we're operating on there's no basis to file a complaint well there's a noticeable violation of section fifty ninety two and if you look at the legislative history of section five ninety two of violation of section five ninety two involves a material false statement in the entry or introduction and have various how do you know it has various penalty levels yes which are entirely up to the court's discretion and let me add in this not going to be required to pay a penalty for its own negligence well if you look at g one twenty one i respectfully disagree they contended of the exercise reasonable care and on top of that contended that there was a reasonable disagreement with regard to with regard to statute provided a process that customs was to comply with the agency and the agency did comply with the statutes and one of the farming job agency comply by statute the agency charged gross negligence but then  but we there is no administrative exhaustion requirement under section five ninety two it requires customs to take certain actions which it did here but there's nothing that precludes the united states from raising the different level of culpability and in fact is that as a factual matter latex always knew that its negligence was on the table it was negligence was an issue with respect to section fifty ninety two d and under this for that yes there is a difference and because the penalty levels are less for negligence than they are for gross negligence or at least a maximum penalty leveled however that brings  section fifty ninety two the which says that all issues are tried to no vote and in the legislative history in the senate report the committee said that this provision would change existing lot by permitting t designed to allow the courts to  our new claim constructions that never occurred below in a patent case even if we're relying certain things to now with nothing in the statute prevents the department of justice from raising them from filing a complaint well well if you look at section fifty ninety two the whole ones customs that alleged violations authority with respect to litigating over that violation turns to the department of justice and the trial court has jurisdiction under overturn for no not at all because ford is very very different from this case for involve the case where there was an issue that was never times considered in the proceedings because we have to say we're wrong because justice was allowed to charge whatever penalty it winds higher or lower these are all ford first of all the fact the four are very very different from the fact that this case of four can live there needs to be an issue considered in the proceeding before customs and that's exactly what we have here with respect to a lesser included offense that would not  issue that was not considered was the amount of duties of the final inconclusive and it was the defendant that sought an offset of its penalty based on based on a different  there had already been be charged under the statute doesn't say that justice can come up with a new charge of the statute it says that it says correct it says in any proceeding commenced by the united states or the recovery of any monetary penalty claimed under this section well once it was the penalty makes it to the court of international trade the claim is by the united states and it's raised by the department of justice so the united states can essentially change it whatever it want and justice can come and say you don't like that and i'm the united states so i can charge anything i want i mean you for all the whole administrative procedures act and everything under and into a tizzy  and i think has been joined in the briefings whether when you get to the enforcement proceeding which brings in the department of justice after the administrative procedures are over to the administrative process if in fact the department of justice believes that the charge was too dramatic were to extreme but skipping can go all of the steps importers generally are required to follow what's called share compliance because of the millions upon millions of entries made every year customs really have to rely on importers to be truthful and accurate introduction of of merchandise through grossly negligent negligence or fraudulent materials or statements so how can you say that they have conceded negligence but not conceding a gross negligence prove this element and see simple negligence with one of the shifting of the group yes generally we would and then that brings up the what we see is the absurd result of the trial court's opinion which was in order for the government to obtain a recovery under section fifty ninety two d which is the recovery of lost earnings there has to be adjudged a finding of at least negligence there has to be a violation of section fifteen ninety two a so what happened here was the trial court said united states you may not recover a penalty against one tech but ahead and pay the last duty because the government didn't seek to impose a penalty on us except for gross negligence and we know they can't prove that so we'll just agreed a lot of duties and we'll move on but then the justice department sweeps in and says well you know you can't have that kind of summit because we've decided that you should get a penalty on based on your agreement the pain of those duties that that is and that sort of a misunderstanding of how that stuff will work and  and it's middle letter but which was not in our view a petition so it had the opportunity to avail sort of that permissive remedy and it did not do so but again now that that was on eighteen is that they get a fresh look at the penalty the culpability level everything by by customs and at that point the the agency could have mitigated the penalty or the culpability level to gross negligence everything was still on the table let's hear from the other side i think you do want to start with a few comments about things that have been said by the department of justice here and it's important to remember when he's saying that there's nothing in the statute that provides for a visit from claiming a new level of culpability he's ignoring the requirements of twenty three sixty eight which is an exhaustive requirement granted that's not in fifty ninety two but it clearly applies as numerous courts have said is a court below felt the court said obviously that it has grounds in some instances from waiving the exhaustion requirement it said it didn't believe those were appropriate here and it said that justice waived all of those so in essence this case does present the issue where justice was required and that customers are quire to exhaust administrative remedies and the penalty that was  court had to be consistent with that notion of exhaustion so i think that's our best argument that they really have is that in order for you to pay the duties there have to be at least a minimum level of negligence correct that is that is be so they just because i mean customs could bring a penalty could decide to bring negligence case on it our duty to cover a cape on its own and not accept the penalty funny one about the time right right right in here what's the difference between negligence under fifty ninety two b n negligence and fifty nine there's probably not a difference in terms of those there is a there is there is however a difference in the context of the case when that is being done one realizes what happened here and this goes back to the earlier point of why we settled which justice is now trying to say is a concession that we owe some kind of a penalty in fact we disagreed throughout that we had been grossly negligent we wanted to bring that issue and in essence the issue as to whether it could change the level of culpability to this court so in order to not have a trial in order to avoid the expense of a trial on the expense of this being for my client visually hide we went ahead to settle to take that issue off the table for the sole purpose of getting the issue here as to whether justice could alter after the customs proceedings the  culpability important to understand why why in many instances that would be that would be prejudicial to and why it could have been prejudicial here when when justice alleges gross and if that is correct then the case is over on that level if that's all the custom has alleged then all you were required to say under that point to refute it is i didn't i didn't i didn't have the state