Customs Fraud: Tariff Evasion, Undervaluation and Origin Misstatement

Why this is a reverse false claim

Most False Claims Act cases involve getting money out of the government. Customs cases work the other way. The importer owes duties and avoids paying them.

The statute covers that expressly. Knowingly concealing or improperly avoiding an obligation to pay money to the government is actionable, and duties owed on imported goods are exactly such an obligation.

The four common mechanisms

Duty liability is a function of what the goods are, what they cost, where they came from, and whether a special duty applies. Fraud attacks each variable.

• Misclassification under the Harmonized Tariff Schedule, declaring a code with a lower duty rate
• Undervaluation, understating transaction value or omitting assists, royalties, and commissions
• Country of origin misstatement, including transshipment through a third country to disguise the true origin
• Antidumping and countervailing duty evasion, often paired with transshipment or misclassification
• First sale valuation claimed without meeting the requirements
• Misuse of duty drawback or free trade agreement preference claims

Transshipment is the enforcement priority

Where antidumping duties apply to goods from a specific country, moving the goods through a third country and declaring that country as the origin can evade duty rates that sometimes exceed the value of the goods.

The evidence usually sits in the supply chain rather than the customs filing. Purchase orders, mill certificates, shipping records, and internal correspondence about routing show what the filing does not.

Who is positioned to report

Import compliance staff, customs brokers, logistics managers, and procurement personnel see the gap between the goods and the declaration. Competitors who are paying the correct duties and losing on price are also eligible relators and often highly motivated.