HQ 224245: Request for Internal Advice; expenses for FDA sampling, testingand examination of gloves; 19 U.S.C. 1623(a); 19 CFR 113.62;charges; St. Paul Fire and Marine Insurance Company v. UnitedStates; 19 CFR 113.62(g)(2); exonerate; Webster's II New RiversideUniversity Dictionary; 21 U.S.C. 381(a),(b) and (c); 21 CFR 1.99;United States v. Utex International Inc.; 19 CFR 174.11(c); VivitarCorp. v. United States.

Native CBP ruling rendition. Applicability is fact-specific; modification/revocation relationships and original publisher date are retained. Publisher sentinel year0001 means unknown date, not a historical legal adoption.

                            HQ 224245

                          June 30, 1994

BON-2 CO:R:C:E 224245 AJS

CATEGORY: Bonds

District Director
U.S. Customs Service
423 Canal Street
New Orleans, LA 70130

RE: Request for Internal Advice; expenses for FDA sampling, testing
and examination of gloves; 19 U.S.C. 1623(a); 19 CFR 113.62;
charges; St. Paul Fire and Marine Insurance Company v. United
States; 19 CFR 113.62(g)(2); exonerate; Webster's II New Riverside
University Dictionary; 21 U.S.C. 381(a),(b) and (c); 21 CFR 1.99;
United States v. Utex International Inc.; 19 CFR 174.11(c); Vivitar
Corp. v. United States.

Dear Sir:

     This is in reply to your Internal Advice request of October 9,
1992, regarding expenses incurred by the Food and Drug
Administration (FDA) for the sampling, examining and testing of
rubber latex examination gloves.

FACTS:

     In May of 1991, L & M Trading Co., Inc., attempted to enter
small, medium and large size rubber latex examination gloves. 
Prior to the release of the gloves, personnel of the FDA detained
the shipment for examination.  The purpose of this examination was
to, among other things, determine whether the gloves contained any
holes.  After sampling and testing of only the small gloves, the
FDA determined that they did in fact possess holes and were in
violation of section 801(a)(3) of the Federal Food, Drug and
Cosmetic Act (Act).  Based on this determination, all of the gloves
in the entry were detained.  The importer then requested an
opportunity to recondition the gloves and bring them into
compliance with the Act.  The FDA incurred travel, supervisory and
analyst expenses for sampling, examining and testing the gloves to
determine whether the importer had 


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successfully brought them into compliance.  Eventually, some of the
gloves were brought into compliance or relabeled for industrial use
only and released.  

     The entry was liquidated "No Change" on December 13, 1991. 
Despite the later, the importer was billed by Customs for $1,883.50
which represented the amount of the above expenses.  On January 31,
1992, the importer informed the District Director that they refused
to pay the bill as the charges were "outrageous".  However, the
importer had earlier signed a FDA form 766 in which they agreed to
pay all supervisory costs in accordance with current regulations. 
When payment of the bill was not received, a demand was made on the
Surety under the Customs Bond for the amount of the bill.  On May
28, 1992, the Surety filed protest 2002-21-000700 claiming that the
FDA charges are not "legally fixed" and "that they [the charges]
were incurred by a government agency whose activities are not
covered by the bond but are covered by the agency's own particular
statutes and regulations".

ISSUE:

     Whether the expenses for sampling, testing and examination of
the gloves incurred by the FDA are "charges" which may be collected
against the Customs bond.

     Whether the amount billed for such expenses is protestable as
a charge pursuant to 19 U.S.C. 1514(a)(3).

LAW AND ANALYSIS:

     19 U.S.C. 1623(a) states that "[i]n any case in which bond or
security is not specifically required by law, the Secretary of the
Treasury may by regulation or specific instruction require, or
authorize customs officers to require, such bonds or other security
as he, or they, may deem necessary for the protection of the
revenue or to assure compliance with any provision of law,
regulation, or instruction which the Secretary of the Treasury or
the Customs Service may be authorized to enforce."  Accordingly,
Customs is authorized to require a bond to assure compliance with
FDA laws and regulations which Customs is required to enforce.