of mind and look back at the facts here this was a this was a classification fight which is going up and down and custom going in front of the federal circuit once as well in terms of taking the gas meter swivels which we had said were iron parts not elsewhere specified or indicated and which they had said were threaded tubes in which other people had said were gas meter part and it was an issue in essence of some sort of a disagreement about what was going on but hardly a case for saying that we had simply just not care  about what the appropriate classification was and had been what had wanton disregard and so when you go to the critical letter which which which doesn't use the words reasonable carries the way the court said but instead  and this was this was a letter that was sent to customs twenty six or seven days before they filed suit and it was an offer of settlement to more or less in the issues and in arguing for why for why that should be done it  look none of the courts that looked in any of this it went back and forth and said that we had at acted with wanton disregard we had a reasonable disagreement over classification and that was their position was was in essence that they didn't have the state of mind  it does state in passing but not in any sense it can be talked about really bringing its argument that that that that in fact let me let me find this  we've said that that in with there's a difference in issue over classification that's hardly gross negligence ardley negligence much less gross negligence so they said that simply impacted but in all of this none of that was ever addressed by customs what they did was essentially they turn this over to the department of justice your point with justice got this and looked at it and said well this is not a case where we could prove negligence or gross negligence this is i mean it's a small part there is hard to figure out what classification is this is that this is going to be a tough one it remains possible i believe for them to go back to customs and say you could issue a penalty notice reissue a penalty notice on negligence at different graphical viewpoint and indeed the gross negligence we had notice of everything in front of them when we didn't have notice that they could go and we had notice that they were going to try to prove almost gross negligence we didn't have notice that we would wind up being a situation where we had to prove that we were not ne that shifting of the burden of proof is essential here and it causes a prejudice to the client kooks who believe that it addressed the issue before customs by saying that it didn't have the requisite state of mind customs officers and the department of justice obviously believed that didn't believe it could win that and so instead of going back and trying to fix that process it filed the suit as as the court has noted this is a simple matter rather than having to worry about whether the case twenty six twenty seven days after our letters which was the date on which our last waiver of the statue of limitations expired so there'd been there had been and there had been a number of of statue of limitations waivers in that so that the whole issue of what was going on which is in they will be telling you do that i thought i should think in a case like this that there were in essence twenty six days left and that is a short period of time but i think that's plenty of time to go back and into customs and to and rule eleven i mean it's got it's got to make some sort of decision within that if it comes to that period of time i did i scarcely believe that it comes to that determination the day before trial it makes that determination i think relatively early in that in that case i could be as as everybody i think understands is easily the prejudice to the importer is easily fixed by customs alleging all three alternate levels and we've cited cases where they've done that i nothing done that and there's never really seems to be have been a challenge to that so i don't you think you could conjure up an argument that there's some impropriety in doing that because you're not really putting on an order on notice as to what it is the actions being charged with no i think i think at that point i think at that point you have you have to feel as as a as an advocate looking at it that i know a centrally i'm going to have to argue all of these things in front of customs and i'll respond to that if they just charge fraud which which happens and you go in with one thing you know they charge negligence and you're going to i mean you're going to try to base your arguments with customs in a way that is of an efficient use of legal resources an efficient use of the important time and you're going to argue against what they charge if they charge all three then you'll understand that you have to do that so i think cases have said that they can that they can that they can allege those those alternate levels of  culpability and they certainly have done that and i'm unaware of any court that is challenge their ability to do that if they do that this problem this problem never arises here whereas by not doing it it puts somebody in a situation where they're going to make one argument and indeed even on the basis of that argument later go in and settle and pay the duties as we did here and then in essence in essence have had justice continue to argue that settlement is a concession and negligence  i think i think it is it is it's easily it's easily solved by easily solved by doing that it's also important to i think important to understand that the threat of the government's argument about the novo review in the legislative history throughout is as the court pointed out one that ultimately says that justice can go back in and charge both higher and lower levels depending upon what it likes that's the thrust of its argument it says so a number of times in the brief word said there need not be any symmetry between the charge and what we find in an effort to try to get around that it says ok it comes up with a lesser included offense notion which you try to import from criminal law the statute says that they recover the amount claim which i think is which i which i think is think is relatively clear that point nor is there anything nor is nor is there anything in there that that suggests that zat that  that charging one of these in essence gives complete notice to the other of all of those all those items  the other the other important thing to i think in terms of assessing this is to assess the impact upon the the statutory impact of shifting the burden of proof as each of these is set up  the court and the justice department wants to say in essence i have i have said that you misclassified the goods and that's all i need to say and everything else is is essentially at that culpability it's going against precisely what this court said in ford and what was said in an op tracks which was that in fact what we did know the review provision means is that we don't accord any deference to what customs found in the proceedings below it does not however permit us to open up the proceedings to any other theory of liability that could subsequently be determined or alleged by the department by the department of justice  what happens is that they morph into these cases because in this instance customs came in with a very large penalty and it looked at it it felt that it it could get gross negligence penalty those were rejected by customs for and i'm not i'm not i'm not clear why on the record doesn't disclose why those offers at that point were rejected and how we and how we got to that how we got to that situation  and some it seems to me that that ultimately the government's position that a lesser included offense can simply be recharged doesn't have a basis in the statute i don't believe it's consistent with the language that that is of this court's language in fort i believe it causes an unfairness to the importer who really doesn't know what he's arguing at that point and may not have had his arguments placed in front of the place in front of the administrative notice of the requirement that they have to prove reasonable care and no one aspect of of imposing such a rigid system on the agency is as we noted in our brief importers who don't respond to penalty notices maybe they weigh different defenses that they could have raised to customs back during the administrative process and we we certainly don't