H. R. 3450—123
‘‘(i) has been certified as a participant in the
recordkeeping compliance program under subsection
(f); and
‘‘(ii) is generally in compliance with the appro-
priate procedures and requirements of the program;
does not produce a demanded record or information for
a specific release or provide the information by acceptable
alternative means, the Customs Service, in the absence
of willfulness or repeated violations, shall issue a written
notice of the violation to the recordkeeper in lieu of a
monetary penalty. Repeated violations by the recordkeeper
may result in the issuance of penalties and removal of
certification under the program until corrective action,
satisfactory to the Customs Service, is taken.
‘‘(B) CONTENTS OF NOTICE.—A notice of violation issued
under subparagraph (A) shall—
‘‘(i) state that the recordkeeper has violated the
recordkeeping requirements;
‘‘(ii) indicate the record or information which was
demanded; and
‘‘(iii) warn the recordkeeper that future failures
to produce demanded records or information may result
in the imposition of monetary penalties.
‘‘(C) RESPONSE TO NOTICE.—Within a reasonable time
after receiving written notice under subparagraph (A), the
recordkeeper shall notify the Customs Service of the steps
it has taken to prevent a recurrence of the violation.
‘‘(D) REGULATIONS.—The Secretary shall promulgate
regulations to implement this paragraph. Such regulations
may specify the time periods for compliance with a demand
for information and provide guidelines which define
repeated violations for purposes of this paragraph. Any
penalty issued for a recordkeeping violation shall take into
account the degree of compliance compared to the total
number of importations, the nature of the demanded
records and the recordkeeper’s cooperation.’’.
SEC. 616. JUDICIAL ENFORCEMENT.
The second sentence of section 510(a) (19 U.S.C. 1510(a)) is
amended by inserting ‘‘and such court may assess a monetary
penalty’’ after ‘‘as a contempt thereof’’.
SEC. 617. REVIEW OF PROTESTS.
Section 515 (19 U.S.C. 1515) is amended by inserting at the
end the following new subsections:
‘‘(c) If a protesting party believes that an application for further
review was erroneously or improperly denied or was denied without
authority for such action, it may file with the Commissioner of
Customs a written request that the denial of the application for
further review be set aside. Such request must be filed within
60 days after the date of the notice of the denial. The Commissioner
of Customs may review such request and, based solely on the
information before the Customs Service at the time the application
for further review was denied, may set aside the denial of the
application for further review and void the denial of protest, if
appropriate. If the Commissioner of Customs fails to act within
60 days after the date of the request, the request shall be considered
denied. All denials of protests are effective from the date of original
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H. R. 3450—124
denial for purposes of section 2636 of title 28, United States Code.
If an action is commenced in the Court of International Trade
that arises out of a protest or an application for further review,
all administrative action pertaining to such protest or application
shall terminate and any administrative action taken subsequent
to the commencement of the action is null and void.
‘‘(d) If a protest is timely and properly filed, but is denied
contrary to proper instructions, the Customs Service may on its
own initiative, or pursuant to a written request by the protesting
party filed with the appropriate district director within 90 days
after the date of the protest denial, void the denial of the protest.’’.
SEC. 618. REPEAL OF PROVISION RELATING TO RELIQUIDATION ON
ACCOUNT OF FRAUD.
Section 521 (19 U.S.C. 1521) is repealed.
SEC. 619. PENALTIES RELATING TO MANIFESTS.
Section 584 (19 U.S.C. 1584) is amended—
(1) by amending subsection (a)—
(A) by striking out ‘‘appropriate customs officer’’ wher-
ever it appears and inserting ‘‘Customs Service’’,
(B) by striking out ‘‘officer demanding the same’’ in
paragraph (1) and inserting ‘‘officer (whether of the Cus-
toms Service or the Coast Guard) demanding the same’’,
and
(C) by inserting ‘‘(electronically or otherwise)’’ after
‘‘submission’’ in the last sentence of paragraph (1); and
(2) by amending subsection (b)—
(A) by striking out ‘‘the appropriate customs officer’’,
‘‘he’’ (except in paragraph (1)(F)), and ‘‘such officer’’ wher-
ever they appear and inserting ‘‘the Customs Service’’,
(B) by striking out ‘‘written’’ wherever it appears (other
than paragraph (1)(F)),
(C) by inserting ‘‘or electronically transmit’’ after
‘‘issue’’ wherever it appears, and
(D) by striking out ‘‘his intention’’ in the first sentence
of paragraph (1) and inserting ‘‘intent’’.
