U. S. Customs (CBP)

We assist our clients in understanding and complying with CBP requirements for many imported and exported products; however, much of our practice pertains to articles that are highly regulated by the U.S. Food and Drug Administration (FDA), the U.S. Department of Agriculture (USDA), the Environmental Protection Agency (EPA), U.S. Fish & Wildlife Service (USFWS), the Drug Enforcement Administration (DEA), the Consumer Product Safety Commission (CPSC), and the Tax and Trade Bureau (TTB) of the U.S. Bureau of Alcohol Tobacco and Firearms (BATF).

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Customs Issues

Customs works with other governmental agencies to ensure their requirements are met when products are imported, and to enforce all relevant federal and state laws and regulations. Customs has unique enforcement tools, such as:

• The authority to demand re-delivery of imported merchandise into CBP’s custody. Once refused by FDA or another agency, an imported article must be exported or destroyed within 90 days of the refusal. Customs will ordinarily issue a demand for re-delivery of refused products within 30 days of the issuance of the refusal. In other situations, FDA or another agency may wish to examine an imported product, but the importer, owner, or consignee failed to hold the product for examination. Failure to re-deliver such products will ordinarily result in Customs issuing a claim for liquidated damages in amounts up to three times the refused merchandise value.
  • Persons whose product is subject to a Customs demand for re-delivery may protest the demand. For instance, if FDA had already released product that it later is trying to examine or refuse, the demand might be subject to cancellation.
  • Persons subject to a notice or claim for liquidated damages have the right to petition Customs seeking mitigation or cancellation of the case against them.
• The power to issue and resolve claims for liquidated damages (bond actions) when an importer or warehouse, or carrier fails to comply with CBP bond provisions.
• The authority to administratively seize or detain goods imported contrary to law.
• The discretionary authority to issue and collect monetary penalties.
  • Unlike liquidated damages claims that arise out of the bond agreement between CBP and the Importer of Record, Penalty Actions are treated more like civil tort claims for more egregious violations of law. The basis for the penalty action ordinarily includes allegations that an importer has imported something contrary to U.S. law in a manner that raises the concern that the violation was somehow designed to defraud the government; for instance, when an agency wishes to examine imported product and the importer presents for inspection of the product from a shipment that was entered prior to or later than the shipment FDA has slated for examination or sampling. If proven, such substitution cases can result in civil monetary penalties up to the domestic value of the products at issue depending upon the statute under which Customs proceeds. Civil monetary penalties may be assessed against persons who are directly responsible for an illegal importation, their agents if they participate in the importation, and others who facilitate, aid, or abet an illegal importation.

FDA uses these tools quite frequently, and thus generates revenue for both Customs and the U.S. Treasury when importers or their imported products fail to comply with federal regulations or the importation process.

Classification

Every product imported into the U.S. must be classified according to the Harmonized Tariff Schedule of the United States (HTSUS). A product’s classification determines the duty rate and provides information regarding possible import restrictions.

The Importer of Record is obligated and ultimately liable for properly classifying a product under HTSUS. The Importer of Record must use “reasonable care” when classifying a good. An improperly classified product will at least cause delays, but the product may also be seized and the Importer of Record subject to monetary penalties.

The selected HTSUS classification code affects how other federal agencies regulate or track your imported product, so it is critical to classify your product correctly. An incorrect classification can result in an unfavorable inspection or entry review by another agency such as FDA, USDA, or TTB.

Customs Brokers

Customs brokers assist importers in “clearing” their imported goods through the border into the U.S. This involves preparing documents and/or electronic filings, calculating (and usually paying) taxes, duties and excises to Customs on behalf of the importer, and facilitating communication between the importer/exporter and governmental authorities.

Customs brokers in the U.S. also submit documentation for obtaining clearance from other government agencies, such as the Food and Drug Administration (FDA), the United States Department of Agriculture (USDA), the Fish and Wildlife Service (USFWS), and many others.

Knowing each type of import requirement helps companies avoid costly delays or Customs seizure of improperly declared merchandise.  Difficulties may arise during the importation process, often from miscommunication between Customs brokers and government agency officials. These difficulties can result in costly delays, detention, or rejection of imported articles.  If the miscommunications are not corrected, FDA may refuse admission of the imported goods.

FDAImports has a long history with many reputable Customs brokers and would be happy to discuss appropriate referrals for your needs.

Filer Evaluation Program

To participate in FDA’s Operational and Administrative System for Import Support (OASIS) system, Customs brokers or filers often find themselves subjected to an FDA audit process the agency calls its “Filer Evaluation Program.” Other than persons that transmit prior-notice to FDA (through Customs’ entry processing system), FDA law does not grant FDA jurisdiction over Customs brokers. Nevertheless, to participate in OASIS, most filers have undergone one or more Filer Evaluations. In this process, FDA inspectors compare electronically filed or transmitted entry information into OASIS with the documentation that underlies the transmission. Where FDA finds too many errors (according to the agency’s unpublished procedure and criteria), filers could be placed on “dual filing” status. Dual filers are required to submit paper records for each electronically filed entry until FDA is “satisfied” that the filer can participate in the program with an “acceptable” error rate. As noted above, FDA’s filer evaluation procedures and criteria are unpublished.

We Can Help.

Through our affiliated attorneys, we represent many clients before Customs in such actions, particularly when the underlying violation is one related to the Food Drug and Cosmetic Act (FDCA) and FDA regulation. If you receive a Request for Information (CBP Form 28), Notice of Action (CBP Form 29), or Notice to Mark and/or Notice to re-deliver (Form 4647), do not delay in calling FDAImports for help immediately. There is a very small window (typically 30-days) to respond to these actions, or risk forfeiting your right to contest CBP.

FDAImports affiliated attorneys routinely handle Customs civil monetary penalty cases seeking mitigation or cancellation based upon mitigating factors or arguments that challenge the basis of the claim. If you find your imported article has already been distributed in domestic commerce and you are unable to re-deliver it for examination or to re-export it (if refused by FDA), FDAImports may be able to assist you by obtaining a reduction – or even cancellation – of the Customs claim.