                              Slip Op. 19–162

               UNITED STATES COURT OF INTERNATIONAL TRADE
____________________________________
                                     :
UNITED STATES,                       :
                                     :
            Plaintiff,               :
                                     :
      v.                             :
                                     :
AEGIS SECURITY INSURANCE             :  Before: Richard K. Eaton, Judge
COMPANY,                             :
                                    :   Consol. Court No. 11-00388
            Defendant,               :
                                     :
      and                            :
                                     :
TRICOTS LIESSE 1983, INC.,           :
                                     :
            Third-Party Defendant.   :
____________________________________:

                                  OPINION and ORDER

[Granting summary judgment for Plaintiff and denying summary judgment for Defendant and
Third-Party Defendant.]

                                                                Dated: December 17, 2019

        Stephen C. Tosini, Commercial Litigation Branch, Civil Division, U.S. Department of
Justice, of Washington, DC, argued for Plaintiff. With him on the brief were Joseph H. Hunt,
Assistant Attorney General, Jeanne E. Davidson, Director, and Patricia M. McCarthy, Assistant
Director, of Washington, DC. Of counsel on the brief was Matthew C. Landreth, Office of the
Assistant Chief Counsel, U.S. Customs and Border Protection, of Buffalo, NY.

       T. Randolph Ferguson, Sandler, Travis & Rosenburg, PA, of San Francisco, CA, argued
for Defendant.

      John B. Brew, Crowell & Moring LLP, of Washington, DC, argued for Third-Party
Defendant. With him on the brief was Frances P. Hadfield.
Consol. Court No. 11-00388                                                                    Page 2


       Eaton, Judge: This matter is before the court on cross-motions for summary judgment

filed by Plaintiff the United States (“Plaintiff” or the “Government”), and by Defendant Aegis

Security Insurance Company (“Aegis”), a surety company, and Third-Party Defendant Tricots

Liesse 1983, Inc. (“Tricots”), an importer of knitted fabric from Canada (collectively,

“Defendants”).

       The Government contends that there is no genuine issue of material fact that would

preclude judgment in its favor for unpaid duties and fees, pursuant to 19 U.S.C. § 1592(d)

(2012),1 because Tricots, in violation of § 1592(a),2 negligently misrepresented to U.S. Customs

and Border Protection (“Customs”) that 875 entries of knitted fabric from Canada qualified for

the preferential tariff treatment afforded to “originating” goods under the North American Free

Trade Agreement (“NAFTA”) Rules of Origin.3 See Pl.’s Mem. Supp. Cross-Mot. Partial Summ.


       1
               Unless otherwise noted, further citations to the Tariff Act of 1930, as amended,
are to the relevant portions of Title 19 of the U.S. Code, 2012 edition. For ease of reference,
citations to Customs’ regulations are to the 2019 edition. The pertinent parts of both statutes and
regulations are identical in substance to the editions in effect at the time of importation.
       2
                Subsection 1592(a) prohibits any person from, among other things, entering
merchandise into the United States by negligently providing materially false information to U.S.
Customs and Border Protection (“Customs”). See 19 U.S.C. § 1592(a). If a person violates
§ 1592(a), and as a result the United States is deprived of duties, taxes, or fees, § 1592(d)
requires Customs to “restore” them, even if the entries of merchandise have been finally
liquidated. That is, the finality of liquidation, which attaches by operation of 19 U.S.C. § 1514,
does not bar the Government’s collection of duties, taxes, and fees according to § 1592(d), which
provides that “[n]otwithstanding section 1514 . . ., if the United States has been deprived of
lawful duties, taxes, or fees as a result of a violation of [§ 1592(a)], [Customs] shall require that
such lawful duties, taxes, and fees be restored, whether or not a monetary penalty is assessed.”
Id. § 1592(d) (emphasis added).
       3
                NAFTA rules for determining when a good “originates in the territory of a
NAFTA country” are codified as part of U.S. law at 19 U.S.C. § 3332(a)(1) and in Customs’
regulations at 19 C.F.R. pt. 181 app., pt. II, § 4. Among the criteria for a good to be originating is
that “the good is produced entirely in the territory of one or more of the NAFTA countries

                                                                            (footnote continued . . .)
Consol. Court No. 11-00388                                                                       Page 3


J., ECF No. 89 (“Pl.’s Br.”); Pl.’s Reply Supp. Mot. Partial Summ. J. & Opp’n Defs.’ Mot.

Summ. J., ECF No. 112; see also Pl.’s R. 56.3 Stmt. Undisputed Facts, ECF No. 89-1 (“Pl.’s R.

56.3 Stmt.”); Pl.’s Resp. Defs.’ R. 56.3 Stmt., ECF No. 112-1 (“Pl.’s Resp. Defs.’ R. 56.3

Stmt.”). As a result, no duties or administrative fees, known as “merchandise processing fees,”

were paid on the entries. That is, all 875 of the entries were finally liquidated free of duties and

fees.

        After liquidation of the subject entries became final, Tricots sought to make a “prior

disclosure” under 19 U.S.C. § 1592(c),4 to correct its claim that its goods were entitled to duty-

free entry because they were NAFTA-originating, and to claim instead that they were entitled to

duty-free entry under a quota program for textiles called the Tariff Preference Levels Program.

Customs rejected the prior disclosure because Tricots failed to submit the Certificates of

Eligibility,5 required to establish eligibility under the quota program, before liquidation became

final, and failed to tender the duties owed. Plaintiff now seeks to recover the unpaid duties and

fees from Tricots, as importer of record, and from Aegis as surety.



exclusively from originating materials,” which is the rule cited by Tricots in its entry paperwork
for the subject entries. See 19 U.S.C. § 3332(a)(1)(C); Defs.’ Mot. Dismiss, ECF No. 76-1, Ex. A
(Certificates of Origin).
        4
                If a party discovers it has claimed incorrectly that its entries qualified for
preferential tariff treatment as originating goods under the NAFTA Rules of Origin, the party
shall not be liable for penalties if it makes a “prior disclosure” of the error, i.e., if it self-reports
the error in writing to Customs. 19 U.S.C. § 1592(c)(5); see also 19 C.F.R. § 181.82(a).
        5
                Pursuant to Customs’ regulations, “[i]n connection with a claim for NAFTA
preferential tariff treatment involving non-originating textile or apparel products subject to the
tariff preference level provisions of [the relevant NAFTA appendix], the importer must submit to
[Customs] a Certificate of Eligibility . . . covering the products.” 19 C.F.R. § 102.25. Certificates
of Eligibility are issued by authorized government officials—here, the Canadian Department of
Foreign Affairs and International Trade.
Consol. Court No. 11-00388                                                                 Page 4


       By their cross-motion, Defendants argue that the Government’s unpaid duties claims

must be dismissed for the same reason the court dismissed its penalty claim in United States v.

Aegis Security Insurance Company, 42 CIT __, 301 F. Supp. 3d 1359 (2018) (“Aegis I”).

Specifically, Defendants contend that Customs must comply with pre-penalty procedures before

it may bring a claim for unpaid duties. See Defs.’ Cross-Mot. Summ. J. & Resp. Pl.’s Cross-Mot.

Partial Summ. J., ECF No. 105 (“Defs.’ Br.”); Defs.’ Reply Pl.’s Resp. Defs.’ Cross-Mot. Summ.

J., ECF No. 116; see also Defs.’ R. 56.3 Stmt. Material Facts Supp. Mot. Summ. J., ECF No.

105; Defs.’ Resp. Pl.’s R. 56.3 Stmt., ECF No. 105 (“Defs.’ Resp. Pl.’s R. 56.3 Stmt.”).

       Additionally, Defendants argue that they do not owe duties on any of the entries in

question because, notwithstanding the timing of its prior disclosure, the subject entries were

eligible to enter duty-free under the Tariff Preference Levels Program. Defendants also argue

that the Government is not entitled to summary judgment because genuine issues of fact exist as

to whether Tricots acted with reasonable care when it made erroneous preference claims in its

entry paperwork, and whether its statements were materially false with respect to a subset of

unidentified entries. Finally, Defendants contend that they have a valid equitable recoupment

counterclaim against the Government.

       Jurisdiction is found under 28 U.S.C. § 1582 (2012). Because the dispositive issues in

this case may be resolved as a matter of law, and there is no genuine issue of any material fact,

the court grants summary judgment in favor of Plaintiff on its claims for unpaid duties and fees

under 19 U.S.C. § 1592(d), plus interest, and denies Defendants’ cross-motion for summary

judgment.
Consol. Court No. 11-00388                                                                     Page 5


                                        BACKGROUND

I.     Overview of Preferential Tariff Treatment Under NAFTA

       NAFTA was implemented into U.S. law on December 8, 1993, for the purpose of

promoting the free flow of goods among the United States, Canada, and Mexico. See North

American Free Trade Implementation Act § 202, 19 U.S.C. § 3311 (1994); Corrpro Companies,

Inc. v. United States, 433 F.3d 1360, 1362 (Fed. Cir. 2006). To accomplish this goal, the

agreement provides for the elimination of most tariffs collected on goods originating from the

three countries. Corrpro, 433 F.3d at 1362; see also 19 U.S.C. § 3332(a)(1) (setting out rules for

determining when a good “originates in the territory of a NAFTA country”); NAFTA Rules of

Origin Regulations, 19 C.F.R. pt. 181 app., pt. II, § 4; General Note 12(b), Harmonized Tariff

Schedule of the United States.

