Ship Manifest Laws Need To Be Administered in a More Consistent, Less Burdensome Manner

GAO was asked to analyze the Customs Service's use of a ship's cargo manifest and the administration of penalties for discrepancies in the manifest. The cargo manifest, which lists the quantity, description, and destination of all cargo on board ships entering the United States, has been and continues to be a useful document for controlling imports. The merchandise quantity and description as shown on the manifest is compared to that shown on importers' merchandise entry documents. Since the manifest is prepared by the carrier and entry documents are prepared by the importer, the comparison provides some control that the quantity and type of merchandise entered by the importer is correct. Further, Customs encourages cargo manifest accuracy through a system of penalties.

Presently, Customs has difficulty determining whether penalties for manifest discrepancies should be levied. The law provides that carriers will not incur penalties if Customs believes that the manifest is incorrect by reason of clerical error or other mistake. Clerical errors are defined as nonnegligent, inadvertent, or typographical mistakes in the preparation, assembly, or submission of the manifest. However, it is difficult to determine precisely what types of errors constitute negligence. Moreover, the penalties for manifest discrepancies are generally mitigated, and mitigation creates an unnecessary administrative burden. Therefore, Customs needs a new system of levying penalties to improve the administration of penalties. The system should set an initial penalty that would not generally have to be mitigated, would be able to be administered uniformly, and would automatically determine the amount of the penalty based on the number of discrepancies in the manifest. To do that, Customs will have to stop determining whether negligence was involved for each discrepancy. Moreover, carriers are in a position to identify manifest discrepancies and thus aid Customs in the levying of penalties. Therefore, carriers need to be provided with a greater incentive to report manifest errors.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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