Customs Bonds are legal instruments to protect the revenue of the United States which sets forth an agreement between the surety and the principal (ensure compliance). All known customs bonds have different guidelines and agreements which the surety and Principal must follow to protect the Importers merchandise and the U.S. government interest (revenue). (a surety issues U.S. Customs Bonds and the principal is the importer of record)
All Sureties must be approved by the Treasury Department which sureties must be listed and named in the current circular 570 to act as sureties on bonds, with the amount in which each may be accepted.
To ensure compliance in the case where merchandise subject to PGA requirements where failure to redeliver could pose a threat to the public health and safety. Therefore a bond will be executed in an amount which is not less than three times the total entered value of the merchandise that are required by the following agencies.
- Food and Drug Administration (FDA) – All
- Environmental Protection Agency (EPA) – All
- Bureau of Alcohol, Tobacco and Firearms (BATF) – Alcoholic Beverages and Distilled Spirits
- Only Consumer Products Safety Commission (CPSC) – Toys and Fireworks only if sampled by Customs for CPSC testing
- Department of Agriculture, Agricultural Marketing Service (AMS) – Subject to marketing orders
- Federal Communications Commission (FCC) – All
- Toxic Substances Control Act (TOSCA) – All
U.S. Customs Bonds serve with multiple purposes based on the activities that an importer or broker will conduct .
- ISF bond:
- Single or Continuous bond
- Used only once.
- For shipment of goods that are laden and set to sail by vessel.
- Must be filed prior to laden of goods.
SINGLE TRANSACTION BOND APPLICATION (ACTIVITY 1, IMPORTER / BROKER) | CONTINUOUS BOND (ACTIVITY 1, IMPORTER / BROKER) |
---|---|
Ideal for importers who import once year. | deal for importers who import twice or more a year (cost savings) |
Used when the transaction value over is $2500 | Used when the transaction value over $2500 |
Minimum amount $100 | Minimum amount $50,000 |
Used only in a one time entry transaction | Used for multiple entries within one year. |
Used when there are missing documents (airway bill, bill of lading, commercial invoice) | Importers who are delinquent with outstanding payments. |
Importers who are delinquent with outstanding payments | Covers any number of shipments within 12 months |
ISF bond covers one entry only. | Covers ISF for each entry |
Bond is not refundable even under free trade agreements | Low yearly fee |
Bonds are determined on premiums or fee per $’s | Renews Once a year with a yearly fee. |
Calculating Single Transaction Bond Example: i. Transaction Value + (Duties + Taxes + Fees) = (Value) (surety fee per $) = Bond Value ii. PGA (Partner Government Agencies) = (3 x Value) (surety fee per $) = Bond value | Re-evaluated once a year to determine bond sufficiency. |
Application to file CF – 301 and filed by FAX, scanned and e-mail to CBP, or by ACE System E-bonds, | Importer of record can terminate the bond by written request that is faxed, or scanned and emailed to the Revenue Division a) The bond will be terminated on the date requested if that date is at least 10 business days after the date CBP receives the request. b) If no termination date is requested, the termination will take effect on the tenth business day following the date CBP receives the request. c) A surety has power to terminate your bond. |
Calculating Continuous Bond Example: (Duties, Taxes & Fees) (10%) = minimum bond amount or $50,000 (rounded up by increments of $10,000 previous 12 months up to $100,000 and then by increments of $100,000). |
Duties, Taxes & Fees | Bond Amount |
$000,000 to $500,000 | $50,000 |
$500,000 to $600,000 | $60,000 |
$600,000 to $700,000 | $70,000 |
$700,000 to $800,000 | $80,000 |
$800,000 to $900,000 | $90,000 |
$900,000 to $1,000,000 | $100,000 |
$1,000,000 to $2,000,000 | $200,000 |
$2,000,000 to $3,000,000 | $300,00 |
ACTIVITY | SINGLE TRANSACTION BOND | CONTINUOUS BOND | Purpose of Bond and Bond Setting |
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Ia | Accelerated drawback Payment Refunds The bond limit of liability amount for accelerated payment of drawback shall be equal to the amount of accelerated payment to be received on the entry covered. | Accelerated drawback Payment Refunds 1. When the bond is for drawback claims using the exporter’s summary procedure the bond limit of liability amount shall be fixed in an amount equal to 25 percent of the drawback claimed on entries filed by the principal (exporter-claimant) during an annual period. 2. When the bond is for both accelerated payment of drawback and claims using the exporter’s summary procedure the bond limit of liability amount shall be fixed at an amount sufficient to cover the maximum amount of accelerated payment to be outstanding at any time during an annual period, or much larger amount the district director may deem necessary to afford ample protection of the revenue. | |
2 | Custodian of Bonded Merchandise | SEE Types of bonds needed below chart. | |
3 | International Carrier If the bond is to secure the landing in foreign ports, by a vessel of less than 500 net tons, of spirits, wines, or other alcoholic beverages not covered by a certificate of shipment, the bond limit of liability amount shall be fixed in an amount equal to double the estimated duty and taxes. | International Carrier In addition, the district director has full responsibility for setting bond limits at higher amounts, up to $250,000 as deemed necessary, for carriers with past narcotics violations and/or those originating from high-risk drug areas. | When the bond is to secure activities, including requested overtime services, related to the entry or clearance of vessels, vehicles, or aircraft which arrive directly or indirectly from any place outside the customs territory of the United States, the bond limit of liability amount shall be fixed in an amount the district director may deem necessary to accomplish the purpose for which the bond is given, but not less than $25,000. |
