After the Mod Act was passed in 1993, staff at US importers were instructed that executives within the importing company could be held personally liable for gross negligence for violation of US Customs law. Last week, however, the US Court of Appeals for the Federal Circuit held that a corporate officer of an “importer of record” is not directly liable for gross negligence penalties under 19 USC 1592(c)(2), even though the company would be.
In the case, US v. Trek Leather Inc., Trek’s president, Harish Shadadpuri, admitted that he did not declare the cost of assists on 72 entries of men’s suits, and failed to pay the correct amount of duties owed. The court ruled that, despite Shadadpuri’s pattern of failing to include assists in this case and in the past, it could not “pierce the corporate veil” because Shadadpuri acted in his scope as a corporate officer, not personally, and would therefore not be personally liable as the “importer of record.”
See an analysis of the court’s decision by Sandler, Travis & Rosenberg, PA.