## Facts

- Optrex America, Inc. imported liquid crystal display (LCD) products; most entries at issue were LCD “glass panels.”
- From October 12, 1997 to June 29, 1999, Optrex entered the glass panels at various U.S. ports and classified them under HTSUS heading 8531, which carried a lower duty rate.
- In 1997, the Federal Circuit’s Sharp decision classified similar LCD glass panels under HTSUS heading 9013.
- After Sharp, Optrex’s customs counsel advised Optrex to seek a binding Customs ruling on the proper classification of its glass panels.
- Optrex did not request a binding ruling and continued using heading 8531 for the covered entries.
- Customs determined the merchandise should have been classified under heading 9013; the Federal Circuit later confirmed that classification for Optrex’s glass panels.
- The United States brought a civil penalty action under 19 U.S.C. § 1592(a), alleging Optrex failed to exercise reasonable care and that the misclassification constituted materially false entry information.
- The Court of International Trade conducted a bench trial in June 2007 and issued findings of fact and conclusions of law in June 2008.

## Issues

1. Whether Optrex failed to exercise “reasonable care” under 19 U.S.C. § 1592(a) by continuing to classify LCD glass panels under heading 8531 after controlling guidance and counsel’s advice indicated heading 9013.
2. Whether the entry classification statements were materially false or misleading for purposes of § 1592(a).
3. If a § 1592 violation occurred, what level of culpability (negligence or gross negligence) applied and what civil penalties were warranted under § 1592(c).

## Decision

- The court held Optrex did not exercise reasonable care and was liable for civil penalties under 19 U.S.C. § 1592.
- The court found Optrex’s conduct—particularly its failure to follow counsel’s advice to seek a binding ruling after Sharp—fell below the reasonable-care standard.
- The court concluded the misclassification was material because it affected duty liability by using a lower-duty provision.
- The court imposed penalties under § 1592(c), with amounts calibrated to the court’s findings regarding culpability for the entries at issue.

## Legal Principles

- 19 U.S.C. § 1592(a) imposes liability when merchandise is entered by means of material and false statements or omissions resulting from fraud, gross negligence, or negligence, including misstatements concerning tariff classification.
- Importers must exercise reasonable care in determining correct classification and duty liability; reasonable care is assessed in light of available legal guidance and the importer’s actions to confirm classification.
- When controlling precedent indicates a different classification, a prudent importer should take affirmative steps to verify classification (including seeking a binding ruling where appropriate); failing to do so can constitute negligence under § 1592.
- A classification error is material under § 1592 when it affects duty rates or duty revenue and thus has the tendency to influence Customs’ assessment of duties.

## Conclusion

The court found Optrex liable under 19 U.S.C. § 1592 because it continued using a lower-duty tariff classification for LCD glass panels despite controlling precedent and counsel’s recommendation to seek a binding ruling, and it imposed civil penalties under § 1592(c) based on the level of culpability proved.


United States v. Optrex Am., Inc., 560 F. Supp. 2d 1326 (Ct. Int’l Trade 2008)