Ceratizit USA LLC, a distributor of tungsten carbide products located in Charlotte, North Carolina, has agreed to pay $54.4 million to settle federal allegations of evading U.S. customs duties on imports from China, as announced by the Justice Department.
This settlement addresses claims under the False Claims Act, asserting that Ceratizit knowingly failed to pay the necessary import duties on tungsten carbide products by misrepresenting their country of origin and incorrectly classifying the goods to lower tariff obligations.
The government states that from August 2020 to March 2024, Ceratizit imported tungsten carbide products manufactured in China but routed through Taiwan before arriving in the United States. Prosecutors claim the company falsely declared these products as originating from Taiwan to evade higher tariffs imposed on Chinese-made goods under Section 301 of the Trade Act.
Additionally, federal authorities alleged that from June 2015 to March 2024, Ceratizit misclassified its tungsten carbide products using incorrect Harmonized Tariff Schedule codes, which further reduced the duties owed to U.S. Customs and Border Protection. The company was also accused of importing certain products without the proper country-of-origin markings and failing to pay the necessary marking duties before distributing the goods in the United States.
Tungsten carbide is a durable, wear-resistant material frequently utilized in cutting tools and industrial components. During the timeframe covered by the settlement, tungsten carbide products manufactured in China were subject to additional tariffs aimed at protecting U.S. industries from unfair trade practices.
The case originated from a whistleblower lawsuit filed in 2022 by Mark Stover under the False Claims Act’s qui tam provisions, which allow private individuals to sue on behalf of the government. As part of the settlement, Stover will receive approximately $9.75 million.
The lawsuit was filed in the U.S. District Court for the Eastern District of Michigan. The settlement does not include an admission of liability, and the allegations have not been adjudicated.
The claims resolved by the settlement are allegations only and there has been no determination of liability.