       A.      Claiming Preferential Tariff Treatment Under NAFTA Rules of Origin

       Preferential tariff treatment under NAFTA is not automatic—it must be claimed. For

originating goods, preferential tariff treatment can mean the elimination of not only duties, but

also merchandise processing fees.6 See 19 U.S.C. § 58c(a)(10). Customs’ regulations set out the

procedure to make a claim that a good is originating:

       § 181.21 Filing of claim for preferential tariff treatment upon importation

       (a) Declaration. In connection with a claim for preferential tariff treatment, or for
       the exemption from the merchandise processing fee, for a good under the
       NAFTA, the U.S. importer must make a formal declaration that the good qualifies

       6
               Merchandise processing fees are administrative fees owed on most imports into
the United States. “[M]erchandise that is formally entered or released is subject to the payment to
[Customs] of an ad valorem fee.” 19 C.F.R. § 24.23(b)(1)(i)(A). The fee “is due and payable to
[Customs] by the importer of record of the merchandise at the time of presentation of the entry
summary and is based on the value of the merchandise as determined under 19 U.S.C. 1401a.”
Id. § 24.23(b)(1)(i)(A)-(B). It shall not exceed $485, and must not be less than $25. Id.
Consol. Court No. 11-00388                                                                     Page 6


       for such treatment. The declaration may be made by including on the entry
       summary, or equivalent documentation, including electronic submissions, the
       symbol “CA” for a good of Canada, or the symbol “MX” for a good of Mexico, as
       a prefix to the subheading of the HTSUS under which each qualifying good is
       classified. Except . . . in the case of a good to which Appendix 6.B to Annex 300–B
       of the NAFTA applies[7] (see also 19 CFR 102.25), the declaration must be based
       on a complete and properly executed original Certificate of Origin,[8] or copy
       thereof, which is in the possession of the importer and which covers the good
       being imported.

19 C.F.R. § 181.21(a) (emphasis added); see also 19 C.F.R. § 181.0 (“[Part 181] implements the

duty preference and related Customs provisions applicable to imported goods under [NAFTA],”

and sets out “procedures and other requirements . . . [that] are in addition to the Customs

procedures and requirements of general application.”).

       Normally, a formal declaration is made “upon importation,” as provided in 19 C.F.R.

§ 181.21(a). Customs’ regulations provide, however, that “free entry” documentation may be

filed after entry, so long as the filing is made before liquidation9 becomes final:

       § 10.112 Filing free entry documents or reduced duty documents after entry

       Whenever a free entry or a reduced duty document, form, or statement required to
       be filed in connection with the entry is not filed at the time of the entry or within
       the period for which a bond was filed for its production, but failure to file it was
       not due to willful negligence or fraudulent intent, such document, form, or


       7
                NAFTA provides for annual quantitative limits, or quotas, on certain textile and
apparel products that are made from “non-originating” materials, i.e., from materials (such as
yarn) that are produced by non-NAFTA suppliers. See NAFTA, Annex 300-B, app. 6.B.4(a). As
discussed in Part I.B of this opinion, for such products, importers must submit to Customs a
Certificate of Eligibility.
       8
              “NAFTA Certificate of Origin” is defined by statute as “the certification,
established under article 501 of [NAFTA], that a good qualifies as an originating good under
such Agreement.” 19 U.S.C. § 1508(b)(1)(B).
       9
             Liquidation is the “final computation or ascertainment of duties on entries for
consumption or drawback entries.” 19 C.F.R. § 159.1.
Consol. Court No. 11-00388                                                                      Page 7


        statement may be filed at any time prior to liquidation of the entry or, if the entry
        was liquidated, before the liquidation becomes final.

19 C.F.R. § 10.112 (emphasis added). In other words, once liquidation has become final,

Customs’ regulations provide that an importer may no longer seek to claim preferential tariff

treatment of its entries.

        In the event that an importer erroneously claims preferential tariff treatment under the

NAFTA Rules of Origin, to avoid penalties, the importer may make a prior disclosure to self-

report the error to Customs by filing a corrected declaration and paying any duties owing:

        (5) Prior disclosure regarding NAFTA claims

        An importer shall not be subject to penalties under [19 U.S.C. § 1592(a)] for
        making an incorrect claim for preferential tariff treatment under [19 U.S.C. §
        3332 (Rules of Origin)] if the importer—

             (A) has reason to believe that the NAFTA Certificate of Origin . . . on
             which the claim was based contains incorrect information; and

             (B) in accordance with regulations issued by the Secretary, voluntarily
             and promptly makes a corrected declaration and pays any duties owing.

19 U.S.C. § 1592(c)(5).10 Customs’ regulations set out procedures for making a “corrected

declaration”:


        10
               “With [the NAFTA Implementation Act], Congress approved NAFTA, as well as
a ‘statement of administrative action’ that was submitted with the legislation.” Bestfoods v.
United States, 165 F.3d 1371, 1374 (Fed. Cir. 1999) (citing 19 U.S.C. § 3311(a)). The NAFTA
statement of administrative action provides, with respect to prior disclosures:

        Generally, importers who make false declarations of NAFTA origin to the
        Customs Service, and persons who make false statements in NAFTA certificates
        of origin, will be liable for penalties under [19 U.S.C. § 1592] for fraud, gross
        negligence or negligence, as appropriate. . . . [T]he bill amends [19 U.S.C. §
        1592] to exempt from penalty U.S. exporters or producers who make false
        certifications if they voluntarily and promptly notify in writing all persons to
        whom the person provided the certificate of origin of its falsity.

                                                                           (footnote continued . . .)
Consol. Court No. 11-00388                                                                    Page 8


       (b) Corrected declaration. If, after making the declaration required under
       paragraph (a) of this section . . . , the U.S. importer has reason to believe that a
       Certificate of Origin on which a declaration was based contains information that
       is not correct, the importer shall within 30 calendar days after the date of
       discovery of the error make a corrected declaration and pay any duties that may
       be due. A corrected declaration shall be effected by submission of a letter or other
       written statement to the [Customs] office where the original declaration was filed.

19 C.F.R. § 181.21(b). Thus, perfecting a prior disclosure requires an importer both to inform

Customs of the error and to pay any duties owing on its entries with respect to which the

erroneous declaration was made.

       B.      Claiming Preferential Tariff Treatment Under the Tariff Preference Levels
               Program

       NAFTA provides for annual quantitative limits, or quotas, on certain textile and apparel

products that are made from “non-originating” materials, i.e., from materials (such as yarn) that

are produced by non-NAFTA suppliers. See NAFTA, Annex 300-B, app. 6.B.4(a). The Tariff

Preference Levels Program is a quota program that applies to these products. See Johnson Decl.

(Feb. 9, 2017), ECF No. 89-8, Ex. 14 (Customs Directive No. 3550-085) (the “Directive”).11

       “NAFTA [Tariff Preference Level] rules allow duty free treatment on knitted fabrics

produced in Canada from non-NAFTA yarns that do not meet the NAFTA [Rules of Origin], up

to a certain quantity per year.” Aegis I, 42 CIT at __, 301 F. Supp. 3d at 1362 n.6. Although

goods entered under the Tariff Preference Levels Program are not subject to duties, “[a]ll [such]

goods . . . are subject to merchandise processing fees.” Directive ¶ 6.1; see also Aegis I, 42 CIT

THE NORTH AMERICAN FREE TRADE AGREEMENT ACT STATEMENT OF ADMINISTRATIVE ACTION,
H.R. DOC. NO. 103-159, vol. 1, at 507 (1993).
       11
                In addition to Customs’ regulations, Customs Directive No. 3550-085 provides
guidelines for filing and processing claims under the Tariff Preference Levels Program. Customs
has also produced a series of informed compliance publications dealing with the trade of textiles
under NAFTA. See, e.g., Johnson Decl. (Feb. 9, 2017), ECF 89-8, Ex. 11.
Consol. Court No. 11-00388                                                                       Page 9


at __, 301 F. Supp. 3d at 1362 n.6 (“[Merchandise processing fees] are owed on NAFTA [Tariff

Preference Level] imports . . . .”).

        The regulations set out the procedure to claim eligibility for Tariff Preference Levels

treatment of non-originating textile and apparel products:

        § 102.25 Textile or apparel products under the North American Free Trade
        Agreement

        In connection with a claim for NAFTA preferential tariff treatment involving non-
        originating textile or apparel products subject to the tariff preference level
        provisions of appendix 6.B to Annex 300–B of the NAFTA and Additional U.S.
        Notes 3 through 6 to Section XI, Harmonized Tariff Schedule of the United
        States, the importer must submit to [Customs] a Certificate of Eligibility . . .
        covering the products. The Certificate of Eligibility . . . must be properly
        completed and signed by an authorized official of the Canadian or Mexican
        government and must be presented to [Customs] at the time the claim for
        preferential tariff treatment is filed under § 181.21 of this chapter. If the Center
        director is unable to determine the country of origin of the products, they will not
        be entitled to preferential tariff treatment or any other benefit under the NAFTA
        for which they would otherwise be eligible.

19 C.F.R. § 102.25. Thus, in the case of non-originating textiles from Canada, in order to

establish eligibility under the Tariff Preference Levels Program, the importer must obtain a

Certificate of Eligibility from the Canadian Department of Foreign Affairs and International

Trade. See Directive ¶ 6.3.2.8 (“A [Certificate of Eligibility] application must be properly

completed by an applicant and submitted to the Department of Foreign Affairs and International

Trade (DFAIT). If approved, a DFAIT official’s signature, on behalf of the Minister of Foreign

Affairs, will be embedded onto the bottom left portion of the [Certificate of Eligibility].”).

        Generally, a Certificate of Eligibility is filed at the time a claim for preferential tariff

treatment is made under 19 C.F.R. § 181.21, i.e., “upon importation.” See 19 C.F.R. § 181.21;

see also id. § 102.25 (“[A] Certificate of Eligibility . . . must be presented to [Customs] at the

time the claim for preferential tariff treatment is filed under § 181.21.”). In accordance with
Consol. Court No. 11-00388                                                               Page 10


§ 10.112 of Customs’ regulations, however, post-entry claims for preferential treatment are

permitted, but they must be made prior to liquidation of the subject entries becoming final. See

id. § 10.112 (“[Documentation for duty-free or reduced duty entry] may be filed at any time prior

to liquidation of the entry or, if the entry was liquidated, before liquidation becomes final.”).

