[Federal Register Volume 64, Number 58 (Friday, March 26, 1999)]
[Notices]
[Pages 14790-14798]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-7410]
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DEPARTMENT OF THE TREASURY
Customs Service
[T.D. 99-29]
Guidelines for the Cancellation of Claims for Liquidated Damages
and Mitigation of Penalties for Failure To Provide General Order
Notifications or Failure To Take Possession of General Order
Merchandise; Guidelines for Mitigation of Penalties for Delivery of
Cargo Without Customs Authorization; Guidelines for Cancellation of
Claims for Liquidated Damages for Failing To Deliver In-Bond
Merchandise; Guidelines for Cancellation of Claims for Removal of
Merchandise From Centralized Examination Stations, Container Freight
Stations or Places of Examination
AGENCY: Customs Service, Department of the Treasury.
ACTION: General notice.
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SUMMARY: Under the Omnibus Trade and Competitiveness Act of 1988, the
Secretary of the Treasury is required to publish guidelines for the
cancellation of bond charges. In Treasury Decision 98-74 (T.D. 98-74),
the Secretary published amendments to the Customs Regulations regarding
the obligation of carriers and certain related parties to provide
notice to Customs and to a bonded warehouse of the presence of
merchandise or baggage that has remained at the place of arrival or
unlading beyond the time period provided by regulation without entry
having been completed. The notice to the bonded warehouse proprietor
initiates his obligation to arrange for transportation and storage of
the unentered merchandise or baggage at the risk and expense of the
consignee. The new regulations provide for the assessment of penalties
or liquidated damages for failure to provide the required notice to
Customs or to a bonded warehouse proprietor of the presence of
unentered merchandise or baggage and for liquidated damages against the
warehouse operator who fails to take required possession of the
merchandise or baggage for which notification has been received.
This document publishes guidelines for the mitigation of penalties
incurred by carriers for failing to provide appropriate notifications.
It also publishes bond cancellation standards to be applied to claims
for liquidated damages incurred by bonded carriers, custodians or
warehouse operators who fail to comply with obligations to provide
notification of the presence of unentered merchandise or to collect
that merchandise about which notification has been received.
In addition, this document publishes new mitigation guidelines for
penalties assessed against carriers and other parties for the delivery
of cargo from the place of unlading without Customs authorization or
delivery of cargo without examination. Inasmuch as these penalties are
very similar to claims for liquidated damages assessed against in-bond
carriers for nondelivery, shortage or delivery directly to the
consignee, the bond cancellation standards for 19 CFR 18.8 in-bond
violations which were published in T.D. 94-38 are revised by this
document to be consistent with guidelines for the mitigation of the
penalties assessed for delivery of cargo without Customs authorization.
Additionally, this document amends T.D. 94-38 to revise bond
cancellation standards for claims for liquidated damages arising from
breach of the Basic Custodial Bond when cargo is removed from a
Centralized Examination Station (CES) without authorization and
standards for claims arising from breach of the Basic Importation Bond
when merchandise is
[[Page 14791]]
not delivered to or is not held at the place of examination. Finally,
the document provides for bond cancellation standards for claims for
liquidated damages arising from the removal of merchandise from a
Container Freight Station (CFS) without authorization.
EFFECTIVE DATE: These guidelines will take effect upon March 26, 1999
and shall be applicable to all cases which are currently open at the
petition or supplemental petition stage. No second supplemental
petitions will be accepted solely to gain the benefit of a less harsh
guideline.
FOR FURTHER INFORMATION CONTACT: Jeremy Baskin, Penalties Branch,
Office of Regulations and Rulings (202) 927-2344.
SUPPLEMENTARY INFORMATION:
Background
Section 1904 of the Omnibus Trade and Competitiveness Act of 1988
(Pub. L. 100-418) amended section 623 of the Tariff Act of 1930 (19
U.S.C. 1623) by adding the following sentence at the end of section
623(c) of the Tariff Act of 1930 (19 U.S.C. 1623(c)):
``In order to assure uniform, reasonable and equitable
decisions, the Secretary of the Treasury shall publish guidelines
establishing standards for setting the terms and conditions for
cancellation of bonds or charges thereunder.''
In T.D. 94-38, dated April 11, 1994, the text of current guidelines
for cancellation of claims for liquidated damages was published.
In a document published as Treasury Decision 98-74 (T.D. 98-74) in
the Federal Register (63 FR 51283) on September 25, 1998, Customs
promulgated amendments to its regulations which implemented section 656
of the North American Free Trade Agreement Implementation Act, Pub. L.
103-182, 107 Stat. 2057, providing for penalties against the owner or
master of any vessel or vehicle or the agent thereof for failure to
notify Customs of any merchandise or baggage unladen for which entry is
not made within the time period prescribed by law or regulation. The
new regulations extend such liability to owners or pilots of aircraft
or the agent thereof.
The new regulations require the owner, master, operator or pilot,
or the agent thereof, of the arriving carrier, or any subsequent in-
bond carrier or party who accepts custody under a Customs-authorized
permit to transfer, to provide notice of the unentered merchandise or
baggage to a bonded warehouse. The notice to the bonded warehouse
proprietor initiates his obligation to arrange for transportation and
storage of the unentered merchandise or baggage at the risk and expense
of the consignee. The new regulations provide for penalties under 19
U.S.C. 1448 or liquidated damages under the International Carrier Bond
(19 CFR 113.64) against the owner, master, operator or pilot of any
conveyance, or agent thereof, for failure to provide the required
notice to Customs or to a bonded warehouse proprietor. The new
regulations provide for the assessment of liquidated damages under the
Basic Custodial Bond (19 CFR 113.63) against any subsequent in-bond
carrier or other party who accepts custody of the merchandise or
baggage under a Customs-authorized permit to transfer who fails to
notify Customs and a bonded warehouse of the presence of such unentered
merchandise or baggage. Finally, the new regulations provide for
liquidated damages under the Basic Custodial Bond (19 CFR 113.63)
against the warehouse operator who fails to take required possession of
the merchandise or baggage after receipt of notification.
