U.S. Supreme Court Ruling Makes Individuals Potentially Liable for Import Infractions
On Tuesday (May 26), the U.S. Supreme Court passed on reviewing a bid by the president of Trek Leather Inc. that had requested to undo a Federal Circuit ruling holding him personally responsible for penalties levied against his company for import violations. The closely-watched ruling is noteworthy, precedent-setting news in the import world.
The suit stems from shipments in 2004, in which Trek imported dozens of men's suits but allegedly failed to disclose the costs of fabric and other materials in their entry documents - resulting in Trek paying lower duties for the imports. The Court of International Trade found Trek President Harish Shadadpuri and his company to be grossly negligent for undervaluing the merchandise and ordered them to pay roughly $45,245 in customs duties and an additional civil penalty near $535,000.
From the perspective of a U.S. Customs broker, the fact that the government is holding Mr. Shadadpuri personally liable for the import infractions is significant, and elevates. Customs compliance for importers to a new level of criticality. Many people within your company's supply chain touch the import process, and while in Trek's case, the actions were found to be grossly negligent, penalties for import violations are not always assessed based on intent. Meaning, this case sets the precedent that your ownership, your Board of Directors and even your employees can be held personally liable for infractions, whether negligent or accidental.
While it is anticipated that will cause some uncertainty over careers in importing, the key for companies to protect themselves will be to put in place a reliable, documented compliance program. Welke Customs Brokers continues to be the leader among importers in education about compliance and the government's enhanced oversight strategy to weed out bad actors as a mechanism to facilitate legitimate trade. This week's ruling gives you another (very) good reason to make a definitive move to get your import processes compliant. Call us today at 716-995-2900 (U.S.) or 800.503.7770 (Canada) to get started.