Moreover, to be a valid post-entry claim, the regulations require that the Certificates of

Eligibility accompany the claim. See id. § 102.25 (emphasis added) (“[Certificates of Eligibility]

must be presented to [Customs] at the time the claim for preferential tariff treatment is filed

under [19 C.F.R. § 181.21].”).



II.    Facts Material to Plaintiff’s Unpaid Duties Claims Under 19 U.S.C. § 1592(d)

       A.      Tricots’ Declaration Upon Importation

       Between November 17, 2005, and December 23, 2008, Tricots imported 875 entries of

fabric into the United States from Canada, declaring to Customs that each entry was eligible for

preferential tariff treatment under NAFTA Rules of Origin because the fabric originated in a

NAFTA country. Pl.’s R. 56.3 Stmt. ¶ 1; Defs.’ Resp. Pl.’s R. 56.3 Stmt ¶ 1. On 874 of its

entries, Tricots made its claims by including on the entry summaries (1) the “CA” indicator,

denoting that the goods qualified for duty-free treatment under NAFTA; (2) the “01” entry-type

code, indicating that the goods were “free” or “dutiable” consumption entries; and (3) a

calculation showing that no duties or merchandise processing fees were owed on the goods. For

one entry—WFN-80098854, entered May 19, 2006—Tricots included on its entry summary

(1) the “CA” indicator, denoting that the goods qualified for duty-free treatment under NAFTA;

and (2) a calculation showing that no duties or merchandise processing fees were owed on the

goods. See Pl.’s R. 56.3 Stmt. ¶ 1; Defs.’ Resp. Pl.’s R. 56.3 Stmt. ¶ 1.
Consol. Court No. 11-00388                                                                  Page 11


       In the Certificates of Origin filed with its entries, Tricots stated that “[t]he good [covered

by the Certificate] is produced entirely in the territory of one or more of the NAFTA countries

exclusively from originating materials.” Defs.’ Mot. Dismiss, ECF No. 76-1, Ex. A. In other

words, Tricots claimed that all 875 entries were made in Canada exclusively from originating

materials.

       Six hundred four of the subject entries for which the Government is seeking lost revenue

(duties and fees) were covered by a continuous bond, in the amount of $230,000, issued by

Aegis. See Pl.’s R. 56.3 Stmt. ¶ 2; Defs.’ Resp. Pl.’s R. 56.3 Stmt. ¶ 2. The bond was effective as

of November 17, 2002, and remained in force for each succeeding annual period until it was

terminated on November 29, 2007. See Johnson Decl. (Feb. 9, 2017), ECF No. 89-8, Ex. 1.

       All of Tricots’ entries liquidated, pursuant to 19 U.S.C. § 1514, before 2010. See Pl.’s R.

56.3 Stmt. ¶ 4; Defs.’ Resp. Pl.’s R. 56.3 Stmt. ¶ 4. Tricots did not file a protest with respect to

any of the entries. See Pl.’s R. 56.3 Stmt. ¶ 5; Defs.’ Resp. Pl.’s R. 56.3 Stmt. ¶ 5. By May 5,

2010, liquidation of the entries had become final, free of duties and fees, under 19 U.S.C. § 1514.

See Pl.’s R. 56.3 Stmt. ¶ 5; Defs.’ Resp. Pl.’s R. 56.3 Stmt. ¶ 5.

       B.      Tricots’ Effort to Make a Prior Disclosure and Correct Its Declaration

       After liquidation of the subject entries became final, by letter dated May 28, 2010,

Tricots sought prior disclosure treatment, under 19 U.S.C. § 1592(c), and notified Customs that

its “claim for preferential tariff treatment under [the] NAFTA [Rules of Origin] for some of the

[entered] merchandise cannot be supported for exportations from 2005 to April 1, 2010,” a

period that encompassed the subject entries. See Defs.’ Mot. Dismiss, ECF No. 76-1, Ex. B at 1.

According to the letter, Tricots made this discovery pursuant to an internal review that it

undertook “as a result of a number of Requests for Information . . . from the Port of Champlain,
Consol. Court No. 11-00388                                                               Page 12


New York,” where the subject fabric entered the United States. See Defs.’ Mot. Dismiss, ECF

No. 76-1, Ex. B at 1. By way of explanation of its error, Tricots stated:

       [T]here was not sufficient attention paid [by Tricots’ former compliance
       specialist] to whether the goods were [Tariff Preference Level] or NAFTA
       [originating].

Defs.’ Mot. Dismiss, ECF No. 76-1, Ex. B at 2; Defs.’ Resp. Pl.’s R. 56.3 Stmt. ¶ 9.

       On December 1, 2010, for the purpose of “complet[ing] the prior disclosure” and

“provid[ing] information concerning the amount of [m]erchandise [p]rocessing [f]ee[s] which

would have been due had the entry been made correctly,” Tricots supplemented its May 28, 2010

letter with a second letter that calculated the fees it claimed were owed on its imports under the

Tariff Preference Levels Program. See Defs.’ Mot. Dismiss, ECF No. 76-1, Ex. D at 2. Although

the prior disclosure statute and Customs’ regulations required that the disclosing party “pay any

duties that may be due,” Tricots did not do so, because, it maintained, no duties were owed. See

19 C.F.R. § 181.21(b). Rather, Tricots maintained that the entries were eligible for duty-free

entry under the Tariff Preference Levels Program. In making this claim, however, Tricots did not

submit a Certificate of Eligibility for any of the subject imports.

       C.      Customs’ Rejection of Tricots’ Prior Disclosure

       Following Tricots’ December 1, 2010 letter, Customs notified Tricots’ counsel that it had

reviewed the company’s submission, and although Tricots had accounted for the merchandise

processing fees that were due, the company had “not accounted for the [d]uty due,” and,

moreover, that “[Customs’] policy is that if a company has failed to present Certificates of

Eligibility by the time of final liquidation, this precludes that company from receiving the duty
Consol. Court No. 11-00388                                                                Page 13


preference under [Tariff Preference Levels Program].”12 Defs.’ Br., ECF No. 105-1, Ex. T at 2

(emphasis added).

       Subsequently, by letter dated May 23, 2011, Customs notified Tricots of the amount of

duties and fees owed. It stated that after carefully reviewing Tricots’ correspondence, the

information Tricots’ office provided, and each of the entries at issue, Customs had concluded

that Tricots owed $2,249,196.04 in lost revenue, representing $2,206,596.05 in unpaid duties and

$42,599.99 in unpaid fees. The letter also notified Tricots that, following its deposit of the full

amount owed, the company could seek review of Customs’ calculations as provided in the

regulations.13 Tricots was given until June 24, 2011 to tender the amounts owed, which, for

Customs, would perfect the prior disclosure. See Aegis I, 42 CIT at __, 301 F. Supp. 3d at 1363.

       Rather than tender the amounts owed, on June 22, 2011, Tricots submitted an offer in

compromise of $85,199.98, representing twice the amount of the unpaid merchandise processing

fees it claimed were due on the entries. See Defs.’ Br., ECF No. 105-1, Ex. T at 8. In response,

on December 7, 2011, Customs sent Tricots a letter stating that its entries did not qualify for

prior disclosure treatment under 19 U.S.C. § 1592(c) because the company “did not tender the



       12
                 According to Customs Ruling HQ 229504, “an importer ha[s] until liquidation to
supply the Certificates of Eligibility, and the opportunity to request delay of liquidation if
necessary.” Johnson Decl. (Feb. 9, 2017), Ex. 9 at 5. Here, Tricots did not supply Certificates of
Eligibility for the subject entries until August 2012—more than two years after final liquidation.
       13
                Under Customs’ regulations, in order to perfect a prior disclosure, a disclosing
party must “tender any actual loss of duties, taxes and fees or actual loss of revenue.” 19 C.F.R.
§ 162.74(c) (“The disclosing party may choose to make the tender either at the time of the
claimed prior disclosure, or within 30 days after [Customs] notifies the person in writing of
[Customs’] calculation of the actual loss of duties, taxes and fees or actual loss of revenue.”).
The regulations provide that a disclosing party may ask Customs Headquarters to review the
calculations. If, in its discretion, Headquarters grants the review, its decision is final. Id.
Consol. Court No. 11-00388                                                               Page 14


total amount owed by [June 24, 2011]” and therefore did not “perfect its prior disclosure.” Defs.’

Br., ECF No. 105-1, Ex. F.

       D.      Customs’ Demands for Unpaid Duties

       On February 16, 2012, Customs demanded payment of unpaid duties from Tricots in the

amount of $2,249,196.04. See Defs.’ Br., ECF No. 105-1, Ex. G. Customs also demanded

payment from Aegis of $500,113.32, the amount of duties owed on the 604 entries secured by its

bond. See Johnson Decl. (Feb. 9, 2017), ECF No. 89-8, Ex. 19. Demands were sent to Aegis on

May 18, 2011, May 31, 2011, and June 9, 2011. See Compl., ECF No. 2 ¶ 21; Answer, ECF No.

13 ¶ 21. Aegis did not respond to any of the demands. See Compl. ¶ 21; Answer ¶ 21. No duties

or fees have been paid on any of the 875 entries.



III.   CIT Litigation

       On September 27, 2011, pursuant to 19 U.S.C. § 1592(d), the Government commenced

an action against Aegis for unpaid duties and merchandise processing fees owed on the 604

entries covered by its bond. On January 19, 2012, Aegis filed its Answer and a Third-Party

Complaint against Tricots, as Third-Party Defendant, for indemnification of any amount Aegis

was ordered to pay on Plaintiff’s claim. See generally Compl.; Answer; Third-Party Compl.,

ECF No. 37.

