Ceratizit to Pay $54.4 Million to Settle Allegations of Evaded Customs Duties

Key Takeaways

• $54.4 Million Settlement: Ceratizit agreed to pay $54.4 million to resolve False Claims Act allegations tied to evaded U.S. customs duties on tungsten carbide imports.
• Country-of-Origin Misrepresentation: The government alleged Ceratizit falsely declared Chinese-manufactured products as originating in Taiwan to avoid Section 301 tariffs.
• Misclassification and Marking Failures: The settlement also covers allegations of incorrect tariff classification and failure to pay required country-of-origin marking duties.
• Whistleblower Role: The case was brought under the False Claims Act by a whistleblower, who will receive approximately $9.75 million from the settlement.
• Heightened Trade Fraud Enforcement: The resolution aligns with the Justice Department’s broader push against tariff evasion, including the 2025 launch of a cross-agency Trade Fraud Task Force.

Deep Dive

Ceratizit USA, a Charlotte, North Carolina–based distributor of tungsten carbide products, has agreed to pay $54.4 million to resolve allegations that it violated the False Claims Act by knowingly evading U.S. customs duties on imports from China, the Department of Justice announced Thursday.

According to the government, Ceratizit improperly failed to pay duties owed on tungsten carbide products imported from the People’s Republic of China, a hard, wear-resistant material commonly used in cutting tools and industrial components. During the relevant period, Chinese-manufactured tungsten carbide products were subject to Section 301 tariffs imposed by the Office of the U.S. Trade Representative.

Federal authorities allege that from August 2020 through March 2024, Ceratizit misrepresented the country of origin of certain products to U.S. Customs and Border Protection. The United States contends that the company knew the products were manufactured in China but were transshipped through Taiwan before entering the United States, and that Ceratizit declared Taiwan, rather than China, as the country of origin to avoid paying applicable Section 301 tariffs.

The settlement also resolves allegations that, from June 2015 through March 2024, Ceratizit knowingly misclassified tungsten carbide products under incorrect Harmonized Tariff Schedule codes to reduce duties owed. In addition, the government alleged that some imported merchandise was not properly marked with its country of origin and that Ceratizit failed to pay required marking duties before distributing the unmarked products to U.S. consumers.

“Import duties are a powerful tool for protecting American industry,” said Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division. “This settlement once again demonstrates that the Department of Justice will zealously pursue those who seek an unfair advantage in U.S. markets by evading customs duties.”

U.S. Attorney Jerome F. Gorgon Jr. for the Eastern District of Michigan emphasized the broader enforcement message behind the case, saying, “We need customs duties to protect our industries and to raise money. We will use the law to support our companies and to make cheaters pay.”

Customs and Border Protection Commissioner Rodney S. Scott pointed to the agency’s role in detecting complex evasion schemes. “Attempts at duty evasion have always existed, regardless of the tariff environment,” Scott said. “These schemes are vast and complex, but CBP professionals are well-trained and positioned to detect, deter, and disrupt tariff evasion schemes to ensure that duties are paid.”

The resolution stems from a civil lawsuit filed under the whistleblower, or qui tam, provisions of the False Claims Act by Mark Stover, who brought the case on behalf of the United States. The lawsuit, United States ex rel. Stover v. Ceratizit USA, et al., was filed in the Eastern District of Michigan. As part of the settlement, Stover will receive approximately $9.75 million from the recovery.

The announcement also comes against the backdrop of heightened federal focus on trade fraud enforcement. On August 29, 2025, the Justice Department launched a cross-agency Trade Fraud Task Force aimed at strengthening efforts to combat tariff evasion and related misconduct. The task force brings together resources from the Department of Justice’s Civil and Criminal Divisions and the Department of Homeland Security to pursue cases involving evaded duties, smuggling, and other trade-related fraud.

The Justice Department said it continues to encourage whistleblowers to report credible allegations of trade fraud through the False Claims Act, underscoring the role of private enforcement actions in uncovering complex customs and tariff schemes.

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