Compliance word cloud

U.S. Customs and Border Protection (CBP) is stepping up enforcement of U.S. laws prohibiting the importation of goods made with forced, indentured, or prison labor.  While existing regulations provide importers with recourse to seek release of improperly detained shipments, these procedures can be challenging to navigate and may require legal action.

On April 15, Virtus Nutrition LLC (“Virtus”) filed a complaint at the U.S. Court of International Trade (CIT), challenging the detention of a shipment of “palm oil distillates and palm stearin.” CBP detained the shipment pursuant to an Withhold Release Order covering palm oil and products containing palm oil produced by Sime Darby Plantation Berhad and its subsidiaries, joint ventures, and affiliated entities in Malaysia.  Virtus states that it provided CBP with “extensive information concerning the manufacture of the merchandise in the subject cargo, including records concerning the growth and harvesting of palm fruit bunches, the extraction of oils from that fruit, and the refining of the oils into the products contained in the subject entry.”  CBP confirmed receipt of the information.  About one month later, CBP notified Virtus that it had decided to exclude the shipment from entry into the United States, saying “[t]he petition that you submitted…requesting that CBP either revoke or modify the [WRO] provided insufficient information to deem the merchandise admissible.” Virtus timely filed a protest, which was also denied, on the grounds that Virtus was “unable to trace production back to the harvesting of the palm kernel/seed as required by the [WRO]” – a fact Virtus challenges, as it claims to have submitted that information to CBP.

Most critically, this case raises questions surrounding CBP’s review of data provided by importers – Virtus claims to have submitted information confirming its goods did not touch Sime Darby, and thus did not fall under the scope of the WRO; CBP’s notification indicates Virtus did not provide enough information to revoke or modify the WRO.  Those are two very different analyses, that require the submission of very different categories of information.

Importers must be prepared to respond to CBP inquiries and detention notices, including by ensuring that the proper auditing documentation is readily prepared and available.  While importers may choose to reexport the covered product, they may wish to undertake the regulatory or legal proceedings necessary to clear the shipment and preserve existing supply chains.