PART 171—FINES, PENALTIES, AND FORFEITURES Authority: 18 U.S.C. 983; 19 U.S.C. 66, 1592, 1593a, 1618, 1624; 22 U.S.C. 401; 31 U.S.C. 5321. Subpart F also issued under 19 U.S.C. 1595a, 1605, 1614. Source: T.D. 70-249, 35 FR 18265, Dec. 1, 1970, unless otherwise noted. § 171.0 Scope. This part contains provisions relating to petitions for relief from fines, forfeitures, and certain penalties incurred, and petitions for the restoration of proceeds from sale of seized and forfeited property. This part does not relate to petitions on claims for liquidated damages or penalties which are guaranteed by the conditions of the International Carrier Bond ( see [T.D. 00-57, 65 FR 53576, Sept. 5, 2000] Subpart A—Application for Relief Source: T.D. 00-57, 65 FR 53576, Sept. 5, 2000, unless otherwise noted. § 171.1 Petition for relief. (a) To whom addressed. (b) Signature. (c) Form. (1) A description of the property involved (if a seizure); (2) The date and place of the violation or seizure; (3) The facts and circumstances relied upon by the petitioner to justify remission or mitigation; and (4) If a seizure case, proof of a petitionable interest in the seized property. (d) False statement in petition. § 171.2 Filing a petition. (a) Where filed. (b) When filed (2) Penalties. (c) Extensions. (d) Number of copies. (e) Exception for certain cases. § 171.3 Oral presentations seeking relief. (a) For violation of section 592 or section 593A. (b) Other oral presentations. Subpart B—Action on Petitions Source: T.D. 00-57, 65 FR 53576, Sept. 5, 2000, unless otherwise noted. § 171.11 Petitions acted on by Fines, Penalties, and Forfeitures Officer. (a) Remission or mitigation authority. (b) When violation did not occur. (c) When violation is result of vessel in distress. [T.D. 00-57, 65 FR 53576, Sept. 5, 2000, as amended by CBP Dec. 12-07, 77 FR 19534, Apr. 2, 2012] § 171.12 Petitions acted on at CBP Headquarters. Upon receipt of a petition for relief filed pursuant to the provisions of section 618 of the Tariff Act of 1930, as amended (19 U.S.C. 1618), or section 5321(c) of title 31, United States Code (31 U.S.C. 5321(c)), involving fines, penalties, and forfeitures which are outside of his or her delegated authority, the Fines, Penalties, and Forfeitures Officer will refer that petition to the Chief, Penalties Branch, Regulations and Rulings, Office of International Trade, CBP Headquarters, who is empowered to remit or mitigate on such terms and conditions as, under law and in view of the circumstances, he or she deems appropriate. [T.D. 00-57, 65 FR 53576, Sept. 5, 2000, as amended by CBP Dec. 12-07, 77 FR 19534, Apr. 2, 2012] § 171.13 Limitations on consideration of petitions. (a) Cases referred for institution of legal proceedings. (b) Conveyance awarded for official use. § 171.14 Headquarters advice. The advice of the Director, Border Security and Trade Compliance Division, Regulations and Rulings, Office of International Trade, CBP Headquarters, or his designee, may be sought in any case (except as provided in this section), without regard to delegated authority to act on a petition or offer, when a novel or complex issue concerning a ruling, policy, or procedure is presented concerning a CBP action(s) or potential CBP action(s) relating to seizures and forfeitures, penalties, or mitigating or remitting any claim. This section does not apply to actual duty loss tenders determined by CBP pursuant to § 162.74(c) of this Chapter relating to prior disclosure and to actual duty loss demands made under § 162.79b of this Chapter. The request for advice may be initiated by the alleged violator or any CBP officer, but must be submitted to the Fines, Penalties, and Forfeitures Officer. The Fines, Penalties, and Forfeitures Officer retains the authority to refuse to forward any request that fails to raise a qualifying issue and to seek legal advice from the appropriate Associate or Assistant Chief Counsel in any case. Subpart C—Disposition of Petitions Source: T.D. 00-57, 65 FR 53577, Sept. 5, 2000, unless otherwise noted. § 171.21 Written decisions. If a petition for relief relates to a violation of sections 592, 593A or 641, Tariff Act of 1930, as amended (19 U.S.C. 1592, 19 U.S.C. 1593a, or 19 U.S.C. 1641), the petitioner will be provided with a written statement setting forth the decision on the matter and the findings of fact and conclusions of law upon which the decision is based. § 171.22 Decisions effective for limited time. A decision to mitigate a penalty or to remit a forfeiture upon condition that a stated amount is paid will be effective for not more than 60 days from the date of notice to the petitioner of such decision unless the decision itself prescribes a different effective period. If payment of the stated amount or arrangements for such payment are not made, or a supplemental petition is not filed in accordance with regulation, the full penalty or claim for forfeiture will be deemed applicable and will be enforced by promptly referring the matter, after required collection action, if appropriate, to the appropriate Office of the Chief Counsel for preparation for referral to the Department of Justice unless other action has been directed by the Commissioner of Customs. § 171.23 Decisions not protestable. (a) Mitigation decision not subject to protest. (b) Payment of mitigated amount as accord and satisfaction. § 171.24 Remission of forfeitures and payment of fees, costs or interest. Any seizure subject to forfeiture may be remitted or mitigated pursuant to the provisions of 19 U.S.C. 1618 or 31 U.S.C. 5321, as applicable. Any person who accepts a remission or mitigation decision will not be considered to have substantially prevailed in a civil forfeiture proceeding for purposes of collection of any fees, costs or interest from the Government. [T.D. 00-88, 65 FR 78093, Dec. 14, 2000] Subpart D—Offers in Compromise Source: T.D. 00-57, 65 FR 53577, Sept. 5, 2000, unless otherwise noted. § 171.31 Form of offers. Offers in compromise submitted pursuant to the provisions of section 617 of the Tariff Act of 1930, as amended (19 U.S.C. 1617) must expressly state that they are being submitted in accordance with the provisions of that section. The amount of the offer must be deposited with Customs in accordance with the provisions of § 161.5 of this chapter. § 171.32 Acceptance of offers in compromise. An offer in compromise will be considered accepted only when the offeror is so notified in writing. As a condition to accepting an offer in compromise, the offeror may be required to enter into any collateral agreement or to post any security which is deemed necessary for the protection of the interest of the United States. Subpart E—Restoration of Proceeds of Sale Source: T.D. 00-57, 65 FR 53577, Sept. 5, 2000, unless otherwise noted. § 171.41 Application of provisions for petitions for relief. The general provisions of subpart A of this part on filing and content of petitions for relief apply to petitions for restoration of proceeds of sale except insofar as modified by this subpart. § 171.42 Time limit for filing petition for restoration. A petition for the restoration of proceeds of sale under section 613, Tariff Act of 1930, as amended (19 U.S.C. 1613) must be filed within 3 months after the date of the sale. § 171.43 Evidence required. In addition to such other evidence as may be required under the provisions of subpart A of this part, the petition for restoration of proceeds of sale under section 613, Tariff Act of 1930, as amended (19 U.S.C. 1613), must show the interest of the petitioner in the property. The petition must be supported by satisfactory proof that the petitioner did not know of the seizure prior to the declaration or decree of forfeiture and was in such circumstances as prevented him from knowing of it. § 171.44 Forfeited property authorized for official use. If forfeited property which is the subject of a claim under section 613, Tariff Act of 1930, as amended (19 U.S.C. 1613) has been authorized for official use, retention or delivery will be regarded as the sale thereof for the purposes of section 613. The appropriation available to the receiving agency for the purchase, hire, operation, maintenance and repair of property of the kind so received is available for the granting of relief to the claimant and for the satisfaction of liens for freight, charges and contributions in general average that may have been filed. Subpart F—Expedited Petitioning Procedures § 171.51 Application and definitions. (a) Application. (b) Definitions. (1) Appraised value. (2) Commercial fishing industry vessel. (i) Commercially engages in the