What is a Customs bond?when do I need one and why?

Customs Bonds are legal instruments to protect the revenue of the United States which both parties, the surety and the principal must agree upon the terms of a bond. Even though all customs bonds have different guidelines and agreements (see chart below) which the surety and Principal must follow to protect the Importers merchandise and the U.S. government interest, its revenue. 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.  

  1. Food and Drug Administration (FDA) – All
  2. Environmental Protection Agency (EPA) – All 
  3. Bureau of Alcohol, Tobacco and Firearms (BATF) – Alcoholic Beverages and Distilled Spirits 
  4. Only Consumer Products Safety Commission (CPSC) – Toys and Fireworks only if sampled by Customs for CPSC testing 
  5. Department of Agriculture, Agricultural Marketing Service (AMS) – Subject to marketing orders 
  6. Federal Communications Commission (FCC) – All 
  7. 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 .

  1. ISF bond:
    1. Single or Continuous bond
    2. Used only once.
    3. For shipment of goods that are laden and set to sail by vessel. 
    4. 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 $2500Used when the transaction value over $2500
Minimum amount $100Minimum amount $50,000
Used only in a onetime 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 paymentsCovers 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 agreementsLow yearly fee
Bonds are determined on premiums or fee per $’sRenews 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 & FeesBond 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
ACTIVITYSINGLE TRANSACTION BOND CONTINUOUS BONDPurpose of Bond and Bond Setting

IaAccelerated 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.
2Custodian 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.
3aInstruments of International TrafficWhen 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.
4Foreign 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.
5Public GaugerThe 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.
6Wool & 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.
7Bill of LadingThe bond limit of liability amount shall be fixed in an amount equal to one and one-half times the invoice value.
8Detention of Copyrighted Materialfixed 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.
9NeutralityThe bond limit of liability amount shall be fixed in an amount equal to double the
value of the vessel and cargo on board.
10Court Costs for Condemned GoodsFixed 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

  1. 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
  2. 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.
  3. 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.
  4. 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.
  5. 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.
  6. 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.
  7. 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.