## Facts

- Hitachi, Ltd. (Hitachi Japan) manufactured subway cars and parts in Japan for a MARTA project; Hitachi America, Ltd. (HAL) imported the merchandise into the United States between 1984 and 1987.
- HAL, as importer of record (in a joint venture with another entity), had statutory duties to accurately report information relevant to customs valuation and duties.
- Customs alleged HAL misstated transaction value and failed to disclose or accurately disclose required information and documentation, including matters related to price adjustments.
- The Court of International Trade (CIT) found HAL committed negligent reporting violations under 19 U.S.C. § 1592, but the government failed to prove fraud or gross negligence.
- The CIT set HAL’s civil penalty at twice the duties due but calculated duties using a valuation tied to a domestic resale price rather than the import sale’s transaction value.
- The CIT also held Hitachi Japan separately liable for the same penalty on an aiding-and-abetting theory tied to HAL’s negligent violations.

## Issues

1. Whether the government proved by the required evidentiary standard that HAL’s § 1592 violations were fraudulent or grossly negligent rather than merely negligent.
2. Whether the penalty for HAL’s negligent violations was improperly calculated using domestic resale value rather than the import transaction value used to determine lawful duties.
3. Whether Hitachi Japan could be liable for aiding or abetting HAL’s negligent § 1592 violations without proof of intent (or comparable knowing assistance).

## Decision

- The Federal Circuit affirmed the dismissal of the government’s fraud and gross negligence claims because the CIT’s finding that the requisite state of mind was not proven by clear and convincing evidence was not clearly erroneous.
- The court affirmed HAL’s negligence liability under § 1592.
- The court vacated the penalty amount and remanded for recalculation because the CIT used the wrong sales transaction and valuation basis in determining lawful duties.
- The court reversed Hitachi Japan’s aiding-and-abetting liability as legally incorrect because the standard applied did not properly require intent.

## Legal Principles

- Fraud and gross negligence under 19 U.S.C. § 1592 require proof of the requisite state of mind by clear and convincing evidence; absent that proof, liability is limited to negligence penalties.
- Civil penalty calculations tied to “lawful duties” and valuation must be based on the import transaction’s “price actually paid or payable” under 19 U.S.C. § 1401a(b)(1), not a downstream domestic resale price.
- Aiding-and-abetting liability for another party’s § 1592 violation requires an intentional (or comparably knowing) form of assistance; “negligent aiding or abetting” is not a valid basis for imposing secondary liability on that theory.

## Conclusion

The Federal Circuit preserved HAL’s negligence liability under § 1592 but rejected enhanced-penalty theories lacking clear and convincing proof of the required mental state, required penalty recalculation using the import transaction value, and set aside exporter liability where intent to aid and abet was not established.


United States v. Hitachi Am., Ltd., 172 F.3d 1319 (Fed. Cir. 1999)