Customs Bonds

General Definition of a Customs Bond

AA Customs Bond is a contract which is given to ensure the performance of an obligation imposed by a law or regulation... to protect the revenue of the United States.

A Customs Bond is required on all commercial shipments 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 or to assure compliance with any pertinent law, regulation or instruction.

Specific Definition of a Customs Bond

A Customs Bond is a type of performance bond. The parties involved in the bond contract include the Principal (the importer of record), the Surety (i.e. ABC Insurance Company) and the Obligee (the U.S. Customs Service). An importer must post a bond to guarantee to U.S. Customs that all import duties, taxes and charges will be paid and all import laws and regulations will be complied with. There are basically two types of Customs Bonds: single transaction bonds and continuous bonds.

(a) Single Transaction Bonds

A single transaction bond is for a particular import shipment and can be used for only one Customs transaction. The bond amount required by Customs is either (1) the value of the goods plus duty or (2) three times the value of the goods, depending on the commodity (e.g. for all Quota shipments, and any shipment involving another govt. agency (OGA) such as FDA, F&W etc). Generally, single transaction bonds are used by importers that only import into the United States a few times a year.

(b) Continuous Bonds

More frequent importers typically use continuous bonds. A continuous bond is in effect for a one year period and covers all import shipments through any port of entry during that year. The bond is automatically renewed each year on its anniversary date, unless the bond is terminated or cancelled. The bond amount required by Customs is usually equal to 10% of the importer=s annual duties and is subject to a $50,000 minimum.

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