BON-2-ENT-1-07-PRO-2-02-
RR:CR:DR 227686 IOR
Port Director
U.S. Customs Service
1000 Second Avenue, Ste 2200
Seattle, WA 98104-1049
Attn: Nancy K. Johnson, SIS
RE: Application for Further Review of Protest No. 3001-97-100347; Notice to redeliver; conditional release; 19 CFR 141.113; 19 CFR 113.62(d)
Dear Sir:
The above-referenced protest was forwarded to this office for further review. Our decision follows a May 27, 1999 meeting between counsel for protestant, and staff from the Duty and Refund Determination Branch and the Entry and Carrier Rulings Branch. We have considered the facts and issues raised, and our decision follows.
FACTS:
The protest concerns Entry no. 113-xxxx564, consisting of a total of 5,356 cartons of fresh honeydew melons, for a total value of $16,095.00. The entry consists of three line items, two of 1,885 cartons valued at $5,655, and one of 1,595 cartons valued at $4,785. The CF 7501 shows the import date as November 30, 1996. According to the CF 7501 and Customs records, the merchandise was entered on December 11, 1996, and according to Customs records the merchandise was released on December 11, 1996. The file includes a CF 3461 (Entry/Immediate Delivery) dated December 7, 1996. The CF 3461 in the file does not indicate that Block 28 for Customs use was completed. According to the CF 7501, a continuous bond secured the entry of the merchandise.
Exhibit three to the protest is a copy of a Customs Automated Commercial System (ACS) computer generated United States Food and Drug Administration (FDA) message, dated December 7, 1996, to protestant’s broker, advising that the entry is subject to FDA review (specifically the message consisted of the words "FDA review"). The file also contains an FDA “Notice of Entries Requiring Documentation” dated January 16, 1997, to the broker, with regard to the subject entry. The notice states that the listed entry “must be held intact pending an admissibility determination from FDA” and requests documents “required by established guidelines” for the entry. The file contains a January 24, 1997 “Notice of FDA Action” identified as “Notice Number: 1" which instructs “Hold All” with respect to the subject merchandise. The notice instructs that all products in the subject entry be held intact and not distributed. The file contains a January 27, 1997 letter from the broker to the FDA stating that the merchandise arrived in Los Angeles on November 30, 1996, and that it was released by the FDA and moved to Seattle on a feeder vessel which arrived in Seattle on December 11, 1996. With respect to the FDA, the broker states:
Information was provided to FDA through the U.S. Customs entry process. However, being preoccupied with USDA in Los Angeles and Seattle, we missed the document review process for FDA in Seattle. This oversight on our part was corrected when documents were presented on January 21.
The protest states that the broker sent the documents requested by the FDA, to the FDA, on January 17, 1997, and that the FDA received the documents on January 21, 1997. Exhibit seven to the protest consists of a copy of an ACS computer generated message to the protestant’s broker of “FDA Exam/Sample” and “FDA Exam, Notify”, dated January 24, 1997. The file contains a February 4, 1997 memorandum from the FDA to Customs stating that the subject entry was not held for FDA exam/sampling and requesting that a demand for redelivery be issued. According to the FDA memorandum, the merchandise arrived in Los Angeles on November 30, 1996 and was moved to Seattle where it arrived and was released on December 11, 1996. The memorandum states that the entry was transmitted electronically and Customs release was obtained on “that day”, and that “an ‘FDA Review’ message was received by the broker, but documents were not submitted to FDA.” The memorandum states that the broker was sent a “Notice of Entries Requiring Documentation” on January 16, 1997, and the FDA received the documents on January 21, and that the entry was designated for FDA exam/sample and a Notice of FDA Action was issued on January 24.
