Tag: customs penalties

A screen capture of the CBP portal for reporting trade violations called e-allegations will soon be supplemented with a throrough new procedure for intiating a request for investigation into companies suspected of evading antidump and countervailing duty orders (AD/CVD duties)

CBP’s Request to Review AD/CVD Evasion Procedures

Evasion of anti-dumping and countervailing duty (AD/CVD) orders is a priority trade issue for U.S. Customs & Border Protection. Evasion of AD/CVD duties can take the form of misrepresenting the country of origin, misclassification/misrepresentation of the physical characteristics of the product itself. What follows is a brief summary of the new procedures and their importance for the trade community.

Why is AD/CVD evasion bad?

In addition to the harm to revenue, domestic manufacturers and importers who are paying under the AD/CVD orders are hurt by those who do pay the AD/CVD duties, but should. For this reason, CBP is enacting a new procedure that allows an interested party to make a claim that an importer is evading anti-dumping or countervailing duties (AD/CVD) which looks back over importations for a period of 1 year.

What is CBP doing about AD/CVD evasion?

An interim rule was published in the Federal Register on August 22, 2016, and comments on the interim rule are due no later than October 21, 2016 (note: later extended to December 20, 2016). The new regulations appear as part 165 of Title 19 of the Code of Federal Regulations (19 CFR 165, et seq.). The regulations implement the provisions of the newly created 19 USC § 1517, which is entitled “Procedures for investigating claims of evasion of antidumping and countervailing duty orders.”

These new procedures are designed to give interested parties an opportunity to participate in the investigation and also requires CBP to notify parties about the outcome of a review (previously, parties were limited to sending in “tips” through CBP’s “e-Allegations” system). Upon filing a Request for Investigation by an interested party, CBP has 15 days to initiate an investigation.

If CBP decides to move forward with an investigation (note, an interested party may “request” an investigation, but CBP is not obliged in all cases to conduct an investigation), it has up to 300 days to reach a determination as to whether or not someone is evading AD/CVD orders/duties (or 360 days in complex cases).

A full explanation of the applicable timelines/deadlines has now been published by CBP.

To reach this determination, CBP may use any means it deems appropriate, but in most cases this process will at least begin by sending questionnaires to interested parties and the alleged evader of AD/CVD duties. If a party fails to cooperate in the information collection stage of the investigation, CBP may make an “adverse inference,” or in other words, assume that they are evading the AD/CVD duties.

What can CBP do if it determines someone is evading AD/CVD duties?

If CBP determines that evasion of AD/CVD duties is occurring, they can:

  • Suspend liquidation of unliquidated entries of the subject imports;
  • Extend liquidation for unliquidated entries that occurred before the initiation of the investigation;
  • Notify the Department of Commerce to determine the applicable duty rates;
  • Require that cash deposits be posted and correct duty assessments;
  • Reliquidate entries;
  • Refer matters to ICE for possible civil or criminal investigation; and,
  • Any other appropriate enforcement action (including penalties under 19 USC § 1592)

In the first 90 days of the investigation, if CBP reasonably suspects there is AD/CVD evasion, they may require cash deposits or that a single transaction bond be posted to ensure that CBP does not lose duties that it may have a right to collect.

Is there a review of CBP’s determination of AD/CVD evasion investigations?

Most interestingly, whatever the result of the investigation by CBP, an interested party may request a de novo administrative review through CBP’s Regulations & Rulings, Office of Trade. That review must be completed within 60 business days. After administrative remedies are exhausted, a request for judicial review at the Court of International Trade can be made within 30 business days of a final administrative determination. However, bear in mind a refusal by CBP to investigate after a request for review has been received is not subject to administrative or judicial review (though I suspect that will be litigated in the future).

Want to file comments or participate in an investigation into the evasion of AD/CVD orders?

Great Lakes Customs Law is available to assist interested parties and trade organizations in preparing comments to the interim final rule that must be received by CBP by October 22, 2016 (again, now extended to December 20, 2016). If you’ve been named a respondent or have received a questionnaire from CBP about your import practices, or are interested in commencing an investigation against someone who you believe is evading anti-dumping duties imposed by CBP, give our customs law firm a call for a free telephone consultation.

CBP Seizes Counterfeit Kids’ Bracelets

Below is a Customs seizure story about fake monster tail bracelets recently seized as counterfeits. In the story, Customs states that fake products, often toys, can contain harmful substances like “lead or phthalates”. While that may be true, Customs only states that generally and does say if these products contain harmful substances. It seems unlikely, but stranger things have happened. In my opinon, by explaining that counterfeits can contain harmful substances Customs obscures the real reason for seizure. Counterfeit products are subject to seizure even if they are totally safe. Period. 

We previously explained the serious dangers of importing counterfeit trademark merchandise into the United States; how it results in seizure, monetary customs penalties, and some strategies as to how the importer can defend it. This story underscores the importance of everything we discussed in those articles, which you should read here: Importing Counterfeit Trademarks – Customs Seizures & Penalties; Part 1 and Part 2.

DALLAS – U.S. Customs and Border Protection officers working at the Dallas/Fort Worth International airport seized 200 Rainbow Loom ® Monster Tail ™ kits, Nov. 16.

“This seizure is indicative of the level of attention CBP officers are paying to protect consumers from harmful counterfeit products,” said CBP Area Port Director Cleatus Hunt. “Genuine products pass rigorous safety testing while cheap imitations, though packaged to look authentic, are an inferior product containing harmful substances.”Customs Seizure of Counterfeits

Common harmful substances found in counterfeit toys include lead or phthalates.

