                        TITLE 19--CUSTOMS DUTIES
 
                      CHAPTER 4--TARIFF ACT OF 1930
 
                 SUBTITLE III--ADMINISTRATIVE PROVISIONS
 
                     Part V--Enforcement Provisions
 
Sec. 1592. Penalties for fraud, gross negligence, and negligence


(a) Prohibition

                          (1) General rule

        Without regard to whether the United States is or may be 
    deprived of all or a portion of any lawful duty, tax, or fee 
    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 or electronically transmitted data or 
            information, written or oral statement, or act which is 
            material and false, or
                (ii) any omission which is material, or

            (B) may aid or abet any other person to violate subparagraph 
        (A).

                            (2) Exception

        Clerical errors or mistakes of fact are not violations of 
    paragraph (1) unless they are part of a pattern of negligent 
    conduct. The mere nonintentional repetition by an electronic system 
    of an initial clerical error does not constitute a pattern of 
    negligent conduct.

(b) Procedures

                       (1) Pre-penalty notice

        (A) In general

            If the Customs Service has reasonable cause to believe that 
        there has been a violation of subsection (a) of this section and 
        determines that further proceedings are warranted, it shall 
        issue to the person concerned a written notice of its intention 
        to issue a claim for a monetary penalty. Such notice shall--
                (i) describe the merchandise;
                (ii) set forth the details of the entry or introduction, 
            the attempted entry or introduction, or the aiding or 
            procuring of the entry or introduction;
                (iii) specify all laws and regulations allegedly 
            violated;
                (iv) disclose all the material facts which establish the 
            alleged violation;
                (v) state whether the alleged violation occurred as a 
            result of fraud, gross negligence, or negligence;
                (vi) state the estimated loss of lawful duties, taxes, 
            and fees, if any, and, taking into account all 
            circumstances, the amount of the proposed monetary penalty; 
            and
                (vii) inform such person that he shall have a reasonable 
            opportunity to make representations, both oral and written, 
            as to why a claim for a monetary penalty should not be 
            issued in the amount stated.

        (B) Exceptions

            The preceding subparagraph shall not apply if--
                (i) the importation with respect to which the violation 
            of subsection (a) of this section occurs is noncommercial in 
            nature, or
                (ii) the amount of the penalty in the penalty claim 
            issued under paragraph (2) is $1,000 or less.

                          (2) Penalty claim

        After considering representations, if any, made by the person 
    concerned pursuant to the notice issued under paragraph (1), the 
    Customs Service shall determine whether any violation of subsection 
    (a) of this section, as alleged in the notice, has occurred. If the 
    Customs Service determines that there was no violation, it shall 
    promptly issue a written statement of the determination to the 
    person to whom the notice was sent. If the Customs Service 
    determines that there was a violation, it shall issue a written 
    penalty claim to such person. The written penalty claim shall 
    specify all changes in the information provided under clauses (i) 
    through (vi) of paragraph (1)(A). Such person shall have a 
    reasonable opportunity under section 1618 of this title to make 
    representations, both oral and written, seeking remission or 
    mitigation of the monetary penalty. At the conclusion of any 
    proceeding under such section 1618, the Customs Service shall 
    provide to the person concerned a written statement which sets forth 
    the final determination and the findings of fact and conclusions of 
    law on which such determination is based.

(c) Maximum penalties

                              (1) Fraud

        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.

                        (2) Gross negligence

        A grossly negligent violation of subsection (a) of this section 
    is punishable by a civil penalty in an amount not to exceed--
            (A) the lesser of--
                (i) the domestic value of the merchandise, or
                (ii) four times the lawful duties, taxes, and fees of 
            which the United States is or may be deprived, or

            (B) if the violation did not affect the assessment of 
        duties, 40 percent of the dutiable value of the merchandise.

                           (3) Negligence

        A negligent violation of subsection (a) of this section is 
    punishable by a civil penalty in an amount not to exceed--
            (A) the lesser of--
                (i) the domestic value of the merchandise, or
                (ii) two times the lawful duties, taxes, and fees of 
            which the United States is or may be deprived, or

            (B) if the violation did not affect the assessment of 
        duties, 20 percent of the dutiable value of the merchandise.

