CIT Orders Another $30,000 Penalty Against Laredo Customs Broker
The Court of International Trade on Dec. 26 slapped yet more penalties on a Laredo-based customs broker whose violations were already the subject of another civil suit and a criminal case. The court ordered Alejandro Santos to pay $30,000 for misclassifying two shipments of pesticides and failing to file the notice of arrival required by the Environmental Protection Agency. The court had already ordered $19,000 in penalties against Santos in December 2012 for unrelated violations of customs laws. Santos also faces prison time after pleading guilty in May to a criminal customs case in the Southern Texas District Court.
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The government alleged that Santos filed two entries in January 2008 that identified the imported merchandise as “fats of bovine animals” classified under Harmonized Tariff Schedule subheading 1502.00.0060. However, the commercial invoices for the shipments indicated the merchandise was actually Co-Ral Flowable, a pesticide classified under HTS subheading 3808.91.2500. Santos did not file the notice of arrival required by the EPA for imports of pesticide products. As a result, CBP was unable to detain and inspect the shipment as it normally would have, said the government.
Santos also claimed NAFTA duty-free treatment on the two entries, but did not possess the required certificates of origin, said the government. The invoices Santos provided to CBP were also deficient, because they were not in English and didn’t identify the duty rate applicable to the merchandise.
CBP issued pre-penalty and penalty notices for $30,000 to Santos, who did not respond. The government subsequently filed suit to collect the penalties at CIT. Santos did not participate in the CIT proceeding either, beyond acknowledging that it had been filed.
In a separate case, CIT had in December 2012 already agreed to a $19,000 penalty against Santos for unrelated violations of customs laws (see 12122603). The government alleged Santos falsely declared goods as “U.S. goods returned” and “vegetable hair,” despite having received CBP instructions that the entries were misclassified. The government also said Santos billed some entries to a freight forwarder instead of the importer of record or consignee, and had on file a power of attorney dated after the associated entry.
The customs broker in May 2013 also pleaded guilty to criminal charges at the Southern Texas U.S. District Court (see 13052214). In that suit, the government alleges Santos falsely declared entries to be U.S. goods returned and NAFTA-eligible. According to the government, Santos collected the full amount of duties from his clients, and then pocketed the duty savings that resulted from his fraudulent classifications. As part of the plea deal, Santos agreed to forfeit his broker license and pay nearly $200,000 in restitution alone. In return, the government agreed to a sentencing reduction. Santos faces up to 20 years in prison.
Santos declined to defend himself in the case involving pesticide shipments, so CIT on found Santos to be in “default.” As a result, the court took all of the government’s allegations as true. The court found Santos committed violations of 19 CFR 152.11 by misclassifying the entries; 19 CFR 12.122-133 by not filing the notice of arrival required by the EPA; 19 CFR 111.32 by knowingly filing false documentation; and 19 CFR 141.86 and 19 CFR 141.90 by filing invoices that were not in English and did not include the applicable duty rate. Santos also failed to exercise due diligence required under 19 CFR 111.29 by claiming NAFTA duty-free treatment despite not having a certificate of origin on file, said the court. Finally, Santos failed to exercise reasonable supervision and control under 19 CFR 111.28 by failing to train and supervise his employees on the lawful importation of pesticides and other entry documentation requirements.
Given the litany of violations committed by Santos, CIT found the $30,000 penalty to be reasonable. Santos had also previously committed the violations at issue in this case -- CBP told Santos as early as 2007 that his invoices needed to be in English and include the duty rate. And his failure to file a notice of arrival prevented EPA “from considering whether to allow entry of a potentially dangerous substance,” said the court. “Violations with possible health and safety implications warrant a stiffer sanction.”