CIT Orders First-Time Importer to Pay Nearly $300K in Penalties and Unpaid AD Duties

The Court of International Trade on April 22 ordered a novice importer to pay a $141,984.98 penalty, plus $146,368.64 in unpaid duties, for failure to declare stainless steel flanges subject to an antidumping duty order. Despite the Titan Metals’ small size, the court found the importer’s false statements on entry documentation “particularly egregious,” setting the penalty at 50 percent of the legal maximum.

“While Titan Metals was a one-time importer, even small, unsophisticated, first-time importers should understand that knowingly submitting false statements to CBP is illegal,” CIT said. The trade court also took note of the “tangled web” woven by Titan in the years since the entry at issue, with the importer first arguing its goods were not subject to AD duties before switching its story and saying the entries were U.S. goods returned.

The shipment of stainless steel flanges at issue in the case dates back to 2003. Titan, an exporter of domestic forging scrap but a first-time importer, claimed the goods originated in India, and that they were eligible for the Generalized System of Preferences benefit. Along with its entry summary, Titan submitted certifications that its goods were products of India.

When CBP inquired as to whether they were subject to the AD duty order on stainless steel flanges from India, Titan’s lawyer claimed they were not because they were unfinished. But the scope of the AD duty order plainly covers stainless steel flanges “both finished and not-finished.” Titan no longer disputes that the goods were subject to the AD duty order.

Then Titan, six years after the entry was filed, changed tack in a response to a CBP penalty notice and claimed the goods were U.S. goods returned. But Titan never submitted any of the required documentation for U.S. goods returned. The importer did send evidence of a shipment of flanges it bought from a U.S. company, and claimed that it had inadvertently exported it to India before arranging its return. But though the weights of the two shipments was close, they did not exactly match. And Titan had already submitted evidence with its entry that the goods originated in India.

The government sought the maximum $283,969.97 penalty for Titan’s alleged negligent violation of 19 USC 1592, representing the domestic value of the merchandise. Looking to mitigating factors, CIT found that “Titan Metals is not a repeat player familiar with customs laws and regulations.” It also found the company has only five employees.

On the other hand, Titan knowingly made false statements to CBP. It also did not cooperate fully with CBP’s “many efforts to resolve this issue,” offering “limited and often non-responsive communications,” CIT said. “Because Titan Metals is a one-time importer, a small business, and has no history of prior violations, but nonetheless falsified CBP documents and failed to cooperate fully with CBP, the court imposes a penalty amount of 50% of the statutory maximum,” or $141,984.98.

(U.S. v. Titan Metals Corporation, Slip Op. 19-49, CIT # 13-00398, dated 04/22/19, Judge Katzmann)

(Attorneys: Davis Oliver for plaintiff U.S. government; Peter Koenig of Squire Patton for defendant Titan Metals)