Penalties
As in the case of previous suspension agreements on Mexican tomatoes, the 2013 SA contains penalty and monitoring provisions that are potentially applicable or at least of concern to importers.
Although other entities involved in the sale and importation of tomatoes may be subject to Perishable Agricultural Commodities Act (PACA) penalties or sanctions for their role in import transactions, our focus is on the “importer of record” for CBP purposes.
Violations
While only parties to the SA have obligations under the agreement, signatories are required to incorporate the terms of the SA into their contracts.
Importers, in general, are not subject to penalties directly under the SA, but importers acting as ‘selling agents’ under the agreement may be. While neither the SA nor PACA specifically define “importer,” the SA provides that a “selling agent” may be an importer, “or any other entity that facilitates the transaction between the signatory and the first unaffiliated U.S. customer,” further defined as either a commission merchant, dealer, or broker.
The SA describes potentially violative activities which importers (regardless of whether or not they are selling agents) should take steps to prevent to avoid both Customs penalties and suppliers who may violate the SA. Practices which may result in incorrect classification or valuation of the product for Customs purposes merit special attention. These include sales below the reference price through improper “rebates, backbilling, discounts for quality and other claims” by hiding the real price (e.g., through “bundling arrangements, commingling tomato products, discounts/free goods financing packages, swaps, or other exchanges”), or through price calculations not in accordance with the SA (e.g., transactions involving adjustments due to changes in condition after shipment).
Violation of §1592(a)
Even if the U.S. importer of record is not in a position to violate the SA, importers may always be subject to Customs penalties under 19 U.S.C. §1592(a) for false statements related to entries of any product, including those regarding the entry of tomatoes from Mexico, independent of the suspension agreement.
If committed by or known to an importer, these acts could subject the importer to a §1592 penalty if they result in a false statement to Customs. As mentioned previously, an importer who is a selling agent may potentially violate both §1592(a) and the agreement.
In addition, signatories to the SA, or parties of sales subject to the SA, may be subject to Customs penalties under 19 U.S.C. §1592(a), for aiding or abetting an importer’s violation.
