US Brings $56,000 Customs Penalty Suit Against Tire Importer

The U.S. opened a customs penalty lawsuit against California importer Rago Tires, alleging that the company avoided antidumping and countervailing duty orders on truck and bus tires from China. The government is looking to collect $56,435.48 from Rago, quadruple the amount of duties the company allegedly failed to pay (U.S. v. Rago Tires, CIT # 24-00043).

The Commerce Department announced the AD/CVD orders in February 2019, telling CBP to collect 2.83% AD and 42.16% CVD on truck and bus tire imports from China. Commerce said the orders cover merchandise that fits under Harmonized Tariff Schedule subheading 4011.20.1015.

Three days after the orders were announced, Rago used that heading when it imported goods worth just over $60,000. The U.S. said Rago entered the goods under the correct HTS subheading but said the entry was a "Type 01," meaning not subject to the AD/CVD orders. The government alleged that this was a "false statement" made with "actual knowledge of or with wanton disregard for the fact that the tires were subject" to the duties and "with indifference to and disregard of Rago Tire's obligations to truly declare that the tires were subject" to the orders.

The U.S. said Rago falsely declared the goods to not be subject to the duties despite "having regularly imported truck and bus tires from China" under HTS subheading 4011.2010.15 for 14 months before the duty orders. The importer declared its goods as not subject to the duties then "abruptly ceased importing the same classification of tires even before the falsely declared entry was discovered by Customs," the complaint said. The company should have paid $14,108.87 in cash deposits, the complaint added.

In June 2019, Rago "corrected the entry by identifying that the tires were Type 03" and subject to AD/CVD, "eventually" paying the outstanding AD/CVD on the goods, the complaint said. CBP issued a pre-penalty notice to the company "based on gross negligence." After Rago failed to respond, the agency issued a penalty of $56,435.48. When that also went unanswered, the present suit followed.

The complaint alleges gross negligence, and in the alternative, negligence.