CIT Orders C.H. Robinson to Pay Duties on T&E Entries Diverted into U.S.; Carrier Couldn't Prove Export

The Court of International Trade ordered C.H. Robinson to pay $106,407.86 in unpaid duties, plus pre- and post-judgment interest, on wearing apparel from China entered for transportation and exportation (T&E) to Mexico but allegedly diverted into U.S. commerce. CIT did not allege C.H. Robinson was party to the diversion scheme, but found that as carrier C.H. Robinson was liable for payment of the duties. C.H. Robinson provided proof of arrival at the port of exportation, but could not prove actual exportation of the merchandise after a CBP investigation indicated the merchandise was missing.

C.H. Robinson Couldn’t Prove Exportation from U.S. in CBP Audit

In December 2001, Trans-Union Group (TUG), the importer of record, made three T&E entries of the apparel at issue at the Port of Los Angeles. C.H. Robinson was designated as the bonded carrier for the entries. At TUG’s request, C.H. Robinson was to deliver the merchandise to Intercambio Comercial Ekim Forwarding & Freight Broker in Laredo, Texas, using Mario’s Transports Inc., CIT said. According to CIT, no entity named Intercambio Comercial Ekim was authorized to receive bonded cargo at that time. TUG employed Mario Pena, a licensed U.S. customs broker, to receive the merchandise in Laredo for exportation to Nuevo Laredo, Mexico.

Pena received the documentation for the T&E entries (CBP Form 7512), and on Jan. 2 and 4, 2002, using an unmonitored stamp machine in the lobby of CBP’s export lot at the Port of Laredo, obtained a date stamp showing receipt of a Form 7512 for each of the three entries, CIT said. At the time, the Port of Laredo worked on an honor system for T&E entries that did not require carriers to report exportation of merchandise separately from arrival at the port of destination, it said.

In March 2002, CBP began an audit of C.H. Robinson to ensure compliance with procedures for T&E entries. In response to a CBP request for proof of exportation, C.H. Robinson produced the date-stamped CF 7512, as well as three “pedimentos,” or Mexican import documents, obtained from TUG. But when asked by CBP to verify the pedimentos, Mexican Customs could not find the records in its system. CBP presumed the merchandise was not delivered, said C.H. Robinson was the responsible party, and demanded payment of $106,407.86, plus interest, for the unpaid duties. C.H. Robinson did not pay nor protest, so CBP brought this action in 2006.

CBP had to Establish Merchandise is Missing, but C.H. Robinson had to Account for Missing Goods

Prior to trial, C.H. Robinson moved to dismiss the case because, according to the company, it had fulfilled its responsibility when the merchandise was delivered to Laredo. Delivery was evidenced by the stamped CBP Form 7512s, it said. But CIT denied the motion, and said C.H. Robinson had to account for any missing merchandise if audited by CBP. On the other hand, CIT said, the government would also have to establish that the merchandise was missing.

At trial, a Mexican customs official said the information in the pedimentos could not be verified in several Mexican databases. The Mexican Customs database did not even contain any record of imports involving Intercambio Comercial in all of 2001 and 2002, the official said. Also, he said, cargo entering through the Port of Nuevo Laredo must pass through four inspection stations, and at each one the pedimentos must be scanned. If the pedimento is not in the Mexican Customs database, the merchandise is seized. No such seizures were reported for the merchandise, indicating that the merchandise never entered Mexico, the official said. Therefore, he said, the apparel likely wasn’t smuggled in, but instead remained in the U.S.

C.H. Robinson also conducted an internal inquiry about the shipment. Its vice president for brokerage operations at the time sent an email to the C.H. Robinson account manager responsible for the entries, asking the account manager to locate any records demonstrating the merchandise had been exported, such as a driver’s record from Mario’s Transports. But the internal effort found no proof of exportation. Meanwhile, when asked by C.H. Robinson for proof of exportation, TUG only provided the allegedly false pedimentos.

C.H. Robinson Can’t Prove Export; CIT Rules it Liable for Unpaid Duties

As the bonded carrier responsible for the entries, C.H. Robinson had a duty to ensure timely exportation from the U.S. or entry into U.S. commerce of warehouse, CIT said. The government proved the merchandise was missing, it said, but C.H. Robinson could not prove its whereabouts. C.H. Robinson could have exposed itself only to liability from one port to another by using an immediate transportation without appraisement entry and ensuring the next carrier filed an entry for exportation, but did not do so, CIT said. Instead, as carrier, it is responsible for ensuring export of merchandise entered for transportation and exportation. CIT ruled C.H. Robinson liable for any violations that may have occurred, and ordered it to make payment of the unpaid duties, plus pre- and post-judgment interest.

C.H. Robinson paid CBP $57,212 in liquidated damages related to the entries in 2004, CIT said. The government admitted that liquidated damages in this case are limited to the amount of the bond on the entries, or $25,000, and said the unpaid duties and interest should by offset by C.H. Robinson’s overpayment.

(United States v. C.H. Robinson, Slip Op. 12-134, dated 11/07/12, Judge Gordon)

(Attorneys: Steven Mager for plaintiff U.S. government; John Peterson of Neville Peterson for defendant C.H. Robinson)