Court Opinion

ID: 818478
Source: CourtListenerOpinion
Date Created: 2013-02-02 23:37:29.756528+00
Date Added: 2024-06-11T09:02:48.117134
License: Public Domain

Slip Op. 06-18

           UNITED STATES COURT OF INTERNATIONAL TRADE

UNITED STATES,

                 Plaintiff,      Before: Richard W. Goldberg,
                                         Senior Judge
                 v.
                                 Court No. 01-01022
PAN PACIFIC TEXTILE GROUP,
INC., AVIAT SPORTIF, INC.,
BUDGET TRANSPORT, INC.,
PRIME INTERNATIONAL AGENCY,
BILLION SALES, EVER POWER
CORP., AMERICAN CONTRACTORS
INDEMNITY COMPANY, and
THOMAS MAN CHUNG TAO, and
STEPHEN SHEN YU JUANG,

                 Defendants.

                               OPINION

[Amount of defendants’ liability for unpaid duties determined.]

                                           Dated: January 31, 2006

     Peter D. Keisler, Assistant Attorney General; David M.
Cohen, Director; Patricia M. McCarthy, Assistant Director,
Commercial Litigation Branch, Civil Division, U.S. Department of
Justice (Michael D. Panzera); Annmarie R. Highsmith, Senior
Attorney, Office of Associate Chief Counsel, U.S. Customs and
Border Protection, U.S. Department of Homeland Security, for
plaintiff.

     Law Offices of John Weber (John Weber and Jaime Lathrop) for
defendants Thomas Man Chung Tao, Pan Pacific Textile Group, Inc.,
and Aviat Sportif, Inc.

     Goldberg, Senior Judge: This case is before the Court on

summary judgment to determine the amount of unpaid duties owed as

a result of fraudulent customs violations.    The Court has

jurisdiction pursuant to 28 U.S.C. § 1582.
Court No. 01-01022                                           Page 2

                            I.   BACKGROUND

     In United States v. Pan Pacific Textile Group, Inc., 29 CIT

___, 395 F. Supp. 2d 1244 (2005) (“Pan Pacific II”), familiarity

with which is presumed, the Court found defendants Thomas Man

Chung Tao, Pan Pacific Textile Group, Inc., and Aviat Sportif,

Inc. (together, “Defendants”) liable for duties unpaid as a

result of their agent’s fraudulent customs violations under 19

U.S.C. § 1592.     Pan Pacific II, 29 CIT at ___, 395 F. Supp. 2d at

1255.   Noting that “Defendants dispute[d] both the valuation of

the merchandise and the calculation of duties owed[,]” id. at ___

n.8, 395 F. Supp. 2d at 1248, and failing to find sufficient

substantiation of that disputed calculation in the summary

judgment briefs, the Court ordered supplemental briefing to

determine if the amount of Defendants’ liability for unpaid

duties could be established on summary judgment.     Specifically,

the Court ordered plaintiff the United States (in particular,

U.S. Customs and Border Protection (“Customs”)) to “file with the

Court a statement of the duties and interest owed by Defendants

accompanied by an explanation of the calculation thereof[.]”

Order on Slip Op. 05-107, 29 CIT ___, Order at 1 (Aug. 26, 2005).

     On September 26, 2005, Customs filed the required statement

and explanation.     See Response to Court’s Request/Order Regarding

Loss of Revenue (the “Statement of Unpaid Duties”).     In the

Statement of Unpaid Duties, Customs calculated Defendants’
Court No. 01-01022                                           Page 3

liability for unpaid duties in the amount of $1,844,284.78, as

well as interest totaling $1,791,115.37 as of September 26, 2005.

