B-120401, AUGUST 16, 1954, 34 COMP. GEN. 70

B-120401, AUGUST 16, 1954, 34 COMP. GEN. 70

REWARDS - INFORMERS - LIQUIDATED DAMAGES UNDER CUSTOMS ENTRY BONDS CONSTITUTING RECOVERY UNDER CUSTOMS LAWS UNDER SECTION 619 OF THE TARIFF ACT OF 1930, AS AMENDED, WHICH AUTHORIZES PAYMENT OF AWARDS TO INFORMERS BASED ON NET AMOUNT RECOVERED, LIQUIDATED DAMAGES WHICH ARE RECOVERED UNDER CUSTOMS ENTRY BONDS FOR FAILURE TO RETURN TO THE APPROPRIATE COLLECTOR ON DEMAND MERCHANDISE SUBJECT TO SUCH RETURNS, MAY BE CONSIDERED A RECOVERY UNDER THE ACT.

ACTING COMPTROLLER GENERAL WEITZEL TO THE SECRETARY OF THE TREASURY, AUGUST 16, 1954:

REFERENCE IS MADE TO YOUR LETTER OF JUNE 9, 1954, AND ENCLOSURES, REQUESTING TO BE ADVISED WHETHER A RECOVERY OF LIQUIDATED DAMAGES UNDER CUSTOMS ENTRY BONDS, FOR FAILURE TO RETURN TO THE APPROPRIATE COLLECTOR ON DEMAND MERCHANDISE SUBJECT TO SUCH RETURNS, MAY BE CONSIDERED "A RECOVERY OF ANY DUTIES WITHHELD, OR OF ANY FINE, PENALTY, OR FORFEITURES INCURRED" WITHIN THE MEANING OF SECTION 619 OF THE TARIFF ACT OF 1930, AS AMENDED, 19 U.S.C. 1619, PROVIDING FOR AWARD OF COMPENSATION TO INFORMERS.

SECTION 619, 46 STAT. 758, PROVIDES, IN PERTINENT PART, AS FOLLOWS:

ANY PERSON NOT AN OFFICER OF THE UNITED STATES WHO DETECTS AND SEIZES ANY VESSEL, VEHICLE, MERCHANDISE, OR BAGGAGE SUBJECT TO SEIZURE AND FORFEITURE UNDER THE CUSTOMS LAWS OR THE NAVIGATION LAWS, AND WHO REPORTS THE SAME TO AN OFFICER OF THE CUSTOMS, OR WHO FURNISHES TO A UNITED STATES ATTORNEY, TO THE SECRETARY OF TREASURY, OR TO ANY CUSTOMS OFFICER ORIGINAL INFORMATION CONCERNING ANY FRAUD UPON THE CUSTOMS REVENUE, OR A VIOLATION OF THE CUSTOMS LAWS OR THE NAVIGATION LAWS, PERPETRATED OR CONTEMPLATED, WHICH DETECTION AND SEIZURE OR INFORMATION LEADS TO A RECOVERY OF ANY DUTIES WITHHELD, OR OF ANY FINE, PENALTY, OR FORFEITURE INCURRED, MAY BE AWARDED AND PAID BY THE SECRETARY OF THE TREASURY A COMPENSATION OF 25 PERCENTUM OF THE NET AMOUNT RECOVERED, BUT NOT TO EXCEED $50,000 IN ANY CASE, WHICH SHALL BE PAID OUT OF ANY APPROPRIATIONS AVAILABLE FOR THE COLLECTION OF THE REVENUE FROM CUSTOMS. FOR THE PURPOSES OF THIS SECTION AN AMOUNT RECOVERED UNDER A BAIL BOND SHALL BE DEEMED A RECOVERY OF A FINE INCURRED. * * *

