On July 17, 2009, U.S. Customs and Border Protection ("CBP") published its Guidelines for the Assessment and Cancellation of Claims for Liquidated Damages for Failure to Comply with Importer Security Filing Requirements. (CBP Dec. 09-26).
In addition to liquidated damages, a carrier or ISF Importer may be issued a do not load (DNL) hold, the delay or denial of a vessel carrier's preliminary entry- permit/special license to unlade and/or the assessment of any applicable statutory penalty. CBP may also withhold the release or transfer of the cargo until CBP receives the required information and has had the opportunity to review the documentation. Liquidated damages may be assessed in the following circumstances:
Late Filing - If an ISF Importer submits a late ISF, CBP may assess a claim for liquidated damages in the amount of $5,000 per late ISF.
Inaccurate Filing - CBP may assess liquidated damages in the amount of $5000 per inaccurate ISF.
Updates - CBP may assess a claim for liquidated damages against the importer for the first inaccurate ISF update in the amount of $5000.
Withdrawals - CBP may assess a claim for liquidated damages in the amount of $5000 if an ISF importer fails to withdraw an ISF.
Additional penalties under 19 U.S.C. § 1595a(b) may be assessed for serious or repetitive violations.
The Guidelines also discuss the cancellation of liquidated damages and mitigating and aggravating factors to consider. In the case of a first time violation, the liquidated damages claim may be cancelled upon payment of an amount between $1000 and $2000 depending on the presence of mitigating and aggravating factors. Subsequent violations may be cancelled upon payment of an amount not less than $2,500 if CBP determines that law enforcement goals were not compromised.
Mitigating factors include evidence of progress in the implementation of the ISF requirement during the flexible enforcement period (January 26, 2009 to January 26, 2010); small number of violations compared to the number of shipments for which ISFs were required; an ISF Importer which is a certified Tier 2 or Tier 3 C-TPAT member; demonstrated remedial action; ISF information was filed late because of vessel diversion due to factors outside of the ISF Importer's control; the presenting party acquired the information from another party in accordance with ordinary commercial practices and can demonstrate that it reasonably believed the information to be true and it was not reasonably able to verify the information.
Aggravating factors include lack of cooperation with CBP; evidence of smuggling or attempt to introduce merchandise contrary to law; multiple errors on the ISF; and rising error rate which is indicative of deteriorating performance in the transmission of ISF information.