Fines, Penalties, And Protests in International Shipping

Claims in international shipping practice depend on the type of transaction:

PERSPECTIVE TRANSACTIONS - Internationally shipping goods had not arrived in the USA, and entry had not been made.
CURRENT TRANSACTIONS - An international shipping entry has been made but has not yet been liquidated.
COMPLETED TRANSACTIONS - International shipping entry is done, but there is still a problem.

PERSPECTIVE TRANSACTIONS:

a. The importer writes a letter (no particular form) to the Port Director describing the international shipping product. The Port Director will respond.
Benefit: Quick response.
Drawback: Valid in the particular port only. Another port may assign a higher duty on international shipping goods.

b. If international shipping/importing something new, write a letter (no particular form) to the JFK National Import Specialist or the headquarters. It will be evaluated, assigned a new HTS#, and bound to all ports.

CURRENT TRANSACTIONS:

The importer has to request Internal Advice (under part 177)

The importer gives his written position to the Port Director.
The Port Director (Import Specialist) must write a letter stating his position.
Both statements are sent to headquarters, which decides what ruling for a particular international shipping will be.

If the importer wants to correct clerical errors in liquidation (part 173), then the importer writes a letter "Correction of clerical errors" to the Port Director:

Part 173.4(a) claim - if heed to correct clerical errors in payment of duty on the international shipping;
Claims 528, 528.4, 1520.4, etc., for different types of errors.

COMPLETED TRANSACTIONS:

A claim under part 173.3, "Request for voluntary re-liquidation."
Customs or brokers can re-liquidate the entry within 90 days of the liquidation.
For example, you must wait 90 more days after liquidation to ensure the liquidation is final.

Re-liquidation is for the correction of clerical errors. After 90 days, if Customs does not respond, the international shipping claim automatically becomes favorable to the importer.

PROTESTS IN INTERNATIONAL SHIPPING PRACTICE. (CFR 19.174)

The importer must file an objection within 90 days of liquidation.

Protests CANNOT be favorable to Customs. It can be advantageous only to the importer.

The importer filed a protest in the appropriate form at the SAME PORT WHERE THE INTERNATIONAL SHIPPING ENTRY WAS MADE.
Customs must receive it within 90 days of the liquidation (not postmarked).
Customs must respond within 2 (TWO) years. If Customs does not, then the importer wins by operating low.

Acceleration of review or disposition of international shipping claims. This situation is when the importer informally knows that Customs will deny his protest and is willing to appeal further:

Importer files a regular protest;
After 90 days, he submits a Letter with the title to Accelerate the review or Disposition;
Now, Customs has 30 days to respond.
If Customs did not respond, THEN IMPORTER LOSES and;
The importer has the right to appeal.
Appeal to the International Shipping Court of International Trade within 180 days. If you lose, then;
U.S. Court of Appeals. If you lose, then;
Appeal to the Supreme Court.

Notice:

NAFTA errors go under 520(d) claims
For everything else, form 520(c)

CLAIMS AND PROTESTS PROCEDURE IN INTERNATIONAL SHIPPING:

Perspective Transactions:
a. Bureau ruling;
b. Binding ruling

Current Transactions:
a. Request for Internal Advice;
b. 173.4(a) claim;
c. 520(a) claim

Completed Transactions:
a. 173.3 claim;
b. 520(c) claim OR 520(d) claim for NAFTA

Protest in 90 days, Customs responds in 2 years.
Request further review after 90 days; Customs must reply within 30 days.
Court of International Trade in 180 days;
U.S. Court of Appeals;
Supreme Court

FINES AND PENALTIES IN INTERNATIONAL SHIPPING (CFR 19.171 appendix):

Under the Tariff Act of 1930:

19 USC 1497 - for PASSENGERS ONLY = Appendix A;
19 USC 1592 - for Customs Brokers and Importers = Appendix B;
19 USC 1641 - for Customs Brokers ONLY = Appendix C

All fines and penalties in international shipping have different levels. As a result, you can have a MITIGATING or AGGRAVATING factor.

MITIGATING factor - vulnerable mistakes in international shipping. It may decrease OK;
Regular fee;
AGGRAVATING factor - when Customs feel that something could be done to prevent it, but it has not been done. It may increase fines for international shipping.

NOTICE: Total value of fine is the Value of international shipping goods (1) + the Duty on it (2) + the Fine itself (3)

19 USC 1497 - for PASSENGERS ONLY	Non-Commercial	MT.	1.5 TIMES OF DUTY; or the domestic value*, whichever is lower
		RG.	3 TIMES OF DUTY, or the domestic value, whichever is lower
		AG.	3-6 TIMES OF DUTY, or the domestic value, whichever is lower
	Commercial or If it is 2nd offense.	MT.	3 TIMES OF DUTY, or the domestic value, whichever is lower
		RG.	6 TIMES OF DUTY, or the domestic value, whichever is lower
		AG.	8 TIMES OF DUTY, or the domestic value, whichever is lower

19 USC 1592 - for Customs Brokers and Importers**	Pure negligence	Revenue***	Min. 1.5 TIMES - Max 2 TIMES OF THE REVENUE LOSSES, or the domestic value, whichever is lower.
	Pure negligence	Non-Revenue ****	5-20% of the dutiable value.
	Gross negligence	Revenue***	Min. 2.5 TIMES - Max 5 TIMES OF THE REVENUE LOSSES, or the domestic value, whichever is lower.
	Gross negligence	Non-Revenue ****	25-40% of the dutiable value.
	Fraud	Revenue***	Min. 5 TIMES - Max 8 TIMES OF THE REVENUE LOSSES, or the domestic value, whichever is lower.
	Fraud	Non-Revenue ****	50-80% of the dutiable value.

19 USC 1641 - for Customs Brokers ONLY	PENALTY CAN NOT SUBSTITUTE REVOCATION OR SUSPENSION OF THE USHCB LICENSE. Customs issues a penalty notice. HCB has 30 days to respond. All fines over $10,000 come from headquarters. $10,000 per entry; $30,000 is the MAXIMUM penalty. Then, Customs takes away the USHCB license. $1,000 for EACH missing Power of Attorney. $30,000 for using the HCB bond for clients who lost Immediate Delivery Privileges.

* - DOMESTIC VALUE is the VALUE OF INTERNATIONALLY SHIPPING GOODS + duties & TAXES

** - This is for FALSE statements in documents. It DOES NOT apply to clerical errors or mistakes of fact. The customs officer issues a PRE-PENALTY NOTICE to the violator. It states a culpability level: Negligence (1), Gross Negligence (2), or Fraud (3). For Negligence and Gross Negligence, it must be over $500.

*** - The government lost revenue.

**** - Duty-free merchandise.

PETITIONS IN INTERNATIONAL SHIPPING

4097; 5092; 6041 forms letter must be sent from a Penalty Notice:

If it is a final penalty, within 60 days (19 CFR 171(g));
If against Broker - within 30 days;
If you must expedite it, within 20 days

While filing a petition on international shipping, you can request an Oral Presentation. It must be in writing in the original petition. Otherwise, you lose the right to the Oral Presentation.