Duty Evasion Case Against Crawfish Importer May Proceed, Says CIT
The Court of International Trade will allow a fraud penalty case against a Florida seafood importer to proceed, denying on Aug. 24 a motion to dismiss from Rupari Food Services. Rupari contended CBP did not provide enough evidence of fraud to back its $2.8 million penalty case. However, relying heavily on the controversial testimony of a Rupari customer relating a conversation he had with a now-deceased Rupari employee, CIT ruled that the government made enough of a case to survive a motion to dismiss.
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CBP had brought the penalty action for violations of 19 USC 1592, alleging Rupari and its Chinese supplier had engaged in a transshipment scheme to mask the source of crawfish that had actually originated in China and was subject to an antidumping duty rate of over 200 percent. Rupari would go on to sell the crawfish to a Popeye’s purchasing entity as an ingredient in the restaurant chain’s two-month crawfish etouffee promotion in 1998.
The government sought to flesh out its case by adding testimony from an employee of the Popeye’s purchasing entity. The testimony related the details of a conversation between the purchasing manager and a now-deceased sales manager from Rupari that appeared to show Rupari knew the crawfish would come through Thailand to avoid duties. The court decided to let the government amend its complaint to include testimony that occurred years before the Rupari sales manager’s death, but not testimony that occurred afterward.
Relying in part on the testimony, CIT found that the government had alleged enough facts to make a plausible case of fraud, and declined to dismiss. CIT also found that CBP had properly satisfied administrative requirements to pursue cases of negligence and gross negligence in court, finding a clause on the CBP penalty notice saying the government may alternatively pursue cases under the lesser standards provided enough notice to Rupari.
(U.S. v. United States v. Am. Cas. Co. of Reading, Pa., Slip Op. 15-94, CIT # 10-00119, dated 08/24/15, Judge Tsoucalas)
(Attorneys: Nikki Cottet for plaintiff U.S. government; Lawrence Friedman of Barnes Richardson for defendant Rupari Food Services)