Penalty Guidelines Applicable to Transshipped Textiles and Textile Products

DEPARTMENT OF THE TREASURY

Customs Service

19 CFR Part 171

[T.D. 94-29]

Penalty Guidelines Applicable to Transshipped Textiles and

Textile Products

AGENCY: U.S. Customs Service, Department of the Treasury.

ACTION: Interim rule; solicitation of comments.

-----------------------------------------------------------------------

SUMMARY: This document amends the revised penalty guidelines pertaining

to section 592 of the Tariff Act of 1930, as amended, to add, as an

example of an aggravating factor in arriving at a final administrative

penalty decision, violations involving the illegal importation and

entry of transshipped textiles and textile products. This amendment

will enhance the U.S. textile import program and other programs or laws

administered or enforced by Customs which involve a determination of

the country of origin of imported merchandise.

DATES: Interim rule effective on, and applicable to all textiles and

textile products entered, or withdrawn from warehouse for consumption,

on or after, April 1, 1994. Comments must be received on or before May

31, 1994.

ADDRESSES: Written comments (preferably in triplicate) may be addressed

to the Regulations Branch, U.S. Customs Service, Franklin Court, 1301

Constitution Avenue, NW., Washington, DC 20229. Comments submitted may

be inspected at the Regulations Branch, Office of Regulations and

Rulings, Franklin Court, 1099 14th Street, NW., suite 4000, Washington,

DC.

FOR FURTHER INFORMATION CONTACT: Robert Pisani, Penalties Branch,

Office of Regulations and Rulings (202-482-6950).

SUPPLEMENTARY INFORMATION:

Background

Customs is confronted with a continuing problem involving textiles

and textile products which, after exportation from their country of

origin, are transshipped through a second country, thereby facilitating

a false or otherwise unlawful statement, act, or omission regarding the

country of origin of the merchandise when ultimately imported and

entered in the United States. Such statements, acts or omissions may

impinge on a number of programs or laws administered or enforced by

Customs, including country of origin marking requirements, textile

quota limitations and visa requirements under the U.S. textile import

program, duty assessment and collection, and collection of trade

statistics. The consequences of such unlawful statements, acts or

omissions may include interference with the consumer's right to make an

informed decision regarding a prospective purchase, undermining of

bilateral and multilateral textile agreements to which the United

States is a party and with resulting injury to domestic producers of

textiles and textile products, loss of revenue, and inability to

maintain proper trade statistics to support overall U.S. trade policy

and analysis.

Under section 592 of the Tariff Act of 1930, as amended (19 U.S.C.

1592), a penalty may be assessed against any party who has committed

fraud, gross negligence or negligence in connection with the unlawful

entry of any merchandise in the United States, including textiles and

textile products that have been transshipped in the circumstances

described above. Provisions relating to filing of petitions, and action

upon petitions, for relief from fines, penalties and forfeitures

incurred under laws administered by Customs, including penalties under

section 592, are set forth in part 171 of the Customs Regulations (19

CFR part 171). Appendix B to part 171 sets forth Revised Penalty

Guidelines under section 592. Although appendix B is not intended to

have regulatory effect, it represents the official Customs position

regarding the standards that are generally applicable to the

administrative review of petitions for remission or mitigation of

penalties incurred under section 592. Appendix B includes, in section

(G), certain factors that may be determined by Customs to be

aggravating factors in arriving at a final administrative penalty

decision. Appendix B is currently undergoing review within Customs with

a view to publication of a proposed revision of those guidelines, with

opportunity for public comment, in the near future.

Notwithstanding the upcoming revision of appendix B to part 171 and

the intended solicitation of public comments thereon, Customs has

determined that immediate action must be taken in a penalty mitigation

context to address the textile and textile products transshipment

problem described above. Customs notes that transshipments have

resulted in material false statements, acts or omissions regarding the

country of origin of the imported merchandise, including false

designations of origin. Consequently, it is Customs position that

transshipment must be susceptible to treatment as an aggravating factor

in arriving at a final mitigated section 592 penalty decision under

part 171 of the regulations. For these reasons, this document amends

section (G) of appendix B to part 171 on an interim basis by adding a

reference to ``transshipment in the case of textiles and textile

products affecting a country of origin determination'' as an

aggravating factor. Although this change is effective for merchandise

entered, or withdrawn from warehouse for consumption, on or after April

1, 1994, Customs will consider any comments submitted either in

response to this document or in response to the solicitation of public

comments on the overall revision of appendix B referred to above.

Comments

Before adopting this interim amendment as a final rule,

consideration will be given to any written comments (preferably in

triplicate) timely submitted to Customs. Comments submitted will be

available for public inspection in accordance with the Freedom of

Information Act (5 U.S.C. 552), Sec. 1.4, Treasury Department

Regulations (31 CFR 1.4), and Sec. 103.11(b), Customs Regulations (19

CFR 103.11(b)), on regular business days between the hours of 9 a.m.

and 4:30 p.m. at the Regulations Branch, Office of Regulations and

Rulings, Franklin Court, 1099 14th Street, NW., suite 4000, Washington,

DC.

Inapplicability of Notice and Delayed Effective Date Requirements

Because this amendment constitutes a general statement of policy,

the public notice requirements of 5 U.S.C. 553(b)(A) do not apply and,

for the same reason pursuant to 5 U.S.C. 553(d)(2), a delayed effective

date is not required.

Executive Order 12866

This document does not meet the criteria for a ``significant

regulatory action'' as specified in Executive Order 12866.

Regulatory Flexibility Act

Because no notice of proposed rulemaking is required for an interim

action, the provisions of the Regulatory Flexibility Act (5 U.S.C. 601

et seq.) do not apply.

List of Subjects in 19 CFR Part 171

Administrative practice and procedure, Customs duties and

inspection, Law enforcement, Penalties, Seizures and forfeitures.

Amendment to 19 CFR Chapter I

Part 171, Customs Regulations (19 CFR Part 171), is amended as set

forth below:

PART 171--FINES, PENALTIES, AND FORFEITURES

1. The authority citation for part 171 continues to read in part as

follows:

Authority: 19 U.S.C. 66, 1592, 1618, 1624.

* * * * *

2. Appendix B to part 171 is amended by revising section (G) to

read as follows:

Appendix B to Part 171--Customs Regulations, Revised Penalty

Guidelines, 19 U.S.C. 1592

* * * * *

(G) Aggravating Factors

Certain factors may be determined to be aggravating factors in

arriving at the final administrative penalty decision. Examples of

aggravating factors include obstructing the investigation,

withholding evidence, providing misleading information concerning

the violation, transshipment in the case of textiles and textile

products affecting a country of origin determination, and prior

substantive violations of section 592 for which a final

administrative finding of culpability has been made.

* * * * *

Samuel H. Banks,

Acting Commissioner of Customs.

Approved: March 18, 1994.

John P. Simpson,

Deputy Assistant Secretary of the Treasury.

[FR Doc. 94-7516 Filed 3-29-94; 8:45 am]

BILLING CODE 4820-02-P