The bond is similar to an insurance policy, imposed by U.S.Customs for guaranteed payment of the duty.
If for some reason, the importer does not pay the duty, or is assessed a penalty or additional duty long after the original duty amount has been paid and he is no longer in business, or unwilling/unable to pay, the BOND COMPANY has the obligation to pay U.S.Customs. In other words, if Customs has not been paid after a certain period of time, they will demand payment from the Bond Company. It will be then for the Bond Company to take legal action against the importer. The insurance company will charge what we call a "Bond Charge" which is required by law and is not refundable.
Cargo valued over $ 2000.00 requires Formal Customs Clearance. U.S.Customs requires that formal entries have a Customs Bond. An importer has two options regarding Customs Bonds:
SINGLE ENTRY BOND :
This bond is valid for one transaction only. The bond amount is based on the value of the cargo plus the duty. For example, invoice value $40,000.00 plus $200.00(duty & taxes).
$40,200.00 (bond amount). A single entry bond will be billed at $5.50 per 1000$ of the bond amount or $55.00 Minimum fee. Cost of the bond in this case would be $221.10.
For shipments falling under the following categories, U.S.Customs requires that the bond amount equal three times the value of the cargo:
CONTINUOUS BOND :
This bond is valid for an unlimited number of entries, through any port in the United States for a period of one year. The bond amount is a minimum of $50,000.00. The bond charge for a continuous bond is $ 475.00 per year (the bond charge will increase as the bond amount requested increase). An importer's decision whether to have a single entry bond or a continuous bond, will depend on the number of import transactions in a year and the value of those import shipments. If the importer expects to have several shipments at High value, it would be prudent for him to take out a continuous bond. We as a Custom Broker can provide both services to the importer.
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