Customs bond
A guarantor's undertaking to the customs authority to pay the duties and taxes an operator owes or may come to owe, which lets it release, store or move goods before it has paid.
A New Jersey furniture importer paid 2.4 million dollars in duties, taxes and fees over twelve months. Its continuous bond, the CBP Form 301 signed by a surety listed on Treasury Circular 570, is in principle set at 10% of that amount, with a 50,000 dollar floor. Let new additional duties double its bill and Customs will send it a bond insufficiency notice: raise the bond, or stop clearing goods. A customs bond guarantees the state duties that have not yet been paid, or not yet finally liquidated. In the United States (19 CFR Part 113), the importer chooses between a single transaction bond, tied to one entry and generally sized on the entered value plus duties, taxes and fees, and a continuous bond covering all its entries for the year. Liquidation normally takes place one year after entry, a period CBP can extend, and an antidumping duty set after the fact can still be claimed from the surety, up to the bond amount for the period. On the European side, the Union Customs Code (Regulation (EU) No 952/2013, articles 89 onward) requires a guarantee for a customs debt that has arisen or may arise: deferred payment of duties, which French practice still calls crédit d'enlèvement or crédit de droits, customs warehousing, transit. It takes the form of a cash deposit or a surety undertaking, and an operator with repeated transactions provides a comprehensive guarantee, whose amount can be reduced, or waived altogether, if it meets the Code's reliability criteria. For the underwriter, this is credit risk on the importer dressed up as a formality. When the importer files for bankruptcy with unliquidated entries, Customs collects from the surety.
Textbook case: an importer paid 2.4 million dollars in duties, taxes and fees over the past twelve months. Its continuous bond comes out at 10%, 240,000 dollars, above the 50,000 floor. The next year, additional duties take its bill to 5.1 million: 10% is 510,000 dollars, and CBP requires a new bond at that amount. The surety's exposure has more than doubled while import volumes have not moved. If the importer goes bankrupt leaving 900,000 dollars of unpaid duties on entries covered by that bond, the surety pays 510,000 dollars, its limit for the period, then turns to the importer under its indemnity agreement; Customs pursues the remaining 390,000 dollars in the bankruptcy.
customs bond, continuous bond, single transaction bond, customs guarantee, comprehensive guarantee
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