US Demands Over $3.6M in Unpaid Duties From Surety for Garlic Entries Made in 2003
The U.S. opened a customs penalty suit against surety company XL Specialty Insurance on July 17, seeking over $3.6 million in unpaid duties and interested owed on customs bonds. The government said XL "materially breached the terms of the subject bonds" by refusing to pay following CBP's demand for payment (United States v. XL Specialty Insurance, CIT # 25-00154).
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The lawsuit concerns 48 single-transaction bonds issued by XL to importer Garlic King covering 24 separate entries made between July and October 2003. The entries were subject to antidumping duties on Chinese garlic. The government alleged that XL "knew or should have known" at the time it issued the bonds that the exporter, Linyi Sanshan Import & Export Trading Co., was a new shipper whose garlic was subject to the antidumping duties.
In November 2003, the Commerce Department issued a notice of opportunity to request an administrative review of the garlic AD order. In December 2003, the agency opened the review, "which included fresh garlic from China supplied by Linyi," the complaint said. In its preliminary determination, Commerce said Linyi didn't qualify for a separate rate and would thus have to pay a 376.67% AD rate. The agency stood by this exact finding in its final determination.
In June 2019, the U.S. said a message was issued containing Commerce's instructions to CBP to liquidate exports from Linyi made during the review period. The 24 entries were liquidated at the country-wide AD rate of 376.57%, though Garlic King didn't pay the duties. CBP then demanded payment from XL. Now at CIT, the agency says as of June 30, 2025, the surety owes $2,610,247.77 in unpaid AD and $994,058.67 in "accrued delinquency interest."