TRADE ALERT

Redelivered Goods, Substituted

(October 25, 2006)

The American Association of Exporters & Importers, Regulated Industries Committee is currently looking into reports of unusual penalty actions. The alleged violations of law involve situations in which FDA regulated goods are refused admission by the FDA. The importer timely returns the goods for destruction under CBP supervision. At the time of destruction, the FDA states that it cannot verify that the goods returned are the same goods that were imported.

First, a liquidated damage case equal to 3 times the value of the goods is initiated. Under petition to mitigate, it is reduced to 3% of the demand (10% of the value of the goods). At this point, the importer believes the case has been closed.

Second, CBP issues a pre-penalty notice under section 592 (negligence, gross negligence, or fraud) for 3 times the value of the goods.

Based on these reports, it appears that an importer should not assume that a liquidated damage claim in regard to redelivered goods has been resolved with CBP.

Deringer's consulting & regulatory affairs group offers a full scope of services to support importers/exporters, carriers, and supply chain partners. For more information regarding this advisory, please call 518-297-3511, or email us at consulting@anderinger.com