The file contains a CF 4647 (Notice to Redeliver) dated February 7, 1997, with regard to the subject entry, and which identifies the merchandise as 1885 boxes of fresh honeydew melons. This CF 4647 contains an “x” across the front of it. The file contains a second CF 4647 dated February 25, 1997 with regard to the same entry but identifies the merchandise as 5365 boxes of fresh honeydew melons. This second CF 4647 states that it “replaces” the February 7 notice, as the quantity is correct on the second notice. The file contains an April 11, 1997 letter from the broker to Customs, stating that the merchandise is no longer available for redelivery and references its January 27, 1997 letter to the FDA and the February 4, 1997 memo to Customs from FDA. The April 11, 1997 letter states that the “inadvertent release of this cargo prior to receiving the FDA may proceed notice was in no way an intentional act on our part, or that of the importer, to circumvent the rules, regulations, or laws of the FDA.” According to Customs records, the importer was assessed a redelivery violation penalty, at three times the value of the imported merchandise.
The subject protest was filed on May 27, 1997 ( May 26, 1997 was Memorial Day, a national holiday). The basis of the protest is that the February 25, 1997 Notice to Redeliver was untimely. The protest does not address the February 7, 1997 Notice to Redeliver. The protest claims that the subject entry was dated December 7, 1996. The protest includes a copy of the February 7, 1997 CF 4647 as issued, without an “X” across the front.
In a supplemental submission, dated October 6, 1998, the protestant takes the position that the December 7, 1996 “FDA Review” message does not establish a different conditional release period, because at that time the FDA has not made any kind of decision with respect to the merchandise. In a submission made subsequent to the meeting between counsel for protestant and representatives of this office, dated July 7, 1999, protestant asserts that 21 U.S.C. §381 and 21 CFR 1.90 support the protestant’s position that the notice to redeliver was not timely issued. In addition, the protestant asserts that the "FDA Review" message is generated based upon an Other Government Agency (OGS) flag, and according to a Customs Electronic Bulletin Board message of October 22, 1998, as such is advisory in nature only and cannot require any action on the part of the recipient of the message.
ISSUE:
Whether the subject notice to redeliver was timely issued.
LAW AND ANALYSIS:
Initially, we note that the subject protest was timely filed under the statutory and regulatory provisions for protests (see 19 U.S.C. §1514 and 19 CFR Part 174). The date of decision as to which protest is made is February 25, 1997, and the date of this protest is May 27, 1997. In determining the timeliness of the protest we take into consideration the fact that May 26, 1997 was Memorial Day, a national holiday. The protest does not address the timeliness of the February 7, Notice of Redelivery, however, this protest is untimely with respect to that Notice and there is no indication that any protest was filed with respect to the February 7, 1997 Notice of Redelivery. We also note that a demand for redelivery is protestable pursuant to 19 U.S.C. §1514(a)(4).
The Customs regulations governing demand for redelivery are found in 19 C.F.R. 141.113 and 113.62. Paragraphs (c) and (e) through (h) of section 141.113 provide as follows:
(c) Other merchandise not entitled to admission. If at any time after entry the port 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) or (b) of this section, he shall promptly demand the return to Customs custody of any such merchandise which has been released.
....
(e) Demand to importer of record or actual owner. A demand for the return of merchandise to Customs custody shall be made on the importer of record, except that it shall be made on the actual owner if an actual owner's declaration and superseding bond have been filed in accordance with §141.20 before the date of the demand.
(f) Form of demand. A demand for the return of merchandise to Customs custody shall be made on Customs Form 4647 or other appropriate form, or by letter. One copy, with the date of mailing or delivery noted thereon, shall be retained by the port director and made part of the entry record.
(g) Time limitation. 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.
(h) Demand not complied with. When the demand of the port director for return of merchandise to Customs custody is not complied with, liquidated damages shall be assessed, except in the case of merchandise entered under chapter 98, subchapter XIII, HTSUS (19 U.S.C. 1202), in an amount equal to the value of the merchandise not returned or three times the value of the merchandise not returned if the merchandise is restricted merchandise or alcoholic beverages, as determined at the time of entry. The amount of liquidated damages to be assessed on merchandise entered under chapter 98, subchapter XIII, HTSUS is set forth in §10.39(d)(3) of this chapter.
