In the shadow of the U.S.-Chinese debate over human rights, a California importer continues his court battle to force the U.S. government to return 49 Chinese-made diesel engines seized by the Customs Service in 1991.

The U.S. Customs Service says the engines were made by Chinese prisoners. U.S. law bans imports of goods produced by prison or forced labor.Importer Hardy Day, owner of China Diesel Imports Inc. of Jamul, Calif., insists the engines were made in a non-prison factory by voluntary, paid workers.

China, which signed a memorandum of understanding with the United States in August 1992 banning prison-made exports, also insists that the Jinma diesel engines are not made by convicts.

The 65-year-old Mr. Day has vowed to fight on.

He said he wants to win release of the 49 engines involved in this case and to secure his right to import more Jinma engines, which he says are "unique in the world" in terms of quality and fuel efficiency.

"When you're right, you're right," Mr. Day told The Journal of Commerce. ''It's not a wise thing to do financially. But I have faith in the U.S. justice system."

The import company generates annual sales of about $1 million, he said.

The dispute is scheduled to got to trial in New York on Feb. 15.

But in the latest court development, Customs has asked Judge Jane Restani to forget the trial and render her decision immediately in favor of the U.S. government.

In documents filed with the court, the Justice Department said it proves that Jinma factory workers are actually convicts from a prison in Yunnan province.

Included in the court documents are excerpts from a 1991 congressional hearing in which Asia Watch testified that "Jinma diesel engines are produced by an extensive penal-industrial complex consisting of several large prison enterprises." Asia Watch is an international human rights organization.

Further, the department said a 1986 yearbook for Yunnan province notes that Jinma engines were among the products that reform-through-labor and education- through-labor units - which the U.S. government maintains are prisons - "worked hard" to turn out.

The Justice Department also referred to what it describes as a June 1989 ''internal circulation" memo from a Chinese prison journal that states ''Jinma diesel engines are being manufactured at Yunnan First Prison."

The Days plan to make their own request to Judge Restani to rule in their favor in the next few weeks, said their attorney, James Zimmerman of La Jolla, Calif.

Mr. Zimmerman said he will submit to the court a videotape of the Jinma factory that he and Mr. Day shot when they visited China in October 1992.

"We were there the day before the U.S. State Department did its inspection," Mr. Zimmerman said. "We saw people on bicycles, children walking - it just doesn't look like a prison."

The importer also will point out that the State Department acknowledged that its inspection visit to the Jinma factory was inconclusive.

The investigating officer found "no direct evidence" of the use of prison labor in assembling the Jinma engine, according to the State Department report. U.S. officials have since requested a second visit, but that visit has not taken place.

On the diplomatic front, meanwhile, policy-makers in Washington and Beijing seem no closer to resolving their differences over human rights.

Beijing was unable to introduce a resolution at the recent annual meeting of the Asia-Pacific Economic Cooperation forum calling for guaranteed most- favored-nation status among all APEC members.

Most U.S. trading partners enjoy MFN status, which guarantees the lowest possible tariffs on goods imported into the United States. But China has faced opposition in renewing its MFN privileges since a 1989 crackdown on pro- democracy demonstrators.

President Clinton in May extended China's eligibility for one year, but linked further renewals to progress on human rights.

Customs has issued three directives since May detaining or banning imported goods believed to have been produced at Chinese prison factories. This brings to 19 the number of similar actions Customs has taken against China since 1991.

China has been less than successful in criticizing the United States for its own prison export program.

At least two states, California and Oregon, have established programs to promote exports of goods produced at state prisons, which, Beijing charges, makes the United States a hypocrite.

State officials have said the difference between their programs and Chinese prison factories is that U.S. prisoners are paid for their work.

U.S. law does not prohibit exports of prison-made goods.