BON-2/RES-2-08-CO:R:C:E 222290 PH

Area Director
J.F.K. Airport Area
U.S. Customs Service
J.F.K. Airport
Building 178
Jamaica, New York 11430

RE: Application for further review of Protest No. 1001-8-006228.

Dear Sir:

The above-referenced protest was forwarded to this office for further review. We have considered the points raised by your office and the protestant. Our decision follows.

FACTS:

Cheese was imported into the United States at J.F.K. Airport. The date of the entry was February 3, 1988. The notices of redelivery which are the subject of this protest, for samples 822813 and 822815, were issued by Customs after Notices of Refusal of Admission, dated April 19, 1988, were issued for the merchandise by the FDA for Customs. The notice of redelivery for sample 822813 was dated April 26, 1988, and that for sample 822815 was undated. We have obtained copies of the notices of redelivery which are made a part of the file for this case. Protest against the notices of redelivery was filed on July 25, 1988.

The protestant contends that because no samples were taken and/or tested from the lots which would justify refusal, the notices of redelivery were invalidated. The protestant also contends that two of the notices of redelivery should be cancelled because the authority cited for redelivery, "21 CFR 331" (actually, the authorities cited on the notice of redelivery form were 21 CFR 381 and 19 CFR 141.113), does not exist and one of the notices of redelivery is undated and therefore defective.

The primary contention of the protestant is that the decision (Import Alert 12-03) of the Food and Drug Administration (FDA) upon which the notices of redelivery were based was invalid. We have obtained a copy of Import Alert 12-03 which is made a part of the file for this case.

The basis for the argument by the protestant that the FDA decision was invalid is Bellarno International Ltd. v. Food and Drug Administration, 678 F. Supp. 410 (E.D.N.Y. 1988), in which the Court considered the legality of an FDA Import Alert which automatically required the detention of all entries of "American Goods" returned pharmaceuticals. Pharmaceuticals so detained were not to be released unless certain conditions, including the establishment of a complete chain of custody, were met. The Court held that the FDA's failure to conduct notice-and-comment rule-making procedures before issuing the Import Alert violated the Administrative Procedures Act and rendered the Import Alert unlawful.

The protestant argues that because the FDA decision was unlawful, Customs cannot enforce it and redelivery notices arising from the decision are void. The protestant claims that Customs cannot absolve itself of responsibility when it issues a redelivery notice pursuant to an FDA Notice of Refusal because Customs issuance of a notice of redelivery is an independent act. If importers are precluded from challenging the underlying basis for a notice of redelivery, the protestant argues, an importer's right to protest would be rendered futile. The protestant contends that the United States v. Continental Seafood, Inc., 11 CIT 768 (1987), case is not dispositive of this issue because that case involved a failure to comply with a notice of refusal of admission whereas this case involves a protest against a notice of redelivery.

The protestant contends that the FDA exceeded its statutory authority in the issuance of Import Alert 12-03. The protestant states that although the Federal Food, Drug, and Cosmetics Act of 1938, as amended (21 U.S.C. 301 et seq.) provides for the delivery by the Secretary of the Treasury to the FDA of samples of food and other articles (see 21 U.S.C. 381), there is no authority in this Act for the refusal of the admission of merchandise solely on the basis of the description of the merchandise in the entry papers. The protestant states that in actuality, samples of merchandise such as that under consideration are not submitted to the FDA; the importer is required to submit samples to a private laboratory for analysis. If the importer fails to comply with these procedures, the protestant states that the merchandise is subject to refusal and a notice of redelivery is issued. The protestant argues that these procedures are inconsistent with the statute (21 U.S.C. 381) claimed by the FDA to provide authority for them.

The protestant contends that the FDA's issuance of Import Alert 12-03 violated the rule-making requirements of the Administrative Procedure Act. The protestant argues that the decision is clearly a rule-making because never before were soft- ripened cheeses detained on the basis of "documentary" rather than physical samples. The protestant states that the decision has elaborate, onerous procedures which place a financial burden, and the burden of proof, on the individual importer. Because the decision failed to comply with the rule-making requirements of the Administrative Procedure Act, the protestant contends that the decision is invalid and may not be enforced and the notices of redelivery should be cancelled.

ISSUES:

(1) In a protest of a notice of redelivery for samples of cheese issued on the basis of an FDA Import Alert, may Customs review the substantive correctness of the FDA decision which is the basis for the notice of redelivery?

(2) Is a notice of redelivery for samples of cheese issued on the basis of an FDA Import Alert valid if the notice of redelivery pre-prepared form cites as authority 21 CFR 381 and 19 CFR 141.113, the former of which does not exist?

(3) Is a notice of redelivery for samples of cheese issued on the basis of an FDA Import Alert valid if the notice of redelivery was not dated?