catching, taking, or harvesting of fish or an activity that can reasonably be expected to result in the catching, taking, or harvesting of fish; (ii) Commercially prepares fish or fish products other than by gutting, decapitating, gilling, skinning, shucking, icing, freezing, or brine chilling; or (iii) Commercially supplies, stores, refrigerates, or transports fish, fish products, or materials directly related to fishing or the preparation of fish to or from a fishing, fish processing, or fish tender vessel or fish processing facility. (3) Controlled substance. (4) Normal and customary manner. (5) Owner or interested party. (6) Personal use quantities. (i) Quantities presumed to be for personal use unless evidence of illicit drug trafficking or distribution exists. (B) One gram of a mixture of substance containing a detectable amount of— ( 1 ( 2 ( 3 ( 4 1 3 (C) 1/10 (D) 1/10 (E) 500 micrograms of a mixture of substance containing a detectable amount of lysergic acid diethylamide (LSD); (F) One ounce of a mixture of substance containing a detectable amount of marihuana; or (G) One gram of methamphetamine, its salts, isomers, and salts of its isomers, or one gram of a mixture of substances containing a detectable amount of methamphetamine, its salts, isomers, or salts of its isomers. (ii) Evidence of possession for other than personal use. (A) Evidence such as drug scales, drug distribution paraphernalia, drug records, drug packaging material, method of drug packaging, drug “cutting” agents and other equipment, that indicates an intent to process, package or distribute a controlled substance; (B) Information from reliable sources indicating possession of a controlled substance with intent to distribute; (C) The arrest and/or conviction record of the person or persons in actual or constructive possession of the controlled substance for offenses under Federal, State or local law that indicates an intent to distribute a controlled substance; (D) The controlled substance is related to large amounts of cash or any amount of prerecorded government funds; (E) The controlled substance is possessed under circumstances that indicate such a controlled substance is a sample intended for distribution in anticipation of a transaction involving large quantities, or is part of a larger delivery; or (F) Statements by the possessor, or otherwise attributable to the possessor, including statements of conspirators, that indicate possession with intent to distribute. (7) Property. (8) Seizing agency. (9) Sworn to. [T.D. 89-86, 54 FR 37602, Sept. 11, 1989; 54 FR 41364, Oct. 6, 1989, as amended by T.D. 00-88, 65 FR 78093, Dec. 14, 2000; CBP Dec. 04-28, 69 FR 52600, Aug. 27, 2004] § 171.52 Petition for expedited procedures in an administrative forfeiture proceeding. (a) Procedures for violations involving possession of controlled substance in personal use quantities. (b) Commercial fishing industry vessels. (c) Elements to be established in petition. (i) The petitioner has a valid, good faith interest in the seized property as owner or otherwise; (ii) The petitioner reasonably attempted to ascertain the use of the property in a normal and customary manner; and (iii) The petitioner did not know or consent to the illegal use of the property or, in the event that the petitioner knew or should have known of the illegal use, the petitioner did what reasonably could be expected to prevent the violation. (2) In addition, the petitioner may submit evidence to establish that he has statutory rights or defenses such that he would prevail in a judicial proceeding on the issue of forfeiture. (d) Manner of filing. (e) Contents of petition. (1) A complete description of the property, including identification numbers, if any, and the date and place of the violation and seizure; (2) A description of the petitioner's interest in the property, supported by the documentation, bills of sale, contracts, mortgages, or other satisfactory documentary evidence; and (3) A statement of the facts and circumstances relied upon by the petitioner to justify expedited return of the seized property, supported by satisfactory evidence. [T.D. 89-86, 54 FR 37602, Sept. 11, 1989; 54 FR 41364, Oct. 6, 1989, as amended by T.D. 99-27, 64 FR 13676, Mar. 22, 1999; T.D. 00-88, 65 FR 78093, Dec. 14, 2000; CBP Dec. 04-28, 69 FR 52600, Aug. 27, 2004] § 171.53 Ruling on petition for expedited procedures. (a) Final administrative determination. (b) Determination within 20 days. (1) If Customs determines that the factors listed in § 171.52(c) have been established, it shall terminate the administrative proceedings and release the property from seizure, or in the case of a commercial fishing industry vessel for which a summons has been issued, but not yet answered, dismiss the summons. The property shall not be returned if it is evidence of a violation of law. (2) If Customs determines that the factors listed in § 171.52(c) have not been established, it shall proceed with the administrative forfeiture. [T.D. 89-86, 54 FR 37602, Sept. 11, 1989] § 171.54 Substitute res in an administrative forfeiture action. (a) Substitute res. (b) Forfeiture of res. [T.D. 89-86, 54 FR 37602, Sept. 11, 1989] § 171.55 Notice provisions. (a) Special notice provision. (b) Notice provision. [T.D. 89-86, 54 FR 37602, Sept. 11, 1989; 54 FR 43424, Oct. 25, 1989] Subpart G—Supplemental Petitions for Relief Source: T.D. 00-57, 65 FR 53578, Sept. 5, 2000, unless otherwise noted. § 171.61 Time and place of filing. If the petitioner is not satisfied with a decision of the deciding official on an original petition for relief, a supplemental petition may be filed with the Fines, Penalties, and Forfeitures Officer having jurisdiction in the port where the violation occurred. Such supplemental petition must be filed within 60 days from the date of notice to the petitioner of the decision from which further relief is requested or within 60 days following an administrative or judicial decision with respect to the entries involved in a penalty case which reduces the loss of duties upon which the mitigated penalty amount was based (whichever is later) unless another time to file such a supplemental petition is prescribed in the decision. The filing of a supplemental petition may be subject to the conditions prescribed in § 171.64 of this part. A supplemental petition may be filed whether or not the mitigated penalty or forfeiture remission amount designated in the decision on the original petition is paid. § 171.62 Supplemental petition decision authority. (a) Decisions of Fines, Penalties, and Forfeitures Officers. (b) Decisions of CBP Headquarters. [T.D. 00-57, 65 FR 53578, Sept. 5, 2000, as amended by CBP Dec. 07-82, 72 FR 59175, Oct. 19, 2007] § 171.63 [Reserved] § 171.64 Waiver of statute of limitations. The deciding Customs official always reserves the right to require a waiver of the statute of limitations executed by the claimants to the property or charged party or parties as a condition precedent before accepting a supplemental petition in any case in which less than one year remains before the statute will be available as a defense to all or part of that case. Appendix A to Part 171—Guidelines for Disposition of Violations of 19 U.S.C. 1497 Liabilities incurred under section 497, Tariff Act of 1930 (19 U.S.C. 1497), shall be mitigated or remitted in accordance with the following guidelines (see also part 148, Customs Regulations): I. Violations Involving Dutiable Articles. 1. Mitigated Penalty for First Offense. 2. Mitigating Factors. a. Communications with the violator are impaired because of language barrier, mental condition, or physical ailment; b. Violator cooperates with Customs officers after discovery of the violation by providing additional information which facilitates conclusion of the case; c. Violator is an inexperienced traveler; d. There is contributory Customs error (for example, violator demonstrates he was given incorrect advice by a Customs officer). 3. Aggravating Factors. a. Documentary or other evidence discovered establishes violator's intent; b. Informant provides information which tends to establish violator's intent and leads to discovery of the violation after the violator has been given an opportunity to properly declare; c. Violator is an experienced traveler; d. Undeclared articles are concealed to evade U.S. law; e. There is behavior, including extreme lack of cooperation, verbal or physical abuse, or attempted escape, which tends to demonstrate a lack of respect for law and authority. 4. Commercial Articles. 