TRANSMITTED WITH YOUR LETTER WERE TWO CLAIMS OF INFORMERS FOR AWARDS OF COMPENSATION ON ACCOUNT OF AMOUNTS RECOVERED AS LIQUIDATED DAMAGES UNDER CUSTOMS ENTRY BONDS. IN ONE CASE THE INFORMATION FURNISHED RESULTED IN THE ESTABLISHMENT OF UNDERVALUATION AT THE TIME OF ENTRY OF IMPORTED CIGARETTE LIGHTERS AND A CLAIM FOR FORFEITURE VALUE UNDER SECTION 592 OF THE TARIFF ACT OF 1930, 46 STAT. 750, 19 U.S.C. 1592, IN THE AMOUNT OF $22,464, A CLAIM FOR INCREASED DUTIES OF $2,675.86, AND A CLAIM FOR ADDITIONAL DUTIES OF $6,931.50 UNDER SECTION 489 OF THE ACT, 46 STAT. 725, 19 U.S.C. 1489. EFFORTS TO EFFECT COLLECTION OF THE CUSTOMS CLAIMS WERE UNSUCCESSFUL EXCEPT TO THE EXTENT OF $6,787.31, THE TOTAL AMOUNT RECOVERABLE UNDER THE ENTRY BOND WHICH AMOUNT WAS DEPOSITED BY THE SURETY COMPANY AS LIQUIDATED DAMAGES FOR FAILURE TO RETURN THE MERCHANDISE UPON DEMAND. IN THE OTHER CASE, THERE WAS INVOLVED A CUSTOMS CLAIM IN THE AMOUNT OF $66,875.24 FOR THE FORFEITURE OF THE VALUE OF MERCHANDISE UNDER SECTION 592 OF THE ACT FOR FALSE INVOICING, AND A CLAIM IN THE AMOUNT OF $40,421.83 FOR LIQUIDATED DAMAGES UNDER THE BOND BECAUSE OF FAILURE TO REDELIVER FIVE ENTIRES OF MERCHANDISE NOT LEGALLY MARKED AT THE TIME OF IMPORTATION. THE CLAIM FOR LIQUIDATED DAMAGES UNDER THE BOND WAS CANCELLED WITH RESPECT TO THREE OF THE ENTRIES, MITIGATED TO $800 AS TO THE FOURTH, ON WHICH MARKING DUTIES OF APPROXIMATELY $782.30 WOULD HAVE BEEN DUE IF THE ENTRY HAD BEEN LIQUIDATED WITH THE ASSESSMENT OF MARKING DUTIES, AND MITIGATED TO $700 AS TO THE FIFTH ENTRY, INVOLVING APPROXIMATELY $620 IN MARKING DUTIES. THE LIABILITY FOR THE FORFEITURE VALUE UNDER SECTION 592 WAS REMITTED ON CONDITION THAT THE TOTAL SUM OF $1,500 BE PAID IN REGARD TO THE TWO ENTIRES AS INDICATED ABOVE.

IT IS UNDERSTOOD FROM YOUR SUBMISSION AND ATTACHMENTS THAT, IN ORDER TO OBTAIN RELEASE OF MERCHANDISE FROM CUSTOMS CONTROL PRIOR TO ASCERTAINMENT AND PAYMENT OF THE FULL DUTIES AND CHARGES CONNECTED THEREWITH, IMPORTERS ARE REQUIRED UNDER AUTHORITY CONTAINED IN SECTION 623 OF THE ACT, 46 STAT. 759, 19 U.S.C. 1623, TO POST BONDS TO INSURE PAYMENT OF THE DUTIES AND CHARGES AND TO INSURE COMPLIANCE WITH CUSTOMS LAWS AND REGULATIONS. ONE OF THE CONDITIONS OF THE BONDS THEY PROMISE TO REDELIVER OR CAUSE TO BE REDELIVERED TO THE COLLECTOR, WHEN DEMANDED BY HIM, MERCHANDISE SO RELEASED OR IN DEFAULT THEREOF TO PAY AS LIQUIDATED DAMAGES THE VALUE OF THE MERCHANDISE PLUS ESTIMATED DUTIES THEREON. SECTION 25/17 (D) OF THE CUSTOMS REGULATIONS OF 1943. HENCE, IT REASONABLY MAY BE CONCLUDED THAT THE AMOUNTS PAID AS LIQUIDATED DAMAGES REPRESENT DUTIES, PENALTIES OR FORFEITURES UNDER THE CUSTOMS LAWS. ACCORDINGLY, THIS OFFICE CONCURS IN THE VIEW THAT IN THE TWO CITED CASES AND IN SIMILAR CASES PAYMENTS OF AWARDS MAY BE BASED UPON THE LIQUIDATED DAMAGES ASSESSED UNDER CUSTOMS BONDS.