SEC. 620. UNLAWFUL UNLADING OR TRANSSHIPMENT.
Section 586 (19 U.S.C. 1586) is amended—
(1) by inserting ‘‘, or of a hovering vessel which has received
or delivered merchandise while outside the territorial sea,’’
after ‘‘from a foreign port or place’’ wherever it appears; and
(2) by amending subsection (f)—
(A) by striking out ‘‘the appropriate customs officer
of the’’ and ‘‘the appropriate customs officer within the’’
and inserting ‘‘the Customs Service at the’’; and
(B) by striking out ‘‘the appropriate customs officer
is’’ and inserting ‘‘the Customs Service is’’.
SEC. 621. PENALTIES FOR FRAUD, GROSS NEGLIGENCE, AND NEG-
LIGENCE; PRIOR DISCLOSURE.
Section 592 (19 U.S.C. 1592) is amended—
(1) by inserting ‘‘or electronically transmitted data or
information’’ after ‘‘document’’ in subsection (a)(1)(A)(i);
(2) by inserting ‘‘The mere nonintentional repetition by
an electronic system of an initial clerical error does not con-
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H. R. 3450—125
stitute a pattern of negligent conduct.’’ at the end of subsection
(a)(2);
(3) by amending subsection (b)—
(A) by amending the first sentence of paragraph
(1)(A)—
(i) by striking out ‘‘the appropriate customs officer’’
and inserting ‘‘the Customs Service’’,
(ii) by striking out ‘‘he’’ and inserting ‘‘it’’, and
(iii) by striking out ‘‘his’’ and inserting ‘‘its’’, and
(B) by amending paragraph (2)—
(i) by striking out ‘‘the appropriate customs officer’’
wherever it appears and inserting ‘‘the Customs Serv-
ice’’,
(ii) by striking out ‘‘such officer’’ wherever it
appears and inserting ‘‘the Customs Service’’, and
(iii) by striking out ‘‘he’’ wherever it appears and
inserting ‘‘it’’;
(4) by amending subsection (c)(4)—
(A) by striking ‘‘time of disclosure or within thirty
days, or such longer period as the appropriate customs
officer may provide, after notice by the appropriate customs
officer of his’’ in subparagraph (A)(i) and by striking out
‘‘time of disclosure in 30 days, or such longer period as
the appropriate customs officer may provide, after notice
by the appropriate customs officer of his’’ in subparagraph
(B), and inserting in each place ‘‘time of disclosure, or
within 30 days (or such longer period as the Customs
Service may provide) after notice by the Customs Service
of its’’; and
(B) by inserting after the last sentence the following:
‘‘For purposes of this section, a formal investigation of
a violation is considered to be commenced with regard
to the disclosing party and the disclosed information on
the date recorded in writing by the Customs Service as
the date on which facts and circumstances were discovered
or information was received which caused the Customs
Service to believe that a possibility of a violation of sub-
section (a) existed.’’; and
(5) by amending subsection (d)—
(A) by striking out ‘‘the appropriate customs officer’’
and inserting ‘‘the Customs Service’’,
(B) by striking out ‘‘duties’’ wherever it appears and
inserting ‘‘duties, taxes, or fees’’, and
(C) by inserting ‘‘, TAXES
OR FEES’’ after ‘‘DUTIES’’
in the sideheading.
SEC. 622. PENALTIES FOR FALSE DRAWBACK CLAIMS.
(a) AMENDMENT.—Part V of title IV is amended by inserting
after section 593 the following new section:
‘‘SEC. 593A. PENALTIES FOR FALSE DRAWBACK CLAIMS.
‘‘(a) PROHIBITION.—
‘‘(1) GENERAL RULE.—No person, by fraud, or negligence—
‘‘(A) may seek, induce or affect, or attempt to seek,
induce, or affect, the payment or credit to that person
or others of any drawback claim by means of—
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H. R. 3450—126
‘‘(i) any document, written or oral statement, or
electronically transmitted data or information, or act
which is material and false, or
‘‘(ii) any omission which is material; or
‘‘(B) may aid or abet any other person to violate
subparagraph (A).
‘‘(2) EXCEPTION.—Clerical errors or mistakes of fact are
not violations of paragraph (1) unless they are part of a pattern
of negligent conduct. The mere nonintentional repetition by
an electronic system of an initial clerical error does not con-
stitute a pattern of negligent conduct.
