CIT Orders CBP to Drop Additional Bonding Requirement for China Garlic Importer
The Court of International Trade recently granted an injunction barring CBP from requiring a single transaction bond (STB) covering an importer’s entries subject to antidumping duties on fresh garlic of China. In an Oct. 16 decision released to the public on Oct. 22, the court said CBP’s decision to require STBs on 129 containers of garlic imported by Kwo Lee, Inc. at the $4.71/kg China-wide rate, instead of the $0.35/kg cash deposit rate normally assigned to the garlic’s exporter, threatens to bankrupt the importer and should be put on hold until the case is decided.
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According to Judge Donald Pogue’s opinion, the garlic was exported by Qingdao Tiantaixing Foods, which was assigned the $0.35/kg AD rate in a 2006 review but waited until 2014 to export any more garlic to the United States. When Kwo Lee attempted to import the garlic, CBP thought the phytosanitary certificates associated with the shipment and amount being imported suspicious, and told Kwo Lee it would have to get an STB at $4.71/kg China-wide rate to be allowed entry. Because of the current fraud-ridden state of the garlic industry, Kwo Lee would have had put up full collateral for the amount of the bonds, totaling over $10 million. Kwo Lee paid for the additional bonding on two of the entries, but the majority of the garlic “has remained in limbo, accruing demurrage charges and spoiling.”
With Kwo Lee poised for bankruptcy, CIT found the damage to the importer faced was irreparable and ordered CBP to hold off until it could decide several issues surrounding the case. CBP’s reason for requiring the STBs was questionable, given that Kwo Lee provided evidence that Chinese phytosanitary certificates are generally unreliable. If that’s true, singling out Kwo Lee might be discriminatory, it said. The court was also concerned about whether CBP took into account Kwo Lee’s explanation for importing in such large quantities, it said. While CBP has a valid concern that Kwo Lee is a revenue risk, there is also the chance that Kwo Lee is an honest importer and the STB will prove unnecessary. On the other hand, without an injunction Kwo Lee is undoubtedly doomed to bankruptcy, said CIT.
(Kwo Lee, Inc. v. U.S., Slip Op. 14-121, #14-00212, dated 10/16/14, public version 10/22/14, Judge Pogue)