This document publishes guidelines for the mitigation of those
penalties incurred by carriers for failing to provide appropriate
notifications. It also publishes bond cancellation standards to be
applied to claims for liquidated damages incurred by arriving carriers,
bonded carriers, custodians or warehouse operators who fail to comply
with obligations to provide notification of the presence of unentered
merchandise or to collect that merchandise about which notification has
been received.
In addition to new guidelines required for these G.O. notification
and merchandise collection violations, this document publishes new
mitigation guidelines for penalties established against carriers and
other parties for violation of 19 U.S.C. 1595a(b) for facilitating an
importation contrary to law, specifically 19 U.S.C. 1448 for delivery
of merchandise from the place of unlading without Customs
authorization, and 19 U.S.C. 1499 for delivery of cargo without a
requested Customs examination. Customs has found that the current
guidelines for mitigation of these penalties do not provide a
sufficient deterrent for parties who violate these provisions of law.
Additionally, these penalties are very similar to claims for
liquidated damages assessed against in-bond carriers for failing to
deliver, short delivery or delivery directly to the consignee of in-
bond merchandise. In Customs view, both types of violations should be
mitigated or canceled under the same standards. Accordingly, the bond
cancellation standards for 19 CFR 18.8 in-bond violations which were
published in T.D. 94-38, Section III., are revised and replaced by this
document to be consistent with guidelines for the mitigation of the
penalties assessed for delivery of cargo without Customs authorization.
This document also updates bond cancellation standards for claims
for liquidated damages arising from breach of the Basic Custodial Bond
when cargo is removed from a Centralized Examination Station (CES)
without authorization. The bond cancellation standards for violations
arising for removal of merchandise from a CES without authorization
which were published in T.D. 94-38, Section XI., are revised and
replaced by this document to be consistent with guidelines for the
mitigation of the penalties assessed for delivery of cargo without
Customs authorization.
The bond cancellation standards articulated in T.D. 94-38 did not
include standards for removal of merchandise from a Container Freight
Station (CFS). This document publishes standards for the removal of
merchandise from a CFS.
Finally, this document updates bond cancellation standards for
claims for liquidated damages arising from breach of the Basic
Importation Bond when merchandise is not delivered to or is not held at
the place of examination (19 CFR 113.62(f)). The cancellation standards
which were published in T.D. 94-38, Section X., are revised and
replaced by this document to be consistent with guidelines for the
mitigation of the penalties assessed for delivery of cargo without
Customs authorization.
The text of the guidelines is set forth below.
Dated: March 23, 1999.
Raymond W. Kelly,
Commissioner of Customs.
[[Page 14792]]
Guidelines for Cancellation of Claims for Liquidated Damages and
Mitigation of Penalties for Failure To Provide General Order
Notifications or Failure to Take Possession of General Order
Merchandise; Guidelines for Mitigation of Penalties for Delivery of
Cargo Without Customs Authorization; Guidelines for Cancellation of
Claims for Liquidated Damages for Failing To Deliver In-Bond
Merchandise; Guidelines for Cancellation of Claims for Removal of
Merchandise from Centralized Examination Stations, Contained
Freight Stations or Places of Examination
I. Penalties Against Carrier for Failure To Notify Customs of
Presence of Unentered Merchandise
A. Assessment
Any merchandise or baggage regularly landed but not covered by a
permit for its release will be allowed to remain at the place of
unlading until the fifteenth calendar day after landing. No later than
20 calendar days after landing, the master, pilot, operator or owner of
the conveyance or the agent thereof must notify Customs of any such
merchandise or baggage for which entry has not been made. Such
notification must be provided in writing or by any appropriate Customs-
authorized electronic data interchange system. Failure to provide such
notification may result in assessment of a monetary penalty of up to
$1,000 per bill of lading against the master, pilot, operator or owner
of the conveyance or the agent thereof for violation of the provisions
of title 19, United States Code, section 1448 (19 U.S.C. 1448). If the
value of the merchandise on the bill is less than $1,000, the penalty
will be equal to the value of such merchandise.
B. Mitigation
1. If notification of the presence of unentered merchandise is
provided outside the time period allowed by law or regulation, the
penalty may be mitigated to an amount between 10 and 50 percent of the
assessment, but not less than $100 or the value of the merchandise
(whichever is lower), depending on the presence of aggravating or
mitigating circumstances.
2. If notification is not received, or if Customs discovers the
presence of unentered merchandise after the time period for
notification has expired, no mitigation will be afforded.
