Trek conceded that it was grossly negligent and did not appeal. Mr. Shadadpuri – who was neither the importer of record (IOR) nor a customs broker – disputed his liability. The CIT agreed with CBP that the statutory term “person” covered Mr. Shadadpuri, who was informed by CBP about having to declare the value of assists in 2002 when another company partially owned by him paid more than $45,000 in unpaid duties for failing to do so.
This ruling underscores the inadequacy of the current bare minimum IOR requirements. IORs can at present be “shell” corporations that go insolvent to avoid penalties, while related individuals are not automatically liable – even if they are the sole owner and have knowledge of the import impropriety, as Mr. Shadadpuri was alleged to have done. Fortunately, last year, Congress demonstrated awareness of this problem and proposed corrective measures as part of the Customs Trade Facilitation and Enforcement Act of 2012 (H.R. 6642). In particular, sections 221, 222, 223, and 224 of that proposed legislation would enhance regulatory control over IORs and discourage the proliferation of “shell” corporations created to evade U.S. law.