Fines, Penalties & Forfeitures
October 2023 — Question 64
What would the proposed penalty amount be under the following facts? In a negligence case brought against an importer of seamless, steel pipe from China that was subject to Section 301 duties of 15% ad valorem, the loss of revenue is $300,000.00. The entered value of the pipe is $500,000.00. The domestic value is $900,000.00. CBP has decided to proceed with the issuance of a pre-penalty notice alleging negligent violations of 19 U.S.C. § 1592. The importer has not made a prior disclosure.
- A$100,000.00, or twenty percent (20%) of the entered value.
- B$600,000.00, or two times the loss of revenue.✓ CBP's answer
- C$900,000.00, or the domestic value.
- D$1,800,000, or two times the domestic value.
Why this answer
The cited provision fixes the maximum penalty for a negligent violation of 19 U.S.C. 1592 that affects the revenue: the lesser of the domestic value of the merchandise or two times the loss of revenue. Two times the $300,000 loss is $600,000, which is less than the $900,000 domestic value, so $600,000 is the proper proposed amount; with no prior disclosure, the standard maximums apply. Option A's twenty percent of value is the negligence ceiling only when the violation causes no loss of revenue, which these facts rule out, and the domestic-value answers describe the fraud ceiling or exceed anything the regulation authorizes for negligence. Watch for: Applying the twenty-percent-of-value cap, which governs only negligence violations causing no revenue loss.
Original CBLE Simulator explanation — the question and key above are CBP's; this analysis is ours. Verify against the current edition before relying on it in practice.
CBP's cited authority
Answer and citations as published in CBP's official answer key for the October 2023 examination.
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