TT Talk - US court rules on customs misdeclarations
We are grateful to Peter Quinter of the law firm of Becker & Poliakoff for drawing our attention to the decision of the US court of international trade in the case of United States v Pan Pacific Textile Group Inc.
Pan Pacific was approached by a Mr Juang, who was a freight forwarder but not a customs broker. He offered to act as the importer of record and to file entries on the company's behalf, in dealing with Pan Pacific's importations. Having received a power of attorney from Pan Pacific, Juang then filed entries with customs in his own company's name. In doing so he not only misdescribed the cargo to circumvent quota restrictions but also declared lower values in order to pay less duty. Pan Pacific never instructed Juang to make these unlawful statements to customs, but was nevertheless prosecuted by the authorities. Finding Pan Pacific liable, the court declared that it was irrelevant whether or not Pan Pacific had authorised the unlawful conduct, it was a matter of public policy that liability for unpaid duties be extended to innocent parties who were in any event 'traditionally liable' for such payments. The court also noted that if it allowed importers to shelter themselves from the illegal actions of agents or brokers, it would create an incentive for bad behaviour. "Allowing such protection for importers would discourage care on their part in selecting their agents, and would thus provide more opportunity for dishonest middlemen".
You may also be interested in:
Learn more about how port authorities and terminal operators are facing an increasing risk of insurance claims relating to storm damage.
Learn more about the risks of abandoned cargo as we reflect on the Beirut explosion of August 2021.
Kate Hollis, Senior Claims Executive at TT Club in Sydney, discusses the risks faced by licenced customs brokers and mitigation steps to take: