## Facts

- Ford Motor Company imported automotive tooling dies into the United States and declared entry values that did not include certain engineering changes that increased the dies’ value, resulting in underpaid duties.
- U.S. Customs began examining Ford’s entries after concerns arose about whether Ford’s declared values reflected the true dutiable value of the imported dies.
- In October 1990, a Customs agent contacted Ford’s legal counsel while working on an investigation involving a different company, and the contact related in part to information relevant to Ford’s entries.
- In March 1991, the agent recorded in the investigative file that he believed Ford had violated customs laws.
- In June 1991, Customs issued a summons to Ford seeking documents concerning the suspected valuation violations.
- In August 1991, Ford sent Customs a letter describing the valuation problem, identifying the affected entries/merchandise, and supplying corrected information that Ford asserted should have been provided at the time of entry.
- Customs concluded Ford’s entry papers contained materially false statements or omissions about value and pursued unpaid duties and civil penalties under 19 U.S.C. § 1592.
- Ford sought the benefit of reduced penalty limits available when an importer makes a qualifying “prior disclosure,” arguing its August 1991 submission came before it knew (or should have known) of any formal Customs investigation.
- The Court of International Trade held Ford should have known of the investigation no later than June 1991 (when the summons issued) and therefore the August 1991 disclosure was not “prior” for purposes of § 1592(c)(4). Ford appealed.

## Issues

1. Whether Ford’s August 1991 disclosure qualified as a “prior disclosure” under 19 U.S.C. § 1592(c)(4), or instead was made after Ford knew or should have known that Customs had commenced a formal investigation.
2. Whether Customs must issue a formal written report of investigation before an importer is treated as having knowledge (actual or constructive) of a formal investigation for prior-disclosure purposes.

## Decision

- The Federal Circuit affirmed the Court of International Trade’s determination that Ford was not entitled to prior-disclosure treatment because Ford should have known of the formal investigation by at least June 1991.
- The court rejected Ford’s argument that the absence of a formal report of investigation until late August 1991 meant the investigation had not formally commenced before Ford’s disclosure.
- Because the disclosure was not “prior,” the statutory penalty limitations tied to prior disclosure did not apply, and Ford remained subject to the higher penalty framework otherwise applicable under § 1592.

## Legal Principles

- Under 19 U.S.C. § 1592, an importer may incur civil penalties for entering merchandise by means of materially false statements, acts, or omissions, including misstatements affecting the duties owed.
- The “prior disclosure” provision in § 1592(c)(4) limits penalties only when the importer discloses the circumstances of the violation before the importer knows, or reasonably should know, that Customs has begun a formal investigation of that violation.
- A formal investigation, and an importer’s knowledge of it, may be shown by objective enforcement steps directed at the importer (such as issuance of a summons for records), not solely by internal agency paperwork or the date an agency memorializes the investigation in a formal report.
- The availability of prior-disclosure penalty limits depends on timing: a disclosure made after the importer has notice (actual or constructive) of a formal investigation does not qualify for the reduced limits.

## Conclusion

United States v. Ford Motor Co. held that Ford’s August 1991 disclosure of undervaluation stemming from engineering changes did not qualify as a § 1592(c)(4) prior disclosure because Ford should have known Customs had begun a formal investigation by the time Customs issued a summons in June 1991; accordingly, Ford was not entitled to the prior-disclosure penalty limitations.


United States v. Ford Motor Co., 463 F.3d 1286 (2006)