The financial obligations - Customs Bond

Laying out the process of commercial importing is like stepping into a cloud of paperwork with so many confused terms. One of the frequent term is " Bond" . You may start wondering, I knew treasure bond, municipal bond and corporate bond . All of those investment products I would get interests and principle backs when bond arrives maturity date. Wait a second, what is custom bond?

Here the so-called bond is more like a " insurance " used for guaranteeing that a specific financial obligation will be fulfilled between customs and an importer for any given import transaction. The main purpose of a customs bond is to guarantee the payment of import duties and taxes.

Out of all the 8 types of Customs bonds, most frequently used are Activity Code 1 - Import Bonds (or a C1 bond). CBP requires that all importers bringing in USD 2500 or more value of goods have an import bond in order to clear entries through Customs. An importer may file a “Single Entry” import bond or a “Continuous” import bond depending on their importation frequency.

The next question would be , how do I know if I should obtain a single bond or Continuous Bond?

What is Single Entry Bond

Just as the name implies, single entry bond serves as one-time importation needs. Business only imports occasionally or who are undertaking their first importing endeavor, may find themselves using a single entry bond as they explore the process.

The single entry bond value and cost depends on your merchandise value. I would suggest clients if they import more than $20000 value of ocean freight shipment ( $6500 if FDA regulated products) to get a continuous bond instead of single entry bond. It is because the combined cost of ISF bond + Single entry clearance bond would not be worthy for one time usage.

Single pass or annual membership? The best way is to contact your custom brokerage firm to get the quotation and use your best judgement. Every custom brokerage firm is the agent of surety bond company that is licensed by U.S Department of treasury . Depends on the bond company affiliation, price might varies slightly form one to another.

Worth to note one point, you will always want to make sure the single entry bond is sufficient to cover the correct duty and fees amount. If not, you might get a insufficient bond notice letter from US Customs few month later asking you to pay for the insufficient bond amount.

What is Continuous Bond

We have mentioned above that you need to pay for ISF bond if imported by ocean and declared Single entry bond. By purchasing continuous bond, you do not have to spend extra money on ISF bond. It is included in continuous bond product.

Therefore, business who regularly import goods into the United States will benefit greatly from a continuous bond.

$50K is the minimum amount and it is sufficient to cover up to $500K in duties, taxes, and fees.

With continuous bond on file, you could have your broker to file different types of import entry clearance , whether is ocean ,air or rail. The bond will be automatically renew if not canceled.

Here i just cover the very basis of the custom bond topics. There are more types of customs bond ( FTZ bond, drawback bond, TIB bond etc.) for different needs. If you have questions or want to express your thoughts, feel free to get in contact with me.