5. Extraordinary Mitigating Factor. a. When an individual who has been cleared through Customs without discovery of any undeclared article returns to the examination area and declares that article, the deciding officer may, within his discretion, remit the liabilities upon payment of One Times the Duty. b. An individual who declares articles some time later (hours, days, weeks, etc.) may be treated similarly. 6. Extraordinary Aggravating Factors. a. When the offense is a second or subsequent violation, the deciding officer may, within his discretion, remit the liabilities upon payment of Between Six and Eight Times the Duty (but not less than $250), or the domestic value, whichever is lower. b. When the offense is a second or subsequent violation, and there are aggravating factors present, generally there shall either be a denial of relief or mitigation to No Less Than Eight Times the Duty or the domestic value, whichever is lower. c. When there is evidence of an ongoing scheme to defraud the revenue involving multiple entries without declaration of articles subject to declaration, the deciding officer shall act in accordance with the preceding paragraph. II. Violations Involving Absolutely or Conditionally Free Articles. 1. Mitigated Penalty for First Offense. a. For violations which are first offense, and involve articles entitled to the benefit of GSP or Chapter 98, HTSUS, the liabilities shall be remitted upon payment of One Times the Duty which would have been due if the articles had not been entitled to the benefit. b. For violations which are first offense, and involve absolutely duty-free articles, the liabilities shall be remitted upon payment of Between One and Five Percent of the Domestic Value, but not less than $50 (or the domestic value, whichever is less) nor more than $1,000. 2. Mitigating Factors. 3. Aggravating Factors. a. When aggravating factors such as those outlined above are present, the deciding officer may, in his discretion, remit the liabilities for conditionally free articles upon the payment of Between One and Two Times the Duty (but not less than $100), or the domestic value, whichever is lower. b. For absolutely free articles, the deciding officer may remit the liabilities upon payment of Between Five and Ten Percent of the Domestic Value, but not less than $100. 4. Commercial Merchandise. The fact that undeclared duty-free articles are imported for commercial purposes may be considered an aggravating factor under section II.3. of these guidelines. III. Other Applicable Rules. 1. These guidelines provide a framework and procedure by which violations of 19 U.S.C. 1497 are to be analyzed. They are not mandatory in the sense that they must be absolutely applied. Customs officers varying from these guidelines must provide reasons for doing so in the case record. 2. Customs officers shall document mitigating and aggravating factors found in each case in the case file. There must be a basis shown for mitigated amounts. 3. It is intended that mitigating and aggravating factors shall be considered together and used to offset each other where appropriate. 4. The rate of duty to be used in calculating the mitigated penalty shall be the appropriate rate from Chapters 1-97, HTSUS, and not the flat rate from Chapter 98, HTSUS. 5. “Duty” means Customs duties and any internal revenue taxes which would have attached upon importation (see section 101.1(i), Customs Regulations). Therefore, multiples will also be applied to internal revenue taxes which would have been due. 6. Customs officers may, within their discretion, consider other factors not here delineated as aggravating or mitigating and apply the guidelines accordingly. These additional factors must also be documented in the case file. 7. These guidelines are not authority for admitting into the commerce of the United States articles which are conditionally or absolutely prohibited from entry. 8. The presence of one or more extraordinary aggravating factors, including but not limited to those set forth in section I.6. of these guidelines, may within the discretion of the deciding officer be a basis for denial of relief. 9. If the violator is being prosecuted criminally, the civil (19 U.S.C. 1497) liability generally is administratively settled only after completion of the prosecution or with the express approval of the appropriate U.S. attorney. Criminal prosecution of the violator, however, is insufficient grounds to delay indefinitely determination of the civil liability. The Fines, Penalties, and Forfeitures Officer should contact the Chief Counsel representative in the field to determine the best course of action to follow with respect to the civil liability. Chief Counsel representative will consult with the U.S. attorney and the Penalties Branch at Customs Headquarters. Because of time delay problems, all seizures [T.D. 83-145, 48 FR 30100, June 30, 1983, as amended by T.D. 89-1, 53 FR 51271, Dec. 21, 1988; T.D. 99-27, 64 FR 13676, Mar. 22, 1999] Appendix B to Part 171—Customs Regulations, Guidelines for the Imposition and Mitigation of Penalties for Violations of 19 U.S.C. 1592 A monetary penalty incurred under section 592 of the Tariff Act of 1930, as amended (19 U.S.C. 1592; hereinafter referred to as section 592) may be remitted or mitigated under section 618 of the Tariff Act of 1930, as amended (19 U.S.C. 1618), if it is determined that there are mitigating circumstances to justify remission or mitigation. The guidelines below will be used by the Customs Service in arriving at a just and reasonable assessment and disposition of liabilities arising under section 592 within the stated limitations. It is intended that these guidelines shall be applied by Customs officers in pre-penalty proceedings and in determining the monetary penalty assessed in any penalty notice. The assessed penalty or penalty amount set forth in Customs administrative disposition determined in accordance with these guidelines does not limit the penalty amount which the Government may seek in bringing a civil enforcement action pursuant to section 592(e). It should be understood that any mitigated penalty is conditioned upon payment of any actual loss of duty as well as a release by the party that indicates that the mitigation decision constitutes full accord and satisfaction. Further, mitigation decisions are not rulings within the meaning of part 177 of the Customs Regulations (19 CFR part 177). Lastly, these guidelines may supplement, and are not intended to preclude application of, any other special guidelines promulgated by Customs. (A) Violations of Section 592 Without regard to whether the United States is or may be deprived of all or a portion of any lawful duty, tax or fee thereby, a violation of section 592 occurs when a person, through fraud, gross negligence, or negligence, enters, introduces, or attempts to enter or introduce any merchandise into the commerce of the United States by means of any document, electronic transmission of data or information, written or oral statement, or act that is material and false, or any omission that is material; or when a person aids or abets any other person in the entry, introduction, or attempted entry or introduction of merchandise by such means. It should be noted that the language “entry, introduction, or attempted entry or introduction” encompasses placing merchandise in-bond (e.g., filing an immediate transportation application). There is no violation if the falsity or omission is due solely to clerical error or mistake of fact, unless the error or mistake is part of a pattern of negligent conduct. Also, the unintentional repetition by an electronic system of an initial clerical error generally will not constitute a pattern of negligent conduct. Nevertheless, if Customs has drawn the party's attention to the unintentional repetition by an electronic system of an initial clerical error, subsequent failure to correct the error could constitute a violation of section 592. Also, the unintentional repetition of a clerical mistake over a significant period of time or involving many entries could indicate a pattern of negligent conduct and a failure to exercise reasonable care. (B) Definition of Materiality Under Section 592 A document, statement, act, or omission is material if it has the natural tendency to influence or is capable of influencing agency action including, but not limited to a Customs action regarding: (1) Determination of the classification, appraisement, or admissibility of merchandise (e.g., whether merchandise is prohibited or restricted); (2) determination of an importer's liability for duty (including marking, antidumping, and/or countervailing duty); (3) collection and reporting of accurate