9-20 - Granting and Denying Transportation and Exportation (T&E) Entries

PURPOSE

To provide uniform guidance regarding circumstances when Transportation and Exportation (T&E) entries will be granted or denied.

This document represents the agency's current thinking on the operating procedures when importers enter articles, subject to FDA's jurisdiction, under CBP's Transportation and Exportation (T&E) entries. It does not create or confer any rights for or on any person, and does not operate to bind FDA or the public.

BACKGROUND

CBP regulation 19 CFR 18.10, "Kinds of Entry", lists the various entries and withdrawals that may be made for merchandise transported in bond. One kind of entry is the transportation and exportation (T&E) entry. A T&E filed with CBP, allows a party to transport merchandise in bond through the U.S. and export the merchandise intact to a foreign destination without the payment of duties. (See 19 U.S.C. 1553, 19 CFR 18.11, and 19 CFR 18.20.)

T&E entries may be made for products which are being transported through the U.S. to be exported. In addition, articles that have been refused admission may be entered under T&E after the importer requests and receives written authorization from the proper governmental authority and/or complies with any applicable regulations. When FDA receives notice from CBP that articles refused by FDA will move under T&E bond to a distant port to be exported under CBP supervision, FDA generally will not object to movement of the refused articles. In addition, when FDA receives notice from CBP that product regulated by FDA, not offered for import will move under T&E entry to a distant port to be exported under CBP supervision, FDA generally will not object to movement. In most instances FDA may waive the written authority requirement. There may be situations, however, where denial of a request for a T&E entry is appropriate.

FDA has been aware of possible weaknesses in T&E entry procedures for movement of refused merchandise to other ports for exportation. For example, in 1975 an incident involving frog legs demonstrated the potential for diversion into domestic commerce when refused articles are transported under T&E bond.

The frog legs case (U.S. v. 76,552 pounds of Frog Legs, 423 F. Supp. 329 (S.D. Texas, 1976)) highlighted the risks of T&E movement of refused articles. In that case, adulterated frog legs, reportedly being exported to Mexico, were in fact being diverted to domestic commerce, thus circumventing FDA authority to prevent violative merchandise from reaching the American public.

In response to this and other incidents of diversion, FDA met with CBP to discuss concerns regarding movement under a T&E entry of violative merchandise. CBP agreed that violative shipments should not be permitted movement under T&E procedures where FDA objected. This approach was taken to prevent the granting of T&Es in a haphazard manner and to eliminate the opportunity for merchandise to become lost, stolen, or diverted.

The availability of T&E entry for "restricted and prohibited merchandise" is described in the CBP regulations. Section 18.21(b) of the CBP regulations authorizes CBP to deny release of this type of merchandise under a T&E entry unless the agency responsible for regulating the article provides written permission. Prohibited articles offered for T&E entry without the requisite written authority may be seized pursuant to 19 CFR 18.21(b). However, it is the practice of CBP and FDA that where FDA has no objection to in-bond movement of violative merchandise through the United States for export to a foreign destination, CBP may issue a T&E entry without FDA written permission. When FDA objects to such movement, it would so notify CBP in writing.

There may also be circumstances where regulatory action such as seizure is appropriate for articles moving under a T&E entry. Often, articles will begin moving under T&E entry prior to FDA receiving notice from CBP or the importer. In the case where a request for T&E is to transport violative articles which FDA believes may be intended for future importations into the U.S., regulatory action against the article, even though it may already be moving under T&E entry, may be appropriate. For example, because of transportation concerns, violative drugs that represent a health risk may be shipped to the U.S. prior to entry into Mexico or other nearby countries. The importer may request a T&E entry from CBP. After receiving notice from CBP or the importer that the articles are moving under T&E entry, if FDA is aware that the drugs may be sold to individuals in the United States, FDA may decide it is appropriate to seize the drugs to prevent them from illegally entering domestic commerce.

In one instance, a quantity of unapproved drugs that was being transported from Romania through the United States under a T&E entry to Tijuana, Mexico was condemned and ordered destroyed by CBP. Section 801(b) of the FD&C Act, involving conditional release for movement of products under CBP redelivery bond, did not apply because that provision does not apply to merchandise that is not eligible for legal import under the FD&C Act. CBP ordered destruction because it was the only way to ensure that the drugs would not be re-imported into the United States. The claimant had stipulated that the drugs were new drugs and that no new drug application had been submitted or approved. (See U.S. v. 300 oz. Gerovital Lotion, and 25,000 Gerovital Tablets, More or Less, 492 F. Supp 114 (C.D. Cal. 1980). )

GUIDANCE

If an article has been refused admission under the FD&C Act, FDA will consider objecting to T&E entry under the following circumstances:

1. The article presents a definite hazard to the health of the consumer (e.g., article containing toxins or pathogens)
2. There is evidence that the T&E entry procedure is being abused and violative merchandise is being diverted into domestic commerce (e.g. the frog legs case cited previously).
3. The distance that the violative product is to be moved is so great that it might be lost, stolen or diverted, and/or that the movement would be very difficult to control and/or monitor.
4. The importing firm has a history of diverting violative merchandise into domestic commerce. (See RPM subchapter "Priority Enforcement Strategy for Problem Importers".)

If the merchandise has been entered as a consumption or warehouse entry, the following statement should appear on the Notices of Detention and Refusal:

"DO NOT ISSUE T&E - PERMISSION AS REQUIRED PURSUANT TO 19 CFR 18.21(b) IS NOT GRANTED FOR THE ISSUANCE OF A TRANSPORTATION AND EXPORTATION ENTRY"

If the merchandise has been entered as a T&E, and CBP has notified FDA of the entry, CBP should be notified in writing that FDA opposes granting of the T&E entry.

NOTE: In developing the Operational and Administrative System for Import Support (OASIS) the FDA forms for Notice of Sampling, Release, Detention and Hearing, Refusal, etc., have been replaced by "Notice of FDA Action," with the description of the action identified for the specific article in the entry. See RPM subchapter, Import Procedures.

Until OASIS is modified to issue a T&E statement, districts operating under OASIS should annotate their Notice of FDA Action appropriately and forward a copy of the Notice to the local CBP office and other notified parties.

Decisions to reconsider T&E movement, or submit regulatory actions, where appropriate, are at the discretion of the district.

Questions regarding use of T&Es should be directed to the Division of Import Operations and Policy, HFC-170, and appropriate Center.

EXHIBITS

• 9-13 Model Letter