Jeffrey A. Newman
With new tariffs on all imported products heading the headlines in the news each day, it is helpful for the U.S. companies importing products to assure that the country of origin is verified, as the law requires that of the importers of record. Many years ago, Congress figured out that US Customs & Border Protection (“CBP”) did not have the resources to check over the millions of shipments of goods that entered the country every year including those from Mexico, originating in China. There are cases in which goods made in China, for example, were shipped to Mexico and not changed and the country of origin was then stamped on them as being made in Mexico. This would allow those goods to evade U.S. Tariffs.
Importers are obligated to ensure that the goods they impot are completely and accurately descrived on Customs form 7501, invoices and bills of lading and that all dutires and tariffs are paid at the time iof importation. The Burden of proof relating to the origin of any goods lies with the importer of record.
It is also important for the importer to understand the substantial transformation test. According to law, an article that consists in who or part of maaterials from more than one country is a product of the country in which it has been substantially transformed into a new and different article of commerce with a name character and use distinct from that of the articles which it was transformed. So, if parts come from China into Mexico and are so transformed as noted, they could be said to be made in as long as they have been substantially transformed. If not, products made in China, shipped to Mexico and stamped made in Mexico and shipped into the U.S. would not have a true country of origin of the product. This would likely mean tariff fraud. The importer must know. See Part 134 of the U.S. Code of Federal Regulations.
The False Claims Act is a law that allows persons with original information of fraudulent country of origin information tio report these violation. If funds are collected by settlement or verdict, the whistleblower can receive between 15-30% of what the Government recovers.
The Justice Department announced an $8.1 million settlement in a customs-related FCA case brought against a flooring company for allegedly evading customs duties by causing false information to be submitted to CBP regarding the manufacturers’ identity and the products’ country of origin.
Jeff Newman JD MBA, represents whistleblowers in major tariff fraud casesconcerning imported Chinese goods. His firm also represents whistleblowers in Medicare and Medicaid fraud cases under the False Claims Act (Qui Tam), and SEC, IRS and FINCEN whistleblower programs. He can be reached at Jeff@JeffNewmanLaw.com or at 617-823-3217