       Separately, on April 25, 2016, the Government sued Tricots to recover (1) civil penalties,

pursuant to 19 U.S.C. § 1592(b), and (2) unpaid duties and merchandise processing fees on all
Consol. Court No. 11-00388                                                                Page 15


875 of the entries, pursuant to 19 U.S.C. § 1592(d).14 See Compl., United States v. Tricots Liesse

1983, Inc., No. 16-00066 (CIT Apr. 24, 2016), ECF No. 2. Tricots filed an Answer in which it

asserted a counterclaim for equitable recoupment against the Government. See Answer, United

States v. Tricots Liesse 1983, Inc., No. 16-00066 (CIT Sept. 2, 2016), ECF No. 14.

       On August 4, 2016, the Government’s lawsuit against Tricots was consolidated sub nom

United States v. Aegis Security Insurance Company, Consol. Court No. 11-00388. See Order

dated Aug. 4, 2016, ECF No. 68.

       After consolidation, Defendants moved to dismiss the Government’s civil penalty claim

and its unpaid duties claims for lack of subject matter jurisdiction on the ground that the

Government failed to exhaust its administrative remedies. Plaintiff opposed the motion and

cross-moved for partial summary judgment solely as to its claims for unpaid duties and fees. The

court stayed briefing on Plaintiff’s cross-motion pending its decision on the motion to dismiss.

See Order dated May 5, 2017, ECF No. 86.

       In Aegis I, the court converted Defendants’ motion to dismiss into a motion for summary

judgment. As to the penalty claim, the court agreed with Defendants that the Government had

failed to exhaust its administrative remedies because “the facts demonstrate that, despite Tricots’

efforts, Customs did not follow the statutory injunction to provide the company with a

‘reasonable opportunity’ to make oral representations ‘seeking remission or mitigation of the

monetary penalty’ following issuance of the Notice of Penalty, and thus did not provide Tricots

with the statutorily required opportunity to be heard” under 19 U.S.C. § 1592(b)(2). Aegis I, 42

CIT at __, 301 F. Supp. 3d at 1368. Accordingly, “[b]ecause Customs failed to exhaust its

       14
             Tricots executed a number of waivers that extended the statute of limitations
through August 18, 2016. See Defs.’ Br., ECF No. 105-1, Ex. C.
Consol. Court No. 11-00388                                                                   Page 16


administrative remedies and thus failed to perfect its penalty claim, Tricots’ motion for summary

judgment [was] granted in part, and the court award[ed] summary judgment in favor of Tricots

on [P]laintiff’s penalty claim.” Id., 42 CIT at __, 301 F. Supp. 3d at 1361.

          On May 23, 2018, the court lifted the stay of briefing on the Government’s previously-

filed cross-motion for summary judgment on its unpaid duties claim. See Order dated May 23,

2018, ECF No. 98. Defendants filed a cross-motion for summary judgment, asking the court to

dismiss Plaintiff’s claims for unpaid duties and fees. See Defs.’ Br. 47. For its part, Plaintiff asks

the court to enter judgment in its favor on its unpaid duties claims (1) against Tricots for

$2,249,196.04, representing $2,206,596.05 in duties and $42,599.99 in merchandise processing

fees, plus equitable prejudgment interest, and post-judgment interest, and (2) against Aegis for

$500,113.32, plus mandatory interest under 19 U.S.C. § 580, equitable prejudgment interest, and

post-judgment interest. See Pl.’s Br. 28, 32.



                                    STANDARD OF REVIEW

          Under Rule 56, “[t]he court shall grant summary judgment if the movant shows that there

is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of

law.” U.S. CT. INT’L TR. R. 56(a); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247

(1986).



                                     LEGAL FRAMEWORK

          Under 19 U.S.C. § 1592(a)(1), “no person, by fraud, gross negligence, or negligence . . .

may enter, introduce, or attempt to enter or introduce any merchandise into the commerce of the
Consol. Court No. 11-00388                                                                Page 17


United States by means of” material and false documents, information, acts, or omissions.15 If a

party violates 19 U.S.C. § 1592(a), “[t]he statutory scheme provides the United States with

means both (1) to impose a penalty for the improper conduct and (2) to recover import duties lost

as a result of the improper conduct.” United States v. Blum, 858 F.2d 1566, 1569 (Fed. Cir.

1988); see also 19 U.S.C. § 1592(b) (penalty claims), (d) (unpaid duties claims).



I.     Penalty Claims

       The Government’s penalty claim is no longer at issue because it was dismissed in Aegis I.

To understand Defendants’ argument for dismissal of the Government’s unpaid duties claims,

however, Customs’ regulations on penalties procedures are discussed briefly below.

       Subsection (b) of 19 U.S.C. § 1592 sets out the procedures that the United States must

follow before it may perfect a penalty claim. See United States v. Int’l Trading Servs., 40 CIT __,

__, 190 F. Supp. 3d 1263, 1269 (2016) (citation omitted) (“Section 1592(b) states the procedures


       15
               In full text, subsection 1592(a)(1) reads:

       Without regard to whether the United States is or may be deprived of all or a
       portion of any lawful duty, tax, or fee thereby, no person, by fraud, gross
       negligence, or negligence—

       (A) may enter, introduce, or attempt to enter or introduce any merchandise into
       the commerce of the United States by means of—

            (i) any document or electronically transmitted data or information, written or
            oral statement, or act which is material and false, or

            (ii) any omission which is material, or

       (B) may aid or abet any other person to violate subparagraph (A).

19 U.S.C. § 1592(a)(1).
Consol. Court No. 11-00388                                                                  Page 18


by which the United States must exhaust administrative remedies; to wit, ‘Customs must perfect

its penalty claim in the administrative process . . . by issuing a pre-penalty notice and a notice of

penalty.’”). These procedures state that if Customs has reason to believe that a violation of

§ 1592(a) has occurred, “and determines that further proceedings are warranted,” it must first

issue a written pre-penalty notice to any person concerned, stating “its intention to issue a claim

for a monetary penalty.” 19 U.S.C. § 1592(b)(1)(A). The notice must contain several pieces of

information provided for in § 1592(b), including “whether the alleged violation occurred as a

result of fraud, gross negligence, or negligence,” “the estimated loss of lawful duties, . . . the

amount of the proposed monetary penalty,” and must also “inform such person that he shall have

a reasonable opportunity to make representations, both oral and written, as to why a claim for a

monetary penalty should not be issued in the amount stated.” 19 U.S.C. § 1592(b)(1)(A)(v)-(vii).

       The court held in Aegis I that “[b]ecause Customs failed to exhaust its administrative

remedies and thus failed to perfect its penalty claim, Tricots’ motion for summary judgment

[was] granted in part, and the court award[ed] summary judgment in favor of Tricots on

[P]laintiff’s penalty claim.” Aegis I, 42 CIT at __, 301 F. Supp. 3d at 1361. Thus, the sole

remaining claims before the court are Plaintiff’s claims for unpaid duties and fees, under 19

U.S.C. § 1592(d).



II.    Unpaid Duties Claims

       Subsection 1592(d) requires Customs to “restore” unpaid duties, taxes, and fees due on

entries, even if the entries have been finally liquidated:
Consol. Court No. 11-00388                                                                   Page 19


       Notwithstanding [19 U.S.C. § 151416], if the United States has been deprived of
       lawful duties, taxes, or fees as a result of a violation of [§ 1592(a)], the Customs
       Service shall require that such lawful duties, taxes, and fees be restored, whether
       or not a monetary penalty is assessed.

19 U.S.C. § 1592(d) (emphasis added). In other words, the finality of liquidation is not a bar to

the Government’s collection of unpaid duties, taxes, and fees.

       Additionally, a claim for lost import duties is judicially enforceable, irrespective of

whether the United States pursues a penalty claim, as the plain language of subsection (d) makes

clear. Id. As the Federal Circuit held in United States v. Blum, 858 F.2d 1566 (Fed. Cir. 1988):

       The plain language of subsection (d) provides for recovery of lost import duties
       resulting from a violation of subsection (a). Under this provision, import duties
       lost as a result of a violation of subsection (a) are recoverable by the United States
       “whether or not a monetary penalty [. . .] is assessed.” We hold that such a claim
       is judicially enforceable pursuant to subsection (d).

Blum, 858 F.2d at 1569. The Blum Court further stated:

       Subsection (d) is not a penalty provision; rather, subsection (d) allows the United
       States to recover lawful duties lost as a result of a violation of subsection (a).
       Lawful duties are those that would have been collected by the United States but
       for the violation of subsection (a).

Id.

       Relying on Blum, this Court has ruled that “subsection [(d)] creates an independent cause

of action,” and the “government’s right to recover unpaid duties under section 1592(d) does not

depend on its right to obtain penalties . . . .” United States v. Nitek Elecs., Inc., 36 CIT 546, 557,

844 F. Supp. 2d 1298, 1309 (2012), aff’d on other grounds, 806 F.3d 1376 (Fed. Cir. 2015) (first

citing Blum, 858 F.2d at 1568-69, then quoting United States v. Jac Natori Co., 108 F.3d 295,

299 (Fed. Cir. 1997)); see also United States v. Aegis Sec. Ins. Co., 29 CIT 1263, 1265, 398 F.

       16
              Section 1514 provides that Customs’ decisions are “final and conclusive upon all
persons” unless a protest is timely filed. 19 U.S.C. § 1514(a).
Consol. Court No. 11-00388                                                                  Page 20


Supp. 2d 1354, 1356 (2005) (citing Blum, 858 F.2d at 1569-70) (“[S]ection 1592(d) ‘require[s]’

restoration of duties, irrespective of penalty assessment.”).

