LIQ-8-CO:R:C:E 221669 TLS
U.S. Customs Service
900 First Avenue
Seattle, Washington 98174
RE: Application for further review of protest No. 3004-5-000318;
entry denied due to mislabelling pursuant to FDA regulations;
restricted vs. prohibited merchandise; 19 CFR 158.45(c).
We have received your memorandum of December 23, 1985,
forwarded to us from the Pacific regional office requesting
further review of the above-referenced protest. Upon review of
your position and the protestant's arguments, we have reached a
decision that is discussed in detail below.
The protestant made a successful entry of peanut butter
through the Sumas Customs port on August 30, 1985. On September
13, 1985, The Food & Drug Administration (FDA) issued a Notice of
Sampling to the importer which entitled the agency to make a spot
inspection of the merchandise at the port of entry. That same
month, the FDA conducted a hearing in conjunction with a Notice
of Detention which authorized the agency to hold the merchandise
in lieu of determining its admissibility.
The entry was liquidated on October 11, 1985; FDA issued a
Notice of Refusal of Admission on the same day. The peanut
butter was deemed violative of FDA regulations because it is
fabricated from two or more ingredients and the labeling does not
bear a list of ingredients by their common or usual name in order
of descending predominance by weight. On October 25, 1985, the
merchandise was exported to Canada under a CF-7512. Three days
later, Customs issued a Notice of Redelivery to the importer.
Among the information contained therein is a statement under the
"REMARKS" section of the notice which states, "Goods have been
refused by Food [and] Drug [Administration] on 10-11-85. Please
export or destroy under Customs [s]upervision. If exported,
drawback form must be executed if duty refund is wanted."
A request for refund of duties paid on the rejected
merchandise was made on November 7, 1985. Customs responded by
stating that the rejected merchandise was not prohibited from
being admitted, only restricted. Customs reasoned that since
only the labelling was incorrect, it could have been corrected
and resubmitted for entry. Customs concluded that in restricted
goods cases, drawback must be applied for since the merchandise
could have been brought into conformity but was not. This
protest was subsequently filed on December 23, 1985.
Whether merchandise that has been rejected because of a
correctable violation of FDA regulations is eligible for refund
of duties paid pursuant to 19 CFR 158.45(c) even if no attempt
has been made to bring the goods into conformity.
LAW AND ANALYSIS:
Various Customs regulations provide guidelines for
situations where merchandise has been denied entry after an
attempt to enter goods has been made in good faith. Under Part
158 of the regulations, the following is provided:
158.45 Exportation of merchandise.
(c) Prohibited merchandise. If merchandise has been
regularly entered or withdrawn for consumption in good
faith and is thereafter found to be prohibited entry
under any law of the United States, it may be exported
under Customs supervision in accordance with 18.25-
18.27 of this chapter, with refund of any duties that
have been paid. In lieu of exportation, the
merchandise may be destroyed in accordance with 158.41.
The importer in this case questions Customs interpretation of the
term "prohibited." It contends that the goods became prohibited
once the Notice of Refusal of Admission was issued and Customs
released them from custody. The protestant contends that
prohibited in this case means denied admission by any Government
agency; thus, once the Notice was issued, the goods became
prohibited. In reaching this conclusion, the importer
acknowledges a Customs letter (HQ 707935, August 1, 1977) finding
that prohibited status applies only to articles that cannot be
brought into conformity. Otherwise, the article is deemed only
to be restricted. The protestant responds to the finding by
arguing that prohibited means "prevented" or "forbidden."
HQ 707935 cites to Customs ruling HQ 720450 (December 19,
1972) which holds that a request for refund of duties paid on an
entry denied admission due to a defect shall be denied if the
goods could have been brought into conformity and then re-
entered but were not.
The Customs Court has decided this issue as well. In A.N.
Deringer, Inc. v. United States, 84 Cust. Ct. 196, C.D. 4858
(1980), similar facts were at issue. The importer had requested
a refund of duties paid on merchandise that was refused admission
because of mislabelling pursuant to FDA regulations, as is the
case here. The request was denied and the importer brought
action against Customs claiming that the refusal of admission was
tantamount to a prohibition. The court disagreed, holding that
the refusal was only conditional upon the importer correcting the
In the present case, the merchandise, jars of peanut butter,
was denied entry because it was not labeled correctly in
accordance with FDA regulations. Upon Notice of Refusal, the
merchandise was exported back to the original importer with
instructions. Nothing contained in the notice indicated that the
merchandise could not be entered if they were subsequently found
to be conforming. In fact, Customs notified the protestant of
its policy soon after the merchandise was exported and in the
importer's custody. The protestant had the opportunity to bring
the goods into conformity and re-enter them afterwards. In this
case in particular, doing so would not have been an overly
arduous task, since all that was required was a change in
labeling to accurately reflect the contents of the merchandise.
If something was found to be defective about the peanut butter
itself, to correct that might have been too difficult an endeavor
to complete. Such is not the case here, however.
While the protestant has expressed his disagreement with the
stated policy, it is not contrary to relevant law as it is
suggested. On the contrary, it is consistent with the
regulations. Whether the situation requires exportation or
destruction, only prohibited merchandise qualifies the importer
for a refund of duties collected. For the reasons expressed
above, the subject merchandise does not qualify as prohibited,
only restricted. Therefore, the importer's options at this point
are to either bring the goods into conformity and re-import them,
or destroy the merchandise and apply for drawback.
We do not disagree with the contention that merchandise
prohibited due to any government law or regulation entitles the
importer to a refund of duties paid; Customs regulation 158.45(c)
clearly allows for such. We simply do not find the subject
merchandise to be prohibited, as the term has been defined in
A.N. Deringer and HQ 720450. Therefore, we conclude that the
protestant does not have a valid claim for refund of duties paid
on the peanut butter that was refused admittance pursuant to FDA
The subject merchandise was only "restricted", not
"prohibited" as the term applies under 19 CFR 158.45(c) when a
Notice of Refusal of Admission was issued. Prohibited status
does not accrue until it has been shown that the merchandise
cannot be brought into conformity through any reasonable means.
The protestant is not entitled to a refund of duties pursuant to
19 CFR 158.45(c).
John Durant, Director