BON-2/PRO-2-02-R:I:EC 225807 AJS
CMC Director of Customs
U.S. Customs Service
c/o Protest and Control Section
6 World Trade Center, Room 761
New York, NY 10048-0945
RE: Protest 1001-94-100071; Notice of Redelivery; 19 CFR 141.113; 19 CFR 113.62; HQ 224854; HQ 951300; United States v. Utex International Inc.; United States v. Toshoku America, Inc.; United States v. Imperial Foods Imports.
Dear Sir or Madame:
This is our decision in protest 1001-94-100071, dated January 4, 1994, concerning a demand for redelivery of frozen shrimp.
FACTS:
A Food and Drug Administration (FDA) Form 701 was filed for the subject entry on behalf of the protestant on July 2, 1993. The "may proceed without FDA examination" portion of the Form 701 was not signed. This portion specifically states that it is "valid only if signed". The form also informed the protestant that it must hold the shipment intact pending further notice from the FDA. The subject shrimp was released by Customs and entered on July 8, 1993. The protestant, as principal, executed a continuous bond securing the entry of the shrimp. Pursuant to the authority granted in the Federal Food, Drug, and Cosmetic (FD&C) Act, section 801(a), codified as amended at 21 U.S.C. 381(a)(1982), the FDA, notified the protestant on July 12, 1993, that it would sample the shrimp. On July 22, 1993, the FDA issued a "Notice of Detention and Hearing" to the protestant stating that the shrimp appeared to contain salmonella bacteria and that the goods must be held intact pending decision as to their admission. The protestant submitted an analysis from an accredited laboratory on August 17, 1993, which indicated that the
merchandise did not contain salmonella. On October 5, 1993, the FDA issued a "Notice of Refusal of Admission" advising the protestant that the shrimp must be exported under the
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supervision of Customs within ninety days of the date of the notice. On December 6, 1993, Customs issued a "Notice to Redeliver" (Customs Form 4647) citing FDA's refusal of admission as the reason for the redelivery request.
ISSUE:
Whether the subject Notice of Redeliver was timely issued within the meaning of 19 CFR 113.62(d).
LAW AND ANALYSIS:
Initially, we note that the subject protest was timely filed pursuant to 19 U.S.C. 1514(c)(2)(B). The date of decision as to which protest is made is December 6, 1993, and the date of this protest is January 4, 1994. We also note that a demand for redelivery is protestable pursuant to 19 U.S.C. 1514(a)(4).
The Customs regulations governing the above-stated issue are found in 19 CFR 141.113 and 113.62. Paragraph (b) of section 141.113 provides as follows:
If at any time after entry the district director finds that any merchandise contained in an importation is not entitled to admission into the commerce of the United States for any reason not enumerated in paragraph (a) of this section [relating to marking of certain merchandise], he shall promptly demand the return to Customs custody of any such merchandise which has been released. (emphasis added).
Section 141.113(f) of the Customs regulations (19 CFR 141.113(f)) states the following time limitation for demands for the return of merchandise:
A demand for the return of merchandise to Customs custody shall not be made after the liquidation of the entry covering such merchandise has become final.
Section 113.62 of the Customs Regulations (19 CFR 113.62) contains the basic importation and entry bond conditions. Paragraph (d) of this provision provides as follows:
If merchandise is released conditionally from Customs custody to the principal before . . . its right of admission into the United States is determined, the principal agrees to redeliver timely, on demand by Customs, the merchandise released if it:
(1) Fails to comply with the laws or regulations governing admission into the United States; . . .
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It is understood that any demand for redelivery will be made no later than 30 days after the date that the merchandise was released or 30 days after the end of the conditional release period (whichever is later).
Paragraph (e) of this provision also provides as follows:
If merchandise is released conditionally to the principal before its right of admission into the United States is determined, the principal, after notification, agrees to . . . do any other thing to the merchandise in order to comply with the law and regulations governing its admission into the United States within the time period set forth in the notification.
The interpretation of these provisions has been thoroughly considered (see e.g., HQ 224854 of July 6, 1994; HQ 224872 of July 5, 1994). Customs is of the position that a Notice of Redelivery must be "promptly" issued. "Promptly" means either: (1) no later than 30 days after the date the merchandise is released if there is no occurrence establishing a different conditional release period; or (2) if there is an occurrence establishing a different conditional release period (e.g., 19 CFR 151.11), no later than 30 days after the end of that period [e.g., if information or a sample is requested, within 30 days from the date of receipt by Customs of the information or sample](HQ 951300 of October 7, 1992; HQ 223535 of September 21, 1992; and HQ 088904 of February 19, 1992). 19 CFR 141.0a(i) states that released conditionally means any release from Customs Custody before liquidation. A notice of redelivery may never be issued after liquidation becomes final (United States v. Utex International Inc., 6 Fed. Cir. (T) 166 (1988)).
