Third-Country Routing in Customs Fraud Cases: What Happened at the Stopover?

Transshipment tariff evasion cases turn on where the goods were made and what happened at the stopover. The supplier can be in Taiwan while the factory is in China. If you know why the goods changed countries and who changed the origin on the paperwork, you may know how the duty disappeared.

That is where a country of origin fraud inquiry starts. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

How to Prove Country of Origin?

Production records have to support the origin declared to U.S. Customs and Border Protection. We examine with you whether the work at the stopover was production, processing, assembly or finishing, or only handling, storage and relabeling. Transshipment tariff evasion uses a stop in another country to give goods a different origin on paper and avoid the duty on their actual origin.

The production evidence behind a country of origin fraud claim follows that work. Shipping records follow the journey. Origin turns on what happened there, not how many days passed. A factory’s ability to make the product, the materials it used and the work it performed answer a different question from which port loaded the container. Calling the middle company a supplier leaves the manufacturing question open.

The incentive is the duty saved. In Institutions and Customs Duty Evasion, a 2018 CEPII working paper, a study covering 55 importing countries found that higher tariffs generally went with more evasion. The relationship weakened at very high tariffs, consistent with customs officers putting more effort into inspection. The price advantage and the chance of being checked both matter. The cases below show what that contest looks like in a shipment’s paperwork.

Transshipment Tariff Evasion Cases and the Records Behind Them

These cases connect a claimed origin to a supplier’s business, a product’s identity, a factory visit or the importer’s knowledge. The examples include customs penalty actions and whistleblower cases under the False Claims Act.

Univar’s Saccharin Supplier Was Not the Factory

The government alleged that Univar USA bought Chinese saccharin through a supplier in Taiwan and negligently failed to determine that the supplier was a trader, not a manufacturer.

The Chinese saccharin carried a 329% antidumping duty rate. The government alleged $36 million in evaded duties. The Univar USA saccharin customs settlement, announced April 9, 2019, required $62.5 million. The alleged mistake was treating the seller’s address as the place of manufacture.

Rupari’s Chinese Crawfish Presented as Thai

Rupari Food Services’ case concerned attempts to enter Chinese crawfish tail meat as Thai product in 1998. On March 9, 2018, the Court of International Trade entered a fraud judgment against Rupari and imposed a $2,784,636 customs penalty.

Evolutions Flooring and the Factories in Thailand

Evolutions Flooring allegedly gave Customs false manufacturer information and false origin information for Chinese multilayered wood flooring. The alleged scheme avoided antidumping and countervailing duties and involved Section 301 tariff fraud under the Trade Act. The Evolutions Flooring customs settlement, announced March 25, 2025, was $8.1 million. A company acting as whistleblower started the case.

Customs visited factories in Thailand, reviewed identified shipments with wood-flooring experts, analyzed import records and data, and took part in witness interviews. The manufacturing account was tested at the factory and against the product. Someone who knows how that flooring is made can contribute something a shipping map cannot.

Ceratizit’s Tungsten Carbide and the Capacity to Make It

The Department of Justice alleged that Ceratizit USA knew tungsten carbide products imported from its supplier had been made in China and transshipped through Taiwan. It allegedly declared them Taiwanese to avoid the tariffs on Chinese goods. Tungsten carbide is a hard, wear-resistant material used in cutting tools and other components. Producing it requires more than a different shipping address.

The whistleblower’s complaint challenged the manufacturing capacity behind the Taiwan claim:

CB-Ceratizit does not have sufficient manufacturing capabilities in Taiwan to make the volume of rods that have been imported into the United States.

Whistleblower’s complaint, United States ex rel. Mark Alan Stover v. Ceratizit USA, Inc.

That allegation gives the routing question something concrete to test: could the claimed producer make that volume? The Ceratizit USA customs settlement, announced December 18, 2025, was $54.4 million and covered origin, classification and marking allegations. The Department of Justice announced a whistleblower award of about $9.75 million.

What Evidence Is Needed to Prove Fraud?

For third-country routing, the useful customs fraud evidence connects the goods, the factory, the declaration and what the importer knew. Bills of lading, commercial invoices and entry summaries describe different parts of that history. We connect the shipment identifiers and product descriptions across them, then compare the declared origin with the production behind it.

