13.15 Penalties for Fraud, Gross Negligence, or Negligence - Without regard to whether the United States is or may be deprived of all or a portion of any lawful duty thereby, no person, by fraud, gross negligence, or negligence-(a) May enter, introduce, or attempt to enter or introduce, any merchandise into the commerce of the United States by means of - (1) Any document or electronically transmitted data or information, written or oral statement, or act which is material and false, or (2)
Any omissions which is material, or
(2) May aid or abet any other person to violate subparagraph (A) (19 U.S.C. §1592(a)). The maximum penalties for such violations range from the domestic value of the merchandise to 20 percent of the dutiable value, depending on whether fraud, gross negligence, or negligence is involved (19 U.S.C. §1592(c)). These are civil penalties. 19 U.S.C. §1592 is a civil penalty statute and thus penalties do not require a criminal conviction. The criminal provision that covers similar fraud is 18 U.S.C. §542, a felony statute. CBP procedures for handling these civil penalties are found in 19 CFR 162. Procedures for petitioning for relief from the penalties are found in Appendix B to 19 CFR 171. (a) Application to Zones – While 19 CFR 1592 is a CBP law, it is not applicable to merchandise in zone status, according to 19 U.S.C. §81c(a). However, it is applicable to merchandise and articles in a zone which do not have zone status, such as prohibited articles, constructively transferred merchandise, and other merchandise and articles described in Sections 2.6 and 5.2 FTZM. Furthermore, in respect to merchandise and articles in zone status, 19 U.S.C. §1592 is applicable to transactions, practices, documentation, acts, and omissions which occur or occurred in the zone, even while the merchandise was in zone status, if it is later transferred to the Customs territory. 19 U.S.C. §1592 penalties connected with a zone would usually involve a User, rather than an Operator , unless the Operator is also the importer or has aided or abetted a Section 1592 violation by an importer or other party. (b) Procedural Protections - Persons accused of violations of Section 1592 have some important procedural safeguards to assure fairness in administration of penalties by CBP: (1) CBP must provide a pre-penalty notice to the person concerned, and time for a response, as set forth in 19 U.S.C. §1592(b)(1), 19 CFR 162.77 and 19 CFR 162.78; (2) After considering any presentations made in response to the pre-penalty notice, CBP must determine whether any violation has occurred and promptly notify the person concerned, in writing, of its final determination as provided in 19 U.S.C. §1592(b)(2), 19 CFR 162.79, and 19 CFR 171, Appendix B.
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