THE 9 REGIONAL OFFICES AND 45 DISTRICT AND AREA OFFICES OF THE U.S. CUSTOMS SERVICE ASSESS PENALTIES UNDER 123 DIFFERENT LAWS AND REGULATIONS. THESE PENALTIES RANGE FROM A NOMINAL FINE TO FORFEITURE OF THE VESSEL AND MERCHANDISE PLUS A FINE EQUAL TO THE MERCHANDISE'S VALUE. IMPORTERS CLAIM THAT SIMILAR VIOLATIONS OFTEN RESULT IN WIDELY DIFFERING FINES, THAT THEY FEEL PRESSURED TO ACCEPT RATHER THAN CHALLENGE PENALTY ASSESSMENTS THAT INSUFFICIENT PROVISION IS MADE FOR JUDICIAL REVIEW, AND THAT PROCEDURES ARE UNDULY COMPLICATED. THIS COMPTROLLER GENERAL'S INVESTIGATION SUSTAINS THESE CHARGES AND FURTHER FINDS THAT COMPLICATIONS IN THE CURRENT SYSTEM DELAY THE RECEIPT OF REVENUES. THE CIRCUMSTANCES OF A VIOLATION ARE NOT CONSIDERED WHEN ASSESSING A PENALTY. JUDICIAL REVIEW IS LIMITED TO DECIDING WHETHER OR NOT A VIOLATION OCCURRED; PARTIES WITH MITIGATING CIRCUMSTANCES ARE PRESSURED TO ACCEPT CUSTOMS' MITIGATED AMOUNT. ALSO, SINCE PENALTIES ARE BASED ON THE VALUE OF THE MERCHANDISE, A MINOR VIOLATION INVOLVING EXPENSIVE MERCHANDISE WILL RESULT IN A LARGER FINE THAN A DELIBERATE FRAUD INVOLVING A SMALLER AMOUNT OF MERCHANDISE. A BILL PASSED BY THE HOUSE OF REPRESENTATIVES IN OCTOBER 1977 WOULD BASE PENALTIES FOR FALSE OR FRAUDULENT DECLARATIONS ON DEGREE OF VIOLATOR CULPABILITY RATHER THAN THE TOTAL VALUE OF THE MERCHANDISE. ALL CUSTOMS VIOLATIONS SHOULD BE HANDLED THIS WAY. CUSTOMS ALSO NEEDS TO SET UP SYSTEMWIDE INSTRUCTIONS FOR MITIGATING PENALTIES AND FOLLOW UP ON INTERPRETATIONS. THE REPORT HAS STATISTICS AND EXAMPLES WHILE APPENDICES CONTAIN EXISTING CUSTOMS REGULATIONS AND GUIDELINES. (GLR)