       Moreover, unlike with penalty claims, “the government need not exhaust administrative

remedies prior to seeking recovery of lost duties”—i.e., “[s]ection 1592 does not provide any

administrative process for imposing lost duty claims.” Nitek, 36 CIT at 557, 844 F. Supp. 2d at

1309 (citing Aegis, 29 CIT at 1265, 398 F. Supp. 2d at 1355). This Court has rejected the

argument that that “because the statutory provision enabling the United States to collect duties

[i.e., subsection (d)] is contained within the same section [i.e., § 1592] that outlines the penalty

assessment procedures [i.e., subsection (b)] that those procedures are applicable to a duty claim

brought by the United States.” United States v. Ross, 6 CIT 270, 271, 574 F. Supp. 1067, 1068-

69 (1983) (footnote omitted). Examining the relevant statutory language,17 the Ross Court found:

       Section 1592(d), taken at face-value, demonstrates that the United States need not
       follow the elaborate penalty procedures when pursuing a duty claim. Subsections
       (b) and (c) of § 1592 are cast in such terms as “monetary penalty” or “penalty
       claim.” Subsection (d) alone deals with “lawful duties” and makes no reference to
       the preceding matters.

Id., 6 CIT at 271, 574 F. Supp. at 1069.

       Subsection (d) does not, by its terms, identify the parties against whom the United States

may seek to “restore” unpaid duties. The Blum Court held that the United States may seek the

       17
                The Ross Court applied the 1982 version of 19 U.S.C. § 1592(d), which is
substantially the same as the 2012 version of the law. The difference is that where the 1982
version speaks of the deprivation of solely “lawful duties,” the 2012 version speaks of the
deprivation of “lawful duties, taxes, and fees.” Compare 19 U.S.C. § 1592(d) (1982) (“[I]f the
United States has been deprived of lawful duties as a result of a violation of subsection (a) of this
section, the appropriate customs officer shall require that such lawful duties be restored, whether
or not a monetary penalty is assessed.”) with 19 U.S.C. § 1592(d) (2012) (“[I]f the United States
has been deprived of lawful duties, taxes, or fees as a result of a violation of [§ 1592(a)], the
Customs Service shall require that such lawful duties, taxes, and fees be restored, whether or not
a monetary penalty is assessed.”).
Consol. Court No. 11-00388                                                                  Page 21


unpaid duties not only from the party that violated § 1592(a), but also “from those parties

traditionally liable for such duties, e.g., the importer of record and its surety.” Blum, 858 F.2d at

1570. A surety’s liability flows solely from its contractual obligations under its bond. It pays, if

the importer does not pay, upon a demand on the bond by the Government. A surety’s liability is

limited to the face amount of the bond, plus statutory interest under 19 U.S.C. § 580. See 19

C.F.R. § 113.62(a) (“Agreement to Pay Duties, Taxes, and Charges”).

       Finally, subsection (e) of the statute provides that, in any proceeding based on

negligence, such as the Government’s claim here, “the United States shall have the burden of

proof to establish the act or omission constituting the violation.” 19 U.S.C. § 1592(e)(4). The

Government’s burden of proof is to establish by a preponderance of the evidence that Tricots

committed an act or omission constituting a negligent violation of § 1592(a). See United States v.

Deladiep, Inc., 41 CIT __, __, 255 F. Supp. 3d 1326, 1337 (2017).

       If the Government meets its burden, “the alleged violator shall have the burden of proof

that the act or omission did not occur as a result of negligence.” 19 U.S.C. § 1592(e)(4). The

alleged violator satisfies its burden of proof by “affirmatively demonstrat[ing] that it exercised

reasonable care under the circumstances.” United States v. Ford Motor Co., 463 F.3d 1267, 1279

(Fed. Cir. 2006) (“Customs has the burden merely to show that a materially false statement or

omission occurred; once it has done so, the defendant must affirmatively demonstrate that it

exercised reasonable care under the circumstances.”). Reasonable care may be demonstrated, if,

for example, an importer can show that it had “an honest, good faith professional disagreement”

with its counsel “as to correct classification of a technical matter.” United States v. Optrex Am.,

Inc., 32 CIT 620, 630-31, 560 F. Supp. 2d 1326, 1336 (2008) (quoting H.R. REP. NO. 103-361

(1993), reprinted in 1993 U.S.C.C.A.N. 2552, 2670). On the other hand, “the failure to follow a
Consol. Court No. 11-00388                                                               Page 22


binding [Customs] ruling is a lack of reasonable care.” Id., 32 CIT at 631, 560 F. Supp. 2d at

1335-36.



                                         DISCUSSION

I.     Plaintiff’s Unpaid Duties Claims Are Not Barred

       Defendants argue that Plaintiff’s claim for unpaid duties and merchandise processing fees

under § 1592(d) must be dismissed, as a matter of law, because Customs “failed to perfect a

valid determination that Tricots violated [subsection] 1592(a).” Defs.’ Br. 10. They argue that

“to determine if a violation of [subsection] (a) [has] occurred, Customs must follow the

subsection (b) procedures.” Defs.’ Br. 11. That is, in Defendants’ view, Customs must follow the

subsection (b) pre-penalty procedures not only to perfect a penalty claim, but also to perfect a

claim for unpaid duties under subsection (d). For Defendants, because the court has ruled that

Customs failed to follow the pre-penalty procedures set out in subsection (b), and therefore

dismissed the Government’s penalty claim, the court must also dismiss the subsection (d) claims.

See Defs.’ Br. 47.

       Defendants’ argument lacks merit. It is an incorrect statement of the law that “to

determine if a violation of [subsection] (a) [has] occurred, Customs must follow the subsection

(b) procedures” to establish a subsection (d) claim for unpaid duties. Whether Customs has

complied with the procedures in subsection (b) bears on whether Customs may pursue a penalty

claim for an alleged violation of subsection (a). By its terms, subsection (b) pertains to a “pre-

penalty notice,” which, among other things, must “inform [a defendant] that he shall have a

reasonable opportunity to make representations, both oral and written, as to why a claim for a

monetary penalty should not be issued in the amount stated.” 19 U.S.C. § 1592(b)(1)(A)(vii)
Consol. Court No. 11-00388                                                                  Page 23


(emphasis added). Nowhere does the statute set out a procedure that the United States must

follow before it seeks to recover unpaid duties under subsection (d). See Nitek, 36 CIT at 577,

844 F. Supp. 2d at 1309 (citation omitted) (“[T]he government need not exhaust administrative

remedies prior to seeking recovery of lost duties.”).

       This Court has long held that “[subs]ection 1592(d), taken at face-value, demonstrates

that the United States need not follow the elaborate penalty procedures when pursuing a duty

claim.” Ross, 6 CIT at 271, 574 F. Supp. at 1069. Indeed, the plain language of subsection (d)

makes it clear that unpaid duty claims may proceed “whether or not a monetary penalty is

assessed.” 19 U.S.C. § 1592(d) (emphasis added) (“Customs . . . shall require that such lawful

duties, taxes, and fees be restored, whether or not a monetary penalty is assessed.”); see also

Aegis, 29 CIT at 1265, 398 F. Supp. 2d at 1356 (citation omitted) (“[S]ection 1592(d)

‘require[s]’ restoration of duties, irrespective of penalty assessment.”). Thus, the court holds that

Plaintiff’s unpaid duties claims are not barred.



II.    Plaintiff’s Unpaid Duties Claims Have Merit

       A.      Tricots’ Violation of § 1592(a)

       As has been discussed, no protest was filed with respect to the liquidation of any of

Tricots’ 875 entries. By May 5, 2010, liquidation of the subject entries had become final. See

Juice Farms, Inc. v. United States, 68 F.3d 1344, 1346 (Fed. Cir. 1995) (“Without a timely

protest, liquidations become final and conclusive under 19 U.S.C. § 1514.”). The finality of

liquidation, however, does not bar the Government’s collection of duties, taxes, and fees

according § 1592(d), which provides that “[n]otwithstanding [19 U.S.C. § 1514], if the United

States has been deprived of lawful duties, taxes, or fees as a result of a violation of [§ 1592(a)],
Consol. Court No. 11-00388                                                                Page 24


the Customs Service shall require that such lawful duties, taxes, and fees be restored, whether or

not a monetary penalty is assessed.” 19 U.S.C. § 1592(d) (emphasis added).

       Subsection 1592(a) prohibits (1) negligently (2) entering merchandise into the commerce

of the United States (3) by means of any statement, act, or omission (4) that is material (5) and

false. See 19 U.S.C. § 1592(a)(1) (“[N]o person, by . . . negligence . . . may enter . . . any

merchandise into the commerce of the United States by means of” material and false documents,

information, acts or omissions). The Government has the burden of proof “to establish the act or

omission constituting the violation” of subsection (a) by a preponderance of the evidence. Id.

§ 1592(e)(4); see also Deladiep, 41 CIT at __, 255 F. Supp. 3d at 1337. If the Government meets

its burden, “the alleged violator shall have the burden of proof that the act or omission did not

occur as a result of negligence,” i.e., by “affirmatively demonstrat[ing] that it exercised

reasonable care under the circumstances.” See 19 U.S.C. § 1592(e)(4); Ford Motor Co., 463 F.3d

at 1279.

