US Seeks $56K Default Judgment Against Importer of Chinese Tires
The U.S. filed a motion for default judgment at the Court of International Trade on Aug. 10 against importer Rago Tires, seeking $56,435.48 for gross negligence in classifying its tires as not subject to antidumping duties and countervailing duties (United States v. Rago Tires, CIT # 24-00043).
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The government said that Rago Tires' entries were subject to 2.83% AD and 42.16% CVD under the AD/CVD orders on truck and bus tires from China. The importer entered tires from China under Harmonized Tariff Schedule subheading 4011.20.1015, the correct subheading, but failed to declare the tires as subject to AD/CVD, the motion said. After CBP told Rago that its goods were subject to AD/CVD and that it had to pay a $14,108.87 cash deposit, the company failed to do so.
Rago "eventually paid the outstanding antidumping and countervailing duties that were owed." Nevertheless, the U.S. sent the importer a pre-penalty notice telling the company it intended to issue a penalty based on gross negligence "for up to four times the loss of revenue, totaling $56,435.48." Rago never responded to the pre-penalty notice or the penalty itself, leading CBP to take to the trade court.
The U.S. then filed for default judgment after Rago also failed to respond to the government's complaint. The government argued that Rago is liable for a "gross negligence penalty," telling CIT that the company's classification of its tire entry as not subject to AD/CVD is a "material false statement or omission."
The motion added that this material false statement "was a grossly negligent violation." The U.S. said Rago had been importing Chinese tires for over a year before the AD/CVD orders took effect. Once the orders took effect, Rago stopped importing tires and prepared its false entry summary nearly two weeks after the AD/CVD orders were published.
"Rago Tires’ abrupt cessation of its tire importation following the ADD and CVD Orders indicates actual knowledge of the ADD and CVD Orders, and its failure to identify the dutiable portion of the order, without any explanation as to why constitutes wanton disregard against its obligation to pay duties," the brief said.
The government added that Rago, with its history of importing in-scope Chinese tires, "would have been aware of Commerce’s public investigations into the detrimental effect on the American market of the importation of truck and bus tires from China and its previous determinations made in 2016 and 2017." In addition, the International Trade Commission's "change in position" regarding the harm posed to the industry by Chinese imports was published nearly three weeks before the entry at issue, the brief said.
The U.S. then urged the trade court to award a gross negligence penalty on the grounds that Rago failed to account for the correct AD/CVD on its imports and failed to respond to "any of the pre-penalty notices, penalties, bills, or the complaint," indicating "further disregard of its statutory responsibilities."