US Customs and Border Protection (“CBP”) recently released some enforcement statistics for FY2012 that I thought you might find to be of interest.
The statistics cover two of CBP’s primary enforcement priorities: (1) antidumping & countervailing duties; and (2) textiles & apparel.
According to the ADD/CVD enforcement statistics:
• CBP initiated over 50 commercial penalty cases against importers of ADD/CVD merchandise in FY2012; these 50 cases involved penalty assessments of $24.3 million;
• CBP completed over 50 audits of importers of ADD/CVD merchandise and identified discrepancies valued at approximately $41 million (and so far collected over $13 million); and
• CBP and ICE/HSI seized 57 shipments with a domestic value of $13.7 million; and.
According to the textile/apparel enforcement statistics:
• CBP initiated 21 commercial penalty cases against textile/apparel importers in FY2012; these 21 cases involved penalty assessments totaling $23.4 million;
• CBP initiated 39 audits of textile/apparel importers and identified $1.36 million in unpaid duties;
• CBP conducted laboratory analysis of 1,014 textile/apparel shipments and found that 572, or 56.4%, were discrepant (i.e., were not what they represented to be, which usually leads to tariff classification and/or preference claim issues); and
• CBP Textile Product Verification Teams visited 174 factories in 9 countries and found evidence of illegal transshipment in 26% of the cases and discrepancies with 39% of the preference claims that were made (which also leads to tariff classification and/or preference claim issues).
The statistics can be found here.
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These statistics demonstrate that CBP is actively pursuing commercial penalties against importers, particularly in areas involving a potential loss of revenue to the government. They also indicate that compliance in these areas is pretty low, so further enforcement can be expected.
Given how difficult in can be to determine whether an article falls within the scope of an antidumping or countervailing duty order (e.g., see the scope of the ADD order on aluminum extrusions), or in classifying or validating preference claims for textiles and/or apparel, it is critical that importers of these articles tailor their internal controls to their specific risk areas. Doing so will help avoid issues like those involved above, or, if an issue does occur, help demonstrate that, notwithstanding the issue, the company exercised reasonable care.
We hope that this is helpful. If you have any questions, or if you would like to discuss what additional steps you can take to help improve your internal controls (and help ensure you do not show up in these statistics in the future), please let us know.