CUSTOMS DIRECTIVE
ORIGINATING OFFICE: CO:T:S:F DISTRIBUTION: See Signature Page
CUSTOMS DIRECTIVE NO. 4410-016
DATE: APRIL 30, 1992
SUBJECT: ISSUANCE OF PENALTIES FOR MANIFEST OR CARGO DELIVERY
VIOLATIONS
1. PURPOSE
To provide guidance to field personnel on appropriate penalty action to be
initiated when manifest or cargo delivery violations are discovered. Mitigation
guidelines are provided in VES section of the Fines, Penalties, and Forfeiture
(FP&F) Handbook.
2. BACKGROUND
There has been a lack of uniformity in penalty actions taken against carriers and
other culpable parties who are chargeable for manifest violations which are
discovered by Customs. This lack of uniformity is due, in part, to recent changes
in manifest discrepancy reporting procedures set out in Customs Directive
3200-33 dated September 29, 1989, as well as regulatory and statutory changes
in manifest requirements and penalty provisions for failure to meet those
requirements. Additionally, confusion exists as to appropriate penalties to be
assessed for cargo misdelivery problems.
It is essential that field officers who are in a position to enforce these
requirements be knowledgeable in the appropriate penalty action which should
be initiated in the automated FP&F module. The appropriate statute should be
cited for similar violations in all districts.
In addition, District/Area Directors who have continued to issue demands or bills
for duties in cases of differences between entered and manifested quantities
should discontinue this practice and issue penalty cases as appropriate.
3. ACTION
The following list of violations covers the most frequently referenced
discrepancies or irregularities involving manifests. If other violations are
discovered, please contact your district FP&F officer for guidance.
4. RESPONSIBILITY
It is the responsibility of each Customs officer initiating a liquidated damages or
penalty case involving manifest or misdelivery violations to obtain the documents
necessary to establish a violation, promptly initiate the case in the automated
FP&F system citing the appropriate statute, regulation or both, and supply any
necessary bond information.
Documents should be forwarded to the Fines, Penalties and Forfeitures office
within three working days of case initiation. FP&F officers are responsible for
quality control over cases initiated by field line officers and case mitigation of all
penalties within the district director's delegated authority. District/Area Directors
are ultimately responsible for all enforcement actions within their area or district.
District/Area Directors may make available for public dissemination the material
contained in this directive.
5. EFFECTIVE DATE
This directive is effective immediately and should be followed in cases of
manifest and cargo delivery violations.
6. MITIGATION OF GUIDELINES
The mitigation guidelines in the VES section of the FP&F Handbook as published
in Change No. 4, dated September 30, 1991, shall be applied to all cases
established under this directive.
Commissioner of Customs
Attachment
Distribution:
R-01 Regional Commissioners
F-01 District/Area Directors
F-02 Port Directors
F-10 District FP&F Officers
G-01 All SACs (ENF)
ATTACHMENT
MANIFESTS AND CARGO DELIVERY VIOLATIONS
I. PRESENTATION OF MANIFESTS
The following list of violations covers the most frequently referenced discrepancies or
irregularities involving the presentation of manifests.
A. Carrier does not have manifest in its possession, the master of a vessel or
person in charge of a vehicle does not produce the manifest to an officer
demanding the same or the carrier does not produce it upon demand by
post-audit team:
1. Penalty action against master of vessel or person in charge of rail
or truck carrier; assess a penalty of $1,000 for violation of
19 USC 1584.
2. Penalty action against pilot of air carrier; assess a penalty of $5,000
for violation of 19 USC 1433, 19 USC 1436, 19 CFR 122.48, and
19 CFR 122.166.
B. Carrier does not deliver manifest to Customs immediately upon arrival:
1. Penalty action against master of vessel; assess a penalty of $500
for violation of 19 USC 1439.
2. Penalty action against operator of rail or truck carrier or aircraft
pilot; assess a penalty of $5,000 for violation of 19 USC 1433, 19
USC 1436, and 19 CFR 123.5 (if truck) or 19 CFR 123.6 (if rail
carrier) or 19 CFR 122.42(c) (if aircraft).
3. In the case of aircraft pilots, if a pilot incurs numerous penalties for
this violation, or exhibits a continuing course of conduct in failing to
deliver the manifest to Customs upon arrival, and the assessment
of the $5,000 penalty for violation of 19 USC 1436 has no deterrent
effect, an additional $5,000 penalty may be assessed for violation
of 49 USC App. 1474, 19 CFR 122.48, 19 CFR 122.42(c), and 19
CFR 122.161.