II. Claims for Liquidated Damages Assessed Against a Bonded Party
for Failure To Notify Customs of the Presence of Unentered
Merchandise
A. Assessment
Any merchandise or baggage that is taken into custody from an
arriving carrier by any party under a Customs-authorized permit to
transfer or in-bond entry may remain in the custody of that party for
15 calendar days after receipt under such permit to transfer or 15
calendar days after arrival at the port of destination. No later than
20 calendar days after receipt under the permit to transfer or 20
calendar days after arrival under bond at the port of destination, the
party must notify Customs of any such merchandise or baggage for which
entry has not been made. Such notification must be provided in writing
or by any appropriate Customs-authorized electronic data interchange
system. If the party fails to notify Customs of the unentered
merchandise or baggage in the allotted time, he may be liable for the
payment of liquidated damages equal to $1,000 per bill of lading for
which notification is not given for violation of the provisions of 19
CFR 113.63(c)(4) and: 19 CFR 4.37(b), if original arrival is by vessel;
19 CFR 122.50(b), if original arrival is by air; or 19 CFR 123.10(b),
if original arrival is by land carrier.
B. Mitigation
1. If notification of the presence of unentered merchandise is
provided outside the time period allowed by law or regulation, the
claim for liquidated damages may be canceled upon payment of an amount
between 10 and 50 percent of the assessment, depending on the presence
of aggravating or mitigating circumstances.
2. If notification is not received, or if Customs discovers the
presence of unentered merchandise after the time period for
notification has expired, no mitigation will be afforded.
III. Claims for Liquidated Damages Incurred by the Carrier or Other
Party for Failure To Notify the Bonded Warehouse of the Presence of
Unentered Merchandise
A. Assessment
In addition to the notification to Customs, the carrier (or any
other party to whom custody of the unentered merchandise has been
transferred by a Customs authorized permit to transfer or in-bond
entry) must provide notification of the presence of such unreleased and
unentered merchandise or baggage to a bonded warehouse certified by the
port director as qualified to receive general order merchandise. Such
notification must be provided in writing or by any appropriate Customs-
authorized electronic data interchange system and must be provided
within the 20-calendar day period. If the party to whom custody of the
unentered merchandise or baggage has been transferred by a Customs-
authorized permit to transfer or in-bond entry fails to notify a
Customs-approved bonded warehouse of such merchandise or baggage within
the applicable 20-calendar-day period, he may be liable for the payment
of liquidated damages of $1,000 per bill of lading for which
notification is not given. Liability of the arriving carrier would be
under the provisions of 19 CFR 113.64(b) and: 19 CFR 4.37(c) if the
original arrival was by vessel; 19 CFR 122.50(c) if the original
arrival was by air; or 19 CFR 123.10(c) if the original arrival was by
land carrier. Liability of the party to whom custody has been
transferred by a Customs-authorized permit to transfer or in-bond entry
would be under the provisions of 19 CFR 113.63(b), 19 CFR 113.63(c)
and: 19 CFR 4.37(c) if the original arrival was by vessel; 19 CFR
122.50(c) if the original arrival was by air; or 19 CFR 123.10(c) if
the original arrival was by land carrier.
B. Mitigation
1. If notification of the presence of unentered merchandise is
provided to the bonded warehouse outside the time period allowed by law
or regulation, the claim for liquidated damages may be canceled upon
payment of an amount between 10 and 50 percent of the assessment,
depending on the presence of aggravating or mitigating circumstances.
2. If notification is not received, or if Customs discovers the
presence of unentered merchandise after the time period for
notification has expired, no mitigation will be afforded.
IV. Claims for Liquidated Damages Against a Bonded Warehouse for
Failure To Collect Unentered Merchandise for Which Notification Has
Been Received
A. Assessment
If the bonded warehouse operator fails to take possession of
unentered and unreleased merchandise or baggage within five calendar
days after receipt of notification of the presence of such merchandise
or baggage under this section, he may be liable for the payment of
liquidated damages of $1,000 per bill of lading remaining uncollected.
Liability would be under
[[Page 14793]]
19 CFR 113.63(a)(1) and: 19 CFR 4.37(d) if the original arrival was by
vessel; 19 CFR 122.50(d) if the original arrival was by air; or 19 CFR
123.10(d) if the original arrival was by land carrier.
B. Mitigation
1. If the bonded warehouse operator takes possession of unentered
merchandise outside the time period allowed by law or regulation, the
claim for liquidated damages may be canceled upon payment of an amount
between 10 and 50 percent of the assessment, depending on the presence
of aggravating or mitigating circumstances.
2. If the bonded warehouse operator never takes possession of
merchandise for which he has received appropriate notification, no
mitigation will be afforded.
V. Delivery of Cargo Without Customs Authorization
A. Assessment
Penalties for removal of merchandise from the place of unlading
without authorization will be assessed under the provisions of 19
U.S.C. 1595a(b) for violation of the provisions of 19 U.S.C. 1448 or
penalties for delivery of merchandise without Customs examination will
be assessed under the provisions of 19 U.S.C. 1595a(b) for violation of
19 U.S.C. 1499.
1. These penalties may be assessed against any party who is deemed
to be responsible for the unauthorized removal or delivery.
2. Penalties are assessed in an amount equal to the domestic value
of the merchandise removed or delivered without authorization.
3. Penalties of these types assessed against holders of
international carrier bonds are secured by the terms and conditions of
the bond up to the limit of the bond. Penalties may be collected in
full from the violator. Collection from a surety is limited to the
amount of the bond.
4. Double penalties should not be assessed, i.e., while the same
misdelivery may be without Customs authorization and may involve
avoidance of examination, only one assessment equal to the value of the
merchandise should be made. If multiple assessments from the same
transaction occur, mitigation should reflect the policy that only a
single penalty should have been assessed.
B. Penalty Mitigation
1. If the violator can show that the violation occurred solely as a
result of Customs error, the penalty should be canceled.
2. If the violator can show that the merchandise was never received
or landed, the penalty should be mitigated without payment.
