Penalty Case on AD Duty Evasion Set for Trial With More Than $80 Million at Stake
A substantial penalty case related to alleged evasion of antidumping duties by a major chemical importer will go to trial, after the Court of International Trade on Nov. 13 issued a mixed ruling on whether CBP proved the existence of a transshipment scheme. In the decision, publicly released Nov. 20, the trade court found evidence pointed both ways on whether Univar imported Chinese saccharin through Taiwan, and whether the importer fulfilled its reasonable care responsibilities.
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According to the government, Univar imported the saccharin from Taiwan between 2007 and 2012, despite a lack of production capacity in the country and a series of what should have been red flags in the form of skepticism from others in the saccharin industry. Attempted visits by Orthodox Union rabbis to verify the saccharin’s kosher certification were met with excuses as to why those visits couldn’t be completed, including floods and dangerous construction. The government seeks $47.9 million in penalties and $36.1 million in unpaid duties for gross negligence (see 1803050021).
An ICE investigation initiated in 2010 found that a residential building was at the address listed on the supplier’s Food and Drug Administration registration, the government said. It also pointed to documents purporting to establish that a company related to Univar’s supplier imported saccharin from China and then exported it to Univar.
Univar contended that its executive visited when it began the sourcing relationship in 2004 and was taken to a saccharin production facility in Taiwan, albeit not at the same address as that listed on the FDA registration. The existence of that facility, and of saccharin production in Taiwan, was confirmed by ICE inspectors. Taiwan’s large informal economy explains the lack of records related to saccharin production, Univar said, and industry suspicions could be attributed to a lack of knowledge on the subject. And Univar received renewals of its supplier’s kosher certifications in 2005 and 2012 from the Orthodox Union, regardless of the issues with the rabbis’ visits.
Finally, Univar participated in a mock audit conducted by DHL that concluded Univar is a “good importer” with a “culture of compliance,” scoring above average in relation to other importers in the 18-year period DHL has performed the service. Good importers do not have to actually visit facilities in foreign countries before purchasing from the facility, a DHL representative had said.
CIT found holes in both sides’ arguments, denying a motion for judgment from Univar. A trial will be required to decide whether Univar is guilty of gross negligence, and whether it acted with reasonable care, the trade court said.
Up to now, “Univar has not established that it acted with reasonable care under the circumstances,” CIT said. Though the Univar executive visited to confirm production of saccharin in Taiwan, “Univar’s failure to revisit its 2004 conclusion that its saccharin was coming from Taiwan could be found to be a failure to exercise reasonable care by the jury,” the court said. The importer’s failure to follow up could also “lead a reasonable jury to find by a preponderance of the evidence that Univar was indifferent to or disregarded its statutory obligations, and therefore acted with gross negligence,” CIT said.
(U.S. v. Univar USA, Slip Op. 18-157, CIT # 15-00215, dated 11/13/18, public version 11/20/18, Judge Barnett)
(Attorneys: Reta Bezak for plaintiff U.S. government; Lucius Lau of White & Case for defendant Univar USA Inc.)