                        (4) Prior disclosure

        If the person concerned discloses the circumstances of a 
    violation of subsection (a) of this section 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, 
            taxes, and fees of which the United States is or may be 
            deprived, so long as such person tenders the unpaid amount 
            of the lawful duties, taxes, and fees at the time of 
            disclosure, or within 30 days (or such longer period as the 
            Customs Service may provide) after notice by the Customs 
            Service of its 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 (computed from the date of liquidation 
        at the prevailing rate of interest applied under section 6621 of 
        title 26) on the amount of lawful duties, taxes, and fees of 
        which the United States is or may be deprived so long as such 
        person tenders the unpaid amount of the lawful duties, taxes, 
        and fees at the time of disclosure, or within 30 days (or such 
        longer period as the Customs Service may provide) after notice 
        by the Customs Service of its calculation of such unpaid amount.

    The person asserting lack of knowledge of the commencement of a 
    formal investigation has the burden of proof in establishing such 
    lack of knowledge. For purposes of this section, a formal 
    investigation of a violation is considered to be commenced with 
    regard to the disclosing party and the disclosed information on the 
    date recorded in writing by the Customs Service as the date on which 
    facts and circumstances were discovered or information was received 
    which caused the Customs Service to believe that a possibility of a 
    violation of subsection (a) of this section existed.

             (5) Prior disclosure regarding NAFTA claims

        An importer shall not be subject to penalties under subsection 
    (a) of this section for making an incorrect claim for preferential 
    tariff treatment under section 3332 of this title if the importer--
            (A) has reason to believe that the NAFTA Certificate of 
        Origin (as defined in section 1508(b)(1) of this title) on which 
        the claim was based contains incorrect information; and
            (B) in accordance with regulations issued by the Secretary, 
        voluntarily and promptly makes a corrected declaration and pays 
        any duties owing.

                             (6) Seizure

        If the Secretary has reasonable cause to believe that a person 
    has violated the provisions of subsection (a) of this section and 
    that such person is insolvent or beyond the jurisdiction of the 
    United States or that seizure is otherwise essential to protect the 
    revenue of the United States or to prevent the introduction of 
    prohibited or restricted merchandise into the customs territory of 
    the United States, then such merchandise may be seized and, upon 
    assessment of a monetary penalty, forfeited unless the monetary 
    penalty is paid within the time specified by law. Within a 
    reasonable time after any such seizure is made, the Secretary shall 
    issue to the person concerned a written statement containing the 
    reasons for the seizure. After seizure of merchandise under this 
    subsection, the Secretary may, in the case of restricted 
    merchandise, and shall, in the case of any other merchandise (other 
    than prohibited merchandise), return such merchandise upon the 
    deposit of security not to exceed the maximum monetary penalty which 
    may be assessed under subsection (c) of this section.

(d) Deprivation of lawful duties, taxes, or fees

    Notwithstanding section 1514 of this title, if the United States has 
been deprived of lawful duties, taxes, or fees as a result of a 
violation of subsection (a) of this section, the Customs Service shall 
require that such lawful duties, taxes, and fees be restored, whether or 
not a monetary penalty is assessed.

(e) Court of International Trade proceedings

    Notwithstanding any other provision of law, in any proceeding 
commenced by the United States in the Court of International Trade for 
the recovery of any monetary penalty claimed under this section--
        (1) all issues, including the amount of the penalty, shall be 
    tried de novo;
        (2) if the monetary penalty is based on fraud, the United States 
    shall have the burden of proof to establish the alleged violation by 
    clear and convincing evidence;
        (3) if the monetary penalty is based on gross negligence, the 
    United States shall have the burden of proof to establish all the 
    elements of the alleged violation; and
        (4) if the monetary penalty is based on negligence, the United 
    States shall have the burden of proof to establish the act or 
    omission constituting the violation, and the alleged violator shall 
    have the burden of proof that the act or omission did not occur as a 
    result of negligence.

(f) False certifications regarding exports to NAFTA countries

                           (1) In general

        Subject to paragraph (3), it is unlawful for any person to 
    certify falsely, by fraud, gross negligence, or negligence, in a 
    NAFTA Certificate of Origin (as defined in section 1508(b)(1) of 
    this title) that a good to be exported to a NAFTA country (as 
    defined in section 3301(4) of this title) qualifies under the rules 
    of origin set out in section 3332 of this title.

                      (2) Applicable provisions

        The procedures and penalties of this section that apply to a 
    violation of subsection (a) of this section also apply to a 
    violation of paragraph (1), except that--
            (A) subsection (d) of this section does not apply, and
            (B) subsection (c)(5) of this section applies only if the 
        person voluntarily and promptly provides, to all persons to whom 
        the person provided the NAFTA Certificate of Origin, written 
        notice of the falsity of the Certificate.