3. If the merchandise which was removed without authorization or
delivered without examination could have been the subject of an
informal entry, the penalty may be mitigated upon payment of an amount
equal to the duties, fees, taxes and charges that would have been due
on the merchandise had entry been properly made plus an amount between
$100 and $500, depending on the presence of aggravating or mitigating
factors.
4. If the violator comes forward and discloses the violation to
Customs prior to Customs discovery of the violation, the penalty may be
mitigated upon payment of an amount equal to the duties, fees, taxes
and charges that would have been due on the merchandise had entry been
properly made plus $50.
5. If the merchandise which was removed without authorization was
not designated for Customs examination and the violator can show that
the merchandise was entered and duties, fees, taxes and charges paid
thereon, the penalty may be mitigated upon payment of an amount between
$250 and $2,000 depending on the presence of aggravating or mitigating
factors.
6. If the merchandise which was removed without authorization was
not designated for Customs examination and the violator cannot show
that the merchandise was entered and duties, fees, taxes and charges
paid thereon, the penalty may be mitigated upon payment of an amount
equal to the duties, fees, taxes and charges that would have been due
on the merchandise had entry been properly made plus an amount between
$300 and $2,500 depending on the presence of aggravating or mitigating
factors.
7. If the merchandise which was removed without authorization or
delivered without examination was designated for Customs examination
and the violator can show that the merchandise was entered and duties,
fees, taxes and charges paid thereon, the penalty may be mitigated upon
payment of an amount between $2,500 and $20,000 depending on the
presence of aggravating or mitigating factors. In no case shall the
mitigated amount be lower than any costs chargeable to the importer
which are incident to such examination. Conversely, the mitigated
amount can never exceed the value of the shipment.
8. If the merchandise which was removed without authorization or
delivered without examination was designated for Customs examination
and the violator cannot show that the merchandise was entered and
duties, fees, taxes and charges paid thereon, the penalty may be
mitigated upon payment of an amount equal to the duties, fees, taxes
and charges that would have been due on the merchandise had entry been
properly made plus an amount between $3,000 and $25,000 depending on
the presence of aggravating or mitigating factors. In no case shall the
mitigated amount be lower than any costs chargeable to the importer
which are incident to such Customs examination. Conversely, the
mitigated amount can never exceed the value of the shipment.
9. If the violator has a history of removal of merchandise from the
place of unlading without Customs authorization or delivery without
Customs examination or particularly aggravating circumstances exist
with regard to a violation, the Fines, Penalties and Forfeitures
Officer may mitigate the penalty upon payment of a higher amount than
that authorized by these guidelines; however, the advice of
Headquarters, Office of Regulations and Rulings, Penalties Branch will
be sought to determine appropriate mitigation.
10. Theft of merchandise from Customs custody. Merchandise which is
stolen from the carrier prior to having been released by Customs shall
be treated as having been delivered without Customs authorization. The
carrier will be liable for penalties and mitigation will occur in
accordance with these guidelines. It should also be noted that
penalties under 19 USC 1595a(b) for violation of 19 USC 1448 or 1499
(as well as criminal sanctions under 18 U.S.C. 549) may also be
assessed against the individuals who steal the merchandise from Customs
custody. In those instances, no mitigation will be afforded to the
person or persons primarily responsible for the illegal act. Aiders and
abettors may receive mitigation to 25-50 percent of the penalty,
depending upon the degree of complicity.
C. Mitigating and Aggravating Factors
1. Mitigating Factors
a. Violator inexperienced in the handling of cargo.
b. Violator has a general good performance and low error rate in
the handling of cargo.
c. Violator demonstrates remedial action has been taken to prevent
future violations.
2. Aggravating Factors
a. Violator refuses to cooperate with Customs or acts to impede
Customs activity with regard to the case.
[[Page 14794]]
b. Violator has a rising error rate which is indicative of
deteriorating performance in the handling of cargo.
D. Restricted or Prohibited Merchandise
If Customs has reason to believe that the merchandise which was
removed from the place of unlading without authorization or which was
delivered without examination may have been restricted or prohibited
from entry, that will be considered an extraordinary aggravating factor
and will result in either no mitigation or mitigation at the high end
of the mitigation range.
VI. Guidelines for Cancellation of Claims for Shortage, Irregular
Delivery, Non-Delivery or Delivery Directly to the Consignee of In-
Bond Merchandise (19 CFR 18.8)
A. Assessment
All claims for liquidated damages assessed for breach of the
provisions of 19 CFR 18.8 for shortage, irregular delivery, nondelivery
or delivery directly to the consignee of in-bond merchandise will be
assessed for the value of the merchandise or three times the value of
the merchandise if the merchandise is restricted or is alcoholic
beverages.
B. Documents Filed Late or Merchandise Delivered Late
1. Modified CF 5955A. Notices of liquidated damages incurred for
documents filed late or merchandise delivered late this violation may
be issued on a modified CF-5955A. If a modified form is issued, it
shall specify two options from which the petitioner may choose to
resolve the demand.
a. Option 1. The bond principal or surety may pay a specified sum
within 60 days and the case will be closed. By electing this option in
lieu of petitioning, the principal or surety waives the right to file a
petition. He may, however, file a supplemental petition, if he does so
in accordance with the Customs Regulations and has some new fact or
information which merits consideration in accordance with these
guidelines.
b. Option 2. The bond principal or surety may file a petition for
relief. By filing a petition for relief, the petitioner will no longer
be afforded the Option 1 mitigation amount. The Fines, Penalties and
Forfeitures Officer will grant full relief when the petitioner
demonstrates that the violation did not occur or that the violation
occurred solely as a result of Customs error. If the petitioner fails
to demonstrate that the violation did not occur or that the violation
occurred solely as a result of Customs error, the Fines, Penalties and
Forfeitures Officer may cancel the claim upon payment of an amount no
less than $100 greater than the Option 1 amount.