The counterfeit craft item was made in China and enroute to La Paz, Bolivia. CBP officers examined the shipment of 15 cartons which was manifested as necklaces when it arrived in Dallas. Upon examination, officers discovered the popular children’s kits among the cartons and after verifying the kits were counterfeit, seized the cartons containing the kits.

Protecting intellectual property rights is a priority CBP trade issue because counterfeit and pirated goods not only hurt American businesses, these products are often associated with criminal activities and fund other criminal enterprises.

For this particular seizure, a primary concern was the risk the counterfeit kits posed to the consumer. Rainbow Loom ® cautions against purchasing counterfeit kits with illustrations of the dangers fake kits pose to consumers.

Shoppers who suspect they purchased a counterfeit item should discontinue using the product and contact the National IPR coordination center. Consumers can learn about getting their money back by visiting the Federal Trade Commission.

As the holiday shopping season begins, shoppers can protect themselves by learning how to spot a fake at Stopfakes.gov.

Importing counterfeit items into the United States is a very serious matter. First, it is very likely that after seizure the property will be forfeited and destroyed by the U.S. government if, in fact, they are violative of the trademark laws.

Once forfeiture is perfected, the person who caused the importation will probably get a notice of penalty from U.S. Custom & Border Protection in the mail for the equivalent of the value of the products if they were real. The importer will have a chance to respond to customs’ notice of penalty with the Fines, Penalties, and Forfeitures office by filing a petition for mitigation and ask customs to reduce the penalty based on the presence of certain mitigating factors that customs particularly looks for. Great Lakes Customs Law has been very successful in getting these kinds of penalties reduced and, sometimes, even eliminated entirely. If the person fails to pay the penalty, the government can bring a lawsuit in federal district court to recover the penalty in the form of a judgment, after which point the government can lien property, garnish bank accounts, and seize property.

If you have had money or merchandise seized by customs because they allege it is counterfeit and contains trademark violations, call our office at (734) 855-4999 to speak to a customs lawyer, or e-mail us through our contact page. We are able to assist petitions for customs seizures nationwide.

Customs Seizure of Fake Toys & Purses valued at $500k

How would you like to cough up a half million dollars for importing counterfeit and infringing goods into the United States? Like we have explained previously, this importer stands to face a hefty penalty — around $500,000 – for this customs counterfeit seizure of fake toys and purses from China.

People fail to grasp the consequences of importing counterfeits. The reason might be a failure see the harm that it causes to the owner of the trademark, by confusing their purchasers and destroying a reputation for quality, or just not caring about the consequences in quest for making themselves some money. To those and others, I say: Consult a customs attorney who is well acquainted with the laws enforced by the customs service and who can judge the legality of the transaction, even getting advice from customs in advance.

The importers should expect to receive a notice of penalty from customs in the next few months. Here is the story:

U.S. Customs and Border Protection officers . . . seized over 200 counterfeit handbags and nearly 50 packages of plastic building blocks, Sept. 29, with an estimated counterfeit toy penaltyManufacturer Suggested Retail Price of more than $500,000.

“Intercepting counterfeit goods protects the trademark holder, the unsuspecting consumer, and strengthens the U.S. economy,” said Houston CBP Area Port Director Dave Fluty. “Import safety and protecting intellectual property rights are priority trade issues.  We will take every opportunity to intercept counterfeit goods entering through this port.”

The shipment, which originated from China, was manifested as bags, plastic toys and jewelry.  However, when CBP officers examined the shipment, cartons of women’s handbags bearing counterfeit Prada, Christian Dior, Michael Kors, and other name brands were discovered.  Also in the shipment were cartons of plastic building blocks bearing the Lego brand.

CBP officers provided images of the items to the different trademark holders who each confirmed that the imported handbags and building blocks were counterfeit and confusingly similar to the genuine brand. The import specialists determined the MSRP value of the goods. The seized items, which were enroute to a Houston store, will be destroyed.

customs penalty for counterfeitHomeland Security Investigations is investigating.

Last year, CBP seized more than $4.7 million in intellectual property rights violations nationwide. Handbags and wallets were the highest valued seized goods with an MSRP estimate of more than $700 million, up from more than $500 million in 2012.

To enforce intellectual property rights, CBP relies on trademark owners registering with the Patent and Trademark Office and by recording the trade name with CBP at e-Recordation.

The trademark holder confirmed they were both counterfeit and confusingly similar? That’s impossible. A counterfeit is something that is indistinguishable, and something that is confusingly similar is considered “infringing” and not a counterfeit. And again, that’s another reason why you need a lawyer to respond to this type of customs actions: oftentimes, customs doesn’t even fully understand what laws they are enforcing!

You might be facing penalties from customs for importing counterfeit merchandise. We can help. Typically, we recommended preparing and filing a petition, with the assistance of legal counsel, which argues persuasively for the substantial mitigation, or when the facts and law warrant it, cancellation of the penalty in full.

Great Lakes Customs Law has been very successful in getting these kinds of penalties reduced and, sometimes, even eliminated entirely (some history of our success is HERE).If you have had merchandise seized by customs because they allege it is counterfeit and contains trademark violations and/or have a received a notice of penalty for importing alleged counterfeits or for making an importation contrary to law, call our office at (734) 855-4999 to speak to a customs lawyer, or e-mail us through our contact page. We are able to assist petitions for customs penalties and seizures around the country, including Detroit, Chicago, Atlanta, New York, Los Angeles, Orlando and many other places. Please read these other articles: