F. Vitelli & Son v. United States

Background

Vitelli & Son, importers, entered nineteen shipments of chestnuts and garlic at New York in 1905–1907. The entries were liquidated and duties paid. About five years later, the collector of the port canceled liquidations for fourteen entries, saying corrected weights showed fraud, and ordered reliquidation. Vitelli & Son protested, paid under protest, and appealed to the Board of General Appraisers. The board found the collector had not proved fraud and sustained the protest. The Court of Customs Appeals reversed, relying on a presumption that official action is correct and placing on the importer the burden to show no fraud. The board later applied that ruling to the remaining five entries and upheld the reliquidations. The cases reached the Supreme Court on review.

Reasoning

The key question was the meaning of Section 21 of the 1874 law, which says that after one year entries and duty settlements are final 'in the absence of fraud and in the absence of protest.' The Court said the appeals court erred by treating official action as presumptively correct and by shifting the burden onto the importer. That approach would negate the statute’s clear limitation and its purpose to protect commerce from endless uncertainty. Instead, the Court held that the presence of fraud must be proved by the party asserting it and that tribunals competent to decide fraud should resolve the issue without the improper presumption.

Real world impact

The ruling protects importers from having to carry a perpetual burden of proving they did not commit fraud to keep entries final. Customs collectors cannot rely on a presumption of correctness to reopen one-year-old entries; the government must prove fraud before reliquidation. The cases were sent back to the Board of General Appraisers to decide the fraud question consistent with this opinion.