2. If merchandise is delivered untimely to the port of destination
or exportation (not within 15 days if transported by air, 30 days if
transported by vehicle, or 60 days if transported by vessel) but is
otherwise intact, the Fines, Penalties and Forfeitures Officer may
cancel the claim upon payment of an amount between $100 or $500,
depending on the presence of aggravating or mitigating factors.
3. If merchandise is delivered timely but the documentation is not
filed with Customs within 2 days of arrival in the port of delivery,
the Fines, Penalties and Forfeitures Officer may cancel the claim upon
payment of an amount between $100 and $500, depending on the presence
of aggravating or mitigating factors.
4. If the bonded carrier consistently fails to deliver paperwork
timely and Customs business is impeded by these repeated failures, the
Fines, Penalties and Forfeitures Officer may cancel any claim upon
payment of a higher amount than the guidelines generally permit. The
advice of Headquarters, Office of Regulations and Rulings, Penalties
Branch, may be sought to determine appropriate mitigation.
C. Failure To Deliver, Shortage or Delivery Directly to the Consignee
1. If the in-bond carrier can show that the violation occurred
solely as a result of Customs error, the claim for liquidated damages
should be canceled without payment.
2. If the in-bond carrier can show that the merchandise was never
received or landed, the claim for liquidated damages should be canceled
without payment.
3. If the merchandise which was not delivered, delivered short or
delivered directly to the consignee could have been the subject of an
informal entry, the claim for liquidated damages may be canceled upon
payment of an amount equal to the duties, fees, taxes and charges that
would have been due on the merchandise had entry been properly made
plus an amount between $100 and $500, depending on the presence of
aggravating or mitigating factors.
4. If the in-bond carrier comes forward and discloses the violation
to Customs prior to Customs discovery of the violation, the claim for
liquidated damages may be canceled upon payment of an amount equal to
the duties, fees, taxes and charges that would have been due on the
merchandise had entry been properly made, plus $50.
5. If the merchandise which was not delivered, delivered short or
delivered directly to the consignee was not designated for Customs
examination and the in-bond carrier can show that the merchandise was
entered and duties, fees, taxes and charges paid thereon, the claim for
liquidated damages may be canceled upon payment of an amount between
$250 and $2,000 depending on the presence of aggravating or mitigating
factors.
6. If the merchandise which was not delivered, delivered short or
delivered directly to the consignee was not designated for Customs
examination and the in-bond carrier cannot show that the merchandise
was entered and duties, fees, taxes and charges paid thereon, the claim
for liquidated damages may be canceled upon payment of an amount equal
to the duties, fees, taxes and charges that would have been due on the
merchandise had entry been properly made plus an amount between $300
and $2,500 depending on the presence of aggravating or mitigating
factors.
7. If the merchandise which was not delivered, delivered short or
delivered directly to the consignee was designated for Customs
examination and the in-bond carrier can show that the merchandise was
entered and duties, fees, taxes and charges paid thereon, the claim for
liquidated damages may be canceled upon payment of an amount between
$2,500 and $20,000 depending on the presence of aggravating or
mitigating factors. In no case should the amount upon which the claim
may be canceled be lower than any chargeable costs which are incident
to such examination. Conversely, the amount upon which the claim may be
canceled can never exceed the value of the claim for liquidated
damages.
8. If the merchandise which was not delivered, delivered short or
delivered directly to the consignee was designated for Customs
examination and the in-bond carrier cannot show that the merchandise
was entered and duties, fees, taxes and charges paid thereon, the claim
for liquidated damages may be canceled upon payment of an amount equal
to the duties, fees, taxes and charges that would have been due on the
merchandise had entry been properly made plus an amount between $3,000
and $25,000 depending on the presence of aggravating or mitigating
factors. In no case should the amount upon which the claim may be
canceled be lower than any chargeable costs which are incident to such
Customs
[[Page 14795]]
examination. Conversely, the amount upon which the claim may be
canceled can never exceed the value of the claim for liquidated
damages.
9. If the in-bond carrier has a history of not delivering,
delivering short or delivering directly to the consignee, or
particularly aggravating circumstances exist with regard to a claim,
the Fines, Penalties and Forfeitures Officer may cancel the claim for
liquidated damages upon payment of a higher amount than that authorized
by these guidelines; however, the advice of Headquarters, Office of
Regulations and Rulings, Penalties Branch must be sought to determine
appropriate mitigation.
10. Theft of in-bond merchandise. In-bond merchandise which is
stolen from the carrier prior to having been delivered to Customs at
the port of destination or exportation will be treated as having been
not been delivered. The carrier will be liable for liquidated damages
and mitigation will occur in accordance with these guidelines. It
should also be noted that penalties under 19 U.S.C. 1595a(b) for
violation of 19 USC 1448 or 1499 (as well as criminal sanctions under
18 U.S.C. 549) may also be assessed against the individuals who steal
the merchandise from the bonded carrier. Claims assessed for theft of
merchandise in those instances will be administered in accordance with
guidelines articulated in Section V.B.10. above.
