Wheel Hub Assembly Importer Says US' $100M Penalty Case at CIT Is a 'Money Grab'

The U.S.'s customs penalty suit against importer Wanxiang America Corp., a U.S. subsidiary of a Chinese manufacturing company, is a "money grab, plain and simple," Michael Roll, counsel for WXA, said during oral argument at the Court of International Trade on May 17. Roll said that because the U.S. is only seeking a penalty for WXA's entries from a company with a 92.84% dumping rate and not entries made before or after the ones at issue from a company with a zero percent rate, it is clear the government is trying to "grab the money" (United States v. Wanxiang America Corp., CIT # 22-00205).

WXA imported the merchandise in question between 2007 and 2012, when it brought in universal joints and parts thereof, wheel hub assemblies, radial ball bearings, tapered roller bearings, and other automobile parts and accessories. The U.S. alleged that these goods were subject to the antidumping duty order on tapered roller bearings from China, claiming that WXA should have paid the cash deposit rate of 92.84% for the goods, since the exporter, Wanxiang Qianchao Co., was subject to the all-others rate (see 2207140032).

The importer filed a motion to dismiss the case, which is seeking nearly $100 million, claiming that the imports were clearly not subject to the AD order at the time of import (see 2210140075). The scope question for these goods was not settled until at least Dec. 6, 2011, after the time of import. The scope issue was not fully settled until 2014 by the U.S. Court of Appeals for the Federal Circuit, which found that the wheel hub assemblies are within the scope of the order.

In the oral argument on the motion to dismiss, Roll claimed that Commerce is required to notify any "reasonably informed importer" that their goods are subject to duties before any retroactive assessment of duties or penalties. The government never served WXA with any scope documents including a preliminary or final scope ruling, and the government does not claim otherwise, Roll argued. One question raised by the court and the government asked whether WXA could just go to Commerce's "reading room" and find the notice saying the assemblies are within the scope of the order.

"We would urge the court from a policy point of view, as much as it's important that importers are following the law and doing due diligence to report entries correctly, it's equally important that we have a country of laws where the government follows them so people can know what they have to do and not just say, 'Go look it up in the reading room,'" Roll replied.

In response, DOJ lawyer Mikki Cottet pointed to the due process importers are entitled to. She said importers are “entitled to a pre-penalty notice, which they received,” and an “opportunity to be heard regarding that pre-penalty notice. You do not hear them alleging they didn't get that due process.” Cottet also said “they're entitled to a penalty notice, which they received. They're entitled to address the issues raised in the penalty notice from further administrative proceedings, which they did."

Cottet added that WXA waived these due process claims since they were not raised administratively. She also said WXA was "sloppy" in its import of not just assemblies but all of its products, which led to negligence and gross negligence. Cottet also told the court that WXA failed to follow direct guidance from CBP regarding the proper classification of its goods and said the government has adequately alleged that materially false statements were made, adding that that's all the U.S. has to prove if the case goes to the merits stage.