Customs Revenue Division jurisdiction over Customs Bonds
The bond amount guidelines outlined in Customs Directive 3510-004 (http://www.cbp.gov/sites/default/files/documents/3510-004_3.pdf ) have been in existence since 1991. Prior to this publication, the minimum continuous bond liability was $10,000 and the enforcement of the guideline was the responsibility of the District Director (now referred to as Port Director). In certain ports (e.g., New York), the minimum continuous bond amount was $50,000, even prior to the Directive. The basic bond formula of 10% of annual duty, taxes and fees was administered at the local ports, specifically at the “Bond Desk” as it was commonly referred to by Customs Brokers and Surety Agents. When bonds reached their saturation limits, it was the job of the Bond Desk to send a letter to the importer requesting a larger bond. The practice of doing this was extremely inconsistent.
In order to achieve uniformity in enforcing the bond guidelines, ensure adequate protection of Customs Revenue, and accomplish additional objectives (including those related to the loss of numerous original bonds when the customhouse in New York City was destroyed on September 11, 2001), Customs decided to centralize the processing of continuous bonds. This transition began in 2003, with selected ports accepting filings of Activity Code 1 continuous bonds (alternatively referred to as “basic importation and entry bond” or “Importer or broker” bond) and then transmitting them to the National Finance Center Bond Team (now the Revenue Division Bond Team) for processing and safekeeping. By the end of 2004, all Activity Code 1 continuous bonds were transmitted by filers directly to the centralized Indianapolis location. Following these changes, the trade saw a substantial increase in requests to increase bond liability as Customs routinely reviewed bonds for sufficiency, as they do to this day.
Port Directors retained responsibility for review and acceptance of continuous bonds of other Activity Codes until March 2010 when filing of all continuous bonds (regardless of Activity Code) with the Revenue Division Bond Team became compulsory.
In July of 2005, the Bond Team published special guidelines in response to huge deficiencies in collection of antidumping and countervailing duties (ADD/CVD). The new guidelines, which eventually became known as an “enhanced bonding requirement” or “EBR,” called for continuous bonds to be increased by an amount equal to one year’s worth of calculated ADD/CVD. Although the guideline was stated as being applicable to “agriculture/aquaculture merchandise,” Customs applied the EBR solely to importers of shrimp. Customs’ ability to apply this calculation was eventually struck down by the U.S. Court of International Trade and the World Trade Organization. Today, the 10% formula applies to all duties, including ADD/CVD. http://www.cbp.gov/sites/default/files/documents/bond_form_7.pdf
The single transaction bond liability guidelines today are essentially unchanged from those promulgated in the 1991 Customs Directive and continue to fall mostly within the jurisdiction of the Port Directors. However, there can be inconsistencies in the interpretation of the guidelines among the various local ports. This can cause friction between Customs Brokers and their importer clients who enter goods at multiple ports. With the advent of eBond and electronic single transaction bonds (eSTB) Customs will need to find a way to arrive at consistent application of guidelines. Logically, this is in line with CBP’s objective of uniformity. However, the local nature of goods entering a port will likely result in deviation from guidelines when CBP believes their revenue is at risk. ITSA members will endeavor keep their trade partners abreast of these changes as they develop.