D. Mitigating and Aggravating Factors
1. Mitigating Factors
a. Carrier inexperienced in the handling of in-bond cargo.
b. Carrier has a general good performance and low error rate in the
handling of in-bond cargo.
c. Carrier demonstrates remedial action has been taken to prevent
future claims.
2. Aggravating Factors
a. Carrier refuses to cooperate with Customs or acts to impede
Customs activity with regard to the case.
b. Carrier has a rising error rate which is indicative of
deteriorating performance in the delivery of in-bond cargo.
E. Restricted or Prohibited Merchandise
If Customs has reason to believe that the merchandise which was not
delivered, delivered short or delivered directly to the consignee may
have been restricted or prohibited from entry, that will be considered
an extraordinary aggravating factor and will result in either no
mitigation or mitigation at the high end of the mitigation range.
VII. Guidelines for Cancellation of Claims Arising From the Failure
of a Centralized Examination Station (CES) Operator To Deliver
Merchandise To or Retain Merchandise at the CES (19 CFR 151.15, 19
CFR 113.63)
A. Assessment
Merchandise not delivered to or retained at a Centralized
Examination Station (CES) by the CES operator will be the subject of a
claim for liquidated damages for violation of the provisions of 19 CFR
151.15(b)(3) and 19 CFR 113.63(b)(2) equal to the value of the
merchandise or three times the value of the merchandise if it is
restricted or prohibited or is alcoholic beverages.
B. Mitigation of Claims Arising for Failure To Deliver Merchandise to
the CES or Removal or Delivery of Merchandise From the CES Without
Authorization
1. If the CES operator can show that the violation occurred solely
as a result of Customs error, the claim for liquidated damages should
be canceled without payment.
2. If the CES operator can show that the merchandise was never
received or landed, the claim for liquidated damages should be canceled
without payment.
3. If the merchandise which was not delivered to the CES or removed
or delivered from the CES without authorization could have been the
subject of an informal entry, the claim for liquidated damages may be
canceled upon payment of an amount equal to the duties, fees, taxes and
charges that would have been due on the merchandise had entry been
properly made plus an amount between $100 and $500, depending on the
presence of aggravating or mitigating factors.
4. If the CES operator comes forward and discloses the violation to
Customs prior to Customs discovery of the violation, the claim for
liquidated damages may be canceled upon payment of an amount equal to
the duties, fees, taxes and charges that would have been due on the
merchandise had entry been properly made, plus $50.
5. By its very nature, merchandise not delivered to a CES or
removed or delivered from a CES without authorization is designated for
Customs examination. If the CES operator can show that the merchandise
was entered and duties, fees, taxes and charges paid thereon, the claim
for liquidated damages may be canceled upon payment of an amount
between $2,500 and $20,000 depending on the presence of aggravating or
mitigating factors. In no case shall the amount upon which the claim
may be canceled be lower than any chargeable costs which are incident
to such examination. Conversely, the amount upon which the claim may be
canceled can never exceed the value of the claim for liquidated
damages.
6. If the merchandise was not delivered to a CES or was removed or
delivered from a CES without authorization, and the CES operator cannot
show that the merchandise was entered and duties, fees, taxes and
charges paid thereon, the claim for liquidated damages may be canceled
upon payment of an amount equal to the duties, fees, taxes and charges
that would have been due on the merchandise had entry been properly
made plus an amount between $3,000 and $25,000 depending on the
presence of aggravating or mitigating factors. In no case should the
amount upon which the claim may be canceled be lower than any
chargeable costs which are incident to such Customs examination.
Conversely, the amount upon which the claim may be canceled can never
exceed the value of the claim for liquidated damages.
7. If the CES operator has a history of receipting for merchandise
which has not been delivered to the CES or allowing merchandise to be
removed or delivered from the CES without authorization, or
particularly aggravating circumstances exist with regard to a claim,
the Fines, Penalties and Forfeitures Officer may cancel the claim for
liquidated damages upon payment of a higher amount than that authorized
by these guidelines; however, the advice of Headquarters, Office of
Regulations and Rulings, Penalties Branch must be sought to determine
appropriate mitigation.
8. Theft of bonded merchandise. Merchandise which is stolen from
the CES shall be treated as having been removed without authorization.
The CES operator will be liable for liquidated damages and mitigation
will occur in accordance with these guidelines. It should also be noted
that penalties under 19 USC 1595a(b) for violation of 19 USC 1448 or
1499 (as well as criminal sanctions under 18 U.S.C. 549) may also be
assessed against the individuals who steal the merchandise from a CES.
Claims for theft of merchandise in those instances will be administered
in accordance with guidelines articulated in Section V.B.10. above.
C. Mitigating and Aggravating Factors
1. Mitigating Factors
[[Page 14796]]
a. CES operator is inexperienced in the handling of cargo.
b. CES operator has a general good performance and low error rate
in the handling of cargo.
c. CES operator demonstrates remedial action has been taken to
prevent future claims.
2. Aggravating Factors
a. CES operator refuses to cooperate with Customs or acts to impede
Customs activity with regard to the case.
b. CES operator has a rising error rate which is indicative of
deteriorating performance in the handling and safekeeping of cargo.
D. Restricted or Prohibited Merchandise
If Customs has reason to believe that the merchandise which was not
delivered to a CES or was removed from the CES without authorization
may have been restricted or prohibited from entry, that will be
considered an extraordinary aggravating factor and will result in
either no mitigation or mitigation at the high end of the mitigation
range.
