[Federal Register: June 7, 2002 (Volume 67, Number 110)]
[Proposed Rules]               
[Page 39322-39324]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07jn02-28]                         

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DEPARTMENT OF THE TREASURY

Customs Service

19 CFR Parts 141 and 151

RIN 1515-AD05

 
Conditional Release Period and Customs Bond Obligations for Food, 
Drugs, Devices, and Cosmetics

AGENCY: Customs Service, Department of the Treasury.

ACTION: Notice of proposed rulemaking.

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SUMMARY: This document proposes to amend the Customs Regulations to 
clarify the responsibilities of importers of food, drugs, devices, and 
cosmetics under Customs entry bond and to provide a reasonable period 
of time to allow the Food and Drug Administration to perform its 
enforcement functions with respect to these articles. The proposed 
amendments provide for a specific conditional release period for any 
food, drug, device, or cosmetic which has been released under bond and 
for which admissibility is to be determined under the provisions of the 
Food, Drug and Cosmetic Act. The proposed amendment also clarifies the 
amount of liquidated damages that may be assessed when there is a 
breach of the terms and conditions of the Customs bond. The document 
also proposes to amend the Customs Regulations to authorize any 
representative of the Food and Drug Administration (FDA) to obtain a 
sample of any food, drug, device, or cosmetic, the importation of which 
is governed by section 801 of the Food, Drug and Cosmetic Act, as 
amended (21 U.S.C. 381).

DATES: Comments must be received on or before August 6, 2002.

ADDRESSES: Written comments (preferably in triplicate) may be addressed 
to the Regulations Branch, Office of Regulations and Rulings, U.S. 
Customs Service, 1300 Pennsylvania Avenue, NW, Washington, DC 20229. 
Comments submitted may be inspected at the Regulations Branch, Office 
of Regulations and Rulings, U.S. Customs

[[Page 39323]]

Service, 1300 Pennsylvania Avenue, NW, 3rd Floor, Washington, DC.

FOR FURTHER INFORMATION CONTACT: Jeremy Baskin, Office of Regulations 
and Rulings, Penalties Branch (202-927-2344).

SUPPLEMENTARY INFORMATION:

Background

    Section 801 of the Food, Drug and Cosmetic Act, as amended (21 
U.S.C. 381), and the regulations promulgated under that statute, 
provide the basic legal framework governing the importation of 
foodstuffs into the United States. Under 21 U.S.C. 381(a), the 
Secretary of the Treasury will deliver to the Secretary of Health and 
Human Services, upon request, samples of food, drugs, devices, and 
cosmetics which are being imported or offered for import. The Secretary 
of Health and Human Services is authorized under section 381(a) to 
refuse admission of, among other things, any article that appears from 
the examination or otherwise to be adulterated or misbranded or to have 
been manufactured, processed, or packed under insanitary conditions. In 
addition, the Secretary of the Treasury is required by section 381(a) 
to cause the destruction of any article refused admission unless the 
article is exported, under regulations prescribed by the Secretary of 
the Treasury, within 90 days of the date of notice of the refusal or 
within such additional time as may be permitted pursuant to those 
regulations.
    Under 21 U.S.C. 381(b), pending decision as to the admission of an 
article being imported or offered for import, the Secretary of the 
Treasury may authorize delivery of that article to the owner or 
consignee upon the execution by him of a good and sufficient bond 
providing for the payment of liquidated damages in the event of 
default, as may be required pursuant to regulations of the Secretary of 
the Treasury. In addition, section 381(b) allows the owner or consignee 
in certain circumstances to take action to bring an imported article 
into compliance for admission purposes under such bonding requirements 
as the Secretary of the Treasury may prescribe by regulation.
    Based upon the above statutory provisions, imported foods, drugs, 
devices, and cosmetics are conditionally released under bond while 
determinations as to admissibility are made; see Sec. 12.3 of the 
Customs Regulations (19 CFR 12.3). Under current Sec. 141.113(c) of the 
Customs Regulations (19 CFR 141.113(c)), Customs may demand the return 
to Customs custody of most types of merchandise that fail to comply 
with the laws or regulations governing their admission into the United 
States (also referred to as the redelivery procedure).
    The condition of the basic importation and entry bond contained in 
Sec. 113.62(d) of the Customs Regulations (19 CFR 113.62(d)) sets forth 
the obligation of the importer of record to timely redeliver released 
merchandise to Customs on demand and provides that a demand for 
redelivery will be made no later than 30 days after the date of release 
of the merchandise or 30 days after the end of the conditional release 
period, whichever is later. Under current procedures, when imported 
merchandise is refused admission by the FDA, Customs issues a notice of 
redelivery in order to establish liquidated damages if the importer of 
record fails to export, destroy, or redeliver the refused merchandise 
in the time period prescribed in that notice of redelivery.
    Customs has taken the position in C.S.D. 86-21 that the term ``end 
of the conditional release period'' in 19 CFR 113.62(d) has reference 
to a set time limitation that is either established by regulation (see, 
for example, 19 CFR 141.113(b) which prescribes a 180-day conditional 
release period for purposes of determining the correct country of 
origin of imported textiles and textile products) or is established by 
express notification to the importer of record. The end of the 
conditional release period does not refer to the liquidation of the 
entry covering the imported merchandise.
    In light of the above authorities, Customs now proposes to amend 
the regulations to provide for a specific conditional release period 
for merchandise for which the FDA is authorized to determine 
admissibility. The proposed changes will clarify importers' 
responsibilities under the bond, provide a reasonable period of time to 
allow the FDA to perform its enforcement functions, and provide 
finality to the process.

