US Tells CIT Tire Importer Failed to Offer Admissible Evidence in Customs Penalty Suit

The U.S. told the Court of International Trade in a March 15 reply brief that importer Katana Racing has failed to submit any evidence that would be admissible at trial to rebut the govenrment's claims in a customs penalty suit. The U.S. said Katana only pointed to "hearsay" in addressing the government's arguments that the company was the importer of record for the 386 entries at issue and that the importer negligently entered the goods via "material and false statement" (United States v. Katana Racing, CIT # 19-00125).

The suit stems from 386 tire entries made between 2009 and 2012 for which duties hadn't been paid. Katana said the entries were made as the result of identity theft, with suppliers or individuals falsely declaring Katana as the importer of record (see 2311150043). The importer moved to dismiss the suit, claiming that the U.S. didn't sufficiently allege fraud in seeking over $5.7 million in unpaid safeguard duties.

The government moved for summary judgment in the case, receiving opposition from Katana. The company is arguing that should the case go to trial, it will produce evidence "both direct and circumstantial" to support the idea that its identity was stolen. In repsonse, the U.S. said this claim "misunderstands" the company's "obligation at the summary judgment stage." Once a party presents a proper motion for summary judgment, as the U.S. had done here, the nonmoving party can't "rest on his allegations" to get to a jury without "any significant probative evidence tending to support the claim."

Katana may not present its claims to a "factfinder without first demonstrating a genuine dispute of fact through evidence that could be admissible at trial," the U.S. said. The government noted that the importer failed to submit any declarations or affidavits under penalty of perjury from any current or former employee or officer. "Instead, Katana attempts to rely on its own statements made to CBP, which, when offered by Katana to prove the truth of the matter, are inadmissible hearsay," the brief said.

Meanwhile, the U.S. said its own evidence against Katana entitles it to summary judgment. The government submitted "sworn declarations" from CBP employees showing Katana to be the importer of record for the entries, along with Katana's statements to CBP, which show that the importer gave powers of attorney to customs brokers allowing entries to be made on the company's behalf. The company also "confirmed the presence of material and false statements in the entry documentation" by Katana copping to the fact that false "statements were made" to CBP and that loss of revenue came from errors made on the entries.

In claiming it wasn't the importer of record for the entries, Katana relied on a prior statement from the trade court that said that the U.S. merely dubbing the company to be the importer of record doesn't make it so in this instance. The U.S. said Katana can't rely on this fact finding since it was reversed by the U.S. Court of Appeals for the Federal Circuit in a 2023 opinion (see 2308030034). The government added that "even assuming that the actual entry documentation was submitted by customs brokers and not by Katana, that does not alter Katana’s status -- and resulting responsibility to exercise reasonable care -- as the importer of record."