Ceratizit USA: Selling Carbide Rods, Declaring Electrodes
In the Ceratizit USA customs settlement, the company agreed to pay $54.4 million over allegations that it declared Chinese carbide as Taiwanese, imported rods under an electrode tariff heading and sold unmarked goods without paying marking duties. The whistleblower’s complaint brought the carbide business into the customs case: what the factories could make, what sales representatives told customers, and what arrived when someone bought the rods.
Ceratizit USA distributes tungsten carbide, a hard, wear-resistant material used to make cutting tools and other components. The Charlotte, North Carolina company reached a settlement that the Department of Justice announced on December 18, 2025. The case began with a False Claims Act qui tam complaint from a longtime metalworking-products industry participant familiar with Chinese sintered tungsten carbide production and sales.
The signed agreement covers three alleged ways of avoiding duties, with the classification allegations reaching back to 2015.
How to Prove Country of Origin?
Proving country of origin means connecting where the goods were actually made to what Customs was told. In this case, the whistleblower connected shipping records with manufacturing capacity, raw-material supplies and conversations with customers. The government’s Section 301 tariff fraud allegation was that Ceratizit knew the carbide was made in China, but declared it Taiwanese after transshipment through Taiwan.
The tariff incentive was substantial. The September 2018 tariff notice imposed an additional 10% duty on covered Chinese goods under heading 8209.00.00, effective September 24, 2018. A May 2019 notice raised the tariff to 25%. The complaint also describes a temporary exclusion for the rods through August 7, 2020.
According to the complaint’s account of the shipping records, every sea shipment of these rods from 2007 through October 5, 2018 originated in Xiamen, China. Starting with a shipment arriving on October 24, 2018, almost all originated in Taiwan. The settlement’s false-origin period began in August 2020.
The factory story ran the other way. The whistleblower alleged that CB Carbide had moved the vast majority of its manufacturing from Taiwan to China between 1999 and 2003. The complaint said CB-Ceratizit lacked the capacity in Taiwan to make the volume of rods reaching the United States, and that Taiwan lacked both the raw materials and the imports of those materials needed to support that production. It also alleged that customers heard a different account from the one given to Customs:
Moreover, representatives of Ceratizit USA or its affiliates have admitted, in conversations with customers, that the rods are not actually manufactured in Taiwan.
Whistleblower’s allegation, United States ex rel. Mark Alan Stover v. Ceratizit USA, Inc., complaint, paragraph 23
The supplier, CBCT, is a joint venture half-owned by Ceratizit’s parent.
The distinction between selling and manufacturing also appeared in Univar USA. In that customs-penalty case, the government alleged that Univar failed to determine that its supplier in Taiwan was not a manufacturer but a middleman, bringing Chinese saccharin into Taiwan for transshipment to the United States. Knowing the supplier’s address and knowing the factory are different things.
What Happens If You Use the Wrong HTS Code?
A wrong HTS code can make goods that carry a duty appear duty-free. That was the alleged HTS misclassification fraud in Ceratizit’s case. The complaint described a product substitution on paper: tungsten carbide rods entered under a heading for electrodes. Its explanation of the substituted heading makes the difference plain:
That latter code is the HTS code for tungsten carbide EDM electrodes, or tungsten electrodes for TIG welding, which are entirely different products than the tungsten carbide rods that Defendant actually imports. Unlike products imported under the code 8209.00.00, which carry a substantial duty, items imported under code 8311.90 are duty free.
Whistleblower’s allegation, United States ex rel. Mark Alan Stover v. Ceratizit USA, Inc., complaint, paragraph 29
The agreement supplies the government’s precise comparison: Ceratizit allegedly used Harmonized Tariff Schedule code 8311.90.00, with a general duty rate of free, instead of 8209.00.00, with a 4.6% rate. Correcting the country would still have left the tariff code wrong.
