Ford Motor Company has agreed to pay the United States $365 million to resolve allegations that it violated the Tariff Act of 1930 by misclassifying and understating the value of hundreds of thousands of its Transit Connect vehicles, the Justice Department announced this week.

The settlement resolves allegations that Ford devised a scheme to avoid higher duties by misclassifying cargo vans. 

Specifically, the government alleged that from April 2009 to March 2013, Ford imported Transit Connect cargo vans from Turkey into the United States and presented them to
U.S. Customs and Border Protection (CBP) with sham rear seats and other temporary features to make the vans appear to be passenger vehicles.

These temporary rear seats were never intended to be, and never were, used to carry passengers. Rather, the government alleged, Ford included these seats and features to avoid paying the 25% duty rate applicable to cargo vehicles. 

By classifying the vans as vehicles for the transport of passengers, Ford instead paid a duty rate of just 2.5%. 

Ford submitted entry papers to CBP declaring these vehicles as classifiable under tariff heading 8703 as “Motor cars and other motor vehicles principally designed for the transport of persons.” After customs clearance, each of these Transit Connect vehicles was immediately stripped of its rear seats and returned to its original identity as a two-seat cargo van. 

The settlement also resolves allegations that, from April 2009 through August 2013, Ford avoided paying import duties by under-declaring to CBP the value of certain Transit Connect vehicles.