trade statistics; (4) determination as to the source, origin, or quality of merchandise; (5) determination of whether an unfair trade practice has been committed under the anti-dumping or countervailing duty laws or a similar statute; (6) determination of whether an unfair act has been committed involving patent, trademark, or copyright infringement; or (7) the determination of whether any other unfair trade practice has been committed in violation of federal law. The “but for” test of materiality is inapplicable under section 592. (C) Degrees of Culpability Under Section 592 The three degrees of culpability under section 592 for the purposes of administrative proceedings are: (1) Negligence. (2) Gross Negligence. (3) Fraud. i.e., (D) Discussion of Additional Terms (1) Duty Loss Violations. (2) Non-duty Loss Violations. (3) Actual Loss of Duties. (4) Potential Loss of Duties. (5) Total Loss of Duty. (6) Reasonable Care. (7) Clerical Error. (8) Mistake of Fact. (E) Penalty Assessment (1) Case Initiation—Pre-penalty Notice. (a) Generally. i.e., i.e., (b) Pre-penalty Notice—Proposed Claim Amount (i) Fraud. (ii) Gross Negligence and Negligence. (c) Technical Violations. (d) Statute of Limitations Considerations—Waivers. i.e., (2) Closure of Case or Issuance of Penalty Notice. (a) Case Closure. (b) Issuance of Penalty Notice. (c) Statute of Limitations Considerations. (F) Administrative Penalty Disposition (1) Generally. (2) Dispositions. (a) Fraudulent Violation. (i) Duty Loss Violation. (ii) Non-Duty Loss Violation. (b) Grossly Negligent Violation. (i) Duty Loss Violation. (ii) Non-Duty Loss Violation. (c) Negligent Violation. (i) Duty Loss Violation. (ii) Non-Duty Loss Violation. (d) Authority to Cancel Claim. (e) Remission of Claim. (f) Prior Disclosure Dispositions. (1) Fraudulent Violation. (a) Duty Loss Violation. i.e., (b) Non-Duty Loss Violation. (2) Gross Negligence and Negligence Violation. (a) Duty Loss Violation. (b) Non-Duty Loss Violation. (G) Mitigating Factors The following factors will be considered in mitigation of the proposed or assessed penalty claim or the amount of the administrative penalty decision, provided that the case record sufficiently establishes their existence. The list is not all-inclusive. (1) Contributory Customs Error. in writing (2) Cooperation with the Investigation. (3) Immediate Remedial Action. (4) Inexperience in Importing. (5) Prior Good Record. (6) Inability to Pay the Customs Penalty. (7) Customs Knowledge. (H) Aggravating Factors Certain factors may be determined to be aggravating factors in calculating the amount of the proposed or assessed penalty claim or the amount of the administrative penalty decision. The presence of one or more aggravating factors may not be used to raise the level of culpability attributable to the alleged violations, but may be utilized to offset the presence of mitigating factors. The following factors will be considered “aggravating factors,” provided that the case record sufficiently establishes their existence. The list is not exclusive. (1) Obstructing an investigation or audit, (2) Withholding evidence, (3) Providing misleading information concerning the violation, (4) Prior substantive violations of section 592 for which a final administrative finding of culpability has been made, (5) Textile imports that have been the subject of illegal transshipment ( i.e., (6) Evidence of a motive to evade a prohibition or restriction on the admissibility of the merchandise (e.g., evading a quota restriction), (7) Failure to comply with a lawful demand for records or a Customs summons. (I) Offers in Compromise (“Settlement Offers”) Parties who wish to submit a civil offer in compromise pursuant to 19 U.S.C. 1617 (also known as a “settlement offer”) in connection with any section 592 claim or potential section 592 claim should follow the procedures outlined in § 161.5 of the Customs Regulations (19 CFR 161.5). Settlement offers do not involve “mitigation” of a claim or potential claim, but rather “compromise” an action or potential action where Customs evaluation of potential litigation risks, or the alleged violator's financial position, justifies such a disposition. In any case where a portion of the offered amount represents a tender of unpaid duties, taxes and fees, Customs letter of acceptance may identify the portion representing any such duty, tax and fee. The offered amount should be deposited at the Customs field office responsible for handling the section 592 claim or potential section 592 claim. The offered amount will be held in a suspense account pending acceptance or rejection of the offer in compromise. In the event the offer is rejected, the concerned Customs field office will promptly initiate a refund of the money deposited in the suspense account to the offeror. (J) Section 592(d) Demands Section 592(d) demands for actual losses of duty ordinarily are issued in connection with a penalty action, or as a separate demand without an associated penalty action. In either case, information must be present establishing a violation of section 592(a). In those cases where the appropriate Customs field officer determines that issuance of a penalty under section 592 is not warranted (notwithstanding the presence of information establishing a violation of section 592(a)), but that circumstances do warrant issuance of a demand for payment of an actual loss of duty pursuant to section 592(d), the Customs field officer shall follow the procedures set forth in section 162.79b of the Customs Regulations (19 CFR 162.79b). Except in cases where less than one year remains before the statute of limitations may be raised as a defense, information copies of all section 592(d) demands should be sent to all concerned sureties and the importer of record if such party is not an alleged violator. Also, except in cases where less than one year remains before the statute of limitations may be raised as a defense, Customs will endeavor to issue all section 592(d) demands to concerned sureties and non-violator importers of record only after default by principals. (K) Customs Brokers If a customs broker commits a section 592 violation and the violation involves fraud, or the broker commits a grossly negligent or negligent violation and shares in the benefits of the violation to an extent over and above customary brokerage fees, the customs broker will be subject to these guidelines. However, if the customs broker commits either a grossly negligent or negligent violation of section 592 (without sharing in the benefits of the violation as described above), the concerned Customs field officer may proceed against the customs broker pursuant to the remedies provided under 19 U.S.C. 1641. (L) Arriving Travelers (1) Liability. (2) Limitations on Liability on Non-commercial Violations. (a) Fraud—Duty Loss Violation. (b) Fraud—Non-duty Loss Violation. (c) Gross Negligence—Duty Loss Violation. (d) Gross Negligence—Non-duty Loss Violation. (e) Negligence—Duty Loss Violation. (f) Negligence—Non-duty Loss Violation. (g) Special Assessments/Dispositions. (M) Violations of Laws Administered by Other Federal Agencies. Violations of laws administered by other federal agencies (such as the Food and Drug Administration, Consumer Product Safety Commission, Office of Foreign Assets Control, Department of Agriculture, Fish and Wildlife Service) should be referred to the appropriate agency for its recommendation. Such recommendation, if promptly tendered, will be given due consideration, and may be followed provided the recommendation would not result in a disposition inconsistent with these guidelines. (N) Section 592 Violations by Small Entities In compliance with the mandate of the Small Business Regulatory Enforcement Fairness Act of 1996, under appropriate circumstances, the issuance of a penalty under section 592 may be waived for businesses qualifying as small business entities. Procedures established for small business entities regarding violations of 19 U.S.C. 1592 were published as Treasury Decision 97-46 in the Federal Register [T.D. 00-41, 65 FR 39093, June 23, 2000] Appendix C to Part 171—Customs Regulations Guidelines for the Imposition and Mitigation of Penalties for Violations of 19 U.S.C. 1641 The Trade and Tariff Act of 1984 promulgated numerous changes to the current statute relating to Customs brokers. The following document attempts to define that conduct which is to be proscribed and to suggest penalty amounts to be assessed for such violations. It also chronicles procedures to be followed in assessment and mitigation of penalties. Note: Assessment of a monetary penalty is an