ENT 1-03
OT:RR:CTF:ER
H240986 MES
Port Director
U.S. Customs & Border Protection
John F. Kennedy International Airport
Bldg #77
Jamaica, NY 11430
Att: Chief, Trade Operations Branch
Re: Duty refunds for shrimp contaminated with salmonella under 19 U.S.C. § 1558
Dear Port Director:
This is in response to a request for internal advice dated April 1, 2013. The issue is whether antidumping duties may be refunded for shrimp that was refused entry by the Food and Drug Administration (FDA) and subsequently exported. A secondary issue is whether CBP is able to refund antidumping duties when there is a court ordered injunction enjoining the liquidation of subject entries. Our analysis is provided below.
FACTS:
This matter concerns shrimp imported by Trans-Ocean Products Inc., (“Trans-Ocean”). The shrimp were entered and released on September 14, 2010. Antidumping duties were deposited per antidumping duty order A-522-802. See Notice of Amended Final Determination of Sales at Less Than Fair Value and Antidumping Duty Order: Certain Frozen Warmwater Shrimp From the Socialist Republic of Vietnam, 70 Fed. Reg. 5152 (February 1, 2005). On September 22, 2010, the FDA collected a sample of the shrimp, which was analyzed for decomposition and salmonella. On October 29, 2010, the FDA issued a notice with a “respond by” date of December 3, 2010, advising that the entry would be detained based on FDA analytical results finding that the shrimp were contaminated with salmonella.
On December 3, 2010, Trans-Ocean’s broker requested an extension via e-mail. On December 3, 2010, the FDA responded with an email to the broker, which included the following:
Please advise the importer that extensions cannot be used for the purpose of delaying FDA refusal. Please determine if the importer plans to submit a reconditioning proposal, or intends to otherwise respond to the detention. (Emphasis added).
The FDA provides for the opportunity to bring refused articles into compliance through the reconditioning proposal process. See 21 U.S.C. § 381(b) and 21 CFR § 1.95. Additionally, guidance on the reconditioning proposal process is available online:
http://www.fda.gov/downloads/ICECI/ComplianceManuals/RegulatoryProceduresManual/UCM074300.pdf.
On December 17, 2010, the FDA issued its notice of Refusal of Admission advising the importer that “[t]he article appears to contain Salmonella, a poisonous and deleterious substance which may render it injurious to health. Product failed FDA analysis for Salmonella.” On February 16, 2011, within 90 days of the issuance date of the FDA notice of “Refusal of Admission,” the subject shrimp was exported.
On June 15, 2012, a Post Entry Amendment was filed at the Port of New York/Newark requesting a refund of all duties paid, including antidumping duties. On November 14, 2012, the Department of Commerce (“Commerce”) issued message 2319301, notifying CBP of a preliminary injunction issued by the U.S. Court of International Trade on November 9, 2012, enjoining the liquidation of entries that were subject to the antidumping duty order covering the subject shrimp. On April 1, 2013, you requested guidance from us. At present, the injunction remains in effect.
ISSUE:
Whether duties may be refunded per 19 U.S.C. § 1558 when shrimp are denied entry by the FDA and then exported.
LAW AND ANALYSIS:
Section 1558 of Title 19, United States Code, prohibits the refund of duties after goods are released except in the following cases:
(1) When articles are exported with respect to which a drawback of duties is expressly provided for by law; (2) When prohibited articles have been regularly entered in good faith and are subsequently exported or destroyed pursuant to a law of the United States and under such regulations as the Secretary of the Treasury may prescribe; and (3) When articles entered under bond, under any provision of law, are destroyed within the bonded period as provided for in section 557 of this Act [19 USCS § 1557], or are destroyed within the bonded period by death, accidental fire, or other casualty, and proof of such destruction is furnished which shall be satisfactory to the Secretary of the Treasury…
In this case, there is no claim for drawback in accordance with the drawback statute (see 19 U.S.C. § 1313) and no assertion or evidence that the goods were entered for warehouse (19
U.S.C. § 1557) or destroyed by death, accidental fire, or other casualty. As such, neither 19
U.S.C. § 1558(a)(1) or (a)(3) would apply. Accordingly, the only exception that might apply is 19 U.S.C. § 1558(a)(2). Under this exception, refund of duty is made only for prohibited goods. "In order to recover under section 1558(a)(2), the protestant must establish by a preponderance of evidence that the merchandise constituted a prohibited article." See HQ 225115 (March 17, 1995) (citing Glazers Wholesale Drug Co, Inc. v. United States, 51 Cust. Ct. 39, 41 (1963)).
In HRL W231396 (February 5, 2007) we held that no refund of duties applied to scooters that were denied admission because they lacked the required Environmental Protection Agency labels. In that case the scooters were restricted goods, not prohibited goods, so 19 U.S.C. § 1558 did not apply. In HRL W231396 we said that:
The distinction between merchandise that is prohibited from that which is restricted is well settled. (See HRL 221669, 9/3/1991). Prohibited merchandise is that which cannot be lawfully imported into the United States under any circumstances. Restricted merchandise is that which may be altered to become conforming with U.S. requirements and then may be lawfully entered. (See A.N. Deringer, Inc. v. United States, 84 Cust. Ct. 196, C.D. 4858 (1980); aff'd 593 F.2d 1015 (1979 Cust. Ct. Pat. App.); HRL 225115, 3/171995). In Zungshen's case, the scooters could have been lawfully entered into the U.S. with the proper labels affixed and accompanied by the proper EPA certification. Since the circumstances of the scooters' importation could have been changed to render the scooters admissible, they fall into the category of restricted merchandise and no refund of duty is permitted. (See Columbia Co. v. United States, 9 Cust. Ct. 179 (1942); C.D. 688, which held that "where Chinese wine was not per se inadmissible, but was subject to detention until packed in containers which complied with the internal revenue regulations, it was not prohibited merchandise.")
Accordingly unless a good is prohibited under any circumstances from entering the United States, 19 U.S.C. § 1558(a)(2) does not apply.
As stated above, the FDA provides importers an opportunity to address the deficiencies of articles refused entry through the reconditioning proposal process. See 21 U.S.C. § 381(b) and 21 CFR § 1.95. The shrimp at issue may have been lawfully entered into the United States if a successful reconditioning proposal had been filed with the FDA. Two examples of processes that may have proved effective would be cooking or segregation, provided the FDA accepted the explanation, reconditioning plan, and subsequent testing was negative for salmonella. Because the importer could have taken steps to permit the shrimp to be lawfully entered, the shrimp are restricted goods and not prohibited goods. Therefore, because the shrimp are restricted goods, CBP is prohibited from refunding any duties deposited for this entry. Because we have determined that no refund is permitted, we do not reach the question of whether a refund may be granted when liquidation of the entry is enjoined.
HOLDING:
No duties may be refunded per 19 U.S.C. § 1558 when shrimp are denied entry because of FDA violations for testing positive for salmonella and then exported because the shrimp are restricted goods and not prohibited goods.
Sixty days from the date of the decision Regulations and Rulings will make the decision available to CBP personnel, and to the public on the CBP Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division