CIT Rules that "Importer of Record" Rather than its Subsidiary That Bought the Goods Is Liable for Unpaid Duties
In U.S. v. Golden Gate Petroleum Co., the Court of International Trade (CIT) ruled that Golden Gate Petroleum, Co. (Golden Gate) was liable for over $1 million in unpaid duties, even though the purchaser of the goods was its (now out-of-business) subsidiary, Golden Gate Petroleum International, Ltd. (Golden Gate Int'l), as Golden Gate was listed on the entry documents as the "importer of record."
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The CIT states that Golden Gate Int'l purchased 225,464 barrels of leaded gasoline in 1985 and unloaded about 44% of the gasoline in Portland, Oregon before entering the remaining gasoline and a shipment of toluene at San Francisco. Although the shipment was entered at San Francisco under TSUS 475.25 as motor fuel, Customs liquidated the merchandise at TSUS 432.10, as a mixture in whole or in part of hydrocarbons derived in whole or in part from petroleum, which resulted in additional duties of $1,359,172.50. Golden Gate timely protested the change in classification and the liquidation; however, Customs denied the protest.
The CIT states that the government now seeks to recover from Golden Gate unpaid duties resulting from the reclassification, plus accrued interest. However, Golden Gate now asserts that the broker made a mistake and Golden Gate Int'l should have been listed as the importer of record on the entry documents. Golden Gate contends that it is therefore not liable for the unpaid duties. The CIT dismisses this argument and notes, among other evidence, that Golden Gate was the importer of record for the San Francisco entry, the principal on the bond, its importer number appears on the bond, and it is named on the pro forma invoice for the merchandise.
Golden Gate further argues that the liquidation of the San Francisco entry is void ab initio as its broker mistakenly listed the entered value of the cargo as $4,966,885.00 (which included the value of the portion unloaded in Portland), instead of the correct value of the portion that was unloaded in San Francisco, which was $2,991,997.00. However, the CIT also denies this claim as the Golden Gate did not protest this issue prior to deemed liquidation becoming final. Alternatively, the CIT states that relief could have also been pursued through 19 USC 1520(c).
In light of its findings, the CIT states that Golden Gate is liable for duties in the amount of $1,359,172.50 in connection with the entry made in October 1985 at the Port of San Francisco, and instructed both parties to negotiate an amount of prejudgment interest. (CIT Slip Op. 06-22, dated 02/21/06, available at http://www.cit.uscourts.gov/slip_op/Slip_op06/06-22.pdf)