Proposed Regulatory Changes

    This document proposes to make the following specific changes to 
the Customs Regulations to address these points:
    1. It is proposed to redesignate some paragraphs in Sec. 141.113 
due to the addition of a new paragraph (c), which will provide for a 
specific conditional release period of 180 days for any food, drug, 
device, or cosmetic. The FDA will have this time period to make its 
determination of admissibility. Similar to the case of textiles and 
textile products mentioned above, the proposed amendment specifies a 
180-day conditional release period but also provides for a shorter 
period if FDA makes a determination of inadmissibility before the 
expiration of that 180-day period. It is noted that as a consequence of 
this new text, under 19 CFR 113.62(d), a demand for redelivery could be 
made up to 210 days (that is, 180 days plus 30 days) after the date of 
release of the merchandise. The proposed regulation will also make 
clear that the failure to redeliver merchandise will result in the 
assessment of liquidated damages equal to three times the value of the 
merchandise or equal to the domestic value of merchandise in those 
instances where the port director has required a bond equal to the 
domestic value as permitted by current Sec. 12.3.
    2. It is proposed to amend Sec. 151.10 of the Customs Regulations 
(19 CFR 151.10) to authorize a representative of the FDA to obtain 
samples of food, drugs, devices, and cosmetic products covered by the 
Food, Drug and Cosmetic Act.

Comments

    Before adopting these proposed regulatory amendments as a final 
rule, consideration will be given to any written comments timely 
submitted to Customs, including comments on the clarity of this 
proposed rule and how it may be made easier to understand. Comments 
submitted will be available for public inspection in accordance with 
the Freedom of Information Act (5 U.S.C. 552), Sec. 1.4, Treasury 
Department Regulations (31 CFR 1.4), and Sec. 103.11(b), Customs 
Regulations (19 CFR 103.11(b)), on regular business days between the 
hours of 9:00 a.m. and 4:30 p.m. at the Regulations Branch, Office of 
Regulations and Rulings, U.S. Customs Service, 1300 Pennsylvania 
Avenue, N.W., 3rd Floor, Washington, DC.

