WASHINGTON, DC: A new ruling by a U.S. Federal Appeals Court makes import managers, compliance officers and business owners personally liable for prosecution by U.S. Customs and Border Protection (CPB) for "fraudulently or negligently providing information on company imports".
According to trade advisory law firm STR, the decision distinguishes between those who "enter" goods (e.g., the importer of record) and those who "introduce" goods into U.S. commerce – thereby creating a wide-ranging new category of individuals subject to penalties for violations.
STR says statute 19 USC 1592(a)(1) "prohibits any person from fraudulently or negligently entering, introducing or attempting to enter or introduce merchandise into U.S. commerce by means of any document or electronically transmitted data or information, written or oral statement, or act that is material and false or any material omission".
Citing the case of the U.S. versus Trek Leather Inc., STR says the court decided the company's president Harish Shadadpuri was personally responsible for a false filing despite his claim he could not be held liable because he wasn't the importer of record.
The court said the relevant statute now applies to any person, regardless of whether or not they are an importer of record, commenting: "There is simply no basis for giving an artificially limited meaning to this most encompassing of terms, which plainly covers a human being."
As a result of its decision, the court found Shadadpuri grossly negligent because he transferred ownership of the goods while they were in transit to a company he chose to be the importer of record and then gave the Customs broker information that understated the value of the shipment.
STR says the new ruling should be of immediate concern to anyone directly involved in the import process for their companies: "It provides another reason to quickly correct entry errors when they are discovered and a compelling motive to engage in prospective compliance rather than reactive compliance."