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Pentax Corp. v. Myhra

filed: July 31, 1995.

PENTAX CORPORATION, A DELAWARE CORPORATION, PLAINTIFF-APPELLANT,
v.
DONALD W. MYHRA, IN HIS OFFICIAL CAPACITY AS DISTRICT DIRECTOR OF CUSTOMS FOR THE DISTRICT OF GREAT FALLS, MT; U.S. CUSTOMS SERVICE, AN AGENCY OF THE U.S., DEFENDANTS-APPELLEES.



Appeal from the United States District Court for the District of Montana. D.C. No. CV-92-00064-PGH. Paul G. Hatfield, District Judge, Presiding. Original Opinion Previously Reported at:,.

Before: Otto R. Skopil, Jr., Robert Boochever and David R. Thompson, Circuit Judges. Opinion by Judge Thompson.

Author: Thompson

Order AND AMENDED OPINION

THOMPSON, Circuit Judge:

I. OVERVIEW

Pentax Corporation (Pentax) imported mismarked goods. Pentax admitted its error by letter to the United States Customs Service (Customs), seeking to limit its potential liability by qualifying for "prior disclosure" status under 19 U.S.C. § 1592(c)(4). That statute requires the violator to tender any unpaid duties. Customs demanded that Pentax tender a ten percent marking duty required for mismarked goods. 19 U.S.C. § 1304(f). Pentax refused to tender any money claiming that no duty was unpaid.

Pentax brought this action in Montana District Court seeking judicial review of Customs' determination that Pentax must prepay $5.2 million by a certain date to qualify for prior disclosure status. The district court granted a temporary restraining order preventing Customs from denying Pentax prior disclosure status.

The district court later granted Customs' motion to dismiss for lack of jurisdiction. The court, at Pentax's request, entered an injunction pending appeal preventing Customs from withholding prior disclosure status for failing to pay the $5.2 million; the money is currently deposited in the district court's registry. Pentax appeals the district court's dismissal for lack of subject matter jurisdiction. We affirm and remand for the district court to dissolve its injunction.

II. FACTS

Pentax imported and paid duties on camera equipment, marking the equipment's country of origin as Hong Kong. Pentax later learned that marking to be incorrect, and disclosed the error to Customs' regional director. Because Customs had not started an investigation, Pentax sought "prior disclosure status" as defined by 19 U.S.C. § 1592(c)(4).

Section 1592(c)(4) limits the penalty for Customs regulations violations to the amount, plus interest, of the duties lost by the United States because of the violations. In addition to the requirement that admission of the violation must predate the commencement of an investigation, the statute requires the violator to tender "the unpaid amount of lawful duties at the time of disclosure, or within 30 days (or such longer period as the Custom Service may provide) after notice by the Customs Service of such unpaid amount." Id.

Customs' district director notified Pentax that it had to tender $5,157,601.30 (rounded to $5.2 million) by June 22 to qualify for prior disclosure status. This amount represented "marking duties" under 19 U.S.C. § 1304(f).*fn1 According to the statute, these duties are "deemed to have accrued at the time of importation." Therefore, Customs reasoned, they are duties owed because of the violation and must be paid before Pentax can qualify for prior disclosure status.

After denying Pentax's application for review, Customs demanded payment of the $5.2 million marking duties. Fearing that if it paid the $5.2 million it would have no forum in which to seek a recovery of the money if Customs were wrong, Pentax brought the instant action in the Montana District Court.

The district court held that preenforcement review of the determination of prior-disclosure status is not available under the statutory scheme set forth in 19 U.S.C. ยง 1592. Pentax Corp. v. Myhra, 844 F. Supp. 611, 616 (D. Mont. 1994). It concluded, therefore, that it lacked jurisdiction to ...


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