Importing FDA‑regulated products is a bit like going through airport security: most of the time it’s routine, but if something goes missing—or looks suspicious—you may be pulled aside, detained, and asked uncomfortable questions. In the import world, that “secondary screening” can result in liquidated damages (and potentially greater scrutiny) if an importer fails to comply with the conditions of an import bond.
Here’s what they are, how to avoid them, and what to do if CBP already has its eye on you.
What Are Liquidated Damages Assessed by Customs?
Liquidated damages are monetary penalties assessed by CBP when an importer violates the terms of its customs bond. For FDA‑regulated products, liquidated damages most commonly arise when:
- A shipment is refused admission by FDA and is not timely re‑exported or destroyed
- The importer fails to redeliver merchandise upon CBP demand
- Required FDA entry information is missing, inaccurate, or misleading
- Products are misbranded, adulterated, or not listed/registered properly
A few unpleasant truths:
- CBP assesses the penalty, not FDA;
- Intent usually does not matter, and
- The penalty can equal 3x the entered value of the shipment (yes, the whole thing), even if the violation was accidental.
CBP treats this as a bond violation—not a misunderstanding, not a learning opportunity, and definitely not “oops.”
How to Avoid Liquidated Damages in the First Place (a.k.a, Staying off CBP’s Radar)
Avoiding liquidated damages is mostly about doing the unglamorous things correctly—and quickly.
Best practices include:
- Accurate FDA entry filings: Product codes, intended use statements, manufacturer information, and listings must all be correct. FDA and CBP have zero sense of humor here.
- Current FDA registrations and listings: “We were about to update it” is not a defense.
- Knowing your bond obligations: Bond deadlines are real deadlines. Not “flexible,” not “business days-ish.”
- Pre‑import compliance checks: Labeling, UDI (for medical devices), ingredient compliance, and classification issues should be resolved before the shipment leaves the dock.
- Immediate response to FDA or CBP notices: Delay is how manageable problems become expensive ones.
In short: problems are cheapest when caught before importation, more expensive when caught at the port, and truly painful when discovered after a redelivery deadline has passed.
Early legal review—before importation—often costs far less than post‑violation mitigation.
How to Mitigate Liquidated Damages Successfully
If you receive a Notice of Liquidated Damages, do not panic—and do not ignore it. Liquidated damages are often negotiable, but only if handled correctly.
Effective mitigation usually involves:
- Filing a timely Petition for Mitigation: Miss the deadline and CBP stops listening entirely.
- Demonstrating reasonable care: CBP prefers “we made a mistake and fixed it” over “we didn’t know.”
- Showing corrective action: What procedures changed? What controls were added? What won’t break again?
- Speaking CBP’s language: Mitigation hinges on regulations, facts, and enforcement guidelines—not dramatic narratives.
Well‑supported petitions frequently result in dramatic reductions, sometimes to a fraction of the original demand.
Key Takeaway
Liquidated damages for FDA‑regulated imports can be severe—but they are often avoidable and frequently reducible with the right strategy. Early compliance planning and prompt, well‑crafted mitigation petitions can mean the difference between a devastating penalty and a manageable outcome.
Please feel free to email info@garg-law.com for assistance with strategy on liquidated damage cases, including preparing and filing Petitions for Relief and Supplemental Petitions, advising on corrective actions to prevent repeat violations, providing pre‑import compliance counseling to reduce future exposure and more.
