Contributing Lawyers

Canada

Cyndee Todgham Cherniak

United States

Susan Kohn Ross

Australia

Andrew Hudson



Massive Penalty Imposed For Really Bad Behavior

Under U.S. law, if an importer fails to properly declare the value or classification of his goods at time of importation, he is subject to a penalty for the material misdeclaration. Typically, that importer ends up owing the underpaid duties, plus interest, plus a penalty. Absent repeated misdeeds, the amount of the penalty is generally mitigated to an amount between 1/2 and 8 times that underpaid duty. However, in a recent case involving Inns Food, the judge's calculator obviously broke. The ultimate fine was almost 12 times the underpaid duties!

The holding reads as follows:

After careful consideration of the Complex Machine Works factors, the evidence and the testimony presented at trial, the Court has determined that the penalty imposed upon Inn Foods must be a substantial one, but imposing the maximum penalty under fraud for the sake of deterring Inn Foods from future transgressions would not appear to be necessary. Based on the foregoing analysis, the Court determines that seven million, five hundred thousand dollars ($7,500,000.00) represents a just penalty in this case.

CONCLUSION

The Court orders that Inn Foods pay $624,602.55 for unpaid duties plus pre-judgment and post-judgment interest, and civil penalties in the amount of $7,500,000.00, plus costs and fees and interest from the date of judgment. Judgment shall enter accordingly.

JUDGMENT

This case having been heard at trial de novo and submitted for decision, and the Court, after due deliberation, having rendered a decision therein; now, in accordance with said decision, it is hereby

ORDERED, ADJUDGED, AND DECREED that a judgment be, and hereby is, entered in favor of Plaintiff, United States, and against Defendant, Inn Foods, Inc. ("Inn Foods") in accordance with the Findings of Fact and Conclusions of Law issued contemporaneously herewith; and it is further

ORDERED, ADJUDGED, AND DECREED that Plaintiff shall recover unpaid duties from Inn Foods in the amount of $624,602.55 plus prejudgment and post-judgment interest; and it is further

For more details, the decision can be found at Slip Op. 07-142 - http://www.cit.uscourts.gov/slip_op/Slip_op07/Slip%20Op.07-142.pdf

 

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