A Charlotte-based distributor of cutting tool material will pay $54.4 million in a settlement agreement for allegedly failing to pay custom duties on its product imported from China, according to the U.S. Department of Justice.
The case began with a whistleblower, and he will receive almost $10 million of the settlement. And according to the whistleblower’s attorney, the settlement payment is one of the largest in custom duties’ evasion cases.
Ceratizit USA LLC sells tungsten carbide products, which can be used to create cutting tools and other hard materials. Ceratizit gets the tungsten carbide from a manufacturer in China and the product is shipped to the U.S. via Taiwan, according to the settlement agreement.
However, from August 2020 through March 2024, Ceratizit told U.S. Customs and Border Protection that the product originated from Taiwan, which allowed the distributor to avoid paying additional tariffs placed on Chinese products. The move was a violation of the False Claims Act.
The suit also alleges that for almost a decade, Ceratizit was misclassifying the tungsten carbide products using an incorrect tariff code, which lead to an even greater reduction in duties that it owed.
The lawsuit was filed in the Eastern District of Michigan by Mark Stover, who was the whistleblower in the case. Stover will receive almost $9.8 million as part of the settlement proceeds.
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