Section 113.62 of the Customs regulations contains the basic importation and entry bond conditions. Paragraph (d) of this provision sets forth the two periods during which a Notice to Redeliver may be issued and enforced by a Customs bond:
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 provides:
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; see, HQ 951300, dated October 7, 1992, HQ 223535, dated September 21, 1992, and HQ 088904, dated February 19, 1992). A notice of redelivery may never be issued after liquidation becomes final. United States v. Utex International Inc., 857 F.2d 1408 (Fed. Cir. 1988).
In this case, the date of release for the subject merchandise was December 11, 1996. However, the December 7, 1996 ACS computer generated “FDA Review” notice required that the merchandise be held intact. A set of instructions, dated August 1, 1997, pertaining to “FDA Messages Transmitted by ACS/ABI” describes the meaning of the ACS message of an “FDA Review”, as:
Referred to FDA for review. All FDA regulated products in the entry must be held intact and not distributed, pending receipt of written notice or additional message from FDA.
Customs has taken the position that “[t]he failure of the FDA to issue a ‘may proceed notice’ prior to release of the merchandise was an occurrence establishing a conditional period.” See HQ 225826, dated March 28, 1996, citing HQ 225807, dated December 4, 1995. This position is consistent with the August 1, 1997 instructions that the products in the entry must be held intact pending receipt of further notice from the FDA. Customs position is also consistent with the FDA statute 21 U.S.C. §381(b), which provides:
Pending decision as to the admission of an article being imported or offered for import, the Secretary of the Treasury may authorize delivery of such article to the owner or consignee upon the execution by him of a good and sufficient bond providing for the payment of such liquidated damages in the event of default as may be required pursuant to regulations of the Secretary of the Treasury. (Emphasis added)
The word “pending” in the above provision, makes it clear that until the FDA makes a determination as to the imported merchandise, the importer is subject to liability for liquidated damages. No “may proceed notice” was issued by the FDA prior to the release of the merchandise. Therefore a different conditional release period had been established at the time of the release of the merchandise, as the merchandise was known to be subject to FDA review, and no “may proceed notice” had been issued. The protestant does not assert that there is any time limitation in which the FDA is required to decide to issue the “may proceed notice” or request samples. To the contrary, in support of its position that a different conditional release period is not started until the FDA makes a decision to review the shipment, the protestant asserts that the FDA is “aware” that it has thirty days after the release of merchandise during which period the FDA “must” notify the importer that the shipment will be reviewed. No authority is provided for the protestant’s assertion, except that the FDA usually gives notice within the 30 day period.
The protestant asserts that because the “FDA review” message is not input into the system by an FDA officer, and “no FDA intervention of any kind is required for that message to be sent”, an entry filer is under no obligation at that point to furnish additional information to the FDA. According to the protestant:
Merely designating a shipment of food as one that is subject to “FDA review” is not tantamount to issuing a Customs Form 28 or other notice expressly requiring the submission of documentation or a sample. If it was, there simply would have been no need for the FDA to issue a Notice of Entries Requiring Documentation on January 16, 1997, or to generate computer messages on January 24, 1997, requesting a sample and advising that an examination was required.
It appears to be true that the importer is not under obligation to supply information at that point, however, it is apparent that the “FDA review” message does instruct the importer to hold the merchandise intact until further notice from the FDA. According to Joe Palmer, a Customs ACS specialist, the "FDA review" message is generated by ACS based on criteria that the FDA’s system has sent to ACS.
In support of its position, protestant cites HQ 225440, in which more than 30 days after the entry and release of merchandise, the FDA examined documents for merchandise and subsequently issued a Notice of Detention and Hearing for the subject merchandise. Subsequently a notice to redeliver was issued. Customs found that the notice to redeliver was not timely because no other conditional release period was established, other than the release of the merchandise. Unlike in the instant case, there was no evidence with regard to the importer having been put on notice that the merchandise was subject to FDA review. There was no evidence of FDA involvement until more than 30 days after the merchandise was released.
