Tag: uscbp

Customs Wood Packaging Material Violations In The News Again

Posted by Jason P. Wapiennik on July 24, 2014

Wood Packaging Material violations and penalties should be something you don’t hear about in the news anymore. But WPM violations and the penalties that come with them, still rear their head everyone once in a while. We authored an article on everything you need to know about Regulated Wood Packaging Material violations and penalties, which discussed the elements of a violation, possible resolutions for the importer who is facing re-export of WPM, and notice of penalty for importations contrary to law for WPM violations.

The reason this should be something that don’t hear about anymore is because the restrictions on WPM have been in place since 2005… the trade community was given ample time to comply. Yet still, almost 10 years

later, customs released a C-TPAT alert for non-compliant wood packaging material violations. The whole alert is HERE, but I quote some parts below:

The purpose of this C-TPAT Alert is to inform all C-TPAT Partners, particularly its sea carriers, of recent interceptions of non-compliant wood packing material (WPM) used in flat rack cargo carried by ocean vessels traversing the Mediterranean.

WPM is defined as wood or wood products (excluding paper products) used in supporting, protecting, or carrying a commodity. Some examples of WPM include: bins, cases, cratings, reels, load boards, boxes, containers, pallets, skids, dunnage and crates. Snails and other pests may infest non-compliant wood packing material. These pests are regulated under the Federal Plant Protection Act. Snail

infestations of WPM is just an example of a threat that targets the world’s agriculture and the Nation’ food supply. With the ever increasing amount of trade, the threat to U.S. crops and livestock is real.

The commodities with the highest incidence of WPM pests include: manifested WPM; machinery (including auto parts); metal products; and stone products (including tile).
Other high risk commodities include electronics and electronic components, finished wood articles, plant products and foodstuffs.

Please read our article including everything you need to know about WPM violations by CLICKING HERE.

If you have been informed that you wood packaging material is in violation of the law and needs to be re-exported, immediately call or e-mail office at (734) 855-4999 and we can prepare an application to separate violative wood packaging material so that, if it is granted, you do not have to undergo the time and expense of re-exporting the merchandise you are trying to import.

If you have received a notice of penalty or liquidated damages and are being told you must pay as a result of the violation, immediately call or e-mail our office at (734) 855-4999 and we can prepare a petition for mitigation of the penalty amount.

Never pay full price in a penalty proceeding!

CBP Counterfeit Handbag Seizure

Posted by Jason P. Wapiennik on September 30, 2013 with 2 Comments

I am sharing this news releases from Customs & Border Protection because it has to deal with topics that we have discussed in previous articles, namely seizures by CBP for counterfeit importations. We previously discussed the notion of gray market goods and touched on the topic of counterfeit imports in our article called Trademark Infringement: Importing Gray Market Goods and Seizure by Customs. This article only says that the bags were “in violation of the Hermes protected trademark” but does not specifically say how they were in violation; because the news release goes on to say that these bags were concealed within a shipment of non-infringing merchandise it seems unlikely that this was an innocent mistake by an inexperienced importer. It shows an intent to commit a fraud.

Los Angeles — U.S. Customs & Border Protection (CBP) officers and import specialists at the Los Angeles/Long Beach Seaport complex seized 16,053 counterfeit Hermes handbags in nine shipments from June 6 through September 17. All were in violation of the Hermes protected trademark.

Their combined domestic value of $295,665 contrasted to the manufacturer suggested retail price of $210,785,475 had they been genuine, illustrates the potentially high profit margins in such an illegal venture.

“CBP officers are trained to identify and interdict counterfeit goods, and this is a great example of how their training and expertise are employed every day in our ports of entry,” said CBP Director of Field Operations in Los Angeles Todd C. Owen. “These counterfeiters are not only cheating the legitimate designers and manufacturers of protected trademark merchandise, but also the public and the U.S. government,” he added.

Eight of the shipments were coming from China, one from China via Hong Kong. Two had the knock-offs hidden in the nose of the containers with concealing attempts of packing legitimate, non-infringing merchandise behind them.

