Thursday, June 25, 2015

Penalties and Default Judgments

What is the Court of International Trade supposed to do when the defendant in a penalty case refuses to show up? The answer is issue a default judgment against that defendant based on the well pleaded facts of the complaint. Unless challenged, those facts are taken as admitted and true. That is the background to United States v. NYCC 1959 Inc.

The imported goods appear to be petroleum wax candles from China, which are subject to antidumping duties. At the time of entry, they were described as merchandise outside the scope of the order. Customs determined that the false statement was a violation of 19 USC 1592, and imposed a penalty based on gross negligence.

A couple interesting points about this otherwise unremarkable case:

The judge found that the uncontested allegations that (1) the importer provided a false description of the merchandise and (2) the importer had prior notice from Customs and Border Protection of the false nature of the statement sufficient to establish liability for gross negligence.

Also, the penalty assessed by CBP was 40% of the value of the merchandise even though the maximum penalty was the full forfeiture value. CBP appears to have mitigated the penalty because the goods were not successfully entered and the goods were abandoned. The Court noted that the 40% figure appears to be based on the inapplicable provision relating to penalties in non-revenue violations. Nevertheless, the Court accepted and imposed judgment based on the mitigated amount.

I may have more to say on this case, but for reasons that may become apparent, I am going to wait.

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