CIT Grants Default Judgment Against Tire Importer for Failing to Pay AD/CVD
The Court of International Trade on Nov. 12 granted default judgment against importer Rago Tires for negligence in importing tires by not declaring the goods as subject to antidumping and countervailing duties on Chinese truck and bus tires. Judge Joseph Laroski ordered Rago to pay a $14,108.87 penalty.
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Laroski said the importer was only negligent and not grossly negligent, as argued by the government, since "the facts do not evince willful, wanton, or reckless misconduct."
At issue is one entry of truck and bus tires from China made by Rago that the U.S. said is subject to a 2.83% AD and a 42.16% CVD. The importer entered tires from China under Harmonized Tariff Schedule subheading 4011.20.1015, the correct subheading, but failed to declare the tires as subject to AD/CVD. The government said CBP told Rago its goods were subject to AD/CVD and that the company had to pay a $14,108.87 cash deposit, but the company failed to do so (see 2508110046).
While Rago eventually paid the outstanding AD/CVD, the U.S. issued a penalty against the importer based on gross negligence totaling $56,435.48. Rago never responded to the government's pre-penalty notice, the penalty itself or the agency's court action against the company, leading to a motion for default judgment.
In granting the motion, Laroski first said Rago "supplied material and false information to Customs." In its entry summary, Rago said the "merchandise constituted a 'Type 01' entry, indicating that it was not subject to the applicable duties" when it was. "This false statement was material," the court noted.
The judge said the government satisfied its initial burden in showing that Rago was negligent by showing that the importer "declared a materially false entry type and failed to pay the applicable AD/CVD cash deposits due at the time of entry." Laroski then looked to whether Rago exercised "reasonable care," though since the company "has defaulted, it offers no evidence or argument to meet its burden."
Laroski found that "Rago had a history of importing the same class of tires, and therefore was reasonably expected to have kept abreast of major trade developments affecting those products, including applicable AD and CVD orders."
While Rago was negligent, it wasn't grossly negligent, the judge held. The facts here "suggest inattentiveness, but they do not demonstrate that Rago knowingly misrepresented the entry type or consciously disregarded its obligations under law," the brief said. While the government said the timing of the entry, Rago's experience as an importer and the company's "eventual cessation of imports" show "actual knowledge or wanton disregard," the facts here don't show continued filings of false entries, since just one entry is at issue, or "repeated misconduct" after notice from CBP of an issue.
There's also no evidence that "Rago intended to evade duties" or that the company's "later failure to defend bears on its knowledge or level of fault at the time of entry," Laroski held. "At most, the facts reflect confusion or administrative neglect during a brief period following the issuance of the AD/CVD orders."
This distinction between negligence and gross negligence was present in the court's discussion of damages. For instance, Laroski said that while Rago's actions show a "lack of reasonable care and diligence in complying with the company’s trade obligations," other facts, such as Rago amending its entry to Type 03 after notice from CBP, show a "degree of good faith."
Regarding the significance of the offense, Laroski said that even an "isolated negligent entry undermines Customs’ enforcement of trade remedy laws, and the court does not discount or take lightly that harm." However, the court said, "Rago’s violation here is substantially less severe than in cases involving multiple shipments under false documentation, repeated warnings, or deliberate misstatements after ample notice." Thus, the "facts support a penalty below the statutory maximum," the judge said.
Ultimately, the judge said "a penalty equal to the amount of initially unpaid cash deposits," which is $14,108.87, appropriately reflects the relatively benign nature of the offense while ensuring adequate deterrence."
(United States v. Rago Tires, Slip Op. 25-143, CIT # 24-00043, dated 11/12/25; Judge: Joseph Laroski; Attorneys: Brett Shumate for plaintiff U.S. government)