alternative sanction to revocation or suspension of the broker's license or permit. I. Penalty Assessment Procedures—19 CFR Part 111, Subpart E A. When a penalty against a broker is contemplated, the “appropriate Customs officer”, ( i.e. B. The written notice shall inform the violator that he has 30 days to respond as to why a penalty should not be issued. See 19 CFR 111.92. C. If no response is received from the violator, or, if after receipt of the response, it is determined that the penalty should be issued as stated in the prepenalty notice, a notice of penalty CF-5955A shall be issued formally assessing a monetary penalty against the broker. D. The Fines, Penalties, and Forfeitures Officer may reduce the amount of the contemplated penalty or cancel its issuance altogether if, after review of the violator's submission in response to the prepenalty notice, he is satisfied that the acts which are the basis for the penalty did not occur as charged or occurred in a manner that would permit a reduction in the contemplated penalty. E. After issuance of a penalty notice, the petitioning provisions of part 171 of the Customs Regulations are in effect. F. If the broker does not comply with a final mitigation decision within 60 days, the matter shall be referred to the Department of Justice for commencement of judicial action. II. Penalty Assessment—Conducting Customs Business Without a License (19 U.S.C. 1641( b A. No person may conduct Customs business, other than solely on behalf of that person, without a broker's license. B. Penalty amount: 1. The maximum penalty for any one incident of conducting Customs business without a license is $10,000. 2. Total aggregate penalties for violation of this or any other section of the broker penalty statute is $30,000. As a general rule, $10,000 will be the maximum assessment for a violation solely involving conducting Customs business without a license, without regard to the frequency of violations. In particularly aggravated circumstances, this rule shall be suspended. C. Customs business includes: 1. Classification and valuation. 2. Payment of duties, taxes or other charges. 3. Drawback or refund of duties. 4. Filing of entries or other documents relating to issues covered by 1-3. D. Customs business does not include: 1. Marine transactions. 2. In-bond movement or transportation of merchandise. 3. Foreign Trade Zone admissions. See C.S.D. 84-23. E. Penalty amounts to be imposed for transacting Customs business without a license are as follows: 1. No penalty action when importation is conducted on behalf of a family member. For purposes of this subsection, “family member” is defined as a parent, child, spouse, sibling, grandparent or grandchild. 2. No penalty action against an individual who has a power of attorney to act as an unpaid agent on a non-commercial shipment. See 19 CFR 141.33. 3. A $250 penalty for: a. First violation when transaction is non-commercial but is conducted on behalf of any business entity, or b. First violation where the importation is commercial in nature ( i.e. or 4. A $1,000 penalty for repeat violation involving: a. Commercial importation. b. Non-commercial importation made on behalf of a business entity. c. Non-commercial importation for which compensation is received by the violator. 5. A $10,000 penalty when: a. Violator falsely holds himself out as being a licensed Customs broker. b. A continuing course of conduct can be shown (determined by frequency of violations or number of entries involved) which would indicate that the violator is entering merchandise for others on a regular commercial basis, e.g., if the violator has incurred numerous penalties under subsections (3) and (4) above, but the smaller penalties have had no deterrent effect, the $10,000 penalty under this subsection should be assessed in an action separate from those smaller penalties. F. Mitigation—No mitigation will be afforded for any violation involving conducting Customs business without a license unless the violator can show an inability to pay such penalty. G. IMPORTANT: As a general rule, a separate penalty should not be imposed for each unlawful Customs business transaction if numerous transactions occur contemporaneously. For example: 1. If an unlicensed individual files six commercial entries at one time, that should be treated as one violation. It should not be treated as six violations because the entries were presented contemporaneously. 2. If Customs discovers that an individual has conducted Customs business without a license on numerous occasions, but such individual acted without knowledge of the prohibition on such conduct, those numerous transactions should be treated as one violation for purposes of imposition of any penalty. H. Note: I. Intent to violate the law is not an element of this violation. Reference to “intentionally transacts Customs business” in subsection 1641(b)(6) relates to the intentional transaction of the business itself, not to any intentional attempt to violate the terms of the statute. III. Section 1641( d A. If the license would not have been issued but for the false statement, the proper sanction would be suspension or revocation of the license. If the false or misleading statement would not have absolutely resulted in the denial, revocation or suspension of a license, then penalty sanctions are proper. B. Material facts include but are not limited to: 1. Facts as to identity. 2. Facts as to citizenship status of an individual. 3. Facts as to moral character of an individual which relate to his fitness to conduct Customs business. 4. The organization of any corporation, association or partnership. 5. The status of the license of a license holder who is a corporate officer or partner. C. Penalty Amount—$5,000 for each false statement, to a maximum of $30,000. D. Examples of situations where revocation of the license is appropriate. 1. An applicant states that he is 21 years old (as required by 19 CFR 111.11) and he is not. But for the false statement, the applicant could not meet the age requirement for a license. 2. An applicant provides an alias in the application which is a material false statement as to identity. E. Mitigation guidelines. 1. Violation due to clerical error (clerical error as defined by 19 U.S.C. 1520(c)(1)), mitigated without payment. 2. Violation due to negligence. a. This is defined as more than clerical error, but not an intentional violation. Examples include: i. Failing to list a new corporate office because corporate records have not been kept current. ii. Listing an incorrect address for a reference because applicant has failed to update his records. b. Mitigate to $500 for each $5,000 penalty assessed. c. This category excludes cases of harmless error, i.e. 3. Intentional violations—Revocation of a license which has been granted is the preferred sanction. If no license has been granted, no mitigation. IV. Section 1641( d A. As a general rule, license revocation is the standard sanction for these violations. If the conviction occurs subsequent to the filing of an application, monetary penalties may be assessed according to the following criteria. B. Unlawful conduct must relate to: 1. Importation or exportation of merchandise. 2. Conduct of Customs business (this shall include violations relating to taxes and duties and documents required to be filed with regard to such taxes and duties). 3. Relevant convictions would include: a. 18 U.S.C. 1001—making a false statement to Customs or any other agency with regard to any relevant transaction. b. 18 U.S.C. 545—unlawful importation of merchandise. c. 18 U.S.C. 542—unlawful importation by means of a fraudulent act or omission. d. 22 U.S.C. 2778—illegal exportation of munitions. C. Monetary penalties may not be imposed in connection with convictions relating to conduct described in subsection 1641(d)(1)(B)(iii) including larceny, theft, robbery, extortion, counterfeiting, fraudulent concealment or conversion, embezzlement or misappropriation of funds. Either suspension or revocation is the appropriate penalty for these infractions. D. Penalty amounts. 1. $15,000 for a misdemeanor conviction. 2. $30,000 for a felony conviction. E. Mitigation. 1. For a misdemeanor conviction, mitigation to a lesser amount is permitted if the conviction related to Customs business and the domestic value of the merchandise involved is less than $15,000. In such case, mitigation to an amount equal to the domestic value of the merchandise is appropriate. 2. For other misdemeanor convictions, no relief. 