592 Penalties Liability; Smugglers Circumvent Duties

A recent story about the criminal conviction of 5 people for smuggling aluminum extrusions and circumventing anti-dumping and countervailing duty orders illustrates the point that importing into the United States requires due diligence. 592 penalties, and others, await those who importers who do not due their due diligence. Importing is not some casual business for the novice entrepreneur looking to make a fast buck. 

I am sharing and commenting on this story to pose the question: what if you got wrapped up in this (criminal) charade unintentionally? Imagine you were buying what you thought were Malaysian origin aluminum extrusions from a supplier in Malaysia that were,¬†in reality, Chinese origin aluminum extrusions. That means rather than only being responsible for the normal duty applicable to the merchandise, they are subject to an additional duty of 374% ad valorem. What happens to you — the innocent importer?

You receive a duty demand or supplemental duty bill for the unpaid anti-dumping or countervailing duties. Maybe also an investigation or pre-penalty notice for potential violations of section 592 penalties, alleging 592 penalties for negligence or gross negligence in importing into the United States. Even though you did not know about it. The law does not require that you know the592 Penalties - Keep Calm and Contact Your Customs Attorney true country of origin to be responsible for duties owed because of the true country of origin.

In short, failure to perform due diligence and verify your supply chain and the true country of origin of the aluminum extrusions would leave you in an awful financial situation. It pays to investigate your supply chain, asks questions of your suppliers, verify all parts of the import transactions, and when in doubt, hire a customs lawyer.  Because in customs law, you can often held responsible for the mistakes of others.

On to the story below (original HERE):

SAN JUAN, Puerto Rico —¬†Five defendants plead guilty Monday in Federal District court, to charges of conspiracy to smuggle aluminum extrusions into the United States, with the intent to avoid paying antidumping and countervailing duties.

[Five people] and PRP Trading Corporation, plead guilty before US District Court Judge Francisco Besosa, after reaching a plea agreement with Assistant US Attorney Scott Anderson. A sentencing hearing is scheduled for December 17, 2014.

The defendants were indicted by a grand jury after an investigation [ ]. According to the indictment, the defendants knowingly and willfully . . . conspired . . . to smuggle . . . merchandise imported from China . . . by passing false and fraudulent invoices and documents through the San Juan CBP customhouse with the intent to defraud the United States in lawful antidumping and countervailing (ADD/CVD) duties accruing upon said merchandise.

The object of the conspiracy was that [the] owners and/or principals of Sultana Screens & Aluminum Sales, PRP Trading, and Aluwest Industries, with the assistance of William Tang Piu Wong, would purchase aluminum from China, transship the aluminum to Malaysia, repackage the aluminum and create false invoices to make it appear as though the aluminum originated in Malaysia, and then import the aluminum into Puerto Rico in order to avoid payment of the antidumping and countervailing duties (ADD/CVD).

You can read the rest HERE. Usually people smuggle drugs, money, gold, jewelry, and other things we consider valuable. Aluminum extrusions are not in that category. But, the smuggling here dealt with avoiding paying extra duties. That gets the product in cheaper than competition. But how much duty savings is your freedom, or non-liability for 592 penalties worth?

If you need help conducting due diligence, or face duty or penalty liability with customs you should contact our office by e-mail or call (734) 855-4999. We are experienced in defending customs 592 penalties, disclosing potential violations through prior disclosures, responding to notices of penalties, and preparing detailed and well argued petitions for mitigation of penalties or liquidated damages. You can also make use of our other articles, such as:

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