Pentax Corp. v. Robison
| Decision Date | 17 September 1997 |
| Docket Number | No. 96-1320,96-1320 |
| Citation | 125 F.3d 1457 |
| Parties | PENTAX CORPORATION, Asahi Optical Co., Ltd., and Asahi Optical (International), Ltd., Plaintiffs-Appellants, v. Lewellyn ROBISON, Area Port Director, Portland, Oregon, United States Customs Service, and the United States, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Federal Circuit |
Charles H. Bayar, of New York City, argued for plaintiffs-appellants.
Elizabeth W. Newsom, Attorney, Commercial Litigation Branch, Civil Division, Department of Justice, of Washington, DC, argued for defendants-appellees. With her on the brief were Frank W. Hunger, Assistant Attorney General, David M. Cohen, Director Before RICH, SCHALL, and BRYSON, Circuit Judges.
and A. David Lafer, Senior Trial Counsel. Of counsel on the brief were Saul N. Perla, Kathleen Bucholtz, and Dyann Medina, Associate Chief Counsel, United States Customs Service, of Chicago, IL. Counsel is Kenneth M. Dintzer, Attorney, Commercial Litigation Branch, Civil Division, Department of Justice, of Washington, DC.
This case relates to the marking of imported goods with the country of origin pursuant to 19 U.S.C. § 1304(a) (1988). 1 Pentax Corporation ("Pentax"), Asahi Optical Co., Ltd. ("AOC"), and AOC's wholly-owned subsidiary, Asahi Optical (Int'l), Ltd. ("AOI"), (collectively "plaintiffs"), appeal from the April 15, 1996 partial judgment of the United States Court of International Trade, as amended nunc pro tunc on March 10, 1997, in favor of Lewellyn Robison, United States Customs Service ("Customs"), and the United States (collectively "the government") in Pentax Corp. v. Robison, Slip Op. 96-64 (Ct. Int'l Trade Apr. 15, 1996), amended by Pentax Corp. v. Robison, Consol., Court No. 96-01-00067 (Ct. Int'l Trade Mar. 10, 1997). The court's decision upheld the determination of Customs that violations of 19 U.S.C. § 1592, arising from the marking of goods from the People's Republic of China as originating from Hong Kong, resulted in $5,157,601.30 ($5.2 million) in "actual loss of marking duties" under 19 U.S.C. § 1304(f). Id. at 18. Based on this determination, the court denied plaintiffs' motion to enjoin the government from requiring Pentax, as importer of the goods, to tender the $5.2 million in order for Pentax to qualify for prior disclosure treatment under § 1592(c)(4) that would mitigate the penalty for false marking. Id. We reverse.
Pursuant to 19 U.S.C. § 1304(a), goods imported into the United States are required to be marked with their country of origin. Customs may impose a variety of sanctions when the marking requirement is not met. For example, and of relevance here, an entity violating section 1304(a) shall have levied against it a 10 percent ad valorem duty in accordance with 19 U.S.C. § 1304(f), which provides, in pertinent part:
(f) Additional duties for failure to mark
If at the time of importation any article ... is not marked in accordance with the requirements of this section, and if such article is not exported or destroyed or ... marked after importation in accordance with the requirements of this section ..., there shall be levied, collected, and paid upon such article a duty of 10 per centum ad valorem, which shall be deemed to have accrued at the time of importation, shall not be construed to be penal, and shall not be remitted wholly or in part nor shall payment thereof be avoidable for any cause....
19 U.S.C. § 1304(f). Section 1592(d) permits Customs to recover unpaid marking duties after liquidation is final pursuant to 19 U.S.C. § 1514. 2 Section 1592(d) provides in full:
(d) Deprivation of lawful duties
Notwithstanding section 1514 of this title, if the United States has been deprived of lawful duties as a result of a violation of subsection (a) of this section, the appropriate customs officer shall require that such lawful duties be restored, whether or not a monetary penalty is assessed.
The prior disclosure provision of section 1592(c)(4) serves to limit the penalties assessed Section 1592(a) provides, in pertinent part:
pursuant to sections 1592(c)(1)-(3) for mismarking resulting from fraud, gross negligence or, at a minimum, negligence. The statutory scheme is as follows:
(a) Prohibition
Without regard to whether the United States is or may be deprived of all or a portion of any lawful duty thereby, no person, by fraud, gross negligence, or negligence--
(A) may enter, introduce, or attempt to enter or introduce any merchandise into the commerce of the United States by means of--
(i) any document, written or oral statement, or act which is material and false, or
(ii) any omission which is material,....