E. Failure To Maintain Records as Required by Regulation
1. If a CES operator fails to maintain records as required by
Customs, claims for liquidated damages not involving merchandise for
violation of 19 CFR 113.63(a)(3) and 19 CFR 118.4 will result.
2. If the breach resulted from clerical error, the claim may be
canceled without payment.
3. If the breach resulted from negligence, the claim may be
canceled upon payment of an amount between $100 and $250 per default,
depending on the presence of aggravating or mitigating factors.
4. If the breach was intentional, no relief shall be granted.
VIII. Guidelines for Cancellation of Claims Arising From the
Removal of Merchandise Without Authorization From a Container
Freight Station (CFS) (19 CFR 113.63(b))
A. Assessment
Merchandise not retained at a Container Freight Station (CFS) by
the CFS operator shall be the subject of a claim for liquidated damages
for violation of the provisions of 19 CFR 113.63(b)(2) equal to the
value of the merchandise or three times the value of the merchandise if
it is restricted or prohibited or is alcoholic beverages.
B. Mitigation of Claims Arising for Removal or Delivery of Merchandise
From the CFS Without Authorization
1. If the CFS operator can show that the violation occurred solely
as a result of Customs error, the claim for liquidated damages should
be canceled without payment.
2. If the CFS operator can show that the merchandise was never
received or landed, the claim for liquidated damages should be canceled
without payment.
3. If the merchandise which was removed or delivered from the CFS
without authorization could have been the subject of an informal entry,
the claim for liquidated damages may be canceled upon payment of an
amount equal to the duties, fees, taxes and charges that would have
been due on the merchandise had entry been properly made plus an amount
between $100 and $500, depending on the presence of aggravating or
mitigating factors.
4. If the CFS operator comes forward and discloses the violation to
Customs prior to discovery of the violation by Customs, the claim for
liquidated damages may be canceled upon payment of an amount equal to
the duties, fees, taxes and charges that would have been due on the
merchandise had entry been properly made, plus $50.
5. If the merchandise which was removed or delivered from the CFS
without authorization was not designated for Customs examination and
the CFS operator can show that the merchandise was entered and duties,
fees, taxes and charges paid thereon, the claim for liquidated damages
may be canceled upon payment of an amount between $250 and $2,000
depending on the presence of aggravating or mitigating factors.
6. If the merchandise which was removed or delivered from the CFS
without authorization was not designated for Customs examination and
the CFS operator cannot show that the merchandise was entered and
duties, fees, taxes and charges paid thereon, the claim for liquidated
damages may be canceled upon payment of an amount equal to the duties,
fees, taxes and charges that would have been due on the merchandise had
entry been properly made plus an amount between $300 and $2,500
depending on the presence of aggravating or mitigating factors.
7. If the merchandise removed or delivered from a CFS without
authorization was designated for Customs examination and the CFS
operator can show that the merchandise was entered and duties, fees,
taxes and charges paid thereon, the claim for liquidated damages may be
canceled upon payment of an amount between $2,500 and $20,000 depending
on the presence of aggravating or mitigating factors. In no case should
the amount upon which the claim may be canceled be lower than any
chargeable costs which are incident to such examination. Conversely,
the amount upon which the claim may be canceled can never exceed the
value of the claim for liquidated damages.
8. If the merchandise which was removed or delivered from a CFS
without authorization and was designated for Customs examination and
the CFS operator cannot show that the merchandise was entered and
duties, fees, taxes and charges paid thereon, the claim for liquidated
damages may be canceled upon payment of an amount equal to the duties,
fees, taxes and charges that would have been due on the merchandise had
entry been properly made plus an amount between $3,000 and $25,000
depending on the presence of aggravating or mitigating factors. In no
case should the amount upon which the claim may be canceled be lower
than any chargeable costs which are incident to such Customs
examination. Conversely, the amount upon which the claim may be
canceled can never exceed the value of the claim for liquidated
damages.
9. If the CFS operator has a history of receipting for merchandise
which has been removed or delivered from the CFS without authorization
or allowing merchandise to be removed from the CFS without
authorization, or particularly aggravating circumstances exist with
regard to a claim, the Fines, Penalties and Forfeitures Officer may
cancel the claim for liquidated damages upon payment of a higher amount
than that authorized by these guidelines; however, the advice of
Headquarters, Office of Regulations and Rulings, Penalties Branch must
be sought to determine appropriate mitigation.
10. Theft of merchandise from the CFS. Merchandise which is stolen
from the CFS shall be treated as having been removed without
authorization. The CFS operator will be liable for liquidated damages
and mitigation will occur in accordance with these guidelines. It
should also be noted that penalties under 19 USC 1595a(b) for violation
of 19 USC 1448 or 1499 (as well as criminal sanctions under 18 U.S.C.
549) may also be assessed against the individuals who steal the
merchandise from a CFS. Claims for theft of merchandise in those
instances will be administered in accordance with guidelines
articulated in Section V.B.10. above.
[[Page 14797]]
C. Mitigating and Aggravating Factors
1. Mitigating Factors
a. CFS operator is inexperienced in the handling of cargo.
b. CFS operator has a general good performance and a low error rate
in the handling of cargo.
c. CFS operator demonstrates remedial action has been taken to
prevent future claims.
2. Aggravating Factors
a. CFS operator refuses to cooperate with Customs or acts to impede
Customs activity with regard to the case.
b. CFS operator has a rising error rate which is indicative of
deteriorating performance in the handling and safekeeping of cargo.