                            (3) Exception

        A person may not be considered to have violated paragraph (1) 
    if--
            (A) the information was correct at the time it was provided 
        in a NAFTA Certificate of Origin but was later rendered 
        incorrect due to a change in circumstances; and
            (B) the person voluntarily and promptly provides written 
        notice of the change to all persons to whom the person provided 
        the Certificate of Origin.

(June 17, 1930, ch. 497, title IV, Sec. 592, 46 Stat. 750; Aug. 5, 1935, 
ch. 438, title III, Sec. 304(b), 49 Stat. 527; Pub. L. 95-410, title I, 
Sec. 110(a), Oct. 3, 1978, 92 Stat. 893; Pub. L. 96-417, title VI, 
Sec. 609, Oct. 10, 1980, 94 Stat. 1746; Pub. L. 99-514, Sec. 2, Oct. 22, 
1986, 100 Stat. 2095; Pub. L. 103-182, title II, Sec. 205(c), title VI, 
Sec. 621, Dec. 8, 1993, 107 Stat. 2095, 2180; Pub. L. 104-295, 
Secs. 3(a)(4), (5), 21(e)(12), (13), Oct. 11, 1996, 110 Stat. 3515, 
3531; Pub. L. 106-36, title I, Sec. 1001(b)(8), June 25, 1999, 113 Stat. 
132.)


                            Prior Provisions

    Provisions similar to those in this section were contained in act 
Oct. 3, 1913, ch. 16, Sec. III, H, 38 Stat. 183, which was superseded by 
act Sept. 21, 1922, ch. 356, title IV, Sec. 592, 42 Stat. 982, and was 
repealed by section 643 thereof. Section 592 of the 1922 act was 
superseded by section 592 of act June 17, 1930, comprising this section, 
and repealed by section 651(a)(1) of the 1930 act.
    The provisions of section III, H, of the 1913 act were substituted 
for provisions of the same nature made by the Customs Administrative Act 
of June 10, 1890, ch. 407, Secs. 6, 9, 26 Stat. 134, 135, amended and 
reenacted by Payne-Aldrich Tariff Act of Aug. 5, 1909, ch. 6, Sec. 28, 
36 Stat. 95, 97.
    Those provisions superseded similar provisions made by R.S. 
Sec. 2864, as amended by act Feb. 18, 1875, ch. 80, 18 Stat. 319, prior 
to repeal by act Sept. 21, 1922, ch. 356, title IV, Sec. 642, 42 Stat. 
989.
    R.S. Sec. 2839 provided for forfeiture of merchandise entered, but 
not invoiced according to the actual cost at the place of exportation, 
with the design to evade payment of duty. It was repealed by the Customs 
Administrative Act of June 10, 1890, ch. 407, Sec. 29, 26 Stat. 141, and 
provisions of a similar nature were made by section 9 of that act, 
amended by the Payne-Aldrich Tariff Act of Aug. 5, 1909, ch. 6, Sec. 28, 
36 Stat. 97, and further amended by the Underwood Tariff Act of Oct. 3, 
1913, ch. 16, Sec. III, H, 38 Stat. 183.
    Act June 22, 1874, ch. 391, Sec. 16, 18 Stat. 189, required special 
findings as to fraud in actions, etc., to enforce forfeitures, etc., 
prior to repeal by Customs Administrative Act of June 10, 1890, ch. 407, 
Sec. 29, 26 Stat. 141.


