Colorado Importer, Danish Parent Company Pay Over $700K to Settle Charges Over Customs Duties

Colorado-based Ellab Inc. and its Danish parent company, Ellab A/S, paid the U.S. over $700,000 to settle charges that it failed to pay customs duties on imports of thermal validation equipment, the U.S. Attorney's Office for the District of Colorado announced Dec. 1. The U.S. alleged Ellab failed to classify its imports and properly declare their value, neglecting to pay the full amount of the duties owed on the goods.

Ellab imports thermal validation equipment for use in the healthcare, pharmaceutical and food industries from its Danish parent company for resale to domestic buyers. The Attorney's Office said that instead of separately deciding which Harmonized Tariff Schedule subheading category applied to each imported product, Ellab classified all its goods under a single HTS code with a low duty rate. The company further "failed to declare the cost of repairs for products that it exported and then re-imported into the United States," the Attorney's Office said.

The U.S. said Ellab's actions violate the Tariff Act of 1930 and the False Claims Act. The lawsuit was originally filed by William Day, a former Ellab employee, who knew of the import practices. Day is entitled to a share of the $728,910 penalty.

“American companies that import products have a duty to truthfully report the nature and value of their imports and pay the appropriate customs duties,” U.S. Attorney Cole Finegan said. “If a company cuts corners and pays less than it owes, that threatens the entire system of self-disclosure, while depriving the United States government of duties lawfully owed. Importers need to understand that if they try to game the system, they can face serious penalties.”