1 19 U.S.C. § 1 592(d) r eads as f ollows: (d) Deprivation of lawful duties, taxes, or fees Notwithstanding section 1514 of this title, if the United States has been deprived of lawful duties, taxes, or fees as a result of a violation of subsection (a) of this section, the Customs Service shall require that such lawful duties, taxes, and fees be restore d, whether or not a monetary penalty is assessed. UNI TED STATE S, Plaintiff,

v. AEGIS SECURITY

INSURANCE COMPANY, Defend ant. SLIP OP. 05-138 UNITED STATES COURT OF I NTERNATIONAL

TRADE

Befor e: Jane A. R

estani, Chief Judge
Court No. 05-00276

OPINI ON [Defendant’s motion to dismiss duty collection suit because administrative proceedings are pending is denied.] Dated: October 24, 2005 Peter D. Keisler , Assistant Attorney Gene ral, David M. Cohen , Director, Patricia M. McCarthy , Assistant Director, Commercial Litiga tion Branch, CivilDivision, U.S. Department of Justice ( Mark T. Pittman ); Edward G reenwa ld , A tt or ne y, Burea

u of Customs

& Border Protection, of counsel, for the plaintiff. Sandler, Travis & Rosenberg and Glad & F erguson ( T. Randolph Ferguson ); Sandler, Travis & Rosenberg, PA ( Arthur K . Purcell ) for the defenda nt. Restani, Chief Judg e: This ma tter is be fore the court on defendant’s motion to dismiss as premature the government’s suit to collect duties allegedly

owed under 19 U.S.C. § 1592(d) (2000) 1Court No. 05-00276 Page 2

2 19 U.S.C. §1 592(a) r

eads as f ollows: (a) Prohibition (1) Ge neral rule Without regard to whether the United States is or may be deprived of all or a portion of any lawf

ul duty, tax, or fee thereby , no person, by fr

aud, gross negligenc e, or negligence – (A) may e

nter, introduce, or attempt to enter or introduce any merchandise into the commerce of the United States by means of – (i) any doc

ument or electronically

transmitted data or information, written or oral statement, or act which is material and fa lse, or (ii) any omission which is material, or (B) may aid or abet any

other person to violate subparagraph (A ). (2) Exception Cl er ic al er ro rs or mi st ak es of fa ct ar e n ot vi ol at io ns of pa ra gr ap h ( 1) un le ss th ey are part of a pattern of negligent conduct. The mere nonintentional repetition by an electronic sy stem of an initial cle

rical er ror does not consti

tute a pa ttern of neglig ent conduct. froma surety, Ae gis Security I nsurance Company

(“Aegis”), for a violation of 19 U.S.C. § 1592(a) (2000). 2 The court has jurisdict

ion pursua

nt to 28 U.S. C. § 1582(2 ) (2000)(suit to recover on a bond relating to the importation of merchandise). There is no dispute

that Aegis is the surety on such a bond and that suit was filed within the a pplicable limitations period. In fact, the press of the limitations period led to filing of the action at this time. See 19 U.S.C. § 1 621 (2000 ) (5-y ear sta tute of limitations for duty collection actions under 19 U .S.C. § 1592(d)). For purposes of the motion to dismiss, the only relevant f act is undisputed, which is that the United States has not

completed

administr

ative pr oceedin gs with r espect t o penalty claims ag ainst the importer

or other persons. The par

ties here disp ut e whether such proceedings ha d beenCourt No. 05-00276 Page 3

3 By the tim e of ora l argum ent he rein, it was undi sput ed tha t the p enalt y proceedi ngs we re we ll un de rw ay.

4 At oral a

rgumen t, Aegi s conced

ed deman d was mad

e some we eks in adv ance of suit. commenced

at the time suit was filed, 3 but it is completion of such proceedings, not commencement
or some later stage, that is of concern if exhaustion of such proceedings is a pre requisite to suit, as defendant alleges. Defendant’s arg ument that

the importer must have an opportunity to re spond to a pre-penalty

notice before the government ca n assert a 19 U.S.C. § 1592(a) violation and a § 1592(d) claim does not stem from either provision. Defendant, rather , infers this to be so from the detailed penalty pr

ocedures of 19 U.S.C. § 1592(b) (2000). With regard to penalty

actions by the United States involving the procedures of § 1592(b), the courts have indic ated in dicta or suggested by

detailed discussion of the issue that such procedures should be e

xhausted pr

ior to suit. See , e.g. , United States v. Priority Prods., I nc. , 9 C IT 383, 615 F . Supp. 591 ( 1985); United States v. Action Prods. Int’l, I nc. , 25 CI T 139 (200 1); United State s v. Ma

xi Switch, Inc. , 22 CIT 778, 18 F. Supp. 2d 1040 (1998). But in eac h of these
cases sufficient compliance with the statutory procedures was found so that, in fact, n o fu rther exhaustion was required

as a pre requisite to suit. Thi s, of cour

se, is not a

penalty collection action. In another

type of collection case, involving liquidated damages for imported automobiles notmeeting

emissions s tandard s, the cou rt did dismi ss the governmen t’s suit a gainst t h e surety because its administrative protest was unresolved. See United States v. Bavarian Motors, I nc. , 4 CIT 83, 86 (1982). This case is not like Bavarian because, inte r alia , Aegis did not protest or even respond t o the dema

nd upon it. 4 Suits under

19 U.S.C. § 1592(d) for duties may proc eed whether or not penalties are asse ssed.Court No. 05-00276 Page 4

See United Stat es v. Blum , 858 F.2d 1566, 1569

–70 (Fe d. Cir. 198 8). With re spect to p enalties , Customs has the discretion to mitigate penalties, see 19 U.S.C. § 1592(b)(2) (2000), and to reduce p enalties fo r prior disclosures, see 19 U.S.C. § 1592(c)(4) (2000). On the other hand, section 1592(d) “ require [s]” restor

ation of d uties, irr especti ve of pen alty assessme nt. The government has alleged a violation of 19 U.S.C. § 1592(a) and loss of duties, which are the essential elements of § 1592(d) liability. I t has made demand on the defendant, and defendant has chosen to sit back and wait for suit against it, as is its right. Defendant, however, has cited no statutory or reg ulatory administr

ative pr ocedure applica ble to simpl e duty

collecti on, as opp osed to penalty assessment, whic h has not been fulfilled. Accordingly, there appears to be no bar to suit. As the government has chosen to procee d before the completion o f rel ated penalty administrative procedu

res, as Congress

has esta blished a limitati o ns period to prevent stale suits, and as defendant objects, this action will not be stay ed. ACCORDINGL

Y, defenda

nt’s motion

to dismiss is

denied and this action will proceed. The parties will file a case manageme nt plan within 30 days hereof
.

/s/ Jane A. Re stani Jane A. Restani Chief Judge Dated: New York, New York. This 24th day of October , 2005.