                               Amendments

    1999--Subsec. (c)(4)(A)(i), (B). Pub. L. 106-36 amended Pub. L. 103-
182, Sec. 621(4)(A). See 1993 Amendment notes below.
    1996--Subsec. (a)(1). Pub. L. 104-295, Sec. 3(a)(4)(A), substituted 
``lawful duty, tax, or fee'' for ``lawful duty''.
    Subsecs. (b)(1)(A)(vi), (c)(2)(A)(ii), (3)(A)(ii). Pub. L. 104-295, 
Sec. 3(a)(4)(B), substituted ``lawful duties, taxes, and fees'' for 
``lawful duties''.
    Subsec. (c)(4)(A)(i), (B). Pub. L. 104-295, Sec. 21(e)(12), amended 
Pub. L. 103-182, Sec. 621(4)(A). See 1993 Amendment notes below.
    Pub. L. 104-295, Sec. 3(a)(4)(B), substituted ``lawful duties, 
taxes, and fees'' for ``lawful duties'' in two places.
    Subsec. (d). Pub. L. 104-295, Sec. 21(e)(13), inserted comma after 
``taxes'' in heading.
    Pub. L. 104-295, Sec. 3(a)(5), substituted ``and fees be restored'' 
for ``or fees be restored''.
    1993--Subsec. (a)(1)(A)(i). Pub. L. 103-182, Sec. 621(1), inserted 
``or electronically transmitted data or information'' after 
``document''.
    Subsec. (a)(2). Pub. L. 103-182, Sec. 621(2), inserted at end ``The 
mere nonintentional repetition by an electronic system of an initial 
clerical error does not constitute a pattern of negligent conduct.''
    Subsec. (b)(1)(A). Pub. L. 103-182, Sec. 621(3)(A), substituted 
``the Customs Service'' for ``the appropriate customs officer'', ``it 
shall issue'' for ``he shall issue'' and ``its intention'' for ``his 
intention'' in introductory provisions.
    Subsec. (b)(2). Pub. L. 103-182, Sec. 621(3)(B), substituted ``the 
Customs Service shall determine'' for ``the appropriate customs officer 
shall determine'', ``the Customs Service determines'' for ``such officer 
determines'' in two places, ``it shall'' for ``he shall'' in two places, 
and ``the Customs Service shall provide'' for ``the appropriate customs 
officer shall provide''.
    Subsec. (c)(4). Pub. L. 103-182, Sec. 621(4)(B), inserted at end 
``For purposes of this section, a formal investigation of a violation is 
considered to be commenced with regard to the disclosing party and the 
disclosed information on the date recorded in writing by the Customs 
Service as the date on which facts and circumstances were discovered or 
information was received which caused the Customs Service to believe 
that a possibility of a violation of subsection (a) of this section 
existed.''
    Subsec. (c)(4)(A)(i). Pub. L. 103-182, Sec. 621(4)(A), as amended by 
Pub. L. 104-295, Sec. 21(e)(12); Pub. L. 106-36, Sec. 1001(b)(8), 
substituted ``time of disclosure, or within 30 days (or such longer 
period as the Customs Service may provide) after notice by the Customs 
Service of its'' for ``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''.
    Subsec. (c)(4)(B). Pub. L. 103-182, Sec. 621(4)(A), as amended by 
Pub. L. 104-295, Sec. 21(e)(12); Pub. L. 106-36, Sec. 1001(b)(8), which 
directed the substitution of ``time of disclosure, or within 30 days (or 
such longer period as the Customs Service may provide) after notice by 
the Customs Service of its'' for ``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 of his'', was 
executed by making the substitution for text which began ``time of 
disclosure or within 30 days'', to reflect the probable intent of 
Congress.
    Subsec. (c)(5), (6). Pub. L. 103-182, Sec. 205(c)(1), added par. (5) 
and redesignated former par. (5) as (6).
    Subsec. (d). Pub. L. 103-182, Sec. 621(5), inserted ``, taxes or 
fees'' after ``duties'' in heading and in text substituted ``duties, 
taxes, or fees'' for ``duties'' in two places and ``the Customs 
Service'' for ``the appropriate customs officer''.
    Subsec. (f). Pub. L. 103-182, Sec. 205(c)(2), added subsec. (f).
    1986--Subsec. (c)(4)(B). Pub. L. 99-514 substituted ``Internal 
Revenue Code of 1986'' for ``Internal Revenue Code of 1954'', which for 
purposes of codification was translated as ``title 26'' thus requiring 
no change in text.
    1980--Subsec. (e). Pub. L. 96-417 substituted in heading ``Court of 
International Trade'' for ``District court'' and in text ``proceeding 
commenced by the United States in the Court of International Trade'' for 
``proceeding in a United States district court commenced by the United 
States pursuant to section 1604 of this title''.
    1978--Pub. L. 95-410 substituted subsecs. (a) to (e) relating to 
penalties for fraud, gross negligence, and negligence for prior 
provisions which: provided for forfeiture of merchandise, or recovery of 
value thereof, where entry or attempted entry of the merchandise was 
made using fraudulent or false invoice, declaration, affidavit, letter, 
paper, or false statement, written or verbal, false or fraudulent 
practice or appliance, or false statement in a declaration on entry 
without reasonable cause to believe the truth of the statement or aided 
or procured the making any such false statement as to any material 
matter without reasonable cause to believe the truth of the statement, 
regardless of deprivation of lawful duties, or guilty of any willful act 
or omission when there was a deprivation of such duties; made the 
forfeiture applicable to the whole of the merchandise or the value 
thereof where package contained the particular articles to which the 
fraud or false paper or statement related; and defined attempt to enter 
the merchandise without an actual entry having been made or offered.
    1935--Act Aug. 5, 1935, inserted ``whether or not the United States 
shall or may be deprived of the lawful duties, or any portion thereof, 
accruing upon the merchandise, or any portion thereof, embraced or 
referred to in such invoice, declaration, affidavit, letter, paper, or 
statement;''.