Five different importers sent the shipments. All were destined to surrounding areas of Los Angeles except for one destined to Texas.

Approximately $1.26 billion worth of counterfeit goods originating overseas were seized by CBP in 2012. China, Hong Kong, Singapore, India and Taiwan are the top five countries of origination for counterfeit goods seized by CBP.

Nationwide, handbags and wallets comprised the greatest number of counterfeit items seized by CBP last year, with the value of seizures up 142 percent compared to 2011. Of the approximately $511 million in handbags and wallets seized, more than $446 million came from China.

Violations of trade laws, including violations of intellectual property rights laws can be reported to CBP online. ( e-Allegations Submission )

It looks like someone is going to be getting a notice of penalty CBP’s Fines, Penalties and Forfeiture’s office very soon. If you are facing penalties from CBP for items you have imported or for your import practices, call my office at (734) 855-4999 or e-mail us through our contact page.

Regulated Wood Packaging Material Customs Violations

Posted by Jason P. Wapiennik on May 28, 2013

In 2007, Customs & Border Protection began enforcing requirements that regulated wood packaging material imported into the United States mandating that it meet certain requirements. Although an “old” issue, importers still run afoul of these requirements and get themselves into trouble. These requirements have the effect of limiting the risk that wood packaging material imported into the United States will introduce foreign insects into the U.S. ecosystem that could be harmful to the environment and U.S. industries, particularly the lumber industry and native tree populations in our forests.

What is wood packaging material, and what is regulated?

First, it should be noted that there is a distinction between wood packaging material and regulated wood packaging material. Wood packaging material is just wood or wood products, excluding paper products, used in support, protecting, or carrying a commodity, including dunnage. 7 CFR 314.40-1.

Regulated wood packaging material is defined as:

Wood packaging material other than manufactured wood materials, loose wood packaging materials, and wood pieces less than 6 mm thick in any dimension, that are used or for use with cargo to prevent damage, including, but not limited to, dunnage, crating, pallets, packing blocks, drums, cases, and skids.

7 CFR 314.40-1.

Although not really made clear in the regulations, for purposes of enforcement Customs probably considers manufactured wood materials to woods like plywood, fiber board, whiskey barrels, wine barrels, and veneer. Regulated wood packaging materials include materials like dunnage, crating, pallets, packing blocks, cases, skids, and other wood that is dry and loose (as in the case of sawdust or wood shavings) and is not less than 6mm thick (as in the case of certain shims).

What must be done to wood packaging material so that it is compliant?

The requirements can be complicated in certain situations, and there are a limited number of exemptions, especially for trade with Canada and Mexico. But generally speaking, the wood must be treated and marked. 7 CFR 319.40-3. The wood must be marked in a “in a visible location on each article, preferably on at least two opposite sides of the article, with a legible and permanent mark that indicates that the article meets” the requirements of the law. The mark looks something like shown below, but the letters and numbers will vary depending on the circumstances (i.e., origin and type of treatment).

The means of treatment is set out in 7 CFR 305, and consists of heat treatment or a type of fumigation through chemical treatment with methyl bromide.

What if regulated wood packaging material is untreated or unmarked?

If your wood packaging material is regulated wood packaging material, meaning that there is no exception to the treatment and marking requirements, then it is violative wood packaging materials if it is not both marked and treated. A violation can either be because the treatment was not done, because the mark is not present, or because the mark is illegible. Even if the wood is actually treated but is not stamped, it is still violative. Even if you somehow know for a fact that the wood is not infested, it is still violative.

As such, it is most likely that you will be required to immediately re-export the wood packaging material out of the country. This will be done through the issuance of an Emergency Action Notification that gives you a certain period of time to re-export your entire shipment.

After receiving a notice of the presence of a violative wood packaging material, whether verbally or through an Emergency Action Notification, it is important to move very quickly. Failure to be obey the deadline given in the Emergency Action Notification can result in additional penalties.

Is there an alternative to re-exporting my merchandise?

