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