CIT Enters Nearly $3.4M Default Judgment Against Importer, Owner in Customs Penalty Suit
The Court of International Trade on May 27 entered default judgment against importer Rayson Global and its owner Doris Cheng in a customs penalty case after previously denying the government's bid for default judgment. In its second attempt to secure default judgment, the U.S. further defended its claim that the merchandise at issue is valued at nearly $3.4 million (United States v. Rayson Global, CIT # 23-00201).
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The U.S. brought the suit in 2023, alleging that Rayson and Cheng negligently entered innersprings by falsely declaring their country of origin to be Thailand when the products were in fact of Chinese origin, skirting Section 301 duties (see 2309220056). The government moved for default judgment in the case after Rayson and Cheng failed to file an answer to the complaint (see 2405280055).
The U.S. sought a penalty for negligence, the maximum for which is twice the loss of revenue or the domestic value, whichever is lower.
The U.S. initially alleged that the actual loss of revenue totaled $205,723.83, though the "potential" loss of revenue amounted to $2,225,501.10, for a total loss of revenue of $2,431,225.93. Multiplying this final figure by two went beyond the nearly $3.4 million alleged domestic value of the merchandise, leading the government to seek a civil penalty totaling $3,381,607.03. CIT Judge Timothy Stanceu rejected the government's valuation of the merchandise due to its lack of factual support (see 2501090041).
In its second bid for default judgment, the U.S. said Rayson and Cheng defaulted, its allegations are taken as true and that the total loss of revenue is $2,431,225.93. The government added that even if the court were to review mitigation factors that could lighten the penalty, including the defendant's "good faith effort to comply with the statute," the history of past violations and the nature of the violations at issue, the evidence shows that mitigation is "unwarranted," given that Cheng's actions have been subject to CBP scrutiny since at least 2004.