‘‘(b) PROCEDURES.—
‘‘(1) PREPENALTY NOTICE.—
‘‘(A) IN GENERAL.—If the Customs Service has reason-
able cause to believe that there has been a violation of
subsection (a) and determines that further proceedings are
warranted, the Customs Service shall issue to the person
concerned a written notice of intent to issue a claim for
a monetary penalty. Such notice shall—
‘‘(i) identify the drawback claim;
‘‘(ii) set forth the details relating to the seeking,
inducing, or affecting, or the attempted seeking, induc-
ing, or affecting, or the aiding or procuring of, the
drawback claim;
‘‘(iii) specify all laws and regulations allegedly vio-
lated;
‘‘(iv) disclose all the material facts which establish
the alleged violation;
‘‘(v) state whether the alleged violation occurred
as a result of fraud or negligence;
‘‘(vi) state the estimated actual or potential loss
of revenue due to the drawback claim, and, taking
into account all circumstances, the amount of the pro-
posed monetary penalty; and
‘‘(vii) inform such person that he shall have a
reasonable opportunity to make representations, both
oral and written, as to why a claim for a monetary
penalty should not be issued in the amount stated.
‘‘(B) EXCEPTIONS.—The Customs Service may not issue
a prepenalty notice if the amount of the penalty in the
penalty claim issued under paragraph (2) is $1,000 or
less. In such cases, the Customs Service may proceed
directly with a penalty claim.
‘‘(C) PRIOR APPROVAL.—No prepenalty notice in which
the alleged violation occurred as a result of fraud shall
be issued without the prior approval of Customs Head-
quarters.
‘‘(2) PENALTY CLAIM.—After considering representations, if
any, made by the person concerned pursuant to the notice
issued under paragraph (1), the Customs Service shall deter-
mine whether any violation of subsection (a), as alleged in
the notice, has occurred. If the Customs Service determines
that there was no violation, the Customs Service shall promptly
issue a written statement of the determination to the person
to whom the notice was sent. If the Customs Service determines
that there was a violation, Customs shall issue a written pen-
alty claim to such person. The written penalty claim shall
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H. R. 3450—127
specify all changes in the information provided under clauses
(i) through (vii) of paragraph (1)(A). Such person shall have
a reasonable opportunity under section 618 to make representa-
tions, both oral and written, seeking remission or mitigation
of the monetary penalty. At the conclusion of any proceeding
under section 618, the Customs Service shall provide to the
person concerned a written statement which sets forth the
final determination, and the findings of fact and conclusions
of law on which such determination is based.
‘‘(c) MAXIMUM PENALTIES.—
‘‘(1) FRAUD.—A fraudulent violation of subsection (a) of
this section is punishable by a civil penalty in an amount
not to exceed 3 times the actual or potential loss of revenue.
‘‘(2) NEGLIGENCE.—
‘‘(A) IN GENERAL.—A negligent violation of subsection
(a) is punishable by a civil penalty in an amount not
to exceed 20 percent of the actual or potential loss of
revenue for the 1st violation.
‘‘(B) REPETITIVE VIOLATIONS.—If the Customs Service
determines that a repeat negligent violation occurs relating
to the same issue, the penalty amount for the 2d violation
shall be in an amount not to exceed 50 percent of the
total actual or potential loss of revenue. The penalty
amount for each succeeding repetitive negligent violation
shall be in an amount not to exceed the actual or potential
loss of revenue. If the same party commits a nonrepetitive
violation, that violation shall be subject to a penalty not
to exceed 20 percent of the actual or potential loss of
revenue.
‘‘(3) PRIOR DISCLOSURE.—
‘‘(A) IN GENERAL.—Subject to subparagraph (B), if the
person concerned discloses the circumstances of a violation
of subsection (a) before, or without knowledge of the
commencement of, a formal investigation of such violation,
the monetary penalty assessed under this subsection may
not exceed—
‘‘(i) if the violation resulted from fraud, an amount
equal to the actual or potential revenue of which the
United States is or may be deprived as a result of
overpayment of the claim; or
‘‘(ii) if the violation resulted from negligence, an
amount equal to the interest computed on the basis
of the prevailing rate of interest applied under section
6621 of the Internal Revenue Code of 1986 on the
amount of actual revenue of which the United States
is or may be deprived during the period that—
‘‘(I) begins on the date of the overpayment
of the claim; and
‘‘(II) ends on the date on which the person
concerned tenders the amount of the overpayment.
‘‘(B) CONDITION AFFECTING PENALTY LIMITATIONS.—The
limitations in subparagraph (A) on the amount of the mone-
tary penalty to be assessed under subsection (c) apply
only if the person concerned tenders the amount of the
overpayment made on the claim at the time of disclosure,
or within 30 days (or such longer period as the Customs
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