bonds 2

Customs Bonds (19 CFR §113)

According to CBP, a bond is “a contract which is given to ensure

the performance of an obligation imposed by a law or regulation.”

There are three parties involved in the contract (bond):

1. Principal – the party that must post the bond in order to do business with CBP, such as an importer.

2. Surety – the party that backs the principal on the bond. The surety is a company that has been pre-approved by the Department of Treasury to write bonds up to a specific limit. By writing the bond, the surety agrees to pay amounts due to CBP if the principal is unable to do so.

3. Obligee – the beneficiary of the contract (CBP)

When a bond is executed, the principal agrees to comply with many conditions,

not limited to:

• Agreement to pay duties, taxes, and charges in a timely manner

• Agreement to make or complete entry

• Agreement to produce documents and evidence upon request

• Agreement to timely redeliver merchandise on CBP demand

• Agreement to rectify any non-compliance with provisions of admission

• Agreement for examination of merchandise by CBP

• Reimbursement and exoneration of the United States of any wrong doing

• Special agreements on duty-free entries or withdrawals

Terms and conditions of the bond may be found under Title 19 of the Code of Federal Regulations (19 CFR §113 Subpart G)

Types of Customs Bonds by Activity Code:

Principal

Surety

Obligee

1 – Importer’s Bond (19 CFR §113.62)

May be written as a single transaction or continuous bond. This bond encompasses a variety of items that are intended to be imported in the United States. If you wish to import anything into the country, an importer’s bond must be obtained.

1a – Drawback Payment Refunds (19 CFR §113.65)

May be written as a single transaction or continuous bond. When merchandise is imported into the United States and later exported, a principal may be entitled to a refund of duty – known as a drawback claim. There are several types of drawback claims and methods of payment; accelerated drawback being the most common way to be paid. With accelerated drawback, the refund is granted before liquidation of the drawback claim. A drawback bond guarantees full repayment to CBP of overpaid drawback monies as determined when the drawback claim is liquidated.

2 – Custodian of Bonded Merchandise (19 CFR §113.63)

May only be written as a continuous bond. This bond guarantees a variety of obligations relating to custodial activities including: all classes of bonded warehouses, domestic common carriers, cartmen, lightermen, centralized examination stations and container freight stations.

Bonded warehousemen guarantee the custody of freight while stored under CBP supervision until withdrawal for consumption.

Domestic common carriers guarantee the custody of bonded goods while being transported from one port to another.

Cartmen/lightermen guarantee the custody of bonded goods while being transported within the same port.

Container freight station operators guarantee the custody of bonded freight until released by CBP.

Centralized examination station operators guarantee the custody of freight while under CBP examination.

3 – International Carrier (19 CFR §113.64)

May be written as either a single transaction or continuous bond. This bond guarantees activities related to the entry and clearance of vessels, vehicles, or aircraft from outside the United States, including any advanced manifest filing requirements by carriers and NVOCCs. It is also used when a vessel repair entry is made. Marine Terminal Operators may fulfill CBP bond requirements using a continuous bond.

3a – Instruments of International Traffic (19 CFR §113.64)

May only be written as a continuous bond. This bond guarantees compliance with laws and regulations on the movements and clearances of shipping containers. Without this provision, each container moving into the United States would need to be formally entered with duty paid.

4 – Foreign Trade Zone Operator (19 CFR §113.73)

May only be written as a continuous bond. This bond guarantees the operation of a foreign trade zone and guarantees that foreign trade zone operators will comply with CBP regulations for maintaining the zone. For CBP purposes, a foreign trade zone is considered a non-US territory. Goods placed within a foreign trade zone may be manufactured, manipulated, repacked, or exported without making a formal entry into the United States.

5 – Public Gauger (19 CFR §113.67)

May only be written as a continuous bond. This bond guarantees the operations of commercial gaugers that are commercial organizations that measure, weight or sample merchandise. Commercial gauger must properly sample and gauge in accordance with CBP regulations and abide to the terms of the commercial gauger agreement.

6 – Wool and Fur Products Labeling Act and Fiber

Products Identification Act (19 CFR §113.68)

May only be written as a single transaction bond. This bond guarantees compliance with provisions and procedures for labeling wool and fur products.

7 – Billing of Lading (19 CFR §113.69)

May only be written as a single transaction bond. This bond protects CBP from loses if merchandise is released from CBP custody without a bill of lading.

May only be written as a single transaction bond. This bond protects CBP from damages arising from the detention of merchandise incorrectly believed to be pirated copies.

8 – Detention of Copyrighted Material (19 CFR §113.67)

9 – Neutrality (19 CFR §113.71)

May only be written as a single transaction bond. This bond provides for the agreement to observe neutrality by armed vessels.

10 – Court Costs for Condemned Goods (19 CFR §113.71)

May only be written as a single transaction bond. This bond guarantees payment of court costs, should judicial proceedings result in property to be condemned.

11 – Airport Customs Security Area (19 CFR §113 Appendix A)

May only be written as a term bond. A new bond must be filed annually with CBP. This bond guarantees that proper standards are maintained regarding access to CBP-secure areas of an airport. Covered parties on the bond include the bond principal’s employees, agents, and contractors.

12 – ITC Exclusion Order Bond (19 CFR §113 Appendix B)

May only be written as a single transaction bond. This bond is required during the Presidential review period of an ITC exclusion order when an imported product, or component thereof, is subject of the exclusion order. The ITC determines the amount of the bond; however, the complainant that sought the exclusion order is the bond oblige. This bond is filed with the entry and is in addition to any additional bond requirements for making entry.

14 – In-Bond Export Consolidation (19 CFR §192)

May only be written as a continuous bond. This bond guarantees compliance with all laws about the receipt, carriage, safekeeping, and disposition of in-bond merchandise. This bond is required for export consolidators who consolidate conveyances (vehicles) for export under 19 CFR §113 outside the port of exportation.

16 – Importer Security Filing (19 CFR §113 Appendix D)

May be written as either a single transaction or continuous bond. This bond guarantees a timely and accurate transmission of specific data elements to CBP before loading the cargo on the vessel, as described in 19 CFR §149.