Product knowledge is useful here because classification depends on what the goods are made of, how far they have been processed and what they do. The 2024 World Customs Journal paper Customs Tariff Classification and the Use of Assistive Technologies describes those physical distinctions and reports practitioners’ accounts of codes copied from supplier invoices or reused from earlier shipments. It also describes businesses tying customs codes to material references, catalog numbers and stock keeping units. A product number can connect what a company buys and sells with what it tells Customs it imported.
In Sigma‘s case, the company sold welded outlets but declared steel couplings. A court account of the case describes the mismatch between marketing and customs descriptions, and the jury found Sigma liable. The sales description can expose what the customs description leaves out.
A competitor paying Section 301 duties on Chinese carbide and full ordinary duty has to price in both bills. Evading them cheats that business and taxpayers together.
Unmarked Rods Reached Customers
The country of origin marking duty fraud allegation followed the rods into the buyer’s hands. The whistleblower reported buying rods twice through third parties, with no country of origin marked on either the rods or their packaging. The complaint separately alleged that Ceratizit had not disclosed its unmarked imports to the government or paid marking duties.
U.S. Customs and Border Protection explains in its country-of-origin marking guidance that the marking tells the final U.S. purchaser where the article was made. The information has to survive ordinary handling. That makes the goods and their packaging part of the customs story even after they leave the port.
The same unpaid-duty issue appeared in Victaulic, where industry investigators alleged that imported pipe fittings lacked origin marks. The court explained the additional marking duty as 10% of the value of improperly marked goods released into U.S. commerce, on top of other duties. Ceratizit’s agreement likewise alleged both unmarked imports and failure to pay the marking duty before selling the goods to U.S. customers.
What Evidence Is Needed to Prove Fraud?
For these carbide allegations, the evidence connects the goods’ actual origin, tariff classification and condition at sale to the declarations, duty payments and what the importer knew. The complaint makes those connections concrete: a changed shipping route, disputed factory capacity, an electrode heading for rods, customer conversations and purchases of unmarked goods. Which of those links you hold, and how they fit, is what we work out with you.
Different people in the trade see different parts of that chain. A plant or purchasing specialist may know the material and where it was actually made. A broker or logistics employee may know the product description and code used at entry. A customer may know what the sales representative said and what the package contained.
Customs’ reasonable-care guidance asks whether importers know what they ordered, where it was made, how it was made and what it is made of. A Taiwanese selling or loading address answers a different question from where a rod was made.
An industry participant brought the Ceratizit case. If you want to report competitor customs fraud, your knowledge of the goods may explain a discrepancy that a shipping record alone cannot. Our whistleblower experts work with you to connect that knowledge to the duty left unpaid and the company’s decisions.
How Much Is a Whistleblower Claim Worth?
The Ceratizit USA customs settlement set the whistleblower reward at $9.75 million.
Under the False Claims Act, a whistleblower case can pay the person who brings it 15% to 30% of what the government recovers.
The Justice Department’s fact sheet on its fiscal year 2025 False Claims Act cases called Ceratizit’s settlement the largest customs fraud resolution ever under the False Claims Act. On May 12, 2026, Perfectus Aluminum passed it with a $549.5 million settlement.
Sources
- Justice Department: Ceratizit USA settlement announcement, December 18, 2025
- U.S. District Court, Eastern District of Michigan: Ceratizit USA complaint, September 28, 2022
- Justice Department: Ceratizit USA settlement agreement, December 2025
- U.S. Customs and Border Protection: Marking of Country of Origin on U.S. Imports, updated May 15, 2026
- U.S. Customs and Border Protection: Reasonable Care, informed compliance publication
- World Customs Journal: Customs Tariff Classification and the Use of Assistive Technologies, 2024
- Justice Department: False Claims Act settlements and judgments fact sheet, fiscal year 2025
- Justice Department: Perfectus Aluminum settlement announcement, May 12, 2026
Your View Inside the Carbide Business
If you know the rods, the factory or the declarations, speak with our whistleblower experts about the difference between what was sold and what Customs was told. We build the case around what your product knowledge reveals and bring in customs fraud whistleblower lawyers who understand origin, classification and marking disputes. We stay alongside you from that first account of the goods through the pursuit of the government’s recovery.