LAW AND ANALYSIS:

The principal contentions by the protestant involve the legality or validity of the decision by the FDA which provided the basis for the notices of redelivery and FDA procedures related to redelivery and sampling. The protestant argues that Customs cannot absolve itself of responsibility for issuance of a notice of redelivery pursuant to an FDA decision because Customs issuance of a notice of redelivery is an independent act. The protestant contends that the United States v. Continental Seafoods, Inc., 11 CIT 768 (1987), case is not dispositive of this issue because that case involved a failure to comply with a notice of refusal of admission whereas this case involves a protest against a notice of redelivery.

With regard to the protestant's argument that the Continental Seafoods case is distinguished from the case under consideration because that case involved a failure to comply with a notice of refusal of admission whereas this case involves a protest against a notice of redelivery, we note that the opinion in the Continental Seafoods case was authored by Judge Tsoucalas. Judge Tsoucalas also authored the opinion in the case of United States v. Toshoku America, Inc., 11 CIT 641 (1987). Although the Toshoku CIT decision was reversed on grounds not applicable in this case by the Court of Appeals for the Federal Circuit (United States v. Toshoku America, Inc., App. No. 88-1221, 88-1222 (23 Cust. Bull. & Dec. 31, August 2, 1989, p. 7), the CIT decision is helpful in considering protestant's attempt to distinguish the Continental Seafoods case from the case under consideration. In the CIT Toshoku case Judge Tsoucalas quoted Congress as stating that:

... a demand for redelivery (or a "constructive seizure"[)] to Customs custody is in reality no different than a decision to exclude merchandise from entry or delivery--a decision which the Customs Court may not review. The only difference ... is the time when the decision is made by the Customs Service. The decision to exclude is made at the time an entry is attempted. A demand for redelivery is made after the goods have already entered but the Customs Service subsequently decides that the goods should not have been allowed into the commerce of the United States in the first instance. [11 CIT at 644.]

We note that Judge Tsoucalas, in Continental Seafoods, did not state "that the principles regarding a redelivery notice did not apply to a notice of refusal, and that the two situations were not analogous," as protestant claims. Judge Tsoucalas actually stated, with regard to a statute of limitations issue, that:

Atkinson [United States v. Atkinson, 6 CIT 257 (1983)] sets forth the broad principle that a cause of action accrues from the time the bond-- or any contract--is breached. [6 CIT at 260.] Further reliance on that decision, however, is misplaced since the failure to redeliver at issue in Atkinson is not analogous to the failure to recondition in the instant case. [11 CIT at 770.]

Bearing in mind that "[t]he only difference [between a demand for redelivery and a decision to exclude merchandise] is the time when the decision is made by the Customs Service" (see Judge Tsoucalas quotation of Congress in the CIT Toshoku decision), it is clear that the reason for the distinction by Judge Tsoucalas in Continental Seafoods between failure to redeliver and failure to recondition (and the failure to export demanded by the subsequent notice of refusal of admission), in the context of the statute of limitations, is just this difference (i.e., when the decision is made by Customs). In view of Judge Tsoucalas' quotation of Congress to the effect that a demand for redelivery is otherwise no different than a decision to exclude merchandise, we are not convinced that Continental Seafoods is so easily distinguished from the case under consideration. This is particularly true in light of other, more explicit statements by the Courts on the issue of Customs reliance on the FDA in its (i.e., Customs) implementation of import exclusion laws of adulterated foods (see Customs Service Decision (C.S.D.) 86-21, noted in United States v. Utex International Inc., 6 Fed. Cir. (T) 166, 170 (1988), for a historical summary of these laws and Customs role in regard to them).

In United States v. Utex International Inc., 11 CIT 325 (1987), involving a notice of refusal of admission, the court (Judge Tsoucalas) stated that:

Unquestionably, the decision to exclude food offered for importation is committed to the discretion of the Secretary of Health and Human Services, administration of which rests with the FDA ....

The decision to exclude diseased food is not a decision by a customs officer within the provisions of the customs law .... [11 CIT at 327; emphasis in original.]

The Utex case, which held that the importer and surety were liable for failure to export merchandise when FDA's notice of refusal of admission was issued after Customs liquidation of the entry, was reversed by the Court of Appeals for the Federal Circuit (6 Fed. Cir. (T) 166, cited above). The Court of Appeals held that the liquidation was final as to all aspects of the entry, including the FDA notice issued after liquidation. However, the Court of Appeals concurred, in no uncertain terms, with the Court of International Trade that the decision to exclude food offered for importation is committed to the FDA, stating:

We agree that the Customs Service has no authority over the correctness of the FDA's analysis of the shrimp; but the correctness of the decision to deny admission is not at issue. The long history of activity and jurisprudence in this area shows that it is Customs' responsibility to carry out the FDA decisions, in accordance with customs law and regulations. The various statutes and regulations make clear that Customs is the enforcement arm of the process wherein admissibility is determined by the FDA .... [6 Fed. Cir. (T) at 170-171.]