     19 CFR 113.62 sets forth the basic importation and entry bond
conditions and states that a bond for basic importation and entry
shall contain the conditions listed in this section.  Paragraph
(a)(ii) of this section requires that if merchandise is imported
and released from Customs custody, the obligors (principal and
surety, jointly and severally) 

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agree to: "[p]ay, as demanded by Customs, all additional charges
subsequently found due, legally fixed, and imposed on any entry
secured by the bond."  The issue in this instance is whether FDA
expenses for sampling, testing and examining are "charges" which
the surety is obligated to pay.

     The courts have found the term "charges" to be applied to
actual assessments of specific sums of money (other than ordinary
customs duties) on imported merchandise.  St. Paul Fire and Marine
Insurance Company v. United States, 729 F. 
Supp. 1371, 1374 (1990); See also Alberta Gas Chemicals, Inc. v.
Blumenthal, 82 Cust. Ct. 77, 82, C.D. 4792 (1979). Furthermore, a
"charge" has been interpreted as an obligation or duty; a claim or
encumbrance; a liability, an expense or the price of an object; an
entry in an account of what's due from one party to another.  St
Paul, 1374.  The subject expenses satisfy these descriptions.  They
are actual assessments of specific expenses on imported
merchandise.  Therefore, they are additional "charges" which must
be paid according to the terms of the Customs bond.

     Even if the subject expenses are not considered "charges", 19
CFR 113.62(g)(2) further requires the obligors of a Customs bond to
exonerate the United States and its officers from any expense
arising out of the principal's importation, entry, or withdrawal of
merchandise.  The term "exonerate" means to release from an
obligation.  Webster's II New Riverside University Dictionary, 453
(1984).  The subject expenses are an obligation which arises out of
the principal's importation or entry.  Therefore, the Surety is
also required to release Customs from the obligation of the subject
expenses under this provision.

     The Surety claims that the subject charges are not "legally
fixed", and thus not recoverable under the bond.  21 U.S.C. 381(a)
states that the Secretary of the Treasury shall deliver to the
Secretary of Health and Human Services (HHS), upon his request,
samples of food, drugs, devices, and cosmetics, which are being
imported or offered for import into the United States.  Section
381(a) further provides that if it appears from the examination of
such samples or otherwise that such article is adulterated, then
such article shall be refused admission.  The subject gloves were
examined, determined to be adulterated, and then refused admission
pursuant to the Act.  

     If it appears to the Secretary of HHS that an adulterated
article can, by relabeling or other action, be brought into
compliance with chapter 21 or rendered other 
than a food, drug, device, or cosmetic, final determination as to
admission of such article may be deferred and, upon 

                               -4-

filing of timely written application and the execution of a bond
with the Secretary of the Treasury, the applicant may be authorized
to perform such relabeling or other required action.  21 U.S.C.
381(b).  All such relabeling or other action shall be under the
supervision of an officer or 
employee of the Department of HHS (i.e., the FDA), or an officer or
employee of the Department of the Treasury (i.e., Customs).  Thus,
Customs is required to demand a bond if the importer attempts to
bring an adulterated article into compliance with the Act, and this
action must be supervised by either the FDA or Customs.  In this
instance, the importer was taking action to bring an article into
compliance with the Act under FDA supervision, while Customs
possessed the importer's bond for the entry.   

     21 U.S.C. 381(c) provides that "all expenses" (including
travel, per diem or subsistence, and salaries of officers or
employees of the United states) in connection with the 
supervision of the relabeling or other action authorized under the
provisions of subsection (b) of this section, the amount of such
expenses to be determined in accordance with 
regulations, shall be paid by the owner or consignee.  The subject
expenses satisfy this description.  They are expenses for the
travel and salaries of FDA employees which were incurred in
connection with an action (i.e., to bring the  gloves into
compliance with the Act) under subsection (b).  Therefore, the
basis for the subject expenses is "legally fixed" by statute. 

     21 CFR 1.99 further elaborates on and establishes the amount
to be charged for expenses.  The costs for an action to bring an
article into compliance with the Act shall include the travel
expenses, and charges for the services of the supervising officer
and analyst.  21 CFR 1.99(a),(c) and (d).  The specific amount
chargeable for travel expenses, which the importer admits they were
expecting to pay, is fixed by the FDA's Regulatory Procedures
Manual at .25 cents per mile, while the other charges are fixed by
paragraph (c) and (d) of section 1.99.  Consequently, not only are
the subject charges "legally fixed", but the specific amount to be
charged is provided for by regulation or manual.  By examination of
the above statute and regulation, the Surety should have been aware
of their potential financial liability for FDA expenses.

