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Importation and Customs Clearance & Drawback Bonds

Last updated on April 23rd, 2019

U.S. Customs & Border Protection (CBP) requires security from importers seeking to bring goods and materials into U.S. commerce, and the most common forms of security are customs bonds. Customs bonds are specific types of surety bonds which are defined as,  “a contract which is given to ensure the performance of an obligation imposed by law or regulation.” There are three primary parties involved in a surety bond, and in the case of a customs bond, these parties are the principal (importer), surety company, and obligee, CBP.

The primary purpose of customs bonds is guaranteeing the payment of import duties and taxes, as well as to assure compliance with all laws and regulations governing the entry of merchandise from foreign shipping points into the United States.

 

Why Do You Need a Customs Import Bond?

A customs import bond is required by CBP when domestic or foreign cargo owners import merchandise valued over $2,500.00 for a commercial purpose into the United States. Regardless of how you plan to ship commercial goods – by air, ocean or ground – you will need a customs bond. It is also possible to provide CBP with security in the form of a cash deposit, but this deposit can be extremely high in monetary value, cannot be used for more than a single entry at a time, and may be held by customs for several years after the importation has been processed.

It is important to keep in mind that a customs bond is not insurance intended to cover the importer but rather a fiduciary requirement intended to cover CBP duties, taxes, and fees, and as such the customs bond must be underwritten. You can read more about the financial statements and indemnity agreements sometimes requested by the surety for underwriting purposes in this article by Roanoke Trade.

 

Types of Customs Bonds

Most often, customs bonds are associated with the guarantee of import duties and taxes. This is an import bond, but there are other types of customs bonds that an importer may need to accurately navigate the financial and compliance requirements at the U.S. border.

 

Customs Bonds: Single Entry or Continuous

The customs bonds program at Roanoke Trade includes the two main types of customs bonds – single entry or continuous. As implied by the name, a single-entry bond only covers a single shipment into the United States. This customs import bond is useful for companies that only import merchandise two or three times a year.

A continuous bond allows an importer to send multiple shipments in a 12-month period. This is useful for transport and logistics companies that make regular shipments to the United States.

 

Duty Drawback Bonds

One common type of customs bond distinct from the standard import bond is the duty drawback or drawback bond. There are situations when merchandise is imported into the United States but later exported in part or in total. When this occurs the principal may be entitled to a refund of duty – referred to as a drawback claim. A duty drawback bond guarantees full repayment to CBP of an overpaid drawback as determined by the liquidation of the drawback claim.

 

Foreign Trade Zone Bonds

Another type of customs bond is particular to a Foreign Trade Zone. Your business may need a particular type of customs bond if you operate in a  Foreign Trade Zone  (FTZ). An FTZ is a designated area within the U.S. located in or near a CBP port of entry but legally considered to be outside of customs territory for the purpose of tariff laws and entry procedures.

An FTZ operator is required to secure a customs bond to assure compliance with customs regulations. The minimum bond amount required by CBP is $50,000. However, the maximum amount is determined by each individual port director and therefore the limits may vary.

Roanoke Trade is a long-time supporter of the National Association of Foreign Trade Zones and offers preferential pricing for customs bonds and insurance to their members.

 

Turn to Roanoke Trade for Customs Bonds Solutions

Insurance, surety, and risk management solutions for supply chain and transportation intermediaries are Roanoke Trade’s focus. We are your resource for accurate customs bonds, no matter your company’s needs. Contact us at 1-800-ROANOKE (800-762-6653) for more information to find out how we can serve your specific needs.