CIT Rejects Importer's Attempt to Dismiss Penalty Case

The Court of International Trade on April 16 denied an importer’s bid to sink a government customs penalty case, rejecting its arguments that the liquidation of an entry makes it final and bars CBP from imposing penalties and seeking unpaid duties. The court also found the government’s complaint successfully alleged that Great Neck Saw Manufacturers’ omission of purportedly improper “buying commissions” may have constituted violations of 19 USC 1592.

In particular, the government alleged GNSM, an importer and manufacturer of hand tools, improperly deducted a 5 percent buyer’s commission from the value of its entries, treating it as a non-dutiable charge. According to the complaint, GNSM paid the “commission” directly to the foreign seller, and the buying agreements showed the agents’ names and addresses were the same as the foreign seller. GNSM allegedly continued to deduct the charges as buying commissions even after being notified by CBP that the commissions were not deductible, the government said.

The government sought $1,111,351.24 in penalties and $307,767.49 for negligent violations of Section 592 occurring before GNSM was notified in 2007, and for grossly negligent violations after being told by CBP to stop. GNSM filed a motion to dismiss the case, arguing the government did not say it made any false statements as required by Section 592, and that the duties were not “lawful” because the entries had already been liquidated.

CIT held that the complaint was valid, in that the government argued GNSM’s deductions of buying commissions were in themselves false statements made as a result of the importer’s negligence and gross negligence. It also disagreed that the government could not collect penalties and unpaid duties because the entries had already been liquidated. Section 592 requires the collection of unpaid duties resulting from misstatements. Though courts have in the past ruled against Section 592 penalties as a result of unreasonable delays, no such delays occurred in this case and any unpaid duties resulted from GNSM’s own actions, it said.

(U.S. v. Great Neck Saw Mfrs., Inc., Slip Op. 18-42, CIT # 17-00049, dated 04/16/18, Judge Gordon)

(Attorneys: Albert Iarossi for plaintiff U.S. government; Carl Soller of Soller Law for defendant Great Neck Saw Manufacturers, Inc.)