In this instance, the shrimp was released from Customs custody on July 8. The FDA did not issue a "may proceed notice" prior to release but determined that the shrimp should not be permitted to enter the country without proof of compliance with 21 U.S.C. 381(a)(3), which concerns adulterated food. In addition, the protestant was notified that the shrimp "must be held intact" pending further notice from the FDA. Under 21 U.S.C. 381(b), Customs authorized delivery of the shrimp to the principal under bond pending the decision as to the admission of the shrimp. The failure of the FDA to issue a "may proceed notice" was an occurrence establishing a conditional period. Therefore, a Notice of Redelivery would be considered promptly issued if issued no later than 30 days after the end of this conditional release period.
On July 12, the FDA issued a Notice of Sampling stating that a documentary sample of the shrimp was taken under authority of the FD&C Act, section 801(a), and that the merchandise "must be held intact" pending further written notice from the FDA upon completion of the examination of samples. This notice required the conditional release period to be continued in order for the sampling process to be completed.
On July 22, the FDA then issued a Notice of Detention and Hearing stating that the shrimp appears to be in violation of the FD&C Act, section 801(a)(3). The notice stated that the shrimp should continue to be held intact pending final decision as to whether it shall be admitted or
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refused admission. In addition, the notice provided the importer 10 days (excluding Saturdays, Sundays and holidays) from the date of the notice to either appear at the FDA or file a statement in writing with the FDA concerning admissibility of the shrimp. This notice also required the conditional release period to remain in operation for the completion of this procedure.
On August 17, the importer submitted an analysis from an accredited laboratory which stated that the subject shrimp did not contain salmonella. While this analysis conflicts with the FDA's analysis, we note that Customs has previously concluded that it had no authority over the correctness of the FDA's analysis upon which a notice of redelivery is based. HQ 222290 (June 19, 1990). Therefore, we have no authority to resolve this conflict.
On October 5, a Notice of Refusal of Admission was issued by the FDA. This notice, issued pursuant to 21 U.S.C. 381(a), stated that the merchandise must be exported or destroyed under Customs supervision within ninety days from the date of the notice or within such additional time as the district director of Customs specifies. This notice established an end to the conditional release period of 90 days from the date of the notice unless otherwise specified. According to the previously discussed cases, Customs then had no later than 30 days after the end of this period to issue a Notice of Redelivery. On December 6, Customs issued a Notice of Redelivery which stated the shrimp had been refused admission by the FDA and must be exported
or destroyed under Customs supervision within thirty days. We note that this notice was permissible inasmuch as the Notice of Refusal of Admission permitted exportation or destruction in "such additional time as the district director of Customs specifies". In this case, the period for exportation or destruction would be 92 days from the date of the Notice of Refusal of Admission.
Therefore, inasmuch as the Notice of Redelivery could be issued anytime up to 30 days after the end of the 90-day period, and the notice was in fact issued before the 90-day period expired, it was timely issued.
Counsel for the protestant cites to Customs Service Decision (C.S.D.) 86-21 in support of the claim that a conditional release period must be limited by a specific regulatory time period. The specific holding in this C.S.D was that the words "end of the conditional release period" in 19 CFR 113.62(d) refers to time limits such as the 180-day period in 19 CFR 12.80(e)(2) and does not refer to the liquidation of the entry. In this case, the end of the conditional release period is governed by 21 U.S.C. 381(a). As stated previously, the Secretary of the Treasury is required to act unless an article is exported within ninety days of the date of notice of refusal of admission or within such additional time as may be permitted pursuant to regulation under this statute. Therefore, the subject conditional release period is in fact governed by a time limit.
Counsel additionally asserts that because the admissibility process administered by FDA is not governed by specific time limits, that this process cannot create a conditional release period. While we concede that relevant FDA regulations (e.g., 21 CFR 1.90 & 1.94) do not establish a
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specific time limit, we do not think that this should disqualify such a process from creating a conditional release period for a number of reasons. First, the process in this case took 85 days which we believe is a reasonable period of time. Second, the protestant was notified three times that its merchandise should be held intact pending an admissibility decision during this process. Third, the FDA process is entirely outside of Customs control and to conclude that it does not create a conditional release could potentially create havoc in Customs ability to demand redelivery of adulterated foodstuffs. Fourth, we note that the regulation discussed in C.S.D. 86-21 was a regulation promulgated under Customs authority and thus the holding in that decision should be limited to similar such regulations. Fifth, the bond provisions themselves notified the protestant that it may be required to redeliver merchandise, that a conditional release period of unspecified duration could exist, and the protestant agreed to "do any other thing to the merchandise in order to comply with the law and regulations governing its admission." Lastly, section 381(b) itself specifically creates a conditional release period with the language "pending decision as to the admission of an article."
