Court Refuses to Dismiss $42 Mil Recordkeeping Penalty
The U.S.
District Court for the Western District of Texas
issued an order on September 27, 2007 denying Ford
Motor Company's motion to dismiss a $42 million
recordkeeping lawsuit brought by U.S. Customs and
Border Protection ("CBP"). The lawsuit began when
Ford refused to answer an administrative summons by
CBP demanding documents relation to imports of
products from Mexico under a NAFTA Certificate of
Origin. Ford claimed that the documents sought by
CBP were not "entry records" and thus, Ford had no
obligation to keep those records. The records in
question all involved components used by the
Mexican exporter to manufacture the products
purchased by Ford.
The Court disagreed with Ford and claimed that the "(a)(1)(A) list"of entry records includes "NAFTA Certificate[s] of Origin and supporting records." It then held, as a matter of law, that the documents requested by CBP were "supporting records" to the NAFTA Certificates of Origin and therefore qualified as entry records.
The Court went on to reject Ford's arguments that it should not be responsible for documents that were both created and maintained solely by the exporter. Even though the Court noted that the CBP publication, NAFTA Focused Assessment Program Guidelines, states that an importer is not responsible to maintain supporting documentation that is certified by the exporter of the NAFTA Certificate of Origin, the Court stated that the publication does not have the force of law to contradict the (a)(1)(A) list recordkeeping requirements.
The Court's order will allow CBP to continue pursuing the $42 million recordkeeping penalty against Ford. More importantly, it may create judicial precedent that should cause NAFTA importers to greatly expand their recordkeeping programs.
The Court disagreed with Ford and claimed that the "(a)(1)(A) list"of entry records includes "NAFTA Certificate[s] of Origin and supporting records." It then held, as a matter of law, that the documents requested by CBP were "supporting records" to the NAFTA Certificates of Origin and therefore qualified as entry records.
The Court went on to reject Ford's arguments that it should not be responsible for documents that were both created and maintained solely by the exporter. Even though the Court noted that the CBP publication, NAFTA Focused Assessment Program Guidelines, states that an importer is not responsible to maintain supporting documentation that is certified by the exporter of the NAFTA Certificate of Origin, the Court stated that the publication does not have the force of law to contradict the (a)(1)(A) list recordkeeping requirements.
The Court's order will allow CBP to continue pursuing the $42 million recordkeeping penalty against Ford. More importantly, it may create judicial precedent that should cause NAFTA importers to greatly expand their recordkeeping programs.