Guidelines on Liquidated Damages for
Importer Security Filing Violations
U.S. Customs and Border Protection
issued in the July 17, 2009, Customs
Bulletin and Decisions a general
notice setting forth guidelines on the
assessment and cancellation of claims
for liquidated damages incurred by
importers and vessel carriers for
failure to comply with the importer
security filing (10+2) rule. Under the
ISF rule importers are required to
submit ten additional data elements for
shipments entering the U.S., including
information that identifies the
manufacturer, supplier, seller, buyer
and consignee; the country of origin and
tariff classification number; where and
by whom the goods were stuffed into the
container; and the party responsible for
compliance with applicable import
requirements. In addition, carriers are
generally required to submit two
additional data elements for containers
loaded on vessels destined to the U.S.,
a vessel stow plan and container status
messages.
Importer Security Filing – Failure to
File
• Liquidated damages cannot be assessed
for failure to file an ISF if no bond is
in place.
• If goods for which an ISF has not been
filed arrive in the U.S., CBP will
withhold the release or transfer of the
cargo until it receives the required ISF
information and has had the opportunity
to review the documentation and conduct
any necessary examination.
• CBP reserves the right to limit the
permit to unlade so as to not permit
unlading of merchandise for which no ISF
has been filed. If such cargo is unladen
without permission, it may be subject to
seizure. All seizures will be approved
by CBP headquarters.
Importer Security Filing – Late or
Inaccurate Filing
• Port directors may assess claims for
liquidated damages in the amount of
$5,000 per ISF for (a) late filed ISFs,
(b) inaccurate ISFs or ISF updates, and
(c) failure to withdraw an ISF when
required. Penalties may be assessed,
with CBP headquarters approval, for
serious or repetitive violations.
• Liquidated damages claims for late
ISFs or inaccurate ISFs or ISF updates
may be canceled, provided CBP determines
that law enforcement goals were not
compromised by the violation, upon
payment of (a) between $1,000 and $2,000
(depending on the presence of mitigating
or aggravating factors) for the first
violation and (b) not less than $2,500
for subsequent violations.
• Mitigating factors include evidence of
progress in implementing the ISF
requirement during the flexible
enforcement period (i.e., Jan. 26, 2009,
through Jan. 26, 2010), small number of
violations compared to the number of
shipments for which ISFs were required,
certification as Tier 2 or Tier 3 member
of the Customs-Trade Partnership Against
Terrorism, demonstrated remedial action
to prevent future violations, and vessel
diversion due to factors outside the ISF
importer’s control. For inaccurate
filings, if the importer acquired
information from another party in
accordance with ordinary commercial
practices and can demonstrate that it
reasonably believed the information to
be true and was not reasonably able to
verify the information, this will be
considered an extraordinary mitigating
factor that may warrant cancellation of
a claim without payment.
• Aggravating factors include lack of
cooperation with CBP or impeding CBP
activity with regard to the case,
evidence of actual or attempted
smuggling (this may be considered an
extraordinary aggravating factor),
multiple errors on the ISF, and a rising
error rate indicative of deteriorating
performance
Vessel Stow Plans
• When a carrier arrives at a port of
entry where a vessel stow plan is
required, port directors may assess a
claim for liquidated damages against the
carrier in the amount of $50,000 per
plan when a complete, accurate and
timely plan is not submitted. A claim
for liquidated damages in the amount of
$50,000 may be assessed for each vessel
arrival. Penalties may be assessed, with
CBP headquarters approval, for serious
or repetitive violations.
• For failure to file, liquidated
damages claims may be canceled, provided
CBP determines that law enforcement
goals were not compromised by the
violation, upon the payment of (a)
between $5,000 and $25,000 (depending on
the presence of mitigating or
aggravating factors) for a first
violation and (b) $25,000 for subsequent
violations.
• For late and inaccurate filings,
liquidated damages claims may be
canceled, provided CBP determines that
law enforcement goals were not
compromised by the violation, upon the
payment of (a) between $2,500 and
$10,000 (depending on the presence of
mitigating or aggravating factors) for a
first violation and (b) not less than
$5,000 for subsequent violations.
• Mitigating factors include evidence of
progress in the implementation of the
vessel stow plan requirement during the
flexible enforcement period, vessel
diversion due to factors outside of the
carrier’s control, validation and good
standing in C-TPAT, and demonstrated
remedial action to prevent future
violations. Demonstrating that the
carrier acquired the information from
another party in accordance with
ordinary commercial practices,
reasonably believed this information to
be true and was not reasonably able to
verify the information is an
extraordinary mitigating factor that may
warrant cancellation of a claim without
payment.
• Aggravating factors include lack of
cooperation with CBP or impeding CBP
activity with regard to the case,
evidence of actual or attempted
smuggling (this may be considered an
extraordinary aggravating factor),
multiple errors on the vessel stow plan,
and a rising error rate indicative of
deteriorating performance.
Container Status Messages
• Port directors may assess claims for
liquidated damages against carriers in
the amount of $5,000 per CSM for failing
to submit a CSM, late filing a CSM, or
submitting an inaccurate CSM. Such
claims may be assessed up to a maximum
of $100,000 per vessel arrival.
Penalties may be assessed for serious or
repetitive violations.
• For failure to file, liquidated
damages claims may be canceled, provided
CBP determines that law enforcement
goals were not compromised by the
violation, upon the payment of (a)
between $1,000 and $2,000 (depending on
the presence of mitigating or
aggravating factors) for a first
violation and (b) $2,500 for subsequent
violations.
• For late and inaccurate filings,
liquidated damages claims may be
canceled, provided CBP determines that
law enforcement goals were not
compromised by the violation, upon the
payment of (a) between $500 and $1,000
(depending on the presence of mitigating
or aggravating factors) for a first
violation and (b) not less than $1,500
for subsequent violations.
• Mitigating factors will include
evidence of progress in the
implementation of the CSM requirement
during the flexible enforcement period,
small number of violations compared to
the number of CSMs submitted, validation
and good standing in C-TPAT, and
demonstrated remedial action to prevent
future violations. Demonstrating that
the carrier acquired the information
from another party in accordance with
ordinary commercial practices,
reasonably believed this information to
be true and was not reasonably able to
verify the information is an
extraordinary mitigating factor that may
warrant cancellation of a claim without
payment.
• Aggravating factors include lack of
cooperation with CBP or impeding CBP
activity with regard to the case,
evidence of actual or attempted
smuggling (this may be considered an
extraordinary aggravating factor),
multiple errors on the CSM, and a rising
error rate indicative of deteriorating
performance.
Other Penalties
CBP states that in addition to
liquidated damages that may be assessed
as provided above, the failure of an
arriving carrier or ISF importer to
provide the required advance electronic
cargo information in the time period and
manner prescribed may result in the
issuance of a do not load hold, the
delay or denial of a vessel carrier’s
preliminary entry permit/special license
to unlade and/or the assessment of any
other applicable statutory penalty. CBP
may also withhold the release or
transfer of the cargo until it receives
the required information and has had the
opportunity to review the documentation
and conduct any necessary examination.