                1.    Tricots’ Negligence

       Customs’ regulations set out rules for determining the level of an importer’s culpability

under § 1592:

       A violation is determined to be negligent if it results from an act or acts (of
       commission or omission) done through either the failure to exercise the degree of
       reasonable care and competence expected from a person in the same
       circumstances either: (a) in ascertaining the facts or in drawing inferences
       therefrom, in ascertaining the offender’s obligations under the statute; or (b) in
       communicating information in a manner so that it may be understood by the
       recipient. As a general rule, a violation is negligent if it results from failure to
       exercise reasonable care and competence: (a) to ensure that statements made and
       information provided in connection with the importation of merchandise are
       complete and accurate; or (b) to perform any material act required by statute or
       regulation.
Consol. Court No. 11-00388                                                                 Page 25


19 C.F.R. pt. 171, app. B(C)(1); see also 19 U.S.C. § 1484(a)(1) (importer has a duty of

“reasonable care” when preparing entry documentation); Optrex, 32 CIT at 631, 560 F. Supp. 2d

at 1335-36 (“[T]he failure to follow a binding [Customs] ruling is a lack of reasonable care.”).

       Plaintiff insists that Tricots was negligent when it represented that its entries were

originating goods and therefore qualified for entry free of duties and fees under the NAFTA

Rules of Origin. In an attempt to defeat summary judgment, Defendants claim that there is a

genuine issue of material fact, and further discovery is warranted, as to whether Tricots acted

with reasonable care when it made erroneous preference claims in its entry paperwork:

       [Tricots] knew the fabric it produced in Canada qualified for duty free treatment
       under the NAFTA, but made incorrect preference claims. As soon as Tricots
       identified that it claimed one NAFTA provision over another in certain instances,
       it immediately corrected its claim with Customs. Its actions were not
       unreasonable and similarly situated companies in the same circumstances would
       have acted in the same fashion. The question of whether a party is negligent is
       fact specific and Tricots should be afforded the opportunity after complete
       discovery to show it was not negligent and acted as others would in the same
       circumstance.

Defs.’ Br. 43. In other words, in Tricots’ view, whether it exercised reasonable care to ensure its

statements to Customs were complete and accurate is a question that cannot be answered based

on the information before the court, but rather requires further discovery from other importers

about what they would have done if they had made the subject entries.

       The standard to determine whether a party has acted negligently is set out in the

regulations. 19 C.F.R. pt. 171, app. B(C)(1). Based on Tricots’ admissions, there can be little

doubt that it failed to act with “reasonable care and competence” when declaring at the time of

importation that each of its 875 entries qualified for preferential tariff treatment under the

NAFTA Rules of Origin. In Tricots’ words, “the imported fabric at bar was mistakenly entered

and liquidated for duty-free entry as NAFTA-originating goods when in fact the fabric qualified
Consol. Court No. 11-00388                                                                 Page 26


for duty-free treatment under the NAFTA Preference Tariff Level . . . quota program for fabrics

knitted or woven in a NAFTA country from non-originating materials.” Tricots’ Answer to

Third-Party Compl. ¶ 8.

       Tricots has admitted that its mistake was the result of inattention: “[B]ecause [Tricots]

was a small manufacturer and importer . . . there was not sufficient attention paid by [its] former

compliance specialist as to whether [its] products qualifie[d] for NAFTA [Tariff Preference

Level] or NAFTA [Rules of Origin].” Defs.’ Resp. Pl.’s R. 56.3 Stmt. ¶ 9; see also Defs.’ Mot.

Dismiss, ECF No. 76-1, Ex. B at 2. Tricots, then, admits that it made a mistake, but insists that

because it acted as other similarly situated importers would have acted, it was not negligent.

Even if it could demonstrate that others would have been similarly inattentive, however, Tricots’

argument would be no more compelling. The test here is whether the company exercised the

degree of reasonable care and competence expected from an importer in the same circumstances.

Tricots has admitted that it failed to pay adequate attention to the origin of the materials used to

make its products, which then resulted in the incorrect statement in the entry paperwork that its

goods were NAFTA-originating. Tricots’ behavior does not stem from, for example, “an honest,

good faith professional disagreement as to correct classification of a technical matter”—but

rather, from a lack of reasonable care. See Optrex, 32 CIT at 630-31, 560 F. Supp. 2d at 1336

(citation omitted).

       Because the question of whether Tricots was negligent here requires the application of

the reasonable care standard to the facts—i.e., Tricots’ conduct and statements to Customs, not

what another company might have done—it is difficult to see any real purpose for more

discovery. A finding that an act is reasonable or not does not rely on consensus in the community

but on the application of reason. Here, the undisputed facts support the conclusion that Tricots—
Consol. Court No. 11-00388                                                                  Page 27


by its inattention—was negligent in its statements to Customs that all of its entries were made

from exclusively originating materials.

               2.      Tricots Entered Merchandise into the United States

       No party disputes that “Tricots imported 875 entries of fabric into the United States from

Canada between November 17, 2005, and December 23, 2008, declaring to [Customs] that each

entry was eligible for preferential tariff treatment under NAFTA because the fabric originated in

a NAFTA country.” Pl.’s R. 56.3 Stmt. ¶ 1; Defs.’ Resp. Pl.’s R. 56.3 Stmt. ¶ 1.

               3.      Tricots’ Statements to Customs

       It is also undisputed that Tricots stated in its entry paperwork that its merchandise was

produced in Canada from NAFTA-originating materials:

       On 874 of its entries, Tricots made such claims [for preferential treatment] by
       including on its entry summaries (1) the “CA” indicator, indicating that the goods
       qualified for duty-free treatment under NAFTA; (2) the “01” entry-type code,
       indicating that the goods were “free” or “dutiable” consumption entries; and (3) a
       calculation indicating that no duties or [merchandise processing fees] were owed
       on the goods. . . . For one entry—WFN-80098854, entered May 19, 2006—
       Tricots included on its entry summary (1) the “CA” indicator, indicating that the
       goods qualified for duty-free treatment under NAFTA; and (2) a calculation
       indicating that no duties or [merchandise processing fees] were owed on the
       goods.

Pl.’s R. 56.3 Stmt. ¶ 1; Defs.’ Resp. Pl.’s R. 56.3 Stmt. ¶ 1. In the Certificates of Origin, Tricots

stated that “[t]he good [covered by the Certificate] is produced entirely in the territory of one or

more of the NAFTA countries exclusively from originating materials.” Defs.’ Mot. Dismiss,

ECF No. 76-1, Ex. A.

               4.      Tricots’ Statements Were Material

       Moreover, Tricots’ statements were material. Regarding “materiality,” the regulations

provide:
Consol. Court No. 11-00388                                                                    Page 28


       A document, statement, act, or omission is material if it has the natural tendency
       to influence or is capable of influencing agency action including, but not limited
       to a Customs action regarding: . . . determination of an importer’s liability for
       duty . . . .

19 C.F.R. pt. 171, app. B(B). Tricots’ entries received preferential tariff treatment based on its

representations in its entry paperwork that its merchandise was NAFTA-originating. See Pl.’s R.

56.3 Stmt. ¶ 1; see also Defs.’ Resp. Pl.’s R. 56.3 Stmt. ¶ 1. As a result, Tricots paid neither

duties nor merchandise processing fees at the time of entry. See Pl.’s R. 56.3 Stmt. ¶ 5; Defs.’

Resp. Pl.’s R. 56.3 Stmt. ¶ 5. Thus, Tricots’ statements were “capable of influencing” and, in

fact, did influence Customs’ action regarding determination of Tricots’ liability for duty.

               5.         Tricots’ Statements Were False

       Based on Tricots’ statements in the entry paperwork, Customs concluded that neither

duties nor merchandise processing fees were due on any of Tricots’ 875 entries. After liquidation

of the subject entries had become final, Tricots attempted to make a prior disclosure under 19

U.S.C. § 1592(c), to correct its claim that all of the entries were NAFTA-originating goods. See

Defs.’ Mot. Dismiss, ECF No. 76-1, Ex. B & D. It stated that its entries were not made from

exclusively NAFTA-originating materials, but rather from “a combination of both [Tariff

Preference Levels Program-eligible] and [NAFTA-originating]” materials. Defs.’ Mot. Dismiss,

ECF No. 76-1, Ex. D at 2. In other words, none of the 875 entries were made exclusively from

NAFTA-originating material, contrary to what Tricots declared in its entry summaries and

Certificates of Origin.

       Defendants assert that there is a genuine issue of material fact as to whether “all 875

entries contained materially false statements.” Defs.’ Br. 41. Here, Defendants appear to argue

that it is possible, subject to further factual discovery, that their statements were not materially

false as to an unidentified subset of the entries. The evidence before the court shows that Tricots,
Consol. Court No. 11-00388                                                                  Page 29


in its attempt to correct its original declaration, stated to Customs that each of the 875 entries,

which were identified as made from exclusively NAFTA-originating materials, should have been

identified as eligible for the Tariff Preference Levels Program, or as “a combination of both

[Tariff Preference Levels Program-eligible] and [NAFTA-originating].” Defs.’ Mot. Dismiss,

ECF No. 76-1, Ex. D at 2. It is with respect to the subset that Tricots described as a

“combination” of originating and non-originating materials that Defendants appear to argue a

genuine issue of fact exists. Defs.’ Resp. Pl.’s R. 56.3 Stmt. ¶ 8 (“[Ninety-seven] entries have

products within [them] that qualified for NAFTA [Tariff Preference Levels] and NAFTA [Rules

of Origin].”).

        The argument that a genuine factual issue exists as to whether Tricots’ representation that

its entries were originating was “materially false” for the combination entries is difficult to

credit. First, it ignores that, as the manufacturer and importer of record, Tricots must have in its

possession the entry and production documentation that could conclusively resolve the issue. If

this documentation established that any of Tricots’ entries, or the materials therein, qualified as

originating goods, Tricots would have brought it forward in its cross-motion for summary

judgment. Rather than doing so, however, Tricots does not even identify the entry numbers of the

entries with respect to which it claims a genuine issue of fact exists.

