U.S. Sues Firm for $1.9M for Falsely Claiming Chinese Apparel Imports Were from Russia
On November 7, 2011, the U.S. brought a case before the Court of International Trade to sue Pier Garden, Inc., a California clothing retailer, for $1.9 million in penalties for allegedly importing apparel during 2004-2006 that was made in China, but claimed to be made in Russia, in order to avoid a quota.
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Falsely Claimed Chinese Apparel Was Manufactured in Russia
The U.S. alleges that from November 2004 through June 2006, Pier Garden entered, introduced, or caused to be entered or introduced into the commerce of the U.S., approximately 35 entries of textile apparel.
According to the U.S., Pier Garden purchased the apparel from Zhejiang Longfeng Garment Col. Ltd., which shipped the apparel from China to Korea in containers. The apparel was reloaded into different containers in Korea and then placed on ships that had originated in Russia but stopped in Korea en route to the U.S.
Pier Garden then filed, or caused to be filed, documents with U.S. Customs and Border Protection that falsely claimed that the Chinese apparel was manufactured in Russia.
Apparel Manufactured in China Was Subject to a Quota at Time of Entries
At the time of these 35 entries, most textiles and apparel manufactured in China were subject to a quota. The U.S. claims that Pier Garden entered, introduced, or caused to be entered or introduced, the Chinese origin merchandise by means of material false statements and/or omissions in violation of 19 USC 1592(a).
The U.S. claims that the false statements and/or omissions were material because they resulted in the circumvention of applicable quotas on Chinese manufactured textiles and had the potential to adversely affect the collection and reporting of accurate trade statistics.
U.S. Says Pier Garden is Liable for $1.9M in Penalties for Gross Negligence
The U.S. states that Pier Garden’s false statements that Russia as the country of origin for the Chinese textiles transshipped through Korea and imported into the U.S. were grossly negligent violations of 19 USC 1592(a). Additionally, the U.S. claims Pier Garden's actions in entering the transshipped Chinese wearing apparel without verifying the country of origin represents a wanton disregard for the relevant facts and indifference to or disregard for statutory obligations.
For these violations, CBP issued a penalty in the amount of $959,862, representing 20 percent of the entered value of the merchandise. However, Pier Garden has not paid any part of the assessed penalty. Therefore, the U.S. is now claiming that Pier Garden is liable for a penalty in the amount of $1,919,725, which represents 40 percent of the entered value of the apparel subject to this litigation.
Alternatively, the U.S. states that if Pier Garden did not enter the subject merchandise by means of gross negligence, then it did so by means of negligence and in violation of 19 USC 1592(a) and should be assessed the penalty of $959,862.
CIT Expected to Rule on Case, See Future Issue of ITT for Summary
The CIT is expected to hear this case and issue a ruling at a future date. See future issue of ITT for summary of the CIT's ruling.
Case is available via email by sending a request to documents@brokerpower.com.