D. Restricted or Prohibited Merchandise
If Customs has reason to believe that the merchandise which was
removed from the CFS without authorization may have been restricted or
prohibited from entry, that will be considered an extraordinary
aggravating factor and will result in either no mitigation or
mitigation at the high end of the mitigation range.
IX. Guidelines for Cancellation of Claims Arising From the Failure
To Hold Merchandise at the Place of Examination (19 CFR 113.62(f))
A. Assessment
The importer of record (or Customs broker if the broker is acting
as importer of record) may seek and obtain permission from Customs to
have merchandise examined at a place other than at a wharf or other
place in the charge of a Customs officer. The importer obligates the
provisions of its basic importation bond guaranteeing to deliver the
merchandise to the place of examination and hold it there until
examination occurs. If merchandise which is to be held at the place of
examination or delivered to the place of examination as obligated by
the importer of record under the terms and conditions of the basic
importation bond is not so held or delivered, a claim for liquidated
damages arises for violation of the provisions of 19 CFR 113.62(f)
equal to the value of the merchandise or three times the value of the
merchandise if it is restricted or prohibited or is alcoholic
beverages.
B. Mitigation of Claims Arising for Failure To Hold Merchandise at or
Deliver Merchandise to the Place of Examination Pursuant to the
Provisions of the Basic Importation Bond
1. If the importer of record can show that the violation occurred
solely as a result of Customs error, the claim for liquidated damages
should be canceled without payment.
2. If the importer of record can show that the merchandise was
never received or landed, the claim for liquidated damages should be
canceled without payment.
3. If the merchandise which was not held at or delivered to the
place of examination could have been the subject of an informal entry,
the claim for liquidated damages may be canceled upon payment of an
amount equal to the duties, fees, taxes and charges that would have
been due on the merchandise had entry been properly made plus an amount
between $100 and $500, depending on the presence of aggravating or
mitigating factors.
4. By its very nature, merchandise not held at or delivered to the
place of examination is considered to be designated for Customs
examination. If the importer of record can show that the merchandise
was entered and duties, fees, taxes and charges paid thereon, the claim
for liquidated damages may be canceled upon payment of an amount
between $2,500 and $20,000 depending on the presence of aggravating or
mitigating factors. In no case should the amount upon which the claim
may be canceled be lower than any chargeable costs which are incident
to such examination. Conversely, the amount upon which the claim may be
canceled can never exceed the value of the claim for liquidated
damages.
5. If the merchandise was not held at or delivered to the place of
examination and the importer of record cannot show that the merchandise
was entered and duties, fees, taxes and charges paid thereon, the claim
for liquidated damages may be canceled upon payment of an amount equal
to the duties, fees, taxes and charges that would have been due on the
merchandise had entry been properly made plus an amount between $3,000
and $25,000 depending on the presence of aggravating or mitigating
factors. In no case should the amount upon which the claim may be
canceled be lower than any chargeable costs which are incident to such
Customs examination. Conversely, the amount upon which the claim may be
canceled can never exceed the value of the claim for liquidated
damages.
6. If the importer of record has a history of not holding
merchandise at or not delivering merchandise to the place of
examination, or particularly aggravating circumstances exist with
regard to a claim, the Fines, Penalties and Forfeitures Officer may
cancel the claim for liquidated damages upon payment of a higher amount
than that authorized by these guidelines; however, the advice of
Headquarters, Office of Regulations and Rulings, Penalties Branch will
be sought to determine appropriate mitigation.
7. Theft of merchandise from the place of examination or while
being delivered to the place of examination. Merchandise which is
stolen from the custody of the importer of record at or on its way to
the place of examination will be treated as having been removed without
authorization. The importer of record will be liable for liquidated
damages and mitigation will occur in accordance with these guidelines.
It should also be noted that penalties under 19 USC 1595a(b) for
violation of 19 USC 1448 or 1499 (as well as criminal sanctions under
18 U.S.C. 549) may also be assessed against the individuals who steal
the merchandise from the importer of record. Claims for theft of
merchandise in those instances will be administered in accordance with
guidelines articulated in Section V.B.10. above.
C. Mitigating and Aggravating Factors
1. Mitigating Factors
a. The importer of record is inexperienced in the handling of
cargo.
b. The importer of record has a general good performance and a low
error rate in the delivery and safekeeping of cargo.
c. The importer of record demonstrates remedial action has been
taken to prevent future claims.
2. Aggravating Factors
a. The importer of record refuses to cooperate with Customs or acts
to impede Customs activity with regard to the case.
b. The importer of record has a rising error rate which is
indicative of deteriorating performance in the delivery and safekeeping
of cargo.
D. Restricted or Prohibited Merchandise
If Customs has reason to believe that the merchandise which was not
held at the place of examination or was not delivered to the place of
examination may have been restricted or prohibited from entry, that
will be considered an extraordinary aggravating factor and will result
in either no mitigation or mitigation at the high end of the mitigation
range.
E. Failure to Keep Customs Seal or Cording Intact
The importer of record also agrees to keep any Customs seals or
cording intact until the merchandise is examined. For a violation which
involves the failure to keep any Customs seal or cording intact until
the
[[Page 14798]]
merchandise is examined, the claim will be canceled upon payment of an
amount between $100 and $500 if there is no evidence to indicate the
merchandise in the sealed or corded shipment was tampered with. If
there is evidence of tampering, the claim will be canceled upon payment
of an amount equal to the value of any missing merchandise. Tampering
with seals also may result in criminal sanctions under 18 U.S.C. 549.
[FR Doc. 99-7410 Filed 3-26-99; 8:45 am]
BILLING CODE 4820-02-P