Statement of Unpaid Duties at 2.    To substantiate this

calculation, Customs provided detailed declarations from two

employees of the U.S. Department of Homeland Security: first, the

import specialist responsible for calculating the amount of

unpaid duties owed by Defendants and, second, the operating

accountant responsible for calculating the interest owed by

Defendants.    Id., Attach. 1-2.   Customs also provided a

spreadsheet listing, inter alia, each disputed entry, its

dutiable value, the amount of duties already paid in connection

with the entry, the amount of duty still owed in connection with

the entry, and the corresponding amount of interest due.     Id.,

Attach. 3.    Defendants filed a response to the Statement of

Unpaid Duties on December 23, 2005 (“Defs.’ Resp.”), raising

several objections to Customs’ calculation.    Customs filed a

reply on January 23, 2006, which included two additional

declarations from employees of the U.S. Department of Homeland

Security, including a detailed declaration from the paralegal

specialist responsible for the maintenance and release of

Defendants’ property which was seized by Customs during the

underlying investigation.
Court No. 01-01022                                           Page 4

     This case is now once again properly before the Court on de

novo review.1    The sole issue to be determined here on summary

judgment is whether a genuine dispute of material fact exists as

to the amount of unpaid duties owed by Defendants by virtue of

the Court’s liability determination in Pan Pacific II.

“[S]ummary judgment is proper if the pleadings [and the discovery

materials] show that there is no genuine issue as to any material

fact and that the moving party is entitled to a judgment as a

matter of law[.]” Celotex Corp. v. Catrett, 477 U.S. 317, 322

(1986) (quotation marks omitted).

                            II.   DISCUSSION

     Defendants object to Customs’ calculation of their liability

for unpaid duties on three grounds, each of which is addressed

below.   After due consideration of Defendants’ arguments, and for

the reasons that follow, the Court concludes that Defendants have

failed to raise a genuine issue of material fact as to Customs’

calculation of the amount of unpaid duties owed by Defendants,

and that Customs is entitled to judgment as a matter of law on

this issue.     Accordingly, the Court accepts Customs’ calculation

and fixes Defendants’ liability for unpaid duties at that amount.

1
 In actions brought for the recovery of a monetary penalty
claimed under 19 U.S.C. § 1592, all issues are tried de novo.
See 19 U.S.C. § 1592(e)(1) (1999). The amount of duties owed to
the United States has a direct correlation to the maximum amount
of penalty that can be assessed. See id. § 1592(c).
Court No. 01-01022                                             Page 5

     First, Defendants argue that Customs failed to offset the

duties owed by the value of a portion of Defendants’ entered

merchandise seized by Customs during its investigation.      Defs.’

Resp. at 1.     Defendants contend that there is a discrepancy

between the value of merchandise seized by Customs and the value

of merchandise ultimately returned to Defendants.      Id.   To

establish this discrepancy, Defendants compare a letter sent by

Customs at the time of seizure noting the domestic value of the

seized entries ($2,010,720) to a letter sent by Customs at the

time of remittance noting the dutiable value of the seized

entries ($244,404).     Id. at 1-2.   Defendants contend that they

are owed, in the form of a duty offset, the difference between

these amounts.     Id. at 2.   What Defendants fail to appreciate is

that they are comparing apples to oranges.     Dutiable value and

domestic value are not equivalent measures of entered

merchandise.2    They are different types of valuations performed

2
  Domestic value is defined as the “price at which such or
similar property is freely offered for sale at the time and place
of appraisement[.]” 19 C.F.R. § 162.43(a) (2005). “Freight,
profit and duty are therefore included.” United States v.
Quintin, 7 CIT 153, 158 n.3 (1984) (emphasis added). In
contrast, transaction value is the general standard for
determining the dutiable value of imported merchandise. 19
U.S.C. § 1401a(a)(1)(A) (1999). Transaction value is defined as
“the price actually paid or payable for the merchandise when sold
for exportation to the United States” plus certain additional
costs. Id. § 1401a(b)(1). The “price actually paid or payable”
is defined as “the total payment . . . made, or to be made, for
imported merchandise by the buyer to, or for the benefit of, the
seller.” Id. § 1401a(b)(4)(A).
Court No. 01-01022                                             Page 6

by Customs during the course of importation.      The fact that

Customs referenced two different types of valuation in its

letters to Defendants is of no legal consequence.      These

references simply do not imply that the value of Defendants’

entries diminished while in Customs’ custody.      Indeed, Defendants

have provided no evidence that the entries were actually damaged

or otherwise suffered some diminution in value while in Customs’

custody.   Without proper presentment of such evidence in

accordance with Customs’ regulations, see 19 C.F.R. §§ 158.21-.30

(2005), Defendants are owed no duty offset as a result of

Customs’ seizure of Defendants’ entered merchandise.

     Second, Defendants argue that Customs overstated the total

dutiable value of Defendants’ entries.   Defs.’ Resp. at 2.