The trade already generates records that can expose the contradiction. Before ocean cargo is loaded abroad, the Importer Security Filing identifies the seller, buyer, manufacturer or supplier, country of origin, container stuffing location and consolidator. The carrier files a separate manifest. A supplier’s address and the place where somebody stuffed a container are recorded separately from the claimed country of manufacture for a reason.

Release and the entry summary also do different jobs. Release lets the goods enter commerce. The entry summary declares value, classification and the duty rate. An invoice that identifies a Chinese manufacturer and a customs filing that declares another origin belong in the same conversation, even if different people inside the business received them.

A certificate passed through several intermediaries remains one statement repeated, however many files contain a copy. We examine who issued it, what production supported it and whether the importer had information contradicting it.

Invoice and Manifest Numbers Connect the Shipments

Invoice and manifest numbers can connect a foreign export to a U.S. import. Census import shifts cannot prove transshipment fraud because the country series starts with the declared origin. The shipment and production records let us test that declaration.

Are Customs Records Consistent Across Countries? Evidence from the U.S. and Colombia, a 2020 Center for Economic Studies working paper, matched only 25-30 percent of individual transactions in the countries’ customs records using its matching methods, despite much stronger matches between buyers and sellers.

The paper’s practical answer was to identify the same shipment on both sides of the border:

The two most promising candidates for this type of standardized identifier are invoice numbers and manifest numbers.

Are Customs Records Consistent Across Countries? Evidence from the U.S. and Colombia, U.S. Census Bureau Center for Economic Studies, 2020

Public manifests can identify a shipper, cargo and ports. The production account still has to come from the people and records behind the goods. A pattern in the trade data gives us somewhere to look. A matched shipment gives us something to test.

Which Duties Can a False Country of Origin Avoid?

A false origin can conceal Chinese goods subject to country-specific tariffs or goods covered by antidumping and countervailing duty orders. The manufacturer’s identity, tariff classification and country-of-origin marking can create separate duty questions. We work out the unpaid duties with you for the goods and entry period.

Antidumping Duty Fraud and the Wrong Manufacturer Rate

Antidumping duty fraud can involve concealing the country covered by an order or using the wrong manufacturer rate. Naming a different producer can change the rate used even when the country stays the same. Evolutions shows why the manufacturer and origin belong in the same inquiry: the government alleged false information about both.

Classification and Marking Add Separate Bills

Ceratizit’s settlement agreement alleged that the company used a duty-free classification instead of the classification carrying a 4.6% duty. It also alleged that Ceratizit imported goods without origin markings and failed to pay country-of-origin marking duties before distributing them. The origin declaration, the tariff code and the markings were separate parts of the alleged underpayment.

Preference Claims Have Their Own Production Question

A claim to a lower free-trade rate depends on the rules of the agreement being claimed. Origin for marking and origin for duty treatment can differ. We assess the work at the stopover against the particular duty or preference the importer used, because one certificate does not answer every origin question.

Who Knew the Factory and Who Knew the Declaration?

Sourcing staff may know the factory, while a broker handling the entry sees the declaration. Correspondence between them can show what the importer knew about a mismatch. The importer declares the value, classification and duty rate even when a broker prepares the filing.

The separate whistleblower complaint against Everlight Electronics quotes an employee describing the extra transit time needed to move products from Chinese factories to Taiwan and relabel them. The complaint alleged that Everlight changed Chinese LED products’ origin labels without substantially changing the products. In that account, the ordinary explanation for a delivery delay described the alleged scheme.

A competitor paying duty on the real origin may see the problem first in a price it cannot match. Its product knowledge can connect that price to the order, supplier and goods being sold. The business paying the duty carries a cost the evading importer avoids. Taxpayers lose the money the dishonest importer kept.

The Part of the Shipment You Know

The factory, supplier, importer, broker and customer can hold different parts of the same history. Routing instructions, commercial invoices, shipment identifiers, production records and correspondence about origin are useful because they connect those parts. Either half of that history, the factory or the declaration, is enough to start a conversation with us.

We assess with you how what you know about the product and the business supports a case over false origin and unpaid duty. A supplier who knows where the goods were made and a competitor who knows the product’s economics bring different starting points to that work.

Sources

The Stopover You Can Explain

If your work in logistics, sourcing or trade compliance tells you what happened at the stopover, speak with our whistleblower experts about the route you know. We build your customs whistleblower case around the routing instructions, supplier correspondence and unpaid duty, and bring in customs fraud whistleblower lawyers who know production and tariff disputes. We stay beside you through the case.

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