II. INACCURACIES OR DISCREPANCIES IN MANIFESTS
The following violations involve manifests that inadequately describe merchandise,
include merchandise that is not found (shortage) or fail to manifest merchandise entirely
(overage).
A. Manifest does not contain sufficient description of merchandise included
thereon as required by 19 USC 1431. The manifest should contain
sufficient detail to enable Customs to verify the type and number of
packages. Carriers are obliged to manifest the quantity of packages in
their smallest external packaging units; i.e., the manifest description
should be the equivalent of that on any pertinent bills of lading or packing
lists. Those carriers that accept unit-loaded cargo may use the provisions
of 19 CFR 4.7a and indicate Shipper's Load and Count (SLAC) next to
the quantity on the manifest. When discrepancies are discovered for
SLAC quantities, the carrier should be warned and permitted to rectify this
with the shipper.
1. When these sorts of discrepancies are originally discovered, the
carrier should be informed of the problem and counseled as to
the correct manner of description of the merchandise contained on
the manifest.
2. If carriers continue to make errors or inadequately describe
merchandise on the manifest after instruction from Customs, a
penalty should be issued for violation of 19 USC 1584 in the
amount of the domestic value of the cargo not adequately
described. Said penalty cannot exceed $10,000. A prepenalty
notice must be issued if the penalty is to be issued for more than
$1,000. (See 19 CFR 162.76).
3. The penalty may be assessed against any party that is directly or
indirectly responsible for the inadequate merchandise description.
The penalty is the same for air, sea, or land carriers.
D. Manifest does not contain shipper/consignee names, or identifies the
shipper as "various."
1. When these sorts of omissions or insufficiencies are originally
discovered, the carrier should be informed of the problem and
counseled as to the appropriate designation of shippers or
consignee names that should appear on the manifest.
2. If parties responsible for preparing manifests continue to omit
names of shippers or consignees or continue to identify them as
"various" on the manifest after instruction from Customs, a penalty
should be issued for violation of 19 USC 1584 in the amount of the
domestic value of the cargo which is not ascribed to a named
shipper or consignee. Said penalty cannot exceed $10,000. A
prepenalty notice must be issued if the penalty is to be issued for
more than $1,000. (See 19 CFR 162.76).
3. The penalty may be assessed against any party that is directly or
indirectly responsible for the omission. The penalty is the same
for air, sea, or land carriers.
C. Manifest quantity is greater than entered or discovered quantity, i.e.,
manifested but not found (shortage).
1. If Customs receives or there is filed an adequate manifest
discrepancy report (MDR) within the time period provided for by
regulation (60 days for vessels per 19 CFR 4.12, 30 days for
aircraft per 19 CFR 122.49(a)(2), and 60 days for vehicle carrier
per 19 CFR 122.9(b), or if during an audit the manifest records
indicate that adequate MDR's are present, than no penalty action is
warranted.
2. Manifest discrepancy reports (MDR's) may be filed by any party
discovering a discrepancy, including but not limited to the importing
carrier, a subsequent in-bond carrier, a cartman or lighterman, or
an importer. Manifest discrepancy reporting procedures are
chronicled in Customs Directive 3200-33, issued
September 28, 1989.
3. The party last receipting for the full amount of merchandise listed
on the manifest, in-bond document, or transfer, document is
responsible for reporting discrepancies.
4. If a clear and concise statement as to the reason for the
discrepancy is not provided (such statement supported by proof in
the form of bills of lading, signed affidavits, exporter's and shipper's
messages and telexes or any other documents that would
substantiate the discrepancy) in the discrepancy report, Customs
must find that the shortage occurred.
5. A penalty of $1,000 shall be assessed under the 19 USC 1584
against any party directly or indirectly responsible for the failure to
explain the discrepancy.
D. Manifest quantity is less than entered or discovered quantity (overage).
1. If Customs receives or there is filed an adequate manifest
discrepancy report within the time period provided for by regulation
(60 days for vessels per 19 CFR 4.12, 30 days for aircraft per
19 CFR 122.49(a)(2), and 60 days for vehicle carrier per 19 CFR
123.9(b), or if during an audit the manifest records indicate that
adequate MDR's are present, then no penalty action is warranted.
2. Carrier is responsible for the merchandise until it has been placed
in G.O. warehouse, exported or entered or receipted for by
another party (container freight station, in-bond carrier, etc.)
3. The party last receipting for the full amount of merchandise listed
on the manifest, in-bond document, or transfer document is
responsible for reporting discrepancies.