        Second, in its dismissal motion, Tricots stated that it sought, and obtained, Certificates of

Eligibility from the Canadian Department of Foreign Affairs and International Trade for all of

the subject entries, not a subset:

        [I]n May 2012, Tricots requested that [the Canadian Department of Foreign
        Affairs and International Trade] issue [Tariff Preference Level] certificates for the
        subject exports made between 2005 and 2008. After confirming that the subject
        fabrics qualified for duty free treatment under the NAFTA [Tariff Preference
        Level] rules, [the Canadian Department of Foreign Affairs and International
        Trade] issued Tricots the [Tariff Preference Level] certificates in June and July
Consol. Court No. 11-00388                                                                 Page 30


        2012. On or about August 9, 2012, Tricots provided the [Tariff Preference Level]
        certificates to Customs (and [the U.S. Department of Justice]).

Tricots’ Mem. Supp. Mot. Dismiss, ECF No. 76, 5 (emphasis added). In other words, Tricots’

position before the Canadian authorities, and before the court in its motion to dismiss, was that

the 875 subject entries were eligible for duty-free treatment under the Tariff Preference Levels

Program, not as a combination of originating and non-originating goods.

        Finally, there has already been discovery in this case. During discovery, Tricots

represented to Customs that any amount of originating yarn included in the combination entries

was so negligible that it disregarded it when calculating the total amount of revenue Customs lost

as a result of Tricots’ error. See Pl.’s Resp. Defs.’ R. 56.3 Stmt. ¶ 7 (citing Letter from Tricots’

Counsel to Government (May 23, 2014), ECF No. 80-17). Because Defendants have failed to

show that there is a genuine issue of material fact with respect to the subset of entries it now

claims were duty-free as a combination of originating materials and materials eligible for Tariff

Preference Levels Program treatment, Plaintiff succeeds on summary judgment. In other words,

Plaintiff wins because Tricots has not cited to, or even made reference to, any evidence that

would support its assertion of a factual dispute, while the record has ample evidence that no

genuine dispute exists.

        Accordingly, the court finds that Plaintiff has met its burden to establish that Tricots

violated 19 U.S.C. § 1592(a).

        B.      Plaintiff Is Entitled to Collect Unpaid Duties and Fees Under § 1592(d) from
                Tricots and Aegis

        Where the United States has been deprived of lawful duties or fees as a result of a

subsection (a) violation, § 1592(d) requires Customs to “restore” such “lawful duties . . . and

fees.” In full text, the statute provides:
Consol. Court No. 11-00388                                                                Page 31


       (d) Deprivation of lawful duties, taxes, or fees

       Notwithstanding [19 U.S.C. § 1514], if the United States has been deprived of
       lawful duties, taxes, or fees as a result of a violation of [§ 1592(a)], the Customs
       Service shall require that such lawful duties, taxes, and fees be restored, whether
       or not a monetary penalty is assessed.

19 U.S.C. § 1592(d). “Lawful duties are those that would have been collected by the United

States but for the violation of subsection (a).” Blum, 858 F.2d at 1569.

       Defendants argue that the United States has not been deprived of any duties it was owed

because the subject entries were eligible for duty-free entry under the Tariff Preference Levels

Program, as Tricots sought to establish by its prior disclosure. See Defs.’ Br. 33 (“[B]ecause the

correct NAFTA preference claim at the time of entry was duty free under the NAFTA [Tariff

Preference Levels Program] rules, Customs was not ‘deprived’ of any duties and cannot

‘recover’ duties that would not have been owed.”).

       Defendants maintain that the law places no time limit on correcting declarations, or

claiming eligibility for Tariff Preference Levels treatment. They point to the absence of a time

limit in 19 U.S.C. § 1592(c) (covering NAFTA prior disclosures) and 19 C.F.R. § 181.21(b)

(covering corrected declarations). The prior disclosure statute provides that a disclosure must be

“voluntarily and promptly” made, and must be accompanied by payment of “any duties owing.”

19 U.S.C. § 1592(c)(5). Subsection 181.21(b) of the regulations sets out the correction

procedure: “[T]he importer shall within 30 calendar days after the date of discovery of the error

make a corrected declaration and pay any duties that may be due.” 19 C.F.R. § 181.21(b).

Defendants read the statute and the regulation as requiring that the calculation of “any duties

owing” be based on the corrected declaration, no matter when it is made. Defendants contend

that “to correct” means “to set or make right,” and “[t]his definition requires a nunc pro tunc

application of the law.” Defs.’ Br. 28 (citation omitted). That is, in Defendants’ view, “[t]he
Consol. Court No. 11-00388                                                                   Page 32


plain language of the statute and regulations require[s] that duties owed as a result of any

correction be determined according to what duties would have been owed if the ‘correct’

declaration was made at the time of entry.” Defs.’ Br. 28 (citations omitted). For Defendants,

because Tricots’ entries were beneficiaries of the Tariff Preference Levels Program, it only owes

merchandise processing fees in the amount of $44,599.99.

       For its part, the Government argues that Customs’ regulations clearly establish the

documentation necessary to claim eligibility under the Tariff Preference Levels Program, and the

timing for making such a claim:

       In connection with a claim for duty-free treatment under the [Tariff Preference
       Levels] Quota Program, importers must (1) make “formal declaration[s]” that
       their goods qualify under the [Tariff Preference Levels] Quota Program, . . . and
       (2) submit Certificates of Eligibility to [Customs] covering the goods. . . . [Tariff
       Preference Levels] Certificates of Eligibility are expected to be presented at the
       time of entry, but [Customs] allows importers to submit them any time before
       liquidation or, if the entry has liquidated, before final liquidation.

Pl.’s Br. 23-24 (citing 19 C.F.R §§ 181.21(a), 102.25, 10.112); see also 19 C.F.R. 10.112

(“[Documentation for duty-free or reduced duty entry] may be filed at any time prior to

liquidation of the entry or, if the entry was liquidated, before liquidation becomes final.”).

Plaintiff argues that, because Tricots failed to submit Certificates of Eligibility before the

liquidation of the subject entries became final, it lost the opportunity to claim preferential tariff

treatment under the Tariff Preference Levels Program:

       Tricots had numerous opportunities to submit Certificates of Eligibility before
       final liquidation of its entries. It could have submitted them when it entered the
       goods between 2005 and 2008 or before final liquidation as late as 2009, but it
       elected not to do so. Instead, Tricots submitted Certificates of Eligibility in
       August 2012—almost seven years after it first entered its goods, more than three
       years after all of its entries had finally liquidated, and more than two years after it
       admitted to its violations. So even assuming that Tricots has otherwise made a
       valid claim for duty-free treatment under the [Tariff Preference Levels] Quota
       Program, its right to duty-free treatment is foreclosed because it did not submit
Consol. Court No. 11-00388                                                                      Page 33


          the required Certificates of Eligibility before its entries finally liquidated under 19
          U.S.C. § 1514.

Pl.’s Br. 27-28 (citations omitted). Therefore, for Plaintiff, while it might have been possible for

Tricots to qualify its merchandise for duty-free treatment under the Tariff Preference Levels

Program prior to the date liquidation became final, its failure to do so leaves it liable for regular

duties.

          Accordingly, Plaintiff asks the court to grant its motion for summary judgment and award

it lost duties and merchandise processing fees:

          [B]ecause Tricots’[] goods were ineligible for preferential NAFTA treatment
          either as originating goods or under the [Tariff Preference Levels] Quota
          Program, they were dutiable at the general duty rate. . . . Because the majority of
          Tricots’[] goods were dutiable at the general rate of 12.3 percent ad valorem, and
          the remaining goods were dutiable at the general rate of 10.0 percent ad valorem,
          Tricots’[] material false statements and/or omissions on its 875 subject entries
          total to be $2,249,196.04, representing $2,206,596.05 in duties and $42,599.99 in
          [merchandise processing fees], and the lost revenue on the Aegis bonded entries
          was $1,653,291.07, of which $500,113.32, was covered by Aegis’[] bond.

Pl.’s Br. 28 (citations omitted).

          The court finds that the United States has been deprived of lawful duties and fees as a

result of Tricots’ violation of § 1592(a), and that the unpaid duties and merchandise processing

fees are due and owing to the Government from Tricots and from Aegis, as surety.18 Preferential

tariff treatment under NAFTA—whether under the Rules of Origin or the Tariff Preference

Levels Program—is not automatic; it must be claimed in compliance with Customs’ regulations.

See 19 C.F.R. §§ 181.21, 102.25, 10.112; see also General Note 12(b), Harmonized Tariff

Schedule of the United States. Put another way, unless an importer files the required

          18
                As noted, Aegis’ liability for duties is solely contractual and is limited by the face
amount of the bond. See 19 C.F.R. § 113.62(a). As shall be seen, Aegis is also liable for statutory
interest under 19 U.S.C. § 580.
Consol. Court No. 11-00388                                                                Page 34


documentation with Customs before the liquidation of its entries becomes final, as provided in

the statute and Customs’ regulations, it has not established entitlement to duty-free treatment.

See 19 U.S.C. § 1514; 19 C.F.R. § 10.112. Thus, the general rates of duty as set forth in the

Harmonized Tariff Schedule of the United States apply to the subject entries.

       Defendants seem to believe that merely by making a prior disclosure they can somehow

turn back the clock, but that is not the case. It is undisputed that Tricots, through its negligent

misrepresentations, entered the 875 subject entries as originating goods between 2005 and 2008.

