NYWL Enterprises: Coaxial Cable Entered as Duty-Free Welding Wire

The NYWL Enterprises customs judgment ordered the importer to pay a fraud penalty of about $3.76 million and $379,666 in unpaid duties for entering coaxial cable under false descriptions, including duty-free welding wire. The cable was labeled for surveillance use, and U.S. Customs and Border Protection had already challenged the same classification at an earlier company run by the same executive.

NYWL, a New York corporation, did not defend the government’s customs fraud case. On April 16, 2021, the Court of International Trade granted a default judgment after finding that NYWL knowingly misclassified its imports. The evidence went beyond what the company called the goods. It showed what happened after Customs told the people handling those goods that the description was wrong.

Why Cable Became Welding Wire on the Entry

The false tariff classification gave coaxial cable the duty treatment of another product. NYWL made 107 entries through Chicago from March 2011 to February 2012. The cable carried a 5.3% duty, but NYWL declared it as duty-free wire for electric arc welding, duty-free telecommunications wire, or winding wire carrying a lower rate.

The goods told a different story. According to the court, the Siamese coaxial cable came on spools labeled for surveillance and CCTV use, packed in boxes marked “CCTV & CATV Cable.” Specifications and invoices also identified the goods as cable. The customer was buying it for closed-circuit television systems.

Customs discovered NYWL’s violations during a routine inquiry. In December 2011, the broker supplied an entry with a commercial invoice describing CCTV cable rather than arc-welding wire.

That substitution of one product for another on the entry removed a cost honest cable importers had to pay. The false description cheated those businesses and taxpayers.

The incentive reaches beyond cable. Measuring Tariff Evasion and Smuggling, published in NBER Reporter in 2009, describes research comparing Hong Kong’s recorded exports to mainland China with China’s recorded imports. It found trade patterns consistent with higher-duty goods being relabeled as similar products carrying lower duties. In NYWL’s case, the court could follow the substitution all the way to the labeled spool.

The Importer Changed After Customs Intervened

NYWL’s executive had already imported coaxial cable through Dony Industrial Corporation and Win Long Enterprises. The court relied on that history to find that NYWL knew the correct classification before its first entry.

Customs examined a Dony shipment in 2006 and found coaxial cable declared as welding wire. After Customs notified its broker, Dony moved its imports to other ports and continued using incorrect classifications. The same executive then began importing through Win Long, using the same broker and declaring cable as duty-free welding wire.

The government’s account included entries on which someone had physically replaced the cable classification. The court reproduced this allegation and relied on it in finding that NYWL knew what classification applied:

After Customs examined a Win Long entry in February 2011, Win Long stopped importing coaxial cable. In March, NYWL began importing it through the same broker. The company name changed. The cable, the executive and the customs broker stayed the same. The court concluded that NYWL had been established to avoid its responsibilities as an importer and the payment of lawful duties.

What Evidence Is Needed to Prove Fraud?

The useful evidence behind a false customs description connects the actual goods, the declared product and the decision to use that description. In NYWL’s case, packaging, specifications, invoices and earlier Customs warnings showed both what the goods were and what the business knew.

Those records pass through different hands. The importer supplies the classification and other information used to assess duty, while a broker may file the entry. Customs’ Reasonable Care guidance places responsibility for classifying the goods with the importer. The invoice supplied for NYWL’s entry showed why the entry cannot tell the whole product story.

The connection can also sit inside the purchasing system. Customs Tariff Classification and the Use of Assistive Technologies, published in World Customs Journal in 2024, describes companies storing tariff codes against material numbers, catalog numbers and stock keeping units. The paper also describes practitioners reusing the code from a previous shipment. A product number can stay the same as a description moves from purchasing to the broker’s instructions and the filed entry. Someone who knows that product can recognize the mismatch across those records.

A customs broker whistleblower may hold the classification correspondence or changes to an entry template that show who selected the wording. We use those instructions with you to connect the wording on the filed entry to the decision behind it.

The Same Product With Two Different Descriptions

Sigma sold welded outlets and called them steel couplings on customs forms, avoiding the antidumping duty attached to the product it actually sold. The court’s account of the evidence describes a catalog and website that used the accurate product name. A competitor brought the whistleblower case, and a jury found Sigma liable.

The whistleblower’s complaint against the welded-outlet importers put the commercial contrast plainly:

A catalog or a sales description can expose the same product being presented differently at the border.

Ceratizit USA faced an even closer product-category allegation. Its whistleblower complaint alleged that tungsten carbide rods were imported under a duty-free code for electrodes, including welding electrodes, rather than the classification for the rods themselves. A welding-related category supplied the alleged duty advantage for a different product. NYWL’s cable and the rods described in the Ceratizit complaint make the question concrete for someone who handles the merchandise: does the product being declared match the product being sold?

What Happens If You Use the Wrong HTS Code?

NYWL’s knowing use of false classifications led to a fraud judgment requiring payment of the unpaid duties and a separate penalty. The prior Customs warnings, the altered classifications and the repeated entries explained why the court treated the conduct as deliberate.

Customs fraud penalties can reach the domestic value of the imported goods under the customs penalty law. That ceiling can be much higher than the duty bill. The court weighed NYWL’s repeated conduct and disregard of the product descriptions when imposing the penalty.

How Much Is a Whistleblower Claim Worth?

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. NYWL’s judgment came from a customs penalty action brought by the government. The Sigma and Ceratizit whistleblower cases show how knowledge of the product and its false description can also underpin a case brought by someone who recognizes the duty evasion.

Sources

• Court of International Trade: NYWL Enterprises opinion granting default judgment, April 16, 2021
• Ninth Circuit: amended opinion on Sigma’s customs False Claims Act judgment, August 21, 2025
• U.S. District Court for the Eastern District of Michigan: whistleblower complaint against Ceratizit USA, September 28, 2022
• Measuring Tariff Evasion and Smuggling, NBER Reporter, 2009
• Customs Tariff Classification and the Use of Assistive Technologies, World Customs Journal, 2024

When the Entry Describes Something Else

If you know the goods in the warehouse and the description sent to Customs tell different stories, speak with our whistleblower experts about the mismatch. We work with you to build the case around the product, the unpaid duty and the decisions inside the business, and bring in customs fraud whistleblower lawyers who know classification disputes. We stay beside you from that first assessment through the case’s conclusion.