One of the most challenging times for any importer is having to defend an enforcement action brought by the Government at the US Court of International Trade (CIT).

The reasonable care standard imposed on importers is found in 19 U.S.C. Section 1484. A failure to meet that burden can result in a penalty action brought under 19 U.S.C. Section 1592.

The level of civil penalty sought will depend on the level of culpability—negligence, gross negligence or fraud—and also whether the violation has resulted in a loss of revenue (LOR)—duties, taxes and fees—or not. Additionally, CBP can seek the unpaid or underpaid duties, taxes and fees. To top it all off, the statute of limitations is five years. In the case of fraud, the statute only begins to run when CBP learned of the fraud.

An able attorney for the importer may be able to argue that the Government suit should be dismissed on jurisdictional or procedural grounds.  This month’s discussion explores that strategy. The article analyzes three court decisions: United States v. Greenlight Organic, Inc. a 2018 case, and two subsequent decisions that are collectively referred to as Greenlight I, II, and III.

For a defendant in a civil collection suit brought by the Government, often the best course is to seek early dismissal of the action with a motion based on affirmative defenses. A defendant has every right to expect that the Government suit provides a level of detail sufficient to prepare a defense. The Greenlight cases provide a useful primer for those defendants faced with overly vague and imprecise charges.

For a a more detailed discussion of the Greenlight cases refer to Mark K. Neville’s October 2020 article “Penalty Case Defense at the CIT,” in the Journal of International Taxation.