The entries liquidated free of duties and fees before 2010. No protests were filed, and liquidation

of all the subject entries had become final by May 5, 2010. See 19 U.S.C. § 1514. Tricots’

attempted prior disclosure on May 28, 2010, twenty-three days after the date liquidation became

final, did not have the effect of undoing final liquidation and permitting Tricots to demonstrate

entitlement to duty-free entry of its merchandise. To the extent that its prior disclosure talked

about the Tariff Preference Levels Program, Tricots was mistaken because establishing that its

goods were eligible under the program was impossible, as the time to submit any certificates

demonstrating eligibility for duty-free treatment had passed. Therefore, the duties owing were

the regular duties on its merchandise. That Tricots did not produce the required Certificates of

Eligibility for another two years does not help its case. Accordingly, Tricots is liable for

$2,249,196.04, representing $2,206,596.05 in duties and $42,599.99 in merchandise processing

fees. See Johnson Decl. (Feb. 9, 2017), ECF No. 89-8, Ex. 3.

       Aegis, as surety, is liable for lawful duties and fees owed on subject entries entered

during the period covered by its bond. Six hundred four of the subject entries were covered by

the continuous bond issued by Aegis. See Pl.’s R. 56.3 Stmt. ¶ 2; Defs.’ Resp. Pl.’s R. 56.3

Stmt. ¶ 2. The 604 subject entries were imported during the following time periods, while the
Consol. Court No. 11-00388                                                               Page 35


bond was in effect: from May 18, 2006, to November 16, 2006; from November 17, 2006, to

November 16, 2007; and from November 17, 2007 to November 27, 2007. The face amount of

the bond was $230,000 per annual period. Aegis’ liability under the bond amounts to

$500,113.32, representing $230,000 for duties owed on the entries entered between May 18,

2006 and November 16, 2006; $230,000 for duties owed on entries entered between November

17, 2006 and November 16, 2007; and $40,113.32 for duties owed on entries entered between

November 17, 2007 and November 27, 2007. See Johnson Decl. (Feb. 9, 2017), ECF No. 89-8,

Ex. 20-22.

       Finally, Defendants’ argument that they have a valid equitable recoupment counterclaim

against the Government lacks merit. For Defendants, it is “patently inequitable” that they should

be made to pay duties on the subject entries because, ultimately, they obtained Certificates of

Eligibility from the Canadian authorities, which showed the goods were eligible for duty-free

treatment under the Tariff Preference Levels Program. See Def.’s Br. 40. It is settled law,

however, that equitable recoupment is unavailable in the case of the recovery of customs duties.

See United States v. Fed. Ins. Co., 805 F.2d 1012, 1013, 1014 n.2 (Fed. Cir. 1986). In Federal

Insurance, the Federal Circuit reversed this Court’s holding that the government was equitably

estopped from collecting duties owed by an importer and its surety because “no equitable

estoppel can arise against the government in connection with an obligation to pay taxes.” Id. at

1013 & 1014 n.2 (noting that the equitable recoupment counterclaim “fails . . . for the same

reason as the defense of estoppel”). Thus, Defendants’ equitable recoupment counterclaim

presents no hurdle to the Government’s collection of the duties owed.
Consol. Court No. 11-00388                                                               Page 36


III.   Plaintiff Is Entitled to Collect Interest from Aegis and Tricots

       A.      Aegis’ Liability for Statutory Prejudgment Interest Pursuant to 19 U.S.C.
               § 580

       In this collection action, the Government seeks an award of statutory prejudgment

interest under 19 U.S.C. § 580, which provides that, “[u]pon all bonds, on which suits are

brought for the recovery of duties, interest shall be allowed, at the rate of 6 per centum a year,

from the time when said bonds became due.” 19 U.S.C. § 580; Pl.’s Br. 29. As the Federal

Circuit has explained:

       [S]ection 580 expressly requires that, when unpaid import duties upon a bond are
       awarded, interest be attached at the statutory rate “from the time when said bonds
       became due.” As a matter of law, whenever a court awards unpaid import duties
       in a suit upon a bond, interest must be attached pursuant to section 580.

United States v. Fed. Ins. Co., 857 F.2d 1457, 1459 (Fed. Cir. 1988). Here, the Government is

seeking unpaid import duties from Aegis under a surety bond. Defendants do not dispute the

award of § 580 interest, except to point out that Aegis “only owes interest on the 604 entries

covered under its bond.” Defs.’ Br. 47. Accordingly, the Government is entitled to collect

interest from Aegis at the rate of six percent per year from May 18, 2011, the date on which

Customs demanded payment from Aegis on the 604 entries.

       B.      Aegis’ and Tricots’ Liability for Mandatory Post-Judgment Interest
               Pursuant to 28 U.S.C. § 1961

       Next, Plaintiff seeks mandatory post-judgment interest from both Tricots and Aegis,

pursuant to 28 U.S.C. § 1961, which provides that “[i]nterest shall be allowed on any money

judgment in a civil case recovered in a district court.” 28 U.S.C. § 1961(a); Pl.’s Br. 31.

Although § 1961 does not apply directly to the Court of International Trade, the Federal Circuit

has confirmed this Court’s authority to award post-judgment interest at the rate provided in

§1961. United States v. Great Am. Ins. Co. of N.Y., 738 F.3d 1320, 1325-26 (Fed. Cir. 2013).
Consol. Court No. 11-00388                                                                 Page 37


Specifically, 28 U.S.C. § 1585 provides that the Court of International Trade “posses[es] all the

powers in law and equity of, or as conferred by statute upon, a district court of the United

States.” 28 U.S.C. § 1585.

       Defendants do not object to Plaintiff’s claim that it is entitled to post-judgment interest,

nor could they. “Post-judgment interest is not discretionary, but rather is available as a matter of

right to prevailing parties.” United States v. Am. Home Assurance Co., 39 CIT __, __, 100 F.

Supp. 3d 1364, 1374 (2015), aff’d, 857 F.3d 1329 (Fed. Cir. 2017) (citation omitted). Therefore,

because Plaintiff has prevailed in this matter by means of an award of a money judgment against

Defendants, it is entitled to post-judgment interest from Tricots and Aegis at the rate set forth in

§ 1961, calculated from the date of entry of the judgment. See 28 U.S.C. § 1961; Am. Home

Assurance Co., 39 CIT at __, 100 F. Supp. 3d at 1374.

       C.      Plaintiff Is Not Entitled to Equitable Prejudgment Interest

       Plaintiff also seeks equitable prejudgment interest, arguing that “Tricots and Aegis should

pay equitable pre-judgment interest as compensation for the lost use of funds over time.” Pl.’s

Br. 29. In determining whether to grant an award of equitable prejudgment interest, full

compensation, including the time value of money, should be a court’s primary concern. See

United States v. Am. Home Assurance Co., 789 F.3d 1313, 1329 (Fed. Cir. 2015); see also West

Virginia v. United States, 479 U.S. 305, 310 n.2 (1987) (“Prejudgment interest serves to

compensate for the loss of use of money due as damages from the time the claim accrues until

judgment is entered, thereby achieving full compensation for the injury those damages are

intended to redress.”). “In other words, if the United States has been compensated for the time

value of its money by another provision, it is difficult to see why equity should direct that it may
Consol. Court No. 11-00388                                                                 Page 38


collect an amount for this purpose again.” United States v. Am. Home Assurance Co., 39 CIT __,

__, 113 F. Supp. 3d 1297, 1315 (2015), aff’d, 776 F. App’x 712 (Fed. Cir. 2019).

       In awarding the United States prejudgment statutory interest under the previously

discussed provision, the Federal Circuit, in United States v. American Home Assurance Co.,

reaffirmed the longstanding principle that “[i]n the absence of a statute governing the award of

prejudgment interest, ‘the question [of prejudgment interest] is governed by traditional judge-

made principles.’” Am. Home Assurance Co., 789 F.3d at 1328 (alterations in original) (quoting

Princess Cruises, Inc. v. United States, 397 F.3d 1358, 1367 (Fed. Cir. 2005)). Here, there is a

statute, 19 U.S.C. § 580, that has been found to provide prejudgment interest to the United States

for interest on bonds securing antidumping duties. Where a statute governs the award of

prejudgment interest (i.e., § 580), the Federal Circuit has explained that “the award of

prejudgment interest [is] an equitable determination to be exercised at the discretion of the trial

judge.” Id. (citing United States v. Reul, 959 F.2d 1572, 1577 (Fed. Cir. 1992); United States v.

Imperial Food Imps., 834 F.2d 1013, 1016 (Fed. Cir. 1987)).

       The court holds that Plaintiff is not entitled to an award of equitable prejudgment interest.

The reasoning in American Home Assurance Co. applies equally here:

       [T]he purpose of equitable interest is to ensure that the party be fully compensated
       for the time during which it was deprived of the use of the funds. Because [the
       Government] will be fully compensated by the statutory prejudgment interest it
       will receive by means of 19 U.S.C. § 580, here, the balance of equities tips in
       favor of [Defendants] and against an award of equitable prejudgment interest. In
       other words, it would be inequitable to award the United States both statutory
       prejudgment interest under § 580 and equitable prejudgment interest under the
       principles of equity.

Am. Home Assurance Co., 39 CIT at __, 113 F. Supp. 3d at 1315. Accordingly, in view of the

court’s holding that Plaintiff is entitled to statutory prejudgment interest under 19 U.S.C. § 580,

Plaintiff may not also recover equitable prejudgment interest in this case.
Consol. Court No. 11-00388                                                                 Page 39


                                 CONCLUSION and ORDER

         Based on the foregoing, Plaintiff’s motion for summary judgment is granted, and

Defendants’ cross-motion for summary judgment is denied. It is hereby

         ORDERED that the parties shall confer and jointly submit a proposed Judgment that sets

out the amounts of duties, fees, and interest that Tricots and Aegis owe to Plaintiff, in accordance

with this opinion. The proposed Judgment shall be submitted to the court on or before

December 31, 2019.




                                                                          /s/ Richard K. Eaton
                                                                           Richard K. Eaton, Judge

Dated:          December 17, 2019
                New York, New York
