Monday, November 12, 2012

Law & Order: CBP

It is not often that case at the Court of International Trade takes on the flavor of a courtroom drama. It does happen, such as in the case of international intrigue and an an importation gone wrong. Recently, the Court decided another case that has the possibility of being turned into the most boring legal thriller ever, which is a step up from the usual customs case.

By way of background, it is important to know that not everything that transits the United States actually enters the commerce of the nation or is subject to a customs entry. One exception to the normal consumption entry process is the entry for transportation and exportation. See 19 USC § 1553(a).  Under this process, merchandise arrives at a port in the United States and is transported under bond to another port for export. The bonded carrier has certain responsibilities to prove exportation and, if it can't, then it risks being responsible for the duties owed and possible penalties.

That was the situation in United States v. C. H. Robinson Company in which Customs and Border Protection asked the Court of International Trade to order Robinson, the bonded carrier, to pay duties owed on the goods involved plus interest and liquidated damages for the breach of the bond.


In the Court of International Trade, the people are represented by two separate yet equally important groups--Customs and Border Protection, which investigates importers, and the Department of Justice, which seeks to collect from them. These are their stories. Actual importers have to get their own lawyers.

["Dum, Dum:" Fade in from black. Lawyers are sitting around a big desk. One is holding a cold scotch in a short glass.]
Essentially, what happened is that Robinson appears to have properly received the goods in Los Angeles and transported them to Laredo for export. When the goods arrived in Laredo, where a licensed broker was ready to accept them for exportation to Mexico. The broker stamped in the T&E documents at Customs and Border Protection's unmonitored date stamp machine. The broker also noted in its own log book that it received the T&E documents. However, the log does not show a date of exportation.

[Cue the ominous music.]

Robinson, for its part, had some documents to show proof of export to Mexico. Specifically, it produced the pedimentos corresponding to the exportations from the U.S. and the importations to Mexico. According to Robinson, it discharged its obligations to Customs and Border Protection when it delivered the goods and T&E documents to the broker in Laredo. That, according to Robinson, should be sufficient to end this case.

[Shot of Robinson's lawyers high-fiving.]

Unfortunately, that is not the last act in this courtroom drama. The government called an expert witness to discuss the actual contents of the pedimentos.

[More ominous music.]

It turns out that almost nothing in the pedimentos could be authenticated. The transaction numbers, tax identification numbers, and broker identifiers were all wrong. According to the expert, these documents could not have been successfully used to enter goods through the four checkpoints maintained by Mexico's customs authorities. As a result, the Court of International Trade concluded that it was more likely than not that the goods were not exported to Mexico and likely never left the United States.

This conclusion resulted in a finding that Robinson had failed to satisfy its regulatory obligation to the Port of Laredo. According to the Court, that obligation included more than simply certifying delivery of the goods to the broker. Robinson, according to the Court had to also account for the missing merchandise (i.e., the merchandise that entered at Los Angeles, was moved to Laredo, and apparently not exported to Mexico). The Court noted that Robinson had alternative measures to avoid liability such as checking with the carrier in Laredo to confirm exportation, using an immediate transportation process, or entering the goods for consumption. Having chosen to accept the responsibility of acting as the bonded carrier, it also had the associated risks. The court, therefore, ordered that Robinson pay the duties owed on the "missing" goods as well as liquidated damages and interest.

[Shot of banging gavel and government lawyers patting each other on the back.]

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