Sections 1592(c)(1)-(3) set the maximum penalties for culpable mismarking as follows:
(c) Maximum penalties
A fraudulent violation of subsection (a) of this section is punishable by a civil penalty in an amount not to exceed the domestic value of the merchandise.
A grossly negligent violation of subsection (a) of this section is punishable by a civil penalty in an amount not to exceed--
(i) the domestic value of the merchandise, or
(ii) four times the lawful duties of which the United States is or may be deprived, or
A negligent violation of subsection (a) of this section is punishable by a civil penalty in an amount not to exceed--
(i) the domestic value of the merchandise, or
(ii) two times the lawful duties of which the United States is or may be deprived, or
19 U.S.C. § 1592(c)(1)-(3). Finally, section 1592(c)(4), the section central to this case, caps the maximum penalties otherwise assessed under section 1592(c) if the concerned entity brings the mismarking to the attention of Commerce. The subsection provides, in pertinent part:
(4) Prior disclosure
If the person concerned discloses the circumstances of a violation of subsection (a) before, or without knowledge of, the commencement of a formal investigation of such violation, with respect to such violation, merchandise shall not be seized and any monetary penalty to be assessed under subsection (c) of this section shall not exceed--
(A) if the violation resulted from fraud--
(i) an amount equal to 100 percent of the lawful duties of which the United States is or may be deprived, so long as such person tenders the unpaid amount of lawful duties at the time of disclosure or within thirty days, or such longer period as the appropriate customs officer may provide, after notice by the appropriate customs officer of his calculation of such unpaid amount, or
(ii) if such violation did not affect the assessment of duties, 10 percent of the dutiable value; or
(B) if such violation resulted from negligence or gross negligence, the interest ... on the amount of lawful duties of which the United States is or may be deprived so long as such person tenders the unpaid amount of the lawful duties at the time of disclosure or within 30 days, or such longer period as the appropriate customs officer may provide, after notice by the appropriate customs officer 19 U.S.C. § 1592(c)(4).
of his calculation of such unpaid amount....
Our task here is to determine whether the ad valorem duties assessed pursuant to section 1304(f) are duties of which the government has been deprived "as a result of a violation of" section 1592(a), 19 U.S.C. § 1592(d), thus making them duties that must be tendered by Pentax before it can qualify for "prior disclosure" treatment under 19 U.S.C. § 1592(c)(4).
Pentax imports and distributes photographic and optical equipment and accessories from AOC, located in Japan, and AOI, located in Hong Kong. Pentax, No. 96-64, slip op. at 2. Beginning in 1972, Pentax imported into the United States products manufactured by AOI and marked by AOI under section 1304(a) as originating from Hong Kong. Id. During the same time frame, however, AOI shifted production of certain goods from Hong Kong to the People's Republic of China. Id. AOI did not change the marking of the goods, however, and Pentax imported them with markings indicating that they were made in Hong Kong. Id. at 3.
On October 29, 1990, Customs notified Pentax of its intention to audit Pentax, AOI, and AOC. Id. On March 11, 1991, Pentax, seeking to mitigate any penalties for violating section 1592(a) with the favorable treatment provision of 19 U.S.C. § 1592(c)(4), informed Customs that, between 1987 and 1991, it had imported falsely marked camera equipment. Id. On May 22, 1991, Customs determined that the disclosed violation amounted to $5.2 million in "actual loss of marking duties" under 19 U.S.C. § 1304(f) (the "Determination"). Pentax, No. 96-64, slip op. at 4. Accordingly, Customs informed Pentax that, in order to qualify for prior disclosure treatment, it would be required to tender marking duties in the amount of $5.2 million. Id. at 5. Pentax objected to Customs' construction of 19 U.S.C. § 1592(c)(4). Id. The parties were unable to resolve the issue.
On June 20, 1991, Pentax requested review of the Determination. Id. Customs confirmed the Determination on November 20, 1991, and reconfirmed its decision on April 20, 1992. Id. Thereafter, Pentax filed a civil action in the United States District Court for the District of Montana seeking immediate review of the Determination under the Administrative Procedure Act, 5 U.S.C. §§ 701-706, and seeking a preliminary injunction against enforcement of the Determination pending such review. Pentax, No. 96-64, slip op. at 6. That action (the "pre-enforcement" action) was transferred to the Court of International Trade on January 12, 1996. Id. at 7. AOC and AOI also filed an action in the Court of...
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