     The Surety further asserts that the examination activities
were incurred by a government agency whose activities are not
covered by the bond but are covered by the agency's own particular
statutes and regulations.  It is Customs' responsibility to carry
out FDA decisions, in accordance with Customs law and regulation. 
United States v. 

                               -5-

Utex International Inc., 857 F.2d 1408, 1411 (Fed. Cir. 1988).  The
various statutes and regulations make clear that Customs is the
enforcement arm of the process wherein admissibility is determined
by the FDA.  Utex, 1411.  FDA's own statute (i.e., 21 U.S.C.
381(b)) provides for a bond to be received by Customs.  As
discussed previously, Customs itself may require a bond pursuant to
19 U.S.C. 1623(a) to assure compliance with FDA laws and
regulations.  Accord- ingly, the relevant statutes governing both
Customs and the FDA indicate that the subject FDA activities are
covered by the Customs bond. 

     This request additionally asks whether the amount billed for
FDA charges may be protested pursuant to 19 U.S.C. 1514.  19 CFR
174.11(c) provides that all "charges" of whatever character within
the jurisdiction of the Secretary of the Treasury, including the
legality of all orders and findings entering into the same, may be
protested under the provisions of section 514, Tariff Act of 1930,
as amended (19 U.S.C. 1514 (a)(3)).  In this instance, the subject
charges are FDA expenses.  The amount billed for these charges is
not within the jurisdiction of the Secretary of the Treasury.  As
discussed previously, this amount is within the jurisdiction of the
Secretary of HHS according to both statute and regulation. 
Therefore, the amount billed for the subject expenses may not be
protested as "charges" within the jurisdiction of the Secretary of
the Treasury pursuant to 19 U.S.C. 1514.

     The Surety filed a protest concerning the subject expenses
under 19 U.S.C. 1514(c)(2), which allows a protest by a surety that
has an unsatisfied legal claim under its bond.  The legislative
history of this provision indicates that Congress intended this
provision to "[p]ermit a surety to file a protest in its own name
and extend the time within which it may file a protest."  St. Paul,
1375.  Section 1514(c)(2) requires that a protest of a "decision,
order or finding" described in section 1514(a) shall be final
within 90 days after the date of demand for payment against a
surety bond.  Utex, 1413.  The proposition naturally follows that
this protest must relate to a "decision, order or finding" subject
to protest within section 1514(a).  As stated in the preceding
paragraph, the amount billed for the subject expenses is not a
charge protestable under section 1514(a)(3).  Therefore, the surety
may not protest the amount billed for FDA expenses under 19 U.S.C.
1514(c)(2).


     We note that the Court of International Trade (CIT)  stated
that Congress intended for the district courts to have jurisdiction
over cases involving imported goods arising 


                               -6-

under the Act (i.e., Federal Food, Drug and Cosmetic Act 21 U.S.C
300 et seg. (1982)).  Vivitar Corporation v. United States, 7 CIT
170, 176-77 (1984).  If the CIT does not possess jurisdiction over
cases involving the Act, it naturally follows that Customs also
does not possess authority over FDA decisions involving the Act. 
As stated previously, this case involves a decision concerning
expenses under section 381(c) of the Act.  Accordingly, Customs
does not have authority to decide this issue.  However, Customs is
required by the Act to execute a bond and to enforce the terms of
this bond based upon FDA decisions.     

HOLDING:

     The expenses for sampling, testing and examination of the
subject gloves incurred by the FDA are "charges" which may be
collected against the Customs bond.  The amount billed for these
expenses is not a matter subject to protest pursuant to 19 U.S.C.
1514.

     The Office of Regulations and Rulings will take steps to make
this decision available to Customs personnel via the Customs
Rulings Module in ACS and the public via the Diskette Subscription
Service, Lexis, Freedom of Information Act and other public access
channels 60 days from the date of this decision.

                                 Sincerely,


                                 John Durant, Director
                                 Commercial Rulings Division