3. Felony convictions, no relief. V. Section 1641( d A. Penalties under this section may be imposed in addition to any penalty provided for under the law enforced by Customs. Exception: B. Additional penalties under this section shall also be imposed against any broker where the other statute violated only moves against property, or the violator has demonstrated a continuing course of illegal conduct or evidence exists which indicates repeated violations of other statutes or regulations. C. Conducting Customs business without a permit penalties should be assessed under this section. 1. The penalty notice should also cite 19 CFR 111.19 as the regulation violated. A party operating without a permit is required to apply for one under the above-noted regulation. 2. Assessment amount—$1,000 per transaction conducted without a permit. 3. Mitigation. a. Negligence, mitigate to $250-$500 per transaction depending on the presence of mitigating factors (lack of knowledge of permit requirement). b. Intentional, grant no relief. c. No mitigation if permit revoked by operation of law. 4. Generally, a separate penalty should not be assessed for each non-permitted transaction if numerous transactions occurred contemporaneously. For example, if a broker files 30 entries the day after a permit expires, the 30 filings should be treated as one violation, not 30 separate violations. D. Penalties for failure to exercise due diligence in payment, refund or deposit of monies received from clients in connection with clients' Customs business also should be assessed under this section. This includes failure to pay over to a client, or file a written statement to a client accounting for, funds received. 1. The penalty notice should also cite 19 CFR 111.29 as the regulation violated. 2. Assessment amount—an amount equal to the value of any monies up to a maximum of $30,000, to be deposited with Customs or refunded or accounted for to a client. 3. No mitigation shall be afforded until the monies are properly paid to Customs or refunded or accounted for to the clients. 4. If any claims for liquidated damages result against the client's bond from the failure to pay monies to Customs, no mitigation from the penalty shall be granted until the claim for liquidated damages is settled by the violating broker 5. After monies are paid or accounted for and/or liquidated damages claims are settled as stated in 3. and 4. above, mitigation may be afforded. If the violator is found to be negligent, the penalty may be mitigated to an amount between 25 and 50 percent of the assessed amount, but no lower than $250. No mitigation from an intentional violation. E. Penalties for failure to retain powers of attorney from clients to act in their names. 1. The penalty notice should also cite 19 CFR 141.46 as the regulation violated. 2. Assessment amount—$1,000 for each power of attorney not on file. 3. Mitigation—for a first offense, mitigate to an amount between $250 and $500 unless extraordinary mitigating factors are present, in which case full mitigation should be afforded. An extraordinary mitigating factor would be a fire, theft or other destruction of records beyond broker control. Subsequent offenses—no mitigation unless extraordinary mitigating factors are present. 4. Penalty should be mitigated in full if it can be established that a valid power of attorney had been issued to the broker, but it was misplaced or destroyed through clerical error or mistake. F. If the other statute violated moves only against property, the violator shall incur a monetary penalty equal to the domestic value of such property or $30,000, whichever is less. e.g., Violation of 22 U.S.C. 401 for unlawful exportation of merchandise results in seizure and forfeiture of the violative merchandise. There are no penalty provisions which Customs enforces against parties responsible for the seizable offense. If brokers are recalcitrant and are constantly responsible for offenses which result in seizure of merchandise, a penalty equal to the domestic value of such merchandise (in no case to exceed $30,000) should be imposed. G. Use of a broker's importation bond to aid an importer who has had his immediate delivery privileges revoked. 1. The broker has aided his client in avoiding the immediate delivery sanctions. The penalty notice should cite 19 CFR 142.25(c) as the regulation violated. Before assessment of this penalty, the broker should be shown to have known or been negligent in not knowing of the client's sanction. 2. A penalty equal to the value of the merchandise, not to exceed $30,000, should be assessed. 3. Mitigation—The penalty shall be mitigated to an amount between 25 and 50 percent of that assessed for a first violation where negligence is shown. Any knowing violation or a subsequent negligent violation (not necessarily involving the same client) will result in no mitigation. H. If the other statute violated provides for a personal penalty, the violator shall incur an additional monetary penalty under this section equal to such personal penalty or $30,000, whichever is less. I. Penalties assessed under this provision are not limited to violations just involving Customs business as defined in the statute. J. Mitigation guidelines. 1. If the other law violated moves only against property, mitigate the penalty using guidelines in effect for the other statute violated. For example, if the broker is responsible for a 401 seizure of merchandise valued at $45,000, he incurs a penalty of $30,000. The guidelines for remission of the 401 forfeiture are applicable to mitigation of the broker penalty. Thus, if the forfeiture is remitted upon payment of 5 percent of the merchandise's value, the penalty will be mitigated upon payment of a like amount. 2. If the other law violated provides for a personal penalty, mitigate the broker penalty using guidelines in effect for the other statute violated. For example, a broker incurs a $40,000 penalty under 1592. The penalty amount represents eight times the loss of revenue because a preliminary finding of fraud is made (see section V.A. of this appendix). A penalty of $30,000, in addition to the $40,000 penalty issued under 1592, may be assessed. The 1592 penalty is later mitigated to $25,000, an amount equal to five times the loss of revenue, as the finding of fraud is upheld and it is also determined that the broker shared in the financial benefits of the violation. The broker penalty also should be mitigated to that $25,000 figure, for a total collection of $50,000. VI. Section 1641( d A. If the law violated by another moves only against property, a monetary penalty equal to the domestic value of such property or $30,000 whichever is less, may be imposed against the broker who counsels, commands or knowingly aids and abets such violation. B. If the law violated provides for only a personal penalty against the actual violator, a penalty may be imposed against the broker in an amount equal to that assessed against the violator, but in no case can the penalty exceed $30,000. C. If the broker is assessed a penalty under the statute violated by the other person, he may be assessed a penalty under this section in addition to any other penalties. D. Examples of violations of this subsection: 1. A broker counsels a client that certain gemstones are absolutely free of duty and need not be declared upon entry into the United States. The client arrives in the United States and fails to declare a quantity of gemstones worth $45,000. A penalty of $30,000 may be imposed against the broker for such counseling. The client would incur a personal penalty of $45,000 under the provisions of title 19, United States Code, section 1497, but the penalty against the broker cannot exceed $30,000. 2. A client imports $15,000 worth of merchandise by vessel. The merchandise is unladen at the wharf but Customs has not appraised or released it. Customs informs the broker that the shipment must be held for an intensive examination. The broker informs the client that the merchandise can be moved and delivered to the consignee. The broker assures his client that he will handle all the necessary paperwork. The merchandise is moved from the wharf. The broker is subject to a $15,000 penalty for counseling and inducing his client to violate the provisions of title 19, United States Code, section 1448 and title 19, United States Code, section 1595a(b). E. Mitigation—Follow guidelines applicable to the other penalty or forfeiture statute involved. VII. Section 1641( d A. A broker has 30 days to seek approval of the Secretary for such employment. If he seeks the approval within such time, no penalty will be assessed. B. A $5,000 penalty for knowingly employing any convicted felon and failing to make application with the Secretary approving such employment within 30 days of the date of discovery of the felony conviction. C. A $25,000 penalty for knowingly employing any convicted felon without seeking approval for employment. D. A $30,000 penalty for knowingly employing any convicted felon and continuing to employ same after approval has been denied (generally revocation or suspension of the license would be appropriate under this circumstance). E. Example: 1. If he seeks approval of the Secretary within 30 days after discovery of the existence of the conviction, no penalty will be assessed. 