Customs & Border Protection has issued the guidelines for mitigation of liquidated damage claims for failure to comply with the requirements of the ISF/10+2 regulations, 19 CFR Part 149. These guidelines took effect on July 17, 2009.
One of the most significant points to the mitigation guidelines is that, as promised, CBP will take into consideration when determining whether to mitigate a liquidated damage claim, the party’s "evidence of progress in the implementation" of the ISF filing, vessel stow plan filing and container status message filing during the flexible enforcement period of January 26, 2009 through January 26, 2010. Thus, parties who have been actively participating in the program will benefit from their participation if faced with a liquidated damage claim after January 26, 2010.
Overview of Guidelines:
ISF Importer - Violation:
- Failure to submit an ISF when one is required;
- Submitting a late ISF;
- Submitting an inaccurate ISF transmission.
ISF Importer - Assessment of Liquidated Damage Claims for Violation:
- Failure to submit - CBP will withhold release or transfer of cargo until CBP receives ISF information, reviews documentation and conducts any examination. CBP can also withhold unlading of cargo from vessel and if unladen without permission, cargo can be seized.
- Late filing of ISF - Liquidated damage claim of $5,000;
- Inaccurate Filing of ISF - Liquidated damage claim of $5,000 per inaccurate ISF filing;
- Updates - Liquidated damage claim of $5,000 for inaccurate updates;
- Failure to Withdraw ISF - Liquidated damage claim of $5,000.
Cancellation of Liquidated Damage Claims
- Liquidated damage claim can be cancelled upon payment of any amount between $1,000 and $2,000 depending on the presence of mitigating or aggravating factors.
- Mitigating Factors include:
- Evidence of progress in implementation of ISF requirements during flexible enforcement period;
- Small number of violations compared to number of shipments requiring ISF;
- ISF Importer is certified Tier 2 or 3 C-TPAT member;
- Demonstrated remedial action;
- ISF information was filed late because of vessel diversion due to factors outside of the ISF Importer’s control;
- Presenting party acquired the information from another party in accordance with ordinary commercial practices and can demonstrate it reasonably believed the information to be true.
- Aggravating Factors Include:
- Lack of cooperation with CBP;
- Evidence of smuggling;
- Multiple Errors on ISF;
- Rising error rate on transmission of ISF information.
For those who are not yet participating in the ISF program, we strongly recommend that consideration be given to the benefits that will result from active participation during the flexible enforcement period.
For more information on these guidelines, refer to pages 29-41 of Customs Bulletin dated July 17, 2009. The title of the referenced section is: Guidelines for the Assessment and Cancellation of Claims for Liquidated Damages for Failure to Comply with the Vessel Stow Plan, Container Status Message, and Importer Security Filing Requirements