4. If the manifest discrepancy report is not adequate a penalty should
be issued under 19 USC 1584 equal to the domestic value of the
merchandise or $10,000 whichever is smaller. The penalty may be
assessed against any party directly or indirectly responsible for the
manifest discrepancy. (See paragraph C.4 above).
5. Any 1584 penalty for over $1,000 requires issuance of a prepenalty
notice. See 19 CFR 162.76.
6. If the coverage has been released without Customs authorization, a
penalty in the amount of the domestic value of the merchandise
may be assessed under the provisions of 19 USC 1595a(b) for
violation of the provisions of 19 USC 1448 for removal of
merchandise from the place of unlading without Customs
authorization against any party responsible for the unauthorized
release.
III. CARGO DELIVERY VIOLATIONS
This section describes cargo misdelivery by bonded carriers, or other carriers, and
describes obligations of container freight stations and centralized examination stations.
A. Failure to deliver merchandise to a Centralized Examination Station or
other location designated by Customs.
1. If merchandise is receipted by a cartman for delivery to a
Centralized Examination Station and delivery does not occur, or
shortages are discovered upon receipt at the CES, a claim for
liquidated damages should be assessed against the cartman and
his bond in an amount equal to the value of the undelivered or
short merchandise for violation of the provisions of 19 CFR 18.8.
NOTE: Once he receipts for a certain quantity of merchandise, the
cartman cannot cure a subsequently discovered shortage by
filing an MDR. He will still be liable for the shortage under
the terms of his custodial bond.
2. If the importing carrier is responsible for delivery to the CES and
delivery does not occur issue a penalty in the domestic value
of the undelivered cargo under 19 USC 1595a(b) for violation of 19
USC 1448.
3. If the importer voluntarily obligates his importation bond for delivery
of merchandise to the CES (See Customs Directive 3270-05,
dated August 31, 1990, then issue a claim for liquidated damages
against the importer in an amount equal to the value of the
undelivered or short merchandise for violation of the provisions of
19 CFR 113.62(f).
4. If the merchandise is receipted for by the CES operator and then is
discovered to be missing or has been delivered without
authorization, a claim for liquidated damages against the CES
operator shall be issued in an amount equal to the value of the
missing or misdelivered goods for violations of the provisions of 19
CFR 113.63(b) regarding safekeeping of merchandise.
B. Merchandise is manifested for delivery at Port B, but is offloaded at Port A
before conveyance arrival at Port B (vessels only).
1. If diversion of cargo occurs for reasons other than those expressed
in 19 CFR 4.33 and the manifest is not amended to reflect the
diversion of cargo, a penalty in the amount of the domestic value of
the cargo unladen at the port for which it was not manifested
shall be assessed under the provisions of 19 USC 1453. The
penalty shall be assessed against any party responsible for the
improper unlading of the cargo without a permit.
2. SPECIAL NOTE: If this violation is discovered only because the
carrier informs Customs of the offloading, then the above-noted
penalties may be waived at the discretion of the district director.
C. Merchandise is manifested for delivery at Port A, but is not offloaded at
Port A and is overcarried to Port B (vessels only).
1. If diversion of cargo occurs and the carrier does not amend the
manifest pursuant to 19 CFR 4.33 to reflect this diversion, a penalty
in the amount of $500 may be assessed under the provisions of
19 USC 1445. The penalty shall be assessed against the master of
the vessel.
2. SPECIAL NOTE: If this violation is discovered only because the
carrier informs Customs of the overcarriage, then the above-noted
penalty may be waived at the discretion of the district director.
D. Merchandise is delivered with seals intact, but upon examination, either an
overage or shortage is discovered.
1. When a container is sealed prior to being received by the carrier,
the carrier or any party who is responsible for the accuracy of
the manifest remains legally responsible for inaccuracies in the
manifest. However, if Customs receives or there is filed an
adequate manifest discrepancy report within the time period
provided for by regulation (60 days for vessels per 19 CFR 4.12, 30
days for aircraft per 19 CFR 122.49(a)(2), and 60 days for vehicle
carrier per 19 CFR 123.9(b)), or if during an audit, manifest records
indicate that a discrepancy was annotated, then no penalty action is
warranted.