19 CFR 113.62(e), as well as paragraph (d), also addresses merchandise released conditionally. As discussed previously, a Notice of Redelivery was timely issued requesting the protestant to export, destroy or return to Customs custody the subject merchandise. The issuance of such a notice would be authorized under section 113.62(e) inasmuch as the principal agreed to "destroy, export, or do any other thing to the merchandise . . ." upon notification. The subject notice was simply requesting the protestant to abide by this bond provision. Therefore, the notice is also proper under section 113.62(e).
The Court of Appeals for the Federal Circuit (CAFC) has generally surveyed the statutory and regulatory framework under which foodstuffs are imported into the United States. United States v. Toshoku America, Inc., 7 Fed. Cir. (T) 104, 107 (1989). The CAFC stated that the basic statutory provision governing the importation of foodstuffs is 21 U.S.C. 381 (1982). Id. The statutory scheme is enforced by joint cooperation of the Secretary of the Treasury, through the Customs Service, and the Secretary of Health and Human Services, through the FDA. Id. The CAFC stated that the interplay between these two agencies was partially described by this court in United States v. Imperial Food Imports, 834 F.2d 1013 (Fed. cir. 1987), as follows:
When importing foodstuffs the importer or its broker must notify the FDA, which may issue a 'may proceed notice'. However, the FDA may determine that the merchandise should not be permitted to enter the country without proof of compliance with 21 U.S.C. 381(a)(3)(1982), which concerns adulterated food. In such case, the FDA will issue a Notice of Sampling, 21 CFR 1.90, and often a Notice of Detention and Hearing, 21 CFR 1.94. If the importer does not respond to the Notice of Detention within 10 days, a Notice of Refusal of Admission is issued, 21 CFR 1.94. The importer then has ninety days to either export or destroy the foodstuffs. If the importer has not acted after
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ninety days, Customs issues a Notice of Redelivery, 19 CFR 141.111 [sic 141.113]. If the importer fails to comply by delivering the goods, the importer breaches its bond with Customs. (emphasis added).
Id.
We find the Toshoku decision instructive for determining that the Notice of Redelivery was timely issued. The notice permitted the importer 30 days, for a total of 92 days from the date of the refusal of admission, to either export or destroy the merchandise. While the notice was not issued after the 90 day period expired as discussed in Toshoku, it still permitted the importer more than 92 days to comply with the refusal of admission. As stated previously, a period of more than 90 days from refusal of admission may be specified by Customs.
Counsel stated that the bond in Toshoku was different from the subject bond and thus the above cited language is not applicable. We note that in footnote 12 the court stated:
Under Customs current practice, Customs Bond Form 301 has replaced Customs Form 7595 here at issue. Instead of including the bond conditions on its face as did its predecessor, Form 301 incorporates by reference the conditions provided at 19 CFR 113.62(1988). See T.D. 84-213 (effective February 18, 1985). Condition (e) of that regulation comports with the language of paragraph 7 of the now superseded bond and is entitled "Agreement to Rectify Any Noncompliance with Provisions of Admission" (emphasis in original).
We also note that condition (d) of section 113.62 comports with the language of paragraph 4 of the superseded bond in Toshoku. Inasmuch as the bond provisions in Toshoku comport to the provisions at issue, we continue to find the regulatory framework discussed in Toshoku instructive for determining that the subject Notice of Redelivery was timely issued. In fact, section 113.62(e) is a broader bond provision for demanding the redelivery of merchandise than paragraph 7 because it applies to merchandise released conditionally before its right of admission is determined while paragraph 7 limits its application to cases where merchandise was "found not to comply with the law and regulations governing its admission".
HOLDING:
The protest is denied. The Notice of Redelivery was timely issued within the meaning of 19 CFR 113.62(d).
In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, this decision should be mailed by your office, with the Customs Form 19, to the protestant no later than 60 days from the date of this letter. Any
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reliquidation of the entry in accordance with the decision must be accomplished prior to the mailing of this decision. Sixty days from the date of the decision the Office of Regulations and Rulings will take steps to make the decision available to Customs personnel via the Customs Rulings Module in ACS and the public via the Diskette Subscription, Freedom of Information Act and other public access channels.
Sincerely,
Stuart P. Seidel
Assistant Commissioner
Office of Regulations and Rulings