2. If he seeks approval at some time after 30 days from the date of discovery, a $5,000 penalty would lie. 3. If he does not seek approval until after Customs becomes aware of the violation, a $25,000 penalty would lie. 4. If he seeks approval, but is denied, and continues to employ the convicted felon, a $30,000 penalty would lie. F. Customs discovery of a felony conviction. If Customs discovers the felony conviction and there is no indication that the employer is aware of same, Customs may inform the employer of such conviction. Discretion should be used in divulging this information. G. Mitigation will only be permitted from the $5,000 penalty as follows: 1. If the application for approval is submitted within 60 days, but after 30 days, mitigate to $2,000. 2. If there is no application beyond the 60-day period, no mitigation shall be granted. Continued employment will result in further penalties as described above in sections E.3 and E.4. VIII. Section 1641( d A. An unsubstantiated accusation by a client is inadequate basis to assess any penalty under this section of law. B. A $30,000 penalty should be imposed for any violation of this section. C. Mitigation—Inasmuch as evidence of intent must be shown before a penalty can be imposed, no mitigation should be permitted if a violation is found to lie. A petition for mitigation could be entertained only on the issue of whether such violation did, in fact, occur. IX. Section 1641( b A. Important: B. A $10,000 penalty may be imposed pursuant to section 1641(b)(6) because the revocation by operation of law results in the broker conducting Customs business without a license. No penalty liability would be incurred specifically under section 1641(b)(5). C. Mitigation—Grant no mitigation from any penalty incurred by a broker for conducting Customs business without a license as a result of revocation of that license by operation of law. X. Section 1641( c A. Important: B. Penalties may be imposed for violation of the provisions of 1641(d)(1)(C), violation of other laws enforced by Customs. Guidelines for imposition of penalties for conducting Customs business without a permit should be followed. C. Mitigation—No mitigation should be permitted from any penalty imposed for failure to have a permit when the permit lapses by operation of law. XI. Section 1641( b A. Standards of responsible supervision and control shall be issued by the Commissioner of Customs. Statutory authority to set such standards is provided by section 1641(f). Note: All penalties assessed for violation of 1641(b)(4) shall also cite section 1641(d)(1)(C) as the statute violated in all notices issued to the alleged violator. B. The following penalty amounts shall be assessed against brokers who fail to exercise responsible supervision and control over business conducted at district level. 1. A penalty of $1,000 against any broker who: a. Continuously makes the same errors on a particular type of entry; b. Fails to properly instruct employees about Customs business, thereby resulting in the filing of incorrect entries or the mishandling of transactions relating to Customs business; c. Knowingly allows his entry bond to be used to effect release of merchandise in districts where he does not have a license or permit (this is imposed in addition to any penalty for conducting Customs business without a license); d. Fails to comply with regulations or procedures but does not commit violations that would warrant any higher penalty amount as described below. 2. A penalty of $5,000 against any broker who, when requested, is unable to produce documents relating to specific Customs business which are material to that business (e.g., if the business regards an entry he should have the invoice, packing list, etc.). This requirement excludes documents not required to be kept by a broker. 3. A penalty of $5,000 against any broker who is unable to satisfy the deciding Customs official that he has a working knowledge of any operation material to his ability to render valuable service to others in the conduct of Customs business. Examples include: a. A working knowledge of all automated systems in use in the district; b. A knowledge of the cash flow procedures in each district of operation; c. Retention of copies of all surety bonds in proper form and in sufficient dollar amount; d. Knowledge of filing systems and document record storage in each district; e. Continuous monitoring to ensure timely payment of all obligations including duties, taxes and refunds. 4. A penalty of $5,000 against any broker who fails to exercise responsible supervision and control over the Customs business that it conducts as defined in section XI.C. of this appendix. 5. A penalty of $10,000 against any broker who is found to have failed to maintain satisfactory accounting records or records of documents filed with Customs on any matter. C. The following factors shall be indicative of a lack of supervision or lack of working knowledge of Customs procedures (the list is not conclusive): 1. A high rate of entry rejections when compared with other brokers in the permitted district. 2. A high rate of late filing liquidated damages cases when compared with other brokers in the permitted district. 3. In the case of entry summaries filed in the broker's name, a high number of missing document cases when compared with other brokers in the permitted district. 4. An inordinate number of entries for which free entry is claimed, but no documentation supporting such claim is submitted, resulting in liquidation of the entries as dutiable. 5. Inability to assist or failure to cooperate with an audit, including failure to provide all records and any other necessary information pertaining to a broker's Customs business to assist auditors. 6. Failure to settle (including petitioning) liquidated damages claims in a timely manner. 7. Evidence to indicate that timely duty refunds to clients are not made or accounted for and adequate records of same are not kept (usually will result in penalty assessed in accordance with section B.5. above). 8. Employing a licensed individual for a minimal number of days each 120- or 180-day period (see sections 1641(b)(5) and 1641(c)(3) so as to avoid violation of the statute. a. For purposes of imposition of penalties under this subsection, a minimal number of days shall be 10 working days for each 120-day period or 15 working days for each 180-day period. b. It shall be presumed that temporary employment of such a licensed individual is undertaken solely to avoid revocation of a license or permit. Such minimal employment shall be prima facie D. Mitigation. 1. $1,000 penalties shall not be mitigated unless the broker can show that extraordinary mitigating factors are present. 2. $5,000 penalties for failure to produce documents may be mitigated to an amount between $2,000 and $3,500 if the documents are produced but not in a timely fashion. No mitigation shall be afforded if the documents are not produced, unless the broker can satisfactorily demonstrate that such failure to produce was caused by circumstances beyond the control of the broker or his client (e.g., a rupture of relations with the party responsible for generating the documents). Full mitigation shall be afforded in the case of destruction of records by events beyond a broker's control, such as theft, flood, fire or other acts of God. 3. $5,000 penalty for failure to have a working knowledge of any operation for which a broker is licensed to do business may be mitigated to a lesser amount upon a showing by the broker that steps have been taken to improve instruction and supervision of employees and an improvement in the knowledge of his operation occurs. 4. $5,000 penalty for failure to exercise responsible supervision and control may be mitigated to a lesser amount if the broker immediately corrects the problem which was the basis for the assessment and sufficiently monitors the situation to avoid recurrence. 