2. If the explanation provided in the manifest discrepancy report is not
acceptable, Customs shall assume that a manifest violation
occurred. If the discrepancy is a shortage, a penalty of $1,000 shall
be assessed under 19 USC 1584 against any party directly or
indirectly responsible for the shortage. If the manifest discrepancy
is an overage, a penalty should be issued under 19 USC 1584
equal to the domestic value of the merchandise or $10,000
whichever is smaller. The penalty may be assessed against any
party directly or indirectly responsible for the manifest discrepancy.
3. If the penalty is for over $1,000, a prepenalty notice must be
issued. See 19 CFR 162.76.
B. Unauthorized delivery of merchandise by carrier.
1. Issue a penalty in an amount equal to the domestic value of the
merchandise which is delivered without authorization. The penalty
may be assessed against any party that is responsible for the
unauthorized delivery, including, but not limited to, NVOCC's,
freight forwarders, deconsolidators, container freight station, etc.
The penalty is assessed under 19 USC 1595a(b) for violation of the
provisions of 19 USC 1448.
2. Districts should not issue demands for duty against carriers in
situations involving unauthorized delivery or failure to rectify
manifest discrepancies. The penalty which is issued will serve to
track the case and amounts equal to estimated duties will be
charged in the mitigation process if entry of the merchandise and
payment of duties cannot be proved in the petitioning process.
3. If an importer indicates that he has not received all manifested
packages from the carrier, this penalty may be assessed against
the carrier for delivery without Customs authorization.
a. This penalty is appropriate even if the carrier can produce an
electronic delivery authorization which indicates that all
manifested packages were released for delivery.
b. The filing of a manifest discrepancy report (MDR) after the
short delivery is discovered will not serve to obviate the
delivery without authorization violation.
c. The filing of a police report, after the report of short delivery,
indicating that a theft or pilferage of the merchandise
reported short has occurred, will not serve to obviate the
violation.
F. Theft of merchandise from Customs custody.
1. If Customs can identify the individual or individuals who commit a
theft of merchandise from Customs custody, penalties equal to the
value of the stolen merchandise may be assessed separately
against all violators.
2. Penalties are assessed under the provisions of 19 USC 1595a(b)
for violation of the provisions of 19 USC 1448.
IV. MANIFEST DISCREPANCY REPORT
A. Carrier fails to file a manifest discrepancy report or to respond to a
manifest discrepancy report issued by Customs within the time period
provided for by regulation.
1. This penalty is issued in addition to any 1584 penalties for
overages or shortages which may be appropriate.
2. Issue a penalty of $500 against the master of the vessel, in care of
the appropriate carrier, for violation of the provisions of 19 USC
1440. Issue a penalty of $5,000 against the pilot of an aircraft for
violation of 49 USC App. 1474 and 19 CFR 122.49.
3. There is no equivalent provision for failure to file a manifest
discrepancy report against a land carrier.
B. Carrier does not maintain adequate records at the time of audit review.
1. If no manifest exists for a particular conveyance arrival, penalties
should be issued in accordance with subparagraph I.A.
2. If manifest discrepancy reports are not maintained, penalties should
be issued in accordance with subparagraph IV.A. above.
3. A separate violation will be established for each conveyance arrival
for which a manifest or a manifest discrepancy report is not
maintained.
V. WHEN IS SEIZURE APPROPRIATE IN MANIFEST DISCREPANCY CASES?
Seizure is appropriate in cases involving manifest violations in the following limited
circumstances.
A. Under the provisions of 19 USC 1584, failure to manifest merchandise
belonging or consigned to the master or any crew of vessel or to the
owner or person in charge of a vehicle or to the pilot or crew of an aircraft.
Only the unmanifested merchandise is subject to seizure and forfeiture.
The conveyance carrying the unmanifested merchandise is not subject to
seizure and forfeiture under 1584.
B. Under the provisions of 19 USC 1436, unmanifested merchandise and the
transporting conveyance may be seized if the manifest contains
substantial material falsity and assessment of a penalty under 19 USC
1436 or 1584 against the person operating the conveyance would have
limited enforcement effect.
For example, an independent trucker arrives at the border with a container
of telephone equipment. He presents a manifest to Customs indicating
that the container has 50 boxes of equipment having a transaction value
of $50,000. Search of the container reveals telephone sets and switching
equipment worth in excess of $500,000. The trucker claims he was given
the paperwork by a foreign freight forwarder who received it from the
foreign shipper. Unless Customs can develop independent information
inculpating the trucker, assessment of a penalty against the independent
trucker would have little enforcement value as he was merely transporting
merchandise for the benefit of others. Seizure of the merchandise would
be appropriate here because it is the most efficient way to reach the
apparently culpable party, i.e., the foreign shipper.