1. Why Cbp May Examine a Foreign Company'S Imports
CBP can compare entry declarations with invoices, payments, product specifications, supplier records, and the physical merchandise. A discrepancy does not automatically prove misconduct, but repeated or unexplained differences may widen the review. The first task is to identify the legal role each company played in the transaction.
The Importer of Record Is the Starting Point
Under 19 U.S.C. § 1484, the importer of record must use reasonable care when entering, classifying, and valuing merchandise. A foreign manufacturer or seller does not assume that role merely because it supplied the goods. Its exposure may change, however, if it served as a nonresident importer, prepared inaccurate supporting documents, or directed information used in the entry.
Compliance with the export rules of the country of departure does not establish compliance with U.S. .ntry, valuation, classification, or origin requirements.
A focused customs law review should map the foreign parent, U.S. subsidiary, purchaser, importer, customs broker, and suppliers. That map helps determine who filed the entry, who controlled the information, and which records CBP may seek.
Issues That Commonly Expand the Inquiry
CBP scrutiny may begin with one shipment and extend to other entries when records reveal a recurring problem. Common concerns include:
- Product descriptions that do not match technical specifications.
- Invoices that omit assists, royalties, side payments, or later adjustments.
- Origin claims that conflict with production or shipping records.
- Markings that differ from the origin declared at entry.
- Preferential-duty claims without adequate supporting evidence.
2. Preparing the Record before Cbp Requests More Information
A company should not wait for an enforcement notice to learn how its entry data was created. An internal review can reveal whether commercial systems, supplier documents, and customs declarations tell the same story. It can also identify errors that may affect more than one product or entry.
Conducting a Targeted Customs Audit
The audit should sample entries by product, supplier, port, broker, and duty treatment. Reviewers can compare purchase orders, invoices, payments, tariff classifications, valuation additions, origin support, and post-entry adjustments. An import and trade compliance assessment should also trace who approved each material data field and how exceptions were escalated.
Preserving Entry and Supplier Evidence
Many customs records generally must be retained for five years under 19 U.S.C. § 1508 and 19 C.F.R. Part 163. Relevant materials may include bills of materials, factory records, license agreements, pricing correspondence, freight documents, broker instructions, and certificates of origin. The company should suspend routine destruction when an inquiry is reasonably anticipated.
Supplier certifications deserve testing rather than automatic acceptance. A clean certificate may carry little weight when factory locations, component sourcing, or production steps point elsewhere.
3. Responding without Giving Up Important Protections
The form of CBP's request matters. A routine information request, proposed action, administrative summons, and penalty notice create different procedural concerns. The response should answer the actual request while preserving objections, privileges, and later review options.
Handling Forms 28 and 29
CBP Form 28 requests information that may support classification, value, origin, or another entry issue. CBP Form 29 may provide notice of proposed or completed action. The recipient should confirm the entries involved, calendar the stated deadline, and reconcile the submission with earlier declarations before responding.
Silence or an incomplete answer can leave CBP to decide the issue on the available record. An overbroad response can create a different problem by introducing unsupported explanations or inconsistent data.
Summonses, Interviews, and Privilege
Under 19 U.S.C. § 1509, CBP may summon records or testimony relevant to customs matters. A company should preserve responsive material, identify custodians, and assess the request's scope before production. Employees also need to understand whether an interview is voluntary and whose interests the attending attorney represents.
Attorney-client privilege may protect confidential communications seeking or providing legal advice. It generally does not shield underlying invoices, entry records, or business facts merely because an attorney reviewed them. A coordinated government and internal investigations process can separate legal analysis from ordinary business communications.
