United States v. Rockwell Intern. Corp., 82-12-01744.
| Decision Date | 22 January 1986 |
| Docket Number | No. 82-12-01744.,82-12-01744. |
| Citation | 628 F. Supp. 206,10 CIT 38 |
| Parties | The UNITED STATES, Plaintiff, v. ROCKWELL INTERNATIONAL CORPORATION, Defendant. |
| Court | U.S. Court of International Trade |
Richard K. Willard, Asst. Atty. Gen., David M. Cohen, Director, Commercial Litigation Branch, Civ. Div., Dept. of Justice, A. David Lafer, Washington, D.C., for plaintiff.
Glad & Ferguson, Edward N. Glad, Los Angeles, Cal., for defendant.
The United States brings this action against defendant Rockwell International Corporation (Rockwell) to recover a civil penalty for alleged negligent violations of section 592 of the Tariff Act of 1930, as amended, 19 U.S.C. § 1592 (1982). The complaint alleges that 223 entries of nickel cadium batteries imported from Mexico over a one year period were entered by means of material and false statement and by means of material omissions.
Rockwell moves under Rule 56 of the Rules of this Court for summary judgment on the material and false statement and material omissions charges. The government opposes Rockwell's motion and cross-moves for summary judgment on the material and false statement charge. Rockwell's motion is denied and plaintiff's motion is granted in part.
The following facts are not in dispute:
Beginning in late 1977, Rockwell imported at Calexico, California, pin ball machine control boards assembled in Mexico, each containing a small nickel cadium battery. The control boards were imported under item 807.00, Tariff Schedules of the United States (TSUS), as "articles assembled abroad in whole or in part of fabricated components, the product of the United States...." Item 807.00, TSUS, imposes a duty upon the full value of the imported article, less the cost or value of United States components. The entries listed in the complaint contained a total of 51,995 batteries, each having a dutiable value of $2.30.
The estimated duties deposited by Rockwell in connection with the control board entries were calculated on the basis of an estimated declaration of assembly costs filed by Rockwell with the United States Customs Service (Customs) on November 21, 1977. The estimated declaration listed the components of the control boards and indicated whether they were of United States or foreign origin.1 The declaration listed the batteries as components of United States origin. The batteries had actually been manufactured in Mexico and sold to defendant by the General Electric Company.
Each battery was marked "assembled in Mexico." Rockwell never physically inspected the batteries prior to their exportation to Mexico for assembly into the control boards. Rockwell never received, or does not recall receiving, an executed origin of manufacturing declaration from General Electric.
The country of origin of the batteries was not made known to Customs until on or about March 27, 1979, when Rockwell filed a revised estimated declaration of assembly costs in which the batteries were shown to be of foreign origin.2
The complaint alleges that the batteries were entered in violation of 19 U.S.C. § 1592(a)(1)(A)(i) by means of material and false statements on the estimated declaration of assembly costs and entry documents. The complaint also alleges that the batteries were entered by means of material omissions in violation of section 1592(a)(1)(A)(ii) on the grounds that the batteries were dutiable separately from the control boards and should have been listed on a separate line on the entry papers.
On its motion for summary judgment, Rockwell argues (1) the action is barred by the applicable statute of limitations because it was commenced more than five years after the filing of the estimated declaration of assembly costs on November 21, 1977, (2) the entry documents contain no false statements and the false statement contained in the declaration of estimated assembly costs is not material within the meaning of section 1592, (3) the entries were not made by means of material omissions since the control boards and batteries were entireties, and (4) the false statement was not filed as a result of negligence.
The government opposes Rockwell's motion for summary judgment on the material and false statement charge and the material omissions charge, and cross-moves for summary judgment on the material and false statement charge. On its cross-motion for summary judgment, the government argues (1) the timeliness of the action is governed by the entry dates, (2) Rockwell's motion for summary judgment on the material omissions charge is precluded by the existence of a genuine issue of material fact, (3) the entries were made by means of a false statement because the value of the batteries was listed as nondutiable in the estimated declaration of assembly costs, (4) the false statement is material, and (5) Rockwell was negligent in filing the material and false statement.
The timeliness of this action is governed by 19 U.S.C. § 1621 (1982), which in relevant part states:
That in the case of an alleged violation of section 1592 of this title arising out of gross negligence or negligence, such suit or action shall not be instituted more than five years after the date the alleged violation was committed.
Under this section, the five year limitations period begins to run upon the commission of the alleged violation of section 1592. Section 1592 prohibits, inter alia, the entry of merchandise into the commerce of the United States by means of any document which is material and false. 19 U.S.C. § 1592(a)(1)(A). Therefore, the timeliness of this action is determined not by the date on which the estimated declaration of assembly costs was filed, but rather by the dates on which Rockwell entered the merchandise.
This action is timely since the entries which are the subject of the complaint occurred less than five years prior to commencement of the action.
With respect to Rockwell's motion for summary judgment on the material omissions charge, both parties have submitted affidavits as to whether the batteries were soldered into the control boards. This question is material to whether the control boards and batteries were entireties, and the entireties issue is material to whether the batteries were negligently omitted from a separate line on the entry documents. Since the affidavits raise a genuine issue of material fact, Rockwell's motion for summary judgment on the material omissions charge is denied.
The Court next turns to the parties' cross-motions for summary judgment on the government's allegation that Rockwell, by negligence, entered the batteries by means of a material and false statement. Rockwell admits that it filed a document containing a false statement with Customs, saying: "The only false statement that appears in any paper filed with U.S. Customs is contained in the initial estimated declaration of dutiable costs filed with U.S. Customs by defendant on November 21, 1977, wherein the rechargeable batteries were stated to be of U.S. origin when in fact these batteries were foreign."3 Since estimated duties on the entries were calculated based upon the estimated declaration of assembly costs, and the estimated declaration listed the battery components as nondutiable, the batteries were entered by means of false statement.
The Court now addresses whether genuine issues of material fact preclude resolution of the questions (1) whether the false statement was material, and (2) whether the false statement was negligently filed.
A question of materiality involves a legal issue to be decided by the Court. See, e.g., Sinclair v. United States, 279 U.S. 263, 298-99, 49 S.Ct. 268, 273-74, 73 L.Ed. 692 (1929); United States v. Ackerman, 704 F.2d 1344, 1347, reh'g denied, 719 F.2d 1282 (5th Cir.1983). "In determining whether a false statement is material, the test is whether it has a natural tendency to influence, or was capable of influencing, the decision of the tribunal in making a determination required to be made." United States v. Krause, 507 F.2d 113, 118 (5th Cir.1975)(citing Blake v. United States, 323 F.2d 245, 246 (8th Cir.1963); Gonzales v. United States, 286 F.2d 118, 122 (10th Cir. 1960)). The Court also notes that in 1984 Customs issued a definition of materiality under section 1592, which states in part: "A document, statement, act, or omission is material if it has the potential to alter the classification, appraisement, or admissibility of merchandise, or the liability for duty...." 19 C.F.R.App. B to Pt. 171 (1984).
In this case, the Court holds that the measurement of the materiality of the false statement is its potential impact upon Customs determination of the correct duty for the imported merchandise. Cf. United States v. Taylor, 574 F.2d 232, 235, reh'g denied, 576 F.2d 931 (5th Cir.), cert. denied, 439 U.S. 893, 99 S.Ct. 251, 58 L.Ed.2d 239 (1978). Under this standard, a statement is material which identifies components to be of United States origin and nondutiable, when in fact the...
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