CCS - Certified Customs Specialist Fines, Penalties, and Forfeitures Questions and Answers 1 — Questions and Answers
Question 1: An importer mistakenly undervalues a shipment due to a clerical error that is part of a pattern of such errors, resulting in a $25,000 loss of revenue to CBP. CBP determines the violation was due to negligence. What is the maximum statutory penalty CBP can assess before considering any mitigating factors?
- The domestic value of the merchandise.
- $25,000, which is the amount of revenue lost.
- $50,000. (Correct answer)
- $100,000.
Correct answer: $50,000.
Under 19 U.S.C. 1592(c)(3), the maximum penalty for a violation resulting from negligence where there is a loss of revenue is the lesser of the domestic value of the merchandise or two times the loss of revenue. In this scenario, two times the $25,000 loss of revenue is $50,000.
Question 2: Which of the following is a key element CBP must prove to establish a claim for a civil penalty under 19 U.S.C. 1592 for fraud?
- The importer failed to exercise the standard of reasonable care.
- The violation was committed knowingly and intentionally. (Correct answer)
- The violation resulted from an act done with wanton disregard for the relevant obligations.
- The importer failed to maintain records for the statutory five-year period.
Correct answer: The violation was committed knowingly and intentionally.
To establish fraud under 19 U.S.C. 1592, CBP must prove that the material false statement or omission was made knowingly and intentionally. Failure to exercise reasonable care is the standard for negligence, while wanton disregard is associated with gross negligence.
Question 3: An importer receives a Pre-Penalty Notice from CBP alleging a violation of 19 U.S.C. 1592. The notice proposes a substantial penalty for gross negligence. What is the importer's primary administrative recourse at this stage of the process?
- File a lawsuit in the Court of International Trade.
- File a Prior Disclosure to mitigate the penalty.
- Submit a written response to the issuing Fines, Penalties, and Forfeitures (FP&F) office to present arguments against the proposed penalty. (Correct answer)
- Immediately pay the proposed penalty to avoid further action.
Correct answer: Submit a written response to the issuing Fines, Penalties, and Forfeitures (FP&F) office to present arguments against the proposed penalty.
Upon receiving a Pre-Penalty Notice, the importer has a right to respond within a set timeframe (typically 30 days) to the issuing CBP office. This response is the opportunity to present evidence and arguments as to why a penalty should not be issued or should be mitigated. Filing a lawsuit is premature as administrative remedies have not been exhausted, and it is too late to file a Prior Disclosure once CBP has commenced a formal investigation.
Question 4: A shipment of merchandise prohibited from importation under a health and safety statute is discovered at the port. Under 19 U.S.C. 1595a(b), in addition to seizing the goods, what action can CBP take against a person who knowingly assisted in the unlawful importation?
- Assess a monetary penalty equal to the domestic value of the merchandise. (Correct answer)
- Issue a claim for liquidated damages against the carrier's bond.
- Assess a penalty of two times the loss of revenue.
- Require the person to enroll in a C-TPAT program.
Correct answer: Assess a monetary penalty equal to the domestic value of the merchandise.
19 U.S.C. 1595a(b) specifically provides that any person who directs, assists, or is otherwise concerned in the unlawful importation of merchandise is liable for a monetary penalty equal to the value of the article(s). This penalty is separate from the seizure and forfeiture of the goods themselves and is not based on a loss of revenue calculation.
Question 5: Generally, what is the statute of limitations for CBP to initiate a penalty action for a violation of 19 U.S.C. 1592 that is based on negligence or gross negligence?
- Three years from the date of liquidation.
- Five years from the date of the alleged violation. (Correct answer)
- Five years from the date of discovery of the violation.
- Seven years from the date of importation.
Correct answer: Five years from the date of the alleged violation.
According to 19 U.S.C. 1621, for violations of 19 U.S.C. 1592 arising from negligence or gross negligence, a suit or action may not be instituted unless it is commenced within five years from the date of the alleged violation, which is typically the date of entry. The 'date of discovery' standard applies to violations arising out of fraud.
Question 6: CBP issues a Notice of Redelivery (CBP Form 4647) for a conditionally released shipment, but the importer fails to return the goods to CBP custody as demanded. This failure is a breach of the customs bond. What is the primary enforcement action CBP will take?
- Issue a penalty for negligence under 19 U.S.C. 1592.
- Refer the case to the Department of Justice for criminal prosecution.
- Seize the importer's assets up to the value of the goods.
- Issue a claim for liquidated damages against the importer and their surety. (Correct answer)
Correct answer: Issue a claim for liquidated damages against the importer and their surety.
A failure to redeliver merchandise upon lawful demand by CBP is a breach of the conditions of the customs bond. The appropriate remedy for a bond breach is for CBP to issue a claim for liquidated damages, which is a predetermined penalty amount, against both the importer (the principal) and the surety company that issued the bond.
CCS - Certified Customs Specialist Fines, Penalties, and Forfeitures Questions and Answers 1
An importer mistakenly undervalues a shipment due to a clerical error that is part of a pattern of such errors, resulting in a $25,000 loss of revenue to CBP.
CBP determines the violation was due to negligence.
What is the maximum statutory penalty CBP can assess before considering any mitigating factors?