Gene Mack, Licensed Customs Broker
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What is a U.S. Customs Bond?

According to the Customs Regulations, a Customs Bond is…"a contract which is given to ensure the performance of an obligation imposed by a law or regulation." The parties involved in the bond contract are the principal (Importer), surety (The Insurance Company) and obligee (U.S. Customs). The primary purpose of a Customs Bond is to guarantee the payment of import duties and taxes as well as assure compliance with all laws and regulations governing the entry of merchandise from foreign shipping points into the United States. A Bond is required to enter all commercial shipments.

Why Is an Importer Required to Post a Bond with Customs?

A Customs Bond is required on all commercial shipments of goods entering the commerce of the United States. According to Customs regulations, importers are required to post a bond…. "to protect the revenue of the United States, to assure compliance with any pertinent law, regulation or instruction". When a Customs Bond is executed, the bond principal agrees to the following conditions:

  • Agreement to pay duties, taxes and charges in a timely manner
  • Agreement to make a complete entry
  • Agreement to produce documents and evidence
  • Agreement to redeliver merchandise
  • Agreement to rectify any non-compliance with provisions of admission
  • Agreement for examination of merchandise
  • Reimbursement and exoneration of the United States
  • Compliance with special requirements on duty-free entries or withdrawals
  • Compliance with U.S. Customs regulations applicable to Customs security areas in airports

What Constitutes Default under the Bond?

Default under a Customs Bond occurs when the principal fails to comply with the conditions of the bond, which provide for compliance with the law and Customs regulations. Default result in assessment of liquidated damages or in the issuance of demands to pay duties, taxes and other charges guaranteed by the bond. If the principal fails to pay these liquidated damages or other lawful charges assessed by Customs, the surety must pay U.S. Customs the appropriate sum to the bond amount.

A Customs Bond is not insurance

With insurance, some losses are expected, and a portion of the premium is set aside to pay losses. With a surety bond, each applicant is reviewed individually, and no portion of the premium is set aside for losses; no surety would knowingly issue a bond for a principal likely to default. A Customs Bond does not protect an importer, nor relieve and importer of its obligations to pay amounts due to Customs. If the surety is forced to pay Customs any amounts due under the terms of the bond, the surety has the right to, and will, demand reimbursement the bond principal. The importer of record is also liable for penalties assessed under Section 592 of the Tariff Act (19 U.S.C. 1592) for material misstatements of fact. Customs Bonds do not cover such penalties.

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