During the conditional release period established by the FDA’s failure to issue a “may proceed notice”, the protestant received the January 16, 1997 “Notice of Entries Requiring Documentation” which again required that the merchandise be held intact pending an FDA admissibility determination, and requested that the required documents be provided. This would operate as a continuation of the conditional period already established. The initial conditional release period had not ended because the FDA had not yet made any determination as to the admissibility of the merchandise. On January 24, 1997, the FDA issued “FDA Exam/Sample” (requiring that all FDA regulated products in entry be held intact and not distributed pending written notice or additional message from FDA and that notice be given to FDA when products will be available for exam or sampling) and “FDA Exam, Notify” (requiring that all containers or trailers comprising the entry be held unopened pending FDA eamination or receipt of further notice from FDA, and notice to FDA when the trailers or containers will be available for opening under FDA supervision) notices. We find that the February 7, 1997 and February 25, 1997 notices to redeliver were timely, as they were issued during a conditional release period. The FDA had not yet made a determination as to the admissibility of the merchandise.
The protestant asserts that the conditional release period “is a set time period established by regulation”, citing C.S.D. 86-21, and therefore the “FDA Review” message does not establish a conditional release period. The specific holding in this C.S.D. was that the words "end of the conditional release period" in 19 C.F.R. 113.62(d) refer to time limits such as the 180 day period in 19 C.F.R. 12.80(e)(2) and do not refer to the liquidation of the entry. While we concede that FDA regulations do not establish a 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 protestant was notified three times, including the “FDA Review” message that its merchandise should be held intact pending an admissibility decision during this process. Second, 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. Third, 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. Fourth, 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."
The protestant takes the position that the "FDA review" message could not have created an alternative conditional release period, because that would be inconsistent with 21 U.S.C. §381, and 21 CFR 1.90. In 21 U.S.C. §381(a), it is provided that "[t]he Secretary of the Treasury shall deliver to the Secretary of Health and Human Services, upon his request, samples of food...which are being imported or offered for import into the United States, giving notice thereof to the owner or consignee...." The regulations, 21 CFR 1.90, provide:
When a sample of an article offered for import has been requested by the district director, the collector of customs having jurisdiction over the article shall give to the owner or consignee prompt notice of delivery of, or intention to deliver, such sample. Upon receipt of the notice, the owner or consignee shall hold such article and not distribute it until further notice from the district director or the collector of customs of the results of examination of the sample.
The protestant takes the position that the "FDA review" notice was neither a request for a sample, nor a notice of sampling, and therefore does not fit into the scheme created by the statute and the regulations. The protestant asserts that its position that the "FDA review" notice did not require any action on the part of the recipient of the message is consistent with FDA literature in the form of a leaflet, and a Customs Electronic Bulletin Board (CEBB) message of October 22, 1998 which states that "Other Government Agency (OGA) flags in the ACS HTS file are only advisory in nature."
We do not find that the "FDA review" notice and its interpreted meaning is inconsistent with the above FDA statute or regulations. With respect to the CEBB message, that message pertains to the ACS HTS file, as stated, and has nothing to do with the FDA screening which is the subject of this protest. We do not find that the protestant has established that the "FDA review" message did not require that the subject merchandise be held intact pending further notice from the FDA, or a "may proceed" message.
HOLDING:
The February 25, 1997 Notice to Redeliver was timely issued.
The protest should be DENIED. In accordance with Section 3A(11)(b) of Customs Directive 099 3550 065, dated August 4, 1993, Subject: Revised Protest Directive, you are to mail this decision, together with the Customs Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to mailing the decision.
Sixty days from the date of the decision, the Office of Regulations and Rulings will make the decision available to Customs personnel, and to the public on the Customs Home Page on the World Wide Web at www.customs.ustreas.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
John Durant, Director
Commercial Rulings Division