Sunday, August 03, 2014

Trouble, With a Capital T&E

You should remember from the prior post on this case that the Court of International Trade held C.H. Robinson liable for duties on imported clothing from China that entered the U.S. bonded for transportation and exportation (“T&E”), but were never exported. That is a violation of the bond. C.H. Robinson was the bonded carrier responsible for delivering the merchandise to Laredo, but another carrier was going to accomplish the actual exportation to Mexico. It appears the goods made it to Laredo, but it is not clear what happened after that.

When U.S. Customs and Border Protection audited the T&E, C.H. Robinson produced the stamped Mexican pedimento entry documents as proof of the export. Unfortunately, Mexican Customs subsequently declared the pedimentos to be false. As a result, Customs hit C.H. Robinson with liquidated damages of $75,000, which it mitigated to about $57,000. Customs then went to court to collect that amount plus duties, taxes, and fees. The total amount was in excess of $100,000. The Court of International Trade found C.H. Robinson breached the bond and is, therefore, liable. This appeal resulted.

As background, keep in mind that when goods are moved via T&E, the bonded carrier may be liable for any shortages, failures to deliver, or irregular delivery. 19 CFR 18.8(a). In addition, the regulation allows Customs to collect duties, taxes, and fees related to “missing merchandise” from the bonded carrier. On appeal, C.H. Robinson’s point was that the goods are not “missing” because it made it to Laredo, the intended port of exportation.

But, that did not convince the Court of Appeals. While C.H. Robinson did show documents indicating delivery to Laredo, those documents were not conclusive proof of delivery. Customs can ask for additional evidence such as bills of lading or delivery receipts, which C.H. Robinson did not produce. Further, evidence that the merchandise was not exported (i.e., the false pedimentos) leads to the possibility that the goods remain somewhere in the U.S. If that’s true, the goods are “missing.”

Remember, C.H. Robinson was not supposed to export the goods. Its job was done when it delivered the clothing to Laredo, where another carrier was going to accomplish the exportation. On appeal, C.H. Robinson argued that it was not obligated to produce evidence of exportation because it was not responsible for exporting the goods. Neither the Court of International Trade nor the Court of Appeals for the Federal Circuit accepted that argument. The problem for C.H. Robinson is that it was the bonded carrier and once the goods went missing, there was a breach of the bond. According to the courts, that makes C.H. Robinson responsible.

Since no one could find the goods and there was no proof of exportation, the Court of Appeals affirmed the CIT’s determination that the government had proven by a preponderance of the evidence that the goods are missing. That was enough and C.H. Robinson remains on the hook.

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