                    Effective Date of 1996 Amendment

    Amendment by section 3(a)(4), (5) of Pub. L. 104-295 applicable as 
of Dec. 8, 1993, see section 3(b) of Pub. L. 104-295, set out as a note 
under section 1321 of this title.


                    Effective Date of 1993 Amendment

    Amendment by section 205(c) of Pub. L. 103-182 effective on the date 
the North American Free Trade Agreement enters into force with respect 
to the United States [Jan. 1, 1994], see section 213(b) of Pub. L. 103-
182, set out as an Effective Date note under section 3331 of this title.


                    Effective Date of 1980 Amendment

    Amendment by Pub. L. 96-417 applicable with respect to civil actions 
commenced on or after 90th day after Nov. 1, 1980, see section 701(c)(2) 
of Pub. L. 96-417, set out as a note under section 251 of Title 28, 
Judiciary and Judicial Procedure.


                    Effective Date of 1978 Amendment

    Section 110(f) of Pub. L. 95-410 provided that:
    ``(1)(A) Except as provided in subparagraphs (B) and (C), 
subsections (a), (b), and (c) (other than new subsection (e) of section 
592 of the Tariff Act of 1930 as added by subsection (a)) [subsec. (a), 
(b), and (c), not including (e) of this section] shall be effective with 
respect to proceedings commenced after the 89th day after the date of 
enactment of this Act [Oct. 3, 1978].
    ``(B) Except as provided in subparagraph (C), section 592 of the 
Tariff Act of 1930 [this section] (as such section existed on the day 
before the date of enactment of this Act) [Oct. 3, 1978] shall apply to 
any alleged intentional violation thereof involving television receivers 
that are the product of Japan and that were or are the subject of 
antidumping proceedings if the alleged intentional violation--
        ``(i) occurred before the date of enactment of this Act, and
        ``(ii) was the subject of an investigation by the Customs 
    Service which was begun before the date of enactment of this Act.
    ``(C) Except as provided in the next sentence, subsection (e) of 
section 592 of the Tariff Act of 1930 (as added by subsection (a)) 
[subsec. (e) of this section] shall be effective on the date of 
enactment of this Act [Oct. 3, 1978]. Notwithstanding any provision of 
law, in any proceeding in a United States district court commenced by 
the United States pursuant to section 604 of the Tariff Act of 1930 
[section 1604 of this title] for the recovery of any monetary penalty 
claimed under section 592 of such Act [this section] for an alleged 
intentional violation described in subparagraph (B)--
        ``(i) all issues, including the amount of the penalty, shall be 
    tried de novo; and
        ``(ii) the United States shall have the burden of proof to 
    establish such violation by a preponderance of the evidence.
    ``(2)(A) The amendment made by subsection (e) [to section 1621 of 
this title] shall apply with respect to alleged violations of section 
592 of the Tariff Act of 1930 [this section] resulting from gross 
negligence or negligence which are committed on or after the date of the 
enactment of this Act [Oct. 3, 1978].
    ``(B) In the case of any alleged violation of such section 592 [this 
section] resulting from gross negligence or negligence which was 
committed before the date of the enactment of this Act [Oct. 3, 1978] 
and for which no suit or action for recovery was commenced before such 
date of enactment, no suit or action for recovery with respect to such 
alleged violation shall be instituted after--
        ``(i) the closing date of the 5-year period beginning on the 
    date on which the alleged violation was committed, or
        ``(ii) the closing date of the 2-year period beginning on such 
    date of enactment,
whichever date later occurs, except that no such suit or action may be 
instituted after the date on which such suit or action would have been 
barred under section 621 of the Tariff Act of 1930 [section 1621 of this 
title] (as in effect on the day before such date of enactment).''

                  Section Referred to in Other Sections

    This section is referred to in sections 1509, 1592a, 1595, 1595a, 
1613, 1615, 1621, 1671c, 1673c of this title; title 7 section 511r; 
title 28 section 1582.