3a | Instruments of International Traffic | When the bond is for the control of instruments of international traffic required by Section 10.41a CR and/or clearance of serially numbered substantial holders or outer containers required in Section 10.41b CR, the bond limit of liability shall be fixed at $20,000, or such larger amount the district director deems necessary to accomplish the purpose for which the bond is given. | |
4 | Foreign Trade Zone Operator (FTZ) | When the bond is for a Foreign Trade Zone operator, the bond limit of liability amount shall be fixed in an amount the district director may deem necessary to accomplish the purpose for which the bond is given, but not less than $50,000. | |
5 | Public Gauger | The bond limit of liability amount shall be fixed in an amount the district director may deem necessary.. Under normal circumstances, the bond limit of liability for Public Gauger and Commercial Laboratory companies who have not been the subject of adverse Customs actions will be based on the number of approved or accredited sites operated by that gauger or laboratory company. Laboratories or gaugers operating one site are considered small and the bond limit of liability should be not less than $20,000. Companies operating two to ten sites are considered medium in size and the bond limit of liability should be from $30,000 to $50,000. Those companies operating more than ten sites are considered large in size and the bond limit of liability should be from $100,000 to $120,000. | |
6 | Wool & Fur Products Labeling Acts and Fiber Products Identification Act Importations | The bond limit of liability amount shall be fixed in an amount equal to two times the value of the merchandise involved and duty thereon. | |
7 | Bill of Lading | The bond limit of liability amount shall be fixed in an amount equal to one and one-half times the invoice value. | |
8 | Detention of Copyrighted Material | fixed in an amount appropriate to hold material depreciation of articles detained as alleged to be infringing and from any loss caused by the detention of articles found not to be infringing. Generally, 120 percent of the value of the articles, as set forth in the entry, plus the estimated duties, taxes and fees will be appropriate, but the district director may raise or lower the amount as necessary. | |
9 | Neutrality | The bond limit of liability amount shall be fixed in an amount equal to double the value of the vessel and cargo on board. | |
10 | Court Costs for Condemned Goods | Fixed in an amount of $5,000 or 10% of the value of the claimed property, which ever is lower, but not less than $250. |
ACTiVITY 2 – Custodian of Bonded Merchandise – Continuous Bond
- Bonded warehouse operator
- fixed in an amount the district director may deem necessary to accomplish the purpose for which the bond is given, but not less than $25,000 on each building or area covered by the bond. Note: In determining the bond amount for a warehouse which will be used to store distilled spirits, consideration must be given to the fact that the warehouse proprietor is liable for both the duty and tax on distilled spirits missing from the warehouse. When the bond is for the carriage of merchandise by common carriers, contract carriers, and freight forwarders, the bond limit of liability amount shall be fixed in an amount the district director may deem necessary to accomplish the purpose for which the bond is given, but not less than $25,000 in the case of motor and air carriers and in an amount not less than $50,000 in the case of other carriers
- Container station operator, independent of either the importing carrier or bonded
- bond limit of liability amount shall be fixed in an amount the district director may deem necessary to accomplish the purpose for which the bond is given, but not less than $25,000.
- A Centralized Examination Station (CES),
- bond limit of liability amount shall be fixed in an amount the district director may deem necessary to accomplish the purpose for which the bond is given, but not less than $25,000.
- customhouse cartage or lighterage operation
- the bond limit of liability amount shall be fixed in an amount the district director may deem necessary to accomplish the purpose for which the bond is given, but not less than $25,000.
- private carrier operator
- the bond limit of liability amount shall be fixed in an amount the district director may deem necessary to accomplish the purpose for which the bond is given.
- to secure the payment of overtime services requested by or on behalf of parties in interest
- the bond limit of liability amount shall be fixed in an amount the district director may deem necessary to secure the payment of the amount due.
- more than one kind of custodial operation,
- the bond limit of liability shall be fixed in an amount large enough to cover the combined operations. For instance, if a bonded warehouse and container station are covered under the same bond, the bond limit of liability shall be fixed in an amount the district director may deem necessary to accomplish the purposes for which the bond is given, but not less than $25,000, plus $25,000 per warehouse building.