Ford SEC Filing Discloses Possible CBP Penalty of Up to $1.3 Billion for Van Classification Issue

CBP may issue a penalty of up to $1.3 billion to Ford Motor Co. related to the company's classification of passenger wagons that were converted to Ford Transit cargo vans, Ford said in a June 3 Securities and Exchange Commission filing. "If such a claim is brought, CBP indicated that the penalty it may seek could be as much as $652 million to $1.3 billion," the company said. "In the event a penalty is ultimately imposed against us, the amount would be based on our level of culpability as determined by the courts. We intend to vigorously defend our actions and contest payment of any amounts set forth in the pre-penalty notice."

The disclosure follows years of litigation in which the U.S. Court of Appeals for the Federal Circuit eventually overturned (see 1906070061) a Court of International Trade decision that found that the imported vans were classifiable as passenger vans, even though the stripped-down rear seats included in the vans were removed right after clearing Customs (see 1708170032).

After the Supreme Court in 2020 declined to further review the case, "we paid the increased duties for certain prior imports, plus interest, and disclosed that CBP might assert a claim for penalties," the company said. "CBP has now issued to us a pre-penalty notice, which includes a demand for additional duties of $181 million and indicates that CBP is contemplating the issuance of a claim for a monetary penalty."