Regulatory Flexibility Act and Executive Order 12866

    Pursuant to the provisions of the Regulatory Flexibility Act (5 
U.S.C. 601 et seq.), it is certified that the proposed amendments, if 
adopted, will not have a significant economic impact on a substantial 
number of small entities. The proposed regulatory amendments reflect 
current statutory requirements, and they will not require any 
additional action on the part of the public but rather are intended to 
facilitate Customs enforcement efforts involving existing import 
requirements. Accordingly, the proposed amendments are not subject to

[[Page 39324]]

the regulatory analysis or other requirements of 5 U.S.C. 603 and 604. 
Furthermore, this document does not meet the criteria for a 
``significant regulatory action'' as specified in E.O. 12866.

List of Subjects

19 CFR Part 141

    Bonds, Customs duties and inspection, Entry procedures, Imports, 
Prohibited merchandise, Release of merchandise.

19 CFR Part 151

    Customs duties and inspection, Examination, Sampling and testing, 
Imports, Laboratories, Penalties, Reporting and recordkeeping 
requirements.

Proposed Amendments to the Regulations

    For the reasons stated above, it is proposed to amend parts 141 and 
151 of the Customs Regulations (19 CFR part 141 and 151) as set forth 
below.

PART 141--ENTRY OF MERCHANDISE

    1. The authority citation for part 141 continues to read in part as 
follows:

    Authority: 19 U.S.C. 66, 1448, 1484, 1624.
* * * * *
    Section 141.113 also issued under 19 U.S.C. 1499, 1623.
    2. Section 141.113 is amended as follows:
    a. Redesignate current paragraphs (c) through (h) as paragraphs (d) 
through (i),
    b. Add a new paragraph (c), and
    c. Amend redesignated paragraph (d) by removing the words ``(a) or 
(b)'' and adding ``(a), (b), or (c)'' after the words ``for any reason 
not enumerated in paragraph.'' New paragraph (c) reads as follows:


Sec. 141.113  Recall of merchandise released from Customs custody.

* * * * *
    (c) Food, drugs, and cosmetics. For purposes of determining the 
admissibility of any food, drug, device, and cosmetic imported pursuant 
to section 801 of the Food, Drug and Cosmetic Act (21 U.S.C. 381), as 
amended, the release from Customs custody of any such product will be 
deemed conditional during the 180-day period following the date of 
release. If before the end of the 180-day period the Food and Drug 
Administration (FDA) finds that a food, drug, device, or cosmetic is 
not entitled to admission into the commerce of the United States, it 
will communicate that fact to the port director who will demand the 
redelivery of the product to Customs custody. Customs will issue a 
notice of redelivery within 30 days from the date the product was 
refused admission by the FDA. The demand for redelivery may be made 
contemporaneously with the notice of refusal issued by the FDA. A 
failure to comply with a demand for return to Customs custody made 
under this paragraph will result in the assessment of liquidated 
damages equal to three times the value of the merchandise involved 
unless the port director has prescribed a bond equal to the domestic 
value of the merchandise pursuant to section 12.3(b) of this Chapter.
* * * * *

PART 151--EXAMINATION, SAMPLING, AND TESTING OF MERCHANDISE

    1. The general authority citation for part 151 is revised, and a 
specific authority citation for Sec. 151.10 is added, to read as 
follows:

    Authority: 19 U.S.C. 66, 1202 (General Notes 23 and 24, 
Harmonized Tariff Schedule of the United States (HTSUS)), 1624.

    Section 151.10 also issued under 21 U.S.C. 381;
* * * * *
    2. In Sec. 151.10, add a sentence at the end of the text to read as 
follows:


Sec. 151.10  Sampling.

    * * * For purposes of determining admissibility, representatives of 
the Food and Drug Administration may obtain samples of any food, drug, 
device, or cosmetic, the importation of which is governed by section 
801 of the Food, Drug and Cosmetic Act, as amended (21 U.S.C. 381).

Robert C. Bonner,
Commissioner of Customs.
    Approved: June 3, 2002.
Timothy E. Skud,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 02-14286 Filed 6-6-02; 8:45 am]
BILLING CODE 4820-02-P