ICE AD/CVD Evasion Investigation Not Sufficient to Justify CBP Single Transaction Bonds, Says CIT
An ongoing criminal investigation for antidumping and countervailing duty evasion does not in itself justify single transaction bond requirements to combat transshipment, ruled the Court of International Trade on June 26. CBP must detail its reasoning for enhanced bonding requirements by providing the importer and the court with specific allegations, instead of noting suspicion based on the mere existence of an ICE investigation, said CIT.
Sign up for a free preview to unlock the rest of this article
If your job depends on informed compliance, you need International Trade Today. Delivered every business day and available any time online, only International Trade Today helps you stay current on the increasingly complex international trade regulatory environment.
CBP required Fedmet Resources to obtain a 260.24% single transaction bond on magnesia carbon bricks imported from Vietnam and entered in December 2014. It acted based on a tip from an ICE officer that Fedmet’s president, Mark Mattar, was under investigation for transshipping magnesia carbon bricks from China to evade AD/CV duties. According to the ICE officer, the Western New York U.S. District Court had issued a search warrant for Mattar’s home in September 2014, and had shortly thereafter sent Fedmet a grand jury subpoena.
CBP’s notice to Fedmet of the enhanced bonding requirements said only that the single transaction bond was “required to safeguard the revenue” because the agency had “reason to believe the magnesia carbon bricks might be of Chinese origin,” which was not, according to CIT, a “satisfactory explanation.” Nor did CBP provide any further justification for the enhanced bonding requirements to CIT during the court case, leaving CIT unable to conclude that CBP “possessed any information beyond the fact of, and the nature of, the investigation from which Customs could have formed a belief that the country of origin of the MCBs on the December entry ‘might be’ China.”
The government argued that, under CBP regulations, the port director has “significant discretion” to require enhanced bonding. But regulations are superseded by the law, and in this case the government did not demonstrate that the single transaction bonds were “necessary for the protection of the revenue” as required under 19 USC 1623, said CIT. The government also argued the fact that a judge issued a search warrant showed “probable cause” that Fedmet was evading AD/CV duties, but CIT said it would have to weigh for itself “the information by which the search warrant was obtained or any evidence that the search warrant may have produced.”
As a result of the lack of evidence, CIT set aside CBP’s decision to require a single transaction bond on the entry in December 2014. It also found that a “User Defined Rule” (UDR) set by CBP’s South Florida National Targeting and Analysis Group that had told ports to require STBs on Fedmet’s future entries was subject to challenge. Despite CBP’s arguments that the UDR was only advisory, the court declined to dismiss that part of Fedmet’s complaint and ordered the Fedmet and the government to create a schedule for filing legal briefs on whether the UDR should be set aside as well.
(Fedmet Resources Corp. v. U.S., Slip Op. 15-69, dated 06/26/15, Judge Stanceu)
(Attorneys: Will Planert of Morris Manning for plaintiff Fedmet Resources Corp.; Amy Rubin for defendant U.S. government)