NEW YORK: The US Customs has rejected the false claims made by the importers against pencils originally manufactured in China but declared to be made elsewhere in Asia the Court of Appeals for the District of Columbia Circuit in order to avoid otherwise applicable customs duties.
The appeals court held that the relator’s allegations triggered the public disclosure bar because the truth of the pencils’ origin was evident from a combination of publicly available administrative reports and the pencils’ physical appearance. The Staples case is one of a rising number of False Claims Act (“FCA”) lawsuits based on alleged violations of customs obligations. A copy of the D.C. Circuit’s decision can be found here.
The relator, a self-identified pencil-industry insider, alleged that defendant retail suppliers imported pencils they knew were manufactured in China, but then falsely declared different countries of origin to Customs to avoid paying substantial antidumping and countervailing duties imposed on Chinese-made pencils.
f These duties are aimed at protecting U.S. industries from unfair trade practices, including the sale of products below the market price or cost of production in their home country (“dumping”), as well as financial benefits provided by foreign governments to their countries’ local producers (“counter available subsidies”). The relator alleged the defendants must have been on notice as to the pencils’ true origin based on certain telltale physical characteristics resulting from the unique manufacturing processes used in China.
