US Department of Commerce Self-Initiates ADD/CVD Investigation on Alloy Aluminum Sheet from China.

Aluminum Antidumping

According to a press release issued by the US Department of Commerce on November 28, 2017; the Commerce Department has self-initiated an ADD/CVD investigation of imports of alloy aluminum sheet from China. This action is noteworthy as most ADD/CVD investigations are brought forward by US manufacturers – with the last self-initiated ADD investigation occurring in 1985 on semiconductors from Japan.

The merchandise subject to investigation is common alloy aluminum sheet that is flat-rolled having a thickness of 6.3 mm or less but greater than 0.2 mm, in coils or cut-to-length, regardless of width. Alloy aluminum sheet is usually used in business, construction, transportation, appliances etc.

While the initiation of the case is unique, the investigation itself will follow any other trade remedy investigation. Look for a preliminary decision on or before January 16, 2018.

CBP fines wholesaler (and not importer) $1 million under the False Claims for failing to act in response to indications of fraudulent resulting in underpayment of customs duties.

Garments

On October 3, 2017, US Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) announced a settlement of civil fraud claims brought under the False Claims Act against a garment wholesaler in Pennsylvania for ignorning repeated warning signs that its importer business partner was engaged in a scheme to underpay customs duties on imported garments from China sold to the wholesaler.

From the press release (full text here: https://www.justice.gov/usao-sdny/pr/acting-manhattan-us-attorney-announces-settlement-civil-fraud-claims-against-garment)

U.S. Attorney Joon H. Kim said: “As this settlement makes evident, companies purchasing imported goods cannot turn a blind eye to fraud committed by their business partners. We will be vigilant in holding accountable all parties who engage in or contribute to fraudulent conduct.”

According to the press release, the wholesaler should have known that discounts of 75% or more for imported garments by the importer were highly suggestive of fraud. In addition to paying $1 million in damages, the wholesaler was also required to implement a written compliance policy to educate employees and identify red flags in fraud in import transactions.

This case is just the latest example of a US company being fined by Customs in this kind of transaction. Any US buyer in this situation should consult with experienced Customs attorneys to vet their transactions and evaluate their own compliance programs.

VW agrees to pay largest civil penalty of $1.45 billion.

pexels-photo-704557.jpeg

Last Wednesday – January 11, 2017, U.S. Customs and Border Protection (CBP), along with Attorney General Loretta Lynch announced a criminal and civil settlement against Volkswagen totaling $4.3 billion.

According to this press release, VW violated customs laws by submitting to CBP false statements and omitting material information with the intent to deceive or mislead CBP concerning the admissibility of vehicles into the US. More specifically, it is claimed VW falsely represented to CBP that nearly 590,000 imported vehicles complied with all applicable environmental laws while knowing these representations to be untrue.

VW plead guilty to three felony counts for false statements regarding their vehicle’s compliance with emissions and will be required to pay a $2.8 billion criminal penalty along with a $1.45 billion civil penalty to settle fraud claims by CBP and the US Environmental Protection Agency.

 

What happens after a Customs currency seizure?

Currency Seizure 02

In my blog post yesterday, I discussed what happens after a U.S. Customs and Border Protection (“Customs”) seizure of items and merchandise. Today’s post is along the same line but will focus instead on currency (cash) seizures by Customs.

Most of our clients report seizures of currency and cash while they are either entering or exiting an airport or at a border crossing. At the time of seizure, Customs will give you a receipt of the seizure. This is form 6051S and is officially known as the “Custody Receipt for Seized Property and Evidence”. It is important to keep this receipt as it will contain the identification number of your seizure for tracking purposes and is your only proof of the money seizure. If you do receive this form, be sure it is properly filled out and contains how much money was seized, the officer seizing the property, and contact information.

Following the seizure, Customs must send you a CAFRA Notice of Seizure that further details the seizure (why it was seized, date, location seized, and additional facts). You will get the seizure notice in the mail and it will be sent certified mail (you sign the green card, or you will receive a notice to pick up the certified mail letter at your local post office).

Once you receive the notice, you have to respond by 30 days from the date of the notice (not the day you physically receive the notice).

Your response to the seizure notice requires you to complete an “Election of Proceedings” form that will be included with the seizure notice. Customs will not easily return your seized currency and there are many nuances involved – contact me for a free consultation regarding your currency seizure.

 

What happens when U.S. Customs seizes your items?

Customs Currency Seizures

We are often asked what happens after U.S. Customs and Border Protection (“Customs”) seizes your merchandise. While there are many different scenarios and factors that influence the client’s specific seizure case, here’s our effort to summarize what typically happens.

At all the ports of entries into the U.S., Customs will stop, examine, search, detain and or seize merchandise from persons entering or leaving the U.S. or merchandise being being exported or imported to and from the U.S.

