Is your company importing goods into the United States or considering importing in the future? To import successfully, the importer must have a customs bond on file with U.S. Customs and Border Protection (CBP). Customs bond compliance can be simple, but there is important information every importer should be familiar with.
1. What is a customs bond?
Customs bonds are required for any import shipment which value exceeds $2,500. Essentially, a customs bond is a contract to insure importers oblige with duties, taxes and fees owed to the government. Additionally, customs bonds are required for any import shipment if the commodity is subject to other government agency (OGA) requirements (i.e. FDA, USDA, BATF, etc.). Bonds are a guarantee from a surety company that the importer of record will abide by the laws and regulations governing the importation of merchandise into the United States.
2. Who are the parties involved in a customs bond?
The principal 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 which seek to do business with CBP.
The surety is normally an insurance company that has been authorized by the Department of Treasury to write CBP bonds. The principal and surety are also known as the bond obligors.
CBP is the beneficiary on all of the bonds it authorizes.
3. What are the main types of customs bonds?
The two main types of customs bonds are Continuous Transaction Bonds and Single Entry Bonds.
A continuous customs bond is used by importers who have a large number of entries or imports through several ports during a given year. Continuous bonds have a term of one year and are automatically renewed each year. Continuous bonds are valid until terminated by the surety or the principle.
Single entry bonds are intended for a single shipment. The single entry bond only covers the entry or transaction for which it was written.
A single entry or continuous customs bond must be obtained prior to submitting a customs entry to CBP. Without a bond on file with CBP, an import shipment will be delayed. If the shipment arrives to a U.S. port and is not customs cleared in a timely manner the cargo owner could incur storage, demurrage or per diem fees by the port, terminal, pier, steamship line (ocean carrier) or the bonded warehouse.
Additionally, if a principal fails to perform its obligations under the bond, CBP may asses a claim against the principal and surety. The claim may be for breach of an obligation to pay duties (taxes) or any other bond condition.
The bond also indemnifies the surety, granting it the ability to take any legal action against the principal if necessary. The surety would be able to collect any funds from the principal which were outlaid to CBP on its behalf.
5. How does an importer obtain a customs bond?
An importer can obtain a customs bond through a surety licensed by the Treasury department or through their customs broker. Importers will have to complete a bond application which will include basic company details and information explaining the type of merchandise to be imported.
The International Freight Forwarding team at Ascent Global Logistics provides single entry and continuous customs bond. If you have questions about customs bonds or regulatory compliance, contact our team of global logistics experts today.