false declarations of country of origin were “material” as required by Section 1592 (see 12083103, 12100429 and 13011722). The government finally succeeded in convincing the court, arguing false countries of origin on the capris avoided a quota, while false declarations on the jackets helped avoid the quota by ensuring CBP officers wouldn’t scrutinize sets of pants and jackets with different countries of origin.
The government sought the maximum penalty amount for negligence -- 20 percent of the dutiable value of the merchandise -- and CIT granted its request. “An importer is required to use reasonable care in importing merchandise,” the court said. “Meeting that standard requires review of information on the characteristics and source of the merchandise and information on the underlying transaction, including review of available documentation, to ensure that origin will be correctly declared upon entry,” it said.
Affidavits submitted by the government said the true bills of lading for the entries listed China as the country of origin. “If that fact is true, even a minimum effort on the part of defendant likely would have uncovered the origin-related discrepancy in the entry documentation. Therefore, a penalty in the highest amount allowed by statute for a negligent violation is appropriate,” CIT aid.
(U.S. v. Active Frontier International, Inc., Slip Op. 18-58, CIT # 11-00167, dated 05/24/18, Judge Stanceu)
(Attorneys: Joshua Mandelbaum for plaintiff U.S. government; defendant Active Frontier International in default)