A Customs bond is a contract that is given to insure the performance of an obligation or obligations imposed by law or regulation. Bonds have a number of uses in the U.S. Customs Service. The most common use allows importers to take possession of their goods before all Customs formalities are completed. Another common use allows a carrier to move goods that have not been entered from one place to another.
All parties that import merchandise into the United States for commercial purposes or transport imported merchandise through the United States must have a Customs Bond.
Who are the parties to a Customs bond?
Usually, there are three parties to a customs bond:
- the principal (importer)
- the surety
- the beneficiary
The principal on a Customs bond can be an importer, a broker, a carrier, a bonded warehouse proprietor, a foreign trade zone operator or any one of a number of other parties that seek to do business with Customs. The principal gives the bond to Customs to insure satisfactory performance of obligations that it undertakes.
The surety is normally an insurance company that has been authorized by the Department of the Treasury to write Customs bonds. The surety agrees to pay any liability that might arise from the principal’s failure to perform its obligations. The principal and surety are also known as the bond obligors.
US Customs & Border Protection is the beneficiary on all the bonds it authorizes.
What happens if the obligations under the bond are not met?
If a principal fails to perform its obligations under the bond, liquidated damages are owed to Customs. The amount of liquidated damages is established by the conditions of the customs bond. Both the bond principal (importer) and surety are jointly liable for liquidated damages.
In no case can a claim for liquidated damages exceed the amount of the customs bond that appears on the Customs Form 301. If the customs bond principal cannot or will not perform its obligations, Customs and Border Protection (CBP) can make demand for payment of liquidated damages on both the principal (importer) and the surety.
Customs and Border Protection (CBP) will accept payment from either party in satisfaction of the claim. If the surety pays Customs and Border Protection (CBP), it can make a claim for payment against its principal, but Customs and Border Protection is not a party to that transaction.
What are the main types of customs bonds?
Continuous Customs Bond
Commonly referred to as an annual bond or ebond, mostly used by high volume importers. Can also be used for ISF tranactions. A continuous customs bond is normally obtained by importers who have a large number of entries and/or imports through several ports of entry during a given year. A continuous bond is valid until it is terminated by the surety or the principal. The principal is only required to renew the bond once a year. The minimum customs bond amount for continuous customs bonds will be $50,000 or 10 percent of the total taxes and fees paid in the previous 12-month period whichever is greater.
Single Entry Bond
Importers obtain a single entry bond for a single shipment. It covers only the entry or transaction for which it was written. The customs bond amount for a single entry customs bond is not less than the total entered value plus all duties, taxes, and fees. If merchandise is subject to other federal agency requirements or is restricted merchandise, the customs bond amount set is not less than three times the total entered value of the merchandise.
ISF Bond
Used only for ISF 10+2 filing, if the importer does not currently have a customs bond.