4. Defending Valuation, Classification, and Origin Allegations
The defense should fit the allegation rather than rely on a general statement that the broker handled the entry. Each issue involves a different legal rule and evidentiary record. The company should also separate an arguable interpretation from evidence suggesting deliberate concealment.
| CBP Issue | Records to Examine | Defense Focus |
|---|---|---|
| Tariff classification | Specifications, samples, and prior rulings | Product characteristics and consistent entry treatment |
| Customs valuation | Invoices, payments, assists, and royalties | Applicable valuation method and required additions |
| Origin and marking | Production records, components, and labels | Governing origin rule and manufacturing evidence |
| Duty evasion or fraud | Approvals, warnings, communications, and corrections | Materiality, knowledge, intent, and individual roles |
Tariff classification
- Records to ExamineSpecifications, samples, and prior rulings
- Defense FocusProduct characteristics and consistent entry treatment
Customs valuation
- Records to ExamineInvoices, payments, assists, and royalties
- Defense FocusApplicable valuation method and required additions
Origin and marking
- Records to ExamineProduction records, components, and labels
- Defense FocusGoverning origin rule and manufacturing evidence
Duty evasion or fraud
- Records to ExamineApprovals, warnings, communications, and corrections
- Defense FocusMateriality, knowledge, intent, and individual roles
Classification and Valuation Disputes
A classification defense begins with the merchandise as imported, not its marketing name. Technical characteristics, principal function, component materials, and relevant rulings may shape the analysis. A customs valuation review should separately examine transaction value, related-party pricing, assists, royalties, packing, and other potential additions.
Origin, Marking, and Fraud Concerns
Country of origin can affect marking, duty preferences, special tariffs, and trade remedies. A changed label does not repair an unsupported origin declaration. When CBP suspects knowing false statements or unlawful importation, the matter may extend beyond civil penalties and involve other federal investigators.
5. Managing Penalties While Protecting Ongoing Imports
Additional duties do not automatically establish a penalty. Under 19 U.S.C. § 1592, CBP evaluates material false statements or omissions and whether the conduct involved negligence, gross negligence, or fraud. The company's response should address both the duty calculation and the asserted level of culpability.
Prior Disclosure and Administrative Petitions
A valid prior disclosure may limit § 1592 penalty exposure, but timing is critical. Disclosure generally must occur before, or without knowledge of, the commencement of a formal investigation. The company should understand the affected entries, legal theory, and duty loss before deciding whether the procedure remains available.
If CBP issues a prepenalty or penalty notice, the recipient may present facts, legal arguments, and mitigating circumstances through the applicable administrative process. Cooperation and corrective action may matter, but the outcome depends on the record and governing standards.
Keeping the Supply Chain Operational
The response team should coordinate with brokers, freight providers, finance personnel, and suppliers without allowing multiple unreviewed explanations to reach CBP. Practical steps may include correcting product data, obtaining missing origin records, adjusting broker instructions, and planning for exams or delayed releases.
Detention, exclusion, seizure, bond demands, and civil penalties arise under different authorities. A company should identify the action affecting each shipment instead of treating every disruption as a loss of import privileges.
6. Frequently Asked Questions
Can a foreign company change customs brokers during a CBP inquiry?
Generally, changing brokers does not erase earlier entry obligations or end CBP's review. The company should preserve former broker records, confirm current authority, and coordinate future filings.
What if an overseas supplier controls the records CBP requests?
CBP may still expect the importer to support its entry. The company should request the records promptly, document its efforts, identify remaining gaps, and avoid replacing missing evidence with assumptions.
Does paying additional duties close a potential penalty matter?
No. Payment may address a revenue loss, but a classification or origin decision, civil penalty proceeding, or criminal referral may continue under separate authority.
Can an importer challenge a CBP decision after liquidation?
Certain decisions may be challenged through a protest under 19 U.S.C. § 1514. The protest generally must be filed within 180 days after the relevant liquidation or decision.
7. Discuss a Foreign Company Cbp Investigation with Sjkp
SJKP's attorneys review entry records, CBP requests, valuation and origin evidence, potential penalties, privilege issues, and operational risks. The firm's lawyers coordinate with customs brokers, accountants, and supply-chain professionals when technical review is needed. Foreign companies facing an information request, proposed action, summons, cargo disruption, or penalty concern may contact SJKP to evaluate the record and response options.
19 Aug, 2026
