Stafford Bone China, Inc. in Pittsburgh, PA imports fine English made bone china figurines from HMS Pottery (HMS), their Canadian supplier in Ontario, Canada. HMS, who is the importer of record on these imports, has been using their standard preprinted commercial invoices that show that the sales are in Canadian dollars for these shipments to Stafford. Over a year goes by before the auditors for HMS discover that the sales to Stafford were in U.S. dollars and thus all of the entered values used were lower due to erroneously converting the invoiced amounts from Canadian to U.S. dollars. HMS calls its Customs broker, who then advises HMS to submit a prior disclosure. HMS submits a prior disclosure and pays the additional duties and fees. Customs accepts the prior disclosure and determines that HMS was negligent and is subject to a penalty under 19 USC 1592. Which ONE of the following is the maximum penalty that Customs can issue in this case?
A) The lesser of the domestic value of the merchandise or two times the loss of duties and fees
B) The interest on the loss of duties, taxes and fees
C) Twenty percent (20%) of the dutiable value of the merchandise
D) No penalty – the prior disclosure precludes the issuance of a penalty
E) Ten percent (10%) of the dutiable value of the merchandise
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The Answer is: B
Citation: 19 CFR 162.73(b)(2)
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