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Importer Security Filing Update: Liquidated Damages Guidelines Published

U.S Customs and Border Protection (CBP) recently published guidelines for the assessment of liquidated damages under the Importer Security Filing (ISF) program. Liquidated damages will be assessed for failure to file ISF in accordance with the established timelines, filing inaccurate or invalid data, or failing to withdrawal ISF.

Failure to file – Liquidated damages cannot be assessed for a failure to file if no bond is in place.
Late filing – $5,000 per late ISF
Inaccurate filing – $5,000 per inaccurate ISF
Updates – $5,000 per inaccurate ISF update
Withdrawals – $5,000

First Violation
If a violation occurs as a result of a late or inaccurate ISF or an inaccurate update, liquidated damages may be cancelled upon payment of an amount between $1,000 and $2,000, depending on the presence of mitigating or aggravating factors (listed below).

Subsequent Violations
If an ISF Importer incurs a subsequent liquidated damages claim, the claim may be cancelled upon payment of an amount not less than $2,500 if CBP determines that law enforcement goals were not compromised by the violation.

No relief will be granted if CBP determines that law enforcement goals were compromised by the violation.

CBP will consider all available information in a petition, taking into account any mitigating, aggravating, and extraordinary factors in determining the final assessed claim for liquidated damages or penalties.

Mitigating Factors
CBP specifically notes that this is not an exhaustive list.

  • Evidence of progress in the implementation of the ISF requirement during the flexible enforcement period (i.e., January 26, 2009 through January 26, 2010).
  • Small number of violations compared to the number of shipments for which ISFs were required.
  • An ISF Importer which is certified Tier 2 or Tier 3 C-TPAT member may receive additional mitigation of up to 50% of the normal mitigation amount, depending upon tier of C-TPAT participation.
  • Demonstrated remedial action has been taken to prevent future violations.
  • ISF information was filed late because of vessel diversion due to factors outside the ISF Importer’s control (e.g., due to weather).
  • Regarding an inaccurate filing, 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. This is an extraordinary mitigating factor that may warrant cancellation of the claim without payment.

Aggravating Factors

  • Lack of cooperation with CBP or CBP activity is impeded with regard to the case.
  • Evidence of smuggling or attempt to introduce or introduction of merchandise contrary to law. This may be considered an extraordinary aggravating factor.
  • Multiple errors on ISF.
  • There is a rising error rate which is indicative of deteriorating performance in the transmission of ISF information.

Failure to File

  • If goods for which an ISF has not been filed arrive in the United States, CBP shall withhold the release or transfer of the cargo until CBP receives the required ISF information and has had the opportunity to review the documentation and conduct any necessary examination.
  • CBP also reserves the right to limit the permit to unlade so as to not permit unlading of merchandise for which no ISF has been filed. If such cargo is unladen it may be subject to seizure by CBP.

The ISF requirement became law January 26, 2009 and mandatory for all ocean cargo, with the exception of bulk, entering the United States. CBP provided importers a grace period before enforcement begins in order to allow importers time to become familiar with the requirements and establish the operating procedures necessary to ensure timely and accurate submission. That period, referred to as “flexible enforcement” ends on January 26, 2010.

All importers are HIGHLY ENCOURAGED to begin complying with ISF immediately. Do not assume that ISF is being performed on your shipments. It is not the responsibility of your customs broker or logistics provider unless you have provided them specific instructions to begin filing on your behalf. For more information, please contact your CVI customer service representative or Venetia Huffman at vhuffman@cvinternational.com.

Click here for more information about ISF>>