Customs officers are entrusted to enforce the hundreds of laws for the over 40 government agencies, such as the U.S. Fish and Wildlife Service, U.S. Department of Agriculture and the U.S. Food and Drug Administration (“FDA”). Customs’ job is to assist these agencies in ensuring unsafe and prohibited items are not allowed to enter the U.S.

A typical Customs officer may search for items such as counterfeit merchandise, illegal drugs, food or drugs not approved by the FDA or items from a country in which the U.S. has an embargo. The list of prohibited items is exhaustive and our clients are often surprised their items were seized.

Items and merchandise held by Customs are sent to a Centralized Examination Station (“CES”) to “maintain control and accountability of merchandise imported into the United States” (U.S. Customs and Border Protection, CBP Directive No. 3270-007A). Customs has 35 days from the time of arrival of the items in the U.S. to detain the items for examination. At this time, Customs will also notify the importer, customs broker or attorney with an explanation for the detention.

After 35 days has passed, the cargo must be seized or released. However, as previously mentioned, the amount of various government agencies involved and associated bureaucracy may cause a delay of 60 days or more.

If it is determined that a violation did occur, the merchandise will be seized by Customs and then transported to a Seized Property warehouse. Once the items arrive at the warehouse, it will remain there until it is authorized to be released by Customs. The paperwork regarding the seized items will then be sent to a Customs Fines, Penalties, and Forfeitures Office (FP&F). At the FP&F, a paralegal reviews the file, prepares a written Seizure Notice and mails the notice to the party responsible for the items.

The Seizure Notice identifies when and where the cargo was seized along with the basis for the seizure.

It is important to seek immediate assistance when you receive a Seizure Notice as Customs only allows 30 days to Petition Customs for the release of the seized items. A Petition is a written explanation to persuade Customs to release the seized items. Not timely filing a Petition may result in the seized items being destroyed or disposed of.

Customs may grant the petition and release the items or Customs may deny the petition. In the event the petition is denied, you have the option to file a Supplemental Petition or Offer in Compromise.

As each seizure case is different, contact me at dhsu@givensjohnston.com to discuss your specific case at no charge.

Z Gallerie Settles False Claims Act Case.

pexels-photo-57686.jpeg

Z Gallerie LLC Settles False Claims Act Case of Alleged Customs Duties Evasion for $15 Million

In April of 2016, the Department of Justice (DOJ) announced that Z Gallerie LLC agreed to pay $15 million to resolve allegations that Z Gallerie tried to evade customs duties on imports of wooden bedroom furniture from the People’s Republic of China (PRC).

The California based company is headquartered in Los Angeles and sells furniture and accessories in stores across the United States.

The allegations claim Z Gallerie evaded antidumping duties on wooden bedroom furniture imported from the PRC by misclassifying, or conspiring with others to misclassify, the imported furniture as pieces intended for non-bedroom use on documents filed with Customs and Border Protection (CBP). For example, furniture used in the bedroom were misclassified as “grand chests” and “hall chests” in order to avoid antidumping duties on wooden bedroom furniture.

The purpose of antidumping duties is to protect domestic manufacturers against overseas companies “dumping” goods in the U.S. market at prices below cost. Since 2004, imports of wooden bedroom furniture manufactured in China have been subject to antidumping duties.

Importers of wooden bedroom furniture should be aware that under the new Trade Facilitation and Trade Enforcement Act of 2015, CBP will be increasing their enforcement of antidumping evasion schemes.

It is important to note that the settlement by Z Gallerie LLC were for allegations only and there were no determinations of liability.

Leave your thoughts or comments below.

Hoveboards face increased CBP Scrutiny.

This past February, Customs and Border Protection (CBP) seized over 40 hoverboards due to counterfeit batteries. The full CBP press release can be found here.

The batteries seized by CBP are alleged to contain the counterfeit “Samsung” (三星) trademark. Besides protecting the IP rights of the trademark holder, CBP claims these seizures are necessary to enforce product safety laws citing safety concerns that the reports of fires may be caused by substandard or counterfeit batteries.

These safety concerns have also caused some retailers such as Amazon, Target and Toys R’ Us to pull the self-balancing scoooters from their websites. So far, CBP has seized more than 50,000 hoverboards while also likely reducing the number of “hoverboard fails” uploaded on Youtube.

Due to heightened scrutiny by CPB, anyone importing these popular items (or any other parts or components they feel may contain counterfeit marks), should seek counsel to verify the origin of the components.

What are your thoughts on the public safety concerns and seizures of hoveboards? Leave a comment below.

220px-Red_self-balancing_two-wheeled_board_with_a_person_standing_on_it

Hoverboard image above from Wikipedia

Want to expand your export business?

Export Law

 

The Houston District Export Council is hosting their “Export University” on April 28, 2016.

Export University is a series of courses on international trade topics organized by the District Export Council (DEC). The DEC is a volunteer, non-profit organization associated with the U.S. Department of Commerce. The purpose of the Export University is to improve the ability of U.S. businesses to compete in the ever growing global marketplace.

More information and registration can be found at the Houston DEC website: here.