HQ 225826 - Application for further review of Protest No. 2704-94- 101170; Notice of Redelivery; HQ 225807 - United States International Trade Commision Rulings

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HQ 225826

March 28, 1996

BON-2/PRO-2-02-RR:IT:EC 225826 CC

CATEGORY: PROTEST BONDS

Port Director
U.S. Customs Service
300 S. Ferry Street
Terminal Island
San Pedro, CA 90731

RE: Application for further review of Protest No. 2704-94- 101170; Notice of Redelivery; HQ 225807

Dear Sir or Madam:

The above-referenced protest was forwarded to this office for further review. We have considered the facts and issues raised, and our decision follows.

FACTS:

The merchandise the subject of this protest consists of sweet rice. The importer submitted required documentation, including a copy of Customs Form (CF) 3461, to the Food and Drug Administration (FDA) prior to entry. A notice of sampling from the FDA, dated November 16, 1993, is stamped on the CF 3461. This notice stated "the shipment must be held intact," and indicated that the FDA would be sampling the merchandise. The subject merchandise was entered and released on November 21, 1993. The protestant, as principal, executed a continuous bond securing the entry of the shrimp. In a letter dated January 21, 1994, the FDA requested Customs to seek redelivery of the subject merchandise, since a sample had not been made available to the FDA. On February 16, 1994, Customs issued a Notice to Redeliver (CF 4647), citing the importer's failure to make the merchandise available to the FDA for examination as the reason for the redelivery request. The protest was filed on April 8, 1994. Liquidation of the subject entry occurred on October 21, 1994.

ISSUE:

Whether a Notice to Redeliver is valid when merchandise subject to FDA regulations is not made available to the FDA for examination after a notice of sampling has been issued?

Whether the subject Notice of Redelivery was timely issued within the meaning of 19 CFR 113.62(d)?

LAW AND ANALYSIS:

Initially, we note that a demand for redelivery is a protestable matter pursuant to 19 U.S.C. 1514(a)(4). In addition, the subject protest was timely filed in accordance with 19 U.S.C. 1514(c)(3)(B).

The protestant states that the Customs bond authorized Customs to demand redelivery if the released merchandise failed to comply with the laws or regulations governing admission into the United States. 19 CFR 113.62(d). Since no notice of refusal of admission was issued determining the merchandise failed to comply with the laws governing admission, the protestant argues that the demand for redelivery is invalid.

Section 12.3 of the Customs Regulations concerning the release of merchandise under bond states the following:

No food, drug, device, cosmetic, pesticide, hazardous substance, or dangerous caustic or corrosive substance, the subject of ?12.1 shall be released except in accordance with the laws and regulations applicable thereto. Where any such merchandise is to be released under bond pursuant to regulations applicable thereto, a bond on Customs Form 301, containing the bond conditions set forth in ?113.62 of this chapter shall be required.

Section 113.62 of the Customs Regulations (19 CFR 113.62) contains the basic importation and entry bond conditions. Paragraph (d) of this provision states the following:

If merchandise is released conditionally from Customs custody to the principal before all required evidence is produced, before its quantity and value are determined, or 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;

(2) Must be examined, inspected, or appraised as required by 19 U.S.C. 1499; ...

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).

19 U.S.C. 1499 provides the following at paragraph (a)(1):

Imported merchandise that is required by law or regulation to be inspected, examined, or appraised shall not be delivered from customs custody (except under such bond or other security as may be prescribed by the Secretary to assure compliance with all applicable laws, regulations, and instructions which the Secretary or the Customs Service is authorized to enforce) until the merchandise has been inspected, appraised, or examined and is reported by the Customs Service to have been truly and correctly invoiced and found to comply with the requirements of the laws of the United States.

Under 21 U.S.C. 381, a sample may be requested by the FDA for examination for imported food and other merchandise subject to FDA authority. In this case the FDA requested a sample of the subject rice for examination. Therefore, the subject merchandise was required by law to be examined pursuant to 19 U.S.C. 1499.

No sample was ever delivered to the FDA for examination; the importer never delivered a sample to the FDA after the notice of sampling was issued. As stated above, under the bond, redelivery may be requested when merchandise must be examined pursuant to 19 U.S.C. 1499. Section 141.113 of the Customs Regulations (19 CFR 141.113) providing for the redelivery of merchandise, specifically provides for the redelivery of merchandise when an importer does not comply with the request for a sample. 19 CFR 141.113 was issued, in part, under the authority of 19 U.S.C. 1499. Consequently, the bond was breached since the merchandise was not examined pursuant to 19 U.S.C. 1499 because no sample was ever made available to the FDA. Thus the redelivery notice was proper, despite the fact that no notice of refusal was issued determining the subject merchandise was inadmissible. In support of this conclusion and a discussion of the issue of the validity of a redelivery notice when there is no formal notification that the merchandise is inadmissible, see HQ 226218 of March 19, 1996.

Concerning the issue of timeliness of the redelivery notice, the protestant makes two major arguments. First, the redelivery notice was untimely because no valid conditional release period was created. Second, even if a valid conditional release period were created, the redelivery notice was not timely issued after the conditional release period ended.

Our analysis in this protest concerning the timeliness of a redelivery notice is the same as that contained in HQ 225807 of December 4, 1995, a similar protest (copy enclosed and incorporated into this ruling). In HQ 225807 we found that the failure of the FDA to issue a "may proceed notice" prior to release of the merchandise was an occurrence establishing a conditional period. The issuance of a Notice of Refusal of Admission by the FDA established an end to the conditional release period of 90 days from the date of the notice unless otherwise specified. Thus, Customs has no later than 30 days after the end of this period to issue a Notice of Redelivery. In HQ 225807, the notice of redelivery was issued within the 90 day period after the Notice of Refusal of Admission was issued. We found, therefore, that the Notice of Redelivery was timely issued within the meaning of 19 CFR 113.62(d).

In this case, we were informed by the import specialist at the port of entry that a copy of CF 3461 was submitted to the FDA by the importer. The FDA either signs a "may proceed notice" or stamps and signs a notice of sampling on the CF 3461. In this case, the FDA signed a notice of sampling, which was dated November 16, 1993. Consequently, the FDA failed to issue a "may proceed notice" prior to release of the subject merchandise on November 21, 1993. This failure to issue a "may proceed notice" by the FDA established a conditional period. A Notice of Refusal was never issued because no sample was ever submitted to the FDA for examination. The conditional period, therefore, did not end prior to issuance of the redelivery notice. Since the Notice of Redelivery was issued before liquidation of the merchandise became final, the Notice of Redelivery was timely. See United States v. Utex, 6 Fed. Cir. (T) 166, 857 F.2d 1408 (1988), United States v. Commodities Export Co., 15 CIT 1, 6, 755 F. Supp. 418 (1991), and HQ 226218 of March 19, 1996.

HOLDING:

Failure of the importer to deliver a sample to the FDA for examination was a breach of the bond, making the issuance of a Notice of Redelivery proper. The Notice of Redelivery was timely
issued within the meaning of 19 CFR 113.62(d). Therefore, the protest is DENIED.

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 to the Protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the 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 Service, Freedom of Information Act and other public access channels.

Sincerely,

Director, International Trade

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