FDA may detain an imported shipment whenever it finds a violation of the Federal Food, Drug and Cosmetic Act (“FFDCA”) via an import exam. When FDA detains the shipment, the Agency will mail a Notice of Detention (“detention notice”) to the importer and importer’s Customs broker/filer advising the importer that it has a certain amount of time (the “detention period”) to overcome the detention by providing testimony such as a private lab report or legal arguments.  

After the detention period ends and if the detention is not overcome, FDA refuses admission of the shipment into US commerce. Click here for more information on FDA detentions. Now we’re going to discuss in more detail what happens when FDA refuses a shipment and how to respond to a refusal notice.

When FDA refuses the shipment, the importer and the importer’s Customs broker 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 export or destroy the goods or redeliver the goods into Customs Custody for the purpose of exportation or destruction.

 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 problems 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. Sometime, importers prefer to have FDA refuse the shipment before the detention period expires so they can export the goods as soon as possible.
• Note that 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 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 if the goods will be exported or if they will be destroyed. The broker will 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 the shipment.
• The importer or broker should arrange the date and time for FDA to perform the refusal verification exam.
• 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 goods to be rendered 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.
• Goods may be exported to any country as long as they 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 liquidate damages to the Importer of Record. The Importer of Record is the entity that purchases the entry bond covering the imported shipment.  The bond amount may be up to three times the value of the merchandise.

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 consignee or US owner receiving the goods. This entity must be 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 bond coverage such as shipments filed as “informal entries” with a value less than $2,500 USD. However, whether or not the shipments are covered by an entry bond or whether or not payment is made for liquidated damages, distribution of refused merchandise in US commerce is prohibited act under FDA law and may subject the importer to enforcement action such as warning letter, injunction, or even criminal prosecution.

Other Tips for Responding to an FDA Refusal:

• Do not export or destroy refused goods without first notifying FDA and Customs! Unless FDA or Customs specifically notifies you that the verification exam is waived, destroying or exporting the goods without FDA or Customs supervision may subject you to liquidated damages or civil monetary penalties and/or other regulatory actions.
• 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 the investigator may need a week or more notice to arrange the exam.
• Never substitute refused goods with other merchandise such as similar products from another shipment. Substituting refused merchandise may subject you to significant enforcement action such as criminal prosecution!
• Always remember that it is much more difficult to have a refusal overturned than overcoming a detention. So try to submit all necessary testimony before the expiration of the detention period.