FDA may detain an imported shipment if it finds a violation of the Federal Food, Drug and Cosmetic Act (“FFDCA”) during an import exam. When FDA detains the shipment, the agency will issue a notice of detention (detention notice) to the importer and importer’s Customs broker/filer, advising the importer how the product appears to violate the FFDCA. FDA provides the importer an opportunity for an administrative hearing (detention period) to overcome the appearance of a violation by providing testimony that overcomes the appearance of a violation(s).

If the importer is unable to overcome the detention during the detention period, FDA will refuse admission of the shipment into US commerce. Click here for more information on FDA detentions. Now, we’re going to discuss what happens when FDA refuses a shipment and how to respond to a refusal notice.

When FDA refuses an imported shipment, the importer and the importer’s Customs broker should receive a notice of refusal from FDA and a notice of redelivery from Customs. The notice of redelivery usually indicates the importer has 90 days to redeliver the goods into Customs Custody and have the goods exported or destroyed.

FDA may refuse a shipment when:

• The importer fails to respond to the detention notice before the respond-by-date indicated on the notice.
• The importer fails to submit all necessary testimony before the expiration of the detention period. Importers may request an extension to the detention period but must do so before FDA issues the notice of refusal to the importer.
• FDA determines that the importer’s testimony is insufficient or contains errors. For example, FDA rejects a private lab report due to finding technical flaws in the testing.
• The importer fails to submit an adequate reconditioning proposal. (Read our article on FDA detentions for more information on reconditioning.)
• FDA accepts the importer’s reconditioning proposal but finds that the importer failed to adequately recondition the products. For example, the importer attempted to relabel the products by placing new labels over the original labels, but an FDA investigator finds that the new labels do not sufficiently adhere to the packaging.
• The importer waives its right to submit testimony and submits a request in writing to FDA to refuse the shipment. Sometimes, importers prefer to have FDA refuse the shipment before the detention period expires so they can export or destroy the goods as soon as possible to avoid further costs of storage or other reasons.
• Customs may issue an “Emergency Action Notification” (EAN), requiring immediate export of the products. Customs issues EANs when imminent hazards are found such as infestation by environmentally harmful insects.

Steps to Take When Responding to a Refusal Notice:

• Once the importer receives the refusal notice from FDA and/or the notice to redeliver from Customs, the importer should let the Customs broker know whether they plan to destroy or whether they plan to export the goods. The broker should file the appropriate paperwork with Customs.
• The importer may contest the refusal but must be able to provide FDA compelling evidence that the agency refused the goods in error. FDA almost never accepts any private lab testimony or reconditioning proposals after it refuses their shipment.
• The importer or Customs broker should arrange a date and time for an FDA investigator to conduct a verification exam to ensure the goods are adequately destroyed or exported.
• During the verification exam, the investigator examines the shipment, checking lot codes, expiration dates, and other identifying marks to ensure that none of the products are missing or have been substituted.
• FDA’s regulations do not require any specific methods for destroying or disposing the refused goods. FDA only requires the importer to render the goods unusable and unsalvageable. For example, the process could be as simple as running over the goods with a forklift at the importer’s facility. The importer may also use a commercial disposal or destruction facility such as a landfill operation. Of course, the destruction must comply with Environmental Protection Agency (EPA) regulations and other federal or local government requirements.
• The importer may export the refused goods to any country if the products comply with the laws of that country. The exportation requirement cannot be met by delivering the goods to a foreign trade zone.

Consequences for Failing to Meet the Refusal Deadline

If the importer fails to redeliver the goods into Customs custody or have the goods exported or destroyed within 90 days of the refusal, Customs may issue a notice of liquidated damages to the Importer of Record. The Importer of Record is the entity that purchases the entry bond covering the imported shipment. Liquidated damages may amount up to three times the value of the merchandise or the amount of the entry bond. Customs may raise the entry bond for future shipments.

Note that the “Importer of Record” is not necessarily the entity that FDA refers to as the “importer.” The Importer of Record is the entity that purchases the entry bond covering the shipment and may be located outside the US. FDA generally refers to the “Importer” as the US consignee or US owner receiving the goods. This entity is located in the United States. This sometimes creates confusion because the terms “Importer” and “Importer of Record” are often used interchangeably in the import industry. But you should be aware that the Importer of Record is the entity that receives the notice of liquidated damages from Customs.

Not all shipments require entry bond. For example, shipments filed as “informal entries” valued at less than $2,500 USD may not require an entry bond unless FDA or Customs specifies otherwise. However, whether the shipments are covered by an entry bond or whether payment is made for liquidated damages, distribution of refused merchandise in US commerce is a prohibited act under FDA law and may result in FDA and/or Customs taking significant enforcement action against any party(s) responsible for the distribution of the refused merchandise.

Other Tips for Responding to an FDA Notice of Refusal:

• Do not export or destroy refused goods without first notifying FDA and Customs! Unless FDA or Customs specifically notifies you that they are waiving the verification exam, destroying or exporting the goods without FDA or Customs supervision may result in liquidated damages, fines, monetary penalties, and/or other sanctions.
• Do not wait until the last minute to arrange the verification exam with FDA or Customs. While Customs provides the importer up to 90 days to have the goods exported or destroyed, keep in mind that FDA may need a week’s or more notice to arrange the exam.
• Never substitute refused goods with other merchandise when exporting or destroying them, when redelivering them into Customs custody, or when staging the products for FDA or Customs exam. Substituting refused merchandise may result in significant enforcement action such as criminal prosecution!
• Always remember that it is generally much more difficult to overcome a refusal than a detention. So try to submit all necessary testimony before the expiration of the detention period.