Defendants note that an exhibit used in the criminal trial

predating this civil action alleged the total dutiable value of

Defendants’ entries to be $3,468,951 - a much smaller amount than

the $10,691,7123 alleged by Customs here.   Id.    Unfortunately for

Defendants, this observation is of no moment.      The exhibit in

question is not a comprehensive analysis of the 68 entries at

issue in this case.   Instead, the exhibit summarizes the invoices

and entry records for only four of those entries.      Customs’

3
  This total dutiable value is much higher than the dutiable
value noted in Customs’ letter, referenced above with regard to
Defendants’ seized merchandise, because Customs seized only a
portion of the 68 entries at issue in this case.
Court No. 01-01022                                              Page 7

decision, in a wholly separate proceeding, to introduce an

exhibit telling only part of the story of large-scale fraud

underlying this case in no way undercuts the more comprehensive

evidence presented by Customs to support its duty calculation

here.    Defendants are not entitled to an inference that no duties

are currently owed on entries which do not appear on an exhibit

only tangentially related to this case.

     Third, Defendants contend that Customs erroneously

calculated dutiable value by referencing the prices reflected on

Defendants’ invoices to end customers.     Defs.’ Resp. at 2.

Instead, Defendants argue that Customs should have calculated

dutiable value “by applying the concept of factory direct

cost[,]” which arguably would have resulted in a lower dutiable

value.   Id. at 2.   Presumably, Defendants’ argument relies on the

decision by the U.S. Court of Appeals for the Federal Circuit in

Nissho Iwai Am. Corp. v. United States, 982 F.2d 505 (Fed. Cir.

1992).    In Nissho Iwai, the court held that, if certain criteria

are present, an importer engaged in a multi-tiered transaction

may claim that an entry’s transaction value (upon which dutiable

value is based) is the value of the entry’s original sale from

the manufacturer to a middleman, rather than value of the sale

from that middleman to the end customer.     Id. at 509.   To take

advantage of this alternative treatment, an importer must present

Customs with evidence that certain criteria are met before
Court No. 01-01022                                           Page 8

liquidation of an entry or during the protest period immediately

following liquidation.    See Treas. Dec. 96-87 (Jan. 2, 1997), 31

Cust. B. & Dec. No. 1, available at 1997 CUSBUL LEXIS 2 at *8

(describing factors used to determine transaction value in multi-

tiered transactions); 19 U.S.C. § 1484 (1999) (requiring importer

to supply valuation documentation to Customs upon entry of

merchandise); id. § 1514(a) (permitting protest of Customs’ entry

valuation).   While it is possible that Defendants’ entries could

have qualified for this alternative treatment, Defendants have

provided no evidence that documentation to this effect was

furnished to Customs prior to liquidation or during the protest

period.    Absent such a showing, Customs appropriately calculated

dutiable value by referencing the prices reflected on Defendants’

invoices to end customers.

     “Where a party has filed a properly-supported motion for

summary judgment in accordance with Rule 56, the non-movant bears

the burden of coming forward with ‘specific facts showing that

there is a genuine issue for trial.’”    Processed Plastic Co. v.

United States, 29 CIT ___, ___, 395 F. Supp. 2d 1296, 1299 (2005)

(quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248

(1986)).   With the Statement of Unpaid Duties and associated

declarations and exhibit, Customs has now provided the proper

support for its calculation of Defendants’ liability for unpaid

duties.    As discussed above, Defendants have failed to allege any
Court No. 01-01022                                             Page 9

facts which call into question the accuracy of Customs’

calculation.   No genuine dispute of material fact exists here.

Accordingly, the Court concludes that Customs is entitled to

judgment as a matter of law on the issue of the amount of unpaid

duties owed by Defendants.

                           III.   CONCLUSION

     For the foregoing reasons, the Court finds that Defendants

have failed to raise a genuine dispute concerning Customs’ duty

calculation.   The Court therefore accepts Customs’ calculation

and fixes Defendants’ liability for unpaid duties at that amount,

plus interest as provided by law.     A separate order will be

issued accordingly.

                                     /s/ Richard W. Goldberg
                                     Richard W. Goldberg
                                     Senior Judge

Date: January 31, 2006
      New York, New York