Similarly, in both the CIT Toshoku decision and the Court of Appeals for the Federal Circuit reversal of that decision (referred to above), the special relationship of Customs and the FDA with regard to the importation of foodstuffs was recognized (see 11 CIT at 644-645; 23 Cust. Bull. & Dec. 31, pp. 10-11).

Based on the foregoing authorities, we conclude that, as stated by the Court of Appeals for the Federal Circuit in Utex, "the Customs Service has no authority over the correctness of the FDA's analysis .... The long history of activity and jurisprudence in this area shows that it is Customs' responsibility to carry out the FDA decisions, in accordance with customs law and regulations." The protest is denied with regard to the issues of the legality or validity of the decision of the FDA upon which the notices of redelivery were based.

The remaining bases for the protest are procedural ones. The protestant contends that both of the notices of redelivery under consideration should be cancelled because the authority cited for redelivery on the notice of redelivery form does not exist. The authority citation in the notice of redelivery form, which is pre-printed, reads:

Redelivery is hereby ordered in accordance with 21 CFR 381 and 19 CFR 141.113.

The protestant is correct; there is no 21 CFR 381. We assume that the provision meant to be cited is 21 U.S.C. 381, referred to above. Additionally, the protestant contends that one of the notices of redelivery (for sample 822815) should also be invalid because it is not signed.

The sufficiency of a demand for redelivery was examined in some detail in C.S.D. 85-22. Based on a number of court decisions cited in the C.S.D., the C.S.D. held, in part, that:

In the case of textile goods which are required to have a visa based on quantity it is sufficient for a redelivery notice to identify the entry number and date, to describe the merchandise that is to be redelivered, and the reason for redelivery.

The C.S.D. analogized notices of redelivery to notices of denial of protests and cited several court decisions on the sufficiency of such notices. One of the court cases discussed was Export-Import Services, Inc., v. United States, 2 CIT 16 (1981), in which the court held that a notice of denial which was "quite slipshod in physical appearance" (one signature was crossed out and marked void and a second signature and the word "denied" were in the wrong place on the form) "sufficiently convey[ed] the impression that the protest was denied." Also cited was Ogden Marine, Inc., v. United States, 60 CCPA 110, CAD 1090, 473 F. 2d 1405 (1973), in which the court made the following statements about the "notice" required with regard to a denial of a protest:

... We agree that the "notice prescribed in 28 U.S.C. 2631(a)(1) must be reasonably interpreted in reference to the limitation placed on an importer's right to contest the denial. ... Information as to the action taken must be clear, definite and explicit. The date of mailing (or under 19 CFR 174.30 the date of denial) must be set forth.

We do not find it essential that the recipient be warned that the statutory period has begun to run. Notice "of denial" is all that the statute requires. Nor do we consider it mandatory that the form be labeled in any particular manner so long as the necessary information is unequivocally conveyed to the proper party.

Turning to the returned protest form, we find that the requisite information is provided. It explicitly states that the protest has been denied. ... The denial is signed by the customs officer, fulfilling the general requirement that written notice be signed by the person authorized to act. The date of denial is noted .... [60 CCPA 110, at 112.]

In this case the notice of redelivery which was dated (for sample 822815) meets the criteria described above. Redelivery is unambiguously demanded. The entry number and date are identified, the merchandise to be redelivered is identified, and the reason for redelivery (i.e., "The merchandise described below has been refused admission into the U.S. by the [FDA]") is given. The protest is denied with regard to the claim that the notices of redelivery were invalid because of the citation to "21 CFR 381".

The notice of redelivery for sample 822813 was not dated. The Customs Regulations setting forth the requirements for a notice of redelivery are found in 19 CFR 141.113(e) which provides that:

... One copy [of the notice], with the date of mailing or redelivery noted thereon, shall be retained by the district director and made part of the entry record.

As quoted above, the court in the Ogden Marine case stated that "[t]he date of mailing (or under 19 CFR 174.30 the date of denial [of a protest]) must be set forth." The language in 19 CFR 174.30 with regard to dating a notice of denial of a protest ("the date appearing on such notice shall be deemed the date on which such notice was mailed") is similar to that in 19 CFR 141.113(e) with regard to dating a notice of redelivery in that neither unambiguously requires the dating of the notice. Yet, as noted above, the court in Ogden Marine stated that the date of denial must be set forth. Accordingly, the protest with regard to the notice of redelivery for sample 822813 is granted.

HOLDINGS:

(1) Customs does not have authority to, and may not review the substantive correctness of, an FDA Import Alert which is the basis for a notice of redelivery for samples of cheese in a protest of the notice of redelivery.

(2) A notice of redelivery for samples of cheese issued on the basis of an FDA Import Alert is valid and should not be cancelled if the notice of redelivery pre-prepared form cites as authority 21 CFR 381 and 19 CFR 141.113, the former of which does not exist.

(3) A notice of redelivery for samples of cheese issued on the basis of an FDA Import Alert should be cancelled because the notice of redelivery was not dated.


Sincerely,

John Durant, Director
Commercial Rulings Division