5. $10,000 penalty for failure to maintain satisfactory accounting records will only be subject to mitigation in full if the broker can prove that satisfactory accounting records and documents records are being kept. Mitigation in a lesser degree may be afforded upon a showing by the broker that a bona fide 6. Penalty equal to the value of monies not properly paid or accounted for. a. If the broker shows that the monies were paid or accounted for and requisite notifications were made, albeit in an untimely fashion not to exceed 30 days after any due date, the penalty may be mitigated upon payment of 25 percent of the assessed amount, but no less than $250. b. If the monies were paid and notifications made more than 30 days after any due date, the penalty may be mitigated upon payment of 50 percent of the assessed amount, but not less than $1,000. c. If there is no proof of proper payment of duties, refunds, etc., no mitigation shall be granted. XII. Limits of Penalty Assessments A. A broker shall be penalized a maximum of $30,000 for any violation or violations of the statute in any one penalty notice. B. If a broker is penalized to the maximum the statute will allow and continues to commit the same violation or violations, revocation or suspension of his license would be the appropriate sanction. Barring such revocation or suspension action, he may again be penalized to the maximum the statute will allow. C. From any one audit, the maximum aggregate penalty for all violations discovered is $30,000. XIII. Consolidation of Cases Whenever multiple penalties arising from a particular fact situation or pattern are contemplated against brokers or individuals operating in different districts, the cases may be consolidated in one district. Approval for consolidation must be sought from the Trade Policy and Programs, Office of International Trade. [T.D. 90-20, 55 FR 10056, Mar. 19, 1990, as amended by T.D. 97-82, 62 FR 51771, Oct. 3, 1997; T.D. 99-27, 64 FR 13676, Mar. 22, 1999; T.D. 00-57, 65 FR 53578, Sept. 5, 2000; 65 FR 65770, Nov. 2, 2000] Appendix D to Part 171—Guidelines for the Imposition and Mitigation of Penalties for Violations of 19 U.S.C. 1593a A monetary penalty incurred under section 593A, Tariff Act of 1930, as amended (19 U.S.C. 1593a; hereinafter referred to as section 593A), may be remitted or mitigated under section 618, Tariff Act of 1930, as amended (19 U.S.C. 1618; hereinafter referred to as section 618), if it is determined that there exist such mitigating circumstances as to justify remission or mitigation. The guidelines below will be used by Customs in arriving at a just and reasonable assessment and disposition of liabilities arising under section 593A within the stated limitations. It is intended that these guidelines will be applied by Customs officers in prepenalty proceedings, in determining the monetary penalty assessed in the penalty notice, and in arriving at a final penalty disposition. The assessed or mitigated penalty amount set forth in Customs administrative disposition determined in accordance with these guidelines does not limit the penalty amount which the Government may seek in bringing a civil enforcement action pursuant to 19 U.S.C. 1593a(i). (A) Violations of Section 593A A violation of section 593A occurs when a person, through fraud or negligence, seeks, induces, or affects, or attempts to seek, induce, or affect, the payment or credit to that person or others of any drawback claim by means of any document, written or oral statement, or electronically transmitted data or information, or act which is material and false, or any omission which is material, or aids or abets any other person in the foregoing violation. There is no violation if the falsity is due solely to clerical error or mistake of fact unless the error or mistake is part of a pattern of negligent conduct. Also, the mere nonintentional repetition by an electronic system of an initial clerical error will not constitute a pattern of negligent conduct. Nevertheless, if Customs has drawn the person's attention to the nonintentional repetition by an electronic system of an initial clerical error, subsequent failure to correct the error could constitute a violation of section 593A. (B) Degrees of Culpability There are two degrees of culpability under section 593A: negligence and fraud. (1) Negligence. (2) Fraud. i.e. (C) Assessment of Penalties (1) Issuance of Prepenalty Notice. (2) Issuance of Penalty Notice. (D) Maximum Penalties (1) Fraud. (2) Negligence. (a) In General. (b) Repetitive Violations. i.e. (3) Prior Disclosure. (a) In General. (i) In the case of 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 26 U.S.C. 6621 on the amount of actual revenue of which the United States is or may be deprived during the period that begins on the date of overpayment of the claim and ends on the date on which the person concerned tenders the amount of the overpayment. (b) Condition Affecting Penalty Limitations. (c) Burden of Proof. (d) Commencement of Investigation. (e) Exclusivity. (E) Deprivation of Lawful Revenue Notwithstanding section 514, Tariff Act of 1930, as amended (19 U.S.C. 1514), if the United States has been deprived of lawful duties and taxes resulting from a violation of section 593A, Customs will require that such duties and taxes be restored whether or not a monetary penalty is assessed. (F) Final Disposition of Penalty Cases When the Drawback Claimant Is Not a Certified Participant in the Drawback Compliance Program (1) In General. (2) Penalty Disposition When There Has Been No Prior Disclosure. (a) Nonrepetitive Negligent Violation. (b) Repetitive Negligent Violation. (i) First Repetitive Negligent Violation. (ii) Second and Each Subsequent Repetitive Negligent Violation. (c) Fraudulent Violation. (3) Penalty Disposition When There Has Been a Prior Disclosure. (a) Negligent Violation. (b) Fraudulent Violation. (4) Mitigating Factors. (a) Contributory Customs Error. (b) Cooperation With the Investigation. (c) Immediate Remedial Action. (d) Prior Good Record. (e) Inability to Pay the Customs Penalty. (f) Customs Knowledge. (5) Aggravating Factors. (a) Obstructing an investigation or audit. (b) Withholding evidence. (c) Providing misleading information concerning the violation. (d) Prior substantive violations of section 593A for which a final administrative finding of culpability has been made. (e) Failure to comply with a Customs summons or lawful demand for records. (G) Drawback Compliance Program Participants (1) In General. (2) Alternatives to Penalties. (a) Contents of Notice. (i) State that the person has violated section 593A; (ii) Explain the nature of the violation; and (iii) Warn the person that future violations of section 593A may result in the imposition of monetary penalties and that repetitive violations may result in removal of certification under the drawback compliance program until the person takes corrective action that is satisfactory to Customs. (b) Response to Notice. (3) Repetitive Violations. (a) In General. i.e. (i) An amount not to exceed 20 percent of the loss of revenue for the first repetitive violation that occurs within three years from the date of the violation of which it is repetitive; (ii) An amount not to exceed 50 percent of the loss of revenue for the second repetitive violation that occurs within three years from the date of the first of two violations of which it is repetitive ; and (iii) An amount not to exceed 100 percent of the loss of revenue for the third and each subsequent repetitive violation that occurs within three years from the date of the first of three or more violations of which it is repetitive. (b) Repetitive Violations Outside 3-Year Period. (4) Final Penalty Disposition When There Has Been No Prior Disclosure. (a) In General. (b) First Repetitive Negligent Violation Within 3 Years of Violation Handled Under Paragraph (G)(2). (c) Second Repetitive Negligent Violation Within 3 Years of Violation Handled Under Paragraph (G)(2) or (G)(3). (d) Third and Each Subsequent Repetitive Negligent Violation Within 3 Years of Violation Handled Under Paragraph (G)(2) or (G)(3). (e) Fraudulent Violations. (5) Final Penalty Disposition When There Has Been A Prior Disclosure. (H) Violations by Small Entities In compliance with the mandate of the Small Business Regulatory Enforcement Fairness Act of 1996, under appropriate circumstances, the issuance of a penalty under section 593A may be waived for businesses qualifying as small business entities. Procedures that were established for small business entities regarding violations of 19 U.S.C. 1592 in Treasury Decision 97-46 published in the Federal Register [T.D. 00-5, 65 FR 3809, Jan. 25, 2000]