It is possible to get permission from the Port Director to separate the violative wood packaging material from the commodity (e.g., separate the merchandise from its pallets), and re-export only the violative wood packaging material and enter the commodity. However, that is a complicated process with its own legal procedures, involving meeting certain requirements, demonstrating certain safeguards, paying certain costs, and filing an Application to Separate Violative Wood Packaging Material directly with the port director.

Obviously, this Application to Separate can be granted or denied. Filing of the application does not suspend the time period in which you must comply with the Emergency Action Notification to re-export. And if denied, you will still need to re-export. So, application to separate should prepared and filed as soon as possible. If the application is not successful, you will be re-exporting your commodities.

What are the ramifications of importing, or attempting to import, violative wood packaging materials?

Apart from the requirement to re-export the materials and your merchandise, and the costs associated with that come from your supply chain and your inventory problem, there are penalties that can be imposed by Customs for this type of violation.

Customs will usually send a Notice of Penalty or Liquidated Damages to the importer involved with the wood packaging material violation for violations of 7 CFR 319.40 as being an importation, or attempted importation, contrary to law under 19 USC 1595a, or as commercial fraud or negligence under 19 USC 1592. As in the case with all customs penalties, there are guidelines for reducing the amount of money customs seeks in penalty. This can only be done by filing a petition for mitigation.

What do I do next?

If you have received a notice of penalty or liquidated damages and are being told you must as a result of the violation, immediately call or e-mail our office at (734) 855-4999 and we can prepare a petition for mitigation of the penalty amount.

A chart showing what happens after money and property are seized by Customs

What happens to money and property seized by Customs?

Posted by Jason P. Wapiennik on May 24, 2013

Once U.S. Customs and Border Protection seizes your money or property it can eventually be forfeited (lost forever to the government); it doesn’t matter if it’s merchandise or cash/currency transported without being reported, structured, or smuggled. Before the property is forfeited the owner can try to get it back (remitted).

But once property is forfeited, it forever becomes property of the United States Government. As a government attorney once told me, it goes to that big government warehouse at the end of Raiders of the Lost Ark. I don’t think he was joking.

What happens after property is seized by Customs?

First, appraisement: CBP must give anything seized a “domestic value.” This is usually measured by

“price at which such or similar property is freely offered for sale at the time and place of appraisement, in the same quantity or quantities as seized, and in the ordinary course of trade.” Although an oversimplification, this is basically the fair-market value of the seized property at the time and place of seizure.

Customs conducts an inspection of the goods to determine if they are admissible (i.e., whether they can be allowed entry into the U.S.). Certain things, like narcotics, unsafe electrical components, or lead-tainted children’s toys are inadmissable.

What happens after property is forfeited by Customs?

If the goods are admissible, but the importer could not get the property back at the agency or through federal district court, then Customs can:

Destroy it. If Customs determines it violates copyright laws, has no commercial value, or is a safety risk or violates U.S. law, the port director is authorized destroy the forfeited merchandise. If this doesn’t apply, it can be disposed elsewhere.
Sell it. If the merchandise is sold, Customs will notify the importer, the consignee, the shipper, and the warehouse transferee of the sale no less than 30 days beforehand and then hold a public auction, sometimes online, overseen by the port director. This includes perishables, agricultural products, alcoholic beverages, and vehicles. Counterfeit goods may be sold with the permission of the U.S. trademark holder once the counterfeit mark has been obliterated and at least 90 days after forfeiture, provided that no government agency or charitable institution has a need for them. For example, customs has donated seized fossils to the University of Michigan in the past.
Use it. Last, the government can use it. The products must be unclaimed or abandoned, which means nonpayment of duties and 6 months in Customs custody. The port director must give a 30 day notice, as above. Afterward, the items belong to Customs and they can decide to to use it or distribute it to another government agency.

Item 3 is true for seized money/currency. At the completion of all procedures, seized and forfeited money transfers to the U.S. government. If your money was seized by Customs, read our Customs Money Seizure Legal Guide.