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NAFTA and Mexican Government Questionnaires to U.S. Exporters

posted by Customs & International Trade Law Blog December 13, 2011 0 comments

In the past year, the Mexican Government (SAT) has issued questionnaires to exporters from the United States which provided a NAFTA Certificate of Origin to the Mexican importer. The North American Free Trade Agreement (NAFTA) Certificate of Origin is always created and signed by the U.S. exporter or producer, and always provided to the Mexican importer at the time of importation so that the Mexican importer may importer the merchandise into Mexico without paying any customs duties.    Years later, the Mexican Government may send a questionnaire to first the U.S. exporter, and then the Mexican importer, demanding proof that the merchandise really "originated" in the United States and properly entered Mexico without any payment of customs duties. 

The problems are (1) the U.S. exporter falsely completed the NAFTA Certificate of origin either intentionally or by ignorance, (2) the U.S. exporter relied on the U.S. producer who provided misleading information to the U.S. exporter, or (3) the records establishing that the merchandise originated in the United States are not available.

I usually recommend the U.S. exporter who received a letter from the SAT of the Mexican Government to respond. Moreover, it is best to seek the assistance of the supplier of the merchandise to the U.S. exporter and the Mexican importer. If the questionnaire is not answered properly and timely, the SAT will deny the NAFTA preferential treatment, and demand payment of customs duties, late fees, interest, and penalties from the Mexican importer, plus perhaps antidumping duties.  The Mexican importer may end up paying those charges to the Mexican Government agency and then seek full reimbursement, plus legal fees, from the U.S. exporter.

NAFTAU.S.Customs

If You are an Owner or Officer of an Importer, This Blog Post is for You

posted by Customs & International Trade Law Blog February 28, 2010 0 comments

In one of the most important recent decisions, the U.S. Court of International Trade dismissed a case filed against the CEO of his importing company that had made false statements to U.S. Customs and Border Protection in the entry documents.  This Court decision has significant implications for every owner, officer, and manager of any company involved in importing merchandise into the United States.

The chronology of the case is somewhat familiar.  In 2002, Tip Top Pants, Inc., imported from Mexico 954 dozen men’s pants, and claimed NAFTA duty free treatment.  Customs issued a Request for Information (CBP form 28), and then a Notice of Action (CBP Form 29) denying the NAFTA claim.  Customs then issued a Pre-Penalty Notice against both Tip Top Pants and its CEO, Mr. Nigri, alleging negligence, and assessing a penalty of $55,000.  Tip Top filed a response to the Pre-Penalty Notice.  Customs then issued a final Penalty Notice. Tip Top Pants filed with Customs another petition seeking cancellation or mitigation of the penalty.  Customs never responded to that Petition filed by Tip Top Pant’s attorney.

Even though the disputed customs duties were subsequently paid by Tip Top Pants, Customs sued both Tip Top Pants, Inc. and its Chairman and CEO, Mr. Saad Nigri, for violating 19 U.S.C. 1592, by allegedly making material false statements or acts, or material omissions, in connection with the entry of the men’s pants from Mexico.

The Court took the unusual action of dismissing Mr. Nigri as a defendant in the case for two reasons.  The first reason is that Customs failed to respond to Tip Top Pant’s Petition, as required by 19 U.S.C. 1592(b)(2).  The second reason is that the Complaint filed with the Court by Customs did not specifically allege that Mr. Nigri personally committed any act or omission in violation of 19 U.S.C. 1592. As the Court stated, “[T]he complaint does not allege that Nigri did, or failed to do, anything whatsoever.” So, even if Tip Top Pants was negligent, its negligence could not be imputed to Mr. Nigri just because he was CEO of the company when the negligence occurred.

In a sentence that is certain to be cited by customs attorneys in petitions and court briefs, Judge Stanceu stated:

The [Priority Products] case does not hold that a party’s serving as an officer of a corporation at the time the corporation imports merchandise is, by itself, sufficient to establish that officer’s liability for acts committed by the corporation that are found to be in violation of Section 592.

The Court then issued an Order dismissing all claims by Customs against Mr. Nigri, personally.

A future blog post will let you know what happened with the negligence penalty case against Tip Top Pants, Inc.