Big Fines for (alleged) Duty Evaders

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Dec. 22, 2025
By: Marvin E. McPherson

Two major penalty cases close out the year under the False Claims Act (FCA). Both arise out of alleged misclassification and falsely reporting country of origin of imported merchandise. Both cases remind importers the importance of correctly reporting and classifying imported merchandise. Importers beware, not only is the government watching for false claims so are whistleblowers, competitors and the like.

Ceratizit USA, LLC, a distributor of tungsten carbide products (TCPs), settled their alleged violation without admitting liability, and agreed to pay $54.4 million to the United States. The payment included $27.2 million in restitution, plus interest and $9.75 million (plus interest) to the relator as a statutory share.

This case arose as a qui tam action filed under the FCA by relator Mark Alan Stover. The United States intervened and the case was resolved through a settlement agreement prior to adjudication on the merits, followed by a stipulated dismissal under Rule 41(a)(1).

The claim alleged that Ceratizit imported products manufactured in the People’s Republic of China (PRC) that were transshipped through Taiwan to disguise their true country of origin. The change in country of origin would avoid Section 301 tariffs on Chinese goods. Furthermore, it’s alleged that Ceratizit misclassified TCPs under a tariff provision with a zero duty rate rather than the correct 4.6% ad valorem rate and failed to mark imported goods with country of origin.

The alleged misconduct spanned multiple years and resulted in underpayment of customs duties owed to the United States.

The second settlement resulted in paying over $53 million in total for full recovery of lost duties and more than $30 million in civil penalties. Wanxiang America Corporation, a U.S. importer affiliated with a Chinese multinational manufacturer, imported automotive components including wheel hub assemblies containing tapered roller bearings. These products were subject to a Commerce’s antidumping duty order on tapered roller bearings from China, with a country-wide duty rate of 92.84%.

Despite knowing of the antidumping order, Wanxiang allegedly misclassified covered merchandise to avoid antidumping duties, failed to disclose that its imports were subject to the antidumping duty order and misclassified other automotive parts under incorrect tariff provisions.

Willfully misrepresenting or classifying imported merchandise as seen by these cases can be extremely costly. The current administration has placed an emphasis on enforcement of duty evasion and importers should put an emphasis on trade compliance in order to avoid civil penalties and fines. If your company has questions of legally reducing duties or the proper classification or origin for imported merchandise, do not hesitate to contact an attorney at Barnes Richardson, & Colburn LLP.