A Colorado corporation, Ellab, Inc. and Ellab A/S, its Danish parent company, have paid the United States $728,910 in Customs duties to resolve civil allegations the United States Attorney’s Office for the District of Colorado announced recently. The company failed to properly classify its imported products and declare their value, thereby failing to pay the full amount of Customs duties owed to the U.S.

The civil agreement release states, “Under the Tariff Act of 1930, companies that import products into the United States are required to pay customs duties—typically calculated as a percentage of the value of the goods—on those products.” Ellab imports thermal validation equipment for use in the healthcare, pharmaceutical and food industries from its Danish parent company for resale to domestic buyers. The Attorney’s Office said that instead of separately deciding which Harmonized Tariff Schedule subheading category applied to each imported product, Ellab classified all its goods under a single HTS code with a low duty rate. The company further “failed to declare the cost of repairs for products that it exported and then re-imported into the United States,” the Attorney’s Office said.

This is a prime example of why it’s crucial to do a detailed, individual, part level review of imported products. Our Trade Advisors offer classification services to avoid blanket classifications that can lead to costly errors like this. While providing the various rates of duty and free trade potentials, we also provide logic to classifications. This adds a layer of reasonable care to supply chains and helps mitigate the risk of these types of scenarios. When faced with an inquiry from U.S. Customs, providing logic and reasonable care bolsters the importers commitment to compliance.

“American companies that import products have a duty to truthfully report the nature and value of their imports and pay the appropriate customs duties,” said United States Attorney Cole Finegan. While it may seem easiest to classify all your goods under a single HTS code rather than take the time to classify the products individually, you risk facing serious penalties in the long-term. Let us help you with classifying your products. Reach out to Mohawk Global Trade Advisors.

By Clarissa Chiclana

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